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Webcast Business Plan 2011-2015 Presentation Presentation Transcript

  • 1. WebcastJosé Sergio GabrielliCEOJuly 26th, 2011 1
  • 2. DISCLAIMER This presentation may contain forward-looking Cautionary statement for U.S. investors: statements. Such statements reflect only the expectations of the Companys management The United States Securities and Exchange regarding the future conditions of the economy, Commission permits oil and gas companies, the industry, the performance and financial in their filings with the SEC, to disclose results of the Company, among other factors. proved reserves that a company has Such terms as "anticipate", "believe", "expect", demonstrated by actual production or "forecast", "intend", "plan", "project", "seek", conclusive formation tests to be economically "should", along with similar expressions, are and legally viable under existing economic used to identify such statements. These and operating conditions. We use certain predictions evidently involve risks and terms in this presentation, such as uncertainties, whether foreseen or not by the discoveries, that the SEC’s guidelines strictly Company. Consequently, these statements do prohibit us from including in filings with the not represent assurance of future results of the SEC. Company. Therefore, the Companys 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. 2
  • 3. BRAZIL LEADERSHIP IN RECENT DISCOVERIESDeep‐water discoveries in Brazil represent 1/3 of the worldwide discoveries in the last 5 years New Discoveries 2005‐2010 (33,989 million bbl) Deep‐Water  Discoveries 38% Brazil Brasil 62% Outros Other Other Discoveries Deep-Waters • 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 additional capacity from the supply chain; • Expansion of the oil and gas chain in Brazil is in line with this perspective. Petrobras expects to double its proved reserves until 2020, keeping the discovery cost around US$2/boe Source: PFC Energy 3
  • 4. INCREASE IN SALES VOLUMES Sales Volume (thousand boe/day)  6.6% p.y. 8.000 7,142 Fertilizers 79 141 7.000 El ectri c Energy 401 5.6% p.y. 906 6.000 Bi ofuel s 4,958 38 480 5.000 106 3,848 290 Interna ti ona l  Sa l es(**) 3,773 3,464 17 17 738 4.000 17 94 97 2,317 94 136 147 436 Na tura l  Ga s (***) 125 593 634 3.000 542 997 312 320 231 Exports 699 586 2.000 706 1,739 1,453 1,204 1,315 Other Di s tri bui tors 1,097 1.000 731 899 1,078 652 718 Sa l es  to BR 0 *2009 *2010 2011 2015 2020 BP 2011‐15 ‐ Petrobras Total Sales Volume (*) Accomplished (**) International area sales and offshore trading operations free from eliminations. (***) Natural Gas was converted to boe/d. 4
  • 5. Investments Program 2011‐15 5
  • 6. 2011‐2015 INVESTMENTSInvestment level similar to the previous Plan, with more focus in E&P 2010‐14 Business Plan 2011‐15 Business Plan US$224 billion US$224.7 billion 2% 1% 2% 1% 2% 2,9 2% 1% 2,4 1% 8% 2.9 6% 2,32.4 4,24,2 17.8 3.5 14,73,2 4.1 14,7 3,2 13.2 3.1 2.4 5.1 4,14,1 3.8 118.8 (*) 53% 65,5 65,5 73.6 70.6 127.5 31% 57% 33% E&P RTM RTC E&P Gás,Energia & Gás Química Gas, Energy & Gas Chemicals Petroquímica Petrochemicals (*) US$22.8 billion in Exploration Distribuição Distribution Biocombustíveis Biofuels • 5% of investments will be made overseas, 87%  Corporativo Corporate of which in E&P. • Obs:  HSEE  (US$  4.2  bi),  IT  (US$  2.7  bi),  Technology (US$ 4.6 bi), Logistics (US$ 17.4 bi) and Maintenance &  Infrastructure (US$ 20.6 bi) 6
  • 7. INVESTMENTS BP 2011‐15 VS. BP 2010‐14US$ billion BP 2010‐14 BP 2011‐15 (R$ 419.7 billion) (R$ 388.9 billion) US$ 224 billion US$ 224.7 billion 0,3% Excluded 10,8 New ‐9,7% 32,1 90,6 82,9 37% 40% Maintained Maintained 213,2 192,6 141,1 Changes in: 134,1 63% FX rate 8.6 60% Budget 1.5 Schedule (23.7) Business model (0.6) Scope (6.4) Total in Foreign Currency Total in Local Currency 7
