www.petrobras.com.br 2003 reportsocial responsibility

HIGHLIGHTS Partnership with society The Petrobras Zero Hunger With its strong economic and social involvement in the regions where the company is Program invests R$ 303 million to located, Petrobras supports and participates in the preparation, execution and refinement of fight social exclusion and bring comprehensive public policies. Much of this work is a result of partnerships with universities, NGOs and public bodies. about development with citizenship Suppliers are encouraged Petrobras is widely recognized for its strong to do their bit commitment towards social values and the Petrobras encourages its company, since 2003, has been aligning its suppliers to strive for standards activities in the social area with public of operational safety, envi- policies to fight social exclusion and misery. ronmental protection and This is the spirit underlying the Petrobras attention to health similar to Zero Hunger Program, which is helping to those prevailing in its own transform the situation of the country’s activities. poorest communities. Between now and Ombudsperson ensures 2006, a total of R$ 303 million will be transparent relations invested in projects that will have a positive The corporate ombudsperson impact in the areas of education, pro- is the principal means of fessional training, the generation of income ensuring transparency in and employment for adolescents and adults, Petrobras’ relations with its protecting children and teenagers’ rights, workers, customers, suppliers social undertakings and voluntary work. and society in general. With the Petrobras Zero Hunger Program, Petrobras upholds the company has redirected its social policy biodiversity and and focused its activities towards achieving environmental protection development with citizenship, which should The company has developed benefit some 4 million people throughout programs for the protection Brazil. (Page 30) of species and ecosystems in various countries where it operates. The Global Compact The Petrobras The company invests reflects a new stage of Environmental Program 2003 IN FIGURES social responsibility at chooses water as its theme in the ‘Brazilian PETROBRAS MARKET VALUE Petrobras cultural identity’ AS AT DECEMBER 31: Petrobras has decided to incorporate the With funding resources amounting to US$ 30.7 billion principles of the Global Compact on R$ 60 million, the Petrobras Cultural OIL LEAKAGES: human rights, labor relations, the Program will sponsor, through a In 2000: 5,983 m3 environment, transparency and fighting process of public selection, a total In 2003: 276 m3 corruption into the company’s business of 141 projects in the fields of music, practices. It has thus joined 1,240 other The Petrobras Environmental Program will cultural heritage and cinema production. PROVED RESERVES companies, in 55 countries worldwide, invest R$ 40 million in sponsorships, over Furthermore, to celebrate the company’s (SEC CRITERIA): that form a community resolved to the next two years, using public selection 50th anniversary, Petrobras has decided (in billions of boe) promote a sustainable and socially inclusive criteria. The program is based on a three-way to expand its investment in culture, In 2001: 9.3 economy, based on ethical principles and strategy that aligns the company’s giving priority to works that portray In 2002: 10.5 the cherishing of life. The Social investments in operational safety, the Brazil’s history and cultural identity, as In 2003: 11.6 Responsibility Report 2003 reflects this development of technologies that will help seen through the eyes of such virtuosos stance taken by the company, to share the improve the environment, and community as Glauber Rocha, Candido Portinari values that guide socially responsible relations. The first theme adopted for the and Ari Barroso, among others. corporations throughout the world. program is “water” – covering bodies of (Page 29) (Page 6) fresh and salt water and their biological diversity. (Page 29) 2 HIGHLIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 CONTENTS 3

Highlights 2003 Contents Social Responsibility Report / 2003 Ibase 2003 Model 2003 information reviewed by Ernst & Young auditors HIGHLIGHTS Company: Social Responsibility Report 2003 2

1 - Calculation Base 2003 (‘000 REAIS) 2002 (‘000 REAIS) Net revenue (NR) 95,742,702 69,176,155 EDITORIAL Operating earnings (OE) 27,873,825 11,464,424 Message to the Shareholders 4 Gross payroll (GP) 3,362,066 2,666,094 Petrobras in 2003 5 2 - In-house Social Indicators (‘000) % OF GP % OF NR (‘000) % OF GP % OF NR Petrobras and the Global Compact 6 Meals 245,233 7 0 165,501 6 0 Mandatory payroll taxes 1,582,65447 2 1,290,806 48 2 04 Private pension fund 331,099 10 0 275,446 10 0 Healthcare 429,129 13 1 314,916 12 0 PETROBRAS Work safety and medical care 76,991 2 0 35,665 1 0 Education 18,531 1 0 3,307 0 0 Mission, Vision & Strategy 8 Culture 148,556 4 0 284 0 0 Values 9 Professional training and development 275,105 8 0 130,065 5 0 Profile of the Petrobras System 9 Day care benefits 41,868 1 0 4,121 0 0 08 Petrobras and the Brazilian Economy 14 Profit sharing scheme 894,442 27 1 444,094 17 1 Corporate Governance and Organizational Structure 14 Approval of Investment Projects at Petrobras 16 Others 55,567 2 0 28,120 1 0 Sustainability Goals and Action Taken 16 Total – In-house social indicators 4,099,175 122 4 2,692,325 101 3 Performance Assessment 17 3 - External Social Indicators (‘000) % OF OE % OF NR (‘000) % OF OE % OF NR The Company’s Image and Brand Management 17 Education 28,166 0 0 n.a. 0 0 Relations with Stakeholders 18 Culture 148,747 1 0 n.a. 0 0 Healthcare and sanitation n.a. 0 0 n.a. 0 0 Sport 21,633 0 0 n.a. 0 0 HUMAN RIGHTS Nutrition and fighting hunger 17,796 0 0 n.a. 0 0 Others 74,008 0 0 n.a. 0 0 Global Compact – Human Rights 22 Total contributions to society 290,350 1 0 254,002 2 1 Petrobras and Human Rights 24 Taxes (excluding payroll taxes) 42,239,729 152 44 39,736,147 347 57 Corporate Ombudsperson 25 Total – External Social Indicators 42,530,079 153 44 39,990,149 349 58 Human Rights Training 26 4 - Environmental Indicators (‘000) % OF OE % OF NR (‘000) % OF OE % OF NR 22 Diversity 26 Investments relating to the company’s production / operations 2,249,751 8 2 1,900,000 17 3 Social Investment 28 Investments in external programs and/or projects 42,000 0 0 68,263 1 0 Total environmental investments 2,291,751 8 2 1,968,263 18 3 With regard to setting annual targets, in order to minimize (X) has no targets ( ) meets 51 to 75% of targets ( ) has no targets ( ) meets 51 to 75% of targets WORK waste and general production/operational consumption, while making ( ) meets 0 to 50% of targets ( ) meets 76 to 100% of targets ( ) meets 0 to 50% of targets (X) meets 76 to 100% of targets more effective use of natural resources, the company (see note ***) Global Compact – Labor Standards 32 5 - Staff Indicators Employee Relations 34 Nº of employees at the end of the period 48,799 47,723 Benefits 34 Nº of staff taken on during the period (see note ****) 2,389 2,943 32 Assessment 35 Nº of outsourced staff (see note ****) 123,266 121,000 Quality of Life 35 Nº of interns n.a. n.a. Health and Safety in the Workplace 36 Nº of employees over the age of 45 (see note ****) 13,229 13,010 Training and Education 38 Nº of women working for the company (see note ****) 4,406 4,765 Outsourcing 39 % of management posts held by women (see note ****) 9.12% 7.50% Combating Child Labor 40 Nº of black people working for the company n.a. n.a. Supplier Selection, Development and Evaluation 41 % of management posts held by black people n.a. n.a. Nº of handicapped people working for the company n.a. 233 THE ENVIRONMENT 6 - Corporate Citizenship - highlights 20032004 TARGETS Ratio between highest and lowest remuneration in the company 4141The Global Compact and the Environment 44 Total accidents in the workplace (see note **) 511 n.a. Petrobras and the Environment 45 Social and environmental projects developed by the company were defined by: ( ) the board ( x ) the board ( ) all the ( ) the board ( x ) the board ( ) all the Policy on Safety, Health and the Environment 46 and management employees and management employees The Consumption of Materials and Natural Resources 47 Workplace health and safety standards were defined by: ( x ) the board ( ) all the ( ) all employees ( x ) the board ( ) all the ( ) all employees 44 Water 48 and management employees + Cipa and management employees + Cipa Energy 49 With regard to trade union freedom, collective bargaining ( ) doesn’t get ( ) observes ILO ( x ) encourages ( ) won’t get ( ) will observe ( x ) will encourage rights and in-house worker representation, the company: involved regulations and complies involved ILO regulations and comply Emissions, Effluent and Waste 52 with the ILO with the ILO Product Health and Safety Precautions 55 The private pension fund covers: (see note *) ( ) board members ( ) the board ( x ) all the ( ) board members ( ) the board (x ) all the Protection, Preservation and Restoration and management employees and management employees of Ecosystems and Biological Diversity 56 The profit sharing scheme includes: ( ) board members ( ) the board ( x ) all the ( ) board members ( ) the board ( x ) all the Environmental Precautions at the International Units 58 and management employees and management employees Environmental Liabilities, Incidents and Fines 59 When it comes to choosing suppliers, the same ethical, ( ) are not ( ) are ( x ) are ( ) will not be ( ) will be (x) will be Environmental Education 60 social responsibility and environmental standards adopted by the company: considered recommended demanded considered recommended demanded Works carried out Within the Company’s Physical Area 60 With regard to employee participation in voluntary work programs, the company: ( ) doesn’t get ( ) supports them ( x ) organizes and ( ) won’t get ( ) will support ( x ) will organize The Community Participates 61 involved encourages them involved them and encourage them Total consumer complaints and criticism: to the company to Procon in the courts to the company to Procon in the courts TRANSPARENCY 3,974n.a. n.a. n.a. n.a. n.a. % of complaints and criticism dealt with or resolved: to the company to Procon in the courts to the company to Procon in the courts The Global Compact’s Tenth Principle 62 90.02% n.a. n.a. n.a. n.a. n.a. Transparency, Ethics and Codes of Conduct 62 Total added value for distribution (R$ '000): IN 2003 80,996,341 IN 2002 65,715,377 Relations with Competitors 63 Distribution of added value (DAV): 65% government 6% staff 15% retained 61% government 5% staff 8% retained 8% shareholders 6% third parties 3% shareholders 23% third parties 62 7 - Other Information INDICATORS 1) Responsibility for the information presented: Wilson Santarosa - Executive Manager,Institutional Communication; Telephone (++21) 2534 1009; e-mail: [email protected] Consolidation of Social Responsibility and Sustainability reporting models 2) This company does not make use of child or slave labor. Recommended Indicators 65 (*) In 2003,the company set up a working group,including FUP (Oil Workers’ Federation) and Petros (Petrobras Pension Fund)entatives,to repres come up with proposals for a supplementary pension model. New employees have life insurance cover,arranged and paid for by the company,valid until such time as a new company private pension modeled. is defin (**) The company does not set targets for the number of accidents. The goal relating to this issue,which is defined in theras PetrobStrategic Plan,is stated in terms of the TFCA – Frequency of Accidents involving Time Off Work, Report of the Independent Auditors on the Application which shows the number of accidents (to employees and outsourced workers) involving time off work per million man-hours of exposure to risk. This indicator is,to a certain extent,an international standard and Petrobras’ goal of Previously Agreed Procedures 71 for 2004 is a ratio of 1.05. (***) There is currently no defined corporate target for dealing with waste. The target mentioned in previous reports was established upon implementation of the Pegaso Program and provided for the elimination of 80% of the waste inventory verified during the audits carried out in 2000. This target was not only met,but exceeded,by the end of 2002,withelimination the of 100% of the accumulated inventory. By its very nature,this target cannot be repeated. What we can add is that,due to the corporate system in operation today for managing waste and affected areas,weginning are be to have at our command a sufficient database for us to establish coherent future Petrobras 50 Years 72 targets for the management of the company’s solid waste. (****) Data relating to the Petrobras holding company,in other words,that don’t include subsidiaries and companies in theational intern area. 3) Cipa – In-house Accident Prevention Committee; ILO – International Labour Organization; Procon – Consumer Protection Agency. 4 EDITORIAL Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 EDITORIAL 5 Editorial

José Eduardo Dutra

PRESIDENT AND CEO

Statement from the CEO

The company’s Social Responsibility for the investments was ‘Water’, in the Young, the same company that audited our in 2003 Report 2003 reflects the important sense of bodies of fresh and salt water, Financial Statements. What is more, this changes taking place at Petrobras. in all their biological diversity, thereby Social Responsibility Report consolidates

Over the course of the year, the harmonizing the investments with the the different models and indicators used in Petrobras company strove to broaden and strengthen message. such reports, both in Brazil and around its social activities in Brazil and abroad, The Petrobras business units are also the world: Ethos, Ibase, CEBDS (Business with involvement throughout the aligning their sponsorship with the new Council for Sustainable Development), production chain that had a significant policy defined by the Petrobras ANP regulations (National Petroleum influence on the company’s business. Environmental Program. In addition, Agency), GRI (Global Reporting Initiative), One of the most important steps taken those projects already supported by the and the Dow Jones Sustainability Index. was to join the United Nations’ Global company that have, over the years, yielded On the 50th anniversary of its Compact, thereby formalizing our positive results and gained the recognition founding, Petrobras has posted the most commitment to the defense of human of society have been maintained. impressive set of results in the company’s rights, respect for the work force and Petrobras’ innovative approach to history. From humble origins, producing conservation of the environment. social responsibility has aimed to reach 2,700 barrels of oil a day in the interior of The year 2003 saw the company, out to all the different population groups the state of Bahia, Petrobras has become through the Petrobras Zero Hunger with which the company interacts. For the a multinational energy giant, with Program, throw its weight behind the consumer, for example, the “Siga Bem operations in 11 other countries. It is federal government’s endeavors to fight Criança (Stay on the right path, children)” Brazil’s largest exporter and taxpayer, a social exclusion and misery in Brazil, program was developed to fight child world leader in deep-water oil exploration The year 2003 was full of good news. In 2003, Petrobras posted the largest Petrobras expanded its business by means of structural and systemic abuse and sexual exploitation, with technology and internationally recognized In addition to numerous prospecting suc- net earnings figure in the company’s abroad, with the acquisition of the engagement. the support of truck drivers who are for excellence in operational and envi- cesses and excellent financial results, the history, at R$ 17.7 billion, a record for a Argentine oil companies Perez Companc In the cultural field, in addition to customers of BR service stations. ronmental safety. company managed to reduce the number Brazilian company. The company’s gross and Petrolera Santa Fe, which resulted in ensuring continuity for ongoing projects, The Program for Organizing Suppliers With half a century of experience of accidents requiring time off work and turnover amounted to R$ 131.9 billion, the creation of Petrobras Energía S.A., to Petrobras concerned itself in activities (Progefe) was set up to monitor the behind it, Petrobras has confidently registered one of the lowest oil leakage boosted mainly by high international oil run Petrobras’ interests in that country. spotlighting Brazilian culture, by performance of suppliers to the asserted its position as a profitable levels in its history. Petrobras also took a prices. With these two acquisitions and new sponsoring works that assert the Engineering division, according to the company dedicated to the continual very important step in the social area, Production was also up, registering, discoveries inside and outside Brazil, the Brazilian identity. criteria of safety, the environment, health refinement of its processes. But, above all, when it joined forces with the federal in Brazil, an average of 1,540 thousand company’s total proved reserves of oil, All cultural sponsorship by the and socially responsible management. For this largest of Brazilian companies, the government in its project to eradicate barrels a day of oil, which was 2.7% condensate and natural gas reached 11.6 Petrobras system – including that of BR its workers, Petrobras set up a program of fruit of public exhortation and hard-won hunger and misery. higher than the figure for 2002. Average billion barrels of oil equivalent, according Distribuidora – has been integrated corporate voluntary social work that battles, comprehends its strategic role in The Petrobras Zero Hunger Program is production of natural gas remained at the to Securities and Exchange Commission and most new projects were first submitted consolidates the company’s stance of the social development of the nations in helping to overcome the challenge of same level as in the previous year, at 39.83 (SEC) criteria. to a public selection process, thereby acting in partnership with its employees to which it operates. transforming the situation of the country’s million m3/day. Thus, the total average The company’s economic and opera- ensuring a democratic allocation of overcome major challenges. It is this obligation that drives poorest communities, enabling them production in Brazil came to 1,790 tional performance in 2003 – added to resources and augmenting the opportu- The General Ombudsperson plays an Petrobras to, every day, reinforce its to attain dignified inclusion in Brazilian thousand barrels of oil equivalent per day, the results achieved in the social, nities for presenting the works. A total of important role in regard to the workers at social responsibility posture, investing society. The philosophy proposed by an increase of 2.2% on the figure for environmental and technological 141 new cultural endeavors were selected Petrobras, the public sector, the business in bettering the quality of life of its Petrobras to guide its social investment is 2002. Adding in the company’s interna- development areas, shown in this report in 2003, involving investments amounting sector and civil society, by ensuring employees and of the Brazilian population development with citizenship. tional production lifts the total to 2,036 – demonstrate that Petrobras is on the to R$ 60 million. transparency and heightening the quality in general, to which our investments and thousand barrels of oil equivalent per day. right track towards realizing its vision of The Petrobras Environmental of relations with the general population, social programs reach out, as they do in all the future. Program, launched in 2003, is committed while becoming a benchmark in the world the countries in which we are involved. to investing, subject to a public selection of business. We hope to inspire other oil process, a total of R$ 40 million, over two companies to follow us in introducing this years, in sponsoring projects devoted to vital facility. José Eduardo Dutra bettering the environment and the lives This document also contains other PRESIDENT AND CEO of the communities where Petrobras important innovations. First of all, the operates. The theme chosen as the focus figures have been reviewed by Ernst & 6 EDITORIAL Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 EDITORIAL 7

What is the Global Compact Petrobras joins the The Social Global Compact Responsibility Report In a speech to the World Economic Forum, The concepts of social responsibility and the Global Compact in 1999, the secretary general of the and corporate citizenship were already United Nations, Kofi Annan, proposed a gaining ground at the time the Global Although Petrobras observed the prin- This Social Responsibility Report 2003 Petrobras took an innovative step by the first year using the model, the com- global compact that would bring together Compact was established. But there was ciples of the Global Compact in its social celebrates Petrobras’ joining the Global developing an integrated matrix for the pany has limited itself to the general not only countries and companies, but also no undertaking that could consolidate responsibility and environmental policies, Compact. The ten principles set out by the various different models and indicators of guidelines, rather than adopting the non-governmental organizations, labor different companies’ experience or help to the company had still not formally UN have inspired the company to relate corporate social responsibility, such as the specific protocols straight away. associations, small and medium-sized develop and promote the administration of adhered to the movement. In 2003, a the progress made and challenges faced in GRI guidelines (Global Report Initiative), One of these guidelines relates to the business entrepreneurs, other UN agencies business based on universal values. formal proposal was made by Petrobras issues relating to human rights, working the Ethos Institute, CEBDS (Brazilian scope of the report. The data presented and civil groups. The idea was to integrate With the implementation of the CEO José Eduardo Dutra, in a letter to relations, the environment and the struggle Business Council for Sustainable refer to the year 2003 and to the Petrobras those who were riding the globalization Compact, there is a globalization of ethics the United Nations secretary general, for transparency in business and against Development) and Ibase indicators, the system, which includes the holding wave with those at the margins, in order to and a cherishing of life that – in unison Kofi Annan. This decision to join the corruption. Thus, Petrobras is honoring ANP regulations and the Dow Jones company and affiliates. When information create a sustainable and inclusive global with economics and politics – will spread undertaking committed the company to one of its commitments to the Global Sustainability Index questionnaire. refers only to part of this group of economy. The Global Compact was throughout the world, not in the form of incorporating its principles within its Compact, by helping to disseminate its The GRI was launched in 1997, as companies, this is made clear in an officially launched in July 2000. teachings or theories, but through the mission statement and development principles. “a collective endeavor by the non-govern- appended note. All areas of the company Nine basic principles were defined for success stories of companies that treat program, disseminated among employees, In the first part of the Report, up to mental organization Coalition for and its subsidiaries demonstrate their companies adhering to the Global their employees, their business and nature shareholders, customers and suppliers by page 21, we will present a profile of the Environmentally Responsible Economies responsibility and commitment through Compact. Two of them relate to respect with respect and make a contribution to means of the Internet, intranet and a company, the economic performance (Ceres) and the United Nations their engagement in the process of compil- for and furthering of human rights, four solving social and economic problems by publicity campaign in Brazil and abroad. indicators for 2003 and the company’s Environmental Program (Unep), with the ing the data.

Petrobras and Petrobras deal with working relations and three are creative and simple means. The company’s CEO also emphasized its strategic profile, including vision and aim of improving the quality, rigor and Certain events in 2002, the year of the about protecting the environment. The These experiences are gathered together commitment to the Global Compact in a strategy, corporate governance structure, applicability of the sustainability reports”. previous report, such as the reintegration first two principles are based on the UN’s in the Learning Forum, a database presentation at the New York Stock administrative systems and means of The first set of guidelines for sus- of Interbrás employees within the Universal Declaration of Human Rights, containing information on how companies Exchange. identifying and consulting the stakehold- tainability reports came out in 1999. Petrobras work force, cause a distortion in the next four on the International Labour are implementing the principles put In December 2003, Petrobras partic- ers. In the second part, beginning on Following intensive discussion and trials, terms of the comparability of the data. In Organization’s Declaration on forward by the Global Compact. It also ipated in the III Global Compact Learning page 22, the social and environmental a new version was launched in 2000. such cases, observations have been made Fundamental Principles and Rights at serves as a stimulus for those that have yet Forum, the members’ annual gathering, performance indicators have been divided Since then, they have become a world in order to clarify the situation. Work, and the last three on the Rio to develop business practices based on alongside the representatives of companies among the four areas covered by the benchmark for companies with a global At the end of the Social Responsibility Declaration on Environment and such principles. and institutions from all around the world Global Compact (human rights, labor reach that want to compare their figures Report, there is a summary to help locate Development. A tenth principle was Two activities of the Learning Forum that participate in this undertaking. At the relations, the environment, and trans- with those of other multinational cor- information in the text pertaining to the

the Global Compact recently added to the original nine: it is help to spread the Global Compact’s venue, in Nova Lima, Minas Gerais, parency and fighting corruption) and will porations. Hence Petrobras’ decision to various reporting models: Ethos, GRI, against corruption, inspired by the United success stories around the world: the the company presented a study on the be presented along with the principles to adopt this reference model and to adapt Ibase, CEBDS, the ANP regulations Nations Convention Against Corruption. publication of case studies on their web development of its program to organize which they relate. itself to their recommendations. As this is and the Dow Jones Sustainability Index Hundreds of companies decided to join site and the annual gathering of partici- the suppliers of engineering services, questionnaire. the Compact, offering their experience and pants to exchange experience regarding which encourages them to adopt socially seeking solutions to their problems that the application of the principles they are responsible practices. are guided by universally defined and defending. supported values. Practically all industrial The Global Compact is not a regulatory Ten principles of the Global Compact sectors, of varying sizes, from all over the body. It relies on the enthusiasm of each world, are represented. participant, in coming up with creative solutions and encouraging innovation. For HUMAN RIGHTS this reason, the Learning Forum is one of its most important tools, enabling the Principle 1: Companies should support and respect the protection exchange of knowledge among the various of internationally proclaimed human rights; and players in the world economic and social scenario. Principle 2: make sure that they are not complicit in human rights abuses.

LABOR STANDARDS

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labor;

Principle 5: the effective abolition of child labor; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

ENVIRONMENT

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

ANTI-CORRUPTION

Principle 10: Businesses should work against all forms of corruption, including extortion and bribery. 8 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 9

Mission, Vision and Strategy 8 Values 9 Profile of the Petrobras System 9 Petrobras and the Brazilian Economy 14 Corporate Governance and Organizational Structure 14 Approval of Investment Projects at Petrobras 16 Sustainability Goals and Action Taken 16 Performance Assessment 17 The Company’s Image and Brand Management 17 Petrobras Relations with Stakeholders 18

Implementation of this corporate Petrobras’ values govern the These values are reflected in strategy is structured on three fronts, in professional stance of the the company’s posture, gov- accordance with defined target markets: company’s staff and under- erned by its commitment to the 1. Consolidate our competitive advantages score its commitment to all country’s development, by in the domestic market for oil and oil stakeholders, notably the share- strong business ethics, by products; holders, customers, employees, appreciation of and respect 2. Maintain our leadership in the society, government, partners, towards all the different Brazilian market for natural gas and suppliers and communities stakeholders; the concept of develop integrated participation in the directly or indirectly connected leadership by example; an energy market; with the company’s activities. emphasis on integration and 3. Expand our international activities. Values Petrobras’ 50-year history teamwork; a focus on the Petrobras works with a ten-year is permeated by the values that development and sustainment window when defining the company’s have made it the largest of competitive advantages; vision and planning its strategic posi- company in Brazil: an entre- close scrutiny of results, with tioning and a five-year window when preneurial spirit that delights appropriate recognition and outlining its business plans. In 2003, in overcoming challenges, accountability for perform- Petrobras’ Strategic Plan 2015 was constantly striving for business ance; transparency in its rela- discussed by 250 of the company’s senior leadership, with the focus on tions with shareholders, executives and technical staff members, obtaining excellent results, employees, local communities who analyzed studies, raised possible quality and leadership also in and all the other parties and Strategy scenarios and identified opportunities, questions of health, safety and involved. threats, strengths and weaknesses that environmental conservation, should be worked on. One of the fun- and an innovative spirit of Mission, Vision Petrobras discloses its Strategic Plan on Vision: Petrobras will be an energy damental issues debated was the intro- competition, seeking to its internet page and in other media, company with a strong international duction of the concepts of social and achieve distinction in its revealing the company’s mission, vision presence and the leader in Latin environmental responsibility into the services and technological and strategies. It also discloses the America, operating with the focus on corporate mission and policies, so as capabilities. company’s Bylaws, Code of Ethics, profitability and social responsibility. to ensure that all activities developed Corporate Governance guidelines and The 2003-2007 Strategic Plan under this Strategic Plan will embrace Petróleo Brasileiro S.A. Code of Good Practice. defines a corporate strategy of leadership social inclusion and respect for the Structure of the Petrobras system (Petrobras) is an integrated Mission: To operate within the oil, in the Brazilian market for oil and oil environment. The board has been company, specializing in the gas and power sector, safely and prof- products, consolidation of its position as involved in the entire process of devel- exploration, production, The company has four business There are representative offices itably, providing quality products and an energy company and the selective oping the latest Strategic Plan. refining, selling and trans- areas – Exploration & in New York (Esnor) and services to both the domestic and expansion of its international operations. portation of oil, natural gas Production (E&P), Supply, Gas Tokyo (Esjap). In addition to international markets, while respecting This strategy will continue to adhere and their derivatives in Brazil & Energy and International; the activities of the holding the environment, serving the interests of to the strict policy of seeking a healthy and abroad. In the year of its two areas of support – Finance company, the Petrobras system the shareholders and contributing to the balance between striving for profitability 50th anniversary, this largest of and Services; and the depart- includes the operations of country’s development. and exercising social responsibility. Brazilian companies is also the ments of the Corporate Area subsidiaries, independent largest oil company in Latin that report directly to the companies with their own America and the 15th largest in CEO. This structure allows the executive boards linked to the the world. employees to develop their company’s head office. Although it is a public potential to the full and benefit Petrobras Gás S.A. corporation, Petrobras is from the added value of the (Gaspetro) has stakes in controlled by the Brazilian business, as well as streamlin- companies operating in the government, which holds ing the company’s operations. transportation of natural gas, 55.7% of its common shares, Petrobras has an active in the transmission of data, and therefore of its voting international presence, with voice and images by means of capital, and 32.2% of the operations in a number of cable or radio telecommuni-

Profile Profile of the company’s total capital stock. countries, including Angola, cations systems, and in the In 2003, Petrobras changed Argentina, Bolivia, Colombia, rendering of technical services its form of involvement in Nigeria and the United States. relating to these activities. social activities and the It also has stakes in several country’s cultural, environ- gas distribution companies, The company’s tradition of sponsoring sports, cultural and mental and sporting develop- exercising shared control of ment. More than just the business. Petrobras system Petrobras environmental projects, together with the importance it providing sponsorship, the company has committed itself gives to social responsibility, make Petrobras an important to the policies and causes themselves, introducing new partner in the development of Brazil. concepts and processes. 10 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 11

