PROCUREMENT

POLICY
AND CRITICAL
EQUIPMENT SUPPLY

DISCLOSURE & IMPORTANT NOTICE

The presentation may contain forecasts about future events. Such forecasts
merely reflect the expectations of the Company's management. Such terms
as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project",
"seek", "should", along with similar or analogous expressions, are used to
identify such forecasts. These predictions evidently involve risks and
uncertainties, whether foreseen or not by the Company. Therefore, the
future results of operations may differ from current expectations, and
readers must not base their expectations exclusively on the information
presented herein. The Company is not obliged to update the
presentation/such forecasts in light of new information or future
developments.

PRESENTATION SUMMARY

1. Business Plan
2. Pre-salt Overview
3. Local Content
4. Brazilian Companies
5. Relevant equipment demand for the
period 2012-2017

6. Suppliers Qualification & Register

7. Conclusion

BUSINESS PLAN

Investments during the 2012-2016 period

2012-2016 BP

Under Implementation

All E&P projects in Brazil and projects of the

remaining segments in phase IV*

Under Evaluation
Projects for the remaining segments currently
in phase I, II and III.

US$ 208.7 Billion

US$ 236.5 Billion

980 projects

US$ 27.8 Billion

833 projects

27.7%

147 projects

17% (**)

24.8%

(US$ 65.5 Billion)

(US$ 4.6 Billion)

US$ 51.7 Billion

28%

7%
(US$ 1.9 Billion)

0%
65.8%

60.0%

3.7%

(US$ 137.2 Billion)

(US$ 141.8 Billion)

(US$ 7.8 Billion)

5.8%

1.8%

(US$ 13.8 Billion

50%

5%

(US$ 13.9 Billion)

(US$ 1.3 Billion)

(US$ 3.7 Billion)

2.1%

1.7%
(US$ 3.5 Billion)

(US$ 5.0 Billion)

1.5%

0.9%

(US$ 3.6 Billion)

21%
(US$ 6.0 Billion)

(US$ 1.9 Billion)

1.6%

1.4%

1.3% (US$ 3.8 Billion)

(US$ 3.0 Billion)
E&P

(US$ 0.1 Billion)

(US$ 3.0 Billion)

RTM

G&E

Petrochemical

Distribution

** E&P abroad
Biofuel

Corporate

* Includes budget already designated for projects under evaluation for RTM, G&E, Petrochemical, Distribution, Biofuels and Corporate

Programs supporting the 2012-2016 BP

2012-2016 BP
US$ 236.5 Billion

Cost
Optimization
Program

Increase of
Operational
Efficiency
Program in
Campos Basin

Local
Content
Management
Program

Integrated Management of the Companys Portfolio

Environment

Safety and

Production Curve in Brazil Post-Salt, Pre-Salt and Transfer of Rights

Oil and LNG Production
Thousands bpd

Franco 4

Norte Pq.
Baleias (P-58)

Baleia Azul
(Cid. Anchieta)
Bana e
Piracaba
(Cid. Itaja)

Roncador IV
Piloto Sapinho
(P-62)
(Cid. So Paulo)
Sapinho
Piloto Lula NE
Norte (Cid.
(Cid. Paraty)
Ilhabela)
Papa-Terra
Iracema Sul
(P-61 e P-63)
(Cid.
Roncador III
Mangaratiba)
(P-55)

Iracema
Norte

Lula Alto

Lula Ext. Sul Sul de Guar

Jpiter
Iara Horst

Lula Central

NE Tupi

Carcar

Lula Sul

Carimb

Sul Pq. Baleias Entorno de Iara

Franco 1

Aruan

Franco 5

Carioca 1

Iara NW

Espadarte I

Lula Norte

Franco 3

Espadarte III

Maromba

Florim

Bonito

Franco 2

19 up to 2016

Production Units

38 up to 2020

2011

2016

2020

2,022 kbpd

2,500 kbpd

4,200 kbpd

Pre-Salt (Concession)
5%

Transfer of Rights
1%
Pre-Salt (Concession)
30%

95%
Post-Salt

New Discoveries (*)

12%
Transfer of Rights
19%

69%
Post-Salt

(*) Includes new opportunities in blocks where discoveries have already been found

Post- Salt
42%

28%
Pre-Salt (Concession)

PETROBRAS: Reserve Replacement Ratio > 100% for the 20th consecutive year

New Discoveries 2005-2010

34 billion bbl

In the last 5 years, more than 50% of the

new discoveries worldwide were made in
deep waters. Brazil accounts for 63% of
these discoveries.

