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Overview

  1. 1. overview2010CONTENTSMESSAGE FROM THE CEO 02kEy indiCATORS 04CORPORATE GOVERnAnCE 06FinAnCE 08RESEARCH & dEVElOPMEnT 10ExPlORATiOn And PROduCTiOn 12REFininG And MARkETinG 16nATuRAl GAS 18TRAnSPORTATiOn And diSTRibuTiOn 20PETROCHEMiCAlS And FERTilizERS 22biOFuElS 24ElECTRiCiTy 25inTERnATiOnAl 26SOCiAl And EnViROnMEnTAl RESPOnSibiliTy 28
  2. 2. MESSAGE FroM THe Ceo Three major achievements marked 2010 for Net profit reached US$ 19,18 million, 17% higher improving and expanding refining facilities, ordering new companies, by market value. For the fifth consecutive year, Petrobras: the start-up of the Lula field Pilot System, in the than in 2009, reflecting the increased production of oil and vessels for the transportation of the company’s products, it has been included in the Dow Jones Sustainability Index, Santos Basin; raising US$ 69,9 million in the world’s lar- natural gas, increased sales of oil products in the Brazilian and completion of work on the pipeline network that con- the world’s most important index on the theme of sus- gest ever equity issuance; and the signing of the Transfer market and the recovery of international oil prices. The to- nects the Brazilian market. tainable development, reflecting its commitment towards of Rights Agreement contract, guaranteeing the company tal volume of oil and natural gas produced in 2010 was This performance is the result of significant invest- society. Furthermore, all initiatives are guided by the on- the right to produce 5 billion barrels of oil equivalent (boe) 2.58 million boe per day. The company’s proven reserves ments in technological development and employee trai- going commitment to adopting best corporate governan- in pre-salt areas that are not under concession. of oil and natural gas, according to the ANP/SPE criteria, ning. Petrobras is the Brazilian company with US$ 993 ce practices. In 2010, Petrobras once again demonstrated The company has a strong portfolio in the pre-salt reached 15,99 billion boe – a 7.5% increase compared to million in this area and one highlight was the doubling in its ability to overcome the challenges. layer of the Santos Basin, the most promising region along 2009. The reserve replacement ratio was 229%. size of its Research Center (Cenpes), which is one of the the Brazilian coast. The capitalization operation provided The 2010 results confirm that Petrobras’ strategy is largests in the world. resources for the Transfer of Rights Agreement and the fi- the right one. A total of US$ 45,08 million was invested – With activities on all the inhabited continents and nancing of the Business Plan 2010-2014, which provides 8% more than in 2009. These investments were primarily operations in 28 countries, in addition to Brazil, the com- José Sergio Gabrielli de Azevedo for investments of US$ 224 billion. aimed at increasing the production of oil and natural gas, pany closed the year ranked third amongst global energy Petrobras CEO2 MESSAGE FROM THE CEO OVERViEw 2010 3
  3. 3. KeY oPerATioNAL SUMMArY 2009 2010 INDICATORS PROVEN RESERVES - SPE Criteria (boe) (1)(2) - Brazil and abroad 14.9 16.0 Oil and condensate (billion barrels) 12.6 13.4 Natural gas (billion boe) 2.3 2.6 AVERAGE DAILY PRODUCTION (thousand boe) (1) - Brazil and abroad 2,526 2,583 Oil and natural gas liquids - NGL (thousands bpd) 2,113 2,155 Natural gas (thousands boed) 413 428 PRODUCING WELLS (oil and natural gas) – on December 31st (1) 14,905 15,087 DRILLING RIGS – on December 31st 100 98 CONSOLIDATED NET INCOME CONSOLIDATED EARNINGS/SHARE (US$ million) (US$ / share) PRODUCING PLATFORMS – on December 31 st 133 132 19,184 PIPELINES (km) – on December 31st 25,966 29,398 18,879 15,504 2.21 1.94 SHIPPING FLEET – on December 31 st 172 291 12,826 1.77 – company operated 52 52 1.36 – third-party operated 120 239 13,138 1.26 TERMINALS – on December 31st (3) 47 48 REFINERIES – on December 31st (1)(4) Quantity 15 16 Nominal installed capacity (thousand bpd) 2,223 2,288 Average daily production of oil products (thousand bpd) 2,034 2,052 Brazil 1,823 1,832 Abroad 211 220 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 IMPORTS (thousand bpd) - Financial Market Report 549 615 Oil 397 316 Oil products 152 299 EXPORTS (thousand bpd) - Financial Market Report 705 697 PETROBRAS INDEBTEDNESS Oil 478 497 MARKET CAPITALIZATION vs SHAREHOLDERS’ EQUITY Oil products 227 200 31% (US$ billion) 28% 26% OIL PRODUCT SALES (thousand bpd) - in Brazil 1,754 1,960 23% 21% SALES ABROAD (thousand bpd) - Oil, gas and oil products 541 593 19% 430 17% 347 380 16% 15% ELECTRICITY (1) Installed Capacity (MW) (5) (6) 6,136 5,944 13% 230 224 307 FERTILIZERS (1) Production Units 2 2 144 164 98 114 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 (1) Includes data from abroad, proportional to the Petrobras stake in each affiliate (2) Proven reserves calculated according to SPE (Society of Petroleum Engineers) criteria Short-Term Debt / Total Debt (3) Includes only Transpetro terminals Market Cap Shareholders’ Equity (4) Excludes flaring, upstream consumption, liquefaction and reinjection Net Debt / Net Capital (5) Includes only assets in which the company has a minimum 50% stake (6) Includes only gas-powered thermoelectric plants4 k E y i n d i C AT O R S OVERViEw 2010 5