Petrobras Química S.A. (Petroquisa) fully-owned subsidiary. The company’s plant, in Sergipe), Lubnor (Lubricants and Petrobras America operates OFFICES ABROAD holds stakes in companies devoted to the mission is to operate profitably in the oil Oil Products of the Northeast of Brazil, in in the sales area, providing oil As a major oil company, manufacturing, sale, distribution, trans- and gas sector, in Brazil and internationally, Ceará), Recap (Capuava refinery, in São and oil products to the Petrobras operates at an portation, importing and exporting of providing transport and storage services, Paulo), Reduc (Duque de Caxias refinery, American market and acquiring international level, with chemical and petrochemical products, as while respecting the environment, taking in Rio de Janeiro), Regap (Gabriel Passos oil and oil products for the activities abroad including well as the rendering of technical and into consideration the interests of its refinery, in Minas Gerais), Repar Brazilian market. buying and selling oil, tech- administrative services relating to these shareholders and contributing to the (President Getúlio Vargas refinery, in The company’s largest nology, equipment, materials activities. Petroquisa has involvement in country’s development. Paraná), Replan (Paulínia refinery, in São customers are oil companies and services; following the all three Brazilian petrochemical hubs, Braspetro Oil Services Company Paulo), Revap (Henrique Lage refinery, in with refineries in the Gulf development of the U.S. and through stakes in companies responsible (Brasoil) is mainly involved in the São Paulo), RLAM (Landulpho Alves of Mexico, on the east European economies; financial for the production of basic petrochemical rendering of services throughout all areas refinery, in Bahia), SIX (shale processing coast and in the Caribbean, operations with banks and products from naphtha (a petrochemical of the oil industry, including the sale of oil business unit) and RPBC (Presidente thermoelectric plants that use stock exchanges; recruitment industry raw material derived from and oil products. The Braspetro Oil Bernardes refinery, in São Paulo). fuel oil to generate electricity of specialized personnel; petroleum). Company (BOC) works in the prospecting, Petrobras’ Exploration & Production for the New York and Miami chartering vessels; and support Petrobras Distribuidora S.A. (BR), a production, processing, sale, transporta- (E&P) area is responsible for the regions and Puerto Rico, and at international events, among mixed capital corporation founded in tion, storing, importing and exporting of prospecting, location, identification, gasoline distributors. others. 1971 as a subsidiary of Petrobras, is oil and oil products, while Petrobras development, production and incorpora- In order to perform these involved in the sale and distribution of oil International Braspetro B.V. (PIB) is a tion of oil and natural gas reserves within activities, Petrobras can count products throughout Brazil. In 1974, it stakeholder in companies operating in the Brazilian territory. NIGERIA on the support of its offices in became the largest distributor in Brazil, same areas as BOC. The E&P area is organized into busi- The company’s activities in New York and Tokyo. outstripping its domestic and foreign Petrobras Comercialização de Energia ness units (BU). Each BU is responsible Nigeria got under way in 1998, competitors. With more than 7,200 service Ltda. is a conduit for Petrobras’ newest for managing a group of exploratory with the acquisition of a stake in TRADING stations, it is the only network providing operations, in the Brazilian electricity concessions, running production and the exploration Block OPL 216, Acting either directly or national coverage and has over 10 sector, while Petrobras Negócios operational and administrative installa- together with Chevron-Texaco through its subsidiaries thousand large-scale customers. The Eletrônicos S.A. holds stakes in companies tions, with their own costs and revenues Devon Energy Corporation, BOLIVIA COLOMBIA and the Nigerian company abroad, Petrobras is involved company is a pioneer, introducing Brazil’s involved in Internet activities and elec- and responsibility for the results. The for US$ 89.5 million, the The Bolivia business unit Petrobras started operating in Famfa. in the international trade in oil first lubricating oil for alcohol powered tronics. Petrobras International Finance BUs are organized according to the final contract for which was carries on all oil industry this country in 1972, through In 1999, Petrobras pur- and oil products, including engines and an ecological lubricant, Company (Pifco) was set up to facilitate geographical location, geological simi- signed in October 2002. This related activities. The company a branch of Braspetro, follow- chased a stake in Block OPL participation in the world’s among other commercial ventures. the importing of oil and oil products, and larity and stage of development of the deal enabled Petrobras to has discovered the country’s ing the acquisition of some 246, with partners TotalFinaElf leading energy exchanges and Petrobras Distribuidora develops partner- Downstream Participações S.A. facilitates concessions, as well as the size and type augment its asset portfolio in largest reserves of natural gas, concessions from the company and the Nigerian company over the counter operations. ships aimed at saving energy, preserving the exchange of assets between Petrobras of infrastructure available. the area of exploration and in the San Alberto and San Tennecol. Sapetro. This block is also The international operations the environment and furthering industrial and Repsol-YPF. Driven by the fact that most of production outside Brazil. Antonio fields. Other blocks were subse- located in the Niger Delta, at are divided by region and type safety, as well as supporting social To complete the structure of the Brazil’s confirmed reserves are located in In the Gas and Energy In the area of refining, quently added to the Colombia depths ranging from 1,100 to of product. integration and investing in scientific Petrobras system, there are the plants and ocean basins, at considerable depth, the segment, Petrobras has a Petrobras operates through its business unit’s portfolio and, 1,900 meters. In November research and projects to develop home- refineries: Reman (Isaac Sabbá refinery, in E&P area, working in partnership with 34% stake in Companhia subsidiary Empresa Boliviana by March 2003, the company 2001, the company acquired a PIFCO grown technology. the Amazon), Refap S.A. (Alberto other areas of the company, has elevated Mega, an investment totaling de Refinación – EBR. This had a stake in 13 blocks, 15% stake in Block OPL 250, Pifco (Petrobras International Petrobras Transporte S.A. – Transpetro Pasqualini refinery, in Rio Grande do Sul), Petrobras to a position of world US$ 715 million. This com- company is the owner of the eight of which were in the also located in deep water, Finance Company) was set up in was set up to handle Petrobras’ maritime Fafen BA (nitrogenized fertilizer plant, in prominence in the development and pany has a natural gas sepa- Gualberto Villaroel (Santa Cruz production phase, and was the in partnership with Chevron- 1997 to facilitate the importing transport and pipeline operations, and is a Bahia), Fafen SE (nitrogenized fertilizer use of deep water exploration and rating unit, at Loma La Lata de La Sierra) and Guillermo operator in 11 of them. Texaco and Shell. of oil and oil products. Its prime production technology. (province of Neuquen), a Elder Bell (Cochabamba) Average production, between In December of the same function is to act as a go- 600-kilometer gas pipeline, refineries. January and March 2003, year, a contract was signed for between for Petrobras in its and a fractioning unit at It was through EBR that came to 14,800 bpd of oil, Block OPL 324, for which dealings with other entities, International involvement Bahía Blanca (province of Petrobras got involved in while natural gas production Petrobras is the operator and has when buying or selling oil and Buenos Aires), as well as distribution. The Empresa amounted to 1,100 boed. a 75% stake, alongside the oil products and obtaining (E&P); Refining, Transportation ARGENTINA infrastructure for tankage Boliviana de Distribuición Proved reserves, in December Nigerian company Horizon. This financing for this purpose. and Sales (RTS); Distribution; The Argentina business unit and the shipment of export (EBD), fully owned by EBR, 2002, totaled 45.8 million deal represents an important Pifco’s operations are reflected and Gas and Energy (G&E) seg- is active in all the business products. The company start- was subsequently founded to barrels of oil equivalent milestone for Petrobras, as it is in the Downstream and ments, in the following coun- segments. In 2002, Petrobras ed operating in April 2001. operate in this segment. (according to SPE criteria). the first block to be operated Exploration & Production tries: Angola, Argentina, Bolivia, acquired 58.62% of the Average production for the EBR also owns a lubricants by the company in deep water business segments and in the Colombia, Ecuador, Nigeria, shares of Perez Companc, the Argentinean business unit, manufacturing plant in USA outside Brazilian territory. Corporate area. Peru, the U.S.A and Venezuela. largest independent oil com- from January to March 2003, Cochabamba. Petrobras Petrobras America Inc. is a fully In 2002, two new pany in Latin America. Perez was 8,400 bpd of oil and Bolívia S.A. works with the owned subsidiary belonging to exploratory wells were drilled ANGOLA Companc has operations not 10,300 boed of gas. Proved brands YPFB, the market the Petrobras group. It operates in Block 246. The Kuro-1 well Petrobras has been active in the only in Argentina, but also in reserves, in December 2002, leader for lubricants, and in the United States in the resulted in a non-commercial Angolan oil business since Bolivia, Ecuador, Peru, amounted to 134.9 million Lubrax, imported from Brazil. Exploration & Production, discovery of gas, while the 1979, when it purchased a Venezuela and Brazil. barrels of oil equivalent In the gas transportation Sales and Buying segments. In extension well Akpo-5 con- 17.5% share in the exploration On April 4, 2003 the (according to SPE criteria). area, we highlight the con- March 2003, Petrobras was firmed a greater volume of phase of Block 2, located in the Perez Companc shareholders struction of a 431-kilometer involved in 111 blocks, in 30 of proved reserves for the unit, Petrobras established a firm Consequently, as part of the Lower Congo Basin. In 1987, approved a proposal to gas pipeline, 32 inches in which as operator. Average taking the total to 160 million presence abroad in 1972, company’s new strategic focus, the company increased to change the company’s name diameter, and two compression production, for the period barrels of oil equivalent acting through its subsidiary Petrobras incorporated into its 27.5% its share in this block, to Petrobras Energía S.A. and stations, between Yacuíba and January to March 2003, was (according to SPE criteria). Petrobras Internacional S.A. Organization and Management which is operated by Chevron- on May 13, 2003 the Rio Grande. Petrobras has a 1,500 bpd of oil and 5,200 (Braspetro), set up for the pur- model, approved in April 2000, Texaco and whose other part- Argentinean government 44.5% stake in this venture. boed of gas. Proved reserves, in pose of developing oil industry the activities previously carried ners are Sonangol and authorized the company’s December 2002, amounted to related activities, either directly on by its subsidiary. With this, TotalFinaElf. acquisition by Petrobras. 15.5 million barrels of oil or through affiliates. there was no longer any reason Average production at the The company also equivalent (according to SPE With the alterations to the for Braspetro to exist as a sepa- Angola business unit, during the acquired, for a sight payment criteria). laws governing the Brazilian oil rate institution and the company period January to March 2003, of US$ 49.8 million, a industry, introduced in was absorbed by the holding was 12,500 bpd. The proved 39.67% stake in Petrolera November 1995, Petrobras was company in September 2002. reserves, in December 2002, Perez Companc. authorized to directly carry on Currently, through its amounted to 19 million barrels Another important acqui- abroad any of the activities International business area, of oil equivalent (according to sition was the purchase of defined within its corporate Petrobras is involved in the Society of Petroleum Engineers Petrolera Santa Fe, an functions. Exploration & Production – SPE criteria). Argentinean affiliate of 12 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 13

Principal products and services PETROBRAS FIGURES 2002 2003% CHANGE 98 production platforms, 68 fixed and 30 floating Net operating revenue R$ 69,176,155 thousand R$ 95,742,702 thousand + 38

duced at one of the world’s most modern 16 refineries, with an average throughput of 1.71 million barrels per day (bpd) Cost of goods, materials mixing plants, which has been awarded Formula 1 racing 35 drilling rigs, of which 22 are maritime and services R$ 44,205,250 thousand R$ 52,893,317 thousand + 20 ISO 9001 certification, and currently 11.6 billion barrels of oil equivalent (boe) in reserves Retained earnings at the end comprises more than one hundred of the period R$ 8,097,791 thousand R$ 17,794,669 thousand +120 15,834 production wells, of which 838 are maritime products, for a variety of applications in, Return on average capital 27,120 km of pipeline for example, the industrial (Lubrax INVESTMENT IN employed (Roace) 22% 24.34% - Industrial), aviation (Lubrax Aviação), TECHNOLOGY FOR THIS Fleet of 97 vessels, 50 owned by Petrobras railroad (Ferbrax) and maritime 5,095 active service stations, 631 owned by the company (Marbrax) sectors. SPORT HAS PRODUCED GENERATION AND DISTRIBUTION OF ADDED VALUE (DAV) 2002/2003 The basic lubricating oils are sold to A WINNING FUEL. 5 fertilizer plants manufacturers, to be turned into a variety 2003 2002 of final products, such as automotive and 2003 was Petrobras’ sixth season BRAZIL’S LARGEST COMPANY R$ MILLION R$ MILLION industrial lubes, maritime and railroad as official supplier of gasoline to R$ 95.7 billion of net revenue in 2003 Gross revenue from sale of products oils, and lubricating greases. the BMW Williams Formula 1 and/or services 131,907 Natural gas provides a number of racing team. The contract, signed R$ 17.8 billion of net earnings in 2003 Raw materials consumed (6,683) economic and environmental benefits, due in 1998, represented a challenge R$ 18.5 billion of investments in 2003 to cleaner burning, free of soot and other for the company, which needed Products for resale (18,044) environmental pollutants. It is suitable for to develop a high-tech fuel PRODUCTION Materials, power, services etc. (20,937) domestic or industrial use or in vehicles, as that would enable the BMW Total added value generated 86,243 a substitute for diesel oil or gasoline. V10 engine to attain peak 1.70 million bpd of oil and NGL Liquefied petroleum gas (LPG), more performance during qualifying 54 million m3 of natural gas per day Depreciation and amortization (5,082) and in races. As the various test popularly known as cooking gas, is 2,141 metric tons of ammonia and 2,437 metric tons of urea Shareholdings in subsidiaries (1,009) normally sold in canisters, in its liquid procedures and the advanced Financial income 844 state, returning to a gaseous state at technology developed for this normal atmospheric pressure and tempera- sport can also be applied to the Total added value for distribution 80,996 65,715 ture when it is used for cooking. LPG is development of commercial also used by the glass, ceramics and food fuels, the biggest winner from industries. the company’s investment in Distribution of Added Value (DAV) 20032002 With its background of half a century exploring, majority of the distributors in the market Petrobras also produces various types this area is the Brazilian R$ MILLION R$ MILLION producing and refining oil in Brazil, Petrobras are the company’s customers. All the of fuel oil, mainly for use in industrial consumer. Staff 5,167 3,501 has an enormous range of products extending aviation fuel used in Brazil today is also boilers and furnaces; a broad variety of Wages, benefits and payroll taxes 4,273 far beyond fuels and oils, deriving mainly from produced by the company. asphalt products, for constructing, water- Profit sharing 894 its refining activities, each one with its own Petrobras meets a large proportion of proofing and repairing asphalt surfaces; specific purpose. The constant technological the country’s demand for diesel oil, either kerosene for lighting; various kinds of Government bodies 52,37439,876 refinements, characteristic of the Petrobras from its own production or from imports. aliphatic and aromatic solvents; paraffins Taxes and social security contributions 42,938 brand, are a guarantee of quality for our Through its Program to Enhance the and green petroleum coke. Government shareholdings 9,774 customers in all the various market segments. Quality of Diesel Oil, the company has The company is also Brazil’s largest managed to considerably reduce sulfur producer of raw materials for making Deferred income tax / soc.sec. contributions (338) The company’s automobile gasolines compound emissions, with a consequent fertilizers, is the country’s sole producer of Financial institutions and suppliers 4,776 14,891 are produced to the highest international reduction in smoke and odor levels. petrochemical naphtha and produces Financial expenses, interest, standards, meeting all the engine The company’s finished lubes and around 7% of the sulfur used in Brazil. It rents and chartering 4,776 requirements and restricting emissions to greases were launched in the Brazilian is, moreover, the largest producer and within acceptable levels. Petrobras market in 1974, under the Lubrax label, supplier of bunker fuel, for fueling ships, Shareholders 18,678 7,447 produces much of the gasoline sold at which has become a highly successful in South America. Dividends 5,650 Brazilian service stations, since the vast market leader. The Lubrax line is pro- Retained earnings 12,144 Minority shareholders 884

In 2003, 704 employees of the holding company who are responsible for the security of the company’s assets received one week’s training, totaling 40 hours of instruction, in basic human rights. 14 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 15

undertaken by the holding company and executive post at Petrobras; bers of the Executive Board specific units for the supervi- Corporate 95.05% of those of Petrobras Distribuidora The gains are ours the president and CEO, José and of the Board of Directors sion, execution and monitor- were paid on time. Eduardo de Barros Dutra. also. The Environmental ing of the company’s governance In the first half of 2003, Petrobras sold The Minister of Mines & Committee defines the com- economic, social and environ- more products abroad than any other Energy, Dilma Rousseff, who pany’s policies with regard to mental practices. Some units THE COMPANY REDOUBLES ITS REFINEMENT EFFORTS IN ADDITION TO SUPPLYING ENERGY TO Brazilian company, according to a survey was appointed to the board by social responsibility, corpo- which are responsible for AND SEARCH FOR THE BEST PRACTICES. carried out by Abracex (Brazilian Foreign POWER THE COUNTRY’S DEVELOPMENT, the Brazilian government, is rate citizenship and sustain- economic procedures, such as Trade Association). The company was PETROBRAS IS ONE OF THE LEADING the chairwoman and the only able development. Corporate Strategy and In 2003, Petrobras set up an in-house multifunctional group to study responsible for 6.43% of the country’s female member of the Board of The corporate governance Business Performance the developments in the legislation and corporate governance foreign sales during the period. GENERATORS OF RESOURCES FOR THE Directors. According to the guidelines at Petrobras, dis- Management, report directly practices in Brazil and around the world, to disseminate the concept BRAZILIAN ECONOMY AND THOSE OF policy adopted five years ago, seminated within the compa- to the CEO, and others to the of good corporate governance within the company and to seek Because of its strong economic and social OTHER COUNTRIES WHERE IT OPERATES. under which the chairman of ny and published on its financial director, as with improvements to the company’s chosen model. Petrobras also went impact on the regions in which it operates, the Board must be independent Internet web page, regulate Corporate Finance & ahead with its program of in-house and outside training in corporate Petrobras is frequently called upon to Last year, Petrobras accounted for more than and hold no executive post in the activities of the Board Treasury and Accounting. governance for executives of the holding company, its subsidiaries participate in and support the preparation, 5% of the country’s GDP and approximately the company, she receives no of Directors and the The social procedures are the and affiliates. execution and refining of comprehensive 12% of federal revenues. Taxes and royalties remuneration from Petrobras Committees. The Code of responsibility of Institutional Energy production is indispensable to the public policies. Much of the work done in alone came to R$ 45 billion. Petrobras was other than that relating to her Conduct lays down rules for Communication, under the functioning of the world’s economies and this area is the result of partnerships with also one of Brazil’s leading exporters, position on the board. the disclosure of information wing of the CEO, while envi- involves considerable risk, large-scale universities, non-governmental organizations accounting for 6.43% of sales abroad. In The Audit Committee is of interest to the market, ronmental procedures are the operations and heavy financial investment and public entities. addition to these revenues, the country also responsible for the auditing trading in securities, adminis- responsibility of Safety, in a fiercely competitive environment. gained from Petrobras’ social investments, and accounting control of the trative policy, executive Health and the Environment, In Brazil, a market that is opening up, The nature of Petrobras’ activities made directly by the company or through company’s business. The appointments at subsidiaries linked to the Services director. involving modifications in companies’ makes it necessary to constantly monitor partnerships with universities, non-govern- Remuneration and Succession and investor relations Internal Auditing, reporting positioning, Petrobras’ business, techno- their impact on the environment and the mental organizations and public bodies. Committee is responsible for policies. directly to the Board of logical and social leadership stands out. social well-being of the communities the selection, appointment The organizational struc- Directors, audits the company’s The company is responsible for more where the company operates. To this end, and remuneration of mem- ture at Petrobras includes activities. than 5% of Brazil’s Gross Domestic the tasks of consolidating the company’s

Petrobras and Petrobras the Product (GDP) and, in 2003, generated R$ leadership, attaining self-sufficiency in oil

Brazilian Brazilian economy 45 billion in taxes and royalties. It production and expanding its natural accounts for approximately 12% of total gas and petrochemical activities should New business federal government revenue. It is the be carried out under the watchful eye of country’s largest taxpayer and in 2003 society, backed by the commitment to Organizational Structure The New Business area has the received R$ 27 million in government social and environmental responsibility, following responsibilities: subsidies. All contractual obligations growing energy efficiency and the use of • Propose strategies, policies cleaner energy sources. and guidelines for the Audit Committee development of new business and partnerships;

Board of Directors • Coordinate and evaluate Petrobras generated R$ 45 billion in taxes and royalties, the development of new business, partnerships and Internal Auditing accounted for 5% of the country’s GDP and 12% of federal tax investments pertaining to the Petrobras system that involve collected in 2003. Executive Board more than one of its business areas; President & CEO • Coordinate the handling of company mergers and Corporate Strategy & Administrative Systems Business Committee Business Performance Development acquisitions. assist the board by making During the feasibility studies recommendations based on New Business Legal Area for a new business venture, the the analysis of specific issues environmental factors are con- (in 2003, there were three Human Resources Institutional Communication sidered and the steps taken are: Committees: for Auditing, the • Environmental consultants Environment and Remune- are hired; Office of the President Petrobras General Secretary ration and Succession); and a • Meetings are held with the Business Committee, which Safety, Health and the brings together members of Environment (SMS) area, the Executive Board and Financial Area Gas & Energy Exploration & Production Downstream International Area Services and an environmental report other company executives in is sought. order to analyze and report Safety, Health & • The due diligence process Accounting Corporate G&E Corporate E&P Corporate Downstream Corporate International to the Executive Board on the Environment assesses, among other things, corporate matters involving Corporate Finance the environmental factors. Marketing & Sales Production Engineering Logistics Technical Support Materials more than one business area & Treasury • Analysis is done of the due

Corporate The corporate structure at General Meeting, responsible or whose importance and diligence results and Research & Petrobras comprises a Board for, among other duties, significance require more Project Finance Operations & Shareholdings E&P Services Refining Business Development Development the impact on the value of of Directors, made up of a supervising administrative ample debate. the business venture and on

Governance minimum of five and a maxi- behavior and analyzing the Investor According to the company’s Energy Development Exploration Marketing & Sales Southern Cone Region Engineering the company is weighed up; Relations mum of nine members elected financial statements; an bylaws, the minority share- • The potential risks are by a General Meeting of the Executive Board, made up of holders of non-voting stock Tax Administration E&P North-Northeast Petrochemicals Americas, Africa & Eurasia Information Technology identified; Shareholders, which is a president and up to six may elect a representative for • Contractual mechanisms are responsible for steering and directors chosen by the Board each category (common and Financial Planning introduced to protect the E&P South-Southeast Shared Services governing the company at the of Directors, responsible for preferred stock) to the Board & Risk Management company against potential highest level; an Audit running the company; Board of Directors. Of the nine liabilities, contingencies Committee, with up to five Committees, of two to four current board members, all and changes in the general members, also chosen by members, whose purpose is to Brazilians, only one holds an scenario. 16 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 17

Petrobras has a corporate system in Risk and crisis management tored using indicators. plan throughout the company. place to authorize investments in projects The performance indica- Disclosure of the strategic related to the company’s key activities, tors are classified according initiatives is recorded in the such as Exploration & Production Petrobras’ CEO is the executive respon- to perspective (financial, Hyperion Performance Score- (E&P), Refining, Transport, Distribution sible for dealing with crises and risk. market, internal procedures card, a computer software and Thermoelectricity Generation, that However, depending on the nature of the and learning and growth), that stores the information involve at least one of the following crisis, he may delegate the coordination of respecting the links to the pertaining to the forecast and goals: setting up a new unit; expanding the company’s response to a provisional strategic goals. achieved results. the capacity of an existing unit; extending representative. Such response will be based In the course of monitoring During the quality drive at the useful life of equipment or a unit on Petrobras’ tried and tested procedures, the company’s performance, the Business Units in 2003, an that is in operation; reducing the operating • Secondary Recovery of the Guando as well as the best practice of similar the development of the goals internal audit was performed, cost of working plants or equipment; field (Colombia); companies worldwide. and the related strategic ini- not only of the quality criteria, logistics infrastructure projects; • Complementary Development of the tiatives, along with the but also of those corporate installing distribution bases or terminals. Albacora field (Capivara area); results of the indicators, are procedures that are considered Under this system, all projects must • Development of Module 1A, Phase 2 all scrutinized on a quarterly indispensable, among them undergo three planning stages. As the at the Roncador field. In 1999, a new process for management, a new metho- basis. In the meantime, those the Strategic Performance minimum requirements of each stage are The following projects were reevaluated: Business Performance Evaluation dology has been introduced, responsible seek to imple- Appraisal using the BSC met, so the project is submitted for • Northeastern Gas Pipeline Network; was introduced at Petrobras, the Balanced Scorecard ment their prescribed instruc- methodology.

approval to go on to the next stage. At • Southeastern Gas Pipeline Network; Assessment the product of which is the (BSC), otherwise known as tions and report on their After the process was

the end of the third stage, the project can • Development of the Fazenda Alegre Performance Business Performance Report the quarterly strategic progress in the following concluded, the administrative then be approved for implementation. field; (BPR). The BPR shows the business performance appraisal. appraisal. area announced the results Projects involving a total investment • UPGN III gas production unit at the current and previous year’s In the present management Points of fundamental of the implementation and of more than US$ 25 million need to be Guamaré field; results at the corporate level model, corporate performance importance in this process monitoring at the various authorized by the Executive Board, after • Augmenting Processing Capacity and and per business segment, as comprises the sum of the are the negotiation, align- units appraised. Since the being analyzed by the Investment Optimizing Operations in the well as the annual target results of the Business, ment and approval of the implementation was begun, Committee and corporate areas. Three Santiago area (Bahia). (monthly tactical appraisal). Services and Financial areas participation/accountability courses to train and up-date large-scale projects (total investment However, in order to meet and the Corporate Units, that of each unit within the scope BSC skills have been given to exceeding US$ 25 million) were all the needs arising from are related to the company’s of the strategies and the 106 of the company’s staff. approved in 2003: the adoption of strategic strategic goals and are moni- dissemination of the strategic

Projects Projects at Petrobras In order to put the company’s the company can be spotted corporate strategies into prac- through this analysis, which One of the indicators of Petrobras’ performance is the tice, objectives were defined can also be used to verify that focus on sustainable whether the company’s consumer’s loyalty to the brand. Approval of Investment Approval development and relations products and services fit in In managing its image, with stakeholders. with its strategic planning and Petrobras seeks to emphasize In the financial area, the have attained the expected three particular characteristics aims with regard to the share- goals. of the company: advanced holders’ interests are to ensure In its internal procedures, technology, a commitment to profitability and value; to seek Petrobras strives to constantly Brazilian society and involve- cost leadership; to sustain the raise the standards of its ment in the country’s cultural company’s revenues while products and services; to keep development. optimizing the margin; and to track of developments at its The company seeks to align grow whilst diversifying the customers and its competitors; the strategic management of portfolio. to strengthen its brand image; its image with its overall In relation to the market, to attain international stan- strategic planning. Moreover, the company seeks to develop dards in the areas of safety, all the Petrobras group brands the loyalty of its downstream health and the environment; to possess the same visual identi- customers; to offer the con- ensure capital discipline and ty, which facilitates customer

Action Taken Taken Action sumer quality products and to reach the benchmark for recognition. services; and to be fully operating costs. The consumer’s brand committed to society. A prac- With regard to learning loyalty is one of the indicators tice that Petrobras has adopted and growth, Petrobras aims to of Petrobras’ performance. is to perform speculative create a results-based environ- Opinion polls among the analysis of its portfolio results ment; channel information into principal stakeholders and for a wide variety of economic the business; develop and brand recognition and prefer- scenarios, in order to look out strengthen strategic skills; and ence studies, contrasting the for and quantify possible build awareness and educate company’s own brands with future risks. Opportunities and the community and the work those of its competitors, also actions that create value for force in social responsibility. help to ascertain the value of the name they bear. Sustainability Goals and The Company’s Image The Company’s and Brand Management 18 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 19

Commitment towards How Petrobras is stakeholders perceived: “Sísmico”

Petrobras’ relationship with, concern for Policy on capital control (shareholders): • Take SMS performance into considera- GENERAL INDEX and commitment to its stakeholders per- • Manage the company’s business using tion in the systems of consequences and YEAR POINTS vades all the company’s Strategic Planning, Return on Capital Employed indicators recognition (employees). and is clearly reflected in its Mission, (Roce). • Promote health and safeguard human 2001 77 Values and Corporate Policies, Behavior, • Evaluate fully and systematically the welfare and the environment through 2002 74 Strategies, Goals and Action. project and debt portfolios of the the identification, control and monitor- 2003 77 Petrobras’ Corporate Policies, which Petrobras system. ing of risk, bringing safety measures guide its Business Strategies, identify the • Manage in an integrated manner the into line with the best international stakeholders who are directly affected and market risks relating to projects, trad- practices and being prepared for emer- define the company’s expectations in rela- ing, financial exposure and acquisitions. gencies (work force, communities and INDICATORS OF PUBLIC OPINION ON SOCIAL tion to them. society in general). RESPONSIBILITY RELATED THEMES Human resources policy (relates more to • Ensure the sustainability of projects, Policy governing corporate activities: the work force – employees and out- undertakings and products over the Indicator 2001 2002 2003 • Exercise corporate governance with a sourcing): course of their life cycles, taking into Social responsibility 69 60 65 view to building credibility and trans- • Attract, use to the best purpose, develop consideration the economic, environ- Environmental responsibility 6463 64 parency in the eyes of Petrobras’ share- and retain personnel, investing in their mental and social impacts and benefits Stakeholders holders, investors, employees and society talents and honing their skills. (all stakeholders). The perception of Petrobras tion, competitiveness, growth, Diversification / energy 67 69 68 in general. • Bring employee remuneration into line • Bear in mind the ecological efficiency of among the various population operations abroad, vision of the Social support 59 61 64

Relations with Relations • Build closer relations with the cus- with business strategies and objectives. the company’s operations and minimize groups, or stakeholders, is veri- future, social support, ethics, Working conditions 70 70 71 tomers, providing them with solutions in • Promote a process of ongoing negotia- the adverse local impact that is inherent fied and monitored using the and social and environmental terms of products, services and supply tion with representatives of the work to the activities of the industry (commu- System for Monitoring the com- responsibility. They appear in Vision of the future 80 79 81 conditions that are superior to those of force (includes trade unions). nities and society in general). pany’s Corporate Image the Balanced Scorecard, are in Product quality 88 82 85 the competition. • Promote managerial practices that breed (Sísmico, which means seismic alignment with the company’s Transparency n.a. 36 48 • Assess the performance of the business motivation and satisfaction in the work- Communications policy: in English). The assessment and Strategic Planning and are inte- Ethics 52 62* 56** units within the context of the compa- place and strengthen the employees’ • Promote, preserve and defend the management of the company’s grated with its process of ny’s overall results and tied into a system commitment towards meeting the corpo- Petrobras brand and corporate identity, image is conducted using 18 knowledge management. Reliability 87 86 88 of accountability and consequences rate targets and to the principles defined reinforcing their attributes and the com- indicators that gauge the stake- The indicators are classified * Included an additional question. (shareholders, employees). in the Petrobras system’s Code of Ethics pany’s commitment to the various target holders’ perceptions, which are as general (surveys involving all • Develop the company’s business and (includes all stakeholders). groups (all stakeholders). consolidated into a single image segments), complementary (sur- ** Points adjusted to the number of questions. activities bearing in mind its commit- • Encourage and give recognition to the • Communicate rapidly, continually and appraisal index. veys involving certain seg- ment to sustainable development (all practice of good citizenship among all with transparency, providing clear, reli- The aim of the ‘Sísmico’ is ments) and specific (surveys SOCIAL RESPONSIBILITY INDICATOR AND GENERAL INDEX stakeholders). the employees, as well as initiatives able, objective, precise and up-to-date to provide support to the strate- involving a particular segment). PER SEGMENT IN 2003 • Promote the efficient use of energy with- related to the company’s social responsi- information about the company’s activi- gic management of the compa- The general index repre- Segment SOCIAL RESPONSIBILITY GENERAL in the community at large, while giving bility (includes communities and society ties, products and services and empha- ny, as well as integrating, sents a weighted average of the INDICATOR INDEX priority to products sold by Petrobras in general). sizing Petrobras’ corporate social standardizing and systematizing points for all the indicators in Public opinion 65 77 (includes customers and communities). • Promote a cohesive corporate culture responsibility (all stakeholders). the instruments for evaluating the public opinion segment. It is Employees* 92 83 • Adopt a proactive stance in relation to that respects local values and gives pri- • Continually seek to discover the opin- its corporate image. The analy- not an average of the points for regulatory, inspection, environmental ority to recognizing and rewarding ions, needs and expectations of the vari- sis of the monitoring process is all the segments, which would Shareholders 77 83 and other national and international teams and individuals for good results. ous interested parties, while respecting provided to select members of not be statistically significant, Press* n.a. 75 bodies with which the company needs to • Bring outsourced practices into line their cultural diversity (all stakeholders). the company’s staff and helps to but for a specific sample that Third Sector* 62 62 deal. with the company’s Human Resources • Maintain open, consistent and wide- guide decision making. reflects the general thinking of and Confidentiality policies and with ranging communications with the Annual surveys of the gener- society. Suppliers n.a. 85 the management of its core business employees, thereby helping to strengthen al public, the employees, the Several indicators showed a Local Communities* 66 74 know-how. their commitment towards the compa- press and the shareholders are decline in 2002, due to the acci- Public Authorities 68 76 ny’s corporate goals and strategies. carried out. Every two years, dents that occurred during the Policy regarding Safety, Health and the • Promote a close relationship with the the perceptions of customers, period. On the other hand, Environment (SMS): communities that are affected by the suppliers, the third sector, com- 2003 was a year of recovery, * Data relates to the 2002 survey. These segments were not surveyed in 2003. • Educate, train and gain the commitment company’s operations, maintaining munities neighboring the com- particularly in areas relating to of the employees regarding SMS issues, an ongoing dialogue with their repre- pany’s units and the public social responsibility, thanks to while also involving suppliers, communi- sentatives. authorities are analyzed. the firm and transparent action ties, responsible bodies and other stake- Under special circum- taken by the company. holders. stances, additional assessments, Ethics and transparency are possibly involving specific tar- the areas where public percep- get groups, may be performed. tions are least favorable, but The indicators were devel- the levels are improving and in oped to provide assessment of 2003 reached their highest the following areas: administra- points to date. 20 PETROBRAS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 PETROBRAS 21

