Embed Size (px)
Citation preview
overview
2010CONTENTS
MESSAGE FROM THE CEO 02
kEy indiCATORS 04
CORPORATE GOVERnAnCE 06
FinAnCE 08
RESEARCH & dEVElOPMEnT 10
ExPlORATiOn And PROduCTiOn 12
REFininG And MARkETinG 16
nATuRAl GAS 18
TRAnSPORTATiOn And diSTRibuTiOn 20
PETROCHEMiCAlS And FERTilizERS 22
biOFuElS 24
ElECTRiCiTy 25
inTERnATiOnAl 26
SOCiAl And EnViROnMEnTAl RESPOnSibiliTy 28
Three major achievements marked 2010 for Petrobras: the start-up of the Lula field Pilot System, in the Santos Basin; raising US$ 69,9 million in the world’s lar-gest ever equity issuance; and the signing of the Transfer of Rights Agreement contract, guaranteeing the company the right to produce 5 billion barrels of oil equivalent (boe) in pre-salt areas that are not under concession.
The company has a strong portfolio in the pre-salt layer of the Santos Basin, the most promising region along the Brazilian coast. The capitalization operation provided resources for the Transfer of Rights Agreement and the fi-nancing of the Business Plan 2010-2014, which provides for investments of US$ 224 billion.
MESSAGEFroM THe Ceo
Net profit reached US$ 19,18 million, 17% higher than in 2009, reflecting the increased production of oil and natural gas, increased sales of oil products in the Brazilian market and the recovery of international oil prices. The to-tal volume of oil and natural gas produced in 2010 was 2.58 million boe per day. The company’s proven reserves of oil and natural gas, according to the ANP/SPE criteria, reached 15,99 billion boe – a 7.5% increase compared to 2009. The reserve replacement ratio was 229%.
The 2010 results confirm that Petrobras’ strategy is the right one. A total of US$ 45,08 million was invested – 8% more than in 2009. These investments were primarily aimed at increasing the production of oil and natural gas,
companies, by market value. For the fifth consecutive year, it has been included in the Dow Jones Sustainability Index, the world’s most important index on the theme of sus-tainable development, reflecting its commitment towards society. Furthermore, all initiatives are guided by the on-going commitment to adopting best corporate governan-ce practices. In 2010, Petrobras once again demonstrated its ability to overcome the challenges.
José Sergio Gabrielli de AzevedoPetrobras CEO
improving and expanding refining facilities, ordering new vessels for the transportation of the company’s products, and completion of work on the pipeline network that con-nects the Brazilian market.
This performance is the result of significant invest-ments in technological development and employee trai-ning. Petrobras is the Brazilian company with US$ 993 million in this area and one highlight was the doubling in size of its Research Center (Cenpes), which is one of the largests in the world.
With activities on all the inhabited continents and operations in 28 countries, in addition to Brazil, the com-pany closed the year ranked third amongst global energy
2 M E S S A G E F R O M T H E C E O 3O V E R V i E w 2 0 1 0
KeYINDICATORS
oPerATioNAL SUMMArY 2009 2010
PROVEN RESERVES - SPE Criteria(boe) (1)(2) - Brazil and abroad Oil and condensate (billion barrels) Natural gas (billion boe)
AVERAGE DAILY PRODUCTION (thousand boe) (1) - Brazil and abroad Oil and natural gas liquids - NGL (thousands bpd) Natural gas (thousands boed)
PRODUCING WELLS (oil and natural gas) – on December 31st (1)
DRILLING RIGS – on December 31st
PRODUCING PLATFORMS – on December 31st
PIPELINES (km) – on December 31st
SHIPPING FLEET – on December 31st – company operated – third-party operated
TERMINALS – on December 31st (3)
REFINERIES – on December 31st (1)(4) Quantity Nominal installed capacity (thousand bpd) Average daily production of oil products (thousand bpd) Brazil Abroad
IMPORTS (thousand bpd) - Financial Market Report Oil Oil products
EXPORTS (thousand bpd) - Financial Market Report Oil Oil products
OIL PRODUCT SALES (thousand bpd) - in Brazil
SALES ABROAD (thousand bpd) - Oil, gas and oil products
ELECTRICITY (1) Installed Capacity (MW) (5) (6)
FERTILIZERS (1) Production Units
(1) Includes data from abroad, proportional to the Petrobras stake in each affiliate (2) Proven reserves calculated according to SPE (Society of Petroleum Engineers) criteria(3) Includes only Transpetro terminals (4) Excludes flaring, upstream consumption, liquefaction and reinjection (5) Includes only assets in which the company has a minimum 50% stake (6) Includes only gas-powered thermoelectric plants
4 k E y i n d i C AT O R S 5O V E R V i E w 2 0 1 0
14.9
12.62.3
2,5262,113
413
14,905
100
133
25,966
17252
120
47
152,2232,0341,823
211
549397152
705478227
1,754
541
6,136
2
16.0
13.42.6
2,5832,155
428
15,087
98
132
29,398
29152
239
48
162,2882,0521,832
220
615316299
697497200
1,960
593
5,944
2
2006 2008 2009 20102007
13%
17%15%
31%
21%
26%
23%
19%
28%
16%
Short-Term Debt / Total Debt
Net Debt / Net Capital
PETROBRAS INDEBTEDNESS
2006
12,826
2007
13,138
2008
18,879
2009
15,504
2010
19,184
CONSOLIDATED NET INCOME (US$ million)
2006 2007 2008 2009 2010 2006
1.36
2007
1.26
2008
2.21
2009
1.77
2010
1.94
CONSOLIDATED EARNINGS/SHARE(US$ / share)
2006 2007 2008 2009 2010
Market Cap Shareholders’ Equity
2006 2007 2008 2009 2010
430
230 224347 380
98 114 144 164307
MARKET CAPITALIZATION vs SHAREHOLDERS’ EQUITY (US$ billion)
The company’s corporate strategy encompasses the expansion of all its businesses and is based on sustain-ability factors such as integrated development, profitabil-ity and social and environmental responsibility. To achieve its growth objectives, the investment program under the Business Plan 2010-2014 has been allocated a total of US$ 224 billion.