  4. 4. CORPORATE GoverNANCe The company’s corporate strategy encompasses the NYSE, in the US; of the Latibex (Madrid Stock Exchange), The Board of Directors established a two-year term regulated by the SEC) requires that the direc- expansion of all its businesses and is based on sustain- in Spain; and of the Buenos Aires Stock Exchange and for the Petrobras General Ombudsman, which can be re- tors of companies whose shares are traded at the ability factors such as integrated development, profitabil- Comisión Nacional de Valores (CNV), in Argentina. newed once, for an equal period. This practice has been BM&FBovespa vouch for the effectiveness of the ity and social and environmental responsibility. To achieve The company practices international standards included in the Corporate Governance Guidelines. company’s internal controls at the end of each year. its growth objectives, the investment program under the of transparency with regard to its various stakeholders: The annual certification process is structured in Business Plan 2010-2014 has been allocated a total of shareholders, investors, customers, suppliers, employees inTERnAl COnTROlS three stages: assessment of the controls at the entity US$ 224 billion. and society. The corporate governance structure comprises Petrobras, Petrobras International Finance level to evaluate the corporate governance environ- the Board of Directors and its advisory committees, the Ex- Company (PifCo) and Petrobras Argentina completed ment; self-assessment by those who oversee the de- TRAnSPAREnCy ecutive Board, the Fiscal Council, the Internal Audit Com- their Certification of Internal Controls for the finan- signing of the business processes and internal controls; Petrobras adopts modern corporate governance mittee, the General Ombudsman’s Office, the Business cial year of 2009, in compliance with the Sarbanes- and testing of the abovementioned controls by the in- practices and the most advanced management tools. As a Committee and the Integration Committees. Oxley (SOX) Act and CVM Instruction No. 480/09. ternal audit committee. Auditing of the accounts was public company in Brazil, it is subject to the regulations of In 2010, the Basic Organization Plan, approved by the The consolidated financial statements were certified carried out by KPMG Auditores Independentes. the Brazilian Securities Commission (CVM) and the BM&F Board of Directors, was refined to include the Corporate Gover- without any restrictions. Bovespa. Abroad, it complies with the requirements of nance Model, as well as its structure of Business and Integration In December 2009, the CVM issued Instruction the Securities and Exchange Commission (SEC) and the committees and the Board of Directors’ advisory committees. No. 480, which, like SOX (applicable to companies6 C O R P O R AT E G O V E R n A n C E OVERViEw 2010 7
  5. 5. and Net Debt / EBITDA at a maximum of 2.5 times. Upon closing 2010 with leverage at 17%, Petrobras may, in co- ming years, raise additional resources in the market to en- sure suitable financing for its projects. FinAnCinG Petrobras has maintained a high degree of liquidity to implement its investment plan. Recognition of the qua- lity of the company’s credit by banks, credit agencies and investors was reflected in costs and favorable terms for fi- nancing its activities. In the banking market, transactions abroad amounting to US$ 9 billion and in Brazil totaling US$ 2,500 million were carried out. To support the business, FINANCE bank guarantees of US$ 8,8 million were secured in the do- mestic and international markets. CAPiTAlizATiOn RiSk MAnAGEMEnT In 2010, Petrobras carried out the largest equity The company’s directors are responsible for risk ma- issuance in world history, which resulted in the offering nagement, acting through the Financial Integration Com- of 2,369,106,798 common shares and 1,901,313,392 mittee, in line with the Business Plan 2010-2014. Factors STOCk PERFORMAnCE preferred shares, making a total of US$ 69,9 million, of such as variations in the price of oil and its by-products and Petrobras’ market capitalization ended the year declaration of commercial viability for the Lula and Cer- which US$ 27,1 million was for cash and US$ 42,5 million in interest rates, currency fluctuations and other risks can 18.6% above the amount recorded at the end of 2009, re- nambi areas), the company’s share prices ended the year went in payment of the agreement to transfer the right to affect the company’s results and require constant monito- aching US$ 236,5 million as a result of the global public at levels below those of twelve months previously. At the produce up to 5 billion boe in pre-salt areas that are not ring in order to balance the degree of risk tolerance against offering of shares. With this operation, the number of sha- BM&FBovespa, the common shares (PETR3) were down by under concession. the growth targets and profitability expectations. reholders registered at the BM&FBovespa on December 31, 26.65% and the preferred shares (PETR4) by 25.62%. At In Brazil, the price was US$ 17,2 for a common share 2010 reached 396,975 – 26.48% more than at the end of the New York Stock Exchange (NYSE), where the company’s and US$ 15,3 for a preferred share. In the USA, the prices MARkET RiSkS 2009. Considering the number of shareholders linked to so-called ADRs – PBR for common shares and PBRA for pre- were US$ 34,49 and US$ 30,59 for the common and pre- The company limits transactions involving derivati- Petrobras through investment funds and Workers’ Severan- ferred shares – fell by 20.63% and 19.38%, respectively. ferred ADRs, respectively. Around 145,000 investors parti- ves to specific short-term transactions. Derivative transac- ce Indemnity Fund (FGTS) resources, as well as ADR holders Petrobras paid gross dividends related to fiscal year cipated in the operation and the federal government also tions (futures, swaps and options) are carried out solely to (about 180,000), the company’s total number of investors 2010 of US$ 0,69 per common or preferred share, totaling increased its stake in Petrobras. protect the results of cargo transactions in the international came to around one million. US$ 6,78 million. The company also made advance payment This deal also contributed to maintaining the markets. In such hedging transactions, positive or negative Despite the good operational results and confirma- of interest on capital (IOC), of US$ 0,61 per common or pre- company’s leverage ratios in line with the targets outlined fluctuations are offset, in whole or in part, by opposite re- tion of the enormous potential of the pre-salt region (with ferred share, for a total of US$ 5,857 million. by the management: Net Debt / Net Equity at 25% to 35% sults in the cargo transactions.8 FinAnCE OVERViEw 2010 9