Petrobras communication channels Investor relations

ber of complaints received by ‘green lines’ (respectively, the Petrobras SAC in 2003 0800-556560 and 0800- related to details of the 422202). All the company’s Petrobras’ investor relations policy strictly access to information via the Business Units have emergency adheres to Chapter 5 of its Code of Good ‘Canal Cliente’ tool on the phone numbers and participate Corporate Practice, which determines that company’s web site. regularly in forums held in it is the director of the Financial area and Of the 2,408 complaints their local communities, where Investor Relations who is responsible for received by Petrobras issues of direct interest to all providing information to the stock market Distribuidora in 2003, the those involved are debated. and its regulatory bodies. It is he, majority were related to fuel therefore, who must outline the company’s characteristics and unsatisfacto- Petrobras Community investor relations policy. ry treatment, delays in product Communication Channels: The executive manager for Investor delivery and ‘Smiles’ mileage • Telephone ‘Green Line’ – Relations, appointed and guided by the program credits that were not free service provided to the director, is the official spokesperson for registered. Approximately 96% local community neighbor- Petrobras in dealings with this population Petrobras considers contact in addition to several other of the complaints were resolved. ing an Operational Unit; group, assuming responsibility for with its customers and the dedicated channels. The refineries have, in • Telephone numbers, available preserving the company’s image and local community to be a In 2003, the Petrobras SAC addition to the Petrobras SAC on the Petrobras web site, of fulfilling the company’s policies with To complement the study, at the end of In order for the investors to know the strategic imperative. For this received 1,342 complaints, of and Corporate Ombudsperson, Environmental Protection regard to its relationship with investors. the phone conferences held to discuss the company better, the site has the areas “Get reason, the company maintains which the company received their own dedicated telephone Centers throughout Brazil These include the proactive, transparent, company’s quarterly results, inquiries are To Know Petrobras”, “Operational channels of communication positive feedback on 1,106. In lines for contact from the local (http://www2. petrobras.com. controlled, thorough and full disclosure made in order to gauge the investors’ Highlights”, “Social and Environmental for each population group. other words, 92.68% of the community in case of emergen- br/portal/meio_ambiente.htm); and dissemination of information to the perceptions and understanding of the Responsibility” and “Corporate The company’s direct clients customers were satisfied with cies and/or complaints. At • Petrobras Distribuidora market. information disclosed. Gover-nance”. In addition, there are stock have their own exclusive the solutions provided. The Recap, for example, there are Ombudsperson; In 2003, the company held 253 meetings Qualitative and quantitative research is market quotations, up-dated every 15 channel, the “Canal Cliente” indicator that monitors con- the Community SAC 0800 - • Transpetro Ombudsperson; and three presentations for investors. At also conducted amongst the minority minutes, charts showing the stock price (www.canalcliente.com.br). sumer satisfaction with the 7043732 and the e-mail • Customer Care Service (SAC); one of these presentations, held at the shareholders, in order to define the yield and variations, a comparative index Consumers can communicate SAC is the Quality of address comunidade@petro- • Internet: Contact Us closing of the day’s trading session at the economic profile of this group and and a price alert facility, which are all with the company through Response Index (IQR). bras.com.br. Revap has the (http://www2.petrobras.com. New York Stock Exchange, in celebration ascertain their perceptions of the company provided to help shareholders. There is a the Petrobras Customer Care All consumer contacts “Banco de Manifestações da br/portugues/index.asp); of the 50th anniversary of the founding with regard to competitiveness, technology, Q&A section, with the most frequently Service (SAC), by telephone were responded to and dealt Comunidade (Community • Involvement of the local of Petrobras, the chosen theme was vision of the future, profitability, inter- asked questions, divided by subject matter or e-mail. The local commu- with within an average of Contact Base)”, and at Replan community in simulated sustainable development and the issues national presence, administration, the for easier reference. nity can also use the SAC, three days. The greatest num- and SIX there are telephone emergency exercises. addressed included, among others, renew- environment, diversification, social Because of its quality, the Investor able energy and carbon dioxide emissions. support, transparency, ethics, corporate Relations site has received awards on A study is presently being carried out governance and communication with several occasions. Most recently, in to ascertain investors’ perceptions regard- stakeholders. January 2004, it was voted the best Latin ing the company. The results will be used American IR site, for the third time, by Administrative policy and systems as indicators for the Balanced Scorecard – WWW.PETROBRAS.COM.BR/RI investors, analysts and other capital BSC in the IR area. The principal areas of One of the principal tools used by market agents (Pop+), at a ceremony held with regard to customer satisfaction focus are transparency and the tailoring Petrobras in its relations with investors is in Cancún (Mexico), organized by MZ of the information, financial reports and the page devoted to them on its internet Consult, Ameri (Mexican Association for The System for Managing the Process of MECHANISMS AND PROCEDURES SCOPE OF THE POLICIES RELATING TO bulletins for the press, analysis of the website, in Portuguese, English and Investor Relations) and M. Gonçalves Supply Logistics and Sales (SGPL&C) was set The satisfaction of the company’s direct CUSTOMER SATISFACTION company’s revenues, phone conferencing, Spanish. There, the shareholders can read Publicidade and sponsored by KPMG, JP up based on the requirements of ISO clients is gauged by means of an annual The policies apply to all the Supply area the annual report, the company’s internet the communiqués issued by the company Morgan and Linklaters. A technical 9001:2000. One of the policy aims of the survey, the procedure for which is part of marketing and sales departments, web page, the organization of road shows, and presentations given by its senior committee comprising Linklaters lawyers process is to augment customer satisfaction. It the SGPL&C. Action plans based on the including the commercial managerial information and communication, the executives, in addition to all the material and auditors from KPMG and Citigroup is supplemented by a routine Assessment of results of the survey are drawn up by the departments at headquarters and at the company’s events, and the analysis of about Petrobras or the oil market that is Global Market considered the website to Supply Management Quality (AQG), which managerial departments involved. Business Units and the Regional suggestions regarding Petrobras’ relations published in the press. be the 3rd best in the world. The same adopts principles compatible with those Managerial Departments, which provide with investors. committee also ranked it Latin American governing the quality criteria of the RESULTS full national coverage. and world’s best in the oil, gas and Foundation for the National Quality Award The Customer Satisfaction Index (ISC) and petrochemical sector. (PNQ). the Index of Quality Perceived by the The Petrobras Customer Program Customer (IQPC) are the two indicators (Clip) is part of the SGPL&C and defines ascertained through the survey and their Prize-winning goals, guidelines and positions to be evolution is monitored systematically. embraced by the work force in order to The ISC is one of the performance transparency ensure effective interaction and a high indicators required under the SGPL&C degree of standardization and quality for policy and goals, as well as being one of THE WEB SITE IS A HIT WITH INVESTORS customers. the BSC indicators for the marketing and The Clip national, regional and local sales area. Our Investor Relations web site was selected, for the third time, committees handle and process customers’ The answers to questions asked after as the best in Latin America in its category, in a poll conducted satisfaction levels. someone has dealt with the company’s among investors, analysts and other capital market operatives. SAC generate the Quality of Response The award was presented in Cancún, Mexico, at a ceremony Index (IQR), which is also monitored and organized by MZ Consult, Ameri and M. Gonçalves Publicidade and improved on a systematic basis. sponsored by KPMG, JP Morgan and Linklaters. The site was also voted the best in the oil, gas and petrochemicals sector, not only in Latin America but in the whole world, and took third place in the world ranking for the category, in a list drawn up by a technical committee comprising lawyers from Linklaters and auditors from KPMG and Citigroup Global Market. 22 HUMAN RIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 HUMAN RIGHTS 23

Global Compact – Human Rights 22 Petrobras and Human Rights 24 Corporate Ombudsperson 25 Human Rights Training 26 Diversity 26 Human Rights Social Investment 28

Principles 1 and 2 of the Global Compact

The first two principles of the Global security of person, freedom from slavery and cultural rights indispensable for his PRINCIPLE 1: COMPANIES MUST SUPPORT PRINCIPLE 2: MAKE SURE THAT YOUR Compact were inspired by the 1948 and servitude or from subjection to any dignity and the free development of his AND RESPECT INTERNATIONALLY OWN COMPANY IS NOT COLLUDING Universal Declaration of Human Rights, form of torture or to cruel, inhuman or personality. RECOGNIZED HUMAN RIGHTS. IN THE ABUSE OR VIOLATION OF which defines international standards for degrading treatment or punishment. Furthermore, they cover respect for As part of its commitment to the Global HUMAN RIGHTS. the protection of individual rights and The Declaration also affirms every- the right to work, to free choice of Compact, a company must encourage The idea of collusion, in this case, can be freedoms. one’s right to recognition everywhere as a employment, to just and favorable respect for human rights, not only in the interpreted in three different ways: direct According to the text of the person before the law, to equal protection conditions of work and to protection workplace, but within their entire sphere collusion, beneficiary collusion and silent Declaration, the intention of the United of the law and to a fair and public hearing against unemployment, as well as to just of influence. This posture can be promoted complicity. The first occurs when the Nations Organization here is that “every by an independent and impartial tribunal. remuneration. According to the by developing corporate policies and company consciously contributes to the individual and organ of society (...) shall It also states that no one should be Declaration, everyone has the right to strategies that serve as a foundation for violation of human rights by, for strive by teaching and education to subjected to arbitrary arrest, detention or rest and leisure, including reasonable the practice of these rights, implementing example, forcibly moving a community promote respect for these rights and exile and that everyone has the right to be limitation of working hours and periodic a project for healthcare and safety because of its business. freedoms (...), to secure their universal and presumed innocent until proved guilty. holidays with pay. Everyone also has the administration, and by instructing The second form occurs when the effective recognition and observance”. Individual Liberty includes the pro- right to a standard of living adequate for employees on human rights issues and how company directly benefits from the action The first two articles of the vision that no one shall be subjected to the health and well-being of himself and of they affect the company’s business, as well of third parties in violation of human Declaration affirm that “all human beings arbitrary interference with his privacy, his family, the right to education and the as displaying them in internal policies rights. An example would be the are born free and equal in dignity and family, home or correspondence, nor to right to freely participate in the cultural related to the subject. repression by security forces of a peaceful rights”, and forbid distinction of any kind attacks upon his honor and reputation. life of the community. Moreover, the company can carry out protest against the company. in the enjoyment of these human rights by There are also guarantees of the right to The authors of the Declaration knew regular surveys in order to ascertain Silent complicity occurs when the

Human Human Rights reason of race, color, sex, language, freedom of movement, to a nationality, to that human rights were (and still are) often the impact of its activities on the local company fails to question the violation religion, political or other opinion, seek asylum from persecution, to marry flaunted and that to make them respected community, in terms of human rights, of human rights, despite having a national or social origin, property, birth or and to found a family, with the free and worldwide would require an enormous discuss the issue with affected groups and relationship with the responsible other status. full consent of the intending spouses. effort on the part of society. For this strive to improve working conditions, with authorities. By tolerating discriminatory Three crucial areas are addressed by Moreover, it covers the right to own reason, instead of specifically addressing the help of the employees themselves and practices in the labor laws, for example, the Universal Declaration of Human property, the right to freedom of thought governments, they called upon individuals their representatives. the company is showing silent complicity

Global Compact – Rights: The rights to Life and Security, and religion, the right to freedom of and organs working for the interests of In order to ensure that human rights in the violation of human rights. Individual Liberty, and Economic, Social expression and the right to freedom of society. are respected on a daily basis at the To avoid such collusion, the company and Cultural Freedom. peaceful assembly and association and to It is on this basis that principles 1 and company, it must provide adequate needs to know the principal issues The first area deals with the notions take part in government. 2 of the Global Compact call upon conditions of health and safety in the relating to human rights in the countries of personal dignity and security, by With regard to Economic, Social and companies not only to develop their workplace, guarantee freedom of associ- in which it operates or intends to operate, guaranteeing the right to life, liberty and Cultural Freedoms, the Declaration calls awareness of human rights, but to work ation, ensure that there is no discrimi- in order to assess its impact on the local for respecting the right to social security within their spheres of influence to nation between employees nor the situation and the risk of getting involved and the realization of the economic, social safeguard these rights. practice of direct or indirect forms in a possible violation. of slavery or child labor, and promote What is more, the company must have access to basic health, education clear policies to protect the human rights and housing for its employees and their of its direct employees and those of its families. network of suppliers, have a system of In relation to the local community, monitoring to ensure that these policies the company can further human rights are being implemented, make sure that its by avoiding the forced transfer of own security system is not involved in the individuals, groups or whole communi- violation of human rights, and maintain ties from their home towns or regions, a dialogue with non-governmental by working to bolster the local economy organizations (NGOs) devoted to the and by contributing to public debate, theme. interacting with the society and the government of the country in which it operates and putting forward the company’s points of view on matters that affect its business, its customers and the community of which it is a part. 24 HUMAN RIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 HUMAN RIGHTS 25

The respect for human rights guides all Corporate Ombudsperson – a channel for all to use Petrobras’ actions, from the company’s relations with its employees to decision making and social investment. There has been a General Ombudsperson identify structural problems in the compa- Having adopted right from the start the The company’s Human Resources (HR) at Petrobras since April 2002, but ever ny’s internal procedures, the resolution of three principles – transparency, protection area confirms its concern over human since the present board and the new which will benefit not only the person who of the individual and safeguarding people’s rights by establishing the policy that the ombudswoman took office the job has brought the matter to attention but also rights, the General Ombudsperson has company must “promote administrative taken on a broader role. Invited to assume others who may be in the same situation. become a sensitive channel for the compa- practices and processes conducive to the post by the company president, Maria The company’s structure and the responsi- ny and the community, receiving claims not satisfaction in the workplace and the Augusta Carneiro Ribeiro – or just Guta, bilities of each area are respected and put foreseen in the conventional business commitment of all the employees to the as she likes to be called – has brought new to work to find solutions to the problems. administration models. goals and ethical principles of the meaning to the job. One of the changes introduced in this During the year 2003, the General Petrobras system”. Moreover, it is the The Ombudsperson is one of the context was greater appreciation for Ombudsperson was contacted 10,062 company’s duty to “encourage and show principal instruments for ensuring women in the company. The female work times. Of these, 4,279 were internal recognition of the exercising of citizenship transparency at the company. It is a force was registered and identified profes- demands, 3,456 were external demands by the employees and to support initiatives channel that is open to all. The aim is to sionally using the Portuguese masculine and 2,327 did not require any steps to be relating to social responsibility at stress the protection of human rights gender. A complaint addressed to the taken, just the answer to a question. Petrobras”. and to be forever open to dialogue, creating Ombudsperson by a female employee Upon assuming the coordination of the According to the Petrobras Code of an environment in which internal and called attention to the problem and now corporate voluntary efforts, the Ethics, “the adoption of ethical principles external groups feel they are respected. the identification badges of all female Ombudsperson’s first step was to put into and behavior reflects the kind of organi- With a name that reinforces her employees show their job functions in the practice a method of listening and local

Petrobras and Petrobras zation we are part of and the type of approachability, Guta receives visitors feminine gender. Another example was the assessment, called social prospecting, Human Human Rights people we are. Our respect for individual with a friendly smile and takes great care employees’ demand for more opportunities whereby the volunteers listen to repre- differences and growing concern about to ensure that her work is a guarantee of to engage in voluntary work. This demand sentatives of the first, second and third social responsibility, under which the transparency in the company’s relations led to the creation of the Corporate sectors in the regions they are working in. questions of safety, health and the with all interested parties. In her view, Volunteers project. The voluntary projects are born of a environment are inserted into our day-to- while the company needs to maintain its Moreover, certain customs that had recognition of the local challenges, day business management, reflect It utilizes the indicators of the Ethos The Corporate HR takes part in the profitability and do good business, at the become ingrained over time were ques- endeavors and aptitudes, avoiding Petrobras’ relationship with its employees Institute, among others, which embrace, in Outsourcing Forum, held since 2001, in same time it also needs to look at the tioned and in certain situations were overlapping activities and favoring and with society.” a specific manner, respect for the human which issues relating to outsourcing policy social side. changed, such as in the opening of the cohesion with civil society and public In the Human Resources area, there are rights of workers. The Engineering are discussed, including questions She knows that institutionalization of company’s library to the general public. policies. a number of instruments for obtaining procurement area also has its own rules connected to the working conditions of the role of Ombudsperson takes time, as it Previously, it was reserved for the exclu- The corporate volunteers have con- feedback from the employees, such as: relating to the issue. contractors, inside or outside the impacts on the corporate culture, but she sive use of the staff. ducted 19 regional inquiries, covering 66 “Fale Conosco RH (Contact us at HR)”, a The contract for the supply of goods Petrobras installations. It also participates thinks it is essential that the position be The Ombudsperson has not avoided municipalities in 11 Brazilian states. This communications channel specially devel- includes the “Petrobras Conditions for the in audits aimed at verifying compliance permanent and effective, and not merely addressing prickly issues, that are hard to groundwork has so far given birth to 67 oped to get the opinions of the employees Supply of Materials (CFM 2003)”, revised by contractors with the contractual symbolic. deal with, such as the issue of moral projects involving the voluntary workers, and feed them to the HR managerial on October 14, 2003, which specify: requirements, such as no child labor, Listening to people’s complaints and harassment, the term used for the exposure 32 of them in the stage of implementation. departments; the Corporate • Compliance with Social Responsibility forced labor or precarious working opinions only makes sense if the broader of employees to embarrassing situations in For all these reasons, the Petrobras Ombudsperson, who registers employees’ Norms, in accordance with SA 8000, conditions. aim is to guarantee freedom of expression the performance of their duties. The issue Ombudsperson serves as a benchmark complaints and, if necessary, passes them not only by the supplier, but by sub- The managerial department for Hiring for all and to ensure that their rights are is being discussed in an open manner and for other organizations, both public on to HR; and the HR Audits. There is contractors, partners and/or service Goods and Services at Petrobras respected. Every individual issue that several possible courses of action have and private. Moreover, it is worth also a Survey of the Corporate providers. These norms define obliga- Distribuidora is also committed to the comes to the attention of the been sketched out, such as the need to pointing out that Petrobras is the only Organizational Environment, conducted tions such as not using child labor and aspects of safety, health, the environment Ombudsperson is examined, passed on to prepare managers more fully for their oil company in the world that has the annually at Petrobras and at its sub- meeting standards of safety, hygiene and and social responsibility relating to the the appropriate people and discussed, and tasks, a measure that has already been put post of ombudsperson. sidiaries and affiliates, which serves as the medical care in the workplace; goods and services purchased by the based on each issue, an effort is made to forward to the Corporate University. basis for the preparation of the Action • Performance of operations so as to avoid company. Their goal is to refine the Plan for Improving the Organizational the risk of accidents or environmental process of hiring suppliers of goods and Environment. damage. services, optimizing their resources and When facing a human rights dilemma, The supplier must also provide encountering solutions that yield improved the employee should consider the relevant documentation and tangible evidence that results, in alignment with the goals and legislation, the professional codes of ethics it is complying with the rules of the labor business of the company, its clients and and the Petrobras system’s Code of Good legislation and meeting the requirements suppliers. Practice, Strategic Planning and Code of of a Socially Responsible administration. At Refap, the principles of the Program Conduct. Petrobras may request these documents at of Seamless Administration and the policy The intentions behind the Universal any time. on Quality, Safety, Health and the Declaration of Human Rights are also When hiring companies to provide Environment extend throughout the entire taken into consideration by Petrobras development programs, consulting and work force and embrace a respect for life, when deciding on investments and other such services, HR chooses institu- health, the environment, safety and sus- purchases, including the selection of tions that are well known in the market tainable development, with activities suppliers or contractors. for their ethical stance and are fully devoted to the common good. Suppliers The Program for Organizing Suppliers qualified for the task, such as the Dom and other service providers to Refap must (Progefe) defines Social Responsibility as Cabral Foundation, PUC (Pontifical show ISO 14001 and OHSHAS 18001 cer- one of the criteria for evaluating suppliers. Catholic University), UFRJ (Federal tification, or else be in full compliance University of Rio de Janeiro) and the with the environmental, health and safety Getúlio Vargas Foundation. regulations governing their activities. The respect for human rights guides all Petrobras’ actions, from the company’s relations with its employees to decision making and social investment. 26 HUMAN RIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 HUMAN RIGHTS 27

Human rights training The Executive Board com- The other eight members are prises six directors and a all men. The number of CEO, all of whom are male. women holding managerial In 2003, 704 employees of the • Bringing personnel up-to- All other employees attend The Board of Directors is positions increased signifi- holding company who are date on technical and techno- lectures disclosing the compa- presided over by a woman. cantly from 2002 to 2003. responsible for the security of logical innovations regarding ny’s Code of Ethics and SA the company’s assets received the role of Security (system 8000 norms. one week’s training, totaling of access, monitoring, inves- The Colombia Business WOMEN IN MANAGERIAL POSITIONS – HOLDING COMPANY 40 hours of instruction, in tigation, etc.); Unit has clauses in all its basic human rights. • Training to handle emergen- contracts with the armed 2001 2002 2003 Following the corporate cies, reinforcing teamwork forces and security compa- 7.8% 7.5% 9.12% requirements for bringing the and dedication; nies requiring the mandatory knowledge and skills of security • Training in the handling of training of all personnel in personnel up-to-date, and those firearms; human rights. People leaving the company (by age and gender) of the Labor Ministry also, this • Human relations in the UNDER 20 OVER 45 training, which occurs every workplace (stressing the Male 0 285 two years, includes: importance of morality and Female 1 52 • Bringing personnel up-to- ethics in security personnel, date on the rules and proce- respect and care in dealing Total 1 337 dures regarding the role of with people, attitude, ways Security (Business, Asset and of approaching people, etc.); People joining the company (by age and gender) Information); • Visits to the government UNDER 20 OVER 45 • Bringing personnel up-to-date mint and other maximum Male 11 245 on the laws governing the role security installations. of Security, with emphasis on Female 0 89 human and criminal rights; Total 11 334 Diversity

At Petrobras, the decision defined in the regulations of the question of diversity. The making process embraces the companies that comprise the project provides special NATIVE RIGHTS and the Environment (SMS), among Petrobras is examining the possibility concepts of justice, legality, Petrobras system. The requisites internships for the handicapped Key features Petrobras provides support to the native other things. of augmenting its investment in the accountability and honesty. of SA 8000, which warns against and promotes action to increase indian and riverside populations near its In Ecuador, the company hires people project, which already reaches out to 90 Petrobras appreciates and the adoption of discriminatory public awareness of their Urucu field exploration installations, in from the native community for work young people from high social risk seeks to develop its staff, giv- practices, are also observed. difficulties of accessibility. DIVERSITY AND THE WORK the Amazon. The company also has a that does not require specific skills. neighborhoods in the state capital, São ing priority to health, safety In the USA, under the legal The “Cidadão Capaz formal arrangement with the government Most of those taken on are former students Luís, as the workshops are planning to FORCE and environmental conserva- obligations of that country, (Capable Citizen)” project is agency Funai for their representatives to of training courses in Safety, Health and sell their products throughout the state, tion and contributing to the Petrobras adopts a specific a Petrobras Distribuidora accompany oil exploration expeditions the Environment. which will necessitate setting up a chain development of the regions or policy prohibiting any form of initiative, under the umbrella Admission to Petrobras is into the Amazon forest. of production and distribution. This countries in which it operates. discrimination, which is strictly of the Petrobras Zero Hunger achieved through public As with the general population, the Social Projects Focus on second stage is being discussed with the observed by the company’s Program, to hire people with examinations. There is no institution responsible, with a view to Ombudsperson is the principal medium for Diversity According to the company’s Human Resources and Admi- special needs for their service discrimination of any kind. The handling the grievances and complaints of being implemented before the end of Code of Ethics, the employees of nistration departments. Until stations. The goal is to have rights of all those enrolled are the native community. 2004, in order to generate more work “SONHO DOS ERÊS” the Petrobras system should today, not a single incident has 13 BR service stations adhering guaranteed. Petrobras’ relations with the indigenous and income for the community. The “Sonho dos Erês (Dream of the Erês)” “further the well-being of all, been recorded. The company to the program by the end of population in Ecuador are focused on project, carried out in the northeastern regardless of origin, race, sex, atmosphere in the United States 2004, thus providing job compliance with the social and environ- “ROÇA DOS JOVENS (CULTIVATION OF state of Maranhão, aims to find ways to color, age and without any other is multicultural, with employees opportunities for 156 people. mental laws prevailing in that country THE YOUNG)” PROJECT insert people in the job market, using form of discrimination”. from 13 different countries. There is already some feed- and the formal agreements entered into Aiding the young natives to plant and Afro-Brazilian art and culture as peda- The “Sem Barreiras (No back showing that the public with the government. harvest crops and protect the environment gogical tools and thereby building self- Violation of the company’s Barriers)” project of UN-BC at large considers the hiring Female Male Based on freely negotiated agreements is just one of the aims of this project. esteem among children and adolescents. Ethical Principles or Code of (Campos Basin Business Unit) is of people with special with these communities, plans, programs Carried out in the native community of Organized by the Maranhão Centre Conduct makes perpetrators a good example of the treatment needs to be a very favorable and projects in the areas of health, edu- Kamayurá, in the Alto Xingu region of for Negro Culture (CCN), the project liable to disciplinary measures, accorded by Petrobras to the differential for the company. 7,993 cation, production and community the state of Mato Grosso, the project provides, among other things, a 6,502 development are defined. seeks to encourage this village of 358 Workshop for the Production of With regard to employment, depending inhabitants to improve their quality of 4,102 Percussion Instruments, that develops 3,502 on needs, the company sometimes life using the land. Young members of MAKE UP OF THE HOLDING COMPANY’S* WORK FORCE BY AGE educational, artistic and cultural engages unskilled personnel from the the community pool their efforts to produce AND GENDER activities for adolescents from nearby different communities that are directly fruits, vegetables and other crops. They neighborhoods, developing their sense FEMALE MALE TOTAL Secondary Higher or indirectly affected by the company’s then appraise, preserve, exchange and education education of cultural and ethnic identity and activities. sell their produce. These young people 18 to 25 246 1,133 1,379 Average monthly pay (R$) working with them to develop aware- In Bolivia, Petrobras helps the peasants are learning new ways to achieve food 26 to 35 532 3,010 3,542 ness in the battle against racism. The of indian descent who live and work self-sufficiency for the community, as “Sonho dos Erês” arranges cultural 36 to 45 2,156 16,057 18,213 within the company’s area of influence, well as the resources to acquire other walks and displays, meetings with the by improving the roads, providing necessities. 46 to 55 1,428 11,177 12,605 families and workshops in Graffiti and health and educational support, teach- Petrobras signed the contract to support 56 or over 44 580 624 Afro Designs. ing skills in the areas of Safety, Health the “Roça dos Jovens” in December Total 4,406 31,957 36,363 2003 and ever since then has been providing the resources that enable the project to be sustained. * Does not include subsidiaries and the International area. 28 HUMAN RIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 HUMAN RIGHTS 29

Social Investment Social Projects R$ Education, professional qualifications and jobs 28,165,799.05 The support and sponsorship collaborative effort integrated Among its many actions in done by overseeing the imple- Generation of employment and income 3,813,862.77 of cultural, social and environ- with Brazilian society, the the social sphere, Petrobras mentation of the proposed Protection of the Social undertakings 13,982,391.01 mental projects has been one Petrobras Zero Hunger makes a notable contribution activity and through a regular young Pate (Advanced Program of Help and of the most successful strate- Program was set up (approval towards the Fund for the report (monthly or quarterly) Allocation of project resources gies for developing links recorded in the minutes, DE Rights of Children and submitted by the organizers RESOURCES LIFT CHILDREN Treatment for People with Special Needs) 1,566,575.53 per area of activity between Petrobras and society. 4,418, of May 13, 2004) with Adolescents, with donations of the undertaking, covering AND ADOLESCENTS OUT Events 3,621,608.57 In the company’s funding of approximately R$ backed by tax incentives. In both evaluation of the Others 1% Balanced Scorecard, within 303 million up to 2006. Its 2003, institutions accredited process and indicators show- OF SOCIAL EXCLUSION Donations to Children’s Rights Funds – FIA 32,760,809.99 Sporting 7% Social 35% the Market sphere, one of the fields of action cover: educa- by the Councils for the Rights ing the results. In addition, Safeguarding Children’s Rights Under the umbrella of the goals assessed is “commitment tion, professional qualifica- of Children and Adolescents during the supervisory visits – “Siga Bem Criança” 542,681.20 towards society”. Within the tions and jobs for young received a total contribution by the company’s employees Petrobras Zero Hunger Program, Learning and Growth sphere, people and adults; generation of R$ 32 million to their responsible for the project, the company allocated R$ 32.76 Relationship with communities living assessment is made of the of employment and income; projects. meetings are held with all the million of its 2003 tax bill to the alongside the pipelines 13,550,648.78 Environmental 10% Cultural 47% goal “educate and develop safeguarding the rights of Monitoring and evaluating project’s technical staff, with Funds for Childhood and tives of civil society and of This is put into practice Donations of goods 10,217,011.60 awareness within the commu- children and adolescents; and the impact of the social projects the people directly or indirectly Adolescence (FIA), as permitted the municipal authorities, in through the development of Others 8,325,768.50 nity and the work force voluntary social work. supported by the company is affected and with representa- under Brazilian legislation. The order to obtain the broadest projects seeking greater know- Total 116,547,157.00 regarding social responsibility”. resources funded public and pri- possible view of the work ledge of Brazil’s natural Another of the company’s vate projects to help children and being carried out. resources, research and devel- Environmental Projects commitments is towards adolescents suffering from hunger In the cultural area, the opment for new technology Environmental protection 20,028,039.59 transparency in its operations and social exclusion, together with Petrobras Cultural Program that enables the preservation Wildlife protection 4,126,377.70 and decision making. The their families. Priority in the allo- was launched on November of these resources and backing Proportion of gross revenue invested in projects (%) Petrobras Cultural, Petrobras cation of the funds was based on 19, 2003, with total funding for projects that make a Support for events 1,677,069.06 Environmental and Petrobras analysis of poverty data and the of R$ 60 million. Enrollment positive contribution to Others 6,122,827.33 0.25 0.24 Zero Hunger programs were commitment to asserting the was carried out, through Brazilian environmental issues all created with this aim in rights of children and adolescents. Total 31,954,313.68 public selection, for the areas and the development of a new 0.16 mind. Projects of quality and One of the challenges focused on of Music, Heritage (Artistic collective awareness. Cultural Projects significant impact are chosen, was the trade in child prostitution. and non-Physical Heritage) Notable among the projects Cinema 37,921,682.36 through a public selection and Film Production (full- in this area is the support process, to receive the company’s Music 22,681,670.09 length and shorts). From a given to the protection of 01 02 03 Cultural heritage 30,352,711.43 financial backing. The process total of 3,736 projects endangered species, such as involves the invitation to enrolled, 141 were selected. the marine turtle, the manatee Performing arts 26,612,629.25 enroll, based on public Another 48 cultural initiatives and the humpback and right Visual arts 6,805,068.17 General Indicator notices and regulations in the areas of development, whales. Then there are others Literature 3,951,999.60 drawn up by specialists and diffusion and reflection relating to environmental 78 company staff, technical (displays, festivals and other education, to supporting con- Others 20,420,742.08 analysis and final selection, also initiatives to disseminate servation bodies, and to Total 148,746,502.98 involving outside participants. Brazilian cultural production, including the local communities Sports Projects In the social area, as a workshops, seminars to within all these projects. consequence of the company’s stimulate reflection on The Petrobras Environmental Water sports 1,244,570.00 desire to lend its weight to Brazilian culture and Program represents a new level Motor racing 2,745,000.00 major national projects, in a thinking) were, based on the of support for environmental Others (handball, football, surfing, etc.) 17,644,322.00 program guidelines, invited concerns, with investments directly by Petrobras to join amounting to R$ 40 million Total 21,633,892.00 the program. in the first two years alone. Support Projects In addition to the 189 The projects, chosen by a Public campaigns 1,377,126.60 new projects embraced by the public selection process, Others 2,046,030.12 Petrobras Cultural Program should encourage the allocation for backing in 2004 and of resources by society, have Total 3,423,156.72 2005, Petrobras also sponsors a significant social angle, Total - Petrobras system 322,305,022.39 undertakings in the institu- involve actions and themes tional relations sphere, such as that are compatible with the the restoration of historical realistic Brazilian environ- buildings. mental circumstances, and The company’s activities allow the environmental PROPORTION OF SOCIAL INVESTMENT REPRESENTED in the environmental area are question to be brought to BY MONETARY DONATIONS (%) governed by a different society’s attention. The guideline, defined in its Petrobras Environmental 2001 2002 2003 strategic planning, which Program adopted water as its 8.47.8 12.9 establishes the goal of “quality latest theme, including in this and leadership in questions all bodies of fresh and salt of safety, health and environ- water and their biological Petrobras has adopted as the principal focus of its social mental conservation”. The diversity. company’s entire work force investment policy the fight for social inclusion and the is responsible for and com- mitted to operational safety, eradication of hunger and misery in Brazil. environmental protection and human development. 30 HUMAN RIGHTS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 HUMAN RIGHTS 31

