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PETROBRAS
1
CLSA Investors' Forum 2006
Almir BarbassaCFO and Investor Relations Officer
September, 14 2006
PETROBRAS
2
The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments.
Cautionary Statement for US investors
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
Cautionary Statement
PETROBRAS
3
Petrobras at glance
PETROBRAS
4
309416427
593614624660
809908919945
1.2671.4481.484
SinopecRepsolStatoil
ENILukoil*Yukos*
ConocoPhillips
PetrobrasTotal
Chevron TexacoPetrochina*
ShellBP
ExxonMobil
6.3434.026
2.9982.7472.708
2.2022.1952.114
1.2231.1751.139
524296
2.275
XOMRDS
SinopecBP
TOTCOP
PetroChinaCVX
PetrobrasYukos
RepsolLukoil
ENI**Statoil8,0
9,010,1
11,512,212,212,313,114,214,615,1
19,620,8
32,7
RepsolShell
StatoilENIBP
TotalSinopec
Chevron TexacoConocoPhillips
PetrobrasExxonMobilPetrochina*
Yukos*Lukoil*
3,33,84,3
6,89,4
11,111,511,812,113,0
17,618,5
20,122,4
RepsolSinopec*
StatoilENI
ConocoPhillips
Total
ShellPetrobras
Chevron Texaco
Yukos*
BPPetrochina*
Lukoil*
ExxonMobil
Publicly traded peer comparisonProven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005
Reserve life (years) – Dec. 2005 Refining capacity (thousand bpd) - 2005
Source: Evaluate Energy and Company Reports
7th
5th
9th
7th
PETROBRAS
5
Liderar o mercado de petróleo, gás natural e derivados na América Latina, atuando como empresa integrada de energia, com expansão seletiva
da petroquímica e da atividade internacional.
Growth ProfitabilityGrowth ProfitabilitySocial and Environmental Social and Environmental
ResponsibilityResponsibility
Consolidate and increase
competitive advantages in
the Brazilian and South American
oil and oil products market
Develop and lead the domestic
natural gas market and perform in an integrated manner
in the gas and power market in South America
Selectively expand
international activities in an
integrated manner with the
Company’s business
Selectively expand interest
in the petrochemicals
market
Expand participation in biofuels market, lead the domestic
biodiesel production and increase
participation in the ethanol business
Operational, management, technological and human resources excellence
Lead the Latin American oil, natural gas, oil products and biofuels market, working as an integrated energy company, with selective expansion in petrochemical, renewable energy and
international activities.
Corporate Strategy
Corporate Strategy
PETROBRAS
6
Energy
Industry
Imported OilProducts
ImportedOil
Imported Gas
International OilProduction
LNG
H - Bio
DomesticNatural GasProduction
Biodiesel Oil Productssold in Brazil
InternationalSales
OtherRenewables
Infrastructure
Petrochemical Plants
Brazilian OilProduction
Throughputin Brazil
InternationalRefining
Integration of the Company's Activities
Ethanol
6
PETROBRAS
7
Vertical Integration ComparisonMajors Average *
2,735
3,176
4,793
4,329
1,630
1,579
National Oil Companies Average **
Petrobras2,296
2,114
Product Sales (thous. bpd)
Refining (thous. bpd)Production (thous. boed)
* Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF ** NOIC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach
*** 2004 figures, except for Petrobras (2005)Source: PIW Intelligence and Petrobras
2,217
3,400Year 2011
2011: New Refinery will add 200
thous. bpd capacity2010:
Pasadena Refinery revamp concluded – processing 70
thous. bpd of heavy oil
PETROBRAS
8
Note: Includes International
31.0
12.41.0
1.0
49.3
23.07.5
3.32.31.8
E&P Downstream G&EPetrochemical Distribution Corporate
9%4%
3% 26%
56%
3%
Business Plan 2007-2011US$ 87.1 billion
86%
14%
Brazil International
US$ 12.1 bi
US$ 75.0 bi
Investment Plan
49,3
23,0
7,53,32,21,8
PETROBRAS
9
Sources Uses
(*)86.7
12.6
2004-2010Financing
Cash Flow
(US$ 99.3 billion)
87.1
12.2
2004-2010Debt Amortization
Capex
(US$ 99.3 billion)
• Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011).
Financial Targets - Sources & Uses
PETROBRAS
10
Our Business
PETROBRAS
11
Petrobras & Partners
Other Companies
Exploration & Production – Overview of E&P in Brazil
•160.5 thousand km2 (Petrobras + Partners)•186 thousand km2 (other Companies)•Total: 346.7 thousand km2.
