Business Opportunities in O&G Sector in Brazil. Joint Ventures Between Brazilian and Japanese Companies. 1
Forward Looking Statements Disclaimer 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
Petrobras Overview 3
Petrobras: An Investment Grade, Publicly Traded, Major International Oil Company Incorporated in 1953 as government monopoly for all hydrocarbon activities in Brazil Originally established as a refinery of imported crude oil Became net exporter in 2006 60% of total equity capital (common and preferred) is now publicly traded Government maintains controlling interest with 55% of voting shares Market cap of approximately $260 billion, NYSE Listed, quarterly disclosure in US GAAP Foreign currency ratings from Moody s of Baa1, Standard & Poors (BBB), and Fitch (BBB) (3, 1, and 1 notch above sovereign, respectively) Brazilian Constitution Amended Nov 1995 First Public Auction of Oil Exploration Areas June 1999 Petrobras NYSE Listing August 2000 Full Deregulation January 2002 Upgraded to Investment Grade Issuer October 2005 Crossed the $100 billion dollar Market Cap mark 2006 Brazil Self- Sufficient in Oil April 2006 2MM bpd, $200MM market cap, Discovery of new oil frontier 2007 4
Corporate Organization and Key Operating Results Exploration and Production Downstream Distribution Gas and Energy Petrochemicals Biofuels Summary Financials (US$ bln) Income from Operations (2) For Year Ended 2005 2006 2007 Net Revenues 56.3 72.3 87.7 EBITDA 17.6 22.9 25.3 Capex 10.4 14.9 21.0 Total Debt (1) 21.2 21.3 21.9 Cash & Cash Equivalents 9.9 12.7 7.0 Net Debt 11.3 8.7 14.9 Total Equity 32.9 44.3 65.2 Total Assets 78.6 98.7 129.7 Distribution 3% Domestic E&P 81% Downstream 16% Notes: 1 Includes capital leases 2 For the year ended December 31, 2006. Excludes losses in gas and energy, corporate results and eliminations 5
Improving Metrics and Proven Track Record Production and Reserves (SEC) Average Realization Price Reserves MM BOE Production M BOE/d 1.810 2.036 2.020 2.217 2.298 2.301 3 2 $ s/bbl 58,58 70,92 79,97 10.533 11.639 11.820 11.775 11.458 11.704 2 1 25,72 36,13 40,75 1 2002 2003 2004 2005 2006 2007 Market Value (as of May 26, 2008) 0 2002 2003 2004 2005 2006 2007 Imports vs. Exports (US$mm) 350.000 300.000 250.000 200.000 296,772 Exports Imports 446 409 (M BBL/d) 523 581 615 150.000 100.000 50.000 (424) (559) (446) (488) (538) 0 Jan- 02 Aug- 02 Mar- 03 Oct- 03 May- 04 Dec- 04 Jul- 05 Mar- 06 Oct- 06 May- 07 Dec- 07 May 08 2003 2004 2005 2006 2007 Fonte: Evaluate Energy and Company Reports 2007 (*) Eni Refining Throughputs 6
World Class Integrated Public Energy Company 2006 Proven Reserves (SEC) 2007 Oil & Gas Production (Bln boe) ( 000s boepd) 25,0 22,1 20,0 15,0 10,0 5,0 0,0 Exxon Mobil 17,4 BP 13,7 11,6 11,5 Chevron 11,2 (1) Conoco Phillips 10,7 6,3 Eni 3,2 Shell Petrobras Total Repsol 4.000 3.000 2.000 1.000 0 4.180 Exxon Mobil 3.771 3.268 2.593 2.324 2.316 2.301 1.736 1.039 BP Shell Chevron Conoco Total Petrobras Eni Repsol Source: Company Filings, Company Website Source: Company Filings Market Value as of March 14, 2008 (US$Bln) ( 000s boepd) 2006 Refining Capacity 500 400 300 200 100 0 460 Exxon Mobil 220 218 Petrobras 202 179 177 138 121 Shell Total Eni Repsol BP Source: Company Filings, FactSet Chevron Conoco 43 8.000 6.000 4.000 2.000 0 6.400 4.040 2.823 2.700 2.227 2.208 2.195 1.234 534 Exxon BP Petrobras Chevron Eni Mobil Shell Total ConocoPhillips Repsol Source: Company Filings, Company Website (1) 7
