0

PETROBRAS

8º Foro LatibexNovember, 15, 16 and 17

Madrid

Strategic Plan and 3rd Quarter Results - 2006

November, 2006

Raul Adalberto de CamposExecutive Manager Investor Relations

Carlos Henrique Dumortout CastroInvestor Relations Manager

1

PETROBRAS

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.

Disclosure

2

PETROBRAS

Drivers Business StrategiesE&P• Focus on light oil and natural gas

production and reserve growthDownstream• Expand conversion capacity and improve

quality of refined products• Increase bio-refining capacity, biomass,

petrochemical and fertilizers businesses• Promote Brazilian biodiesel production and

export ethanolDistribution• Increase market-share in Brazil for oil

products and biofuelsGas & Energy• Develop and establish a profitable and

reliable natural gas market including LNGInternational• Expand E&P in Gulf of Mexico and Africa• Undertake investments in refining

conversion capacity and quality

Develop market and monetize natural gas reserves in Brazil

Reduce dependence on light oil and oil product imports

Improve oil product quality in Brazil and abroad

Reduce carbon intensity of operations and products

Drivers & Strategies

Exploit competitive advantage from deep water exploration technology abroad

Assure future demand and add value to heavy oil exports

3

PETROBRAS

At current levelsCosts

2006 – 62.002007 – 55.002008 – 40.00

2009-2011 – 35.00

Brent for funding (US$/bbl)

Linked to international market

pricesDomestic sales prices

23.00Robustness Brent (US$/bbl)

4.2GDP – World (% p.a.) –PPP*

3.7GDP – Latin America (% p.a.) – PPP

2.50FX rate (R$/US$)4.0GDP – Brazil (% p.a.)

2007-2011Assumptions

* PPP – purchase power parity

Fundamentals - Macroeconomic assumptions

• Market developments indicate an appreciation of the FX rate (R$/US$).

• Petrobras robustness Brent price below the low end of market’s forecast band.

• Costs are projected at current levels, with no adjustment for future price reductions.

• Petrobras products prices follow international prices in the medium term.

• Natural gas prices to accompany international differentials to oil products.

4

PETROBRAS

224312 315 368237 237 282

773 777935

97128 128

211

201 201

116 108

0

500

1000

1500

2000

2500

2004 2005 2011

LPG Gasoline A Naphta Diesel* + Jet Fuel Fuel Oil Coke + Others

Thou

sand

bpd 1,766

2,1173.1% p.a.

*Includes Biodiesel (2%)

Brazil’s Oil products demand

• Increasing demand for middle distillates.

1,767

0.52%Diesel + Jet Fuel

0.00%LPG0.96%Gasoline A0.00%Naphtha

-6.90%Fuel Oil0.00%Cocke and Others

Variation 2004 x 2005

Fundamentals - Domestic oil products market

5

PETROBRAS

Note: Includes International

31.0

12.41.0

1.0

49.3

23.07.5

3.32.31.8

E&P Downstream G&EPetrochemical Distribution Corporate

9%4%

3% 26%

56%

3%

Business Plan 2007-2011US$ 87.1 billion

86%

14%

Brazil International

US$ 12.1 bi

US$ 75.0 bi

Investment Plan

49,3

23,0

7,53,32,21,8

6

PETROBRAS

New Projects17,412

Cost Increase7,792

FX Rate Appreciation

4,189

Business Model Change

2,957

Other517

Scope Change1,824

BP 2006-1052,430

• New projects represent 50% and cost increase 23% of the additional Capex in relation to the previous Plan.

• New exploration projects in Brazil

• Production development Jabuti, ESS-164

• HBIO, RPBC modernization• Ethanol exports• New vessels • Northeast and southeast LNG• New projects in E&P and

refining abroad

• Exploration and development projects

• Offshore production• Diesel and gasoline quality and

conversion portfolio• Fleet renovation and expansion

program

US$ Million

Investment Plan

7

PETROBRAS

Sources

(*)86.7

12.6

2004-2010Financing

Cash Flow

(US$ 99.3 billion)

87.1

12.2

2004-2010Debt Amortization

Capex

(US$ 99.3 billion)

• Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011).

Uses

Financial Targets - Sources & Uses

8

PETROBRAS

Sensitivity to Brent in 2007-2011(annual average)Every US$ 5.00 Brent price change will result in:

• 3 pp change in ROCE;

• US$ 3.5 billion change in the operational cash generation;

• 10 pp change in leverage.

1.5

8.6x

28

4.4

2.9

15

2006-2010Average

1.5

13.7x

25

3.5

3.1

16

2007-2011 Average

Oper. Cash Flow before interest and taxes / interestFree Operating Cash Flow (US$ billion)

Cash Balance (end of the year) (US$ billion)Net Debt/ Net Debt + Shareholders’ Equity (Leverage) (%)

Long Term Funding (US$ billion per year)

Return on Capital Employed (ROCE) (%)

Indicators

Financial Targets - Main Financial Indicators

9

PETROBRAS

2 , 3 7 42 , 8 1 2

5 5 1

7 2 4

7 4 2

1 8 5

2 7 8

3 8 3

2 0 1 5

F o r e c a s t

1 , 6 8 4 1 , 8 8 01 , 5 4 0 1 , 4 9 3

2 5 0 2 6 5 2 7 4

2 8 9

1 3 3

1 6 1 1 6 81 6 3

8 5

1 0 1

9 49 6

2 0 0 3 2 0 0 4 2 0 0 5 T a r g e t 2 0 0 6

O i l a n d N G L - B r a z i l N a t u r a l G a s - B r a z i l

O i l a n d N G L - I n t e r n a c i o n a l N a t u r a l G a s - I n t e r n a c i o n a l

2,036 2,020 2,217 2,403

3,493

4,556Thousand boed

7.8% p.a.

