RESULTS ANNOUCEMENT
     2nd Quarter 2007
   (Brazilian Corporate Law)
Disclaimer
The presentation may contain forecasts about future events. Such forecasts merely reflect the
expectations of t...
DOMESTIC OIL AND NGL PRODUCTION



• Stable production reflecting the mature                            Δ=-
              ...
E&P – OIL PRICES

                                                                                69.5                    ...
REFINING IN BRAZIL AND SALES IN THE DOMESTIC MARKET
      Thous. barrels/day
                    93
                      ...
AVERAGE REALIZATION PRICE - ARP

100
                                                      2Q06                           ...
INCOME STATEMENT 2Q07 VS 1Q07
                                                     1Q07    2Q07
                          ...
OPERATIONAL EXPENSES ANALYSIS 1Q07 VS 4Q06

                                                        1Q07         2Q07
    ...
CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07)
              Exploration & Production –Operating Profit Change– R$ millions
   ...
CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07)

                            Downstream – Change in Operating Profit – R$ millio...
NET EXPORTS OF OIL AND OIL PRODUCTS
 EXPORTAÇÃO LÍQUIDA DE PETRÓLEO E DERIVADOS
         187 tbpd Volume Surplus and US$ 2...
NET INCOME CHANGE – R$ million (2Q07 VS 1Q07)

         1,800                   Domestic Oil, NGL and Condensate – thousan...
LEVERAGE

                                                        Petrobras’ Leverage Ratio

                             ...
CONSOLIDATED CASH FLOW STATEMENT

                                                     R$ million
                        ...
INVESTMENTS

                                             R$ million
                                                     ...
DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION
                                                                  ...
LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION


                                                                       ...
REFINING COSTS IN BRAZIL (US$bbl)

                                                                     Δ = 5.9% or US$ 0....
COSTS IN REAIS


              18                                                                                  2,2
   ...
NET INCOME COMPARISON 2Q07 vs 1Q07


Petrobras presented the highest quarter growth compared with the Majors Oil Companies...
QUESTION AND ANSWER SESSION
Visit our website: www.petrobras.com.br/ri

                         For more information cont...
2008-2012 Business Plan
José Sergio Gabrielli de Azevedo
Chief Executive Officer
Disclosure


    The presentation may contain forecasts about future events. Such forecasts merely
    reflect the expecta...
Business Environment Vision in 2020



                          Transparency                        Economic
            ...
Vision 2020 and Characteristics

                            Vision 2020
        We will be one of the five largest integr...
Vision 2020 and Mission

                         Vision 2020
     We will be one of the five largest integrated energy
  ...
Management Challenges
      New Strategic Projects Focusing:

    • Capital Discipline
       • Ensure adequate returns on...
Management Challenges
        New Strategic Projects Focusing:

    •    Social Responsibility
          • To be a world c...
Business Segment Strategy

                                                            Corporate Strategy
                ...
Macroeconomic Assumptions

    Indexes                                                   2007-2011                        ...
Oil prices: Brent curves




           55
                                      Price curve BP 2008/12
                  ...
Investment Plan by Business Segment
                                                      2008-12 Period
                 ...
Investment Plan

                                                                               US$ billion
              ...
The Business Plan assumes Brazilian Content to be 65% of total capital spending,
     generating annual average purchases ...
Of the 34% increase in total capital spending, US$ 13.3 billion (or 16%) was due to the
       inclusion of new projects

...
E&P Business Segment
      To grow production and oil and gas reserves in a sustainable manner, and
                 to be...
Total Production – Oil, NGL and Natural Gas - Targets
     Thousand boed

                                                ...
Growth opportunities for E&P in Brazil ensure continued self-sufficiency

                                       Oil, Cond...
E&P Business Segment – Main Projects

                                           Projects
      Exploration in Brazil and ...
Corporate Targets – E&P
       Lifting Costs



                                      6.59
                               ...
Downstream Business Segment
     To expand integrated operations in refining, sales, logistics and
     distribution in Br...
Domestic Oil Products Market

      Thous. bpd
     3000                                             .
                   ...
Downstream Investments


       US$ 29.6 billion investments in the Downstream area....


             21%                ...
The production flow of liquids in 2012 shows the high degree of integration
     among the business segments in the Brazil...
Corporate Targets – Downstream
        Refining Costs


                                                                  ...
Corporate Targets – Downstream


                Throughput (Brazil and Abroad) and Processing of Domestic Oil
           ...
Distribution Business Segment
     To expand operations in refining, commercialization, logistics and
     distribution in...
Corporate Targets – Distribution



                          BR Participation in the Brazilan Market (%)



             ...
Petrochemical Business Segment
     Expand operations in petrochemicals in Brazil and South America on an
     integrated ...
Main Projects: Petrochemical Segment



                                    Main Projects
        COMPERJ – Basic Petroche...
Gas & Energy Business Segment

     Develop and lead the Brazilian natural gas market and operate on an
     integrated ba...
Domestic Natural Gas Market*

