Braskem S.A. ("Braskem"), the leading petrochemical company in Latin America, and Petroquímica de Venezuela, S.A. ("Pequiven"), the largest petrochemical company in Venezuela, have entered into a memorandum of understanding that has as its objective the building of the most competitive integrated petrochemical complex in the Americas, the Jose Olefins Complex, in Venezuela. The project contemplates the construction of an ethylene "cracker" that will use natural gas as its primary raw material and will have a globally competitive scale with an annual production capacity in excess of 1.2 million tons, as well as the integrated production of polyethylene and other second generation petrochemicals.

The Jose Olefins Complex is an important step in the development of the
Venezuelan petrochemical sector and is part of Pequiven"s 2006-2012 development plan. "Venezuela has one of the largest oil and natural gas reserves in the world and occupies a privileged geopolitical position on the American continent", says Saul Ameliach, Pequiven"s president. "We intend to use these structural advantages in partnership with Braskem to develop our petrochemical industry even further, in this case in the olefins sector (thermoplastic resins), with the objective of making Venezuela a global player in the plastic sector, promoting the transformation industry, creating new companies, guaranteeing the supply of raw materials, substituting imports and generating sustainable and permanent jobs. The purpose of this project is to generate wealth and to contribute to the reduction of poverty in the region," he added.

"The Jose Project represents an important step in Braskem"s strategy to grow
with value creation, combining a competitive production scale, up-to-date
technology and access to raw materials under competitive conditions, which should result in reduced production costs and improved profitability" said José Carlos Grubisich, the chief executive officer of Braskem. "The Jose Project strengthens our strategic alliance with Pequiven and would become an international platform for our company," he further noted.

The detailing of the project to be undertaken by Braskem and Pequiven is expected to last six months and will address the operational, technological,
marketing, financial and strategic aspects of the Jose Project. In addition to this initiative, Braskem and Pequiven are proceeding with their action plan for building a new polypropylene plant in the El Tablazo complex, with an expected annual production capacity of 400,000 tons and total investments estimated at nearly US$ 370 million. Braskem and Pequiven will continue to analyze other opportunities in the Venezuelan petrochemical sector within the scope of their existing strategic alliance.