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Ethanol america s conference
Petrobras is a large, integrated Brazilian oil and gas company. It aims to achieve self-sufficiency in oil production and consumption for Brazil by increasing its investments in renewable fuels like ethanol and biodiesel. Petrobras plans to invest over $780 million in renewable energy sources between 2007-2011, including expanding Brazil's domestic biodiesel production and ethanol exports. The company sees opportunities to apply its expertise in Brazilian ethanol to expand global distribution networks and break into new markets like Japan.
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Ethanol america s conference
- 1. PETROBRAS Petrobras and Ethanol Perspectivesfrom a Brazilian Oil Company Ethanol Finance and Investment Americas Conference Ted Helms General Manager PETROBRAS New York Office 1
- 2. PETROBRAS Petrobras: World ClassIntegrated Public Energy Company Proved Reserves as of Dec 31, 2005 (billion boe) 2Q2006 Oil & Gas Production (thousand boed) 5,000 22.4 4,163 4,018 25 4,000 3,253 20 17.6 1,462 1,487 2,668 2,537 3,000 2,290 2,273 15 12.9 11.9 11.8 11.7 1,356 10.7 805 1,748 2,000 975 824 378 10 6.9 1,098 2,701 2,531 692 5 3.3 1,000 1,897 1,863 1,466 1,895 600 1,562 1,056 0 498 0 4 4 l i BP s ll n F il ta s² En l i BP e n as ba l¹ il ob F³ ta ro s² En YP ob To p ro Sh el p To ev YP illi br tro nM Sh ev illi nM ol Ph tro Ch RD Pe Ph Ch ps xo ol RD xo Pe co ps Ex Re co Ex no Re no Oil Gas Co Co Market Value as of September 19, 2006 (US$ 2005 Refining Capacity (thousand boed) 5 billions) 500 8,000 394 6,400 400 6,000 300 220 4,026 213 200 148 4,000 2,832 2,708 138 2,610 2,195 109 97 90 2,156 100 34 2,000 1,233 524 0 0 6 l i BP l n as F il ta s En el ob ro p YP l i BP To l as Sh n il F br s ta En illi el ev ob ro ilip YP nM To tro Sh Ph br ol ev Ch RD nM Ph tro ps xo Pe ol co Ch RD xo ps Ex Re co Pe no Ex Re no Co Co Notes: Based on information from company financials and Wall Street research 1 Reflects only those activities relating to the Oil Products business 2 Proforma for acquisition of Burlington Resources 3 Includes revisions on Bolivian reserves 4 Includes volumes added from Unocal acquisition 5 Includes equity in affiliates 6 Based on capacity of wholly owned refineries 2
- 3. PETROBRAS Achieving Self-Sufficiency inOil Consumption & Production Production/ Consumption 52% 70% 91% 100% 114% 2500 2300 2000 1806 1802 1761 1686 1722 1769 1700 1783 1766 2060 1800 1684 1500 Self-Sufficiency 1500 1540 1493 1336 1271 1000 1132 1004 869 Petrobras’ Production 500 Brazilian Consumption 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 (*) Petrobras' estimate considering an average growth of 2.6 % per year 3
- 4. PETROBRAS Overview of theCompany's Activities Petrochemical Imported Imported Oil Plants H - Bio Oil Products Biodiesel Oil Products Brazilian Brazilian Oil sold in Brazil Refining Production Throughput Ethanol International Oil International International Production Refining Sales Domestic Natural Gas Other Production Energy Renewables Imported Gas Infrastructure Industry LNG Expansion/future activities 4
- 5. PETROBRAS Corporate Strategy evolvingto include International, Gas, Petrochemicals, Bio- fuels 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 5
- 6. PETROBRAS Petrobras Investment Plan2007-2011 BP 2006-10 (2007-11 Period) BP 2007-11 US$ 52.4 billion US$ 87.1 billion 59% 56% 49.3 31.0 1.0 1.0 12.4 2% 4.7 1.8 2.3 2.3 3.3 23.0 2% 24% 3% 26% 4% 7.5 9% 3% 4% 9% E&P Downstream G&E Petrochemical Distribution Corporate Note: Includes International 6
