Petrobras' Role in Energy Integration and Renewable Fuels in South America

1. The Role of Petrobras in Energy Integration and Renewable Fuels in South America José Sergio Gabrielli de Azevedo President and CEO September 25, 2006

2. Disclosure The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. Cautionary Statement for US investors The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.

3. Concentration of reserves in sensitive areas cause for increasing concern • In the medium to long term light oil supplies likely to come from Middle East, Africa (OPEC) and Russia • More than 62% of the world reserves on the hands of 5 Middle East Countries 742.7 (reserves billion boe) 140.5 114.3 103.5 59.5 40.2 Africa South and Central America Asia North America Europe & Middle East Eurasia Fonte: BP Statistical Review of World Energy

4. Latin American proven oil reserves have increased in relative importance and average life 1984 1994 2004 R/P* = 41.84 R/P* = 41.78 R/P* = 26.77 Total 762 billion boe Total 1.017 billion boe Total 1.188 billion boe • In 20 years, Latin America’s proven reserves increased from 36.6 billion barrels (1984) to 101 billion barrels (2004). Source: BP Statistical Review of World Energy * Reserves/Production Latin America (years)

5. World Total Primary Energy Supply has shown increased use of gas, coal and nuclear sources 1973 2004 Increase 5,069 Mtoe 6,154 Mtoe 11,223 Mtoe Source: IEA Energy Statistics

6. Compared to OECD, LA uses more hydro, oil and renewables and less nuclear and coal (2003) Latin America OECD World 464 Mtoe 5,395 Mtoe 10,579 Mtoe In comparison to the whole world LA uses much less coal and more crude oil as a result of China. Source: IEA Energy Statistics

7. Transportation (liquids) in energy consumption is likely to increase with growing income Latin America OECD 364 Mtoe 3,754 Mtoe Source: IEA Energy Statistics

8. Coal has dominated Electric Energy Generation growth in the world Coal Crude Oil Natural Gas Nuclear Hydro Renewables Geothermal/Solar/Eolic

9. While in LA hydro power has predominated followed by natural gas Carvão Petróleo Gás Natural Nuclear Hídrica Renováveis Geotérmica/Solar/Eólica

10. PETROBRAS in position to promote energy integration in South America • Explore synergies between existing companies in Brazil, Argentina, Bolivia and Colombia • Increase exploration and production efforts in Peru, Ecuador and Venezuela • Intensify commercial operations in Paraguay, Uruguay and Chile • Invest in tecnology logistics and production of renewable fuels • Participate in development of integrated gas pipeline network

11. Corporate Strategy already points to integration and renewable fuels Corporate Strategy Social and Environmental Responsibility Growth Profitability Lead the Latin American oil, natural gas, oil products and biofuels market, working as an integrated energy company, with selective expansion in petrochemical, renewable energy and international activities. Liderar o mercado de petróleo, gás natural e derivados na América Latina, atuando como empresa integrada de energia, com expansão seletiva da petroquímica e da atividade internacional. Consolidate and increase competitive advantages in the Brazilian and South American oil and oil products market Develop and lead the domestic natural gas market and perform in an integrated manner in the gas and power market in South America Selectively expand international activities in an integrated manner with the Company’s business Selectively expand interest in the petrochemicals market Expand participation in biofuels market, lead the domestic biodiesel production and increase participation in the ethanol business Operational, management, technological and human resources excellence

12. Petrobras already among largest publicly traded companies Proven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005 7th 7th Refining capacity (thousand bpd) - 2005 Reserve life (years) – Dec. 2005 5th 9th Source: Evaluate Energy and Company Reports

13. Investment Plan reflects integrated global expansion 49.3 US$ 12.1 bi 31.0 1.8 23.0 2.3 US$ 75.0 bi 3.3 7.5 1.0 12.4 1.0 E&P Downstream G&E Note: Includes International Petrochemical Distribution Corporate Business Plan 2007-2011 US$ 87.1 billion 49,3 23,0 1,8 2,2 3,3 7,5

14. Capex to be financed with its own cash flow Sources Uses (US$ 99.3 billion) (US$ 99.3 billion) (*) • Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011).

15. Oil and gas production based on development of existing reserves • Strong investments in production will optimize the development of Petrobras’ proven reserves, aiming light oil production and a minimum reserve/production ratio of 15 years. • Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells classified as discovery or producing wells. Undeveloped Reserves / Total Reserves* (2005) 17 * Source: Evaluate Energy

16. Production targets assure brazilian consumption and among most ambitious in the industry 7.5% p.a. Thousand boed 4,556 7.8% p.a. 3,493 2,403 2,217 2,036 2,020

17. Fast growing domestic natural gas market for electicity and other uses Natural gas market 121.0 121.0 17.7% p.a. 45.4 Million m3/day 36.9 * Considers maximal dispatch for every thermoelectric power plant

18. Brazilian market open for investments in downstream New Refinery in Pernambuco • Investment: US$ 2,5 billion • Throughput capacity: 200 thousand heavy oil barrels (50% Petrobras oil / 50% PDVSA oil) • Focusing diesel and LPG production maximization, the new refinery will aim the growth of oil products demand in the Northeast. • The Northeast Region, which responds for 19% of oil products demand and holds only one refinery in Bahia, will no longer be a fuel importer (either from refineries in Brazil or abroad). • Costs reduction: oil products transportation are more expensive than for crude oil.

