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"Business Plan 2007-2011, the Gulf of Mexico, and Renewable Fuels"

Petrobras' business plan for 2007-2011 outlines $87.1 billion in investments across its operations. 56% or $49.3 billion will go towards expanding production in exploration and production (E&P). Key goals include optimizing development of existing reserves and maintaining a minimum reserve to production ratio of 15 years. The plan also details investments in refining and downstream operations, including a $2.5 billion new refinery in Pernambuco, Brazil and $1 billion for upgrading a refinery in Texas, USA. Financial targets include accrued economic profit of $83.4 billion by 2015 and maintaining a debt to capitalization ratio below 30%.

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Petrobras Business Plan 2007-2011, the Gulf of Mexico, and Renewable Fuels José Sergio Gabrielli de Azevedo President and CEO September 20th, 2006 1
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 2
Diversified Shareholder Base • More than 400,000 investors in Brazil and abroad • 60% of the economic value of Petrobras in private hands • Almost 40% of the stocks with international investors 9,5% 20,3% Foreign 10,9% 26,4% 31,2% 31,5% 39,8% 46,4% 10,3% 18,0% 9,9% 8,0% 8,3% Bovespa 25,1% 23,1% 28,7% 20,7% 20,4% 53,6% 61,6% 44,4% 40,6% 40,1% 39,8% Oct/1992 Jul/2000 After Aug/00 After Jul/01 Dec/2003 Aug/06 offering offering Governm ent (1) (%) Bovespa Brazil Bovespa Foreign ADRs Free Float 46,4 38,4 55,6 59,4 59,9 60,2 (1) Includes BNDES / BNDESPAR 3 3
US$ million - C Pe 50 100 150 200 250 300 350 400 ia tr . Va ob le ra s* do R US$ 359 million io D oc PETROBRAS e* US$ 256 million B P US$ 247 million N ok A ia m ér US$ 223 million Source: Bloomberg ic a M Petrobras’ ADRs in NYSE óv il* El US$ 150 million an C or * Every ADR program of the company. p. US$ 128 million C 1H06 daily average em ex B US$ 123 million H P B ill ito Turnover (traded volume) in NYSE n US$ 118 million To ta l US$ 111 million Te na ris US$ 101 million 44 4
50 100 150 200 250 300 Jan-05 Feb-05 Mar-05 Apr-05 PETROBRAS May-05 01/01/2005 = 100 Jun-05 Jul-05 Aug-05 PBR Sep-05 Oct-05 Nov-05 Petrobras’ ADRs x Amex Oil Dec-05 Jan-06 Feb-06 Amex Oil Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 55 50% 5 105%
PETROBRAS Publicly traded peer comparison Proven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005 ExxonMobil 22,4 ExxonMobil 1.484 Lukoil* 20,1 BP 1.448 Petrochina* 18,5 Shell 1.267 BP 17,6 Petrochina* 945 Yukos* 13,0 Chevron Texaco 919 Chevron Texaco 12,1 Total 908 7th 809 Petrobras 11,8 Petrobras ConocoPhillips 660 7th Shell 11,5 Total 11,1 Yukos* 624 ConocoPhillips 9,4 Lukoil* 614 ENI 6,8 ENI 593 Statoil 427 Statoil 4,3 Repsol 416 Sinopec* 3,8 Sinopec 309 Repsol 3,3 Reserve life (years) – Dec. 2005 Refining capacity (thousand bpd) - 2005 Lukoil* 32,7 XOM 6.343 Yukos* 20,8 RDS 4.026 Petrochina* 19,6 Sinopec 2.998 ExxonMobil 15,1 BP 2.747 Petrobras 14,6 TOT 2.708 ConocoPhillips 14,2 5th COP 2.275 Chevron Texaco 13,1 PetroChina 2.202 12,3 CVX 2.195 Sinopec Total 12,2 Petrobras 2.114 9th BP 12,2 Yukos 1.223 ENI 11,5 Repsol 1.175 Statoil 10,1 Lukoil 1.139 Shell 9,0 ENI** 524 Repsol 8,0 Statoil 296 6 Source: Evaluate Energy and Company Reports 66
Corporate Strategy Corporate Strategy Social and Environmental Growth Profitability Responsibility Lead the Latin American oil, natural gas, oil products and biofuels market, working as an Liderar o mercado de petróleo, gás natural e derivados na América Latina, integrated energy company, empresa integrada de energia, com expansão renewable energy and atuando como with selective expansion in petrochemical, seletiva international activities. da petroquímica e da atividade internacional. Consolidate and Develop and lead Selectively Selectively Expand participation increase the domestic expand expand interest in biofuels market, competitive natural gas market international in the lead the domestic advantages in and perform in an activities in an petrochemicals biodiesel production the Brazilian and integrated manner integrated market and increase South American in the gas and manner with the participation in the oil and oil power market in Company’s ethanol business products market South America business Operational, management, technological and human resources excellence 7 7
