2. Disclosure
The presentation may contain forecasts about future events. Such forecasts merely
reflect the expectations of the Company's management. Such terms as "anticipate",
"believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along
with similar or analogous expressions, are used to identify such forecasts. These
predictions evidently involve risks and uncertainties, whether foreseen or not by the
Company. Therefore, the future results of operations may differ from current
expectations, and readers must not base their expectations exclusively on the
information presented herein. The Company is not obliged to update the
presentation/such forecasts in light of new information or future developments.
Cautionary Statement for US investors
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves that a
company has demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. We use certain terms in this presentation, such as oil and gas resources,
that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
2
2
3. Vision 2015
Petrobras will be an integrated
energy company with a strong
international presence and a
leading force in Latin America,
working with a focus on
profitability and social and
environmental responsibility.
3
3
5. Drivers & Strategies
Drivers Business Strategies
Develop market and monetize E&P
natural gas reserves in Brazil • Focus on light oil and natural gas
production and reserve growth
Reduce dependence on light oil Downstream
and oil product imports • Expand conversion capacity and improve
quality of refined products
• Increase bio-refining capacity, biomass,
Improve oil product quality in petrochemical and fertilizers businesses
Brazil and abroad • Promote Brazilian biodiesel production and
export ethanol
Reduce carbon intensity of Distribution
operations and products • Increase market-share in Brazil for oil
products and biofuels
Assure future demand and add Gas & Energy
value to heavy oil exports
• Develop and establish a profitable and
reliable natural gas market including LNG
Exploit competitive advantage International
from deep water exploration • Expand E&P in Gulf of Mexico and Africa
technology abroad • Undertake investments in refining
conversion capacity and quality
5
5
6. Integration of the Company's Activities
Petrochemical Imported Imported Oil
Plants H - Bio
Oil Products
Biodiesel Oil Products
Throughput
Brazilian Oil sold in Brazil
in Brazil
Production
Ethanol
International Oil International International
Production Refining Sales
Domestic
Natural Gas
Other
Production Energy
Renewables
Imported Gas Infrastructure
Industry
LNG 6
6
8. Fundamentals
Macroeconomic assumptions
Assumptions 2007-2011 • Market developments indicate an
appreciation of the FX rate
GDP – World (% p.a.) –
4.2 (R$/US$).
PPP*
GDP – Latin America (%
3.7 • Petrobras robustness Brent price
p.a.) – PPP
below the low end of market’s
GDP – Brazil (% p.a.) 4.0
forecast band.
FX rate (R$/US$) 2.50
Robustness Brent • Costs are projected at current
23.00
(US$/bbl) levels, with no adjustment for
2006 – 62.00
future price reductions.
Brent for funding 2007 – 55.00
(US$/bbl) • Petrobras products prices follow
2008 – 40.00
2009-2011 – 35.00 international prices in the medium
term.
Costs At current levels
Linked to • Natural gas prices to accompany
Domestic sales prices international market international differentials to oil
prices products.
* PPP – purchase power parity
8
8
9. Fundamentals
Brent prices 2006-2015 forecasts
• Supply and demand tight equilibrium → high volatility in medium and long terms;
• Petrobras assumes conservative values for Brent prices → low end of market’s
forecast band.
120
Brent prices 2006-2015 forecasts
100
Forecasted Band
2007-2011
80
US$/bbl
62
60 56
38 54 39 42 43 44
42 38 38 41
Forecasted Band
40 29
2004-2010
20
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Max. and Min. BP 2004-2010 (US$ nominal)
Petrobras (US$ nominal - as of 2008 US$ 35 in current value)
9
Max. and Min. BP 2007-2011 9
10. Fundamentals
Cost escalation
• Crude oil escalation → high industry services cost and reduction of lag to oil prices.
