Petrobras Domestic E&P Results and Perspectives. Hugo Repsold Junior General Manager for Domestic E&P Strategy and Portfolio

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1 Petrobras Domestic E&P Results and Perspectives Hugo Repsold Junior General Manager for Domestic E&P Strategy and Portfolio October, 2006

2 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

3 Corporate Targets Overview 3

4 Increase production and reserves Domestic E&P Strategy Strengthen expertise in deep and ultra-deep waters; Perform on-shore and in shallow water fields focusing on profitable opportunities; Implement practices and new technologies in areas with high exploitation degree in order to optimize recovery factor; Develop exploratory efforts in new frontiers in order to assure a sustainable reserve / production ratio; Guarantee a sustainable self-sufficiency in the long term; Optimize development of proven reserves prioritizing on increasing production of light oil and a minimum R/P ratio of 15 years; Maximize and accelerate gas production and supply from E&P. Perform with operational excellence and social and environmental responsibility 4

5 Domestic E&P Operations Reserves (at December 31, 2005) Proven reserves of billion boe (SPE) or billion boe (SEC) Reserve life of 19.7 years (SPE) and 15.7 (SEC) Internal Reserve Replacement of 131.1% (SPE) and 101.3% (SEC) Petrobras & Partners Other Companies Production (2005) 1,958 thousand boed (1,684 thousand bpd oil) 5-year CAGR of 5.6% (5.8% oil) F&D Cost US$ 3.45/boe ( ) SPE Lifting Cost US$ 5.73/boe (2005) Exploratory Area (Nov/2005) thousand km 2 (Petrobras + Partners) thousand km 2 (other Companies) Total: thousand km 2. 5

6 ExxonMobil Lukoil Petrochina Proven Reserves SEC Criteria (billion boe) Oil and Gas Proven Reserves and Production Publicly Traded Peer Group ExxonMobil BP ShellGroup(RD) Production (million boed) BP 17.6 Petrochina 2.9 Chevron 12.1 Total 2.4 ShellGroup (RD) 12.0 Chevron 2.4 Petrobras 11.8 Petrobras 2.2 Total 10.7 ConocoPhillips 2.0 ConocoPhillips 9.4 Lukoil 1.9 ENI 6.7 ENI 1.7 Repsol-YPF 3.2 Repsol-YPF Reserve Replacement Index (%) Petrochina ExxonMobil ConocoPhillips BP Petrobras Lukoil Total Shell 149% 121% 100% 95% 94% 91% 87% 77% Source: Evaluate Energy %% ENI Chevron Repsol-YPF 23% 13%

7 Proven Reserve Profile 7

8 Total Production Oil & NGL and Natural Gas Thousand boed 7.5% p.y. 4, % p.y. 3, ,036 2, ,540 1,493 2, ,684 2, , T ar get 2006 Oi l and NGL - Br azi l Target 2011 Natural Gas - Brazil 2015 For ecast Oi l and NGL - I nter naci onal Natural Gas - Internacional 8

9 Brazilian production curve ,684 1,880 1,979 2,061 2,195 2,368 2, Net Increase Thous. bpd (400) (900) (154) (154) (172) (326) (181) (508) (189) (697) (201) (897) (217) 1,114 Accumulated Natural Decline (1.400) Total Production Accumulated Decline Annual Decline 1,804 Gross Increase 9

10 2,600 2,400 2,200 2,000 1,800 Albacora Leste P ,000 bpd April/2006 Jubarte Fase 1 P-34 60,000 bpd Oct/2006 FPSO Capixaba Golfinho Mod ,000 bpd May ,880 Main Domestic Oil Production Projects 7 out of the 15 projects refer to after-2002 discoveries Roncador P ,000 bpd 2007 Rio de Janeiro Espadarte Mod II II 100,000 bpd ,979 Roncador P ,000 bpd 2007 ESS-130 Golfinho Mod III **** (FPSO) 100,000 bpd ,061 Marlim Sul Module 2 P ,000 bpd ,195 Frade 100,000 bpd ,368 Jubarte Phase 2 P ,000 bpd 2010 Thousand pbd 2,374 Parque das Conchas*** 100,000 bpd 2011 Roncador P-55** 180,000 bpd ,600 1,684 Piranema bpd Dec Cidade de Vitória Golfinho Mod ,000 bpd 2007 Marlim Leste P-53* 180,000 bpd ,

