CEO July 26th, 2011 · This presentation may contain forward-looking statements. Such statements...
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1 Webcast José Sergio Gabrielli CEO July 26th, 2011
Transcript of CEO July 26th, 2011 · This presentation may contain forward-looking statements. Such statements...
1
Webcast
José Sergio GabrielliCEO
July 26th, 2011
2
This presentation may contain forward-lookingstatements. Such statements reflect only theexpectations of the Company's managementregarding the future conditions of the economy,the industry, the performance and financialresults of the Company, among other factors.Such terms as "anticipate", "believe", "expect","forecast", "intend", "plan", "project", "seek","should", along with similar expressions, areused to identify such statements. Thesepredictions evidently involve risks anduncertainties, whether foreseen or not by theCompany. Consequently, these statements donot represent assurance of future results of theCompany. Therefore, the Company's futureresults of operations may differ from currentexpectations, and readers must not base theirexpectations solely on the information presentedherein. The Company is not obliged to updatethe presentation and forward-looking statementsin light of new information or futuredevelopments. Amounts informed for the year2011 and upcoming years are either estimatesor targets.
The United States Securities and ExchangeCommission permits oil and gas companies,in their filings with the SEC, to discloseproved reserves that a company hasdemonstrated by actual production orconclusive formation tests to be economicallyand legally viable under existing economicand operating conditions. We use certainterms in this presentation, such asdiscoveries, that the SEC’s guidelines strictlyprohibit us from including in filings with theSEC.
Cautionary statement for U.S. investors:
DISCLAIMER
3
62%38%
Brasil
Outros
New Discoveries 2005-2010
(33,989 million bbl) Deep-Water Discoveries
Source: PFC Energy
BRAZIL LEADERSHIP IN RECENT DISCOVERIESDeep-water discoveries in Brazil represent 1/3 of the worldwide discoveries in the last 5 years
• In the last 5 years, more than 50% of new discoveries (worldwide) were made in deep waters;
• The development of these reserves will demand additional capacity from the supply chain;
• Expansion of the oil and gas chain in Brazil is in line with this perspective.
Petrobras’ estimative: double proved reserves until 2020, keeping the discovery cost around US$2/boe
Other Discoveries Deep-Waters
Brazil
Other
4
Thous. bpd4,112
2,609
3,399 3,336
4,385
2010 2015 2020
5.3% p.y.
4.7% p.y
2,5363,095
3,327
421
699 744
945977
42
56 55
7281
2,1472,643
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Scenario A Scenario B Scenario A Scenario B
Oil Products Ethanol Biodiesel/biojet
LIQUIDS MARKET IN BRAZIL
5
Investments Program
2011-15
6
2010-14 Business Plan
53%
33%
2% 1%1% 2%
8%
2,9
56%31%
7%2%
1%1% 2%
E&P RTC
Gás,Energia & Gás Química Petroquímica
Distribuição Biocombustíveis
Corporativo • 5% of investments will be made overseas, 87%of which in E&P.
2011-15 Business Plan
US$224.7 billionUS$224 billion
65,5
14,74,1
3,24,2
2,3
65,5
14,7
4,1
3,24,2
2,4
2011-2015 INVESTMENTSStable investments, greater focus on E&P
57%31%
6%2%
1%1% 2%
E&P RTC
Gás,Energia & Gás Química Petroquímica
Distribuição Biocombustíveis
Corporativo
(*) US$22.8 billion in Exploration
(*)
Biofuels
Gas, Energy & Gas Chemicals
Distribution
Corporate
E&P
Petrochemicals
RTC
118.8
73.6
17.8
5.1
2.4
3.5
2.9
127.570.6
13.2
3.8
3.1
4.1
2.4
7
Maintained
New
US$ billion
Excluded
192,6213,2
10,8
(R$ 419.7 billion)
BP 2011-15BP 2010-14
82,9
37%
141,1
63%
90,6
40%
134,1
60%
Total in Foreign Currency
Total in Local Currency
32,1
INVESTMENTS BP 2011-15 VS. BP 2010-14
0,3%
-9,7%
(R$ 388.9 billion)
Maintained
US$ 224 billion US$ 224.7 billion
Changes in:FX rate 8.6Budget 1.5Schedule (23.7)Business model (0.6)Scope (6.4)
8
Exploration & Production
+ US$8.7 billion
New Projects