350
Evolution of E&P Industry Costs and Oil Prices
300
250
200
150
100
50
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
F&D Costs - 3 years average Oil price (Brent)
Source : Costs – PFC Energy – Companies average: Exxon, BP, Shell, Total, Chevron, COP, Eni, Repsol, Petrobras
Prices – Platt´s
10
10
12. Fundamentals
Domestic natural gas market
140
Natural gas market 121.0 121.0
120
up to 20.0
100 34.0
17.7% p.a.
up to 30.0
80
Million m3/day
38.6
60
45.4
40 13.5 up to 71.0
20 24.8 48.4
0 7.1
Consumed in 2005 Maximum Demand Potential Supply 2011
2011(*)
Thermoplants Industry Other
National Production Bolivian Imports LNG
* Considers maximal dispatch for every thermoelectric power plant
12
12
14. Investment Plan
Business Plan 2007-2011
US$ 87.1 billion
56% 14%
49.3 U
S$
12
49,3 .1
bi
31.0
23,0 US$ 75.0 bi
1.8
1,8
2.3 3.3 23.0
3% 2,2 3,3 7,5 26%
7.5
1.0
3% 1.0
4% 12.4
9% 86%
E&P Downstream G&E Brazil International
Petrochemical Distribution Corporate
Note: Includes International
14
14
15. Investment Plan
• New projects represent 50% and cost increase 23% of the additional Capex
in relation to the previous Plan.
US$ Million
• Exploration and development
projects
Business Model Scope Change Other
• Offshore production 1,824
Change 517
• Diesel and gasoline quality and
2,957
conversion portfolio
FX Rate
• Fleet renovation and expansion
Appreciation
program
4,189
Cost Increase
• New exploration projects in
7,792
Brazil
• Production development
Jabuti, ESS-164
• HBIO, RPBC modernization
• Ethanol exports New Projects
• New vessels 17,412
• Northeast and southeast LNG BP 2006-10
• New projects in E&P and 52,430
refining abroad
15
15
17. E&P Investments
• Strong investments in production will optimize the development of Petrobras’ proven
reserves, aiming light oil production and a minimum reserve/production ratio of 15 years.
• Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells
classified as discovery or producing wells.
Undeveloped Reserves / Total Reserves* (2005)
60,0%
54,3% 53,1%
51,5% 50,5%
50,0%
43,8%
40,5% 39,7%
40,0%
34,3%
30,0% 29,7%
30,0%
25,0%
20,3%
20,0%
12,9%
10,0%
0,0% n
C
na
l
as
il
c
BP
l
s
PF
l
il
ta
el
oi
ro
ko
pe
ob
llip
O
i
To
Sh
at
br
ev
Ch
-Y
O
Lu
no
nM
i
17
St
tr o
Ph
CN
ol
Ch
tr o
Si
17
xo
ps
Pe
co
Pe
Ex
Re
no
17
Co
* Source: Evaluate Energy
19. PETROBRAS
E&P Investments
Production targets – Oil & NGL and Natural Gas
Thousand boed 7.5% p.a.
4,556
278
7.8% p.a.
3,493 742
185
383 724
2,403
2,036 2,020 2,217
101
96 551
85 94 133
163 289
161 168
274
250 265
2, 812
2, 374
1, 880
1, 540 1, 684
1, 493
2003 2004 2005 T a r get 2 006 T a rg e t 2 0 1 1 2015
For ecast
Oi l and N GL - B r az i l N at ur al Gas - B r az i l
19
Oi l and N GL - I nt er naci ona l N at ur al Gas - I nt e r naci onal 19
19
20. PETROBRAS
E&P Investments
Main Brazilian Oil & NGL production projects
2,600
Albacora Leste
Albacora Leste
P-50
P-50
Thous. bpd
180,000 bpd
180,000 bpd ESS-130
April/2006
April/2006
Roncador
Roncador
P-52
P-52
ESS-130
Golfinho Mod III ****
Golfinho Mod III **** 2,374
2,400 (FPSO)
(FPSO)
180,000 bpd
180,000 bpd
Jubarte
Jubarte 100,000 bpd
2007
2007 100,000 bpd
Fase 1
Fase 1
P-34
2008
2008 2,368 Parque das
Parque das
P-34 Conchas***
