DIVERSITYLABOR SOCIAL AND


                                        RENEWABLE ENERGY
 EDUCATION ENVIRONMENTAL
   ECO-EFFIC...
health, safety and
enVironMent Guidelines
Health, Safety and Environment                                   5. Operation an...
14. Product Management                                              15. Ongoing Improvement Process
The company must do it...
Profile
Petrobras is a publicly listed company based in Rio de Janeiro, Brazil. Rated as invest-
ment grade, it has shares...
CONTENTS
                          message from the CEO             2      PrinciPle 6 BuSiNESSES ShOuld uphOld


        ...
mESSagE
frOm ThE CEO



    i am pleased to present the Social and Environmen-            the first long-duration test wil...
We understand that the relations with society
and the environment are essential. This is why
the management system of soci...
sT r aT egy

    peTrobras
        resulTs




4               eixo
performance



             profile
               governance
                                            business




   ...
ProFile




ExpEriENCE
iN ThE BraziliaN
aNd iNTErNaTiONal
pETrOlEum
markET
created in 1953, in brazil, petrobras operates
...
platform p-51




                petrobras accumulates
              know-how in exploration
               and productio...
profile


         size oF comPany

         Employees                                                                    ...
pETrOBraS BraNdS
The petrobras corporate trademark is much more than a visual representation - it is managed as a strate-
...
PerFormance in 2008




pOSiTivE
rESulTS iN
faCE Of glOBal
ECONOmiC
iNSTaBiliTy
in the second half of 2008, the changes in...
getúlio vargas refinery (repar), in araucária, in paraná




In spite of this conjuncture, Petrobras had positive         ...
Performance in 2008




The company’s refineries were responsible for the total
production of 1.97 million barrels of bypr...
rElEvaNT faCTS
›    in april, the creation of an executive management responsible for coordinating the activities of
     ...
International Activities
Petrobras, by means of units, subsidiaries or offices of commercial and financial representation,...
Se CiA ó A o nuA R 200 e
R o l AT l R in DAe n V il o n M8 n TA l R e P o R T 2 0 0 8
                                    ...
performance in 2008



                                                                                                   ...
of the total of petrobras investments in 2008, 11.5%
were allocated to international activities, focusing on
the increase ...
performance in 2008


     aDDeD Value Financial sTaTemenT
     fiscal year ending in december 2008 and 2007 (in Thousand ...
corPoraTe goVernance anD sTraTegy




STrENgThENiNg
BuSiNESS TO
aChiEvE grOwTh

The corporate strategy of petrobras, expre...
corporaTe governance and sTraTegy


                    The plan also takes into account in its projections: uncer-       ...
Petrobras Organizational Structure




                                                                          BD       ...
pArTICIpATIon


       soCIAL
      respon
     susTA In A bILIT y

                                TrAnspArenCy
         ...
GLobAL CompACT

mAnAGemenT

sIbILITy
AssoCIATIons
                                       Inde xes




ACTIons
            ...
commitment to SuStainable development




AcTIonS FoR
SuSTAInAbIlITy


petrobras believes that by adopting a responsible a...
When affirming its participation in the UN Global Com-             management model provides a better dissemination
pact, ...
CommITmenT To susTAInAbLe deveLopmenT




The commitment to adopt the ten principles of the
UN Global Compact – relating t...
Communication and Citizenship Workshop of the Quixote project




    millennium development goalS (mdg) — Although       ...
CommITmenT To susTAInAbLe deveLopmenT




                   participate in the initiative, to discuss solutions for in-  ...
Social and environmental report




TRAnSPAREncy
In PERFoRmAncE
DIScloSuRE

The social and environmental report is the



...
soCIAL And envIronmenTAL reporT




     comPAnIES AnD SubSIDIARIES REPoRTED In ThE REPoRT 2008
     ›   petrobras Holding...
tion of the estimates presented and changes in the data          recognition
measuring method are followed by explanation ...
CoMMUNities


         HUMAN
     re l At i o N s Hi p
       CUltUre

                          sUppliers



32          ...
CitizeNsHip




            iNvestMeNts
riGHts
 soCiAl                                      Human rigHts All Petrobras ope...
Community Development                                   prinCiple 1
                                         Businesses sh...
Actions taken with the participation of community                  The company also acknowledges that the invest-
members ...
Social Balance 2008
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Social Balance 2008

