barclays - 2011 ceo energy – power conference | almir barbassa - cfo and chief relations officer
TRANSCRIPT
September, 2011
Barclays 2011 CEO Energy – Power Conference
2
DISCLAIMER
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statementsabout future events within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended, thatare not based on historical facts and are not assurances offuture results. Such forward-looking statements merelyreflect the Company’s current views and estimates offuture economic circumstances, industry conditions,company performance and financial results. Such termsas "anticipate", "believe", "expect", "forecast", "intend","plan", "project", "seek", "should", along with similar oranalogous expressions, are used to identify such forward-looking statements. Readers are cautioned that thesestatements are only projections and may differ materiallyfrom actual future results or events. Readers are referredto the documents filed by the Company with the SEC,specifically the Company’s most recent Annual Report onForm 20-F, which identify important risk factors that couldcause actual results to differ from those contained in theforward-looking statements, including, among otherthings, risks relating to general economic and businessconditions, including crude oil and other commodityprices, refining margins and prevailing exchange rates,uncertainties inherent in making estimates of our oil andgas reserves including recently discovered oil and gasreserves, international and Brazilian political, economicand social developments, receipt of governmentalapprovals and licenses and our ability to obtain financing.
We undertake no obligation to publicly update orrevise any forward-looking statements, whether asa result of new information or future events or forany other reason. Figures for 2011 on areestimates or targets.
All forward-looking statements are expresslyqualified in their entirety by this cautionarystatement, and you should not place reliance onany forward-looking statement contained in thispresentation.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, suchas oil and gas resources, that we are not permittedto present in documents filed with the UnitedStates Securities and Exchange Commission (SEC)under new Subpart 1200 to Regulation S-K becausesuch terms do not qualify as proved, probable orpossible reserves under Rule 4-10(a) of RegulationS-X.
3
Exploration and Production
Gas and Power
Downstream
• Intense focus on production in deep and ultra-deep waters;
• Licensed blocks guarantee access to reserves and economies of scale;
• New exploratory frontier, adjacent to existing operations.
• Dominant position in a growing market, far from other refining centers;
•Balance and integration between production, refining and demand.
• Developed infrastructure for process ing and transporting gas;
• Complete flexibility to supply and consume domestic or imported gas.
Bio-Fuels
• Integrated and competive with hydrocarbon products;
• Large areas of available unused agricultural land;
• Large consumer market, with fleet and distribution in place.
BUSINESS MODELOperating as an integrated balanced oil company, dominant in Brazil
4
62%38%
Brasil
Outros
New Discoveries 2005-2010
(33,989 million bbl) Deep-Water Discoveries
Source: PFC Energy
BRAZIL LEADERSHIP IN RECENT DISCOVERIESDeep-water discoveries in Brazil represent 1/3 of the worldwide discoveries in the last 5 years
• In the last 5 years, more than 50% of the new discoveries (worldwide) were made in deep waters
• The development of these reserves will demand additional capacity from the supply chain
• Expansion of the oil and gas chain in Brazil is in line with this perspective
Petrobras expects to double its proved reserves until 2020, keeping the discovery cost around US$2/boe
Other Discoveries Deep-Waters
Brazil
Other
5
2010-14 Business Plan
53%
33%
2% 1%1% 2%
8%
2,9
• 5% of investments will be made overseas, 87%of which in E&P.