60,000 bpd Rio de Janeiro
Rio de Janeiro Conchas***
60,000 bpd 100.000 bpd
2,200 Oct/2006 Espadarte Mod II
Espadarte Mod II 100.000 bpd
Oct/2006
100,000 bpd
100,000 bpd 2,195 2011
2011
FPSO Capixaba
FPSO Capixaba 2007
2007 Roncador
Frade Roncador
Golfinho Mod. 1
Golfinho Mod. 1 Frade
P-55**
P-55**
2,000
100,000 bpd
100,000 bpd 2,061 100,000 bpd
100,000 bpd
2009
180.000 bpd
180.000 bpd
May 2006
May 2006 2009
1,979 Marlim Sul
Marlim Sul
2011
2011
Module 2 Jubarte
Jubarte
Module 2
Roncador
Roncador P-51 Phase 2
Phase 2
P-51
P-54
P-54 180,000 bpd P-57
P-57
180,000 bpd
1,800 1,880 180,000 bpd
180,000 bpd 2008
2008
180,000 bpd
180,000 bpd
2007
2007 2010
2010
Piranema
Piranema
Marlim Leste
1,600 1,684 20.000 bpd
20.000 bpd Cidade de Vitória
Cidade de Vitória
Golfinho Mod. 2
Golfinho Mod. 2
Marlim Leste
P-53*
P-53* Postponed
Oct 2006
Oct 2006
100,000 bpd
100,000 bpd 180,000 bpd
180,000 bpd New
2007 2009
2009
2007 Antecipated
1,400
2005 2006 2007 2008 2009 2010 2011
* In the previous plan, P-53 was scheduled to 2008
** In the previous plan, P-55 was scheduled to 2010
20
*** Abalone, Ostra, Argonauta and Nautilus (former BC10): Petrobras share 35%
**** In the previous plan, Golfinho Mod. 3 was scheduled to 2010
20
20
21. PETROBRAS
E&P Investments
2011-2015 main Brazilian projects
• To sustain production growth, 15 large projects will be implemented between 2011 to
2015. The highlights are:
Oil Production in Brazil (Thous. bbl)
2900
2,812
2800
• Marlim Sul P-56
2700 • Roncador P-55
2600 • Papa-Terra Mód. 1 e 2
• Marlim Sul Mód. 4
2500 • Roncador Mód. 4
2,374 • Cachalote and Baleia Franca
2400 • Baleia Azul
2300
2200
2100
2011 2015 21
21
21
22. PETROBRAS
E&P Investments
Oil and Gas Lifting Costs
US$/bbl 6.32
5.73 5.60
4.28
3.36
2003 2004 2005 1Q06 2011 Target
• New lifting costs targets adjusted to new industry levels, partially offset by
the increased production gains.
22
22
22
23. E&P Investments
Petrobras CAPEX vs. Peers CAPEX
E&P CAPEX to production 2005-2008E Average (US$/bbl)
30
Petro-Canada: 14,17
ConocoPhillips: 12,5
Marathon Oil: 12,31
25
CNOOC: 13,19
Imperial Oil: 10,21
Exxon Mobil: 9,54
Chevron: 11,32
Petrochina: 10,2
Sinopec: 10,02
Petrobras*: 8,56
Shell Canada: 26,86
20
Murphy Oil: 27,75
Statoil: 9,89
Total: 9,41
Suncor: 21,65
15
BP: 7,03
10
5
0
* CAPEX and production over 2006-2011
Global Oils E&P CAPEX to production 2005-2008E Average
Source: Merrill Lynch estimates based on available data for the companies.
• Per barrel CAPEX* for Petrobras (2006-2011) of US$ 8.56 vs. Global Oils average (2005-08) of
US$ 13.74 (ex-PBR).
23
23
24. E&P Investments
Production CAGR: Petrobras vs. Peers
Production CAGR for the planed period
ExxonMobil (2006-10): 4,0%
Lukoil (2005-14): 4,7%
Total (2006-10): 4,0%
ConocoPhillips (2007-11): 3,0%
Chevron (2005-10): 3,0%
9,0%
Eni (2006-09): 4,0%
BP (2005-10): 4,0%
Repsol (2004-09): 2,6%
8,0%
Eni (2009-12): 3,0%
RD Shell (2005-09): 1,0%
7,0%
Petrobras (2006-11): 7,8%
Petrobras (2006-15): 7,5%
Petrobras (2011-15): 6,9%
6,0% Statoil (2006-07): 6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
CAGR for the planed period
Source: Company reports Obs.: Please note that data for different companies is available for different time period.