7.5% p.a.

T a r g e t 2 0 1 1

E&P - Production targets – Oil & NGL and Natural Gas

10

PETROBRAS

• P-50 is currently producing 150,000 bpd and should reach its production peak by the end of the year.• FPSO Capixaba is producing 35.000 bpd and should reach its full capacity in 2007.• P-34 is being tested on the ocean and its start-up is scheduled to November.• The start-up of FPSO Rio de Janeiro was anticipated form 2007 to December 2006.

In 2006, two platforms, P-50 and FPSO Capixaba, have started operating. Until the end of the year, other two platforms will start-up operation, adding a production

capacity of 440 thousand bpd to the county.

Albacora LesteCapacity 180,000 bpd

April 2006

P-50

Golfinho Mod. 1Capacity 100,000 bpd

May 2006

FPSO Capixaba

Jubarte Phase 1 Capacity 60,000 bpd

November 2006

P-34

Espadarte Mod. IICap.: 100,000 bpd

December 2006

FPSO Cidade do Rio de Janeiro

E&P - Main production projects in 2006

11

PETROBRAS

1.9792.061

2.195

2.368

2.374

1.400

1.600

1.800

2.000

2.200

2.400

2.600

2007 2008 2009 2010 2011

Parquedas Conchas100,000 bpd

2011

Parquedas Conchas100,000 bpd

2011

Marlim LesteP-53*

180,000 bpd2009

Marlim LesteP-53*

180,000 bpd2009

Frade100.000 bpd

2009

Frade100.000 bpd

2009

RoncadorP-52

180,000 bpdDec/2007

RoncadorP-52

180,000 bpdDec/2007

RoncadorP-54

180,000 bpdOct/2007

RoncadorP-54

180,000 bpdOct/2007

Marlim SulMódulo 2

P-51180,000 bpd

2008

Marlim SulMódulo 2

P-51180,000 bpd

2008

Piranema20,000 bpdApril/2007

Piranema20,000 bpdApril/2007

JubarteFase 2P-57

180,000 bpd2010

JubarteFase 2P-57

180,000 bpd2010

ESS-130Golfinho Mód. III

(FPSO)100,000 bpd

2008

ESS-130Golfinho Mód. III

(FPSO)100,000 bpd

2008

Cidade de VitóriaGolfinho Mod. 2

100,000 bpdMay/2007

Cidade de VitóriaGolfinho Mod. 2

100,000 bpdMay/2007

RoncadorP-55

180,000 bpd2011

RoncadorP-55

180,000 bpd2011Th

ousa

ndbp

d

E&P - Main production projects in 2007 - 2011Aditional

Capacity (bpd) 280,000180,000280,000280,000480,00020112010200920082007

12

PETROBRAS

P-52P-51Capacity: 180,000 bpd

Modality: Owned

Current Situation: under construction in Angra dos Reis (RJ)

Start-up: December 2007 (Roncador Field)

Capacity: 180,000 bpd

Modality: Owned

Current Situation: under construction in Angra dos Reis (RJ)

Start-up: February 2008 (MarlimSul Field)

Currently, three Petrobras platforms are being built in Brazil

P-51will be the first semi-submersible unit to be entirely built in Brazil.

P-54Capacity: 180,000 bpd

Modality: Owned

Current Situation: under construction in the Mauá-Jurong(RJ) shipyard

Start-up: September 2007 (Roncador Field)

E&P - Platforms under Construction in Brazil

13

PETROBRAS

• To sustain production growth, 15 large projects will be implemented between 2011 to 2015. The highlights are:

2,812

2,374

2100

2200

2300

2400

2500

2600

2700

2800

2900

2011 2015

• Marlim Sul P-56• Roncador P-55• Papa-Terra Mód. 1 e 2• Marlim Sul Mód. 4• Roncador Mód. 4• Cachalote and Baleia Franca• Baleia Azul

Oil Production in Brazil (Thous. bbl)

E&P - 2011-2015 main Brazilian projects

14

PETROBRAS

(154) (326) (508) (697)(154)

(172)(181)

(189)(201)

(217)

(897)

(1.400)

(900)

(400)

100

600

1.100

1.600

2.100

2.600

2005 2006 2007 2008 2009 2010 2011

Total Production Accumulated Decline Annual Decline

2,0612,195

2,368 2,374

1,6841,880

1,979

1,114Accumulated

Natural Decline

690

Net Increase

+

1,804

Gross Increase

Thou

s. b

pdE&P Investments - Brazilian production curve

15

PETROBRAS

54,3% 53,1% 51,5% 50,5%

43,8%40,5% 39,7%

34,3%30,0% 29,7%

25,0%20,3%

12,9%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

Petr

obras

She

ll

T

otal

CNOOC

Stat

oil

BP

Exx

onMob

il

L

ukoil

Chev

ron

Cono

coPhillip

s

R

epsol-Y

PF

P

etroC

hina

S

inopec

Undeveloped Reserves / Total Reserves* (2005)

• Strong investments in production will optimize the development of Petrobras’ proven reserves, aiming light oil production and a minimum reserve/production ratio of 15 years.

• Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells classified as discovery or producing wells.