TRAnSPAREnCyPetrobras adopts modern corporate governance
practices and the most advanced management tools. As a public company in Brazil, it is subject to the regulations of the Brazilian Securities Commission (CVM) and the BM&F Bovespa. Abroad, it complies with the requirements of the Securities and Exchange Commission (SEC) and the
The Board of Directors established a two-year term for the Petrobras General Ombudsman, which can be re-newed once, for an equal period. This practice has been included in the Corporate Governance Guidelines.
inTERnAl COnTROlSPetrobras, Petrobras International Finance
Company (PifCo) and Petrobras Argentina completed their Certification of Internal Controls for the finan-cial year of 2009, in compliance with the Sarbanes-Oxley (SOX) Act and CVM Instruction No. 480/09. The consolidated financial statements were certified without any restrictions.
In December 2009, the CVM issued Instruction No. 480, which, like SOX (applicable to companies
CORPORATEGoverNANCe
regulated by the SEC) requires that the direc-tors of companies whose shares are traded at the BM&FBovespa vouch for the effectiveness of the company’s internal controls at the end of each year.
The annual certification process is structured in three stages: assessment of the controls at the entity level to evaluate the corporate governance environ-ment; self-assessment by those who oversee the de-signing of the business processes and internal controls; and testing of the abovementioned controls by the in-ternal audit committee. Auditing of the accounts was carried out by KPMG Auditores Independentes.
NYSE, in the US; of the Latibex (Madrid Stock Exchange), in Spain; and of the Buenos Aires Stock Exchange and Comisión Nacional de Valores (CNV), in Argentina.
The company practices international standards of transparency with regard to its various stakeholders: shareholders, investors, customers, suppliers, employees and society. The corporate governance structure comprises the Board of Directors and its advisory committees, the Ex-ecutive Board, the Fiscal Council, the Internal Audit Com-mittee, the General Ombudsman’s Office, the Business Committee and the Integration Committees.
In 2010, the Basic Organization Plan, approved by the Board of Directors, was refined to include the Corporate Gover-nance Model, as well as its structure of Business and Integration committees and the Board of Directors’ advisory committees.
6 C O R P O R AT E G O V E R n A n C E 7O V E R V i E w 2 0 1 0
STOCk PERFORMAnCEPetrobras’ market capitalization ended the year
18.6% above the amount recorded at the end of 2009, re-aching US$ 236,5 million as a result of the global public offering of shares. With this operation, the number of sha-reholders registered at the BM&FBovespa on December 31, 2010 reached 396,975 – 26.48% more than at the end of 2009. Considering the number of shareholders linked to Petrobras through investment funds and Workers’ Severan-ce Indemnity Fund (FGTS) resources, as well as ADR holders (about 180,000), the company’s total number of investors came to around one million.
Despite the good operational results and confirma-tion of the enormous potential of the pre-salt region (with
declaration of commercial viability for the Lula and Cer-nambi areas), the company’s share prices ended the year at levels below those of twelve months previously. At the BM&FBovespa, the common shares (PETR3) were down by 26.65% and the preferred shares (PETR4) by 25.62%. At the New York Stock Exchange (NYSE), where the company’s so-called ADRs – PBR for common shares and PBRA for pre-ferred shares – fell by 20.63% and 19.38%, respectively.
Petrobras paid gross dividends related to fiscal year 2010 of US$ 0,69 per common or preferred share, totaling US$ 6,78 million. The company also made advance payment of interest on capital (IOC), of US$ 0,61 per common or pre-ferred share, for a total of US$ 5,857 million.
CAPiTAlizATiOnIn 2010, Petrobras carried out the largest equity
issuance in world history, which resulted in the offering of 2,369,106,798 common shares and 1,901,313,392 preferred shares, making a total of US$ 69,9 million, of which US$ 27,1 million was for cash and US$ 42,5 million went in payment of the agreement to transfer the right to produce up to 5 billion boe in pre-salt areas that are not under concession.
In Brazil, the price was US$ 17,2 for a common share and US$ 15,3 for a preferred share. In the USA, the prices were US$ 34,49 and US$ 30,59 for the common and pre-ferred ADRs, respectively. Around 145,000 investors parti-cipated in the operation and the federal government also increased its stake in Petrobras.
This deal also contributed to maintaining the company’s leverage ratios in line with the targets outlined by the management: Net Debt / Net Equity at 25% to 35%
FINANCE
and Net Debt / EBITDA at a maximum of 2.5 times. Upon closing 2010 with leverage at 17%, Petrobras may, in co-ming years, raise additional resources in the market to en-sure suitable financing for its projects.
FinAnCinGPetrobras has maintained a high degree of liquidity
to implement its investment plan. Recognition of the qua-lity of the company’s credit by banks, credit agencies and investors was reflected in costs and favorable terms for fi-nancing its activities. In the banking market, transactions abroad amounting to US$ 9 billion and in Brazil totaling US$ 2,500 million were carried out. To support the business, bank guarantees of US$ 8,8 million were secured in the do-mestic and international markets.
RiSk MAnAGEMEnTThe company’s directors are responsible for risk ma-
nagement, acting through the Financial Integration Com-mittee, in line with the Business Plan 2010-2014. Factors such as variations in the price of oil and its by-products and in interest rates, currency fluctuations and other risks can affect the company’s results and require constant monito-ring in order to balance the degree of risk tolerance against the growth targets and profitability expectations.
MARkET RiSkSThe company limits transactions involving derivati-
ves to specific short-term transactions. Derivative transac-tions (futures, swaps and options) are carried out solely to protect the results of cargo transactions in the international markets. In such hedging transactions, positive or negative fluctuations are offset, in whole or in part, by opposite re-sults in the cargo transactions.
8 F i n A n C E 9O V E R V i E w 2 0 1 0
Petrobras is the company that makes the great-est investment in science and technology in Brazil. In 2010, US$ 993 million was allocated to Research & Development (R&D) – a 30% increase over 2009. Of this total, US$ 276 million went into projects at univer-sities and research institutes for staff training, project development, and the building of infrastructure.
