Brazil Restructures Petrochemical Sector

Brazil???s state oil company, Petrobras, is reshaping the country???s petrochemical industry with two deals. The company is swapping some of its petrochemical assets in exchange for an 18% equity stake in Brazil???s largest private chemical company, Braskem. It is also forming a new petrochemical company with Brazilian industrial group Unipar.

Under the first deal, Braskem will get full control of Copesul, a petrochemical complex in the southern state of Rio Grande do Sul, by acquiring Petrobras??? 37.3% stake. Braskem will also obtain Petrobras??? 40.0% stake in polyethylene maker Ipiranga Petroqu??mica.

Braskem will assume full control of Petroquílmica Paulínia, which is building a polypropylene plant in S??o Paulo, by acquiring Petrobras??? 40% stake. And Petrobras has an option to give Braskem its 100% ownership in Petroqu??mica Triunfo, a low-density polyethylene maker that gets its feedstock from the Copesul cracker.

In return for these assets, Petrobras will increase its stake in Braskem from 6.8 to 25.00%. Petrobras will also obtain three seats on Braskem???s 11-member board.

In the second deal, Petrobras is forming a Brazilian chemical company with Unipar, the holding company that owns Petroqu??mica Uni??o, a petrochemical complex in São Paulo. Ownership of the new company, dubbed Companhia Petroqu??mica do Sudeste (CPS), will be held 60% by Unipar and 40% by Petrobras.

The company will pool approximately $3 billion in assets owned by Petrobras and Unipar. It will control Petroqu??mica Uni??o and Rio Polímeros, a newly constructed ethylene and polyethylene complex in the state of Rio de Janeiro. It will also include Brazil???s largest polypropylene maker, Suzano Petroquímica, and polyethylene maker Polietilenos União.

Braskem says its acquisition of Petrobras assets is a big step toward its goal of becoming a major petrochemical company. ???The implementation of this agreement will enable Braskem to accelerate its strategic goal to become one of the 10 leading global petrochemical players,??? says Braskem Chief Executive Officer José Carlos Grubisich. The company is already the third-largest player in the Americas, behind ExxonMobil and Dow Chemical, when measured by capacity to make polyethylene, polypropylene, and polyvinyl chloride.

CPS???s start is more modest; it would be ranked 13th in the world by the same measure.