Refining transportation &_marketing_(rtm)_and_petrochemicals

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Refining transportation &_marketing_(rtm)_and_petrochemicals

  1. 1. Refining, Transportation & Marketing  (RTM), and Petrochemicals 1
  2. 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. 3. RESERVES AND RECOVERABLE VOLUMESRapid growth in reserves from discoveries in deep waters  Proved Reserves  – SPE criteriaMillion boe Pre‐salt: Lula and Cernambi 15,28 Bi boe Whales Park,  Mexilhão  Roncador Marlim Namorado Guaricema Garoupa Carmópolis * * Lula/Cernambi, Iara, Guará and Whales Park, ranging from 8.1 to 9.6 Billion boe 3
  4. 4. MONETIZING THE RESERVESBrazilian market is an attractive and sustainable way to monetize part of Petrobras reserves Growth HIGH GROWTH POTENTIAL Low per capita consumption supports demand growth in developing countries Total Oil Consumption Per capita consumption (Index =100 in 2002) Barrels per year 27,1 130 25,0 1980 2000 125 22,3 2010 120 115 16,0 15,3 14,8 110 12,8 12,4 105 9,9 100 4,5 4,9 95 3,7 1,4 2,5 90 0,6 2002 2003 2004 2005 2006 2007 2008 2009 2010 OECD US Brazil World OEDC Sourc e: BP Statistic al Review 2011 8 Margins and Refining Profile Market Location Distance PRODUCTS Sustainable New refineries will produce higher value‐added oil products Productivity of existing refineries – 2020 Productivity of new refineries – 2020 65% Competitive 43% 38% 36% 21% 21% 50% 19% Advantage 4% 15% 10% 4% 9% 7% 15% 15% 11% • Lead-Times 5% 6% 4% • Tanks Medium Distillated Light Others Medium Distillated Light Others • Inventories • Ships 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  Crude freight gasoline price. Product freight 8 40 Return and Risks Profitability New refining projects have return rate above the cost of capital Return rate (%) 18 Key Assumptions: 16 • Refinery with trains of 300 k bpd 14 • Refining scheme with HCC, Coking and  12 HDT 10 •Refining costs in line with the current  refineries  that has the same scale 8 • Integrated Analysis 6 • Production for the domes tic market 4 • Does not include tax benefits in the  2 operation of the ass et 0 13 14 15 16 17 18 19 20 21 22 23 Margin  Case 1 – Ca pex US$ 3 0.00 0/bpd US$/bbl C ase  2 – Ca pex US$ 4 0.00 0/bpd Expecte d Scenario  C ase  3 ‐ Cape x US$ 50.0 00/bpd 23 4
  5. 5. Growth Potential 5
  6. 6. MIDDLE DISTILLATE DEMAND EVOLUTIONExpectations of strong middle distillate growth TRANSPORT MATRIX (Cargo) GDP AND OIL DEMAND GROWTH IN BRAZIL (%) 12 The Brazilian transportation matrix strongly depends on trucks 10 Historical Demand Russia 81% 8% 11% 8 Historical GDP Canada 46% 43% 11% 6 4 Australia 43% 53% 4% 2 USA 43% 32% 25% 0 China 37% 50% 13% ‐2 ‐4 Brazil 25% 58% 17% 00 01 02 03 04 05 06 07 08 09 10 11* Trains Trucks Maritime and Others Sources: Plano Nacional de Logística e Transportes 2010 (PNLT) JET FUEL MARKET Number of passengers carried ‐ Air Transportation in Brazil  180 GDP and AGRICULTURE GDP IN BRAZIL  10.000 (thousand) 170 +52% 9.000 160 +12%a.a. 150 8.000 140 7.000 130 6.000 120 110 GDP 5.000 100 Agriculture GDP Source: ANAC 4.000 90 1Q00 1Q01 1Q03 1Q05 1Q06 1Q07 1Q09 1Q02 1Q04 1Q08 1Q10 jan 07 jan 08 jan 09 jan 10 jan 11 jan 12* 2011 GDP as of september; Demand growth in 2011 correspond to Petrobras sales growth. 6
  7. 7. MIDDLE DISTILLATE DEMAND EVOLUTIONStrong diesel and jet fuel consumption growth in Brazil have been observed following the economic growth… Diesel Sales (2006 to 2011) +9% +5% +9% 2006 2007 2008 2009 2010 2011 Jet Sales (2006 to 2011) +10% +11% +17% 2006 2007 2008 2009 2010 2011 7
  8. 8. HIGH GROWTH POTENTIALLow per capita consumption supports demand growth in developing countries Total Oil Consumption Per capita consumption (Index =100 in 2002) Barrels per year 27,1130 25,0 1980125 22,3 2000 2010120115 16,0 15,3 14,8110 12,8 12,4105 9,9100 4,5 4,9 95 3,7 1,4 2,5 90 0,6 2002 2003 2004 2005 2006 2007 2008 2009 2010 OECD US Brazil World OEDCSource: BP Statistical Review 2011 8
