Sustainability report 2010

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Sustainability report 2010

  1. 1. Sustainability Report
  2. 2. ProfileFounded in 1953, Petrobras is a publicly traded company with activites in 30countries on all continents. The oil sector leader in Brazil, it ranks third amongthe international energy companies in market value, according to PFC Energy’sranking. Petrobras operates in exploration and production, refining, oil andnatural gas trade and transportation, petrochemicals, oil product distribution,electric energy, biofuels, and in other sources of renewable energy.MissionOperate in a safe, profitable manner, with social and environmental responsibility,in Brazil and abroad, providing products and services that meet clients’ needs andthat contribute to the development of Brazil and of the countries in which itoperates.Vision for 2020We will be one of the five largest integrated energy companies in the world andthe preferred choice among our stakeholders.Attributes of the Vision for 2020Our operations will stand out for:» Their strong international presence» Being a global reference in biofuels» Excellence in operations, management, energy efficiency, human resources, and in technology» Their profitability» Being a benchmark in social and environmental responsibility» Their commitment to sustainable developmentValues» Sustainable development» Integration» Results» Readiness for change» Entrepreneurship and innovation» Ethics & transparency» Respect for life» Human & cultural diversity» People» Proud to be Petrobras
  3. 3. HighlightsOPERATIONAL SUMMARY 2008 2009 2010 PERFORMANCE SCHEDULEPROVED RESERVES - SPE Criterion - (billions of barrels INDICATOR 2006 2007 2008 2009 2010 15.1 14.9 16.0of oil equivalent - boe) (1) (2) - BRAZIL AND ABROAD EnvironmentOil and condensate (billions of barrels) 12.5 12.6 13.4 Oil & Oil Product Leaks (m 3) 293 386 436 254 668Natural gas (billion boe) 2.6 2.3 2.6 Energy consumption (terajoule - TJ) 576,762 574,145 604,333 527,717 716,673AVERAGE DAILY PRODUCTION (thousand boe) (1) - BRAZIL AND ABROAD 2,400 2,526 2,583 Greenhouse gas emissions 50.43 49.88 57.6 57.8 61.1BRAZIL (million tons of CO2 equivalent) Ք Oil & LNG (thousand bpd) 1,855 1,971 2,004 Carbon dioxide emissions - CO2 (million tons) 46 45 54 52 57 Ք Natural gas (thousand boe) 321 317 334 Methane emissions - CH 4 (thousand tons) 190 206 188 235 196ABROAD Nitrous oxide emissions - N2O (tons) 997.23 919.5 1,215 1,241 1,360 Ք Oil & LNG (thousand bpd)* 124 141 152 Atmospheric emissions - NOx (thousand tons) 233.54 222.65 244.50 222.04 227.75 Ք Natural gas (thousand boe) 100 97 93 Atmospheric emissions - SOx (thousand tons) 151.96 150.9 141.79 135.39 133.73FLOW WELLS (oil and natural gas) – on December 31 (1) 13,174 14,905 15,087 Other atmospheric emissions - includes particulate 17.11 15.22 16.71 19.30 17.51DRILLING RIGS – on December 31 109 100 98 matter (thousand tons)PLATFORMS IN PRODUCTION – on December 31 112 133 132 Fresh water withdrawal (million m 3) 178.8 216.5 195.2 176.0 187.3PIPELINES (km) – on December 31 25,197 25,966 29,398 Water effluent disposal (million m ) 3 164.3 172.8 181.14 197.2 172.6VESSEL FLEET – on December 31 189 172 291 Occupational Health and SafetyAmount - Own operation 54 52 52 Lost Time Injury Frequency Rate - LTIFR 0.77 0.76 0.59 0.48 0.52 (includes employees and workers) - Operated by third parties 135 120 239TERMINALS – on December 31 (3) Fatalities (including employees and workers) 9 15 18 7 10Amount 46 47 48 Fatal Accident Rate (fatalities per 100 millionREFINERIES – on December 31(1) (5) man-hours of exposure to risk - including 1.61 2.28 2.4 0.81 1.08 employees and workers)Nominal installed capacity (thousand barrels per day - bpd) 2,223 2,223 2,288Average daily oil products production (thousand barrels per day - bpd) 1,970 2,034 2,052 Percentage of Lost Time (includes employees only) 2.06 2.19 2.31 2.36 2.38 Brazil 1,787 1,823 1,832 Employees* Abroad 183 211 220 Number of employees 62,266 68,931 74,240 76,919 80,492IMPORTS (thousand barrels per day – bpd) 570 549 615 Number of workers 176,810 211,566 260,474 295,260 291,606Oil 373 397 316 Contributions to societyOil Products 197 152 299 Investments in social projects (R$ million) 199.6 248.6 225.1 173.6 199.3EXPORTS (thousand barrels per day – bpd) 673 705 697 Investments in cultural projects (R$ million) 288.6 205.5 206.8 154.6 170.3Oil 439 478 497 Investments in environmental projects (R$ million) 44.6 51.7 53.8 93.9 257.7Oil Products 234 227 200 Investments in sports projects (R$ million) 58.2 80 69 42.4 80.5OIL PRODUCTS TRADE (thousand barrels per day – bpd)Brazil 1,737 1,754 1,960INTERNATIONAL SALES (thousand barrels per day – bpd) CONSOLIDATED FINANCIAL INFORMATION 2008 2009 2010Oil, gas, and oil products 552 537 593 Gross Operating Revenue (R$ million) 266,494 230,504 268,107SOURCE OF THE NATURAL GAS (millions of m 3 per day) (4) 58 45 62 Net Operating Revenue (R$ million) 215,118 182,710 213,274Domestic gas 29 23 29 Operating Profit (R$ million) 45,950 46,128 47,057Bolivian gas 29 22 26 Profit / Share (R$) 3.76 3.30 3.57LNG 1 8 Net Profit (R$ million) 32,988 28,982 35,189DESTINATION OF THE NATURAL GAS (millions of m 3 per day) (4) 58 45 62 EBITDA (R$ million) 57,170 59,944 60,323Distributors 37 32 37 Net Debt (R$ million) 48,824 71,533 62,067Thermoelectric plants 14 5 16 Investments (R$ million) 53,349 70,757 76,411Refineries 5 6 7 Gross Margin 34% 40% 36%Fertilizers 2 2 2 Operating Margin 21% 25% 22%ENERGY (1) Net Margin 15% 16% 16%Number of thermoelectric plants (5) (6) 18 18 15Installed capacity (MW) (5) (6) 6,103 6,136 5,944FERTILIZERS (1) 2 2 2(*) Includes non-consolidated(1) Includes information from abroad for Petrobras’ part in associated companies(2) Proved reserves measured according to the SPE (Society Petroleum Engineers) criterion(3) Includes only Transpetro terminals(4) Excludes flaring, own consumption by E&P, liquefaction and reinjection(5) Only includes assets in which there is an interest of 50% or more(6) Only includes the natural gas-fired thermoelectric plants
