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Home , ExxonMobil, LUKOIL, PDVSA, PEMEX, Pertamina, Petrobras

The Success Stories – Lessons from Experience Publicly traded peer comparison (SEC - billion boe) – Dec. 2005 and gas production (million boe) - 2005

ExxonMobil 22,4 ExxonMobil 1.484 * 20,1 BP 1.448 Petrochina* 18,5 Shell 1.267 BP 17,6 Petrochina* 945 * 13,0 Chevron Texaco 919 Total Chevron Texaco 12,1 908 7th 809 Petrobras 11,8 7th ConocoPhillips 660 Shell 11,5 Yukos* 624 Total 11,1 Lukoil* 614 ConocoPhillips 9,4 593 ENI 6,8 Statoil 427 Statoil 4,3 416 * 3,8 Sinopec 309 Re ps ol 3,3 Reserve life (years) – Dec. 2005 Refining capacity (thousand bpd) - Lukoil* 32,7 XOM 6.343 2005 Yukos* 20,8 RDS 4.026 Petrochina* 19,6 Sinopec 2.998 ExxonMobil 15,1 BP 2.747 Petrobras 14,6 TOT 2.708 ConocoPhillips 14,2 5th COP 2.275 Chevron Texaco 13,1 PetroChina 2.202 Sinopec 12,3 CVX 2.195 Total 12,2 Petrobras 2.114 9th BP 12,2 Yukos 1.223 ENI 11,5 Repsol 1.175 Statoil 10,1 Lukoil 1.139 Shell 9,0 ENI** 524 Repsol 8,0 Statoil 296 Source: Evaluate Energy and GeneralGeneral ViewView ofof CompanyCompany

An integrated energy company with a Gross Income of US$ 76.5 billion, US$ 10,3 billion in net income, US$ 17,6 billion in EBITDA (2005 BR GAAP)

ExplorationExploration and and • Proven Reserves: 11,8 Billion boe (SEC 2005) ProductionProduction • Oil and Gas Production: 2,22 million boed (2005)

Refining,Refining, • 16 Refineries • Capacity: 2.214 mil bpd TransportationTransportation and and • Pipeline: 30.343 km • Vessels (Own fleet): 50 TradingTrading • 6.933 service stations (34% of the Brazilian market) DistributionDistribution • More than 850 centers in (, Uruguai, Paraguai, and )

NaturalNatural GasGas • Gas Sales: 52 million .m/day

• Ethylene Production: 460 thousand tons/year PetroquímicaPetroquímica • Estirene Production: 250 thousand tons/year • Polyestirene Production: 120 thousand tons/year PetrobrasPetrobras inin thethe WorldWorld

UK USA Nova York Libia Colombia Tanzania Equador BRASIL Angola

Bolivia Paraguai Uruguai

Argentina

HEAD OFFICE MARKETING GAS AND E&P AGENCIES

Focused in Latin America and Atlantic Basin Comparison Majors Average * 4,793

3,176

2,735

National Oil Companies Average **

1,579

1,630

4,329

2011: Petrobras New Refinery will add 200 thous. bpd capacity 2,296 2010: Pasadena Refinery revamp concluded – processing 70 2,114 thous. bpd of heavy oil Product Sales (thous. bpd) 2,217 Refining (thous. bpd) 3,400 Production (thous. boed) Year 2011

* Majors: BP, , Total, , Chevron, and Repsol-YPF *** 2004 figures, except for Petrobras (2005) ** NOIC: PEMEX, PDVSA, Saudi Amraco, KPC, and Source: PIW Intelligence and Petrobras Corporate Strategy Corporate Strategy Social and Environmental Growth Profitability Responsibility

Lead the LatinLiderar American o mercado oil, de natural petróleo, gas, gás naturall products e derivados and na América market Latina,, working as an integrated energyatuando company, como empresawith selective integrada expansion de energia, in , com expansão renewable seletiva energy and da petroquímicainternational e da atividade activities. internacional.

