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Brazil as a predominant global player of the future
Paulo Roberto Costa Downstream Director
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This presentation may contain forward-looking statements. Such statements reflect only the expectations of the Company's management regarding the future conditions of the economy, the industry, the performance and financial results of the Company, among other factors. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar expressions, are used to identify such statements. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Consequently, these statements do not represent assurance of future results of the Company. Therefore, the Company's future results of operations may differ from current expectations, and readers must not base their expectations solely on the information presented herein. The Company is not obliged to update the presentation and forward-looking statements in light of new information or future developments. Amounts informed for the year 2011 and upcoming years are either estimates or targets.
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally viable under existing economic and operating conditions. We use certain terms in this presentation, such as discoveries, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
Cautionary statement for U.S. investors:
DISCLAIMER
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COMPARATIVE POSITION Ranked among the leading integrated energy companies
2010 Refining Capacity (mm boe/d)
2010 Proven Reserves – SEC (bln boe)
Notes: Peer companies selected above have a majority of capital traded in the public market; * 2009
Source: Evaluate Energy (barrels per calendar day, considering company % shareholding and including JVs) and Bloomberg
Market Cap (US$ bn) -‐ August 22nd, 2011
2010 Oil and Gas ProducPon (mm boe/d) 4.4
3.8
3.3
2.8 2.6
2.4 2.1
1.8
0.6
24,8
17,8
14,2 12,7
10,7 8,3
6,8 5,4
10,6
* * * *
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• To meet growing world demand while replacing exis4ng produc4on addi4onal capacity of 38 MMbpd will be needed by 2020
• Demand must be met by a combina4on of factors: • New discoveries • Alterna4ves energy sources • Increase of energy efficiency
Source: WoodMackenzie
(MM bpd) GLOBAL LIQUIDS DEMAND SCENARIO
Projects under development and
prospective
OPEP Project Decline
Project Decline Non-OPEP
OPEP
Projects under development, prospective and new
discoveries
WORLD OIL DEMAND Replacing produc5on with new discoveries will be a major challenge
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New Discoveries 2005-‐2010
(33,989 million bbl) Deep-‐Water Discoveries
Source: PFC Energy
BRAZIL LEADERSHIP IN RECENT DISCOVERIES Deep-‐water discoveries in Brazil represent 1/3 of the worldwide discoveries in the last 5 years
• In the last 5 years, more than 50% of the new discoveries (worldwide) were made in deep waters
• The development of these reserves will demand addiPonal capacity from the supply chain
• Expansion of the oil and gas chain in Brazil is in line with this perspecPve
Petrobras expects to double its proved reserves unPl 2020, keeping the discovery cost around US$2/boe
Other Discoveries Deep-Waters
Brazil
Other
6
0
5,000
10,000
15,000
20,000
25,000
30,000
Onshore 0-‐300 m 300-‐1500 m > 1500 m Pre-‐salt's Recoverable Volume Transfer of Rights
Million boe Proved Reserves – SPE criteria
* Lula/Cernambi, Iara, Guará and Parque das Baleias, ranging from 8.1 to 9.6 Billion boe
*
Garoupa Namorado
Marlim
Roncador
Parque das Baleias, Mexilhão
Pre-‐salt: Lula and Cernambi 15,28 Bi boe
Carmópolis Guaricema
RESERVES AND RECOVERABLE VOLUMES Rapid growth in reserves from discoveries in deep waters
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1977 Enchova 410f 125m
1988 Marimbá 1,610f 491m
1994 Marlim 3,370f 1,027m
1997 Marlim Sul 5,600f 1,707m
2003 Roncador 6,180f 1,884m
2009 Lula
7,125f 2,172m
Deepwater ProducPon 2010 Gross Global Operated¹
Offshore ProducPon FaciliPes
Source: PFC Energy Note: (1) These 15 operators account for 98% of global deepwater produc4on in 2010. Minimum water depth is 1,000 feet (about 300 meters)
DEEPWATER LEADERSHIP A history of developing technology and know-‐how in Brazilian waters
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Onshore Shallow water Deep water Deep and ultra-‐deep water
Pre-‐salt
PRODUCTION Petrobras history is to grow produc5on by expanding into new fron5ers
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2,386 2,516
6,418
3,993
1,148 543 Pre-Salt ’0
00 boe
/day
2,772
845 Transfer of Rights
13
+10 Post-‐Salt Projects
+8 Pre-‐Salt Projects
+1 Transfer of Rights
+ 35 Systems
Added Capacity Oil: 2,300,000 bpd
2,575
Note: Does not include Non-‐Consolidated InternaPonal ProducPon.
