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contentsProfile, mission, vision 2015 and values
Highlights
Message from the president
The conquest of self-sufficiency
Conduct of the oil market
Corporate strategy
o u r b u s i n e s s e s i n b r a z i l
22 Exploration and Production
29 Refining and Commercialization
32 Petrochemicals
35 Transportation
37 Distribution
40 Natural Gas
44 Energy
I N T E R N AT I O N A L A C T I V I T I E S
54 South America
60 North America
61 Africa
62 Asia
SOCIAL AND ENVIR ONMENTAL RESPONSIBIL IT Y
66 Social Investiments
71 Human Resources
75 Health, Safety, and Environment
I N TA N G I B L E A S S E T S
84 Technological Know-how Capital
87 Organizational Capital
88 Relationship Capital
91 Human Capital
B U S I N E S S M A N A G E M E N T
94 Business Performance
97 Capital Markets
103 Risk Management
106 Corporate Governance
112 Corporate Information
116 Glossary, Abbreviations and Addresses
contents
p e t r o b r a s i n b r a z i l a n d o v e r s e a s
THE UNITED STATES
MEXICOVENEZUELA
NIGERIA
IRAN
SINGAPURE
CHINA
ANGOLATANZANIA
BOLIVIA
PARAGUAY
URUGUAY
COLOMBIA
ENGLAND
ECUADOR
PERU
CHILE
ARGENTINA
EQUATORIAL GUINEA
JAPANLIBYA
Coari
SANTA CRUZDE LA SIERRA
GualbertoVillarroel Guillermo
Elder Bell
MANAUS
COCHABAMBASen. Canedo
BRASÍLIA
Copesul
PARAGUAI
Tramandaí
Terminal deRio Grande
Bahía Blanca
São SebastiãoRIO DE JANEIRO
REDUC
REGAP
VITÓRIA
Itabuna
DTBAS
ARACAJUCandeias
Suape
Dunas
Guamaré
Mucuripe
SÃO LUÍS
Jequié
BELÉM
PORTO ALEGRE
FORTALEZA
NATAL
MACEIÓ
SALVADOR
ESPÍRITO SANTONorte-Capixaba
Regência
GOIÂNIA
ARGENTINA
URUGUAI
FLORIANÓPOLISCURITIBA
SÃO PAULO Paranaguá
REFISAN
RICARDO ELIÇABE
REFAP
São Francisco do Sul (DTSUL)
RPBC
Macaé
Pipelines
Fertilizer Plant
Refinery
Terminal
Petrobras overseas
REVAPREPLAN
RECAP
REFINOR
UBERABA
RLAM
REMAN
RECIFE
LUBNOR
CabedeloJOÃO PESSOA
Campina Grande
REPAR
SIX
profile mission
To operate safely and profitably in
the oil, gas and energy domestic
and international markets in a socially
and environmentally responsible
manner, supplying products and
services to meet the needs of its
customers and contributing to the
development of Brazil and the
countries in which it operates.
values
Focus on the Company’s main
stakeholders: shareholders,
customers, employees, society,
government, partners, suppliers
and the communities in which
it operates;
A spirit of entrepreneurship and
an ability to meet challenges;
Focus on obtaining excellent results;
Innovative and competitive spirit
with a focus on providing services
with a competitive edge and
technological competence;
Excellence and leadership in
questions of health, safety and the
preservation of the environment;
A permanent quest for business
leadership.
P E T R O B R A S W I L L B E A N I N T E G R AT E D
E N E R G Y C O M PA N Y W I T H A S T R O N G
I N T E R N AT I O N A L P R E S E N C E A N D T H E
L E A D E R I N L AT I N A M E R I C A , O P E R AT I N G
W I T H I T S F O C U S O N P R O F I TA B I L I T Y
A N D S O C I A L A N D E N V I R O N M E N TA L
R E S P O N S I B I L I T Y.
Petrobras is a publicly listed company that
operates on an integrated and specialized basis
in the following segments of the oil, gas and
energy industry: exploration and production;
refining, commercialization, transportation and
petrochemicals; distribution of oil products;
natural gas and energy. Founded in 1953, the
Company today is the world’s 14th largest oil
company according to Petroleum Intelligence
Weekly. Leader in the Brazilian hydrocarbons
sector, Petrobras has been expanding its
operations to become an integrated energy
company with international operations and a
leader in Latin America.
profile
vision2 0 1 5vision 2015
HIGHLIGHTSHIGHLIGHTS
Operational summary | 2005
2004 2005PROVED RESERVES – SPE criteria (billions of barrels of oil equivalent - boe) (1)(2) 14.9 14.9
Oil and condensate (billions of barrels) 12.1 12.3
Natural gas (billions of boe) 2.8 2.6
AVERAGE DAILY PRODUCTION (th. boed) (1) 2,020 2,217
• Oil and NGL (th. bpd) 1,661 1,847
Onshore 407 396
Offshore 1,254 1,451
• Natural gas (th. boed) 359 370
Onshore 217 213
Offshore 142 157
PRODUCING WELLS (oil and natural gas) – 12/31/2005 (1) 13,821 14,061
Onshore 13,156 12,803
Offshore 665 1,258
DRILLING RIGS – 12/31/2005 50 64
Onshore 19 22
Offshore 31 42
OPERATING PRODUCTION PLATFORMS – 12/31/2005 95 97
Fixed 72 73
Floating 23 24
PIPELINES (km) – 12/31/2005 (1) 30,039 30,343
Oil and oil products 12,553 12,857
Natural gas 17,486 17,486
TANKER FLEET – 12/31/2005
Vessels - company owned 50 50
- chartered 74 75
Tons (millions of deadweight tons - dwt) 8 8
TERMINALS – 12/31/2005
Number 65 66
Storage capacity (million m3) (3) 9.9 10.4
REFINERIES – 12/31/2005 (1)
Number 16 16
Nominal installed capacity (th. bpd) 2,114 2,114
Average throughput processed (th. bpd) 1,847 1,861
Brazil 1,728 1,758
Overseas 119 103
Average daily production of oil products (th. bpd) 1,797 1,839
IMPORTS (th. bpd)
Oil 450 352
Oil products 109 94
EXPORTS (th. bpd)
Oil 181 263
Oil products 228 241
COMMERCIALIZATION OF OIL PRODUCTS (th. bpd)
Brazil 1,637 1,655
INTERNATIONAL SALES (th. bpd)
Oil, Gas and Oil Products 416 385
HIGHLIGHTSORIGIN OF NATURAL GAS (million m3/day) (4) 42 45
Domestic gas 23 23
Bolivian gas 19 22
NATURAL GAS MARKET DISTRIBUTION (million m3/day) (4) 42 45
Distributors 28 31
Thermoelectric power plants 7 7
Domestic consumption 7 7
ENERGY (1)
Number of thermoelectric power plants(5) 7 9
Installed capacity (MW)(5) 2,194 3,203
Energy sales (GWh) 11.32 16.64
Number of hydroelectric power plants 2 2
Installed capacity (MW)(5) 285 285
Transmission lines (km) 15,414 15,414
Energy distribution (TWh/year) 13 13
FERTILIZERS (1)
Number of plants 3 3
Some 2004 data were revised due to changes in the criteria.(1) Includes overseas data, corresponding to Petrobras’ stake in each partnership(2) Proved reserves are calculated according to SPE (Society of Petroleum Engineers) criteria(3) Includes Transpetro’ port terminals only(4) Excludes flare off, own E&P consumption, liquefaction and reinjection(5) Includes only assets with an equity stake equal or larger than 50%
4 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 5
2004 2005 %Gross Operating Revenue 150,440 179,065 19%
Net Operating Revenue 111,128 136,605 23%
Operating Profit 29,930 39,773 33%
Financial Result (3,321) (2,843) -14%
Net Income 16,887 23,725 40%
Net Income per Share (R$/share) 3.85 5.41 41%
EBITDA 36,798 47,808 30%
Total Debt 55,803 48,242 -14%
Net Debt 35,816 24,825 -31%
Market Value 112,458 173,584 54%
Gross Margin 41% 44% 3%
Operating Margin 27% 29% 2%
Net Margin 15% 17% 2%
Financial and Economic Indicators
Brent (US$/bbl) 38.21 54.38 42%
US Dollar Average Price - Sale (R$) 2.9262 2.4350 -17%
US Dollar final Price - Sale (R$) 2.6544 2.3407 -12%
2004 2005Own Investments 21,151 22,927
Exploration & Production 12,441 13,934
Supply 3,907 3,286
Gas & Energy 625 1,527
International 2,331 3,153
Distribution 1,223 495
Corporate Areas 624 532
Special Purpose Companies (SPCs) 775 2,385
Ventures under Negotiation 454 311
Project Finance 169 87
Total Investments 22,549 25,710
Financial summary | 2005
I N V E S T M E N T S R$ mi l l ion
R$ mi l l ionC O N S O L I D A T E D F I N A N C I A L I N F O R M A T I O N
Market Capitalization Net Equity
HIGHLIGHTS
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 7
Oil and Oil Products Spill (m3)
Spills of more than 1 barrel (0.159 m3) impacting
the environment outside the installation perimeter.
2001
2002
2003
2004
2005
2,619
197
276
530
269
Gross Margin, Operating and Net (1)
BR GAAP Criteria
Gross Margin
Operating Margin
Net Margin
Earnings/Share
BR GAAP Criteria
(R$/share)(1)(2)
2001
2002
2003
2004
2005
2.27
1.86
4.06
3.85
5.41
Net Income
BR GAAP criteria
(R$ million)(1)
2001
2002
2003
2004
2005
9,867
8,098
17,795
16,887
23,725
(1) The 2004 and 2005 fiscal years include the Specific Purpose Companies whose activities are controlled, directly or indirectly, by Petrobras (2) For the effects of comparison, Net Earnings per share were recalculated for the previous periods as a result of the share split approved by the AGM of July 22, 2005.(3) The 2001, 2002 and 2003 fiscal years include debt contracted by the SPEs with which Petrobras structured "Project Finance" and consortia. The2002, 2003, 2004 and 2005 fiscal years include leasing contracts.
Short-Term
Long-Term
Funds obtained but still not used in projects
Net Debt
20052004200320022001
Valor de Mercado Valor Patrimonial
56 54
2001 2002 2003 2004 2005
Market Capitalization x Net Equity
(R$ billion)(1)
78
174
112
87
6249
3429
2001 2002 2003 2004 2005
17%
39%36%
45%
20%
44%41%
29%
19%
12%
24%
17%
29%
15%
27%
2001 2002 2003 2004 2005
44.2
49.6
46.2
37.1
8.5 8.1 11.19.610.9
Debt – BR GAAP Criteria
(R$ billion)(1)(3)
1.3
3.3
9.7
40
34.7
35.8
24.8
18.2
Production of Oil, NGL,
Condensate and Natural Gas
(th. boed)
Voting Capital - Preferred Shares
Federal Government
BNDESPar
ADR Level 3
FMP – FGTS Petrobras
Foreign Investors (Resolution no. 2.689 C.M.N.)
Other individuals and legal entities
2001
2002
2003
2004
2005
Proved Reserves of Oil, NGL, Condensate
and Natural Gas SPE Criteria
(billions boed)
Oil, NGL and Condensate
Natural Gas
Oil, NGL and Condensate
Natural Gas
2001
2002
2003
2004
2005
BNDESPar
ADR Level 3 and Rule 144-A
Foreign Investors (Resolution no. 2.689 C.M.N.)
Other individuals and legal entities
Federal Government
BNDESPar
ADR (ON Shares)
ADR (PN Shares)
FMP – FGTS Petrobras
Foreign Investors (Resolution no. 2.689 C.M.N.)
Other individuals and legal entities
Voting Capital – Common Shares
Number of lost time injuries per millionmen-hours of exposure to risk.Note: LTIFR covers employees and outsourced workers
Lost Time Injury
Frequency Rate (LTIFR)
2001
2002
2003
2004
2005
2.89
1.53
1.23
1.04
0.97
2.8% 1.9%
2005 2004
15.7%
37.1%
31.7%
15.5%
37.2%
15.8%
31.8%
15.2%
Capital Stock
7.6% 32.2%
15.9%
8.2%
2.7%
15.7%
17.7%
32.2%
18.0%
7.8%
15.7%
2.8%
15.4%
8.1%
2005 2004
2005 2004
8.5 10.62.1
9.9 12.22.3
11.6 14.5
12.1 14.92.8
12.3 14.92.6
1,381 258 1,639
1,535 275 1,810
1,701 335 2,036
1,661 359 2,020
1,847 370 2,217
Commom shares - 2,536,673,672
Preffered shares - 1,849,478,028
Total shares - 4,386,151,700
2.8% 1.9%4.6%
7.5%
27.5%
4.9%7.9%
55.7%26.7%
55.7%
HIGHLIGHTS
2.9
MESSAGE FROM THE PRESIDENT
MESSAGE FROM THE PRESIDENTMESSAGE FROM THE PRESIDENT
“ I N A S I T U A T I O N I N W H I C H A
S C A R C I T Y O F E N E R G Y
R E S O U R C E S , M A I N LY O I L , H A S
B E C O M E M O R E A N D M O R E
E V I D E N T , A C H I E V I N G S E L F -
S U F F I C I E N C Y R E P R E S E N T S A N
I M P O R T A N T S T E P T O W A R D S
R E D U C I N G T H E R I S K A N D
V U L N E R A B I L I T Y O F B R A Z I L ´ S
T R A D E B A L A N C E . A N D
P E T R O B R A S I S P R O U D T O B E
M A K I N G A N I M P O R T A N T
C O N T R I B U T I O N T O W A R D S
R E A C H I N G T H I S G O A L .”
It is with special pride that I present the Company’s results for 2005, a year in which we set records for
production, profitability and investments. The Company ended the year with an annual daily production of oil
and gas of 2,217 million barrels of oil equivalent (boe), consolidated earnings of R$ 23,725 billion and total
investments of R$ 25,710 billion, all historical records.
In order to obtain these results, we implemented a vigorous plan of action based principally on the
continuation of a bold investment cycle that allows us to achieve sustainable returns over the medium and
long-term. This effort, initiated during the administration of President José Eduardo Dutra with whom I shared
the command of the company during 2005, made it possible to restructure our activities and improve our
strategic vision of the future.
In practical terms, I should mention that we passed the benchmark of 1.8 million barrels of oil per day
(bpd) produced in Brazil, mainly due to the startup of the P-43 and P-48 platforms. We consider this a
milestone in the ability of Petrobras’ technical and managerial staff to overcome challenges. In 2003, these
units were well behind in executing their projects and ran serious risks in contractual and
operational feasibility. Nevertheless, we were able to reverse the situation and today
the two rigs are operating at full production.
As a result, we were able to boost annual oil production in Brazil by 13%. This growth
placed Petrobras in the ranks of companies with the highest rise in production in the
world oil industry in 2005. Even with our expanded production, we were able to
guarantee a 131% replacement rate of our oil reserves. That is, for each barrel we
produced, we replaced 1.31 barrels in our reserves, meaning that we continue to maintain
long-term sustainable growth.
In step with the restructuring of our exploration portfolio and the
preservation of sustainable growth, during the 7th Bidding Round
run by the National Petroleum, Natural Gas and Biofuel Agency
(ANP), Petrobras acquired 96 new exploratory blocks, of which
42 were exclusive and 54 were in partnership, totaling the
greatest number of exploratory areas in its portfolio since
the Agency began running the auctions.
We are now quite close to self-sufficiency in
providing oil and oil products to our main market
MESSAGE FROM THE PRESIDENTM E S S A G E F R O M T H E P R E S I D E N T
MESSAGE FROM THE
in its composition, and it already is fueling fleets of buses and trucks in large cities. Developed by
Petrobras, the new fuel contributes to improve air quality and is part of the Company’s commitment to
social and environmental responsibility.
Moreover, the projects that have been approved by the current management in Brazil have a
commitment to domestic content of at least 60%, which will strengthen local industry and generate
thousands of direct and indirect jobs. Of particular note in this regard was the approval of the order for
42 tankers — the largest to be given to the naval industry in the country.
The confidence of our shareholders and investors in the Company’s results can be
measured by the performance of our shares. During the course of 2005, there was an
increase in the average daily financial trading volume of Petrobras’ shares. After the
stock split concluded in September 2005, to make shares more accessible to small
and medium sized investors, Petrobras’ shares became the most-traded security on
the São Paulo Stock Exchange. We expanded our shareholder base and earned an
investment grade rating from Moody’s Investor Service for our foreign currency debt
— four levels higher than the classification of the Brazilian sovereign risk.
Petrobras’ results in 2005 were reflected in the Company’s market capitalization,
which rose 54% in 2005. Today we are the 8th most valuable company in the sector in
the world and the highest valued in Latin America, according to Business Week magazine
In the following pages, you will find greater detail about Petrobras’ results in 2005.
They were conquests that consecrated the efforts of our employees and suppliers
along with the trust of our shareholders and customers.
JOSÉ SERGIO GABRIELLI DE AZEVEDO
President and CEO of Petrobras
— Brazil. This target, which is symbolic for Brazilian society, will materialize in a sustainable manner in 2006,
as soon as the recently launched P-50 platform reaches its peak production capacity of 180,000 bpd in
the Campos Basin. In a situation in which a scarcity of energy resources, mainly oil, has become more and
more evident, achieving self-sufficiency represents an important step towards reducing the risk and
vulnerability of Brazil´s trade balance. And Petrobras is proud to be making an important contribution
towards reaching this goal.
Petrobras has sought to expand its activities with the same entrepreneurial determination and spirit.
The Company’s project for international expansion is based upon the same ethical and business
principles that are leading the Brazilian market to sustainable self-sufficiency. Thus, in 2005 Petrobras
intensified its activities in Africa, South America and United States, strengthening its international
presence. The Company’s overseas offensive also includes the purchase of assets in Colombia, Paraguay
and Uruguay, and the acquisition of 50% of the Passadena Refinery in the United States, an investment
of some US$ 370 million that will add value to the oil produced by the Company.
Pursuing the same strategic objective of adding value to its products, Petrobras decided to build a new
refinery in the Northeast of Brazil, in the state of Pernambuco, with scheduled investments of US$ 2.5
billion. This is the first project for a Petrobras refining facility since conclusion of the Henrique Laje
Refinery (Revap) in 1980 in the state of São Paulo.
In the energy area, Petrobras took over full control of three power plants in 2005: TermoRio (1,040
MW), Eletrobolt (388 MW) and TermoCeará (220 MW) — the latter two being Merchant type plants. In
February 2006, we signed a memorandum of understanding for the acquisition of the Macaé Merchant
Plant (929 MW), thus reducing the need to make contingency payments. We took major steps to expand
natural gas distribution infrastructure with the approval of projects such as the Southeast-Northeast
Interconnection Pipeline (Gasene) and the expansion of the Southeast and Northeast grids, satisfying the
growing demand for our product.
One of the underpinnings of our action plan has been continuous massive investment in technological
development. And the results can be seen in, for example, the national record for drilling depth: a slanting
well that reached 6,915 meters below the sea bottom in the Santos Basin. Our refineries have been
adapted — and this is a permanent practice — to process more heavy oil and to improve the quality of
our products, extracting high added value oil products. We introduced Diesel 500, with 75% less sulfur
10 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
PRESIDENT
The largest natural gasreserve on theBrazilian continentalshelf is discovered inthe Santos Basin. Newlight oil provinces arefound in Espírito Santoand Sergipe, with highpotential forexploration andproduction.
Petrobras breaks thework offshoreproduction record atthe Roncador fieldin the CamposBasin, producing at1,853 meters ofwater depth.
The first semi-submersibleplatform totally developed byPetrobras technicians(Petrobras-18) beginsoperations in the Marlim fieldof the Campos Basin).
First offshore discoveryof oil: the Guaricemafield in Sergipe.
Exploration of thecontinental platformfrom Maranhão toEspírito Santo isinitiated.
Creation of thePetrobras ResearchCenter (Cenpes).
1953October 3 | President GetúlioVargas signs Law 2004 thatestablishes the monopoly of thefederal government over theactivities of the oil industry in thecountry and authorizes thecreation of Petróleo Brasileiro S.A. – Petrobras as the statecompany to be the executor ofthe monopoly.
The discovery ofthe Garoupa fieldoff the northerncoast of Rio deJaneiro marks thebeginning of theconquest of theCampos Basin,which will becomethe largestproduction regionin the country.
The giant Roncadorfield in the CamposBasin is discovered.
Campos Basinproduction beginsthrough an earlysystem installed atthe Enchova field.
The giant Albacora field isdiscovered in the Campos Basin.Production reaches 500,000barrels per day.
The giant Marlimfield is discoveredin the CamposBasin.
The Technological Innovation and AdvancedDevelopment in Deep and Ultra-Deep WaterProgram (PROCAP) is created. Initially, theprogram studies solutions for exploration andproduction in water up to 1,000 meters deep.Subsequently, the studies are extended towaters 2,000-3,000 meters in depth.
The Rio Urucu field starts producing in AltoAmazonas, celebrating a long period ofprospecting activities in the Amazon region.
The discovery ofthe Carmópolis(SE) field opensup prospects forproduction outsideof Bahia.
Oil production at the giant Albacora field inthe Campos Basin is initiated in 420 metersof water depth, a world record at the time.
Another giant oil field is discovered at theCampos Basin: Marlim Sul.
1974
2003
19961987
1988
1985
1986
1999
1994
1963
1961
1966
1968
1977
1953
1962
1984
The companyreaches theproduction markof 100,000 barrelsof oil per day.
Oil industry activities in Brazilare opened up to privateinitiative. Production exceedsthe historic milestone of 1million barrels per day.
1997
Oil
prod
ucti
on i
n B
razi
l |1
953
to 2
005
self-sufficiencyThe conquest of self-sufficiency
1954
Petrobras begins itsactivities, taking overthe collection ofassets of the formerNational PetroleumCouncil (CNP).Production is 2,700barrels of oil per day. 2005
On December 19, Petrobras sets aproduction record of 1,857,425barrels of oil per day. Work on theP-50 platform, which has thecapacity to produce 180,000barrels a day, is concluded.Installed in the Albacora Lestefield of the Campos Basin, it willassure sustainable oil self-sufficiency for the country when ithits peak production in 2006.
Conduct of the Oil market
Oil prices continued rising in 2005, following a trend that began in 2004.
Brent and WTI oil were, respectively, 42% and 36% more expensive than the
average of the previous year. This increase in prices, compared to the rises of
similar magnitude that occurred during the decade of the 1970s, has been
presenting a singular characteristic because it is predominantly due to market
fundamentals rather than geopolitical events.
Strong price swings during the year also demonstrated the nervousness of
the market in the face of any changes in the perception of the market funda-
mentals, a symptom of the exhaustion of capacity in the oil chain. In particu-
lar, in 2005 attention was concentrated more on the stress in refining rather
than on production capacity.
In this sense, the effect of the passage of Hurricanes Katrina and Rita
through the Gulf of Mexico was a clear sign that the system lacks flexibility to
deal with unexpected events. Because the interruption of production was
compensated for through the liberation of strategic inventories managed by
the International Energy Agency, the oil price peaks were of short duration — US$ 67.5/bbl for Brent and US$
69.8/bbl for WTI. On the oil product market, however, the reduction by 30% of refining activity in United States
led to an increase in real prices only comparable to that seen in the 1970s.
Even with the slowdown in the growth of world demand — 1.4% in 2005 against 3.8% in 2004 — it cannot
be said that the increase in the price of oil is reducing the consumption of oil products and, as a result, crude oil
sales. The control of the price of oil products in China and the subsequent stagnation of Chinese imports of such
products contributed to reduced growth in demand, as did the impact of the hurricanes on the U.S. economy.
Nevertheless, prices remained high.
The growth of oil production in non-OPEC countries declined drastically in 2005, remaining practically stable,
according to the calculations of the International Energy Agency, compared to an increase of about 1 million bpd
in 2004. This decline is explained less by the fall in production in the mature regions such as the North Sea, than
by the temporary halt in the Gulf of Mexico and — more importantly — by the strong slowdown of production in
Russia that went from average annual increases of 10% in each of the past five years to 2.4% in 2005.
Even with the
slowdown in the
growth of world
demand — 1.4% in
2005 against 3.8% in
2004 — it cannot be
said that the increase
in the price of oil is
reducing the
consumption of oil
products and, as a
result, crude oil sales.
250.000
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
270.000
290.000
310.000
330.000
350.000
Faixa 2000-2004 2004 2005 (Depois dos furações)
(semanas)
Private Oil Stocks in the U.S. (M bbl)Source: US-DOE/EIA
10
20
30
40
50
60
70
80
1.1.061.9.051.5.051.1.051.9.041.5.041.1.041.9.031.5.031.1.031.9.021.5.021.1.021.9.011.5.011.1.011.9.001.5.001.1.00
Cesta OPEP WTI Brent
Oil Prices (US$/bbl, nominal)Source: Bloomberg
OPEC Basket WTI Brent
2000-2004 band
2004
2005
(after the hurricanes)weeks
Conduct of the Oil market
Conduct of the
16 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Nevertheless, the rise in prices is not due to a shortage of oil in the market. To the contrary, analysts have been
surprised by the persistent high price of a barrel of oil despite the formation of private oil inventories — a sign of
abundance in the system.
Because non-OPEC oil does not satisfy incremental demand, the organization began to produce more, as in 2004,
placing excess capacity into operation, which today consists primarily of heavy oil. Although more than sufficient in
volume, the quality of this additional supply was inadequate to satisfy demand due to the lack of capacity in the world’s
refineries to convert this oil into the medium and light oil products most required, such as diesel and gasoline.
As a result, marginal refiners put
upwards pressure on the price of
lighter oils such as Brent and WTI in
order to obtain final products that
were adjusted to the demand profile.
However, because the additional
supply was of a heavy type of oil,
processing it generated surplus
supplies of fuel oil, widening the
difference between light and heavy
oils, as happened in 2004. That
explains the occurrence of even
higher refining margins in 2005,
particularly for refiners with
conversion capacity.
As a result of this market situation, the historic OPEC trade-off between high prices and high production was invalidated.
By combining the two, it obtained oil export revenues of some US$ 450 billion – 50% higher than in 2004. In Iraq, the
prolonged political instability and sabotaging of the oil infrastructure frustrated attempts to increase production, which was
lower than in 2004, to the benefit of the other members of OPEC with available capacity.
The maintenance of OPEC production at a level of about 30 million bpd also meant the increase in its production quotas
during the course of 2005 were merely cosmetic, ending the year at 28 million bpd. In September, the organization offered
the market all of its surplus capacity — without the move easing prices at all. An absolute novelty, the total production of
the ten member countries subject to quotas (Iraq excluded) was lower than the stipulated quantities — behavior that rather
than reflecting discipline demonstrated the inability to increase production: countries such as Venezuela, Iran and Indonesia
did not even meet their quotas. The year, thus, was notable for OPEC’s reduced surplus capacity, which inserted a high risk
premium into the price of oil.
Another significant fact in 2005 was the official suspension of the OPEC price target (between US$ 22/bbl and
US$ 28/bbl for its oil basket). Although the target had no longer been a benchmark for the organization since 2004,
its suspension formalized the view that OPEC desired a higher price level. The organization also adopted a new basket
of reference oils that are heavier and have higher sulfur content. Given the widening of the differential between oils,
this means that OPEC will indirectly seek a higher level for its benchmark oils (Brent and WTI), which are lighter.
The influx of speculative capital into the “paper barrels” market was also among the causes of higher oil prices
in 2005. The action of the derivatives funds occurred due to the low level of interest rates and the high rate of
monetary liquidity in the world. However, it is necessary to understand that the volatility caused by the increase in
the volume of the oil futures markets was not, by itself, the cause of the rise in the prices; rather, in a context in
which the fundamentals pointed towards an increase, it was the cause of the exacerbation of this trend.
