Refining transportation &_marketing_(rtm)_and_petrochemicals

1

Refining, Transportation & Marketing (RTM), and Petrochemicals

2

This presentation may contain forward-looking statements. Such statements reflect only the expectations of the Company's management regarding the future conditions of the economy, the industry, the performance and financial results of the Company, among other factors. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar expressions, are used to identify such statements. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Consequently, these statements do not represent assurance of future results of the Company. Therefore, the Company's future results of operations may differ from current expectations, and readers must not base their expectations solely on the information presented herein. The Company is not obliged to update the presentation and forward-looking statements in light of new information or future developments. Amounts informed for the year 2011 and upcoming years are either estimates or targets.

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally viable under existing economic and operating conditions. We use certain terms in this presentation, such as discoveries, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.

Cautionary statement for U.S. investors:

DISCLAIMER

3

Million boeProved Reserves  – SPE criteria

* Lula/Cernambi, Iara, Guará and Whales Park, ranging from 8.1 to 9.6 Billion boe

*

GaroupaNamorado

Marlim

Roncador

Whales Park, Mexilhão 

Pre‐salt: Lula andCernambi 15,28 Bi boe

CarmópolisGuaricema

RESERVES AND RECOVERABLE VOLUMESRapid growth in reserves from discoveries in deep waters 

4

23

Return rate (%)

Key Assumptions:

•Refinery with trains of 300 k bpd

•Refining scheme with HCC, Coking and HDT

•Refining costs in  line with the current refineries  that has the same scale

• Integrated Analysis

•Production for the domestic market

•Does not include tax benefits in the operation of the asset

Case  3 ‐ Capex US$  50.000/bpd

Case  1 – Capex US$ 30.000/bpd

Case  2 – Capex US$ 40.000/bpd

ProfitabilityNew refining projects have return rate above the cost of capital

Margin 

US$/bblExpected Scenario 

0

2

4

6

8

10

12

14

16

18

13 14 15 16 17 18 19 20 21 22 23

8

0,6

3,7

15,314,8

27,1

1,4

4,5

12,4

16,0

25,0

2,54,9

9,9

12,8

22,3201020001980

90

95

100

105

110

115

120

125

130

2002 2003 2004 2005 2006 2007 2008 2009 2010

OEDCWorldBrazilUS

Source: BP Statistical Review 2011

OECD

Total Oil Consumption Per capita consumptionPer capita consumptionBarrels per year(Index =100 in 2002)

HIGH GROWTH POTENTIALLow per capita consumption supports demand growth in developing countries

8

Distance

Crude freightProduct freight

• Lead-Times• Tanks• Inventories• Ships

Market Location

Growth

40

21%

4%7%

10%

Light

36%

6%

9%

21%

Medium Distillated

43%

5%

38%

Others

Fuel Oil

Special

Naphtha

LPG

Gasoline

Jet Fuel

Diesel

Intermediary

4%

15%

19%

4%

11%

15%

65%

15%

50%

Productivity of existing refineries – 2020

LightMedium Distillated Others

Productivity of new refineries – 2020

• Increase in global demand for medium‐distillated products tends to lead to an increase in price versus the gasoline price.

PRODUCTSNew refineries will produce higher value‐added oil products

Margins and Refining Profile

MONETIZING THE RESERVESBrazilian market is an attractive and sustainable way to monetize part of Petrobras reserves

Sustainable Competitive Advantage

Return and Risks

5

Growth Potential

6

Trucks Maritime and OthersTrains

81%

46%

43%

43%

37%

25%

25%

13%

17%

11%

11%8%

50%

32%

Brazil

China

USA

53% 4%

43%

Australia

Canada

Russia

58%

TRANSPORT MATRIX (Cargo)The Brazilian transportation matrix strongly depends on trucks

4.000

5.000

6.000

7.000

8.000

9.000

10.000

jan 10jan 09jan 08jan 07

+12%a.a.

jan 12jan 11

Number of passengers carried ‐ Air Transportation in Brazil (thousand)

JET FUEL MARKET

MIDDLE DISTILLATE DEMAND EVOLUTIONExpectations of strong middle distillate growth

