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<P align="center"><FONT size="3"><B>SECURITIES AND EXCHANGE COMMISSION</B>
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<DIV align="center"><FONT size="2"><B>WASHINGTON, D.C. 20549</B>
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<P align="center"><FONT size="4"><B>FORM 20-F</B>
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<P align="center"><FONT size="2"><B>ANNUAL REPORT</B>
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<P align="center"><FONT size="2"><B>PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES<BR>
EXCHANGE ACT OF 1934<BR>
for the fiscal year ended December&nbsp;31, 2002</B>
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<P align="center"><FONT size="2">Commission File Number: 333-14168
</FONT>


<P align="center"><FONT size="6"><B>Petrobras International Finance Company</B>
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<DIV align="center"><FONT size="2">(Exact name of registrant as specified in its charter)
</FONT></DIV>


<P align="center"><FONT size="2"><B>Cayman Islands</B><BR>
(Jurisdiction of incorporation or organization)
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<P align="center"><FONT size="2"><B>Anderson Square Building<BR>
P.O. Box 714<BR>
George Town, Grand Cayman<BR>
Cayman Islands</B><BR>
(Address of principal executive offices)
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<P align="center"><FONT size="2"><B>Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act: None</B>
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<P align="center"><FONT size="2"><B>Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act: None</B>
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<P align="center"><FONT size="2"><B>Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act:</B>
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<P align="center"><FONT size="2"><B>Title of each class:</B><BR>
U.S.$500,000,000 9.125% Senior Notes due 2007<BR>
U.S.$450,000,000 9.875% Senior Notes due 2008<BR>
U.S.$600,000,000 9.750% Senior Notes due 2011<BR>
U.S.$400,000,000 9.00% Global Step-Up Notes due 2008
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<P align="center"><FONT size="2"><B>Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common stock<BR>
as of the close of the period covered by this Annual Report:</B><BR>
At December&nbsp;31, 2002, there were outstanding:<BR>
50,000 common shares of Petrobras International Finance Company
</FONT>

<P align="left"><FONT size="2"><B>Indicate by check mark whether the registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or for such shorter period that the
registrant was required to file such reports), and (2)&nbsp;has been subject to such
filing requirements for the past 90&nbsp;days.</B>
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<P align="center"><FONT size="2"><B>Yes <FONT face="Wingdings">&#120;</FONT> No <FONT face="Wingdings">&#111;</FONT></B>
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<P align="center"><FONT size="2"><B>Indicate by check mark which financial statement item the registrant has elected to follow.</B>
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<P align="center"><FONT size="2"><B>Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT> Item&nbsp;18 <FONT face="Wingdings">&#120;</FONT></B>
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<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

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<TR><TD colspan="9"><A HREF="#000">INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">FORWARD LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">PRESENTATION OF FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item&nbsp;1. Identity of Directors, Senior Management, and Advisers.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Item&nbsp;2. Offer Statistics and Expected Timetable</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Item&nbsp;3. Key Information.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item&nbsp;4. Information on the Company.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item&nbsp;5. Operating and Financial Review and Prospects.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item&nbsp;6. Directors, Senior Management and Employees.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item&nbsp;7. Major Shareholders and Related Party Transactions.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item&nbsp;8. Financial Information.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">Item&nbsp;9. The Offer and Listing.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">Item&nbsp;10. Additional Information.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Item&nbsp;12. Description of Securities Other than Equity Securities.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Item&nbsp;15. Controls and Procedures.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">Item&nbsp;16. Reserved</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">Item&nbsp;17. Financial Statements.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#020">Item&nbsp;18. Financial Statements.</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">SIGNATURE</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w15.txt">STANDBY PURCHASE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w18.txt">AMENDMENT TO THE MASTER EXPORT CONTRACT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w20.txt">LETTER AGREEMENT RE: THE DEPOSITARY AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w22.txt">LETTER AGREEMENT RE: ADMINISTRATIVE SERVICES AGMT.</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w25.txt">AMENDED/RESTATED RECEIVABLES PURCHASE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w26.txt">PREPAYMENT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv2w27.txt">AMENDED AND RESTATED PREPAYMENT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87531exv10w1.htm">906 CERTIFICATIONS: CEO AND CFO</A></TD></TR>
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    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Incorporation of Certain Documents By Reference</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forward Looking Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
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    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Presentation of Financial Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;1. Identity of Directors, Senior Management, and Advisers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;2. Offer Statistics and Expected Timetable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;3. Key Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;4. Information on the Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;5. Operating and Financial Review and Prospects</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;6. Directors, Senior Management and Employees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;7. Major Shareholders and Related Party Transactions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;8. Financial Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;9. The Offer and Listing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;10. Additional Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;12. Description of Securities Other than Equity Securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;13. Defaults; Dividend Arrearages and Delinquencies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;15. Controls and Procedures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;16. Reserved</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;17. Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;18. Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Item&nbsp;19. Exhibits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<P align="center"><FONT size="2">i</FONT>

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<!-- link1 "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center"><FONT size="2"><B>INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The annual report on Form&nbsp;20-F of Petr&#243;leo Brasileiro S.A.&#151;PETROBRAS
(&#147;Petrobras&#148;) for the year ended December&nbsp;31, 2002, as first filed with the
United States Securities and Exchange Commission (the &#147;SEC&#148;) (Commission file
No.&nbsp;1-15106) on June&nbsp;19, 2003, is incorporated herein by reference.
</FONT>

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<DIV align="left"><A NAME="001"></A></DIV>

<P align="center"><FONT size="2"><B>FORWARD LOOKING STATEMENTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many statements made in this annual report under the captions &#147;Item&nbsp;3.
Risk Factors,&#148; &#147;Item&nbsp;4. History and Development of the Company&#151;Business
Overview&#148; relating to the operation and performance of Petrobras International
Finance Company, or PIFCo, and Petrobras and under the caption &#147;Item&nbsp;5.
Operating and Financial Review and Prospects&#148; and elsewhere are forward-looking
statements within the meaning of Section&nbsp;27A of the Securities Act of 1933, as
amended, and Section&nbsp;21E of the Securities Exchange Act of 1934, as amended,
that are not based on historical facts and are not assurances of future
results. Many of the forward-looking statements contained in this annual
report may be identified by the use of forward-looking words, such as
&#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;should,&#148; &#147;planned,&#148; &#147;estimate&#148; and
&#147;potential,&#148; among others. These forward-looking statements are subject to
certain risks and uncertainties, including, but not limited to, our ability to
obtain financing, changes in Petrobras&#146; use of our services for market
purchases of crude oil and oil products, changes in Brazilian foreign exchange
control regulations and changes in other applicable government regulations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All forward-looking statements attributed to us or a person acting on our
behalf are expressly qualified in their entirety by this cautionary statement,
and you should not place reliance on any forward-looking statement contained in
this annual report.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The annual report on Form&nbsp;20-F of Petrobras for the fiscal year ended
December&nbsp;31, 2002, incorporated herein by reference, also contains
forward-looking statements. For a discussion of the factors affecting the
forward-looking statements contained therein, see &#147;Forward-Looking Statements&#148;
on page 1 thereof.
</FONT>

<!-- link1 "PRESENTATION OF FINANCIAL INFORMATION" -->
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<P align="center"><FONT size="2"><B>PRESENTATION OF FINANCIAL INFORMATION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report, references to &#147;Real,&#148; &#147;Reais&#148; or &#147;R$&#148; are to
Brazilian Reais and references to &#147;U.S. dollars&#148; or &#147;U.S.$&#148; are to United
States dollars.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our functional currency is the U.S. dollar. Substantially all of our
sales are made in U.S. dollars and all of our debt is denominated in U.S.
dollars. Accordingly, our audited consolidated financial statements as of
December&nbsp;31, 2002 and 2001, and for each of the three years in the period ended
December&nbsp;31, 2002, and the accompanying notes contained in this annual report
have been presented in U.S. dollars and prepared in accordance with U.S.
generally accepted accounting principles (&#147;U.S. GAAP&#148;) and include our three
wholly-owned subsidiaries, since their incorporation: Petrobras Netherlands
B.V. (which we transferred to Petrobras in January 2003), Petrobras Europe Ltd.
and Petrobras Finance Limited. See Item&nbsp;5. &#147;Operating and Financial Review and
Prospects&#148; and Note 2(a) to our audited consolidated financial statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain figures included in this annual report have been subject to
rounding adjustments; accordingly, figures shown as totals in certain tables
may not be an arithmetic aggregation of the figures that precede them.
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>

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<DIV align="left"><A NAME="003"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;1. Identity of Directors, Senior Management, and Advisers.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>

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<DIV align="left"><A NAME="004"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;2. Offer Statistics and Expected Timetable</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>

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<DIV align="left"><A NAME="005"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;3. Key Information.</B>
</FONT>


<P align="center"><FONT size="2"><B>SELECTED FINANCIAL DATA</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table of selected financial data is presented in U.S.
dollars and prepared in accordance with U.S. GAAP. The data for each of the
five years in the period ended December&nbsp;31, 2002 have been derived from our
audited consolidated financial statements, which were audited by
PricewaterhouseCoopers Auditores Independentes. Petrobras is required by
Brazilian Corporate Law to change auditors every five years. Beginning in June
2003 and through 2005, Ernst &#038; Young Auditores Independentes S/C will serve as
Petrobras&#146; and our independent auditors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information below should be read in conjunction with, and is qualified
in its entirety by reference to, our financial information set forth below
under &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148; and in our audited
consolidated financial statements, and the accompanying notes appearing
elsewhere in this annual report.
</FONT>

<P align="center"><FONT size="2">2</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>For the Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Income Statement Data:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sales of crude oil, oil products and services</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,390.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,260.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,937.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,728.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,873.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lease income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,426.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,271.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,937.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,728.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,873.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,371.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,253.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,912.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,723.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,873.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lease expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">General and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,396.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,263.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,912.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,723.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,873.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial
income<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">219.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">221.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial
expense<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(314.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(187.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(219.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(142.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(62.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on materials and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(65.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(20.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">26.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">20.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Balance Sheet Data (end of period):</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">260.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">48.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">51.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">49.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">16.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,697.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,277.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,244.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,900.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,729.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans payable to related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,688.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,716.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,628.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">570.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt and current portion of
long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">367.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">990.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">530.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">741.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">905.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term capital lease</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="right"><FONT size="2">68.9</FONT></TD>
     <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,248.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,335.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">245.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term capital lease</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">601.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholder&#146;s equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Financial income represents primarily the profits realized from our sales
of crude oil and oil products to Petrobras. Financial expense consists
primarily of costs incurred by us in financing our activities in
connection with the importation by Petrobras of crude oil and oil
products.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2"><B>RISK FACTORS</B>
</FONT>


<P align="left"><FONT size="2"><B>Risks Relating to Our Company</B>
</FONT>

<P align="left"><FONT size="2"><B><I>We may not earn enough money from our own operations to meet our debt obligations.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a direct wholly-owned subsidiary of Petrobras incorporated in the
Cayman Islands as an exempted company with limited liability. Accordingly, our
financial position and results of operations are largely affected by decisions
of our parent company. We have limited operations consisting principally of
the purchase of crude oil and oil products from third parties and the resale of
those products to Petrobras, with financing for such operations provided by
Petrobras as well as third-party credit providers. We also resell crude oil and
oil products to third parties on a limited basis. Our ability to pay interest,
principal and other amounts due on our outstanding and future debt obligations
will depend upon a number of factors, including:
</FONT>

<P align="center"><FONT size="2">3</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the extent to which Petrobras continues to use our services
for market purchases of crude oil and oil products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras&#146; willingness to continue to make inter-company
loans to us and provide us with other financial support;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our ability to access financing sources, including third-party credit facilities; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our ability to transfer our financing costs to Petrobras.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a material adverse change in Petrobras&#146; financial
condition or results of operations or in Petrobras&#146; financial support of us, we
may not have sufficient funds to repay all amounts due on our indebtedness. See
&#147;Risks Relating to Petrobras&#148; for a more detailed description of certain risks
that may have a material adverse impact on Petrobras&#146; financial condition or
results of operations and therefore affect our ability to meet our debt
obligations.
</FONT>

<P align="left"><FONT size="2"><B><I>If Brazilian law restricts Petrobras from paying us in U.S. dollars, we may
have insufficient U.S. dollar funds to make payments on our debt obligations.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We obtain substantially all of our funds from Petrobras&#146; payments in U.S.
dollars for crude oil that it purchases from us. In order to remit U.S. dollars
to us, Petrobras must comply with Brazilian foreign exchange control
regulations, including preparing specified documentation to be able to obtain
U.S. dollar funds for payment to us. If Brazilian law were to impose additional
restrictions, limitations or prohibitions on Petrobras&#146; ability to convert
Reais into U.S. dollars, it could restrict the source of U.S. dollar funds
available for us to make payment on our debt obligations. Such restrictions
could also have a material adverse effect on the Brazilian economy or
Petrobras&#146; business, financial condition and results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>We may be limited in our ability to pass on our financing costs.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are principally engaged in the purchase of crude oil and oil products
for resale to Petrobras, as described above. At any time, we may incur
indebtedness related to such purchases and/or obtain financing from Petrobras
or third-party credit providers. As of December&nbsp;31, 2002, approximately 45% of
our indebtedness not having the benefit of Petrobras&#146; standby purchase
obligation or other support was floating-rate debt denominated in U.S. dollars.
Petrobras is in the process of changing its risk management processes,
including those which may affect us, but neither Petrobras nor we have yet
entered into derivative contracts or made other arrangements to hedge against
interest rate risk. We have historically passed on our financing costs to
Petrobras by selling crude oil and oil products to Petrobras at a premium to
compensate for our financing costs. Although we and Petrobras are considering
methods of continuing this practice in the future, we cannot assure you that
this practice will continue. Our inability to transfer our financing costs to
Petrobras could have a material adverse effect on our business and on our
ability to meet our debt obligations.
</FONT>


