Production in Argentina reached 51.7 thousand bpd of oil and 8.2 million m3/day of natural gas, making a total of 100 thousand boed

new business furthers expansion abroad

Petrobras stepped up its international expansion, in geographical terms, and also diversified its businesses in the markets where it was already present. The company closed 2008 with operations in 27 foreign countries and expanded its activities in North and South America, Europe, Africa and Asia.

Refinaria de Pasadena, unidade da Petrobras America, nos Estados Unidos
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SOUTH AMERICA

ARGENTINA –In 2008, Petrobras obtained regulatory approval for acquisition of Burlington Resources Argentina Holding Limited, for US$ 77.6 million. That company has a 52.4% stake in the Parva Negra block and a 25.7% stake in the Sierra Chata block. With this transaction, the company, which is the operator in both blocks, will have a 100% stake in the Parva Negra block and a 45.5% stake in the Sierra Chata block.

Production in Argentina reached 51.7 thousand bpd of oil and 8.2 million m³/day of natural gas, making a combined total of 100 thousand boed. The regions of note were the Austral Basin, Medanito, Puesto Hernandez and Entre Lomas. The proven reserves in that country amounted to 290.6 million boe.

In addition to the E&P assets, Petrobras owns the Ricardo Eliçabe and San Lorenzo refineries (with a combined capacity of 81 thousand bpd), which in 2008 processed a total of 71.4 thousand bpd of oil, at an 88% utilization rate. The company also has a 28.5% stake in the Del Norte refinery (Refinor), through its subsidiary Pesa. In the petrochemicals and fertilizers segment, the company has four units: Puerto General San Martin, Zarate, Campana and Innova, this last producing styrene, polystyrene and ethyl benzene.

Petrobras also owns a natural gas powered thermoelectric plant (Genelba), a hydroelectric plant (Pichi Picu Leufu) and the company Transportadora Gás Del Sur, which has the country’s largest gas pipeline network, as well as equity stakes in Edesur (electricity distributor in Buenos Aires) and Companhia Mega, which sells ethane, propane, butane and natural gasoline. Furthermore, the company sells fuels and oil products through a network of 651 service stations.

BOLIVIA – Petrobras concentrates its activities in the Exploration & Production and Gas & Energy segments in the San Alberto and San Antonio fields. The production in 2008 amounted to 8.4 thousand bpd of oil and 7.8 million m³/day of natural gas, making a combined total of 54.5 thousand boed, 10% less than in 2007. This reduction was the result of contractual clauses for the passing on of production, according to criteria agreed with the Bolivian state-owned company that came into effect as from September 2007. The impact on production was only felt in full in 2008, since the production from January to August 2007 was at the pre-contract level.

CHILE – In August, Petrobras signed an agreement with ExxonMobil to acquire its assets in this country, in 2009, for a price of around US$ 400 million. This transaction will take the company into the Distribution segment, with a network of 233 service stations, 109 of which will be company owned, and other assets, as well as the sale of aviation products at 11 airports. The deal will be completed following the integration of the companies’ operational and information systems.

COLOMBIA – Petrobras is active in the E&P and Distribution segments, with assets that include 68 service stations, a storage base and a lubricants plant in Puente Aranda, with a total sales volume of 491 thousand m³ of fuel. The production in 2008 amounted to 15.3 thousand bpd of oil and 24 thousand m³/day of natural gas, making a combined total of 15.5 thousand boed.

ECUADOR – In October, an agreement was signed establishing a period of one year to negotiate the migration of the concession contracts for the consolidated field of Palo Azul and Block 18, in which Petrobras has a stake, to a new contractual model that will be introduced by the government of Ecuador. Block 18 has an average production level of 11.4 thousand bpd.

On December 31st, the company surrendered Block 31, in accordance with the terms of an agreement with the government. Petrobras had invested around US$ 200 million in that block. However, foreseeing difficulties in developing the block, the company had already made a provision in 2007 to write-off the assets.

PARAGUAY – Petrobras continued its activities in the Distribution segment, with 165 service stations and 55 convenience stores throughout the country. The company also has assets for the commercialization of LPG, as well as installations for the storage and commercialization of fuels and aviation products, at the Assunção and Cidade Del Este airports. A total of 344 thousand m3 of products was sold in 2008.

PERU – The company discovered gas and condensate in Block 57, which it is exploring as part of a consortium, in which it has a 46.2% stake. The production testing, which is still in progress, has recorded a flow rate of 1 million m3/day of gas and 198 m3/day of condensate. The data that is available so far is insufficient to reach a precise definition of the resources discovered, but the dimensions of the reservoir could hold as much as 2 trillion cubic feet (56 billion m3). Average production in 2008 amounted to 14.1 thousand bpd of oil and 336 thousand m³/day of natural gas, making a combined total of 16.1 thousand boed.

URUGUAY – Sales in 2008 amounted to 147.4 thousand m3/day of natural gas and a total of 458 thousand m3 of fuels. The company participates in the natural gas segment through two distribution concessions, one in Montevideo and the other in the interior of the country, and is also involved in the fuel distribution segment, through a network of 89 service stations and installations for the commercialization of aviation and marine products, petrochemicals and asphalt.

VENEZUELA – Production in 2008 amounted to 12.7 thousand bpd of heavy oil and 222 thousand m3/day of gas, making a combined total of 14.1 thousand boed. The company has activities in four blocks and is studying the possibility of expanding its operations in the country, with the production of extra-heavy oil in Carabobo I, in the Orinoco strip, in association with Petróleos de Venezuela (PDVSA).