The trend of an increase in costs throughout the oil chain continued in 2005, especially for exploration and
production development activities. Also rising was the alarmist tone of the official energy agencies regarding the need
for greater investment in order to put into operation sufficient production and refinery capacities to accommodate the
growth in demand. In this situation, the government-owned companies of China and India, anxious for energy
resources, further increased the competitive atmosphere of the sector and restricted the investment opportunities of
the large international companies in search of acquisitions to compensate for their inability to meet their targets for
growth of production and replacement of reserves.
In conclusion, 2005 was a year when the circumstances leading to an increase in prices over the previous year became
exacerbated, with few signs of an abatement in the conditions provoking these highs. In the sense that a higher level of
prices is now expected over the long term as in 2004, the year of 2005 demonstrated that it was part of a period of
transition to a new reality in the
international oil market.
-5
0
5
10
15
20
200520042003200220012000199919981997199619951994199319921991199019891988198719861985
Isthmus Cracking Isthmus Coking Maya Coking
Net U.S. Gulf Refining Margins
(real values 2005, US$/bbl)
Source: Purvin & Gertz
Oil market
23.0
24.0
25.0
26.0
27.0
28.0
29.0
Nov
-05
Sep-
05
Jul-0
5
May
-05
Mar
-05
Jan-
05
Nov
-04
Sep-
04
Jul-0
4
May
-04
Mar
-04
Jan-
04
Produção OPEP-10Cota OPEP-10
OPEC-10 Oil Production and Quotas (MM bpd)Source: OPEC and the International Energy Agency
Isthmus Cracking Isthmus Coking Maya Coking
OPEC-10 Quota OPEC-10 Production
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 17
18 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Corporate StrategyCorporate Strategy
Petrobras’ Business Plan 2006-2010 maintains the aggressive growth targets established by the 2015 Strategic
Plan. The production of oil and natural gas in Brazil is to reach 2,860 thousand boed in 2010. With this perform-
ance, the Company will be able to boost the share of Brazilian oil in the throughputs processed in domestic refiner-
ies from 80% to 91%, thus consolidating the sustainability of self-sufficiency in this market.
Approved by the Board of Directors in August, the Business Plan calls for investments of US$ 56.4 billion – an
average of US$ 11.3 billion per year. Of the total, US$ 49.3 billion (87%) is earmarked for Brazil while US$ 7.1 bil-
lion (13%) will be applied overseas. The countries of Latin America, West Africa and the Gulf of Mexico – priority
areas within the Company’s international strategy — are where the Company will concentrate 82% of the funds
invested abroad.
The amounts exceeded the previous plan by US$ 21.9 billion, resulting in the increase in investments for
Exploration and Production (+ 73%), Supply (+ 39%) and, in view of the growing demand for natural gas, in Gas
and Energy (+ 151%). To stimulate the development of a new center of supply, at least 65% of the amount invest-
ed in the country will be earmarked for Brazilian suppliers. Of these funds – an average of US$ 6.4 billion annually –
77% will mobilize the materials, construction and assembly sectors. Petrobras will demand, directly and indirectly, the
creation of 662 thousand job positions.
In parallel with the increase in the Brazilian production of oil and natural gas, which should reach 2,200
thousand bpd in 2006, this year the country’s refineries should process 1,846 thousand bpd – a volume that
points to a target of 1,869 thousand bpd in 2010. With the sustainability of self-sufficiency guaranteed, the daily
processing of crude Brazilian oil, which was 1,376 thousand bpd in 2005, will rise to 1,710 thousand bpd in 2010.
The sale of surplus domestic oil, which was 262 thousand bpd in 2005, will reach 522 thousand barrels.
Overseas, where Petrobras produced 259 thousand boed of oil and natural gas during 2005, production should
hit 545 thousand boed in 2010, when the processed throughput in the Company’s refineries in other countries
should total 154 thousand bpd. The volume of natural gas sales in the Southern Cone (excluding Brazil), of
Investment Plan (US$ Billion)
Business Area BP 2006-10
E&P 28.0
Downstream 12.9
Gas & Energy 6.5
International 7.1
Distribution 0.9
Corporate Areas 1.0
Total 56.4
87%
13%
Brazil
Overseas
15.64 million m3/day in 2005, should reach 37 million m3/day in four years’ time.
As part of the strategy to consolidate itself as an integrated energy company with an international presence,
Petrobras seeks to optimize the use of renewable sources, such as biomass, biodiesel and wind and solar gener-
ation. In 2010, the installed capacity of generation from these sources will reach 169 MW and the capacity of the
thermoelectric and cogeneration power plants will be 4,857 MW. Furthermore, Petrobras should make available
8.2 thousand bpd of biodiesel.
The Company is maintaining its policy of alignment of its prices with the international market over the long-
term. The forecast for own cash flow generation between 2006 and 2010 is US$ 58.9 billion, which is compatible
with the investment plan. Funding raised in the financial market is forecast at US$ 12.2 billion and the debt amor-
tization is calculated to be US$ 14.7 billion. The policy of extending the debt maturity profile will proceed as before
as will efforts to reduce financial leverage. Average Return on Capital Employed (ROCE) for the period should be
15%. As a result, US$ 71.1 billion will be obtained and invested.
With the commitments it has assumed in the fields of social and environmental responsibility and technologi-
cal know-how, investments in Health, Safety and Environment (HSE), technology, telecommunications and
Information Technology (IT) for the 2006-2010 period will total US$ 4.7 billion.
Third-party Capital
Own Generation
Debt Amortization
Investments
Oil + LNG Brazil
Oil + LNG International
Natural Gas Brazil
Natural Gas International
(US$ 71.1 billion)
14,7 56,4
12,2Sources
Use
58,9
Production increase (th. bpd)
Sources and use of resources
Business
Plan Investments 2006-10
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 19
our businessesOUR BUSINESSES
CA
RLO
S L
EO
NA
M,
LU
BR
ICA
NT
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IN P
LA
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OP
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21
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2 0 0 5 WA S A D E C I S I V E Y E A R F O R P E T R O B R A S TO A C H I E V E S E L F - S U F F I C I E N C Y. T H E C O M PA N Y P R O D U C E D 1 , 6 8 4
T H O U S A N D B A R R E L S P E R DAY O F O I L ( B P D ) , L I Q U E F I E D N AT U R A L G A S ( LG N ) A N D C O N D E N S AT E I N B R A Z I L –
12 . 8 % M O R E T H A N D U R I N G 2 0 0 4 . A D D I N G T H E I N T E R N AT I O N A L P R O D U C T I O N A N D N AT I O N A L P R O D U C T I O N
O F N AT U R A L G A S , T H E C O M PA N Y S E T A P R O D U C T I O N R E C O R D O F 2 , 2 17 T H O U S A N D B A R R E L S O F O I L
E Q U I VA L E N T P E R DAY ( B O E D ) .
D U E TO T H E I N C R E A S E I N P R O D U C T I O N A N D I N V E S T M E N T S , B R A Z I L’ S 11 R E F I N E R I E S W E R E A B L E TO
I N C R E A S E T H E A M O U N T O F D O M E S T I C O I L P R O C E S S E D F R O M 1 , 2 9 2 T H O U S A N D B P D TO 1 , 3 76 T H O U S A N D
B P D — A J U M P F R O M 76 % TO 8 0 % .
W I T H R E G A R D TO T H E D I S T R I B U T I O N O F O I L P R O D U C T S , T H E P E T R O B R A S D I S T R I B U I D O R A S U B S I D I A R Y H A D
G R O S S R E V E N U E S 2 5 % H I G H E R T H A N I N 2 0 0 4 . S A L E S I N T H E N AT U R A L G A S S E G M E N T R O S E 9 . 5 % .
P E T R O B R A S C O N T I N U E D T H E R E S U M P T I O N O F P E T R O C H E M I C A L A C T I V I T I E S , S E E K I N G
S E L E C T I V E E X PA N S I O N I N B R A Z I L A N D S O U T H E R N C O N E C O U N T R I E S . T H E
C O M PA N Y H A S A P R E S E N C E I N N E W P R O J E C T S , S U C H
A S R I O P O L Í M E R O S A N D P E T R O Q U Í M I C A PA U L Í N I A .
Two large gas production projects came on stream: in Bahia, the UPGN III at Catu (2.5 million m3/day) in
January and the Natural Gas Onshore Project (500,000 m3/day) in July in the Tucano Sul Basin. In Rio Grande do
Norte, UPGN III in Guamaré (1.5 million m3/day) initiated its pre-operation activities in December.
In 2005, the average lifting cost without government participation was US$ 5.73 per barrel of oil equivalent,
34% higher than during 2004, due to the 17% appreciation of the Brazilian real against the U.S. dollar, the increase
in the rates of leased drilling rigs, operational transportation, underwater operations, restoration and maintenance
and chemical products, as well as increases stemming from the collective bargaining agreement and an increase
in the size of the labor force. Taking into account government participations, this cost rose to US$ 14.65 per boe.
OUR BUSINESSES
The growth of domestic oil production in 2005 left the country close to self-sufficiency, boosting the Company’s
operating flexibility. Continuing its strategy of surmounting domestic demand, Petrobras produced 1,684 thousand
barrels per day (bpd) of oil, liquefied natural gas (LNG) and condensate in Brazil. The increase represented a
12.8% rise over the 1,493 thousand bpd produced in 2004.
Four large projects contributed to raise production. In addition to the P-48 platform, with capacity to produce
150 thousand bpd and which started up in February in the Caratinga field in the Campos Basin, we also had the
FPSO-MLS (100 thousand bpd) and the P-43 (150 thousand bpd) in operation, respectively, since June and
December 2004 in the Marlim Sul and Barracuda fields and that, in 2005, increased production outputs. Moreover,
we also were able to count on production from the UPGN-3, which has been in activity since June 2004 in Urucu
(AM). As reinforcement for production in the Marlim field, in November Petrobras put the P-47, with capacity for
treating 150 thousand bpd of crude oil, into operation.
Average production in 2005 increased significantly, remaining close to the established target of 1,700 bpd. The
cause of the difference was the postponement until 2006 of the startup of the P-50 (180 thousand bpd) in the
Albacora Leste field in the Campos Basin.
A number of production records were set. On December 19, Petrobras produced 1,857,425 barrels – 23
thousand more than the previous record established on June 23. Besides the exceptional performance of the
Campos Basin platforms, the Mature Fields Recovery Enhancement Program (RECAGE), which seeks to minimize
the decline in mature areas, contributed to the production peaks.
For its part, natural gas production (without LNG) also rose, going from 42.1 million m3/day in 2004 to 43.5
million m3/day. The increase, of 3.3%, was the result of the continuity of actions aimed at expanding the supply
of domestic gas, in step with the Company’s strategy to strengthen the segment and consolidate its leadership in
the distribution and commercialization of the product.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 23
E xploration and production
I N C R E A S E I N O I L P R O D U C T I O N D U R I N G 2 0 0 5 P L A C E D
T H E C O U N T R Y O N T H E D O O R S T E P O F S E L F - S U F F I C I E N C Y
22 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
0 - 300 m
300 - 1,500 m
Production: 1,684 thousand bpd
>1,500 m
ONSHORE
Production of Oil, Condensate and LNG in Brazil
Distribution by Water Depth
Production of Non–Liquefied Natural Gas in Brazil
Distribution by Water Depth
0 - 300 m
300 - 1,500 m
>1,500 m
ONSHORE
Total Production: 43,532 thousand m3/day
Evolution of the Production of Oil, LNG, Condensate and Natural Gas
(thousands of boed)
Oil, LNG and Condensate
Natural Gas
1,270 1,491
1,336
1,500
1,540
1,493
1,684
2,300
221
232
252
250
265
274
560
1,568
1,752
1,790
1,758
1,958
2,860
2000
2001
2002
2003
2004
2005
TARGET2010
1 - Nosso Negocios (1º parte)
Produção de óleo Produção de Gás
0.0 0.5 1.0 1.5 2.0 2.5
18.2%
35.0%
3.0%
43.8%
14.4%
15.2%
5.1%
65.3%
OUR BUSINESSES
T H E C O N Q U E S T O F S E L F - S U F F I C I E N C Y
In 2006, Petrobras should reach annual average production of 1,910 thousand bpd, surpassing Brazilian
demand, which is estimated at between 1,850 and 1,900 thousand bpd. An initial step in the 2006-2010
business plan, which calls for investments of US$ 28 million in exploration and production, sustainable
self-sufficiency will be obtained through the coming on stream of the P-50 and three other platforms in
the Campos Basin — the P-34 (60 thousand bpd) in the Jubarte field, Phase I; SSP 300 (20 thousand
bpd) in the Piranema field; and an FPSO (100 thousand bpd) for the Golfinho field’s Module I.
The increase in the amounts produced is in line with the strategy for exploration and production
in Brazil. Carried out with operational excellence and social and environmental responsibility,
Petrobras has sought to strengthen its activities in deep and ultra-deep water and to take advantage
of profitable opportunities in shallow water and onshore areas. At the same time in which it invested
in optimizing mature fields, the Company launched itself into the exploration of new frontiers in order
to guarantee a sustainable ratio between production and reserves.
Besides the oil production projects, in 2006 the Company will initiate gas activities in the Manati field in
Bahia, with production of 6 million m3/day and the first phase of the Peroá-Cangoá field, with production
capacity of 2.5 million m3/day. The construction of the P-52 and P-54 platforms (180 thousand bpd each)
continues to proceed within a timetable that calls for the start up of their operations in 2007 in the Roncador
field of the Campos Basin. Two other projects are currently being executed: the P-51 and the P-53 (180
thousand bpd each), scheduled to begin operations in 2008 in Marlim Sul and Marlim Leste, respectively.
For 2009, Petrobras foresees the start up of production of the Frade project in the Campos Basin, with
capacity for 100 thousand bpd. And in 2010, in the same region, the platforms that are scheduled to begin
operating include the P-55, for the Roncador
project’s Module III; the P-57, for Phase II of
the Jubarte field; and another for the Albacora
Supplemental project. Also slated for startup
that year is the FPSO 3, for the production of
light oil in the Golfinho field.
The targets contained in the Petrobras
Strategic Plan require that, by 2010, 15 large oil and
four natural gas production projects enter into operation
and that the reserve/production ratio is 16 to 18 years in
2010. The volumes of oil and gas to be incorporated will come
from current proved and possible reserves, those still in an
exploratory evaluation stage and from new discoveries.
Discoveries
In 2005, Petrobras declared the commercial viability of eight new oil and gas fields. The gigantic Papa-Terra field in
the south of the Campos Basin, with a recoverable volume estimated at between 700 million and 1 billion barrels
of equivalent oil (boe), deserves mention; Petrobras is the operator of the field with a 62.5% stake and is
associated with Chevron-Texaco in the project. Also noteworthy was the new accumulation discovered in the Marlim
Leste field of the Campos Basin that, because it is located in geologically deeper layers, opens a new exploration
frontier in the region.
Other offshore highlights included the Uruguá and Tambaú fields in the Santos Basin, totaling more than 270
million boe in recoverable volumes of light oil and natural gas, and the Canapu field in the Espírito Santo Basin. In
onshore basins, discoveries were made and commercial viability declarations issued for the following fields: Acauã,
in the Potiguar Basin; Anambé, in the Sergipe-Alagoas Basin; Jandaia, in the Recôncavo Baiano Basin; and Inhambu,
in the Espírito Santo Basin. Moreover, Petrobras has a 35% stake in the Abalone, Ostra, Nautilus and Argonauta
fields in the north of the Campos Basin, which were declared commercially viable in 2005 by Shell, which is the
operator of the concession.
The new discoveries are in line with the targets
contained in the Strategic Plan to increase domestic
production of oil and natural gas to 2,860 thousand
boe/day by 2010. Guaranteeing the sustainability of
production with replacement of reserves, these
results obtained through exploration demonstrate
that Petrobras’ decision to focus on deep and ultra-
deep offshore areas, to conduct research in new
frontiers, to resume efforts onshore and to optimize
mature fields was correct.
E x p l o r a t i o n a n d p r o d u c t i o n
Exploration Success Rate
20%
24%
23%
33%
50%
55%
2000
2001
2002
2003
2004
2005
24 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 25
OUR BUSINESSES
to be high risk. It is a basin with many recorded natural gas seeps and the objective is to verify the existing natural
gas potential.
The 15 offshore contract blocks acquired are located in frontier exploration areas with excellent potential. The
first areas, in deep waters in the Potiguar Basin, offer prospects of large discoveries despite a high exploration risk.
In the high-potential blocks, the areas in the Espírito Santo and Santos Basins have already shown a vocation for
discoveries of non-associated gas. The deep-water blocks have been favorable for oil discoveries, in the Campos
Basin, and both associated and non-associated natural gas in the Espírito Santo and Santos Basins.
E x p l o r a t i o n a n d p r o d u c t i o n
During the year, 292 wells were
drilled and concluded, of which 251
were onshore and 41 in the ocean.
For exploration, 69 wells were drilled
— 36 onshore and 33 offshore. The
exploration success rate hit 55%,
because 38 of the 69 wells that
reached their geological objectives
were considered to be oil or gas
discovery or production wells.
New Concessions
At the Seventh Bidding Round of the National Petroleum, Natural Gas and Biofuels Agency (ANP) held in October,
Petrobras proceeded to restructure and expand the profile of its portfolio of exploration areas, reversing the decline
that was a trend of the first rounds. Of the 109 areas it disputed, the Company acquired 96, totaling 39,872.80 km2.
With the new concessions Petrobras is seeking to guarantee the levels of production of oil and gas called for in
the 2015 Strategic Plan. The portfolio now contains 134 blocks totaling 151.5 thousand km2. Added to the 27 areas
with discovery evaluation plans (9.1 thousand km2) in operation, the total exploration area is 160.7 thousand km2.
Previously, the company had 94 blocks (111.7 thousand km2) and 31 areas with discovery evaluation plans (9.5
thousand km2), for a total exploration area of 121.2 thousand km2.
The bonuses that Petrobras and its partners offered during the Seventh Bidding Round totaled R$
726,322,700.00, with the Company’s portion being R$ 503,527,350.00. Based upon an ANP decision, similar to
the previous rounds, the 96 cells that were auctioned off were grouped into 39 contract blocks, each one consisting
of a contractual instrument. Of the 39 contract blocks, Petrobras has exclusive rights in 16 and is in partnerships
with other companies to operate another 14 blocks. In the other nine, partners are responsible for the operation
and the Company is an associate.
Furthermore, of the 39 of the contract blocks, 24 are located in onshore sedimentary basins and 15 are in
maritime basins. On land, the blocks are in two types of basins: mature coastal and inland. In the coastal basins,
Petrobras already has installed infrastructure and intends to incorporate oil volumes in the short term that should
slow the decline in production in these areas.
In blocks located in the inland basins, the objective is to make new discoveries. In the Solimões Basin, the
Company already produces oil and gas and has accumulated knowledge about the area. In the São Francisco Basin,
which is geologically older but without much seismic data and very few wells, the acquired areas are considered
BLOCKS IN ONSHORE BASINS
Mature coastal Inland
Potiguar 10 Solimões 1
Sergipe-Alagoas 5 São Francisco 1
Recôncavo 2 - -
Espírito Santo 5 - -
OFFSHORE BASINS
Exploratory frontiers (deep water) High potential (deep water)
Potiguar 2 Espírito Santo 2
- - Campos 3
- - Santos 4
Exploratory frontiers (shallow water) High potential (shallow water)
- - Espírito Santo 2
- - Santos 2
26 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 27
OUR BUSINESSES
The growth in the production of oil products in the country, the increase in the volume of domestic oil processed
and the sharp increase in overseas sales were highlights of the refining and commercialization activities during
2005, which are part of the Downstream area.
The investments scheduled for refining over the 2006-2010 period total US$ 8.0 billion. Of this amount,
US$ 3.1 billion is earmarked for adapting the country’s refineries to be able to process heavy oils (metallurgical
adjustments and conversion). These investments are designed to adjust the yields of oil products obtained from
heavy domestic oils to the profile of the consumer market. Moreover, in order to further raise the quality of its
diesel and gasoline products, the Company proceeded with the installation of hydrotreatment units (HDTs), which
are a part of the portfolio of projects and will require an investment of US$ 3.2 billion.
The processed throughput (primary processing) in the country’s refineries was 1,727 thousand bpd in 2005, an
increase of 1% compared to 2004. The 11 refineries in Brazil increased the amount of domestic oil
processed in 2005 by 84 thousand bpd. In comparison to the previous year, oil refining in the
country rose from 1,292 thousand bpd to 1,376 thousand bpd. As result, its share of the total
throughput in the refineries went from 76% to 80%, increasing the refining margin.
The processing of domestic oil increased without impacting the production of medium
oil products such as diesel and aviation fuel. This resulted from the investments made
to adapt the industrial plants in the requirements of heavy oil processing. With the startup
of the retarded coking units (RCUs) and diesel HDTs, the Company optimized use of
domestic oil for manufacturing oil byproducts.
REFINING AND COMMERCIALIZATION
R E F I N E R I E S A R E A D A P T E D T O P R O C E S S M O R E
D O M E S T I C O I L A N D S A L E S A R E O N T H E R I S E O V E R S E A S
Proved reserves
Petrobras’ proved reserves of oil, condensate and natural gas in Brazil reached 13.2 billion boe, using ANP/SPE
criteria, posting an increase of 1.6% over 2004. During the year, 882 million boe of reserves were incorporated while
the volume produced was 673 million boe. With this, the Proved Reserve Replacement Index (IRR) rose to 131.1%.
For each barrel produced, 1.31 was replaced in the reserves. The reserve/production ratio (R/P) was 19.7 years.
New fields that were discovered in the past few years and had commercial viability declared recently (580
million boe) contributed to the increase in the volume of the proved reserves as did new accumulations discovered
in fields that already are in production (300 million boe). The incorporation of existing fields resulted in the
transformation of probable and possible reserves into proved reserves, thanks to development continuity. They also
stemmed from reservoir management practices that sought to enhance oil recovery.
Evolution of Proved Reserves of Oil, NGL, Condensate and Natural Gas – SPE criteria
(billion boe)
Oil, LNG and Condensate
Natural Gas
8.29 9.65
8.32
9.56
10.6
11.05
11.36
1.36
1.35
1.45
1.99
1.97
1.87
9.67
11.01
12.59
13.02
13.23
2000
2001
2002
2003
2004
2005
Evolution of Proved Reserves in Brazil
(Billion boe- SPE Criteria)
Remainder of proved reserves 2004
Incorporation of New Discoveries
Incorporation in Existing Fields in 2004
13.02
12.35 0.58 0.3
2004
2005 13.23
Volume produced in 2005:
0.6 7 billion boe
28 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
OUR BUSINESSESR E F I N I N G A N D C O M M E R C I A L I Z A T I O N
According to the strategy of offering quality products with low environmental impact, Petrobras initiated
the sale of low sulfur Diesel S500 fuel. The product is sold in the metropolitan areas of São Paulo, Rio de
Janeiro and Belo Horizonte, in the São José dos Campos (SP) region and the Vale do Aço (MG). The supply
of Podium gasoline, which has high performance and less sulfur content, also was expanded thanks to the
startup of production of the fuel at Reduc, in addition to the production that already was taking place at
the Presidente Bernardes–Cubatão Refinery (RPBC).
D I E S E L S 5 0 0
Commercialization
Petrobras took advantage of new business opportunities to increase the commercialization of oil and oil products
in overseas markets in 2005. In line with the increase in production during the year and prospects for self-
sufficiency, the strengthening of relations with international buyers of Brazilian heavy oil was a determining factor
for the boost in exports, which hit 504 thousand bpd — an amount that was 23% more than in 2004.
The increase in the commercialization of oil abroad was the result of the adoption of a more aggressive sales
strategy, also motivated by the increase in the international price of the product. At the same time that the
Company sought to consolidate already developed markets, it won over new customers. The United States were
the largest customer, absorbing 39% of foreign sales, followed by customers in Asia (18%), Europe (18%), the
Caribbean (13%) and South America (12%).
In the domestic market, the commercialization of oil products by Petrobras averaged 1,655 thousand bpd, an
increase of 1.1%. The maintenance of sales near 2004 levels was caused by factors such as the increase in the
use of natural gas replacing gasoline and fuel oil, and the expansion of the dual-fuel automobile fleet through
incentives for the use of alcohol. Also contributing was the decline in the growth of demand for diesel because of
a smaller agricultural harvest.
The performance of the refineries was a consequence of the high level of operating reliability and the integrated
management of the entire Petrobras chain of supply – from the exporting of oil from the production regions to the
delivery of oil products around Brazil and abroad. The development of overseas markets for surpluses also is among
the factors that led to the increase in the processed throughput.
The production of oil products in Brazil in 2005 was 1,735 thousand bpd. In 2005, the average refining unit
cost was US$ 1.90/bbl, 38% higher than the previous year. This result stems from the appreciation of the Brazilian
real against the U.S. dollar; a greater number of scheduled maintenance industrial shutdowns compared to 2004;
higher operating costs due to the startup of new facilities; and an increase in the cost of outsourcing contracts.
The Alberto Pasqualini Refinery (Refap) was included in the program to optimize domestic oil production with
the installation of an RCU and a residues catalytic cracking unit (RCCU) that were part of the program to expand
the facility. Their operations will begin in 2006. The RCU at the Duque de Caxias Refinery (Reduc) also was initiated,
scheduled to come on stream in 2007. The basic projects for two other RCUs, at the Henrique Lage (Revap) and
Presidente Getúlio Vargas (Repar) refineries, were concluded.
As part of a program to improve the quality of diesel, the new HDT at Refap was placed into operation at the
end of the year, adding its production to the second of its type installed at the Paulínia Refinery (Replan) and the
new HDTs at Reduc, Presidente Getúlio Vargas (Repar) and the Gabriel Passos Refinery (Regap). This set of units
in operation makes possible to satisfy the environmental specifications that will be put into practice as of 2009.
Petrobras approved the initial studies for construction of the Northeast refinery — a strategic project for achieving
sustainable self-sufficiency. With an estimated investment of US$ 2.5 billion, the refinery is to be a joint venture with
Petróleos de Venezuela S.A. (PDVSA), located in the Porto de Suape industrial complex in Pernambuco. It will have
the capacity to process 200 thousand bpd of heavy oil from the two countries and startup is scheduled for 2011.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 31
OUR BUSINESSES
32 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 33
In order to build an integrated Acrylic Complex in Minas Gerais for production of
160 thousand tons/year of crude acrylic acid and some byproducts, including
acrylate, Petrobras concluded the first stage of a technical-economic and
environmental study of the project, which is budgeted at an estimated US$ 500
million and is scheduled for startup in 2009. A pioneer effort in Latin America, the
complex is designed to substitute importation of the product and its byproducts,
helping develop the chain of production dedicated to the acrylic and acrylate sector,
with new manufacturing companies to be incorporated.
Petroquisa also initiated studies for the building of a purified terephthalic acid
(PTA) plant in Pernambuco, with capacity to produce 550 thousand tons/year.
Budgeted at US$ 492,1 million, and with operations to come on stream in 2009
the plant will use para-xylene as its raw material, initially imported but subsequently
to be substituted for by the product manufactured at the future Rio de Janeiro
petrochemical refinery.
Located in Duque de
Caxias, Riopol initiated
operations in
November, using
ethane and propane
extracted from Campos
Basin natural gas as
raw material.
