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Presentation to Analysts: 2030 Strategic Plan and 2014-2018 Business Plan

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Presentation to Analysts: 2030 Strategic Plan and 2014-2018 Business Plan
CEO Maria das Graças Silva Foster

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  • 1. 1 2030 Strategic Plan and 2014-2018 Business Plan Maria das Graças Silva Foster CEO
  • 2. 2 FORWARD-LOOKING STATEMENTS: DISCLAIMER The presentation may contain forward-looking statements about future events within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not based on historical facts and are not assurances of future results. Such forward-looking statements merely reflect the Company’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forward-looking statements. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. Readers are referred to the documents filed by the Company with the SEC, specifically the Company’s most recent Annual Report on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to general economic and business conditions, including crude oil and other commodity prices, refining margins and prevailing exchange rates, uncertainties inherent in making estimates of our oil and gas reserves including recently discovered oil and gas reserves, international and Brazilian political, economic and social developments, receipt of governmental approvals and licenses and our ability to obtain financing. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason. Figures for 2014 on are estimates or targets. All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place reliance on any forward-looking statement contained in this presentation. NON-SEC COMPLIANT OIL AND GAS RESERVES: CAUTIONARY STATEMENT FOR US INVESTORS We present certain data in this presentation, such as oil and gas resources, that we are not permitted to present in documents filed with the United States Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation S-K because such terms do not qualify as proved, probable or possible reserves under Rule 4-10(a) of Regulation S-X. DISCLAIMER
  • 3. 3 2030 Strategic Plan
  • 4. 4 2030 Strategic Plan • Created in: 2013 • Drivers: changes in regulatory framework in Brazil – new Transfer of Rights and Production Sharing Agreement Regimes, growth in US shale gas and tight oil production and 2008 world economic crisis. • 17 year horizon: growth in oil production beyond 2020 demands, on top of the 2013 exploratory potential, the incorporation of areas acquired in the new bids (concession and PSA) Petrobras Strategic Plan: Recent History Main Drivers for the Revision of 2013 Planning 2030 Vision 2005 2006 2006 Pre-Salt’s Discovery: Lula (Jul) 2008 First Oil: Pre-Salt Jubarte EWT (Sep) 2009 First Oil – Santos Pre-Salt: Lula EWT (May) 2014 Pre-salt’s production record: 407 thous. bpd (Feb) 2011 Libra’s discovery 2013 Pre-salt: 300 th. bpd only 7 years after discovery* 2007 2008 2009 2010 2011 2012 2013 2014 2020 Strategic Plan • Created in: 2007 • Drivers: pre-salt’s discovery and growth of oil products market in Brazil. • 13 year horizon: strategies defined to 2020, based on 2007’s exploratory potential, not considering future bid rounds. 2013 Libra Auction (Oct) First PSA Auction 2007 Last Offshore Areas Bid 2010 Law 12.276: Transfer of Rights Law 12.304: PPSA Law 12.351: PSA *GOM=17 years, Campos B.=11 years, North Sea=9 years 2008 Shale Gas – Beginning of US Shale Gas production growth 2008 World Economic Crisis Brent drops to US$ 34.00/bbl 2013 Tight Oil – production reaches 2.3 million bpd
  • 5. 5 50 60 70 80 90 100 110 120 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Demand Projection and Expected Decline of World Oil Production Supply challenges NewProjects Current Production 2020 Total23.1MMbpd 101.5 MM bpd 78.4 MM bpd WorldLiquidsDemand(MMbpd) World Oil Supply x Demand: 2013-2020 Economic feasibility of future oil production 224 514 1.558 1.593 1.118 453 824 1.012 231 1.209 1.358 29 365 486 938 960 1.032 977 814 2.069 1.233 1.377 2.727 0 500 1000 1500 2000 2500 3000 3500 Europe Others Caspian Russia and East Europe North Sea Asia Others Australia China Middle East Others Saudi Arabia Iran Iraq EUA (Alasca) Canadá México EUA (Golfo do México) Canadá Oil Sands EUA (Onshore) Africa Others North Africa West Africa Latin Am. Others Venezuela Brazil Production volumes from new projects (thousand barrels per day) Latam 5.337 Africa 3.859 North Am. 3.810 Middle East 3.809 Asia 2.394 Europe + FSU 3.888 Total 23.1 MM bpd Source: Wood Mackenzie Data - Global Oil Supply Tool (May/2013), developed by Petrobras, save for Brazil data, for which the source is Petrobras’ internal estimates (Jul/2013). Tight Oil Contribution (382 Mbpd) 2020 Production Volume from New Projects with production start up from 2013 on according to WoodMackenzie
  • 6. 6 2030 Strategic Plan Assumptions Brent and Henry Hub Natural Gas Prices Petrobras’ assumptions on Brent price within the most conservative range of market projections. Petrobras’ projection for Henry Hub natural gas prices is close to the average of long term’s projections. 2013 2014 2015-2017 2018-2030 US$ 107/bbl US$ 105/bbl US$ 100/bbl US$ 95/bbl Oil prices in US$/bbl (2010 – 2030) * Projections: AIE (Nov/2013), PIRA (May/2013) , WoodMackenzie (March/2013), IHS (Jul/2013), AEO (April/2013). 0 1 2 3 4 5 6 7 8 9 10 11 12 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 HenryHubNat.GasPricesinUS$/MMBtu (2014US$) * Projections: IEA/DOE (June/2012), PIRA (Jan/2013) and CERA (Oct/20123), Barclays Capital (Nov/2012) Henry Hub Natural Gas Prices in US$/MMBtu Petrobras 2013 2014 2015-2017 2018-2030 3.51 US$/MMBtu 4.00 US$/MMBtu 4.60 US$/MMBtu 5.88 US$/MMBtu Projections*
  • 7. 7 INTERNATIONAL DISTRIBUTION NATURAL GAS, ENERGY and GAS-CHEMICAL BIOFUELS To produce on average 4.0 million barrels of oil per day in the 2020-2030 period, under Petrobras’ ownership in Brazil and abroad, acquiring exploration rights to meet this objective To maintain the leadership in the domestic market for fuels, increasing the value added and the preference for Petrobras’ brand To add value to the businesses of the natural gas chain, ensuring the monetization of the gas from the Pre-salt and Brazil’s land basins. To keep the growth in biofuels, ethanol and biodiesel, alongside the domestic market for gasoline and diesel RTMP To supply the Brazilian oil products market, reaching a refining capacity of 3.9 million bpd, to match domestic market demand Perform E&P activities, focusing on oil and gas exploration in Latin America, Africa and USA E&P E&P Petrobras’ Strategy: Choices of an Integrated Energy Company
  • 8. 8 Source: Petrobras – Dec/2013 – E&P-CORP Oil and NGL production scenarios in Brazil Petrobras and Estimators: 2013, 2020 to 2035 2020-2030 Average Millionbpd Brazil’s Average Oil Production 2020-2030: 5.2 million bpd Petrobras Vision* In 2035, according to estimators, Brazil’s oil production will range from 4.7 to 6.6 million barrels of oil per day. International Energy Agency places Brazil as the 6th largest oil producer in 2035. Source: AIE 2013, DOE 2013, WoodMackenzie 2013, IHS - CERA 2013 (The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without a written permission by IHS. All rights reserved). Estimator Brazil’s Oil Production 2020-2030 Average Brazil’s Oil Production 2035 1. Petrobras - Brazil* 5.2 million bpd Outside SP 2030 horizon 2. DOE 5.0 million bpd 6,6 million bpd 3. WoodMackenzie 4.9 million bpd 5,4 million bpd 4. CERA 4.4 million bpd 4,7 million bpd 5. AIE 5.4 million bpd in 2025 6,0 million bpd 2035 1. 2. 3. 4. * Brazil’s production according to Petrobras’s view and reasoning, considering different paces for the bid rounds put forward by the Government (Petrobras’ view today, 2013, up to 2030).
