Petrobras (PBR)

Milestone Mutual Conciliation and Waiver Agreement (“Milestone Agreement”)

In order to clean up the finances of Compañia de Inversiones de Energia S.A. – CIESA, a company jointly controlled by PESA and ENRON, PESA transferred its interest of 7,35% in the capital of Transportadora de Gás Del Sur S.A. – TGS (a subsidiary of CIESA) to ENRON, and ENRON simultaneously transferred 40% of its interest in the capital of CIESA to a trustee. Once the approvals required from Ente Nacional Regulador Del Gas (National Gas Regulator) and Comisión Nacional de Defensa de la Competencia (National Competence Defense Commission) have been obtained, ENRON shall transfer the remaining 10% interest in CIESA to the financial creditors in exchange for 4,3% of the class B common shares in TGS held by CIESA, in part payment of the debt. The remaining balance of the financial debt shall be capitalized by the creditors.

Once the debt has been restructured and following the simultaneous share transfers mentioned above, ownership of the CIESA shares held under fiduciary ownership by the trust will be transferred to Petrobras Energia S.A. and Petrobras Hispano Argentina S.A., new shares will be issued to the creditors, and the share capital of CIESA will then be comprised as follows: ( i ) Class A shares held directly and indirectly by Petrobras Energia S.A. accounting for 50% of CIESA’s total and voting capital. and ( ii ) Class B shares held by CIESA’s financial creditors, accounting for the remaining 50% of CIESA’s total and voting capital.

As it is operating under long-term constraints which significantly hinder its capacity to transfer capital to investors, CIESA is being excluded from the consolidation process of PESA and consequently from the consolidation process of PETROBRAS, pursuant to CVM 247/96.