<P align="left"><FONT size="2"><B>Risks Relating to Petrobras&#146; Operations</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; operations are affected by the volatility of prices for crude oil
and oil products</I></B><I>.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until January&nbsp;2, 2002, the prices Petrobras was allowed to charge for
crude oil and oil products (and, as a result, its recorded prices for the
calculation of net operating revenues) were determined on the basis of a
pricing formula established by the Brazilian government designed to reflect
changes in the Real/U.S. Dollar exchange rate and international market prices
for relevant benchmark products.
</FONT>

<P align="center"><FONT size="2">4</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, as of January&nbsp;2, 2002, the crude oil and oil products markets in
Brazil were deregulated in their entirety.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, international prices for crude oil and oil products have
fluctuated widely as a result of many factors. Petrobras does not, and will
not, have control over the factors affecting international prices for crude oil
and oil products. These factors include:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">global and regional economic and political developments in
crude oil producing regions, particularly in the Middle East;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the ability of OPEC and other crude oil producing nations to
set and maintain crude oil production levels and prices;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other actions taken by major crude oil producing or consuming countries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">global and regional supply and demand for crude oil and oil products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">competition from other energy sources;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">domestic and foreign government regulations;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">weather conditions; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">military action, such as the recent U.S. military action in Iraq.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in crude oil prices typically result in changes to prices for oil
products. Lower crude oil prices have various effects on Petrobras, including
decreasing its net operating revenues, net income and cash flows. In
comparison, higher crude oil prices generally lead to increases in Petrobras&#146;
net operating revenues, net income and cash flows.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras expects continued volatility and uncertainty in international
prices for crude oil and oil products. Declines in international crude oil
prices may adversely affect Petrobras&#146; business, results of operations and
financial condition and the value of its proved reserves.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices remain regulated for natural gas, electricity and certain
petrochemicals. These controls could have an adverse effect on revenues from
these business activities.
</FONT>

<P align="left"><FONT size="2"><B><I>Because of changes in government regulations, Petrobras faces increased
competition and may lose market share.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantial changes have been occurring in the oil and gas industry in
Brazil as a result of the continuing process of deregulation by the Brazilian
government. As part of this deregulation, the Brazilian government eliminated
all price controls on crude oil and oil products in early 2002. Prices remain
regulated, however, for natural gas, electricity and certain petrochemicals.
The changes in government regulation have enabled multi-national and regional
oil companies to enter the Brazilian energy market. Petrobras expects that
competition in its downstream and upstream activities will increase further, as
existing and new participants expand their activities as a result of these
regulatory changes.
</FONT>

<P align="center"><FONT size="2">5</FONT>

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<P align="left"><FONT size="2"><B><I>Although Petrobras&#146; prices for crude oil and oil products are based on
international prices, in periods of high international prices or sharp
devaluations of the Real, Petrobras may not be able to adjust its prices in
Reais sufficiently to maintain parity with international prices.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the Brazilian government&#146;s elimination of all price controls on
crude oil and oil products in January 2002, there have been periods of high
international prices or sharp devaluations of the Real when Petrobras has been
unable to increase prices in Reais sufficiently to maintain parity with
international prices. While Petrobras does not have an obligation to supply
the Brazilian market, during periods when the local prices of crude oil and oil
products were below prevailing international prices, Petrobras&#146; competitors
were unwilling to supply the local market. In order to ensure adequate supply
of crude oil and oil products in Brazil, Petrobras sold crude oil and oil
products below prevailing international prices.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of deregulation of the Brazilian market, and the elimination
of import tariffs in particular, Petrobras&#146; competitors can sell products in
the Brazilian market at parity with international prices. In light of this
increased competition, Petrobras has less flexibility to maintain local prices
above international prices to compensate for revenues not realized in periods
in which it sold crude oil and oil products below prevailing international
market prices.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras may be required to sell some of its refining capacity in Brazil.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras presently owns 98.6% of the existing refining capacity in
Brazil. Petrobras plans to upgrade its present refineries and it may build new
refineries in Brazil, sell participation interests in its present refineries to
new partners or engage in asset swaps, as it did through its business
combination in 2001 involving assets of Repsol-YPF S.A. Although Petrobras is
not presently subject to any requirement to divest any assets, and the
Brazilian government has not made any proposal in that respect, it is possible
that Petrobras will be required to divest a portion of its refining capacity or
other assets in the future. Any such divestiture could have a material adverse
effect on Petrobras&#146; financial condition and results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; ability to achieve growth is dependent upon its finding or acquiring
additional reserves, as well as successfully developing current reserves, and
risks associated with drilling may cause drilling operations to be delayed or
cancelled.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras&#146; ability to achieve its growth objectives is highly dependent
upon its level of success in finding, acquiring or gaining access to additional
reserves, as well as successfully developing current reserves. In general, the
volume of production from crude oil and natural gas properties declines as
reserves are depleted, with the rate of decline depending on reservoir
characteristics. Unless Petrobras conducts successful exploration and
development activities or acquires properties containing proved reserves, or
both, its proved reserves will decline as reserves are extracted.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras&#146; exploration and development activities expose it to the
inherent risks of drilling, including the risk that no economically productive
crude oil or natural gas reserves will be discovered. The costs of drilling,
completing and operating wells are often uncertain and numerous factors beyond
Petrobras&#146; control may cause drilling operations to be curtailed, delayed or
cancelled. Petrobras&#146; future drilling, exploration and acquisition activities
may not be successful and, if unsuccessful, could harm its future results of
operations and financial condition.
</FONT>

<P align="center"><FONT size="2">6</FONT>

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<P align="left"><FONT size="2"><B><I>Petrobras&#146; crude oil and natural gas reserve estimates involve some degree of
uncertainty and may prove to be incorrect over time.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The proved crude oil and natural gas reserves set forth in Petrobras&#146;
annual report are its estimated quantities of crude oil, natural gas and
natural gas liquids that geological and engineering data demonstrate with
reasonable certainty to be recoverable from known reservoirs under existing
economic and operating conditions (i.e. prices and costs as of the date the
estimate is made). Petrobras&#146; proved developed crude oil and natural gas
reserves are reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods. There are numerous
uncertainties inherent in estimating quantities of proved reserves. The
reliability of proved reserve estimates depends on:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the quality and quantity of Petrobras&#146; geological, technical
and economic data;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the prevailing crude oil and natural gas prices applicable to
Petrobras&#146; production (which in the past have been subject to
Brazilian government regulation);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the production performance of Petrobras&#146; reservoirs; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">extensive engineering judgments.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of the factors, assumptions and variables involved in estimating
reserves are beyond Petrobras&#146; control and may prove to be incorrect. The
results of Petrobras&#146; future drilling, testing and production activity may lead
it to make significant revisions to its reserve estimates.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; equipment, facilities and operations are subject to numerous
environmental and health regulations which may become more stringent in the
future and may result in increased liabilities and increased capital
expenditures.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras&#146; facilities are subject to a wide variety of federal, state and
local laws, regulations and permit requirements relating to the protection of
human health and the environment. Petrobras could be exposed to civil
penalties, criminal sanctions and closure orders for non-compliance with these
environmental regulations, which, among other things, limit or prohibit
emissions or spills of toxic substances produced in connection with its
operations. Current and past waste disposal and emissions practices may
require Petrobras to clean up or retrofit its facilities at substantial cost
and could result in substantial liabilities. The <I>Instituto Brasileiro do Meio
Ambiente dos Recursos Naturais Renov&#225;veis </I>(Brazilian Institute of the
Environment and Renewable Natural Resources), or IBAMA, has been investigating
Petrobras&#146; oil platforms in the Campos Basin, and may impose fines,
restrictions on operations or other sanctions in connection with its
investigations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras spent approximately U.S.$466&nbsp;million in 2002, U.S.$473&nbsp;million
in 2001 and U.S.$356&nbsp;million in 2000 to comply with environmental laws.
However, since environmental laws are becoming more stringent in Brazil and in
other jurisdictions where it operates, it is likely that Petrobras&#146;
environmental capital expenditures and costs for environmental compliance will
increase, perhaps substantially, in the future. In addition, due to the
possibility of unanticipated regulatory or other developments, the amount and
timing of future environmental expenditures may vary widely from those
currently anticipated. The amount of investments Petrobras makes in any given
year is subject to limitations by the Brazilian government. Accordingly,
expenditures required for compliance with environmental regulation could result
in reductions in other strategic investments that Petrobras has planned, with a
resulting decrease to its profits, and future environmental costs may harm
Petrobras&#146; results of operations or financial condition.
</FONT>

<P align="center"><FONT size="2">7</FONT>

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<P align="left"><FONT size="2"><B><I>In the past, significant oil spills have occurred and Petrobras has incurred,
and may continue to incur, liabilities in connection with oil spills, including
clean up costs, government fines, and potential lawsuits.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, oil spills occur in connection with Petrobras&#146;
operations. Since January&nbsp;1, 2000, Petrobras has experienced 11 significant
oil spills. In each of these, it undertook cleanup efforts as promptly as
possible. Nevertheless, in some situations, Petrobras was fined by various
state and federal environmental agencies, became the defendant in several civil
and criminal suits, and remains subject to several investigations and potential
civil and criminal liabilities as a result of past oil spills. These or any
future oil spills may have a material adverse effect on Petrobras&#146; financial
condition or results of operations. Accordingly, if one or more of the
potential liabilities resulting from these oil spills were to result in an
actual fine or civil or criminal liability, Petrobras&#146; operations and financial
condition could be negatively affected.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras may incur losses and spend time and money defending pending
litigation and arbitration.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras is currently a party to numerous legal proceedings relating to
civil, administrative, environmental, labor and tax claims filed against it.
It is also pursuing discussions with various government authorities and with
Repsol-YPF over its licenses, including its right to operate certain platforms,
in connection with the 2001 Repsol-YPF asset swap. These claims involve a wide
range of issues and seek substantial amounts of money and other remedies.
Several individual disputes account for a significant part of the total amount
of claims against Petrobras. Petrobras&#146; audited financial statements as of
December&nbsp;31, 2002 include reserves totaling U.S.$50&nbsp;million as of that date,
for probable and reasonably estimable losses and expenses it may incur in
connection with all of its pending litigation and a separate provision of
U.S.$105&nbsp;million related to various tax assessments received from the <I>Instituto
Nacional de Seguridade Social </I>(National Security Institute, or INSS).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a number of the claims that Petrobras considers to
represent remote or reasonably possible risks of loss were to be decided
against it, or in the event that the losses estimated turn out to be higher
than the reserves made, the aggregate cost of unfavorable decisions could have
a material adverse effect on Petrobras&#146; financial condition and results of
operations. Additionally, Petrobras&#146; management may be required to direct its
time and attention to defending these claims, which could preclude them from
focusing on its core business. Depending on the outcome, certain litigation,
including matters involving its platforms and asset swaps, could result in
restrictions on Petrobras&#146; operations and have a material adverse effect on
certain of its businesses.
</FONT>

<P align="left"><FONT size="2"><B><I>Proposed legislative changes to the ICMS tax imposed by the State of Rio de
Janeiro may have a material adverse effect on Petrobras&#146; results of operation and
financial condition.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The governor of the State of Rio de Janeiro is considering signing a bill
into law that would increase the amount of <I>Imposto sobre Circula&#231;&#227;o de
Mercadorias e Servi&#231;os </I>(state value-added tax, or ICMS) that
Petrobras is required to
pay by approximately R$5.4&nbsp;billion (U.S.$1.9&nbsp;billion) per year. The proposed
new law would change the point of collection of part of the ICMS from the
refinery level to the wellhead level of production in the State of Rio de
Janeiro. If it becomes effective, Petrobras may be unable to utilize part of the
taxes imposed at the wellhead level in Rio de Janeiro to offset taxes that are
imposed at the refinery level in other states, and therefore would be paying
taxes on the same oil products at both the production and refining level.
Petrobras believes that the proposed new law would be an unconstitutional form of
taxation, and intends to challenge the law if it becomes effective. If the law
becomes effective, it would significantly increase the amount of taxes
Petrobras pays, and such increase could have a material adverse
effect on Petrobras&#146; level of
investments and, therefore, on Petrobras&#146; results of operation and financial
condition.
</FONT>