NORTH AMERICA

UNITED STATES – Petrobras has a stake in 259 offshore blocks in the American sector of the Gulf of Mexico, including the 23 blocks acquired at auction in March, and is the operator of 161 of them. The company also holds exploration rights for onshore areas in Texas.

The highlight in 2008 was participating in the discovery, in ultra-deep waters, of hydrocarbons in the Stones well, operated by Shell. Petrobras has a 25% stake in this consortium. The volume and commercial viability of the discovery will be assessed through additional drilling, but the initial drilling has indicated the potential of this reservoir, located in an area known as the Walker Ridge Quadrant, where the company is presently carrying out production development of the Cascade and Chinook fields.

Petrobras’ average production in the Gulf of Mexico came to 4.6 thousand boed, 60% lower than in 2007, due to difficulties in channeling the production from the Coulumb field and declining production from the Cottonwood field, as well as the hurricane season, which temporarily halted production in the area.

In the second full year that Petrobras has been a partner in the Pasadena refinery (PRSI), located in Texas, which has a capacity of 100 thousand bpd, the installation processed only 68.8 thousand bpd, due to unscheduled stoppages. In October, the Arbitration Council handed down a provisional ruling in an international case, considering the sale of the 50% stake of Astra Oil Trading N.V. in PRSI to Petrobras America Inc., a US subsidiary of Petrobras, to be a valid option. Once the judgement has been confirmed, the company will hold 100% of PRSI and its affiliates.

MEXICO – Petrobras is involved in two contracts to provide multiple services to Pemex, in the Cuervito and Fronterizo blocks. The average production of natural gas reached approximately 414 thousand m3/day.

AFRICA

NIGERIA – The projects for Agbami (Block OML 127) and Akpo (Block OML 130) – huge fields in the Niger Delta Basin – represent Petrobras’ principal investments in this country, along with exploration block OPL 315, where the company is the operator.

Production began in July at the Agbami field, where a production peak of 250 thousand bpd should be reached in early 2010. Petrobras has a 13% stake in the investments made in this field and participated actively in all the production development stages. The world’s largest FPSO is operating in the Agbami field.

The Akpo field, which comes into production in 2009, should attain a production peak of 185 thousand bpd before the end of this year. Petrobras has a 20% stake in the investments in Block OML 130. Another three deposits - Egina, Egina Sul and Preowei – have also been discovered in this block. The project for the development of Egina is being analyzed by the responsible Nigerian government bodies.

In Block OPL 315, where the company has a 45% stake and is the operator, exploration activities are in progress and the first well is expected to be drilled in 2010. Petrobras also has a 37.5% stake in Block OPL 324, where it is also the operator, and the exploratory work and contractual commitments have been completed without offering any prospect of fresh discoveries.

ANGOLA – Notable discoveries of oil have been made in the N’Goma-1 and Sangos fields, confirming the huge potential of Block 15/06, in which the company has a 5% stake.

Block 2, in the Lower Congo Basin, where Petrobras has a 27.5% stake, generated average production of 2.5 thousand bpd in 2008. In the other blocks in which Petrobras is the operator (6, 18 and 26) or participates in a consortium (34), exploratory work is proceeding.

LIBYA – In area 18 of the Libyan sector of the Mediterranean Sea, in which Petrobras is the operator, with a 70% stake, the company continued the exploratory program, carrying out seismic surveys and geological interpretation.

TANZANIA – The company is in the process of opening its local office and is participating in blocks 5 and 6, in which it has a 100% stake. In both areas, the exploratory program is going ahead, in compliance with contractual commitments.

MOZAMBIQUE – Work in the Zambezi Delta Block, in which Petrobras has a 17% stake, is proceeding according to the exploration timetable, with interpretation of the seismic survey carried out in 2008.

SENEGAL – The company has a 40% stake in the Rufisque Profond Block, located in deep waters, which is in the exploratory assessment phase.

ASIA

IRAN – Petrobras fulfilled its contractual commitments, by carrying out seismic surveys and drilling two wells. In the Taftan-1 Block, an oil discovery turned out to be non-commercial.

TURKEY – Following the acquisition of seismic data for the Kirklarelli and Sinop blocks, respectively located in the western and eastern parts of the Turkish sector of the Black Sea, 2008 was dedicated to continuing exploration activities.

PAKISTAN – Petrobras has a 50% stake in exploration block G, in the Indus Basin, in partnership with the Oil & Gas Development Company Limited. The technical and economic feasibility study, which is in the final phase, will determine whether the company participates in the next exploration phase.

JAPAN – The company completed its acquisition of the controlling stake in the Nansei Sekiyu refinery, in Okinawa, which has the capacity to process 100 thousand bpd and storage for 9.6 million barrels of oil products, as well as providing logistical support (piers and monobuoy) for the distribution of Petrobras products to the Asian market.

INDIA – The company maintains a partnership with the Indian state-owned company Oil & Natural Gas Corporation, through a contract for exploration and production in three exploration blocks in the Krishna - Godavari, Mahanadi and Cauvery Basins, on the country’s east coast.

EUROPE

PORTUGAL – Investments were made in seismic surveys, and the data are under analysis, so that a decision can be made as to future activities. The company has an agreement to operate four offshore blocks, in the Peniche Basin, in partnership with the Portuguese companies Galp Energia SGPS and Partex Oil & Gas.