Leadership for Reliability

J.R. Lafraia
PETROBRAS / ABRAMAN
2011

1
Introduction

2
Introduction

• Petrobras / Abraman
• Operational Excellence - OE
• Defects and Failures
• Culture
• Leadership
• Conclusion

3
 Petrobras Downstream

General Outlook for the refining sector

J. Lafraia @ Copyright 4
DISCLAIMER
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements
about future events within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are not
based on historical facts and are not assurances of future
results. Such forward-looking statements merely reflect the
Company’s current views and estimates of future economic
circumstances, industry conditions, company performance
and financial results. Such terms as "anticipate", "believe",
"expect", "forecast", "intend", "plan", "project", "seek",
"should", along with similar or analogous expressions, are
used to identify such forward-looking statements. Readers
are cautioned that these statements are only projections and
may differ materially from actual future results or events.
Readers are referred to the documents filed by the Company
with the SEC, specifically the Company’s most recent Annual
Report on Form 20-F, which identify important risk factors
that could cause actual results to differ from those contained
in the forward-looking statements, including, among other
things, risks relating to general economic and business
conditions, including crude oil and other commodity prices,
refining margins and prevailing exchange rates, uncertainties
inherent in making estimates of our oil and gas reserves
including recently discovered oil and gas reserves,
international and Brazilian political, economic and social
developments, receipt of governmental approvals and
licenses and our ability to obtain financing.
We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a
result of new information or future events or for any
other reason. Figures for 2010 on are estimates or
targets.
All forward-looking statements are expressly qualified
in their entirety by this cautionary statement, and you
should not place reliance on any forward-looking
statement contained in this presentation.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, such as
oil and gas resources, that we are not permitted to
present in documents filed with the United States
Securities and Exchange Commission (SEC) under
new Subpart 1200 to Regulation S-K because such
terms do not qualify as proved, probable or possible
reserves under Rule 4-10(a) of Regulation S-X.
5
PETROBRAS PROFILE

J. Lafraia @ Copyright 6
Petrobras Overview:
an integrated oil major

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J. Lafraia @ Copyright 8
EXPANDING THE CAPACITY TO MEET
MARKET DEMAND

QUALITY, GROWTH AND UNRIVALED OPPORTUNITY

J. Lafraia @ Copyright 9
Dominant Position in a Large
and Growing Emerging Market

2009 Total Oil Consumption by Country (mmbo/d)

18,7

10
9 8,63

8
7  Brazil is world’s tenth-
6
5 4,40
largest oil consumer.
4 3,18
2,79 2,70 2,61
3 2,42 2,36 2,33 2,20
1,94 1,94 1,83 1,74 1,61
2 1,58

1
-
South
US

Kingdom
Italy
China

India

Brazil 2020

Brazil 2014

Brazil 2009

Iran
Arabia
Germany

Korea

France
Japan

Mexico
Canada
Federation
Saudi

United
Russian

Total Oil Consumption mb/d (index)

130
125
 Brazil oil consumption 120 Brazil
115
growing at 2.38% p.a; US
110
OECD
 OECD oil consumption 105
World
growing at -0.04% p.a. 100
95
1999 2001 2003 2005 2007 2009

Source: BP Statistical Review 2010, PFC Energy

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FOCUSED STRATEGY

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 Petrobras Strategy to 2020

Commitment to Sustainable Development

Integrated Growth Profitability Social and Environmental Responsibility

Expand operations in target markets for oil, oil products, petrochemicals, gas and energy, biofuels and
distribution and to be recognized as a benchmark among integrated energy companies

Grow oil and gas Expand refining in Consolidate leadership Operate in the Operate in Brazil
Corporate Strategy

production and Brazil, ensuring in the Brazilian natural petrochemical and abroad in the
reserves in a sufficiency in domestic gas market, sector in an biofuels sector in an
sustainable manner, supply and leadership establishing an integrated manner integrated manner
becoming one of the in distribution, while international presence with the other with the
five largest oil developing export and increasing the businesses of the PETROBRAS
producers in the markets for products, domestic electricity PETOBRAS system system, and to do
world. with emphasis in the generation business . so on a sustainable
Atlantic basin. and gas-chemical, basis.
emphasizing fertilizers.

Excellence in operations, in management, in energy efficiency, in human resources and in technology

Business Segments

E&P Downstream Distribution Gas and Energy Petrochemicals Biofuels

J. Lafraia @ Copyright 12
Petrobras’ Refining
Infrastructure

RPCC Capacity (Mbpd)

REMAN LUBNOR
Refineries
Original Upgraded %

Paulínia - Replan (SP) 252 396 57%

RLAM
Duque de Caxias -Reduc (RJ) 191 347 81%
Landulpho Alves - Rlam (BA) 218 279 28%

