1. PETROBRAS
7th Annual Conference
Santander Banespa Brazil
Petrobras Overview and 2Q Results
Almir Barbassa
CFO
Campos do Jordão – São Paulo
August 2006
1

2. Disclosure
The presentation may contain forecasts about future events. Such forecasts merely
reflect the expectations of the Company's management. Such terms as "anticipate",
"believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along
with similar or analogous expressions, are used to identify such forecasts. These
predictions evidently involve risks and uncertainties, whether foreseen or not by the
Company. Therefore, the future results of operations may differ from current
expectations, and readers must not base their expectations exclusively on the
information presented herein. The Company is not obliged to update the
presentation/such forecasts in light of new information or future developments.
Cautionary Statement for US investors
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves that a
company has demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. We use certain terms in this presentation, such as oil and gas resources,
that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
2
2

3. Drivers & Strategies
Drivers Business Strategies
Develop market and monetize E&P
natural gas reserves in Brazil • Focus on light oil and natural gas
production and reserve growth
Reduce dependence on light oil Downstream
and oil product imports • Expand conversion capacity and improve
quality of refined products
• Increase bio-refining capacity, biomass,
Improve oil product quality in petrochemical and fertilizers businesses
Brazil and abroad • Promote Brazilian biodiesel production and
export ethanol
Reduce carbon intensity of Distribution
operations and products • Increase market-share in Brazil for oil
products and biofuels
Assure future demand and add Gas & Energy
value to heavy oil exports
• Develop and establish a profitable and
reliable natural gas market including LNG
Exploit competitive advantage International
from deep water exploration • Expand E&P in Gulf of Mexico and Africa
technology abroad • Undertake investments in refining
conversion capacity and quality
3
3

4. Fundamentals
Macroeconomic assumptions
Assumptions 2007-2011 • Market developments indicate an
appreciation of the FX rate
GDP – World (% p.a.) –
4.2 (R$/US$).
PPP*
GDP – Latin America (%
3.7 • Petrobras robustness Brent price
p.a.) – PPP
below the low end of market’s
GDP – Brazil (% p.a.) 4.0
forecast band.
FX rate (R$/US$) 2.50
Robustness Brent • Costs are projected at current
23.00
(US$/bbl) levels, with no adjustment for
2006 – 62.00
future price reductions.
Brent for funding 2007 – 55.00
(US$/bbl) • Petrobras products prices follow
2008 – 40.00
2009-2011 – 35.00 international prices in the medium
term.
Costs At current levels
Linked to • Natural gas prices to accompany
Domestic sales prices international market international differentials to oil
prices products.
* PPP – purchase power parity
4
4

5. Fundamentals
Domestic oil products market
• Increasing demand for middle distillates.
2500
Oil products demand 3.1% p.a.
2,117
211 8,7% p.a.
2000
1,766 97
Thousand bpd
-1,8% p.a.
128
1500 108
935 3,1% p.a.
777
1000
282 2,9% p.a.
237
500 2,6% p.a.
315 368
201 224 1,8% p.a.
0
2005 2011
LPG Gasoline A Naphta
Diesel* + Jet Fuel Fuel Oil Coke + Others
*Includes Biodiesel (2%) 5
5

6. Fundamentals
Domestic natural gas market
140
Natural gas market 121.0 121.0
120
up to 20.0
100 34.0
17.7% p.a.
up to 30.0
80
Million m3/day
38.6
60
45.4
40 13.5 up to 71.0
20 24.8 48.4
0 7.1
Consumed in 2005 Maximum Demand Potential Supply 2011
2011(*)
Thermoplants Industry Other
National Production Bolivian Imports LNG
* Considers maximal dispatch for every thermoelectric power plant
6
6

7. Investment Plan
Business Plan 2007-2011
US$ 87.1 billion
56% 14%
49.3 U
S$
12
49,3 .1
bi
31.0
23,0 US$ 75.0 bi
1.8
1,8
2.3 3.3 23.0
3% 2,2 3,3 7,5 26%
7.5
1.0
3% 1.0
4% 12.4
9% 86%
E&P Downstream G&E Brazil International
Petrochemical Distribution Corporate
Note: Includes International
7
7

