Petrobras Magazine - Special Business Edition (Rio Oil & Gas) by Petrobras

SPECIAL BUSINESS EDITION

Learn about the Business Plan 2010-2014 in detail Petrobras is counting on Brazilian industry and technology park

Pre-salt Production for Real Definitive systems start the production on a commercial scale in the Tupi accumulation

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Petrobras Magazine • Special Business Edition Published by Petrobras Texts: Cláudia Gisele Peres Martins, Eduardo Gutterres Villela, Estephani Zavarise, Larissa Asfora, Odília Raquel Raulino de Almeida, Telmo Wambier e Vinícius Bastiani Translation and Revision: John Waggoner and Pamela Mills Graphic Design: Flávia da Matta Design Cover Photo: Roberto Rosa / Petrobras Image Bank Pre-print and Printers: Ipsis Gráfica e Editora Petrobras Magazine is not sold. To request subscriptions, photographs, additional information, please contact us: Address: Petrobras – Av. Chile, 65 – suite 1001 Rio de Janeiro – RJ CEP: 20031-912 – Brasil E-mail: petromag@petrobras.com.br – web: http://www.petrobras.com © Copyright 03/09/2010

Japan

Tokyo Ginko Bldg. 5th floor, rooms 505/506 - Marunouchi 1-3-1, Chiyoda-ku, Tokyo 100-0005 - Japan Tel: (813) 5218-1200 / fax: (813) 5218-1212 / e-mail: kawakami@petrobras.com.br General Manager: Osvaldo Kawakami

Libya

Al Fateh Tower, 2 - rooms 156 and 157 - Tripoli - Libya Tel: (218 91) 215-0634 / e-mail: irangarcia@petrobras.com.br General Manager: Iran Garcia da Costa

Mexico

Avenida Paseo de la Reforma, 115 - piso 11 - oficina 1101 - Colonia Lomas de Chapultepec 11000 - México, D.F. Tel: + 52 (55) 30 67 91 00 / fax: + 52 (55) 30 67 91 02 / e-mail: miltoncfi@petrobras.com Gerente General: Milton Costa Filho

Netherlands

Weenapoint, toren A - Weena 722, 3e verdieping - 3014DA - Rotterdam - The Netherlands Tel: (31 010) 206-7000 / e-mail: samir.awad@petrobras.com.br CEO: Samir Passos Awad

Nigeria

Plot 98, Adeola Odeku Street - 5th Floor - Victoria Island, Lagos - Nigeria Tel: (+ 234 1) 462-1300 / fax: (+ 234 1) 461-8987 / e-mail: nmblanco@petrobras.com.br General Manager: Nelson Marçal Blanco

Paraguay

España e Brasilia - Edif. España - piso 3 - Casilla de Correos, 942 - Asunción - Paraguay Tel.: (595 21) 249-1405 / e-mail: jotavio@br-petrobras.com.br Gerente General: Jose Otavio Alves de Souza

PETROBRAS REGIONAL OFFICES

Angola

Rua Pedro Felix Machado, 51 - 2º andar - Caixa Postal 2665 - Luanda - Angola Tel: (244 2) 39 0330 / fax: (244 2) 39 0480 / e-mail: mmurilo@petrobras.com.br Gerente Geral: Manoel Murilo Silva

Argentina

Av. Maipú, nº 1 - 22º piso - C1084AB - Buenos Aires - Argentina Tel: (54 11) 4344-6072 / e-mail: cdacosta@petrobras.com.br CEO: Carlos Alberto da Costa

Bolivia

Avenida Grigota, esquina Los Troncos, casi 4to anillo, casilla 6886 Santa Cruz de la Sierra - Bolivia Tel: (591 3) 358 6030 / fax: (591 3) 358 6157 / e-mail: ccastejon@petrobras.com.br Gerente General: Claudio Castejon

Chile

Cerro Colorado nº 5240 piso 13 e 14 - Parque Arauco - Las Condes - Santiago – Chile Tel: 00562 3812130/31/32 / fax : 00562 3812133 / e-mail: vilson.reichemback@petrobras.com Gerente General: Vilson Reichemback da Silva

China

Level 12th floor, units 21-25 - China World Tower 1 / China World Trade Center - nº 1 JianGuoMenWai Avenue - Beijing 100004 - China Tel: (86 10) 650 598 37 / fax: (86 10) 650 59 850 / e-mail: mcastilho@petrobras.com.br General Manager: Marcelo Castilho da Silva

Colombia

Carrera 7, 71/21 - Edificio Bancafe, torre B, 17º piso - Santa Fe de Bogotá - Colombia Tel: (57 1) 313 5000 / fax: (57 1) 313 5070 / e-mail: ramosa@petrobras.com.co Gerente General: Abilio Paulo Pinheiro Ramos

Cuba

Piso Nro.2, Oficina 216, Avenida 3º, entre 76 e 78, Miramar, Municipio Playa Ciudad de La Havana – Cuba Tel: (53 7) 207 9754 / e-mail: jfigueira@petrobras.com Gerente General: João Carlos Figueira Araújo

Ecuador

Esquina de Av. Amazonas N39-123 y José Arízaga - Edificio Amazonas - Plaza, piso 5 Quito, Ecuador Tel: (593-2) 2985-300 / fax. (593-2) 2985-396 / e-mail: javier.gremes@petrobras.com Gerente: Javier Jorge Gremes Cordero

Peru

Amador Merino Reyna 285, piso 5, San Isidro - Lima - Perú Tel: (51 1) 222 4455 / fax: (51 1) 221 7921 / e-mail: pedro.grijalba@petrobras.com Gerente General: Pedro Grijalba

Singapore

200 Newton Road # 07-01, Newton 200, 307983 – Singapore Tel: (65) 6550 50 80 / fax: (65) 6734 9087 / e-mail: odilia@petrobras.com General Manager: Odilia Dauzacker

Tanzania

Plot 1403/1 A, Makaki Area, P.O. Box 31391, Off Chole Rd, Behind Old Canada Village Dar es Salaam - Tanzania Tel: (255 22) 216 5676 / e-mail: samuelmiranda@petrobras.com General Manager: Samuel Bastos de Miranda

Turkey

Karum Business Center, 427, Iran Caddesi, No. 21, Kat5 - Kavaklidere – 06680 - Ankara - Turkey Tel: (90 312) 457 6222 / fax: (90 312) 457 6271 / e-mail: hsilva@petrobras.com.br General Manager: Hércules Tadeu Ferreira da Silva

United Kingdom

4th floor, 20 North Audley Street - London W1K 6WL - UK Tel: (44 0 20) 7535 1100 / fax: (44 0 20) 7467 5800 / e-mail: messeder@petrobras.com.br General Manager: Marcelo Malta da Costa Messeder

Uruguay

Plaza Independência 831 - piso 10, CP11100 - Montevideo - Uruguay Tel: (598 2) 500-84-00 / e-mail: iranivarella@petrobras.com.br Gerente General: Irani Varella

USA - Houston

10350 Richmond Ave., Suite 1400 - Houston, TX 77042 - USA Tel: (1 713) 808-2000 / fax: (1 713) 808-2017 / e-mail: orlandomelo@petrobras.com.br General Manager: José Orlando Melo de Azevedo

USA - New York

570 Lexington, 43rd floor - New York, NY 10022-6837 - USA Tel: (1 212) 829 1517 / fax: (1 212) 832 5300 / e-mail: helms@petrobras.com.br General Manager: Theodore Helms

Venezuela

Av. Venezuela del Rosal - Edificio Torre Lamaletto - piso 8 – 1060 - Caracas - Venezuela Tel: (58 212) 957-7300 / e-mail: jfigueira@petrobras.com Gerente General: João Carlos Figueira Araújo

This is not an offer of shares. Any public offering of Petrobras shares will be made by means of a prospectus containing detailed information about Petrobras and the offering.