     160          Million m3/day
                                                      134  ...
Main Projects: Gas & Energy
                                                                          US$ million



     ...
Corporate Targets – G&E

                                                                  3
            Domestic Natural ...
Corporate Targets – G&E

                              Power Sales – Petrobras
                      (TOTAL Brazil + Inter...
Biofuels Business Segment
     To be a global company in biofuels sales and logistics, leading the
     domestic productio...
Main Projects: Biofuels



                          US$ 1.5 billion Investments

                                       4...
Corporate Targets – Biofuels


                                     Biodiesel Available Capacity
                         ...
Corporate Targets – Biofuels



                                Ethanol Exports (Thousand m3)

     5,000                 ...
Main Fincancial Indicators



                                                                  Average        Average
   ...
Value Generation BP 2008-2012

                          Accumulated EVA value generation
                                ...
Sources and Uses – BP 2008-2012


            (US$ 123.8 Billion)                (US$ 123.8 Billion)
                    1...
Other Corporate Targets


                                                   Business Plan 2008-2012
          HSE Targets...
Social and Environmental Responsibility Targets

     Social and Environmental Responsibility                 Business Pla...
Human Resources Corporate Targets


                                          Business Plan 2008-2012
     Human Resources...
The Investment Plan in Brazil will require an average annual work force of
     approximately 917,000, of which 228,000 wi...
Macroeconomic Effect

     The Added Value in Brazil generated by Petrobras’ activities and the
     impact of its investm...
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Webcast: Results Announcement - 2nd Quarter 2007 (Brazilian Corporate Law)

