ENERGY for the FUTURE OIL, GAS, BIOFUEL, EQUIPMENT, ENGINEERING Self-Sufficiency Shows Maturity and Consolidates a New Energy Map for Brazil

MINISTRY OF EXTERNAL RELATIONS Trade Promotion Department BRAZILA BRAND OF EXCELLENCE

ENERGY FOR THE FUTURE OIL, GAS, BIOFUEL, EQUIPMENT, ENGINEERING Self-sufficiency shows maturity and consolidates a new energy map for Brazil

Platform P-50 (top) aggregates 180,000 barrels a day to the national production capacity, guaranteeing self-sufficiency in oil. Brazil continues to invest in oil exploration and production on land and in the sea, giving emphasis to renewable sources of energy and the search for better technology BRAZIL CONTENTS JUNE/2006 MINISTRY OF EXTERNAL DIRECTOR AND EDITOR RELATIONS Dirceu Brisola ASSISTANT DIRECTOR EDITORIAL ADVISERS Roberto Baraldi Ambassador Mario Vilalva, EXECUTIVE EDITOR Counselor Paulo Feres Alex Branco ENGLISH EDITOR TRADE PROMOTION Kendra R. Johnson DEPARTMENT CONTRIBUTORS Anexo Administrativo I - Sala 220 Luiz Gonzaga S. Neto Palácio Itamaraty PHOTOS Esplanada dos Ministérios - Bloco H Banco de Imagens Petrobras, Guto 70170-900 Brasília - DF Muniz/www.casadafoto.art.br, Jose Paulo Phones: 55-61-3411- Lacerda/CNI, Ricardo Stuckert/PR 6240/6241/6242 COVER GRAPHIC DESIGN 4 Fax: 55-61-3322-2392/2609 A new profile for the Brazilian oil and gas industry Assaoka.D Comunicação E-mail: [email protected] GRAPHIC PRODUCTION [email protected] COVER STORY Solange Melendez 6 Website: Conquering self-sufficiency PRINTED AT www.braziltradenet.gov.br After 53 years, Petrobras – Brazil’s biggest company and the eighth-largest oil Ipsis Gráfica producer in the world – has finally made the country self-sufficient in the vital TRADE PROGRAMMES DIVISION commodity Phones: 55-61-3411-6392/6393 TO ADVERTISE PLEASE Fax: 55-61-3322-0827 CONTACT REGULATION Editora Brazil Now Ltda. 12 E-mail: [email protected] Clear rules stimulate new investments [email protected] Responsible for regulating the market, the ANP has been holding public TRADE INFORMATION DIVISION http://www.brazilnow.com auctions to concede oil and natural gas exploration rights in Brazil Phones: 55-61-3411- 6663/6668/6636 Editora Brazil Now Ltda. TECHNOLOGY Fax: 55-61-3322-6312 Av. Prof. Alfonso Bovero, 323 16 Brazil at the vanguard of deep-water production E-mail: [email protected] 01254-000 São Paulo SP Brazil Of the 1.9 million barrels of oil extracted each day on average from Brazilian Phone: 55 11 3672 4323 basins in April 2006, about 70% originated from offshore wells in deep and TRADE PROMOTION Fax: 55 11 3875 7100 ultra-deep waters OPERATIONS DIVISION http://www.brazilnow.com Phones: 55-61-3411-6577/6578 Fax: 55-61-3411-6007 SUPPLIERS RESPONSIBLE DIRECTOR 19 E-mail: [email protected] Orders help consolidate industrial and services Dirceu Brisola (MT 8.961) industries TRADE FAIRS AND TOURISM More than 1,300 companies currently supply materials, equipment and DIVISION services for the Brazilian oil sector. And orders should continue to rise due to Phones: 55-61-3411-6394/6395 the investment plans of Petrobras and other companies Fax: 55-61-3322-0833 E-mail: [email protected] 21 NATURAL GAS On the road to self-sufficiency The discovery and exploration of new natural gas reserves combined with MINISTRY OF EXTERNAL RELATIONS incentives for international companies could lead Brazil to become self-sufficient by 2010

23 BIOFUELS Brazil seeks new renewable sources of energy After developing Proálcool, the largest automotive fuel substitution program in the world, Brazil is investing in new sources of renewable energy like biodiesel

25 PETROCHEMICALS New cycle of investments To support expansion and modernization, the Brazilian petrochemicals industry will invest more than US$ 14 billion in the next four years

28 SOCIAL INVESTMENTS Fuel for Brazilian culture Petrobras sponsors social, educational, cultural and arts programs based on public criteria and the transparent analysis and selection of projects 4 Ministry of External Relations

COVER creasing revenues government from taxcollection. and fomentsimprovements inthequalityofoilderivates–notto mentionin- the current environment encouragesthedevelopment of newtechnologies the Brazilianoilindustry. Nowmore competitiveand open toprivateinitiative, groups.national orinternational Thismodelhasprovided newdynamics to private-sector companies thateitheroperateseparatelyorinpartnership with them toconsortialed byPetrobras butincreasingly involvingthepresence of conducted sevensuchrounds. Inall,610 blockshavebeensold,mostof identified ashavingpotentialhydrocarbon occurrences. TheANPhasalready gas from amongthe29Braziliansedimentary basinsthathavesofarbeen the concessionrightstoexplore wellsand potentialpointsforoilornatural the AuctionRoundsforExploratoryBlocks promoted bytheANP, whichsell of countrieswhosedebtisclassifiedasinvestmentgrade. nomic indicatorsandbringingthecountryclosertoenteringselectgroup markets,contributingtoanimprovement initsmacroeco- the international owned oilcompanyPetrobras, hasmadeBrazillessvulnerabletovolatilityon half acenturyofeffort andtechnicalknow-howonthepartoffederally- than tion exceededdomesticconsumption.Theconquest,thefruitofmore profound economicrepercussions: forthefirsttimeever, nationaloilproduc- AND GASINDUSTRY THE BRAZILIANOIL A NEWPROFILEFOR At a time when international oilprices areAt atimewhen international atrecord highs, Brazil’s position Reaching self-sufficiency isthepinnacleofstrategictrajectorysetby In AprilofthisyearBrazilreached anhistoricalmilestonethatwillhave PEDRO ROCHA more importantmechanismsthathavebeen adoptedare ters. Inthearea ofexplorationandproduction, amongthe in extractingoilandnaturalgasfrom Brazil’s soil andwa- and foreign companies–from largetosmall–are involved tory organresponsible forthesector. Currently 56national Natural GasandBiofuelAgency(ANP),the federalregula- That calculationwasrecently madeby theNationalOil, investments estimatedatoverUS$20billion through 2009. sanctioned in1997–,whichpavedtheway foracycleof oly overalloilexplorationandrefining inthecountry– monop- point onthispathwastheendofgovernment and constantsearch forgreater efficiency. Theinflection the Brazilianoilindustry, todayknownforitsmodernization troleum oil. bean oilorotherplant oilswithpe- oped byPetrobras that mixessoy- precedented refining process devel- production testsforH-Bio, anun- recently production ofbiodiesel and, more gasoline. Ithasbeeninvesting inthe tomobiles andasanadditivefor oneer intheuseofethanolforau- national energymatrix.Brazilisapi- currently accountsfor44.7%ofthe vesting inrenewable energy, which dependence onfossilfuelsbyin- ed astrategicpolicyofreducing its hasadopt- the Braziliangovernment try self-sufficient inthisfuelaswell. duction shouldsoonmakethecoun- on investmentsinnaturalgaspro- of totalreserves). Therecent focus ural gas(454.4billioncubicmeters of 306.3billioncubicmetersnat- in totalreserves) andproven reserves lion barrels ofoil(16.1billionbarrels aided byproven reserves of11.7 bil- today isoneofrelative comfort, Petrobras programs newinvestmentsinrefineries toincrease production capacity foroilderivates Despite allthiswealth,however, , beganitsfirstlarge-scale same period. will beaddedtothistotaloverthe vestments inotheroilcompanies lion. AnotherUS$11billioninin- ments ontheorder ofUS$54bil- projects involvingglobalinvest- bras planstodevelopabout600 period fr biggest customer. Overthe four-year company theexpansionoftheir also investcontinuallysoastoac- among otheractivities–andwhich puts andprofessional training, services, materials,equipment,in- hundreds ofcompanies providing investments haverisenandgrown and production alone.Around these than US$65billioninexploration federal oilgianthasinvestednoless ics, industrial engineering,electric try (infrastructure), heavymechan- volve sectorssuchas primary indus- the entire economybecause theyin- generating animpact onpractically late abroader chainofsuppliers, Since beginningoperations,the These projects stimu- willin turn om 2006to2010,Petro- synthetic fibers industries. cleaningproductsvarnishes, and al defensives,fertilizers, paintsand perfumes andcosmetics, agricultur- pharmaceuticals, personal hygiene, tive chainssuchas theplastics, sector hasfomented otherproduc- ation (Abiquim).Furthermore, the Brazilian ChemicalsIndustryAssoci- according tofigures released bythe 14.4 billionoverthenextfouryears, expects toinvestasmuchUS$ tional petrochemical complexthat the consolidationofadiversifiedna- oil andgasindustryhasalsoledto nies. less than1,300supplyingcompa- and gassectorissupportedbyno ganization (Onip),theBrazilianoil ing totheNationalOilIndustryOr- other typesofengineering.Accord- such asinformationtechnologyand port andsupport,besidesservices tubes andductsmarinetrans- products, motors,turbines,metal and electronic equipment,plastic The developmentofthenational