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Letter to Our Readers

Brazil: a Global Power in the Energy Sector The decade since year 2000 has been very good for Brazil in all areas, but especially for the energy industry. We reached self-sufficiency in oil production, we exported our experience with ethanol to the entire world, and we made the greatest oil discovery in the Western Hemisphere in decades when we found the pre-salt reserves. We know that, in our industry, there is no such thing as short term. These results are the fruit of efforts that began more than 50 years ago, with the creation of Petrobras, motivated by the belief that Brazil could indeed become a global power in the energy sector. In the coming years, Petrobras will take decisive steps in this direction. With the support of our partners and suppliers, we are currently building the foundations for presalt production, which will reach its peak ten years from now. We successfully concluded Phase Zero, which was the Extended Well Test (EWT) at Tupi, obtaining results that will be extremely useful for perfecting our definitive production systems. The challenge for us now is, by 2017, to reach production of one million barrels per day exclusively from the pre-salt area. Toward this goal, we are investing $33 billion between 2010 and 2014 in exploration, production development, infrastructure, and support to develop the new cluster. We have full confidence that Petrobras is prepared to lead this complex and challenging undertaking. It is not a question only of the extraction of oil and gas from below the sea floor at great depths. Our objective is to maximize the benefits of this historic discovery, generating, from these reserves, the greatest benefit possible for the

company and for Brazil. It is for this reason that we are expanding and modernizing our refining park, with an eye toward becoming exporters of oil products very soon and producing fuels with lower sulfur content. We are also preparing to expand our share of the global market for natural gas and electricity. And we are investing ever greater amounts of resources to ensure the safety of our operations. To make it possible to carry out more than 600 projects over the next five years, Petrobras has developed one of the most ambitious business plans in the entire industry, which calls for total investments $224 billion throughout all the companyâ&#x20AC;&#x2122;s areas. But the pre-salt legacy for Brazil and for Petrobras goes well beyond the productive cycle. The mobilization of the domestic industry, with the training of workers and the creation of jobs and income, and the development of the Brazilian industrial park are two premises which Petrobras will not give up. Of the total amount to be invested between 2010 and 2014, no less than $142.2 billion will be spent on the acquisition of goods and services from domestic suppliers. This policy will resonate through the industry with a surge in demand for labor, both at Petrobras itself and at the industries and Tthe supplier companies, generating close to 1.5 million new positions. If any â&#x20AC;&#x153;bottlenecksâ&#x20AC;? are discovered in the Brazilian energy industry, they will be identified and fixed. They represent opportunities for improvement, and not insurmountable obstacles, More than that, they make us feel certain that we are on the verge of turning a new page in the history of the company, of Brazil and of the energy industry.

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petrobras magazine – special business edition

Pre-Salt production gets underway

Roberto Rosa / Petrobras Image Bank

Petrobras will put into production the first definitive platform in Tupi accumulation by the end of 2010.

Transforming Brazil’s industry

Petrobras Image Bank

Petrobras turns to domestic suppliers for the development of the pre-salt pole.

Partnerships for growth Petrobras’ collaboration with supplier companies and academia for the development of the pre-salt cluster has spurred the development of one the world’s most advanced technological parks in the energy sector.

petrobras magazine 2010

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Operational safety Juarez Cavalcanti / Petrobras Image Bank

Integrating to develop

Contingency Management strengthens prevention efforts and ensures quick responses in the event of accidents.

Petrobras Image Bank

Bruno Veiga / Petrobras Image Bank

Petrobras is implementing a new work philosophy to integrate its operations.

On the way to the top Geraldo FalcĂŁo / Petrobras Image Bank

The Business Plan 2010-2014 prepares Petrobras to become one of the worldâ&#x20AC;&#x2122;s five largest oil majors.

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Pre-salt production gets underway Petrobras will put into production the first definitive platform in Tupi accumulation by the end of 2010.

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Roberto Rosa / Petrobras Image Bank

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BY DECEMBER OF THIS YEAR, PETROBRAS EXPECTS

to put into production its FPSO Cidade de Angra dos Reis, in the pre-salt layer of the Santos Basin. This unit is the first production platform of commercial scale scheduled for the Tupi region, and the start of its operations is a major step forward in the company’s plans to develop the massive accumulations discovered in recent years under the layer of salt. The FPSO Cidade de Angra dos Reis, chartered from the company Modec, will set anchor in 2,149 meters of water depth. It will immediately be connected to the well 9-RJS-660 and will begin producing between 15,000 to 20,000 barrels of oil per day (bpd). The new platform has the capacity to produce up to 100,000 bpd and to process up to 5 million cubic meters of gas per day. Once peak production is reached, it will be connected to six oil producing wells, a gas injector, a water injector, and finally, one capable of alternating between water and gas injection. Once the Cidade de Angra dos Reis arrives, the FPSO Cidade de São Vicente, which is conducting an Extended Well Test (EWT) at Tupi using the well 3-RJS-646, will be transferred to the Northeast Tupi region, where it will begin a new EWT. Just like the Cidade de São Vicente, the Cidade de Angra dos Reis will continue, until December, to collect technical data about the reservoir. From the designation of Tupi as a commercial area, currently expected to happen around the end of December, Cidade de Angra dos Reis will begin the Tupi Pilot Project phase, and will also be connected to the well 3-RJS-646. It will complement the objective of the EWT by providing valuable information about the reservoir and production, considered essential for the conception of the other pre-salt production units. This data will be fundamental for the other pre-salt areas, especially in regard to the

optimization of the number of wells for each project and to better define their geometry and type of required stimulation; for a performance evaluation of the different methods of recovery; to calibrate the oil flow tests in the subsea lines; to verify the performance of the subsea systems; and to maximize the operational efficiency of the gas processing plant on the platform. The Tupi Pilot will test the performance of the various methods of recovery planned for the pre-salt layer, especially Water Alternating Gas Injection (WAG). The gas processing plant will treat the oil to separate the natural gas, the CO2, and the water, which can all be reused to improve the recovery of oil from the reservoir, by means of reinjecting sea water after extracting the sulfate, as well as the possible re-injection of natural gas and CO2, or just CO2. The commercial gas flow will be carried by an 18-inch pipeline that will connect the Pilot’s FPSO to a pipeline end manifold (PLEM) to be installed close to the platform in Mexilhão, which is a field of non-associated gas located in the Santos Basin. At this point it will be transported to the coast, together with the gas from Mexilhão and other areas, through a 34-inch pipeline already installed, ending up at the Monteiro Lobato Gas Treatment Unit, currently being built by Petrobras in the city of Caraguatatuba, on the coast of São Paulo state. There it will be treated before being taken to the consumer market. The oil will be transported by relief vessels from the FPSO Cidade de Angra dos Reis. At present, six wells have already been drilled in the Tupi region. By 2017, Petrobras expects to put 11 production units into operation at the presalt cluster of the Santos Basin, including three production pilots in the accumulations at Tupi, Northeast Tupi, and Guará; and another eight in locations still to be defined, as foreseen in the development plans for the area.

The FPSO Cidade de Angra dos Reis has the capacity to produce up to 100,000 bpd and to process up to 5 million cubic meters of gás/day. 6

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Elizabeth Dalcin / Petrobras Image Bank

Construction of the Monteiro Lobato GĂĄs Treatment Unit

PLANSAL

The development of pre-salt production from the Santos Basin has quite different characteristics from those of projects which have been carried out in the Campos Basin in recent decades, not only because of the exploratory aspects, but also owing to the expectation of potentially high volumes of oil and gas spread out over an extensive area. The characteristics of the Santos Basin pre-salt cluster make integrated development not only viable, but highly advantageous. The exploratory blocks are located geographically close to one another, in an area of about 11,600 kmÂ˛ and were acquired simultaneously in leasing rounds promoted by the National Oil, Natural Gas, and Biofuels Agency (ANP) in 2000 and 2001. The exploratory risk in this area has shown itself to be much less than is generally found in the industry. Every single exploratory well drilled in the Santo Basin pre-salt cluster so far has resulted in a discovery. The combination of these factors will make it possible for Petrobras and its partners (BG, Partex, Shell, Petrogal-Galp, Repsol) to develop the discoveries by creating solutions to be deployed in several areas of the pre-salt pole. With this, the strategies for developing these technologies will be optimized, as will the contracting and utilization of physical and financial resources. It is with this in mind that

practically all the areas of Petrobras have worked together on the elaboration of the Master Plan for the Integrated Development of the Santos Basin Pre-Salt Cluster, better known as PLANSAL. The plan encompasses a set of strategies and projects which will be implemented in the next 20 years in order to develop the area. It is comprised of five project subprograms: Exploratory Evaluation; Production Development; Logistical and Flowline Infrastructure; Transportation and Use of Oil; and Transformation and Trading of Gas. These subprograms are supported by eight functional plans: Technological Development; Availability of Critical Resources; Availability of Skills; Quality, Health, Safety, and the Environment (QHSE); Operational Partnership Management; Regulatory Aspects; Investment Optimization; and finally, Integrated Planning. PLANSAL is not a static or definitive plan. It is revised every year, in a process of permanent inclusion of data about the geology of the area, the productivity of the reservoirs, subsea flow lines, and the performance of production facilities. This is the reason for the importance given to the Petrobras strategy of conducting extended well tests before defining the production systems. Acquiring the maximum amount of data possible will permit the company to constantly perfect its concepts for these projects, will reduce uncertainties, and will make the planning increasingly effective. 2 0 1 0 petrobras magazine