The company’s partnership with suppliers has been intensified, especially in projects related to the pre-salt layer. Important representatives of this oil & gas industry segment are being encouraged by Petrobras to establish research centers in Brazil.
In 2010, the doubling in size of the Leopoldo Américo Miguez de Mello Research & Development Center (Cenpes) was completed. It is now the largest research complex in the southern hemisphere, with laboratories to meet all Petrobras’ technological de-mands, especially those dedicated to the pre-salt layer. Cenpes has approximately 1,800 employees, 41% of
whom have postgraduate qualifications. The compa-ny’s R&D strategy is focused on three areas: business expansion; product enhancement and diversification; and sustainability.
• Discoveryofamicrofossilthathashelpedtowards the more accurate placement of reservoirs at different depths in the pre-salt layer of the Santos, Campos and Espírito Santo basins;
• CompletionoflaboratorytestingofCO2 injection as an oil recovery fluid;
• Completionofpreliminarytestingoftech-nology that will maximize the drainage of reservoirs and minimize the number of wells in the pre-salt layer;
• Completionofthebasicdesignforafloatingliquefied natural gas unit to maximize utili-zation of natural gas from the pre-salt layer of the Santos Basin;
• Applicationofanewmethodofanchoringthat meets the specific requirements of the pre-salt layer;
• Developmentofequipmentforemergencyrepair during the operation of pipelines that are transporting liquids, without disrupting the flow;
• NewformulaforPodiumdiesel,withreductionof the sulfur content from 200 to 50 parts per million (ppm) and inclusion of 5% biodiesel;
• Developmentofacatalystforuseintheproduction of high-density polyethylene – a material offering high mechanical performance;
10 R E S E A R C H & d E V E lO P M E n T 11O V E R V i E w 2 0 1 0
RESEARCh &DeveLoPMeNT
• Signingoftechnologicalcooperationagree-ments with companies in Denmark, the USA and the Netherlands for the development of biofuels.
In 2010, Petrobras consolidated its successful ex-ploratory activities in the pre-salt and post-salt layers of Brazilian basins in the south and southeast regions. It also opened up a new oil frontier off the coast of Sergipe, streng-thening the foundation for oil production in Brazil to conti-nue its sustainable growth over the coming decades.
SERGiPE bASinA new oil province was identified in ultra-deepwater
of the Sergipe Basin with the drilling of well 1-SES-158, named Barra Prospect, at a depth of around 4,700 m. With this well, the presence of gas and condensa-te was confirmed some 60 km offshore in water that is 2,341 m deep.
SAnTOS bASinLight oil was discovered at a depth of 2,200 m in
well 1-SPS-76 (Marujá Prospect), drilled in block S-M-1352. The well is located approximately 215 km offshore in water that is 400 m deep and about 15 km from the Tiro and Sidon accumulations.
A high-quality oil (30° API) accumulation was found with the drilling of well 2-ANP-1-RJS, in Franco Prospect, 195 km offshore in a water depth of 1,889 m. Prelimina-ry estimates indicate a recoverable volume of about three billion barrels of oil. Franco is one of the areas under the Transfer of Rights Agreement.
In 2010, according to the Tupi Evaluation Plan, en-compassing the areas of Tupi and Iracema, five exploration wells and one gas injection well were drilled and the drilling of another three wells was initiated (one of which the pilot production system). At year-end, the commercial viability of two accumulations in these areas, named the Lula and Cer-nambi fields, was announced.
CAMPOS bASinIn the Marlin concession area, Petrobras ascertained
the presence of a deep deposit in the pre-salt reservoirs, con-taining high-quality oil (29º API). The discovery was the result of the drilling of Brava Prospect, in well 6-MRL-199D-RJS. At a water depth of 648 m, the accumulation is 4,460 m below sea level. Preliminary estimates show a recoverable volume of around 380 million boe.
The company has discovered two accumulations of high-quality oil (29º API) in the Caratinga field, in post- and pre-salt reservoirs, following the drilling of well 6-CRT-43-RJS, known as Carimbé Prospect, located 106 km offshore in water that is 1,027 m deep. In one accumulation, the re-coverable volume is estimated at 105 million barrels. In the other, the potential recoverable volume is estimated at 360 million boe.
In well 6-MLL-70-RJS (Tracajá), drilled near Mar-lim Leste, the presence of pre-salt hydrocarbon reservoirs was detected at a depth of 4,442 m, in a water depth of 1,366 m, 124 km off the coast.
SOliMõES bASinPetrobras has made an important discovery of supe-
rior quality oil (46º API) and associated gas in the Solimões Basin, with the drilling of well 1-ICB-1-AM (Igarapé Chiba-ta1), which reached a depth of 3,485 m. The discovery is located in the oil province of Urucu. The extended well test (EWT) initiated in September 2010 indicates a daily produc-tion capacity of 2,500 barrels of oil.
TRAnSFER OF RiGHTS AGREEMEnTOn June 30, 2010, the government sanctioned Law
12276, which authorizes the Transfer of Rights Agreement , by the federal government to Petrobras, of activities invol-ving the exploration and production of oil, natural gas and other hydrocarbon fluids in pre-salt areas not yet put out to tender, up to a maximum of 5 billion boe.
PROduCTiOnIn March 2010, Petrobras initiated the EWT of the
Tiro and Sidon areas, using the SS-11 Atlantic Zephyr pla-tform, with a production capacity of 20,000 barrels of oil and 475,720 m3 of gas per day. The deposits are located in block BM-S-40, south of the Santos Basin, about 210 km off the coast.
In May, production began on FPSO Capixaba, in the Cachalote field. Two months later, this FPSO (which has the capacity to process 100,000 barrels of oil and 3.2 million m³/day of gas) was connected to a well in the pre-salt layer of the Baleia Franca field. Both these fields are located in Parque das Baleias, off the southern coast of Espírito Santo, in the Campos Basin.