5 Ministry of External Relations 6 Ministry of External Relations

COVER STORY the vitalcommodity in intheworld–hasfinallymadecountryself-sufficient oil producer –Brazil’sbiggestcompanyandtheeighth-largest After 53years,Petrobras it becomeself-sufficient in oil Petrobras’ leadershipindeep-waterexploration andproduction helped around Brazil.ThisyearPresident LuizInácioLuladaSilvarepeated GetúlioVargas’s gesture, Petrobras (foundedin1953),responding tothe“OilisOurs”campaignthattook streets northeast ofthecountry. AtthattimeGetúlioVargas hadalready envisionedthecreation of Getúlio Vargas dippedhishandsintooilextractedfrom awellinCandeiras,BahiaState,the filled agoalthathaschallengedgenerationsofBrazilianssince1952,whenthen-President By achievingself-sufficiency indomesticoilandgasproduction inApril 2006,Petrobras ful- LUIZ GONZAGAS.NETO SELF-SUFFICIENCY CONQUERING this edition). Theeighth-largest the worldleader(see report in where Petrobras isrecognized as ultra-deep waters, anarea ing andproduction indeepand nology, particularly forprospect- the developmentof local tech- conquest wasattained through ry ofthenation.Moreover, the economy, technology andhisto- nificant impactonthepolitics, pany, theeventalsohashadsig- try andthehistoryofcom- stone fortheBrazilianoilindus- during thesamemonth.Amile- consumed dailybythecountry than the1.85millionbarrels al territory, comfortablyhigher (BOE –dailyaverage)onnation- barrels ofoil-equivalent aday years, producing 1.91million has accumulateddeficitsfor53 account inwhichthecountry April, Brazilfinallyinvertedan sufficiency. Inthemonth of and asymbolofnationaloilself- into operationbythepresident de Janeiro State),newlyplaced form intheCamposBasin(Rio extracted from theP-50Plat- smothering hishandswithoil bility and security, makingthe vides anelementof economic sta- year. Self-sufficiency therefore pro- peak ofUS$70.00 abarrel this continues torise,having reached a tween 2004andmid-2006 and commodity, which doubledbe- newed volatilityinthe priceofthe market iscurrently experiencingre- ginning ofthe1980s,globaloil steady increases inpricesatthebe- 1979, whichwere followedby ket. mar- price ofoilintheinternational voked bystrong fluctuations inthe punctuated withsupplycrisespro- a dependenceonforeign fueland whose historyhasbeenmarkedby is clearlystrategicforthecountry, and oilderivates.Thisachievement sufficient intheproduction ofoil lect group ofnationsthatare self- helped placeBrazilamongthese- of R$108billionin2005,Petrobras billion (in2005)andanetincome market valuecalculatedatR$218 to BusinessWeek magazine,witha largest inLatinAmericaaccording oil companyintheworldand Celebrating self-sufficiency onboard PlatformP-50 After theoilcrisesof1973and shocks. country lessvulnerabletoforeign ports onthecountry’s tradebalance risks, reducing theweightofoilim- nal supply, reducing inflationary world oilstocks,guaranteeinginter- reduces Brazil’s dependenceon 06Self-sufficiency 4 6 25 2006 42 2005 48 2003 45 2000 41 1998 61 1995 86 1990 80 1985 61 1983 68 1979 67 1973 1969 1964 1960 1954 98 Y SELF-SUFFICIENCY FROM DEPENDENCETO Source: Petrobras The goalattainedbyPetrobras a Oilimportedtomeet ear (in %) domestic demand of oilandderivates. distribution andcommercialization Brazil inallsegments –exploration, tional groups, nowoperatingin not loseground tolargemultina- to ensuringthatthe company does investments havebeen fundamental greater competitiveness,Petrobras’ tions byforeign companies. market wasfirstopenedtoopera- August thatyeartheBrazilian for 44years,until1997.Itwasin tion anddistributionofoilinBrazil nopoly overallexploration,produc- vironment thatguaranteed itamo- into asolidcompanywithinanen- 1938. Itkeptgrowing andturned by President GetúlioVargas in to theNationalOilCouncilcreated founded in1953asthesuccessor ny, especiallynow. Petrobras was and abroad iscrucialtothecompa- and refining technologies. ment ofoilextraction,production tions intheresearch anddevelop- abroad, theresult ofitscontribu- million barrels –260,000ofthem just themonthbefore, reaching 2.3 overcame itsproduction record set 2006 thecompanyonceagain vestments forthesector. InMay duction, distribution,salesandin- Petrobras successiverecords inpro- the country. human capitalwithoutparallelin a employs nolessthan43,000people the companyhasforBrazil;today Add thistothesocialimportance West AfricaandtheGulfofMexico. countries, especiallyLatinAmerica, and businessactivitiesineighteen context. international tion ofBrazil’s independenceinan of Brazilianrisk.Itisalsoanaffirma- and helpingimprove theperception nd developstechnologyand In thisnewenvironment of The investmentpolicyinBrazil Strategic investments Such performancehasearned Petrobras currently hasassets In addition, theinvestments

7 Ministry of External Relations 8 Ministry of External Relations oil andgasproduction chainin jobs andwillstimulatetheentire the openingof665,000indirect these investmentsshouldresult in abroad (13%). vested inBrazilandUS$7.1billion US$ 49.3billion(87%)willbein- 11.3 billionayear. Ofthatnumber, 56.4 billion,anaverageofUS$ i ness planthrough 2010 involving of directors hasapproved abusi- pansion plans,thecompany’s board tainability ofitsproduction andex- was stilllacking.To ensure thesus- biggest exporterinBrazil,butscale Petrobras hadalready becomethe the globalenergymarket.In2002 plans, reinforcing itsparticipationin company’s internationalization have alsobeenstrategicforthe nvestments ontheorder ofUS$ PLATFORM P-50,AMILESTONEOFSELF-SUFFICIENCY and canstock1.6million barrelsof million cubicmetersof naturalgas boasts thecapacitytocompress six in2005.P-50also the country of theaveragevolume produced in 180,000 barrelsaday, roughly 11% unit inBrazil,producing upto the largestcapacityofanyfloating stores andpumpsoilgas.Ithas form thatproduces,processes, duction StorageOffloading–plat- 1.91 millioninAprilthisyear. jumping from1.5millionin2004to production by400,000barrels/day, Petrobras managedincreasedits producing in2003,justtwoyears ra andRoncadorfieldsthatbegan Campos BasinintheMarlim,Albaco- gether withotherplatformsinthe years toreachself-sufficiency. To- by Petrobrasoverthepastthree the finalstageofaconcertedeffort Basin inRiodeJaneiroState,marked bacora LestefieldoftheCampos platform P-50,assembledintheAl- According tothe company, P-50 isanFPSO–Floating,Pro- The April2006inaugurationof and platforms,adaptingthe producing equipmentforpipelines oping newsearch technologies, bras willbechanneledintodevel- the outlaysannouncedbyPetro- 9% ofthecountry’s GDP. Mostof Brazil, whichtodayaccountsfor US$ 3billiontradesurplus expects thecompanytoclose2006witha Petrobras president JoséSérgioGabrielli 2,000 meters. from800to with depthsvarying an areaof141square kilometers, the stateofRiodeJaneiro; itspans 120 kilometersoffSão Tome Capein 10% stake.AlbacoraLeste islocated Spanish companyRepsolholdsa is partofaprojectinwhichthe Leste fieldintheCamposBasinand jobs. rect and12,000indirectdomestic these worksalonecreated4,000di- ponents weredoneinBrazil.Just and allintegrationoftheunit’s com- All ofthemodulessetintohull cost forP-50wasUS$634million. FPSO-type productionunit.Thetotal tanker fromPetrobras’fleetintoan ing thehullofFelipeCamarãooil storey building. high -equivalenttoaneighteen- merged depth)andis55meters platform hasa21-meterdraft(sub- oil. Measuring337meterslong,the P-50 isinstalledintheAlbacora The unitistheresultofconvert- tion andsalespoints. tankers andexpandingitsdistribu- Janeiro), purchasing newoil and theotherinstateofRiode State, the capitalofPernambuco petrochemical hubs (oneinRecife, structing twolargerefining and eleven domesticrefineries, con- p eleven r expansion program initiatedatits and quence ofthemodernization especially diesel,adirect conse- lower importsofotheroilderivates, ports ofheavyoilandderivates likewise forBrazil)duetohigherex- surplus initstradebalance(and will end2006withaUS$3billion nounced thatthefederaloilgiant dent, JoséSérgioGabrielli,an- oil. InJunethecompany’s presi- enough tocoveritsimportsoflight cant volumesofheavyoil,butnot pany hasalready exportedsignifi- becoming anetexporter. Thecom- mestic market,Petrobras willstart decade. a rateof2.6%overthenexthalf mand, whichisexpectedtogrow at – wellinexcessofdomesticde- rels adaybytheendofperiod years, anincrement of600,000bar- 6.2% ayearoverthenextfive ed toincrease oilsupplyinBrazilby the decade.Thebuild-upisexpect- ble thenumberatbeginningof 1,300 companies–practicallydou- suppliers estimatedatmore than industry, mobilizinganetworkof provide servicesorgoodsfortheoil –that national andinternational sized andlargecompanies–both tunity forhundreds ofsmall,mid- an unparalleledwindowofoppor- at Petrobras’ elevenrefineries in 2010, ofthetotalload processed load in2004to80% in2005.By from 76%ofthecountry’s total processed domestically, whichrose increasing thevolumeofheavyoil rocesses of and modernizing its rocesses ofandmodernizing More thanattendingtothedo- These venturesoffer willinturn This program hasbeensteadily efineries.

