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Mitsubishi UFJ Securities “Brazil Day”Conference - 2008
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DISCLAIMER
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.
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 withthe SEC.
CAUTIONARY STATEMENT FOR US INVESTORS
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2005 2006 2007
LTM (6/30/2008)
Net Revenues 56.3 72.3 87.7 108.6 EBITDA 17.6 22.9 25.3 31.8 2005 2006 2007 1H08 Capex 10.4 14.9 21.0 24.3 Total Debt(1) 21.2 21.3 21.9 25,9 Cash & Cash Equivalents
9.9 12.7 7.0 6.6
Net Debt 11.3 8.7 14.9 19.2 Total Equity 32.9 44.3 65.2 83.0 Total Assets 78.6 98.7 129.7 156.9
NOTES:
Exploration & Production
Downstream(Supply)
Gas & EnergyDistribution
Petrochemicals
Downstream
16%
Domestic E&P
81%
Distribution
3%
International
CORPORATE ORGANIZATION AND KEY OPERATING RESULTS
Summary Financials (US$ billion)
Income from Operations(2)
1 Includes capital leases2 For tthe year ended December 31, 2007. Excludes losses in gas and energy, corporate results and eliminations
Biofuels
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Profitability
To grow production and
oil and gas reserves
sustainably, being recognized for excellence in E&P operations
To expand integrated
operations in refining,
commercialization, logistics and
distribution with a focus on the Atlantic
Basin
Expand operations in target markets for oil, oil products, petrochemicals, gas and energy, biofuels and distribution, being a world benchmark as an integrated energy company
IntegratedGrowth
Social and Environmental Responsibility
Gas & EnergyE&P Downstream (RTC) Distribution Petrochemicals Biofuels
CORPORATE STRATEGY
Develop and lead the Brazilian natural
gas market and operate on an
integrated basis in the gas and electric energy markets with
a focus on South America
Expand operations in
petrochemicals in Brazil and South America on an
integrated basis with the
PETROBRAS Group’s other businesses
Operate on a global basis in biofuels
commercialization and logistics, leading the
domestic production of biodiesel and
expanding participation in the ethanol segment
Operational, management, technological and human resources excellence
Commitment to sustainable development
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BALANCED VERTICAL INTEGRATION
PetrobrasOther Companies
Existing PipelinesRefineriesTerminal aquaviárioTerminal terrestre
Upstream Operations Downstream Operations
Proved Domestic Reserves of 13.92 Billion BOE (SPE)Southeast Basins responsible for more than 80% of Brazil’s oil production2007 domestic oil average daily Production of 1,792 k bpd
11 refineries in Brazil2007 domestic throughput of 1,795 k bpd 2007 oil products domestic consumption of 1,725 k bpd
Áreas de Concessão(outubro/2005)
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Source: Bloomberg
TRADED VOLUME 2003 - 2008
Turnover NYSE & Bovespa (daily average US$ MM)
$304
$552
$382$431
$998
$132
$56
$101
$25,0
$201
$99
$227
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2003 2004 2005 2006 2007 2008 YTD
Dai
ly A
vera
ge (U
S$ M
M)
PETR4 (Bovespa) PETR3 (Bovespa) PBR/A (Nyse) PBR (Nyse)
$60
$2,034
$992
$483
$219$111
NysePBR
PBR/A
BovespaPETR3PETR4
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DIVIDEND POLICY
28%
34%30% 30% 29% 29%
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
2002 2003 2004 2005 2006 20070%
10%
20%
30%
40%
50%
Net Income Dividend Dividend as % of Net Income
According to the Brazilian Corporate Law, shareholders are entitled to a mandatory dividend of 25% of the annual net income.
In the last years, Petrobras has been paying an average of 30%
US GAAPUS$
* Net Income and Dividends based on provisioned dividends and US GAAP.
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UPSTREAM OVERVIEW
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LONG-TERM RECORD OF INCREASING RESERVES
15.015.014.914.914.512.1
10.710.4
2000 2001 2002 2003 2004 2005 2006 2007
BY DEPTH
BY GRAVITY
OIL VS. GAS
BY LOCATION
92%
8%
56%
23%
11%10%
85%
6%9%
Non-Assoc. GasAssoc. GasOil and Condensate
OnshoreOffshore (0-300m)Offshore (300-1500m)Offshore (>1500m)
74%26%
BrazilInternational
> 31o API Light< 31o API Heavy/Intermediate
WORLDWIDE PROVED RESERVES OF PETROBRAS (SPE)PROVEN RESERVES BY CATEGORY
(Reviewed and Certified by DeGolyer and MacNaughtonsince 2001)
BILLION BBLS
Note: SPE (Society of Petroleum Engineers) method and includes both Brazilian and international reserves.
