PETRÓLEO BRASILEIRO S.A.

- PETROBRAS

MATERIAL FACT

2010-2014 Business Plan

Rio de Janeiro, June 21 2010 – Petróleo Brasileiro S.A. - Petrobras announces that its Board of
Directors approved the 2010-2014 Business Plan today, with investments totaling $224 billion,
representing an average of $44.8 billion per year.

Based on macroeconomic and energy scenarios for the world and for Brazil, the investment
portfolio and the company’s projections were revised accordingly. The pillars of integrated growth,
profitability, and social and environmental responsibility remain as the company’s foundation, as it
invests for sustainable performance in the domestic and international markets.

The 2010-2014 Business Plan forsees investments of $224 billion, of which 95% ($212.3 billion)
will be invested in Brazil and 5% ($11.7 billion) abroad. The Plan includes significant utilization of
the domestic supplier market, with local content forming 67% of total investment. This rate would
signify annual purchases of some $28.4 billion in Brazil.

Business Segment Brazil and Abroad

17,8 1%2%1% International
5%
2.5 2.8 5%
8% 3.5
66,4 5.1 11.7
17.8

118.8 53%
73.6
212.3
30%

E&P Downstream G&E

Petrochemicals Distribution Biofuels 95%
Corporate Brazil

www.petrobras.com.br/ri/english
Contacts: PETRÓLEO BRASILEIRO S. A. – PETROBRAS
Investor Relations Department I E-mail: [email protected] / [email protected]
Av. República do Chile, 65 – 22nd floor - 20031-912 - Rio de Janeiro, RJ I Tel.: 55 (21) 3224-1510 / 9947

This document may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) that merely reflect the expectations of the Company’s management.
Such terms as “anticipate”, “believe”, “expect”, “forecast”, “intend”, “plan”, “project”, “seek”, “should”, along with similar or analogous expressions, are used
to identify such forward-looking statements. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company.
Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information
presented herein.
The planned investment for the next five years is 20% more than the previous Plan. In total, $31.6
billion will be directed to new projects, 62% of which is earmarked for E&P ($19.7 billion).

31.7 (17.0) 10.3

(6.8) 19.2

224
186,6

CAPEX 2010-
2010-2014 New Projects Change in Change in Change in 2010-
2010-2014
in 2009-
2009-2013 Projects Excluded project timeline project design Stake Business
Business Plan and cost Plan

1%

21% E&P 
0.3
0.3
Downstream
6.5
6.5 Gas & Energy
Corporate

19.7
19.7
5.15.1
16%
62%

The 2010-2014 Business Plan maintains the growth targets for the Company and incorporates the
resources needed to explore and develop the oil discoveries made in the pre-salt cluster. The total
oil production goals are 3.9 million barrels of oil equivalent per day (boe) in 2014, and 5.4 million
boe in 2020.

The lower production target for 2020, when compared to the previous plan (of 5.7 million boe) is a
consequence of reducing international production goals due to lower future investments. Because
of our opportunities in Brazil, reduced emphasis will be placed on Petrobras’ international E&P
activities.
5,382
120
203
7.1% p.y.
1109
3,907
128
4.9% p.y. 9.4% p.y. 176
2,723 623
2,400 2,525
2,301 93
2,217 2,297 97
2,020 110 100 146
2,037 101 141
1,810 94 96 124 384
85 163 142 126 316
22 277 273 321 3,950
35 161 168 274
252 251 265
2,980

1,971 2,100
1,684 1,778 1,792 1,855
1,500 1,540 1,493
1,183
152
2002 2003 2004 2005 2006 2007 2008 2009 2010 2014 2020
1.183
Oil Production - Brazil Gas Production - Brazil Oil Production - International Gas Production - International
152

The targets presented take into account only actual projects in the portfolio and do not consider
potential production from the Transfer of Rights (Cessao Onerosa), nor any production from the
new pre-salt regulatory framework.

2
The Exploration and Production (E&P) segment will invest $118.8 billion, 14% more than had been
budgeted in the 2009-2013 BP. The funds will be used to ensure the discovery and appropriation
of reserves, to maximize oil and gas recovery in concessions already in production, to develop
production in the Santos Basin pre-salt region, and to intensify exploratory efforts in the pre-salt
areas as well as new frontiers, both in Brazil and abroad.