ExPlORATION AND ProDUCTioN
2 E x P lO R AT i O n A n d P R O d u C T i O n 13O V E R V i E w 2 0 1 012
Operations on four new platforms were also initi-ated. The first was the FPSO Cidade de Santos, operating in the Uruguá and Tambaú fields, which is anchored 160 km offshore in water depht of 1,300 m and has the capacity to produce 10 million m³ of gas and 35,000 barrels of oil per day. Next, platform vessel Cidade de Angra dos Reis was put into operation, as the first unit to produce on a commercial scale in the pre-salt layer of the Santos Basin, in the Lula field. It has the capacity to produce 100,000 barrels of oil and 5 million m³/day of gas and is anchored about 300 km offshore in water that is approximately 2,100 m deep.
Then, in the Campos Basin’s Jubarte field, it was the turn of the P-57 platform, located 80 km off the coast of Espírito Santo. It is anchored in 1,260 m of water and has the capacity to process 180,000 barrels of oil and 2 mil-lion m³/day of gas. This unit inaugurates a new generation of platforms based on an engineering concept that empha sizes the streamlining of projects and standardizing of equipment. The EWT of the Guará field was initiated in block BM-S-9, in the Santos Basin, about 310 km offshore and 55 km southwest of the Lula field. The Dynamic Producer platform was installed in 2,140 m of water.
These projects, coupled with increased production following the connection of new wells to various platforms (P-53, P-51, P-34, FPSO Cidade de Vitória, FPSO Espírito Santo and FPSO Frade) offset the natural decline in produc-tion and provided the company with a 1.7% increase in do-mestic production of oil and LNG, which reached 2,004,000 bpd of oil.
liFTinG COSTIn 2010, lifting cost, excluding the government take,
averaged US$10.03/boe, a 14% increase over the previous year due to the higher number of well workovers. With gov-ernment participation, the cost rises to US$24.64/boe, 20% higher than in 2009.
nATuRAl GAS PROduCTiOnProduction in 2010 totaled 56.6 million m3/day – an
increase of three million m3/day compared to the previous year – as a result of the increased demand. Supplies in Brazil increased in relation to 2009 due to the operations of new projects under the Anticipated Gas Production Plan (Plangas), in the Canapu and Camarupim fields of Espírito Santo.
There was also the start up of operations in the Sul Capixaba Gas Treatment Unit, based on the production from Parque das Baleias, and the adaptation of the process-ing unit at the RPBC refinery to take gas from the Lagosta field, in the Santos Basin. Following up the Plangas projects, the Mexilhão field will come into production as of 2011 and the flow from the Uruguá and Tambaú fields will be initi-ated. During this period, production from the Lula field will also begin to flow.
PRE-SAlTThe discoveries in the pre-salt layer are located in
the Campos Basin (Marlim, Albacora Leste and Caratinga fields, as well as Parque das Baleias – Jubarte, Cachalote and Baleia Branca) and in the Santos Basin (in the areas of Guará, Iara, Júpiter, Parati, Bem-Te-Vi, Caramba, Carioca and Franco and in the Lula and Cernambi fields). If recoverable volumes of between 8.1 and 9.6 billion boe from Petrobras’ stake in Lula, Cernambi, Guará, Iara and Parque das Baleias are confirmed, the coming years should see a significant increase in the company’s proven reserves.
The start-up of the first permanent pre-salt system in the Santos Basin took place in October 2010, using the plat-form vessel Cidade de Angra dos Reis. Named the Lula Pilot Project, it provides for the interconnection of six production wells, three injection wells and the construction of a pipe-line through which gas will transported to the mainland.
In December 2010, Petrobras submitted to the National Agency Oil (ANP) declarations of commercial vi-ability for the Lula and Cernambi fields, with recoverable
volumes of 6.5 billion boe and 1.8 billion boe, respec-tively. With the commencement of commercial produc-tion and the channeling of gas, peak production should occur in 2012, with oil flow close to 100,000 bpd Also in December, the EWT of the BM-S-9 (Guará) was initiated.
PROVEn RESERVESPetrobras’ proven reserves of oil, condensate and
natural gas in Brazil amounted to 15.28 billion boe in 2010, according to the ANP/SPE criteria, representing an increase of 8% over the previous year. The company appropriated reserves of 1,911 million boe and produced 797 million boe, adding 1,114 million boe to its proven reserves.
As a result, the Reserve Replacement Ratio (RRR) came to 240%, which means that, for every barrel of oil equivalent produced during the year, 1.4 barrels of oil equivalent were added to the reserves. The Reserve/Pro-duction (R/P) ratio increased to 19.2 years. In addition to the volumes mentioned above, Petrobras has the right to produce 5 billion boe in the pre-salt areas, acquired in 2010 through the Transfer of Rights Agreement.
PROjECTSThe most important systems that are starting pro-
duction in 2011 are:• Mexilhão Field – In the Santos Basin, in water
depths of approximately 170m of water, with capacity of 15 million m3 /day of gas, to be chan-neled to the mainland through a 139 km-long pipeline.
• Caraguatatuba Gas Treatment Unit – Located on the São Paulo coast, it will come into operation to handle gas from the Uruguá, Tambaú, Mexilhão and Lula fields, and has the capacity to process 18 million m³ of gas and 42,000 bpd of oil.
• Marlim Sul Field, Module 3 (Platform P-56) – Located in the Campos Basin, in
approximately 1,700 m of water, it has the capacity to process 100,000 barrels of oil and compress 6 million m³/day of gas. The oil will be transported to the P-38 platform and the gas to the P-51 platform.
• EWT of BM-C-36 (Aruanã) – Located in the Campos Basin, the discovery well RJS-661 will be connected to the FPSO Cidade de Rio das Ostras. Situated in water depht of approximately 1,000 m, it has the capacity to process 20,000 barrels of oil per day.
• Lula Nordeste (BM-S-11): Start-up following installation of the FPSO BW São Vicente in approximately 2,200 m of water.
• Carioca Nordeste (BM-S-09): Start-up following installation of the FPSO Dynamic Producer in approximately 2,150m of water.
• Iracema (BM-S-11): Start-up following installation of the FPSO BW São Vicente in approximately 2,100m of water.