Integration of the Company's Activities Petrochemical Imported Imported Oil Plants H - Bio Oil Products Biodiesel Oil Products Throughput Brazilian Oil sold in Brazil in Brazil Production Ethanol International Oil International International Production Refining Sales Domestic Natural Gas Other Production Energy Renewables Imported Gas Infrastructure Industry LNG 8 8
Investment Plan Business Plan 2007-2011 US$ 87.1 billion 56% 14% 49.3 U S$ 12 49,3 .1 bi 31.0 23,0 US$ 75.0 bi 1.8 1,8 2.3 3.3 23.0 3% 2,2 3,3 7,5 26% 7.5 1.0 3% 1.0 4% 12.4 9% 86% E&P Downstream G&E Brazil International Petrochemical Distribution Corporate Note: Includes International 9 9
Financial Targets Sources & Uses Sources Uses (US$ 99.3 billion) (US$ 99.3 billion) 12.6 12.2 86.7 (*) 87.1 2004-2010 2004-2010 Financing Debt Amortization Cash Flow Capex • Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011). 10 10
Upstream • Strong investments in production will optimize the development of Petrobras’ proven reserves, aiming light oil production and a minimum reserve/production ratio of 15 years. • Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells classified as discovery or producing wells. Undeveloped Reserves / Total Reserves* (2005) 60,0% 54,3% 53,1% 51,5% 50,5% 50,0% 43,8% 40,5% 39,7% 40,0% 34,3% 30,0% 29,7% 30,0% 25,0% 20,3% 20,0% 12,9% 10,0% 0,0% n C na l as il c BP l s PF l il ta el oi ro ko pe ob llip O i To Sh at br ev Ch -Y O Lu no nM i St tr o Ph CN ol Ch tr o Si 11 xo ps Pe co Pe 11 Ex Re no 17 Co * Source: Evaluate Energy
Upstream Production targets – Oil & NGL and Natural Gas Thousand boed 7.5% p.a. 4,556 278 7.8% p.a. 3,493 742 185 383 724 2,403 2,036 2,020 2,217 101 96 551 85 94 133 163 289 161 168 274 250 265 2, 812 2, 374 1, 880 1, 540 1, 684 1, 493 2003 2004 2005 T a r get 2 006 T a rg e t 2 0 1 1 2015 For ecast Oi l and N GL - B r az i l N at ur al Gas - B r az i l 12 12 Oi l and N GL - I nt er naci ona l N at ur al Gas - I nt e r naci onal
Natural Gas and Energy Domestic natural gas market Natural gas market 140 Variation 2004 x 2005 Others 150% 121.0 121.0 120 Industry 8,30% 17.7% p.a. up to 20.0 Thermoplants -26,04% 100 34 up to 30.0 80 Million m3/day 38,6 60 36.9 45.4 40 13,5 5,4 up to 71.0 20 22,9 24,8 48,4 0 9,6 7,1 2004 Consumed in Maximum Potential Supply 2005 Demand 2011(*) 2011 Thermoplants Industry Other National Production Bolivian Imports LNG 13 13 * Considers maximal dispatch for every thermoelectric power plant
Downstream Refining Investments New Refinery in the USA • Petrobras has acquired 50% of the Pasadena Refinery System Inc. (PRSI), located in Texas, USA; • Total Investment: US$ 370 million; Petrobras share of upgrade US$ 1 billion • The refinery, which already has a capacity of 100,000 bbl/day, will be upgraded to handle 70,000 bbl/day of heavy oil and feedstock (including Marlim field’s production); • The upgraded refinery will be ready in four years. After the revamp project all products will match USA highest standards; • Possible increase in capacity to 200,000 bbl/day. 16 16
Downstream Refining Investments New Refinery in Pernambuco • Investment: US$ 2,5 billion • Throughput capacity: 200 thousand heavy oil barrels (50% Petrobras oil / 50% PDVSA oil) • Focusing diesel and LPG production maximization, the new refinery will aim the growth of oil products demand in the Northeast. • The Northeast Region, which responds for 19% of oil products demand and holds only one refinery in Bahia, will no longer be a fuel importer (either from refineries in Brazil or abroad). • Costs reduction: oil products transportation are more expensive than for crude oil. 17 17
