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2005
2005
f i n a n c i a l a n a ly s i s a n d f i n a n c i a l s tat e m e n t s
f i n a n c i a l a n a ly s i s a n d f i n a n c i a l s tat e m e n t s | 2 0 0 5
www.petrobras.com.br
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Contents
Contents
FINANCIAL ANALYSIS
F I N A N C I A L S TAT E M E N T S
19
20
Balance Sheet
22
Statement of Income
23
24
26
27
28
35
38
38
1. Consolidation principles
43
46
47
47
5. Related parties
52
6. Inventories
53
52
8. Marketable securities
54
9. Project financings
60
61
11. Investments
75
80
13. Financings
84
14. Financial income (expenses), net and other operating income (expenses), net
85
85
90
98
98
101
106
108
109
110
115
115
115
116
Corporate Information
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FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
PETROBRAS and its subsidiary companies reported consolidated net income of R$ 23.725 million in fiscal year 2005,
after the elimination of intercompany operations and deduction of minority interests. This amount is practically the
CONSOLIDATED(6)
PETROBRAS
2005
2004
2005
2004
179.065
150.440
143.666
120.025
136.605
111.128
105.823
85.575
24.551
17.065
22.161
16.438
(250)
(145)
1.782
1.350
24.301
16.920
23.943
17.788
(576)
(33)
(493)
(34)
23.725
16.887
23.450
17.754
Income:
Company's own activities
Subsidiary and affiliated companies
Extraordinary items
(2)
24.825
35.816
(5)
1.217
(4)
47.808
36.798
36.518
28.554
(3) (4)
0,52
0,97
78.785
(3)
(3)
(5)
0,04
62.130
80.703
64.254
109.184
96.972
71.717
57.065
48/52
42/58
59/41
51/49
Notes:
1. The figures expressed in Reais (R$) in this financial analysis were determined in accordance with accounting practices prescribed by Brazilian Corporate Law
and the rules established by the Brazilian Securities Commission - CVM.
2. Extraordinary items include amounts referring to unexpected or unusual events to the Company's operations, and are therefore nonrecurring.
3. Includes indebtedness relating to leasing contracts.
4. Earnings before income tax and social contribution, minority interests, net financial income and expenses, equity adjustments, and depreciation, amortization
and abandonment costs.
August 2004, which reduced to zero PIS/PASEP and COFINS rates applicable to financial income.
Positive effect of R$ 478 million on net financial income (expenses), due mainly to:
Decrease of R$ 691 million in financial expenses due to a decrease in interest on loans and financing,
reflecting the appreciation of the Brazilian real in relation to the U.S. dollar during the year (12%), in spite of
an increase in the Libor rate applicable thereto;
2. Consolidated Result
Negative monetary and foreign exchange variation (effect of R$ 213 million) as a result of the lower exchange
variation (R$ 419 million), reflecting the appreciation of the Brazilian real in relation to the U.S. dollar during
(R$ Million)
the year (12%) when compared to the prior year's appreciation (8%), together with the fact that the parent
23.725
20.237
17.795
16.887
company's relationship with foreign subsidiaries and affiliated companies has turned from debtor to creditor.
17.848
Increase of R$ 3.898 million in the provision for income tax and social contribution in view of the increase
in taxable income, in spite of a higher tax benefit arising from the provision for interest on capital in 2005
(R$ 5.483 million) over 2004 (R$ 4.386 million).
2003
HISTORIC VALUES
2004
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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b. Supply
Result per Business Area
PETROBRAS operates in an integrated manner, and most of its oil and gas production in the Exploration and
Supply
(R$ million)
The main criteria used to determine the income by business area are highlighted below:
5.556
a. Net operating revenues include revenues related to sales made to external clients and billings and transfers
among business areas, the reference price is the internal transfer price defined among the areas, using computation
2.553
2005
2004
business area considering the internal transfer price), and other operating costs incurred by each area, as well
as operating expenses, which include the expenses actually incurred by each area.
In 2005, net income recorded by the Supply area was R$ 5.556 million, 118% lower than net income recorded in 2004
(R$ 2.553 million), as a result of the increase of R$ 4.859 million in gross profits, with the following aspects to be highlighted:
Increase in the average realization value of oil products traded in the domestic market and the other markets;
Improved refinery production performance, reducing the need for importing oil products with greater added value;
4% increase in volumes of oil products sold in the domestic market, a demand met by increased refinery processing.
E&P
(R$ million)
Increase in the acquisition/transfer cost of oil and oil products, forced by higher international prices, in spite
22.699
18.083
of the 17% appreciation in the average rate of the real against the U.S. dollar, increased spread between heavy
and light crude oil;
Increase in depreciation costs due to investments in refining facilities, resulting in increased refinery capacity
2005
and complexity.
2004
In 2005, net income recorded by the exploration and production area was R$ 22.699 million, 26% higher than
net income for 2004 (R$ 18.083 million), due to the R$ 8.401 million increase in gross profits with oil sales and
transfers, reflected by the increase in international prices, reflecting the 13% increase in oil and LNG production
and the 3% increase in natural gas production, as well as higher international prices, in spite of the 17%
(R$ million)
appreciation of the average real rate to the U.S. dollar and of the lower appreciation of heavy crude oil prices in
(624)
(517)
2005
2004
the write-off of dry holes and/or uneconomical wells, and the restatement of the abandonment provision.
2005 reported improved energy sales, considering the new agreements entered into. Operating revenues from
natural gas sales remained positive, in view of the 9% increase in the sales volume and the natural gas sale price
realignment, in spite of increased operating expenses.
However, the sales performance was not sufficient to offset losses on energy generation considering continuous
low prices in the local market, as well as expenses recorded in 2005 relating to negotiated contractual issues and
to the acquisition of thermoelectric plants, aimed at reducing contingent risks.
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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These combined aspects led the Gas and Energy segment to record losses of R$ 624 million in 2005, 21%
higher than the losses of R$ 517 million reported in the prior year.
In 2005, the International business area reported net income of R$ 567 million, 63% greater than net income
of R$ 347 million recorded in 2004.
Excluding the extraordinary expenses, the Energy and Gs business area would have reached in 2005
an operational income of R$ 38 million (operational income of R$ 111 million in 2004) and a loss net of tax
effects, of R$ 223 million (loss of R$ 471 million in 2004).
d. Distribution
ii) production cost increase in Bolivia due to an increase in the hydrocarbon tax rate from 18% to 50%, effective
May 2005; iii) lower trading margins for diesel oil and gasoline in Argentina due to restrictions imposed by the
local government on sale prices; and iv) 12% appreciation of the Brazilian real in relation to the U.S. dollar in
(R$ million)
784
623
developed by PEPSA's related parties, especially with regard to the electric energy segment in Argentina.
These effects were partially offset by an increase of R$ 106 million in operating expenses due to the write-off
of tax credits in Ecuador and to the increase in general and administrative expenses.
2005
2004
f. Corporate
In 2005, the distribution business area recorded net income of R$ 784 million, 26% higher than net income
reported in the previous year (R$ 623 million), as a result of the R$ 636 million increase in gross profit, especially
Corporate
due to the consolidation of Liquigs (company acquired in August 2004), favorably impacting the sales volume,
(R$ million)
(4.096)
(3.677)
These impacts were partially offset by the R$ 226 million increase in selling and general and administrative
expenses, which consider in commercialization, distribution and payroll expenses.
The Company's share in the fuel distribution market in 2005 was 33,8% (552 thousand bbl/day), including the
company Liquigs, while in 2004 this share was 31,6% (500 thousand bbl/day).
2005
2004
In 2005, Liquigs contributed gross profit and net income of R$ 548 million and R$ 111 million, respectively.
From August to December 2004, Liquigs' share in gross profit and net income was R$ 319 million and R$ 155
Corporate activities of the PETROBRAS Group generated losses of R$ 4.096 million in 2005, an 11% increase over
million, respectively.
losses reported in 2004 (R$ 3.677 million), relating especially to personnel, publicity and institutional advertising
costs, and to the change in assumptions as a result of the actuarial review of Health Care (AMS) and Pension
e. International
the higher appreciation of the Brazilian real in relation to the U.S. dollar during the year (12%) as compared to the
(R$ million)
567
347
2005
2004
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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In 2005, the following extraordinary items impacted net income (consolidated and by segment) recorded by
PETROBRAS Group:
Year - R$ Million
E & P SUPPLY
CORPOR
ELIMIN.
TOTAL
29.101
3.604
42
828
1.938
(4.796)
(787) 29.930
169
169
135
135
(412)
(412)
192
192
(239)
(239)
165
165
94
94
69
69
(277)
94
69
122
165
173
28.824
3.698
111
828
2.060
(4.631)
(787) 30.103
18.083
2.553
(517)
623
347
(3.677)
(525) 16.887
(277)
94
69
122
165
173
94
(32)
(23)
(123)
(56)
(140)
17.900
2.615
(471)
623
346
(3.568)
Extraordinary Items:
Contractual losses on
Year - R$ Million
E & P SUPPLY
ELIMIN.
TOTAL
36.518
8.482
(456)
1.238
2.187
Extraordinary Items:
Contractual losses on
transportation services (Ship or Pay)
147
147
(146)
(146)
286
286
23
23
118
118
376
376
286
494
170
(146)
804
36.518
8.768
38
1.238
2.357
22.699
5.556
(624)
784
567
(4.096)
Extraordinary Items
286
494
170
(146)
804
Tax Effects
(98)
(93)
(87)
50
(228)
22.699
5.744
(223)
784
650
(4.192)
Reinstatement of termoeletrics
output capacity in Northeast
(1.161) 23.725
Tax Effects
Net income (Loss) per business
rea excluding extraordinary items
(525) 16.920
(1.161) 24.301
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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these products was partially offset by a decrease in sales of fuel oil (8%) due to fierce competition of replacement
products such as coal, coke, biomass, firewood and natural gas. Demand for diesel oil remained practically stable
when compared to 2004, especially because of agricultural performance and increased product prices, which also
In 2005, financial the consolidated financial result was negative in R$ 2.843 million (R$ 1.061 million - Parent
Company), while the year before, R$ 3.321 million (R$ 564 million - Parent Company). Foreign exchange variation
is impacted by the effects of the appreciation of the Brazilian real in relation to the U.S. dollar during the year (12%)
YEAR
2005
when compared to the prior year's appreciation (8%), together with the fact that the parent company's relationship
2004
with foreign subsidiaries and affiliated companies has turned from debtor to creditor.
665
656
Gasoline
287
275
Fuel oil
99
108
157
157
LPG
213
210
QAV
78
74
Other
156
157
(1)
1.655
1.637
28
32
(13)
228
210
1.911
1.879
Exports
512
416
23
International sales
385
416
(7)
897
832
2.808
2.711
Total
PETROBRAS
2005
2004
2005
2004
(3.509)
(3.647)
(658)
(710)
(44)
(22)
(1.515)
(1.441)
(1.011)
(1.511)
(70)
(102)
(4.564)
(5.180)
(2.243)
(2.253)
358
468
(188)
30
2.043
1.141
Advances to suppliers
79
93
79
93
Advances to Petros
73
74
73
74
Loans granted
93
106
748
535
362
273
1.351
1.276
2.369
1.611
131
307
116
606
(209)
(590)
(174)
(454)
(1.243)
(122)
(4.185)
(3.020)
1.691
988
3.056
2.946
370
583
(1.187)
78
(2.843)
(3.321)
(1.061)
(564)
(8)
Naphtha
CONSOLIDATED
Financial expenses
Loans and financing
Suppliers
Other
Financial income
Short-term investments
Subsidiaries and affiliated companies
Other
4% QAV
Fuel Oil 5%
Naphtha 8%
35% Diesel
Others 10%
10
PETR OBRA S
15% Gasoline
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
11
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(R$ millions)
R$ million
1.909
CONSOLIDATED
12.31.2005
12.31.2004
17.531
18.765
4.658
9.843
Row Materials
12.873
8.922
Oil Products
Noncurrent assets
3.009
2.499
Permanent assets
29.097
25.747
Assets
Current assets
Cash and cash equivalents
Other current assets
Investments
Property, plant and equipment
Other permanent assets
Total assets
(272)
145
28.777
24.806
592
796
49.637
47.011
1.939
5.400
Others
Liabilities
1.572
Current liabilities
15.141
13.874
Financing
7.393
7.560
Suppliers
4.583
3.587
3.165
2.727
30.082
37.000
28.498
35.177
1.584
1.823
45.223
50.874
4.414
(3.863)
11.469
8.349
627
870
15.256
3.616
Noncurrent liabilities
Financing
Other noncurrent liabilities
Total liabilities
(5)
6.518
1.362
1.855
6.447
Row Materials
Oil Products
Materials and Suppliers
4.390
Others
2004
749
689
21
14
Partial settlement
(8)
Regularization GTI*
50
770
749
Opening balance
Reimbursements to PETROBRAS
(5) Considers the translation of amounts expressed in reais using the U.S. dollar selling rate at the balance sheet date (2005 - R$ 2,3407 and 2004 - R$ 2,6544).
6. Inventories
Closing balance
The consolidated inventories of crude oil, oil products, raw materials and alcohol amounted to R$ 13.607 million
at December 31, 2005, 5% lower than the figure for December 31, 2004, while inventory balances at the
parent company decreased by 11% over the prior year.
As defined by Law N 10.742 dated October 6, 2003, the settlement of accounts should have been completed
by June 30, 2004. After having provided all information required by the National Treasury Secretariat (STN),
PETROBRAS has been in contact with the Ministry of Energy and Mines (MME) with a view to resolving the
differences between the parties in order to conclude the settlement process as established by Provisional Measure
N 2.181-45, of August 24, 2001.
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PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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The remaining balance may be paid with National Treasury Bonds issued at the same amount as the final
9. Indebtedness
balance determined as a result of the process for the settlement of accounts, or other amounts that might be owed
by PETROBRAS to the Federal Government, including taxes due, or a combination of the foregoing.
At December 31, 2005, consolidated indebtedness for local and foreign loans and financing totaled R$ 48.242
million, as shown below:
8. Investments
R$ Million
CONSOLIDATED
DETAILS
In Brazil, PETROBRAS invested primarily in developing its oil and natural gas production capacity, through its own
Short term:
investments and through structured undertakings with partners. In 2005, total consolidated investments reached
Financing
Leasing
Subtotal
Consolidated Investiments
Financing
13.000
2004
10.503
8.805
613
770
11.116
9.575
34.439
42.977
2.687
3.251
37.126
46.228
48.242
55.803
(23.417)
(19.987)
24.825
35.816
Long term:
(R$ million)
14.000
2005
13.934
Leasing
12.441
Subtotal
12.000
11.000
Total indebtedness
10.000
9.000
Net indebtedness
8.000
7.000
6.000
5.000
4.000
3.286
PETROBRAS' net indebtedness at December 31, 2005 amounted to R$ 24.825 million, a 31% decrease over
3.907
3.153
3.000
2.000
1.527
1.000
indebtedness. We can also mention a better indebtedness level as measured by the Net indebtedness/EBITDA
1.223
625
December 31, 2004. Appreciation of the Brazilian real in relation to the U.S. dollar has contributed to lower
2.385
2.331
495
532
775
624
311
454
0
Exploration
and
Production
JAN/DEC - 2005
Supply
Gas and
Energy
International
Distribution
Corporate
SPE
Ventures
under
Negotiation
87
169
Project
Financings
ratio, which decreased from 0,97 as of December 31, 2004 to 0,52 as of December 31, 2005. Capital structure
is represented by a 52% sharer in the capital of third parties as of December 31, 2005, a decrease of 6 percentage
points when compared to December 31, 2004.
JAN/DEC - 2004
Of total own investments made in the country by PETROBRAS System in 2005, 54% were employed to exploration
and production development activities, of which were invested in the Campos Basin alone R$ 4.486 million.
The principal investments made in 2005 in the Exploration and Production area were in the following fields:
The value added by PETROBRAS in 2005 was R$ 115.311 million (R$ 95.404 million in 2004), as shown below:
Marlim Sul (R$ 764 million), Roncador (R$ 579 million), Albacora Leste (R$ 745 million), Jubarte/Cachalote
(R$ 234 million), Marlim Leste (R$ 82 million) and Barracuda/ Caratinga (R$ 138 million), located in the Campos Basin.
14
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
15
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At an Extraordinary General Meeting held on April 3, 2006, the shareholders of PETROBRAS approved an
increase in the Company's capital R$ 32.896 to R$ 48.248, through the capitalization of revenue reserves accrued
9.643
during previous financial years, in the amount of R$ 15.013 million, R$ 844 million to statutory reserve and
8%
R$ 14.169 million to retained earnings, and the reserve for restatement of realized capital in the amount of R$ 339
17.110
15%
63.810
56%
b. Retention of earnings
Government Entities
Shereholders
24.748
The proposal for appropriation of net income for the year ended December 31, 2005 includes retained earnings
21%
in the amount of R$ 15.104 million, R$ 15.095 million of which relate to net income from the year and R$ 9 million
Personnel
from the remaining balance of retained earnings, intended to cover part of the annual investment program defined
R$ 115.311 million
in the 2006 Capital Budget, to be approved at the General Shareholders' Meeting of April 3, 2006.
c. Stockholders' Remuneration
(R$ million)
Based on the Company's by-laws, the Board of Directors of PETROBRAS proposed to the Ordinary General Meeting
to be held on April 3, 2006 the distribution of dividends for 2005 in the amount of R$ 7.018 million, equivalent
7.516
8%
to 31,80% of the basic income for dividend purposes. The dividend is equivalent to R$ 1,60 per common or
13.303
preferred share and represents dividend yields of 3,9% and 4,3% (4,3% and 4,7% in 2004) of common and
14%
56.015
59%
Government Entities
18.570
Shereholders
19%
Personnel
R$ 95.404 million
ON AND PN
R$ MILLION
0,50
2.193
0,50
2.193
0,25
1.097
0,35
1.535
TOTAL DIVIDENDS
1,60
7.018
a. Capital
The Extraordinary Shareholders' Meeting held on July 22, 2005 decided and approved a 300% share split, resulting
Dividends proposed include interest on capital in the amount of R$ 5.483 million (R$ 1,25 per share), subject to
in the free distribution of the same type of shares on a three-for-one basis, considering the shareholding position
15% withholding income tax, except for immune and exempt stockholders. On January 5, 2006, the company
as of August 31, 2005. Accordingly, capital amounting to R$ 33.235 million, has been represented, as of
prepaid interest on capital (R$ 2.193 million) to holders of common and preferred shares as of June 30, 2005.
September 1, 2005, by 4.386 million shares with no par value, 2.537 million of which are common and 1.849
The balance of dividends and the amount referring to interest on capital will be made available on a date to be
million are preferred; the ratio between American Depositary Receipts (ADR) and each share type has changed
defined at the Ordinary General Meeting, being monetarily restated from December 31, 2004 to the date of payment,
from one share per one ADR to four shares per one ADR.
16
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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Report of Auditors
To the Board of Directors and Shareholders of PETRLEO BRASILEIRO S.A. - PETROBRAS
1. We have audited the accompanying balance sheets of PETRLEO BRASILEIRO S.A. - PETROBRAS and the
consolidated balance sheets of PETRLEO BRASILEIRO S.A. - PETROBRAS and its subsidiaries, jointly-owned
subsidiaries and special purposes companies as of December 31, 2005 and 2004, and the related statements
of income, changes in shareholders' equity and changes in financial position for the years then ended. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements.
2. We conducted our audits in accordance with auditing standards generally accepted in Brazil including: (a) the
planning of our work, taking into consideration the materiality of balances, the volume of transactions and the
accounting and internal control systems of the Company, (b) the examination, on a test basis, of the
documentary evidence and accounting records supporting the amounts and disclosures in the financial
statements, and (c) an assessment of the accounting practices used and significant estimates made by
management, as well as an evaluation of the overall financial statement presentation.
financial statements
financial
statements
3. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of PETRLEO BRASILEIRO S.A. - PETROBRAS and the consolidated financial position of PETRLEO
BRASILEIRO S.A. - PETROBRAS and its subsidiaries at December 31, 2005 and 2004, and the results of their
operations, the changes in their shareholders' equity and the changes in their financial position for the years then
ended, in accordance with the accounting practices adopted in Brazil.
4. Our audits were conducted for the purpose of forming an opinion on the financial statements referred to in the
first paragraph. The social balance sheet and the statements of cash flow (consolidated and parent company), of
value added (consolidated and parent company) and segmentation of business (consolidated), prepared in
accordance with the accounting practices adopted in Brazil, are presented for purposes of additional information
and are not a required part of the basic financial statements. Such information has been subjected to the auditing
procedures described in the second paragraph and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
5. As mentioned in Note 1, in compliance with CVM Instruction N 408, of August 18, 2004, the Company has
included as of January 1, 2005 the Special Purpose Companies (SPCs) in its consolidated financial statements.
For comparability purposes, these SPCs have also been included in the financial statements for the year ended
December 31, 2004.