  9. 9. DOWNSTREAM EXPANSION Reduced 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 1 Net Imports as a percentage of total demand (%) 2006 2007 2008 2009 2010 2011 USA 3 Brazil (2010) 5 France 8 118 Germany 10 148 152 China 11 197 Japan 16 Spain 21 299 Mexico 22 Indonesia 24 389 Brazil (2020) 2 40 3 20 Brazilian net Imports as a percentage of total demand (%) 10 0 1990 -10 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 -20Notes: 1. Source: IEA – 2010 World Energy Statistics 2. Without considering Capacity Expansion 3. Source: EPE, considers LPG, Naphta, Gasoline, Diesel, Jet and Fuel Oil. 9
  10. 10. REGIONAL GROWTHIn the last decade the growth has been higher in the North, Northeast and Mid‐west regions of Brazil… Demand 2001-2010 Demand 2010-2015 763 3,1% 4,9% 968 763 579 1,4% 1.384 3,9% 1.675 1.384 1.224 10
  11. 11. REGIONAL GROWTH… increasing the need for new capacities in these 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. 11
  12. 12. INTEGRATION AND BALANCEConstruction of new refineries intended to meet Brazilian demandThous bpd PREMIUM I (2nd phase) 4,910 300,000 bpd (2019) COMPERJ (2nd phase) 165,000 bpd 3,327 3,070 3,217 (2018) 2,643 3,095 COMPERJ PREMIUM II 2,147 (1st phase) 2,2052,536 2,004 300,000 bpd 1,814 1,798 165,000 bpd 1,641 (2017) (2014) 1,393 1,323 1,036 Abreu e Lima PREMIUM I Refinery (RNE) (1st phase) 230,000 bpd 300,000 bpd 181 (2013) (2016) ... ... ... ... • No new refineries built since 1980 12
  13. 13. LOGISTICS Distance from the Brazilian coast to refining centers is at least 5.000 miles, or 16 to 33  days of travel 1 Freight cost ($/bbl) 2,8 4,9 5,4 2,8 7,7 4,1 Processing in Brazil implies: • Lower Lead-Times • Reduced Tankage needs • Lower Inventories Crude • Reduced need for shipsPetrobras estimates in october/20111 Products 13
  14. 14. Refining Profile, Margins and Return 14
  15. 15. REFINING MARGINSMargins can have large amplitude according to the type of processed oil and product yields $/bbl (US$ of 2010) PBR Downstream Margin USG LLS Cracking NWE Brent Topping USG Maya Coking 30 NWE Brent Cracking 25 20 19 -8 15 11 10 +6 6 5 0 USG LLS PBR USG Cracking Downstream Maya -5 Margin Coking 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: Margens internacionais - PIRA 15
  16. 16. PETROBRAS X MAYA COKINGComparison shows that crude cost and yields explain the deviation of our margins to Maya Coking Petrobras vs. Maya Coking (average 2002-2010) 19 US$/bbl 2010  3 5 11 Maya Coking Raw material  Yield effect Petrobras Margin Margin cost effect 16
  17. 17. CONVERSIONNew refineries will have higher conversion than existing ones with lower crude cost 1 Convertion Capacity/ Destilation Capacity Average Cost of Oil (2020) 70 Coker 68% (US$/bbl) 65% 64% FCC 60 HCC -5,8 50 31% 26% 40 37% -2,3 30 10% 65% 20 36% 38% 27% 10 0 Existing RNE COMPERJ PREMIUM Brent Existent PREMIUM Refineries Refineries (2010)1 Considering a Brent of 75 $/bbl 17
  18. 18. PRODUCTSNew refineries will produce higher value‐added oil products Productivity of existing refineries – 2020 Productivity of new refineries – 2020 65% 43% 50% 36% 38% 21% 21% 19% 4% 15% 10% 4% 9% 7% 15% 15% 11% 5% 6% 4% Medium Distillated Light Others Medium Distillated Light Others Diesel Gasoline Naphtha Fuel Oil Jet Fuel LPG Special Intermediary • Increase in global demand for medium‐distillated products tends to lead to an increase in price versus the  gasoline price. 18
  19. 19. DISTILLATE PRICESIn recent years, we were close to import parity Distillates had a prize in the last years of 8 US$/bbl in relation to the U.S. Gulf prices, close to freight + internalization costs US$/bbl (actual value) 6,0 8,2 91,8 91,7 97,7 Average 2002-2011 91,0 89,5 85,7 USGC US PBR USGC US PBR Diesel Jet Fuel … and these are the products that the new refineries will focus 19
  20. 20. RESOURCE OPTIMIZATION AT PREMIUM REFINERIES  Lower refining costs due to design Economies of scale and new implementation quality and scale strategies to reduce Capex, including: Current downstream cost • Design competition based on the lowest final cost (US$ / bbl in 2011) Age (years) • Selection of UOP ‐ international company with extensive  70 refining experience 60 • Single design integrating all the refinery on‐site and off‐site 6,8 • Designer involved from conceptual design to technical  50 assistance in the start up 5,6 40 • Scale economies (RPRE: 300kbpd modules) 2,8 30 • Maximum standardization of equipments specification 20 • Scheduling the construction stage allowing long‐term planning  for equipment suppliers 0 100 200 300 400 Scale (’000 bpd) • Reuse of the executive project allowing the incorporation of  lessons learned 20
