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Petrobras could turn around on the sell of its stake on petrochemicals Braskem, CFO says


- Waiting on Lyondell's offer for Odebrecht's stake in Braskem.
- Petrobras May exercise preferential rights on Odebrecht stake

By Sabrina Valle and Gerson Freitas Jr

Petroleumworld 08 17 2018

Petroleo Brasileiro SA may abandon a plan to sell shares in Braskem SA, and could even double its stake in the petrochemical company it views as a natural hedge for oil prices.

Petrobras, as the Rio de Janeiro-based company is known, is reassessing its petrochemicals strategy after having put its 4.3 billion-real ($1.1 billion) stake in Braskem up for sale in 2016 as part of a wider divestment plan, Chief Financial Officer Rafael Grisolia said in an interview.

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 enterprise, is in exclusive talks to sell its shares to LyondellBasell Industries NV. Petrobras' options include selling its stake to LyondellBasell along with Odebrecht, retaining its shares, or exercising preferential rights to buy Odebrecht's stake, Grisolia 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.

"Petrobras needs to decide if petrochemicals are strategic before then; we need to be prepared," Grisolia said at one of Petrobras' office towers in Downtown in Rio.

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.

"What we have seen globally is a growing integration between refining and petrochemical operations," Grisolia said. "I stand for what is best for Petrobras and its shareholders."

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

Braskem , which makes ingredients used in everything from plastic bags to car components and pipes, has a market value of 45 billion reais ($11.5 billion). LyondellBasell's potential bid for full ownership could be worth as much as $19.5 billion, Vertical Research Partners said in a note to clients in June.


Story by Sabrina Valle and Gerson Freitas Jr from Bloomberg News. 08 16 2018

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