  1. 1. DIVERSITYLABOR SOCIAL AND RENEWABLE ENERGY EDUCATION ENVIRONMENTAL ECO-EFFICIENCYREPORT DIALOGUE CITIZENSHIPCOMMUNITY 2008 VALUES COMMITMENT HUMAN RIGHTS BIODIVERSITY RESPECT EDUCATION SUSTAINABILITY TRANSPARENCY TECHNOLOGY ETHICS
  2. 2. health, safety and enVironMent Guidelines Health, Safety and Environment 5. Operation and Maintenance Company operations must be performed as provided in set Policy (HSE) procedures, and using the proper facilities and plant, in- › Educate, enable and commit the employees with HSE spected and guaranteed to meet safety, health and envi- matters, involving suppliers, communities, competent ronmental requirements. entities, entities that represent the employees and other 6. Change Management related parties; Temporary or permanent changes must be assessed in order › Encourage registration and training in HSE inssues and to eliminate and/or minimize risks that may be caused by consider, in the consequence and recognition systems, such change. their performande in HSE; › Act in the endorsement of health, in the protection of 7. Goods and Service Procurement the human being and the environment by means of risk Safety, health and environment performance of out- identification, control and monitoring, adapting safety sourcees, suppliers and partners must be compatible with processes to the best world practices and being prepared the Petrobras System. for emergencies; 8. Capacity Building, Education and › Assure sustainability of projects, enterprises and Consciousness products throughout their life cycles, considering Capacity building, education and consciousness must be con- impacts and benefits in economic, environmental, and stantly encouraged to reinforce the commitment of the work- social scales; force to its performance in safety, health and environment. › Consider operation and product eco-efficiency, mitigating adverse local impacts inherent to the 9. Information Management industry’s activities. Information and know-how relating to safety, health and envi- ronment must be accurate, updated and documented for easy 1. Leadership and Responsibility consultation and use. When Petrobras integrates safety, health and environment to its business strategy, it is reaffirming the commitment of 10. Communication all its employees and outsourcees to strive for excellence in The information relating to safety, health and environment these areas. must be clear, fast and objective to achieve the desired effects. 2. Legal Compliance 11. Contingency The company’s activities must abide by the prevailing legisla- Emergencies must be foreseen and confronted rapidly and ef- tion in the areas of safety, health and environment. ficiently to cause minimum damage. 3. Risk Assessment and Management 12. Community Relations Risks inherent to the company’s activities must be identified, The company must do its best for the safety of the communi- assessed and managed in order to prevent accidents and/or ties where it operates and keep them informed about impacts minimize the effects. and/or risks that may occur as a result of its operations. 4. New Enterprises 13. Analysis of Accidents and Incidents The new enterprises must law-abiding and include the best Accidents and incidents arising from the company’s activities practices of safety, health and environment throughout their must be analyzed, investigated and documented in order to life cycle. prevent repetition and/or to assure the least possible damage.
  3. 3. 14. Product Management 15. Ongoing Improvement Process The company must do its best in terms of safety, health and Ongoing improvement of the performance in safety, health environment of its products from their origin to final des- and environment must be encouraged at all levels of the com- tination, and to strive to constantly reduce impacts that pany to assure its progress in those areas. they may cause. Policy of social resPonsibility To Petrobras, social responsibility is the integrated, ethical, 4. Human rights and transparent management of its business interests and Respect and support internationally acknowledged human activities and of its relationships with all of its stakeholders, rights, basing Petrobras System’s actions on furthering the furthering human rights and the full exercise of citizenship, principles of decent, non-discriminatory labor. respecting human and cultural diversity, working to eradi- 5. Diversity cate discrimination, degrading work, child and forced labor, Respect the human and cultural diversity of its workforce and contributing to sustainable development and to reduce and of the contries where it operates. social inequality. 6. Labor Principles 1. Corporate Performance Support the eradication of child, forced, and degrading labor Assure Petrobras System’s corporate governance is com- in Petrobras System’s supply chain. mited to ethics and trasparency in its relationship with its stakeholders. 7. Sustainable Social Investment Seek social investment sustainability to drive social develop- 2. Integrated Management ment at the communities. Guarantee integrated social responsability management throughout the Petrobras System. 8. Workforce Commitment Assure workforce commitment to Petrobras System’s Social 3. Sustainable Development Responsibility Policy. Carry out Petrobras System’s business interests and activi- ties with social responsibility, meeting its commitments pursuant to the principles set forth by the UN’s Global Com- pact, and contributing to sustainable development.
  4. 4. Profile Petrobras is a publicly listed company based in Rio de Janeiro, Brazil. Rated as invest- ment grade, it has shares and ADRs traded on the stock exchanges of São Paulo (Bo- vespa), New York, Latibex and BCBA. It operates on an integrated and specialized basis in the following segments of the oil, gas and energy industry: exploration and produc- tion, refining, trading, transport and petrochemicals; byproduct distribution; natural gas; biofuels and electricity. It was founded in 1953 and today is the world’s ninth largest oil major by market value, in accordance with the ranking of consulting firm PFC Energy. The company, top in the Brazilian oil sector, operates in another 27 countries, and its reserves total 15.1 billion boe according to the SPE criterion. The 2009-2013 Business Plan forecasts investments of US$ 174.4 billion. Mission Operate in a safe and profitable manner in Brazil and abroad, with social and environ- mental responsibility, providing products and services that meet clients’ needs and that contribute to the development of Brazil and the countries in which it operates. Vision for 2020 We will be one of the five largest integrated energy companies in the world and the pre- ferred choice among our stakeholders. Vision 2020 characteristics Our operations will be notable for: > Strong international presence > World scale prominence in biofuels > Operational excellence in management, technology and human resources > Profitability > Benchmark in social and environmental responsibility > Commitment to sustainable development
  5. 5. CONTENTS message from the CEO 2 PrinciPle 6 BuSiNESSES ShOuld uphOld 4 petrobras ThE ElimiNaTiON Of diSCrimiNaTiON iN rESpECT Of EmplOymENT aNd OCCupaTiON Combating prejudice 72 6 profile 72 and discrimination (PrinciPle 6) performance in 2008 10 Case study – labor 76 Corporate governance and strategy 19 22 Social 78 Environment PrinciPle 7 BuSiNESSES ShOuld SuppOrT responsibility a prECauTiONary apprOaCh TO ENvirONmENTal ChallENgES 80 Commitment to sustainable development 24 Environment (PrinciPle 7) 80 Social and environmental report 29 mapping, monitoring and 32 human rights reducing impacts (PrinciPle 7) 83 Climate change (PrinciPle 7) 86 PrinciPle 8 BuSiNESSES ShOuld uNdErTakE PrinciPle 1 BuSiNESSES ShOuld iNiTiaTivES TO prOmOTE grEaTEr SuppOrT aNd rESpECT ThE prOTECTiON Of iNTErNaTiONally prOClaimEd humaN righTS 34 ENvirONmENTal rESpONSiBiliTy 88 Consumption of energy, materials Community development (PrinciPle 1) 34 and natural resources (PrinciPle 8) 88 Social, cultural and sports investments (PrinciPle 1) 38 Emissions, effluents and waste (PrinciPle 8) 91 PrinciPle 2 BuSiNESSES ShOuld Biodiversity (PrinciPle 8) 94 makE SurE ThaT ThEy arE NOT COmpliCiT iN humaN righTS aBuSES 47 products, compliance and transportation (PrinciPle 8) 99 Supplier and customer relations (PrinciPle 2) 47 PrinciPle 9 BuSiNESSES ShOuld ENCOuragE Case study - human rights 50 ThE dEvElOpmENT aNd diffuSiON Of 52 labor ENvirONmENTally friENdly TEChNOlOgiES 102 renewable energy (PrinciPle 9) 102 workers 54 Case study – Environment 106 health, safety and quality of life 56 remuneration and benefits 60 108 Transparency PrinciPle 3 BuSiNESSES ShOuld uphOld 110 Stakeholder relations ThE frEEdOm Of aSSOCiaTiON aNd products and services 115 ThE EffECTivE rECOgNiTiON Of ThE righT TO COllECTivE BargaiNiNg 64 PrinciPle 10 BuSiNESSES ShOuld wOrk agaiNST COrrupTiON iN all iTS fOrmS, freedom of association (PrinciPle 3) 64 iNCludiNg ExTOrTiON aNd BriBEry 120 PrinciPle 4 BuSiNESSES ShOuld uphOld ThE anti-bribery and anti-corruption ElimiNaTiON Of all fOrmS Of fOrCEd 120 policies (PrinciPle 10) aNd COmpulSOry laBOr 66 Case study – Transparency 124 refusal of forced labor (PrinciPle 4) 66 PrinciPle 5 BuSiNESSES ShOuld uphOld ThE EffECTivE aBOliTiON Of Child laBOr 69 annexes 126 guarantee of the rights of children materiality Test 130 and adolescents (PrinciPle 5) 69 indicator matrix 132