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Ministry of External Relations in 1979. concluded inthestate ofSãoPaulo Paraíba Valley Refinery(Revap) was structed byPetrobras sincethe the firstnewrefining unitcon pected tobeginin2011. Itwillbe S. A.(PDVSA).Operations are ex nership withPetróleosdeVenezuela in thePortofSuape,Recife,part- hood ofUS$2.5billion,willbebuilt sorb investmentsintheneighbor- northeast, whichisexpectedtoab- oil refining needs. come self-sufficient inallitsheavy- heavy oil,Brazilshouldalsobe- Rio deJaneiro –,bothprojected for integrated petrochemical hubin the refinery inRecife(PE)andthe processing unitsare completed– tional oil.Andafterthetwonew Brazil, atleast90%willbewithna- P-50 produces, processes, stores andtransportsoilgas.Itsdailycapacityis180,000barrels On June14 thecompanyan- Petrobras’ newrefinery inthe - - continue developing itsexpertise in self-sufficiency, Petrobras plansto that are currently imported. and produce petrochemical inputs Comperj willprocess nationaloil petrochemical crackerinonehub, ny inBrazil.Unitinga refinery anda logical preeminence ofthecompa- five yearsandreaffirm thetechno- rect andindirect jobsoverthenext the historyofPetrobras. the biggestprojects undertakenin investments andisalr consume around US$ 6.5billionin José SérgioGabrielli,Comperjwill to traininglocallabor. Accor ter ofSãoGonçalo(CISG),destined of ItaboraíandtheIntelligenceCen- Hub (Comperj)inthemunicipality of theRiodeJaneiro Petrochemical nounced thestartofconstruction Having surpassedthe markof The hubwillcreate 212,000di- eady oneof ding to operation of PlatformP-50was the obtained inAprilwith theentryinto derivates. version capacityof heavy oilinto of credit toincrease Revap’ ny obtainedaUS$900 millionline Janeiro State.Recentlythecompa- Duque deCaxiasRefineryinRio state ofRioGrandedoSulandthe Pasqualini Refinery(Refap)inthe aremodernized theAlberto exploit heavyoil. Brazil –,adaptingthemtobetter fineries –elevenofwhichare in someofitssixteenre- modernize Brazil, butanotherpriorityisto cated alongthecoastofSoutheast especially intheCamposBasinlo- centrate itsefforts onproduction, traction. Thecompanyplanstocon- deep andultra-deepwateroilex- The goalof1.91million barrels Among theunitscurrently being s con- 370 million. the USwithaninvestment ofUS$ 50% ofthePasadena Refineryin announced thatit hadbought Bolivia. InApril2006 thecompany previous yearsinArgentinaand incorporations accomplished in Uruguay, completing theround of in Colombia,Paraguayand cludes recent acquisitionsofassets ca andtheUS.Theoffensive in- West Africa(Angola),SouthAmeri- activities abroad, particularlyin Brazil, Petrobras isintensifyingits in theGolfinhofield. 300 inthePiranemafield;andFPSO year: P-34,intheJubartefield;SSP pos basinwillbeginpumpingthis other three platformsintheCam- for explorationandproduction. An- ments ofUS$28billionupto1010 cy inaplanthatforesees invest- first stepofsustainedself-sufficien- 003.4million*** 2010 1.91million(April)– 2006 1.7million(April) 1.62million* 2005 1.56million 2003 1.5million 2001 1.2million 2000 1million 1998 500,000 1997 165,500 1984 100,000 1978 2,700 1962 Creation ofPetrobras 1954 1953 erBarrels ofoil-equivalents Year PRODUCTION INBRAZIL GROWTH OFPETROBRAS *** Projection countries. ** 2.3millionintotal,Brazilandother countries. * 2.0millionintotal,Brazilandother Source: Petrobras Global performance Besides investingheavilyin (in May)** 2.07 million– Self-sufficiency 1.8 million(May) per day hol and alternative energiessuch as hol andalternative important areas likebiofuels,alco- to expanditsperformance inother made itpossiblefor thecompany achieved byPetrobras hasalso lion barrels. contains reserves ofabout750mil Gema Group from Spain.Theblock gol, theUS’FalconOiland golan state-ownedcompanySonan- sortium inpartnershipwiththeAn- in adeep-wateroilexplorationcon- Angola, Petrobras has a30%stake total produced bythecompany. In rels adaytothe2.3-million-barrel ies contributesabout260,000bar- NEW PRODUCTIONPROJECTSINBRAZIL the EspíritoSantoBasin. barrels/day fromtheGolfinhofieldin in SergipeState. barrels/day fromthePiranemafield the CamposBasin. barrels/day fromtheJubartefieldin mention: Among them,thefollowingdeserve implementation of36otherprojects. production willbeensuredbythe P -50,thefuturegrowthofBrazilian intooperationof field withtheentry obtained fromtheAlbacoraLeste Campos Basin. from theEspadartefieldin in theCamposBasin. barrels/day fromtheRoncadorfield the EspíritoSantoBasin. barrels/day fromtheGolfinhofieldin The self-sufficiency inoilsupply Production from foreign refiner- - GolfinhoPhaseOne,100,000 - PlatformSSP-300,20,000 - PlatformP-34,60,000 IN 2006: Besides the180,000barrelsaday - RJS-409,100,000barrels/day IN 2007: - PlatformP-54,180,000 - PlatformP-52,180,000 - GolfinhoPhaseTwo, 100,000 - energy. but indeedagiantin thearea of to becomeamajor oilcompany Petrobras ispreparing itselfnotjust new investmentsand projects, based fuels. ducing thetotaldemand forfossil- of ethanolforgasoline,therebyre- production through thesubstitution Brazil conquerself-sufficiency inoil tained from sugarcane helpedto own growth plans. Fuel alcoholob- ian economyandforthecompany’s sources isimportantfortheBrazil- biomass. wind, solarandthosebasedon defined, fromtheCamposBasin. phase withproductiontobe field intheCamposBasin. barrels/day fieldfromtheRoncador the CamposBasin. barrels/day fromtheJubartefieldin definition. Santo Basin. to bedefined,fromtheEspírito from theCamposBasin. field intheCamposBasin. barrels/day fromtheMarlimLeste in theCamposBasin. barrels/day fromtheMarlimSulfield in theCamposBasin. barrels/day fromtheRoncadorfield This diversificationofenergy - Albacorafield,complementary - PlatformP-55,180,000 - PlatformP-57,180,000 - GolfinhoFPSO3,inphaseof IN 2010: - Golfinho(EES-156),production - Fradefield,100,000barrels/day IN 2009: - PlatformP-53,180,000 - PlatformP-51,180,000 IN 2008: With thisaggressive programWith of

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Ministry of External Relations

REGULATION auctions toconcedeoilandnaturalgasexplorationrights inBrazil themarket,ANPhasbeenholdingpublic Responsible forregulating investments Clear rulesstimulatenew order of16.1billionbarrels (oil- ested inexploringreserves onthe foreign companiesofallsizesinter- Currently there are 56domesticand sponsible forregulating thesector. Agency (ANP),thefederalorganre- al Oil,NaturalGasandBiofuels calculation wasmadebytheNation- US$ 20billionthrough 2009.That vestments estimatedatmore than in 1997openednewspaceforin- over Brazil’s oilandderivatesmarket INFRASTRUCTURE FORTRANSPORTING OIL,OILDERIVATES AND The endofthefederalmonopoly LUIZ GONZAGAS.NETO Source: ANP/SPP ETHYL ALCOHOL-2004 drocarbon occurrences. been foundtocontainpossiblehy- tary basinsinBrazilthathavesofar oil ornaturalgasinthe29sedimen- exploit wellsandpotentialpointsof auctions selltheconcessionrightsto tions promoted bytheANP. These Rounds ofExploratoryBlockAuc- country’s processes hasbeenthe mechanisms forregulating the production, oneoftheprincipal ian soilandinitswaters. equivalent) ofoilandgasonBrazil- In thearea ofexplorationand PIPELINES CAPITALS REFINERIES SCHIST PROCESSINGUNIT ALCOHOL CONECTIONCENTER WATER TERMINALS LAND TERMINALS barrels ofoilandmore than140 sult ofthelicenses,about3billion or 4.7%ofthe29basins.Asare- mately 300,000square kilometers- concession corresponds toapproxi- exploratory area currently under that havebeenhandedback,the sion sales).Discountingtheblocks 3 billioninsigningbonuses(conces- snapped up,yieldingmore thanR$ companies. Inall,610blockswere rights tonolessthan56groups of such rounds, grantingexploration The ANPhasalready heldseven signed between each contract process isthat damental tothe companies. Fun- ternational Brazilian andin- ships withother or inpartner- ate eitheralone nies thatoper- sector compa- ence ofprivate- greater pres- increasingly containing an Petrobras, but dominantly by sortia ledpre- quired bycon- blocks were ac- Brazil’s reserves. rated into been incorpo- al gashave meters ofnatur- million cubic Most ofthe

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Ministry of External Relations ergy, with15.4% (R$ 168million), million, followedbythe UK’s BGEn- and paidtheANPabout R$188 which won17.3% of theblocks company basedin Oklahoma, round were DevonEnergy, aUSoil other importantwinners ofthis sions purchases (R$533million), sponsible for49%oftheconces- seventh round. phase fortheblockssoldduring lion tobeappliedintheexploration minimum investmentsofR$1.8bil- next twoyearstheagencyexpects put backintothemarket.Over were abandonedbyPetrobras and ginal accumulations–areas that lion from inactiveareas withmar- ploratory potentialandR$3.04mil- 1.06 billionfrom blockswithex- from thesaleoflicenses:R$ contracts. 41 eventuallysignedconcession their ownorinaconsortium,while process, 85presented bidseitheron nies qualifiedtoparticipateinthe October 2005,ofthe116compa- auctions conductedbytheANPin nentially. Attheseventhround of ating inthesectorhasgrownexpo- ket, thenumberofcompaniesoper- the openingofBrazilianoilmar- derivates andhighertaxcollections. imported oil,improved qualityofoil contributing tolowervolumesof development ofnewtechnologies, proving tobeveryfavorablethe initiative, thecurrent environment is n More competitiveandnowopento counting for9%ofBrazil’s GDP. tion chain,asectorpresently ac- dynamics totheBrazilianoilproduc- (PEM). Minimum ExploratoryProgram area, technicallydenominateda ment tomakeinvestmentsinthe or consortiumincludesanagree- the ANPandwinningcompany ational and international private ational andinternational Besides Petrobras, whichwasre- The ANPraisedR$1.09billion Seventh Round-Nineyearsafter This operatingmodeloffers new auction for theso-calledmarginal couraged theANPto holdasecond tiers (land). mature basinsand64 innewfron- shallow waters,210on land,146in blocks are indeep waters,18in São Francisco(MG).Of thetotal,23 zonas, Solimões(AMandMG) (MA), Pará-Maranhão,FozdoAma- Potiguar (RNandCE),Barreirinhas Recôncavo (BA),Sergipe-Alagoas, ha (MG),Camamu-Almada(BA), (RJ), EspíritoSanto(ES),Jequitinhon- Santos (SP, RJ,PRandSC),Campos sedimentary basins:Pelotas(RS), square kilometersacross fourteen In alltheblockscovered 194,739 (in thestatesofBahiaandSergipe). areas with marginalaccumulations were sold,aswere 16ofthe17 ploratory riskthatwere offered, 251 were inconsortia. ton. Mostoftheseparticipations AmbientalandW.Vitória Washing- Statoil, amongotherslikeBrazil’s Brazalta CorporateandNorwegian Argentina’s OilM&S,Canadian Energia group), Anglo-DutchShell, rogal (from thePortugueseGalp Corporation, Italy’s ENIgroup, Pet- were AmeradaHessoftheUS smaller positions–2%orlower 11.85% (R$128,million).Taking and Spain’s RepsolYPF, with Haroldo Lima,generaldirector oftheANP The successoftheoperation en- Of the1,134blockswithex- do Peixeand Tucano basinswith the Rio from theAmazonas,Parnaíba, land, theANPhasselected sectors terms ofnewfrontier blockson Espírito SantoandSantos basins.In ing promising blocksin theCampos, the previously adopted model,offer- crease future production. reserves aspartofadrivetoin- and bolsterthecountry’s naturalgas ciency inthemediumtolongterm serves soastomaintainself-suffi- round istoreinforce Brazil’s oilre- of exploration.Theobjectivethe ready inarelatively advancedstage nities inmature basins,whichare al- nies there are anumberofopportu- yet. Forsmallandmid-sizedcompa- still nooilornaturalgasproduction attract investmentswhere there is basins innewfrontiers inorder to mid-sized andlargeinvestors. potential basinsofmajorinterestto natural gaswillbeoffered inhigh mentary basins.Blocksemphasizing 54 sectorsforsalefrom 18sedi- and Production Auctionswilloffer of OilandNaturalGasExploration November 2006,theEighthRound dustry. the developmentofregional in- and gasmarket,thereby boosting seeking toentertheBrazilianoil small andmid-sizedcompanies came anexcellentopportunityfor US$ 70.00,theauctionround be- oil currently beingquotedatabout hydrocarbons. Butwithabarrel of relatively lowvolumeofrecoverable and naturalgassectorduetotheir part ofmajorcompaniesintheoil did notattractmuchinterest onthe round wastoreactivate fieldsthat square kilometers. of Barreirinhas (MA),atotalof305 and thepracticallyunexplored basin t blocks inthemature basinsofPo- areas inJune2006,sellingland iguar (RN)andEspíritoSanto(ES) The eighthround willpreserve Areas willalsobeauctionedfrom Eighth auction The objectiveofthesecond – Plannedfor EIGHTH ANPAUCTION SECTORS ANDBLOCKSFORTHE i oPie 1 2133 54 Source: ANP-On4/17/2006 Total 1 Tucano 1 51 6 1 Sergipe-Alagoas 516 Santos 7 2 Rio doPeixe 4 2 Recôncavo 4 2 2 Potiguar 7 2 Pernambuco-Paraíba Pelotas 1 1 1 Parnaíba 1 Pará-Maranhão Total Jequitinhonha 1 Sea Foz doAmazonas Espírito Land 325 Cumuruxatiba 1 1 Campos 8 Santo Camamu-Almada 2 Barreirinhas 3 1 Amazonas 1 1 2 Basin 8 3 should provide reserves estimatedat US$ 2.4billionindeepwatersand The project foresees investmentsof (Rio deJaneiro State)intooperation. the FradefieldinCamposBasin and theFradeJapangroup to place 2006 betweenPetrobras, Chevron the partnershipannouncedinJune for large-scaleinvestmentssuchas new areas provide greater security biofuel (biodiesel)auctions. records. Theagencywillalsohold should break previous concession eighth round ofANPauctions f Alagoas terrestrial basins.Analysts tiguar, RecôncavoandSergipe- mature from theEspíritoSanto,Po- can alsoinvestinareas classifiedas new productive basins. to encouragetheappearanceof marine frontiers, theagencyhopes knowledge oftheseareas. Fornew and increasing thegeological objective ofattractinginvestments rom thesectorbelievethat The ANP’s auctionsofblocksand Small andmid-sizedcompanies day tobereached twoyearslater. peak production of90,000barrels a are slatedtobeginin2009,with 300 millionbarrels ofoil.Operations rounds. least oneoftheANP’s auction world havenotparticipatedinat and naturalgascompaniesinthe that onlyfiveofthe50biggestoil invest inBrazil.Itisenoughtonote lated majorforeign oilinterests to ma, PortugaltheUnitedKingdom). Holland, Italy, Japan,Norway, Pana- mark, Spain,UnitedStates,France, gentina, Canada,SouthKorea, Den- 15 othercountries(Germany, Ar- 26 ofnationaloriginand30from duce oiland/ornaturalgasinBrazil: industrial groups explore andpro- eral-director oftheagency, today56 to theagency. 9.05% sevenyearslater, according leaping from 2.75%in1997to share ofGDPhasmore thantripled, 26.8% overtheperiod.Thesector’s tic Product (GDP),whichrose only – compared toBrazil’s Gross Domes- gas industryhasexpanded318.2% ANP’s activities,theBrazilianoiland nopoly andthebeginningof ters are intheocean. that total,1.6million square kilome- 70% ofthecountry’s territory. Of square kilometers,equivalentto surface area spanning 6.4million basins withoilpotential thatcovera a 454.4billionm? Source: ANP 16.1 billionbarrels Gas Oil 306.3billionm? TOTAL RESERVES 11.7billionbarrels Gas Oil PROVEN RESERVES (On 12/31/2005) RESERVES INBRAZIL The rallyinoilpriceshasstimu- According toHaroldo Lima, gen- Since theendofstatemo- Brazil possesses29sedimentary f liquefied petroleum gas(LPG)prices across 411municipalities,besides natural gas(VNG)pricessurveyed nonadditive dieseloilandvehicular gasoline, hydratedethylalcohol, Sales Marginsincludescommon agency’s SurveyofFuelPricesand and supplyofproducts. The consumers intermsofprice,quality strives toprotect theinterests of ate hiring. about 70,000workers forimmedi- 40 teachinginstitutions, training courses offered to4,000 classesat ducing oilandnatural gas. for exploring,developing andpro- the company’s concessioncontracts the obligatoryinvestmentsstatedin implement theprogram aspartof Petrobras toinvestR$157million (PROMINP). Theagencyauthorized try MobilizationProgram tion PlanfortheNationalOilIndus- launched theProfessional Qualifica- year inSãoPaulotheANPofficially ited bytheagency. versities andR&Dinstitutionsaccred- least 50%–mustbeinvestedinuni- companies, whiletheremainder –at of itsaffiliates andotherdomestic penses madebythecompany, those of thisvaluecanbeusedforR&Dex- search anddevelopment.Upto50% large production volumesintore- fields withhighprofitability and/or of thegross revenue generatedfrom aires toinvesttheequivalentof1% mechanism thatrequires concession- ing andtheformationofcartels. an economicorder, suchasprice-fix- agency inidentifyinginfractionsof praisals are alsousedtoguidethe making betterchoices.Theseap- and offering themthepossibilityof the pricespracticedinmarket with more completeknowledgeof vulged weekly, providing consumers rom 363municipalities. The results ofthesurveysare di- The program will feature 580 Based onthisclause,inJune The ANPhasalsocreated a Price policy – TheANPalso