• Inclusion of Transfer of Rights
• New Pre-Salt Units (Lula)
• Operating Infrastructure
• New Discoveries and R&D
Excluded, Revised and/or Postponed Projects
• Projects discontinued after unsuccessful exploratory phase
• Revision of Production Development Projects
KEY CHANGES IN PORTFOLIOReassignment of E&P investments
Gas & Energy
- US$4.6 billion
Supply
(includes Petrochemicals)
- US$4.3 billion
New Projects• HPP Barra do Rocha I• HPP Bahia II
Projects concluded in 2010
• The gas pipelines Gasene, Pilar-Ipojuca, Gasduc III e Gasbel II started up in 2010
Excluded, Revised and/or Postponed Projects
• Postponement of projects: UFN IV, UFN V, GTL Paraffins and Gas FSO
•Exclusion of Catu-camaçari gas pipeline and Ecomp Itajuípe
• Exclusion of HPP projects from 2010 auctions
New Projects
• New units Comperj
• Oil Logistics
Projects concluded in 2010
• Braskem investment
• Investments in quality
Excluded, Revised and/or Postponed Projects
•Postponement of Premium I Refinery
9
75,7
224,751,0
41,4
33,5
5,4 4,113,5
0
50
100
150
200
250
Aprovados
até 2009
2010 2011 2012 2013 2014 Pós 2014 Total
275 projetos
95 projetos
104 projetos
112 projetos39 projetos
22 projetos 41 projetos
34%
23%
18%
15%6% 2% 2%
US$ billion
INVESTMENTS AND PROJECT APPROVAL DYNAMICS
2011-15 Period
US$224.7 billion688 projects
Approved
up to 2009
After 2014
95 projects
104 projects
112 projects39 projects
22 projects 41 projects
275 projects
10
• Investments in E&P (57% of total) ensure production growth and high IRR;
• Other investments (43% of total) add value to the chain, generating return that is equal to or higher than the cost of capital;
• Investments in quality are a legal requirement.
• Attractive IRR of total investments (2011-2015 BP):
•The Company is integrated and ready to speed up the production growth;
• Reduced cost due to a higher business integration and to the Company's leading position in a large and growing market.
CONSOLIDATED RETURNSE&P drives results
ROCE
-5%
0%
5%
10%
15%
20%
25%
30%
35%
20002001
20022003
20042005
20062007
20082009
2010
Companhias Integradas Companhias de E&P Companhias de Refino
Source: PFC Energy
Integrated companies deliver better returns
Integrated Companies Downstream CompaniesE&P Companies
11
Analysis of the Plan’s
Funding Needs
12
Based on 2011-2012 forecasts: Banks (Source: Bloomberg)
Based on 2013-2015 forecasts: PIRA, DOE, CERA, WoodMackenzie, IEA
Petrobras’ Outlook
95
80
US$/bbl
OIL PRICEOil price assumptions within market's expectations
13
Oil price
Foreign Exchange Rate
Growth of the Brazilian Market
Average Realization Price (ARP) – Brazil
International Parity
International margins per product
Oil and products exports and imports
Investment Program
Disinvestment and business restructuring
Raising of third-party funds
Assumptions
No new Capitalization
Investment grade maintenance
Key variables for Cash Generation and Investment Level
VARIABLESKey variables that impact the cash flow and funding needs
14
125,0148,9
224,7 224,7
91,467,0
31,4 30,926,1 26,1
13,6 13,6
Scenario A Scenario B
US$ 256.1 US$ 255.6US$ 256.1 US$ 255.6 Key assumptions
Scenario A Scenario B
Exchange rate (R$/US$)
1.73 1,73
Brent (US$/bbl)
2011 – 110 2011 – 110
2012 – 80 2012 – 95
2013 – 80 2013 – 95
2014 – 80 2014 – 95
2015 – 80 2015 – 95
Leveraging(Average)
29% 26%
Net Debt/EBITDA (Average)
1.9 1.5
ARP (R$/bbl) 158 177Debt Amortization
Investments
Disinvestment and Restructuring
Cash
Third-Party Resources (Debt)
Operating Cash Flow (After Dividends)
Sources Use Sources Use
CASH GENERATION AND INVESTMENTSDisinvestment and traditional funding sources adequate for Plan needs
• 40% of capex in dollar in comparison to 37% in the previous Plan
15
Exploration & Production
US$127.5 billion
16
Increase oil and gas reserves and production, in a sustainable manner, and be recognized for its excellence in E&P operations, placing the Company among the world’s
five largest oil producers.
2011-15 Business Plan Highlights:
• 65% of Capex allocated to production development.