  6. 6. mESSagE frOm ThE CEO i am pleased to present the Social and Environmen- the first long-duration test will be undertaken in the tal Report 2008 of Petrobras, an important instrument Tupi field, and in 2010 a pilot system will be installed of transparency and communication with our stake- with the capacity to produce up to 100 thousand bpd, holders. Society increasingly demands ethical and sus- facts which mark the start of a new era for Petrobras tainable behavior from companies, which makes our and for Brazil. The production coming from the pre-salt challenge greater and more complex. In this sense, we layer has the great potential of stimulating the domes- intend that the company’s performance is even better, tic market, generating new jobs and strengthening the in line with the concepts of sustainable development in Brazilian economy. business management. Concerning fuel quality, Petrobras has systemati- The objective defined in our Strategic Plan is auda- cally invested in new technologies and upgrading the cious: be among the five largest integrated energy com- refineries to optimize production and enhance the panies in the world by 2020. In 2008, we were the ninth products. To do so, R$ 8.5 billion will be invested in 13 largest company of energy, according to the ranking of hydrotreatment plants by 2013. the consulting firm PFC Energy. Even with the insta- We will also have other challenges to overcome. One bility of the international market and the price of the of them is the investment in clean energy such as bio- barrel of oil, Petrobras obtained a record net profit of fuels. In 2008, we took an important step forward: the R$ 33 billion, 53.3% more than the previous year, which creation of Petrobras Biocombustível S.A., a subsidiary shows that we are a solid and structured company. In whose objective is to develop ethanol sales, biodiesel 2008, our gas and oil production reached the mark of production and other products and activities. By 2013, 2.4 million barrels of oil equivalent per day. For 2013, we US$ 2.8 billion will be invested in this segment. expect to exceed the volume of 3.6 million barrels per With the increased supply and demand in the gas & day (bpd). For 2020, our goal is 5.7 million bpd. energy area, we also intend to consolidate our perfor- The recent discoveries of petroleum in the pre-salt mance in the Brazilian and international market, and layer, in Santos Basin, will be responsible for a radical to increase business in the generation of electricity and change in level for the business of Petrobras. In 2009, natural gas in Brazil. 2 m e s s a g e F r o m T H eecx o ie
  7. 7. We understand that the relations with society and the environment are essential. This is why the management system of social responsibility and standards of environmental excellence are continually being improved We understand that relations with society and the methods of environmental protection, social justice environment are essential. This is why the manage- and economic efficiency. ment system of social responsibility and the standards The information contained in this report is part of of environmental excellence are continually being im- the Petrobras strategies for conducting business and proved. In 2008, the company invested R$ 1.92 billion in activities with social responsibility, aligned with the the environment to upgrade the operational processes, ten principles of the UN Global Compact. Therefore, we in order to make them safer and more efficient. restate our commitment to ongoing participation in Moreover, almost R$ 556.8 million were invested this initiative, of which the company has been a signa- in more than 2,300 social, environmental, cultural and tory since 2003. sports projects. These initiatives are inserted in corpo- We hope that everyone will now learn a little more rate programs, such as the Petrobras Development & of the trajectory of Petrobras to attain this common Citizenship, the Petrobras Environmental Program, the objective: the building of a fairer, more ethical environ- Petrobras Cultural Program and the Petrobras Sport & mentally balanced world. Citizenship Program. They are programs which have a public selection of projects, which allows organizations José Sergio Gabrielli de Azevedo all over Brazil to have fair and democratic opportuni- CEO of Petrobras ties of access to the resources. During the public selec- tion the registered projects undergo several levels of ad- ministrative and technical analyses by representatives of different segments of society. Another highlight is the program Keeping an Eye on the Environment, which promotes the sustainable development of communities surrounding the opera- tions of the company based on Agenda 21, a methodol- ogy for building sustainable societies, reconciling the se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 3
  8. 8. sT r aT egy peTrobras resulTs 4 eixo
  9. 9. performance profile governance business PeTrobras with investments of r$ 53 billion petrobras closed 2008 with significant results, having a record net profit of r$ 33 billion, approximately 53% more than in 2007. The year was also positive for the company in the international scenario. petrobras expanded business and maintained activities in 27 countries besides Brazil. in the operational area, the pre-salt area stands out, which is estimated to increase production from 219,000 bpd, expected in 2013, to 1,815,000 bpd, in 2020. r e l aT ó r i o a n u a l 2 0 0 8 5
  10. 10. ProFile ExpEriENCE iN ThE BraziliaN aNd iNTErNaTiONal pETrOlEum markET created in 1953, in brazil, petrobras operates on an integrated basis in the oil, gas and energy industry in the segments of exploration and production » (e&p); downstream (refining, transportation and sales); distribution; gas & energy; petrochemicals; and biofuels. 6 P e T r o b rx o ei as
  11. 11. platform p-51 petrobras accumulates know-how in exploration and production in deep and ultra-deep water It is a mixed economy company, controlled by the Bra- zilian government – under the Ministry of Mines and Energy –, and incorporated as a mixed capital corpora- tion. It is regulated by the provisions in the Corporations Act (Law 6404, of December 1976) and by its articles of incorporation, which define its economic activities un- dertaken in free competition with other companies, in accordance with the market. The Petrobras System consists of Petróleo Brasileiro S.A. (Petrobras Holding), its subsidiaries, affiliates, joint affiliates and associated companies. The subsidiaries in- clude Petrobras Distribuidora S.A. (Petrobras Distribui- dora), Petrobras Química S.A. (Petroquisa), Petrobras Transporte S.A. (Transpetro) and Petrobras Biocombus- tível S.A., the last incorporated in June 2008. The com- pany does not have a holding in special-purpose compa- nies. However, these companies are part of the financial statements of Petrobras which directly or indirectly con- trols their operational activities. Petrobras is a benchmark in deep and ultra-deep water exploration and production. As estimated by consulting firm PFC Energy, in 2007, the company was responsible for operating about 23% of the global pro- duction at depths exceeding 300 meters of nappe (dis- tance between the water surface and seabed). se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 7
  12. 12. profile size oF comPany Employees 74,240 Shareholders (1) 344,179 Exploration 86 drilling rigs (48 offshore) productive wells 8,263 (728 offshore) production platforms 112 (78 fixed; 34 floating) refineries 17 pipelines 25,197 km fleet of ships 54 own Service stations 7,323 fertilizers 3 plants Thermoelectric power stations 14 1) shareholders in the são paulo stock exchange (bovespa), without considering investors of resources as the government severance indemnity fund for employees (fgTs) and quotaholders of investment funds in shares of petrobras. comPosiTion oF caPiTal sTock (r$ million) shareholders shares % federal union 2,826,516,456 32.2 BNdESpar 668,539,662 7.6 adr (ON Shares) 1,350,276,582 15.4 adr (pN Shares) 1,235,631,388 14.1 fmp petrobras fgTS 186,749,197 2.1 foreigners (resolution # 2.689 CmN) 689,376,869 7.9 Other physical & Corporate Entities 1,816,986,586 20.7 ToTal 8,774,076,740 100 Among other products, the company produces products, besides rendering added services, in the automotive gasoline, aviation fuels, diesel oil, lubri- service stations and convenience stores. The subsid- cants in the Lubrax line, basic lubricating oils, fuel iary also handles major consumers dealing with bulk oils, liquefied petroleum gas (LPG), natural gas, as- sales of fuels and lubricants to customers such as phalt products, lighting kerosene, solvents, paraffin, industries, governments, transportation companies fertilizers (urea and ammonia), petrochemical naph- and thermoelectric power stations; the aviation mar- tha, petroleum green coke, sulfur and bunker (fuel ket for products and services of supply of aircraft and for ships). Some of the main services offered are ser- related activities; the market of chemical products; vice stations, the Customer Channel (electronic trade asphalt; and energy business. ■ platform), the Petrobras Customer Help Desk (SAC), bunkering and the sale of electricity. The Petrobras service stations have convenience stores (BR Mania), advanced lubrication centers (Lubrax Center) and the Fleet Total Control system (CTF). Petrobras Distribuidora operates throughout Brazil in the market of resale of fuels, lubricants and 8 P e T r o b rx o ei as