<P align="center"><FONT size="2">8</FONT>

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<P align="left"><FONT size="2"><B><I>Labor disputes, strikes, work stoppages and protests could lead to increased
operating costs.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of Petrobras&#146; employees, other than its maritime employees, are
subject to a collective bargaining agreement with the Oil Workers&#146; Unified
Federation, which was signed on December&nbsp;4, 2002, retroactive to September&nbsp;1,
2002. This collective bargaining agreement will expire on October&nbsp;31, 2003.
On December&nbsp;27, 2002, Petrobras signed a separate collective bargaining
agreement with the maritime employees&#146; union retroactive to November&nbsp;1, 2002,
which will expire on October&nbsp;31, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, Petrobras has been subject to strikes and work
stoppages. In 2001, its oil workers began a five-day strike. While this
strike was settled, it did result in a decrease in crude oil production. If
Petrobras&#146; workers were to strike, the resulting work stoppages could have an
adverse effect on Petrobras, as it does not carry insurance for losses incurred
as a result of business interruptions of any nature, including business
interruptions caused by labor action. As a result, Petrobras&#146; financial
condition and results of operations could be adversely affected by future
strikes, work stoppages, protests or similar activities.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; expansion into the domestic power market is relatively recent and
has generated losses, and the regulatory environment remains uncertain.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent with the global trend of other major oil and gas companies and
to secure demand for its natural gas, Petrobras is currently expanding its
business into the domestic power market. Despite a number of incentives
introduced by the former Brazilian government to promote the development of
thermoelectric power plants, development of such plants by private investors
has been slow to progress. Petrobras currently invests in 16 of the 39
gas-fired power generation plants being built or proposed to be built in Brazil
under the program to promote the development of thermoelectric plants, known as
the <I>Programa Priorit&#225;rio de Termoelectricidade </I>(Thermoelectric Priority
Program, or PPT). Petrobras invests in some of these plants with partners,
many of whom may have power purchase agreements with the plants. Petrobras has
had contractual disputes in connection with these investments and other
disputes may occur. Depending on the outcome of any such disputes, they could
have an adverse economic impact on Petrobras, including on the profitability of
its investments.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras has a limited history of investing in thermoelectric plants, and
thermoelectric plants have not previously operated in a competitive environment
in Brazil. Thermoelectric plants have faced difficulties passing on to
electricity offtakers foreign currency financing costs of developing new
generating capacity, and have had to contend with the reluctance of many
distribution companies to sign power purchase agreements due mainly to their
existing initial contracts, which provide for a guaranteed price from 1998 to
2002, which is phased out over the following four years. In addition, demand
for thermoelectric power in Brazil has been lower than expected. In 2002,
Congress passed a law increasing government intervention in the market, and the
current administration is studying the implementation of changes that could be
material to the natural gas and power sector. It is not clear that
thermoelectric power generation will remain a priority for the country. In
addition, the energy policy of the new administration remains uncertain.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002, Petrobras experienced significant losses relating to its
investments in thermoelectric power generation. As a result, in 2002,
Petrobras created a U.S.$205&nbsp;million provision for losses related to its
commitments to off-take electricity from certain thermoelectric power plants.
Petrobras increased this provision in the first quarter of 2003 by a further
U.S.$205&nbsp;million. After deducting the losses incurred in the first quarter of
2003, which amounted to U.S.$111&nbsp;million, the balance of the provision totaled
U.S.$316&nbsp;million as of March&nbsp;31, 2003. Petrobras has limited its investments
in this area, but its
</FONT>
<P align="center"><FONT size="2">9</FONT>

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<P align="left"><FONT size="2"> participation in the domestic power market may never become profitable.
As a result, Petrobras&#146; participation in this market may adversely affect its
operating results and financial condition.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras is in the process of implementing a new Strategic Plan, which may
have a material adverse effect on its competitive position or ability to expand
its operations.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;17, 2003, Petrobras announced the adoption of revisions to its
Strategic Plan for the period 2003-2007. The new Strategic Plan maintains
Petrobras&#146; core strategies and objectives, but reduces its overall budgeted
capital expenditures for the year 2003. The revisions for 2003 reflect an
environment of decreased access to financial markets and increased volatility
in foreign exchange rates and crude oil prices. The changes to Petrobras&#146;
Strategic Plan, particularly the decrease in overall budgeted capital
expenditures, could affect Petrobras&#146; ability to achieve certain of its
strategic goals, and in particular, could negatively impact its competitive
position or ability to expand its operations.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras may not be able to obtain financing for all of its planned
investments.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian government maintains control over Petrobras&#146; budget and
establishes limits on its investments and long-term debt. As a
state-controlled entity, Petrobras must submit its proposed annual budgets to
the Ministry of Planning, Budget and Management, the Ministry of Mines and
Energy and the Brazilian Congress for approval. Petrobras is endeavoring to
obtain financing that does not require Brazilian government approval, such as
structured financings, but there can be no assurance that it will succeed. As
a result, Petrobras may not be free to make all the investments it envisions,
including those it has agreed to make to expand and develop its crude oil and
natural gas fields. If Petrobras is unable to make these investments, its
future operating results and financial condition may be adversely affected. In
addition, failure to make its planned investments in Brazil could hurt its
competitive position in the Brazilian oil and gas sector, particularly as other
companies enter the market.
</FONT>

<P align="left"><FONT size="2"><B><I>Currency fluctuations could have a material adverse effect on Petrobras&#146;
financial condition and results of operations, because most of Petrobras&#146;
revenues are in Reais and a large portion of its liabilities are in foreign
currencies.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal market for Petrobras&#146; products is Brazil, and over the last
three fiscal years over 86% of Petrobras&#146; revenues have been denominated in
Reais. A substantial portion of Petrobras&#146; indebtedness and some of its
operating expenses and capital expenditures are, and are expected to continue
to be, denominated in or indexed to U.S. Dollars and other foreign currencies.
In addition, during the year ended December&nbsp;31, 2002, Petrobras imported
U.S.$5.2&nbsp;billion of crude oil and oil products, the prices of which were all
denominated in U.S. Dollars.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of downward pressure on the Real, on January&nbsp;15, 1999, the
Central Bank of Brazil allowed the Real to float freely. The Real depreciated
9.3% in 2000, 18.7% in 2001 and 52.3% in 2002 against the U.S. Dollar. As of
June&nbsp;13, 2003, the exchange rate of the Real to the U.S. Dollar was R$2.857 per
U.S.$1.00, representing an appreciation of approximately 24.0% in 2003
year-to-date. There is no assurance that this trend will continue, and the
Real may depreciate further in the future. Petrobras cannot predict the impact
on its operations of any future substantial devaluation of the Real, which
could adversely affect its operating cash flows and its ability to meet its
foreign currency-denominated obligations. You should consider this risk in
light of past devaluations of the Real caused by inflationary and other
pressures.
</FONT>

<P align="center"><FONT size="2">10</FONT>

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<P align="left"><FONT size="2"><B><I>Petrobras is exposed to increases in prevailing market interest rates.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, approximately 45% of Petrobras&#146; total
indebtedness consisted of floating rate debt. Although Petrobras is changing
its risk management practices, it has not yet entered into derivative contracts
or made other arrangements to hedge against interest rate risk. Accordingly,
if market interest rates (principally LIBOR) rise, Petrobras&#146; financing
expenses will increase.
</FONT>

<P align="left"><FONT size="2"><B><I>In the aftermath of the U.S. military action in Iraq there may be changes to
the international oil markets, some of which could have an adverse effect on
Petrobras.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the U.S. military action in Iraq, the United Nations eliminated
sanctions that had limited Iraq&#146;s ability to participate in the international
oil markets. As a result, it is expected that, in the future Iraq will
substantially increase its production and export sales of crude oil and oil
products. Given the uncertainty surrounding the circumstances under which
Iraq&#146;s oil industry will be managed over the next few years, it is impossible
to predict the economic or political goals which the United States government
or any other party controlling such industry will seek to achieve. The changes
to the international oil markets that could result from Iraq&#146;s re-entry into
such markets could have a material adverse effect on Petrobras&#146; financial
condition and results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; ability to obtain affordable insurance coverage may be adversely
affected by changes in the insurance markets, its recent history of claims
under its insurance policies and changes in the insurance markets following the
September&nbsp;11, 2001 terrorist attacks.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The insurance premiums charged for some or all of the coverage
historically maintained by Petrobras and its subsidiaries has increased
significantly in the past as a result of changes in the insurance markets and
claims under Petrobras&#146; insurance policies. Following the March&nbsp;15, 2001
explosion that sank Platform P-36, Petrobras&#146; insurance costs increased
substantially, from U.S.$36.0&nbsp;million in 2001 to U.S.$46.4&nbsp;million in 2002.
For 2003, these costs have decreased to U.S.$30.5&nbsp;million. Petrobras&#146;
insurance costs may increase, or coverage may be unavailable, in the future.
The premiums for war risk and terrorism insurance have also increased
substantially in the past, and in some cases, such insurance is not available.
Following the September&nbsp;11, 2001 terrorist attacks, insurance underwriters have
issued general notices of cancellations to their customers for war risk and
terrorism insurance in respect of a wide variety of insurance coverage,
including, but not limited to, liability coverage. Petrobras does not know
whether underwriters will offer to reinstate some or all of these types of
coverage and, if reinstatement is offered, the extent to which premiums may be
increased. The failure to obtain insurance against risks inherent in our
business may expose Petrobras to catastrophic losses that may materially affect
its results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras may not achieve the anticipated timing, efficiencies and benefits of
integrating Perez Companc into its business.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;17, 2002, Petrobras agreed to acquire 58.62% of the capital
stock of Perez Companc S.A. (&#147;Perez Companc&#148;), the second largest Argentine
energy company, from the Perez Companc family and the Perez Companc Foundation
for approximately U.S.$1.03&nbsp;billion. The completion of the Perez Companc
acquisition was contingent upon antitrust approval from the Argentine
government&#146;s <I>Comisi&#243;n Nacional de Defensa de la Competencia </I>(the &#147;National
Council for the Defense of Competition&#148; or the &#147;CNDC&#148;). The CNDC approved the
transaction on May&nbsp;13, 2003. Upon approval of the transaction, Perez Companc
agreed to divest itself of its equity interest in Transener S.A., which
operates most of Argentina&#146;s high-tension electricity lines. This divestiture
is in line with Perez Companc&#146;s strategic plan and does not affect Petrobras&#146;
strategic plan in Latin America.
</FONT>

<P align="center"><FONT size="2">11</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is possible that Petrobras may not achieve the anticipated timing,
efficiencies and benefits of integrating Perez Companc into its business.
Differing corporate cultures, legal and regulatory environments, personalities,
languages and other factors may pose challenges to the success of the
acquisition. Failure to achieve the anticipated timing, efficiencies and
benefits of integrating Perez Companc into its business may negatively impact
Petrobras and its ability to implement its strategic objectives in South
America.
</FONT>

<P align="left"><FONT size="2"><B><I>Perez Companc is subject to substantial risks relating to its business and
operations in Argentina and other South American countries.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Perez Companc is an Argentine <I>sociedad anonima </I>with approximately 59.6% of
its total crude oil and natural gas production and 45.6% of its proved crude
oil and natural gas reserves located in Argentina at December&nbsp;31, 2002. As a
result, Perez Companc&#146;s financial condition and results of operation may be
adversely affected by Argentine political instability, fluctuations in the
Argentine economy and governmental actions concerning the economy, including:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the imposition of exchange controls, which could restrict the
flow of capital out of Argentina and make it more difficult for
Perez Companc to service its non-Peso denominated debt;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the imposition of restrictions on the export of crude oil and
oil products, which could decrease Perez Companc&#146;s U.S. Dollar cash
receipts;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the devaluation of the Argentine Peso, which could lead to
significant losses in Perez Companc&#146;s net foreign currency position
and, therefore, restrict its ability to make payment on its
foreign-currency denominated debt;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">increases in export tax rates for crude oil and oil products,
which could lead to a reduction in Perez Companc&#146;s export margins
and cash flows; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other measures enacted by the Argentine government to address
Argentina&#146;s economic crisis, including the pesification of utility
rates, which combined with the devaluation of the Argentine Peso,
resulted in payment defaults by three of Perez Companc&#146;s affiliated
utility companies, TGS, CIESA (the parent of TGS) and Transener, and
which could lead to defaults by other affiliated utility companies.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Perez Companc is also active in Venezuela, Ecuador, Bolivia, Peru and
Brazil. Production from Venezuela accounted for approximately 28.7% of Perez
Companc&#146;s total average production in barrels of oil equivalent in 2002,
constituting the largest operation outside Argentina. Accordingly, Perez
Companc&#146;s operations may be negatively affected by:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the continuing political and economic instability in
Venezuela, particularly the labor strikes and other forms of
political protest directed against the Hugo Chavez administration;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any decisions by the Organization of Petroleum Exporting
Countries (&#147;OPEC&#148;) to decrease production volumes, as Venezuela is a
member of OPEC; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any decision by the Venezuelan government to modify the terms
and conditions of Perez Companc&#146;s operating agreements in Venezuela.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If one or more of the risks described above were to materialize, Petrobras
may not be able to realize the benefits that it currently intends to realize
from the Perez Companc acquisition, and that
</FONT>
<P align="center"><FONT size="2">12</FONT>

