Petrobras Domestic E&P Results and Perspectives Hugo Repsold Junior General Manager for Domestic E&P Strategy and Portfolio October, 2006 •The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. Cautionary Statement for US investors: •The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. 2 CorporateCorporate TargetsTargets OverviewOverview 3 DomesticDomestic E&PE&P StrategyStrategy • Increase production and reserves Strengthen expertise in deep and ultra-deep waters; Perform on-shore and in shallow water fields focusing on profitable opportunities; Implement practices and new technologies in areas with high exploitation degree in order to optimize recovery factor; Develop exploratory efforts in new frontiers in order to assure a sustainable reserve / production ratio; Guarantee a sustainable self-sufficiency in the long term; Optimize development of proven reserves prioritizing on increasing production of light oil and a minimum R/P ratio of 15 years; Maximize and accelerate gas production and supply from E&P. • Perform with operational excellence and social and environmental responsibility 4 DomesticDomestic E&PE&P OperationsOperations Reserves (at December 31, 2005) • Proven reserves of 13.23 billion boe (SPE) or 10.58 billion boe (SEC) • Reserve life of 19.7 years (SPE) and 15.7 (SEC) • Internal Reserve Replacement of 131.1% (SPE) and 101.3% (SEC) Production (2005) • 1,958 thousand boed (1,684 thousand bpd oil) • 5-year CAGR of 5.6% (5.8% oil) F&D Cost • US$ 3.45/boe (2003 – 2005) – SPE Lifting Cost • US$ 5.73/boe (2005) Petrobras & Partners Exploratory Area (Nov/2005) Other Companies • 157.7 thousand km2 (Petrobras + Partners) • 153.4 thousand km2 (other Companies) Total: 311.1 thousand km2. 5 OilOil andand GasGas ProvenProven RReserveseserves andand ProductionProduction PubliclyPublicly TradedTraded PeerPeer GroupGroup Proven Reserves SEC Criteria Production (billion boe) (million boed) ExxonMobil 22.4 ExxonMobil 4.1 Lukoil 20.3 BP 4.0 Petrochina 20.0 ShellGroup(RD) 3.5 BP 17.6 Petrochina 2.9 Chevron 12.1 Total 2.4 ShellGroup (RD) 12.0 Chevron 2.4 Petrobras 11.8 Petrobras 2.2 Total 10.7 ConocoPhillips 2.0 ConocoPhillips 9.4 Lukoil 1.9 ENI 6.7 ENI 1.7 Repsol-YPF 3.2 Repsol-YPF 1.1 0 5 10 15 20 25 012345 Reserve Replacement Index (%) Petrochina 149% ExxonMobil 121% ConocoPhillips 100% BP 95% Petrobras 94% Lukoil 91% Total 87% Source: Evaluate Energy 2005 Shell 77% ENI 23% Chevron 13% -101%% Repsol-YPF -150 -100 -50 0 50 100 150 200 6 Proven Reserve Profile 7 Total Production – Oil & NGL and Natural Gas 7.5% p.y. Thousand boed 4,556 278 7.8% p.y. 3,493 742 185 2,403 383 724 2,217 2,036 2,020 101 96 551 85 94 133 163 289 161 168 274 250 265 2.812 2.374 1,880 1,684 1,540 1,493 2003 2004 2005 T ar get 2006 Target 2011 2015 For ecast Oi l and NGL - Br azi l Natural Gas - Brazil Oi l and NGL - I nter naci onal Natural Gas - Internacional 8 Brazilian production curve 2.600 2,368 2,374 2,195 690 1,979 2,061 2.100 1,880 Net Increase 1,684 1.600 1.100 600 + Thous. bpd Thous. 100 (154) (154) (326) (172) (508) (697) (400) (181) (897) 1,114 (189) (201) Accumulated (900) (217) Natural Decline (1.400) 2005 2006 2007 2008 2009 2010 2011 1,804 Total Production Accumulated Decline Annual Decline Gross Increase 9 Main Domestic Oil Production Projects 7 out of the 15 projects refer to after-2002 discoveries 2,600 AlbacoraAlbacora Leste Leste Thousand pbd P-50P-50 180,000180,000 bpdbpd ESS-130 RoncadorRoncador ESS-130 April/2006April/2006 Golfinho Mod III **** 2,374 P-52P-52 Golfinho Mod III **** 2,400 (FPSO) 180,000180,000 bpdbpd (FPSO) JubarteJubarte 100,000100,000 bpdbpd 20072007 Parque das FaseFase 1 1 20082008 Parque das P-34P-34 2,368 Conchas***Conchas*** Rio de Janeiro 60,00060,000 bpdbpd Rio de Janeiro Espadarte Mod II 100,000100,000 bpdbpd 2,200 Oct/2006Oct/2006 Espadarte Mod II 100,000100,000 bpdbpd 2,195 20112011 FPSOFPSO CapixabaCapixaba 20072007 Roncador GolfinhoGolfinho Mod. Mod. 11 FradeFrade Roncador P-55** 100,000100,000 bpdbpd 100,000100,000 bpdbpd P-55** 2,061 180,000 bpd 2,000 MayMay 20062006 20092009 180,000 bpd 1,979 MarlimMarlim Sul Sul 20112011 ModuleModule 22 JubarteJubarte Roncador Phase 2 Roncador P-51P-51 Phase 2 P-54 P-57 P-54 180,000180,000 bpdbpd P-57 180,000 bpd 1,800 1,880 180,000 bpd 20082008 180,000180,000 bpdbpd 20072007 20102010 PiranemaPiranema MarlimMarlim Leste