  13. 13. pETrOBraS BraNdS The petrobras corporate trademark is much more than a visual representation - it is managed as a strate- gic asset, considered to be capable of generating demand for the products and services of the company and of collaborating for managing the business risks. estimated at r$ 2.774 billion, 28.2% more than in 2007, it is one of the ten most valuable brands in brazil, according to the brand analytics consultancy. The variables which comprise and build the value of its brand have been grouped into a methodology of identification, which allows the establishment of metrics for long-term follow-up and management. application of this method was the calculation of the estimated return for the value of the petrobras brand, related to the investment in sponsoring the Williams aT&T team of formula 1. in the last two years, petrobras has obtained the highest score in the dow Jones sustainability in- dexes, for the oil and gas sector, in the brand management criteria. some other brands managed by the company are lubrax, podium, br aviation, verana, liquigás br mania, cartão petrobras, spacio 1 and amigo mecânico (mechanical friend). se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 9
  14. 14. PerFormance in 2008 pOSiTivE rESulTS iN faCE Of glOBal ECONOmiC iNSTaBiliTy in the second half of 2008, the changes in the international economic scene caused global effects, such as instabilities in the quotations of the barrel » of oil, stock exchange volatility, limited access to the credit market and ensuing increased costs of new operations. 10 P e T r o b rx o ei as
  15. 15. getúlio vargas refinery (repar), in araucária, in paraná In spite of this conjuncture, Petrobras had positive operating cash flow (EBITDA) was R$ 57.2 billion, an results in its operational, economic and financial per- increase of 14%. formance in the year. The net profit of the company The company investments also had a record vol- achieved a record of R$ 33 billion, calculated from the ume, totaling R$ 53.3 billion, 18% more than in 2007. changes in Brazilian accounting practices (Law 11.63 The area of exploration and production received R$ 8/07, on the preparation and disclosure of financial 26.2 billion (49.1% of the total), which contributed statements for large companies). The profit, 53% higher to the replacement of reserves and the knowledge of than in 2007, was mainly due to the increase in total reservoirs in the pre-salt layer (in ultra-deep water production and average prices of petroleum and by- off the Brazilian coast). Downstream investments products, a larger sales volume, besides gains relating were R$ 12 billion (22.5%), emphasizing the increased to changes in the exchange rate. capacity of refining, compliance with standards of With a growth of 26% in relation to 2007, the net quality and construction of the Petrochemical Com- operating revenue was R$ 215.1 billion, whereas the plex of Rio de Janeiro (Comperj). se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 11
  16. 16. Performance in 2008 The company’s refineries were responsible for the total production of 1.97 million barrels of byproducts per day, using 91% of installed capacity in Brazil and 61% of the capacity elsewhere The other investments were allocated to the areas in Brazil (17.8% more than in 2007) were highlights of gas & energy (13.5%), international (11.5%), corpo- in 2008. rate (2.3%) and distribution (1%). According to the criteria of the Society of Petro- With the downward trend in the main world stock leum Engineers (SPE), the volume of proven reserves exchanges, Petrobras papers (shares and receipts) ac- of oil, condensate and natural gas of Petrobras, on companied the negative performance of BOVESPA December 31, 2008, was 15.08 billion barrels of oil and the Dow Jones Index. The market value was R$ 224 equivalent (boe), 93% in Brazil. billion, a drop of 52.1% compared with 2007. The refineries of the company were responsible In line with the principles of capital discipline, for the total production of 1.97 million barrels of by- the company took strict measures to control its products per day, using 91% of the installed capacity costs. This factor contributed to maintaining its in Brazil and 61% of the capacity in other countries. goals of growth, with a well-structured portfolio of The 3.7% drop in byproduct production compared projects with a high return. with 2007 is mainly due to the sale of refineries in Another operational highlight was Petrobras pro- Bolivia and scheduled shutdowns in Argentina and duction, which attained the mark of 2.4 million bar- in the USA. rels of oil equivalent per day (boed) of oil and natural The total sales of the company came to 3.37 mil- gas, an increase of 4.3% compared with the previous lion boed, including exports, natural gas and inter- year. Also 1,979 million barrels of oil, liquefied natu- national sales, representing an increase of 4.2% com- ral gas (LNG) and condensate and 421,000 boed of pared with the previous year. natural gas were produced. The opera-tions in Bra- In Brazil, where the growth was 5.5%, the main zil handle 90.7% of the total production, with 2,176 products in sales volume were diesel (34%), gasoline million boed. The start of production in the pre-salt (15%), natural gas (15%) and liquefied petroleum gas layer in Campos Basin and natural gas production (LPG) (10%). 12 P e T R o B Rx o ei AS
  17. 17. rElEvaNT faCTS › in april, the creation of an executive management responsible for coordinating the activities of exploration and production in the pre-salt layer was approved. › in June, the subsidiary petrobras biocombustível s.a. was created, to develop the sale of ethanol and biodiesel production to consolidate petrobras in the segment. in 2009, the company will now operate three commercial petrobras biodiesel production plants, under the concession of the na- tional agency of petroleum, natural gas and biofuels (anp). Two of these plants were launched in 2008 one planned to start production in January 2009. › With works started march, in the petrochemical complex in rio de Janeiro (comperj) will produ- ce 150,000 barrels of petroleum per day for the production of petrochemical byproducts from 2012 onwards. The complex will be composed of a basic petrochemical utility center, second generation units, corporate and worker capacity-building center plus a distribution center for liquid products. › With operations foreseen to start in 2011, the abreu e lima s.a. refinery was constituted in mar- ch 2008 as a closed capital joint-stock company. The unit has investments of us$ 4.05 billion and will have capacity to process 230,000 barrels of petroleum per day and produces low sulfur content byproducts. › in may, petrobras holding and its subsidiary petroquisa increased their participation in braskem, a brazilian petrochemical company, to hold 30% of the voting capital. and in december the admi- nistrative council for economic defense (cade) approved the acquisition by petrobras of the assets of the ipiranga group, related to the business of distribution and resale of fuels and lubricants and greases in the north, northeast and central West regions of brazil, besides the production and distribution of asphalts in the country. › petrobras also concluded the operation of acquiring the total share issue of Termobahia s.a., in april. in July, petrobras distribuidora transferred its shares in energy companies to petrobras hol- ding, when the general energy management was created. › some of the new undertakings will include building two premium refineries for high quality and low sulfur content byproducts from processing heavy oil and acid, both in northeast brazil. › after being approved in an extraordinary shareholders meeting, the proposal to split petrobras shares was put into effect in april. The result was that each common and preferential share was now represented by two shares. The capital stock of the company was now 8,774,076,740 shares with no face value. › at the beginning of the year, equipment containing information considered important for the com- pany was stolen from the premises of a firm providing special services to petrobras. The actions of federal the police and the brazilian intelligence agency (abin) led to the prison for those involved and recovery of the material. se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 13
