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Biofuels Market in Brazil

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Biofuels Market in Brazil and the Participation of Petrobras * * * * * * Production, consumption and export projections of ethanol reflect great dynamism, especially ... – PowerPoint PPT presentation

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Title: Biofuels Market in Brazil


1
Biofuels Market in Brazil and the
Participation of Petrobras
2
Historical and Recent Development of Biofuels in
Brazil
Integrated Growth
Social and Environmental Responsability
Profitability
Expand operations in target markets for oil, oil
products, petrochemicals, gas and energy,
biofuels and distribution, being a world
benchmark as an integrated energy company
To grow production and oil and gas reserves
sustainably, being recognized for excellence in
EP operations
To expand integrated operations in refining,
commercialization, logistics and distribution
with a focus on the Atlantic Basin
Expand operations in petrochemicals in Brazil and
South America on an integrated basis with the
PETROBRAS Groups other businesses
Develop and lead the Brazilian natural gas market
and operate on an integrated basis in the gas and
electric energy markets with a focus on South
America
Operate on a global basis in biofuels
commercialization and logistics, leading the
domestic production of biodiesel and expanding
participation in the ethanol segment
Operational, management, technological and human
resources excellence
Petrochemicals
Gas Energy
EP
Downstream (RTC)
Distribution
Biofuels
Commitment to sustainable development
3
Historical and Recent Development of Biofuels in
Brazil
1980
1979
1977
1983
1974
1973
2nd Oil Chock
Ethanol dedicated vehicles participation of total
vehicles sales gt90
15 Blending of ethanol to gasoline
4,5 Blending of ethanol to gasoline
Brazil creates PROÁLCOOL
1st Oil Chock
1992
2001
2003
90s
1985
1989
Rio 92 Signing of the climate change milestone
End of deregulation process
Ethanol blending varies between 20 - 25 of
gasoline
Flex-Fuel vehicles launching
Ethanol blending into gasoline reaches 22
2005
Crude oil prices fall and price of gasoline
equates to that of ethanol
Biodiesel National Program launching
Jan 2008
Mar 2008
May 2008
2 Blending of biodiesel to diesel
Aug 2008
Jul 2009
CNPE authorizes 3 blending of biodiesel to diesel
Jan 2010
Ethanol consumption is bigger than gasoline
July 11, oil prices rose to a new record of
147.27
4 Blending of biodiesel to diesel
CNPE anticipates 5 blending mandate from 2013 to
2010
4
The Economics of Brazilian Ethanol Supply
Proalcool Program and flex-fuel vehicles were
both responsible for the strong growth observed
in the last 30 years
Flex-fuel vehicles launching
Proalcool
Source MAPA
5
Looking Ahead domestic market growth export
opportunities
ETHANOL Production, consumption and export
projections of ethanol reflect great dynamism,
especially the growth of domestic demand.
billion liters
Ethanol Domestic Demand Forecast
Production
Source EPE
6
Looking Ahead domestic market growth export
opportunities
BIODIESEL Accompanying the demand for diesel, the
demand for biodiesel is expected to reach 3.5
billion liters in 2017
million liters
Biodiesel production
Biodiesel Demand Projection (EPE)
Source EPE
7
Looking Ahead Ethanol domestic market growth
export opportunities
8
Historical and Recent Development of Biofuels in
Brazil
  • PROALCOOL PRINCIPLES AND CHARACTERISTICS
  • On November 14, 1975 the Alcohol National Program
    was created with
  • five stated goals
  • Foreign currency savings
  • Reducing regional income disparities
  • Reducing disparities in individual income
  • Growth of domestic income
  • Expansion of capital goods production

9
Historical and Recent Development of Biofuels in
Brazil
  • Use of its nationwide logistical and retail
    infrastructure to assure that the blend and the
    pure ethanol could reach all the country
  • Development of technical solutions for adequate
    handling of ethanol, including its transportation
    by multi-product pipelines and storage
  • Formulation of gasoline to receive the blend of
    ethanol
  • RD of solutions regarding quality of product,
    effects of blend and pure ethanol on the engines
    and materials etc
  • Instrumental, on behalf of the government, in
    centralizing acquisitions of huge volumes of
    ethanol to regulate the domestic market

10
The Economics of Brazilian Ethanol Supply
  • ETHANOL INDUSTRY HAS IMPROVED AND BECOME MORE
    SUSTAINABLE SINCE IT WAS FIRST ESTABLISHED
  • Sugar-energy sector US 28.1531 billion (almost
    2of GDP)
  • Increased productivity (as ethanol yields)
  • Mapping the sugarcane genome
  • Power generation with sugarcane bagasse