• Petrobras CAPEX aims an unique production CAGR among the sector.
24
24
26. PETROBRAS
Downstream Investments
US$ 23.1 billion in the downstream segment… ...of which US$ 14.2 billion in refining
6%
14%
US$ 0.9
19%
26%
US$ 3.2 US$ 2.7
US$ 3.7
12% US$ 2.8 61% 8% US$ 1.1
US$
0.7
US
US$ 14.2 US$ 1.7 $0 5%
.7
0
US$ 2.7
3.
$
12% 5%
US
13% 19%
Refining
Pipelines & Terminals Transport Gasoline Quality Diesel Quality
Ship Transport Infraestructure Maintenance Expansion
Petrochemical HSE Conversion
Others Special
• Aggregating value to our heavy oil and producing diesel and gasoline according to
international standards.
26
26
26
27. PETROBRAS
Downstream Investments
Liquid products flow
• In 2011 international sales will amount to 967 Thous. bpd.
International Production Brazilian Production 80 Oil products consumption
383 2,374 in Brazil (**) 2,099
584 1,710
Throughput in
Brazil 1,877
Oil Oil Products (*)
167 142
Imports
383 + 584
309
International oil sales
In Thous. bpd
967 (*) National imports and private refineries
(**) Biodiesel portion not included
27
27
27
28. PETROBRAS
Downstream Investments
Petrochemical investments
Main Projects Basic Petrochemical Unit:
- 150.000 bbl/d of Marlim Oil;
- Products: Diesel, LPG, Ethylene,
Rio de Janeiro Petrochemical Propylene, PX, Benzene and Coke.
Complex
Petrochemical Integrated Complex:
- Polypropylene;
Acrylic Complex /SAP - Polyethylene;
- PTA;
PTA Pernambuco - Ethylene glycol;
- PET;
- Styrene;
Nitrogenated Fertilizers Unit III - Phenol.
Fafen BA
• Investments of US$ 3.3 billion in Petrochemicals;
• Reducing the Brazilian deficit and adding value to
Downstream production.
28
28
28
30. PETROBRAS
Downstream Investments
Refining Costs
US$/bbl
2.90
1.90 1.90
1.38
1.14
2003 2004 2005 1Q 06 Target 2011
• Increase in refining costs due to FX rate appreciation and higher refining
complexity as new conversion units come on stream each year.
30
30
30
32. PETROBRAS
Distribution Investments
US$ 2.2 billion investments in Distribution.
Lead the Brazilian market for oil products and bio-fuels.
Expand domestic market-share and client portfolio.
Internationalize and add value to Petrobras’ brand and consolidate it as
customer’s favorite.
Increase product and service sales, expanding the company’s activities.
Offer excellence in service and products.
New products offered by Petrobras’
service stations as of 2006 32
32
32
34. PETROBRAS
Natural Gas Investments
Challenges Business Plan 2007-2011 Targets
Over 75% of Petrobras’ current natural Investments to develop production of
gas production is associated gas non-associated gas
Risk of gas supply failure due to LNG to provide flexibility to mitigate
abnormalities such risk
Lack of infrastructure to develop Total investment (Petrobras and
Brazilian market partners) in Brazilian natural gas chain
adds up to US$ 22.1 billion
34
34
34
35. PETROBRAS
Natural Gas Investments
Main Projects
LNG – Liquefied Natural Gas
Gasene – Northern Segment
Urucu-Coari-Manaus Gas Pipeline
NG infra-structure maintenance
Southeast Gas Pipeline Network
Gasbel Extension
Extension of Gasbol Southern Segment
(LNG distribution)
Northeast Gas Pipeline Network
Construction
Current
Under evaluation
US$ 6.5 billion investments between
GASBOL
2007-2011
• Natural gas prices to accompany international differentials to oil products.