• Implementation of 19 large projects, adding capacity of 2.3 million bpd.
• Drilling of more than 1,000 offshore wells, of these 40% is exploratory and 60% is production
development.
• In 2020, the pre-salt production will correspond to 40.5% of the oil production in Brazil.
STRATEGYSustainable development of hydrocarbon reserves
17
• Annual investments of more than US$ 4 billion inexploration;
• Investments of US$ 12.4 billion in the transfer of rights areasin 2011-15
• In the BP 2010-2014, the forecasted investment for the Pre-Salt was of US$33 billion
Pre-Salt
US$ 53.4 billion
Post-Salt
US$ 64.3 billion
17%
65%
Production Development
18%
Exploration
Infrastructure68%
Other areasTransfer of
Rights
26%Pre-salt
6%
Exploration
Production Development
Pre-salt37%
Transfer of Rights
Other areas48%
15%
E&P investments in Brazil: US$117.7 bn
TOTAL E&P INVESTMENTS IN BRAZIL– 2011-15 BUSINESS PLAN
Note: Pre-salt includes Basins in Santos, Campos and Espírito Santo
18
1.855 1.971 2.004
321 317 334 435
618
1.120
111 132 144141
180
246
2.100
99 9693 96
125
142
2008 2009 2010 2011 2015 2020
Oil Production- Brazil Natural Gas Production - Brazil Oil Production - International Natural Gas Production - International
2,386 2,516
6,418
3,993
1,148543
Pre-Salt’00
0 b
oe
/day
2,772
845
Transfer of Rights13
+10 Post-Salt Projects
+8 Pre-Salt Projects
+1 Transfer of Rights
+ 35 Systems
Added Capacity
Oil: 2,300,000 bpd
2,575
Note: Does not include Non-Consolidated International Production.
•Pre-salt and Transfer of Rights will represent 69% of the additional capacity up to 2020;
•Pre-Salt participation in the total production will enhance from the current 2% to 18% in 2015 and 40.5% in 2020.
3,070
4,910
PRODUCTIONWith broad access to new reserves, Petrobras can more than double its production in the next decade
19
112 211 230 21475
400 292189
749
1,601
42
0
400
800
1200
1600
2000
1980 1990 2000 2010
Deep water
Shallow water
Onshore
187
2,004
1,271
653
10% p.y over the last 30 years
Tho
us.
b
pd
FPSO Cidade de Santos
• 123 offshore units (45 floating and 78 stationary)
• 25 new units installed over the last 5 years
FPSO Cidade de Angra dos ReisP-56
P-57
PRODUCTIONLong history of implementing offshore projects in Brazil
20
3.070
2.1002.004
0
500
1000
1500
2000
2500
3000
2010 2011 2012 2013 2014 2015
Thous.bpd
Lula PilotFPSO BW Cidade Angra dos Reis100.000 bpd
Cachalote andBaleia Franca
FPSO Capixaba100.000 bpd
Marlim Sulmodule 3SS P-56
100.000 bpd
Jubarte FPSO P-57
180.000 bpd
Baleia AzulFPSO Cidade de
Anchieta100.000 bpd
(FPSO Espadarte reallocation)
Roncador module 4 FPSO P-62
180.000 bpd
Roncador module 3SS P-55
180.000 bpd
Papa-Terra TLWP P-61 &
FPSO P-63150.000 bpd
Guará (North) FPSO
150.000 bpd
Parque das Baleias
FPSO P-58180.000 bpd
Tiro/SidonFPSO Cidade de
Itajaí80.000 bpd
Tiro PilotSS-11
Atlantic Zephir30.000 bpd
MexilhãoJaqueta
GNA
EWT GuaráFPSO Dynamic
Producer30.000 bpd
ESP/MarimbáFPSO
40.000 bpd
UruguáFPSO Cidade de
Santos35.000 bpd
AruanãFPSO
100.000 bpd
Guará Pilot 2FPSO Cidade de
São Paulo120.000 bpd
Lula NEFPSO Cidade de
Paraty120.000 bpd
MarombaFPSO
100.000 bpdSiriJaqueta e
FPSO50.000 bpd
Cernambi SouthFPSO
150.000 bpd
FPSO P-67 Replicant 2
150.000 bpdBMS-9 our11
4 EWTs Pre-salt
FPSO P-66Replicant 1
150.000 bpdBMS-9 or 11
Baleia AzulFPSO
60.000 bpd
Juruá GNA
Tambaú FPSO Cidade
de SantosGNA
EWTs
EWTs Lula NE e CernambiFPSO BW
Cidade São Vicente
30.000 bpd
EWT Carioca FPSO Dynamic
Producer30.000 bpd
Franco 1 Transfer of
RightsFPSO
150.000 bpd
3 EWTs Pre-salt
5 EWTs Pre-salt
5 EWTs Pre-salt
LARGE PROJECTS SUSTAIN THE INCREASE IN PRODUCTIONPre-Salt and Transfer of Rights Projects
NG Projects
Post-Salt Projects
21
0
4
8
12
16
20
P-43 P-48 P-50 P-52 P-54 P-53 P-51 FPSO
CAPIXABA
P-57
Para atingir 50% capacidade
Para atingir 75% capacidade
Months
2004 20062005 2007 2007 2008 2009 2010
Water Depth 2006 2008 2010
Up to 1,000 meters 6 11 11
1,000 to 2,000 meters 19 19 21
Over 2,000 meters 2 3 15
From 2007 to 2012 Petrobras will double its fleet of contracted drilling rigs, focusing on modern, recently built drilling rigswith capacity to operate in the Pre-salt layer.