8. Financial Targets
Sources & Uses
Sources Uses
(US$ 99.3 billion) (US$ 99.3 billion)
12.6 12.2
86.7 (*) 87.1
2004-2010 2004-2010
Financing Debt Amortization
Cash Flow Capex
• Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011).
8
8

9. PETROBRAS
Financial Targets
Main Financial Indicators
2006-2010 2007-2011
Indicators
Average Average
Return on Capital Employed (ROCE) (%) 15 16
Long Term Funding (US$ billion per year) 2.9 3.1
Cash Balance (end of the year) (US$ billion) 4.4 3.5
Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%) 28 25
Oper. Cash Flow before interest and taxes / interest 8.6x 13.7x
Free Operating Cash Flow (US$ billion) 1.5 1.5
Sensitivity to Brent in 2007-2011(annual average)
Every US$ 5.00 Brent price change will result in:
• 3 pp change in ROCE;
• US$ 3.5 billion change in the operational cash generation;
• 10 pp change in leverage.
9
99

10. PETROBRAS
E&P
Production targets – Oil & NGL and Natural Gas
Thousand boed 7.5% p.a.
4,556
278
7.8% p.a.
3,493 742
185
383 724
2,403
2,036 2,020 2,217
101
96 551
85 94 133
163 289
161 168
274
250 265
2, 812
2, 374
1, 880
1, 540 1, 684
1, 493
2003 2004 2005 T a r get 2 006 T a rg e t 2 0 1 1 2015
For ecast
Oi l and N GL - B r az i l N at ur al Gas - B r az i l
10
Oi l and N GL - I nt er naci ona l N at ur al Gas - I nt e r naci onal 10
10

11. PETROBRAS
E&P
Main projects that will contribute to the production growth in 2006
P -- 34
P 34 Piranema
Piranema
FPSO Capixaba
FPSO Capixaba Jubarte Phase 1
Jubarte Phase 1 Capacity 20.000 bpd
Capacity 20.000 bpd
Golfinho Mod. 1
Golfinho Mod. 1 Capacity 60,000 bpd
Capacity 60,000 bpd October 2006
October 2006
P -- 50
P 50 October 2006
Capactiy 100,000 bpd
Capactiy 100,000 bpd October 2006
Albacora Leste
Albacora Leste 1,880
May 2006
May 2006
Capacity 180,000 bpd
Capacity 180,000 bpd
April 2006
April 2006
1,684
∆ 11.6%
Crude oil in Brazil
2005A 2006E
• P-50 is currently producing 75.000 bpd and should reach its production peak by the end of the year.
• FPSO Capixaba is producing 50.000 bpd (half of its capacity) and should also reach its peak by the
end of the year.
• P-34 is being adapted in the Vitória shipyard and should start-up operation late September.
• Piranema was constructed in China (Yantai Raffles shipyard) and is currently in the Netherlands
(Keppel Verolme shipyard) concluding its conversion. Production should begin in October.
11
11
11

