Petrobras and Ethanol Perspectives from a Brazilian Oil Company

Transcription

1 Petrobras and Ethanol Perspectives from a Brazilian Oil Company Ethanol Finance and Investment Americas Conference Ted Helms General Manager PETROBRAS New York Office 1

2 Petrobras: World Class Integrated Public Energy Company Proved Reserves as of Dec 31, 2005 (billion boe) 22.4 ExxonMobil BP 17.6 RD Shell¹ Chevron Petrobras ConocoPhillips² Market Value as of September 19, 2006 (US$ billions) Total Eni Repsol YPF³ 2Q2006 Oil & Gas Production (thousand boed) 5,000 4,163 4,018 4,000 3,253 1,462 1,487 3,000 2,668 2,537 1,356 2,290 2, ,748 2,000 2,701 2, ,098 1,000 1,897 1,863 1,562 1,466 1,895 1, ExxonMobil BP RD Shell 4 Chevron ConocoPhillips² Oil Gas Total Petrobas 2005 Refining Capacity (thousand boed) 5 Eni Repsol YPF ExxonMobil BP 220 RD Shell 213 Total Chevron Eni ConocoPhillips Petrobras Repsol YPF 8,000 6,400 6,000 4,026 4,000 2,000 0 ExxonMobil RD Shell 2,832 2,708 2,610 BP Total ConocoPhilips 2,195 2,156 1,233 Chevron Petrobras Repsol YPF Eni 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 Achieving Self-Sufficiency in Oil Consumption & Production Production/ Consumption 52% 70% 91% 100% 114% Self-Sufficiency 2060 Petrobras Production Brazilian Consumption (*) Petrobras' estimate considering an average growth of 2.6 % per year 3

4 Overview of the Company's Activities Petrochemical Plants Imported Oil H - Bio Imported Oil Products Brazilian Oil Production Brazilian Refining Throughput Biodiesel Ethanol Oil Products sold in Brazil International Oil Production International Refining International Sales Domestic Natural Gas Production Other Renewables Energy Imported Gas Infrastructure Industry LNG Expansion/future activities 4

5 Corporate Strategy evolving to include International, Gas, Petrochemicals, Biofuels Corporate Strategy Growth Profitability Social and Environmental Responsibility Lead the Latin Liderar American o mercado oil, de natural petróleo, gas, gás oil natural products e derivados and biofuels na América market, Latina, working as an integrated energy atuando company, como empresa with selective integrada expansion de energia, in petrochemical, com expansão renewable seletiva energy and da petroquímica international e da atividade activities. internacional. Consolidate and increase competitive advantages in the Brazilian and South American oil and oil products market Develop and lead the domestic natural gas market and perform in an integrated manner in the gas and power market in South America Selectively expand international activities in an integrated manner with the Company s business Selectively expand interest in the petrochemicals market Expand participation in biofuels market, lead the domestic biodiesel production and increase participation in the ethanol business Operational, management, technological and human resources excellence 5

6 Petrobras Investment Plan BP ( Period) US$ 52.4 billion 59% US$ 87.1 billion 56% BP % 2% 4% 2.3 9% % E&P Downstream G&E Petrochemical Distribution 3% 26% 3% % Corporate 3.3 9% Note: Includes International 6

7 Renewable Energy and Biofuels ( ) Investments 2011 Target US$ 136 MM Biodiesel Plants US$ 140MM H-Bio (Bio-Refining) US$ 170MM Alcohol pipelines US$ 70MM Alcohol Vessel Project US$ 104MM Wind Power US$ 123MM Photovoltaic Other Renewable Energy Sources Availability of 855 Thous. m 3 /year Processing 425 Thous. m 3 /year of vegetable oil 3.5 million m 3 Ethanol Exports Additional 240 MW Installed Capacity of Power Generation from Renewable Sources Investments of US$ 780 MM in development of renewable energy sources and biofuels 7

8 Domestic Refined Products and Natural Gas Market in Brazil Thousand bpd , % p.y 2, Natural Gas LPG Ethanol** Gasoline Naphta Diesel* + QAV Fuel Oil Other * Includes Biodiesel (2%) ** Assumes 40% of gasoline market 8

9 Consumption by Light Vehicle in Brazil Ethanol Market-share: 14.8% % 34.7% NGV 5.5% Hydrous Ethanol 14.8% Gasoline (E25) 79.7% Anhydrous Alcohol represents 19.92% of Vehicle consumption Source: ANP and Gás Brasil (2004) 9