“Mova-Brasil (Arouse volunteers, civil society ini- child prostitution. Various networks (which improved Brazil)” is a joint effort involv- tiatives and regional public different social techniques are the quality of life of more The social projects developed by Petrobras also enjoy the support of ing Petrobras, the Paulo Freire policies, thereby avoiding being tested and monitored in than 580 inhabitants in Institute and the Federação overlapping activities. relation to this issue. The different regions); other civil entities and government bodies. The company believes in the Única dos Petroleiros (FUP) – The Corporate Volunteers results will enable the battle • improvement and expansion the national oil workers’ repre- now mobilizes more than a against one of the most per- of school installations; democratic structure and the power of civil society and that challenges sentative, with 17 affiliated thousand Petrobras employees verse forms of child labor to be • support for the construction trade unions – to teach literacy throughout Brazil, at different adapted and intensified. The of a school kitchen and should be met by the concerted efforts of government and society. to young people and adults in levels of involvement. They total donated amounted to canteen; the regions where illiteracy is have conducted 19 regional R$ 32.76 million in December • restoration of the concrete of most prevalent. Groups are inquiries, covering 66 munici- 2003. roads and avenues; being formed in five states: Rio palities in 11 Brazilian states. • improvement of the tertiary PETROBRAS ZERO HUNGER PROGRAM 4. To reassert the historical commitment SOME OF THE PROJECTS UNDER THE de Janeiro, São Paulo, Bahia, The projects so far developed MODEL OF INTERNATIONAL road system; Petrobras has adopted as its principal of Petrobras to participate in addressing UMBRELLA OF THE PETROBRAS ZERO Ceará and Rio Grande do deal with issues such as INVOLVEMENT • an irrigation program. focus the battle against social exclusion major national challenges. HUNGER PROGRAM Norte. A total of 547 groups supplementary schooling Through its Relations with Through actions such as and the fight to eradicate hunger and Petrobras has defined its involvement “Agricultura Familiar (Family Farming)” have already been set up and and professional training, the Community programs, these, Petrobras Colombia misery in Brazil. A management committee in emergency and structural activities. For is an activity to encourage farming in set- 600 literacy instructors have generation of employment Petrobras Colombia has forms a strong connection with was set up, comprising representatives of structural activities, priority has been tlements formed as part of the government’s been accredited to attend to and income, encouraging invested in infrastructure, the development of the areas in the company’s different areas, to run the given to educational activities and those agrarian reform, in cooperatives and in some 15 thousand candidates. cooperatives, environmental cultural entertainment and which it operates, building Petrobras Zero Hunger Program, officially that generate employment and income, are other rural communities. Much of the The goal is to have 1,600 education, eliminating sports, generation of income, bonds of solidarity, mutual launched on September 1, 2003. convergent and aim to promote inde- groundwork has begun on the Palheiros III accredited instructors and garbage tips and social rein- education and health. Around respect and involvement. What Four objectives were defined for the pendence and sustainability. farming project, in Upanema, Rio Grande bring literacy to 40 thousand tegration of the people living 30% of the investments in the is more, there is the pride of Program: The stance of the company is no longer do Norte. The Agrovida Project has also young people and adults by the off them, teaching literacy, three regions in which it having invested in resolving 1. To stimulate social involvement and merely to hand over financial resources. It got under way, in Alterosa, Minas Gerais. end of 2006. digital inclusion and nutri- operates – North, Center and the basic needs of these shared responsibility, so as to ensure is now a participant in the process, as a Carried out in partnership with the local tional concerns. South – went into infrastruc- communities. independence and sustainability as a partner of the private, public and third municipal government, the project PETROBRAS VOLUNTEERS ture. Some of these invest- As of 2003, Petrobras result of its activities; sectors in furthering human rights, not just involves 120 low-income families, who are Set up in July 2003, under the FUNDS FOR CHILDHOOD AND ments were directed towards: Bolivia has also begun an 2. To carry out strategic, systematized and a financer and supervisor. This new stance growing rice for the 2003/2004 harvest. Petrobras Zero Hunger ADOLESCENCE (FIA) • a program to build artesian important project to build multi-institutional activities, encouraging has implications for all the company’s The goal is to stimulate agricultural Program, the Petrobras One of the things the company wells; drinking water systems for the participation of the Petrobras stake- involvement in social work. More than production, processing and sales and it is Corporate Volunteers is does under the Petrobras Zero • a program of housing communities in the region of holders in the Zero Hunger Program; one thousand projects are being developed expected to embrace 10 thousand people coordinated by the General Hunger Program is to set aside improvements; San Antonio, thereby reaffirm- 3. To contribute towards the organizing of in partnership with NGOs and other by the end of 2006. Ombudsperson, with support a portion of its taxes for the • construction of a sports court; ing Petrobras’ commitment to civil society, building relations based on public and private organizations. Digital Inclusion operates in two areas: from Institutional Communica- Funds for Childhood and • materials for the “Mi the people of all the nations solidarity and respect for diversity; 1. Telecenters (centers for familiarizing tion and the communications Adolescence (FIA), based on Casamare” housing construc- in which it operates. people with computers and the internet, area managerial departments Regulatory Instruction SRF no tion program; located in low-income communities at the company’s units and 267, of December 27, 2002. • idealization and construction near the company’s installations, in subsidiaries. This legislation allows the of aqueducts and the con- various states); The aim is to promote donation of up to 1% of struction of water distribution 2. Donating computer equipment that is voluntary social work, encour- income tax, through the FIA, to no longer used by the owners. aging the company’s employees public or private projects that A formal agreement was reached with to take the opportunity to get contribute in some way the National Information Technology involved and also to learn from towards compliance with the Institute (ITI), which has links to the this work. All employees of the Children and Adolescents’ Act. Areas of involvement of the Petrobras Office of the President of the Republic and Petrobras system – active or Thus, backing is provided Zero Hunger Program the Third Sector Information Network retired – can participate. for public policies aimed at (RITS), in order to develop the Digital The volunteers carry out helping young people, and their Inclusion Telecenters project. Each local assessments, called families, affected by hunger • Education, professional qualifications and jobs for young people telecenter will have the capacity to attend “prospecting”, listening to and social exclusion, with the and adults. to about 2 thousand people a day. public authority, civil society aim of guaranteeing their right Petrobras’ Information Technology (IT) and business representatives of to education and a healthy • Generation of employment and income. and Telecommunications (Tecom) areas the region in which they are home and community life. • Safeguarding the rights of children and adolescents. are also involved in the project. working. Only when they have Priority in the allocation of “Molhar a Terra (Irrigate the Soil)” managed to identify the the funds was based on analysis • Social undertakings. aims to restore hundreds of wells in the principal local needs and of poverty data and the semi-arid northeast of Brazil to provide potential do they start to commitment to asserting the • Voluntary work. water for human, animal and agricultural define a sphere of interest and rights of children and adoles- use. Water, empowerment and agriculture operations. This approach cents. One of the challenges are the three elements underpinning the favors cohesion between the focused on was the trade in project, which has the collaboration of various bodies, public companies and social entities. 32 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 33

Global Compact – Labor Standards 32 Employee Relations 34 Benefits 34 Assessment 35 Quality of Life 35 Health and Safety in the Workplace 36 Training and Education 38 Outsourcing 39 Combating Child Labor 40 Work Supplier Selection, Development and Evaluation 41

The four principles of the Global Compact PRINCIPLE 3: BUSINESSES SHOULD PRINCIPLE 5: BUSINESSES SHOULD If it finds children working in From the company’s point of view, relating to work relations are based on the UPHOLD THE FREEDOM OF ASSOCIATION UPHOLD THE EFFECTIVE ABOLITION inadequate and socially unacceptable discrimination not only harms its reputa- International Labour Organization’s AND THE EFFECTIVE RECOGNITION OF OF CHILD LABOR. circumstances, the company should tion, but is also a setback in impeding the Declaration of Fundamental Principles and THE RIGHT TO COLLECTIVE BARGAINING. In addition to those rights applying to arrange for them to be removed from hiring or promotion of staff who are Rights at Work, adopted in their 86th This principle encourages constructive dia- all human beings, children enjoy certain the activity in question and put under more qualified for the position. Session, in 1998. logue between companies and their special rights, in view of their innocence, the care of those who can offer them Nevertheless, in breaking with dis- The rights defined in the Declaration employees, leading to better understanding limited experience of life and powerless- viable alternatives. Simply expelling the criminatory practice, a company has to reflect a consensus among all those between the two and facilitating the ness in regard to adults. Hence, they are children from the work environment be careful not to violate the laws of the involved in and affected by working resolution of any problems between them. protected from economic exploitation could push them into even worse cir- country in which it is operating nor to relations, such as governments, companies Studies show that freedom of association and from work that can harm their physical cumstances, such as prostitution. offend local cultural sensibilities. and workers, with regard to the principles and collective bargaining bring about or mental health. Businesses should introduce policies that must be respected and safeguarded improved working conditions that, in Although there are acceptable forms of PRINCIPLE 6: BUSINESSES SHOULD and procedures that make qualifications, throughout the world. turn, lead to increased productivity and work for older children, businesses should ELIMINATE DISCRIMINATION IN RESPECT skills and experience the decisive factors in The four categories of rights identified gains for all those involved. be careful not to use child or adolescent OF EMPLOYMENT AND OCCUPATION. the hiring, training and progress of staff at in the Declaration are reflected in princi- Businesses can promote respect for this labor in a way that can hinder their Discrimination is defined as any distinc- all levels. Judicious evaluation of the criteria ples 3, 4, 5 and 6 of the Global Compact. principle by allowing their employees the scholastic progress. tion, exclusion or preference that impairs for each job will avoid situations where an They are: freedom of association and freedom of association, without fear The priority in combating child labor is or jeopardizes equality of opportunity and unreasonable requirement makes it collective bargaining; the elimination of all of reprisal; providing the workers’ to eradicate the most serious forms of treatment in the hiring or promotion of impossible for an otherwise qualified forms of forced or compulsory labor; the representatives with the infrastructure abuse, whether it be slavery, prostitution, employees, whether by reason of race, group or individual to participate in the effective abolition of child labor; and the they need to perform their duties at the compelled participation in illicit activities color, sex, religion, political position, selection process. elimination of discrimination in respect of company in the best possible way; and by or work that can endanger their health, nationality or social background. employment and occupation. acknowledging the organizations that safety or morals. Upon suffering discrimination at work, represent the workers in collective bar- Companies engaging the work of the employee is deprived of opportunities, gaining. These can be used as forums for suppliers from distant locations where which is a violation of the individual’s discussing employees’ working conditions, records are sparse should take particular human rights. The discrimination may be Labor Standards for which the company should make as care with regard to the question of child direct, when it infringes the law or the much information available as possible, in labor and, if necessary, call on the support company’s internal regulations, or order to ensure a fair debate. Finally, busi- of NGOs and UN agencies to check out indirect, as when the rules give the appear- Global Compact – nesses should support the forming and the situation. ance of neutrality, but lead to exclusion. functioning of trade unions and other worker organizations, both local and national. GEOGRAPHICAL DISTRIBUTION OF THE STAFF Brazil North* 832 2.3% Northeast* 9,892 27.2% Center-West* 70 0.2% PRINCIPLE 4: BUSINESSES SHOULD regions where the use of compulsory labor UPHOLD THE ELIMINATION OF ALL FORMS is common. Companies should also Southeast* 24,284 66.8% OF FORCED OR COMPULSORY LABOR. contribute to the development of projects South* 1,285 3.5% Forced or compulsory labor describes all to educate children who have been pulled Total* 36,363 that work performed under threat of pun- out of forced labor and programs of train- ishment and which the person does not do ing and income generation for adults in a Abroad South America 5,736 voluntarily. The payment of a wage or similar situation, as well as encourage the Central and other form of recompense does not neces- development of health and supplementary North America 66 sarily discount the possibility that the nutrition programs for workers who have Africa 8 labor was forced or compulsory. been removed from critical compulsory Types of forced labor include: slavery; labor situations. Europe 0 work performed under obligation in order Companies should also explain to all Asia 0 to pay off a debt; work by children not their staff the terms of the contracts they Oceania 0 performed voluntarily; the use of prisoners have signed, emphasizing their freedom to as a work force by private companies; resign from the job and any penalties that work imposed by those in positions of might be incurred from breaking the Form of engagement* authority for development purposes or to contract. Planning and supervising all the EMPLOYEE OUTSOURCED discourage the expression of opinion; and stages of a job, being sure not to use 36,363 123,266 exploratory practices, such as forced forced labor and, in the engaging of overtime or the confiscation of money, prisoners, applying the same rules as one documents or goods in exchange for a job. would to any other employee are other In order to help eradicate all forms of practices that can be applied by businesses * Only holding company staff. forced labor, businesses should assist wishing to make a contribution towards associations or small and medium-sized the fourth principle of the Global enterprises to develop basic guidelines to Compact. avoid such practices, particularly in 34 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 35

Petrobras complies with all the requirements Representation Freedom of association Assessment of the Assessment of the of Brazilian labor and social security legislation and those International Labour Organization company by the employees employees by the company agreements ratified by the Brazilian Although the direct representatives of the One of the items in the company’s Human government. The presence of labor employees do not participate in the Resources policy states: “Foster an The Organizational Environment Study, The employee assessment policy at representatives, collective labor agreements, running of Petrobras, the company on-going process of negotiation with work carried out every year by Petrobras, Petrobras utilizes two methodologies: the avoidance of any kind of discrimination, maintains a constant dialogue with force representatives”. Petrobras respects assesses, among other things, the GDP – Administration of Personnel working hours, weekly rest time, nighttime employee representatives, notably in the the freedom of association of its entire employees’ feelings regarding remuneration. Performance – and GDL – Administration working conditions, employee safety and negotiation of the Collective Labor work force and is constantly seeking to This is traditionally one of the lowest- of Leadership Performance. Under the healthcare programs, healthy working Agreements – off-shore and on-shore – and expand the opportunities for dialogue scoring factors in company surveys of this GDP, the company negotiates with its conditions and accident prevention are the joint commissions, involving Petrobras between the company and union represen- kind. At Petrobras, this indicator showed employees the conditions for meeting the just some of the areas governed by these and the trade unions, to discuss matters tatives, notably through joint a level of satisfaction of 42% in 2002, targets and desirable levels of individual requirements. such as benefits, work regime, amnesties, Petrobras/trade union commissions and but increased nine percentage points in skills laid down by the company. Under outsourcing, career plans, PLR 2003 the holding of workshops to discuss 2003, to 51%, from a total of 24,399 the GDL, the company negotiates with its At the Petrobras units outside Brazil, negotiations, health and safety. matters of interest to the employees. replies, representing 75% of the company’s managers the desirable performance level the company observes the labor legislation Workshops involving Petrobras and the permanent staff. in each of the company’s nine strategic of the respective country. trade unions are also held to discuss issues There was also an 11% increase in areas. These methods are extremely impor- such as Outsourcing Policies, employee satisfaction over benefits in tant for the professional and personal Remuneration, Career Plans and Safety, Relations based on Assessment 2003, to 68%, from 57% in 2002. The development of the company’s staff. Health and the Environment (SMS). respect general level of employee satisfaction The work force is kept informed rose from 62% in 2002 to 68% in 2003. through bulletins available in printed format and on the company’s intranet. PRESENTLY, 65.66% OF THE EMPLOYEES BELONG TO A TRADE UNION

Petrobras respects the freedom of association of its entire work force and is constantly seeking to expand the opportunities for dialogue between the company and union representatives. Employee Relations Relations Employee Notable steps in this direction are the setting up of joint commissions, together with the unions, and the holding of workshops to discuss matters of interest to the employees.

In addition to those require- • Basic Private Education • Child Supervision Assis- • Clubs: Petrobras also pro- ments under the law, Petrobras Assistance and Basic Public tance: for mothers, upon vides clubs for the employees provides the following benefits Education Assistance: returning from maternity of its various units, where to its employees: available for employees leave, or single fathers, the entire work force, • Multidisciplinary Health with children up to the age who may be widowed, retirees, their dependents Care Scheme (AMS): provides of 15 years and 11 months divorced or separated and and the local community supplementary health care who are registered in the who have legal custody of can enjoy leisure facilities services, covering medical, company’s records and are their children. that favor integration and hospital, dental and enrolled in and regularly • Nursery Assistance: for family well-being. psychological and physio- attending basic education mothers, upon returning Petrobras Distribuidora therapeutic treatment, as at a private or public teaching from maternity leave, or offers the following benefits, well as complementary establishment. The age single fathers, who may be in addition to those provided

Benefits services of diagnosis and limit may be exceptionally widowed, divorced or sepa- for under the law: Medical particularly costly treatment, extended to the end of the rated and who have legal and Dental Scheme, Basket of such as transplants and for school year, should the custody of their children. basic food items, Food/Meal Aids victims. There is also student reach the age limit • Private Welfare Scheme: for Vouchers, Special Vacation cover for homecare, before completing the level all employees who joined Bonus (2/3), Basic Education through the Homecare in which they are enrolled. Petrobras before 2003 and Assistance, Secondary Edu-

Program (PAD), and for The basic Education who chose to join the com- cation Assistance, Pre-School Quality of Life those with special needs, Supplement is also available pany’s private welfare Assistance, Nursery Assistance, through the Special Care to employees whose children scheme. Employees who Child Supervision Assistance, Program (PAE). AMS is have special needs, are joined the company after Assistance for Children with Established within Petrobras’ towards this end is divided into Centers for the promotion available to current and enrolled in the Special Care 2002 are entitled to life special needs, INSS Sickness SMS guidelines, the Program for two areas: individual respon- of well-being are being set up retired employees and their Program (PAE) and are insurance cover, paid for by Benefit Supplement and the Promotion of Well-Being sibility, through awareness- at the company’s units, offering dependents, through a net- attending basic education the company, until such Private Welfare Scheme. shows clearly how it has assumed building and education to activities that help to relieve work of more than 20 at a non-specialized teaching time as a new formula is the responsibility of role model, introduce changes in behavior, stress (yoga, shiatsu, tai chi thousand accredited outlets establishment. defined for this benefit. by spreading values that improve and the role of the company, chuan). Examples are the within Brazil, including • Pre-School Assistance: for • Life Insurance Cover: for all TOTAL PAYROLL AND the quality of life of its work encouraging and facilitating Center for the Promotion of hospitals, clinics, laboratories employees with children employees who joined the BENEFITS* force, inside and outside the the adoption of healthy habits. Well-Being at the company’s and specialized medical between the ages of 3 company after its private 20032002 company. Priority is being given to headquarters in Rio de Janeiro, centers, though the benefi- months and 6 years and 11 welfare scheme was closed projects aimed at education for the Well-Being Area at the ciaries also have the option months who are registered to new participants. R$ 5.1 billion R$ 3.5 billion The program encourages the well-being, the promotion of Research Center, and the area of choosing professionals in the company’s records search for a balance between physical activities, dealing with for the promotion of well-being from outside the accredited and are enrolled in and regu- * Petrobras System physical, emotional, profes- stress, the modifying of eating at Regap, in Betim, Minas network. larly attending pre-school. sional, social, spiritual and habits, other aspects of well- Gerais, which was established intellectual well-being. Action being and the combat of smok- more than ten years ago. ing and other drug use. 36 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 37

Workplace Accident Prevention Occupational Accidents SMS Committees Day, World Day of the Heart and National Anti-Cancer Day. At Transpetro, lectures are PETROBRAS regularly held, posters put NUMBER OF NUMBER OF ACCIDENT RATE ABSENCE RATE up and leaflets distributed INJURED (1) FATALITIES (2) (TFCA) (3) (DOWNTIME on themes such as smoking, PERCENTAGE) alcohol and drugs, cancer (4) prevention and road safety. Company employees 118 3 1.17 2.88 At Petrobras Distribuidora, the health programs were Outsourced workers 393 16 1.25 - divided into three areas: Total 511 19 1.23 - lifestyle factors and associated risks (promoting physical (1) This information relates only to workers who required time off work due to typical industrial accidents. activities, combating smoking (2) This information relates to deaths caused by typical industrial accidents. and other drugs, dealing with (3) The Accident Rate reflects the number of accident victims per million man-hours of exposure to risk. stress and modifying eating (4) Petrobras monitors only medically authorized time off work (due to illness or accident),which is recorded as a Downtime Percentage for company employees. The SD 2000 System is in the process of being introduced,and this habits), work environment Issues relating to Safety, The actions of this committee will be used to monitor the medically authorized time off work of outsourced workers. factors and associated risks (5) General Observation: All the information presented here is available on the Petrobras intranet,the Safety,Health Health and the Environment ensure that consideration of (Occupational Health and and the Environment area’s web site,under the link “SMS Indicators”,and in the minutes of the SMS Management (SMS) are analyzed by the SMS the questions of safety, health The recording of occupational using the system for recording Although Brazilian law Medical Control Program, Committee. committees of the holding and the environment is to be accidents and illnesses, the Accident Rate – TFCA, on grants a period of more than Calisthenics Program, Program company and its affiliates, found in all the company’s governed by the prevailing the occurrence of accidents in one year between health exams for the Control of Physical including those of the com- activities. legislation, is carried out at or en route to or from the for staff of a certain age, all Exertion, Ergonomics Program, panies operating abroad. The purpose of the SMS Petrobras by issuing a workplace, with or without Petrobras employees have an Program for the Restoration of PETROBRAS DISTRIBUIDORA The SMS Management Subcommittee, coordinated by Committee, coordinated by the Communication of Accident time off work, and fatalities. annual medical checkup. Work Potential and Anti-Flu Absence rate Downtime Percentage = 2.55 the SMS general manager and in the Workplace in the executive manager for Safety, in the Workplace (CAT) and The company’s operations Moreover, the Safety, Vaccinations) and social, Hours lost = 109,118 comprising the SMS managers Health and the Environment, notification, through the CAT in Argentina and Colombia Health and the Environment environmental and spiritual Hours worked = 4,275,334 of the Business areas, the Services Health and Safety and schedule IV of Regulatory have their own policies for corporate area prepares and factors (Program for Family- comprises the executive areas and the subsidiaries, is to Standard 4 (NR 4), both recording and notifying the introduces an annual calendar Company Integration, Program Accident rate TFCA = 1.12 managers of the Business advise the SMS Management forwarded to the Ministry of occurrence of occupational of SMS related activities, by to Support the Handicapped, 15 accidents requiring time areas, the Services areas and Committee, expanding on its Labor and Employment via accidents and illnesses. means of which it draws Program of Updating for Work off work (11 company staff + 4 the subsidiaries and meets once guidelines and decisions; to formal registration with the Every four months, Petrobras attention to themes that need and Living, Pre-Retirement outsourced workers) a month. The principal aims of propose short, medium and Regional Labor Department. compiles an epidemiological to be worked on or developed Program, Retiree Reunions and TFSA = 1.05 this committee are: to advise long-term SMS measures; to The documents are kept in the report, providing information over the course of the year at Blood Donation Program). 14 accidents not requiring senior management on the make a critical assessment of archives of the Specialized and indicators on the state of all the company’s units. time off (7 company staff + 7 definition and updating of the SMS performance of the Safety Engineering and health of its employees, and Examples of events scheduled outsourced workers) SMS policy, in alignment with Business and Services areas, Workplace Healthcare Service. this is disseminated throughout under this calendar are: Work related fatalities 0 corporate strategy; to make a and present their conclusions At Petrobras Distribuidora, the company, as well as being World Health Day, World critical assessment of the to the SMS Management the managerial departments released to the public health Non-Smoking Day, International company’s SMS performance; Committee; and to encourage provide a monthly report, authorities. Anti-Drug Day, National to define guidelines for the the exchange of experience and

INTERNATIONAL handling of activities in this the dissemination of best area; to set and keep up-to- practices in SMS. The committee ABSENCE RATE ACCIDENTS WORK-RELATED PETROBRAS DISTRIBUIDORA NUMBER OF BENEFICIARIES REQUIRING TIME FATALITIES date strategies relating to SMS meets on a weekly basis. Health Programs 5,361 OFF WORK management; and to encourage These committees represent the use of SMS indicators and Health Campaigns 3,500 Colombia 3 (275.8 days) 190 0 the entire Petrobras work monitor their results. force. Psychological Care 1,850 Argentina 1.83 61 4 Relief Programs 559 Nigeria - 0 0 Welfare Support 4,710 United States 2.31 0 0

HIV/Aids

Some Petrobras units develop positive, if they are unwilling their own programs to deal to participate in the public pro- with HIV-Aids, involving the grams that provide medication. verification and monitoring of At Petrobras Distribuidora, cases. On a corporate basis, there is an Aids prevention Petrobras promotes educational and treatment program that activities related to the issue, provides information and supports the campaigns of monitors registered cases. recognized health organizations The company also reimburses and makes Aids testing available the cost of special medication. as part of the employees’ In Nigeria, Petrobras con- regular medical checkup. The ducted an Aids prevention company reimburses 70% of campaign in 2003, covering the sum spent on medication 40 schools in the region of the by employees or their capital, Lagos. dependents who are HIV 38 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 39

Petrobras/FUP (Oil Workers’ Federation) Corporate University Commission for SMS issues The Corporate University has Another initiative of the growing international involvement created a variety of educational Human Resources area is make information and com- CLAUSE 84 – WORKPLACE SAFETY AND Paragraph 3 – The company undertakes to programs, in partnership with aimed at retaining high munication technology an HEALTH CONDITIONS make permanently available to its employees universities, companies and achievers with knowledge, imperative ingredient of the The company shall make continuous and Cipa (Accident Prevention Committee), consulting firms, with a view skills or mastery of technology educational process. With the improvements in SMS conditions in the in electronic format, the technical details to assisting managers and and techniques relating to company’s intranet and the workplace, in accordance with its policies of the chemical products present in the staff to plan their courses, processes that are both spread of multimedia tools, the and guidelines for these areas. workplace. training, events and reading. strategic and vital to the possibilities for the expansion Paragraph 1 – The company shall conduct Paragraph 4 – The company shall adopt a To facilitate knowledge manage- company’s business, while at of its management training training programs to develop the skills policy of prevention and treatment of ment and the development of the same time making it area are huge. The prime goal of the employees and ensure their participation Repetitive Strain Injury/Work-Related the necessary skills, the possible for this knowledge of the company’s Distance in occupational SMS programs. Musculoskeletal Disorders, with specific Corporate University divides to be shared and spread within Learning is to refine and Paragraph 2 – The company upholds the disease prevention measures to be applied its activities among three the organization. update the know-how acquired employees’ right to be informed as to in the work environment. areas: Culture and Values, The dispersal of Petrobras’ in the corporate management workplace hazards and the measures Paragraph 5 – The company undertakes to Strategies and Vital Skills. activities and the company’s programs. adopted in order to forestall and contain make improvements in the health testing the risk involved. procedures and health area activities of the companies hired in subsequent processes to engage service providers.

• Project for vocational training and certification in SMS for outsourced workers; • Upgrading of contractors’ installations HOURS OF TRAINING HOURS OF TRAINING INVESTMENT There is no figure specified for staff training to a standard equivalent to that of PER EMPLOYEE PER EMPLOYEE IN TRAINING in the U.S.A.. Training is authorized (AVERAGE) TYPE (TOTAL) IN 2003 Petrobras; according to need and in 2003 an item (‘000) • Sharing of restaurants at the company’s identifying this need was incorporated units; shared Specialized Safety Holding company 120 Secondary 75 R$ 141,256 in the GDP (Professional Performance education Engineering and Workplace Healthcare Management). Service in Petrobras’ various areas of Higher activity; education 235 • Conducting auditing of the quality of Transpetro 18 Onshore 28 R$ 3,526 When engaging the services of third outsourced services; Offshore 9 parties, the company requires that all • Joint efforts made with outside entities labor requirements be observed. Petrobras to improve workers’ qualifications; Refap 147 Managers and 135 R$ 1,309 demands, for example, that contractors • Promotion of regional SMS gatherings of supervisors provide benefits such as meal vouchers, contractors; Higher 315 transport and health scheme. At • Meetings between Petrobras’ CEO and education Transpetro, outsourced workers are given those of the contractors. Education Administrative 42 Outsourcing access to facilities, such as calisthenics In Colombia, outsourced workers training, provided to the company’s own participate in all the programs developed Operational 170 employees at its various locations. for the company’s employees. In Nigeria, Colombia 7 Managers and 50 R$ 883 With a view to obtaining better safety specific technical training courses are Training and Training supervisors and working conditions for the employees made available for every job function that Other 73 of its service providers, Petrobras has been is outsourced. The UN-BSOL conducts adopting a number of measures, notable programs of environmental education, Nigeria 40 - - US$ 203 among which are: basic education (“Escola Esperança”), Argentina - - - R$ 5,259 technical training, SMS awareness building and social responsibility for around 2 thousand outsourced workers.