Rio de Janeiro, February 17, 2006
ERNST & YOUNG Auditores Independentes S/S
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
19
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FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Balance Sheet
Years ended December 31, 2005 and 2004
(In thousands of reais)
CONSOLIDATED
ASSETS
2005
PARENT COMPANY
2004
2005
CONSOLIDATED
2004
Current assets
PARENT COMPANY
2005
2004
2005
2004
8.589.629
8.219.855
1.499.012
1.144.973
1.913.369
585.374
156.709
165.265
Suppliers
8.976.359
9.054.723
24.865.115
26.949.707
8.931.341
7.854.014
7.292.508
6.583.563
7.165.878
5.141.363
7.017.843
5.044.074
28.135
64.106
2.421.806
4.652.469
482.942
441.374
461.848
414.865
1.196.281
873.561
978.222
653.812
167.645
339.612
167.645
333.111
1.626.854
780.028
1.054.783
381.719
Other payables
3.281.717
3.371.877
1.780.189
1.613.792
42.360.150
36.725.887
47.695.680
47.937.350
34.439.489
42.976.885
6.408.872
8.589.120
39.954
276.328
1.925.046
3.420.119
8.461.721
7.474.135
6.270.290
5.263.660
1.898.360
696.273
1.749.036
601.347
7.030.939
5.673.650
6.477.127
5.214.410
614.568
632.721
225.251
220.721
3.228.563
2.766.832
2.558.578
2.135.582
55.713.594
60.496.824
25.614.200
25.444.959
Current liabilities
23.417.040
19.986.848
85.229
217.748
14.148.064
10.977.519
10.676.578
7.421.319
41.907
48.625
945.676
440.240
13.606.679
14.263.518
10.337.565
11.555.627
6.550.997
4.842.714
4.037.175
2.966.007
941.016
490.366
680.787
735.261
1.444.258
1.958.862
535.395
744.528
60.235.190
52.786.200
44.694.731
35.443.270
17.481.555
11.580.288
Noncurrent assets
Accounts receivable, net (Note 4)
1.587.771
1.914.788
28.151.479
35.220.122
769.524
748.788
769.524
748.788
618.091
858.873
7.601
4.840
569.030
1.830.257
Long-term liabilities
Financing (Note 13)
684.235
958.692
684.235
958.692
1.818.185
1.815.104
1.443.834
1.068.657
3.454
331.589
1.475
1.476
1.362.800
1.513.045
1.060.967
1.076.077
1.205.358
1.217.612
1.205.358
1.217.612
4.337.361
4.148.685
2.333.641
2.030.268
Other payables
117.811
117.488
117.811
117.488
Inventories (Note 6)
492.777
265.296
492.777
265.296
Deferred income
483.274
502.171
1.104.861
1.018.548
763.816
588.090
Minority interest
6.178.854
4.811.315
14.102.228
14.908.508
37.601.550
45.127.663
33.235.445
33.235.445
33.235.445
33.235.445
372.064
354.673
372.064
354.673
60.120
69.094
60.120
69.094
45.117.607
28.470.957
47.035.637
30.594.424
78.785.236
62.130.169
80.703.266
64.253.636
183.521.108
164.666.366
154.013.146
137.635.945
Permanent assets
2.280.702
2.078.758
20.366.625
14.048.878
Capital reserves
105.429.354
93.323.224
50.772.065
42.582.076
Revaluation reserve
1.473.634
1.569.676
578.175
434.058
109.183.690
96.971.658
71.716.865
57.065.012
183.521.108
164.666.366
154.013.146
137.635.94
Total assets
Revenue reserves
20
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
21
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Page 22
Statement of Income
CONSOLIDATED
2005
177.595.324
1.469.960
179.065.284
(42.460.206)
136.605.078
(77.107.946)
59.497.132
PARENT COMPANY
2004
149.973.540
466.619
150.440.159
(39.312.400)
111.127.759
(65.069.329)
46.058.430
2005
143.276.549
389.181
143.665.730
(37.843.204)
105.822.526
(57.512.113)
48.310.413
119.709.723
315.004
120.024.727
(34.450.292)
85.574.435
(48.607.576)
36.966.859
(5.477.419)
(4.751.890)
(4.195.157)
(2.858.630)
(4.564.773)
1.351.410
370.536
(5.180.059)
1.276.134
583.346
(2.242.658)
2.369.097
(1.187.233)
(2.252.841)
1.611.385
77.243
(28.845)
(5.401.953)
(895.208)
(934.600)
(126.032)
(2.222.792)
(2.011.016)
(2.626.419)
(22.567.111)
(26.390)
(4.117.811)
(1.255.033)
(695.650)
(55.205)
(1.682.664)
(1.320.929)
(2.222.718)
(19.448.869)
(4.089)
(3.449.664)
(443.415)
(932.627)
(49.368)
(1.876.411)
(1.888.903)
(2.692.062)
(16.592.490)
(3.214)
(2.596.338)
(807.547)
(688.562)
(55.205)
(1.164.741)
(1.240.026)
(2.804.865)
(12.783.341)
(250.124)
36.679.897
(124.531)
(144.661)
26.464.900
(207.309)
1.782.023
33.499.946
(199.982)
1.349.879
25.533.397
(227.772)
36.555.366
(2.845.244)
(7.956.912)
26.257.591
(1.940.903)
(4.962.966)
33.299.964
(2.466.083)
(6.537.799)
25.305.625
(1.830.978)
(5.060.476)
25.753.210
19.353.722
24.296.082
18.414.171
(1.005.564)
(783.224)
(846.000)
(660.000)
24.747.646
(1.022.923)
23.724.723
18.570.498
(1.683.100)
16.887.398
23.450.082
17.754.171
23.450.082
17.754.171
5,41
15,40
5,35
16,19
5,41
3,85
5,35
4,05
CONSOLIDATED
2005
2004
23.724.723
1.022.923
158.529
91.595
172.977
8.034.716
16.887.398
1.683.100
129.761
14.900
202.545
6.868.355
3.999.654
2.411.575
1.774.139
2.734.006
(4.083.087)
3.306.932
1.983.578
(2.015.160)
2.555.545
1.733.745
40.824.117
Other sources:
Financing
Credits and subventions for investments
Proceeds from the sale of equipment
Total funds provided
Financial resources were used for
Increase in the Petroleum and Alcohol Account - STN
Investments
Acquisition of minority interest
Cost of exploration and developing
production of oil and gas
Other
Deferred charges
Increase in ventures under negotiation
Transfer of financing and suppliers to current liabilities
Decrease in other noncurrent asset accounts
Increase in noncurrent assets
Proposed dividends
Total funds used
Increase in working capital from subsidiary
merged and prior year adjustments
Increase (decrease) in working capital
Changes in working capital
Current assets:
At end of year
At beginning of year
Current liabilities:
At end of year
At beginning of year
Increase (decrease) in working capital
2004
PARENT COMPANY
2005
2004
23.450.082
17.754.171
(1.816.395)
34.372
990.935
3.739.373
3.277.858
(1.345.357)
(4.522)
546.885
3.807.002
(13.248.121)
1.106.798
(6.453)
1.097.034
(40.168)
32.568.334
(768.921)
2.928.199
491.471
19.167
33.446.486
127.926
2.195.396
821.126
(70.291)
11.641.081
5.747.298
17.391
506.187
6.270.876
47.094.993
4.573.214
14.808
2.516.454
7.104.476
39.672.810
373.199
17.391
2.488.610
2.879.200
36.325.686
369.624
14.808
2.662.895
3.047.327
14.688.408
18.727
46.252
910.167
45.349
3.041.246
46.252
1.214.962
5.813.253
7.094.042
169.453
615.991
1.394.149
1.273.477
221.784
5.044.074
22.887.437
11.385.451
15.186.497
360.839
10.222.766
10.385.981
388.900
9.879.227
913.592
370.055
7.165.878
45.280.266
5.706.659
1.093.189
811.011
5.470.124
35.080.398
5.041.315
7.677.517
204.812
907.459
1.719.940
582.606
639.817
7.017.843
26.832.555
1.814.727
409.810
4.182.602
9.493.131
(8.199.029)
60.235.190
52.786.200
7.448.990
52.786.200
56.041.522
(3.255.322)
44.694.731
35.443.270
9.251.461
35.443.270
39.246.621
(3.803.351)
42.360.150
36.725.887
5.634.263
1.814.727
36.725.887
44.163.811
(7.437.924)
4.182.602
47.695.680
47.937.350
(241.670)
9.493.131
47.937.350
43.541.672
4.395.678
(8.199.029)
22
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
23
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Page 24
CAPITAL
REVALUATION
CAPITAL RESERVES
SUBSCRIBED AND
MONETARY
SUBVENTIONS
TAX
PAID-UP CAPITAL
19.862.634
ADJUSTMENTS
AFRMM
INCENTIVES
339.307
126.099
213.766
REVENUE RESERVES
RESERVE
72.029
RETENTION
RETAINED
TOTAL
EARNINGS
SHAREHOLDERS'
LEGAL
STATUTORY
OF EARNINGS
EQUITY
3.147.702
679.159
27.078.876
51.519.572
13.033.504
(13.033.504)
Other changes
(2)
14.808
Reserves set up
9.161
Realization of reserves
9.161
(12.096)
12.096
17.754.171
887.708
164.480
Retention of earnings
11.657.907
12.096
339.307
140.907
213.766
69.094
4.035.410
843.639
(12.096)
25.715.375
17.391
(8.974)
8.974
23.450.082
1.172.504
164.480
Retention of earnings
15.095.255
8.974
158.298
33.235.445
372.064
213.766
5.207.914
60.120
1.008.119
23.450.082
(16.432.239)
(8.974)
(7.017.843)
339.307
(5.044.074)
64.253.636
17.391
Realization of reserves
32.896.138
17.754.171
(12.710.095)
(5.044.074)
32.896.138
(2)
14.808
(7.017.843)
40.819.604
47.035.637
80.703.266
24
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
25
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CONSOLIDATED
2005
Operating activities
Net income for the year
Adjustments:
Equity pickup
Goodwill/discount - amortization
Minority interest
Depreciation, amortization
Net book value of assets sold or disposed of
Monetary and exchange variation and charges
related to financing and intercompany loans
Exchange variation allocated to permanent assets
Deferred income tax and social contribution, net
Change in accounts receivable
Change in inventories
Change in the Petroleum and Alcohol
Account - STN
Change in other assets
Change in suppliers
Change in taxes and social contributions
Change in project financing liabilities
Change in other liabilities
Change in short-term transactions with
subsidiaries and affiliated companies:
Accounts receivable
Accounts payable
Oil and oil products supply-foreign transactions
Effect on cash from merger of subsidiary
and affiliated companies
Cash generated by operating activities
Financing activities
Financing and intercompany loans, net
Dividends paid to shareholders
Cash generated by (used in)
financing activities
Investing activities
Investment in oil and gas exploration
and production
Investments in refining and transportation
Investment in gas and energy
Investment in distribution
Other investments
Dividends received
Ventures under negotiation
Cash used in investing activities
Net changes in the year
Cash at beginning of year
Cash at end of year
23.724.723
2004
16.887.398
PARENT COMPANY
2005
23.450.082
CONSOLIDATED
2004
17.754.171
158.529
91.595
1.022.923
8.034.718
2.411.575
129.761
14.900
1.683.100
6.868.355
2.734.006
(1.816.395)
34.372
(1.345.357)
(4.522)
3.739.373
1.106.799
3.807.002
1.097.034
(1.477.086)
3.999.654
889.869
(2.256.555)
429.358
(38.854)
1.774.139
974.289
(3.666.142)
(4.129.463)
(807.987)
1.162.956
422.392
(2.200.799)
990.581
1.692.288
(960.641)
(3.100.484)
(20.736)
(1.308.871)
(248.122)
1.239.008
(59.428)
2.665.551
2.295.631
522.726
247.907
(2.416.118)
(20.736)
(113.810)
(381.943)
92.010
22.057
3.056.687
(59.428)
(677.522)
1.150.391
(669.440)
2.879.208
(1.064.773)
508.889
(236.374)
(762.531)
(2.550.692)
(934.994)
(1.451.454)
(961.720)
(1.020.593)
333.250
4.800.933
32
37.211.236
226.953
23.153.581
24.224.515
25.774.473
(5.603.269)
(5.151.844)
(2.566.464)
(5.470.124)
2.531.278
(4.829.762)
(14.850.768)
(5.424.070)
(10.755.113)
(8.036.588)
(2.298.484)
(20.274.838)
(16.062.141)
(3.444.969)
(1.732.046)
(528.089)
(1.388.741)
130.255
(14.970.425)
(4.892.628)
(920.917)
(993.809)
(1.063.673)
133.876
(9.895.016)
(4.403.980)
(850.353)
(9.126.349)
(3.844.686)
(507.824)
(23.025.731)
3.430.192
19.986.848
23.417.040
(22.707.576)
(7.590.583)
27.577.431
19.986.848
(815.542)
531.224
(591.097)
(16.024.764)
5.901.267
11.580.288
17.481.555
(812.850)
560.317
(411.334)
(14.142.726)
(8.643.091)
20.223.379
11.580.288
Revenues
Sales of products and services
and nonoperating income
Provision for uncollectible
accounts - setting up
2004
2005
2004
179.660.812
150.821.726
144.107.488
120.325.296
(269.324)
179.391.488
(183.247)
150.638.479
(120.835)
143.986.653
15.819
120.341.115
(4.003.598)
(29.035.164)
(4.822.986)
(30.177.437)
(11.963.673)
(6.960.946)
(14.427.689)
(7.660.105)
(23.595.126)
(56.633.888)
122.757.600
(14.641.987)
(49.642.410)
100.996.069
(20.080.629)
(39.005.248)
104.981.405
(12.432.371)
(34.520.165)
85.820.950
(8.034.718)
(6.868.355)
(3.739.373)
(3.807.002)
114.722.882
94.127.714
101.242.032
82.013.948
(158.528)
(129.761)
1.816.395
1.345.357
238.999
(91.595)
598.002
586.878
1.044.794
(14.900)
376.680
1.276.813
1.923.310
(34.372)
400.689
4.106.022
1.531.550
4.522
376.680
3.258.109
115.309.760
95.404.527
105.348.054
85.272.057
Value added
received in transfers
Equity pickup
Financial income - includes
monetary and exchange variation
Goodwill/discount - amortization
Rental and royatiel
Total value added available
for distribution
Distribution of value added
Personnel
Salaries, benefits and related charges
Directors' fees
Profit sharing
Pension and post-retirement plan
Health care benefits
Government entities
Taxes and social contributions
Deferred income tax and
social contribution
Governmental participation
Financial institutions
and suppliers
Interest and monetary
and exchange variation
Rental and charter expenses
Shareholders
Interest on capital and dividends
Minority interests
Retained earnings
Value added distributed
PARENT COMPANY
2005
5.186.123
27.864
1.005.744
1.737.771
1.685.295
9.642.797
5%
0%
1%
2%
1%
9%
4.655.154
18.838
773.840
625.852
1.442.303
7.515.987
4%
0%
1%
1%
2%
8%
3.316.397
4.089
846.000
1.646.521
1.685.296
7.498.303
3%
0%
1%
1%
2%
7%
2.882.511
3.214
660.000
625.852
1.442.303
5.613.880
3%
0%
1%
1%
2%
7%
48.833.887
42%
43.630.123
46%
48.044.789
46%
41.911.641
49%
501.637
14.473.550
63.809.074
0%
13%
55%
1.058.297
11.326.516
56.014.936
1%
12%
59%
422.392
13.754.210
62.221.391
0%
13%
59%
1.692.288
10.823.792
54.427.721
2%
13%
64%
4.915.429
12.194.816
17.110.245
4%
11%
15%
4.462.469
8.840.636
13.303.105
5%
9%
14%
2.984.104
9.194.174
12.178.278
3%
9%
12%
2.095.763
5.380.522
7.476.285
2%
6%
8%
5.044.909
5%
1.683.100
2%
11.842.490 12%
18.570.499 19%
95.404.527 100%
7.017.843
7%
0%
16.432.239 15%
23.450.082 22%
105.348.054 100%
5.044.074
7.050.642
6%
1.022.923
1%
16.674.079 14%
24.747.644 21%
115.309.760 100%
6%
0%
12.710.097 15%
17.754.171 21%
85.272.057 100%
26
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
27
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Page 28
Assets
2005
SUPPLY
DISTRIBUTION
INTERNATIONAL
CORPORATE
ELIMINATIONS
TOTAL
68.310.263
40.439.192
21.404.260
8.815.638
21.025.682
39.018.298
(15.492.225)
183.521.108
7.527.760
20.766.479
4.677.400
4.865.430
6.289.824
23.181.048
(7.072.751)
60.235.190
1.639.752
1.458.488
1.960.420
371.475
1.498.639
16.488.266
5.888.008
19.307.991
2.716.980
4.493.955
4.791.185
6.692.782
(7.072.751)
36.818.150
3.335.206
1.186.391
2.157.918
1.097.047
776.907
13.623.751
(8.074.992)
14.102.228
309.519
4.982
1.552
1.187
300.851
3.025.687
1.181.409
2.157.918
1.095.495
775.720
12.553.376
(8.074.992)
12.714.613
57.447.297
18.486.322
14.568.942
2.853.161
13.958.951
2.213.499
(344.482)
109.183.690
ELIMINATIONS
TOTAL
Current assets
Noncurrent assets
Petroleum and alcohol account - STN
Marketable securities
Other noncurrent assets
Permanent assets
769.524
2004
E&P
Assets
Current assets
23.417.040
769.524
618.091
2004
SUPPLY
DISTRIBUTION
INTERNATIONAL
CORPORATE
60.306.369
37.161.611
19.145.310
8.173.299
21.287.244
42.887.740
(24.295.207)
164.666.366
6.516.070
19.564.162
3.603.848
4.610.480
5.751.675
17.464.554
(4.724.589)
52.786.200
2.329.607
1.338.456
786.770
304.165
1.387.175
13.840.675
4.186.463
18.225.706
2.817.078
4.306.315
4.364.500
3.623.879
(4.724.589)
32.799.352
5.031.646
1.639.184
2.329.409
902.740
985.380
23.236.945
(19.216.796)
14.908.508
Noncurrent assets
Petroleum and alcohol account - STN
Marketable securities
Other noncurrent assets
Permanent assets
19.986.848
748.788
748.788
425.131
4.983
485
2.689
12.177
5.648.851
(5.235.443)
858.873
4.606.515
1.634.201
2.328.924
900.051
973.203
16.839.306
(13.981.353)
13.300.847
48.758.653
15.958.265
13.212.053
2.660.079
14.550.189
2.186.241
(353.822)
96.971.658
The assumptions used to prepare this statement are described in Note 23.
The accompanying notes form an integral part of these financial statements.
28
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
29
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2005
SUPPLY
DISTRIBUTION
INTERNATIONAL
CORPORATE
ELIMINATIONS
TOTAL
136.605.078
STATEMENT OF INCOME
Net operating revenue
(1)
69.487.768
109.598.661
8.087.995
38.309.062
11.467.758
(100.346.166)
65.007.338
30.027.189
2.402.294
544.765
2.364.580
(100.346.166)
4.480.430
79.571.472
5.685.701
37.764.297
9.103.178
(29.682.023)
(97.452.235)
(6.446.519)
(34.619.857)
(7.350.399)
98.443.087
(77.107.946)
Gross profit
39.805.745
12.146.426
1.641.476
3.689.205
4.117.359
(1.903.079)
59.497.132
Operating expenses
(3.285.907)
(3.665.151)
(2.098.404)
(2.451.985)
(1.929.686)
(6.427.402)
134.251
(19.724.284)
(872.646)
(3.000.164)
(1.366.110)
(2.314.281)
(1.130.581)
(2.358.686)
134.251
(10.908.217)
(29.729)
(79.078)
(61.042)
(164.245)
(128.562)
(432.552)
Intersegments
Third parties
Cost of products and services sold
136.605.078
(895.208)
1.876.411
(346.381)
(2.222.792)
(49.368)
(76.664)
(126.032)
(371.814)
(133.728)
(53.314)
(1.973)
(4.488)
(369.283)
(934.600)
(2.011.016)
(2.011.016)
(2.626.419)
(85.939)
(452.181)
(617.938)
28.514
(243.010)
(1.255.865)
(1)
36.519.838
8.481.275
(456.928)
1.237.220
2.187.673
(6.427.402)
(1.768.828)
39.772.848
(1.007.367)
119.387
88.911
20.808
(1.263.286)
(793.680)
(7.600)
(2.842.827)
198.764
(42.175)
99.648
(506.361)
(250.124)
(97.796)
(19.015)
(37.544)
(8.883)
(6.362)
45.069
(124.531)
35.414.675
8.780.411
(447.736)
1.249.145
1.017.673
(7.682.374)
(1.776.428)
36.555.366
(11.732.592)
(2.867.501)
87.082
(389.872)
(306.649)
3.792.016
615.360
(10.802.156)
Minority interest
(613.289)
(73.635)
(236.762)
(369.743)
(283.673)
(26.702)
(75.589)
(45.135)
(204.722)
22.699.051
5.555.602
(624.118)
783.684
566.652
(4.095.080)
(1) Beginning 2005 revenues from the sale of oil to third parties have been allocated based on the location originating the sale, which may belong to the
(99.237)
(1.022.923)
(1.005.564)
(1.161.068)
23.724.723
The assumptions used to prepare this statement are described in Note 23.
Exploration and Production or Supply areas. Up to 2004, oil sales were fully allocated to the Exploration and Production segment.
The accompanying notes are an integral part of the financial statements.
Considering that the methodology for internal transfer prices is based on market parameters and that all of the oil sold by the Supply segment is transferred from
the Exploration and Production segment, this adjustment does not practically impact the result of the individual areas, being limited to an increase in Inter-segment
Net Operating Revenues recorded for the Exploration and Production area, against a decrease in Net Operating Revenues to Third Parties, as well as an increase
in Net Operating Revenues to Third Parties and in the Cost of products and services sold reported for the Supply area.
30
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
31
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2004
SUPPLY
DISTRIBUTION
INTERNATIONAL
CORPORATE
ELIMINATIONS
TOTAL
111.127.759
STATEMENT OF INCOME
Net operating revenue
(1)
55.218.709
82.930.659
5.944.447
30.507.700
10.593.577
(74.067.333)
47.825.956
22.932.862
1.159.130
508.213
1.641.172
(74.067.333)
7.392.753
59.997.797
4.785.317
29.999.487
8.952.405
(23.816.539)
(75.643.034)
(4.605.525)
(27.453.831)
(6.830.349)
73.279.949
(65.069.329)
Gross profit
31.402.170
7.287.625
1.338.922
3.053.869
3.763.228
(787.384)
46.058.430
Operating expenses
(2.302.663)
(3.683.211)
(1.295.378)
(2.224.941)
(1.825.286)
(4.796.811)
(16.128.290)
(685.940)
(2.888.904)
(693.027)
(1.817.787)
(1.062.181)
(1.748.252)
(8.896.091)
(21.251)
(76.690)
(60.193)
(158.273)
(132.838)
(805.788)
(1.255.033)
Intersegments
Third parties
Cost of products and services sold
(1)
111.127.759
(1.166.987)
Impairment
(515.677)
(1.682.664)
(55.205)
(55.205)
(305.264)
(142.560)
(23.221)
(7.088)
(4.145)
(213.372)
(695.650)
(1.320.929)
(1.320.929)
(2.222.718)
(68.016)
(575.057)
(518.937)
(241.793)
(110.445)
(708.470)
29.099.507
3.604.414
43.544
828.928
1.937.942
(4.796.811)
(787.384)
29.930.140
(1.000.255)
160.784
360.051
(6.975)
(1.239.360)
(1.560.178)
(34.646)
(3.320.579)
190.759
18.311
20.573
(374.304)
(144.661)
(246.517)
119.264
(9.289)
(6.432)
(43.821)
(20.514)
(207.309)
27.852.735
4.075.221
412.617
815.521
675.334
(6.751.807)
(822.030)
26.257.591
(9.361.277)
(1.264.724)
280.559
(134.064)
49.854
3.228.979
296.804
(6.903.869)
(76.213)
(41.070)
(1.206.385)
(331.800)
(216.022)
(3.504)
(58.424)
(19.041)
(154.433)
18.083.445
2.553.405
(516.713)
623.033
346.715
(3.677.261)
(359.432)
(1.683.100)
(783.224)
(525.226)
16.887.398
(1) Up to 2004, oil sales were fully allocated to the Exploration and Production segment.