Petrobras participates in the petrochemical sector through its Petrobras Química S.A. (Petroquisa) subsidiary, which
has ownership stakes in all of the petrochemical complexes in the country and in companies that manufacture
resins and other products. In 2005, Petroquisa’s net earnings totaled R$ 213.8 million.
The following petrochemical projects were noteworthy in 2005: Rio Polímeros, Paulínia Petrochemical (PPSA),
Petrochemical Refinery, the Acrylic Acid Complex and the PTA Project.
Located in Duque de Caxias (Rio de Janeiro), Rio Polímeros S.A. (Riopol) initiated operations in November,
using ethane and propane extracted from natural gas from the Campos Basin as its raw material. Riopol has the
capacity to produce 540 thousand tons of polyethylene and 75,000 tons of propane per year. Petroquisa owns
16.7% of the shares, together with Suzano (33.3%), Unipar (33.3%) and BNDESPar (16.7%). In 2005,
Petroquisa invested R$ 57 million in the project, totaling R$ 245 million of investments since its beginning.
In compliance with the strategy to expand its presence in the market, Petroquímica Paulínia S.A (PPSA) was
constituted on September 16, with ownership stakes belonging to Petroquisa (40%) and Braskem (60%). This
company will be responsible for building an industrial plant with additional polypropylene production capacity of
300,000 tons/year, located near REPLAN in the municipality of Paulínia (SP), based upon a propane-grade
polymer supplied by REPLAN and REVAP. The project is scheduled for conclusion at the beginning of 2008, at an
investment estimated at US$ 240 million.
The 2015 Strategic Plan highlighted installation of a Rio de Janeiro Petrochemical Refinery. Developed in
partnership with the Ultra Group, it will have the capacity to process 150 thousand bpd of heavy domestic oil.
Besides producing ethane, propane, para-xylene, benzene, LPG and diesel, this facility will produce a number of
second-generation petrochemicals, such as polyethylene, polypropylene, ethylengycol and purified terephthalic
acid. The refinery, with total investments of some US$ 6 billion, is scheduled to begin operating in 2011.
Petrochemicals
I N V E S T M E N T S I N N E W P R O J E C T S S H O W S T H A T P E T R O B R A S
H A S R E T U R N E D T O T H E S E G M E N T W I T H F U L L F O R C E
Company Product Voting capital (%) Total capital (%)
Braskem S.A. Basic, intermediate
and final petrochemicals 10.0 8.4
Cia. Petroquímica do Sul – Copesul Basic petrochemicals 15.6 15.6
Petroquímica União S.A Basic petrochemicals 17.5 17.4
Metanol do Nordeste – Metanor S.A. Methanol 49.5 34.3
Deten Química S.A. Linear alkylbenzene 28.6 27.7
Fábrica Carioca de Catalisadores S.A. Catalyzers 50.0 50.0
Petrocoque S.A. Indústria e Comércio Calcinated petroleum coke 35.0 35.0
Petroquímica Triunfo S.A. Low density polyethylene 70.5 85.0
Petroquisa’s Participation in Operating Companies | December/2005
OUR BUSINESSES
Petrobras is active in the field of the transportation and storage of oil, oil products and gas through its wholly owned
Transpetro subsidiary. Responsible for the operation of 50 oil tanker ships, 44 terminals and 9,839 km of pipelines,
the company provides services to the Petrobras System as a way of adding value to its products. It plays a strategic
role because its integrated logistical solutions and operating flexibility give the Petrobras System a series of
competitive advantages.
Transpetro is the largest shipping company in South America, owning a fleet with a capacity of 2,480,000
deadweight tons (DWT). Of the vessels operated by the company, 46 belong to Transpetro and Petrobras while
four are chartered on a bareboat basis from third parties. The fleet also includes a Floating Storage and Offloading
unit (FSO) and an AHTS-type offshore support boat.
As part of the strategy to increase its services to Petrobras, Transpetro has implemented the first phase of its
Fleet Modernization and Expansion Program — involving an investment of US$ 1.2 billion. The company initiated a
tender process construction of 26 Suezmax, Aframax, Panamax, product and LPG ships by 2010.
The program calls for 42 new vessels by 2015 to allow Transpetro to handle all of Petrobras’ coastal shipping and
50% of its long haul requirements. The renovation of the fleet also will make it possible for the company to take
advantage of business opportunities that emerge in the field of renewable products, such as alcohol and biodiesel.
The orders for the tankers, financed by the BNDES through funds made available by the Merchant Marine Fund,
have a premise: at least 65% of the ships must be domestic content, which is in line with the guidelines of the
National Petroleum and Natural Gas Industry Mobilization Program (Prominp).
Over 20 thousand jobs will be created during construction of the first 26 vessels. By contracting the
manufacturing of the ships in Brazil, Transpetro is contributing to the resumption of large scale naval construction
in the country. It is expected that the dock yards will gain international competitiveness, stimulated by the scale of
production and the incentive for technological modernization, coupled with the training of their professional staffs.
F E R T I L I Z E R S F O R B R A Z I L I A N A G R O B U S I N E S S
Petrobras’ strategy is to increase its participation in the fertilizer segment, mainly nitrogenates, in
view of the fact that a major portion of the demand from Brazilian agribusiness — a sector
that represents 30% of the GDP — is supplied via imports. In 2005, the sales of ammonia
and urea generated net revenues of US$ 330 million for Petrobras, rising 8% over the
previous year.
The nitrogenous fertilizer plants sold 205,000 tons of ammonia on the domestic market,
the fourth consecutive year in which sales increased. Another noteworthy point regarding ammonia
was the record production of Fafen/SE (400 thousand tons). In the segments of urea used as
fertilizer, Petrobras remained the leader of the domestic market, with sales of 708 thousand
tons during the year.
Seeking improvements in urea logistics and quality, Petrobras initiated construction of a
warehouse at the Sergipe plant with capacity for storing 30 thousand tons and a granulation unit to
process 600 tons/day of the product. These investments totaled R$ 53.8 million, with the conclusion
of the projects scheduled for the first half of 2006. At the nitrogenous fertilizer plant in Bahia,
R$ 26.3 million was invested to increase ammonia production by
50 thousand tons annually and to boost urea production by 68
thousand tons a year.
Petrobras is finalizing studies for construction of a
nitrogenous fertilizer plant in the Center-West Region of the
country, for an estimated investment of US$ 780 million, to
come on stream in 2010. Using natural gas imported from
Bolivia, the plant will have the capacity for annual production
of 760 thousand tons of ammonia and 1 million tons of urea.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 35
Transportation
T R A N S P E T R O ’ S F L E E T E X P A N S I O N A N D M O D E R N I Z A T I O N
P R O G R A M C A L L S F O R 4 2 N E W V E S S E L S B Y 2 0 1 0
OUR BUSINESSES
In the field of fuel distribution, Petrobras operates through its Petrobras Distribuidora (BR) subsidiary, which has the
largest network of service stations in the country. Of the 6,933 BR service stations spread through all regions of the
nation, 763 are owned by the company while the other 6,170 belong to franchisees of the Petrobras flag brand.
Being the preferred brand of consumers and adding value to the Petrobras System are the strategic objectives
of the company, which is the market leader of the segment. In 2005, net revenues for products and services totaled
R$ 46.3 billion – an increase of 25.1% over the previous year, stemming from a greater volume of sales.
Petrobras’ share of the distribution market reached 33.8% - 2.2 percentage points higher than recorded
in 2004. The increase of its presence in the segment was a consequence of the 8.6% growth in the volume
of fuel sales.
Petrobras also is the leader of the Vehicular Natural Gas (VNG) market, with a 25.1% share of sales during
2005, thanks to the supply of the product through a network of 295 BR outlets. Its leadership position of the gas
market also encompasses the supply of direct consumers — large industrial clients, trucking fleets, airlines and
public authorities.
The strategy for expanding business in the commercialization area has been the guiding factor for the increase
in investments in new markets, such as that for liquefied petroleum gas (LPG) and green petroleum coke (GPC).
After the acquisition in 2004 of Agip do Brasil, which had its official name changed to Liquigás Distribuidora S.A.,
Petrobras reached 21.83% market share of the LPG market in 2005.
Petrobras Distribuidora invested R$ 459.7 million in 2005. The funds were applied on a priority basis to expand
and modernize its service stations, to support industrial and commercial customers, on Health, Safety and
Environment (HSE) programs and in logistics and operations.
In the automotive segment, the strategy continues to be to get closer to the resellers and end consumers. The
objective is to offer speedy and qualified service in order to increase market presence and profitability. Petrobras
Distribution
P E T R O B R A S D I S T R I B U I D O R A I N C R E A S E S I T S M A R K E T
S H A R E A N D I S T H E L E A D E R O F V E H I C L E N A T U R A L G A S S A L E S
The company seeks to offer quality services at competitive prices along with an excellent level of compliance
with the standards for Health, Environment and Safety (HSE). In 2005, fleet operating reliability reached its target
of 98%. Its vessels achieved an average grade of 783 in the Navio 1000 Program that evaluates operating and
managerial conditions of the ships according to international regulations.
The volume of product spills from its ships totaled only 25 liters, compared to 102 liters in 2004. This reduction
is a result of the number of environmental actions taken by the company, such as its Process Safety Program.
Pipelines and terminals
Transpetro is the operator of the majority of Petrobras’ land-based and maritime terminals, oil pipelines, gas
pipelines and natural gas processing units. This network, which transports a major part of the Company’s
production, was the focus of a number of improvement actions during 2005. The objective is to maintain these
facilities within suitable conditions of operating reliability, assuring the safety of people, installations and the
environment — whether within the company or in neighboring communities.
Its network is comprised of 7,011 kilometers of oil pipelines and multiple pipelines and 2,828 kilometers of gas
pipelines. The storage capacity of its 44 terminals totals 65 million barrels (10 million m3). In 2005, Transpetro’s
network was responsible for the movement of nearly 640 million m3 of oil, oil products and alcohol,
and of 33 million m3 of gas per day. At its waterway terminals, the monthly average was
382 ships in operation. The company also managed the supply of bunker to ships
all along the Brazilian coastline, supplying some 350
thousand m3 of this fuel per month.
In the natural gas segment, Transpetro operates the
Malhas Project that, by 2012, will boost the supply of the
product to 14 million m3/day in the Southeast. In 2005, yet
another phase of the Cabiúnas Project was concluded,
increasing the natural gas processing capacity of the Campos
Basin to 14.9 million m3/day.
For the 2006-2010 period, in line with the Petrobras Business
Plan and the transportation requirements created by self-
sufficiency, Transpetro has forecast an increase in capacity of the
Southeast and South pipelines and the construction of an oil products
terminal in Fortaleza.
The company has been investing in the creation of a “corridor” for
exporting alcohol from the São Paulo countryside and for an increase in
the gas processing capacity at Cabiúnas. This project will raise supply of
the product to 20 million m3/day, satisfying the requirements of industrial
companies located in the Rio de Janeiro Gas and Chemical Complex.
.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 37
OUR BUSINESSESD i s t r i b u t i o n
E X C E L L E N C E I N C U S T O M E R R E L A T I O N S
Increasingly, BR gas stations are being converted into service stations, with service excellence being a
priority. Besides the Petrobras Card, clients have at their disposal a chain of convenience stores (BR
Mania), advanced lubrication centers (Lubrax Center), car washes (Lava Mania), ATM machines and VHS
and DVD rental shops, as well as “Siga Bem”, a program aimed at professional truck drivers.
AP • 22
PA • 109AM • 61
RO • 42
MT • 165
MS • 196
GO • 241
TO • 63
MA • 71
PI • 89
BA • 384
CE • 256
MG • 1.052
SP • 1.619
RJ • 391
ES • 104
SE • 60
AL • 92
PE • 197
PB • 79
RN • 100
PR • 428
SC • 276
RS • 634
RR • 36
AC • 33
BR Service Stations per State (2005)
Distribuidora maintains several contact mechanisms with resselers, including regular visits of commercial
representatives and publication of a newsletter, the Jornal do Revendedor, along with regular meetings to map out
strategies and plan courses of action.
The increase in the demand for hydrated alcohol in 2005 was 15% compared to the previous year, while
demand for gasoline rose little more than 1%. The growth of alcohol sales was driven by the leap in sales of multi-
fuel automobiles (flex fuel). Surpassing forecasts, flex fuel vehicles reached 50% of the total of all new vehicles
sold during the year – more than double the amount in the new car market in 2004.
Flex fuel vehicle sales should continue growing in 2006. However, the expansion of this fleet should be
contained over the course of the year by a rise in the relative price of alcohol resulting from exports of the product.
In the direct fuel consumer market, Petrobras Distribuidora’s share is 45%, with highlights being the company’s
share of aviation products (55.7%), large consumers (44.3%), asphalt (29.5%) and retail delivery fleets (TRR –
42.1%). One of our advantages over the
competition is the ability to supply technical support
throughout the country, a factor that boosts the
level of customer loyalty.
Petrobras Distribuidora has the largest network for
the distribution of fuels and lubricants in Brazil. There
are 51 operating installations that are strategically
located — 22 terminals and 29 bases, ensuring
excellent capillarity network for placing our products.
This network also makes it possible to integrate
transportation and inventory solutions — another
distinguishing characteristic that sets us apart from
the competition in terms of service quality.
Stake of the Fuel Distribution Companies in Brazil (%)
2001
2002
2003
2004
2005
40,0
30,0
20,0
10,0
0,0
BR Ipiranga Shell Esso Texaco Others
38 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 39
Units
BR Outlets 6,933
Urban 5,334
Highway 1,567
Maritime 32
Active Outlets 5,885
Own Outlets 763
Third Party Outlets 6,170
Convenience Stores 740
VNG Outlets 295
Service Station Network
OUR BUSINESSES
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 41
This project is consistent strategically with the development of production in the
Campos Basin and Petrobras’ exploration of offshore blocks in order to ensure the
ability to take advantage of future discoveries. The construction of the Southeast-
Northeast Interconnection Gas Pipeline (Gasene) and the expansion of the pipeline
grid in the two regions are among the investments currently being studied.
The Gasene project is comprised of three gas pipelines: The Cabiúnas–Vitória
Pipeline (Gascav), the Cacimbas–Vitória Pipeline and the Cacimbas–Catu Pipeline.
The Company obtained an R$ 800 million loan from the National Economic and
Social Development Bank (BNDES) for the Cabiúnas-Vitória stretch. Gasene will
make it possible to ship out natural gas produced in the oil and gas fields in the north
of the state of Espírito Santo.
The Cabiúnas–Vitória stretch already has been granted a prior license, an installation license and a construction
permit. The construction timetable calls for work to begin in January 2006 with the project scheduled to come on
stream in March 2007. With the start up of the Cabiúnas–Vitória stretch in 2007, the Southeast Grid of pipelines will
be connected until the state of Espírito Santo. At this stage of the Gasene Project, gas will flow in a North-South
direction, reinforcing supply of Vitória and the Southeast Region.
In the Brazilian Northeast, the routes that have been decided upon will favor the interior. Budgeted at R$ 3 billion
over the course of the construction period, the project encompasses seven northeastern states. The contracts signed
with Petrobras and the other partners contain clauses that ensure the use of a major portion of the funding for
national content. This will have a multiplying effect on employment and income, fostering the development of local
suppliers and creating an alternative supply center for the Company. Many of the projects involved are permanent
in nature and their maintenance and operation will require creation of fixed job positions along the route of the
pipeline. In the Northeast region, of the five pipelines that are scheduled, four are under construction, representing
50% of the physical execution of the total that is planned.
In the Southeast region, the construction projects, with total investments of some R$ 1.9 billion over the course
of the program, encompass the states of Rio de Janeiro, São Paulo and Minas Gerais.
In Brazil’s North region, Petrobras has been investing in building the strategically important Urucu–Coari–Manaus gas
pipeline designed to transport nearly 5.5 million m3/day of natural gas. This gas will be consumed for the most part by
thermoelectric power plants in the region that have been converted from fuel oil to gas due to the more rational economic
and environmental advantages of the latter. Some of the product will be earmarked for industrial companies, homes and
the fleet of natural gas-fueled vehicles in Manaus and the seven municipalities located along the pipeline’s right of way.
Natural gas sales increased 9.5% in 2005, with average sales of 36 million m3/day. Petrobras continued to follow
its strategy of developing the segment in an integrated manner with the Company’s other chains of production in
Brazil. During the year, the financial turnover of this business totaled more than R$ 5 billion.
Two factors were responsible for maintaining the Brazilian market for this product in expansion: (i) the growth
of the supply logistical infrastructure, and (ii) the growing pressure for the use of fuels that have a less aggressive
impact on the environment. In September, the country passed the milestone of 1 million automobiles converted
to use VNG, according to the Brazilian Petroleum Institute (IBP), counting for this upon a network of more than
1,190 VNG stations. It is the second largest VNG fleet in the world, behind only Argentina’s, which is fueled by a
network of approximately 1,500 stations, of which 47% belong to Petrobras.
In order to satisfy the increase in demand, besides domestic production Petrobras imported 23 million m3/day
of natural gas, representing 98% of all Brazilian imports of the product, which was an increase of 2.5 million m3/day
compared to 2004.
Petrobras continued to be the largest investor in the segment, increasingly striving to insert the product into the
Brazilian energy matrix. In view of the prospects for the expansion of the market, the new discoveries are making
it possible to increase the supply of Brazilian gas at competitive costs, supplemented through imports.
Transportation
The company remained committed to setting up a Basic Natural Gas
Transportation Network (RBTGN) – which consists of a set of interconnected
gas pipelines that will extend from Fortaleza to Porto Alegre and from São
Paulo to Bolivia, thus helping expand the market.
Natural Gas
I M P R O V E M E N T I N S U P P LY I N F R A S T R U C T U R E
A N D N E W D I S C O V E R I E S E N L A R G E D T H E M A R K E T
Brazil has the second-
largest VNG fleet in the
world, after only Argentina,
which is supplied through
a network of
approximately 1,500
service stations, of which
47% belong to Petrobras .
OUR BUSINESSESN a t u r a l G a s
42 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Petrobras owns a share of eight natural gas
pipeline transportation companies, including:
Transportadora Brasileira Gasoduto Bolívia-Brasil
and Gás Trans-Boliviano S.A., owners, respectively,
of the Brazilian and Bolivian stretches of the
Bolivia-Brazil gas pipeline. The other six gas
transportation companies in which Petrobras
participates are Sul-Brasileira de Gás S.A., Meio
Norte S.A., TNG Participações Ltda., Amazonense
de Gás S.A., Capixaba de Gás S.A. and Nordeste-
Sudeste de Gás S.A..
In the domestic distribution market, Petrobras
maintained its holdings in 19 distribution
companies, but increased its participation in the capital stock of Distribuidora de Gás Natural Canalizado CEG-Rio to
37.41% after acquiring 12.41% of its shares (common and preferred) in July 2005 for R$ 39.33 million (US$ 16.54
million). Through this acquisition, Petrobras gained shared control of CEG-Rio
Petrobras continued to support projects for anticipating the supply of natural gas, either through compressed
natural gas (CNG) as, for example, at Gaspisa, or participating in the Gemini Consortium, which will make it possible
to supply the product in the form of liquefied natural gas (LNG) to Cebgás, Goiasgás and upcountry areas operated
by Gasmig and Compagás. The Gemini Consortium will establish, in 2006, the first LNG plant in Brazil.
Technology
As part of the strategy to develop the segment, two technological enhancement initiatives in the natural gas chain
of production were chosen as priority programs for investment: the RedeGasEnergia (Gas Energy Network) and
the Gas Technology Center. With 90 projects on the drawing boards for expanding the use of the product, the
Network involves universities research institutes, distributors, equipment manufacturers and government
organizations. In partnership with the National Industry Service (SENAI), the Center promotes the use of gas and
fosters the training of specialized manpower.
Within the context of bringing the use of natural gas to a mass market, RedeGasEnergia’s Excellence Network
undertakes cooperative and segmented efforts focused on technology and the development of the natural gas
market, striving to increase the share of this fuel in the domestic energy matrix in a sustainable manner, connecting
up all of the links in the chain of production. Among the 90 projects currently being contracted or alreadyunderway
around Brazil, we can highlight the following:
In the automotive segment, the Ottolized (converted to VNG) Gas-Fueled Bus Using Light Cylinders Project
promoted the conversion of an OM 366 LA diesel engine in order to evaluate the performance of the engine
and obtain technical, economic and environmental data based on field tests and operating in real passenger
transportation conditions;
In the residential segment, Vala Técnica de Caxias do Sul is a laboratory that makes it possible to consolidate
the methodology of shared utility networks (gas, water, etc.) in a single trench; and also to implement new RGE
projects, designed to use this methodology in the residential segment. Also in this segment, the objective of the
Pre-Payment System Meter is to develop a metering pre-payment system that can be used in housing projects
to measure natural gas consumption in residences;
For the industrial segment, the project for the construction of a Natural Gas Tunnel Kiln for the Red Ceramic
Industry seeks to design and build to serve as a demonstration plant for other red ceramic producers;
In the commercial segment, the proposal of a micro co-generator that uses domestic technology is to help
develop and build a micro co-generator prototype using local technology that incorporates a gas generator, a
free power turbine and a heat recovery unit;
In the alternative mode segment, the RedeGasEnergia is developing a final use program for LNG, which is
an advance alternative for the natural gas market in view of the relative lack of gas pipeline transportation
infrastructure.
OUR BUSINESSES
44 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 45
The acquisition of the three merchant plants ended legal controversies regarding
the consortium contracts signed with the plants in 2001 and 2002. The Company
had been obliged to make contingency payments regarding taxes, fees, operating
costs, maintenance and investments in situations in which the companies involved
had not obtained efficient funds. The acquisitions were designed to reduce costs
and to guarantee receipt of all of the energy generation revenues in compliance
with Petrobras’ guidelines for its participation in the electricity sector.
In March 2005, Petrobras acquired all of the quotas belonging to the Cubatão
thermoelectric power plant, scheduled to start up operations in October 2007,
supplying 47 MW and 415t/h of steam to the RPBC refinery.
Construction of the Termoaçu Plant (RN) is continuing. Petrobras has a 46%
stake in the project, which is scheduled to come on stream in 2007. This plant,
budgeted at US$ 300 million, should generate 310 MW and 610 t/h of steam,
which will be used to be injected into oil wells to increase the production of oil.
In compliance with Petrobras’ Strategic Plan, the Company will invest US$ 1.3 billion in the Energy Sector over
the 2006-2010 period. The Business Plan calls for acquisitions, the conclusion of projects and the conversion of gas-
fueled thermoelectric plants to bi-fuel facilities as well as the development of generation from renewable sources.
Petrobras’ own thermoelectric power plants, or those that are under its management, generated a total of
3,100,632 MWh in 2005, having “generation by inflexibility” of 42% as its main ratio, thus contributing to the safety
of the Electric System and the saving of reservoir water, especially in the Northeast. Most of this generation,
1,271,830 MWh, was earmarked to comply with an agreement Petrobras signed at the end of 2004 to guarantee
saleable power from the northeast region thermoelectric power plants. The accumulated generation for the year
for this purpose was used to rebate 49.6% of the initial debt of 2,562,639 MWh.
The conversion of thermoelectric power plants to bi-fuel (natural gas and diesel) seeks to guarantee greater
reliability regarding the supply of fuels to the plants and, in compliance with the legal requirement that
establishes mandatory proof of the
origin of fuel for 100% of the
generation capacity of each
thermoelectric power plant (Decree
no. 5.163, of July 30, 2004),
Petrobras decided to convert part of
its thermoelectric power plants to
bi-fuel operation. The basic projects
for the conversions have been
concluded and now await the
granting of environmental licenses.
The next phase will be to contract
the required construction work.
Petrobras’ main
projects for the use of
renewable energy
sources are for the
production of biodiesel
and the generation of
electricity through
wind power.
Petrobras increased its share of the thermoelectricity segment, oriented by a strategy of consolidating itself as an
integrated energy company. The Company is present in the entire thermal generation chain of production,
optimizing the use of natural gas, ensuring the placement of oil products, operating power plants and selling energy.
Its presence in the sector strengthens the contribution of the thermoelectric power plants in improving the reliability
of the National Interconnected System (SIN).
According to the new electric sector model, energy is sold through Regulated Contracts via auctions, and Free
Contracts through bilateral contracts between sellers and buyers.
At the new energy auction held in December by the National Electric Energy Agency (ANEEL), Petrobras sold
1,391 MW made available by its power plants. The final result of the auction gave the Company a fixed revenue
for a period of 15 years, of R$ 199,842,928.00/year (in current values) as of 2008, which will reach R$
277,927,992.00/year as of 2010.
Thermoelectric power plants
Petrobras took over full control of three thermoelectric power plants during 2005. TermoRio (1,040 MW) was
acquired for US$ 83 million from NGR, as were two merchant-type plants – the Barbosa Lima Sobrinho
thermoelectric power plant, former Eletrobolt (386 MW), also in Rio de Janeiro, and the TermoCeará thermoelectric
power plant (220 MW). The former was purchased for US$ 65.1 million, with absorption of a debt of US$ 98.9
million from Sociedade Fluminense de Energia; the latter was acquired for US$ 137 million, including the
liquidation of debt obligations with financing institutions. At the beginning of 2006, Petrobras signed a
Memorandum of Understanding for the acquisition of the Macaé Merchant thermoelectric power plant.
T H E C O M P A N Y A C Q U I R E D N E W T H E R M O E L E C T R I C P O W E R P L A N T S
A N D I N V E S T E D I N T H E D E V E L O P M E N T O F R E N E W A B L E E N E R G Y S O U R C E S
Energy
OUR BUSINESSESE n e r g y
The Company’s activities in sustainable development businesses in the field of energy during 2005 were
designed to evaluate projects that are eligible to receive carbon credits according to the Clean Development
Mechanism (CDM) defined by the Kyoto Protocol, as well as to propose commercialization policies for these
certificates. Toward this end, the technical feasibility and baseline methodologies necessary to obtain the
approval of these products were studied. The main projects being evaluated that might qualify for CDM
credits were the following:
Renewable and alternative energies;
The UN-SIX agricultural schist project in São Mateus do Sul (PR);
The Urucu–Manaus Gas Pipeline: evaluation of its potential;
The reutilization of industrial exhaust gases;
Closed cycles in thermoelectric power plants;
Reduction of leakages in natural gas transportation compression stations.
Of particular note is the proactive participation of Petrobras in its support, through an agreement, of the
Brazilian Climate Change Forum, that is seeking the development of a Brazilian policy regarding climate change.
S U S T A I N A B L E D E V E L O P M E N T
Measures were implemented at all Petrobras units to meet, in addition to the aforementioned projects, the energy
consumption and emission reduction targets that were established. For this, energy diagnosis surveys were conducted
in all of the Company’s industrial facilities. Furthermore, each Business Unit that will operate future production platforms
will be the focus of efforts to ensure that the projects they prepare are based on the efficient use of energy.
In 2005, the National Program for the Rational Use of Oil Products and Natural Gas (Conpet) increased by 23%
the size of the fleet it services, surpassing the 10% target that had been established at the beginning of the year.
The environmental counterpart of this performance meant that 920 thousand fewer tons of CO2 went into the
atmosphere, an effort that is allied to Petrobras’ overall commitment to social and environmental responsibility.
Renewable energy
The main projects under development for the utilization of renewable energy sources are aimed at production of biodiesel
and the generation of electric energy through wind power. To this end, the Strategic Plan established targets of 481
thousand m3/year of biodiesel and 169 MW of electric energy through renewable sources to be available by 2010.
Investments of some US$ 335 million are foreseen over this period for the development of renewable energy businesses.
