argentina meeting with saudi arabian delegation october 12, 2010 argentina

ARGENTINA

MEETING WITH SAUDI ARABIAN DELEGATION

OCTOBER 12, 2010

ARGENTINA

ARGENTINA

PRESENTATION

•Energy sector in Argentina.

•Reasons for the development of biofuels in Argentina.

•Law Nº 26.093: main objectives.

•Availability of raw material for biodiesel production.

•Recent developments in the Argentine biofuels sector.

•Conclusions and challenges ahead.

ARGENTINA

ARGENTINE ENERGY CONSUMPTION BY SOURCE

Source: Department of Energy, Argentina

Coal2%

Others4%

Nuclear2%Hydro

6%Natural Gas

41%

Oil45%

ARGENTINA

LIQUID FUELS - CONSUMPTION

Fuente: Secretaría de Energía

DIESELOIL66%

GASOLINE17%CNG

17%

Argentina imports 3 to 4% of total diesel oil

ARGENTINA

WORLD SOYBEAN PRODUCTION 2008:

Source: SOYSTAT- USDA

Country Production Share

million tons %

USA 72.9 33%

BRAZIL 61.0 28%

ARGENTINA 46.2 21%

CHINA 14.0 6%

SUBTOTAL 194.1 88%

REST 26.4 12%

TOTAL 220.5 100%

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

ARGENTINA

•One of the main exporters of vegetable oil in the world.

•The oil industry in Argentina is export - oriented, sending 95% of its production to the foreign market.

(2008 crushing capacity : 160,000 tons/day).

Source: CIARA

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

OTHERS 0.1 Million Tons

TOTAL 7.9 Million Tons

SOY OIL 6.1 Million Tons

SUNFLOWER OIL 1.7 Million Tons

ARGENTINA

Plants by crushing capacity

Crushing capacity tons/day< 1000

1001 to 1600016001 to 31000

> 31001

Crusging Capacity by Province (Share of total)

Santa Fe, 81%

Córdoba, 11%

Buenos Aires, 8% Otras, 1%

ARGENTINA

ARGENTINA IS THE No 1 EXPORTER AND No 3 WORLD PRODUCER OF SOY OIL

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

THE No 1 EXPORTER AND No 2 PRODUCER OF SUNFLOWER OIL IN THE WORLD

ARGENTINA

MAIN TOOL FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

• The creation of a legal framework for the development of this

new industry.

• The Argentine Congress approved on April 19th, 2006 a

law to promote the use and production of biofuels in the

country. The biofuels involved are: biodiesel, ethanol

and biogas.

ARGENTINA

MAIN ASPECTS OF THE LAW

• 5% mandatory use of biodiesel and ethanol in all diesel oil and gasoline consumption, beginning January 1, 2010. Currently is 7% for biodiesel.

• Creation of a National Authority (N.A.) for the evaluation and support of projects for the production of biofuels.

• The functions of the N.A are, among others:

• To establish biofuels quality standards.

• To establish the criteria for the approval of projects in order to obtain the benefits established by the law.

• The law prioritizes projects that follows these criteria:

• Sponsored by small and medium sized companies.

• Belong to farming producers.

• Located in regional and rural economies.

ARGENTINA

AVAILABILITY OF RAW MATERIAL FOR BIODIESEL PRODUCTION IN

ARGENTINA

ARGENTINA

Argentine Grain Production- in million tons -

62,0

95,0

69,469,2 70,8

95,0 97,3

84,5

67,4

76,5

-

20,0

40,0

60,0

80,0

100,0

120,0

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10(*)

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, livestock and fisheries of Argentina(*) Estimated

ARGENTINA

Argentine total grain production for the 2007/2008 reached 95,0 million tons. SOY, CORN and WHEAT account for almost 90% of total grain production.

