Petrobras (PBR)

Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead, actuarial expenses related to our pension and health care plans for inactive participants.

The increase in net loss for our Corporate segment in the first half of 2009 compared to the same period of 2008 was primarily due to higher net financial expenses and noncontrolling interest results reflecting the impact of the appreciation of the Real against the U.S.dollar on the debt of Special Purpose Entities and affiliated companies where neither Petrobras nor any of its subsidiaries have a majority interest.

This effect was partially offset by increased income tax and social contribution tax credits.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead, actuarial expenses related to our pension and health care plans for inactive participants.

The increase in net loss for our Corporate segment in the first quarter of 2009 compared to the same period in 2008 was primarily due to higher net financial expenses. This effect was partially offset by an increase in income tax and social contribution credits.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead and actuarial expenses related to our pension and health care plans for inactive participants.

Net loss for our Corporate segment decreased in 2008 compared to 2007, primarily due to: (1) increased net financial income from foreign exchange gains on international investments; (2) reduced pension plan expenses; and (3) the elimination of the CPMF tax.

These effects were partially offset by increased selling, general and administrative expenses, primarily attributable to higher personnel expenses.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead and actuarial expenses related to our pension and health care plans for inactive participants.

Net loss for our Corporate segment decreased in the nine-month period ended September 30, 2008, compared to the same period of 2007, primarily due to an increase in net financial income, a reduction in expenses from the amendments to the Petros Plan regulations and a reduction in tax expenses due to the extinction of the CPMF tax.

These effects were partially offset by increased selling, general and administrative expenses, primarily attributable to higher personnel expenses.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead and actuarial expenses related to our pension and health care plans for inactive participants.

The lower net loss for our Corporate segment in the first half of 2008, as compared to the first half of 2007, was mainly due to a reduction in expenses from the amendments to the Petros Plan regulations and a reduction in tax expenses due to the extinction of CPMF tax.

These effects were partially offset by the increase in the net financial expenses.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead and actuarial expenses related to our pension and health care plans for inactive participants.

The lower net loss for our Corporate segment in the first quarter of 2008, as compared to the first quarter of 2007, was primarily due to a reduction in net financial expenses, in expenses from the amendments to the Petros Plan regulations and a reduction in tax expenses due to the extinction of the CPMF tax.

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Corporate

Our Corporate segment includes our financing activities not attributable to other segments, including corporate financial management, central administrative overhead and actuarial expenses related to our pension and health care plans for inactive participants.

Consolidated net loss for our Corporate segment increased to U.S.$1,796 million in 2007, compared to a net loss of U.S.$1,436 million in 2006. This larger net loss was primarily affected by the following items:

• a 38.2% increase in selling, general and administrative expenses, in the amount of U.S.$436 million, mainly due to personnel expenses due to staffing for our planned growth as well as increased activity in 2007, a new salary plan to make our salaries more competitive with the Brazilian labor market and the renewal of a collective bargaining agreement; and

• a one-time charge of U.S.$305 million included in other operating expenses related to the amendments in the Petros Pension Plan regulations.

These effects were partially offset by a decrease in income tax expense in the amount of U.S.$601 million due to the additional tax incentives in relating to operations in the region covered by the Northeast Development Agency (ADENE).

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Corporate

Our Corporate segment includes our financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, which include actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our Corporate segment remained relatively constant amounting, to U.S.$ 1,254 million in the nine-month period ended September 30, 2007, compared to a net loss of U.S.$ 1,279 million in the nine-month period ended September 30, 2006. This result in net loss was primarily affected by the following items:

• an increase in other operating expenses related to the amendments to certain clauses in Petros Pension Plan regulations in the amount of U.S.$ 303 million; and

• an increase in selling, general and administrative expenses, in the amount of U.S.$ 265 million, mainly due to higher personnel expenses due to the expansion of the workforce in 2006 and the collective bargaining agreement.

These effects were partially offset by a decrease in income tax expense due to the additional tax benefits related to: (1) tax incentives in the Northeast, within the region covered by the Northeast Development Agency (ADENE), granting a 75% reduction in income tax payable, calculated on the profits of the exploration of the incentived activities, in the amount of U.S.$ 587 million.

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Corporate

Our Corporate segment includes our financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, which include actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our Corporate segment decreased to U.S.$ 932 million in the first half of 2007, compared to a net loss of U.S.$ 1,224 million in the first half of 2006.

This decrease in net loss was primarily attributable to the following items:

          These effects were partially offset by:

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Corporate

Our Corporate segment includes the financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, which include actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our Corporate segment increased to U.S.$ 958 million in the first quarter of 2007, as compared to a net loss of U.S.$ 936 million in the first quarter of 2006.

This increase in net loss was primarily attributable to the following items:

• an increase in other operating expenses related to the amendments to certain clauses in Petros Plan regulations in the amount of U.S.$ 303 million; and

• an increase in selling, general and administrative expenses, in the amount of U.S.$ 96 million, mainly due to higher personnel expenses due to the increase in our workforce and salaries.

These effects were partially offset by the increase in financial income (expenses) net, which amounted to a loss of U.S.$ 137 million for the first quarter of 2007 as compared to a loss of U.S.$ 311 million for the first quarter of 2006. This increase was primarily attributable to fair value adjustments on hedge transactions, which generated a gain of U.S.$ 38 million in the first quarter of 2007 as compared to a loss of U.S.$ 328 million in the first quarter of 2006.

