1. What is driving growth
in transport fuels?
Alternative Energy Conference
Biofuels
Sillas Oliva Filho
Alcohol and Oxygenate Trading Manager

2. Petrobras in Numbers
proven reserves:
16 Refineries with a capacity of 2,125
14.9 billions of boe (SEC)
millions bpd
oil and gas production:*
2,217 million boe/day Vessels: 50 owned and 75 tcp
Oil rings in operation: 97 Refine,
Transportation, Pipelines: 30.343 km
E&P Trading
Gross Revenue
6,154 gas
US$ 72 billions stations in Brazil
(33% of retail
market)
Petrochemicals Retailing
ethylene
production: 2,4 727 gas stations in
millions ton/year Argentina
Gas & Energy
25% of retail market in
Bolívia and 14% in
Argentina
gas sales: 45,000 m3/day Thermoelectric: 9 – 3.2 GW
*Brazil and abroad

3. Strategic Planning for Biofuels
Petrobras Mission
Operate in a safe and profitable manner in the oil, gas and energy industry
in Brazil and abroad, with social and environmental responsibility,
providing products and services that meet client's needs.
Business Strategy
Diversify the business portfolio (emphasizing petrochemicals, logistics
and commercial operations of new energy products), anchored in the
synergy of downstream assets and capabilities;
Develop, coordinate and implement activities related to energy efficiency
and renewable energy at Petrobras companies and to final consumers.
Selective entry into renewable energy projects.
Corporate Target for Carbon Credits
Carbon credits generated in renewable energy projects 1,200 million CO2
by 2010.

4. Business Strategy
Renewable Energy
Investments will go towards the following priority
sources energy:
Biomass energy
Photo voltaic
Bio-diesel production
Main targets for 2010 EMBRAER – E100
Availability or 169 MW
Produce 8,200 bpd of biodiesel

5. Brazilian Experience
Fuel Ethanol Program Evolution
Ethanol Program of
Program Gasohol and Emission Renewable
Implanted Ethanol Cars Controls Gasohol and
Hydrogen
(BLENDS) (2nd oil shock) (PROCONVE) Flex fuel Cars
Program for oil imports
reduction Environmental Benefits
70’s 80´S 90´S 00´S Future

6. Why did ethanol become a fuel in Brazil?
First car operating
100% ethanol
Fiat 147 – 1979
Brazil was an oil importer;
Looking for fuel diversification;
An alternative and internal solution;

7. Brazilian Energetic Matrix - 2004
Renewable Sources 43.9%
Wood Sugarcane 13.5% Other renewable
13.2% sources 2.7%
Hydroelectricity
14.4%
Uranium 1.5% Petroleum and
derivatives 39.1%
Coal 6.7%
Natural gas 8.9%
100% = 213.4 millions [toe] Source: Brazilian Energy Balance (2005)

8. INTEGRATED SUGAR & ETHANOL PRODUCTION
INTEGRATED SUGAR & ETHANOL PRODUCTION
Process Heat & Sugar
Cogeneration Production
Bagasse Primary
Juice
Transport, Juice
Sugarcane
Cleaning & Crushing Treatment
Secondary +
Filter Juice
Hydrous Distillation Fermentation
Ethanol
Anhydrous Molasses
Ethanol Dehydration
Source: UNICA

9. Ethanol: Learning Curve
More than 400 types of Sugar-Cane
Trend
(Anhydrous Ethanol Prices)
Trend (Rotterdam Gasoline Prices)
Prof. Goldemberg, Coelho, Nastari and Lucon - USP

10. Why FFV in Brazil?
FFV changed fuel market:
Consumer want to decide the fuel at the gas station
Fuel price is one the most important factor
Consumer is aware of pollution and renewable fuels
Today cars manufacturer is producing 80% of FFV in Brazil

11. Jan-03
Feb-03
Mar-03
Apr-03
E
May-03
Jun-03
thanol
Jul-03
Aug-03
Sep-03
G
Oct-03
asoline
Nov-03
Dec-03
Jan-04
Feb-04
F
FV
T
Mar-04
Apr-04
May-04
LIGH VEH
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
ICLES TOTAL SALES
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
0
units
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
130,000
140,000
150,000