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<P align="left"><FONT size="2"> development might negatively impact it and its ability to implement its
strategic objectives in South America.
</FONT>

<P align="left"><FONT size="2"><B>Risks Relating to the Relationship between Petrobras and the Brazilian
Government</B>
</FONT>

<P align="left"><FONT size="2"><B><I>The interests of the Brazilian government, as Petrobras&#146; controlling
shareholder, may conflict with the interests of our other shareholders and
creditors.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian government, as Petrobras&#146; controlling shareholder, has
pursued, and could continue to pursue, certain of its macroeconomic and social
objectives through Petrobras. These initiatives have not always been in
Petrobras&#146; best interests or the best interests of its other shareholders and
creditors. Brazilian law requires the Brazilian government to own a majority
of Petrobras&#146; voting stock, and so long as it does, the Brazilian government
will have the power to elect a majority of the members of Petrobras&#146; board of
directors and, through them, a majority of the executive officers who are
responsible for Petrobras&#146; day-to-day management. As a result, Petrobras may
engage in activities that give preference to the Brazilian government&#146;s agenda
rather than to its own economic and business objectives. In particular,
Petrobras continues to assist the Brazilian government to ensure that the
supply of crude oil and oil products in Brazil meets Brazilian consumption
requirements. Accordingly, Petrobras may continue to make investments, incur
costs and engage in sales on terms that are not necessarily in its best
interests or in the best interests of its shareholders and creditors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Luiz In&#225;cio Lula da Silva was elected President of Brazil in October 2002
and took office on January&nbsp;1, 2003. As a result, there have been significant
changes in Petrobras&#146; board of directors and senior management in recent
months. The reconstituted board of directors and new senior management may
pursue a strategy or conduct operations in a manner that diverges significantly
from the strategy and operations pursued by Petrobras&#146; previous management.
Changes in government or government policy could have a material adverse effect
on Petrobras and its business, results of operations, financial condition or
prospects.
</FONT>

<P align="left"><FONT size="2"><B><I>If the Brazilian government reinstates controls over the prices Petrobras can
charge for crude oil and oil products, such price controls could affect
Petrobras&#146; financial condition and results of operations.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, the Brazilian government set prices for crude oil and oil
products in Brazil, often below prevailing prices on the world oil markets.
These prices involved elements of cross-subsidy among different oil products
sold in various regions in Brazil. The cumulative impact of this price
regulation system on Petrobras is recorded as an asset on Petrobras&#146; balance
sheet under the line item &#147;Petroleum and Alcohol Account&#151;Receivable from the
Brazilian government.&#148; The balance of the account at December&nbsp;31, 2002 was
U.S.$182&nbsp;million. Effective January&nbsp;2, 2002, all price controls for crude oil
and oil products ended, and while no price controls were imposed in 2002, the
Brazilian government could decide to reinstate price controls in the future as
a result of market instability or other conditions. If this were to occur,
Petrobras&#146; financial condition and results of operations could be adversely
affected.
</FONT>

<P align="left"><FONT size="2"><B><I>Brazilian political and economic conditions may have a material adverse effect
on Petrobras.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian economy has been characterized by significant involvement by
the Brazilian government, which often changes monetary, credit and other
policies to influence Brazil&#146;s economy. The Brazilian government&#146;s actions to
control inflation and other economic policies have often involved wage and
price controls, modifications to the Central Bank&#146;s base interest rates, and
other measures, such as the freezing of bank accounts, which occurred in 1990.
</FONT>

<P align="center"><FONT size="2">13</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Brazilian government&#146;s economic policies may have important effects on
Brazilian corporations and other entities, including Petrobras, and on market
conditions and prices of Brazilian securities. Petrobras&#146; financial condition
and results of operations may be adversely affected by the following factors
and the Brazilian government&#146;s response to these factors:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">devaluations and other exchange rate movements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">inflation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">exchange control policies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">social instability;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">price instability;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">energy shortages;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">interest rates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">liquidity of domestic capital and lending markets;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax policy; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other political, diplomatic, social and economic developments in or affecting Brazil.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Petrobras cannot predict the effect that the policies of the
new Brazilian administration may have on Brazilian economic conditions or on
Petrobras&#146; financial condition and results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>The current Argentine economic, political and social crisis could adversely
affect the financial condition and results of operation of Perez Companc and
Petrobras&#146; other Argentine operations.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since 1999, the Argentine economy has been in a recession marked by
reduced levels of consumption and investment, increased unemployment, declining
gross domestic product and capital flight.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;20, 2001, President Fernando de la R&#250;a resigned, and since
then, Argentina has had several presidents, including President Eduardo
Duhalde, who held office from January 2002 to May 2003. During his term,
President Duhalde and his government underook a number of far-reaching
initiatives, including:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ratifying the suspension of payment of certain of Argentina&#146;s
sovereign debt;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">amending Argentina&#146;s Convertibility Law to allow the exchange
rate of the Argentine Peso to float, breaking the Peso&#146;s decade-old
one-to-one relationship to the U.S. Dollar, and resulting in a 66.4%
decline in the value of the Peso against the U.S. Dollar from
January&nbsp;7, 2002 to March&nbsp;31, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">converting certain U.S. dollar-denominated debts into
peso-denominated debts at a one-to-one exchange rate and U.S.
dollar-denominated bank deposits into peso-denominated bank deposits
at an exchange rate of 1.4 Argentine Pesos per U.S.$1.00;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">14</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restructuring bank deposits and maintaining restrictions on
bank withdrawals;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enacting an amendment to the Argentine Central Bank&#146;s charter
to (i)&nbsp;allow it to print currency in excess of the amount of the
foreign reserves it holds, (ii)&nbsp;make short-term advances to the
Argentine federal government and (iii)&nbsp;provide financial assistance
to financial institutions with liquidity constraints or solvency
problems;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">imposing restrictions on transfers of funds abroad subject to
certain exceptions; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">requiring the deposit into the banking system of foreign
currency earned from exports, subject to certain exceptions.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rapid and radical nature of recent changes in the Argentine social,
political, economic and legal environment created an atmosphere of great
uncertainty in the banking system. As a result, commercial and financial
activities were virtually paralyzed during 2002, further aggravating the
economic recession which precipitated the current crisis. Moreover, due to the
depth of the social and political crisis that affected Argentina in 2002,
Argentina continues to face risks, including: (i)&nbsp;civil unrest, rioting,
looting, nation-wide protests, widespread social unrest and strikes, (ii)
expropriation, nationalization and forced renegotiation or modification of
existing contracts and (iii)&nbsp;changes in taxation policies, including royalty
and tax increases and retroactive tax claims.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;25, 2003, a new president, N&#233;stor Kirchner, took office. There is
uncertainty as to the nature and scope of the measures to be adopted by Mr.
Kirchner&#146;s government to address many of the country&#146;s unresolved economic
problems, including the renegotiation of its external debt. Petrobras cannot
predict the policies the new Kirchner administration may adopt or the effect
that those policies could have on Argentine economic conditions and our
investments in Argentina.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras has acquired a majority interest in several entities with
operations in Argentina, including Perez Companc. The financial condition and
results of operation of Perez Companc and other acquisitions may be adversely
affected by Argentine political instability, fluctuations in the Argentine
economy and governmental actions concerning the economy, which could result in
Petrobras&#146; failure to realize the benefits it currently expects to realize from
those acquisitions.
</FONT>

<P align="left"><FONT size="2"><B><I>Historical Brazilian government control of Petrobras&#146; sales prices and
regulation of its operating revenues mean that Petrobras&#146; results of operations
cannot be easily compared from year to year.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the tools available to the Brazilian government to control
inflation and pursue other economic and social objectives has been the
regulation of oil product prices. The method by which the Brazilian government
has controlled Petrobras&#146; prices has varied from year to year. Until December
31, 2001, the Brazilian government regulated the prices at which Petrobras was
permitted to sell its oil products. The Brazilian government also established
freight subsidies to ensure uniform oil product prices throughout Brazil, but
these subsidies have since been phased out. Beginning in July 1998, and until
the institution of price deregulation on January&nbsp;2, 2002, the Brazilian
government established a new methodology for calculating Petrobras&#146; net
operating revenues.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of this government price control and the change in methodology:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the various line items in Petrobras&#146; financial statements are
not necessarily comparable from period to period; and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">15</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras&#146; results of operations reflect not only its
consolidated operations, but also the results of economic activity
undertaken on behalf of the Brazilian government.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, from time to time, the Brazilian government may impose
specific taxes or other special payment obligations on Petrobras&#146; operations
that may affect its results of operations.
</FONT>

<P align="left"><FONT size="2"><B><I>Petrobras does not own any of the crude oil and natural gas reserves in Brazil.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A guaranteed source of crude oil and natural gas reserves is essential to
an oil and gas company&#146;s sustained production and generation of income. As a
result, many oil and gas companies own crude oil and natural gas reserves.
Under Brazilian law, the Brazilian government owns all crude oil and natural
gas reserves in Brazil. Petrobras possesses the exclusive right to develop its
reserves pursuant to concession agreements awarded to it by the Brazilian
government, but if the Brazilian government were to restrict or prevent
Petrobras from exploiting these crude oil and natural gas reserves, its ability
to generate income would be adversely affected.
</FONT>

<P align="left"><FONT size="2"><B><I>The Brazilian government is no longer contingently liable for Petrobras&#146;
liabilities in the event of its insolvency.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2002, an amended Brazilian corporate law became effective.
Among other changes, the amended law provides for the termination of the
contingent liability of the Brazilian government for the liabilities and
obligations of mixed capital companies, such as Petrobras and, as a
consequence, for the termination of mixed capital companies&#146; immunity from
bankruptcy legal proceedings. Accordingly, the Brazilian government will not
be contingently liable, as it was in the past, for any of Petrobras&#146;
obligations incurred after the enactment of this law.
</FONT>


<P align="left"><FONT size="2"><B>Risks Relating to Brazil</B>
</FONT>

<P align="left"><FONT size="2"><B><I>The Brazilian government&#146;s actions to maintain economic stability, as well as
public speculation about possible future actions, may contribute significantly
to economic uncertainty in Brazil and to heightened volatility in the Brazilian
securities markets.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras&#146; principal market is Brazil, which has periodically experienced
extremely high rates of inflation. Inflation, along with recent governmental
measures to combat inflation and public speculation about possible future
measures, has had significant negative effects on the Brazilian economy. The
annual rates of inflation, as measured by the National Consumer Price Index
(<I>&#205;ndice Nacional de Pre&#231;os ao Consumidor</I>), have decreased from 2,489.1% in 1993
to 929.3% in 1994, to 8.4% in 1999 and to 5.3% in 2000. The same index
increased to 9.4% during 2001 and to 14.7% in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brazil may experience high levels of inflation in the future. The lower
levels of inflation experienced since 1994 may not continue. Future
governmental actions, including actions to adjust the value of the Real, could
trigger increases in inflation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over the last three fiscal years, approximately 86% of Petrobras&#146; revenues
have been denominated in Reais, although prices for crude oil and oil products
have been based on international prices. A substantial portion of Petrobras&#146;
indebtedness and some of its operating expenses and capital expenditures are,
and are expected to continue to be, denominated in or indexed to the U.S.
Dollar and other foreign currencies. In addition, during the year ended
December&nbsp;31, 2002, Petrobras imported approximately U.S.$5.2&nbsp;billion of crude
oil and oil products, the prices of which were all denominated in U.S. Dollars.
</FONT>

<P align="center"><FONT size="2">16</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of inflationary pressures, the Real and its predecessor
currencies have been devalued periodically during the last four decades.
Through this period, the Brazilian government has implemented various economic
plans and utilized a number of exchange rate policies, including sudden
devaluations, periodic mini-devaluations during which the frequency of
adjustments has ranged from daily to monthly, floating exchange rate systems,
exchange controls and dual exchange rate markets. From time to time, there
have been significant fluctuations in the exchange rates between the Real and
the U.S. Dollar and other currencies. For example, the Real declined in value
against the U.S. Dollar by 9.3% in 2000, 18.7% in 2001 and 52.3% in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Devaluation of the Real relative to the U.S. Dollar could create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary governmental policies to curb
aggregate demand. On the other hand, appreciation of the Real against the U.S.
Dollar may lead to a deterioration of the country&#146;s current account and the
balance of payments, as well as dampen export-driven growth. The potential
impact of the floating exchange rate and of measures by the Brazilian
government aimed at stabilizing the Real is uncertain. In addition, a
substantial increase in inflation may weaken investor confidence in Brazil.
Future devaluation of the Real could adversely affect our results of operations
and financial condition.
</FONT>