* Source: Evaluate Energy

E&P Investments

17

16

PETROBRAS

Mur

phy

Oil:

27,

75

Shel

l Can

ada:

26,

86

Sunc

or: 2

1,65 Pe

tro-

Can

ada:

14,

17

Con

ocoP

hilli

ps: 1

2,5

Mar

atho

n O

il: 1

2,31

Che

vron

: 11,

32

Impe

rial

Oil:

10,

2 1

Petr

ochi

na: 1

0,2

Sino

pec:

10,

02

Stat

oil:

9,89

Exxo

n M

obil:

9,5

4

Tota

l: 9,

41

Petr

obra

s*: 8

,56

BP:

7,0

3CN

OO

C: 1

3,19

0

5

10

15

20

25

30

Global Oils E&P CAPEX to production 2005-2008E AverageSource: Merrill Lynch estimates based on available data for the companies.

* CAPEX and production over 2006-2011

• Per barrel CAPEX* for Petrobras (2006-2011) of US$ 8.56 vs. Global Oils average (2005-08) of US$ 13.74 (ex-PBR).

E&P CAPEX to production 2005-2008E Average (US$/bbl)

E&P Investments - Petrobras CAPEX vs. Peers CAPEX

17

PETROBRAS

200520042003

66

41

25

Total

90

43

47

Total

23

4

19

International

4642Offshore

8764Total

4122Onshore

TotalBrazil

Owned Rigs: 31

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.

E&P - Petrobras’ Drilling Rigs

18

PETROBRAS

61%

13%

12%

14%

RefiningPipelines & Terminals TransportShip TransportPetrochemical

US$ 14.2

US$ 3.2

US$ 3.0

US$ 2.8

US$ 23.1 billion in the downstream segment… ...of which US$ 14.2 billion in refining

• Aggregating value to our heavy oil and producing diesel and gasoline according to international standards.

31%

19%

6% 26%

18%

Gasoline and Diesel Quality Expansion

HSE Conversion

Others

US$ 2.5US$ 0.9

US$ 4.4

US$ 2.7

US$ 3.7

Downstream – 2007-2011 Investments

19

PETROBRAS

Majors Average *

2,735

3,176

4,793

4,329

1,630

1,579

National Oil Companies Average **

Petrobras2,296

2,114

Product Sales (thous. bpd)

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

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

*** 2004 figures, except for Petrobras (2005)Source: PIW Intelligence and Petrobras

2,217

3,400Year 2011

2011: New Refinery will add 200

thous. bpd capacity2010:

Pasadena Refinery revamp concluded – processing 70

thous. bpd of heavy oil

Vertical Integration Comparison

20

PETROBRAS

New Refinery in Pernambuco• Investment: US$ 2,5 billion;

• Throughput capacity: 200 thousand heavy oil barrels (50% Petrobras oil / 50% PDVSA oil);

• Focusing diesel and LPG production maximization, the new refinery will aim the growth of oil products demand in the Northeast.

• The Northeast Region, which responds for 19% of oil products demand and holds only one refinery in Bahia, will no longer be a fuel importer (either from refineries in Brazil or abroad);

• Costs reduction: oil products transportation are more expensive than for crude oil.

New Refinery in the USA• Petrobras has acquired 50% of the Passadena Refinery System Inc. (PRSI), located in Texas, USA;

• Total Investment: US$ 370 million;

• The refinery, which already has a capacity of 100,000 bbl/day, will be upgraded to handle 70,000 bbl/day of heavy oil and feedstock (including Marlim field’s production);

• The upgraded refinery will be ready in four years. After the revamp project all products will match USA highest standards.

Business Strategies - Downstream

21

PETROBRAS

Nitrogenated Fertilizers Unit III

PTA Pernambuco

Fafen BA

Acrylic Complex /SAP

Rio de Janeiro Petrochemical Complex

Main Projects Advantages: • Proximity to Petrobras’ installations in Rio de Janeiro; • Availability of labor for both the construction and operational phase; • Proximity to port installations.• Products: Diesel, LPG, Ethylene, Propylene, PX, Benzene and Coke.

•The Complex will add value to 150,000 barrels/day of heavy oil form the Campos Basin.

• Investments of US$ 3.3 billion in Petrochemicals;

• Reducing the Brazilian deficit and adding value to Downstream production.

São GonçaloLiquids

Outflow Unit

Petrochemical Complex –

Itaboraí

Downstream Investments - Petrochemical investments

22

PETROBRAS

In Thous. bpd(*) National imports and private refineries(**) Biodiesel portion not included

International Production383

Brazilian Production2,374

383 584+

1,710

Imports309

584

Throughput inBrazil 1,877

Oil products consumptionin Brazil (**) 2,099

Oil 167

Oil Products (*)142

International oil sales967

80

• In 2011 international sales will amount to 967 Thous. bpd.

Downstream Investments - Liquid products flow

23

PETROBRAS

Over 75% of Petrobras’ current natural gas production is associated gas

Investments to develop production of non-associated gas

Lack of infrastructure to develop Brazilian market

Risk of gas supply failure due to abnormalities

Total investment (Petrobras and partners) in Brazilian natural gas chain

adds up to US$ 22.1 billion

LNG to provide flexibility to mitigate such risk

Challenges Business Plan 2007-2011 Targets

Natural Gas Investments

24

PETROBRAS

Mill

ion

m3 /d

ay

48.4

7.124.8

38.6

13.5

34.0

up to 71.0

up to 30.0

up to 20.0

0

20

40

60

80

100

120

140

Consumed in 2005 Maximum Demand2011(*)

Potential Supply 2011

Thermoplants Industry OtherNational Production Bolivian Imports LNG

* Considers maximal dispatch for every thermoelectric power plant

121.0

17.7% p.a.