An experimental plant with capacity to produce 4,000 tons/year, to provide technological support for the
production of biodiesel, was built in Guamaré (RN); the biodiesel it produces makes use of vegetable oil deriving
mainly from castor beans.
In terms of production of electricity through wind power, Petrobras already is operating a pilot wind farm in Macau
(RN) with an installed generating potential of 1.8 MW, and it is preparing a second pilot project in Rio Grande (RS),
with 4 MW capacity. The building of wind farms with larger scales of production is being negotiated with outside
partners and takes into account the opportunity for the acquisition and development of projects that are structured
within the Alternative Electric Energy Sources Incentive Program (Proinfa) located in the Northeast region and whose
production of energy already has been contracted by Eletrobrás. The objective of these projects is to increase the
supply of electric energy to the Northeast, supplementing the power that is generated through natural gas.
Also along these lines, Petrobras signed a protocol of intentions with the National Department for Drought
Projects (DNOCS) and is studying the technical and economic feasibility of the hydroelectric potential of DNOCs
reservoirs, aimed at implementing small hydroelectric power plants
(PCHs) in the Northeast.
Energy efficiency
Petrobras’ promotion of energy efficiency is strongly linked in the Strategic Plan, 2015 vision,
in which social and environmental responsibility is highlighted. To this end, the In-house Energy
Conservation Program was involved in the development, coordination and implementation of
activities related to energy efficiency, fostering a relative reduction of the burning of fossil fuels and,
consequently, CO2 emissions, the one of the main greenhouse gases.
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P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 51
Petrobras’ average overseas production of oil and LNG reached 162,8 thousand bpd in 2005, while production of
natural gas was 95,900 boed – for a total of 258,700 boed. Average listing cost was US$ 2.90/boe.
In 2005, the company‘s overseas proved reserves reached 1.68 billion boe, using ANP/SPE criteria. Petrobras‘
refineries abroad, with an installed processing capacity of 129 thousand bpd, processed 103 thousand bpd, a
volume 2.4% higher than in 2004.
50 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Foreign Production of Oil, LNG, Condensate and Natural Gas
(th boed)
Oil, LNG and condensate
Natural gas
71
58
246
262
259
545
2001
2001
2001
2001
2002
2002
2002
2002
2003
2003
2003
2003
2004
2004
2004
2004
2005
2005
2005
2005
META2010
TARGET2010
TARGET2010
2001
2002
2003
2004
2005
TARGET2010
206
161 85
168 94
163 96
339
45
35 23
26
Unit Cost of Foreign Lifting
(US$/bbl)
2.46
2.6
2.9
2.1
2.26
2.08
Proved Foreign Reserves of Oil, LNG and Condensate and Natural Gas
SPE Criteria (MM boe)
Oil, LNG and condensate
Natural gas
979
1,123
1,870
1,681
1,013 891
1,010 860
955 726
226
320 803
753
1,904
Proved Foreign Natural Gas Reserves by country
SPE Criteria (BCF)
Proved Foreign Reserves of Oil
and Condensate by country
SPE Criteria (MM bbl)
Total Throughput - Foreign
(th bpd)
Unit Cost of Foreign Refining
(US$/bbl)
1.17
1.09
1.30
1.8
1.15
0.94
With a presence in 21 countries, Petrobras participates in the entire chain of operations of the oil, natural gas
and electricity industries on the continent and also is expanding its participation in projects in North America, Africa
and Asia. Associated with 71 oil companies, Petrobras is the operator for 170 blocks of the 357 blocks in which it
has a share.
Argentina
Bolivia
U.S.
Peru
Venezuela
4% 3% 1%
23%
69%
Tabela 4
Tabela 5
Angola
Argentina
Bolivia
Colombia
Ecuador
U.S.
Nigeria
Peru
Venezuela
1%
25%
25%
18%
10%
9%
6%4% 2%
p e t r o b r a s O V E R S E A S
ARGENTINA
Exploration and Production; refining; pipelines transportation; commercialization;
distribution; gas and energy; petrochemicals; eletric energy
BOLIVIA
Exploration and production; refining; pipelines transportation;
commercialization; distribution; gas and energy
CHILE Representative Office and commercialization
COLOMBIA Exploration and Production
ECUADOR Exploration and Production
THE UNITED STATES Exploration and Production; refining
MEXICO Exploration and Production
PARAGUAY Distribuition
PERU Exploration and Production
URUGUAY Natural gas distribution; pipelines transportation
VENEZUELA Exploration and Production
ANGOLA Exploration and Production
CHINA Representative Office and commercialization
SINGAPURE Representative Office and commercialization
EQUATORIAL GUINEA Exploration
IRAN Exploration
ENGLAND Representative Office and commercialization
JAPAN Representative Office
LIBYA Exploration
NIGERIA Exploration
TANZANIA Exploration
international activitiess o u t h a m e r i c a
SOUTH AMERICAArgentina, Bolivia, Colombia, Venezuela, Uruguay, Ecuador, Paraguay, Peru, Chile
Argentina
Petrobras has a presence in the country through Petrobras Energía S.A. (PESA), which acts throughout the value
chain of an integrated oil and natural gas company. Its exploration and production area achieved an average
production of 61.9 thousand bpd of oil and LNG and 42.2 thousand boed of natural gas, totaling 104.1 thousand
boed, comprising the Company’s largest overseas production region. Its Argentine company operated and
participated in 26 blocks – 16 in production and 10 in the exploratory phase. Lifting cost was US$ 3.76 per boe.
Petrobras Energía operates the Ricardo Eliçabe (Bahía Blanca) and San Lorenzo (Rosário) refineries and also
participates and operates Refinaria Del Norte (Refinor), with a 28.5% ownership stake. Considering the proportion
of its share, in Refinor, the company has installed capacity of 76.2 thousand bpd, and processed average
throughput of 68 thousand bpd in 2005.
Petrobras Energía has three units in the petrochemical and fertilizer segments in Argentina: Puerto General San
Martin, Zarate and Campana. The company also has a 40% stake in Petroquímica Cuyo and is the only producer
in Argentina of products such as SBR (styrene butadiene rubber), polystyrene and UAN (urea + ammonium
nitrate) and is the exclusive manufacturer in South America of bioriented polystyrene. It also has activities in Brazil,
in Rio Grande do Sul, through Innova, producing styrene and polystyrene.
In the distribution of oil products, PESA owns 746 service stations – 436 flying the Petrobras flag – and 24
exclusive Compressed Natural Gas (CNG) stations. In 2005, the company’s sales in the country totaled 50.7
thousand bpd.
Among the products offered by Petrobras Energía service stations, of particular note are Podium gasoline and
Lubrax lubricating oils. With high performance and low sulfur content, sales of Podium gasoline increased 70%
compared to 2004, while overall sales of premium gasoline in the country rose 33.3%. Lubrax’s sales also continued
to grow, rising 11% and guaranteeing an 8.7% share of the Argentrine lubricant market for Petrobras Energía.
The good acceptance of Petrobras products in Argentina is related to the strategy to consolidate the brand in
the country. With an 8.7% share of the automobile fuel market, Petrobras Energía extended the presence of the
brand to 121 service stations in its network during 2005. As a result, sales increased on average 21%, while
average market growth 8.8%.
Natural gas sales were affected by the deregulation of the price of gas for generators and distributors, which
began to use the Electronic Gas Market (MEG) for spot market operations. Government policy that directed gas
that previously was exported to the domestic market impacted Petrobras Energía by approximately 115 thousand
m3/day. The company sold 7.9 million m3/day of gas, of which 0.9 million m3/day came from Bolivia.
For the transportation of natural gas, Petrobras Energía has a 50% stake in the holding company of
Transportadora de Gás Del Sur (TGS), which has the largest gas pipeline network in the country, totaling 7,400
kilometers with capacity for 62 million m3/day. TGS increased the capacity of a 495-kilometer stretch by 2.9 million
m3/day in order to satisfy growing Argentine demand. The BNDES and the gas producers financed this project,
requiring an investment of US$ 342 million.
In the electric energy segment, Petrobras Energía has 100% ownership of the Pichi Picún Leufú hydroelectric
power plant and the Genelba natural gas thermoelectric plant. The company has a minority position in the
Hidrelétrica de Piedra del Águila hydroelectric power plant (5.4%); in Edesur, a power distributor in the Buenos
56 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Aires central region; and in Transener, the main electricity transmission company in the country. Its stake in the
latter company was reduced from 32.5% to 26.33% in June as part of a financial restructuring agreement.
Petrobras owns 34% of Cia. Mega, which has a separate natural gas unit in Loma la Lata, Neuquén province,
and fractioning facility in Bahía Blanca, Buenos Aires province. Furthermore, it operates a 600-kilometer multiple
pipeline and has tank farms and facilities for exporting products. In 2005, this company sold 495 thousand tons
of products (ethane, propane, butane and natural gasoline), with gross revenues of US$ 220 million.
Bolivia
The main focus of Petrobras’ activities in Bolivia is exploration and production of natural gas for export as
part of its strategy for the integration of the Southern Cone markets.
In 2005, while Petrobras’ production of oil and LNG in Bolivia was 8.5 thousand bpd, natural gas production
reached 7.75 million m3/day, the equivalent to 54.1 thousand boed. Gas exports to Brazil through the Bolivia-Brazil
Gas Pipeline totaled 22.9 million m3/day, of which 6.1 million m3/day were commercialized by Petrobras, besides
the 0.9 million m3/day that went to Argentina.
Petrobras is associated in seven production blocks in Bolivia, and is the operator of six. With the new
Hydrocarbons Law effective as of May 2005, the concession contracts currently underway will need to be changed.
The Regulations still need to be defined for the oil companies to be able to adjust themselves to the new terms
of the legislation approved by Congress.
The most important financial consequence of the new law is the institution of the Direct Hydrocarbon Tax,
which applies a 32% levy at the “wellhead.” Because royalties and other governmental participations already total
18%, the overall tax burden has now risen to 50%. The increase will have an important effect on the Company’s
exploration and production operations in the country.
Petrobras Bolívia is the largest company in Bolivia, having initiated its activities in 1996. With a significant share
in the GDP and a major taxpayer, it is recognized both for its operational quality as well as its commitment to
environmental and social questions. Besides participating in GTB, which is the operator of the Bolivian stretch of
the Bolivia–Brazil Gas Pipeline, Petrobras has a 44.5% stake in Transierra, the controlling company of the
Yacuíba–Rio Grande gas pipeline, with
capacity for transporting 17 million
m3/day. Petrobras also owns the San
Marcos gas pipeline and part of the Rio
Grande gas compression station and
two gas processing units at the San
Alberto and Sábalo fields.
Through Petrobras Bolivia Refinación
S.A. (the former Empresa Boliviana de
Refinación), the company is the owner
of the Gualberto Villaroel refinery in
Cochabamba and the Guillermo Elder
Bell refinery in Santa Cruz de la Sierra. In 2005, these units jointly processed 39,800 bpd, corresponding to 67%
of the installed capacity. The utilization rate of the refineries is low due to the characteristics of the Bolivian oil and
of the local market.
The average volume of sales for oil products distributed by the company in Bolivia was 7.9 thousand bpd during
the year. Of the company’s 105 service stations, 40 operate under the flag of the Empresa Boliviana de Refinación;
46 are under a neutral flag and 19 are under the Petrobras brand. The stations, which have Spacio 1 and Lubrax
Center facilities, are consolidating the company’s leadership of the market with a 25% share.
Colombia
Petrobras is entering the oil product distribution segment in the country, where it already conducts exploration and
production activities. In line with the strategy for expansion and leadership on the continent, the Company signed
an acquisition contract which will allow it to incorporate retail and supply assets in the country. The negotiation,
which also involves Uruguay and Paraguay, has an estimated value of US$ 140 million. The assets should pass over
to Petrobras’ control in 2006.
The acquisitions in Colombia, subject to governmental permits, include 38 own or long-term leased service
stations in Bogotá with annual sales of 235 thousand m3 and commercial supply contracts of 149 thousand m3 per
year. Also part of the accord are: a tank farm in Puente Aranda with capacity for 9 thousand m3; a lubricants mixing
plant, with capacity of 38 thousand m3; and a basic products terminal in Santa Marta.
Furthermore, the company entered the lubricants market in the country through the launch of its Lubrax brand,
which includes lubricants for diesel and gasoline engines, for transmissions, hydraulics and two-cycle motors. In
2005, more than 800 m3 in products were sold, surpassing the target for the year by more than 75%.
Petrobras has a stake in 18 exploration and production contracts in the country (six of them in production), and
is the operator in 12 of them. Over 2005, the average production of oil and LNG was 16,520 bpd while natural
gas production was, 11 thousand m3/d, totaling 16,582 boed.
Venezuela
With four production and two exploration
assets, Petrobras Energía produced 44.2
thousand bpd of oil and LNG in the country
as well as 3.4 thousand boed of natural
gas, for total of 47.6 thousand boed.
Because the Venezuelan Ministry of
Energy and Oil initiated a review of
operating concessions in exploratory
blocks, Petrobras Energía signed
transitional agreements committing it to
international activitiess o u t h a m e r i c a
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 57
international activitiess o u t h a m e r i c a
Ecuador
With operations in two blocks, Petrobras Energía produced 9.1 thousand boed of oil and LNG in the country. The
company negotiated an agreement with Teikoku for the cession of 40% of its stake in Block 18, currently in production,
and Block 31, in the exploratory phase. The transaction requires the final approval of the Ecuadorian government.
In order to proceed with exploration operations in Block 31, part of which is located in the new of Yasumi
National Park, Petrobras Energía is negotiating a solution with authorities that would permit activities in the location.
Paraguay
Petrobras is entering the oil product distribution segment in Paraguay through an agreement that also includes assets
in Colombia and Uruguay. Some 154 service stations with 52 convenience stores should pass over to the control of
the Company. Spread throughout Paraguay, the network has annual sales of 241 thousand m3 and commercial
supply contracts totaling 67 thousand m3 per year. The agreement encompasses assets for the sale of LPG, offered
in 17 service stations for vehicular use. Furthermore, it includes commercialization of products for aviation at the
Asuncion and Cidade Del Este airports, with an annual sales volume of 18 thousand m3.
Peru
Of the five blocks in the country in which Petrobras Energía is associated, one is currently in production (Lot X),
and the others are in the exploratory phase. In 2005, average production of oil reached 12.6 thousand bpd, and
the average production of gas was 1.8 thousand boed, totaling 14.4 thousand boed.
Chile
With the establishment of a representation office in Santiago at the end of 2005, Petrobras began to prospect for
business opportunities in the Andean nation. In line with its strategy for expanding around the continent, the
Company’s interests in the Chilean market include oil and natural gas activities, taking into account the agreements
the country has with Argentina in this field.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 59
negotiate the conversion of these contracts to mixed-ownership companies in which the Venezuelan government
would have more than a 50% stake.
Petrobras made the winning bid for the Moruy II block in the 2nd Round of the tender for underwater exploration
in Venezuela, denominated the Rafael Urdaneta – Phase B Project, together with Teikoku Oil Co., Ltd. The 874 km2-
block that was picked up is located in the southeast section of the Gulf of Venezuela, north of Lake Maracaibo and
450 kilometers west of Caracas.. Petrobras and Teikoku each own 50% of the project and the Brazilian company
will be the operator.
Uruguay
In December 2004, Petrobras acquired shareholding control (55%) of Conecta S.A., thus beginning the activities
of Petrobras in Uruguay. The Administración Nacional de Combustibles Alcohol y Portland (Ancap), which is
controlled by the Uruguayan government, has the other 45% of the voting shares of this company.
Conecta S.A. has the government concession to distribute natural gas, liquefied petroleum gas (LPG) and
manufactured gas through a 300-km-long pipeline network along with exclusivity to supply small and medium
consumers (up to 5 thousand m3 per day) to the upcountry regions of Uruguay. Revenues in 2005 were some
US$ 4.0 million, with sales volume totaling 39 thousand m3/day involving 3,400 clients.
Natural gas distribution activities are being expanded through the acquisition of 51% of the shares of Gaseba
Uruguay S.A., which holds the concession to distribute gas to the province of Montevideo’s 1.4 million inhabitants
until January 2025. The end of the negotiation with the Gaz de France Internacional Group, the parent company,
depends upon compliance with legal requirements and approval by Uruguayan and French authorities. Gaseba,
which services customers who consume less than 5 thousand m3/day in a regulated market, will be Petrobras’
second gas distribution company in the country.
Petrobras is preparing to enter the oil product distribution market. Through an agreement signed in 2005 that
also encompasses assets in Colombia and Paraguay, the Company should assume control of a 89 service stations
with annual sales of 227 thousand m3 and supply contracts totaling 62 thousand m3 per year. The agreement also
includes the sale of marine products, asphalt and aviation fuel at the
Carrasco International Airport.
AFRICA | Nigeria, Equatorial Guinea, Angola, Tanzania, Libya
Nigeria
With the governmental sanction for development of the gigantic Agbami field in
February, Petrobras is preparing itself to invest US$ 460 million over the next four years
in the project. Scheduled to begin in 2008, total production will be 230 thousand bpd,
with the Company having the right to receive 30 thousand bpd in association with
Chevron Texaco, the operator, Famfa Oil of Nigeria and Norway’s Statoi
The development of Akpo – another giant field in the Niger River Delta – also was approved, in August. Petrobras will
invest US$ 960 million over the next four years and its share of the production, which will total 185 thousand bpd as of 2008,
is 36 thousand bpd. The company’s partners in the project are Total, the operator, and South Atlantic Petroleum of Nigeria.
In September, exploration of the OPL 324 block was guaranteed for another three years. The operator,
Petrobras’ participation is 37.5% together with Exxon Mobil and Statoil.
The company was successful in the tender for new blocks held in Nigeria in 2005, offering the best proposal
for the OPL 315 block, as operator in partnership with Statoil and Nigeria’s Ask Petroleum. Petrobras’ stake in this
block is 45%. The acquisition is in line with the strategy to strengthen the Company’s position in the deep and
ultra-deep waters of the West Coast of Africa.
Moreover, the Company supports the use of alcohol as a fuel in the country. In August, Petrobras signed a
memorandum of understanding with the Nigerian National Petroleum Corporation (NNPC) for providing technical
assistance to a project for mixing the product with gasoline, as is done in Brazil.
Equatorial Guinea
In November, Petrobras obtained a 50% stake in L Block. Its partners are Chevron (operator), Amerada Hess, Energy
Africa and Sasol Oil. The work program includes the drilling of a pioneer exploration well during the second quarter of
2006. If successful, Petrobras will be the operator of the production development phase.
Angola
The Company has two E&P assets in the country –Block 2, located in shallow water in the Lower Congo Basin,
and Block 34, in deep water. With a 27.5% stake of a consortium made up of Total, Sonangol and Chevron, which
is the operator, Petrobras produced an average of 8.3 thousand bpd in Block 2 during 2005. In Block 34, located
in 1,500 to 2,500 meters of water, after drilling two wells, Petrobras brought together a group of technicians to
analyze the potential of the block, based upon accumulated knowledge and recent discoveries along the Brazilian
coastline. The study indicated good prospects in deeper layers. As a result, the consortium requested and
obtained an extension of the contract exploration deadline. In Block 34, Petrobras is associated with Sonangol
and Norsk Hydro.
NORTH AMERICA | The United States, Mexico
The United States
In order to position itself among the companies that are most actively exploring for oil and natural gas in the Gulf
of Mexico, Petrobras continued to apply its strategy of strengthening its operations along four fronts: ultra-deep
water activities; the search for deep fields with large gas reserves in shallow water and onshore; prospecting in the
extreme western section of the Gulf; and exploration efforts in lower-risk deep water areas.
Petrobras has stakes in 271 blocks, and is the operator in 180. In the 196th Bidding Round for concessions in
exploratory areas in 2005, the Company picked up 53 blocks. Of these, 18 cover three prospects that have the
potential for large oil reserves and have the objective of consolidating Petrobras’ position in ultra-deep water. Also
during this round, and as a way of consolidating its position in the extreme western section of the Gulf, the
Company acquired 26 blocks, obtaining full control of 10 prospects with high potential for gas reserves; drilling is
scheduled to begin in 2006.
During the year, its average production in the Gulf of Mexico was 4.6 thousand boed, which was lower than the 7.9
thousand boed that had been forecast due to the unscheduled shutdowns in August and September imposed on the
activities of oil companies in the Gulf of Mexico by Hurricanes Katrina and Rita and their effects in subsequent months.
Petrobras proved the extension of the oil reservoirs of the Cascade accumulation in ultra-deep waters in the
American sector of the Gulf of Mexico upon conclusion of the drilling of a discovery delineation well. After
evaluating productivity, to be carried out in 2006, the Company will establish the best manner of production.
In the exploration of deep gas reservoir, the Company proceeded with drilling activities in the Blackbeard
prospect, whose objectives are deeper than 7 thousand meters. Petrobras also picked up a stake in the Mega Mata
onshore prospect, scheduling drilling for 2006.
In deep waters, the Company has been seeking to increase its share in prospects located in the Garden Banks
Quadrant, which presents comparatively smaller potential reserves but offers lower risk and the possibility of high
profitability. Following this strategy Petrobras absorbed an 80% stake in the Cottonwood discovery where the first
well operated by the Company in deep waters in the Gulf had been drilled. Once the size of the gas accumulation
is confirmed, production should begin in 2007. Meanwhile, drilling was initiated at the Live Oak exploratory
prospect in 2005 and other wells should be drilled in the region in 2006.
Petrobras entered the refining sector of U.S. by acquiring 50% of the Pasadena Refinery in Texas, an investment
of aproximately US$ 370 million.
Mexico
Petrobras participates, in association with Teikoku of Japan and Diasvaz of Mexico, in two multiple service contracts
with Pemex in the Cuervito and Fronterizo blocks. The services that are provided include exploration, production
development and production activities. Petrobras’ stake in each one of these contracts is 45%. In 2005, 14
production wells were drilled and turned over to Pemex, surpassing the targets for the year.
Petrobras operates
180 blocks in the
Gulf of Mexico.
The Company picked
up 53 exploration blocks
during the 196th Bidding
Round held in 2005.
60 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 61
international activitiesa s i a
China
Petrobras signed its second agreement in the country in February 2005 for the formalizing of an understanding
with the China National Petroleum Corporation (CNPC) for the development of joint businesses. The terms of the
cooperation encompass activities such as oil exploration and production, refining and transportation via pipeline in
the country, in Brazil and other regions of the world.
A Strategic Cooperation Agreement containing similar objectives had been signed in 2004 with Sinopec, another
of the three Chinese state oil companies, upon the occasion of the inauguration of the Petrobras office in the
country. Among the goals of this office is to support the sale of oil to China and to prospect new market
opportunities for the Company in Asia.
Tanzania
Petrobras is getting ready to begin seismic surveys in Block 5, which should be extended to Block 6 in ultra-deep waters
in the Gulf of Mafia. After having signed an exploration contract for Block 5 with the government and the state-owned
Tanzania Petroleum Development Corporation in 2004, the company picked up Block 6 during the third exploration
area auction in May. Thus, it reinforced its position in a frontier exploratory region on the east coast of Africa, which is
in line with its international expansion and portfolio diversification strategy. When the new contract has been signed,
the project portfolio in the country will total 18.5 thousand km2 in concession areas that are fully operated by Petrobras.
Libya
With rights to Area 18 located in deep water (200-700 meters) in the Libyan sector of the Mediterranean
Sea, obtained in an auction that was run in January 2005, Petrobras signed a contact for shared production
with the state-owned National Oil Company (NOC) in March. Associated with Oil Search Limited, of Papua
New Guinea, the Company is the operator, with a 70% stake. In the event of exploration success, NOC will assume
51% of the investments.
The work program in Area 18 to be carried out by the consortium calls for acquisition of 2 thousand kilometers
of 2D and 500 km2 of 3D seismic data and the drilling of an exploration well with a minimum total investment
of US$ 21 million.
ASIA | Iran, China
Iran
In the search for business opportunities in the Middle East, guided by the strategic objective of becoming more active
in the region, Petrobras maintains a subsidiary, Petrobras Middle East, in Iran. In 2005, the Company began
preparations for exploration activities in the Tusan Block in shallow waters in the Persian Gulf. Petrobras is the operator,
with a 100% stake, under the terms of an agreement signed in 2004 with the National Iranian Oil Company (Nioc).
Petrobras’ contractual commitments, with a minimum budget of US$ 32 million, includes reprocessing of 2,000
kilometers of seismic 2D data, the acquisition and processing of 400 km2 of seismic 3D and the drilling of two
exploration wells — the first in 2006.
Q U A L I T Y , S A F E T Y , E N V I R O N M E N T , A N D H E A L T H
The Company considers that the corporate requirements of Quality, Safety, the Environment and Health are
also an integral part of its overseas processes and products, where it seeks to act in a socially and
environmentally responsible manner, respecting each country’s legislation.
Its overseas units obtained significant HSE results during the year. In Bolivia, the Gualberto Villarroel
Refinery in Cochabamba completed five years without any accidents with loss of time – a record among
Petrobras’ refineries. In Argentina, Petrobras Energía’s Lost Time Injury Frequency Rate (LTIFR) continued to
decline — to 0.90 in 2005 from 5.67 in 2002, 2.13 in 2003 and 1.4 in 2004.
Petrobras Energía inaugurated the first Environmental Defense Center in Argentina in June at the Ricardo
Eliçabe Refinery in Bahía Blanca. By 2008, another 12 centers will be established in the country
representing a total investment of US$ 15 million – the largest network of its kind by an
oil and energy company in Argentina. The centers extend the Company’s logistics
concept overseas, making its response in the event of emergency spill situations
quicker and more effective.
Among the distinctions obtained by the Company’s overseas units for recognition
of the care they exercised in the field of HSE was the Colombian Prize for Management
Quality offered by the federal government and awarded for the first time to a company in
the oil industry. In Argentina, Petrobras Energía won the Environmental Excellence Prize
granted by the Buenos Aires University of Social and Environmental Sciences. The
award was for the company’s support of a program to stimulate student interest in
scientific knowledge and defense of the environment.
social and environmentalSocial and Environmental Responsibility
DA
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BR
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.
T H E C R E AT I O N O F A S O C I A L A N D E N V I R O N M E N TA L R E S P O N S I B I L I T Y M A N A G E M E N T C O M M I T T E E E N H A N C E D T H E
P E T R O B R A S C O R P O R AT E G O V E R N A N C E M O D E L B Y A L I G N I N G A N D I N T E G R AT I N G T H E M A N A G E M E N T O F T H E
C O M PA N Y ’ S S O C I O - E C O N O M I C A C T I O N S . T H E AT T R I B U T E S O F T H E C O M M I T T E E I N C L U D E T H E P R O P O S A L O F
C O R P O R AT E S O C I A L A N D E N V I R O N M E N TA L R E S P O N S I B I L I T Y S T R AT E G I E S A N D G U I D E L I N E S , T H E S U G G E S T I N G
O F P E R F O R M A N C E I N D I C ATO R S A N D TA R G E T S , T H E F O L LO W - U P O F T H E A C T I V I T I E S A N D T H E P U B L I C I Z I N G O F
B E S T P R A C T I C E S A S A WAY O F U N I F Y I N G T H E P R O C E D U R E S O F T H E B U S I N E S S U N I T S I N T H E R E L AT I O N S H I P
W I T H S O C I E T Y.
