Brazil Abief warns of govt control over petchems

09 August 2007 00:57  [Source: ICIS news]

HOUSTON (ICIS news)--Brazil’s flexible plastic packaging association (Abief) on Wednesday warned that the expanding role of the Brazilian government in the petrochemical industry could lead to higher prices.

Abief said its concerns were heightened last week following news that state-run oil company Petrobras was acquiring petrochemical group Suzano Petroquimica for Brazilian reais (R) 2.7bn ($1.4bn).

The transaction will lift Petrobras’ participation in two other petrochemical firms, while giving the oil company a 20% stake in a third group it previously had no ownership.

Abief said a quasi-nationalisation of the sector could result in market control of petrochemicals, particularly thermoplastic resins - the main feedstock for flexible plastic packaging.

The acquisition of Suzano Petroquimica marked Petrobras’ second major venture into the Brazilian petrochemical sector in 2007.

In March, the company and two private partners, Brazilian petrochemicals majors Braskem and Ultrapar, announced plans to acquire petrochemical and oil group Ipiranga for R4bn. Under that deal, Braskem will own 60% of Ipiranga’s petrochemical assets, while the remaining 40% will go to Petrobras. The two companies and Ultrapar will each get one third of Ipiranga’s refinery assets.

The operation was still pending regulatory approval.

Petrobras dismissed concerns that the government plans to have a monopoly of the Brazilian petrochemical industry through its recent acquisitions. “The idea is to give the industry a boost to make it more competitive,” a company official said.

Fears of government intervention in the sector gained momentum after Venezuela President Hugo Chavez announced plans to nationalise the petrochemical industry in the neighbouring country.

($1.00 = R1.90)

By: William Lemos
+1 713 525 2653

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