REGAP Henrique Lage - Revap (SP) 189 252 33%

Pres. Getúlio Vargas - Repar (PR) 126 195 55%
Alberto Pasqualini - Refap (RS) 142 189 33%
REDUC Pres. Bernardes - RPBC (SP) 139 170 22%
REPLAN Gabriel Passos - Regap (MG) 110 151 37%
Capuava - Recap (SP) 20 53 165%
REVAP Manaus - Reman (AM) 37 46 24%
Clara Camarão - RPCC (RN) 25 31 24%
REPAR REFAP RPBC RECAP Fortaleza - Lubnor (CE) 3 7 133%
Total Brazil 1,452 2,008 38%

United States 100

Argentina 81
Okinawa 100
As Petrobras continues to grow its upstream
Total Petrobras 2,289
business, the need for a compatible refining
infrastructure becomes more critical
With limited investment over the last 20 years,
Petrobras will increase capacity to meet the
needs of a growing domestic market.
J. Lafraia @ Copyright 1313
Domestic Refining Greenfields
Capacity Additions

(600 kbpd) (300 kbpd)

(Premium I & II)

Diesel 10 ppm (60%), LPG (4%),
Naphtha (14%), Jet (12%), OC +
Terminals and Pipelines
Bunker (10%)
Operated by Transpetro
(100% Brazilian Company)
(230 kbpd)

Diesel (64%), LPG (3%), Naphtha (6%),

Bunker (16%), Coke (11%)

(330 kbpd)

Diesel (53%), LPG (6%), Naphtha

Existing pipelines (1%), Jet (28%),OC (4%), Coke (8%)
Refineries
Onshore Terminals
Offshore Terminals
Numbers in kbpd are capacities

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15
Operational Excellence
Objectives

• Achieve an incident and injury-free workplace

• Promote a healthy workforce and mitigate significant

workplace health risks

• Identify and mitigate environmental and process safety

risks

• Operate with industry-leading asset integrity and reliability

• Efficiently use natural resources and assets

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Operational Excellence
Definition

• Operational Excellence is the systematic management

of process safety, personal safety and health,
environment, reliability and asset efficiency to achieve
word-class performance

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Operational Excellence
Areas

• Process and Personal Safety

• Personal Health
• Environmental Stewardship
• Reliability
• Physical Assets Efficiency

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OE parts:

LEADERSHIIP MANAGEMENT
SYSTEM

OPERATIONAL
EXCELLENCE

PEOPLE PHYSICAL
(Culture & ASSETS
behavior)

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OE – Leadership Accountability

The single largest factor for success

• Accountable for running OEMS

• Enabling and delivering OE performance
• Through personal example and actions, leaders cascade,
manage and drive execution
• Reinforce the OE Culture
• Instill Operational Discipline
• Ensure that the entire workforce comply with OE
• Demonstrate that 100% performance is attainable
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 Asset
Efficiency
Reliability & Process Safety
Environment Stewardship

People Safety & Health

LEADERSHIP MANAGEMENT SYSTEM PHYSICAL ASSETS BEHAVIOR

Visible and Commited

Proactive Performance

Continuous Learning

Focus On people and

Defect and incidents
Line Accountability

Constant Auditing

management
Leadership

Indicators

culture
Operational Excellence  OPERACIONAL DISCIPLINE  Business Excellence
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Defect and Incident Management

Vision of OE
“We will build, operate and maintain our
plant in a manner that treats reliability
of our assets the same way we treat the
safety of our employees.”

22
Defect and Incident Management

Safety Model Reliability Model

Lost Day Case Break

Minor injury Failure

Incident Defect

Deviation Error

Behavior Behavior

People Equipment
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Defect and Incident Management

Defect
Defect

Break

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Defect and Incident Management

Defect
Defect

Break

25
System, Tools
Assets
Tangible Side of OE
Behavior

Attitudes

Mental Maps
Intangible Side of OE
Culture

26
What culture is?
Culture is an extremely complex phenomena, which
can be understood from several different angles.

In general, it’s everything that separates human beings from

animals in terms of our capacity to understand the world and
transform it.

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The Elements of Culture
Ethics

Leadership

Culture Communication

Discipline

28
The Elements of Culture

Values
Principles

Law
Culture Symbols Rules
Rites,Myths

Structures
Things

29
 Culture, rules and symbols
Organizations are symbolic entities, which behave according to
the mental map of it’s members. Those models are culturally
determined.
 Cow in India  Cow in Brazil

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The Elements of Culture

Values
Principles

Law
Culture Symbols Communication Rules
Rites,Myths

Structures
Things

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Communication – Text and Context

Gato !!!

32
Communication – Text and Context

Gato !!!

33
Communication – Text and Context

Gato !!!

34
Communication – See and Perceive

35
Communication – See and Perceive

36
The meaning is in the software

Hardware Software

Brain Mind and Culture

37
The meaning is in the Culture

Modelo mental Cultura

Mental Map Culture

Representa ções
Individual Representa
Groupç
individuais
Representations Representations

38
The Elements of Culture

Values
Principles

Law
Actions
Culture Symbols Communication Rules
(habitus)
Rites,Myths

Structures
Things

J. Lafraia @ Copyright 39
Culture and “habitus”
The first step to change a culture: become conscious of the
“habitus”, the invisible string that move us

“Habits are safer than rules; you

don’t have to follow them. You
don’t have to keep them either.
They keep you.”