The assumptions used to prepare this statement are described in Note 23.
The accompanying notes are an integral part of the financial statements.
32
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
33
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2005
INTERNATIONAL AREA
Assets
E&P
SUPPLY
DISTRIBUTION
CORPORATE
ELIMINATIONS
TOTAL
14.632.753
3.292.936
4.208.422
486.924
6.461.454
(8.056.807)
21.025.682
Statement of income
5.582.793
5.398.696
2.296.275
2.486.510
Intersegments
3.398.644
2.915.113
389.885
8.233
Third parties
2.184.149
2.483.583
1.906.390
2.478.277
50.779
2.175.052
186.639
369.913
(21.245)
(574.486)
655.272
154.373
310.340
(13.557)
(580.358)
50.779
(4.347.295)
11.467.758
(4.347.295)
2.364.580
9.103.178
51.800
2.187.673
Meals
40.582
566.652
Health care**
2004
1,69%
2.212.483
42,95%
1,99%
722.535
12,04%
0,53%
387.175
7,52%
0,35%
0,08%
Culture
19.489
0,32%
0,01%
1.775
0,03%
0,00%
311.966
5,20%
0,23%
274.659
5,33%
0,25%
1.620
0,03%
0,00%
1.570
0,03%
0,00%
1.005.744
16,76%
0,74%
783.224
15,20%
0,70%
59.100
0,98%
0,04%
57.410
1,11%
0,05%
6.769.027
112,77%
4,96%
5.523.605
107,22%
4,97%
AMOUNT
% OF RO
% OF RL
AMOUNT
% OF RO
% OF RL
(4.555.097)
10.593.577
Intersegments
2.871.676
2.962.487
322.724
39.382
(4.555.097)
1.641.172
Third parties
1.906.871
2.871.199
1.737.784
2.389.132
8.952.405
Profit-sharing
Others
346.715
38,40%
1,63%
47.419
39.488
2.304.676
84.082
2.428.514
(691.599)
0,27%
0,06%
2.060.508
(275.859)
5,85%
1,37%
5.833.686
365.310
301.524
82.096
4.778.547
569.039
0,26%
Education
21.287.244
340.336
5,97%
1,24%
(5.953.745)
358.521
0,04%
5.505.939
1.937.942
% OF RL
0,85%
589.042
37.886
% OF FPB
26,71%
4.231.422
(383.584)
AMOUNT
43.551
3.338.845
(387.623)
% OF RL
1.376.152
13.575.741
466.555
% OF FPB
1,36%
TOTAL
628.135
AMOUNT
0,03%
ELIMINATIONS
1.576.573
2004
0,68%
CORPORATE
5.151.447
31,03%
DISTRIBUTION
47.419
6.002.420
40.754
26.464.900
1.862.526
SUPPLY
Statement of income
36.679.897
E&P
Assets
2004
111.127.759
2005
Private pension
INTERNATIONAL AREA
2005
136.605.078
The assumptions used to prepare this statement are described in Note 23.
The accompanying notes are an integral part of the financial statements.
Education
60.742
0,17%
0,04%
66.118
0,25%
0,06%
264.611
0,72%
0,19%
153.147
0,58%
0,14%
7.620
0,02%
0,01%
7.969
0,03%
0,01%
Sports
25.774
0,07%
0,02%
34.553
0,13%
0,03%
66.825
0,18%
0,05%
32.904
0,12%
0,03%
Culture
Healthcare and sanitation
Others***
48.130
0,13%
0,04%
17.943
0,07%
0,02%
473.702
1,29%
0,35%
312.634
1,18%
0,28%
69.801.173
190,30%
51,10%
45.254.056
171,00%
40,72%
70.274.875
191,59%
51,44%
45.566.690
172,18%
41,00%
AMOUNT
% OF RO
% OF RL
AMOUNT
% OF RO
% OF RL
1.224.745
3,34%
0,90%
1.515.625
5,73%
1,36%
44.195
0,12%
0,03%
17.026
0,06%
0,02%
3,46%
0,93%
1.532.651
5,79%
1,38%
34
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
( ) no targets established
PETR OBRA S
( ) 51 to 75% compliance
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
35
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2005
2004
53.933
52.037
1) Corporate Taxpayer's Number: 33000167/0001-01 - Activity: Industry/Oil, Gas and Energy - Headquartered in (State): Rio de Janeiro
1.806
3.355
2) For further clarification of disclosed information, please contact: Telephone (21) 3224-1009 - E-mail comunicao@petrobras.com.br
155.267
146.826
560
660
17.521
15.313
5.116
4.857
10,70%
9,40%
2.339
2.339
3,10%
3,10%
1.298
1.298
7. OTHER INFORMATION
3) This company does not make use of children's labor or slave work, nor is it involved in prostitution or sexual exploitation of minors or corruption. (i)
4) Our company values and respects diversity both internally and externally. (i)
(*) As of January 1, 2005, the Special Purpose Companies either directly or indirectly controlled by Petrobras have been included in the consolidated
financial statements, as determined by CVM Instruction N 408/2004. For comparability purposes, these Special Purpose Companies have also been
included in the financial statements for the year ended December 31, 2004.
(**) In view of the consistent criteria adopted by the Company's Health Care Program (Assistncia Multidisciplinar de Sade - AMS), for
comparison purposes the year 2004 was reclassified so as to consider future retirements and the provision for retirees.
(***) Of the value of R$ 48.130, the amount of R$ 41.983 corresponds to the it reviews from resources to Fund for the Childhood and
Adolescence - FCA.
(****) This refers to the target completion rate for reducing oil consumption in production processes.
(*****) This refers to Petrobras Holding.
6. SIGNIFICANT INFORMATION
ON CORPORATE CITIZENSHIP
2005
42
42
516
474
be conducted in 2006.
(*******) The expected number of employees absent from work due to accidents in 2006 is based on an estimated 585 million men-hours'
exposure to the risk and the maximum acceptable limit for the Accidents with Downtime Frequency Rate - TFCA.
(******) The reported number was estimated considering a national research conducted on the internet in 2004, on a self-declaratory basis, which
prompted completion of the fields. 33,04% of PETROBRAS Holding's employees took part in the research. The census initially scheduled for 2005 will
( ) the Board
( X ) the Board
( ) all employees
( ) the Board
and management
( X ) the Board
( ) all employees
and management
(********) These standards are prepared by in-house subject matter experts, discussed at several internal forums and approved by management.
(*********) The Company has established a task force, including FUP and PETROS, with a view to proposing alternative options for the
supplementary pension plan framework.
( X ) the Board
and management
( X ) the Board
and management
( ) + Cipa
figure refers only to complaints and criticism received. In view of the expanded service framework, the number of events to be received in 2006 is
expected to increase when compared to the previous year. This will result in an increased absolute number of complaints and criticism, but the
( ) no
( ) complies
( X ) encourages and
( ) no
( ) complies
( X ) encourages and
involvement
involvement
( ) the Board
( ) the Board
( X ) all employees
( ) the Board
( ) the Board
( X ) all employees
( X ) all employees
( ) the Board
and management
(**********) This refers to Petrobras holding. Up to 2004, the total number of events received by SAC was reported, and beginning 2005, this
( ) the Board
( ) the Board
includes: (i)
and management
and management
( ) the Board
(i) unaudited
The accompanying notes are an integral part of the financial statements.
( X ) all employees
management
( ) not
considered
( ) suggested
( X ) required
( ) not
( ) suggested
( X ) required
( ) support
( x ) organizes
considered
( ) no
involvement
( ) supports
( x ) organizes
( ) no
and encourages
involvement
and encourages
at the Company
at Procon
at Court
at the Company
at Procon
at Court
2.434
4.500
at the Company
at Procon
at Court
at the Company
at Procon
at Court
100%
100%
In 2005: 115.309.760
Distribution of added
value (DVA):*
36
PETR OBRA S
In 2004: 95.404.527
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
37
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Page 38
OWNERSHIP OF CAPITAL - %
2005
(Continuation)
2004
SUBSCRIBED
AND PAID-UP
Jointly-owned subsidiaries
1. Consolidation principles
The consolidated financial statements as of and for the years ended December 31, 2005 and 2004 were prepared
SUBSCRIBED
VOTING
AND PAID-UP
VOTING
(ii)
25,00
25,00
25,00
25,00
TERMOSERGIPE S.A.
20,00
20,00
20,00
20,00
TERMOAU S.A.
33,90
33,90
39,00
39,00
10,00
10,00
10,00
10,00
50,00
50,00
50,00
50,00
34,00
34,00
(i)
in accordance with accounting practices adopted in Brazil and supplementary standards of the Brazilian Securities
(iv)
Commission (CVM), and include the financial statements of PETRLEO BRASILEIRO S.A. - PETROBRAS and the
OWNERSHIP OF CAPITAL - %
2005
2004
SUBSCRIBED
AND PAID-UP
AND PAID-UP
99,99
99,90
VOTING
Subsidiaries
PETROBRAS QUMICA S.A. PETROQUISA and subsidiaries
PETROBRAS DISTRIBUIDORA S.A. BR and subsidiaries
(v)
99,00
100,00
99,99
99,00
100,00
99,99
(i)
(i)
COMPANHIA DE DESENVOLVIMENTO E
SUBSCRIBED
VOTING
99,99
99,99
99,99
99,99
99,99
99,99
99,99
99,99
78,80
78,80
99,99
99,99
99,00
99,00
100,00
100,00
99,95
99,95
99,95
99,95
(iv) As from January 1, 2005, the Special Purpose Companies (SPC) of which the operacional activities are controlled, whether directly or indirectly, by
99,94
99,94
99,90
99,99
PETROBRAS, were included in the consolidated financial statements, as prescribed by CVM Instruction N 408/2004. For financial statements comparison
PETROBRAS INTERNATIONAL
BRASPETRO PIB B.V. and subsidiaries
(i) (v)
(v)
purposes, adjustments were also performed in the previous year so as to include the SPCs in the consolidated financial statements.
PETROBRAS INTERNATIONAL
FINANCE COMPANY PIFCo and subsidiaries
(i)
100,00
100,00
99,99
99,99
100,00
100,00
100,00
100,00
99,99
99,99
99,99
99,99
100,00
100,00
100,00
100,00
99,00
99,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
TERMORIO S.A.
100,00
100,00
TERMOCEAR LTDA.
100,00
100,00
(iii)
29,00
50,00
TERMOBAHIA S.A.
IBIRITERMO S.A.
(iii)
(ii) Companies with shared management, consolidated in proportion to the Company's holdings in total capital.
(iii) Companies with activities controled by PETROBRAS, in accordance with CVM Instruction n 408/2004.
(i) Companies located overseas, whose financial statements are prepared in the respective local currencies.
(i)
The consolidation process for the balance sheet and income statement accounts reflects the aggregate value of the assets,
liabilities, income and expense account balances, according to their nature, together with the following eliminations:
the participations in capital and reserves held among the companies;
the balances of intercompany current accounts and other asset and/or liability accounts held among the
companies;
unrealized results, current assets and permanent assets arising from intercompany transactions;
50,00
50,00
29,00
29,00
29,00
50,00
50,00
50,00
38
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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The reconciliation between consolidated shareholders' equity and net income (loss) for the year and the
corresponding amounts of PETRLEO BRASILEIRO S.A. - PETROBRAS (parent company), at December 31, is as follows:
SHAREHOLDERS'
EQUITY
2005
2005
2004
78.785.236
62.130.169
23.724.723
EFFECTS
ADJUSTED
PREVIOULSY
INSTRUCTION
PRO-FORMA
REPORTED
408/04
BALANCE
Current assets
51.287.418
1.498.782
52.786.200
16.216.740
(1.308.232)
14.908.508
Permanent assets
79.530.960
17.440.698
96.971.658
147.035.118
17.631.248
164.666.366
Current
33.957.992
2.767.895
36.725.887
48.041.147
12.455.677
60.496.824
ASSETS
BALANCES AS
16.887.398
976.000
78.785.236
62.130.169
23.724.723
17.863.398
Deferred income
301.770
186.281
LIABILITIES
301.770
186.281
(186.281)
(163.076)
604.191
436.515
167.676
67.601
254.635
655.390
(294.885)
(308.047)
Other eliminations
757.434
845.281
(262.921)
108.014
502.171
Minority interest
Shareholder's equity
502.171
2.262.245
2.549.070
4.811.315
62.271.563
(141.394)
62.130.169
147.035.118
17.631.248
164.666.366
80.703.266
64.253.636
23.450.082
17.754.171
BALANCE AS
EFFECTS
ADJUSTED
PREVIOULSY
INSTRUCTION
PRO-FORMA
REPORTED
408/04
Gross sales
150.403.212
36.947
150.440.159
value of the investment in the subsidiary. Therefore, unsecured liabilities (negative shareholders' equity) of subsidiaries did not influence the income or
Sales deductions
(42.201.733)
2.889.333
(39.312.400)
equity recorded by PETROBRAS in the financial years ended December 31, 2005 and 2004, generating a reconciliation item between the financial
Net sales
108.201.479
2.926.280
111.127.759
Cost of sales
(63.100.143)
(1.969.186)
(65.069.329)
Gross margin
45.101.336
957.094
46.058.430
(2.417.877)
(902.702)
(3.320.579)
(15.429.404)
(843.547)
(16.272.951)
27.254.055
(789.155)
26.464.900
(531.125)
323.816
(207.309)
(7.249.694)
345.825
(6.903.869)
19.473.236
(119.514)
19.353.722
(*) According to CVM Instruction N 247/96, the losses considered to be non-permanent (temporary) on investments recorded under the equity method,
BALANCE
for which the investee companies do not show signs of closing down business or the need of financial support from the investor, should be limited to the
The effects of CVM Instruction N 408/2004 adoption are set out below, as compared to 2004, adjusted for
presentation purposes, including the SPC:
2004
23.724.723
17.863.398
609.014
977.619
163.246
104.142
(163.246)
(104.142)
Gain on inventories
Expenses with thermoeletric plants
Adjustments and elimination
Consolidated net income before CVM Instruction n 408/2004
40
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
(976.000)
(609.014)
(977.619)
23.724.723
16.887.398
2005
Minority interests
(783.224)
Profit sharing
(826.614)
(856.486)
(1.683.100)
17.863.398
(976.000)
16.887.398
PETR OBRA S
(783.224)
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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CVM Resolution N 496 delayed the enforcement of CVM Resolution N 488 from October 3, 2005 to the financial
years beginning January 1, 2006. In line with international accounting practices, CVM Resolution N 488 approved
IBRACON Standard NPC N 27, which establishes new financial statement reporting and disclosure standards.
Under this statement, assets are to be classified as Current and Noncurrent, and this latter item is to be split
The financial statements (consolidated and parent company) were prepared in accordance with the accounting
into long-term receivables, investments, intangible assets and deferred charges; liabilities are be classified
practices adopted in Brazil, in conformity with the provisions of Brazilian Corporate Law (Lei das Sociedades por
Aes) and supplementary standards established by the Brazilian Securities Commission (CVM), in accordance
We set out below the financial statements under the new criterion:
CONSOLIDATED
2005
ASSETS
Current assets
Cash and cash equivalents
Acounts receivable
Inventories
Other
Investiments
Property, plant and equipment
Intangible assets
Deferred charges
Current liabilities
Financing and interest on financing
Suppliers
Taxes, contributions and participation
Dividends/Interest on shareholders' equity
Project financing
Other
Long-term liabilities
Financing
Subsidiaries, associated and affiliated companies
Provision for pension
Provision for health care plan
Deferred income tax and social contribution
Other
Deferred income
Minority interest
Shareholder's equity
PARENT COMPANY
2005
2004
23.417.040
14.148.064
13.606.679
9.063.407
60.235.190
19.986.848
10.977.519
14.263.518
7.558.315
52.786.200
17.481.555
10.676.578
10.337.565
6.199.033
44.694.731
11.580.288
7.421.319
11.555.627
4.886.036
35.443.270
769.524
1.587.771
748.788
1.914.788
684.235
4.337.361
1.205.358
5.517.979
14.102.228
958.692
4.148.685
1.217.612
5.919.943
14.908.508
769.524
28.151.479
569.030
684.235
2.333.641
1.205.358
3.888.283
37.601.550
748.788
35.220.122
1.830.257
958.692
2.030.268
1.217.612
3.121.924
45.127.663
2.280.702
104.058.277
1.371.077
1.473.634
183.521.108
2.078.758
92.471.797
851.427
1.569.676
164.666.366
20.366.625
49.400.988
1.371.077
578.175
154.013.146
14.048.878
41.730.649
851.427
434.058
137.635.945
(a) Determination of net income, current and non current assets and liabilities
Net income is accounted for on an accrual basis and include: revenues, expenses and monetary or exchange
variations, based upon official indexes or rates, calculated on current and noncurrent assets and liabilities as well
as, where applicable, the adjustment of assets to market or net realizable values and provision for uncollectible
accounts established in amounts considered sufficient to cover possible losses on accounts receivable.
CONSOLIDATED
2005
LIABILITY
2004
2004
PARENT COMPANY
2005
(b) Inventories
Inventories are stated as follows:
Raw materials comprise principally crude oil inventories, which are stated at average importation and
production cost, not exceeding market value;
Oil products and alcohol are stated at average refining or purchase cost, adjusted, when applicable, to their
net realizable value;
Materials and supplies are stated at average purchase price not exceeding replacement value; imports in
transit are stated at identified cost and advances are shown at the amounts effectively paid.
2004
10.502.998
8.976.359
8.931.341
7.165.878
28.135
6.755.439
42.360.150
8.805.229
9.054.723
7.854.014
5.141.363
64.106
5.806.452
36.725.887
1.655.721
24.865.115
7.292.508
7.017.843
2.421.806
4.442.687
47.695.680
1.310.238
26.949.707
6.583.563
5.044.074
4.652.469
3.397.299
47.937.350
34.439.489
39.954
1.898.360
7.030.939
8.461.721
3.843.131
55.713.595
42.976.885
276.328
696.273
5.673.650
7.474.135
3.399.553
60.496.824
6.408.872
1.925.046
1.749.036
6.477.127
6.270.290
2.783.829
25.614.200
8.859.120
3.420.119
601.347
5.214.410
5.263.660
2.356.303
25.444.959
483.274
6.178.854
78.785.236
183.521.108
502.171
4.811.315
62.130.169
164.666.366
80.703.266
154.013.146
64.253.636
137.635.945
42
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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production in relation to the proven developed reserves of each production field. Assets whose estimated useful
lives are shorter than the related field are depreciated on a straight-line basis. Depreciation of other equipment and
The discount recorded on asset swap (Note 11e) is derived from expected future earnings of the investee
assets not related to the production of oil and gas is based on their estimated useful lives.
company, assets market values or others assumptions and has been amortized over the period and to the extent
The costs incurred with exploration and production of oil and gas are recorded in accordance with the successful
of the projections that gave rise to the discount or assets useful life.
efforts method and include estimated abandonment costs discounted to present value. This method requires that
the costs related to the development of all production wells and successful exploratory wells on proven reserves
are capitalized. In addition, the costs relating to geological and geophysical activities are charged as expenses in the
In accordance with the new accounting practice, based on Statement SFAS 143 - Accounting for Asset Retirement
period incurred and the costs relating to dry wells and to those on unproven reserves are charged as expenses
Obligations issued by the Financial Accounting Standards Boards - FASB, the future liability with well abandonment
and demobilization of production areas at present value discounted at a free-risk rate, is fully recorded upon the
The capitalized costs and related assets are reviewed annually, on a field-by-field basis, to identify possible
impairment losses, taking into consideration the estimated future cash flows for the fields.
start-up of production activities as part of the costs of the related assets (property, plant and equipment) against
the provision supporting these costs, recorded in liabilities.
The capitalized costs are depreciated based on the unit-of-production method using proven developed reserves.
These reserves are estimated by the Company's geologists and petroleum engineers in accordance with international
standards and are reviewed annually or when there are indications of significant changes in the reserves.
The preparation of financial statements in conformity with accounting practices requires management to use
estimates and assumptions regarding the disclosure of assets and liabilities and contingent assets and liabilities at
the balance sheet date, as well as estimates regarding revenues and expenses for the year. Actual amounts may
These taxes are calculated and recorded based on the rates in effect at the balance sheet date. Deferred taxes are
recognized based on timing differences and tax loss carryforwards, whenever applicable.
For purposes of providing additional information, the following statements are presented: (a) statement of cash
The provision for actuarial liabilities related to pension and retirement benefit plans and to health care benefits is
flows, prepared in accordance with Accounting Standards and Procedures - NPC 20, issued by the Institute of
recorded in accordance with the procedures stipulated in CVM Resolution N 371/00, based on an actuarial
Independent Auditors of Brazil - IBRACON; (b) statement of value added, prepared in accordance with Resolution
calculation prepared by an independent actuary according to the projected credit unit method, net of plan assets,
CFC N 1.010 issued by the Federal Accountancy Board on January 21, 2005; (c) social balance sheet, prepared
when applicable. The cost corresponding to the increase in the present value of the liability resulting from the
in accordance with Resolution CFC N 1.003 issued by the Federal Accountancy Board on August 19, 2004;
services provided by the employees is recognized during the working life of the employees.
and (d) statement of segmentation of business, prepared in accordance with International Accounting Standard
The projected credit unit method considers each service period as a triggering event of an additional benefit unit
and the units are accumulated to calculate the final liability. In addition, other actuarial assumptions are used, such
as an estimate of the evolution of health care costs, biometric and economic hypotheses and also historical data
on expenses incurred and employee contributions.
44
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
45
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CONSOLIDATED
2005
3.651.644
PARENT COMPANY
2004
1.671.430
2005
2.114.551
2004
921.166
CONSOLIDATED
Short-term investments
2005
PARENT COMPANY
2004
2005
2004
Customers
Local:
Financial investment funds - foreign currency
Financial investment funds - DI
Other
11.469.121
8.348.505
11.349.571
8.129.524
2.590.493
1.961.110
122.008
792.940
488.008
194.044
125.159
14.852.554
10.797.623
11.665.623
8.254.683
Foreign:
13.842.634
11.807.696
4.447.097
2.570.261
1.296.167
1.759.881
32.716.974
38.835.005
Other
3.139.508
1.728.179
1.879.661
(*)
1.331.015
18.278.309
15.295.756
39.043.732
(2.542.474)
(2.403.449)
(215.675)
(94.840)
15.735.835
12.892.307
38.828.057
42.641.441
(1.587.771)
(1.914.788)
(28.151.479)
(35.220.122)
14.148.064
10.977.519
10.676.578
7.421.319
(*)
42.736.281
Time deposit
1.974.814
3.116.091
1.537.314
Fixed-income securities
2.938.028
4.401.704
2.164.067
2.200.112
(*) This does not include dividends receivable of R$ 945.676 in 2005 (R$ 440.240 in 2004) and reimbursements receivable of R$ 469.711 in 2005 (R$ 681.749
4.912.842
7.517.795
3.701.381
2.404.439
in 2004).