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, Livestock and Fisheries - Argentina

Total Grain Production 2007/2008 season:

Grain Planted area Production Share

million hectares million tons %

SOY 16.6 46.2 47%

CORN 4.2 22.0 23%

WHEAT 6.0 16.3 17%

SUNFLOWER 2.6 4.7 5%

SORGHUM 0.8 2.9 3%

OTHERS 1.8 5.2 5%

TOTAL 32.0 97.3 100%

ARGENTINA

Soybean ProductionCampagne2007 – 2008

46.2 million tons

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, livestock and fisheries of Argentina- 2009/2010 projected

85%

Argentine Soybean Production- in million tons -

40.5

10.9

20.1

46.2

3.8

53.0

-

10.0

20.0

30.0

40.0

50.0

60.0

1980 /81 1990 /91 1999 /00 2005 /06 2007 /08 2009/2010

300 kms

ARGENTINA

MAIN IMPACTS EXPECTED FROM THE LAW

With the implementation of the 7% mandatory use of biofuels, the needed production is:

• Biodiesel: 1,200,000 tons

• Vegetable oil: 1,240,000 tons. (17% of total current production).

• Soybean seed contains 18% oil, and 77% protein meal

Oil, 18%Rest, 5%

Meal, 77%

BIODIESEL

ARGENTINA

RECENT DEVELOPMENTS

23 Biodiesel plants

Total production capacity : 2,5 million tons.

Total Investments: US$ 500 million

Source: Department of Energy and CARBIO(*) Projected

Argentine Biodiesel Markets- in thousand tons -

168

1150

725

1200

800

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 (*)

Domestic

Export

ARGENTINA

RAW MATERIAL FOR THE PRODUCTION OF ETHANOL

With the implementation of the 5% mandatory use of ethanol, the needed production is:

• Ethanol : 250.000 tons.

• Quantity of corn/sorghum needed = 550.000 tons (2,5% of total

current production)

Currently total production of Ethanol is from Sugar Cane

ETHANOL

ARGENTINA

Member of the Global Bioenergy Partnership (GBEP) – Participation on the definition of criteria and indicators for sustainable production of bioenergy (environmental, social, economic and energy indicators).

EU Directive on Renewable Energy - JRC-DGEN- INTA Document.

Establishment of a Working Group for measurement of GHGs – MINAGRI - MinCyT- Universities and Research Centers.

Participation in Public Consultations related to the sustainability of bioenergy (eg EU and U.S.A).

Implementation of WISDOM methodology (S&D of biomass resources). Tool for decision making.

SUSTAINABILITY OF BIOENERGY

ARGENTINA

CONCLUSIONS

ARGENTINA

CONCLUSIONS

• Argentina has ideal growing conditions for the sustained development of the raw materials needed for the production of biofuels.

• Argentina has immediate availability of the raw material needed to cover the 5%-10% of mandatory use in all gasoline and diesel consumption.

• Argentina would become one of the major producers of biofuels worldwide.

ARGENTINA

CONCLUSIONS

• From the economic and social point of view, the development of the Argentine biofuels industry is:

• Creating a new industry in our country.

• Adding value to grain and vegetable oil production since

Argentina exports 70 percent of the corn and 90 percent

of the vegetable oil that it produces.

• Having a favorable impact on the environment.

ARGENTINA

MAIN CHALLENGES AHEAD

ARGENTINA

MAIN CHALLENGES AHEAD

• To monitor on a permanent basis, issues related to quality, safety and environment.

• To promote research and development to reduce costs of biofuels and to make more efficient use of the biomass produced.

• To encourage the use of biotechnology for the development of new varieties of feedstocks for the production of biofuels.

• To encourage cooperation between countries in the region, in order to access new foreign markets.

ARGENTINA

MAIN CHALLENGES AHEAD

• To promote projects that are labour intensive and have a high impact on regional economic and agricultural development.

• To support the interaction between private and public companies, scientific and technological organizations and public organizations.

• To become one of the main producers and exporters of biofuels worldwide, adding value to current agricultural exports.

ARGENTINA

HOW TO CONTACT US

Ministry of Agriculture, livestock and Fisheries of Argentina

Paseo Colón 982 – 2nd. Floor - Office 219 – Buenos Aires

Miguel Almada

Phone: (5411) 4349-2226 / 2111

E-mail: malmad@minagri.gob.ar

Website: www.minagri.gob.ar