  • 9. 9 4,2 Petrobras Big Choice for the E&P segment 4 million bpd average production: 2020 to 2030, Brazil and Abroad Petrobras chooses to be a company with a potential production capacity of 4 million bpd in its activities in Brazil* and abroad, maximizing profitability. Petrobras Average Production in Brazil* and Abroad 2020-2030: 4.0 million bpd Average 2020-2030 Millionbpd Petrobras Average Production in Brazil* 2020-2030: 3.7 million bpd Average Oil Production in Brazil* Petrobras + Third Parties + Government 2020-2030: 5.2 million bpd Petrobras Average Production in Brazil* and Abroad 2013-2020: 3.0 million bpd Petrobras Average Production in Brazil* 2013-2020: 2.9 million bpd * Brazil’s production according to Petrobras’s view and reasoning, considering different paces for the bid rounds put forward by the Government (Petrobras’ view today, 2013, up to 2030).
  • 10. 10 Brazil: Oil and NGL Production x Oil Products Demand Refining Expansion Aligned with the Domestic Market Growth OBS: Additional throughput capacity from PROMEGA (by/2016): +165 thousand bpd (existing refineries) + 30 thousand bpd (RNEST). PROMEGA: Its goal is to increase diesel, jet fuel and gasoline production from the existing refineries, based on the increase in the capacity and efficiency of the processing units millionbpd PROMEGA Increase in Capacity by 195 th. bpd Average Oil Production in Brazil* Petrobras+Third Parties+ Government 2020- 2030: 5.2 million bpd Average Demand for Oil Products in Brazil 2020-2030: 3.4 million bpd Oil Products Self-sufficiency: Total throughput = Total demand Petrobras Average Oil Production in Brazil 2020-2030: 3.7 million bpd Volumes Self-sufficiency: Oil production = oil products consumption Petrobras Average Oil Production in Brazil 2013-2020: 2.9 million bpd Petrobras’ processing capacity is expected to reach 3.9 million barrels per day by 2030. * * Brazil’s production according to Petrobras’s view and reasoning, considering different paces for the bid rounds put forward by the Government (Petrobras’ view today, 2013, up to 2030).  
  • 11. 11 Natural Gas Supply and Demand Balance: 2013 - 2030 (million m³/day) Supply Demand LNG Regasification Thermoelectric Demand Petrobras + Third Parties 42 12 35 2014 47 12 35 2013 45 12 33 Average 2020-2030 50 11 35 2020 49 11 35 2018 47 Inflexible Flexible To be contracted NG Distributors Demand 57 5249 4139 20142013 Average 2020-2030 20202018 Demand Petrobras Demand: Fertilizers + Refineries 5 55 33 3 1127 21 2014 16 13 2013 12 9 Average 2020-2030 35 27 2020 28 22 2018 Refining Fertilizers Fertilizers under Evaluation 96 124 129 14398 146 157 168118 105 Total 77777 Average 2020-2030 41 20 14 2020 41 20 14 2018 41 20 14 2014 41 20 14 2013 27 20 Baía de Guanabara Pecém TRBA Bolivia Imports 2020 24 6 2013 30 24 6 Average 2020-2030 30 24 6 30 24 6 2018 30 24 6 2014 30 Inflexible Flexible Domestic Supply of NG¹ 8 47 2013 41 41 Average 2020-2030 97 89 2020 86 86 2018 75 75 2014 47 Supply E&P Supply E&P New BIDs Total ¹ Includes NG from Partners and Third Parties. ** Supply expects the renovation of the GSA with YPFB (Bolivia) and does not consider the need of a 4th LNG terminal. ** ** The natural gas imports and transportation infrastructure already installed is enough to meet Petrobras’ demand until 2030*. * Excludes natural gas production outflow and processing infrastructure.