  4. 4. Contents 002 Message from the CEO 004 About the Report 006 Corporate Performance 008 Profile 012 Corporate governance 019 Strategy 027 Intangible assets 029 Our stakeholders 032 Operational Performance 034 Our activities 050 Results and Contributions to Society 052 Economic and financial results 056 Contributions to society and indirect impacts 066 Employment Practices and Human Rights 068 People management 075 Human rights 078 Environment 080 Environmental management 092 Social Balance According to the IBASE Model 094 GRI Table of Contents 098 Glossary 100 Management 102 Independent Auditors’ Limited Assurance Report 103 Editorial Staff
  5. 5. SuSTAInABILIT y REPORT 2010 Message from the CEO Three major accomplishmenTs marked Lula and Cernambi fields. The rate of reserve primarily via Gasene, in order to enable nat- listed on the Dow Jones Sustainability Index, 2010: the start-up of operations at the Lula field replacement was 229%, meaning that for each ural gas supply source diversification and the world’s most important in this regard, for Pilot System, in the accumulation area known barrel of oil equivalent produced, Petrobras flexibilization. the fifth year in a row, evidence of our com- as Tupi, in the Santos Basin Pre-Salt layer; the added 2.29 barrels to its reserves. Seeking to increase its stakes in the mitment to the environment and to sustain- raising of R$120.2 billion through the world’s The excellent results achieved in 2010 con- biodiesel and ethanol business, Petrobras able development. largest ever equity issuance; and the signing of firmed Petrobras’ strategic direction is on the invested R$1.2 billion in this area, a sum Petrobras’ Sustainability Report brings the Transfer of Rights Agreement, guarantee- right track. Investments amounted to R$76.4 equivalent to 2% of the total investments. together, under a single cover, not only the ing the company the right to produce 5 billion billion, 8% more than in 2009. These invest- In Distribution, Petrobras continued grow- company’s main achievements, but also the barrels of oil equivalent (boe) in Pre-Salt areas ments were mainly directed to increase oil and ing its market share, maintaining its lead- challenges it faced in 2010. The information that are not under concession. natural gas production, to improve and en- ing position in the domestic fuel market, of contained herein is part of our strategy to con- Petrobras’ dedication to exploring new hance refining facilities, to hire new vessels to which it holds a 38.8% share. To this end, it duct business and activities with social and business frontiers has allowed the company transport company products, and to complete invested R$900 million, equivalent to 1% of environmental responsibility, aligned with the to make these achievements, which have the construction work for the pipeline net- the total, mainly in automotive market proj- ten principles of the UN Global Compact. This strengthened it. Petrobras has a robust port- work that interconnects all of the main Bra- ects and in logistics and operations. is why we reaffirm our commitment to con- folio in the Santos Basin Pre-Salt layer, the zilian markets. The large investments made in Our performance is the end result of mas- tinue taking part in this initiative, of which most promising exploration region along the each of the segments in which the company sive investments in technology development the company has been a signatory since 2003, Brazilian coast. The capitalization operation operates underpin Petrobras’ position as an and in qualifying employees, this combined fulfilling and reporting our activities under provided the resources needed not only for the integrated energy company. with our relentless commitment to adopting the ten principles relating to Labor, Human Transfer of Rights Agreement, but also to sup- Most of the investments (43%) were ear- good corporate governance practices. Year af- Rights, Environment, and Transparency. port Petrobras 2010-2014 Business Plan, which marked for Exploration and Production, ter year, Petrobras stands out worldwide for its In 2010, Petrobras once again has proven calls for investments in the order of $224 billion. which received R$32.7 billion, 6% more than pioneering technology in oil exploration and its competence to overcome challenges. Tech- The company’s net revenue reached R$35.2 a year earlier. The goal of the investments production. Petrobras is the Brazilian com- nological accomplishments, increased reserves billion, 17% more than in 2009. This is a result was to boost oil and natural gas output and pany that invests the most in R&D. In 2010, and output, refining plant enhancements and of the