The increase in sales volumes, by 5.5% in the domestic market and by 2% abroad, helped to swell the consolidated gross operating revenue, which exceeded the 2007 figure by 22.1%

In 2008, Petrobras’ investments saw an increase of 17.8% in relation to the 2007 figure, attaining the historical milestone of R$ 53.3 billion

INVESTMENTS amounting to US$ 174.4 billion for the period 2009-2013

Three elements of sustainability underpin Petrobras’ corporate strategy: integrated growth, profitability and social and environmental responsibility. Our commitment towards sustainable development also shapes the growth targets defined under the Business Plan 2009-2013, which has earmarked investments of US $ 174.4 billion.

Empregado trabalhando na produção do polo industrial de Guamaré
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Of that total, US$ 158.2 billion is related to projects in Brazil and US$ 16.2 billion is for activities abroad, mainly in Latin America, the United States and western Africa.

The largest portion, equivalent to 59% of the total approved for the period, has been allocated to the Exploration & Production segment, which will receive US$ 104.6 billion for investment in Brazil and abroad. Of that amount, about US$ 28 billion has been earmarked for development of the pre-salt layer, with production expected to attain an average of 219 thousand bpd in 2013. The new Plan embraces this new exploration frontier and establishes production targets that are even more aggressive than those of the previous plan. The company’s average production of oil and natural gas should attain 3,655 thousand boed in 2013, with 3,414 thousand boed being produced in Brazil.

The Refining, Transportation and Commercialization (RTC) segment will receive US$ 43.4 billion, equivalent to 25% of total budgeted investment, and will stick to its strategy of augmenting refining capacity, in order to keep up with the expanding oil production. In addition, investment will be focused on improving fuel quality and increasing the processing of heavy oil. With the operational start-up of the Abreu e Lima refinery in 2011, of the Rio de Janeiro Petrochemical Complex (Comperj) in 2012, and of the first phase of the Premium I Refinery in 2013, the domestic oil throughput should attain 2,270 thousand bpd in 2013.

The investment in Gas &m Energy will amount to US$ 11.8 billion. Budgeted in line with the growing domestic production of natural gas, this sum will enable the expansion of the company’s distribution capacity, thereby increasing sales in the local market.

The Plan also determines that all projects must have a 64% Brazilian produced content, which will generate orders totalling US$ 20 billion a year, on average, for local suppliers. It will also create a requirement for 1 million direct and indirect job positions in Brazil.

Record sa les and net income

RECORD IN COME - The changes in the Brazilian accounting principles, introduced by Law no 11,638/07, were taken into consideration when calculating Petrobras’ 2008 results.

Reflecting the company’s excellent operational, economic and financial performance, Petrobras’ net income for 2008 set a new record of R$ 33 billion, fully 53.3% higher than that of the previous year. The consolidated operating income came to R$ 46 billion, 14.8% higher than the 2007 figure, largely due to the increased production volume and higher average prices for oil and oil products in domestic and foreign markets. The expenses that arose from the renegotiating of the employee supplementary pension plan, which affected the 2007 results, were non-recurring and this, together with exchange rate gains on dollar denominated monetary assets, also helped to boost the profit level.

The increase in sales volumes, by 5.5% in the domestic market and by 2% abroad, along with the higher average prices for oil and oil products, helped to swell the company’s consolidated gross operating revenue to R$ 266.5 billion, an increase of 22.1% over the figure for 2007. Meanwhile, the net operating revenue came to R$ 215.1 billion, 26.1% more than in the previous year.

Net revenue in the domestic market grew by 23%, to R$ 126.9 billion, mainly due to increases of R$ 3.8 billion in revenue from natural gas, R$ 2.9 billion in revenue from energy and R$ 17.3 billion in revenue from oil products, notably diesel, jet fuel, gasoline, fuel oil and naphtha.

In the face of rising international prices – the average price of Brent oil increased by 33.7% in relation to the 2007 average, to US$ 96.99 – in May, the company raised the price of gasoline (10%) and diesel (15%), which had been unchanged since September 2005. The prices of fuel oil, naphtha and jet fuel change in line with international market fluctuations, and the average oil product price in the domestic market reached R$ 176.4, up 13.5% in relation to the 2007 average.

EBITDA - The company's EBITDA reached R$ 57.2 billion in 2008, 14% higher than the previous year’s figure, thus providing a solid foundation for Petrobras’ planned investments. The ROCE rose by 1 percentage point, as a result of the increase in operating income, which outweighed the impact of the increased indebtedness brought about by the devaluation of the local currency (real) and the securing of new financing.

SALES - Petrobras’ total sales, including exports, natural gas and sales abroad, amounted to 3,374 thousand boed, an increase of 4.2% in relation to the 2007 figure. The sales volume in the domestic market, not including electricity, expanded by 5.5% in 2008. This result was boosted by oil product sales, which were up by 1.3%, stimulated by Brazil’s GDP growth, the operations of the country’s dieselpowered back-up thermoelectric power plants and the expansion and increased production of grains and sugarcane. Another highlight was the record oil exports, amounting to 439 thousand bpd, 24.4% higher than the previous year’s volume, due to the company’s increased production.