10 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10 jan/04 feb mar apr may jun jul aug sep oct nov dec jan/05 feb mar apr may jun jul aug sep oct nov dec jan/06 feb mar Evolution of Flexfuel Automobile Productionl Light Vehicles Sales FFV Gasoline Diesel Oil Ethanol

11 Gradual Replacement of Conventional Engines LIGHT VEHICLES FLEET (thousand units) 20,000 CNG vehicles FFV since ,000 16,000 14,000 12, , , , , , ,230 1,996 1,820 1,108 1, ,678 3,716 10,000 8,000 6,000 4,000 9,088 10,463 11,399 12,019 12,755 13,506 14,075 14,439 14,680 14,431 2, Gasoline Ethanol Diesel Oil CNG FFV 11

12 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 The Potential to Expand World Production Is Enormous North and Central America 37% South America 38% Brazil 35% Europe 9.8% Asia 16.2% 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 Brazil Enjoys Enormous Advantages in Ethanol Production Raw Material Wheat Corn Sugar Beet Sugar Cane (under Brazilian production conditions) Energy Output / Energy Input Raw Material Production / ha (kg) Quantity of Ethanol / ha Energy Output / Energy Input Sugar Cane 85,000 7,080 liter 8.3 Corn 10,000 4,000 liter

15 Land use in Brazil Type Total country Native Amazon Forest Secondary Amazon Forest and Others Native Forests Pasture Temporary Crops Permanent Crops Available land Available land with low impact (*) Area (Mha) , Source: FAO, 2002 and EMBRAPA (*) 15

16 Petrobras Will Participate Through Export Logistics New Ethanol Pipeline (800 km) New Water Way for Ethanol Ethanol Export 8.0 Million m 3 in 2012 Marine Terminal Rio de Janeiro Marine Terminal São Paulo 16

17 Petrobras Will Use Ethanol Knowledge to Expand World Distribution Brazil-Japan Ethanol Inc. Recently, Petrobras incorporated Brazil-Japan Ethanol Inc. The company will import and distribute Brazilianproduced 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 Biodiesel Will Follow Ethanol Trajectory Law /2005 established minimal percentage for biodiesel mix in diesel 2005 to 2007 (2% allowable) 2008 to 2012 (2% required) (5% allowable) From 2012 on (5% required) Brazilian market million barrels Petrobras market share million barrels Brazilian market million barrels Petrobras market share million barrels Brazilian market 15.7 million barrels Petrobras market share 3.8 million barrels Petrobras target for 2010: Production of 8,200 bpd of Biodiesel 18

19 Bifuel Production- Two Approaches to Using Vegetable Oil Agribusiness Seeds Processed Oil Hydrogen Diesel Fractions Farming Crushing or or Refinery Diesel Ethanol Transerestification Biodiesel or Distributors Methanol B 2 or B 5 mixture or Diesel Glycerin + Others Stations Complementary and not competitive processes 19

20 Bio-diesel Production Facilities Underway 3 Projects Being Implemented Quixadá Capacity: 171 thousand m 3 /year Investments: ~ US$ 60 million CE Inputs Family Agriculture: castor, cotton, and palm. Complementary: soy. BA Jobs Generations: Construction: 1,200 direct and 400 indirect Operation: 105 direct Raw material production:70,000 families Start up: 4 Q/2007 MG semi-arid region Candeias Montes Claros All Petrobras Biodiesel has Social Fuel Seal 20

21 Legal Requirements for Bio-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 Biodiesel Production Cost Capacity Ton/year 10,000 35,000 65, ,000 Chemicals R$/litro Energy R$/litro Depreciation R$/litro Labor R$/litro Maintenance R$/litro Oper Cost R$/litro Investment US$ MM Laboratory US$ 500,000 Source: Dedini, Intecnial, Lurgi 22

23 Results of Auction for Biodiesel Biodiesel Sales in ANP s Auction (B100 m3 ) Auction Quantity (mil m 3 ) Delivery Price (R$/L) 1 0 NOV/ JAN/DEZ/2006 1,90 + ICMS 2 0 MAR/ JUL/2006 TO JUN/2007 1,86+ICMS /JUL/ /JUL/2006 Ofertado Arrematado 600 JAN/DEC/2007 1,75+ICMS Voluntary Participation of Petrobras and Refap start sales ahead of schedule 23

24 H-Bio A Complementary, Proprietary Use of Vegetable Oil H-BIO in 4 refineries using up to 256 thousand m 3 /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 m 3 /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 = thousand m 3 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 Biofuels Biomass Wind Solar Photovoltaic Solar Thermal Other renewables 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

26 Slide 25 PS2 PETROBRAS S.A.; 24/5/2004