realignment of international activities

The discovery of oil in the pre-salt layer in Brazil made it necessary to realign the strategy underlying Petrobras’ international activities, as from 2008.

As a result, the company is focused on breaking into new markets, downstream growth, supplementing the Brazilian natural gas market, the integrated management of critical upstream resources, and the alignment of its portfolio with the domestic segments, with a view to creating added value in the company’s businesses.

In the Exploration & Production segment, the company has assets in 19 foreign countries: Angola, Argentina, Bolivia, Colombia, Ecuador, India, Iran, Libya, Mexico, Mozambique, Nigeria, Pakistan, Peru, Portugal, Senegal, Tanzania, Turkey, the U.S.A. and Venezuela. In the Refining segment, the company has operations in Argentina, Japan and the U.S.A., while in the Distribution segment, it is active in Argentina, Chile, Colombia, Paraguay and Uruguay. The company also has operations in Argentina in the petrochemicals and electricity sectors.

Petrobras also has an agreement with Cuba for cooperation in various segments of the oil production chain, as well as representative offices in China, Japan, Singapore and the U.K..

Petrobras’ international production in 2008 averaged 123.6 thousand bpd of oil and 17.1 million m³/ day of natural gas – representing, respectively, 6.3% and 25% of the company’s total production. The investments abroad during the year came to a total of R$ 6.1 billion, 66% of which went into the sustaining and development of oil and gas production, with another 20% devoted to exploration. The Refining and Petrochemicals segments received 9%, while the other 5% went into the Gas & Energy and Distribution segments.

RESERVES

Petrobras’ international proven reserves exceeded 0.99 billion boe, 9% lower than in 2007. This represented 7% of the the company’s total proven reserves, according to ANP/SPE criteria. The reduction was due to the production volume during the year (82 million boe) and changes in Ecuador, with the surrendering of Block 31 and the reduction of the company’s stake in Block 18, from 35% to 15%. Furthermore, there was a reduction in the company’s reserves in Nigeria, due to technical revisions.

In the management area, Petrobras continued with its Program of International Integration Processes (Proani). Aimed at implementing a single management model, to facilitate the identification of new business opportunities, the exchanging of information and the professional development of employees abroad, the program has been successfully implemented in Argentina. Proani is to be introduced next in Angola, Chile and the U.S.A..

INVESTMENT

The company’s new Business Plan, for the period 2009 to 2013, provides for investment in the International area of US$ 15.9 billion. The Exploration & Production segment is to receive 79% of these funds – most of which will go into developing and sustaining the production of the company’s assets in the U.S.A., Nigeria, Angola and Argentina. The Refining, Transportation, Commercialization and Petrochemicals segments are to receive 7%, approximately 40% of which will be channeled into new business. The Gas & Energy and Distribution segments, meanwhile, are to get 13% of the total, mainly for putting into new business.