THE ETHANOL AS A BIO FUEL

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• THE ETHANOL AS A BIO FUEL
• PROPELLER CLUB
• JUNE 1ST, 2006

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ETHANOL C2 H5 OH Molecular Formula

• Utilizations
• Beverages
• Perfumes and Cosmetics
• Pharmaceutical
• Chemical Industry
• Solvents and Inks
• Food Industry
• Fuel

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Raw Materials

• Fermentation
• Sugar cane
• Corn
• Wheat
• Cereals
• Sugar Beet
• Potatoes
• Tapioca
• Wine
• Cellulose
• Molasses (sugar cane, beet, HFCS, etc)

• Synthetic
• Coal
• Ethylene

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Producing Countries

• Brazil
• USA
• Thailand
• China
• EU (Spain, France, Italy, Germany, Poland, among
  others)
• Australia

• Indonesia
• South Africa
• Argentina
• Guatemala
• Costa Rica
• Saudi Arabia
• Russia

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Supply / Demand

• World Production 40 MM m3 (all grades)
• Consumption (main countries)
• Brasil (16 MM m3) (mostly fuel)
• USA (16 MM m3) (mostly fuel)
• EU (3 MM m3)
• Japan Korea (0.7 MM m3) (mostly industrial)
• Others ( Thailand, China, Mexico, Philipines,
  etc...)

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Break Down of Utilization

• Fuel (35 MM m3)
• ETBE, Gasohol and Ethanol cars FFVs
• Non fuel ( 5 MM m3)
• Beverages, Pharmaceutical Industry, Food
  Conservatives, Perfumes and Cosmetics, Solvents
  and Inks, Chemical Industry, Automotive Industry,
  etc..

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Energy Concerns

• Environmental (Kyoto protocol) (MTBE Ban)
• Economical (Oil Prices)
• Strategical (Oil Reserves)
• Political (Dependence)

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Ethanol the ideal solution

• Renewable
• Reduces CO2 emissions
• Utilization as
• Raw Material for ETBE production
• Direct Blends on gasoline
• Fuel for ethanol cars
• Fuel for FFVs
• Generates jobs and brings social benefits
• Reduces dependence on crude

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Bio Fuels Matrix

• Bio diesel
• Blends of 5 into normal diesel oil (B5)
• Direct utilization (new types-B100)
• ETBE
• Blends of 10-15 on gasoline to avoid problems
  with water miscibility and also RVP
• Ethanol
• Blends of 2 up to 20 on gasoline
• Direct fuel on Ethanol cars (Brazil only)
• Direct fuel on FFVs (Brazil, USA, Sweden)

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EU Policy

• Directives for Bio Fuels
• 2 by Jan 1st 2005
• 5.75 by Jan 1st 2010
• Subsidies / Incentives
• Germany, UK, France, Sweden, Spain, Italy, Poland
  and Czeck Republic
• Mandatory Uses
• Germany, France, UK, Italy, Belgium and
  Netherlands

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Other Countries

• USA (Energy Bill)
• 7.5 mmm gals by 2012 (aprox 30 MM m3)
• Thailand
• Mandatory use for 720 M m3/year as from 2008
• Japan
• Under study-target 7 ETBE on 20 gasoline
  by 2010
• South America
• Various fuel Ethanol programs being
  implemented (Venezuela, Colombia, Peru,
  Argentina)
• South Africa
• Under study mandatory use of gasohol by
  2008-2009
• Philipines
• Already testing some imports of Ethanol for
  gasohol blends
• China
• 3 provinces Ethanol to gasoline
• India
• 9 states utilizing 10 Ethanol blends

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Future of the Trade

• Most of Production consumed domestically
• Exports likely to occur to countries which can
  not produce
• Potential Importers
• Japan
• Korea
• Some Central and South American Countries
• CBI ( as a bridge to U.S.)
• Some South East Asian Countries ( Thailand,
  Philipines, Malaysia)
• India
• China
• EU ( eventually)

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Supplying Countries (Exports)

• Brazil
• Largest expansion capacity
• Lowest production cost
• Good oportunity for foreign investments
• Adequate and competitive logistics
• USA
• Production growing fast due to Energy Bill
• Expansion Capacity at relative/competitive cost
• Available raw material
• Others such as China, India, Australia and South
  Africa will depend on development of their own
  programs

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Main Expected Routes

• Brazil to Far East
• Brazil to Caribbean
• Brazil to Europe
• U.S.A to Far East
• U.S.A to Europe

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Main Loading Ports

• Brazil
• Paranaguá
• Santos
• São Sebastião
• Rio de Janeiro
• Maceió
• Suape
• U.S.A
• U.S Gulf Ports

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Main Discharging Ports

• EU
• Rotterdam/Antwep
• French Med Ports (FOS/Laveras)
• London (Thames River)
• Swedish Ports (Gottenburg, Stockholm, Malmo,
  Osnskoldvik)

• Far East
• Ulsan
• Yokohama
• Dalian
• Manila
• Bangkok
• India
• Mumbai
• Kandla

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Logistics (Terminals)

• Brazil
• Existing facilities to export 2.5 MM m3/year
  without any problem
• Pipelines can be used in addition to existing
  facilities
• Export capacity can triple without too much
  investment
• Logistics Agreements being made between
  Transpetro and Japanese Buyers

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• Far East
• Japan needs infrastructure to receive Ethanol
  (not compatible with wet systems)
• Can receive ETBE without any problem
• Bio Diesel still not being focused on
• Korea/China/India for the moment only Gasohol
  blends under consideration
• Infrastructure (terminals) being built to
  receive Ethanol
• Oil Cos still resisting
• EU
• Same problems with wet systems
• Logistics not only affecting imports but also
  local production
• Specs issue driving Oil Industry in favor of
  ETBE and Bio Diesel
• Protection to local production will also be a
  sensitive factor
• Logistics without participation of Oil Cos will
  be rather difficult

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Logistics (Shipping)

• IMO 2 requirements for vegoil vessels will
  reduce tonnage availability as from Jan 1st, 2007
  r
• Demand for tonnage shall substantially increase
  as from 2008 or what concerns Bio Fuels
  transportation
• Bio Diesel shall increase its participation in
  this market
• Control of Vessels or long term COAs will be a
  key issue to keep the competitivety and assurance
  of supply
• Construction of new vessels will be a must

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Conclusion

• Bio Fuels is an unquestionable reality
• Inside the context, Ethanol is a key factor
• Renewable source of energy
• Environmentally friendly
• Strategic Alternative
• Social Benefits
• Different uses (ETBE, Gasohol, FFVs)
• Most emphasis in producing countries
• Some exceptions in the Far East
• Brazil as a logical supplier
• Lowest production cost
• Largest expansion capacity
• Adequate logistics
• Sugar cane plantations do not interfere with
  other cultures

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Thank you