90

100

110

120

130140

150

160

170

180

+52%

1Q10

1Q09

1Q08

1Q07

1Q06

1Q05

1Q04

1Q03

1Q02

1Q01

1Q00

Agriculture GDPGDP

GDP and AGRICULTURE GDP IN BRAZIL 

‐4‐20

2468

1012

09080706050403020100 11*10

Historical GDP

Historical Demand

GDP AND OIL DEMAND GROWTH IN BRAZIL (%)

Source: ANAC

Sources: Plano Nacional de Logística e Transportes 2010 (PNLT)

* 2011 GDP as of september; Demand growth in 2011 correspond to Petrobras sales growth.

7

+5%+9%

+9%

201120102009200820072006

+10% +11%+17%

201120102009200820072006

Jet Sales (2006 to 2011)

Diesel Sales (2006 to 2011)

MIDDLE DISTILLATE DEMAND EVOLUTIONStrong diesel and jet fuel consumption growth in Brazil have been observed following the economic growth…

8

0,6

3,7

15,314,8

27,1

1,4

4,5

12,4

16,0

25,0

2,54,9

9,9

12,8

22,3201020001980

90

95

100

105

110

115

120

125

130

2002 2003 2004 2005 2006 2007 2008 2009 2010

OEDCWorldBrazilUS

Source: BP Statistical Review 2011

OECD

Total Oil Consumption Per capita consumptionPer capita consumptionBarrels per year(Index =100 in 2002)

HIGH GROWTH POTENTIALLow per capita consumption supports demand growth in developing countries

9-20

-10

0

10

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

DOWNSTREAM EXPANSIONReduced dependence on imports of oil products

Notes: 1. Source: IEA – 2010 World Energy Statistics 2. Without considering Capacity Expansion 3. Source: EPE, considers LPG, Naphta, Gasoline, Diesel, Jet and Fuel Oil.

389

299

152

197

148118

201120102009200820072006

40

2422

2116

11

108

53

Brazil (2020)Indonesia

MexicoSpainJapanChina

GermanyFrance

Brazil (2010)USA

Net Imports as a percentage of total demand (%)’000 bpd

Increase in import levels will lead to higherlogistical costs...

... and to high levels of exposure to international supply

Brazilian net Imports as a percentage of total demand (%)

1

2

3

10

Demand 2001-2010 Demand 2010-2015

3,1%763

579

1,4% 1.384

1.224

4,9% 968

763

1.6753,9%

1.384

REGIONAL GROWTHIn the last decade the growth has been higher in the North, Northeast and Mid‐west regions of Brazil…

11

Market in 2015Market in 2010

REGIONAL GROWTH… increasing the need for new capacities in these regions

• Increase in demand in the Central‐West, Northeast, and North explains the concentration of investments in the Northeast;

• Tax incentives combined with environmental restrictions also contribute to the concentration in the region.

552

Deficit

-416

Demand

968

Capacity

1.652

Deficit

-23

Demand

1.675

Capacity

299

-464

763

82

1.466

1.384

DeficitDemandCapacity

SuperavitDemandCapacity

12

INTEGRATION AND BALANCEConstruction of new refineries intended to meet Brazilian demand

• No new refineries built since 1980

Abreu e LimaRefinery (RNE)230,000 bpd

(2013)

COMPERJ(1st phase)165,000 bpd

(2014)

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

... ... ... ...

13

CrudeProducts

2,8

2,8

7,7

4,1

4,9 5,4

Processing in Brazil implies:• Lower Lead-Times• Reduced Tankage needs• Lower Inventories• Reduced need for ships

Freight cost ($/bbl)

LOGISTICSDistance from the Brazilian coast to refining centers is at least 5.000 miles, or 16 to 33 days of travel

1Petrobras estimates in october/2011

1

14

Refining Profile, Margins and Return

15

REFINING MARGINSMargins can have large amplitude according to the type of processed oil and product yields

-5

0

5

10

15

20

25

30

201020092008200720062005200420032002

USG Maya CokingUSG LLS Cracking

NWE Brent CrackingNWE Brent ToppingPBR Downstream Margin

$/bbl (US$ of 2010)