23.417.040
19.986.848
17.481.555
11.580.288
204.327
Third parties
CONSOLIDATED
2005
Short-term investments are comprised principally of government, foreign currency and DI (Interbank Deposits)
securities recorded at market value plus accrued interest, which is recognized proportionately up to the balance
Balance at January 1
Additions
PARENT COMPANY
2004
2005
2004
2.403.449
2.267.515
94.840
116.705
350.098
340.054
132.555
14.263
Exclusions
(211.073)
(204.120)
(11.720)
(36.128)
Balance at December 31
2.542.474
2.403.449
215.675
94.840
467.642
401.323
215.675
94.840
2.074.832
2.002.126
in the amount of R$ 5.966.388 in 2005 (R$ 5.429.292 in 2004). This amount refers to consolidated companies
and was offset against the balance of financing classified under current and long-term liabilities.
5. Related parties
PETROBRAS carries out transactions with its subsidiary, affiliates companies and special purpose entities associated
companies on normal market terms. The transactions for purchase of oil and oil products from the subsidiary PIFCO
carried out by PETROBRAS feature longer term for settlement, since PIFCO is a subsidiary created for this purpose.
The amounted related to prepayment export and intanational market funding are made at the same rate obtained
by the subsidiaries. The value, income and charges in connection with other transactions, especially intercompany
loans, are established at arms' length and/or in accordance with applicable legislation.
46
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
47
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(a) Assets
PARENT COMPANY - R$ THOUSANDS
CURRENT ASSETS
NON-CURRENT ASSETS
ACCOUNT RECEIVABLES,
ADVANCE
PRINCIPALLY
DIVIDENDS
FOR CAPITAL
CONSTRUCTION OF PLATFORMS
INTERCOMPANY
OTHER
REIMBURSEMENTS
FOR SALES
RECEIVABLE
INCREASE
OPERATIONS
OPERATIONS
RECEIVABLE
31.455
95.341
126.800
857.657
280.283
350.919
1.488.859
466.579
33.472
4.441
1.712.234
280.787
5.677
11.512
65.084
575.091
128.606
1.422.508
5.228
2.029.838
18.913.444
2.267
20.908.732
747
17.936
304.925
1.127.616
ASSETS
97.610
890.863
37.798
TOTAL
955.947
381
880.397
50.648
179.254
4.097.566
5.262.980
34
34
103.265
217.778
617.042
13.877
1.330
2.243
321.043
427.961
431.797
11.634
307.846
1.490.830
3.573
290.694
17.172
153
286.673
431.797
11
290.705
142
747.418
141.288
449.134
SPC'S
469.711
469.711
31/12/2005
4.600.522
945.676
724.701
2.550.124
24.782.203
59.424
469.711
34.132.361
31/12/2004
3.652.272
440.240
825.263
3.355.627
28.971.629
2.030.214
681.749
39.956.994
Intercompany loans
INDEX
2005
2004
416.739
2.745.984
23.011.010
24.739.357
1.189.687
1.208.441
IGPM + 6% p.a.
70.892
71.987
Other indices
93.875
205.860
24.782.203
28.971.629
TJLP + 5% p.a.
LIBOR + 1 to 3% p.a.
101% of CDI
48
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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(b) Liabilities
PARENT COMPANY - R$ THOUSAND
CURRENT LIABILITIES
NONCURRENT LIABILITIES
SUPPLIERS OF
OPERATIONS WITH
ADVANCES FROM
OIL PRODUCTS
CUSTOMERS
(21.499)
(2)
(168.653)
(8.726)
(114.019)
(54.960)
(17.908.027)
(38.002)
(35.738)
(806.233)
LOANS
OTHERS
INTERCOMPANY
EXPORT
OTHERS
STRUCTURED
TOTAL
OPERATIONS
LOANS
PREPAYMENT
OPERATIONS
PROJECTS
LIABILITIES
(21.501)
(644.962)
(822.341)
(168.979)
(1.239.214)
(19.147.241)
(280.251)
(318.253)
(3)
(35.741)
(50)
(134.773)
(172.004)
(35.676)
(2.533)
(83.665)
(806.283)
(4.166)
(419.122)
(310.943)
(5.250)
(462.581)
(83.665)
(120.558)
(35.620)
(156.178)
(2.243)
(2.243)
(100.654)
(100.654)
(17.661)
(35.620)
(53.281)
(19.466.843)
(238.228)
(699.373)
31/12/2004
(19.718.329)
(565.244)
(1.508.731)
50
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
(131.883)
(2.393.671)
(2.393.671)
(4.216)
(40.870)
(1.239.214)
(644.962)
(2.393.671)
(24.727.377)
(162.019)
(37.320)
(3.349.375)
(33.424)
(4.588.363)
(30.094.688)
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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(c) Result
PARENT COMPANY - R$ THOUSAND
RESULT
FINANCIAL
MONETARY
INCOME,
INCOME
AND EXCHANGE
MAINLY FROM
(EXPENSES),
VARIATION,
TOTAL
SALES
NET
NET
RESULT
1.944
359.788
357.844
34.227.219
265.089
(7.845)
34.484.463
2.201.493
76.720
(205.003)
2.073.210
14.711.451
(460.614)
(360.879)
13.889.958
54.179
54.179
OPERATING
1.009.876
59.910
(119.652)
950.134
374.269
(29)
28.192
402.432
293.084
31.581
324.665
456.863
(1.049.445)
(592.582)
(4.326)
20.116
219.683
2.469
8.846.223
157.648
15.790
222.152
(65.252)
8.938.619
1.932
15
1.947
26
395
421
Beginning balance
2005
2004
748.788
689.360
Reimbursement to PETROBRAS
4.221
20.736
13.129
Partial settlement
(8.095)
GTI*
50.173
Final balance
769.524
748.788
(559)
161.539
(65.987)
94.993
8.844.824
(3.891)
325
8.841.258
The remaining balance may be paid with National Treasury Bonds issued at the same amount as the final
123.086
123.086
balance determined as a result of the process for the settlement of accounts, or other amounts that might be owed
62.241.142
553.730
(1.548.978)
61.245.894
31/12/2004
40.305.271
(191.028)
(5.061.046)
35.053.197
8. Marketable securities
6. Inventories
At December 31, marketable securities negotiated in Brazil classified as noncurrent assets are comprised as follows:
CONSOLIDATED
PARENT COMPANY
2005
2004
2005
2004
4.359.019
4.389.651
2.728.304
3.211.804
CONSOLIDATED
Products:
Oil products (*)
Fuel alcohol (*)
2004
2005
2004
9.824
9.797
4.815
4.815
414.104
25
154.501
36.856
58.191
36.551
4.513.520
4.426.507
2.786.495
3.248.355
B Certificates
309.519
5.400.305
6.446.885
4.542.871
5.578.491
Private TDE
163.883
1.909.014
1.854.559
1.650.531
1.570.905
NTN P
Advances to suppliers
1.806.096
1.377.768
1.736.795
1.332.854
Other
470.521
423.095
113.650
90.318
Total
14.099.456
14.528.814
10.830.342
11.820.923
Short-term
13.606.679
14.263.518
10.337.565
11.555.627
Long-term
492.777
265.296
492.777
265.296
Other
PARENT COMPANY
2005
1.358
119.893
27
133.507
315.079
2.759
618.091
858.873
7.601
4.840
B certificates, which were received by BRASOIL in 2002 on account of the sale of platforms in 2000 and 2001, have
(*) Includes imports in transit.
semi-annual maturity dates until 2011 and carry interest equivalent to the Libor rate plus 2.50% to 4.25% p.a.
52
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
53
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Investments in private TDE refer to securities issued by financial institutions and closely-held companies,
maturing up to 2014 and bearing interest from 6.67% p.a. to 8.60% p.a.
PARENT COMPANY
COMPANIES
2005
2004
39.715
4.899
9. Project financings
218.295
78
331.930
2.864
276.269
800.417
995.709
325.944
118.495
230.936
87.697
142.589
Total
1.335.495
2.240.342
purpose companies - SPC's - when the nature of their relationship with Petrobras indicates that the operational
Advances received
(865.784)
(1.558.593)
activities of such entities are controlled directly or indirectly, individually or jointly, by the Company.
Net
469.711
681.749
The Company develops projects with domestic and international finance agencies and companies in the oil and
energy sector to establish operational partnerships for the purpose of making viable investments necessary in the
business areas where PETROBRAS operates.
According to CVM Instruction N 408, of August 18, 2004, the consolidated financial statements include special
compensation for amounts already spent by PETROBRAS in the projects for which partnerships have been
obtained. These amounts are classified under noncurrent assets as project financings, as shown bellow:
PETROBRAS entered into a consortium on December 6, 2001 with the Special Purpose Companies (SPCs)
Novamarlim Petrleo S.A. and Companhia Petrolfera Marlim, for the purpose of optimizing the development
PARENT COMPANY
PROJECTS
2005
2004
965.044
SPEs has provided funds to the Project, of which the balance, net of operating expenses already made by
147.652
PETROBRAS of approximately R$ 1.411.555 thousand (R$ 1.053.354 thousand in 2004) and assets transferred
Amaznia
63.414
Other
35.905
35.812
99.319
1.148.508
of approximately R$ 49.464 thousand, reached R$ 702.980 thousand (R$ 1.061.181 mil in 2004) classified
469.711
681.749
569.030
1.830.257
CLEP Project
By December 31, 2005, Companhia Locadora de Equipamentos Petrolferos (CLEP) had transferred R$ 5.143.010
to PETROBRAS as advances for the future sale of assets by PETROBRAS. This amount, net of assets sold by
As refered at the CVM Instruction 408/2004, these expenses are registered in the permanent assets - property,
PETROBRAS to CLEP in the amount of R$ 3.657.274 (R$ 1.727.224 in 2004), totaled R$ 1.485.736 (R$ 3.415.786
in 2004) is classified as project financings under current liabilities. On January 2006 the advances received were
The expenses that refers to the constitution of the Usina Termoeltrica Nova Piratininga were reclassified as from
Ventures under negotiation to Property, plant and equipment due to the termoeltrica start up, and to the non
PDET Project
PDET Offshore S.A. passed on to PETROBRAS the amount of R$ 204.955 thousand as advance on future sale
of assets and refund of expenses incurred by PETROBRAS, classified in current liabilities as project financings.
The balance receivable, net of advances received corresponding to costs incurred by PETROBRAS respective to
projects already negotiated with third parties, is classified under noncurrent assets as project financings and is
As of December 31, 2005, PETROBRAS had consortium contracts for the purpose of supplementing the development
of oil field production, and the related accounts payable to consortium partners, in the amount of R$ 28.135
(R$ 175.502 in 2004), were classified under current liabilities as project financings.
54
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
55
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PROJECTS/COMPANIES
2005
2004
702.980
1.061.181
1.485.736
3.415.786
Advances received
Nova Marlim Petrleo S.A. (Note 9c)
Cia. Locadora de Equipamento Petrolfero - CLEP (Note 9c)
PDET Offshore (Note 9c)
Total
PROJECT
PURPOSE
MAIN GUARANTEES
INVESTMENT AMOUNT
CURRENT PHASE
Malhas
Prepayments based on
US$ 1 billion
The consortium
transportation capacity to
became operational
on January 1, 2006.
insufficiencies.
However, some
204.955
2.393.671
construction.
4.476.967
110.274
1.122
28.135
64.106
Total
28.135
175.502
Grand total
2.421.806
4.652.469
Companhia de Recuperao
In operation.
Assets being
be pledged as collateral.
acquired.
PROJECT
PURPOSE
MAIN GUARANTEES
INVESTMENT AMOUNT
CURRENT PHASE
Albacora
Pledge of assets.
In operation.
CLEP
In January 2006,
the investment
value decreased
Companhia Locadora de
lenders.
Pledge of assets.
In operation.
billion.
In operation.
In operation.
In operation.
56
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
57
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PROJECT
PURPOSE
MAIN GUARANTEES
INVESTMENT AMOUNT
CURRENT PHASE
PROJECT
PURPOSE
MAIN GUARANTEES
INVESTMENT AMOUNT
CURRENT PHASE
Cabinas
Amaznia
Being negotiated.
In operation, with
assets being
amount of R$ 800
agreement.
acquired.
million was
obtained from
BNDES. Asset
acquisition is in its
initial phase.
Barracuda
To allow development of production in Pledge of certain oil volumes US$ 3,1 billion
In operation, with
and Caratinga
assets being
acquired.
lenders.
(P-53)
charter payments to be
amount of US$
obtained. Asset
Certificate of
Corporate guarantee
Real Estate
provided by PETROBRAS.
Receivables -
CRI Maca
R$ 200 million
Buildings being
constructed.
GASENE
Financing in the
acquisition is in its
PETROBRAS.
To be defined.
initial phase.
US$ 2 billion
amount of R$ 800
million was
obtained from
BNDES.
Construction of the
GASCAV gas
pipeline is in its
de Gs Natural - RBTGN).
initial phase.
REVAP
The commitment
Modernization
agreement was
signed, with no
bridge loan
demand. In final
negotiation status.
58
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
59
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11. Investments
On December 31, 2005 and 2004, the judicial deposits balances due to the claims were presented according to
2005
2004
Labor claims
493.762
455.704
450.856
414.077
Tax claims
957.724
687.325
731.504
538.754
Civil claims
357.186
666.870
261.002
115.826
9.513
5.205
472
1.818.185
1.815.104
1.443.834
Others
Total
1.068.657
NET INCOME
(LOSS) FOR THE
COMMON
2005
SHARES/QUOTAS
SHARES
LIABILITY)
YEAR
817.363
10.098.347
9.702.334
1.638.038
213.812
DISTRIBUIDORA
3.986.404
42.853.453
5.782.916
655.630
GASPETRO
1.427.432
1.114
1.694.513
86.191
TRANSPETRO
1.126.329
1.126.329
1.449.761
376.862
630.000
630.000 (*)
1.020.777
174.073
117
50
(262.552)
(79.141)
9.204
10 (*)
22.622
231.556
21.000
21.000
21.772
2.361
3.993
1.585
3.611.236
638.025
352.041
106.210
1.279.390
(352.945)
PARENT COMPANY
2005
SHAREHOLDERS'
THOUSANDS OF SHARES/QUOTAS
AT DECEMBER 31,
Subsidiaries and
Affiliated Companies
PETROQUISA
PETROBRAS
DOWNSTREAM
PIFCo
PETROBRAS
PETROBRAS was sued in court by certain small oil distribution companies under the allegation that it does not pass
DE ENERGIA
on to state governments the State Value-Added Tax (ICMS) collected according to the legislation upon fuel sales.
E-PETRO
278
COMERCIALIZADORA
These suits were filed in the states of Gois, Tocantins, Bahia, Par, Maranho and in the Federal District.
Of the total amount related to legal actions of approximately R$ 895.795, up to December 31, 2005 some
PIB BV
BRASOIL
BOC
117
50
(504.194)
(76.249)
R$ 80.159 (R$ 74.875 in 2004) had been withdrawn from the Company's accounts as a result of judicial rulings
PNBV
39
181
607.538
498.805
of advance relief, which were annulled as a result of an appeal filed by the Companys.
10
10 (*)
10
With the support of the state and federal authorities, PETROBRAS has succeeded in stopping the execution
TERMORIO S.A.
2.554.180
2.554.180
2.400.454
(133.908)
of other withdrawals, and is making all possible efforts to obtain reimbursement of the amounts that had been
FAFEN ENERGIA
380.574
380.574
198.157
49.874
BAIXADA SANTISTA
217.836
217.836 (*)
217.836
SFE
202.456
202.456
146.149
(70.335)
TERMOCEAR LTDA
199.924
199.924
161.974
(79.405)
5283 PARTICIPAES
1.421.604
1.421.604 (*)
765.413
50.703
In addition to withdrawals relating to ICMS amounts, the authorities have prevented the withdrawal of other
IBIRITERMO S.A.(i)
7.652
7.652
31.311
66.305
amounts due to labor claims in a total R$ 202.177 as of December 31, 2005 (R$ 260.599 in 2004).
TERMOBAHIA S.A.(i)
5.930
3.000 (*)
72.982
71.592
328.300
3.283.001
294.414
1.000
1.000
999
TERMOAU S.A.
372.101
419.985
372.101
481.432
481.432
503.884
510
7.508 (*)
510
342.643
203.400
604.729
275.926
1.000
1.000 (*)
(182.102)
(57.151)
10.621
10.621
10.621
Jointly-owned subsidiaries
TERMOGACHA
USINAS TERMOELTRICAS S.A.
TERMOSERGIPE S.A.
113.579
Affiliated company
UEG ARAUCRIA LTDA.
COMPANHIA
PETROQUIMICA PAULISTA
(*) Quotas
(i) Companies with activities controled by PETROBRAS in accordance with CVM Instruction n 408/2004.
60
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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PETROBRAS COLMBIA
TERMOCEAR LTDA.
TERMORIO S.A.
and storage of bunker, crude oil and oil products and gas
and export of oil and oil products, and also provides services
TERMOBAHIA S.A.
IBIRITERMO S.A.
funds abroad.
components in order to obtain ethane, the principal raw material used by Argentine petrochemical industries that
The other thermometrics are engaged in the generation of electrical energy involving the transformation of
thermoelectric from the burning of natural gas and can function in open cycles of simple, combined cogeneration cycle.
62
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
63
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PARENT COMPANY
SUBSIDIARIES
SUBSIDIARIES
Petrobras
Petrobras
Distribuidora
Gaspetro
Transpetro
Downstream
PCEL
E-Petro
PIB BV
Brasoil
PNBV
UTE N.Piratin.
Colombia
Energia
1.489.493
3.167.476
1.317.128
1.195.667
1.279.680
218.498
19.053
2.656.926
1.809.144
104.526
10
8.037
138.603
1.900.000
323.398
Baixada
5283
Santista
Participaes
Termocear
Energia Ltda.
Ltda.
Ltda.
Petroquisa
2.585
Energia Ltda.
TOTAL
Termobahia
Termorio S.A.
Ibiritermo
217.770
518.391
2005
2004
232.281
202.974
Ltda.
229.849
2.540.272
5.935.239
1.358.102
Discount on acquisition
of investments
15.159
Revaluation reserve
9.161
Equity adjustments
227.571
683.114
86.442
394.307
(95.341)
(280.282)
(33.472)
(142.620)
187.445
229.240
2.647
(425.342)
(2.509)
502.772
(317.403)
492.752
(313.999)
(202.610)
(12.353)
59.555
(56.825)
67
14.741
(67.875)
(139.795)
15.655
20.762
2.335.172
(528.962)
(359.391)
(7.383)
(986.949)
(546.885)
(618.565)
(90.215)
1.769.593
(433.741)
Write-off
At the end of the year
1.621.723
5.470.308 1.693.496
1.447.354
1.033.384
(184.824)
22.396
21.776 2.845.699
1.104.307
584.925
10
8.037
198.158
146.149
217.837
765.413
161.974
AFFILIATED COMPANIES
2.400.477
15.655
JOINTLY OWNED
TOTAL
COMPAIA
PETROQUIMICA
FLUMINENSE
TERMOGACHA
TERMOSERGIPE
TERMOAU
NORDESTE
MEGA S.A.
PAULISTA
200
116.400
255
9.748
184.824
366
31.981
UTE NORTE
40.528
67.417
Capital paid-in
5.913
7.775
Equity adjustments
7.932
Dividends
2005
2004
475
225.275
139.132
1.678
209.938
96.434
40.279
(10.291)
(3.985)
(3.985)
Exchange variation
(11.197)
50.388
200
75.192
126.514
255
205.608
(11.197)
2.153
460.310
225.275
20.238.322 13.867.352
234.529
235.863
20.472.851 14.103.215
Goodwill and discount:
At the beginning of the year
(54.337)
103.810
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
(15.159)
(38.610)
(39.259)
(84.650)
Amortization of discount
6.820
16.584
(106.266)
(54.337)
Total of investments
64
(55.762)
20.366.625 14.048.878
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
65
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(e) Goodwill/discount
The discount recorded by PETROBRAS, on the acquisition of shares of BR, in the amount of R$ 62.821, is being
amortized within the term provided for in the appraisal report (10 years), and the discount on the acquisition of
DIRECT JOINTLY-OWNED
INDIRECT JOINTLY-OWNED
SUBSIDIARIES
SUBSIDIARIES
UTE NORTE
GNL DO
MEGA
DISTRIBUTORS
OTHER
29 438.847
708.911
528.682
111.703
288.376
1.130
18
3.480
Noncurrent assets
28
551
344
Permanent assets
299.380
431
515.304
1.314.490
481 513.996
969.928
3.605.183
37
13.062
402.121
295.765
625.446
344.722
132.867
657.626
52.399
319.758
1.866.468
373.198
503.884
510 604.729
845.338
2.211.051
Current liabilities
249.141
GAS
Current assets
the majority interest in FAFEN Energia (80.20%) in the amount of R$ 15.159, is being amortized in the period,
In the acquisition of 50% of TERMORIO shares, PETROBRAS presented discount of R$ 38.610, which will only
be amortized according to CVM Instruction N 247/96, upon investment disposal or liquidation.
In the acquisition of TERMOCEAR Ltda., goodwill of R$ 103.810 was arrived at, based on its expected future
profits, to be amortized over the period of 10 years.
Long-term
liabilities
6.087
Moviment of goodwill/discount:
Shareholders'
(unsecured)
liabilities
294.414
999
CONSOLIDATED
Net operating
revenue
833.717
134.579
2.224.883
901.841
113.579
35.515
230.053
49.177
34%
23,50% a 50,00%
16,67% a 72,00%
PARENT COMPANY
270.696
54.337
38.610
38.610
39.259
39.259
Participaes shares
84.650
84.650
Amortization of discount
(6.820)
(6.820)
426.395
210.036
Termocear shares
(103.810)
(103.810)
(385.357)
percentage - %
25%
20%
34%
10%
50%
OWNERSHIP OF
NET INCOME
SUBSCRIBED SHAREHOLDERS'
AFFILIATES OF PETROQUISA
CAPITAL %
2004
EQUITY
(LOSS) FOR
NONCURRENT
PERMANENT
NONCURRENT
PERMANENT
THE YEAR
ASSETS
ASSETS
ASSETS
ASSETS
Petroqumica Unio
S.A. PQU
17,44
755.890
82.178
131.839
105.086
15,63
1.246.159
566.575
194.799
181.124
S.A DETEN
27,70
266.419
59.876
74.645
61.069
BRASKEM S.A.