2011 2012 2013
+2 +1 +1
+10 +13 +1
2010
Forecast
NEW PROJECTSHigher number of drilling rigs will enable a faster ramp-up of the new platforms
P-56 will have 4 producing wells and 4 injection wells ready to be connected as soon as it goes online in 3Q11.
To reach 50% capacity
To reach 75% capacity
22
34
35 5
41
4
1
2011 2012 2013 2014 2015
TLD - Pré-Sal e Cessão Onerosa TLD - Outras áreas
Constant production
Restriction due to gas burning limitation
Good behavior of the reservoirs
Good lateral communication
No issues regarding flow guarantee
Results obtained during EWTs
POSITIVE RESULTS OBTAINED DURING EWTs
Average drilling time of the wells completed during the year
(versus combined average time for 2006/7)
5 wells
4 wells
5 wells
6 wells
EWT Schedule
EWT – Pre-Salt and Transfer of
Rights
EWT – Other areas
23
COST-BENEFIT ANALYSISCapital investments required by Plansal 45% lower, increasing NPV
Investm
ent
Net P
resent V
alu
e
Bid Area
Bid Areas
24
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
45,0%
60 70 80 90 100 110
Key Assumptions:
• 150,000 bpd FPSOs
• Production of 500,000 bpd
• Ramp-up in line with industry
• Historic decline rate
• Oil value = 95% Brent
• Does not include exploration and acquisition costs
• The graph illustrates the cost-benefit ratio of a standard production development in Brazil, using assumptionsbased on previous experiences
Case 3 – US$12/boe Capex / US$5/boe Opex without Special Interest (such as assignment for consideration)
Case 1 – US$12/boe Capex / US$5/boe Opex
Case 2 – US$15/boe Capex / US$7/boe Opex
(expected scenario)
PROFITABILITYNew E&P projects generate attractive returns
25
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010
Peer Range
E&P PROFITABILITY IN BRAZIL
• E&P profitability strongly correlates with oil price
• Production in Brazil: 86% oil and 14% gas
• Higher net profit per barrel yields better return than its peers
• Stable regulatory environment allows for capturing the benefits of the increase in oil prices
Peers: BP, CVX, XOM,RDS, TOT
E&P’s ROCE
E&P’s Net Income ($/boe)
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010
Peer Range
Brent vs. Net income per Barrel
Profitability of oil Production in Brazil fully exposed to oil prices
Petrobras
Peers
Petrobras
Peers
Brent (Average in dollars)
Net
inco
me p
er
Barr
el (U
S$)
Source: PFC Energy
26
VARREDURA PROJECT: TECHNOLOGICAL DEVELOPMENT AND EXPLORATORY OPTIMIZATION
• Additional recoverable volume from discoveries:
• Post-salt: Marimbá, Marlim Sul and Pampo:1,105 MM boe;
• Pre-salt: Barracuda, Caratinga, Marlim, MarlimLeste, Albacora and Albacora Leste: 1,130 MMboe*.
• Well productivity exceeds 20,000 bpd
67 exploratory wells will be drilled between 2011 and 2015 at production areas in
Campos basin
Operation Sweep
*No volumes have been announced regarding the Marlim Leste and Albacora Leste discoveries.