  18. 18. International Activities Petrobras, by means of units, subsidiaries or offices of commercial and financial representation, performs in 28 countries, including Brazil. The company has activities of exploration and production in 20 countries; of refining in four; of distribution in six; of petrochemicals and electricity in two; and offices of representation in four. The international Petrobras Subsidiary Braspetro B.V. (PiB BV) participates in companies which perform outside brazil in several segments of the oil and gas industry. for the period 2009 thru 2013, it is foreseen to invest US$ 15.9 billion in international operations, of which 79% will be related to exploration and production. 14 P e T R o B Rx o ei AS
  19. 19. Se CiA ó A o nuA R 200 e R o l AT l R in DAe n V il o n M8 n TA l R e P o R T 2 0 0 8 15
  20. 20. performance in 2008 petrobras office in nigeria Presence in THe Foreign markeT As a strategy of expansion in the Gulf of Mexico, In 2008, 11.5% of all Petrobras investments that year USA, Petrobras bought at an auction 23 new explor- was allocated to international operations (performance atory blocks, coming to have a participation in 259 outside Brazil), focusing on increasing refining and dis- offshore blocks (operating 161 of them). The compa- tribution. Some of the highlights were the signing of the ny also has onshore exploratory rights in the coun- purchase agreement of participation of ExxonMobil in try, in Texas. Esso Chile Petrolera, increasing the company’s share in In Ecuador, Petrobras and the government of the the fuel distribution segment in Latin America, and the country signed an agreement which extends for a conclusion of the purchase of 87.5% of the shares in the year the negotiation about the concession contracts Japanese refinery Nansei Sekiyu, in Okinawa. With ca- of the unified field of Palo Azul and block 18, in which pacity to process 100,000 barrels of oil a day (bpd) and Petrobras has a share. A new draft contract will be store 9.6 million barrels of byproducts, the refinery pro- presented by the government of Ecuador. Block 31 was vides logistic support for the distribution of the com- returned to the State, as agreed, due to the difficulty pany products in the Asian market. of developing it. 16 P e T r o b rx o ei as
  21. 21. of the total of petrobras investments in 2008, 11.5% were allocated to international activities, focusing on the increase in the activities of refining and distribution Some risks associated with the common impacts PeTrobras in numbers of oil and gas operations are considered in the interna- tional performance of Petrobras, such as market risks neT equiTy (in Thousand r$) (prices, interest rates and exchange rate, drop in con- Capital stock executed 78,966,691 sumer levels), political and regulating risks and busi- Capital reserves 514,857 ness risks (production, reserves and competition). In revaluation reserves 10,284 acquisitions or operating start-up in certain countries, profit reserves 58,643,049 there are also risks of rejection by part of the surround- accrued conversion ing community and direct customers, by the nature of 636,264 adjustments the activity or by the fact that the company is based in Equity evaluation adjustments (405,863)(2) another country. ToTal 138,365,282(1) However, among the opportunities identified 1) consolidated as per financial statements on december 31, 2008. for the international activities, it is worth mention- 2) amounts between parentheses are negative. ing the increase in company business, greater vis- ibility of the Petrobras brand, the transmission of In 2008, there was no use, as in previous years, of re- best practices to investors and other stakeholders, sources from Addition to Freight for Renewal of the as well as the development of new forms of energy, Merchant Navy (AFRMM), a financial incentive from such as biofuels. the Brazilian government. ■ asseTs (in Thousand r$) Current(2) 63,575,278 Non-current (long term) 21,254,843 Non-current (investments) 5,106,495 Non-current (real estate) 190,754,167 Non-current (intangible) 8,003,213 Non-current (deferred) 3,469,846 ToTal 292,163,842(1) 1) consolidated as per financial statements on december 31, 2008. 2) current assets include: cash and cash equivalents; bonds and securities; net accounts receivable; dividends to receive; inventories; taxes, contributions and participations; prepaid expenses; other currents assets. se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 17
  22. 22. performance in 2008 aDDeD Value Financial sTaTemenT fiscal year ending in december 2008 and 2007 (in Thousand r$) 2008 2007 reVenue 315,933,330 246,107,023 Sales of goods, products and services 268,936,483 220,153,532 revenue referring to building own assets 47,163,873 26,057,647 provision for credits of doubtful settlement – constitution (167,026) (104,156) ProDucTion resources acquireD From THirD ParTies (166,732,054) (110,292,287) Cost of products, goods and services sold (53,989,794) (29,888,395) materials, energy, services of third parties and others (52,590,649) (42,840,479) loss/recovery of active amounts (2,658,224) (480,812) Others (57,493,387) (37,082,601) gross added value 149,201,276 135,814,736 WiTHHolDing (DePreciaTion anD amorTizaTion) (11,631,984) (10,695,826) neT added value produced by The company 137,569,292 125,118,910 aDDeD Value receiVe D in TransFer 3,914,124 2,514,692 income of equity accounting (115,790) (367,361) financial revenue 3,494,430 2,417,659 Others 535,484 464,394 aDDeD Value To DisTribuTe 141,483,416 127,633,602 DisTribuTion oF aDDeD Value 141,483,416 127,633,602 sTaFF 14,526,830 14,163,085 direct remuneration 10,448,120 8,052,873 Benefits 3,478,036 5,603,033 fgTS 600,674 507,179 Taxes, cHarges anD conTribuTions 85,112,615 73,919,111 federal 62,625,920 50,810,506 State 22,338,990 22,993,351 municipal 147,705 115,254 remuneraTion oF THirD ParTy caPiTal 10,945,676 16,296,791 interest 1,891,069 7,385,853 rent 9,054,607 8,910,938 remuneraTion oF oWn caPiTal 30,898,295 23,254,615 interest on own capital and dividends 9,914,706 6,580,557 interest withheld/loss of fiscal year 23,073,086 14,931,232 Non-controlling participation in withheld profit (2,089,497) 1,742,826 1) The added value to distribute equals the revenue minus the production resources acquired from third parties and withholding (depreciation and amortization) plus the added value received in transfer. 2) The added value is distributed between government (60%), shareholders (22%), staff (10% and third parties (8%). 3) The amounts of 2007 differ from those published in the usa 2007, the result of changes in brazilian accounting practices (law 11.638/07). 4) amounts between parentheses are negative. 18 P e T r o b rx o ei as
  23. 23. corPoraTe goVernance anD sTraTegy STrENgThENiNg BuSiNESS TO aChiEvE grOwTh The corporate strategy of petrobras, expressed in the strategic plan 2020, considers its commitment to sustainable development, based on integrated growth, profitability and social and environmental responsibility, and it is structured in the business segments of the company. projections of the business plan 2009-2013 » include investments of US$ 174.4 billion for the period and the production of 3.655 million boed of oil and gas in 2013. se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 19
  24. 24. corporaTe governance and sTraTegy The plan also takes into account in its projections: uncer- The tenure of the board members is one year, with the The petroleum tainties, such as the price of petroleum, costs, dynamics possibility of re-election without limit of the number of of the supply and demand; geopolitical aspects (such as mandates. The Board consists of nine members elected market is the global economic crisis, wars and conflicts, political by the General Shareholders Meeting and chaired by a favorable in the tension and environmental implications) and critical member with no executive functions or other links with mid and long resources (such as assets and services and human re- the company. The CEO of Petrobras is the only member sources). However, the petroleum market is favorable in with executive functions term, with a the mid and long term, with the cost of production of In order to avoid any conflicting interests, there relatively low the pre-salt (in ultra-deep water) relatively low. is no influence of the Executive Board in electing the cost of pre-salt The development of the pre-salt area will direct members of the Board of Directors. Besides the Code the growth of production in the long term. The esti- of Ethics of Petrobras, issues such as loyalty and use of production mate is an rise from 219,000 bpd in 2013 to 1,815,000 privileged information related to the senior manage- bpd in 2020. ment of Petrobras are dealt with in several