1

José Sergio Gabrielli de AzevedoPresident and CEOSeptember 25, 2006

The Role of Petrobras

in Energy Integration and Renewable

Fuels in South America

22

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

33

Concentration of reserves in sensitive areas cause for increasing concern

• In the medium to long term light oil supplies likely to come from Middle East, Africa (OPEC) and Russia •More than 62% of the world reserves on the hands of 5 Middle East Countries

Asia North America

AfricaSouth and Central America

Europe &

Eurasia

MiddleEast

742.7

40.259.5

103.5

(reserves billion boe)

114.3 140.5

Fonte: BP Statistical Review of World Energy

44

12,7%

7,6%

13,4%

5,0%

4,8%

56,5%

Middle East Europe & Eurasia Africa

North America Pacific Asia Latin America

7.9%

6.4%

8.8%

3.8%

8.0%

65.1% 11.7%

9.4%

5.1%

3.5%

8.5%

61.8%

1984 1994 2004

Total762 billion boe

Total1.017 billion boe

Total1.188 billion boe

• In 20 years, Latin America’s proven reserves increased from 36.6 billion barrels (1984) to 101 billion barrels (2004).

Source: BP Statistical Review of World Energy

Latin American proven oil reserves have increased in relative importance and average life

R/P* = 26.77R/P* = 41.78

R/P* = 41.84

* Reserves/Production Latin America (years)

55

24%

16%

1%11%

2%

46.0%

World Total Primary Energy Supply has shown increased use of gas, coal and nuclear sources

Source: IEA Energy Statistics

1973

25%

21%

6%

11%2%

35.2%

2004

25.21%

22.12%

26.19%

13.04%2,59%

10.85%

Coal Crude OilGas NuclearHydro Renewables and Others

Increase5,069 Mtoe

6,154 Mtoe 11,223 Mtoe

66

Compared to OECD, LA uses more hydro, oil and renewables and less nuclear and coal (2003)

Source: IEA Energy Statistics

5%

20%1%

19%

10% 45.5%

Coal Crude OilGas NuclearHydro Renewables and Others

Latin America

21%

22%

11%

4%2%

40%

OECD464 Mtoe 5,395 Mtoe

25%

21%

6%

11%2%

35%

World10,579 Mtoe

In comparison to the whole world LA uses much less coal and more crude oil as a result of China.

77

Transportation (liquids) in energy consumption is likely to increase with growing income

Source: IEA Energy Statistics

39%28%

3%

30%

Industry Sector Transportation Sector

Other Sectors Non-Energy Use

Latin America

30%

33%

4%

33%

OECD364 Mtoe 3,754 Mtoe

88

Coal Crude Oil Natural Gas Nuclear Hydro Renewables Geothermal/Solar/Eolic

Coal has dominated Electric Energy Generation growth in the world

99

Carvão Petróleo Gás Natural Nuclear Hídrica Renováveis Geotérmica/Solar/Eólica

While in LA hydro power has predominated followed by natural gas

1010

Explore synergies between existing companies in Brazil, Argentina, Bolivia and Colombia

Increase exploration and production efforts in Peru, Ecuador and Venezuela

Intensify commercial operations in Paraguay, Uruguay and Chile

Invest in tecnology logistics and production of renewable fuels

Participate in development of integrated gas pipeline network

PETROBRAS in position to promote energy integration in South America

1111

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 already points to integration and renewable fuels

PETROBRAS

121212

309416427

593614624660

809908919945

1.2671.4481.484

Sinopec

Repsol

Statoil

ENI

Lukoil*

Yukos*

ConocoPhillips

Petrobras

Total

Chevron Texaco

Petrochina*

Shell

BP

ExxonMobil

6.3434.026

2.9982.747

2.708

2.202

2.1952.114

1.2231.175

1.139524

296

2.275

XOM

RDSSinopec

BP

TOTCOP

PetroChinaCVX

PetrobrasYukos

Repsol

LukoilENI**

Statoil8,0

9,0

10,1

11,5

12,2

12,2

12,3

13,1

14,2

14,6

15,1

19,6

20,8

32,7

Repsol

Shell

Statoil

ENI

BP

Total

Sinopec

Chevron Texaco

ConocoPhillips

Petrobras

ExxonMobil

Petrochina*

Yukos*

Lukoil*

3,33,84,3

6,89,4

11,111,511,812,113,0

17,618,5

20,122,4

Repsol

Sinopec*

Statoil

ENI

ConocoPhillips

Total

Shell

Petrobras

Chevron Texaco

Yukos*

BP

Petrochina*

Lukoil*

ExxonMobil

Petrobras already among largest publicly traded companies

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

1313

Note: Includes International

31.0

12.41.0

1.0

49.3

23.0

7.53.32.3

1.8

E&P Downstream G&EPetrochemical Distribution Corporate

9%4%

3% 26%

56%

3%

Business Plan 2007-2011US$ 87.1 billion

86%

14%

Brazil International

US$ 12.1 bi

US$ 75.0 bi

Investment Plan reflects integrated global expansion

49,3

23,0

7,53,32,21,8

1414

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

Capex to be financed with its own cash flow

1515

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%

      

     P

etrob

ras

      

     S

hell

      

     T

otal

      

     C

NOOC

      

     S

tatoil

      

     B

P

      

     E

xxon

Mob

il

      

     L

ukoil

      

     C

hevro

n

      

     C

onoco

Phillips

      

     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

Oil and gas production based on development of existing reserves

17

1616

2, 3742, 812

551

724

742

185

278

383

2015

For ec as t

1, 6841, 880

1, 540 1, 493

250 265274

289

133

161 168163

85

101

9496

2003 2004 2005 T ar get 2006

Oi l and NG L - B r az i l Natur al G as - B r az i l

O i l and NG L - I nter nac i onal Natur al G as - I nter nac i onal

2,036 2,020 2,2172,403

3,493

4,556Thousand boed

7.8% p.a.