11 Corporate Targets Capital Expenditures and Costs 11

12 Investment Plan Exploration Production Development Area (BP )* (BP ) Difference Difference (%) E&P Downstream G&E International Distribution Corporate Total The forecast indicates an annual investment average of US$ 17.4 billion between 2007 and (*) Obs.: US$ 52.4 related to the investments of the previous Plan regarding the period, i.e. US$ investments investments. 12

13 Competitive Cost Structure Average Finding & Development Costs ($/boe) Lifting Costs 1 ($/boe) Chevron Royal Dutch/ Shell² Total Fina Elf BP Petrobras Exxon Mobil Notes: 1 Per company financials and J.S. Herold. Excludes corporate G&A 2 For the period 3 Without government participation Average 0.00 Exxon Mobil Chevron Petrobras³ Royal Dutch/ Shell BP Total Fina Elf Average 13

14 Domestic Lifting Cost Lifting Costs and Government Take per Barrel US$/boe 25,0 20,0 15,0 10,0 5,0 0,0 28,13 24,11 25, ,7 3,3 4,0 28, ,1 38, ,3 3,3 3,0 3,4 4,3 5,7 5,6 6,4 54, , Lifting Cost Government Take Brent Lifting costs expected to stabilize Production increases Technological enhancements Wells, platforms and plants automation Optimization of logistics, operations and administrative processes 14

15 Petrobras Drilling Rigs Total Total Brazil International Total Onshore Offshore Owned Rigs: 31 Total Leased: 56 Petrobras leasing contracts are long term, averaging a 5 years length; In 2005, 18 offshore drilling rigs were owned by Petrobras; In August 2005, Petrobras renovated 24 drilling rigs contracts. In July 2006, Petrobras signed contracts worth R$ 10.5 billion for the charter of six drilling units: 4 rigs will operate in water depths of up to 2,000 meters (seven-year term contract, renewable for further seven years); 2 rigs will operate at depths down to 2,400 meters (units chartered for 5 years, renewable for the same period); In September 2006, the Company contracted two ultra-deepwater rigs for its drilling operations in the Gulf of Mexico. The contracts have 5 and 6 years term. 15

16 Recent Exploration Efforts and Results 16

17 Exploration Activities /2005 wells & seismic Espírito Santo 40 wells offshore Campos 186 wells offshore Santos 65 wells offshore 611 exploration wells 31% overall success ratio Last year (2005) 55% Other Basins 216 wells onshore 104 wells offshore 1998/2005 ~ 450,000 km 2D seismic ~ 92,240 km 2 3D seismic 17

18 Number of Concessions in Brazil Concessions Petrobras Concessions Other Total 100% Parnerships Total Companies Brazil W.I Exploration Blocks Exploration EP s Production Total Petrobras & Partners Other Companies 18

Petrobras Current Exploration Portfolio EXPLORATORY AREA 157.7 thousand km 2 Santos 39.

19 Petrobras Current Exploration Portfolio EXPLORATORY AREA thousand km 2 Santos 39.4 milkm 2 2 Santos Campos Espírito Santo Other Basins* Pará Maranhão-Barreirinhas Sergipe Alagoas Potiguar-Ceará Bahia Sul 6% 5% 4% 3% 9% Solimões 10% Other (*) 11% São Francisco 25% 8% 6% 11% Foz do Amazonas Campos 13.1 mil mil km km 2 2 Espírito Santo mil mil km2 km2 40 % of the concession areas in Campos, Espírito Santo e Santos basins. * Other basins: Pelotas (2%), Ceará (0.8%) and Recôncavo (0,2%) 19

Expansion of Exploration Frontiers and New Oil Producing Districts Fields discovered until 1984 Fiels discovered between 1984 and 2001 Fields

20 Expansion of Exploration Frontiers and New Oil Producing Districts Fields discovered until 1984 Fiels discovered between 1984 and 2001 Fields discovered in 2002/2003 Oil and gas discoveries under evaluation (Heavy oil) (Light oil) ESS-130 (Light oil) Gas Gas and light oil BC-20 (Heavy oil) BS

Main Discoveries - 2002/2005 Natural Gas 15.