expanding Brazilian economy, of the in- reserves. In the Pre-Salt area, the highlight it invested R$1.8 billion in this area, with spe- modernizations, and a record equity issuance creased oil and natural gas production, higher was the start-up of operations of the Lula cial emphasis on the doubling of the Research ensured the sustainability the company need- oil trade volumes on the Brazilian market, and Pilot System, with nominal capacity of 100 Center, one of the world’s biggest and key to ed and guaranteed continuity in the imple- of the international oil price recovery. Domes- thousand barrels of oil and 3.5 million cubic the development of new technologies for all mentation of its Business Plan. tic oil and natural gas liquids output added up meters of natural gas per day. segments the company has operations in, par- to 2.004 million barrels of oil per day (bpd), up The Downstream area investments were ticularly oil production in the Pre-Salt area. José Sergio Gabrielli de Azevedo 1.7% over the previous year due mainly to new R$28.5 billion, 73% more than in the previ- To address both the corporate challeng- Petrobras’ CEO platforms going on stream. Natural gas pro- ous year. The company advanced the con- es it faces and the company’s ever-growing duction in Brazil, meanwhile, rose to 56.6 mil- struction work of the Abreu e Lima Refinery business expansion, the Petrobras System lion cubic meters per day, 5.6% more than in and the Rio de Janeiro Petrochemical Com- increased its staff by 4.65% compared to the previous year. The total volume of oil and plex (Comperj), and set the two Premium re- 2009, ending the year with 80,492 employ- natural gas produced by Petrobras in 2010 was finery projects. The goal is twofold: add value ees. Two selection entry processes were held 2.583 million boed, 245,000 of which coming to domestic oil and supply the Brazilian oil for Petrobras Holding alone. Approximately from units abroad. product market. 336,000 candidates signed-up for the pro- The company’s proved oil and natural gas The Gas & Power area invested R$6.9 cess and 2,687 were hired. reserves, according to the ANP/SPE criteria, billion, equivalent to 9% of the total and up With activities on all continents and oper- climbed to 15.986 billion boe in late 2010, a 5% compared with the previous year. These ations in 25 countries besides Brazil, Petrobras 7.5% increase over 2009 thanks to the addi- resources were directed mainly to integrate ended 2010 ranked third among the global tion of new discoveries, particularly in the the Southeast-Northeast pipeline network, energy companies in market value. We were002 003
  6. 6. SuSTAInABILITy REPORT SuSTAInABILIT y REPORT 2010 information is available in the online version Transporte S.A. (Transpetro), Liquigás, and of this report, which is posted on Petrobras’ the Alberto Pasqualini Refinery (Refap). The Parameters website. The contents of the report were submitted to an external audit conducted by KPMG Auditores Independentes (check the criteria used to select these companies and subsidiaries were their role in management and control and the organization’s represen- for the report statement out on page 102). tativeness in the Petrobras System. The Subcommittee for Social Responsi- When the data considered for the perfor- bility Report Preparation and Assessment mance indicator differs from the scope set for conducts the process of developing the com- the report, this information is presented inABOUT THE REPORT pany’s sustainability report. Comprising rep- sections highlighted within the text itself, in peTrobras applies The guidelines seT out growth, profitability, and social responsibil- resentatives of 24 Petrobras System areas and footnotes or in the notes to the graphs and in the third generation of Global Reporting ity. The information provided in the docu- subsidiaries, the subcommittee consolidates schedules. Initiative’s Sustainability Reporting Frame- ment covers the period ranging from January information compiled and obtained by a net- Some information from previous years on work (GRI G3) to draft its report. Headquar- 1 to December 31, 2010. The latest report was work of about 300 collaborators. It also as- performance indicators, stated in historical se- tered in Amsterdam, the Netherlands, the released last year and concerned the activi- sess the information published in the report ries, have been reviewed and, therefore, these initiative brings together representatives of ties carried out in 2009. We also report on our to then undertake actions aiming to improve figures differ from those published in previous governments, companies, NGOs, and experts compliance with the ten principles of the UN company management. editions of the report. In such cases, explana- in order to set parameters and indicators for Global Compact, of which we are signatories. tions about data updates or on possible indi- peTrobras’ the preparation of sustainability reports. This Since it presents information on all GRI lIMIT OF THE REPORT cator calculation methodology changes are reporting model is the one that is currently guidelines essential performance indica- In preparing the content for the 2010 Sus- reported together with the reviewed informa- susTainabiliTY most widely used by world-class companies tors, Petrobras’ sustainability report is in tainability Report, the activities of Petrobras’ tion in order to facilitate understanding. The operating in several industries worldwide. accordance with application level A+. We in Brazil and in 29 other countries where it same is true concerning the techniques used reporT reaches We present our sustainability report to use a materiality matrix to define and pri- has activities were considered - except for the to calculate a given indicator - if necessary, an our stakeholders every year, disclosing our oritize content, and the issues considered thermoelectric plants controlled indirectly by explanation comes along with the indicator. The a+ leVel oF economic, social and environmental perfor- most relevant both by Petrobras’ stakehold- the company -, as were those of Petrobras Dis- In 2010, no significant change was made to mance and focusing primarily on integrat- ers and by the company are addressed in the tribuidora, Petrobras Química S.A. (Petro- the scope or coverage compared to the com- applicaTion ing the three pillars of our corporate strategy: printed version of the document. Additional quisa), Petrobras Biocombustível, Petrobras pany’s previous report. MATERIALITy MATRIX REPORT CAPTIOnS The materiality matrix provides the themes that are priority for the company, which are deter- There are a few graphic figures in the report that were designed to help the reader find content, to mined based on the crossing of the perceptions of key stakeholders – employees, investors, sup- associate content to indicators, to identify the relevance in the materiality matrix, and to find more pliers, communities, experts and public authorities, among others. Get to know the ten issues information about a particular topic. These graphic figures are as follows: considered most strategic for Petrobras activities. Additional information about the materiality process can be found in the online version of the Report. @ » More information on the topic @ : available on Petrobras’ website (www.petrobras.com.br) or in the online version of the Sustainability Report (www.petrobras.com.br/rs2010). » Some additional information can be found on the investor relations website: GREATEST RElEvAnCE B A 1. Risk management www.petrobras.com.br/ri. 2. Alternative and renewable energy » Global Compact Icon: appears next to the chapter corresponding to Petrobras’ actions related 3. Emissions reductions and management to a certain principle of the Global Compact. 1 4. Accident prevention » Material topic : the indication appears next to items considered material by the main stake- holders at the materiality matrix process. 5. Contribution to local development » GRI indicators: in the GRI table of contents, the table shows, next to the indicator, the description Society 6. Impact on local communities of the topic, the guidelines degree of adherence, and the page where the information is presented. 7. Accountability and transparency 8. Pre-Salt management, policy and feasibility 2 COnTACT US 9. Research and development / E-mail comments, questions, suggestions and criticism regarding Petrobras’ Sustainability Re- technological innovation port to rs2010@petrobras.com.br. This feedback helps us increasingly adjust the content to the 10. Engagement and dialogue Company readers’ demands and needs. with stakeholders GREATEST RElEvAnCE004 005
  7. 7. CORPORATEPERFORMANCE
  8. 8. PROFILE SuSTAInABILIT y REPORT 2010 A global COMPAnY PROFIlE name Petrobras company of Corporate name Petróleo Brasileiro S.A. World headquarters Rio de Janeiro, BrazilCORPORATE PERFORMAnCE number of employees (Dec/2010): 80,492 (Petrobras System) Brazilian origin number of products offered 255 products (Petrobras Holding) Diesel fuel, liquefied petroleum gas, gasoline, Main products lubricants, naphtha, fuel oil, and jet fuel. ENGLAND peTrobras is The Third largesT energy company in the world, with an average daily THE NETHERLANDS output of 2.6 million barrels of oil equivalent. Established in 1953 and with a presence in 30 countries on all continents, the company is a state-run, publicly traded company controlled UNITED STATES PORTUGAL by the Brazilian government by means of the TURKEY Ministry of Mines and Energy. CHINA IRAN JAPAN The oil and gas industry leader in Brazil, Petrobras has integrated operations in explora- LIBYA tion and production, refining, oil and natural MEXICO CUBA INDIA gas trade and transportation, petrochemicals, oil product distribution, electricity, biofuels, CURACAO and in other sources of renewable energy. Products made by the Petrobras System COLOMBIA NIGERIA VENEZUELA SINGAPORE – formed by the Company, its subsidiaries, jointly controlled and associated companies ECUADOR –, are present in virtually all areas of mod- TANZANIA PERU ern life, ranging from the fuel that moves BRAZIL ANGOLA cars and propels aircraft to the liquefied pe- troleum gas (LPG) used in the kitchens of BOLIVIA homes and businesses. Diesel fuel, gasoline, PARAGUAY AUSTRALIA NAMIBIA lubricants, naphtha, biodiesel, ethanol, fuel oil and jet fuel, among others, complement CHILE URUGUAY the company’s portfolio. @ learn more about our operations ARGENTINA at Petrobras’ website NEW ZEALAND Petrobras’ main customers include, in ad- Exploration Distribution / dition to end consumers, businesses operating Representation and Production Trade in logistic transportation, agricultural, indus- trial, air, maritime, and rail markets and in the Refining / Gas & Power Main Office Petrochemicals thermoelectric segment.008 009