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DEVELOPMENT IN STAGES

The subprograms for Exploratory Evaluation and Production Development will be carried out in two stages, known as Phase 0 and Phase 1A . Phase 0, or the data acquisition stage, began in 2008 and should end in 2016. It seeks to define the limits of the discoveries with an eye toward improving the geological characterization of the areas, as called for in the Evaluation Plans established by the ANP. Besides new surveys and seismic reprocessing, up to 37 delineation wells will be drilled and up to 18 extended well tests (EWTs) will be performed. The Tupi Pilot will also be conducted in this stage. The information obtained in Phase 0 will be fundamental for the definition of Phase 1, or, in other words, the definitive development stage. This phase will be subdivided into 1A and 1B. Phase 1A, planned for sometime between 2013 and 2016, has the goal of reaching production above 1 million barrels of oil per day (bpd), in locations operated by Petrobras, to generate cash flow for the development of Phase 1B, which will take place as of 2017. During phase 1A, Petrobras will apply production concepts already mastered by Petrobras and

PHASE 0: THE AQUISITION OF DATA

FASE 1: DEFINITIVE DEVELOPMENT 1A

PERIOD: 2008-2016

PERIOD: 2013-2016

PERIOD: beginning in 2016

OBJECTIVE: To define the limits of the discoveries and the geological characterists of the areas.

OBJECTIVE: production above 1 million barrels per day (bpd) of oil in 2017

OBJECTIVE: to complete the development of the pre-salt cluster with the heavy use of new technologies

MARKS: Besides new surveys and seismic reprocessing, up to 37 delineation wells will be drilled and up to 18 extended well tests (EWTs) will be performed. The Tupi Pilot will be conducted in this stage.

adapted for the unique pre-salt conditions. This phase will function as a field laboratory for the development of new technologies. This is when the two anticipated production pilots will be installed at Guará and Northeast Tupi, both with capacity to produce up to 120,000 bpd, as well as eight other production units called “replicas” that will be done in series. The replicas, whose hulls will be built in Brazil at the Rio Grande shipyard, will each have the capacity to produce up to 150,000 bpd. The natural gas processing capacity will be about 5 million m³ per day. Each system will be connected to about 20 different wells, including producer and injector wells, as well as subsea installations to controll production and flow. Phase 1B seeks to complete the development of the pre-salt cluster with the heavy use of new technologies to be developed. Among these new technologies will be production units with dedicated drilling rigs, dry Christmas tree completion systems (with the tree on the surface); alternate water and gas and/or CO2 injection (WAG) into the reservoirs to provide enhanced recovery; and solutions for oil and gas

MARKS: The installation of anticipated production pilots at Guará and Northeast Tupi, each with capacity to produce up to 120,000 bpd, in addition to eight other production units

MARKS: Among these new technologies will be production units with dedicated drilling rigs, dry completion systems, and alternate water and gas and or CO2 injection into the reservoirs

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Roberto Rosa / Petrobras Image Bank

PrĂŠ-salt oil has good characteristics, such as low sulfer content

flow assurance. Production will be transported according to two subprograms: one for Logistical and Flowline Infrastructure; and another for the Transportation and Use of Oil, with the foreseen installation of two transport modalities: by ship and by pipeline. The transportation by ships will rely upon systems that permit the transfer from relief vessels using dynamic positioning to conventional vessels, which will then transport the cargo of oil to the final destination, either in the country or abroad. This option will be sufficient for the entire production volume foreseen in Phase 1A, and partially for 1B. The remainder could be transported by a system of pipelines that will complement the outflow capacity for Phase 1B. Due to its good characteristics, among which are the low sulfur content and the production of derivatives with a high aggregate value, Brazilian pre-salt oil could lead to a significant reduction in Brazilian imports of medium to light crude. The natural gas to be traded will be transported by those projects defined in the subprograms of Logistical and Flowline Infrastructure, and the Transformation and Trading of Gas. Initially, the gas will be transported via a subsea pipeline, which will connect Tupi to the gas pipeline network at Caraguatatuba. Later, it will be necessary to install a new transport route, which could be done either by means of a Floating Liquefied Natural Gas (FLNG) plant, or by a new gas pipeline to the CabiĂşnas Terminal, located in the Campos Basin. These alternatives are being evaluated to determine the best course of action for the future. Operational support will be handled by the subprogram for logistical infrastructure, whose basic strategy is the optimization of support costs. It will be necessary to build ports, airports, fiber optic rings, midway stations for the movement of fluids, and possibly an intermediate logistical support platform.

The objective of PLANSAL is to produce more than 1 million barrels per day in 2017

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Replica FPSOs will be built at the Rio Grande shipyard

PROGRAMS AND INITIATIVES

OXYGENATING THE INDUSTRY

Petrobras relies upon a number of initiatives and programs that will make feasible its desired goals in the years ahead. An example is the Program for Developing CO2 Technologies (PRO-CO2), which seeks to make it possible to capture, transport, and store carbon dioxide underground. Since both environmental preservation and operational safety are priorities for all the projects, this program is developing the initiatives to reach the goal of not releasing atmospheric emissions of the CO2 produced with pre-salt gas. A new model of operations called GIOp – Integrated Operations Management will be used in the Santos Basin, with the focus on remote, integrated monitoring of the operations, seeking excellence in safety and operational efficiency. The Technology Program for the Development of Pre-Salt Reservoirs (PROSAL) was created with the objective of maximizing the recovery of hydrocarbons from the area, identifying the most adequate well geometry for the reservoirs, and guaranteeing that the fluids produced flow without problems from the producing reservoirs to the production units.

With the implantation of the Santos Basin presalt cluster projects, there will be a significant increase in demand for goods and services in Brazil. This will serve to generate great opportunities for the growth of domestic industries, whether it is through expansion of the existing industrial park or by creation of new players in the service and manufacturing sector. One of the PLANSAL strategies that will make possible a policy of domestic content is the construction in series of production units: the so-called “FPSO Factory”. This is an initiative without precedent in the oil and gas industry, which will permit swifter delivery of the units, and thereby will make it possible to anticipate the production curve and the economic return from the investments in the pre-salt cluster. One of the challenges of the pre-salt layer in this area is the number of wells that will be drilled. Considering that on average each production unit in Phases 0 and 1A could have up to 20 wells connected to it, there will be somewhere in the range of 200 wells to be drilled in the coming years. With this in mind, and in light of the overall demand generated by Petrobras’ exploratory efforts and by the development of the production of Petrobras’ extensive portfolio of opportunities, the company has contracted a number of rigs to operate in ultradeep water. Currently it is in the process of contracting the acquisition of up to 28 more units, all to be built in Brazil, in line with the strategy to have all the equipment available within the stipulated timeframe. Both the “FPSO Factory” concept and the acquisition of rigs are part of a set of strategies that will make it possible to raise the index of local content, generating scale to promote the expansion of the Brazilian industry in terms of global competition. The demand for goods and services for the presalt projects will sustain the creation of thousands of new jobs, will improve the qualification of the existing labor force, and will increase income in a wide range of sectors throughout Brazil. In this context, it is becoming increasingly clear that the Oil and Gas Mobilization Program (PROMINP) is making a major contribution toward maximizing the participation of local industry along competitive and sustainable lines. Petrobras has also created the Pre-Salt Skills Development Program (PRODESAL), with the