    (1/3 of the plant)
  • Use of the vinasse as a fertilizer
  • Production of 9.2 units of energy per unit

    of fossil fuel energy
  • Recognized as an advanced biofuel, it

    emits more than 60 less

7 thousand liters/ha
2 thousand liters/ha
Source MAPA
11
The Economics of Brazilian Ethanol Supply
  • NUMBERS OF THE BRAZILIAN SUGARCANE INDUSTRY
  • 434 Plants¹
  • 70,000 Sugarcane growers
  • The 15 largest producers of ethanol represent
    only 37 of total production
  • 1.28 million People formally employed²
  • 1,042 Municipalities directly benefited
  • GDP of the sugarcane sector US 28 billion
  • Foreign revenue US 9.8 billion (2009)
  • Participation in Brazilian energy matrix 18 (gt
    Hidroelectricity)
  • Avoided CO2 emissions gt 600 million tons since
    1975³

12
Historical and Recent Development of Biofuels in
Brazil
ETHANOL PLANTS IN BRAZIL
Ethanol Plants Operational 434 plants Total 27
billion liters/year
13
Looking Ahead domestic market growth export
opportunities

Growth Rate 2009/2010 up to 2019/2020 Growth Rate 2009/2010 up to 2019/2020
Production 9.38
Domestic Demand 9.00
Exports 10.70
14
Looking Ahead Biodiesel domestic market growth
export opportunities
15
Historical and Recent Development of Biofuels in
Brazil
MOTIVATIONAL PRINCIPLES FOR THE CREATION OF
BRAZILIAN BIODIESEL PROGRAM
  • Fixing families in the countryside
  • Expansion of sustainable agriculture
  • Utilization of soil unsuitable for food crops
  • Offering an environmentally friendly fuel
  • Introduction of a new sustainable renewable fuel
  • Diversifying the Energy Matrix
  • Reduction in imports of diesel and oil
  • Employment creation and income

Castor-Oil Plant
African Oil Palm
Sunflower
Soy
Cotton
16
Historical and Recent Development of Biofuels in
Brazil
  • BRAZILIAN VEGETABLE OIL PRODUCTION
  • Soy large-scale farming, helped make Brazilian
    Biodiesel Program possible
  • Castor beans production helping family farming
  • Jatropha, Macauba, Sunflower and Others small
    scale or still in development
  • Animal Fat the second largest feedstock for
    brazilian biodiesel
  • Palm oil in the north region the new frontier

Source EPE
17
Social Fuel Stamp
  • Granted to producers who
  • Buy raw material from family agriculture in the
    minimum percentage of
  • 15 North and West-center region
  • 30 Other regions
  • Do negotiated contracts with family farmers,
    consisting
  • The contractual period
  • The value of buying criteria and adjustment of
    contract price
  • The delivery terms of raw material
  • The safeguards of each party
  • Identification and agreement of a representation
    of farmers who participated in the negotiations
  • Ensure training and technical assistance to
    family farmers.

Source MDA
18
Looking Ahead domestic market growth export
opportunities
  • BIODIESEL
  • Biodiesel in Brazil today involves a wide range
    of sectors. Among the groups with great influence
    there are the biodiesel producers, farmers,
    distributors, automakers and major consumers of
    diesel, private or public ones.
  • The production chain of biofuels began a
    campaign in favor of a gradual increase in the
    use of biodiesel to 10
  • Brazilian biodiesel market is oversupplied, with
    63 authorized plants representing 4,5 million m³
    per year
  • Projections show records in oil crops
    production, specially soy
  • However, there are new investments in other
    crops, specially palm oil

Today only a few amount of soy oil is transformed
in biodiesel
Year
Soybean Oil
Total Biodiesel
Soybean Oil Biodiesel
Source MAPA
19
Historical and Recent Development of Biofuels in
Brazil
BIODIESEL PLANTS IN BRAZIL
Biodiesel plants authorized by ANP Operational
63 Commercialization 42 Total 4,5 billion
liters/year B5 2,4 billion liters/year
Plants in the Social Pact (k m³/y)
Plants not in the Social Pact (k m³/y)
20
0
Petrobras and Biofuels
21
PETROBRAS - BUSINESS PLAN 2010-2014
  • The segment of biofuels will receive U 3.5
    billion, operating in production, logistics and
    marketing of biofuels and participating in the
    value chain in Brazil and abroad, working in an
    integrated manner.
  • The strategy in the ethanol segment was
    redirected to the acquisition of shares in order
    to become a major player in the market, ensuring
    the field of technology for sustainable
    production of biofuels.

