GAS TO POWER - BRAZIL

Rogerio MansoExecutive Manager

Marketing and Trading – Gas & Energy

manso@petrobras.com.br

June 6th, 2006

23rd WORLD GAS CONFERENCE

AMSTERDAM

Disclaimer

The presentation may contain forecasts about future events.

Such forecasts merely reflect the expectations of the Company's

management. Such terms as "anticipate", "believe", "expect",

"forecast", "intend", "plan", "project", "seek", "should", along

with similar or analogous expressions, are used to identify such

forecasts. These predictions evidently involve risks and

uncertainties, whether foreseen or not by the Company.

Therefore, the future results of operations may differ from

current expectations, and readers must not base their

expectations exclusively on the information presented herein.

The Company is not obliged to update the presentation/such

forecasts in light of new information or future developments.

Brazilian Power GridContinental Dimension

Total Installed Generation Capacity: 94 GW

� Thermal 14.4 GW 15%

� Total NG 8.4 GW 9%

� Petrobras 3.9 GW 4%

���� 85% hydroelectric power plants

Total Installed Generation Capacity: 94 GW

� Thermal 14.4 GW 15%

� Total NG 8.4 GW 9%

� Petrobras 3.9 GW 4%

���� 85% hydroelectric power plants

(2006 - Data)

4,000 kms

Average Power Consumption – 48.6 GW�Growth Rate – 5% per year

Transmission grid is well developed� 80 thousand km of transmission lines;

� 40 thousand km of lines will be constructed until 2012

Petrobras’ plants/ perceived role

• Reduce the risk of future energy deficits

• Stabilize tension levels (market position)

TRÊS LAGOAS364 MW - 1,87 MM m3/d

BARBOSA L. SOBRINHO382 MW - 2,3 MM m3/d

MACAÉ MERCHANT923 MW - 5,5 MM m3/d

NORTE FLUMINENSE929 MW - 5,0 MM m3/d

TERMO RIO1.036 MW / 330 t/h

5,0 MM m3/d

IBIRITÉ234 MW - 1,0 MM m3/d

FAFEN146 MW / 125 t/h0,55 MM m3/d

TERMOBAHIA180 MW / 360 t/h 1,37 MM m3/d

TERMO CEARÁ225 MW - 1,37 MM m3/d

VALE DO AÇU310 MW / 450 t/h2,1 MM m3/d

NOVA PIRATININGA406 MW - 2,8 MM m3/d

CCBS-RPBC 216 MW / 400 t/h

1,1 MM m3/d

CANOAS251 MW - 1,1 MM m3/d

ARAUCÁRIA469 MW - 2,1 MM m3/d

Thermo Power Plants

Co-Generation Plants

Hydroeletric73%

Others10%

Imports8%

Natural Gas9%

Projected Energy Generation Capacity

Hydroeletric73%

Others12%

Imports6%

Natural Gas9%

Coal; 2%

Diesel; 2%

Nuclear; 2%

Others (PROINFRA,

etc.); 4%

Biomass; 1%

Fuel Oil; 1%

Coal; 2%

Diesel; 2%

Nuclear; 2%

Others (PROINFRA,

etc.); 3%

Biomass; 0%

Fuel Oil; 1%

Jan/2006 – 94 GW

Jan/2015 – 135 GW

Source: EPE

Gas availabilityGas availability

Gas CostGas Cost

PPA StructurePPA Structure

Relevant Factors

Gas availability

Pólo BS - 500 (RJ)Pólo BSPólo BS -- 500 (RJ)500 (RJ)

Pólo Mexilhão (SP)Pólo Mexilhão (SP)Pólo Mexilhão (SP)

Pólo Centro (SP, RJ)Pólo Centro (SP, RJ)Pólo Centro (SP, RJ)

Pólo Sul (SP, PR, SC)Pólo Sul (SP, PR, SC)Pólo Sul (SP, PR, SC)

Pólo Merluza (SP)Pólo Pólo Merluza Merluza

(Área de 352.000 km2 de 0 a 3000m)

(SP)(SP)

Pólo BS - 500 (RJ)-Pólo BS-500 (RJ)

Pólo Mexilhão (SP)Pólo Mexilhão (SP)

Pólo Centro (SP, RJ)Pólo Centro (SP, RJ)

Pólo Sul (SP, PR, SC)Pólo Sul (SP, PR, SC)

Pólo Merluza (SP)

(352.000 km Area2 de 0 a 3000m)

Pólo Merluza (SP)Petrobras & Partners

Other Companies

Gas availability

Petrobras & Partners

Other Companies

Golfinho + CanapuGolfinho + Canapu

Parque das BaleiasParque das Baleias

CacimbasCacimbasPeroá/CangoaPeroá/Cangoa

ESS-130ESS-130

CabiúnasCabiúnas

NamoradoNamorado

120 km

ESS-164

120 km

Roncador

Merluza

2008

Barracuda

(P-43)

Caratinga

(P-48)

Albacora

Leste (P-50)

Jubarte Phase 1

(P-34)

2006

Golfinho

Mod 1

2006Golfinho

Mod 2

2007

RJS-409

Espadarte

2007

Roncador

( P-54)

2007

Marlim Sul

Mod 2

(P-51)

2008

Marlim

Leste

(P-53)

2008

Piranema

2006

Roncador

(P-52)

2007

Roncador

( P-55)

2010

Jubarte Phase 2

(P-57)

2010

2005 2006 2007 2008 2009 2010

Frade

2009

Golfinho

(FPSO 3)