• Pre-‐salt and Transfer of Rights will represent 69% of the addiPonal capacity up to 2020; • Pre-‐Salt parPcipaPon in the total producPon will enhance from the current 2% to 18% in 2015 and 40.5% in 2020.
3,070
4,910
PRODUCTION With broad access to new reserves, Petrobras can more than double its produc5on in the next decade
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VARREDURA PROJECT: TECHNOLOGICAL DEVELOPMENT AND EXPLORATORY OPTIMIZATION
• AddiPonal recoverable volume from discoveries:
• Post-‐salt: Marimbá, Marlim Sul and Pampo: 1,105 MM boe;
• Pre-‐salt: Barracuda, CaraPnga, Marlim, Marlim Leste, Albacora and Albacora Leste: 1,130 MM boe*.
• Well producPvity exceeds 20,000 bpd
67 exploratory wells will be drilled between 2011 and 2015 in producPon areas in
Campos basin
Varredura Project
*No volumes have been announced regarding the Marlim Leste and Albacora Leste discoveries.
Descobertas do Pr é - sal na Bacia de Campos 2009/10 (VARREDURA) Discoveries in Pre-‐salt Campos Basin 2009/10 (Varredura)
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NEW VESSELS AND EQUIPMENTS Resources required for produc5on growth
CriPcal Resources Current SituaPon (Dec/10)
Delivery Plan (to be contracted) Accumulated Value
By 2013 By 2015 By 2020
Drilling Rigs Water Depth Above 2.000 m 15 39 37 (1) 65 (2)
Supply and Special Vessel 287 423 479 568
ProducPon Plauorms SS e FPSO 44 54 61 94
Others (Jacket and TLWP) 78 80 81 83
Produc4on
Pladorm (FPSO) Drilling Rigs Supply Vessel
(1) Two rigs reallocated from internaPonal operaPons, expire in 2015, so it is not considered in the 2020 accumulated value
(2) The demand for long-‐term will be adjusted as new demand assessments are made.
Water Depth 2006 2008 2010
Up to 1,000 meters 6 11 11
1,000 to 2,000 meters 19 19 21
Over 2,000 meters 2 3 15
2011 2012 2013
+2 +1 +1
+10 +13 +1
Drilling Rigs Under Contract
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UFN III (Sep/14)
Regás Bahia
(Jan/14)
New NG TPPs
Urucu-Manaus
Gasbel II
Gasduc III
Gastau
Gasene
Gaspal II
Gasan II
Pilar-Ipojuca
Atalaia-Itaporanga
Cacimbas-Vitória
Catu-Pilar
Japeri-Reduc
Gascav
Gascar
LNG Pecém
LNG BGUA
TPP Bicomb. Conversion Termoaçu
Cubatão
Sulfato de Amônio (May/13)
ARLA 32 (out/11)
Ecomps + Delivery Spots + Network Maintainance
UFN IV (Jun/17)
Acquisition TPPs
UPGN Cabiúnas – Route 2 Pre-Salt
(Aug/14)
Adaptation of the Gas Pipelines Network (US$ 3.34 bi) New TPPs run on Natural Gas (US$ 1.82 bi) LNG regasification (US$ 0.74 bi) Chemical Transformation of NG (US$ 5.85 bi)
TPP Commitments (US$ 0.94 bi) Renewable Energy: Wind Power and Biomass (US$ 0.02 bi) Natural Gas Liquefaction (US$ 0.10 bi)
% o
f Tot
al In
vest
men
ts
UFN V (Sep/15)
1st Investment Cycle COMPLETED
2ND INVESTMENT CYCLE: MONETIZATION OF THE PRE-‐SALT RESERVES
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13
2010-‐14 Business Plan
• 5% of investments will be made overseas, 87% of which in E&P.
