BRAZIL:Opportunities in the O&G business

Disclaimer

The content of this presentation is merely informative and uses data from third parties. IBP disclaims any responsibility for the completeness, accuracy and timeliness of the presented information, as well as for any effects arising from its use and interpretation. All intellectual property rights in any way related to the presented information, as well as any responsibility for its content, lies with its respective authors and/or proprietors.

More than

US$ 7 bi in signature bonuses

61%Majors

33%NOCs

6%Others

Source: IBP with data retrieved from Wood Mackenzie

Private companies were responsible for 67% of the signature bonuses paid from 2016 to 2018.

Signature bonuses by company type2016-2018, %

Total signature bonuses2019, US$ Million

Signature bonuses by country between 2016 and 2018US$ Million

Why has Brazil captured 77% of signature bonuses payed globally between 2016 and 2018 ?

5506

771586

195 119

Brazil Mexico USA Russia Egypt

% 77% 8%11% 3% 2%

TOTAL: 7.177

72%81%

97%

28%19%

3%

2017 2018 2019 YTD

Rest of the World

Brazil

Fossil fuels participation in the global energy matrix is expectedto decline in the next decades

Global energy matrix projections%

ExxonMobil ExxonMobil DNV GL Shell

-4p.p. -34p.p.-20p.p.

Source: Elaborated by IBP with data from ExxonMobil, DNV GL and Shell

80% 76%

56%

22%

20% 24%

44%

78%

2016 2040 2050 2070

Others

Oil, Gas and Coal

Energy matrix projection - 2050

According to DNV GL, by 2050, coal, oil and natural gas will be responsible for

around 56% of the energy offer.

Source: Energy Transition Outlook 2019 – DNV GL

0

2000

4000

6000

8000

10000

12000

14000

16000

2017 2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050

Eólica

Solar Fotovoltaica

Solar Térmica

Hidroelétrica

Biomassa

Geotérmica

Nuclear

Gás Natural

Petróleo

Carvão

Mtoe

The world’s biggest economies have strong fossil fuelparticipation in the energy matrix

Source: Elaborated by IBP with data retrieved from IEA (2017)

74%68% 66%

56%50%

43%

31%25%

16%

14%

8%22%

6%

4%

44%64%

7%

10%

12%7%

1%

43%

1%

2%

3%8%

15% 15%

43%

11%

23%

9%

Russia USA Spain Germany Brazil France India China

O&G Coal Nuclear Renewables

Brazil’s Energy Matrix

Source: Elaborated by IBP with data retrieved from BP 2019

Oil

46%

Natural Gas

10%

Coal

5%Nuclear energy

1%

Hydro

30%

Renewables

8%

TOTAL

297,6 Mtoe

Oil

35%

Natural Gas

23%

Coal

21%

Nuclear energy

5%

Hydro

1%

Renewables

15%

TOTAL

323,9 Mtoe

Germany’s Energy Matrix

Source: Elaborated by IBP with data retrieved from companies outlooks

Forecast peak in oil global demand according to major industry players

The next decade can represent O&G’s industry last window of opportunities

2020 2025 2030 2035 2040

Não previsto

Window of investments in long-term projects

(optimistic scenario for O&G)

Lower demand Lower price Higher competition

Current reserves and potential O&G resources in Brazil2018, Billions of boe

Observations: 1) Boe refers to barrel of oil equivalent2) Instituto Nacional de Óleo e Gás da Universidade Estadual do Rio de JaneiroSource: IBP with data retrieved from ANP, BP and UERJ

Less than 7% of the areas of Brazil’s sedimentary basins are under contract.

Brazil´s great reserves and an industry with high growth potential

20

1510

1136

176 176

Consumption1965-2017

Provenreserves

Possiblereserves

Contingentresources

Undiscoveredresources

Totalresources

UERJ’s INOG study indicates that the Brazilian pre-salt may contain 176 billion boe of undiscovered and recoverableoil and natural gas

Madre de Dios basin haven’t had

a single well drilled

Global deepwater recoverable resources discoveredBboe, 2P accumulated

* Ex: Ghana, Senegal, Angola** Ex: Somalia, KenyaSource: Elaborated by IBP with data retrieved from IHS Global Deepwater and Growth Play Service

Brazil pre-salt

Brazil post salt

USA GoM

East Africa **

West Africa *

Congo

High productivity

Great prospects

4959

1928

27

32

51

78

151

188

2000 2005 2010 2015

Nigeria

7691

Brazil has the largest recent offshore discoveries, especially in the Pre-salt area

The Pre-Salt

The pre-salt discoveries are among the most important

made in the world over the last decade.