T H E C O M M I T T E E I S C O M P O S E D O F A C O N S U LTA N T TO T H E P R E S I D E N T A N D R E P R E S E N TAT I V E S
O F T H E O M B U D S M A N O F F I C E , O F 12 E X E C U T I V E D E PA R T M E N T S A N D O F T H E P E T R O B R A S
D I S T R I B U I D O R A A N D T R A N S P E T R O S U B S I D I A R I E S . A M O N G T H E I N I T I AT I V E S T H AT W E R E
A D O P T E D I N 2 0 0 5 WA S T H E C R E AT I O N O F T H E G E N D E R C O M I S S I O N A N D
T H E C O M I S S I O N O F P R E PA R AT I O N A N D E V A L U AT I O N O F S O C I A L A N D
E N V I R O N M E N TA L R E S P O N S I B I L I T Y R E P O R T S . W O R K G R O U P S F O R
M A N A G E M E N T I N D I C ATO R S A N D C E R T I F I C AT I O N A N D T H E D O W J O N E S
S U S TA I N A B I L I T Y I N D E X C H A L L E N G E A L S O W E R E E S TA B L I S H E D .
responsabilityof civil society and public policies, the program fosters social activism by encouraging the direct participation of the
communities that are involved.
The Petrobras Zero Hunger initiatives involve five lines of action — guarantee of the rights of children and
teenagers, education and professional training, generation of jobs and income, social projects and volunteerism.
On these fronts, the program runs programs aimed at promoting racial and gender equality and the inclusion of
the handicapped.
The great majority of the projects for the Petrobras Zero Hunger program was chosen through a public selection
process. A total of R$ 18 million was earmarked in 2005 for this process, resulting in sponsorship of 74 new
projects. As a result, Petrobras’ funds and knowledge were merged with society’s own resources in an effort to
overcome misery and to foster the social inclusion of low-income communities around Brazil.
The Petrobras System disbursed R$ 42 million to the Infancy and Adolescence Fund (FIA) through the National
Council (Conanda), the Piauí State Council and municipal councils in order to guarantee the rights of children and
teenagers. The funds were used in 190 municipalities, in a majority of the states, to finance more than 300 projects
for the prevention and eradication of child labor, the combat of sexual exploitation of children and teenagers and
vocational training of young people.
Petrobras continued to support vocational training activities for both youths and adults. Its Mova-Brasil Project,
run in conjunction with the Paulo Freire Institute and the Petroleum Workers’ Federation (FUP), taught more than
23 thousand people how to read and write in the states of São Paulo, Rio de Janeiro, Bahia, Sergipe, Rio Grande
do Norte and Ceará. The project’s target is to teach literacy to 40 thousand people between August 2003 and May
2006, and involves the training of 1,600 educators and 160 regional coordinators. Regarding the generation of
jobs and income, projects designed to promote cooperative action succeeded in organizing nearly 10 thousand
autonomous collectors of recyclable materials around Brazil, disseminating a socio-environmental consciousness
and knowledge about the selective collection and processing of waste materials.
With the support of the Advanced Program for Assistance and Treatment of Special Persons (Pate), Petrobras
helped handicapped people exercise their basic rights of citizenship. In 2005, as part of its policy of combating
inequality and achieving social inclusion, the program focused on adapting society to the reality of these people
while also running programs in the fields of education, culture, sports and professional training.
responsabilityS o c i a l I n v e s t m e n t s
A signatory of the United Nations Global Compact, the Company is involved in the dissemination of the document’s
ten principles, which involves topics such as human rights, workplace conditions, the environment and combat of
corruption. In 2005, Petrobras joined the UN task force and the European Foundation for Management
Development, which develop the bases for the formation of business leaders committed to the vision that social
and environmental responsibility is an integral part of business. It was the first oil and energy company and the
only Latin American participant among the 21 members of the group
In 2005, Petrobras signed a declaration of intentions with the United Nations Children’s Fund (UNICEF) to
develop technical planning, research, communication, and the generation of financial resources in order to
guarantee the rights of children and teenagers in Latin America and the Caribbean. The initiatives contributed to
helping meet the targets set for the UN’s Millennium Objectives.
As a way of further enhancing transparency, Petrobras has participated as a monitor and contributed with
suggestions in the meetings of the Extractive Industries Transparency Initiative (EITI). This is a voluntary initiative
created in 2003 with the participation of governments, international organizations, NGOs and investors that is
designed to ensure that the money extractive industries pay to governments contributes to sustainable
development and poverty reduction in the countries in which they operate.
Social sponsorships
The Petrobras Zero Hunger Program, which was launched in 2003, joins together the efforts of the Company in
the fight for social inclusion and the eradication of misery and hunger in Brazil through citizen-based development
actions. In 2005, we invested R$ 139.6 million in projects in every state in the country. In step with the initiatives
Social Investments
O N E O F T H E F I R S T S I G N A T O R I E S O F T H E U N I T E D
N A T I O N S G L O B A L C O M P A C T , P E T R O B R A S H A S
I N T E N S I F I E D I T S S U P P O R T O F I N C L U S I O N P R O J E C T S
66 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
68 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
Environmental Projects
A number of projects accepted as part of the first public selection of the Petrobras Environmental Program in 2003
are being developed in biomes such as the Amazon region, the Caatinga and Cerrado areas, the Atlantic Forest and
the Pantanal. Being run in partnership with NGOs, universities and labor organizations, the projects are involved in
the preservation of hydrographic basins, ecosystems and landscapes, encompassing approximately 5 thousand
species of Brazilian fauna and flora.
In the more than 250 municipalities that were benefited, taken together the projects influence over 900
thousand hectares. About 3 million people were directly helped while another 20 million received indirect assistance.
The first selection of Petrobras Environmental Program projects involved an investment of some R$ 40 million over
the first two years they were being run, with approximately 5 thousand people working to conserve water resources.
In December 2005 during the National Environmental Conference, the Company presented the results of the
analyses of samples that were collected in Brazil’s main rivers, reservoirs and lakes through the Brasil das Águas
project that was carried out over 14 months and covered 120 thousand kilometers. The second phase of the
project calls for preservation actions in seven rivers that have been selected based upon the results of the research
study and the existing social, economic and environmental situation of the regions that are involved.
The Company continues to sponsor programs aimed at preserving marine biodiversity — including the
Tamar Marine Turtle, Humpback Whale, Manatee and Southern Right Whale projects. Sponsored since
2002, the Humpback Whale Project has catalogued 332 individuals of this threatened species along
Brazil’s South Region coastline, representing a 14% increase per year. Approximately 2,000 whales
have been catalogued by the Southern Right
Whale project, which is conducted on the
Northeast coast. This is the third largest
group of the species found to date on the
planet. The project has recorded an annual increase of 13% in their numbers.
Cultural sponsorship
Petrobras continues to be largest sponsor of culture in Brazil with an annual
investment of about R$ 150 million and more than 700 active projects. The
guidelines for cultural support are in tune with public policy for the sector and seek
to encourage national culture and the expansion of opportunities for the creation,
circulation and fruition of projects as well as the permanent building of a Brazilian
cultural memory.
Petrobras’ cultural sponsorships are structured through the Petrobras Cultural
program, which earmarks 75% of the funding to projects that have been chosen
through a public selection process. In 2005, of the 4 thousand projects that were
in the running, 200 publicly selected projects received R$ 46 million, distributed in the fields of filmmaking,
scenic arts, visual arts and music. Approximately another 100 projects directly invited to participate received
funding in the amount of R$ 15 million.
The third edition of Petrobras Cultural (2005-2006) was launched in November with total funds of R$
62 million. Support to publicly selected projects covered actions for cultural preservation, production and
dissemination of films, theater productions, bands, choral groups, orchestras and regional musical groups.
The directly chosen projects involved film, scenic arts, visual arts and music as well as the maintenance of
archeological sites such as those at Xingó (SE) and Serra da Capivara (PI).
The Company encourages registration of projects throughout the country through the Petrobras Cultural
Caravan, which visits Brazilian state capitals between September and December each year. In 2005, a
workshop was added to the caravan for formatting the projects, being at helping cultural producers in all
regions to prepare their proposals. Decentralization already can be seen in the 2004–2005 edition of the
program: of the 171 publicly selected projects, 57% were produced outside the Rio–São Paulo axis. During
the previous edition, the figure was 32%.
Petrobras continues
to be the largest
sponsor of culture in
the country, with annual
investments of some
R$ 150 million and
more than 700
projects underway.
responsability
Sports sponsorship
One of the major partners of Brazilian sports, during the year Petrobras destined some R$ 50 million in support of
different sporting activities. Besides traditional sponsorship — such as Formula 1 motor racing, the Petrobras Lubrax
Team and the Flamengo soccer club, the Company sought to consolidate the presence of its brand in the worlds of
surfing, tennis and handball. The latter, which is the most practiced sport in public schools in the country, was chosen
as the focus of its support of the Olympic ideals.
Sponsorship of tennis was definitively incorporated into the Company’s internationalization strategy in South
America. Through the second holding of the Petrobras Tennis Cup, disputed in Brazil, Argentina, Colombia, Uruguay
and Chile, the Company brand was on display in countries where it has commercial interests in view of its business
expansion around Latin America.
In surfing, Petrobras sought to associate youthful characteristics with its brand name as well as the energy and
strength of the ocean, in reference to the offshore production of oil of gas. The Company sponsored four important
tournaments disputed by top athletes — the Petrobras Women’s Surfing Circuit, the Petrobras Longboard Classic, the
Petrobras Men’s Selective Surfing Championship and the Petrobras Surfing Festival.
The Company continued sponsor the Brazilian Handball Confederation (CBH) and initiated a partnership with the
Brazilian Olympic Committee (COB). Its sponsorship of the Handball Brazil project encompasses the Brazilian national
handball team as well as actions that encourage the practice of the sport. Through the COB, Petrobras’ brand name remains
associated with the Olympic movement, emphasizing the role of sports in the education of young people. Furthermore,
Petrobras is a sponsor of the XV Pan-American Games Rio 2007, involving athletes from more than 40 countries.
In motor sports, Petrobras continued its sponsorship of a number of different types of events, with
particular emphasis on presence of its brand in Formula 1 motor racing. Since
1998, the Company has been developing a special fuel used by England
Williams F1 team in the most important automobile competition in the
world. The development of motor sport products is part of the strategy
to use auto race courses as laboratories. One example is the production
of the Podium gasoline, created thanks to the work carried out with
Williams and available in Brazil and Argentina. (for more information,
consult our social and environmental report 2005)
70 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 71
One important milestone in the Human Resources area in 2005 – year dedicated to improving and adjusting its
strategies to the 2015 Strategic Plan and the 2006-2010 Business Plan - was the creation of the HR Management
Committee made up of executives from different Petrobras areas. The idea is to foster alignment between business
development, management of the Company and the main HR initiatives. Towards this end, an agenda of medium
and long-term priorities was created consisting of topics related to the organization and management of the HR
Function, the management of human capital, business education, external relations and organizational climate.
In order to publicize the best HR management practices, Petrobras organized a series of in-house forums and
seminars during the year. It also obtained 100% participation of the employees in the new system used to manage
personnel performance.
Salary Policy
Expenditures on personnel totaled R$ 6.569 billion during the year, including fixed and variable compensation
components that make up the Company’s salary policy. Fixed compensation encompasses remuneration such as
wages, extras, bonuses and promotion increases payments; variable compensation involves profit and results
sharing (PLR) linked to the business results tied to the Strategic Plan’s targets.
Human Resources
T H E C R E A T I O N O F A M A N A G E M E N T C O M M I T T E E A N D
T H E E S T A B L I S H M E N T O F A N A G E N D A O F P R I O R I T I E S
W E R E H I G H L I G H T S O F T H E A R E A I N 2 0 0 5
Gráfico 1
Tabela 2
Corp. Consulting and Support 16% 20% Downstream
International Area - Overseas 11%
1% International Area - BrazilResearch 3%
33% E&P
Subsidiaries 13%
Gas and Energy 2% 1% Support of Senior ManagementPercentage of Employees
in the Petrobras System
by Area of Activity
responsabilityH u m a n R e s o u r c e s
Petrobras System Number of Employees
Subsidiaries
International Area - Overseas
PETROBRAS Holding
System
60.000
50.000
40.000
30.000
20.000
10.000
0
2001
5,674
0
32,809
38,483
2002
5,875
6,328
34,520
46,723
2003
6,625
5,810
36,363
48,798
2004
7,007
5,939
39,091
52,037
2005
7,197
6,166
40,541
53,904
in the number of employees. These positions, in a number of different areas, will be filled gradually, using the
existing candidate database and the conducting of public selection processes The Company ran a public selection
in 2005 for the admission of professionals at several different job levels. During the year, 1,806 employees were
admitted — 835 college-educated professionals and 971 high-school educated.
Professional Training
In order to satisfy the requirement for the transmission of knowledge throughout the Company, the Petrobras
University had 1,216 new employees enrolled during 2005, of which 749 completed training courses. With 60
professors — 13 with PhDs, 28 holders of Masters degrees and 19 specialists — the University’s Human Resources
Development (HRD) process was certified to IS0 9001/2000 standards.
In collaboration with all areas of the Company, the University’s Business and Management School prepared a
management training model involving the instruction of 4 thousand managers and supervisors. A Business
Teaching Plan was created to improve the learning-apprenticeship process.
Moreover, Petrobras University had its specialization courses in the fields of Petroleum Engineering and Process
Engineering recognized by the Ministry of Education. Created in partnership with the Federal University of Bahia
(UFBA) and the State University of Rio de Janeiro (UERJ), respectively, these courses are in line with the strategy
of strengthening the relationship of the University with Brazilian and international teaching and research institutions.
Health Care
The Multidisciplinary Health Care Service (AMS) helped an average of 249 thousand people per month —
employees, retirees and pensioners and their dependents. Petrobras disbursed R$ 460 million to help pay for
medical appointments, examinations and hospitalization. The effective network encompasses 21,260
establishments throughout Brazil, including hospitals, clinics, laboratories and healthcare specialists. Under the free
choice option, beneficiaries may choose health professionals from outside of the accredited network.
In 2005, as a part of the collective work agreements, three important changes were introduced in AMS: the
increase, from 8 to 18 years, of the age limit for including children and teenagers in an adoption process; the
adjustment of the major risk contribution table to the National Health Agency’s (ANS) age groups, according to the
Statute for the Elderly; and the use of the same consignable margin of 13% for active participants as well as retirees.
Collective Wage Agreements
In the collective wage agreements with onshore union employees in september and offshore employees in november,
Petrobras remained open to negotiation, being represented also in regular follow-up meetings.
As in previous years, the agreements consolidated important advances for employees. Among the main results
were: a salary readjustment of 6.02% and the granting of a level of career progression for all employees; the creation
of an Onshore Field Production Bonus; the commitment to present a proposal encompassing all of the union
demands pertaining to Petros, with a two-month deadline as of the signing of the Collective Wage Agreement of 2005.
Admissions
In order to face the needs that expansion is bringing to Petrobras and are foreseen in the 2015 Strategic Plan, in
October the Executive Board approved the opening up of 9 thousand new jobs, representing an increase of 23%
responsability
Petrobras’ health, safety and environment (HSE) policy, laid out in the 2015 Strategic Plan, seeks to consolidate
HSE aspects as values that are intrinsic to the Company’s planning and management processes, based upon 15
corporate guidelines approved by the executive board in 2001. Subsequently they were divided into different levels
of guidelines and published as the HSE Management Manual.
The HSE guidelines have being implemented since 2002 through the Process Safety Program (PSP). This has
involved the development and implementation of corporate action plans and specific programs for the business
and service units, designed to ensure that the objectives of the HSE policy are met at all levels of the Company.
The visible commitment of the top management and qualification are also the focus of the HSE corporate
guidelines. The president and the Company’s directors participated in 10 HSE audits conducted in the business
units during 2005. The training programs have had the participation of 36,000 persons since 2002.
In April 2004, the Business Committee approved, in its Strategic Plan, the HSE Excellence Strategic Project,
designed to equip the Company with international standards of excellence in the fields of accident prevention,
incidents and failures; emergency readiness; worker health; ecoefficiency in operations and products; and HSE
management, following up on the actions that were initiated by the PSP.
The Company invested R$ 2.8 billion in HSE in 2005. Of the total, R$ 1.6 billion was earmarked for
safety programs, projects and actions, R$ 1 billion went to the environment and
health got R$ 184 million. These values did not include expenditures on behalf of the
Multidisciplinary Health Assistance program or sponsorship of environmental
programs and projects run by society’s organizations.
Part of the disbursements – R$ 777 million – was made through the Program for
Excellence in Environmental and Operational Safety (Pegaso). Transpetro subsidiary also
invested R$ 502 million in the program, totalling a amount of R$ 1.3 billion in 2005.
Health, Safety and Environment
T H E S E A R C H F O R E X C E L L E N C E I N C L U D E S T R A I N I N G P R O G R A M S ,
A U D I T S A N D I N V E S T M E N T S T O T A L I N G R $ 2 . 8 B I L L I O N I N 2 0 0 5
Pension Plan
The Petros Plan is a defined benefit plan that is closed to new participants. The new employees were covered in
2005 by a life insurance policy fully underwritten by the Company until the creation of a supplemental pension
plan for them. Petrobras expects to discuss a proposal for a new plan submitted by a committee made up of
representatives of the company, Petros, the Petroleum Workers’ Federation (FUP) and labor unions.
Educational Benefits
The benefits are of a supplemental nature, complementing the beneficiary’s contribution to the overall cost and
encompass day care centers, helpers, kindergarten, grade school and middle school as well as supplemental
education. In 2005, the amounts disbursed directly to employees totaled R$ 65 million and the total cost, including
taxes, was nearly R$ 100 million. Through the Collective Wage Agreement, Petrobras began to offer the benefits to
employees with minor children under their care who they were seeking to adopt.
Career Plan
Petrobras continued to review its Job Classification and Evaluation Plan (PCAC) in order to adjust its Career Plan to
the challenges defined in the Strategic Plan. The study — conducted by a work group comprised of representatives
of all company areas, the Petroleum Workers Federation (FUP) and the labor unions – received contributions from
more than one thousand employees during the job description phase. The conclusion of the project is scheduled
for May 2006, according to the 2004/2005 collective bargaining agreements.
Transparency and the participation of the workforce have been encouraged throughout the entire PCAC review
process. Among the review premises are: adjustment of the length of careers to the expectation of time with the
company and the mobility mechanisms; the analysis of positions and careers based upon the market and their
importance to Petrobras; and the observance of the weight of personnel costs and its impact on the Petros Plan.
Clubs
With the creation of a Leisure Center in Vitória,
Petrobras expanded its network of clubs open to
employees, retirees, pensioners, dependents and other
members of the local community, on a membership
basis. Its more than 30 clubs have recreational and
sports infrastructure, helping integrate employees and
provide well being for their families.
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 75
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 7776 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
Environment
Environmental responsibility actions implemented in 2005 were aimed mainly at atmospheric emissions
management, liquid effluents and waste management; ecosystems evaluation and monitoring; remediation and
emergency responses.
Emissions
In December, Petrobras published an Air Emissions Management Performance Report, consolidating information
of its operations in Latin America between 2002 and 2004. The report was filed for public consultations with the
Global Greenhouse Gas Register of the World Economic Forum (www.ghgr.org/public) and Petrobras website
(www.petrobras.com.br/environment).
The data contained in the report resulted from an inventory conducted by the Air Emissions Management
System (Sigea) and verified by an independent international consulting firm.
Through the system, Petrobras monitors the emissions of the main greenhouse gases (carbon dioxide, methane
and nitrous oxide) as well as carbon monoxide, sulfur and nitrogen oxides, volatile organic compounds and
particulate matter. The Company has over 20,000 sources registered of emissions in its facilities in South America.
Employees
Outsourced Workers
Totals
Number of Fatalities
2001
2002
2003
2004
2005
12
Emission of Greenhouse Gases
(in millions of tons of equivalent CO2)
Total emissions (direct + indirect) associated with Petrobras’
installations in Brazil and abroad and consolidated by Sigea
As of 2003, the data includes the emissions from the Gas
and energy area, from the assets of Petrobras Energia S.A.
located in Brazil, Argentina, Bolivia, Peru and Venezuela and
from the shipsof Petrobras´ own fleet and vessels chartered
for international trips
44.41
51.56
30.43
39.09
18
318
16
30
21
3
15
1615
1
15
19
0
The number of fatal
accidents was stable
compared to 2004. The
company pays special
attention to this aspect,
because the corporate
target for this type of
incident is zero.
Fatal Accident Rate (TAF)
Number of fatalities per 100 million manhours
of exposure to risk, encompassing own
employees and outsourced workers.
Implemented since 2000, Pegaso strives to eliminate the risks and the liabilities in Petrobras’ installations and
activities, constituting one of the largest initiatives of its kind in the world oil industry. Overall, Pegaso has had some
R$ 9.26 billion in investments and operating expenses since it was created in 2000.
The Pegaso project includes the Pipeline Integrity Program, which absorbed R$ 226.5 million in investments
during 2005. The program covers inspection projects, tests, appraisals, repair and rehabilitation of oil and gas
pipelines designed to guarantee the safety of its operations and to minimize the impact of eventual accidents on
nearby communities.
The HSE Management Evaluation Program oversees the execution of Petrobras’ safety, environment and health policy.
In 2005, 20 appraisals were conducted – 13 in facilities in Brazil and seven outside of the country. The evaluations
encompassed the degree of compliance with corporate guidelines and the requirements of ISO 14001 and OHSAS
18001 standards, which certify environmental, health and safety systems in 171 units in the country and 26 abroad.
Operational Safety
Petrobras continues to reduce its Lost Time Injury Frequency Rate (LTIFR), and is approaching the levels of
excellence prevailing in the international oil and gas industry benchmarks.
The total number of manhours of exposure to risk rose from 483 million in 2004 to 533 million in 2005, a result
of the increase in the Company’s operating activities. The number of accident fatalities remained stable as compared
to 2004. The company gives special attention to this topic cause the corporate target for this type of incident is zero.
The Fatal Accident Rate (TAF), which corresponds to the number of fatalities per 100 million men-hours of
exposure to risk, maintained a trend in 2005 consistent with the overall decline that has been seen. The rate for
the year was substantially under the average for the world oil and gas industry that, in 2004, according to Oil and
Gas Producers (OGP) data, was 5.2.
Lost Time Frequency Injury Rate (LTIFR)
Number of accidents with injuries and time lost from work
per million manhours of exposure to risk, encompassing
own employees and outsourced workers.
1.23
1.04
0.97
2.89
1.53
4.57
2.81
15.70
6.29
3.30
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
2002
2003
2004
2005
responsabilityE n v i r o n m e n t
Biodiversity
Conserving biodiversity of the ecosystems that are influenced by Petrobras’ activities is a permanent concern of the
Company. This attitude reflects its strategic commitment to apply the principles of social and environmental
responsibility to all of the stages of its projects, including planning, construction, operation and decommissioning.
In 2005, Petrobras established a workgroup to prepare a corporate standard to manage potential impacts to
biodiversity. This standard, scheduled to begin implementation in 2006, covers strategies and actions for
characterizing protected or environmentally sensitive areas influenced by the Company’s operations, guide
protection measures or recovery of the ecosystems involved.
With this objective, the Company in March initiated an environmental assessment of a number of ecosystems in
Guanabara Bay at an estimated investment of R$ 9 million. In the Amazon region, studies being carried out with universities
and research institutes are evaluating the potential impact of Petrobras’ operations in the surrounding ecosystems.
Petrobras’ strategy for acting during emergency situations is based on the integration of the contingency resources
of its business units with dedicated vessels along the Brazilian coast and the Environmental Protection Centers
(CDAs). The CDAs operate 24 hours a day and have trained professionals and equipment at their disposal in order
to act quickly and effectively. This includes ships and oil collectors, contention barriers and absorbers. There are nine
CDAs around the country and six advanced bases in the North Region of Brazil and one in the Center-West Region.
This network of protection against accidents effects, which also can count on funds from public agencies and
communities, has six emergency plans in place that cover all Brazilian regions and are evaluated through emergency
simulation exercises. Civil Defense, police, environmental agencies, city governments and the population participate,
as well. In 2005, six regional exercises were run in various locations around Brazil.
The Company maintains three vessels dedicated to emergency operations in a state of permanent
readiness — in Guanabara Bay, on the coast of São Paulo and the coast of Sergipe and
Alagoas. In 2005, Petrobras invested nearly R$ 36 million in Transpetro’s waterway
terminals to establish Emergency Response Centers (CREs) to reinforce
protection of the coastal regions.
E M E R G E N C Y P R E P A R E D N E S S
Belém
Belo Monte
Porto Velho
Cruzeiro do Sul
Coari
Urucu
CDAAmazônia(Manaus)
Uberaba
CDACentro-Oeste(Goiânia)
CDA Sul (Itajaí)
CDAMaranhão(São Luís)
CDA Bahia (Madre de Deus)
CDARio Grande do Norte(Guamaré)
CDA São Paulo (Guarulhos)CDA Rio de Janeiro (Rio de Janeiro)
CDA Bacia de Campos (Macaé)
Rebelo XV
Astro Ubarana
Marati CDA Environmental Defense Center
CDA Environmental Defense Center - São Paulo
National / International Logistics
Advanced Base
Dedicated Ships
Regional Emergency Plans
Fauna Rehabilitation Units
I
V
II
III
VI
IV
I VIa
Water Resources and Effluents
Petrobras directed its efforts in re-utilizating and optimizating water use in its refineries, prioritizing the facilities where
operating scenarios point to a potential scarcity of the resource.
In 2005 the Company concluded evaluation of the current and future availability of water sources that supply
Repar, Refap, Rlam, Lubnor and its nitrogenous fertilizer plants in Sergipe and Bahia. Similar studies already had
been carried out at refineries in the Southeast region, at the Campos Basin production units and Transpetro’s
Cabiúnas Terminal.
These studies provided subsidies for the initiatives designed to optimize and re-use water. Among them, two
are in a phase of conclusion: closing the refrigeration cycle at Reduc, which will no longer make use of water from
Guanabara Bay for this purpose; and the re-utilization by Replan’s cooling towers of 80 m3/h of water coming from
the vacuum distillation units.
Solid Wastes
The Company’s Corporate Waste System registered 532
thousand tons of hazardous solid wastes generated in
2005. This corresponded to the total of the wastes
generated by operating activities in Brazil and abroad, of the
wastes produced during remediation processes in impacted
areas and that which constitute environmental liabilities of
assets that were acquired by the Company. During the year,
468 thousand tons of hazardous wastes were treated and
disposed of in environmentally appropriate manner.
Treatment and disposal plans were agreed to with
environmental agencies and will be initiated in 2006 for
more than 90% of the stock of hazardous solid wastes
accumulated at the Company’s facilities at the end of 2005.
Sulfur Oxide - SOx Emissions
(in tons)
Emissions consolidated by Sigea; methodological
improvements led to a review of the previously published
values for the 2002-2004 period
As of 2003, the data includes the emissions from the Gas
and energy area, of the assets of Petrobras Energia S.A.
located in Brazil, Argentina, Bolivia, Peru and Venezuela and
the ships from Petrobras´own fleet and vessels chartered for
international trips
160,845
151,617
158,620
156,677
153,717
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 7978 P E T R O B R A S A n n u a l R e p o r t 2 0 0 5
2001
2002
2003
2004
2005
responsabilityh e a l t h
80 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 81
Regarding the reasons leading to Petrobras’ own employees leaving their jobs in 2005, as shown in the following
chart, by far the main cause was non-occupational disease — that is, reasons that were not related to professional
activities of employment.
This fact justified the Company’s emphasis on the Health Promotion Program, both on and off the job, which
encourages the adoption of healthier lifestyles. The Company also seeks to motivate employees to participate in the
annual medical checkup campaigns it offers and promotes the idea that they should follow the recommendations
that are made as a result of the exams they take.