121.0

45.4

Natural gas market

Fundamentals - Domestic natural gas market

25

PETROBRAS

7070.6

65.2

49.4

34.1

27.5

0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 2010 2011

AlbacoraLeste(P-50)2006 Golfinho Mod 1

2006

Jubarte(P-34)2006

Manati2006

Piranema2006

UrucuNatural gas

sales2007

GolfinhoMod 22007

Roncador(P-54)2007

Peroá-CangoaPhase 2

2007Roncador

(P-52)2007

CavaloMarinho

2010

Marlim Leste(P-53)2009

Mexilhão2009

Marlim SulMod 2(P-51)2008

Frade2009

Roncador(P-55)2011

Jubarte Fase 2(P-57)2010

SPS252009

AlbacoraComplemental

2007

NG

associated

NG

non associated

Peroá-CangoaPhase 1

2006

EspadarteMod. 22007

ESS1642008

Canapu2008

ESS1302008

Tambaú/Uruguá2010

RJS6332010

Parque dasConchas

2011

Million m3/day

Natural Gas Investments - Delivery Curve

26

PETROBRAS

• Production will raise from the current 15.8 million to 40 million m3 per day in 2008 in the Southeast.

• Development of two new oil and gas fields in Espírito Santo;

• Increase of natural gas supply from the Marlim field (Campos Basin);

• Expansion of gas production in the Merluza field (Santos Basin).

• Demand Flexibilization

• Refineries, Distributors and flex-fuel thermoelectric plants ( LNG, diesel and alcohol)

New investments will reduce the country’s dependence on imported gas.

BS-500BS-500

BC-20BC-20Gas and light oilGGaas s andand lightlight oiloil

ESS-130

(Light oil)ESSESS--130 130

(L(Lightight oiloil))

(Light oil)(L(Lightight oiloil))

GasGGaass

(Heavy oil)((HeavyHeavy oiloil))

(Heavy oil)((HeavyHeavy oiloil))

Natural Gas Investments

27

PETROBRAS

Natural Gas supply extension in Southeast 2006 - 2008

ESSESS--164164

ESSESS--130130

MexilhãoMexilhão UruguáUruguá

TambaúTambaú

Golfinho + Golfinho + CanapuCanapu

PeroáPeroá (10 MM m3/d)(10 MM m3/d)

MerluzaMerluza

PqPq. . BaleiasBaleias + + BC10BC10

Vitória

NamoradoNamorado

PlataformasPlataformas dadaUNUN--BC e UNBC e UN--RIORIO

REDUCREDUC

CabiúnasCabiúnasCampinasCampinas

RPBC

GaroupaGaroupa

EnchovaEnchovaPampoPampo

Ubu

MerluzaMerluza -- IIII(BM(BM--SS--3/ BM3/ BM--SS--7, 7,

SPSSPS--25)25)LagostaLagosta

Belo HorizonteBelo Horizonte

CaraguatatubaCaraguatatubaRio de JaneiroRio de Janeiro

Total Southeast:40 MM m3/d(+ 24,2 MM m3/d)

(*) Schedules under evaluation

PLANGÁS Dec./2008

CacimbasCacimbas (20 MM m3/d)(20 MM m3/d)

Lagoa parda

+6,4 MM m3/d (*)+6,4 MM m3/d (*)

(*) Additional to the current supply

PóloPólo Golfinho Golfinho +16,3 MM m3/d (*)+16,3 MM m3/d (*)

+1,5 MM m3/d (*)+1,5 MM m3/d (*)

•Development of new fields in Espírito Santos field (1-ESS-164 and 1-ESS-130)

• Increase in Marlim supply (Campos Basin)• Merluza production expansion (Santos Basin)

28

PETROBRAS

Natural Gas supply extension in Brazil

Santos Basin:• Investments: US$ 18 billion over the next 10 years;• Increase of 12 million m3/day in the supply of gas as of 2009;• In 2010, total volume will reach 30 million m3/day.Peroá Field:• Gas production will guarantee a 1.3 million m3/day supply to the State of Espírito Santo• Supply may be duplicated with the start-up of the first 100km of Gasene.Manati Project:• Forecasted production of 6 million m3/day, attending the demand of the State of Bahia.

• SE production will raise from the current 15.8 million to 40 million m3 per day in 2008.• Development of two new oil and gas fields in Espírito Santo; • Increase of natural gas supply from the Marlim field (Campos Basin);• Expansion of gas production in the Merluza field (Santos Basin);• Demand rationalization;• Refineries, Distributors and flex-fuel thermoelectric plants ( LNG, diesel and

alcohol).

New investments will reduce the country’s dependence on imported gas.

Highlights

29

PETROBRAS

Facilitates the adjustment of the offer to the market’s characteristic:Flexible Offer (with guarantee) to the thermoelectric plants.

More efficient than Diesel in the thermo plants;

Mitigates the risk of failing to supply the gas due to abnormalities;

Diversifies the sources of imported gas;

Projects under evaluation:Purchase or freight of floating storage and regasification units (FSRU);Maritime terminal in Pecém (Ceará) - 6 MM m³/day (estimate Jul/2008 ± 3 months)Maritime terminal in the Guanabara Bay (Rio de Janeiro)– 12/14 MM m³/day (estimate

Jul/2008 ± 3 months)

FSRUFSRUFloating Storage and Floating Storage and RegasificationRegasification UnitUnit

Flexible LNG Project

30

PETROBRAS

Northeast Gas Pipeline NetworkUS$ 6.5 billion investments

between 2007-2011

Extension of Gasbol Southern Segment (LNG distribution)

Gasbel ExtensionSoutheast Gas Pipeline NetworkNG infra-structure maintenanceUrucu-Coari-Manaus Gas PipelineGasene – Northern SegmentLNG – Liquefied Natural Gas

Main Projects

Natural Gas Investments

TOTAL INVESTMENTS OF US$ 22,1 BIILION IN THE BRAZILIAN NATURAL GAS CHAIN FROM 2007 – 2011 (Petrobras and Partners)

Espírito Santo

Campos

Santos

31

PETROBRAS

1,73 51,6 9 61,76 11,8 0 41,6 6 81,70 8 1,8 12 1,79 51,6 551,6 3 71,6 8 41,6 4 91,6 4 71,73 11,6 6 51,58 9

807780

818079 79 81

88879191

8783

91 91

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 2004 200550556065707580859095

Domestic oil products production Oil products sales volume

Domestic crude as % of total Primary processed installed capacity - Brazil (%)

• High utilization factor (91%) in the second half of 2005 in the refineries resulted in maintenance of the oil products production high level, diminishing the needs for oil products imports.• In 2005, the contribution of the National oil Production in the feedstock were 84 thousand bpd higher than in 2004.

