Petrobras (PBR)

Natural Gas

Domestic natural gas production increased 0.6% due to increased production from new platforms.

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International gas production decreased 1.0% due to reduced imports of Bolivian gas until April 2009 and reduced consumption of natural gas at our gas-powered thermoelectric plants, which supplement the base hydroelectric system. This decrease was partially offset by higher production from Argentina due to the increase in our interest in the Sierra Chata gas block in the fourth quarter of 2008.

Natural Gas

Domestic natural gas production increased 1.6% due to increased production from new platforms.

5

International gas production decreased 7.8% due to reduced imports of Bolivian gas reflecting reduced demand for natural gas at our gas-powered thermoelectric plants, which supplement the base hydroelectric system. Power generation at Brazil’s hydroelectric plants increased in the first quarter of 2009 due to heavy rainfall.

Natural Gas

Domestic natural gas production increased 17.6% due to increased production from new platforms.

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International gas production decreased 8.3% due to reduced reservoir pressure in U.S. wells.

Natural Gas

Domestic natural gas production increased 17.3% due to increased production from new platforms.

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International gas production decreased 9.1% due to reduced reservoir pressure in U.S. wells.

Natural Gas

Domestic natural gas production increased 15.1% to 1,872 million cubic feet per day (Mmcfpd) in the first half of 2008, as compared to 1,626 Mmcfpd in the first half of 2007 due to the increase in the production of the new platforms mentioned above.

International gas production by the consolidated companies for the first half of 2008 decreased 7.5% to 594 Mmcfpd in the first half of 2008, compared to 642 Mmcfpd in the first half of 2007, due to the natural decline in the U.S. wells production caused by reduced reservoir pressure.

Natural Gas

Domestic natural gas production increased 10.9% to 1,824 million cubic feet per day (Mmcfpd) for the first quarter of 2008, as compared to 1,644 Mmcfpd for the first quarter of 2007 due to the operational start-up of the platforms mentioned above.

International gas production for the first quarter of 2008 remained constant as compared to the first quarter of 2007 (618 Mmcfpd).

Natural Gas

Domestic natural gas production amounted to 1,638 million cubic feet per day (Mmcfpd) for 2007, as compared to 1,656 Mmcfpd for 2006. As with our oil production, new systems to produce associated and non-associated gas offset natural decline in production.

International gas production increased 10.2% to 648 Mmcfpd for 2007, as compared to 588 Mmcfpd for 2006, due to increasing production in the United States and Bolivia.

Natural Gas

Domestic natural gas production amounted to 1,626 million cubic feet per day (Mmcfpd) for the nine-month period ended September 30, 2007, as compared to 1,656 Mmcfpd for the nine-month period ended September 30, 2006. The decrease in domestic natural gas production was primarily due to a decrease in market demand, particularly with respect to thermal power in the southeast, associated with the natural production decline, partially compensated by the start-ups of P-50 (Albacora Leste), on April 2006, FPSO-Capixaba (Golfinho), on May 2006, P-34 (Jubarte), on December 2006, Manati, on January 2007 and FPSO-Cidade do Rio de Janeiro (Espadarte), on January 2007.

International gas production increased 10.0% to 660 Mmcfpd for the nine-month period ended September 30, 2007, as compared to 600 Mmcfpd for the nine-month period ended September 30, 2006, primarily due to the due to storm-driven production stoppages in the United States.

Natural Gas

Domestic natural gas production amounted to 1,626 million cubic feet per day (Mmcfpd) for the first half of 2007, as compared to 1,656 Mmcfpd for the first half of 2006. The decrease in domestic natural gas production was primarily due to a decrease in market demand, particularly with respect to thermal power in the southeast, associated with the natural production decline, partially compensated by the start-ups of P-50 (Albacora Leste), on April 2006, FPSO-Capixaba (Golfinho), on May 2006, P-34 (Jubarte), on December 2006, Manati, on January 2007 and FPSO-Cidade do Rio de Janeiro (Espadarte), on January 2007.

International gas production increased 10.3% to 642 Mmcfpd for the first half of 2007, as compared to 582 Mmcfpd for the first half of 2006, primarily due to the resumption of normal production in the United States, which (1) had been adversely affected in 2006 by hurricanes Rita and Katrina; and (2) was positively affected by the start-up of production in the Cottonwood field in February 2007.

Natural Gas

Domestic natural gas production remained relatively constant, amounting to 1,644 million cubic feet per day (Mmcfpd) for the first quarter of 2007, as compared to 1,620 Mmcfpd for the first quarter of 2006.

International gas production increased 4.0% amounting 618 Mmcfpd for the first quarter of 2007 and 594 Mmcfpd for the first quarter of 2006, due to the resumption of normal production in the United States, which was still experiencing adverse effects from hurricanes Rita and Katrina, in the first quarter of 2006.

