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RESULTS ANNOUCEMENT2nd Quarter 2007
(Brazilian Corporate Law)
1
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.
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 for US investors
Disclaimer
2
DOMESTIC OIL AND NGL PRODUCTION
1,7891,800
1Q07 2Q07
Δ = -0.6%
thou
sand
bpd
• Stable production reflecting the mature fields natural production decline rate partially offset by the production increase in FPSO Rio de Janeiro, P-34 and FPSO Capixaba units.
• 1Q07 – Scheduled Stoppage in P-37
• 2Q07 – Scheduled Stoppages: P-18, P-07 and P-09 and non-scheduled stoppages in FPSO-Seillan. Besides, operating problems in a pipeline in UM-SEAL and in platforms FPSO-Brasil and P-34, situations already normalized.
3
E&P – OIL PRICES
US$
/bbl
57.0
47.848.7
58.758.2
53.7
46.1
54.2
43.0
61.8
51.6
61.5
56.9
69.6 69.5
59.757.8
68.8
64.9
54.856.1
66.164.757.6
52.7
56.4
49.3
2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07Average Sales Price Brent (average) OPEC Basket
Increase in E&P’s average oil sales/transfer price in line with international crude benchmarks.
4
REFINING IN BRAZIL AND SALES IN THE DOMESTIC MARKET
%Thous. barrels/day
• Increase in oil products sales – mainly diesel – due to market seasonality and growth of economic activities, specially agriculture and transportation.
1,7951,753
1,6961,684
1,7461,711
1,646
1,709
1,781 1,796
9085
89
93
8978
7780
7879
1,50 0
1,6 50
1,8 0 0
1,9 50
2 Q0 6 3 Q0 6 4 Q0 6 1Q0 7 2 Q0 750
6 0
70
8 0
9 0
D o mest ic o i l p ro d uct s p ro d uct io n Oil p ro d uct s sales vo lume
Primary pro cessed inst alled cap acit y - B raz i l ( %) D o mest ic crud e o i l as % o f t o t al
5
20
40
60
80
100
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07
ARP Brasil (US$/bbl)
Average Brent Price (US$/bbl)
ARP USA (US$/bbl w/sales vol.in Brasil)
68.,8
57.7
71.5
1Q07Average
2Q06Average
70.669.6
81.8
AVERAGE REALIZATION PRICE - ARP
• Seasonal increase in US ARP due to the start up of the American driving season;• Steady increase in Brazilian ARP reaffirms policy of aligning internal prices with international levels in the medium to long term, avoiding short term volatility;
82.4
68.7
78.2
2Q07Average
6
4.131
8.582
10.993
23.692
38.894
6.800
11.535
14.190
24.489
41.798
Net Income
Operational Profit
EBITDA
GOGS
Net Revenues
1Q07 2Q07
R$
mill
ion
INCOME STATEMENT 2Q07 VS 1Q07
34.4%
29.1%
• 64.6% increase in 2Q07 net income due to:• Price increases and higher volumes sold in the domestic market;• Higher oil prices in the international market;• Absence of extraordinary expense that occurred in 1Q07 related to Petros Pension Fund Plan; • Tax benefit due to provision for interest on own capital;
64.6%
3.4%
7.5%
7
1.871
299
655
1.545
1.415
1.239
323
391
1.498
1.443
Others
Taxes
Exploratory Costs
General andAdministrative
Sales Expenses
1Q07 2Q07
OPERATIONAL EXPENSES ANALYSIS 1Q07 VS 4Q06
R$
mill
ion
-33.8%
8.0%
-40.3%
-3.0%
2.0%
• Exploratory Costs: lower expenditures for seismic acquisition in 2Q07 • Others: 34% decline mainly due to absence of costs related to renegotiation of clauses in Petros Retirement
Fund Plan that occurred in 1Q07.
