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S Three-time winner at Bovespa■ In December, Petrobras was awarded for the

third time in a row, at the São Paulo Stock Market

(Bovespa), the “Publicly-Traded Company – The

Most Traded”. The award is the acknowledgement

of the increasing liquidity of the company’s shares

and shows the Company’s continuous effort to

enhance its shareholders base, which presented

an increase of 52,385 new participants in the past

two years. For this purpose, Petrobras has given

equal treatment to all of its investors and carried

out initiatives focused on the access of small and

midsize investors to its issued bonds.

Petrobras’ market value■ The strong increase of the oil international

prices and the Company’s operational and financial

performance favored the good performance of

Petrobras’ shares in the first nine months of 2007.

Its market value reached US$ 155 billion at

the end of the third quarter of this year, which is

77% higher than the corresponding period in 2006.

The shares surpassed BOVESPA’s performance in

the last quarter. In December 12, 2007, the market

value amounted to US$ 232 billion.

Sales Record ■ In August and September 2007, Petrobras

has broken two more sales records. In August,

57,4 million barrels were commercialized, a

historical record in the Brazilian market. In

September, the sales reached 54,5 million barrels,

a monthly record, when compared to the same

period in the last five years. The results

demonstrate the Company’s integrated effort to

meet the demands of the Brazilian market.

Biodiesel acquisition ■ In December, Petrobras and its subsidiary

Refap S.A signed agreements for the acquisition of

380 million liters of biodiesel from the 15 producing

units that won the auctions held by the National

Petroleum, Gas and Biofuels Agency (NPA). This

acquisition refers to the 2% biodiesel addition to the

diesel fuel to be commercialized by fuel distributors in

the first half of 2008, deliveries beginning as of

January 1st, 2008.

Global Notes ■ In November, Petrobras, through its subsidiary

Petrobras International Finance Co. (PIFCo),

concluded the issuance of US$ 1 billion of senior

unsecured Global Notes in the international capital

market, due on March 1st, 2018. This issuance

is aligned with the strategies to access the long-term

capital market, refinance prepayment of maturing

debts and reduce the cost of capital.

Refining inboth sides of

the world

PAGE 3

Renewal in Bovespa’s

CSI (ISE)

PAGE 4

Progress in

fuels

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Discovery of Brazil’snew oil province

Petrobras announced in November the discovery of theBrazilian new oil province, oil province, equivalent to theworld’s most important ones, extending through the Espírito Santo,

Campos and Santos basins, in the so-called pre-salt area (explored for thefirst time). It is 800 km long and 200 km wide, and is located inwater depths between 2 and 3 thousand meters.

The volume that was discovered in the Tupi accumulation alone,which represents a small portion of the new frontier, may increase by50% Brazil’s current oil and gas reserves, amounting nowadaysto 14 billion barrels. The area is operated by the Company, in partnershipwith the British group BG and the Portuguese company Galp Energia.Light oil (of high commercial value) was found, as well as a large amountof associated natural gas.

More discoveries and new exploratory frontiersAt the end of 2007, more discoveries were announced. One of them

was in the Xerelete field, in the Campos Basin, where studies indicate thatthe total area may reach an approximate volume of 1,4 billionbarrels of equivalent oil. In addition, gas and light oil were discoveredin Camarupim, in the Espírito Santo Basin.

Regarding its performance growth, Petrobras won the right to explorein new frontiers. In the United States, it was the highest bidder in theauction for 26 blocks in the Gulf of Mexico, in partnership, with investmentamounting to US$ 108,1 million. These new blocks will be incorporatedto the Company’s exploratory project portfolio, which totals 338 blocks,200 of which directly operated by Petrobras. In Brazil, it was the top bidderfor 27 blocks offered in auction, on its own or in partnership, with aninvestment of US$142 million.

Thus, Petrobras enhance its portfolio in areas ofexploration and production in order to achieve the

objectives defined in its Strategic Plan.