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Corporate

Our corporate segment includes the financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, which include actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our corporate segment increased to U.S.$ 1,461 million in 2006, as compared to a net loss of U.S.$ 1,390 million in 2005.

This increase in net loss was primarily attributable to the following items:

These effects were partially offset by the gain of U.S.$ 453 million in income tax savings, related primarily to the tax benefit derived from the provisioning of interest on capital and the increase of U.S.$ 389 million in our capitalized interest.

Corporate

Our corporate segment includes the financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, which include actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our corporate segment decreased to U.S.$ 1,299 million in the nine-month period ended September 30, 2006, as compared to a net loss of U.S.$ 1,545 million in the nine-month period ended September 30, 2005.

This decrease in net loss was primarily attributable to the gain of U.S.$ 683 million in income tax savings, related primarily to the tax benefit derived from the provisioning of interest on capital.

These effects were partially offset by the increase in selling, general and administrative expenses, mainly due to higher personnel expenses derived from the salary increase by category in accordance with the collective bargaining agreement signed at the end of the 2005, and by the entrance of new employees during 2006.

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Corporate

Our corporate segment includes the financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our corporate segment increased to U.S.$ 1,238 million in the first half of 2006, as compared to a net loss of U.S.$ 959 million in the first half of 2005.

This increase in net loss was primarily attributable to the following items:

• an increase of U.S.$ 166 million in selling, general and administrative expenses related to salaries, third party services, including information services connected with the implementation of information solutions systems for projects and services in the area of new businesses and environmental management, and the effect of the 15.0% increase in the value of the Real against U.S.$ dollars, in the first half of 2006, as compared to the first half of 2005; and 

Corporate

Our corporate segment includes the financial results and those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for our corporate segment increased to U.S.$ 936 million in the first quarter of 2006, as compared to a net loss of U.S.$ 612 million in the first quarter of 2005.

This increase in net loss was primarily attributable to the increase in financial expenses, net, which amounted to U.S.$ 311 million in the first quarter of 2006, as compared to financial expenses, net in the amount of U.S.$ 20 million in the first quarter of 2005, primarily due to the decrease in financial income primarily attributable to the reduction of fair value adjustments on gas hedge transactions that generated a loss of U.S.$ 328 million in the first quarter of 2006 as compared to a gain of U.S.$ 232 million in the first quarter of 2005. A breakdown of financial income and expenses is disclosed in Note 7 of our unaudited consolidated financial statements for the three-month period ended March 31, 2006.

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Corporate

Our corporate segment includes those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for the units that make up our corporate segment increased to U.S.$ 1,577 million in the nine-month period ended September 30, 2005, as compared to a net loss of U.S.$ 536 million in the nine-month period ended September 30, 2004. This increase in net loss was primarily attributable to:

• an increase of U.S.$ 319 million in net financial expenses, caused by losses in net financial assets exposed to exchange rate variation, following the appreciation of the real;

• an increase of U.S.$ 314 million in selling, general and administrative expenses, mainly as a result of the increase in expenses related to technical consulting services in connection with our increased outsourcing of selected non-core general activities and an increase in our expenses with employees due to the increase in our workforce and salaries;

• an increase of U.S.$ 254 million in Employee benefit expense for non-active participants, primarily attributable to an increase of U.S.$ 151 million from the annual actuarial calculation of our pension and health care plan liability; and

• to the 16.0% increase in the value of the Real against the U.S. dollar in the nine-month period ended September 30, 2005, as compared to the nine-month period ended September 30, 2004.

Corporate

Our corporate segment includes those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans for non-active participants.

Consolidated net loss for the units that make up our corporate segment increased 59.2% to U.S.$ 729 million in the first half of 2005, as compared to a net loss of U.S.$ 458 million in the first half of 2004. This increase in net loss was primarily attributable to:

• an increase of U.S.$ 180 million in selling, general and administrative expenses, mainly as a result of the increase in expenses related to technical consulting services in connection with our increased

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outsourcing of selected non-core general activities and an increase in our expenses with employees due to the increase in our workforce and salaries;

• an increase of U.S.$ 126 million in Employee benefit expense for non-active participants, primarily attributable to an increase of U.S.$ 97 million from the annual actuarial calculation of our pension and health care plan liability; and

• to the 13.4% increase in the value of the Real against the U.S. dollar in the first half of 2005, as compared to the first half of 2004.

Corporate

Our corporate segment includes those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans.

Consolidated net loss for the units that make up our corporate segment increased 49.7% to U.S.$ 455 million in the first quarter of 2005, as compared to a net loss of U.S.$ 304 million in the first quarter of 2004. This increase in net loss was primarily attributable to:

These effects were partially offset by a U.S.$ 104 million reduction in financial expenses, net, primarily attributable to reduced repurchases of our own securities during the first quarter of 2005 as compared to the first quarter of 2004, and to the 8.0% increase in the value of the Real against the U.S. dollar in the first quarter of 2005, as compared to the first quarter of 2004.

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Table of Contents

Corporate

Our corporate segment includes those activities not attributable to other segments, including corporate financial management, overhead related to central administration and other expenses, including actuarial expenses related to our pension and health care plans.

Consolidated net loss for the units that make up our corporate segment increased to U.S.$ 1,055 million during 2004, as compared to a net loss of U.S.$ 496 million during 2003. This increase in net loss was primarily attributable to:

These effects were partially offset by a U.S.$ 679 million increase in gains associated with income tax benefits, principally deferred tax benefits.

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Table of Contents