1. adilson@ie.ufrj.br Energy and Environment Innovation Systems BRICS Conference Rio -Brazil April 25/26/27, 2007

2. adilson@ie.ufrj.br Hydrocarbons Challenges and Opportunities Adilson de Oliveira Professor Instituto de Economia Universidade Federal do Rio de Janeiro

3. adilson@ie.ufrj.br Agenda Cooperation: the opportunity Off-Shore: the challenge

4. adilson@ie.ufrj.br

6. The OECD will be increasingly dependent on imports of hydrocarbons from the Middle East And the BRICS?

7. adilson@ie.ufrj.br Oil Balance Million Barrels per day

8. adilson@ie.ufrj.br Natural Gas Balance Trillion Cubic Feet

9. adilson@ie.ufrj.br Deep off-shore –The next frontier –The opportunity

10. adilson@ie.ufrj.br The Off-Shore Challenge Source: Petrobras

11. adilson@ie.ufrj.br Brazil 1974: First off-shore discovery 1981: giant fields (300m to 2100m) High complexity, high risk; high premium Petrobras decided to take the risk

12. adilson@ie.ufrj.br Geological Strategy Develop domestic capabilities –Training 1300 geologists 10,000 engineers –Learning by doing New models for turbidite formations Understanding the Brazilian plataform

13. adilson@ie.ufrj.br Technological Strategy Incremental innovation (until 1984) –1960/1980: acquisition and assimilation of technologies –1980/1990: adaptations and absorption of design –1990/2000: joint R&D; knowledge production –2000: joint R&D; technology exchange; specialized knowledge production

14. adilson@ie.ufrj.br Technological Strategy Source: Petrobras

15. adilson@ie.ufrj.br Technological Strategy Radical innovation –Procap 1000 –Procap 2000 –CENPES plataform design : 30% cost reduction 1992: Distinghished Achievement Award (OTC)

16. adilson@ie.ufrj.br Oilfields Discovered (Southeastern Basins) Source: Petrobras

17. adilson@ie.ufrj.br Technologies Wet christmas tree (200m) Flexible risers Robotics (over 300m) New anchors (plastics) New technologies for liquid flow Horizontal hole Drilling mud Resistance of drillling equipment Conversion of ships Automation of plataforsms

18. adilson@ie.ufrj.br Financial Strategy Antecipate cash flow Early production systems (Sedco- Hamilton) –Drilling equipment removed –Replaced by small processing plant –From 1977 to 1984: 17 EPS

19. adilson@ie.ufrj.br Recent Exploration Investments Source: Petrobras

20. adilson@ie.ufrj.br Reserves (oil and gas) Source: Petrobras

21. adilson@ie.ufrj.br Production Targets Source: Petrobras

22. adilson@ie.ufrj.br CONCLUSION BRICS –Can have a joint strategy to achieve security of energy supply –Technological cooperation for the development of deep-off-shore is critical –The National Oil ompanies have a key role in this process