Biofuels in Brazil. Fabio R. de Carvalho PETROBRAS S.A Nairobi, June 28, 2007

Transcription

1 Biofuels in Brazil Fabio R. de Carvalho PETROBRAS S.A Nairobi, June 28, 2007

2 Company Overview Proven reserves: 11.0 billion boe (SEC) 16 Refineries with a refine capacity of 2,060 thousand bpd Oil & gas production: 2,036 thousand boe/d E&P Refining, Transportation, Trading Pipelines: 22,390 km More than 7,000 service stations (33% of the Brazilian retail market) Ethylene Production: 2.4 million ton/year Petro chemicals Retailing 720 stations in Argentina Natural Gas Gas sales: 27.5million m 3 /d 20% of the distribution market in Bolivia and 14% in Argentina

3 Operational data includes Petrobras Energia Company Overview An integrated energy company with US$ 74 billion in gross revenue (2005 US GAAP) Exploration and Production Refining, Transport Distribution Proven Reserves: 11.8 billion boe (SEC 2005) Oil and Gas Production: 2.22 million boed (2005) 16 Refineries Capacity: 2,114 thousand bpd Pipelines: 18,854 miles Vessels (own fleet): 50 6,933 service stations (34% share in the Brazilian market), 746 in Argentina and 105 in Bolivia Natural Gas Sales of Natural Gas: 1.83 bcf/day Ethene Production: 460,000 tons/year Petrochemicals Styrene Production: 250,000 tons/year Polystyrene Production: 120,000 tons/year

4 International Overview Global Biofuels Demand Dynamics Strategies for reducing / curtailing the volumes of greenhouse gases emissions by 2012 (Kyoto Protocol) Less dependence on oil products Strengthening local agriculture and non-food markets (energy agriculture) Generation of local jobs and income with subsidies and protectionism

5 Biofuels Motivation for the use of Biofuels in Brazil Renewable Energy Sources Secure Energy Supplies Lower Emissions Carbon Credits Import Substitutions Generation of Jobs and Income

6 Biodiesel Vocation for the Production of Biofuels Trop.Cancer 30 o N Equator Trop.Capricorn 30 o S

7 Land Availability Brazil: 851 million hectares Million hectares AMAZON RAINFOREST 350 GRAZING LANDS 215 PROTECTED AREAS. 55 ANNUAL CROPS 47 PERENNIAL CROPS 15 CITIES, LAKES, HIGHWAYS AND SWAMPS 20 PLANTED FORESTS 5 OTHER USES UNUSED ARABLE LANDS ON THE AGRICULTURAL FRONTIER 90 TOTAL 851 Source: MAPA, 2005

8 Energy in Brazil RENEWABLE ENERGY: 44,7 % Fonte: MME, BEN 2006

9 Energy Matrix % 100 Energy Matrix: Brazil x Global RENEWABLE 20 NON-RENEWABLE 0 14 World Brazil Source: Ministry of Mines and Energy (MME), 2005

10 Vehicular Fuels Matrix (2005) Diesel oil 54.5% 55,7% (2004) Gasoline A 25.6% 26,5% (2004) Anhydrous Alcohol 8.5% 8,8% (2004) Hydrated Alcohol 8.4% 6,6% (2004) VNG 2.9% 2,4% (2004) % Alcohol used Participação in Otto-Type do Alcohol em Veículos Vehicles Otto 37% 56% 6% Álcool Gasolina GNV Gasoline C = 34.1% 35.3% (2004) Total Alcohol = 16.9% 15.4% (2004)

11 Biofuels Brazil and Biofuels Brazil is still a diesel oil importer Brazil plays an outstanding role on the world biofuels stage (fuel alcohol) Vast territory with weather and soil conditions favoring the production of biomass Much of Brazil is suitable for growing oil seeds and sugar cane Global demands for biofuels are rising Alcohol production is firmly established, while biodiesel production is rated as strategic for Brazil

12 Alcohol

13 Alcohol - Brazil Proálcool Brazilian Alcohol Programme In 1975 Brazil started an extensive ethanol production programme largely supported by Petrobras. The company also developed and installed an ethanol producing plant from cassava (Curvelo, MG) Ethanol Program Implanted (BLENDS) Fuel Ethanol Program Evolution Gasohol and Ethanol Cars (2 nd oil shock) Program of Emission Controls (PROCONVE) Gasohol and Flex fuel Cars Program for oil imports reduction Environmental Benefits 70 s 80 S 90 S 00 S Future

