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Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE MINISTRY OF MINES AND ENERGY Brazilian Oil, Gas and Reneweble Fuels Policies.

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Presentation on theme: "Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE MINISTRY OF MINES AND ENERGY Brazilian Oil, Gas and Reneweble Fuels Policies."— Presentation transcript:

1 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE MINISTRY OF MINES AND ENERGY Brazilian Oil, Gas and Reneweble Fuels Policies João José de Nora Souto Deputy Secretary of Oil, Natural Gas and Renewable Fuels Quito – 13 th July 2011

2 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Guidelines for the Brazilian Energy Policy 2 Energy Supply Security Reasonable Tariff Policy Service availability for the entire population Regulatory framework stability Strengthening of planning Energy matrix diversification and renewables usage National energy integration National technological development Concern about social-environmental constraints

3 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE 3 Source: PDE 2019, IEA Data Services - World Energy Balances and IEO 2010/DOE Brazilian Energy Supply Matrix (%) Energy (Mtoe) World 2008: → Brazil 2009: 2,0% World 2020: → Brazil 2019: 2,9% GDP Growth: 4.7 % per annum 5.8 % p.a.

4 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE E&P Activity in Brasil Total sedimentary area: 7.5 million sq km 2.8 million sq km of E&P efective area (37.3% from total) Granted area: th sq km (12.3% from efective area) 376 exploratory blocks 392 fields in production phase 7 blocks at Onerous Assignment 80 E&P concessionaries Source: ANP, 2010

5 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Oil & Gas Statistics  Proved Reserves (December, ): billion barrels (+11% over 2009)  Production (2010): 2.14 million barrels/day  Consumption (2010): 2.23 million barrels/day  Imports (2010)*: 0.34 million barrels/day  Exports (2010)*: 0.63 million barrels/day  Refine capacity (2010): 2 million barrels/day  Reserve / Production Rate - R/P: 18.3 years Source: MME 2011 and ANP 2011 (www.anp.gov.br)  Proved Reserves (December, ): billion m³ (14.9 tcf, +16% over 2009)  National Production of NG (2010): million m³/day  Consumption in Process, Reinjection, Flare (2010): million m³/day  National Gas made available to the market (2010): million m³/day  Imports (transport consumption deleted )*: million m³/day  Total supply of natural gas (2010): million m³/day  Reserve / Production Rate - R/P: 22.8 years Natural Gas: Expected Investments: R$ 8,96 billion Petroleum: Expected Investments E&P: R$ 232,91 billion

6 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Main Derivates: GLP, Nafta, Gasoline, QAV, Diesel, Fuel Oil and Coke. Source: PDE and ANP, 2011 National Oil Production and Demand – 2010 to 2019

7 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Supply and Demand for Oil Products (Kbbl/day) Surplus 96% deficit 85% Maximum deficit between 1970 and 2009 Surplus 6% Note: % surplus and deficits = net external trade divided by internal demand In 2019, net imports will be around 2,200 Kbbl/day Supply Demand

8 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Natural Gas Supply and Demand Source: PDE Northern Region not included

9 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Natural Gas Supply and Demand Projections ( Mm³/day ) deficit 28% deficit 13% Surplus 21% Note: % surplus and deficits = net external trade divided by internal demand (a) Expected production, based on known reserves (imports of 24 Mm³/day) (b) Expected production, based on known and to be discovered reserves (net exports of 40 Mm³/day) Supply Demand

10 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE 10 Main Oil & Gas Discoveries in Pre-salt Granted area: 42 th sq km (28%) Cession area: 3.,74 th sq km(2.5%) Estimated volumes (12/2010) 25.3toto33.8billionboe Parque das Baleias 1.5 to 2 biboe Franco 2.0 to 5.5 bi boe Iara 3 to 4 bi boe Lula - Cernambi 8.3 bi boe Guará 1.1 to 2 bi boe Entorno de Iara 0.6 to 0.8 bi boe Florim 0.1 to 0.4 bi boe Sul de Guará 0.1 to 0.3 bi boe Sul e NE de Tupi 0.5 to 0.7 bi boe Peroba 1.1 to 1.8 bi boe Libra 7 to 8 bi boe

11 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE E&P Legislation Law nº 9,478/1997 – Petroleum Law, establishes concession rules for outside of Pre-salt polygon Law nº 12,351/2010 – Establishes the use of production sharing contracts for oil and gas exploration and production in Pre-salt polygon and areas with strategic or high potential for oil and creatse the Social Fund to receive the results – Petrobras will be the only operator at new contract areas (PSC) in the Pre-salt polygon, with at least 30% of work interest in the contracted consortium – Government will either contract Petrobras directly or other companies through bidding – Contract is under construction with collaboration of oil companies associations. At the end it will be object of public debate – Block offers at PSC model will take into account the national policy for oil exportation and the national industry for oil and gas sector capacity to attend the requirements of the Local Content policy – Social Fund - resources will be invested in profitable activities in Brazil’s or foreign countries. Profits will be used in national projects to reduce poverty, and to improve education, public health, culture, sports, science and technology, environmental issues and to mitigate climate changes

12 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Natural Gas Law - Overview Law nº 11,909/2009 and Decree nº 7,832/2010 Establishment of a new framework for natural gas transport activities Main goals: Increase investments in natural gas exploration, production and infrastructure Expansion of Brazilian natural gas market Competition in transport will bring more investments in E&P, resulting in more investments in infrastructure, creating a virtuous circle New concession contracts should bring more competition in the transport sector