• Obs: HSEE (US$ 4.2 bi), IT (US$ 2.7 bi), Technology (US$ 4.6 bi), LogisPcs (US$ 17.4 bi) and Maintenance & Infrastructure (US$ 20.6 bi)
2011-‐15 Business Plan US$224.7 billion US$224 billion
2011-‐2015 INVESTMENTS Investment level similar to the previous Plan, with more focus in E&P
(*) US$22.8 billion in Explora4on
(*)
Biofuels
Gas, Energy & Gas Chemicals
Distribution
Corporate
E&P Petrochemicals
RTM
118.8 73.6
17.8 5.1 2.4 3.5 2.9
127.5 70.6
13.2
3.8
3.1 4.1
2.4
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Downstream Challenges
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* * *
* * * *
Source: BP Statistical Review 2011
OCDE
Total Oil Consumption (Índex=100 in 2002) Per capita consumption
HIGH GROWTH POTENTIAL Low per capita consump5on supports demand growth in developing countries
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Licenses for new vehicles
Million of units
Number of vehicles per 1000 habitants
POTENTIAL INCREASE OF OIL PRODUCTS CONSUMPTION Brazil s5ll has a low motoriza5on rate
17 * * * * * * * * * * * * * * * * * * * * * * * *
During recent years, the Demand growth in Brazil has increased its’ speed when compared with GDP growth
* * * * * * * * * * * *
Percentage points (p.p.) of GDP growth above Demand growth
*
* GDP and Demand growth rates (yearly)
*
*
*
*
* *
* *
*
*
*
Lower GDP
Higher GDP
Lower GDP
Higher GDP
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A sharp growth in the air transportation industry has been observed in recent years
It was possible by the increase in the number of people having access to air transportation due to higher income and stronger BRL leading to cheaper flight rates.
* * * * * *
*p.y.
Number of passengers carried - air transportation (thousand) Seats / Km available
* * * * * *
*p.y.
* Source: ANAC
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The diesel demand has also increased sharply…
... not only based on recovery of the industrial activity, ...
Index - Industrial Output
... but also due to agricultural activity growth in Brazil over time
* *
*
* * * *
*
* * * *
* *
The cargo transportation matrix in Brazil is highly dependent upon trucks, with the growth in economic activity boosting diesel demand.
*
* * * *
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*
* * * * * *
8,7%
5,5%
4,1%
* *
13,4%
* *
*
*
* * * * *
9,7%
DIESEL AND JET FUEL CONSUMPTION Strong diesel and jet fuel consump5on growth in Brazil have been observed following the economic growth
• The 1S2011 sales exceeded expected growth, keeping a faster-than-GDP growth.
• The same higher-than-GDP acceleration was verified during first semester 2011.
Jet Sales (2006 to 2011/jun)
Diesel Sales (2006 to 2011/jun)
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Market in 2015 Market in 2010
… increasing the need for new capaciPes in the North, Northeast and Mid-‐west regions
• Increase in demand in the Central-‐West, Northeast, and North explains the concentraPon of investments in the Northeast;
• Tax incenPves combined with environmental restricPons also contribute to the concentraPon in the region.
Deficit
*
Demand
*
Capacity
Deficit
*
Demand
*
Capacity
*
*
*
Deficit Demand Capacity
Superavit Demand Capacity
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DOWNSTREAM EXPANSIONReduced dependence on imports of oil products
* Source: IEA – 2010 World Energy Statistics ** Without considering Capacity Expansion
* * * 2011E * *
Brazil (2020)** Indonesia
Mexico Spain Japan China
Germany France
Brazil (2010) USA
Net Imports as a percentage of total demand (%)*
’000 bpd Increase in import levels will lead to higher
logistical costs... ... and to high levels of exposure to
international supply
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• Small refineries and with low complexity being closed in stagnant markets
• New large-‐scale refineries, high complexity, adapted to process heavy oil in growing markets
Source: Pira, Petrobras, 2011
Adding Refining Capacity (2011-‐2016)
GLOBAL REFINING Regions with fast growth con5nue to invest in refining
Thou
sand
bpd
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Oil and NGL Produc4on – Brazil Total crude oil processed – Brazil Oil Products Market (2 scenarios)
• Highlights: Abreu e Lima, 1st phase of COMPERJ, and 1st phase of Premium I.
