Petrobras (PBR)

Financial Income

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 14.2% to U.S.$822 million in the first half of 2009 compared to U.S.$958 million in the first half of 2008. This decrease was primarily attributable to a U.S.$139 million decrease in financial interest income from marketable securities. A breakdown of financial income is set forth in Note 11 of our unaudited consolidated financial statements as of June 30, 2009.

Financial Income

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 23.6% to U.S.$337 million in the three-month period ended March 31, 2009 compared to U.S.$441 million in the three-month period ended March 31, 2008. This decrease was primarily attributable to lower financial interest income on investments in the three-month period ended March 31, 2009 (U.S.$95 million decrease). A breakdown of financial income is set forth in Note 11 of our unaudited consolidated financial statements for the three-month period ended March 31, 2009.

Financial Income

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 increased 5.9% to U.S.$1,641 million for 2008 compared to U.S.$1,550 million for 2007. This increase was primarily attributable to gains on derivatives investments in 2008. 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 income

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 increased 35.7% to U.S.$1,133 million in the nine-month period ended September 30, 2008, compared to U.S.$835 million in the nine-month period ended September 30, 2007. This increase was primarily attributable to higher financial interest income on derivatives investments in the nine-month period ended September 30, 2008. 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 income

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 increased 42.3% to U.S.$958 million in the first half of 2008 as compared to U.S.$673 million in the first half of 2007. This increase was primarily attributable to the increase in financial interest income from gains in derivatives and increase in income from marketable securities in the first half of 2008 as compared to 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 income

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 increased 44.1% to U.S.$441 million for the first quarter of 2008 as compared to U.S.$306 million for the first quarter of 2007. This increase was primarily attributable to the increase in financial interest income from investments of U.S.$180 million in the first quarter of 2008 as compared to 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 income

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 increased 22.5% to U.S.$1,427 million for 2007 as compared to U.S.$1,165 million for 2006. This increase was primarily attributable to the increase in financial interest income from investments in the amount of U.S.$258 million 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 income

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 10.2% to U.S.$ 835 million for the nine-month period ended September 30, 2007 as compared to U.S.$ 930 million for the nine-month period ended September 30, 2006. This decrease was primarily attributable to the decrease in financial interest income from clients in the amount of U.S.$ 96 million 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 income

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 increased to a gain of U.S.$ 673 million for the first half of 2007 as compared to a gain of U.S.$ 401 million for the first half of 2006. This increase was primarily attributable to the increase in financial interest income from short-term investments in the amount of U.S.$ 220 million in the first half of 2007 as compared to the first half of 2006, resulting from the reduction in the dollar-denominated portion. 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.

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Financial income

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 increased to a gain of U.S.$ 306 million for the first quarter of 2007 as compared to a loss of U.S.$ 192 million for the first quarter of 2006. This increase was primarily attributable to the increase of fair value adjustments on hedge transactions, which increased to 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; and to an increase in financial interest income from short-term investments in the amount of U.S.$ 148 million, in the first quarter of 2007 as compared to the first quarter of 2006, resulting from the reduction in the dollar-denominated portion. 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.

Financial income

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 increased 64.1% to a gain of U.S.$ 1,165 million for 2006 as compared to U.S.$ 710 million for 2005. This increase was primarily attributable to an increase in financial interest income from short-term investments, in the amount of U.S.$ 229 million, in 2006 as a result of increased cash and cash equivalent due to increases in operational cash generation, and an increase in financial income from customers in the amount of U.S$ 147 million, as compared to 2005. 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 income

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 increased to a gain of U.S.$ 930 million for the nine-month period ended September 30, 2006 as compared to a gain of U.S.$ 141 million for the nine-month period ended September 30, 2005. This increase was primarily attributable to an increase in financial interest income from short-term investments, in the amount of U.S.$ 597 million in the nine-month period ended September 30, 2006 as compared to the same period in 2005. 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 income

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. dollars. We also hold U.S. dollars deposits.

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Financial income increased to a gain of U.S.$ 401 million for the first half of 2006 as compared to a gain of U.S.$ 113 million for the first half of 2005. This increase was primarily attributable to an increase in financial interest income from short-term investments, in the amount of U.S.$ 170 million in the first half of 2006 as compared to the same period in 2005. 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 income

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. dollars. We also hold U.S. dollars deposits.

Financial income decreased to a loss of U.S.$ 192 million for the first quarter of 2006 as compared to a gain of U.S.$ 402 million for the first quarter of 2005. This decrease was primarily attributable to the reduction of fair value adjustments on gas hedge transactions that resulted in 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.

Financial income

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 to U.S.$ 86 million for the nine-month period ended September 30, 2005 as compared to U.S.$ 545 million for the nine-month period ended September 30, 2004. This decrease was mainly due to short-term investments indexed to the U.S dollar, primarily attributable to the effect of the 16,3% appreciation of the Real against the U.S. dollar in the nine-month period ended September 30, 2005, as compared to the 1.1% appreciation of the Real against the U.S. dollar in the nine-month period ended September 30, 2004. See note 7 to our unaudited consolidated financial statements as of September 30, 2005 for a breakdown of financial income and expenses.

Financial income

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 to U.S.$ 85 million for the first half of 2005 as compared to U.S.$ 445 million for the first half of 2004. This decrease was mainly due to short-term investments indexed to the U.S dollar, primarily attributable to the effect of the 11.5% appreciation of the Real against the U.S. dollar in the first half of 2005, as compared to the 7.6% depreciation of the Real against the U.S. dollar in the first half of 2004. See note 7 to our unaudited consolidated financial statements as of June 30, 2005 for a breakdown of financial income and expenses.

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Financial Income

PIFCo’s financial income consists of the financing of sales to us and inter-company loans to us, investments in marketplace securities and other financial instruments. Our financial income increased to U.S.$442.9 million in 2003, from U.S.$219.6 million in 2002, primarily due to an increase in loans to related parties and interest received as a result of increases in the time period previously agreed with us for receipt of payments related to sales of crude oil and oil products to Petrobras from up to 120 days in early 2002 to up to 270 days beginning in May 2002 and continuing for the remainder of 2002 and throughout all of 2003, increases in the periods of time for receipt of payments beyond the time periods previously agreed with us and a modification of the interest component of the payment formula by which we reimburse PIFCo for its financing costs. In January 2003, this formula was adjusted in order to more fully pass on PIFCo’s average costs of capital to us.

Financial income

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 increased to U.S.$ 390 million for the first quarter of 2005 as compared to U.S.$ 146 million for the first quarter of 2004. This increase was primarily attributable to fair value adjustments on gas hedge transactions, which resulted in a mark-to-market gain of U.S.$ 232 million for the first quarter of 2005. See Note 7 to our unaudited consolidated financial statements as of March 31, 2005 for a breakdown of financial income and expenses.

Financial income

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 increased 51.3% to U.S.$ 911 million for 2004 as compared to U.S.$ 602 million for 2003. This increase was primarily attributable to fair value adjustments on gas hedge transactions, which was partially offset by a decrease in financial interest income from short-term investments due to higher investments in securities indexed to the U.S. dollar in 2004 when compared to 2003, resulting in lower income due to the effect of the 8.1% appreciation of the Real against the U.S. dollar during 2004, as compared to the 18.2% appreciation of the Real against the U.S. dollar during 2003. A breakdown of financial income and expenses is shown in Note 14 to our audited consolidated financial statements for the year ended December 31, 2004.