ARGENTINA

MEETING WITH SAUDI ARABIAN DELEGATION

OCTOBER 12, 2010

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PRESENTATION

•Energy sector in Argentina.

•Reasons for the development of biofuels in Argentina.

•Law Nº 26.093: main objectives.

•Availability of raw material for biodiesel production.

•Recent developments in the Argentine biofuels sector.

•Conclusions and challenges ahead.

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ARGENTINE ENERGY CONSUMPTION BY SOURCE

Source: Department of Energy, Argentina

Coal2%

Others4%

Nuclear2%Hydro

6%Natural Gas

41%

Oil45%

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LIQUID FUELS - CONSUMPTION

Fuente: Secretaría de Energía

DIESELOIL66%

GASOLINE17%CNG

17%

Argentina imports 3 to 4% of total diesel oil

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WORLD SOYBEAN PRODUCTION 2008:

Source: SOYSTAT- USDA

Country Production Share

million tons %

USA 72.9 33%

BRAZIL 61.0 28%

ARGENTINA 46.2 21%

CHINA 14.0 6%

SUBTOTAL 194.1 88%

REST 26.4 12%

TOTAL 220.5 100%

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

ARGENTINA

•One of the main exporters of vegetable oil in the world.

•The oil industry in Argentina is export - oriented, sending 95% of its production to the foreign market.

(2008 crushing capacity : 160,000 tons/day).

Source: CIARA

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

OTHERS 0.1 Million Tons

TOTAL 7.9 Million Tons

SOY OIL 6.1 Million Tons

SUNFLOWER OIL 1.7 Million Tons

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Plants by crushing capacity

Crushing capacity tons/day< 1000

1001 to 1600016001 to 31000

> 31001

Crusging Capacity by Province (Share of total)

Santa Fe, 81%

Córdoba, 11%

Buenos Aires, 8% Otras, 1%

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ARGENTINA IS THE No 1 EXPORTER AND No 3 WORLD PRODUCER OF SOY OIL

REASONS FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

THE No 1 EXPORTER AND No 2 PRODUCER OF SUNFLOWER OIL IN THE WORLD

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MAIN TOOL FOR THE DEVELOPMENT OF BIOFUELS IN ARGENTINA

• The creation of a legal framework for the development of this

new industry.

• The Argentine Congress approved on April 19th, 2006 a

law to promote the use and production of biofuels in the

country. The biofuels involved are: biodiesel, ethanol

and biogas.

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MAIN ASPECTS OF THE LAW

• 5% mandatory use of biodiesel and ethanol in all diesel oil and gasoline consumption, beginning January 1, 2010. Currently is 7% for biodiesel.

• Creation of a National Authority (N.A.) for the evaluation and support of projects for the production of biofuels.

• The functions of the N.A are, among others:

• To establish biofuels quality standards.

• To establish the criteria for the approval of projects in order to obtain the benefits established by the law.

• The law prioritizes projects that follows these criteria:

• Sponsored by small and medium sized companies.

• Belong to farming producers.

• Located in regional and rural economies.

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AVAILABILITY OF RAW MATERIAL FOR BIODIESEL PRODUCTION IN

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Argentine Grain Production- in million tons -

62,0

95,0

69,469,2 70,8

95,0 97,3

84,5

67,4

76,5

-

20,0

40,0

60,0

80,0

100,0

120,0

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10(*)

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, livestock and fisheries of Argentina(*) Estimated

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Argentine total grain production for the 2007/2008 reached 95,0 million tons. SOY, CORN and WHEAT account for almost 90% of total grain production.