12. PETROBRAS
E&P
Main Brazilian Oil & NGL production projects
2,600
Albacora Leste
Albacora Leste
P-50
P-50
Thous. bpd
180,000 bpd
180,000 bpd ESS-130
April/2006
April/2006
Roncador
Roncador
P-52
P-52
ESS-130
Golfinho Mod III ****
Golfinho Mod III **** 2,374
2,400 (FPSO)
(FPSO)
180,000 bpd
180,000 bpd
Jubarte
Jubarte 100,000 bpd
2007
2007 100,000 bpd
Fase 1
Fase 1
P-34
2008
2008 2,368 Parque das
Parque das
P-34 Conchas***
60,000 bpd Rio de Janeiro
Rio de Janeiro Conchas***
60,000 bpd 100.000 bpd
2,200 Oct/2006 Espadarte Mod II
Espadarte Mod II 100.000 bpd
Oct/2006
100,000 bpd
100,000 bpd 2,195 2011
2011
FPSO Capixaba
FPSO Capixaba 2007
2007 Roncador
Frade Roncador
Golfinho Mod. 1
Golfinho Mod. 1 Frade
P-55**
P-55**
2,000
100,000 bpd
100,000 bpd 2,061 100,000 bpd
100,000 bpd
2009
180.000 bpd
180.000 bpd
May 2006
May 2006 2009
1,979 Marlim Sul
Marlim Sul
2011
2011
Module 2 Jubarte
Jubarte
Module 2
Roncador
Roncador P-51 Phase 2
Phase 2
P-51
P-54
P-54 180,000 bpd P-57
P-57
180,000 bpd
1,800 1,880 180,000 bpd
180,000 bpd 2008
2008
180,000 bpd
180,000 bpd
2007
2007 2010
2010
Piranema
Piranema
Marlim Leste
1,600 1,684 20.000 bpd
20.000 bpd Cidade de Vitória
Cidade de Vitória
Golfinho Mod. 2
Golfinho Mod. 2
Marlim Leste
P-53*
P-53* Postponed
Oct 2006
Oct 2006
100,000 bpd
100,000 bpd 180,000 bpd
180,000 bpd New
2007 2009
2009
2007 Antecipated
1,400
2005 2006 2007 2008 2009 2010 2011
* In the previous plan, P-53 was scheduled to 2008
** In the previous plan, P-55 was scheduled to 2010
12
*** Abalone, Ostra, Argonauta and Nautilus (former BC10): Petrobras share 35%
**** In the previous plan, Golfinho Mod. 3 was scheduled to 2010
12
12

13. PETROBRAS
E&P
Projects for 2007
4 new platforms will provide additional production capacity of 560,000 bpd
FPSO Cidade Vitória
This leased FPSO with capacity of 100,000 bpd is currently being constructed by Saipem in Dubai. It is
scheduled to start operation May/2007 in the Golfinho Field.
FPSO Cidade Rio de Janeiro
With a capacity of 100,000 bpd, this leased unit is being
converted by Modec in Singapore. Production will begin May/2007
in the Espadarte field.
P-54
Petrobras constructed this platform in the Jurong shipyard, in Cidade Rio de Janeiro
Singapore, and is currently transporting it to the Mauá-Jurong
shipyard, in Niterói (RJ). It should be operating by October/2007
in the Roncador field with a capacity of 180,000 bpd.
P-52
This platform was constructed by Petrobras, in Singapore (Keppel
Fels shipyard) and will have the capacity to produce 180,000 bpd.
Currently it is in Angra dos Reis (RJ) concluding its construction to
operate in the Roncador field (December/2007).
P-52 13
13
13

14. PETROBRAS
E&P
2011-2015 main Brazilian projects
• To sustain production growth, 15 large projects will be implemented between 2011 to
2015. The highlights are:
Oil Production in Brazil (Thous. bbl)
2900
2,812
2800
• Marlim Sul P-56
2700 • Roncador P-55
2600 • Papa-Terra Mód. 1 e 2
• Marlim Sul Mód. 4
2500 • Roncador Mód. 4
2,374 • Cachalote and Baleia Franca
2400 • Baleia Azul
2300
2200
2100
2011 2015 14
14
14

15. PETROBRAS
E&P Investments
Brazilian production curve
2.600 2,368 2,374
2,195
690
1,979 2,061
2.100 1,880 Net Increase
1,684
1.600
Thous. bpd
1.100
600 +
100
(154) (154)
(326)
(172) (508)
(697)
(400) (181) (897) 1,114
(189)
(201) Accumulated
(900)
(217) Natural Decline
(1.400)
2005 2006 2007 2008 2009 2010 2011
1,804
Total Production Accumulated Decline Annual Decline
Gross Increase
15
15
15