  9. 9. PETROBRAS AnD ITS BuSInESS AREAS PROFILE SuSTAInABILIT y REPORT 2010 The company’s large array of activities, products and customers demand efficiency and organiza- tional capacity. Therefore, Petrobras’ businesses are divided into four areas: » Exploration & Production – This area encompasses oil, natural gas liquids (nGL), and natural gas exploration, production development, and production in Brazil. It aims, primarily, to supply the Brazilian refineries and to trade, on the domestic and foreign markets, both excess oil and the products produced at its natural gas processing plants;CORPORATE PERFORMAnCE » Downstream – This area undertakes oil and oil product refining, logistics, transportation, and trade activities, ethanol exports, and shale extraction and processing. Additionally, it holds interests in businesses operating in the petrochemical industry in Brazil. It aims to produce high-quality oil products, ensuring the supply of products that are essential for the entire pop- ulation’s daily life; » Gas & Power – This area’s activities include transporting and trading natural gas produced in Brazil or imported; liquefied natural gas (LnG) transportation and marketing; electric energy production and sales; and equity interests in natural gas transporters and distributors and in thermal power plants in Brazil. It is also responsible for the fertilizer business; » International – This area works with oil and gas exploration and production, supply, and gas, power and distribution operations carried out abroad, in several countries of the Americas, Africa, Europe, Asia, and Oceania. PERFORMAnCE On Petrobras also has the Corporate Finance and Services areas. Each of these areas is controlled THE BRAzIlIAn MARKET by a director, except the Corporate area, which is connected directly to the CEO. Petrobras has a daily output of 2.338 million The market for biodiesel, Petrobras Bio- barrels of oil equivalent of oil and natural gas. combustível’s flagship product, is regulated The average total daily production, adding by federal law. In order to meet the demand Brazil and abroad, is 2.583 million. for the biodiesel that is needed to compose the Petrobras Distribuidora operates nation- B5 blend (5% biodiesel in diesel), the National @ learn, in the online version of the Report, the main wide in the Service Station and Consumer Petroleum Agency (ANP) organizes auctions changes made to the organizational structure in 2010 markets - the latter including the sale of large covering the entire Brazilian territory. amounts of fuel, lubricants, special products, To become a Petrobras customer and asphalt, emulsions, and energy. purchase gasoline or diesel, the company The LPG market, served by Liquigás, is must be registered as a distributor by the broken down into two business areas: Bottled ANP, and such record must be published in PETROBRAS SySTEM’S MAIn COMPAnIES* and Bulk. The bulk area is characterized by Official Register. direct sales to corporations, while the bottled » Petróleo Brasileiro S.A. (Petrobras) one is geared to small corporate clients and in- GlOBAl OPERATIOnS » Petrobras Distribuidora S.A. dividuals, mostly through its reseller network. Petrobras has operations in 29 countries, be- » Petrobras Transporte S.A. (Transpetro) Petroquisa has ownership interests in com- sides Brazil, and projects on five continents. » Petrobras Química S.A. (Petroquisa) panies operating in the petrochemical and In addition to its representation offices and » Petrobras Biocombustível S.A. chemical segments and has national (North- production units, the company has coopera- » Liquigás Distribuidora S.A. eastern, Southeastern, and Southern Brazil) tion agreements with other countries to de- » Refinaria Alberto Pasqualini S.A. (Refap) and international coverage. velop knowledge and business that can make » Petrobras Gás S.A. (Gaspetro) Transpetro, in turn, operates nationwide, both technology and energy projects feasible. *The companies above are controlled by Petrobras or by one of its subsidiaries. with facilities in 19 states and in the Federal A total of R$4.8 billion was invested in the District. Such facilities include water and land international businesses, 12% of which ear- OnE MIllIOn SHAREHOlDERS transportation terminals, pipelines, and ves- marked for refining, petrochemicals, distri- Petrobras has 396,975 shareholders at BM&FBovespa, which, added to the shareholders of sels that transport and store oil, oil products, bution, and gas and energy, while 88% to ex- funds that invest in Petrobras shares (365,899), to FGTS fund investors (86,562), and to holders gas, petrochemicals, and biofuels for all types ploration and production, of which 60% were of ADRs (180,000 approximately), increase the company’s total number of investors to close to of customers, such as fuel and gas distributors, allocated to develop production. a million shareholders. among others.010 011