Business Strategies - DownstreamDomestic refining and sales

32

PETROBRAS

34%

17%13%

7%

8%

21%

BR Ipiranga Shell

Esso Texaco Outras

Market Share of Fuel Distribution Companies in Brazil (%)

• Lead the Brazilian market for oil products and bio-fuels;

• Expand domestic market-share and client portfolio;

• Internationalize and add value to Petrobras’ brand.

US$ 2.2 billion to be invested between 2007-2011

Distribution Investments

33

PETROBRAS

International - Overview

Houston

Colombia

Argentina

Angola

United Kingdom.

USA

BRAZIL

Bolivia Rio de Janeiro

Trinidad &Tobago Nigeria

Venezuela

EcuadorPeru

Mexico

Tanzania

Saudi Arabia

Iran

EXPLORATION AND PRODUCTIONTRADING

HEAD OFFICE

REFINING

UNDER EVALUATION

REPRESENTATIVE OFFICE

New York

Tokyo

Beijing

Singapore

Lybia

Mozambique

Uruguay

Equatorial Guinea

Turkey

34

PETROBRAS

Core Areas:

• Refining

• Add value to Brazilian heavy oil exports

• E&P: West Africa (Nigeria and Angola) & Gulf of Mexico:

• Apply deep water and deep well drilling technology.

• Latin America:

• Leadership as an integrated energy company

70,2%

24,8%

1,7%0,8%

1,7%

0,8%

E&P

Refining andMarketing Petrochemical

Gas & Energy

Distribution

Corporate

Total CAPEX: US$ 12.1 billion

168 163

38396

185

94

2004 2005 2011 Target

Oil and NGL Natural Gas

568

262 259

Thous. boed

Targets

International Investments

35

PETROBRAS

UNITED STATES

MEXICO

HoustonNew Orleans

Cascade

ChinookSt Malo

Producing FieldsDiscoveriesProspects

Coulomb NorthZion

Bryce Sedona

Das Bump

Hadrian

Deep Shelf Gas Prospects

Hadrian S

Monte BeloCottonwood

Live Oak

Aquarius

CentaurusAndromeda

Claudius

Flavian

Aurelian

Redbud

Cygnus

Crater

Aquila

Pegasus

Scorpio

Current PortfolioPosition:

• 80 shallow water blocks and 197 deepwater blocks

• 6 Producing Fields

• 3 discoveries (appraisal) and studies of the production development

• 1 field on development.

• 1 onshore prospect

• Proven reserves (SPE, 2005): 39,0 million boe

• Average production (2005): 5,0 thousand boe/d

The US Sector of Gulf of Mexico

36

PETROBRAS

International - Main Projects in the Gulf of Mexico

• Petrobras (50%) - Operator

• Devon (50%)

• Petrobras (67%) - Operator

• Total (33%)

• Petrobras (80%) - Operator

• Mariner (20%)

Cascade(Under Evaluation)

Chinook(Under Evaluation)

Cottonwood(Development)

• EXPLORATION WELLS •Petrobras (20% to 100%)

• Various partners (Exxon, Newfield, BP,• BHPBilliton, Dominion, Carrizo, Hess,• Kerr McGee

LONG TERM COMMITMENTSTwo drilling units on long term contracts

• Petrobras (25%)

• Unocal (20%) - Operator

• Chevron (13%)

• Encana (6%)

• Devon (23%)

• Exxon (4%)

• ENI (1%)

Blackbeard, Megamata (deep gas)Andromeda (WGoM), Alsace (GBanks)

Saint Malo(Under Evaluation)

37

PETROBRAS

• Petrobras recently announced the acquisition of additional participation in the Cascade and Chinook fields;

• Both fields will be developed using a FPSO* facility, a development concept so far never deployed in the American waters of the Gulf of Mexico;

• Petrobras is conducting an aggressive exploration campaign in the Gulf of Mexico, which includes acquisition of additional acreage and participation in wells being drilled or planned for the near future;

• With these developments, Petrobras consolidates its position as one of the leading players in the ultra deep waters of the Gulf of Mexico, benefiting from its deepwater expertise and technology developed offshore Brazil

* Floating Production Storage and Offloading

Recent Developments - Gulf of Mexico

38

PETROBRAS

2,000m

1,000m

2,000m

1,000m

37,5%37,5%

9%9%

40%40%13%13%

Production (2005):8,300 bpd Proven reserves (SPE):9,1 million bbl

Start up / Production Peak:AGBAMI:- First oil: 2008 / Peak: 250,000 bpd in 2009 (total)AKPO:- First oil: 2008 / Peak: 175,000 bpd in 2009 (total)Proven reserves (SPE): 249 million bbl

315

International - Main Projects in West of Africa

39

PETROBRAS

• As a consequence to the measures adopted by the Bolivian Government, Petrobras will act to:

• Protect its interests through negotiations by all legal means;

• Suspend all new investments in Bolivia as well as those related to the Bolivia-Brazil Gas Pipeline (GASBOL);

• Immediately initiate studies to diversify supply sources, including LNG regasefication project(s);

26.5 31.4 43.0 54.3 61.5 69.630.0 30.030.0

30.030.0

30.0

11.011.04.0

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010

Domestic Production Imports from Bolivia as of existing GSA

National Production Increase or LNG

Natural Gas Offer - Million m3/day Substitution of additional imports from Bolivia

Situation in Bolivia

40

PETROBRAS

North and Central America

37%

Europe

9.8%

South America

38%

Asia

16.2%

Ethanol global market – 46.5 Billions LitersEthanol global market – 46.5 Billions Liters

Brazil35%

Brazil35%

How much the production can be increased to attend the demand with social responsibility?

