FDI in LAC Region Falls for Third Straight Year

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Foreign Direct Investment (FDI) in Latin America and the Caribbean fell for a third straight year in 2017, reported the Economic Commission for Latin America and the Caribbean or CEPAL by its Spanish acronym.

The details were revealed in CEPAL’s annual report titled “FDI in Latin America and the Caribbean 2018.”

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Petrobras, CNPC to Finish Rio Refinery

(Efe, 4.Jul.2018) – Brazilian state oil company Petrobras and China’s state-owned China National Petroleum Corporation signed a letter of intent to conclude construction of a refinery in Rio de Janeiro, the South American company said.

Work on the refinery, known as the Rio de Janeiro Petrochemical Complex (Comperj), has been stalled since 2015 due to the sprawling Car Wash probe, initially focused on a massive bribes-for-inflated contracts scandal centered on Petrobras

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ISA CTEEP Awarded $1.7 Bln Projects in Brazil

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – The company was awarded two areas that total 2,560 kilometers of transmission lines, and substations with transformation capacity of 12,230 mega-volt amperes.

The announcement came as part of an auction of 20 energy transmission projects carried out by the National Agency of Electric Power of Brazil (Aneel by its Portuguese acronym) with the aim to strengthen Brazil’s national interconnected system, reported the daily El Tiempo.

“The company will invest close to $1.680 billion in the next five years,” reported the daily, citing Reynaldo Passanezi Filho, president of ISA CTEEP, an affiliate of Interconexión Eléctrica S.A. (ISA).

***

Brazil Deep-water Competitiveness: José Firmo

(Energy Analytics Institute, Aaron Simonsky, 29.Jun.2018) – “Today Brazil is the most competitive in all of deepwater and ultra-deepwater,” José Firmo, Brazilian Petroleum Institute, said during a debate hosted by Washington, DC-based Inter-American Dialogue.

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Sterlite, State Grid Win Brazil Power Licenses

(Reuters, 29.Jun.2018) – India’s Sterlite, China’s State Grid, and Colombia’s Isa clinched licenses to build power transmission lines in Brazil in a government auction on Thursday that is expected to draw a total of 6 billion reais ($1.55 billion) in investment.

Some 47 companies and consortia registered to present bids at the auction at Sao Paulo’s stock exchange B3, which led to a competitive round.

Under auction rules, the companies that offered the biggest discounts in the tariffs would win. Brazil’s electricity regulator, Aneel, registered a 55 percent fall in average tariffs the companies will be allowed to charge.

Sterlite, which debuted in Brazil last year, clinched six projects that will require around 3.6 billion reais to build, according to Aneel.

Cteep, a unit of Colombia’s Isa, won two projects, with projected investments of 880 million reais, while CPFL, a subsidiary of China’s State Grid, was granted a project that is slated to cost about 102 million reais.

Electricity heavyweights such as Portugal’s EDP and Spain’s Iberdrola, bidding through their joint venture Neoenergia, left empty-handed, amid the hot competition.

The licenses include a 30-year contract to operate the lines, with pre-defined annual revenues coming from the tariffs to be charged for the service.

***

EDP Introduces Blockchain Solution in Brazil

(Renewables Now, 28.Jun.2018) – Energias de Portugal SA (ELI:EDP) announced on Thursday it has become the first to use blockchain technology to measure and record energy consumption and distributed generation (DG) coming from its consumers in Brazil.

EDP’s new solution simplifies the process of managing the energy produced and consumed by its clients’ solar arrays. The initiative is a partnership with the Austrian Riddle & Code.

The new system is a non-removable cryptographic tag that is attached to domestic energy meters to measure the co-consumption of each user. It facilitates transactions and calculations for charging and taxing, EDP said.

This project follows the introduction of Brazil’s legislation on remote consumption of distributed energy, in which consumers can rent a quota from a solar plant that is not allocated on their land, the company noted.

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Brazil to Auction 20 Transmission Lines

(RioTimes, Lise Alves, Senior Contributing Reporter, 28.Jun.2018) – ANEEL (Electric Energy Regulator) in Brazil will conduct the first energy transmission auction of the year on Thursday (June 28th) with twenty lots of transmission lines up for sale. According to officials the sale of these lots will generate R$6 billion in investments and approximately 13,600 jobs.

“Twenty lots of new concessions will be auctioned, totaling 2,563 km of transmission lines and 12,200 MVA [megavolt-ampere] of transformation capacity in substations,” said the Minister of Mines and Energy, Wellington Moreira Franco on Wednesday.

According to Moreira Franco, the lots to be auctioned are distributed in sixteen states: Santa Catarina, Rio de Janeiro, Ceará, Rio Grande do Norte , Paraíba, Bahia, Sergipe, Alagoas, São Paulo, Tocantins, Goiás, Rio Grande do Sul, Pará, Piauí, Maranhão and Minas Gerais.

“The projects being implemented, for the period 2018 to 2022, will add a total of 34,000 km to our transmission network. This equals to an annual average of 6,800 km. We are talking about R$60 billion in investments,” added the Energy and Mines Minister.

According to Aneel, the transmission facilities must enter into commercial operation within 36 to 63 months from the signing of the concession agreements. and the winning concessionaire shall be entitled to receive revenues from energy produced by the facilities for the next thirty years.

In 2017, there were two auctions, the first in April, when 31 lots were sold, with an estimated investment of R$12.7 billion, and the second in December, when eleven lots were sold, with a planned investment of R$8.7 billion.

***

Petrobras New CFO Election

(Petrobras, 27.Jun.2018) – Petrobras informs that its Board of Directors, at a meeting held today, appointed the engineer Rafael Salvador Grisolia to the position of Chief Financial and Investor Relations Officer of the company, with an office term until March 26, 2019, the same term of the other officers of the Executive Board.

Rafael Grisolia is a Production Engineer, holding an MBA from Coppead/UFRJ. Has a 30 year extensive career experience having worked at the financial department of Esso – an affiliate of ExxonMobil Corp., and at Cosan Combustíveis e Lubrificantes SA, held a position of Chief Financial Officer (CFO) and Investor Relations Officer (IRO) of Cremer SA, CFO of Grupo Trigo SA, CFO and IRO of Inbrands SA. Since August 2017, as Chief Financial Officer (CFO) and Investor Relations Officer (IRO) at Petrobras Distribuidora SA (BR).

The nomination was subject to prior analysis by the Nominating, Compensation and Succession Committee of Petrobras’ Board of Directors.

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Tartaruga Verde Field Commences Production

(Petrobras, 25.Jun.2018) – Petrobras started production of Tartaruga Verde field, in deep waters of Campos Basin, by means of FPSO Cidade de Campos dos Goytacazes.

The FPSO is located about 127 km off the coast of the state of Rio de Janeiro, in water depth of 765 meters, with a capacity to process daily up to 150 thousand barrels of oil and 3.5 million cubic meters of gas and 5 million cubic meters of gas compression.

Tartaruga Verde field has good quality oil (27º API) and is located in the southern area of Campos Basin, in the post-salt, in water depth ranging from 700 to 1,300 meters and with reservoirs at 3,000 meters depth. It consists of two reservoirs, Tartaruga Verde, where Petrobras holds 100% interest, and Tartaruga Mestiça, a joint reservoir between the Union, represented by Pre-Sal Petróleo SA – “PPSA”, with a 30.65% interest, and Petrobras with 69.35%. All of the field production will be offloaded by FPSO Cidade de Campos dos Goytacazes.

This is the second platform to start operations this year and will contribute to the increase of Petrobras’ production under the 2018-2022 Business and Management Plan.

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Brazil Labor Court Rules Against Petrobras

(Reuters, 21.Jun.2018) – Brazil’s top labor court ruled in favor of workers at Brazil’s state-controlled oil giant Petroleo Brasileiro in a wage spat that could cost the world’s most indebted oil company up to 17 billion reais ($4.5 billion).

Petrobras, as the company is known, could still appeal the Superior Labor Court’s ruling in the case, brought by Petrobras workers seeking more pay.
***

Uncertainty Looms Large Over LatAm Oil

(Oilprice.com, Tsvetana Paraskova, 20.Jun.2018) – While oil industry analysts and market participants are watching Venezuela closely for clues about how low its oil production will go, several other countries in Latin America are holding key elections this year, elections that will no doubt shape the countries’ short and medium-term oil policies. These developments could spell trouble for oil supply and oil investment in South America’s biggest crude-producing nations.

A populist leftist candidate pledging to undo energy reforms is widely expected to win Mexico’s presidential election in two weeks. There has been recent turmoil in Brazil’s fuel sector policies ahead of a wide-open presidential race for the October elections. A newly elected president in Colombia is vowing to amend a historic peace deal with the FARC rebels.

All these events add uncertainties to how politics will influence Latin American countries’ oil policies and investment climate for foreign oil companies, Paul Ruiz and Jena Merl write for The Fuse.

In Colombia, a conservative political newcomer, Iván Duque, won the presidential election this past weekend in the traditionally conservative country. The new president, however, has pledged to revise the 2016 deal with the Revolutionary Armed Forces of Colombia (FARC) rebels that put an end to 50 years of armed conflict. Duque wants to re-write the deal that guaranteed the rebels seats in Congress and allowed them to run in elections.

The new president, like the outgoing president Juan Manuel Santos, will have to face another rebel group, the National Liberation Army (ELN)—a Marxist guerrilla group that sabotages oil industry facilities to protest against foreign companies operating in Colombia. In January this year, Colombia suspended talks with ELN after bombings killed police officers. ELN has repeatedly attacked the second-largest oil pipeline in Colombia, Cano Limon-Covenas, causing oil spills and shutdowns.

Mexico is holding a presidential election on July 1, and a few weeks ahead of the vote, all polls point to populist leftist candidate Andrés Manuel López Obrador having a comfortable lead over other candidates. López Obrador pledges to roll back the landmark 2013 energy reform of outgoing president Enrique Peña Nieto, who opened Mexico’s oil sector to private investment for the first time in seven decades. The jury is still out as to whether López Obrador will backtrack entirely on the oil reforms, but uncertainties remain regarding the investment environment in the country—at least for this year.

Brazil is holding elections in October and the race is still wide open.

But in recent weeks, the country came to an economic standstill due to widespread truckers’ strikes over high fuel prices. President Michel Temer announced subsidies on diesel at the end of May, freezing prices for 60 days.

The recent turmoil in the country’s oil industry and renewed anxiety over political meddling in the energy sector add an uncertainty ahead of the election later this year. Pedro Parente, chief executive at state-run oil company Petrobras, resigned on June 1, after the strikes forced the government to cut diesel prices and after oil workers demanded that Brazil end the one-year-old policy to allow fuel prices be dictated by the market and international crude oil benchmarks.

Yet, some of the world’s biggest oil companies—including Exxon, Chevron, Shell, BP, and Equinor—bid aggressively in Brazil’s latest offshore bid round on June 7, snapping up acreage in three blocks in the coveted pre-salt layer.

Nevertheless, uncertainty over how Brazil will handle oil sector policies until and immediately after the October elections has increased.

Brazil is still expected to be one of the largest contributors to non-OPEC oil supply growth in the coming years. According to the International Energy Agency’s (IEA) Oil 2018 outlook from March, oil production growth from the United States, Brazil, Canada, and Norway “can keep the world well supplied, more than meeting global oil demand growth through 2020.”

According to OPEC’s latest Monthly Oil Market Report, non-OPEC oil supply in the second half of this year is expected to increase by 2.0 million bpd year on year, with the United States leading the pack, contributing 1.4 million bpd to growth, followed by Canada and Brazil.

While uncertainties mount in the political shifts and oil policy choices in other Latin American countries, there’s only one uncertainty left for Venezuela—how fast production from the collapsing oil industry will sink to as low as 1 million bpd. Some analysts reckon the plunge to 1 million bpd is imminent.
***

ExxonMobil Reconfirms March 2020 for First Guyana Oil

(Denis Chabrol, DemeraraWaves, 12.Jun.2018) – ExxonMobil on Tuesday reconfirmed that Guyana will pump up its first barrel of oil in March 2020, even as the Guyana government continued to fend off criticisms of the 2016 production sharing agreement.

Vice President of ExxonMobil Development Company, Lisa Walters said work was well advanced by several companies in Singapore, Brazil and the United States Gulf Coast to ensure that commercial oil production begins in less than two years. “We are on track for first oil in March of 2020,” she said. “In just a little over a year and a half, the Liza Destiny will deliver its first oil to its first tanker offshore,” she added.

ExxonMobil estimates that oil discoveries at Liza, Payara, Snoek and Turbot offshore Guyana total 3.2 billion barrels and would eventually lead to daily production of 500,000 barrels. ExxonMobil estimates that Liza Phase 1 will generate over US$7 billion in royalty and profit oil revenues for Guyana over the life of the project.

Walters said the drill-ship, Noble Bob Douglas, recently started drilling the production wells located at Liza more than 125 miles off the Demerara Coast. She said “all of the design work on the project is nearing completion” and “construction is well-underway worldwide” for the Floating Storage, Production, Storage and Offloading (FPSO) vessel named “Liza Destiny”. SBM Offshore has won the contract to construct that vessel, while TechnicFMC, and Saipem have been hired for sub-sea construction of the umbilical cords and flow-lines. Guyana Shorebase Inc was awarded the contract in June, 2017 for shore-base services and in August, 2017 the Noble Bob Douglas was hired for drilling services.

ExxonMobil’s Country Manager, Rod Henson also used the opportunity of the official start of the Liza Phase 1 Development Programme to show off that in the first quarter of 2018, over US$14 million were spent with Guyanese suppliers; together with its contractors ExxonMobil utilized 262 Guyanese registered suppliers, 227 of which are Guyanese owned.

Minister of Natural Resources, Raphael Trotman reiterated that the revised ExxonMobil Production Sharing Agreement has “the same or very similar contractual terms” as those Guyana has signed with other companies such as Anadarko Petroleum, Ratio, CGX, REPSOL, Ratio, Eco-Atlantic and Mid Atlantic.

“In that regard, they will enjoy the same rights and obligations as every other company that has been contracted by the government to explore and develop our hydrocarbons.

That they were the first to find a large deposit should no redefine their contractual terms or place them in any position less than that enjoyed prior to discovery. For government to do otherwise is not how responsible or how well-organised and governed States function,” she said.

The Minister of Natural Resources said the proceeds of Guyana’s oil production would be fairly shared among all Guyanese without discrimination as part of a process that would eventually lead to the removal of negative labels such as Third World, backwards, underdeveloped and developing from Guyana. “With the blessings that have been revealed, and are within our grasp, we purpose to develop a modern, peaceful and cohesive State-one in which every man, woman and child, without exception, reservation, and/or discrimination of any kind, is able to enjoy the full and equal benefits of the bounty we are about to be bestowed,” he said.
***

Chevron Brazil Chief to Lead Venezuela Ops After Arrests

(Reuters, 9.Jun.2018) — US oil producer Chevron Corp permanently assigned its Brazil country chief to run its Venezuelan operations, three sources said this week, after the months-long detention of two executives escalated tensions between the Opec-member nation and foreign oil firms.

Javier La Rosa, who had been president of Chevron Brazil since 2016 according to his LinkedIn page, this month was named to replace the company’s Venezuela general manager, Christopher Whatley, said the sources, who spoke on Thursday and Friday.

Chevron did not immediately respond to a request for comment.

Mr La Rosa had headed Venezuela operations for the company from 2005 to 2008, his LinkedIn page said. He flew to Caracas shortly after Chevron employees were detained to temporarily lead the Venezuela unit, according to two other people familiar with the matter.

None of the sources could speak for attribution because they were not authorized to speak on the matter.

Mr La Rosa’s appointment comes after a tense showdown between foreign oil companies and the government in recent months as Venezuela’s political and economic meltdown deepened.

Venezuelan authorities this week released the two executives jailed since April as part of an ongoing graft probe into the oil sector, which has spooked other foreign companies operating in partnership with state oil company PDVSA.

The arrests, related to the executives’ refusal to sign a supply contract for furnace parts for a PDVSA joint venture, were made public after some oil-service companies pulled back from Venezuela, writing off billions of dollars in assets.

La Rosa is leaving Brazil just as Chevron begins to flex its muscle in Latin America’s largest crude producer. In a consortium with Petrobras and Royal Dutch Shell Plc , Chevron clinched its first block in Brazil’s coveted offshore pre-salt oil play on Thursday.

It was not immediately clear who will run Chevron’s Brazil operations.

Reuters reported in December that Chevron was in talks with oil services firm Schlumberger NV to resume drilling in an offshore field after a 2011 oil spill there cut production.

Chevron, the world’s seventh-largest publicly traded oil producer, with 2017 revenue of US$135 billion, operates in Venezuela mostly through minority stakes in five projects. Its earnings from Venezuela dropped 18 per cent last year to US$329 million, according to regulatory filings.
***

Brazil Raises $830 Mln in Pre-Salt Auction

(Efe, 7.Jun.2018) – Brazil raised 3.15 billion reais (around $830 million) in fixed signing bonuses on Thursday in its fourth auction of oil blocks in a deepwater region of the Atlantic Ocean known as the pre-salt.

The winner of the largest and most coveted block – known as Uirapuru – was a consortium made up of Brazilian state oil company Petrobras (30 percent stake), Irving, Texas-based supermajor Exxon Mobil (28 percent), Norway’s Statoil (28 percent) and Portugal’s Petrogal (14 percent).

It won the block after offering the government a record 75.48 percent share of so-called profit oil, more than three times the minimum required by the National Petroleum Agency (ANP, Brazil’s oil regulator).

Two other consortiums also were awarded licenses for blocks in the pre-salt region, so-named because its massive reserves are located under water, rocks and a layer of salt at depths thousands of meters below the surface of the Atlantic.

One of them is made up of Royal Dutch Shell (40 percent), San Ramon, California-based Chevron (30 percent) and Petrobras (30 percent), while the other is led by Petrobras (45 percent) and also includes BP Energy (30 percent) and Statoil (25 percent).

Although Petrobras initially only was part of that latter consortium, it exercised its right under pre-salt regulations to be an operating partner in the other two consortiums with at least a 30 percent stake.

The ANP received offers that were well above what had been expected for the three most coveted blocks in the auction. The auction of a fourth smaller block, Itaimbezinho, did not attract any bidders and was declared void.

The bid round was among the most successful in recent years, according to ANP director Decio Oddone.

He said that in addition to the proceeds from the fixed signing bonuses the auction also would guarantee some 40 billion reais (some $10.5 billion) in income for the state over the 30-year lifespan of the contracts in the form of profit-sharing arrangements and taxes and royalties.

The consortium led by Shell and Chevron that won the right to develop a pre-salt block known as Tres Marias offered the government 49.95 percent of the profit oil, more than five times the minimum required.

The third block that attracted interest, Dois Irmaos, was awarded to the Petrobras-BP-Statoil consortium, which offered the government a 16.43 percent share of the profit oil, the minimum proportion required.

“It was a very successful auction because it attracted the attention of the world largest oil companies, which made offers that were higher than what we were expecting; it showed how competitive the pre-salt is,” Oddone said.

He said that all told the Brazilian government would have a nearly 90 percent share of liquid revenues from the development of Uirapuru, adding that such a high level was “not even seen in the Middle East.”

The four blocks on offer on Thursday contain roughly 5 billion barrels of oil and natural gas.

Prior to this latest auction Brazil had only awarded licenses to develop six blocks in the pre-salt region, which contains tens of billions of barrels of hydrocarbon reserves.
***

ExxonMobil Wins More Acreage in Brazil Bid Round

(ExxonMobil, 7.Jun.2018) – ExxonMobil has increased its holdings in Brazil’s pre-salt basins after winning the Uirapuru exploration block with co-venturers Equinor and Petrogal Brasil during Brazil’s 4th pre-salt bid round.

The block awarded adds about 88,900 net acres to the ExxonMobil portfolio, expanding the company’s total position in the country to more than 2.2 million net acres.

“Uirapuru is a uniquely valuable block that represents tremendous opportunity for us,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Brazil continues to represent a key investment for ExxonMobil, and we look forward to exploring and developing its world-class resources with our co-venturers and the government.”

Petrobras exercised its right to enter in the consortium and will be the operator. Equity interest in the Uripuru block will be 30 percent for Petrobras, 28 percent for ExxonMobil, 28 percent for Equinor and 14 percent for Petrogal Brasil.

ExxonMobil plans to obtain seismic coverage in 2018 on more than 7,500 square miles. 3-D seismic survey work is already underway on two blocks in the Northern Campos area offshore Brazil. Preparations are under way to obtain the necessary approvals to commence drilling activities.

Development plans are also under way in the Equinor-operated Carcara field, where drilling began in late April. The Carcara field contains an estimated recoverable resource of more than 2 billion barrels of high-quality oil.

ExxonMobil now has interests in a total of 25 blocks offshore Brazil. The company has had business activities in Brazil for more than 100 years and has about 1,300 employees in the country across its upstream, chemical and business service center operations.

***

Brazil Will Strengthen Energy Supply during Soccer World Cup

(Efe, 6.Jun.2018) – Brazil’s Electricity Sector Monitoring Committee (CMSE) announced special operational measures to ensure that the country will not have problems with its energy supply during the 2018 World Cup in Russia, which will begin on June 14, official sources said on Wednesday.

One of the measures announced by the CMSE, which evaluates the conditions of electricity supply throughout the country, is to increase operational security of the National Interconnected System (SIN) during the Brazilian team’s matches in the World Cup, for which a special operation will be carried out.

The operation will begin two hours before and ends two hours after the Brazil matches, and other important events, such as the opening ceremony and the final match, according to a statement released Wednesday by the Ministry of Mines and Energy.

The objective is to reinforce the power supply during the World Cup and avoid possible blackouts, as occurred in March 2017 when 13 states in the north and northeast of Brazil were affected and more than 70 million people were left without electricity.

According to the statement, other measures aimed to increase the security of the system are to have a greater number of energy-generating units synchronized with the hydroelectric system and to reinforce the shift teams in strategic installations.

Brazil, five-time World Cup champion and one of the favorites to win the 2018 World Cup Russia, will play its first match on June 17 against Switzerland in the city of Rostov-on-Don.
***

Petrobras BOD Appoints New CEO

(Energy Analytics Institute, Ian Silverman, 5.Jun.2018) – Ivan de Souza Monteiro is the new president of Petrobras.

Brazil’s state oil company Petrobras announced controlling shareholder informed the company of the appointment of engineer Ivan de Souza Monteiro, current interim CEO, to join Petrobras’ Board of Directors and assume the position of CEO of the company.

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Petrobras Boss Resigns Amid Truckers’ Strike

(Al Jazeera, Daniel Schweimler, 2.Jun.2018) – Pedro Parente’s resignation was one of the demands of striking workers due to worries that he was going to privatise Brazil’s share of the Latin American oil company.

https://www.aljazeera.com/news/2018/06/brazil-oil-company-petrobras-boss-resigns-truckers-strike-180602120210810.html

The boss of the biggest oil company in Brazil has resigned, driving down the share price of Petrobras by 15 percent.

He’s the highest-profile casualty so far of a truck drivers’ strike that’s virtually paralysed Brazil for nearly two weeks.

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Petrobras CEO Parente Resigns Post

(Energy Analytics Institute, Ian Silverman, 1.Jun.2018) – Pedro Parente resigned as CEO of Petrobras.

In an official statement, Brazil’s state oil company Petrobras confirmed Mr. Parente had resigned his position as CEO of the company.