Consolidate and Develop and lead Selectively Selectively Expand participation increase the domestic expand expand interest in biofuels market, competitive market international in the lead the domestic advantages in and perform in an activities in an production the Brazilian and integrated manner integrated market and increase South American in the gas and manner with the participation in the oil and oil power market in Company’s business products market South America business

Operational, management, technological and human resources excellence Drivers & Strategies Drivers Business Strategies E&P Develop market and monetize • Focus on light oil and natural gas natural gas reserves in production and reserve growth Downstream Reduce dependence on light oil • Expand conversion capacity and improve and oil product imports quality of refined products • Increase bio-refining capacity, biomass, Improve oil product quality in petrochemical and businesses Brazil and abroad • Promote Brazilian biodiesel production and export ethanol Reduce carbon intensity of Distribution operations and products • Increase market-share in Brazil for oil products and biofuels Assure future demand and add Gas & Energy value to heavy oil exports • Develop and establish a profitable and reliable natural gas market including LNG Exploit competitive advantage International from deep water exploration • Expand E&P in and technology abroad • Undertake investments in refining conversion capacity and quality Corporate Governance Structure

Board Committees: Fiscal Council

Board • Audit Board of Directors Commit Environment Strategic tees • definitions and • Compensation and Succession supervision Audit Board Ombusman Rapporteur Management Committees:

CEO • Downstream Executive Board • E&P Gas and Energy Officers • Strategy • Human Resources execution and • HSE development of Analysis of Corporate operations Business • Committees Structure and Management • Information Technology Management • Internal Control Committees • Information Security • Risk • Social and Environmental Responsibility • Marketing and Brands 2010214N 8 Oil and Gas Production • 632 thous. bpd of oil exports in Thousand boed 7.5% p.a. 2011; 4,556 • US$ 49.3 billion CAPEX in the 2007-2011 period; 278 7.8% p.a. • 3 new refineries 3,493 742

185 2,403 383 724 2,217 2,036 2,020 101 96 551 85 94 133 163 289 161 168 274 250 265 2,812 2,374 1,880 1,684 1,540 1,493

2003 2004 2005 T ar get 2006 Target 2011 2015 For ecast Oi l and NGL - Br azi l Natur al Gas - Br azil

Oi l and NGL - I nter naci onal Natur al Gas - Inter nacional Human80% Resources HR Practices in Petrobras Employees Satisfaction Index • Gender Commission 70% goal • Ambiance Survey 60% • Ethics Code • Woman Assistance Program 50% • Petrobras University – 154 40% hours per year average of 1996 1998 2000 2002 2003 2004 2005 training per employee • Personal Performance 30% Management • New employees training % of Women in Management Positions • Leader Performance 11 • Result: 3,17% turnover 10,4 • Petrobras chosen by university students as the dream 9,5 9,6 company* 9,4

2001 2002 2003 2004 2005

* Source: Research accomplished in 2005 by RH Júnior Consulting Health and Safety

The performance measured by LTIF* and Fatalities has been improving as a consequence of the implementation of best practices, such as:

6 LTIF* 5 • Fatal and serious accidents videoconferences 4

3 • HSE Alerts

2 • Communication of the blockage 1 actions implemented n.a. 0 Shell Total ExxonMobil Petrobras • Indicator audit and scope analysis 60 Number of Fatal Accidents 2002 50 2003 • Leadership Training: Systemic 2004 Accidents, Incidents and 40 2005 Deviations Investigation

30 • Best Practices Seminar – 1,300 20 professionals 10 • Behavior audits n.a. 0 bp Shell Total ExxonMobil Petrobras * Lost Time Injuries Frequency– number of accidents involving leave from work per million man-hours of risk exposure. Community Investments • Total Investments from 09/2003 to 12/2006 : US$ 125 million* Programs NUMBER AMOUNT INVESTED OF IN 2005 (US$) PROJECTS Education and professional 102 20 MILLION qualification for youth and adults Employment and income creation 111 11 MILLION Children and adolescents rights 27 4 MILLION guarantee Social endeavor 181 7 MILLION Advanced Program of Assistance and 15 1.5 MILLION Treatment of Disabled People Others 8 254 THOUSAND Childhood and Adolescence Fund 311 17 MILLION payment Total 755 60 MILLION

*Free conversionMore using averagethan 2000 exchange volunteer rate workers in more than 1,200 projects THANKS

Joaquim Dib Cohen Managing Director Petrobras Limited [email protected] Energy Security And : What’s On The Horizon?