Source: Margens internacionais - PIRA

19

11

6+6

-8

USG Maya

Coking

PBR Downstream

Margin

USG LLS Cracking

16

PETROBRAS X MAYA COKINGComparison shows that crude cost and yields explain the deviation of our margins to Maya Coking

US$/bbl 2010 

Petrobras vs. Maya Coking (average 2002-2010)

3

5

11

19

Petrobras MarginYield effectRaw material cost effect

Maya CokingMargin

17

65%

31% 26%

27%

10%

0

10

20

30

40

50

60

70

RNE

65%

Existing Refineries

(2010)

37%

PREMIUM

64%

38%

COMPERJ

68%

36%

HCCFCCCoker

CONVERSIONNew refineries will have higher conversion than existing ones with lower crude cost

Average Cost of Oil (2020)

-5,8

-2,3

PREMIUMExistent Refineries

Brent

(US$/bbl)

Convertion Capacity/ Destilation Capacity

1 Considering a Brent of 75 $/bbl

1

18

21%

4%7%

10%

Light

36%

6%

9%

21%

Medium Distillated

43%

5%

38%

Others

Fuel Oil

Special

Naphtha

LPG

Gasoline

Jet Fuel

Diesel

Intermediary

4%

15%

19%

4%

11%

15%

65%

15%

50%

Productivity of existing refineries – 2020

LightMedium Distillated Others

Productivity of new refineries – 2020

• Increase in global demand for medium‐distillated products tends to lead to an increase in price versus the gasoline price.

PRODUCTSNew refineries will produce higher value‐added oil products

19

DISTILLATE PRICESIn recent years, we were close to import parity

Ave

rage

2002

-201

1

Jet FuelDiesel

6,0

PBR

91,7

US

91,8

USGC

85,7

8,2

PBR

97,7

US

91,0

USGC

89,5

US$/bbl (actual value)

Distillates had a prize in the last years of 8 US$/bbl in relation to the U.S. Gulf prices, close to freight + internalization costs

… and these are the products that the new refineries will focus

20

• Design competition based on the lowest final cost

• Selection of UOP ‐ international company with extensive refining experience

• Single design integrating all the refinery on‐site and off‐site

• Designer involved from conceptual design to technical assistance in the start up

• Scale economies (RPRE: 300kbpd modules)

• Maximum standardization of equipments specification

• Scheduling the construction stage allowing long‐term planning for equipment suppliers

• Reuse of the executive project allowing the incorporation of lessons learned

6,8

5,6

2,8

20

30

40

50

60

70

0 100 200 300 400

Age (years)

Scale (’000 bpd)

RESOURCE OPTIMIZATION AT PREMIUM REFINERIES 

Current downstream cost(US$ / bbl in 2011)

Lower refining costs due to design quality and scale

Economies of scale and new implementationstrategies to reduce Capex, including:

21

PREMIUM REFINERIES PROJECTIn line with industry standards and more optimized than RNEST

Distillation Tower

Diesel Hidrotreater

Coker Unit

Metric: Reactor Weight (Kg)REPRE result: 38% lower than average

Metric: Atmosferic Column Weight (MT/Kbpd)REPRE result: 19% lower than average

Metric: Vacum Column Weight (MT/Kbpd)REPRE result: 28% lower than average

Metric: Coke Drum Weight kgs/KbpdREPRE result: 5% lower than average

Metric: Coke Furnace MM BTU HR/KbpdREPRE result: 18% lower than average

Metric: Wet Gas Compressor Motor HP/KbpdREPRE result: 28% lower than average

Benchmark results using a process plants database

Cable-rack (above grade)

Underground structure

Electric System Interconnection

Pipe-rack83 bridges (20 of

96m and 63 of18m on average)

Pipelines

9.140 k bbl (30,5 bbl/ bpd)

9.280 k bbl (40,4 bbl/ bpd)

Crude and Products Tanks

4 coke drums 2 furnaces

6 coke drums 3 furnacesCoker

1 reactor 1 fired heater6 reactors

2 fired heatersMiddle Distillate Hydrotreatment

RPRE 300 kbpd

RNEST 230 kbpd

Scope Optimized

Benchmark results comparing with RNEST project

More detailed analysis will be possible with the conclusion of the Basic Design (in the coming weeks) and conclusion of the FEED - Front End Engineering Detail (in the 1st Half of 2012)