8,45
4.697.993
687.796
397.225
267.182
1.862
83
1.862
191
1.862
798.591
330.113
380.318
1.592
5.953
1.476
3.509
3.454
804.544
331.589
383.827
(62.772)
106.226
Companhia Petroqumica
do Sul S.A. COPESUL
In the parent company's financial statements, the balance of discount, in the amount of R$ 210.036, is recorded
Deten Qumica
Other investments
93.917
as investments; in the consolidated financial statements, the balance of discount, in the amount of R$ 426.395,
is recorded as deferred income.
66
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
67
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The contract established in its 4th clause that the parties receiving the shares of EG3 and REFAP should, in the
PETROBRAS paid R$ 165.000 for the units of interest of SFE and assumed the debt of the company of
course of eight years after January 1, 2001, review every year the reference values of EG3 Group and REFAP S.A.
R$ 250.000. Upon conclusion of the acquisition, PETROBRAS signed the Consortium Contract Termination Document,
(denominated escalators) to adjust them observing the conditions of said clause and to allow determining at the
thus extinguishing the obligation of making the monthly contingent payments. As such, PETROBRAS started to
end of the period the definitive value of the shares of EG3 and REFAP, as well as definitive assets position and payment
enjoy the full benefits from said acquisition (operation and physical structure to sell electricity).
2006, the companies performed early and definitive liquidation of the escalators. The net final value, including
On June 24, 2005, PETROBRAS acquired Termocear Ltda. The plant, with net generation capacity of 220 MW/h,
monetary restatement, due by Repsol YPF to PETROBRAS for the full period of 8 (eight) years, including the
is of the Merchant type, for which PETROBRAS entered into a contract, between 2001 and 2002, with a clause
projections for 2006, 2007 and 2008 for the assets involved, reached R$ 180.164 thousand, including interest of
providing for contingent payments related to taxes, charges and tariffs, operating costs, maintenance and
8% p.a. established in the contract. Out of this amount, R$ 67.384 was recorded in the financial statements of
investments (capacity) should the plant be unable to generate revenue enough to cover these items.
PETROBRAS at December 31, 2005 as other nonoperating revenues and the remaining amount as financial income.
This amount is definitive, and not subject to review or verification by any of the parties, thus liquidating
application and quantification of escalators, as provided for in the Escalators Liquidation Agreement.
The acquisition was made for R$ 327.000, of which R$ 193.000 refers to price of the units of interest and
US$ 56 million was destined to settle liabilities with project lenders (BNDES and Eximbank).
PETROBRAS was released from the contingent payments under the consortium contract and will fully enjoy all
the benefits resulting from the plant (operation and physical structure to sell electricity).
Acquisition of CEG-RIO
Baixada Santista Energia Ltda. - BSE, a special purpose company incorporated within the UTE Cubato Project. This
Through its subsidiary PETROBRAS Gs S/A - GASPETRO, PETROBRAS acquired on July 11, 2005, 12.41% of the
operation involves approximately R$ 244.000, and project resumption will meet the present requirements for the
shares (common and preferred) of Distribuidora de Gs Natural Canalizado CEG-RIO, for R$ 39.334 (US$ 17 million).
energy and steam power generation system renewal for the Cubato Refinery (RPBC). Upon conclusion, this plant will
With this acquisition, the shareholding of GASPETRO in this company was increased to 37.41%, characterizing
have an installed capacity of 200 MW for electricity generation and 400 ton/hours for steam generation.
The Thermoelectric Plant of Cubato is expected to start operating in October 2007 and will supply 47 MW and
415 t/h of steam to Refinaria Presidente Bernardes in Cubato (RPBC), belonging to PETROBRAS. Of the excess
158 MW, 141 MW were trade in an auction for new energy held on December 16, 2005, wich will represent annual
Investments in quoted companies whose shares are traded on the stock market are as follows:
As it already held 0.01% of capital of Baixada Santista Energia Ltda., PETROBRAS will pay R$ 47.000 thousand for
STOCK MARKET -
99.99% interest held by Marubeni, corresponding to the costs incurred up to that date, in developing the project.
IN LOTS OF ONE
THOUSAND SHARES
COMPANY
THOUSAND SHARES
MARKET VALUE
COMMON
PREFERRED
TYPE
2005
2004
2005
2004
Consolidated
In February 2005, the proceeding related to TERMORIO, filed in December 2003, was concluded through the
BRASKEM
12.111
3.027.736
ON
17,39
0,094
210.610
284.607
payment of US$ 219.000 to NRG and the consequent transfer of shares belonging to NRG to PETROBRAS. As
BRASKEM
18.522
4.630.565
PNA
19,06
0,134
353.029
620.496
COPESUL
23.482
2.348.201
ON
31,25
0,380
733.813
892.316
PQU
8.738
8.738
ON
13,90
17,500
121.458
152.915
PQU
8.738
8.738
PN
10,69
17,500
93.409
152.915
1.512.319
2.103.249
68
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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In addition, the new legislation determines substitution of shared risk contracts for new contracts observing the
STOCK MARKET IN LOTS OF ONE
THOUSAND SHARES
COMPANY (Continuation)
models established in the Law, and introduces changes in the oil products distribution activity. On May 20, 2005,
MARKET VALUE
contracts were entered into for association among YPFB (Bolivian state-owned company) and fuel distribution
COMMON
PREFERRED
TYPE
2005
2004
2005
2004
PETROQUISA
10.098.083
10.098.083
ON
(*)
(*)
1.767.165
1.808.668
PETROQUISA
9.505.390
9.505.390
PNA
0,175
0,179
1.663.443
1.701.465
Up to December 31, 2005, the Bolivian government had not yet presented the new contract models mentioned
PEPSA
1.249.717
1.249.717
ON
2,94
3,17
3.674.168
3.961.603
in the Law (operation, shared production and association). The impact for the Company, from substitution of the
230.193
177.709
ON
6,55
6,60
1.507.764
1.172.879
8.612.540
8.644.615
Parent company
PESA (**)
The market values of these shares do not necessarily reflect the net realizable values at liquidation of a major block of shares.
(*) As the common shares of the subsidiary PETROQUISA traded on the stock market do not have liquidity, the price for preferred shares was used for purposes
of determining market values.
(**) These shates do not include participation through PEPSA.
companies to extend the term of Distributors' operations up until YPFB accumulates sufficient funds to develop
this segment all over the national territory.
current shared risk contracts will be analyzed after the models proposed and the regulations therein are known.
subsidiary, which regulate exploitation of the areas of Oritupano Leona, La Concepcin, Acema and Mata.
Agreement for sale and association with Teikoku Oil Co. Ltd. in operations in Ecuador
Under the new rules, all the necessary measures to adapt the current mixed capital operating agreements shall
In January 2005, PETROBRAS Energia S.A. entered into an agreement for sale and association with Teikoku, under
be adopted, for the Bolivian Government, through PDVSA, to have participation in excess of 50%. In relation to these
which, after obtaining prior approval and authorization from the Ministry of Energy and Mines of Ecuador, it will
agreements, MEP sent instructions to PDVSA for the amount of payments to parties to the agreements not to be
assign 40% of the rights and obligations under the contracts for participation in Blocks 18 and 31. It has been
in 2005 in excess of 66.67% of the amount in US dollars of oil delivered under the ruling operating agreements.
agreed that Teikoko will undertake the payment for 40% of the oil transportation agreement to Oleoduto de Crudos
In June 2005, PDVSA communicated PETROBRAS Energia Venezuela S.A. that the remuneration provided for by
Pesados - OCP, as from the time production from Block 31 reaches an average of 10,000 barrels per day in a
the operating agreements would be made in bolvares, corresponding to national component (Venezuelan) of
period of 30 consecutive days. During the transition period and before the expected output is reached, Teikoko will
materials and services. This changes the provisions of these agreements, under which payments by PDVSA should
be made in US dollars. Until PDVSA conducts an audit allowing the determination of the portion corresponding to
Teikoko will also make a one-time payment of 20%, equivalent to an additional disbursement included in the
national component, it was defined that PDVSA will pay 50% of the amounts previously stipulated in the contracts
agreement, considering the shortest of the following periods: (a) from July 1, 2006 until Block 31 reaches the
in US dollars and 50% in bolvares. The application of the new rules and the need to pay the financial commitments
estimated output; or (b) 18 months before the estimated output level is attained.
of PETROBRAS Energia Venezuela abroad required foreign capital remittances. Later on, as from collection
For this acquisition, Teikoko will make a down payment of US$ 5 million and additional disbursement of US$ 10
million. Additionally, Teikoko is to make additional investments in Block 31, above and beyond its share in the joint
venture, which will permit accelerated development of the block and monetization of the reserves.
The agreement will allow release of 40% of letters of credit of PETROBRAS Energia S.A., which are restricted to
compliance with commercial commitments, linked to the transportation contract with Oleodutos de Crudos
corresponding to 2005 third quarter production, the percentage of payment in bolvares was reduced to 25%.
The Integrated Tax Administration Service of Venezuela (SENIAT) carried out a series of tax inspections at the
companies participating in the 32 oil operating agreements and as a result of these procedures adjustments were
made, which resulted in loss of R$ 42.133, in addition to increase in income tax rate from 34% to 50%.
On September 29, 2005, PETROBRAS Energia Venezuela S.A. entered into Transitory Agreements with PDVSA,
under which it commits itself to negotiate the terms and conditions of the conversion of the operating agreements
Pesados - OCP.
in the areas of Oritupano Leona, La Concepcin, Acema and Mata and further acknowledges application of the limit
of 66.67% calculated on the amount paid to the parties to agreements in 2005. Acknowledgement of said limit
The New Hydrocarbons Law N 3058, effective May 19, 2005 in Bolivia, revoked the former Hydrocarbons Law
conformity with the information available from PDVSA. The provisions made are very sensitive for whatever change
of 18% and a direct tax on hydrocarbons (IDH) of 32%, to be applied directly on 100% of the production, on top
in scenario. The losses provisioned are considered the best estimate possible available of the result of the conversion
of taxes in force by operation of Law N 843. On June 30, 2005, the first payment of the new tax (IDH) was made.
Up to December 31, 2005, the Company recognized US$ 64 million referring to this tax.
70
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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contracts liquidation of acquisition negative goodwill and in 2002, of the 58.6% purchase of the Perez Companc
Landmark agreement for reconciliation and mutual waivers (Landmark Agreement) - CIESA
stock shares actually called now PEPSA in a value equivalent to R$ 190.414, and R$ 135.564 thousand in the
In order to allow improving the financial situation of Compaa de Inversiones de Energa S.A. - CIESA, a company
minority interest, impacting the result of PETROBRAS consolidate in R$ 1.720 thousand equivalent, formed by the
under joint control by PESA and ENRON, PESA transferred 7.35% of its interest in Transportadora de Gs Del Sur S.A. -
following concept:
TGS (subsidiary of CIESA) to ENRON and simultaneously ENRON transferred 40% of its interest in CIESA to
a fiduciary agent. Subsequently, after obtaining the approvals necessary from the Ente Nacional Regulador Del Gas
R$ thousand
and the Comisin Nacional de Defensa de la Competencia, ENRON will transfer 10% of the remaining interest in
(44.473)
CIESA to creditors in exchange for 4.3% of the common shares - class B of TGS belonging to CIESA, as debt payment.
(8.546)
After concluding the debt reorganization, and considering that, on a simultaneous basis with the aforementioned
(84.265)
transfers of shareholdings, there will be transfer to PETROBRAS Energia S.A. and PETROBRAS Hispano Argentina
Minority interests
135.564
S.A. of the shares of CIESA held by the trust, capital of CIESA will comprise: (i) class A shares held directly and
1.720
indirectly by PETROBRAS Energia S.A., representing 50% of voting capital of CIESA and (ii) class B shares held by
Net loss
CIESA is not being included in the consolidation of PESA and, consequently, of PETROBRAS, under CVM Instruction
Compaa de Transporte de Energa de Alta Tensin S.A. - TRANSENER is an indirect subsidiary of CITELEC, which
N 247/96.
creditors that participated in the debt reorganization offer. The nominal value of the debt redeemed approximated the
In September 2005, CIESA entered into an agreement for reorganization of its debt with all of its creditors. The
equivalent to US$ 460 million. As a result of the decision of creditors and under the mechanisms of apportionment,
debt to be reorganized, with original maturity in April 2002, totals approximately US$ 270 million.
concession and other conditions of the debt reorganization offer, TRANSENER S.A. issued trading securities, class B shares
and made payments related to the debt reorganization.
Due to the agreement entered into, CIESA refinanced debt of approximately US$ 23 million over a period of 10
years and, after obtaining the approval from the Ente Nacional Regulador del Gs and the Comisin Nacional de
As a consequence of the financial agreements entered into to allow debt reorganization, TRANSENER S.A. is
subject to compliance with a series of restrictions, including limits for issue of debt securities, acquisition of
investments, sale of assets and distribution of dividends.
Defensa de la Competencia, it will assign to its creditors approximately 4.3% of the class B common shares of
TGS and will capitalize the remaining debt balance.
In October 2004, TGS presented a proposal for debt reorganization of US$ 1,018 million which was concluded
Upon acquisition by PETROBRAS Participaciones S.L. - PPSL of the majority interest in PETROBRAS Energia
in December 2004. The debt exchange reached US$ 1,016 million, representing approximately 99.76% of TGS
Participaes S.A. - PEPSA, PETROBRAS Energia S.A. - PESA assumed the unilateral commitment of selling all of its
indebtedness. Creditors that accepted the proposal will receive cash payment equivalent to 11% of the indebtedness,
shareholdings in CITELEC. As such, CITELEC and its parent company TRANSENER are not included in the
new debt securities for the remaining 89% of debt and cash payment related to unpaid interest on the previous
As a result of shares issue, shareholding of CITILEC in TRANSENER was reduced from 65.00% to 53,67 % and
the indirect interest from 32.50% to 26.84%.
As a consequence of the financial agreements entered into related to debt reorganization, TGS is subject to
compliance with a series of restrictions, including limits to issue debt securities, investments, sale of assets,
payment of technical assistance fees and distribution of dividends.
The new debt is subject to accelerated repayment clause, of which the amount depends on consolidated
debt coefficient, liquidity level and subsequent payment to be made by TGS.
72
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2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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CONSOLIDATED
related to the international area, would be merged with the assets of PETROBRAS, other assets of Downstream
PARENT COMPANY
2005
2004
2005
ACCUMULATED
COST
2004
ACCUMULATED
DEPRECIATION
NET
NET
COST
DEPRECIATION
NET
NET
94.509.236 (37.937.010)
56.572.226
51.559.331
65.828.983 (32.175.487)
33.653.496
27.898.275
Supply
30.514.417 (13.026.018)
24.993.063 (11.980.071)
13.012.992
11.735.204
In November 2005, the Board of Directors of PETROBRAS approved the acquisition of 51% of the capital of Gaseba
Distribution
Uruguay - Grupo Gaz de France S.A., a natural gas distribution concession company in Montevideo, Uruguay, from
GDF International (GDFI). This operation is subject to conclusion and execution of a purchase and sale agreement
17.488.399
13.007.897
3.933.407
(1.473.422)
2.459.985
2.194.188
16.275.937
(2.623.367)
13.652.570
11.039.843
2.482.165
(370.399)
2.111.766
1.002.819
International
23.174.111
(9.907.913)
13.266.198
13.579.293
25.449
(12.068)
13.381
11.893
2.855.876
(865.900)
1.989.976
1.942.672
2.842.251
(861.821)
1.980.430
1.933.885
93.323.224
96.171.911 (45.399.846)
50.772.065
42.582.076
Corporate
between PETROBRAS and GDFI, to the completion of some legal procedures, especially with regard to Gaseba's
minority shareholders, to the approval from Uruguayan authorities and to the approval from the French government.
In December 2005, PETROBRAS signed three Share Purchase Agreements for the acquisition of fuel businesses
(retail and trade markets) in Colombia and of total operations conducted by Shell in Paraguay and Uruguay, in the
approximate amount of US$ 140 million. The final transaction price will be defined when the related assets are fully
CONSOLIDATED
transferred to PETROBRAS in 2006. Acquisitions in these countries are subject to proper governmental approvals.
2005
The completion of such operations is in line with the objectives defined in PETROBRAS' Strategic Planning of
PARENT COMPANY
2004
2005
2004
ESTIMATED
USEFUL
positioning the Company as an integrated energy company with strong international presence, leader in its industry
LIFE(YEARS)
ACCUMULATED
COST
DEPRECIATION
ACCUMULATED
NET
NET
COST
DEPRECIATION
NET
NET
(1.347.613)
893.138
768.427
33.879.707 (22.596.731)
11.282.976
10.650.030
in Latin America.
improvements
25 a 40
3.995.948 (1.837.325)
2.158.623
1.954.466
2.240.751
3 a 30
76.383.972 (36.635.571)
39.748.401
41.058.181
2.705.967
2.208.816
3.021.696
2.584.531
1.963.560
678.955
681.731
283.115
283.115
305.810
Equipment and
Ventures in Japan
other assets
Through its subsidiary PETROBRAS International Braspetro B.V. - PIB BV, PETROBRAS created in Japan Brazil-Japan
Ethanol Co., Ltd (Nippaku Ethanol K.K. in Japanese) in order to import and distribute ethanol produced in Brazil,
developing technical and business solutions that result in reliable long-term fuel alcohol supply to the Japanese market.
Brazil-Japan Ethanol Co. Ltd will be equally owned (50% - 50% share) by PETROBRAS and Nippon Alcohol
Hanbai K.K., which holds 70% of the ethanol distribution market in that country. Corporate management will be
shared by both companies, which will join efforts and apply their distinct knowledge, technology and experience
to export ethanol for fuel use from Brazil to Japan in large volumes, with quality and safety.
Land
3.229.106
(523.139)
678.955
(437.165)
Materials
1.950.346
(5.460)
1.944.886
1.521.880
1.820.767
1.820.767
1.444.345
Advances to suppliers
1.661.790
(37)
1.661.753
1.101.533
318.763
318.763
353.658
24.848.858
24.848.858
15.919.522
12.761.597
12.761.597
8.575.024
58.514.009 (26.832.098)
31.681.911
28.877.095
41.845.515 (21.018.337)
20.827.178
18.521.222
93.323.224
96.171.911 (45.399.846)
50.772.065
42.582.076
Expansion projects
Oil and gas exploration
and production
development costs (E&P)
The new company will seek to develop technical and business solutions with a view to introducing ethanol in
the Japanese energy system in replacement for fuel fossils, in order to reduce greenhouse gas emissions, such as
Depreciation of equipment and installations related to oil and gas production is based on the volume of monthly
carbon dioxide, thus contributing to the successful adoption of the Kyoto protocol.
production in relation to the proven developed reserves of each production field. Assets whose estimated useful
Strategically, the creation of Brazil-Japan Ethanol Co. Ltd is in line with the objective defined in PETROBRAS'
Strategic Planning of internationalizing its business.
74
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F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
lives are shorter than the related field are depreciated on a straight-line basis. Depreciation of other equipment
and assets not related to the production of oil and gas is based on their estimated useful lives.
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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CONSOLIDATED
Capitalized costs
Accumulated depreciation
PARENT COMPANY
chartered to PETROBRAS, and the commitment assumed by the parent company is equivalent to the amount of
2005
2004
2005
2004
58.514.009
54.282.790
41.845.515
38.123.142
(26.700.662)
(25.332.597)
(20.934.244)
(19.576.089)
Net investment
Amortization of/provision
for abandonment costs
the contracts. As of December 31, 2005 and 2004, PETROBRAS also had leasing contracts with third parties for
(131.436)
(73.100)
(84.093)
(25.831)
31.681.911
28.877.093
20.827.178
18.521.222
which, if recorded as assets purchased under capital leases, would have represented financed acquisition of fixed
assets, are shown below:
CONSOLIDATED
In 2005, the Company reviewed, in accordance with the accounting practice described in Note 2h, the estimated
costs associated with well abandonment and the demobilization of oil and gas production areas, considering the
useful economic life of the fields and expected cash flows at present value discounted at a free-risk rate, adjusted
by PETROBRAS risk. This review resulted in an increase in the related provision of R$ 42.597, charged to net income
for the year, recorded as exploratory costs for oil and gas exploration.
PARENT COMPANY
2005
2004
2005
2004
1.260.601
1.547.952
290.982
353.981
Short-term
613.396
770.242
79.540
89.305
Long-term
2.686.594
3.250.506
422.532
554.607
3.299.990
4.020.748
502.072
643.912
(d) Depreciation
Depreciation expenses for the year ended December 31 are shown below:
Expenditures on platform charters incurred in periods prior to the operational start-up are recorded by
CONSOLIDATED
PARENT COMPANY
PETROBRAS as prepaid expenses and totaled R$ 1.185.714 in 2005 (R$ 1.042.818 in 2004), R$ 949.347
2005
2004
2005
2004
Of assets
2.938.339
3.430.195
1.514.370
1.678.474
1.508.581
1.674.071
1.508.261
1.656.215
BRASOIL and PETROBRAS participate in several contracts relating to the conversion and acquisition of P-36
Platform, which suffered a total loss in 2001 accident. Under these contracts, BRASOIL and PETROBRAS has
committed to depositing any insurance reimbursement, in case of an accident, in favor of a Security Agent for the
239.037
80.803
71.968
21.607
payment of creditors, in accordance with contractual terms. A legal action brought by companies that claim part of
4.685.957
5.185.069
3.094.599
3.356.296
these payments is currently in progress in a London Court, since BRASOIL and PETROBRAS understand to be
entitled to such amounts in accordance with the distribution mechanism established in the contract.
2.646.463
Other
662.453
568.630
368.398
In April 2003, BRASOIL provided the Court with a bank guarantee obtained from a financial institution for the
payment of insurance indemnity to the Security Agent. In order to facilitate the issue of the bank guarantee,
390
2.646.463
662.843
568.630
368.398
7.332.420
5.847.912
3.663.229
3.724.694
BRASOIL provided the financial institution with counter-guarantees in the amount of US$ 175 million.
