1. Organization of Clean Energy:
American States Meeting the Energy
Challenges of the
José Sergio Gabrielli de Azevedo
CEO and President 21st Century
June, 2007

2. Latin American Share of Oil World Reserves
Latin American oil reserves are becoming increasingly important
1984 1994 2004
R/P* = 26,77 R/P* = 41,78 R/P* = 41,84
4,8% 8,0% 8,5%
5,0%
3,8% 3,5%
8,8% 5,1%
13,4%
9,4%
6,4%
7,6% 56,5% 65,1% 61,8%
7,9% 11,7%
12,7%
Total Total Total
762 billion barrels 1.017 billion barrels 1.188 billion barrels
Middle East Europe & Eurasia Africa
North America Pacific Asia Latin America
In 20 years, Latin America proven reserves increased from 36.6 billion barrels (1984) to 101 billion.
Source: BP Statistical Review of World Energy * Reserves/Production Latin America (years)
2

3. Net Oil Availability
Latin America
Mbpd
Russia
Asia
United States
OECD(- Mexico)
Projected growth in
oil production and
demand suggests
balance and
independence of
supply from politically
unstable regions
Source: Internacional Energy Agency Reference Scenario
Includes Bitumen and non-conventionals, including synthetic oils. 3

4. Gas Rich Region with limited infrastructure
Proven Reserves as of January 1, 2005
4.3 T m3
Ample gas reserves will allow for: 0.55 T m3
152 Tcf
::: Regional growth in consumption 19.4 Tcf
0.41 T m3
substituting some demand for oil 14.5 Tcf
Venezuela
Trinidad
::: Higher exports of liquids Mexico
0.33 T m3 Brazil
11.7 Tcf
Perú 0.74 T m3
0.74 T m3 26.1 Tcf
But:
::: Will require increasing energy 2005 Gas Bolivia 0.50 T m3
integration and Proven Reserves 26.1 Tcf 17.7Tcf
World:
::: Substantial investments in 179,8 T m3
South and Central Argentina
infrastructure covering great America:
distances and environmentally 7,02 T m3
sensitive regions
Source: Cambridge Energy Research Associates.
4

5. PRODUCTION X DEMAND X REFINING CAPACITY: REACHING SELF-SUFFICIENCY
Production/ 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2006 2011F
Consumption
(%) 3,0 30,5 28,4 32,2 19,5 16,7 56,2 55,3 49,3 70,4 97,6 112,1
Brazil: first major market to shift
from import dependency to self
sufficiency since first oil from
Proj.
2500 North Sea in 1971 began to shift
european balance
2000 Production
THOUSAND BPD
Consumption
1500
Refining
1000
500
0
1954 1960 1970 1980 1990 2000 2006 2011

6. Business Plan 2007-2011 - Total Production – Oil, NGL’s and Natural Gas
Thousand boed 7.5% p.a. 4,556
278
Total Investment: US$ 87.1
billion in 2007-2011 7.8% p.a. 742
3,493
(US$ 49.3 billion in E&P) • Heavy8oil production technology
1 5
2,403
development will expand LA 4
383 72
reserve
2,217 growth5 possibilities;
5 1
,
2.036 2,020 101
85 94
96
133 • Successful Doha Round Negotiations
161 168
163 289 are essential to permit greater
250 265
274 trade of agricultural commodities and 2. 812
increase agricultural productivity
2. 374
1. 540 1. 493 1. 684
1. 880 considering comparative advantages;
• Technological breakthroughs in
enzyme technology for the use of
2003 2004 2005 Target a
M et 2006 Lignocelluloses biomass e 2015 BTL;
Targete2011
M ta M and
Forecast t a
2011 2015
Ól e o + L G NBrazils i l
Oil + NGL B r a • ás N a t u r aprogress in regional
G
Further l B r a s i l
Natural Gas Brazil
Ól e o + L G NInternationalo n a l
Oil + NGL I n t e r n a c i
integration.
G ás N a t u r a l Natural a c i o n a l
International I n t e r n Gas

7. Brazil is the 1st country to reap benefits from Ethanol
Original drivers were energy security and economic attractiveness; Alcohol Exports
Today environmental benefits are also considered. 2005
End of regulation
1999
FFV
160000
Beginning of the
sector deregulation
140000
120000 PROÁLCOOL
Alcohol Vehicles
10000
80000
60000
1000 BEP
40000
20000 Accumulated effective economy:
CNG Source: MME, BEN 2006 1 Billion boe ~US$ 52 bi
0
ETHANOL
GASOLINE 1972 1976 1980 1984 1988 1992 1996 2000 2004
During this period, ethanol utilization saved 644 million ton. of CO2 emission