  6. 6. RESEARCh & DeveLoPMeNT Petrobras is the company that makes the great- whom have postgraduate qualifications. The compa- est investment in science and technology in Brazil. In ny’s R&D strategy is focused on three areas: business 2010, US$ 993 million was allocated to Research & expansion; product enhancement and diversification; Development (R&D) – a 30% increase over 2009. Of and sustainability. this total, US$ 276 million went into projects at univer- • Discovery of a microfossil that has helped sities and research institutes for staff training, project towards the more accurate placement of development, and the building of infrastructure. reservoirs at different depths in the pre-salt • Application of a new method of anchoring • Signing of technological cooperation agree- The company’s partnership with suppliers has layer of the Santos, Campos and Espírito that meets the specific requirements of the ments with companies in Denmark, the USA been intensified, especially in projects related to Santo basins; pre-salt layer; and the Netherlands for the development of the pre-salt layer. Important representatives of this • Completion of laboratory testing of CO2 • Development of equipment for emergency biofuels. oil & gas industry segment are being encouraged by injection as an oil recovery fluid; repair during the operation of pipelines that Petrobras to establish research centers in Brazil. • Completion of preliminary testing of tech- are transporting liquids, without disrupting In 2010, the doubling in size of the Leopoldo nology that will maximize the drainage of the flow; Américo Miguez de Mello Research & Development reservoirs and minimize the number of wells • New formula for Podium diesel, with reduction Center (Cenpes) was completed. It is now the largest in the pre-salt layer; of the sulfur content from 200 to 50 parts per research complex in the southern hemisphere, with • Completion of the basic design for a floating million (ppm) and inclusion of 5% biodiesel; laboratories to meet all Petrobras’ technological de- liquefied natural gas unit to maximize utili- • Development of a catalyst for use in the mands, especially those dedicated to the pre-salt layer. zation of natural gas from the pre-salt layer production of high-density polyethylene – a Cenpes has approximately 1,800 employees, 41% of of the Santos Basin; material offering high mechanical performance;10 R E S E A R C H & d E V E lO P M E n T OVERViEw 2010 11
  7. 7. SAnTOS bASin In well 6-MLL-70-RJS (Tracajá), drilled near Mar- Light oil was discovered at a depth of 2,200 m in lim Leste, the presence of pre-salt hydrocarbon reservoirs well 1-SPS-76 (Marujá Prospect), drilled in block S-M-1352. was detected at a depth of 4,442 m, in a water depth of The well is located approximately 215 km offshore in water 1,366 m, 124 km off the coast. ExPlORATION AND that is 400 m deep and about 15 km from the Tiro and Sidon accumulations. SOliMõES bASin ProDUCTioN A high-quality oil (30° API) accumulation was found with the drilling of well 2-ANP-1-RJS, in Franco Prospect, 195 km offshore in a water depth of 1,889 m. Prelimina- Petrobras has made an important discovery of supe- rior quality oil (46º API) and associated gas in the Solimões Basin, with the drilling of well 1-ICB-1-AM (Igarapé Chiba- ry estimates indicate a recoverable volume of about three ta1), which reached a depth of 3,485 m. The discovery is billion barrels of oil. Franco is one of the areas under the located in the oil province of Urucu. The extended well test Transfer of Rights Agreement. (EWT) initiated in September 2010 indicates a daily produc- In 2010, according to the Tupi Evaluation Plan, en- tion capacity of 2,500 barrels of oil. SERGiPE bASin compassing the areas of Tupi and Iracema, five exploration In 2010, Petrobras consolidated its successful ex- A new oil province was identified in ultra-deepwater wells and one gas injection well were drilled and the drilling TRAnSFER OF RiGHTS AGREEMEnT ploratory activities in the pre-salt and post-salt layers of of the Sergipe Basin with the drilling of well 1-SES-158, of another three wells was initiated (one of which the pilot On June 30, 2010, the government sanctioned Law Brazilian basins in the south and southeast regions. It also named Barra Prospect, at a depth of around 4,700 production system). At year-end, the commercial viability of 12276, which authorizes the Transfer of Rights Agreement , opened up a new oil frontier off the coast of Sergipe, streng- m. With this well, the presence of gas and condensa- two accumulations in these areas, named the Lula and Cer- by the federal government to Petrobras, of activities invol- thening the foundation for oil production in Brazil to conti- te was confirmed some 60 km offshore in water that is nambi fields, was announced. ving the exploration and production of oil, natural gas and nue its sustainable growth over the coming decades. 2,341 m deep. other hydrocarbon fluids in pre-salt areas not yet put out to CAMPOS bASin tender, up to a maximum of 5 billion boe. In the Marlin concession area, Petrobras ascertained the presence of a deep deposit in the pre-salt reservoirs, con- PROduCTiOn taining high-quality oil (29º API). The discovery was the result In March 2010, Petrobras initiated the EWT of the of the drilling of Brava Prospect, in well 6-MRL-199D-RJS. Tiro and Sidon areas, using the SS-11 Atlantic Zephyr pla- At a water depth of 648 m, the accumulation is 4,460 m tform, with a production capacity of 20,000 barrels of oil below sea level. Preliminary estimates show a recoverable and 475,720 m3 of gas per day. The deposits are located in volume of around 380 million boe. block BM-S-40, south of the Santos Basin, about 210 km The company has discovered two accumulations of off the coast. high-quality oil (29º API) in the Caratinga field, in post- and In May, production began on FPSO Capixaba, in the pre-salt reservoirs, following the drilling of well 6-CRT-43-RJS, Cachalote field. Two months later, this FPSO (which has the known as Carimbé Prospect, located 106 km offshore in capacity to process 100,000 barrels of oil and 3.2 million water that is 1,027 m deep. In one accumulation, the re- m³/day of gas) was connected to a well in the pre-salt layer coverable volume is estimated at 105 million barrels. In of the Baleia Franca field. Both these fields are located in the other, the potential recoverable volume is estimated at Parque das Baleias, off the southern coast of Espírito Santo, 360 million boe. in the Campos Basin.12 2 E x P l O R AT i O n A n d P R O d u C T i O n OVERViEw 2010 13