PETROBRAS The Petrochemical Chain Oleophines Intermediate Exploration/ Refining and Aromatics Polymers Transformation Uses Production Production Production Natural Gas Liquids Oleophines Packaging Poliethylene Ethylene Ethane Polipropylene Processes Films Propane Propene Styrene/PS Components Extrusion PTA/PET Blow Automotive AA/SAP Injection Pipes Aromatics MEG Wires Refineries Benzene Home Appliance Oil (Naphta) P-Xylene Fibers Non-integrated oil companies Petrochemical companies Integrated Oil companies Tranformation Industry Total Capex US$ 8.4 billion of which US$4.9 billion basic petrochemicals and US$ 3.5 billion downstream 20 20 20
PETROBRAS Carbon intensity reduction of operations and products Oil Natural Gas Renewables Availability of 855,000 m3/year of biodiesel Processing 425,000 m3/year of vegetable oil (H-BIO) 3.5 million m3 ethanol exports 240 MW installed capacity of power generation from renewable sources Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent) Investments of US$ 0.7 billion in renewable energy and biofuels 21 21 21
Brazilian Experience Fuel Ethanol Program Evolution Ethanol Program of Gasohol and Emission Renewables Program Implanted Ethanol Cars Controls Gasohol and and (BLENDS) (2nd oil shock) (PROCONVE) Flex fuel Cars Hydrogen Program for oil imports reduction Environmental Benefits 70’s 80´S 90´S 00´S Future 22 22
Facts about Ethanol Market in 2005 • Ethanol global market is 46.5 Billion Liters (2005) • Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production) • Today the ethanol consumption is 2.6% of gasoline MKT • 10% of ethanol in gasoline will represent 118 Billion Lt 1 Ton Sugar Cane ~ = 1.2 boe SUGAR 153 KG 608 x 103 KCAL BAGASSE (50% UMIDADE) 276 KG 598 x 103 KCAL LEAVES (*) (15% HUMIDY) 512 x 103 KCAL 165 KG 1 Ton-Field 1 boe 24 1718 x 103 KCAL 24 1718 x 103 KCAL 1,386 x 103 KCAL
Raw Material Comparison Raw Material Energy Output / Energy Input(boe) Wheat 1.2 Corn 1.3 – 1.8 Sugar Beet 1.9 Sugar Cane 8.3 (under Brazilian production conditions) Production / ha Quantity of Energy Output Raw Material (kg) Ethanol / ha / Energy Input (boe) Sugar Cane 85,000 7,080 liter 8.3 Corn 10,000 4,000 liter 1.3 – 1.8 25 25
Sugar Cane Crop Profile 2005 Anhydrous and Hydrous Ethanol => 17 Billion liters 9,70% 40,84% 49,46% Anhydrous, Hydrous and Neutral Sugar Cachaça, Sweet and Animal Feed 26 26
PETROBRAS Flex-Fuel Vehicles • Consumer wants to decide the fuel at the gas station • Fuel price is one the most important factor • Consumer is aware of pollution and renewable fuels • Today cars manufacturer is producing 80% of FFV in Brazil LIGHT VEHICLES TOTAL SALES units 150,000 Ethanol Gasoline FFV 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Nov-05 Feb-06 Aug-05 Nov-03 Nov-04 Feb-04 Feb-05 Feb-03 Aug-03 Aug-04 Dec-05 Sep-05 Jan-06 Oct-05 Apr-03 May-03 Apr-04 Apr-05 May-05 Mar-06 Jun-03 May-04 Jun-04 Jun-05 Dec-03 Dec-04 Sep-03 Sep-04 Jul-03 Oct-03 Jul-04 Oct-04 Jul-05 Jan-03 Jan-04 Jan-05 Mar-03 Mar-05 Mar-04 29 29 29
PETROBRAS Ethanol Market Brazil-Japan Ethanol Inc. • Recently, Petrobras incorporated Brazil-Japan Ethanol Inc. • The company will import and distribute Brazilian-produced ethanol in Japan; • Development of technical and commercial solutions for the reliable and long term supply of alcohol in the Japanese market; • Petrobras will break into one of the most complex and important energy markets in the World: • ethanol logistics distribution • fuel distribution sector in Japan. 32 32 32