Production capacity of biodiesel in Brazil
Ethanol Production
Export of ethanol
22
BIODIESEL and ETHANOL PLANTS
  • 4 Biodiesel Units in operation
  • Quixadá (CE)
  • Candeias (BA)
  • Montes Claros (MG)
  • Marialva (PR)
  • 10 Ethanol units in operation
  • Guarani 7 in SP and 1 in Moçambique
  • Total (MG)
  • Nova Fronteira (GO)

23
BIODIESEL PLANTS
  • Semiarid region of Brazil
  • Candeias (BA), Quixadá (CE) and Montes Claros
    (MG)
  • 2008/09 150.000 tonnes/year (50.000 tonnes/year
    each plant)
  • Dec,2009 300.000 tonnes/year (100.000
    tonnes/year each plant)
  • Sept/10 duplication of Candeias 100.000
    tonnes/year
  • South region of Brazil
  • Marialva
  • May,2010 60.000 tonnes/year (PBIO owns 50 of
    the plant of 120.000 tonnes/year capacity)
  • New Projects
  • Belém project (Portugal)
  • 2014 300.000 tonnes/year of palm oil biodiesel
  • Pará project
  • 2013 120.000 tonnes/year of palm biodiesel
  • Guamaré RN (30 - castor oil)
  • 2011 55.000 tonnes/year
  • (9,6 of semiarid production)

Overall processing capacity (2010) 475.000
tonnes/year
24
ETHANOL PLANTS
SANTA LUZIA Greenfield project
GO
GO
SÃO MARTINHO BOA VISTA
MG
GUARANI VERTENTE
TOTAL BAMBUÍ
GUARANI CRUZ ALTA
GUARANI TANABI
GUARANI MANDÚ
GUARANI ANDRADE
GUARANI SÃO JOSÉ
SP
GUARANI SEVERÍNIA
SP
GUARANI SENA ( Mozambique AFRICA)
Overall Crushing Capacity (2010) 20 million
tonnes of sugarcane Overall Ethanol Production
(2010) 890.000 m3
25
PARTNERSHIP USINA TOTAL
  • December 22, 2009 Petrobras Biofuels announced
    its entry into the ethanol segment, by acquiring
    40.4 of Usina Total S.A.
  • Plant capacity production of 103.000 m3 of
    ethanol and 9.8 MW of electric power of 9.8 MW.
  • Petrobras Investment R 150 MM that will be used
    to expand the unit to 203.000 m3 of ethanol and
    38.5 MW of electricity. The other portion will be
    invested in machinery and equipment to achieve
    the goal of 100 of mechanized harvesting of
    sugarcane in 2012.

26
PARTNERSHIP TEREOS
  • A strategic investment
  • Petrobras Biocombustível announced in April,
    2010 it was forming a strategic partnership with
    Tereos Internacional to jointly invest in Guarani
    and become a leading player in the Brazilian
    sugarcane industry.
  • A strategic investment that provides Petrobras
    Biocombustível with a significant stake in a
    market leader
  • The capital increase strengthens Guaranis
    balance-sheet and provides the company with new
    resources and expertise for its growth.
  • Total investment of R2.2 Bn in Guarani
  • Investment by Petrobras Biocombustível of R1.6
    Bn over next 5 years (R682 MM already invested)
    with an option to reach a stake of up to 49 in
    Guarani
  • Option for Tereos Internacional to invest up to
    R600 MM of new equity in Guarani in the 12
    months following Petrobras Biocombustívels
    initial investment in Guarani.

JV post-merger structure
26.3 to 49.0
73.7 to 51.0
27
PARTNERSHIP SÃO MARTINHO
  • June, 21 2010 Petrobras announced a strategic
    partnership with Grupo São Martinho S.A. for the
    growth of ethanol production in the Midwest
    region of Brazil, State of Goiás.
  • A new company will be created, called Nova
    Fronteira Bioenergia S.A., which controls the
    Usina Boa Vista, currently in production, and the
    greenfield project called SMBJ Agroindustrial
    S.A., both located in Goiás.
  • Petrobras investment R 420.8 MM to Petrobras
    Biocombustível acquire 49 stake in the new
    company.
  • The investment will be used to expand production
    of the new society, especially Usina Boa Vista.
    With the investments already made and
    implemented, it will have its milling capacity
    expanded from the current 2.5 million tonnes of
    sugarcane to 7 million tonnes in the 2014/15
    season.

28
Export Logistics
1
Multi-product pipeline
Existent
2
Ethanol pipeline
Study concluded
3
Ethanol pipeline
In study
4
Barges
Study concluded
Uberaba
MG
3
Presidente Epitácio
Ribeirão Preto
MS
Araçatuba
2
4
REDUC
RJ
SP
REPLAN
Anhembi
Taubaté
1
Ilha D água
REVAP
São Sebastião
PR
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