1

PetrobrasBusiness Plan 2007-2011,

the Gulf of Mexico, and Renewable Fuels

José Sergio Gabrielli de AzevedoPresident and CEO

September 20th, 2006

2 2

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

3 3

53,6% 61,6%44,4% 40,6% 40,1% 39,8%

46,4% 18,0%25,1% 23,1% 20,7% 20,4%

10,3% 9,9% 8,0% 8,3%

31,5%10,9%9,5% 20,3% 26,4% 31,2%

Oct/1992 Jul/2000 After Aug/00offering

After Jul/01offering

Dec/2003 Aug/06

Government (1) (%) Bovespa Brazil Bovespa Foreign ADRs

(1) Includes BNDES / BNDESPAR

Foreign39,8%

Free Float 46,4 38,4 55,6 59,4 59,9 60,2

Bovespa28,7%

Diversified Shareholder Base

• More than 400,000 investors in Brazil and abroad• 60% of the economic value of Petrobras in private hands• Almost 40% of the stocks with international investors

PETROBRAS

444* Every ADR program of the company.

Source: Bloomberg

Petrobras’ ADRs in NYSE

Turnover (traded volume) in NYSE 1H06 daily average

US$

223

mill

ion

US$

247

mill

ion

US$

256

mill

ion

US$

359

mill

ion

US$

150

mill

ion

US$

128

mill

ion

US$

123

mill

ion

US$

118

mill

ion

US$

111

mill

ion

US$

101

mill

ion

-

50

100

150

200

250

300

350

400

Petrobr

as*

Cia. Vale

do Rio D

oce* BP

Nokia

América

Móvil

*Elan

Corp

.

Cemex

BHP Billi

ton Total

Tenari

sU

S$ m

illio

n

PETROBRAS

555

50

100

150

200

250

300

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

Apr

-06

May

-06

Jun-

06

Jul-0

6

Aug

-06

Sep-

06

PBR Amex Oil

105%

50%

Petrobras’ ADRs x Amex Oil

01/01/2005 = 100

PETROBRAS

666

309416427

593614624660

809908919945

1.2671.4481.484

SinopecRepsolStatoil

ENILukoil*Yukos*

ConocoPhillips

PetrobrasTotal

Chevron TexacoPetrochina*

ShellBP

ExxonMobil

6.3434.026

2.9982.7472.708

2.2022.1952.114

1.2231.1751.139

524296

2.275

XOMRDS

SinopecBP

TOTCOP

PetroChinaCVX

PetrobrasYukos

RepsolLukoil

ENI**Statoil8,0

9,010,1

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

19,620,8

32,7

RepsolShell

StatoilENIBP

TotalSinopec

Chevron TexacoConocoPhillips

PetrobrasExxonMobilPetrochina*

Yukos*Lukoil*

3,33,84,3

6,89,4

11,111,511,812,113,0

17,618,5

20,122,4

RepsolSinopec*

StatoilENI

ConocoPhillips

Total

ShellPetrobras

Chevron Texaco

Yukos*

BPPetrochina*

Lukoil*

ExxonMobil

Publicly traded peer comparison

Proven reserves (SEC - billion boe) – Dec. 2005 Oil and gas production (million boe) - 2005

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

Source: Evaluate Energy and Company Reports

7th

5th

9th

7th

7 7

Liderar o mercado de petróleo, gás natural e derivados na América Latina, atuando como empresa integrada de energia, com expansão seletiva

da petroquímica e da atividade internacional.

Growth ProfitabilityGrowth ProfitabilitySocial and Environmental Social and Environmental

ResponsibilityResponsibility

Consolidate and increase

competitive advantages in

the Brazilian and South American

oil and oil products market

Develop and lead the domestic

natural gas market and perform in an integrated manner

in the gas and power market in South America

Selectively expand

international activities in an

integrated manner with the

Company’s business

Selectively expand interest

in the petrochemicals

market

Expand participation in biofuels market, lead the domestic

biodiesel production and increase

participation in the ethanol business

Operational, management, technological and human resources excellence

Lead the Latin American oil, natural gas, oil products and biofuels market, working as an integrated energy company, with selective expansion in petrochemical, renewable energy and

international activities.

Corporate Strategy

Corporate Strategy

8 8

Energy

Industry

Imported OilProducts

ImportedOil

Imported Gas

International OilProduction

LNG

H - Bio

DomesticNatural GasProduction

Biodiesel Oil Productssold in Brazil

InternationalSales

OtherRenewables

Infrastructure

Petrochemical Plants

Brazilian OilProduction

Throughputin Brazil

InternationalRefining

Integration of the Company's Activities

Ethanol

9 9

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

10 10

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 TargetsSources & Uses

11 11

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

Conoco

Phillips

Reps

ol-YPF

Petr

oChina

Sinop

ec

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

Upstream

17

12 12

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

UpstreamProduction targets – Oil & NGL and Natural Gas

13 13

Natural Gas and EnergyDomestic natural gas market

Mill

ion

m3 /d

ay

9,6 7,1

48,422,9 24,8

38,6

5,4 13,5

34

up to 71.0

up to 30.0

up to 20.0

0

20

40

60

80

100

120

140

2004 Consumed in2005

MaximumDemand 2011(*)

Potential Supply2011

Thermoplants Industry OtherNational Production Bolivian Imports LNG

* Considers maximal dispatch for every thermoelectric power plant

121.017.7% p.a.