8
8.056
2.122 220 50 10.0241531
1Q07 Oper. Profit Price Effect onNet Revenue
Volume Effect onNet Revenue
Avrg Cost Effecton COGS
Volume Effect onCOGS
Oper. Exp. 2Q07 Oper. Profit
CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07)Exploration & Production –Operating Profit Change– R$ millions
1,7891,800 Domestic Production of Oil, NGL and Condensate (thous. bpd)
• Increase in average sales/ transfer prices, following the trend internationally
9
CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07)
Downstream – Change in Operating Profit – R$ million
3.197
1.541
1.578
90 3.358
1.694
1.982
1Q07 Oper. Profit Price Effect on NetRevenue
Volume Effect onNet Revenue
Avrg Cost Effecton COGS
Volume Effect onCOGS
Oper. Exp. 2Q07 Oper. Profit
• Increase in average realization prices, due to higher oil prices in international market, higher sales volumes and liquidation of inventories with a lower cost basis purchased during prior quarters, partially offsetting the average cost increase.
10
EXPORTAÇÃO LÍQUIDA DE PETRÓLEO E DERIVADOS
354 373 408 340 410
88137 132
97
159
2Q06 3Q06 4Q06 1Q07 2Q07
510442 437540
267355
454377 321
281221
215247
271
2Q06 3Q06 4Q06 1Q07 2Q07Oil Oil Products
624548 576
669592 569
NET EXPORTS OF OIL AND OIL PRODUCTS187 tbpd Volume Surplus and US$ 242 million Financial Deficit in the 2Q07
Imports (thous barrels/day)Exports (thous barrels/day)
• Higher oil and oil products imports due to increase in demand, especially for lighter oil products.
11
1,7891,800
NET INCOME CHANGE – R$ million (2Q07 VS 1Q07)
Domestic Oil, NGL and Condensate – thousand bpd
• Increase in Net Income due to better domestic market sales volumes and higher prices (linked to international benchmarks);• Better COGS structure, due to liquidation of inventories with a lower cost basis purchased during the previous quarter; • Decrease in Operational Expenses given the absence of the effects of Petros Pension Plan amendment (R$ 1billion loss)
accrued in the 1Q07;• Lower Taxes impact because of fiscal benefits from the interest on own capital provision (R$ 746 million)
4,131
2,903 796 763 109 172 25 6,800
1Q07 Net Income Revenues COGS Oper. Exp. Fin. Exp, NonOper. and Others
Taxes Minority Interest 2Q07 Net Income
12
16%
19%17%
28%27%
18%20%
26%24%
17%
28%26%
19% 23%
27%
27%
set/05 dez/05 mar/06 jun/06 set/06 dez/06 mar/07 jun/07
End. Líq./Cap. Líq. End. CP/End. Total
R$ million 06/30/2007 03/31/2007Short Term debt (1) 10.720 11.879Long Term Debt (1) 29.100 32.539
Total Debt 39.820 44.418
Cash and Cash Equivalents 17.854 20.463
Net Debt (2) 21.966 23.955
(1) Includes debt contracted through leasing contracts (R$ 1.980 million in 06.30.2007 and R$ 2.259 million in 03.31.2007).(2) Total debt - cash and cash equivalents
LEVERAGE
Petrobras’ Leverage Ratio
• 8% decline in net debt during the quarter as a consequence of strong net cash generation (R$ 2.498 million), despite material growth in CAPEX, dividend payment, and impact of dollar devaluation on the debt.