Projections indicate that as Brazil develops

these newly discovered reserves, it will
lead non-OPEC supply growth until 2030
(PFC Energy).

19%
49%

32%
Brazil
Brasil

Deep Waters
Other Discoveries

Petrobras: Proven Reserves in Brazil (billion boe)

+3%

15.28 15.71
13.23

Reserves Incorporated in 2011

+164%

Total: 1.24 billion boe

Pre-Salt: 1 billion boe

9.65
7.53

2011

2010

2005

2000

1995

5.96

1991

Reserve/Production 19.2 years

E&P Investments

2012-2016 Period
Exploration
US$ 25.4 Billion

Production Development
US$ 89.9 Billion

24%
(6)
Pre-Salt
8%
(2)

69%
(17.5)

Post-Salt

49%
(43.7)

Transfer of Rights

34%
(30.2)

18%
(16.0)

Besides Exploration and Production Development, E&P investments in infrastructure total US$ 16.3 billion

BUSINESS PLAN - 2012-2016

More information about the Business Plan 2012-2016 at:

http://www.investidorpetrobras.com.br/2012-2016-businessplan.htm

PRE-SALT OVERVIEW

WHAT IS PRE-SALT?
Located in a remote area, up to 300 km
offshore

Water depths that

can
exceed 2,000 meters

Corcovado
Hill

Total depth from

5,000 to 7,000
meters

Post-Salt Layer
Focus up to
2006

Salt layer more than

2,000 meters thick.
Pre-Salt Layer
New Exploratory
Border

Large Oil Carbonatic

Reservoirs

WHAT IS PRE-SALT?

WHAT IS PRE-SALT?

PRE-SALT - SOME TECHNOLOGICAL CHALLENGES

Drilling and Completion
Construction of high angle
wells, deviated into the salt
zone
Well integrity

Penetration rate in the

microbial carbonate
reservoir
New alloys to reduce costs
of well materials

WHAT IS PRE-SALT?
PRE-SALT - SOME TECHNOLOGICAL CHALLENGES
Reservoir
Reservoir
characterization
Rock fluid interaction
EOR

WHAT IS PRE-SALT?
PRE-SALT - SOME TECHNOLOGICAL CHALLENGES
Subsea

Flexible risers for water depth

of 2,200m (7,218 ft)
Flow assurance

Scaling control

WHAT IS PRE-SALT?
PRE-SALT - SOME TECHNOLOGICAL CHALLENGES
Floating Production Units
Mooring in 2,200m water
depths
Interaction with the risers
system
CO2 processing

LOCAL CONTENT

LOCAL CONTENT
Petrobras Local Content Policy

PETROBRAS LOCAL CONTENT POLICY

The projects and contracts of Petrobras
must withstand the challenges of the
Strategic Plan and maximize Local Content
in competitive and sustainable basis,
contributing to market development where
Petrobras operates, guided by ethics and
continued innovation.

LOCAL CONTENT
Legal Requirements

E&P
E&P

Exploration and
Explorao
e
Production:
Desenvolvimento:
Evidences to ANP
for
comprovaes
para
ANP
para novos
new concessions
contratos
de
contracts,
production
concesso, partilha
sharing
and onerosa
transfer of
e cesso
rights

RTC
Abast

There is no requirement to
No Content.
existe
Local
exigncia de
The
operatingLocal.
company
Contedo
states
its goal and
proves
Operadora
declara
e comprova
themeta
percentage
achieved
ndice realizado

G&P
G&E
There is no requirement to
No Content.
existe
Local
exigncia de
The
operating
company
Contedo Local.
states
its goal and
proves
Operadora
declara
e comprova
themeta
percentage
achieved
ndice realizado

Operating expenses are not subject to the requirements of the Local Content by ANP

Local Content Measurement and Monitoring Program

Motivation:

Higher efficiency in maintenance and post-sales services, access to suppliers,

logistics cost optimization, reduction on transportation and delivery time.

Objective
Maximize the use of the Brazilian equipment and services industry capacity for
Bottlenecks
2012-2016 BP procurement demands, with schedules
and costs
identification
and aligned with best
industry
market practices
mobilization

Action Plan
I

Minimum Local Content

Planning of 2012 2016
BP projects
Information on Industry Capacity
Identification of imported goods and
services
Identification of items for nationalization

II

Local Content
Monitoring

Implementation of Local Content Indicators

Monitoring of local content in projects
Actions for recovering occasional deviations in
schedule and costs

III

Local Content
Measurement
Preparation of Execution Reports of Local
Content per project (forecast x executed)
Updating data base for future projects

REFINERIES AND G&E DECISION MATRIX

Item X
Is it
possible to
buy in
Brazil?

