1. CERAWeek 2007 Latin America
José Sergio Gabrielli de Azevedo Perspectives and
CEO and President Opportunities
February, 2007
2. Latin American Share of Oil World Reserves
Latin American oil reserves are becoming increasingly important
1984 1994 2004
R/P* = 26.77 R/P* = 41.78 R/P* = 41.84
4.8% 8.0% 8.5%
5.0%
3.8% 3.5%
8.8% 5.1%
13.4%
9.4%
6.4%
7.6% 56.5% 65.1% 61.8%
7.9% 11.7%
12.7%
Total Total Total
762 billion barrels 1,017 billion barrels 1,194 billion barrels
Middle Orient Europe & Eurasia Africa
North America Pacific Asia Latin America
In 20 years, Latin America proven reserves increased from 36.6 billion barrels (1984) to 103 billion.
Source: BP Statistical Review of World Energy * Reserves/Production Latin America (years)
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3. Net Oil and Oil Products Availability
Latin America (LA)
Ability to produce non-conventional heavy oil will play
an increasing role in LA
Mbpd
Russia
Asia
United States
OECD(- Mexico)
Projected growth in oil
production and
demand suggests
balance and
independence of
supply from politically
unstable regions
Source: Internacional Energy Agency Reference Scenario
3
4. Gas Rich Region with limited infrastructure
Proven Reserves as of January 1, 2005
4.3 T m3
Ample gas reserves will allow for: 0.55 T m3
151.9 Tcf
19.4 Tcf
::: Regional growth in consumption 0.41 T m3
substituting some demand for oil 14.5 Tcf
Venezuela
Trinidad
::: Higher exports of liquids Mexico
0.33 T m3 Brazil
11.7 Tcf
Perú 0.31 T m3
10.9 Tcf
But:
::: Will require increasing energy 2005 Gas Bolivia 0.50 T m3
Proven Reserves 26.1 Tcf 17.7Tcf
integration and World: 0.74 T m3
::: Substantial investments in 179,8 T m3 / 6,350 Tcf
South and Central America: Argentina
infrastructure covering great 7,02 T m3 / 247,9 Tcf
distances and environmetally
sensative regions
Source: Cambridge Energy Research Associates.
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5. Relative importance of oil sector varies widely among the main players in
the region affecting legislation, pricing and curbing integration prospects
106%
Consumption of oil as % of Production 2005
80%
58%
53%
42%
27%
18% 15%
Brazil Bolivia Oil Argentina Mexico Colombia Ecuador Venezuela Bolivia Gas
Source: BP Statistical Review 2006; EIA; INE/BO; Superintendence de Hidrocarburos de Bolivia
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6. International prices affect each country's
trade balance differently
% Exports of oil as % of total Goods
87 Exports 2005 (in US$)
%
60
%
36
%
26 %
15 %
11
9%
7%
Venezuela Ecuador Bolívia (gas) Colômbia México Bolívia (oil) Argentina Brasil
Source: BP Review 2006; EIA; INE/BO
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7. Domestic Pricing is also affected by
the relative importance of oil sector
7
Subsidized prices reduce financing 1 .1
possibilities
93
September 2006 (in US$ per liter) 0.
67
1 0.
5 0 .6
0 .5
6
0 .4
38
0.
3
0 .0
Venezuela Ecuador Bolivia Argentina México Colombia Peru Brazil
Source: ARPEL
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8. Regulatory Challenges – Recent Trends
• Countries that have recently changed
or have manifested a desire to change
legislation towards higher Government
Participation in production and
revenues: Venezuela, Ecuador, Bolivia
• Countries that are in the process of
liberalizing legislation to encourage
foreign participation: Colombia & Peru
• Countries that have consolidated
reforms: Argentina (w/ price controls) &
Brazil (w/o price controls);
• Mexico remains the most closed oil
economy but there are indications that a
move towards opening to investment is
possible.