14 Alcohol: Benefits for Brazil FUEL DEMANDS OTTO CYCLE VEHICLES 10 6 BEP TOTAL DEMAND OTTO CYCLE GASOLINE PRODUCTION GASOLINE CONSUMPTION What Brazil would need to meet fuel demands from Otto-cycle vehicles if ethanol did not exist YEAR During the period, the use of alcohol avoided the emission of 644 million tons of CO 2 Accumulated effective savings of 778 million bep ~US$ 52 billion Source: MME, BEN 2005

15 Alcohol - Brazil World largest ethanol producer and technological leader. Annual turnover: US$ 12 billion (circa industries). Exports: US$ 2.5 billion/year (sugar and ethanol). Total area of plantations: 5 million hectares. Sugar cane production: 340 million tons/year. Installed capacity for ethanol production: 16 million m³/year. Ethanol production: 14 million m³/year (2004). Ethanol present potential surplus (for export) : 2 million m³/y can be easily expanded. 308 Sugar Mills and Distilleries: 218 locatedat Center-Southern.

16 Alcohol - Brazil Competitive advantages of Brazil High standard agro-industrial technological level. All input and equipment produced in in Brasil. World lowest cost Available extra area for agriculture. Very favorable climate conditions. Brasil: US$ 0,18/liter USA: US$ 0,33/liter Europe: US$ 0,56/liter

17 Álcool Ethanol production: World and Brazil main producers (2005, billion liters) Source: F.O. Licht World 44,9 USA 16,21 Brazil 16,07 China 3,8 India 1,7 France 0,9

18 Alcohol - Brazil Technological development New irrigation systems Sugar cane harvesting without burning Climate zone areas Reduction of equipment losses Technical management (softwares) Genetic improvement Since 1975, technological development has improved the results by increasing productivity: 33% saccharose amount in sugar cane: 8% conversion rate: 14%

19 Alcohol - Brazil Learning Curve for Ethanol Production in Brazil Production Costs (US$/m3) US$ 105 / bbl Accumulated Ethanol Consumption (million m³) m ethanol cumulative consumption (in million cubic meters) 1998 US$ 30 / bbl Source: COPERSUCAR

20 Ethanol trading Brazil-Japan Ethanol Inc. Recently, Petrobras incorporated Brazil-Japan Ethanol Inc. The company will import and distribute Brazilianproduced ethanol in Japan; Development of technical and commercial solutions for the reliable and long term supply of alcohol in the Japanese market; Petrobras will break into one of the most complex and important energy markets in the World: ethanol logistics distribution fuel distribution sector in Japan. Others Exploiting opportunities for sales and technology transfer in Ecuador, Venezuela, Cuba and Nigeria.

21 Alcohol - Brazil Challenges for the sugar cane sector Dimension of the worldwide fuel market Managing Plan for sugar cane sector expansion Infrastructure of transportation in the countryside Capacity of the capital goods industry to meet the demand Continuous technological evolution

22 Alcohol - Brazil Forecasts for the Sugar and Alcohol Sector HARVEST Plants in operation: 329 Sugar cane production: 386 million tons Alcohol production: 15.4 billion liters Sugar production: 26.5 million tons Alcohol exports: 2.5 billion liters HARVEST Plants in operation: Sugar cane production: 570 million tons Alcohol production: 27.3 billion liters Sugar production: 31.7 million tons Alcohol exports: 5.2 billion liters Source: Única, Copersucar, Dedini.

23 Biodiesel

24 Biodiesel Brazilian Biodiesel Production and Use Program Purposes: Diversification of Brazil s Energy Matrix: Fossil and Renewable Reduction of diesel and oil imports Generation of jobs and income Settling families on the land and expansion of local sustainable agriculture Making good use of soils not appropriate for food crops Providing an environmentally correct fuel

25 Biodiesel Brazil s Biodiesel Program Biodiesel Social Environmental Economic Sustainability

26 Potential Raw Materials Cotton seeds Peanuts Babassu palm nuts Buriti palm nuts Rapeseed Dendê palm nuts Sesame seeds Sunflower seeds Jojoba palm nuts Linseed Castor beans Oilseed radish Frying oil Palmiste nuts Pequi / souari nuts Physic nuts Soybeans Tucuma palm nuts Industrial wastes Animal fats Ramos, LP (adapted)