The Company also has been running an Occupational Hygiene and Ergonomics Program designed to identify, control
and eliminate occupational risks at all units. The procedures for guaranteeing the good health of employees during trips,
which include medical check-ups prior to travel and medical supervision upon return, also are being standardized.
In order to provide better levels of health for its employees and members of their families, Petrobras and the
National Cancer Institute (Inca) trained nearly 500 health professionals to deal with and treat employees who
smoke cigarettes. They represent 11% of the workforce – a percentage that is lower than the maximum prescribed
by the World Health Organization (WHO), of 15%.
Gráfico 1
Tabela 2
88.4%
0.1%5.9%
4.5%
Non-occupational disease
Work-related (occupational) disease
Workplace accident
Non-workplace accident
Accident on way to work
1.1%
Cause of Employee Missed Time
Health
The underpinnings of Petrobras’ actions on behalf of employee health rest upon the fostering of good health and
disease prevention, based on the integral health concept — both at work and outside of it. The programs and
interventions in the area are guided by epidemiological analysis of information such as mortality, morbidity and the
prevalence of risk factors.
This systematic procedure has produced positive results regarding the health of our employees. The Percentage
of Time Lost index, which measures the amount of time lost due to illness or accidents, has declined consistently
over the past four years.
Oil and oil product spills
The volume of spills in 2005 was significantly lower than in 2004, maintaining , as it has in the last three years,
the standards of excellence in terms of the global oil and gas industry. In 2005, without any reported large spills
of oil and oil products, the Company obtained its second best annual result for this indicator over the past six years.
Percentage of Time Lost (PTP)
Percentage of the total potential work hours lost
due to medical authorization caused by
occupational diseases or not and work accidents;
calculated only for own employees.
2.88
2.48
2.90
3.01
2.57
Oil and oil products spills
(m3)
Spills of more than 1 barrel (0,159 m3) impacting
the environment outside installation perimeter.
276
269
2,619
197
530
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
Intangible assets
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 83
Intangible assets
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P E T R O B R A S I S S T R U C T U R I N G T H E F U N C T I O N O F K N O W L E D G E M A N A G E M E N T, S E E K I N G TO E S TA B L I S H T H E
G U I D E L I N E S F O R T H E C R E AT I O N , P R OT E C T I O N , M A I N T E N A N C E A N D M E A S U R E M E N T O F I T S I N TA N G I B L E A S S E T S
— C L A S S I F I E D I N TO F O U R T Y P E S O F C A P I TA L — H U M A N C A P I TA L , O R G A N I Z AT I O N A L C A P I TA L , R E L AT I O N S H I P
C A P I TA L A N D T E C H N O LO G I C A L K N O W - H O W — A S C A L L E D F O R B Y T H E 2 015 S T R AT E G I C P L A N . P E T R O B R A S WA S
A P I O N E E R I N T H E M A N A G E M E N T O F I N TA N G I B L E A S S E T S – E S P E C I A L LY A F T E R C R E AT I O N O F T H E L E O P O L D O
A M É R I C O M I G U E Z D E M E L L O R E S E A R C H C E N T E R ( C E N P E S ) I N 1 9 6 3 . C O N S I S T E N T T E C H N O L O G I C A L
M A N A G E M E N T H A S M A D E I T P O S S I B L E F O R T H E C O M PA N Y TO A C H I E V E T E C H N O LO G I C A L E X C E L L E N C E I N A L L
S E G M E N T S O F T H E O I L A N D G A S I N D U S T R Y.
T H I S E X C E L L E N C E WA S R E C O G N I Z E D W I T H T H E S E L E C T I O N O F P E T R O B R A S A M O N G T H E F I N A L I S T S F O R T H E
M A K E ( M O S T A D M I R E D K N O W L E D G E E N T E R P R I S E S ) P R I Z E – G LO B A L 2 0 0 5 E D I T I O N , A WA R D E D B Y T H E
E N G L I S H - B A S E D K N O W N E T W O R K . I N T H E O V E R A L L C L A S S I F I C AT I O N , P E T R O B R A S C A M E I N 3 5 T H A N D , I N T H E
O I L A N D G A S S E C TO R , I T W E N T F R O M 10 T H P L A C E I N 2 0 0 4 TO 5 T H P L A C E I N 2 0 0 5 A M O N G C O M PA N I E S T H AT
B E S T A P P LY A N D D E V E LO P T H E I R B U S I N E S S K N O W L E D G E .
Intangible assets The continuity of the Deep Water Technological Program (Procap) is in line with the
priorities that Cenpes has established. The objective of the program is to anticipate
solutions for production in the Marlim Leste and Albacora Leste fields, in the next
stages of Roncador and Marlim Sul fields, in the deep water blocks in the Santos and
Espírito Santo Basins and in fields found in up to 3,000 meters of water depth.
Cenpes restructured its exploration R&D program in 2005. Until then based
upon joint projects with Brazilian universities, research now has a central focus on
the identification of exploration targets with a high degree of probability of an
accumulation of oil and the detection of the exploration risks in ultra-deep waters
and onshore basins. As a result, Cenpes’ participation in solving the Company’s
specific challenges has grown.
Restructuring led to the creation of the Basin Modeling Program (Promob) and a Geophysics Department.
Promob is aimed at running geological simulations designed to reduce exploration risks. The new department will
intensify the development of computer applications, emphasizing 4D seismic imaging used to explore areas with
complex geological compositions.
Beside reducing costs and optimizing Petrobras’ investments, Cenpes’ programs seek to achieve high levels of
operational reliability, safety excellence and the preservation of the environment. For the Company’s downstream
and refining activities, one of the main R&D programs strives to adjust Petrobras’ refineries to the characteristics of
heavy oil in view of the increase production of this type of oil in Brazil.
Technologies to be applied in processes, products and services also are under development by Cenpes, including the
formulation of fuels with lesser environmental impact. Another line of research is aimed at the development of solutions
to increase the useful life of the Company’s pipeline network and to reduce operating costs and transportation risks.
In the field of natural gas, thermoelectric power generation and renewable fuels, Cenpes is a part of Petrobras’
overall efforts to consolidate itself as an integrated energy company. Besides working on innovations for expanding
the use of gas, in order to boost gas consumption to 78 million m3/day in 2010, Cenpes is developing programs
to enable the Company’s operations to achieve environmental excellence and sustainability and become eco-
Technological research
Technological know-how is a strategic imperative for sustaining self-sufficiency in Brazilian oil production. The
Leopoldo Américo Miguez de Mello Research and Development Center (Cenpes), located on the Ilha do Fundão
campus of the Federal University of Rio de Janeiro (UFRJ), is responsible for anticipating and supplying the
technological needs for all of Petrobras’ areas.
Cenpes, whose 1,569-person staff has 350 members who hold Master’s degrees and 130 researchers with PhD
qualifications, is composed of technological programs in Research and Development (R&D) and Basic Engineering
(BE). The integration of the Center with the 2015 Strategic Plan’s targets has resulted in a number of contributions
to the Company’s activities. Among them are the basic projects for the P-34 and P-50 platforms, which are
hallmarks of sustained self-sufficiency. With regard to production R&D, in 2005 Cenpes gave priority to three lines
of research: improving the production of heavy oil in an offshore environment; achieving technological
advances in ultra-deep water areas; and the minimizing of the decline of mature onshore and offshore
oil fields. In its efforts to improve production technology, one of Cenpes’
objectives is to reduce costs for the Company.
Horizontal wells are one of Cenpes’ technological contributions
for enhancing resources since they increase the flow of oil out of
offshore fields by up to a factor of five — thus making Petrobras’
large projects economically feasible. The use of artificial
oil lifting equipment, installed at a depth of 2,000
meters, also has been a decisive factor for the
development of heavy oil production.
TECHNOLOGICAL KNOW-HOW CAPITAL
C E N P E S C O N D U C T S R E S E A R C H I N T O T H E O P T I M I Z A T I O N O F O F F S H O R E H E A V Y
O I L P R O D U C T I O N , O P E R A T I O N S I N U LT R A - D E E P W A T E R A N D M A T U R E O I L F I E L D S
In the fields of natural
gas, thermoelectric
generation and
renewable energy sources,
Cenpes participates in
efforts to consolidate
Petrobras as an integrated
energy company.
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 85
Intangible assets efficient. Furthermore, it seeks technologies that will make it possible to optimize the use of renewable sources of
energy, satisfying the business targets of a number of segments within the Company.
Cenpes’ basic engineering area participated in seven large projects in 2005, including natural gas production
projects in the Santos Basin and heavy oil production projects in the Jubarte field in the Campos Basin. In downstream
activities, it was involved in projects at RPBC, Replan and Repar encompassing improvements in fuel quality, the
reduction of polluting emissions and expansion of heavy oil refining operations. The Center also developed the new
formulation of Podium gasoline in Argentina and continued its research for the production of biodiesel fuel.
Cenpes carried out a number of relationship activities with its stakeholders, strengthening the role of the
Company as a technological leader and adding value to the brand. The Center launched a second edition of the
Petrobras Technology Prize, created in 2004 to encourage the work of researchers and students in the field of oil
and gas. For their innovative contributions to the Company’s oil, gas and energy sectors, the authors of 27 projects
that were selected during the first edition of the Prize received their awards in October.
Petrobras has initiated expansion of Cenpes in view of the new research demands that have emerged in fields
such as the environment, gas and energy. New facilities, totaling 88.7 thousand m2, will be built on its land directly
in front of the current buildings. The new building will contain effluent treatment and recycling stations and other
technological resources, incorporated into the project according to the eco-efficiency concept.
86 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Petrobras is the company that files the most patents in Brazil and the Brazilian company with the most
patents filed in the United States. In 2005, ten patents were granted and 80 patent requests were filed
in Brazil. Overseas, 49 patents were filed while 58 patent requests were granted.
The Company requested nine trademarks in Brazil while 141 trademarks were requested in 29 other
countries. Overseas, Petrobras obtained 89 trademark requests as well as the registration of seven
software and three copyrights requests.
P A T E N T S
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 87
Brands
The Petrobras brand is managed as a strategic asset due to its importance and its potential to add value to prod-
ucts and services. Based on the 2015 Strategic Plan, the Company created a Marketing and Brand Committee to
improve management of this asset in view of the demand stemming from the expansion of its activities.
Among the attributes of the new committee, which is linked to the Businesses Committee, is the preparation
of a brand management operating model, designed to establish the guidelines for use of brand names within the
Petrobras System. By the creation of these guidelines, the Company is seeking greater protection of the asset while,
at the same time, it continues to be involved in the legal defense of its brand in the markets where it is active.
The global management of the brand is in step with Petrobras’ strategy of an integrated effort to increase its
visibility and strengthen the identity of its products and services on the markets. At the corporate level, the
Company has been implementing initiatives that are designed to develop global brands for its products and
services, standardizing the visual aspects of its installations and communication actions.
Management Practices
The Management Quality Evaluation Program, created at the beginning of the 1990s, was held for the sixth time
during the year, During the cycle, the units that are evaluated organize programs for implementing improvements,
based upon the results of the appraisal. Many of the management practices that have been widely adopted
throughout the Company were created or improved as result of this program.
Management excellence was responsible for two important distinctions received by the Company during 2005.
Petrobras Colombia received the Colombian Prize for Management Quality, becoming the first Business Unit overseas
to obtain a prize of this nature. In Brazil, the Downstream area won silver in the Federal Government Quality Award
competition (PQGF).
Organizational Capital
T H E M A R K E T I N G A N D B R A N D S C O M M I T T E E W A S B O R N W I T H T H E M I S S I O N
O F C R E A T I N G A M A N A G E M E N T M O D E L F O R T H E P E T R O B R A S B R A N D
Intangible assets
Company evaluation
Petrobras has been carrying out increasingly wider ranging opinion surveys to check on how its practices and
products are viewed and evaluated by stakeholders. The surveys, which have given the Company substantial
knowledge about the socio-economic environment in which it operates, are based upon 18 indicators that make
it possible to evaluate perceptions regarding management, competitiveness, growth, overseas activities, vision of
the future, social support, ethics, social and environmental responsibility.
The weight point average of the indicators in the public opinion segment led to the creation of a general
indicator. The information resulting from the surveys its consolidated within the Corporate Image Monitoring System
(Seismic). Using this company reputation monitoring tool, management can follow the evolution of Petrobras’
image and adjust its communication policies and actions and management practices in different areas.
Relationship Capital
P E T R O B R A S I N V E S T S I N O P I N I O N S U R V E Y S I N O R D E R T O M O V E
E N H A N C E D I A L O G U E W I T H I T S I N V E S T O R S A N D S H A R E H O L D E R S
Environmental NGOs
Communities
Employees
Suppliers
PressSocial NGOs
Government
Public opinion
Shareholders
Clients
Seismic
Investor relations
Petrobras has constant dialogue with its investors and shareholders, aligned with
the principles of transparency for the disclosure of information. In order to improve
this relationship, the Company conducts two surveys annually focused in two dis-
tinct audiences.
The quality of the work with relation to the institutional investors and analysts is
verified through a perception study conducted by the Investor Relations
department that encompasses the disclosure media and the entire IR program. Its
results are indicators for the IR’s Balanced ScoreCard (BSC) performance – with a
part of them being replicated on the Financial Department’s panel. Furthermore, at the end of each conference call
about the Company’s quarterly results, a study is conducted to evaluate the degree of perception of the messages
that were transmitted by the IR director and the other managers.
Quantitative and qualitative surveys have made it possible to obtain the socio-economic profile of the
Company’s minority shareholders, allowing us to evaluate the quality of the service that is provided to them and
to check up on their perception of Petrobras. The aspects that are monitored include competitiveness, technology,
vision of the future, profitability, overseas activities, management, the environment, energy diversification, social
efforts, transparency, ethical behavior, corporate governance, communication with society and the shareholders.
These results also have become performance indicators for the BSC.
In 2005, Petrobras won the Transparency Trophy for the second consecutive year awarded by the National
Association of Finance Executives (Anefac) in recognition of the transparency of its financial reports and in the
providing of information. It also received the Best Investor Relationship Program Prize, in the Individual Investors
category, granted by Investor Relations Magazine of the U.S.
Relationship with suppliers
Petrobras adopted a new registration process for outsourced suppliers in 2005, integrating materials and
services companies into a single system that is aligned with the corporate Health, Safety and Environment (HSE)
and social responsibility guidelines. Besides incorporating the requirements of these two areas, the Company
perfected the technical, legal-tax and economic-financial aspects of the registration process.
In 2005, for the second
consecutive year
Petrobras won the
Transparency Trophy
awarded by Anefac in
recognition of the
transparency of its
financial reports.
Corporate image monitoring system (Seismic)
88 P E T R O B R A S a n n u a l r e p o r t 2 0 0 5
Intangible assets
Knowledge management
In compliance with the corporate policies to strengthen operational, managerial and technological competencies to
ensure the internal dissemination of knowledge, construction of a Knowledge Management Program for the
Petrobras System was initiated based upon a model developed by the International area. During the year, pilot
projects were set up for knowledge management practices (case histories, the recording of narratives, a best
practices database, a catalogue of specialists, a meeting about lessons learned, communities of practice and
taxonomies), which provided methodological support to the program.
Designed to disseminate the E&P experiences and best practices to the area’s professionals, the E&P
Communities of Practice Program was instituted in 2005. This program makes it possible to merge the different
knowledge environments without the limitations imposed by organizational boundaries. In the six communities
originally covered, the involvement of some 2,500 employees is expected.
Seeking to improve the Company’s internal practices using world-class corporate examples, Petrobras
participated in two international study groups of benchmarking practices in the field of Knowledge Management,
coordinated by the American Productivity & Quality Center (APQC). The focus was on two knowledge management
topics: Communities of Practice and the Extended Value Chain.
Petrobras participated in the 4th Annual Oil and Gas Industry Knowledge Management Conference in Singapore.
The Company presented the Knowledge Memory Project that records the history of the development of knowledge
within Petrobras and the Knowledge Management initiatives that support the Program for Excellence in Environmental
Management and Operational Safety (Pegaso), and notably its information management system (Infopae).
P E T R O B R A S a n n u a l r e p o r t 2 0 0 5 91
The registry also was improved in order to include other processes, both centralized and regional, for the evaluation
and qualification of suppliers in order to standardize methodologies and rationalize efforts. Petrobras currently has some
5,000 companies enrolled in its database for the acquisition of goods and services for operating requirements and new
projects. Moreover, there are about 40,000 smaller companies throughout Brazil that supply Petrobras with goods and
services. The Company also created a Registration Portal in 2005, in order to strengthen the relationship with its suppliers.
For the acquisition of goods, the new Materials Supply Conditions (CFM) are in effect for contracts signed as of
November 1st. The result of interaction between Petrobras and professional associations of suppliers, the CFM
adapted contract clauses to legislation and current market practices. The Company also adopted new payment
conditions for goods that have a long manufacturing timeframe, supplied by companies in Brazil.
Petrobras continued its partnership with the Brazilian Service for the Support of the Micro and Small Business
(Sebrae) to encourage the competitive insertion of micro and small companies into the oil, natural gas and electric
energy productive chain.
The agreement covers the 12 states where there are Petrobras Business Units and is worth R$ 12 million over
a three-year period, with the Company committed to investing R$ 6 million and Sebrae putting up the remaining
R$ 6 million. In addition, an investment of some R$ 3 million has been earmarked for participating companies. Due
to the large number of companies that are participating, the portion of the investments destined for the small
companies rose to R$ 16.7 million in 2005.
Human Capital
P I L O T P R O J E C T S K I C K O F F T H E B U I L D I N G O F A P R O G R A M
D E S I G N E D T O M A N A G E T H E C O M P A N Y ’ S K N O W L E D G E
The Materials Procurement System made US$ 2.89 billion in direct purchases in 2005. Thanks
to an increase in the competitiveness of Brazilian-based suppliers, their share in the
transactions was the highest of the past few years, reaching 89% of all purchases made.
Part of the acquisitions were conducted through the electronic trading portal Petronect,
which ended 2005 with 2,686 suppliers registered in Brazil, Argentina, Bolivia,
Colombia, Ecuador, the United States, Peru, Singapore and Venezuela. In three
years of operations, Petrobras System companies used the Petronect for
concluding 81 thousand purchases, 56 direct auctions and 138 reverse auctions.
M A T E R I A L S P R O C U R E M E N T
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 93
managementbusinessbusinessBUSINESS MANAGEMENT
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P E T R O B R A S ’ S B U S I N E S S P E R F O R M A N C E I N 2 0 0 5 , M E A S U R E D B Y S O M E O F I T S P R I N C I P L E I N D I C ATO R S , WA S O F
H I S TO R I C P R O P O R T I O N S . F O R O N E T H I N G , B E C A U S E O F I T S N E T C O N S O L I DAT E D E A R N I N G S — O F R $ 2 3 . 7
B I L L I O N — A N D F O R T H E I N C R E A S E O F T H E P R O D U C T I O N O F O I L A N D G A S I N B R A Z I L – 1 , 9 5 8 T H O U S A N D
B A R R E L S O F O I L E Q U I VA L E N T P E R DAY, 11 . 4 % H I G H E R T H A N I N 2 0 0 4 . P E T R O B R A S S P E N T R $ 2 5 . 7 B I L L I O N O N
C A P I TA L E X P E N D I T U R E S I N 2 0 0 5 , 14 % M O R E T H A N I N 2 0 0 4 .
P E T R O B R A S ’ P R E F E R R E D S H A R E S W E R E T H E O N E S W I T H H I G H E R L I Q U I D I T Y I N T E R M S O F T H E F I N A N C I A L
V O L U M E T R A D E D , W I T H A N AV E R A G E O F R $ 13 1 . 6 M I L L I O N P E R DAY. T H E Y A L S O B E C O M E T H E O N E S W I T H
G R E AT E R W E I G H T O N T H E I B O V E S PA T H E O R E T I C A L P O R T F O L I O – 9 . 2 2 7 % F O R T H E J A N U A R Y - A P R I L P E R I O D O F
2 0 0 6 . A D D I N G T H E N U M B E R S O F T H E O N A N D P N S H A R E S , P E T R O B R A S S E C U R I T I E S H A D T U R N O V E R O F
A P P R O X I M AT E LY R $ 16 3 M I L L I O N P E R DAY, R E P R E S E N T I N G M O R E T H A N 10 % O F T H E AV E R A G E F I N A N C I A L
V O L U M E O F T H E B O V E S PA I N 2 0 0 5 .
T H E C O M PA N Y ’ S M A R K E T C A P I TA L I Z AT I O N , P R O P E L L E D B Y I T S P E R F O R M A N C E O N T H E S TO C K M A R K E T S ,
E N D E D T H E Y E A R AT R $ 173 . 6 B I L L I O N – T H E H I G H E S T A M O U N T A M O N G A L L P U B L I C LY T R A D E D C O M PA N I E S I N
L AT I N A M E R I C A . T H I S R E P R E S E N T S A N I N C R E A S E O F 5 4 % C O M PA R E D TO 2 0 0 4
management
94 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
transportation units; the full utilization rate of coke and de-asphalting units, resulting
from the high heavy oil refining capacity; and the development of markets for the
production surpluses of oil and oil products. It should be noted that this result was
achieved without expanding installed refining capacity and fully respecting the
Company’s principles for Health, Safety and Environment.
The production of oil and natural gas in Brazil hit 1,958 thousand boe/day,
representing an increase of 11.4% compared to the previous year, mainly because
of the start up of platforms FPSO-MLS (Marlim Sul) in June 2004, P-43 (Barracuda)
in December 2004 and P-48 (Caratinga) in February 2005, and the coming on
stream of the UPGN-3 (Urucu) in June 2004, that increased the LNG production of
the Solimões Basin Unit.
Overseas, the production of oil and gas declined 1.1% over 2004, totaling 259 thousand boe/day, due to the
maintenance shutdown of the Palanca terminal for equipment change (Angola) and a strike in the Austral Basin
(Argentina) area over labor-related issues. This result was partially compensated for by the increase in gas
production by the Bolivia in order to satisfy an increase in demand.
Petrobras’ proved reserves of oil, condensate and natural gas were 14.913 billion boe on December 31, 2005,
an increase of 0.13% (0.018 billion boe) over the previous year, according to Society of Petroleum Engineers (SPE)
criteria, with 89% of the reserves located in Brazilian territory and 11% overseas. For each barrel of oil equivalent
produced in 2005, 1.023 barrels of oil equivalent were appropriated, resulting in a Reserves Replacement Ratio
(IRR) of 102.3%. The Reserves-Production Ratio (R/P) was 19.6 years.
Of particular note was the 208 thousand bpd increase in net exports of oil and oil products. From a deficit of
150 thousand bpd in 2004, 2005 saw a surplus of 58 thousand bpd. From a financial point of view, this meant a
reduction in the oil and oil products trade deficit of some US$ 3 billion.
Consolidated gross operating revenues were R$ 179.1 billion, whereas the net operating revenues totaled R$ 136.6
billion, surpassing these indicators in 2004 by 19% and 22.9%, respectively. Contributing to
this result was the increase in prices on the domestic and overseas markets together with
the increase in the domestic market volume of sales, including natural gas and exports.
On the domestic market, the effect of the increase in the realization price of oil
products and the growth in volumes sold led to a rise in net operating revenues
of R$ 14.3 billion, mainly due to the increases in revenues from diesel
(27.3%), gasoline (24.7%) and aviation fuel (26.5%). Gasoline sales
volumes grew 4.4% (12 thousand bpd), surpassing the 1.4% increase in
diesel (9 thousand bpd) and 5.4% rise in aviation fuel (4 thousand bpd).
However, the effect of the price of diesel was stronger when compared
to gasoline and aviation fuel, with these products presenting,
respectively, increases of 25.8% (R$ 0.21/lt), 19.7% (R$ 0.15/lt)
and 20.2% (R$ 0.19/lt) of their average realization prices in 2005
in relation to 2004.
Business performance
P E T R O B R A S ’ N E T E A R N I N G S W E R E 4 0 % H I G H E R T H A N I N 2 0 0 4 W H I L E
C A P I T A L E X P E N D I T U R E S S U R P A S S E D T H E R $ 2 5 B I L L I O N M A R K
Petrobras maintained
the price policy it
adopted in 2004,
avoiding immediately
passing along the
volatility of oil prices
on the international
market to consumers.
Oil prices reached very high levels on the international market; the Brent average (US$ 54.38/bbl) was 42.3% above
the 2004 average, hitting a peak monthly average of US$ 64.12/bbl in August. This rise directly impacted the lifting cost
of Brazilian oil and the portion of oil that is imported, which represented 20.4% on average of the processed throughput.
Petrobras maintained the price policy it adopted in 2004, of avoiding the immediate pass-through to consumers
of the volatility of the price of oil on the international market. In 2005, the Average Realization Price of oil products
on the domestic market in 2005 was R$ 141.57/barril, 19.5% higher than in 2004. This was principally due to the
increase in the prices of gasoline and diesel that took place at the end of 2004 and in September 2005, the
commercializing of S500 diesel as of the beginning of 2005 and sales of other oil products, notably naphtha and
aviation fuel, whose prices were readjusted to accompany the higher prices on the international market.
Petrobras’ total sales, including exports, natural gas and international sales, totaled 2,780 thousand barrels of oil
equivalent (boe), growing 4.3% over 2004 (2,665 thousand boe). However, excluding sales based on imports,
the Company’s sales rose 11%, that is by 210 thousand boe.
The energy segment grew 2.6%, considerably under the 9.5% obtained in 2004. Gas sales in 2005 rose 7.8%
over 2004, mainly due to growth of the South/Southeast market, while the oil products market saw sales expand
by 1.9%. Energy sales volumes rose 76.8% the result of the beginning of contracts signed in previous years
coupled with an increase in the volume of sales linked to existing contracts.
The share of domestic oil in the processed throughput (79.6%) was 3.7 percentage points higher than the
previous year (75.9%), going from 1,296 thousand bpd in 2004 to 1,376 thousand bpd in 2005 — without
harming the production of medium oil products such as diesel and aviation fuel. This significant performance was
due to a series of factors, of which the following can be highlighted: the excellent and collaborative integrated
management of the supply chain, from the shipping of oil from the production regions until the delivery of oil
products to Petrobras’ customers in Brazil and abroad; the high operating reliability of the production, refining and
management
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 97
On the export market, net revenues increased by R$
7.3 billion, with the export of oil, which was responsible for
about 59.6% of the total, being particularly noteworthy.
Moreover, Petrobras’ offshore sales grew by R$ 0.8
billion over 2004.
Operating Profit was R$ 39.8 billion, some 32.9%
higher than the previous year, basically due to the increase
of net operating revenues, the significant rise in production
and the respective processing of more domestic oil,
leading to an increase in the Cost of Goods and Services
Sold, which presented growth of 18.5% whereas the
increase in the price of Brent benchmark oil was 42.3%.
In 2005, the Financial Result was a negative R$ 2.8 billion in counterpart to 2004, when it was R$ 3.3 billion.
This result was influenced by the appreciation of the real, substantially greater than the variation during the same
period of 2004 with respect to the main currencies traded by Petrobras.
Thus, Net Profit was R$ 23.7 billion, 40.5% higher than in 2004.
Consequently, the EBITDA was R$ 47.8 billion, 29.9% above the result for the previous year, while the Return
on Capital Employed (ROCE) increased 4 percentage points over 2004, reaching 24%.
Petrobras’ total assets reached R$ 183.5 billion, representing growth of 11.5% over 2004. This was the result
of a 12.6% increase of fixed assets and 14.1% in current assets (cash on hand and financial investments alone
represented 46.1% of the variation in current assets), compared to a reduction of 5.4% in long-term assets.
The counterpart in liabilities occurred mainly in net equity, which grew 26.8%, with the 57.6% rise in reserves
being particularly noteworthy.
