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Petrobras Distribuidora, has a 6 thou- sand-strong workforce and leads the mar- ket, holding a 38.4% share of it. To implement the strategies and objectives in the Strategic Plan, Petrobras Dis- tribuidora will invest the equivalent of $2.02 billion over the period 2010 to 2014, which will increase BR?s market share to 40% in 2014.Petrobras is investing $4 billion in 2012 to improve its refining complex. This in- vestment in the refineries is essential, most refineries in Brazil are optimized to work with the heavier oil usually found in the Campos Basin and many of the ex- isting refineries will need major ajust- ments in order to be capable ofprocessing the much lighter pre-salt oil. There is an expected increase of 56% in hydrotreatment capacity and 18% in waste conversion. These investments are for improving fuel quality and increasing profit margins. In 2011, eighteen new units went on stream at the refineries to improve oper- ations, make environmental adjustments at the units, enhance energy efficiency, and increase the flexibility of producing oil products.Petrobras?s domestic and foreign pro- duction target for oil, NGL?s (natural gas liquids) and natural gas for 2016 is 3.3m boe/day, including 3.0m boe/day in Brazil. Oil and NGL production in Brazilis expected to reach 2.5m bpd in 2016. Most production growth is expected to occur from 2014 onward, with an annual estimated increase of between 5 and 6%for the period 2014-2016. For 2012- 2013, the company expects to maintain the same production levels as in 2011 (+/- 2%).2012-2016The Petrobras business plan for 2012- 2016 gives us a clear idea of the impor- tance placed in downstream development, assets and infrastructure, as it only looses to E&P in terms of budget for the segment. The Downstream segment has invest- ments of $51.7b for the projects underimplementation. The refining capacity expansion projects to come into operation by 2016 include the Abreu and Lima Re- finery and the first phase of Comperj, al- ready in the implementation phase. The company?s strategy entails pressing for- ward with the refining capacity targets of the previous plan, seeking to align the two new refineries currently under evalu- ation with international metrics. Petrobras owns or has an interest in 11 of Brazil?s 13 refineries and has four ad- ditional refineries under construction or in advanced planning. Consequently, Petrobras accounts for roughly 98% ofBrazilian refining capacity. Long-term oil demand is expected to be high, with growth forecasted at approximately 1.9% per year over the next 20 years, from the 2.5mbpd seen in 2009. BMI is predictingthat Brazil will be consuming 3.35mbpdby 2020, but at the same time, net exports will rise to 1.98mbpd including biofuelsdue to the development of offshore re- serves. With these numbers it becomes appar- ent that the O&G market in Brazil is in a definite growth curve, what is still nebu- lous is if the country will be able to getthe vital infrastructure asset it needs func-tioning in time, in order to be able to runa smooth Downstream operation for the pre-salt produce. It will be a massive hur- dle any way you look at it. July 2012www.marinelink.com 35Brazil?s Downstream ChallengesFor those outside the country, and even sometimes in, Brazil can appear a quag- mire of rules, regulations and challenges to conducting efficient, profitable busi- ness. To help address some of the inherent infrastructure issues that must be resolved to realize the full potential of the country?s O&G business, MR tapped Douglas Moura (pictured below), Logistics Specialist , Brazilian O&G market. Moura?s experience includes five years in the downstream industry followed by upstream work at Subsea 7, and then on to OGX as procurement analyst. Re- cently, he has worked with Westshore as a shipbroker and is currently employed by Brazilian tug boat operator SulNorte at its office in Rio de Janeiro as Opera- tional Coordinator. ?The first point is that the newly build refineries probably won?t be ready to op- erate at the same time that they were forecast to at first, so the production com- pany will have to use the refineries that already exist, which do not have the capacity to produce petroleum derivatives during the new production,? said Moura. ?The Comperj complex is being built in a place that, if looked at through a geographic perspective is good, for they are in the middle of the state of Rio de Janeiro.? ?Unfortunately, the infrastructure necessary does not exist today and everything is being built from scratch. The port to support this refinery is still not approved and its construction still has not begun. This would be the TPN port, which would receive the petroleum coming from the pre-salt and would send it to the refinery. The gas from the pre-salt would be sent to the TPN port by an underwater gas pipeline which would make landfall at the TPN port, and continue from there to the Comperj refinery. Another major hurdle is the fact that roads are still not ready, and both the cities of Maricá and Itaborai do not have the necessary in- frastructure to support the influx of people and pollution these two major infra- structure projects will bring? said Douglas. ?In order to build a refinery destined to pre-salt production there is a lot of work to do.? ?The cost of the product following the market law, where the refinery has more capacity to produce than client demand, will force the price of the product to belower, whereas a scenario in which the capacity to produce is lower than client demand, which in the case, will result in a higher price for the product,? he said. ?Brazil faces big challenges to supply its market after the product leaves the re- finery. The cheapest transport from the refinery to the distribution center is the pump modal. However this is possible only for the company which has its bases as close to the refinery as is possible. The new refinery that is being built does not have any link with any distribution fuel center due to the distance from the traditional market pool.? ?Unfortunately, the infra- structure necessary does not exist today and every-thing is being built from scratch. The port to sup- port this refinery is still not approved and its con- struction still has notbegun.?Petrobras Business Plan ($236.5B)SegmentInvestments%E&P 141.8 60.0Downstream 65.527.7 Gas & Energy 13.85.8Petrochemical 5.0 2.1Distribution3.61.5Biofuels3.81.6Corporate3.01.3Total 236.5100 (Photo: Claudio Paschoa)Ponta Negra viewed from the sea. MR#7 (34-41):MR Template 7/9/2012 9:56 AM Page 35