PETROBRAS

000

Oil and Sustainable Development

Petrobras and the development of local services

and manufacturing industries

November, 2006

Raul Adalberto de Campos

Investor Relations Executive Manager

PETROBRAS

111

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.

PETROBRAS

222

309416427

593614624660

809908919945

1.2671.4481.484

SinopecRepsolStatoil

ENILukoil*Yukos*

ConocoPhillips

PetrobrasTotal

Chevron TexacoPetrochina*

ShellBP

ExxonMobil

6.3434.026

2.9982.7472.708

2.2022.1952.114

1.2231.1751.139

524296

2.275

XOMRDS

SinopecBP

TOTCOP

PetroChinaCVX

PetrobrasYukos

RepsolLukoil

ENI**Statoil8,0

9,010,1

11,512,212,212,313,114,214,615,1

19,620,8

32,7

RepsolShell

StatoilENIBP

TotalSinopec

Chevron TexacoConocoPhillips

PetrobrasExxonMobilPetrochina*

Yukos*Lukoil*

3,33,84,3

6,89,4

11,111,511,812,113,0

17,618,5

20,122,4

RepsolSinopec*

StatoilENI

ConocoPhillips

Total

ShellPetrobras

Chevron Texaco

Yukos*

BPPetrochina*

Lukoil*

ExxonMobil

Petrobras already among largest publicly traded companiesProven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005

Reserve life (years) – Dec. 2005 Refining capacity (thousand bpd) - 2005

Source: Evaluate Energy and Company Reports

7th

5th

9th

7th

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Vertical Integration Comparison

Majors Average *

2,735

3,176

4,793

4,329

1,630

1,579

National Oil Companies Average **

Petrobras2,296

2,114

Product Sales (thous. bpd)

Refining (thous. bpd)Production (thous. boed)

* Majors: BP, Exxon, Total, Royal Dutch Shell, Chevron, Conoco and Repsol-YPF ** NOC: PEMEX, PDVSA, Saudi Amraco, KPC, Pertamina and Sonatrach

2,217

3,400Year 2011

2011: New Refinery will add 200

thous. bpd capacity2010:

Pasadena Refinery revamp concluded – processing 70

thous. bpd of heavy oil

PETROBRAS

444

Increasing Participation of the Oil Chain in Brazilian GDP

• From 1996 to 2004 the oil stake in Brazilian total GDP increased more than 200%Source: Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP)

# Petrobras estimate from IPEA data

6,5%

4,7%

5,5%6,0% 6,1%

4,0%

3,0%

2,2%2,0%2,1%

2,9%

1,8%1,3%1,3%1,4%1,3%

0,9%0,7%0,7%

2,9% 2,8%3,1%

4,3%

5,3%

6,0%

6,8%

7,7%

9,1%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

10,0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Petrobras Others - Oil Chain Total oil chain

#

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555

Note: Includes International

31.0

12.41.0

1.0

49.3

23.07.5

3.32.31.8

E&P Downstream G&EPetrochemical Distribution Corporate

9%4%

3% 26%

56%

3%

Business Plan 2007-2011US$ 87.1 billion

86%

14%

Brazil International

US$ 12.1 bi

US$ 75.0 bi

Investment Plan reflects integrated global expansion

49,3

23,0

7,53,32,21,8

PETROBRAS

666

2007-11 Business Plan indicates that 66% of CAPEX related to Brazilian projects will be directed towards the domestic market, representing an average of US$ 10 billion/year injected into this market.

66%49.975.0Total

80%1.41.7Corporate

100%2.22.2Distribution

87%6.37.2G&E

78%18.123.1Downstream

54%22.040.7E&P

Domestic Content (%)

Domestic Market Purchases 2007-11

Domestic Investment

2007-11Business Area

US$ billion

National Content

PETROBRAS

777

The investment plan from 2007-2011 will demand on average a total of 840 thousand jobs in Brazil…

...peaking in 2007 with more than 970 thousand jobs, considering direct, indirect and income effect.