Regarding the Company’s debt, leverage (Net Debt over Net Capitalization) declined from 37% to 24%.
Petrobras had capital expenditures totaling R$ 25.7 billion (equivalent to US$ 10.6 billion), 14% higher than in
2004. The E&P area invested R$ 15.5 billion, with the priority being given to the need for an increase in production
and the oil and gas reserves. The Downstream area invested R$ 3.3 billion to add value to the Petrobras System’s
raw materials (oil and gas), focusing on a higher value and higher quality product mix. In the International area,
investments of some R$ 3.2 billion were in step with the Company’s efforts to become the leading integrated
energy company in Latin America.
Of the total, about R$ 2.3 billion was through Specific Purpose Companies (SPCs), a figure that was 208%
higher than the previous year.
96 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
50
100
150
200
IbovespaOrdináriasPreferenciais
12/29/0510/31/058/30/056/30/054/29/052/28/05
Share performance
The year was a positive one for Petrobras on the stock markets. The nominal appreciation of the Company’s shares –
55.12% for its common shares (PETR3) and 53.21% for its preferred shares (PETR4) – surpassed the most often
used market indicators in the country, such as the IBrX (37.32%), the Ibovespa (27.71%) and the IGC (43.76%).
Petrobras’ preferred shares had higher liquidity in terms of the financial volume traded, with an average of R$ 131.6
million per day. They also had greater weight on the Ibovespa theoretical portfolio – 9.227% for the January-April
period of 2006. Adding the numbers of the ON and PN shares, Petrobras securities had turnover of approximately R$
163 million per day, representing more than 10% of the average financial volume of the Bovespa in 2005.
Capital Markets
P E T R O B R A S ’ S H A R E S W E R E O N E O F T H E Y E A R ’ S H I G H L I G H T S ,
A N D I T S M A R K E T C A P I T A L I Z A T I O N R E A C H E D R $ 1 7 3 B I L L I O N
Fields in Campos, Espírito Santoand Santos Basins declaredcommercially feasible as well asdiscoveries of light oil in deeperCampos Basin water
Petrobras rises more than theIbovespa
Stock split
10/13 Petrobras is raised toInvestment Grade
9/10 Increase in the price ofgasoline and diesel
Large increase in production due to startup of the P-43 (Dec/2004)and P-48 (Feb/2005) platforms.
I
II
II
III III
IV
IVV
VVI
VI
VI
I
I
I
Preferred Shares Common Shares Ibovespa
R$ US$
ON PN PBR PBRA
Closing price 2005 41.30 37.21 71.27 64.37
2004 26.63 24.29 39.78 36.21
Daily average volume ($ billion) 2005 30.88 131.48 95.17 55.68
2004 30.59 100.61 43.32 23.52
Average price 2005 32.32 28.63 53.76 47.61
2004 23.24 20.97 32.01 28.82
Average number of daily transactions 2005 392 2,009
2004 397 1,394
Ibovespa index relative weight 2005 2.05% 7.93%
2004 2.63% 9.17%
Source: Economática
business managementC A P I T A l S M a R k e t s
98 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 99
On the New York Stock Exchange (NYSE), as a result of the appreciation of the real over the dollar, the returns
for holders of Petrobras’ ADRs were even greater: the receipts representing the ON shares (PBR) had a nominal
appreciation of 79.19%, and the PN shares (PBRA) rose 77.77%. Petrobras’ shares rose higher than important
indexes such as the Dow Jones Industrial (- 0.61%), a major benchmark for the American stock market; the Amex
Oil Index (36.85%), made up of large companies in the oil and gas industry; and the NYSE's International 100
(8.09%), which contains the 100 most liquid ADRs.
In financial volume, the turnover of Petrobras’ common shares for the year on the NYSE was US$ 24.04 billion,
while transactions with preferred shares totaled US$ 14.4 billion. Respectively, Petrobras securities were the fifth
and 13th most actively traded ADRs in the U.S. Adding together both the PBR and PBRA positions, Petrobras came
in third among the corporations with the most transactions on the ADR market.
The Company’s market capitalization, propelled by its performance on the stock markets, ended the year at R$
173.6 billion – the highest amount among all publicly traded companies in Latin America. This represents an
increase of 54% compared to 2004 (R$ 112.5 billion) and 96% over 2003 (R$ 88.7 billion). In U.S. currency, its
market capitalization reached US$ 75 billion in 2005, against US$ 42 billion in 2004 and US$ 30.9 billion in 2003.
Stock split
In order to facilitate access of small investors and to increase share liquidity, on September 1st Petrobras conducted
a stock split, substituting one former share for four new ones. Capital stock now is represented by 2,536,673,672
common shares and 1,849,478,028 preferred shares, with the number of investors having risen by 11 thousand
at the end of 2005. This increase reflectes the excellent operating and financial performance of the Company and
how it is perceived by the market, as well as confidence about its future results.
0
2.000
4.000
6.000
8.000
10.000
12.000
15 years10 years5 years1 year
26 57 58 29 158 164 190
945
2.109 1.984
6.871
10.228
Ibovespa Preferenciais Ordinárias
Real Accumulated Appreciation (%)
Data deflated by the IGP-DI
Source: Economática
Ibovespa Preferred Shares Common Shares
70% supported operations for importing oil and oil products and 30% went for
ensuring compliance with the obligations of other operations for various areas of
the Company.
Regarding credit lines through the international banking market, PIFCo, PEB and
Refap S.A. raised a total of US$ 1.578 billion, an amount that was 26% more than
during 2004. Of the total, US$ 1.538 billion was used to support activities for the
commercialization of oil and oil products while the remainder went for specific
operations at the subsidiaries. The increase in funding, despite the Company’s
favorable liquidity situation, was a consequence of Refap’s cash flow requirements,
which represented nearly 70% of the total volume raised.
As part of its debt extension policy, US$ 485 million (31%) all the total raised
through the lines of credit were contracted to mature in three, five and seven years.
The other US$ 1.093 billion (69%) had maturities of up to 60 days in view of
Refap’s cash flow requirements.
In order to provide a liquidity “cushion” for the Company, PIFCo has contracted,
since 2004, US$ 675 million in standby facilities. These facilities allow Petrobras to make disbursements maturing
in two years up to the limit of the amount contracted, with the principle to be paid back within one year.
In 2005, Petrobras returned to access the capital market in Brazil through the issuance of Certificates of Real
Estate Receivables (CRI) for the construction of new administrative buildings in Macaé (RJ). Valued at R$ 200
million with a 10-year maturity, the operation was structured by the Rio Bravo group and distributed to investors
by the Santander Banespa Bank. The issue was one of the largest ever conducted in the CRI market with
distribution aimed at individuals.
Project Finance
Through project finance operations, Petrobras raised funds on the Brazilian and overseas financial markets for oil
exploration and production and natural gas projects. The operations are conducted through Special Purpose
Companies (SPCs) created for each project.
The split changed the relationship of the shares with the ADRs. Each Petrobras receipt in the U.S. market now
represents four Brazilian shares. As a result, the trading price of ADRs in the U.S. was not affected.
During the year, Petrobras’ shareholders received dividends relative to 2004 totaling R$ 4.77 gross per pre-split
ON or PN share – an amount that corresponds to R$ 1.19 per post-split share.
Corporate financing
The recognition of the quality of Petrobras’ credit by banks, capital market investors and official credit agencies
provided favorable conditions enabling the Company to raise funds for financing its activities. The highlight was the
upgrading, in October, of the Company’s risk rating by Moodys Investor Services, which moved Petrobras up to
investment grade level Baa2. Besides reducing the cost of financing, this resulted in expansion of the number of
investors in the Company.
As a result of the high liquidity of Petrobras, the total of the new funds that were raised was lower than during
2004, obtained at more favorable conditions not only regarding costs but also in terms of maturities. Also due to
its strong cash generation, the Company realized debt pre-payment operations totaling approximately US$ 406
million, and renegotiated financing contracts, improving the profile of its debt and reducing financial expenses.
In operations with official and multilateral credit agencies, approximately US$ 525 million was used from loans
guaranteed by the Export Credit Agency (ECA) in contracts signed in 2005 and previous years. Petrobras Netherlands
B.V. (PNBV) signed a US$ 40 million contract with the Nordic Investment Bank to finance goods and services
acquired from Nordic countries for the construction of the P-51 and P-52 platforms. PIFCo signed a contract with
the Sumitomo Mitsui Banking Corporation, guaranteed by Nippon Export and Investment Insurance (Nexi), an official
agency of the Japanese government, in the amount of US$ 300 million for financing the Pegaso project.
The Company used about US$ 211 million from the financing contract signed by PNBV with the Brazilian
National Economic and Social Bank (BNDES) for the purchase of Brazilian goods and services used in construction
of the P-52 platform. In 2005, PNBV signed another contract with the bank, worth US$ 403 million, earmarked for
the acquisition of nationally produced goods and services for the P-51 platform.
The volume of bank guarantees contracted by Petrobras and its subsidiaries was US$ 1.985 billion – 3.1%
more than during 2004, when a total of US$ 1.926 billion was contracted. Of the guarantees obtained in 2005,
100 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 101
The recognition of
the quality of
Petrobras’ credit by
banks, investors and
official credit
agencies led to
favorable conditions
for the Company to
obtain funds to
finance its activities.
management
102 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
In March, the Company signed the contracts for the financial structuring of the Master Plan for the Delivery and
Treatment of Campos Basin Oil (PDET). The US$ 910 million funding comes through the Japan Bank for
International Cooperation (JBIC), commercial bank consortia and Mitsubishi and Marubeni of Japan.
Another exploration and production financing operation was signed in November. Through the specific purpose
company Charter Development Company (CDC), Petrobras raised US$ 500 million from a syndicate of overseas
banks for the construction of the FPSO P-53 platform, which will be used in the Marlim Leste field.
In the gas area, two bridge loans in the amount of R$ 800 million each were signed in November with the
Brazilian National Economic and Social Development Bank (BNDES) for construction of the Southeast-Northeast
Gas Pipeline (Gasene) and the Urucu–Coari–Manaus Gas Pipeline (The Amazônia Project).
Thanks to an improvement of Brazil’s and Petrobras’ image on the international financial markets, the Company
also has been seeking to renegotiate some structured financing operations in order to adjust its costs to current
market levels. In September, refinancing of US$ 380 million balance due on a loan granted by commercial banks
to the Barracuda/Caratinga Project was concluded.
Risk management
T H E V A L U E O F P E T R O B R A S ’ I N S U R E D A S S E T S G R E W 2 3 % I N
2 0 0 5 , W I T H P A Y M E N T O F U S $ 2 9 . 3 M I L L I O N I N P R E M I U M S
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 103
Projects Value USD Million
Urucu-Coari-Manaus (Amazônia) Gas Pipeline and Manaus thermo power plant 1,300
Revap Refinery Expansion and Modernization 900
P-53 Platform Construction 1,030
GASENE 2,000
New Projects being Structured
Structured Projects Projects Year Structure Value USD Million
Marlim 1998 1,500
Albacora 2000 410
Barracuda / Caratinga 2000 3,100
Cabiúnas 2000 850
Espadarte, Voador e Marimbá (EVM) 2000 1,076
Novamarlim 2001 834
Pargo, Congo, Garoupa, Cherne e Carapeba (PCGC) 2001 86
Malhas 2003 1,000
Rental Company of oil equipament (Clep) 2004 1,250
Master Plan for Delivery and treatment of Oil from da Campos Basin (PDET) 2005 910
In its evaluation of risk, the Company takes into account the effect of the integration of its activities, adopting
guidelines and limits to activities throughout the entire Petrobras System. The Executive Board’s policies and
guidelines are previously discussed by the Risk Management Committee.
Containing a number of commissions, this committee centralizes the examination of risk management actions,
facilitating communication with the Executive Board and the Board of Directors.
The Company is exposed to a series of market risks deriving from its operations. The risks mainly involve the
fact that eventual variations in the price of oil and oil products, exchange or interest rates could negatively affect
the value of its financial assets and liabilities or the Company’s future cash flow and profits.
In view of this, the risk management policy seeks to contribute to an appropriate balance between Petrobras’
growth objectives and returns and its level of exposure to risks, whether inherent to its activities or stemming from
the context in which it operates. Thus, through the effective allocation of its resources — physical, financial and
human — the Company is able to meet its strategic objectives.
In the management of the oil and oil products market risks, according to the premise of considering only the
consolidated net exposure to the risk of oil and oil products prices, operations with derivatives are, in general,
limited to protecting the result of specific short-term transactions (up to six months). In these hedges, futures, swap
and option contracts are used, always linked to physical market operations. From January-December 2005, hedge
operations for 23.30% of the total volume sold (imports and exports) were realized.
In a specific business, Petrobras exceptionally conducted a long-term hedge operation, which is still ongoing,
involving the sale of 52 million barrels of WTI oil from 2004 to 2007. The operation seeks to establish a price
protection for this volume of oil in order to guarantee a minimum margin for the financing agents of the
Barracuda/Caratinga Project to cover the debt service.
104 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
Like other oil companies, in the light of its investments in Health, Safety
and environment (HSE) and Quality, Petrobras retains a significant portion of the
risk, which includes increasing deductibles to as much as US$ 40 million.
Consequently, the Company does not insure against lost profits, wellhead controls
or its pipeline network.
Platforms, refineries and other facilities are covered by insurance policies against
major fire/operational risk, petroleum risk and named risk. Freight movement is
covered through transportation policies while ships are insured by hull and engine
insurance. Civil liability and environmental risks, depending upon the case, are
covered by one or more policies. Projects and facilities under construction are insured against engineering risk
through a policy taken out by Petrobras or the contractors.
For insurance purposes, the Company’s assets are valued at replacement cost, as appraised by Petrobras
and/or appraisal companies. In order to stipulate the maximum probable damage at each installation, this appraisal
serves as a basis to set a maximum indemnity limit for the major fire/operational risk policies, today fixed at US$
600 million.
The majority of Petrobras’ overseas activities are insured or reinsured by the captive insurance company Bear
Insurance Co. Ltd., domiciled in Bermuda. Bear retains none of the risk, completely laying it off on the market.
Due to the size of its activities, Petrobras is subject to legal actions in the commercial, labor and tax spheres. In
order to minimize these risks, the Company strictly complies with all the legal provisions of the various aspects
related to its businesses. In the case of legal actions currently in progress, the Company has recourse to the courts
in order to assure its defense and to seek the reversal of unfavorable decisions.
0
10.000
20.000
30.000
40.000
50.000
60.000
Prêmio US$ M Valores segurados US$ MM
2005200420032002200120001999
Petrobras Energía S.A. (Pesa), an indirect subsidiary of Petrobras, also makes use of derivative financial instruments
to mitigate its exposure to the oil and oil products market risks. From January to December of 2005, Pesa had 7.3
million barrels of oil covered.
Because a considerable portion of Petrobras’ debt and future operating cash flow is in dollars or strongly tied to
the U.S. currency, the Company does not have too large an exposure to exchange risk. Depending upon specific
analyses, the use of derivatives is limited to reducing exposure regarding other currencies, such as the euro or the
Japanese yen.
The company does not currently make use of derivative financial instruments to manage its exposure to swings
in interest rates, which is only used by its indirect subsidiary Petrobras Energía S.A. (Pesa).
Insurance
The Company increased the final premium paid on its main policies in 2005 — major fire/operational risk,
petroleum risk and named risks. The premium rose from US$ 25.2 million in 2004 to US$ 29.3 million in 2005,
an increase of 16%. During the period, the value of insured assets rose 23%, going from US$ 26.6 billion to
US$ 32.7 billion.
The greater part of Petrobras’ risk is laid off in the international reinsurance market. To this end, the Company
has a permanent policy in Brazil and overseas of disclosing the quality and practices of its risk management.
Relevant information, such as accidents, their causes and improvements that have been introduced, are promptly
and transparently passed along to the insurance market.
Oil Risks | Operating Risks | Named Risks
In 2005, the Company
increased the final
premium paid on its
main policies — major
fire/operational risk,
petroleum risk and
named risk.
Premium US$ M Values insured US$ MM
managementbusiness management
c o r p o r a t e g o v e r n a n c e
Petrobras constantly strives to improve its corporate governance practices and relationships with shareholders,
customers, suppliers, employees and other stakeholders. The Company adopts management procedures that are
compatible with the rules governing market activities in Brazil and other countries, which requires constant effort
in order to monitor and implement the practices established in the various nations in which it operates.
In Brazil, Petrobras is subject to the rules of the Brazilian Securities and Exchange Commission (CVM) and the
São Paulo Stock Exchange (Bovespa). Abroad, it submits itself to the regulations of the Securities and Exchange
Commission (SEC) and the New York Stock Exchange (NYSE) in the United States; of the Latibex market of the
Madrid Stock Exchange in Spain; and the Buenos Aires Stock Exchange in Argentina.
Since changes were made to its bylaws in 2002, Petrobras has been in compliance with the practices and
regulations of the São Paulo Stock Exchange, and its process of formal adhesion to the differentiated corporate
governance levels of the Bovespa continuing to be a subject of permanent analysis by the Company.
The corporate governance executive training program continued to be run during the year. Besides disseminating
the best governance practices adopted in Brazil and abroad within the Company, the program fosters awareness
about the importance of this topic to both senior management and employees in general. In 2005, training focused
on the alignment between the holding company and the other Petrobras System companies.
Sarbanes-Oxley Law
Petrobras has been working in a fully integrated manner since 2002 to adjust its procedures to the U.S. Sarbanes-
Oxley Act (SOX), which introduced new standards of corporate governance for companies listed on the New York
Stock Exchange and subject to SEC regulations.
In 2005, the Board of Directors chose to constitute an Audit Committee comprised of independent members
of the Board to satisfy the requirements of SOX Section 301 and its relevant regulations. In this manner,
adjustments were made to the Board’s jurisdiction in order to include, among its attributes, those required by the
U.S. law in a way that did not conflict with Brazilian legislation.
Petrobras’ Ombudsman’s Office, linked to the Board of Directors, was formally included in the Company’s
organizational chart. This body is responsible for being a channel to receive and process accusations regarding accounting,
internal controls and auditing questions, including confidential and anonymous submissions from employees.
The Company published in its 2005 Form 20-F filing (Annual Report document required by the SEC) relative to the
2004 fiscal year, among the nine members of the Board of Directors elected by the Ordinary General Shareholders’
Meeting held on March 31, 2005, one of them is a financial specialist, as called for under Section 407 of the SOX.
The review of the Petrobras System’s Code of Ethics, with the participation of the employees, was another
initiative adopted in 2005, designed to update and enhance it in view of the SOX’s requirements.
Controls and Procedures for Disclosing Information
Petrobras has an internal document that formalizes its Controls and Procedures for Disclosing Information (CPDI). The CPDI
establishes the rules to be followed by the Company’s staff to ensure that the information released to the market can be
registered, processed, prepared and disseminated within the timeframes and regulations of the prevailing legislation.
According to SOX Section 302 and SEC Rule 13a-14, the filing of the Annual Report through Form 20-F must be
accompanied by certifications signed by the Company’s President and CEO and the Chief Financial Officer (CFO)
attesting their responsibility for the preparation and maintenance of the CPDI.
They must supervise the conception and updating of these controls and disclosure
procedures, which is carried out by the Investor Relations Department.
The process described in the document allows the collection, control, analysis
and tracking of all of the information periodically released by Petrobras in its
quarterly and annual reports, including through the Form 20-F. The use of a
responsibility matrix makes it possible to identify the origin of each piece of
information and who was responsible for generating it, subsequently certified by the
executive managers involved in the process. Thus, it is possible to know where
and in what corporate system information is recorded and who was responsible
for processing, summarizing and registering the information in the reports.
The controls and procedures for disclosing information applies to the
preparation of the following documents: Annual Report, Annual Information
Report to the CVM, Form 20-F Annual Report, Form 6-K reports, Prospectuses
for the issue of securities filed with the regulatory agencies for
each issue in Brazil and abroad, Announcements of Material
Facts, publishing of information on the Company’s Internet
site and other announcements to the public.
Corporate Governance
T H E T R A I N I N G O F E X E C U T I V E S A N D I M P R O V E M E N T O F I N T E R N A L C O N T R O L S
H A S B E E N F O C U S E D O N M A N A G E M E N T T R A N S P A R E N C Y A N D E F F I C I E N C Y
106 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
business managementc o r p o r a t e g o v e r n a n c e
Auditors
The Internal Auditors plan, execute and appraise Petrobras’ internal auditing activities and advise senior
management and external control bodies. The Company also has an outside auditor, appointed by the Board
of Directors, which is restricted regarding the consulting services it can provide. It is mandatory that the external
auditor is rotated among the various auditing companies every five years.
Board Advisory Committees
There are three: Audit; Environment; and Compensation and Succession. These committees are a part of the
Board of Directors and they assist the Board carrying out its responsibilities to provide the Company with overall
guidance and direction.
Business Committee
This committee is a forum for integration. It seeks to align business development, Company management and
the Strategic Plan’s guidelines, supporting Senior Management’s decision-making process.
Management Committees
These committees are forums for delving deeper into the issues to be presented to the Business Committee,
with which it closely works. Such integration also exists between the Management Committees and their
relationships with the Board of Directors’ committees.
Currently, the company has the following management committees: E&P, Downstream, Gas and Energy;
HR, HSE; Organization and Management analysis; Information Technology; Internal Controls; Risks;
Petrobras Technology; Social and Environmental Responsibility; and Marketing and Brands, which was
established in 2005.
108 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 109
Petrobras’ corporate governance structure is made up of the Board of Directors and its committees, the Executive Board,
the Statutory Audit Committee, the Internal Auditors, the Business Committee and the Management committees.
Board of Directors
A collegial and autonomous body in accordance with its legal powers and responsibilities established by law
and through the Company’s bylaws, the Board of Directors’ main functions are to set the strategic guidelines
of Petrobras and to supervise the acts of the Executive Board. There are nine members of the Board of
Directors, all elected at Ordinary General Shareholders Meetings to one-year terms, with reelection permited.
Seven members represent the controlling shareholder; one represents the minority common shareholders and
one represents the preferred shareholders.
Executive Board
The Executive Board manages the Company’s businesses in compliance with the mission, objectives, strategies
and guidelines established by the Board of Directors. It is made up of the president and CEO and six directors
elected by the Board of Directors to three-year terms, with re-election permitted. They may be removed at any
time. Only the president is a member of the Board of Directors without, however, presiding over this body.
Fiscal Council
The committee is permanently installed and independent of management and the external auditors,
as required by under the Brazilian Corporate Law. It is made up of five members, with one-year
terms, with re-election permitted. One of these members represents the minority shareholders;
another represents the preferred shareholders; and three represent the Federal government,
one of whom is appointed by the Minister of Finance as representative of the National Treasury.
It is incumbent on the Fiscal Council to represent the shareholders as part of its supervisory
function, monitoring the actions of management to ensure compliance with their legal and
statutory duties as well as to defend the interests of the Company and the shareholders.
C O R P O R A T E G O V E R N A N C E S T R U C T U R E
business managementc o r p o r a t e g o v e r n a n c e
Petrobras’ Organization
Petrobras’ organizational model, approved by the Board of Directors in October 2000, is constantly being improved
to adjust it to the 2015 Strategic Plan. Besides formalizing the establishment of the Office of the Ombudsman,
changes in the general structure of the Company in 2005 resulted in the reorganization of its Finance Area.
Fiscal Council
Board of Directors
Ombudsman Internal Auditors
Executive Board
President & CEO
Business Strategy & Performance
New Business
Human Resources
Business Committee
CEO’s Cabinet
General Secretariat
Management System Development
Legal
Institutional Communication
Finance
Corporate
Production Engineering
Services
Exploration
North/Northeast
South/Southeast
E&P (Upstream)
Corporate
Logistics
Refining
Marketing & Trading
Petrochemicals& Fertilizers
Downstream
Corporate
Technical Supportfor the Businesses
BusinessDevelopment
Southern Cone
Americas, Africa& Eurasia
International
Health, Safety& Environment
Materials
Research & Development
(Cenpes)
Engineering
Information Technology
Shared Services
Services
Corporate
Marketing & Trading
Power Development
Gas & Energy
Operations& Holdings
Corporate
Financial Planning & Risk Management
Finance
Accounting
Tax
InvestorRelations
110 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 111
Internal Controls
The work to satisfy Section 404 of the Sarbanes-Oxley Act was continued during the year in an effort to maintain
the structure of the internal controls and procedures for properly preparing the consolidated financial reports, with
a first filing relative to the 2006 fiscal year to be made with the SEC scheduled for June 30, 2007. Petrobras made
advances in monitoring, standardization and integrated management of these controls, with emphasis on those
that have an impact on its financial reports.
Through the evaluation of the Integrated Program for Systems and Methods and Internal Control (Prisma),
created in 2004, the Company further reinforced its commitments to corporate governance and the integrated
management of its internal controls. The Financial, Business and Services areas and internal auditors of the
Petrobras System participate in this program. With the involvement of specialized consultants, Prisma encompasses
32 companies, besides the methodological follow up of its subsidiary Petrobras Energía Participaciones S.A. –
PEPSA, which has its own certification.
Prisma’s scope is based on the permanent review of the Financial Statements and other information from the
consolidated financial reports. The methodology follows the guidelines of the Public Company Accounting
Oversight Board (PCAOB) and the Commitee of Sponsoring Organizations of the Treadway Commission (Coso) for
the best control practices applicable to the Company’s businesses and services, as well as Control Objectives for
Information and Related Technology (Cobit), for information technology.
In 2005, Prisma concluded the phases for designing the macroflows of the 16 macroprocesses and 183
processes, and the evaluation of approximately 10 thousand controls of processes and another approximately
7,400 information technology controls. In Phase 3, in conclusion, the internal auditors tested the applicable internal
controls of the processes for eventual vulnerabilities. A report on the principal problems was sent to management
at the end of the year offering solutions through remedial plans.
The internal control documentation is being recorded on a specific portal on the Company’s intranet to permit the
integrated management of the design of the processes, risks and controls. Through this, Senior Management, the
internal auditors and the Audit Committee are able to view the updated diagnosis of the certification of the Petrobras
System’s internal controls, participating in the continuous self-assessment of the business units and corporate areas.