The increased production will be sustained by the development of post-salt areas with the
installation of major projects in the Company's areas of operation. Additionally, new units will be
installed in pre-salt areas already under concession, although the pre-salt is expected to contribute
more to the production curve in the post-2014 period. On average, some three production systems
are planned for installation each year, as well as three extended well tests per year in the pre-salt
areas.
Pre-Salt Post-Salt
US$ 30.9 Billion US$ 77.3 Billion
3%
14% 15% 18%
0.8
11.5
4.3 13.7

25.8
52.1

83% 67%

Exploration Production Development Infrastructure

In addition to the investments in infrastructure that are required to grow production, the Company is
also preparing for access to the critical resources that are needed to implement this Plan. In this
context, it expects to have the largest availability of drilling rigs for deep-water among any other oil
company, with a total of 26 rigs by2014 and 53 by 2020 and 504 support vessels by 2020 (254 in
2009).

Projected investments in Refining, Transportation, and Marketing are budgeted for $73.6 billion.
The strategy of expanding refining capacity has been maintained, seeking to balance Petrobras’
increasing oil production and growing product demand in Brazil with greater refining capacity. In
addition the refining park is being upgraded to meet the product quality levels required by Brazil’s
regulatory framework.
3%1%
6%
Additional Capacity

11% Quality and Conversion

Operational Support

50%
Fleet Expansion

Logistics

29%
International

The Plan foresees, in addition to the expansion of existing units, the start-up of the Abreu e Lima
Refinery (Pernambuco - RNEST), the first Phase of Premium I, and of the first phase of the Rio de
Janeiro Petrochemical Complex - COMPERJ, which was redefined in its initial phase to be a
refinery with capacity to process 165,000 barrels of oil per day (bpd) into diesel fuel. With these
investments, the feedstock processed in Brazil is expected to reach 2,3 million bpd in 2014.

3
For the post-2014 period, the second stage of the Comperj, with capacity to process 165,000 bpd
into base petrochemicals, and the Premium II Refineries, will contribute to achieving the target of
3.2 million barrels of feedstock processed in 2020. Thus, the Company will be prepared for the
increasing demand for derivatives in the domestic market, projected to reach 2.4 million bpd in
2014 and 2.8 million bpd by 2020.

3,196
Thousand bpd PREMIUM I
Clara (2ª fase)
RNE PREMIUM I
3000 Camarão 300 thous. bpd
230 thous. bpd (1ª phase)
2010 (2013) 300 thou. bpd (2014) 2,804
(2014)
PREMIUM II
REPLAN (2ª phase)
Revamp
U200+PAM COMPERJ 2,356 2,260
300 thous. bpd
(2016)
33 thous. bpd (1º phase)
(2010) 165 thous. bpd 1159
(2013)
2000 1,933 COMPERJ
(2º phase)
1,831 165 thous. bpd
1016 (2018)

826

1000 1190
937
769

... 403
... 455
338
0

2009 2010 2014 2020

Gasoline Diesel Others Refining Capacity

• Comperj is now a new refinery

• Even with the increase in refining capacity, in 2014 we will be exporting 966 thousand bpd

The investments in Petrochemicals are budgeted for $5.1 billion and will focus on the production of
petrochemicals and biopolymers, preferentially via equity investments with partners, focused on
Brazil, in a manner that is integrated with other Company operations.

The Distribution business will receive investments of $2.5 billion, aiming to ensure the leadership in
domestic distribution with a market share of 40%, as well as continue its operations in product
distribution abroad.

Now in the final years of a phase to construct a natural gas transportation infrastructure, to the Gas
& Power segment will invest $17.8 billion. These investments will be directed to consolidating
Petrobras' leadership in the Brazilian natural gas market, and ensuring marketing in the
thermoelectric and non-thermoelectric markets.

Installed Capacity of Electrical Energy Generation (MW)

7,227 +9% 7,892

365
137

5,997 6,437

1,093 1,090 Natural Gas Demand 130*

Million m3/day

% 32
2010 2014 174
Renewables Sources Thermoelectrical and Co-generation International 4
46
41

21
11
53
24
5
2009 2014
Electrical Generation Industrial Fertilizers Other uses

* 2014 – Thermoelectrical generation refers to full and simultaneous dispatch of UTEs

4
In addition, three new fertilizer plants to produce nitrogenates (ammonia and urea) will be built to
increase the flexibility within the natural gas chain and the generation of electricity as well as add
synergy with other activities of Petrobras.

Fertilizers Production UFN III (set/14)

Ammonia:
UFN IV
(dec/15)
81th. ton/year
Urea 763 th.
Urea 1.210 th.
ton/year
ton/year

2,911
Ammonia Plant
(Dec/14) 2,104
519 th.
ton/year
+160%

1,374
Th. ton/year

1,118 1,076
844

807

274 298

2010 2014 2015

Ammonia Urea

Despite the increase in investments targeted to the domestic market, $11.5 billion have been
earmarked for the international area, with a focus on developing exploration and production in the
Gulf of Mexico (Cascade, Chinook, Saint Malo, and Tiber), the West Coast of Africa (Nigeria), and
in Peru.