  • 12. 12 Mission, Vision 2030 and Corporate Drivers To be one of the five largest integrated energy companies in the world¹ and the preferred one by its stakeholders. ¹ Metric: one of the five largest oil producers among all companies, with or without shares in stock exchanges. (Source for calculation: Petroleum Intelligence Weekly – PIW - Annual Report ) Integrated Growth Corporate Drivers Profitability Social and Environmental Responsibility Mission To perform in the oil and gas industry in an ethic, safe and profitable way, with social and environmental responsibility, providing products suited to the needs of its clients and contributing to the development of Brazil and the countries where it operates. Vision 2030
  • 13. 13 2014-2018 Business and Management Plan
  • 14. 14 Exploratory Success and Reserves Increase 14 TANGO(CES-161) PITU(RNS-158) PAD FARFAN-1(SES-176D PAD MURIÚ-1(SES-175D) PAD MOITA BONITA(SES-178) SÃO BERNARDO(ESS-216) ARJUNA(ESS-211) RIO PURUS(CXR-1DA) PAD TAMBUATÁ SANTONIANO(GLF-35) EXT DE FORNO(AB-125) EXT DE BRAVA (VD-19) MANDARIM(MLS-105) BENEDITO(BP-8) FRANCO NORDESTE(RJS-724) FRANCO LESTE(RJS-723) FRANCO SUL(RJS-700) FLORIM(RJS-704) IARA ALTO ÂNGULO(RJS-715) ENTORNO DE IARA-1(RJS-711) PAD IARA EXT-4(RJS-706) NE TUPI-2(RJS-721) JÚPITER BRACUHI(RJS-713) SUL DE TUPI(RJS-698)) SAGITÁRIO(SPS-98) 46 discoveries in the last 14 months (Jan/13 – Feb/14), of which 24 were offshore (14 in Pre-salt). State Limit Sedimentary Basin 100% Petrobras Petrobras and Partners ¹ RRR: Reserves Replacement Ratio ² R/P: Reserve / Production ³ Proven Reserves in Brazil 4 Transfer of Right original contract of 5 billion boe, of which 0,7 billion boe were already incorporated to proven reserves 5 Potential recoverable volume in Pre-Salt: Lula, Lula/área de Iracema, Iara, Sapinhoá, Pq. das Baleias, Lapa and Campos Basin. Brazil  Discoveries: 46 • Offshore: 24 • Onshore: 22  Exploratory Success Ratio: 75%  Reserves: 16.0 Billion boe  RRR¹: 131% > 100% for the 22nd consecutive year  R/P²: 20.0 years  Potential Recoverable Volume: • 16.0³ + 4.34 + 7.15 = 27.4 billion boe Pre-Salt  Discoveries: 14, of which 5 were pioneers wells  Exploratory Success Ratio: 100%  Reserves: 300 km of SE region, 55% of GDP
  • 15. 15 2014 Growth: 7.5% ± 1p.a. 2014-2018 BMP: Petrobras Oil, NGL and Natural Gas Production Curve in Brazil
  • 16. 1616 • Norte Pq. Baleias (P-58) 1st Quarter  Sapinhoá Pilot (Cid. São Paulo)  Baúna (Cid. Itajaí) • Iracema Sul (Cid. Mangaratiba) • Roncador IV (P-62) 2º Quarter • Sapinhoá Norte (Cid. Ilhabela) • Papa-Terra (P-61 + TAD ) 2nd Quarter • Florim • Júpiter• Lula Alto • Lula Central • Lula Sul (P-66) • Búzios I (P-74) • Lapa • Lula Norte (P-67) • Búzios II (P-75) • Lula Ext. Sul e ToR Sul de Lula (P-68) • Lula Oeste (P-69) • Búzios III (P-76) •Tartaruga Verde and Mestiça • Maromba I • Iara Horst (P-70) • Búzios IV (P-77) • Entorno de Iara (P-73) • NE de Tupi (P-72) • Iara NW (P-71) • Sul Pq. Baleias • Deep Water ES • Carcará • Búzios V • Espadarte III  Production Units in operation • Deep Water I SE • Marlim I •Revitalization • Deep Water II SE • Libra • Marlim II Revitalization Lula NE Pilot (Cid. Paraty)  Papa-Terra (P-63)  Roncador III (P-55) --- Production Units not bid as of Feb/2014 1st Oil Forecast 3rd Quarter 4th Quarter • Iracema Norte (Cid. Itaguaí) 3rd Quarter 1st Oil Forecast9 Production Units Concluded • Norte Pq. Baleias (P-58) • Roncador IV (P-62) • Papa-Terra (P-61) • Papa-Terra (TAD) • Production Units Delivered in 2013 2014 Growth: 7.5% ± 1p.a. 2014-2018 BMP: Petrobras Oil and NGL Production Curve in Brazil Oi and NGL production (million bpd) 2014 - 2015 2016 - 2020 In the first quarter 2014 production growth will not be relevant, due to adjustment works on new platforms on location and well interconnections.
  • 17. 1717 ProductionUnitsDelivered,underConstructionandunderBidding 2014 2015 2016 2017 20182013 1,000 th. bpd 300 th. bpd Additional Installed Capacity Operated by Petrobras 150 th. bpd 1,000 th. bpd 900 th. bpd 1,050 th. bpd Cid. Ilhabela Cid. Mangaratiba P-75 P-67 P-74 P-66 P-68 P-69 P-76 P-77 P-72 P-71 P-73 P-67 Cid. Itaguaí Cid. Maricá Cid. Saquarema Cid. Caraguatatuba Cid. São Paulo Cid. Itajaí Cid. Paraty P-63 P-55 P-61 P-58 P-62 TAD PU to be bid: • Deep Water ES • Marlim I Revitalization • Deep Water I SE • Maromba I • Sul do Pq. das Baleias • Carcará + 600 th. bpd PU under bidding: •Tartaruga Verde and Mestiça + 150 th. bpd P-70 Under Bidding Process: • Tartaruga Verde and Mestiça • Deep Water ES • Marlim I Revitalization • Deep Water I SE • Maromba I • Sul do Pq. das Baleias • Carcará
  • 18. 1818 PLSVsunderOperationandConstruction 2014 20162014 Current Fleet = 11 PLSVs + 2 19 New PLSVs to support the Oil Curve + 8 throughout 2014 + 9 P-58 2017 Sunrise 270t Deep Constructor 125t Skandi Vitória 300t Skandi Niterói 270t Kommandor 3000 135t Normand7 340t Seven Mar 340t Seven Seas 430t Seven Condor 230t Seven Phoenix 340t McDermott Agile 200t North Ocean 102 210t Polar Onyx 275t Coral do Atlântico 550t Estrela do Mar 550t Lay Vessel 105 300t Seven Waves 550t 1 PLSVs of 300t (The Netherlands) Sapura Diamante 550t Sapura Topázio 550t 3 PLSVs of 550t (The Netherlands) 2 PLSVs of 650t (Norway) 1 PLSVs of 300t (Suape) 1 PLSVs of 550t (The Netherlands) 1 PLSVs of 300t (Suape) 2 PLSVs of 550t (The Netherlands) PLSV: Pipe Laying Support Vessel
  • 19. 1919 Brazil: Oil and NGL Production x Oil Products Demand Refining Expansion Aligned with Domestic Market Growth RNEST 1st Phase 4th Quarter RNEST 2nd Phase 2nd Quarter Comperj 1st Phase Premium I 1st Phase Premium II OBS: PROMEGA additional refining capacity (by Dec/2016): +165 thousand bpd (current refineries) + 30 thousand bpd (RNEST). PROMEGA targets are to increase diesel, jet fuel and gasoline production of our refineries, based on capacity and efficiency increase of processing units. Millionbpd PROMEGA Capacity Expansion of 195 thousand bpd Petrobras’ refining capacity should reach 3.3 million bpd in 2020, aligned with domestic market growth.
