PRICE, DEMAND AND MARKET STRUCTURE FOR

THE OIL INDUSTRY: Distillates in the drivers seat or

Gasoline resurgence ?

Oxford Institute for Energy Studies February 23 th

Marcelo S. Pinelli, Petrobras Downstream Planning Manager

1
DISCLAIMER

The presentation may contain forecasts about future events. Such forecasts merely reflect the
expectations of the Company's management. Such terms as "anticipate", "believe", "expect",
"forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous
expressions, are used to identify such forecasts. These predictions evidently involve risks and
uncertainties, whether foreseen or not by the Company. Therefore, the future results of
operations may differ from current expectations, and readers must not base their expectations
exclusively on the information presented herein. The Company is not obliged to update the
presentation/such forecasts in light of new information or future developments.

CAUTIONARY STATEMENT FOR US INVESTORS

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

2
FUNDAMENTALS REGARDING OIL MARKET STRUCTURE

OPECs oil price Weak Crude Oil Spare

mismanagements Economic Capacity in High
Growth Levels

Aggregate
Demand
Geopolitical Factors Reduction

Energetic Efficiency
& Biofuel Markets
Low Oil Prices Financial Speculation
Dollar x Euro feedbacks the process

Interest Rates
New Brings Volatility to the
Refining Process, Amplifying
Units Tendencies

3
 US$/bbl

5
25
45
65
85
105
125
jan/01
jul/01

Source: NYMEX
jan/02
jul/02
jan/03
jul/03
US$/bbl nominais

jan/04
jul/04
jan/05
jul/05
jan/06
jul/06
jan/07
CRUDE OIL FUTURES AND MARKET STRUCTURE

jul/07
jan/08
jul/08
jan/09
jul/09
jan/10
jul/10
jan/11
jul/11
jan/12
jul/12
jan/13
4
THE ROLE OF FINANCIAL PLAYERS IN OIL MARKET NYMEX FUTURES POSITIONS

Non-Commercial Futures
140000 160
WTI_Nymex
120000 140
Number of Contracts

100000
120
80000

US$/bbl
60000 100

40000 80
20000 60
0
40
jul-07

jul-08
mai-07
jun-07

set-07

jan-08
fev-08

mai-08
out-07

jun-08

set-08

jan-09
out-08
nov-07
dez-07

ago-08

dez-08
mar-07
abr-07

abr-08
-20000
-40000 20

-60000 0

The data above indicates poor correlation and no causality between these variables.
Sources: CFTC and NYMEX This chart is based on weekly data

5
CRUDE OIL WAS USED AS A HEDGE AGAINST INFLATION, AND NOW ?

150 Brent US$/bbl US$/Eur$ 1.4

US$/bbl and Eur/bbl
Brent Eur/bbl
130 1.2
USD$/Eur$
110 1.0

90 0.8

70 0.6

50 0.4

30 0.2

10 0.0
sep/0

sep/0

sep/0

sep/0

sep/0

sep/0

sep/0

sep/0

sep/0
jan/00

may/0

jan/01

may/0

jan/02

may/0

jan/03

may/0

jan/04

may/0

jan/05

may/0

jan/06

may/0

jan/07

may/0

jan/08

may/0

jan/09
From August 2007 to July 2008, Brent prices and Brent US$/bbl minus Brent Eur/bbl
spread have caused* the dollar/euro rate and a good correlation between these variables
is noticed from August 2007 to November 2008.
Among securities, the common stock of natural resource companies (such as gold, timber, and oil) is often considered an
inflation hedge because the value of the companies' assets should rise during a period of inflation.
* Grangers causality tests were performed between these variables during this period
Source: Bloomberg and Platts

6
RESERVE/PRODUCTION RATIO EVOLUTION

90
82
80

70

60
Years

53
50 46

40
31
30 24 22
18 20 18 19
20 14 14

10

0
19 8 0 2007

Total North Am erica Total S. & Cent. Am erica

Total Europe & Eurasia Total Middle East
Total Africa Total Asia Pacific

Source: BP Statistics 2008

7
WORLD: OIL PRODUCTION EVOLUTION

90000
M bpd bpd
Thousand
80000
70000
60000
50000
40000
30000
20000
10000
0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Total North America Total S. & Cent. America
Total Europe & Eurasia Total Middle East
Total Africa Total Asia Pacific

