OREANDA-NEWS. Brazilian petrochemicals giant Braskem signed a five-year naphtha supply contract with Brazilian state-controlled oil company Petrobras for 7mn t/yr at 102.1pc of the ARA price.

The contract was signed after nearly three years of negotiations between the two companies and five short-term contract extensions.

Braskem lamented that it was unable to reach an agreement with Petrobras for a flexible formula for naphtha pricing, which would vary from 90pc and 110pc of the ARA price.

Braskem argued that this formula would have reflected components that are typical for long-term contracts.

The two companies have the option of renegotiating aspects of the contract after three years.

The new contract takes effect immediately.

Despite its disappointment with the terms of the contract, Braskem said it signed the contract in an effort to reduce uncertainties for the Brazilian petrochemicals industry.

Braskem depends on Petrobras for 70pc of its naphtha requirements and imports the rest from other suppliers. Because of logistical constraints, Braskem cannot import a greater percentage of its naphtha demand.

Brazilian conglomerate Odebrecht controls Braskem with a 38pc stake. Petrobras holds 36pc and the remaining shares are publicly listed. Petrobras was not available to comment on the negotiations.

The naphtha supply contract was signed at a time when Petrobras is seeking to maximize its revenues. During the second half of 2015, the company has raised the price of gasoline, diesel, natural gas and LPG.

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