YES

NO

YES

National
demand is
enough to
justify adding
capacity?
(incremental or
new plant)
Item
components,
individually,
NO
can improve
local content?

YES

Use local industry

Develop
Component
Supplier

NO

Import

Local Content Downstream projects Global Average

Source: ONIP

99%

100
85%

80
68%
60

52%
44%

40

20

0
Global

Goods
Equipment
(Eq+Mat)

Materials

Services

HOW TO MESURE LOCAL CONTENT

Local Content Formula

% LC = 1-

Imported Portion
System Total Price
without tax

X100

PROMINP
HISTORY - 2003

PROMINP Mobilization Program for the

National Oil and Natural Gas Industry.
Coordinated by the Ministry of Mines and
Energy, was established by the Federal
Government through the Decree nr. 4925,
dated Dec/19th, 2003.
Its main goal is to maximize the participation
of the national goods and services industry, on
a competitive and sustainable basis, in the
implementation of projects in the area of
petroleum and natural gas in Brazil and
abroad.

Construction of research centers in Brazil

Petrobras partnerships with more than 120 universities and research centers
have led Brazil to have a prominent worldwide applied R&D complex

50 Thematic Networks

At the UFRJ technological complex, 9 P&D

centers of important equipment and services
suppliers are already in construction/operation:
Schlumberger

FMC Technologies

Baker Hughes

Usiminas

Halliburton

TenarisConfab

General Electric
Vallourec & Mannesman

Other Companies with development plans for

technological centers in Brazil:

CENPES expansion (Mar/2012)

Cameron
IBM
Technip

Weatherford
Wellstream

Source: E&P-CORP, May 25/2012 and CENPES, May 28/2012.

BRAZILIAN
COMPANIES

BRAZILIAN COMPANIES
Definition

Brazilian companies means companies

that have manufacturing processes and
after-sales services in Brazil, thus creating
jobs and collecting taxes in the country.

RELEVANT
EQUIPMENT
DEMAND
FOR THE PERIOD
2012-2017

Competitiveness

INDUSTRIAL SECTORS PERFORMANCE ANALYSIS

Production
capacity
expansion

Demand time
spreading

Changes in
production paths

O&G offer
changing

Demand
fulfillment

High

13

14

15

Sectors

3
4

Medium

17
19

10
18

16
12

20

11

1. Telecommunication
2. Substation and transformers
3. Generators and Motors
4. Electrical Distribution Panels
5. Automation
6. Pipelines
7. Mills
8. Steam Turbines
9. Winches
10. Valves
11. Flanges and Connections
12. Boilers Works
13. Subsea - Equipment
14. Subsea - Umbilical and
Flexible Pipes
15. Pumps
16. Alternative Compressors
17. Engines
18. Cranes (Onshore)
19. Engineering Services
20. Construction and Assembly
21. Instrumentation and
Measurement
22. Gas Turbines
23. Centrifugal Compressors
24. Electrical Motors (large
size)

Legend
Degree of dependence of O&GI

Low

21
22
24

23

Low

Productive Capacity

Medium

High

Local Content
Companies building capacity in Brazil
Products

Projects in Brazil
NKT Flexibles
New flexible pipe plant in Brazil in 2013.

Technip
Installation of new plant.
Wellstream

Current plant expansion in 2013 (60% capacity increase).

Subsea Pipelines
Prysmian

Plant expansion to produce flexible pipes.

Butting

Construction of a new plant for the production of line pipes.

Duco and Nexans
Ongoing discussions to establish new plants in Brazil.
Umbilicals

Oceaneering (MSD)

Current manufacturing capacity will double by early 2013.

MFX
80% expansion in manufacturing capacity by 2013.
Aker

Increase of manufacturing capacity.

FMC
Increase of manufacturing capacity and construction of a technology center.

Subsea Equipment
GE

Expansion of the Jandira Plant and the construction of a new unit.

Cameron

Industrial Expansion.

3030

Local Content
Companies building capacity in Brazil
Products

Projects in Brazil
. Rolls-Royce

Construction of new plant in Santa Cruz (Turbogenerators).