838Total Jobs613Indirect Jobs + Income Effect225Direct Jobs

Annual Average2007-11 Jobs (Thousand)

Value Added and Jobs

Job Creation

46Productive Chain - Investments

216Total Value Added53Productive Chain – Operational expenses

117Petrobras in Brazil

Annual Average2007-11 Value added by:

Value AddedR$ BillionRepresents on average 10% of Brazilian GDP.

PETROBRAS

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Suppliers – Transparency

• In Petrobras Suppliers Databank there are:

• 40 thousand companies that produce goods without specification

• 30 thousand that supply services without specification;

• 2 mil that manufacture specific equipment

• 2 mil that provide specific services;

• Since the end of 2003, Petrobras does electronic auctions via Internet;

• In 2005, Petrobras performed 73 thousand electronic auctions, totaling 55% of the expenditure with goods in the year;

• This service will be expanded to include transactions with medium and small suppliers, as well as service suppliers;

• The electronic auction databank includes 14 thaousandcompanies.

• Goal: in the next 2 years 85% sales volume though the internet.

PETROBRAS

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Supplies Qualification Requirements

TECHNICAL

LEGAL

ECONOMICHSE

QUALITY & SOCIAL

RESPONSIBILITY

Reference:Quality: ISO 9.001Social Resp. : ETHOS

Reference:Environmental: ISO 14.001Health and Safety: OHSAS 18.001

Requirements for pre-qualifying suppliers

ACCORDING TO THE GOOD OR SERVICESOME REQUIREMENTS ARE OBLIGATORY

SOME ATTRIBUTES ARE REQUIRED FOR BEING INCLUDED IN THE DATABASE DEPENDING ON THE GOOD OR SERVICE

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• Planning (risk analysis, environmental aspects, legal compliance and goals)

• Structure and responsibility• HSE Training• Involvement and communication• Accidents and incidents treatment• Critical analysis by the administration • HSE management system audit• Organization and Cleaning• Subcontracts

HSE requirements will be requested in every contract with a degree of flexibility that will depend on the level of the contract’s risk

1

2

3

4

OCURRANCE PROBABILITYB DA C

GRAV

ITY

QI

QIIQIII

QIV

SERVICES CATEGORIES EXAMPLE

Supplies Qualification Requirements

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• Prominp - investments of R$ 200 million to qualify 70 thousand professionals between 2005-2007

• TEAR (Weaving Responsible Network): partnership Inter-American Development Bank, ETHOS and IBP

• 33 projects to develop new suppliers to substitute imports –R$ 53.5 million

• Pact with Government Agency (Sebrae) to include small and medium companies in the supply chain

• “Mechanics Friend Program” - since 2001 23,500 people have participated

• “Transport Quality Program” from BR – aims to reduce accidents through training and qualification

Petrobras demands high quality, but the company also helps the local market to achieve necessary standards

Goods and Services Suppliers Training Efforts

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PROMINP: Promoting the Oil Industry

POLICYMaximize the national industry of

goods and services participation, in a competitive and sustainable basis, in

the implementation of oil and gas projects in Brazil and abroad

PROMINP: Programa de Mobilização da Indústria Nacional de Petróleo e Gás Natural

Capacity of attending the national Industry in a Competitive and Sustainable Basis

Agent

PETROBRAS

PROMINPPortfolio of projects for the

Mobilization and Qualification

of the IndustryInvestment

Portfolio

Main Goal: to incite oil & gas activities to provide growth opportunities to the national industry of goods and services, creating jobs, generating wealth and allowing a surplus

in the trade balance

Program for the Development of the National Oil and Gas Industry

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Tecnicallevel

College level

Met by market

Met by market SENAI CEFET

FBTS ??

