Of the $2.4 billion, 80% will be invested in ethanol, with 20% for biodiesel. One of the company’s goals is to reach 2013 producing 640 million liters (169 million gallons US) of biodiesel in Brazil.

To achieve that goal, Petrobras anticipates building a new plant in Northern Brazil; the Candeias (state of Bahia) plant will be duplicated; and the experimental plants in Guamaré, in the state of Rio Grande do Norte, will be adapted for commercial production. Work will also be done on enhancing production capacity at the Quixadá (state of Ceará) and Montes Claros (state of Minas Gerais) plants. Furthermore, the possibility of acquiring two new plants is under consideration.

Studies for the project developed in partnership with Portuguese company Galp Energia, which calls for the annual production of 330,000 cubic meters (330 million liters, 87 million gallons US) of vegetable oil in Brazil and 320,000 cubic meters (320 million liters, 85 million gallons US) of biodiesel in Portugal, will be continued. The deployment of a biodiesel production unit in Africa is also being planned.

For the ethanol segment, the goal is to reach, in partnerships, the production of 1.9 billion liters (502 million gallons US) in 2013, aimed at the foreign market, and 1.8 billion liters (476 million liters US) to be distributed in the domestic market.

Petrobras plans to sign partnerships this year for four new ethanol production projects, involving a foreign partner, which will ensure market share, and a domestic ethanol producer. The company may also acquire participation in existing plants. Abroad, meanwhile, an ethanol production unit is under analysis for Colombia.

Separately, last week, Brazil Japan Ethanol (BJE), a joint venture formed between Petrobras and Japan Alcohol Trading, inaugurated its first unit to produce E3 (a 3% ethanol-gasoline blend) in Japan.

The construction of the plant, which began in October 2008, is part of the Sodegaura Project, designed by BJE in partnership with the Japanese Ministry of the Environment to introduce E3 in the Japanese market. The facility is located in the city of Sodegaura, in the Kanto Region, central Japan, which accounts for 40% of all gasoline consumed in the country.

Overall output is estimated at 3 million liters (approximately 793 thousand gallons US) of E3 per month, to be supplied to independent gas stations. The Nansei Sekiyu refinery, in Okinawa, will supply the gasoline for the project. Petrobras holds 87.5% of the stakes in the refinery.

Overall, Petrobras’s corporate strategy for the ethanol segment includes:

• Performing in ethanol production, participating in the productive chain in Brazil;

• Participating, via partnerships, in new projects in Brazil and/or acquire stakes in existing plants, seeking to supply the external market and part of the demand resulting from the growth in the domestic market;

• Performing in ethanol production partnerships in opportunities abroad, seeking synergies with other Petrobras System businesses and prioritizing Latin America and Africa; and

• Ensuring the development of competitive second generation ethanol production technologies, based mainly on residual biomass feedstock.

Strategies for the biodiesel segment include:

• Structuring the agricultural supply chains via integrated productive arrangements to ensure the regular, competitive provision of feedstock, driving regional development and prioritizing the Brazilian semi-arid region;

• Prioritizing the supply of feedstock from family farming by means of sustainable and competitive models;

• Participating in the domestic production of biodiesel, seeking operating excellence, product quality, competitiveness and sustainability;

• Ensuring the development of competitive biodiesel production technologies, based, mainly, on residual biomass feedstock; and

• Performing, via partnerships, in opportunities abroad, seeking synergies with other Petrobras System businesses and prioritizing Africa.