PETROBRAS H-Bio • H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil; • Hydrogenation of a blend of diesel and vegetable oils; Hydrogen Diesel Agribusiness Processed Fractions Seeds Oil Farming Crushing Refinery or Diesel or Transerestification Biodiesel Ethanol Distributors or or B2 or B5 Diesel Methanol mixture Stations Glycerin + Others 33 Complementary and not competitive processes 33 33
PETROBRAS International Presence in 21 Countries Total CAPEX: US$ 12.1 billion Targets 0,8% 1,7% 0,8% 568 1,7% Thous. boed E&P 185 Refining and 259 Marketing 262 Petrochemical 24,8% 94 96 383 Gas & Energy 70,2% 168 163 Distribution Corporate 2004 2005 2011 Target Oil and NGL Natural Gas Core Areas: • Refining • Add value to Brazilian heavy oil exports • E&P: West Africa (Nigeria and Angola) & Gulf of Mexico: • Apply deep water and deep well drilling technology. • Latin America: • Leadership as an integrated energy company • Investments in the United States: US$ 2.7 billion 35 35 35
PETROBRAS The US Sector of Gulf of Mexico Current Portfolio UNITED STATES Position • 80 shallow water New Orleans blocks and 197 Houston deepwater blocks • 6 Producing Fields Coulomb North • 3 discoveries Deep Shelf Gas Prospects Zion (appraisal) and studies of the production Aquila Redbud Bryce Sedona development Aquarius Cottonwood Andromeda Live Oak • 1 field on development. Pegasus Monte Belo Centaurus Cascade Crater Flavian • 1 onshore prospect Scorpio Hadrian Malo St Chinook Cygnus • Proven reserves (SPE, Claudius 2005): 39,0 million boe Aurelian Hadrian S Das Bump • Average production Producing Fields (2005): 5,0 thousand boe/d Discoveries MEXICO Prospects • In the latest Western Gulf of Mexico Lease Sale (Aug/16/2006), Petrobras had the highest number of bids (34), totaling an amount of US$ 45,5 million. 36 3636
PETROBRAS Main Projects in the Gulf of Mexico Cottonwood Chinook Cascade (Development) (Under Evaluation) (Under Evaluation) • Petrobras (80%) - Operator • Petrobras (67%) - Operator • Petrobras (50%) - Operator • Mariner (20%) • Total (33%) • Devon (50%) Saint Malo Blackbeard, Megamata (deep gas) (Under Evaluation) Andromeda (WGoM), Alsace (GBanks) • Petrobras (25%) • EXPLORATION WELLS •Petrobras (20% to 100%) • Unocal (20%) - Operator • Various partners (Exxon, Newfield, BP, • Chevron (13%) • BHPBilliton, Dominion, Carrizo, Hess, • Encana (6%) • Kerr McGee • Devon (23%) LONG TERM COMMITMENTS • Exxon (4%) Two drilling units on long term contracts • ENI (1%) 37 37 37
PETROBRAS Recent Developments Gulf of Mexico Cascade and Chinook Fields • Acquisition of additional participation in the Cascade and Chinook fields; • Use of a FPSO* facility, a development concept so far never deployed in the American waters of the Gulf of Mexico; • Aggressive exploration campaign in the Gulf of Mexico, including acquisition of additional acreage and participation in wells being drilled or planned for the near future; Petrobras consolidating its position as one of the leading players in the ultra deep waters of the Gulf of Mexico, benefiting from its deepwater expertise and technology developed offshore Brazil 38 * Floating Production Storage and Offloading 38 38
Final Comments Vertical Integration Comparison Majors Average * 4,793 3,176 2,735 National Oil Companies Average ** 1,579 1,630 4,329 2011: Petrobras New Refinery will add 200 thous. bpd capacity 2,296 2010: Pasadena Refinery revamp concluded – processing 70 2,114 thous. bpd of heavy oil Product Sales (thous. bpd) 2,217 Refining (thous. bpd) 3,400 Production (thous. boed) Year 2011 *** 2004 figures, except for Petrobras (2005) 39 39 * Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF ** NOC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach Source: PIW Intelligence and Petrobras
PETROBRAS Question and Answer Session 40 40 40

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"Business Plan 2007-2011, the Gulf of Mexico, and Renewable Fuels"

  • 1.