Descobertas do Pr é-sal na Bacia de Campos
2009/10 (VARREDURA)
Discoveries in Campos Pre-salt basin 2009/10 (Varredura)
27
NEW TECHNOLOGIES
Applications enhance recovery, slow decline rates, increase production
VASPS
Technological Solution Technology Status
Subsea Pumping Systems
Subsea BCS In Operation
Subsea Pumping Model In Operation (Jubarte e Golfinho)
Skid BCS Prototype in TLD ESP 23 (Oct/11)
Subsea Muliphase Pump BMSHA Prototype in Barracuda (Dec/11)
Gas/Liquid Subsea Separation
VASPS Prototype Tested in P-08 (2011)
Oil/Water Subsea Separation
SSAO Prototype in Marlim (Final de 2011)
Raw water injection SRWI Prototype in Albacora (End of 2011)
Subsea electric transmission and
distributionUnder qualification Prototype schedule to 2015
Underwater Electric Pump in Skid
Raw water injection Oil/Water Subsea Separation
28
NEW VESSELS AND EQUIPMENTS
Resources for Production Growth
39 rigs contracted, 28 more to be built by 2020:o Until 2013: 16 rigs contracted before 2008 and 2 rigs relocated from international operations¹; +15 new
rigs contracted in 2008, +1 in 2009, +1 in 2010 and +4 in 2011 through international bidding;
o 2015-2020: From the 28 rigs to be built in Brazil, EAS won the bid for the first package - construction andchartering of seven drilling rigs to be built in Brazil. A new bid was open for the remaining 21.
Critical ResourcesCurrent Situation
(Dec/10)
Delivery Plan (to be contracted)Accumulated Value
By 2013 By 2015 By 2020
Drilling Rigs Water Depth Above 2.000 m 15 39 37 (1) 65 (2)
Supply and Special Vessel 287 423 479 568
Production Platforms SS e FPSO 44 54 61 94
Others (Jacket and TLWP) 78 80 81 83
Production
Platform (FPSO)Drilling RigsSupply Vessel
(1) Two rigs reallocated from international operations, expire in 2015, so it is not considered in the 2020 accumulated value
(2) The demand for long-term will be adjusted as new demand assessments are made.
29
Development Stage
Duration: 4 yearsExtendable for 2 more years
Variable, according to Development Plan
Total Duration: 40 years, extendable for 5 more years according to specific criteria
TRANSFER OF RIGHTS
Development of the areas under fully under way
Commerciality Statement
Exploration Stage Production Stage
Area 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Franco
lara surroundings
Florim
NE of Tupi
South of Guará
South of Tupi
Resources already available for:
• 7 Exploratory wells• 1 contingent Exploratory well• 1 EWT• 2 contingent EWTs• 3D Seismic
First 4
production
units
undergoing
contracting
(*)
New technologies and resource
allocation determination
* Conversion at the Inhaúma shipyard
30
MECHANISMS FOR THE REVISION OF THE TRANSFER OF RIGHTS
• The revision will be completed after the commerciality statement (period of 4 years)
• Revision based on technical reports and on assumptions provided for in the contract
• Assumptions for price revision:
– Change in oil price
– Production curve
– Updating of cost assumptions
– Maintenance of the discount rate and appraisal base date
Higher Lower
• Petrobras pays the difference to the Federal
Government
• (or) Petrobras requests a reduction in
volumes corresponding to the difference
• Federal Government pays the difference
to Petrobras
Final
value
31
Suppliers investing in Brazil
Flexible pipes - Wellstream and Prysmian
Pumping Units – Weatherford
Valves – Cameron
Turbine generators – Rolls-Royce
2 FPSOs fully built in Brazil
6 Platforms under construction in Brazil
Construction of 8 hulls for Replicant FPSOs (65% Local Content)
Contracting of 7 drilling rigs at competitive costs, with 21 other rigs undergoing contracting (55% to 65% Local Content)
BENEFITS FROM THE DEVELOPMENT OF THE LOCAL INDUSTRY
Source: Sinaval
Platforms built in Brazil with competitive costs
30 x
Naval Industry Direct Labor force
32
Refining, Transportation & Commercialization (RTC),
and Petrochemicals
US$74.4 billion
33
Expand the downstream, ensuring the margins from the Brazilian market supply
with the required quality, and developing markets for the oil surplus
2011-15 Business Plan Highlights:
• Downstream capacity will increase by 395,000 bpd between 2011-15 and 1,065,000 bpd between 2016-2020;
• Completion of the process to modernize the downstream segment;
• Logistics integrated with E&P activities to ensure the commercialization of the oil surplus;
• Expansion of the production of petrochemicals and biopolymers.