  1. 1. RESULTS ANNOUCEMENT 2nd Quarter 2007 (Brazilian Corporate Law)
  2. 2. Disclaimer The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. Cautionary Statement for US investors The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. 1
  3. 3. DOMESTIC OIL AND NGL PRODUCTION • Stable production reflecting the mature Δ=- 0.6% fields natural production decline rate partially offset by the production increase 1,800 thousand bpd 1,789 in FPSO Rio de Janeiro, P-34 and FPSO Capixaba units. • 1Q07 – Scheduled Stoppage in P-37 • 2Q07 – Scheduled Stoppages: P-18, P- 07 and P-09 and non-scheduled stoppages in FPSO-Seillan. Besides, operating problems in a pipeline in UM- SEAL and in platforms FPSO-Brasil and P-34, situations already normalized. 1Q07 2Q07 2
  4. 4. E&P – OIL PRICES 69.5 68.8 69.6 61.5 61.8 64.7 66.1 59.7 57.8 64.9 56.9 57.6 56.4 US$/bbl 58.7 52.7 58.2 56.1 51.6 54.8 57.0 54.2 53.7 49.3 48.7 46.1 47.8 43.0 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 Average Sales Price Brent (average) OPEC Basket Increase in E&P’s average oil sales/transfer price in line with international crude benchmarks. 3
  5. 5. REFINING IN BRAZIL AND SALES IN THE DOMESTIC MARKET Thous. barrels/day 93 % 90 1,9 50 90 89 89 80 85 78 77 80 1,795 79 78 1,8 0 0 1,781 1,796 1,753 1,746 1,711 1,709 70 1,684 1,696 1,646 1,6 50 60 1,50 0 50 2 Q0 6 3 Q0 6 4 Q0 6 1Q 0 7 2 Q0 7 D o mest i c o i l p r o d uct s p r o d uct i o n O i l p r o d uct s sales vo l ume Pr i mar y p r o cessed inst all ed cap acit y - B r az i l ( %) D o mest i c cr ud e o i l as % o f t o t al • Increase in oil products sales – mainly diesel – due to market seasonality and growth of economic activities, specially agriculture and transportation. 4
  6. 6. AVERAGE REALIZATION PRICE - ARP 100 2Q06 1Q07 2Q07 Average Average Average 80 81.8 82.4 70.6 71.5 78.2 69.6 60 68.,8 68.7 57.7 40 20 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 ARP Brasil (US$/bbl) Average Brent Price (US$/bbl) ARP USA (US$/bbl w/sales vol.in Brasil) • Seasonal increase in US ARP due to the start up of the American driving season; • Steady increase in Brazilian ARP reaffirms policy of aligning internal prices with international levels in the medium to long term, avoiding short term volatility; 5
  7. 7. INCOME STATEMENT 2Q07 VS 1Q07 1Q07 2Q07 41.798 Net Revenues 7.5% 38.894 24.489 GOGS 3.4% 23.692 R$ million 14.190 EBITDA 10.993 29.1% 11.535 34.4% Operational Profit 8.582 6.800 64.6% Net Income 4.131 • 64.6% increase in 2Q07 net income due to: • Price increases and higher volumes sold in the domestic market; • Higher oil prices in the international market; • Absence of extraordinary expense that occurred in 1Q07 related to Petros Pension Fund Plan; • Tax benefit due to provision for interest on own capital; 6
  8. 8. OPERATIONAL EXPENSES ANALYSIS 1Q07 VS 4Q06 1Q07 2Q07 1.443 2.0% Sales Expenses 1.415 General and 1.498 -3.0% R$ million Administrative 1.545 391 -40.3% Exploratory Costs 655 323 8.0% Taxes 299 1.239 -33.8% Others 1.871 • Exploratory Costs: lower expenditures for seismic acquisition in 2Q07 • Others: 34% decline mainly due to absence of costs related to renegotiation of clauses in Petros Retirement Fund Plan that occurred in 1Q07. 7
  9. 9. CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07) Exploration & Production –Operating Profit Change– R$ millions 1,800 Domestic Production of Oil, NGL and Condensate (thous. bpd) 1,789 2.122 31 220 15 50 10.024 8.056 1Q07 Oper. Profit Price Effect on Volum e Effect on Avrg Cost Effect Volum e Effect on Oper. Exp. 2Q07 Oper. Profit Net Revenue Net Revenue on COGS COGS • Increase in average sales/ transfer prices, following the trend internationally 8
  10. 10. CHANGE IN QUARTER REVENUES (2Q07 VS 1Q07) Downstream – Change in Operating Profit – R$ million 1.982 1.578 1.694 1.541 90 3.358 3.197 1Q07 Oper. Profit Price Effect on Net Volum e Effect on Avrg Cost Effect Volum e Effect on Oper. Exp. 2Q07 Oper. Profit Revenue Net Revenue on COGS COGS • Increase in average realization prices, due to higher oil prices in international market, higher sales volumes and liquidation of inventories with a lower cost basis purchased during prior quarters, partially offsetting the average cost increase. 9
  11. 11. NET EXPORTS OF OIL AND OIL PRODUCTS EXPORTAÇÃO LÍQUIDA DE PETRÓLEO E DERIVADOS 187 tbpd Volume Surplus and US$ 242 million Financial Deficit in the 2Q07 Exports (thous barrels/day) Imports (thous barrels/day) 669 624 576 592 569 548 510 540 215 442 437 247 132 159 221 271 137 281 88 97 454 355 377 321 373 408 410 267 354 340 2Q06 3Q06 4Q06 1Q07 2Q07 2Q06 3Q06 4Q06 1Q07 2Q07 Oil Oil Products • Higher oil and oil products imports due to increase in demand, especially for lighter oil products. 10