    Petrobras Business Plan 2007-2011, the Gulf of Mexico, and Renewable Fuels José Sergio Gabrielli de Azevedo President and CEO September 20th, 2006 1
  • 2.
    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 2
  • 3.
    Diversified Shareholder Base • More than 400,000 investors in Brazil and abroad • 60% of the economic value of Petrobras in private hands • Almost 40% of the stocks with international investors 9,5% 20,3% Foreign 10,9% 26,4% 31,2% 31,5% 39,8% 46,4% 10,3% 18,0% 9,9% 8,0% 8,3% Bovespa 25,1% 23,1% 28,7% 20,7% 20,4% 53,6% 61,6% 44,4% 40,6% 40,1% 39,8% Oct/1992 Jul/2000 After Aug/00 After Jul/01 Dec/2003 Aug/06 offering offering Governm ent (1) (%) Bovespa Brazil Bovespa Foreign ADRs Free Float 46,4 38,4 55,6 59,4 59,9 60,2 (1) Includes BNDES / BNDESPAR 3 3
  • 4.
    US$ million - C Pe 50 100 150 200 250 300 350 400 ia tr . Va ob le ra s* do R US$ 359 million io D oc PETROBRAS e* US$ 256 million B P US$ 247 million N ok A ia m ér US$ 223 million Source: Bloomberg ic a M Petrobras’ ADRs in NYSE óv il* El US$ 150 million an C or * Every ADR program of the company. p. US$ 128 million C 1H06 daily average em ex B US$ 123 million H P B ill ito Turnover (traded volume) in NYSE n US$ 118 million To ta l US$ 111 million Te na ris US$ 101 million 44 4
  • 5.
    50 100 150 200 250 300 Jan-05 Feb-05 Mar-05 Apr-05 PETROBRAS May-05 01/01/2005 = 100 Jun-05 Jul-05 Aug-05 PBR Sep-05 Oct-05 Nov-05 Petrobras’ ADRs x Amex Oil Dec-05 Jan-06 Feb-06 Amex Oil Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 55 50% 5 105%
  • 6.
    PETROBRAS Publicly traded peer comparison Proven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005 ExxonMobil 22,4 ExxonMobil 1.484 Lukoil* 20,1 BP 1.448 Petrochina* 18,5 Shell 1.267 BP 17,6 Petrochina* 945 Yukos* 13,0 Chevron Texaco 919 Chevron Texaco 12,1 Total 908 7th 809 Petrobras 11,8 Petrobras ConocoPhillips 660 7th Shell 11,5 Total 11,1 Yukos* 624 ConocoPhillips 9,4 Lukoil* 614 ENI 6,8 ENI 593 Statoil 427 Statoil 4,3 Repsol 416 Sinopec* 3,8 Sinopec 309 Repsol 3,3 Reserve life (years) – Dec. 2005 Refining capacity (thousand bpd) - 2005 Lukoil* 32,7 XOM 6.343 Yukos* 20,8 RDS 4.026 Petrochina* 19,6 Sinopec 2.998 ExxonMobil 15,1 BP 2.747 Petrobras 14,6 TOT 2.708 ConocoPhillips 14,2 5th COP 2.275 Chevron Texaco 13,1 PetroChina 2.202 12,3 CVX 2.195 Sinopec Total 12,2 Petrobras 2.114 9th BP 12,2 Yukos 1.223 ENI 11,5 Repsol 1.175 Statoil 10,1 Lukoil 1.139 Shell 9,0 ENI** 524 Repsol 8,0 Statoil 296 6 Source: Evaluate Energy and Company Reports 66
  • 7.
    Corporate Strategy Corporate Strategy Social and Environmental Growth Profitability Responsibility Lead the Latin American oil, natural gas, oil products and biofuels market, working as an Liderar o mercado de petróleo, gás natural e derivados na América Latina, integrated energy company, empresa integrada de energia, com expansão renewable energy and atuando como with selective expansion in petrochemical, seletiva international activities. da petroquímica e da atividade internacional. Consolidate and Develop and lead Selectively Selectively Expand participation increase the domestic expand expand interest in biofuels market, competitive natural gas market international in the lead the domestic advantages in and perform in an activities in an petrochemicals biodiesel production the Brazilian and integrated manner integrated market and increase South American in the gas and manner with the participation in the oil and oil power market in Company’s ethanol business products market South America business Operational, management, technological and human resources excellence 7 7
  • 8.
