Petrobras Magazine

Petrobras has reviewed and updated its Business Plan and has now released the revised document which will be in force from 2009 to 2013.The forecast is to invest US$174.4 billion in Brazil and abroad during this period. More specifically, US$104.6 billion will be destined to the business sector of the Exploration and Production area, US$43.4 billion to the Supply area, US$11.8 to Gas and Energy, US$5.6 billion to Petrochemicals, US$3.2 billion to the Corporate area, US$4.3 billion to Distribution, and US$2.8 billion to Biofuels.

The goal, ambitious in terms of investment considering the global economic crisis, is to expand operations in the target markets. This will be achieved by maintaining the commitment to sustainable development, based on profitability, social and environmental responsibility, and integrated growth. In this way, Petrobras intends to become a benchmark as one of the largest integrated energy companies in the world

Exploration and Production

In the Exploration and Production segment, in Brazil, Petrobras will maintain partnerships with the Brazilian industry, seeking to ensure national content in the construction of production units, negotiating price reductions with suppliers, and counting on the competitiveness of Brazilian entrepreneurs. The idea is to increase the Brazilian production of oil by means of projects in order to reach 2,680,000 barrels per day in 2013.To achieve this, US$92 billion will be invested in the country, with US$70 billion invested in production development, US$13.6 billion in exploration activities, and US$8.4 billion in other sectors.

Projects in the pre-salt province alone will receive investments of US$29 billion. Guilherme Estrella, the Petrobras director of Exploration and Production, explains the details. “We will implement the Tupi Pilot System, which will begin the production of 100,000 barrels of oil equivalent and about 3.5 million cubic meters of natural gas per day in 2010. The Guará and Iara pilot projects in the Santos Basin will come onstream in 2013 and 2014, respectively. In each of these accumulations, an FPSO with production capacity of 100,000 bpd will be installed. In addition, we will install a production unit in the Parque das Baleias area off the coast of Espirito Santo in the Campos Basin. It is estimated that the fields in the pre-salt province will reach a production of 219,000 barrels per day in 2013 and about 1,800,000 barrels per day in 2020, a volume that will practically double the Petrobras daily production in Brazil,” he says.

Outside the province, the oil production systems in the marine fields Jabuti, Frade, and Parque das Conchas should begin to operate already in 2009. The platforms P-57 and P-56 will come onstream in the Jubarte field in the Espirito Santo Basin, and the Marlim Sul field in the Campos Basin, respectively, in 2011. In 2013, operations should start on platforms P-62 and P-55 in the Roncador field in the Campos Basin and on P-61 and P-63 in the Papa-Terra field.

In relation to the production of gas, the expansion of the Manati project in the Camamu/Almada Basin in Bahia is forecast to occur already in 2009, as is the start of production in the Lagosta field in the Santos Basin, in the Canapu and Camarupim fields in the Espirito Santo Basin, and in the Urucu field in the Solimões Basin.

More specifically, some projects of production of gas not associated with oil to be implemented in the Uruguá/Tambaú and Mexihão fields in 2010 will have the important function of anticipating natural gas production in Brazil, as part of the Gas Production Anticipation Plan (Plano de Antecipação de Produção do Gas - PLANGAS) and will increase the production of this fuel in Brazil. “The contiguous fields of Uruguá/Tambaú will have a production capacity of 8 million m³/day. The Mexilhão field is able to produce up to 15 million m³/day,” says Estrella. In 2011, in turn, the Juruá and Araracanga projects should go into production.

Exploratory activities will also be intense. “The forecast is to explore 265 blocks in the basins of Ceará, Potiguar, Solimões, Sergipe, Alagoas, São Francisco, Espirito Santo, Campos, Santos, and Pelotas. The area to be explored totals 154,998 km², as foreseen in 186 exploration contracts,” emphasizes Estrella..

Abroad, exploration and production projects will remain in focus in fields located in the North American section of the Gulf of Mexico, as will investments in oil and natural gas exploration in Argentina and exploration and production in fields in Nigeria and Angola, in this order.

Considering the projects mentioned, in 2013, Petrobras expects to have a total production of about 3.6 million barrels of oil equivalent per day (boed), including the input from its fields abroad.

Supply

In the business segment of Supply, Petrobras intends to increase its refining capacity in Brazil and overseas, as the oil production increases. The volume of oil processed should increase from the current 1.791 million barrels to 2.270 million in 2013 and 3.012 million in 2020, with an annual increase of 4.8%.

In order to achieve this target, in Brazil the Clara Camarão Refinery in Rio Grande do Norte will begin operations in 2010, as will the Abreu e Lima Refinery in Pernambuco in 2011, the Rio de Janeiro Petrochemical Complexo Petroquimico(COMPERJ) in Itaboraí in 2012, the Suape Complexo in Pernambuco, and the Premium I and II refineries, in Maranhão and in Ceará, respectively, in 2013.