• Obs: HSEE (US$ 4.2 bi), IT (US$ 2.7 bi), Technology(US$ 4.6 bi), Logistics (US$ 17.4 bi) and Maintenance &Infrastructure (US$ 20.6 bi)
2011-15 Business Plan
US$224.7 billionUS$224 billion
65,5
14,74,1
3,24,2
2,3
65,5
14,7
4,1
3,24,2
2,4
2011-2015 INVESTMENTSInvestment level similar to the previous Plan, with more focus in E&P
57%31%
6%2%
1%1% 2%
E&P RTC
Gás,Energia & Gás Química Petroquímica
Distribuição Biocombustíveis
Corporativo
(*) US$22.8 billion in Exploration
(*)118.8
73.6
17.8
5.1
2.4
3.5
2.9
127.570.6
13.2
3.8
3.1
4.1
2.4
56%31%
7%2%
1%1% 2%
E&P RTC
Gás,Energia & Gás Química Petroquímica
Distribuição Biocombustíveis
Corporativo
Biofuels
Gas, Energy & Gas Chemicals
Distribution
Corporate
E&P
Petrochemicals
RTM
6
125,0148,9
224,7 224,7
91,4 67,0
31,4 30,926,1 26,1
13,6 13,6
Scenario A Scenario B
US$ 256.1 US$ 255.6US$ 256.1 US$ 255.6 Key assumptions
Scenario A Scenario B
Exchange rate (R$/US$)
1.73 1,73
Brent (US$/bbl)
2011 – 110 2011 – 110
2012 – 80 2012 – 95
2013 – 80 2013 – 95
2014 – 80 2014 – 95
2015 – 80 2015 – 95
Leverage (Average) 29% 26%
Net Debt/EBITDA (Average)
1.9 1.5
ARP (R$/bbl) 158 177Debt Amortization
Investments
Divestment and Restructuring
Cash
Third-Party Resources (Debt)
Operating Cash Flow (After Dividends)
Sources Use Sources Use
CASH GENERATION AND INVESTMENTSDivestment and traditional funding sources adequate for Plan needs
• 40% of capex in dollar in comparison to 37% in the previous Plan
UPSTREAM
8
1.855 1.971 2.004
321 317 334 435
618
1.120
111 132 144141
180
246
2.100
99 9693 96
125
142
2008 2009 2010 2011 2015 2020
Oil Production- Brazil Natural Gas Production - Brazil Oil Production - International Natural Gas Production - International
2,386 2,516
6,418
3,993
1,148543
Pre-Salt’00
0 b
oe
/day
2,772
845Transfer of Rights
13
+10 Post-Salt Projects
+8 Pre-Salt Projects
+1 Transfer of Rights
+ 35 Systems
Added Capacity
Oil: 2,300,000 bpd
2,575
Note: Does not include Non-Consolidated International Production.
• Pre-salt and Transfer of Rights will represent 69% of the additional capacity in2020;
• Pre-Salt share of total production will eincrease from the current 2% , to 18% in 2015 and 40.5% in 2020.
3,070
4,910
PRODUCTIONWith broad access to new reserves, Petrobras can more than double production this decade
9
E&P INVESTMENTS IN BRAZIL– 2011-15 BUSINESS PLANPre-salt now more than half of development spending next five years
• Annual investments of more than US$ 4 billion in exploration
• 23% of the pre-salt investments are in the transfer of rights areas
Pre-Salt
US$ 53.4 Billion
Post-Salt
US$ 64.3 Billion
22%
57%
21%
54%
12%2%
21%
13%Tranfer of
Rights
Exploration Development Infrastrutucre and support
10
Thousand bpd
Onshore Shallow water Deep waterDeep and ultra-deep
waterPre-salt
PRODUCTIONHistorically, Petrobras’ production has grown through expanding to new frontiers
P-50
FPSO Frade
P-52
P-54
P-53
P-51
FPSO Marlim Sul
FPSO Espadarte
FPSO Cid. Niteroi
P-43
P-48
Installed Units
2004
P-43 – 150.000 bpd
FPSO Marlim Sul– 100.000 bpd
2005
P-48 – 150.000 bpd
2006
P-50 – 180.000 bpd
P-34 – 60.000 bpd
2007
P-52 – 180.000 bpd
P-54 – 180.000 bpd
FPSO Espadarte – 100.000 bpd
2008
P-53 – 180.000 bpd
2009
P-51 – 180.000 bpd
FPSO Frade – 100.000 bpd
FPSO Cid. Niteroi – 100.000 bpd
FPSO Espírito Santo – 100.000 bpd
200420052006200720082009
Installed units in the Campos Basin since 2004 FPSO Espírito Santo
P-34
P-57
2010
2010
P-57 – 180.000 bpd
P-56
2011
P-62
P-55
FPSO
FPSO
P-61P-
63
20122013
New Units em Campos
Basin: 2011-15
New Units
2011
P-56 – 100.000 bpd
2012
P-55 – 180.000 bpd
FPSO Espadarte – 100.000 bpd
2013
P-58 – 150.000 bpd
P-61 – 150.000 bpd
P-62 – 180.000 bpd
P-63 – 150.000 bpd
FPSO (Marimbá) – 40.000 bpd
FPSO (Aruana) – 100.000 bpd
2014
FPSO (Baleia Azul) – 60.000 bpd
FPSO
FPSO
2015
FPSO (Maromba) – 100.000 bpd
FPSO Espadarte
P-58
20142015
13
2010
Lula Pilot
FPSO Cidade Angra dos Reis – 100.000 bpd
2013
Lula Northeast
FPSO Cidade Paraty – 120.000 bpd
Piloto de Guará
FPSO Cidade de São Paulo – 120.000 bpd
2014
Guará North
FPSO – 150.000 bpd
Cernambi
FPSO – 150.000 bpd
2015
Lula Central
FPSO – 150.000 bpd
Lula High
FPSO – 150.000 bpd
Franco – Transfer ofRights
FPSO – 150.000 bpd
PRODUCTION SYSTEMS7 new systems until 2015, having already hired six
The 1st production well in Lula Pilot reached 36,000 boed (28,000 bpd of oil), being the most prolific well from Petrobras
14
VARREDURA PROJECTTechnological development and exploratory optimization
• Additional recoverable volume from discoveries:
• Post-salt: Marimbá, Marlim Sul and Pampo:1,105 MM boe
• Pre-salt: Barracuda, Caratinga, Marlim, MarlimLeste, Albacora and Albacora Leste: 1,130 MMboe*
• Well productivity exceeds 20,000 bpd
Between 2011 and 2015 67 exploratory wells will be drilled in current production
areas in Campos basin
Varredura Project
*No volumes have been announced regarding the Marlim Leste and Albacora Leste discoveries.