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E&P - RAPIDLY GROWING PRODUCTION PROFILE
2 .8 122 .4 2 1
6 4 3
6 3 7
515
2 8 5151
18 3
809 869 1 . 004 1. 132 1 . 271 1. 336 1 . 500 1. 540 1. 493152 163
179197
221 232252 250 265
1 . 684
716
1. 778 1. 792
274
134
277 273142
168161
25 38 47 4560
53 4435 163
12610196
94852324
20161011910
109
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Natur al Gas - Inter national
Oi l and NGL - Inter national
Natur al Gas - Br azi l
Oi l and NGL - Br azi l
Thou
sand
boe
d
2012 Target 2015 Forecast
* Includes non consolidated production
885
3,494
4,153
8.7% p.y.
7.7% p.y.
*
*
1,008 1,0901,238
1,505 1,5651,636
1,810 2,036 2,0202,217
8.3% p.y.
2,298 2,300
11
2.421
1.792
1.950*2.191
2.2962.374
1.600
1.800
2.000
2.200
2.400
2.600
2007 2008 2009 2010 2011 2012
Obs.: This curve does not include Tupi’s Pilot System Production
MAIN PROJECTS IN BRAZIL – 2007-2012
Rio de JaneiroEspadarte Mód II100.000 bpd6/jan/07
RoncadorP-52180.000 bpdNovember 2007
RoncadorP-54180.000 bpdNovember 2007
Piranema30.000 bpd10/oct/07
Cidade de VitóriaGolfinho Mód. 2100.000 bpdNovember 2007
Marlim LesteP-53180.000 bpd2008
Marlim Sul Módulo 2P-51180.000 bpd2008
Cidade NiteróiJabuti (FPSO)100.000 bpd2008
Parque das Conchas100.000 bpd2009
Frade100.000 bpd2009
Cachalote & BaleiaFranca FPSO Capixaba100,000 bpd2010
Marlim SulMódulo 3 –P-56
100.000 bpd2011
EspadarteMódulo 3100.000 bpd2012
JubarteP-57180.000 bpd2011
TupiEWTUp to 30.000 bpd2009
TupiPilot SystemUp to 100.000 bpd2010
RoncadorModule 4 P-62100.000 bpd2012
* Target may vary +/- 2.5%
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3.3 3.0 3.4 4.3 5.7 6.6 7.7 8.7 9.93.3 4.0 5.1 6.4 9.0 11.1 11.7 16.221.2
24.4 24.8 28.8
38.2
54.4
65.172.5
96.9
121.0
-10
10
30
50
70
90
110
130
2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08
US$/b
oe
Lifting Cost Production Tax Brent
8.510.7 14.7 17.7 19.4
24.9
7.06.6
31.1
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Sergipe-AlagoasLight Oil
Espirito SantoLight Oil & Natural Gas
CamposProducible Heavy Oil & Light Oil
SantosLight Oil & Natural Gas
Proven Reserves: 3.80 B boeProb.&Poss. Res: 4.50 B boeUnder Evaluation (2007) : 4.70 B boe
~ 13.0 billion boe(2002-2007)
MAIN DISCOVERIES - 2002/2007
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164 Million years ago152 Million years ago130 Million years ago122 Million years ago108 Million years agoEarth Planet as today
EARTH DEVELOPMENT
0 4960 Miles
SINBPA/Petrobras - Scotese
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PRE SALT PROVINCE
hinge line
Well Tested HC CampusExploratory blocks Pre-salt Reservoirs
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RECENT OIL/GAS DISCOVERIES 2006-2007 - CLUSTER BLOCKS
Discovered fields before 1984Discovered fields between 1985/2001Discovered fields between 2002/2007Cluster Blocks
Production to date: 7 bi boeActual Production: 1.6 MMboepdProducing Wells: 542 Area: 7,000 km2
Pre-salt Cluster:15.000 km2Tupi: 5 to 8 bi boeIara: 3 to 4 bi boe
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TUPI AND NEIGHBOURING BLOCKS