Source: BP Statistics 2008

8
WORLD: OIL CONSUMPTION EVOLUTION

90000
80000 M bpd bpd
Thousand
70000
60000
50000
40000
30000
20000
10000
0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Total North America Total S. & Cent. America
Total Europe & Eurasia Total Middle East
Total Africa Total Asia Pacific

Source: BP Statistics 2008

9
U.S., EUROPE, JAPAN PETROLEUM STOCKS AND CRUDE OIL PRICE

850.000
M bbl
Thousand barrels 150
US$/bbl

800.000
120

750.000
90

700.000 60

650.000 30
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Range 2003 - 2007
WTI 2007
2007
WTI 2008 2008

Source: IEA and Platts

10
CONTRIBUTIONS TO OIL AND LIQUIDS DEMAND AND SUPPLY GROWTH

Oil and Liquids Demand

4,000
Thousand bpd
M bpd NON-OECD Demand
3,000 OECD Demand

2,000

1,000

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-1,000

-2,000

Oil and Liquids Supply

4.000
MThousand
bpd bpd Non-OPEC 13
3.000
OPEC 13
2.000

1.000

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-1.000

-2.000

Source: IEA

11
OIL AND LIQUIDS SUPPLY CHANGE

Average 2003 - 2008 Year 2007 Year 2008

2,100 2,100
2,100
M bpd bpd
Thousand M bpd
Thousand bpd M bpd
Thousand bpd
1,800 1,800
1,800

1,500 1,500
1,500
1,200
1,200 1,200
900
900 900
600
600 600
300
300 300
0
0 0 Growth Decline
Growth Decline Growth Decline -300
-300 -300
-600
-600 -600

OECD OPEC 13 FSU Other Non-OPEC

Source: IEA

12
OIL AND LIQUIDS DEMAND CHANGE
2007 2008

-1200

-1000
-1200

-1000

-800

-600

-400

-200
-800

-600

-400

-200

200

400

600
200

400

600

0
0
China 329 China 320

India 141 Saudi Arabia 240

Thousand bpd
Brazil 122 127
Thousand bpd India

Saudi Arabia 111

Brazil 120
Iran 98
Iran 116
Canada 74
Germany 94
-1 United States
-79 Italy
-49 United Kingdom
-250 Japan
-191 Japan
OECD -1163 OECD
-236 Germany Non-OECD United States Non-OECD

Source: IEA

13
2008 WORLD DEMAND GROWTH: OECD vs NON OECD

IEA forecast revisions for 2008 Oil and Liquids Demand Growth

2,5 Million bpd

MM bpd
2,0
1,5
1,0
0,5
0,0
-0,5 Jan 2008 Mar 2008 Jun 2008 Sep 2008 Dec 2008
IEA Estimate IEA Estimate IEA Estimate IEA Estimate IEA Estimate
-1,0
-1,5
-2,0
OECD Demand Non-OECD Demand Total Demand

Sources: IEA Oil Market Report

14
WORLD: REGIONAL CONSUMPTION - BY PRODUCT GROUP

100%

80%

60%

40%

20%

0%
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Light distillates Middle distillates Fuel oil Others

Source: BP Statistics 2008

15
WORLD FINAL ENERGY CONSUMPTION BY SECTOR

Total Consumption ( %)

Residential, Residential,
Industry Industry
Services Services
and 35% and
30%
Agriculture Agriculture
40% 40%

Transport
Transport
30%
25%

1980
1980 2006
2007

Oil Consumption (%)

Residential, Residential, Industry

Services Services and
Industry 11%
and Agriculture
Agriculture 22% 40%
40%

Transport
Transport 73%
56%

1980
1980 2006
2007
Source: IEA

16
World Product Consumption Light and Middle Distillates

70.000
Thousand bpd
60.000

50.000

40.000
middle
30.000 light

20.000

10.000

0
85

87

89

91

93

95

97

99

01

03

05

07
19

19

19

19

19

19

19

19

20

20

20

20
Source: BP Statistics 2008

17
Regional Demand - Light and Middle Distillates
Thousand bpd

13.000 EUROPE Middle distillates

12.000
11.000 EUROPE Light distillates
10.000
9.000
8.000
7.000 18.000
Asia Middle distillates
6.000 16.000
5.000 Asia Light distillates
4.000 14.000
3.000
2.000 12.000
1.000
0 10.000
8.000
85

87

89

91

93

95

97

99

01

03

05

07
19

19

19

19

19

19

19

19

20

20

20

20
6.000
18.000
US Middle distillates 4.000
16.000
14.000 US Light distillates 2.000
12.000 0
10.000