Natural Gas

Domestic natural gas production remained relatively constant, amounting to 1,656 million cubic feet per day (Mmcfpd) for 2006, as compared to 1,644 Mmcfpd for 2005.

International gas production remained relatively constant, amounting 588 Mmcfpd for 2006 and 576 Mmcfpd for 2005.

Natural Gas

Domestic natural gas production remained relatively constant, amounting 1,656 million cubic feet per day (Mmcfpd) for the nine-month period ended September 30, 2006, as compared to 1,644 Mmcfpd for the nine-month period ended September 30, 2005.

International gas production remained relatively constant, amounting 600 million cubic feet per day for the nine-month period ended September 30, 2006, as compared to 588 million cubic feet per day for the nine-month period ended September 30, 2005.

Natural Gas

Domestic natural gas production remained relatively constant amounting 1,656 million cubic feet per day (Mmcfpd) for the first half of 2006, as compared to 1,650 Mmcfpd for the first half of 2005.

International gas production remained constant amounting 588 million cubic feet per day for the first half of 2006 and for the first half of 2005.

Natural Gas

Domestic natural gas production remained relatively constant amounting 1,620 million cubic feet per day (Mmcfpd) for the first quarter of 2006, as compared to 1,596 Mmcfpd for the first quarter of 2005.

International gas production remained relatively constant amounting 594 million cubic feet per day for the first quarter of 2006, as compared to 588 million cubic feet per day for the first quarter of 2005.

Natural Gas

Domestic natural gas production increased 3.4% to 1,644 million cubic feet per day (Mmcfpd) for the nine-month period ended September 30, 2005, as compared to 1,590 Mmcfpd for the nine-month period ended September 30, 2004. This increase was primarily the result of the Cabiúnas project, which is a program designed to meet the petrochemical sector’s increased demands for natural gas.

International gas production increased 3.2% to 588 million cubic feet per day for the nine-month period ended September 30, 2005, as compared to 570 million cubic feet per day for the nine-month period ended September 30, 2004, principally due to increased production at the Bolivia unit, following the increase in gas demand in Brazil and Argentina.

Natural Gas

Domestic natural gas production increased 5.0% to 1,650 million cubic feet per day (Mmcfpd) for the first half of 2005, as compared to 1,572 Mmcfpd for the first half of 2004. This increase was primarily the result of the Cabiúnas project, which is a program designed to meet the petrochemical sector’s increased demands for natural gas.

International gas production increased 5.4% to 588 million cubic feet per day for the first half of 2005, as compared to 558 million cubic feet per day for the first half of 2004, principally due to increased production at the Bolivia unit, following the increase in gas demand in Brazil and Argentina.

Natural Gas

Pipelines

Our main pipeline investment has been the development and construction of the Bolivia-Brazil natural gas pipeline, which has a total capacity of 1,060 MMscfd (30 MMcmd). The pipeline is 1,969 miles (3,150 kilometers) in length, representing 40% of the existing Brazilian onshore gas pipelines, and running from Rio Grande in Bolivia to Porto Alegre in Southern Brazil. The Bolivia-Brazil pipeline connects to our domestic pipeline system that transports natural gas from the Campos and Santos Basins. We are a significant investor in the Bolivia-Brazil natural gas pipeline, holding an 11% interest in GTB—Gas TransBoliviano S.A., or GTB, the corporate entity owning the Bolivian portion of the pipeline, and a 51% interest in TBG—Transportadora Brasileira do Gasoduto Bolívia-Brasil S.A., or TBG, the corporate entity owning the Brazilian portion of the pipeline. This pipeline is currently in operation and it supplies gas to some of our power and petrochemical plants, including the Uruguaiana Power Plant and the Triunfo Petrochemical Plant.

Our investment in the Bolivia-Brazil gas pipeline was the result of a 1996 gas supply agreement, or the GSA, for the purchase of natural gas between the Bolivian state oil company, Yacimientos Petrolíferos Fiscales Bolivianos –YPFB, and us. The GSA requires us to purchase from YPFB minimum specified quantities of natural gas transported through the pipeline over a 20-year term.

We are also investing in other major domestic natural gas projects: Cabiúnas, the Southeast and the Northeast Gas Pipeline networks, Urucu – Manaus Gas Pipeline and the Southeast – Northeast Gas Pipeline (GASENE).

The Cabiúnas project comprises transportation and processing facilities of natural gas from the offshore oil fields in the Campos Basin to the State of Rio de Janeiro, and includes the construction of an undersea facility for storage of natural gas during declines in consumption. We expect this project to be operational by the second

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semester of 2005 and to increase transportation capacity from the current 290 million cubic feet (8.2 million cubic meters) per day to a total of 476 million cubic feet (13.5 million cubic meters) per day of associated gas while reducing the volumes of natural gas currently flared on offshore platforms and alleviating existing constraints on oil production from these platforms. In 2004, the average daily volume of natural gas flared on the offshore platforms of the Campos Basin was 88 million cubic feet (2.5 million cubic meters).