'Clean' Energies & Energy Sustainability: What Can the Private Sector Do? Where Are the Constraints? Biofuels In Brazil BrazilianBrazilian EnergeticEnergetic MatrixMatrix

Renewable Sources 44.7%

Wood Sugarcane 13.5% Other renewable 13.2% sources 2.7%

Hydroelectricity 14.4%

Petroleum and Uranium 1.5% derivatives 39.1% Coal 6.7% Natural gas 8.9%

100% = 218.6 millions [toe] Source: Brazilian Energy Balance (2006) Spills – cubic meters Eco-efficiency of SOx Emissions – tons 3.00 Oil and LNG Production (Mbpd) OperationsHSE Insurance Premium/ Insurance Value 2.82 Excellenc e 2.50 Program 1,846

2.00 5,983 1.90 PSP – Process Safety Program 158,620 1.53 1. 50 Pipeline Integrity Program 1. 0 0 0.95 PEGASO 0.90 MPL* 2011 = 137,210 t 0.50 1,323 0.42 HSE Corporate MPL* 2011 = 601 m3 151,617 Guidelines 269 0.00 20001234562001 2002 2003 2004 2005 *MPL = Maximum Permissible Limit Land use in Brazil Type Area (Mha) • Total 851 • Native Amazon Forest 370 • Secondary Amazon Forest and Others 180 • Native Forests 6 •Pasture 197 • Temporary Cultures 59 • Permanent Cultures 7.6 • Available land 263 • Available land with low impact (*) 90 Source: FAO, 2002 and EMBRAPA (*) and Biofuels (2007-2011)

2007-2011 Investments 2011 Target Biodiesel Plants Availability of 855 Thous. m3/year Processing 425 Thous. m3/year H-Bio (Bio-Refining) of vegetable oil Alcohol pipelines 3.5 million m3 Ethanol Exports Alcohol Vessel Project Additional 240 MW Installed Capacity of Photovoltaic Power from Renewable Sources Other Renewable Energy Sources

Investments of US$ 0.7 billion in development of renewable energy sources and biofuels Petrobras currently has 280 MW of renewable energy installed capacity BiofuelsBiofuels Strategies Strategies

Renewable Energy

Investment 2007-2011 Goal 2011 Bio-diesel Plants Availability of 855 Thousand cu.m/year Vegetable oil Processing HBio (Bio-Refining) 1,033 Thousand cu.m/year Alcohol pipelines Export of 3.5 million cu.m/year of Ethanol Alcohol Project Vessel

Aeolic Energy Installed Capacity of Generation of Solar Energy Electric Power from 240 MW Renewable Sources Other Sources of Renewable Energy

Total investments in energetic development of renewable sources and biofuels of US$ 0.7 billion Future Markets for Biodiesel Law 11.097/2005 – established minimal percentage for biodiesel mix in diesel 2008 2005 to From 2012 to 2012 on 2007 (2% required) (5% required) (2% allowable) (5% allowable)

Brazilian market Brazilian market Brazilian market 0 – 5.2 million barrels 5.2 – 15.7 million barrels 15.7 million barrels

Petrobras market share Petrobras market share Petrobras market share 0 – 1.3 million barrels 1.3 -3.8 million barrels 3.8 million barrels • Petrobras target for 2010: Production of 8,200 bpd of Biodiesel • Two new experimental units of biodiesel (Guamaré – ), which have received investments of R$ 19 million in research & development until now, will produce up to 300 bpd of biodiesel. BiodieselBiodiesel Estimated Estimated DemandDemand

Biodiesel Demand (Thousand cu.m/year)

3.000 2.771 2.571 2.666

2.500 2%2% MandatoryMandatory 2.000 ANPANP 1.500 PublicPublic Sale Sale 993 5% Mandatory 871 898 926 958 5% Mandatory 1.000 620 500 240

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year HBIOHBIO

HBIOHBIO isis aa processprocess of:of:

• Oil Refining that uses vegetable oil as raw material to get diesel oil. • Hydrogenation of the mixture diesel + vegetable oil HBIOHBIO ProcessProcess inin RefineryRefinery

OTHER VEGETABLE DIESEL DD FRACTIONS OIL ATMOSPHERIC OIL OF DIESEL DISTILLATION

atmospheric residue Existing HDT VACUUM Gas-oil DIESEL FCC FCC DIESEL DISTILLATION Process HBIO Vacuum Residue

