In a major consolidation of Brazil's petrochemicals industry, private
industry resin-maker Braskem SA, Latin America's largest petrochemicals
company, said Friday it signed a deal to gain major petrochemicals stakes in
Brazil now held by state-run Petrobras. In exchange, Petrobras will more than
triple its stakes in Braskem, to 25% from 6.8% now.

     Braskem said Petrobras will control 30% of Braskem's voting shares, while
Braskem's main shareholder, Odebrecht SA, will retain 37.2 percent of voting
shares. The operation must be approved by Brazil's antitrust watchdog, Cade,
before it's allowed to go ahead.

     The new Braskem would incorporate several large stakes in petrochemicals
facilities throughout Brazil now held by Petrobras. They include: a 37.3%
stake in southern basic petrochemicals maker Companhia Petroquimica do Sul
(Copesul), 40% of Ipiranga's chemicals and petrochemicals divisions, 40
percent of a new Sao Paulo-based resin-maker Petroquimica Paulinia, and 100%
in southern Brazilian resin-maker Petroquimica Triunfo.

     Braskem already controls the majority of Copesul and Ipiranga's chemicals
and petrochemicals assets, but will gain larger stakes following the asset
merger with Petrobras, the company said. Petroquimica Triunfo, with its
160,000 mt/year polyethylene capacity, is the major buyer of ethylene
feedstock from Copesul. Petroquimica Paulinia is already a joint-venture
between Braskem and Petrobras (60%/40%) under construction to produce 350,000
mt/year of polypropylene. The plant is expected to start production in April,
2008, Braskem said.

     In a statement, Braskem said that by merging petrochemicals assets in
Brazil it would obtain synergies worth $1.1 billion in net present value, and
additional cost benefits in the future, plus better access to Petrobras
refineries and research facilities. Braskem will issue 103 million new shares
as part of the deal.

     "This decisive step in the process of consolidation of Brazil's
petrochemicals industry puts Braskem in a position to better compete in the
global petrochemicals arena by boosting its cash generation, which will help
speed up its projects and expand internationally," Braskem's chief executive
Carlos Grubisich said Friday. Braskem said it wants to become one of the
world's 10 largest petrochemicals companies.

     By boosting cross-shareholdings in Brazil's petrochemicals industry, the
asset merger gives state-run Petrobras more control over Braskem, a company
that was created and privatized earlier this decade.