  • 8. KEY CHANGES IN PORTFOLIONew projects concentrated in E&P  Exploration & Production Supply  Gas & Energy (includes Petrochemicals) + US$8.7 billion ‐ US$4.3 billion ‐ US$4.6 billion New Projects New Projects • HPP Barra do Rocha I New Projects • New units Comperj • HPP Bahia II • Transfer of Rights • Oil Logistics Projects concluded in 2010 • New Pre‐Salt Units (Lula) • Gas pipelines: Gasene, Pilar‐ Projects concluded in 2010 Ipojuca, Gasduc III and Gasbel II  • Infrastructure • Braskem investment • New Discoveries and R&D Excluded, Revised and/or  • Investments in quality Postponed Projects Excluded, Revised and/or  Excluded, Revised and/or  • Postponement of projects: UFN IV,  Postponed Projects Postponed Projects UFN V, GTL Paraffins and Gas FSO  • Projects discontinued after  • Postponement of Premium I  • Exclusion of Catu‐camaçari gas unsuccessful exploratory phase Refinery pipeline and Ecomp Itajuípe • Exclusion of HPP projects from  • Revision of Development Projects 2010 auctions 8
  • 9. INVESTMENTS AND PROJECT APPROVAL TIMELINE US$224.7 billion 688 projects 2011‐15 Period US$ billion 250 41 projects 39 projects 22 projetos 41 projetos 22 projects 112 projects 39 projetos 112 projetos 13,5 4,1 200 5,4 33,5 6% 2% 2% 104 projects 104 projetos 15% 150 41,4 95 projects 18% 95 projetos 51,0 224,7 100 23% 275 projetos 275 projects 50 75,7 34% 0 Aprovados Approved 2010 2011 2012 2013 2014 Pós 2014 After 2014 Total until 2009 até 2009 9
  • 10. CONSOLIDATED RETURNSE&P drives results• E&P Investments (57% of total) ensure production growth and high IRR; • Other investments (43% of total) add value to the chain, generating returns equal or higher than the cost of capital; • Investments in quality are a legal requirement. • Total investments (BP 2011‐2015) with attractive IRR; • Petrobras is an integrated company ready to speed up production growth; • Reduced cost due to a higher business integration and a leading position in a large and growing market.  ROCE 35% 30% 25% Integrated companies  20% deliver better returns  15% 10% 5% 0% ‐5% 00 01 02 03 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 20 Integrated Companies Companhias Integradas E&P Companies Companhias de E&P Downstream Companies Companhias de Refino Source: PFC Energy 10
  • 11. Analysis of  the Plan’sFunding Needs 11
  • 12. OIL PRICEOil price assumptions within markets expectations  US$/bbl 95 Petrobras’ Scenarios 80 Based on 2011‐2012 forecasts: Banks (Source: Bloomberg) Based on 2013‐2015 forecasts: PIRA, DOE, CERA, WoodMackenzie, IEA 12
  • 13. VARIABLESKey variables that impact the cash flow and funding needs Assumptions No Capital Increase in the period Investment grade maintenance Key variables for Cash Generation and Investment Level • Oil price  • Foreign Exchange Rate • Brazilian Market Growth  • Average Realization Price (ARP) – Brazil – International Parity – International margins per product • Oil and products exports and imports • Investment Program  • Divestitures and business restructuring • Third‐party funding 13
  • 14. CASH GENERATION AND INVESTMENTSDivestment and traditional funding sources adequate for Plan needs Scenario A  Scenario B US$ 256.1 US$ 256.1 US$ 255.6 US$ 255.6 Key assumptions 13,6 13,6 31,4 30,9 26,1 26,1 Scenario A Scenario B Exchange rate  1.73 1,73 67,0 (R$/US$) 91,4 2011 – 110 2011 – 110 2012 – 80 2012 – 95 224,7 224,7 Brent (US$/bbl) 2013 – 80 2013 – 95 2014 – 80 2014 – 95 148,9 125,0 2015 – 80 2015 – 95 Leverage (Average) 29% 26% Net Debt/EBITDA  1.9 1.5 Sources Use Sources Use (Average) ARP (R$/bbl) 158 177 Divestment and Restructuring Debt Amortization Cash Investments Third‐Party Resources (Debt) • 40% of capex in dollar in comparison to 37% in the  Operating Cash Flow (After Dividends) previous Plan 14