Exploratory Area (Nov/2005)
•US$ 5.73/boe (2005)Lifting Cost
•US$ 3.45/boe (2003 – 2005) – SPEF&D Cost
•2,030 thousand boed (1,754 thousand bpd oil) 5 - year CAGR of 5%.
Production (1H06)
•Proven reserves of 13.23 billion boe (SPE) or 10.58 billion boe (SEC)•Reserve life of 19.7 years (SPE) and 15.7 (SEC)•Internal Reserve Replacement of 131.1% (SPE) and 101.3% (SEC)
Reserves (at December 31, 2005)
PETROBRAS
12
54,3% 53,1% 51,5% 50,5%
43,8%40,5% 39,7%
34,3%30,0% 29,7%
25,0%20,3%
12,9%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
Petr
obras
She
ll
T
otal
CNOOC
Stat
oil
BP
Exx
onMob
il
L
ukoil
Chev
ron
Cono
coPhillip
s
R
epsol-Y
PF
P
etroC
hina
S
inopec
Undeveloped Reserves / Total Reserves* (2005)
• Strong investments to optimize the development of Petrobras’ proven reserves, aiming light oil production and a minimum reserve/production ratio of 15 years.
• Petrobras had a 55% success ratio for our exploration wells during 2005.
* Source: Evaluate Energy
Exploration & Production – Reserves
PETROBRAS
13
2 , 3 7 42 , 8 1 2
5 5 1
7 2 4
7 4 2
1 8 5
2 7 8
3 8 3
2 0 1 5
F o r e c a s t
1 , 6 8 4 1 , 8 8 01 , 5 4 0 1 , 4 9 3
2 5 0 2 6 5 2 7 4
2 8 9
1 3 3
1 6 1 1 6 81 6 3
8 5
1 0 1
9 49 6
2 0 0 3 2 0 0 4 2 0 0 5 T a r g e t 2 0 0 6
O i l a n d N G L - B r a z i l N a t u r a l G a s - B r a z i l
O i l a n d N G L - I n t e r n a c i o n a l N a t u r a l G a s - I n t e r n a c i o n a l
2,036 2,020 2,217 2,403
3,493
4,556
7.8% p.a.
7.5% p.a.
T a r g e t 2 0 1 1
Exploration & Production - Production Targets
Oil & NGL and Natural Gas (Thousand boed)
PETROBRAS
14
1,493
1,684
2004 2005
P - 48Caratinga
Capacity 150,000 bpdFebruary 05
FPSO Marlim SulCapacity 100,000 bpd
June 04
P - 43Barracuda
Capacity 150,000 bpdDecember 04
∆ 12.8%Crude oil in Brazil
Main projects that contributed to the production growth in 2005
Exploration & Production – 2005 Production
PETROBRAS
15
1.880
1.684
2005A 2006E
Crude oil in Brazil∆ 11.6%
P - 50Albacora Leste
Capacity 180,000 bpdApril 2006
P - 50Albacora Leste
Capacity 180,000 bpdApril 2006
P - 34 Jubarte Phase 1
Capacity 60,000 bpdOctober 2006
P - 34 Jubarte Phase 1
Capacity 60,000 bpdOctober 2006
FPSO CapixabaGolfinho Mod. 1
Capactiy 100,000 bpdMay 2006
FPSO CapixabaGolfinho Mod. 1
Capactiy 100,000 bpdMay 2006
PiranemaCapacity 20,000 bpd
December 2006
PiranemaCapacity 20,000 bpd
December 2006
Main Projects that will contribute to the production growth in 2006
• P-50 is currently producing 55,000 bpd and should reach its production peak by the end of the year.
• FPSO Capixaba is currently producing 41,000 bpd and peak production is expected by 1H07.
• P-34 is being adapted in the Vitória shipyard and should start-up operation in October.
• Piranema was constructed in China (Yantai Raffles shipyard) and is currently in the Netherlands concluding its conversion. Production should begin in December.