16. E&P Investments
• Strong investments in production will optimize the development of Petrobras’ proven
reserves, aiming light oil production and a minimum reserve/production ratio of 15 years.
• Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells
classified as discovery or producing wells.
Undeveloped Reserves / Total Reserves* (2005)
60,0%
54,3% 53,1%
51,5% 50,5%
50,0%
43,8%
40,5% 39,7%
40,0%
34,3%
30,0% 29,7%
30,0%
25,0%
20,3%
20,0%
12,9%
10,0%
0,0% n
C
na
l
as
il
c
BP
l
s
PF
l
il
ta
el
oi
ro
ko
pe
ob
llip
O
i
To
Sh
at
br
ev
Ch
-Y
O
Lu
no
nM
i
16
St
tr o
Ph
CN
ol
Ch
tr o
Si
16
xo
ps
Pe
co
Pe
Ex
Re
no
17
Co
* Source: Evaluate Energy

17. E&P Investments
Petrobras CAPEX vs. Peers CAPEX
E&P CAPEX to production 2005-2008E Average (US$/bbl)
30
Petro-Canada: 14,17
ConocoPhillips: 12,5
Marathon Oil: 12,31
25
CNOOC: 13,19
Imperial Oil: 10,21
Exxon Mobil: 9,54
Chevron: 11,32
Petrochina: 10,2
Sinopec: 10,02
Petrobras*: 8,56
Shell Canada: 26,86
20
Murphy Oil: 27,75
Statoil: 9,89
Total: 9,41
Suncor: 21,65
15
BP: 7,03
10
5
0
* CAPEX and production over 2006-2011
Global Oils E&P CAPEX to production 2005-2008E Average
Source: Merrill Lynch estimates based on available data for the companies.
• Per barrel CAPEX* for Petrobras (2006-2011) of US$ 8.56 vs. Global Oils average (2005-08) of
US$ 13.74 (ex-PBR).
17
17

18. PETROBRAS
Downstream Investments
US$ 23.1 billion in the downstream segment… ...of which US$ 14.2 billion in refining
6%
14%
US$ 0.9
19%
26%
US$ 3.2 US$ 2.7
US$ 3.7
12% US$ 2.8 61% 8% US$ 1.1
US$
0.7
US
US$ 14.2 US$ 1.7 $0 5%
.7
0
US$ 2.7
3.
$
12% 5%
US
13% 19%
Refining
Pipelines & Terminals Transport Gasoline Quality Diesel Quality
Ship Transport Infraestructure Maintenance Expansion
Petrochemical HSE Conversion
Others Special
• Aggregating value to our heavy oil and producing diesel and gasoline according to
international standards.
18
18
18

19. PETROBRAS
Business Strategies - Downstream
New Refinery in Pernambuco
• Investment: US$ 2,5 billion;
• Throughput capacity: 200 thousand heavy oil barrels (50%
Petrobras oil / 50% PDVSA oil);
• Focusing diesel and LPG production maximization, the new
refinery will aim the growth of oil products demand in the
Northeast.
• The Northeast Region, which responds for 19% of oil products demand and holds only one refinery
in Bahia, will no longer be a fuel importer (either from refineries in Brazil or abroad);
• Costs reduction: oil products transportation are more expensive than for crude oil.
New Refinery in the USA
• Petrobras has acquired 50% of the Passadena Refinery System
Inc. (PRSI), located in Texas, USA;
• Total Investment: US$ 370 million;
• The refinery, which already has a capacity of 100,000 bbl/day, will
be upgraded to handle 70,000 bbl/day of heavy oil and feedstock
(including Marlim field’s production);
• The upgraded refinery will be ready in four years. After the revamp project all products will match
USA highest standards.
19
19
19

20. PETROBRAS
Downstream Investments
Petrochemical investments
Advantages:
Main Projects • Proximity to Petrobras’ installations in Rio de
Janeiro;
Rio de Janeiro Petrochemical • Availability of labor for both the construction
Complex and operational phase;
• Proximity to port installations.
Acrylic Complex /SAP • Products: Diesel, LPG, Ethylene, Propylene,
PX, Benzene and Coke.
PTA Pernambuco
•The Complex will add value to 150,000
barrels/day of heavy oil form the Campos
Nitrogenated Fertilizers Unit III Basin.
Fafen BA
• Investments of US$ 3.3 billion in
Petrochemicals;
Petrochemical
• Reducing the Brazilian deficit and adding São Gonçalo
Complex –
value to Downstream production. Liquids
Itaboraí
Outflow Unit 20
20
20