  21. 21. PREMIUM REFINERIES PROJECTIn line with industry standards and more optimized than RNEST Benchmark results using a process plants database Benchmark results comparing with RNEST project Distillation Tower Scope RNEST RPRE Metric: Atmosferic Column Weight (MT/Kbpd) Optimized 230 kbpd 300 kbpd REPRE result: 19% lower than average 1 reactor Middle Distillate 6 reactors 1 fired heater Metric: Vacum Column Weight (MT/Kbpd) Hydrotreatment 2 fired heaters REPRE result: 28% lower than average 6 coke drums 4 coke drums Coker Coker Unit 3 furnaces 2 furnaces Metric: Coke Drum Weight kgs/Kbpd Crude and 9.280 k bbl 9.140 k bbl REPRE result: 5% lower than average Products Tanks (40,4 bbl/ bpd) (30,5 bbl/ bpd) Metric: Coke Furnace MM BTU HR/Kbpd 83 bridges (20 of Pipelines 96m and 63 of Pipe-rack REPRE result: 18% lower than average 18m on average) Metric: Wet Gas Compressor Motor HP/Kbpd Electric System Underground Cable-rack REPRE result: 28% lower than average Interconnection structure (above grade) Diesel Hidrotreater Metric: Reactor Weight (Kg) REPRE result: 38% lower than average More detailed analysis will be possible with the conclusion of the Basic Design (in the coming weeks) and conclusion of the FEED - Front End Engineering Detail (in the 1st Half of 2012) 21
  22. 22. PROFITABILITY New refining projects have return rate above the cost of capitalReturn rate (%) 18 Key Assumptions: 16 • Refinery with trains of 300 k bpd 14 • Refining scheme with HCC, Coking and  12 HDT 10 •Refining costs in line with the current  refineries  that has the same scale 8 • Integrated Analysis 6 • Production for the domestic market 4 • Does not include tax benefits in the  2 operation of the asset 0 13 14 15 16 17 18 19 20 21 22 23 Margin  Case 1 – Capex US$ 30.000/bpd US$/bbl Case 2 – Capex US$ 40.000/bpd Expected Scenario  Case 3 ‐ Capex US$ 50.000/bpd 22
  23. 23. NEW REFINERIESRNEST and Comperj are under construction and Premium I is doing the underground work  RNEST REPRE II REPRE COMPERJ 23
  24. 24. HISTORY OF PRODUCT MIX ADJUSTMENTS These new refineries will allow Petrobras keep its’ history of adjusting its’ products  mix to the market needs Demand profile changes over time Refining Naphta X Gasoline yields over time 3% 3% 8% 14% 32% 29% 20% 19% 71-75 76-80 81-85 86-90 91-95 96-00 01-05 06-10 23% Refining Diesel X Fuel Oil yields over time 44% 30% 14% 29% 7% 71-75 76-80 81-85 86-90 91-95 96-00 01-05 06-10 40% 5 years periods LPG Gasoline Diesel* 28% Naphta Jet Fuel Oil *does not include biodiesel 71-75 76-80 81-85 86-90 91-95 96-00 01-05 06-10Source: EPE and MME 24
  25. 25. CONTINUED FOCUS ON MIDDLE DISTILLATES PRODUCTION In spite of the recent moves in the otto cycle market in Brazil d Tren ved 1 Domestic Ethanol Production (MM m3) Pe rcie Actual F igures Hydrated -6% Anidrous +13% 28 27 26 26 23 23 Lower production: 18 18 15 16 19 17 • Climate conditions 15 14 19 14 9 • Low investments 8 6 7 • High sugar prices 9 8 8 8 8 9 8 9 9 7 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12* 12/13* R$/l 3.0 Ethanol Consumer Price 2.5 2.0 Leading to: • Higher ethanol prices 1.5 • Higher gasoline demand 1.0 Minimum ethanol price (parity to sugar) in the short term 0.5 Maximum ethanol price (parity to gasoline) • Gasoline imports 0.0 04 05 06 07 08 09 10 11Source: Datagro and Única. Petrobras estimates. 1 25
  26. 26. INTERNATIONAL CONTEXT FOR GASOLINE DEMANDIncrease in gasoline surplus will make the product available at low prices  Demand Economic growth Ambitious goals to Gasoline demand growth in improve fuel efficiency in non-OECD and decrease in OECD Weak Refined passenger cars Gasoline Demand Growth Penetration of alternative Dieselization and forms of supply (NGL, alternative fuels (electric biofuels, CTL, GTL...) vehicles, natural gas, …) Supply Distillate demand will push Capacity additions in Asia Refined crude runs leading to and Middle East to meet Gasoline byproduct gasoline supply regional demand Oversupply Leading to gasoline surplus, especially in the Atlantic Basin, driving weak gasoline crack spreads. 26