6 billion boer Sergipe-Alagoas Basin Light Oil Espirito

21 Main Discoveries /2005 Natural Gas 15.5 TCF Light Oil 1 billion boer 17 º API Oil 2.1 bilhões boe Jubarte & Cachalote 1 billion boer TOTAL 4.1billion boe TCF 6.6 billion boer Sergipe-Alagoas Basin Light Oil Espirito Santo Basin Light Oil & Natural Gas Campos Basin Producible Heavy Oil & Light Oil Santos Basin Natural Gas & Light Oil 21

22 Discoveries & Reserves Discoveries (2002/2005): 6,6 billion boe Proved Reserves: 3,1 billion boer Campos Basin: 2,0 billion boer (Jubarte, Cachalote, Baleia Franca, Baleia Azul, Baleia Anã, Papa-Terra, Abalone, Ostra, Nautilus, Argonauta and Ring-Fences of Marlim Leste, Espadarte & Albacora; Santos Basin: 0,8 billion boer (Mexilhão, Uruguá, Tambaú & Lagosta) Espírito Santo Basin: 0,25 billion boer (Golfinho & Canapu) Sergipe-Alagoas Basin: 0,05 billion boer (Piranema) Probable & Possible Reserves: 1,5 billion boer Still in Appraisal (2006): 2,0 billion boer 22

23 Domestic E&P Exploration Portfolio: Sustaining Growth Beyond

1 (000 bpd) Oil 20.3 (000 boe/d) ) Gas DOMESTIC PRODUCTION Offshore... 1,726.7 (000 boe/d) Onshore... 342.9 (000 boe/d) Total...: 2,069.6 (000 boe/d) Oil.

24 Production per Basin (July, 2006) 55.6 (000 bpd) Oil 56.7 (000 boe/d) ) Gas 84.9 (000 bpd) Oil 18.2 (000 boe/d) ) Gas 53.4 (000 bpd) Oil 27.1 (000 boe/d) ) Gas 48.7 (000 bpd) Oil 31.4 (000 boe/d) ) Gas BR 100% e BR Partners Other Companies 4,2 (000 bpd) Oil 0.7 (000 boe/d) Gass 83.1 (000 bpd) Oil 20.3 (000 boe/d) ) Gas DOMESTIC PRODUCTION Offshore... 1,726.7 (000 boe/d) Onshore (000 boe/d) Total...: 2,069.6 (000 boe/d) Oil.: 1,785.1 (000 bpd) Nat. Gas: (000 boe/d) Total...: 2,069.6 (000 boe/d) 3.0 (000 bpd) Oil 6.8 (000 boe/d) ) Gas Campos Basin 1,449.3 (000 bpd)oil (81.2%) (000 boe/d) ) Gas (43.%) 24

25 Exploration Perspectives Paleozoic basins Light oil/condensate & natural gas Equatorial margin basins (frontier) High risks & high rewards natural gas & light oil Proterozoic basin High risks natural gas Eastern/Norteastern margin basins Light oil & natural gas Jequitinhonha basin (new province??) Espirito Santo, Campos & Santos basins Search for new producible heavy oil discoveries Search for light oil & natural gas discoveries 25

26 SOLIMÕES 1.4% Exploration Portfolio: Hydrocarbon Potential Distribution EQUATORIAL MARGIN 10.3% SEAL & RECÔNCAVO 4.5 % SÃO FRANCISCO 0.2 % BAHIA SOUTH 16.5 % ESP.SANTO 11.0 % Petrobras Other Companies PELOTAS 0.1 % SANTOS 27.3 % CAMPOS 28.7 % 78% 26

27 Exploratory Wells MEQ (13) Solimões (3) Ceará (7) Potiguar (47) SEAL& REC (54) S.Francisco (2) Bahia Sul (43) TOTAL BRASIL (# wells) = 368 Investments: Investments: US$ US$ billion billion Esp.Santo (69) Campos (62) 65% Petrobras Other Companies Pelotas (2) Santos (66) 27

28 Domestic E&P Development of Natural Gas Reserves 28

29 Domestic Natural Gas Market Million m 3 /day % p.y Consumed in 2005 Potential Demand 2011(*) Potential Supply 2011 Thermoelectric PP Industry Other LNG National Production Bolivian Imports * Potential consumption for power generation, considering maximal dispatch for every thermoelectric power plant 29

Baleias + BC10 Campinas Caraguatatuba Rio de Janeiro Cabiúnas Garoupa Namorado ESS-130 RPBC REDUC Tambaú Pampo Enchova