  12. 12. NET INCOME CHANGE – R$ million (2Q07 VS 1Q07) 1,800 Domestic Oil, NGL and Condensate – thousand bpd 1,789 2,903 796 763 109 172 6,800 25 4,131 1Q07 Net Income Revenues COGS Oper. Exp. Fin. Exp, Non Taxes Minority Interest 2Q07 Net Income Oper. and Others • Increase in Net Income due to better domestic market sales volumes and higher prices (linked to international benchmarks); • Better COGS structure, due to liquidation of inventories with a lower cost basis purchased during the previous quarter; • Decrease in Operational Expenses given the absence of the effects of Petros Pension Plan amendment (R$ 1billion loss) accrued in the 1Q07; • Lower Taxes impact because of fiscal benefits from the interest on own capital provision (R$ 746 million) 11
  13. 13. LEVERAGE Petrobras’ Leverage Ratio 27% 28% 27% R$ million 06/30/2007 03/31/2007 26% (1) 26% Short Term debt 10.720 11.879 28% 24% 27% (1) Long Term Debt 29.100 32.539 19% 23% 20% Total Debt 39.820 44.418 19% 18% 17% 17% 16% Cash and Cash Equivalents 17.854 20.463 (2) Net Debt 21.966 23.955 set/05 dez/05 mar/06 jun/06 set/06 dez/06 mar/07 jun/07 End. Líq./Cap. Líq. End. CP/End. Total • 8% decline in net debt during the quarter as a consequence of strong net cash generation (R$ 2.498 million), despite material growth in CAPEX, dividend payment, and impact of dollar devaluation on the debt. (1) Includes debt contracted through leasing contracts (R$ 1.980 million in 06.30.2007 and R$ 2.259 million in 03.31.2007). (2) Total debt - cash and cash equivalents 12
  14. 14. CONSOLIDATED CASH FLOW STATEMENT R$ million 2Q07 1Q07 (=) Net Cash from Operating Activities 13.548 7.493 (-) Cash used in Cap. Expend. (10.600) (7.951) (=) Free Cash Flow 2.948 (458) (-) Cash used in Financing and Dividends (5.557) (6.908) Financing (3.958) (1.035) Dividends (1.599) (5.873) (=) Net Cash Generated in the Period (2.609) (7.366) Cash at the Beginning of Period 20.463 27.829 Cash at the End of Period 17.854 20.463 • Decrease in cash mainly due to net amortizations and prepayments of debt 13
  15. 15. INVESTMENTS R$ million 1H07 % Direct investments 17.030 86 Exploration & Production 9.092 45 Downstream 2.856 14 Gas & Energy 730 4 International 3.486 19 Distribution 547 3 Corporate 139 1 Special Purpose Companies (SPCs) 2.596 13 Ventures under Negociation 169 1 Project Finance - - Total Investments 19.795 100 • R$ 19.795 million invested in 1H07, primarily for the development of future oil and natural gas production capacity in Brazil (R$ 9.092 million) and abroad (R$ 3.129 million) 14
  16. 16. DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION Δ = 1.81% or US$ 0.13 US$/bbl 7.24 7.20 7.33 6.64 6.12 2Q06 3Q06 4Q06 1Q07 2Q07 • 1.8% increase mainly due to the effect of Real appreciation (6%) on that portion of costs denominated in local currency; • Deducting the FX rate effect, lifting costs decreased 3% due to lower expenditures with well interventions and maintenance. 15
  17. 17. LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION 69,6 69,5 68,8 26 61,5 61,8 59,7 56,9 57,8 60 51,6 47,5 17.5 18.1 17.9 38,2 17.3 17.6 15.2 16.1 16.2 US$/boe 16 13.6 13.9 40 28,8 10.8 11,0 65% 11,4 11,5 10,4 9,0 59%10,6 8.6 9,8 10,0 56% 7,6 61% 8,5 20 6,5 6 5,2 60% 6,0 6,1 6,3 6,1 6,6 7,2 7,2 7,3 4,3 5,4 5,4 0 3,4 2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 -4 -20 Lifting Cost Gov. Take Brent • Higher government take during 2Q07, mainly due to the increase in the domestic oil reference price, linked to international prices. 16
  18. 18. REFINING COSTS IN BRAZIL (US$bbl) Δ = 5.9% or US$ 0.15 2.71 2.69 2.48 2.54 2.07 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 • 5.9% increase due mainly to FX rate effect, partially offset by reduced number of scheduled stoppages; • Expressed in Reais, a decrease of 0.9%. 17
  19. 19. COSTS IN REAIS 18 2,2 15,5 15,2 16 14,3 14,5 14 13,2 2,1 FX Rate R$/barrel 12 10 2 8 5,4 5,8 5,4 5,3 6 4,6 4 1,9 2 0 1,8 2Q06 3Q06 4Q06 1Q07 2Q07 Lifting Cost Refining Cost FX Rate • Stable lifting and refining costs over time, when expressed in Reais 18
  20. 20. NET INCOME COMPARISON 2Q07 vs 1Q07 Petrobras presented the highest quarter growth compared with the Majors Oil Companies US$ billion 1Q07 2Q07 2Q07/1Q07 Petrobras* 2,01 3,53 75,0% BP 4,66 7,38 58,1% Shell 7,28 8,67 19,0% Chevron 4,72 5,38 14,1% ExxonMobil 9,28 10,26 10,6% ConocoPhillips 3,55 0,30 -91,5% Source: Evaluate Energy e Petrobras *Petrobras results in R$ converted by the US dollar last price for the period (1T07: R$ 2,050 e 2T07: R$ 1,926). 19
  21. 21. QUESTION AND ANSWER SESSION Visit our website: www.petrobras.com.br/ri For more information contact: Petróleo Brasileiro S.A – PETROBRAS Investor Relations Department Raul Adalberto de Campos– Executive Manager E-mail: petroinvest@petrobras.com.br Av. República do Chile, 65 – 22o floor 20031-912 – Rio de Janeiro, RJ (55-21) 3224-1510 / 3224-9947 20
  22. 22. 2008-2012 Business Plan José Sergio Gabrielli de Azevedo Chief Executive Officer
