Petrobras (PBR)

Financial Expenses

Financial expenses increased 6.2% to U.S.$482 million in the first half of 2009 compared to U.S.$454 million in the first half of 2008. This increase was primarily attributable to increased financial expenses related to our debt (U.S.$297 million increase) and higher losses on derivative instruments (U.S.$199 million increase) in the first half of 2009. These increases were partially offset by a 19.3% (U.S.$163 million) increase in capitalized interest. A breakdown of financial expenses is set forth in Note 11 of our unaudited consolidated financial statements as of June 30, 2009.

Financial Expenses

Financial expenses increased 15.6% to U.S.$126 million in the three-month period ended March 31, 2009 compared to U.S.$109 million in the three-month period ended March 31, 2008. This increase was primarily attributable to increased financial expenses related to our debt in the three-month period ended March 31, 2009 (U.S.$138 million increase). These increases were partially offset by a 15.4% (U.S.$ 60 million) increase in capitalized interest. A breakdown of financial expenses is set forth in Note 11 of our unaudited consolidated financial statements for the three-month period ended March 31, 2009.

Financial Expenses

Financial expenses increased 25.3% to U.S.$848 million for 2008 compared to U.S.$677 million for 2007, primarily due to the increase in losses on derivative investments. A breakdown of financial income and expenses is set forth in Note 13 of our consolidated financial statements for the year ended December 31, 2008.

Financial expenses

Financial expenses increased 8.5% to U.S.$624 million in the nine-month period ended September 30, 2008, as compared to U.S.$575 million in the nine-month period ended September 30, 2007. A breakdown of financial income and expenses is set forth in Note 11 of our unaudited consolidated financial statements for the nine-month period ended September 30, 2008.

Financial expenses

Financial expenses decreased 1.3% to U.S.$454 million in the first half of 2008, as compared to U.S.$460 million in the first half of 2007. A breakdown of financial income and expenses is set forth in Note 11 of our unaudited consolidated financial statements for the six-month period ended June 30, 2008.

Financial expenses

Financial expenses increased 2.8% to U.S.$109 million for the first quarter of 2008, as compared to U.S.$106 million for the first quarter of 2007. A breakdown of financial income and expenses is set forth in Note 11 of our consolidated financial statements for the three-month period ended March 31, 2008.

Financial expenses

Financial expenses decreased 58.7% to U.S.$554 million for 2007, as compared to U.S.$1,340 million for 2006. This decrease was primarily attributable to the decrease of U.S.$414 million of losses on derivative instruments and U.S.$122 million of repurchased securities losses in 2007 as compared to 2006. A breakdown of financial income and expenses is set forth in Note 13 of our consolidated financial statements for the year ended December 31, 2007.

Financial expenses

Financial expenses decreased 59.3% to U.S.$ 575 million for the nine-month period ended September 30, 2007, as compared to U.S.$ 1,414 million for the nine-month period ended September 30, 2006. This decrease was primarily attributable to the decrease of U.S.$ 399 million of losses on derivative instruments and U.S.$ 131 million of repurchased securities losses and a increase of U.S.$ 243 million on capitalized interest in the nine-month period ended September 30, 2007 as compared to the nine-month period ended September 30, 2006. A breakdown of financial income and expenses is set forth in Note 11 of our unaudited consolidated financial statements for the nine-month period ended September 30, 2007.

Financial expenses

Financial expenses decreased 48.7% to U.S.$ 460 million for the first half of 2007, as compared to U.S.$ 896 million for the first half of 2006. This decrease was primarily attributable to the decrease of U.S.$ 423 million of losses on derivative instruments in the first half of 2007 as compared to the first half of 2006. A breakdown of financial income and expenses is set forth in Note 8 of our unaudited consolidated financial statements for the six-month period ended June 30, 2007.

Financial expenses

Financial expenses decreased 54.1% to U.S.$ 106 million for the first quarter of 2007, as compared to U.S.$ 231 million for the first quarter of 2006. This decrease was primarily attributable to the decrease of U.S.$ 31 million in expenses related to our project financings; and by the increase of U.S.$ 68 million in our capitalized interest 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 disclosed in Note 8 of our unaudited consolidated financial statements for the three-month period ended March 31, 2007.

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Financial expenses

Financial expenses increased 12.7% to U.S.$ 1,340 million for 2006, as compared to U.S.$ 1,189 million for 2005. This increase was primarily attributable to the increase of U.S.$ 378 million of losses on derivatives instruments principle due to cancellation of gas hedge contract; and U.S.$ 143 million of losses with repurchased securities. These increases were partially offset by the increase of U.S.$ 389 million in our capitalized interest 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 disclosed in Note 13 to our consolidated financial statements for the year ended December 31, 2006.

Financial expenses

Financial expenses increased 55.6% to U.S.$ 1,414 million for the nine-month period ended September 30, 2006, as compared to U.S.$ 909 million for the nine-month period ended September 30, 2005. This increase was primarily attributable to the increase of U.S.$ 530 million of fair value adjustments on gas hedge transactions in the nine-month period ended September 30, 2006 as compared to the nine-month period ended September 30, 2005. This increase was partially offset by the increase of U.S.$ 299 million in our capitalized interest 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 disclosed in Note 8 of our unaudited consolidated financial statements for the nine-month period ended September 30, 2006.

Financial expenses

Financial expenses increased 20.4% to U.S.$ 896 million for the first half of 2006, as compared to U.S.$ 744 million for the first half of 2005. This increase was primarily attributable to the increase of U.S.$ 396 million of fair value adjustments on gas hedge transactions in the first half of 2006 as compared to the first half of 2005. This increase was partially offset by the increase of U.S.$ 209 million in our capitalized interest 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 disclosed in Note 8 of our unaudited consolidated financial statements for the six-month period ended June 30, 2006.

Financial expenses

Financial expenses decreased 46.4% to U.S.$ 231 million for the first quarter of 2006, as compared to U.S.$ 431 million for the first quarter of 2005. This decrease was primarily attributable to a U.S.$ 107 million increase in our capitalized interest as part of the cost of construction and development of crude oil and natural gas production projects; and to a decrease of U.S.$ 86 million in losses on derivative instruments. 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.