BIOETHANOL & FLEX FUEL IN BRAZIL PETROBRAS FEALAC Inter- regional Workshop on Clean Fuels and Vehicle Technologies BIOETHANOL & FLEX FUEL IN BRAZIL PETROBRAS Kuniyuki Terabe Bangkok 28 – 30 June 2006

FUTURE OF ETHANOL AS FUEL CONCLUSION AGENDA PETROBRAS ETHANOL PRODUCTION ETHANOL USE IN BRAZIL FLEX FUEL CAR FUTURE OF ETHANOL AS FUEL CONCLUSION

PETROBRAS ATIVITIES

Transportation, Trading gas sales: 32 million m3/day Petrobras in Numbers proven reserves: 13 billion of boe (SPE) 16 Refineries with a capacity of 2,114 million bpd oil and gas production:* 2,257 million boe/day Pipelines: 30.318 km 6,154 gas stations in Brazil (33% of retail market) Refine, Transportation, Trading E&P Gross Revenue US$ 50.6 billion 727 gas stations in Argentina Petrochemicals Retailing ethylene production: 2,4 million ton/year 25% of retail market in Bolívia and 14% in Argentina Natural Gas gas sales: 32 million m3/day *Brazil and abroad

Petrobras in the world Exploration & Production Refining UK USA – New York China Japan USA - Houston Iran Libya Mexico Venezuela Colombia Nigeria Ecuador Tanzania Singapore Peru Angola Bolivia BRASIL Headquarters Paraguay Argentina Chile Uruguay Exploration & Production Refining Representative Office Trading Distribution / Service Stations Lubricant Sales

ETHANOL PRODUCTION

Agents of Sugar Cane Industry 50 thousand sugar cane growers PETROBRAS ETHANOL PRODUCTION EVOLUTION OF ETHANOL USES FLEX FUEL CARS WORLD PRODUCTION INFRA-STRUTURES CONCLUSION 50 thousand sugar cane growers 313 Industrial Plants

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

Production of Sugar and Ethanol　　

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

Energy Matrix in Brazil - 2005 Hydroelectricity 16.0% Oil Charcoal 12,8% Sugar Cane 13.9% Others 2.3% 38,4% Biomass 29.0% Uranium Coal Natural Gas 1.2% 6.4% 9.0% Source: MME/2005

Raw Material Comparison Relative Production Cost Energy out / Energy in SUGAR CANE 38 8,3 CORN 64 1,3 - 1,8 WHEAT 92 1,2 SUGAR BEET 100 1,9 All over the world, ethanol is made from four main raw materials: wheat, corn, beet and sugar cane. This chart shows the advantages of the utilization of sugar cane.

ETHANOL USE IN BRAZIL Thank You !

Bioethanol Use in Brazil EVERYETHING STARTED IN 1925 E >10 in 1970’s FIRST E100 in 1979 1980’s ENVIRONMENTAL

Bioethanol use in Brazil From 1925 up to 1975: Different Levels of Anhydrous Ethanol direct Blend in Gasoline . After 1975- PROALCOOL Fuel Ethanol blended as Additive and used to E100 cars . In 1980’s : Environmental, leads excluded In 1993 : National law- mandatory use of ethanol as Oxygenate, 20% to 25% In 1997/1998: Deregulation of fuel ethanol - Free Market In 2003: New FFV-Flex Fuel Vehicles , Huge Demand of ethanol in Brazil; After 2004: Increasing International demand. Hydrogen production will be ?

Ethanol Market-share: Fuel Consumption in Vehicle in Brazil 2005 Ethanol Market-share: 8,4% + 8,5%  16.9% Anhydrous Ethanol 8.5%

FUEL ETHANOL USE IN BRAZIL National / Imported Vehicle E100 or E20/E25 or FFV National Motocycle or Imported E20/E25 Ethanol is used as a fuel in a wide variety of transportation vehicles. From national to international vehicles, motorcycles and boats, the share of ethanol in the Brazilian´s fuel market is extremely important. After the launch of the FFV, it is increasing very fast the brazilian internal demand. Only from 2004 to 2005, the internal consumption of ethanol increased more than 1 billion litres because of the FFV fleet. National or Imported Boats E20/25 Aircraft – E100

Bioethanol Use in Brazil EVERYETHING STARTED IN 1925 FLEX FUEL 2003

Flex Fuel Vehicles in Brazil Good conditions to produce ethanol Ethanol Producers and Government are interested Consumers want to decide which fuel to use at the gas station Government and Consumers are aware of pollution and renewable fuels Automobile producers are interest in producin

Light Vehicles Sales in Brazil

Light Vehicles Sales in Brazil

FLEX FUEL CAR PERFORMANCE

FUTURE OF ETHANOL AS FUEL

World Ethanol production Ethanol global market – 44,0 Billion Liters North and Central America 36% Europe 8% Brazil ３6% Asia 18% South America 38% Ethanol Will be a Commodity ??

Sugarcane area in the Brazil 2.Savanah area:24% *Sugarcane area:0,6% *Potential area for sugar- cane expansion:12% of the total. Satellite Image Sugarcane 1.Total brazilian area :850 M ha 7% for agriculture (50% for soya and corn) 35% pastures 55% forests Actual area: 5,5 M ha Potential:20 times Source:CTC

New Ethanol & Sugar Plants > Red are new Plants

Logistic Exportation in Brazil

CONCLUSION

Ethanol is Better Alternative Reduction of the oil dependence Energy diversification MTBE and lead replacement Kyoto Protocol and Carbon Credit Opportunities There are car technologies to use ethanol Brazil can increase production with adequate price

The brazilian vocation for biofuels Equator line Capricorn Tropic 30o S Cancer Tropic 30o N

I believe Ethanol is one of the best alternative to match part of World Biofuel needs. Brazil is prepared to attend part of the needs in a Sustainable way. The cars markers are fully prepared to adjust the vehicles to biofuel. Than all together, we can allow a better World Environmental Conditions by using biofuel.

Petrobras General manager Vice President BJE -Tokio THANK YOU www.petrobras.com.br Kuniyuki Terabe terabe@petrobras.com.br Petrobras General manager Vice President BJE -Tokio