  10. 10. CORPORATE GOVERnAnCE fighting against discrimination, degrading regarding ten principles related to Labor, Human @ More information can SuSTAInABILIT y REPORT 2010 work, child and slave labor, aiming to con- Rights, the Environment, and Transparency. be found in the online tribute to sustainable development and to The company has been a member of the version of the Report The path towards reduce social inequality. The company’s activities are guided by codes and policies such as the Code of Eth- Brazilian Committee of the Global Compact since its inception, and has been represented by its CEO on the Global Compact’s Interna- transparency ics, the Code of Good Practices, the Code tional Board since 2006, when it became the @ In the online version of of Competitive Conduct, and by policies on only Latin American and oil and gas industry the Report, learn moreCORPORATE PERFORMAnCE HSE, Human Resources, Social Responsibil- company to be on the Board. @ about other commitments ity, Corporate Performance, New Business Petrobras has taken-on Development, Capital Discipline, Communi- TRAnSPAREnCY HIGHlIGHTS and initiatives and forums cations, Tax Management, and Principles of For the fifth consecutive year, Petrobras is in which it takes part Corporate Security. @ part of the Dow Jones Sustainability Index (DJSI), the most important global index in GlOBAl COMPACT this category, which brings together over Petrobras has been a signatory of the United 300 companies from 57 industry sectors. The Nation Global Compact since 2003, an initia- company distinguished itself in the Trans- tive through which businesses commit, volun- parency criterion, in which it again got the tarily, to fullfil and report their performance highest score in the industry. THE TEn PRInCIPLES OF THE GLOBAL COMPACT RESPECT MAKE SURE UPHOlD ElIMInATE EFFECTIvElY and support the company the freedom all forms eradicate all internationally is not complicit of association of forced or forms of child proclaimed human with human and recognize compulsory labor from its rights in its area rights abuses the right to labor productive chain of influence collective bargaining peTrobras adopTs The besT corporaTe 2002 by the U.S. Congress aiming to protect in- governance practices and the most advanced vestors by improving the accuracy and reliability ElIMInATE SUPORT UnDERTAKE EnCOURAGE WORK AGAInST discrimination a precautionary, initiatives and the development corruption in management tools, according to international of the information disclosed by companies. in respect of responsible, and practices to and dissemination all its forms, employment proactive approach promote and of environmentally including standards. As a publicly-held company, it is and occupation to environmental disseminate friendly extortion subject to the rules set forth by the Securities BUSInESS DRIvERS challenges environmental responsibility technologies and bribery and Exchange Commission (CVM) and by Over the years, Petrobras has developed poli- BM&FBovespa. Abroad, it meets the Securi- cies, codes and procedures that reflect the ties and Exchange Commission (SEC) and the company’s commitment to issues such as sus- NYSE rules, in the United States; the rules set tainability, business ethics and valuing its em- forth by the Latibex, of the Madrid Stock Ex- ployees, among others. PETROBRAS AnD ABnT LAunCHED ISO 26000 In BRAZIL change, in Spain; as well as those of the Bue- One such instrument is Petrobras’ Social nos Aires Stock Exchange and of the Comisión Responsibility Policy, which, aligned to UN In December 2010, Petrobras, in partnership with the Brazilian Association of Technical Stan- Nacional de Valores (CNV), in Argentina. Global Compact principles, establishes eight dards (ABnT), promoted the release of the International Standard ISO 26000: Guidance on Social To meet these standards, the company guidelines focused on corporate activities, Responsibility in Brazil. The company was the industry representative of the Brazilian delegation relies on instruments such as its bylaws and integrated management, sustainable develop- on the international working group responsible for building the standard. In 2011, the company the Corporations Law (Act 6404, of 1976), ment, human rights, diversity, working prin- will sponsor, together with ABnT, a nationwide series of seminars promoting the ISO 26000 stan- based on which it is managed. It also adopts ciples, sustainable social investments, and dard in which the free distribution of the printed standard is provided. other business drivers, such as codes of Eth- workforce commitment. ics and Good Practices, the Code of Conduct To Petrobras, social responsibility is the Petrobras’ internal actions to implement the ISO 26000 guidelines include qualifying workforce of the High Federal Administration, the Code integrated, ethical, and transparent man- through specific training courses on the issues covered by the standard to be held at Petrobras of Competitive Conduct, and the Corporate agement of its business and activities and of university, and providing training in social responsibility to suppliers. The standard establishes Governance Guidelines. its relationships with all of its stakeholders, the definition, principles, and core themes of social responsibility and was drafted on a multi- Petrobras also meets the standards set forth promoting human rights and citizenship, stakeholder process encompassing representatives of the industry, government, labor, consum- under the Sarbanes-Oxley Act (SOX), enacted in respecting human and cultural diversity, ers, nGOs, academia and services, research and consulting organizations.012 013