Turbomachines

Dresser-Rand
Construction of new unit in Santa Brbara do Oeste (Turbocompressors).

Offshore cranes

Drill pipes

CRA Tubing
High diameter pipes
Offshore steel
structures

Automation

MEP Pellegrini
Working through partnerships, ongoing discussions to establish new plant in Brazil.
V&M do Brasil

Adapting current units to manufacture pipes.

V&M do Brasil
Capacity to produce high corrosion-resistant alloys
USIMINAS

Current units under qualification.

Metasa
Industrial expansion.
Emerson

Industrial expansion to assemble equipments in Brazil.

EQUIPMENT AND MATERIALS REQUIRED FOR 2012-2017

Unit

2012

2013

2014

2015

2016

2017

Total

Pumps

un

899

1.737

942

381

96

331

4.386

Compressors

un

174

54

51

23

40

45

387

Cranes

un

23

25

24

93

Structure Steel (Ships Hull)

205.100

45.600

31.750

29.600

70.900

70.900

453.850

Structure Steel (Plataforms

Hull)

140.000

364.000

224.000

112.000

140.000

112.000

1.092.000

Structure Steel (Rigs Hull)

120.000

120.000

120.000

120.000

80.000

560.000

Flares

un

11

12

46

Power Generators (13,8 kV)

un

32

189

14

20

27

17

299

Power Generators (0,48 kV)

un

158

158

Tanks

un

253

180

68

55

39

89

684

Processing Towers

un

101

119

53

17

295

Reactors

un

114

71

189

Wet Christmas Trees

un

136

158

191

217

203

229

1.135

Offshore Wellheads

un

215

204

220

225

207

235

1.307

Dry Christmas Trees

un

457

522

436

324

189

120

2.047

Onshore Wellheads

un

458

522

436

324

189

120

2.049

Manifolds

un

10

18

23

15

12

21

99

Umbilicals

km

517

714

887

1.295

1.485

1.593

6.492

(**) This list does not exhaust all the equipment and materials required for 2012-2017 period.

EQUIPMENT AND MATERIALS REQUIRED FOR 2012-2017

Unit

2012

2013

2014

2015

2016

2017

Total

Tubing (Onshore)

28.681

28.681

28.681

28.681

28.681

28.681

172.084

Tubing (Offshore)

13.947

13.947

13.947

13.947

13.947

13.947

83.682

Flexible pipes

km

743

616

713

957

1.471

1.478

5.977

Risers

km

210

173

311

441

544

682

2.361

Turbines (Gas)

un

41

38

18

12

16

26

151

Turbines (Steam)

un

28

91

67

17

203

2.470

3.293

5.927

6.256

11.525

11.854

41.325

Turbo generators

un

32

37

12

12

37

138

Polyester mooring cables

km

182

249

319

113

170

114

1.147

Fiberglass pipelines

km

425

128

353

353

353

353

1.966

Electrical cables for CSP

km

9.562

8.487

10.073

10.363

38.485

Steam generators

un

HCC reactors

un

Special alloy boilers, reactors,

towers, and pressure vessels

un

64

79

67

219

Heat exchangers

un

61

63

65

196

Reformer Furnaces

un

Special alloys for tubing and

casings

(**) This list does not exhaust all the equipment and materials required for 2012-2017 period.

SUPPLIERS
QUALIFICATION &
REGISTER
Petrobras Concepts &
Requirements Overview

SUPPLIERS QUALIFICATION & REGISTER

Corporate Register
The Corporate Register is a database of Brazilian and foreign
companies interested in participating in bidding for Petrobras.
Petrobras Procurement Manual (MPC)

These companies, Brazilians

or4.1.6
foreigners, are eligible to
Item
(Approved
by the Board
of Directors)
provide to Petrobras high
complexity
services
or
equipment/goods, which are under permanent Petrobras
interest.
The evaluation approval, as part of the registration process,
ensures the incorporation of the company in the Petrobras
Corporate Register, obtaining the CRCC Certificate of
Registration and Classification. Then, the company could be
invited to participate of new biddings.

