NAPHTHA AND GAS OIL PURCHASE AND SALE CONTRACT



 





EXHIBIT 10.06




	 	 	 
	 

	 	Sale Agreement of Naphtha and
Gasoil between Petróleo
Brasileiro S.A. - Petrobrás
and Copene, Petroquímica do
Nordeste S.A.






Petróleo Brasileiro S.A.
- Petrobrás, Part Public Part Private Company, with
head office in this City, located at Av. República do Chile,
number 65, l9th
floor, enrolled in the General Taxpayers’ Register under number
33.000.167/000l-0l, hereinafter named Petrobrás , represented by its General
Superintendent of the Commercial Department -DECOM Armando Guedes Coelho and
Copene Petroquímica do Nordeste S.A., with head office in the City of Camaçari, State of Bahia, enrolled in the General Taxpayers’ Register under number
42.150.391/0001, hereinafter named Buyer, represented by its Officers José Jucá
Bezerra Neto and Luiz Carlos Borges Fortes;



Whereas Buyer is installing in the City of Camaçari, State of Bahia, a Raw
Material Facility destined to the Petrochemical Complex of the Northeast and
will use as raw materials, among other products, naphtha and gasoil;



Whereas Buyer will be the main supplier of raw materials to the Petrochemical
Complex;



Whereas Petrobrás has the available naphtha and gasoil that Buyer needs;



Whereas the National Petroleum Agency, through its resolution 001813, dated
March 01, 1978, authorized Petrobrás to supply naphtha and gasoil to the Buyer
within the conditions therein established;



Whereas the National Petroleum Agency, in its 1657th Ordinary Meeting held on
June 04, 1974, approved a criteria for the establishment and review of the
price for the supply of petrochemical naphtha;



Whereas the National Petroleum Agency has the duty to establish the price for
the supply of gasoil;



Whereas the provisions of Decreto-Lei 1597 of December 23, 1977;



The parties hereby agree to execute this sale Agreement, which shall be
governed by the following clauses and conditions:



CLAUSE 1 - Object.





	1.1	 	Petrobrás agrees to
sell and deliver to
the Buyer, on a
non-exclusive
basis, during the
term established in
Clause 8, and the
Buyer agrees to buy
and receive from Petrobrás, for use as raw material only, at its mentioned plant, naphtha
and gasoil, in the quantities and characteristics described in Clauses 2
and 3, observed all other conditions of this instrument.




 









 






	1.2	 	Buyer agrees not to sell, assign or, in any other form, transfer to third
parties the naphtha and gasoil acquired from Petrobrás, limiting itself to
use it as raw materials with the intent to meet Buyers own industrial
needs.





CLAUSE 2 - Quantities.





	2.1	 	The quantities of naphtha and gasoil to be supplied by Petrobrás, during
the initial and primary phases of the processing units of the Buyer, shall
be the quantities agreed by the parties at least 60 (sixty) days prior to
the commencement of the respective monthly supply.






	 	2.1.1	 	The initial and primary phases of the processing units of
the Buyer shall end when such processing units obtain all conditions
to be submitted to the acceptance tests, though, it shall not last
after December 31, 1978.






	2.2	 	From January 1979, and excepting the provisions of items 2.3 and 2.4, the

minimum and maximum quantitative limits of naphtha and/or gasoil that
Petrobrás is obliged to sell to the Buyer and that Buyer is obliged to buy
from Petrobrás, are listed below:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Q U A N T I T I E S ( M3 / M O N T H )	 	 
	 	 	N A F T A	 	G A S O I L
	 	 	min.	 	max.	 	min.	 	max.
	1979
	 	 	60,000	 	 	 	95,000	 	 	 	50,000	 	 	 	70,000	 
	1980
	 	 	70,000	 	 	 	95,000	 	 	 	60,000	 	 	 	90,000	 
	1981 and after
	 	 	70,000	 	 	 	95,000	 	 	 	70,000	 	 	 	110,000	 








	 	2.2.1	 	Until September 30 of each year, the Buyer may review the
naphtha and/or gasoil consumption predictions, adapting them to the
Buyers market prediction for the next year.
	 
	 	2.2.2	 	For 1980 and the following years, considering the evolution
of the basic petrochemical market and considering the full
utilization of unexplored capacities of existing projects in
processing units of the same types of the existing ones at the
Buyers premises, Petrobrás agrees that the maximum figures
established in the table above be surpassed by up to 20%, as already
authorized by the National Petroleum Agency.






