José Sergio Gabrielli de AzevedoCEO and PresidentFebruary, 2007

CERAWeek 2007 Latin America Perspectives and Opportunities

1984 1994 2004

Total762 billion barrels

Total1,017 billion barrels

Total1,194 billion barrels

In 20 years, Latin America proven reserves increased from 36.6 billion barrels (1984) to 103 billion.Source: BP Statistical Review of World Energy

R/P* = 26.77 R/P* = 41.78 R/P* = 41.84

* Reserves/Production Latin America (years)

12.7%

7.6%

13.4%

5.0%

4.8%

56.5%

Middle Orient Europe & Eurasia AfricaNorth America Pacific Asia Latin America

7.9%

6.4%

8.8%

3.8%

8.0%

65.1%11.7%

9.4%

5.1%

3.5%

8.5%

61.8%

2

Latin American Share of Oil World Reserves Latin American oil reserves are becoming increasingly important

Source: Internacional Energy Agency Reference Scenario

Net Oil and Oil Products Availability

Mbpd

Latin America (LA)

Russia

AsiaUnited StatesOECD(- Mexico)

Projected growth in oilproduction anddemand suggestsbalance andindependence of supply from politicallyunstable regions

3

Ability to produce non-conventional heavy oil will play an increasing role in LA

Source: Cambridge Energy Research Associates.

Gas Rich Region with limited infrastructureProven Reserves as of January 1, 2005

14.5 Tcf

10.9 Tcf

Brazil

Argentina

Perú

Mexico

Venezuela

26.1 TcfBolivia

11.7 Tcf

17.7Tcf

151.9 Tcf 19.4 Tcf

Trinidad

2005 GasProven ReservesWorld:179,8 T m3 / 6,350 TcfSouth and Central America:7,02 T m3 / 247,9 Tcf

4

0.41 T m3

4.3 T m30.55 T m3

0.31 T m3

0.33 T m3

0.74 T m3

0.50 T m3But:::: Will require increasing energy

integration and::: Substantial investments in

infrastructure covering greatdistances and environmetallysensative regions

Ample gas reserves will allow for:::: Regional growth in consumption

substituting some demand for oil::: Higher exports of liquids

Consumption of oil as % of Production 2005

Source: BP Statistical Review 2006; EIA; INE/BO; Superintendence de Hidrocarburos de Bolivia

15%18%

80%

58% 53%42%

27%

106%

Brazil Bolivia Oil Argentina Mexico Colombia Ecuador Venezuela Bolivia Gas

5

Relative importance of oil sector varies widely among the main players in the region affecting legislation, pricing and curbing integration prospects

87%

60%

36%

26%

15%

9%7%

Venezuela Ecuador Bolívia (gas) Colômbia México Argentina Brasil

Exports of oil as % of total Goods Exports 2005 (in US$)

International prices affect each country's trade balance differently

Source: BP Review 2006; EIA; INE/BO

6

Bolívia (oil)

11%

Domestic Pricing is also affected by the relative importance of oil sector

Subsidized prices reduce financing possibilities

1.17

0.93

0.67

0.61

0.55

0.46

0.38

0.03

September 2006 (in US$ per liter)

Venezuela Ecuador Bolivia Argentina México Colombia Peru Brazil

Source: ARPEL

7

• Countries that have recently changedor have manifested a desire to change legislation towards higher Government Participation in production and revenues: Venezuela, Ecuador, Bolivia

• Countries that are in the process of liberalizing legislation to encourage foreign participation: Colombia & Peru

• Countries that have consolidated reforms: Argentina (w/ price controls) & Brazil (w/o price controls);

• Mexico remains the most closed oil economy but there are indications that a move towards opening to investment is possible.

Regulatory Challenges – Recent Trends

8

Bio-fuel usage in OECD Countries will benefit LA

Global warming, energy security and/or cost effectiveness are

encouraging renewable fuels with two important initiatives: (i) ethanol and (ii) biodiesel. Both can be

produced and consumed in Latin America advantageously.

Production of biofuels in LA will also contribute to displace production of liquids increasing export availability.

9

Latin America offers excellent resources to expand agricultural production

Africa Latin America Asia OCDE World

More than 3 times the average world per capita water availability

3,966 4,050

24,97311,196

7,055

Nearly half world sugar cane production Nearly 1/3 world main oil seed production

Availability per capita (m3/year)

Higher Potable Water availability per capita

Million Metric Tons

World South and Central Americaand Caribbean

Soybeans, Groundnuts, Sunflower, Rape Seed, Cotton Seed

95

359

World South and Central Americaand Caribbean

631

1,328

Sugar cane production

Million Metric Tons

10

Original drivers were energy security and economic attractiveness;

Today environmental benefits are also considered.

CNG

ETHANOL

GASOLINE

Source: MME, BEN 2006

120000

140000

1976 1980 1984 1988 1992 1996 2000 2004

During this period, ethanol utilization saved 644 million ton. of CO2 emission

1972

Brazil is the 1st country to reap benefits from Ethanol

Fuel demand for Otto Cycle Vehicles160000

10000

80000

60000

40000

20000

01000

BEP

11

Accumulated effective economy:1 Billion boe ~US$ 52 bi

Brazil35%

Ethanol market may double its size with growth potential in all sugar cane producing countries

North and Central America

37%

South America38%

Asia16.2%

Europe9.8%

Current Market Distribution of World Consumption

Ethanol global market is 46.5 Billion LitersEthanol as a Fuel is 30.6 Billion Liters, or 67% of total ethanol production

Today the ethanol consumption is 2,6% of gasoline MKTIncreasing ethanol to 10% of gasoline will represent 118 Billion Lt

12

Raw Material Energy output / energy inputWheatCorn

Sugar Beet

Sugar Cane (under Brazilian Production Conditions)

1.21.3 – 1.8

1.9

8.3

Today : Sugar cane has the highest energy output/input ratio

TomorrowLignocelluloses Biomass technology will double ethanol per ha. yield

1 metric ton of sugar cane

Molasses yields only 85 L of ethanol,

But

Cane bagasse yields 185 L of ethanolBase calculation

13

2nd Generation Biodiesel (BTL) will expand biodiesel prospectsApplication of Fischer-Tropsch gas to liquids technology

Biomass Solid FuelsGasification Syngas

Sequestered CO2

Fisher-TropschConversion

Waxy SyncrudeProduct Work-up

Naphtha

Diesel

BTL also nicknamed “Designer Fuel”- because fuel specifications can be adjusted to engine requirements altering form and length of molecules

14

BTL uses whole plant, thus requiring less land area per unit of energy produced compared to biodiesel or ethanol

Principal Conclusions, Hurdles and Challenges

• Latin America is in a privileged position regarding oil reserves, and energy independence;

• Use of natural gas prospects are encouraging and should contributeto increase liquid fossil fuel exports availability but integration and financial issues are a main concern;

• Land, water and human resource availability and biodiversity place Central and South America and Caribbean in a privileged position to use and supply OECD countries with renewable fuels, and also further liberating liquid fossil fuels for export.

• Heavy oil production technology development will expand LA reserve growth possibilities;

• Successful Doha Round Negotiations are essential to permit greater trade of agricultural commodities andincrease agricultural productivity considering comparative advantages;

• Technological breakthroughs in enzyme technology for the use of Lignocelluloses biomass and BTL;

• Further progress in regional integration.

But the main hurdles and challenges are:

José Sergio Gabrielli de AzevedoCEO and PresidentFebruary, 2007

CERAWeek 2007 Latin America Perspectives and Opportunities