  11. 11. CORPORATE GOVERnAnCE SuSTAInABILIT y REPORT 2010 CORPORATE STRUCTURE and employees, emphasizing it is necessary to e. Business Committee: comprising members of the Executive Board and other company execu- In 2010, the Basic Organization Plan, approved avoid any situation that may characterize con- tives, this committee aims to examine and give its opinion to the Executive Board on corporate by the Board of Directors, was refined to in- flict of interest and affect the company’s busi- matters involving more than one Area, as well as those whose importance and relevance de- clude Petrobras’ Corporate Governance Mod- ness. The Code of Ethics also addresses the mand broader discussion. el and its structure, comprising: the Board of subject, only more generally, as it is a tool for f. Integration Committees: composed of executive managers of the company, these committees CORPORATE PERFORMAnCE Directors and its committees, the Executive all Petrobras employees, and not only for the are forums to analyze and examine issues under their scope and can also assist in structuring Board, the Fiscal Committee, the Internal senior management. information to be presented to the Business Committee and to the Executive Board. They are Audit, the Ombudsman’s Office, the Business According to the Corporate Governance divided into: Segment Committees (E&P, Downstream, and Gas & Power) and Corporate Com- Committee, and the Integration Committee. Guidelines, the Board has committees to as- mittees (Corporate, Financial, Technology, and Engineering & Services). Petrobras’ directors are elected by the sist in the analysis of financial and environ- General Meeting without any influence mental issues. Petrobras has specific units from the Executive Board. Since 1999, the in its organizational structure to supervise, Board has been chaired by a non-executive implement and monitor its economic, social, OVERALL COMPAny ORGAnIZATIOn member of the company. and environmental practices. With links to In late 2010, the President of Brazil en- the Business Committee, Integration Com- BD AC acted Act 12,353, which determines the par- mittees were created specifically to address Board of Directors Audit Committee ticipation of active employees on the Boards of economic, environmental, and social issues. state-owned and mixed-economy companies These include, for example, the Financial Ombudsman Internal Auditing and their subsidiaries and affiliates. The rep- Integration Committee and the Corporate resentative will be selected through elections Function Integration Committee. These com- Corporate Strategy organized together with the trade unions. mittees are composed of executive managers Executive CEO Board Petrobras, Petrobras Distribuidora, Liquigás, from related areas. Corporate Performance Organization, Management and Governance Transpetro, Refap (the Alberto Pasqualini Re- The Board of Directors should also assess finery), and TBG (Transportadora Brasileira its performance annually pursuant to crite- new Business Legal Department Gasoduto Brasil-Bolívia S.A.) are expected ria it defines. Likewise, it is also foreseen that to elect employee representatives to serve on the Board should also assess the performance Human Resources CEO’s Office General Secretary Corporate of Petrobras Communications their Boards of Directors from 2011. of Petrobras’ CEO and officers to ensure the The company’s Code of Good Practices alignment of the interests of the members of provides policies on important issues related the Executive Board with the shareholders’ Gas & Power Exploration & Downstream International Financial Area Services Area Area Production Area Area Area to insider trading - such as a ban on trading in long-term interests. Board of Director and securities in certain periods - and to the con- Executive Board evaluation mechanisms are Safety, @ Corporate Section Corporate Section Corporate Section Corporate Section Corporate Section learn more about the duct of Petrobras’ Senior Management officers currently being studied. @ Environment, Energy Efficiency, and Health qualifications of Petrobras’ Financial Investment Production Investment Business Planning & Risk Program Engineering Programs Technical Support officers and about our Management Materials managers compensation PETROBRAS’ CORPORATE GOVERnAnCE STRuCTuRE EnCOMPASSES: natural Gas Production Logistics Business Logistics & Development Development policy in the online Finance Equity Stakes Projects Research & version of the Report a. Board of Directors: composed of nine members elected - four of whom independent - by the Development (Cenpes) Refining Latin America Energy Operations General Shareholders Meeting, which is responsible for guiding and for the higher manage- Accounting & Equity Stakes Offshore Well Construction ment of the company. Americas, Africa Engineering Petrochemicals & Eurasia b. Audit Committee: a permanent body, this committee comprises five members who are also Taxation Chemical Gas Services & Liquefaction Information elected by the General Shareholders Meeting. It is responsible for monitoring management Technology and Marketing & Sales Telecommunications actions and for reviewing the financial statements, among other duties. Investor Relations Marketing & Sales Exploration c. Executive Board: composed of the CEO and six officers elected by the Board of Directors, the Shared Services Executive Board is responsible for managing the company’s business. Pre-Salt d. Board of Directors’ Committees: composed of three members of the Board of Directors, these committees are intended to assist the Board by providing analyses and recommenda- north-northeast tions on specific issues (pursuant to Corporate Governance Guidelines adopted by the Board of Directors, Petrobras has three Board Committees: Auditing, Environment, and Compen- South-Southeast sation & Succession).014 015
