Clarifications about investments in Ecuador

Monday, Oct 13, 2008

PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, responding to written notice CVM/SEP/GEA-2/Nº 249/08, regarding the story published by the Valor Econômico journal titled “Petrobras cancels investments in Ecuador,” clarifies that:

Petrobras Energia Ecuador, a subsidiary of Petrobras Energia S.A. (PESA), a publicly traded company headquartered in Argentina, which, in turn, is a subsidiary of Petróleo Brasileiro S.A. – Petrobras, signed, last September 16, an agreement with the government of Ecuador (“Acta de Entendimiento”) in which it commits to return exploratory block 31. This agreement is subject to a few conditions being met, among which approval by PESA’S Board of Directors.

PESA’S accumulated investments in this block add up to $200 million in nominal values. Anticipating the difficulties to develop these reserves, a provision was made in 2007 for the write-off of the asset. By returning the block, PESA will not have its own oil to transport in the OCP oil pipeline, in which it has already contracted capacity (ship-or-pay). Because of this, it is negotiating an oil transportation agreement with Petroecuador for the usage of this idle capacity.

Once the return of exploratory block 31 has been confirmed, the investments Petrobras Energia Ecuador had programmed to develop production will no longer be made.

 

Source: Petrobras