  23. 23. Disclosure The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. Cautionary Statement for US investors The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. 2
  24. 24. Business Environment Vision in 2020 Transparency Economic Stakeholders Growth Climate Change Cleaner Energies Social Brazil, Environmental Responsibility China and India Pressures Biofuels Energy: Oil and Technology ? Geopolitics Natural Gas 3
  25. 25. Vision 2020 and Characteristics Vision 2020 We will be one of the five largest integrated energy companies in the world and the preferred choice among our stakeholders Vision 2020 Characteristics Our operations will be notable for: • Strong international presence • World scale prominence in biofuels • Operational excellence in management, technology and human resources • Profitability • Benchmark in social and environmental responsibility • Commitment to sustainable development 4
  26. 26. Vision 2020 and Mission Vision 2020 We will be one of the five largest integrated energy companies in the world and the preferred choice among our stakeholders Mission Operate in a safe and profitable manner in Brazil and abroad, with social and environmental responsibility, providing products and services that meet clients’ needs and that contribute to the development of Brazil and the countries in which it operates. 5
  27. 27. Management Challenges New Strategic Projects Focusing: • Capital Discipline • Ensure adequate returns on capital employed by the different business segments of the Company: • Strive for greater efficiency in project execution (Deadlines and Costs); • Streamline Inventory Management; • Decrease Operating and Administrative Costs; • Manage Portfolio Efficiently. • Human Resources • To be an international benchmark for personnel management in the energy segment, having our employees as our most valuable asset. 6
  28. 28. Management Challenges New Strategic Projects Focusing: • Social Responsibility • To be a world class reference for social responsibility, contributing to the development of sustainable business models. • Climate Change • Achieve levels of excellence within the energy industry for reducing the intensity of greenhouse gas emissions in our processes and products, contributing to the sustainability of the energy business and the mitigation of global climate change. • Technology • To be a world class contributor to technologies that lead to the sustainable growth of the Company in the oil, natural gas, petrochemical and biofuels industry. 7
  29. 29. Business Segment Strategy Corporate Strategy Commitment to sustainable development Social and Environmental Integrated Growth Profitability Responsibility Expand operations in target markets for oil, oil products, petrochemicals, gas and energy, biofuels and distribution, being a world benchmark as an Corporate Strategy integrated energy company To grow To expand Develop and lead Expand operations in Operate on a global production and oil integrated the Brazilian petrochemicals in Brazil basis in biofuels and gas reserves operations in natural gas market and South America on commercialization and sustainably, being refining, and operate on an an integrated basis logistics, leading the recognized for commercialization, integrated basis in with the PETROBRAS domestic production excellence in E&P logistics and the gas and electric Group’s other of biodiesel and operations distribution with a energy markets businesses expanding focus on the with a focus on participation in the Atlantic Basin South ethanol segment America Operational, management, technological and human resources excellence Downstream Biofuels E&P Distribution Gas & Energy Petrochemicals (RTC) 8 Confidencial
  30. 30. Macroeconomic Assumptions Indexes 2007-2011 2008-2012 GDP – World (% p.y.) – PPP(*) 4.2 4.3 GDP – Latin America (% p.y.) – PPP 3.7 3.9 GDP – Brazil (% p.y.) 4.0 4.0 FX rate (R$/US$) 2.50 2.18 Linked to international market Linked to international market Oil Products Prices prices, without changes in prices, without changes in relative prices relative prices (*) PPP – purchase power parity 9
  31. 31. Oil prices: Brent curves 55 Price curve BP 2008/12 50 45 35 40 35 35 35 35 Price curve BP 2007/11 2008 2009 2010 2011 2012 BP – Business Plan 10
  32. 32. Investment Plan by Business Segment 2008-12 Period US$ 112.4 billion 58% 13% 65.1 15.0 1.5 97.4 29.6 2.6 2.6 1% 2% 4.3 6.7 87% 26% 2% 4% 6% Brasil Internacional E&P RTC G&E Petrochemical Distribution Corporate Biofuel • US$ 65.1 billion directed to E&P: • Exploration: US$ 13.8 billion • Production: US$ 51.3 billion 11 11 Note: Includes International
  33. 33. Investment Plan US$ billion Petrobras Petrobras Difference Business Segment 2007-11 2008-12 (%) E&P 49.3 65.1 32 RTC 21.9* 29.6 29 G&E 7.3* 6.7 -2 Petrochemical 3.3 4.3 30 Distribution 2.3 2.6 13 Biofuels 0.7 1.5 114 Corporate 1.8 2.5 39 Total 87.1 112.4 29 The forecast indicates annual average capital investment of US$ 22.5 billion for the period 2008 - 2012. * 2007-2011 Plan included biofuels investments. 12