UFRJ

USP

PUC

??CONTENT

DEVELOPMENT

CONTENT DEVELOPMENT

118118118

Identification training

level needs

Mapping of Training market

Identification of entities to develop new

courses

Content development based

on appropriate methodology

Courses

PROMINP IN NUMBERS• 150 critical Oil&Gas categories

• 750 courses in 17 states• 50 institutions throughout the country

• 70,000 trained• R$200 million invested

PROMINP: Promoting the Oil Industry

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PROMINP: Supply of Goods and Services

Competitive Supplywith initiatives

Non-CompetitiveSupply

FomentingActions

Increasing Infra-structure, Personnel Qualification and Competitiveness of the Industry

Time

Competitive Supply

Comfort Zone

Over-price Zone

Imports Zone

% N

atio

nal C

onte

nt

0

Supply withImports

100

Current Supply Zone(Loss Zone)

t0 t1

(Fomentation Actions)Suppliers

Development( Competitive Supply Zone

Amplification )

( Impossibility of National Supply )

PROMINP’sMain Goal

PETROBRAS

151515

0

50000

100000

150000

200000

250000

2004 2005 2006 2007 2008 2009 2010 2011 2012

Positions created due to Investments in Oil and Gas Industry

Num

bero

f Pos

ition

sC

reat

ed

Years

Estimate of direct labor *

* Critical Resources, Non-Critical and Complementary Services

Up to 203 thousand positions will be created during the implementation of the project

Estimate of indirect labor

Total positions CreatedPeak: 203

thous. jobs

Average number of positions created

between 2004-2010166 thous.

Average number of positions created

between 2005-2009189 thous.

PROMINP: Creation of job opportunities

PETROBRAS

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Improvement of the Supply Chain S&E Responsibility

• Partneership with ETHOS Institute, reporting to Ethos Indicators• Assessement of Results:

•2003: 105 companies assessed•2004: 195 companies assessed•2005: 400 companies assessed

• Implementing CSR for micro and small companies• Petrobras’ Role (anchor of Oil and Gas sector): commitment,

expertise, staff, operational costs, seminars, working groups and qualification courses.

TEAR (Weaving Responsible Network): partnership Inter-American Development Bank, ETHOS and IBP

Other Training Programs

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Other Training Programs

• Local baseline of Micro and Small companies• Development plan for Micro and Small companies• Qualification of Micro and Small companies to be potential suppliers for the

Oil & Gas Sector• Networking and cooperation between local companies and Oil & Gas

Companies• Institutional support of Oil & Gas Companies• Network and cooperation between large, micro and small suppliers to

become local suppliers

Main Initiatives of the Agreement Petrobras/Sebrae

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Biodiesel – Social Fuel

BA

MG

CE

Montes Claros

Quixadá

semi-arid region

3 Projects Being Implemented

Capacity: 171 thousand m3/year

Investments: ~ US$ 60 million

Jobs Generations: Construction: 1,200 direct and 400 indirectOperation: 105 directRaw material production:75,000 families

Start up: 4 Q/2007

InputsFamily Agriculture: castor, cotton, and palm.Complementary: soy.

All Petrobras Biodiesel has Social Fuel Seal

Candeias

PETROBRAS

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• Given to biodiesel producers that:• Purchase a minimum percentage of raw materials from family

agriculture: • 50% NE and semi-arid region• 10% NW and CW region• 30% SE and S region

• Sing a formal contracts with the family agriculture that includes:• Contract period• Value to purchase and price readjustment criteria • Raw material delivery conditions • Safeguards for each party• Identification and agreement that a representative of the farmers

participated in the negotiations• Assure assistance and technical training for the agriculture families

Government Social Seal in Biodiesel

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Final Comments

• The contribution of Petrobras to Brazil's growth can be evaluated by its capacity to stimulate de development of:

• Jobs and income;

• Business opportunities (also for small and medium companies);

• Technological and Management knowledge;

• Energy Efficiency and guaranteed supply;

• Tax payment;

• Social Welfare.

PETROBRAS

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Visit our website: www.petrobras.com.br/ri/english

For further information please contact:

Petróleo Brasileiro S.A – PETROBRAS

Investor Relations Department

E-mail: petroinvest@petrobras.com.br

Av. República do Chile, 65 - 22nd floor

20031-912 – Rio de Janeiro, RJ

(55-21) 3224-1510 / 3224-9947

QUESTION AND ANSWERSESSION