85

87

89

91

93

95
97

99

01

03

05

07
8.000

19

19

19

19

19

19
19

19

20

20

20

20
6.000
4.000
2.000
0
85

87

89

91

93

95

97

99

01

03

05

07
19

19

19

19

19

19

19

19

20

20

20

20

Source: BP Statistics 2008

18
LIGHT DISTILLATES CONSUMPTION, 2000-2007

12
MMbpd
Million bpd
10
2000
2001
8
2002
2003
6
2004
2005
4
2006
2007
2

0
North US Europe FSU Middle Africa Asia China Japan
America East Pacific

CAGR 1.3% 1.1% -2.5% 3.9% 5.4% 2.4% 3.5% 7.1% 0.4%

Source: BP Statistics 2008

19
U.S., EUROPE, JAPAN GASOLINE STOCKS AND CRACKSPREAD GASOLINE USG MINUS WTI

100
M bbl
Thousand barrels
370,000

US$/bbl 80

350,000

60

330,000
40

310,000
20

290,000 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Crack-Spread Gasoline 2007
Range 2003 - 2007
2007 Crack-Spread Gasoline 2008 -20
2008

CrackSpread Gasoline = Unleaded USG WTI

Source: IEA and Platts

20
U.S. Finished Motor Gasoline Refinery Yield

49

48

47

46 2005
45 2006
44 2007
43 2008
42

41

40
jan fev mar abr mai jun jul ago set out nov dez

Source: EIA DOE

21
MIDDLE DISTILLATES CONSUMPTION, 2000-2007

10.0
Million bpd
MMbpd
9.0

8.0 2000
7.0 2001
2002
6.0
2003
5.0
2004
4.0 2005
3.0 2006
2.0
2007

1.0

0.0
North US Europe FSU Middle Africa Asia China Japan
America East Pacific

CAGR 1.1% 0.9% 2.0% 3.0% 3.9% 3.4% 2.3% 9.0% -2.7%

Source: BP Statistics 2008

22
U.S., EUROPE, JAPAN DIESEL STOCKS AND CRACKSPREAD DIESEL USG MINUS WTI

40
390,000
Thousand
M bbl barrels US$/bbl

30
360,000

20
330,000

300,000 10

270,000 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Range 2003 - 2007 Crack-Spread Diesel 2007

2007
Crack-Spread Diesel 2008
2008

Crackspread Diesel = N2 Diesel USG - WTI

Source: IEA and Platts

23
 Ja
n-

0
20
40
60
80
100
120
140
160
M 00
ay
-
Se 00
p-
0
Ja 0
n-
M 01
ay
-
DIESEL PRICES

(US$/BBL)
Se 01
p-
0
Ja 1
n-
M 02
ay
-0
Se 2
p-
0
Ja 2
n-
M 03
ay
-
Se 03
p-
0
Ja 3
n-
M 04
ay
-
Se 04
p-
0
Ja 4
n-
M 05
ay
Diesel Prices

-
Se 05
p-
0
No.2 USG Waterborne Platts Mid Ja 5

Gasoil 0.5%S Singapore Platts Mid

n-
M 06
ay
-0
Se 6
Gasoil 0.2%S NWE FOB Barges Platts Mid

p-
0
Ja 6
n-
M 07
ay
-0
Se 7
p-
0
Ja 7
n-
M 08
ay
-
Se 08
p-
0
Ja 8
n-
09
24
 Ja

0
10
20
30

-30
-20
-10
n-
Ap 0 0
r-0
Ju 0
l-
O 00
ct
-
Ja 00
n-
Ap 0 1
r-0 (US$/BBL)
Ju 1
l-
O 01
ct
-
Ja 01
n-
Ap 0 2
r-0
Ju 2
l-
O 02
ct
-
Ja 02
GASOLINE DIESEL SPREADS

n-
Ap 0 3
r-0
Ju 3
l-
O 03

USG
ct
-
Ja 03
n-
Ap 0 4
r-0
Ju 4
l-
O 04

NWE
ct
-
Ja 04
n-
Ap 0 5
r-0
Ju 5
l-
O 05
Sing
ct
-
Ja 05
n-
Ap 0 6
Gasoline - Diesel Spreads

r-0
Ju 6
l-
O 06
ct
-
Ja 06
n-
Ap 0 7
r-0
Ju 7
l-
O 07
ct
-
Ja 07
n-
Ap 0 8
r-0
Ju 8
l-
O 08
ct
-
Gustav