Leste 20.00020.000 bpdbpd CidadeCidade de de VitóriaVitória P-53*P-53* 1,600 1,684 Dec.Dec. 20062006 GolfinhoGolfinho Mod. Mod. 22 100,000100,000 bpdbpd 180,000180,000 bpdbpd 20072007 20092009 1,400 2005 2006 2007 2008 2009 2010 2011 10 CorporateCorporate TargetsTargets CapitalCapital ExpendituresExpenditures andand CostsCosts 11 InvestmentInvestment PlanPlan Exploration 7.7 Production Development 33.0 2007-2011 2007-2011 Area Difference Difference (%) (BP 2006-10)* (BP 2007-11) E&P 25.0 40.7 15.7 63 Downstream 14.3 23.1 8.8 62 G&E 4.6 7.2 2.6 56 International 6.7 12.1 5.4 82 Distribution 0.9 2.2 1.3 131 Corporate 1.0 1.7 0.7 81 Total 52.4 87.1 34.7 66 The forecast indicates an annual investment average of US$ 17.4 billion between 2007 and 2011. (*) Obs.: US$ 52.4 related to the investments of the previous Plan regarding the 2007-2011 period, i.e. US$ 56.4 - 2006 investments + 2011 investments. 12 CompetitiveCompetitive CostCost StructureStructure 2003–2005 Average 2005 Lifting Costs1 Finding & Development Costs ($/boe) ($/boe) 16 15.14 15.06 10.00 9.39 14 8.00 12 6.80 9.62 10 5.88 6.00 5.73 5.54 5.08 8 7.55 7.04 6.81 6.07 4.00 6 2.76 4 2.00 2 0 0.00 Chevron Royal Total BP Petrobras Exxon Average Exxon Chevron Petrobras³ Royal BP Total Average Dutch/ Fina Elf Mobil Mobil Dutch/ Fina Elf Shell² Shell Notes: 1 Per company financials and J.S. Herold. Excludes corporate G&A 2 For the 2002–2004 period 3 Without government participation 13 DomesticDomestic LiftingLifting CostCost Lifting Costs and Government Take per Barrel 54,50 25,0 50 38,29 20,0 40 28,74 14.65 15,0 28,13 25,47 24,11 30 10.7 10,0 8.5 8,9 7.0 6.6 7.0 20 6,4 US$/boe 5,1 5,0 3,7 3,3 4,0 10 5,7 5,6 3,3 3,3 3,0 3,4 4,3 0,0 0 2000 2001 2002 2003 2004 2005 2011 Lifting Cost Government Take Brent Lifting costs expected to stabilize ♦ Production increases ♦ Technological enhancements ♦ Wells, platforms and plants automation ♦ Optimization of logistics, operations and administrative processes 14 Petrobras’ Drilling Rigs 2003 2004 2005 Total Total Brazil International Total Onshore 25 47 22 19 41 Offshore 41 43 42 4 46 Owned Rigs: 31 Total 66 90 64 23 87 Leased: 56 • Petrobras’ leasing contracts are long term, averaging a 5 years length; • In 2005, 18 offshore drilling rigs were owned by Petrobras; • In August 2005, Petrobras renovated 24 drilling rigs contracts. • In July 2006, Petrobras signed contracts worth R$ 10.5 billion for the charter of six drilling units: • 4 rigs will operate in water depths of up to 2,000 meters (seven-year term contract, renewable for further seven years); • 2 rigs will operate at depths down to 2,400 meters (units chartered for 5 years, renewable for the same period); • In September 2006, the Company contracted two ultra-deepwater rigs for its drilling operations in the Gulf of Mexico. The contracts have 5 and 6 years term. 15 RecentRecent ExplorationExploration EffortsEfforts andand ResultsResults 16 ExplorationExploration ActiActivitiesvities -- 1998/2005 1998/2005 wellswells && seismicseismic 611 exploration wells Espírito Santo Î 40 wells offshore Î 31% overall success ratio Campos Î 186 wells offshore Last year (2005) Î 55% Santos Î 65 wells offshore Other Basins Î 216 wells onshore 1998/2005 Î 104 wells offshore ~ 450,000 km 2D seismic ~ 92,240 km2 3D seismic 17 NumberNumber of of Concessions Concessions in in BrazilBrazil PetrobrasPetrobras ConcessionsConcessions OtherOther TotalTotal ConcessionsConcessions 100%100% ParnershipsParnerships Total Total CompaniesCompanies BrazilBrazil W.IW.I ExplorationExploration BlocksBlocks 59 59 66 66 125 125 218 218 343 343 ExplorationExploration EP´sEP´s 24 24 6 6 30 30 0 0 30 30 ProductionProduction 273 273 19 19 292 292 29 29 321 321 TotalTotal356356 91 91 447 447 247 247 694 694 Petrobras & Partners Other Companies 18 Petrobras’ Current Exploration Portfolio EXPLORATORYEXPLORATORY AREAAREA SantosSantos 22 157.7157.7 thousandthousand km km 39.439.4 milkm milkm22 CamposCampos Other (*) 13.1 mil km22 Pará Maranhão-Barreirinhas 13.1 mil km 4% 3% 25% Sergipe Alagoas 5% Potiguar-Ceará 6% 8% SantosSantos Bahia Sul 9% CamposCampos 6% 10% Espírito Santo Solimões 11% Espírito Santo 11% Espírito São Francisco Foz do Amazonas Espírito Santo OtherOther Basins Basins** Santo 10.110.1 mil mil km km22 Î 40 % of the concession areas in Campos, Espírito Santo e Santos basins.