DELAYED DIESEL COKE COKING CargoCargo OptionsOptions for for HBIOHBIO ProcessProcess

Castor-Oil Plant Sun-flower Soy African Oil Palm Cotton

Likely Output of Culture

1,500 kg/ha 1,500 kg/ha 3,000 kg/ha 20,.000 kg/ha 3,000 kg/ha

Percentage of Vegetable Oil 47% 42% 18% 20% 15%

Vegetable Oil Production (kg/ha) 705 630 540 4.000 450

Production in 2005 in Brazil cu.m/y 90,000 23,000 5,600,000 151,000 315,000

CENPES HAS ALREADY TESTED IN A PILOT • CASTOR-OIL PLANT – SOY – BABASSU • PALMISTE (SEED OF PALMA) • OURICURI SOURCES: Embrapa, MDA, IBGE, CONAB EthanolEthanol GlobalGlobal MarketMarket –– 42 42 BillionBillion LitersLiters

North and Central Europe America 9,8% 36% BrazilBrazil 35%35% South America Asia 36% 16,2%

Potential trading of Ethanol: 1,5 Billion Liters (2006) → 7,0 Billion Liters (2010) DrivingDriving ForcesForces forfor FuelFuel EthanolEthanol AdoptionAdoption

Reduction of the oil dependence

Energy diversification

Agribusiness development

Kyoto Protocol

Carbon Credit Opportunities EthanolEthanol InvestimentsInvestiments

Goal: Export 3,5 MM cu.m/year in 2011

Logistic to export – New investments in pipelines, water way and vessels (US$ 454 MM) EverythingEverything startedstarted inin 19311931 Ethanol addition into

ƒ 1930 blending depending of the harvest yield ƒ 1979 20% v/v addition variable ƒ 1980 20% v/v addition continuously ƒ 1982 increase to 22% v/v continuously ƒ 1988 reduction to 18% in some regions ƒ 1993 blending by law (22% v/v) ƒ 2001 blending between 20 to 24% v/v (*) ƒ 2002 law fixing the addition of 20 min. to 25% max. v/v* ƒ 2003 launched flex-fuel-vehicles (FFV)

(*) in accord to ethanol availability WhyWhy ethanolethanol becamebecame aa fuelfuel inin Brazil?Brazil?

First operating 100% ethanol (Fiat) – 1979 Æ

Brazil was an oil importer

The two oil shocks had an enormous impact in the Brazilian economy

Looking for an alternative and internal solution

Development demands energy consumption

Arable lands availability Ethanol:Ethanol: LearningLearning CurveCurve More than 400 types of Sugar-Cane

Trend (Anhydrous Ethanol Prices)

Trend ( Gasoline Prices)

Prof. Goldemberg, Coelho, Nastari and Lucon - USP Ethanol:Ethanol: 3030 yearsyears ofof experienceexperience

FuelFuel EthanolEthanol ProgramProgram EvolutionEvolution

Ethanol Program of Program Gasohol and Emission Renewable Controls Implanted Ethanol Gasohol and Hydrogen nd (PROCONVE) (BLENDS) (2 oil shock) Flex fuel Cars

Program for oil imports reduction Environmental Benefits

70’s 80´S 90´S 00´S Future BrazilianBrazilian DistributionDistribution SystemSystem RegulationRegulation andand PoliciesPolicies Sales Biodiesel Oil Derivates T.R.R. Biodiesel Producers End Users Petrol Station Cars Biodiesel T.R.R. Trucks Diesel 13 Refinares Ethanol Transport 3 Petrochemicals Diesel for Agricultures Gasoline Companies 1 Formulator

Jet Air Companies Distributors Airports Industries - LPG Lubricants Importers LPG Farms

Residence Ethanol Lubricants Anhydrous and Retail Hydrouso T.R.R. 304 Mills LPG Retail Ethanol Logistic to Export

New Ethanol Pipeline (800 km)

New Water Way for Ethanol Ethanol Export 8.0 Million m3 in 2012

Marine Terminal Rio de Janeiro

Marine Terminal São Paulo THANKS

Joaquim Dib Cohen Managing Director Petrobras Europe Limited [email protected]