On December 15, 2005, a court ruling determined that the following payment were made related to bank
guarantee of April 30, 2004: US$ 171 million to be paid to BRASOIL; US$ 1.5 million to be deposited in a current
account maintained by Linklaters, the lawyers of BRASOIL, amount which is pending decision on the claims of
SANA and Den Norske Bank ASA; amounts that total US$ 624 thousand, to be deposited in current accounts
maintained by Linklaters to cover certain responsibilities of PETROMEC and SANA towards Brasoil; and US$ 41
thousand to be paid to the security agent in relation to its expenses. These payments were duly made in December
2005. On January 4, 2006, the guarantor confirmed that the guarantee was cancelled.
The trial has been divided into two stages. The first stage was initiated in October 2003 with a decision being
handed down on February 2, 2004. The terms of the decision are complex and subject to appeal. In summary:
76
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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(a) neither PETROBRAS nor BRASOIL have been considered to have defaulted their obligations; (b) PETROMEC
The insurance companies filed a full bench appeal against this decision, which was dismissed, making final the
and MARITIMA are subject to reimbursing BRASOIL for approximately US$ 58 million plus interest; and (c) PETROMEC
aforementioned decision. The parties (insurance companies and BRASOIL) started negotiations in April 2005
endeavoring to settle the credit of BRASOIL, which however were to no avail. For this reason, in December 2005,
A ruling was handed down on July 15, 2005, determining indemnification of insurance of BRASOIL, except for
the amount of US$ 629 thousand plus interest, which shall be paid to the other parties in the litigation, further to
the proceeding was resumed, and the parties are now awaiting a court ruling about the interest rates to be considered,
and the partial refund of court costs and fees incurred by BRASOIL. No date has been settled for this judgment.
an additional amount of US$ 1.5 million, which shall be maintained on hold until the resolution of certain
outstanding issues.
After the judgment of February 2004, PETROMEC amended the judicial proceeding in which it claims US$ 131
During 2005, PETROBRAS returned to the National Petroleum Agency - ANP the rights associated with:
million as additional costs for the upgrade made and, alternatively, as damages for false representation, however
Pursuant to the construction and conversion of vessels into FPSO - Floating Production, Storage and Offloading
and FSO - Floating, Storage and Offloading, considering the contractual default of the constructors, by December
31, 2005, BRASOIL contributed financial resources in the amount of US$ 599 million, equivalent to R$ 1.403.154
(R$ 1.566.180 in 2004) on behalf of the constructors directly to the suppliers and subcontractors in order to avoid
During 2005, PETROBRAS returned to the National Petroleum Agency - ANP the rights associated with
Based on the opinion of BRASOIL's legal advisers, these expenses can be reimbursed, since they represent a
right of BRASOIL with respect to the constructors, for which reason judicial action was filed with international courts
the fields Ilha da Caumba (agreement n 48000.003774/97-42) and Norte de Pescada (agreement
n 48000.003905/97-19), through formal termination (Contract Rescission).
to obtain financial reimbursement. However, as a result of the litigious nature of the assets and the uncertainties
as regards the probability of receiving all the amounts disbursed, the company conservatively recorded a provision
for
In October 2005, PETROBRAS acquired 96 (ninety-six) new exploratory blocks out of the 251 (two hundred and
uncollectible
accounts
for
all
credits
that
are
not
backed
by
collateral,
in
the
amount
of US$ 527 million, equivalent to R$ 1.234.525 at December 31, 2005 (R$ 1.374.953 in 2004).
fifty one) blocks included in the 7th bidding process conducted by the National Agency of Petroleum, Natural Gas
and Biofuels - ANP.
PETROBRAS acquired 42 (forty-two) blocks with exclusive rights and another 54 (fifty-four) blocks in consortium
On July 25, 2002, BRASOIL and PETROBRAS won a lawsuit filed with an American Court by the insurance
companies United States Fidelity & Guaranty Company and American Home Assurance Company, which had
attempted to obtain since 1997, a legal judgment in the United States to exempt them from the obligation to
indemnify BRASOIL for the construction (performance bond) of platforms P-19 and P-31, and from PETROBRAS,
the refund of any amounts that they might be ordered to pay in the performance bond proceeding. A court
decision by the first level of the Federal Court of the District of New York recognized the right of BRASOIL and
PETROBRAS to receive indemnity for losses and damages in the amount of US$ 237 million, plus interest and
reimbursement of legal expenses on the date of effective payment, relating to the performance bond in a total
US$ 370 million.
The insurance companies have filed appeals against the decision with the United States Court of Appeals for
the Second Circuit. A decision was handed down on May 20, 2004, when the Court partly maintained the verdict,
confirming the insurance companies liability to pay the performance bonds and exempting the insurance
companies from the obligation to pay liquidated damages, attorney's fees and expenses, reducing the indemnity
by BRASOIL and PETROBRAS to approximately US$ 245 million.
78
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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13. Financings
CURRENT
PARENT COMPANY
NONCURRENT
CURRENT
CONSOLIDATED
NONCURRENT
2005
2004
2005
2004
2005
2004
2005
2004
5.228.367
5.445.159
10.363.546
15.237.769
778.554
1.010.071
2.659.830
3.846.012
Foreign
Financial institutions
Bearer bonds (Notes),
Global Notes e
Global step-up Notes
Suppliers
1.012.479
1.475.864
15.340.322
15.163.027
103.002
185.760
28.527
1.024.274
976.956
407.930
1.239.214
3.349.375
72.523
45.463
1.525.834
402.550
7.393.327
7.560.176
28.497.443
35.176.995
601.572
19.066
371.831
1.149.622
Senior/Junior
Other
Subtotal
2004
2005
2004
Up to 6%
9.939.475
14.707.825
2.263.927
3.339.265
From 6 to 8%
6.204.469
6.636.665
759.410
959.574
From 8 to 10%
10.645.329
12.102.001
8.324
696.795
1.708.170
1.365.403
Foreign
From 10 to 12%
Trust Certificates -
Other
1.380.126
1.029.137
3.031.661
4.995.634
PARENT COMPANY
2005
365.101
28.497.443
35.176.995
3.031.661
4.995.634
1.520.302
1.848.391
104.764
832.871
Local
Local
Up to 6%
From 6 to 8%
667.198
972.483
528.840
From 8 to 10%
561.254
606.252
555.313
599.145
3.193.292
4.224.378
2.188.294
2.161.470
1.611.568
528.482
2.004.273
2.273.095
563.535
562.047
3.156.688
4.571.147
8.970
161.116
158.623
4.477
2.743.606
2.760.615
Other
the construction of
Bolvia-Brasil gas pipeline
Other
Subtotal
Interest on financing
Principal
From 10 to 12%
98.157
131.008
528.840
738.887
98.157
110.918
528.840
708.754
836.411
23.516
252.245
216.761
16.322
2.590
104.765
119.640
3.109.671
1.245.053
5.942.046
7.799.890
275.595
281.101
3.377.211
3.593.486
10.502.998
8.805.229
34.439.489
42.976.885
1.655.721
1.310.238
6.408.872
8.589.120
(1.913.369)
(585.374)
(156.709)
(165.265)
8.589.629
8.219.855
1.499.012
1.144.973
(4.824.194)
(4.884.758)
(1.499.012)
(1.144.973)
3.765.435
3.335.097
148.386
5.942.046
7.799.890
3.377.211
3.593.486
34.439.489
42.976.885
6.408.872
8.589.120
Current portion of
long-term debt
Total short-term debt
CONSOLIDATED
2004
2005
2004
28.127.183
34.316.556
2.377.944
3.247.769
Japanese yen
783.715
1.190.003
783.715
1.190.003
Euro
564.437
801.071
398.843
562.338
Real
3.160.909
5.669.497
2.848.370
3.589.010
Other
1.803.245
999.758
34.439.489
42.976.885
6.408.872
8.589.120
U.S. dollar
PARENT COMPANY
2005
CONSOLIDATED
PARENT COMPANY
2007
6.865.096
1.191.972
2008
5.233.277
769.235
2009
3.549.448
560.165
The estimated fair value for the long term loans of the parent and f the consolidated company at December 31,
2010
4.636.170
1.551.457
2005 was respectively R$ 6.492.649, and R$ 34.670.535, calculated based upon market values, considering the
14.155.498
2.336.043
nature term in contracts with similar risks, and can be compared with an accounting value of R$ 6.408.872 and
Total
34.439.489
6.408.872
R$ 34.439.489.
The derivative financial instrument operations contracted in connection with Notes issued abroad in foreign
currency are disclosed in Note 24.
80
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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On August 29, 2005, Compaa Mega paid all negotiable series G bonds for approximately US$ 57.4 million, plus
PETROBRAS and PETROBRAS FINANCE LTD. have contracts ("Master Export Contract" and "Prepayment
interest incurred from June 15, 2005 to August 29, 2005, for approximately US$ 1.3 million and the Make Whole
Agreement") between themselves and a special purpose entity not related with PETROBRAS, PF Export Receivables
Amount premium of approximately US$ 16.3 million. The portion attributable to PETROBRAS is of 34% of the
Master Trust (PF Export), relating to the prepayment of export receivables to be generated by PETROBRAS FINANCE
aforementioned amounts.
LTD. by means of sales on the international market of fuel oil and other products acquired from PETROBRAS.
As stipulated in the contracts, PETROBRAS FINANCE LTD. assigned the rights to future receivables in the amount
of US$ 1.800 million (1st and 2nd tranches) to PF Export, which, in turn, issued and delivered to PETROBRAS
FINANCE LTD. the following securities, also in the amount of US$ 1.800 million:
On December 5, 2005, PETROBRAS obtained a bridge loan from the National Bank for Economic and Social
US$ 1.500 million in Senior Trust Certificates, which were negotiated by PETROBRAS FINANCE LTD. on the
Development (BNDES), in the amount of R$ 800.000, for the special purpose company Transportadora GASENE
international market at face value, and the amount was transferred to PETROBRAS as prepayment for exports
S.A., responsible for the project aimed at interconnecting the Southeastern and Northeastern gas pipeline networks-
GASENE, and R$ 800.000 for the special purpose company Transportadora Urucu Manaus S.A. proceeding with
US$ 300 million in Junior Trust Certificates, which are held in the portfolio of PETROBRAS FINANCE LTD. If PF
the financial structuring of the projects Urucu-Coari-Manaus gas pipeline and the Urucu-Coari liquefied petroleum
Export incurs any losses on the receipt of the exports, transferred by PETROBRAS FINANCE LTD., these losses
will be compensated by the securities linked to export prepayments. In May 2004, a contractual amendment
was made to allow the presentation of the securities linked to the export prepayment, offsetting the debt
At December 31, 2005, the balance of export prepayment, considering amortization for the period, totaled
entered into a financing agreement with BNDES, in the amount of US$ 402 million (equivalent to R$ 941.000),
R$ 2.216.170 (R$ 3.757.305 in 2004), of which R$ 1.239.214 is classified in long-term liabilities (R$ 3.349.375
for the national share of the P-51 semi-submersible platform that is being built in Brazil. Financing will be amortized
over 10 years once construction of the platform has been concluded, which is expected to occur in the last quarter
The assignment of rights to future export receivables represents a liability of PETROBRAS FINANCE LTD., which
will be settled by the transfer of the receivables to PF Export as and when they are generated. This liability will
bear interest on the same basis as the Senior and Junior Trust Certificates, as described above.
of 2007.
Other credit lines have also been negotiated with Banco BNP Paribas, guaranteed by European export credit
agencies, and with Nordic Investment Bank, for the financing of imported platform assets.
PETROBRAS early settled US$ 330 million related to the advance received from PETROBRAS FINANCE LTD. -
The platform is being built in accordance with an engineering, procurement and construction agreement entered
PFL as export prepayment. This advance allowed PETROBRAS FINANCE LTD. - PFL to pay on September 1, 2005
into with the Fels Setal/Technip consortium, an agreement for the construction and assembly of gas compression
the Senior Trust Certificates series A2 and C with floating rates, issued by PF Export, maturing on 2010 and 2013,
modules, entered into with Nuovo Pignone, and an agreement for the construction and assembly of turbo-
respectively.
generators, entered into with Rolls Royce, totaling approximately US$ 810 million (R$ 1.896.000). P-51 will be one
PETROBRAS will prepay US$ 334 million related to the advance received from PETROBRAS FINANCE LTD. - PFL
as export prepayment. Accordingly, R$ 689.921 (US$ 295 million) were reclassified from long-term to current
of PETROBRAS' platforms having the largest processing capacity in the Marlim Sul field, located in the Campos
Basin, expected to commence operations in 2008.
liabilities. This advance will allow PETROBRAS FINANCE LTD. - PFL to pay on March 1, 2006 the Senior Trust
Certificates series A1 and B with fixed rates, issued by PF Export, maturing in 2010 and 2011, respectively.
production projects, construction of vessels and pipelines and the expansion of industrial plants.
On March 31, 2005, Compaa Mega made partial prepayment of series G bonds, in the amount of approximately
The debentures issued through BNDES - National Bank for Economic and Social Development, for the pre-
US$ 110 million, increased by interest of US$ 530 thousand and a Make Whole Amount premium provided for
acquisition of the right to use the Bolivia-Brazil pipeline, over a 40-year period, to transport 6 million cubic meters
in the financing contract in the amount of approximately US$ 30.8 million. The portion attributable to PETROBRAS
of gas per day (TCO - Transportation Capacity Option), totaled R$ 430.000 (43.000 notes with par value of
related to these three items amounted to US$ 37.4 million - principal, US$ 179 thousand - interest and US$ 10.5
R$ 10) maturing February 15, 2015. GASPETRO, as the intervening party in the transaction, provided a guarantee
million - premium.
to the BNDES, secured on common shares owned by GASPETRO issued by Transportadora Brasileira Gasoduto
82
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2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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PETROBRAS e it's subsidiaries have an important commercial and financial relationship with international market,
Financial institutions abroad do not require guarantees from PETROBRAS. The financing granted by the National
and results of its operations in foreign currency are impacted by foreign currency valuations, with respect to the
Bank for Social and Economic Development - BNDES is guaranteed by a lien on the assets being financed (carbon
U.S. dollar in the years 2005 and 2004 there was an inflation of 11.82% and 8.13%, respectively, which has been
Respective to the guarantee contract issued by the Federal Government in favor of the Multilateral Credit Agencies,
as a result of the loans raised by TBG, counter-guarantee contracts have been signed by the Federal Government,
TBG, PETROBRAS, PETROQUISA and Banco do Brasil S.A., whereby TBG undertakes to restrict its revenues to the
National Treasury order until the obligations guaranteed by the Federal Government have been liquidated.
CONSOLIDATED
PARENT COMPANY
2005
2004
2005
2004
51.442
45.324
(118.880)
(661.318)
(977.486)
(757.650)
(873.466)
(667.389)
(1.126.208)
(597.202)
(1.074.128)
(326.115)
(147.441)
(169.045)
(205.588)
(416.575)
(157.041)
(245.086)
(151.734)
(237.855)
(343.142)
(461.423)
(381.524)
(104.217)
Financial charges and net monetary and exchange variation, allocated to income for the years ended 2005 and
CONSOLIDATED
PARENT COMPANY
2005
2004
2005
2004
(3.508.608)
(3.646.894)
(658.012)
(710.095)
(44.278)
(21.502)
(1.515.336)
(1.441.428)
19.272
13.267
19.272
13.267
(1.031.159)
(1.524.930)
(88.582)
(114.585)
(4.564.773)
(5.180.059)
(2.242.658)
(2.252.841)
358.101
468.090
(188.097)
30.465
56.240
2.043.207
1.140.506
79.370
93.127
79.370
93.127
Financial expenses
Loans and financing
Suppliers
Capitalized interest
Other
Others
401.217
(13.813)
401.626
(21.588)
(327.760)
(23.823)
(288.368)
(369.808)
(2.626.419)
(2.222.718)
(2.692.062)
(2.804.865)
Financial income
Short-term investments
Other
73.316
73.959
73.316
73.959
840.621
584.718
361.301
273.328
1.351.410
1.276.134
2.369.097
1.611.385
370.536
583.346
(1.187.233)
77.243
(2.842.827)
(3.320.579)
(1.060.794)
(564.213)
PARENT COMPANY
2005
2004
2005
2004
2.776.973
1.873.054
2.271.072
1.381.591
377.468
386.009
201.551
182.760
34.792
17.919
34.792
17.919
762.532
581.613
119.638
253.367
156.349
128.822
11.244
11.244
1.311.396
942.084
1.134.827
848.681
Local:
CONSOLIDATED
CURRENT ASSETS
ICMS recoverable
PASEP/COFINS recoverable
CIDE recoverable
297.216
452.562
264.051
270.445
5.716.726
4.382.063
4.037.175
2.966.007
406.318
382.244
283.483
144.470
4.037.175
2.966.007
Foreign:
84
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
78.407
834.271
460.651
6.550.997
4.842.714
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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CURRENT LIABILITIES
PARENT COMPANY
2005
2004
2005
2004
2.509.352
1.863.751
2.296.543
1.721.904
254.968
505.009
118.554
393.521
577.742
653.222
530.882
608.264
43.415
111.729
13.598
87.043
2.507.795
2.045.052
2.476.946
2.007.969
414.382
77.065
410.964
62.599
178.004
97.505
178.004
97.505
1.011.556
1.001.461
234.395
470.897
1.046.862
1.010.541
902.225
957.908
387.265
488.679
130.397
175.953
Other taxes
2005
NATURE
8.931.341
7.854.014
7.292.508
6.583.563
CONSOLIDATED
PARENT COMPANY
509.739
243.199
operations carried out in the state for the period from September 1984 to February 1989. The suit was tried at all
levels and the legal system eventually opposed the argument defended by the Company, having understood that,
Programmed maintenance
157.088
143.301
(Sponsor's portion)
894.491
869.934
Tax losses
363.569
Unrealized profits
907.572
Profit accomplisment
344.945
305.857
By payment.
Return to shareholders -
372.822
372.822
Pension plan -
shareholders.
131.252
The So Paulo State tax authorities fileda tax foreclosure suit to demand payment of ICMS on naphta-petrochemical
line method.
662.169
171.307
Total
4.212.395
2.237.672
Long-term
2.617.516
1.102.845
Current
1.594.879
1.134.827
Other
NATURE
PARENT COMPANY
2004
2005
2004
Deferred ICMS
2.617.516
1.477.460
Others
2.681.481
1.357.904
242.385
109.300
4.337.361
4.148.685
1.102.845
1.230.796
2.333.641
860.433
1.169.835
PETR OBRA S
219.483
foreign operations
7.474.135
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
6.270.290
2005
5.263.660
Tax losses
41.317
36.230
192.459
8.461.721
Investments in subsidiary
(net of depreciation)
2.030.268
Long-term liabilities
86
6.913.832
social contribution
PARENT COMPANY
6.913.832
Noncurrent assets
CONSOLIDATED
Other
1.183.721
2.970
Total
9.508.583
7.172.515
Long-term
8.461.721
6.270.290
Current
1.046.862
902.225
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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At the parent company, realization of deferred tax credits amounting to R$ 2.237.672 does not depend on future
The reconciliation of income tax and social contribution determined in accordance with statutory rates and the
income since these credits will be absorbed annually by realizing the deferred tax liability. Based on forecasts, the
management of subsidiaries expect to offset the consolidated credit amounts in excess of the balance recorded by
the parent company where applicable within a 10-year period.
Consolidated
REALIZATION EXPECTATION
CONSOLIDATED
PARENT COMPANY
2005
2004
35.549.802
25.474.367
(12.086.933)
(8.662.382)
DEFERRED
DEFERRED
DEFERRED
DEFERRED
INCOME TAX
INCOME TAX
INCOME
INCOME TAX
ASSETS
LIABILITIES
TAX ASSETS
LIABILITIES
1.696.868
1.232.069
1.134.827
902.224
(703.242)
(444.947)
2007
413.337
1.191.013
122.924
901.906
Equity pickup
(100.503)
(66.249)
2008
243.818
1.147.788
122.925
901.906
1.879.948
1.651.947
2009
196.743
1.126.746
100.377
901.906
(96.943)
179.924
2010
199.133
1.203.944
100.377
901.906
Amortization of goodwill/discount
(11.687)
7.395
2011
413.787
1.056.111
362.070
901.432
Tax incentives
311.187
131.647
6.017
298.796
(10.802.156 )
(6.903.869)
2006
1.048.709
2.550.912
294.172
1.761.235
4.212.395
9.508.583
2.237.672
7.172.515
1.276.704
Total
5.489.099
152.684
9.508.583
2.390.356
Other
Expense for income tax and social Contribution
Deferred income tax and social contribution
7.172.515
(501.636)
(1.058.295)
(10.300.520)
(5.845.574)
(10.802.156)
(6.903.869)
At December 31, 2005, TBG, a subsidiary of GASPETRO, had accumulated income tax losses carryforwards
amounting to R$ 300.103 (R$ 405.540 in 2004), which may be offset against taxes up to a limit of 30% of annual
Parent Company
taxable income, based on Law N 9.249/95, which, in the opinion of TBG management, will occur within the useful
life of the Bolivia-Brazil Gas Pipeline project. However, considering the accounting for deferred tax assets in
accordance with CVM Instruction N 371/02 insofar as it relates to the determination of taxable income in three
of the past five financial years and the long term estimate for utilization, these credits are not recorded in the
consolidated financial statements for December 31, 2005 and 2004. The accounting recognition of these credits
Equity pickup
The subsidiary Petrobras Energia S.A. - PESA has tax credits arising from accumulated tax losses amounting to
approximately R$ 823.917 (R$ 1.196.000 in 2004), which were not recorded in asset accounts. Pursuant to
2005
2004
32.453.964
24.645.625
(11.034.348)
(8.379.513)
(750.841)
(561.082)
617.574
457.421
1.864.115
1.416.117
Discount amortization
(11.687)
1.537
Tax incentives
309.992
130.858
specific tax legislation in Argentina and other countries where PESA has investments, which define statute of
1.313
43.208
limitations for such credits, only the amount of R$ 774.407 can be used to offset future taxes payable until 2007,
(9.003.882)
(6.891.454)
(422.392)
(1.692.288)
88
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
(8.581.490)
(5.199.166)
(9.003.882)
(6.891.454)
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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Evaluation of the PETROS costing plan is performed by independent actuaries based on a capitalization system
on a general basis.
In relation to an adventitious deficit in the plan for defined benefits, determined in accordance with the actuarial
cost method used by PETROS, Brazilian legislation, constitution amendment n 20 applicable to private pension
plans of mixed capital companies provides that in the reorganization of such deficit, via adjustment of normal
contributions, it shall be borne equally by sponsors and participants.
