Brazil Energy Market Overview

5 Jan 2012

Massive investments in the energy sector

2010 Key Figures

Population: 196.0 million

GDP growth rate: 7.5%

Energy independence: 93%

Total consumption/GDP: 99.5 (2005=100)

CO2 Emissions: 1.9 tCO2/capita

Rate of T&D power losses: 16.4%

Brazil is investing massively in the energy sector to make the maximum use of its resource and to meet a strong demand growth. Petrobras reviewed slightly its business plan for the period 2011-2015. The new plan foresees an investment of US$225bn by 2015 (95% of which in Brazil), which is similar to the previous five-year business plan (US$224bn). Investments in exploration and production activities will amount to US$128bn (57%, which is more than the previous year‘s 53%), while the focus remains to the creation of a value chain in Brazil with increased spending on infrastructure, logistics and downstream activities, notably refining; these investments will involve massive increases in staffing. Petrobras plans to launch 4 new refineries in the next decade for a total capacity of 1.5 mb/d. The company announced a doubling of oil production by 2020, with pre-salt fields participation in the total production increasing from 2% in 2011 to 18% in 2015 and 41% in 2020.

In its 10-year expansion plan for 2010-2019, the Government expects to increase the country‘s electricity generating capacity by 61% over the next decade. The share of hydro in the total capacity is expected to drop from 74% to 70%, mainly due to oil (6%) and wind (4%), which are occupying increasingly important places. The total share of renewable energy sources in Brazil is expected to increase by 13% annually to meet power demand. In November 2010, Eletrobras was drafting plans to invest $27bn between 2010 and 2014 in electricity grid improvements in Brazil and in the expansion of overseas activities.

Brazil intends to continue the development of biofuels. There are projects for many factories, the objective being to increase the ethanol production to 64 Gl in 2017. That would require the exploitation of 6 Mha of additional land, including an extension of the arable lands on forest surfaces. By 2013, 52% of Brazilian cars could be equipped with the "flex-fuel" technology. Petrobras intends to invest $2.8bn in biofuels over the 2009-2013 period.

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