13
R$ million2Q07 1Q07
(=) Net Cash from Operating Activities 13.548 7.493 (-) Cash used in Cap. Expend. (10.600) (7.951) (=) Free Cash Flow 2.948 (458) (-) Cash used in Financing and Dividends (5.557) (6.908) Financing (3.958) (1.035) Dividends (1.599) (5.873) (=) Net Cash Generated in the Period (2.609) (7.366) Cash at the Beginning of Period 20.463 27.829 Cash at the End of Period 17.854 20.463
CONSOLIDATED CASH FLOW STATEMENT
• Decrease in cash mainly due to net amortizations and prepayments of debt
14
1H07 %Direct investments 17.030 86 Exploration & Production 9.092 45 Downstream 2.856 14 Gas & Energy 730 4 International 3.486 19 Distribution 547 3 Corporate 139 1 Special Purpose Companies (SPCs) 2.596 13 Ventures under Negociation 169 1 Project Finance - - Total Investments 19.795 100
R$ million
INVESTMENTS
• R$ 19.795 million invested in 1H07, primarily for the development of future oil and natural gas production capacity in Brazil (R$ 9.092 million) and abroad (R$ 3.129 million)
15
7.207.246.64
6.127.33
2Q06 3Q06 4Q06 1Q07 2Q07
Δ = 1.81% or US$ 0.13
US$/bbl
DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION
• 1.8% increase mainly due to the effect of Real appreciation (6%) on that portion of costs denominated in local currency;
• Deducting the FX rate effect, lifting costs decreased 3% due to lower expenditures with well interventions and maintenance.
16
3,4 4,3 6,0 5,4 5,4 6,1 6,3 6,1 6,6 7,2 7,2 7,35,2
6,57,6 8,5 9,8 10,0 11,0 11,4 11,5 10,4 9,0 10,6
68,8
57,859,769,5
28,8
38,247,5
51,6
61,556,9
61,869,6
-4
6
16
26
2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
US$
/boe
-20
0
20
40
60
Lifting Cost Gov. Take Brent
8.610.8
13.6 13.9 15.2 16.1 17.3 17.5 18.117.6 16.2
17.9
65%61%
60%
59%56%
LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION
• Higher government take during 2Q07, mainly due to the increase in the domestic oil reference price, linked to international prices.
17
2.692.542.712.48
2.07
2Q 06 3Q 06 4Q 06 1Q 07 2Q 07
Δ = 5.9% or US$ 0.15
REFINING COSTS IN BRAZIL (US$bbl)
• 5.9% increase due mainly to FX rate effect, partially offset by reduced number of scheduled stoppages;
• Expressed in Reais, a decrease of 0.9%.
18
COSTS IN REAIS
13,214,3
15,5 15,2 14,5
4,6 5,4 5,8 5,4 5,3
02468
1012141618
2Q06 3Q06 4Q06 1Q07 2Q071,8
1,9
2
2,1
2,2
Lifting Cost Refining Cost FX Rate
R$/
barr
elFX R
ate
• Stable lifting and refining costs over time, when expressed in Reais
19
NET INCOME COMPARISON 2Q07 vs 1Q07
Petrobras presented the highest quarter growth compared with the Majors Oil Companies
US$ billion 1Q07 2Q07 2Q07/1Q07Petrobras* 2,01 3,53 75,0%BP 4,66 7,38 58,1%Shell 7,28 8,67 19,0%Chevron 4,72 5,38 14,1%ExxonMobil 9,28 10,26 10,6%ConocoPhillips 3,55 0,30 -91,5%
*Petrobras results in R$ converted by the US dollar last price for the period (1T07: R$ 2,050 e 2T07: R$ 1,926).
Source: Evaluate Energy e Petrobras
20
QUESTION AND ANSWER SESSIONVisit our website: www.petrobras.com.br/ri
For more information contact:Petróleo Brasileiro S.A – PETROBRAS
Investor Relations DepartmentRaul Adalberto de Campos– Executive Manager
E-mail: [email protected]. República do Chile, 65 – 22o floor
20031-912 – Rio de Janeiro, RJ(55-21) 3224-1510 / 3224-9947
20082008--20122012 Business Business PlanPlan
José Sergio Gabrielli de Azevedo
Chief Executive Officer
2
Disclosure
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.
3
Business Environment Vision in 2020
Environmental Pressures
Climate Change
Technology
Geopolitics
Social Responsibility
TransparencyStakeholders
Cleaner Energies
Biofuels
Energy: Oil and Natural Gas
Economic Growth
Brazil, China and India
?
