1ER CONGRESO INTERNACIONAL DE BIOCOMBUSTIBLES

The Brazilian Experience on Biofuels

Luthero Winter Moreira
Downstream Area
Guadalajara, Mayo 07-08, 2008.
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.

Disclosure
Fuel Ethanol Program Evolution
Ethanol: 30 Years of Experience
Program for Oil Imports
Reduction
Environmental Benefits
70s 80S 90S
Ethanol
Program
Implanted
(BLENDS)
Gasohol and
Ethanol Cars
(2
nd
oil shock)

Program of
Emission
Control
(PROCONVE)

Gasohol and
Flex Fuel
Cars
00S
Cellulosic
Ethanol and
Renewable
Hydrogen
Future
Original drivers were energy security and
economic attractiveness.

Today environmental benefits are also a
consideration.
CNG
ETHANOL

GASOLINE
Source: MME, BEN 2006

120000
140000
1976

1980

1984

1988

1992

1996

2000

2004

In this period, the use of ethanol avoided 644 million tons of CO
2
emissions.
1972

Brazil is the 1st country to get benefits from Ethanol
Fuel demand for Otto Cycle
Vehicles
160000
10000
80000
60000
40000
20000
0
1
0
0
0

B
E
P

Accumulated effective
economy:
1 billion boe ~US$ 52 bi
A Brief History of Ethanol and Petrobras by the End of Oil Monopoly
1976/1977
- PB creates the first task force to study
blending operations
- PB starts to convert storage tanks and
tankers for ethanol transportation
1982/1983
- PB broadens its scope and encompasses internal
market as well as international market for ethanol
- PB concludes coastal shipping plans for ethanol
1986/1997
- PB issues over 130 papers and
studies on all aspects of ethanol
handling and distribution





- PB consolidates over 40 internal
procedures related to ethanol
handling
1978/1979
- PB starts to export fuel ethanol
- The first 35 PB service station pumps
for ethanol are installed (SP and RJ)
1980/1981
- PB develops LUBRAX, the first lubricant for ethanol cars
- PB is appointed responsible for handling the safety stock
of ethanol
- PB starts to produce ethene from ethanol

Source of ethanol production data: UNICA
Source of Petrobras developments: PETROBRAS
1973
OIL SHOCK
A Brief History of Ethanol and Petrobras after the End of Oil Monopoly
1997
- Creation of Petrobras Transporte and
end of PB monopoly in the Brazilian oil
market
1998/2001
-The Brazilian market starts to
adjust itself to the new rules
2001
- After a steep drop, the price of oil
reaches its lowest point
2003
- The first contracts to follow the new rules
established in 1997 for ethanol transportation in multi-
product pipelines are signed
Source of ethanol production data: UNICA
Source of Petrobras developments: PETROBRAS

1997/2007
- PB issues over 80 new papers and studies on all aspects of
ethanol handling and distribution
- PB updates its internal procedures related to ethanol handling,
including new technologies for Pipeline Integrity Management and
dye handling
2005
- Petrobras Transporte converts in 15 days 80,000 m3 from diesel to
ethanol. Its the first increase in storage capacity since 2003
- Petrobras Transporte has to adapt its logistics to handle the dyed
ethanol. From that point on, there would be 3 different specifications
of ethanol in the PB system
North and Central
America
45.8%
Europe
9.2%
South America
32.6%
Asia & Africa
12.4%
Estimated Ethanol Production in 2008 70.5 Billion Liters
Brazil
32%
More than 75% of all ethanol is produced by Brazil and USA. Brazilian exports in 2007: 3.5 billion liters.
World ethanol consumption is 3.7% of gasoline market.
Increasing ethanol blending in the world to 10% would represent 187 billion liters.
Source: F.O.Licht

Nigeria / South Africa
:: Petrobras is providing technical cooperation in logistics
and blending know-how.

Japan
:: Recently, Petrobras has incorporated Brazil-Japan Ethanol Inc.
(Joint Venture of Petrobras and Japan Alcohol Trading);
:: The Company will import and distribute Brazilian ethanol in Japan;
:: Development of technical and commercial solutions for a reliable, long
term supply of ethanol to the Japanese market;
:: Petrobras intends to introduce fuel ethanol into one of the most complex
and important energy markets in the world:
ethanol for power generation,
fuels distribution in Japanese market,
logistics for distribution of ethanol in Japan and other Asian markets.

Petrobras Partnerships to Introduce Ethanol as a Fuel
Research on lignocellulosic ethanol (2nd generation biofuels) using
sugar cane bagasse as raw material:
- Pilot plant start-up: 4thQ 2007;
- Demonstration plant start-up: 3rdQ 2010;
- Property of process (patent already issued).

HBIO: process of crude oil refining that uses vegetable oils as raw
material to obtain a cleaner diesel oil by hydrogenation of a blend of
diesel and vegetable oil.

Biodiesel: research on new raw materials, improvement of industrial
process, quality of product, and tests with engines.
R&D - Petrobras Projects on Biofuels

Stages
Petrobras Technology Evolution
2006 - 2010 2011 - 2015 2015 - 2020
Large-scale
deployment

Technology
implementation
(1
st
industrial unit)
Demonstration
(Prototype unit)
R&D
(including pilot plant)

HBIO
Biodiesel
Lignocel. Ethanol
Summary Petrobras Technological Roadmaps on Biofuels
Renewable Energy
Business Strategies
2008-2012
Investments
2012 Target
Biodiesel Plants
Availability of 938,000
m3/year
H-Bio (Bio-Refining)
Vegetable oil Processing
1.6 million m/year
Installed Capacity of
Generation of Electric Power
from 365 MW Renewable
Sources
Ethanol pipelines
Export of 4.7 million m/year
of Ethanol
Aeolic Energy
29%
46%
21%
4%
Biofuels
Pipelines and Ethanol Pipelines
Others
H-Bio
US$ 1.5 billion
Investments
Total avoided GHG emissions: 3.93 MM tons CO2 equivalent
Ethanol Project
Vessel
Solar Energy
Other Sources of
Renewable Energy
Petrobras will continue to invest on: development of international
markets for ethanol, improvement of Brazilian export infrastructure,
and R&D of new production technologies (lignocellulosic process
and BTL).

Petrobras investment on the development of feasible production
technologies of 2nd generation biofuels will assure, in the long-
term, the regular supply of renewable fuels, in a fully sustainable
manner regarding economical, environmental and social aspects
along the production chain.

In summary, Petrobras investments on biofuels contribute to
reduce emissions of fossil fuels, generating environmental benefits
and increasing social inclusion by creation of jobs in rural areas.
Final Comments
Vision 2015
Petrobras will be an integrated energy company
with a strong international presence and a
leading force in Latin America, working with
a focus on profitability and social and
environmental responsibility.