When engaging the services of third parties, the company requires that all labor obligations be observed. 40 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 41

An important focus of the the age of 14; any hazardous “Siga Bem Criança” The selection of suppliers is carried out in from a particular site, which contains The CEO, directors and executive Petrobras Zero Hunger or unhealthy nighttime work accordance with Decree no 2,745/98, indicators for each criterion that were managers of Petrobras all participate in Program is on projects devoted for children under 16; The goal of the “Siga Bem occur on the main federal which governs Petrobras’ tendering developed by Petrobras, with the the event, together with representatives to combating child labor and commercial relations with the Criança (Stay on the right path, highways. That is what makes procedures, including the registration of exception of the Business Social of the contractors. It is a forum for the sexual abuse, under the terms suppliers of products and/or children)” project is to combat the work done at Petrobras suppliers. The criteria include legal Responsibility (RSE) criterion, which presentation of the best practices, as well of the Children and services that are shown to be in one of the worst forms of child service stations throughout the requirements (setting up a company), uses the indicators of the Instituto as the indicators and goals to be attained Adolescents’ Act. Donations to violation of the laws governing labor: sexual exploitation. Set country so important, by having one’s taxes in order (for Brazilian Ethos de RSE, a Petrobras partner. in this area. The main purpose of this FIA (Funds for Childhood and child labor. A Child Labor up in August 2003, through informing and alerting truck companies), economic-financial evaluation Based on the analysis of 33 vital event is to demonstrate Petrobras’ concern Adolescence) and the activities Contractual Clause has been a partnership between the drivers and other motorists and assessment of technical qualifications services provided to the Engineering area that its SMS policy and guidelines also of the “Siga Bem Criança” inserted in all Petrobras’ holding company and Petrobras about the situation. Under the in the field of activity. On the ethical during the previous five years, around 300 extend to its contractors. Project, part of the Zero service contracts as of 2003. Distribuidora, the project tries “Siga Bem Criança” banner, side, the process is guided by companies were invited to participate in Petrobras’ Corporate SMS Guideline no Hunger Program, provide the Manual for Contractual to raise awareness, alerting they are encouraged to report Petrobras’ own Code of Ethics, as well the inaugural phase of Progefe. 7 determines that the SMS performance of platform for the company’s Procedures – Standard society as to the nature of the incidents using the toll-free as the ethical principles laid down in During 2003, the following integral contractors, suppliers and partners must policy of asserting the rights of Petrobras Contract: “2.3.2 – problem. But it doesn’t stop number 0800-990500 (“Disque- Decree no 2,745/98. The register of steps were carried out: be compatible with that of the Petrobras children and adolescents and refrain from using child labor, there; it issues a call to action, Denúncia”). Following the suppliers is updated every year. • Launch of the Manpower Development system, and thus meet the following combating the abovementioned in all activities relating to the creating opportunities for launch of “Siga Bem Criança”, Program (PDMO), which is aligned with requirements: practices. performance of the terms of society in general and specific the reporting of crimes In 2003, the company introduced the Progefe and is aimed at developing and • Inclusion in the hiring process of spe- Combating Combating

Child Labor In its formal commitment this document, under the terms segments, such as truck drivers, increased significantly. The Program for Organizing Suppliers (Progefe), improving the quality of the work force. cific SMS requirements, and verification to the Abrinq Foundation for of subsection XXXIII of article to make a contribution. It is an project has a slot reserved on with the aim of making the process of The PDMO seeks to raise the level of that these are met throughout all the Children’s Rights, Petrobras 7 of the Brazilian Constitution, act of social responsibility the TV program “Siga Bem analyzing service providers more detailed. professional training and qualifications stages of the activities to be developed; undertook to uphold article 7, and to demand that this same that extends to the company’s Caminhoneiro”, broadcast by Under the program, the intention is to provide of the personnel hired by the contrac- • A guarantee that the materials and subsection XXXIII of the measure be adopted in the relationship with its customers. the SBT network every Sunday, information on the companies that is tors, thereby yielding better results for products to be acquired meet the Federal Constitution, which contracts signed with the Courses of action are from 8:30 to 9 a.m., and aimed integrated, up-to-date and reliable and Petrobras and for these companies, established SMS requirements; forbids children under the age suppliers of your inputs and/or discussed by representatives specifically at truck drivers. The covers all the criteria that are vital to the particularly in terms of quality, safety • Evaluation of the SMS performance of of 16 to work, except in the services, under penalty of the of the company’s social area, radio version of the program is success of the undertaking: technical, and the environment; contractors according to criteria that case of apprenticeship, from rescission of the contract”. along with the Special aired, Monday to Friday, by economic, legal, safety, health and • Three RSE (business social responsibility) are clearly defined in the respective Department for Human more than 180 stations around environmental (SMS), management and workshops were held for suppliers, run contracts; Rights and the National the country and in the section social responsibility. by the Ethos Institute, with the aim of • Monitoring of the SMS performance Council for the Rights of dedicated to “Siga Bem disseminating the principles of social of the contractors and taking the Supplier Selection, Children and Adolescents. Criança’, the presenter – well- Progefe was launched in September responsibility. necessary steps to have any non-com- According to studies by the known country singer Sérgio 2003 and has five stages: self-assessment, The suppliers evaluated during these pliance corrected; Federal Highway Police and the Reis – instructs truck drivers pre-assessment, head office evaluation, processes received assessment reports • Implementation of measures to Special Department for Human to report any cases of child field evaluation and consolidation. indicating areas for improvement. encourage the adoption of SMS best Rights, most child sexual prostitution and exploitation. By the end of 2003, the companies Something else Petrobras does to practices by contractors and partners; exploitation crimes in Brazil were going through the first stage of the develop its suppliers is to hold an annual • Integration of the performance of process, in which they assess themselves, gathering of its 400 largest Brazilian contractors within the set of SMS using a questionnaire they can download contractors in order to discuss SMS issues. indicators for each unit. Teenage apprentices Combating Forced Labor In 2003, Petrobras and the 18 thousand teenage apprentices, Ministry of Labor initiated a through partnerships with tech- The standard contract, pre- joint endeavor to come up with nical schools and third sector pared by the legal area for use guidelines and harmonize ideas entities. The investment of R$ 37 throughout the company in regarding the impact of Law no million, up to the end of 2006, is engaging the provision of 10,097 on a company in the oil estimated for this project. goods and services, contains Development and Development Evaluation sector. This law, ratified on This same year, the Joint specific clauses obliging the December 19, 2000, modified Services area also began contractor to present the work provisions of the Labor Laws implementing a project, the documents of the employees and provided a new definition Program for the Professional involved in those services, as of a teenage apprentice, Initiation of Teenagers, aimed well as a monthly presentation namely, a young person at preparing young people aged showing compliance with all between the ages of 14 and 16 to 18 for the job market. employment ties with São promoters and lubricant its labor obligations (payment 18 who is enrolled in an Through the Joint Services/ Martinho. technicians, giving priority to of wages, withdrawal of INSS apprenticeship program. The Southeast Region, a formal Over the course of 23 those preparing for their first payroll taxes and depositing of law determines that a special socioeducational agreement months the apprentices perform job. Eight service station FGTS severance contribution). work contract, denominated was entered into, in 2001, with administrative and computing schools have been set up, in Apprenticeship Contract, be the Associação Beneficente São tasks at the company’s installa- the following locations: drawn up, for a term not Martinho welfare agency. tions and receive training in Curitiba-PR (3), Contagem- exceeding two years, under However, Petrobras has been preparation to enter the job MG (1), Macaé-RJ (1), Niterói- which the employer (medium implementing socioeducational market. The formal agreement RJ (1), Porto Seguro-BA (1), or large-scale company) assumes practices, particularly in with São Martinho has been and Salvador-BA (1). A total of responsibility for the methodical partnership with the São renewed up till November 801 apprentices completed technical-professional training Martinho agency, since 1988, 2004. their training in 2003. of the apprentice, compatible with the aim of helping to Petrobras Distribuidora has The “Cidadão Capaz” with their physical, moral and insert young people within the its own projects aimed at project involves the construc- psychological development. formal job market. inserting young people in the tion of 18 service stations, In September 2003, under The program currently job market, such as “Cidadão three of which were already the Petrobras Zero Hunger provides an opportunity for Capaz (Capable Citizen)” and operating in 2003, that are Program, Petrobras launched 134 literate teenagers from “Posto-Escola (Service Station adapted to make them the Young Apprentice Project, the poorer classes to gain a School)”, under the umbrella accessible to and generate which, in meeting the provi- professional start in life, aided of the Petrobras Zero Hunger employment for people with sions of Law no 10,097/2000, by the agency. The labor and Program. special needs. aims to train and introduce social security rights of these The “Posto-Escola” project into the working world up to teenagers are protected through trains pump attendants, sales 42 WORK Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 WORK 43

THE SUPPLIERS EVALUATE PETROBRAS (“SÍSMICO”) Materials Operational units Petrobras Distribuidora

Indicator RATING* At the Materials business unit The operational units follow the Petrobras’ social responsibility In order to improve the control, quality With regard to ethics and social When hiring service providers, there is a formal structure general orientation of Petrobras, policy is made available, in and security of its supplier register, the responsibility, in the context of materials Petrobras Distribuidora demands a Transparency towards suppliers 84 devoted to the development but some of them have their written form, to all their company’s Managerial Department for that could compromise the operations commitment on the part of the companies Ethics towards suppliers 86 of alternative supplies and own specific supplementary workers. the Procurement of Materials and and threaten the safety of the people, not to use child labor, endorsed by clauses Commercial relationship 85 suppliers in areas of interest to practices. The UN-BSOL, for The UN-BA organized a Services adopted two new procedures for installations or environment, the in the standard invitation to tender, along Petrobras. The goal is to meet example, requires that all meeting in 2003, involving registering the suppliers of materials and company demands ISO 9001/14001 the lines of: Burden of demands 91 the company’s internal demand contractors are covered by a Petrobras and suppliers, to services to Petrobras Distribuidora S.A.. certification, Inspection Warranty and “The contractor undertakes not to utilize Conditions for outsourced workers 81 for cutting-edge equipment health scheme and adopts as announce to the managers With the procedures in place, the process evidence of the capacity to provide child labor in any of the activities that pushes the technological a selection criterion the and contract supervisors of procurement has become more nimble technical assistance and furnish mate- governed by this legal instrument, under * Assessed by Suppliers,divided into two groups,those who have boundaries, in addition to requirement of at least two the results of the survey “A and dependable, as the registered rials, among other assurances. the terms of subsection XXXIII of article employees working at Petrobras and those who don’t. stimulating competition in of the following: ISO 14001 voz do Fornecedor (The companies are all duly assessed and able If all the requirements have been met, in 7 of the Brazilian Constitution, and to the market to supply mature certification, OHSAS18001 Supplier’s Voice)” and the to supply a quality product or service the case of an environmentally unfriendly strive to get this same measure adopted technology. certification, an SMS training commitments assumed under that will give the customer guaranteed product, an inspection of the product is in the contracts signed with the suppliers At the same time, the program, a plan for responding the “Ações da Petrobras” satisfaction. One of the new procedures carried out at the moment of purchase, to of your inputs and/or services.” company is developing engi- to emergencies, inspection of program. Meanwhile, the is to analyze the supplier’s legal and ensure that the material acquired will not At the same time, Petrobras neering solutions (materials personal safety equipment, E&P purchasing area at the taxation, economic-financial and technical affect the environment nor the health of the Distribuidora S.A. is studying the and suppliers) aimed at anti-drug and alcoholism UN-ES has a program in documents. people involved in the process. possibility of broadening the new underpinning the increase in program. operation to develop the Routines were also developed for Inspection of suppliers of materials registration procedures, by getting natural gas consumption. In the UN-RNCE’s E&P skills of its suppliers, called inspections, the collection of data from and/or services also checks for ISO 14001 suppliers to answer a simple questionnaire In December 2003, there area, social responsibility the Program for the the supplier and preparation of the certification, in accordance with proce- based on the social responsibility were 40 declarations of values that suppliers need to Development and Assessment inspection report, which determine dures developed by the Managerial indicators of the Ethos Institute. technological cooperation adopt are specified in the of Suppliers. various procedures to be adopted in the Department for the Procurement of (TCT) in progress for the contract. Examples are: to not The E&P area at the inspection of a supplier. Materials and Services. development of materials/ allow child labor, forced labor UN-Rio offers its Plan suppliers, 29 TCTs were under or disciplinary measures that for the Enhancement and negotiation and another 81 involve physical, mental, Development of Suppliers, for were being monitored or were psychological or hierarchical service providers on contracts Transpetro in a simplified process of coercion, verbal abuse or other of more than one year’s qualification of materials/ unethical discomfort. They also duration and a value exceeding Transpetro’s suppliers, not suppliers. The project portfolio include: making sure there is no R$ 1 million. Under this plan, only in the areas of Maritime will be augmented in 2004. discrimination of any kind the contractor’s performance is Transport and Pipelines and The materials under develop- (race, social class, nationality, monitored and the managers Terminals but also in the ment may be equipment, color, religious creed, sex, and contract supervisors Corporate area, are selected devices, systems, chemical sexual tendency, union mem- receive training in preventive in accordance with the appli- products, software, etc. bership, political affiliation, and corrective measures for cable legislation. In addition etc.), that subcontractors, the satisfactory performance to the tendering processes, partners and service providers of the contract and the along the same lines as those are committed to observing the refinement of their techniques. of Petrobras, demands are SA 8000 norms, and that About 49 contractors are made for certain ethical currently included in the plan. standards, in alignment with the procedures and criteria International of the company. The firms registered as suppliers to Transpetro, usually the same norms, earning a rating of not less than If a company is not approved in the as those that serve the 80% from the Colombian Safety Council. pre-selection process, a committee of holding company, have to Refap A supplier development program was representatives from the Human present their balance sheets implemented in 2003, the principal aim of Resources, Purchasing and SMS areas will and have a record of Refap uses the Consolidated With regard to the which is to develop an alliance that will analyze the result and try to help the soundness and social Materials System (SUM) development of its suppliers, facilitate the pursuit of common objectives supplier to make improvements, by involvement. and Petrobras’ Contractor Refap gives support to a and mobilize all efforts in the direction of holding meetings, asking for the further The SMS Management Data-base (BDC) in selecting Sebrae/RS program, the Oil Petrobras’ goals. The program is divided clarification of details or drawing up a Policy at Transpetro and its suppliers. Both these and Gas Productive Chain into four modules: personnel development plan of improvements. Petrobras’ 15 SMS Guidelines resources contain assessments Project. Since November and change, values, behavior and indica- The goals of such a plan would be: to require a commitment to that assist in the choice of 2002, there has been a group tors, and communication effects and develop in the supplier an awareness of environmental issues on the suppliers. The refinery is participating in the program, handling conflicts. Upon its inauguration, quality in the context of SMS norms; to part of the suppliers, and also determined not to hire involving 32 companies, and the program provided training for 50 of prepare the supplier for compliance with their performance must be companies that make use of in 2004 this number is the UN-Colombia’s principal suppliers. Petrobras’ minimum requirements; and to compatible with that of child labor. expected to grow to about 80 In Argentina, Petrobras registers reapply for classification, with evidence the Petrobras system. The companies. suppliers who meet the company’s basic of the improvements made. In 2003, 58 contracts with the suppliers In Colombia, no process has yet been requirements with regard to quality, evaluations were carried out and 13 plans of services and materials implemented for verifying ethical and reliability, management systems, technical, of improvements were prepared. contain clauses stipulating social responsibility standards during economic and commercial ability, etc. In Both in Argentina and in Colombia, conservation of the environment the selection of suppliers. Nevertheless, the first stage of the selection process, Petrobras has systems for evaluating the and compliance with the candidates are required to comply with interested companies must furnish data performance of suppliers. Moreover, in prevailing environmental basic legal criteria, such as paying taxes relating to these themes. If they are Colombia there is a program providing legislation. and keeping documentation in order and approved, they can participate in the for the recognition of the year’s top up to date, and meeting minimal SMS company’s tendering processes. performers. 44 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 45 The Global Compact and the Environment 44 Petrobras and the Environment 45 Policy on Safety, Health and the Environment 46 The Consumption of Materials and Natural Resources 47 Water 48 Energy 49 Emissions, Effluent and Waste 52 Product Health and Safety Precautions 55 Protection, Preservation and Restoration of Ecosystems and Biological Diversity 56 Environmental Precautions at the International Units 58 Environmental Liabilities, Incidents and Fines 59 Environmental Education 60 The Environment Works carried out Within the Company’s Physical Area 60 The Community Participates 61

greater spending later, on cleaning up the • to support the development of PRINCIPLE 9: BUSINESSES SHOULD On a strategic level, a company can environment and treating people affected one’s suppliers, so that they too ENCOURAGE THE DEVELOPMENT AND make a contribution to the ninth principle by its degradation. What is more, it is can operate responsibly in relation DIFFUSION OF ENVIRONMENTALLY of the Global Compact by introducing cheaper and easier to preserve a company’s to the environment; FRIENDLY TECHNOLOGIES. corporate policies encouraging the use good image than to try and regain it once • to facilitate the transfer of technology; According to the Agenda 21, clean of clean technology, by propagating it has been sullied. • to contribute to the environmental technology is that which protects the information on the subject among its From the production point of view, education of the communities directly environment, reduces pollution, uses stakeholders, by focusing R&D goals there is no point investing in a method that and indirectly linked to the company; resources in a sustainable manner, recycles on the question of sustainability, and is not sustainable. Thinking, right from • to share resources evenly. its output and waste and deals with by taking the whole life cycle into the start, of ways to produce that protect, To make these steps feasible, the waste in a more acceptable way than consideration when developing products or at least do not damage, the environment company should redefine its policies and traditional technology does. and technologies, looking at the impact reduces the financial risk and can ensure strategies, placing the expectations for The level of commitment of companies in all aspects, from production to waste long-term benefits. economic growth, environmental quality to the ninth principle depends, to a certain generation. As well as the concept of the precau- and social justice on an equal footing. It is extent, on their size and nature, but all It is also important that the company tionary approach, it is important to know important to define specific targets and companies can benefit from a more builds into its structure opportunities for the precautionary principle, according to goals, introduce sustainability indicators rational use of resources. analysis and discussion that will ensure which the burden of proof in any ecologi- that allow the company’s progress to be Four measures, in particular, can that the question of sustainability is cal problem lies with those who are sup- assessed, adopt codes of conduct and good bring an improvement in the quality of a taken into consideration at the moment posedly causing the environmental damage practices and ensure transparent means of company’s applied technology. These are: that decisions are taken and that the and not with those who are suffering communicating with stakeholders. changes in the production process, changes company collaborates with its partners because of that damage. Contrary to the in the raw materials used, changes in the in making sure that the best available normal premise, that one is “innocent products themselves, and the recycling of technology is also within the reach of until proven guilty”, the precautionary waste. other organizations. principle implies that certain industrial emissions are “naturally to blame” and that steps should be taken to reduce them, One of the directives of mythical winged horse, In 2003, a total of R$ 2.3 The UN’s concern with this issue dates governments, peoples and key organizations even without proof that they have caused Petrobras’ Corporate Action Pegasus). One of the most billion was invested in the back to 1972 and the first major interna- in society. or could cause environmental damage. Less oil leaked Policy is “to develop the perceptible results of the environment, R$ 948 million tional conference on the environment, in The Rio Declaration and Agenda 21, company’s businesses and program so far was the drastic in projects under the Pegaso Stockholm, Sweden. The first principle of both signed on the same occasion, have PRINCIPLE 8: BUSINESSES SHOULD activities, bearing in mind reduction in oil leakages umbrella and R$ 1.4 billion in the statement prepared at this gathering guided the debates, over the intervening UNDERTAKE INITIATIVES TO THE INDEX OF OIL its commitment towards obtained in 2002 and sustained other projects. On top of this, determines that humans have the right to years, on environmental degradation and PROMOTE GREATER ENVIRONMENTAL

The The Global Compact LEAKAGES IS ONE OF sustainable development”. in 2003, to levels below the a further R$ 31.9 million was freedom, equality and decent living condi- the damage to this planet caused by RESPONSIBILITY. and the Environment Honoring this commitment has international average for invested in supporting external THE LOWEST IN THE tions, in an environment that allows them humanity. The three environmental princi- Ever since the 1992 event in Rio, the required the company to make companies of this size. Projects environmental programs and to live in dignity and well-being. They ples of the Global Compact also follow clamor from the global community for COMPANY’S HISTORY enormous advances in its in the Pegaso program have projects and R$ 10.0 million also, according to this same principle, these guidelines and seek to involve companies to take a responsible stance in treatment of environmental also brought significant went into compensation for the One of the most perceptible have a responsibility to protect the envi- companies more actively in the issue: relation to the environment has grown, issues, involving dialogue improvements in the opera- potential environmental im- results of the company’s envi- ronment and to work towards its improve- particularly in view of the fact that not all with local communities and tional safety of the company’s pact of company undertakings. ronmental policy has been the ment, making a pledge not only to their PRINCIPLE 7: BUSINESSES SHOULD the measures that were supposed to have protection and conservation of processes and installations, drastic reduction in oil leakage own generation, but to all future genera- SUPPORT A PRECAUTIONARY APPROACH been adopted after the declaration was the ecosystems affected by its reflected by, for example, One of the consequences of the levels in the last two years. The tions. TO ENVIRONMENTAL CHALLENGES. signed have come to fruition. operations. a substantial reduction in company’s adoption of this new index dropped to extremely low The gathering in Stockholm led to the At the gathering in Rio de Janeiro it was With the private sector becoming more accident rates. SMS standard is that, in May levels, below the international creation of the United Nations determined that the best approach to the and more involved in questions of global All the company’s units in Brazil 2003, Petrobras managed to average for companies of this Environmental Program (Unep), which has question of environmental risk should be management, the people are demanding and many of its units abroad have obtain a 42% reduction in its size. Petrobras invested a hefty worked for more than thirty years to coor- preventive and that steps to avoid ecologi- that companies not only avoid doing harm ISO 14001 certification, which insurance premium, upon renew- R$ 2.3 billion in the environment dinate international activities relating to cal damage would have to be taken even to the environment but make an effort to covers environmental manage- ing its policy covering the opera- during 2003, of which R$ 948 environmental protection. before there was scientific confirmation of protect it. Seven steps are suggested that

Petrobras and Petrobras ment. This certification requires tions of its refineries and million went just to Pegaso – The principles of the Global Compact the risks involved. Anticipating risks is one could be taken by organizations in Oil leakage volumes (m3) that, among other things, the platforms, from US$ 46.4 million Program of Quality in relating to this theme are based on The of the principal characteristics of this con- response to the eighth principle of the units retain systems for monitor- to US$ 27 million, despite an Environmental Management and Rio Declaration on Environment and cept, which was termed the Precautionary Global Compact: ing the impact of their activities. increase in the total amount Operational Safety. Development, formulated at the 1992 Approach. • to adopt the precautionary approach; 5,983 insured, which went from US$ 18

international conference in Rio de Janeiro. The central idea of the Precautionary • to adopt the same production standards, the Environment The principal tool intro- billion, in 2002, to US$ 21 billion, This declaration states that, to ensure eco- Approach is that it is better to prevent independent of location. In other words, 2,850

duced by Petrobras to provide 2,619 in 2003. nomic progress over the long-term, it is than to cure. Companies should therefore not to cede to the low legal expectations effective administration of the necessary to link this progress to environ- adopt a stance of avoiding ecological risks of some countries, but to work in each 276

environmental aspects of the 197 In September, the company mental protection and to create sustain- and not put off tackling problems, since region as if it were the most demanding company’s business is the was presented, in Washington, able forms of development, which will some losses are irretrievable. Such an in terms of environmental preservation; 97-99 00 01 02 03 Program of Quality in (average) with the Clean Air Celebration require a global partnership between approach can also save the need for even Environmental Management award, for its efforts to improve and Operational Safety, Pegaso the quality of its fuels and, conse- (the Portuguese name for the quently, of the air we breathe. 46 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 47

The company’s Policy on Safety, Health 3. RISK EVALUATION AND MANAGEMENT 10. COMMUNICATION The principal raw material In addition, it imported and the Environment (SMS) forms part of Risks inherent to the activities of the com- Information relating to SMS must be com- used by Petrobras is oil. In around 44 thousand barrels of Petrobras’ Strategic Plan and determines pany must be identified, assessed and municated clearly, objectively and quickly, 2003, 80.2% of the oil refined oil products per day, 29% of that it should: administered in such a way as to prevent in order for it to have the desired effect. by Petrobras in Brazil was pro- which from Argentina, 13% • Educate, train and gain the commitment accidents from occurring and/or ensure that duced nationally and the com- from Saudi Arabia and the of the employees regarding SMS issues, their effects are reduced to a minimum. 11. CONTINGENCIES pany met 91% of the Brazilian same amount from India. while also involving suppliers, communi- Emergency situations need to be anticipated demand for oil products. Crude oil consumption at ties, worker representatives, responsible 4. NEW VENTURES and must be handled rapidly and efficiently, To supplement Brazilian oil the company’s units in bodies and other stakeholders; All new ventures must be in compliance with a view to reducing their effects as requirements, Petrobras import- Argentina amounted to 19.8 • Encourage SMS situations to be record- with the Brazilian legislation and incorpo- much as possible. ed approximately 117 thousand million barrels in 2003. ed and dealt with and consider SMS per- rate, throughout their entire life cycle, the barrels of oil per day (bpd), Petrobras Distribuidora is formance in the company’s systems of best SMS practices available. 12. RELATIONS WITH THE COMMUNITY from a number of different the largest single customer for consequences and recognition; The company must watch over the safety of countries. Petrobras’ oil products, • Promote health and protection of human 5. OPERATIONS AND MAINTENANCE the communities where it operates, as well absorbing 24.6% of the com- welfare and the environment, through The company’s operations must be carried as keeping them informed as to the effects pany’s production. the identification, control and monitor- out in accordance with established proce- and/or hazards that may possibly arise from Another important raw ing of risk, bringing safety measures into dures and utilizing suitable installations its activities. Country SHARE OF material is natural gas, which TOTAL OIL and equipment, which have been inspected line with the best international practices IMPORTS is used as a fuel at the com- worldwide and being prepared for emer- and found to meet SMS requirements. 13. ANALYSIS OF ACCIDENTS AND pany’s three thermoelectric Nigeria 44% gencies; OTHER INCIDENTS plants in Brazil. • Ensure the sustainability of projects, 6. MANAGING CHANGE Accidents and other incidents arising from Saudi Arabia 22% undertakings and products over the Any changes, whether they be temporary or the company’s activities should be investi- Algeria 19% course of their life cycles, taking into permanent, must be analyzed, with a view gated, analyzed and documented, so as to Iraq 8% consideration the economic, environ- to eliminating and/or minimizing risks aris- avoid any repetition and/or ensure that mental and social impacts and benefits; ing from their implementation. their effects are minimal. Congo 2% • Take into consideration the ecological Others 5% efficiency of the company’s operations 7. ACQUISITION OF GOODS AND SERVICES 14. HANDLING OF PRODUCTS and products and minimize the adverse The SMS performance of contractors, sup- The company must take care over the SMS effects that are inherent to the activities pliers and partners must be compatible with aspects of its products, from their origin to Tires are also a raw material of the industry. that of the Petrobras system. their final destination, as well as striving The implementation of this policy is constantly to reduce the impact they could safeguarded by the application of the SMS 8. TRAINING, EDUCATION AND possibly provoke. Every year, 61 million tires are sold in Brazil, and 54 million more are discarded because they Corporate Guidelines, as follows: AWARENESS BUILDING no longer meet the requirements for use on vehicles. These discarded tires represent an envi- and the Environment Training, education and the development of 15. PROCESS OF CONSTANT ronmental headache that is difficult to resolve, as they decay very slowly and burning them 1. LEADERSHIP AND RESPONSIBILITY awareness need to be constantly fostered, IMPROVEMENT is environmentally harmful. What does one do with 150 thousand tons of rubber? Upon integrating safety, health and the so as to strengthen the commitment of the The continual improvement of SMS per- and Natural Resources Petrobras has been coming up with some answers. The Shale Processing Unit (UN-SIX), in São environment (SMS) within its business workforce to SMS performance. formance must be fostered at all levels of

Policy Policy on Safety, Health Mateus do Sul, Paraná, has turned old tires, chopped into pieces, into a raw material. In 2003, strategy, Petrobras reaffirms the commit- the company, in order to ensure progress in about 1,200 tons/month of shredded tires were processed, together with the shale. ment of all its employees and contractors to 9. INFORMATION MANAGEMENT these areas. strive for excellence in these areas. Information and knowledge regarding SMS The activities of all the companies in the Petrobras Distribuidora recycles the same material, mixed with asphalt, to produce a paved needs to be precise, up-to-date and docu- Petrobras system are in alignment with the surface that can extend a road’s useful life. About 4,600 unserviceable tires are used for every 2. LEGAL COMPLIANCE mented, so as to facilitate reference and use. Corporate Policy and Guidelines. The kilometer of highway. The company’s activities must be in compli- Petrobras SMS Policies and Guidelines may ance with the prevailing SMS legislation. be seen in full on the company’s web site, According to studies, asphalt mixed with rubber from old tires allows a reduction of up to under the portal Environment. 40% in surface thickness, as well as extending the period estimated for flaws to appear, nor- mally three years, to as long as ten years. Environmental Management Structure The reutilization of unserviceable tires has economic value, but its most important signifi- The Consumption The Consumption of Materials cance is its contribution towards solving a serious environmental and public health problem, Petrobras’ organizational structure within the SMS Executive Managerial as well as making it possible for tire manufacturers and importers to comply with Conama includes a section devoted to coordinating Department, with responsibility, respec- Resolution no 258/99, which obliges them to find a useful and non-polluting means of dispos- SMS activities, handled in an integrated tively, for the North, Northeast and South ing of the material. manner, and their incorporation within the of Brazil; the state of São Paulo and the Board of Directors Environmental Committee company’s business. This structure works Center-West Region; the states of Espírito In addition to old tires, Petrobras Distribuidora utilized other waste as raw materials. The at various levels of the organization and Santo, Minas Gerais and Rio de Janeiro; hydrochloric acid (420 tons/year) and lignosulphate (168 tons/year) reutilized represents includes the following organs and func- and the international area. These coordi- Executive Board Business Committee 56% of the emulsifiers used. tions: nators contribute towards the integration • Environmental Committee, comprising and synergy of the company’s various

three members of the company’s Board activities in the area of SMS. SMS Executive Management SMS Management Committee of Directors (structural phase); The SMS Management Committee • SMS Executive Management, with cor- (linked to the Business Committee) is now

porate scope, reporting to the director of formally set up and running, while the Business Areas, Services Areas Services; other committees, at the Business Area and and subsidiaries • SMS Managerial Departments in the Gas Business Unit levels, are in the structural and Energy, Supplies, E&P and phase. Business Area, Services Area Business Area, Services Area and subsidiary SMS International business areas, which The SMS Management Committee is and subsidiary SMS Management Committees report to their respective managing coordinated by the SMS executive manag- directors or executive managers; er and comprises the executive managers In 2003, total spending on the acquisition of raw materials • SMS Managerial Departments at the var- of the business and services areas and of Business Units ious Business Units; the subsidiaries; the activities of this com- came to R$ 6.68 billion. • SMS Managerial Departments at the mittee ensure that SMS issues are taken Business Unit SMS Business Unit SMS subsidiaries. into consideration across the board, in Management Committees Also included within this structure are relation to the activities and business of the regional SMS coordinators, working the company. 48 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 49

The scope of the system for 2001 2002 2003 Energy consumption by primary source 2003 recording the total consump- 76.3 million m3 94.4 million m3 124.4 million m3 TERA-JOULES tion of water in Petrobras’ Electricity purchased Public concessionaires 11,453 Just refinery consumption Includes Transpetro and International Includes Petrobras operations is gradually being Business Area consumption Distribuidora consumption Energy generated in-house Natural gas 211,210 augmented, as the accompany- ing table shows. The consump- Diesel oil 16,229 tion of the E&P (Exploration Fuel oil 83,732 & Production) units and of the Refinery gas 79,038 administrative areas is still to Cracking coke 64,504

Water be consolidated in the total. The data needed in order to Petrobras helps to preserve dos Campos (Revap) refineries.