internal The plan also emphasizes the growth of the Brazil- policies. They include the Disclosure of Information ian domestic content in strengthening the business about Relevant Facts or Acts, Negotiation with Secu- of Petrobras in the long term. The domestic context is rities, the Conduct of the Administrators and Senior responsible for the increased installed capacity (limit Management Employees, the Indication for Job Titles of of production) and for developing new suppliers, which Management of Subsidiaries, affiliates and Associated generate a positive scenario in relation to prices, avail- Companies and Investor Relations. ability, options and flexibility. On the other hand, from The Board of Directors approved the Directives of the sustainability viewpoint, the expected expansion in Corporate Governance, which establish the experience the Brazilian economy will tend to promote the genera- and knowledge expected of a board member, as well as tion of employment and income, making the domestic some requirements which must be complied with. Thus, market more dynamic. the Board of Directors of Petrobras aims to promote the Petrobras also has codes and statutes to protect long-term prosperity of business, by adopting an active the interests of its shareholders and other stakeholders. and independent posture, always taking into account In this context the company bylaws, its Code of Eth- the interest of all the shareholders. Although they have ics, Directives of Corporate Governance, Code of Good not yet been approved, the Directives of Corporate Gov- Practices and that of Competitive Conduct, as well as ernance foresee mechanisms where the Board evaluates its internal rules, are worthy of note. yearly its own performance and that of the Executive Di- rectory every six months. corPoraTe goVernance The model of corporate governance of Petrobras also Petrobras is run by the Board of Directors and by the has a Fiscal Board, three Committees of the Board of Executive Board. Responsible for the direction and top Directors (Audit; Environment; and Remuneration and management of the company, the duties of the Board of Succession), Business Committee and 12 Management Directors include deciding on the basic plan of organi- Committees. The Management Committees allow the zation and about the election and removal of the mem- deepening and maturing of important subjects (includ- bers of the Executive Board. It also handles establishing ing strategies about issues related to sustainability), be- the general guidance of the company business – defin- sides structuring information which will be submitted to ing its mission, its strategic objectives and directives –, higher authorities, covering the economic, environmen- besides approving the strategic plan, with its respective tal and social dimensions. The Management Committees plans for several years and annual programs of expen- are: Downstream; Organization and Management Analy- diture and investments. It is the duty of the Executive sis; Internal Controls; E&P; Gas & Energy; Marketing and Board to manage the business, in line with the mission, Brands; Human Resources; Social Responsibility; Health, objectives, strategies and directives established by the Safety and Environment; Risks; Information Technology; Board of Directors. and Petrobras Technology. ■ 20 P e T r o b rx o ei as
  25. 25. Petrobras Organizational Structure BD FC Fiscal Council Board of Directors ombudsman internal auditing Executive CEO Board business strategy management systems & performance development new business legal area human resources general secretary institutional communication ceo's office of petrobras Exploration Financial Area Gas & Energy & Production Downstream International Area Services (Upstream) health, safety corporate finance corporate section corporate section corporate section corporate area & environment financial natural gas production business Technical planning & logistics & equity logistics materials engineering support risk management stakes research & energy operations business finance services refining development & equity stakes development (cenpes) energy petrochemicals southern cone accounting exploration engineering development & fertilizers region information americas, africa Taxation marketing & sales pre-salt marketing & sales Technology & & eurasia Telecommunications investor relations north-northeast shared services south-southeast se cia ó a o nua r 200 e r o l aT l r in Dae n V il o n m8 n Ta l r e P o r T 2 0 0 8 21
  26. 26. pArTICIpATIon soCIAL respon susTA In A bILIT y TrAnspArenCy InITIATIves 22 eixo
  27. 27. GLobAL CompACT mAnAGemenT sIbILITy AssoCIATIons Inde xes ACTIons Social reSponSibility The Social and Environmental Report 2008 was based on the latest version of the GRI Sustainability Report Guidelines, which reaffirms the commitment of Petrobras to provide this reliable, clear and updated infor- mation. From these premises, the company adopts measures to enhance the management of its investments. The national and international initiatives aim to develop projects that contribute to reducing social inequalities and minimize environmental impacts. r e l at ó r i o a n u a l 2 0 0 8 23
  28. 28. commitment to SuStainable development AcTIonS FoR SuSTAInAbIlITy petrobras believes that by adopting a responsible and transparent attitude toward its activities and business contribute to the planet’s sustainable development. This is why it has been taking initiatives to enhance » management and investments in order to monitor its performance, increase quality of projects and obtain consistency results of its actions. 24 S o c i a l r e S p o n S i b ie iix o l ty
  29. 29. When affirming its participation in the UN Global Com- management model provides a better dissemination pact, the company established the key strategies which of guidance and alignment of action among the com- guides its actions for sustainability. The commitment panies in the Petrobras System. to adopt the ten principles of the Compact – relating to The Social Responsibility Management Committee Human Rights, Labor, Environment and Transparency (CGRS) is a forum of discussion of social and environ- – it is a guideline for its decisions as well as provide co- mental topics. The proposal are submitted to the Busi- herence between the actions taken and the objectives ness Committee assessment and for subsequent ap- provided in the Global Compact. proval of the top executive administration. The CGRS has 17 members, including corporate ex- Social reSponSibility and ecutive managers and representatives of the subsidiaries management Transpetro and Petrobras Distribuidora. Some of its du- In Petrobras, social responsibility is a corporate ties are: to propose corporate guidelines and strategies of function. This means that the various units and sub- social responsibility; to define goals, monitor and assess sidiaries take actions according to the policies and performance; and promote dissemination of the com- guidelines set by the company. This organization and pany’s actions. Approval Flow of Social Responsibility Decisions Social Responsibility Business areas Management Committee: and subsidiaries: discussion / decision / approval implementation of the action plan PRoPoSAl Lower relevance themes to the organization oF ThEMES Top Executives Business areas Higher relevance themes to the organization and subsidiaries Social Responsibility Business Committee: Executive Board: Business areas and Management Committee: forwarding for decision / approval subsidiaries: recommendation of actions decision implementation of + the action plan directives and strategies of social responsibility Se cia ó a o nua r 200 e r o l at l r in dae n v il o n m8 n ta l r e p o r t 2 0 0 8 25