Petrobras said nomination of an interim CEO will be analyzed by the Board of Directors in due time.

***

Brazil Oil Workers Strike, Defying Court Order

(Efe, 30.May.2018) – Brazilian oil workers defied a court order on Wednesday by launching a three-day strike affecting oil refineries.

The FUP, a federation that assembles most of Brazil’s oil workers’ unions, said in a statement that the top labor court’s decision to declare the strike illegal had not “intimidated” workers.

On Tuesday, a judge declared the strike illegal because it would be “abusive” and be “carried out to disturb” the population, threatening to impose a 500,000-real fine ($135,000) in case the strike broke out.

The oil workers strike was organized to support striking truckers, who have been calling on state oil company Petrobras to lower fuel prices, which have sharply increased due to a rise in international crude prices and to the slide in the value of the Brazilian real.

The strike, according to the FUP, was also organized to demand the resignation of Petrobras CEO Pedro Parente and to denounce a purported plan by the right-wing government to sell company assets to multinational corporations.

The oil workers’ unions said that the 72-hour work stoppage was a “warning” and that an open-ended strike could ensue if their demands were not met.

The FUP, however, said that the strike would not lead to a lack of fuel in the country, at a time when the truck driver’s strike, which is now in its 10th day, has caused a shortage of basic goods such as gasoline and some foodstuffs.

On Sunday, the Brazilian government and truckers’ unions reached an agreement to put an end to the strike, although hundreds of truck drivers have continued to block dozens of roads to demand that the government provide more guarantees that it will lower diesel prices.
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Energy, Education, and Learning Through NRG ED

(Energy Analytics Institute, Aaron Simonsky, 24.May.2018) – Energy Analytics Institute, formerly LatinPetroleum Inc., continues to promote its “Energy Education Initiative” in the Americas, also known as “NRG ED.”

NRG ED is structured to work with K-12 schools, community colleges, four-year colleges and universities, workforce training programs, communities and businesses, and aims to promote reduction of non-renewable energy usage in favor of renewable energies. However, the core of the initiative is education, without which the NRG ED initiative would not be.

“At its core the initiative is really focused on education,” said Chad Archey, Editor-in-Chief at Energy Analytics Institute from Atlanta, Georgia.

EAI views basic education as most important in the overall learning process and also promotes educational initiatives and research from grade school to the professional level related to the energy sector. EAI aims to foment constructive dialogue regarding energy usage as well as ways to reduce the carbon footprint left by non-renewable energy resources through the following: 1) educational consultancy, 2) development and distribution of educational and training materials, and 3) promotion of debate and discussion regarding renewable energy alternatives.

Energy Analytics Institute (EAI), formerly LatinPetroleum Inc. (dba LatinPetroleum.com), is a Houston-based independent company focused on producing non-biased news, updates and special reports for investors interested in the Latin America and Caribbean petroleum sectors.
***

Petrobras Pricing Pressure Spooks Potential Refinery Buyers

(Reuters, Tatiana Bautzer & Carolina Mandl, 24.May.2018) – A surprise decision by Brazil’s state-controlled oil company Petroleo Brasileiro SA to cut diesel prices in response to truckers’ protests is worrying some potential buyers of Petrobras’ refineries, three people with knowledge of the matter said on Thursday.

Petrobras’ planned sale of a 60 percent stake in four refineries, announced on April 19, is part of a wider effort to unload assets to reduce debt. The refineries will be sold in two regional blocks: one in the northeast and another in the southern region of the country, with two refineries each.

Petrobras has said it will retain around 75 percent of its domestic refining capacity after the privatization of the four units.

Petrobras is hoping to get non-binding proposals in early July, two people with knowledge of the sale process said, asking for anonymity because negotiations are private.

Among the groups Petrobras has invited to bid are buyout firms Patria Investimentos Ltda, which has an investment agreement with Blackstone Group LP, and First Reserve Management LP. Other potential buyers are Brazilian firms Ultrapar Participações SA and Cosan SA Industria e Comercio , the sources said.

The groups are expected to receive the initial invitations to participate in the process next Monday 

But rising pressure on Petrobras to cut fuel prices, sparked by the truckers’ protest this week, has worried some potential acquirers.

Petrobras late on Wednesday said it would slash diesel prices by 10 percent for 15 days to ease pressure while the government tries to reach a permanent deal with truckers to ease price pressure more permanently. The decision triggered a 15 percent plunge in Petrobras shares on Thursday.

Two potential investors told Reuters they worry that changes in Petrobras’ pricing policy would strongly affect private competitors, as the state-controlled company plans to keep most of its refining capacity, especially in southeastern Brazil, the country’s wealthiest region.

Potential pricing changes to appease the government could create unfair competition, the sources added.

Cosan, Pátria, First Reserve did not immediately respond to requests for comment on the matter. Ultrapar declined to comment.

In a conference call with investors on Thursday, Petrobras Chief Executive Officer Pedro Parente, who has insisted that the diesel price cut does not change the company’s overall pricing policy, also said it would not jeopardize the refinery sale plan.

But the sources said investors were likely to demand more guarantees related to pricing policies in the refineries sale process as a result.

***

Mexico’s Vista Oil & Gas Signs Onshore JV with Jaguar

(Reuters, 23.May.2018) – Mexican energy investment firm Vista Oil & Gas will tie up with Jaguar Exploracion y Produccion on three onshore projects, the company said on Tuesday, acquiring 50 percent stakes with an initial payment of nearly $27.5 million.

Vista will pay Monterrey-based Jaguar a further $10 million to compensate the firm for past investments in the projects, or so-called carry costs, the firm said in a statement.

The three onshore projects were won at auctions last July by Jaguar, an upstart oil firm owned by Mexico’s Grupo Topaz, and are located in the Gulf coast states of Tabasco and Veracruz.

Two of the blocks will be operated by Vista, while the other will be run by Jaguar, in what Vista described as Mexico’s first joint venture between two private oil firms.

The joint venture between the two must still be approved by the National Hydrocarbons Commission, the Mexican oil regulator that supervises exploration and production contracts.

Last year, Vista became Mexico’s first publicly traded oil firm, four years after a landmark energy reform ended the decades-long monopoly enjoyed by state-owned Pemex.

Vista, which has targeted assets for possible acquisition in Mexico, Brazil, Colombia and Argentina, is backed by private equity firm Riverstone Capital.

***

ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

(Energy Analytics Institute, Aaron Simonsky, 1.May.2018) – The United Nations Economic Commission for Latin America and the Caribbean, also known as ECLAC or CEPAL by its Spanish acronym, projects economic activity in troubled Venezuela will contract 8.5% in 2018.

Gross domestic product or (GDP) estimates for other important countries and regions follows:

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

Argentina ———————————— 2.5%
Bolivia ————————————— 4.0%
Brazil —————————————- 2.2%
Chile —————————————– 3.3%
Colombia ———————————— 2.6%
Ecuador ————————————– 2.0%
Paraguay ————————————- 4.0%
Uruguay ————————————– 3.0%
Venezuela ———————————– (8.5%)

Latin America and Caribbean (LAC) —- 2.2%
South America —————————— 2.0%
Central America and Mexico ————- 2.6%
Central America —————————- 3.6%
Latin America ——————————- 2.2%
Caribbean ———————————— 1.4%

Source: ECLAC, April 2018
***

ANP Notice on Participation in Lula Field

(Petrobras, 1.Apr.2017) – Petrobras announced that, on March 30, 2017, Consortium BM-S-11 received a notice of violation issued by the National Petroleum, Natural Gas and Biofuels Agency (ANP), relating to the Lula Field in the Santos Basin pre-salt, for the amount of R$2.6 billion. This notice is due to the variance in applying oil prices used to calculate the governmental share from May 2013 to December 2016. The consortium will contest the ANP notice and, if necessary, adopt all judicial measures to defend its interests.

Consortium members understand that they have acted according to the legislation which has been in force since 2000. The change in the interpretation of the rules applicable to the concession contract by the regulatory agency directly affects the economic and technical assumptions that support investment decisions.

Consortium BM-S-11 is formed by Petrobras (65% WI), as operator, in partnership with BG E&P Brasil – a subsidiary company of Royal Dutch Shell plc (25% WI) – and Petrogal Brasil (10% WI).

Consortium BM-S-11 will contest the notice.

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Petrobras Says P-69 Arrives in Brazil

(Petrobras, 30.Mar.2017) – Platform is now at Brasfels shipyard in Angra dos Reis

On March 28, the hull of floating production, storage and offloading vessel (FPSO) P-69 arrived at the Brasfels shipyard in Angra dos Reis, in the state of Rio de Janeiro. This shipyard will do the platform’s integration work, encompassing the installation of modules on the hull, the interconnection of all equipment, and the commissioning of operating systems (a series of tests to check whether the systems have turned out as planned and are able to function properly). Each of the platform’s 18 modules has a specific function, such as generating power, supplying and treating water, producing oil, and offloading gas.

The hull is 288 meters long, 54 meters wide, and 31.5 meters tall (from the bottom of its tanks to the main deck). It was built at the Cosco shipyard in Zhoushan, China. After it has been integrated, the platform will be capable of processing 150,000 barrels of oil and 6 million cubic meters of natural gas per day. Able to store 1.6 million barrels of oil, it will operate at a water depth of 2,200 meters.

P-69 will be installed in Lula field, in the Far South Lula module, in the Santos Basin pre-salt. This field is operated and 65% owned by Petrobras, in partnership with Royal Dutch Shell plc subsidiary BG E&P Brasil (25% WI) and Petrogal Brasil (10% WI). Start up is scheduled for 2018.

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Petrobras Updates on Baúna, Tartaruga Verde

(Petrobras, 30.Mar.2017) – Petrobras, in continuation to the material facts of 10/6/2016, 12/20/2016, and 3/15/2017 and to the press release of 11/21/2016, clarifies that it has notified the Federal Supreme Court of the impossibility to proceed with the divestment process for the transfer of rights relating to the fields of Baúna and Tartaruga Verde.

Furthermore on today’s date the company submitted the same information to the Federal Court of Aracaju, requesting the termination of court proceedings.

On March 15, as disclosed by Petrobras, TCU revoked the preventive order and, among other measures, upheld the permission to proceed with this sale process for being in advanced stage of negotiation, with the determination of compliance with the Court´s rules. In the face of this decision, the lack of conditions presented in the acquisition proposal and the maintenance of the effects of the judicial injunction, the continuation of this divestment process proved to be unfeasible, given the negotiation or procedural impossibility of resuming negotiations.

For this reason, the company waived the appeal before the Federal Supreme Court, which aimed to reverse the Court injunction.

Finally, Petrobras informs that requested in all judicial instances for granting judicial secrecy, considering the need to preserve its own interests and third parties interests.

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Petrobras Requests for Replacement of Substitute Candidate

(Petrobras, 27.Mar.2017) – Petrobras, as stated in Circular Letter CVM/SEP/01/2017, reported that it has received a request for the replacement of the substitute candidate to the Fiscal Council (FC) nominated by preferred shareholders Leblon Previdência Fundo de Investimento Multimercado and Ataulfo LLC, whose elections will take place at the Annual Shareholders Meeting to be held on April 27, 2017.

Candidates nominated by preferred shareholders Leblon Previdência Fundo de Investimento Multimercado and Ataulfo LLC

Candidate —————————— Position

Sonia Julia Sulzbeck Villalobos —- Member of FC – preferred (full member)

Roberto Lamb ————————- Member of FC – preferred (alternate)

Below are the resumes of the nominated candidates:

Sonia Julia Sulzbeck Villalobos, Brazilian citizen, married, administrator, Bachelor of Public Administration (1985) from EAESP – Getúlio Vargas Foundation and Master of Business Administration with specialization in Finance (2005) from EAESP – Getúlio Vargas Foundation. In 1994, she was the First Person in South America to receive the Chartered Financial Analyst – CFA credential, by the CFA Institute. She is Professor of Post-Graduation Lato Sensu, in the matters of Asset Management and Analysis of Financial Statements by Insper. He holds positions on the Boards of Directors of CEG – Distribuidora de Gas do Rio de Janeiro SA and Telefônica do Brasil SA. He has extensive experience in the financial market, having served as Head of the investment analysis department of Banco de Investimentos Garantia SA (1989 to 1996), Where he was voted Best Analyst in Brazil by Institutional Investor magazine in 1992, 1993 and 1994. He served as Senior Vice President of Bassini, Playfair & Associates, LLC (1996 to 2002) and Latin America Manager of Larrain Vial SA (2005 to 2011). She was the founding Partner and Manager of Lanin Partners Ltd., responsible for Long / short and long-only funds of Latin American stocks (2012 to 2016).

Roberto Lamb, Brazilian, physicist. Specialized in Monetary Economics and a holds a Master’s degree in Financial Management. Former career employee at Banco do Brasil, he has served as standing Audit Committee member for several Brazilian companies, among which Marcopolo, Gerdau and AES Eletropaulo, AES Tiete Energia, and MARFRIG. Board of Directors member for CADAM S.A. based in Belém, PA, a company whose purpose is the extraction and processing of ultrafine kaolin. It is controlled by KaMin, a company that operates in the kaolin extraction and processing segment, based in the state of Georgia, USA. He is a Certified Counselor by IBGC, where he coordinated the guidelines for best practices of the Audit Committee and the Auditing Committee and participated in the development of the handbook on best practices in Risk Management. He is a professor of Financial Management at UFRGS. He is the author of the Brazilian version of the book “Fundamentals of Financial Management” by Ross, Westerfield, and Jordan (McGraw Hill-Bookman, 2013) and of the Brazilian version of “Financial Administration” by Ross, Westerfield, and Jaffe (McGraw Hill-Bookman, 2015).

The names nominated above:

— In the last 5 years, they have not been subjected to criminal conviction, conviction in an administrative proceeding of the CVM and a final and unappealable conviction, in the judicial or administrative sphere, that has suspended or disqualified them for practicing professional or commercial activity;

— Do not have a marital relationship, stable union or informationable parentage according to item 12.9 of the Reference Form;

— They have no relationship of subordination with related parties of the Company.

— Meet the independence criteria of the Brazilian Institute of Corporate Governance (IBGC).

— They had the information provided by the “Fiscal Counselor Registry of the Ministry of Planning, Development and Management” analyzed by Petrobras and the Ministry of Finance, which concluded that the nominees are not subject to any impediment and have all the requirements set forth in the Law 6,404/1976, Law 13303/2016 and Decree 8.945/2016, according to the minutes of the Temporary Eligibility Committee of Petrobras, which will be disclosed at http://www.investidorpetrobras.com.br/en/governancacorporativa/Governing bodies/committees, up to the date of the Annual General Meeting.

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Petrobras Updates on Shareholders Meeting

(Petrobras, 27.Mar.2017) – Petrobras informed that the Extraordinary General Shareholders Meeting, held in the Auditorium of the company’s headquarters on Avenida Republic of Chile nº 65-1st floor, in the city of Rio de Janeiro (RJ), decided, by the majority, and has adopted the following:

  1. Election of Mr. Adriano Pereira de Paula as a member of the Fiscal Council appointed by the controlling shareholder, and;
  2. Approval of the sale of 100% (one hundred percent) of the shares held by Petróleo Brasileiro S.A. – PETROBRAS of Petroquímica Suape and CITEPE, to GRUPO PETROTEMEX, S.A. DE C.V. and DAK AMERICAS EXTERIOR, S.L., subsidiaries of Alpek, S.A.B. de C.V., for the amount, in Reais, equivalent to $385,000,000.00 (three hundred and eighty five million dollars).

Federal Government, as the controlling shareholder, voted on item II of the agenda, considering a manifestation of the STN – Secretariat of the National Treasury that there may have been possible irregularities in the companies of the PQS Complex, and has determined that Petrobras promotes due determination of the facts, as well as to adopt any and all legal measures necessary accountability of the agents responsible for damages and also to recover the damages caused to them.

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Reelection of Petrobras CEO

(Petrobras, 27.Mar.2017) – Petrobras reports that in the meeting held yesterday Petrobras’ Board of Directors approved the reelection of CEO Pedro Pullen Parente for a two-year term in the company’s Executive Office.

Mr. Pedro Parente had been elected CEO as of May 31, 2016, following the term in office of the previous CEO, Mr. Aldemir Bendine. A new two-year term begins with this reelection.

The election process followed the rules of Petrobras Nomination Policy for the Members of the Fiscal Council, Board of Directors and Executive Office, including the review of integrity analyzes and the fulfillment of such other requirements for the position. The Nominating, Compensation and Succession Committee of Petrobras’ Board of Directors evaluated all relevant documentation and recommended the approval of the new term in office to the Company’s Board of Directors.

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Petrobras’ Sale of PetroquímicaSuape and Citepe

(Petrobras, 27.Mar.2017) – Petrobras, in continuation to the material fact disclosed on December 28, 2016, informed that, the Shareholders’ Extraordinary General Meeting approved the sale of 100% of the shares held by Petrobras in PetroquímicaSuape and Citepe to Grupo Petrotemex S.A. de C.V. and Dak Americas Exterior, S.L, subsidiaries of Alpek, S.A.B. de C.V., for the amount of $385 million, which will be paid on the closing date, and it is subject to working capital, net debt, and recoverable taxes adjustments.

This transaction is part of the 2015-2016 partnership and divestment program, that reached $13.6 billion in the biennium, and it is still subject to the fulfillment of usual precedent conditions, among them the approval of the operation by the Administrative Council for Economic Defense (CADE). The sale is aligned to Petrobras Strategic Plan, which provides for business portfolio optimization with full withdrawal from petrochemical interests.

Furthermore, at the moment, there is no restriction to continuing this transaction, since the Regional Federal Court revoked the injunction that suspended the operation, as disclosed on the material fact of February 22, 2017.

Petrobras also clarifies that the decision of the Brazilian Federal Accounting Court (TCU), issued and announced on March 15, 2017, does not interfere in this sale process, due to the fact that the purchase and sale agreement of PetroquímicaSuape and Citepe was already signed on December 28, 2016, prior to the publication of said decision.

***

Petrobras Offers Clarification: CARF Ruling

(Petrobras, 24.Mar.2017) – Petrobras informed that the Administrative Board of Tax Appeals (CARF) issued on 3/22/17 a decision in favor of the Company, in the administrative proceeding that addresses the deductibility of expenses incurred by Petrobras in the development of oil and gas production, for the purposes of calculating the Income Tax for Legal Entities (IRPJ) and Social Contribution on Net Profits (CSLL) for the 2009 period. However, the Company has not yet been notified of the content of the decision, so that its legal department can proceed to an appropriate analysis. It should be noted that the National Treasury may still appeal the decision. In such a case, if the appeal is accepted, Petrobras may apply to the courts to defend their rights. Therefore, this is not a final decision in favor of the company.

The information pertaining to this proceeding has been incorporated in the 2014 financial statements, the year of sanction, and remained reflected therein in the Company’s financial statements for the 2015 and 2016 fiscal years, in explanatory note 30 (Judicial proceedings and contingencies – item 30.3 – taxation proceedings).

Petrobras did not consider the information to be suitable to the effect that it could impact investor decisions in relation to Company securities.

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Petrobras Reports 2016 Results

(Petrobras, 23.Mar.2017) – Petrobras’ results in 2016 were marked by a significant improvement in its operational performance over the course of the year, reflected in a reversal from the loss posted in 3Q16 to a net profit of R$2.51 billion in 4Q16, and a reduction in indebtedness.

Despite lower oil prices in 2016, an 8% decline in sales of oil products in the Brazilian market, and reduced power generation, the company obtained higher diesel and gasoline margins than in 2015. It also cut its spending on imports, royalties, sales, general and administrative expenses, and net financial expenses.

Exports increased 12% in 4Q16, amounting to 634,000 barrels per day of oil and oil products. Most notably, oil exports rose 14%, making the company a net exporter from Brazil in 2016.

In operational terms, Petrobras also achieved its production target for the second year in a row, producing 2.144 million barrels per day of oil in Brazil, and in December it set a new monthly record by producing 2.9 million barrels of oil equivalent per day, including oil and gas, in Brazil and abroad.

Thanks to higher operating cash generation and a 32% reduction in investment, the company achieved free cash flow of R$41.57 billion. 4Q16 was the seventh consecutive quarter of positive free cash flow, demonstrating the greater capital discipline the company has been pursuing.

Petrobras’ net debt declined 20%, to R$314 billion or $96.4 billion, due to the amortization and early payment of debts using resources from disposals and cash flow, as well as the appreciation of the Brazilian real. Debt management also enabled an increase in the average debt term, from 7.14 to 7.46 years.

EBITDA, an indicator widely used in the financial markets as a yardstick for cash flow, was R$24.8 billion in 4Q16 and R$88.7 billion in 2016, up 16% from the previous year.

As a result, the net debt to EBITDA ratio fell from 5.11 at the end of 2015 to 3.54 at the end of 2016. The target established in the company’s Business and Management Plan is to reach 2.5 by the end of 2018.

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Petrobras Announces Resignation of Council Member

(Petrobras, 23.Mar.2017) – Petrobras informed that Mr. Paulo José dos Reis Souza, member of the Fiscal Council, submitted his resignation to the post, effective on March 27, 2017.

The election of the new member of the Fiscal Council appointed by the controlling shareholder will be in the Extraordinary General Meeting, on March 27, 2017.

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Petrobras Offers Clarifications on Libra Pilot Project

(Petrobras, 21.Mar.2017) – Petrobras and its partners are committed to implementing the production sharing agreement (PSA) for the Libra area, executed in 2013 and for which Libra Pilot, the first definitive production system, scheduled for late 2020, is an important milestone.

Petrobras and its partners have, since 2015, carried out bids with different levels of local content to gather competitive proposals aligned with international metrics and to assist ANP on discussions about the feasible level of local content for those items that make up the Libra Pilot system project.

According to the contract, ANP has the possibility to ease compliance with local content percentage in the procurement of goods and services if such percentage leads to excessive terms and prices by granting a Waiver, which has already been requested by the consortium.

The consortium estimates that, by comparing the local content level required in the contract against the level it deems feasible, in the case that ANP decides not to grant the Waiver and the project is nevertheless implemented, the contractual fine value for the portion of required local content not met could reach $630 million.

The consortium is sparing no efforts to facilitate the implementation of the Libra Pilot Project at the highest possible level of local content within competitive deadlines, quality, and prices.

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Moody’s Takes Action on Cosan’s Ratings

(Moody’s Investors Service, 17.Mar.2017) – Moody’s Investors Service affirmed the ratings of the notes issued by Cosan Overseas Limited and Cosan Luxembourg S.A. and guaranteed by Cosan at Ba3.

At the same time, Moody’s América Latina affirmed Cosan S.A. Indústria e Comércio’s corporate family ratings at Ba2 (global scale) and upgraded the national scale (NSR) rating to Aa1.br from Aa2.br. The outlook was revised to stable from negative.

The action mirrors the change in outlook to stable from negative, on March 17, of the ratings of its subsidiaries Raizen (Ba1 stable) and Comgás (Ba2 stable), both of which are constrained by Brazil’s sovereign bond ratings. On March 15, Moody’s changed Brazil’s outlook to stable from negative and affirmed its issuer rating, senior unsecured at Ba2 and shelf ratings at (P)Ba2.