Full implementation of the be able to provide the total this precious resource by also Petrobras Distribuidora has Energy “Data-Hidro” system for man- annual volume of underground taking precautions regarding installed a system for utilizing Indirect energy consumption amounts to 13,682 tj. aging water resources and and surface water removed, the discharging of effluents rainwater, at Fasduc, the effluent, which is being devel- and what this represents as a into the environment. The con- results of which last year oped by Petrobras, means that percentage of the annual solidated results of all these accounted for around 10% of Energy from renewable sources the water consumption data renewable water resources in initiatives are not yet available. the unit’s annual consumption. for all the company’s installa- each region is also not avail- However, both in Brazil and at There are also pilot projects at Petrobras has, in the most of renewable energy that can tions will be consolidated as able. Nevertheless, aware of its units abroad, effluents are Petrobras Distribuidora for recent revisions of its strategic add value to its own chain of from 2005. how important it is to make treated in appropriate manners reutilizing the water used at planning, determined to be- businesses or will contribute to Highlight rational use of water, during that comply with the applica- service stations for washing come an energy company, and the country’s sustainable devel- 2002 and 2003, Petrobras con- ble local legislation. vehicles and for installing that renewable energy sources opment, in social and environ- ducted a survey of the avail- With regard to the recycling closed-loop water systems at will be one of the pillars for mental terms. The minimum PETROBRAS’ COMMITMENT ability and utilization of the and reutilization of water, the asphalt plants, which the future sustainability of its rates of return established for TO RENEWABLE ENERGY water resources in the areas various initiatives are being results in the more efficient uti- business. these investments are lower Cenpes is involved in devel- than those set for the compa- where six refineries, the developed at Petrobras and its lization of water. • R$ 6.8 million invested in a 1.8 MW wind farm in Macau – RN Cabiúnas terminal and the subsidiaries. In the search for In Argentina, Petrobras oping these new energy ny’s other areas of activity and Campos Basin Business Unit greater consumption efficiency, and Repsol-YPF have been sources, with projects involv- take into account the possibili- • R$ 270 thousand invested in a solar thermal unit to heat the are located. This survey not for example, there are projects working together since 1997 ing biological fuels, photo- ty of other returns, such as water at the refineries only took into consideration such as: Using Rainwater, on a survey that monitors the voltaic and thermal solar those stemming from use of the the water presently available Reusing Industrial Effluent, quality of the aquatic environ- energy, aeolian or wind energy, Kyoto Protocol’s Clean • R$ 26 million invested since 2001 in projects for the research but also projected the future Reusing Sanitary Effluent and ment of the Colorado river generating energy from organic Development Mechanism. and development of renewable energy sources parameters. Hence, it is possi- Automated Irrigation. and its tributaries. waste (biomass), generating Biomass and biological ble to assess the impact of cur- In 2004, Cenpes (Petrobras The company’s particular energy in isolated locations fuels merit particular atten- rent and future restrictions of research center) will test, at the concern derives from the eco- from hybrid systems (wind, tion, as they are tied into the the use of water on the com- Gabriel Passos refinery, in nomic importance of the photovoltaic and diesel), as reasoning underlying the pany’s operations in each Minas Gerais, a technology for Colorado to its riverside popu- well as monitoring progress Petrobras business chain and region and, armed with this the reutilization of water and lations and the whole northern around the world in this area. are naturally suited to the information, to take steps to effluent that uses filtration region of Patagonia. In channeling its invest- favorable conditions for the avoid water shortages, without membranes. Similar systems ments, Petrobras is giving production of biomass in affecting other water users are at an advanced design emphasis to projects in the area Brazil. (human and animal consump- stage, for installation at the tion, agriculture, etc.) Paulínia (Replan) and São José

Biological fuels

engineering research and graduate school) into the production of biodiesel from the oil left over from frying. This biodiesel is being tested as a 5% ingredient mixed with the mineral diesel oil used in the truck fleet

Petrobras has developed in-house a well as swelling the company’s production process for producing biodiesel directly of biodiesel and related products, thereby from the castor bean, without needing to allowing fleet testing with biodiesel fuel On its 50th anniversary, the company has refined its sponsorship policy and first extract the castor oil, as was tradi- and testing the markets for the other prod- tionally the case, thus reducing the ucts to be carried out. Operational start- launched the Petrobras Environmental Program, which, using public process’ investment and operating costs. up is scheduled for the first half of 2005. A prototype biodiesel production plant Moreover, studies are being carried out selection criteria, will invest, in its first two years, a total of R$ 40 million is currently being set up, in the state of Rio for utilizing the resulting ‘cake’ as a source Grande do Norte, with the capacity to of protein and as a raw material for the in projects under the theme of water – covering bodies of fresh and salt process 10 thousand kilograms a day of production of ethanol. castor beans. This unit will demonstrate Joint studies are also being carried water and their biological diversity. the feasibility of large-scale production, as out with Coppe (Rio’s federal university 50 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 51

Wind energy Solar energy Encouraging reduced consumption and energy efficiency On January 26, 2004, Petrobras inaugurated The company’s solar thermal heating its first wind farm, the first to be set up in the project involves installing water heating Petrobras has managed to Under the company’s Energy Conservation program, an annual state of Rio Grande do Norte. The wind farm systems in the canteens and changing achieve significant results in its target is set for the reduction of consumption. has three turbines, each producing 600 kW of rooms at several of its operational and efforts to reduce its energy energy, making a total installed capacity of administrative units. consumption and increase its YEAR 2004 2005 2007 2010 1.8 MW. The towers are 46 meters high, the The first system went into operation in energy efficiency. More than Target 1.73% 1.55% 1.35% 1.15% diameter of the rotor blades is 44 meters and 2003, at UN-Regap, with 550 m2 of solar ten years ago, the company they turn at a speed of 18 to 36 RPM.The wind collectors providing 87.5% of the water developed a program, using 36 farm will supply the electricity needs of four heating requirement, which is expected to In-house Energy Conservation Petrobras is a leading partici- 830 thousand tons of CO2 and Petrobras production fields in the state. reduce electricity consumption by around Commissions, to promote a pant in Conpet, a government 18 thousand tons of particu- 316 MWh/year. Other solar heating sys- reduction in the consumption program to reduce the Brazilian lates; and “Transportar The company invested R$ 6.7 million Petrobras, as an energy company seek- tems are being assembled at Recap and of oil and natural gas, with a consumption of oil and gas. (Transport efficiency)”, which in this venture, the tender for which was ing sustainable solutions, has made use of Reduc, with completion scheduled for consequent reduction in car- Two outstanding successes of provided a saving of 13.6 mil- won by Wobben Windpower, which, in photovoltaic solar energy as a means of 2004. bon dioxide (CO ) emissions. this program are the projects lion liters of diesel oil and addition to manufacturing the turbines, is providing power for certain applications Low power (up to 3 kW) photovoltaic 2 In 2003 alone, the equiva- “Economizar (Savings)”, which avoided the emission of 37.2 responsible for the installation, operation in remote areas. Some examples are panels generate a total of 100 kW for a lent of 91,834 tons of oil was in 2003 brought about a saving thousand tons of CO2 and 800 and maintenance of the equipment for a cathodic protection for pipelines, city gate variety of purposes, such as the control saved. Between 1992 and of 303 million liters of diesel oil tons of particulates. period of five years from the conclusion of control stations for natural gas, remote and signaling at unmanned oil platforms 2003, there was a saving of and avoided the emission of the construction work. valves in pipelines and control systems and and operating the pumping units at small 729 million m3 of natural gas, Cenpes has been measuring the wind radio communications at small platforms oil wells in remote areas (isolated sys- 900 thousand m3 of fuel oil, 76 potential at another 20 Brazilian sites in the northeast of Brazil. tems). An oil pumping system, powered by thousand m3 of diesel oil and 8 located close to Petrobras units. Cenpes also develops projects aimed at photovoltaic solar energy, is being thousand tons of LPG, repre- “Economizar” Other trial projects are also being perfecting solar power technology and installed at a well in Mossoró (RN), and is senting a cost reduction of “Transportar” Project implemented. Petrobras plans to install a broadening its applications. Examples are: expected to be inaugurated in 2004. A sys- Project around R$ 600 million and pilot unit near its refinery at Baía Blanca, solar pumping stations in remote areas, tem is being installed at Cenpes, with a avoiding the emission of 4.75 in Argentina. The preliminary study was hybrid solar-diesel-wind systems, develop- total capacity of 45 kW, for comparing dif- With the intention of reducing exhaust emissions in large urban cen- Created in 1996 through a partnership between Petrobras and the million tons of CO2. carried out by the country’s National ing more advanced solar cells, supplying ferent photovoltaic technologies. ters and encouraging efficient fuel consumption, Petrobras inaugu- National Transport Confederation, under the aegis of the Ministry for University of Technology, as part of the power to Cenpes’ own perimeter II build- In Argentina, a service station at San rated at Revap, in November 2002, the “Transportar (Transport Mines and Energy and backed by the private freight and passenger company’s investment plan. Also in the ing and two BR service stations using solar Isidro, in Buenos Aires, belonging to the efficiently) Project. The program, of an educational nature, aims to transport sector, the “Economizar (Savings)” Project consists of ana- basic engineering phase is a project to set panels, solar cooling systems, hybrid gas- company, runs on solar energy. The instal- help fuel transporters to maintain their tankers in good working con- lyzing the fuel and emissions of buses and trucks, in a quest to pro- up a wind powered filling station in solar energy systems and a solar cooking lation has 24 panels, with the capacity to dition, thus saving diesel oil and reducing environmental pollution. tect the quality of the air. Technicians trained by Petrobras in Rio de Comodoro Rivadavia (Chubut). stove. generate 1,680 W at 48 V dc. The saving The trucks are inspected every day at the refineries, free of charge, by Janeiro drive vehicles equipped with mini-laboratories that are capa- in electricity is between 60% and 100%. technicians trained by the company, who check exhaust emissions, ble of performing field tests. Based on the results, the companies the quality of the diesel oil and the general roadworthiness of the that have volunteered to participate receive guidance on how to vehicles.An inspection report, containing suggested improvements, is improve their diesel consumption efficiency and perfect their man- handed to the driver.This results in a reduction in the consumption of agement methods and training of the employees who work with the diesel oil, which, in addition to yielding a financial saving, benefits vehicles and who handle and store the fuel. The companies who par- the health of the driver and of society at large. ticipate are managing to save 144 million liters of diesel oil annually. The “Economizar” Project is functioning today in 22 states, with the So far, a total of 1,350 vehicles have been evaluated under this pilot participation of 14 trade unions and regional transport federations, Hybrid systems A hydrogen-based economy project. It is estimated that the improvements have resulted in the involving about 3,200 companies and a fleet of more than 133 thou- non-emission of 800 tons of particulates, which is one of the most sand vehicles. harmful agents given off by the burning of diesel oil.

At the same time, with a view about 230 inhabitants. There With the increasing urgency of partially financed by Finep, to realizing the vision of sus- are also a primary school, two environmental issues and the through CTenerg, to study the tainable development, a proj- churches and a community influence of greenhouse gases production of hydrogen (H2) ect was implemented under the center. The demand for elec- on global climate change, from the processing of

CTPetro umbrella to apply the tricity, estimated at 5 kW, is some predictions point to liq- ethanol. The production of H2 concept of hybrid energy sys- supplied by a hybrid system, uid fossil fuels having been from the steam processing of tems to generate electricity for comprising of a 20 kVA diesel replaced by hydrogen pro- natural gas is a technology an isolated community. generator, a 7.5 kW wind-driv- duced from renewable sources, that Petrobras has already The “Hybrid Wind- en generator, a 3.2 kW photo- somewhere around the year mastered. Photovoltaic-Diesel System to voltaic panel and a set of 6,000 2050. With regard to end-user bring electricity to the village Ah batteries. A portfolio of projects cov- technology, there are several of São Tomé” project was car- A pre-payment system of ering all these issues is being projects under the CTPetro ried out by the Federal charging for the energy was put together, in a joint effort umbrella, in partnership with University of Pará and also implemented, to create a with Brazilian universities and Coppe, UFBA (Federal financed by Finep and self-sustaining model that can other national and interna- University of Bahia) and Petrobras. Electricity started to be disseminated among other, tional institutions. Lactec, focused on the coun- flow for the community on similar communities. The pres- In the area of production, a try’s development and the September 5, 2003. ent diesel generator will be project was recently initiated utilization of fuel cells that Located within the munici- replaced by a biodiesel genera- in partnership with Unicamp use hydrogen to generate pality of Maracanã, on the tor, so that the system is fully (University of Campinas, SP), electricity. coast of the state of Pará, the supplied by renewable sources. village has 45 residences and 52 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 53

Emission of greenhouse gases Another way in which Petrobras Targets Highlight is helping to reduce environmen- tally harmful emissions is by In 2003, Petrobras continued DIRECT EMISSIONS (BY SOURCES INDIRECT EMISSIONS (FROM developing the market for and The Petrobras Strategic Plan CONTROLLED BY THE COMPANY) THE GENERATING OF ELECTRICITY, to implement its Atmospheric augmenting the use of natural 2004-2015, which started to (TONS) HEAT OR STEAM PURCHASED BY PETROBRAS INVESTMENTS DURING 2001 Emissions Inventory, covering THE COMPANY) gas. To this end, the company is be debated in 2003, establishes all its installations (except TO 2003 IN PROJECTS RELATED TO adopting initiatives on three targets for the carbon credits carbon dioxide - CO 35.5 million Insignificant the Bolivia-Brazil gas 2 strategic fronts: to be gained from the use of CLIMATE CHANGE pipeline). This system will methane - CH4 137,860 Insignificant a) Increasing the supply of nat- renewable energy, equivalent

enable each unit, as from nitrous oxide - N O 874 Insignificant ural gas to the market: the to 130 tons of CO2 in 2005 2 • R$ 26 million in 51 projects in the field of renewable energy; 2004, to systematically com- Strategic Plan 2015 envis- and 1.2 million tons in 2010. hydrofluorocarbons - HFCs Insignificant Insignificant pile data on its emissions of • R$ 10 million in 21 projects related to the use of hydrogen as a fuel; ages this market growing at During this period, around the principal greenhouse perfluorocarbons - PFCs Insignificant Insignificant the rate of about 14.2% per US$ 377 million will be invest- • R$ 33 million in 61 projects in the area of natural gas; gases (carbon dioxide, sulfur hexafluoride - SF6 Insignificant Insignificant annum; ed in the development of methane and nitrous oxide) b) Increasing the use of natural renewable energy sources. By • R$ 3 million in 7 projects related to energy efficiency; and pollutants that affect the Source: Inventory of Atmospheric Emissions – Petrobras (2003). Includes vessels chartered for gas as an energy source for 2010, Petrobras ought to be

and Waste and local air quality (carbon generating 60 MW of electrici- coastal shipping. • R$ 34 million in 23 projects related to carbon sinks. the company’s own industri- monoxide, sulfur oxides, al processes; ty from wind power, 31 MW nitrogen, volatile organic c) Reducing the burning of from biomass and 4.9 MW compounds and particulates), OTHER SIGNIFICANT ATMOSPHERIC EMISSIONS natural gas as part of the oil produced by photovoltaic pan- as well as the gases burned in production process; in 2003, els. By that time, the company the flares. A process is cur- DIRECT EMISSIONS (TONS) INDIRECT EMISSIONS the company reduced gas intends to be deriving 10% of rently being prepared to flaring by 27% in relation to the energy it consumes from Sulfur oxides - SOx 179,107 Insignificant select an independent organi- 2002; the volume of gas renewable sources. zation to audit the system. Nitrogen oxides - NOx 191,002 Insignificant The carbon credits market burned declined from 5.9 Carbon monoxide - CO 31,013 Insignificant million m3/day to 4.3 million 3 Particulates 12,258 Insignificant m /day. In 1998, 160 countries signed the Kyoto Protocol, an agreement under Non-methane hydrocarbons 150,524 Insignificant which the industrialized countries pledged to reduce by 5.2% their Emissions, Effluent Total hydrocarbons 288,384 Insignificant emissions of carbon dioxide (CO2), the most important of the green- house gases connected with human activity. In order to facilitate compliance with this target, the Protocol created so-called “Flexibility Mechanisms”, of which the most important to countries Careful handling of waste such as Brazil is the Clean Development Mechanism. Through this In addition to enabling better In 2003, around R$ 8 mil- Petrobras is currently nego- scheme, in order to meet their targets, the industrialized countries Petrobras has developed and The system classifies the What is the greenhouse effect? control of the gases launched lion was invested in 19 carbon tiating participation with BP can utilize reductions in the emission of greenhouse gases brought is operating a computerized waste according to the danger into the atmosphere, as the sink projects. One of these, in (British Petroleum) and the IFP about by projects they have financed in developing countries, which system that consolidates, at it represents, registering the Atmospheric Emissions partnership with the São Paulo (French Petroleum Institute) in have not been set targets under the Protocol. These reductions are the corporate level, all data quantities produced, treated,

Inventory helps to identify State University (USP), the CCP (CO2 Capture Project) registered through Emission Reduction Certificates, carbon credits relating to the management of recycled/reutilized or stored Some of the gases in the Earth’s atmosphere, among them carbon emission reduction projects involves the restoration, using and Castor (Capture and that can be traded in the carbon markets that are now in the process waste and areas contaminated in an environmentally sound dioxide (CO2), function as a kind of blanket, keeping the planet’s sur- with a better cost-benefit ratio, native species, of 50 hectares Storage Project) projects, of being set up. as a result of the company’s manner. An in-house regula- face temperature relatively stable, without, for example, large vari- so it could provide a platform of degraded areas, 25 hectares aimed at the capture and stor- activities. tion is also applied, governing ations between daytime and nighttime. Without these gases, known for the company’s eventual in the state of São Paulo and age of CO2. Participation in all procedures relating to as greenhouse gases, the planet’s average surface temperature participation in the carbon 25 hectares in Bahia. A similar these projects will involve waste management. would be extremely low, somewhere around minus 18 degrees credits markets that are right project is being developed in investments of around US$ 2.4 Celsius. This retention, in the form of heat, of part of the solar ener- now being set up. partnership with the Rural million. WASTE CLASSIFICATION (TONS) gy that reaches the Earth is known as the greenhouse effect. With a view to consolidat- Federal University of Petrobras is a member of 2003 HAZARDOUS NON-HAZARDOUS TOTAL ing the information that will Amazônia. Another experi- the committee representing Human activity has caused the quantity of carbon dioxide in the provide the basis for managing ment is being pursued, in the Brazil at the Carbon Seques- Origin Processes 336,373 127,354 463,728 atmosphere to rise, principally due to the burning of fossil fuels the carbon risk of its activities state of Sergipe, by the Sergipe tration Leadership Forum, an Affected areas 84,921 169,310 254,231 (mainly oil, natural gas and coal/charcoal) and deforestation. and possible participation in – Alagoas Business Unit, aimed initiative aimed at stimulating Total 421,294 296,664 717,959 the carbon trading markets, at developing a carbon sink by international cooperation in The greater concentration of CO in the atmosphere has intensified 2 Petrobras is conducting vari- lumping together areas of the quest for alternative tech- Waste treated or disposed of 197,696 274,583 472,279 the greenhouse effect, with a consequent rise in the surface temper- ous R&D projects in the areas native forest and family farms. nology to mitigate global cli- Balance at December 31, 2003 297,094 28,040 325,104 ature of the planet. of greenhouse gas emission A project is also being pre- mate change, with an emphasis Balance at December 31, 2002 151,519* 19,532 171,051* reductions and carbon sinks. pared for developing a carbon on carbon sequestration sink in the semi-arid northeast projects. of Brazil, with implementation * Includes 91,627 tons stored at the International Business Area Units that will be included in the scheduled for 2005. Corporate Register of Industrial Waste as from January/2004.

Type of treatment QUANTITY (TONS) (%) Destroyed, with use of the energy generated 103,865 22 Destroyed by burning/heat 5,513 1 Landfill 248,330 53 Others 74,947 16 Recycled 29,566 6 Biologically treated 10,058 2 Total 472,279 100 54 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 55

In 2003, waste treatment was 100% in the Continual improvements to avoid waste Discharge into Enhanced state of readiness Supply area and at Transpetro, 80% in E&P and 30% in the International area. bodies of water The quantity of waste generated in 2003 All the company’s units in Brazil and some The reutilization or recycling of prod- The total quantity of effluent In addition to investing in prevention, to the Rebelo XV, which are specially the sea up to 250 thousand liters of oil per includes around 250 thousand tons stem- of those located abroad have ISO 14001 ucts at the end of their useful lives serves a generated by Petrobras’ opera- avoid accidents occurring, Petrobras con- designed to handle fires and oil spills. This hour, and also has fire-fighting equipment ming from the restoration of affected certification, one of the premises of which twin function: it helps to preserve the envi- tions in the last year amounted tinues to perfect its contingency prepara- follows in the footsteps of the highly suc- that is capable of discharging up to 40 areas. The apparent increase in waste gen- is continual improvement in environmen- ronment, both by reducing the consump- to approximately 129 thousand tions, so that even if an accident were to cessful experience with the Astro Ubarana, thousand liters of water per minute. eration can be explained by the increase in tal management. Petrobras’ corporate tion of natural resources and by reducing m3. This volume of effluent con- occur, its effects would be minimized. To which for two years has protected the In the same vein, by setting up the number of units that report their waste SMS guidelines state that the company pollution, and it helps to keep down the tained around 1,280 tons of oils this end, the company maintains nine company’s installations in Rio de Janeiro’s Emergency Response Centers (CREs), all to the Corporate System (19 units in 2002 must give close attention to the SMS ele- costs of the production process. and greases and, at the refineries, Environmental Protection Centers (CDAs) Guanabara Bay. 22 of Transpetro’s waterway terminals, and 25 in 2003) and by the company’s ments of its products throughout their In the production of lubricating oils, 217 tons of ammonia. The in Brazil, with six outposts in the Amazon Operating off the coast of the state of scattered along the Brazilian coast, are increased production. effective life cycle, from the extraction of for example, Petrobras has tried to maxi- implementation of the computer- and one in the Center-West region, thus Sergipe, the Norsul Marati has the task of now equipped to handle oil spills, as part Contaminated areas are classified the raw materials through production, mize its utilization of basic oils re-refined ized “Data-Hidro” system, providing an ample network of protection protecting an area containing 23 produc- of a system that seeks the best possible according to geoenvironmental parame- transportation, use and eventual disposal, from used oils, with a consequent reduc- which is now in progress and against the possible repercussions of an oil tion platforms and a system of buoys for combination of speed and efficiency. ters. An assessment is then made of the forever striving to minimize the impact tion in the consumption of petroleum by scheduled for completion in leak. loading tankers. The vessel can also be Furthermore, in order to be able to risk posed to human health, which in turn they might have. The principal requisites the refineries. 2006, will enable the effective Operated by highly trained teams that rapidly redeployed to handle emergencies constantly assess and refine this system, in determines the nature and urgency of the of the guidelines are: With regard to the handling of prod- consolidation, as from 2005, of are on duty round the clock, the CDAs off the coast of the states of Bahia, 2003 Petrobras stepped up the frequency remedial action to be taken in the area. A • That all the company’s products be ucts, the company prepares and keeps per- data relating to the utilization of supplement the contingency plans imple- Alagoas and Rio Grande do Norte. The of simulated exercises, including unsched- total of approximately 250 hectares has attributed SMS ratings, from the choos- manently up to date a File of Safety water resources and the produc- mented at the company’s various installa- Rebelo XV has been put into operation in uled simulations, a practice in which it been identified as having been contaminat- ing of the raw materials through produc- Information on Chemical Products. tion of effluent by the company, tions. They are equipped with their own the São Sebastião channel, in the state of was one of the industry’s pioneers. ed as a result of the company’s activities. tion, packaging and transportation to It should also be pointed out that with positive repercussions on vessels, skimmers, tanker barges and many São Paulo, to reinforce the environmental Another distinguishing feature of Petrobras does not transport industrial the final destination; directions for the disposal of unserviceable the quality of the management of kilometers of oil retaining and absorption safety at one of the country’s most impor- Petrobras’ simulations is the participation waste across national borders. • That suitable and up-to-date informa- materials are being inserted in the guide- this environmental feature. barriers, which can be rapidly transported tant terminals. of local communities, civil defense and tion be provided about the products, lines for Petrobras’ Materials Supply to the site of an emergency. A kind of floating CDA, this type of environmental bodies. Petrobras has introduced programs to reduce allowing their safe handling and use System, taking into account factors relat- With regard to leakages of oil and To further reinforce its contingency vessel remains crewed around the clock, so the amount of waste at all its units, which and/or the minimizing of potential risks; ing to environmental preservation. oil products, which invariably preparations, in 2003 Petrobras launched that it can be the first to tackle any spills. include the use of innovative technology. At • That priority be given to the develop- Petrobras Distribuidora also develops tend to end up affecting bodies two new vessels, the Norsul Marati and It is equipped to contain and remove from the end of 2003, the company reached the ment of products that best meet the SMS a variety of measures aimed at recuperat- of water, Petrobras managed in milestone of 1.5 million tons of waste treated requirements. ing, recycling and reutilizing some of the 2003 to sustain the low level since 2000. products it sells. achieved in 2002. There were 228 incidents, with a total leakage volume of 276 m3.

All Petrobras’ products are combustible Additional information can be specifications infringe the regulatory and present a fire (or even explosion) and obtained from the Petrobras Customer norms and pose a potential health threat. pollution (atmospheric emissions, soil and Care Service (SAC) or via the internet, In these proceedings, Petrobras Distribuidora water contamination) hazard. That is the using the “Fale Conosco (Contact Us)” has presented evidence that refutes Product % RECOVERABLE, % EFFECTIVELY RECOVERED, RECYCLABLE OR REUSABLE RECYCLED OR REUSED reason underlying the rigorous processes, resource. these allegations and is now awaiting a Amyr Klink the strict attention to safety procedures The information contained in the prod- pronouncement from the organs that Asphalt 80% Around 50%, methods and the enormous care taken over environ- uct files, and other important information will appraise its defense. and equipment currently used. mental controls. In full compliance with regarding safety and health, is widely pub- There are no cases of complaints over On board the vessel Paratii 2, Brazil’s most celebrated yachtsman, Lubricating oil 60% 32.36% recovered by Petrobras the measures demanded for ISO 14001 licized by Petrobras Distribuidora, non-compliance with the legislation gov- Amyr Klink, recently completed another circumnavigation of the Distribuidora. Other quantities certification, Petrobras monitors the risks through posters placed at visible points in erning product information and labeling globe, this time following the most perilous route, around the conti- may be recovered by other of every one of its products and the proce- the service stations and where the products or the health and safety of the consumer. nent of Antarctica. In addition to four crew members, he added parties. dures for minimizing those risks. are used. another novelty that was important to his safety and comfort. This Petrobras fully complies with all the The safety warnings placed on the was the diesel oil used for the cabin heaters and the stove on which specific legislation governing the trans- labels of the products and particularly on Highlight the meals were prepared. The product was specially developed for the portation and handling of hazardous prod- the lubricant containers, present all the trip by Cenpes and was produced by Revap. The diesel oil used on Ecological efficiency at Cenpes ucts, such as ANTT Resolution no 420 of information needed by the consumer, as board the Paratii 2 is a fuel that is guaranteed to function and flow February 12, 2004, Decree no 96,044 of far as the handling of the product and dis- The industrial waste generated by the projects aim to promote the reduced normally at extremely low temperatures. It has a low content of sul- May 18, 1988, and Decree no 98,973 of posal of the containers is concerned. CORPORATE GUIDELINE REQUISITES activities of Cenpes is managed under generation and increased reutilization of fur and of aromatic and polyaromatic compounds, which means it February 21, 1990. A working group has been set up to RELATING TO PRODUCT SAFETY AND its Program of Ecological Efficiency, waste, the results of which can be seen pollutes less and can be stored for long periods – up to three years Furthermore, the question is covered evaluate every one of the company’s prod- through the Selective Waste Collection in the table below: HEALTH PRECAUTIONS: without any kind of degradation. Another innovation created by by the Petrobras corporate SMS guideline, ucts, in terms of the end of its effective Project and the Compost Project. These Cenpes, and produced industrially by the RPBC, is the gasoline used item 14, which states that the company useful life. by the supporting craft. It is a high octane fuel with a long storage Recycled Waste must take every care over the safety, health Petrobras Distribuidora has a docu- • That all the company’s products be attrib- life, lasting for long periods without oxidation, with zero alcohol con- and environmental aspects of its products, ment control system called SPBR. For ver- uted SMS ratings, from the choosing of the MATERIAL TONS tent and extremely low sulfur content. Amyr Klink also uses from origin to final destination, and for- ification of the laws and regulations raw materials through production, packag- Petrobras lubes, such as Lubrax Top Turbo, that have a high capacity of Oils 15.5 ever strive to minimize the impact they governing not only the labeling of the ing and transportation to the final destina- lubrication and flow under extreme temperature conditions. Amyr Solvents 33.9 might have. products but applying to the whole lubri- tion; Klink’s voyages serve as a testing ground for whether these products Aluminum 3.7 A “File of Safety Information on cant business, there is a computerized sys- will be suitable for a broader market. Chemical Products” is prepared for all tem of control that is constantly up-dated • That suitable and up-to-date information Safety Safety Precautions Copper, steel and lead 4.7 new products and the files of the existing by consultants who specialize in dealing be provided about the products, allowing Iron 310.8 Product Health and products are regularly brought up to date. with legal requirements. their safe handling and use and/or the min- imizing of potential risks; Wood 156.0 The information in these files is dis- Despite these precautions, the compa- closed to customers and can also be ny is involved in 13 legal proceedings Paper 47.9 • That priority be given to the development accessed through the Petrobras customer attesting to its responsibility in placing of products that best meet the SMS Cardboard 30.8 channel “Canal Cliente”. on the market products whose technical requirements. Plastic 11.2 Glass 10.1 Total 625.5 56 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 57