  30. 30. CommITmenT To susTAInAbLe deveLopmenT The commitment to adopt the ten principles of the UN Global Compact – relating to Human rights, Labor, environment and Transparency – guide the petrobras’ decisions Petrobras is one of the companies members of the un global compact — An initiative of the United Na- Globally Responsible Leadership Initiative (GRLI), a tions by which organizations agree voluntarily to com- project of the European Foundation for Management mit and to communicate their performance concerning Development (EFMD), supported by the UN Global ten principles related to Labor, Human Rights, Environ- Compact, which aims to further and support develop- ment and Transparency. Petrobras is a signatory since ment of responsible leaders. 2003 and the company CEO became a member of the The company, in partnership with Dom Cabral initiative International Board in 2006. In the Brazilian Foundation and under the coordination of EFMD, has Global Compact network, Petrobras and CPFL Energia created its own methodology to develop the Globally jointly chair the Human Rights and Labor Committee Responsible Leader. In the first module, top level execu- and Environment Committee. tives participated in four seminars in 2007 and 2008. iSo 26000 — The future international standard of In 2009, the plan is to increase the capacity building social responsibility is being drafted and is expected to among the other managers and later disseminate the be launched in the second half of 2010. Petrobras par- methodology worldwide through UN Global Compact- ticipates in its development process representing the related networks. industry segment in the Brazilian delegation. In order to further discussion of the ISO 26000 in Brazil, the participation in initiativeS company and the Brazilian Association of Technical and aSSociationS Standards (ABNT) have been promoting thematic sem- The commitment of Petrobras to sustainability is not inars for the Brazilian society. A highlight in 2008 was only expressed in strategic documents and internal the Petrobras - ABNT - ISO Devco workshop (ISO Com- management processes. The company also participates mittee for developing countries). This workshop was in several initiatives and is member of many national held in Rio de Janeiro attended by the Brazilian delega- and international organizations where the discussion tion and stakeholder representatives from Brazil, and of strategic topic is deepened, lessons are learned and South American countries, as Argentina, Bolivia, Chile, best practices of social responsibility are shared. Colombia, Ecuador, Peru, Uruguay and Venezuela. 26 S o c i a l r e S p o n S i b ie iix o l ty
  31. 31. Communication and Citizenship Workshop of the Quixote project millennium development goalS (mdg) — Although alliance between governments, international organi- it is a project designed for countries that agree to zations, investors, companies and civil society groups achieve the objectives by 2015, Petrobras supports to enhance transparency and accountability in the the MDG and takes actions to help achieve its goals, extractive sector, to improve the management of re- through an agreement with the UN Development Pro- sources obtained from this activity. Petrobras joined gramme (UNDP). In 2008, the company sponsored the the initiative in 2005 and agrees to encourage initia- second year of the MDG Brasil Prize, which acknowl- tives for transparency with the governments of the edges projects of social inclusion, achieving citizenship countries where it operates. and promoting human rights. global reporting initiative (gri) — The initiative Statement of g-8 climate change roundtable — prepares guidelines for sustainability reports in a process In this statement, company CEOs worldwide backed that involves representatives from various stakeholders the efforts of consciousness regarding climate change, groups around the world. By its participative nature and adopting policies and measures to mitigate greenhouse coverage of the indicators, it is considered the top interna- gas emissions. Petrobras joined the project in 2005 tional reference on guidance for sustainability reports. when it was launched. In 2003, Petrobras started to adress the complete partnering againSt corruption initiative (paci) — framework of the GRI guidelines when preparing the So- This initiative of the World Economic Forum was launched cial and Environmental Report and, in 2006, became an in 2004 and brings together companies to establish princi- Organizational Stakeholder of GRI. Since 2007, the com- ples and practices of integrity, justice and ethics in the pany is a member of the GRI International Stakeholders market’s competitive relations. Petrobras is signatory Council as one of the representatives of the industry in since 2005 and agrees to develop an effective program Latin America. The council discusses and deliberates to implement these principles and adopt a zero-toler- on GRI governance and makes recommendations to its ance policy toward bribery. Board of Directors on the guidelines preparation process. extractive induStry tranSparency initiative World buSineSS council for SuStainable develo- (eiti) — The EITI was set up in 2002 as a result of an pment (WbcSd) — More than 200 top global companies Se cia ó a o nua r 200 e r o l at l r in dae n v il o n m8 n ta l r e p o r t 2 0 0 8 27
  32. 32. CommITmenT To susTAInAbLe deveLopmenT participate in the initiative, to discuss solutions for in- reneWal in dJSi In 2008, tegrating the sustainability principles in business man- In 2008, Petrobras renewed its participation in the agement and solutions. Petrobras joined the WBCSD in Dow Jones Sustainability Indexes (DJSI), a portfolio of Petrobras 2007. In Brazil the company is also part of the Brazilian the New York Stock Exchange of companies with best renewed its Business Council for Sustainable Development (CEBDS) performance in economic, environmental and social participation in which is the national network of WBCSD and works to aspects, where it has been listed since 2006. In accor- achieve the goal of integrating Brazilian companies on dance with the assessment criteria, the company has the Dow Jones the discussion of sustainable development. standed as a benchmark in the oil industry on the crite- Sustainability international petroleum induStry environmental rias of transparency, brand management, environmen- Indexes (DJSI), conServation aSSociation (ipieca ) — In 2006, Petro- tal report, biodiversity, human resources development bras became a member of this non-profit organization and corporate citizenship. Today 20 global oil and gas a portfolio of oil corporations and business associations world- majors companies belong to the DJSI. of the new wide to adopt best practices in Safety, Health and Envi- york Stock ronment by drafting handbooks, guides and guidelines. deliSted from iSe The discussions concentrate on topics such as climate In 2008 Petrobras was no longer part of the corporate Exchange change, biodiversity, response to oil spills, health care portfolio of the São Paulo Stock Exchange Sustainabil- and social responsibility. ity Index (ISE-Bovespa), where it has listed since 2006. aSociación regional de empreSaS de petroleo y The Petrobras Executive Board submitted to the Delib- gáS natural en latinoamérica y el caribe (arpel) — It erative Council of ISE a formal request to explain the brings together oil and gas companies and institutions reason for this decision and at their answer they invited operating in Latin America and the Caribbean to en- Petrobras to submit its main sustainability projects. courage development and integration of the region and The company awaits the schedule for this presentation. to strength the relationship with society. Petrobras is The chairman of the Deliberative Council of the represented on nine committees and with Repsol co- Ethos Institute disclosed to the press the presumed chairs the Committee of Corporate Social Responsibil- reason for Petrobras being delisted, information which ity. In 2008, the Committee focused mainly on develop- concerns only to the members of the ISE Deliberative ing a Management System for Community Relations. Council, since it is protected by a clause of confiden- brazilian inStitute of oil, gaS and biofuelS (ibp) tiality. For this reason the company decided to disas- — This organization’s role is to further development of sociate from the Ethos Institute and the institute was the Brazilian oil and gas sector to make it competitive, suspended from the ISE council for one year. ■ sustainable, ethical and socially responsible. There are more than 200 members in 44 commissions, committees and working groups, including the Biodiesel and Social Responsibility Committees, and the HSE Subcommittee. 28 S o c i a l r e S p o n S i b ie iix o l ty
  33. 33. Social and environmental report TRAnSPAREncy In PERFoRmAncE DIScloSuRE The social and environmental report is the » disclosure of information about the performance of the Petrobras System in the economic, environmental and social areas. Se cia ó a o nua r 200 e r o l at l r in dae n v il o n m8 n ta l r e p o r t 2 0 0 8 29
