Petrobras (PBR)

Impairment of Oil and Gas Properties

For 2008, we recorded an impairment charge of U.S.$519 million, compared to U.S.$271 million for 2007. The impairment charge in 2008 was primarily attributable to goodwill impairment at Petrobras’ indirect subsidiary in the United States, Pasadena Refining System (U.S.$223 million) and to impairment at Petrobras´ Guajá field and other producing properties in Brazil due to reduced year-end international oil prices (U.S.$171 million). The impairment charge in 2007 was primarily related to international investments, principally in Ecuador (U.S.$174 million) due to tax and legal changes implemented by the government, the United States (U.S.$39 million) and Angola (U.S.$13 million). See Notes 9(b) and 18(a) to our consolidated financial statements for the year ended December 31, 2008.

Impairment of oil and gas properties

For 2007, we recorded an impairment charge of U.S.$271 million, compared to U.S.$21 million for 2006. The impairment charge was related primarily to international investments, principally in Ecuador (U.S.$174 million), due to the tax and legal changes implemented by the government; the United States (U.S.$39 million) and Angola (U.S.$13 million). The impairment charge in 2006 was related primarily to our Córrego de Pedras on-shore field in Brazil. See Note 9(b) and 9(d) to our consolidated financial statements for the year ended December 31, 2007.

Impairment of oil and gas properties

For 2006, we recorded an impairment charge of U.S.$ 21 million, as compared to an impairment charge of U.S.$ 156 million for 2005. During 2006, the impairment charge was primarily related to producing properties in Brazil and principle amounts were related to our Córrego de Pedras on-shore field. During 2005, the impairment charge was primarily related to a loss in some of our investments in Venezuela (U.S.$ 134 million), due to the tax and legal changes implemented by the Ministry of Energy and Petroleum of Venezuela (MEP) in connection with its nationalization measures. See note 9 (c) and 9(e) to our consolidated financial statements for the year ended December 31, 2006.

Impairment of oil and gas properties

For 2003, we recorded an impairment charge of U.S.$70 million, as compared to an impairment charge of U.S.$75 million for 2002. In 2003, the impairment charge was related to certain of our oil and gas producing properties in Brazil, Colombia and Angola. In 2002, the impairment charge was related to certain of our oil and gas producing properties in Brazil and Angola. These charges were recorded based upon our annual assessment of our fields using prices consistent with those used in our overall strategic plan and discounted at a rate of 13%.

Impairment of oil and gas properties

For 2004, we recorded an impairment charge of U.S.$ 65 million, as compared to an impairment charge of U.S.$ 70 million for 2003. The impairment charge in 2004 related to capital expenditures for Brazilian fields in production, but with only marginal reserves. We also recorded an impairment charge of U.S.$ 13 million due to goodwill assessment. In 2003, the impairment charge was related to certain of our oil and gas producing properties in Brazil, Colombia and Angola. These charges were recorded based upon our annual assessment of these fields using prices consistent with those used in our overall strategic plan and discounted at a rate of 10%, a rate consistent with the rate used for internal project valuations.

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