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Paulo Roberto CostaDownstream DirectorPaulo Roberto CostaDownstream Director

Petrochemical andRefining Integration -Petrobras Panorama

Petrochemical andRefining Integration -Petrobras Panorama

2

AgendaAgenda:: Strategic Plan - 2020

:: Refining Investments

:: Petrochemical Industry

:: Petrochemical-Refining Integration

:: Petrochemical Investments

:: Conclusions

:: Strategic Plan - 2020

:: Refining Investments

:: Petrochemical Industry

:: Petrochemical-Refining Integration

:: Petrochemical Investments

:: Conclusions

Natural GasNatural Gas • Gas Sales: 50 millions of m³/day (brazilian production and imports)

Exploration and Production Exploration and Production

• Proven reserves : 11.7 Billion boe (not including the Tupi, Jupiter, Carioca, Iara and Bem-Te-Vi discoveries)

• Oil and gas production: 2.065 millions boe/d (SEC 2007)

Petrochemical and Fertilizers Petrochemical and Fertilizers

• Petrobras has relevant shares of the two main brazilian petrochemical companies, Quattor (40%) and Braskem (30%). These two companies run 27 petrochemical plants, producing basic petrochemicals and plastic resins. • The fertilizers plants, located at Bahia and Sergipe states, produced together, during 2007 campaign, 235,000 t of ammonia and 824,000 t of urea, most of them to Brazilian market.

• Over 7,000 service stations, constituting the largest and the unique station network spread throughout brazilian territory.

• Over 10,000 clients among industries, thermoelectric companies, airlines and vehicle fleets.

DistributionDistribution

Refining, Transportation and Marketing

Refining, Transportation and Marketing

• 16 Refineries – Brazil (12); Argentina (2); USA (1); Japan (1)• Capacity: 2269 thousand bpd

• Oil and gas pipelines: 11,000 km • Ships (own fleet): 54

Energy Generation Energy Generation

• 15 Thermoelectric plants – 5,300 MW installed• 15 Small hydroelectric plants and 12 Thermal plants – under construction – 1,800 MW

Petrobras – An Energy Integrated CompanyPetrobras – An Energy Integrated Company

Petrobras – Company’s Integrated ActivitiesPetrobras – Company’s Integrated Activities

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Strategic Plan - 2020Strategic Plan - 2020

Cor

pora

teSt

rate

gy

Corporate Strategy

Business Segment Strategy - 2020

Investment Plan by Business SegmentInvestment Plan by Business SegmentPETROBRAS

26,1

1,14,23%

13%

84%

DOWNSTREAM2008-12 PeriodUS$ 31,4 bi

2008-12 PeriodUS$ 112,4 bi

Petroquímica

RTC

Biocombustível

Supply ChallengesSupply Challenges

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Refining Investments Refining Investments

Current Refining Infrastructure in BrazilCurrent Refining Infrastructure in Brazil

REMAN 46LUBNOR 6RLAM 323REGAP 151REDUC 242REVAP 251RECAP 53REPLAN 365RPBC 170REPAR 189REFAPRPI

18915

TOTAL BRAZIL 2,000

Refining Capacity (Thousand barrels/day)

ARGENTINA 69USA 100JAPAN 100

TOTAL PETROBRAS 2,269

Refining New ProjectsRefining New Projects

RNEST (Abreu e Lima)

Guamaré

PREMIUM IIPREMIUM I

COMPERJ

New Refineries ProposalsNew Refineries Proposals

GUAMARÉ Abreu e Lima -

PE Premium I -

MA Premium II -

CE

Capacity 30 thousand

bpd 200 thousand

bpd 600 thousand

bpd

300 thousand

bpd

Operation Aug/2010 Aug/2010Sep/2013

andSep/2015

(2 phasis)

Sep/2014

andSep2016 (2 phasis)

Investment US$ 191 Milllion US$ 4.05 Billion US$ 19.8 Billion US$ 11.07 Billion

Porducts

and Market

Gasoline

and Diesel

Rio Grande do Norte

(RN)

GLP and Diesel North and Northeast

GLP, Naphta

and QAV (Brazil) and Diesel 10 ppm of sulfur

Oil RN mixBC 16 (50%) and Carabobo (50% -

Venezuela)

