Khen Group

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KHEN GROUP: Brazilian EconomicScenario and Investment O ortunities

Khen Group assists clients with critical, high value services to createcompanies, and generate wealth in fast-growing Brazil


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Khen Group is a solid consultancy and industrial sales firmfocused on development of global business in the Brazilianmarket

Markets we cover Services we provide

OIL & GAS

CHEMICAL

SALES REPRESENTATION

INITIAL BUSINESS SET UP (GREENFIELD)

PETROCHEMICAL

REFINERY

MVL & END USERS APPROVALS

MARKETING & SALES MANAGEMENT

MARITIME

SHIPYARDS

STRATEGIC PLANNING & PRODUCT STRATEGIES

ORGANIZATIONAL CONSULTING WORKFLOW &

WATER TREATMENT

MANAGEMENT PERSONNEL


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Outline

BRAZIL - Attractive Investment Destination

Oil and Gas Sector and Investments

Petrobras CRCC Vendor Registration

Establishing a Company in Brazil


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Brazils Facts

6th Largest economy in the world in terms ofnominal GDP 7TH ON PPP

Has the worlds THIRD largest portfolio ofc ar ere o an ers

Largest consumer market in Latin America

It is the world's fifth largest country, both by

over 192 million people - Has an annualpopulation growth of 2.5 million.

Is the gateway to MERCOSUR

Largest producer of biofuels

The worlds 10th largest petroleum reserves

steel (27 million tons per year).


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Biggest Companies in Brazil


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Brazilian Oil Market

Oil and Gas accounts for49.1% of Brazils energyproduction

-exploration underpinsmassive growthopportunities

Total estimates for thereserves range from 30 to100 billion barrels


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Statistics

GDP $2.518 trillion (nominal, 2011)/ $2.309 trillion (PPP)

GDP growth 7.5% (2010), 3.5% (2011), 5.0% (Projection 2012)

GDP by sector agriculture: 6% industry: 28% services: 66% (2011)

Inflation (CPI) 5.1% (2012)

Labor force104.3 million (2011)

Unemployment 6.2% (March 2012)

Exports $250.8 billion (2011 est.), Imports $219.6 billion (2011 est.)

Ease of Doing Business 126th Business Rank (2012)


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Platforms being built in Brazil (Modules)

Platforms 2011 Brazil InternationalMarket

Construction

FPSO P-58 Modules Hull Bidding- hull Keppel(Singapore)

- Hull Jurong (Singapore),Modules QUIP (RS)

FPSO P-63 Modules Hull QUIP/ BW (Norway)

FPSO Cidade deParaty

ModulesIntegration at

BrasFELS

Hull c a n o ec anSBM/Queiroz GalvaoConversion of the hull

Keppel FELS (Singapore)

FPSO Cidade de

Sao Paulo

Modules

Integration

Hull Schahin/ Modec andSBM/Queiroz Galvao-

Modules BrasFELS (RJ)


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Platforms Fully Built in Brazil

Platforms 2011 Brazil InternationalMarket

Construction

TLP P-61 - Total Floatec (KeppelFELS+ RJ Mc

Dermott

FPSO Santos - Total Modec- hire

FPSO Angra dosReis

- Total Modec- hire


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Drilling Platforms

Equipment Operations Brazil Intl

Market Construction

r ngplatforms jack-up type

n erconstruction

o a - oParaguau

ConsortiumBA

7 Drillingplatforms

Underconstruction

Hull Drilling tower EAS (PE)

1 Drillingplatforms

UnderconstructionSemborpMarine

Total - JurongAracruz(Sembcorp

20 Drilling

platforms

Under

constructionSete Brasil S.A.

Total - EAS


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World Shipbuilding Scenario

Brazilian participation inworld orders= 3.97%

.

