Propeller Club Final

Slide1: 

THE ETHANOL AS A BIO FUEL PROPELLER CLUB JUNE 1ST, 2006

ETHANOL C2 H5 OH – Molecular Formula: 

ETHANOL C2 H5 OH – Molecular Formula Utilizations: Beverages Perfumes and Cosmetics Pharmaceutical Chemical Industry Solvents and Inks Food Industry Fuel

Raw Materials: 

Raw Materials Fermentation: Sugar cane Corn Wheat Cereals Sugar Beet Potatoes Tapioca Wine Cellulose Molasses (sugar cane, beet, HFCS, etc…) Synthetic: Coal Ethylene

Producing Countries: 

Producing Countries Brazil USA Thailand China EU (Spain, France, Italy, Germany, Poland, among others) Australia Indonesia South Africa Argentina Guatemala Costa Rica Saudi Arabia Russia

Supply / Demand: 

Supply / Demand World Production 40 MM m3 (all grades) Consumption (main countries) Brasil (16 MM m3) (mostly fuel) USA (16 MM m3) (mostly fuel) EU (3 MM m3) Japan + Korea (0.7 MM m3) (mostly industrial) Others ( Thailand, China, Mexico, Philipines, etc...)

Break Down of Utilization:: 

Break Down of Utilization: Fuel (35 MM m3) ETBE, Gasohol and Ethanol cars + FFVs Non fuel ( 5 MM m3) Beverages, Pharmaceutical Industry, Food Conservatives, Perfumes and Cosmetics, Solvents and Inks, Chemical Industry, Automotive Industry, etc..

Energy Concerns: 

Energy Concerns Environmental (Kyoto protocol) + (MTBE Ban) Economical (Oil Prices) Strategical (Oil Reserves) Political (Dependence)

Ethanol the ideal solution: 

Ethanol the ideal solution Renewable Reduces CO2 emissions Utilization as Raw Material for ETBE production Direct Blends on gasoline Fuel for ethanol cars Fuel for FFVs Generates jobs and brings social benefits Reduces dependence on crude

Bio Fuels Matrix: 

Bio Fuels Matrix Bio diesel Blends of 5% into normal diesel oil (B5) Direct utilization (new types-B100) ETBE Blends of 10-15% on gasoline to avoid problems with water miscibility and also RVP Ethanol Blends of 2 up to 20% on gasoline Direct fuel on Ethanol cars (Brazil only) Direct fuel on FFVs (Brazil, USA, Sweden)

EU Policy: 

EU Policy Directives for Bio Fuels 2% by Jan 1st 2005 5.75% by Jan 1st 2010 Subsidies / Incentives Germany, UK, France, Sweden, Spain, Italy, Poland and Czeck Republic Mandatory Uses Germany, France, UK, Italy, Belgium and Netherlands

Other Countries: 

Other Countries USA (Energy Bill) 7.5 mmm gals by 2012 (aprox 30 MM m3) Thailand Mandatory use for 720 M m3/year as from 2008 Japan Under study-target 7% ETBE on 20% gasoline by 2010 South America Various fuel Ethanol programs being implemented (Venezuela, Colombia, Peru, Argentina) South Africa Under study mandatory use of gasohol by 2008-2009 Philipines Already testing some imports of Ethanol for gasohol blends China 3 provinces Ethanol to gasoline India 9 states utilizing 10% Ethanol blends

Future of the Trade: 

Future of the Trade Most of Production consumed domestically Exports likely to occur to countries which can not produce Potential Importers Japan Korea Some Central and South American Countries CBI ( as a bridge to U.S.) Some South East Asian Countries ( Thailand, Philipines, Malaysia) India China EU ( eventually)

Supplying Countries (Exports): 

Supplying Countries (Exports) Brazil Largest expansion capacity Lowest production cost Good oportunity for foreign investments Adequate and competitive logistics USA Production growing fast due to Energy Bill Expansion Capacity at relative/competitive cost Available raw material Others such as China, India, Australia and South Africa will depend on development of their own programs

Main Expected Routes: 

Main Expected Routes Brazil to Far East Brazil to Caribbean Brazil to Europe U.S.A to Far East U.S.A to Europe

Main Loading Ports: 

Main Loading Ports Brazil Paranaguá Santos São Sebastião Rio de Janeiro Maceió Suape U.S.A U.S Gulf Ports

Main Discharging Ports: 

Main Discharging Ports EU Rotterdam/Antwep French Med Ports (FOS/Laveras) London (Thames River) Swedish Ports (Gottenburg, Stockholm, Malmo, Osnskoldvik) Far East Ulsan Yokohama Dalian Manila Bangkok India Mumbai Kandla

Logistics (Terminals): 

Logistics (Terminals) Brazil Existing facilities to export 2.5 MM m3/year without any problem Pipelines can be used in addition to existing facilities Export capacity can triple without too much investment Logistics Agreements being made between Transpetro and Japanese Buyers

Slide18: 

Far East Japan needs infrastructure to receive Ethanol (not compatible with wet systems) Can receive ETBE without any problem Bio Diesel still not being focused on Korea/China/India for the moment only Gasohol blends under consideration Infrastructure (terminals) being built to receive Ethanol Oil Cos still resisting EU Same problems with wet systems Logistics not only affecting imports but also local production Specs issue driving Oil Industry in favor of ETBE and Bio Diesel Protection to local production will also be a sensitive factor Logistics without participation of Oil Cos will be rather difficult

Logistics (Shipping): 

Logistics (Shipping) IMO 2 requirements for vegoil vessels will reduce tonnage availability as from Jan 1st, 2007 r Demand for tonnage shall substantially increase as from 2008 or what concerns Bio Fuels transportation Bio Diesel shall increase it’s participation in this market Control of Vessels or long term COAs will be a key issue to keep the competitivety and assurance of supply Construction of new vessels will be a must

Conclusion: 

Conclusion Bio Fuels is an unquestionable reality Inside the context, Ethanol is a key factor Renewable source of energy Environmentally friendly Strategic Alternative Social Benefits Different uses (ETBE, Gasohol, FFVs) Most emphasis in producing countries Some exceptions in the Far East Brazil as a logical supplier Lowest production cost Largest expansion capacity Adequate logistics Sugar cane plantations do not interfere with other cultures

Thank you: 

Thank you