4
We will be one of the five largest integrated energy companies in the world and the
preferred choice among our stakeholders
Vision 2020
Our operations will be notable for:
• Strong international presence • World scale prominence in biofuels• Operational excellence in management, technology and
human resources• Profitability• Benchmark in social and environmental responsibility• Commitment to sustainable development
Vision 2020 Characteristics
Vision 2020 and Characteristics
5
MissionOperate in a safe and profitable manner in Brazil
and abroad, with social and environmental responsibility, providing products and services
that meet clients’ needs and that contribute to the development of Brazil and the countries in which it
operates.
Vision 2020 and Mission
We will be one of the five largest integrated energy companies in the world and the preferred choice
among our stakeholders
Vision 2020
6
Management ChallengesNew Strategic Projects Focusing:
• Capital Discipline• Ensure adequate returns on capital employed by the
different business segments of the Company:• Strive for greater efficiency in project execution
(Deadlines and Costs);
• Streamline Inventory Management;
• Decrease Operating and Administrative Costs;
• Manage Portfolio Efficiently.
• Human Resources• To be an international benchmark for personnel
management in the energy segment, having our employees as our most valuable asset.
7
• Social Responsibility
• To be a world class reference for social responsibility, contributing to the development of sustainable business models.
• Climate Change
• Achieve levels of excellence within the energy industry for reducing the intensity of greenhouse gas emissions in our processes and products, contributing to the sustainability of the energy business and the mitigation of global climate change.
• Technology
• To be a world class contributor to technologies that lead to thesustainable growth of the Company in the oil, natural gas, petrochemical and biofuels industry.
Management ChallengesNew Strategic Projects Focusing:
8
Cor
pora
te S
trat
egy
Develop and lead the Brazilian
natural gas market and operate on an integrated basis in the gas and electric
energy markets with a focus on
South America
To expand integrated
operations in refining,
commercialization, logistics and
distribution with a focus on the
Atlantic Basin
Operate on a global basis in biofuels
commercialization and logistics, leading the domestic production
of biodiesel and expanding
participation in the ethanol segment
Expand operations in petrochemicals in Brazil and South America on
an integrated basis with the PETROBRAS
Group’s other businesses
To grow production and oil and gas reserves sustainably, being
recognized for excellence in E&P
operations
Expand operations in target markets for oil, oil products, petrochemicals, gas and energy, biofuels and distribution, being a world benchmark as an
integrated energy company
Confidencial
Commitment to sustainable development
Gas & EnergyE&P Downstream (RTC) Distribution Petrochemicals Biofuels
Operational, management, technological and human resources excellence
Integrated Growth Profitability Social and Environmental Responsibility
Corporate Strategy
Business Segment Strategy
9
Linked to international market prices, without changes in
relative prices
2.50
4.0
3.7
4.2
2007-2011
Linked to international market prices, without changes in
relative pricesOil Products Prices
4.3GDP – World (% p.y.) – PPP(*)
3.9GDP – Latin America (% p.y.) – PPP
2.18FX rate (R$/US$)
4.0GDP – Brazil (% p.y.)
2008-2012Indexes
Macroeconomic Assumptions
(*) PPP – purchase power parity
10
55
45 3550
3535353540
2008 2009 2010 2011 2012
Oil prices: Brent curves
Price curve BP 2007/11
Price curve BP 2008/12
BP – Business Plan
1111
6%4%
1%2%26%
58%
2%
65.1
29.6
6.74.3
2.62.6
Investment Plan by Business Segment
2008-12 PeriodUS$ 112.4 billion
E&P RTC G&EPetrochemical Distribution Corporate Biofuel
1.5
• US$ 65.1 billion directed to E&P:
• Exploration: US$ 13.8 billion
• Production: US$ 51.3 billion
13%
87%
Brasil Internacional
97.4
15.0
Note: Includes International
12
Investment Plan
87.1
1.8
0.7
2.3
3.3
7.3*
21.9*
49.3
Petrobras2007-11
29112.4Total
392.5Corporate
1141.5Biofuels
132.6Distribution
304.3Petrochemical
-26.7G&E
2929.6RTC
3265.1E&P
Difference (%)
Petrobras2008-12Business Segment
* 2007-2011 Plan included biofuels investments.