15 Ministry of External Relations an award at the Offshore Technolo- Brazil at the vanguard of deep-water gy Conference, the most important event in the world for the sector. The company received the same production award again in 2001, consolidating its technological leadership in deep- Of the 1.9 million barrels of oil extracted each day on average from Brazilian

TECHNOLOGY water oil production. In 2000 na- basins in April 2006, about 70% originated from offshore wells in deep and tional production topped 1.5 million ultra-deep waters barrels, reaching 2.02 million barrels per day in May 2006 – almost 10% more than the domestic consumption of 1.85 million barrels. (Self- LUIZ GONZAGA S. NETO owned company earmarks 1% of its through strong investments in per- sufficiency had been reached in The perforation-depth record for net income to investments in re- sonnel and research and develop- April, with a production total of an oil well (6,915 meters), the search and development (R&D). Ac- ment. Up until 1970, it was believed 1.91 million barrels.) launching of Diesel 500 – with 75% cording to data from the federal oil that Brazil did not have any large- Behind this conquest is the less sulfur – in 2005 and the large- giant, in 2004 R$ 654.5 million was scale quantities of oil. But after Leopoldo Américo Miguez de Mello scale production test conducted in set aside for research in almost all much surveying of geological and Center for Research and Develop-

June 2006 for H-Bio (a biodiesel ad- processes of the oil and energy in- geophysical basins, it became clear Automatic process control: Petrobras develops software and applications ment (Cenpes) at the Federal Uni- ditive for diesel oil) are just a few dustry. that the country is in fact abundant versity of Rio de Janeiro (UFRJ) on examples of the technological excel- Of the 1.9 million barrels of oil in the commodity. Fundão Island, assigned to antici- lence achieved by Petrobras and extracted each day on average from In 1974, after four years of PROFESSIONAL QUALIFICATION ON A LARGE SCALE pate and supply the technological which are increasingly recognized Brazilian basins in April 2006, about drilling, oil was finally discovered in needs for all Petrobras’ areas. To do With no less than 43,000 employ- developing the necessary talents and internationally. The Brazilian state- 70% originates from offshore wells the Garoupa field off the coast of this Cenpes employs 350 Master’s ees in June 2006 and operating in a competences in its personnel. To do in deep and ultra- Rio de Janeiro State, the first com- sector that demands a high degree of this Petrobras has developed partner- Degrees and 130 PhDs among the deep waters. In other mercially viable source in the Cam- labor specialization, Petrobras is one ships with educational institutions in 1,565 professionals that structure words, without the pos Basin. Three years later Petro- of the companies that most invests in Brazil and other countries and pro- technological programs in research technology developed bras’ foreign arm Braspetro – al- training in the world. Of its total motes both normal classes and long- and development (R&D) and basic by Petrobras to pro- ready operating abroad –, discov- workforce, 35,800 have already un- distance education through a Virtual engineering (BE). duce oil in deep wa- ered the gigantic Majnoon well in dergone some form of training while Campus, Digital TV and the University It was at Cenpes that Petrobras’ ters, today Brazil Iraq. In Brazil, the Enchova field in 1,400 have been (or are being) TV Channel. Professionals recently-ad- pioneer floating-production concept would still be far from the Campos Basin was the first to trained abroad, according to data mitted into the company from univer- was developed under the aegis of self-sufficiency in oil enter into production using an an- provided by the federal oil giant. The sity and who do not have prior work the Deep Water Production System company’s research center currently experience have to attend classes at supply. More than ticipation system (while the fixed Technological Development Program counts on 350 Master’s Degrees and Petrobras University before they can this, it is quite proba- platforms were being built). This (Procap), launched in 1986. During 130 PhDs among its 1,565 profes- effectively begin their jobs. ble that most of the system later served as the basis for its initial phase, the objective of the sionals. Training has become such a priori- new discoveries in Petrobras’ renowned deep-water Each day about a thousand peo- ty for the company because there is program was to improve the techni- Brazil will be located production technology. ple are trained by Petrobras Universi- still a significant lack of skilled labor in cal competence of the company in in ultra-deep waters – In 1978 national production ty, which has three campuses: in Rio the oil industry in Brazil. Concerned oil and natural gas production in about 65% of the reached 165,000 barrels. By 1984 de Janeiro, São Paulo and Salvador, about this shortage, the Mines and waters up to a thousand meters country’s offshore ex- the company set a new daily record respectively. The company’s employ- Energy Ministry has joined forces with deep in the Albacora and Marlim ploratory blocks are of 500,000 barrels. However large- ees are encouraged to continue various private-sector and govern- fields in the Campos Basin. more than 400 meters scale production in Brazil only studying, with courses that are either ment institutions along with Petro- The results obtained from this below sea level. began at the beginning of the totally or partially financed by the bras and the National Oil Agency first program plus discoveries in Providing continu- 1990s, after having consolidated its company, be it technical, undergradu- (ANP) to create the National Oil and even deeper waters encouraged the ate or postgraduate (specialization Natural Gas Industry Mobilization and ity to the develop- production technology in deep wa- company in 1993 to create a new course, MBA, Master’s Degree or Qualification Program. The program ment of this technolo- ters. In 1997 the 1-million-barrel program, Procap-2000 – the Tech- Ministry of External Relations Ministry of External Relations Ministry of Doctorate), both in Brazil or abroad. aims to train labor in 150 specializa- gy is one of the main threshold was finally overcome. nological Innovation Program for Ex- The result of such high investment tions by offering 750 courses to fill pillars of Petrobras’ Two years later Petrobras estab- has been global recognition for the 70,000 job vacancies in 41 projects. ploration Systems in Deep Waters. strategic plan, the re- lished a new world record in deep- qualification level of its technical The plan will require investments of To put already-discovered deep- sult of a history water oil production, reaching a labor. The company’s university is the R$ 230 million, of which Petrobras is water fields into production as well marked by overcom- depth of 1,853 meters in the Ron- principal instrument for training and the main contributor. as potential fields up to depths of Underwater probe to search for oil and gas: production will 16 continue expanding ing challenges cador field (RJ). That feat earned it about 3,000 meters, the Brazilian oil 17 ority to three lines: the production of heavy oil in Orders help consolidate industrial a marine environment; advancing operating technologies in deep wa- and services industries ters; and minimizing the SUPPLIERS decline of mature fields More than 1,300 companies currently supply materials, equipment and on land and in the ocean. services for the Brazilian oil sector. And orders should continue to rise due to In the quest to improve the investment plans of Petrobras and other companies production technologies, one of the objectives is to reduce the company’s costs. Cenpes estimates LUIZ GONZAGA S. NETO of the country’s GDP, the federally- lion (12%); petrochemicals, US$ 2.1 that for each US$ 1 in- In 53 years of history Petrobras controlled company’s investments billion (4%); distribution, US$ 1 bil- vested in technology, US$ has invested no less than US$ 65 bil- have traditionally had an enormous lion (2%); and corporate affairs, 8 eventually returns. lion in its Exploration and Production impact on industrial activity and ser- with US$ 1.1 billion (2%). And all In 1998, for example, (E&P) area alone, asserts Boris Asril- vices in Brazil. At the beginning of this is without taking into account Petrobras began develop- hant, E&P manager for the company, 2006, Petrobras’s E&P area boasted planned investments in the interna- ing a fuel for the BMW in a recent speech given to the a portfolio of more than 600 pro- tional arena, informs the company. Williams Formula-1 rac- Brazilian Association for the Devel- jects to be developed in the coming That is an average of US$ 2.82 ing team. More than a opment of Basic Industry (Abdib). years. billion invested each quarter (distrib-

