Petroleo Brasileiro SA (Petrobras) - RepRisk Company Report... · RepRisk Company Report Friday, 12 February 2016 Risk Exposure of «Petroleo Brasileiro SA (Petrobras)» since February

RepRisk Company Report

Petroleo Brasileiro SA (Petrobras)

Friday, 12 February 2016

Sector(s)Oil and Gas

HeadquartersBrazil

Websitehttp://www.petrobras.com.br

The information contained in this report is not intended to be relied upon as, nor to be a substitute for, specific professional advice. No responsibility for loss occasioned toany persons and legal entities acting on or refraining from action as a result of any material in this publication can be accepted. RepRisk retains copyright and all originators'rights to this report. The report may not be sold, reproduced, or distributed without the express written consent of RepRisk. Please see the last page of the report foradditional information and important disclaimers.

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RepRisk Company Report Friday, 12 February 2016

About this report

This RepRisk Company Report is a compilation of all the RepRisk data for anindividual company in a convenient PDF format. The reports aredynamically-generated - i.e. automatically updated upon download to include thelatest information from the RepRisk database.

RepRisk's assessment of the ESG risk exposure of a company is based on thecompany's activities in the field as observed by external stakeholders andindependent third parties, and is not derived from information provided by thecompany itself.

The RepRisk Index

The RepRisk Index (RRI) is a quantitative measure that captures criticism andassesses a company's exposure to environmental, social and governance(ESG) risks. It does not measure reputation, but rather is an indicator of riskexposure related to ESG issues. It facilitates an initial assessment of the risksassociated with investments or business relationships, allows the comparison ofa company's exposure with that of its peers, and helps track risk trends overtime.

The RRI ranges from zero (lowest) to 100 (highest). The RRI is calibrated asfollows: 0-25 indicates low exposure, 25-50 indicates moderate exposure, 50-75denotes high exposure while an RRI of 75-100 signifies a very high riskexposure.

The RRI is calculated based on the influence of news source, the frequency andtiming of the news, as well as the severity (harshness) and novelty (newness) ofthe risk incident. In order to ensure a balanced and objective rating andweighting, risk incidents are only entered once into the database, unless the riskprofile of the incident changes - i.e the incident is escalated to a more influentialsource, appears again after six weeks, or additional issues emerge.

The Current RRI value indicates the current level of criticism about a companyor project. The Peak RRI denotes the highest level of criticism in the past twoyears, and is an indicator of the ESG risks associated with a company. The RRIChange shows the increase or decrease of the RRI within the past 30 days.

The RRI emphasizes companies which are newly criticized or have had lesscriticism in the past. Expressed differently, companies with a lot of criticism inthe past are less sensitive to new allegations. If no new criticism is captured, theRRI of a company decays to zero over a period of two years. The RRI does notdepend on the sequence of news.

Once a risk incident has been identified using advanced search algorithms andanalyzed to ensure its relevance, it is entered into the RepRisk database andlinked to the companies and related entities in question. This evaluation isperformed by risk analysts according to a strict, rule-based methodologydeveloped by RepRisk.

Our Scope

The RepRisk's research scope includes comprehensive coverage of ESG issuesincluding environmental pollution and climate change, human rights andcommunity relations, employee relations as well as corruption and fraud.RepRisk's scope was developed in accordance with established internationalstandards, such as the World Bank Environmental, Health and SafetyGuidelines, the IFC Performance Standards, the OECD Guidelines forMultinational Enterprises, the Universal Declaration of Human Rights, ILOConventions, the UN Convention Against Corruption and the Equator Principles.For more information on RepRisk's scope, please visit: www.reprisk.com/scope/

In addition, all 10 principles of the UN Global Compact are addressed. TheUnited Nations Global Compact (UNGC or UN Global Compact) is a strategicinitiative whose purpose is to encourage businesses worldwide to adoptsustainable and responsible practices by aligning their strategies, operationsand policies with ten universally accepted principles in the areas of humanrights, labor, environment and corruption. For more information on the UNGC,please visit: www.unglobalcompact.org.



RepRisk Index Analysis of «Petroleo Brasileiro SA (Petrobras)»

RepRisk Index Trend

75 75

50 50

25 25

0 0JD

2016

NOSAJJMAMFJD

2015

NOSAJJMAMF Now

Petroleo Brasileiro SA (Petrobras)

Current RRI

64 -1

Peak RRI

67 in Aug 15

Comparison with sector(s) *

Current RRI

29 -1

Peak RRI

67 in Aug 15

Maximum RRI of sector(s)Average RRI of sector(s)

Low risk High risk

Currently most exposed companies

Currently most exposed companies in the sector(s)«Oil and Gas»

Current RRI

1. Petroleo Brasileiro SA (Petrobras) 64

BHP Billiton Group (BHP Billiton) 64

3. BP PLC (British Petroleum) 54

4. Gazprom; OAO (Gazprom) 50

5. Royal Dutch Shell PLC (Shell) 48

Exxon Mobil Corp (ExxonMobil) 48

7. Chevron Corp (Chevron) 47

8. Total SA 44

9. SBM Offshore NV (formerly IHC Caland NV) 43

10.