Ja 08
Hurricane

n-
09
25
 ja
n

20%
25%
30%
35%
40%
45%
/0
5
m
ar
/0
5
m
ai
/0
5
ju

Source: EIA/DOE
l/0
5
se
t/0
5
no
v/
05
ja
n /0
6
m
ar
/0
6
m
ai
/0
6
ju
l/0
6
se
t/0
6
no
v/

Gasoline
06
ja
n /0
7
m
ar
/0
7
m
ai
/0
7
US PRODUCTS YIELDS: REFINERY MAXIMIZATION WAR !

ju
Diesel
l/0
7
se
t/0
7
no
v/
07
ja
n /0
8
m
ar
/0
8
m
ai
/0
8
ju
l/0
8
se
t/0
8
no
v/
08
26
Diesel Engine Vehicle Market Shares in Western Europe and the United States, 1999-2007

(% of Total New Light-Duty Vehicle Sales)

Source: EIA.

27
While in Europe, diesel penetration

Trends in composition of new cars registered in the EU15

80,00%
70,00%
60,00%
50,00%
Petrol
40,00%
Diesel
30,00%
20,00%
10,00%
0,00%
95

96

97

98

99

00

01

02

03

04

05

06

07
19

19

19

19

19

20

20

20

20

20

20

20

20
Source:

28
Average Retail Prices for Premium Gasoline and Diesel Fuel in Western Europe and the US,
1999-2007
(Nominal U.S. Dollars per Gallon)

Source: EIA.

29
Diesel Engine Vehicle Market Shares in Western Europe and the United States, 1999-2007

90
(% of Total New Light-Duty Vehicle Sales)
80

70

60

50

40

30

20

10

0
1999 2000 2001 2002 2003 2004 2005 2006 2007

United States Western Europe Belgium France

Germany Italy Norway Spain
Switzerland United Kingdom

Source: EIA.

30
US Gasoline Demand Downturn in 2008
Consumption Cents/gallon
10.000 Retail Gasoline Price 350
9.000
Thousand bpd 300
8.000
7.000 250

6.000
200
5.000
150
4.000
3.000 100
2.000
50
1.000
0 0
1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008
Pump price Thousand bpd
Consumption
400 Retail Prices 600
350 Wholesale Price 400
300 200
Cents/gallon 250 0
200 -200
150 -400
100 -600
Source: EIA DOE
50 -800
0 -1000
jul/07

jul/08
jan/07

out/07

jan/08

out/08
abr/07

abr/08
31
Vehicle-Distance Traveled - Americans are driving less

Billion Miles
3.050

3.000

2.950
Inflexion point
2.900

2.850

2.800

2.750

2.700

2.650

2.600

2.550

2.500

2.450

2.400

2.350

2.300

2.250

2.200
5

8
99

99

99

99

99

00

00

00

00

00

00

00

00

00
1

2
Source: US Federal Highway Administration

32
US vehicle sales have been trending downward

Thousands

Light trucks--trucks up to 14,000 pounds gross vehicle weight, including minivans and sport utility vehicles

Source: US Department of Commerce

33
Fuel Economy in US

* Light-duty trucks = sport utility vehicles or SUVs, vans, and pickup

Source: EPA trucks with less than 8500 pounds gross vehicle weight ratings.

34
Fuel Economy by Country/Region

35
US: ETHANOL SUPPLY AND MANDATE

2.50

2.00

1.50
mmbpd

1.00

0.50

0.00
06

07

08

09

10

11

12

13

14

15

16

17

18

19

20
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
Mandate ethanol Mandate cellulosic
Mandate biodiesel Mandate Other Advanced
Total Supply

Source: EIA

36
Total Aircraft deliveries from Airbus 1992-2008

600

500

400

300

200

100

0
92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08
19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20
Source: Airbus (1992-2008 Results).

37
SPREADS LIGHT HEAVY: THE COMPLEX REFINER ADVANTAGE

45
US$/BBL of 2008
40
35
30
25
20
15
10
5
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
WTI - Maya Diesel & Gasoline - Fuel Oil

Spread Crude Oil Light-Heavy = WTI Maya

Spread Oil Products Light-Heavy = (Unleaded USG + N2 Diesel USG)/2 Fuel Oil 3% USG
Sources: Platts

38
GROSS REFINING MARGINS AT US GULF COAST

35
US$/BBL of 2008

30 Margin WTI Cracking

Margin Maya Coking

25

20
US Gasoline Downturn
15

10

0
1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008
Gross Refining Margins = Products prices minus crude oil
Margin WTI Cracking = USGC Margin of using WTI with cracking yields
Margin Maya Coking = USGC Margin of using Maya with coking yields

