Opportunities and Investment in Brazil: A BP perspective Dr Dominic Emery BP Alternative Energy
Brazil - Economic Overview • The largest and most populous country in Latin America, leading regional economy and the 6 th largest economy • Rich in natural resources, and enjoys a comparative advantage in commodity exports of cashcrops, wood and paper products, minerals and metal products • Brazil’s diverse industrial sector accounts for 1/3 of the country’s GDP, making it one of the most advanced industrial nations in Latin America • Tighter economic policy and softened external demand dampened the pace of Brazil's economic expansion considerably in 2011; real GDP growth declined to an estimated 3.8%, and is projected at 3.6% for 2012 2
BP in Brazil • Presence since 1957 (Castrol plant in Rio de Janeiro) • Risk Contracts 1970s-1980s • Foz do Amazonas exploratory campaign 1998-2005 • Air BP since 2002 − 2012: total of18 airports • BP Biofuels since 2008 − Tropical Bioenergia − CNAA • Butamax Advanced Biofuels since 2010 • BP Energy do Brasil since 2011 • Currently present in 11 states and Federal District 3
Exploration and Production in Brazil • The world’s leading deepwater E&P province • Currently 14 th largest oil producer in the world – aims to double oil production to almost 5million b/d by 2020 • Brazil is becoming increasingly gas-rich and production capacity growth is expected to exceed demand growth • NOC Petrobras dominates the upstream, midstream and downstream sectors • Multiple opportunity types exist across the country onshore and offshore, conventional and unconventional • The pre-salt has been a game changer and the government is seeking to increase state control • Leading companies are seeking entry opportunities to Brazil, which is already a core growth area for major IOCs such as BG and BP 4
BP Exploration and Production Brazil BM-BAR-5 BM-BAR-5 40% BP BM-BAR-3 0 5 10 20 40%BP 2010 - Devon deal: 10 licenses Km BT-PN-2 40%BP 2011 - Equatorial margin: 4 licenses BM-CE-2 BT-PN-3 40%BP 40%BP BM-CE-1 40% BP BM-CE-2 Today: 40%BP • 3 discoveries (Itaipu, Wahoo & Xerelete) 0 5 10 20 Km • 8 offshore exploration • 2 onshore exploration • 1 producing asset BM-CAL-13 100% BP BM-C-32 40%BP Largest resource potential associated to BM-C-30 25%BP Exploration & Appraisal activity BM-C-34 (C-M-471 & C-M-473) 2012 -2013 $450m planned spend on 30%BP Polvo exploration and appraisal 60% BP BM-C-35 35%BP Xerelete 0 20 40 80 17.65% BP Km BP operated BP operated Operated by others Operated by others 0 125 250 500 Km 5
BP Biofuels Brazil Biofuels Production (M Litres) Brazil Cane to Ethanol: •Aim to be a top tier player in Brazilian cane to ethanol production by 2020 •Production costs of $50/boe and falling Growth of production clusters to achieve scale: • CNAA acquisition in 2011, adding 2 new mills and 3000 new staff, at a cost of $680m • Tropical JV started up in 2008, BP 50% share Tropical Bioenergia, Brazil • Acquisition of remaining 50% of Tropical in 2011, adding 1,100 staff • Expansion of Tropical in 2012 in progress • Further mill expansions and new builds planned • R&D in Biobutanol and sugar to chemicals Jennings Plant, Louisiana 6
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