• Large accumulations of excellent quality

• High commercial value light oil

• Close to the consumers centers

Sources: PPSA and Petrobras*ANP – september 2018

Average oil production per well*

8.640 bpd224 wells

1.405 bpd676 wells

15 bpd6,559 wells

Mean construction time for offshore

wells

2010

310 DAYS

2015

128 DAYS

2016

89 DAYS

Cumulative production(time to reach the production of 1 biliion

barrels)

GoM

14yrCampos Basin

15yr

Pre-Salt

6yr

Oil production

2.99Million bpd(August 2019)

Cumulative production

~21Billion boe

(31/12/17)

Natural Gas production

133Million m³/d

(August 2019)

Proven reserves

15Billion boe

(December 2018)

Today’s E&P in Brazil

TOTAL PRODUCTION (August 2019)

3.828 Million boe/d

Fonte: ANPSource: ANP

14

Brazil emerges as a key source of global oil production growth

Brazil’s oil production to grow strongly, supported by changes to the regulatory framework which attract capital to develop its abundant resources. If conditions are right, there is even further upside potential.

Top 5 contributors to world oil production growth, 2018-30

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

United States Brazil Iraq Canada Saudi Arabia

mb/d

Offshore acquired areakm², 1999-2019

Source: ANP

11 years later

Competition1999

Concentration2002 2006

Gap2017

Return to competition

80 117 149 23 7 166 271

527

22

4.497

-

30

-

2.498

4.496

20.981

1st Round 2ndRound

3rd Round4th Round5th Round6th Round7th Round 9th Round 10thRound

11th/12thRound -1st PSC

13thRound

14thRound -2nd/3rd

PSC

15thRound -4th/5th

PSC

16thRound -

6th PSC -ToR

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

...

Signature bonuses paid per year – Concessionand Production Sharing (US$ Million)

1) 8th Bidding Round was cancelled 2) Open Acreage Round not included3) US$ 1 = R$ 4Source: IBP with data retrieved from ANP

Signature bonuses paid

Cumulative signature bonuses paid by concessionary –13th to 16th concession rounds – offshore (US$ Million)

US$ 1 = R$ 4Source: IBP with data retrieved from ANP

1.359

1.198

738

487

403

243 243 198 185

42 40 34 28 6 6 5

Petrobras ExxonMobil QPI Petronas Total BP Equinor Chevron Shell Wintershall Repsol Enauta Petrogal CNOOC

Petroleum

Murphy Karoon

The amount bonuses payed has grown greatly in recent years

Cumulative signature bonuses paid by concessionary– Production sharing rounds (US$ Million)

Note: First round (Libra) not includedUS$ 1 = R$ 4Source: IBP with data retrieved from ANP

1.564

986

511 484

398 355 353

303 243

55 25 13 5

Petrobras ExxonMobil Equinor Shell Chevron BP CNODC QPI Petrogal CNOOC Ecopetrol Repsol Sinopec Total

The amount bonuses payed has grown greatly in recent years

Campos and Santos basins: Bidding Round Zero1998

Campos and Santos basins: after the return of bidding rounds2018

1 million bbl/day 2,6 millions bbl/day

Source: IBP with data retrieved from ANP

More than 20 years after the Oil Act, it’s evident the players diversification in upstream and the expansion of offshore

infrastructure

Market opening also increased the number of players

Bidding Rounds

Source: ANP

Oil production

6,0Million bpd

(in 2027)

Cumulative production

~39Billion boe

(by 2027)

Natural Gas production

217Million m³/d

(in 2027)

Proven reserves

~45Billion boe

(in 2027)

Future E&P in Brazil

TOTAL PRODUCTION (in 2030)

~7,50 Million boe/d

Fonte: Elaboração IBP com dados da EPESource: Elaborated by IBP with data retrieved from EPE and ANP

1º

2º

3º

4º

5º

6º

7º

8º

9º

10º

Marketedproduction²

~65million m³/d

Imports²

~26million m³/d

14NGPUs

9,4thousand km of

pipelines

Processing Capacity

96million m³/d

The Brazilian Natural Gas market

Note: 1) Excludes natural gas converted to liquid fuels but includes derivatives of coal as well as natural gas consumed in Gas-to-Liquids transformation.2) Data from August 2019

Source: IBP with data retrieved from EPE, ANP and BP

World’s Natuaral Gas consumption¹2018, Billion m³

National Natural Gas market

27º

Production²

~133million m³/d

3LNG

terminals

Processing capacity

41million m³/d

Natural Gas transport pipelines

187citygates

33Compression

stations

817,1

454,5

283

225,6

115,7

115,7

112,1

89,5

88,3

78,9

35,9

USA

Russia

China

Iran

Canada

Japan

Saudi Arabia

Mexico

Germany

United Kingdom

Brazil

MARKET OPENING

ProductionNatural gas(2019 - 2023)