Sources: Platts

39
 GLOBAL MARGINAL REFINER 2002-2003
12
US$/bbl
67.163

10
2002

8
Refining Margin

Coking

Cracking
4

2
Topping
Topping
12
US$/bbl
2003 71.868

0
10
- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000

Mbpd
Thousand bpd
8
Refining Margin
Coking

Cracking
4

2 Topping
Average crude oil quality: 32 api, 1,2 S%, 0,9 TAN Topping

Sources: OGJ, PIRA & Crude Oil Handbook 2002 0

- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.0

Mbpd bpd
Thousand
40
 GLOBAL MARGINAL REFINER 2005-2006
12
US$/bbl
75.677

10
2005

8
Refining Margin

Coking

Cracking
4

2 Topping
Topping

12
0 US$/bbl
- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000
2006 76.131

Mbpd
Thousand bpd 10

Refining Margin 8
Coking

Cracking

2 Topping

Average crude oil quality: 32 api, 1,2 S%, 0,9 TAN

0
Sources: OGJ, PIRA & Crude Oil Handbook 2004, 2006 - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000

Mbpd
Thousand bpd
41
 GLOBAL MARGINAL REFINER 2007-2008
12
US$/bbl
77.681

10 2007

8
Refining Margin

Coking

Cracking
4

Topping
2 Topping

12
US$/bbl
0 77.387
- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000
10
2008
Mbpd bpd
Thousand

8
Refining Margin
Coking

Cracking
4

2 Topping
Topping
Average crude oil quality: 32 api, 1,2 S%, 0,9 TAN
Sources: OGJ, PIRA & Crude Oil Handbook 2007, 2008 0
- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.0

Mbpd bpd
Thousand
42
REFINERY CAPACITY PROFILE
mbpd
Thousand bpd
FSU
1,500
Europe 13% 18% 17% 17% 19%
North America 5,000 1,000
15,000 4,000 30% 30% 31% 32% 32% 65% 63% 62% 62% 62%
17% 17% 17% 18% 18% 500
3,000
10,000
2,000 60% 60% 60% 59% 58%
-
22% 20% 21% 21% 19%
60% 60% 60% 59% 59% 1,000
5,000 9% 9% 9% 9% 10% 2004 2005 2006 2007 2008
-
23% 23% 23% 23% 24%
- 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Middle East
1,500

1,000 52% 55%

57% 57% 57%

500
40% 38%
34% 34% 34%
- 9% 9% 9% 9% 7%
Latin America
2004 2005 2006 2007 2008
3,000 6% 5% 5% 22%
6% Asia
2,000 10,000
67% 66% 66% 66% 66%
1,000 Africa 8,000 22%
19% 21% 22%
500 19%
28% 28% 29% 28% 29% 6,000
- 400 62% 60% 59%
33% 4,000 64% 64%
2004 2005 2006 2007 2008 27% 27% 29%
300 29%
2,000
200 62% 62% 53% 54% 53% 17% 17% 18% 18% 19%
100 -
11% 11% 17% 17% 14%
- 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008

Coking FCC Hydrocracking

Source: Pira

43
DIESEL MARKET - OVERVIEW
Global demand for middle distillates has been growing faster than for gasoline over the last
decade and is expected to continue to do so.
This has gradually been reflected in the price differential between diesel and gasoline. Two
factors have exacerbated this trend: tightening sulfur specifications for diesel and growing
ethanol and NGL supplies which weigh on gasoline/naphtha prices.
Developing countries have been a large source of incremental diesel demand over the past
four years.
Refiners have been maximizing their diesel yields to take advantage of superior margins for
the product. European refiners have less potential to increase distillate yields further as most
of the measures have already been taken, while US refiners have more potential as they have
long been focused on gasoline production.
Middle distillate margins are expected to weaken in 2009 from the record levels reached in
2007 and 2008, however they are not expected to collapse completely.
Demand growth in 2009 is likely to be much weaker than in the recent past. The sharp
contraction in the OCDE economies has resulted in a reduction of trade and freight
movements. Thus, demand for diesel for trucking firms, railroads and agricultural sector is also
down.
Many of the large refining projects scheduled to come online over the next two years are
configured to produce a large yield of middle distillates and thus there will be also pressure
from the supply side.
As refiners periodically need to rebalance the gasoline market and draw down inventories,
many refineries may be forced to cut runs.
Another argument for continued relatively tight middle distillate markets is that incremental
world liquids production will be biased toward lighter liquids such as condensates and natural
gas liquids (NGLs). When refined into products, these NGLs yield mostly naphtha and
gasolineboiling range material, and relatively little middle distillates.

