PROCUREMENT POLICY AND CRITICAL EQUIPMENT SUPPLY

1. PROCUREMENT POLICY AND CRITICAL EQUIPMENT SUPPLY João Henrique Rittershaussen Material Engineering Manager Petrobras Procurement Department May 2010

2. DISCLOSURE & IMPORTANT NOTICE The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments.

3. Project Forecast Local Content Supply Policy Brazilian Companies Critical Goods and Services Petrobras Goods and Services Contracts Supplying Goods and Services to Petrobras Relevant Equipment Demand Conclusions PRESENTATION SUMMARY

4. PROJECT FORECAST

5. Petrobras Investments Projects in BrazilExploration & Production (Business Plan 2009 – 2013)

6. Petrobras Investments Projects in BrazilMaritime Transportation – PROMEF I PROMEF I – 26 Large Vessels 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 2006 10 Suezmax 4 Products 4 Panamax 3 LPG 5 Aframax To be Contracted Contracted Finished Ongoing PROMEF I: Modernization and Expansion of Petrobras´ Petroleum Fleet (1st phase) PROMEF I: Modernization and Expansion of Petrobras´ Petroleum Fleet (1st phase)

7. Petrobras Investments Projects in BrazilMaritime Transportation – PROMEF Ii PROMEF II – 23 Large Vessels 2017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Products and LPG in bidding process 3 Bunker 8 Products 5 LPG 4 Suezmax 3 Aframax To be Contracted Contracted Finished Ongoing PROMEF II: Modernization and Expansion of Petrobras´ Petroleum Fleet (2nd phase)

8. Petrobras Investments Projects in BrazilSupply Boats – 3rd Fleet Renew Plan AHTS: Anchor Handling OSRV: Oil Recovery PSV: Supply Boat T 15000: Towboats 3nd Renew Fleet Plan – 146 Supply Boats 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PSV 3000 (49) PSV 4500 (15) OSRV (18) T 15000 (10) AHTS 18000 (46) AHTS 21000 (8) Planned Ongoing

9. Petrobras Investments Projects in BrazilRefineries Revamps and Modernization Finished Ongoing Planned

10. Petrobras Investments Projects in BrazilGas, Power and Pipelines Finished Ongoing Planned

11. Critical Resources CHALLENGES Equipment Human Resources Cost Inflation HOW PETROBRAS IS DEALING Aggressive bidding program for rigs, support vessels and anchor handlers, mainly new built units Long-term contract with service providers Anticipating the renew of current contracts Supporting the expansion of the suppliers installed capacity Training programs for its own employees and for the supply chain workforce

12. LOCAL CONTENT SUPPLY POLICY

13. Supply Policy to maximize Local Content LOCAL CONTENT – SUPPLY POLICY • Petrobras recognizes in the local supplying market, opportunities to improve cost effectiveness and quality standards for the present and future projects; • Local suppliers usually provide After Sales faster and friendlier when compared with the foreign companies; Petrobras Local Content Policy • Petrobras focuses on competitiveness and sustainability in the supply market (in Brazil or abroad); • The Petrobras Local Content policy is connected and contributes to the Petrobras Social Responsibility Policy.

14. Supply policy to maximize local content Petrobras (as G&S purchasing company) Minimum Local Content requirement in contracts for oil field development Local content - also for G&S in downstream contracts Local content (Manual for Local Content Assessment) Calculated with specific methodology to measure the real value of locally manufactured goods and services. Financing Agent (BNDES - development bank) Minimum Local Content requirement for financing concession Brazilian Regulatory Agency (ANP) Minimum Local Content requirement in 9 bidding rounds of exploratory blocks (since 1997) LOCAL CONTENT – SUPPLY POLICY

15. BRAZILIAN COMPANIES

16. BRAZILIAN COMPANIES • ‘Brazilian companies’ means companies that have manufacturing processes and after-sales services in Brazil, thus creating jobs and collecting taxes in the country.