Laboratory simulates the rigors of operating platforms on the high seas in a tank question of marketing, uted across domestic and interna- however, the company tional projects), affirms Abdib, which industry has been expanding and Espírito Santo basins. The program was studying a new type of gaso- expects another US$ 11 billion to be developing a new set of technolo- also intends to stimulate production line. The result of that research led invested by private-sector oil compa- gies under Procap-3000 – the Petro- from new discoveries up to depths the company to launch a gasoline nies through 2010. Most of this vol- bras Technological Program for Ex- of 3,000 meters and to reduce ex- dubbed Podium in 2004, which ume will be spent on acquisitions of ploration Systems in Ultradeep Wa- traction expenses for fields with quickly became a sales success both materials and equipment and the ters, launched in 2000. depths over 1,000 meters. It is also in Brazil and abroad. The research construction and assembly of plat- The objectives of Procap-3000 developing the technology for heavy center also works on developing al- forms and tankers. An additional are to produce and provide support underwater hardware to be posi- ternative and renewable sources of 600,000 jobs should be created by for the new phases of the Marlim tioned at 3,000 meters below sea energy, such as biodiesel, solar ener- the end of the decade as a result of Sul, Roncador, Marlim Leste, Alba- level, among numerous other re- gy (cells) and wind-powered (eolian) these projects. cora Leste, Jubarte and Cachalote search projects. energy. Petrobras’ activities involve al- fields (all with depths superior to a In 2005, Cenpes – to where most The number of requests and reg- most every productive chain in thousand meters), besides other of the roughly R$ 650 million des- istrations for patents is another Brazil, but especially basic industry deep-water blocks in the Santos and tined to research goes – , gave pri- demonstration of the vitality of (infrastructure), heavy mechanics, Petrobras’ research: today it has industrial engineering, electrical TRAINED X EFFECTIVE EMPLOYEES PETROBRAS EMPLOYEES – TRAINED more patents than any other com- and electronic equipment, plastic ABROAD Trained pany in the country and is also the products, motors, turbines, metal Effective Brazilian company with the most tubing, transport and marine sup- 1600 40,000 patents registered in the United port and services like information 1400 States. In 2005 Petrobras was grant- New investments in the oil and gas sector require ships, equipment, facilities and services technology, just to mention a few. 1200 ed six patents in Brazil, while According to the National Oil Indus- 30,000 1000 around 80 new requests were Around these investments has arisen This portfolio of projects present- try Organization (Onip), today made. Abroad, 49 patent requests and flourished hundreds of compa- ly involves investments on the order roughly 1,300 companies supply 800 20,000 were filed and 38 obtained. At nies that supply specialized services, of US$ 34 billion, 60% of the US$ products or services to the Brazilian Ministry of External Relations Ministry of External Relations Ministry of 600 home the company registered 9 materials, equipment, inputs and 54 billion total earmarked for the oil and gas sector.

400 10,000 trademarks and requested 141 in 29 professional training, among com- company’s 2006-2010 investment Because it exercised a monopoly

200 other countries. Of these 89 were mercial activities. plan. After E&P comes RTC (refining, over national oil production for al- granted, in addition to seven com- Since Petrobras dominates about transport and commercialization), most half a century – from 1953 to

1997 1998 1999 2000 2001 2002 2003 2004 2005 1997 1998 1999 2000 2001 2002 2003 2004 2005 puter programs, according to infor- 90% of the Brazilian oil and gas sec- with US$ 11.4 billion set aside 1997 –, Petrobras had to foment its 18 mation released by the company. tor, which in turn accounts for 9% (20%); gas and energy, US$ 6.7 bil- own industry of suppliers for the oil 19 20

Ministry of External Relations Development Bank(BNDES)inorder receive financingfrom the Brazilian ships). Itajaí Shipyard (three gas transport rong Shipyard (fourships)andthe and Hyundai(eightships), MauáJu- by theMPEGroup, IESA,Sermetal by theRioNavalconsortium,formed that willbesuppliedbyUsiminas. ships willuse210,000tonsofsteel mentioned, forexample,the16 many companies.Fortheorder just activates variouschainsandinvolves Each largeorder placedbyPetrobras should costmore thanUS$1billion. Another 10units–largervessels billion hasalready beenconcluded. group of16units costingUS$1.27 The auctionprocess foraninitial LPG transportshipsandatanker. derivate liquids,10supportships,six include 17oiltankers,19carriersof ships from Brazilianshipyards. These newing itsfleet,withorders for53 make aggressive investmentsinre- ny’s subsidiaryTranspetro plansto and metallurgy. emphasis onindustrialengineering bilizes numerous sectors,withan taining platformsisanotherthatmo- sponsible forconstructingandmain- terminals andpipelines.Thearea re- safety conditionsofthecompany’s and improving theoperatingand 1 billionwillbespentonexpanding with thefederaloilgiant. i over time,saystheentity. Brazilian partnership thatwouldconsolidate was raisedbyPetrobras, creating a ation ofAbdibin1955aftertheidea industry led,forexample,tothecre- services. Theneedtodevelopalocal dependent onimportedgoodsand beginning thecompanywasheavily in thesectoroverperiod.In it wasresponsible forallpurchases and gassectorinthecountry, since ndustry hasgrown hand-in-hand Brazilian shipyards are eligible to The 16shipswillbeconstructed The firstorder involves26ships. In termsoftransport,thecompa- In thelogisticssector, aboutUS$ professional training program tofill 2006 theorganization willconducta qualification onalarge scale.In sector, besidesstimulatinglabor chain forthenational oilandgas gaps andbottlenecks inthesupply sector entitieswhich aims todetect with Petrobras, theANPand private- Mines andEnergyinconjunction gram coordinated bytheMinistryof (83%) anddistribution(92%). supplies (82%),gasandenergy even higherthanthe65%average: while inothersegmentsitshouldbe for explorationandproduction, sector couldreach ashigh51% the nationalcontentindexin lization Program (Prominp), in2006 from theNationalOilIndustryMobi- Accordingliterally reborn. todata 67%, Brazil’s navalindustryhasbeen laws, whichhaverisenfrom 57%to period endingin2005. billion fundedduringthethree-year That’s more thandoubletheR$5.7 gas sectoroverthenextthree years. than R$11.8billionfortheoiland BNDES expectstodisbursenoless to buy36shipsfrom Brazil.The which hasannounceditsintention Petróleos deVenezuela (PDVSA), another order recently placedby to filltheTranspetro order andalso 4000 1000 2000 3000 5000 6000 Prominp pro- isagovernment mandatorylocal-content With 0 161 2003 SUPPLIERS REGISTEREDON Jan/04 207 Feb/04 240 PETRONECT Mar/04 299 Apr/04 412 537 May/04 856 June/04 1314 July/04 2945 3820 Aug/04 Sep/04 5098 Oct/04 ness unitsabroad. Thelistofsuppli- Petrobras system,includingitsbusi- tric sectors. oil, petrochemical andthermoelec- unites anumberofsuppliersforthe SAP andAccenture. Theportal its subsidiarye-Petro togetherwith the result ofanassociationbetween gas industry–dubbedPetronect –, merce portalinBrazilfortheoiland Petrobras created thefirste-com- tionship withsuppliers,in2003 production hubsandplatforms. jects, suchasgaspipelinenetworks, panies inmajorinfrastructure pro- greater share toprivate-sectorcom- for example,asaformofoffering a tion, sayanalysts.Theycouldserve, a vate Partnerships(PPPs)couldbean implement largeprojects, Public-Pri- goods andservicesinthesector. To periods there isoftenashortageof skilled labor, duringpeakexpansion 70,000 jobvacanciesinthesector. pliers, affirms thecompany. portal to600buyersand 7,100sup- 120,000 orders issued through the have already been madeand business. Nolessthan 18,000bids Petronect overR$1billion in turned purchase modality. In2005 the portal,especially viathequick- number purchases madethrough sponsible formore thanhalfthe Campos BasinBusinessUnitisre- plete fouryearsontheair. Today the viding records ofallactions. ing orders withproduction andpro- single placeofeasyaccess,integrat- making allinformationavailableina need forpublicmeetings,besides opportunities andeliminatesthe duces costsformonitoringbusiness est) orbyinvitation.Theportalre- est priceandmovedowntothelow- auctions (whichstartfrom thehigh- able toparticipatethrough reverse ers isavailabletoallbuyers,whoare lternative waytofinanceproduc-lternative In 2006theprogram willcom- Petronect attendstotheentire To facilitateandimprove itsrela- This isbecausebesidesalackof