José Luis Rodrigues da Cunha / Petrobras Image Bank

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The acquisition of drilling rigs will make it possible to raise the levels of domestic content

Geraldo Falcão / Petrobras Image Bank

The demand for goods and services will sustain the creation of thousands of new jobs, the training of the labor force, and the increase of income in various sectors in Brazi goal of disseminating and perpetuating the knowledge of its workforce acquired by the accumulation of the technologies developed and innovative practices. THE EXPANSION OF THE SANTOS BASIN

With the pre-salt cluster, the Petrobras activities near the Santos Basin will be accelerated in the coming years. In order to support the growth of the company’s activities in the region, in 2008, it purchased a 25,000m² area in the historical neighborhood of Valongo, in the city of Santos. On this piece of land, the company plans to build three high-rises which will coordinate the operations in the basin. The installations of the future headquarters of the Santos Basin Operations Unit will have the capacity to accommodate about 6,000 people. With this project, together with others being carried out in the region, the neighborhood will go through a profound process of revitalization. It will be the first building in the city with green

certification, as it foresees in its project the intelligent use of natural resources. This undertaking illustrates a success story that began during the early part of the 2000s, when Petrobras decided to expand its exploratory activities beyond the central nucleus of the Campos Basin, intensifying surveys to the north and south of the area, and advancing through the Santos and Espírito Santo basins. For logistical support, there are already four air support areas for the Santos Basin operations: in Jacarepaguá and Cabo Frio, in Rio de Janeiro; in Itanhaém, in São Paulo; and in Navegantes, in Santa Catarina. For sea support, three other areas are used: the port of Rio de Janeiro and the port of Imbetiba/Macaé, in Rio de Janeiro state, and the port of Itajaí, in Santa Catarina. Besides these facilities, two logistical bases with port and airport infrastructure are being considered for installation in Itaguaí, in Rio de Janeiro, and in part of the Santos air base, in Guarujá, in São Paulo. 2 0 1 0 petrobras magazine

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Transforming Brazilâ&#x20AC;&#x2122;s Industry Petrobras turns to domestic suppliers for the development of the pre-salt pole.

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Petrobras Image Bank

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PETROBRAS

RELIES

HEAVILY

UPON

BRAZIL’S

consolidation as major hub for goods and engineering services with international standards of competitiveness. The proof of this is the global goal of attaining 67% Brazilian content in new company projects, stipulated in the Business Plan 2010-2014. Purchases from the domestic market are forecasted to reach the range of $142.2 billion over the next five years, representing a volume of annual contracts in the country worth nearly $28.4 billion per year. Investiments in Brazil (US$ Billions) Investments in Brazil

Placement on the National Market

Domestic Content (%)

E&P

108.2

57.8

53%

Supply

78.6

62.8

80%

Gas & Energy

17.6

14.4

82%

Distribution

2.3

100%

Biofuels

2.3

100%

3.3

2.6

80%

213.3

142.2

67%

Business Area

Corporate Total

+ US$ 46.4 BILLION FROM PARTNERS

The greatest sign of Petrobras’ faith in domestic suppliers is the fact that one of the most critical resources for pre-salt exploration, the contracting of drilling rigs for deep water, will focus predominately on the Brazilian market. Twenty six rigs are scheduled for construction in the country by 2014 (there will be 53 by 2020), with rising levels of domestic content. Two other programs also reflect the efforts that Petrobras is devoting toward stimulating the domestic industry: Transpetro’s Fleet Modernization and Expansion Program (PROMEF) and the Oil and Natural Gas Mobilization Program (PROMINP). PROMINP

The Oil and Natural Gas Mobilization Program (PROMINP), which seeks to strengthen the competitiveness of the domestic industry and to foster job growth, has also obtained significant results. The amount of domestic content in project execution rose from 57% in 2003 to 75% in 2009. The increase in local content represented additional orders placed on the domestic market worth $17.8 billion, generating some 755,000 new jobs during that time.

Font: Petrobras Business Plan 2010-2014 Prominp students

Petrobras Image Bank

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PROMINP trains new professionals for industry

Petrobras Image Bank

Through the National Professional Training Plan (PNQP), with an investment of R$ 260 million, PROMINP, by 2010, will train 78,000 professionals in 15 states, through coursework linked to the oil and gas sector. According to the executive coordinator of PROMINP, José Renato de Almeida, by 2013, the pre-salt investments will demand 207,000 professionals with specialized training, in large part due to the shipbuilding industry. The need for new professionals is based on the Petrobras Business Plan, which has seen its annual investment grow more than seven times since 2003, going from $5.8 billion to $42.4 billion in 2010. “This means that the industry will have an opportunity seven times larger with an equally large challenge. In order to be able to do this in Brazil, with local companies, a high level of competitiveness is fundamental to provide the services required for these projects,” says the PROMINP coordinator. PROMEF

PROMEF seeks, above all, to give local shipyards the ability to compete on a global marketplace. The program requires ships to be built in Brazil with a minimum of 70% domestic content.

“PROMEF is an exercise in industrial policy. Brazil currently represents the fourth largest portfolio of new vessels being built for the oil industry in the world, and the intent is to pursue the same goal of sustainability as Petrobras, so that the shipyards export vessels and acquire new clients,” says executive manager of PROMEF, Arnaldo Arcadier. The program was funded with an investment of $4.7 billion in its first two phases (PROMEF I and II), having created close to 200,000 direct and indirect jobs. PROMEF III, which should begin tendering contracts between 2012 and 2013, will take into consideration the demands of the pre-salt pole and the start-up of four new refineries in the Northeast (in the states of Pernambuco, Ceará, Maranhão, and Rio Grande do Norte), and the Rio de Janeiro Petrochemical Complex (COMPERJ). Part of the attempt to revive the tradition and quality of the Brazilian shipbuilding industry has already produced results. In August of 2010, during a seminar at the Navalshore event, a group of suppliers from the Japanese Marine Equipment Association (JSMEA) displayed their products and showed interest in participating in PROMEF. Some of these suppliers already have agreements with

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Transpetro, a Petrobras subsidiary, and intend to invest in Brazil because of the efforts to reactivate the local shipyards. By investing in programs such as PROMEF and PROMINP, Petrobras seeks to contribute to the revitalization of Brazil’s industrial base, which

has been stagnant since the 1990s. In this way, the effort to introduce domestic content into the company’s demands will contribute toward the consolidation of the shipbuilding industry in Brazil, which today has the largest program of offshore investments in the world.

PROMEF ORDERS:

Of the 49 vessels designated in the first two phases of PROMEF, 46 have already been tendered and contracted. The final three ships are in the final stages of tendering: • 10 Suezmax vessels – US$ 1.2 billion • 5 Aframax vessels – US$ 693 million • 4 Panamax vessels – US$ 468 million • 9 Product vessels – US$ 552.5 million • 4 Suezmax DP support vessels – US$ 746 million • 3 Aframax DP support vessels – US$ 477 million • 3 Bunker vessels – US$ 46 million Orders that have already been negotiated, awaiting contract signature: • 3 LPG tankers – US$ 536 million Orders in the final stage of tendering: • 3 Product cargo vessels Total already under contract: US$ 4.7 billion Brasfels Shipyard, in Angra dos Reis (RJ) Ari Versiani / Petrobras Image Bank

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Petrobras Image Bank

The South Atlantic Shipyard The South Atlantic Shipyard (EAS), created in November of 2005 in the Suape region of Pernambuco, is the largest shipyard in the Southern Hemisphere and has the largest PROMEF portfolio, with orders for 22 vessels. This undertaking, considered a milestone in the revitalization of the Brazilian shipbuilding industry, has led to nearly 60,000 new direct and indirect jobs. The EAS was built with an investment of R$ 1.4 billion, and has an installed capacity on the order of 160,000 tons of steel per year. The shipyard has as partners the Brazilian groups Camargo CorrĂŞa and Queiroz GalvĂŁo, and the company PJMR. Its international partner is the South Korean Samsung Heavy Industries (SHI).