  8. 8. nATuRAl GAS PROduCTiOn volumes of 6.5 billion boe and 1.8 billion boe, respec- Operations on four new platforms were also initi- Production in 2010 totaled 56.6 million m3/day – an tively. With the commencement of commercial produc- ated. The first was the FPSO Cidade de Santos, operating in increase of three million m3/day compared to the previous tion and the channeling of gas, peak production should the Uruguá and Tambaú fields, which is anchored 160 km year – as a result of the increased demand. Supplies in Brazil occur in 2012, with oil flow close to 100,000 bpd Also in offshore in water depht of 1,300 m and has the capacity to increased in relation to 2009 due to the operations of new December, the EWT of the BM-S-9 (Guará) was initiated. produce 10 million m³ of gas and 35,000 barrels of oil per projects under the Anticipated Gas Production Plan (Plangas), day. Next, platform vessel Cidade de Angra dos Reis was put in the Canapu and Camarupim fields of Espírito Santo. PROVEn RESERVES into operation, as the first unit to produce on a commercial There was also the start up of operations in the Sul Petrobras’ proven reserves of oil, condensate and scale in the pre-salt layer of the Santos Basin, in the Lula Capixaba Gas Treatment Unit, based on the production natural gas in Brazil amounted to 15.28 billion boe in 2010, field. It has the capacity to produce 100,000 barrels of oil from Parque das Baleias, and the adaptation of the process- according to the ANP/SPE criteria, representing an increase and 5 million m³/day of gas and is anchored about 300 km ing unit at the RPBC refinery to take gas from the Lagosta of 8% over the previous year. The company appropriated offshore in water that is approximately 2,100 m deep. field, in the Santos Basin. Following up the Plangas projects, reserves of 1,911 million boe and produced 797 million boe, Then, in the Campos Basin’s Jubarte field, it was the the Mexilhão field will come into production as of 2011 and adding 1,114 million boe to its proven reserves. turn of the P-57 platform, located 80 km off the coast of the flow from the Uruguá and Tambaú fields will be initi- As a result, the Reserve Replacement Ratio (RRR) Espírito Santo. It is anchored in 1,260 m of water and has ated. During this period, production from the Lula field will came to 240%, which means that, for every barrel of oil the capacity to process 180,000 barrels of oil and 2 mil- also begin to flow. equivalent produced during the year, 1.4 barrels of oil lion m³/day of gas. This unit inaugurates a new generation equivalent were added to the reserves. The Reserve/Pro- approximately 1,700 m of water, it has of platforms based on an engineering concept that empha PRE-SAlT duction (R/P) ratio increased to 19.2 years. In addition to the capacity to process 100,000 barrels sizes the streamlining of projects and standardizing of The discoveries in the pre-salt layer are located in the volumes mentioned above, Petrobras has the right to of oil and compress 6 million m³/day of equipment. The EWT of the Guará field was initiated in block the Campos Basin (Marlim, Albacora Leste and Caratinga produce 5 billion boe in the pre-salt areas, acquired in 2010 gas. The oil will be transported to the BM-S-9, in the Santos Basin, about 310 km offshore and fields, as well as Parque das Baleias – Jubarte, Cachalote through the Transfer of Rights Agreement. P-38 platform and the gas to the P-51 55 km southwest of the Lula field. The Dynamic Producer and Baleia Branca) and in the Santos Basin (in the areas of platform. platform was installed in 2,140 m of water. Guará, Iara, Júpiter, Parati, Bem-Te-Vi, Caramba, Carioca and PROjECTS • EWT of BM-C-36 (Aruanã) – Located in the These projects, coupled with increased production Franco and in the Lula and Cernambi fields). If recoverable The most important systems that are starting pro- Campos Basin, the discovery well RJS-661 following the connection of new wells to various platforms volumes of between 8.1 and 9.6 billion boe from Petrobras’ duction in 2011 are: will be connected to the FPSO Cidade de (P-53, P-51, P-34, FPSO Cidade de Vitória, FPSO Espírito stake in Lula, Cernambi, Guará, Iara and Parque das Baleias • Mexilhão Field – In the Santos Basin, in water Rio das Ostras. Situated in water depht of Santo and FPSO Frade) offset the natural decline in produc- are confirmed, the coming years should see a significant depths of approximately 170m of water, with approximately 1,000 m, it has the capacity to tion and provided the company with a 1.7% increase in do- increase in the company’s proven reserves. capacity of 15 million m3 /day of gas, to be chan- process 20,000 barrels of oil per day. mestic production of oil and LNG, which reached 2,004,000 The start-up of the first permanent pre-salt system in neled to the mainland through a 139 km-long • Lula Nordeste (BM-S-11): Start-up following bpd of oil. the Santos Basin took place in October 2010, using the plat- pipeline. installation of the FPSO BW São Vicente in form vessel Cidade de Angra dos Reis. Named the Lula Pilot • Caraguatatuba Gas Treatment Unit – Located approximately 2,200 m of water. liFTinG COST Project, it provides for the interconnection of six production on the São Paulo coast, it will come into operation • Carioca Nordeste (BM-S-09): Start-up In 2010, lifting cost, excluding the government take, wells, three injection wells and the construction of a pipe- to handle gas from the Uruguá, Tambaú, Mexilhão following installation of the FPSO Dynamic averaged US$10.03/boe, a 14% increase over the previous line through which gas will transported to the mainland. and Lula fields, and has the capacity to process 18 Producer in approximately 2,150m of water. year due to the higher number of well workovers. With gov- In December 2010, Petrobras submitted to the million m³ of gas and 42,000 bpd of oil. • Iracema (BM-S-11): Start-up following ernment participation, the cost rises to US$24.64/boe, 20% National Agency Oil (ANP) declarations of commercial vi- • Marlim Sul Field, Module 3 (Platform installation of the FPSO BW São Vicente in higher than in 2009. ability for the Lula and Cernambi fields, with recoverable P-56) – Located in the Campos Basin, in approximately 2,100m of water.14 2 E x P l O R AT i O n A n d P R O d u C T i O n OVERViEw 2010 15
