Refining, Transportation & Marketing (RTM), and Petrochemicals Paulo Roberto Costa Downstream Director 26th October, 2011 1
BUSINESS MODEL Operating as an integrated balanced oil company, dominant in Brazil Exploration & Production Focus on production in deep and ultra-deep waters; Licensed blocks guarantee access to reserves and economies of scale; New…
RESERVES AND RECOVERABLE VOLUMES Rapid growth in reserves from discoveries in deep waters Proved Reserves SPE criteria Million boe 30.000 25.000 20.000 Pre-salt: Lula and Cernambi 15,28 Bi boe 15.000 Whales Park,…
PRODUCTION Petrobras history is to grow production by expanding into new frontiers 2.004 2000 8,2% p.y. in the last 30 years Deep and ultra-deep water 1600 Shallow Water Onshore 1.271 1200 1.601 653 749 Mil bpd 800 42 400…
PRODUCTION With access to abundant reserves, Petrobras can more than double production 6,418 142 246 1.120 3,993 125 180 + 35 Systems 2,575 2,772 618 2,386 2,516 +10 Post-Salt Projects 93 96 96 141 +8 Pre-Salt Projects 4,910…
MONETIZING THE RESERVES Brazilian market is an attractive and sustainable way to monetize part of Petrobras reserves Growth A GROWING MARKET IN BRAZIL CREATES DOWNSTREAM OPPORTUNITIES OPPORTUNITIES 27.1 Petroleum Consumption 25.0…
Growth Potential 8
During recent years, the Demand growth in Brazil has increased its speed when compared with GDP growth GDP and Demand growth rates (yearly) 11-20 GDP Forecast 11-20 Demand Forecast 12 Historical Demand 10 Historical GDP 8 6 5,5…
JET FUEL MARKET A sharp growth in the air transportation industry has been observed in recent years Number of passengers carried - air transportation (thousand) Seats / Km available 10.000 13.000 9.000 12.000 +12%a.a. 8.000…
AIR TRANSPORTATION The significant reduction in the airline tickets prices associated with the expansion of income in Brazil led to an accelerated growth in the sector Yield Revenue R (deflated by IPCA) Economic indicator that…
CONCENTRATED TRANSPORT MATRIX The Brazilian transportation matrix strongly depends on trucks Russia 81% 8% 11% Canada 46% 43% 11% Australia 43% 53% 4% USA 43% 32% 25% China 37% 50% 13% Brazil 25% 58% 17% Average Trucks Fleet…
DIESEL DEMAND The diesel demand has also increased sharply ... not only based on recovery of the industrial ... but also due to agricultural activity growth in activity, ... Brazil over time Index - Industrial Output 145 180 140…
MIDDLE DISTILLATE DEMAND EVOLUTION Strong diesel and jet fuel consumption growth in Brazil have been observed following the economic growth Diesel Sales (2006 to 2011/jun) 4,1% 8,7% +9% 5,5% Jan-Jun 10 Jan-Jun 11 The 1S2011…
HIGH GROWTH POTENTIAL Low per capita consumption supports demand growth in developing countries Total Oil Consumption Per capita consumption (Index =100 in 2002) Barrels per year 27,1 130 25,0 1980 125 2000 22,3 2010 120 115 16,0…
POTENTIAL INCREASE OF OIL PRODUCTS CONSUMPTION Brazil still has a low motorization rate Licenses for new vehicles 17,4 18,0 2000 2010 11,8 Million of units 2015 6,0 5,0 4,0 3,7 3,2 3,5 3,0 2,6 2,7 2,7 2,2 2,1 1,5 0,8…
GROWTH DEMAND Economic growth and improved living standards will lead to a significant increase in oil products demand in Brazil Others Fuel oil (GDP: 4,1% p.y.) Gasoline +3,8% Middle destilates p.y. 3.095 2.643 928 2.147…
DOWNSTREAM EXPANSION Reduced dependence on imports of oil products Increase in import levels will lead to higher ... and to high levels of exposure to 000 bpd logistical costs... international supply Net Imports as a percentage of…
REGIONAL GROWTH In the last decade the growth has been and will be higher in the North, Northeast and Mid-west regions of Brazil Demand 2001-2010 Demand 2010-2015 763 3,1% 4,9% 968 763 579 1,4% 1.384 3,9% 1.675 1.384…
increasing the need for new capacities in these regions Market in 2010 Market in 2015 299 552 968 763 -464 -416 Capacity Demand Deficit Capacity Demand Deficit 1.652 1.675 1.466 1.384 82 -23 Capacity Demand…
INTEGRATION AND BALANCE Construction of new refineries intended to meet Brazilian demand Thous bpd PREMIUM I (2nd phase) 4,910 5000 300,000 bpd (2019) 4000 COMPERJ (2nd phase) 165,000 bpd 3,327 3,070 3,217 (2018) 3000 2,643 3,095…
Refining Profile and Margins 22
REFINING MARGINS Conservative assumptions compared to historical data and consultants forecast Crack 321* and 2011 - 2020 average forecast Light-Heavy* and 2011 - 2020 average forecast (US/bbl) (US/bbl) Consultants Range…
REFINING MARGINS Margins can have large amplitude according to the type of processed oil and product yields /bbl (US of 2010) PBR Downstream Margin USG LLS Cracking NWE Brent Topping USG Maya Coking 30 NWE Brent Cracking 25…