Wells Drilled
Evaluation Plans approved by ANP
Evaluation Plans being prepared/under negotiation
Parati – 1-RJS-617Tupi – 1-RJS-628Carioca – 1-SPS-50Caramba – 1-SPS-51Guará – 1-SPS-55
Bem-Te-Vi – 1-SPS-52Júpiter – 1-RJS-652Iara – 1-RJS-656
Blocks ConsortiumBMS-8BMS-9BMS-10BMS-11BMS-21BMS-22BMS-24BMS-50
BR (66%), SH (20% e PTG (14%)BR (45%), BG (30%) e RPS (25%)BR (65%), BG (25%) e PAX (10%)BR (65%), BG (25%) e PTG (10%)BR (80%), PTG (20%)EXX (40%), HES (40%) e BR (20%)BR (80%), PTG (20%)BR (60%), BG (20%) e RPS (20%)
BM-S-21Caramba
BM-S-24Jupiter
BM-S-8Bem-te-Vi
BM-S-9Carioca
BM-S-11Tupi
BM-S-17
BM-S-42
BM-S-10Psrati
BM-S-42
Yara
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* Leased from BW Offshore
EXTENDED WELL TEST -TUPI
1st Oil: March/2009
1 Oil Production
Capacity
1Riser to Export Gas1000 thous. m3Flare Capacity
Wells
2,170 mWater Depth
28 – 42 º API30,000 bpd
Oil RangeCapacity to Process Oil
FPSO – Leased*
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Capacity
5 oil production (+4 extra)2 water injection (+3 extra)
1 gas injection (+1 extra)Wells
20 – 30 º APIOil degree
100 mil bpd60 mil bpd
Water InjectionWater Production
2,145 mWater Depth
4 million m3 /d
100,000 bpd
Capacity of Gas Compression
Capacity to Process Oil
1st Oil: Dec./2010
TUPI PILOT SYSTEM* - PRODUCTION UNIT
* Leased from Modec
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2812269628Total per year
63352321156Cumulative
+ 28 new units to be leased
• Delba V• Delba VI• Scorpion• Delba VII• Delba VIII• Norbe IX• Schahin 1• Schahin 2• Norbe VIII• Petroserv• Etesco 8• Sevan Brasil
•Delba IV
• Gold Star• Schahin I• Norbe VI• Delba III• SSV Victoria• West Orion
• Lone Star• Schahin III• Petrorig II• Sevan Driller• West Taurus• West Eminence• Dave Beard
5≥ 2000m
From 2013 to 2017
1000-1999m
0-999m
Water Depth
18
5
Operating 2007
• Pride South Atlantic
• O. Yorktown• Pride Mexico • Borgny Dolphin• Ocean Concord• Falcon-100
Start Up 2008
Olinda StarOcean Worker
Start Up 2009
•Petrobras XIV
Start Up 2011
Start Up 2010
Start Up 2012
NEW RIGS
Stena Drillmax e Dep Water Millennium are not being considered since they are being negotiated in the Spot Market
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CONTRACTING OF 10 FPSOs FOR THE PRE-SALT AREA
10 new FPSO-type oil-production platforms for the Pre-Salt areas in the Santos Basin.
First two FPSOs to be chartered:• Oil Production Capacity: 100,000 bpd;• Gas Compression: 5 million m3;• Employed as Pilot Units in new Blocks;• Start-up between 2013 and 2014.
Eight additional FPSOs belonging to Petrobras:• Construction of the hulls at the dry dock of the Rio Grande Shipyard, in Rio Grande do Sul;• Dry dock leased by Petrobras for a 10 years term; • Topside production modules to be defined in the future;• Oil Production Capacity: 120,000 bpd;• Gas Compression: 5 million m3;• Start-up in 2015 and 2016.
After the 10 FPSOs are deployed, major technological innovations will be introduced for the subsequent production development phases in the pre salt.