8. Quais seriam os motivos do diferencial de produtividade brasileira ?
Greater production cost reduction Ethanol Engine Relative Performance*
when compared to gasoline. 140
132,4%
120 110,0%
103,3% 110,0%
100
20
80
60
18
40
20
16
0
Power
14 Consumption
Gasoline 100% Gasohol 22% Ethanol 100%
US$/GJ 2002
12
10
8
6
4
2 1980 1985 1990 1995 2002
0 Ethanol prices in Brazil Rotterdam regular gasoline price Source: Goldemberg 2004
*Source: Volkswagen (Brazil) - Presentation prepared for review within The Warren Centre for Advanced
Engineering at Sydney University

9. Como se distribui a Oferta Mundial de Energia ?
• World Energy Consumption reached 7,639 Mtoe in 2004;
• According to the International Energy Agency estimates, it will reach 11,664 Mtoe in
2030, which means an increase of 1,8% p.a.;
•Oil, Coal, Gas and Nuclear Energy, which are non renewable energies, are responsible
for over 85% of total world supply;
Non-Renewables
35
2004 13%
25
Shares (%)
21
Renewables
87%
10
6
2
1
Oil Coal Gas Nuclear Biomass and Hydro Other
Waste Renew ables
Source: World Energy Outlook 2006

10. Mas esta estrutura gera externalidades negativas
• Fossil fuels usage increases global temperature, generating urban pollution. During the
last 20 years, 25% of CO2 emissions were caused by fossil fuels usage in transportation
activities.
27.044
Million Metric Tons of Carbon Dioxide 2004
9.605
6.887 4.653
5.912 4.707
2.551 2.004 1.041
1.320 987
China
World Total
Asia & Oceania
Europe
Region/Country
Eurasia
Africa
United States
Middle East
North America
South America
Central &
224%
170% 167%
∆% 2004/1980
85%
67%
48%
27% 24%
China
Oceania
United
Africa
& South
World
Middle
Total
States
America
America
Central
Asia &
East
North
Source: Energy Information Administration, 2004

11. O Etanol contribui para a redução do aquecimento global
•Biofuels usage can reduce CO2 emissions at a 5:1 rate;
•Besides being a cleaner source of energy, sugar cane ethanol produces 8,3 more energy
than the fossil energy used in its production process. Ethanol usage in Brazil has decreased
the emission of Greenhouse Effect Gases at 13% (1994 data);
•Sugar-cane is the most productive among ethanol raw materials and the production of
ethanol has limited affect on food supply.
Energetic balance - Ethanol Ethanol Productivity
10 7000
6000
8
5000
liters per hectar
6
4000
Energetic ratio
4 3000
2000
2
1000
0 0
sugar-cane sugar- sugar-cane corn - USA wheat - EU
Sugar Wheat Beet- Corn - Brazil beet- EU - India
cane root
Source: World Watch Institute

12. Bio-fuel usage in OECD Countries will benefit LA
Global warming, energy security and/or cost effectiveness
are encouraging renewable fuels with two principle
initiatives ethanol and biodiesel. Both can be produced and
consumed in Latin America advantageously
US$/ Liter of Ethanol (Without taxes)
Sugar-cane -
0,22
Brazil
Ethanol gasoline additive or substitute Corn - USA 0,30
• US – (2007 State of the Union) target of 136.5 billion
liters by 2017 (target of 20% of current gasoline 0,33
Corn - Canada
consumption to be substituted by ethanol by 2017 and
cost efficient by 2012);
• US – (2006 State of the Union) target of 30% of current
Cereals - EU 0,45
gasoline consumption to be substituted by ethanol by
2030 and cost efficient by 2012;
• Japan 3% ethanol for gasoline mixture by 2010; Sugar - beet - 0,53
• China pilot programs and fiscal incentives for use of EU
ethanol.
12

13. Cenário para a demanda
• A strong increase in the demand for ethanol is expected;
• This amount of future consume may be levered if new countries adhere
the compulsive blend with ethanol.
Strong Increase in Demand
Renewable Fuels Standard
Ethanol Global Demand (Million liters/Year)
MTBE Substitution
Clean Air Act
Lead Substitution
Source: F.O. LICHT, 2004

14. The potential to expand world production is enormous
North and
Europe
Central America Brazil
37% 35% 9.8%
South America Asia
38% 16.2%
Current Market Distribution of World Consumption
Ethanol global market is 46.5 Billions Liters
Ethanol as a Fuel is 30.6 Billions Liters, or 67% of total ethanol production
Today the ethanol consumption is 2,6% of gasoline MKT
Increasing ethanol to 10% of gasoline will represent 118 Billions Lt
14

15. A PROMISING MARKET
Potential demand Ethanol
Country Comment
(Billion liters) addition
Potential demand considering 3% ethanol addition to
Japan 1.7 3% the gasoline formula
Expected demand in 2012, according with the
US 16.8 - Renewables Fuels Law
Potential demand considering 10% ethanol addition
China 4.5 10% to the gasoline formula
Potential demand considering 5% ethanol addition to
EU 7.4 5% the gasoline formula in 2011
India ? 5% Percentage approved only in some regions
Potential demand considering 5% ethanol addition to
Thailand 0.7 5% the gasoline formula
Total: 31.1 billion liters
•Only in the US, a 5.7% addition of ethanol the gasoline would translate into a consumption of 30 billion
liters of ethanol per year.
Souce: EIA/DOE; Comissão Européia; FO Licht; Copersucar