2 E x P lO R AT i O n A n d P R O d u C T i O n 15O V E R V i E w 2 0 1 014
REFINING AND MArKeTiNG
The 12 Petrobras refineries in Brazil processed 1.80 million bpd of feedstock in 2010, using an average of 93% of the installed capacity, and produced 1.83 million bpd of oil products. Of the total volume of processed oil, 82% came from Brazilian fields.
The program for maximizing diesel oil and kerosene production resulted in 17.1 million additional barrels per day in 2010. Due to the increased domestic oil production, the company is investing in new refining units and tech-nological improvements to enhance the quality of its fuels and oil products and adapt them to market needs.
The improvements include the production of diesel oil with low sulfur and propylene content (a high value-added product) and start-up of units with processes to reduce fuel oil production and increase that of middle dis-tillates. Scheduled maintenance shutdowns were carried out at four refineries during the year.
nEw dEVElOPMEnTSThe Abreu e Lima Refinery, under construction in
Pernambuco, will have the capacity to process 230,000 bpd of heavy oil and produce 162,000 bpd of low
sulfur content diesel oil, among other products. Start-up is scheduled for 2012.
Two new Premium refineries, which will produce oil products of high quality and low sulfur content, such as diesel oil and aviation fuel, are also scheduled. The Premium I Refinery, in Bacabeira (Maranhão), will begin operations in 2014 (first phase), processing 300,000 bar-rels of oil per day – a capacity that should be doubled by 2016 (second phase). The project includes a port terminal. Premium II, with start-up scheduled for 2017, will be built in Caucaia (Ceará) and connected to the Pecém port ter-minal. It will have the capacity to process 300,000 bpd.
The Rio de Janeiro Petrochemical Complex (Com-perj) is being built in Itaboraí (RJ) and its first phase of operation is scheduled for 2013, with capacity to process 165,000 bpd. The second phase, in 2018, will expand the capacity to 330,000 bpd. Diesel oil, LPG, aviation fuel, naphtha, fuel oil, coke and sulfur will all be produces there, as well as raw materials for petrochemicals.
The first part of the expansion of the Potiguar Clara Camarão Refinery, in Guamaré (Rio Grande do Norte), began operations in 2010. Work on the unit – which produces gasoline, naphtha, diesel oil and aviation fuel – should be completed in 2011.
SAlESThe company sold 2.38 million barrels of oil per day
in 2010 in the domestic market – a volume 13% higher than in 2009. The highlights were diesel oil, gasoline, LPG, naphtha and natural gas. Demand for aviation fuel grew
by 19%, due to Brazil’s increased number of domestic and international flights.
Naphtha sales grew by 2%, driven by inventory re-plenishment in the industry. LPG sales grew by 4%, boosted by the recovery in industrial production, while gasoline sales grew by 17%, as a result of market growth and the reduced availability of ethanol during the offseason.
With regard to diesel oil, the 9% increase in sales is associated with the upturn in industrial activity, the in-crease in grain production and infrastructure investments. There was a 43% increase in sales of asphalt, due to an increased volume of paving and maintenance works on Brazil’s roads. Fuel oil sales fell by 1%, due to replacement of this industrial input by natural gas and coal.
Oil exports reached 497,000 bpd, exceeding by 4% the volume in 2009. Oil product sales abroad totaled 200,000 bpd – a 12% decline.
Oil imports stood at 316,000 bpd (20% decrease compared to 2009), while oil products totaled 299,000 bpd (97% increase over the same period) – due to the expansion of domestic consumption. The volume of im-ported diesel oil reached 143,000 bpd (up 149% over 2009) and of aviation fuel was 34,000 bpd (60% in-crease). Moreover, 9,000 bpd of gasoline were imported as a result of the growing fleet of flex-fuel vehicles and the scarcity of ethanol.
The company’s trade balance in 2010, based on ex-ports and imports of oil and oil products, without regard to natural gas, liquefied natural gas and nitrogen com-pounds, showed a surplus of US$ 1,53 million.
2 R E F i n i n G A n d M A R k E T i n G 17O V E R V i E w 2 0 1 016
The expansion of the natural gas supply continued in 2010, with the completion of major projects aimed at enhancing the production and distribution infrastructu-re. Including partners, production reached 62.4 million m3/day, a 7.5% increase compared to 2009. The domestic supply was 28.6 million m3 /day, after deducting the volu-me of LPG, gas used in the production process and losses.
Of the 62.4 million m3/day supplied to the natural gas market in Brazil, 26.2 million m3 were transported by the Bolivia-Brazil pipeline, after deducting the gas used in the system. The imported volume of regasified liquefied natural gas (LNG) went from 7.6 million m3, in 2009, to 18.9 million m3/day. The increase in consumption over that of the previous year was a result of the economic recovery and increased demand from thermal power plants.
Investments in transportation infrastructure during 2010 totaled US$ 3,41 million. The highlights were the expansion of the capacity of the gas pipeline network in Brazil and electricity generation projects.
TRAnSPORTATiOnThe national network of transportation pipelines
increased by 1,696 km, to a totaling of 9,506 km. The following stretches began operating in 2010:
• Pilar / Ipojuca – 189.1 km in length. Along with the expansion of the Pilar Compression Services, in Alagoas, it raised the capacity of
• Cacimbas / Catu (Gascac) – 954 km in length and with the capacity to transport 20 million m³/day. It is the longest stretch of Gasene (Southeast-Northeast Pipeline), connecting Espírito Santo and Bahia.
liquEFiEd nATuRAl GAS The year 2010 marked the consolidation of Petrobras’
position as a global player in the liquefied natural gas (LNG) market. With continuous diversification of its portfolio, the company signed 37 agreements and performed 41 cargo purchasing operations, 36 of which were intended for Bra-zil, while five were resold in the foreign market.
The company, in partnership with BG, Repsol, and Galp, has implemented a tendering process to select the best proposal, from a technical and economic standpoint, for the construction of a ship-based liquefaction plant, which will allow the distribution of 14 million m3/day of natural gas from the pre-salt layer, as of 2016.