<P align="left"><FONT size="2"><B><I>The current crisis in Argentina could adversely affect the Brazilian economy,
adversely affecting Petrobras&#146; ability to finance its operations and Petrobras&#146;
investments in Argentina.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, the Brazilian economy and the securities of Brazilian
companies have been, to varying degrees, influenced by economic and market
conditions in other emerging market countries, particularly in Latin America,
as well as by investors&#146; responses to those conditions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any further deterioration of the Argentine economy and further devaluation
of the Argentine Peso could adversely affect the Brazilian economy, as
Argentina is one of Brazil&#146;s principal trading partners, accounting for 26% of
Brazil&#146;s exports in 2002. Adverse developments in the Brazilian economy could,
in turn, negatively impact Petrobras&#146; business and results of operations.
</FONT>

<!-- link2 "Item&nbsp;4. Information on the Company." -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;4. Information on the Company.</B>
</FONT>


<P align="center"><FONT size="2"><B>HISTORY AND DEVELOPMENT OF THE COMPANY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were established on September&nbsp;24, 1997 as a wholly-owned subsidiary of
Braspetro Oil Services Company, or Brasoil, a wholly-owned subsidiary of
Petrobras Internacional S.A. (Braspetro), which has since been absorbed by
Petrobras. We were initially incorporated under the name Brasoil Finance
Company, which was changed by special resolution of our shareholders to
Petrobras International Finance Company on September&nbsp;25, 1997. On January&nbsp;14,
2000, the board of directors of Braspetro and Petrobras approved the transfer
of 100% of our voting shares from Brasoil to Petrobras. Since April&nbsp;1, 2000,
we have operated as a wholly-owned subsidiary of Petrobras.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exempted company incorporated with limited liability under the
laws of the Cayman Islands. Our registered office is located at Anderson
Square Building, P.O. Box 714, George Town, Grand Cayman, Cayman Islands, and
our telephone number is 55-21-2534-1410.
</FONT>


<P align="center"><FONT size="2"><B>BUSINESS OVERVIEW</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were incorporated in order to facilitate and finance the import of
crude oil and oil products by Petrobras into Brazil. Accordingly, our primary
function is to act as an intermediary between third-party oil suppliers and Petrobras by engaging in crude oil and oil product
purchases from international suppliers
</FONT>
<P align="center"><FONT size="2">17</FONT>

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<P align="left"><FONT size="2">and reselling crude oil and oil products
in U.S. dollars to Petrobras on a deferred payment basis, at a price which
represents a premium to compensate us for our financing costs. We are
generally able to obtain credit to finance purchases on the same terms granted
to Petrobras, and we buy crude oil and oil products at the same price that
suppliers would charge Petrobras directly.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of Petrobras&#146; strategy to expand its international operations and
facilitate its access to international capital markets, we engage in borrowings
in international capital markets supported by Petrobras, primarily through
standby purchase agreements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we also engage in a number of activities that are conducted
by three wholly-owned subsidiaries incorporated in 2001:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras Netherlands B.V., or PNBV, a Dutch company,
incorporated to engage in leasing activities of primarily offshore
exploration and production of crude oil and natural gas equipment to
be used by Petrobras, while taking advantage of the import and
export tax benefits provided by the Netherlands and Brazil. As part
of Petrobras&#146; restructuring of its international business segment,
PNBV became a wholly-owned subsidiary of Petrobras, effective as of
January, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras Europe Ltd., or PEL, a U.K. company, intended to
act as an agent and advisor in connection with Petrobras&#146; activities
in Europe, the Middle East, the Far East and North Africa; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras Finance Limited, or PFL, a Cayman Islands company,
incorporated with the purpose of facilitating an export receivables
securitization program linked to the resale of fuel oil and bunker
fuel bought from Petrobras.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, we received Bear Insurance Company Ltd. &#150; BEAR
from Brasoil. BEAR is a captive insurance company incorporated in Bermuda.
</FONT>


<P align="left"><FONT size="2"><B>Our Principal Commercial Activities</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal activity is the purchase of crude oil and oil products for
resale to Petrobras and, to a limited extent, third parties. We acquire the
crude oil and oil products either through purchases on the spot market or
long-term supply contracts. Our crude oil and oil product purchase obligations
are, in most instances, guaranteed by Petrobras. We sell the products to
Petrobras at our purchase price, plus a premium, which until December&nbsp;31, 2002
was determined by a formula based on LIBOR to compensate us for our financing
costs. In 2003, the interest component of this formula was modified to a formula based on a rate which more fully passes on our average
costs of capital to Petrobras.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we finance our oil trading activities through a combination
of inter-company loans from Petrobras, commercial paper programs, lines of
credit and the issuance of notes in the international capital markets.
</FONT>

<P align="center"><FONT size="2">18</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart illustrates how we act as the intermediary between
international crude oil suppliers and Petrobras.
</FONT>


<P align="center"><FONT size="2"><IMG src="y87531y8753100.gif" alt="(CHART)">
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We purchase crude oil and oil products from international oil suppliers on
a free-on-board (F.O.B.) basis under standard terms that traditionally require
payment within 30&nbsp;days from the bill of lading. Petrobras buys crude oil and
oil products from us under terms that allow for payment up to 270&nbsp;days from the
date of the bill of lading. Petrobras would typically be unable to meet the
30-day payment term imposed by international suppliers because of the
complexity of producing a full set of documents for a single bill of lading
when, for example, the shipment to which that bill of lading relates must be
delivered to different parts of Brazil and different sets of documents must be
delivered with respect to each delivery point. Depending on the unloading
ports&#146; locations, this process may be completed up to 120&nbsp;days from the
vessel&#146;s departure. We can pay the international supplier on time without
having to produce these different sets of documents. To cover our financing
costs, we include a LIBOR-based premium when we sell crude oil and oil products
to Petrobras.
</FONT>


<P align="left"><FONT size="2"><B>Our Principal Suppliers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our eight principal suppliers represented 65.7% of our total imports as of
December&nbsp;31, 2002, as compared to 69.1% of our total imports as of December&nbsp;31,
2001 and 70.3% of our total imports as of December&nbsp;31, 2000. The chart below
sets forth information with respect to our principal suppliers for the years ended
December&nbsp;31, 2002, 2001 and 2000.
</FONT>



<P align="center"><FONT size="2">19</FONT>



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<P align="center"><FONT size="2"><B>OUR PRINCIPAL SUPPLIERS<SUP>(1)</SUP></B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Country of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(in millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(in millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(in millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Supplier</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Headquarters</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Imports</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras America, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">United States</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">947.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,320.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,254.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sonatrach Group</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">Algeria</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">604.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">970.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,473.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Saudi Aramco</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Saudi Arabia</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">534.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">587.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">890.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PDVSA Petr&#243;leo</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Venezuela</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">413.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">515.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,072.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shell</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">England</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">279.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sinochem</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">England</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reliance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">India</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">217.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">224.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mega</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Argentina</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">AGIP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Italy</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">318.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ryttsa (Repsol-YPF)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Argentina</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">248.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Chevron San Jorge</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Argentina</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">126.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Somo</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Iraq</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">211.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,395.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,312.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,557.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<HR size="1" align="left" width="10%">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Excluding suppliers to our subsidiaries</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Our Principal Customers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, Petrobras conducted 99.9% of its crude oil and oil products
import activities through us in order to give it the flexibility it needs to
meet various delivery and funding requirements. During the year ended December
31, 2002, we sold crude oil and oil products with a total value of U.S.$5,191.1
million. During the year ended December&nbsp;31, 2001, we sold crude oil and oil
products with a total value of U.S.$6,250.0&nbsp;million and during the year ended
December&nbsp;3, 2000, we sold crude oil and oil products with a total value of
U.S.$7,937.0&nbsp;million.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales of crude oil and oil products to Petrobras and the Alberto
Pasqualini refinery (&#147;Refap,&#148; which is 70% owned by Petrobras) represented
U.S.$4,884.7&nbsp;million (94.1%) of our total sales in the year ended December&nbsp;31,
2002 and U.S.$5,842.0&nbsp;million (93.5%) of our total sales in the year ended
December&nbsp;31, 2001. Our sales of crude oil and oil products to third parties
and other related parties (excluding Petrobras and Refap) totaled U.S.$306.4
million during the year ended December&nbsp;31, 2002, U.S.$407.6&nbsp;million during the
year ended December&nbsp;31, 2001 and U.S.$646.7&nbsp;million during the year ended
December&nbsp;31, 2000. Our nine principal clients, excluding Petrobras and Refap,
represented 80.5% of our sales to third parties and related parties as of
December&nbsp;31, 2002, 68.0% of our sales to third parties and related parties as
of December&nbsp;31, 2001 and 71.6% of our sales to third parties and related
parties as of December&nbsp;31, 2000.
</FONT>

<P align="center"><FONT size="2">20</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>THIRD PARTY AND RELATED PARTY SALES<SUP>(1)</SUP></B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% of Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sales</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>(in millions</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>(in millions</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>(in millions</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>of U.S.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1"><B>dollars)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">104.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">283.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gases y Graneles</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ancap</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vitol</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EG3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ferrel</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ipiranga</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gazocean</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Glencore</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cargill</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Contigroup</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trafigura</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Hin Leong</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gontichen</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">246.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">276.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">462.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<HR size="1" align="left" width="10%">

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Excludes Petrobras and Refap, as we do not generate profits from sales to
Petrobras and Refap. For each year, includes only our nine principal clients
during that year.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Petrobras Netherlands B.V. (PNBV)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of Petrobras&#146;s restructuring of its international business
segment, in January 2003 we transferred our subsidiary, PNBV, to Petrobras.
PNBV became a wholly-owned subsidiary of Petrobras, and, therefore, leasing
activities are no longer included in our results of operations (see note 10 to
our audited consolidated financial statements for the year ended December&nbsp;31,
2002).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
established PNBV in May 2001 as a wholly-owned subsidiary incorporated
in the Netherlands, to engage in leasing activities of primarily offshore
equipment and vessels for the exploration and production of crude oil and
natural gas, which we lease or freight to Petrobras for its use in Brazil.
PNBV was created in order to capture tax benefits and segregate our leasing
activities from our imports of crude oil and oil products.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By purchasing exploration and production equipment through PNBV, we
enabled Petrobras to benefit from Brazil&#146;s Special Customs System (<I>Regime
Aduaneiro Especial</I>), or Repetro. Repetro is a tax benefit program that grants
exemptions from some Brazilian taxes on the imports and exports of certain
goods engaged in exploration and development activities (upstream activities)
in the crude oil and natural gas industries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to goods manufactured within Brazil, we, as a foreign entity
acting alone or through PNBV, would purchase goods from a Brazilian supplier
and benefit from the tax exemptions provided by the Repetro laws that seek to
provide incentives for Brazilian industrial exports related to exploration and
development activities. In the case of goods manufactured abroad, we would
import these goods and
</FONT>
<P align="center"><FONT size="2">21</FONT>

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<P align="left"><FONT size="2"> lease or freight them to Petrobras, thereby capturing the tax exemption
benefits the Repetro law provides for imported goods, so long as such goods are
used in Brazilian exploration and production activities and remain in Brazil on
a temporary basis. In order to take advantage of Repetro, the use of the
goods, produced either domestically or abroad, must ultimately be related to
the offshore exploration and production of crude oil and natural gas, and the
items must remain within Brazilian territory. As a practical matter, the
period during which the goods may remain in Brazil under the Repetro laws
typically exceeds the period during which their value depreciates to zero for
tax purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into capital lease transactions for equipment and production
platforms and acquired other materials and equipment totaling U.S.$1,015.9
million in the year ended December&nbsp;31, 2002 to be leased to Petrobras under the
Repetro regime.
</FONT>


<P align="left"><FONT size="2"><B>Petrobras Europe LTD. (PEL)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 2001, we established PEL, a wholly-owned subsidiary incorporated
and based in the United Kingdom, to consolidate Petrobras&#146; trade and finance
activities in Europe, the Middle East, the Far East and North Africa. These
activities consist of advising on, and negotiating the terms and conditions
for, crude oil and oil products supplied to us and Petrobras, as well as
marketing Brazilian crude oil and crude oil products exported to the geographic
areas in which PEL operates. PEL plays an advisory role in connection with
these activities and undertakes no direct or additional commercial or financial
risk. PEL provides these advisory and marketing services as an independent
contractor, pursuant to a services agreement between PEL and Petrobras. In
exchange, Petrobras compensates PEL for all costs incurred in connection with
these activities, plus a margin.
</FONT>


<P align="left"><FONT size="2"><B>Petrobras Finance Limited (PFL)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2001, we established PFL, a wholly-owned subsidiary
incorporated and registered in the Cayman Islands, to facilitate an export
receivables asset securitization program established by Petrobras. PFL
primarily purchases bunker fuel and fuel oil and limited amounts of crude oil
and gasoline from Petrobras and sells the products in the international market.
</FONT>