7.5% p.a.

Target 2011

Production targets assure brazilian consumption and among most ambitious in the industry

1717

Fast growing domestic natural gas market for electicity and other uses

Mil

lio

n m

3 /d

ay

Mil

lio

n m

3 /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 Other

National 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

36.9

Variation 2004 x 2005

Others 150%

Industry 8,30%

Thermoplants -26,04%

1818

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.

Brazilian market open for investments in downstream

1919

Main Projects

Rio de Janeiro Petrochemical Complex

Acrylic Complex /SAP

PTA Pernambuco

Nitrogenated Fertilizers Unit III

Fafen BA

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.

and petrochemicals

• Investments of US$ 3.3 billion in Petrochemicals or more with Rio de Janeiro petrochemical plant

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

Liquids Outflow Unit

Petrochemical Complex –

Itaboraí

2020

South Cone: US$ 2.8 Million Americas, Africa e Eurasia: US$ 5.4 Million

New Businesses: US$ 3.9 Million

Others 4%

Ecuador 4%

Peru 8%

Argentina 84%

Nigeria/Guine 33%

Others 8%

Venezuela 9%

United States50%

Southern cone and Venezuela to receive US$3.3 billion Capex and US$3.9 billion still to be allocated

2121(*) Petrobras Energía

Argentina (*)Proved Reserves: 336 MMBOe (SPE, 2005)

2005 Average Production: 104,000 boed

Refining and Distribution: 62,900 bbld in Ricardo D. Eliçabe – Bahía Blanca, Refisan - San Lorenzo; and Refinor (28.5 % interest:) refineries648 service stationsLUBRAS lubricant plantDock Sud and Puerto Galvan TerminalsPetrochemicalPower generationEnergy Transmission and DistributionOil and Gas Transportation

Producing, refining and distributing in the South Cone

Bolívia

Production: San Alberto e San Antonio; and Colpa-Caranda (*)

Proved Reserves: 553 MMBOe (SPE, 2005)

2005 Average Production: 54,100 boed

Yacuiba – Rio Grande Gas pipe (431 km, 32”, 17 MM m3/dia transportation capacity)

2 Refineries, with 60,000 bpd of total capacity

20 service stations with Petrobras brand

Paraguay

132 service stations

Uruguay

89 service stations

Natural Gas Distribution: share control and operation of Conecta and Gaseba (Montevidéu)

2222(*) Petrobras Energía

Ecuador (*)

1 Production Block

1 Exploration Block

Proved Reserves: 81.2 MMBOe(SPE 2005)

Production: 9.1 thous. boed – 2005

Peru (*)

1 Production Block

5 Exploration Blocks

Proved Reserves: 109.2 MMBOe(SPE 2005)

Production: 14.3 thous. boed – 2005

Exploring and producing in Ecuador and Peru

2323

Venezuela

4 Production Blocks (*)

2 Explorations Blocks (*)

Proved Reserves: 269 MMBOe(SPE 2005) (*)

Production 47.6 thous. boed – 2005 (*)

Moruy II exploratory block, operated by Petrobras in the Venezuelan Golf

(*) Petrobras Energía

Colômbia

6 Production Blocks. Includes Guando field, the largest discovery in the country in the last 15 years.

11 Exploration Blocks. Includes Tayrona Block (22,500 km2) in deep waters of the Caribbean Sea

Proved Reserves 36.3 MMBOe (SPE 2005)

Production 16.6 thous. boed – 2005

39 service stations

Producing and exploring in Colombia and Venezuela, and distributing in Columbia

PETROBRAS

242424

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

Company commitment to reduce carbon intensity of operations and products

2525

Ethanol from sugar cane much more efficient than from other crops

Raw Material Energy Output / Energy Input(boe)

Wheat 1.2

Corn 1.3 – 1.8

Sugar Beet 1.9

Sugar Cane(under Brazilian production conditions)

8.3

Raw Material

Production / ha

(kg)

Quantity of Ethanol / ha

Energy Output /

Energy Input (boe)

Sugar Cane 85,000 7,080 liter 8.3

Corn 10,000 4,000 liter 1.3 – 1.8

PETROBRAS

262626

• 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

0

10,000

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

Ap

r-03

May

-03

Jun

-03

Jul-

03

Au

g-0

3

Sep

-03

Oct

-03

No

v-03

Dec

-03

Jan

-04

Feb

-04

Mar

-04

Ap

r-04

May

-04

Jun

-04

Jul-

04

Au

g-0

4

Sep

-04

Oct

-04

No

v-04

Dec

-04

Jan

-05

Feb

-05

Mar

-05

Ap

r-05

May

-05

Jun

-05

Jul-

05

Au

g-0

5

Sep

-05

Oct

-05

No

v-05

Dec

-05

Jan

-06

Feb

-06

Mar

-06

LIGHT VEHICLES TOTAL SALES

Ethanol Gasoline FFV

Ethanol-gasoline flex-fuel vehicles are already a reality

2727

• 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 may become a global market

2828

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

But as all renewables need investments in logistics

PETROBRAS

292929

Agribusiness

Farming

Seeds

or

or

or

Ethanol

Methanol

Glycerin + Others

Biodiesel

B2 or B5 mixture

orDiesel

Distributors

DieselRefinery

Hydrogen Diesel Fractions

Stations

Processed Oil

Crushing

Transesterification

Bio diesel and H-bio will reduce dependency on imported diesel

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

303030

Muchas Gracias