SUPPLIERS QUALIFICATION & REGISTER

Corporate Guidelines
Requirements:
Legal
Economics
Technical Approval

Complementary Corporate Guidelines

Requirements:
Health, Safety & Environment - HSE

Management & Social Responsibility

SUPPLIERS QUALIFICATION & REGISTER

Petronect
It is an e-Procurement portal, which provides tools for acquiring
goods and services for Petrobras System companies. In its
business platform are carried out several transactions ranging
from requests for quotes and sending proposals to
management of orders and contracting.

http://www.petrobras.com.br/en/supplier-channel/

www.petronect.com.br

SUPPLIERS QUALIFICATION & REGISTER

Since April 2012 the Suppliers Registration System was
incorporated to Petronect as a integrated tool and access point for
companies registration and bidding

SUPPLIERS QUALIFICATION & REGISTER

Register Flow Chart
Company Access at
www.petronect.com.br

Identification:
- Contact Information;
- Scope of Supply;
- Local Representative;

Criterias:
Technical;
- Legal;
- Economical;
- Managerial;
- Health, Safety &
Environment.

Identification

Questionnaire

Petrobras
Approval

Registration
Certificate
sent
to Company

Company Registration
in SAP Petrobras

SUPPLIERS QUALIFICATION & REGISTER

Legal Requirements
Foreign Companies
Proof of being duly established and registered in
the country of origin;
Legal Representative in Brazil the company must
provide its legal representative in Brazil (Power of
Attorney);
Letter stating that the company is not bankrupt or in
debt;

SUPPLIERS QUALIFICATION & REGISTER

Legal Requirements
Foreign Companies

Commitment Letter Through this document the

company shall formalize its intention of being included
in Petrobras Corporate Register;
Commercial Representative (indicated by and linked to
the supplier):
Not mandatory, but advisable (may be the own
company)
May be the same or other than the legal
representative

SUPPLIERS QUALIFICATION & REGISTER

Economic Requirements
Brazilian and Foreign companies:
Annual Reports with Audited Financial Statements or
Balance Sheet and Income Statement
Financial statements of foreign companies must be prepared under
IFRS or USGAAP
Economic calculation formulas and acceptance criteria are public,
available online in the instructions.

SUPPLIERS QUALIFICATION & REGISTER

Health, Safety and Environment

Service Providers
ISO-14001 and OHSAS-18001:
Certification is not mandatory

Petrobras evaluates how the suppliers implement these

standards requirements (ranking from 0 to 10 points)

Goods Suppliers
Not required

SUPPLIERS QUALIFICATION & REGISTER

Management
Goods Suppliers
ISO-9001 certification is mandatory

Services Providers
Compliance to the requirements of ISO-9001 is
ranked from 0 to 10 points - certification is valued

SUPPLIERS QUALIFICATION & REGISTER

RQT Category of products - definition

(RQT - requires specific technical qualification)

Those equipments or materials which performance in the

industrial process of Petrobras can threaten continuity,
compromise the safety of personnel, facilities and

environment, and those products that, included in the

industrial process as raw material, can jeopardize the quality
of the final product of the Company.

SUPPLIERS QUALIFICATION & REGISTER

Technical Requirements for Materials & Equipment
Depending on the material or equipment, the supplier must
comply with the following requirements:
Tradition (Main Sales, Reference Letters)
Facilities for Technical Assistance (in the case of
Automation Systems, Rotating Machinery, etc)
Mandatory Product Certification (API, ASME, ...)
Other Specific Requirements

SUPPLIERS QUALIFICATION & REGISTER

Technical Requirements for Services

Depending on services criticality, the supplier must comply

with the following requirements:
Tradition (List of Services Provided continuity
and Reference Letters)
List of equipment relating to services provided;
Main personnel curricula vitae

Other specific requirements

NOTE: in accordance to the Law, to render services in Brazilian

territory the company must have a subsidiary or partner
company in Brazil.

CONCLUSIONS

CONCLUSIONS

Petrobras has a robust projects portfolio, which is

atypical of the current economic situation.

There are huge opportunities for already installed and

newcomers in the Brazilian market of suppliers, service
and engineering companies due to the scale provided by
the project portfolio.

In order to carry out such a portfolio, Petrobras is

looking forward to establish long term business with
companies willing to invest in Brazil.

CONCLUSIONS

Petrobras has a robust projects portfolio, which is atypical

of the current economic situation.

There are huge opportunities for already installed and

newcomers in the Brazilian market of suppliers, service and
engineering companies due to the scale provided by the
project portfolio.

In order to carry out such a portfolio, Petrobras is looking

forward to establish long term business with companies willing
to invest in Brazil.

Thank you !
ronaldomartins@petrobras.com.br
materiais.rel@petrobras.com.br
eliel.costa@petrobras.com.br

suppliers.registry@petrobras.com.br