<P align="left"><FONT size="2"><B>Bear Insurance Company LTD. (BEAR)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, we received BEAR from Brasoil. This transaction took
place as part of the restructuring of Petrobras&#146; international business
segment. Bear currently serves as an intermediary for Petrobras, advising on,
and negotiating the terms and conditions of, certain of Petrobras&#146; insurance
policies.
</FONT>


<P align="left"><FONT size="2"><B>Export Receivables Asset Securitization Program</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras sells and delivers bunker fuel and fuel oil and, subject to
certain conditions, other oil products (collectively, the &#147;Eligible Products&#148;)
to PFL under two principal agreements: the Master Export Contract and the
Prepayment Agreement. The PF Export Receivables Master Trust (the &#147;Trust&#148;) was
formed under the laws of the Cayman Islands to provide PFL with the funding
necessary to purchase Eligible Products from Petrobras and resell these
products through the arrangements described below.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;21, 2001, the Trust issued to PFL U.S.$750&nbsp;million of Senior
Trust Certificates in four series (collectively, the &#147;Series&nbsp;2001 Senior Trust
Certificates&#148;) and U.S.$150&nbsp;million of Junior Trust Certificates (the &#147;Series
2001 Junior Trust Certificates,&#148; and together with the Series&nbsp;2001 Senior Trust
Certificates, the &#147;Series&nbsp;2001 Trust Certificates&#148;). PFL in turn offered the
Series&nbsp;2001 Senior Trust Certificates in four series (series A-1, A-2, B and C)
to certain certificate holders.
</FONT>

<P align="center"><FONT size="2">22</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;21, 2003, the Trust issued to PFL U.S.$550&nbsp;million of Senior Trust
Certificates (the &#147;Series&nbsp;2003-A Senior Trust Certificates&#148;), maturing on June
1, 2015. On the same date, the Trust issued U.S.$200&nbsp;million of Senior Trust
Certificates (the &#147;Series&nbsp;2003-B Senior Trust Certificates&#148; ), maturing on June
1, 2013. The Series&nbsp;2003-A Senior Trust Certificates, along with the Series
2003-B Senior Trust Certificates and the Series&nbsp;2001 Senior Trust Certificates,
represent senior undivided beneficial interests in the property of the Trust
(other than certain charitable property held by the Trust).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the same date, the Trust also issued to PFL U.S.$110&nbsp;million in Series
2003-A Junior Trust Certificates and U.S.$40&nbsp;million in Series&nbsp;2003-B Junior
Trust Certificates (collectively, the &#147;Series&nbsp;2003 Junior Trust Certificates,
and together with the Series&nbsp;2003-A Senior Trust Certificates and the Series
2003-B Senior Trust Certificates, the &#147;Series&nbsp;2003 Trust Certificates&#148;). The
Series&nbsp;2003 Junior Trust Certificates represent, together with the 2001 Junior
Trust Certificates, junior subordinated undivided beneficial interests in the
property of the Trust (other than the charitable property).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFL agreed to transfer to the Trustee, in return for the Series&nbsp;2001
Senior Trust Certificates and Series&nbsp;2001 Junior Trust Certificates, the right
to a specified amount of receivables to be generated from PFL&#146;s sale of
Eligible Products with a value equal to the aggregate amount scheduled to be
paid in respect of the Series&nbsp;2001 Senior Trust Certificates and the Series
2001 Junior Trust Certificates. PFL also agreed to transfer to the Trustee, in
return for the Series&nbsp;2003 Senior Trust Certificates and Series&nbsp;2003 Junior
Trust Certificates, the right to an additional specified amount of receivables
to be generated from PFL&#146;s sale of Eligible Products with a value equal to the
aggregate amount scheduled to be paid in respect of the Series&nbsp;2003 Senior
Trust Certificates and the Series&nbsp;2003 Junior Trust Certificates.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value of receivables scheduled to be designated for sale in any
quarterly period represents a portion, but not all, of the receivables expected
to be generated from the sale of Eligible Products by PFL in such period. The
remainder of such receivables remain the property of PFL.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The timely payment of interest on, and scheduled principal of, each series
of the Series&nbsp;2001 Senior Trust Certificates is unconditionally and irrevocably
guaranteed under financial guaranty insurance policies issued by XL Capital
Assurance Inc., MBIA Insurance Corporation or Ambac Assurance Corporation
(collectively, the &#147;Enhancers&#148;). The timely payment of interest on, and
scheduled principal of, the Series&nbsp;2003-B Senior Trust Certificates is
unconditionally and irrevocably guaranteed under a financial guaranty insurance
policy issued by MBIA Insurance Corporation. The Series&nbsp;2003-A Senior Trust
Certificates do not have the benefit of any financial guaranty insurance
policy.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the Series&nbsp;2001 Senior Trust Certificates and the Series
2003 Senior Trust Certificates currently outstanding, additional series of
senior trust certificates (which may or may not benefit from a financial
guaranty insurance policy) may be issued to PFL from time to time if Petrobras
agrees to sell additional Eligible Products to PFL in an amount that is
adequate to make all required payments under the additional series of senior
trust certificates and certain other conditions are met.
</FONT>


<P align="left"><FONT size="2"><B><I>Petrobras&#146; Bunker Fuel Business</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bunker fuel is a common term for marine fuels that are burned in the
boilers or engines of ships. Petrobras produces and exports two types of
bunker fuel: intermediate fuel oil or marine fuel (for ships&#146; main engines
and, occasionally, auxiliary engines) and marine diesel fuel and marine gas oil
(for auxiliary engines and main engines of military vessels).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras&#146; bunker fuel production in 2002 was 29,869 Mbbl (&#147;Mbbl&#148; stands
for thousand barrels), compared to 27,468 Mbbl in 2001. Petrobras&#146; total
bunker fuel production totaled 126,564 Mbbl for the period from January&nbsp;1, 1998
to December&nbsp;31, 2002. Petrobras exports approximately 92% of the bunker
</FONT>
<P align="center"><FONT size="2">23</FONT>

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<P align="left"><FONT size="2"> fuel it produces, with the exception of bunker fuel used by Petrobras&#146;
fleet. Bunker fuel sold in Brazil by Petrobras to ships owned by non-Brazilian
companies is considered an export under Brazilian regulations.
</FONT>


<P align="center"><FONT size="2"><B>PETROBRAS&#146; ANNUAL BUNKER FUEL PRODUCTION</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(Mbbl)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic Consumption</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras Fleet</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,623</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 27% of Petrobras&#146; bunker fuel sales in 2002 were to shipping
companies or ship owners, 40% to brokers who purchase fuel on behalf of
shipping companies and the remaining 33% to traders. In 2002, Petrobras
delivered bunker fuel to approximately 35% of the ships calling at Brazilian
ports.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Petrobras&#146; Bunker Fuel Buyers</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total bunker fuel customers currently total approximately 300, with the
top ten customers representing approximately 35% of Petrobras&#146; total sales in
2002. Petrobras has been increasing its sales to shipowners, either directly
or through brokers. Sales to shipowners have increased from 64% of bunker fuel
sales in 1998 to 67% in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Competition</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the changes in Brazilian government regulation in 1995, the
bunker fuel business is deregulated. However, Petrobras remains the only
producer of bunker fuel in Brazil. Petrobras&#146; competition consists of other
providers of bunker fuel in ports outside of Brazil.
</FONT>


<P align="left"><FONT size="2"><B><I>Bunker Fuel Delinquencies</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning bunker fuel
delinquencies and charge-offs for the five year period from 1998 to December
31, 2002:
</FONT>


<P align="center"><FONT size="2"><B>PETROBRAS&#146; DELIQUENCY DATA</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Delinquencies<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93.1&nbsp;&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.0&nbsp;&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.1&nbsp;&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97.4&nbsp;&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.6&nbsp;&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">More than 2 working days</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">More than 5 working days</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">More than 360 working days</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Charge-offs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As a percentage of total year-end sales.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B><I>Petrobras&#146; Fuel Oil Business</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fuel oil originates from residual fractions or distillation units at the
refinery and from other processes such as deasphalting. Dilutents in the form
of lighter cutter stocks are mixed into the residue pool to create the desired
viscosity for different types of fuel oil.
</FONT>

<P align="center"><FONT size="2">24</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Major buyers of Petrobras&#146; fuel oil include utilities, refineries and
traders. Fuel oil is used by industries and utilities to run machinery and
generate electricity. Commercial buildings and homes employ fuel oil for
heating purposes, and refineries use fuel oil for blending purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fuel oil prices are a function of the supply, demand and price of crude
oil. Price is also affected by the relationship of heavy fuel oil and lighter
oil product prices to crude oil prices. Heavy fuel oil prices for Brazilian
production are determined by New York Harbor prices net of freight and
insurance. Other factors affecting fuel oil prices include sulfur content,
season and other specifications, including viscosity and metal content.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a comparison between fuel oil prices at New
York Harbor and Brazil on an F.O.B. basis for the years 1998 to 2002:
</FONT>


<P align="center"><FONT size="2"><B>HISTORICAL AVERAGE FUEL OIL PRICES (1998-2002) PER Bbl</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>New York Harbor 1%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Brazil (FOB) 0.5%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Brazil (FOB) 1%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sulfur</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sulfur</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Sulfur</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(expressed in billions of barrels)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">22.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">22.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">22.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<FONT size="2"><I>Source</I>: PIRA Energy Group</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fuel Oil Export Sales</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth Petrobras&#146; fuel oil export sales for the
period 1998-2002:
</FONT>


<P align="center"><FONT size="2"><B>FUEL OIL EXPORT SALES (1998-2002)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Millions of U.S.$</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">697.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">658.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">482.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">170.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">151.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Millions of Barrels</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Petrobras&#146; Fuel Oil Buyers</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for Petrobras&#146; fuel oil is concentrated, with 20 to 30
participants representing approximately 80% of the market. The primary market
for fuel oil produced by Petrobras is the U.S. East Coast, where sales are made
by Petrobras Americas, Inc. (PAI), and Argentina, where sales are carried out
by Petrobras.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Competition</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Price, sulfur content and service are the bases of competition in the fuel
oil market. The principal competitors of Petrobras in the fuel oil market are
refineries in the Caribbean and the U.S. East Coast.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most of Petrobras&#146; and PAI&#146;s sales are transacted on a spot basis. In
addition, PAI has a multi-shipment fuel oil supply contract with the Puerto
Rico Electric Power Authority (PREPA)&nbsp;and a six month contract with Florida
Power and Light Company. PAI believes that the contract with PREPA will
comprise approximately 25% of Petrobras&#146; fuel oil exports in 2003. These sales
are based on market prices.
</FONT>

<P align="center"><FONT size="2">25</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fuel Oil Delinquencies</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have not been any charge-offs on receivables arising from the sale
of fuel oil in the last four years, but price reductions have been granted to
customers on occasion due to quality disputes or operational problems. Past
due accounts are typically of short duration and are typically the result of
operational problems or disputes with a customer.
</FONT>


<P align="center"><FONT size="2"><B>ORGANIZATIONAL STRUCTURE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras conducts its operations through its Brazilian and international
subsidiaries. We are a wholly-owned subsidiary of Petrobras and we conduct
certain of our operations through our three wholly-owned subsidiaries. For a
description of our subsidiaries and their respective businesses, see &#147;&#151;Business
Overview.&#148;
</FONT>


<P align="center"><FONT size="2"><B>PROPERTY PLANT AND EQUIPMENT</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not own or lease any materially important physical properties or
fixed assets. The majority of the assets reflected in our
consolidated financial statements for the year ended
December&nbsp;31, 2002 consisted of investments in
direct-finance leases with Petrobras. These investments included contracts to
lease various types of materials and equipment utilized for the exploration and
production of crude oil and natural gas, including production and drilling
platforms, oil tankers, supply boats and other types of ships. We
would then lease
these assets to Petrobras. We received lease payments for these assets, which
were calculated to include the cost of capital and a fee for acting as
Petrobras&#146; agent. As of
December&nbsp;31, 2002, we will no longer engage in leasing
activities. See &#147;&#150; Business Overview &#150; Petrobras Netherlands B.V.
(PNBV).&#148;



</FONT>

<!-- link2 "Item&nbsp;5. Operating and Financial Review and Prospects." -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;5. Operating and Financial Review and Prospects.</B>
</FONT>


<P align="center"><FONT size="2"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS<BR>
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read the following discussion of our financial condition and
results of operations together with the attached audited consolidated financial
statements and the accompanying notes for the year ended December&nbsp;31, 2002
beginning on page F-2. You should also read our audited consolidated financial
statements for the year ended December&nbsp;31, 2001 and the accompanying notes,
which are included in our annual report on Form&nbsp;20-F for the year ended
December&nbsp;31, 2001, but which are not presented in this annual report. The
audited consolidated financial statements for the years ended December&nbsp;31, 2002
and December&nbsp;31, 2001 and the accompanying notes have been presented in U.S.
dollars and prepared in accordance with U.S. GAAP. In addition, as a
subsidiary of Petrobras, we also prepare financial statements in accordance
with Brazilian Corporate Law.
</FONT>