The forecast indicates annual average capital investment of US$ 22.5 billion for the period 2008 - 2012.
US$ billion
13
The Business Plan assumes Brazilian Content to be 65% of total capital spending, generating annual average purchases of US$ 12.6 billion from local suppliers
Annual average purchases in the domestic market for the previous Plan was approximately US$ 10 billion
65%63.197.4Total80%1.92.3Corporate Areas100%2.42.5Distribution76%5.06.6G&E77%24.331.4Downstream54%29.554.6E&P
Brazilian Content (%)
Purchased In the Domestic Market
2008-12
Domestic Investments
2008-12Business Segment
US$ billion
14
PN 2007-1183.571
Outros-2.435
Aumento de Custo10.912
Melhoria do grau de
Definição2.835
Alteração da Taxa de Câmbio
4.224
Projetos Novos13.267
Of the 34% increase in total capital spending, US$ 13.3 billion (or 16%) was due to the inclusion of new projects
• 13% increase in costs, in alignment with industry pressures
New Projects• Exploration & Production:
• Exploration• Enhanced Recovery from Mature
Fields • Support and Infra-structure• Plangás
• Refining, Transportation and Distibution:
• Plangás Downstream • Petrochemical
• New units COMPERJ
• 5% increase in CAPEX due to change in FX Rate premise
Costs Increase
US$ 10,912 bi
FX Rate Change
US$ 4,224 bi
New Projects
US$ 13,267 bi
Betterdegree of Definition
2,835
Others
-2,435
* 2008-2012 Amounts
*
15
•Increase oil production in a sustainable manner, preserving the country’s self-sufficiency.
•Guarantee access to natural gas reserves and production to ensure domestic supply.
•Expand operations in areas of major E&P potential, where operating, technical and technological skills represent a competitive differential.
•Adopt practices and new technologies into declining fields in order to optimize recovery factors.
•Strengthen the Company’s position in deep and ultra deep water exploration.
•Develop exploratory efforts in new frontiers to ensure a sustainable reserve/ production ratio.
•Guarantee a high replacement of reserves, maintaining the annual Reserve Replacement Index (RRI) above 100%.
Strategies by Segment
E&P Business Segment
To grow production and oil and gas reserves in a sustainable manner, and to be recognized for excellence in E&P operations
16
2 , 4 2 12 , 8 1 2
6 3 7
6 4 3
5 1 5
1 5 1
1 8 3
2 8 5
F o r e s c a s t
2 0 1 5
1 , 7 7 81 , 4 9 3 1 , 6 8 4
2 6 52 7 4 2 7 71 6 8
1 6 3 1 4 29 49 6
1 0 1
2 0 0 4 2 0 0 5 2 0 0 6
O i l + 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 + N G L I n t e r n a t i o n a l N a t u r a l G a s I n t e r n a t i o n a l
2,0202,217 2,298
3,494
4,1537.2% p.y.
6.8% p.y.