  34. 34. The Business Plan assumes Brazilian Content to be 65% of total capital spending, generating annual average purchases of US$ 12.6 billion from local suppliers US$ billion Domestic Purchased In the Brazilian Business Segment Investments Domestic Market Content (%) 2008-12 2008-12 E&P 54.6 29.5 54% Downstream 31.4 24.3 77% G&E 6.6 5.0 76% Distribution 2.5 2.4 100% Corporate Areas 2.3 1.9 80% Total 97.4 63.1 65% Annual average purchases in the domestic market for the previous Plan was approximately US$ 10 billion 13
  35. 35. Of the 34% increase in total capital spending, US$ 13.3 billion (or 16%) was due to the inclusion of new projects New Projects • Exploration & Production: • Exploration • Enhanced Recovery from Mature Fields • Support and Infra-structure • Plangás • Refining, Transportation and Distibution: New Projects Projetos Novos FX Rate Change Others • Plangás Downstream 13.267 Alteração da US$ 13,267 bi Outros • Petrochemical Taxa de Câm bio US$ 4,224 bi -2,435 -2.435 • New units COMPERJ 4.224 Melhoria do Better • 5% increase in CAPEX due to grau de degree of change in FX Rate premise Definição Definition 2.835 2,835 • 13% increase in costs, in Costs Increase Aum ento de alignment with industry pressures US$ Custo bi 10,912 10.912 * PN 2007-11 83.571 * 2008-2012 Amounts 14
  36. 36. E&P Business Segment To grow production and oil and gas reserves in a sustainable manner, and to be recognized for excellence in E&P operations Strategies by Segment •Increase oil production in a sustainable manner, preserving the country’s self- sufficiency. •Guarantee access to natural gas reserves and production to ensure domestic supply. •Expand operations in areas of major E&P potential, where operating, technical and technological skills represent a competitive differential. •Adopt practices and new technologies into declining fields in order to optimize recovery factors. •Strengthen the Company’s position in deep and ultra deep water exploration. •Develop exploratory efforts in new frontiers to ensure a sustainable reserve/ production ratio. •Guarantee a high replacement of reserves, maintaining the annual Reserve Replacement Index (RRI) above 100%. 15
  37. 37. Total Production – Oil, NGL and Natural Gas - Targets Thousand boed 6.8% p.y. 4,153 7.2% p.y. 183 3,494 51 5* 151 285* 643 2,298 2,217 637 2,020 101 96 94 142 163 274 277 168 265 2, 812 2, 421 1, 778 1, 684 1, 493 2004 2005 2006 Target 2012 For es c as t 2015 Oi l + NGL Br az i l N at ur al Gas B r az i l Oi l + N GL I nt e r na t i ona l N a t ur a l Ga s I nt e r na t i ona l 16 * Includes non consolidated production
  38. 38. Growth opportunities for E&P in Brazil ensure continued self-sufficiency Oil, Condensates, and NGL Production 2900 2,812 2700 2500 2,421 2,374 2,296 Thousand bpd 2300 2,191 2,337 2,050 2100 2,170 2,101 2,039 1900 1,968 1,922 1700 1500 2008 2009 2010 2011 2012 2015 17 17 BP 2008-2012 Demand
  39. 39. E&P Business Segment – Main Projects Projects Exploration in Brazil and Abroad Production Development in Campos Basin: Roncador (P-52, P-54, P-55), Marlim Sul (P-51, P-56), Papa Terra, Maromba, Jubarte Phase II (P-57), Cachalote, Baleia Franca and Baleia Anã Production Development in Santos Basin: Mexilhão, Uruguá-Tambaú, Pirapitanga Production Development in Espírito Santo Basin: Golfinho and Peroá-Cangoá Production Development of fields in Brazilian other basins: (Pólo Juruá- Aracacanga, Manati, D. João Mar, Sergipe-Alagoas) Production Development in the United States (Cascade, Chinook, Cottonwood) Production Development in Argentina, Nigeria (Akpo, Agbami), Angola, Venezuela, Colombia and Turkey) Total US$ 65 billion 18 18
  40. 40. Corporate Targets – E&P Lifting Costs 6.59 6.13 5.72 3.36 3.52 US$bbl 2.90 2005 2006 Target 2012 Lifting Cost - Brazil Lifting Cost - International 19
  41. 41. Downstream Business Segment To expand integrated operations in refining, sales, logistics and distribution in Brazil and abroad with a focus on the Atlantic Basin Strategies by Segment •Increase refining capacity in Brazil, maximizing the throughput of domestically produced oil. •Expand refining capacity in Brazil and abroad, seeking to maintain a balance between refining capacity and the growth of PETROBRAS’s oil production. •Develop the portfolio of PETROBRAS’s products, services, and technologies, with an emphasis on the client’s needs. •Increase the volume products and services sold, expanding sales activities, as well as logistics and processing, in Brazil and abroad. •Adapt the existing refinery complex and expansions in Brazil and abroad to meet the standards and expectations of product quality in target markets. • Develop commercial and logistics partnerships in alternative models. 20
