antonio carlos pinto - "pre-salt: challenges and opportunities for the brazilian industry"...

May -2011

Pre-Salt: Challenges and Opportunities for the Brazilian Industry

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.All projects forecasted herein are subject to approval by the appropriate stakeholders.

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.

CAUTIONARY STATEMENT FOR US INVESTORS

Summary

• History

• Development Strategy

• Material Results

• Technological Challenges

• Opportunities

Pre‐Salt Province

Total area: 149.000 km²Area already under concession: 41.750 km² (28%)

Area with Petrobras interest: 35.750 km² (24% of the total area)Area without Petrobras interest: 6.000 km² (4% of the total area)

Area not under concession : 107.228 km² (72%)

Petrobras Exploratory Sucess Rate in Presalt Province => 85% (until 2009, 41 drilled wells)Industry Benchmark => 30%

Blocks ConsortiumBMS-8BMS-9BMS-10BMS-11BMS-21BMS-22BMS-24

BR (66%), SH (20%) e PTG (14%)BR (45%), BG (30%) e RPS (25%)BR (65%), BG (25%) e PAX (10%)BR (65%), BG (25%) e PTG (10%)BR (80%), PTG (20%)EXX (40%), HES (40%) e BR (20%)BR (80%), PTG (20%)

Shore Distance = 300 kmTotal Area = 15.000 km2Shore Distance = 300 kmTotal Area = 15.000 km2

Largest seismic acquisition in the worldLargest seismic acquisition in the world

19202020202020202020202020

99000102030405060708091011

20012000

20022003

ParatiParati: First Wildcat Well : First Wildcat Well

19202020202020202020202020

99000102030405060708091011

20022003200420052006

Outstanding Exploratory Success

19202020202020202020202020

99000102030405060708091011

2006200720082009

Transfer of Rights with Compensation areas

19202020202020202020202020

99000102030405060708091011

20102009

Summary

• History




• Opportunities

Integrated Planning OpportunityIntegrated Planning Opportunity

Several blocksacquired at thesame period

OperationalPartnership

Similar geologicalcharacteristics

Challengingwater depth, shore distance, salt layer...

High risk andhigh potential areas

Petrobras asoperator in

several blocks

Massiveexploratory

efforts

Hugediscoveries

Significanttechnologicalchallenges

High investmentneed

OilTransference

RegulatoryAspects

FPUsTechnology

Development

CriticalResources -Engineering

CriticalResources -

E&P

OilTransportation HSSE

Joint VenturesGas

Transference

GasTechnolo\gy

HumanResources

ProductionDevelopment

GasTransportation

Infrastructure

WellTechnology

Development

CO2Technology

Development

?

Exploration

PLANSAL PLANSAL StructureStructure

PLANSAL PLANSAL StructureStructure

Development Strategy

Innovation and Production

After 2017

• Innovation acceleration• Massive use of new technologies specially tailored for Pre-Salt conditions

Phase 1b

Operated Production > 1 MM bbl

2013/2016

• Guará Pilot• Lula NE Pilot• Guará N• Cernambi S • 8 definitive productionsystems (replicants)• 4 Transfer of Rightsproduction units

Phase 1a

Information Gathering

2008/2018

• Appraisal wells• Extended Well Tests• Lula Pilot

Phase 0

Production increase – new technologyProduction increase – new technology

DP ShuttleTanker DP Shuttle

Tanker

ConventionalShuttleTanker

Offshore TransferenceTerminal (UOTE)

DP Shuttle Tanker

FLNGRoute 3(3 options)

Route 3(3 options)

Route 2Route 2

Route 1Route 1

Petrobras Estimated Production

* Production curve does not currently assume any contribution from Transfer of Rights

4.6% p.y.2,5832,583

5,3825,382

3,9073,907

7.6% p.y.

1,8101,810

2411078

Pre‐sal

tPre

‐salt

Petrobras Estimated Total Recoverable Volumes in Brazil

20

25

30

billion boe ~ 28-30 bn boe

5

10

15

0

*SPE Criteria

Santos Pre‐Salt announced recoverable volumes including the transfer of rights, can more than double Petrobras Brazilian reserves.