For example, the Presidente Bernardes Petrobras initiated a project Petrobras sponsors and deep waters in the Campos government of Betim. It also (Cubatão – SP), Landulpho Alves in 2003, scheduled for comple- supports projects for the Basin; environmental evalua- organized the thickening with (Mataripe – BA) and Duque de Caxias tion in 2004, aimed at develop- preservation of several species tion of the Lagoa de Ibirité native plant species of the (Duque de Caxias – RJ) refineries are all ing artificial marine habitats, of marine life, such as the lake, in Minas Gerais; and the green belt around the unit, an located in areas of extensive mangrove by sinking decommissioned humpback and right whales, conceptual development of a area of permanent conserva- swamp. These units are organizing, with structures off the coast. The the manatee, the spinner dol- Center for Ecosystem tion covering more than 93 the participation of other company new habitat becomes a breed- phin and the marine turtle Restoration Technology. thousand m2. organs, studies and research into whether ing ground for fish, thereby (Tamar Project), and others Other units of Petrobras The Termobahia plant was the industrial operations are having an stimulating local fishing. dedicated to specific ecosys- are situated in highly urban- installed within the boundary impact on these ecosystems. About R$ 1 million was invest- tems, such as the “Ecolagoas” ized areas that are usually of the Landulpho Alves refin- Since 2002, Petrobras has been devel- ed in this project in 2003. project, aimed at preserving environmentally compromised. ery, in Mataripe, Bahia, which oping, through a contract with Funpar One of Petrobras’ most sen- the lagoons situated to the Such is the case of, for exam- is defined as an industrial area. (Foundation of the Federal University of sitive units, in environmental northeast of Rio de Janeiro. ple, the new natural gas pow- In order to set up the plant, it Paraná for the Development of Science, terms, must be the Solimões The company also carries ered thermoelectric plants. was necessary to clear an area Technology and Culture), a project to Basin Business Unit (UN- out technical research projects, As detailed in the relevant of trees and, under an agree- reproduce freshwater crab larvae on a BSOL), located deep in the aimed at environmental pro- impact study and report, the ment with the municipal gov- large scale, in order to repopulate degrad- Amazon rainforest. The tection and restoration. Its Ibirité plant is located in a ernment of São Francisco do ed areas, as well as stimulate local fishing. “Reflora (Rebloom)” project is research center, Cenpes, runs a heavily degraded metropolitan Conde, this was compensated The project, which should be concluded in being developed there, with the Technological Program for the area in the state of Minas by the planting of three new July 2004, involved the investment of objective of reforesting with Environment, which, with Gerais. Nevertheless, in the saplings for every tree around R$ 128 thousand in 2003. native species the areas cleared investments of more than R$ knowledge of Petrobras’ com- removed. The Shale Processing Business Unit – for the company’s operations. 30 million, is an umbrella for a mitment to carrying out its SIX obtains its principal raw material One of the most important number of projects, notably: activities in an environmental- from mining, and has a systematic process outcomes so far of this project the reforesting of degraded ly responsible manner, the unit for the environmental restoration of the has been the preparation of a areas in the Amazon; the devel- arranged for 1,200 trees to be areas affected by this activity. In 2003, a Manual of Techniques for opment of cognitive tools for planted in the neighborhoods total area of approximately 154 thousand Dealing With the Amazon Soil, the Amazon region; environ- of Ibirité and Betim closest to No Brazilian unit of Petrobras is located in The planning of all the company’s m2 was mined, while other areas already which guided the reforesting, mental management of the its installations and donated any of the conservation areas defined undertakings includes procedures to iden- mined, totaling 164 thousand m2, were between 1986 and 2003, of Amazon coastal areas; envi- another 1,580 saplings and within the legislation. However, some of tify the potential environmental effects, as restored. The Restoration of Mined Areas 182 hectares of cleared land. ronmental definition of the 870 imperial palms to the local them are situated in areas of environmen- well as to define measures that may miti- Indicator, calculated by dividing the tal interest or that have fragile ecosystems, gate them. In Brazil, in accordance with restored area by the difference between the and therefore demand special care and the requirements of the environmental leg- mined area and the area needed for the attention on the part of the company. islation, the company develops development of mining operations, is used Environmental Monitoring Programs set Environmental Impact Studies and pre- to follow developments in this area. In the up at the business units keep track of pares the corresponding Environmental last four years, this indicator has remained Pipeline network: safety and protection activities with the potential to affect the Impact Reports. at around 95%. through co-responsibility environment; Environmental Sensitivity All Petrobras’ activities are supervised With this continual process of renova- Maps are plotted, by means of which the and immediately potential environmental tion, restoration of the area mined in 2003 PIPELINE NETWORK: ENHANCED SAFETY AND Even though the company adheres to • to explain to the local communities the ecosystems located within the area of impacts have been identified, programs are ought to be completed by the middle of ENVIRONMENTAL PROTECTION THROUGH the strictest operating procedures and uses possibility and importance of living in Fully automated influence of the company’s installations set up to monitor the situation and, if nec- 2006. THE ENGAGEMENT OF LOCAL COMMUNITIES the most advanced technology to monitor harmony with the pipeline network. are defined and classified according to essary, take remedial action. The system of oil and gas pipelines operat- its pipeline network, social and demo- The Plan for Harmony and Co- their vulnerability to oil leaks. These maps ed by Transpetro is an area that demands graphic factors still exert a strong influ- Responsibility is much more than merely are used as part of broader programs for the special attention of Petrobras, both ence on the safety of this system. This informative, striving to transform values, ENHANCED SAFETY OF the prevention of environmental accidents. from the point of view of environmental means that the engagement of the commu- behavior and practices through an educa- THE PIPELINE NETWORK protection and with regard to human safety. nities that live near the pipelines is essen- tional effort based on reflection and Although none of Petrobras’ units in tial to preserving their integrity. action. It is through collective reflection Brazil are situated in conservation areas, The Communication Plan for Harmony that the residents are able to perceive, Nowadays, all of Petrobras’ the pipelines used for transporting oil, gas and Co-Responsibility with the comprehend and discuss the issues relating main network, of more than Marine habitat: “building” and their derivatives may pass through Communities Bordering the Pipeline to safety in the pipeline domain, the exist- 7,000 kilometers of pipeline, is artificial reefs biological reserves or areas of environmen- Domain, developed by Petrobras, aims to ing protection measures, the importance of automatically controlled and tal interest, rural areas and urban centers, encourage the active participation of the preventing the degradation of the pipeline monitored. As a result, the flow sometimes resulting in interaction with the local residents in developing a collective area, and the rights and duties of the local of products can be halted After 35 years of service to the Brazilian navy, the hydrographical local population. commitment to the integrity of the pipeline communities regarding the use and occu- immediately an anomaly is exploration vessel Orion was scuttled on November 27, 2003, and In this context, and aware of its social domain, with the following goals: pation of the land along these strips. Only detected, which reduces signifi- now lies at a depth of 30 meters, 15 kilometers off the Rio de Janeiro and environmental responsibility, the com- • to share responsibility for pipeline safety through reflection on the true circum- cantly the risk of environmen- coastline, near a small town called Quissamã, for the purpose of pany perceived that issues pertaining to with the local communities, so that every stances will the local residents adopt a tal damage. The motto here is being transformed into an artificial reef. This is part of a pilot project the use and occupation of land in the areas resident becomes a protector of their stance and act objectively in favor of their “If in doubt, stop!”, which conducted through a partnership between Petrobras, the navy’s Ports bordering the pipelines need to be dealt own environment, making sure the strip common interests and basic concerns. The reflects the new level of aware- and Coastal Authority and Emgepron, a company that manages of Ecosystems of and Ecosystems Biological Diversity with on a multidisciplinary level and of land remains clear and unoccupied; reflection-action mechanism is the driving ness amongst the labor force marine projects. Although this is a first in Brazil, the building of arti- demand a proactive stance. • to engage the local communities, along force in building a community culture of regarding the issues of safety, ficial reefs is a widespread practice in the USA and Europe. The idea is with the company, in discussion of the harmony and co-responsibility in relation health and the environment. that the sunken vessel attracts and then encourages the proliferation

Protection, and Preservation Restoration possible uses of the strips of land bor- to the pipeline network. of various species of marine flora and fauna, with the added benefit dering the pipelines; to local fishing and to research into biological diversity. Other artifi- cial reefs are being created in Brazil, through the Marambaia Project, developed by Petrobras in partnership with the Federal University of Ceará, which involves the sinking of containers off the coast of Rio Grande do Norte, and the Bioproduction Structures Project, which, in a partnership with Coppe/UFRJ, involves the sinking of unserviceable pipeline, near Rio das Ostras, in Rio de Janeiro. 58 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 59

LOCATION INCIDENT ment proposals for the utiliza- CONSERVATION AREA INSTALLATION The company takes precau- tion of the strips of land bor- tions to avoid situations that Guadalupe Environmental Alagoas/Pernambuco gas pipeline Duque de Caxias/RJ Inadequate disposal of drums dering the pipelines, which could lead to environmental Conservation Area containing contaminated may include making communi- liabilities. Particular attention material (Feb. 4, 2003) ty vegetable and flower gar- Jurubatiba Reserve National Park Cabiúnas sea outfall is paid to questions relating to São Sebastião/SP Leakage of 25 thousand liters of dens, footpaths, flights of steps Saltinho Reserve Nordestão gas pipeline licensing and work that needs oil from a tanker (June 2003) to be authorized by environ- or new accesses. Guaratuba Environmental Araucária/Biaguaçu, São Francisco/ mental bodies. This preventive Cachoeiras de Macacu/RJ Leakage of 20 liters of oil from the Other means of transport- Conservation Area Araucária oil pipeline ing the products and raw mate- posture also governs the com- Macaé-Duque de Caxias stretch of rials used by Petrobras may Tinguá Biological Reserve Duque de Caxias/Betim oil pipeline pany’s compliance with its the Osduc pipeline, at Papucaia also cause an environmental Volta Redonda gas pipeline obligations in the communica- (Aug. 26, 2003) impact. In the case of Optic fiber cable strip tion of accidents. Duque de Caxias/RJ Operation of Teduc (Duque de To make the process of reflec- ing people to recognize com- Petrobras Distribuidora, for Nowadays, all Petrobras Caxias Terminal) without an Duque de Caxias/Betim gas pipeline tion - action feasible, strategies munity attitudes and practices example, the greatest risks units are licensed by environ- operating license (October 2003) Guaíba Forest Reserve Guamaré/Cabo gas pipeline mental bodies or backed by were defined to achieve recog- that cause damage to the relate to the leakage of oil Aracaju/SE Leakage of 450 liters of oil from specific conduct change agree- nition of reality, communica- pipeline installations and to products and accidents. Atlântica rainforest Alagoas/ the Riachuelo production line ments. In its biggest deal of tion, mobilization and participate in the process of However, there are efficient Pernambuco gas pipeline (November 2003) intervention, so that the local ensuring the safety of these contingency schemes in place this kind, involving the invest- Mundaú Estuary/ Alagoas/ Manaus/AM Storage of oily substances in population is able to perceive, areas. to deal with such situations. ment of R$ 192 million, the Lagoon Complex Pernambuco gas pipeline violation of the legal visualize and absorb the inter- The work methodology In order to minimize the company completed, at the requirements (Jun. 25, 2003) relationship between the strips adopted recommends using risks involved in road trans- Fazenda União Cabiúnas/ beginning of 2004, the terms of land occupied by the techniques of direct relation- portation and augment the Biological Reserve Duque de Caxias oil pipeline of its compliance with the Petrobras Distribuidora 66 proceedings for determining pipelines and the communities ship with the community efficiency of the measures Mangaratiba Environmental Angra dos Reis/ Term of Commitment for responsibility that border them. It is neces- through small groups and aimed at minimizing their pos- Conservation Area Campos Elíseos oil pipeline Environmental Adjustment Transpetro Various proceedings in Rio de sary to build a relationship of interpersonal dialogue. Talks, sible impact, the company is (TCAA), the goal of which Janeiro, São Paulo, Paranaguá and trust with these communities, debates, group dynamics, per- revising its whole system for was to make improvements at elsewhere keeping channels of communi- sonal experience, focus groups, hiring freight transporters, as Reduc and at the Ilha d’Água Argentina – Genelba Fine imposed by the national cation permanently open, pro- dramatization, competitions, well as the process for hand- Terminal, in Rio de Janeiro. electricity regulatory body, for the viding information, in a and informal conversations are ling the existing contracts, Over three years, more than 40 projects were implemented presentation of an environmental transparent fashion, on the work methods utilized with a with the aim of strengthening Incidents and Fines document that had expired company’s activities and about community to promote reflec- the commitment of transport at the two units, notably the the impact of its operations on tion and changes of attitude companies to Petrobras’ SMS isolation of 70% of the cool- Argentina – EG3 Asfaltos S.A. Fine imposed by the Environmental the environment, training local and practices. policies and guidelines. ing system at Reduc, which Policy Department of the Province agents to conduct dialogues After assessing the possibil- The accompanying chart still relied on water taken of Buenos Aires, for the violation of with the various community ities, in technical and safety shows the main conservation from Guanabara Bay. a norm governing the storage of groups and, above all, educat- terms, the company can imple- areas where Petrobras installa- The accompanying table special waste (Law no 11,720) tions are located. presents information relating to fines arising from environ- mental problems handled by No new Terms of Change of Environmental Management),

Environmental Liabilities, Environmental the SMS area and the com- Conduct were signed in 2003, the legal instrument by means pany’s legal advisors. but five terms agreed in pre- of which the oil companies Petrobras does not acknowl- vious years are still in force. should adapt to the country’s The environmental precautions taken in enter the sea. With the coming of autumn, old, which was handed over to Ecuador’s edge responsibility in these In Argentina, there are new environmental legislation, Brazil also apply to the other countries in the birds then migrate to the south of National Cultural Heritage Institute. cases and is appealing the eight Terms of Change of has been completed. The which Petrobras operates. Programs are Brazil. This penguin colony is made up of Approximately 70% of Block 31, explored decision in all of them, with Conduct in force, while in process of adaptation was developed for the protection of ecosystems around 85 thousand mating couples, by Petrobras, lies within the Yasuní the exception of EG3 Asfaltos Peru, implementation of Pama approved by Osinerg (Energy and endangered species and measures are spread over an area of 47 hectares. National Park, which was declared a (Argentina), which has (Program of Adaptation and Investment Supervisory Body). adopted in order to minimize the environ- During the period 2000-2001, the World Biosphere Reserve by Unesco. already been legally ratified. mental impact of the company’s activities. company played an active role in the dis- In Venezuela, the company’s operations In Argentina, since 1992 operations cussions for the preparation of the Plan for are conducted in two important ecosys- have been conducted in the Faro Virgenes the Management of the Cabo Virgenes tems: those of the Morichales and Bosques area, in which there are nowadays a num- Provincial Reserve, alongside other inter- de Galeria, with a combined area of about ber of production wells and a gas treat- ested parties. During this process, a num- 23 thousand hectares. The Morichales are ment plant. The area is situated within the ber of other species in need of protection an ecosystem that is protected under Cabo Virgenes Reserve, in the extreme and study were identified. Decree no 846/90 of the Venezuelan south of the Santa Cruz province and The company’s operations in Peru are Ministry of the Environment. These are bounded by the Atlantic Ocean and the located in a desert area, with a low level of areas where the Moriche palm (Mauritia Strait of Magellan. The reserve was creat- biological diversity and species density, flexuosa) is to be found, as well as pro- ed with the prime intention of protecting but in Ecuador, in addition to the precau- viding a refuge for the region’s fauna. The the Magellan penguin, one of the 16 tions regarding the local fauna and flora, Bosques de Galeria are not covered by any species of penguin, which uses the region it is also necessary to give special attention special protection mechanism, but the nat- for breeding. Being migratory birds, they to activities involving earth moving, which ural abundance of the forest, beside the arrive in the region between the end of must be supervised by archaeological spe- rivers that cross this region where the spring and the beginning of summer. After cialists. During the construction of the company’s activities are carried out, places

Environmental a 40-day incubation period, the chicks are Nenke platform, a vessel was discovered a special burden of constant care and born and 50 days later they are ready to that is estimated to be 3 thousand years attention. Precautions Precautions at the International Units 60 THE ENVIRONMENT Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 THE ENVIRONMENT 61

Petrobras’ entire workforce is Every year, at all its units, In partnership with Semadur – instructed in the environmen- Petrobras holds a National Municipal Department of the Environment tally appropriate manner for Environment Week (Senama), and Urban Development of the city of Rio disposing of all the different to celebrate World de Janeiro, Petrobras developed the proj- kinds of waste. Recyclable Environment Day, on June 5. ect to establish a Future of Ecology Station materials are separated by The Senama is always devel- at the Praia de Ramos Environmental selective waste collection and oped around the environmen- Park. Completed in July 2003, with the passed on to NGOs, which use tal theme proposed by the UN investment of around R$ 300 thousand by the resources obtained in this for that year. The company’s Petrobras that year, the project aims to way to promote activities of an units hold exhibitions, lec- provide vocational training for young peo- environmental and social tures, concerts and other ple from the surrounding communities, nature involving local commu- events aimed at mobilizing and using an internet digital information net- nities. raising the awareness of the In-house training work, in order to awaken a sense of citi- Leisure, health and envi- workforce in relation to envi- zenship in dealing with the region’s serious ronmental education activities ronmental topics. Petrobras has been investing employee participation in environmental questions.

Education are regularly promoted in con- Daily SMS dialogues are heavily in the training of its training and skills development Petrobras has also introduced an servation areas and in-house also held at the Petrobras employees in subjects related programs. Of the total number Environmental Education Program and set campaigns inform, build units, aimed at systematically to safety, health and the envi- of training programs provided up a Center for Environmental Education

awareness and motivate encouraging the workforce to ronment. In 2003, these train- by the Petrobras Corporate Participates at Vila União, in Campinas/SP, in a formal employees in relation to the adopt safe, healthy and envi- ing programs attained first University, 18% were related agreement with the local city hall. This SGI – System of Integrated ronmentally sound practices in place, in terms of the number to SMS and involved more program aims to develop awareness Management, based on the ISO their activities. of company participants, re- than 4,400 participants. Petrobras undertakes many activities that safety, health and the environment that among the local inhabitants with regard to directly involve the communities near its can improve people’s quality of life and conservation and improving the environ-

Environmental 14001 norm. presenting 28% of total units and supports numerous projects promote environmental conservation. The mental and social conditions of their developed by NGOs and schools that are program aims to awaken an interest in neighborhoods, as well as teaching them

The The Community focused on environmental education. SMS, on the part of the communities the proper use of the sports and leisure Simulated emergency exercises are car- neighboring the company’s units, and facilities installed at the location. ried out regularly, involving the participa- draw these communities and the company Transpetro also provides environmen- tion of the local community. There are closer together. The participants learn tal education programs for the communi- programs of visits to the company’s units, about the workings and activities of ties neighboring its installations, including Special care is taken regarding environ- impacts, sustainable development, the con- aimed especially at students and the neigh- Petrobras, and this encourages their fishing communities, which involve the mental issues when it comes to construc- trol of effluent and emissions, among boring communities, and on these occa- involvement in, for example, communicat- distribution of booklets, leaflets and jour- tion work carried out within the physical other topics, which are distributed to the sions, the visitors receive a wide range of ing to the company any abnormalities nals. During the work to construct area of the company. The contractual SMS various works undertaken by the area, information on environmental issues. detected in the pipelines or installations. onshore pipelines, the company develops guidelines applied by Petrobras’ with a view to raising awareness among The Corporate SMS area has, since In addition to dealing with issues such as programs of communication with the Engineering area require that suppliers the workforce. There is also an Office 1999, been running the SMS Communities water and soil pollution and their effects, affected communities, which also look at conduct instructional campaigns and give Safety Manual, which, among other project, in partnership with Abes – this program, which involves 157 commu- factors relating to the environment. on-site talks to the workers, dealing with things, deals with the environmental Brazilian Sanitary Engineering nities in 17 municipalities, also touches on topics such as the protection of fauna and factors related to office work. Posters, Association. The focus of the program is themes such as hygiene and health, conta- flora, recycling, waste separation and stickers, banners and free gifts, all relating the dissemination of information about gious diseases and safety, in the home and dealing with environmental emergencies. to care over safety, health and the in the workplace. The Engineering area prepares instruc- environment, are also prepared and tion booklets on waste management, sys- distributed and various planned activities tems of environmental management, a are regularly developed to raise the survey of environmental factors and awareness of the workforce in this area. Certification

Petrobras is one of the world’s first oil companies, and the only one in Brazil, to have all its domestic Business Units, and some of those abroad, certified according to the ISO 14001 (environment) and BS 8800 or OHSAS 18001 (health and safety) norms and, in the case of ships and self-propelled platforms, also in accordance with the ISM Code, which deals specifically with safety management on board vessels.

There are 57 certifications in accordance with the ISO 14001 and OHSAS 18001 norms.

The full list of certifications, their scope, the certification date and the certifying body can all be found on the company’s web site, at http://www2.petrobras.com.br/portal/meio_ambiente.htm. Works carried out Works within the company’s the physical area company’s 62 TRANSPARENCY Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 TRANSPARENCY 63

The Global Compact’s Tenth Principle 62 Transparency, Ethics and Codes of Conduct 62 Transparency Relations with Competitors 63

Corruption is always a sensitive subject PRINCIPLE 10: BUSINESSES SHOULD WORK Code of Conduct of the Federal Senior that is complicated to deal with, particular- AGAINST ALL FORMS OF CORRUPTION. Petrobras Argentina ly on an international level. Governments With the adoption of this principle, the Administration prefer not to talk about it, while companies companies participating in the Global portray themselves more as victims than co- Compact have made a commitment not As a company controlled by the federal All employees and subsidiaries are sub- protagonists in the illegal transactions that only to avoid bribery and corruption, but government, Petrobras is subject to the ject to the company’s Policy for GUIDELINE FOR MINIMIZING IRREGULARITIES AND CONFLICTS OF guarantee them advantages and create an to work to prevent these practices occur- Code of Conduct of the Federal Senior Combating Corruption and Bribery. INTEREST AT PETROBRAS ENERGÍA unlevel playing field for competition ring. Administration, addressing corruption, As a government controlled enterprise, between organizations. Corruption is an impediment to the bribes and the receiving of gifts, among the company must obey all the laws of the Since 1996, when the president of the development of countries throughout the other issues. federal public administration. Under these The Guideline for Minimizing Irregularities and Conflicts of Interest at Petrobras World Bank, James Wolfensohn, declared world. Moreover, it is often linked to Petrobras does not make political contri- rules, the company is regularly audited by Energía aims to create a climate of transparency in the company’s relationships that war against the “cancer of corrup- unlawful activities like money laundering, butions of any kind. It sponsors social, envi- the TCU (Federal Audit Court), which and enable its various businesses to be run in a highly ethical manner, observing tion” had become a priority for the bank, drug trafficking and organized crime. The ronmental and cultural projects. The publicly declares any violations and the all the applicable laws and regulations. this situation has begun to change. worst part is that it harms small business- projects undergo a process of public selec- appropriate sanctions. Services and supply This guideline allows any employee, or any member of the outside community or Initiatives have been proffered by a whole es and developing countries much more tion and are chosen in accordance with the contracts are also submitted to inspection general public, to freely relate any failure to comply with the Petrobras norms variety of institutions, to debate the sub- than it does the big corporations and the company’s activities and the needs of society. by the TCU. regarding values and ethical principles, international policies or laws, or situa- ject and define steps to combat bribery more developed countries. tions where there has been some kind of retaliation against people, or account- and corruption. This has culminated in the ing irregularities. This process is conducted through special communication United Nations Convention Against channels that protect the individual’s anonymity, should they so desire. Corruption, which inspired the creation of the tenth principle of the Global Compact. Tenth Principle Tenth

Petrobras’ codes of conduct address sev- Code of Ethics eral different areas, such as corruption and bribes; discrimination; confidentiali- ty; denunciation; money laundering; the The company’s Code of Ethics (available Petrobras Competitive Code of Conduct Relations with security of the workers, business partners on the internet at http://www2.petrobras. Society and customers; safety, health and the com.br# Code of Ethics and Code of Petrobras is convinced that a general understanding of the themselves well informed as to environment. Conduct) is revised regularly. When respect for the antitrust legisla- legislation, to avoid delays in the company’s competitive Petrobras participates actively, The federal government has its own breaches of the principles and behavior set tion protecting fair competi- situations requiring preventive strategies and their implemen- through associations and busi- code of conduct that also applies to down in the Code of Ethics are discovered, tion is fundamental to the action being drawn to the tation, particularly in those ness forums, contributing The The Global Compact’s Petrobras, as it is the company’s majority a special commission is established to ana- preservation and broadening attention of the legal area. markets where the company human and/or financial shareholder. Moreover, Petrobras is also lyze the case and recommend sanctions, as of the principles and socioeco- Taking preventive measures has a position of dominance. resources, in the development subject to the regulations laid down by ordained in the company’s disciplinary nomic goals of the National minimizes the risk of civil, Petrobras considers it of proposals that are of public the CVM (Brazilian Securities & code. Petrobras promotes a variety of pro- Energy Policy, as stated in Law administrative or penal respon- important to manifest to the interest and of a social nature. Exchange Commission) regarding the dis- grams (courses, forums and seminars) to nº 9,478, of August 6, 1997. sibility proceedings that can government, its competitors, The company also sponsors closure of information and the trading of disseminate the values of the Code of In order to take preventive harm the company’s image. its customers and antitrust and carries out media cam- shares and securities. The company and Ethics. During their training, new employ- measures, Petrobras intro- The code particularly seeks to bodies – the Justice Ministry’s paigns relating to issues of its subsidiaries keep internet channels ees get special attention with respect to duced a program for conform- avoid questionable situations Department of Economic Law public interest, as well as sup- open for any interested party who wishes values, ethics and culture. Ethical behavior ing to the antitrust legislation, arising in markets where the (SDE) and Administrative porting the preparation, refine- to make suggestions or complaints or to also plays an important role during man- the Petrobras Competitive company enjoys a dominant Council of Economic Defense ment and execution of ask questions. agement development programs. There are Code of Conduct. position. In Brazil, this is con- (Cade) and the Treasury comprehensive public policies, three different communication channels Under this code, the legali- sidered to be the case when a Department’s Office for such as combating child prosti- for employees to express their concerns ty of the commercial practices company has a 20% or greater Economic Surveillance (Seae) – tution through the “Siga Bem regarding the question of ethics, namely: Competitors and policies adopted or intend- share of the market. its commitment towards con- Criança” Program. the direct line of communication, the ed is analyzed, with appropri- The Competitive Code of ducting its commercial prac- Corporate Ombudsperson and “Fale ate preventive or corrective Conduct recommends that the tices in strict accordance with Conosco RH (Contact Us at Human with Relations steps taken. The purpose of the Executive Board and managers Brazilian antitrust legislation Resources)”. code is to provide the execu- with responsibility in this area and that of the foreign jurisdic-

Codes of Codes Conduct tives, managers and staff with should monitor and keep tions in which it does business. Transparency, Ethics and 64 TRANSPARENCY Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 INDICATORS 65

AWARDS RECEIVED IN 2003 International Refiner of the Year During the 22nd World Fuels Conference, in San Antonio, Texas, in March 2004, Petrobras was presen ted with the title “International Refiner of the Year”, awarded annually to the year’s most outstanding refining company, according to criteria such as the preservation of the environment through cleaner fuels. Clean Air Celebration On September 27, 2003, Petrobras was presented, in Washington, USA, with the Clean Air Celebration award, bestowed by Hart Downstream, for its endeavors in improving the quality of its fuels and, consequently, of the air we breathe. World Refining Magazine’s Refining An award bestowed annually to the year’s outstanding refiner in three categories: Environment; Profitability and Growth; and Vision. Company of the Year 2003 Indicators IR Web Report Global Ranking The company’s Investor Relations website was elected the best among the top energy companies and was ranked fourth among the companies listed in the S&P Global 1200 Index (Top Ten in the World), by IR Web Report Global Ranking. MZ Consult Award 2003 The company’s Investor Relations website received the following awards: Best POP+, for the third year runnin g; Best TOP 5 – Latin America; Best TOP Consolidation of Social Responsibility and Sustainability reporting models 5 – Oil, Gas and Petrochemicals; Third place among the world’s top 256 companies. Recommended Indicators Program for Quality in Public The Instrument for the Evaluation of Public Administration is a set of guidelines and parameters for assessment based on the Model of Excellence in 1 – VISION AND STRATEGY Services Award 2003 (UN BSOL) Public Administration and the concepts and fundamentals approved by the Program for Quality in Public Services. Report Profile PAGE REFERENCE REVISED SUBJECT PAGE REFERENCE REVISED SUBJECT Outstanding National Social The award is bestowed by the five most important entities in the area of social responsibility in Brazil: the Brazilian Association for Business 8,16 GRI-1.1 √ (*1) Presentation of the 7 GRI-2.17 (N/R) Decisions regarding the application Responsibility Report 2003 Communication (Aberje), the Association of Capital Market Analysts and Investment Professionals (Apime c), the Foundation of the Business and Social ETHOS- 08 organization’s Vision and of the GRI Development Institute (Fides), the Brazilian Institute for Social and Economic Analysis (Ibase) and the Ethos Institute for Comp anies and Social CEBDS Strategy in terms of its contribution Responsibility. Petrobras won the award for its Social Responsibility Report. n.a. GRI-2.18 (N/R) Criteria and/or definitions used in DOW JONES to sustainable development ETHOS cost accounting, benefits etc. Top Social The Brazilian Association of Sales & Marketing Directors (ADVMB) set up the ADVMB Institute for Social Responsibility (Ires) and, in 1999, created the 4 GRI- 1.2 (N/R) Statement by the president n.a. GRI-2.19 (N/R) Significant changes in calculation “Top Social”, an award aimed at giving recognition to organizations that have demonstrated vision regarding the importance of social development as ETHOS-01 ETHOS-02 methods in relation to previous years a vital element of growth, and that do not merely chase after profits, but also perform the role of social agent. Petrobras won the award with four projects: – Petrobras Social Program – Generating Peace; the Program of Social Investment using Tax Incentives; the Communication Plan for Harmony CEBDS n.a. GRI-2.20 (N/R) Guarantee policies and measures and Co-Responsibility with the Communities Bordering the Pipeline Domain; and “Lajedo de Soledade”, for archaeological preservati on. 2 – PROFILE n.a. GRI-2.21 (N/R) Policies and measures to enable Organization profile the use of independent Aberje Award The Aberje Award, presented by the Brazilian Association for Business Communication, is aimed at giving recognition t o quality in organizational PAGE REFERENCE REVISED SUBJECT verification mechanisms communication and public relations in Brazil, by encouraging and disclosing the best practices in the sector. It highlights the importance of √ √ communication as a key element for organizations, in that it boosts the institutional image as well as the specific undertaking. Petrobras/Transpetro 9 GRI- 2.1 Name of company or group 71 GRI-2.22 Methods available to readers won the award in the category Corporate Citizenship, with the project “Communication Plan for Harmony and Co-Responsibility with the ETHOS-02 ETHOS to obtain further information Communities Bordering the Pipeline Domain”. The company also received the title of “Company of the Year in Business Communicatio n”. CEBDS 3 – GOVERNANCE AND MANAGEMENT SYSTEMS STRUCTURE The executive manager for Institutional Communication, Wilson Santarosa, received the title of “Personality of the Year in Busine ss Communication”. 12, 17 GRI- 2.2 (N/R) Main products and services Structure and Governance Marketing Best for The Marketing Best for Social Responsibility, of which this is the third edition, was created in order to highlight organizations that are helping to solve ETHOS-02 PAGE REFERENCE REVISED SUBJECT Social Responsibility the country’s problems and privation by developing social efforts. Petrobras received an award for the Petrobras Social Program. CEBDS 14 GRI-3.1 √ Structure of governance, councils, 9 GRI- 2.3 √ Organization’s operational structure ETHOS-07 committees and other bodies Super Ecology Award 2003 Category: Communities – Company Project: “Lajedo de Soledade” ETHOS-06 ANP-3.1 responsible for defining √ Promoter: Editora Abril (publisher) – “Super Interessante” magazine 9 GRI- 2.4 Departments, subsidiaries, DOW JONES strategies and supervising the affiliates, shareholdings organization Oswaldo Chechia “Ser Humano” A Brazilian award presented in two categories: Personnel Management (business category) and Corporate Social Responsibility. 10 GRI- 2.5 √ Countries in which it does business 14 GRI-3.2 √ Percentage of the Board of Award 2002 The UN-ES was the winner in the Personnel Management (business category), with its “Take a Chance Project: the success of the creative process as a tool for personal and organizational transformation”. The UN-ES also won in the Social Responsibility category, with the project “De ação em ação CEBDS DOW JONES Directors made up of independent √ acontece a transformação (a Brazilian saying meaning that big changes are brought about in small steps)”. The Oswaldo Chechia “Ser Humano (Be 9 GRI- 2.6 Corporate and legal status members, without executive Human)” Award is the national equivalent of the João Pereira dos Santos Human Resources Talent Award (see below). ETHOS-02 positions within the organization CEBDS Top Ecology Award 2003 Presented by the Brazilian Association of Sales & Marketing Directors. The award-winning projects were: Aracaju Oceanarium – live transmission from n.a. GRI-3.3 (N/R) Determinations regarding the the ocean depths (Platform PCM-9) to the Oceanarium in Aracaju, SE, where courses in environmental education are held for local students; the 10, 11, 12 GRI- 2.7 (N/R) Nature of the markets in/for which specialization required of its “Verão Legal no Mar (Great Summer by the Sea)” Project, at the Pajuçara beach, in Alagoas; and the Manatee Project. ETHOS-02 it operates members in order to be allowed to CEBDS guide the strategic management of Top Social Northeast Award 2003 Awarded by the Brazilian Association of Sales & Marketing Directors to the Petrobras units located in the northeast of Brazil that implemented the √ following programs and social projects: the Child Program; the Seamstresses of Caípe; the “Menino (Boy) Jesus” Institute and Daycare Center; and the 14, 13 GRI- 2.8 Size of the company the organization, including issues “Lajedo de Soledade” Project. ETHOS-02 relating to environmental and CEBDS social opportunities and risks Honorable Mention from the Rio A certificate issued in recognition of the company’s contribution to the voluntary donation of blood. 18, 21 GRI- 2.9 √ List of stakeholders, main 16 GRI-3.4 (N/R) Capacity of the Board to supervise de Janeiro City Council characteristics ANP-3.1 the management of environmental Environmental Partner – 2003 The Canoas UTE received the Honorary Distinction of Environmental Partner – 2003 – presented by the Canoas Municipal Department for 9 ETHOS-03 √ Sector of the economy and social opportunities and risks Environmental Preservation, during the Environment Week, 2003. 72 ETHOS-04 √ Background n.a. GRI-3.5 √ Relationship between the Action in Favor of Water Awards presented by the Intermunicipal Consortium for the basins of the rivers Piracicaba, Capivari an d Jundiaí to Petrobras/Replan in recognition of 2, 13 CEBDS (N/R) Economic data remuneration of the Management Award (2000, 2002, 2003) the refinery’s efforts in the use, reuse, treatment and disposal of water. Scope of the Report and the achievement of financial Friend of Avap Award 2003 An award presented to Petrobras/RPBC, for “believing in the ideal of social inclusion and investing sothat a dream can continue to come true”. PAGE REFERENCE REVISED SUBJECT and non-financial targets João Pereira dos Santos Human Promoted by the Brazilian Human Resources Association for the state of Espírito Santo (ABRH-ES), the award is presented in two categories: Personnel 7 GRI-2.10 (N/R) Contact names, by topic 15 GRI-3.6 √ Structure of the organization Resources Talent Award Management (business category) and Corporate Social Responsibility. The UN-ES was the winner in the Person nel Management (business category), GRI-2.11 √ Period covered by the report ETHOS-06 responsible for supervision, with its “Take a Chance Project: the success of the creative process as a tool for personal and organizational transformation”. The UN-ES also won in GRI-2.12 √ Data from previous report execution, monitoring and auditing the Social Responsibility category, with the project “De ação em ação acontece a transformação (a Brazilian saying meaning that big changes are ETHOS-02 of economic, social and brought about in small steps)”. 7 GRI-2.13 √ Range environmental policies and practices Ecology Award, sponsored by Iema/ The UN-ES won this award for its work in monitoring water resources. 7 GRI- 2.14 √ Significant changes that have 8 GRI-3.7 √ Statements of mission, values, State Dep’t of the Environment, ES ETHOS-02 occurred in the company between the ETHOS-05 principles and codes of conduct Alagoas Green Award 2003 Presented by the Alagoas Environmental Institute to the companies that have contributed the most towards improving the quality of life in the state. CEBDS previous report and the present one DOW JONES 7 GRI-2.15 (N/R) Situations that might affect n.a. GRI-3.8 (N/R) Mechanisms that allow comparison with previous years or shareholders to make their views other companies known to Management 7 GRI-2.16 (N/R) Information regarding any change whatsoever to information previously disclosed 66 INDICATORS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 INDICATORS 67