    Integration of theCompany's Activities Petrochemical Imported Imported Oil Plants H - Bio Oil Products Biodiesel Oil Products Throughput Brazilian Oil sold in Brazil in Brazil Production Ethanol International Oil International International Production Refining Sales Domestic Natural Gas Other Production Energy Renewables Imported Gas Infrastructure Industry LNG 8 8
  • 9.
    Investment Plan Business Plan 2007-2011 US$ 87.1 billion 56% 14% 49.3 U S$ 12 49,3 .1 bi 31.0 23,0 US$ 75.0 bi 1.8 1,8 2.3 3.3 23.0 3% 2,2 3,3 7,5 26% 7.5 1.0 3% 1.0 4% 12.4 9% 86% E&P Downstream G&E Brazil International Petrochemical Distribution Corporate Note: Includes International 9 9
  • 10.
    Financial Targets Sources & Uses Sources Uses (US$ 99.3 billion) (US$ 99.3 billion) 12.6 12.2 86.7 (*) 87.1 2004-2010 2004-2010 Financing Debt Amortization Cash Flow Capex • Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011). 10 10
  • 11.
    Upstream • Strong investments in production will optimize the development of Petrobras’ proven reserves, aiming light oil production and a minimum reserve/production ratio of 15 years. • Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells classified as discovery or producing wells. Undeveloped Reserves / Total Reserves* (2005) 60,0% 54,3% 53,1% 51,5% 50,5% 50,0% 43,8% 40,5% 39,7% 40,0% 34,3% 30,0% 29,7% 30,0% 25,0% 20,3% 20,0% 12,9% 10,0% 0,0% n C na l as il c BP l s PF l il ta el oi ro ko pe ob llip O i To Sh at br ev Ch -Y O Lu no nM i St tr o Ph CN ol Ch tr o Si 11 xo ps Pe co Pe 11 Ex Re no 17 Co * Source: Evaluate Energy
  • 12.
    Upstream Production targets – Oil & NGL and Natural Gas Thousand boed 7.5% p.a. 4,556 278 7.8% p.a. 3,493 742 185 383 724 2,403 2,036 2,020 2,217 101 96 551 85 94 133 163 289 161 168 274 250 265 2, 812 2, 374 1, 880 1, 540 1, 684 1, 493 2003 2004 2005 T a r get 2 006 T a rg e t 2 0 1 1 2015 For ecast Oi l and N GL - B r az i l N at ur al Gas - B r az i l 12 12 Oi l and N GL - I nt er naci ona l N at ur al Gas - I nt e r naci onal
  • 13.
    Natural Gas andEnergy Domestic natural gas market Natural gas market 140 Variation 2004 x 2005 Others 150% 121.0 121.0 120 Industry 8,30% 17.7% p.a. up to 20.0 Thermoplants -26,04% 100 34 up to 30.0 80 Million m3/day 38,6 60 36.9 45.4 40 13,5 5,4 up to 71.0 20 22,9 24,8 48,4 0 9,6 7,1 2004 Consumed in Maximum Potential Supply 2005 Demand 2011(*) 2011 Thermoplants Industry Other National Production Bolivian Imports LNG 13 13 * Considers maximal dispatch for every thermoelectric power plant
  • 14.
    Downstream Refining Investments New Refinery in the USA • Petrobras has acquired 50% of the Pasadena Refinery System Inc. (PRSI), located in Texas, USA; • Total Investment: US$ 370 million; Petrobras share of upgrade US$ 1 billion • The refinery, which already has a capacity of 100,000 bbl/day, will be upgraded to handle 70,000 bbl/day of heavy oil and feedstock (including Marlim field’s production); • The upgraded refinery will be ready in four years. After the revamp project all products will match USA highest standards; • Possible increase in capacity to 200,000 bbl/day. 16 16
  • 15.
    Downstream Refining Investments New Refinery in Pernambuco • Investment: US$ 2,5 billion • Throughput capacity: 200 thousand heavy oil barrels (50% Petrobras oil / 50% PDVSA oil) • Focusing diesel and LPG production maximization, the new refinery will aim the growth of oil products demand in the Northeast. • The Northeast Region, which responds for 19% of oil products demand and holds only one refinery in Bahia, will no longer be a fuel importer (either from refineries in Brazil or abroad). • Costs reduction: oil products transportation are more expensive than for crude oil. 17 17
  • 16.