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DOWNSTREAM OVERVIEW
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DOWNSTREAM REFINING CAPACITY(thousands barrels/day)
REFINING INFRASTRUCTURE
Pasadena - Estados Unidos 100 91Ricardo Eliçabe - Argentina 31 29San Lorenzo - Argentina 50 47Okinawa – Japan 100 19
TOTAL INTERNATIONAL 281 186(*) (**) TOTAL 2.267 1.965
Refineries Capacity(Mbpd)
Troughput(Mbpd)
Paulínia - Replan (SP) 365 348Landulpho Alves - Rlam (BA) 323 261Duque de Caxias -Reduc (RJ) 242 243Henrique Lage - Revap (SP) 251 236Alberto Pasqualini - Refap (RS) 189 148Pres. Getúlio Vargas - Repar (PR) 189 169Pres. Bernardes - RPBC (SP) 170 153Gabriel Passos - Regap (MG) 151 132Manaus - Reman (AM) 46 41Capuava - Recap (SP) 53 42Fortaleza - Lubnor (CE) 7 6TOTAL BRAZIL 1.986 1.779
(*) According to ownership acknowledged by the ANP (National Oil Agency)(**) Only includes refineries with equity holding equal to or above 50%
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29%
13%
18%4%
8%
8%
20%
Quality (8,619)Conversion (3,938)Expansion(5,353)HSE (1,083)Transportation (2,270)Pipelines (2,264)Others (6,112)
3
5
8
10
3
Delayed Coking HDT - NK Destilates HDT HDS Gasoline CatalyticReforming
New Refining Units (2008 – 2012)
TOTAL DOWNSTREAM INVESTMENT: US$ 29.6 BILLION
*HDS: Hidrodessulfurização ˚HDT: Hidrotratamento
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Exports (‘000s barrels/day) Imports (‘000s barrels/day)
319450
352 370 390
105
109
94 118 148
209
125
2003 2004 2005 2006 2007 2012
233 181263
335 353
213228
260246 262
454
141
2003 2004 2005 2006 2007 2012Oil Oil Products
NET EXPORTS OF OIL AND OIL PRODUCTS
• Surplus in Liquides;
• Deficit in Trade Balance
446409
615581 595
523
424488
538
334
559
446
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REFINING EXPANSION - INTERNATIONAL
REFINERY IN THE USAPetrobras has acquired 50% of the Pasadena Refinery System Inc. (PRSI), located in Texas, USA;Capacity of 100,000 bbl/day, will be upgraded to handle up to 70,000 bbl/day of heavy oil and feedstock;
Petrobras signed the purchase document of 87.5% interest in the Japanese Company Nansei Sekiyu Kabushiki Kaisha (NSS)
REFINERY IN JAPAN
ACQUISITION INCLUDES:a refinery with capacity of 100 thousand bpd, that process light crude oil and high quality products,
a crude oil and products terminal with storage capacity of 9.6 million barrels, three piers with capacity to receive product vessels of up to 97 thousand deadweight tonnage (dwt),
a mono buoy for Very Large Crude vessels (VLCC) of up to 280 thousand dwt.
The use of terminal capacity is planned to boost the commercialization of biofuels in Japan and other Asian markets and complement current trading of crude oil and products into Asian market of approximately 100,000 bpd.
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GAS AND ENERGY OVERVIEW
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Participation of the natural gas in the Brazilian energy matrix
Sour
ce: M
ME, B
EN 2
006
In 16 years, natural gas participation in the energy matrix increased 370%, boosted by the ramp up of Campos Basin production and Gasbol pipeline
Campos Basin
Gasbol
INCREASING DEMAND FOR NATURAL GAS
1970 1980 1989 1990 1998 1999 2000 2002 2004 2006
4.7%
9.4%
2.0%
2007 2012*
10%13,4%
*Forecast
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Million cu.m/day
1998
TermeletricIndustrialOther Uses*
134
•Other uses: vehicle, residential / commercial, refineries e fertilizer plants•Source: Petrobras and MME
E&P
Boliv
iaLN
G
0
20
40
60
80
100
120
140
160
2000 2007 20122012
25,3
17,5
48,3
10,9 16,1 5,5
Average Demand Average Supply
12,5
1,9 1,79,4 0,5 0,9
134
48,0
42,1
43,9
72,9
30,0
31,1
NATURAL GAS SUPPLY VS. DEMAND
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GAS & POWER OPERATIONAL PERFORMANCE
Energy sold in the last auctions
Increase gas supply from E&P
New gas pipelines in operation
New regulatory framework in the electric sector
Next Steps…Completed ActionsMore gas available to be sold or to be used in
thermo generation
Better prices and margins
Higher dispatch in the thermo power plants to guarantee the security of the electric system
Recovery of fixed costs
Reduction in contractual penalties
HydroNuclearWindCoalThird-parties Thermo generation (oil + gas)Petrobras Thermo generation (oil + gas)
New contracts with the distribution companies
40.000
42.000
44.000
46.000
48.000
50.000
52.000
jan/07 jun/07 jan/08 jun/08
MW av
erga
e