12. LIGHT VEHICLES FLEET
(thousand units)
20,000
CNG vehicles FFV since 2003
335 1,108
44
18,000 807
439 626 1,004
288 764 782 810
143 734 843
16,000 57 686
18 1,996 1,820
632 2,230 1,678
9 597 2,449
546 2,712
14,000 5 2,972
499 3,221
3,471
12,000
3,716
10,000
8,000
14,439 14,680 14,431
14,075
13,506
12,755
6,000 11,399
12,019
10,463
9,088
4,000
2,000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Gasoline Ethanol Diesel Oil CNG FFV

13. jan/04
feb
mar
apr
may
jun
FFV
jul
aug
sep
oct
nov
dec
Gasoline
jan/05
feb
mar
apr
may
jun
Diesel Oil
jul
Light Vehicles Sales
aug
sep
oct
nov
dec
Ethanol
jan/06
feb
mar
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

14. A New Opportunity for Business
Ethanol global market – 46.5 Billions Liters
North and Central Europe
America
9.8%
37%
Brazil
35%
South America Asia
38% 16.2%
How much the production can be increased to attend
the demand with social responsibility?

15. Main Production Areas in Brazil
North East Region - 11% Production
1% 1%
2%
2%
5%
5%
4%
5%
3% 2%
61% 1%
Mid South Region - 89% Production
8%
Source: Brazilian Government

16. Potential Land for Sugar Cane
Withouth Irrigation
High
Medium
Low
Unusable
CTC - UNICAMP

17. Land use in Brazil
Area
Type (Mha)
• Total country 851
• Native Amazon Forest 370
• Secondary Amazon Forest and Others 180
• Native Forests 6
• Pasture 197
• Temporary Cultures 59
• Permanent Cultures 7,6
• Available land 263
• Available land with low impact (*) 90
Source: FAO, 2002 and EMBRAPA (*)

18. Ethanol Logistic to Export
New Ethanol Pipeline
(800 km)
New Water Way
for Ethanol Ethanol Export
8.0 Million m3 in 2012
Marine Terminal
Rio de Janeiro
Marine Terminal
São Paulo

19. Sustainable Energy
CO2 CO2
Capture Emission
Ethanol Ethanol
Production Use
Guarantee of
Guarantee of
social
social Ethanol Ethanol
responsibility
responsibility

20. Facts about Ethanol Market in 2005
Ethanol global market is 46.5 Billions Liters
Ethanol as a Fuel is 30.6 Billions Liters
Ethanol as a Fuel is 67% of total ethanol production
Today the ethanol consumption is 2.6% of gasoline MKT
10% of ethanol in gasoline will represent 118 Billions Lt
1 Ton Sugar Cane ~
= 1.2 boe
SUGAR
153 KG 608 x 103 KCAL
BAGASSE
(50% UMIDADE)
276 KG
598 x 103 KCAL
LEAVES (*)
(15% HUMIDY) 512 x 103 KCAL
165 KG
1 Ton-Field 1 boe
1718 x 103 KCAL 1718 x 103 KCAL 1,386 x 103 KCAL

21. Ethanol as a Fuel around the World
Why Ethanol Market is now an alternative?
Reduction of the oil dependence
Energy diversification
Agribusiness development
MTBE and lead replacement
Kyoto Protocol
Carbon Credit Opportunities

22. Ethanol as a Fuel - New Market
Guarantee of Supply
• Reliable and stable supply
Contracts:
• Development of price mechanism
• Infrastructure development
International Ethanol Prices:
• On line information
International Future Market
(international commodity)

23. Conclusion
Petrobras, as an integrated energy
Petrobras, as an integrated energy
company, can have an important role in the
company, can have an important role in the
development of this market and contribute
development of this market and contribute
to develop friendly and environmental
to develop friendly and environmental
solutions.
solutions.

24. Sillas Oliva Filho
sillas@petrobras.com.br
Ethanol and Oxygenate Manager