STRATEGYExpansion, quality, logistics and commercialization
34
US$70.6 billion
• Expansion of the downstream segment:
Refinery in the NE, Premium I and II, and
Comperj;
• Serving the local market: Modernization,
conversion, and hydrodesulfurization;
• Operating improvement: maintenance and
optimization of the industry, HSEE, and R&D;
• Fleet Expansion
• Allocation of the national oil: oil supply for
refineries and infrastructure for oil exports.
1.1%4.5%
26.4%
0.8%15.2%
Allocation of the national oil
International
Fleet Expansion
Serving the local market
Expansion of the downstream segment
Operating improvement
1.0%
23.9%
13.9%
4.9%
Investments in Petrochemicals amount to US$3.8 billion
NEW REFINERIES, FUEL QUALITY AND MODERNIZATION SUM UPTO 74% OF RTM INVESTMENTS
35
DOWNSTREAM EXPANSIONReduced dependence on imports of oil products
Growth in imports would result in
increased logistics costs...
* Source: IEA – 2010 World Energy Statistics
** Without considering Capacity Expansion
2006 2007 2008 2011E2009 2010
Brazil (2020)**
Indonesia
Mexico
Spain
JapanChina
Germany
France
Brazil (2010)
USA
...and increased dependence on the
international market.
Net Imports as a percentage of total demand (%)*
’000 bpd
36
Oil and NGL Production – Brazil Total crude oil processed – Brazil Oil Products Market (2 scenarios)
• The highlights of the 2011-15 BP are the investments in RNE, 1st train of COMPERJ, and 1st train of Premium I.
PRODUCTION, DOWNSTREAM AND DEMAND IN BRAZILConstruction of new refineries to meet the demands of the local market
1,8
11
2,2
05
3,2
17
1,9
71
2,0
04
2,1
00 3,0
70
4,9
10
1,7
92
1,7
98
1,9
33
2,1
47
2,2
08
0
1,000
2,000
3,000
4,000
5,000
2009 2010 2011 2015 2020
,000 bpd
Abreu e LimaRefinery (RNE)230,000 bpd
(2012)
COMPERJ(1st train)
165,000 bpd(2013)
PREMIUM I(1st train)
300,000 bpd(2016)
PREMIUM I(2nd train)
300,000 bpd(2019)
PREMIUM II300,000 bpd
(2017)
COMPERJ(2nd train)
165,000 bpd(2018)
2,536
3,0952,643
3,327
37
Capacity: 230,000 bpd
Stage: Implementation
Startup: 2012
REPRE I
Comperj
Nordeste Refinery
Capacity: 330,000 bpd
Stage: Implementation
Startups: 2013 and 2018
Capacity: 300,000 bpd
Stage: Preliminary License issued
Startup: 2017
REPRE II
RNE
Comperj
Capacity: 600,000 bpd
Stage: Earthworks
Startup: 2016 and 2019
Premium I Refinery Premium II Refinery
60’s50’s 70’s 80’s 90’s 00’s
RLA
M
REC
AP
RP
BC
REM
AN
RED
UC
REG
AP
REF
AP
REP
LAN
REP
AR
REV
AP
RN
EST
CO
MP
ERJ
10’s
32 years
Launch of Petrobras’ Refineries
• Learning curve from the two new refineries (RNEST and Comperj) to reduce the CAPEX at the Premium refineries
INVESTMENTS IN DOWNSTREAM EXPANSION – BUSINESS PLAN 2011-15
PR
EMIU
M I
PR
EMIU
M II
38
Market in 2015Market in 2010
REFINING CAPACITY NEEDS OUTSIDE THE SOUTH/SOUTHEAST REGIONS
• Increase in demand in the Central-West, Northeast, and North explains the concentration of investments in the Northeast;
• Tax incentives combined with environmental restrictions also contribute to the concentration in this region.
552
Deficit
-416
Demand
968
Capacity
1.652
Deficit
-23
Demand
1.675
Capacity
299
-464
763
82
1.466
1.384
DeficitDemandCapacity
SuperavitDemandCapacity
39
21%
4%
7%
10%
Light
36%
6%
9%
21%
Medium Distilled
43%
5%
38%
Others
Fuel Oil
Special
Naphtha
LPG
Gasoline
Jet Fuel
Diesel
Intermediary
4%
15%
19%
4%
11%
15%
65%
15%
50%
Productivity of existing refineries – 2020
LightMedium Distilled Others
Productivity of new refineries – 2020
• The increase in the global demand for medium-distilled products tends to lead to an increase in price versus the gasoline price.