13 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Local Content Policy Concessionaries operating in Brazil must grant equal opportunities to local suppliers, giving them preference based on competitiveness – Contract clause establishing minimum percentage for local supply of goods and services Aims to enhance the participation share of national industries, in a competitive and sustainable way, at local and foreign projects for petroleum industry Local suppliers development will be necessary to attend petroleum industry contract compromises Brazilian and foreign companies associations to produce locally are encouraged 13

14 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Oil and Gas Rounds 11 th Bidding Round for exploration blocks in concession modality planned to November, st Bidding Round in production sharing modality planned to take place by the end of

15 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE 15 Refining Instaled Capacity Expansion (Kbbl/day) (a)Base Line: +38 expansion of the current refineries Abreu e Lima Refinery (PE) COMPERJ Refinery (RJ) + 30 Potiguar Refinery (RN) (b)Premium refinery trajectory: base line (CE) (MA) Oil Production in 2019 = 5,113 Kbbl/day

16 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE BioenergyBioenergy 16 Bioethanol The ethanol production will rise from 27,9 million m³ (2010) to 73,3 million m³ (2020). The usage of ethanol allows Brazil to avoid, yearly, around 10% of the Green House Gas emissions. Flex-fuel vehicles represent almost 90% of the new vehicles licensed (2011) The productivity of sugarcane ethanol in Brazil is the highest in the world (6,800 l/ha). Biodiesel Dec. 2004: Launch of the National Program for the production and use of Biodiesel Growing use of Biodiesel contributes to reduce urban pollution, improving life quality of the citizens. Brazil is already the world’s 3 rd largest consumer (after Germany and France) Accomplished in 2010: Obligatory addition of 5% of biodiesel on fossil diesel.

17 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Ethanol and Biodiesel Projections – 2011 to 2020

18 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Sustainable Biofuels Expansion Sugar Cane Agro- ecological Zoning BRAZIL – Qualified Areas (P, R, M) in Livestock (Ap) and Agriculture (Ag) P – Areas qualified as “Preferential” R – Areas qualified as “Regular” M – Areas qualified as “Marginal” Due to environmental reasons, the bill would effectively make 92.5% of Brazil’s national territory off-limits for sugarcane farming and processing. Excluded biomas Suitable areas identified sum up to 64 million hectares (or 7.5% of the territory) Currently, sugarcane for ethanol corresponds to 4 million hectares or 1% of arable lands.

19 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Sustainable Biofuels Expansion Palm Oil Agro-ecological Zoning Restricts 86,4% of the apt areas in the agroclimatic point of view and 96,3% of the Brazilian territory Potential for sustainable expansion: 31,8 million ha Plantation in areas with previous human activities identified until 2008 only Fobids native vegetation deforestation Orient the recovery of degraded lands

20 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Latest Biofuel Regulations Publication of the MP 532/2011 by the Executive: With this regulation the ethanol is no more considered an agricultural good. Now ethanol is considered a energetic product. The measure gives the ANP (regulatory agency) the competence to regulate, authorize and supervise the activities related to production, importation, exportation, storage, transportation, distribution and commercialization of ethanol. 20

21 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE 21 Energy Investments Billion US$(%) Electricity Power Generation Transmission Oil and Gas Biofuels396.9 TOTAL ENERGY: Makes up about 2.2% of GDP and 10.1% of gross fixed capital formation on the period ( ) 2019 Energy Plan: Investments Source: PDE 2019 (MME), R$ 1 = US$ 1,69 (oct. 2010) Investment Opportunities

22 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Brazilian Oil & Gas Policies  Ensure the supply of oil and natural gas  Transform Brazil into a net exporter of oil and its derivatives  Develop the national industry of suppliers of goods and services for the oil sector  Auctions for Oil Exploration Blocks  Realization of Round 11 in Concession System  Realization of Round 1 in Production Sharing Regime  Local Content Policy  Ensure that investments in the development of hydrocarbon production in Brazil result in sustainable growth and competitiveness of domestic industry  Natural Gas Sector  Regulation of the Natural Gas Act  Formulation of the Plan for Expansion of Pipeline Network - PEMAT  Assessing the PRE-SALT potential

23 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE FINAL REMARKS Brazil has excellent opportunities for oil and gas exploration and production, presenting growing expectations for both reserves and production The Brazilian Government wants international oil companies as partners and not as simple finance investors for the oil field development projects, even at the Pre-Salt The pace of bidding rounds in the Pre-Salt Area will depend heavily on local industry's capacity to provide goods and services required by local content rules Foreign companies are encouraged to seek partnerships with local suppliers and establish manufacturing operations within Brazil Government has also policies to achieve sustainability in the oil industry, according to long term goals The Brazilian Government will at all times give ways to assure and respect contracts, induce and facilitate the international trade The Brazilian energetic policies intend to keep increasing the participation of renewable fuels in its energy mix in accordance to sustainability criteria.

24 Ministry of Mines and Energy Secretariat of Energy Planning and Development – SPE Rio de Janeiro, July 2011 THANKS! João José de Nora Souto Deputy Secretary of Oil, Natural Gas and Renewable Fuels MINISTRY OF MINES AND ENERGY


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