Petrobras reconsidering sale of Braskem

Rio de Janeiro-based Petroleo Brasileiro SA, or Petrobras, is reportedly reconsidering its decision to sell its shares in Brazilian petrochemicals firm Braskem, and could even double its stake in the company it views as a natural hedge for oil prices.

Petrobras is reassessing its petrochemicals strategy after having placed its US$1.1 billion stake in Braskem up for sale in 2016 as part of a divestment plan, according to its Chief Financial Officer Rafael Grisolia who was interviewed by Bloomberg.

Asset sales are less urgent for Petrobras thanks to higher oil prices, cost cuts and success at reducing debt, Grisolia said, adding that the company will meet its leverage targets for 2018 even if its planned sales don’t materialize.

Construction conglomerate Odebrecht SA, which controls Braskem and is a partner with Petrobras in the firm, is in exclusive talks to sell its shares to LyondellBasell Industries. Petrobras’s options include selling its stake to LyondellBasell along with Odebrecht, retaining its shares, or exercising preferential rights to buy Odebrecht’s stake, Grisolia is reported to have said.

The decision depends on the offer price and strategic considerations, he said, adding that petrochemicals are a natural hedge for an oil producer. Petrobras hasn’t received Houston-based LyondellBasell’s offer and will have 60 days to make a decision when it does.

If the offer price is higher than internal valuations, Petrobras may decide not to exercise its preferential rights. Global oil companies typically rely on downstream activities to pad margins when oil prices are low.

A potential review of Petrobras’s strategy comes after former CEO Pedro Parente, lauded for turning around the oil company at the centre of the corruption scandal known as Carwash, left in June following a nationwide truckers’ strike over fuel prices. He was replaced by Ivan Monteiro.

Braskem has a market value of US$11.5 billion. LyondellBasell’s potential bid for full ownership could be worth as much as US$19.5 billion.

(PRA)

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