1

José Sergio Gabrielli de AzevedoCEO and PresidentAugust, 2007

Petrobras and the Biofuels

PETROBRAS

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.

Cautionary Statement

3

1984 1994 2004

Total762 billion barrels

Total1.017 billion barrels

Total1.188 billion barrels

In 20 years, Latin America proven reserves increased from 36.6 billion barrels (1984) to 101 billion.Source: BP Statistical Review of World Energy

R/P* = 26,77 R/P* = 41,78 R/P* = 41,84

* Reserves/Production Latin America (years)

12,7%

7,6%

13,4%

5,0%

4,8%

56,5%

Middle East Europe & Eurasia AfricaNorth 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%

Latin American Share of Oil World Reserves Latin American oil reserves are becoming increasingly important

4

Source: Internacional Energy Agency Reference Scenario

Net Oil Availability

Mbpd

Latin America

Russia

AsiaUnited StatesOECD(- Mexico)

Projected growth in oil production and demand suggests balance and independence of supply from politically unstable regions

Includes Bitumen and non-conventionals, including synthetic oils.

5

Source: Cambridge Energy Research Associates.

Gas Rich Region with limited infrastructureProven Reserves as of January 1, 2005

14.5 Tcf

26.1 Tcf

Brazil

Argentina

Perú

Mexico

Venezuela

26.1 TcfBolivia

11.7 Tcf

17.7Tcf

152 Tcf 19.4 Tcf

Trinidad

2005 GasProven ReservesWorld:179,8 T m3

South and Central America:7,02 T m3

0.41 T m3

4.3 T m30.55 T m3

0.74 T m3

0.33 T m3

0.74 T m3

0.50 T m3But:::: Will require increasing energy

integration and::: Substantial investments in

infrastructure covering great distances and environmentally sensitive regions

Ample gas reserves will allow for:::: Regional growth in consumption

substituting some demand for oil::: Higher exports of liquids

6

Production X Demand X Refining Capacity: Reaching Self-Sufficiency

112,197,670,449,355,356,216,719,532,228,430,53,0

2011F20062000199519901985198019751970196519601955Production/ Consumption

(%)

1954 1960 1970 1980 1990 2000 2006 2011

THO

USA

ND

BPD

0

500

1000

1500

2000

2500

Production

Consumption

Refining

Brazil: first major market to shift from import dependency to self sufficiency since first oil from North Sea in 1971 began to shift european balance

Proj.

7

A Track Record of Growth

2.374

2.812

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

1004 11321271 1336

1500 1540 1493

163179

197221

232

252 250 265

1684 1778

809 869

274 277

152

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

1,565 1,636

1,810

2,2172,298

2,036 2,020

1,2381,090

1,405

1,008

3,493

4,5568,7% p.y.

7.9% p.y.

In Thousand boed

1996 2001 2006 2011

2015

Brazil is the 1st country to reap benefits from Ethanol

Accumulated effective economy:1 Billion boe ~US$ 52 bi

During this period, ethanol

utilization saved 644 million ton.

of CO2 emission

1976 1980 1984 1988 1992 1996 2000 20041972

CNG

ETHANOL

GASOLINE

120000

140000

160000

10000

80000

60000

40000

20000

0

1000

BEP

PROÁLCOOLAlcohol Vehicles

Beginning of the sector deregulation

Source: MME, BEN 2006

End of regulation 1999 FFV

Alcohol Exports 2005

Because program is government regulated there are no benefits from KT but benefitsof reduction in CO2 emissions have already materialized;

Used up to 10% in petrol, ethanol substitutes lead and MTBE as an oxygenate, withour any change in engines, without harmo to air or groundwater

9

Ethanol can be introduced also as a partial or full substitute for petrol: up to 25% (Brazil) partial motor adjustments require participation of automobile industry; up to/over 85% requires flex-fuel vehicles, consumer preference (price/performance).

Source:Henry Joseph Jr. ANFAVEA - Volkswagen

Ethanol

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• A strong increase in the demand for ethanol is expected;• Ethanol as a substitute to Lead and MTBE•This amount of future consume may be levered if new countries adhere the compulsive blend with ethanol.

Source: F.O. LICHT, 2004

Strong Increase in Demand

Clean Air Act

Lead Substitution

MTBE Substitution

Renewable Fuels Standard

Etha

nol G

loba

l Dem

and

(Milli

on lit

ers/Y

ear)

Demand Overview

11

•Only in the US, a 5.7% addition of ethanol the gasoline would translate into a consumption of 30 billion liters of ethanol per year.

Souce: EIA/DOE; Comissão Européia; FO Licht; Copersucar

A PROMISING MARKET

Total: 31.1 billion liters

Potential demand considering 5% ethanol addition to the gasoline formula5%0.7Thailand

Percentage approved only in some regions5%?India

Potential demand considering 5% ethanol addition to the gasoline formula in 20115%7.4EU

Potential demand considering 10% ethanol addition to the gasoline formula10%4.5China

Expected demand in 2012, according with the Renewables Fuels Law-16.8US

Potential demand considering 3% ethanol addition to the gasoline formula3%1.7Japan

CommentEthanol addition

Potential demand(Billion liters)Country

Demand Overview

12

•Biofuels usage can reduce CO2 emissions at a 5:1 rate;•Besides being a cleaner source of energy, sugar cane ethanol produces 8,3 more energy than the fossil energy used in its production process. Ethanol usage in Brazil has decreased the emission of Greenhouse Effect Gases at 13% (1994 data);•Sugar-cane is the most productive among ethanol raw materials and the production of ethanol has limited affect on food supply.