PRODUCTSNew refineries will produce higher value-added oil products
40
• “Design Competition” determined based on the lowest final cost
• UOP was chosen – An international company with vast experience in the downstream segment
• Unique design providing off-site and on-site integration
• Designer participates from initial conception to the beginning of technical operations
• Economies of scale (RPRE: 300,000 bpd modules)
• Equipment’s technical specifications are standardized
Age (years)
Scale (’000 bpd)
...and allow for lower downstream costs due to projects’ remodeling...
Economies of Scale and new implementation strategies reduce the CAPEX...
RESOURCE OPTIMIZATION AT PREMIUM REFINERIES
Current downstream cost
(US$ / bbl in 2010)
41
US$ 16 billion
1.01.0
3.2
4.9
5.9
7.0
4.5
2.3
1.1
0.20.1
15141312111098765
-15%aa
INVESTMENT LEVELDecreasing investments in quality after the segment’s modernization stage
Investments of US$16 billion in 2001-15 Reduction in sulfur level
Avg. Sulfur Level – Diesel (ppm)
42
MARKET IN BRAZILFree market follows international prices in the long term
0
50
100
150
20122006 20112010200920082007
ARP Brasil
ARP EUAUS$/bbl
43
Natural Gas, Electric Energy and Fertilizers
US$13.2 billion
44
INVESTMENTS IN GAS, ENERGY, AND GAS-CHEMICALS 2011-2015
2011-15 InvestmentsUS$13.2 billion
• Cycle of investments in the expansion of the
transportation network to be completed in
2011;
• New natural gas delivery spots, managementwith distributors to increase sales anddiversification of contractual arrangements ;
• Consolidated investment in thermal powergeneration;
• Operating in the LNG chain, and serving thethermal power market;
• Increased portion of investments allocated tothe conversion of natural gas into urea,ammonia, methanol, and other fertilizers, andgas-chemicals.
3,4
5,9
0,30,8 26%
21%
45%
2%6%
3,4
2,85,9
0,30,8
3,4
2,8
Network Electric Energy
Gas-chemicals plants
(Nitrogenized)
International
LNG
45
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
UFN III (Sep/14)
Regás Bahia
(Jan/14)
New NG TPPs
Urucu-Manaus
Gasbel II
Gasduc III
Gastau
Gasene
Gaspal II
Gasan II
Pilar-Ipojuca
Atalaia-Itaporanga
Cacimbas-Vitória
Catu-Pilar
Japeri-Reduc
Gascav
Gascar
LNG Pecém
LNG BGUA
TPP Bicomb. Conversion
Termoaçu
Cubatão
Sulfato de Amônio (May/13)
ARLA 32 (out/11)
Ecomps + Delivery Spots + Network Maintainance
UFN IV (Jun/17)
Acquisition TPPs
UPGN Cabiúnas –Route 2 Pre-Salt
(Aug/14)
Adaptation of the Gas Pipelines Network (US$ 3.34 bi)
New TPPs run on Natural Gas (US$ 1.82 bi)
LNG regasification (US$ 0.74 bi)
Chemical Transformation of NG (US$ 5.85 bi)
TPP Commitments (US$ 0.94 bi)
Renewable Energy: Wind Power and Biomass (US$ 0.02 bi)
Natural Gas Liquefaction (US$ 0.10 bi)
%
do
In
ve
sti
me
nto
To
tal
UFN V (Sep/15)
1st Investment Cycle
COMPLETED
2nd Investment Cycle
2011-2015 BP
2ND INVESTMENT CYCLE: MONETIZATION OF THE PRE-SALT RESERVES
45
46
813813
291
2,936
2,271
1,109
13
3
6
0
1.000
2.000
3.000
4.000
2011 2015 2020
Th
ou
s.t
on
/year
-
5
10
15
20
25
30
Ammonia Urea Natural Gas Consumption
Generation Intalled CapacityFertilizer Production
420420
581
6.6946.098
8.894
34
30
44
-1.000
1.000
3.000
5.000
7.000
9.000
11.000
2011 2015 2020
MW
0
10
20
30
40
50
60
70
UTE Renewable Natural Gas Consumption
Millio
n c
m/d
7,114
9,475
6,518
Millio
n c
m/d
ay
NEW UNITS BENEFITING FROM HIGHER NATURAL GAS PRODUCTION
UFN III (Sep/2014)
UFN IV (Jun/2017)
UFN V (Sep/2015)
• Brazil currently imports 53% of the total ammonia consumption in the country. Will be self-sufficient in 2015;
• We currently import 53% of the total urea consumed. This amount will reduce to 28% in 2015, 16% in 2017 and 22%
in 2020.