19. and petrochemicals Petrochemical Complex – Itaboraí São Gonçalo Liquids Outflow Unit • Advantages: • Proximity to Petrobras’ installations in Rio de Janeiro; • Availability of labor for both the construction and operational phase; • Proximity to port installations. • Products: Diesel, LPG, Ethylene, Propylene, PX,Benzene and Coke. • The Complex will add value to 150,000 barrels/day of heavy oil form the Campos Basin. • Investments of US$ 3.3 billion in Petrochemicals or more with Rio de Janeiro petrochemical plant • Reducing the Brazilian deficit and adding value to Downstream production.

20. Southern cone and Venezuela to receive US$3.3 billion Capex and US$3.9 billion still to be allocated Americas, Africa e Eurasia: US$ 5.4 Million South Cone: US$ 2.8 Million New Businesses: US$ 3.9 Million

21. Paraguay • 132 service stations • Uruguay • 89 service stations • Natural Gas Distribution: share control and operation of Conecta and Gaseba (Montevidéu) Producing, refining and distributing in the South Cone • Bolívia • Production: San Alberto e San Antonio; and Colpa-Caranda (*) • Proved Reserves: 553 MMBOe (SPE, 2005) • 2005 Average Production: 54,100 boed • Yacuiba – Rio Grande Gas pipe (431 km, 32”, 17 MM m3/dia transportation capacity) • 2 Refineries, with 60,000 bpd of total capacity • 20 service stations with Petrobras brand • Argentina (*) • Proved Reserves: 336 MMBOe (SPE, 2005) • 2005 Average Production: 104,000 boed • Refining and Distribution: 62,900 bbld in Ricardo D. Eliçabe – Bahía Blanca, Refisan - San Lorenzo; and Refinor (28.5 % interest:) refineries • 648 service stations • LUBRAS lubricant plant • Dock Sud and Puerto Galvan Terminals • Petrochemical • Power generation • Energy Transmission and Distribution • Oil and Gas Transportation (*) Petrobras Energía

22. Exploring and producing in Ecuador and Peru • Ecuador (*) • 1 Production Block • 1 Exploration Block • Proved Reserves: 81.2 MMBOe(SPE 2005) • Production: 9.1 thous. boed – 2005 • Peru (*) • 1 Production Block • 5 Exploration Blocks • Proved Reserves: 109.2 MMBOe(SPE 2005) • Production: 14.3 thous. boed – 2005 (*) Petrobras Energía

23. Producing and exploring in Colombia and Venezuela, and distributing in Columbia • Venezuela • 4 Production Blocks (*) • 2 Explorations Blocks (*) • Proved Reserves: 269 MMBOe(SPE 2005) (*) • Production 47.6 thous. boed – 2005(*) • Moruy II exploratory block, operated by Petrobras in the Venezuelan Golf • Colômbia • 6 Production Blocks. Includes Guando field, the largest discovery in the country in the last 15 years. • 11 Exploration Blocks. Includes Tayrona Block (22,500 km2) in deep waters of the Caribbean Sea • Proved Reserves 36.3 MMBOe (SPE 2005) • Production 16.6 thous. boed – 2005 • 39 service stations (*) Petrobras Energía

24. Company commitment to reduce carbon intensity of operations and products Oil Natural Gas Renewables Availability of 855,000 m3/year of biodiesel Processing 425,000 m3/year of vegetable oil (H-BIO) 3.5 million m3 ethanol exports 240 MW installed capacity of power generation from renewable sources Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent) Investments of US$ 0.7 billion in renewable energy and biofuels

25. Ethanol from sugar cane much more efficient than from other crops

26. LIGHT VEHICLES TOTAL SALES units 150,000 140,000 Ethanol Gasoline FFV 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Feb-06 Jul-03 Jul-04 Jul-05 Nov-05 Feb-03 Feb-04 Feb-05 Oct-05 Nov-03 Nov-04 Apr-03 Apr-04 Apr-05 Jan-06 Aug-05 Oct-03 Oct-04 Dec-05 Jun-03 Aug-03 Jun-04 Aug-04 Jun-05 Sep-05 Jan-03 Jan-04 Jan-05 Mar-06 Sep-03 Dec-03 Sep-04 Dec-04 May-03 May-04 May-05 Mar-03 Mar-04 Mar-05 Ethanol-gasoline flex-fuel vehicles are already a reality • Consumer wants to decide the fuel at the gas station • Fuel price is one the most important factor • Consumer is aware of pollution and renewable fuels • Today cars manufacturer is producing 80% of FFV in Brazil

27. Ethanol may become a global market • Ethanol global market is 46.5 Billion Liters (2005) • Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production) • Today the ethanol consumption is 2.6% of gasoline MKT • 10% of ethanol in gasoline will represent 118 Billion Lt Brazil-Japan Ethanol Inc. • Recently, Petrobras incorporated Brazil-Japan Ethanol Inc. • The company will import and distribute Brazilian-produced ethanol in Japan; • Development of technical and commercial solutions for the reliable and long term supply of alcohol in the Japanese market; • Petrobras will break into one of the most complex and important energy markets in the World: • ethanol logistics distribution • fuel distribution sector in Japan.

28. But as all renewables need investments in logistics New Ethanol Pipeline (800 km) New Water Way for Ethanol Ethanol Export 8.0 Million m3 in 2012 Marine Terminal Rio de Janeiro Marine Terminal São Paulo

29. Bio diesel and H-bio will reduce dependency on imported diesel • H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil; • Hydrogenation of a blend of diesel and vegetable oils; Hydrogen Diesel Fractions Agribusiness Processed Oil Seeds Farming Crushing Refinery or Diesel or Transesterification Biodiesel Ethanol Distributors or or B2 or B5 mixture Diesel Methanol Stations Glycerin + Others Complementary and not competitive processes

30. Muchas Gracias