	2.3	 	Petrobrás may, at its discretion and observing the provisions of 2.3.1
and 2.3.2, substitute partially or totally the quantities of gasoil
indicated in 2.2 for naphtha, through previous written notice of 120 days
for the first substitution and 60 days for succeeding ones.






	 	2.3.1	 	The total substitution of gasoil for naphtha will be allowed
only if it does not diminish the capacity of the Buyer to fulfill
its agreements for the supply of petrochemical products from January
1980.




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	 	2.3.2	 	In the event of partial substitution of gasoil for naphtha,
the minimum quantity of gasoil to be supplied must allow the gasoil
hydrodesulphurization plant to operate, and such quantity is fixed
as 50,000 m3/month. In the event the supplied gasoil has a
proportion of sulfur equal or inferior to 1/10% in weight, the
quantity of gasoil supplied may be inferior to 50,000 m3/month,
observed 2.3.1.
	 
	 	2.3.3	 	Petrobrás may, at its discretion and observing the
provisions of 2.3.1. and 2.3.2, substitute the supply of gasoil and
naphtha for naphtha partially or totally, as long as Petrobrás
undertakes to supply additionally up to 300 cubic meters per month
of gasoil type LCO.






	2.4	 	The Buyer shall inform, in written notice, until the 5th day of the
preceding month, the quantities of naphtha and gasoil that it wants to
purchase in the next calendar trimester. The absence of or delayed notice
shall entail the supply of the quantity informed in the previous month.
Until the 20th day of the month, Petrobrás will give its opinion on the
consumption predicted, and the quantities agreed upon shall prevail in
relation to the ones described in 2.2.






	 	2.4.1	 	If the Buyer does not withdraw the established minimal
monthly quantity, Petrobrás shall have no obligation to add such
quantities in any subsequent month.
	 
	 	2.4.2	 	If the quantities requested by the Buyer exceed the maximum
monthly limit established in 2.2 and 2.2.2, Petrobrás may, at its
own discretion, agree with the supply of the increased quantity.
	 
	 	2.4.3	 	The possible variation in percentage, for the predictions
mentioned in 2.4 shall be 5% for the second month and 10% for the
third month, excluding months in which there is a start up of an
industrial unit that is fed by raw materials supplied by the Buyer.
Such events shall require a notice with 60 days of advance.






	2.5	 	The quantities of naphtha and gasoil referred in this Agreement are based
on a 20oC temperature.





CLAUSE 3 - Technical Characteristics.





	3.1	 	The naphtha to be supplied by Petrobrás to the Buyer will be a
debutanized naphtha of full range (full range), obtained by direct
distillation, non desulfurized, which typical characteristics are found in
Annex I of this Agreement.
	 
	3.2	 	The gasoil supplied by Petrobrás to Buyer shall be a gasoil of full
range, obtained by direct distillation, which typical characteristics are
found in Annex I of this Agreement.
	 
	3.3	 	Petrobrás shall supply, as much as possible, a naphtha and a gasoil to
the Buyer according with the technical characteristics established in
Annex I. However, once




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	 	 	Petrobrás is obliged to use different types of petroleum, due to
international market contingencies, with consequent variation in the
characteristics of its derivatives, Petrobrás is not obliged to observe
the technical characteristics of Annex I, in what concerns the
composition of hydrocarbons.
	 
	3.4	 	If Buyer finds that such products are unsuitable for use in its units, it
may refuse to accept such products, justifying in written form the reasons
for the refusal, and shall not incur in the penalties described in clause
11, but Petrobrás will not be obliged to substitute the refused
quantities, neither will it be obliged to indemnify Buyer.





CLAUSE 4 - Form of delivery and transfer of proprietorship.





	4.1	 	The delivery of the volumes of naphtha and gasoil to Buyer is an
exclusive responsibility of Petrobrás. Such delivery will be made through
one oleoduto of 14 inches, which is a property of Petrobrás, connecting
Landulpho Alves Refinery (LAR) to the Raw Material Facility (RMF) of the
Buyer.
	 
	4.2	 	The naphtha and gasoil shall be considered delivered to the Buyer, and it
shall then be considered Buyer’s property, when downstream of point A of
the refinery.






	 	4.2.1	 	Buyer shall bear all risks of loss of naphtha and gasoil
after transfer of proprietorship according to 4.2.





CLAUSE 5 - Prices and Reviews.