17. CRITICAL GOODS AND SERVICES

18. CRITICAL EQUIPMENT Special alloys (for boiler works) and forged alloys Pipelines 14-42” diameter with longitudinal welding; Polished rods with centering guides; Polyester cables and mooring systems; Drilling pipes and fiberglass pipes; Electrical cables for CSP (Centrifugal submersible pumping); Well control systems, oil and gas metering systems for drilling activities; Offshore drilling rigs; GravelPacking; Drilling bits; Production pipes with special alloy coatings (13 Cr, Super 13 Cr); Pumps - API standards; Electrical dry transformers; Bottlenecks and challenges Infrastructure Technology Staff 1 Insufficient Basic Technological Product Low local Low R&D Process Professional Sectors fulfilment of Industrial Engineering Basis portfolio content Activity Technology Qualification 2 future demands Technology Steel Mills 1 1 0 0 0 0 0 0 0 0 1 Pipelines 3 1 2 0 0 0 0 0 0 0 0 Metalurgical Tecnology 2 Flanges and Connections Boiler Works Rods and Socker Road Pumps 0 1 0 0 0 0 0 0 0 0 3 Subsea 1 1 1 1 1 0 0 0 0 0 4 Pumps 1 1 0 0 1 0 0 0 0 0 5 Transforming Industry Compressors Mechanical Technology Gas and Diesel Engines 4 Turbines 1 0 0 1 0 0 Marine parts Cranes and Hoists Valves and City Gates Generators and Electrical Engines 1 0 0 0 0 0 0 0 0 0 Electric Technology Substations and Transformers 0 1 0 0 0 0 0 0 6 Automation and Instrumentation Engineering Services Services Construction and Assembly Services 5 Incentive to R&D activities in Brazill (Not a priority) 6 Sources: Institute of Economy UFRJ COMPETITIVENESS DIAGNOSIS OF BRAZILIAN INDUSTRY HIGH COMPETITIVENESS SECTORS Actions Incentive to domestic production of components Increase of production capacity Sources: Institute of Economy UFRJ and Petrobras

19. IMPORTED COMPONENTS Bottlenecks and challenges Infrastructure Technology Staff Insufficient Basic Technological Product Low local Low R&D Process Professional Sectors fulfilment of Industrial Engineering Basis portfolio content Activity Technology Qualification future demands Technology Steel Mills 1 1 0 0 0 0 0 0 0 0 A 1 Christmas Trees – forged alloys and electronic systems; Umbilicals: Nylon 11,inox flexible pipes and aramid fiber; Flexible pipelines: External polymers and alloys; Imported assemblies Roller bearings and automation Steel and copper plates Pipelines 1 2 0 0 0 0 0 0 0 0 Metalurgical Tecnology 2 Flanges and Connections Boiler Works Rods and Socker Road Pumps 0 1 0 0 0 0 0 0 0 0 3 A Subsea 1 1 1 1 1 0 0 0 0 0 4 Pumps 1 1 0 0 1 0 0 0 0 0 5 Transforming Industry Compressors Mechanical Technology Gas and Diesel Engines Turbines 1 0 0 1 0 0 Marine parts Cranes and Hoists B Valves and City Gates B Generators and Electrical Engines 1 0 0 0 0 0 0 0 0 0 Electric Technolog Substations and Transformers 0 1 0 0 0 0 0 0 6 Automation and Instrumentation Engineering Services Services Construction and Assembly Services COMPETITIVENESS DIAGNOSIS OF BRAZILIAN INDUSTRY HIGH COMPETITIVENESS SECTORS Actions Incentive to domestic production of components Increase of production capacity Sources: Institute of Economy UFRJ

20. CRITICAL EQUIPMENT HCC Reactors (250-300 mm wall width 200kgf/cm2 internal pressure) Boiler works with special alloys (reactors, towers and pressure vessels) Boilers (steam generators); High pressure heat exchangers with H2S traces Structured packing for process towers Moto-compressor and bare compressor Heavy engines Offshore and marine cranes Special submarine sphere valves Forged valves Basic and thermal design Bottlenecks and challenges Infrastructure Technology Staff Insufficient Basic Technological Product Low local Low R&D Process Professional Sectors Engineering fulfilment of Industrial Basis portfolio content Activity Technology Qualification future Technology Steel Mills 7 Pipelines Metalurgical Tecnology Flanges and Connections 1 0 1 1 1 Boiler Works 1 1 1 1 1 1 1 7 Rods and Socker Road Pumps Subsea Pumps Transforming Industry Compressors (Alternative) 1 1 1 8 Mechanical Technology 8 Gas and Diesel Engines 1 1 1 9 Turbines Marine parts Cranes and Hoists 1 1 1 9 10 Valves and City Gates 1 1 1 1 1 1 11 Generators and Electrical Engines 10 Electric Technolog Substations and Transformers Automation and Instrumentation Engineering Services 1 1 1 1 1 1 11 Services 12 Construction and Assembly Services 1 1 1 1 12 COMPETITIVENESS DIAGNOSIS OF BRAZILIAN INDUSTRY MEDIUM COMPETITIVENESS SECTORS Actions Technological update Partnership with foreign companies Increase of production capacity Source: Institute of Economy/UFRJ and Petrobras