Total Production – Oil, NGL and Natural Gas - TargetsThousand boed
Target 2012
* Includes non consolidated production
*
*
1717
Growth opportunities for E&P in Brazil ensure continued self-sufficiency
Oil, Condensates, and NGL Production
2,050
2,1912,296
2,374 2,421
1,922 1,9682,039
2,1012,170
2,337
2,812
1500
1700
1900
2100
2300
2500
2700
2900
2008 2009 2010 2011 2012 2015
Thou
sand
bpd
BP 2008-2012 Demand
1818
Total US$ 65 billion
Exploration in Brazil and Abroad
Production Development in Campos Basin: Roncador (P-52, P-54, P-55), MarlimSul (P-51, P-56), Papa Terra, Maromba, Jubarte Phase II (P-57), Cachalote, BaleiaFranca and Baleia Anã
Production Development in Santos Basin: Mexilhão, Uruguá-Tambaú, Pirapitanga
Production Development in Espírito Santo Basin: Golfinho and Peroá-Cangoá
Production Development of fields in Brazilian other basins: (Pólo Juruá-Aracacanga, Manati, D. João Mar, Sergipe-Alagoas)
Production Development in the United States (Cascade, Chinook, Cottonwood)
Production Development in Argentina, Nigeria (Akpo, Agbami), Angola, Venezuela, Colombia and Turkey)
Projects
E&P Business Segment – Main Projects
19
Corporate Targets – E&PLifting Costs
5.72
6.596.13
2.903.36 3.52
2005 2006 Target 2012
Lifting Cost - Brazil Lifting Cost - International
US$
bbl
20
• Increase refining capacity in Brazil, maximizing the throughput of domestically produced oil.
•Expand refining capacity in Brazil and abroad, seeking to maintain a balance between refining capacity and the growth of PETROBRAS’s oil production.
•Develop the portfolio of PETROBRAS’s products, services, and technologies, with an emphasis on the client’s needs.
• Increase the volume products and services sold, expanding sales activities, as well as logistics and processing, in Brazil and abroad.
•Adapt the existing refinery complex and expansions in Brazil and abroad to meet the standards and expectations of product quality in target markets.
• Develop commercial and logistics partnerships in alternative models.
Strategies by Segment
Downstream Business Segment
To expand integrated operations in refining, sales, logistics and distribution in Brazil and abroad with a focus on the Atlantic Basin
21
237 257333 340 386 432241 282 281 28176 96 129 173706
779902
1105
116
138
153228
287
345
204 217
11095
0
500
1000
1500
2000
2500
3000
2006 2010 2015 2020
LPG Gasoline Naphta Jet Fuel Diesel Fuel Oil Others
Domestic Oil Products Market
Thous. bpd
2,337
1,824
2,732
2,039
2.93% p.y.
22
US$ 29.6 billion investments in the Downstream area....
Downstream Investments
28%
13%
18%
4%
8%
8%
21%
Fuel QualityConversion
ExpansionHSE
TransportationPipelines
Others 6,112
2,264
2,270
1,083
5,353
3,938
8,619
US$ million
23
International285**
Production Brazil2,421
256
Throughput in Brazil 2,061
Oil Products Consumptionin Brazil ** 2,170
208Imported Oil
5Oil Products Exports ***
International Oil Sales762
114
Thousand bpd
The production flow of liquids in 2012 shows the high degree of integration among the business segments in the Brazil and abroad.
29256*
Throughput Abroad348
Oil Purchase Abroad 23
296 158 1.853
(*) Includes non-consolidated production (**) Biodiesel Portion not included(***) Liquid Exports of Oil Products
24
Corporate Targets – DownstreamRefining Costs
1.90
2.29
3.69
1.30
1.73
2.24
2005 2006 Target 2012
Refining Cost - BrazilRefining Cost - International
US$
/bbl
25
Corporate Targets – Downstream
Throughput (Brazil and Abroad) and Processing of Domestic Oil Production in Brasil (Thousand bpd)
205348
348
2,0611,7922,659
92
90
80
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2012 201571
76
81
86
91
96
BP 2008-12 - Throughput - International (thousand bpd)
BP 2008-12 - Throughput - Brazil (thousand bpd)
Domestic Crude Oil as a % of Total
1,997
2,4093,007
26
•Lead the Brazilian market in the distribution of oil products and biofuels to achieve maximum market share, under profitable terms.
•Make the PETROBRAS brand name the preferred choice among consumers, offering excellence in quality of products and services, both in Brazil and abroad.
•Expand participation in the natural gas distribution market with a focus on the largest markets.
Strategies by Segment
Distribution Business SegmentTo expand operations in refining, commercialization, logistics and distribution in Brazil and abroad with a focus on the Atlantic Basin.