21. PETROBRAS
Vertical Integration Comparison
Majors Average *
4,793
3,176
2,735
National Oil Companies Average **
1,579
1,630
4,329
2011: Petrobras
New Refinery will add 200
thous. bpd capacity 2,296
2010:
Pasadena Refinery revamp
concluded – processing 70
2,114
thous. bpd of heavy oil
Product Sales (thous. bpd)
2,217
Refining (thous. bpd)
3,400 Production (thous. boed)
Year 2011
*** 2004 figures, except for Petrobras (2005) 21
* Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF
Source: PIW Intelligence and Petrobras 21
21
** NOIC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach

22. PETROBRAS
Downstream Investments
Liquid products flow
• In 2011 international sales will amount to 967 Thous. bpd.
International Production Brazilian Production 80 Oil products consumption
383 2,374 in Brazil (**) 2,099
584 1,710
Throughput in
Brazil 1,877
Oil Oil Products (*)
167 142
Imports
383 + 584
309
International oil sales
In Thous. bpd
967 (*) National imports and private refineries
(**) Biodiesel portion not included
22
22
22

23. PETROBRAS
Natural Gas Investments
Challenges Business Plan 2007-2011 Targets
Over 75% of Petrobras’ current natural Investments to develop production of
gas production is associated gas non-associated gas
Risk of gas supply failure due to LNG to provide flexibility to mitigate
abnormalities such risk
Lack of infrastructure to develop Total investment (Petrobras and
Brazilian market partners) in Brazilian natural gas chain
adds up to US$ 22.1 billion
23
23
23

24. PETROBRAS
Natural Gas Investments
New investments will reduce the country’s dependence on imported gas.
• Production will raise from the current 15.8
million to 40 million m3 per day in 2008 in the
Southeast.
• Development of two new oil and gas
fields in Espírito Santo;
• Increase of natural gas supply from the
Marlim field (Campos Basin);
• Expansion of gas production in the
Merluza field (Santos Basin).
• Demand Flexibilization
Espírito
Santo • Refineries, Distributors and flex-fuel
Campos thermoelectric plants ( LNG, diesel and
Santos alcohol)
•Investments of US$ 6.5 billion in
infrastructure from 2007 – 2011 to
integrated and develop the natural gas
market
TOTAL INVESTMENTS OF US$ 22,1 BIILION IN THE BRAZILIAN NATURAL GAS CHAIN
FROM 2007 – 2011 (Petrobras and Partners)
24
24
24

25. PETROBRAS
Natural Gas Investments
Delivery Curve
Million m3/day
Roncador
SPS25 RJS633 Cavalo (P-55)
80 ESS164
2008
2009 2010 Marinho
2010
2011
Urucu
Natural gas Mexilhão 70
70 sales 2009
2007 70.6
Roncador Golfinho 65.2 Parque das
60 (P-54)
2007
Mod 2
2007
Canapu
2008 Tambaú/Uruguá
Conchas
2011
2010
50 Peroá-
Cangoa
Frade
2009
Jubarte Fase 2
NG non associated
NG associated
(P-57)
Phase 1 49.4 Marlim Leste
(P-53) 2010
2006 Marlim Sul
40 Manati
ESS130 Mod 2
2009
2008 (P-51)
2006 2008
34.1
30 Piranema Peroá-
Cangoa
27.5 2006
Roncador Phase 2
20 Jubarte
(P-52)
2007
2007
Albacora
Albacora (P-34)
Complemental
Leste 2006 Espadarte
10 (P-50) Mod. 2
2007
2007
2006 Golfinho Mod 1
2006
0
2006 2007 2008 2009 2010 2011
25
25
25