30 Cacimbas (20 MM m3/d) PLANGAS December/2008 Peroá (10 MM m3/d) Belo Horizonte Lagoa parda Ubu Vitória ESS-164 Pólo Golfinho MM m3/d (*) Golfinho + Canapu Pq. Baleias + BC10 Campinas Caraguatatuba Rio de Janeiro Cabiúnas Garoupa Namorado ESS-130 RPBC REDUC Tambaú Pampo Enchova Platforms from UN-BC and UN-RIO +6.4 MM m3/d (*) Merluza - II (BM-S-3/ BM-S-7, SPS-25) Lagosta Mexilhão Merluza +1.5 MM m3/d (*) Uruguá TOTAL SOUTHEAST: 40 MM m3/d ( MM m3/d) (*) Additional to the current supplay 30

31 Natural Gas Supply Curve Million m 3 /day 14 out of the 27 projects refer to after 2002 discoveries Manati Albacora Leste (P-50) 2006 Roncador (P-54) 2007 Peroá- Cangoa Fase Golfinho Mód Piranema 2006 Jubarte (P-34) 2006 Golfinho Mód Urucu Start gas Sales Espadarte Mód Canapu 2008 ESS Roncador (P-52) 2007 ESS Mexilhão 2009 Frade Marlim Sul Mód 2 (P-51) 2008 Peroá- Cangoa Fase Albacora Complement 2007 SPS Marlim Leste (P-53) 2009 RJS Tambaú/Uruguá 2010 Cavalo Marinho Parque das Conchas 2011 Jubarte Fase 2 (P-57) 2010 Roncador (P-55) 2011 GN Non associated GN associated 31

32 Domestic E&P Partnerships 32

33 Concessions in Partnerships 26 Oil & Gas Companies Production Fields (284) Exploration Blocks (134) Petrobras (100%) Partnerships 33

34 Partnerships with Petrobras Opportunities for Petrobras Reduction of risk exposure Business leverage Access to scarce resources (e.g. deepwater rigs) Why associate with Petrobras? Geological & Technological knowledge Experience Existing infrastructure 34

35 Petrobras Partners TotalFinaElf Exploration (17 companies) Exxon-Mobil ChevronTexaco Statoil El Paso Petroserv BG Partex Petrogal Kerr-McGee Queiroz Galvão Wintershall Amerada Hess Encana Devon Maersk Oil Eni E & P (5 companies) Repsol-YPF Shell Unopaso Coplex Starfish Production Development (4 companies) UP Petróleo Brasil TDC do Brasil Ipiranga Frade Japão Petróleo 35

36 Domestic E&P Development Approach and Technological History 36

Extended Well Testing & Phased Development Lower Capital Exposure & Early Cash Flow Anticipation of First

37 Petrobras Development Approach Subsea Equipment and Floating Production Units: Reservoir Characteristics Favorable Sea Environmental Conditions Early Production Unit as a Field-scale Lab for Definitive Systems Extended Well Testing & Phased Development Lower Capital Exposure & Early Cash Flow Anticipation of First Oil & High Level of Flexibility Field-proven & Reliable Technology Partnerships with the Main Suppliers 37

The Main Petroleum Province in Brazil Discovery Campos Basin Main Data (Dec 2005) 82% of the Domestic Reserves & Production 1974 - Garoupa field Water

38 The Main Petroleum Province in Brazil Discovery Campos Basin Main Data (Dec 2005) 82% of the Domestic Reserves & Production Garoupa field Water depths 50-3,400 m Floating Production Units 26 (12 SS, 13 FPSO, 1 FSO) Fixed platforms 13 Production fields Pipeline Network 41 (15% of the Total) 3,443 km 38

Campos Basin: A Giant Technology Lab Petrobras Records Petrobras Offshore Facilities Completion & Production at 1886 m Equipment Subsea Trees Subsea Manifolds Installed Dec/2005 Planned (2006)

39 Campos Basin: A Giant Technology Lab Petrobras Records Petrobras Offshore Facilities Completion & Production at 1886 m Equipment Subsea Trees Subsea Manifolds Installed Dec/2005 Planned (2006) Subsea Flexible Flowlines (km) 2, Umbilicals (km) 1, Rigid Pipelines (km) 1, Feb/2002: Exploration Well at 2853 m Floating Production Units Monobuoys

40 Petrobras Records in Completion/Production and Exploration Drilling Offshore OTC 1992 OTC 2001 Exploration Wells Vs. Maximun Water-Depths by year 40

41 Installed Subsea Trees x Oil Operator Petrobras Royal Dutch/Shell Statoil bp ExxonMobil ChevronTexaco Hydro Amerada-Hess (Triton) Total ConocoPhillips Eni Kerr-McGee BHP Billiton Other Source: Quest SUBSEA-DATA-BASE 41