- 7. PETROBRAS Renewable Energy andBiofuels (2007-2011) 2007-2011 Investments 2011 Target US$ 136 MM Biodiesel Plants Availability of 855 Thous. m3/year Processing 425 Thous. m3/year US$ 140MM H-Bio (Bio-Refining) of vegetable oil US$ 170MM Alcohol pipelines 3.5 million m3 Ethanol Exports US$ 70MM Alcohol Vessel Project US$ 104MM Wind Power Additional 240 MW Installed Capacity of US$ 123MM Photovoltaic Power Generation from Renewable Sources Other Renewable Energy Sources Investments of US$ 780 MM in development of renewable energy sources and biofuels 7
- 8. PETROBRAS Domestic Refined Productsand Natural Gas Market in Brazil 3500 3.1% p.y 2,117 3000 211 97 Thousand bpd 2500 1,766 935 128 2000 108 282 777 1500 368 237 147 1000 224 315 126 500 201 786 295 0 2005 2011 Natural Gas LPG Ethanol** Gasoline Naphta Diesel* + QAV Fuel Oil Other * Includes Biodiesel (2%) ** Assumes 40% of gasoline market 8
- 9. PETROBRAS Consumption by LightVehicle in Brazil Ethanol Market-share: 14.8% + 19.92% ⇒ 34.7% NGV Hydrous Ethanol 5.5% 14.8% Gasoline (E25) 79.7% Anhydrous Alcohol represents 19.92% of Vehicle consumption Source: ANP and Gás Brasil (2004) 9
- 10. PETROBRAS Evolution of FlexfuelAutomobile Productionl Light Vehicles Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% may may jan/04 nov jan/05 nov jan/06 jun jun jul dec jul dec feb aug sep feb aug sep feb mar apr mar apr mar oct oct FFV Gasoline Diesel Oil Ethanol 10
- 11. PETROBRAS Gradual Replacement ofConventional Engines LIGHT VEHICLES FLEET (thousand units) 20,000 CNG vehicles FFV since 2003 335 1,108 44 18,000 807 439 626 1,004 288 764 782 810 143 734 843 16,000 57 686 18 1,996 1,820 632 2,230 1,678 9 597 2,449 546 2,712 14,000 5 2,972 499 3,221 3,471 12,000 3,716 10,000 8,000 14,439 14,680 14,431 14,075 13,506 12,755 6,000 11,399 12,019 10,463 9,088 4,000 2,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Gasoline Ethanol Diesel Oil CNG FFV 11
- 12. PETROBRAS Ethanol:Learning Curve Driving Down Ethanol Prices More than 400 types of Sugar-Cane Trend (Anhydrous Ethanol Prices) Trend (Rotterdam Gasoline Prices) Prof. Goldemberg, Coelho, Nastari and Lucon - USP 12
- 13. PETROBRAS The Potential toExpand World Production Is Enormous North and Europe Central America 9.8% 37% Brazil Brazil 35% 35% Asia South America 16.2% 38% Current Market Distribution of World Consumption •Ethanol global market is 46.5 Billions Liters • Ethanol as a Fuel is 30.6 Billions Liters, or 67% of total ethanol production •Today the ethanol consumption is 2.6% of gasoline MKT • Increasing ethanol to 10% of gasoline will represent 118 Billions Lt 13
- 14. PETROBRAS Brazil Enjoys EnormousAdvantages in Ethanol Production Raw Material Energy Output / Energy Input Wheat 1.2 Corn 1.3 – 1.8 Sugar Beet 1.9 Sugar Cane (under Brazilian production conditions) 8.3 Production / ha Quantity of Ethanol Energy Output / Raw Material (kg) / ha Energy Input Sugar Cane 85,000 7,080 liter 8.3 Corn 10,000 4,000 liter 1.3 – 1.8 14
- 15. PETROBRAS Land use in Brazil Area Type (Mha) • Total country 851 • Native Amazon Forest 370 • Secondary Amazon Forest and Others 180 • Native Forests 6 • Pasture 197 • Temporary Crops 59 • Permanent Crops 7,6 • Available land 263 • Available land with low impact (*) 90 Source: FAO, 2002 and EMBRAPA (*) 15
- 16. PETROBRAS Petrobras Will ParticipateThrough Export Logistics New Ethanol Pipeline (800 km) New Water Way for Ethanol Ethanol Export 8.0 Million m3 in 2012 Marine Terminal Rio de Janeiro Marine Terminal São Paulo 16
- 17. PETROBRAS Petrobras Will UseEthanol Knowledge to Expand World Distribution 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. 17