16. Ethanol Logistics System in Brazil
Ethanol collection,
storage and
distribution centers
are spread out
Large scale marine
terminals improve through producing
efficiency and consuming
regions
Large storage capacity
necessary to regulate
supply Primary Base
Secondary Base
Pipelines reduce
Collection Centers
transport costs; improve Inland Navigation
energy efficiency Railways
Road
Multi product pipelines

17. US Ethanol
producers are
concentrated in
upper mid-west
with little or no
integration with oil
ETHANOL HIDRATED
facilities
DISTRIBUTION AVOID REGIONALIZATION
• While most oil and product pipelines
run from the south to northeast, north
or southwest;
• Shipment in the Pacific will have a
comparative advantage in supplying
California.

18. Diferenças de produtividade na cana de açúcar
•Availability of lands, water and low labor cost also benefit production in Central
and South America.
Latin America has the largest potential arable
land per capita and only uses 13,9% of it.
Sugar-Cane Productivity Potential Arable Land % of Potential Arable Land
Yeld per Hectar actually in use
(1.000 ha per capita)
72,41 73
71,13 2,2 61,4
67,77 69,34
55,6
1,7 48,6
1000 Kg/Ha
0,6
13,9
0,2
Asia USA Central South Brazil Asia and Europe North Latin Asia and Europe North Latin
America America Pacific America America Pacific America America
World Average
Source: FAO

19. Diferenças de produtividade na cana de açúcar
• 33% of the world’s internal renewable water resources are concentrated in Central and
Latin America;
Annual water use by sector
Internal renewable water resources Latin America and
Brazil Caribbean
(m³ per capita – 1997)
18% 9%
35000 33.097
19%
30000 27.673 21%
61% 73%
25000
20000 World
15000
20%
10000
6.984 9%
5000 71%
0
World Latin America and Brazil
Caribbean
Agriculture Domestic Industrial
Source: FAO

20. Increasing Efficiency in Raw Material Use
Raw Material Energy output / energy input
Wheat 1.2
Corn 1.3 – 1.8
Sugar Beet 1.9
Sugar Cane (under Brazilian Production Condictions) 8.3
Tomorrow
Potential ethanol production would grow by more than 100% based on Lignocelluloses Biomass technology
Molasses
yields only 85 l
of ethanol,
1 metric ton of
sugar cane But
Cane bagasse
yields 185 L of
ethanol
Base
calculation
20

21. Principal Conclusions, Hurdles and Challenges
• Latin America is in a privileged position as
regards oil reserves, and energy
independence;
• Prospects for the use of natural gas are
encouraging and should contribute to
increase availability of liquid fossil fuel exports
but integration and financial issues are a
main concern;
• Land, water and human resource availability
and bio-diversity put Central and South
America and Caribbean in a privileged
position to use and supply OECD
countries with renewable fuels, further
liberating liquid fossil fuels for export.
21

22. Principal Conclusions, Hurdles and Challenges
But the main hurdles
and challenges are:
• Successful Doha Round Negotiations are
essential to permit greater trade of
agricultural commodities and increase
agricultural productivity considering
comparative advantages;
• Technological breakthroughs in enzyme
technology for the use of Lignocelluloses
biomass;
• Further progress in regional integration.
22

23. Main Obstacles to Greater Integration
• Oil sector has different impact on
each economy that affects fiscal,
balance of trade, and pricing
policies;
• Different social and economic
realities and historical origins;
• Changing legal environments;
• Financing for infrastructure;
• Lack of strategic coordination;
• Need for institutional reforms;
• Need to coordinate different energy
models: competitive markets and
public services;
• Localized supply disruptions.
23

24. New Frontiers for Ethanol Development
• Ethanol can be used in place of gasoline, as a substitute for additives
(lead, MTBE), particularly important in Central America, or for export;
• CAFTA-DR countries may export to the USA up to 7% of US
consumption without countervailing duties (54 cents per gallon);
• Export by the Pacific Coast to California avoids problem with US
logistics.
New Initiatives
• IDB will offer a different set of services, such as financing, to exporting
countries like Costa Rica and El Salvador;
• Costa Rica adopts pilot program for using up to 10% ethanol in
gasoline;
• El Salvador has plans to regulate ethanol content in domestic gasoline;
• Honduras announces that it can be self-sufficient in ethanol;
• Venezuela uses ethanol as a substitute for lead.

25. Organization of Clean Energy:
American States Meeting the Energy
Challenges of the
José Sergio Gabrielli de Azevedo
CEO and President 21st Century
June, 2007