  9. 9. REFINING AND MArKeTiNG sulfur content diesel oil, among other products. Start-up is by 19%, due to Brazil’s increased number of domestic and scheduled for 2012. international flights. Two new Premium refineries, which will produce Naphtha sales grew by 2%, driven by inventory re- oil products of high quality and low sulfur content, such plenishment in the industry. LPG sales grew by 4%, boosted as diesel oil and aviation fuel, are also scheduled. The by the recovery in industrial production, while gasoline Premium I Refinery, in Bacabeira (Maranhão), will begin sales grew by 17%, as a result of market growth and the operations in 2014 (first phase), processing 300,000 bar- reduced availability of ethanol during the offseason. rels of oil per day – a capacity that should be doubled by With regard to diesel oil, the 9% increase in sales The 12 Petrobras refineries in Brazil processed 1.80 2016 (second phase). The project includes a port terminal. is associated with the upturn in industrial activity, the in- million bpd of feedstock in 2010, using an average of 93% Premium II, with start-up scheduled for 2017, will be built crease in grain production and infrastructure investments. of the installed capacity, and produced 1.83 million bpd in Caucaia (Ceará) and connected to the Pecém port ter- There was a 43% increase in sales of asphalt, due to an of oil products. Of the total volume of processed oil, 82% minal. It will have the capacity to process 300,000 bpd. increased volume of paving and maintenance works on came from Brazilian fields. The Rio de Janeiro Petrochemical Complex (Com- Brazil’s roads. Fuel oil sales fell by 1%, due to replacement The program for maximizing diesel oil and kerosene perj) is being built in Itaboraí (RJ) and its first phase of of this industrial input by natural gas and coal. production resulted in 17.1 million additional barrels per operation is scheduled for 2013, with capacity to process Oil exports reached 497,000 bpd, exceeding by day in 2010. Due to the increased domestic oil production, 165,000 bpd. The second phase, in 2018, will expand the 4% the volume in 2009. Oil product sales abroad totaled the company is investing in new refining units and tech- capacity to 330,000 bpd. Diesel oil, LPG, aviation fuel, 200,000 bpd – a 12% decline. nological improvements to enhance the quality of its fuels naphtha, fuel oil, coke and sulfur will all be produces Oil imports stood at 316,000 bpd (20% decrease and oil products and adapt them to market needs. there, as well as raw materials for petrochemicals. compared to 2009), while oil products totaled 299,000 The improvements include the production of diesel The first part of the expansion of the Potiguar Clara bpd (97% increase over the same period) – due to the oil with low sulfur and propylene content (a high value- Camarão Refinery, in Guamaré (Rio Grande do Norte), expansion of domestic consumption. The volume of im- added product) and start-up of units with processes to began operations in 2010. Work on the unit – which ported diesel oil reached 143,000 bpd (up 149% over reduce fuel oil production and increase that of middle dis- produces gasoline, naphtha, diesel oil and aviation fuel – 2009) and of aviation fuel was 34,000 bpd (60% in- tillates. Scheduled maintenance shutdowns were carried should be completed in 2011. crease). Moreover, 9,000 bpd of gasoline were imported out at four refineries during the year. as a result of the growing fleet of flex-fuel vehicles and SAlES the scarcity of ethanol. nEw dEVElOPMEnTS The company sold 2.38 million barrels of oil per day The company’s trade balance in 2010, based on ex- The Abreu e Lima Refinery, under construction in in 2010 in the domestic market – a volume 13% higher ports and imports of oil and oil products, without regard Pernambuco, will have the capacity to process 230,000 bpd than in 2009. The highlights were diesel oil, gasoline, LPG, to natural gas, liquefied natural gas and nitrogen com- of heavy oil and produce 162,000 bpd of low naphtha and natural gas. Demand for aviation fuel grew pounds, showed a surplus of US$ 1,53 million.16 2 REFininG And MARkETinG OVERViEw 2010 17
  10. 10. NATUrAL GAS The expansion of the natural gas supply continued the local system from 3.5 to 7.5 million in 2010, with the completion of major projects aimed at m³/day. It was thus possible to use gas from enhancing the production and distribution infrastructu- Gasene (Southeast-Northeast Pipeline) in the re. Including partners, production reached 62.4 million states of Alagoas, Pernambuco, Paraíba and Rio • Cacimbas / Catu (Gascac) – 954 km in separated by sub-market, since Gasene was already ope- m3/day, a 7.5% increase compared to 2009. The domestic Grande do Norte. length and with the capacity to transport rating and integrating the natural gas market in Brazil. In supply was 28.6 million m3 /day, after deducting the volu- • Paulínia / Jacutinga – 93 km in length and with 20 million m³/day. It is the longest stretch the latest auction, 9.18 million m3 /day were sold – a vo- me of LPG, gas used in the production process and losses. a flow capacity of 5 million m³/ day. It enabled the of Gasene (Southeast-Northeast Pipeline), lume 34% higher than the previous record and equivalent Of the 62.4 million m3/day supplied to the natural transportation, for the first time, of natural gas to connecting Espírito Santo and Bahia. to 61% of the total of 15 million m3/day on offer. gas market in Brazil, 26.2 million m3 were transported by serve municipalities in the south of Minas Gerais. The company also started to implement a new gas the Bolivia-Brazil pipeline, after deducting the gas used in • Ramal Gascav / Sul Capixaba Gas Treatment liquEFiEd nATuRAl GAS marketing format: weekly sales. Since the start of these the system. The imported volume of regasified liquefied Unit – 10 km in length and with the capacity The year 2010 marked the consolidation of Petrobras’ operations, 18 registered distributors have placed orders. natural gas (LNG) went from 7.6 million m3, in 2009, to to transport 2 million m³/day. It connects the position as a global player in the liquefied natural