  • 15. Exploration & Production  US$127.5 billion 15
  • 16. STRATEGYSustainable development of hydrocarbon reserves Increase oil and gas reserves and production, in a sustainable manner, and be  recognized for its excellence in E&P operations, placing the Company among the world’s  five largest oil producers 2011‐15 Business Plan Highlights: • 65% of Capex allocated to production development. • 19 large projects, adding capacity of 2.3 million bpd. • Drilling of more than 1,000 offshore wells, of these 40% is exploratory and 60% is production  development. • In 2020, the pre‐salt production will correspond to 40.5% of the oil production in Brazil. 16
  • 17. TOTAL E&P INVESTMENTS IN BRAZIL– 2011‐15 BUSINESS PLAN Exploration E&P investments in Brazil: US$117.7 bn Pre‐Salt Post‐Salt 26% Pre‐salt US$ 53.4 billion US$ 64.3 billion Infrastructure 68% Other areas 6% Transfer of  17% Rights 18% Exploration 65% Production Development Production  Development  Pre‐salt Other areas 37% 48%• Annual investments of more than US$ 4 billion in exploration 15%• Investments  of  US$  12.4  billion  related  to  the  transfer  of  rights areas in 2011‐15 Transfer of Rights• In the BP 2010‐2014, the forecasted investment for the Pre‐ Salt was of US$33 billion Note: Pre‐salt includes Basins in Santos, Campos and Espírito Santo 17
  • 18. PRODUCTIONWith broad access to new reserves, Petrobras can more than double its production in the next decade 6,418 142 246 1.120 3,993 125 180 + 35 Systems 2,575 2,772 618 2,386 2,516 +10 Post‐Salt Projects 93 96 96 141 +8 Pre‐Salt Projects 4,910 99’000 boe/day 132 144 435 111 317 334 321 +1 Transfer of Rights 845 3,070 Transfer of Rights Added Capacity 13 1.855 1.971 2.004 2.100  Oil: 2,300,000 bpd Pre-Salt 1,148 543 2008 2009 2010 2011 2015 2020 Oil Production‐ Brazil Natural Gas Production ‐ Brazil Oil Production ‐ International Natural Gas Production ‐ International • Pre‐salt and Transfer of Rights will represent 69% of the additional capacity up to 2020; • Pre‐Salt participation in the total production will enhance from the current 2% to 18% in 2015 and 40.5% in  2020. Note: Does not include Non‐Consolidated International Production. 18
  • 19. PRODUCTIONLong history of implementing offshore projects in Brazil 2,004 2000 10% p.y over  the last 30 years 10% p.y Deep water 1600 Shallow water Onshore 1,271 1200 1,601 Thous .  Thous.  653 749 bpd 800 42 400 400 292 187 189 75 211 230 214 0 112 1980 1990 2000 2010 • 123 offshore units (45 floating and 78 fixed) • 25 new units installed over the last 5 years P‐56 FPSO Cidade de  Angra dos Reis P‐57 FPSO Cidade de  Santos 19
  • 20. LARGE PROJECTS SUSTAIN THE INCREASE IN PRODUCTION NG Projects  Pre‐Salt and Transfer of  Rights Projects Post‐Salt Projects Lula Pilot FPSO BW Cidade  Juruá NG EWTs Angra dos Reis 100.000 bpd  Lula NE Franco 1  FPSO Cidade de  Transfer of Cachalote and Mexilhão Paraty Rights Baleia Franca  Jaqueta FPSO Capixaba HG  Guará Pilot 2 120.000 bpd FPSO  100.000 bpd  FPSO Cidade  de  São Paulo Parque das  Guará (North)  150.000 bpd Tambaú Baleias FPSO  FPSO P‐67  120.000 bpd Replicant 2 Thous. Uruguá FPSO Cidade  FPSO P‐58 150.000 bpd FPSO Cidade de  150.000 bpd bpd Santos  de Santos NG  Baleia Azul 180.000 bpd Cernambi  BMS‐9 our11 35.000 bpd FPSO Cidade  de  Papa‐Terra  South Marlim Sul Anchieta TLWP P‐61 & FPSO 3.070 module 3 100.000 bpd FPSO P‐63 150.000 bpd 3000 Jubarte SS P‐56 (FPSO Espadarte  150.000 bpd FPSO P‐57 180.000 bpd  100.000 bpd reallocation) FPSO