  • 20. 20 Trade Balance: Oil and Oil Products Petrobras will become relevant net exporter Exports Imports Balance Thousandbpd 242 503 436 357 1.004 1.191 389 231 -40% +36% 2020 256 124 132 2018 425 194 2014 825 2020 1.694 2018 1.246 2014 549 192 Oil ProductsOil +208% 11 -32 +75% 2020 1.438 379 1.059 2018 821 810 2014 -276 -244 -69% Increase in oil production and higher refining capacity will make Petrobras become net exporter starting in 2016 OBS: Volume of oil exported by Petrobras’ partners: 195 th. bpd in 2014, 689 th. bpd in 2018 and 780 th. bpd in 2020.
  • 21. 2121 RNEST and COMPERJ Refineries Physical and Financial Monitoring PNG 13-17 2016 Projetado 2016 0 10 20 30 40 50 60 70 80 90 100 110 mai-04 nov-04 mai-05 nov-05 mai-06 nov-06 mai-07 nov-07 mai-08 nov-08 mai-09 nov-09 mai-10 nov-10 mai-11 nov-11 mai-12 nov-12 mai-13 nov-13 mai-14 nov-14 mai-15 nov-15 mai-16 nov-16 mai-17 nov-17 mai-18 nov-18 mai-19 nov-19 mai-20 nov-20 mai-21 nov-21 PNG 12-16 PNG 13-17 Realizado Projetado Physical Monitoring – S-Curve (%) PNG 13-17 2014 Projetado 2014 0 10 20 30 40 50 60 70 80 90 100 110 abr-05 out-05 abr-06 out-06 abr-07 out-07 abr-08 out-08 abr-09 out-09 abr-10 out-10 abr-11 out-11 abr-12 out-12 abr-13 out-13 abr-14 out-14 abr-15 out-15 abr-16 out-16 abr-17 out-17 abr-18 out-18 abr-19 out-19 abr-20 out-20 PNG 12-16 PNG 13-17 Realizado Projetado Physical Monitoring – S-Curve BMP 13-17: 87% Accomplished: 84% PNG 13-17: US$ 13.457 MM Projetado: US$ 13.596 MM 0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 jan-10 jul-10 jan-11 jul-11 jan-12 jul-12 jan-13 jul-13 jan-14 jul-14 jan-15 jul-15 jan-16 jul-16 jan-17 jul-17 jan-18 jul-18 jan-19 jul-19 jan-20 jul-20 jan-21 jul-21 US$MM PNG 13-17 Realizado Projetado (%) Financial Monitoring – S-Curve Financial Monitoring – S-Curve BMP 13-17: 7,882 Million Accomplished: 7,573 Million PNG 13-17: US$ 18.515 MM Projetado: US$ 18.579 MM 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 abr-05 out-05 abr-06 out-06 abr-07 out-07 abr-08 out-08 abr-09 out-09 abr-10 out-10 abr-11 out-11 abr-12 out-12 abr-13 out-13 abr-14 out-14 abr-15 out-15 abr-16 out-16 abr-17 out-17 abr-18 out-18 abr-19 out-19 abr-20 out-20 US$MM PNG 13-17 Realizado Projetado IMPLEMENTION MILESTONES 1 - Start-up - ETA (Mar/2014) 2 - Start-up - ETDI (Sep/2014) 3 - Start-up UDA 11 (Oct/2014) 4 - Start-up UCR 21 (Nov/2014) 5 - Start-up HDT Diesel 31 (Nov/2014) IMPLEMENTATION MILESTONES 1 - Start-up – ETA (Jun/2015) 2 - Start-up - ETDI (Jun/2015) 3 - Start-up - UDAV (Ago/2016) 4 - Start-up - UCR (Ago/2016) 5 - Start-up - HCC (Ago/2016) BMP 13-17: 15,246 Million Accomplished: 14,841 Million BMP 13-17: 67% Accomplished: 66% COMPERJ Start-up: 2016 Feb/14 BMP 13-17 Accomplished Planned BMP 13-17 Accomplished Planned BMP 12-16 BMP 13-17 Accomplished Planned BMP 13-17 Accomplished Planned BMP 13-17 2016 Planned 2016 Planned 2014 BMP 13-17 2014 BMP 13-17 US$ 18.515 MM Planned US$ 13.596 MM BMP 13-17 US$ 13.457 MM Planned US$ 18.579 MM RNEST Start-up: 4th Quarter BMP 12-16Mar/14
  • 22. 22 Average Realization Price Brazil* x Average Realization Price US Gulf** *Considers Diesel, Gasoline, LPG, Jet Fuel and Fuel Oil ** Considers Brazilian market volumes for the above mentioned products. In 2013 we had 3 price increases in diesel and 2 in gasoline, totaling 20% and 11% increases respectively. The Real devaluation contributed significantly to the non-convergence of prices throughout 2013. Oil Products Price - Brazil vs International Dec/13 Nov/13 Oct/13 Sep/13 Aug/13 Jul/13 Jun/13 May/13 Apr/13 Mar/13 Feb/13 Jan/13 Dec/12 Nov/12 Oct/12 Sep/12 Aug/12 Jul/12 Jun/12 May/12 Apr/12 Mar/12 Feb/12 Jan/12 Prices(R$/bbl) 2012 2013 Average Sales Price USGC Jun 25th Adjustments July 16th Average Sales Price Brazil Adjustments Jan 30th Mar 6th Nov 30th Adjustments Losses Gasoline Imports Diesel Imports ImportedVolumes(thousandbpd)
  • 23. 2323 Natural Gas, Energy and Gas-Chemical 7.5 5.0 2.5 0.0 +20% 2020 7,2 6.0 1.2 2018 6.8 6.0 0.8 2014 6,3 6.0 0.3 2013 6.0 6.0 Installed Capacity of Thermoelectric Generation (GW) Current Capacity New TP 5249 4139 0 20 40 60 +33% 2020201820142013 NG Distributor Demand (million m³/d) 0.7 2018 4.5 3.0 1.5 0.0 +169% 2020 3.5 2.8 1.8 1.6 3.5 2.7 0.8 2014 0.2 2013 1.3 1.1 0.2 Ammonia and Urea Market Supply (million ton/year) Ammonia Urea Thermoelectric Power Plant projects: TP Baixada Fluminense Feb/2014 TP Azulão 2017 TP Bahia II 2020 TP Sudeste VI 2020 Fertilizers projects: Ammonium Sulfate Feb/2014 UNF III (MS) 4th Quarter - 2014 UNF V (MG) 2017 Infrastructure projects of NG: Delivery gates along GASBOL and NE and SE Network Monetization of Natural Gas reserves by increasing the capacity of thermoelectric generation and of nitrogenous fertilizers, as well as the NG distributor demand.