44
FINAL REMARKS
Crude Oils rally in 2007-2008 was caused by fundamentals, but amplified by
financial flows. Will they also amplify a plunge in prices ?

Strong Economic Growth from Non-OCDE countries;

A better classification for Non-commercial players is absolutely needed;

Loose monetary policy has played a role in shaping the Oil Market;

Upstream: tight now and tighter in the future;

Distillates in the Driver's Seat;

Refiners need to look for a stable and secure oil supply sources;

Complex and integrated refiner: good environment.

45
LATIN AMERICA: OIL PRODUCTION EVOLUTION

8000
Thousand
M bpd bpd
7000
6000
5000
4000
3000
2000
1000
0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Argentina Brazil Colombia
Ecuador Peru Trinidad & Tobago
Venezuela Other S. & Cent. America

Source: BP Statistics 2008

46
LATIN AMERICA: OIL CONSUMPTION EVOLUTION

6000
Thousand
M bpd bpd
5000

4000

3000

2000

1000

0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Argentina Brazil Chile
Colombia Ecuador Peru
Venezuela Other S. & Cent. America

Source: BP Statistics 2008

47
LATIN AMERICA: REGIONAL CONSUMPTION - BY PRODUCT GROUP

100%

80%

60%

40%

20%

0%
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Light distillates Middle distillates Fuel oil Others

Source: BP Statistics 2008

48
CONSUMER PRICES IN BRAZIL AND USA GASOLINE AND DIESEL

US Brazil
Taxes
GASOLINE 24%
Distribution & Marketing Taxes 41%
19%
Refining 1%
Distribution & Marketing 17%
Ethanol 9%
Crude Oil 56%
Crude Oil 33%
and Refining

US Brazil
Taxes 19% Taxes 22%

Distribution & Marketing 25%

DIESEL

25% Distribution & Marketing 16%

and Biodiesel (3%)
Refining 17%

Crude Oil 39% Crude Oil 62%

and Refining

Sources: DOE (dez/08) and Brazil's National Petroleum Agency (ANP) (jan/09).

49
BRAZIL: DEMAND PROFILE EVOLUTION

100%

80%

60%

40%

20%

0%
1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006
DIESEL FUEL OIL GASOLINE LPG NAFTA JET OTHERS

Sources: Brazil's Mines & Energy (MME) Ministry

50
BRAZIL: UNIT SALES OF VEHICLES BY FUEL

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000 82%
82%
1,000,000 49% 74%

500,000

0
2005 2006 2007 2008

GASOLINE FLEX FUEL ETHANOL DIESEL

Source: ANFAVEA

51
BRAZIL: SUPPLY AND DEMAND BALANCES

GASOLINE DIESEL
Thousand bpd
99 112 109
56 43 64 64 45 51 70 89
34 51 34 48 46 41 36

2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008

JET FUEL OIL

126
109
84 102 98 113 91
73
15 20 17 12 15 25 29
6 2 6

2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008

Surplus Deficit

Sources: Brazil's National Petroleum Agency (ANP)

52
BRAZIL: ETHANOL EXPORTS

4,000,000
3,500,000
3,000,000
2,500,000
m

2,000,000
1,500,000
1,000,000
500,000
-
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

North America S. & Cent. America Europe Others

Source: ANP

53
BRAZILIAN FAST GROWING DOMESTIC DEMAND

2,876
3.3% p.a.
(Thousand bpd)
400
2,257
150 Others
1,906 1,945 3.0% p.a. 274 FO
112 Diesel
182 202
107 1224 QAV
119
901 Naphta
738 783 Gasoline
179 LPG
118
84 89 246
250 218 255

367 419
326 332
208 214 230 257

2007 2008E 2013E 2020E

54
OTHER IMPORTANT ISSUES TO BE CONSIDERED
Tighter especifications for Diesel and Jet Fuel;

Better perspectives for Ethanol market than Biodiesel;

Bunker fuel market is going to marine gasoil path ;

Lack new HCCs due to credit crunch;

Excellent perspectives for distillates in emerging economies considering a recovery

of the global economy;

Gasoil demand is less elastic than gasoline. Few substitutes for diesel in relation to
gasoline. These two factors provide a more resilient demand for the diesel slate.

55
56