  12. 12. CORPORATE GOVERnAnCE SuSTAInABILIT y REPORT 2010 GEnERAL OMBuDSMAn The General Ombudsman’s Office is a channel for dialogue between the company’s stakeholders and its executive management and aims to receive denunciations, complaints, and suggestions. Linked directly to the Board of Directors, the General Ombudsman’s Office acts independently as CORPORATE PERFORMAnCE an instrument to drive transparency and ethics. The Ombudsman’s term is for two years, renewable once for an equal period. The General Om- budsman’s Office is responsible for concerns related to other Petrobras System enterprises, except for Petrobras Distribuidora and Transpetro, which have ombudsmen in their organiza- tional structures. InvESTOR RElATIOnS Petrobras is committed to providing cor- and material facts, the Investor Relations rect and accurate information to its inves- Portal provides presentations, conference tors - whether corporate or individual, in- calls, chats, event calendars, and sharehold- cluding shareholders and debenture holders. ers meeting minutes. The goal is to maintain ongoing dialogue A telephone support for shareholders and and credibility, a prerequisite for successful an e-mail address to be used solely by this share trading. audience (acionistas@petrobras.com.br) are The investor relations Internet portal also available. Each quarter, after the results (www.petrobras.com.br/ri) brings together are announced, a chat is held with investors, data about the company, such as its corpo- and information is sent to them by letter or rate strategy, corporate governance, com- fax. Information about the company is avail- petitive advantages and risk factors, opera- able over social networks, the Internet, and tional highlights, announcements, reports, cell phones. In 2010, this structure, coupled (PETR4) fell 25.62%. At the New York Stock Ex- TREATMEnT OF MInORITY SHAREHOlDERS information about the dividends payment with advertising and corporate communica- change (NYSE), where common and preferred During the capitalization process, questions policy, and about shareholding breakdown, tions, allowed for the widespread divulging ADRs are traded, the slump was 20.63% and were raised about the benefits the operation among others. In addition to press releases of the equity issuance. 19.38%, respectively. Even with the price drop, would afford minority shareholders. The the company’s market value ended the year main concerns included the price Petrobras 18.6% above the 2009 mark, closing at $236.5 would pay the Federal Government per bar- InDEXES PETROBRAS IS LISTED On billion as a result of the capitalization process. rel, an amount set by the Brazilian President. Petrobras distributed gross dividends of In that case, Petrobras complied with the » Bovespa: Ibovespa, Brasil (IBrX), and Brasil 50 (IBrX50). R$1.03 per common or preferred share refer- current legislation and got the approval for » new York Stock Exchange: nyse International 100 Index, nyse World Leaders Index, Dow ring to the 2010 fiscal year, adding up to R$11.73 the price to be paid per barrel from a Special Jones Sustainability Index, and nyse Energy Index, the latter through Petrobras Energía billion. Furthermore, in 2010, Petrobras had Committee formed by minority shareholder Participaciones S.A. approved and made the payment of three an- representatives both to monitor all stages of ticipated distributions of interest on equity for the equity issuance and to make sure the pro- the 2010 fiscal year. This anticipation was worth cess was transparent and done pursuant to STOCK MARKET PERFORMAnCE Despite the good operating results and al- R$0.91 per common or preferred share, for a to- the Corporations Law. In a year marked by stability, the main high- though the huge potential of the Pre-Salt region tal of R$7.95 billion. Petrobras also made sure that minority light was the large number of new investors was confirmed with the declaration of com- Petrobras shareholding composition was shareholders were entitled to acquire shares who took part in Petrobras’ equity issuance, merciality of the Lula and Cernambi fields, the maintained even after the capitalization, and and receipts in the same extent they held in the bringing to 396,975 the number of sharehold- company’s shares closed the year in a slump. At its main shareholders took part in the offer- period prior to the capitalization to avoid the ers at the BM&FBovespa on December 31, BM&FBovespa, the common stocks (PETR3) ing. The Government increased its stake in the dilution of their holdings if they so wished. In 2010, up 26.48% over the previous year. were down 26.65%, while the preferred ones company’s total capital through the Sovereign other words, the Government could only grow Fund, which purchased 4.6% of the bonds of- its share in the capital if the minority share- fered to the market. holders did not fully exercise their rights.016 017

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