22

Return rate (%)

Key Assumptions:

• Refinery with trains of 300 k bpd

• Refining scheme with HCC, Coking and HDT

•Refining costs in line with the current refineries  that has the same scale

• Integrated Analysis

• Production for the domestic market

• Does not include tax benefits in the operation of the asset

Case 3 ‐ Capex US$ 50.000/bpd

Case 1 – Capex US$ 30.000/bpd

Case 2 – Capex US$ 40.000/bpd

PROFITABILITYNew refining projects have return rate above the cost of capital

Margin 

US$/bblExpected Scenario 

0

2

4

6

8

10

12

14

16

18

13 14 15 16 17 18 19 20 21 22 23

23

COMPERJCOMPERJ

NEW REFINERIESRNEST and Comperj are under construction and Premium I is doing the underground work 

REPRE IREPRE I

RNESTRNEST

24

40%28%

06-10

14%

01-0596-0091-9586-9081-8576-8071-75

29%

44%

23%

20%

32%

06-10

7%

14%

01-0596-0091-9586-9081-8576-8071-75

30%

3%

Fuel OilDiesel*

JetGasoline

NaphtaLPG

19%

29%

06-10

8%

01-0596-0091-9586-9081-8576-8071-75

3%

Demand profile changes over time Refining Naphta X Gasoline yields over time

Source: EPE and MME *does not include biodiesel

HISTORY OF PRODUCT MIX ADJUSTMENTSThese new refineries will allow Petrobras keep its’ history of adjusting its’ products mix to the market needs

Refining Diesel X Fuel Oil yields over time

5 years periods

25

CONTINUED FOCUS ON MIDDLE DISTILLATES PRODUCTIONIn spite of the recent moves in the otto cycle market in Brazil

6 7 8 914

1819

1914

17

-6%

+13%

12/13*

26

9

11/12*

23

9

10/11

27

8

09/10

26

7

08/09

28

9

07/08

23

8

06/07

18

8

05/06

16

8

04/05

15

8

03/04

15

9

Source: 1 Datagro and Única. Petrobras estimates.

Domestic Ethanol Production (MM m3)Percieved Trend

Actual FiguresAnidrousHydrated

Lower production:• Climate conditions• Low investments• High sugar prices

Leading to:• Higher ethanol prices• Higher gasoline demandin the short term• Gasoline imports

R$/l

2.5

3.0

2.0

1.5

1.0

0.5

0.01110090807060504

Maximum ethanol price (parity to gasoline)Minimum ethanol price (parity to sugar)

Ethanol Consumer Price

1

26

Supply

Capacity additions in Asia and Middle East to meet

regional demand

Distillate demand will push crude runs leading to

byproduct gasoline supply

RefinedGasoline

Oversupply

Demand

Ambitious goals to improve fuel efficiency in

passenger cars

Economic growth

Weak Refined Gasoline

Demand GrowthDieselization and alternative fuels (electric vehicles, natural gas, …)

Penetration of alternative forms of supply (NGL, biofuels, CTL, GTL...)

Leading to gasoline surplus, especially in the Atlantic Basin, driving weak gasoline crack spreads.

INTERNATIONAL CONTEXT FOR GASOLINE DEMANDIncrease in gasoline surplus will make the product available at low prices 

Gasoline demand growth in non-OECD and decrease in OECD

27

GASOLINE PRODUCTIONPetrobras position in this segment will be driven towards seeking higher refining flexibility in the existing assets

+12%

20112010

351

395

+25%

2011

442

2010

355

GASOLINE PRODUCTIONGASOLINE SALES

In the long run, highervolatility in gasolineconsumption is expected, requiring flexible refiningoperations

We will keep focusing our investments in Diesel and Jet, while seeking flexibilities in the current assets for gasoline, like:• Shifts in cut points• FCC operation optimization• Different catalysts ...