Upstream Overview 8
Thousand boed E&P - rapidly growing production profile 8,3% p.y. 2.300 2.217 2.298 1.810 2.036 2.020 10 1 96 10 9 1.565 1.636 23 85 94 14 2 12 6 24 16 3 20 35 277 273 44 16 1 16 8 16 53 252 250 274 885 1.008 1.090 1.238 1.505 10 265 11 60 221 232 10 9 45 19 7 38 47 25 17 9 15 2 16 3 1. 7 7 8 1. 7 9 2 13 4 809 869 1. 0 0 4 1. 13 2 1.271 1. 3 3 6 1. 5 0 0 1. 5 4 0 1.684 1. 4 9 3 716 7,7% p.y. 8,7% p.y. 3.494 151 285 * 637 2.421 4.153 18 3 515 * 643 2.812 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Oil and NGL - Brazil Natural Gas - Brazil Oil and NGL - International * Includes non consolidated production Natural Gas - International 2012 Target 2015 Forecast 9
Main Projects in Brazil 2007-2012 2.600 2.400 2.200 2.000 1.800 Rio de de Janeiro Espadarte Mód II II 100.000 bpd 6/jan/07 Piranema 30.000 bpd 10/oct/07 Cidade de de Vitória Golfinho Mód. 2 100.000 bpd November 2007 Roncador P-52 180.000 bpd November 2007 1.792 Roncador P-54 180.000 bpd November 2007 Cidade Niterói Jabuti (FPSO) 100.000 bpd 2008 Marlim Sul Módulo 2 P-51 180.000 bpd 2008 1.950* Marlim Leste P-53 180.000 bpd 2008 Tupi EWT Up to to 30.000 bpd 2009 Frade 100.000 bpd 2009 2.191 Parque das Conchas 100.000 bpd 2009 Tupi Pilot System Up to to 100.000 bpd 2010 2.296 Cachalote & Baleia Franca FPSO Capixaba 100,000 bpd 2010 Marlim Sul Módulo 3 P-56 100.000 bpd 2011 2.374 Jubarte P-57 180.000 bpd 2012 Espadarte Módulo 3 100.000 bpd 2012 2.421 Roncador Module 4 P-62 100.000 bpd 2012 1.600 2007 2008 2009 2010 2011 2012 Obs.: This curve does not include Tupi s Pilot System Production * Target may vary +/- 2.5% 10
Exploration Perspectives 11
Exploratory Perspectives in Brazilian Southeastern Margin Espírito Santo Golfinho/Canapú/ Peroá/Cangoá Parque das Baleias Roncador Light Oil Mexilhão Campos Merluza/ Lagosta Papa- Terra BS-500 Santos Pre-salt Cluster Blocks 12
Pre Salt Santos Basin BM-S-52 (Corcovado) BM-S-42 BM-S-50 BM-S-10 (Parati) (Yara) BM-S-11 (Tupi) BM-S-24 (Jupiter) BM-S-8 (Bem-te-Vi) BM-S-9 (Carioca) (Guará) BM-S-17 BM-S-21 (Caramba) BM-S-22 Wells Being Drilled Wells Drilled 13
E&P: UPCOMING UNITS Units Field Capacity Status Start-up Shipyard FPSO Cidade de Niterói* Jabuti Oil: 100.000 bpd Gas: 3,5 MM m 3 /dia Under construction 2S08 Modec Sipem - Dubai P-51 Marlim Sul Oil: 180.000 bpd Gas: 6MM m 3 /dia Under construction 2S08 Nuclep/Brasfels Angra/RJ P-53 Marlim Leste Oil: 180.000 bpd Gas: 6MM m 3 /dia Under construction 2S08 Quip Rio Grande/RS Cidade São Mateus* Camarupim Oil: 35.000 bpd Gas: 10 MM m 3 /dia Under construction 2S08 Prosafe Keppels - Cingapura PMXL-1 Mexilhão Gas: 15MM m 3 /dia Under construction 2009 Mauá-Jurong Niterói/RJ P-56 Marlim Sul Oil:100.000 bpd Gas: 6MM m 3 /dia Under construction (P-51 Clone) 2011 Brasfels -FSTP Keppel & Technip Angra/RJ P-57 Jubarte Oil: 180.000 bpd Gas: 2MM m 3 /dia Contracted 2011 SBM Shipyard N/A P-62 Roncador Oil:100.000 bpd Gas: 6MM m 3 /dia Contracted 2012 Mauá-Jurong Niterói/RJ P-55 Roncador Oil: 180.000 bpd Gas: 6MM m 3 /dia Hull contracted. Basic project under revision. 2013 Atlântico Sul Suape/PE Rio Grande/RS * Leased 14
E&P: Rigs Water Depth Start Up 2009 Start Up 2010 Start Up 2011 Start Up 2012 From 2013 to 2017 0-999m Petrobras XIV 1000-1999m Olinda Star Ocean Worker 2000m Lone Star Schahin III Petrorig II Gold Star Schahin I Norbe VI Delba IV Sevan Brasil Delba V Delba VI Scorpion + 28 New Units to be leased Sevan Driller W. Taurus Delba III SSV Victoria Delba VII Delba VIII W.Eminence Dave Beard W. Orion Norbe IX Schahin 1 Schahin 2 Norbe VIII Petroserv Etesco 8 Total 9 7 2 11 28 29 Rigs contracted plus 28 to be leased up to 2017 making a total of 57 new drilling rigs. Stena Drillmax e Dep Water Millennium are not being considered since they are being negotiated in the Spot Market 15
New Vessels to be Contracted Large Vessels 26 Supply Vessels 24 FPSO/SS 6 Others (jack-ups, TLWP) 3 Total 59 Leased/ Being Leased To be Leased Navio-sonda Barco de Apoio Navio de grande porte (VLCC) Plataforma de Produção (FPSO) (FPSO) 44 122 8 1 175 16
Downstream Overview 17
Total Downstream Spending of $29.6 Billion 21% 28% Fuel Quality 8,619 Conversion 3,938 Maintaining Balanced integration between Refining and Production 8% Expansion HSE 5,353 1,083 1,792 2,167 8% 4% 18% 13% Transportation 2,270 Pipelines 2,264 Others 6,112 2,412 Year 2012 Total Refining Capacity ( 000s. bpd) Domestic Oil Production ( 000s. boed) 2011: New Refinery in Brazil to add 200 000s. Bpd cap. New Refinery in Texas expanded & upgraded 18
Downstream Business Strategy Complexo Petroquímico do Rio de Janeiro - COMPERJ Total Investment: US$ 8.4 billion (Petrobras Investment US$4.6 billion); Throughput capacity: 150 thousand heavy oil barrels (Marlim oil from Campos Basin); Start Up: 2012 Refining and Petrochemical Integrated Complex that through the use of new technologies process heavy oil to obtain oil products and first and second generation petrochemical products. New Refinery in Pernambuco Total Investment: US$ 4.1 billion (Petrobras Investment US$2.4 billion); Throughput capacity: 200 thousand heavy oil barrels (60% Petrobras oil / 40% 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; Start Up: 2011 19
Downstream Business Strategy Northeast Region Refinery in Rio Grande do Norte Premium Refinery in Ceará Petrobras will deploy its 12th refinery in the state of Rio Grande do Norte. New plant to produce gasoline and improve the quality of other oil products (Jet fuel, Diesel and LPG) produced in existing facilities in Guamaré. Capacity: 80,000 bpd. Start-up scheduled for 2010. Petrobras will study, together with Ceará State, the possibility of installing a Premium refinery; Capacity: 300,000 bpd; Premium Refinery in Maranhão The refinery s first operation phase is scheduled to start in 2014. Petrobras will study, together with Maranhão State, the possibility of installing a Premium refinery; Capacity: 600,000 bpd; The refinery s first operation phase is scheduled to start in 2013. 20
International Overview 21
International - Overview United Kingdom. Mexico USA Colombia Ecuador Peru Houston New York Venezuela BRAZIL Portugal Turkey Jordan Libya Iran Pakistan Senegal Nigeria India Tanzania Singapore Angola Mozambique Beijing Tokyo Okinawa HEAD OFFICE REPRESENTATIVE OFFICE Bolivia REFINING TRADING EXPLORATION AND PRODUCTION Paragay Rio de Janeiro Uruguay Argentina Core Areas: Refining Add value to Brazilian heavy oil exports E&P: West Africa & Gulf of Mexico: Apply deep water and deep well drilling technology. Latin America: Leadership as an integrated energy company 22
Gas and Energy Overview 23
Domestic Natural Gas Market* 160 140 Million m3/day 134 134 120 100 80 60 40 20 0 58.6 19,1 27,5 12 43,9 42,1 48,0 31,1 30,0 72,9 LNG Bolívia E&P** 2007 2012 Supply 2012 Thermoelectric Industry Other (*) considering maximum dispatch of every thermoelectric power plant Other: vehicular, residential / commercial, refineries and fertilizer units. (**) Adjusted to STD Heat Value (9,400 Kcal/kg) 24
Plangás: Increasing Natural Gas Supply in the Southeast Region From the current 15.8 million cubic meters per day to 40 million in 2008 and 55 million in 2010. Main Projects: Marlim and Roncador field in the Campos Basin, Merluza in Santos Basin and Peroá in Espírito Santo Basin. Total Southeast in 2008: 40 MM m3/d Additional: + 24,5 MM m3/d Total Southeast in 2010: 55 MM m3/d Additional: + 39,2 MM m3/d UTGC Extension to 20MM m3/d Peroá Extension to 10MM m3/d Cabiúnas/Reduc Extension to 23MM m3/d UTGCA Extension to 15MM m3/d UPGN Cubatão Adaptation to 15MM m3/d 25
Pipelines Network Belém Coari-Manaus Manaus Natal Recife Catu Carmópolis Pilar Gasbel II Paulinia - Jacutinga Brasília Salvador Cacimbas Catu Vitória -Cacimbas GASENE Cabiúnas Vitória Existing Pipelines New Pipelines Expansão Gasbol Sul Rio de Janeiro São Paulo Campinas Rio Caraguatatuba Taubaté Gaspal II / Gasan II Porto Alegre Gasduc III e Japeri-Reduc 26
Renewables 27
Renewable Energy and Biofuels (2008-2012) 2008-2012 Investments Biodiesel Plants H-Bio (Bio-Refining) 2012 Target Availability of 938 Thousand m3/year Vegetable oil Processing 1.6 million m³/year 21% US$ 1.5 billion Investments 4% 29% Ethanol pipelines Ethanol Project Vessel Export of 4.7 billion m³/year of Ethanol Aeolic Energy Solar Energy Other Sources of Renewable Energy Installed Capacity of Generation of Electric Power from 365 MW Renewable Sources Biofuels 46% Pipelines and Ethanol Pipelines Total avoided GHG emissions: 3.93 MM tons CO2 equivalent Others H-Bio 28
Petrobras Investments to Export Ethanol New Ethanol Pipeline (1.150 Km) Ethanol collection, storage and distribution centers are spread out through producing and consuming regions Large scale marine terminals improve efficiency New Pipeline (1412 km) New Water Way for Ethanol Replan Ilha Dágua Pipeline (Current flow) Tietê-Paraná Water way Senador Canedo São Sebastião Pipeline Replan Brasília Pipeline (OSBRA) Replan Guararema Pipeline Existing Pipeline New Ethanol Pipeline (919Km) Large storage capacity necessary to regulate supply Pipelines reduce transport costs; improve energy efficiency São Paulo Marine Terminal Rio de Janeiro Marine Terminal Future Pipeline Existing Terminal Future Terminal Exportation Target: Export 4.75 MM cu.m/year in 2012 29
Financial Considerations 30
PETROBRAS BUSINESS PLAN Indexes FX rate (R$/US$) Brent for Funding (US$/bbl) Projected Net Cash Flow (Including Dividends) Projected Investments for 2008-2012 2007-2011 Plan 2.50 2008 40.00 2009-2011 35.00 86.7 83.5 2008-2012 Plan 2.18 2008 55.00 2009 50.00 2010 45.00 2011-2012 35.00 104.4 112.4 Net Debt/ Net Debt + Shareholders Equity (Leverage) (%) 25 20 Return on Capital Employed (ROCE) (%) 16 14 (*) PPP purchase power parity 31
Investment Plan by Business Segment 58% 2008-12 Period US$ 112.4 billion 13% 65.1 15.0 1.5 2.6 2.6 29.6 1% 2% 4.3 6.7 26% 2% 4% 6% E&P RTC G&E Petrochemical Distribution Corporate Biofuel Brasil 97.4 Internacional 87% US$ 65.1 billion directed to E&P: Exploration: US$ 13.8 billion Production: US$ 51.3 billion Note: Includes International 32
Strong returns have enable company to grow without increasing debt 25,0% Historical ROCE U.S. GAAP Consolidated Cash Flows 74.3 BN 2003-2007 20,0% 15,0% Inc. Debt Dividends 10,0% 5,0% 0,0% 2003 2004 2005 2006 2007 CFFO (including W.C.) Capex Operating Income and Assets by Segment - 2007 (US GAAP US$ Millions) E&P (Brazil) Downstrea m (Brazil) Gas & Energy Distribution Int l Sources Uses Net Op. Inc. 14,072 2,785 (834) 446 (815) PP&E (inc. Dep.) 48,529 14,480 10,615 1,838 7,596 O/w Construction in Progress 13,558 9,371 6,023 291 1,144 Source: Petrobras and Bloomberg 33
Capital Structure and Credit Metrics (US$ MM) 2005 2006 2007 Cash and Cash Equivalents 9,871 12,688 6,987 Total Debt 21,177 21,338 21,895 Net Debt 11,306 8,650 14,908 Shareholders Equity 32,917 44,299 65,179 Net Income 10,344 12,826 13,138 EBITDA 17,638 22,923 25,333 Net Debt / Book Capital 26% 16% 18% Net Debt/ Market Capital 15% 8% 6% Net Debt / Boe Production (X) 13.9 10.3 15.4 Net Debt / Proved Reserves (X) 1.0 0.8 1.1 Reserves/Production (Years, SPE Criteria) 19.6 18.9 18.9 34
Brazilian Oil Indutry Main Chalengies Infrastructure Enhancement Critical Items Supply (imports) Drilling Equipments Dynamic Positioning and Propeller Systems Steel Manufacturing Process and Supply Brasfels Shipyard at Angra dos Reis. P-51 and P-56 construction sites. Skilled Work Force for Construction and Operation Financiability Rio Grande Shipyard under construction. Designed for platforms construction. 35
Final Remarks Results Expected Fulifl PETROBRAS Demand for Equipments ; Brazil O&G Industry Development into a Competitive Global Player. PETROBRAS is committed to achieve its business interests with social and economic development responsibilities. It should assure an efficient supply chain of critical resources to its projects and perform its mission to enhance the sustainable development of Brazil and of the other countries where it is established. 36
Petrobras at a Glance - Results and Perspectives Thank You For more information, visit our website: http://www.petrobras.com.br/ri/english 37