Petrobras em Ações

Investor Relations • Year VII • nº 25

Sharing in Petrobras

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■ Ibovespa

■ Petrobras PN

■ Petrobras ON

Petrobras’ Net Operating Revenuespresented an increase of 17% inrelation to jan-sep/2006. The oper-

ating cash generation measured byEBITDA was superior to US$ 18 billion,guaranteeing the resources for signifi-cant increase of the investment vol-ume. These investments, fundamentalfor the expansion of the oil and gasproduction, reached US$ 14 billion inthe first nine months of 2007, repre-senting a growth of 46% over thesame period in 2006.

The net profit, 3% higher than thesame period last year, reflects the appre-ciation of the Real on the net assets indollar.

The domestic oil productionincreased by 2% over jan-sep/2006,due to the operational start-up ofplatforms, which added approximate-ly 200 thousand barrels/day, morethan offsetting the natural decline inproduction. The international produc-tion fell 16% in this period, due to theexclusion of the Venezuelan produc-tion as of April 2007.

Processed crude in overseasrefineries increased 93% in relationto jan-sep/2006, due to the opera-tions of Pasadena refinery (USA) andthe upturn of Argentinean refiningcapacity, offset by the sale of theBolivian refineries in June 2007. Thetotal by-product production pre-sented an 8% growth in the firstnine months of the year, due to theincrease of the international produc-tion, which was 147% higher in thesame period. The domestic productionremained flat. Domestic unit refiningcost, in dollar, moved up 20% in rela-tion to the period of jan-sep/2006, dueto increased operating expenses, aswell as the increased number of sched-uled stoppages.

Domestic sales volume moved up 3%in relation to jan-sep/2006. Internationalsales increased 33%, when comparedto the same period of the previous year,due to the inclusion of the operations ofthe USA refinery and the distributorsacquired from Shell in Paraguay,Uruguay and Colombia, and the new

overseas business opportunities in off-shore operations.

The net balance between crude oiland oil product exports and importsincreased 10% in the first nine monthsof 2007. In this period, investmentsreached US$ 14 billion, representing agrowth of 46% over the same periodof the previous year.

The domestic unit lifting cost, in Reais, including government participa-tion increased by 3% due to the impactof the appreciation of the Real. Excludinggovernment participation, it increased by16%, pushed by higher operating expen-ses due to the heating up of the industryand the increase of the workforce neededfor the new projects.

The total indebtedness of thePetrobras System was 2% higher inrelation to 06/30/2007, due to theprepayment of debts and the apprecia-tion of the Real. The net debt increased18% caused by the reduction in cashdue to major investments, prepaymentof debts and investments in long-termsecurities.

Results for the third quarter of 2007

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Petrobras ADRs versus DOW JONES and Amex Oil Indexes Economic and Financial Figures

Real Increase in Stock Price*

In US$ million 2007 2006 Variation (%)

Sales of products and services 79,983 69,267 15.5

Net operating revenues 62,411 53,327 17.0

Gross profit 23,664 21,870 8.2

Net income 10,326 10,040 2.8

Earnings per share 2.35 2.29 2.6

Net cash provided by operating activities 15,919 15,438 3.1

Capital Expenditures 14,005 9,598 45.9

Net debt 12,978 8,937 45.2

Debt to equity ratio 50% 52% -2 pp

In thousand barrels of oil equivalent 2007 2006 Variation (%)

Average daily crude oil and gas production 2,306 2,285 0.9

Oil product production 2,046 1,888 8.4

Net imports 89 81 10

Refining and marketing operationsBrasil – Utilization 90% 90% –

Refining and marketing operationsInternational – Utilization 85% 79% + 6 pp

Domestic crude oil of total

feedstock processed 78% 80% -2 pp

Jan-Sep

Operating Performance

* Monthly changes discounted for inflation in accordance with IGP-DI index

1189.2% (PBR/ADR ON)

1111.5% (PBRA/ADR PN)

219.9% (Amex Oil)

60.3% (Dow Jones)

50150250350450550650750850950

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T he first phase of operationof the Submarine CentrifugePumping System (BCSS), with

Petrobras technology, installed in the Campos Basin, was successfullycompleted at the end of 2007. Thesystem increases producer fieldproductivity and makes commercial production viable in fields previouslyconsidered unviable.