P‐66 2500 2.100 Replicant 1 2.004 Baleia Azul 150.000 bpd Roncador  BMS‐9 or 11 2000 EWTs Lula NE    module 3 Roncador  FPSO module 4   60.000 bpd Maromba Tiro Pilot e Cernambi SS P‐55 FPSO P‐62 FPSO  1500 SS‐11 FPSO BW  180.000 bpd 180.000 bpd Siri 100.000 bpd Cidade São  Atlantic Zephir 30.000 bpd  Vicente Tiro/Sidon Aruanã Jaqueta e  1000 30.000 bpd FPSO Cidade   de  FPSO  FPSO ESP/Marimbá Itajaí 50.000 bpd FPSO  EWT Guará EWT Carioca  100.000 bpd 80.000 bpd 40.000 bpd 500 FPSO Dynamic FPSO Dynamic Producer 30.000 bpd  Producer 30.000 bpd 4 EWTs Pre‐salt 3 EWTs Pre‐salt 5 EWTs Pre‐salt 5 EWTs Pre‐salt 0 2010 2011 2012 2013 2014 2015 20
  • 21. NEW PROJECTSHigher number of drilling rigs will enable a faster ramp‐up of the new platforms Months 20 To reach 50% capacity Para atingir 50% capacidade 16 Para atingir 75% capacidade To reach 75% capacity 12 8 Forecast 4 0 P‐43 P‐48 P‐50 P‐52 P‐54 P‐53 P‐51 FPSO P‐57 CAPIXABA 2004 2005 2006 2007 2007 2008 2009 2010 2010  P‐56 will have 1 producing well and 1 injection well to be connected in 3Q11. Water Depth 2006 2008 2010 2011 2012 2013 Up to 1,000 meters 6 11 11 1,000 to 2,000 meters 19 19 21 +2 +1 +1 Over 2,000 meters 2 3 15 +10 +13 +1 From 2007 to 2012 Petrobras will double its fleet of contracted drilling rigs, focusing on modern, recently built drilling rigswith capacity to operate in the Pre‐salt layer. 21
  • 22. POSITIVE RESULTS OBTAINED DURING EWTs Average drilling time of the wells completed during the year (versus combined average time for 2006/7) Results obtained during EWTs  Constant production 5 wells  Restriction due to flaring limitation 4 wells  Good behavior of the reservoirs 5 wells  Good lateral communication 6 wells  No issues regarding flow guarantee EWT Schedule 4 1 4 1 5 5 4 3 3 2011 2012 2013 2014 2015 TLD ‐ Pré‐Sal e Cessão Onerosa EWT – Pre-Salt and Transfer of TLD ‐ Outras áreas EWT – Other areas Rights 22
  • 23. COST‐BENEFIT ANALYSISCapital investments required by Plansal 45% lower, increasing NPV Investment Bid Areas Net Present Value Bid Areas 23
  • 24. PROFITABILITYNew E&P projects generate attractive returns Key Assumptions: • 150,000 bpd FPSOs • Production of 500,000 bpd • Ramp‐up in line with industry • Historic decline rate • Oil value = 95% Brent • Does not include exploration and  acquisition costs Case 1 – US$12/boe Capex / US$5/boe Opex (expected scenario) Case 2 – US$15/boe Capex / US$7/boe Opex Case 3 – US$12/boe Capex / US$5/boe Opex without Special Interest (such as Transfer of Rights) • The  graph  illustrates  the  cost‐benefit  ratio  of  a  standard  production  development  in  Brazil,  using  assumptions  based on previous experiences 24
  • 25. E&P PROFITABILITY IN BRAZILOil production profitability in Brazil fully exposed to oil prices Brent vs. Net income per Barrel E&P Net Income ($/boe)Net income per Barrel (US$) Peers Petrobras Brent (Average in dollars) E&P ROCE • E&P profitability strongly correlated to oil price • Production in Brazil: 86% oil and 14% gas • Higher net profit per barrel yields better return  than its peers • Stable regulatory environment allows for  Peers capturing the benefits of the increase in oil prices Petrobras Source: PFC Energy Peers: BP, CVX, XOM,RDS, TOT 25
  • 26. VARREDURA PROJECT: TECHNOLOGICAL DEVELOPMENT AND EXPLORATORY OPTIMIZATION Varredura Project Discoveries in Pre‐salt Descobertas do Pr é-sal Campos Basin 2009/10  na Bacia de Campos 2009/10 (VARREDURA) (Varredura) • Additional recoverable volume from discoveries: • Post‐salt:  Marimbá,  Marlim Sul and  Pampo:  1,105 MM boe; • Pre‐salt:  Barracuda,  Caratinga,  Marlim,  Marlim Leste,  Albacora and  Albacora Leste:  1,130  MM  boe*.  • Well productivity exceeds 20,000 bpd 67 exploratory wells will be drilled between 2011 and 2015 in production areas in  Campos basin *No volumes have been announced regarding the Marlim Leste and Albacora Leste discoveries.  26