    PETROBRAS The Petrochemical Chain Oleophines Intermediate Exploration/ Refining and Aromatics Polymers Transformation Uses Production Production Production Natural Gas Liquids Oleophines Packaging Poliethylene Ethylene Ethane Polipropylene Processes Films Propane Propene Styrene/PS Components Extrusion PTA/PET Blow Automotive AA/SAP Injection Pipes Aromatics MEG Wires Refineries Benzene Home Appliance Oil (Naphta) P-Xylene Fibers Non-integrated oil companies Petrochemical companies Integrated Oil companies Tranformation Industry Total Capex US$ 8.4 billion of which US$4.9 billion basic petrochemicals and US$ 3.5 billion downstream 20 20 20
  • 17.
    PETROBRAS Carbon intensity reductionof operations and products Oil Natural Gas Renewables Availability of 855,000 m3/year of biodiesel Processing 425,000 m3/year of vegetable oil (H-BIO) 3.5 million m3 ethanol exports 240 MW installed capacity of power generation from renewable sources Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent) Investments of US$ 0.7 billion in renewable energy and biofuels 21 21 21
  • 18.
    Brazilian Experience Fuel Ethanol Program Evolution Ethanol Program of Gasohol and Emission Renewables Program Implanted Ethanol Cars Controls Gasohol and and (BLENDS) (2nd oil shock) (PROCONVE) Flex fuel Cars Hydrogen Program for oil imports reduction Environmental Benefits 70’s 80´S 90´S 00´S Future 22 22
  • 19.
    Facts about EthanolMarket in 2005 • Ethanol global market is 46.5 Billion Liters (2005) • Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production) • Today the ethanol consumption is 2.6% of gasoline MKT • 10% of ethanol in gasoline will represent 118 Billion Lt 1 Ton Sugar Cane ~ = 1.2 boe SUGAR 153 KG 608 x 103 KCAL BAGASSE (50% UMIDADE) 276 KG 598 x 103 KCAL LEAVES (*) (15% HUMIDY) 512 x 103 KCAL 165 KG 1 Ton-Field 1 boe 24 1718 x 103 KCAL 24 1718 x 103 KCAL 1,386 x 103 KCAL
  • 20.
    Raw Material Comparison Raw Material Energy Output / Energy Input(boe) Wheat 1.2 Corn 1.3 – 1.8 Sugar Beet 1.9 Sugar Cane 8.3 (under Brazilian production conditions) Production / ha Quantity of Energy Output Raw Material (kg) Ethanol / ha / Energy Input (boe) Sugar Cane 85,000 7,080 liter 8.3 Corn 10,000 4,000 liter 1.3 – 1.8 25 25
  • 21.
    Sugar Cane CropProfile 2005 Anhydrous and Hydrous Ethanol => 17 Billion liters 9,70% 40,84% 49,46% Anhydrous, Hydrous and Neutral Sugar Cachaça, Sweet and Animal Feed 26 26
  • 22.
    PETROBRAS Flex-Fuel Vehicles • Consumer wants to decide the fuel at the gas station • Fuel price is one the most important factor • Consumer is aware of pollution and renewable fuels • Today cars manufacturer is producing 80% of FFV in Brazil LIGHT VEHICLES TOTAL SALES units 150,000 Ethanol Gasoline FFV 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Nov-05 Feb-06 Aug-05 Nov-03 Nov-04 Feb-04 Feb-05 Feb-03 Aug-03 Aug-04 Dec-05 Sep-05 Jan-06 Oct-05 Apr-03 May-03 Apr-04 Apr-05 May-05 Mar-06 Jun-03 May-04 Jun-04 Jun-05 Dec-03 Dec-04 Sep-03 Sep-04 Jul-03 Oct-03 Jul-04 Oct-04 Jul-05 Jan-03 Jan-04 Jan-05 Mar-03 Mar-05 Mar-04 29 29 29
  • 23.
    PETROBRAS Ethanol Market Brazil-Japan Ethanol Inc. • Recently, Petrobras incorporated Brazil-Japan Ethanol Inc. • The company will import and distribute Brazilian-produced ethanol in Japan; • Development of technical and commercial solutions for the reliable and long term supply of alcohol in the Japanese market; • Petrobras will break into one of the most complex and important energy markets in the World: • ethanol logistics distribution • fuel distribution sector in Japan. 32 32 32
  • 24.