  34. 34. soCIAL And envIronmenTAL reporT comPAnIES AnD SubSIDIARIES REPoRTED In ThE REPoRT 2008 › petrobras Holding in brazil and in another 27 countries where it operates(1) › petrobras distribuidora › petrobras Química s.A. (petroquisa) › petrobras biocombustível › petrobras Transporte s.A. (Transpetro) › Alberto pasqualini refinery (refap)(2) The selection of these companies and subsidiaries was based on the following criteria: participation in the management and control and their representation on petrobras' results. The recently acquired companies were not reported due to some of the above reasons and/or because they are in a stock transfer process. 1) does not include the thermal power plants controlled indirectly by the company. 2) refap is controlled in conjunction with repsol ypF and is not included among the refineries of the petrobras Holding. This edition of the annual publication includes data for 6. Transparency: information about Petrobras the period between January 1 and December 31, 2008, relations with its stakeholders, including the and is also a report on the company’s progress in com- measures taken to guarantee transparency and plying with the ten UN Global Compact principles, ini- ongoing dialogue. tiative of which it is a signatory. The Committee for Preparing and Assessing Social and The information in the report is organized under Environmental Responsibility Reports is in charge of the following items: drafting the Social and Environmental Report. This 1. Petrobras: general profile data of the committee consists of representatives from 29 areas organization, corporate strategy and and subsidiaries of the Petrobras System. These repre- performance in 2008; sentatives compile the information through a collab- 2. Social Responsibility: data on social orative network, which in 2008 consisted of 370 or so responsibility management and the Social and professionals of the company participating in produc- Environmental Report; ing the report. 3. Human Rights: Petrobras initiaties for the respect The data is recorded in the Social Responsibility and protection of Human Rights; Eletronic Data System and validated by the Commit- 4. Labor: information about the company’s labor tee before its publication. The process is coordinated relations with its workforce and actions taken by the Institutional Communication of Petrobras to eliminate child and forced labor in its value Holding. chain; In order to facilitate guidance and understanding, 5. Environment: data on environment and eco- all information disclosured in earlier reports that were efficiency management; reformulated in this Report, plus the contextualiza- 30 Social reSponSibilit y
  35. 35. tion of the estimates presented and changes in the data recognition measuring method are followed by explanation for its At the GRI Readers’ Choice Award, organized by GRI, The relevance changes. In this report, there was not major change in Petrobras Social and Environmental Report 2006, was scope or coverage in relation to last year’s report. elected by the readers as the best report in the All Stake- level of themes holders and Civil Society categories. The announcement is assigned management tool was made at the awards ceremony in May 2008, at the by Petrobras The Social and Environmental Report has two stra- Amsterdam Global Conference on Sustainability and tegic roles for social responsibility management. Transparency. stakeholders While it is a dialogue tool - to the extent that it in- On a survey promoted by GRI, sustainability forms about Petrobras actions and provides chan- report readers voted by Internet on reports they nels for the stakeholders to express their opinion -, it considered to be the best based on their requirements is also a tool to assess corporate management, since and preferences. More than 1,700 people from its process encompasses as a self-diagnosis, identify- 70 countries participated on the process. Eight ing opportunities for improvement. hundred reports from 50 countries were assessed The 2008 report was based on the latest version of according to their category of public: civil society, the GRI Guidelines for Sustainability Reports, known media, financial market, employees, non-business, as GRI G3. Its indicators give guidance on relevant not-so-big business, non-OECD, and all Stakeholders matters in the economic, environmental and social group, the last being the total votes of the seven spheres and the principles that must guide the com- preceding groups. panies when preparing a report. The criteria adopted for defining the report notable communication on content is the level of importance attributed to progreSS by the un global compact the topics by Petrobras and its stakeholders. They For the third consecutive year, the Social and Envi- are consulted through a process called Materiality ronmental Report was considered notable by the UN Test, which allows the company to draw up an over- Global Compact. The criteria for identifying notable re- view of stakeholder's expectations (learn more about ports consider the statement of ongoing support for the the Materiality Test at the appendix, on pages 130 initiative, clear description of the actions for its imple- and 131). mentation, following up the results and reliability, clear After releasing the Social and Environmental Re- and updated information in the report in addition to port, Petrobras contracts a consulting firm special- including dialogue with the stakeholders. ized on sustainability reports to assess any gap in management and content. This process, called Vulner- diStribution and communication abilities Map, allows the company to draw up action The Social and Environmental Report 2008 is published plans to enhance its action and constantly improve in Portuguese, English and Spanish and is designed for performance and its report. In 2008, in addition to the all the company’s stakeholders: clients, scientific and Vulnerabilities Map, Petrobras undertook an assess- academic community, communities, consumers, sup- ment of the Social and Environmental Report 2007 by pliers, press, investors, partners, public authorities, in- the public participating in the Materiality Test. The ternal public, resellers and the third sector. results of both processes were analyzed and consid- Its communication and distribution are planned ered while preparing this report. and encompasses various actions, such as creating For the third consultive year the information of summarized version for employees and the general the Social and Environmental Report were audited public, a version in Braille for the visually impaired, and revised by KPMG Auditores Independentes. The announcement and disclosure on partners’ sites. The auditors’ letter of Independent Verification is pub- Social and Environmental Report 2008 is available on lished on page 139. the Petrobras site (www.petrobras.com.br). ■ S o c i a l a n d e n v i r o n m e n ta l r e p o r t 2 0 0 8 31
  36. 36. CoMMUNities HUMAN re l At i o N s Hi p CUltUre sUppliers 32 eixo
  37. 37. CitizeNsHip iNvestMeNts riGHts soCiAl Human rigHts All Petrobras operations and facilities conform to environmental regulations and adopt the principle of respecting life and citizenship. In order to fulfill this commitment, social, cultural and sports projects are developed for its surrounding communities, to prevent, monitor, assess and control the impacts of its activities in these regions. In 2008, Petrobras allocated approximately R$ 500 million to sponsoring and supporting these actions. This sum also includes the contribution of R$ 48.5 million to the Fund for Childhood and Adolescence (FIA), focusing on guaranteeing the rights of children and adolescents. Petro- bras is also concerned with the activities of its service providers, establishing contracts with clauses that reject forced labor and eliminate the use of slave or child labor or labor in degrading conditions. r e l at ó r i o a n u a l 2 0 0 8 33
  38. 38. Community Development prinCiple 1 Businesses should support and respect the protection of internationally proclaimed human rights PROJECTS IN PARTNERSHIP WITH COMMUNITIES » petrobras is committed to maintaining ongoing communication channels and open dialogue in its surrounding communities. 34 H u m a n r i g Hx o ei ts
  39. 39. Actions taken with the participation of community The company also acknowledges that the invest- members are in accordance with local culture and ments in infrastructure and services can generate im- customs and are designed to prevent, monitor, assess pacts – positive or negative – in the daily activities and and control the impacts where Petrobras is present. the economy of wherever it operates. This is why it strives They also seek to ensure the process of social insertion to improve its operations, pursuing local development, and improve the quality of life of the communities, also always taking precautions to reduce the negative im- aiming to reduce the interference of the company ac- pacts on the surroundings to the minimum as possible. tivities in cultural processes. Undertakings are concerned mainly on investment Petrobras identifies the basic needs of the re- in public utilities, such as water and power supply, gions where it operates and seeks to promote health sanitation, roads and hospitals. They include reurban- care in the areas around its facilities, with monitor- ization and conservation of historic monuments. In ing services for control of endemic diseases, provid- Brazil, for instance, investments include road building ing medical care and social assistance to prevent, and access roads in the area of influence of the Rio de control and accompany health problems caused by Janeiro Petrochemical Complex (Comperj), which will impacts from its operational activities, products allow shorter and safer journeys. The Transpetro ur- and services. banization projects of stretches of pipelines maintain Art & Dressmaking Cooperative – fashion and style in the solidarity economy, Fortaleza, Ceará state se Cia ó a o nua r 200 e r o l at l r in Dae n v il o n m8 n ta l r e p o r t 2 0 0 8 35

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