26. PETROBRAS
Flexible LNG Project
Facilitates the adjustment of the offer to the market’s characteristic:
Flexible Offer (with guarantee) to the thermoelectric plants.
More efficient than Diesel in the thermo plants;
Mitigates the risk of failing to supply the gas due to abnormalities;
Diversifies the sources of imported gas;
Projects under evaluation:
Purchase or freight of floating storage and regasification units (FSRU);
Maritime terminal in Pecém (Ceará) - 6 MM m³/day (estimate Jul/2008 ± 3 months)
Maritime terminal in the Guanabara Bay (Rio de Janeiro)– 12/14 MM m³/day (estimate
Jul/2008 ± 3 months)
FSRU
Floating Storage and Regasification Unit
26
26
26

27. PETROBRAS
Distribution Investments
Market Share of Fuel Distribution • Lead the Brazilian market for oil products
Companies in Brazil (%) and bio-fuels;
34% • Expand domestic market-share and client
21%
portfolio;
8% • Internationalize and add value to
Petrobras’ brand.
7%
13% 17%
BR Ipiranga Shell
Esso Texaco Outras
US$ 2.2 billion to be invested between 2007-2011
27
27
27

28. PETROBRAS
International Investments
Total CAPEX: US$ 12.1 billion Targets
0,8%
1,7%
0,8% 568
1,7%
Thous. boed
E&P
185
Refining and
Marketing 259
262
Petrochemical 24,8%
94 96
Gas & Energy 383
70,2% 168 163
Distribution
Corporate 2004 2005 2011 Target
Oil and NGL Natural Gas
Core Areas:
• Refining
• Add value to Brazilian heavy oil exports
• E&P: West Africa (Nigeria and Angola) & Gulf of Mexico:
• Apply deep water and deep well drilling technology.
• Latin America:
• Leadership as an integrated energy company
28
28
28

29. PETROBRAS
Situation in Bolivia
• As a consequence to the measures adopted by the Bolivian Government, Petrobras
will act to:
• Protect its interests through negotiations by all legal means;
• Suspend all new investments in Bolivia as well as those related to the Bolivia-Brazil Gas Pipeline
(GASBOL);
• Immediately initiate studies to diversify supply sources, including LNG regasefication project(s);
120
Natural Gas Offer - Million m3/day Substitution of additional imports from Bolivia
11.0
100 11.0
4.0
80 30.0
30.0
30.0
60 30.0
30.0 30.0
40
61.5 69.6
54.3
20 43.0
26.5 31.4
0
2005 2006 2007 2008 2009 2010
Domestic Production Imports from Bolivia as of existing GSA
National Production Increase or LNG
29
29
29

30. PETROBRAS
Situation in Venezuela
International Production 2006
Oil, NGL and Gas (boed)
300.000
250.000
Nationalization
200.000
Decree Effect
150.000
Fall in production as a
100.000 result of the decrease of
Petrobras Energia
50.000
Venezuela participation;
-
jan/06 Feb/06 mar/06 Apr/06
ANGOLA ARGENTINA BOLIVIA COLOMBIA ECUADOR PERU USA VENEZUELA
2005 Production (%)
18% 3%
ANGOLA • Venezuela was responsible for 18% (47,632 boed) of 2005
ARGENTINA Petrobras international production – this amount has
BOLIVIA
2% decreased to 8.4% (18,629 boed) in April/06;
COLOMBIA
6% 40%
ECUADOR • Negotiations about the compensation are still running;
4%
PERU
6% USA • Possible outcome: extension of the current exploration
VENEZUELA agreements.
21%
30
30
30

31. PETROBRAS
Biofuel Production
• H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil
• Hydrogenation of a blend of diesel and vegetable oils
Hydrogen Diesel
Agribusiness Fractions
Processed
Seeds Oil
Farming Crushing Refinery
or Diesel
or
Transerestification Biodiesel
Ethanol
Distributors
or or
B2 or B5 Diesel
Methanol mixture
Stations
Glycerin + Others
31
Complementary and not competitive processes 31
31