In October, Petrobras started theproduction in the Piranema field, inSergipe. The new platform is the resultof a joint project of the Company and the Norwegian company SevanProduction, with investment of approximately US$ 1,2 billion. It is afloating unit of the FPSO kind (whichproduces, stores and transfers oil)and has unprecedented technicalcharacteristics: round hull, and moreversatility and stability, ensuringmore safety to the operations. Thefield will initially produce 10 thou-sand barrels of light oil per day and itmay reach 30 thousand barrels perday in 2008.

In November, the platform FPSOCidade de Vitória was put online inthe Campos Basin, with a productionof 20 thousand barrels per day of lightoil. In 2008, the production should be of 80 thousand barrels/day.Platform P-52 started productiontests by lifting 20 thousand barrels/day and full capacity of 180 mil barrels/

day in 2008. Platform P-54 has alsostarted operating. Designed to pro-duce 180 thousand barrels per day, itwill produce 460 thousand barrels/ dayat peak production.

The agreement for the construc-tion of the hull for platform P-55 wassigned by Petrobras in October. Thetotal cost will amount to US$ 392,6million. Another agreement was alsosigned for the construction of the P-56 semi submersible platform. Thetotal value will reach US$ 1 billion and200 million. These two new platformswill be installed in the Campos Basin.

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Between October and November, Petrobras carried out actions to incre-ment its performance in petrochemicals. At the end of October, theacquisition of Suzano Petroquímica’s share control was concluded.

Suzano Petroquímica will remain a distinct legal entity, maintaining its opera-tions, personnel and agreements, and will use the Nova Petroquímica branduntil the integration is completed.

In November, Petrobras and Unipar (União de Indústrias Petroquímicas)concluded the negotiations to establish a company – 60% Unipar and 40%Petrobras – which will be the second largest Brazilian petrochemical group.Unipar is one of Brazil’s most traditional corporate groups and it has per-formed in the segment for more than 35 five years.

In November as well, Petrobras signed an investment agreement with theOdebrecht Group that foresees the increase of the Company’s participation inBraskem’s total capital from 6.8% to 25%, consolidating the largest Brazilianpetrochemical group.

These actions integrate Petrobras’ strategy, started with Ipiranga’s acquisi-tion, to restructure the petrochemical sector with companies, which arecapable to face the multinational competitiveness.

Production is increased by new platforms

In both sidesof the world

In November, Petrobras acquired87,5% interest in the Japaneserefinery Nansei Sekiyu Kabushiki

Kaisha (NSS), by approximately US$ 50million. Besides Petrobras, TonenGeneral and Sumitomo are also share-holders of the company.

The refinery has capacity to process100 thousand bpd of light crude oiland produces high quality byproducts.It has also a storage terminal withcapacity of 9,6 million barrels, andthree piers to receive vessels of up to97 thousand deadweight tonnage(dwt). The terminal will also facilitatethe commercialization of biofuels inJapan and will complement the currenttrading of crude oil and byproducts inthe region. The business – alignedwith the Company’s Strategic Plan – is an important milestone forPetrobras, which will enter in refiningoperations in Asia for the first time.

In Brazil, the construction works forthe Abreu e Lima Refinery, in Pernam-buco, were started in the second halfof the year. This project register theresumption by Petrobras of the down-stream industry’s expansion in Brazil.The total investment amounts toUS$ 4,05 billion and the opening is foreseen for the second half of2010. Thousands of direct and indi-rect jobs will be generated during theconstruction works and at the begin-ning of the operations.

The new unit, which will use heavycrude and will have the capacity forprocessing 200 thousand barrelsper day, will be the first one toprocess 100% of heavy crude andproduce low sulfur by-products.

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On the second half of 2007,Petrobras won several national

and international awards, whichacknowledged its performance and itsgovernance process. The Investors’ areawon two Aberje local awards, the mostimportant award of the Brazilian cor-porate communication, with investors’relation projects.