Energetic balance - Ethanol

0

2

4

6

8

10

Sugarcane

Wheat Beet-root

Corn

O Etanol contribui para a redução do aquecimento globalEn

erge

tic ra

tio

Source: World Watch Institute

Ethanol Productivity

0

1000

2000

3000

4000

5000

6000

7000

sugar-cane- Brazil

sugar-beet- EU

sugar-cane- India

corn - USA wheat - EU

liter

s pe

r hec

tar

Demand Overview

13

0

2

4

6

8

10

12

14

16

18

20

US$

/GJ

2002

Ethanol prices in Brazil Rotterdam regular gasoline price

Quais seriam os motivos do diferencial de produtividade brasileira ?

1980 199519901985 2002

Source: Goldemberg 2004

*Source: Volkswagen (Brazil) - Presentation prepared for review within The Warren Centre for Advanced Engineering at Sydney University

Ethanol Engine Relative Performance*

Price Reduction

103,3% 110,0%

0

20

40

60

80

100

120

140

Power

Gasoline 100% Gasohol 22% Ethanol 100%

110,0%

132,4%

Consumption

Greater production cost reduction when compared

to gasoline.

14Source: Ministry for the Development of Industry and Commerce

0

200

400

600

800

1000

1200

1400

1600

1800

1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

0,5

1

1,5

2

2,5

3

3,5

4

Export Revenues - F.O.B. Exports (secondary axis)

Brazilian ethanol exports increased sharply in the last three years, resulting in US$ 1.6 billionexport revenues in 2006.

US$

Mill

ion

F.O

.B.

Bill

ion

Lite

rs

2003-2006: 352% increase

Supply Overview – Brazilian Ethanol Exports

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Brazil35%

The potential to expand world production is enormous

North and Central America

37%

South America38%

Asia16.2%

Europe9.8%

Current Market Distribution of World Consumption

Ethanol global market is 46.5 Billions LitersEthanol as a Fuel is 30.6 Billions Liters, or 67% of total ethanol production

Today the ethanol consumption is 2,6% of gasoline MKTIncreasing ethanol to 10% of gasoline will represent 118 Billions Lt

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Supply Overview

16Source: World Energy Outlook 2006

• World Supply of Biomass and Waste reached 1,176 Mtoe in 2004 (10% of total supply);

• According to the International Energy Agency Reference Scenario, it will reach 1,645 Mtoe in 2030, an increase of 1.3% p.a., still representing 10% of total supply.

35

25

21

6

10

2 1

Oil Coal Gas Nuclear Biomass andWaste

Hydro OtherRenewables

Shar

es (%

)

Non-Renewables

Renewables

2004 13%

87%

Supply Overview - Increase in the supply of Biofuels

17

1,023

77

42

Oil Bio Other

659132

45

Oil Bio Other

36%

16%

4%

2%

5%

9%

4%

18%

5%

United States

OECD Europe

OECD Pacific

Other OECD

Brazil

China

India

Other Asia

Rest of World

Reference Increase in Demand 2004-2030 (mtoe)

Alternative Increase in Demand 2004-2030 (mtoe)

Bio 2004-2030Reference - Alternative

But transport sector can still contribute to emission reductions(IEA alternative scenario)

Increased use of renewable fuels can contribute to reduce projected increase in energy for transport by 7 %, to 15 % if adequate policies followed.

The direct benefits in emission reductions would be equally distributed between US, Europe OECD and the rest of the world

Total: 1,142 mtoe Total: 836 mtoe

18Source: World Energy Outlook 2006

Brazil’s AdvantagesAverage production costs are projected to drop by around a third between 2005 and 2030.

• Ethanol production costs vary widely across countries, mainly due to climatic factors: crop production costs are much lower in tropical countries.

• According to the IEA, costs in Europe and the United States would be significantly higher without crop and ethanol subsidies.

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Diferenças de produtividade na cana de açúcar

Source: FAO

0,2

0,6

1,7

2,2

Asia andPacific

Europe NorthAmerica

LatinAmerica

Potential Arable Land

(1.000 ha per capita)

61,455,6

48,6

13,9

Asia andPacific

Europe NorthAmerica

LatinAmerica

% of Potential Arable Land actually in use

•Availability of lands, water and low labor cost also benefit production in Central and South America. Latin America has the largest potential arable

land per capita and only uses 13,9% of it.

72,4169,34 71,13 73

67,77

Asia USA CentralAmerica

SouthAmerica

Brazil

Sugar-Cane Productivity

Yield per Hectare

1000

Kg/

Ha

World Average

Latin America offers excellent potential to increase ethanol production

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Diferenças de produtividade na cana de açúcar

• 33% of the world’s internal renewable water resources are concentrated in Latin America;

Internal renewable water resources

(m³ per capita – 1997)

6.984

27.673

33.097

0

5000

10000

15000

20000

25000

30000

35000

World Latin America andCaribbean

Brazil

Source: FAO

73%

19%

9%

20%

9%71%

Agriculture Domestic Industrial

21%

18%

61%

Brazil

World

Latin America andCaribbean

Annual water use by sector

Latin America’s Advantages

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Primary BaseSecondary BaseCollection Centers

RailwaysInland Navigation

RoadMulti product pipelines

Large scale marine terminals improveefficiencyLarge storage capacitynecessary to regulatesupplyPipelines reducetransport costs; improveenergy efficiency

Ethanol collection, storage and

distribution centersare spread out

through producingand consuming

regions

Ethanol Logistics System in Brazil

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22

José Sergio Gabrielli de AzevedoCEO and PresidentAugust, 2007

Petrobras and the Biofuels