27
BR Participation in the Brazilan Market (%)
3141
24
36
2006 2012
BR Participation in Total Brazilian Market (%)
BR Participation in the Brazilian Automotive Market (%)
Corporate Targets – Distribution
28
•Expand operations in 1st and 2nd generation processes, increasing the production of petrochemicals, while adding value to the products of the Group’s refineries by capturing synergies related to the production of oil, gas, refining and petrochemicals.
•Develop new technologies for the chemical industry based on the technological evolution of petrochemical fluid catalytic cracking (FCC) and biodegradable polymers and biopolymers.
Strategies by Segment
Petrochemical Business SegmentExpand operations in petrochemicals in Brazil and South America on an integrated basis with the PETROBRAS Group’s other businesses
2929
Main Projects: Petrochemical Segment
COMPERJ - Intermediate (Styrene, PTA and Ethylene glycol)COMPERJ – Thermoplastic Resin ( Polyethylene, Polypropylene and PET)
Total investments: US$ 4.3 billionComplexo AcrílicoPetroquímica Paulínia - PolypropyleneInternational Petrochemical ProjectsCompanhia de Coque Calcinado de PetróleoCompanhia Integrada Têxtil de Pernambuco – CITEP (POY)Petroquímica SUAPE (PTA)
COMPERJ – Basic Petrochemicals UnitMain Projects
30
•Develop and consolidate the natural gas business in the Brazilian market, ensuring the flexibility and reliability of supply.
•Operate vertically in the LNG business on an integrated basis, prioritizing meeting the demands of the Southern Cone market.
•Profitably consolidate electric power generation assets by optimizing the existing thermoelectric power plant portfolio.
•Play a role in the energy integration of South America.
•Capitalize on the opportunities for generating electricity from biomass, oil products and natural gas.
•Promote the mastering of necessary technologies along the entire natural gas chain.
Strategies by Segment
Gas & Energy Business Segment
Develop and lead the Brazilian natural gas market and operate on an integrated basis in the gas and electric energy markets with a focus on South America.
31
Domestic Natural Gas Market*
24
42.1
16.2
43.9
72.9
30.0
31.1
48.0
6.10
20
40
60
80
100
120
140
160
2006 2012
Thermoelectric Industry Other
Million m3/day134 134
(*) considering maximum dispatch of every thermoelectric power plant• Other: vehicular, residential / commercial, refineries and fertilizer units.
E&P
Bolívia
LNG
46.3
Supply 2012
19.4% p.y.
3232
Main Projects: Gas & EnergyUS$ million
Gas Pipelines: Gasene, Northeast and Southeast Network, South Section of Gasbol, Urucu-Coari-Manaus and Gasduc III
LNG – Liquified Natural Gas
Thermo-Electrics: Cubatão, Três Lagoas, Canoas and Termoaçu
Wind Power Generation
G&E in Argentina and Other Countries
Total investments US$ 6.7 billion
Main Projects
33
Corporate Targets – G&E
Domestic Natural Gas Sales – G&E* (million m3/day)
57
82
2008 2012
BP 2008-12 - Domestic Natural Gas Sales – G&E (million m3/day)
* Does not include Petrobras consumption
6.2% p.y.
34
Power Sales – Petrobras (TOTAL Brazil + International) (Average MW)
718 722
2,234
3,741118
976
5,439
3,070
0
1,000
2,000
3,000
4,000
5,000
6,000
2008 2012BP 2008-12 - Expansion Opportunities in Thermoplants (Average MW)BP 2008-12 - Thermoplants and Co-generation - Brazil (Average MW)BP 2008-12 - International (Average MW)BP 2008-12 - Petrobras (Total Brazil + International) (Average MW)
Corporate Targets – G&E
35
•Expand operations in the ethanol business by participating in the domestic production chain to develop international markets, focusing on logistics and sales.
•Develop and spearhead the production of biodiesel for meeting the requirements of the Brazilian market, as well as to capitalize on opportunities in overseas markets.
•Develop technologies which ensure worldwide leadership in biofuels production, including technologies based on low value-added raw materials (residual biomass).
