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Petrobras Executives Continue In Chile, Mulling Takeover

THE WALL STREET JOURNAL: Petrobras Executives Continue In Chile, Mulling Takeover

…considering an asset swap involving Petrobras upstream assets and Shell downstream operations, including service stations in Chile and Argentina and refining in the latter country.

DOW JONES NEWSWIRES

August 26, 2004 10:03 a.m.

SANTIAGO — Executives from Brazilian state energy company Petroleo Brasileiro (PBR) continue in Chile, meeting peers and mulling a possible asset purchase in the Andean country, one of only three South American countries in which it isn’t yet active and whose energy market is a declared target.

“Any commitment undertaken leading to the acquisition of any asset in Chile will be announced to the market and the shareholders at the appropriate time in accordance with the company’s disclosure practices,” the company said in a statement distributed from its Rio de Janeiro headquarters.

The release was titled “Clarification on the acquisition of (Royal Dutch) Shells (RD) assets in Chile,” but didn’t mention Shell in the text.

Petrobras officials have been in Chile for several days, originally accompanying Brazilian President Luis Inacio Lula da Silva on a two-day state visit early in the week.

Without citing sources, Chilean daily El Mercurio reported Thursday that the companies are considering an asset swap involving Petrobras upstream assets and Shell downstream operations, including service stations in Chile and Argentina and refining in the latter country.

Petrobras’ overtures to Chilean companies over the past year so far have been unsuccessful.

Shell has been selling downstream assets in several markets worldwide, including Latin America.

Local media have speculated that Petrobras and Repsol YPF SA (REP) are the most likely buyers of the Chilean operation, following the sale of Shell ‘s Peruvian assets to Chilean state energy company Empresa Nacional del Petroleo (ENP.YY) and a closely held Peruvian partner.

However, a takeover of Shell gas stations in Argentina would leave Repsol in control of two thirds of the gas stations in that country, which would likely be blocked by competition authorities. A Petrobras takeover would leave it with 32% of that market, El Mercurio reported.

-By Stephan Kueffner, Dow Jones Newswires; +56 2-460-8546; [email protected] (Matthew Cowley contributed to this report)

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