BC-20 / BC-

18, BC-16 and BC-16 mixes with

Tupi

Partnership100%

PetrobrasAgreement

in March

2008 60% Petrobras40% PDVSA

100% Petrobras

REMAN 46LUBNOR 6RLAM 323REGAP 151REDUC 242REVAP 251RECAP 53REPLAN 365RPBC 170REPAR 189REFAPRPI

18915

TOTAL 2,000New CapacitiesPremium I 600Premium II 300RNESTCOMPERJ

200150

GuamaréTOTAL

303,280

Refining Capacity in the Brazil (thousand bbd)

Incrising Refining CapacityIncrising Refining Capacity

Premium-I/MAGuamaré/RN

Comperj/RJ

Premium-II/CE

RNEST/PE

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PetrochemicalIndustryPetrochemicalIndustry

Oil companies seek to maximize their profits integrating throughout the supply chain

Refineries(Nafta andPropylene)

NaturalGas

Oil

Olefins(Ethylene,Propilene)

Aromatics(Benzene,p-xylene)

Polyolefins(HDPE, LDPE, LLDPE)

Polypropylene

Styrene/PSPTA/PETAA/SAP

Processes:Extrusion,

Blow-moulding,Injection

PackagesFilms

Automotivecomponents

TubesCablesWires

Electronic equipments

Fibers

No integreted oil companies PetrochemicalCompanies

Integrated Oil Companies Plastic Manufacturers

RefiningPolymerProduction

Olefins and AromaticsProduction

Final UsageMouldingExploration

andProduction

Petrochemical Industry Value ChainPetrochemical Industry Value Chain

Simplified Plan of the petrochemical chainSimplified Plan of the petrochemical chain

Basic Input

Ethane

Nafta

Natural Gas

Oil

1st Genetation

Ethylene

Butene

Propylene

Butadiene

Benzene

Para-xylene

2nd Genetation

Polyethylene (PE)

Polypropylene (PP)

Styrene

ABS

SBR

PET

Other

PTA

DMT

Ethylene Dichloride

PVC

Ethylbenzene Poliystyrene (PS)

3rd Genetation

Films, packaging. bottles, housewares

wires and cables

Tubes and connections, film wiers and cables

Autopieces, casingsand packages

Electronic equipmentsand packages

Automotive parts, eletronic equipments

and telephones

Textile fibers and bottles

Other

End-users

Retail sales

Buildings

Foodstuffs

Automotive industry

Personal care

Other

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Petrochemical –RefiningIntegration

Petrochemical –RefiningIntegration

What are companies seeking?

Lower Costs in Operationand Accomplishment

Proximity to theConsumer Market

Proximity to theFeedstocks

IntegrationRefining and

Petrochemical

PETROCHEMICALREFINING +

Companies decisions on petrochemical investments are based on:

Sense of balance between petrochemical and refining cycles (i.e. hedge)

Diversification into higher value added products

Partnerships focusing on access to competitive feedstocks

Develop a leadership position on costs of select products through leverage of synergies

Competitiviness through high production scale and cost reductions

Upstream integration and flexibility: refining streams as feedstocks

Oil and gas major companies, private or state-owned, have important positions in petrochemical and continously seek growth with diverse strategies.

Refining and petrochemical integration hedges both segments against profitability cyclical performance, mitigating financial risks

Refining and Petrochemical ProfitabilityRefining and Petrochemical Profitability

Petrochemical Refining

Oportunities for Petrochemical and Refining IntegrationOportunities for Petrochemical and Refining Integration

Product Integration

refinery streams as feedstock as feedstock for petrochemical plants

Example: naphta, propylen, propane, ethane and refinery gas

petrochemical streams as blendstock for refining operations

Example : pyrolysis gasoline

Product and Energy Integration

product integration and power generation

Example : COMPERJ, an integrated solution

Technology Integration

Example : automation technology for petrochemical companies

Integration for Scheduled Maintenance

Synchronization of the scheduled maintenance plans in order to optimize the maintenance efforts and avoid production gaps

Example : petrochemical refinery plant

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Petrochemical Investments Petrochemical Investments

Expand operations in 1st and 2nd generation processes, increasing the production of petrochemicals, while adding value to the products of the Group’s refineries by capturing synergies related to the production of oil, gas, refining and petrochemicals

Develop new technologies for the chemical industry based on the technological evolution of petrochemical fluid catalytic cracking (FCC), biodegradable polymers and biopolymers

Petrochemical Segment Strategies on Strategic Plan - 2020 Petrochemical Segment Strategies on Strategic Plan - 2020

Refinery Propylene Sppliter ProjectsRefinery Propylene Sppliter Projects

Objective: Provide petrochemical feedstock for polypropilene and other plants, through the extraction of the propylene from LPG stream, adding value to Company’s products.