NATURAL GAS self-sufficient by2010 self-sufficient companiescouldleadBraziltobecome with incentivesforinternational combined The discoveryandexplorationofnewnaturalgasreserves On theroadtoself-sufficiency 2010, according torecent projec- end of2006and110millionin rise to54millioncubicmetersbythe of naturalgas,demandthatshould roughly 48millioncubicmeters/day fuel consumptioninthecountry. account formore than10%oftotal 2010 thecommodityisexpectedto 1990 to9.3%in2005.Moreover, by 1% in1980,leapedfrom 3.1%in ergy supply, whichwasaslow share ofthisfuelinthenation’s en- has beengrowing thefastest.The Brazilian powermatrix,naturalgas Currently Braziliansconsume Of allthecomponentsof LUIZ GONZAGAS.NETO gentina). (91% from Boliviaand9%from Ar- some 27millioncubicmetersaday imports about50%ofthefuel– To meetdemand,todaythecountry ural GasandBiofuelsAgency(ANP). tions madebytheNationalOil,Nat- into theproduction process. Net orreinjectedthemselves orburned duced isreused bytheprocessors lion cubicmetersofthegaspro- tain amountbecauseabout20mil- country stillneedstoimportacer- ume ofdomesticconsumption,the ters closelyapproaches thetotalvol- production of47.4millioncubicme- Although Brazil’s gross national PIPELINE URUGUAIANA-PORTO ALEGRE SE-NE CONNECTION SE-NE EXPANSION HALF-NORTH PIPELINE BRAZIL-CENTRAL PIPELINE URUCU-PORTO VELHOPIPELINE URUCU-MANAUS PIPELINE BOLÍVIA-BRAZIL PIPELINE will probably attainself-sufficiency in ies ofgasfieldsindicate thatBrazil levels combinedwith newdiscover- and consortia.Current production ment partnerships, joint ventures couraging theformation ofinvest- tion potential.Theagency isalsoen- blocks withhighnatural gasproduc- cessions inAugust,offering several an eighthround ofexplorationcon- 2011. TheANP, foritspart,willhold barrels ofoilequivalentsadayby rels perdayofoil,risingto300,000 day ofnaturalgasand100,000bar- Basin are 30millioncubicmetersa tion expectationsfortheSantos next tenyears.Short-termproduc- at around US$ 18 billionoverthe the SantosBasinaloneare estimated exploration andproduction justin Basin. its discovery)andtheEspíritoSanto known gasdepositsinBrazilupuntil meters are twiceasgreat asthetotal mated reserves of420billioncubic cially theSantosBasin(whoseesti- ural gasproduction potential,espe- jects invariousbasinswithhighnat- tion inthecountry. tions toincrease naturalgasproduc- accelerating andredirecting theirac- and Petrobras –,havebeensharply ANP, theMinesandEnergyMinistry defining energypolicyinBrazil–the the principalagentsresponsible for the short,mediumandlongterm, tion’s supplyanddemandcurvesin three monthsof2006. data released bytheANPforfirst cubic meters,according toproduct production iscloserto27million Investments programmed forgas Petrobras hasstepped-upitspro- In order toapproximate thena-

21 Ministry of External Relations 22

Ministry of External Relations at R$1.5billion. TheUrucu-Manaus try. Total investmentsare calculated for thefuelinnorth ofthecoun- meters adayandhelp meetdemand should carryabout6.5 millioncubic Urucu-Manaus gaspipeline, which been intensifyingits worksonthe US$ 1.6billion. other legsshouldcostanadditional for theinitialstage.Gasene’s two a totalUS$450millionearmarked has beensetatUS$239million,of of Brazil.Thevaluethecontract the southeastandnortheastregions planned gaspipelinethatwilllink 300-kilometer legofGasene,a (ES) gas pipeline,thefirst Vitória tract tobuildtheCabiúnas(RJ)- Sinopec corporationsignedacon- May 2006Petrobras andChina’s sorb mostoftheseresources. In units inBrazilandabroad willab- pipelines, gasfieldsandprocessing gas andenergy. Dozensofnewgas investing US$22billioninnatural through 2011,Petrobras foresees by 2010. natural gas(orapproach thatgoal) NATURAL GASINBRAZIL imports, salesandadjustmentsinnationalnaturalgasproduction. condensed, consumedbytherefineries,processingunitsandtransfertransportsystems, (5) Equaltotheapparentmarket(netnationalproduction+imports),includinggasliquefied, 454.4billioncubicmeters (4) Equivalenttoproductionminusthepartsself-consumed,burned,lostandreinjected; 27.2 (3) ThereinjectedportionintheUrucufieldwas83.1%onaverage2006; 54.3 306.4billioncubicmeters, (2) ReferstogasburnedandlostinPetrobras’productionareas; (1) ReferstoPetrobras’ownconsumptioninitsproductionareas; 54.0 8.3 Source: ANP-MonthlyBulletin–April/2006 Total reserves (2005) 47.4 4.3 Proven reserves (2005) 27.14 Total consumedinBrazil 7.7 Total supply(5) Imported Net nationalproduction (4) Reinjected (3) andlost(2) Burned Self consumption(1) Production on theaverageforfirstquarterof2006) Average production–inmillionsofcubicmetersperday(projectionbased In theAmazon,Petr As partofitsbusinessplan obras has and transportation, asaninput for thermoelectric power generation fertilizer industries), followedby steel, chemical,petrochemical and industrial plants(particularly the the gasconsumedin Brazilgoesto that are fired bynatural gas. Mostof will bethermoelectric powerplants to nationaldemandincomingyears explore naturalgasinMozambique. panhia Vale doRioDoce(CVRD)to has formedanalliancewithCom- On theAfricancontinentPetrobras tomers, foraboutUS$12.5million. Uruguay withabout45,000cus- tribution companyinMontevideo, control ofGaseba,a natural gasdis- market. InJunethisyearitassumed performance intheinternational evaluates thecompany. costs shouldbesavedeachyear, some R$1.2billioningeneration cal energyforAmazonasState, oil currently usedtoproduce electri- of naturalgasforthedieselandfuel thesubstitution March 2008.With ters andshouldbeconcludedby gas pipelinewillextend670kilome- One ofthebiggestcontributors Petrobras isalsoincreasing its kitchen gas. 95% ofBrazilianhouseholds use uct ofgreat socialimportance since (Sindigás). Nevertheless, itisaprod- Gas Distributing Companies Association ofLiquefied Petroleum sumption, according totheNational only 3%oftotaldomestic LPGcon- sufficient inthisarea, importing small andBrazilispracticallyself- of totalconsumptionisrelatively wise knownaskitchengas)part liquefied petroleum gas(LPG,other- of VNGconsumption. Bus fleetsare alsoagrowing source gine foranotherbasedonlyongas. or bysubstitutingtheolddieselen- form, injectingbothdieselandgas, only dieseloil–eitherinacombined pel vehiclesnormallypowered by VNG. VNGcanalsobeusedtopro- combination ofgasoline,alcoholor tri-fuel vehicles,whichcanuseany by June2006. vehicles hadbeenconvertedtoVNG growing rapidly:more than206,000 (VNG). Thelattermarkethasbeen vehicles fueledwithnaturalgas INVESTMENTS NATURAL GAS ■ ■ ■ ■ ■ ■ ■ ■ Principal gaspipelineprojects capacity– increase delivery Investments ininfrastructureto Source: Petrobras On theotherhand,share of Demand hasalsobeegrowing for Investments ingaspipelines Development ofthePDEGgas Paulínea-Jacutinga gaspipeline SE andNEnetworks Expansion ofGasbel Urucu-Coari-Manaus gas Northeast gaspipelinenetwork Southeast-Northeast pipeline period 2006/10 totaling US$4.5billionforthe transportation plan pipeline (GASENE)

BIOFUELS savings ofaboutUS$145million Petrobras, Brazilshouldpocketa duced onacommercial scaleby 2007, whenH-Biostartsbeingpro- Brazilian Energy”).Beginningin matrix (seethechart“TheProfile of for 44.7%ofthecountry’s energy able energies,whichtodayaccount position atthevanguard ofrenew- oils withpetroleum. that mixessoybeanorotherplant process developed byPetrobras an unprecedented diesel refining scale production in 2006 ofH-Bio, nounced itsfirsttestsforlarge for automobiles,inJuneBrazilan- the world, Brazil is investing in new sources of renewable energy likebiodiesel energy ofrenewable the world,Brazilisinvestinginnewsources in automotivefuel substitutionprogram thelargest After developingProálcool, of energy Brazil seeksnewrenewablesources Automobile with biofuelengine:Brazil investsinrenewable energy The newfuelreinforces Brazil’s A pioneerintheuseofethanol LUIZ GONZAGAS.NETO year isonlyUS$38million. 256,000 cubicmetersofH-Bioa investment neededtoprocess liters lessofdieselayear. Thetotal from havingtoimport 250million of roughly US$240millionayear. erating gainsinthetradebalance US$ 23millionininvestments,gen- begin producing H-Biowithanother In 2008,anothertwoplantsshould Sul Statewillenterintooperation. Pasqualini refinery inRioGrandedo Paraná StateandtheAlberto dent GetúlioVargas refinery in Gerais State.NextyearthePresi- Gabriel Passosrefinery inMinas process thenewfuelwillbe H-Bio isjustthemostrecent The firstPetrobras unitto and 2012. After 2013,thepercent- becoming obligatorybetween 2008 to dieseloilby2007, withitsuse rizes amixture of2%biodiesel(B2) mercial useofthisfuelandautho- gram, whichestablishes thecom- ation oftheNational BiodieselPro- movement in2004 with thecre ers. cial SupportProgram, amongoth- (BNDES) BiodieselInvestmentFinan- Brazilian DevelopmentBank’s commercialization through the implementation, production and financing for research,government from family farmers. ers, palm,red palm,babassuetc.) material (castor-oil plants,sunflow- producers ofbiodieselwhobuyraw ng aSocialFuelSealtoindustrial of AgrarianDevelopmentisgranti- Biodiesel Program and theMinistry ergy Plan;Petrobras hasitsown operatestheNationalAgroen- turn, gram; theAgriculture Ministry, in Biodiesel Production andUsePro- ample, conductstheNational Mines andEnergyMinistry, forex- and developingnewbiofuels.The ment are involvedinresearching fleet. a goodpartofBrazil’s automotive from sugarcane thattodaypowers with ethanol,fuelalcoholobtained program forsubstitutinggasoline cool –thefederalgovernment’s that beganinthe1970swithProál- in biofueldevelopment,aneffort conquest achievedbythecountry A majorboostwasgiventothe All theseprograms benefitfrom All theprincipalareas ofgovern- -