  • 24. 2424 International: Oil and Natural Gas Production Production growth by participation in exploratory opportunities in Latin America, Africa and the USA. Maintenance of Bolivian gas supply to Brazil and minority operation in non-conventional in Argentina and the USA. 294 253 177 152140 92 202020192017 201820162014 2015 Petrobras International Oil and Natural Gas Production Petrobras International Oil Production Thousand boed 2014-2020 Growth rate: 8.9 % p.a. 2014-2020 Growth rate: 8.7 % p.a.
  • 25. 2525 • Management focused on excellence in costs PERFORMANCE • Guarantee the expansion of the business with solid financial indicators CAPITAL DISCIPLINE • Priority for oil and natural gas exploration & production projects in Brazil PRIORITY 2014 2018 Financiability Assumptions • Investment Grade rating maintenance • No new equity issuance • Convergence with International Prices (Oil Products) • Partnerships and Business Models Restructuring 2014-18 Business and Management Plan Fundamentals
  • 26. 2626 BMP 2014-2018 US$ 220.6 billion 2014-2018 BMP Investments Approved by the Board of Directors of Petrobras on 02/25/2014 • Investment Grade Rating maintenance: − Return of the debt ratios and leverage to their limits within 24 months (*) − Leverage lower than 35% − Net Debt/Ebitda lower than 2.5x • No new equity issuance • Convergence with International Prices (Oil Products) • Partnerships and Business Models Restructuring Financiability Assumptions 38.7 (18%) 153.9 (70%) Distribution Biofuels Downstream Other Areas 1International Gas and Energy Engineering, Technology and Materials E&P 2.2 (1%) 1.0 (0.4%) 2.7 (1.2%) 2,3 (1.0%) 9.7 (4%) 10.1 (5%) 1) Financial Area, Strategy and Corporate-Services (*) Material Fact of 11/29/2013
  • 27. 2727 2014-2018 BMP Investments: US$ 220.6 Billion Projects Under Implementation, Bidding Process and Evaluation Under Implementation (US$ 175.9 billion) • Projects being executed (construction) • Projects already bid • Resources required for studies of Projects Under Evaluation = 38.7 (18%) 153.9 (70%) 2,2 (1%) 1,0 (0,4%) 2,7 (1,2%) 2,3 (1,0%) 9,7 (4%) 10,1 (5%) Total Investments US$ 220.6 Billion Portfolio of Projects Under Evaluation US$ 13.8 Billion Under Bidding Process¹ (US$ 30.9 billion) • E&P projects in Brazil • Represent around 200 th. bpd of production in 2018 and 900 th. bpd in 2020. • Refineries Premium I and II • Capex considers a relevant participation of partners • Capex aligned to international parameters² (US$ 13,000 – 38,000/barrel) • Projects under Studies in Phase I, II or III (except E&P in Brazil) Oil Production 2020: 4.2 million bpd No impact in Oil Production 2020 + Portfolio of Projects Under Implementation + Under Bidding Process US$ 206.8 Billion * Financial Area, Strategy and Corporate-Services Distribution Biofuels Downstream Other Areas*International Gas and Energy Engineering, Technology and Materials E&P ¹ Includes E&P projects in Brazil which will stil go through bidding process of their units, as well as Premium I and Premium II refineries, which will have the bidding process carried out throughout 2014 ² Source: IHS CERA Regional Downstream Capital Costs Indexes - 2011
  • 28. 2828 112,5 (73%) 18,0 (12%) 23,4 (15%) Petrobras Investments in Exploration and Production: US$ 153.9 billion Total E&P US$ 153.9 bilhões Production DevelopmentExploration Infrastructure and Support E&P Petrobras US$ 153.9 Billion (77%) =+ E&P Partners US$ 44.8 Billion (23%) Total with Partners US$ 198.7 Billion (100%) Pre-SaltPost-Salt Production Development + Exploration US$ 135.9 billion Pre-Salt (Concession) Transfer of Rights PSA (Libra) 53,9 (40%) 82,0 (60%)