PRODUCTION, DOWNSTREAM AND DEMAND IN BRAZIL Construc5on of new refineries to meet local market demand
1,811
2,205 3,217
1,971
2,004
2,100 3,070
4,910
1,792
1,798
1,933
2,147
2,208
0
1,000
2,000
3,000
4,000
5,000
2009 2010 2011 2015 2020
,000 bpd
Abreu e Lima Refinery (RNE) 230,000 bpd
(2012)
COMPERJ (1st phase) 165,000 bpd
(2013)
PREMIUM I (1st phase) 300,000 bpd
(2016)
PREMIUM I (2nd phase) 300,000 bpd
(2019)
PREMIUM II 300,000 bpd
(2017)
COMPERJ (2nd phase) 165,000 bpd
(2018)
2,536
3,095 2,643
3,327
25
21%
4% 7%
10%
Light
36%
6%
9%
21%
Medium Dis4llated
43%
5%
38%
Others
Fuel Oil
Special
Naphtha
LPG
Gasoline
Jet Fuel
Diesel
Intermediary
4%
15%
19%
4%
11%
15%
65%
15%
50%
ProducPvity of exisPng refineries – 2020
Light Medium Dis4llated Others
ProducPvity of new refineries – 2020
• Increase in global demand for medium-‐disPllated products tends to lead to an increase in price versus the gasoline price.
PRODUCTS New refineries will produce higher value-‐added oil products
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More RestricPve specificaPon on Diesel brings challenges to lots of players Besides Petrobras, success of a cleaner fuel depends on other stakeholders
PETROBRAS
• Replace high sulphur fuel production for cleaner one
ANP
• Set possible uses for Diesel off-road until the end of 2012.
Engine Manufacturer
• Produce engines able to use cleaner diesel (10 ppm)
Distribuitors
• Logistics Investiment to transport and store different diesel grades
Retails
• Investments at service stations in order to manage sales of different diesel grades
Petrobras is investing over US$ 12 billion on the next 5 years building treatment units capable of producing a clear diesel and adjusting
logistics related to diesel movement.
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2011 2012 2013 2014 2015
1000 ppm Trnasition 50 ppm
" RECAP Diesel and Gasoline
" REFAP Gasoline
" REGAP Gasoline
" RLAM Gasoline
" RPBC Gasoline
" REPAR Gasoline
" REPLAN Gasoline
" REVAP Gasoline
2011 2012 2013 2014 2015 and beyond
Diesel S-1800
Diesel S-500
Diesel S-50
Diesel S-10
" RECAP Diesel and Gasoline
" RLAM Diesel
" REFAP Diesel
" REPLAN Diesel
" REGAP Diesel
" RPBC Diesel
" REGAP Revamp HDT
Gasoline Quality Diesel Quality:
… reassuring Petrobras’ commitment with sustainability and sulfur emission reduction over time.
" REDUC Gasoline
" REDUC Diesel
New units in existing refineries are being built as part of the product quality investments …
" REPAR Diesel
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Hydrorefining Capacity rela4ve to Dis4lla4on Capacity
23%
23% (current)
59% (2015)
74% (2020)
" Adding value to domesPc crude oil by producing diesel and gasoline in-‐line with internaPonal standards.