SAlESIn 2010, Petrobras continued its strategy of elec-
tronic auctioning for developing the short-term market for natural gas. For the first time, distributors were not
separated by sub-market, since Gasene was already ope-rating and integrating the natural gas market in Brazil. In the latest auction, 9.18 million m3 /day were sold – a vo-lume 34% higher than the previous record and equivalent to 61% of the total of 15 million m3/day on offer.
The company also started to implement a new gas marketing format: weekly sales. Since the start of these operations, 18 registered distributors have placed orders. The short-term auctions and weekly sales are consolidated now in the Brazilian market and will continue in 2011.
diSTRibuTiOnThe average volume of natural gas sold by distri-
butors in Brazil in 2010 stood at 49 million m3/day. The company’s stakes in 20 of the 27 state distributors main-tained virtually the same profile as in the previous year, with percentages ranging from 24% to 100%.
In comparison to 2009, non-thermal consumption by distributors in which Petrobras holds a stake saw a 15% increase (from 13 to 15 million m³/day), while ther-mal consumption saw a 181% increase (from 2.6 to 7.4 million m³/day), making an overall increase of 43% (from 15.6 to 22.4 million m³/day).
NATUrALGAS
the local system from 3.5 to 7.5 million m³/day. It was thus possible to use gas from Gasene (Southeast-Northeast Pipeline) in the states of Alagoas, Pernambuco, Paraíba and Rio Grande do Norte.
• Paulínia / Jacutinga – 93 km in length and with a flow capacity of 5 million m³/ day. It enabled the transportation, for the first time, of natural gas to serve municipalities in the south of Minas Gerais.
• Ramal Gascav / Sul Capixaba Gas Treatment Unit – 10 km in length and with the capacity to transport 2 million m³/day. It connects the Cabiúnas-Vitória Pipeline (Gascav) to the Sul Ca-pixaba Gas Treatment Unit (Sul Capixaba GTU), to supply gas to Espírito Santo.
• Cabiúnas / Reduc III (Gasduc III) – 181 km in length. It has the greatest diameter of any pipeline in South America and has the highest transportation capacity (40 million m³/day) among Brazilian pipelines. It allows natural gas to be channeled from the Campos and Espírito Santo basins.
• Rio de Janeiro / Belo Horizonte II (Gasbel II) – 268.9 km in length and with the capacity to transport 5 million m³/day. It has made it possible to increase the supply of natural gas to Minas Gerais.
2 n AT u R A l G A S 19O V E R V i E w 2 0 1 018
Transpetro, a Petrobras subsidiary handling the transportation and storage of oil, oil products, ethanol and natural gas, operates 7,179 m of oil pipelines, 7,193 km of gas pipelines, and 48 terminals – 20 on land and 28 on waterways, in addition to 52 vessels.
In 2010, 48.9 million tonnes of oil and oil products were transported by ship. Transpetro handled 704 mil-lion m³ of liquids through its terminals – a volume 4% higher than that of 2009 – in addition to an average
57 million m³/day of natural gas – 62% more than the vol-ume recorded in the previous year. The daily record for the handling of natural gas over the year was 69 million m3.
nEw VESSElSUnder its Fleet Modernization and Expansion Pro-
gram (PROMEF) Transpetro is expected to order the con-struction of 49 new vessels, in two stages, which should add 4 million deadweight tonnes to the current capacity.
Ships are being built in Pernambuco for oil transportation and in Rio de Janeiro for oil, ethanol and bunker fuel. The three first vessels were launched in 2009. In 2011, another five ships should be delivered.
TERMinAlS, Oil PiPElinES And GAS PiPElinES
To address the increased LPG production resulting from Plangas, the Ilha Redonda Terminal in Guanabara Bay is being expanded, while the construction of new facilities in Ilha Comprida (São Paulo) is in progress. In Barra do Riacho (Espírito Santo), a new terminal is also being built and in Guamaré (Rio Grande do Norte), the infrastructure for handling oil products from the Potiguar Refinery has been expanded.
The gas pipeline network for transportation and transfers has a total length of 7,193 km – an increase of 1,771 km compared to 2009, a year when eight new gas
pipelines started operating. The company operates seven plants for the processing of natural gas from the Campos Basin. In 2010, the volume processed was approximately 16 million m³/day of natural gas, while LPG production reached 14,000 tonnes/day.
ETHAnOl lOGiSTiCSDue to the growth of the ethanol market, particu-
larly in Brazil, Petrobras has developed a program to ex-pand the pipeline and waterway infrastructure for trans-portation from production areas in the Mid-West and São Paulo to the domestic and export markets. Expected investments total US$ 3,500 million and start-up is sched-uled for 2011.
diSTRibuTiOnPetrobras Distribuidora sold a total of 48.69 mil-
lion m³ in 2010 – a volume 8.2% higher than that re-corded in the previous year. For the first time, the 4 mil-lion m3/month barrier was surpassed, with record sales of 4,06 million m3/month, maintaining the company’s leadership of the Brazilian fuel market, with a market share of 38.8%.
With a network of 7,306 service stations and some 11,000 direct consumers, the company attained net oper-ating revenues of US$ 37,308 million and net earnings of US$ 1,101 million. Investments totaled US$ 482 million.
Last year, most of the service stations received in the acquisition of Ipiranga were adapted to Petrobras standards. A piped natural gas distribution network was inaugurated in Espírito Santo and the activities of an LPG operations center in Rio de Janeiro were initiated. Other initiatives included the revamping of the Lubrax brand and the launching of the Lubrax + Automotive Lubrication Technology Center.
TRANSPORTATIONAND DiSTribUTioN
2 T R A n S P O R TAT i O n A n d d i S T R i b u T i O n 21O V E R V i E w 2 0 1 020
Petrobras has consolidated its activities in the petrochemical sector, in a manner that is integrated with its other activities and diversifies its product portfolio, by increasing its stake in Braskem. The agreement determines that the integration of the Petrobras and Odebrecht stakes should occur in sta-ges. In the end, the two companies would hold, res-pectively, 36.1% and 38.3% of the total capital stock of Braskem. In January 2010, Petrobras, Odebrecht and Braskem signed an association agreement to regulate Braskem’s stakes in Comperj and the Suape Petroche-mical Complex.
