Mr Jose Gabrielli took office in July 2005 as the CEO of Petrobras. His recent recognition by Energy Intelligence as its 2011 Petroleum Executive of the Year reflects his stewardship in establishing Petrobas as a pioneer in deepwater exploration and the dominant force in the development of Brazil's oil industry. Mr Gabrielli will speak at the Singapore Energy Summit and Downstram Asia.
1. What are some of the key challenges facing Brazil's oil industry, particularly when the country has just announced a new national 10-year plan to triple its use of renewable energy by 2020, with a significant part of it coming from wind energy?
Jose Gabrielli: Brazil has a significant renewable energy matrix. With renewable energy reaching 45 percent of the matrix, according to 2010 data, this trend has been solidified. In 2001, renewable energy represented 41 percent. Compared with 2010/2009, there has been growth in all energy sources, mainly natural gas. Electric power production increased by 9 percent. As underlined in the question, wind power stands out within the renewable energy sources for electric power, increasing its share by 51 percent when compared with 2009, which shows its future growth potential.
Despite the importance of renewable energy in our matrix, when we analyse the Brazilian economy's growth prospects and global scenario, we see that in the next 40 years, despite the progress, the volume of alternative energy sources as a primary supply of energy will still be small. In Brazil, crude oil, oil products and natural gas represented about 50 percent of the primary energy supply in 2010, and this trend will still continue in the near future.
In total, all the wind power, solar energy, geothermal and hydro energy from waves, generated worldwide, represent just 0.9 percent of the world's power matrix. Even if these sectors grow faster than the others, say, by 10 in this period, they will still reach only 9 percent, which is very little. Renewable power sources will still play a complementary role to fossil fuels for a long time to come.
2. Brazil has sworn to reduce its expected emissions by over 36 percent by 2020, but emissions have rocketed. How do you see its increasing energy demand being balanced with climate change objectives?
JB: Brazil has shown important progress in controlling CO2 emissions. In 2000, the country released about 1.62 tonnes of CO2 per equivalent tonne of crude oil. In 2010, the value fell to 1.43 tonnes according to the data provided by the Ministry of Mines and Energy. In other words, there was a reduction of 12 percent over 10 years. Without a doubt, the economic growth, such as was seen in the Brazilian economy for the past five years, increases the challenge.
This is an equation to be faced by emerging economies. It's a fundamental environmental challenge of sustainability combined with the availability of primary sources of energy and energy efficiency. In other words, we need to reduce wastage while optimising the use of energy. Brazil is paying attention to this and Petrobras has put in practice several energy efficiency programmes such as reducing the intensity of gas flames in our production units by 65 percent.
3. Peter Voser, Chief Executive of Shell, is a strong proponent of biofuels. Do you share his optimism and, if so, what are some of Petrobras' key initiatives in this space?
JB: Certainly, Brazil has shown economic growth combined with a reduction in social differences, and this will stimulate the growing consumption of fuel over the next few years as new consumers show greater purchasing power. However, Brazil has been betting on biomass (ethanol is an example) for a long time as an energy source. We have plenty of water and land to increase the production of biofuels and biodiesel. This was considered when Brazil launched the National Alcohol Program (ProAlcool) in the mid-1970s. This important initiative resulted in the savings of foreign currency and job creation, and resulted in cost and power efficiency comparative advantages in the production of hydrous and anhydrous ethanol (blended with gasoline by a proportion of E20). Data showed that ethanol produced from Brazilian sugar cane is much more efficient than ethanol produced from corn, sugar beet or other feedstock.
Hence, taking advantage of this significant learning curve in the production of ethanol over the past 30 years, Petrobras in 2008 created a subsidiary, Petrobras Biocombustíveis, which is well-positioned in this area, being the largest biodiesel producer in the country and aiming to be the largest ethanol producer in the next years. It has investments of US$ 4.1 billion for 2011 to 2015, and patents in the production of ethanol from lignocellulose, which we are getting ready to begin producing in 2015.
4. Petrobras' global operations extend over 27 countries in Africa, North America, South America, Europe and Asia. How is Petrobras looking to expand its energy investments, and in which sources and technologies?
JB: Petrobras has a strong international presence. We are moving towards greater integration between our international activities and our operation in Brazil in sectors such as downstream and fuel distribution. With regard to upstream, for example, we are in offshore areas where the geology and technology are in sync with what is being done in Brazil. We also have biofuel projects in Portugal and Mozambique, and we are always reviewing new business opportunities and partnerships that can add value to the company.
5. Latin America and Asia are currently two of the fast-growing regions in the world, with energy demand growing rapidly in tandem. What role do you see both regions playing in the global energy space, and how can both better learn from each other's experience and expertise?
JB: In the last five years, the world consumption of oil products grew because China, India, Brazil and countries from Africa and South America increased their demand. In other words, the emerging countries increased their consumption of oil products. This is due primarily to the economic growth policies adopted by these countries. As for reducing energy poverty, the intensity of oil consumption is higher, hence the demand for petroleum products is growing faster than the GDP of these countries.
While we see the decline in demand in the US and Europe, Asia and Latin America are rising markets which justify investment in the sector. In Brazil, we are building five new refineries; that is if COMPERJ is considered as two refineries. If not, there will be four refineries, namely RNEST, PREMIUM I, PREMIUM II and COMPERJ (2 FASES) to meet the booming demand for oil. China and India are also investing heavily in infrastructure. These countries have much to contribute to each other in the areas of transportation and energy.