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1
José Sergio Gabrielli de Azevedo CEO
September, 29th 2011
Brazil: The Next Oil Giant?
2
This presentation may contain forward-looking statements. Such statements reflect only the expectations of the Company's management regarding the future conditions of the economy, the industry, the performance and financial results of the Company, among other factors. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar expressions, are used to identify such statements. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Consequently, these statements do not represent assurance of future results of the Company. Therefore, the Company's future results of operations may differ from current expectations, and readers must not base their expectations solely on the information presented herein. The Company is not obliged to update the presentation and forward-looking statements in light of new information or future developments. Amounts informed for the year 2011 and upcoming years are either estimates or targets.
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally viable under existing economic and operating conditions. We use certain terms in this presentation, such as discoveries, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
Cautionary statement for U.S. investors:
DISCLAIMER
3
6,3
3,9
2,7 2,7 2,6 2,3 2,2
0,7 0,3
XOM RDS BP COP TOT BR CVX ENI STL
PETROBRAS: A WORLD-CLASS INTEGRATED ENERGY COMPANY Among the Leading International Oil Companies
2010 REFINING CAPACITY (MM BOE/D)
2010 PROVEN RESERVES – SEC (BLN BOE)
Notes: Selected peer companies have a majority of capital traded in the public market; * 2009
Source: EvaluateEnergy and Bloomberg
XOM BP RDS CVX BR TOT COP ENI BG
Oil Gas
2010 OIL & GAS PRODUCTION (MM BOE/D)
4.4
3.8
3.3
2.8 2.6
2.4 2.1
1.8
0.6
XOM BP RDS BR TOT CVX COP ENI STL
Oil Gas
24.8
17.8
14.2 12.7
10.7
8.3 6.8
5.4
10.6
341
201 187 169
121 110 87
76 72
XOM RDS CVX PBR BP TOT COP ENI STL
MARKET CAP (US$ BN) - AUGUST 22, 2011
BR * * * *
4
THE GROWING IMPORTANCE OF DEEPWATER E&P …
Sources: IHS CERA, WoodMackenzie and PFC Energy
0
2
4
6
8
10
12
2005 2010 2015 2020
GoM
Brazil
Nigeria
Angola
Others
MM
Bp
d
Worldwide deepwater production capacity estimates by region
14
Worldwide discoveries
0
5
10
15
20
25
30
35
40
45
50
2004 2005 2006 2007 2008 2009 2010
Deepwater (>2,000 ft)
Shallow Water (<2,000 ft)
Onshore
Worldwide discoveries
Bill
ion
bo
e
Deepwater discoveries in
Brazil represent 1/3 of worldwide discoveries in
the last 5 years
5
PBR 22%
Statoil 12%
Shell 11%
ExxonMobil 10%
BP 9%
Chevron 8%
TOTAL 8%
Reliance 4%
BG Group 3%
Anadarko 3%
Other 10%
100
5
8
8
9
10
12
12
13
15
15
45
0 20 40 60 80 100
Others
ENI/Agip
ConocoPhillips
CNOOC
Total
Anadarko
Chevron
BP
ExxonMobil
StatoilHydro
Shell
Petrobras
FPSO Semi Spar TLP Other
1977 Enchova
410ft 125m
1988 Marimbá 1,610ft 491m
1994 Marlim 3,370ft 1,027m
1997 Marlim Sul
5,600ft 1,707m
2003 Roncador
6,180ft 1,884m
2009 Lula
7,125ft 2,172m
… AND PETROBRAS’ LEADERSHIP IN THE SEGMENT … A history of technology development and know-how in Brazilian waters
Deepwater Production 2010 Gross Global Operated¹
Offshore Production Facilities
Source: PFC Energy. Note: These 15 operators accounted for 98% of global deepwater production in 2010. Minimum water depth: 1,000 feet
6
… WHICH CAN BE MAINTAINED AT RELATIVELY LOW PRODUCTION COSTS
Source: IEA
Pro
du
ctio
n c
ost
s (U
S$/b
bl-
20
08
)
Reserves (bn bbls)
1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 0
20
40
60
80
100
120
140
Deepwater and ultra-deep water
Produced MENA
Other conventional
oil
CO
₂ -
EOR
EOR
Arc
tic
Heavy oil and bitumen
Oil Shales Gas to liquids Coal to liquids
