Petrobras (PBR)

Participation in the ANP’s 7^th Bidding Round for Exploratory Blocks

In the course of this bidding round, the Company acquired 96 new blocks either exclusively or in consortium, and tendered bids in 109 of the 1134 blocks offered for auction by the Agency.

Of the blocks acquired by the Company, 73 are located onshore and 23, offshore. Petrobras is to participate as the operator for 70 of these and in a non-operating capacity, for a further 26. The Company’s results in the latest round are shown below:

Petrobras successfully bid for 18 blocks in high exploratory potential areas of the Espírito Santo, Campos and Santos basins with the objective of consolidating the Company’s position in deep and ultra-deep waters where it has an existing comprehensive infrastructure and is operating on a selective basis. In addition, Petrobras obtained blocks in strategic areas of shallow waters in the Espírito Santo and Santos basins. These acquisitions will enable the Company to operate in areas where there are economically viable opportunities, the focus being on possible gas finds. In these areas, Petrobras has signed agreements for 15 blocks with Shell, Statoil, Petrogal, Devon, BG and Repsol-YPF. The Company’s average stake in these partnerships is 60%.

The acquisition of 63 blocks in mature areas in the Potiguar, Sergipe-Alagoas, Recôncavo and Espírito Santo basins is consistent with the strategy of operating in onshore areas by leveraging opportunities, and in synergy with existing production facilities. In the case of these acquisitions, Petrobras has signed partnership agreements with Petrogal, Starfish and Partex for 32 blocks and participates with an average stake of 56% in the related investments and interests.

The Company successfully tendered for 15 blocks in new exploratory frontier deep-water areas in the Potiguar basin and in the onshore São Francisco and Solimões basins. These investments are in line with Petrobras’ strategy of developing its exploratory activities in new frontier areas and are designed to ensure a sustainable “reserve/strategic production” ratio with the emphasis on increasing possible oil and gas discoveries. In 11 of these blocks where it is to operate in consortium with Petrogal, Encana and BG, the Company’s average stake is 60%.

Petrobras was the company that acquired the most blocks, 54 as partners and 42 on an exclusive basis, increasing its exploratory projects portfolio by an additional concession area of 39,871 km² (including acquisitions on a consortium basis). The Company’s total financial outlay for account of the 7^th Bidding Round was R$ 503.5 million. The success ratio in the acquisition of blocks was 88.1% .

The new concession areas will be instrumental in allowing the Company to replenish its portfolio of exploratory blocks, at the same time lengthening the portfolio’s average maturity. With the incorporation of the results of this bidding round, the Company will have enhanced its participation to more than 331 exploratory blocks. The signature of the new concession contracts is forecast for January 2006.

The active participation of Petrobras in the latest round is in line with the priorities set out in the Company’s Strategic Plan for operating prudently and profitably in a socially and environmentally responsible manner.

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.