foto 12174.jpg

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Petrobras Image Bank

Partnerships for growth Petrobrasâ&#x20AC;&#x2122; collaboration with supplier companies and academia for the development of the pre-salt cluster has spurred the development of one the worldâ&#x20AC;&#x2122;s most advanced technological parks in the energy sector. 18

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PETROBRAS’ WORK IN CONJUNCTION WITH THE

academic community and the company’s suppliers of goods and services has proven decisive for the development of technology needed for its activities. These partnerships, carefully nurtured over many years, are more dynamic today than ever before due to the immense challenges of the pre-salt pole, and they have led to a true revolution among Brazilian research facilities with the creation within the country’s borders of one of the most advanced technological parks anywhere in the world in the oil, natural gas, and energy segments. With the pre-salt pole, the scale and complexity of Petrobras’ technological challenges has grown continuously. As a result, traditional suppliers, including large multinationals, are knocking on the company’s doors to establish long term partnerships to supply goods and services, often requiring state-of-the-art technologies. To develop these technologies, Petrobras encourages these firms to build research centers in the country, close to its installations and to its university partners, therefore strengthening integration and the exchange of knowledge. These partnerships also result in the creation of new jobs and in the training of highly qualified Brazilian workers for the sector. This initiative has been particularly successful at the Federal University of Rio de Janeiro (UFRJ) Technology Park, located near the Petrobras Research Center (CENPES). The park has already been selected for the construction of new research centers by at least three important equipment suppliers and service companies in the oil and gas industry: FMC Technologies, Schlumberger, and Baker Hughes. These firms are leaders in the market for their activities and will invest millions of dollars in facilities and research activities, directed primarily toward offshore exploration and production. Among the projects planned is an integration test for the first subsea oil and water separation system (OWSS), the fruit of a technological cooperation agreement between Petrobras and FMC. The system is in the construction phase

outside Brazil and, once finalized, will be installed at a real-scale testing unit by FMC in the park. The UFRJ is also evaluating requests from other companies interested in installing their own facilities in the park, including an R&D center already confirmed by the Brazilian steel company Usiminas. And this is just the beginning: General Electric (GE), IBM, and Cameron are other companies which have already announced their intention to build research facilities in partnership with Brazilian universities, as well as to sign technological cooperation agreements with Petrobras. “Currently the UFRJ Technology Park is the only one that has signed agreements that have been disclosed with companies supplying goods and services to Petrobras, but other agreements will certainly be formed in the coming years,” says executive manager of CENPES, Carlos Tadeu da Costa Fraga. NETWORK COLLABORATION

Petrobras is presently the company that most invests in research and development in Brazil. From 2007 to 2009, the company spent $2.5 billion in pursuit of new technology solutions to the company’s challenges. These investments should reach $5.1 billion between 2010 and 2014. Petrobras’ investments in R&D between 2007 and 2009, by area 4%

3% 3%

Production Downstream

10% 47%

Exploration The Environment Biofuels Gas and Energy

12%

Others

21%

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Innovation as a differentiator has been one of Petrobrasâ&#x20AC;&#x2122; pillars to obtain results Besides developing its own technologies and providing incentives for its partners, Petrobras works in conjunction with universities and research institutions. From 2006 to 2009, the company invested close to $200 million per year in partnership with these institutions. These investments are encouraged by a clause found in the concession contracts for exploration and production granted to Petrobras by the National Agency of Oil, Gas, and Biofuels (ANP), which sets aside at least 1% of the gross revenue generated from high profitability fields, or those with large volumes of production, for investment in research and development. To make the most of these investments, in 2006, Petrobras created a research model called Thematic Networks. Each network encompasses several universities and research centers, which are integrated and operate together under the coordination of Petrobras, along themes defined by the company. There are currently 50 such networks, in which close to 100 different institutions exchange expertise, share infrastructure, and develop joint research activities. In the beginning, the largest volume of funds was dedicated to improving laboratory facilities, which acquired a standard equivalent to the best research laboratories known to Petrobras anywhere in the world. With the physical structures already completed, this initiative has constantly increased the funds used to carry out the research projects and to train the researchers. Some of the results of this strategy are already visible in practice. One example is the research developed in the Corrosion and Nondestructive Testing Laboratory at the UFRJ, which is part of the Materials and Corrosion Control Technology Network. This research has contributed to studies which identify the materials best suited for the equipment which will be used in the presalt fields. By means of the Thematic Networks strategy, the area of the laboratory facilities at Brazilian universities is already about four times larger than the existing area at CENPES. Also, because

of the partnerships with these institutions, for every researcher at CENPES, there are close to nine researchers working on projects of interest to Petrobras at Brazilian institutions of higher learning.

A technician working in the Corrosion and Non-Destructive Testing Laboratory (LNDC)

Leonardo Borba / Petrobras Image Bank

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The Petrobras Research Center is also being readied for the challenges of the coming years. The physical space is being doubled, with an architectural project that is considered a reference in eco-efficiency and offers collaborative spaces that encourage innovation. Besides its Rio de

Janeiro facilities, CENPES has five experimental clusters located at the company’s operational sites to conduct tests on a semi-industrial scale, which make possible a greater integration of research and industrial activities (see figure below).

Petrobras’ R&D centers and their research focuses

BIOLUBRICANTS Fortaleza (CE) BIOFUELS Guamaré (RN) GUARANTEE OF FLOW AND PROCESSING Aracaju (SE) WELL TECHNOLOGY Taquipe (BA)

CENPES Rio de Janeiro (RJ)

REFINING São Mateus do Sul (PR)

International recognition Ever since its initial success in exploration and production in the deep waters of the Campos Basin, Petrobras has accrued international recognition for its technology development. The current technology strategy, with the increase in investments in C&T institutions and the growing technological cooperation with partners, has made this recognition even greater. Not by chance, the company was considered the fifth most admired operator in the oil industry, and was ranked first for innovation, according to the ranking by Fortune magazine in March of this year. This recognition is based on the opinions of high ranking executives from all around the world and of financial analysts called on to establish the ranking, published every year. Meanwhile, in April, the magazine Bloomberg Businessweek, in partnership with the Boston Consulting Group, designated Petrobras as the 41st most innovative companies in its “The World’s 50 Most Innovative Companies” ranking. This made Petrobras the only company in the Southern Hemisphere, as well as the only oil and gas company, to enter this list, based upon a survey of high executives and the financial results.

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Petrobras Image Bank

The Technological Park at the Federal University of Rio de Janeiro (UFRJ)

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Operational safety

Juarez Cavalcanti / Petrobras Image Bank

Contingency Management strengthens prevention efforts and ensures quick responses in the event of accidents.

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PETROBRAS IS DEDICATED TO SECURING THE

safety of its operations on sea and land through an integrated approach that seeks synergies between its units in operation and work sites, in collaboration with government agencies, suppliers, other energy firms, and the communities close to its facilities. The company is also participating in the elaboration of Brazil’s National Contingency Plan, which will be instituted later this year by presidential order. Internally, every Petrobras business unit, whether it is a refinery, a cargo terminal, or a network of offshore facilities and assets in the Campos Basin, for example, has an Emergency Response Plan. This plan defines the course of action in the case of any possible incident or accident, and stipulates the required resources and the respective quantity that each unit should have for local action. On a broader scope, Petrobras has its Regional Contingency Plan, which divides Brazil into six separate regions – the Amazon area; Pernambuco and Maranhão; Bahia, Sergipe, and Alagoas; Rio de Janeiro, Espírito Santo, and Minas Gerais; São Paulo and the Center West; Paraná, Santa Catarina, and Rio Grande do Sul – and calls for the sharing of resources among these units. To support the actions of this plan, there are ten Environmental Defense Centers (EDCs) located throughout Brazil, which contain trained personnel on alert 24 hours per day, ready to mobilize in case of an oil spill. The EDC for São Paulo, because of its location near the Guarulhos International Airport, the largest in Brazil, also provides support for Petrobras units located outside the country. The EDCs’ Forward Bases, often located in remote and inhospitable areas of the country, reinforce Petrobras’ safety strategy. In the event that regional resources are not enough, Petrobras relies upon its Corporate Contingency Plan, which has mapped out the entire network of relationships with other energy companies, equipment manufacturers, a roster of volunteers trained to act in case of emergencies, and government and non-government agencies. “The goal is to mobilize each member of this network in a swift and efficient manner. Contracts or national and international agreements provide added strength to the plan and make it possible, for example, to mobilize companies such as Clean Caribbean & Americas (CCA) in case of occurrences in the United States and in Latin