21. Bottlenecks and challenges Infrastructure Technology Staff Insufficient Basic Technological Product Low local Low R&D Process Professional Sectors Engineering fulfilment of Industrial Basis portfolio content Activity Technology Qualification future Technology Steel Mills Pipelines Metalurgical Tecnology Flanges and Connections Boiler Works Rods and Socker Road Pumps Subsea Pumps Transforming Industry Compressors (Centrifugal) 1 1 1 1 1 1 1 1 1 1 Mechanical Technology Gas and Diesel Engines (heavy work) 1 1 1 1 1 1 1 1 1 1 Gas Turbines 1 1 1 1 1 1 1 1 1 1 Marine parts Cranes and Hoists Valves and City Gates Generators and Electrical Engines Electric Technolog Substations and Transformers Automation and Instrumentation 1 1 1 1 1 1 1 1 1 1 Engineering Services Services Construction and Assembly Services COMPETITIVENESS DIAGNOSIS OF BRAZILIAN INDUSTRY LOW COMPETITIVENESS SECTORS Actions Importing / To incentive the introduction of foreign companies in Brazil Source: Institute of Economy UFRJ and Petrobras

22. TECHNOLOGICAL DEVELOPMENT Materials and Equipment to be developed in the next years Submarine sensor for measuring the oil and grease content in water; Signal optical cable for well temperature and pressure monitoring; Submarine optical connectors; Intelligent sensor network for natural gas flow measurement; Internal for piping in the radiation zone of industrial furnaces; Co-generation system using biomass as fuel; Submarine sphere valves; Monitored cathodic protection system for pipelines.

23. Area Services Drilling ; Well Completions; Flexible lines and umbilicals (installation); Support to diving; Support to ROV operation; Support to mooring activities; Special support vessels; Well subsea connections. E&P OTHER E&P CRITICAL SERVICES

24. PETROBRAS GOODS AND SERVICES CONTRACTS HISTORICAL INFORMATION

25. GOODS CONTRACTS – US$ MILLIONS

26. SERVICES CONTRACTS – US$ MILLIONS

27. Equipment • Chemicals • Spare parts • Etc. • Manufacturers US$ 7.0 Bi • Distributors • Retailers • Seismic • Drilling • Transport • Etc. • Service providers US$ 25.8 Bi • Platform • Refinery • Revamps • Etc. • EPC • Shipyards • Constructors US$12.4 Bi As per 2008 SUPPLY STRATEGIES FOR GOODS AND SERVICES

28. SUPPLYING GOODS AND SERVICES TO PETROBRAS

29. SUPPLYING PETROBRAS Access www.petrobras.com.br Select English version; Select Business and Supplier Channel. There you can access - CONDITIONS FOR THE SUPPLY OF MATERIAL - CFM 2005. Brazilian Law: DL 2745, devoted to Petrobras • establishes clear rules for Petrobras • and their suppliers.

30. RELEVANT EQUIPMENT DEMAND FOR THE PERIOD 2010-2014

31. Main Projects RESOURCE DEMANDS PORTFOLIO OF INVESTIMENTS Critical Resource PROFESSIONALS Critical Resource MATERIALS & EQUIPMENT Critical Resource INFRASTRUCTURE OF PRODUCTION

32. Equipment and Materials Required for 2010-2014 (*) (*) This list does not exhaust all the equipment and materials required for 2010-2014 period.

33. Equipment and Materials Required for 2010-2014 (*) (*) This list does not exhaust all the equipment and materials required for 2010-2014 period.

34. CONCLUSIONS

35. CONCLUSIONS Petrobras has a robust projects portfolio, which is atypical of the current economic situation. There are huge opportunities for already installed and newcomers in the Brazilian market of suppliers, service and engineering companies due to the scale provided by the project portfolio. In order to carry out such a portfolio, Petrobras is looking forward to establishing stable long term business relationships with all available companies that are willing to invest in Brazil.

36. Thankyou Questions & Answers rittershaussen@petrobras.com.br