DISTRIBUTION
CORPORATE
221 
123 
2%
G&E 1%
186  RTCP
2% 615 
5%

E&P
10,330 
90%

The Biofuels segment will invest $3.5 billion to operate in biofuels production, logistics, and trade,
and to participate in the value chain in Brazil and abroad. The strategy in this segment has been
redirected to the acquisition of equity stakes in order for the Company to more quickly become an
important market participant, and thus ensuring the technological know-how necessary for the
sustainable production of biofuels.

Biofuels’ Production
Ethanol Production Ethanol Exports Capacity in Brazil
2,600 5,524 747
3 %
Thous. m³/ year

+19 +4 5
% +47
%
Thous. m³/year
Thous. m³/year

3,803 507

886

2010 2014 2010 2014 2010 2014

5
The Plan considers operating cash flow generation based on an average oil price of $80 for the
period, below the average of projections from a range of consultants and official energy agencies.

The target of average financial leverage of 25-35% is unchanged. A public offering of shares is
expected to maintain the capital structure and indicators sound. |n addition to an equity offering;
Petrobras will continue to seek debt funding from a variety of sources of funds in Brazil and
abroad.

INDEX 2010-2014 Plan 2009-2013 Plan

FX Rate (R$/US$) 1.78 2.00
2010 – 76 2009 – 58
2011 – 78 2010 – 61
Brent for Funding (US$/bbl) 2012– 82 2011 – 72
2013 – 82 2012 – 74
2014 – 82 2013 – 68

Projected Investments (US$ bn) 224 174

Projected Net Cash Flow (After dividends) 155 149

(US$ bn)

Net Total Capt. (US$ bn) 58* 23

Leverage Up to 35% Up to 35%

Average Realization Price (R$ barrel) 163 160

* Including Capitalization
1
The expected Internal Return Rate (IRR) of the Company´s portfolio is approximately 14% per
year, considering the assumptions of the Business Plan.

PROJECTED Operating Cash Flow US$ 155.2 Billion

(2010 – 2014)

Net Debt +
Capitalization

Investments
(US$ 224 billion)
OCF
(after dividends)

Sources Uses

Under the Plan, the Company has earmarked investments to overcome technological, operational
safety, and human resource challenges. The Health, Safety, and Environment (HSE), Technology,
Information & Communications (TCI), and Research & Development (R&D) areas will invest $11.4
billion in resources during the period.

6
In the Technology area, the business plan was based on three key challenges: Expanding the
Limits, Adding value and Product diversification, and Sustainability.

In the Engineering area, the challenges will be overcome by reducing project complexity, using
standardized solutions, and employing international metrics in our industrial facility designs to
ensure our industrial competitiveness. The domestic content will help consolidate Brazil as a good
and service supplier hub.

The Brazilian content is expected to represent approximately $ 28.4 billion per year of
Petrobras´capex and will help to create a supply hub in Brazil.

Domestic Purchased in the Brazilian

Business Segment Investment Domestic Market Content
2010-14 2010-14 (%)
E&P 108.2 57.8 53%
Downstream 78.6 62.8 80%
G&E 17.6 14.4 82%
Distribution 2.3 2.3 100%
Corporate Areas 2.3 2.3 100%
E&P 3.3 2.6 80%
Total 212.3 142.2 67%

The challenge for the Human Resource area will be ensuring excellence in people management
and finding talent, providing adequate training and education, and strengthening the Company's
culture and identity.

The 2010-2014 Business Plan requires the acquisition and management of critical resources.
Skilled labor, a strengthened supply chain, and financing capacity will all be required if Petrobras is
to bring to successful completion the large number of projects within the Plan. The company is
continuously working to overcome these challenges.

Social and environmental responsibility is a pillar of the corporate strategy of Petrobras, alongside
profitability and growth, and it guides our relations with all our stakeholders. The company acts on
the basis of the ten principles of the Global Compact of the United Nations, of which it has been a
signatory since 2003.

Our objective in Health, Safety, and Environment is to accompany the substantial growth and
diversification of the businesses of the company in the coming years, to continually improved the
safety conditions of our operations, and to minimize the impact of our operating activities and of
our products on the environment, reducing the consumption of natural resources and effects of
pollution.

This announcement is for informational purposes only and does not constitute an offer, invitation to
or request for an offer for underwriting or purchasing any securities in Brazil or in any other
jurisdiction and, therefore, should not be used as the basis for any investment decision.

Almir Guilherme Barbassa

CFO and Investor Relations Director