  42. 42. Domestic Oil Products Market Thous. bpd 3000 . 2,732 2.93 % p. y 2,337 345 2500 2,039 138 287 1,824 2000 228 116 153 95 1105 110 1500 902 779 706 1000 173 129 76 96 281 282 281 241 500 386 432 333 340 204 217 237 257 0 2006 2010 2015 2020 LPG Gasoline Naphta Jet Fuel Diesel Fuel Oil Others 21
  43. 43. Downstream Investments US$ 29.6 billion investments in the Downstream area.... 21% US$ million 28% Fuel Quality 8,619 Conversion 3,938 Expansion 5,353 8% HSE 1,083 Transportation 2,270 Pipelines 2,264 8% Others 6,112 13% 4% 18% 22
  44. 44. The production flow of liquids in 2012 shows the high degree of integration among the business segments in the Brazil and abroad. Thousand bpd International Production Brazil 114 Oil Products Consumption 285** 2,421 in Brazil ** 2,170 256* 29 296 158 1.853 Oil Purchase Throughput in Abroad 23 Brazil 2,061 5 Throughput Abroad 208 348 Oil Products Imported Oil Exports *** 256 (*) Includes non-consolidated production International Oil Sales (**) Biodiesel Portion not included (***) Liquid Exports of Oil Products 762 23
  45. 45. Corporate Targets – Downstream Refining Costs 3.69 2.29 2.24 US$/bbl 1.90 1.73 1.30 2005 2006 Target 2012 Refining Cost - Brazil Refining Cost - International 24
  46. 46. Corporate Targets – Downstream Throughput (Brazil and Abroad) and Processing of Domestic Oil Production in Brasil (Thousand bpd) 3,007 3,500 2,409 96 3,000 92 1,997 348 91 2,500 90 348 86 2,000 205 1,500 80 81 2,659 1,000 1,792 2,061 76 500 0 71 2008 2012 2015 BP 2008-12 - Throughput - International (thousand bpd) BP 2008-12 - Throughput - Brazil (thousand bpd) Domestic Crude Oil as a % of Total 25
  47. 47. Distribution Business Segment To expand operations in refining, commercialization, logistics and distribution in Brazil and abroad with a focus on the Atlantic Basin. Strategies by Segment •Lead the Brazilian market in the distribution of oil products and biofuels to achieve maximum market share, under profitable terms. •Make the PETROBRAS brand name the preferred choice among consumers, offering excellence in quality of products and services, both in Brazil and abroad. •Expand participation in the natural gas distribution market with a focus on the largest markets. 26
  48. 48. Corporate Targets – Distribution BR Participation in the Brazilan Market (%) 41 36 31 24 2006 2012 BR Participation in Total Brazilian Market (%) BR Participation in the Brazilian Automotive Market (%) 27
  49. 49. Petrochemical Business Segment Expand operations in petrochemicals in Brazil and South America on an integrated basis with the PETROBRAS Group’s other businesses Strategies by Segment •Expand operations in 1st and 2nd generation processes, increasing the production of petrochemicals, while adding value to the products of the Group’s refineries by capturing synergies related to the production of oil, gas, refining and petrochemicals. •Develop new technologies for the chemical industry based on the technological evolution of petrochemical fluid catalytic cracking (FCC) and biodegradable polymers and biopolymers. 28
  50. 50. Main Projects: Petrochemical Segment Main Projects COMPERJ – Basic Petrochemicals Unit COMPERJ – Thermoplastic Resin ( Polyethylene, Polypropylene and PET) COMPERJ - Intermediate (Styrene, PTA and Ethylene glycol) Petroquímica SUAPE (PTA) Companhia Integrada Têxtil de Pernambuco – CITEP (POY) Companhia de Coque Calcinado de Petróleo International Petrochemical Projects Petroquímica Paulínia - Polypropylene Complexo Acrílico Total investments: US$ 4.3 billion 29 29
  51. 51. Gas & Energy Business Segment Develop and lead the Brazilian natural gas market and operate on an integrated basis in the gas and electric energy markets with a focus on South America. Strategies by Segment •Develop and consolidate the natural gas business in the Brazilian market, ensuring the flexibility and reliability of supply. •Operate vertically in the LNG business on an integrated basis, prioritizing meeting the demands of the Southern Cone market. •Profitably consolidate electric power generation assets by optimizing the existing thermoelectric power plant portfolio. •Play a role in the energy integration of South America. •Capitalize on the opportunities for generating electricity from biomass, oil products and natural gas. •Promote the mastering of necessary technologies along the entire natural gas chain. 30
  52. 52. Domestic Natural Gas Market* 160 Million m3/day 134 134 140 120 y. 31.1 LNG p. 43.9 % 100 1 9.4 30.0 Bolívia 80 46.3 42.1 60 E&P 40 16.2 72.9 20 48.0 24 0 6.1 2006 2012 Supply 2012 Thermoelectric Industry Other (*) considering maximum dispatch of every thermoelectric power plant • Other: vehicular, residential / commercial, refineries and fertilizer units. 31
  53. 53. Main Projects: Gas & Energy US$ million Main Projects Gas Pipelines: Gasene, Northeast and Southeast Network, South Section of Gasbol, Urucu-Coari-Manaus and Gasduc III LNG – Liquified Natural Gas Thermo-Electrics: Cubatão, Três Lagoas, Canoas and Termoaçu Wind Power Generation G&E in Argentina and Other Countries Total investments US$ 6.7 billion 32 32