China Petroleum & Chemical Corp (China Petrochemical Corp; SINOPEC Group)

39

Most exposed companies over the past two years

Most exposed companies in the sector(s)«Oil and Gas» in the past two years

Peak RRI

1. Petroleo Brasileiro SA (Petrobras) 67

2. BHP Billiton Group (BHP Billiton) 65

3. China Petroleum & Chemical Corp (China Petrochemical Corp; SINOPEC Group)

64

China National Petroleum Corporation (CNPC) 64

PetroChina Co Ltd 64

6. Nexen (formerly Nexen Inc) 62

7. BP PLC (British Petroleum) 58

BRSM Nafta 58

Essar Energy PLC 58

CPC Corporation (Chinese Petroleum Company) 58

How to interpret the RepRisk Index

The RepRisk Index (RRI) is a quantitative measure that captures criticism and assesses a company's exposure to environmental, social and governance (ESG) risks. Itdoes not measure reputation, but rather is an indicator of risk exposure related to ESG issues. It facilitates an initial assessment of the risks associated with investments orbusiness relationships, allows the comparison of a company's exposure with that of its peers, and helps track risk trends over time.The RRI ranges from zero (lowest) to 100 (highest). The RRI is calibrated as follows: 0-25 indicates low exposure, 25-50 indicates moderate exposure, 50-75 denotes highexposure while an RRI of 75-100 signifies a very high risk exposure. The Current RRI value indicates the current level of criticism about a company or project. The PeakRRI denotes the highest level of criticism in the past two years, and is an indicator of the ESG risks associated with a company. The RRI Change shows the increase ordecrease of the RRI within the past 30 days.

* Comparison with sector(s): The value denotes the average Current RRI and Peak RRI of the sector. The sector average is calculated based on the 50 most exposedcompanies of the sector.



Risk Exposure of «Petroleo Brasileiro SA (Petrobras)» since February 2012

Global risk exposure

The world map represents thegeographic distribution of the riskexposure of «Petroleo BrasileiroSA (Petrobras)». Highlightedareas correspond to countrieswhere «Petroleo Brasileiro SA(Petrobras)» has been mostlycriticized.

1 5 10 20+

No. of news

«Petroleo Brasileiro SA (Petrobras)» has been mostly associated with the following countries No. of relations

1. Brazil 555

2. United States of America 59

3. Switzerland 37

4. Argentina 11

5. Monaco 8

5. Netherlands 8

Unspecified 8

8. Peru 6

9. Italy 5

United Kingdom of Great Britain and Northern Ireland 5

Related projects

«Petroleo Brasileiro SA (Petrobras)» has been mostly associated with the following projects

No. of relations

1. Abreu e Lima Refinery (also known as Refinaria do Norte; Rnest)

29

Petrochemical Complex of Rio de Janeiro (Comperj) 29

3. Getulio Vargas Refinery (Repar) 16

4. Refinaria Duque de Caxias (Refinery Duque de Caxias, Reduc)

15

Pasadena Oil Refinery (Pasadena Refining System Inc) 15

6. Planalto Paulinia Refinery (Replan) 9

7. Campos Basin (Marlim, Roncador and other oil fields) 8

8. Landulpho Alves Refinery (RLAM) 7

Cidade de Sao Mateus FPSO 7

10.

Gabriel Passos Refinery (Regap) 6

Related NGOs

«Petroleo Brasileiro SA (Petrobras)» has been mostly associated with or criticized by the following NGOs

No. of relations

1. Workers' Party (Partido dos Trabalhadores; PT) 44

2. Democratic Movement Party (Partido do Movimento Democratico do Brasil; PMDB)

13

3. Associacao dos Homens e Mulheres do Mar (AHOMAR) 8

4. Progressive Party (Partido Progressista; PP; Brazil) 7

5. Federacao Unica dos Petroleiros (FUP) (United Oil Workers' Federation)

6

6. Amazon Watch 4

Brazilian Labor Party (Partido Trabalhista Brazileiro; PTB)

4

8. Transparency International 3

Federação dos Pescadores do Rio de Janeiro (FEPERJ)

3

10.