Ratings affirmed:

Issuer: Cosan Luxembourg SA – $51 million equivalent senior unsecured notes due 2018: Ba3 – $121 million senior unsecured notes due 2023: Ba3 – $650 million senior unsecured notes due 2027: Ba3 Issuer: Cosan Overseas Limited – $500 million perpetual bonds: Ba3 Outlook actions: Revised to stable from negative

RATING RATIONALE

Cosan’s Ba2 corporate family rating reflects the group’s aggregate credit risk, and is supported by the company’s diversified portfolio of businesses, including the entire sugar-ethanol chain, fuel and gas distribution, and lubes in Brazil, and its adequate liquidity profile. The company’s diversification, especially towards resilient businesses such as the fuel and gas distribution, translates into a stable cash source over the long-term. We expect Raízen and Comgás to distribute a significant amount of dividends over the next several years, which will be the primarily liquidity source to service Cosan’s obligations.

Constraining the ratings is Cosan’s ongoing corporate restructure, likely high dividend upstream to Cosan Limited — although the company is expected to generate enough cash to fund those dividends and reduce leverage — and an acquisitive growth history. Still, the company has not made any significant acquisitions over the past few years and entered a deleveraging path with strong dividends from Comgás and Raizen. Cosan no longer proportionally consolidates its stake in Raízen, but we continue to incorporate Raízen’s strengths, including its strong cash generation, and risks, such as the exposure to the underlying volatility of the sugar-ethanol business, in Cosan’s ratings.

The bulk of Cosan’s cash generation comes from dividends from Raízen and Comgás and, consequently, we see the debt at Cosan S.A.’s level as structured subordinated to the debt at the operating companies. The recent rating action affirming Raízen and Comgás ratings and outlook change to stable from negative followed the action that affirmed Brazil’s government bond rating to Ba2 and changed the outlook to stable from negative. Although we believe a significant portion of Cosan’s cash flows, represented by Raízen Combustíveis and Comgás, is more resilient than the overall economy in Brazil, these entities are not fully insulated from the deterioration in the domestic environment.

The stable outlook on Cosan’s ratings mirrors the stable outlook on its two main subsidiaries, Raízen and Comgás.

A downgrade of Cosan’s ratings could result from further negative rating actions on Comgás or Raízen or if liquidity deteriorates. In addition, the ratings could be downgraded if total adjusted debt to EBITDA is sustained above 4.0x.

An upgrade of Cosan’s ratings could result from positive rating actions on Comgás or Raízen. In addition, the company would have to maintain an adequate liquidity and gross leverage below 3.2x (All pro-forma ratios including Raizen figures)

Headquartered in São Paulo, Cosan S.A. Indústria e Comércio has a 50% stake in Raízen (Ba1/Aaa.br stable) and a 62.6% stake in Comgás (Ba2/Aa1.br stable). With annual revenue of BRL 81.2 billion (approximately $24.9 billion) as of December 2016, Raízen is one of the global leading players in the sugar-ethanol segment with an installed crushing capacity of 68 million tons and also the third largest Brazilian fuel distributor, operating 6,027 gas stations, mainly under the Shell brand name. Comgás, with annual net revenues of approximately BRL 7.0 billion (approximately $2.1 billion) in the same period, is Brazil’s largest gas distributor, providing natural gas to industrial, residential, commercial, automotive, thermal-power generation and co-generation consumers. The company benefits from an attractive concession area strategically located in one of the most densely populated and economically robust regions in the country. Additionally, Cosan produces and distributes automotive lubricants and base oil under the Mobil brand name with net revenues of BRL 1.9 billion ($0.5 billion) as of December 2016. In the fiscal year 2016 Cosan’s net sales reached BRL 7.5 billion (approximately $2.3 billion).

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Petrobras Says Court Authorizes Divestment Program

(Petrobras, 15.Mar.2017) – Petrobras, in continuation to the material facts disclosed on 12/8/2016 and 12/20/2016, reports that the decision by the Federal Accounting Court (TCU) issued, repealed the preventive order preventing the company from initiating new divestment projects and concluding those in progress and, as for the merit, ordered Petrobras to adopt its reviewed divestment process methodology for the divestment projects of the company.

The decision also allows Petrobras to conclude two of its projects – sale of interest in the Baúna and Tartaruga Verde fields and sale of interest in Saint Malo field in the U.S. Gulf of Mexico – which were already included in the list of five projects authorized by TCU in the 12/7/2016 preventive order, using the reviewed divestment process methodology, as of the currently stage, and to apply the reviewed divestment process methodology to other projects from the beginning.

Petrobras also informs that the divestment process methodology is subject to continuous improvement, always observing the best market practices in acquisition and divestment transactions. In order to improve its competitive process, based on the recommendations suggested by the TCU, the divestment process methodology was then reviewed and presented to the Court, culminating with the decision issued today.

Such decision is crucial for the company to move forward with its Divestment Plan, which is considered one of the main pillars to achieve the goal of reducing leverage.

Petrobras reaffirms the maintenance of its partnership and divestment target established in the Strategic Plan of $21 billion for the 2017/2018 biennium.

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Petrobras’ Unaffected by Brazil’s Outlook

(Moody’s, 15.Mar.2017) – On 15 March 2017 Moody’s changed the outlook on the Government of Brazil’s Ba2 rating to stable from negative, reflecting Moody’s expectation that the downside risks are abating and macroeconomic conditions stabilizing.

As stated in our previous reports, the change in Brazil´s outlook does not directly affect the B2 ratings or stable outlook of state-owned oil company Petroleo Brasileiro S.A. (Petrobras).

Petrobras’ ratings and outlook reflect Moody’s joint-default analysis for the company as a governmentrelated issuer. The ratings reflect the rating agency’s assumption of a moderate likelihood of timely extraordinary support from the Brazilian government. As well, Moody’s assumption for default dependence between Petrobras and the government continues to be moderate. This assessment currently results in a one-notch uplift of Petrobras’ senior unsecured rating to B2 from its b3 Baseline Credit Assessment (BCA).

On 21 October 2016, Moody’s raised Petrobras’ Baseline Credit Assessment to b3 from caa2, upgraded its ratings to B2 from B3, and changed the ratings outlook to stable from negative. The action incorporated improvements in the company’s liquidity profile and in the regulatory framework in Brazil, both of which reduced Petrobras’ credit risk. Moody’s continues to monitor progress on Petrobras’ execution of asset sales, operational improvements, and debt refinancing initiatives.

Following the $13.75 billion in bond issuances since May 2016, Petrobras’ debt amortization schedule has improved, although debt maturing in 2017 and 2018 remains high at $21.45 billion as of September 30, 2016. In addition, the class action lawsuit, the US Securities Exchange Commission (SEC)’s civil investigation and the US Department of Justice (DoJ)’s criminal investigation related to bribery and corruption could negatively affect the company’s cash position in an amount yet unclear. While Moody’s believes Petrobras’ dispute with Brazil’s federal securities regulator CVM over the company’s 2013-15 financial statements will not cause a material enough restatement to prompt the agency to take a negative rating action, any resolution with CVM could result in some future cash implications for dividend payments.

Petrobras’ lower capital spending in relation to about $13.6 billion in asset sales could indicate a reduction in its future revenues and cash flow. But any actions that strengthen Petrobras’ liquidity while also improving its operating margins and leverage would likely have a greater impact on the company’s credit quality than reductions in its production, revenues and reserve base.

Petrobras is an integrated energy company, with total assets of $247 billion as of 30 September 2016. The company dominates Brazil’s oil and natural gas production, as well as downstream refining and marketing. Petrobras also holds a significant stake in petrochemicals and a position in sugar-based ethanol production and distribution. The Brazilian government directly and indirectly owns about 46% of Petrobras’ outstanding capital stock and 60.5% of its voting shares.

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Petrobras Reports Oil, Gas Output in February

(Petrobras, 14.Mar.2017) – Petrobras’ oil and natural gas production in February totaled 2.82 million barrels of oil equivalent per day (boed), with 2.703 million boed produced in Brazil and 113,000 boed abroad.

Average domestic oil output stood at 2.20 million barrels per day (bpd), 1% down on the January figure. This was mainly due to a scheduled stoppage on FPSO Cidade de Paraty in the Santos Basin’s Lula Nordeste pre-salt field, and termination of the Anticipated Production System (SPA) test phase in the Búzios field under the Rights Transfer Agreement. The SPA was designed to gather information about the behavior of the reservoirs in the oilfield.

In February, production of natural gas in Brazil (excluding liquefied gas) stood at 80.2 million m³/d, 1% down on the previous month, mainly because of a scheduled stoppage on the FPSO Cidade de Paraty.

Pre-salt Production

In February, oil and natural gas production managed by Petrobras (own and third party output) in the presalt layer was 1.53 million boed, showing growth of 41% against the February 2016 figure. However, compared to January this year, this figure is represents a 3% drop, which was due to a scheduled stoppage on FPSO Cidade de Paraty in the Santos Basin’s Lula Nordeste pre-salt field, and termination of the SPA test phase in the Búzios field.

Gas and oil production abroad

In February, oil output from oilfields abroad stood at 63.5 million bpd, 8% down on the previous month. Natural gas production amounted to 8.4 million m³/d, 3% down on the January 2017 figure. This was mainly due to operational stoppages in the Lucius and Hadrian South fields in the U.S. because of limitations in the distribution capacity of third-party facilities.

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Petrobras Clarification on Alliance News

(Petrobras, 10.Mar.2017) – Petrobras understands that the content disclosed to the market on the Strategic Alliance with Total on 10/24/2016, 12/21/2016 and 3/1/2017, includes the relevant information about this partnership, informing the values that refer to the purchase and sale contracts that were signed between the two companies and to the credit line negotiated. It should be noted that the contracts signed were based on internal and external economic-financial assessments, as well as fairness opinion issued by independent institutions.

In relation to the internal memo disclosed exclusively to the workforce, Petrobras considered that its content is not a matter of relevant information that could impact an investor’s decision in respect to the Company’s securities, since the main partnership elements were already included in the releases disclosed to the market.

It is important to note that the potential additional gains mentioned in the internal memo depends on synergy gains from the technological cooperation in the future, involving research components, exchange of knowledge and expertise, which may or may not materialize, so that they did not present sufficient certainty to be disclosed to the market, due to the preliminary level of discussions in progress and the low maturity of their estimates.

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Petrobras Updates on Nova Transportadora Sale

(Petrobras, 10.Mar.2017) – Petrobras informed that it was suspended today by the President of the Federal Regional Court for the 5th Region, the injunction that determined the interruption of the sale of 90% of Petrobras stake in Nova Transportadora do Sudeste (NTS).

With the favorable decision by said Court, the company may move forward with this sale process. The transaction is part of Petrobras’ partnership and divestment program, which amount to a total of $13.6 billion in the 2015-2016 biennium.

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Strategic Alliance Between Petrobras, Total

(Petrobras, 7.Mar.2017) – Petrobras clarified that the R$ 500 million amount mentioned in the article published by the newspaper O Estado de S. Paulo and mentioned by President Pedro Parente in an internal communication to the company’s work force, represents a preliminary estimate of potential gains that may result from the Strategic Alliance signed between Petrobras and Total.

The synergy between the companies, where Petrobras brings in technical knowledge from the operation of pre-salt layer fields in Brazil, and Total brings in its experience in the operation of deep water fields in the Western African coast and in carbonate reservoirs, might facilitate production optimization in the future as a consequence of an increase in the recovery factor in carbonate reservoirs and resulting increase in volume produced.

As such, the aforementioned amount has not been recorded in the global value of the Strategic Alliance announced to the market on 10/24/2016, 12/21/2016, and 03/01/2017, in the amount of $2.2 billion, since materialization of the foreseen synergies will depend on the progress of technical discussions and development plans to be jointly prepared.

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Petrobras, Total Finalize Strategic Alliance

(Petrobras, 1.Mar.2017) – Petrobras and Total signed the sales contracts for the assets in the Strategic Alliance, as set out in the Master Agreement signed on the 21st of December, 2016.

The contracts signed yesterday form a Strategic Alliance between both companies creating new partnerships in the Upstream and Downstream segments, and they reinforce technical cooperation in operations, research and technology. This alliance should allow both companies to bring together their internationally recognized expertise in all segments of the oil and gas value chain in Brazil and abroad.

Through these contracts:

– Petrobras will transfer 22.5% of the rights to Total in the concession area called Iara (comprising Sururu, Berbigão and Oeste de Atapu fields, which are subject to unitization agreements with the area called Entorno de Iara, a transfer of rights area in which Petrobras holds a 100% stake), in the Block BM-S-11. Petrobras will continue as operator and hold the largest stake, with 42.5%. The partnership with Total will allow Petrobras to reduce its investment and will benefit from technological solutions for its development that will be jointly studied by Petrobras and Total, maximizing profitability and the volume of oil to be recovered. BG E&P Brasil, a subsidiary of Royal Dutch Shell plc, with 25%, and Petrogal Brasil, with 10%, are also part of the consortium.

– Petrobras will transfer 35% of the rights to Total, along with its operation, in the Lapa field concession area, in Block BM-S-9. Petrobras will keep 10%. The Lapa field is in the production phase and came onstream in December 2016. Total, as the new operator of this field, will benefit the Consortium by incorporating valuable experience in deepwater projects for the next phases of the challenging Lapa project, which has distinct characteristics from other operating pre-salt fields. BG E&P Brasil, a subsidiary of Royal Dutch Shell plc, with 30%, and Repsol-Sinopec Brasil, with 25%, are also part of this consortium.

– Sale of Petrobras’ 50% stake to Total in Termobahia, which includes two cogeneration plants, Rômulo de Almeida and Celso Furtado, located in Bahia. Both plants are connected to the regasification terminal located in São Francisco do Conde, Bahia, where Total will take the regasification capacity to supply gas to the thermoelectric plants. This initiative constitutes an innovative partnership in the Brazilian thermal market.

The above contracts are in addition to other agreements already entered into on the 21st of December, namely: (i) Letter granting Petrobras the option to purchase a 20% stake in block 2 of the Perdido Foldbelt area, in the Mexican sector of the Gulf of Mexico, only taking on future obligations in proportion to its stake (ii) Letter of intent for joint exploration studies in the exploratory areas of the Equatorial Margin and the Santos Basin; and (iii) Technological partnership agreement in digital petrophysics, geological processing and subsea production systems.

The deal includes Total paying $2,225 million to Petrobras, made up of $1,675 million in cash for assets and services, a $400 million line of credit that could be triggered by Petrobras for part of their investment in the Iara development fields and $150 million for contingent payments.

After signing the contracts, Pedro Parente, CEO of Petrobras and Patrick Pouyanné, Chairman and CEO of Total, have declared: “We are delighted today to see our Strategic Alliance becoming reality. These new partnerships together with a reinforced technological cooperation should create significant synergies and values, mutualizing our operational excellence and further reducing costs on our joint projects for the benefit of both companies”

The deal is subject to the approval of the relevant regulatory entities, the potential exercise of preemptive rights by current Iara partners in addition to other preceding conditions.

For Petrobras, this Strategic Alliance is an important part of the Petrobras 2017-2021 Business and Management Plan. It increases information, experience, and technology sharing, which strengthens corporate governance, and improves the company’s financeability through mitigation of risks, cash inflows, and the release of investments.

For Total, these new partnerships with Petrobras reinforce Total’s position in Brazil through the access to new fields in the Santos Basin while entering a promising gas value chain.

Total and Petrobras

Currently, Petrobras and Total jointly participate in 19 Exploration and Production consortiums worldwide. In Brazil, the companies are partners in the development of the giant Libra field, which is the first Production Sharing Contract in the Brazilian pre-salt Santos basin. Outside Brazil, Petrobras and Total are partners in the Chinook field in the US Gulf of Mexico, in the deep-water Akpo field in Nigeria and in the gas fields of San Alberto and San Antonio/Itau in Bolivia, as well as in the Bolivia-Brazil gas pipeline.

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Petrobras Approves Settlements with Investors

(Petrobras, 24.Feb.2017) – Petrobras announces its Board of Directors has approved settlements to end four individual lawsuits filed before the Federal Court of New York, USA, by New York City Employees Retirement System (and others), Transamerica Income Shares, Inc. (and others), Internationale Kapitalanlagegesellschaft mbH, Lord Abbett Investment Trust – Lord Abbett Short Duration Income Fund (and others).

Petrobras had already agreed settlements for fifteen other individual lawsuits before the Federal Court of New York, as announced on October 21, 2016 and November 23, 2016.

As a result of the agreements reached and the stage of ongoing negotiations with other plaintiffs in individual lawsuits, the Company, currently, expects the total provision for 2016 to be $372 million, of which a $364 million provision has already been set on September 30, 2016.

These four individual lawsuits had been consolidated for the purposes of the judgment with twenty-three other individual lawsuits and a class action filed against the Company (and others) before the Federal Court of New York, USA. With today’s announcement, Petrobras has reached an agreement in nineteen individual lawsuits from a total of twenty-seven, which were consolidated with the class action.

Currently, Petrobras cannot reliably estimate the outcome of the class action.

These agreements, the terms of which are confidential, aim to eliminate uncertainties, charges and costs associated with the continuity of such disputes and do not constitute any acknowledgment of liability on the part of Petrobras, which will continue to firmly defend itself in other ongoing lawsuits.

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Nova Fronteira Merges into São Martinho S.A.

(Petrobras, 23.Feb.2017) – Petrobras announced that, further to the statement on 12/15/2016, its wholly owned subsidiary Petrobras Biocombustível S.A. (PBIO) finalized the merger of Nova Fronteira into São Martinho S.A.

The transaction was concluded on PBIO’s receipt of 24 million new ordinary shares issued by São Martinho, representing 6.593% of the voting and total capital of this company, replacing and proportionally to the Nova Fronteira shares held by PBIO.

These shares will not be subject to any type of lock-up and any sale shall be done in an organized manner, with the collaboration of São Martinho, for a period of up to four years.

The project is part of the five transactions that can be signed in accordance with the provisional ruling of the Brazilian Federal Accounting Court (TCU), as disclosed in the material fact dated 12/20/2016.

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Petrobras Proceeds with Sale of PetroquímicaSuape

(Petrobras, 23.Feb.2017) – Further to the relevant fact disclosed on January 31, 2017, Petrobras announced that the Federal Regional Court of the 5th Region granted the stay of proceedings sought by Petrobras concerning the sale of the shares in Companhia Petroquímica de Pernambuco (PetroquímicaSuape) and Companhia Integrada Têxtil de Pernambuco (Citepe).

With the Court’s favorable decision, the company can proceed with this sale, one of five transactions given the go-ahead following the provisional ruling of the Brazilian Federal Accounting Court (TCU), as disclosed on December 20, 2016.

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Petrobras Reports Production in January

(Petrobras, 15.Feb.2017) – Petrobras’ total oil and natural gas production in January was 2.86 million barrels of oil equivalent per day (boed), of which 2.74 million boed were produced in Brazil and 0.12 million boed abroad.

The average oil production in the country was 2.23 million barrels per day (bpd), 3% lower than December, 2016. This result was mainly due to the scheduled stoppage of platform P-40, located in the Marlim Sul field, and to maintenance in one of the producing wells in FPSO Cidade de Anchieta, located in Parque das Baleias, both in Campos Basin.

In January, the natural gas production in Brazil, excluding the liquefied volume, was 81.4 million m³/d, in line with the production of December, 2016.

Pre-salt production reaches new daily and monthly records

In January, oil production operated by Petrobras (wholly-owned and partner shares) at the pre-salt layer achieved two new records, namely, the 1.28-million-bpd monthly production record and the 1.34-millionbarrel daily production record achieved on Jan. 4. It is also worth noting that oil and natural gas production operated by Petrobras reached a new record of 1.59 million boed.

Those results are mainly due to production increase in the new wells interconnected to the FPSOs Cidade de Caraguatatuba (in the Lapa field); Cidade de Saquarema, Cidade de Mangaratiba, and Cidade de Itaguaí (located in the Lula field); and Cidade de São Paulo (in the Sapinhoá field); all in Santos Basin. Another highlight was the higher operating performance at platform P-58, located in Parque das Baleias, in Campos Basin.

Oil and gas production abroad

In January, oil production in fields abroad reached 69 thousand bpd, a volume 13% higher than in the previous month. This increase was particularly due to resumed operations in the Agbami field, in Nigeria, after a scheduled stoppage that took place in December.

Natural gas production was 8.6 million m³/d, 16% lower than the volume produced in the previous month. This decrease occurred mostly because of the demand reduction for the gas from Bolivia.

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Petrobras Reaches Production Target

(Petrobras, 12.Feb.2017) – Petrobras reported average oil production in Brazil reached an annual historical record in 2016, at 2.144.256 barrels per day (bpd), 0.75% above the results for the prior year and in line with the 2,145 thousand bpd target forecast for the period. For the second year in a row, the company has met forecast plans, reinforcing its commitment to the predictability of its projections.

Average annual production operated in the pre-salt layer in 2016 was also the highest in the company’s history, reaching 1.02 million barrels of oil per day and surpassing the 2015 production by 33%.

If Petrobras’ own natural gas production, which reached in 2016 an unprecedented 77 million m³ per day, is considered, total production in the country reaches 2.63 million of barrels of oil equivalent per day (boed) – 1% more than the levels for 2015, also a new record for Petrobras.

The main highlights for production expansion in 2016 were the significant production growth in the Lula field (Iracema Norte and Iracema Sul areas, with FPSOs Cidade de Itaguaí and Cidade de Mangaratiba) and in the Sapinhoá field (FPSO Cidade de Ilhabela), located in the Santos Basin’s pre-salt layer, in addition to the Parque das Baleias area (P-58), in the Espírito Santo state section of the Campos Basin. Additionally, operations for three production systems started, two of which in the Lula field (FPSO Cidade de Maricá and FPSO Cidade de Saquarema) and one in Lapa (FPSO Cidade de Caraguatatuba), located in the Santos Basin’s pre-salt layer.

The utilization rate for Petrobras’ gas in Brazil also achieved its annual record in 2016, reaching 96%, a result of the efforts undertaken by the operating efficiency improvement and gas use optimization programs.

Record productions in December

In December 2016, the company also surpassed its monthly and daily production historical records: average oil production in Brazil for the first time exceeded 2.3 million bpd, 3% above the record registered in September 2016, and production on December 28 achieved 2.4 million barrels of oil.

In gas production, there was a 2% increase in comparison to the previous month, achieving 81.8 million m³/day. As such, oil and natural-gas production in Brazil in December were 2.82 million boed, 3% higher than what was recorded in November 2016 and 6% higher than December 2015, which also represents a new monthly production record for the company.

Oil production operated by Petrobras in the pre-salt layer reached in December the new monthly record of 1.27 million bpd, a 9% increase in comparison to production in November, which was 1.16 million bpd. Moreover, Petrobras reached a 1.34 million barrels daily record on December 29.

Meanwhile, oil and natural-gas production operated in the pre-salt layer were 1.58 million boe/d, displaying a significant 45% increase between December 2015 and December 2016, also representing a new monthly record.

Internationally, average oil production in December was 61 thousand bpd and average natural gas production was 10.3 million m³/day. As such, in December, 122 thousand boe/d were produced globally.

If oil and gas production in Brazil and internationally are consolidated, production in December 2016 was 2.94 million boed, which also represents a new monthly record.

International oil and gas production in 2016

Internationally, average oil production in 2016 was 80 thousand bpd, 19% below the volumes in the previous year. Average natural gas production reached 13.7 million m³/day, 11% below 2015 production. Reduction occurred mainly because of divestments executed, such as the sale of Petrobras Argentina.

If production in Brazil and internationally are consolidated, average oil production in 2016 was 2.22 million bpd, while average annual production of oil and gas was 2.79 million boed, the same level as in 2015.