gas (LNG) The short-term auctions and weekly sales are consolidated 18.9 million m3/day. The increase in consumption over that Cabiúnas-Vitória Pipeline (Gascav) to the Sul Ca- market. With continuous diversification of its portfolio, the now in the Brazilian market and will continue in 2011. of the previous year was a result of the economic recovery pixaba Gas Treatment Unit (Sul Capixaba GTU), company signed 37 agreements and performed 41 cargo and increased demand from thermal power plants. to supply gas to Espírito Santo. purchasing operations, 36 of which were intended for Bra- Investments in transportation infrastructure during • Cabiúnas / Reduc III (Gasduc III) – 181 km zil, while five were resold in the foreign market. diSTRibuTiOn 2010 totaled US$ 3,41 million. The highlights were the in length. It has the greatest diameter of any The company, in partnership with BG, Repsol, and The average volume of natural gas sold by distri- expansion of the capacity of the gas pipeline network in pipeline in South America and has the highest Galp, has implemented a tendering process to select the butors in Brazil in 2010 stood at 49 million m3/day. The Brazil and electricity generation projects. transportation capacity (40 million m³/day) best proposal, from a technical and economic standpoint, company’s stakes in 20 of the 27 state distributors main- among Brazilian pipelines. It allows natural gas for the construction of a ship-based liquefaction plant, tained virtually the same profile as in the previous year, TRAnSPORTATiOn to be channeled from the Campos and Espírito which will allow the distribution of 14 million m3/day of with percentages ranging from 24% to 100%. The national network of transportation pipelines Santo basins. natural gas from the pre-salt layer, as of 2016. In comparison to 2009, non-thermal consumption increased by 1,696 km, to a totaling of 9,506 km. The • Rio de Janeiro / Belo Horizonte II (Gasbel by distributors in which Petrobras holds a stake saw a following stretches began operating in 2010: II) – 268.9 km in length and with the capacity SAlES 15% increase (from 13 to 15 million m³/day), while ther- • Pilar / Ipojuca – 189.1 km in length. Along to transport 5 million m³/day. It has made it In 2010, Petrobras continued its strategy of elec- mal consumption saw a 181% increase (from 2.6 to 7.4 with the expansion of the Pilar Compression possible to increase the supply of natural gas tronic auctioning for developing the short-term market million m³/day), making an overall increase of 43% (from Services, in Alagoas, it raised the capacity of to Minas Gerais. for natural gas. For the first time, distributors were not 15.6 to 22.4 million m³/day).182 n AT u R A l G A S OVERViEw 2010 19
  11. 11. pipelines started operating. The company operates seven plants for the processing of natural gas from the Campos Basin. In 2010, the volume processed was approximately 16 million m³/day of natural gas, while LPG production reached 14,000 tonnes/day. ETHAnOl lOGiSTiCS Due to the growth of the ethanol market, particu- larly in Brazil, Petrobras has developed a program to ex- pand the pipeline and waterway infrastructure for trans- portation from production areas in the Mid-West and São Paulo to the domestic and export markets. Expected investments total US$ 3,500 million and start-up is sched- uled for 2011. diSTRibuTiOn Petrobras Distribuidora sold a total of 48.69 mil- Ships are being built in Pernambuco for oil transportation lion m³ in 2010 – a volume 8.2% higher than that re- and in Rio de Janeiro for oil, ethanol and bunker fuel. The corded in the previous year. For the first time, the 4 mil- TRANSPORTATION three first vessels were launched in 2009. In 2011, another lion m3/month barrier was surpassed, with record sales AND DiSTribUTioN five ships should be delivered. of 4,06 million m3/month, maintaining the company’s leadership of the Brazilian fuel market, with a market TERMinAlS, Oil PiPElinES And share of 38.8%. GAS PiPElinES With a network of 7,306 service stations and some To address the increased LPG production resulting 11,000 direct consumers, the company attained net oper- from Plangas, the Ilha Redonda Terminal in Guanabara Bay ating revenues of US$ 37,308 million and net earnings of Transpetro, a Petrobras subsidiary handling the 57 million m³/day of natural gas – 62% more than the vol- is being expanded, while the construction of new facilities US$ 1,101 million. Investments totaled US$ 482 million. transportation and storage of oil, oil products, ethanol and ume recorded in the previous year. The daily record for the in Ilha Comprida (São Paulo) is in progress. In Barra do Last year, most of the service stations received in natural gas, operates 7,179 m of oil pipelines, 7,193 km handling of natural gas over the year was 69 million m3. Riacho (Espírito Santo), a new terminal is also being built the acquisition of Ipiranga were adapted to Petrobras of gas pipelines, and 48 terminals – 20 on land and 28 on and in Guamaré (Rio Grande do Norte), the infrastructure standards. A piped natural gas distribution network was waterways, in addition to 52 vessels. nEw VESSElS for handling oil products from the Potiguar Refinery has inaugurated in Espírito Santo and the activities of an LPG In 2010, 48.9 million tonnes of oil and oil products Under its Fleet Modernization and Expansion Pro- been expanded. operations center in Rio de Janeiro were initiated. Other were transported by ship. Transpetro handled 704 mil- gram (PROMEF) Transpetro is expected to order the con- The gas pipeline network for transportation and initiatives included the revamping of the Lubrax brand lion m³ of liquids through its terminals – a volume 4% struction of 49 new vessels, in two stages, which should transfers has a total length of 7,193 km – an increase of and the launching of the Lubrax + Automotive Lubrication higher than that of 2009 – in addition to an average add 4 million deadweight tonnes to the current capacity. 1,771 km compared to 2009, a year when eight new gas Technology Center.202 T R A n S P O R TAT i O n A n d d i S T R i b u T i O n OVERViEw 2010 21
