Petrobras (PBR)

Equity in Results of Non-Consolidated Companies

Equity in results of non-consolidated companies decreased 35.6% to a gain of U.S.$215 million in the first half of 2009 compared to a gain of U.S.$334 million in the first half of 2008, due mainly to a U.S.$88 million loss from investments in international subsidiaries.

Equity in Results of Non-Consolidated Companies

Equity in results of non-consolidated companies decreased to a loss of U.S.$15 million in the three-month period ended March 31, 2009 compared to a gain of U.S.$81 million in the three-month period ended March 31, 2008, due mainly to losses from international companies in Argentina and Venezuela.

Equity in Results of Non-Consolidated Companies

Equity in results of non-consolidated companies decreased to a loss of U.S.$21 million for 2008 compared to a gain of U.S.$235 million for 2007, due mainly to losses from investments in affiliated petrochemical companies, principally Quattor Companhia Petroquímica (U.S.$126 million) and Braskem S.A. (U.S.$116 million), caused by foreign exchange variation expenses related to debt.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to U.S.$296 million in the nine-month period ended September 30, 2008, compared to U.S.$172 million in the nine-month period ended September 30, 2007, due mainly to gains from investments in affiliated companies of Petrobras Distribuidora S.A. – BR (U.S.$27 million), petrochemical companies (U.S.$45 million) and in Petrobras International Braspetro B.V. (U.S.$25 million).

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to U.S.$334 million in the first half of 2008, compared to U.S.$75 million in the first half of 2007, primarily as a result of the increase in gains in investments in affiliated companies of Petrobras Distribuidora S.A. - BR (U.S.$26 million); Petroquisa (U.S.$157 million) and Petrobras International Braspetro B.V. (U.S.$41 million).

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased 179.3% to U.S.$81 million for the first quarter of 2008, compared to U.S.$29 million for the first quarter of 2007, primarily as a result of the increase in gains in investments in affiliated companies of Petrobras Distribuidora S.A. - BR (U.S.$12 million) and UEG Araucária LTDA (U.S.$14 million).

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to U.S.$235 million for 2007, compared to U.S.$28 million in 2006, primarily as a result of the increase in gains in investments in affiliated companies of Petrobras Gás S.A - Gaspetro (U.S.$71 million), Petrobras Química S.A. - Petroquisa (U.S.$62 million) and of Petrobras International Braspetro B.V – PIB (U.S.$37 million).

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to U.S.$172 million for the nine-month period ended September 30, 2007, as compared to U.S.$ 36 million for the nine-month period ended September 30, 2006, primarily as a result of the increase in gains in investments in affiliated companies of Petrobras Gás S.A - Gaspetro (U.S.$. 48 million) and of Petrobras International BRASPETRO B.V – PIB (U.S.$ 63 million).

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to a gain of U.S.$ 75 million for the first half of 2007, as compared to a gain of U.S.$ 57 million for the first half of 2006, primarily as a result of the increase in gains in investments in Companhia Mega.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased to a gain of U.S.$ 29 million for the first quarter of 2007, as compared to a gain of U.S.$ 10 million for the first quarter of 2006, primarily as a result of decrease in losses in investments in certain affiliated companies of Petrobras Distribuidora S.A in the amount of U.S.$ 15 million.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 79.9% for a gain of U.S.$ 28 million for 2006, as compared to a gain of U.S.$ 139 million for 2005, primarily as a result of losses in investments in certain affiliated companies of Petrobras Distribuidora S.A, in the amount of U.S.$ 52 million and in certain affiliated companies of Petrobras S.A, in the amount of U.S.$ 43 million.