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Standard & Poor’s Improves Petrobras’ Rating

(Petrobras, 11.Feb.2017) – Petrobras announced that the credit rating agency Standard & Poor’s raised its rating for the company’s corporate debt to ‘BB-‘ from ‘B+’ and changed its outlook to stable from negative.

The agency stated that the improvement in Petrobras’ rating reflects the evolution of its liquidity and a robust cash position that confers greater capacity to handle eventual liabilities. The recovery in the relationship with domestic and foreign banks and in Petrobras’ capacity to access capital markets was also highlighted by the agency, which considered debt management operations to be positive. The progress in the Divestment Program and the perspectives to reach the targets set for 2017 and 2018 were also emphasized.

Standard & Poor’s further stressed the management’s focus on profitability, a more balanced capital structure, and the commitment to deleverage the company, as well as the consistency of the new Pricing Policy, which enables greater visibility over Petrobras’ cash flow.

The agency has also reinforced the progress in corporate governance and the measures adopted to improve internal controls, relationship with suppliers, and decision-making processes.

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Petrobras Announces Final Tender Results

(Petrobras, 9.Feb.2017) – Petróleo Brasileiro S.A. – Petrobras (PBR) announced that holders of $4,899,100,000 and €631,753,000 principal amount of the outstanding notes of the series set forth in the table below (all such notes, collectively, the Old Notes and each a “series” of Old Notes), issued by its wholly-owned subsidiary Petrobras Global Finance B.V. (PGF), tendered their Old Notes at or prior to 11:59 p.m., New York City time, on February 8, 2017 (the Expiration Date), pursuant to PGF’s previously announced cash tender offers (the Tender Offers).

The following table summarizes the final tender results as of the Expiration Date and the principal amount of Old Notes that PGF has accepted for purchase:

Holders of $13,542,000 and €200,000 principal amount of Old Notes tendered their Old Notes after 5:00 p.m., New York City time, on January 25, 2017 (the Early Tender Date), and on or prior to the Expiration Date. PGF has accepted for purchase all of the Old Notes validly tendered in the Tender Offers after the Early Tender Date and on or prior to the Expiration Date. The final settlement date on which PGF will make payment for Old Notes accepted in the Tender Offers after the Early Tender Date is expected to be February 13, 2017 (the Final Settlement Date).

Holders of Old Notes that validly tendered on or prior to the Early Tender Date and whose Old Notes were accepted for purchase received the applicable total consideration set forth in the table above, which included an early tender premium as set forth therein, and accrued and unpaid interest on their accepted Old Notes from the last interest payment date to, but not including, January 30, 2017, the early settlement date of the Tender Offers. Holders of Old Notes that validly tendered after the Early Tender Date but on or prior to the Expiration Date and whose Old Notes have been accepted for purchase are entitled to receive only the applicable tender offer consideration set forth in the table above, which is equal to the total consideration set forth in the table above minus the applicable early tender premium as set forth therein, and to receive accrued and unpaid interest on their accepted Old Notes from the last interest payment date to, but not including, the Final Settlement Date.

The total cash payment to purchase the accepted Old Notes on the Final Settlement Date will be $13,975,639.76 and €209,913.02, in each case including accrued and unpaid interest. Old Notes that have been validly tendered after the Early Tender Date and on or prior to the Expiration Date cannot be withdrawn, except as may be required by applicable law.

The Tender Offers have now expired. No Old Notes tendered after the Expiration Date will be accepted for purchase pursuant to the Tender Offers. Any tendered Old Notes that are not accepted for purchase will be returned or credited to the holder’s account.

The Tender Offers were made pursuant to the offer to purchase dated January 9, 2017 (as amended or supplemented from time to time, the “Offer to Purchase”), and the related letter of transmittal dated January 9, 2017 (as amended or supplemented from time to time, the “Letter of Transmittal”), which set forth in more detail the terms and conditions of the Tender Offers.

PGF engaged Banco Bradesco BBI S.A., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Itau BBA USA Securities, Inc. and Morgan Stanley & Co. LLC to act as dealer managers (the “Dealer Managers”) in connection with the Tender Offers. Global Bondholder Services Corporation acted as the depositary and information agent for the Tender Offers.

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P-66 Leaves Shipyard for Lula Field

(Petrobras, 6.Feb.2017) – The floating platform will operate in the Santos Basin pre-salt and it will be the seventh unit deployed in Lula field.

On February 4, 2017 the floating production, storage and offloading vessel (FPSO) P-66 left the Brasfels shipyard in Angra dos Reis, Rio de Janeiro. It is now heading to the Lula Sul module in the Lula field, Santos Basin pre-salt, where it is expected to arrive in days. The production system will come online after the vessel has been moored and the first production well has been connected.

P-66 is the Lula Consortium’s first FPSO to be deployed in the Santos Basin pre-salt. It was assembled at the Brasfels shipyard in Angra dos Reis, where the equipment and systems were also tested.

The FPSO will separate the oil from the gas and water during the production process, storing it in tanks, and finally transferring it into oil tankers, which will then transport it. P66 will be connected to 10 production wells and 8 injector wells, and it will be able to process up to 150,000 barrels of oil per day and 6 million cubic meters of natural gas per day.

Lula field is located within the BM-S-11 concession area, operated by Petrobras (65% WI) in partnership with BG E&P Brasil (25% WI), a subsidiary of Royal Dutch Shell plc (25% WI), and Petrogal Brasil (10% W).

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Gran Tierra to Divest Brazil Business

(Gran Tierra Energy Inc., 6.Feb.2017) – Gran Tierra Energy Inc. announced a purchase and sale agreement was executed pursuant to which Maha Energy AB agreed to purchase Gran Tierra’s Brazil business unit through the acquisition of all of the equity interests in one of Gran Tierra’s indirect subsidiaries, and the assignment of certain debt owed by the corporate entities comprising Gran Tierra’s Brazil business unit to the Gran Tierra group of companies.

Upon completion of the Brazil divestiture, Maha will acquire all of Gran Tierra’s assets in Brazil, including its 100% working interest in the Tiê Field and all of Gran Tierra’s interest in exploration rights and obligations held pursuant to concession agreements granted by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis of Brazil (ANP).

The completion of the Brazil divesture is subject to Maha obtaining financing, as well as customary closing conditions, including the receipt of required regulatory approval from the ANP. The consideration to be received by Gran Tierra on the completion of the Brazil divestiture is $35 million, subject to adjustments, plus the assumption by Maha of certain existing and potential liabilities of Gran Tierra’s Brazil business unit. Pursuant to the Agreement, Maha will pay a deposit $3.5 million by February 9, 2017, which is not refundable in the event Maha is not successful in obtaining financing to complete the Brazil divestiture.

As previously disclosed, the company’s assets in Brazil are not considered core to Gran Tierra’s Colombia growth strategy, and we believe this divestiture allows Gran Tierra a significant advantage by reallocating resources (people and money) to our core Colombian exploration, development and production operations.

The economic effective date of the transaction will be on or before August 1, 2017, and Gran Tierra will continue to operate its Brazil business unit until the completion of the Brazil divestiture.

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LatinFinance Says Petrobras Has Best Debt Management

(Petrobras, 16.Jan.2017) – Voted the company with the best debt management performance in the international capital markets in 2016, Petrobras was presented by LatinFinance magazine with the Corporate Liability Management of the Year award, at a ceremony held in New York on January 12, 2017.

The award took into consideration two securities issue and repurchase transactions in the international market, in May and July last year. In the former, Petrobras issued securities with a total value of $6.75 billion and maturities of five and ten years. In the latter, the company raised an additional $3 billion by reopening the bond series. In both transactions, the company used the proceeds to repurchase securities maturing between 2017 and 2019, so as to extend its average debt maturity profile.

It was the first time the company had been presented with this award.

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Petrobras Announces Pricing of Global Notes

(Petrobras, 10.Jan.2017) – Petrobras announces the pricing of global notes denominated in U.S. Dollars (the “Notes”) to be issued by its wholly-owned subsidiary Petrobras Global Finance B.V. (PGF).

The Notes will be unsecured obligations of PGF and will be fully and unconditionally guaranteed by Petrobras. Closing is expected to occur on January 17, 2017.

The terms of the 6.125% Global Notes due 2022 are as follows:

— Issue: 6.125% Global Notes due 2022 — Amount: US$2,000,000,000 — Coupon: 6.125% — Interest Payment Dates: January 17 and July 17 of each year, commencing on July 17, 2017 — Issue price: 100.000% of principal amount, plus accrued interest (if any) from July 17, 2017 — Yield to Investors: 6.125% — Maturity: January 17, 2022

The terms of the 7.375% Global Notes due 2027 are as follows:

— Issue: 7.375% Global Notes due 2027 — Amount: US$2,000,000,000 — Coupon: 7.375% — Interest Payment Dates: January 17 and July 17 of each year, commencing on July 17, 2017 — Issue price: 100.000% of principal amount, plus accrued interest (if any) from July 17, 2017 — Yield to Investors: 7.375% — Maturity: January 17, 2027

PGF intends to use a portion of the net proceeds from the sale of the Notes to repurchase notes validly tendered and accepted for purchase by PGF in the previously announced cash tender offers (the “Tender Offers”), and to use any remaining net proceeds for general corporate purposes.

In connection with the Tender Offers, PGF announces that it has increased the tender cap from $2 billion to $4 billion. Except as described in this press release, all other terms of the Tender Offers as described in the offer to purchase dated January 9, 2017 (as may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related letter of transmittal dated January 9, 2017 (as may be amended or supplemented from time to time, the “Letter of Transmittal”) remain unchanged.

PGF has engaged Banco Bradesco BBI S.A., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Itau BBA USA Securities, Inc. and Morgan Stanley & Co. LLC to act as dealer managers in connection with the Tender Offers. Global Bondholder Services Corporation is acting as the depositary and information agent for the Tender Offers.

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Moody’s Assigns Rating to Petrobras Notes

(Moody’s Investors Service, 9.Jan.2017) – Moody’s Investors Service assigned a B2 rating to Petrobras Global Finance B.V.’s proposed global notes, which will be unconditionally guaranteed by Petroleo Brasileiro S.A. (B2 stable).

The B2 rating on the proposed notes is based on the rating of Petrobras. The proposed notes are senior unsecured and pari passu with Petrobras Global Finance B.V. and Petrobras’ other senior foreign currency debt. Proceeds from the proposed notes issuance will be used for debt refinancing and other general corporate purposes. The outlook on the ratings is stable.

RATINGS RATIONALE

Petrobras’ b3 BCA, which indicates Moody’s view of the company’s standalone credit strength, considers its high financial leverage, low to negative free cash flow, weak liquidity, local currency volatility risk and operating challenges in a difficult industry and economic environment. Consolidated free cash flow will remain under pressure in the foreseeable future as its upstream business suffers from low oil prices and downstream operations are hurt by low demand, high competition and local currency volatility, at the same time that the company’s new pricing policy for fuel is tested.

Petrobras’ b3 BCA and B2 rating are supported by the company’s solid reserve base and dominance in the Brazilian oil industry, and its importance to the Brazilian economy. Furthermore, the ratings reflect the company’s sizeable reserves at 10,515.9 Mboe, its renown technological offshore expertise and potential for continued growth in production over the long-term.

Petrobras’ B2 ratings also consider Moody’s joint-default analysis for the company as a government related issuer. Petrobras’ ratings reflect Moody’s assumption for a moderate likelihood of timely extraordinary support from the government of Brazil. Despite its stated willingness to stand behind Petrobras, Moody’s believes that the government’s current fiscal situation tempers its capacity to support Petrobras sufficiently to avoid a default. Moody’s continues to assume moderate default dependence between Petrobras and the government. Petrobras’ rating incorporates one notch of uplift between Petrobras’ BCA and its senior unsecured rating.

Petrobras’ liquidity risk has declined over 2016 on the back of $13.6 billion in asset sales and around $10 billion in exchanged notes during the third quarter last year, which helped to extend the company’s debt maturity profile. However, liquidity risk remains significant. As of September 30, 2016, Petrobras’ maturing debt in fiscal years 2017 and 2018 was $7.9 billion and $13.5 billion, respectively, for a total of $21.4 billion in the next 2 years. In addition, the class action lawsuit, the US Securities Exchange Commission (SEC)’s civil investigation and the US Department of Justice (DoJ)’s criminal investigation related to bribery and corruption will negatively affect the company’s cash position in an amount yet unclear. Other threats to Petrobras’ liquidity, as well as to its operating and financial performance, include tax contingent liabilities, execution risk related to the 2017-21 business plan and potential delays in fully executing its asset sales plan.

Petrobras’ ratings have a stable outlook, reflecting Moody’s expectation that, in the next 12 to 18 months, the company’s liquidity and overall credit profile will gradually improve, supported by managerial focus on improvements in operations and capital allocation; further debt refinancing; and additional asset sales, despite the uncertainty around the payment of fines related to the class action lawsuit as well as the SEC and DoJ investigations.

Positive rating actions could be considered if the company raises sufficient sums through asset sales or new debt arrangements to refinance its upcoming debt maturities and significantly strengthen its liquidity profile while also improving operating and financial performance. Although current low levels of capex in connection with asset sales would reduce future revenues and cash flow, actions that further strengthen the company’s liquidity but also help improve operating margins and prospects of leverage reduction are currently likely to have a greater credit impact than possible reductions in production, revenues and reserve base.

Negative actions on Petrobras’ ratings could result from deterioration in its liquidity or financial profile. Downgrades could also be prompted if negative developments from the corruption investigations or litigation against the company appear to have the potential to significantly worsen the company’s liquidity or financial profile.

Petrobras is an integrated energy company, with total assets of $247 billion as of September 30, 2016. Petrobras dominates Brazil’s oil and natural gas production, as well as downstream refining and marketing. The company also holds a significant stake in petrochemicals and a position in sugar-based ethanol production and distribution. The Brazilian government directly and indirectly owns about 46% of Petrobras’ outstanding capital stock and 60.5% of its voting shares.

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Petrobras Concludes Nansei Sekiyu Sale

(Petrobras, 28.Dec.2016) – Petrobras concluded the sale of its 100% stake in Nansei Sekiyu (NSS) to the Taiyo Oil Company.

The transaction was done by Taiyo paying $165 million, after complying with all previous conditions set forth in the agreement as signed on October 17, 2016. This amount is still subject to final adjustments.

NSS is a company wholly-owned by Petrobras International Braspetro – PIB BV located on the Island of Okinawa, in Japan. It has a refinery with a processing capacity of 100,000 barrels of oil per day, 36 tanks that store 9.5 million barrels of oil and oil products, three piers for loading and unloading ships and a monobuoy.

Taiyo is a privately-held Japanese company headquartered in Tokyo that imports, exports, refines and sells oil products. It has nine offices/branches including one oil refinery in Japan.

Nansei was sold through a bidding process, and the transaction price was assessed by three financial institutions and through two independent fairness opinions and a valuation report.

The transaction was recorded in the partnership and divestment program reaching $13.6 billion during 2015-2016. The sale is in line with the Petrobras Strategic Plan, which aims to optimize its business portfolio.

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Petrobras Sells Sugar, Ethanol, PetroChem Assets

(Petrobras, 28.Dec.2016) – These transactions are part of the company’s partnerships and divestments program. The target for the period 2017-2018 is $21 billion …

On December 28, 2016, Petrobras closed two asset sales for the total sum of $587 million. The subsidiary Petrobras Biocombustível (PBio) sold to Tereos Participations – a company in the French Tereos group – its entire stake in Guarani, representing 45.97% of the company’s equity capital, for $202 million. The Petrobras Board of Directors also approved the sale of Companhia Petroquímica de Pernambuco (PetroquímicaSuape) and Companhia Integrada Têxtil de Pernambuco (Citepe) to two subsidiaries of the Mexican company Alpek, for $385 million.

With these transactions, the Petrobras partnerships and divestments program has chalked up a total of $13.6 billion in the period 2015-2016, which is below the $15.1 billion target set for the two-year period. This failure to meet the target is explained by the company’s obligation to comply with the preliminary injunction of the Sergipe Court that blocked the completion of the negotiations for sale of the Tartaruga Verde and Baúna fields, located in the Campos Basin and the Santos Basin, respectively, which were already at an advanced stage. The target for the partnerships and divestments program in the period 2017-2018 will automatically be increased by the respective amounts, to the sum of $21 billion.

The assets sold do not have any Petrobras employees and the employment ties with the respective companies will not change as a result of the transactions.

The two agreements closed are among the five transactions that may see their contracts signed in accordance with a precautionary decision handed down by the Federal Audit Court (TCU).

All the transactions were conducted through a competitive process and the sale prices were appraised by several financial institutions, by means of independent opinions regarding the fair value (fairness opinion) and the valuation report.

More about the companies involved in the transactions:

Guarani

Guarani is one of the leading companies in the Brazilian sugar and ethanol market, ranked third among the largest sugar producers in Brazil. The company has eight industrial units: seven in Brazil, in the state of São Paulo (Andrade, Cruz Alta, São José, Severínia, Mandu, Tanabi and Vertente mills, the last in a joint venture with the Humus Group, which owns 50%) and one in Africa, in Mozambique (Sena mill).

Tereos

Tereos, which is a partner of PBio (Petrobras Biofuels) in Guarani, with a 54.03% equity stake, is the world’s third largest sugar producer. The group specializes in transforming raw materials into sugar, ethanol, alcohol and starch and has 24,000 employees at 42 industrial units across Europe, South America, the Indian Ocean, Africa and Asia.

PetroqímicaSuape and Citepe

PetroquímicaSuape and Citepe are fully-owned subsidiaries of Petrobras and form part of the company’s Chemical-Textile Industrial Complex in Ipojuca, in the state of Pernambuco. These companies bring together three integrated industrial units: PTA (purified terephthalic acid), polyester fibers and PET (polyethylene terephthalate) resin.

Alpek

Alpek is a listed Mexican company, owned by Alfa, S.A.B. de C.V., which operates in the petrochemical segment and is a world leader in the production of polyester (PTA, PET and fibers).

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Petrobras, Total Move Forward with Alliance

(Petrobras, 21.Dec.2016) – Petrobras signed a Master Agreement with the French company Total, in connection with the Strategic Alliance established in the Memorandum of Understanding signed on 10/24/2016, as previously announced to the market.

Entering into strategic partnerships is an important part of Petrobras’ 2017-2021 Business and Management Plan, as it contributes to mitigating risks, strengthening corporate governance and sharing information, experiences and technologies, in addition to improving the Company’s financial viability through cash inflows and the release of investments.

Petrobras and Total have strong similarities in the upstream segment, sharing a relevant common base of E&P assets and the search for technological development in similar themes.

The companies jointly participate in 19 consortiums worldwide in exploration and production in key projects such as the Libra area, which is the first production sharing contract in the Brazilian pre-salt in Santos Basin, besides exploration areas in Equatorial Margin, Espírito Santo Basin and Pelotas Basin. In addition, both companies are partners in the Brazil-Bolívia gas pipeline.

With this new agreement, both companies will strongly reinforce their technological cooperation in the areas of geoscience, subsea systems and joint studies in areas of mutual interest, aiming to reduce investment risks and increase the probability of exploratory success over the next years. The companies will also become partners in the Iara and Lapa fields, in the pre-salt Santos Basin, and in two thermal plants, sharing the use of the regasification terminal infrastructure in the state of Bahia.

The companies also undertake to expand their joint activities outside Brazil, with Petrobras having the option of taking a stake in the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico.

The transaction has a global estimated value of $2.2 billion including cash, contingent payments and the carry of investments in production development of common assets to both companies, to be paid by Total to Petrobras and its subsidiaries as appropriate.

The signing of the relevant Sale and Purchase Agreements (SPA) related to the assets from this Master Agreement is subject to internal and external control and regulatory approvals, including the Brazilian Federal Accounting Court (TCU), potential preemptive rights from the current partners of Iara, plus other precedent conditions. The companies have a mutual commitment to make all the necessary efforts to sign all contracts within 60 days.

The main terms and conditions of this Agreement are as follows:

– the sale of a 22.5% interest to Total, in the Iara area (Sururu, Berbigão and Oeste de Atapu fields) in Block BM-S-11. Petrobras will remain the operator and will keep the largest stake in that consortium, with a 42.5% interest.

– the sale of 35% interest to Total in Lapa field in Block BM-S-9, with transfer of the operation to Total. Petrobras will have a 10% interest in this concession.

– Petrobras’ option to take a 20% participation in block 2 of the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico, acquired by Total in partnership with Exxon in the round of bidding held by the Mexican government on 12/05/2016.

– shared use of the Bahia regasification terminal, with a capacity of 14 million m3/day.

– partnership, with Total holding a 50% stake, in the thermal plants Rômulo de Almeida and Celso Furtado, located in Bahia, with energy generation capacity of 322 MW.

– joint studies in the exploratory areas in the Equatorial Margin and in the southern area of Santos Basin, taking advantage of the existing synergy between the two companies, since each has outstanding geological knowledge of the oil basins located on both sides of the Atlantic.

– technological partnership agreement in geological processing and subsea engineering, in which the companies have complementary knowledge, which can boost the gains from the application of new technologies in the partnership areas.

The information below refers to the concessions established in the Agreement:

Concessions in Upstream

In the Iara concession, Petrobras holds a 65% interest and is the operator. Shell, with 25%, and Galp with 10%, are partners in this area, which is part of Block BMS-11. The reservoirs of this concession have higher complexity and are in the production development phase. The partnership with Total in this area will bring benefits such as the release of investments and new technological solutions for its development, maximizing profitability and the volume of oil to be recovered.

The limits of this consortium extend into the Entorno de Iara area, from the Transfer of Rights agreement, in which Petrobras holds a 100% interest. The fields Berbigão, Sururu and Oeste de Atapu must enter into Individualization Production Agreements (unitization) with this area of the Transfer of Rights.

In the Lapa field, Petrobras holds a 45% interest and is the operator. Shell, with 30%, and Repsol with 25%, are partners in this field, which is part of BM-S-9 block. The development of the Lapa field is at an advanced stage, with the recent start of production, as announced on 12/20/2016, and presents geological characteristics and oil quality different from other pre-salt fields. Total, as future operator of this field, will bring benefits to the consortium, by incorporating its experience and knowledge in the continuity of its development plan.

The technological partnerships in the Iara and Lapa areas will develop and apply certain subsea technologies in a pioneering manner in Brazil. The efforts to reduce risks and increase the probability and the success in exploration will rely on a 4D seismic application in the context of carbonate reservoirs, with specific studies on CO2 migration and geomechanical studies, in addition to the development of a methodology for the construction of models to support investment decisions.

Gas & Energy Concessions

In the case of the G&E area, Petrobras and Total are forming an innovative partnership in the Brazilian thermal market. The initiative is aligned with the strategies of Petrobras for the Gas and Energy segment in the 2017-2021 Business and Management Plan, which establishes the restructuring of the Energy Businesses and maximizes the value generated in the gas chain. This vision considers a regulatory evolution, that is already under discussion with Brazilian federal authorities, forecasting an improvement of the procurement rules, access to the pipeline network and LNG regasification terminals.

The partnership with Total includes two thermal plants (Rômulo Almeida and Celso Furtado), connected to the Regasification Terminal located in São Francisco do Conde, in Bahia.