  54. 54. Corporate Targets – G&E 3 Domestic Natural Gas Sales – G&E* (million m /day) 82 p.y. 6.2% 57 2008 2012 BP 2008-12 - Domestic Natural Gas Sales – G&E (million m3/day) * Does not include Petrobras consumption 33
  55. 55. Corporate Targets – G&E Power Sales – Petrobras (TOTAL Brazil + International) (Average MW) 6,000 5,439 5,000 976 4,000 3,070 118 3,000 3,741 2,000 2,234 1,000 718 722 0 2008 2012 BP 2008-12 - Expansion Opportunities in Thermoplants (Average MW) BP 2008-12 - Thermoplants and Co-generation - Brazil (Average MW) BP 2008-12 - International (Average MW) BP 2008-12 - Petrobras (Total Brazil + International) (Average MW) 34
  56. 56. Biofuels Business Segment To be a global company in biofuels sales and logistics, leading the domestic production of biodiesel and expanding participation in the ethanol segment Strategies by Segment •Expand operations in the ethanol business by participating in the domestic production chain to develop international markets, focusing on logistics and sales. •Develop and spearhead the production of biodiesel for meeting the requirements of the Brazilian market, as well as to capitalize on opportunities in overseas markets. •Develop technologies which ensure worldwide leadership in biofuels production, including technologies based on low value-added raw materials (residual biomass). 35
  57. 57. Main Projects: Biofuels US$ 1.5 billion Investments 4% 21% 29% 46% Biodiesel Pipelines and Ethanol Pipelines Others H-Bio 36 36
  58. 58. Corporate Targets – Biofuels Biodiesel Available Capacity 3 (thousand m /year) 2,500 2,705 3,000 2,000 2,500 2,000 1,500 1,254 1,500 1,000 844 1,000 1,182 500 938 500 329 0 0 2008 2012 2015 BP 2008-12 - Biodiesel Available Capacity (thousand m3/ year) Dopmestic Biodiesel M arket (thousand m3/ year) 37
  59. 59. Corporate Targets – Biofuels Ethanol Exports (Thousand m3) 5,000 4,750 4,000 y. p. 3,000 5% 45. 2,000 1,000 500 0 2008 2012 BP 2008-12 - Ethanol Exports (Thousand m3) 38
  60. 60. Main Fincancial Indicators Average Average Indicators BP 2007-2011 BP 2008-2012 Return on Capital Employed (ROCE) (%) 16 14 Long Term Funding (US$ billion per year) 3.1 3.9 Cash Balance (end of the year) (US$ billion) 3.5 3.1 Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%) 25 20 Free Operating Cash Flow (US$ billion) 1.5 1.4 39
  61. 61. Value Generation BP 2008-2012 Accumulated EVA value generation (US$ billons) 103.1 81.5 Period 2007-2012 Period 2007-2015 40
  62. 62. Sources and Uses – BP 2008-2012 (US$ 123.8 Billion) (US$ 123.8 Billion) 19.4 11.4 (15.7%) (9.2%) 104.4 112.4 (84.3%) (90.8%) 2004-2010 Financing Debt Amortization Cash Flow CAPEX In the BP 2007-11, required financing was 13% 41
  63. 63. Other Corporate Targets Business Plan 2008-2012 HSE Targets 2008 2012 Maximum Admissible Spill Volume (m3) 694 601 Lost Time Injury Frequency (LTIF) 0.68 0.50 (Injuries / Millions Man Hours Worked) Lost Time Percentage 2.23 2.18 Employees (%) Total Avoided Greenhouse Gas 3.56 3.93 Emissions (Million Ton CO2 Equivalent) 42
  64. 64. Social and Environmental Responsibility Targets Social and Environmental Responsibility Business Plan 2008-2012 Targets 2008 2012 Social Responsibility Image (%) 78 81 Corporate Image (%) 82 83 Image as an Energy Company 71 77 Social and Environmental Responsibility Capacitating 65,049 185,783 (Number of Hours) Employees’ Commitment to Social and Environmental 97 98 Responsibility (%) Employees Knowledge of Social and Environmental 85 88 Responsibility (%) Ethos Scores- Values, Transparency and Government (#) 342 344 Ethos Scores - Community (#) 341 344 Ethos Scores- Government and Society (#) 339.5 344 43
  65. 65. Human Resources Corporate Targets Business Plan 2008-2012 Human Resources Targets 2008 2012 Commitment to the Company (%) 79 83 Employees’ Satisfaction Index (%) 69 73 Management Competence Index (%) 80.4 82.3 Individual Competence Index (%) 90.5 91.7 Individual Results Index (%) 91.7 92.9 44
  66. 66. The Investment Plan in Brazil will require an average annual work force of approximately 917,000, of which 228,000 will be directly employed by the industry Work Force (Thousand) Annual Average 2008-12 Direct Work Force 228 Indirect Work Force (Productive Chain) 350 Indirect Work Force (Income Effect) 338 Total Work Force 917 45
  67. 67. Macroeconomic Effect The Added Value in Brazil generated by Petrobras’ activities and the impact of its investments and operating expenditures along the production chain are presented below, representing on average approximately 10% of Brazilian income. R$ Billion Annual Average Added Value by: 2008-2012 Petrobras in Brazil 141 Investments along the Production Chain 50 Operating Expenditures along the Production Chain 55 Total Added Value 246 46

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