Descobertas do Pr é-sal na Bacia de Campos
2009/10 (VARREDURA)
Discoveries in Pre-salt Campos Basin 2009/10 (Varredura)
15
SANTOS BASIN (PRE-SALT)
EWT Guará: 15,300 bopd EWT Lula NE: 14,400 bopd Lula Pilot: 28,300 bopd TOTAL: 58,000 bopd
CAMPOS BASIN (PRE-SALT)
Baleia Franca: 19,800 bopd Brava: 6,900 bopd Carimbé: 23,100 bopd Tracajá: 19,800 bopd TOTAL: 69,600 bopd
TOTAL PRODUCTION (JUL/11): 127,600 bopd
PRE-SALT PRODUCTIONAppraisal stage production from Pre-salt already making significant contribution
16
NEW TECHNOLOGIESOil/water subsea separation resolves limitations from growing water production
• Benefit: Separates water and oil under the sea, re-injecting water and relieving the size of the surface equipment on the platform.
• Field : Marlim
• Operation: 2011
17
NEW TECHNOLOGIESRaw water injection promises to increase production from existing systmems
• Benefit: 3 subsea systems for pumping raw water (with little treatment) to pressurize the Albacora reservoir, increasing reservoir recovery factor without increasing surface systems. Pioneer in the world in water depth.
• Field: Albacora
• Operation: 2011
18
Petrobras Long Term Outlook
Increasing volume of Petrobras investments
Impacts on National Industry
Transfer of Rights-Petrobras sole operator in thePre-salt
Increasing local content obligations
Increasing demand for products and services of O&G
Productive Capacity
HR qualification
Financing and tax incentives
Main Challendes
Tecnological Inovation
Business Management
LOCAL CONTENT Growth of industry and concession terms make increasing Local Content a necessity, but not without its challenges
19
NEW VESSELS AND EQUIPMENTSResources required for production growth
Critical ResourcesCurrent Situation
(Dec/10)
Delivery Plan (to be contracted)Accumulated Value
By 2013 By 2015 By 2020
Drilling Rigs Water Depth Above 2.000 m 15 39 37 (1) 65 (2)
Supply and Special Vessel 287 423 479 568
Production Platforms SS e FPSO 44 54 61 94
Others (Jacket and TLWP) 78 80 81 83
Production
Platform (FPSO)Drilling RigsSupply Vessel
(1) Two rigs reallocated from international operations, expire in 2015, so it is not considered in the 2020 accumulated value
(2) Figure includes 28 rigs built in Brazil, added to existing contracte fleet. The demand for long-term will be adjusted as new demand assessments are made.
Water Depth 2006 2008 2010
Up to 1,000 meters 6 11 11
1,000 to 2,000 meters 19 19 21
Over 2,000 meters 2 3 15
2011 2012 2013
+2 +1 +1
+10 +13 +1
Drilling Rigs Under Contract
20
Rounds 7, 9 and 10
Rounds 5 and 6
Minimum limit by blockBetween 30% and 70% in the exploration and
production development phases
Rounds 1 to 4
Maximum limit50% in the exploratory phase
70% in the production development phase
No local content required Round 0Minimum and maximum limits by block:
In deep water, between 37% and 55% in the exploration phase, and between 55% and 65% in
the production development phase.
Transfer of Rights
Concession
Minimum exploration limit: 37%Minimum production development limit:
• Up to 2016: 55%• 2017-2018: 58%• After 2019: 65%
Marlim Sul
SS P-56
Baleia Azul
FPSO
Roncador
FPSO P-62
Roncador
SS P-55
Papa-Terra
P-61 &FPSO P-63
Guará (Norte)
FPSO
Parque das Baleias
FPSO P-58
Tiro/Sidon
FPSO
ESP/MARIMBÁ
FPSO
Aruana
FPSO P-62
Guará Piloto 2
FPSO Cid. São Paulo
Lula NE
FPSO Cid. de Paraty
Maromba
FPSO
SIRI
2 jacket and FPSO
Cernambi
FPSO
Lula 3 Central
FPSO
Franco 1
FPSO
Lula 4 Alto
FPSO
BALEIA AZUL
FPSO
LOCAL CONTENTRequirements in concession agreements become great over time
Lower local content requirements in the ANP’s initial concession rounds give local industry time to adapt.