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Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 68.1% for a gain of U.S.$ 36 million for the nine-month period ended September 30, 2006, as compared to a gain of U.S.$ 113 million for the nine-month period ended September 30, 2005, primarily as a result of losses in investments in certain affiliated companies of Petrobras Distribuidora S.A, in the amount of U.S.$ 36 million.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 23.0% to a gain of U.S.$ 57 million for the first half of 2006, as compared to a gain of U.S.$ 74 million for the first half of 2005, primarily as a result of losses in investments in certain affiliated companies of Petrobras Distribuidora S.A, in the amount of U.S.$ 21 million.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 56.5% to a gain of U.S.$ 10 million for the first quarter of 2006, as compared to a gain of U.S.$ 23 million for the first quarter of 2005, primarily as a result of losses in investments in certain affiliated companies of Petrobras Distribuidora S.A, in the amount of U.S.$ 21 million.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 19.2% to a gain of U.S.$ 139 million for 2005, as compared to a gain of U.S.$ 172 million for 2004, primarily due to the results of our investments in: (a) certain thermoelectric and petrochemical companies being lower as certain of these entities have been subsequently purchased and are now consolidated on a line by line basis; and (b) as a result of losses in investments in certain affiliated companies of Petrobras Energia Venezuela S.A, in the amount of U.S.$ 19 million.

We derive financial income from several sources, including interest on cash and cash equivalents. The majority of our cash equivalents are short-term Brazilian government securities, including securities indexed to the U.S. dollar. We also hold U.S. dollar deposits.

Financial income decreased 25.7% to U.S.$ 710 million for 2005 as compared to U.S.$ 956 million for 2004. This decrease was primarily attributable to the reduction of fair value adjustments on gas hedge transactions in the amount of U.S.$ 460 million.

This decrease was partially offset by an increase in financial interest income from short-term investments, in the amount of U.S.$ 138 million, primarily attributable to increased investments in securities in 2005 as compared to 2004, due to higher amount of cash and cash equivalents. A breakdown of financial income and expenses is shown in Note 14 to our consolidated financial statements for the year ended December 31, 2005.

Financial expenses decreased 31.4% to U.S.$ 1,189 million for 2005, as compared to U.S.$ 1,733 million for 2004. This decrease was primarily attributable to:

• a U.S.$ 345 increase in our interest expense capitalized as part of the cost of construction and development of crude oil and natural gas production projects. A breakdown of financial income and expenses is shown in Note 14 to our consolidated financial statements for the year ended December 31, 2005;
  
  
• a U.S.$ 130 million decrease of expenses related to hedge transactions. A breakdown of financial income and expenses is shown in Note 14 to our consolidated financial statements for the year ended December 31, 2005; and
  
  
• a U.S.$ 120 million decrease in expenses relating to repurchases of our own securities.
  
  

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Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 19.9% to a gain of U.S.$ 113 million for the nine-month period ended September 30, 2005 as compared to a gain of U.S.$ 141 million for the nine-month period ended September 30, 2004, primarily due to the results of our investments in certain thermoelectric and petrochemical companies.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 27.5% to a gain of U.S.$ 74 million for the first half of 2005 as compared to a gain of U.S.$ 102 million for the first half of 2004, primarily due to the results of our investments in certain thermoelectric companies.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies registered a gain of U.S.$141 million for 2003, as compared to a loss of U.S.$178 million for 2002. This increase was primarily attributable to:

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies decreased 57.4% to a gain of U.S.$ 23 million for the first quarter of 2005, as compared to a gain of U.S.$ 54 million for the first quarter of 2004.

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This decrease was mainly attributable to a gain of U.S.$ 7 million for the first quarter of 2005, as compared to a gain of U.S.$ 28 million for the first quarter of 2004, from our investments in natural gas distribution activities.

Equity in results of non-consolidated companies

Equity in results of non-consolidated companies increased 22.0% to a gain of U.S.$ 172 million for 2004, as compared to a gain of U.S.$ 141 million for 2003, due primarily to a U.S.$ 21 million gain as a result of the consolidation of PEPSA and PELSA and their equity method investees for the full year in 2004, as opposed to approximately seven months in 2003.

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