Source: Clarksons- June 2011


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Petrobras Business Plan Summar


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Refinery Industry

Oil production and theBrazilian market demand

currently exceed refiningca acit

Demand growing by 20% inthe last two years and willkee rowin in the future

Most refineries areexpanding


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Projects that sustain increased production: Petrobras


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OGX Production Targets


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Petrobras and OGX Investments

Petrobras invested US$ 43 billion in 2010and has a US$ 224.7 billion (BRL 389billion investment lan for 2011-2015 ofwhich 95% in Brazil), and expects to lift itsoil production within Brazil from 2 to 3million barrels per day by 2015, and to

4.9 million by 2020

E&P portfolio has around 3,000 projects

OGX invested US$4.1 billion of Drilling

Seismic Campaign

Total OGX cash raised to date: US$8.3bn


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New frontiers


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Conc.

Petrobras has a robust project portfolio, which is atypical

There are tremendous opportunities for already installed

companies and newcomers in the Brazilian oil & gassupply chain due to the scale provided by Petrobrasand other Brazilian companies in upstream anddownstream portfolio

In order to carry out such portfolio, Petrobras is lookingforward to establishing stable long term business

to invest in Brazil (Local Content)


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Local Content

Companies that win a concession to operate an oil fieldoverall local content level, on average around 60%

At least 10% of the product value must be added in Brazil

for the local content to be registered

The primary objec tive of the Brazilian loc al content polic yis to maximize goods and services national industrycontent, within competitive and sustainable basis, in the

imp lantation of oil and gas projec ts in Brazil and abroa d.Petrobras strateg ic investment p lan c alls for 75% ofequipment and services to be sourced from domesticsuppliers.

Objective To increase local employment and income


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Supply Policy to Maximize LC

The Brazilian Government recognizes in the local supplyingmarket, opportunities to improve cost effectiveness and qualitystandards for the present and future projects

when compared with the foreign companies

Petrobras focuses on competitiveness and sustainability in thesupp y mar e n raz or a roa

The Petrobras Local Content policy is connected andcontributes to the Petrobras Social Responsibility Policy


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Exporting to Brazil: possible but difficult

To be able to import goods, you need an import licensenamed RADAR

When the license has been granted, the company getsaccess o , e n egra e ys em on ore gnTrade

II, AFRMM, PIS/ COFIMS, IPI, ICMS


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CRCC Registration

Corporate Register It is a database of Brazilian and foreign companies

The evaluation process approval ensures the inclusion ofthe company in Corporate Register, obtaining the CRCC.

Certificate of Registration and Classification

The company then may be invited to participate inbiddings.

www.petronect.com.br


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Cont.

1. CRCC - Registered Supplier CertificationRCC(Certificado de Registro e Classificao Cadastral)

Phase 1: power of attorney, commitment letter, certificate

of registration, general info about the company Phase 2: companys certifications, technical specifications

of the products, recommendation letters form customers,financial information, management and HSE information

2. Petrobras Master Vendor List Offshore or Onshore(MVLO/MVLOn, hereafter only called MVLO)

,elaborated for each project


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Establishing a company in Brazil

Limitada (Ltda.) S.A.

Flexible decision makingmechanisms

Freely transferrable shares

More formal decision- Reduced bureaucracy

No audit requirements

making process

Easier access to external

Greater confidentiality

Lower operating costs Must be audited once a

year.


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First Steps

Company name and check availability

Select a qualified attorney-in-fact to represent each of the

foreign partners, and prepare power of attorney(s)

Apply for a notarized UK certificate of incorporation

The ower of attorne and certificates of incor oration

must be authenticated by a United Kingdom publicnotary, legalized (verified) by the Brazilian embassy inLondon and translated into Portuguese by a certified


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Cont. Document Preparation

Obtain State and Countycenses

Fire Department clearance

Register the foreign partners withthe Brazilian Central Bank andget the business registrationnumber.

Provision of initial temporaryregistered office address

Employee registration


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Conclusions Brazil offers a robust investment portfolio with no parallel in the world for the same

timeframe

Gas consum tion is risin stron l in Brazil with new ower lants and cars tendin tobe gas fuelled

High number of fields can be exploited commercially in Brazil and demand projects to

improve the existing infrastructure

New refineries, fuel quality and modernization account for 70% or USD 73.6 B ofPetrobras CAPEX investments (2011-2014)

-

Loc al content dem and for new p rojec ts in E&P business areas: 90%

Do your market research and consider Greenfield projects and local partnership as a

way of accessing the Brazilian market

Khen Group

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