Petrobras expected maximum break-even cost
7
PETROBRAS’ TOTAL RESERVES AND POTENTIAL RECOVERABLE VOLUMES, … Continuous growth from deeper discoveries
Million boe
Potential increase
0
5.000
10.000
15.000
20.000
25.000
30.000
Onshore 0-300 m 300-1500 m > 1500 m Pre-salt's Recoverable Volume Transfer of Rights
8
0
500
1.000
1.500
2.000
2.500
-
5,00
10,00
15,00
20,00
25,00
30,00
35,00
40,00
45,00
50,00
Tho
usa
nd
bp
d
US$
bill
ion
, de
flla
ted
by
the
PP
I in
de
x
Total Investments Oil Production in Brazil (bpd)
… INVESTMENTS AND DOMESTIC OIL PRODUCTION (1954-2010) Growing investments supporting the increase in production
9
57%31%
6%2%
1%
2%
1%
70,6
3,8
13,2 3,1
4,1 2,4
127,5 (*)
2011-2015 BUSINESS PLAN: HIGHER E&P INVESTMENTS
(*) US$ 22,8 bi in Exploration
53%
33%
8%
2%
1% 2% 1%
E&P
Downstream
G&P
Petrochemicals
Distribution
Biofuels
Corporate
73,6
5,1
17,8 2,4 3,5 2,9
118,8
2010-14 US$ 224 billion
2011-15 US$ 224,7 billion
10
1.855 1.971 2.004 2.100
321 317 334 435
618
1.120
111 132 144 141
180
246
99 96 93
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
1,148 543
Pre-Salt
’00
0 b
oe
/day
2,772
845 Transfer of Rights
13
+10 Post-Salt Projects
+8 Pre-Salt Projects
+1 Transfer of Rights
+ 35 Systems
Added Capacity
Oil: 2,300,000 bpd
2,575
3,070
4,910
PRODUCTION TARGETS With broad access to new reserves, Petrobras can more than double its production in the next decade
11
106 211 230 214
75
400 292 189
42
749
1601
1980 1990 2000 2010
Deep water
Shallow water
Onshore
181
653
1.271
2.004
Tho
usa
nd
bp
d
HISTORICALLY, PETROBRAS HAS GROWN THROUGH THE EXPANSION TO NEW FRONTIERS…
OIL PRODUCTION IN BRAZIL
12
... THE LATEST OF WHICH IS THE MOST IMPORTANT DEEPWATER BREAKTHROUGH WORLDWIDE: THE PRE-SALT PROVINCE
Total Area: 149,000 km2 Area Under Concession: 41,772 km2 (28%) Area Not Under Concession: 107,228 km² (72%) Petrobras’ Interest: 35,739 km2 (24%)
Some key facts: Pre-salt’s proven reserves: 1.2 billion boe Current production: 152 kboed Exploratory success rate: 88% Productivity: 36,322 boed (Lula well) Reduction in drilling+ completion time: 66% of the 2006/7 average
13
OIL/WATER SUBSEA SEPARATION
- Resolves limitations from growing water production
- Separates water and oil under the sea, reinjecting water and relieving the size of the surface equipment on the platform
- Field: Marlim (Nov/2011)
RAW WATER INJECTION
- Increases production in existing systems
- 3 subsea systems for pumping raw water (with little treatment) to pressurize the reservoir, increasing recovery factor without increasing surface systems. Pioneer in the world in such water depth
- Field: Albacora (Dec/2011)
... TO SUPPORT THIS GROWTH, PETROBRAS WILL IMPLEMENT CUTTING-EDGE TECHNOLOGIES ...
14
… AND WILL PROCURE CRITICAL RESOURCES, WITH INCREASINGLY HIGHER LOCAL CONTENT …
15
39
37
65
287
423
479
568
44
54
61
94
78
80
81
83
2010
By 2013
By 2015
By 2020
Drilling Rigs (Water Depth Above 2.000 m) Supply and Special Vessel
Production Platforms SS and FPSO Others (Jacket and TLWP)
15
… FOSTERING THE GROWTH OF THE BRAZILIAN INDUSTRY THROUGH STRATEGIES AIMED AT ENHANCING ITS COMPETITIVENESS
Bottlenecks identification and Industry mobilization
Demands visibility,
Vendor list expansion and
Simplified bidding process
Funding and Support to the supply chain
Technological Management and Incentives
to new entrants
16
WITH A VIEW TO MAINTAINING ITS DOMINANT POSITION IN THE BRAZILIAN MARKET, …
UPSTREAM OPERATIONS DOWNSTREAM OPERATIONS
Petrobras
Other Companies
Existing Pipelines
Refineries
Marine Terminal
Inland Terminal
Dominant Position
Growing Market
Logistical Synergies
Stable Cash Flows
17
... ONE OF THE LARGEST AND FASTEST GROWING MARKETS IN THE WORLD ...