Recent Flexibility Results (kbpd)

0

10.000

20.000

30.000

40.000

50.000

60.000

20151005009590

Gasolina CHidratado

Flex-fuelDiesel

Light Vehicles Fleet Evolution

1 Natural gas Veihcles are cosidered in gasoline and flex-fuel fleet

1

28

Business Integration

29Refining Capacity

Oil Production

BUSINESS INTEGRATIONPetrobras will increase the importance in the industry through growing the oil production and expanding the Downstream

Note: For other companies, capacity in 2010.

0

1

2

3

4

5

6

0 1 2 3 4 5 6

1980

2010

2020

30

28%

51%

Supply

Pre‐SaltProjects

21%

Plangás

30%Others

70%

Oil

US$ 3,5 billionUS$ 4,4 billion

Capex for Fleet Expansion Capex for Logistics for  Oil

SUPPORTTING UPSTREAM OPERATIONSThis integrated performance can be verified in Capex of "downstream" dedicated to support upstream operations

31

Final Remarks

32

US$70.6 billion

• Refining Capacity Expansion: Abreu e Lima Refinery, Premium I and II, and Comperj;

• Quality and Conversion: Modernization, conversion, and hydrodesulfurization;

• Operating improvement: maintenance and optimization, HSEE, and R&D;

• Fleet Expansion

• Logistics for Oil: oil supply for refineries and infrastructure for oil exports.

1.1%4.5%

26.4%

0.8%15.2%

Logistics for  Oil

International

Fleet Expansion

Quality and Conversion

Refining Capacity Expansion

Operating improvement

1.0%

23.9%

13.9%

4.9%

Petrochemical Investments amount to US$3.8 billion

DOWNSTREAM INVESTMENTSNew refineries, fuel quality and modernization sum up to 74% of RTM investments

33

Refineries Producing Diesel S-50 Comercialization Sites of Diesel S-50 Petrobras Stations with Diesel S-50Since March 2012Since December 2011

Available in more than 900 stations in Brazil

Refineries Producing Diesel S-50

Comercialization Sites of Diesel S-50

2012 2013

Road Diesel Evolution

DIESEL S‐50New treating units will fulfill growing quality requirements in Brazil

34

2011 2012 2013 2014 2015

1000 ppm Tranasition 50 ppm

RECAP Diesel and Gasoline

REFAP Gasoline

REGAP Gasoline

RLAM Gasoline

RPBC Gasoline

REPAR Gasoline

REPLAN Gasoline

REVAP Gasoline

2011 2012 2013 2014 2015 and beyond

Diesel S-1800

Diesel S-500

Diesel S-50

Diesel S-10

RECAP Diesel and Gasoline

RLAM Diesel

REFAP Diesel

REPLAN Diesel

REGAP Diesel

RPBC Diesel

REGAP Revamp HDT

Gasoline Quality Diesel Quality:

… reassuring Petrobras’ commitment with sustainability and sulfur emission reduction over time.

REDUC Gasoline

REDUC DieselREPAR

Diesel

QUALITY INVESTMENTSNew units in existing refineries are being built

Construction concludedBusiness Plan 11-15 schedule

Legend:

35

QUALITY INVESTMENTSSeveral units were concluded in 2011 and more units will be available in 2012

HDS GasolineHDT Nafta Ck

HDT DieselReform

REPAR

REDUC

REGAP

RLAM

REPLAN

REVAPRECAP

RPBC

2011 2012

US$ 16 Bi

1,01,0

3,2

4,9

5,9

7,0

4,5

2,3

1,1

0,20,1

15141312111098765

Quality investments (Business Plan 11-15)

36

Preserving our unique position in the Brazilian market as the best way to monetize our crude reserves

Shifting the refining system towards middle distillates production while increasing fuel quality standards

Reducing import levels through refining capacity expansion and domestic crude processing maximization

Optimizing capital allocation through new refining modules concept and implementation strategy

Creating efficient and reliable infrastructure to get the best value of crude oil export operations

Mitigate risks and use the flexibilities in  the existing refining  facilities to optimize the product portfolio

FINAL REMARKSAdding value in Refining, Transportation and Marketing (RTC) and Petrochemicals

3737

Information:

Investor Relations

+55 21 3224-1510

[email protected]

www.petrobras.com.br/ir