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, Livestock and Fisheries - Argentina

Total Grain Production 2007/2008 season:

Grain Planted area Production Share

million hectares million tons %

SOY 16.6 46.2 47%

CORN 4.2 22.0 23%

WHEAT 6.0 16.3 17%

SUNFLOWER 2.6 4.7 5%

SORGHUM 0.8 2.9 3%

OTHERS 1.8 5.2 5%

TOTAL 32.0 97.3 100%

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Soybean ProductionCampagne2007 – 2008

46.2 million tons

ARGENTINE GRAIN PRODUCTION

Source: Ministry of Agriculture, livestock and fisheries of Argentina- 2009/2010 projected

85%

Argentine Soybean Production- in million tons -

40.5

10.9

20.1

46.2

3.8

53.0

-

10.0

20.0

30.0

40.0

50.0

60.0

1980 /81 1990 /91 1999 /00 2005 /06 2007 /08 2009/2010

300 kms

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MAIN IMPACTS EXPECTED FROM THE LAW

With the implementation of the 7% mandatory use of biofuels, the needed production is:

• Biodiesel: 1,200,000 tons

• Vegetable oil: 1,240,000 tons. (17% of total current production).

• Soybean seed contains 18% oil, and 77% protein meal

Oil, 18%Rest, 5%

Meal, 77%

BIODIESEL

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RECENT DEVELOPMENTS

23 Biodiesel plants

Total production capacity : 2,5 million tons.

Total Investments: US$ 500 million

Source: Department of Energy and CARBIO(*) Projected

Argentine Biodiesel Markets- in thousand tons -

168

1150

725

1200

800

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 (*)

Domestic

Export

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RAW MATERIAL FOR THE PRODUCTION OF ETHANOL

With the implementation of the 5% mandatory use of ethanol, the needed production is:

• Ethanol : 250.000 tons.

• Quantity of corn/sorghum needed = 550.000 tons (2,5% of total

current production)

Currently total production of Ethanol is from Sugar Cane

ETHANOL

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Member of the Global Bioenergy Partnership (GBEP) – Participation on the definition of criteria and indicators for sustainable production of bioenergy (environmental, social, economic and energy indicators).

EU Directive on Renewable Energy - JRC-DGEN- INTA Document.

Establishment of a Working Group for measurement of GHGs – MINAGRI - MinCyT- Universities and Research Centers.

Participation in Public Consultations related to the sustainability of bioenergy (eg EU and U.S.A).

Implementation of WISDOM methodology (S&D of biomass resources). Tool for decision making.

SUSTAINABILITY OF BIOENERGY

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CONCLUSIONS

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CONCLUSIONS

• Argentina has ideal growing conditions for the sustained development of the raw materials needed for the production of biofuels.

• Argentina has immediate availability of the raw material needed to cover the 5%-10% of mandatory use in all gasoline and diesel consumption.

• Argentina would become one of the major producers of biofuels worldwide.

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CONCLUSIONS

• From the economic and social point of view, the development of the Argentine biofuels industry is:

• Creating a new industry in our country.

• Adding value to grain and vegetable oil production since

Argentina exports 70 percent of the corn and 90 percent

of the vegetable oil that it produces.

• Having a favorable impact on the environment.

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MAIN CHALLENGES AHEAD

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MAIN CHALLENGES AHEAD

• To monitor on a permanent basis, issues related to quality, safety and environment.

• To promote research and development to reduce costs of biofuels and to make more efficient use of the biomass produced.

• To encourage the use of biotechnology for the development of new varieties of feedstocks for the production of biofuels.

• To encourage cooperation between countries in the region, in order to access new foreign markets.

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MAIN CHALLENGES AHEAD

• To promote projects that are labour intensive and have a high impact on regional economic and agricultural development.

• To support the interaction between private and public companies, scientific and technological organizations and public organizations.

• To become one of the main producers and exporters of biofuels worldwide, adding value to current agricultural exports.

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HOW TO CONTACT US

Ministry of Agriculture, livestock and Fisheries of Argentina

Paseo Colón 982 – 2nd. Floor - Office 219 – Buenos Aires

Miguel Almada

Phone: (5411) 4349-2226 / 2111

E-mail: malmad@minagri.gob.ar

Website: www.minagri.gob.ar