A New Opportunity for Business

41

PETROBRAS

Agribusiness

Farming

Seeds

or

or

or

Ethanol

Methanol

Glycerin + Others

Biodiesel

B2 or B5mixture

orDiesel

Distributors

DieselRefinery

Hydrogen Diesel Fractions

Stations

ProcessedOil

Crushing

Transerestification

Complementary and not competitive processes

• H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil

• Hydrogenation of a blend of diesel and vegetable oils

Biofuel Production

42

PETROBRAS

2007-2011 Investments 2011 Target

Biodiesel Plants Availability of 855 Thous. m3/year

H-Bio (Bio-Refining) Processing 425 Thous. m3/year of vegetable oil

Wind Power

Photovoltaic 240 MW Installed Capacity of Power Generation from Renewable Sources

Alcohol pipelines3.5 million m3 Ethanol Exports

Alcohol Vessel Project

Other Renewable Energy Sources

* 2010 Target

Investments of US$ 0.7 billion in development of renewable energy sources and biofuels

Renewable Energy and Biofuels

PETROBRAS

2005to

2007(2% allowable)

2008to

2012(2% demanding)

(5% allowable)

From 2012on

(5% demanding)

Brazilian market0 – 5.2 million barrels

Petrobras market share0 – 1.3 million barrels

Brazilian market5.2 – 15.7 million barrels

Petrobras market share1.3 -3.8 million barrels

Brazilian market15.7 million barrels

Petrobras market share3.8 million barrels

Law 11.097/2005 – established minimal percentage for biodiesel mix in diesel

• Petrobras target for 2010: Production of 8,200 bpd of Biodiesel• Two new experimental units of biodiesel (Guamaré – Rio Grande do Norte), which have received investments of R$ 19 million in research & development until now, will produce up to 300 bpd of biodiesel.

Future Markets for biodiesel

44

PETROBRAS

• Ethanol global market is 46.5 Billion Liters (2005)

• Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production)

• Today the ethanol consumption is 2.6% of gasoline MKT

• 10% of ethanol in gasoline will represent 118 Billion Lt

• Recently, Petrobras incorporated Brazil-Japan Ethanol Inc.

• The company will import and distribute Brazilian-produced ethanol in Japan;

• Development of technical and commercial solutions for the reliable and long term supply of alcohol in the Japanese market;

• Petrobras will break into one of the most complex and important energy markets in the World:

• ethanol logistics distribution

• fuel distribution sector in Japan.

Brazil-Japan Ethanol Inc.

Ethanol Market

45

PETROBRAS

Marine Terminal Rio de Janeiro

Marine Terminal São Paulo

New Ethanol Pipeline (800 km)

New Water Wayfor Ethanol Ethanol Export

8.0 Million m3 in 2012

Ethanol Logistic to ExportEthanol Logistic to Export

46

PETROBRAS

• Consumer wants to decide the fuel at the gas station

• Fuel price is one the most important factor

• Consumer is aware of pollution and renewable fuels

• Today cars manufacturer is producing 80% of FFV in Brazil

010,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

units

Jan-

03

Feb-

03

Mar

-03

Apr

-03

May

-03

Jun-

03

Jul-0

3

Aug

-03

Sep-

03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb-

04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-0

4

Aug

-04

Sep-

04

Oct

-04

Nov

-04

Dec

-04

Jan-

05

Feb-

05

Mar

-05

Apr

-05

May

-05

Jun-

05

Jul-0

5

Aug

-05

Sep-

05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

LIGHT VEHICLES TOTAL SALES

Ethanol Gasoline FFV

Flex-Fuel Vehicles

PETROBRAS

3rd Quarter 2006 Results(Brazilian Corporate Law)

48

PETROBRAS

1,779

1,736

1,751 1,757

1,725

3Q05 4Q05 1Q06 2Q06 3Q061.7001.7101.7201.7301.7401.7501.7601.7701.7801.790

Domestic oil and NGL productionth

ousa

ndbp

d

∆ = 3.1%∆ = 1.3%

• 1.3% increase due to P-50 (Albacora Leste) and FPSO Capixaba (Golfinho) platforms performances, both recently started operations;

• In the 3Q06, P-50’s contribution was around 18 thous. bpd above 2Q06 average, while FPSO Capixaba increased production around 8 thous. bpd in the same period.

49

PETROBRAS

US$

10.

80 b

bl

E&P – Oil Prices

• The spread between Brazilian oil and Brent decreased from US$ 11.42/bbl, in the 2Q06, to US$ 10.80/bbl, in the 3Q06.

36,14 35,1137,48

43,04

54,24

46,05

53,69

58,2 58,6951,59

69,4969,62

61,75

56,9

61,53

47,8344,00

41,59

38,9839,70 44,19

49,33

56,39

52,7

57,59

64,7466,07

3T04 4T04 1T05 2T05 3T05 4T05 1T06 2T06 3T06

US

$/bb

l

Average Sales Price Brent (average) Cesta OPEP

50

PETROBRAS

5.446.07 6.32 6.12 6.64

3Q 05 4Q 05 1Q06 2Q06 3Q06

∆ = 8.5% or US$ 0.52

Domestic Lifting Costs without Government ParticipationU

S$/b

bl

Main Causes• Higher expenditure in:

• Transportation cost, seismic and drilling for wells intervention;• Corrective maintenances;• Higher costs due to initial operational phase in Albacora Leste and Golfinho

fields.

