OVERVIEW OF BRAZIL BIOFUEL BUSINESS

OVERVIEW OF BRAZIL BIOFUEL BUSINESS Tsukuba, October 29, 2009 IEA Bioenergy Kuniyuki Terabe Petrobras General Manager terabe@petrobras.com.br

OVERVIEW OF BRAZIL BIOFUEL BUSINESS AGENDA > BIOFUEL IN BRAZIL > FORECAST OF BIO FUEL > INVESTMENT OF PETROBRAS IN BIOFUELS > COOPERATION WITH ASIAN COUNTRIES > FINAL COMMENTS

OVERVIEW OF BRAZIL BIOFUEL BUSINESS BIOFUEL IN BRAZIL

Brazil natural resources and excellent climate Cancer Tropic Equator Line Capricorn Tropic Abundant Natural resources as iron core, bauxite, copper and others, Adequate climate, large available land, abundant rain, tropical temperature

Bio fuel overview in Brazil Biodiesel Production 2008 1,2 billions liters 2013 4.0 billions liters Ethanol Production 2008 24,0 billions liters 2013 40,0 billions liters Sugarcane Plantation area 7.5 millions ha Biodiesel Program - 4% from Jul/2009 and 5% from 2013, mandatory - 50 biodiesel plants - Ethanol Program - 30 years producing and using - 400 Ethanol Plant Source: Ministry of Energy- Ministry of Agriculture,Livestock and Food Supply

Production of ethanol NORTH- NORTHEAST Total mills 79 Sugar mills 8 Ethanol mills 19 Ethanol and Sugar 52 SOUTH CENTER Total mills 288 Sugar mills 8 Ethanol mills 59 Ethanol and Suga r 221 Fontes: Ministry of Energy- Ministry of Agriculture,Livestock and Food Supply

Comparison of feedstock to produce Ethanol 10 8 6 8,30 Energy Energy efficiency index 4 2 1,90 1,55 1,20 0 Cana-de-açúcar* Beterraba Milho Trigo Sugar Cane Beet Corn Wheat 8,000 7,000 Produtivity liters / ha 800 700 Production cost US$/ m3 600 6,000 500 5,000 400 4,000 300 3,000 200 100 2,000 Sugar Cane Brazil Beet EU Sugar Cane India Corn USA Cassava Tailand Wheat EU 0 Brasil Brazil Tailândia Thailand Austrália Australia EUA USA China Europa Europe Source: International Energy Agency. Source: FO Litch.

Importance of ethanol use 10 6 BOE FUEL DEMAND FOR LIGHT VEHICLES IN BRAZIL 180 160 140 120 100 TOTAL DEMAND FOR LIGHT VEHICLES GASOLINE PRODUCTION GASOLINE CONSUMPTION Total economy of 1.25 billion boe or 22 months of the present Brazilian petroleum production of 2,2 millions barrel per day. 80 60 40 20 DURING THIS PERIOD, THE USE OF FUEL ETHANOL IN BRAZIL HAS PREVENTED THE EMISSON OF 1,20 BILLION TONS OF CO 2 0 1970 1975 1980 1985 1990 1995 2000 YEAR Source: Ministry of Mines and Energy - Brazilian Energy Balance 2008

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 100% 80% 60% 40% 20% 0% Flexible Fuel Vehicle forecast More than 6.0 million FFV was sold till 2008 Gasoline Ethanol FFV Natural Gas

Biodiesel s s target and market 2008 (2% mandatory) 2009 (4% mandatory) From 2013 (5% mandatory) Brazilian market 840 million liters Brazilian market 0,8-2,5 billion liters Brazilian market More 2,5 billion liters