Exploration & Production – 2006 Production
PETROBRAS
16
2.374
2.195
2.0611.979
1.880
1.684
2.368
1.400
1.600
1.800
2.000
2.200
2.400
2.600
2005 2006 2007 2008 2009 2010 2011
Parque dasConchas*** 100,000 bpd
2011
Parque dasConchas*** 100,000 bpd
2011
Albacora LesteP-50
180,000 bpdApril/2006
Albacora LesteP-50
180,000 bpdApril/2006
JubarteFase 1P-34
60,000 bpdOct/2006
JubarteFase 1P-34
60,000 bpdOct/2006
Marlim LesteP-53*
180,000 bpd2009
Marlim LesteP-53*
180,000 bpd2009
FPSO CapixabaGolfinho Mod. 1
100,000 bpdMay 2006
FPSO CapixabaGolfinho Mod. 1
100,000 bpdMay 2006
Frade100,000 bpd
2009
Frade100,000 bpd
2009
RoncadorP-52
180,000 bpd2007
RoncadorP-52
180,000 bpd2007
RoncadorP-54
180,000 bpd2007
RoncadorP-54
180,000 bpd2007
Marlim SulModule 2
P-51180,000 bpd
2008
Marlim SulModule 2
P-51180,000 bpd
2008Piranema
20,000 bpdOct 2006
Piranema20,000 bpdOct 2006
JubartePhase 2
P-57180,000 bpd
2010
JubartePhase 2
P-57180,000 bpd
2010
Espadarte Mod 2FPSO Rio de Janeiro100,000 bpd
2007
Espadarte Mod 2FPSO Rio de Janeiro100,000 bpd
2007
ESS-130Golfinho Mod III ****
(FPSO)100,000 bpd
2008
ESS-130Golfinho Mod III ****
(FPSO)100,000 bpd
2008
Golfinho Mod 2 FPSO Cid. de
Vitória100,000 bpd
2007
Golfinho Mod 2 FPSO Cid. de
Vitória100,000 bpd
2007
* In the previous plan, P-53 was scheduled to 2008** In the previous plan, P-55 was scheduled to 2010
RoncadorP-55**
180,000 bpd2011
RoncadorP-55**
180,000 bpd2011
Thous. bpd
*** Abalone, Ostra, Argonauta and Nautilus (former BC10): Petrobras share 35%**** In the previous plan, Golfinho Mod. 3 was scheduled to 2010
Exploration & Production - Main ProjectsBrazilian Oil & NGL production
PETROBRAS
17
4 new platforms will provide additional production capacity of 560,000 bpd
FPSO Cidade VitóriaThis leased FPSO with capacity of 100,000 bpd is currently being constructed by Saipem in Dubai. It is scheduled to start operation May/2007 in the Golfinho Field.
FPSO Cidade Rio de JaneiroWith a capacity of 100,000 bpd, this leased unit is being converted by Modec in Singapore. Production will begin May/2007in the Espadarte field.
P-54Petrobras constructed this platform in the Jurong shipyard, in Singapore, and currently it is in Mauá-Jurong shipyard, in Niterói (RJ). It should be operating by October/2007 in the Roncador field with a capacity of 180,000 bpd.
P-52This platform was constructed by Petrobras, in Singapore (Keppel Felsshipyard) and will have the capacity to produce 180,000 bpd. Currently it is in Angra dos Reis (RJ) concluding its construction to operate in the Roncador field (December/2007). P-52
Cidade Rio de Janeiro
Exploration & Production – Projects for 2007
PETROBRAS
18
2.374
2.812
2100
2200
2300
2400
2500
2600
2700
2800
2900
2011 2015
• To sustain production growth, 15 large projects will be implemented between 2011 to 2015. The highlights are:
Oil Production in Brazil (Thous. bbl)
Exploration & Production - 2011-2015 Main Brazilian Projects
Main Projects
Baleia Azul
Cachalote and Baleia Franca
Roncador Mód. 4
Marlim Sul Mód. 4
Papa-Terra Mód. 1 e 2
Roncador P-55
Marlim Sul P-56
PETROBRAS
19
200520042003
66
41
25
Total
90
43
47
Total
23
4
19
International
4642Offshore
8764Total
4122Onshore
TotalBrazil
Owned Rigs: 31
Leased: 56
• Petrobras’ leasing contracts are long term, averaging a 5 years length;• In 2005, 18 offshore drilling rigs were owned by Petrobras;• In August 2005, Petrobras renovated 24 drilling rigs contracts.• In July 2006, Petrobras signed contracts worth R$ 10.5 billion for the charter of six drilling units:
• 4 rigs will operate in water depths of up to 2,000 meters (seven-year term contract, renewable for further seven years);• 2 rigs will operate at depths down to 2,400 meters (units chartered for 5 years, renewable for the same period);
Exploration & Production - Petrobras’ Drilling Rigs
PETROBRAS
20
61%
13%
12%
14%
RefiningPipelines & Terminals TransportShip TransportPetrochemical
US$ 14.2
US$ 3.2
US$ 3.0
US$ 2.8
US$ 23.1 billion in the downstream segment… ...of which US$ 14.2 billion in refining
• Aggregating value to our heavy oil and producing diesel and gasoline according to international standards.