+ Competitiveness

+ Investiment

NATURAL GAS2019-2023 Outlook

29%

+ Employment

+ Income

131,05

143,88152,76

164,30168,47

2019 2020 2021 2022 2023

Offshore Onshore

New design for Brazilian gas market foresees competition and new investment opportunities

Brazilian natural gas production forecastMMm³/d, 2019-2023

Source: IBP with data retrieved from ANP

NOVO MERCADO DE GÁS

20

14

5

4

4

3

3

3

2

2

USA

China

India

Japan

Saudi Arabia

Russia

Brazil

South Korea

Canada

Germany

1º

2º

3º

4º

5º

6º

7º

8º

9º

10º

National sales of oil products

~ 2,0million bpd

Imports (ethanol, naphtha, QAV, LPG, Gasoline and

Diesel)

387thousand bpd

17refineries

8ºLargest refining

park

STRONG AND GROWING PARTICIPATION OF BIOFUELS

Installed Refining Capacity

National sales of biofuels

622thousand bpd

378Ethanol

mills

51Biodiesel plants

~ 2,4million bpd

2ºLargest biofuels

producer

Brazil is the world’s 7th largest consumer of oil products

Note: 1) Considers the domestic demand plus international aviation and shipping fuel, refining consumption and losses, biofuels, coal and natural gas derivatives2) QAV refers to aviation kerosene

Source: IBP with data retrieved from EPE, ANP, BP Statistical Review

World’s oil consumption¹2018, Million bpd

National mid-downstream market²

Producing

Yet to hire

Under construction

Last update – August 2019Source: IBP with data retrieved from Petrobras

Around 50 new FPSOs are expected tobe in operation untill 2030!

11 FPSOs are expected to go online in the next 5 years

P-75Búzios II

2016 2019 2020 2021 2022

C. de Caraguatatuba

Lapa

C. de SaquaremaLula Central

C. de MaricáLula Alto

2017 2018

Pioneiro de Libra

TLD Libra

P-76Búzios III

P-68Berbigão

P-67Lula Norte

Campos de GoytacazesTartaruga V.

P-74Búzios I

Petrojarl IAtlanta

P-77Búzios IV

P-69Ext. Sul Lula

P-70Atapú I

GuanabaraMero 1

CariocaSépia

Almirante BarrosoBúzios V

ASNRev. Marlim II

ASNSEAP I

ASNItapu

ASNRev. Marlim I

ASNParque das

Baleias

SepetibaMero II

P-66Lula Sul

2023

Potential investment for the next 10 years

SectorInvestments(US$ billion)

Investments(R$ billion)

E&P 568 2.102

Refining, Processing and Petrochemical Plants

58 216

Biofuels 28 105

Pipelines 10 35

Logistics Supply 8 31

TOTAL 672 ~2.500

Source: ANP

- Transfer of Rights Surplus + 6th PSC: ~ 400 billions in investments

How much investments on the Oil, Gas & Biofuels Industry would be necessary todevelop all the Brazilian potential in the next 10 years?

Petrobras: new business plan

Divestment• On and offshore• Downstream• Natural gas

Debt reduction11% (3rd quarter)

Focus on E&P79,4% of 2019 investments

Production records• 3,1 MM Boe/d – August 2019

• 2,3 MM boe/d only on Pre-salt

Lifting costreduction

• 9,7 US$/boe (E&P)• 5,0 US$/boe (Pre-Salt)

Challenges and opportunities for the O&G sector

Human Resources

Geopolitical context

Communication

Competitive supply chain

Opening of the natural gas market

Environmental Licensing

Tax simplification

Downstream market opening

Technology, Innovation and Digital Transformation

Energy Transition

21-24, September | Rio de Janeiro

The leading oil and gas event in Latin America

RIO OIL & GASLAST EDITION FIGURES

33 sponsors

10simultaneous events

+1.000 presentationsEXHIBITION

39.000 sqm

+500 exhibitors

42.200attendees

9 international pavilions

CONFERENCE

5.000delegates

200speakers

+600 technical papers

RIO OIL & GASCONFERENCE – THEMATIC BLOCKS

Exploration & Production

Offshore Downstream Natural Gas Leadership & Management

Digital Technology

Energy Transition

BLOCK 1 BLOCK 2 BLOCK 3 BLOCK 4 BLOCK 5 BLOCK 6 BLOCK 7

32

Brazil in global energy markets

Global energy demand to continue to increase, driven by economic & population growth in the emerging

economies

• Brazil became a net energy exporter in 2018 – the turnaround from decades of dependence on imports is a rare & historic achievement

Brazil is set to enter the global league of top oil exporters, reaping the benefits of its long pursuit of

deepwater oil

Brazil can play a role in global energy transitions, thanks to its leadership in hydropower & bioenergy

Ongoing energy sector reforms are critical for Brazil to mobilize the annual 70 billion USD investment it needs

in its energy sector

THANK YOU!