1

BIOETHANOL & FLEX FUEL

IN BRAZIL

PETROBRASKuniyuki Terabe

Bangkok 28 – 30 June 2006

FEALAC Inter- regional Workshop on Clean Fuels and Vehicle Technologies

2

• PETROBRAS

• ETHANOL PRODUCTION

• ETHANOL USE IN BRAZIL

• FLEX FUEL CAR

• FUTURE OF ETHANOL AS FUEL

• CONCLUSION

AGENDA

3

PETROBRAS ATIVITIESPETROBRAS ATIVITIES

4

Petrobras in NumbersPetrobras in NumbersPetrobras in NumbersPetrobras in Numbers

16 Refineries with a capacity of 2,114 million bpd

Gross RevenueUS$ 50.6 billion

ethylene production: 2,4 million ton/year

gas sales: 32 million m3/day

proven reserves:

13 billion of boe (SPE)

oil and gas production:* 2,257 million boe/day

6,154 gas stations in Brazil (33% of retail market)

25% of retail market in Bolívia and 14% in Argentina

727 gas stations in Argentina

Pipelines: 30.318 km

Natural GasNatural Gas

PetrochemicalsPetrochemicals RetailingRetailing

E&PE&P

*Brazil and abroad

Refine, Transportation,

Trading

Refine, Transportation,

Trading

5

Petrobras in the worldPetrobras in the worldPetrobras in the worldPetrobras in the world

UruguayArgentina

Chile

Paraguay

Bolivia

Colombia

Venezuela

Mexico

USA - Houston

USA – New York

UK

Libya

Nigeria

Angola

Tanzania

ChinaJapan

Singapore

Peru

Ecuador

Iran

TradingExploration & Production

Distribution / Service Stations

Refining

Lubricant Sales

Representative Office

Headquarters

BRASIL

6

ETHANOL PRODUCTIONETHANOL PRODUCTION

7

•PETROBRAS

•ETHANOL PRODUCTION

•EVOLUTION OF ETHANOL USES

•FLEX FUEL CARS

•WORLD PRODUCTION

•INFRA-STRUTURES

•CONCLUSION

50 thousand sugar cane growers

313 Industrial Plants

Agents of Sugar Cane Industry

8

INTEGRATED SUGAR & ETHANOL PRODUCTIONINTEGRATED SUGAR & ETHANOL PRODUCTION

Process Heat & Cogeneration

SugarcaneTransport,

Cleaning & CrushingJuice

Treatment

Bagasse

Sugar Production

HydrousEthanol

Distillation Fermentation

DehydrationAnhydrous

EthanolMolasses

PrimaryJuice

Secondary +Filter Juice

Source: UNICA

9

Production of Sugar and EthanolProduction of Sugar and Ethanol 　　　　Production of Sugar and EthanolProduction of Sugar and Ethanol 　　　　

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,00016,00017,00018,00019,00020,00021,00022,00023,00024,00025,00026,00027,00028,00029,00030,00080

/81

81/8

2

82/8

3

83/8

4

84/8

5

85/8

6

86/8

7

87/8

8

88/8

9

89/9

0

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

year

k m

³

anhydrous hydrous total sugar

10

Main Production Areas in BrazilMain Production Areas in Brazil

Source: Brazilian Government

61%3%

8%1%

2%5%

4%

5%

5% 2%2%

1%1%

Mid South Region - 89% Production

North East Region - 11% Production

11

Coal6.4%

Natural GasNatural Gas9.0%9.0%

Oil38,4%

Biomass29.0%

Uranium1.2%

Hydroelectricity16.0%

Source: MME/2005

Energy Matrix in Brazil - 2005Energy Matrix in Brazil - 2005 Energy Matrix in Brazil - 2005Energy Matrix in Brazil - 2005

Charcoal12,8%

Sugar Cane

13.9%

Others2.3%

12

Raw Material Comparison Raw Material Comparison

RAW MATERIALRelative Production

Cost

Energy out /

Energy in

SUGAR CANE 38 8,3

CORN 64 1,3 - 1,8

WHEAT 92 1,2

SUGAR BEET 100 1,9

13

ETHANOL USE IN BRAZILETHANOL USE IN BRAZIL

14

EVERYETHING STARTED IN 1925

FIRST E100 in 1979

Bioethanol Use in Brazil

E >10 in 1970’s

1980’s ENVIRONMENTAL

15

• From 1925 up to 1975: Different Levels of Anhydrous Ethanol direct Blend in Gasoline . After 1975- PROALCOOL Fuel Ethanol blended as Additive and used to E100 cars

. In 1980’s : Environmental, leads excluded

• In In 19931993 : National law- mandatory use of ethanol as Oxygenate, 20% to 25%

• In 1997/1998: Deregulation of fuel ethanol - Free Market

• In 2003: New FFV-Flex Fuel Vehicles , Huge Demand of ethanol in Brazil;

• After 2004: Increasing International demand. Hydrogen production will be ?