Frank Crane

J. Lafraia @ Copyright 40
Mindfulness x Complacency

Everyone
THE
Operacional Operacional
RIGHT
Discipline WAY Excellence

Every task All the time

• Operational Discipline means completing every task,

the right way, every time.

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The Elements of Culture

Values
Principles

Law
Actions
Culture Symbols Communication Rules
(habitus)
Rites,Myths

Structures
Things Discipline Education

42
The ABC Behavior Model

• Antecedents what drives and preceeds

Behavior.

• Behavior A visible action.

• Consequences what is directly originated from

the Behavior

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 The ABC Model
Antecedents Behavior Consequence
What DRIVES and preceed What is directly originated
Behavior.
A visible action. from the Behavior
• Organizacional Culture; • Not using PPE; • Injuries;
• Risk perception; • Violations; • Death;
• Values & beliefs; • Following rules, laws e • Productivity;
procedures;
• Knowledge; • Comfort/discomfort;
• Experience; • Not to follow rules, laws • Disciplinare actions;
e procedures;
• Procedures; • Reward/ Penality
• Thoughts; • Satisfaction (risks).
• Examples;
• Rules, Systems

44
The ABC Model and the Culture

Antecedents Culture

Intentions

Behavior

Consequences Attitudes

45
The ABC Model and the Culture

Rites / Myths
Antecedents
Infrastructure

Intentions
Values
Role Models
Behavior

Consequences Attitudes

46
Leadership and The ABC Model

LEADERSHIP IS THE KEY FOR

CHANGING BEHAVIOR

ESTABLISHING ESTABLISHING
ANTECEDENTS CONSEQUENCES

47
The Elements of Culture

Values
Leadership Power Decision
Principles

Law
Actions
Culture Symbols Communication Rules
(habitus)
Rites,Myths

Structures
Things

48
Culture, Power and Leadership

Power: Nobody is, so to speak, it’ owner; and, however, it

always goes in some way, with some groups in either side;
it is not clear who holds it, but it is clear who doesn’t.

Individuality is a result of
the exercise of power. (MF)

49
 Leadership
• Leadership = leader + led. The leadership does not belong only
to the leader. Leadership does not exist if adhesion to the leader
does not exist.

• The leadership is a function/process.

• Leadership = to get results + through relationships.

• The leader is a person.

• A person cannot be responsable for the success of the whole

organization.

• Leadership requires to give up the notion of the heroic leader -

the person who has all the answers.
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The Dual Role of Leadership

Communication
Vision PERMANENT
LEADERSHIP

Strategies CHANGES
Innovations
Yes

AND
Culture & Mental Map SUSTAINABLE
NOT SUSTAINABLE
CHANGES

Command and control

Planning
CAOS System
DIFFICULTY
OF CHANGES

No Yes
MANAGEMENT
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The Leadership Model
Reward / Recognition Reliability
Safety Production Contractor
Manegement
Lack of visiable leadership
Mixed & unclear messages
Prodution vs Reliability
Poor support for the line
No continous
improvement

Acts as one team with the same

Vision & Values

Increased profitability

Decreased risk taking

Leadership is the magnet that
aligns the driving force for
developing the reliability culture

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How to change the Culture????

53
The Elements of Culture
Ethics

Values
Leadership Power Decision
Principles

Law
Actions
Culture Symbols Communication Rules
(habitus)
Rites,Myths

Structures
Things Discipline Education

54
Operational Excellence Culture Journey
Mindfulness

Visible commitment
Individual Taking of Cautious and
Commitment Rigorous Action
Line Accountability
Comunicação
Partnership
Defect and incident
management Commitment of
Good Installations
Leadership and equipment
Continuous Learning Defenses against
Accidents and failures
Effective Physical
Focus on People and
Culture
Assets
Explicit Management
System
Reward and Penality
Commitment of
Management structures
Management
Resources/Delegation
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 Development of the Culture of the Company
NATURAL
INSTINCTS
INSTALLATION MANAGEMENT SYSTEM LEADERSHIP
Performance Measures

ANTECEDENTS ANTECEDENTS ANTECEDENTS ANTECEDENTS

Meet Budget Breakdowns Avoid Failures Precision

Prevention Innovation
Low Cost

BAHAVIOR BAHAVIOR BAHAVIOR

BAHAVIOR
Fix it after it breaks Fix it before it breaks Don´t just fix it,
Don´t fix it Improve it
Responding Planning Proactive

CONSEQUENCE CONSEQUENCE CONSEQUENCE CONSEQUENCE

Decaying Overtime No Surprises Best in Class
Short term savings Heroes Competitive
Advantage
CAOS REACTIVE PLANNED Op Excellence
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Conclusion

LDWR
Production

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www.qualitymark.com.br

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jrlafraia@ig.com.br

Questions ?

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