350.org 2



Issue Analysis of «Petroleo Brasileiro SA (Petrobras)» since February 2012

Issue exposure and alleged UNGC breaches compared to the sector average

Issue exposure Alleged UNGC breaches

EnvironmentalFootprint

CommunityRelations

EmployeeRelations

CorporateGovernance

Product-PortfolioRelated Risks

Principle 1(Human Rights)

Principle 2(Human Rights)

Principle 3(Labour)

Principle 4(Labour)

Principle 5(Labour)

Principle 6(Labour)

Principle 7(Environment)



Principle 10(Anti-corruption)

Petroleo Brasileiro SA (Petrobras) Average of sector(s)

1 5 10 20+

No. of news

Environmental Footprint Community Relations� Employee Relations Corporate Governance Product-Portfolio RelatedRisks

Forced Labor

Child Labor Executive Compensation Products (Health andEnvironmental Issues)

Discrimination inEmployment

Animal Mistreatment

Global Pollution and ClimateChange

Human Rights Abuses,Corporate Complicity

Corruption, Bribery,Extortion, Money Laundering

Controversial Products andServices

Local Pollution Impacts on Communities

Impacts on Ecosystems andLandscapes

Local Participation Issues Freedom of Association andCollective Bargaining

Misleading Communication,e.g. "Greenwashing"

Overuse and Wasting ofResources

Social Discrimination Fraud*

Waste Issues Health and Safety Issues Tax Evasion*

Poor EmploymentConditions

Anti-competitive Practices*

Violation of International Standards

Violation of National Legislation

Supply Chain (Environmental, Social, and Governance Issues)

* As of May 1, 2010

The issues associated with «Petroleo Brasileiro SA (Petrobras)» are highlighted in the table above. The table represents all the 27 environmental, social and governanceissues covered by RepRisk's scope.



News for«Petroleo Brasileiro SA (Petrobras)» since January 2007

Summary

Total number of risk incidents 577

- Very severe criticism and risk incidents 7

- Severe criticism and risk incidents 217

- Low level criticism and risk incidents 353

Total number of issues 27

Total number of countries 104

About the RepRisk methodology

Daily, RepRisk systematically screens big data from a broad range of openintelligence sources in 14 languages in order to identify, filter, analyze andquantify ESG risks related to companies. Risk incidents are analyzed basedon the influence of the source and the source content, including the severity(harshness) and novelty (newness) of the issues addressed.In order to ensure a balanced and objective rating and weighting, riskincidents are only entered once into the database, unless the risk profile of theincident changes - i.e. the incident is escalated to a more influentialsource,appears again after six weeks, or additional issues emerge.

Date / Source News / Abstract Issues / Countries

10.02.2016Reuters UK (online)

Low level criticism Escalation / Recurrence

SBM Offshore to face bribery probe in the US amid corruption charges in Brazil The US Department of Justice has reopened bribery investigations against SBMOffshore relating to the corruption charges it faced in Brazil involving Petrobras.SBM Offshore earlier said it was setting aside USD 245 million for a possiblesettlement with Brazilian officials. The company has also been in negotiationswith Brazil's Comptroller General regarding a leniency deal in the corruptioncase related to Petrobras. In January 2016, two SBM Offshore executives madesettled "personal favoritism" charges by Brazilian prosecutors for USD 60,000each. Separately, in November 2014, SBM Offshore agreed to settle USD 240million with Dutch and US authorities for bribery payments worth more than USD200 million in Angola, Brazil, and Equatorial Guinea from 2007 to 2011.

http://uk.reuters.com/article/sbm-offshore-corruption-idUKL8N15P540

Associated Issues- Violation of National Legislation - Corruption, Bribery, Extortion and Money Laundering

Associated Countries- Brazil

03.02.2016World Weekly; The (theworldweekly.com)

Low level criticism Escalation / Recurrence

Brazilian firms accused of bribing Peruvian officials linked to the Lava Jato corruption probe in Brazil Peru's current and former presidents have been asked to testify on the ongoingLava Jato corruption investigations into corruption at Petrobras. In November2015, Peru's Congress authorized a probe on this issue after Brazilianauthorities alerted them of alleged bribes paid to Peruvian officials over a periodof three decades. Brazilian companies Odebrecht, Andrade Gutierrez CamargoCorrea, OAS, Queiroz Galvao, Galvao Engenharia and Engevix are facinginvestigations on contracts valued at USD billions. The contracts in questioninclude the Southern Gas Pipeline, the Interoceanic Highway, Lima's Metro andLima Convention Center. It is further claimed that an ally a government officialwith links Brazil's Workers' Party played a central role in facilitating deals forBrazilian companies.

http://www.theworldweekly.com/reader/view/newswire/2016-02-03/peruvian-president-humala-and-two-predecessors-called-to-give-evidence-at-bribery-trial/6566

Associated Issues- Violation of National Legislation - Corruption, Bribery, Extortion and Money Laundering

Associated Countries- Brazil


Documents

Petroleo Brasileiro SA (Petrobras) - RepRisk Company Report... · RepRisk Company Report Friday, 12 February 2016 Risk Exposure of «Petroleo Brasileiro SA (Petrobras)» since February