27 Biodiesel Brazilian seeds Castor oil seed Sunflower Soy Palm Cotton Crop yield (kg/ha) 1,500 1,500 3,000 20,000 3,000 Oil contents 47% 42% 18% 20% 15% Oil yield (kg/ha) , Production in Brazil (m 3 /yr) 90,000 23,000 5,600, , ,000 Source: Embrapa, MDA, IBGE, CONAB

28 Plant Oils Production in Brazil Brazil Jan - Dec Jan - Dec Jan - Dec Part. % Soybean Oil 4, , ,571.0 p 89.2 Cotton Seed Oil * * * 4.3 Dendê Palm Oil * * * 2.2 Sunflower Seed Oil 55.7 * 62.1 * 74.6 * 1.2 Maize Oil 45.9 * 55.0 * 63.6 * 1.0 Castor Bean Oil 40.1 * 39.7 * 60.8 * 1.0 Rapeseed Oil 16.9 * 20.4 * 22.8 * 0.4 Peanut Oil 28.1 * 21.8 * 21.8 * 0.3 Palmiste Oil 13.3 * 14.5 * 15.8 * 0.3 Linseed Oil 1.7 * 2.0 * 2.1 * 0.0 Coconut Oil 1.9 * 1.9 * 1.9 * 0.0 Total 5, , , Source: Oilword Annual 2005

29 Biodiesel Brazil s National Biodiesel Program (2% authorizative) (2% mandatory) (5% authorizative) 2012 onwards (5% mandatory) Brazilian Market million liters Brazilian Market billion liters Brazilian Market 2.5 billion liters BR Distribuidora Market million liters BR Distribuidora Market million liters BR Distribuidora Market > 600 million liters

30 Projects in Brazil Producers in Operation and Planned B2 Demand 840 million liters / year Built with no Production Under Construction Producing Pilot Plants Being Planned

31 Guamaré, Rio Grande do Norte State PETROBRAS Research Projects Experimental Biodiesel Production Unit using Plant Oils

32 PETROBRAS Research Projects Experimental Biodiesel Production Unit using Oilseeds Guamaré, Rio Grande do Norte State

33 Biodiesel Industrial Plants 3 Projects Being Implemented Quixadá Capacity: 171 thousand m 3 /year Investments: ~ US$ 60 million CE Inputs Family Agriculture: castor, cotton, and palm. Complementary: soy. BA Jobs Generations: Construction: 1,200 direct and 300 indirect Operation: 90 direct Raw material production:70,000 families Start up: 4 Q/2007 MG semi-arid region Candeias Montes Claros All Petrobras biodiesel production will qualify to the Government Social Seal

34 Distribution More than 4,000 PETROBRAS service stations already offer the B2 diesel / biodiesel blend

35 Corporate Strategy Petrobras strategic position towards its Mission and Vision 2015 were not modified, Corporate Strategy now also focuses on Renewable Energy. Growth Profitability Corporate Strategy Social and Environmental Responsibilities Lead the Liderar Latin o America mercado oil, de natural petróleo, gas, gásoil natural products e derivados and biofuels na América market, Latina, working as an integrated atuando energy como company, empresawith integrada selective de energia, expansion com of expansão petrochemical, seletiva renewable da petroquímica energy and international e da atividadeactivities. internacional. Consolidate and increase competitive advantages in the Brazilian and South American oil and oil products market. Develop and lead the domestic natural gas market and perform in an integrated manner in the gas and electric market in South America. Selectively expand international activities in an integrated manner with Company s businesses. Selectively expand interest in the petrochemicals market. Expand participation in biofuels market, lead the domestic biodiesel production and increase participation in the ethanol business. Operational, management, technological and human resources excellence

36 Business Strategies Renewable Energy Investment Target 2011 Biodiesel Plants HBio (Bio-Refining) Alcohol pipelines Alcohol Project Vessel Aeolic Energy Solar Energy Other Sources of Renewable Energy Availability of 855 Thousand cu.m/year Vegetable oil Processing 1,033 Thousand cu.m/year Export of 3.5 million cu.m/year of Ethanol Installed Capacity of Generation of Electric Power from 240 MW Renewable Sources GHG avioded emissions: 3.93 MM tons CO 2 eq. Total investments in energetic development of renewable sources and biofuels of US$ 0.7 billion

37 Thank you! Fabio R. de Carvalho