23 Ministry of External Relations 24

Ministry of External Relations Base: 2004 Source: MinistryofMinesandEnergy Natural gas(8.85%) Other products(3.08%) Uranium (1.87%) Steam coal(1.06%) Metallurgical coal(0.07%) ethanol. for theproduction ofbiodieseland ian agroenergy program, especially to investR$1.2billionintheBrazil- eration announcedthatitintends Coop- Japan BankofInternational pean UnionandJapan.InJune,the like theUnitedStates,Euro- kets withhighenergyconsumption in themediumtolongtermmar- also openspossibilityofexporting 400 million. nual economyshouldreach US$ theuseofB5,an- ports. With lion/year duetolowerdieseloilim- savings ofroughly US$160mil- the newfuel,providing anational order of800millionliters/year should create amarket onthe regular dieselwillriseto5%(B5). age ofbiodieseltobeadded (Ceam), the statepowerutilitycon- cal power. oil forbiodieseltogenerate electri- with theaimofsubstituting diesel has installedabioelectricity project the stateofAmazonas, Eletrobrás babassu andcastor-oil plants.In the production ofred palm oil, ties andfamilyfarmersthatliveoff opportunities forsmallcommuni- east regions ofBrazil,sinceitopens ly positiveforthenorthandnorth- impact ofbiodieselwillbeespecial- PROFILE OFBRAZILIANENERGY Window ofopportunity The developmentofbiodiesel thismeasure, theuseofB2 With Centrais Elétricasdo Amazonas Petroleum (40.36%) Sugarcane products(15.52%) Firewood (14.80%) Hydraulic energy(14.49%) – The both gasoline (25%alcohol)and 28,000 servicestations, mostwith Brazil currently boastsabout To meet thisgrowing demand the totalmarketedover theperiod. were soldinthecountry 513,784 “flexfuel”(dual-fuel) cars favea), for2006up through May motive Vehicle Association(An- mixture withtheirgasoline. rest usea25%anhydrous alcohol clusively withhydratedalcohol;the 3 millionvehiclesare powered ex- Union (Unica).Ofthistotal,about State Sugarcane Agro-Industry lion units,affirms theSãoPaulo vehicles estimatedatabout17mil- drated -tosupplyafleetoflight fuel alcohol–anhydrous andhy- no lessthan15.9billionlitersof alcohol. LastyearBrazilproduced uted inthecountrycontains25% Currently allthegasoline distrib- substitution program ontheplanet. today thebiggestautomotivefuel Proálcool, created in1975and travel apathsimilartothatof 550 millionliters,respectively. ing available50millionlitersand round ofbioedieselauctions,mak- ANP announcedathird andfourth at 7,000postsby2007.InJulythe tions in22statesandplanstosellit biodiesel at500ofitsservicesta- ra. Thecompanyalready sells of biofueltoPetrobras Distribuido- tions, sellingatotal240,000liters According totheNationalAuto- Each oftheseprograms could held twobiodieselauc- Agency (ANP)hasalready tend toisolatedsystems. on dieselpurchases toat- about R$2billionayear regionnorthern spends and red palmoil. The extracted from castor oil responsibility forbiodiesel isolated systemsunderits diesel oilusedinthe91 progressively substitutethe t rolled byEletronorte, will The NationalOil , 76.1%of 2010. that couldreach 6billionlitersby access toa1.8-billion-liter market Brazil-Japan Ethanol, it willprovide Nipon AlcoholBanhai. Baptized lished ajoint-venture withJapan’s markets, Petrobras recently estab- pected tosoonreach US$1billion. Trade Secretariat. Exportsare ex- cording totheBrazilianForeign off avolume of2.5billionliters,ac- in 2005totaledUS$765.5million into theatmosphere. for reducing pollutionemissions agreement thatestablishesterms such astheKyotoProtocol, aglobal prices andenvironmental legislation rising duetopressure from highoil exports oftheproduct shouldkeep Goiás. of SãoPaulo,MinasGeraisand major producing regions instates million andwillinterconnect the will require investmentsofUS$330 be inauguratedin2008,theproject on theBrazilianalcoholmarket.To which shouldhavealargeimpact network offuel-alcoholpipelines, struction ofanew950-kilometer bras recently announced thecon- next fiveyears. struct 31production unitsoverthe 1.6 billionwillbeinvestedtocon- tons ofsugarcane. A furtherUS$ senting anadditional150million cohol production by 2010,repre- US$ 6billionwillbeinvestedinal- the country, estimatesthatabout unites mostofthemajorplantsin national groups. Unica, which being madebynationalandinter- pansion, withheavyinvestments currently undergoing astrong ex- ers intheworld. one ofthelargestjetmanufactur- Ipanema, developedbyEmbraer, used asafuelforairplaneslikethe a lcohol pumps.Alcoholiseven With aneyeon the majorglobal With Revenues from alcoholexports Besides thedomesticmarket, To supportitsdistribution,Petro- The alcoholsectorinBrazilis

PETROCHEMICALS industry will invest more thanUS$14billioninthenextfouryears industry willinvestmore theBrazilianpetrochemicals To supportexpansionandmodernization, New cycle ofinvestments Production hubforpetrochemical rawmaterials industry iscurrently undergoinga year –,theBrazilianpetrochemicals more thanthetotalforprevious order ofUS$69.5billion–15.4% Boasting netrevenues onthe LUIZ GONZAGAS.NETO Industry Association(Abiquim). tions madetheBrazilianChemicals 14.4 billion,according tocalcula- next fouryearsestimatedatUS$ by programmed investmentsforthe period ofconsolidationconcretized tite model basedontheparticipa- thanks totheadoption ofatripar- these hubswasmade possible materials inthecountry. produce allthepetrochemical raw State (Copesul).Until todaythey 1975 inTriunfo, RioGrandedoSul rently Braskem);andthethird in Bahia, builtin1970byCopene(cur- one inCamaçarithestateof química União(currently Unipar); state ofSãoPauloin1968byPetro- one inCapuava,installedthe petrochemical hubsinthecountry: ed theimplementationofthree big cals industry. Thecompanypromot- national chemicalsandpetrochemi- of developingandconsolidatinga created in1967withtheobjective Petroquisa, aPetrobras subsidiary andgrewtor wasborn uparound ment. ment beganprivatizingtheseg- in themid-1990swhengovern- uity stakesthatgainedmomentum movement ofmergersandcross-eq- industry hasbeenreinforced bya and artificialsyntheticfibers. cleaningproductsand varnishes, cultural defensives,fertilizers,paints ucts, perfumesandcosmetics,agri- products, personalhygieneprod- cals forplastics,pharmaceutical and producers ofindustrialchemi- more recently alcoholandcharcoal) puts (naphthaandnaturalgas uct (GDP),includessuppliersofin- of thenation’s Gross DomesticProd- plex, whichaccountsforabout4% The Brazilianpetrochemical com- Driving force The Brazilianpetrochemical sec- The consolidationprocess inthe – Constructionof

25 Ministry of External Relations 26

Ministry of External Relations program, theState’s shares inthe federal government’s privatization tween 1992and1995aspartofthe s petrochemical compounds. in thecountryand,asaresult, and third generationsplasticschains hind theinstallationofsecond ny servedasthedrivingforce be- the equity. Thestate-ownedcompa- capital, eachonewiththird of vestors andnationalprivate-sector (through Petroquisa), foreign in- tion ofthefederalgovernment takes in36companies.Butbe- Polietilenos União.LDPEisusedto year, followedbyDowBraziland Braskem leadswith210,000tonsa Low DensityPolyethylene(LDPE), installed capacityare,byproduct:in The companieswiththegreater for 2%ofBrazil’s GDP. 23.15 kgandthesectoraccounts consumption inBrazilisaround 258,000 workers.Percapitaplastic 8,523 companiesthatemploy Currently thesectoriscomposedof (Abiplast). Plastics IndustriesAssociation The informationisfromtheBrazilian US$ 974millioninforeignrevenues. more than50countries,generating 2005 andexported275,000tonsto over nolessthanUS$15.9billionin the plasticsindustry, whichturned the Brazilianpetrochemicalchainis One ofmostimportantsegmentsin In 1990,Petroquisa owned PLASTICS INDUSTRY EXPORTS TOOVER50COUNTRIES (BNDES). the BrazilianDevelopmentBank and BNDESPar, theequityarmof investors includePetroquisa (16.7%) Suzano Petroquímica (33.3%);other ian groups Unipar(33.3%)and opol isdividedbetweentheBrazil- dustrial hubinBrazil.Control ofRi- largest integratedgas-chemicalin- the stateofRiodeJaneiro. Itisthe augurated inDuquedeCaxias Gas-Chemicals Hub(Riopol)wasin- ending thetripartitemodel. petrochemical hubswere sold,thus HDPE, followedbyRiopol(540,000 produces 550,000annualtonsof tanks forautomobilesetc.Ipiranga hoses, waterandseweragepipes,fuel hygiene andcleaningproducts,gas rations, cosmetics,toys,containersfor used inpackagingforfoodand High DensityPolyethylene(HDPE)is tons). and Ipiranga(with150,000annual Braskem (with300,000annualtons) of theproductayear, followedby napkins etc.Riopolproduces540,000 packaging, diapersandsanitary for industrialpackaging,food (LLDPE), ontheotherhand,isused Low LinearDensityPolyethylene telephones etc. wires andcablesfortelevisions tetrapak packaging-,besidescovering impermeabilize paper–suchas make shrinkwrapfilmsandto In June2005,theRioPolímeros tons) andIpiranga 650,000 annual Braskem (with tons, followedby 740,000 annual Brazil with production in Polypropylene (PP) Suzano leads annual tons). Politeno (210,000 annual tons)and duce second-generationpetrochem- and diesel,thehubwillalsopro- zene, LPG(liquefiedpetroleum gas) producing ethylene,propylene, ben- a dayofheavyBrazilianoil.Besides c into operation.Theplantwillhave 2011, whenitisexpectedtoenter vestments ofUS$6billionupto Refinery, whichshouldconsumein- ate theRiodeJaneiro Petrochemical company inLatinAmerica,tooper- largest privately-heldpetrochemical joined forces withBraskem,the Ledervin (60,000annualtons). Ledervin Brakem (78,000annual tons)and tons ofPETayear, followedby etc. M&GFibrasproduces 290,000 cosmetics, medications andfertilizers for beverages,foodoils, sauces, used indisposablerigid packaging Polyethylene Terephthalate (PET)is annual tons). annual tons)andPoliteno(150,000 next byPolietilenosUnião(13,000 with 160,000annualtons,followed Triunfo leadsnationalproduction seatsetc. chains, pastes,sanitary tires forbabycarriagesandtoys,key acetate, isusedinshoes,stickers, EVA, ethylenemixedwithvinyl with 236,000annualtons. a year, followedbySolvayIndupa, etc. Braskemproduces475,000tons shoes andtubesconnections make toys,hoses,windowframes, (43%), isarawmaterialusedto from seasalt(57%)andpetroleum Polyvinyl Chloride(PVC),derived with 120,000annualtons. 190,000 annualtons,andInnova, tons. NextcomesEDN-Sul,with production with190,000annual Basf leadslocalPolystyrene among ahostofotherapplications. large mineral-waterbottlesandtoys, used inpackaging,lids,freezerpots, (150,000 annualtons).PPisaresin apacity toprocess 150,000barrels On anotherfront, Petroquisa Source: Abiquim 5.3 Personal hygiene Fertilizers Pharmaceutical products Chem. prod.forindustrialuse 5.5 NET INCOMEBYSEGMENTIN2005 9,2 4.0 Revap refineries, both inSãoPaulo. terial suppliedbythe Replanand of polypropylene based onrawma- ty toproduce 300,000 tonsayear ca, whichwillboastan initialcapaci- construction ofPaulínia Petroquími- lene andotherplastics. icals likepolyethylene,polypropy- Research supportstheexpansionofpetrochemicals industry Total: US$69.5billion The company isalsostudyingthe Also in2005,Petroquisa began 2.5 1.9 2.0 Others Paints andVarnishes Soaps andDetergents Defensives 39.1 pany. US$ 492.1million,informsthecom- plant. Theproject isbudgetedat purified terephthalic acid(PTA) has approved theinstallationofa Petroquisa the stateofPernambuco, investment ofUS$500million.In crude acrylicacidfrom anestimated produce 16,000tonsayearof state ofMinasGerais,whichwill Acrylic Hubtobeinstalledinthe implementation ofanIntegrated US$ 330millionforPetrobras. from ammoniaandurea generated million. In2005,gross revenues an investmentabsorbing US$780 the Midwestbasedon naturalgas, struction ofanitrogenates unitin and Bahia.Itisalsoanalyzingcon- its plantsinthestatesofSergipe pany isconcludingimprovements to groups are alsopreparing toinvest In thearea offertilizers,thecom- Major nationalandinternational workstations. business opportunities andnew omy more dynamic, creating new helping tomakethe Brazilian econ- a globalizedenvironment, itisalso to operatewithgreater ef not justbecomingstronger inorder Brazilian petrochemicals sectoris (33.3%). Petroflex (10.1%)andPolibutenos (37.2%), Carbocloro (50%), panies: Petroquímica União vision) andstakesinfourothercom- etilenos Uniãoanditschemicalsdi- Terminais, UniparComercial, Poli- 2005 from itssubsidiaries(União gross revenues ofR$3.2billionin tor, Uniparpostedconsolidated ene, polypropylene, PVCandPET. Latin America,producing polyethyl- resins segmentitistheleaderin (kitchen gas).Inthethermoplastic chemicals, besidesgasolineandLPG company produces basicpetro- 5% inrelation totheprevious year. 11.6 billionin2005–anincrease of Braskem postedanetincomeofR$ Controlled bytheOdebrecht Group, company incorporatedPolialden. 100% ofPolitenoandinMaythe the Braziliancompany. into aplatformforinternationalizing The project isexpectedtotransform second-generation petrochemicals. units forpolyethyleneandother lion tons/yearofethylene,besides able toproduce more than1.2mil- mented withnaturalgasthatwillbe of anethaneproduction plantali- that country. known astheJoseOlefinasHub–in Hub oftheAmericas–otherwise install theIntegratedPetrochemical chemical companyinVenezuela, to with Pequiven,thebiggestpetro- B icals bothwithinandoutsideBrazil. heavily inchemicalsandpetrochem- raskem recently signedanaccord With suchboldinvestments,the With Another strong group inthesec- thirteenplantsinBrazil, the With In April2006Braskemacquired The project involvesconstruction ficiency in

