Petrobras (PBR)

Complementary Pension Plan

(Rio de Janeiro, August 17, 2007). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that, as part of the process of concluding renegotiations of the Complementary Pension Fund, as widely announced to the market on April 19 2006, the Executive Board has approved changes in the regulations of the Petros Complementary Pension Plan, subject to ratification by the Complementary Pension Plan Secretariat, as well as the bases of the Agreement that will be submitted to legal ratification, in relation to motives of legal proceedings concerning issues relating to the Complementary Pension Plan of the Petrobras group.

The new regulations of Petrobras Group’s Petros Plan, resulting from the approved changes, no longer bind readjustments in benefits to the sponsors’ salary scale, while, in addition, making the values of the benefits awarded independent of those paid by the Official Social Security System. The benefits to pension plan members will be readjusted according to the inflation index to be adopted by Petros, currently the IPCA, a step that will considerably improve the Plan’s predictability.

In addition to the implementation of the new Petros Plan’s regulations, as per the Reciprocal Obligation Agreement – AOR, the legal exchanges between Petrobras, other sponsors (Petrobras group), Petros, FUP and the signatory labor unions will settle and extinguish purposes of legal suits against the company relating to the Group’s complementary pension plan.

The legal exchange, according to the terms and conditions of the AOR, provides for payment by Petrobras of R$ 4,766 million, to be disbursed over a period of 20 years in accordance with the level of the Plan’s liquidity. This payment meets the solvency and liquidity needs of the Complementary Pension Model sponsored by the Company - the Petros Plan. This value has been calculated by an actuarial consultancy as at the baseline date of December 31 2006.

The commitments undertaken shall involve an increase in expenses during fiscal year 2007 of about R$ 700 million, reflecting the growth in benefits to be conceded to the plan’s beneficiaries.

Once more, we would emphasize that the Judicial Exchange together with the changes to regulations and the implementation of the New Petros-2 Plan are the result of an extensive negotiation process between Petrobras and representatives of the labor unions, with the participation of employees and beneficiaries, undertaken with the objective of strenghtening the Company’s Complementary Pension Plan, making it more attractive, sustainable and an important benefit to employees of Petrobras in line with its strategy of excellence in human resources management.

www.petrobras.com.br/ri/english
Contacts: PETRÓLEO BRASILEIRO S. A. – PETROBRAS
Investor Relations Department I Raul Adalberto de Campos - Gerente Executivo I E-mail: petroinvest@petrobras.com.br
Av. República do Chile, 65 – 22^nd floor - 20031-912 - Rio de Janeiro, RJ I Tel.: 55 (21) 3224-1510 / 994

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

Complementary Pension Plan

Complementary Pension Plan

The proposal’s adoption required the adhesion of the vast majority of fund members, including employees, retirees and pensioners. The Company hereby notifies that only 53% of those affected, have adhered to the proposal, thus rendering unfeasible its renegotiation and implementation.

The Company’s proposal involved the alteration of the Petros Plan’s Regulations, principally with respect to the item relating to the restatement method, removing the linkage of the readjustment of benefits paid to retirees and pensioners from the salary increases awarded to active employees. Petrobras further proposed the extinguishing and settlement of ongoing litigation which in the light of the lack of the necessary adhesion to the new model, will continue to proceed through the courts. Under the proposal, benefits would have been readjusted according to an inflation index.

Given the non-acceptance of the proposal, Petrobras will request Petros to adopt the legal measures to remedy the current actuarial deficit. Pursuant to the prevailing legislation, the deficit must be remedied according to the existing proportion between the sponsors and the plan members, be they active employee members or beneficiaries, through readjustment of the respective contributions or a reduction in benefits.

As widely announced, the current deficit has already been recognized, registered in the Company’s accounts and shown in the sponsor’s Financial Statements Notes.

In addition, we wish to inform that any contribution on the part of Petrobras and other sponsors or by the members, will increase the Plan’s assets, reducing the deficit, on a cash basis, without affecting the result of those sponsors’ Companies participants in Petros’ complementary private pension plans. These values will only be determined following a joint decision between the sponsoring Companies and Petros, and the approval of the Complementary Social Security Secretariat - SPC. Once this process is concluded, the values will be announced to the market accordingly.

In parallel, Petrobras and Petros have continued to pursue discussions with the regulatory organs on a new complementary pension plan for employees hired from 2002 and future employees based on the defined contribution model, in line with the structure previously notified. These employees are not enrolled in the existing complementary pension plan, but are covered by a life insurance policy funded by the Company, thus making the implementation of a new plan increasingly necessary.

		http: //www.petrobras.com.br/ri/english
Contacts:
		Petróleo Brasileiro S.A – PETROBRAS
		Investor Relations Department
		Raul Adalberto de Campos– Executive Manager
		E-mail: petroinvest@petrobras.com.br
		Av. República do Chile, 65 - 22nd floor
		20031-912 – Rio de Janeiro, RJ
		(55-21) 3224-1510 / 9947

This document may contain forecasts that merely reflect the expectations of the Company’s management. Such terms as “anticipate”, “believe”, “expect”, “forecast”, “intend”, “plan”, “project”, “seek”, “should”, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.