2. DISCLAIMER
This presentation may contain forward-looking Cautionary statement for U.S. investors:
statements. Such statements reflect only the
expectations of the Company's 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 Company's 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
4. MONETIZING THE RESERVES
Brazilian 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
6. MIDDLE DISTILLATE DEMAND EVOLUTION
Expectations 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
8. 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
125 22,3 2000
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
Source: BP Statistical Review 2011
8
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
-20
Notes: 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. REGIONAL GROWTH
In 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. 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. INTEGRATION AND BALANCE
Construction of new refineries intended to meet Brazilian demand
Thous 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. 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 ($/bbl)
2,8
4,9 5,4
2,8
7,7
4,1
Processing in Brazil implies:
• Lower Lead-Times
• Reduced Tankage needs
• Lower Inventories
Crude • Reduced need for ships
Petrobras estimates in october/2011
1 Products 13
17. CONVERSION
New refineries will have higher conversion than existing ones with lower crude cost
1
Convertion Capacity/ Destilation Capacity Average Cost of Oil (2020)
70 Coker 68% (US$/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 $/bbl
17
18. PRODUCTS
New refineries will produce higher value‐added oil products
Productivity of existing refineries – 2020 Productivity of new refineries – 2020
65%
43%
50%
36%
38% 21% 21% 19%
4% 15%
10% 4%
9%
7% 15% 15% 11%
5% 6% 4%
Medium Distillated Light Others Medium Distillated Light Others
Diesel Gasoline Naphtha Fuel Oil
Jet Fuel LPG Special Intermediary
• Increase in global demand for medium‐distillated products tends to lead to an increase in price versus the
gasoline price.
18
19. DISTILLATE PRICES
In recent years, we were close to import parity
Distillates had a prize in the last years of 8 US$/bbl in relation to the U.S. Gulf prices,
close to freight + internalization costs
US$/bbl (actual value)
6,0 8,2
91,8 91,7 97,7
Average 2002-2011
91,0
89,5
85,7
USGC US PBR USGC US PBR
Diesel Jet Fuel
… and these are the products that the new refineries will
focus
19
20. RESOURCE OPTIMIZATION AT PREMIUM REFINERIES
Lower refining costs due to design Economies of scale and new implementation
quality and scale strategies to reduce Capex, including:
Current downstream cost • Design competition based on the lowest final cost
(US$ / 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. PREMIUM REFINERIES PROJECT
In 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. 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 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
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 06-10
Source: EPE and MME 24
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 11
Source: Datagro and Única. Petrobras estimates.
1 25
26. INTERNATIONAL CONTEXT FOR GASOLINE DEMAND
Increase 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. GASOLINE PRODUCTION
Petrobras 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 2011
1 Natural gas Veihcles are cosidered in gasoline and flex-fuel fleet 27
32. DOWNSTREAM INVESTMENTS
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$3.8 billion
International
32
33. DIESEL S‐50
New treating units will fulfill growing quality requirements in Brazil
Road Diesel
Evolution
2012 2013
Refineries Producing Diesel S-50
Comercialization Sites of Diesel S-50
Refineries Producing Diesel S-50 Comercialization Sites of Diesel S-50 Petrobras Stations with Diesel S-50
Since December 2011 Since March 2012
Available in more than 900 stations in
Brazil
33
34. QUALITY INVESTMENTS
New units in existing refineries are being built
Gasoline Quality Diesel Quality:
2015 and
2011 2012 2013 2014 2015 2011 2012 2013 2014
beyond
1000
Tranasition 50 ppm Diesel S-1800
ppm
Diesel S-500
REDUC RECAP REPLAN
Gasoline Diesel and Gasoline
Gasoline Diesel S-50
REFAP
Gasoline REPAR
Gasoline Diesel S-10
REVAP
Gasoline
RECAP REGAP REFAP REDUC
REPAR
Diesel and Diesel Diesel Diesel
REGAP Diesel
Gasoline
Gasoline
RLAM REPLAN RPBC
RPBC Diesel Diesel Diesel
Gasoline
REGAP
RLAM Revamp
Gasoline HDT
… reassuring Petrobras’ commitment with sustainability and
sulfur emission reduction over time.
Legend:
Construction concluded
Business Plan 11-15 schedule 34
35. QUALITY INVESTMENTS
Several units were concluded in 2011 and more units will be available in 2012
Quality investments (Business Plan 11-15)
7,0
US$ 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
REGAP
2011 2012
REDUC REPLAN
HDS Gasoline
HDT Nafta Ck REPAR
RECAP REVAP
HDT Diesel
Reform
RPBC
35
36. FINAL REMARKS
Adding 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