51

PETROBRAS

Lifting Costs including Government Participation

• Government participation remained stable due to the stability of the Brent price, FX rate and production.

59%

3,0 3,4 4,3 6,0 5,4 5,4 6,1 6,3 6,64,0 5,1

6,47,7 8,4 9,7 10,0 11,0

6,1

11,511,4

69,569,6

24,828,8

38,2

47,551,6 61,5 56,9

61,8

-4

1

6

11

16

21

26

2002 2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06

US$

/boe

-20

-10

0

10

20

30

40

50

60

70

Lifting Cost Gov. Participation Brent

7.08.5

10.7

13.6 13.915.2 16.1

17.3 17.5 18.1

57%

63%

62% 63

%

Obs.: Lifting Cost w/ gov. part. series was adjusted (retroactive to 2002) due to new ANP interpretation of the expense deductibility for the Finance Project of Marlim Field, calculated as special participation.

52

PETROBRAS

1.7951.8121.7611.804 1.753 1.7571.6841.6491.647

1.720

89

91 91

91 93

798180 80 79

1.000

1.200

1.400

1.600

1.800

2.000

2.200

2.400

3Q05 4Q05 1Q06 2Q06 3Q06505560

65707580

859095

D o mest ic o il pro ducts pro ductio n Oil pro ducts sales vo lume

P rimary pro cessed installed capacity - B razil (%) D o mest ic crude as % o f to tal

%

Thou

s. b

arre

ls/d

ay

Refining and Sales in the Domestic Market

• 4 pp reduction in throughput due to: • Oil supply limitation;• More scheduled stoppages compared to 2Q06;

• 1 pp decrease in domestic crude participation in processed feedstock due to operational problems in Golfinho (less light oil) and increase spread between fuel oil and domestic heavy oil (more profitable to export).

• Increase in sales volume due to seasonality in agricultural diesel consumption, industrial fuel oil and substitution of imported naphtha.

53

PETROBRAS

1.862.03

1.902.07

2.48

3Q 05 4Q 05 1Q 06 2Q 06 3Q 06

• 20% increase compared to the previous quarter due to the occurrence of more scheduled stoppages.

Domestic Refining Costs (US$/bbl)

54

PETROBRAS

20

40

60

80

100

Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06ARP Brazil (US$/bbl) Brent Average Price ARP USA (w/ volumes sold in Brazil)

72,28

69,49

81,83

3Q06Average

70,66

69,62

81,78

2Q06Average

• Prices in US reflect the Brent price decrease in September;• ARP in Brazil follows the mid term adjustments price policy.

3Q05Average

60,26

61,54

72,43

Average Realization Price - ARP

55

PETROBRAS

Thousand bpd 3Q06 2Q06 % Jan-Sept 06

Jan-Sept 05

%

Total Oil Products 1,757 1,684 4 1,697 1,658 2Alcohol, Nitrogen and others 35 13 169 26 26 0Natural Gas 250 239 5 240 224 7Total Domestic Market 2,042 1,936 5 1,963 1,908 3Exports 564 536 5 540 498 8International Sales 509 459 11 468 388 21Total International Market 1,073 995 8 1,008 886 14Total 3,115 2,931 6 2,971 2,794 6

Sales Volume

2006 includes ongoing exports

• Increase in the sales of fuel oil, diesel, LPG and gasoline.

56

PETROBRAS

6.959

11.267

13.614

21.260

37.948

7.085

10.303

12.912

27.066

43.363

Net Income

Operating Profit

EBITDA

COGS

Net Revenues

2Q06 3Q06

27.3%

1.8%

-5.2%

-8.6%

14.3%

Income Statement 3Q06 vs 2Q06R

$ M

illio

n

• Net Revenues: 5% increase in the domestic sales volume, oil exports (33%) and ARP (2%);

• COGS: ANP (National Petroleum Agency) new interpretation of special participation in the Marlim field (retroactive to 2002); expenses adjustment related to reinjected gas (Solimões, Campos and Esp. Santo Basins).

• Net Income: R$ 1.492 billion in benefits due to Interest on Own Capital provision, reduced in R$ 321 million relative to bonds buyback.

57

PETROBRAS

890

378

1.415

1.353

1.342

531

1.459

1.546

Others

Exploratory Costs

General andAdministrative Exp.

Sales Expenses

2Q06 3Q0614.3%

3.1%

40.5%

50.8%

Operating Expenses Analysis 3Q06 vs 2Q06

• Operating Expenses increase mainly because of:

• Sales Expenses: increase in domestic sales (5.5%) and oil exports volume (33%);

• Exploratory Costs: write-off of dried wells (Brazil and abroad);

• Others: hedge contract maturity with ANDINA (R$ 167 million) and others (R$ 285 million).

R$

mill

ion

58

PETROBRAS

Changes in Operating Profit (3Q06 vs. 2Q06)- E&PChanges in Operating Profit – R$ million

Domestic Oil, NGL and Condensate – thousand bpd 1,7791,757

• Quarter characterized by the increase in production and accounting of extraordinary items.