32. PETROBRAS
Future Markets for biodiesel
Law 11.097/2005 – established minimal percentage for biodiesel mix in diesel
2008
2005
to From 2012
to
2012 on
2007
(2% demanding) (5% demanding)
(2% allowable)
(5% allowable)
Brazilian market Brazilian market Brazilian market
0 – 5.2 million barrels 5.2 – 15.7 million barrels 15.7 million barrels
Petrobras market share Petrobras market share Petrobras market share
0 – 1.3 million barrels 1.3 -3.8 million barrels 3.8 million barrels
• Petrobras target for 2010: Production of 8,200 bpd of Biodiesel
• Two new experimental units of biodiesel (Guamaré – Rio Grande do Norte),
which have received investments of R$ 19 million in research & development until
now, will produce up to 300 bpd of biodiesel.
32
32

33. PETROBRAS
Ethanol Market
• Ethanol global market is 46.5 Billion Liters (2005)
• Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production)
• Today the ethanol consumption is 2.6% of gasoline MKT
• 10% of ethanol in gasoline will represent 118 Billion Lt
Brazil-Japan Ethanol Inc.
• Recently, Petrobras incorporated Brazil-Japan Ethanol Inc.
• The company will import and distribute Brazilian-produced
ethanol in Japan;
• Development of technical and commercial solutions for the
reliable and long term supply of alcohol in the Japanese market;
• Petrobras will break into one of the most complex and
important energy markets in the World:
• ethanol logistics distribution
• fuel distribution sector in Japan.
33
33
33

34. PETROBRAS
Flex-Fuel Vehicles
• Consumer wants to decide the fuel at the gas station
• Fuel price is one the most important factor
• Consumer is aware of pollution and renewable fuels
• Today cars manufacturer is producing 80% of FFV in Brazil
LIGHT VEHICLES TOTAL SALES units
150,000
Ethanol Gasoline FFV 140,000
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Nov-05
Feb-06
Nov-03
Nov-04
Aug-05
Feb-03
Feb-05
Aug-03
Feb-04
Aug-04
Dec-05
Apr-03
May-03
Apr-04
Apr-05
Sep-05
Jun-03
May-04
Jun-04
May-05
Oct-05
Mar-06
Jan-06
Jun-05
Dec-03
Dec-04
Sep-03
Sep-04
Jan-04
Jul-03
Jul-04
Jul-05
Jan-03
Jan-05
Mar-03
Oct-03
Oct-04
Mar-05
Mar-04
34
34
34

35. 2nd Quarter 2006 Results
(Brazilian Corporate Law)
35

36. PETROBRAS
Income Statement 2Q06 vs 1Q06
1Q06 2Q06
37.948 5.7%
Net Revenues
35.886
R$ Million
21.260
COGS 8.2%
19.644
13.614
EBITDA -3.5%
14.113
11.267
Operating Profit -6.2%
12.010
6.958 4.2%
Net Income
6.675
• Reduced operating profit due to higher oil price and COGS including government participation;
• Lower operating profit reflects mainly increases in general and administrative expenses and
others, as described in the next slide;
• Increase in Net Income due to Real depreciation (0.5%) over equity income of investments abroad.
36
36
36

37. PETROBRAS
E&P – Oil Prices
US$ 11.42 bbl
69.62
61.75
61.53
56.90 57.59 64.74
US$/bbl
56.39
51.59
47.83 58.20
44.00 52.70
41.59 54.24 53.69
39.70 49.33
35.38 38.98
44.19
34.38 43.04 46.05
36.14 37.48
35.11
32.88
2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
Brent (average) Average Sales Price OPEC Basket
• The spread between Brazilian oil average price and Brent increased from US$
8.07/bbl to US$ 11.42/bbl, due to reduced oil products inventory in the international
market, which resulted in a higher value of light oil compared to heavy oil.
37
37
37

38. PETROBRAS
Domestic Lifting Costs w/o Gov. Part.
∆ = -3% or US$ 0.20
6.07 6.32 6.12
5.99
5.45 5.44
1Q 05 2Q 05 3Q 05 4Q 05 1Q06 2Q06
-US$ 0,12/boe: higher expenditures with turbine maintenance, gas pipelines
repair and P-32 collection and flowage line substitution, all in the 1Q06;
• -US$ 0,07/boe: higher oil and gas production
• In reais, extraction cost decreased from R$ 13,84 in the 1Q06 to R$ 13,16
in the 2Q06.
38
38
38