Abroad, the Petrobras refinery in Pasadena, Texas, will continue to be an investment priority, followed by the refineries Ricardo Eliçabe, San Lorenzo, and Refinor in Argentina and Okinawa in Japan.

The Petrobras refineries will be adapted to produce diesel oil and gasoline with reduced sulfur content, with a forecast to increase the supply of oil derivatives, which will rise from 1.95 million barrels per day in 2008 to 2.257 million per day in 2013. According to the forecast in the Business Plan, diesel should continue to be the oil product with the highest consumption. However, during the period, a new fact will create a more favorable scenario. “Brazil will achieve self-sufficiency in the production of the fuel,” guarantees Paulo Roberto Costa, the company’s Supply director.

The supply of fertilizers to the Brazilian market will be increased. To this end, the construction of a new nitrogen fertilizer unit is planned. “The new plant will add a million tons per year to the Petrobras production, which is scheduled to begin in 2013,” explains Paulo Roberto Costa.

With regard to logistics, Petrobras intends to create commercial partnerships and implement multimodal logistics, so as to guarantee the placement of oil, derivatives, and biofuels in the target markets, in Brazil and abroad. In addition, the company will redimension the tanker fleet in its service, including both its own vessels and those operated by third parties, taking into account the balance between reliable supply of the markets, costs, and operational safety.

Gas and Energy

In the Gas and Energy segment, the objectives will be to strengthen the Petrobras leadership in the Brazilian natural gas market and in its international activities and to increase the business of generating electric power in Brazil, maintaining flexibility in the supply and meeting the demands t and making flexible the offer to the thermal and non-thermal markets. To this end, a budget of US$5.4 billion will be applied to projects already underway and US$5.2 billion to new projects.

Among the projects in progress receiving investments, the Petrobras Gas and Energy director, Graça Foster provides details about some: “The third and last stretch of the Southeast-Northeast gas pipeline, Gasene, will be concluded. This stretch, known as Cacimbas-Catu, will be 954 km long, will connect Espírito Santo to Bahia, and should be finished in the first half of 2010.This enterprise will make possible the interconnection of the Southeast and Northeast regional networks. Seven small hydroelectric plants with a total capacity of 144 MW and seven thermoelectric plants, which will total 1,113 MW capacity, will be concluded. Also, the combined cycle of the Luis Carlos Prestes unit in Mato Grosso do Sul, which will have its capacity increased from 262MW to 368 MW, and Sepé Tiaraju in Rio Grande do Sul, which will have its capacity increased from 161 MW to 238 MW, will be installed. In addition, the Bolivia-Brazil gas pipeline, Gasbol, will have its capacity increased between São Paulo and Paraná through new compression stations.”

Regarding the new projects foreseen, the construction of the third and fourth Petrobras liquefied natural gas (LNG) terminals is noteworthy. The first of these, with the capacity to store, regasify, and transfer 14 million m³/day, should begin operations by the end of 2013. The fourth will start functioning immediately afterwards. Another relevant project is the construction of a floating liquefaction unit for the company. The unit will supply gas from the pre-salt province and will direct it to regasification terminals installed on the Brazilian coastline, or will export it in periods in which the thermoelectric demand is reduced or the spot market is not buying additional volume. An onshore LNG plant, capable of importing, stocking, and exporting liquefied natural gas is another big innovation being considered, for the purpose of integrating the natural gas and electric power sectors.

More specifically in the energy area, other projects should consolidate the presence of Petrobras in the energy market. “The company is planning to participate in electric power auctions in a manner both competitive and profitable. In addition, it will invest in renewable energy sources, including wind power,” explains Graça Foster.

It is possible to say that, in view of the commitments assumed, in 2013 Petrobras will be responsible for the production of 8,787 MW of energy in the role of a generator of electric power or as a supplier of natural gas to the thermoelectric plants.

Petrochemicals

In the Petrochemicals segment, in harmony with the other business areas of the Petrobras System, the company will increase the production of basic petrochemical products such as ethylene, propylene, benzene, and paraxylene. Through participation in companies in Brazil and abroad, the company will operate in second generation refining with the objective of transforming basic petrochemical products into second generation products such as styrene, ethylene-glycol, polypropylene, PTA, and polyethylene, destined for domestic and overseas markets. In addition the company will operate in the production of biopolymers, that is, polymers produced from renewable raw materials such as cellulose, sugarcane, corn, and milk serum.

In this context, COMPERJ will stand out in transforming heavy oil extracted from the Marlim field, in the Campos Basin, into petrochemical raw material which, in turn, will be transformed into resins.

Biofuels

In the biofuels segment, Petrobras will act in Brazil and abroad so as to have a relevant participation in the biodiesel and ethanol markets, always in a sustainable manner, promoting the development of the countries where the company operates and contributing to the reduction of greenhouse gas emissions.