Bioethanol use in Brazil

16

Hydrous Ethanol8.4%

NGV2.9%

Gasoline (E25)34.1%

Diesel54,6%

Fonte: ANP and Gás Brasil (2005)

AnhydrousAnhydrous

EthanolEthanol

8.5%8.5%

Ethanol Market-share:Ethanol Market-share:

8,4% + 8,5% 8,4% + 8,5% 16.9%16.9%

Fuel Consumption in Vehicle in Brazil 2005Fuel Consumption in Vehicle in Brazil 2005Fuel Consumption in Vehicle in Brazil 2005Fuel Consumption in Vehicle in Brazil 2005

17

FUEL ETHANOL USE IN BRAZIL

National / Imported Vehicle E100 or E20/E25 or FFV

National or Imported Boats E20/25

National Motocycle or Imported E20/E25

Aircraft – E100

18

19

EVERYETHING STARTED IN 1925

FLEX FUEL 2003

Bioethanol Use in Brazil

20

Good conditions to produce ethanol

Ethanol Producers and Government are interested

Consumers want to decide which fuel to use at the gas station

Government and Consumers are aware of pollution and

renewable fuels

Automobile producers are interest in producin

Flex Fuel Vehicles in BrazilFlex Fuel Vehicles in Brazil Flex Fuel Vehicles in BrazilFlex Fuel Vehicles in Brazil

21

Light Vehicles Sales in BrazilLight Vehicles Sales in BrazilLight Vehicles Sales in BrazilLight Vehicles Sales in Brazil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

jan

/04

feb

mar ap

r

may ju

n jul

aug

sep

oct

no

v

dec

jan

/05

feb

mar ap

r

may ju

n jul

aug

sep

oct

no

v

dec

jan

/06

feb

mar ap

r

Flex-Fuel Gasoline Diesel Ethanol

22

Light Vehicles Sales in BrazilLight Vehicles Sales in BrazilLight Vehicles Sales in BrazilLight Vehicles Sales in Brazil

23

FLEX FUEL CAR PERFORMANCE

Consumo de Combustível dos Veículos Corsa

11

,43

11

,11

9,5

7

7,0

8 10

,24

16

,58

16,6

4

14

,17

0

3

6

9

12

15

18

CONS. URBANO CONS. ESTRADA

km

/l

Corsa Gas. 1.8 Corsa Flex c/Gas. Corsa Flex c/Mist. Corsa Flex c/Al.

(- 3

%)

(- 1

6%

)

(- 3

8%

)

(s/ d

if.)

(- 1

5 %

)

(s/d

if.)

(- 3

8%

) 1,3

0

0,9

9

0,2

5

0,2

2

0,9

5

0,8

1

0,0

9

0,2

00,6

5

0,5

6

0,0

5

0,9

8

0,8

2

0,6

4

0,0

5

2,3

9

0

1

2

3

HC x 10 CO NOx ALDEÍDOSx 100

g/k

m

Corsa 1.8 Gas. Padrão

Corsa Flex Gas. Padrão

Corsa Flex Mistura 50%

Corsa Flex Álcool

PROCONVE

24

FUTURE OF ETHANOL AS FUEL

25

North and Central America

36%

Europe

8%

South America

38%

Asia

18%

Ethanol global market – 44,0 Billion LitersEthanol global market – 44,0 Billion Liters

Brazil３ 6%Brazil３ 6%

World Ethanol productionWorld Ethanol productionWorld Ethanol productionWorld Ethanol production

Ethanol Will be a Commodity ??

26

1.Total brazilian area :850 M ha 7% for agriculture (50% for soya and corn) 35% pastures 55% forests

2.Savanah area:24% *Sugarcane area:0,6% *Potential area for sugar- cane expansion:12% of

the total.

Actual area: 5,5 M haPotential:20 times

SatelliteImage

Source:CTC

Sugarcane area in the BrazilSugarcane area in the Brazil

Sugarcane

27

New Ethanol & Sugar PlantsNew Ethanol & Sugar Plants

> Red are new Plants

28

Logistic Exportation in BrazilLogistic Exportation in BrazilLogistic Exportation in BrazilLogistic Exportation in Brazil

29

CONCLUSION CONCLUSION

30

Ethanol is Better AlternativeEthanol is Better Alternative Ethanol is Better AlternativeEthanol is Better Alternative

Reduction of the oil dependence

Energy diversification

MTBE and lead replacement

Kyoto Protocol and Carbon Credit Opportunities

There are car technologies to use ethanol

Brazil can increase production with

adequate price

31

Equator line

Capricorn Tropic30o S

Cancer Tropic30o N

The brazilian vocation for biofuelsThe brazilian vocation for biofuelsThe brazilian vocation for biofuelsThe brazilian vocation for biofuels

32

I believe

Ethanol is one of the best alternative to match part of World Biofuel needs.

Brazil is prepared to attend part of the needs in a Sustainable way.

The cars markers are fully prepared to adjust the vehicles to biofuel.

Than all together, we can allow a betterWorld Environmental Conditions by using

biofuel.

33

www.petrobras.com.brwww.petrobras.com.br

Kuniyuki Terabeterabe@petrobras.com.br

Petrobras General managerVice President BJE -Tokio

Kuniyuki Terabeterabe@petrobras.com.br

Petrobras General managerVice President BJE -Tokio

THANK YOU