  • 29. 2929 9,0 92% 0,05 0,5% 0,6 6% 0,01 0,1% 0,05 0,5% 0,1 0,7% Projects Under Implementation  RNEST (Pernambuco)  COMPERJ 1st phase (Rio de Janeiro)  PROMEF – 45 Vessels to transport Oil and Oil Products Projects Under Bidding Process Premium I – 1st phase (Maranhão) Premium II (Ceará) • Capex considers a relevant participation of partners • Capex aligned to international parameters¹ (US$ 13,000 – 38,000/barrel) Projects Under Implementation  UNF III (Mato Grosso do Sul)  UNF V (Minas Gerais)  Rote 2: Gas pipeline and NGPU  Rote 3: Gas pipeline and NGPU Downstream Gas, Energy and Gas-Chemical International Projects Under Implementation  E&P USA – Saint Malo  E&P USA – Cascade and Chinook  E&P USA – Lucius  E&P Argentina – Medanito and Entre Lomas  E&P Bolivia – San Alberto and San Antonio  E&P Nigeria – Egina US$ 38.7 billion US$ 10.1 billion US$ 9.7 billion Petrobras Investments: US$ 58.5 billion Downstream – Gas, Energy and Gas-Chemical – International Logistics for Ethanol Corporate Petrochemical Fleet Expansion Logistics for Oil Quality and Conversion Operational Improvement Refining Capacity Expansion Distribution Gas-Chemical Operational Units (Nitrogenous) Regas - LNG Network Energy Distribution Corporate Gas & Energy Refining & Marketing Exploration & Production Petrochemical 1,3 13% 2,6 25% 6,1 61% 0,1 1% 16,8 43% 9,4 24% 5,5 14% 1,4 3% 3,3 9% 1,4 4% 0,4 1% 0,3 1% 0,3 1% OBS: Projects under implementation, under evaluation and under bidding were included. . ¹ Source: IHS CERA Regional Downstream Capital Costs Indexes - 2011
  • 30. 30 E&P and Dowstream Share Evolution in the Business and Management Plan Portfolio of Projects for Financiability Evaluation * Gas and Energy, International, BR Distribuidora, PBio , Engineering Technology and Materials (ETM) and Corporate and Services Area 2014-2018 BMP Total Capex 2012-2016 BMP Total Capex 2013-2017 BMP Total Capex 2010-2014 BMP 2011-2015 BMP E&P Downstream Other Areas* PortfolioofProjectsfor FinanciabilityEvaluation US$ 224.0 BillionInvestment US$ 224.7 Billion US$ 236.5 Billion US$ 236.7 Billion US$ 220.6 Billion E&P share in Petrobras investments has been increasing in the last five Business and Management Plan 48% 35% 17% 52% 33% 11% 15% 18% 27% 62% 14% 30% 56% 70% 12%
  • 31. 3131 2014-2018 BMP: Investment and Operating Costs Management 2014-2018 BMP US$ 220.6 Billion PRC-Poço Program to Reduce Well Costs PRC-Sub Program to Reduce Subsea Facilities Costs PROEF Program to Increase Operational Efficiency UO-BC UO-RIO PROCOP Operating Costs Optimization Program INFRALOG – Logistic Infrastructure Optimization Program Local Content Management– Take advantage of the industry´s capacity to maximize gains to Petrobras Health, Safety, Environment and Energy Efficiency PROCOP: Focus on OPEX, operating costs of the Company activities – Manageable Operating Costs. Savings of US$ 2.8 billion in 2013. PRC-Poço: Focus on CAPEX dedicated to Wells construction – Investments in Drilling and Completion. Avoided Capex of US$ 0.3 billion in 2013. PRC Sub: Focus on CAPEX dedicated to subsea systems construction. PROEF: Focus on oil production, aiming at increasing the operational efficiency in Campos Basin. +63 thousand bpd in 2013. INFRALOG: Focus on CAPEX, optimizing investments with Integrated Management of Logistics Projects. Avoided Capex of US$ 0.4 billion in 2013.
  • 32. 3232 2014-2018 BMP Incorporates operational efficiency gains from PROCOP * UEDC = Utilized Equivalent Distillation Capacity 2014-18 period: projected with nominal values. LiftingCost (R$/boe): 27,3 34,8 24,2 32,7 20182014 -7.2% p.a. -5.9% p.a. 10,83 10,11 10,50 10,06 20182014 +0.12% p.a. +0.78% p.a. 1,177 2018 1,013 1,240 2014 1,029 -0.40% p.a. +1.32% p.a. Costs reduction between 2013 and 2016 with potential savings of R$ 37.5 billion in nominal values LogisticCostinDownstream (R$/bbl): RefiningCost (R$thous./UEDC*): Without PROCOP With PROCOP Without PROCOP With PROCOP Without PROCOP With PROCOP Gains from PROCOP reduce Logistic Cost:  Reduction in shipping costs: simplification of customs procedures; optimization of fuel consumption; and implementation of new management tools.  Optimization of inventory levels of oil and oil products.  Reduction of stored water in the logistics system. Gains from PROCOP reduce Lifting Cost:  Optimization of routine processes and resources used in the production of oil & gas.  Excellence level in the management of materials and spares.  Adequacy of overhead. Gains from PROCOP reduce Refining Cost:  Integrating common and interdependent activities among refineries.  Optimized use of support resources.  Optimization in the consumption of energy, catalyzers and chemicals.
