1

Business Plan 2007-2011

July 2006

José Sergio Gabrielli de AzevedoPresident and CEO

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

Petrobras will be an integrated energy company with a strong international presence and a

leading force in Latin America, working with a focus on

profitability and social and environmental responsibility.

Vision 2015

4

Business Plan 2007-2011:Drivers & Strategies

5 5

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

6 6

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

7

Business Plan 2007-2011:Fundamentals

8 8

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

FundamentalsMacroeconomic 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.

99

Fundamentals Brent prices 2006-2015 forecasts

2004

-201

0Fo

reca

sted

Ban

d

US$

/bbl

5429

3856

62

42 38 38 39 41 42 43 44

0

20

40

60

80

100

120

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Max. and Min. BP 2004-2010 (US$ nominal)Petrobras (US$ nominal - as of 2008 US$ 35 in current value)Max. and Min. BP 2007-2011

2007

-201

1Fo

reca

sted

Ban

d

• Supply and demand tight equilibrium → high volatility in medium and long terms;• Petrobras assumes conservative values for Brent prices → low end of market’s

forecast band.

Brent prices 2006-2015 forecasts

10 10

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

F&D Costs - 3 years average Oil price (Brent)Source : Costs – PFC Energy – Companies average: Exxon, BP, Shell, Total, Chevron, COP, Eni, Repsol, Petrobras

Prices – Platt´s

Fundamentals Cost escalation

• Crude oil escalation → high industry services cost and reduction of lag to oil prices.

Evolution of E&P Industry Costs and Oil Prices

11 11

315 368237 282

777935

128

211

201 224

10897

0

500

1000

1500

2000

2500

2005 2011

LPG Gasoline A NaphtaDiesel* + Jet Fuel Fuel Oil Coke + Others

Thou

sand

bpd 1,766

2,1173.1% p.a.

*Includes Biodiesel (2%)

Fundamentals Domestic oil products market

Oil products demand

• Increasing demand for middle distillates.

12 12

Fundamentals Domestic natural gas market

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

13

Business Plan 2007-2011:Investment Plan

14 14

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

15 15

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 Capexin 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

16

Business Plan 2007-2011:E&P Investments

17 17

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

E&P Investments

17

PETROBRAS

181818

(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

E&P InvestmentsBrazilian production curve

1,114Accumulated

Natural Decline

690

Net Increase

+

1,804

Gross Increase

Thou

s. b

pd

PETROBRAS

191919

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 InvestmentsProduction targets – Oil & NGL and Natural Gas

PETROBRAS

202020

2,374

2,195

2,0611,979

1,880

1,684

2,368

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2005 2006 2007 2008 2009 2010 2011

Parque dasConchas*** 100.000 bpd

2011

Parque dasConchas*** 100.000 bpd

2011

Albacora LesteP-50

180,000 bpdApril/2006

Albacora LesteP-50

180,000 bpdApril/2006

JubarteFase 1P-34

60,000 bpdOct/2006

JubarteFase 1P-34

60,000 bpdOct/2006

Marlim LesteP-53*

180,000 bpd2009

Marlim LesteP-53*

180,000 bpd2009

FPSO CapixabaGolfinho Mod. 1

100,000 bpdMay 2006

FPSO CapixabaGolfinho Mod. 1

100,000 bpdMay 2006

Frade100,000 bpd

2009

Frade100,000 bpd

2009

RoncadorP-52

180,000 bpd2007

RoncadorP-52

180,000 bpd2007

RoncadorP-54

180,000 bpd2007

RoncadorP-54

180,000 bpd2007

Marlim SulModule 2

P-51180,000 bpd

2008

Marlim SulModule 2

P-51180,000 bpd

2008

Piranema20.000 bpdOct 2006

Piranema20.000 bpdOct 2006

JubartePhase 2

P-57180,000 bpd

2010

JubartePhase 2

P-57180,000 bpd

2010

Rio de JaneiroEspadarte Mod II

100,000 bpd2007

Rio de JaneiroEspadarte Mod II

100,000 bpd2007

ESS-130Golfinho Mod III ****

(FPSO)100,000 bpd

2008

ESS-130Golfinho Mod III ****

(FPSO)100,000 bpd

2008

PostponedCidade de VitóriaGolfinho Mod. 2

100,000 bpd2007

Cidade de VitóriaGolfinho Mod. 2

100,000 bpd2007

New

* In the previous plan, P-53 was scheduled to 2008** In the previous plan, P-55 was scheduled to 2010*** Abalone, Ostra, Argonauta and Nautilus (former BC10): Petrobras share 35%**** In the previous plan, Golfinho Mod. 3 was scheduled to 2010

RoncadorP-55**

180.000 bpd2011

RoncadorP-55**

180.000 bpd2011

Thous. bpd

Antecipated

E&P InvestmentsMain Brazilian Oil & NGL production projects

PETROBRAS

212121

• 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

E&P Investments2011-2015 main Brazilian projects

Oil Production in Brazil (Thous. bbl)

PETROBRAS

222222

3.36

4.28

5.73

6.32

5.60

2003 2004 2005 1Q06 2011 Target

US$/bbl

• New lifting costs targets adjusted to new industry levels, partially offset by the increased production gains.

E&P InvestmentsOil and Gas Lifting Costs

23 23

E&P InvestmentsPetrobras CAPEX vs. Peers CAPEX

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)

24 24• Petrobras CAPEX aims an unique production CAGR among the sector.