  12. 12. PETROChEMICAlS AND FerTiLizerS PROjECTS FERTilizERS Petrobras has consolidated its activities in the The 2010 - 2014 Business Plan calls for petro- Petrobras’ fertilizer production facilities comprise petrochemical sector, in a manner that is integrated chemical investments of US$ 5.1 billion. The main two units, located in Bahia and Sergipe. The main products with its other activities and diversifies its product projects are: sold are urea, nitric acid, ammonia and carbon dioxide. portfolio, by increasing its stake in Braskem. The • Rio de Janeiro Petrochemical Complex (Com- In 2010, the fertilizer market witnessed a recovery. agreement determines that the integration of the perj) – The Comperj units, scheduled to begin operations in The company sold 772,000 tonnes of urea and 236,000 Petrobras and Odebrecht stakes should occur in sta- 2017, will produce basic petrochemicals and by-products; tonnes of ammonia, which provided net revenue of ges. In the end, the two companies would hold, res- • Companhia Petroquímica de Pernambuco US$ 386 million, compared to US$ 286 million recorded pectively, 36.1% and 38.3% of the total capital stock (Petroquímica Suape) and Companhia Integrada Têx- the previous year. The Bahia unit achieved record produc- of Braskem. In January 2010, Petrobras, Odebrecht and til de Pernambuco (Citepe) – Petroquisa holds 100% of tion of 335,000 tonnes of urea – 53% higher than the Braskem signed an association agreement to regulate the capital stock of both companies, which together own amount in 2009. In the same period, the Sergipe unit pro- Braskem’s stakes in Comperj and the Suape Petroche- three integrated units for the production of PTA and PET- duced 423,000 tonnes of urea, exceeding the output of mical Complex. BG, in addition to supplying fibers to the textile segment; 386,000 tonnes in the previous year. Also in January, the shares of Petrocoque ow- • Coquepar – Petroquisa and Unimetal will jointly ned by Companhia Brasileira de Alumínio (CBA) were build two petroleum coke calcination units, in Rio de Ja- purchased by Petroquisa and Universal. Each now hol- neiro and Paraná, with a combined production capacity of ds 50% of the company’s shares. 700,000 tonnes per year.222 PETROCHEMiCAlS And FERTilizERS OVERViEw 2010 23
  13. 13. bIOFuElS ElECTRICITy Petrobras generated an average 1,837 MW in 2010 biOFuElS 66,554 family farmers accounting for 148,578 hectares of (525 MW in 2009) for the Brazilian national grid (Siste- The subsidiary Petrobras Biocombustível operates cropland. The company acquired 50% of the capital stock ma Interligado Nacional - SIN), through 15 of its own or three biodiesel plants, located in Bahia, Ceará and Minas of Bioóleo Industrial e Comercial S.A. in Bahia for US$ 8,8 leased thermal power plants (TPPs), with an installed ca- Gerais. In 2010, the plant in Bahia was doubled, reaching million, with capacity to process up to 130,000 tonnes of pacity of 5,284 MW (1,471 MW in 2009). The increase in annual production capacity of 434,000 m3. The company oleaginous plants and store 30,000 tonnes of grain per power generation was a result of low water levels in the also holds stocks (50%) in a biodiesel plant in Paraná, year, in addition to tankage for 10 million liters of oil. reservoirs of Brazilian hydropower plants, which caused with production capacity of 127,000 m³/year. In Pará, the the TPPs to increase their output. Investments reached project of a new plant is underway, which should begin ETHAnOl US$ 358 million. The company also traded the non-con- operation by 2013, increasing the installed capacity by In 2010, the milling capacity of Petrobras Biocom- tracted capacity of the TPPs, taking advantage of the gro- 120 mil m3. bustível was 23 million tonnes of cane, while ethanol pro- wing demand spurred by the economic recovery. The partnership between Petrobras and Galp Ener- duction reached 942,000 m³ and sugar production reached gia was strengthened by a joint venture that will conduct 1.55 million tonnes. Additionally, 517GWh in electricity Petrobras also has a project in the wind power seg- the project in Pará and the construction of a plant to pro- surpluses were sold through participation in the sector. ment – the pilot plant in Macau, Rio Grande do Norte – duce 250,000 tonnes per year of green diesel (second ge- In the same period, in another area of activity, with 1.8 MW installed capacity. It has already produced neration diesel) in Portugal. With these investments, the Petrobras Biocombustível performed operations to acqui- 32,256 MWh, avoiding the emission of approximately total production capacity of Petrobras Biocombustíveis re stakes and invest in companies that have plants in the 1,200 tonnes/year of CO2 into the atmosphere over seven will reach 750,000 m3/year by 2013. process of capacity expansion and infrastructure improve- years in operation. In 2009, the company also started im- The company has signed agreements to purchase ment. This should allow the growth of ethanol production, plementing in Rio Grande do Norte four winning projects raw materials (rapeseed, sunflower, and soybean) from with adequate market distribution logistics. from the first auction exclusively aimed at wind power ge- neration. An average of 49 MW, corresponding to 104 MW of installed capacity have already been sold. The projects are expected to start operating in 2011.242 biOFuEl | ElECTRiCiTy OVERViEw 2010 25