  • 33. 3333 *Financial Area, Strategy and Corporate-Services No impact in Oil Production 2020 2014-2018 BMP: Financiability Analysis– US$ 206.8 billion Total Investment US$ 220.6 billion • Projects under Studies in Phase I, II or III (except E&P in Brazil) + Financiability US$ 206.8 billion Low maturity: projects not considered in the financiability analysis3 38.7 (18%) 153.9 (70%) 2.2 (1%) 1,0 (0.4%) 2.7 (1.2%) 2,3 (1.0%) 9.7 (4%) 10.1 (5%) Distribution Biofuels Downstream Other Areas*International Gas and Energy Engineering, Technology and Materials E&P ¹ Includes E&P projects in Brazil which will stil go through bidding process of their units, as well as Premium I and Premium II refineries, which will have the bidding process carried out throughout 2014. ² Source: IHS CERA Regional Downstream Capital Costs Indexes – 2011 ³ As occurred in 2012 (2012-2016 BMP ) and in 2013 (2013-2017 BMP). Portfolio of Projects Under Evaluation US$ 13.8 Billion Portfolio of Projects Under Implementation + Under Bidding Process US$ 206.8 Billion • Projects under Studies in Phase I, II or III (except E&P in Brazil) Oil Production 2020: 4.2 million bpd Under Implementation (US$ 175.9 billion) • Projects being executed (construction) • Projects already bid • Resources required for studies of Projects Under Evaluation Under Bidding Process¹ (US$ 30.9 billion) • E&P projects in Brazil • Represent around 200 th. bpd of production in 2018 and 900 th. bpd in 2020. • Refineries Premium I and II • Capex considers a relevant participation of partners • Capex aligned to international parameters² (US$ 13,000 – 38,000/barrel) =
  • 34. 3434 2014-2018 BMP: Financial Planning Assumptions Financiability analysis only incorporates projects under Implementation + Bidding = US$ 206.8 Billion Main Assumptions for Cash Flow Generation and Investment Levels 2014-2018 BMP is based on constant currencies from 2014. Brent Prices (US$/bbl) US$ 105 in 2014, declining to US$ 100 by 2017 and to US$ 95 in the long term Average Exchange Rate (R$/US$) R$ 2.23 in 2014 and R$ 2.10 in 2015, strengthening to R$ 1.92 in the long term Leverage Limit: < 35% │ Declining leverage (although limit surpassed in 2014) Net Debt/ EBITDA Limit: < 2.5x │ Limit will be surpassed in 2014 and will fall below 2.5x as of 2015 and below 2.0x in the end of period Oil Product Prices in Brazil Convergence of prices in Brazil to international benchmarks, according to diesel and gasoline price policy appreciated by the Board of Directors on November 29th, 2013. Plan does not consider price parity in 2014 No equity issuance Investment grade maintenance
  • 35. 3535 2014-2018 BMP: Operating Cash Flow and Funding Needs 61,3 165,0 Operating Cash Flow (After Dividends) and Divestments Third-party resources (Debt) Cash Utilization Business Model Restructuring 207,1 39,8 Amortization Investments Annual borrowing needs 2014-2018 Gross: +US$ 12.1 billion │Net: +US$ 1.1 billion  Total Divestments between US$ 5 and 11 billion throughout 2014- 2018, depending on market appetite and evolution of the Company’s financial indicators.¹  Additional funding needs will be funded exclusively through new debt. No equity issuance is envisaged  Free cash flow, before dividends, as of 2015.  Net borrowing needs US$ 3.2 billion below previous BMP due to: • Increase in operating cash flow generation due to increase in production and expansion of the refining capacity, substituting oil products imports. The same in relation to 2012-2016 BMP. • Business model restructurings reduce cash needs throughout the BMP. Substitution of Capex by Opex. 182.2 60.5 9.1 9.9 206.8 54.9 261.7 261.7 Fontes Usos US$bilhão Sources Uses US$Billion ¹ Divestments already accomplished: US$ 3.4 billion in 2012 and US$ 7.3 billion in 2013.
  • 36. 3636 2014-2018 BMP: Leverage and Net Debt/EBITDA  Net Debt/EBITDA within limit as of 2015 Leverage Net Debt/EBITDA  Declining leverage, within maximum limit of 35% as of 2015 0 20 40 60 80 100 120 140 2008 2009 2010 2011 2012 2018 2013 2014 2015 2016 2017 2007 Net DebtGross Debt US$ billion Petrobras – Gross and Net Debt 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 2014 2015 2016 2017 2018
  • 37. 37 FX Rate Sensitivity
  • 38. 38 FX Rate Sensitivity: Financial Planning Assumptions Financiability analysis only incorporates projects under Implementation + Bidding = US$ 206.8 Billion Main Assumptions for Cash Flow Generation and Investment Levels 2014-2018 BMP is based on constant currencies from 2014. Brent Prices (US$/bbl) US$ 105 in 2014, declining to US$ 100 by 2017 and to US$ 95 in the long term Average Exchange Rate (R$/US$) R$ 2.44 in 2014 and R$ 2.56 in 2015, devaluating to R$ 2.59 in the long term Leverage Limit: < 35% │ Declining Leverage, returning to limit in 2017 Net Debt/ EBITDA Limit: < 2.5x │ Limit will be surpassed in 2014 and 2015 and will fall below 2.5x starting in 2016 Oil Product Prices in Brazil Convergence of prices in Brazil to international benchmarks, according to diesel and gasoline price policy appreciated by the Board of Directors on November 29th, 2013. Sensitivity analysis does not consider parity in 2014 and 2015, only from 2016 on No equity issuance Investment grade maintenance
  • 39. 39 FX Rate Sensitivity: Operating Cash Flow and Funding Needs 61,3 165,0 207,1 39,8 Annual borrowing needs 2014-2018 Gross: +US$ 10.3 billion │Net: -US$ 0.2 billion²  Total Divestments between US$ 5 and 11 billion throughout 2014-2018, depending on market appetite and evolution of the Company’s financial indicators.¹  Additional funding needs will be funded exclusively through new debt. No equity issuance is envisaged.  Free cash flow, before dividends, as of 2016.  Increase in operating cash flow generation due to increase in production and expansion of the refining capacity, substituting oil products imports. The same in relation to 2012-2016 BMP.  As an effect of the FX Rate sensitivity, total investment amount in Dollars is reduced, due to the portion of Capex in Reais. 173.1 51.6 . 3,28.7 184.7 51.9 236.6 236.6 Sources Usos ¹ Divestments already accomplished: US$ 3.4 billion in 2012 and US$ 7.3 billion in 2013. ² The Annual Funding Need leads to a reduction in Net Debt during 2014-2018. Operating Cash Flow (After Dividends) and Divestments Third-party resources (Debt) Cash Utilization Business Model Restructuring Amortization Investments