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Statoil Awards Wood Group Contract Offshore

(Statoil ASA, 22.Sep.2015) – Norway’s Statoil ASA, on behalf of the Peregrino license partners, has been awarding a contract to Wood Group to provide 4-year operations and maintenance for 2 wellhead platforms (Alpha and Bravo) and modification services for both units and the FPSO Peregrino in the Campos Basin, offshore Brazil.

The contract’s scope includes offshore services and covers all production processes and equipment except drilling services and introduces a new operating model for the field, as for the first time the company is bundling all these services in one single contract in order to boost integration and simplify the contract management.

“We have decided to group these contracts in line with our corporate strategy of simplification, cost optimization and production efficiency. We have been working closely with Wood Group in Peregrino field and we look forward to strengthening our partnership for the next four years,” says Pal Eitrheim, senior vice president for Development Production International South America and Brazil Country Manager.

Wood Group has been operating the 2 wellhead platforms since 2009 and has supported the Peregrino project throughout its development.

“The bundling of the contracts will bring significant cost savings to Statoil Brazil, in addition to simplification to our operations. It’s essential to take the best of what the market can offer to us and further strengthen the relationship with our key suppliers,” says Jon Arnt Jacobsen, chief procurement officer of Statoil.

About The Peregrino Field

The Peregrino field is Statoil´s first and largest operatorship outside the Norwegian Continental Shelf. It started production on Apr.2011 and produces today around 90 Mb/d.

The field is located 53 miles (85 kms) offshore Brazil in the Campos basin at about 328 ft (100 meters) water depth in licenses BMC-7 and BMC-47. Statoil holds 60% ownership and the operatorship of the field and Sinochem the remaining 40%.

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Petrobras Clarifies Gaspetro Details

(Petrobras, 17.Sep.2015) – Due to the article published in the press on the potential sale of Gaspetro, Petrobras clarifies that, as announced on June 29, 2015, a divestment plan has been approved totaling $15.1 bln for the 2-year period 2015 and 2016. Therefore, the company is considering divestment opportunities in gas and energy, exploration and production and downstream. The divestment portfolio is dynamic and the materialization of these opportunities depends on business conditions and the market.

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Petrobras Output Sets Record in August

(Petrobras, 16.Sept.2015) – Petrobras’ oil and natural gas production in Brazil and abroad reached 2.88 MMboe/d in Aug.2015, a new record. It is up 0.8% on the previous record of 2.86 MMboe/d set in Dec.2014. This volume is also up 4.5% on Aug.2014 (2.76 MMboe/d). Oil and natural gas production was up 3.1% on the previous month (July) when 2.80 MMboe/d were produced.

Petrobras’ total oil and natural gas production of in Brazil was 2.69 MMboe/d, up 3.1% on the previous month (2.61 MMboe/d), which is also a new domestic production record (0.6% up on the previous record of 2.67 MMboe/d set in Dec.2014).

It is worth noting that total production operated by Petrobras in Brazil, including the portion operated for partner companies, exceeded 3 MMboe/d for the first time when 3.01 MMboe/d were produced. The company’s oil production was 2.21 MMb/d (3% higher than the 2.14 MMb/d produced in the previous month) making it the second best mark ever reach.

The increase reflects the FPSO Cidade de Itaguaí coming on stream on 31.July.2015. The vessel is anchored in Iracema Norte, an area located in the northwest portion of the Lula field, in the Santos Basin pre-salt. This platform has the capacity to process 150 Mb/d of oil and 8 MMcm/d of gas. Additionally, platforms that were undergoing scheduled maintenance returned on stream, contributing to the good performance in the month.

Natural gas production in Brazil, excluding liquefied gas, also set a new record of 77.2 MMcm/d (3.6% higher than the previous month).

New records in the pre-salt

In the pre-salt, two new records were set: daily production operated by Petrobras, with a volume of 896 Mb/d recorded on Aug.19; and the monthly production operated by the company, which reached 859 Mb/d for the month.

Oil and gas production abroad

Abroad, 192 Mboe/d were produced, 3.8% up on the 185 Mboe/d produced in July. This is mainly due to the return to operation of the platform in the Saint Malo field, in the Gulf of Mexico, in the United States. Oil production was 101 Mb/d, 5.2% up on than the 96 Mb/d produced in July and the average natural gas production abroad was 15.4 MMcm/d, 1.9% up on July’s production, which was 15.1 MMcm/d.

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Petrobras Clarifies Details of Expense Cuts

(Petrobras, 15.Sep.2015) – Petrobras hereby responds to BM&FBovespa Official Letter 2851/2015-SAE, which requests the following clarifications:

BM&FBovespa Official Letter 2851/2015-SAE       “We request that you provide clarification, by 9 a.m. on 9.Sep.2015, of the content of the article published by the newspaper Valor Econômico on 14.Sep.2015, entitled “Petrobras promises unprecedented expense cuts”, as well as any other information deemed important.”

Clarification

As disclosed in the material fact of 29.Jun.2015, the 2015-2019 Business and Management Plan envisages the adoption of optimization measures and productivity gains in order to reduce manageable operating expenses (total costs and expenses less raw material acquisitions).

Initiatives already identified by the company show that this can be achieved by greater efficiency in regard to the management of contracted services, the streamlining of structures and the reorganization of businesses, the optimization of personnel costs and a reduction in expenditures on inputs, in order to ensure a manageable operating expense ceiling of $142 bln between 2015-2019.

With this in mind, on 26.Aug.2015 all company employees were informed of the first immediate impact measures to reduce manageable operating expenses, including a reduction in expenses associated with travel and transportation, the hiring of consultants, events and communications (freebies and printed publications), training programs outside Petrobras University, and personnel.

In addition, on September 10 Petrobras presented the trade unions with its proposal for the social clauses in the 2015 Collective Bargaining Agreement, including the possibility of administrative area employees on flexi time opting for a 30-hour working week with a proportional reduction in compensation (25%).

These and other measures will play a fundamental role in achieving the goal established by the 20152019 Business and Management Plan, ensuring the Company’s alignment with the current business environment.

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Petrobras Appoints Temp Chairman, BOD

(Petrobras, 15.Sep.2015) – Petrobras’ Board of Directors approved the appointment of Director Luiz Nelson Guedes de Carvalho at a meeting.

Carvalho will chair this Board during Mr. Murilo Pinto de Oliveira Ferreira’s leave of absence, which was granted by the Council until 30.Nov.2015.

The alternate to the Chairman of the company’s Board of Directors, Mr. Clovis Torres Junior, will also not take part in the Board’s proceedings until 30.Nov.2015.

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Petrobras Updates on Leasing of Rigs

(Petrobras, 15.Sept.2015) – In regard to the news items carried by the press concerning the leasing of oil rigs, Petrobras cannot confirm that it is about to sign a 15-year lease covering 19 oil rigs, amounting to $40 billion.

As indicated on 9.Sep.2015, Petrobras currently has 28 leasing contracts for oil rigs with Sete Brasil. Contracts for seven rigs were signed in Jun.2011 and for 21 rigs in Aug.2012, totaling $89 billion. Five rigs are to be delivered within 10 years, 21 in 15 years and a further 2 rigs in 20 years.

Negotiations are in progress for a possible realignment of the total number of rigs ordered, as requested by Sete Brasil.

The company strongly denies the allegation that it is “going over the heads of technical areas and even some senior management members” and would like to make it clear that approval for any subsequent amendment of the above contracts will be subject to corporate rules of governance and compliance, as well as approval by the competent authorities.

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Petrobras Reports on Downgrade by S&P’s

(Petrobras, 11.Sep.2015) – Regarding Standard & Poor’s announcement of its new rating on September 10, 2015, Petrobras reiterates the medium-term fundability of its projects has been assured through loans taken out this year from financial institutions in Brazil and other countries.

Petrobras also clarifies its loans do not contain any clauses linked to credit ratings. In other words, the downgrade will not cause any alterations to contracts in effect.

Petrobras has been taking a series of internal measures to improve its production and management processes so as to reduce costs and thereby enhance its competitiveness. By 2019, the company forecasts that it will be able to reduce its operating costs by around $12 bln. The measures taken include a reduction in investment volumes (Capex) and prioritization of the exploration and production segment, as provided for in our new Business Plan.

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Petrobras’ Naphtha Contract with Braskem

(Petrobras, 11.Sep.2015) – Petrobras and Braskem have signed contracts to supply naphtha for 2-months, starting on September 1, 2015: one is for the Braskem Unit in São Paulo and the other is for the Bahia and Rio Grande do Sul units.

Petrobras tried to negotiate a price for the naphtha that both reflected balanced commercial conditions and the market value for this raw material, based on the international market for oil products.

Despite all efforts, the parties have still not agreed on a new long-term contract. The parties have agreed to extend the contract for another 2-months, during which time they will continue to negotiate a new long-term contract.

The price set in the contracts that have ended will be used as a provisional billing amount for the 2month period and will be adjusted for later if a new price is set in a long-term contract, as agreed between the parties or, if it is not agreed upon, the amount set in the contracts is based on international naphtha prices.

Taking the current billing price and the quantity contracted for the period in both contracts, the amount negotiated is estimated at R$1.5 bln (without taxes). The following situations are provided for to terminate the contract: breach of any of the clauses in the period over 30 days, bankruptcy or liquidation, the assignment or transfer of contract rights or credit arising from the contract to third parties used as collateral without the consent of the other party, unforeseeable circumstances or force majeure, company dissolution, change in shareholding, change in company type or purpose conflicting with the object of the contract, the failure of Braskem to provide assurances in case of extrajudicial recovery.

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Petrobras’ Clarification on Drilling Rigs

(Petrobras, 10.Sep.2015) – Currently, Petrobras has 28 contracts with Sete Brasil to charter drilling rigs. Charter contracts for 7 of the rigs were signed in Jun.2011 and the remaining 21 rigs were signed in Aug., totalling $89 bln. The 28 drilling rigs are scheduled to be delivered at different times: 5 rigs within 10-years; 21 rigs within 15-years and the remaining 2 rigs within 20-years.

Negotiations are underway to adjust the number of drilling rigs according to the equipment planned for in the 2015-2019 Petrobras Management and Business Plan. Any approval to review the contracts will have to comply with Petrobras’ regulations on corporate governance and conformity, as well as getting the approval of its competent bodies.

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Petrobras Output for July 2015

(Petrobras, 26.Aug.2015) – Petrobras sets new daily and monthly records for oil extraction in the pre-salt layer.     Petrobras’ average oil and natural gas production rose 1.8% in July 2015 compared to the previous month and reached 2.796 MMboe/d. The company produced 2.746 MMboe/d in Jun.2015. Production is up 3.6% on Jul.2014 (2.699 MMboe/d).

On Jul.8, Petrobras set a new daily oil production record in the pre-salt layer: 865 Mb/d. This production does not include natural gas extraction. Monthly production was 798 Mb/d, 6.9% higher than the existing record for Jun.

Oil and gas Production in Brazil

Petrobras’ total oil and natural gas production in Brazil was 2.611 MMboe/d, 2.3% up on the previous month (2.553 MMboe/d).

Oil production (not including natural gas) was 2.142 MMb/d, 2.6% up on the 2.088 MMb/d produced in Jun. The increase reflects new wells coming on stream at platforms P-58, in the Parque das Baleias, and P-62, in the Roncador field, both located in the Campos Basin; and on the FPSO Cidade of Mangaratiba, anchored in Iracema Sul, in the Santos pre-salt basin. FPSO is an acronym for a Floating production, storage and offloading unit.

Note that, as announced to the market and the press on 31.Jul.2015, the FPSO Cidade de Itaguaí came on stream in Iracema Norte, which is located in the Lula field in the Santos pre-salt basin. This new unit has the capacity to process 150 Mb/d of oil and 8 MMcm/d of gas.

Natural gas production in Brazil, excluding liquefied natural gas, was 74.524 MMcm/d, 0.9% up on the total production in June (73.886 MMcm/d).

Oil and gas Production abroad

Abroad, 184.6 Mboe/d were produced, 4.2% down on the 192.7 Mboe/d produced in Jun, mainly due to the scheduled shutdown of the platform in the Saint Malo field, in the Gulf of Mexico.

Oil production was 95.9 Mb/d, 5.9% down on the 101.900 Mb/d produced in Jun. and the average production of natural gas was 15.1 MMcm/d, 2% down on the previous month’s production, which was 15.4 MMcm/d.

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Petrobras Debentures Public Offering

(Petrobras, 26.Aug.2015) – Petrobras has submitted to the Brazilian Financial and Capital Markets Association (ANBIMA) a request for the preliminary analysis of registration for the public offer of simple debentures, not convertible into shares, unsecured, in up to 3 series, to be held in accordance with the procedures of CVM Instruction 400, of 29.Dec.2003 and CVM Instruction 471, of 8.Aug.2008.

The offer will initially be for 300,000 debentures with a face value of R$10,000, on the issue date, for a total initial amount of R$3,000,000,000). This amount may be increased through the exercise of the possible distribution of additional debentures and supplementary debentures.

The proceeds of the offer will be used (i) for the planned investments in the Business and Management Plan and/or extending the company’s debt profile; and/or (ii) to fund the expenses already incurred or to be incurred related to the prioritized investment project, in accordance with Law 12,431/11, as will be described in the offer documents.

In due course, a notice to the market will be issued, in accordance with Article 53 of CVM Instruction 400/03, containing information on: (i) the other characteristics of the issue; (ii) where to obtain the preliminary prospectus; (iii) the estimated dates and venues for the disclosure of the offering; and (iv) the conditions, the procedure and the bookbuilding date.

The offer will begin only after (i) the granting of the offer registration by the CVM; (ii) registration for the distribution and trading of the debentures on the CETIP and/or the BM&FBOVESPA, as applicable; (iii) the disclosure of the launch announcement; and (iv) the availability of the final prospectus to investors, including the reference form, prepared by the Company in accordance with CVM Instruction 480, of 7.Dec.2009, as amended.

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Details Related to Petrobras Distribuidora IPO

(Petrobras, 18.Aug.2015) – Pursuant to CVM Instruction 480/09, Petrobras has published, in the Brazilian Securities and Exchange Commission (CVM) system, an acknowledgement relating to the meeting of the Board of Directors held on 6.Aug.2015, which resolved on the following issues related to the IPO of Petrobras Distribuidora (BR):

(i) the recommendation that BR submit a request to the CVM for registration as a category “A” publiclyheld company and submit an application to the BM&FBOVESPA for the trading of securities on the Novo Mercado segment;

(ii) approval, as offeror, of the presentation before the CVM, of the request to register the public offering of the secondary distribution of shares issued by BR, corresponding to 25% of its capital stock, and the application for the option to distribute a supplementary lot (Green Shoe) and an additional lot (Hot Issue), within the context of the public offering;

(iii) the recommendation that BR approve, before the CVM, the request for registration of the public offering of a secondary distribution of BR shares, corresponding to 25% of its capital stock.

This release should not be regarded as an offering announcement and said offering will depend on favorable national and international capital market conditions.

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Moody’s Affirms Petrobras Argentina Notes

(Moody’s Investor Service, 14.Aug.2015) – Moody’s Latin America Agente de Calificación de Riesgo affirmed the Ba2/Aaa.ar global scale rating and national scale rating on Petrobras Argentina S.A.’s $300 million in guaranteed Series S notes (CUSIP 71646JAB5).

The rating action reflects Moody’s Investors Service’s rating action on August 11, 2015 of affirming Petróleo Brasileiro S.A.’s (Petrobras, the guarantor) global debt ratings at Ba2. The rating outlook is stable.

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Petrobras Updates on Inclusion of Tax Debts

(Petrobras, 14.Aug.2015) – Petrobras has decided to include tax debts in the Special Installment Program – REFIS, introduced under Law 12996/2014 and regulated by the Joint Ordinance PGFN/RFB 1064/15 and the Regulatory Instruction RFB 1576/15, published on 3.Aug.2015.

Since the above-mentioned regulatory instruments were published, Petrobras has been reassessing its federal tax litigation to identify any proceedings to be included in the REFIS.

These debts include unpaid Withheld Income Tax (IRRF) on remittances to the subsidiary Petrobras International Finance Company (PIFCO) to pay for oil and oil product importation for the periods 1999 to 2002, 2004, 2005 and 2007 to 2012.

The inclusion of these debts, which have an updated value of R$6 bln, in the REFIS, will save the company 50% by reducing the liability to R$3 bln, R$876 mln of which will be settled with tax loss carryforwards.

The total disbursement will therefore be R$2.1 bln, R$1.26 bln of which will come from converting the judicial deposit to be settled definitively and the remainder to be paid in installments, by disbursing R$536 mln in 2015 and R$333 mln between 20162017.

The negative impact on the company’s profits for the 3Q:15 will be R$2 bln, net of taxes.     The decision to adhere to the program was based on the potential financial benefits and a risk analysis of possible unfavorable decisions both from a legal and management perspective.

On the reporting date of the 2Q:15 financial statements, this analysis had not been completed. It was finished on 13.Aug.2015.

In addition, to judicialize it would mean a financial outlay for guarantees, as well as a substantial increase in the amount of the debt over time from interest and additional financial charges and the risk of revoking the Federal Tax Clearance Certificate, which would result in significant losses for the company.

Since the deadline for including notified tax debts is in September 2015, the company continues to reanalyze litigation to identify other debts that can be settled through the Program.

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Petrobras Updates on Settlement of Tax Liability

(Petrobras, 7.Aug.2015) – Following the publication of Joint Regulation RFB/PGFN #1064 and Regulatory Instruction 1576 in the Official Gazette on 3.Aug.2015, by the Brazilian Internal Revenue and the Office of the General Council to the National Treasury, Petrobras has decided to include, under these regulations, the processes relating to the liability for Financial Transactions Tax (IOF) on loan agreements with foreign subsidiaries (loan transactions between Petrobras System Companies) for years 2007 and 2009 to 2012, amounting to R$2.8 bln.

The above-mentioned regulations allow taxpayers who joined the scheme in 2014 to include tax liabilities on their original dates. In addition to being able to take advantage of tax losses and a negative basis for Social Contributions against Net Profits by settling tax liabilities, the scheme also has advantages in terms of reductions in fines and interest.

Notwithstanding the financial advantages for the settlement of tax liabilities, any legal action taken would require guarantees to be provided, as well as a substantial increase in the amount of the liability as time progressed due to interest and additional financial charges. There is also the risk of cancellation of the Federal Tax Clearance Certificate, which could inflict losses on the Company through measures such as prohibiting it from importing and exporting oil and oil products.

Given the financial advantages offered, the Company has opted to include these liabilities under the scheme instituted by Law 12.996/14, and accordingly recognize a total amount of R$3.1 bln under tax expenses and R$1.3 bln under financial expenses in the income statement for the second quarter of 2015.

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Filing of IPO by Petrobras Distribuidora

(Petrobras, 7.Aug.2015) – Petrobras announces that, in continuation of the studies for the initial public offering of shares by Petrobras Distribuidora (BR), disclosed in the Material Fact of 1.Jul.2015, its Board of Directors has authorized the filing of a formal request for registration of an initial public offering and for registration of Petrobras Distribuidora as a publiclyheld company with the CVM – Brazilian Securities and Exchange Commission.

All the acts necessary for the holding of the IPO will be subject to approval by the internal bodies of Petrobras and Petrobras Distribuidora, as well as subject to analysis and approval by the respective regulatory and monitoring bodies, pursuant to the applicable legislation.

This Material Fact should not be regarded as an offering announcement and said offering will depend on favorable national and international capital market conditions.

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Petrobras Post Net 1H:15 Earnings

(Petrobras, 7.Aug.2015) – Petrobras made net earnings of R$5.9 bln in the 1H:15, down 43% from the 1H:14. This result mainly reflects an increase in net financial expenses and recognition of a Financial Operations Tax (IOF) expense involving loans between different Petrobras group companies.

Operating earnings were R$22.8 bln, up 39% from the 1H:14. The main factor that contributed to this growth was higher margins in oil product sales.

Adjusted EBITDA in the 1H:15 was R$41.3 billion, up 35% from the 1H:14.

Free cash flow was R$4.5 bln, compared with minus R$15.8 bln in the 1H:14.

Investment amounted to R$36.2 bln, down 13% from the 1H:14. The exploration and production area in Brazil accounted for 78% of this investment. In dollar terms, investment totaled $12 bln, down 33% from the 1H:14 ($18.1 bln).

Petrobras received R$157 mln of sums retrieved as part of the Federal Police’s “Lava Jato” anticorruption investigation.

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FPSO Starts Ops in Santos Basin Pre-Salt

(Petrobras, 1.Aug.2015) – On July 31, 2015, the Cidade de Itaguaí started up production to commence the operational phase of the Iracema Norte project. This area is located in the Lula oilfield off the coast of Rio de Janeiro, in the Santos Basin pre-salt.

The floating, production, storage and offloading vessel (FPSO) Cidade de Itaguaí is anchored at 2,220 meters, some 240 km offshore. It has capacity to process up to 150 Mb/d of oil and 8 MMcm/d of gas, and storage capacity of 1.6 MMbbls of oil.

The 7-LL-36A-RJS well, the first to be connected to the FPSO, has a production potential of 32 Mb/d. The oil produced in the Iracema Norte area is high quality and of medium density (30º API) and will be transported by shuttle tankers. FPSO Cidade de Itaguaí will be connected to 8 production wells and 9 injection wells. It is expected to reach peak production of 150 Mb/d at the beginning of 2017.

The vessel’s modules were built and integrated in Brazil at shipyards in Rio de Janeiro (Itaguaí and Angra dos Reis) and São Paulo (São Sebastião). The Iracema Norte area is located in the BM-S-11 concession, operated by Petrobras (WI 65%) in association with BG E&P Brasil Ltda (WI 25%) and Petrogal Brasil S.A. (WI 10%).

TABLE 1: Technical characteristics

Oil production capacity ———— 150 Mb/d

Natural gas treatment capacity —- 8 MMcm/d

Storage capacity ——————— 1.6 MMbbls of oil

Water depth ————————– 2,220 meters

Source: Petrobras

Petrobras Tightens Controls in Hiring Suppliers

(Petrobras, 31.Jul.2015) – The Federal Public Prosecution Ministry returned R$139 mln misappropriated by former employees to Petrobras.

Petrobras has made its supplier management process stricter. Its suppliers must now provide detailed information about their structure, finances and mechanisms for compliance and combating fraud and corruption, among other items, which are evaluated through a process called Integrity Due Diligence.

The aim is to make the procurement of goods and services more secure and mitigate risks regarding fraud and corruption. The company has been implementing measures to ensure only suppliers with proven compliance and integrity mechanisms remain in Petrobras’ registry and can participate in competitive tenders. These measures were announced on 31.Jul.2015 during a ceremony to formally return funds to the company retrieved by the Federal Public Prosecution Ministry.

In all, R$139 mln was returned – R$69 mln of funds misappropriated by former employee Pedro Barusco, and R$70 mln misappropriated by former director Paulo Roberto Costa. This was Petrobras’ second such reimbursement. In May, the Federal Public Prosecution Ministry returned R$157 mln retrieved as part of the “Lava Jato” anti-corruption investigation.

Petrobras’ review of its suppliers’ status is beginning with companies whose activities have been suspended by courts due to evidence uncovered by the Lava Jato investigation. At the same time, the company is evaluating suppliers whose contracts are in the renewal process or that have applied to join the corporate registry.

Besides attesting to the veracity of the information they provide, the companies that remain in Petrobras’ supplier database will give it authorization to conduct audits of their integrity systems and mechanisms to combat fraud and corruption.