Downstream – 2007-2011 Investments
31%
19%
6% 26%
18%
Gasoline and Diesel Quality Expansion
HSE Conversion
Others
US$ 2.5US$ 0.9
US$ 4.4
US$ 2.7
US$ 3.7
PETROBRAS
21
New Refinery in Pernambuco• Investment: US$ 2.5 billion
• Throughput capacity: 200 thousand heavy oil barrels (50% Petrobras oil / 50% PDVSA oil)
New Refinery in the USA• Petrobras has acquired 50% of the Passadena Refinery System Inc. (PRSI), located in Texas, USA.
• Total Investment: US$ 370 million
• The refinery, which already has a capacity of 100,000 bbl/day, will be upgraded to handle 70,000 bbl/day of heavy oil and feedstock (including Marlim field’s production)
Rio de Janeiro Petrochemical Complex• Total Investment: US$ 6.5 billion
• Expected Annual Production:
• 1.3 million tons of Ethane;
• 900,000 tons of propane;
• 360,000 tons of benzene and 700,000 tons of p-xylene.
Downstream – New Refineries
PETROBRAS
22
Between 2007 and 2011, investment of US$ 2.8 billion.
10 PSV (Platform Supply Vessels)
1 FSO (Floating, Storage & Offloading)
PROMEF 16 vessels
Fleet Modernization and Expansion Program (PROMEF): 26 vessels
Main Projects
Transportation – Fleet renovation
PETROBRAS
23
Over 75% of Petrobras’ current natural gas production is associated gas
Investments to develop production of non-associated gas
Lack of infrastructure to develop Brazilian market
Risk of gas supply failure due to abnormalities
Total investment (Petrobras and partners) in Brazilian natural gas chain
adds up to US$ 22.1 billion
LNG to provide flexibility to mitigate such risk
Challenges Business Plan 2007-2011 Targets
Natural Gas – Main Challenges
PETROBRAS
24
Natural Gas – Main Projects
Northeast Gas Pipeline NetworkUS$ 6.5 billion investments between
2007-2011
Extension of Gasbol Southern Segment (LNG distribution)
Gasbel ExtensionSoutheast Gas Pipeline NetworkNG infra-structure maintenanceUrucu-Coari-Manaus Gas PipelineGasene – Northern SegmentLNG – Liquefied Natural Gas
Main Projects
• Natural gas prices to accompany international differentials to oil products.
ConstructionCurrentUnder evaluationGASBOL
PETROBRAS
25
Petrobras in the World
PETROBRAS
26
International – Business Strategies
• Add value to Petrobras’ heavy oil production ;
•Seek leadership position as an integrated energy company in Latin America;
• Expand Petrobras’ Focus Areas through businesses that contribute to growth and portfolio diversification;
• Expand operations in Gulf of Mexico and West Africa;
•Accelerate natural gas reserves monetization ;
• Make the Petrobras brand international and valuable.
PETROBRAS
27
70.2%
24.8%
0.8%
1.7%0.8%1.7%
E&P Refining and Marketing Petrochemical Gas & EnergyDistribution Corporate
US$ 12.1 billion Distribution by Geographic Area
3,1
1,41,4
70% will be directed to the E&P
3,1
1,41,4
28%
16%
23%
33%
South America AfricaNorth America Others(*)
3.3
4.02.0
2.8
(*) Including investiments in Angola under consideration
Investments in E&P accompanied by growth in refining investiments
International – Investments 2007-2011
PETROBRAS
28
International – Latin America
Activities in 9 countries: Brazil, Argentina, Bolivia, Colombia, Ecuador, Peru, Venezuela, Paraguay and Uruguay.