- 18. PETROBRAS Biodiesel Will FollowEthanol Trajectory Law 11.097/2005 – established minimal percentage for biodiesel mix in diesel 2008 2005 to From 2012 to 2012 on 2007 (2% required) (5% required) (2% allowable) (5% allowable) Brazilian market Brazilian market Brazilian market 0 – 5.2 million barrels 5.2 – 15.7 million barrels 15.7 million barrels Petrobras market share Petrobras market share Petrobras market share 0 – 1.3 million barrels 1.3 -3.8 million barrels 3.8 million barrels • Petrobras target for 2010: Production of 8,200 bpd of Biodiesel 18
- 19. PETROBRAS Bifuel Production-Two Approaches to Using Vegetable Oil Hydrogen Diesel Agribusiness Processed Fractions Seeds Oil Farming Crushing Refinery Diesel or or Ethanol Transerestification Biodiesel or Distributors B2 or B5 or Methanol Diesel mixture Stations Glycerin + Others Complementary and not competitive processes 19
- 20. PETROBRAS Bio-diesel Production FacilitiesUnderway 3 Projects Being Implemented Quixadá Capacity: 171 thousand m3/year CE Investments: ~ US$ 60 million Inputs Family Agriculture: castor, cotton, and palm. Complementary: soy. BA Jobs Generations: Candeias Construction: 1,200 direct and 400 indirect Operation: 105 direct MG Montes Raw material production:70,000 families Claros Start up: 4 Q/2007 semi-arid region All Petrobras Biodiesel has Social Fuel Seal 20
- 21. PETROBRAS Legal Requirements forBio-Diesel Voluntary Social Seal • Given to biodiesel producers that: • Purchase a minimum percentage of raw materials from family agriculture: • 50% NE and semi-arid region • 10% NW and CW region • 30% SE and S region • Sing a formal contracts with the family agriculture that includes: • Contract period • Value to purchase and price readjustment criteria • Raw material delivery conditions • Safeguards for each party • Identification and agreement that a representative of the farmers participated in the negotiations • Assure assistance and technical training for the agriculture families 21
- 22. PETROBRAS Biodiesel Production Cost Capacity Ton/year 10,000 35,000 65,000 100,000 Chemicals R$/litro 0.11 0.10 0.10 0.10 Energy R$/litro 0.05 0.02 0.02 0.02 Depreciation R$/litro 0.08 0.08 0.05 0.04 Labor R$/litro 0.11 0.04 0.02 0.015 Maintenance R$/litro 0.05 0.04 0.03 0.03 Oper Cost R$/litro 0.40 0.30 0.22 0.21 Investment US$ MM 5 8 10 12 Laboratory US$ 500,000 Source: Dedini, Intecnial, Lurgi 22
- 23. PETROBRAS Results of Auctionfor Biodiesel Biodiesel Sales in ANP´s Auction (B100 m3 ) Quantity Price Auction Delivery (R$/L) (mil m3) 10 NOV/2005 70 JAN/DEZ/2006 1,90 + ICMS 20 MAR/2006 170 JUL/2006 TO JUN/2007 1,86+ICMS 30 11/JUL/2006 Ofertado 1.266 JAN/DEC/2007 1,75+ICMS Arrematado 600 40 12/JUL/2006 Voluntary Participation of Petrobras and Refap – start sales ahead of schedule 23
- 24. PETROBRAS H-Bio – A Complementary, Proprietary Use of Vegetable Oil 2006-2007 • H-BIO in 4 refineries – using up to 256 thousand m3/year of vegetable oil • 9.1% of total soy oil export • Equivalent to 15% of Diesel imports 2008 • H-BIO in 5 refineries • Using up tp 425 thousand m3/year of vegetable oil • 15.1 % of total soy oil export • Equivalent to 25% of Diesel imports Main advantages: • No waste • Simple logistics • Improves diesel quality • Flexible vegetable oil source * Of total of Soybean oil exported, 2288 thousand m³ is crude oil, and 535 thousand m³ is refined oil ** Estimated volume of imported diesel in 2006 = 1.709 thousand m3 Sources: Abiove e Petrobras 24
- 25. PS2 PETROBRAS Continuing Research Efforts for Renewable Energy • Budget: US$ 32 million • 66 R&D projects • 6 Research Lines • Solar Photovoltaic • Biofuels • Solar Thermal • Biomass • Other renewables • Wind • Example: BioLignocellulosic Bioethanol • Raw material: sugar cane bagasse • Proprietary process • Successful ongoing bench-scale experiments • Patent issued • End of tests: 4thQ 2006 • Pilot plant start-up: 2ndQ 2007 • Demonstration plant start-up: 3rdQ 2010 25
- 26. Slide 25 PS2 PETROBRAS S.A.; 24/5/2004