	5.1	 	For the naphtha and gasoil supplied by Petrobrás to the Buyer, in the
delivery point defined in 4.2, Buyer shall pay to Petrobrás the following
amounts:






	 	5.1.1	 	The prices FOB-Refinery determined by the National Petroleum
Agency for the products classified as “naphtha for Copene” and
“gasoil for Copene”, or any other classification that such Agency
may establish for similar use as of Buyer’s. Such prices shall be
reviewed whenever National Petroleum Agency reviews them.
	 
	 	5.1.2	 	The tariff for the utilization of the pipe-line for the
transport of the products between point “A” of LAR and the limit of
the tanks of the RMF of the Buyer, shall be the one approved by the
National Petroleum Agency. Such tariff shall be reviewed
periodically by Petrobrás, and any change shall be in effect only
after approval by the National Petroleum Agency. Petrobrás shall
inform Buyer of all proposals for the change of such tariffs sent to
such Agency.





CLAUSE 6 - Method of Payment.





	6.1	 	The supply of naphtha and gasoil object of this agreement shall be billed
monthly, according to Clause 7, and such bills shall be presented to the
Buyer in the City of




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	 	 	Camaçari, State of Bahia, in an address to be determined by the Buyer,
until the 5th day of the month subsequent to the supplies that are being
billed.
	 
	6.2	 	Buyer shall pay, in national currency, the paying bill correspondent to
each bill, in an address to be determined by Petrobrás, in the City of
Salvador, State of Bahia, until the 15th day of the month subsequent to
the supplies that are being billed, or until 10 days after receiving the
bill, whichever occurs last; late payments being subject to interest plus
a collection fee, charged accordingly to the price practiced by Petrobrás
in that occasion, both values calculated over the amounts past due, from
the due date until the date payment is effectively made.
	 
	6.3	 	The non payment of three bills, whether or not consecutive ones, in the
terms indicated in this agreement, during one calendar year, shall grant
Petrobrás the right to interrupt the supplies without previous warning.





CLAUSE 7 - Measurements.





	7.1	 	To ascertain the quantity of naphtha and gasoil supplied, for billing
purposes, Petrobrás shall install outflow meters, of reputable brands and
models.
	 
	7.2	 	The measurement of the quantities of naphtha and gasoil supplied shall be
made daily by Petrobrás, in hours pre-determined by Petrobrás.
	 
	7.3	 	The maintenance and calibration of the meters shall be performed by
Petrobrás, always with previous notice to the Buyer, in a manner that
allows Buyer to send its representatives to accompany such work if so
desired.






	 	7.3.1	 	In the absence of representatives from Buyer, Petrobrás
shall perform the calibration and Buyer shall have no right to
complain.






	7.4	 	While there are no conditions to perform the control of the quantities of
naphtha and gasoil supplied, in the form above mentioned for billing
purposes, such quantities shall be calculated over the measurements
performed in the tanks of LAR.
	 
	7.5	 	In the event of breakdown or malfunction in the meters, the quantities
delivered shall be determined by measurements in the tanks of Petrobrás
until such meters are back to their normal condition. In the event the
supply of products presents a monthly discrepancy, positive or negative,
above 1/10% (one tenth percent), between the measures performed by
Petrobrás and the Buyer, both parties shall examine the causes of such
discrepancies and shall promote the necessary corrections.
	 
	7.6	 	Buyer shall be entitled to, upon request, access to the distribution
facilities of the products object of this agreement, to verify the
measurements of the supplied products through its agents, whom shall be
accompanied by Petrobrás representatives.




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CLAUSE 8 - Term.





	8.1	 	This agreement shall be in effect from the date of its execution until
the 10th year from the date the first supply referred in 8.2 is initiated,
and it shall be considered renewed for the same term in case none of the
parties revoke it with a previous written notice, through a Titles and
Documents Notary, stating that such party does not intend to renew it, and
such notice shall be made at least 1 year prior to the expiration of the
10 years term or the expiration of any renewed term of this agreement.






	 	8.1.1	 	The first supplies of naphtha and gasoil shall be
conditioned to the authorization of the National Petroleum Agency,
which shall be obtained by the Buyer.






	8.2	 	The first supplies of naphtha and gasoil are scheduled for the 1st
semester of 1978, but Buyer is obliged to inform Petrobrás, with a 3 month
previous letter, the effective date of commencement of the supply of
naphtha and gasoil.






	 	8.2.1	 	In the event the first supply does not occur until June 30,
1978, this date shall be considered the initial term of the period
of 10 years described in 8.1.





CLAUSE 9 - Maintenance Interruptions.





	9.1	 	Buyer shall have storage compatible with its consumption pattern, taking
under consideration the programmed annual maintenance interruption of both
parties, whether partial or total, for periods not greater than 30 days.
	 
