UK Energy in Brazil

The Oil and Gas Industry in Brazil The view of a former Regulator

Rio de Janeiro, March 11, 2013

Brazil in The Global Competitiveness Report 2012/13

The Global Competitiveness Report 2012/2013 (World Economic Forum)

Brazil analyzed amongst 144 countries

Basic

requirements

Innovation and

sophistication factors

Efficiency enhancers

Key Indicators 1. Gross Domestic Product (GDP) –

Brazil Rank 6 with USD 2,492.9 billion

2. Population – Brazil Rank 5 with around 200 million

3. GDP per capita – Brazil Rank 52 with around USD 13,000

4. GDP as a share of world GDP – Brazil

Rank 7 with 2.91 percentage of world GDP

Brazil in The Global Competitiveness Report 2012/13

WEF SOURCE: International Monetary Fund, World Economic Outlook Database; national sources

Brazil - E&P Governance Framework

BRAZIL´S OIL & GAS BUSINESS ENVIRONMENT

Opportunities to Investors

(All Sizes)

Petroleum Law

(Concession Regime)

1997

2003

G&G Studies by ANP

2005

Bidding Rounds for

Small, Medium and

Large Companies.

2007

Start Local Content

Certification by ANP

2009

Stop Bidding Rounds

2011

80 Companies

as O&G Operators

2013

Restart Bidding Rounds

Government (O&G National Policy)

1997

Creation of ANP and CNPE

(Open Market

and Start Bidding Rounds)

Production Policy and PROMINP

2003

Regulatory Agency (Regulation and Monitoring)

Local Content Policy

2005

PRE-SALT

2007

Gas Law

2009

PSC Regime

2011

New Royalties Distribuition

2013

BRAZIL´S OIL & GAS BUSINESS ENVIRONMENT

Source: ANP – OIL, NATURAL GAS AND BIOFUELS STATISTICAL YEARBOOK 2011

Proved oil reserves, by location (onshore and off shore) – 2001-2010

31-Dec-2012 @ 14,524.23 million bbl

Brazil - E&P Roadmap

Brazil’s Oil & Gas Business Environment

Source: ANP – National Agency of Petroleum, Natural Gas and Biofuels

NNF’s Vision:

Main Considerations about Brazil’s Oil & Gas Industry

Potential Pre-salt Political and Economic Stability Domestic Market Regulatory Stability Local Content

Long Term Opportunities

NNF’s Vision:

Main Considerations about Brazil’s Oil & Gas Industry

Local Content

Petrobras’ View • Fully aligned with Brazilian

Government’s regulations and guidelines.

• Easy after sales and services • Simplified Logistics - Fast

substitution of spare parts; • Use of local language and

local currency • Development of Local

capability

Regulator’s View

(ANP) • Government Policy • Contractual clause

Main Considerations about Brazil’s Oil & Gas Industry

Capital Availability

Local Content

Investment Projects

Demand for Goods and

Services

Technological &

Delivery Capacity Gaps

NNF’s Vision:

Main Considerations about Brazil’s Oil & Gas Industry

Foreign Investors

International Goods and

Services Suppliers

Brazilian O&G companies/

Foreign O&G companies in

Brazil

Opportunity

GAPS

NNF’s Vision:

‘Brazilian companies means companies that have manufacturing

processes and after-sales services in Brazil, thus, creating jobs and collecting taxes in the country.

Main Considerations about Brazil´s Oil & Gas Industry

④ Acquire local

companies ② and / or ③

② Establish

Joint Venture with local

company with recognized

service / manufacturing /

capacity

③

Establish Joint Venture with local

company with services, products

and technology similar or

complementary to the investor’s

①

Establish

Manufacturing Plant or Service Unit in

Brazil

Conclusion

Main Considerations about Brazil’s Oil & Gas Industry

• Brazil possesses high potential. Yet, there is a mismatch between projects’ timeframe and current technical capacity.

• The country does not have enough time to develop its

national industry in order to meet the equipment and services needs of the Oil & Natural Gas and Infrastructure sectors.

• GREAT OPPORTUNITIES FOR NEW COMERS

THANKS

Nelson Narciso

nnarciso@nnfenergy.com.br

+5521 95158361