  14. 14. INTERNATIONAl Petrobras is present on five continents, operating AMERiCAS in 28 countries in addition to Brazil. In all these places, it Petrobras operates in 13 countries in the Ameri- maintains operations in all segments of the oil industry cas, in addition to Brazil, namely: Argentina, Bolivia, Chi- and has cooperation agreements to develop technology le, Colombia, Cuba, Curacao, Ecuador, the USA, Mexico, and new businesses. It also has representative offices in Paraguay, Peru, Uruguay, and Venezuela. Between them, New York, London, Tokyo, Beijing and Singapore. they have 1,171 service stations, in addition to upstream In the international market, Petrobras closed 2010 assets. Production was 91,000 barrels of oil and 16 million AnGOlA with production of 151,000 barrels of oil and 16 million cubic meters of natural gas per day, making a total of ARGEnTinA AuSTRAliA cubic meters of natural gas per day, making a total of 185,100 boe. bEnin 245,000 boed. Additionally, 206,800 bpd were processed In the Gulf of Mexico, the company is developing bOliViA in four refineries (one in Japan, one in the USA and two in production projects in Cascade and Chinook (start-up bRAzil CHilE Argentina), equivalent to 70% of the processing capacity planned for 2011), Saint Malo, Tiber and Stones, as well as COlOMbiA abroad – which will be reduced from 280,500 to 230,500 projects that are in the exploratory phase. HOllAnd barrels of oil per day, as the San Lorenzo refinery, in Argen- In the USA, Pasadena Refining Systems, Inc. (PRSI) (Akpo and Agbami fields) and Angola (Plot 2) totals 60,300 ECuAdOR tina, is to be sold. The company will still have the Argen- recorded its highest average oil processing level and even barrels of oil per day. The company is also active in explo- indiA jAPAn tinean refinery of Bahia Blanca. saw a cost reduction, which allowed better use of busi- ration in Tanzania, Namibia and Libya. libyA Proven reserves abroad totaled 703 million boe – ness operating margins. MExiCO 1% more than in 2009, giving a Reserve Replacement Ra- In Ecuador, Petrobras has declined the government’s ASiA & OCEAniA nAMibiA nEw zEAlAnd tio of 110%. This volume represents 4% of the company’s proposal to migrate from exploration agreements to ser- Petrobras has a refinery on the island of Okinawa, niGERiA total reserves, according to SPE (Society of Petroleum En- vice agreements in Block 18, and is negotiating to receive Japan, and is currently developing exploratory projects in PARAGuAy gineers) criteria. The main additions to reserves occurred the compensation provided for in its contracts. Produc- Turkey, India, Australia and New Zealand. PERu in Block 57, in Peru, and in the projects of Saint Malo and tion in the country was 2,300 barrels of oil per day. The PORTuGAl Cascade, both in the deepwater of the Gulf of Mexico. company’s presence will be maintained through its stake EuROPE SEnEGAl SinGAPORE The company invested US$ 2,16 million in interna- in the company Oleoducto de Crudos Pesados (OCP). In Portugal, Petrobras is currently developing ex- TAnzAniA tional business, with 12% going into refining, petrochemi- ploration projects in the Peniche and Alentejo basins, TuRkEy cals, distribution and gas & energy activities and 88% into AFRiCA as well as other projects related to production, techno- uniTEd kinGdOM uRuGuAy exploration and production, 60% of which was allocated The west coast of Africa is a strategic area for logy development and biofuel trading, in partnership uSA to production development. Petrobras’ international operations. Production in Nigeria with local companies. VEnEzuElA262 i n T E R n AT i O n A l OVERViEw 2010 27
  15. 15. SOCIAl AND ENvIRONMENTAl iNveSTor reLATioNS/iNSTiTUTioNAL CoMMUNiCATioN GEnERAl COORdinATiOn And EdiTORiAl reSPoNSibiLiTY PROduCTiOn GrAPHiC DeSiGN AND LAYoUT TAPiOCA COMuniCAÇÃO PHoToGrAPHS PETRObRAS iMAGE bAnk The performance of Petrobras is also dictated by There are 30 large oil collection vessels, 130 support ves- Page 2, Roberto Rosa social and environmental responsibility. The company in- sels, 150,000 meters of containment barriers, 120,000 m Pages 6, 23, Rogério Reis vested US$ 2,591 million in health, safety and the environ- of absorbent barriers, 200 oil collectors and 200,000 liters Pages 8, 12, 19, Geraldo Falcão ment (HSE) in 2010. In the same period, it also allocated of chemical dispersants, among other items avail- Page 15, Paulo Cabral Page 16, j. Valpereiro US$ 402 million to 1,770 projects in the social, cultural, able in ten Environmental Protection Centers and environmental and sporting spheres that were chosen by 13 outposts within Brazil. PETRObRAS nEwS AGEnCy (Page 10) a process of public selection. In 2010, the company performed ten emergen- For the fifth consecutive year, the company has cy drills (nine in Brazil and one abroad), involving TRAnSPETRO iMAGE bAnk Page 20, Thelma Vidales been included in the Dow Jones Sustainability Index (DJSI), both government agencies and local communities. a global benchmark in this area. What is more, it stood out Oil and oil product spills during the year totaled 668 iNveSTor reLATioNS in the criterion of Transparency, in which it again achieved m³ – below the 1 m³ per million barrels of oil pro- AV. REPúbliCA dO CHilE, 65, ROOM 2202 b, CEnTRO the maximum score. duced, an excellent level for the world’s oil & gas RiO dE jAnEiRO - Rj, ziP COdE: 20031–912 industry. PHOnE: +55 21 3224-1510 HEAlTH FAx: +55 21 3224-6055 E-MAil: PETROinVEST@PETRObRAS.COM.bR Petrobras’ safety indicators remained compatible EnViROnMEnT www.PeTrobrAS.CoM.br/ir with international benchmarks in the oil & gas industry. Petrobras seeks to minimize the impact of its op- The Frequency Rate of Accidents involving Time Off Work erational activities and products on the environment. In was 0.52 for the year. 2010, the environmental management systems of 93% of Fatalities among employees and outsourced work- its certifiable units in Brazil and abroad were in compli- ers increased from seven to ten, while the Fatal Accident ance with the ISO 14001 standard. Rate – representing the number of fatalities per 100 mil- The company adopts indicators of energy inten- lion man-hours of exposure to risk – increased from 0.81 sity and greenhouse gas emissions and sets targets for in 2009 to 1.08 in 2010. The Medical Leave Index, relating these indices. Over the past five years, it has invested over to employee absences due to illnesses or accidents was US$ 245 million in energy efficiency projects, which 2.38% in 2010 - less than the maximum tolerance limit have provided savings of approximately 3,000 boed. for the year (2.41%). It also seeks to reduce the generating of solid waste and encourages reutilization and recycling. As a re- wORk SAFETy sult, it recycled 155,000 tonnes of hazardous solid Petrobras has trained staff and appropriate waste in 2010, representing 37% of all its treated material resources for carrying out its emergency plans. solid waste.282 S O C i A l A n d E n V i R O n M E n TA l R E S P O n S i b i l i T y
  16. 16. MAY / 2011w w w.PETRObRAS .COM.bR/iR

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