Of the investments foreseen for the segment, US$ 2.4 billion will be destined to the production of biofuel, this activity being the responsibility of Petrobras Biocombustível, with 91% of the production consumed in Brazil and 9% overseas. Petrobras will also invest US$ 400 million in infrastructure, including the construction of the Senador Canedo-São Sebastião alcohol pipeline, which will extend from Goiás, passing through Minas Gerais, to São Paulo, with the possibility of outflow also through the Ilha D’Agua terminal in Rio de Janeiro.

In the ethanol sphere, which will absorb 80% of the resources, the goal is to achieve production of 1.9 billion liters of fuel for the export market and 1.8 billion for the domestic market by 2013. The projects focused on exports will be carried out in partnership with third parties. “These projects will include a Brazilian company as majority stockholder which is an ethanol producer, Petrobras Biocombustível, which will act as a relevant minority partner, and an international company which has an export market for the product. Our expectation is to implement four of these projects already in 2009,” explains the Petrobras Biocombustível president, Alan Kardec Pinto.

Other Petrobras plans include the possibility of acquiring a participation in existing ethanol plants and an analysis of the viability of constructing an ethanol production unit in Columbia.

In the biodiesel sphere, which will absorb 20% of the resources, the objective is to produce 640 million liters in Brazil by 2013. To achieve this target, the following measures are being studied: the construction of a new plant in the northern region of the country; the duplication of the Candeias plant, which operates in Bahia; an increase in the production capacity of the Quixadá and Montes Claros plants, in Ceará and Minas Gerais, respectively; the adaptation of the experimental plants in Guamaré, in Rio Grande do Norte, to produce on a commercial scale; and the acquisition of two new biodiesel plants in Brazil , which will total a production of 230 million liters per year.

A broad support program for agriculture, based on environmental, social, and economic sustainability, is being developed to make possible the supply of biodiesel raw materials to the plants. The planting of castor beans and sunflowers is being encouraged. Programs are also being developed to make possible the cultivation of African oil palm trees, pine trees, macaúba, and, on a smaller scale, cotton, peanuts and soybeans. The target is , by 2013, to establish partnerships with 80,000 agricultural families, directly or through representative entities.

Overseas, a project in partnership with the Portuguese company Galp Energia is being evaluated which foresees an annual production of 330,000 m³ of vegetable oil in Brazil and 320,000 m³ of biodiesel in Portugal. In addition, the implantation of a biodiesel production unit in Africa is planned.

In parallel, in the period from 2009 to 2013, Petrobras will invest US$530 million in biofuel research and development, in addition to US$2.8 billion destined to production and infrastructure in the area. Included in the principal research lines highlighted is the development of competitive technologies for the production of second generation ethanol using biomass residuals – in this case sugarcane bagasse. In the Petrobras R&D center, CENPES, a demonstration plant will be in operation for tests in 2010. There will also be investment in the technological development of new varieties of oleaginous plants and in the genetic improvement of varieties already in existence.

Distribution

Finally, in the Distribution segment, Petrobras, through Petrobras Distribuidora, will work principally to consolidate its leadership in the segments of service stations, large consumers, and aviation products, having as priorities the construction, expansion, and modernization of enterprises and the improvement of the logistics infrastructure.

The automobile market will be receiving the most investment. Included are the resources destined to changing the service station image which Petrobras acquired from the Ipiranga company in Brazil and to maintaining and modernizing the Petrobras service station network, which will be equipped with new automatic technology.

Petrobras Distribuidora will be responsible for the Petrobras System asphalt business and will absorb seven product factories in Brazil. In this area, improvement in the quality of asphaltic emulsions and industrial asphalt is foreseen, as well as the installation of laboratories and storage equipment for the customers of asphalt products.

In terms of logistics infrastructure, the lubricant factory in Duque de Caxias will be expanded. New fuel and lubricant storage facilities will be constructed, as well as the Macapá terminal in Amapá and the Cruzeiro do Sul base in Acre. The infrastructure of the terminals and the bases for satisfying the demands of the thermoelectric plants and those relative to biofuels will be extended and improved. In addition, the piped gas distribution network in Espirito Santo will be expanded.

In the large consumer segment Petrobras Distriduidora will increase the capacity of the deposits to provide supply and storage services of chemical products and will increase the distribution capacity for these products.

In the aviation segment, the Aircraft Refueling Units will be expanded and modernized in the airports serviced by Petrobras Distribuidora in Brazil, new BR Aviation Center units will be installed to ensure the fidelity of corporate customers in the executive aviation sector, and operations will be initiated in new Brazilian airports such as Porto Seguro in Bahia; Navagantes, in Santa Caterina; Foz de Iguaçu and Maringá, in Paraná; Macapá, in Amapá; Imperatriz, in Maranhão; and Itanhaém, in São Paulo.

Considering the investments forecast and the projects to be implemented, Petrobras confirms, even in times of crisis, that the company has a vision of the future and does not think short term .Therefore, it will seek a balance between producing and refining, business synergy, and leveraging the development of Brazil and of the countries in which it operates. It will work to become a major oil and oil products exporter, and one of the largest energy companies in the world. This is not just a plan, but a commitment. Whoever is around will see it fulfilled.