39. PETROBRAS
Lifting Costs including Gov. Participation
26
% 2002 – 2Q06 70
Brent = 181%
61.5 56.9 69.6
Lifting Cost = 103% 51.6 60
21 61.8
Gov. Participation = 185% 47.5 50
38.2 17,3 17,5
16,0
16 15,0 40
28.8 13,6 13,3
US$/boe
24.8
65%
63%
30
10,7 11.0 11.4
62%
59%
11 9.9
7.6 9.6
8,5 7.8 20
7,0
6.4
6 5.1 10
57%
4.0
6.0 5.5 5.4 6.1 6.3 6.1 0
3.0 3.4 4.3
1
-10
2002 2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
-4 -20
Lifting Cost Gov. Participation Brent
• Government Participation per barrel increased 4%, reflecting larger share in
total production of fields that are currently in a highly productive phase
(Barracuda and Caratinga) and a 9% increase in the reference price in reais for
Brazilian oil.
39
39
39

40. PETROBRAS
E&P
Royalties
• Monthly payment due from concessionaires for the exploration and production of oil
and natural gas;
• Rates vary, according to the area, from 5% to 10% (per producing field) and are
established in each concession contract;
• Production Volume x Reference Price (to be published by the regulator, the National
Petroleum Agency - ANP), in relation to each field
7.000
6.366
6.000
R$ Million
5.020
5.000
4.372
4.000 3.739
3.509
3.000
2.000
1.000
0
2002 2003 2004 2005 1H2006 40
40
40

41. PETROBRAS
E&P
Special Participation – Progressive Tax
• Special Participation is the progressive tax applied over the net income from production.
• Tax depends on the year of production, daily production and location (Land, Offshore Shallow
Water or Offshore Deep Water)
• Bellow, the characteristics of the special participation for deep water shelves:
40%
30% 35%
10% 20%
Tax Rates
Daily production (thousand m3/day)
First Year
of 15 20 25 30 35
Production
Second Year
of 11.7 16.7 21.7 26.7 31.7
Production
Third Year
of 8.3 13.3 18.3 23.3 28.3
Production
After the Third
Year of 5 10 15 20 25
Production
41
41
41

42. PETROBRAS
Refining and Sales in the Domestic Market
95
2,400
90
87 91 91
2,200 91 91
83 85
2,000 80
81 80 81 80
79 79
1,800 75
70
1,600
65
1,400 1,804 1,731 1,7951,684
1,708 1,589 1,668 1,665 1,761 1,647 1,812 1,649 60
1,200 55
1,000 50
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06
Dom estic oil products production Oil products sales volum e
Prim ary processed installed capacity - Brazil (%) Dom estic crude as % of total
• Brazilian oil products production slightly lower than in the previous quarter due
to more frequent scheduled stoppages in refineries;
• Higher nominal capacity utilization.
42
42
42

43. PETROBRAS
Average Realization Price - ARP
100
2Q05 4Q05 1Q06
Average Average Average
80 71.0 80.0
60.7 70.7
60 70.2
55.3 61.8 69,6
51.6
40
20
Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06
ARP Brazil (US$/bbl) Brent Average Price ARP USA (w/ volumes sold in Brazil)
• Unraveling from US ARP due to the beginning of US summer, reduced
gasoline inventories and Middle East conflicts that threaten supply;
• Higher quality requirements in the American market (MTBE).
43
43
43

44. PETROBRAS
Domestic Refining Costs (US$/bbl)
2,07
2,03 1,90
1,96 1,86
1,74
1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
• 9% increase with respect to previous quarter due to:
• +US$ 0,12/bbl: scheduled stoppages;
• + US$ 0,04/bbl: Materials;
• + US$ 0,04/bbl: FX Rate effect;
• - US$ 0,04/bbl: Increase in the throughput.
• Refining cost raised from R$ 4.19 in the 1Q06, to R$ 4.55 in the 2Q06
44
44
44