Feedstock Options for Biodiesel Castor-Oil Plant Sunflower Soy Palm Cotton Likely Output of Culture 1,500 kg/ha 1,500 kg/ha 3,000 kg/ha 20,.000 kg/ha 3,000 kg/ha Percentage of Vegetable Oil 47% 42% 18% 20% 15% Vegetable Oil Production (kg/ha) 705 630 540 4.000 450 Production in 2005 in Brazil m3/year 90,000 23,000 5,600,000 151,000 315,000 SOURCES: Embrapa, MDA, IBGE, CONAB

56 Biodiesel Plant 3 Petrobras s biodiesel plant 11 Strategic storage of Petrobras 64 Petrobras terminal Biodiesel plant and logistics

Matrix Energy of Brazil 2008 Renewable: 45,4 % 251,5 Millions tep 100 80 60 87 94 45 55 Oil 37,3% Biomass 31,5% 40 20 13 6 0 World Japan Brazil Renewable Non Renewable Natural gas 10,2% Coall 5,7% Nuclear 1,5% Hidraulic 13,9% Fonte: Resenha Energetica Brasileira 2008 Ministério de Minas e Energia (MME) 13

OVERVIEW OF BRAZIL BIOFUEL BUSINESS FORECAST OF BIOFUEL IN BRAZIL

Brazil is able to expand production of food and bio fuel Total area (mm ha) 851,0 Amazon Forest 350,0 Atlantic Forest 35,0 Pantanal 13,0 Preserved area 7,0 Cities, lakes and roads 20,0 Total 425,0 Amazon Forest Total area (mm ha) 851,0 Preserved area 425,0 Pasture 210,0 Soybean 21,5 Corn 13,7 Sugarcane 7,5 Bean 4,0 Rice 2,9 Coffee 2,3 Cassaba 1,9 Wheat 1,7 Cotton 1,1 Orange 0,8 Others 1,6 Pantanal Iguaçu falls Available more than 70 million ha 426 Food & Biofuel Atlantic Forest Preserved area

Agricultural productivity growing 60.000 50.000 Production (thousand ton) 40.000 30.000 20.000 10.000 Planted area (thousand hectares) - 90-91 92-93 94-95 96-97 98-99 00-01 02-03 04-05 06-07 Produtivity + 79% Source: Conab, Aliceweb e Embrapa. Nota: dados estimados para 2007-08.

Evolution of Ethanol Productivity

Exportation of ethanol from Brazil 6 5 million kl 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008

Forecast of ethanol in Brazil Year 2007 2008 2009 2010 2011 2012 2013 Production 20.4 24 27 30.5 33.5 36.6 40.5 Consumption 160 18.2 19.8 23.6 26 28.3 30.5 Surplus 4.4 4.8 5.8 6.9 7.5 8.3 10 45 40 35 30 25 20 15 10 5 0 Million kl Production Consumption Surplus 2007 2008 2009 2010 2011 2012 2013

Forecast of passenger car in Brazil 45.000 40.000 7% 35.000 1000 Vehicle 30.000 25.000 20.000 75% 15.000 10.000 1% 5.000 17% 0 1990 1995 2000 2005 2010 2015 2020 Gasoline Ethanol Flexfuel Diesel Fonte: Estratégia / Petrobras 20

OVERVIEW OF BRAZIL BIOFUEL BUSINESS INVESTMENT OF PETROBRAS IN BIOFUEL

Petrobras Business Plan 2009 to 2013 - US$ 174.4 billions 11,8 2,8 5,6 3 3,2 7% 3% 2% 2% 2% E&P RTC G&E 43,4 25% 59% 104,6 (*) Petrochemicals Distribution Biofuels Corporate (*) US$ 17 billion allocated to Exploration

Investment of Petrobras Total Investment 2009-2013 = US$ 174.4 billion Exploration and Production Refining, Transportation and Trading Distribution Gas & Energy Petrochemical US$104.6 US$ 43.4 US$ 3.0 US$ 11.8 US$ 5.6 Pre-salt Development:Roncador,Jubarte, Marlin,etc Exploration News Refineries Conversion Units/Quality of products Marine transport, pipelines and terminal LPG distribution Quality control Logistics and infraetruture Pipelines and terminal Power Plants Renewable energies Comperj complex. Suape Complex Second generation petrochemical units Biofuel US$ 2.8 Ethanol Production Biodiesel Production Logistics, R&D Visit our website:www.petrobras.com.br