47
Total
Demand
Demand from Thermal Power Plants: Petrobras + Third parties
NATURAL GAS SUPPLY & DEMAND BALANCE (MILLION M3/D) – SCENARIO A
Firm
Flexible30
24
30
24
30
24
202020152011
Total
Supply173149106 20015196
Downstream
UPGN
Fertilizers61
32
1639
25
17
Petrobras’ Demand: Downstream + Fertilizers
Non-thermal power
Demand from NG Distributors
202020152011
2011 2015 2020
2011 2015 2020
2011 2015 2020
Guanabara Bay
Pecém
Bahia41
20
1441
20
1421
14
Bolivian Supply
National NG Supply to the Market
Supply via LNG Regasification Terminals
Inflexible
Flexible40
13
3725
2011 2015 2020
To be contracted (5.5 GW)
76(15.1 GW)
59(10.7 GW)
38(6.7 GW)
DEMANDPCS 9.400 kcal/m³
4969
936
9
9 Northern Region
Other Regions
55
78
102
SUPPLY
48
Biofuels
Distribution
International
US$18.2 billion
49
INVESTMENTS IN BIOFUELS
2011-2015 INVESTMENTS US$ 4.1 billion
Ethanol
Ethanol Logistics
Biodiesel
R&D
273%
1.5
Pbio + Partners
5.6
16%
735
855
Pbio + Partners
Market Share Pbio+Partners:
• 2011: 28%
• 2015: 26%
Biodiesel supply (’000 m³)
2011 2015
Ethanol supply (million m³)
2011 2015
Market-share Pbio+Partners:
• 2011: 5.3%
• 2015: 12%
47%
7%
32%
14%
1.9
1.3
0.6
0.3
50
INVESTMENTS IN DISTRIBUTION
Share in the automotive and global markets
2011-2015 BPUS$3.1 billion
21%
18%
13%
42%
Mercado Automotivo
Mercado Consumidor
Operações e Logística
Liquigás
Internacional 6%
33.731.330.930.6
38.6 38.8 38.5 40.6
0
10
20
30
40
50
2009 2010 2011 2015
Automotive Market (%) Global Market (%)
Automotive Market
Consumer Market
Operations & Logistics
International
51
INVESTMENTS: INTERNATIONAL AREA
Key Projects:
• Cascade / Chinook
• Saint-Malo
• Tiber
Key Projects:
BoliviaSan Alberto / San Antonio Serving the Brazilian market
PeruIntegrated Gas Project – Lots 57 and 58 Oil Production – Lot X
ArgentinaMaintenance of Existing Assets
Key Projects:
• NigériaAkpo AgbamiEgina
• AngolaBlock 26
US$11 billion
Activities in 27 countries in the E&P, RTCP, Distribution, and G&E segments
Africa’s West Coast
Gulf of Mexico
Latin America
Corporate
Distribution
G&E
E&P
RTCP
87%
1%
3% 2%7%
52
Final Considerations
53
HUMAN RESOURCES
Position in Jan/11
61.070 63.673 65.971 68.96874.422
24.34725.528
26.72227.985
28.608
2011 2012 2013 2014 2015
Projeção de Efetivo do Sistema Petrobras
Controladora Outras Empresas do Sistema Petrobras
85.41789.201
92.69396.953
103.030
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
500
1000
1500
2000
2500
3000
Efetivo Produção
55%
E&P
wo
rkfo
rce P
rod
uctio
n (’0
00
barre
ls/day)
• 2011-2015 BP requires additional personnel
• 51% of the workforce has been working at the Company for less than 10 years, while 46% has been at the Company for more than 20 years
• E&P Segment will be the key driver of the increase in the workforce, in line with the increase in production
Parent Other companies in Petrobras Group
Workforce Production
Petrobras’ Labor Force Projection
54
Other operators
International Research Institutions
Suppliers
Brazilian Universities and Research Institutions
• 4 R&D centers of Petrobras’ suppliers under construction;• In order to meet local content requirements, several companies will develop technological centersin the country.
Expenditures (investments and funding): US$1.3 billion / year
PETROBRAS’ TECHNOLOGY MANAGEMENT INTEGRATED WITH SUPPLIERS, RESEARCH INSTITUTIONS AND OTHER OIL COMPANIES
55