Colombia :• First oil production abroad (1972) and 3rd private producer• 6 production blocks, 11 exploration blocks and gas stations
Bolivia :• Natural Gas exports to Brazil (up to 30 MMm3/d)
Uruguay :• Natural Gas distribution and gas stations
Highlights:
Mexico :• Service Contracts – Cuervito & Fronterizo blocks
Venezuela :• 4 assets in production and 2 in exploration
Argentina :• Exploration, production, refining and distribution
PETROBRAS
29
Participation in 287 blocks5 production fields1 field in development (Cottonwood)3 discoveries (Cascade, Chinook and Sant Malo)
International – North America
50% stake in Pasadena Refiniry
PETROBRAS
30
International – West Africa
2,000m
1,000m
2,000m
1,000m
6 blocks (1 in production)
Operator in prolific Block 18 with 30% stake
Start up / Production Peak:AGBAMI:
- First oil: 2008 / Peak: 250,000 bpd in 2009 (total)AKPO:
- First oil: 2008 / Peak: 175,000 bpd in 2009 (total)Petrobras stake: from 70,000 to 100,000 bpd
Operator of new Block OPL 315 with stake of 45%
PETROBRAS
31
Recent Results
PETROBRAS
32
9.951
18.268
22.174
34.489
62.256
13.634
23.277
27.727
40.904
73.834
Net Income
OperatingProfit
EBITDA
COGS
Net Revenue
1H05 1H06
37%
R$
Mill
ion
• Net income growth was supported by a 7% increase in the domestic production of oil and NGL´s and higher international oil prices.
• Operating cash flow (EBITDA) generates sufficient resources to meet the Company’s investment plan, while reducing debt.
19%
25%
27%
19%
Recent Results – Income Statement 1H05 vs. 1H06
PETROBRAS
33
486 527432 451
54 76
0
200
400
600
1 H 2 0 0 5 1 H 2 0 0 6
Exports Imports Net Exports
Thou
sand
bpd
2006 includes undergoing exports
Recent Results – Net exports of oil and oil products
• Net exports growth limited by:• Production stability due to scheduled stoppages (2Q06);• Domestic gasoline consumption increase due to ethanol reduction (mix
reduced from 25% to 20%);• Oil inventories stored in new production units.
PETROBRAS
34
Petrobras’ Leverage Ratio
(1)Includes debt contracted through leasing contracts of R$ 3.300 million on December 31, 2005, and R$ 4.021 million on December 31, 2004.(2)Total debt - cash and cash equivalents
18%
26%
32%
24%
20%
28%
19%19% 23%
26%
6/30/2005 9/30/2005 12/31/2005 3/31/2006 6/30/2006
Net Debt/Net CapitalizationShort-Term Debt/Total Debt
R$ million 06/30/2006 06/30/2005
Short Term debt (1) 12.213 9.645
Long Term Debt (1) 31.306 40.866
Total Debt 43.519 50.511
Cash and Cash Equivalents 22.713 17.195
Net debt (2) 20.806 33.316
Recent Results – Leverage
• Net Debt/Net Capitalization was 14 p.p. lower than reported in the sameperiod last year, refleting long term financing amortization and higher cashposition.
• Increase in the short-term debt due to reclassification adjustments from longterm to short term (debts with lower than 12 months to maturity).
PETROBRAS
35
1H06 1H05(=) Net Cash from Operating Activities 21.509 14.731 (-) Cash used in Cap. Expend. (12.660) (11.061) (=) Free Cash Flow 8.849 3.670 (-) Cash used in Financing and Dividends (9.553) (6.462) Financing (1.971) (1.574) Dividends (7.582) (4.888) (=) Net Cash Generated in the Period (704) (2.792) Cash at the Beginning of Period 23.417 19.987 Cash at the End of Period 22.713 17.195
R$ million
As of January 1, 2005, the Special Purpose Companies whose activities are directly or indirectly controlled by Petrobras were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004.
• R$ 5.179 million increase in Free Cash Flow.
Recent Results – Consolidated Cash Flow Statement
PETROBRAS
36
Market Capitalization
15,530,9
42,0
74,394,1
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
2002 2003 2004 2005 8/31/2006
US$
bilh
ões
Petrobras’ Market Cap increased 6x since 2002
PETROBRAS
37
Final Remarks
“Brazil (our main market) is self-sufficient in a period of relative oil scarcity and increasing prices”
Few industrialized countries are self-sufficient in crude oil
Global dependence on oil and natural gas
There are no financial restrictions for the
accomplishment of the goals
Technical and managing capacity for the execution of
oil and natural gas production projects
“Exploratory portfolio and proven reserves will reduce the vulnerability of natural gas in a few years”
PETROBRAS
QUESTION AND ANSWERSESSION
Visit our website: www.petrobras.com.br/ri/english
For further information please contact:
Petróleo Brasileiro S.A – PETROBRAS
Investor Relations Department
E-mail: [email protected]
Av. República do Chile, 65 - 22nd floor
20031-912 – Rio de Janeiro, RJ
(55-21) 3224-1510 / 3224-9947