Braskem signed a contract today with PDVSA in which the state-owned Venezuelan oil company will become a regular supplier of naphtha, Braskem´s main petrochemical raw material, as of February 2006. The contract, signed in Suape, Pernambuco state, in the presence of the presidents of Brazil and Venezuela, Luiz Inácio Lula da Silva and Hugo Chávez, respectively, includes monthly purchases of naphtha up to a maximum annual volume of 600,000 tons. The initiative will result in important strategic gains in competitiveness and flexibility for Braskem.

"Access to high-quality raw materials, under competitive conditions, is essential to  he petrochemical sector and Venezuela possesses the biggest oil reserves in Latin America," said José Carlos Grubisich, Braskem´s Chief Executive Officer. "This contract represents a landmark in the consolidation of a long-term relationship with PDVSA," he added.

Theagreement establishes a monthly volume range of naphtha urchases. Between 25,000 and 35,000 tons to be supplied by the Venezuelan company, although this figure could rise to a maximum of 50,000 tons. Should this limit be reached, the total volume supplied over the period of a year would represent around 15% of Braskem´s current emand for naphtha annually.

Braskem has maintained a contract for sever l years with Petrobras, its local supplier of raw materials, to acquire 60% to 70% of the volume of naphtha needed for its perations. The remainder has come from long-term contracts held with international uppliers in Algeria and Libya, among others. The agreement with PDVSA, a new supplier ith closer proximity to Braskem, will allow for more flexibility in terms of supply management.

BRASKEM-PEQUIVEN INDUSTRIAL PROJECT ENTERS NEW PHASE

Following a memorandum of understanding the two companies signed last June, Braskem and the Venezuelan oil company, Pequiven, took an important step today towards the joint installation of a polypropylene industrial unit located in Venezuela, with annual productive capacity of 400,000 tons and expected to begin operations in 2008. After preliminary studies found that the project was technically and economically viable, the companies have now signed a new agreement to accelerate through the details of these studies and established a timetable for the implementation of the partnership.

As an integral part of Braskem´s strategy to consolidate its leadership in the  regional polypropylene market, the project is attractive for both parties as its conditions are considered extremely advantageous. World production scale, access to raw materials under competitive terms - propylene to be supplied by PDVSA - in addition to Braskem´s world-class technology are some of the factors which, when combined, will ensure important competitive advantages to the enterprise.

"The new industrial unit will occupy a strategic geopolitical position and should supply both local and regional polypropylene markets, as well as becoming a platform for exports to other markets," said Grubisich. The investment to be made in the new plant is estimated at US$ 250 million.

Under the agreement signed today, the corporate structure of the project will be
concluded by July of next year and the constitution of the joint venture between Braskem and Pequiven should occur by the end of 2006. The partnership also includes the possibility of identifying and examining other joint business opportunities in Venezuela, that create value for both partner companies. "The establishment of the polypropylene unit may represent a landmark in the process of internationalization at Braskem," added Grubisich.