Petrobras' Technological History First technological program - PROCAP (1986-1991): enable production feasibility up to 1,000 m water depth Second version of the program PROCAP 2000 (1992-1999):

42 Petrobras' Technological History First technological program - PROCAP ( ): enable production feasibility up to 1,000 m water depth Second version of the program PROCAP 2000 ( ): enable production feasibility up to 2,000 m water depth Albacora and Marlim fields producing around bpd of oil Ability to operate competitively in deep and ultra deep waters Further technological developments (PROCAP 3000) will provide conditions to extend the operational scenario to 3,000 m water depth 42

43 Domestic E&P Conclusions 43

44 Conclusions Investment Plan is supported by a strong cash flow generation; Current portfolio allows a strong production growth to meet the corporate targets; The company remains focused in deep and ultra-deep water environment due to high revenue projects; Investment in technology to be able to produce up to 3,000 m of water depth; Develop exploratory efforts in order to ensure a sustainable reserve / production ratio; Perform with operational excellence and social and environmental responsibility. 44

45 Petrobras at a Glance Results and Perspectives End Thank You for your Attention 45

46 Domestic E&P Annex: Current Field Developments 46

47 P-38 Module 1 Operating P-40 Module 1 Complementar FPSO Marlim Sul 1000 m Marlim Sul Field Development 1500 m Module 1 Highlights Module 2 Module 3 P-40 Module 4 // P-38 Complem. Production Wells Injection Wells Capacity (bpd) 155, , , ,000 First Oil Production P-40 (SS) System P-38 (FSO) FPSO-MLS P-51(SS) ND API Module 3 Under Feasibility Study Water depth: 850-2,400 m P-51 Module 2 Module m Gas pipeline Oil pipeline 47

48 Roncador Field Development Production wells Injection wells Capacity (bpd) , , ,000 First oil Production system FPSO Brasil SS P-52 FPSO P-54 SS P-55 API 27 to to under feasibility study API 18 Water depth: 1,500 1,900 m P-52 FPSO Brasil 1,500 m MODULE 1A P-54 MODULE 2 MODULE 4 MODULE 3 P-55 1,900 m 48

Barracuda & Caratinga Field Development Highlights Barracuda Caratinga Water depth: 700-1,200 m Production Wells 20 12 Injection

49 Barracuda & Caratinga Field Development Highlights Barracuda Caratinga Water depth: 700-1,200 m Production Wells Injection Wells 14 8 Capacity (bpd) 150, ,000 First Oil 12/21/ /28/2005 Production System P-43 (FPSO) P-48 (FPSO) API

50 Albacora Leste Field Development Highlights Production Wells 17 Water depth: 1,100-1,500 m Injection Wells 14 Capacity (bpd) 180,000 First Oil 2006 Production System P-50 ( FPSO ) API 18,3 P-50 50

51 Marlim Leste Field Development Highlights Production Wells 14 Injection Wells 8 Capacity (bpd) 180,000 First Oil 2009 Production System P-53 (FPU) FPU API 21,5 Water depth: 820 1,500 m 51

Jubarte Field Development Highligths Pilot Phase 1 Phase 2 Production wells 1 4 21 Injection wells 7 Capacity (bpd) 20,000

52 Jubarte Field Development Highligths Pilot Phase 1 Phase 2 Production wells Injection wells 7 Capacity (bpd) 20,000 60, First Oil Production System Seillean FPSO P-34 FPSO P-57 o API Water Depth: 1,240 1,350 m 52

53 Development of the Gas Fields Peroá and Cangoá INTEGRATED PROJECT CACIMBAS - VITÓRIA (ES) Gas pipelines 26 inch- 112 km 16 inch - 15 km Capacity 4.0 MMm³/d Pressure 100 kgf/cm²g Starting in the Cacimbas GasTreatment Unit (UTGC), 23 km north of Lagoa Parda Ending in the Lagoa Parda Vitória gas pipeline, near ther Vale do Rio Doce Company. 53

54 Development of the Piranema Field (light oil SE) 54

GAS TO POWER - BRAZIL

23 rd WORLD GAS CONFERENCE AMSTERDAM GAS TO POWER - BRAZIL Rogerio Manso Executive Manager Marketing and Trading Gas & Energy manso@petrobras.com.br June 6 th, 2006 Disclaimer The presentation may contain