2010

Manati

2006 Peroa Cangoá

Phase 2

2008

Mexilhão

2008

BS-500

2010

Urucu

2007

Peroá-

Cangoa

(PPER)

Albacora

Expansion

2010

Non-associated Gas

Associated Gas

Main New Oil andGas Projects

Natural GasSupply

Million m3/day

26,5 31,443,0

54,3 61,5 69,630,0 30,0

30,0

30,030,0

30,0

11,011,0

4,04,0

00

2020

4040

6060

8080

100100

120120

20052005 20062006 20072007 20082008 20092009 20102010

Domestic ProdutionDomestic Prodution Pipeline ImportsPipeline Imports

Additional domestic production and LNGAdditional domestic production and LNG

Investments in Gas & Energy

Total Investment: US$ 16.3 billion through 2010

33 %0.60.20.4International

12 %6.70.85.9Gas & Energy

53 %0.10.10.1Downstream

52 %8.84.64.2E&P

35 %16.35.710.6Total

% Partnership

TotalPartners

2006-2010Petrobras2006-2010

US$ billion

Natural GasDemand

Monthly Sales Volumes - 1,000 m3/day

-

5.0005.000

10.00010.000

15.00015.000

20.00020.000

25.00025.000

30.00030.000

35.00035.000

40.00040.000

45.00045.000

50.00050.000

Jan

Fev

Mar

Abr

Mai

Jun

Jul

Ago Set

Out

Nov

Dez

Jan

Fev

Mar

Abr

Mai

Jun

Jul

Ago Set

Out

Nov

Dez

Jan

Fev

Mar

Abr

Mai

Jun

Jul

Ago Set

Out

Nov

Dez

Jan

Fev

Mar

Abr

Mai

Jun

Jul

Ago Set

Out

Nov

Dez

Jan

Fev

Mar

Abr

Mai

Jun

Jul

Ago Set

Out

Nov

Dez

Jan

Fev

Mar

20012001 20022002 20032003 20042004 20052005 20062006

IndustrialIndustrial VehicularVehicular ResidentialResidential CommercialCommercial CogenerationCogeneration Power GenerationPower Generation CNGCNG

Natural Gas Growth2004-2010

Million m3/dayMillion m3/day

30,730,7

37,937,9

99,399,3

46,419,6

22,9

39,1

4,65,4

13,8

9,66,500

2020

4040

6060

8080

100100

120120

20032003 20042004 20102010

Gas to PowerGas to Power IndustrialIndustrial Auto/other usesAuto/other uses

Producer Price Index Industry Data (jan/2006)Producer Price Index Industry Data (jan/2006)

U.S. Department of Labor

Bureau of Labor Statistics

(Site: “www.bls.gov”)

Drilling Rigs Market

Industry: Drilling oil and gas wells

Product: Drilling oil and gas wells

Industry: Crude petroleum & natural gas extr

Product: Crude Petroleum

20062006

0

50

100

150

200

250

300

350

400

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Non-Associated Gas Growth

By 2010 63.5 % of Natural Gas Consumption will be of Non-Associated Gas

97,3

%

97,0

%

98,7

%

85,9

%

84,7

%

86,7

%

83,8

%

82,0

%

81,2

%

82,6

%

80,3

%

74,9

%

72,5

%

70,2

%

70,3

%

73,6

%

73,5

%

70,9

%

59,8

%

58,3

%

50,2

%

50,5

%

36,5

%36

,5%

6,3%

14,2

%

24,8

%

25,3

%

33,8

%

33,7

%

27,0

%

27,5

%

25,1

%

19,7

%

17,4

%

18,8

%

18,0

%

16,2

%

13,3

%

15,3

%

14,1

%

1,3%1,3%3,0%3,0%2,7%2,7%

29,8

%

29,7

%

26,4

%

20,2

%

14,8

%

15,4

%

16,5

%

15,9

%

15,8

%

19831983 19841984 19851985 19861986 19871987 19881988 19891989 19901990 19911991 19921992 19931993 19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001 20022002 20032003 20042004 20102010

ASSOCIATEDASSOCIATED NON-ASSOCIATEDNON-ASSOCIATED IMPORTEDIMPORTED

Duration of ContractsDuration of Contracts

Indexation of Gas Supply CostsIndexation of Gas Supply Costs

Points for Improvement

Flexibility x InflexibilityFlexibility x Inflexibility

Tax ReductionsTax Reductions

Compensation of Tax CreditsCompensation of Tax Credits

Site selection: South/SoutheastSite selection: South/Southeast

TEBIG

CARAGUATATUBA

GUANABARA B.

SEPETIBA

SÃO FRANCISCO DO SUL

LNG Regas Project South/Southeast

Guanabara Bay Regas TerminalGuanabara Bay Regas Terminal

LNG Regas Terminal

Option 2

16,500 m

Option 1

14,500 m

Pipeline 24”

Guanabara BayLNG Regas

Site Selection: NortheastSite Selection: Northeast

SUAPE

ARATU

PECÉM

LNG Regas Project Northeast

Pecem LNG Regas TerminalPecem LNG Regas Terminal

Pecem LNG Regas Project

• Hydro-dominated market progressively understands the heavy

investments for the gas chain to supply power plants;

• PPAs progressively adapted to gas market costs, prices and

investments;

• Gas-Energy convergence through continuous dialogue and

acceptance of hydro-thermal differences, focused on

complementarity;

• New gas-fired power generation growth in Brazil dependent on

the ability of the new PPAs to stimulate gas production on a

level that fulfills both power and non-power segments.

Final Remarks

Dank U Dank U