Investiments: US$ 688 MM

Start-up: 2008 -

Units: REGAP, REPLAN, REPAR and REVAP

Total capacity: 741 kty

Petroquímica Suape Location: Suape/PE;Capacity: 640 kty PTA;Total investment: US$ 632 million;Raw material: imported p-xylene until 2012 and COMPERJ from 2013 onwards;Start-up: 4thQ 2009.

Companhia Têxtil de Pernambuco - CITEPE Location: Suape/PE;Capacity: 240 kty POY;Total investment: US$ 342 million;Raw Material: imported POY until 2009 and Petroquímica Saupe from 2009 onwards;Start-up: 2thQ 2008.

Petrochemical ProjectsPetrochemical Projects

COMPERJ’s main purpose is to increase the production of petrochemicals in Brazil, using as feedstock 150 thousand bpd of domestic heavy crude, the Marlim oil from Campos Basin.

Area: 45 million sq. ft.

Location: Itaboraí - RJ

Investments: US$ 8.38 billion

Capacity:

• Basic Petrochemicals: 1,300 kty ethene; 700 kty p-xylene; 881 kty propylene; 608 kty benzene; 157 kty butadiene;

• Downstream: 800 kty PE; 850 kty PP; 500 kty styrene; 600 kty ethylene glycol; 500 kty PTA; 600 kty PET;

Start-up: 2012

Technology: Petrochemical FCC – deep fluid catalytic cracking technology

• This technology allow the production of huge amounts of olefins (ethene and propylene) and will enable tighter integration between refining and basic petrochemicals production technologies

COMPERJ –Petrochemical Complex of Rio de Janeiro COMPERJ –Petrochemical Complex of Rio de Janeiro

COMPERJ – Petrochemical Complex of Rio de Janeiro COMPERJ – Petrochemical Complex of Rio de Janeiro

POLYPROPILENE 850 kta

COMPERJ LocationCOMPERJ Location

REDUC

QuattorGuapimirim’s APA

Islands: Redonda and d´Água

Pipelines:Cabiunas - REDUC

CENPES

PETROCHEMICAL COMPLEX

SÃO GONÇALO’S CENTRAL DISTRIBUTION BASE

INTEGRATION CENTER TRAINING COORDINATION

COMPERJ ProductionCOMPERJ Production

Products Production

(kty)

Downstream

Polypropylene 850

Polyethylene 800

Styrene 500

Ethylene glycol 600

PTA 500

PET 600

ProductsProduction

(kty)Basics

Fuels

Diesel 535Naphtha 284Coke 700

Petrochemicals

Ethylene 1,300Propylene 881Benzene 608Butadiene 157p-Xylene 700Sulphur 45

COMPERJ Main FrameworkCOMPERJ Main Framework

FEL 3 Conclusions Dez/08

Contracting of the Integrator Oct/07

End of the Integration Center Construction Oct/08

FEED Elaboration Oct/08

Acquisition of the Main Access Area Dec/08

Start of Embankment Mar/08

*UPB LI Feb/09

*Main Access Road LI Apr/09

*345 kV Transmission Line LI Jun/09

*Terminal and Pipeline LI Aug/09

*Submarine Emissary LI Dec/09

ANP Authorization Oct/09

Start of EPCs Contracting Feb/09

Expected Start-up Jun/12

Expected Full Operation Aug/13

*LI – Licenciamento de Instalações (Facilities Licensing)

COMPERJ ScheduleCOMPERJ Schedule

StepStep 20032003 20042004 20062006 20082008 20102010 2012201220052005 20072007 20092009 20112011 20132013

Accomplishment

Business Planning (FEL 1)

Conceptual Engineering (FEL 2)

Basic Engineering (FEL 3)

Constr. and Assembly

Units Start-up

Concluded In progress To be startedUPB Conditioning

and Start-up

Full Operation

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ConclusionsConclusions

Benefits for Petrobras, adding value to the supply chain, capturing synergies related to both segments and following a global trend of upstream integration among large companies;

Techonological challenges with the use of heavy crude oils for petrochemical purposes, using innovative Petrochemical FCC technology, developed internally and adopetd at COMPERJ, integrating refining operations and the production of basic petrochemicals;

Strengthening of Brazilian Petrochemical Industry, promoting training, technology development, employment and income for the country.

Motivation for Petrochemical-Refining IntegrationMotivation for Petrochemical-Refining Integration

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