Fundao Petrobras de Seguridade Social - PETROS, was established by PETROBRAS, as a private legally separate
nonprofit pension entity with administrative and financial autonomy. As such, Petros has the following principal objectives:
(i) institute, manage and execute benefit plans for the companies or entities with which it has signed agreements;
In 2001, a mixed private pension plan was introduced denominated PETROBRAS VIDA, destined to current and
(ii) provide administration and execution services for benefit plans focused on post-retirement payments; and
new employees, but it has been suspended that year by operation of injunctions in connection with writ of
(iii) promote the well-being of its members, especially with respect to post-retirement payments.
mandamus filed by labor unions. A ruling on the merit of the proceeding was handed down in 2004, voiding the
The PETROS plan is a defined-benefit pension plan and was introduced by PETROBRAS in July of 1970 to
act of the Supplementary Pension Secretary of MPAS, which had approved the new plan, declaring invalid any
ensure members a supplement to the benefits provided by Social Security. In 2001, subsequent to a process
of separating participant groups, the PETROS Plan was transformed into several distinct defined benefit plans.
changes made in Petros Plan, based on said approval. The case is pending Court of Appeal judgment.
In June 2005, the judge of the 7th Federal Court of Rio de Janeiro determined notification of PETROBRAS and
As of December 31, 2005, the following sponsor companies formed part of the Petrobras System PETROS plan:
PETROS for them to prove in the court records the contribution on employer part to the PETROS PLAN for all
PETRLEO BRASILEIRO S.A. - PETROBRAS, Petrobras Distribuidora S.A. - BR, Petrobras Qumica S.A. - Petroquisa
employees hired after August 2002, or alternatively, the offset of deficit presented in the balance sheets, under
PETROS receives monthly contributions from the sponsoring companies of the PETROS Plan amounting to
In view of the terms of this decision, PETROS filed a petition informing the judge that PETROBRAS had made a
12.93% of the salaries of employees participants in the plan and contributions from employees and retirees, as well
contribution to reorganize the deficit determined at plan closing. On the same date, PETROS filed a special bill of
review requiring apology and retraction of allegations by the judge in view of the information that has been provided.
In relation to the contribution made, PETROBRAS based itself on the information furnished by PETROS and also
filed an appeal for the review of this last ruling. The Union filing the proceeding submitted its contestation against
The provision for actuarial liabilities related to pension and retirement benefit plans and to post-retirement health
said appeal. Court records are current with the reporting judge for judgment.
care life benefits is recorded in the Company's balance sheet accounts based on calculations prepared by an
independent actuary according to the projected credit unit method, net of plan assets. The actuarial liabilities increase
from one year to another, on a pro rata basis in relation to the employees' length of service during their working life.
The assets that guarantee the pension plan are presented as a reducing balance of the net actuarial liabilities.
The projected credit unit method considers each service period as a triggering event of additional benefit units
and the units are accumulated to calculate the liability upon each new analysis. In addition, actuarial assumptions
In the original proceeding, the Federal Public Prosecutor presented his statement. The proceeding was then
submitted to the Public Prosecution service for recording and is currently pending judgment.
At December 31, 2005, PETROBRAS presented advance to the pension plan of R$ 1.205.358 (R$ 1.217.612
at December 31, 2004). The impacts of adhesion and the cost of benefits provided for by the new plan will be
evaluated based on the concepts established in CVM Resolution N 371/00 and will only be determined and
recognized after the case has been resolved.
are used, such as an estimate of the evolution of costs with medical assistance, biometric and economic
PETROS Plan is closed for new employees of the PETROBRAS system and the Company has taken out group
hypotheses regarding active and inactive service periods and also historical data on expenses incurred and
life insurance to cover all employees admitted thereafter. This insurance will be effective until a new private pension
employee contributions.
plan is implemented.
Gains and losses arising from the difference between the actuarial assumptions and the fair value of plan assets
In 2003, PETROBRAS constituted a working group with participation of Federao nica dos Petroleiros - FUP
are respectively included or excluded when defining the net actuarial liability, and are not therefore immediately
and union with the objective to make technical valuation, diagnostics and alternatives for support and strengther
recognized. These unrecognized gains and losses are amortized during the average remaining service period of the
active employees.
The relation between contributions by the sponsors and participants of the PETROS Plan, considering only those
attributable to PETROBRAS and subsidiaries in December 31, 2005 y 2004, was 1,00.
90
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
with Conttmaf and representatives of Sitramico. The Company held meeting with these entites to consider
questions relative to the Petros plan and when the proposal for a new plan will be completed. One of the principal
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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objectives od the negotiations as to define a solution to the technical deficit of the petros plan also to solve the
problems os structural and disgnostic issues raised in the FUP and union studies, always observing the limits imposed
This benefit can be granted to all those employees of PESA who have participated in the contribution plan on a
continuous basis and that have joined the Company before May 31, 1995, and have the length of service required.
PETROBRAS, in its policy of transparency hopes to arrive at an understanding with all unions as briefly as possible,
The benefit is calculated on the basis of the latest salary of workers participating in the plan and on the number of
to find and implement the structural solutions and sustain relative questions of the model intended to be completed.
years of service. The plan is of a supplementary nature. This means that the benefit received by the employee consists
of the amount determined in accordance with the provisions of plans, after deducting the benefits granted in
TRANSPETRO
connection with the contribution plan and with the public system of retirement, so that the addition of total benefits
TRANSPETRO maintains a defined-contribution private pension scheme with PETROS called Plano TRANSPETRO,
received by each employee is equivalent to that set forth in the plan. At retirement, the employees have the right to
which receives monthly contributions equivalent to 5.32% of the payroll of the members and is equal to the
since these are required to contribute to the official retirement system, whether public or private, based on their total
salaries. The assets of the fund have been contributed to a trustee, whose assumptions of investments obligatorily
address preservation of capital in U.S. dollars, maintenance of liquidity and obtainment of maximum market profitability
In November 2005, the Board of Directors of PETROBRAS ENERGIA approved the implementation of a defined
for 30-day investments. Accordingly, the funds are mainly invested in bonds, notes, mutual investment funds and fixed
contribution plan, which all of the Company's employees may opt to join. This implementation will be supported by
term deposits. Bank of New York is the fiduciary agent, and Watson Wyatt is the administrator. The Company
several financial channels and a trust, for the investments of PETROBRAS ENERGIA, and by mutual investment funds
determines the liabilities corresponding to this plan by using actuarial calculation methods. The assumptions used in
or investments in a Pension Fund Manager (AFJP), for the employees' option. Through this plan, PETROBRAS ENERGIA
the actuarial calculation are not the same as those adopted for the other PETROBRAS System companies.
contributes to a trust the amounts equivalent to the contributions made by the employees participating in the plan to
the mutual investment fund or AFJP, based on the contribution plan defined for each salary level. Participating
In conformity with PESA's by-laws, the Company contributes to the fund based on amounts proposed by the Board of
Directors to the Shareholders' Meeting limited to a maximum equivalent to 1.5% of net income for each year.
employees may make voluntary contributions in excess of those established in the contribution plan, but these will not
be considered for purposes of calculating the amounts to be contributed by PETROBRAS ENERGIA. Upon joining the
plan, the employees may opt to make contributions retroactively to January 1, 2004 or to the date they joined
PETROBRAS, PETROBRAS Distribuidora S.A. - BR, PETROBRAS Qumica S.A. - PETROQUISA, and Alberto Pasqualini -
REFAP S.A., Downstream Participaes Ltda. subsidiary, maintain a health care benefit plan (AMS), which offers defined
In addition to the current plan the company maintains an active policy of benefits for all employees after a certain
benefits and covers all employees of the companies in Brazil (active and inactive) together with their dependents. The
moment is affective considering one month of salary for each year of service to the company, in accordance with decreasing
plan is managed by the Company, with the employees contributing a fixed amount to cover the principal risks and a
scale in conformity with the years of service of the employee and meant do complement the employees pension.
portion of the costs relating to other types of coverage in accordance with participation tables defined by certain
PESA, a PETROBRAS indirect subsidiary in Argentina, contributes to a defined contribution private pension plan
applicable to all company employees whose salaries exceed a certain level. Based on this plan, PESA made additional
The Company's commitment related to future benefits to plan participants is calculated on an annual basis by an
contributions for amounts equivalent to those made by employees who exceeded the amounts required by law, which
independent actuary, based on the Projected Unit Credit method, similar as the calculation method for the
were inputted to results for the periods in which such contributions were made. Due to important changes in the Argentine
macroeconomic scenario as from the end of 2001 and to the uncertainties on the economic unfolding in Argentina, PESA
temporarily suspended this benefit as from January 2002. The benefit will be resumed as a provisional savings method
is found for such purpose.
The health care plan is not funded by collateral assets. Payment of benefits is made by the Company based on
costs incurred by the plan participants.
Gains and losses arising from the difference between the actuarial assumptions and the costs effectively incurred
are respectively included or excluded when defining the net actuarial liability. These gains and losses are amortized
over the average remaining service period of the active employees.
92
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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(c) The balance of the provisions for expenses associated with post-retirement
benefits, calculated by an independent actuaries, shows the following movements:
CONSOLIDATED
2005
PARENT COMPANY
2004
Health
2005
Health
CONSOLIDATED
2004
Health
2005
Health
Retirements
care
Retirements
care
Retirements
care
Retirements
care
and pensions
benefits
and pensions
benefits
and pensions
benefits
and pensions
benefits
30.548.261 10.683.803
22.394.259
8.879.781
28.778.017
9.980.813
21.230.354
8.329.509
3.363.923
1.189.586
2.532.496
1.003.884
3.168.615
1.111.087
2.399.030
940.789
355.377
179.913
391.063
131.065
320.654
160.402
365.013
116.971
(1.388.186)
(342.137)
(1.272.463)
(300.936)
(1.320.209)
(323.954)
(1.211.790)
(285.761)
881.347
Other
(4.625)
Retirements
care
Retirements
care
Retirements
care
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
of assets
8.712.165 10.864.395
8.798.298
9.980.813
(68.131)
6.452.520
934.770
50.386
35.239
801.294
(63.953)
5.995.410
879.305
9.350.684 11.643.034
losses
Net actuarial liability
Long-term liabilities
(6.969.382) (4.612.095)
2.381.302
7.030.939
482.942
1.898.360
7.030.939
33.756.097 11.643.034
30.548.261 10.683.803
31.748.371 10.864.395
28.778.017
2005
9.980.813
21.100.801
18.378.629
19.979.719
17.463.696
2.332.154
2.041.736
2.204.273
1.937.422
of NPC 26
649.854
342.137
596.343
300.936
610.380
323.954
561.092
285.761
(1.388.186)
(342.137)
(1.272.463)
(300.936)
(1.320.209)
(323.954)
(1.211.790)
(285.761)
1.314.153
1.562.043
1.229.299
42.403
1.749.036
5.214.410
414.865
6.477.127
601.347
5.214.410
PARENT COMPANY
2004
2005
Health
2004
Health
Health
Retirements
care
Retirements
care
Retirements
care
Retirements
care
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
1.137.647
5.673.650
807.747
4.563.826
1.016.212
5.214.410
722.916
4.216.517
of employees
of subsidiaries
Other
24.405.413
21.100.801
23.036.206
19.979.719
35.238
1.617.974
1.699.426
686.896
1.375.522
1.550.468
1.586.671
622.465
1.283.654
(376.605)
(342.137)
(356.996)
(300.936)
(355.796)
(323.954)
(329.169)
(285.761)
7.030.939
1.137.647
5.673.650
2.210.884
6.477.127
1.016.212
5.214.410
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
2.286
Balance at
December 31
PETR OBRA S
5.673.650
1.016.212
(+) Incorporation
contributions
461.848
(7.782.086) (4.766.403)
(-) Payment of
94
6.477.127
of the year
2.210.884
Contributions received
Other
696.273
(6.501.281) (4.387.268)
Balance at January 1
Expected return
of the year
5.673.650
Health
Benefits paid
(5.010.153)
1.137.647
CONSOLIDATED
by the fund
(8.309.813)
441.374
on plan assets
9.447.460 10.683.803
Unrecognized actuarial
Health
care
Current liabilities
Health
Retirements
Benefits paid
Health
2004
2005
Amounts recognized in
obligation
Interest cost
2004
Health
Change in benefit
of the year
PARENT COMPANY
2.381.302
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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The net expense associated with the pension and retirement benefits granted and to be granted to employees,
retirees and pensioners for the period January to December, according to the actuarial calculation made by
Assumed health care costs trend rates have a significant effect on the amounts provided for and related recognized
costs. A 1% change in assumed health care costs rates would have the following effects:
CONSOLIDATED
2005
2004
Health
CONSOLIDATED
PARENT COMPANY
2005
2004
Health
Health
Health
Retirements
care
Retirements
care
Retirements
care
Retirements
care
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
355.377
179.913
391.063
131.065
320.654
160.402
365.013
116.971
3.363.923
1.189.586
2.532.496
1.003.884
3.168.615
1.111.087
2.399.030
940.789
(2.332.154)
(2.041.736)
(2.204.273)
(1.937.422)
507.174
329.927
88.232
240.573
524.326
315.182
83.700
225.894
Other
(278.124)
(307.465)
1.778
24.306
(258.854)
(287.856)
1.854.071
(1.507.663)
1.719.468
(1.399.297)
254.817
(204.862)
235.063
(189.167)
pension and healthcare plans in Brazil with a view to monitoring the changes in the profile of employees, retirees
The main assumptions adopted by the Brazilian companies in the actuarial calculation were the following:
1.617.974
1.699.426
686.896
1.375.522
1.550.468
1.586.671
622.465
1.283.654
TYPE
1% decrease
principally to strengthen benefit plans in order to align them to a greater beneficiary life expectancy.
1% increase
and pensioners, based on longevity, age of invalidity and invalid mortality tables. The purpose of this review is
Contributions from
participants
1% decrease
On February 4, 2005, the Executive Board of PETROBRAS approved a review of the actuarial assumptions of the
Amortization of
unrecognized losses
1% increase
(e) Assumptions
Estimated return
on plan assets
Actuarial liability
PARENT COMPANY
102.131
99.692
1.720.105
1.650.160
The restatement of the provisions was recorded under income for the year, as described below:
CURRENT ASSUMPTION
Benefit plan
Defined benefit
Mortality table
AT 2000 *
Disability
AT 49 *
Petros rotation
0% p.a.
AMS rotation
CONSOLIDATED
PARENT COMPANY
2004
2005
2004
From age 36 to 40 - 0.28% p.a.
Health
Health
Health
Health
Retirements
care
Retirements
care
Retirements
care
Retirements
care
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
and Pensions
benefits
employees:
Absorbed in the cost
of operating activities
497.105
400.514
181.951
271.687
539.194
350.354
167.165
264.975
Directly to income
259.554
251.342
109.819
178.032
205.106
253.274
92.461
141.492
963.446
1.047.570
395.126
925.803
905.860
983.043
362.839
877.187
1.720.105
1.699.426
686.896
1.375.522
1.650.160
1.586.671
622.465
1.283.654
96
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
Salary growth
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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(b) Reserves
Subsidy reserve - AFRMM
This reserve represents funds received from freight surcharges levied for the renewal of the Merchant Marine
According to the provisions of current legislation, employees' participation in income or results of operations may
(AFRMM). These funds are used to purchase, enlarge or repair vessels of the fleet, pursuant to Administrative
be based on voluntary programs instructed by companies or by agreements signed with employees or unions.
In 2005, PETROBRAS provided for an amount of R$ 1.005.564 in the consolidated financial statements
(R$ 783.224 in 2004) and R$ 846.000 in Parent Company financial statements (R$ 660.000 in 2004), for profit
Revaluation reserve
sharing of employees and management. The value of the provision complies with the terms established by
This reserve is established in the amount of revaluation of property, plant and equipment recorded by a jointly-
Resolution N 10 issued by the State Company Control Council - CCE on May 30, 1995.
Management's participation in income or results of operations will be subject to approval at the Ordinary General
Meeting to be held on April 3, 2006, in accordance with articles 41 and 56 of the Company's by-laws and specific
Realization of this reserve totaled R$ 8.974 in 2005 (R$ 12.096 in 2004), in proportion to depreciation of the
revalued assets, and was fully transferred to retained earnings.
federal regulations.
Legal reserve
The legal reserve is constituted through an appropriation of 5% of net income for the year, as required by article
(a) Capital
Statutory reserve
The Extraordinary General Meeting of July 22, 2005 decided split of each company share into four, resulting in free
This is an appropriation of net income of each year in an amount equivalent to a minimum of 0.5% of paid-in
distribution of 3 (three) new shares of the same type for each original share, based on the shareholding structure
capital at year-end. This reserve is used to fund research and technological development programs. The
accumulated balance of the reserve cannot exceed 5% of paid-in capital, according to article 55 of the Company's
On December 31, 2005, paid up capital amounts to R$ 32,896,138, and is divided into 2,536,673,672
by-laws.
common shares (634.168.418 in 2004) and 1,849,478,028 preferred shares (462.369.507 in 2004), all of
The purpose of this reserve is to be used in capital budget investments, principally in exploration and domestic oil production
development, according to article 196 of Brazilian Corporate Law.
represented by this class of shares, whichever is larger, and shall participate equally with common shares in capital
The proposal of destination of net income for the year ended December 31, 2005 includes retention of profits
increases resulting from the incorporation of reserves and income. Preferred shares are not entitled to voting rights
of R$ 15.104.229, with a R$ 15.095.255 amount, arising from net income for the year, and the R$ 8.974 retaining
and are not convertible into common shares and vice versa.
earnings remaining balance, to partially meet the annual investment program established in the 2006 capital
At an Extraordinary General Meeting held on April 3, 2006, the shareholders of PETROBRAS approved an
increase in the Company's capital R$ 32.896.138 to R$ 48.247.669, through the capitalization of revenue reserves
accrued during previous financial years, in the amount of R$ 15.012.224, R$843.638 to statutory reserve and
(c) Dividends
R$ 14.168.586 to retained earnings, and the reserve for restatement of realized capital in the amount of R$
Shareholders are assured a minimum dividend/interest on shareholders' equity of at least 25% of adjusted net
339.307 and without the issuance of new shares, in accordance with article 169, paragraph 1, Law N 6.404/76.
income for the year, calculated in accordance with to article 202 of Law N 6.404/76.
The proposal for 2005 dividends that is being submitted by the PETROBRAS Board of Directors for approval of
the shareholders at the Ordinary General Meeting to be held on April 03, 2006, in the amount of R$ 7.017.843,
conforms to the by-laws in regard to guaranteed rights of preferred shares (article 5), and distributes dividends
98
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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calculated on the adjusted net income to common and preferred shareholders, as shown below:
from retained earnings, as required by CVM Resolution N 207/96, resulting in income tax and social contribution
credits of R$ 1.864.115 (R$ 1.491.291 in 2004).
2005
2004
23.450.082
17.754.171
Appropriation:
Legal reserve
(1.172.504)
(887.708)
22.277.578
16.866.463
Reversals/Additions:
Revaluation reserve
Adjusted net income for calculation of dividend
8.974
12.096
environmental issues arising in the normal course of business. Based on the advice of its internal legal counsel and
22.286.552
16.878.559
management's best judgment, the Company has recorded accruals in amounts sufficient to provide for losses that
are considered probable. At December 31, the respective claims by type are as follows:
PARENT COMPANY
2005
2004
2005
2004
144.946
252.846
144.946
252.846
22.699
54.000
22.699
54.000
5.482.690
4.386.151
Dividend
1.535.153
657.923
7.017.843
5.044.074
Civil claims
Total proposed dividends
32.766
26.265
167.645
339.612
167.645
333.111
71.875
62.355
1.231
1.543
Dividends proposed as of December 31, 2005, amounting to R$ 7.017.843, include interest on capital approved by
Tax claims
173.277
160.315
16.169
16.169
the Board of Directors on June 17, 2005, amounting to R$ 2.193.076, which will be made available to shareholders
Civil claims
251.793
308.178
176.550
171.708
on January 5, 2006, corresponding to R$ 0,50 (fifty cents) per common and preferred share, and to R$ 2,00 (two
Other
117.623
101.873
31.301
31.301
reais) per share before the share split of September 2005, based on the shareholding position of June 30, 2005,
Long-term litigation
614.568
632.721
225.251
220.721
monetarily restated in accordance with the SELIC rate variation as from December 31, 2005. The dividend
Total
782.213
972.333
392.896
553.832
proposed also includes interest on capital approved by the Board of Directors on December 16, 2005, which will
be made available until March 31, 2006 based on the shareholding position of December 31, 2005, amounting
to R$ 2.193.076, corresponding to R$ 0,50 (fifty cents) per common and preferred share, plus R$ 1.096.538,
corresponding to R$ 0,25 (twenty-five cents) per common and preferred share, based on the shareholding position
of December 31, 2005, to be approved by the Ordinary General Meeting to be held on April 3, 2006.
These amounts are subject to withholding tax at the rate of 15%, except for untaxed or exempt shareholders,
as established by Law N 9.249/95.
PETROBRAS received various tax assessments related with social security charges as a result of irregular
presentation of documentation required by the INSS, to eliminate its joint liability in contracting civil construction
and other services, stipulated in paragraphs 5 and 6 of article 219 and paragraphs 2 and 3 of article 220 of Decree
N 3.048/99.
The dividends and the final portion of the interest on shareholders' equity will be paid on a date to be
established by the General Shareholders' Meeting. These amounts will be monetarily restated from December 31,
2005 to the initial date of payment, according to the variation in the SELIC rate.
Since 2002, the Company has been conservatively accruing a provision for this contingency which at December
31, 2005 totals R$ 712.272 in December, 31, 2005 (R$ 654.841 in 2004).
Out of the total provisioned, PETROBRAS spent up to December 31, 2005, the amount of R$ 567.326
Interest on shareholders' equity was included with the proposed dividend for the year, as established in the
(R$ 401.995 in 2004) and R$ 108.868 of judicial deposits , in connection with the administrative proceedings.
Company's by-laws. This interest was recorded as operating expenses, as required by tax legislation, and reversed
100
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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In theory, of the total amount involved in the assessments, the part relating to the subcontractors' debt could be
recovered by the Company either by suspending the payment of invoices or adopting administrative or legal measures.
Of the measures adopted so far, including defenses, appeals and remandments to the INSS, notifications have
been issued to all of the subcontractors. As a result of the request for Administrative Review made to the Social
DESCRIPTION
NATURE
PROBABILITY OF LOSS
Claimant: Mathias
Civil
Possible
CURRENT SITUATION
Engenharia Ltda.
Contractual civil liability
Security Appeals Board - CRPS, part of the assessment notices has been annulled. We expect that the requests for
equation.
Internally, procedures were revised to improve the inspection of contracts and correctly demand the presentation
of the documents stipulated in the legislation to substantiate the payment of the INSS payable by contractors.