America, and Oil Spill Response (OSR) in the case of Africa and the Middle East,” says sector manager for Petrobras Contingencies, Marcio José de Macedo Dertoni. At the EDCs alone, where close to 300 technicians are employed, Petrobras has more than 200 km of contention barriers, 100 km of absorbent barriers, 85 km of absorbent covers, 200,000 liters of dispersant, 40,000 kg of biological remediators, 350 inflatable tanks, and 222 portable oil collection devices, as well as 130 support vessels and 30 large vessels, among other resources. CAPACITY TO RESPOND

Petrobras put into action in 2006 its Strategic Project for Excellence in HSE, which has an interface with the three plans. The guidelines of the project are integrated HSE management; ecoefficiency in products and operations; prevention of accidents, incidents, and irregularities; employee health; readiness to respond to emergency situations and minimization of risks to assets. In this project, a series of actions have been foreseen to strengthen the company’s capacity to respond to oil spills of any size. The first such action was the adoption of the Incident Command System (ICS), a system developed in the U.S. for managing incidents that seeks to respond in an integrated and sustainable way, without impediments of political or customs jurisdiction, for any kind of accident. The system standardizes terminology, communication and procedures, integrating planning, logistics, operations, finances, safety, and information. The sharing of material and human resources among different agencies and companies should be internally incorporated by each member of a pair and be done quickly. After all, in case of a major accident, it is highly unlikely that any company would have all the resources needed at hand, in the quantities necessary, and at the precise location of the occurrence, without having to move them from another location. The system deals with the internalization of resources on an exceptional basis so that, if needed, no delays will be encountered in getting imported equipment through customs or in obtaining visas for specialists brought in from other countries to help with the contingency response. The amount of resources at all the Petrobras EDCs has been redimensioned, keeping in mind the company’s international presence,

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The training of accident containment in Amazonia

the planned creation of new units, and the possible incorporation of others. For this reason, new equipment will be acquired. As technical consultant for the Petrobras Health, Safety and the Environment area, Marcus Vinícius Lisboa Brandão, points out, “today, Petrobras alone has more material and human resources available than all the other international companies which operate in response to oil spills, with the exception of MSRC, because it works in association with 50 smaller companies.” The capacity of Petrobras to respond to accidents and the coordinated mobilization of all the agencies involved to act as a network, which are already periodically evaluated, have also started to undergo tests in simulated exercises, to better ensure rapid and efficient responses in real contingencies. New technologies are being sought to create better models for oil spills, in other words, to define their source, trajectory, and ultimate destination with greater precision, helping to improve response. The constant exchange of information with other energy companies throughout the world has contributed to the updating of all the companies. Petrobras’ commitment to innovation and cutting-edge technology for accident prevention is constant,

maintained through the Petrobras research and development center (CENPES)and through its partnerships with universities and R&D institutions all around the world. Finally, Petrobras works in close conjunction with the Brazilian government so that, in the event of an emergency, the company already has the authorization for exceptional measures that must be taken quickly, so that the resulting impact is as small as possible. All these initiatives are in line with the National Contingency Plan, which is currently being finalized in Brazil. Petrobras participates in discussions about the plan through the Brazilian Petroleum Institute. Petrobras also participates in the discussions to create the National Plan for Prevention, Preparation, and Rapid Response to Environmental Emergencies with Hazardous Materials, which, among other measures, seeks to better regulate the use of oil dispersants in situ. This alternative is often discarded in Brazil due to the lack of clear regulations about their use. As is evident from these actions, Petrobras is ready to act in the event of incidents and large scale accidents, and it is well-informed about the vanguard of technology in the world so that it can acquire and/or develop what is technologically best. The company is also able to operate in a Bruno Veiga / Petrobras Image Bank

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Thelma Vidales / Petrobras Image Bank

The Ilha d’Água Terminal (RJ)

Petrobras is participating in the elaboration of Brazil’s National Contingency Plan, to be instituted later this year network with governmental agencies, suppliers of goods and services, and other energy companies around the world through partnerships and international agreements. This level of preparation enables safe oil and gas operations, in a business which is known to have inherent risks and where there can never be too much precaution. In addition, Petrobras makes use of an important strategy. “The company operates intensively to reduce risks; to control irregularities; to diminish the number of accidents; to develop faster, more efficient responses; and to operate in a network with synergy. It stands out in the global energy industry, principally in the areas of prevention and response capacity. It is for this reason that we count on effective management, which we have today and which we are constantly improving,” says Petrobras Contingency Manager in the HSE area, Jayme de Seta Filho.

Petrobras Image Bank

One of Petrobras’ ten Environmental Defense Centers

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AndrĂŠ Valentim / Petrobras Image Bank

Integrating to develop 28

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Petrobras is implementing a new work philosophy to integrate its operations. 2 0 1 0 petrobras magazine

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Petrobras Image Bank

Center for Decision-Making Support for the activity of well construction

WITH THE GROWTH OF PETROBRAS’ ACTIVITIES ALL

around the world, in addition to the increasing complexity of its operations in recent years, the company is now preparing for an even greater step forward in the way it works and manages its operations. It is a change which has been proposed to integrate a set of tools and management systems created, in large part, over the past ten years. To attain this goal, the company has begun to implement a new labor and management philosophy: Integrated Operations Management – known by its Portuguese acronym, GIOp. All the good practices and lessons learned on the company’s long road to becoming a world reference in deepwater oil exploration and production in recent decades contributed to enabling its exploration and production area to face the enormous challenges defined in the ambitious Strategic Plan 2020. The development of massive accumulations of hydrocarbons discovered in the pre-salt layer of the Santos Basin is a good example of the challenges and opportunities the company will face in the future. At the same time, the strategic plan calls for the total oil and gas production to surpass 5 million barrels of oil equivalent (boe) per day by 2020. These are bold objectives, which will require innovative forms of management and work. The basic concept of this new philosophy is the integration of operations, with a focus on personnel, processes, and technology, with 30

the goal of increasing operational safety and efficiency while reducing costs. With its emphasis on personnel, the company hopes to foster a more collaborative work environment, which eliminates interfaces and barriers. In relation to processes, the company believes it will be necessary to redefine and to simplify them. To the extent possible, it also seeks to integrate disciplines and to plan on shore, given that most of its activities are offshore, as well to give priority to preventative maintenance. In relation to technology, GIOp will favor increasingly intelligent and innovative solutions, with a preference for existing technologies. It foresees as well the adoption of technologies developed by its partners, both in the oil and gas industry and at the universities. To reach these objectives, the exploration and production area will rely upon the participation of important technological partners. Among these are the company’s own research center (CENPES) and domestic and foreign universities, such as the Norwegian University of Technology (NTNU). Besides these institutions, the company will benefit from the intellectual support of Cambridge Energy Research Associates (CERA), an independent consultancy based in the United States that performs project implementation analysis for large companies. The company’s operational units have already begun to implement this new work philosophy. One of the initial priorities in the implementation

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The Integrated Operations Management aims at increasing operational safety, efficiency, and cost reduction.

schedule was to meet the new challenges of developing the pre-salt pole in the Santos Basin. In the first collaborative effort, CERA has already evaluated as excellent the conceptual project of the GIOp pilot for the Santos Basin Operations Unit. The other operational units are also already working on the conceptual phase. PRINCIPAL AREAS TO BE AFFECTED

GIOp will promote the integration of information within the company’s oil exploration area, creating a collaborative environment which will include the activities of geology, geophysics, exploratory drilling, laboratories, project management, and HSE. The expected benefits of this new way of working will be the better following of the exploration processes, the rationalization of activities, and the reduction of operational costs and investments. Within the area of production, the objective is to integrate the oil production processes and the interfaces with the management in other areas, in order to increase operational safety and efficiency, with an eye toward increasing the recovery factor (volume of oil extracted from reservoirs) and reducing the overall cost of operations and investments. Another area that should benefit is well construction, with the goal of minimizing construction time. For this reason, among others, the Support and Decision Centers will be modernized, permitting remote monitoring, modeling, and the control of processes in real time for the drilling operations and well intervention. In the area of installation and subsea oil production system maintenance, there will be an emphasis on fine tuning the existing Integrated Control Center, as well as the programming and monitoring of subsea engineering operations, with an emphasis on activities using support vessels. These changes are proposed to optimize the ability to respond to demands of the company’s varied production assets.