E&P InvestmentsProduction CAGR: Petrobras vs. Peers

Production CAGR for the planed period

Petr

obra

s (2

006-

11):

7,8

%

Petr

obra

s (2

011-

15):

6,9

%

Stat

oil (

2006

-07)

: 6,0

%

Luko

il (2

005-

14):

4,7%

Exxo

nMob

il (2

006-

10):

4,0%

BP

(200

5-10

): 4

,0%

Tota

l (20

06-1

0): 4

,0%

Eni (

2006

-09)

: 4,0

%

Che

vron

(200

5-10

): 3

,0%

Eni (

2009

-12)

: 3,0

%

Con

ocoP

hilli

ps (2

007-

11):

3,0%

Rep

sol (

2004

-09)

: 2,6

%

RD

She

ll (2

005-

09):

1,0

%

Petr

obra

s (2

006-

15):

7,5

%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

CAGR for the planed periodSource: Company reports Obs.: Please note that data for different companies is available for different time period.

25

Business Plan 2007-2011:Downstream Investments

PETROBRAS

262626

61%

13%

12%

14%

RefiningPipelines & Terminals TransportShip TransportPetrochemical

US$ 14.2

US$ 3.2

US$ 3.0

US$ 2.8

19%

12%

8%

19%

6%

26%

5%

5%

Gasoline Quality Diesel QualityInfraestructure Maintenance ExpansionHSE ConversionOthers Special

US$ 2.7

US$

0.9

US$ 3.7

US$ 1.1

US$ 1.7US$ 2.7

US$ 0.7US$ 0.7

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.

Downstream Investments

PETROBRAS

272727

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 InvestmentsLiquid products flow

PETROBRAS

282828

Nitrogenated Fertilizers Unit III

PTA Pernambuco

Fafen BA

Acrylic Complex /SAP

Rio de Janeiro Petrochemical Complex

Main Projects Basic Petrochemical Unit:- 150.000 bbl/d of Marlim Oil;- Products: Diesel, LPG, Ethylene, Propylene, PX, Benzene and Coke.

Petrochemical Integrated Complex:- Polypropylene;- Polyethylene; - PTA; - Ethylene glycol; - PET; - Styrene;- Phenol.

Downstream InvestmentsPetrochemical investments

• Investments of US$ 3.3 billion in Petrochemicals;

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

PETROBRAS

292929

FuelsFuels

Basic Basic petrochemicalspetrochemicals

PolypropylenePolypropylenePolyethylenePolyethylene

StyreneStyrene PTAPTAPhenolPhenol

Ethylene GlycolEthylene Glycol

EthyleneEthylenePP--XyleneXylene

BenzeneBenzene

PropylenePropylene

Basic Basic Petrochemicals Petrochemicals Production UnitProduction Unit

Basic Basic Petrochemicals Petrochemicals Production UnitProduction Unit

Marlim oil

150,000 bbl/d

FuelsFuels

Basic Basic petrochemicalspetrochemicals

PolypropylenePolypropylenePolyethylenePolyethylene

StyreneStyrene PTAPTAPhenolPhenol

Ethylene GlycolEthylene Glycol

EthyleneEthylenePP--XyleneXylene

BenzeneBenzene

PropylenePropylene

Downstream InvestmentsIntegrated Petrochemical Complex

PETROBRAS

303030

• Increase in refining costs due to FX rate appreciation and higher refining complexity as new conversion units come on stream each year.

2.90

1.901.90

1.381.14

2003 2004 2005 1Q 06 Target 2011

US$/bbl

Downstream InvestmentsRefining Costs

PETROBRAS

3131

Business Plan 2007-2011:Distribution Investment

PETROBRAS

323232

New products offered by Petrobras’ service stations as of 2006

Expand domestic market-share and client portfolio.

US$ 2.2 billion investments in Distribution.

Offer excellence in service and products.

Increase product and service sales, expanding the company’s activities.

Internationalize and add value to Petrobras’ brand and consolidate it as customer’s favorite.

Lead the Brazilian market for oil products and bio-fuels.

Distribution Investments

33

Business Plan 2007-2011:Gas & Energy Investment

PETROBRAS

343434

Natural Gas Investments

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

PETROBRAS

353535

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 prices to accompany international differentials to oil products.

ConstructionCurrentUnder evaluationGASBOL

Natural Gas Investments

PETROBRAS

363636

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 InvestmentsDelivery Curve

37 37

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

38

Business Plan 2007-2011:International Investment

PETROBRAS

393939

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

40

Business Plan 2007-2011:Financial Targets

PETROBRAS

414141

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 / interest

Free 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 TargetsMain Financial Indicators

42 42

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

43

Business Plan 2007-2011:Final comments

PETROBRAS

444444

• Oil & LGN production and refining throughput growth will maintain a balance between E&P and Downstream segments and making vertical integration options possible, given the importance of these activities both domestically and abroad.

2.013

2.757

3.554

1.9082.376

3.201

0500

1.0001.5002.0002.5003.0003.5004.000

2006 2011 2015

Total Oil and LGN Production (Thous. bpd) Total Throughput (Thous. bpd)

Final CommentsOil and NGL Production x Refining Throughput (Thous. bpd)

45 45

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 ** 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

PETROBRAS

464646

Question and Answer Session