  • 27. NEW TECHNOLOGIES Applications enhance recovery, slow decline rates and increase production  Technological Solution Technology Status Subsea BCS In Operation Subsea Pumping Model In Operation (Jubarte e Golfinho) Subsea Pumping  Systems Skid BCS  Prototype in TLD ESP 23 (Oct/11) Subsea Muliphase Pump BMSHA Prototype in Barracuda (Dec/11) Gas/Liquid  Subsea  VASPS Prototype Tested in P‐08 (2011) Separation Oil/Water Subsea  SSAO Prototype in Marlim (End of 2011) Separation Raw water injection SRWI Prototype in Albacora (End of 2011) Subsea electric  transmission and  Under qualification Prototype scheduled to 2015 distribution VASPS Underwater Electric  Raw water injection Oil/Water Subsea  Pump in Skid  Separation 27
  • 28. NEW VESSELS AND EQUIPMENTSResources required for production growth Delivery Plan (to be contracted) Current Situation Accumulated Value Critical Resources (Dec/10) 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 Production Platforms SS e FPSO 44 54 61 94 Others (Jacket and TLWP) 78 80 81 83 Production  Supply Vessel Drilling Rigs Platform  (FPSO) 39 rigs contracted, 28 more to be built by 2020: o Until 2013: 16 rigs contracted before 2008 and 2 rigs relocated from international operations¹; +15 new  rigs contracted in 2008, +1 in 2009, +1 in 2010 and +4 in 2011 through international bidding; o 2015‐2020: From the 28 rigs to be built in Brazil, EAS won the bid for the first package ‐ construction  and chartering of seven drilling rigs to be built in Brazil. A new bid was open for the remaining 21.(1) Two rigs reallocated from international operations, 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. 28
  • 29. TRANSFER OF RIGHTS Development of the areas fully under way Declaration of Commerciality Exploration Production Development Duration: 4 years Variable, according to  Extendable for 2 more years Development Plan Total Duration: 40 years, extendable for 5 more years according to specific criteria Area 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Franco Resources already  lara surroundings available for: First 4  production  Florim • 7 Exploratory wells New technologies  units  • 1 contingent Exploratory  and definition of  NE of Tupi well undergoing  resource allocation • 1 EWT contracting  South of Guará • 2 contingent EWTs (*) • 3D Seismic  South of Tupi * Conversion at the Inhaúma shipyard 29
  • 30. REVISION OF THE TRANSFER OF RIGHTS • The revision will be completed after the declaration of commerciality (4 years period) • Revision based on technical reports and on assumptions provided in the contract • Assumptions for price revision: – Change in oil price – Production curve – Cost assumptions update – Discount rate and appraisal base date maintenance Final value Higher Lower • Petrobras pays the difference to the Federal • Federal Government pays the difference Government to Petrobras • (or) Petrobras requests a reduction in volumes corresponding to the difference 30
  • 31. BENEFITS FROM THE LOCAL INDUSTRY DEVELOPMENT  Suppliers investing in Brazil Navy Industry Direct Labor force  Flexible pipes ‐ Wellstream and Prysmian  Pumping Units – Weatherford 30 x  Valves – Cameron  Turbine generators – Rolls‐Royce  2 FPSOs fully built in Brazil  6 Platforms under construction in Brazil   Construction of 8 hulls for replicant FPSOs (65% Local  Content)  Contracting of 7 drilling rigs at competitive costs and  21 being leased (55%‐65% Local Content) Platforms built in Brazil with competitive costs Source: Sinaval 31
