Petrobras (PBR)

Major factors that contributed to build up net income in 1S-2005:

• Increase in the average realization price (PMR) of basic oil products in the local market (specially gas and Diesel) and increase in the PMR for exports, reflecting the major crude oil quotes in the foreign market, which contributed to an increase (25%) in Net Operating Revenues in 1S-2005, as compared to the same period in 2004.

• Increase in the Brazilian crude oil and NGL production (12%) over 1S-2004, generating an increase in the participation of national crude oil in the total volume processed by the refineries (80% in 1S-2005 as compared to 75% in the same 2004 period).

• Increase in health care costs (Assistência Médica Suplementar (AMS))and pension costs (Petros Plan), as a result of the actuarial calculation review carried out at the end of 2004.

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• Litigation costs as a result of unfavorable decisions or judicial agreements and contingencies in the amount of R$ 328 million.

• Non-commercial or dry well expenditures charged to income for the six-month amounting to R$ 127 million.

• Equity in significant investments in Petrobrás System represented a gain of R$ 1.003 million in income for the first six-month period of 2005.

• Decrease in Tax Expenses, as a result of changes, as from August /04, in legislation on PASEP/COFINS, which reduced the rates on financial income to zero.

• Tax economy of R$ 746 million, resulting from accrual, in June 2005, of interest on shareholders´ equity.