Through the Downstream area, the Company won for the first time the2007 National Quality Award (PNQ),Brazil’s main award directed to organi-zations that achieved the excellence intheir management and result practices.

Petrobras University was grantedthe Corporate University Best in Class2007 award, in the United States, whichacknowledges the world’s best corpo-rate universities.

Also in the USA, the Company wasawarded the Carolita Kallaur award forits (and its contractor’s) high level ofperformance in maritime installationoperating safety.

And the Ibero-American QualityAward, in Colombia, made the Companythe first of the oil sector in that countryto receive this international recognition.

P etrobras has started a new stage of the

bioethanol research project, produced

from agribusiness residues. So, the Company

enters the second generation of biofuels,

holds a pioneering position and contributes to

reinforce Brazil’s natural vocation for renew-

able energies.

After the lab test stage, the project,

developed jointly with Brazilian universities,

will progress to the pilot scale test phase at

the only unit of its kind in Brazil, in Rio de

Janeiro. The system uses the sugarcane

bagasse as main base, as this is the coun-

try’s most expressive agribusiness residue.

As a result of this research, Petrobras has

already applied for two patents – with one

of them, it reached the milestone of one

thousand patent applications made by the

company.

By 2009, with an investment of US$ 4,9

billion*, Petrobras will supply diesel with 50

ppm of sulfur for heavy vehicles, which will

adopt the new technology to comply with

the requirements of the Vehicle Air Pollution

Control Program (Proconve), created by the

National Environment Council (Conama).

Progress in fuels

Awards

Renewal in

Bovespa’s CSI

(ISE)

For the second consecutive year,Petrobras’ participation in the

São Paulo Stock Market – Bovespa’sCorporate Sustainability Index (CSI)has been renewed, due to its highlevel of commitment to sustainabili-ty and social responsibility. TheCompany’s ordinary and preferredshares will have the weights of11.12% and 13.88%, respectively,totaling 25%, the CSI’s biggest indi-vidual weight.

Petrobras’ participation has alsobeen renewed in the Dow JonesSustainability Index (DJSI), the world’smost important index in the area.These renewals represent a majorachievement and are the outcomeof the Company’s efforts to reach itsstrategic objectives of growing withprofitability and social and environ-mental responsibility.

Excellence in theAmazon

P etrobras announced theimplementation of the Center forEnvironmental Excellence in the

Amazon (Ceap), which willcontribute to reduce the risks of oil

industry interventions and tofoment researches. The investment

of US$ 260 million, up to 2012,reinforces the socio-environmentalresponsibility commitment, whichis essential for sustainable activities

in the area. The Center forEnvironmental Defense (CDA – Sul)was also inaugurated in Itajaí (SC).

Exports to Europe and Asia

In November, Petrobras exported9 million liters of ethanol to theEuropean market via the Port of

Suape in Pernambuco. The product was acquired from apool of mills in the area. This was

the first operation of its kindperformed by the Company,

which also signeda memorandumof understanding with SamsungCorp., in December, to carry out

studies for the ethanolproduction. Its purpose is to

meet the future demand of theSouth Korean market, which willintroduce ethanol in its energymatrix in 2009 to comply with

its commitment with the Kyoto Protocol.

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Newssheet edited by Petrobras' Investor Relations Department • Executive Manager: Theodore Helms • Editor: Cláudio Paula (RJ-21059-JP) • Writer: Orlando Gonçalves Jr. • Colaboration:Ana Paula Carvalho and Fábio Rocha • Contact: Petrobras' Shareholders Department • Phones: (55-21) 3224-1540/4914 • 0800 282-1540 • Fax: (55-21) 2262-3678 • Address: Av. Repúblicado Chile, 65 / 2202-B • Centro – Rio de Janeiro – RJ – Brazil – 20031-912 • E-mail: acionistas@petrobras.com.br • Design: Estúdio MatizDepositary Bank: JPMorgan Chase Bank • JPMorgan Depositary Receipts • 4 New York Plaza, 13th Fl. • New York, NY 10004 • +1 (866) JPM-ADRS (576-2377)

Visit our website at www.petrobras.com.br/ri/english

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