Strategies by Segment
Biofuels Business Segment
To be a global company in biofuels sales and logistics, leading the domestic production of biodiesel and expanding participation in the ethanol segment
3636
Main Projects: Biofuels
29%
46%
21%
4%
Biodiesel Pipelines and Ethanol Pipelines Others H-Bio
US$ 1.5 billion Investments
37
Corporate Targets – Biofuels
Biodiesel Available Capacity (thousand m3/year)
329
1,182938
844
2,705
1,254
0
500
1,000
1,500
2,000
2,500
2008 2012 20150
500
1,000
1,500
2,000
2,500
3,000
BP 2008-12 - Biodiesel Available Capacity (thousand m3/year)
Dopmestic Biodiesel M arket (thousand m3/year)
38
Ethanol Exports (Thousand m3)
500
4,750
0
1,000
2,000
3,000
4,000
5,000
2008 2012
BP 2008-12 - Ethanol Exports (Thousand m3)
Corporate Targets – Biofuels
45.5% p.y.
39
Main Fincancial Indicators
1.5
25
3.5
3.1
16
AverageBP 2007-2011
1.4
20
3.1
3.9
14
AverageBP 2008-2012
Free Operating Cash Flow (US$ billion)
Cash Balance (end of the year) (US$ billion)
Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%)
Long Term Funding (US$ billion per year)
Return on Capital Employed (ROCE) (%)
Indicators
40
Accumulated EVA value generation(US$ billons)
81.5
103.1
Period 2007-2012 Period 2007-2015
Value Generation BP 2008-2012
41
Sources and Uses – BP 2008-2012
104.4
19.4
2004-2010FinancingCash Flow
(84.3%)
(15.7%)
In the BP 2007-11, required financing was 13%
(US$ 123.8 Billion)
112.4
11.4
Debt AmortizationCAPEX
(90.8%)
(US$ 123.8 Billion)
(9.2%)
42
Other Corporate Targets
3.933.56Total Avoided Greenhouse Gas Emissions (Million Ton CO2 Equivalent)
2.182.23
0.500.68
601694
Business Plan 2008-2012HSE Targets
20122008
Lost Time PercentageEmployees (%)
Maximum Admissible Spill Volume (m3)
Lost Time Injury Frequency (LTIF) (Injuries / Millions Man Hours Worked)
43
Social and Environmental Responsibility Targets
8178Social Responsibility Image (%)
8382Corporate Image (%)
7771Image as an Energy Company
185,78365,049Social and Environmental Responsibility Capacitating (Number of Hours)
9897Employees’ Commitment to Social and Environmental Responsibility (%)
8885Employees Knowledge of Social and Environmental Responsibility (%)
344339.5Ethos Scores- Government and Society (#)
344342Ethos Scores- Values, Transparency and Government (#)
344341Ethos Scores - Community (#)
Business Plan 2008-2012Social and Environmental Responsibility Targets 20122008
44
Human Resources Corporate Targets
8379Commitment to the Company (%)
7369Employees’ Satisfaction Index (%)
82.380.4Management Competence Index (%)
91.790.5Individual Competence Index (%)
92.991.7Individual Results Index (%)
Business Plan 2008-2012Human Resources Targets
20122008
45
The Investment Plan in Brazil will require an average annual work force of approximately 917,000, of which 228,000 will be directly employed by the industry
917 Total Work Force
338 Indirect Work Force (Income Effect)
350 Indirect Work Force (Productive Chain)
228 Direct Work Force
Annual Average 2008-12
Work Force (Thousand)
46
Macroeconomic Effect
The Added Value in Brazil generated by Petrobras’ activities and the impact of its investments and operating expenditures along the production chain are presented below, representing on average approximately 10% of Brazilian income.
R$ Billion
50Investments along the Production Chain
141Petrobras in Brazil
55Operating Expenditures along the Production Chain
246Total Added Value
Annual Average 2008-2012Added Value by: