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17.11.2009 Presentation of General Manager for E&P Hugo Repsold Junior in Bank of America Merrill Lynch Energy Conference - New York

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  • 1. Bank of America Merrill Lynch 2009 Energy Conference November, 2009 Pre-Salt Reservoir Hugo Repsold Junior E&P Strategy and Portfolio Management 1
  • 2. DISCLAIMER The presentation may contain forecasts CAUTIONARY STATEMENT about future events. Such forecasts merely FOR US INVESTORS reflect the expectations of the Company's management. Such terms as "anticipate", The United States Securities and Exchange "believe", "expect", "forecast", "intend", Commission permits oil and gas companies, "plan", "project", "seek", "should", along with in their filings with the SEC, to disclose only similar or analogous expressions, are used proved reserves that a company has to identify such forecasts. These predictions demonstrated by actual production or evidently involve risks and uncertainties, whether foreseen or not by the Company. conclusive formation tests to be Therefore, the future results of operations economically and legally producible under may differ from current expectations, and existing economic and operating conditions. readers must not base their expectations We use certain terms in this exclusively on the information presented presentation, such as oil and gas herein. The Company is not obliged to resources, that the SEC’s guidelines update the presentation/such forecasts strictly prohibit us from including in in light of new information or future filings with the SEC. developments. 2
  • 3. PETROBRAS E&P OVERVIEW VALUE CREATION THROUGH EXPLORATION DELIVERING ACTUAL GROWTH CLOSING REMARKS 3
  • 4. PETROBRAS E&P OVERVIEW 4
  • 5. OVERVIEW OF DOMESTIC E&P Reserves (at December 31, 2008) Proven reserves of 14.09 billion boe (SPE) or 10.27 billion boe (SEC) Reserve life of 18.9 years (SPE) and 13.8 (SEC) Internal Reserve Replacement of 123% (SPE) and 27% (SEC) Production (2008) 2,176 thousand boed (1,855 thousand bpd oil) 5-year CAGR of 5.6% (5.9% oil) F&D Cost US$ 10.63/boe (2006 – 2008) Lifting Cost US$ 9.26/boe (2008) Exploratory Area (2008) 155.0 thousand km² (Petrobras + Partners) 256 thousand km² (Other Companies) Total: 411 thousand km². 5
  • 6. PETROBRAS’ OVERVIEW UPSTREAM EFFECTIVE STRATEGY 2009-2013 Discover and develop resources in Brazil and internationally, maintaining a reserves-to-production ratio of 15 years Develop an integrated Delineate and develop global natural gas network the pre-salt cluster and to supply Petrobras’ new oil provinces in markets Southeast Brazil Apply innovative Increase production in deepwater expertise in Brazil and abroad, new high-potential optimizing the use of frontier provinces in Brazil existing infrastructure and abroad 6
  • 7. DOMESTIC E&P PROFILE 2008 Production 2008 Proven Reserves (SPE) 15% 9% 10% 14% 13% 23% 58% 58% 2,176 thousand boed 14.09 billion boe Onshore Shallow water (0-300m) Deep water (300-1500m) Ultra-deep water (> 1500m) Current Exploratory Area 155 thousand km2 40% 51% of the concession areas are 37% located in deep / ultra-deep waters. 14% 9% 7 Source: Petrobras
  • 8. DOMESTIC PROVEN RESERVES PROFILE Proven Reserves as of Dec/2008 (SPE) (14.09 billion boe) Oil + Condensate < 22º API 22º 85% (heavy) 22 – 31 º API 10% 5% 50% (intermediate) 29% 15% 6% Associated Gas Non-Associated Gas Gas > 31 º API (light) 45% Undeveloped 55% Proven Reserves Developed Proven Reserves 8 Source: Petrobras
  • 9. VALUE CREATION THROUGH EXPLORATION EXPLORATORY APPROACH AND RESULTS • High Exploratory Success Index • Worldwide Leadership in Deepwater Exploration • High Reserves Incorporation Rates and Potential • Continuous New Exploratory Frontiers Opening Accurate Exploratory Risk Assessment Efficient Knowledge Management Long Term Strategic Vision Creativity and Risk Assumption Culture 9
  • 10. Value creation through exploration Consistently delivering reserve growth 16.000 14,895 14,913 15,023 15,010 15,085 14,505 14.000 12,131 12.000 10,650 10,365 10.000 14.230 8.000 14.127 14.181 14.100 13.807 11.426 6.000 10.095 10.024 9.807 9.554 4.000 2.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Reserves Replacement Index 150% 151% 337% 437% 156% 102% 114% 98% 109% 124% 124% Proved reserves in billions of boe (barrels of equivalent oil) 10
  • 11. ENHANCING RESERVES Santos Pre-Salt announced recoverable volumes including the transfer of rights, can more than double Brazilian reserves. million boe ~ 30-35 bn boe 35,000 +5,000 30,000 Higher estimates 25,000 +5,400 20,000 Lower estimates 10,600 15,000 10,000 5,000 14,093 0 2008 Proven Santos and Campos Basins Transfer of Proven Reserves* Reserves* Pre-Salt Rights with + (Tupi, Iara, Guará and Whale’s Compensation Santos and Campos Basins Park)** Pre-Salt (Tupi, Iara, Guará and Whale’s Park)** *SPE Criteria + Transfer of Right ** include Petrobras and Partners 11
  • 12. PURSUING NEW PROJECTS WHILE MAXIMIZING PRODUCTION FROM EXISTING ASSETS Petrobras Total Production (x 1000 boe/d) 5,729 223 7.5% p.y. 409 1.177 3,655 5.6% p.y. 8.8% p.y. 131 2,758 210 634 2,400 103 2,217 2,297 2,301 142 1,810 2,037 2,020 101 110 100 1,635 96 124 463 22 85 94 142 126 24 35 163 277 273 321 161 168 274 3.920 44 252 251 265 232 2.680 1.855 2.050* 1.684 1.778 1.792 1.500 1.540 1.493 1.335 2001 2002 2003 2004 2005 2006 2007 2008 2009 ..... 2013 ..... 2020 Oil production - Brazil Gas production - Brazil Oil production - International Gas production - International * Consider +- 2,5% 12
  • 13. NEW PRODUCTION UNITS Project Start up Type Oil and Gas Capacity Shipyard Leased Uruguá-Tambaú 25,000 bpd 1Q/10 FPSO Modec Cidade de Santos 10.0 MM m3/d Mexilhão 2Q/10 Fix 15 MM m3/d Mauá Jurong Cachalote/Baleia Franca 100,000 bpd 2Q/10 FPSO SBM FPSO Capixaba 3.2 MM m3/d Tupi Pilot 100,000 bpd 4Q/10 FPSO Cosco (China) Modec Cidade de Angra dos Reis 5.0 MM m3/d Marlim Sul Mod. 3 - P-56 (P- 100,000 bpd Brasfels-Keppel 2H/11 SS 51 Clone) 6.0 MM m3/d Angra 180,000 bpd Jubarte Mod. 2 - P-57 2H/11 FPSO SBM Cingapura 2.0 MM m3/d 100,000 bpd Papa Terra - P-61 2H/13 TLWP Bid in progress 1.0 MM m3/d 150,000 bpd Papa Terra - P-63 2H/13 FPSO Bid in progress 1.0 MM m3/d 120,000 bpd Guará Pilot 2H/13 FPSO Bid in progress 5.0 MM m3/d Atlântico Sul 180,000 bpd Roncador Mod 3 - P-55 2H/13 SS (Suape) and Rio 6.0 MM m3/d Grande 13
  • 14. MANAGING LIFTING COSTS R$/barrel US$/barrel 121.37 114.78 51.14 54.40 54.91 58.79 41.48 38.86 44.40 34.80 36,.9 34.24 22.39 16.33 21.28 31.08 30.27 21.20 20.06 18.11 14.69 19.50 16.34 17.61 19.09 17.91 17.58 9.87 6,87 10.78 9.88 10.21 8.24 7,82 8.72 2Q08 3Q08 4Q08 1Q09 2Q09 2Q08 3Q08 4Q08 1Q09 2Q09 Lifting Cost Gov. Take Lifting Cost Gov. Take Brent • In the 2Q09, the increase in oil prices and the strengthening of the Real caused an increase in lifting costs in US. Dollars; • Reflecting the influence of the exchange rate, lifting costs were flat when expressed in Reais. 14
  • 15. THE PRE-SALT REGION The big blue area represents the expected Pre-salt location, with great potential for oil presence Currently, there is a production acceleration program in Jubarte (Whales’ Park) and an extended well test in Tupi (Santos Basin) • Total Area: 149,000 km2 • Area Under Concession: 41,772 km2 (28%) • Area Not Under Concession: 107,228 km² (72%) • Area With Petrobras Interest: 35,739 km2 (24%) 15
  • 16. PRE-SALT ACCOMPLISHMENTS TIMELINE 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000-2001: BIDs 2 and 3: Acquisition of Santos Basin Pre- Salt blocks 11 exploratory wells drilled to date by Petrobras as operator: 100% success rate in Santos 2001-2004: Largest seismic Basin Pre-Salt Cluster acquisition and interpretation in the world 2005-2006: 1st wildcat well: Parati 2009: Santos Basin Pre-Salt First Oil: Tupi EWT (May 1st) 16
  • 17. PRE-SALT ACCOMPLISHMENTS TIMELINE 2008 2009 2010 2011 2012 2013 2014 2015 2016 Phase 0:Information gathering, appraisal wells, small scale production (EWTs) Last Updates 2009: • 5 Rigs currently working in the cluster: • 3 are drilling new wells –TUPI NORDESTE + TUPI SUL P1 wells for EWT/Pilot in BMS-11 + ABARÉ OESTE in BMS-9; • 2 are doing Formation Tests – IARA and GUARÁ; • 2 new rigs will be allocated to the pre salt cluster shortly. 17
  • 18. 10 NEW FPSOS 2012 2013 Phase 1A 2017 2020 … Phase 1B Phase 1A - Projects Phase 1a: 1st phase of definitive development, Phase 1B - Projects • Use of consolidated or rapidly-consolidating technologies to achieve production targets • 2nd phase of definitive development • Generate cash-flow to support Phase 1b • Significant production increase First 2 FPSOs to be chartered (2013-2014) • Oil Production: 120,000 bpd • Innovation acceleration • Gas Compression: 5 M m³/d Additional 8 FPSOs (2015-2016) • Massive use of new technologies specially • Construction of the hulls at the Rio Grande tailored for Pre-Salt conditions Shipyard • All identical units, serial manufacturing • Process plant under study: − Oil Production: 150,000 bpd − Gas Compression: 5.5 M m³/d − Water-Alternating-Gas injection capability 18
  • 19. WELLS DRILLED AND TESTED IN SANTOS BASIN PRE SALT CLUSTER BLOCKS BLOCK PROSPECTS WELL TESTED/ BMS-8 TESTING BEM-TE-VI SPS-52 X BMS-9 CARIOCA SPS-50 X GUARÁ SPS-55 X IGUAÇU SPS-60 ABARÉ OESTE SPS-66 * BMS-10 PARATI RJS-617 X BMS11 TUPI RJS-628 X TUPI RJS-646 X IRACEMA RJS-647 IARA RJS-656 X TUPI P1 RJS-660 * TUPI NE RJS-662 * BMS21 CARAMBA SPS-51 BMS-22 ESSO-2 ESSO-3 BMS-24 JUPITER RJS-652 19 * on drilling
  • 20. DEADLINE FOR DECLARING COMMERCIALITY 2010 2011 2012 2013 … Bem-Te-Vi (09/08/2010) firm activities (31/12/2012) contingent activities Tupi Parati (31/12/2010) (31/05/2011) Carioca (11/11/2011) Guará (11/11/2012) Caramba (31/12/2012) Iara (31/12/2013) 20
  • 21. ESPÍRITO SANTO PRE SALT o nt UTG Cacimbas Infrastructure in-place: diversified and flexible portfolio; Sa Linhares Rio Doce Cangoá MG Peroá P-34 at Jubarte field, first pre-salt production (Sep/08): ito UPGN Lagoa Parda excellent results/light oil (30ºAPI); pír 24” – 66 km Aracruz 25 MM m3/d Es Terminal Barra do Riacho Camarupim FPSO Seillean started in dec/08 an extended well test Canapu for the Cachalote (CHT) field; Golfinho VITÓRIA 2 wells were reallocated from FPSO Capixaba to Carapó Vila Velha FPSO Cidade de Vitória; UTG Sul Capixaba Sul-Norte Capixaba Gas pipeline Developing new discoveries in the Ring Fence of Guarapari Sul Capixaba Gas pipeline 12 a 24” – 160 km 12” – 83 km 7 a 15 MM m3/d Golfinho using FPSO Cidade de Vitória; Anchieta 4,5 MM m3/d Presidente Marataizes FPSO Capixaba (100 Mb/d) moved from Golfinho field Kennedy ARG CHT Baleia Franca and is being adapted to produce in Cachalote JUB OST RJ Baleia Azul NAU (CHT)/Baleia Franca (BFR) in 1H10; ABA CXR PRB Baleia Azul first definitive production unit by 4Q12; Catuá Natural gas production transported via pipeline. Whales Park* 21 *Whales Park comprehends the fields: Jubarte, Cachalote, Baleia Franca, Baleia Azul and Baleia Anã
  • 22. Delivering actual growth People as the main foundation of our results No Employees Petrobras University * Novas Contratações 22
  • 23. NEW REGULATORY MODEL Production Transfer Sharing of Rights with Agreement compensation Pre-salt Petrobras 100% and Petrobras Operator Strategic Other companies Areas Up to 5 billion boe Trough Bidding Process Other Areas Current Concession Model There will be no regulatory changes in the areas under concession, including the pre-salt area already granted 23
  • 24. PRODUCTION SHARING AGREEMENTS Production sharing agreements Petrobras will operate all blocks under this regime, with a minimum stake of 30% Consortium between Petrobras, Petro-sal and the winning bidder will be managed by the Operational Committee Petrobras will be able to participate in the bidding process to increase its stake The winning bidder will be the Companies company that offers the highest percentage of “profit oil” for the Profit Brazilian Government Oil Petrobras will have to follow Government the same percentage offered by the winning bidder The Brazilian Government will not assume the risks of the activities, Cost except when it decides to invest Oil directly Prior to contracting, the Government will evaluate the potential of the areas and may contract Petrobras directly 24 Graphs are showing only hypothetical values
  • 25. OPERATOR’S ROLE AND INDUSTRY PRACTICES OPERATOR Responsible for conducting exploration and production activities providing critical resources: technology (usage and development), human resources and equipments Access to strategic information Production and costs control Technological access and development PETROBRAS: defined as the exclusive operator of all areas under the production sharing agreements 25
  • 26. AGENT’S ROLE OF PRODUCTION SHARING AGREEMENTS NATIONAL ENERGY POLICY COUNCIL - CNPE Bidding schedule and national content Blocks for exclusive contracts and blocks for bidding Technical and economical parameters of the contracts Definition changes (increase) for the areas called pre-salt Areas to be classified as strategic National Petroleum Agency - ANP Promote bids, regulate and supervise Analyze and approve production sharing agreements Approve the contracts of Unitization Adapt and standardize the applicable rules under different regimes Advising Ministry of Mines and Energy in blocks ring fences delimitation PETRO-SAL Will reduce information asymmetry between the Brazilian Government and oil companies, aiming to reduce cost oil Will not assume risks nor invest Contract management of production sharing agreements Will not execute E&P activities 26
  • 27. E&P TRANSFER OF RIGHTS WITH COMPENSATION Government may transfer to Petrobras, for compensation, without bidding, the rights to explore and produce oil in the pre-salt areas not under concession. These areas may or may not be contiguous Transfer of rights limited to a maximum produced of 5 billion boe. Petrobras will be the owner of produced volumes Oil values shall be determined by technical reports prepared by qualified third parties contracted by the government (ANP) and Petrobras, taking into account best industry practices The transaction includes a clause of reappraisal of reserves value If the value of appraisal rises, Petrobras will pay the difference to the Government. If price falls, the contrary will happen Royalties will be paid by Petrobras and distributed according to the Law nº 9.478/97. No special participation payment is expected 27
  • 28. PETROBRAS’ CAPITALIZATION The value of capitalization could be: • Minimum: the same value of the transfer of rights with compensation • Maximum: up to 3 times this value Petrobras will receive cash from minority Petrobras’ increase shareholders in capital Petrobras will pay the (to be approved by transfer of rights with Appraisal of the ESM) compensation to the reserves in R$ federal govt • Brazilian Government could pay the capital contribution to Petrobras with public debt issuances, priced at market value • Petrobras may pay the Brazilian Government the transfer of rights with compensation, using the same securities arising from the capitalization 28 Graphs are showing only hypothetical values
  • 29. Thank You. 29