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Pre-Salt Management, Policy, and Viability
In August, the Brazilian government submitted four proposed laws
Strategy
Investments
Based on integrated growth, profitability and social and environmental responsibility as factors for sustainability, and focused on the goals aimed to grow and expand our business, our corporate strategy includes an investment program worth US $174.4 billion, according to the 2009-2013 Business Plan, a US$62 billion increase compared to the previous plan (2008-2012). Projects in Brazil will get US $158.2 billion, i.e., approximately 90.7% of the total. Meanwhile, the remaining US $16.2 billion will be invested abroad, focusing on activities in Latin America, the United States, and Western Africa.
Petrobras’ corporate strategy includes:
- Growing oil and gas production and reserves sustainably, and being recognized for excellence in E&P, ranking the company among the world’s five biggest oil producers;
- Expanding the itegrated performance in refining, trade, logistics, and distribution with a focus on the Atlantic Basin and the Far East;
- Consolidating market leadership in the Brazilian natural gas market, with international operations, and expanding the power generation business in Brazil;
- Operating in petrochemicals in an integrated manner with other Petrobras System businesses;
- Performing globally in the biofuels segment, holding relevant stakes in the biodiesel and ethanol businesses.
When broken down per segment, the investment highlights how the strategy is focused on E&P, which concentrates US $104.6 billion, or 59% of the total approved for the period. The 2009-2013 Business Plan revised and expanded the goals of growing production in the Pre-Salt exploratory frontier as compared to the previous plan.
Acknowledged as one of the largest oil discoveries in Brazil, the Pre-Salt encompasses marine portions of much of the coastline where there is light oil, i.e., high-quality, higher market value petroleum. Because they are located at great depths, at times upwards of 7,000 meters below the sea surface, there are a few production challenges to be faced, such as researching materials to be used to line the wells, adjusting the hot oil temperature to flow in pipelines in icy waters, flow control, and there is a need for studies both on rock geometry for better well placement, and on cost and drilling time reductions.
Oil production got underway in the Pre-Salt in May. From 2009 to 2013, US$28 billion will be earmarked for the development of this area. Production is estimated to reach 219,000 barrels per day (bpd) there as early as 2013, when the company’s total production is slated to be 3.66 million barrels of oil equivalent per day (boed). To keep up with this growth, the Business Plan maintains its strategy of increasing the refining capacity. With US $43.4 billion earmarked for the period, investments to be made in the Refining, Transportation, and Commercialization segments will focus on processes to improve fuel quality, on increasing the heavy oil processing capacity levels, and on expanding the capacity of the refining facilities. Operations will start at the Abreu e Lima Refinery and at the Rio de Janeiro Petrochemical Complex (Comperj), both in 2012, and the beginning of Phase 1 of the Premium I and II Refineries will take place in 2013. By 2013, it is estimated 2.27 million bpd of crude oil will be being processed in Brazil. After achieving self-sufficiency in oil supply for Brazil in 2006, one of our next challenges is self-sufficiency in oil products.
The investments in Gas and Power will be used to increase Petrobras outflow capacity and grow its sales in the domestic market, in line with the increasing domestic production of natural gas.
With the strategy of operating globally in the biofuels sector, with a relevant participation in the biodiesel and ethanol businesses, the company expects to invest US $2.8 billion in the 2009-2013 period. The Technological Program for Biofuels Development will receive US$530 million in this period to develop first and second generation biofuel technology.
| INVESTMENTS FROM 2009 TO 2013 | |||
|---|---|---|---|
| Total | 174.4 | 100 | |
| Segment | Investment ($ billion) | % | |
| E&P(1) | 104.6 | 59 | |
| Refining, Transportation and Trade | 43.4 | 25 | |
| Gas & Energy | 11.8 | 7 | |
| Petrochemicals | 5.6 | 3 | |
| Distribution | 3 | 2 | |
| Biofuels | 2.8 | 2 | |
| Corporate | 3.2 | 2 | |
Despite the repercussions of the 2008 economic crisis, with few options to access the credit market at a reasonable cost in the beginning of the year, Petrobras secured bridge loans worth US $6.5 billion from financial institutions, and funding in the order of US $25 billion from the National Development Bank (BNDES) for projects to be developed by it and two of its subsidiaries: Abreu e Lima Refinery S .A. (RN EST) and the Associated Gas Carrier (TAG ).
In 2009, the Petrobras System secured total funding of R$14.9 billion in current liabilities and of R$84.7 billion in the non-current, 12.1% and 69.2% more than a year earlier, respectively. In the current liabilities, the highlight is on the funding from foreign financial institutions (R$9.3 billion), debentures (R$1.7 billion), BNDES (R$1.5 billion) and export credit notes (R$1.1 billion).