Collective Decisions

Petrobras is also carrying out a series of initiatives to improve its internal controls. One of the guiding principles of these changes is the limitation of individual decisions at all levels of the company and the promotion of collective decisions.

Another measure is the creation of two new committees (Strategy and Finance), in addition to three existing ones (Audit; Safety, Environment & Health; and Remuneration & Succession), to advise the Board of Directors on issues, providing more detailed analysis of all topics submitted to it.

All projects planned and approved within the company must now be evaluated using a matrix that takes into consideration possible risks, including from a control and transparency perspective.

Reporting And Investigation

To encourage people to report any signs of irregularities, Petrobras has begun the process of hiring an external, independent specialized reporting channel.

This channel will be available 24 hours a day, in several languages, and will also be open to external stakeholders and anonymous reports. This format has already been adopted by several other large oil companies with good governance practices.

Another reform is related to the functioning of Internal Investigation Commissions, created whenever it is necessary to examine signs of irregularities committed by Petrobras employees. From now on, all such commissions that investigate possible cases of fraud and corruption will be composed of representatives of the Business Security, Audit, Legal and Compliance areas. Whenever they identify possible crimes, the commissions’ reports will be submitted to the Public Prosecution Ministry and police authorities.

Another measure is that the Internal Audit area will now participate in all meetings of Petrobras’ Executive Board, contributing to the production of audit plans from the beginning of the project approval process.

Punishment For Employees

In order to create stricter penalties for employees involved in breaches of Petrobras’ rules, a Disciplinary Committee has been established, reporting to the Governance, Risk and Compliance Department.

This committee’s role is to ensure that punishments imposed on company employees are appropriate given the gravity of the irregularities. The committee is also tasked with punishing managers who fail to investigate or punish their subordinates.

***

SBM Completes $1.55 Bln Financing of FPSO

(SBM Offshore N.V., 28.Jul.2015) – SBM Offshore N.V. announced that on 27.Jul.2015 it completed the project financing of FPSO Cidade de Saquarema — which will be deployed to the Lula field offshore Brazil upon completion — for a total of $1.55 billion, which is the largest project financing in the company’s history.

Project financing was secured by a consortium of 16 international banks with insurance cover from four Export Credit Agencies (ECA): Atradius Dutch State Business N.V. (Atradius), Nippon Export and Investment Insurance (NEXI), Servizi Assicurativi del Commercio Estero S.p.A. (SACE) and UK Export Finance (UKEF).

The facility is composed of three separate tranches totalling $1.55 bln with a 5.1% weighted average cost of debt and 14-year post-completion maturity:

— Atradius covered tranche of $800 mln including SACE $167 mln and UKEF $53 mln

— NEXI covered tranche of $400 mln

— Uncovered commercial tranche of $350 mln

FPSO Cidade de Saquarema is owned and operated by a JV owned by affiliated companies of SBM Offshore (WI 56%), Mitsubishi Corporation (WI 20%), Nippon Yusen Kabushiki Kaisha (WI 19%), and Queiroz Galvao Oleo e Gas S.A. (WI 5%). The vessel has processing capacity of up to 150 Mb/d of oil and 211.86 MMcf/d (6 MMcm/d) of gas, and storage capacity of approximately 1.6 MMbbls of crude oil. The JV will own and operate the vessel on a 20-year charter service for Tupi B.V.

Combined with the $1.45 bln project financing of FPSO Cidade de Marica (Jul.2014), this announcement culminates the successful financing of $3 bln for 2 sister units destined for the Lula field in the pre-salt province offshore Brazil. BM-S-11 block is under concession to a consortium comprised of Petrobras (WI 65%), BG E&P Brasil Ltda. (WI 25%), and Petrogal Brasil S.A. (WI 10%).

***

Petrobras Clarifies Contract with Braskem

(Petrobras, 22.Jul.2015) – In regard to the news published by the press on the Braskem contract, Petrobras would like to make it clear that the naphtha supply contract between Petrobras and Braskem was examined by an Internal Investigative Committee set up after the company had access to the state’s evidence agreement signed by Alberto Youssef and Paulo Roberto Costa.

Based on its investigations and in compliance working within its brief, the committee identified certain irregularities in the internal approval procedures for the contract to supply petrochemical naphtha to Braskem, signed in Jul.2009.

Petrobras has taken appropriate administrative steps and forwarded the committee’s final report to the Federal Prosecution Office (MPF) and Paraná state’s Regional Superintendence of the Federal Police Department so that further investigations can be conducted by the competent authorities.

The Braskem contract is now being investigated within the framework of operation Lava-Jato, which has already received ample media coverage.

Finally, the company states that other measures are still under evaluation and full cooperation with the authorities is ongoing.

***

Petrobras Clarifies IPO News

(Petrobras, 21.Jul.2015) – Regarding reports in the press about an Initial Public Offering (IPO) for BR Distribuidora S.A., Petrobras clarifies that, as announced on 1.Jul.2015, the Executive Board authorized a study to be prepared analyzing strategic alternatives for its wholly-owned subsidiary Petrobras Distribuidora.

Among the possibilities to be explored, is attracting a strategic partner and a public offering, making this a subsidiary a listed company in a special segment of the BM&FBovespa stock market called Novo Mercado – New Market and is in compliance with the best corporate governance practices.

If this offering takes place, it will be through a secondary public offering of shares and all the acts needed for the offering are subject to the approval of Petrobras and Petrobras Distribuidora S.A. internal bodies, as well as the analysis and approval of their respective regulatory entities, supervisors and authorities, according to applicable law.

***

Petrobras Updates on Tax Contingency

(Petrobras,  17.Jul.2015) – Due to the unfavorable final ruling by the Tax Appeals Board (CARF), Petrobras paid R$1.6 bln to cover the Tax Deficiency Notice issued by the Brazilian Federal Revenue Service, R$1.2 bln in cash and R$0.4 bln in tax losses.

The Tax Deficiency Notice relates to Financial Operations Tax (IOF) on loans made by the company to its overseas subsidiaries in 2008. The discussion began in 2012 and over time the probative-evidentiary context proved to be unfavorable to the position defended by the company.

Consequently, appealing the decision in court would involve the constitution of a guarantee, as well as a substantial increase in the amount of the debt over time due to interest and additional financial charges.

It is important to note that if the payment were not made, in addition to the above impacts, the debt would be registered as delinquent, which would prevent the renewal of the Federal Tax Clearance Certificate or even result in its cancellation, which could substantially jeopardize the company, for example, by preventing it from importing and exporting oil and oil products.

This payment will be recognized in the financial statements for the 2Q:15, with a negative impact of R$1.4 bln, net of taxes.

***

Petrobras Decision on Parque das Baleias Arbitration

(Petrobras, 17.Jul.2015) – Further to the Parque das Baleias Arbitration released on July 6, 2015, the Arbitration Tribunal issued a new ruling (16.Jul.2015) to suspend deposits of disputed special participation tax amounts, estimated at R$ 350 mln/quarter.

This ruling is provisional and is valid until the final judgement of the Request for Reconsideration submitted by Petrobras in order to suspend the effects of the previous ruling.

The tribunal also extended the deadline for the parties to submit precise calculations of the amounts corresponding to previous discrepancies in the special participation tax and a proposal for depositing these discrepant amounts.

***

FPSO Cidade de Marica Arrives in Brazil

(SBM Offshore B.V., 10.Jul.2015) – SBM Offshore announced the arrival of FPSO Cidade de Marica at BRASA, Brazil. The SBM Offshore vessel berthed safely at the Niteroi-Rio based yard 9.Jul.2015. She had arrived in Brazilian waters midJune, following her 10,625 nautical miles (Nm) or 19,678 kilometers voyage from China.

FPSO Cidade de Marica is one of two carbon-copy FPSOs being constructed from the blueprint for FPSO Cidade de Ilhabela, the mother ship, which sailed from Brasa to commence production in Nov.2014. The FPSO is the deepest in SBM’s operating fleet at 7,021 feet (2,140 meters) and has the largest capacity at 150,000 b/d of oil.

“We are happy with the progress to date on Marica and we look forward to the delivery of the FPSO to our client once the BRASA scope is completed. We expect her to follow in the footsteps of her mother ship FPSO Cidade de Ilhabela, which has been successfully producing offshore Brazil for eight months and is an example of the world-class standards to which SBM aspires. All our teams are working hard to achieve our delivery target for Marica, the third pre-salt FPSO in the series of four that SBM is providing to Petrobras,” said SBM Offshore COO Philippe Barril.

“The arrival of FPSO Cidade de Marica to BRASA represents a newsworthy milestone for SBM Offshore and a further step on the road to delivery. It demonstrates SBM’s effective global project management for her conversion, which is being jointly conducted from our Regional Centers in Holland, Monaco and Brazil.

As a joint venture partner with Synergy in BRASA shipyard, SBM is very proud to welcome her to the quayside for the final integration of her modules,” said Project Director John Perkins.

Conversion work on the hull and some module integration was completed in China before she set sail in Apr.2015 for Brazil. Cidade de Marica is the second FPSO to moor and be integrated at BRASA shipyard since it opened in 2012. Project Manager Martijn Kleijn says “Integration of the hull and topsides will take place at BRASA where some of the modules have also been fabricated. The yard is ready to begin the module lifting phase using the yard’s Pelicano-1 barge crane. Additional modules were constructed and delivered by EBSE, a Rio yard that SBM works closely with as part of its development of local content solutions.”

FPSO CIDADE DE MARICA AND FPSO CIDADE DE SAQUAREMA

The FPSO Cidade de Marica is destined for the Lula field in the pre-salt province offshore Brazil. BM-S-11 block is under concession to a consortium comprised of the following companies: Petrobras (WI 65%), BG E&P Brasil Ltda. (WI 25%), and Petrogal Brasil S.A. (WI 10%). Her sister ship – FPSO Cidade de Saquarema which is currently in the CXG yard in China from where Marica sailed – is also destined for the same field and is being converted in parallel. Planned delivery for FPSOs Cidade de Marica and Cidade de Saquarema is expected respectively by end 2015 and early 2016. SBM Offshore’s contract with BM-S-11 subsidiary Tupi BV is for the 22-year charter and operation of the two FPSOs.

The FPSOs are owned and will be operated by a JV owned by affiliated companies of SBM Offshore, Mitsubishi Corporation, Nippon Yusen Kabushiki Kaisha, and Queiroz Galvao Oleo e Gas S.A. in which SBM Offshore shareholding is 56%.

The twin FPSOs will benefit from the technological expertise that SBM Offshore acquired during the successful conversion and operational experience of FPSO Cidade de Ilhabela and FPSO Cidade de Paraty.

FOUR FPSOS OFFSHORE PRE-SALT BRAZIL:

1) 2013 Cidade de Paraty

2) 2014 Cidade de Ilhabela

3) 2015 Cidade de Marica

4) 2016 Cidade de Saquarema

***

Douglas-Westood: Brazil in Deep Trouble

(Douglas-Westwood, 7.Jul.2015) – Douglas-Westwood commented on “Brazil – In Deep Trouble” in its latest edition of DW Monday.

Petrobras has long been a pioneer in the adoption and deployment of deepwater technology. This has enabled them to build huge reserves of some 16 billion barrels of oil. Converting these reserves to production, however, is another matter and Petrobras has a history of setting ambitious targets, with a poor record of meeting them.

The long delayed ‘2015-2019 Business and Management Plan’ recently released is a reflection of the new reality for Petrobras. With collapsed oil prices and unfavorable exchange rates, Petrobras has slashed their expenditure plans by 40% from the plans announced a year ago. Recognizing the upstream challenges, the company is now allocating 84% of its budget to E&P compared to 70% in the previous plan. The biggest cut goes to their refining and supply sector which has seen its budget reduced by 67% compared to last year’s plan.

Production decline from existing fields is a huge challenge with around 200,000 b/d of capacity eroded each year. Brazil’s huge deepwater potential remains constrained with Petrobras having to revise their production target for 2020, which now forecasts domestic oil output to increase to 2.8 MMb/d – 40% lower than its projection 12 months ago. DouglasWestwood predicts that over the forecast period, Brazil will need to drill around 300 development wells in deepwater, in order to sustain and reach its production target. However, of the 29 new rigs being built by the company, many are under threat from either funding problems or yards withdrawing from the contracts. Douglas-Westwood had already taken a conservative position on Brazil and the cut in production target now brings in line Petrobras’ expectations and our own ‘DW D&P’ forecast.

The scale and importance of Brazil in the overall offshore sector means that the impact of the latest spending revisions will be felt throughout the oilfield service industry supply-chain.

***

FPSO Cidade de Itaguai Arrive at Iracema

(Petroleo Brasileiro S.A., 6.Jul.2015) – Petroleo Brasileiro S.A. (Petrobras) reported that the floating production, storage and offloading unit (FPSO) Cidade de Itaguai is now anchored in the Iracema Norte area of Lula field, in the Pre-Salt layer of Santos Basin, off the coast of Rio de Janeiro, Brazil.

The platform-ship is able to produce 150,000 b/d of oil and compress 282.49 MMcf/d (8 MMcm/d) of natural gas. Oil production in the field is scheduled to begin in the 3Q:15.

Moored 149 miles (240 kilometers) off the coast of Rio at a water depth of around 7,349 feet (2,240 meters), FPSO Cidade de Itaguai will be connected to 8 production wells and 9 injection wells. The natural gas will be exported to shore via a subsea gas pipeline. The unit is also capable of storing 1.6 MMbbls of oil and injecting 264,000 b/d of water.

Overall, 65% of Cidade de Itaguai was produced domestically, and 12 of its modules were built in Brazil: 10 at the EBE shipyard in Itaguai, Rio de Janeiro; and two at the Schahin shipyard in Sao Sebastiao, Sao Paulo. The modules were integrated at the BrasFELS shipyard in Angra dos Reis, Rio de Janeiro.

The platform-ship was acquired from the Schahin/Modec consortium, which was responsible for converting the hull, constructing and integrating the modules, and operating the unit.

The Iracema Norte area of Lula field is located in exploration block BM-S-11, in the pre-salt layer of Santos Basin. BM-S-11 is being developed through a consortium featuring the following partners: Petrobras (leader and operator, WI 65%), BG E&P Brasil Ltda (WI 25%) and Petrogal Brasil SA (WI 10%).

FPSO Cidade de Itaguai – key figures:

— Oil processing: 150,000 b/d

— Gas treatment and compression: 282.49 MMcf/d (8 MMcm/d)

— Water treatment and injection: 264,000 barrels per day

— Oil storage capacity: 1.6 MMbbls

— Water depth: 7,349 feet (2,240 meters)

— Total length: 1,089 feet (332 meters)

— Breadth: 190 feet (58 meters)

— Height: 102 feet (31 meters)

— Weight: 82,000 metric tons

***

Court’s Prelim Ruling on Parque das Baleias

(Petrobras, 6.Jul.2015) – On 2.Jul.2015, the Arbitration Court granted a provisional remedy in an action filed by Petrobras relating to a resolution of the National Agency of Petroleum, Natural Gas and Biofuels (ANP) to treat the assets of Baleia Anã, Baleia Azul, Baleia Franca, Cachalote, Caxaréu, Jubarte and Pirambu as a single field, as from the 2Q:14.

The provisional ruling states that Petrobras must make quarterly deposits in favor of ANP covering the disputed amounts related to the special holding. Based on the price of oil and the current output from the field, the quarterly deposit will amount to around BRL 350 million.

The Arbitration Court also ordered the parties to submit the following: i) an exact calculation of the amounts corresponding to the historical differences of the special holding up to the date of the ruling; ii) a proposal for depositing these differences. Although the amount is yet to be confirmed by the parties, according to the ANP the estimated amount to date is BRL 2.2 billion.

It is important to point out that this is a preliminary judgment and a ruling has yet to be made on the merits of the case.

***

Petrobras Reports Sale of Bijupirá, Salema fields

(Petrobras, 2.Jul.2015) – Petrobras signed with PetroRio S.A. contracts for the sale of 20% of its stake in the concessions of Bijupirá and Salema fields, currently operated by Shell. The transaction amounts to $ 25 million and is subject to adjustments that are common to this type of operation.

These fields are located in the Campos Basin, between 480-850 meters depth. Production averages 22 Mb/d of oil and 325 thousand m3 of associated gas. The oil extracted is light, between 28-31 degree API.

As part of the Petrobras’ Divestment Plan, this operation is related to the portfolio optimization in the Exploration and Production area, and is in line with the 2015-2019 Business and Management Plan.

The conclusion of the purchase and sale transaction between the parties is subject to certain preceding conditions, including the approval of an assignment of rights by the Board of Directors of the Brazilian Administrative Council for Economic Defense – CADE and the Brazilian National Petroleum Agency – ANP.

***

Petrobras to Study Petrobras Distribuidora Offering

(Petrobras, 1.Jul.2015) – Petrobras’ Executive Board, at a meeting held on 30.Jun.2015, authorized studies to be prepared analyzing strategic alternatives for its wholly-owned subsidiary Petrobras Distribuidora S.A. (BR).

Among the possibilities to be explored, is attracting a strategic partner and a public offering, making this subsidiary a listed company in a special segment of the BM&Fbovespa stock market called Novo Mercado – New Market and in compliance with corporate governance practices.

This initiative is part of Petrobras´ Divestment Plan and, if this offering takes place, it will be through a secondary public offering of shares issued by that company.

All acts needed for the public offering are subject to the approval of Petrobras and Petrobras Distribuidora internal bodies, as well as the analysis and approval of the respective regulatory entities, supervisors and authorities, according to applicable law.

This notice should not be considered a public offering announcement and its realization will depend on favorable domestic and international stock market conditions.

***

Petrobras to Spend $130.5 Bln Between 2015-2019

(Petrobras, 29.Jun.2015) – On 26.Jun.2015, the Board of Directors of Petrobras approved the 2015–2019 Business and Management Plan. The plan earmarks investments of $130.3 billion for 2015-2019. The investment portfolio prioritizes oil exploration and production (E&P) in Brazil, especially in the pre-salt. Of the total amount, 83% ($108.6 billion) will go to E&P. In other business segments, investments are targeted basically at maintaining operations and projects related to transferring the oil and natural gas produced.

Total investments in the previous plan have been cut by 37% and are allocated to business segments as follows. Note: Table not available.

The basic objectives of the plan are to reduce the company’s indebtedness and to generate value for shareholders. The goal is to cut indebtedness levels by reducing leverage (Net Indebtedness/(net indebtedness + net assets)) to below 40% by 2018 and 35% by 2020, and the ratio of net indebtedness to Ebitda (earnings before interest, taxes, depreciation and amortization) to less than 3 by 2018 and 2.5 by 2020.

The financial plan is based on the following main assumptions:

— Oil product prices in Brazil at parity with imports;

— Brent Price (average): $60/bbl in 2015 and $70/bbl from 2016 to 2019;

— Exchange rate (average): as shown below. Note: Table not available.

The amount of divestment for the period between 2015 and 2016 has been revised to $15.1 billion (30% in Exploration and Production, 30% Downstream and 40% Gas and Power). The Plan also includes efforts to restructure business, retire assets and further divestment, totaling $42.6 billion between 2017 and 2018.

Divestment is common among large oil companies throughout the world. Over the past few years, in addition to mergers and acquisitions by the private oil companies, most asset acquisitions have been made by Asian national oil companies (NOC) and finance companies.

Of planned investments in E&P, 86% will be allocated to production development, 11% to exploration and 3% to operational support. $64.4 billion will be earmarked for new production systems in Brazil, including 91% of this figure for the pre-salt. In terms of exploration in Brazil, investments will be concentrated in the Minimum Exploratory Program for each block.

Downstream will receive investments of $12.8 billion, including 69% for maintenance and infrastructure, 11% for completing work on the Abreu e Lima Refinery and 10% for Distribution. The total amount includes investment in Comperj for receiving and processing gas, maintaining equipment, etc.

Gas and Power have been allocated $6.3 billion, chiefly for gas pipelines for transferring gas from the pre-salt, as well as the associated processing units (UPGNs).

Oil, NGL and Natural Gas Production Curve

The production targets for oil, NGL (natural gas liquids) and natural gas in Brazil have been updated to reflect the postponements of low-maturity projects and delays in the delivery of production units, largely due to limitations of Brazilian suppliers.

The company plans to reach total oil and gas production (domestic and international) of 3.7 MMboe/d in 2020, by which time the pre-salt will account for 66% of total oil production in Brazil.

The reduction in Petrobras’ investments follows a global trend in the oil and gas industry and is directly linked to the in oil prices on the world market. All companies in the sector, whether majors, national or independent, have been forecasting a cut in investments in all areas, including E&P. Average global E&P investments this year are down 20% on the 2014 figure.

The Plan allows for the adoption of measures for optimization and productivity gains to reduce Manageable Operating Costs (total costs and expenses, excluding costs related to basic materials). Actions already planned indicate that this could be achieved by greater efficiency in managing contracted services, rationalizing structures and reorganizing the company´s businesses, optimizing personnel costs and reducing expenditure on inputs.

Note that the company is subject to various risk factors that could adversely affect its cash flow projections, including:

— Fluctuations in market variables, such as oil prices and exchange rates;

— Divestment operations and other business restructuring plans, subject to market conditions prevailing as and when transactions are made;

— Achieving oil and natural gas production targets at a time when suppliers in Brazil are experiencing difficulties.

***

Swire Secures Contract with Weatherford Brazil

(Swire Oilfield Services, 29.Jun.2015) – Swire Oilfield Services secured an exclusive five year contract with Weatherford International plc in Brazil.

“This is a great reward for the team’s efforts in growing the business in Brazil and we are proud to support Weatherford’s activities,” said Marcelo Nacif, Swire General Manager in Brazil. “Of all the markets we operate in, Brazil in particular is undergoing a period of transformation as it attempts to more than double production by 2020.”

The contract, providing DNV 2.7-1 cargo carrying units (CCU’s) to the oil and gas service company, was awarded following a year-long tender process and will ensure the safe transportation and storage of project critical equipment offshore.

Worth a seven figure Brazilian Real (BRL) sum and running for the duration of five years, this is an important contract for the company in a key growth market where they already employ 85 people in Rio de Janeiro and Macae, maintaining the firm’s development of its services to help clients in the region deal with increasingly challenging logistics.

***

Petrobras Comments on FPSO Cidade de São Mateus

(Petrobras, 12.Jun.2015) – Petrobras completes analysis of factors that contributed to accident on 11.Feb.2015, on board FPSO Cidade de São Mateus, in Espírito Santo.

The report is aimed at documenting the analysis of the occurrence, in order to further improve the industry’s safety standards and prevent similar accidents in future. The main causal factors identified were breaches of fluid pumping operating procedures, the installation of a piece of equipment (racket) in a pipe without the proper technical specifications and alteration registration, and safety procedure violations.

Petrobras has submitted the report to the public authorities, including the National Oil, Natural Gas and Biofuels Agency (ANP), the Federal Police and the Civil Police, with whom Petrobras has been collaborating since the start of the investigations.

The report’s conclusions are also being shared with Petrobras’ exploration and production workforce, the BW Offshore group – responsible for operating FPSO Cidade de São Mateus – and the oil industry as a whole.

Petrobras also clarifies that claims that it was warned about certain faults before the accident are incorrect.

***

Petrobras Set Record Pre-Salt Production

(Petrobras, 12.Jun.2015) – Petrobras’ pre-salt production in May set two new monthly output records. Production handled by the company, including both Petrobras and partner production, reached a new high of 726,000 b/d, up 1.6% on the Apr.2015 figure (715,000 b/d). This includes Petrobras’ own record output of 519,000 b/d, 3.2% up on the Apr.2015 figure (503,000 b/d).