JOSÉ SERGIO GABRIELLI DE AZEVEDO PRESIDENT AND CEO
C O R P O R A T E
OMBUDSMAN I MARIA AUGUSTA CARNEIRO RIBEIRO
INTERNAL AUDITING I GERSON LUIZ GONÇALVES
GENERAL SECRETARIAT I HÉLIO SHIGUENOBU FUJIKAWA
CEO’S CABINET I ROGÉRIO GONÇALVES MATTOS
STRATEGY AND BUSINESS PERFORMANCE I CELSO FERNANDO LUCCHESI
MANAGEMENT SYSTEM DEVELOPMENT I IRANI CARLOS VARELLA
NEW BUSINESS I JOSÉ LIMA DE ANDRADE NETO
INSTITUTIONAL COMMUNICATION I WILSON SANTAROSA
LEGAL I NILTON ANTONIO DE ALMEIDA MAIA
HUMAN RESOURCES I HEITOR CORDEIRO CHAGAS DE OLIVEIRA
F I N A N C E
ALMIR GUILHERME BARBASSA DIRECTOR
PROJECT FINANCE I PEDRO AUGUSTO BONÉSIO
FINANCIAL PLANNING AND RISK MANAGEMENT I JORGE JOSÉ NAHAS NETO
CORPORATE FINANCE AND TREASURY I DANIEL LIMA DE OLIVEIRA
ACCOUNTING I MARCOS ANTONIO SILVA MENEZES
TAX ADMINISTRATION I MARIA ALICE FERREIRA DESCHAMPS CAVALCANTI
INVESTOR RELATIONS I RAUL ADALBERTO DE CAMPOS
S E R V I C E S
RENATO DE SOUZA DUQUE DIRECTOR
HEALTH, SAFETY AND ENVIRONMENT I CLÁUDIO FONTES NUNES
MATERIALS I ARMANDO OSCAR CAVANHA FILHO
LEOPOLDO A. MIGUEZ DE MELLO RESEARCH AND DEVELOPMENT CENTER I CARLOS TADEU DA COSTA FRAGA
ENGINEERING I PEDRO JOSÉ BARUSCO FILHO
INFORMATION TECHNOLOGY I WASHINGTON LUIZ FARIA SALLES
SHARED SERVICES I RICARDO ANTONIO ABREU IANDA
business management
112 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 113
Executive Board
E X P L O R A T I O N A N D P R O D U C T I O N
GUILHERME DE OLIVEIRA ESTRELLA DIRECTOR
E&P CORPORATE I FRANCISCO NEPOMUCENO FILHO
E&P NORTH-NORTHEAST I SOLANGE DA SILVA GUEDES
E&P SOUTH-SOUTHEAST I JOSÉ ANTONIO DE FIGUEIREDO
E&P PRODUCTION ENGINEERING I JOSÉ MIRANDA FORMIGLI FILHO
E&P EXPLORATION I PAULO MANUEL MENDES DE MENDONÇA
E&P SERVICES I ERARDO GOMES BARBOSA FILHO
D O W N S T R E A M
PAULO ROBERTO COSTA DIRECTOR
DOWNSTREAM CORPORATE I VENINA VELOSA DA FONSECA
DOWNSTREAM LOGISTICS I PAULO MAURÍCIO CAVALCANTI GONÇALVES
DOWNSTREAM REFINING I ALAN KARDEC PINTO
DOWNSTREAM MARKETING AND TRADING I NILO CARVALHO VIEIRA FILHO
DOWNSTREAM PETROCHEMICALS AND FERTILIZERS I MARIA DAS GRAÇAS SILVA FOSTER
G A S A N D E N E R G Y
ILDO LUÍS SAUER DIRECTOR
GAS AND ENERGY CORPORATE I RAFAEL SCHETTINI FRAZÃO
GAS AND ENERGY POWER DEVELOPMENT I PAULO KAZUO TAMURA AMEMIYA
GAS AND ENERGY MARKETING AND TRADING I ROGÉRIO ALMEIDA MANSO DA COSTA REIS
GAS AND ENERGY OPERATIONS AND HOLDINGS I JOSÉ MARIA CARVALHO RESENDE
I N T E R N A C I O N A L
NESTOR CUÑAT CERVERÓ DIRECTOR
INTERNATIONAL CORPORATE I CLÁUDIO CASTEJON
INTERNATIONAL AMERICAS, AFRICA AND EURASIA I JOÃO CARLOS ARAÚJO FIGUEIRA
INTERNATIONAL SOUTHERN CONE I DÉCIO FABRÍCIO ODDONE DA COSTA
INTERNATIONAL BUSINESS DEVELOPMENT I LUÍS CARLOS MOREIRA DA SILVA
INTERNATIONAL TECHNICAL SUPPORT TO THE BUSINESSES I ABÍLIO PAULO PINHEIRO RAMOS
On November 30, 2005 the Executive Board approved a new structure for the Finance Area,comprised of the following Executive Departments: Corporate Finance, Financial Planning and RiskManagement, Finance, Accounting, Tax and Investor Relations. However, by the end of 2005 notall executive managers for the respective departments had been appointed.
e x e c u t i v e b o a r d
114 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 115
Board of Directors
DILMA VANA ROUSSEFF CHAIRWOMAN
MEMBERS
JOSÉ SERGIO GABRIELLI DE AZEVEDO
JORGE GERDAU JOHANNPETER
ANTONIO PALOCCI FILHO
FÁBIO COLLETTI BARBOSA
GLEUBER VIEIRA
JAQUES WAGNER
ARTHUR ANTONIO SENDAS
CLÁUDIO LUIZ DA SILVA HADDAD
Fiscal Council
MARIA LÚCIA DE OLIVEIRA FALCÓN CHAIRWOMAN
EFFECTIVE MEMBERS
NELSON ROCHA AUGUSTO
TÚLIO LUIZ ZAMIN
DENISE MARIA AYRES ABREU
MARCUS PEREIRA AUCÉLIO
ALTERNATES
EDUARDO COUTINHO GUERRA
CELSO BARRETO NETO
EDISON FREITAS DE OLIVEIRA
MARIA AUXILIADORA ALVES DA SILVA
OSWALDO PETERSEN FILHO
annexannex
116 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 117
AMERICAN DEPOSITARY RECEIPTS (ADR) | Negotiable
certificates in the United States and representing one or
more shares of a foreign company. A US depositary bank
issues the ADRs against a deposit of underlying shares, held
by a custodial institution in the country of origin of the shares
AMERICAN PETROLEUM INSTITUTE API DEGREE (°API) |
A measurement of the relative density of an oil or oil product.
The API scale, measured in degrees, varies inversely with the
relative density – in other words the greater the relative
density, the lower the API degree. Conversely, the lighter the
oil, the higher the API degree. Oils with an API of more than
30 degrees are considered light; between 22 and 30 degrees
API are medium; lower than 22 API degree are heavy while
an API degree equal or lower than 10 indicates an
extra–heavy oil. The higher the API degree, the greater the
product’s market value.
ASSOCIATED NATURAL GAS | Natural gas produced
together with oil. Crude petroleum is made up of three
states: oil, gas and water. In this respect, gas is obtained after
the physical separation of the liquid fraction of the
petroleum. Gas can also be of a non– associated nature and
produced from purely gas deposits. Under these
circumstances, there is no need for physical separation
during production. However, in both cases, after production
and/or separation, the gas is processed to the required
standards and quality before being sold.
BALANCED SCORECARD | Described by Kaplan and Norton,
is more than a tactical or operational measurement system. An
explicit strategy and a vision form the basis for four perspectives
(financial, customer, business process and learning and growth).
For each one, strategic objectives, measurements, specific
targets and action plans are formulated.
BLOCK | A small portion of a sedimentary basin where oil
and natural gas exploration and production is carried out.
BOVESPA INDEX (IBOVESPA) | Indicator of the price
changes of a variable share portfolio that is defined
periodically by the São Paulo Stock Exchange.
BRENT PETROLEUM | A blend of petroleum produced in
the North Sea from fields
BS 8800 | British Standard for implementing a health and
occupational (SMS) Management System.
BUNKER | Fuel for ships.
CARBON MARKET | Regulated trading system between
companies or other institutions of credits corresponding to
certified reductions in the emission of greenhouse gases, the
objective being to meet business, regional, national or global
targets for reducing the emission of these gases
CATALYST | Any substance that speeds up or retards a
chemical reaction but does not itself undergo any lasting
chemical alteration during the process
CATALYTIC CRACKING UNIT | Refining process whereby
heavier distilled oils are converted into lighter fractions of
greater commercial values, such as gasoline, liquefied
petroleum gas (LPG) and naphtha.
CERTIFICATES OF REAL ESTATE RECEIVABLES (CRI) | A
security linked to real estate loans, issued exclusively by
securitization companies. They are created to obtain funds
from institutional investors, with maturities compatible with
the characteristics of real estate loans
Glossáry, abbreviations and conversion table GlossARY, abBreviations and conversion table
CO–GENERATION | The simultaneous generation of
electricity and thermal energy (heat/steam from the
process), through the sequential and efficient use of
quantities of energy from a single source. This increases the
thermal efficiency of the thermodynamic system as a whole.
CONDENSATE | Natural gas liquids recovered in the normal
oilfield separation process and maintained in liquid state
under normal pressure and temperature conditions.
CONFERENCE CALL | A telephonic conference with market
analysts, institutional and individual investors that takes place
when the Company reports its most recent quarterly financial
results. The conference call normally also includes
information on the Company’s future prospects.
CORPORATE GOVERNANCE | The relationship between
economic agents (shareholders, executives, board
members) that can infl uence or determine the course and
performance of a company. Good corporate governance
assures stakeholders equitable treatment, transparency and
responsibility for the results.
CRUDE PETROLEUM (OR CRUDE OIL) | The oil that first
enters a refinery for processing.
DELAYED COKING UNIT (DCU) | This is the most extreme
form of thermal cracking, transforming vacuum residue into
lighter products, in addition to coke.
DERIVATIVE | A contract or security, the value of which is
related to the price of another security, instrument or
underlying index. It can be used as a hedge instrument.
DIFFERENTIATED CORPORATE GOVERNANCE SHARE
INDEX (IGC) | A share index calculated by the São Paulo
Stock Exchange that measures the performance of a
theoretical portfolio of shares of companies that present
good levels of corporate governance.
DISPATCH | Functioning (bringing into operation) of a
thermoelectric power station (UTE), when this begins
generating electricity for supply to consumers/ grid – “to
dispatch power from a thermoelectric power station” – means
bringing it into operation for producing electric power.
Currently, in Brazil with its predominantly hydroelectric
generating capacity, thermoelectric plants only dispatch
electricity at certain peak demand times (when hydro sources
are insufficient to supply demand), during hydrological
shortfalls (low rainfall) or whenever the National System
Operator (ONS) so determines to stabilize the system.
E&P | Exploration and production of oil and natural gas.
EBITDA | Earnings before interest, taxes, depreciation and
amortization expenses.
E–COMMERCE | Commercial transactions carried out
electronically through the exchange of bits. The relationship is
digital and therefore virtual. The sale of goods and services
involve a digital communication medium – the multimedia –
and the principal vehicles for this type of transaction are:
CD–Rom, kiosks, BBS and the Internet. Also known as virtual
commerce or electronic commerce.
EQUITY VALUE | This is the value of a company’s net equity,
ETHENE OR ETHYLENE | A basic petrochemical product of
the light olefin family (C2H4) produced from naphtha or
ethane. executives, board members) that can influence or
business management
P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 119118 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
determine the course and performance of a company. Good
corporate governance assures stakeholders equitable
treatment, transparency and responsibility for the results.
EXPLORATORY SUCCESS RATE | The number of exploratory
wells with commercially
FIELD | An oil or natural gas producing area from a continuous
reservoir or more than one reservoir at variable depths,
including the associated production installations and equipment.
FLOATING, PRODUCTION, STORAGE & OFFLOADING
(FPSO) | A floating unit for the production, storage and
transfer of hydrocarbons using a ship as platform
FUEL OIL | The heavier fractions from the atmospheric
distillation of petroleum, widely used as and industrial fuel in
boilers, ovens, etc.
GROSS MARGIN | Gross Profit ÷ Net Revenue.
HEDGE | A financial position or combination of positions for
the purpose of reducing some kind of risk.
IBRX | Brazil Index -This is a price index that measures the
return on a theoretical portfolio composed of 100 shares
selected from the most traded shares on the Bovespa, in terms
of trading volume and financial volume. They are weighted in
the portfolio by their respective number of shares available for
trading on the market in the Brent and Ninian Systems with a
39.4 (thirty–nine and four tenths percent) degree API and a
0.34% (zero decimal point thirty–four per cent)
INSTALLED CAPACITY | Project capacity of the unit
authorized by the ANP.
INVESTMENT GRADE | Risk classification level that
considers a company to have a low risk and, thus, its
securities can be acquired by more conservative investors.
ISO 14001 | An international standard, prepared and
managed by the International Organization for
Standardization, which specifies the requirements for
environmental management systems with a view to the
certification of these systems.
LIQUEFIED PETROLEUM GAS (LPG) | A mixture of
hydrocarbons and high pressure steam obtained from natural
gas at special processing units, which is kept in a liquid state
under special conditions for surface storage.
LIQUID NATURAL GAS (LNG) | Part of natural gas that is
found in the liquid phase at a given pressure and temperature
on the surface, obtained during field separation processes, in
natural gas processing units or in gas pipeline transfer operations.
LIQUEFIED NATURAL GAS (LNG) | Natural gas cooled
to temperatures below 160 C° for transfer and storage in a
liquid state.
LOCAL GOODS CONTENT | The percentage that is
equivalent to the coefficient between: The difference between
the total sale value of a good (excluding IPI and ICMS taxes)
and the value of the associated imported portion and; Its total
sale value (excluding IPI and ICMS taxes).
MARKET CAPITALIZATION | This is a company’s value
measured by the price of its shares in the market, according
to the following formula: (share price x number of shares).
MARKET SHARE | Percentage or participation of the market.
MERCHANT POWER PLANT | In general, merchant power
plants sell their power to the spot market. Under this form of
business structure, there are natural gas supply contracts with
clauses, which govern the division of gains and losses above
those set from the outset of the agreement among the parties.
NAPHTHA | A petroleum product, mainly used as feedstock
in the petrochemical industry to produce ethane and
propane together with other liquid fractions such as benzene,
toluene and xylene.
NATIONAL PETROLEUM, NATURAL GAS AND BIO-FUEL
AGENCY (ANP) | The Brazilian regulatory agency for the oil
and natural gas sector
NATURAL GAS | Any hydrocarbons or mixture of
hydrocarbons that remain in a gaseous state under normal
atmospheric conditions, extracted directly from reservoirs of
petroleum or gas, including moist, dry, residual and rare gases.
NATURAL GASOLINE | Natural gas liquids with a steam
pressure halfway between that of condensate and LPG,
obtained from natural gas through a process of compression,
distillation and absorption.
NET MARGIN | Net Profit ÷ Net Revenue.
NEW FRONTIERS | Areas of sedimentary basins or
sedimentary basins where exploration has occurred.
OFFSHORE | Located or operating in the sea.
OHSAS 18001 | A standard prepared and managed by BSI
Management Systems, which specifies the requirements for
the health and occupational safety management systems with
a view to certifying these systems among other purposes.
OIL | The portion of petroleum that exists in a liquid state
under original reservoir conditions and remains liquid under
surface pressure and temperature conditions.
ONSHORE | Located or operated on land.
OPEC BASKET PRICE | Saharan Blend (Algeria), Minas
(Indonesia), Bonny Light (Nigeria), Arab Light (Saudi Arabia),
Dukhan (Qatar), BCF-17 (Venezuela), Iranian Heavy, Kuwait
Crude, Es Sider (Libya), Murban (United Arab Emirates) and
Basrah (Iraq).
OPERATING MARGIN | Operating Profit ÷ Net Revenue.
OPTION | A type of derivative that gives the buyer the right
to purchase (call option) or sell (put option) an asset or
security for a given price (strike price) at a future date
ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES
(OPEC) | Algeria, Indonesia, Iran, Iraq, Kuwait, Nigeria, Qatar,
Saudi Arabia, United Arab Emirates and Venezuela.
PETROLEUM | Any liquid hydrocarbon in its natural state
such as crude oil and condensate.
POLYETHYLENE | A petrochemical product used to make
casks, receptacles, film canisters, plastic packaging for
clothing and lightweight objects.
POLYMER | The generic designation for some second
generation petrochemicals such as plastics, rubber and
synthetic fibers.
POLYPROPYLENE | A petrochemical product with uses
similar to those of high–density polyethylene, such as film,
beverage crates and packaging, etc
PROCESSED CRUDE | Total volume processed in a refinery.
PROPENE OR PROPYLENE | A basic petrochemical product,
produced from naphtha propane that serves as feedstock for
making polypropylene.
PROVED RESERVE | Reserves of petroleum and/or natural
G L O S S a r y
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gas that, based upon analysis of geological and engineering
data, are estimated to be commercially recoverable from
discovered and evaluated reservoirs, to a high degree of
certainty, taking into account the prevailing economic
circumstances, the usually feasible operational methods and
the Brazilian petroleum and tax regulations.
RATING | Classification or rating of risk.
RECOVERABLE VOLUME | Volume of petroleum, expressed
under basic conditions which can be obtained from the
production of a reservoir from the time of its initial conditions
to the time of its abandonment using the best alternative
indicated by technical- economic studies carried out at the
time of appraisal. Formula: recoverable volume = original
volume x recovery factor.
RESERVE | Discovered oil and/or natural gas resources that
are commercially recoverable as of a given date.
RESERVE REPLACEMENT INDEX (IRR) | Variation in the
proved recoverable volume of reserves in relation to
aggregate production in a given year.
RESIDUE | There are two kinds of residue: firstly the
atmospheric (RAT) kind, the fraction of oil from an
atmospheric distillation unit, the distillation of which varies
from 420 degrees Celsius upwards; secondly – asphalt, the
refined products from de–asphalting residue, resulting from
the extraction of light fractions from vacuum residue using a
paraffin solvent (propane or butane).
ROCE (RETURN ON CAPITAL EMPLOYED) | Calculated by
using the following formula: Net earnings – financial results
(net of income tax (IR) and social contribution (CSSL)) /
average borrowings (loans and financing) + average
shareholders equity – financial investments.
SECOND GENERATION PETROCHEMICAL COMPANIES |
The companies that make up a petrochemical complex are
classified in three segments. The second generation
companies process basic petrochemicals (ethane, propane,
benzene, etc.) to manufacture intermediate products
(plastics, rubber and synthetic fibers)
SECURITIES AND EXCHANGE COMMISSION (SEC) | The
U.S. capital market oversight and regulatory agency, whose
equivalent in Brazil is the Comissão de Valores Mobiliários (CVM).
SPE | Society of Petroleum Engineers.
SWAP | Contract between two parties to exchange payment
flows. A typical oil swap consists of a contract in which one
party buys at a certain price and sells at a future floating price.
TOTAL PROCESSED THROUGHPUT | Total of crude oil, plus
reprocessing and intermediate products processed in the
distillation plants.
TOTAL THROUGHPUT | Total of crude oil processed in the
distillation plants viable oil and/or gas, as a proportion of the
total number of exploratory wells drilled and evaluated in any
given year.
VOLATILITY | Statistical measure of variation of a price or
rate over time. Normally calculated by variance or standard
deviation – the higher the price volatility, the more extensive
its variation above or below an average value.
WEST TEXAS INTERMEDIATE (WTI) | Petroleum with an
API degree between 38 and 40 and approximately 0.3% of
sulfur, the daily price of which reflects the price of a barrel of
oil delivered in Cushing, Oklahoma, in the United States.
WORK– RELATED ILLNESS | Illness arising from or triggered
by special conditions of work and related directly to it.
ABBREVIATIONS
BBL | Barrel.
BOE | Barrels of oil equivalent. Normally used to express
volumes of oil and natural gas in the same unit of
measurement (barrels) by converting Brazilian gas at the rate
of 1,000 cubic meters of gas to 1 cubic meter of oil. 1 cubic
meter of oil = 6.289941 barrels of oil. As an international
standard, one barrel of oil equivalent equals approximately
6,000 cubic feet of natural gas.
BOED | Barrels of oil equivalent per day.
BPD | Barrels per day.
DWT | Deadweight tonnage. Unit that measures the freight
transportation capacity of a ship.
CONVERSION TABLE
A) Cubic meters (m3) into barrels (b):
b = m3
0,158984
B) Barrels (b) into cubic meters (m3):
m3 = b x 0,158984
C) Cubic meters (m3) into tons (t):
t = m3 x D
D) Tons (t) into cubic meters (m3):
m3 = t
D
E) Barrels (b) into tons (t):
t = b x 0,158984 x D
F) Tons (t) into barrels (b):
b = t
D x 0,158984
G) 1 m3 = 1.000 liters = 6,28994113 b
H) 1 b = 158,984 liters = 0,158984 m3
I) 1.000 m3 natural gas= 1 m3 oil
(approximately)
J) D = M , where
V
D = Density
M = Mass
V = Volume
G L O S S a r y
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P E T R O B R A S A n n u a l r e p o r t 2 0 0 5 123122 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
HEAD OFFICE
PETRÓLEO BRASILEIRO S.A. – PETROBRASAvenida República do Chile, nº 65 – Centro20031-912 – Rio de Janeiro – RJ – BrazilTel.: (21) 3224-4477
REPRESENTATIVE OFFICES IN BRAZIL
BRASÍLIASetor de Autarquias Norte – SAN – Quadra 1, bloco D,Edifício Petrobras – 2º andar70040-901 – Brasília – DF – BrazilTel.: (61) 3429-7131Fax: (61) 3226-6341
SÃO PAULOAvenida Paulista, 901 – 11º andar – Cerqueira César 01311-100 – São Paulo – SP – BrazilTel.: (11) 3523-6501Fax: (11) 3523-6488
SALVADORAvenida Antônio Carlos Magalhães, 1113 – sala 112 – Pituba41825-903 – Salvador – BA – BrazilTel.: (71) 3350-3700Fax: (71) 3350-3080
OVERSEAS REPRESENTATIVE OFFICES
NEW YORK570, Lexington Avenue 43rd Floor 10022-6837 – New York – NY – USATel.: (1) 212 829-1517Fax: (1) 212 832-5300
TOKYOTogin Building 5th Floor, Room 508 4-2 Marunouchi 1 – Chome Chiyoda–Ku Tokyo 100-0005 – JapanTel.: (81) 3 5208-5285Fax: (81) 3 5208-5288
CHINAPetrobras Beijing Representative OfficeChina World Trade Center Tower 1, Units 1221-1225Nº 1, Jian Guo Men Wai Avenue,Chao Yang District,Beijing 100004 – P.R. ChinaTel.: (86-10) 6505-9838Fax: (86-10) 6505-9850
SINGAPORE435 Orchard Road # 19-05/06 – Wisma AtraSingapore – 238877Tel.: (65) 6550-5080Fax: (65) 6734-908
SUBSIDIARIES
BRASPETRO OIL SERVICES COMPANY - BRASOIL4th Floor, Harbour Place, 103 south Church Street –Georgetown Grand Cayman – Cayman Island (BWI)P.O. Box 1034 GTTel.: 0.0021-1 (345) 814-1557Fax: 0.0021-1 (345) 814-1557
BRASPETRO OIL COMPANY Second Floor, Anderson Square BuildingGeorgetown Grand Cayman – Cayman Island (BWI)P.O. Box 714Tel.: 0.0021-1(345) 949.8888 / 8889Fax: 0.0021-1(345) 949.8899
PETROBRAS NETHERLANDS B.V.Rokin 551012 KK Amsterdam The NetherlandsTel.: 0021-31 20 521 4805Fax: 0021-31 20 521 4827
DOWNSTREAM PARTICIPAÇÕES S.A.Avenida República do Chile, 65 – 22º andar (parte) – Centro20031-912 – Rio de Janeiro – RJ – BrazilTel.: (21) 3224-4819Fax: (21) 2262-4228
PETROBRAS INTERNATIONAL FINANCE COMPANY 4th Floor, Harbour Place, 103 south Church Street Georgetown Grand Cayman – Cayman Island (BWI)P.O. Box 1034 GTTel.: (0.0021-1) (345) 814-1557Fax: (0.0021-1) (345) 814-1557
5283 PARTICIPAÇÕES LTDA.Avenida República do Chile, 65 – sala 1003 – Centro20031-912 – Rio de Janeiro – RJ – BrazilTel.: (21) 3224-7308
PETROBRAS INTERNATIONAL BRASPETRO B.V. Rokin 551012 KK Amsterdam P.O. Box 9901000 AZ AmsterdamThe NetherlandsTel.: (0021) 3120 521-4805Fax: (0021) 3120 521-4827
PETROBRAS COMERCIALIZADORA DE ENERGIA LTDA.Avenida República do Chile, 500 – 27º andar – Centro20031-170 – Rio de Janeiro – RJ – BrazilTel.: (21) 3212-6202Fax: (21) 3212-6205
USINA TERMELÉTRICA NOVA PIRATININGA LTDA.Avenida Paulista, 901 – 14º andar – Centro13111-000 – São Paulo – SP – BrazilTel.: (11) 5613-2700Fax: (11) 5614-9222
BAIXADA SANTISTA ENERGIA LTDA.Praça Mal. Stenio Caio de Albuquerque Lima, 1 (parte) – Jardim das Indústrias11555-900 – Cubatão – SP – BrazilTel.: (13) 3362-4004Fax: (13) 3362-4818
SFE – SOCIEDADE FLUMINENSE DE ENERGIA LTDA. Rodovia Presidente Dutra – KM 200, s/nº – Jardim Maracanã23890-000 – Seropédica – RJ – BrazilTel.: (21) 2665-9204Fax: (21) 2665-9249
FAFEN ENERGIA S.A.Rua Eteno, 2198 – Pólo Petroquímico42810-000 – Camaçari – BA – BrazilTel.: (71) 642-4706Fax: (71) 642-4300
TERMOCEARÁ LTDA. (MPX)Rodovia CE-422, Km 0 – Nihil61600-000 – Caucaia – CE – BrazilTel.: (85) 3372-2200Fax: (85) 3372-2212
TERMORIO S.A.Avenida Almirante Barroso, 63 – salas 815 a 817 (parte) – Centro – 20031-003 – Rio de Janeiro – RJ – BrazilTel.: (21) 2532-6572Fax: (21) 2532-1957
PETROBRAS QUÍMICA S.A. – PETROQUISAAvenida República do Chile, 65 – Salas 902/903 – Centro20031-912 – Rio de Janeiro – RJ – BrazilTel.: (21) 3224-6397Fax: (21) 2262-1918 / 2262-4728
PETROBRAS NEGÓCIOS ELETRÔNICOS S.A.Avenida República do Chile, 65 – 16º andar (parte) – Centro20031-912 – Rio de Janeiro – RJ – BrazilTel.: (21) 3224-3990 / 3224-7210Fax: (21) 3224-2703 / 3224-3558
PETROBRAS DISTRIBUIDORA S.A. – BRRua General Canabarro, 500 – 16º andar – Maracanã20271-900 – Rio de Janeiro – RJ – BrazilTel.: (21) 3876-4001Fax: (21) 3876-4977
PETROBRAS TRANSPORTE S.A. – TRANSPETROAvenida Presidente Vargas, 328 – 10º andar – Centro20091-060 – Rio de Janeiro – RJ – BrazilTel.: (21) 3211-9100Fax: (21) 3211-9121
PETROBRAS GÁS S.A. – GASPETROAvenida República do Chile, 500 – 28º andar – Centro20031-170 – Rio de Janeiro – RJ – BrazilTel.: (21) 3212-6053Fax: (21) 3212-6165
A D d R E S S E S
124 P E T R O B R A S A n n u a l r e p o r t 2 0 0 5
P-50 – Petrobras Image Bank
This oil and gas FPSO Platform (Floating, Production, Storage and Offloading) is the
milestone of the oil self-sufficiency conquest in Brazil. It is the greatest production
capacity unit in the country - 180 thousand bpd - and will operate in the Albacora
Leste Field in the Campos Basin.
PREPARATION, EDITING AND GENERAL COORDINATION
Investor relations and
Institutional communication
GRAPHIC PROJECT
Traço Design
GRAPHIC PROJECT
Soter Design
EDITORIAL PRODUCTION
Letra Viva Comunicação
TEXT EDITION
Ofício de Letras
TEXT
Escrita Fina
PHOTOGRAPHY
Ari Gomes, Banco de Imagens Petrobras, Bruno Veiga, Claudia Martins, Cris Isidoro,
Eliana Fernandes, Fabio Oliveira, Felipe Goifman, Geraldo Falcão, Geraldo Kosinski,
J. Valpereiro, Jônio Machado, José Caldas, Juarez Cavalcanti, Patrícia Santos, Paulo
Arthur, Paulo Rubens, Projeto Tamar, Publius Vergilius, Rogério Reis
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Ipsis Gráfica e Editora
COVER PHOTOGRAPH