Also in January, the shares of Petrocoque ow-ned by Companhia Brasileira de Alumínio (CBA) were purchased by Petroquisa and Universal. Each now hol-ds 50% of the company’s shares.
PROjECTSThe 2010 - 2014 Business Plan calls for petro-
chemical investments of US$ 5.1 billion. The main projects are:
•RiodeJaneiroPetrochemicalComplex (Com-perj) – The Comperj units, scheduled to begin operations in 2017, will produce basic petrochemicals and by-products;
•Companhia Petroquímica de Pernambuco(PetroquímicaSuape)andCompanhiaIntegradaTêx-til de Pernambuco (Citepe) – Petroquisa holds 100% of the capital stock of both companies, which together own three integrated units for the production of PTA and PET-BG, in addition to supplying fibers to the textile segment;
•Coquepar – Petroquisa and Unimetal will jointly build two petroleum coke calcination units, in Rio de Ja-neiro and Paraná, with a combined production capacity of 700,000 tonnes per year.
FERTilizERSPetrobras’ fertilizer production facilities comprise
two units, located in Bahia and Sergipe. The main products sold are urea, nitric acid, ammonia and carbon dioxide.
In 2010, the fertilizer market witnessed a recovery. The company sold 772,000 tonnes of urea and 236,000 tonnes of ammonia, which provided net revenue of US$ 386 million, compared to US$ 286 million recorded the previous year. The Bahia unit achieved record produc-tion of 335,000 tonnes of urea – 53% higher than the amount in 2009. In the same period, the Sergipe unit pro-duced 423,000 tonnes of urea, exceeding the output of 386,000 tonnes in the previous year.
PETROChEMICAlS AND FerTiLizerS
2 P E T R O C H E M i C A l S A n d F E R T i l i z E R S 23O V E R V i E w 2 0 1 022
biOFuElSThe subsidiary Petrobras Biocombustível operates
three biodiesel plants, located in Bahia, Ceará and Minas Gerais. In 2010, the plant in Bahia was doubled, reaching annual production capacity of 434,000 m3. The company also holds stocks (50%) in a biodiesel plant in Paraná, with production capacity of 127,000 m³/year. In Pará, the project of a new plant is underway, which should begin operation by 2013, increasing the installed capacity by 120 mil m3.
The partnership between Petrobras and Galp Ener-gia was strengthened by a joint venture that will conduct the project in Pará and the construction of a plant to pro-duce 250,000 tonnes per year of green diesel (second ge-neration diesel) in Portugal. With these investments, the total production capacity of Petrobras Biocombustíveis will reach 750,000 m3/year by 2013.
The company has signed agreements to purchase raw materials (rapeseed, sunflower, and soybean) from
66,554 family farmers accounting for 148,578 hectares of cropland. The company acquired 50% of the capital stock of Bioóleo Industrial e Comercial S.A. in Bahia for US$ 8,8 million, with capacity to process up to 130,000 tonnes of oleaginous plants and store 30,000 tonnes of grain per year, in addition to tankage for 10 million liters of oil.
ETHAnOlIn 2010, the milling capacity of Petrobras Biocom-
bustível was 23 million tonnes of cane, while ethanol pro-duction reached 942,000 m³ and sugar production reached 1.55 million tonnes. Additionally, 517GWh in electricity surpluses were sold through participation in the sector.
In the same period, in another area of activity, Petrobras Biocombustível performed operations to acqui-re stakes and invest in companies that have plants in the process of capacity expansion and infrastructure improve-ment. This should allow the growth of ethanol production, with adequate market distribution logistics.
bIOFuElS ElECTRICITy
Petrobras generated an average 1,837 MW in 2010 (525 MW in 2009) for the Brazilian national grid (Siste-ma Interligado Nacional - SIN), through 15 of its own or leased thermal power plants (TPPs), with an installed ca-pacity of 5,284 MW (1,471 MW in 2009). The increase in power generation was a result of low water levels in the reservoirs of Brazilian hydropower plants, which caused the TPPs to increase their output. Investments reached US$ 358 million. The company also traded the non-con-tracted capacity of the TPPs, taking advantage of the gro-wing demand spurred by the economic recovery.
Petrobras also has a project in the wind power seg-ment – the pilot plant in Macau, Rio Grande do Norte – with 1.8 MW installed capacity. It has already produced 32,256 MWh, avoiding the emission of approximately 1,200 tonnes/year of CO2 into the atmosphere over seven years in operation. In 2009, the company also started im-plementing in Rio Grande do Norte four winning projects from the first auction exclusively aimed at wind power ge-neration. An average of 49 MW, corresponding to 104 MW of installed capacity have already been sold. The projects are expected to start operating in 2011.
2 b i O F u E l | E l E C T R i C i T y 25O V E R V i E w 2 0 1 024
Petrobras is present on five continents, operating in 28 countries in addition to Brazil. In all these places, it maintains operations in all segments of the oil industry and has cooperation agreements to develop technology and new businesses. It also has representative offices in New York, London, Tokyo, Beijing and Singapore.
In the international market, Petrobras closed 2010 with production of 151,000 barrels of oil and 16 million cubic meters of natural gas per day, making a total of 245,000 boed. Additionally, 206,800 bpd were processed in four refineries (one in Japan, one in the USA and two in Argentina), equivalent to 70% of the processing capacity abroad – which will be reduced from 280,500 to 230,500 barrels of oil per day, as the San Lorenzo refinery, in Argen-tina, is to be sold. The company will still have the Argen-tinean refinery of Bahia Blanca.
Proven reserves abroad totaled 703 million boe – 1% more than in 2009, giving a Reserve Replacement Ra-tio of 110%. This volume represents 4% of the company’s total reserves, according to SPE (Society of Petroleum En-gineers) criteria. The main additions to reserves occurred in Block 57, in Peru, and in the projects of Saint Malo and Cascade, both in the deepwater of the Gulf of Mexico.