35
35
35
36. PETROBRAS
Natural Gas Investments
Delivery Curve
Million m3/day
Roncador
SPS25 RJS633 Cavalo (P-55)
80 ESS164
2008
2009 2010 Marinho
2010
2011
Urucu
Natural gas Mexilhão 70
70 sales 2009
2007 70.6
Roncador Golfinho 65.2 Parque das
60 (P-54)
2007
Mod 2
2007
Canapu
2008 Tambaú/Uruguá
Conchas
2011
2010
50 Peroá-
Cangoa
Frade
2009
Jubarte Fase 2
NG non associated
NG associated
(P-57)
Phase 1 49.4 Marlim Leste
(P-53) 2010
2006 Marlim Sul
40 Manati
ESS130 Mod 2
2009
2008 (P-51)
2006 2008
34.1
30 Piranema Peroá-
Cangoa
27.5 2006
Roncador Phase 2
20 Jubarte
(P-52)
2007
2007
Albacora
Albacora (P-34)
Complemental
Leste 2006 Espadarte
10 (P-50) Mod. 2
2007
2007
2006 Golfinho Mod 1
2006
0
2006 2007 2008 2009 2010 2011
36
36
36
37. Carbon intensity reduction of operations and
products
Oil Natural Gas Renewables
Availability of 855,000 m3/year of biodiesel
Processing 425,000 m3/year of vegetable oil (H-BIO)
3.5 million m3 ethanol exports
240 MW installed capacity of power generation from renewable sources
Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent)
Investments of US$ 0.7 billion in renewable energy and biofuels
37
37
39. PETROBRAS
International Investments
Total CAPEX: US$ 12.1 billion Targets
0,8%
1,7%
0,8% 568
1,7%
Thous. boed
E&P
185
Refining and
Marketing 259
262
Petrochemical 24,8%
94 96
Gas & Energy 383
70,2% 168 163
Distribution
Corporate 2004 2005 2011 Target
Oil and NGL Natural Gas
Core Areas:
• Refining
• Add value to Brazilian heavy oil exports
• E&P: West Africa (Nigeria and Angola) & Gulf of Mexico:
• Apply deep water and deep well drilling technology.
• Latin America:
• Leadership as an integrated energy company
39
39
39
41. PETROBRAS
Financial Targets
Main Financial Indicators
2006-2010 2007-2011
Indicators
Average Average
Return on Capital Employed (ROCE) (%) 15 16
Long Term Funding (US$ billion per year) 2.9 3.1
Cash Balance (end of the year) (US$ billion) 4.4 3.5
Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%) 28 25
Oper. Cash Flow before interest and taxes / interest 8.6x 13.7x
Free Operating Cash Flow (US$ billion) 1.5 1.5
Sensitivity to Brent in 2007-2011(annual average)
Every US$ 5.00 Brent price change will result in:
• 3 pp change in ROCE;
• US$ 3.5 billion change in the operational cash generation;
• 10 pp change in leverage.
41
41
41
44. PETROBRAS
Final Comments
Oil and NGL Production x Refining Throughput (Thous. bpd)
4.000 3.554
3.500 3.201
3.000 2.757
2.376
2.500 2.013 1.908
2.000
1.500
1.000
500
0
2006 2011 2015
Total Oil and LGN Production (Thous. bpd) Total Throughput (Thous. bpd)
• Oil & LGN production and refining throughput growth will maintain a balance
between E&P and Downstream segments and making vertical integration options
possible, given the importance of these activities both domestically and abroad.
44
44
44
45. Final Comments
Vertical Integration Comparison
Majors Average *
4,793
3,176
2,735
National Oil Companies Average **
1,579
1,630
4,329
2011: Petrobras
New Refinery will add 200
thous. bpd capacity 2,296
2010:
Pasadena Refinery revamp
concluded – processing 70
2,114
thous. bpd of heavy oil
Product Sales (thous. bpd)
2,217
Refining (thous. bpd)
3,400 Production (thous. boed)
Year 2011
*** 2004 figures, except for Petrobras (2005) 45
45
* Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF
** NOIC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach
Source: PIW Intelligence and Petrobras
46. PETROBRAS
Question and
Answer Session 46
46
46