Sales of natural gas in the domestic market rose by 20%, in comparison with 2007, to a total of 18,140 million m3, due to an 8% increase (1 million m3/day) in non-thermal gas sales to distributors in the state of São Paulo and a 150% increase (8 million m3/day) in sales to thermoelectric power plants (UTEs). This demand growth was stimulated by the increased supply to the market, largely as a result of expanding production from the Manati field, off the coast of Bahia, and the operational start-up of the Cabiúnas-Vitória and Vitória–Cacimbas gas pipelines.

Moreover, a resolution issued by the CNPE (National Energy Policy Board) on December 8, 2007 allowed the generation of electricity using thermoelectric power plants, in order to maintain water levels in the country’s hydroelectric reservoirs. This measure had a direct influence on the amount of electricity generated by Petrobras, which increased by 253%, to 2,025 average MW. Another highlight was the start up of supplies from the first block of electricity (352 average MW) acquired at energy auction (Gov. Leonel Brizola UTE).

INVESTIMENT - In 2008, Petrobras’ investments established a new milestone, at R$ 53.3 billion, 17.8% more than in 2007. The sum was allocated in line with the company’s strategy of expanding its operations in the oil, oil product, petrochemicals, gas &m energy, biofuels and distribution markets, and particularly the augmenting of its oil and natural gas production capacity in Brazil.

Of the total invested, 49.1% was allocated to the Exploration & Production segment, with the aim of meeting the growth targets for oil and natural gas production and reserves, set out in the company’s Strategic Plan 2020. A total of R$ 4.6 billion was invested in exploration within Brazil, contributing towards the replacement of reserves and acquisition of deeper knowledge of the reservoirs in the pre-salt layer. Petrobras’ consolidated investment in exploration, including that of the International area, amounted to R$ 6.5 billion for the whole year.

The Downstream segment received 22.5% of the total investment, which was mainly directed towards conversion, expanding the capacity of refineries and ensuring that quality standards are met, in harmony with the Strategic Plan. The highlight in the petrochemicals segment, an area in which Petrobras has been expanding its activities in Brazil and the rest of South America, is the construction of the Rio de Janeiro Petrochemical Complex (Comperj), with the strategic objective of producing large quantities of propylene, ethylene and aromatic raw materials from the heavy oil extracted from the Campos Basin, so as to be able to reduce imports of oil products, such as naphtha.

The Gas & Energy segment accounted for 13.5% of all investment, a 49.9% increase in relation to 2007. The resources were mainly used to extend the pipeline network, notably the Urucu-Coari-Manaus, Cabiúnas- Vitória and Cacimbas-Catu gas pipelines, and the construction of LNG regasification terminals, at Pecém (Ceará), and on the Guanabara Bay (Rio de Janeiro), in order to help attain the natural gas and electricity sales volumes set out in the Strategic Plan.

In 2008, Petrobras set up a fully-owned subsidiary, Petrobras Biocombustível S.A., for the development of ethanol and biodiesel production, as well as for that of other products and related activities, thereby advancing its commitment towards sustainable development, allied with social and environmental responsibility, and reinforcing its vision as an integrated energy company. Petrobras aims to become the leader in domestic biodiesel production and to expand its participation in the ethanol business, in order to serve the Brazilian market, but also with a view to the international market, given the importance of biofuels in the world geopolitical scenario.

With the objective of holding onto its leadership of the Brazilian market and making the Petrobras brand the favourite among consumers, the company allocated 1.1% of its total investment to Distribution, with the largest portion going to projects related to the automotive market. In accordance with the Strategic Plan, resources were invested in the expansion, modernization and maintenance of the retail infrastructure for oil product distribution, so as to ensure the best possible level of assistance and delivery of high quality products and services, and bring about an increase in the company’s market share.

Petrobras’ international activities were allocated 11.5% of the total investment, which was mainly directed into expanding its refining and distribution abroad, and thereby consolidating the company’s presence in the international market. Completion of the acquisition of an 87.5% stake in the Nansei Sekiyu refinery, in Okinawa, Japan, marking the company’s entry into refining in Asia, has made an important contribution to its strategic positioning. Pushing ahead with the consolidation of Petrobras’ presence in the Latin American fuel distribution segment, an agreement was signed for the company’s acquisition of ExxonMobil’s equity stake in Esso Chile Petrolera.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITY - Petrobras maintains its commitment to excellence in Social and Environmental Responsibility. Despite the significant expansion of its operations in recent years, the volume of oil and oil product spillages into the environment, at 436 m3 in 2008, was only slightly greater than that recorded in 2007 (386 m3). This volume is well below the company’s tolerable limit, of 694 m3. Meanwhile, the Frequency Rate of Injuries Involving Time Off Work, covering the company’s own employees and those of its contractors, declined from 0.76, in 2007, to 0.59, in 2008.

The company aims become the leader in domestic biodiesel production and expand its participation in the ethanol business , in order to serve the Brazilian market