We are currently developing the Southeast and the Northeast Gas Pipeline Networks (Malha Sudeste and Malha Nordeste) jointly with private capital investors (the Malhas Project). These projects will create additional transportation capacity by expanding the existing natural gas infrastructure and delivering natural gas to markets in the Northeast and Southeast regions of Brazil. These projects include the construction of an approximately 890-mile (1,423 kilometers) pipeline network, which is expected to start operations in 2007, at a total cost of approximately U.S.$1,000 million. We are currently negotiating with private capital investors an additional investment of U.S.$900 million for this gas pipeline network.

We are negotiating a long-term financing for a project to deliver natural gas to the states of Amazonas in Northern Brazil (Urucu – Manaus Gas Pipeline). Another long term financing is being negotiated for the Southeast-Northeast Gas Pipeline (GASENE). This pipeline, with a length of 1,280 kilometers, will connect the Southeast and Northeast gas pipeline networks allowing the interconnection of the Brazilian natural gas network system (Rede Básica de Transporte de Gás Natural). This pipeline will link more gas supply sources to demand and increase the existing gas pipeline network’s overall reliability.

Local Distribution Companies

We sell natural gas in Brazil to local gas distribution companies, as under Brazilian law, each state has the monopoly right to distribute gas within a certain region. Most states established companies to act as local gas distributors and sold minority interests in them. We have invested actively in local gas distribution companies, and we currently have minority interests in 19 natural gas distribution companies from a total of 26 existing companies. Of the 19 companies in which we have minority interests, 14 are currently in operation. These companies have an aggregate pipeline extension of 1,800 miles (2,900 kilometers). In 2004, these gas distribution companies sold an average of 585.7 million cubic feet of natural gas per day (16.4 million cubic meters) and generated total net operating revenues of R$2.6 billion (U.S.$0.9 billion), as compared to R$2.4 billion (U.S.$0.8 billion) in 2003. We invested in gas distribution companies through BR until March 2002, and subsequently sold these investments to our subsidiary, Petrobras Gás S.A.–Gaspetro. In the State of Espírito Santo, we have the exclusive rights to distribute natural gas through BR.

In December 2004, Gaspetro acquired a 40% equity interest in Gasmig, the gas distribution company of the State of Minas Gerais, from Cemig for R$154 million (U.S.$58 million). In connection with this acquisition, we assumed the obligation to construct natural gas pipelines to be financed by Cemig. In 2004, Gaspetro also increased its participation in CEG-Rio, the gas distribution company of the State of Rio de Janeiro, by acquiring an additional 9.86% of common shares and 13.68% of preferred shares from Gás Natural SGD for R$46.8 million (U.S.$16.5 million). Gaspetro now holds 26.2% and 43.4% of CEG-Rio’s common and preferred shares, respectively.

We serve as the technical and commercial operator in all of the distribution companies in which we have a minority shareholding stake. Each of the distribution companies in operation in which we have an interest has entered into long term gas supply contracts with us under which such companies have gas purchase obligations (in the case of contracts relating to Brazilian gas), and ship-or-pay and gas purchase obligations (in the case of contracts relating to Bolivian gas or with thermoelectric power producers). These ship-or-pay and gas purchase contracts do not permit net settlement by either the buyer or the seller, and no market mechanism exists for net settlement.

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The following table sets forth our domestic sales of natural gas to affiliated and non-affiliated local distribution companies for each of 2004, 2003 and 2002:

Natural Gas

Domestic natural gas production increased 1.9% to 1,596 million cubic feet per day (Mmcfpd) for the first quarter of 2005, as compared to 1,566 Mmcfpd for the first quarter of 2004. This increase was primarily the result of the Cabiúnas project, which is a program designed to meet the petrochemical sector’s increased demands for natural gas.

International gas production increased 6.5% to 588 million cubic feet per day for the first quarter of 2005, as compared to 552 million cubic feet per day for the first quarter of 2004, principally due to increased production in Bolivia as a result of increased demand in Brazil and Argentina.

Natural Gas

Domestic natural gas production increased 6.0% to 1,590 million cubic feet per day (Mmcfpd) for 2004, as compared to 1,500 Mmcfpd in 2003. This increase was primarily the result of the Cabiúnas project, which is a program designed to meet the petrochemical sector’s increased demands for natural gas. International natural gas production increased 10.6% to 564 Mmcfpd in 2004, as compared

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to 510 Mmcfpd in 2003, mainly due to (1) increased production of Bolivian gas, driven by increased demand in the Brazilian market; and (2) additional natural gas sales from Bolivia to Argentina, beginning in June 2004.