Higher estimates10

Lower estimates8

5

Cumulative Production

from Petrobras

1953 - 2010

Proved Recoverable Volume BR1953 - 2010

Proved Reserves BR (SPE 2010)

Potential Recoverable (Lula,

Cernambi, Iara, Guará and Whales Park), ranging from

8.1 to 9.6

Transfer of Rights

Proved Reserves+

Potential Recoverable +

Transfer of Rights

29

14

15

Summary

• History




• Opportunities

Extended Well Tests

Lula Pilot

Declaration of Commerciality

Summary

• History




• Opportunities

Reservoir Characterization

Recent StromatoliteLagoa Salgada, RJ

Stromatolites – Shark Bay ‐ Australia

Reservoir

Subsea

Petrobras Investments R&D (2010‐14)

US$ 5.3 Billion

Investing in Technological Leadership

Petrobras´s partnerships with 120 universities and research centers has created one of the greatest concentrations of energy research in the world

Expansion of CENPES makes it one of the largest research center in the world

In the Technological Park of the Rio de Janeiro Federal University, four R&D centers for major equipment and services suppliers is currently under construction :

Others companies are schedule to come to Brazil to develop technological centers:

•TenarisConfab

• Vallourec & Mannesman

•Weatherford

•Wellstream

• FMC Technologies

• Usiminas

• Schlumberger

• Baker Hughes

• Cameron• General Electric• Halliburton • IBM• Technip

Summary

• History




• Opportunities

Pre‐Salt Opportunities

ScenarioExploration and Production Development in several blocks;

Several operator partnerships in each block;

Several projects to be implemented in each block;

Each project will demand: Sub-surface studies

Well drilling/completion

Subsea equipments Instalation

Subsea lines handling

Floating Production Units

Oil and gas flow

Future operation/maintanance for long time period

Strong local content orientation.

Petrobras Petrobras E&PE&P equipmentequipment andand servicesservices demanddemand

Source: Petrobras Investor Relations

Critical ResourcesCurrent SituationDec/10

Delivery Plan (to be contracted)Accumulated Value

2013 2015 2020

Drilling Rigs Water Depth Above 2.000 m 14 26 31 53

Supply and Special Vessel 298 465 491 504

Production Platforms SS e FPSO 47 53 63 84

Others (Jacket and TLWP) 79 81 83 85

Critical ResourcesCurrent SituationDec/10

Delivery Plan (to be contracted)Accumulated Value

2013 2015 2020

Drilling Rigs Water Depth Above 2.000 m 14 26 31 53

Supply and Special Vessel 298 465 491 504

Production Platforms SS e FPSO 47 53 63 84

Others (Jacket and TLWP) 79 81 83 85

EquipmentInstalledDec/10

Business Plan(2010‐2014)

Subsea Trees 803 500

Subsea Manifolds 25 30

Subsea FlexibleFlowlines (km)

4,364 4000

Umbilicals (km) 3,303 2200

Rigid Pipelines (km) 1,773 500

EquipmentInstalledDec/10

Business Plan(2010‐2014)

Subsea Trees 803 500

Subsea Manifolds 25 30

Subsea FlexibleFlowlines (km)

4,364 4000

Umbilicals (km) 3,303 2200

Rigid Pipelines (km) 1,773 500

53%

33%

2%1%2%8%

1%

E&P

RTM

G&P

Petrochemicals

Petrobras’ Corporate Strategy to 2020

Brazil95%

International5%

Total Capital Investment Plan ‐ 2010‐2014: US$ 224.1 bi

Focus in oil, oil products, petrochemicals, gas &

energy, biofuels, refining and distribution with an

integrated and sustainable business model

Oil & gas production growth in a sustainable manner

that will approximately double our production in the

next 10 years

Integrated Growth, Profitability and Sustainability

Be recognized as a benchmark among integrated energy companies

Consolidate leadership in the Brazilian market of

natural gas, electricity generation and gas chemicals

Business Plan 2010‐14: Increased Investment for Integrated Operations in Brazil

Distribution

Biofuels

Corporate

Prod

uctio

n (m

illion bo

e/d)

Exploration Development Infrastructure

Pre‐Salt: US$ 33.0 billion Post‐Salt: US$ 75.2 billion

84%

13%

3%

67%

18%

15%15%

Brazil has a determination to maximize value for their own country and population, using the same approach as Norway did in the 70’s.

• A stronger bargaining position caused policy changes in 1972• Application in 1973 licensing round• Initial emphasis on procurement and human capital• “Local Content” through bidders lists and procurement reviews• Transfer of managerial and operational skills• Cooperation in research and development• Procurement: preference to domestic goods and services, to build up supply industries, 1972‐94• Transfer of knowledge, priority to human capital to enhance research and development, 1972‐94• Petroleum Fund, setting revenues aside to spend proceeds only, since 1992

•Creation of the local content program ‐ 2003•Petrobras recognizes opportunities to improve cost•effectiveness and quality standards in the local supplying market•Local suppliers usually provide After Sales faster and friendlier when compared with foreign companies•Financing Agent (BNDES – Brazilian development bank) requires minimum local content for financing concession•The Petrobras Local Content policy is connected and contributes to the Petrobras Social Responsibility Policy

Local Content Policies and Strategies