Gas-fired thermo generation growing importance in Brazil
Creating flexibility in the portfolioIncrease LNG regasification capacity
Completing gas infra-structure
Increasing domestic production
More contracts sold in energy auctions
Source: ONS (Brazilian Energy System)
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RENEWABLES
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Begun operation of the First Ethanol Lignocellulosis Pilot Plant, in BrazilThe pilot phase is focused on the optimization of the production process of the bio ethanol (second generation fuel which diminishes environmental impacts) Semi- Industrial bio ethanol plant: Forecast 2010
2008-2012 INVESTMENTS 2012 TARGET
Biodiesel Plants Availability of 938 Thousand m3/year
H-Bio (Bio-Refining)
Installed Capacity of Generation of Electric Power from 365 MW Renewable Sources
Ethanol pipelines
Aeolic Energy
Ethanol Vessel
Solar Energy
Other Sources of Renewable Energy
Guamaré Biodiesel Plant
4%
21%
46%
29%
BiofuelsPipelines and Ethanol PipelinesOthersH-Bio
RENEWABLE ENERGY AND BIOFUELS (2008-2012)
Export of 4.7 billion m³/year of Ethanol
Vegetable oil Processing 1.6 million m³/year
US$ 1.5 BILLION INVESTMENTS
LIGNOCELLULOSIS
Total avoided GHG emissions: 3.93 MM tons CO2 equivalent
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Raw Material Production / ha (kg) Quantity of Ethanol/ ha
Energy out/ Energy in
SUGAR CANE 85,000 7.080 liter 8,3
CORN 10,000 4.000 liter 1,3 - 1,8
Total countryNative Amazon ForestSecondary Amazon Forest and Others Native ForestsPastureTemporary CropsPermanent CropsAvailable land Available land with low impact (*)
851370180
6197
597,626390
AREA (MMHA)TYPE (LAND USE IN BRAZIL)Today the ethanol consumption is 2,6%
of gasoline MKT Increasing ethanol to 10% of gasoline will represent 118 Billion Lt (more than 2 million barrels per day)
RAW MATERIAL COMPARISON
Source: FAO, 2002 and EMBRAPA (*)
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São Paulo Marine Terminal
Rio de JaneiroMarine Terminal
PETROBRAS INVESTMENTS TO EXPORT ETHANOL
Ethanol collection, storage and distribution centers are spread out through producing and consuming regions
New Ethanol Pipeline (919Km)
Large scale marine terminals improve efficiency
Large storage capacity necessary to regulate supplyPipelines reduce transport costs; improve energy efficiency
New Water Way for Ethanol
Replan – Ilha Dágua Pipeline Current flow
Tietê-Paraná Water way
Senador Canedo -São Sebastião Pipeline
Replan – Brasília Pipeline (OSBRA)
Replan – Guararema Pipeline
Existing Pipeline
Future Pipeline
Existing Terminal
Future Terminal
Exportation
Target: Export 4.75 MM cu.m/year in 2012
New Ethanol Pipeline(1.150 Km)
New Pipeline (1412 km)
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FINANCIAL CONSIDERATIONS
$
36
13%
87%
Brasil Internacional6%4%
1%
2% 26%
58%
2%
65.19
29,22
6.74
2.252.25
E&P RTC G&EPetrochemical Distribution Corporate Biofuel
1.13 97.4
15.0
Note: Includes International
US$ 65.1 billion directed to E&PExploration: US$ 13.8 billionProduction: US$ 51.3 billion
INVESTMENT PLAN BY BUSINESS SEGMENT
2008-12 PeriodUS$ 112.4 billion
4,5
37
104.486.7Projected Net Cash Flow (Including Dividends)
1416Return on Capital Employed (ROCE) (%)
2025Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%)
112.483.5Projected Investments for 2008-2012
2008 – 40.002009-2011 – 35.00
2.50
2007-2011 Plan2.18FX rate (R$/US$)2008 – 55.002009 – 50.002010 – 45.002011-2012 – 35.00
Brent for Funding(US$/bbl)
2008-2012 PlanIndexes
(*) PPP – purchase power parity
PETROBRAS’ BUSINESS PLAN
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STRONG RETURNS HAVE ENABLED COMPANY TO GROW WITHOUT INCREASING DEBT
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
2003 2004 2005 2006 2007
Sources Uses
CFFO(including W.C.)
Capex
Dividends
Consolidated Cash Flows74.3 BN 2003-2007
Inc. Debt
7,5961,83810,61514,48048,529PP&E (inc. Dep.)
291
446
Distri-bution
Int’lGas & Energy
Downstream (Brazil)
E&P(Brazil)
1,1446,0239,37113,558O/w Construction in Progress
(815)(834)2,78514,072Net Op. Inc.
Historical ROCEU.S. GAAP
Operating Income and Assets by Segment - 2007(US GAAP – US$ Millions)
Source: Petrobras and Bloomberg
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PETROBRAS SCENARIO
Perspective of a high increase in production and reserves
High volume of investments
Pro-active performance to overcome present challenges of the oil and gas industry
Activities Integration
40