Another goal is to make information available in real time about every step of the process of the supply and transport of materials to the several exploration and production areas. With this in place, the operational area of the company will be able to plan, control, and adjust the operational processes in order to prioritize its response to logistical demands. More than a simple work tool, GIOp is a cultural change that will extend transversally throughout the entire value chain in the company’s exploration and production activities, preparing it to meet the challenges of its vision to become one of the world’s five largest integrated energy companies. Bruno Veiga / Petrobras Image Bank

A 3-D seismic visualization room

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Bruno Veiga / Petrobras Image Bank

GIOp creates a collaborative, multidisciplinary environment

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Lessons learned GIOp should, over the next few years, integrate the tools and management systems already developed by the company over decades of oil exploration and production activity in Brazil. There are virtual reality rooms, centers which control the E&P operations, equipment which monitors platforms via remote, among other technologies. It will now be up to GIOp to coordinate all of these in a way to best attain an integrated view of the area’s entire production process. Among the tools and systems developed by the company in recent years, and which will now be integrated, are: • Monitoring and Process Control – The trajectory of Petrobras toward automation began in the 1980s, when the company introduced the first systems for Monitoring and Control of Process Variables. The lessons learned from this experience culminated in 1996 with the installation of the first automated platform, in the Ubarana field, in Rio Grande do Norte. In the Campos Basin, this process continued with the installation, in 1998, of an integrated subsea cable for electricity and telecommunications at the Northeast Pole, and a fiber optic ring with a perimeter of 490 km. This was the backbone for other network access points that currently link 83 of the company’s different production units. In 2000, the company built technology to allow secure access in real time to the integrated operational information on the platforms. From this was born Plant Information, which would later be disseminated by the company. • High Performance Data Processing – From that point forward, many other tools and management systems emerged. In 2001, the Rio Grande do Norte Operations Unit (UO-RNCE) received the company’s first 3D visualization room. With the goal of providing support to the oil reservoir modeling studies, other such rooms were inaugurated at the other E&P operating units. • Integrated field monitoring – With the increasing interrelationship among the various disciplines in the E&P processes, and the need to make decisions in an integrated way, starting in 2006, Petrobras began to install six pilot projects for Integrated Digital Management, the so-called GEDIG. This initiative made it possible to evaluate different technologies and to improve monitoring and control of day-today production operations, with an integrated understanding of the fields. The following year, the Operational Control Center (CCO) was installed at the Campos Basin Operations Unit (UO-BC), with the goal of facilitating the decisions for controlling production in the entire basin. By 2008, rooms began to be installed in the Campos Basin headquarters to allow remote control monitoring of the offshore operations, the so-called SCR. These rooms guarantee greater integration with the Integrated Digital Management Centers and the Platform Control Rooms, facilitating decision-making and the immediate involvement of specialists on shore. • Well Construction – In 2006, Decision Support Centers (CSD) were created to allow remote monitoring, modeling and process control in real time for drilling operations, and well intervention. This new approach increased the safety and efficiency of these operations, as well as reducing the time, risks, and costs involved in these activities. • Installation Integrity – Also in 2006, a pilot project for Maintenance Based on Condition began to be installed at the UO-BC, which consists of systematic monitoring, in real time, of the variables and parameters which indicate the performance of turbines, generators, compressors, and pumps. Two years later, an integrated center for monitoring these systems, called CIB-TBM, was installed. These projects seek to determine the need to intervene in critical equipment, permitting the realization of preventative actions and contributing to a longer service life.

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On the way to the top

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SPECIAL FEATURE – BUSINESS PLAN

Geraldo Falcão / Petrobras Bank Image

The Business Plan 2010-2014 prepares Petrobras to become one of the world’s five largest oil majors.

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SPECIAL FEATURE – BUSINESS PLAN

PETROBRAS’ TOTAL PRODUCTION OF OIL AND GAS,

including oilfields in Brazil and abroad, should increase from an average of 2.7 million barrels of oil equivalent (boe) per day this year, to 3.9 million in 2014, and to 5.3 million in 2020. These projections come from the company’s Strategic Plan 2020, which establishes a rate of growth of 9.4% per year for oil production between 2010 and 2014, and of 7.1% per year between 2010 and 2020. The company’s strategy is to reach 2020 as one of the five largest petroleum producers in the world. The company’s total investments in the next five years, including all its areas of business, will reach $224 billion, of which $212.3 billion (95%) will be spent in Brazil and $11.7 billion will be directed abroad. This level of investment will guarantee, among other applications, the completion of 686 projects. Of the total amount to be invested, $31.6 billion will correspond to greenfield projects. “No other large company has such a rapid growth program for the production of oil and gas,” announced the president of the company, José Sergio Gabrielli de Azevedo, upon presenting the Petrobras Business Plan for the next five years.

The exploration segment of the company will continue to draw the largest share of the planned expenditures. This amount is forecast at $118.8 billion from 2010 to 2014, encompassing the projects in Brazil as well as in the other countries where Petrobras conducts its business. This level of investment corresponds to 53% of the total amount set aside to be invested in the entire company. Investments outside Brazil in the coming years will amount to 5% of the total planned by the company. These investments will be directed, basically, toward projects involved in the development of production in the Gulf of Mexico, along the west coast of Africa, and in the other countries of Latin America where Petrobras does business. The exploration activities outside Brazil will focus on the Atlantic Ocean. The company does not foresee expansion within the refining segment in the other countries where it operates. As a result of the rapid growth planned for production, investments in the refining, transportation, and sales segment, linked to the Supply area, will represent the proportionately highest increase, in percentage terms, compared to the previous Business Plan. This amount will reach $73.6 billion over the period, or 69.5%

Petrobras’ strategy is to become one of the world’s largest oil majors by 2020 Ehder de Souza / Petrobras Image Bank

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SPECIAL FEATURE â&#x20AC;&#x201C; BUSINESS PLAN

higher than the nominal value of the Business Plan for 2009-2013, disclosed in January last year, which set aside some $43.4 billion. The company now expects to reach 2014 with a refining capacity of 2.26 million barrels per day (bpd), and 2.79 million bpd by 2020. The gas and electricity segment is another area which received a significant boost in planned investments, compared to the previous Business Plan. While for 2009-2013, $11.8 billion was planned for the segment, the Business Plan for 2010-2014 foresees a volume of investment of $17.8 billion, representing a 50.8% increase. BETTING ON BRAZILIAN INDUSTRY

When the company was defining its new business plan, one important strategic decision was to prioritize local industry in the planning of its future projects. Of the total amount to be invested between 2010 and 2014, no less than $142.2 billion will be set aside for contracting goods and services on the domestic market. This amount is 40% higher than the estimate in the Business Plan for 2009-2013, which destined $100.9 billion to be invested in Brazilian service industries and companies. This strategy will have an enormous repercussion throughout the Brazilian industrial segment. The company expects to spend, on average, $28.4 billion per year on the domestic market, which will provide a positive impact not only on production but also on the creation of new jobs in the country. On average, the planned projects will rely upon local suppliers for more than two thirds, or about 67%, of the total content of goods and services. This investment policy will have a direct repercussion on the demand for qualified labor, not only at Petrobras itself but also in industries and at companies supplying goods and services. The new business plan calculates that between 2010 and 2014, these investments will generate 1.456 million new jobs, of which 380,000 will be contracted directly by the company, 542,000 will be hired at service companies, and 534,000 will come from the generation of wealth and increased spending by the newly employed workers. INVESTMENTS IN E&P