Commitment to Stakeholders Capital providers Energy Additional Indicators PAGE REFERENCE REVISED SUBJECT 14 GRI-EC6 √ Distribution to investors 49 GRI-EN3 √ Energy consumption, by type of PAGE REFERENCE REVISED SUBJECT 18 GRI-3.9 (N/R) Bases used for identifying CEBDS-1.8 CEBDS-2.2.1 source Raw materials ETHOS-9 stakeholders 13 GRI-EC7 √ Increase/decrease in profits at the ETHOS 51 ETHOS √ Initiatives to reduce consumption CEBDS CEBDS-1.9 end of theperiod. Include ROACE. DOW JONES Energy 19, 20, 35 GRI-3.10 √ (*2) Methods for consulting with ETHOS-II 49 GRI-EN4 √ Indirect consumption of energy 49 GRI-EN17 √ Initiatives to use renewable energy ETHOS-9 stakeholders 21 DOW JONES √ Integration of the concepts of CEBDS-2.2.2 CEBDS-2.2.3 sources and to increase the CEBDS Corporate Social Responsibility DOW JONES ETHOS efficiency of energy use 19 GRI-3.11 (N/R) Type of information generated by and Sustainability in relations with Water n.a. GRI-EN18 (N/R) Consumption of energy within the ETHOS-9 such consultations investors 48 GRI-EN5 √ Total consumption of water CEBDS-2.2.4 life cycle of the company’s main 19 GRI-3.12 (N/R) Use of the information obtained Public Sector CEBDS-2.3.1 DOW JONES products ETHOS-9 14 GRI-EC8 √ Total sum of taxes paid, by country ETHOS n.a. GRI-EN19 (N/R) Other indirect uses of energy Management Policies and Systems CEBDS-1.10 in which paid DOW JONES Water PAGE REFERENCE REVISED SUBJECT 14 GRI-EC9 √ Subsidies received, by country Biological Diversity 48 GRI-EN20 √ Sources of water and 57 GRI-3.13 √ Adoption of the Precautionary 29 GRI-EC10 √ Donations made to the community, 55 GRI-EN6 √ Location and area of land owned, CEBDS-2.3.3 ecosystems/habitats Approach CEBDS-1.11 civil society and other groups, CEBDS-2.4.2 leased or administered by the DOW JONES significantly affected 7 GRI-3.14 (N/R) Commitments, principles or other DOW JONES separated by type, in cash or goods company in habitats rich in n.a. GRI-EN21 (N/R) Annual extraction of underground outside voluntary initiatives of Others biological diversity CEBDS-2.3.4 and surface water, showing % of an economic, social and 13 ETHOS-I √ Generation and distribution of 56 GRI-EN7 √ Analysis of the principal effects on DOW JONES annual renewable quantity, by environmental nature which wealth (DVA) CEBDS-2.4.3 the surrounding biological diversity region Petrobras subscribes to or supports 13 ETHOS-II √ Gross margin of the company’s activities or 48 GRI-EN22 √ Total estimate of water recycled 7 GRI-3.15 (N/R) Participation in business and other Net margin products and services CEBDS-2.3.2 and reutilized (minimum count) ETHOS associations Level of indebtedness Emissions, Effluent and Waste Biological Diversity 16 GRI-3.16 (N/R) Policies for managing impacts prior Level of liquidity 52 GRI-EN8 √ Gas emissions (greenhouse effect): n.a. GRI-EN23 (N/R) Water sources and ecosystems √ ANP-02 and posterior to action taken by 49 ETHOS-III Research and Development CEBDS-2.5.1 CO2,CH4,N2O, HFC, PFC, SF 6 CEBDS-2.4.1 affected (minimum count) ANP-07 the company Improvement in productivity DOW JONES n.a. GRI- EN24 (N/R) % of impermeable surface CEBDS Increase in production capacity 52 GRI-EN9 (N/R) Use and emission of substances CEBDS-2.4.4 16 GRI-3.17 (N/R) Focus of the organization on the Additional Indicators CEBDS-2.5.2 that degrade the ozone layer 55 GRI-EN25 (N/R) Impacts caused in conservation areas CEBDS management of indirect economic, PAGE REFERENCE REVISED SUBJECT DOW JONES CEBDS-2.4.5 social and environmental impacts Customers 52 GRI-EN10 √ NOx, SOx and other important 55 GRI-EN26 (N/R) Changes effected in natural habitats 16 GRI-3.18 (N/R) Main decisions regarding location, 20 CEBDS-1.13 (N/R) Customer/consumer perception of CEBDS-2.5.3 emissions, by type CEBDS-2.4.6 as a consequence of the company’s expansion etc. during the period the benefit of the relationship with DOW JONES activities and the % of habitat covered by the report the company 53 GRI-EN11 √ Total quantity of waste, by type protected or restored 17 GRI-3.19 √ Programs and procedures relating Suppliers CEBDS-2.5.4 and what happens to it 55 GRI-EN27 √ Programs aimed at protecting CEBDS to economic, social and n.a. GRI-EC11 (N/R) Geographical distribution of suppliers 55 GRI-EN12 √ Significant discharges into water CEBDS-2.4.7 ecosystems and species in environmental performance CEBDS-1.5 (CEBDS considers this information CEBDS-2.5.6 degraded areas 61 GRI-3.20 √ Status of certification of economic, ETHOS essential) 45 GRI-EN13 √ Significant discharges of chemical 55 GRI-EN28 (N/R) Number of species included in the CEBDS social and environmental 42 CEBDS-1.13 (N/R) Supplier perception of the benefit CEBDS-2.5.5 substances, oil and/or fuels CEBDS-2.4.8 UICN (International Union for management systems of the relationship with the company (volume and impact) Conservation of Nature and PERFORMANCE INDICATORS Employees Products and Services Natural Resources) Red List of Economic Indicators 35 CEBDS-1.13 √ Employee perception of the benefit 55 GRI-EN14 √ Significant environmental impact Threatened Species whose habitats Key Indicators ETHOS of the relationship with the company CEBDS-2.7.1 of the company’s main products are located in areas affected by the PAGE REFERENCE REVISED SUBJECT Public Sector ETHOS and services company’s operations Customers n.a. GRI-EC12 (N/R) Total spending on the implementation 54 GRI-EN15 (N/R) % of the weight of products sold 55 GRI-EN29 (N/R) Units in operation or expected to 13 GRI-EC1 √ Net sales (2.8) CEBDS-1.15 of external business infrastructure CEBDS-2.7.2 that can be recovered (recycled or CEBDS-2.4.9 begin operating within or around CEBDS-1.1 Indirect economic impact reutilized) at the end of their conservation areas ETHOS-II 14 GRI- EC13 (N/R) State the main externalities useful lifespan and % actually Emissions, Effluent and Waste DOW JONES CEBDS-1.16 associated with the organization’s recovered n.a. GRI-EN30 (N/R) Significant indirect emissions of 47 GRI-EC2 √ Market geographical distribution products and services Compliance CEBDS-2.5.7 gases (greenhouse effect) CEBDS-1.2 Environmental Indicators 59 GRI-EN16 √ (*4) Incidents and fines relating to DOW JONES CEBDS-1.3 Key indicators CEBDS-2.8.1 non-compliance with agreements/ 54 GRI-EN31 √ Production, transport, importing or Suppliers PAGE REFERENCE REVISED SUBJECT CEBDS-2.8.2 treaties/ international CEBDS-2.5.8 exporting of waste 13 GRI-EC3 √ Cost of all raw materials, material Raw materials declarations and environmental DOW JONES CEBDS-1.4 acquired and services engaged 47 GRI-EN1 √ (*3) Total consumption of raw materials legislation, by country 55 GRI-EN32 √ Water sources and ecosystems 14 GRI-EC4 √ % of contracts settled within the CEBDS-2.1.1 (except water). Facilitate the General CEBDS-2.5.9 significantly affected by the CEBDS-1.6 agreed terms ETHOS understanding of terms and 45 ETHOS √ Policies, infrastructure and processes discharge of water and liquid 41 ETHOS √ Supplier selection criteria definitions of types of raw DOW JONES related to environmental waste IBASE materials used management Suppliers DOW JONES 47 GRI-EN2 √ % of raw materials used that are 60 ETHOS √ Environmental Education activities 41, 45 GRI-EN33 √ Supplier performance in relation to Employees CEBDS-2.1.2 residues coming from external developed in-house and externally CEBDS-2.6.1 environmental factors 34 GRI-EC5 √ Total payroll expenditure, by ETHOS sources. These should be expressed 61 ETHOS √ Environmental certifications and DOW JONES CEBDS-1.7 country or region in volume or weight DOW JONES their scope DOW JONES 68 INDICATORS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 INDICATORS 69

Products and Services Diversity and Opportunity 24,40 GRI-HR3 √ Policies and procedures aimed at 25 IBASE √ Voluntary work: services to support 55 ETHOS √ Care taken over the continual 26 GRI-LA10 √ Description of policies and programs protecting human rights, related to ETHOS volunteers or structured voluntary improvement of products and CEBDS-3.1.9 to provide equal opportunities the production chain and programs services CEBDS-3.1.17 (including workplace accessibility, outsourced personnel 2 ETHOS √ % of gross revenue set aside for Compliance ETHOS affirmative action, etc.) Non- Discrimination IBASE all the organization’s social efforts. 59 ETHOS √ Conduct Adjustment proceedings DOW JONES 26 GRI-HR4 √ Policies and procedures for DOW JONES The % donated in cash should be and compensatory lawsuits in general 14 GRI-LA11 √ Composition of senior levels and CEBDS-3.2.3 avoiding any kind of discrimination specified 57 GRI-EN34 (N/R) Significant environmental impacts CEBDS-3.1.18 corporate administration, informing ETHOS in operations, monitoring systems Corruption related to transport ETHOS the proportions between genders DOW JONES and results 62 GRI-SO2 √ Description of policies, 2 GRI-EN35 √ Total environmental spending. DOW JONES and other indicators of diversity Freedom of Association and Collective Bargaining ETHOS management/procedural systems CEBDS-2.9.1 Identify expenditure related to the n.a. ETHOS (N/R) Processes for sharing in the profit 34 GRI-HR5 √ Analysis of the policy towards DOW JONES and mechanisms for compliance in ETHOS company’s production/operations IBASE and other results and amounts CEBDS-3.2.4 freedom of association and the relation to the issue of bribery and IBASE and other spending DOW JONES distributed ETHOS degree to which it is applied, corruption SOCIAL INDICATORS n.a. ETHOS (N/R) Measures adopted to meet the IBASE procedures and programs Political Contributions Labor Practices and Decent Employment need to reduce labor costs DOW JONES 62 GRI-SO3 √ Description of policies and Key Indicators 38/39 ETHOS √ Programs directed at integration, Child Labor ETHOS management/procedural systems PAGE REFERENCE REVISED SUBJECT benefits, training and % of total 40 GRI-HR6 √ Policy to combat child labor (additional) relating to the issue of political Employment Additional Indicators CEBDS-3.2.5 contributions and political 33 GRI-LA1 √ Total workforce, by region, work PAGE REFERENCE REVISED SUBJECT DOW JONES pressure CEBDS-3.1.1 status, type of contract and length Employment 40 ETHOS √ Training programs for 14 to 16 Additional Indicators ETHOS of working day. List employees 34 GRI-LA12 √ Benefits provided to employees, in year-olds, on the basis of PAGE REFERENCE REVISED SUBJECT IBASE outsourced by the company on a CEBDS-3.1.10 addition to those required by law apprenticeship Community DOW JONES temporary basis ETHOS 40 ETHOS √ Participation in external and 65 GRI-SO4 (N/R) Awards, certifications and recognition 27 GRI-LA2 √ Net rate of employment. Job DOW JONES in-house campaigns to combat CEBDS-3.3.16 received for social, environmental CEBDS-3.1.2 creation, dismissals, hiring, and 2 ETHOS √ In-house social expenditure, set child labor ETHOS and ethical efforts ETHOS average turnover, by region IBASE down in law or agreements, such Forced and Compulsory Labor n.a. ETHOS (N/R) Use of tax incentives for activities IBASE DOW JONES as: food, transport, private pension 40 GRI-HR7 √ Policy to combat forced and linked to culture and the social area DOW JONES scheme, healthcare, daycare or CEBDS-3.2.6 compulsory labor 16 ETHOS (N/R) Participation, together with other 2 ETHOS √ Wage profile (highest remuneration/ daycare allowance, etc. DOW JONES companies, in the discussion of IBASE lowest remuneration, lowest Company/Worker relations Additional Indicators community problems and the DOW JONES remuneration/minimum wage) 34 GRI-LA13 √ Formal representation and PAGE REFERENCE REVISED SUBJECT proffering of solutions Company/Worker relations CEBDS-3.1.11 participation by workers in decision Strategy and Management 28 ETHOS (N/R) Mechanisms for evaluating the 34 GRI-LA3 √ % of employees represented by ETHOS making and management, including 26 GRI-HR8 √ Training employees in the practice social impact of the organization’s CEBDS-3.1.3 independent labor organizations/ corporate administration CEBDS-3.2.7 and respecting of human rights investments and social projects, ETHOS trade unions Health and Safety Disciplinary Measures with feedback from, or DOW JONES 32 GRI-LA14 √ Evidence of compliance with ILO 25 GRI-HR9 (N/R) Description of means for appeal participation by the beneficiaries 34 GRI-LA4 √ Policy and procedures to inform, CEBDS-3.1.12 recommendations CEBDS-3.2.11 related (not exclusively) to human 40 ETHOS (N/R) Participation in and support for the CEBDS-3.1.4 consult and negotiate with 38 GRI-LA 15 √ Description of formal agreements rights preparation, execution and ETHOS employees over changes in CEBDS-3.1.13 with unions or other representatives 24, 2 GRI-HR10 √ Analysis of policies to avoid refinement of comprehensive DOW JONES the company’s operations over health and safety, and the reprisal and confidential systems of public policies Health and Safety proportion of the workforce complaint Political Contributions 36 GRI-LA5 √ (*5) Methods for recording and notifying covered by these Security Measures 62 GRI-SO5 √ Sums donated to political CEBDS-3.1.5 accidents in the workplace and Training and Education 26 GRI-HR11 √ Training of security personnel in CEBDS-3.3.13 institutions and parties for the DOW JONES occupational illnesses (ILO) n/a GRI-LA16 (N/R) Description of programs and CEBDS-3.2.12 human rights main purpose of financing these 37 GRI-LA6 √ Description of joint committees on CEBDS-3.1.15 initiatives aimed at providing Rights of Indigenous Peoples parties or their candidates CEBDS-3.1.6 health and safety and the ETHOS support to employability and 27 GRI-HR12 (N/R) Description of policies, guidelines Competition and Prices ETHOS proportion of the workforce DOW JONES retirement DOW JONES and procedures aimed at meeting n/a GRI-SO6 (N/R) Resolutions related to legal cases IBASE covered by each of these committees 39 GRI-LA17 √ Specific policies focused on the needs of indigenous communities involving anti-trust regulations DOW JONES CEBDS-3.1.16 knowledge management or 27 GRI-HR13 (N/R) Description of complaints 64 GRI-SO7 √ Description of policies and 37 GRI-LA7 √ (*6) Rates of absenteeism, occupational ETHOS ongoing training and education CEBDS-3.2.13 mechanisms available to the CEBDS-3.3.14 management/procedural systems, CEBDS-3.1.7 accidents, illnesses, fatalities and DOW JONES community, jointly run by the as well as compliance mechanisms ETHOS days lost, including outsourced labor Diversity and Opportunity organization and the authorities focused on the prevention of IBASE 26 ETHOS (N/R) Staff profile (gender, race, age, 2 GRI-HR14 (N/R) Percentage of operating results behavior considered to be contrary DOW JONES IBASE disability) and respective average CEBDS-3.2.14 that are returned to the local to free market competition 36 GRI-LA8 √ Description of policies or programs DOW JONES remuneration community PRODUCT RESPONSIBILITY CEBDS-3.1.14 regarding HIV-Aids (additional ind.) HUMAN RIGHTS SOCIETY Subject Minimum Content ETHOS (N/R) Campaigns held Key Indicators Key Indicators PAGE REFERENCE REVISED SUBJECT 35 ETHOS (N/R) Actions taken to achieve a balance PAGE REFERENCE REVISED SUBJECT PAGE REFERENCE REVISED SUBJECT Consumer Health and Safety between the workplace and family Strategy and Management Community 55 GRI-PR1 √ Description of policies regarding Training and Education 24 GRI-HR1 √ Policies, guidelines, corporate 30 GRI-SO1 √ (*3) Description of policies for dealing CEBDS-3.3.1 consumer health and safety when 38 GRI-LA9 √ (*7) Average number of hours of training CEBDS-3.2.1 structure and procedures relating CEBDS-3.3.6 and 3.3.7 with the impact on communities in ETHOS using the company’s products and CEBDS-3.1.8 per annum, per employee, by CEBDS-3.2.2 to human rights ETHOS regions affected by the company’s services ETHOS employee category 24, 40 GRI-HR2 √ Evidence that the decision-making activities DOW JONES Investments CEBDS-3.2.8 processes take into consideration IBASE (additional indicator) the potential impact on human rights 70 INDICATORS / CREDITS Social Responsibility Report 2003 Petrobras Petrobras Social Responsibility Report 2003 REPORT OF THE INDEPENDENT AUDITORS ON THE APPLICATION OF PREVIOUSLY AGREED PROCEDURES 71

Products and Services Notes: Report of the Independent Auditors on the 55 GRI-PR2 √ Description of policies and √ – Data reviewed by Ernst & Young CEBDS-3.3.2 management/procedural systems, N/R – Data not reviewed by Ernst & Young Application of Previously Agreed Procedures as well as compliance mechanisms *1 – Not including sustainability goals regarding standards for labeling *2 – Not including information regarding Sísmico To the and information about products *3 – Not including the International area Board of Directors and services *4 – Only the incidents were reviewed Petróleo Brasileiro S.A. – Petrobras √ 20 ETHOS Customer Care Service for *5 – Not including information regarding Petrobras Distribuidora IBASE consumers/customers *6 – Not including Petrobras Distribuidora and International area Respect for Privacy *7 – Not including Transpetro, Refap and International area 1. As previously agreed with the Management of Petróleo Brasileiro S.A. – Petrobras, we carried out the procedures described n.a. GRI-PR3 (N/R) Analyses of policies and in our Letter of Intent of July 13, 2004 and summarized in the second paragraph, in regard to the Social Responsibility n.a – Not available CEBDS-3.3.4 management/procedural systems, Report of Petróleo Brasileiro S.A. – Petrobras relating to the year ended December 31, 2003, prepared under the responsi- n/a – Not applicable ETHOS as well as compliance mechanisms bility of the Management. Our responsibility was to carry out the previously agreed procedures in compliance with the for legal norms and voluntary norms laid down by the American Institute of Certified Public Accountants – AICPA. The preparation of the Social codes relating to customer privacy Responsibility Report was based on the principal report models available, such as Ethos, Ibase, CEBDS (Brazilian Business Council for Sustainable Development), GRI (Global Reporting Initiative) and Dow Jones Sustainability. The adequacy of the General procedures carried out is the responsibility of Petróleo Brasileiro S.A. – Petrobras. 41 ETHOS √ Initiatives with suppliers, Credits DOW JONES distributors and technical 2. The previously agreed procedures applied to the Social Responsibility Report are summarized as follows: i) interviewing assistance aimed at creating a Petrobras staff; ii) analyzing the computer records that gave rise to information contained in the Social Responsibility Responsibility for the information presented culture of respect and appreciation Report; iii) reviewing the external information sources that gave rise to information contained in the Social Responsibility for the consumer Wilson Santarosa Executive Manager, Institutional Communication Report; iv) reviewing the contracts, agreements and other documents supporting certain information contained in the Additional Indicators Social Responsibility Report; v) analyzing the principal processes and reviewing the internal control structure for these Consumer Health and Safety For more information, please contact processes that generated the information contained in the Social Responsibility Report; and vi) checking the accounting n.a. GRI-PR4 (N/R) Number and type of infractions of Luís Fernando Maia Nery information contained in the Social Responsibility Report against the financial statements for the year ended December 31, [email protected] CEBDS-3.3.8 norms governing customer health 2003, audited by us, the report on which was issued without reservations on February 13, 2004. and safety, as well as sanctions and Preparation and content Petrobras fines imposed as a result of these 3. In carrying out the procedures summarized above, we did not discern any events that could significantly modify the Hernani Leonardo Miranda, Fernando Albano Carriço, Paulo infractions information contained in the Social Responsibility Report of Petróleo Brasileiro S.A. – Petrobras relating to the year Roberto Pereira da Costa, Luis Cesar Stano, Izabel Cristina ended December 31, 2003. 55 GRI-PR5 (N/R) Number of complaints ratified by Guimarães Serra Seca, Rita de Cássia Pereira Fagundes Netto, CEBDS-3.3.9 official regulators or similar Ana Luisa Feijó Abreu, Gladys de Carvalho Goulart, Sylvia 4. Certain information contained in the Social Responsibility Report relating to the year 2003 was not submitted to the previ- organizations relating to the Sampaio Lopo, Sérgio Carvalho Bandeira de Mello, Carmen ously agreed review procedures and is identified in the notes to the section dealing with the Indicators. supervision or regulation of the Andrea R. V. Santos, Carlos Felipe Guimarães Lodi, Lia Hermont Blower Passos, Claudia Marcia Cabral de Carvalho del health and safety of the company’s Souza, Thais Kohlmann de Junod, Daniela Couto da Silva, 5. The previously agreed procedures do not represent an audit, in the same sense as the auditing standards generally applied products and services Carlos Augusto Arentz Pereira, Marilene Silva Correia, Jorge in Brazil to financial statements, as there are still no formal standards for the auditing procedures to be applied to social 55, 61, 64 GRI-PR6 √ Voluntary adherence to and Luiz Lopes de Freitas, Paulo Ribeiro Daltro Santos, Eduardo responsibility reports. Hence, we are not expressing an opinion on the Social Responsibility Report of Petróleo Brasileiro CEBDS-3.3.10 compliance with codes, product Augusto Correa Esposel, Therezinha de Jesus Ferreira Serpa, S.A. – Petrobras relating to the year ended December 31, 2003. If we had carried out additional procedures, other details ETHOS labeling, and awards received Roberto Becker, Alessandra Teixeira de Teixeira, Elizete Pompa may have been observed and reported herein. The distribution of this report is the responsibility of the Management of this Antunes Vazquez, Maria da Penha Martins Barreto Barroso, relating to the social and/or Company. Eraldo Carneiro da Silva, Eliane Sarmento Costa, Izeusse Dias environmental responsibility of the Braga Junior, Luis Antonio de Carvalho Vargas and Claudio organization in question Paula de Carvalho Products and Services Oficina de Idéias e Marketing Cultural Ltda. Rio de Janeiro, September 10, 2004 n.a. GRI-PR7 (N/R) Number and type of violations of Cenise Monte Vicente, Nísia Werneck, Michelle Ferreti and CEBDS-3.3.11 norms regarding product Tiago Lima Cecilio information and labeling Conceptual development and graphic design 20 GRI-PR8 √ Analyses of policies and Ana Couto Branding & Design CEBDS-3.3.5 management/procedural systems English translation and proof-reading related to customer satisfaction Bruce L. Rodger Advertising [email protected] AUDITORES INDEPENDENTES S/S n.a. GRI-PR9 (N/R) Analyses of policies and Photographs CEBDS-3.3.3 management/procedural systems, André Vieira, Antonio Batalha, Petrobras Photo Library, Paulo José Machado Photodisk Photo Library, Bruno Veiga, Claudia Martins, Cris (minimum count) as well as mechanisms for PARTNER Isidoro, Daniela Dacorso, Eliana Fernandes, Enrique Fernandez, compliance with legal norms and Fábio Correa, Fernando Bergamaschi, Geraldo Falcão, Giovani voluntary codes regarding Sérgio, João Roberto Ripper, José Caldas, Juarez Cavalcanti, J. advertising Valpereiro, Márcio Garcez Vieira, Márcio RM, Margarete Maria n.a. GRI-PR10 (N/R) Number and type of infractions Vitória dos Santos, Michel Rey, Patrícia Neves and Rogério Reis committed with regard to Printing marketing and advertising Ipsis Gráfica e Editora Ltda. standards This report is printed on Reciclato 120g paper Respect for Privacy (100% recycled) n/a GRI-PR1 (N/R) Number of complaints in relation Distribution CEBDS-3.3.14 to violations of customer privacy This report has a printing run of 4,500 copies in Portuguese, 3,000 in English and 1,000 in Spanish. It is also available on CD (9,000 in Portuguese, Spanish and English) and at the web site http://www.petrobras.com.br This publication is for distribution to shareholders, suppliers, workers, customers, governmental and non-governmental organizations and community leaders in the areas where Petrobras operates. 72 PETROBRAS 50 YEARS Social Responsibility Report 2003 Petrobras Petrobras 50 years

As soon as he had word that Congress situated in Bahia. The National girding itself to keep up with the had passed into law the government’s Petroleum Council (CNP) ceded to the evolution of the market. The policy plan for exploration of the country’s company the oilfields of Recôncavo of expanding the number of refineries oil, the president at the time, Getúlio Baiano, a refinery at Mataripe, a paid off. By the end of the 50s, Vargas, addressed the Brazilian public, refinery and a fertilizer plant that were Petrobras was producing 65 thousand on October 3, 1953, announcing the still under construction in Cubatão, the barrels of oil a day and its reserves creation of Petróleo Brasileiro S.A., National Tanker Fleet, comprising 22 amounted to 617 million barrels. Petrobras. Law no 2,004, sanctioned vessels, and the assets of the In the following year, the company that day by President Vargas, defined Commission for the Processing of attained the goal of becoming self- the basis of the national oil policy and Bituminous Shale. sufficient in the production of the was viewed by the president as an The Brazilian government assured principal oil products, with the important step in the direction of Petrobras of the necessary conditions operational start-up of the Duque de Brazilian economic independence. for the expansion of the country’s oil Caxias Refinery (Reduc) in Rio de The road ahead was a long one. industry. The company responded by Janeiro. Other important refineries President Getúlio Vargas signs Law When it was founded, Petrobras started expanding its refinery infrastructure, also came on line during the 60s, such o n 2,004 off producing 2,700 barrels of oil a day, augmenting production and improving as Gabriel Passos (Regap), in Minas 27% of Brazilian consumption at the its transport capacity. It made decisive Gerais, and Alberto Pasqualini time, from the Candeias, Dom João, investments in research and the (Refap), in Rio Grande do Sul. Água Grande and Itaparica fields, all specialized skills of its workforce,

With the intention of paid a high price, in foreign the conversion of leftover fuel products, to satisfy the growing reducing the cost of imports, currency, but due to the good oil into diesel oil, gasoline and demand of the domestic market DEVELOPMENT OF THE the Brazilian government in relations that it maintained cooking gas. for better and more sophisticated COMPANY LOGO 1962 established a monopoly with the state companies in Another Petrobras inno- fuels and lubricants. over the importing of oil and these countries, Petrobras was vation at that time was a In 1997, the Brazilian oil oil products. That same year, able to keep the domestic concern over the environment, market underwent a huge Petrobras reached the mark of market supplied, even during at the forefront of what was to change, with the introduction 100 thousand barrels a day. In the most critical moments of become a worldwide trend. As of Law no 9,478, making the In 1958, the company’s first logo 1968, Petrobras made its first the crises. well as introducing specific state oil monopoly more was created. offshore oil discovery, off the To reduce the foreign conservation technologies and flexible. At the end of the coast of Sergipe. exchange pressure, the a program to improve fuel 90s, Petrobras was ranked During the 70s, Brazil government encouraged the quality, the company also 14th among the world’s underwent the contrasts of development of new energy promoted training courses and largest oil companies and 7th political repression and strong sources, the greatest example environmental education. among those whose shares economic growth, particularly being the National Alcohol Petrobras entered the 90s are traded publicly, according in the period prior to the first Program, which stimulated with the challenge of producing to a survey published in In 1972, Petrobras changed its logo, in view of the need to oil crisis. During that time, the the use of alcohol as an oil from offshore fields at a Petroleum Intelligence Weekly. modernize the brand. consumption of oil products automotive fuel. Investment depth of over 500 meters, At the beginning of the doubled and Petrobras had to in exploration and production which demanded unprecedented new century, with the state make some changes in its became a priority and technological advances. To still the majority shareholder investment structure in order to domestic oil continued to achieve this goal, it would be and linked to the Ministry meet the demand. broaden its share of the necessary to invest heavily in of Mines and Energy, the The Paulínia Refinery Brazilian market. technology, and that is exactly company has entered new In 1994, the traditional lozenge shape, associated with the (Replan) was built in São Paulo The need to make Brazil what the company did. The areas of business and is Petrobras image since its inception, during the period and the self-sufficient grew stronger in process, developed entirely in looking for new markets. Once is replaced by the BR symbol. Presidente Bernardes Refinery, the 80s, with the rising price of Brazil, to produce oil at a depth again in the vanguard of world in Cubatão, underwent a oil in the international market. of up to one thousand meters trends, Petrobras has started, process of modernization. The start of operations in was acclaimed worldwide and in these first few years of the What is more, investments the Campos Basin gave a Petrobras became a benchmark decade, to strengthen its projects in Brazil. Success in were made to enable domestic significant boost to the for oil production in deep relationship with society, the social field accompanies the oil to win a larger share of the country’s oil production. By waters. By the end of the assuming the role of corporate new triumphs and excellent Brazilian market. In 1974, the 1989, Petrobras was producing decade, the company was citizen, with the aim of con- economic results recorded by Garoupa field was discovered, 675,135 barrels of oil a day. producing at a depth of 1,853 solidating its position as a the company in the year of its off the coast of Rio de Janeiro. The refineries also received meters. socially responsible organization. 50th anniversary. With the oil crises of 1973 sizeable investment in the 80s, If, during the 80s, there was On completing 50 years in and 1979, caused by the new to adapt the installations to concern about increasing the activity, Petrobras already market posture of Opec the growing demand for oil output of oil products, to this stands out as the company that (Organization of Petroleum products. A project nicknamed was added, in the 90s, the need invests most in social, cultural Exporting Countries), Brazil “bottom of the barrel” fostered to improve the quality of these and environmental education