Concession and Transfer of Rights agreements permit waivers if they are not competitive with international metrices (price, quality, timeliness and technology.
2011 2012 2013 2014 2015
2011-2015 Projects
21
o 2 Jack-ups under construction (P-59 and P-60) in São Roque (BA)
o Inclusion of 900 new suppliers per year in Petrobras' Corporate Vendor List;
o 13 new shipyards currently under construction, raising the total number to 50*;
Recently built platform:
P-57: BrasFels – RJ Capacity: 180 thous. boe/day Value: US$ 1.2 billion Delivered two months ahead of schedule
8 FPSOs (Pre-salt - P-66; P-67; P-68; P-69; P-70; P-71; P-72; P-73 ): Ecovix – Rio Grande (RS)
P-56 and P-61: Brasfels (RJ)P-62: Jurong (ES)
P-63: QUIP (RS)
FPSO Cidade de Paraty: Brasfels (RJ)
FPSO Cidade de São Paulo: Brasfels (RJ)
Under Construction:
Under Construction:
PLATFORM CONSTUCTIONJoint ventures with foreign shipbuilders creating shipyard capacity
Under Construction: P-55: Estaleiro Atlântico Sul – PE (hull) /QUIP- RS (modules)
P-58: Estaleiro Rio Grande –RS , UTC Engenharia S/A – RJ e EBE – RJ.
*Source: Sinaval – Executive Summary -2011, Jan. 21
22
RONCADOR DEVELOPMENT P-54: 68% local content
23
MARLIM SUL DEVELOPMENTP-56: 73% local content
24
JUBARTE DEVELOPMENT P-57: 65% local content
DOWNSTREAM
26
PRODUCTION, DOWNSTREAM AND DEMAND IN BRAZILConstruction of new refineries to meet local market demand
• No new refineries built since 1980•Demand now exceeds refining capacity, with demand growing 20% last two years and growing
0
1000
2000
3000
4000
5000
1980 2000 2010 2015 2020
Oil and NGL Production - Brazil Total crude oil processed – Brazil Oil Products Market (2 scenarios)
Abreu e LimaRefinery (RNE)230,000 bpd
(2012)
COMPERJ(1st phase)
165,000 bpd(2013)
PREMIUM I(1st phase)
300,000 bpd(2016)
PREMIUM I(2nd phase)300,000 bpd
(2019)
PREMIUM II300,000 bpd
(2017)
COMPERJ(2nd phase)165,000 bpd
(2018)
Thous bpd
2,536
2,643 3,095
3,327
1,641
2,205
3,217
181
2,004
3,070
4,910
1,3931,798
1,036
2,1471,814
1,323
... ... ... ...
27
DOWNSTREAM EXPANSIONNew refineries needed to avoid excessive dependence on product imports
* Source: IEA – 2010 World Energy Statistica
** Without considering Capacity Expansion
2006 2007 2008 2011E2009 2010
Brazil (2020)**
Indonesia
Mexico
Spain
JapanChina
Germany
France
Brazil (2010)
USA
Net Imports as a percentage of total demand (%)*
• Increasing imports will lead to higher logistical costs and increasing exposure to
availability of international supplies
Net Product Imports (’000 bpd)
28
US$ 16 billion
1.01.0
3.2
4.9
5.9
7.0
4.5
2.3
1.1
0.20.1
15141312111098765
<250
INVESTMENTS IN QUALITYInvestment cycle in modernization and quality has peaked
US$16 billion in 2011-15 Reduction in sulfur level
Avg. Sulfur Level – Diesel (ppm)
• After 2013 investment can be focused principally on expansion alone
29
MARKET IN BRAZILFree market follows international prices in the long term
20
40
60
80
100
120
140
160
2011201020092008200720062005200420032002
US$/bbl
2002-2011
ARP Brazil
ARP USA
• No change in policy: Petrobras remains fully committed to international prices
30
CHALLENGES
• Critical Resources (goods and services, human resources)
• Infrastructure and logistics
• Developing industry to meet local content requirements
• Cost pressures
OPPORTUNITIES
• Abundant oil reserves
• A Growing domestic market
• Maximizing scale, standardization, and integration
• Developing new technologies
• Monetizing natural gas
CONCLUSIONA Portfolio of opportunities and challenges