We describe below the current status of the main legal proceedings not considered as probable losses:
DESCRIPTION
NATURE
PROBABILITY OF LOSS
CURRENT SITUATION
Civil
Possible
Imvel Ltda
Claimant: Walter
do Amaral
of shareholdings in several
of Paulipetro/PETROBRAS
in attorney's fees.
contract
of Rio de Janeiro
delinquency notice on
chartering.
petrochemical companies
included in the National
Civil
Possible
pending judgment.
Privatization Program.
Tax
Possible
ICMS. Sinking of
P-36 Platform
Tax
Possible
Civil
Tax
Possible
Possible
Empresa Marambal
Agro-lndustrial BIA.
P-36 Platform
was determined.
102
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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DESCRIPTION
NATURE
PROBABILITY OF LOSS
Claimant: IRS
Tax
Possible
Tax
CURRENT SITUATION
DESCRIPTION
Claimant: Ministry
PROBABILITY OF LOSS
Labor
CURRENT SITUATION
Possible
Jurisdiction
Indemnification for
occupational security
awaits trial.
Assistance.
Possible
The appeal was dismissed by the second
NATURE
Tax
Possible
The Company is subject to various environmental laws and regulations. These laws regulate activities involving the
Finance Authorities
PETROBRAS is awaiting judgment of the
Tax
Possible
Finance Authorities
discharge of oil, gas and other materials, and establish that the effects caused to the environment by Company
operations should be remedied or mitigated by the Company.
As a result of the July 16, 2000 oil spill at the So Fancisco do Sul Terminal of Presidente Vargas refinery - REPAR,
natural gas
Tax
spilled in Barigui and Iguau rivers. Approximately R$ 74.000 were expensed in the clean up of the affected area
Possible
on LPG operations
Claimant: Petroleum
Labor
located about 24 kilometers from Curitiba, capital of Paran state, approximately 1,06 million liters of crude oil were
and to cover the fines applied by the environmental bodies. The following suits and proceedings refer to this spill:
Possible
Workers Union
DESCRIPTION
NATURE
PROBABILITY OF LOSS
Civil
Possible
and Sergipe)
CURRENT SITUATION
of Araucria
to environment.
Economic Plans)
be tried as one.
Claimant: Adailton
Labor
On February 16, 2001, the Company's pipeline Araucria - Paranagu, ruptured due to a seismic movement and
caused the spill of approximately 15.059 gallons of fuel oil in several rivers in the State of Paran. On February 20,
Possible
2001 the clean up services of the river were concluded, recovering approximately, 13.738 gallons of oil. As a result of
de Oliveira Bittencourt
the accident, the following suits were filed against the Company:
and Others
Labor claims for payment
DESCRIPTION
NATURE
PROBABILITY OF LOSS
Fine
Possible
CURRENT SITUATION
Institute - IAP
Fine levied on alleged
environmental damages.
104
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
PETR OBRA S
F I N A N C I A L A N A LY S I S A N D F I N A N C I A L S TAT E M E N T S
2005
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Petrobras and its subsidiary Gaspetro filed a ordinary suit against the Federal Government / National Treasury before
the Federal Judicial Section of Rio de Janeiro seeking to recover, through offset, the PIS and COFINS amounts paid on
PETROBRAS leased the IBIRITERMO and TERMOBAHIA plants and took over their operations and maintenance
financial income and foreign exchange variation recoverable during the period between February 1999 and December
(Energy Conversion Contract - ECC). At the end of the 20-year periods of the two agreements, the thermoelectric
2002, claiming unconstitutionality of paragraph 1 of article 3 of Law N 9.718/98 for having expanded the concept of
power plants will be transferred to PETROBRAS ownership. The price disbursed each month takes into account the
As requested for the press in November 09, 2005 the Supreme Federal Court considered unconstitutional the
mentioned of paragraph 1 of art 3 of Law N 9.718/98.
On December 28, 2005, PETROBRAS exercised its preemptive right and concluded the acquisition of a 49%
interest held by ABB Equity Venture (ABB-EV) in TERMOBAHIA, comprising shares and amounts receivable in the total
On January 9, 2006, in view of a final decision by the STF, PETROBRAS filed a new suit aiming to recover COFINS
amounts relating to the period January 2003 to January 2004.
amount of R$ 106.000, under a financial structuring agreed upon with the IDB.
This financial structuring involves two simultaneous operations: the acquisition of ABB-EV's rights and the sale of
The value of R$ 1.769.657, related to the action, is not reflected in these Financial Statements.
such rights to a private institution until a strategic partner is introduced by PETROBRAS within a maximum period of
one year.
The private institution offering the best alternative option was Deutsche Bank (DB), which created the Special
Purpose Company (SPC) BLADE Securities Ltd (BLADE), based in Ireland, to be succeeding to ABB-EV's rights until
PETROBRAS introduces a strategic partner, limited to one year.
The operation was structured considering the following four main aspects:
The Company has commitments for the supply of gas, purchase of energy and reimbursement of operating expenses
PIFCO, a PETROBRAS subsidiary, negotiated derivatives with BLADE, which obtained the necessary funds to
with thermoelectric plants included in the Priority Thermoelectric Energy Program, summarized as follows:
acquire from PETROBRAS the debt and interest previously owned by ABB-EV. Under the derivative contracts
entered into by PIFCO and BLADE, the latter undertook the obligation to pass on to the former all of the proceeds
PETROBRAS understands that the economic and financial equitability of the agreements involving Maca Merchant power
TERMOBAHIA's debt to ABB-EV was acquired by BRASOIL, and its shares were directly acquired by PETROBRAS;
plants has been seriously impacted, approached El Paso with a view to negotiating, considering that, under the related
contractual conditions, these contributions should be made occasionally rather than permanently and regularly, which has been
The derivative contracts include Put and Call Option arrangements that can be triggered under certain conditions
the case as a result of a structural change in the market, thereby being excessively costly to the Company.
previously agreed to by PETROBRAS, BLADE and the IDB. One of these arrangements allows PETROBRAS to
Negotiations are being conducted with El Paso, owner of the Maca Merchant thermoelectric, although it was not
regain these rights at any moment, and sell them to a strategic partner, subject to IDB's prior approval.
possible to reach an agreement for reduction of the contingency amounts, culminating in the commencement of
The rate applicable to the loan was renegotiated in USD from 18.79% per annum (p.a.) to 8% p.a., - the main
reason for the operation -, which will represent savings of some R$ 80.000 to PETROBRAS, considering that the
At the same time, El Paso and PETROBRAS restarted negotiations with a view to resolving this suit, and a Memorandum
of Understanding (MOU) was eventually signed on February 1, 2006, adjusting the following general terms:
Company guarantees TERMOBAHIA project's cash flows under an ECC contract. The sale to a strategic partner is
subject to approval of the renegotiated loan rate.
PETROBRAS will acquire, for R$ 837.000, the companies El Paso Rio Claro Ltda., owner of Maca Merchant
Upon conclusion of this operation, shareholding in TERMOBAHIA remains unchanged, except for ABB-EV's being
Thermoelectric Power Plant, and El Paso Rio Grande Ltda., responsible for trading the energy available at the Maca
replaced by BLADE, i.e. PETROBRAS will still hold 29%, PETROS, 20%, BLADE, 49%, and EIC Eletricity S.A. (EIC), 2%.
EIC has been negotiating the sale of these rights to ABB-EV, which will in turn sell them to PETROBRAS, subject to
the IDB's approval. The commitment undertaken by EIC, ABB-EV and PETROBRAS is formalized through mail
exchanged among the parties. This shall occur in the first quarter of 2006, when PETROBRAS' share in TERMOBAHIA
The parties have committed to completing the operation in the shortest time possible, with the execution of final
contracts intended for March 2006 at the latest. Additionally, the parties will jointly require temporary suspension
of the international arbitration process and the preventive injunction proceeding, which should be extinguished
once the operation has been completed.
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PETROBRAS is an operationally integrated company, and the greater part of the production of crude oil and gas of
Contract and paid 82 million referring to volumes not transported, during 2002 and 2005.
2006
2007
2008
2009
2010 - 2019
24
24
24
24
24/per year
Structure approved on October 23, 2000 by the Board of Directors of PETROBRAS, comprising the following
business units:
(a) Exploration and production: covers, by means of PETROBRAS, BRASOIL, PNBV, PIFCo and PIB BV and
Special Purpouse Companies, exploration, production development and production activities of oil, liquefied
natural gas and natural gas in Brazil, for the purpose of supplying the refineries in Brazil as a priority, and also
On December 16, 2005, the National Electric Power Agency - ANEEL conducted a bidding round in the form of an
commercializing the surplus oil on the domestic and foreign markets and/or taking advantage of commercial
auction with a view to trading energy capacity deriving from new generation projects (new energy) for the
opportunities;
National Interconnected System - SIN, in the Regulated Environment - ACR. This regulated trading process must be
formalized in bilateral agreements referred to as Energy Trading Agreements in the Regulated Environment -
BRASOIL, PIFCo, PIB BV and PNBV, refining, logistics, transport and sale activities of oil products and alcohol,
CCEAR, to be signed between each electric power generation concession or authorization holder and all
BR DISTRIBUIDORA, Special Purpouse Companies and Termoeltrics, the transport and sale of natural gas
produced in Brazil or imported, equity interests in natural gas transport and distribution companies and in
Fixed income must encompass all of the elements intended to cover the project.
thermoelectric plants;
In the first auction for new energy, PETROBRAS sold energy capacity of 1.391 MW through its thermoeletrics
Baixada Santista Energia Ltda. - BSE, Sociedade Fluminense de Energia Ltda. - SFE, Termocear Ltda., Termorio S.A.
and Unidade de Negcios Trs Lagoas. The outcome of the auction will represent, in sales of available energy from
its plants, fixed income for a 15-year period, in the present amount of R$ 199.843/year after 2008 with the sale
(d) Distribution: responsible for the distribution of oil products and alcohol and vehicle natural gas in Brazil,
basically represented by the operations of BR DISTRIBUIDORA and LIQUIGAS;
(e) International: covers, by means of PIB Netherlands BV, BRASOIL, BOC and PETROBRAS, the exploration and
production of oil and gas, the supply of gas and energy and distribution in 15 countries around the world.
of 352 MW, of R$ 210.878/year after 2009 with the sale of 469 MW, and of R$ 277.928/year after 2010 with the
The items that cannot be attributed to the other areas are allocated to the group of corporate entities, especially
those linked with corporate financial management, overhead related with central administration and other
Additionally, PETROBRAS can recover variable operating costs based on pre-defined parameters and actual
plant dispatch.
expenses, including actuarial expenses related with the pension and health care plans intended for employees,
retirees and beneficiaries.
The accounting information by business area was prepared based on the assumption of controllability, for the
purpose of attributing to the business areas only items over which these areas have effective control.
We set forth below the main criteria used in determining net income by business segments:
(a) Net operating revenues: these were considered to be the revenues from sales to third parties, plus revenues
between the business segments, based on the internal transfer prices established by the areas.
PETROBRAS granted R$ 5.253.287 to the National Petroleum Agency (ANP) in guarantee of the minimum
(b) Operating income includes net operating revenue, the costs of products and services sold, calculated per
exploration and/or expansion programs defined in the concession contracts for exploration areas. Of the total
business segment, based on the internal transfer price and the other operating costs of each segment, as
amount, R$ 4.388.977 refer to a pledge on the oil from previously identified fields already in production, and
well as operating expenses, based on the expenses actually incurred in each segment.
(c) Assets: covers the assets referring to each segment.
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In 2004, PETROBRAS Executive Board organized a Risk Management Committee comprising executive managers of
Company's own activities or arise from the context in which it operates, in such a way that the Company can attain
all business areas and of several corporate areas for the purpose of ensuring an integrated management of risk
its strategic goals by effectively allocating its physical, financial and human resources.
exposures and formalizing the main guidelines adopted by the Company to handle uncertainties regarding its activities.
In addition to ensuring adequate cover for the Company's fixed assets, facilities, operations and management
The Risk Management Committee has been created with a view to concentrating risk management information
and to managing exposure to financial, tax, regulatory, market and credit risks, among others, the objective of the
and discussions, facilitating communications with the Board of Directors and the Executive Board concerning
risk management policy adopted by PETROBRAS is to supplement structural actions that will create solid financial
and economic foundations in order to ensure that growth opportunities will be used, regardless of adverse
Since the beginning of the year, several commissions created by the Risk Management Committee have been
developing specific policies for management of risks related to credit, assets and liabilities, commodities price,
foreign exchange and interest rates in order to make the Company's operating and commercial activities comply
external conditions.
This policy's objective is to guide decisions on risk transfer, and is supported by structures that are grounded on
capital discipline processes and on debt management, including:
Low cost production - capital discipline guarantees competitive costs to all products traded;
Definition of future investment levels in a realistic manner, considering the balance among profitability, growth
and strategic adherence to the project portfolio, and maintenance of the strength of the Company's balance
The Company is exposed to a number of market risks arising from the normal course of business. Such market
risks principally involve the possibility that changes in interest rates, currency exchange rates or commodity prices
Wise debt management, seeking to link operating cash flow to debts, including volumes, currencies, maturity,
will adversely affect the value of the Company's financial assets and liabilities or future cash flows and earnings.
PETROBRAS maintains an overall risk management policy that is evolving under the direction of the Company's
Other important risk management characteristics:
executive officers.
Most of PETROBRAS' revenues are obtained in the Brazilian market through the sale of oil products, in reais.
Integrated management of market risks, qualifying total exposures, observing the existence of natural hedges
Other revenues flow from product exports and sales of products through international activities where, in both
and acting on the Company's liquid exposure, avoiding isolated actions of the Business Units that do not
In Brazil, with the oil price deregulation implemented as of January 2002, most prices charged locally also keep
Respecting the concepts of efficient market and diversification. PETROBRAS believes that it operates in some
close ties with those in the international market. Since then, exchange rate and international market reference price
of the most liquid global markets, where the possibility of systematic forecast of future prices is very restricted.
variations are compensated in the local market prices, even where certain differences occur.
As a result, PETROBRAS' risk management policy focuses on eliminating undesirable extreme events instead
As a consequence of the characteristics of the markets where PETROBRAS operates, the following aspects apply:
A considerable amount of PETROBRAS' total debt and future operating cash flow is expressed in dollars, or
Risk Assessment
medium term, the Company's operating cash flow contributes to mitigating foreign currency risks, considering
The risk assessment regarding the Company's strategic plan financing is conducted by means of a probabilistic
that the Company's revenues in US dollars are significantly higher than costs and expenses denominated in
that currency.
Should there be future cash balances at amounts less than the minimum adequate level, actions to reduce this
risk to acceptable grounds are proposed, thereby minimizing the possibility of postponing or interrupting the
Company's investment plan.
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The benchmark for risk management (Cash Flow at Risk or CFaR) considers the changes in the most significant aspects
for cash generation: price, quantities (production and markets), foreign exchange and interest.
Cash balances are projected for numerous scenarios considering the main risk factors through the Monte Carlo
Simulation process. Thus, the estimated cash balance is defined for the intended level of reliability, and the periods
during which cash may be below minimum adequate levels are identified.
The results arising from derivatives are deferred and recorded as financial results.
For the period January to December 2005, Petrobras Energia S.A. - PESA hedged oil volumes reached 7.300
thousand barrels. These hedge instruments generated a loss of US$ 628.648 (R$ 268,4 million).
The aforesaid operations expose Petrobras Energia S.A. - PESA. to a credit risk, which is mitigated, among others, by
agreements for collection and prepayments by those operations and by offset of collection and payment.
Among the various alternative options to preserve the minimum pre-defined cash balance, derivative transactions,
additional funding and optimized distribution of disbursement periods are to be noted.
Economic and financial estimates are restated annually during the strategic planning review process.
In 2000, PETROBRAS contracted economic hedge operations to cover Notes issued abroad in Italian lira and Austrian
Operations involving derivative instruments are not exclusively associated to the above-described processes.
shilling, in order to reduce its exposure to the appreciation of these currencies in relation to the U.S. dollar.
As previously mentioned, the Company's risk philosophy relies on the strength of some corporate foundations,
The economic hedge operations are known as Zero Cost Collar purchase and sale of options, with no initial cost,
which consider that derivatives are important tools used in the protection of transactions and in the consistency of
and establish a minimum and a ceiling for the variation of one currency against another, limiting the loss on the
devaluation of the U.S. dollar, while making it possible to take advantage of some part of the appreciation of the future
Exposures relating specifically to treasury investments are assessed by a traditional value at risk (VaR) system and
the economic proceeds from investment projects are, in some specific cases, assessed by risk assessment models that
are adequate to each business segment based on the Monte Carlo Simulation.
Like all of its peers, PETROBRAS is subject to the volatility of the international energy prices (mainly oil), which may
The fair value of derivatives is based on usual market conditions, at values prevailing at the closing of the period
considered for relevant underlying quotations.
instruments used in these hedges. These operations are always tied to actual physical transactions, that is, they are
The Company's interest rate risk is a function of its long-term debt and, to a lesser extent, of its short-term debt. The
economic hedge transactions (not speculative), in which all positive or negative results are offset by the reverse results of
Company's foreign currency floating rate debt is principally subject to fluctuations in LIBOR and the Company's floating
rate debt denominated in Reais is principally subject to fluctuations in the Brazilian long-term interest rate (TJLP), as
From January to December 2005, economic hedge transactions were carried out for 23.30% of the total volume
fixed by the Central Bank of Brazil. The Company currently does not use any derivative financial instruments to manage
traded (imports and exports). At December 31, 2005, the open positions on the futures market, when compared to
its exposure to fluctuations in interest rates. The one exception is the indirect subsidiary Petrobras Energia S.A. - PESA,
their market value, would represent a negative result of approximately R$ 1.500, if liquidated on that date.
which uses several derivative financial instruments with a view to reducing exposure to certain risks associated with
In compliance with specific business conditions, an exceptional long-term economic hedge operation, still
outstanding, was effected by the sale of put options for 52 million barrels of West Texas Intermediate (WTI) oil over
the period from 2004 to 2007, to obtain price protection for this quantity of oil to provide the funding institutions of
the Barracuda/Caratinga project with a minimum guaranteed margin to cover the debt servicing. As of December 31,
2005, this transaction, if settled at market values, would represent a cost of approximately R$ 68.200.
d) Derivative instruments
Petrobras Energia S.A. - PESA, an indirect subsidiary of PETROBRAS, in the capacity of crude oil producer, is exposed
The Company may use derivative and non-derivative instruments to implement its overall risk management strategy.
to the related price risks and utilizes financial instruments to mitigate its exposure to the risk. These instruments take
However, by using derivative instruments, the Company exposes itself to credit and market risk. Credit risk is the failure of
as reference the West Texas Intermediate (WTI) price, which is primarily used to determine the sales price at the
a counterparty to perform under the terms of the derivative contract. Market risk is the adverse effect on the value of a
physical market.
financial instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The Company
addresses credit risk by restricting the counterparties to such derivative financial instruments to major financial institutions.
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Market risk is managed by the Company's executive officers. The Company does not hold or issue financial instruments
for trading purposes.
Considering its financial proportion and the commitments and investments in the areas involving Health, Safety
and Environment (SMS) and Quality, PETROBRAS, similarly to other large oil companies, retains a significant
amount of its risks, also by means of increasing the deductible amounts, which may reach US$ 20 million.
negotiated with one of the producers of natural gas supplied to Petrobras and has the same maturity term as the
Gas Supply Agreement.
PETROBRAS' continuous improvement in its environmental policy, as defined in the Strategic Plan, is associated
Considering that there is no market quotation for natural gas to cover such a long-term contract as the CRVPGN,
the fair value of this derivative instrument has been calculated based on a simulation that used the reserve model
developed by the Company. In addition, taking into consideration the complexity for defining the parameters used
with the implementation of two major programs: the Process Security Program (PSP) and the Program for
Excellency in Environmental Management and Operational Safety (PEGASO).
Investments in PEGASO in 2005 totaled approximately R$ 1.279.000, including R$502.000 of Transpetro.
in the stochastic model and to adjust the value estimated resulting from the model, we adopt the policy of applying
to such result the average difference of results from applicable sensitivity analyses.
As of December 31, 2005 the fair value of CRVP reached approximately R$ 1.280.000.
Any gains that may be realized by the difference between prices established in the two contracts related to the
(f) Insurance
In order to protect its assets, PETROBRAS transfers, through insurance contracts, the risks that may generate losses
In 2005, the highest and lowest salaries for employees occupying permanent jobs were respectively
significantly impacting its financial position, as well as the risks subject to compulsory insurance required either
R$ 36.871,66 and R$ 867,82 (R$ 33.455,82 and R$ 818,55 in December 2004). The average salary for that year
legally or contractually. Other risks are self-insured, with PETROBRAS intentionally and fully assuming all the risks
involved. Self-insurance is adopted when the assets involved are not economically significant or in view of a high
With regard to Company directors, the highest remuneration in 2005, again for December, was R$ 42.402,40
(R$ 38.474 in 2004).
SUM INSURED
ASSETS
TYPE OF COVERAGE
CONSOLIDATED
PARENT COMPANY
and inventories
60.979.425
55.600.426
Hull
Installations, equipment
On February 3, 2006, the Board of Directors of PETROBRAS approved the purchase and sale agreement with
2.538.840
Astra Oil NV for the acquisition of 50% of refinery Pasadena Refining System Inc. (PRSI), former Crow Refinery,
Oil risks
15.567.176
15.567.176
79.085.441
71.167.602
in Pasadena - Texas - USA, for approximately US$ 370 million. The initial business plan provides for joint operation
and commercial management of PRSI.
PRSI refinery's capacity is of 100,000 bbl/d and is going through a modernization process to meet the new
environment standards established by the Environmental Protection Agency (EPA) for gasoline.
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Corporate information
notes
BOARD OF DIRECTORS
PRESIDENT | Dilma Vana Rousseff
ADVISORS
EXECUTIVE BOARD
PRESIDENT | Jos Sergio Gabrielli de Azevedo
MANAGER OF EXPLORATION AND PRODUCTION | Guilherme de Oliveira Estrella
MANAGER OF GAS AND ENERGY | Ildo Lus Sauer
CHIEF FINANCIAL OFFICER AND INVESTOR RELATIONS OFFICER | Almir Guilherme Barbassa
MANAGER OF INTERNATIONAL ACTVITIES | Nestor Cuat Cerver
MANAGER OF CORPORATE SERVICES | Renato de Souza Duque
MANAGER OF REFINING, TRANSPORTATION AND MARKETING | Paulo Roberto Costa
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notes
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GRAPHIC PROJECT
Trao Design
GRAPHIC DESIGN
Soter Design
EDITORIAL PRODUCTION
COVER PHOTOGRAPH
PRINTING
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