  • 32. Refining, Transportation &  Marketing (RTM),  and Petrochemicals US$74.4 billion 32
  • 33. STRATEGYExpansion, quality, logistics and commercialization Expand the downstream, ensuring the margins from the Brazilian market supply with the required quality, and developing markets for the oil surplus2011‐15 Business Plan Highlights:• Downstream capacity will increase by 395 thousand bpd between 2011‐15 and 1,065 thousand bpd between  2016‐2020;• Completion of the process to modernize the downstream segment;• Logistics integrated with E&P activities to ensure the commercialization of the oil surplus;• Increase petrochemicals and biopolymers production. 33
  • 34. NEW REFINERIES, FUEL QUALITY AND MODERNIZATION SUM UP TO 74% OF RTM INVESTMENTS US$70.6 billion • Refining Capacity Expansion: Abreu e Lima  4.5% 4.9% 1.0% 1.1% Refinery, Premium I and II, and Comperj; 0.8% 15.2% • Quality and Conversion: Modernization,  13.9% conversion, and hydrodesulfurization; • Operating improvement: maintenance and  optimization, HSEE, and R&D; 26.4% 23.9% • Fleet Expansion • Logistics for Oil: oil supply for refineries and  infrastructure for oil exports. Refining Capacity Expansion Quality and Conversion Operating improvement Fleet Expansion Logistics for  Oil Petrochemical Investments amount to US$3.8 billion International 34
  • 35. DOWNSTREAM EXPANSIONReduced dependence on imports of oil products Increase in import levels will lead to higher ... and to high levels of exposure to’000 bpd logistical costs... international supply Net Imports as a percentage of total demand (%)* 2006 2007 2008 2009 2010 2011E USA Brazil (2010) France Germany China Japan Spain Mexico Indonesia Brazil (2020)** * Source: IEA – 2010 World Energy Statistics ** Without considering Capacity Expansion 35
  • 36. PRODUCTION, DOWNSTREAM AND DEMAND IN BRAZILConstruction of new refineries to meet local market demand PREMIUM I,000 bpd (2nd phase) COMPERJ 300,000 bpd (1st phase)5,000 165,000 bpd (2019) (2013) COMPERJ (2nd phase) Abreu e Lima 165,000 bpd4,000 Refinery (RNE) (2018) 230,000 bpd (2012) 3,327 PREMIUM II3,000 2,643 300,000 bpd 3,095 (2017) 4,910 2,536 PREMIUM I2,000 (1st phase) 3,070 3,217 300,000 bpd (2016) 2,147 2,205 2,208 2,100 2,004 1,971 1,933 1,811 1,798 1,7921,000 0 2009  2010 2011 2015 2020 Oil and NGL Production – 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. 36
  • 37. INVESTMENTS IN DOWNSTREAM EXPANSION REPRE I Abreu e Lima Refinery Comperj REPRE II Capacity: 230,000 bpd Capacity: 330,000 bpd Stage: Implementation Stage: Implementation Startup: 2012 Startups: 2013 and 2018 RNE Premium I Refinery Premium II Refinery Capacity: 600,000 bpd Capacity: 300,000 bpd Comperj Stage: Earthworks Stage: Preliminary License issued Startup: 2016 and 2019 Startup: 2017 Launch of Petrobras’ Refineries PREMIUM II PREMIUM I COMPERJ REPLAN REMAN REDUC  REGAP  REVAP REPARRECAP RNEST REFAPRLAMRPBC  32 years 50’s 60’s 70’s 80’s 90’s 00’s 10’s• Learning curve from the two new refineries (Abreu e Lima Refinery and Comperj) to reduce Premium  refineries CAPEX 37
  • 38. REFINING CAPACITY NEEDS OUTSIDE THE SOUTH/SOUTHEAST REGIONS Market in 2010 Market in 2015 299 552 968 763 -464 -416 Capacity Demand Deficit Capacity Demand Deficit 1.652 1.675 1.466 1.384 82 -23 Capacity Demand Superavit Capacity Demand Deficit • Increase in demand in the Central‐West, Northeast, and North explains the concentration of investments in the  Northeast; • Tax incentives combined with environmental restrictions also contribute to the concentration in the region. 38
