Braskem SA (ADR), Latin America’s petrochemical giant has reported to come at terms with Petroleo Brasileiro Petrobras SA (ADR) as they have agreed to revise its naphtha supply contract for the next six months.
Braskem’s naphtha was primarily sold to government owned Petrobras, being their major buyer. Naphtha is a compound of liquefied hydrocarbons which is used as a fuel. The contract is said to continue for the next six months, ending at August 31, 2015.
By utilizing the past price for naphtha, the latest agreement between the two of the biggest energy companies is most likely to be signed on 1st March.
Earlier last month, Chief Executive Officer of Braskem SA, Carlos Fadigas said that various chemical and plastics plants of the company confronted the probability of a closure due to unavailability of any contract.
36% Braskem’s equity is owned by Petrobras. However, Odecrecht Group of Brazil which is known for its engineering and construction has controlling interest in Braskem. The Latin America’s petrochemical giant has suffered recently because of allegations involving internal corruption. This had a directly proportional effect on the operations of Braskem as now they have to over pay for their natural gas and naphtha.
Federal prosecutors started investigating Petrobras last march. They were to look closely to check for any activity including corruption, bribery and organized crime. Prosecutors believed that Petrobras was involved in an organized crime involving multi-million dollars with some of the biggest names in construction business. They have voluntarily inflated the prices of their contracts and seek help from various politicians to ensure the scheme follow through.
Braskem major shareholder Odebrecht was amongst the numerous construction companies caught up in corruption scandal. In order to coordinate with the authorities, Petrobras is not signing any further contracts with most of the concerned contractors. This has made it problematic for Braskem to start contract with the Brazilian crude oil giant.
In News related to the matter, on Friday, Luiz Navarro was added to the board of Directors panel of Brazilian oil giant company. Previously Mr. Navarro has worked as a federal controller of Brazil office and was also a consultant at Veirano Advogados law firm. The news of Mr. Navarro appointment comes after the resignation of CEO Maria das Gracas Silva Foster and 5 other executives.
At market close on Monday 2nd March, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) stock price stood at $6.63 after its stock went red by 3.92%