27 Ministry of External Relations 28

Ministry of External Relations

SOCIAL INVESTMENTS training labor inthemore disadvan- as awayofgenerating incomeand pation ofthepopulations involved are installedwiththe activepartici- lic selectionprocess, newprojects lescence Fund(CAF).Through apub- million totheChildhood andAdo- cluding adonationof aboutR$42 were sponsored bytheprogram, in- and SpecialGifts. SpecialNeeds teerism, PeopleWith Rights, SocialEnterprises,Volun- tion, Children andAdolescent Training, JobandIncome Genera- areas: EducationandProfessional that are dividedintosevengeneral 2003-2006 period,usedinprojects received R$303millionforthe (“Zero Hunger”)program hassofar 2003, thePetrobras FomeZero public criteria and the transparent analysis and selection of projects analysisandselectionofprojects public criteriaandthetransparent basedon sponsorssocial,educational,culturalandartsprograms Petrobras Fuel forBrazilianculture of projects from allBrazilianstates. investments inthearea iscomposed project. Thecompany’s portfolioof istration requirements canpropose a person orgroup thatmeetsthereg- ance ofindependentspecialists.Any company committeeswiththeguid- million appliedin2004by57%. pany in2005exceededtheR$330 jects. Thetotalinvestedbythecom- mental preservation andsports pro- cation, culturalpatronage, environ- besides alargenumberofarts,edu- training foryouthandadolescents, to generateincomeandprovide programs developedwere projects vironmental projects. Amongthe 518 millioninsocial,culturalanden- In 2005noless755initiatives Social actions All socialprojects are selectedby In 2005,Petrobras investedR$ LUIZ GONZAGAS.NETO - Launchedin attended tofrom amongthemunici- duction. About500familieswillbe sustainability ofagropastoral pro- water (tubularwells)toimprove the systems forsupplyingunderground seeks toinstallandrecover simplified are agoodexample.Theprogram (“Wet theEarth”),selectedin2004, over thefour-year period. rectly attendtofourmillionpeople Petrobras FomeZero Program willdi- country. Itisestimatedthatthe taged communitiesaround the created in2001, whichbenefits800 deries from theCaatinga”) program “Bordados daCaatinga” (“Embroi- states ofthenortheast. Rio GrandedoNorte andother stalled inBahia,Sergipe, Alagoas, Thewells willbein- government. calamity recognized bythefederal in asituationofemergencyorpublic Zero program, withpriorityforthose palities participatingintheFome “A ManisaMan,”spectaclebytheGalpãogroup withculturalsupportfrom Petrobras Projects like“MolharaTerra” Also generatingincome isthe Janeiro. About300studentsfrom Morro districtofinRio de doVidigal develop art-educationprojects inthe the experienceofatheatergroup to (“We from theHill”)program uses sional Training, the“NósdoMorro” from Unesco. project hasalready gainedanaward families keeptheirproperties, the ducing ruralpovertyandhelping themainobjective of re- ucts. With Piauí Statewhomakelinenprod- women inthesemi-aridregion of its forms.Managed bytheArchdio- infant-juvenile sexual violenceinall Teresina area withactionstocombat and adolescentsin theGreater aims todefendtherights ofchildren dance andmoviescripts. history ofthetheater, literatur pretation, sets,costumes,lighting, Morro” group” insubjectslikeinter- workshops offered bythe“Nósdo the communityparticipatein20 In termsofEducationandProfes- The Girassol(Sunflower) project e, Citizenship projects: artandeducationforsocialinclusion tecting the environment hasbe- adolescents. artistic andcultural activities with shop, whichdevelops educational, the Percussion Instrument Work- the actionsofproject standsout sertion intothejobmarket.Among youth insearchforin- ofalternatives vention ofchildren, adolescentsand ject arose through theactiveinter- dos Erês”(“Dream oftheErês”)pro- Black Culture Center, the“Sonho cover 98municipalitiesinPiauíState. priests andparents. Theactions teachers, municipalhealthagents, pre-school andprimary-school iferia programs, besides day-care, the CasadeZabelêandProjeto Per- children andadolescentsenrolled in of Piauí,theproject operateswith cese SocialAction(ASA)intheState Environmental actions Organized bytheMaranhãoState – Pro- Management (SMS). Safety, Environment andHealth defined inthecompany’s Manualof degree ofenvironmental respect as auctions iftheyobtainaminimum suppliers canonlyparticipatein contracts withPetrobras. Today came abasicrequirement forall on executingtheselected projects. Approximately 5,000peoplework benefiting about20 million people. public selectionprocess, indirectly ipalities were chosen duringthefirst scapes. Projects inabout250munic- graphic basins,ecosystemsandland- The actionsare focusedonhydro- Mata AtlânticaandPantanalbiomes. the Amazon,Caatinga,Cerrado, ecution around allBrazilandspans gram coversprojects currently inex- patronage projects liketheTamar bras hasinvestedin environmental The Petrobras Environmental Pro- Over thepastthree yearsPetro- square-meter laboratorybuiltby the Brazilian coast)ina special 1,550- Jacques (amollusk native tothe and spawningCoquille Saint- velops marineculture bycultivating Petrobras since1994, theproject de- Rio deJaneiro State.Sponsored by ties ofAngradosReis andParatyin being developedinthemunicipali- de Janeiro. mountain rangesinthestateofRio the SerrasdoMarandMantiqueira has already inventoriedtheforests in Atlântica noRiodeJaneiro program the RemanescentesdeFlor Atlântica forest. Initiatedin1989, and renewal program fortheMata aims atexecutingasurvey, study Botanical Garden Research Institute, ture between Petrobras andthe Mata AtlânticaProject, ajointven- Peixe-Boi (manatee)projects. The (turtle), BaleiaJubarte(whale)and Projeto Pomar, foritspart,is esta

29 Ministry of External Relations prove professionals in the field of popular music. Cinema has been the area most- funded by the company for many years. In 2005, R$ 24.4 million was donated to sponsor, among other projects, “Benjamin,” a film based on the romance of the same name by Chico Buarque de Holanda. Di- rected by Monique Gardenberg, “Benjamin” received four awards at the 8th Brazilian Cinema Festival in Miami: Best Film, Best Actor, Best Editing and Best Art Direction. Petrobras also sponsored the first phase of the “Glauber Rocha Collec- tion,” which involves the restoration, re-mastering in HDTV and produc-

Cinema has received the most incentives from Petrobras for various years tion of four DVDs of the films “Terra em Transe,” “O Dragão da Maldade company. There countless coquille Rouanet Law, which was R$ 650 contra o Santo Guerreiro,” “Idade offspring are produced regularly, million in 2005, according to the da Terra” and “Barravento,” made with a record of 10 million in 2006. Ministry of Culture. by the director from Bahia State. In More than 6,800 people have al- The most important front for the area of literature and books, ready received training in the states Petrobras’ cultural patronage ac- Petrobras sponsored the 19th Inter- of São Paulo, Espírito Santo, Maran- tions is the Petrobras Cultural Pro- national Book Biennial of São Paulo hão and Ceará. gram, which each year holds new in 2006, one of the largest and most public selection processes for pro- important book fairs in the world. Culture - Since the 1990s, Petro- jects in diverse areas and widely dis- bras has been the biggest sponsor seminated nationally. It is the largest Sport – The Petrobras Sports Pro- of Brazilian culture. In 2005 the cultural patronage program existing gram consolidates the company as value destined to patronage of cul- in the country and its budget is the one of the biggest sponsors of natural projects reached a record R$ largest destined by any company to tional sport. In 2005, support for the 244 million, compared to R$ 146.6 cultural ends. Brazilian Handball Confederation million in 2004, a growth of 66.4%. One of the countless projects was reinforced with the objective of Among the highlights in this area is funded by the program is the Tom helping Brazil become an important the Petrobras Cultural Program, Jobim Archive, already open to the international player in the modality. which supports projects involving public and researchers. Roughly The Petrobras Sports Program also cinema, music, scenic arts, visual 25,000 text documents, 150 hours includes patronage for four big arts, immaterial patrimony, memory of audiovisual documents and Brazilian surfing tournaments and of the arts and support for muse- 3,000 photos of the composer have the Rio de Janeiro soccer club Fla- ums, archives and libraries through- been digitized. Beyond that materi- mengo, a partnership which began out the entire national territory. al, many articles, poems, album in 1984. Of the total volume invested in covers, repertoires and records are There is also the Petrobras Tennis culture in 2005, only about R$ 180 available. Cup, disputed by players from coun- million represented incentive-based Also selected was the II Ibiapaba tries in South America. The company patronage, with the rest being di- Music Festival, held in the municipal- also sponsors the BMW-Williams Ministry of External Relations Ministry of rect patronage that did not benefit ity of Viçosa, Ceará State, an historic Formula-1 racing team, the Brazilian from tax breaks granted by the city protected by the National His- Stock Car Championship, Formula Rouanet Law. Petrobras’ invest- toric and Artistic Heritage Institute Truck racing, rallies (with Petrobras’ ments in incentive-based patronage (IPHAN). Offering workshops, lec- Lubrax team), go-carts, the Mini-Baja in 2005 corresponded to about tures, debates and mini-courses, the prototype and motorcycle racing 30 28% of all the funds raised by the event seeks to train, develop and im- with the Scud team.