Technological advances boost refining

Petrobras’ 11 refineries in Brazil processed 1,765 thousand bpd of throughput and produced 1,787 thousand bpd of oil products in 2008, using an average of 90.9% of the refining capacity. 77.9% of the total volume of oil that was processed came from Brazilian fields.

Refinaria Duque de Caxias (Reduc), no Rio de Janeiro
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In July, a program was set up to maximize diesel production, by optimizing the operational conditions at the refineries. As a result, Petrobras avoided the need to import 4.9 million barrels of diesel, yielding a saving of around US$ 457 million.

Petrobras has been investing in new refinery units and in technological improvements to convert the heavy oil produced in Brazil into added-value oil products. This investment was made more necessary by the increasing domestic production of heavy oil. The retarded coking unit at the Duque de Caxias (Reduc) refinery went into production in 2008, to be followed by the ones at the Henrique Lage (Revap) and Presidente Getúlio Vargas (Repar) refineries, in 2009 and 2011, respectively.

These investments will give the company greater flexibility in determining the range of oil products that are to be produced, according to the level of demand and the market prices, and whether to use imported oil, which is lighter and can be used to produce higher value- added products, or to refine the heavy domestic oil.

Import investment was made in 2008 to enhance the quality of the oil products. There are projects under way to raise the quality of the diesel, at the Henrique Lage (Revap), Getúlio Vargas (Repar), Capuava (Recap) and Landulpho Alves (RLAM) refineries, and of the gasoline, at the Presidente Bernardes (RPBC), Duque de Caxias (Reduc), Gabriel Passos (Regap), Landulpho Alves (RLAM), Getúlio Vargas (Repar), Henrique Lage (Revap), Capuava (Recap) and Paulínia (Replan) refineries.

During 2008, the projects were completed at the Gabriel Passos and Getúlio Vargas refineries to adopt HBIO technology, making it possible to add vegetable oil to the diesel line, to produce a very pure product. The Presidente Bernardes, Henrique Lage, Duque de Caxias and Paulínia refineries are also adopting this pioneering technology developed by Petrobras, which yields benefits in terms of diesel quality and environmental protection.

The company’s capacity to produce propene, a high value-added product, has been increased with the operational start-up of the propene unit at the Henrique Lage refinery and investment in optimizing the process at the Capuava refinery, which raised production to 335,921 tons. With the 64,689 tons produced by Refap S.A., the total supply amounted to 400,610 tons. The propene units at the Gabriel Passos (Regap) and Paulínia (Replan) refineries, which are scheduled to come on-stream in 2009, will add another 370 thousand tons a year to Petrobras’ installed capacity.

In 2008, Petrobras sold 1,748 thousand bpd of oil products in the domestic market, an increase of 1.3% in relation to 2007

NEW UNDERTAKINGS

The Northeastern Refinery (Abreu e Lima refinery), in the state of Pernambuco, which is expected to become fully operational in 2011, will have the capacity to process up to 230 thousand bpd of heavy oil and will turn out up to 162 thousand bpd of its main product, diesel. The refinery will also produce LPG, petrochemical naphtha (LAN), fuel oil for ships and petroleum coke.

Of the ground levelling work, 65% has been carried out, and the project execution will be completed in 2009. The tendering processes for the constructions of the processing units and utilities should also be completed in 2009, while the purchasing of the equipment will continue.

PREMIUM REFINERY - Petrobras will build two Premium refineries, to produce high quality oil products with low sulphur content, through the processing of acidic heavy oil. Production will be devoted mainly to diesel, but these refineries will also turn out LPG, naphtha, fuel oil, asphalt and jet fuel. Some of the coke produced will be used by the units themselves, to generate hydrogen and energy.

The Premium I refinery is to be built in the state of Maranhão and will process 600 thousand bpd. The operational start-up of the first phase is forecast for 2013, and of the second phase, for 2015. The Premium II refinery is to be built in the state of Ceará, at the Pecém Industrial and Port Complex. It will have a processing capacity of 300 thousand bpd and the operational startup of the first phase is forecast for 2014, with the second phase planned for 2016.

COMMERCIALIZATION

The increase in domestic oil production, the full use of the company’s logistics infrastructure in Brazil and abroad, and the seizing of commercial opportunities abroad helped Petrobras to achieve excellent sales results in 2008, in both the Brazilian and foreign markets.

DOMESTIC MARKET - In 2008, Petrobras sold 1,748 thousand bpd of oil products in the domestic market, an increase of 1.3% in relation to the 2007 figure. The company set a new sales record, of 1,779 thousand bpd, in October, the month in which the impact on sales of the international crisis started to be felt.

The leading products, in terms of sales volume, were diesel, gasoline, LPG, naphtha, fuel oil and jet fuel, which recorded the largest percentage increase (7.1%), due to the robust performance of the Brazilian economy, the appreciation of the local currency and the increased number of flights, particularly international ones.

Sales of diesel were up by 6.1%, thus exceeding the country’s economic growth rate. Supplies to meet the demand of the thermoelectric power plants in the early part of the year, together with the growing GDP, increased grain and sugarcane harvests and greater investment in public works were the main factors boosting sales of this product.

Gasoline sales increased by 4.3%, a reflection of the almost 60% increase in the flex-fuel vehicle fleet, which offset the decline in the gasoline only fleet. However, this behavior in the automobile market contributed far more towards the significant increase in the consumption of fuel alcohol. What is more, there was a considerable increase in general consumption, reflecting an increase in household incomes.

Sales of LPG rose by 3.4%, a result that is linked to demographic growth and increased household consumption and industrial use. Sales of fuel oil (excluding bunker fuel) were down by 9.4%, basically due to the product’s replacement by other energy sources. Sales of naphtha were also down, by 9%, mainly due to stoppages at the petrochemical complexes during the course of the year.

EXPORTS VS IMPORTS - Oil exports attained the record level of 439 thousand bpd in 2008, an increase of 24.4% in relation to the previous year’s figure. However,oil product exports fell by 10.7%, to a total of 234 thousand bpd. Oil imports amounted to 373 thousand bpd, a reduction of 4.4%, while those of oil products grew by 33.1%, to a total of 197 thousand bpd.

During the year, the country’s increased economic activity was reflected in the level of foreign oil product sales. Despite continued investment in its refining infrastructure and increased production, Petrobras maintained the profile of a net importer of medium distillates (diesel and kerosene) and a net exporter of gasoline.

Imports of diesel totaled around 100 thousand bpd, an increase of 20.5% in relation to the figure for 2007, the principal suppliers being producers in the Middle and Far East. Jet fuel imports recorded an even more impressive increase, of 92.9%, to a total of 26.5 thousand bpd.

On the export side, gasoline continued to be the leading product, totaling 40 thousand bpd in 2008, which was down by 31.4% in comparison with the figure for 2007. This was basically due to the increase in domestic demand and scheduled downtime at some of the units at Petrobras’ refineries.

International trading operations involving oil and oil products attained an average of 552 thousand bpd, which was down by 5.8% in relation to the 2007 figure. On the other hand, the consolidation of low sulphur bunker fuel trading operations in northwestern Europe raised the sales of that product by 51% in 2008.

NEW PRODUCTS - Petrobras launched the Add Cleaner, a fuel oil containing additives that act as dispersing agents and detergents. Laboratory combustion testing at the IPT (Technological Research Institute), in the state of São Paulo, showed a 68% reduction in particle emissions, compared to ordinary fuel oil.