Petrobras (PBR)

CHANGES IN THE REGULATIONS OF PETROS PLAN

On August 17, 2007, our Executive Board approved changes in Petros Plan regulations in relation to the agreement presented on April 19, 2006, which will not materially affect the projected benefit obligation. Also, the Executive Board approved changes in the Plan regulations to include the assumptions related to the two judicial proceedings taken by some participants against Petros, which are: i) the lowering of age for employees who joined Petrobras in 1978/1979 and; ii) same coverage of governmental pension for widows. These changes increased “Employees’ post-retirement benefit obligations - Pension” in the amount of U.S.$ 443 million and “Accumulated other comprehensive income, Post-retirement benefit reserves adjustments, net of tax - pension cost”, in the amount of U.S.$ 314 million.

On September 12, 2007 Petrobras and the subsidiaries sponsoring the Petros Plan, trade union organizations and Petros signed a Settlement Agreement that will cover commitments with pension plans in the amount of U.S.$ 2,380 million, which will be paid in installments over the next 20 years, as previously agreed during the renegotiation process, also providing guarantees to such amount, which is already accrued in the consolidated financial statements.

See Note 14 of our unaudited consolidated financial statements for the nine-month period ended September 30, 2007.

CHANGES IN THE REGULATIONS OF PETROS PLAN

On August 17, 2007, our Executive Board approved changes in Petros Pension Plan regulations with respect to the means of readjusting the benefits and pensions, that will increase “Employees’ post-retirement benefit obligations – Pension” in the amount of U.S.$ 272 million and “Accumulated other comprehensive income, Post-retirement benefit reserves adjustments, net of tax - pension cost”, in the amount of U.S.$180 million. According to the new pension regulations, the benefits will no longer be tied to the sponsors’ salaries and the benefits paid by the Official Social Security System. As the changes in the regulations are linked to the conclusion of the repactuation process, we are waiting for the final settlement of some judicial proceedings to determine whether this increase in pension obligations should be accrued. The Executive Board also approved the terms of an agreement to be signed by Petrobras and Petros, in the amount of U.S.$ 2,474 million that will be paid on installments over the next 20 years, in order to guarantee pension obligations. See Note 11 of our unaudited consolidated financial statements for the six-month period ended June 30, 2007.

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