Of the $108.2 billion set aside for exploration and production in Brazil, $77.9 billion will be invested in production development. The post-

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SPECIAL FEATURE – BUSINESS PLAN Geraldo Falcão / Petrobras Image Bank

salt projects will receive $52.1 billion, while the pre-salt projects, which are in the initial stages of development, will receive $25.8 billion. For the exploration segment, $18 billion has been planned for investment, of which $13.7 billion is for the post- salt layer, and $4.3 billion is for pre-salt exploration. All of these numbers refer exclusively to the concession areas already granted. They do not take into consideration future areas which might be explored upon the approval of a production sharing proposal currently in the legislature. By 2013, the company expects to contract 26 drill ships and rigs, 465 support and special purpose vessels, and 53 production platforms, including semisubmersibles and FPSOs, as well as 81 other kinds of equipment. By 2015, these numbers will expand (noncumulatively) to 31 drill ships and rigs, 491 support vessels, 63 platforms, and 85 other kinds of equipment. Of the 5.3 million barrels of oil equivalent (boe) to be produced per day by 2020, about 4 million will be oil. Of this amount, 1 million will be produced from the pre-salt cluster. To do this, the company plans to conduct 21 projects in these areas over the next five years, with 15 extended well tests, four production pilots, one definitive project, and one anticipated production project.

INCREASED REFINING CAPACITY

In order to keep pace with the faster growth in oil production, the new plan also proposes to significantly increase the company’s refining capacity. “The ratio between production and refining, which today is 1.08 times, will shift to 1.32 times in 2014 and to 1.23 in 2020,” said Gabrielli upon announcing the new business plan. By doing this, the company will maintain the equilibrium between oil production and refining capacity. Part of the surplus will be exported. The main projects planned for the expansion of refining capacity include, for 2010, the conclusion of the Clara Camarão Refinery in Rio Grande do Norte, and the conclusion of the project to expand the Paulínia Refinery in São Paulo. For the period between 2010 and 2014, the Refinery of the Northeast should enter into operation, as well as the oil products refinery at the Rio de Janeiro Petrochemical Complex (COMPERJ). Also in 2014, the first phase of the Premium 1 refinery in Maranhão should go into production. Between 2014 and 2020, the plan foresees the conclusion of the second phase of the Premium I refinery, the start of operation for Premium II, which is being built in Ceará, and the entry into production of the COMPERJ petrochemical plant. With these projects, the company’s refining capacity will reach 2.26 million barrels per day (bpd) in 2014, and 3.19 million bpd in 2020.

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MORE GAS AND ENERGY

Of the $17.8 billion to be invested in the Gas and Energy area, $2.7 billion will be directed toward new regasification units for liquefied natural gas production; $4.1 billion will go toward the expansion of the electric power generation park; $5.7 billion will be for gas-chemical, fertilizer, and ammonia projects. The remaining $5.3 billion will be dedicated to expanding the pipeline network. By the end of 2014, Petrobras intends to have an installed electricity generation capacity of 7,892 MW, a growth of 9% compared to the current capacity of 7,227 MW.

The cycles of investment in the company’s project portfolio tend to decrease in infrastructure and increase in the gas-chemical segment. These are projects that will permit an increase in the aggregate value of the gas produced. The company projects the demand for natural gas to reach 130 million cubic meters in 2014. Of this total, 53 million cubic meters will be consumed for electricity generation, 41 million for industrial purposes, and 4 million as feedstock for fertilizers. The company’s fertilizer production should surpass 1 million tons per year in 2014, reaching 2 million tons/year in 2020.

Geraldo Falcão / Petrobras Image Bank

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ETHANOL AND BIOFUELS

The business plan also foresees growth of nearly 200% in ethanol production. By halfway through the next decade, the company intends to be producing about 2.6 billion liters of ethanol per year, with biodiesel production, in Brazil, of 5.5 billion liters per year. The company’s strategy for biofuels is to operate in an integrated manner within the Petrobras

System, looking for synergies, opening up new markets, and continuing to supply the current ones. Toward this goal, the company is preparing to increase ethanol exports, for example, going from 330 million liters exported last year to 1.63 billion liters in 2014. With this accomplished, the company will establish itself as the largest producer and exporter of ethanol in Brazil.

André Valentim / Petrobras Image Bank

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Japan

Libya

Al Fateh Tower, 2 - rooms 156 and 157 - Tripoli - Libya Tel: (218 91) 215-0634 / e-mail: irangarcia@petrobras.com.br General Manager: Iran Garcia da Costa

Mexico

Netherlands

Weenapoint, toren A - Weena 722, 3e verdieping - 3014DA - Rotterdam - The Netherlands Tel: (31 010) 206-7000 / e-mail: samir.awad@petrobras.com.br CEO: Samir Passos Awad

Nigeria

Paraguay

España e Brasilia - Edif. España - piso 3 - Casilla de Correos, 942 - Asunción - Paraguay Tel.: (595 21) 249-1405 / e-mail: jotavio@br-petrobras.com.br Gerente General: Jose Otavio Alves de Souza

PETROBRAS REGIONAL OFFICES

Angola

Rua Pedro Felix Machado, 51 - 2º andar - Caixa Postal 2665 - Luanda - Angola Tel: (244 2) 39 0330 / fax: (244 2) 39 0480 / e-mail: mmurilo@petrobras.com.br Gerente Geral: Manoel Murilo Silva

Argentina

Av. Maipú, nº 1 - 22º piso - C1084AB - Buenos Aires - Argentina Tel: (54 11) 4344-6072 / e-mail: cdacosta@petrobras.com.br CEO: Carlos Alberto da Costa

Bolivia

Chile

China

Colombia

Cuba

Ecuador

Peru

Amador Merino Reyna 285, piso 5, San Isidro - Lima - Perú Tel: (51 1) 222 4455 / fax: (51 1) 221 7921 / e-mail: pedro.grijalba@petrobras.com Gerente General: Pedro Grijalba

Singapore

200 Newton Road # 07-01, Newton 200, 307983 – Singapore Tel: (65) 6550 50 80 / fax: (65) 6734 9087 / e-mail: odilia@petrobras.com General Manager: Odilia Dauzacker

Tanzania

Turkey

United Kingdom

4th floor, 20 North Audley Street - London W1K 6WL - UK Tel: (44 0 20) 7535 1100 / fax: (44 0 20) 7467 5800 / e-mail: messeder@petrobras.com.br General Manager: Marcelo Malta da Costa Messeder

Uruguay

Plaza Independência 831 - piso 10, CP11100 - Montevideo - Uruguay Tel: (598 2) 500-84-00 / e-mail: iranivarella@petrobras.com.br Gerente General: Irani Varella

USA - Houston

10350 Richmond Ave., Suite 1400 - Houston, TX 77042 - USA Tel: (1 713) 808-2000 / fax: (1 713) 808-2017 / e-mail: orlandomelo@petrobras.com.br General Manager: José Orlando Melo de Azevedo

USA - New York

570 Lexington, 43rd floor - New York, NY 10022-6837 - USA Tel: (1 212) 829 1517 / fax: (1 212) 832 5300 / e-mail: helms@petrobras.com.br General Manager: Theodore Helms

Venezuela

Av. Venezuela del Rosal - Edificio Torre Lamaletto - piso 8 – 1060 - Caracas - Venezuela Tel: (58 212) 957-7300 / e-mail: jfigueira@petrobras.com Gerente General: João Carlos Figueira Araújo

This is not an offer of shares. Any public offering of Petrobras shares will be made by means of a prospectus containing detailed information about Petrobras and the offering.

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SPECIAL BUSINESS EDITION

Learn about the Business Plan 2010-2014 in detail Petrobras is counting on Brazilian industry and technology park

Pre-salt Production for Real Definitive systems start the production on a commercial scale in the Tupi accumulation

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