" Underinvested over the past years requires catching up with hydrorefining capacity (for removal of sulfur)
HYDROREFINING INVESTMENTS Catch up phase to meet interna5onal standards for quality products
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Biofuels’ Future Role
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PRIMARY ENERGY DEMAND BY FUEL TYPE
2010* Mundo Brasil
Source: Ministério de Minas e Energia (MME)
Brazil World
12,975 (MM TEP) 268,4 (MM TEP)
Source: U.S. Energy Information Administration/2008 (EIA)
Brazil is a leader in the use of renewable sources of energy. At 46%, renewable energy demand in Brazil is more than three times higher than the world average of 14%
31
PRIMARY ENERGY DEMAND BY FUEL TYPE
Mundo Brasil
17,237 (MM TEP) 557 (MM TEP)
2030 Mundo Brasil Brazil World
Source: Petrobras Strategy / EPE
Brazil’s primary energy demand will double until 2030, and the share of renewables will remain in 46%. In order to meet the challenge of supplying Brazilian energy demand growth, Petrobras is
investing in ethanol, biodiesel plants and wind farms in the Northeast
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PETROBRAS BIOFUEL INVESTMENTS Priority for ethanol in partnership with private companies
Ethanol
Ethanol Logistics
Biodiesel
R&D
47%
7%
32%
14%
1.9
1.3
0.6 0.3
INVESTMENTS / 2011- 2015 US$ 4.1 billion
273%
1.5
5.6
Ethanol supply (million m³)
2011* 2015
Market-‐share Pbio+Partners: • 2011: 5.3% • 2015: 12%
16% 735 855
Pbio + Partners
Market Share Pbio+Partners: • 2011: 28% • 2015: 26%
Biodiesel supply (thousand m³)
2011* 2015 Pbio + Partners
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BIODIESEL AND ETHANOL PLANTS OF PETROBRAS
Guarani-‐SP
Bambuí-‐MG (Petrobras-‐Total)
Montes Claros-‐MG (Petrobras)
Candeias-‐BA (Petrobras)
Quixadá-‐CE (Petrobras)
Guamaré-‐RN (Experimental)
Belém Project -‐PA (Implementa4on)
Pará Projest-‐PA (Implementa4on)
Belém Project-‐Portugal
(Implementa4on)
Guarani -‐ Moçambique
(Sena)
Marialva-‐PR (Petrobras-‐BS Bios)
Boa Vista-‐GO (Petrobras-‐ São Mar4nho)
Biodiesel PBIO Biodiesel Partnership Biodiesel PBIO (Implementation) Biodiesel Partnership (Implementation) Ethanol Partnership Crusher Partnership
Bioóleo (Crusher)
Passo Fundo-‐RS (Petrobras-‐BS Bios)
Biodiesel => 5 plants running 2 under implementation
Ethanol => 10 mills running
34
RECENTLY, LOGUM LOGÍSTICA WAS CREATED A Broad Logis5c System For Mul5modal Transport And Storage Of Ethanol
LOGUM’s Plan and shareholders
Source: Logum Logística; AB-CR/PP/ICP
When completed, the system will integrate the main ethanol-producing regions in the states of São Paulo, Minas Gerais, Goiás and Mato Grosso
Main Features
1,300 Km of pipelines Waterway terminals Total storage capacity: 800 thousand m3 Total flow capacity (2020): 21 million m3
10%
20% 20%
20%
20% 10%
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EVOLUTION OF ETHANOL AND GASOLINE DEMANDS
Gasoline C
Hydrous Ethanol
Thou
sand
m3
Year
Demand – Scenario “FdH”
Participation of the fleet
Ligh
t veh
icle
s
The demand for ethanol has grown much more rapidly than gasoline
• CAGR Gasoline C (2000-2011) = 4%
• CAGR Hydrous Ethanol (2000-2011) = 8%
Source: Petrobras Strategy
The significant growth of the fleet of flex-fuel vehicles associated with the shortage of ethanol in the market since early 2010 resulted in the shift in demand from ethanol to gasoline
10,8% 0,1%
84,3%
4,7%
Year
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BIOFUELS SUMMARY
• Petrobras’ investments aim to increase local biofuels production as well as implement Brazilian logistics system in order to ensure security of long term energy supply
• As the main supplier of ethanol to the local market, the sucroenergy industry in Brazil has an important challenge in the following years. Based on that, this industry should consider new investments in order to supply the huge demand of the domestic market in the medium and long term
37
FINAL REMARKS
• Brazil offers an inspiring set of business opportunities in E&P, Downstream, Biofuels and others. Petrobras will be well positioned in them
• The expected increase in Brazilian reserves and production will give a signifficant contribution to the world’s new barrels in this decade
• Petrobras will continue to be a relevant offshore player
• Brazilian demand keeps with a good growth prospect, requiring refining expansion. Petrobras will keep its’ position as the main supplier
• Biofuels will continue to deserve attention and investments in production and logistics systems
38
Thank you!