<P align="left"><FONT size="2"><B>Overview</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We earn income from:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales of crude oil and oil products to Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">limited sales of crude oil and oil products to third parties;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">financial income derived from financing of sales to Petrobras
and inter-company loans to Petrobras, investments in marketable
securities and other financial instruments; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">leasing income derived from financing leases entered into with Petrobras.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">26</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating expenses include:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">cost of sales, which is comprised mainly of purchases of crude oil and oil products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">financial expense, mainly from interest on our lines of
credit and capital markets indebtedness, securitization of
receivables and inter-company loans from Petrobras; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">leasing expenses derived from financing leases entered into
with third parties and Petrobras.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B><I>Purchases and Sales of Crude Oil and Oil Products</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We typically purchase crude oil and oil products in transactions with
payment terms of approximately 30&nbsp;days. Petrobras typically pays for shipments
of crude oil and oil products that we sell to it over a period ranging up to
270&nbsp;days, which allows Petrobras sufficient time to assemble the necessary
documentation under Brazilian law to commence the payment process for its
shipments. During this period, we typically finance the purchase of crude oil
and oil products through either funds previously provided by Petrobras or
third-party trade finance arrangements. Financial income from sales to
Petrobras was, until December&nbsp;31, 2002, calculated according to a formula based
on LIBOR, which was designed to reimburse us for estimated financing expenses
we may incur in connection with these sales. The difference between the amount
we pay for crude oil and oil products and the amount Petrobras pays for that
same crude oil and oil products is deferred and recognized as part of our
financial income on a straight-line basis over the period in which Petrobras&#146;
payments to us come due. In January 2003, the interest component of
the formula
was modified to a formula based on a rate which more fully passes on our average costs of capital
to Petrobras.
</FONT>


<P align="left"><FONT size="2"><B>Results of Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Results of operations for 2002 compared to 2001.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales of crude oil and oil products (including sales of imported crude
oil and oil products) and services remained relatively stable, increasing 2.1%
from U.S.$6,260.5&nbsp;million in 2001 to U.S.$6,390.2&nbsp;million in 2002, primarily
due to a slight increase in the average price of Brent crude oil from
U.S.$24.42 per barrel in 2001 to U.S.$24.76 per barrel in 2002 and sales made
by our subsidiary PFL in connection with Petrobras&#146; export receivables
securitization program. This increase was partially offset by a reduction in
the volume of oil products we sold to Petrobras as a result of the deregulation
of the Brazilian market for oil products.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lease income</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lease income reflects interest income from direct financing leases of
platforms and equipment and operating leases for vessels by us to Petrobras. In
2002, our lease income increased to U.S.$36.1&nbsp;million from U.S.$10.7&nbsp;million in
2001. This increase is mainly due to the fact that we derived revenue in 2001
exclusively from operating leases of vessels, while in 2002, we also derived
revenue from direct financing leases of equipment and platforms that we
acquired in 2002. See Note 6(b) to our audited consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">27</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of sales remained relatively stable, increasing 1.9% from
U.S.$6,253.0&nbsp;million in 2001 to U.S.$6,371.5&nbsp;million in 2002, primarily due to
a slight increase in the average price of Brent crude oil in 2002, as compared
to 2001, and to sales made by our subsidiary PFL in connection with Petrobras&#146;
exports receivables securitization program. This increase was partially offset
by a reduction in the volume of oil products sold to Petrobras as a result of
the deregulation of the Brazilian market for oil products.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lease Expense</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lease expense reflects interest expense from direct financing leases
of platforms and equipment and operating leases for vessels. Our lease expense
increased to U.S.$24.0&nbsp;million in 2002 from U.S.$10.5&nbsp;million in 2001. This
increase was mainly due to the fact that we incurred lease expenses in 2001
exclusively from operating leases of vessels, while in 2002, we also incurred
lease expense from direct financing leases of equipment and platforms. See Note
6(b) to our audited consolidated financial statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general and administrative expenses consist primarily of fees for
services. Our general and administrative expenses increased from U.S.$0.1
million in 2001 to U.S.$1.2&nbsp;million in 2002, as a result of fees for financial,
consulting and advisory services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross Profit</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit reflects profits from our third-party sales of crude oil
and oil products and services (since we record profits from sales of crude oil
and oil products to Petrobras as financial income) and from our leasing
transactions. Our gross profit increased from U.S.$7.6&nbsp;million in 2001 to
U.S.$29.6&nbsp;million in 2002, due primarily to U.S.$12.1&nbsp;million in profits
generated by a leasing transaction for platforms, equipment and vessels with
Petrobras, as well as, to a lesser extent, our ability to achieve more
favorable terms on our third-party sales.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Income</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial income increased 38.3% from U.S.$158.8&nbsp;million in 2001 to
U.S.$219.6&nbsp;million in 2002, primarily due to an increase in loans to related
parties and interest received as a result of increases in the time period for
receipt of payments related to sales of crude oil and oil products to Petrobras
from 120&nbsp;days to 270&nbsp;days in the second quarter of 2002 and increases in the periods of time for receipt of
payments beyond the time periods previously agreed with Petrobras. The increase
in financial income was partially offset by a reduction in LIBOR,
which was a
component of the formula designed to reimburse us for financing expenses
incurred, and a reduction in volume of sales of oil products to Petrobras.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expense</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial expense increased 68.2% from U.S.$187.1&nbsp;million in 2001 to
U.S.$314.7&nbsp;million in 2002, primarily due to the increase in the amount of our
long-term indebtedness.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Loss</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss increased from U.S.$20.3&nbsp;million in 2001 to U.S.$65.5&nbsp;million in
2002.
</FONT>

<P align="center"><FONT size="2">28</FONT>

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<P align="left"><FONT size="2"><B><I>Results of operations for 2001 compared to 2000.</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales of crude oil and oil products (including sales of imports of
crude oil and oil products and sales of services) decreased 21.1% from
U.S.$7,937.0&nbsp;million in 2000 to U.S.$ 6,260.5&nbsp;million in 2001, primarily due to
a decrease in the average price of Brent crude oil from U.S.$28.50 per barrel
during 2000 to U.S.$24.42 per barrel during 2001 and a reduction in the volume
of crude oil and oil products imported by Petrobras resulting from an increase
in Petrobras&#146; crude oil and oil products production in Brazil.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lease Income</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lease income for 2001 reflects interest income from operating leases
of vessels by us to Petrobras. In 2001, our lease income was U.S.$10.7
million. Prior to 2001, we had no income from leases.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs of sales decreased 21.0% from U.S.$7,912.6&nbsp;million in 2000 to
U.S.$6,253.0&nbsp;million in 2001, due primarily to a reduction in the volume of
crude oil and oil products imported by Petrobras, resulting from an increase in
Petrobras&#146; crude oil and oil products production in Brazil, as well as a
decrease in the average price of Brent crude oil.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lease Expense</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lease expense for 2001 reflects interest expense from operating leases
for vessels. In 2001, our lease expense was U.S.$10.5&nbsp;million. Prior to 2001,
we had no lease expense.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general and administrative expenses were U.S.$0.1&nbsp;million in 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross Profit</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit decreased 71.0% from U.S.$24.4&nbsp;million in 2000 to
U.S.$7.6&nbsp;million in 2001, due primarily to a decrease in sales to third
parties, as a result of a decrease of imports of crude oil and oil products.
Sales to third parties are typically conducted when we have imported crude oil
and oil products that we no longer need because of decreased Brazilian demand
or operational changes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Income</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial income decreased 28.3% from U.S.$221.6&nbsp;million in 2000 to
U.S.$158.8&nbsp;million in 2001, primarily due to the reduction of LIBOR rates used
in the formula designed to reimburse us for our financing expenses. This
resulted in our financing costs not being fully reimbursed. See Item&nbsp;4.
&#147;Information on Our Company&#151;Business Overview&#151;Our Principal Commercial
Activities.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expense</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial expense decreased 14.8% from U.S.$219.7&nbsp;million in 2000 to
U.S.$187.1&nbsp;million in 2001, primarily due to a reduction in the credit terms we
extend to Petrobras from 180&nbsp;days to 120&nbsp;days and a decrease in crude oil
prices, which together decreased our need for financing. The reduced
</FONT>
<P align="center"><FONT size="2">29</FONT>

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<P align="left"><FONT size="2"> financing costs resulting from this trend were offset by higher interest
rates as a result of our replacement of a significant amount of short-term debt
with long-term debt and the issuance of senior notes in the capital markets.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gains on Material and Equipment</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001, we realized a gain on material and equipment of U.S.$0.4&nbsp;million,
mainly as a result of the sale of equipment by us to Catl&#233;ia.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Loss</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income decreased from U.S.$26.3&nbsp;million in 2000 to a loss of U.S.$20.3
million in 2001.
</FONT>


<P align="left"><FONT size="2"><B>Liquidity and Capital Resources</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We finance our oil trading activities through a combination of
inter-company loans from Petrobras, commercial paper programs, lines of credit
and the issuance of notes in the international capital markets. In our opinion,
our working capital is sufficient for our present requirements.
</FONT>


<P align="left"><FONT size="2">Our Indebtedness
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an offshore non-Brazilian company, we are not legally obligated to
receive prior approval from the Brazilian National Treasury to incur debt or
register debt with the Central Bank. However, as a matter of policy, the
issuance of any debt is recommended by either of Petrobras&#146; Chief Financial
Officer, Executive Board or Board of Directors, depending on the aggregate
principal amount and the tenor of the debt to be issued.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our Short-Term Indebtedness</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
short-term indebtedness is denominated in U.S. dollars and consists of
commercial paper and lines of credit. At December&nbsp;31, 2002, we had fully
utilized all lines of credit for the purchase of crude oil and oil products. In
2002, we accessed U.S.$367.5&nbsp;million in lines of credit, including the current
portion of long-term debt, as compared to US$990.4&nbsp;million accessed at December
31, 2001. The weighted average annual interest rate on these short-term
borrowings was 3.4% at December&nbsp;31, 2002, as compared to 2.8% at December&nbsp;31,
2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2002, we renewed our commercial paper program in an amount of
U.S.$335.0&nbsp;million in order to finance our working capital requirements (at
December&nbsp;31, 2002, no commercial paper notes were outstanding under this
program). In May 2003, we again renewed this program in an amount of
U.S.$160.0 million. Our commercial paper program is rated A1&#043; by Standard &#038; Poor&#146;s and
P-1 by Moody&#146;s and is supported by a letter of credit issued by Barclays Bank
and a standby purchase agreement with Petrobras. At December&nbsp;31, 2002, we also
had access to short-term capital through U.S.$380.6&nbsp;million in irrevocable
letters of credit supporting oil imports.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our loans payable to related parties (inter-company loans) increased from
U.S.$334.6&nbsp;million at December&nbsp;31, 2001 to U.S.$3,688.2&nbsp;million at December&nbsp;31,
2002 due to our increased working capital needs resulting from an increase in
the average time period for receipt of payments related to sales of crude oil
and oil products to Petrobras, from 120&nbsp;days to up to 270&nbsp;days. Although our sales
to Petrobras decreased in 2002, accounts receivable from Petrobras increased
87.2% from U.S.$2,584.9&nbsp;million at December&nbsp;31, 2001 to U.S.$4,838.3&nbsp;million at
December&nbsp;31, 2002, as a result of the increased time periods for receipt of
payment and an increase in inter-company loans from U.S.$283.0&nbsp;million at
</FONT>
<P align="center"><FONT size="2">30</FONT>

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<P align="left"><FONT size="2"> December&nbsp;31, 2001 to U.S.$1,157.9&nbsp;million at December&nbsp;31, 2002, primarily
as a result of inter-company loans we granted in connection with Petrobras&#146;
purchase of a controlling interest in Perez Companc S.A.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our
Long-Term Indebtedness</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, we had outstanding U.S.$460.3&nbsp;million in long-term
lines of credit due between 2003 and 2012 and U.S.$1,550&nbsp;million in three
series of long-term senior notes due between 2007 and 2011,
U.S.$750&nbsp;million in Senior Trust Certificates and
U.S.$150&nbsp;million in Junior Trust Certificates received by
our subsidiary, PFL, in connection with Petrobras' asset
securitization program. On October&nbsp;17,
2002, we also issued U.S.$338.4&nbsp;million in 4.75% Senior Exchangeable Notes due
2007 in connection with Petrobras&#146; purchase of Perez Companc S.A. In exchange,
we received notes issued by Petrobras International Braspetro BV (PIB BV), a
related party, in the same amount, terms and conditions as the Senior
Exchangeable Notes. In connection with the acquisition of Perez Companc, we
also provided PIB BV with a loan for U.S.$738.9&nbsp;million, with an interest rate
of 4.79%, which was renewed in the amount of U.S.$750.3&nbsp;million in April 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Petrobras&#146; strategy to obtain a wider range of medium- and
long-term financial instruments and to channel more of its financings through
us, in March 2003, we issued U.S.$400&nbsp;million of Global Step-Up Notes due 2008,
using the net proceeds principally to finance the purchase of oil product
imports and repay existing related-party debt and inter-company loans. These notes bear interest from
March&nbsp;31, 2003 at the rate of 9.00% per year until April&nbsp;1, 2006 and at a rate
of 12.375% thereafter.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with Petrobras&#146; export receivables asset securization
program, on May&nbsp;21, 2003, PF Export Trust issued to us
U.S.$550&nbsp;million in 6.436% Senior Trust
Certificates due 2015 and U.S.&nbsp;$200&nbsp;million in 3.748% Senior Trust Certificates due
2013. PF Export Trust also issued to us U.S.$100&nbsp;million in 6.436% Junior
Trust Certificates due 2015 and U.S.$40&nbsp;million in 3.478%
Junior Trust Certificates due 2013.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the sources of our current and long-term debt at
December&nbsp;31, 2002 and December&nbsp;31, 2001:
</FONT>


