PETROBRAS:

THE WAY FORWARD

— October 24th, 2016

2

FORWARD-LOOKING STATEMENTS:

DISCLAIMER

The presentation may contain forward-looking statements about

future events within the meaning of Section 27A of the Securities Act

of 1933, as amended, and Section 21E of the Securities Exchange Act

of 1934, as amended, that are not based on historical facts and are

not assurances of future results. Such forward-looking statements

merely reflect the Company’s current views and estimates of future

economic circumstances, industry conditions, company performance

and financial results. Such terms as "anticipate", "believe", "expect",

"forecast", "intend", "plan", "project", "seek", "should", along with

similar or analogous expressions, are used to identify such forward-

looking statements. Readers are cautioned that these statements are

only projections and may differ materially from actual future results

or events. Readers are referred to the documents filed by the

Company with the SEC, specifically the Company’s most recent

Annual Report on Form 20-F, which identify important risk factors

that could cause actual results to differ from those contained in the

forward-looking statements, including, among other things, risks

relating to general economic and business conditions, including crude

oil and other commodity prices, refining margins and prevailing

exchange rates, uncertainties inherent in making estimates of our oil

and gas reserves including recently discovered oil and gas reserves,

international and Brazilian political, economic and social

developments, receipt of governmental approvals and licenses and

our ability to obtain financing.

Disclaimer

— We undertake no obligation to publicly update or revise any forward-

looking statements, whether as a result of new information or future

events or for any other reason. Figures for 2016 on are estimates or

targets.

All forward-looking statements are expressly qualified in their

entirety by this cautionary statement, and you should not place

reliance on any forward-looking statement contained in this

presentation.

In addition, this presentation also contains certain financial

measures that are not recognized under Brazilian GAAP or IFRS.

These measures do not have standardized meanings and may not be

comparable to similarly-titled measures provided by other

companies. We are providing these measures because we use them

as a measure of company performance; they should not be

considered in isolation or as a substitute for other financial

measures that have been disclosed in accordance with Brazilian

GAAP or IFRS.

NON-SEC COMPLIANT OIL AND GAS RESERVES:

CAUTIONARY STATEMENT FOR US INVESTORS

We present certain data in this presentation, such as oil and gas

resources, that we are not permitted to present in documents filed

with the United States Securities and Exchange Commission (SEC)

under new Subpart 1200 to Regulation S-K because such terms do not

qualify as proved, probable or possible reserves under Rule 4-10(a)

of Regulation S-X.

WHERE WE ARE

WHERE WE WANT TO BE

HOW WE WILL GET THERE

MANAGEMENT SYSTEM

LONG TERM STRATEGIC DRIVERS

3

WHERE WE ARE

—

4

Where we are

—

Uncertainties in global economy

Oil industry

Changes in the competitive scenario: shale oil/gas

Portfolio optimization and adjustments to the workforce

Petrobras’ Context

Lava-Jato operation

Challenging regulatory framework and judicial disputes

High-cost high debt levels

Business environment in Brazil

5

Excess supply pushes oil prices down

—

Supply and demand balance

(kbpd)

Source: U.S. Energy Information Administration

Average deficit:

0.1 kbpd

6

Brent Price Trend (2005 – 2016) (US$/bbl)

Source: Bloomberg. Data as of 10/21/2016

2012 2013 2014 2015

1,4

0,6

-0,8 -0,9 -0,6

0,1

-0,5

-0,9

0,3

0,6 0,4

1,9 1,6

1,8

1,2

2,3

1,3

0,2 0,4

3Q 2016

Average surplus:

1.4 kbpd

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0

5

10

15

20

25

30

35

2006 2015 1H16

21

11

Petrobras: financial situation

—

Operating cash generation Gross debt

0

1

2

3

4

5

6

2006 2015 2Q16

0.4

5.3

4.5

Net Debt / EBITDA

7

21

132

124

Growing Debt relative to Cash Generation

(US$ billion)

8

Attraction of private

investments

Expectation of a more dynamic and competitive business environment

—

1997

End of

Petrobras’

monopoly

2008 2006

Pre-salt

discovery

Discussion of new

pre-salt regulatory

framework

Interruption of bid

rounds

2016

Changes in the pre-salt

regulatory framework

Partnerships and divestments

by Petrobras

Improvement in local content

policy

Economic stability

Regulatory stability

Regularity of bid rounds

Market opening:

competitive

environment

1999

Partnerships

with Petrobras

10 bid rounds with the participation of several companies

1998 2013

Resumption of

bid rounds

Start of bid

rounds

WHERE WE WANT TO BE

—

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An integrated energy company

focused on oil and gas that

evolves with society, creating

high value, with a unique

technical capability

OUR VISION

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OUR VALUES

Ethics and

transparency

Market

driven Results

oriented

Overcoming

and confidence

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Respect for life,

people and

environment

Main Metrics of Strategic Plan (SP) and Business and Management Plan (BMP)

—

SAFETY FINANCIAL

Reduction of

36% In the Total Recordable Injury

Frequency Rate (TRIFR*)