  • 39. PRODUCTSNew refineries will produce higher value‐added oil products Productivity of existing refineries – 2020 Productivity of new refineries – 2020 65% 43% 50% 36% 38% 21% 21% 19% 4% 15% 10% 4% 9% 7% 15% 15% 11% 5% 6% 4% Medium Distillated Light Others Medium Distillated Light Others Diesel Gasoline Naphtha Fuel Oil Jet Fuel LPG Special Intermediary • Increase in global demand for medium‐distillated products tends to lead to an increase in price versus the  gasoline price. 39
  • 40. RESOURCE OPTIMIZATION AT PREMIUM REFINERIES  Economies of scale and new implementation Lower refining costs due to design strategies to reduce Capex, including: quality and scale • Design competition based on the lowest final cost Current downstream cost (US$ / bbl in 2010) • Selection of UOP ‐ international company with extensive  refining experience Age (years) • Single design integrating all the refinery on‐site and off‐site • Designer involved from conceptual design to technical  assistance in the start up • Scale economies (RPRE: 300kbpd modules) • Maximum standardization of equipments specification Scale (’000 bpd) 40
  • 41. DECREASING INVESTMENTS IN QUALITY US$16 billion in 2011‐15 Reduction in sulfur level 7.0 US$ 16 billion 5.9 4.9 4.5 Avg. Sulfur Level – Diesel (ppm) -15%p.y. 3.2 2.3 1.1 1.0 1.0 0.1 0.2 5 6 7 8 9 10 11 12 13 14 15 41
  • 42. MARKET IN BRAZILFree market follows international prices in the long term 2002-2011 160 ARP USA US$/bbl 140 ARP Brazil 120 100 80 60 40 20 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 42
  • 43. Natural Gas, Electric Energy  and Fertilizers US$13.2 billion 43
  • 44. INVESTMENTS IN GAS, ENERGY, AND GAS‐CHEMICALS 2011‐2015 2011‐15 Investments US$13.2 billion • Investment  cycle  in  the  expansion  of  the  6% transportation  network  to  be  completed  in  2% 2011; 0,8 0,8 26% 0,3 0,3 • New natural gas delivery spots, negotiation with  3,4 distributors to increase sales and diversification  of contractual arrangements ; 5,9 5,9 2,8 • Consolidated  investment  in  thermal  power  45% generation; 21% • Operating  in  the  LNG  chain  and  serving  the  3,4 thermal power market; Network 3,4 Electric Energy • Increased  portion  of  investments  allocated  to  Gas-chemicals plants International the  conversion  of  natural  gas  into  urea,  (Nitrogenized) ammonia,  methanol,  and  other  fertilizers,  and  2,8 LNG gas‐chemicals.  44
  • 45. 2ND INVESTMENT CYCLE: MONETIZATION OF THE PRE‐SALT RESERVES 1st Investment Cycle 2nd Investment Cycle COMPLETED 2011‐2015 BP 2011‐ 100% LNG LNG Acquisition TPPs Pecém BGUA UFN III (Sep/14) 90% Cubatão UFN V (Sep/15) TPP Bicomb. Conversion Sulfato de Amônio (May/13) Termoaçu 80% ARLA 32 (out/11) 70% UFN IV (Jun/17) % do Investimento Total 60% Gasduc III 50% Gasbel II Regás Bahia Gasene (Jan/14) 40% Pilar-Ipojuca New NG TPPs 30% Cacimbas-Vitória Japeri-Reduc 20% Gastau Catu-Pilar Gascav Gaspal II Gascar UPGN Cabiúnas – 10% Atalaia-Itaporanga Urucu-Manaus Gasan II Route 2 Pre-Salt (Aug/14) Ecomps + Delivery Spots + Network Maintainance 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Adaptation of the Gas Pipelines Network (US$ 3.34 bi) TPP Commitments (US$ 0.94 bi) New TPPs run on Natural Gas (US$ 1.82 bi) Renewable Energy: Wind Power and Biomass (US$ 0.02 bi) LNG regasification (US$ 0.74 bi) Natural Gas Liquefaction (US$ 0.10 bi) Chemical Transformation of NG (US$ 5.85 bi) 45
  • 46. NEW UNITS BENEFITING FROM HIGHER NATURAL GAS PRODUCTION Fertilizer Production Installed Generation Capacity UFN IV (Jun/2017) 4.000 UFN V (Sep/2015)  30 11.000 70 9,475 UFN III (Sep/2014)  2,936 25 9.000 581 60 Million cm/dThous.ton /year 3.000 7,114 Million cm/day 2,271 20 6,518 44 50 7.000 420 13 420 2.000 15 34 40 MW 5.000 30 1,109 6 30 10 1.000 813 813 3.000 3 8.894 5 20 291 6.098 6.694 1.000 10 0 - 2011 2015 2020 -1.000 2011 2015 2020 0 Ammonia Urea Natural Gas Consumption UTE Renewable Natural Gas Consumption • Brazil currently imports 53% of its total ammonia consumption and will be self‐sufficient in 2015; • We currently import 53% of the total urea consumed. This amount will reduce to 28% in 2015, 16% in  2017 and 22%  in 2020. 46