Domestic and foreign total oil and natural gas production in May.2015 was 2.766 MMboe/d, up 6.2% on the volume produced in May.2014 (2.605 MMboe/d) and down 0.7% on Apr.2015 (2.785 MMboe/d).

In Brazil, Petrobras’ total oil and gas production in May.2015 totaled 2.574 MMboe/d, 0.8% lower than in Apr.2015 (2.596 MMboe/d).

The company’s exclusive oil production in Brazil was 2.111 MMb/d in May.2015, 1% down on the Apr.2015 figure (2.134 MMb/d).

Production was impacted by a higher number of scheduled maintenance stoppages on platforms in May.2015, in comparison to the previous month. This effect was partially offset by the start-up of the early production system in the Atapu field (in the Transfer of Rights area), implemented on the FPSO Cidade de São Vicente in the Santos Basin pre-salt. Production was also reinstated on platform P-58, in the Campos Basin area known as Parque das Baleias, after completion of maintenance work in Apr.2015.

Petrobras natural gas production in Brazil, excluding the liquefied gas, was 73.593 MMcm/d, practically unchanged on the Apr.2015 figure (73.370 MMcm/d).

Foreign oil and gas production

In May.2015, 192,000 boed were produced abroad, 1.2% up on the previous month’s output of 190,000 boed, mainly due to the performance of gas wells in Hadrian South field in the North American Gulf of Mexico.

Average oil production abroad in May.2015 stood at 101,000 boed, stable in comparison to the volume produced in Apr.2015 (102,000 b/d).

Average natural gas production abroad was 15.3 MMcm/d, 3.2% up on the 14.8 MMcm/d produced in the previous month, mainly due to the performance of wells in the Hadrian South Basin.

***

Petrobras Aims to Gas Reduce Faring by 60%

(Petrobras, 5.Jun.2015) – Brazil is now among the countries that best use their natural gas output.

By significantly reducing gas flaring on its platforms, in Feb.2015 Petrobras achieved a record 96.5% gas usage rate in its exploration and production activities, considering total production in the fields operated by the company.

Petrobras’ Gas Usage Optimization Program (POAG), under way since 2010 at its E&P area operational units in the South-Southeast region of Brazil, contributed decisively to this record. This initiative was the subject of a talk entitled “Reduction of Petrobras’ gas flaring,” presented by the program’s coordinator, Vitor Souza Lima, 5.Jun.2015 at the World Gas Conference (WGC 2015) in Paris.

It is estimated that through this reduction in gas flaring, Petrobras will have avoided emitting nearly 23 million metric tons of CO2 into the atmosphere by the end of 2015. “The program’s aim is to increase natural gas usage in Petrobras’ E&P activities. As a consequence, we have cut our emissions considerably while increasing the gas supply in the market. Before POAG was started, half our greenhouse gas emissions came from gas flaring in our production activities. Flaring now accounts for one-sixth of these emissions,” explained Lima, based on data from the company’s Safety, Environment and Health area.

About gas flaring

Natural gas flaring is an inherent part of the production process in the oil industry, and takes place for a variety of reasons: safety, emergencies, operational abnormalities, scheduled maintenance and during the start-up (commissioning) of new platforms.

***

Moody’s Assigns Ba2 Rating to Petrobras Notes

(Moody’s, 3.Jun.2015) – Moody’s Investors Service assigned a Ba2 rating to Petrobras Global Finance B.V.’s proposed global notes, which will be unconditionally guaranteed by Petrobras. The Ba2 rating on the proposed notes is based on the rating of Petrobras (Ba2 stable).

The proposed notes are senior unsecured and pari passu with Petrobras Global Finance B.V. and Petrobras’ other senior foreign currency debt. Proceeds from the proposed notes issuance will be used for general corporate purposes, including debt refinancing and capital investitures. The outlook on the rating is stable.

***

Petrobras Signs $5 Bln Deal with CDB

(Petrobras, 20.May.2015) – On 19.May.2015, Petrobras signed a cooperation agreement with the China Development Bank (CDB) for the years 2015-2016.

The deal encompasses funding of $3.5 billion already disbursed, as announced on 1.Apr.2015, and an additional disbursement of $1.5 billion, adding up to $5 billion in 2015.

The agreement was signed by Petrobras CEO Aldemir Bendine and CDB Chairman Hu Huaibang at a ceremony in Brasília.

This deal furthers the strategic partnership between CDB and Petrobras, strengthening cooperation between the two countries’ economies.

***

Petrobras Impairment of Trade Receivables

(Petrobras, 20.May.2015) – Petrobras has provisioned, in its 2014 Financial Statements, an allowance for impairment of trade receivables to cover uncollateralized receivables.

In the 1Q:15 financial statements, as disclosed in the note 7.4, the company reported the reversion of part of these allowances in the amount of approximately R$1.3 billion.

The inclusion of collaterals has made this reversion possible, which was formalized in 7.May.2015, due to the pledge of additional receivables the Fuel Consumption Account (Conta de Consumo de Combustível – CCC) has from the Brazilian Energy Development Account (Conta de Desenvolvimento Energético – CDE).

The signing of the pledge agreement formalized the conclusion of a negotiation process started on Mar.2015 and therefore, still in the first quarter and includes the recognition by the Brazilian Electric Energy Agency – ANEEL of new amounts to be included in the 2016 Annual Plan of the Fuel Consumption Account (CCC).

Pursuant to CPC 24 (related to the International Accounting Standards – IAS 10) – Subsequent Events – issued by the Accounting Standards Committee, the effects of the conclusion of this process were recognized in the 1Q:15 financial statements as they are considered a subsequent event with amending effects that occurred before the disclosure of the quarterly results with an effective inclusion of collaterals and consequent credit improvement.

***

Petrobras Reports Output for April 2015

(Petrobras, 19.May.2015) – Petrobras’ foreign oil and natural gas production in April 2015 was 2.785 (Mmboe/d), in Brazil and abroad, up 0.8% on March 2015, which was 2.764 Mmboe/d.

Among this total, 2.596 Mmboe/d were produced in Brazil and 189 Mboe/d abroad. The production of 2.785 Mmboe/d is up 8.8% on the volume produced in Apr.2014, which represented 2.560 Mmboe.d.

Oil and Gas Production in Brazil

In Apr.2015, Petrobras total oil and natural gas production in Brazil was 2.596 Mmboe/d, up 0.8% on the volume registered in the previous month (2.574 Mmboe/d).

Petrobras’ total oil and natural gas production in Brazil – which includes a portion produced to partner companies – was 2.886 Mmboe/d, up 1.8% on Mar.2015 (2.834 Mmboe/d).     In Apr.2015, Petrobras’ exclusive oil production in Brazil was 2 million 134 thousand boed, up 1.2% on March, which was 2 million 108 thousand boed.

Such increase is mainly due to the production growth of FPSOs Cidade de Manguaratiba, located in the Sapinhoá Norte field, and Cidade de Ilhabela, in Iracema do Sul – both on the Santos Basin pre-salt cluster – besides the smallest quantity of platforms scheduled maintenance shutdowns.

The oil production operated in the country was 2/346 MMb/d. 2.1% above the previous month (2.297 MMb/d).

The own production of natural gas in Brazil, excluding the liquefied volume, was 73 million m³/d in Apr.2015, keeping the same level of the previous month.

The natural gas production without liquefied operated by Petrobras in Brazil, including the portion to partner companies, was 86 million m³/d.

The usage of produced gas reached 96.1% in Apr.2015.

New pre-salt records

In 11.Apr.2015, Petrobras reaches its own daily production record at the “pre-salt” layer of Santos and Campos basins, with 590 Mb/d. Furthermore, the production operated by the company at the “presalt” reached a peak of 802 Mb/d in the same day.

Other Apr.2015 highlights were the monthly presalt production record of 503 thousand bpd and operated production of 715 Mb/d.

Foreign production

In Apr.2015, 189.5 Mboe/d were produced abroad, down 0.2% (189.8 Mboe/d) on the previous month.

In Apr.2015, the average oil production was 102.2 Mb/d, 0.2% up 101.9 Mb/d on the previous month. This increase was mainly due to production ramp-up of new production wells in Saint Malo and Lucius basins in the US and higher production in the Nigerian Akpo field. The sale of basins in the Southern Basin, Argentina, compensated such production growth.

Foreign natural gas production was 14.8 million m³/d, down 0.6% (14.9 million m³/d) on the previous month. The sale of basins in the Southern Basin, in Argentina, compensated the startup production of the Hadrian South basin, in the U.S.A.

***

Petrobras’ New Pre-Salt Record

(Petrobras, 13.May.2015) – Petrobras announces that on April 11, 2015, oil production in the fields it operates in the pre-salt province of the Santos and Campos basins reached the milestone of 800,000 b/d, constituting a new daily production record. Of this volume, around 74% (590,000 b/d) corresponds to Petrobras’ share and the remainder belongs to its partner companies in different pre-salt layer production areas.

The 800,000 b/d output was achieved just eight years after the first oil discovery in the pre-salt layer, in 2006 – less time than was necessary to arrive at the same level in other offshore production areas. It took Petrobras 40 years and 6,374 wells to reach oil production of 800,000 b/d in Brazil. In Campos Basin, this same production volume was reached in 24 years, using 423 wells.

In the pre-salt, the 800,000 b/d milestone was achieved now with just 39 production wells. Of these wells, 20 are located in Santos Basin, which accounts for 64% of output (511,000 b/d), while the other 19 wells are located in Campos Basin, representing 36% of production (291,000 b/d).

On the day the record was achieved, 11 definitive production systems and one early production system were operating in the pre-salt layer. Seven of these systems were exclusively producing oil from this geological layer. This record was aided by the startup of the early production system installed in Búzios field in March of this year, using a dynamic producer platform-ship – the first extended oil and gas production in the “Cessão Onerosa” area. Another contributor to this result was the start-up of platform P-20 in the pre-salt layer in Marlim field, Campos Basin, which will contribute to future production growth in the area.

***

Petrobras Seeks Compensation Against Contractors

(Petrobras, 8.May.2015) – Petrobras has filed joint lawsuits with the Federal Public Prosecutors’ Office for improper conduct against the contractors and executives identified as responsible for irregularities within the scope of the Federal Police’s “Lava Jato” anti-corruption investigation.

The lawsuits are on top of a series of measures the company has adopted to guarantee full compensation for the losses it has suffered, including those related to its reputation.

In this first stage, there are two lawsuits – one filed on 30.Apr.2015 and the other filed 8.May.2015 – concerning improper payments related to contracts between the companies Engevix and Mendes Júnior and Petrobras’ Downstream Department. The total value involved is around R$452 million, including compensation for material damages plus a fine, as well as a claim for compensation for moral damages, whose value will be quantified in due course.

Soon, Petrobras will also jointly file another three lawsuits, involving contracts with the companies Camargo Corrêa, OAS and Galvão Engenharia, with a total claim for reimbursement of approximately R$826 million. As in the first group of lawsuits, the sum is composed of material damages, plus a fine – equivalent to three times the material losses – and moral damages to be quantified over the course of the process.

By monitoring lawsuits already proposed and future ones, the company reinforces its cooperation with the investigations and seeks compensation for the losses caused by the improper payments scheme.

***

Petrobras Reports New Composition of Committee

(Petrobras, 8.May.2015) – Petrobras’ Board of Directors has unanimously approved the new composition of its Audit Committee, by appointing Directors Luiz Nelson Guedes, Luiz Augusto Fraga Navarro de Britto Filho and Roberto da Cunha Castello Branco as the new members of this Committee.

The Board of Directors has also unanimously approved the appointment of Director Luiz Nelson Guedes de Carvalho as the President of Petrobras’ Audit Committee.

***

Moody’s Assigns Rating to Raízen Energia

(Moody’s, 30.Apr.2015) – Moody’s América Latina assigned a Baa3 global scale and Aaa.br national scale ratings to Raízen Energia S.A.’s proposed BRL 500 million senior unsecured CPR-F (Cédulas de Produto Rural Financeiras) due 2021 and guaranteed by Raízen Combustíveis S.A. The outlook for the rating is stable.

The rating of the proposed CPR-F assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody’s to date and assume that these agreements are legally valid, binding and enforceable.

***

Petrobras Completes Third Sergipe Basin Well

(Petrobras, 29.Apr.2015) – Petrobras finished drilling well 3-BRSA-1296-SES (ANP nomenclature) in the Sergipe Basin’s ultra-deep waters, in concession BM-SEAL-10, block SEAL-M499.

The test results confirmed the presence of light oil (higher market value) and good reservoir porosity and permeability.

The well was drilled to a depth of 6,060 m. It is located 94 km off the Aracaju coast (SE), 10 km from the discovery well, at a water depth of 2,988, setting a new record for Brazilian offshore well depth.

This is the third extension well in the Moita Bonita Area, discovered on August 2012, and is part of the Segipe-Alagoas Basin deep-water exploration Project.

Petrobras holds a 100% interest in the block and will proceed with the Discovery Evaluation Plan approved by Brazil´s National Petroleum, Natural Gas and Biofuels Agency (ANP).

***

Petrobras Seeks Assist of Federal Prosecutors Office

(Petrobras, 28.Apr.2015) – On 24.Apr.2015, Petrobras submitted a request to assist the Federal Prosecutors Office in seven criminal lawsuits related to Operação Lava Jato (Operation Car Wash), in which the company is the defendant.

These lawsuits have been filed at the 13th Federal Court in Curitiba (Paraná state).

This indicates that Petrobras, which is already collaborating with the public authorities, is seeking to act firmly in order to remedy its losses, as a conviction may guarantee that the company is compensated for the damage caused by these crimes.

Petrobras is taking all possible measures with the Brazilian authorities in order to remedy the damage incurred as a result of the unlawful acts reported as part of Operação Lava Jato.

***

Petrobras Reports Audited Results for 2014

(Petrobras, 23.Apr.2015) – Petrobras presented a loss of R$21.6 billion for the year 2014, mainly due to an asset impairment charge of R$44.6 billion, a write-down of improperly capitalized additional spending within the scope of the Federal Police’s “Operação Lava Jato” anticorruption probe (R$6.2 billion), a provision for losses from power sector receivables (R$4.5 billion), write-downs related to the construction of the Premium I and II refineries (R$2.8 billion), and a provision for the Program to Encourage Voluntary Severance (PIDV) (R$2.4 billion).

In the 3Q:14, a loss of R$5.3 billion was made. The difference in relation to the R$3.1 billion net earnings reported on 27.Jan.2015 reflects the write-down of improperly capitalized additional spending within the scope of Operação Lava Jato (R$6.2 billion), as well as an extra R$1.6 billion provision for losses from power sector receivables.

The R$26.6 billion loss in the 4Q:14 reflected the asset impairment. Most of this loss was related to refining activities, due to project planning problems, the use of a discount rate with a higher risk premium, the postponement of expected cash inflow and lower economic growth. In exploration and production, the impairment resulted from the decline in oil prices. As an operational highlight, Petrobras’ oil and natural gas production (in Brazil and abroad) grew by 5% in relation to 2013, reaching an average of 2.669 Mmboe/d in 2014. Pre-salt production contributed 381,000 b/d during the year, with record oil production of 713,000 b/d achieved on 21.Dec.2014.

During the year, four new platforms came on line and 87 new wells were interconnected in Brazil.

In refining, total production of oil products in 2014 was 2.170 MMb/d, up 2% from 2013. The first part of the RNEST refinery began operating in Nov.2014.

Investments totaled R$87.1 billion in 2014, down 17% from 2013.

The company ended the year with R$68.9 billion in cash.

***

Baker Hughes Announces 1Q:15 LatAm Results

(Baker Hughes Incorporated, 21.Apr.2015) – Baker Hughes Incorporated announced results for the first quarter of 2015.

Latin America revenue was $493 million for the 1Q:15, down $37 million, or 7%, compared to the 1Q:14. The drop in revenue can be attributed to activity declines in the Andean area, as reflected in a 24% decline in the rig count, and revenue declines in Venezuela from both lower rig count activity and unfavorable exchange rates as a result of the currency devaluations that occurred in the 2Q:14.

These reductions in revenue were partially offset by share gains in Mexico’s marine region, increased unconventional activity in Argentina, and share gains in Brazil as a result of a recent drilling services contract.

Adjusted operating profit margin for Latin America in the 1Q:15 was 9.1%, down 180 basis points compared to the 1Q:14. Not unlike revenue, profitability was impacted by reduced onshore activity levels, along with $14 million in reserves for doubtful accounts and inventories, and $5 million for a currency devaluation in Venezuela as the company adopted the prevailing market rate of 192 Venezuelan Bolivars per U.S. Dollar.

In the 2Q:15, the Latin America rig count is projected to drop less than 5%. However, this forecast includes a decrease of 5 deep-water drilling rigs in Brazil relating to demobilization of a local drilling rig supplier facing potential bankruptcy. The reduction of deep-water activity is expected to have a negative impact on the 2Q:15 results.

***

Karoon Confirms Find at Echidna-1 Well

(Karoon Gas Australia Ltd., 21.Apr.2015) – Karoon Gas Australia Ltd. announced that a 699 foot (213 meter) gross oil column has been confirmed in the Echidna-1 exploration well in Block S-M-1102, Santos Basin offshore Brazil from wireline pressure data across the Paleocene and Maastrichtian aged reservoir intervals. Physical oil samples recovered measure a 39.5 degree API oil gravity.

The Echidna-1 exploration well had completed the wireline program and was preparing for the commencement of a production testing program within the Paleocene reservoir section.

“The Echidna discovery represents another significant achievement for Karoon. Echidna adds incremental resource to Karoon’s discovered Kangaroo oil field which further supports Karoon’s ambitions to develop an integrated production hub in the Santos Basin,” said Karoon Managing Director Robert Hosking.

Wireline Results

The Paleocene reservoir interval has a gross thickness of 246 feet (75 meters), 177 feet (54 meters) net, with an average porosity of 25 percent. Oil recovered from wireline MDT samples is 39.5 degree API with a GOR of 750 standard cubic feet per barrel.

The Maastrichtian reservoir interval has a gross thickness of 371 feet (113 meters), 164 feet (50 meters) net, with an average porosity of 21%. A pressure defined oil gradient shows the Maastrichtian to have the same oil pressure gradient as the Paleocene reservoir, indicating that the oil API and GOR are very similar to the recovered Paleocene samples.

A deeper Maastrichtian oil column was also intersected in a separate 7 meter sand having an average 23% porosity. The interpretation of oil is supported by natural shows and a pressure-defined oil gradient.

The Echidna-1 exploration well is located in Block S-M-1102, on the east side of the “Emu” salt 25iaper complex, and tested a similar salt flank play first proven by Kangaroo-1 and later confirmed by Kangaroo-2 and its two sidetracks. Results of Echidna further substantiate the validity of the salt flank play.

The JV will conduct a production testing program over the Paleocene reservoir section which is set to commence as soon as preparations are complete, expected later this week. The Maastrichtian reservoir section is planned to be tested as part of the follow up drilling program.

A decision with respect to the second well option will be made in the coming weeks.

Forward Plan

Over the coming months Karoon will continue to conduct the required geoscience and engineering work to characterize the Kangaroo and Echidna oil fields. Further appraisal drilling is planned to commence in the near term with pre-FEED studies to be conducted in tandem with drilling.

Partners in the block S-M-1102, Santos Basin, Brazil include: Karoon (Operator, WI 65%) and Pacific Rubiales Energy Corp. (WI 35%).

***

Petrobras Approves Loan for Contracts

(Petrobras, 17.Apr.2015) – Petrobras has approved the following contracts:

— R$ 4.5 billion export note with Banco do Brasil through its subsidiary BR Distribuidora for a 6-year period.

— R$ 2 billion standby loan with Caixa Econômica Federal for a 5-year period.

— R$ 3 billion standby loan with Bradesco for a 5-year period.

— Cooperation Agreement with Standard Chartered Bank for the sale and leaseback of production platforms totaling up to $3 billion and for a 10-year period.

These transactions, along with the ones already entered into this year, will meet the company’s 2015 financing requirements.

Petrobras will continue to assess financing opportunities aimed at anticipating some of the requirements for 2016.

In addition, as disclosed on 3.Feb.2015, Petrobras approved a $13.7 billion divestment plan for 2015 and 2016.

Pre-salt assets in production are not included among the upstream assets of this divestment plan.

***

Petrobras Divestments Exclude Pre-salt Assets

(Petrobras, 15.Apr.2015) – Petrobras’ approved divestment plan does not contain pre-salt assets. As reported in a Material Fact on 2.Mar.2015, Petrobras has approved a divestment plan with a total value of $13.7 billion for 2015 and 2016.

This plan is part of the company’s financial plan, which aims to reduce leverage, preserve cash flow and concentrate on priority investments.

***

Subsea 7 Signs $200 Mln Contract in Brazil

(Subsea 7 S.A., 14.Apr.2015) – Norway’s Subsea 7 S.A. was awarded a contract worth approximately $200 million with a duration of approximately 2-years.

“This new contract for Seven Seas maintains our solid presence in the market for PLSVs in Brazil. We are proud to provide continuous service to Petrobras as it develops its complex oil and gas fields offshore Brazil,” said Victor Bomfim, Subsea 7’s Senior Vice President for Brazil.

The contract is for the installation of flexible lines for Petrobras’ projects using Subsea 7’s construction and flex-lay vessel Seven Seas, on a day-rate basis. The vessel has been operating for Petrobras under a similar day-rate contract since 2013 and will commence the new contract in direct continuation to the current one.

The Seven Seas is a vessel capable of operating in water depths up to 9,842 feet (3,000 meters) and is equipped with an advanced flexible pipe-lay system with top tension capacity of 430 tons. The contract work scope will be similar to that of other Subsea 7 Pipelay Support Vessels (PLSVs) operating under dayrate contracts in Brazil, providing engineering and installation services for client-supplied flowlines, umbilicals and subsea equipment.

***

Petrobras’ Board Election

(Petrobras, 27.Mar.2015) – The Petrobras Annual Shareholders’ Meeting scheduled for April 29, 2015 will elect new members of the Board of Directors and Fiscal Council.

Petrobras has not yet completed the preparatory work on the company’s third quarter 2014 and annual 2014 financial statements for examination by independent auditors, approval by the Audit Committee, Fiscal Council and Board of Directors, and subsequent release.

Additional items on the Annual Shareholders’ Meeting agenda, including examining, discussing and voting on the financial statements, accepting the administrative accounts, deliberating on the allocation of net profits for the year and 2014 dividend distribution, and approving the capital budget for the 2015 fiscal year, will be on the agenda of an Extraordinary General Meeting to be held at the earliest opportunity.

Petrobras would like to reaffirm its commitment to finalizing the financial statements as soon as possible, but as yet is unable to specify a completion date.

***

Petrobras’ Withdrawal Plan from Okinawa

(Petrobras, 27.Mar.2015) – Petrobras has decided to initiate its plan for withdrawing from Okinawa, Japan.

The plan involves closing down the refining activities of the Nansei Sekiyu refinery (NSS). To maintain supplies to the island of Okinawa, NSS will continue to operate the maritime cargo terminal until the end of the plan, which will be executed in close collaboration with Japan’s Ministry of Economy, Trade and Industry (METI).