  • 40. 40 FX Rate Sensitivity: Leverage and Net Debt/EBITDA  Declining Leverage, returning to limitof 35% in 2017 Leverage Net Debt/EBITDA  Net Debt/EBITDA below limit as of 2016 0 20 40 60 80 100 120 140 2016 2015 2008 2007 2010 2009 2018 2017 2014 2013 2012 2011 Net DebtGross Debt US$ billion Petrobras – Gross and Net Debt 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 5,0 2014 2015 2016 2017 2018 Reference FX rate Reference FX rate
  • 41. 41 Investment Sensitivity (Portfolio Under Implementation = US$175.9 billion)
  • 42. 42 Investment Sensitivity: Financial Planning Assumptions Financiability analysis only incorporates projects under Implementation = US$ 175.9 Billion Main Assumptions for Cash Flow Generation and Investment Levels 2014-2018 BMP is based on constant currencies from 2014. Brent Prices (US$/bbl) US$ 105 in 2014, declining to US$ 100 by 2017 and to US$ 95 in the long term Average Exchange Rate (R$/US$) R$ 2.23 in 2014 and R$ 2.10 in 2015, strengthening to R$ 1.92 in the long term Leverage Limit: < 35% │ Declining leverage, although limit surpassed in 2014 Net Debt/ EBITDA Limit: < 2.5x │ Limit will be surpassed in 2014 and will fall below 2.5x as of 2015 and below 2.0x in the end of period Oil Product Prices in Brazil Convergence of prices in Brazil to international benchmarks, according to diesel and gasoline price policy appreciated by the Board of Directors on November 29th, 2013. Plan does not consider price parity in 2014 No equity issuance Investment grade maintenance
  • 43. 43 Investment Sensitivity: Operating Cash Flow and Funding Needs 61,3 165,0 207,1 39,8  Total Divestments between US$ 5 and 11 billion throughout 2014-2018, depending on market appetite and evolution of the Company’s financial indicators.¹  Additional funding needs will be funded exclusively through new debt. No equity issuance is envisaged.  Free cash flow, before dividends, as of 2015.  Operating cash flow generation is US$ 3.4 lower than when considering Portfolio Under Implementation + Under Bidding Process due to lower oil production (around 200 thousand bpd by 2018).  Even with a lower operating cash flow generation, funding needs decrease by US$ 27.5 billion due to a lower investment level throughout 2014-2018. 178.8 33.0 9.1 9.9 175.9 54.9 230.8 230.8 Sources Uses US$Billion ¹ Divestments already accomplished: US$ 3.4 billion in 2012 and US$ 7.3 billion in 2013 ² The Annual Funding Need leads to a reduction in Net Debt during 2014-2018. Annual borrowing needs 2014-2018 Gross: +US$ 6.6 billion │Net: -US$ 4.4 billion² Third-party resources (Debt) Cash Utilization Business Model Restructuring Amortization Investments Operating Cash Flow (After Dividends) and Divestments
  • 44. 44 Investment Sensitivity: Leverage and Net Debt/EBITDA Leverage Net Debt/EBITDA 0 20 40 60 80 100 120 140 2008 2007 2012 2011 2018 2016 2017 2015 2014 2013 2010 2009 Gross Debt Net Debt US$ billion Petrobras – Gross and Net Debt  Declining leverage, within maximum limit of 35% as of 2015  Net Debt/EBITDA within limit as of 2015 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 2014 2015 2016 2017 2018
  • 45. 45 Investment (Portfolio Under Implementation = US$175.9 billion) and FX Rate Sensitivity
  • 46. 46 Investment and FX Rate Sensitivity: Financial Planning Assumptions Financiability analysis only incorporates projects under Implementation = US$ 175.9 Billion Main Assumptions for Cash Flow Generation and Investment Levels 2014-2018 BMP is based on constant currencies from 2014. Brent Prices (US$/bbl) US$ 105 in 2014, declining to US$ 100 by 2017 and to US$ 95 in the long term Average Exchange Rate (R$/US$) R$ 2.44 in 2014 and R$ 2.56 in 2015, devaluating to R$ 2.59 in the long term Leverage Limit: < 35% │ Declining Leverage, returning to limit in 2017 Net Debt/ EBITDA Limit: < 2.5x │ Limit will be surpassed in 2014 and 2015 and will fall below 2.5x starting in 2016 Oil Product Prices in Brazil Convergence of prices in Brazil to international benchmarks, according to diesel and gasoline price policy appreciated by the Board of Directors on November 29th, 2013. Sensitivity analysis does not consider parity in 2014 and 2015, only from 2016 on No equity issuance Investment grade maintenance
  • 47. 47 Investment and FX Rate Sensitivity: Operating Cash Flow and Funding Needs 61,3 165,0 207,1  Total Divestments between US$ 5 and 11 billion throughout 2014-2018, depending on market appetite and evolution of the Company’s financial indicators.¹  Additional funding needs will be funded exclusively through new debt. No equity issuance is envisaged.  Free cash flow, before dividends, as of 2016.  Operating cash flow generation is US$ 1 billion lower than when considering Portfolio Under Implementation + Under Bidding Process due to lower oil production (around 200 thousand bpd by 2018).  Even with a lower operating cash flow generation than when considering Portfolio Under Implementation + Under Bidding Process, funding needs decreases by US$ 23.8 billion due to a lower investment level.  As effect of the FX Rate sensitivity total investment amount in Dollars is reduced, due to the portion of Capex in Reais, and operating cash flow generation decreases by US$ 6.7 billion , due to the higher difference between prices and parity in 2014 and 2015, partially offset by the higher operating cash flow during 2016-2018. 172.1 27.8 1.4 8.7 158.0 51.9 209.9 209.9 Sources Uses US$Billion Annual borrowing needs 2014-2018 Gross: +US$ 5.6 billion │Net: –US$ 4.8 billion² Operating Cash Flow (After Dividends) and Divestments Third-party resources (Debt) Cash Utilization Business Model Restructuring Amortization Investments ¹ Divestments already accomplished: US$ 3.4 billion in 2012 and US$ 7.3 billion in 2013 ² The Annual Funding Need leads to a reduction in Net Debt during 2014-2018.
  • 48. 48 Investment and FX Rate Sensitivity: Leverage and Net Debt/EBITDA Leverage Net Debt/EBITDA 0 20 40 60 80 100 120 140 2018 2009 2008 2007 2016 2017 2015 2014 2013 2012 2011 2010 Gross Debt Net Debt US$ billion Petrobras – Gross and Net Debt  Declining Leverage, returning to limit of 35% in 2017  Net Debt/EBITDA below limit as of 2016 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 5,0 2014 2015 2016 2017 2018 Reference FX rate Reference FX rate
  • 49. 49 2014 – 2018 Business and Management Plan The End