Petrobras (PBR)

ACCOUNT RECTIFICATION WITH THE GOVERNMENT

By means of Official Document No. 11/2004, of June 23, 2004, the Integrated Audit Commission ANP/STN presented the final audit report certifying and homologating the amount in the petroleum and alcohol account and making account rectification between PETROBRAS and the government possible. This is now underway.

As per Law No. 10,742 of October 6, 2003, account rectification with the government should have occurred by June 30, 2004. PETROBRAS, after having furnished all the information required by the National Treasury Secretary – STN, is in discussion with the Ministry of Mines and Energy – MME, seeking to equalize the disparities that still exist between the parties in an effort to conclude account rectification with the government, as per Provisionary Measure No. 2,181-45, dated August 24, 2001.

On July 2, 2004, the government made a deposit in the amount of R$ 172 million, equivalent to the National Treasury Notes – H Series (NTNs-H) which were issued in favor of PETROBRAS to guarantee payment of the amount due in relation to the petroleum and alcohol account, which matured on June 30, 2004. Of this amount, R$ 8 million was made available to PETROBRAS, and the remaining amount of R$ 165 million was placed in an open account in favor of the Company as a blocked deposit linked to the STN order. The amount of the account may be paid through the issue of National Treasury bonds of a value equal to the final amount of the account rectification or with other amounts that PETROBRAS may owe to the federal government, including tax amounts or a combination of the foregoing options.