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9. Bio-fuel usage in OECD Countries will benefit LA
Global warming, energy security
and/or cost effectiveness are
encouraging renewable fuels with two important
initiatives: (i) ethanol and (ii) biodiesel. Both can be
produced and consumed in Latin America advantageously.
Production of biofuels in LA will also contribute to displace
production of liquids increasing export availability.
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10. Latin America offers excellent resources to expand agricultural production
More than 3 times the average world per capita water availability
Higher Potable Water availability per capita
24,973
11,196
7,055
4,050
3,966
Africa Latin America Asia OCDE World
Availability per capita (m3/year)
Nearly half world sugar cane production Nearly 1/3 world main oil seed production
Million Metric Tons Million Metric Tons
1,328
359
Sugar cane production Soybeans, Groundnuts, Sunflower,
631 Rape Seed, Cotton Seed
95
World South and Central America World South and Central America
and Caribbean and Caribbean
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11. Brazil is the 1st country to reap benefits from Ethanol
Original drivers were energy security and CNG
economic attractiveness;
ETHANOL
Today environmental benefits are also GASOLINE
considered.
160000
Fuel demand for Otto Cycle Vehicles
140000
120000
10000
80000
60000
40000
20000
Accumulated effective economy:
1000 BEP
Source: MME, BEN 2006 1 Billion boe ~US$ 52 bi
0
1972 1976 1980 1984 1988 1992 1996 2000 2004
During this period, ethanol utilization saved 644 million ton. of CO2 emission
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12. Ethanol market may double its size with growth potential in all sugar
cane producing countries
North and
Europe
Central America Brazil
37% 35% 9.8%
South America Asia
38% 16.2%
Current Market Distribution of World Consumption
Ethanol global market is 46.5 Billion Liters
Ethanol as a Fuel is 30.6 Billion Liters, or 67% of total ethanol production
Today the ethanol consumption is 2,6% of gasoline MKT
Increasing ethanol to 10% of gasoline will represent 118 Billion Lt
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13. Today : Sugar cane has the highest energy output/input ratio
Raw Material Energy output / energy input
Wheat 1.2
Corn 1.3 – 1.8
Sugar Beet 1.9
Sugar Cane (under Brazilian Production Conditions) 8.3
Tomorrow
Lignocelluloses Biomass technology will double ethanol per ha. yield
Molasses
yields only 85 L
of ethanol,
1 metric ton of
sugar cane But
Cane bagasse
yields 185 L of
ethanol
Base calculation
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14. 2nd Generation Biodiesel (BTL) will expand biodiesel prospects
Application of Fischer-Tropsch gas to liquids technology
BTL also nicknamed
“Designer Fuel”- because
fuel specifications can be
adjusted to engine
Biomass
Solid Fuels
Syngas requirements altering form
Gasification and length of molecules
Sequestered CO2
Fisher-Tropsch
Conversion
Naphtha
Product
Waxy Syncrude Work-up
Diesel
BTL uses whole plant,
thus requiring less land
area per unit of energy
produced compared to
biodiesel or ethanol
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15. Principal Conclusions, Hurdles and Challenges
• Latin America is in a privileged
position regarding oil reserves, and But the main hurdles
energy independence; and challenges are:
• Use of natural gas prospects are • Heavy oil production technology
encouraging and should contribute development will expand LA reserve
to increase liquid fossil fuel exports growth possibilities;
availability but integration and • Successful Doha Round Negotiations
financial issues are a main are essential to permit greater
concern; trade of agricultural commodities and
• Land, water and human resource increase agricultural productivity
availability and biodiversity place considering comparative advantages;
Central and South America and • Technological breakthroughs in
Caribbean in a privileged position to enzyme technology for the use of
use and supply OECD countries Lignocelluloses biomass and BTL;
with renewable fuels, and also
further liberating liquid fossil fuels • Further progress in regional
for export. integration.
16. CERAWeek 2007 Latin America
José Sergio Gabrielli de Azevedo Perspectives and
CEO and President Opportunities
February, 2007