10.938 18

1.040536

408420

6426 10.198

2Q06 Oper.Profits

Price effecton Net

Revenue

Volumeeffect on Net

Revenue

Average costeffect on

COGs

GasReinjection

Effect

Marlim part.Calculation

Effect

Volumeeffect on

COGs

OperatingExpenses

3Q06 Oper.Profits

Extraordinary Items:

R$ 834 million

59

PETROBRAS

2.486

1.017

2.160

106 1.461

2.944

3.168

2Q06 Oper.Profit

Price effect onNet Revenue

Volume effecton Net

Revenue

Average costeffect on COG

Volume effecton COGs

Oper. Exp. 3Q06 Oper.Profit

Changes in Operating Profit (3Q06 vs 2Q06)- SupplyChanges in Operating Profit – R$ million

• Increase in oil products domestic sales volume (4%), offset by inventory sales with a higher average cost.

60

PETROBRAS

507

183

219 283

156

137

333

2Q06Operating

Profit

Price Effect onRevenues

Volume Effecton Revenues

Cost Effect onCOGS

Volume Effecton COGS

OperatingExpenses

3Q06Operating

Profit

• Cost effect on COGS due to:• Increase in the production costs in Bolivia resulting from tax increase on hydrocarbons from

50% to 82% as of May 2006.• Stoppage in the San Lorenzo refinery, Argentina.

Changes in Operating Profit (3Q06 vs 2Q06)- InternationalChanges in Operating Profit – R$ million

61

PETROBRAS

Main factors that affected the Gas & Energy Business

• R$ 581 million loss mainly due to: • R$ 150 million decrease in gross income due to lower energy

commercialization margins because of increase in the Electric Energy Commercialization price (decrease in reservoirs water level in South region);

• Loss accrual of R$ 167 million, resulting from conclusion of hedge contract that reduced imported natural gas price volatility.

• These factors were partially offset by the 5% increase in the natural gas sales volume.

Gas & Energy Results (3T06 vs. 2T06)

62

PETROBRAS

• COGS: influenced by extraordinary effects (R$ 426 million reinjected gas and R$ 408 million special participation costs in Marlim field) and sales of higher costs inventories;

• Operating Expenses: write-off of dried wells (Brazil and foreign); increase in the domestic sales and oil exports volume; maturity of the hedge with ANDINA, operating expenses with thermoelectric plants and others.

Domestic Oil, NGL and Condensate – thousand bpd 1,7791,757

Changes in Net Profit – R$ million (3Q06 vs 2Q06)

6.959

5.415 4.982

573824341 321

1.603 149 7.085

2Q06 NetProfit

Revenues GOGS w/oextraordinary

items

Extr. Items Oper. Exp. Fin. and NonOper. Exp.

and Eq.Income

BondsBuyback

Taxes MinorityInterest

3Q06 NetIncome

Extraordinary Items andBonds Buyback:

R$ 1.145 million

63

PETROBRAS

181263 262

257

355267233

209269

213249

228

2003 2004 2005 1Q06 2Q06 3Q06

Oil Oil Products

446536

512 519

409

450352 344

115

319 354 373

105 94

109

88137

2003 2004 2005 1Q06 2Q06 3Q06

Oil Oil Products

424 446 442459

559564510

Imports (thousand bpd)Exports (thousand bpd)

Net exports of oil and oil products

54 thous. bpd volume surplus in the 3Q06

2006 includes ongoing exports

• Oil exports increase due to scheduled stoppages in refineries with high complexity;• Oil products imports increase due to the seasonal increase in the diesel

consumption.

64

PETROBRAS

R$ million 09/30/2006 06/30/2006Short Term debt (1) 11,858 12,214Long Term Debt (1) 32,280 31,307

Total Debt 44,138 43,521

Cash and Cash Equivalents 24,519 22,713

Net debt (2) 19,619 20,808

18%20%

26%24%

17%

28%26%

19% 23%

27%

set/05 dez/05 mar/06 jun/06 set/06

Net Debt/Net CapitalizationShort-Term Debt/Total Debt

LeveragePetrobras’ Leverage Ratio

(1)Includes debt contracted through leasing contracts of R$ 3.300 million on December 31, 2005, and R$ 4.021 million on December 31, 2004.(2)Total debt - cash and cash equivalents

(1)Includes debt contracted through leasing contracts of R$ 2,729 million on September 30, 2006, and R$ 2,815 million on June 30, 2006.(2)Total debt - cash and cash equivalents

• Decrease in total and net debt:

• Strong operating cash generation allows reduction of the debt (bonds buyback) and increase in cash balance.

65

PETROBRAS

3Q06 2Q06(=) Net Cash from Operating Activities 10,209 11,365 (-) Cash used in Cap. Expend. (8,337) (6,640) (=) Free Cash Flow 1,872 4,725 (-) Cash used in Financing and Dividends (66) (4,995) Financing (60) (1,472) Dividends (6) (3,523) (=) Net Cash Generated in the Period 1,806 (270) Cash at the Beginning of Period 22,713 22,983 Cash at the End of Period 24,519 22,713

R$ million

• R$ 1,8 billion increase in Free Cash Flow.

Consolidated Cash Flow Statement

66

PETROBRAS

Jan-Sept/06 % Jan-Sept/05 % %• Direct investments 20.264 90 14.751 87 37 Exploration & Production 11.404 51 8.907 53 28 Supply 2.800 13 2.184 13 28 Gas and Energy 1.203 5 1.098 6 10 International 3.923 17 1.871 11 110 Distribution 477 2 368 2 30 Corporate 457 2 323 2 41 • Special Purpose Companies 2.072 9 1.914 11 8

• Ventures under Negotiation 300 1 169 1 78

• Project Finance 1 0 87 1 0

Total Investments 22.637 100 16.921 100 34

R$ million

Investments (Capex)

• Following the targets established in its Business Plan, the company continues to invest primarily in Exploration and Production.