Reduction in

LEVERAGE Net Debt/EBITDA

* TRIFR = number of reportable injuries per million man-hours

TO

2.5

in 2018

FROM

5.3 in 2015

TO

1.4

in 2018

FROM

2.2 in 2015

12

HOW WE WILL GET THERE

—

13

Highlights of the Plan

—

main metrics drive the strategy

Unified Plan

New management system with targets cascaded down

to supervisory level

Disciplined execution: systematic monitoring of goals with mid-course corrections

New tools of cost management

Meritocracy

2 (SP and BMP)

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Engagement of the leadership

SAME FOCUS ON GOALS AND RISC MITIGATION

EVOLUTION

15

Gasoline and diesel prices: aligned with market

—

Import parity

Tax

Margin and risk

IP

Volatility in foreign exchange, oil and oil products prices,

delays and others

CIDE, PIS and COFINS, ICMS

Price at the refinery

16

Investment spending by Petrobras (Capex)

—

17

2017 Capex

US$ 19.2 Billion

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

100,00

PNG 2015-2019

(revisão JAN 2016)

PNG 2017-2021

81%

82%

17%

17%

2%

1%

Comparison of total capex

(US$ Billion)

Exploration & Production (E&P) Other segments Refining & Natural Gas (RNG)

98.4

74.1

-25%

2015-2019 BMP (Jan 2016 review)

2017-2021 BMP

Cost reductions

—

142

126

2015-2019

BMP 2017-2021

Estimates

2017-2021

BMP

-18%

53% 37%

10%

E&P RGN Demais áreas

Manageable operating costs*

(US$ Billion)

18

153

* Manageable operating costs: lifting, refining, logistics and distribution costs, overhead and others

Refining & Natural Gas (RNG) E&P

Partnerships and divestments

—

2015-2016 2017-2018

19.5

15.1

Amount in US$ Billion

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Benefits of the partnerships

Risk sharing

Capex reduction

Increased capacity to invest along the value chain

Technological exchange

Strengthening of corporate governance

The partnerships and divestments program of

Petrobras leverages third parties investments

that might surpass US$ 40 Billion* in the next

10 years.

* Does not consider investment of suppliers to increase capacity

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0

1

2

3

4

2017 2021

Produção Óleo, LGN e Gás

Oil+ NGL Brazil

Oil + gas International

2.52

3.34

2.07

2.77

Natural gas Brazil

2.62

3.41

Production profile

—

Oil , NGL* and Gas production

(million boed)

* Natural Gas Liquids

Main risks*

—

Material changes to market conditions

Divestments and partnerships below plan

Judicial disputes

Renegotiation of the Transfer of Rights terms

Impact of Local Content on costs and timing of the projects

Delays in the construction of platforms

Higher than expected capex

*These risks are not exhaustive

Risks and mitigating activities

managed by accountable

people

MANAGEMENT

SYSTEM

—

Defined Strategic Plan and

top BMP targets...

Next steps of the

management system

… supported by specific

initiatives

Define action plans for the

initiatives

Detail targets – Scorecards

Application of Zero Base

Budgeting (ZBB) methodology

Actively manage risks

Define monitoring governance

and tools

Culture change

✓ ✓

Next steps: it is all about execution

—

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EVOLUTION

add value which can be stopped?

Is each area

Are there activities that do not

Is it possible to do deliver targets

Is there a simpler way to work without

compromising safety and quality?

Threshold (Most important)

High priority expenses

Medium priority expenses

Low priority expenses

EXPENSES TOWER

Application of Zero Base Budgeting (ZBB) methodology

—

focused on its core activities?

more efficiently?

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Petrobras is preparing a culture change plan in three phases

—

Transformation

culture 1

Prosperity

culture 2

Continuity

culture 3

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2016/2017

2017/2018

2018/2019

Based on a high performance culture, with tangible results, which will prioritize people

safety, ethics, simplicity, transparency and trust

Petrobras is implementing a program to reduce bureaucracy

—

ASSUMPTIONS

Simplicity for

productivity

Trust with consequence

GOALS

Agile decisions without

compromising safety and

compliance

Simplification of internal

processes leading to a

reduction of times and cost

DRIVERS

Excessive number of

standards and reports

To foster mutual trust

Slow and complex decision

processes

Impact to productivity at

both corporate and

operational areas

STRUCTURE

Program led by the Chief

Strategy and Performance

Officer

Managing group responsible

for program coordination

Executive group formed by

project teams, with

representatives from

involved areas

Initial focus on decision

processes, management

reports, standards and

control systems

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LONG TERM

STRATEGIC DRIVERS

—

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We will continue to strengthen our company to become a

reference in ethics, governance, process integrity, safety

and productivity

Our company will be guided by business principles in

compliance with its social objectives

We will move ahead with a prudent and sustainable

approach, maintaining a long-term view on financial,

environmental and social aspects

We will be one of the best companies to work for, with

meritocracy as the key pillar for recognizing our employees’

development

We will consider opportunities to increase our international

presence, taking advantage of the learnings of the past

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We will seek alternative higher value added uses for oil,

including the integration between the refining and

petrochemical areas

We will continue to be at the forefront in deep water

technological development and knowledge

We will expand our expertise in renewable energy,

seeking competitiveness in the medium and long term

We will pursue a relevant share in the market of gas as a

transition energy to a low carbon society

We will continue to be Brazil's largest integrated energy

company focused on oil and gas and with a growing

presence in alternative energy

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