The company invested US$ 2,16 million in interna-tional business, with 12% going into refining, petrochemi-cals, distribution and gas & energy activities and 88% into exploration and production, 60% of which was allocated to production development.
AMERiCASPetrobras operates in 13 countries in the Ameri-
cas, in addition to Brazil, namely: Argentina, Bolivia, Chi-le, Colombia, Cuba, Curacao, Ecuador, the USA, Mexico, Paraguay, Peru, Uruguay, and Venezuela. Between them, they have 1,171 service stations, in addition to upstream assets. Production was 91,000 barrels of oil and 16 million cubic meters of natural gas per day, making a total of 185,100 boe.
In the Gulf of Mexico, the company is developing production projects in Cascade and Chinook (start-up planned for 2011), Saint Malo, Tiber and Stones, as well as projects that are in the exploratory phase.
In the USA, Pasadena Refining Systems, Inc. (PRSI) recorded its highest average oil processing level and even saw a cost reduction, which allowed better use of busi-ness operating margins.
In Ecuador, Petrobras has declined the government’s proposal to migrate from exploration agreements to ser-vice agreements in Block 18, and is negotiating to receive the compensation provided for in its contracts. Produc-tion in the country was 2,300 barrels of oil per day. The company’s presence will be maintained through its stake in the company Oleoducto de Crudos Pesados (OCP).
AFRiCAThe west coast of Africa is a strategic area for
Petrobras’ international operations. Production in Nigeria
(Akpo and Agbami fields) and Angola (Plot 2) totals 60,300 barrels of oil per day. The company is also active in explo-ration in Tanzania, Namibia and Libya.
ASiA & OCEAniAPetrobras has a refinery on the island of Okinawa,
Japan, and is currently developing exploratory projects in Turkey, India, Australia and New Zealand.
EuROPEIn Portugal, Petrobras is currently developing ex-
ploration projects in the Peniche and Alentejo basins, as well as other projects related to production, techno-logy development and biofuel trading, in partnership with local companies.
INTERNATIONAl
2 i n T E R n AT i O n A l 27O V E R V i E w 2 0 1 026
AnGOlA
ARGEnTinA
AuSTRAliA
bEnin
bOliViA
bRAzil
CHilE
COlOMbiA
HOllAnd
ECuAdOR
indiA
jAPAn
libyA
MExiCO
nAMibiA
nEw zEAlAnd
niGERiA
PARAGuAy
PERu
PORTuGAl
SEnEGAl
SinGAPORE
TAnzAniA
TuRkEy
uniTEd kinGdOM
uRuGuAy
uSA
VEnEzuElA
iNveSTor reLATioNS/iNSTiTUTioNAL CoMMUNiCATioNGEnERAl COORdinATiOn And EdiTORiAl PROduCTiOn
GrAPHiC DeSiGN AND LAYoUT TAPiOCA COMuniCAÇÃO
PHoToGrAPHSPETRObRAS iMAGE bAnkPage 2, Roberto RosaPages 6, 23, Rogério Reis Pages 8, 12, 19, Geraldo FalcãoPage 15, Paulo CabralPage 16, j. Valpereiro
PETRObRAS nEwS AGEnCy (Page 10)
TRAnSPETRO iMAGE bAnkPage 20, Thelma Vidales
iNveSTor reLATioNS
AV. REPúbliCA dO CHilE, 65, ROOM 2202 b, CEnTRORiO dE jAnEiRO - Rj, ziP COdE: 20031–912PHOnE: +55 21 3224-1510FAx: +55 21 3224-6055E-MAil: [email protected]/ir
The performance of Petrobras is also dictated by social and environmental responsibility. The company in-vested US$ 2,591 million in health, safety and the environ-ment (HSE) in 2010. In the same period, it also allocated US$ 402 million to 1,770 projects in the social, cultural, environmental and sporting spheres that were chosen by a process of public selection.
For the fifth consecutive year, the company has been included in the Dow Jones Sustainability Index (DJSI), a global benchmark in this area. What is more, it stood out in the criterion of Transparency, in which it again achieved the maximum score.
HEAlTHPetrobras’ safety indicators remained compatible
with international benchmarks in the oil & gas industry. The Frequency Rate of Accidents involving Time Off Work was 0.52 for the year.
Fatalities among employees and outsourced work-ers increased from seven to ten, while the Fatal Accident Rate – representing the number of fatalities per 100 mil-lion man-hours of exposure to risk – increased from 0.81 in 2009 to 1.08 in 2010. The Medical Leave Index, relating to employee absences due to illnesses or accidents was 2.38% in 2010 - less than the maximum tolerance limit for the year (2.41%).
wORk SAFETyPetrobras has trained staff and appropriate
material resources for carrying out its emergency plans.
S O C i A l A n d E n V i R O n M E n TA l R E S P O n S i b i l i T y228
SOCIAl AND ENvIRONMENTAlreSPoNSibiLiTY
There are 30 large oil collection vessels, 130 support ves-sels, 150,000 meters of containment barriers, 120,000 m of absorbent barriers, 200 oil collectors and 200,000 liters of chemical dispersants, among other items avail-able in ten Environmental Protection Centers and 13 outposts within Brazil.
In 2010, the company performed ten emergen-cy drills (nine in Brazil and one abroad), involving both government agencies and local communities. Oil and oil product spills during the year totaled 668 m³ – below the 1 m³ per million barrels of oil pro-duced, an excellent level for the world’s oil & gas industry.
EnViROnMEnTPetrobras seeks to minimize the impact of its op-
erational activities and products on the environment. In 2010, the environmental management systems of 93% of its certifiable units in Brazil and abroad were in compli-ance with the ISO 14001 standard.
The company adopts indicators of energy inten-sity and greenhouse gas emissions and sets targets for these indices. Over the past five years, it has invested over US$ 245 million in energy efficiency projects, which have provided savings of approximately 3,000 boed. It also seeks to reduce the generating of solid waste and encourages reutilization and recycling. As a re-sult, it recycled 155,000 tonnes of hazardous solid waste in 2010, representing 37% of all its treated solid waste.
MAY
/ 2
011
www.PETRObRAS.COM.bR/iR