Throughout the process, Petrobras will continue to act responsibly and in line with best social and environmental responsibility practices, committed to the people of Okinawa and its local workforce.

***

Petrobras Reviews Governance

(Petrobras, 25.Mar.2015) – At a meeting on March 24, 2015, Petrobras’ Executive Board gave the go-ahead for a project to review its corporate governance and organizational management model, based on the new business environment and review of the company’s investment plan.

The project will be headed by Senior Management with the support of the Executive Board, and implemented by a group of executives with expertise in various areas of the company.

***

Petrobras Libra Consortium 2nd Extension Well

(Petrobras, 24.Mar.2015) – The Libra consortium has finished drilling extension well 3-BRSA-1267-RJS/3-BRSA-1267A-RJS (3-RJS-735/735A). The drilling results confirmed the presence of a hydrocarbon column approximately 200 meters deep in reservoirs with good permeability and porosity characteristics.

Informally known as C1, the well is located in the central part of the Libra block, in Santos Basin, around 220 km offshore from the city of Rio de Janeiro.

The final depth reached was 5,780 m, including a water depth of 2,160 m. This is the second well successfully drilled by the Libra consortium, and is 18 km from the first well, called 3-RJS-731.

The hydrocarbon and CO2 bearing intervals were calculated through electrical profiles and fluid samples, which are being characterized through laboratory analysis.

The consortium will continue with the exploration plan by drilling new wells in order to evaluate the Libra area, which covers around 1,550 km2.

The Libra consortium is composed of Petrobras (Operator, 40% WI), Shell (20% WI), Total (20% WI), CNPC (10% WI) and CNOOC (10% WI), as well as Brazilian state-owned company Pré-Sal Petróleo S.A. (PPSA), which is the contract manager.

***

Coutinho Takes Over Petrobras Board

(Petrobras, 22.Mar.2015) – Economist Guido Mantega resigned on March 23, 2015 from the Petrobras’ Board of Directors, leaving his position as President.

The Board approved by majority vote the election of Luciano Galvão Coutinho as the new President.

No new board member was elected. Luciano Galvão Coutinho has been a Petrobras board member since April 2008. He is also on the Board of Directors of Petrobras Distribuidora S.A. and has been President of the National Economic and Social Development Bank (BNDES) since April 2007.

In compliance with Brazilian Corporate Law and the company’s Articles of Association, Coutinho’s election is valid until the next Shareholders’ Meeting.

***

Olinda to Drill Kangaroo West1 Well

(Karoon Gas Australia Ltd., 20.Mar.2015) – Karoon Gas Australia Ltd.’s disclosed that the Kangaroo-2 appraisal well, located in exploration Block S-M-1165, confirmed a 820 foot (250 meter) gross or 443 foot (135 metre) net oil column in Paleocene and Maastrichtian aged reservoirs, announced November 26, 2014. Karoon is the operator and has a 65 percent interest in the jointly held Block S-M-1165, Santos Basin, Brazil. Pacific Rubiales Energy Corp. holds the remaining 35 percent interest.

As at 0600 hrs AEST January 6, production testing over the Paleocene A, B and C oil bearing reservoirs was complete. Preparations are underway to commence a side-track program to better define the resource size and recovery factors. The results from the test are as follows:

Oil Flow Rate

Production test DST-2A was conducted in the Paleocene A, B and C sandstone reservoirs over the intervals 5,456-5,515 feet (1,663- 1,681 meters) rotary table (RT), 5,561-5,672 feet (1,695-1,729 meters) RT and 5,692-5,751 feet (1,735-1,753 meters) RT with a 12 hour main flow period. The maximum oil flow rate attained was 3,700 stock tank barrel per day or stb/d (stabilized rate of 3,450 stb/d) through an 88/64 inch choke with a flowing tubing head pressure of 270 psia, a gas-oil-ratio of 540 standard cubic feet (scf)/stb.

Production test DST-2 was conducted in the Paleocene C sandstone reservoir over the interval 5,692-5,751 feet (1,735-1,753 meters) RT. The maximum oil flow rate attained was 2,500 stb/d through a 44/64 inch choke with a flowing tubing head pressure of 425 psia and a gas-oil-ratio of 450 scf/stb. The well was then flowed on a 40/64 inch choke at a stabilised rate of 1,820 stb/d with a flowing tubing head pressure of 420 psia, a gas-oilratio of 450 scf/stb.

At the end of a main 24 hour flow period, the well was shut-in for a 48 hour pressure build-up period.

Oil Specification

DST-2A produced a 33 degree API oil with zero carbon dioxide (CO2), hydrogen sulfide (H2S), water or sand produced.

DST-2 produced a 31 degree API oil with zero CO2, H2S, water or sand produced.

Production Well Potential

Based on the oil rates obtained in DST-1A (Maastrichtian section) and DST-2A (Paleocene section), Managing Director, Robert Hosking said “Karoon is very pleased with the production testing results from Kangaroo-2. Based on the flow rates achieved in both the Paleocene and Maastrichtian reservoirs, a vertical production well could produce 6,000 to 8,000 stb/d from the combined reservoirs. In addition, horizontal production wells could be expected to produce at higher rates. “

Kangaroo-2 Side-Track Program

After the well testing string is removed and the Paleocene reservoirs are plugged back with cement and a cement retainer, the well will be side-tracked in both a down-dip and up-dip location in order to better define the resource size and recovery factors.

Side-track-1 will be drilled to a down-dip location to target the Paleocene and Maastrichtian reservoirs on the eastern side of an interpreted north-south trending fault, and to evaluate potential hydrocarbon accumulations in the Campanian. Wire-line logs and a pressure survey will be conducted.

Side-track-2 will be drilled into Paleocene and Maastrichtian reservoirs in an up-dip location to test reservoir and hydrocarbon potential towards the salt wall.

The information obtained from Kangaroo-2 will be important for assessing the commerciality of the Kangaroo oil field and will be valuable for a Front End Engineering and Design (FEED) phase bringing the project a step closer to commerciality.

The Kangaroo-2 appraisal well is located in exploration Block S-M-1165, approximately 984 feet (300 meters) up-dip and 2.4 miles (4 kilometers) south of Kangaroo-1 and is the first well in the Santos Basin exploration and appraisal drilling campaign.

Forward Program

Following the completion of all operations on the Kangaroo-2 appraisal well, the rig will be moved to drill Kangaroo West-1 exploration well (the second firm well in the program) and evaluate the prospect approximately 2.8 miles (4.5 kilometers) distant on the western side of Kangaroo salt structure.

Due to the large size and proximity to Kangaroo, a successful outcome at Kangaroo West-1 would materially add to any possible development of the Kangaroo oil field.

The exploration and appraisal drilling campaign is expected to continue through first half 2015.

The rig contract provides Karoon with 2 firm wells plus 2 option wells, and, in the event of a successful drilling outcome in the first 2 wells provides maximum flexibility for further appraisal of the Kangaroo oil discovery, additional drilling at Kangaroo West or possibly targeting other prospects.

The salt flank play was first proven by Kangaroo-1 with the intersection of a 249 foot (76 meter) gross oil column and oil recovered to surface from wireline DSTs. Results of the Kangaroo-2 further confirm the viability of the play. Kangaroo West-1 is located on the western flank of the same salt structure as Kangaroo-1 and has the same trap type and reservoir and seal intervals that have been mapped into the prospect from surrounding wells.

The Olinda Star (mid-water semisub) is drilling the entire campaign.

***

Petrobras Sets New Pre-Salt Records

(Petrobras, 19.Mar.2015) – Petrobras output from the Santos and Campos basin pre-salt clusters reached record levels in February. On 26 of the month, records were broken for own output, which rose to 555,000 barrels per day (bpd), and for output from concessions operated for other companies (including operations run for partner companies), which reached 737,000 bpd.

Petrobras’ total oil and natural gas production in February 2015 was 2.801 million barrels of oil equivalent per day (boed), down 1.5% on the January figure (2.845 million boed). This February total includes both oil and natural gas, with domestic production at 2.612 million boed and foreign output at 189,000 boed.

Domestic oil and natural gas output reaches 2.612 million boed.

Total oil and natural gas production in Brazil for February 2015 was 2.612 million boed, down 1.8% on January’s figure (2.661 million boed).

Total production operated by Petrobras in Brazil was 2.854 million boed.

Petrobras domestic output of oil alone was 2.146 million barrels per day (bpd), down 2.1% on January’s figure of 2.192 million bpd. Oil output from operations in Brazil (including operations run for partner companies) was 2.319 million bpd, down 2.1% on last month’s figure (2.370 million bpd).

February’s slight in production was primarily due to planned maintenance shutdowns of platforms P19, in Marlim field and P-58, in Parque das Baleias, both in Campos Basin. FPSO Cidade de Angra dos Reis, in the Santos basin’s Lula field, was also shut down for scheduled maintenance. The fall in output due to shutdowns was partially offset by seven new offshore wells in the Campos and Santos Basins which came onstream in February.

Record level for utilization of natural gas

Petrobras’ own production of natural gas in Brazil, excluding the volume liquefied, stood at 73.968 million m3/day in February, 0.8% down on the January figure. Gas production excluding the volume liquefied but including operations run for partner companies, reached 84.958 million m3/day.

In February, utilization of natural gas produced reached 96.5%, a historic monthly level for domestic gas output and surpassing the previous record of 96.3% set in September 2013.

Production abroad in February increases 2.7%

In February, output of oil and natural gas abroad reached 189,000 boed, up 2.7% on January’s figure of 184,000 boed.

Average oil output abroad in February stood at 100,000 bpd, up 2.1% on January’s figure of 98,000 bpd, primarily due to the start-up of new production wells in the Saint Malo and Lucius fields in the United States.

Average natural gas output abroad was 15.016 million m³/day, up 2.5% on the January figure of 14.646 million m³/day due to a boost in output from the Sábalo field in the Bolivian San Antonio block.

***

Petrobras Breaks Record in Sergipe-Alagoas Basin

(Petrobras, 18.Mar.2015) – Petrobras set a new national record, drilling under a water column (distance between the water surface and the seabed) of 2,990 meters. This was achieved in February in the Moita Bonita area of SergipeAlagoas Basin, 92 km off the coastal city of Aracaju.

Only six exploration wells across the world have exceeded this depth. Of the 50 deepest wells in the world, Petrobras has drilled 15 (30%) of them.

The deepwater discoveries made in SergipeAlagoas Basin since 2010 have revealed a new extremely promising exploration frontier. The drillstem test, conducted in 2012, confirmed the presence of 41º API oil (light, high-quality crude) and good reservoir productivity.

Eight wells in the region are more than 2,700 meters deep, all drilled within a period of three years. This is a significant achievement given the adverse local drilling conditions, with intense ocean currents, deep water and the need to use more robust drilling equipment such as blowout preventers (safety equipment designed to permit well closure).

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Petrobras Receives $157 Mln via “Operação Lava Jato”

(Petrobras, 13.May.2015) – Petrobras CEO Aldemir Bendine participated in a ceremony to return to Petrobras sums recovered through the Federal Police’s “Operação Lava Jato” anti-corruption investigation.

At the event, a symbolic handover of R$157 million to the company took place, in reference to the sums retrieved by the Federal Public Prosecution Ministry through Operação Lava Jato. The ceremony was held at the headquarters of the Office of the Chief Federal Prosecutor, in Brasília. These sums were kept in secret accounts in Switzerland and repatriated through joint work by the Federal Public Prosecution Ministry, the Federal Police, the Federal Revenue Service and the Federal Courts. The judicial bank account that is receiving back the stolen amounts now has a balance of approximately R$205 million.

Bendine emphasized the importance of the event for the company at its current moment. “A day like this, when we retake the first installment of the resources lost through these practices, reinforces that Petrobras is on the right track to overcome this crisis and become once more a source not just of pride, but also good prospects and good results for its employees, shareholders and the whole of Brazilian society,” he said. He also stressed the company’s efforts to recover the stolen resources and to collaborate with the investigations conducted by the public authorities.

“In another area, we have jointly filed lawsuits for improper conduct against former employees and executives, and companies. We have filed two requests and over the next two weeks we will lodge three more. In this first batch of lawsuits alone, we expect to recover R$1.3 billion, plus moral damages, whose values have not yet been determined,” stated Bendine.

The chief federal prosecutor, Rodrigo Janot Monteiro de Barros, stressed the importance of the money’s return. “We are doing our part by guaranteeing that the money diverted through corruption is returned to Petrobras’ coffers.” Janot added that one of the objectives of the public authorities’ action is to recover what was taken from a company that fell victim to a criminal scheme.

The ceremony was opened by the federal public prosecutor of the state of Paraná, Deltan Martinazzo Dallagnol, who is coordinating the Lava Jato task force. According to him, the initiative has been a historic milestone for Brazilian institutions. “This return of money gives us hope. The millions that are being returned today to Petrobras were obtained through collaborative agreements involving the Federal Public Prosecution Ministry, those under investigation and defendants.”

The event was also attended by federal judge Nivaldo Brunoni, who is the director of the Paraná Judicial Service; the vice-president of the Brazilian Association of Federal Judges (Ajufe), Candice Galvão; Federal Police officer Erika Miali; and the head of the Research and Investigation Office of the 9th Fiscal Region of the Federal Revenue Service, Roberto Leonel.

***

Petrobras Early Production System in Buzios Field

(Petrobras, 12.Mar.2015) – On March 10, 2015 Petrobras started up its early production system in the Santos Basin’s Buzios field. This will be the first large-scale long-term production run in the Rights’ Transfer area, to be handled by FPSO Dynamic Producer, tied back to well 2-ANP-1RJS. Average output will be limited to 15,000 barrels of oil per day due to restrictions on gas use.

This early production system will enable Petrobras to produce for a six-month period and gather important information to optimize the field’s first permanent production system on platform P-74, which is currently in the final conversion phase at the Inhaúma shipyard, in Rio de Janeiro.

The Buzios field is around 200 km off the coast of Rio de Janeiro, with water depths ranging from 1,600 to 2,100 m. Commerciality was declared in December of 2013.

Rights’ Transfer Agreement – A Rights’ Transfer agreement is a concession agreement between Petrobras and Brazilian Federal Government covering a group of pre-salt areas and fields in the Santos Basin. The agreement legally authorizes Petrobras to carry out oil and natural gas exploration and production in these areas, with production capped at 5 billion barrels of oil equivalent (oil and gas), and subject to payments to the Federal Government.

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Moody’s Comments on Braskem

(Global Credit Research, 3.Mar.2015) – Moody’s Investors Service comments that Braskem S.A. announcement of a third extension of its naphtha supply contract with Petroleo Brasileiro S.A. (Petrobras) is credit negative because it fails to set the final conditions for Petrobras long-term contract, although it reduces fuel supply risk.

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Petrobras Contract with Independent Auditor

(Petrobras, 2.Mar.2015) – Petrobras announces that its Board of Directors, on a meeting on February 27, has approved a contract with PricewaterhouseCoopers Auditores Independentes for the provision of accounting audit services for the years 2015 and 2016.

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Petrobras Reveals Divestement Plan Review

(Petrobras, 2.Mar.2015) – Petrobras announced that its Executive Board, on a meeting on February 26, 2015, has approved the company’s two-year (2015/2016) divestment plan.

Divestitures total $13.7 billion, and include Exploration & Production assets in Brazil and abroad (30%), as well as assets in the Downstream (30%) and Gas & Energy (40%) segments.

The approved divestment amounts represent a rise when compared to the $5-$11 billion allocated in the 2014-2018 Business & Management Plan, as released in February 2014.

This plan is part of Petrobras’ financial planning aimed at reducing leverage, preserving cash and focusing on priority investments, mainly oil and gas production in Brazil in areas of high productivity and return.

Please note that the approved amount of $13.7 billion is Petrobras’ best estimate, however, it is susceptible to changes in the market, including but not limited to, Brent barrel price, exchange rate, and economic growth in Brazil and abroad. Market changes may lead Petrobras to adjust its divestment target accordingly.

The appropriate Governance authorities, including the Executive Board and the Board of Directors, will review and approve each asset sale transaction.

These operations are also subject to approval by the relevant Brazilian and international regulatory agencies, as applicable.

New announcements deemed relevant will be made to the market in a timely manner.

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Petrobras Credit Rating Downgrade

(Petrobras, 27.Feb.2015) – Regarding the downgrade to Petrobras’ debt rating announced on February 24, 2015 by Moody’s, the company emphasizes that it is working to guarantee the transparent and accurate disclosure of its 2014 financial results as soon as possible.

Furthermore, Petrobras is implementing a series of measures aimed at preserving its cash position and reducing its leverage. The company is revising its financial plan and it understands it should be necessary to reduce its investments, increase its disposals and study other options for funding and increasing its cash flow. Petrobras has also been working to enhance its internal controls, as demonstrated by the creation of its Governance, Risk and Compliance Department.

In its operational activities, Petrobras continues to seek to improve its results, as reflected in its successive production records in pre-salt, refining and natural gas supply.

Finally, the company reaffirms that it does not have any covenants related to the ratings downgrade by ratings agencies or related to having ratings below investment grade.

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Petrobras Names New CEO, Executive Officers

(Petrobras, 6.Feb.2015) – Petrobras informs that its Board of Directors, in a meeting, has approved with majority vote the election of Aldemir Bendine as CEO of Petrobras replacing the current CEO, Maria das Graças Silva Foster.

Maria das Graças Silva Foster is also leaving the Company’s Board of Directors, which elected Aldemir Bendine as its new Director. This election, according to the provisions of the Brazilian legislation and Petrobras’ by-law, is valid until the next General Shareholders Meeting.

Aldemir Bendine was CEO and member of the Board of Directors of Banco do Brasil. He has a bachelor degree in Business Administration from PUC-Rio, and a MBA degree in Finance and General Training for Senior Executives.

The Board of Directors also elected, with majority vote, Ivan de Souza Monteiro, as Chief Financial Officer and Chief Investor Relations Officer, in replacement to Almir Guilherme Barbassa. Ivan Monteiro was the Senior Vice President of Financial Management and Investor Relations of Banco do Brasil since June 2009, where he had already served as Commercial Officer, Senior Vice President of Finance, Capital Markets and Investor Relations, and also as Chairman of the Supervisory Board of BB AG.

He has a bachelor degree in Electronic Engineering and Telecommunications from INATEL-MG and MBA degree in Finance and Management.

The following executives have also been elected with majority vote to take over the position as interim Executive Directors:

– The current Executive Manager of Corporate Exploration and Production, Solange da Silva Guedes, as Exploration and Production Officer, replacing José Miranda Formigli Filho. Solange Guedes is PhD in petroleum engineering, with 30 years of experience at Petrobras where she has held several managerial positions, all related to Exploration and Production.

– The current Executive Manager of Downstream Logistics, Jorge Celestino Ramos, as Downstream Officer to replace José Carlos Cosenza. Jorge Celestino has a bachelor degree in chemical engineering from Rio de Janeiro State University (UERJ) and in oil processing engineering from CENPRO as well as a specialization in ethanol production technology from COPPE / UFRJ and a MBA in Business Administration and Marketing. He has been working for 32 years at Petrobras where he has held several managerial positions in the Downstream area and at Petrobras Distribuidora.

– The current Executive Manager of Corporate Gas and Power, Hugo Repsold Júnior, as Gas and Power Officer replacing José Alcides Santoro Martins. Hugo Repsold has a bachelor degree in Mechanical Engineering from Universidade Federal Fluminense (UFF) and in economics from Rio de Janeiro State University (UERJ) as well as a Master degree in Energy Planning through Energy Planning Program of the Federal University of Rio de Janeiro (Coppe / PPE / UFRJ). He has been working for 30 years with the Company, where he has held several managerial positions in the areas of Exploration and Production, Strategy and Business Performance and Gas and Energy.

– The current Executive Manager of Engineering for Subsea Developments, Roberto Moro, as Engineering, Technology and Procurement Officer replacing José Antônio de Figueiredo. Roberto Moro has a bachelor degree in Mechanical Engineering from University Gama Filho, specializing in Project Management. He has been working for 33 years at Petrobras where he has held several managerial positions in Engineering.

Petrobras expresses gratitude to the CEO and Director Graça Foster and Officers Almir Barbassa, José Formigli, José Cosenza, José Alcides Santoro and José Antônio de Figueiredo for the technical expertise, professionalism and dedication in the exercise of their duties.

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Petrobras Reports New Campos Basin Find

(Petrobras, 4.Feb.2015) – Petrobras announced the discovery of new oil accumulations in concession BM-C-35 (exploratory block C-M-535), located in the Campos Basin postsalt layer.

The discovery was made while drilling well 1BRSA-1289-RJS (ANP nomenclature) / 1-RJS-737 (Petrobras nomenclature), informally known as Basilisco.

The well is situated some 143km from the city of Armação dos Búzios, on the coast of Rio de Janeiro state, at a water depth of 2,214 meters. The accumulations consist of heavy oil and can be found in two different reservoir depths, at 3,190 meters and at 3,521 meters.

The consortium of concession BM-C-35, which includes Petrobras (operator, 65% WI) in partnership with BP (35% WI), will proceed with the necessary activities to assess the extension of the discoveries, as well as the concession’s exploratory potential.

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Mood’s Downgrades Construtora Andrade Gutierrez

(Global Credit Research, 21.Jan.2015) – Approximately $500 million of rated debt affected.

Moody’s Investors Service (Moody’s) downgraded to Ba2 from Ba1 the corporate family rating assigned to Construtora Andrade Gutierrez S.A. (CAG) and the rating of its guaranteed notes issued by Andrade Gutierrez International S.A. (AGInt). The outlook for all ratings was changed to negative from stable.

The downgrade of CAG’ ratings to Ba2 reflects the sharp deterioration in the company’s credit metrics in 2014 due to weaker than anticipated revenue growth and lower profit margins. Despite the company’s strong liquidity profile and track record of shareholder’s financial support, the change in outlook to negative reflects the deterioration in industry fundamentals on the back of corruption scandals at of Petrobras and macroeconomic uncertainties in Brazil and Venezuela, which could lead to higher execution risks for the company in the near term.

Ratings changed:

Company: Construtora Andrade Gutierrez S.A. (CAG)

–Corporate Family Rating: to Ba2 from Ba1

Issuer: Andrade Gutierrez International S.A. (AGInt)

— $500 million senior unsecured notes due 2018: to Ba2 from Ba1

The outlook for all ratings changed to negative from stable.

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Q&A with Arthur Little’s Rodolfo Guzman

(Energy Analytics Institute, Pietro D. Pitts, 24.Sep.2013) – Arthur D. Little Partner Rodolfo Guzman spoke with Energy Analytics Institute in a brief interview from Houston, Texas. What follows are excerpts from the brief interview.

Regarding PDVSA’s potential departure from Abreu e Lima refinery project in Pernambuco, Brazil:

EAI: It appears PDVSA is close to leaving the Abreu e Lima refinery project in Brazil, is that a surprise to you: Why or why not?

Guzman: I wouldn’t be surprised if they leave the project. One reason is that PDVSA is financially not in a strong position to invest internationally; second, the execution capabilities of the company are limited.

The Abreu e Lima project was originally planned to receive heavy oil from Venezuela and Brazil. Now with all the pre-salt developments and future supply in Brazil, the dependence on Venezuela crudes for the refinery is lower. So, again, I am surprised that they may withdraw from the project.

PDVSA has a lot of priorities in Venezuela and the company’s refinery projects in the domestic market are moving forward very slowly. So why would the company commit to an international venture when they cannot progress with their own projects in Venezuela?

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