    PETROBRAS H-Bio • H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil; • Hydrogenation of a blend of diesel and vegetable oils; Hydrogen Diesel Agribusiness Processed Fractions Seeds Oil Farming Crushing Refinery or Diesel or Transerestification Biodiesel Ethanol Distributors or or B2 or B5 Diesel Methanol mixture Stations Glycerin + Others 33 Complementary and not competitive processes 33 33
  • 25.
    PETROBRAS International Presence in 21Countries Total CAPEX: US$ 12.1 billion Targets 0,8% 1,7% 0,8% 568 1,7% Thous. boed E&P 185 Refining and 259 Marketing 262 Petrochemical 24,8% 94 96 383 Gas & Energy 70,2% 168 163 Distribution Corporate 2004 2005 2011 Target Oil and NGL Natural Gas Core Areas: • Refining • Add value to Brazilian heavy oil exports • E&P: West Africa (Nigeria and Angola) & Gulf of Mexico: • Apply deep water and deep well drilling technology. • Latin America: • Leadership as an integrated energy company • Investments in the United States: US$ 2.7 billion 35 35 35
  • 26.
    PETROBRAS The US Sector of Gulf of Mexico Current Portfolio UNITED STATES Position • 80 shallow water New Orleans blocks and 197 Houston deepwater blocks • 6 Producing Fields Coulomb North • 3 discoveries Deep Shelf Gas Prospects Zion (appraisal) and studies of the production Aquila Redbud Bryce Sedona development Aquarius Cottonwood Andromeda Live Oak • 1 field on development. Pegasus Monte Belo Centaurus Cascade Crater Flavian • 1 onshore prospect Scorpio Hadrian Malo St Chinook Cygnus • Proven reserves (SPE, Claudius 2005): 39,0 million boe Aurelian Hadrian S Das Bump • Average production Producing Fields (2005): 5,0 thousand boe/d Discoveries MEXICO Prospects • In the latest Western Gulf of Mexico Lease Sale (Aug/16/2006), Petrobras had the highest number of bids (34), totaling an amount of US$ 45,5 million. 36 3636
  • 27.
    PETROBRAS Main Projects inthe Gulf of Mexico Cottonwood Chinook Cascade (Development) (Under Evaluation) (Under Evaluation) • Petrobras (80%) - Operator • Petrobras (67%) - Operator • Petrobras (50%) - Operator • Mariner (20%) • Total (33%) • Devon (50%) Saint Malo Blackbeard, Megamata (deep gas) (Under Evaluation) Andromeda (WGoM), Alsace (GBanks) • Petrobras (25%) • EXPLORATION WELLS •Petrobras (20% to 100%) • Unocal (20%) - Operator • Various partners (Exxon, Newfield, BP, • Chevron (13%) • BHPBilliton, Dominion, Carrizo, Hess, • Encana (6%) • Kerr McGee • Devon (23%) LONG TERM COMMITMENTS • Exxon (4%) Two drilling units on long term contracts • ENI (1%) 37 37 37
  • 28.
    PETROBRAS RecentDevelopments Gulf of Mexico Cascade and Chinook Fields • Acquisition of additional participation in the Cascade and Chinook fields; • Use of a FPSO* facility, a development concept so far never deployed in the American waters of the Gulf of Mexico; • Aggressive exploration campaign in the Gulf of Mexico, including acquisition of additional acreage and participation in wells being drilled or planned for the near future; Petrobras consolidating its position as one of the leading players in the ultra deep waters of the Gulf of Mexico, benefiting from its deepwater expertise and technology developed offshore Brazil 38 * Floating Production Storage and Offloading 38 38
  • 29.
    Final Comments Vertical Integration Comparison Majors Average * 4,793 3,176 2,735 National Oil Companies Average ** 1,579 1,630 4,329 2011: Petrobras New Refinery will add 200 thous. bpd capacity 2,296 2010: Pasadena Refinery revamp concluded – processing 70 2,114 thous. bpd of heavy oil Product Sales (thous. bpd) 2,217 Refining (thous. bpd) 3,400 Production (thous. boed) Year 2011 *** 2004 figures, except for Petrobras (2005) 39 39 * Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF ** NOC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach Source: PIW Intelligence and Petrobras
  • 30.
    PETROBRAS Question and Answer Session 40 40 40