	9.2	 	In the event of maintenance interruptions programmed for more than 5
days, previous written notice of at least 45 days stating initial date and
duration of the interruption, shall be sent through letter with notice
upon delivery. The Buyer shall seek to adapt its interruption plans for
preventive maintenance to the interruption plans of the supply source
(LAR), but Petrobrás promises to maintain the normal supply of naphtha and
gasoil to the Buyer, independently from the interruptions of LAR, except
when such supply jeopardizes the national supply of fuels.





CLAUSE 10 - Tax Burden.





	10.1	 	Buyer shall reimburse Petrobrás of all tax (taxes, charges, public fees,
and tax and non tax contributions) from Federal, State or city
governments, that are or may be due as a direct or indirect result of this
agreement or its performance.





CLAUSE 11 - Penalties.





	11.1	 	In the event Buyer may not receive the monthly minimal quantities
(naphtha + gasoil) established according to Clause 2, Petrobrás shall bill
Buyer a value equivalent to the quantities not delivered multiplied by
1/10 of the prices of realization of the refinery.




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CLAUSE 12 - Act of God.





	12.1	 	None of the parties may be held responsible for the non performance of
its obligations, when due to factors that may not be controlled by them,
or in other words, whenever there is a act of god, as established by
article 1058, sole paragraph, of the Brazilian Civil Code, as well as in
the circumstances allowed under clause 9.
	 
	12.2	 	The impossibility of the Buyer or Petrobrás, proved in a proper manner,
to obtain the importation of raw materials or equipment essentials to
their plants, that does not have a national counterpart, shall be
considered an act of god.





CLAUSE 13 - Rescission.





	13.1	 	Petrobrás may rescind this instrument, in a lawful manner, independently
from judicial or non judicial notification or interpolation, in the
following hypothesis:






	 	13.1.1	 	Non performance of any clause or condition of this instrument.
	 
	 	13.1.2	 	Bankruptcy, judicial or non judicial liquidation or reorganization
of the Buyer, approved or imposed.
	 
	 	13.1.3	 	Assignment or transfer, total or partial, to third parties,
without authorization of Petrobrás, of the rights or obligations
that are attributed in this agreement to the Buyer.
	 
	 	13.1.4	 	Change of corporate type, amalgamation, merger or any form of
succession of the Buyer.






	13.2	 	Any and all tolerance regarding the fulfillment, by any of the parties,
of the terms and conditions established in this agreement, shall not mean
alteration of the terms herein agreed, but, shall be construed only as a
liberality of the other party.
	 
	13.3	 	Buyer may also rescind this instrument, in a lawful manner, independently
from judicial or non judicial notification or interpolation, in case of
non performance by Petrobrás of any clause or condition agreed upon in
this agreement.





CLAUSE 14 - Addresses.





	14.1	 	The correspondence regarding this contract or its performance, shall be
directed to the main offices of the parties, being allowed to the parties
to indicate in a written fashion any other addresses to correspondence
arising from this instrument.




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CLAUSE 15 - Assignment and Venue.





	15.1	 	This agreement shall not be assigned in whole or in part without the
written consent of the other party. The venue of the City of Rio de
Janeiro is elected to solve any controversies arising from the performance
of this agreement, excluding any other venue, regardless of its
privileges.




In witness whereof, the parties execute the present instrument in 7
counterparts of equal tenor, before the undersigned witnesses.




	 	 	 
	 

	 	Rio de Janeiro, June 22, 1978
	 
	 

	 	Petróleo Brasileiro S.A. - Petrobrás
	 
	 

	 	(illegible signature)
	 
	 

	 	Copene - Petroquímica do Nordeste S.A.
	 
	 

	 	(illegible signature)
	 
	 

	 	(illegible signature)







Witnesses:




(illegible signature)




(illegible signature)




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ANNEX I




1) Typical characteristics of the naphtha:




	 	 	 	 	 
	Final Point ASTM, max 
	 	 	200	oC
	sulfur, % max weight 
	 	 	0.1	 
	content of paraffins, % min volume 
	 	 	68	 
	content of naphthenes, % min volume 
	 	 	21	 
	content of olefins, % max volume 
	 	 	1	 







1) Typical characteristics of the gasoil:




	 	 	 	 	 
	Final Point ASTM, max 
	 	 	360	oC
	sulfur, % max weight 
	 	 	1	 
	content of paraffins, % min volume 
	 	 	43	 
	content of olefins, % max volume 
	 	 	1	 








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