PETROBRAS X MAYA COKING Comparison shows that the effect of the different oil processed and the average produtivity explain the deviation of our margins in relation to Maya Coking Petrobras vs. Maya Coking (average 2002-2010) 19 US/bbl…
CONVERSION New refineries will have significant higher conversion than existing refineries , allowing less costs of raw material Convertion Capacity/ Destilation Capacity Average Cost of Oil (2020) 70 Coker 68% (US/bbl) 65% 64% FCC…
PRODUCTS New refineries will produce higher value-added oil products Productivity of existing refineries 2020 Productivity of new refineries 2020 65% 43% 50% 36% 38% 21% 21% 19% 4% 15% 10% 4% 9% 7% 15% 15% 11% 5% 6% 4%…
PRICES OF DISTILLATES In recent years, we have been approximating to the import parity Distillates had a prize in the last 8 years of US/bbl in relation to the U.S. Gulf prices, similar to cost freight + internalization US/bbl…
RESOURCE OPTIMIZATION AT PREMIUM REFINERIES Economies of scale and new implementation Lower refining costs due to design strategies to reduce Capex, including: quality and scale Design competition based on the lowest final cost…
FACTORS THAT WILL IMPACT THE COST OF THE PREMIUM REFINERIES Project under development already allows us to evaluate some optimizations RPRE Scope Optimized RNEST (projetct under development - Expected Effects preliminary data)…
Market Location 31
LOGISTICS Distance from the Brazilian coast to refining centers is at least 5.000 miles, or 16 to 33 days of travel Distance in miles / days of travel 5.400 16 days 5.500 16 days 8.000 11.200 24 days 33 days Processing in…
LOGISTICS These distances have relevant freight costs to reach the different markets Freight cost (/bbl) 2,8 4,9 5,4 2,8 7,7 4,1 Processing in Brazil implies: Lower Lead-Times Reduced Tankage needs Lower Inventories…
GLOBAL REFINING Regions with fast growth continue to invest in refining Adding Refining Capacity (2011-2016) 3.204 New Refineries Thousand bpd Expansion 1.997 1.755 736 703 437 153 Asia Middle East North Latin…
Risk and Return 35
Profitability New refining projects have return rate above the cost of capital Return rate (%) 18 Key Assumptions: 16 Refinery with trains of 300 k bpd 14 Refining scheme with HCC, Coque and 12 HDT 10 Refining costs in line…
RISK MITIGATION The expansion of refining also allows us to mitigate risks from upstream, as in 2009, beyond the benefit of the integration Adjusted EBITDA by Segment (US bi) 48 2 1 40 2 35 1 2 1 0 33 1 2 1 1 4 1 11 41 35…
BUSINESS INTEGRATION Petrobras will increase the importance in the industry through growing the oil production and expanding the Downstream Oil Production 6 2020 5 4 3 2010 2 1 1980 0 0 1 2 3 4 5 6 Refining…
SUPPORTTING UPSTREAM OPERATIONS This integrated performance can be verified in Capex of downstream dedicated to support upstream operations Capex for Fleet Expansion Capex for Logistics for Oil US 4,4 billion US 3,5 billion…
FLEXIBILITY The existence of a flexible domestic refining capacity mitigates the risk of fluctuations in the demand SALES PRODUCTION k bpd 1.873 1.985 1.786 +5% +7% Oil Products 1H10 1H11 1H10 1H11 SALES PRODUCTION SALES…
Final Remarks 41
NEW REFINERIES, FUEL QUALITY AND MODERNIZATION SUM UP TO 74% OF RTM INVESTMENTS US70.6 billion Refining Capacity Expansion: Abreu e Lima 4.5% 4.9% 1.0% 1.1% Refinery, Premium I and II, and Comperj; 0.8% 15.2% Quality and…
DECREASING INVESTMENTS IN QUALITY US16 billion in 2011-15 Reduction in sulfur level 7.0 US 16 billion 5.9 4.9 4.5 Avg. Sulfur Level Diesel (ppm) -15%p.y. 3.2 2.3 1.1 1.0…
QUALITY INVESTMENTS New units in existing refineries are being built Gasoline Quality Diesel Quality: 2015 and 2011 2012 2013 2014 2015 2011 2012 2013 2014 beyond 1000 Trnasition 50 ppm Diesel S-1800 ppm Diesel S-500 REDUC…
HYDROREFINING INVESTMENTS Catch up phase to meet international standards for quality products Hydrorefining Capacity relative to Distillation Capacity 100 95% 86% 80 74% (2020) 67% 70% 69% 70% 15% 59% (2015) 60 40 36% 23%…
PETROCHEMICAL STRATEGY PETROCHEMICAL AREA Operate in the petrochemical sector in activities that are integrated manner with the other businesses of the Petrobras system Increase petrochemicals and biopolymers production…
FINAL REMARKS Adding value in Refining, Transportation and Marketing (RTC) and Petrochemicals Preserving our unique position in the Brazilian market as the best way to monetize our crude reserves Shifting the refining system towards…
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