  • 47. NATURAL GAS SUPPLY & DEMAND BALANCE (MILLION M3/D) – SCENARIO APCS 9.400 kcal/m³ SUPPLY DEMANDDomestic NG Supply Thermal Power Plants Demand : Petrobras + Third parties 102 78 9 Northern Region 76 (15.1 GW) 55 9 59 (10.7 GW) To be contracted (5.5 GW 6 93 38 Other Regions (6.7 GW) 69 49 37 40 Flexible 25 13 Inflexible 2011 2015 2020 2011 2015 2020Supply via LNG Regasification Terminals NG Distributors Demand 41 41 14 14 Bahia Non‐thermal power 21 Pecém 14 20 20 Guanabara Bay 2011 2015 2020 2011 2015 2020Bolivian Supply Petrobras’ Demand: Downstream + Fertilizers 61 Fertilizers 39 30 30 30 16 UPGN Flexible 17 24 24 24 25 32 Downstream Firm 2011 2015 2020 2011 2015 2020 Total  Total 106 149 173 96 151 200 Supply Demand 47
  • 48. BiofuelsDistributionInternationalUS$18.2 billion 48
  • 49. INVESTMENTS IN BIOFUELS 2011‐2015 INVESTMENTS  US$ 4.1 billion 7% 14% 0.3 Ethanol 0.6 Ethanol Logistics 1.9 47% Biodiesel 1.3 R&D 32% Ethanol supply (million m³) Biodiesel supply (’000 m³)Market‐share Pbio+Partners: Market Share Pbio+Partners:• 2011: 5.3% • 2011: 28% 5.6• 2015: 12% • 2015: 26% 273% 16%    855 735 1.5 2011 2015 2011 2015 Pbio + Partners Pbio + Partners 49
  • 50. INVESTMENTS IN DISTRIBUTION 2011‐2015 BP US$3.1 billion Mercado Automotivo Gas Station   Mercado Consumidor Wholesales Consumers 21% 42% Operações e Logística Operations & Logistics Liquigás  18% Internacional 6%   International 13% Share in the automotive and global markets 50 40.6 38.6 38.8 38.5 40 30 20 30.6 30.9 31.3 33.7 10 0 2009 2010 2011 2015 Automotive Market (%) Global Market (%) 50
  • 51. INVESTMENTS: INTERNATIONAL AREA Activities in 27 countries in the E&P, RTCP, Distribution, and G&E segments US$11 billion Gulf of Mexico 7% 1% Key Projects: 3% 2% • Cascade / Chinook E&P G&E • Saint‐Malo  RTCP • Tiber Distribution 87% Corporate Africa’s West Coast Latin America Key Projects: Key Projects:  Bolivia • Nigéria San Alberto / San Antonio  Akpo Serving the Brazilian market Agbami Peru Egina Integrated Gas Project – Lots 57 and 58  Oil Production – Lot X • Angola Argentina Block 26 Maintenance of Existing Assets 51
  • 52. Final Considerations 52
  • 53. HUMAN RESOURCES Projeção de Efetivo do Sistema Petrobras Petrobras’ Labor Force Projection 103.030 96.953 92.693 89.201 85.417 28.608 27.985 26.722 25.528 24.347 • BP 2011‐2015 requires additional personnel • 51% of the workforce has been working at the  Company for less than 10 years, while 46% has  68.968 74.422 61.070 63.673 65.971 been at the Company for more than 20 years 2011 2012 2013 2014 2015 Parent Controladora Outras Empresas do Sistema Petrobras Group Other companies in Petrobras 35.000 3000 Company a te 30.000 E stim 2500 Production (thousd. bbl/d) 25.000 55% 2000E&P workforce 20.000 1500 • E&P Segment will lead workforce increase,  15.000 in line with production growth  1000 10.000 5.000 500 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Position in Jan/11 Workforce Efetivo Production Produção 53
  • 54. PETROBRAS’ TECHNOLOGY MANAGEMENT INTEGRATED WITH SUPPLIERS, RESEARCH CENTERS AND OTHER OIL COMPANIES International Research  Centers Other operators Suppliers Brazilian Universities  and Research Centers Expenditures (investments and funding): US$1.3 billion / year • Four R&D centers of Petrobras’ suppliers under construction; • In order to meet local content requirements, several companies will develop technological centers  in the country.  54
  • 55. 55