Sources: BP Statistical Review / Petrobras estimates
80
100
120
140
160
180
200
220
240
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015
Brazil USA India China World OECD
9,06
4,45
3,32 3,20 2,81 2,60 2,44 2,38 2,28 1,99 1,80 1,74 1,59
2010 TOTAL OIL CONSUMPTION* (MM BPD) *Includes ethanol and biodiesel
>3 MM bpd 2-3 MM bpd <2 MM bpd 19,15
TOTAL OIL CONSUMPTION (1999=100)
18
181
2.004 2.100
3.070
4.910
1.393 1.798 1.811
2.205
3.217
1.036
2.147 2.208
2.536
3.095
1980 2010 2011 2015 2020
Oil and NGL production - Brazil Throughput - Brazil Oil products demand (2 scenarios)
3.327
2.643
... PETROBRAS WILL BUILD NEW REFINERIES ...
ABREU E LIMA 230 kbpd
(2012)
COMPERJ (1st train) 165 kbpd
(2013)
PREMIUM I (2nd train) 300 kbpd
(2019)
PREMIUM II 300 kbpd
(2017)
COMPERJ (2nd train) 165 kbpd
(2018)
PREMIUM I (1st train) 300 kbpd
(2016)
(th
ou
san
d b
pd
)
19
Average API Processed (2020)*
-5,5
Premium Refineries
22,5
Existing Refineries
28,0
Crude Sulfur Content (2020)*
+0,1
Premium Refineries
0,6
Existing Refineries
0,5
(pp
m)
Average Naphthenic Acidity (2020)*
0,5
1,3
+0,7
Premium Refineries
Existing Refineries
(mg
KO
H/g
)
Average Crude Cost (2020)*
-5,8
-2,3
Premium Refineries
67
Existing Refineries
69
Brent
75
(US$
/bb
l)
* Estimates
... WHICH ARE EXPECTED TO BE MORE COST-EFFICIENT The new refineries will process a different crude profile, with lower oil costs
20
Total
Demand
Thermal Power Plants’ Demand: Petrobras + Third parties
NATURAL GAS WILL CONTINUE TO PLAY A KEY ROLE IN PETROBRAS’ STRATEGY
Firm
Flexible 30
24
30
24
30
24
2020 2015 2011
Total
Supply 173 149
106 200 151 96
Petrobras’ Demand: Downstream + Fertilizers
Non-thermal power
NG Distributors Demand
2020 2015 2011
2011 2015 2020 2011 2015 2020
Guanabara Bay
Pecém
Bahia 41
20
14 41
20
14 21
14
Bolivian Supply
Domestic NG Supply
Supply via LNG Regasification Terminals
Inflexible
Flexible 40
13
37 25
2011 2015 2020
To be contracted (5.5 GW)
76 (15.1 GW) 59
(10.7 GW) 38
(6.7 GW)
DEMAND PCS 9.400 kcal/m³
4969
936
9
9 Northern Region
Other Regions
55
78
102
SUPPLY
11 4
8 3
6
13
Refineries
NGPU
Fertilizers 61
32
16
39
25
18
2011 2015 2020
Million m3/d
21 Source: Bloomberg
WTI Futures x S&P 500 x Fed Rates (%)
0
20
40
60
80
100
120
140
18/7
/00
18/7
/01
18/7
/02
18/7
/03
18/7
/04
18/7
/05
18/7
/06
18/7
/07
18/7
/08
18/7
/09
18/7
/10
18/7
/11
0
1
2
3
4
5
6
7
S&P 500 WTI FED Target Rate
OIL PRICES: DRIVEN SOLELY BY FUNDAMENTALS?
Open positions in Nymex’s oil futures (# of contracts) Factors driving
physical oil markets: Supply/demand outlook Key markets’ inventories OPEC’s spare capacity
Factors driving oil futures: Expectations on physical
markets’ outlook Liquidity conditions Macroeconomic issues Portfolio managers’
strategies
22
22
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