The long-awaited sale of Brazilian thermoplastic resin producer Braskem in 2024 may force its second-largest shareholder — state-controlled Petrobras — to make a decision about its future in the petrochemical arena.
Braskem is the largest producer of thermoplastic resins in the Americas and a leader in biopolymer production. Fellow conglomerate Novonor — formerly known as Odebrecht — holds a 38.3pc stake in Braskem, Petrobras a 36.1pc share, and the remaining 25.6pc is split among other shareholders. Under Braskem's shareholders agreement, Petrobras has the right to match any acquisition proposal by a third-party company.
Abu Dhabi national oil company Adnoc in November offered R10.5bn ($2.1bn) for Novonor's controlling stake in Braskem, after Novonor rejected smaller bids by Unipar Carbocloro, South America's second-largest producer of polyvinyl chloride (PVC), and J&F, the holding company of the Batista family, which also controls beef giant JBS.
The sale is of extreme importance for Novonor as it plans to use any sale proceeds to repay R14bn in debt to creditors.
A sale of Novonor's controlling stake in Braskem to Adnoc could also make sense for Petrobras, which would continue to be the second largest shareholder in Braskem. It is planning a return to the petrochemicals arena, so partnering with a global player could help with operations of Braskem's assets in Brazil, the US, Mexico, and Europe.
But the Brazilian oil major could have other plans, as it has a privileged situation in Braskem. Petrobras has both the preemptive right to buy the Novonor stake offered for sale, and the "tag along" right to sell its stake in the business if it so decides. Petrobras said in its 2024-28 investment plan released in late November that it will resume building the GasLub petrochemical complex in Rio de Janeiro state, formerly known as Comperj. That aligns with earlier Petrobras comments that it is eyeing a major presence in the second-generation petrochemicals market, which includes producing polyethylene (PE) and polypropylene (PP).
The complex will receive natural gas from the Santos basin in early 2024 through the Rota 3 pipeline, but will need a gas-based cracker for production, which would not be a problem for Petrobras.
Developing the gas-fed complex makes sense for Petrobras, since Brazilian natural gas is cheaper than naphtha, the main feedstock used by Braskem to produce polyolefins in most of its plants. Petrobras produces some of the naphtha consumed by Braskem, but Braskem's naphtha imports have increased in recent years.
Braskem has also signaled that it could expand its petrochemical complex in Rio de Janeiro, also using gas from the Santos basin. That would require $500mn-600mn in investments, which the company said could be a challenge.
The Rio de Janeiro unit, powered by gas, is Braskem's most profitable. With the possible expansion, the unit could produce 728,000 metric tonnes (t)/yr of ethylene, the raw material for polyolefins, compared to the current 520,000 t/yr.
With Petrobras and Braskem's plans both pointing to possible additional capacity for polyolefins, Petrobras' future with Braskem in the case of a sale remains unclear. Furthermore, Brazil's securities regulator CVM will have to give a final word on whether Petrobras still remains a partner or is bought out out completely.
Brazilian president Luiz Inacio Lula da Silva is a vocal supporter of the potential Braskem sale to Adnoc, because it is not controlled by a country the Brazilian government has banned from owning major assets. State-controlled Saudi Aramco, which was also rumored to be interested in acquiring Braskem, would also be a viable candidate under the sales rules.
Another possible impediment to a Braskem sale is the 10 December collapse of a subterranean salt mine owned by the company to extract salt for its chlor-alkali operations. The collapse, and a 2018 incident where subsidance in the mine led to property damage in Maceio, Alagoas state's capital, has prompted opposition leaders at the upper house of congress to ask for a formal investigation on its causes. LyondellBassell walked away from a 2019 effort to acquire a stake in Braskem in large part because of environmental liabilities from Braskem's chlor-alkali operations in Alagoas.