  27. 27. GASOLINE PRODUCTIONPetrobras position in this segment will be driven towards seeking higher refining flexibility in the existing assets 60.000 Light Vehicles Fleet Evolution1 In the long run, higher 50.000 volatility in gasoline Diesel Hidratado consumption is expected, 40.000 Flex-fuel Gasolina C requiring flexible refining 30.000 operations 20.000 10.000 Recent Flexibility Results (kbpd) GASOLINE SALES GASOLINE PRODUCTION 0 90 95 00 05 10 15 20 +25% +12% 442 395 We will keep focusing our investments in Diesel and Jet, while seeking flexibilities in 355 351 the current assets for gasoline, like: • Shifts in cut points • FCC operation optimization • Different catalysts ... 2010 2011 2010 20111 Natural gas Veihcles are cosidered in gasoline and flex-fuel fleet 27
  28. 28. Business Integration 28
  29. 29. BUSINESS INTEGRATIONPetrobras will increase the importance in the industry through growing the oil production and expanding the Downstream Oil Production 6 2020 5 4 3 2010 2 1 1980 0 0 1 2 3 4 5 6 Refining CapacityNote: For other companies, capacity in 2010. 29
  30. 30. SUPPORTTING UPSTREAM OPERATIONSThis integrated performance can be verified in Capex of "downstream" dedicated to support upstream operations Capex for Fleet Expansion Capex for Logistics for  Oil US$ 4,4 billion US$ 3,5 billion Pre‐Salt Plangás Projects Others 21% 30% 51% 70% 28% Supply Oil 30
  31. 31. Final Remarks 31
  32. 32. DOWNSTREAM INVESTMENTSNew 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$3.8 billion International 32
  33. 33. DIESEL S‐50New treating units will fulfill growing quality requirements in Brazil Road Diesel Evolution 2012 2013 Refineries Producing Diesel S-50 Comercialization Sites of Diesel S-50Refineries Producing Diesel S-50 Comercialization Sites of Diesel S-50 Petrobras Stations with Diesel S-50Since December 2011 Since March 2012 Available in more than 900 stations in Brazil 33
  34. 34. QUALITY INVESTMENTSNew units in existing refineries are being built Gasoline Quality Diesel Quality: 2015 and 2011 2012 2013 2014 2015 2011 2012 2013 2014 beyond 1000 Tranasition 50 ppm Diesel S-1800 ppm Diesel S-500 REDUC RECAP REPLAN Gasoline Diesel and Gasoline Gasoline Diesel S-50 REFAP Gasoline REPAR Gasoline Diesel S-10 REVAP Gasoline RECAP REGAP REFAP REDUC REPAR Diesel and Diesel Diesel Diesel REGAP Diesel Gasoline Gasoline RLAM REPLAN RPBC RPBC Diesel Diesel Diesel Gasoline REGAP RLAM Revamp Gasoline HDT … reassuring Petrobras’ commitment with sustainability and  sulfur emission reduction over time.Legend: Construction concluded Business Plan 11-15 schedule 34
  35. 35. QUALITY INVESTMENTS Several units were concluded in 2011 and more units will be available in 2012 Quality investments (Business Plan 11-15) 7,0 US$ 16 Bi 5,9 4,9 4,5 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 RLAM REGAP2011 2012 REDUC REPLAN HDS Gasoline HDT Nafta Ck REPAR RECAP REVAP HDT Diesel Reform RPBC 35
  36. 36. FINAL REMARKSAdding value in Refining, Transportation and Marketing (RTC) and Petrochemicals Preserving our unique position in the Brazilian market as the best way to monetize  our crude reserves Shifting the refining system towards middle distillates production while increasing  fuel quality standards Reducing import levels through refining capacity expansion and domestic crude  processing maximization Optimizing capital allocation through new refining modules concept and  implementation strategy Creating efficient and reliable infrastructure to get the best value of crude oil  export operations Mitigate risks and use the flexibilities in  the existing refining  facilities to optimize  the product portfolio 36
  37. 37. Information: Investor Relations +55 21 3224-1510petroinvest@petrobras.com.br www.petrobras.com.br/ir 37 37

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