121.0

45.4

Natural gas market

36.9

-26,04%Thermoplants8,30%Industry150%Others

Variation 2004 x 2005

16 16

New Refinery in the USA

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

• Total Investment: US$ 370 million; Petrobras share of upgrade US$ 1 billion

• 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;

• Possible increase in capacity to 200,000 bbl/day.

DownstreamRefining Investments

17 17

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.

DownstreamRefining Investments

PETROBRAS

202020

The Petrochemical Chain

Exploration/Production Refining

Oleophinesand Aromatics Production

Intermediate Polymers Production

Transformation Uses

Natural Gas Liquids

EthylenePropane

Oleophines

EthanePropene

Aromatics

BenzeneP-Xylene

PoliethylenePolipropylene

Styrene/PSPTA/PETAA/SAP

MEG

Processes

ExtrusionBlow

Injection

PackagingFilms

ComponentsAutomotive

PipesWires

Home ApplianceFibersOil Refineries

(Naphta)

Non-integrated oil companies Petrochemical companies

Integrated Oil companies TranformationIndustry

Total Capex US$ 8.4 billion of which US$4.9 billion basic petrochemicals and US$ 3.5 billion downstream

PETROBRAS

212121

Oil Natural Gas Renewables

Investments of US$ 0.7 billion in renewable energy and biofuels

Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent)

Availability of 855,000 m3/year of biodiesel

Processing 425,000 m3/year of vegetable oil (H-BIO)

240 MW installed capacity of power generation from renewable sources

3.5 million m3 ethanol exports

Carbon intensity reduction of operations and products

22 22

Fuel Ethanol Program Evolution

Brazilian Experience

Program for oil imports reduction Environmental Benefits

70’s 80´S 90´S

EthanolProgram

Implanted(BLENDS)

Gasohol and Ethanol Cars(2nd oil shock)

Program of Emission Controls

(PROCONVE)Gasohol and Flex fuel Cars

00´S

Renewablesand

Hydrogen

Future

24 24

Facts about Ethanol Market in 2005

608 x 103 KCAL

598 x 103 KCAL

512 x 103 KCAL

1718 x 103 KCAL

1 Ton Sugar Cane

SUGAR 153 KG

BAGASSE(50% UMIDADE)

276 KG

LEAVES (*)(15% HUMIDY)

165 KG

1 Ton-Field1718 x 103 KCAL

1.2 boe

1 boe1,386 x 103 KCAL

~=

• 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

25 25

Raw Material Comparison

8.3Sugar Cane(under Brazilian production conditions)

1.9Sugar Beet1.3 – 1.8Corn

1.2Wheat

Energy Output / Energy Input(boe)

Raw Material

1.3 – 1.84,000 liter10,000Corn

8.37,080 liter85,000Sugar Cane

Energy Output / Energy Input

(boe)

Quantity of Ethanol / ha

Production / ha(kg)Raw Material

26 26

40,84%

49,46%

9,70%

Anhydrous, Hydrous and Neutral Sugar Cachaça, Sweet and Animal Feed

Anhydrous and Hydrous Ethanol => 17 Billion liters

Sugar Cane Crop Profile 2005

PETROBRAS

292929

• 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

150,000units

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

323232

• 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

PETROBRAS

333333

Agribusiness

Farming

Seeds

or

or

or

Ethanol

Methanol

Glycerin + Others

Biodiesel

B2 or B5mixture

orDiesel

Distributors

DieselRefinery

Hydrogen Diesel Fractions

Stations

ProcessedOil

Crushing

Transerestification

H-Bio

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;

PETROBRAS

353535

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

• Investments in the United States: US$ 2.7 billion

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

InternationalPresence in 21 Countries

PETROBRAS

363636

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

The US Sector of Gulf of MexicoCurrent Portfolio

Position

• 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

• In the latest Western Gulf of Mexico Lease Sale (Aug/16/2006), Petrobras had the highest number of bids (34), totaling an amount of US$ 45,5 million.

PETROBRAS

373737

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)

PETROBRAS

383838

Recent DevelopmentsGulf of Mexico

• Acquisition of additional participation in the Cascade and Chinook fields;

• Use of a FPSO* facility, a development concept so far never deployed in the American waters of the Gulf of Mexico;

• Aggressive exploration campaign in the Gulf of Mexico, including acquisition of additional acreage and participation in wells being drilled or planned for the near future;

* Floating Production Storage and Offloading

Cascade and Chinook Fields

Petrobras consolidating 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

39 39

Final CommentsVertical Integration Comparison

Majors Average *

2,735

3,176

4,793

4,329

1,630

1,579

National Oil Companies Average **

Petrobras2,296

2,114

Product Sales (thous. bpd)

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

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

*** 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

PETROBRAS

404040

Question and Answer Session