Petrobras Biocombustível S.A. (PBIO) A New Subsidiary for Biofuel Production In July of 2008 PETROBRAS BIOCOMBUSTIVEL S.A - PBIO, a subsidiary of PETROBRAS was created with the purpose of producing bio fuels; PBIO has three biodiesel plants located in Northeast region and Brazilian semiarid area, with total capacity of 171,000 m 3 /yr R&D on bio fuels is developed by PETROBRAS Research & Development Center, Cenpes, located in Rio de Janeiro. Budget 2009-2013:US$ 530 Million

Ethanol Production by PBIO

Biodiesel Production by PBIO

Petrobras s new logistics to export ethanol Aparecida Taboado São Simão Senador Canedo Itumbira Uberaba 2 1 2 3 4 5 6 Trasnport Existing pipeline New pipeline New pipeline New pipeline New water way New pipeline Capacity (million kl/year) 2.9 12.0 6.0 12.9 6.4 8.0 Start up Des / 2010 Des / 2010 Des / 2010 Nov/ 2011 Sep/2012 Sep/2012 MS Bataguassu 5 São Paulo Araçatuba Sta. Maria da Serra Ribeirão Preto 6 REPLAN 3 REVAP Minas Gerais REDUC Taubaté 1 Rio de Janeiro Ilha D água Parana 4 São Sebastião Export Capacity From 2013 12.0 million kl

Overview of Biofuels Process Synthetic Fuels Biofuels 1. Generation 2. Generation Feedstocks oils / fats Sugar Plants Biomass Vegetable oils, animal fats Sugarcane, beat, corn Energy plants, biowaste, bagasse, straw, wood Natural Gas Coal Process Transesterification Fermentation Enzymatic Hydrolysis, Fermentation Gasification, FT-Synthesis, Product upgrading Product Biodiesel FAME Ethanol Cellulosic ethanol BTL GTL CTL

Technological strategy 2006 2011 Deployment of 1st generation technologies (HBIO and Biodiesel) Demonstration plant of Cellulosic Ethanol R&D 2nd generation technologies (BTL and Bio-oil) 2012 2015 Demonstration plant of 2nd generation technologies (BTL and Bio-oil) Deployment of Biorefinery concept

OVERVIEW OF BRAZIL BIOFUEL BUSINESS BRAZIL AND ASIAN COUNTRIES

Brazil Partnership to produce ethanol JAPAN ALCOHOL TRADING CO., Ltd. BJE was created in 2006, to develop ethanol market in Japan -New concept of ethanol production in Brazil dedicated to exportation. -Many Japanese companies are analising the possibility to invest in Brazil. Other Companies Cooperation to increase production of bio fuel in Indonesia. Cooperation to increase production of bio fuel in India. Cooperation to use biofuel in Korea. Cooperation to produce biofuel in Vietnam Other Countries Source:Prof. Lauta Tettis - USP

Partnership to ethanol production New New ethanol ethanol production production to to meet meet the the increase increase of of internal internal and and international international demand demand in in a long long term term basis, basis, with with sustainability sustainability and and no no impact impact on on food food production. production. Investors Target Markets Sugar cane Producers Potential Market Petrobras Biocombustível

Petrobras in Japan Nansei Sekiyu K.K Tokyo Office

OVERVIEW OF BRAZIL BIOFUEL BUSINESS

OVERVIEW OF BRAZIL BIOFUEL BUSINESS FINAL COMMENTS Visit our website:www.petrobras.com.br Tsukuba, October 29, 2009 IEA Bioenergy Kuniyuki Terabe Petrobras General Manager terabe@petrobras.com.br