<P align="center"><FONT size="2"><B>CURRENT AND LONG-TERM DEBT</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long-term</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long-term</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financing institutions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$367.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$460.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$540.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$385.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commercial paper</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">449.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior notes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,550.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,050.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Securitization of Receivables</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior exchangeable notes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$367.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$3,248.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$990.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$2,335.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">31</FONT>



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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the sources of our capital markets debt outstanding at
December&nbsp;31, 2002:
</FONT>


<P align="center"><FONT size="2"><B>CAPITAL MARKETS DEBT
OUTSTANDING<sup>(1)</sup></B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="82%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Notes</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Principal Amount</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9.125% Senior Notes due 2007<sup>(2)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">4.750% Senior Exchangeable Notes due 2007<sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9.875% Senior Notes due 2008<sup>(2)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.750% Senior Trust Certificates due 2010<sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Floating Rate Senior Trust Certificates due 2010<sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">9.750%
Senior Notes due 2011<sup>(2)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">6.600% Senior Trust Certificates due 2011<sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Floating Rate Senior Trust Certificates due 2013<sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Does not include Junior Trust
Certificates issued by PF Export Trust in connection with
Petrobras&#146;
export receivables asset securitization program, because we are the
beneficiary of such Junior Trust Certificates.
</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Issued by us, with support from Petrobras through a standby
purchase agreement.
</FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Issued by us on October&nbsp;17, 2002 in connection with Petrobras&#146;
acquistion of Perez Companc S.A.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Issued in connection with Petrobras&#146; export receivables asset
securitization program.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual obligations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the
table below, we set forth our outstanding contractual obligations as
of December&nbsp;31, 2002, consisting of long-term debt including
financial leases, and the period in which the contractual obligations
come due.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="13"><FONT size="1"><B>Payments
Due</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
   <TD align="center" colspan="13"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2007 and<BR>
thereafter</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center" colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
<TD align="center"><HR size="1" noshade></TD>

</TR>


<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="13"><FONT size="1"><B>(millions of U.S. dollars)</B></FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Contractual
obligations as of December&nbsp;31, 2002:<BR>
Long-term debt including financial leases</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">3,932,149</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">81,700</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">229,250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">87,250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">243,300</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="2">3,290,649</FONT></TD>
</TR>

<TR valign="bottom">
</TABLE>
</CENTER>







<P align="left"><FONT size="2"><B>Critical Accounting Policies</B>
</FONT>

<!-- link2 "Item&nbsp;6. Directors, Senior Management and Employees." -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that there are no critical accounting policies in connection with
the preparation of our financial statements.
</FONT>


<P align="left"><FONT size="2"><B>Item&nbsp;6. Directors, Senior Management and Employees.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are managed by a board of directors, which currently consists of two
members, and our executive officers. The executive officers work as a board
and are responsible for our day-to-day management. The board of directors is
responsible for preparing our year-end accounts, convening shareholders&#146;
meetings and reviewing and monitoring our financial performance and strategy.
Although not required by our bylaws, it is our policy that the Chairman and all
of our executive officers be Petrobras employees. All of the current executive
officers are experienced managers from Petrobras, some of whom have served on
the boards of directors of Petrobras subsidiaries and in representative offices
abroad.
</FONT>

<P align="center"><FONT size="2">32</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors serve indefinite terms and can be removed with or
without cause. The following table sets forth certain information about our
board of directors.
</FONT>


<P align="center"><FONT size="2"><B>BOARD OF DIRECTORS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Date of Birth</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year of Appointment</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Amir Guilherme Barbassa</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
May&nbsp;19, 1947
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chairman
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1999</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Carlos Ney Martin de Andrade</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
April&nbsp;29, 1950
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2001</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Almir Guilherme Barbassa. </I>Mr.&nbsp;Barbassa has been our Chairman and Executive
Manager of Corporate Finance of Petrobras since July&nbsp;12, 1999. He joined
Petrobras in 1974 and served in Braspetro as Financial Manager in the Middle
East, North Africa, the United States and Brazil. He served as Financial
Director of Braspetro from 1993 to 1999. In addition, he was a professor in
the economics department of the Petr&#243;polis Catholic University and of the
Faculdades Integradas Bennett from 1973 to 1979.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Carlos Ney Martin de Andrade. </I>Mr.&nbsp;Andrade joined Petrobras in 1974. He has
served as Commercial Department Manager for Bunkering Crude Oil Supply and
Petroleum Products Trading. He has also served as Director of BR and Trading
Manager for Petrobras Am&#233;rica International. Prior to serving in his current
role as Executive Manager for Marketing and Trading, Mr.&nbsp;Andrade was General
Manager for Trading.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information about our executive
officers.
</FONT>


<P align="center"><FONT size="2"><B>EXECUTIVE OFFICERS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Date of Birth</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cl&#225;udia Val&#233;ria Carreiro de Souza</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
March&nbsp;8, 1963
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Commercial Manager</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Daniel Lima de Oliveira</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
December&nbsp;29, 1951
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Financial Manager</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Mari&#226;ngela Monteiro Tizatto</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
August&nbsp;9, 1960
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Accounting Manager</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Geraldo Vieira Baltar</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
August&nbsp;25, 1944
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Procurement Manager</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Nilton Ant&#244;nio de Almeida Maia</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
June&nbsp;21, 1957
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Legal Manager</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ana Celia Fleischman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
February&nbsp;21, 1957
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Secretary</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">G&#233;rson Luiz Gon&#231;alves</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
September&nbsp;29, 1953
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Auditor Manager</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cl&#225;udia Val&#233;ria Carreiro de Souza. </I>Ms.&nbsp;Carreiro became an executive officer
of our company on March&nbsp;19, 2000. She joined Petrobras in 1990 and has served
as Commercial Department Manager for Petroleum Products Supply and Trading
since 1994.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Daniel Lima de Oliveira</I>. Mr.&nbsp;Lima de Oliveira became an executive officer of
our company on April&nbsp;19, 2000. He joined Petrobras in 1976 as a supply
engineer in the Commercial Department. In 1982 he moved to the Financial
Department where he worked in the short-term credit division and served as
Assistant to the General Manager. From 1984 until 1988, he served as Financial
Manager of the London office. Since 1998, he has served as a manager at
Braspetro and a financial manager of the New York office. Since January 2002,
he has been a director of Petrobras International&#151;BRASPETRO and Braspetro Oil
Services&#151;BRASOIL.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mari&#226;ngela Monteiro Tizatto. </I>Ms.&nbsp;Tizatto became an executive officer of our
company on April&nbsp;4, 1998. She joined Petrobras in 1989 as an accountant in the
Accounting Department. Since 1999, she has served as Petrobras&#146; General
Manager for Accounting Operations. From 1990 to 1995, she was Manager of Petrobras&#146; Consolidated Accounting System, and from 1995 to 1999, she served
as Manager of Petrobras&#146; Division of Corporate Accounting. Before joining
Petrobras, Ms.&nbsp;Tizatto was Manager of </FONT>
<P align="center"><FONT size="2">33</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="left"><FONT size="2">Auditing for Deloitte Touche Tohmatsu,
where she worked for seven years. She was also a professor of advanced
accounting at the Faculdade Moraes Junior in Rio de Janeiro (1990).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Geraldo Vieira Baltar. </I>Mr.&nbsp;Baltar became an executive officer of our company
on August&nbsp;11, 2001. He joined Petrobras in 1970 and currently serves as the
Executive Manager of Energy under the Gas and Energy Directorship. He has held
several positions with Petrobras, including Senior Equipment Engineer and
Executive Manager of Materials.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nilton Ant&#244;nio de Almeida Maia. </I>Mr.&nbsp;Maia became an executive officer of our
company on April&nbsp;19, 2000. He joined Petrobras in 1984 as an internal auditor.
He has served as a tax consultant to Petrobras&#146; Legal Department, and since
early 2000, has served as General Manager for the Finance and Tax Division.
Mr.&nbsp;Maia is also a professor at the Universidade Federal do Rio de Janeiro.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ana Celia Fleischman. </I>Ms.&nbsp;Fleischman became an executive officer of our
company on August&nbsp;15, 2001. She joined Petrobras in 1980 as Analyst for
Trading and Supply in the Commercial Department, where she worked in the
natural gas, financial and pricing areas.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gerson Luiz Gon&#231;alves. </I>Mr.&nbsp;Gon&#231;alves became an executive officer of our
company on April&nbsp;19, 2000. He joined the Internal Audit Department of
Petrobras in 1976 and has been Petrobras&#146; Executive Manager for Internal
Auditing for the last six years. He is responsible for all of Petrobras&#146;
internal accounting control activities. Mr.&nbsp;Gon&#231;alves is a member of the
Brazilian Institute of Internal Auditors (AUDIBRA)&nbsp;and of the United States&#146;
Institute of Internal Auditors (IIA).
</FONT>


<P align="left"><FONT size="2"><B>Compensation of Directors and Executive Officers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and executive officers are paid by Petrobras in respect of
their function as Petrobras employees, but they do not receive any additional
compensation, pension or other benefits from us or Petrobras in respect of
their functions as our directors and officers.
</FONT>


<P align="left"><FONT size="2"><B>Board Practices</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The dates of appointment of our current directors and executive officers
are set forth above under &#147;Item&nbsp;6. Directors and Senior Management and
Employees.&#148; Our directors and executive officers do not have set terms of
appointment. We have not entered into any service or employment contracts with
any of our directors and executive officers. We do not have any audit or
remuneration committees.
</FONT>


<P align="left"><FONT size="2"><B>Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the exception of twelve employees of PEL, our personnel consists
solely of Petrobras employees, and we rely on Petrobras to provide all
administrative functions.
</FONT>


<P align="left"><FONT size="2"><B>Share Ownership</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;16, 2003, we had 50,000 shares of common stock outstanding.
All of our issued and outstanding shares of common stock are owned by
Petrobras. In June 2001 and in December 2002, Petrobras
upon receiving approval from its Board of Directors, converted a
total of U.S.$120&nbsp;million in accounts receivable from us into an
advance for a capital increase.
</FONT>

<P align="center"><FONT size="2">34</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;7. Major Shareholders and Related Party Transactions." -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;7. Major Shareholders and Related Party Transactions.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a wholly-owned subsidiary of Petrobras. We have numerous
transactions with Petrobras and other affiliated companies in the ordinary
course of business, as our primary function is to purchase crude oil and oil
products for sale to Petrobras.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions with related parties resulted in the following balances:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Liabilities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Liabilities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,838.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,584.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes
receivable<sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,157.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">283.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other non current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">473.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export prepayment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">832.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">292.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">288.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans payable<sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,688.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">8,110.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,028.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,825.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">631.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,049.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,028.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,867.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">631.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,061.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">958.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Our notes receivable from and payable to Petrobras bear interest at LIBOR
plus 3.0% per year.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">35</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal transactions with related parties are as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in millions of U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Sales of crude oil and oil products and services</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,208.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,115.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,290.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">680.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">738.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras America, Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">467.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">283.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BR Distribuidora</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EG3 S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cost of sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,212.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(95.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(81.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras America, Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(947.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,320.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,260.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro Oil Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(83.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Companhia MEGA S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(158.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(148.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape International Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(34.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PEBIS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Lease income (expense)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro Oil Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape International Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">161.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">127.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">217.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro Oil Company&#151;BOC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro Oil Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape International Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PIB.B.V</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marlim</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial expense</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(153.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro Oil Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5.7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,613.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(2,494.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,016.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(1,726.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,790.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(1,494.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">36</FONT>

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<!-- link2 "Item&nbsp;8. Financial Information." -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;8. Financial Information.</B>
</FONT>


<P align="left"><FONT size="2"><B>Consolidated Statements and Other Financial Information</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;18. &#147;Financial Statements.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no litigation or governmental proceeding pending or, to our knowledge,
threatened against us or any of our subsidiaries that, if adversely determined,
would have a significant effect on our financial position or profitability.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of our dividend distribution policy, see &#147;Item&nbsp;10.
Additional Information&#151;Memorandum and Articles of Association&#151;Rights and
Obligations of Shareholders&#151;Dividends.&#148;
</FONT>

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<DIV align="left"><A NAME="011"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;9. The Offer and Listing.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is not listed. &nbsp;Our Senior Notes are listed in the
Luxembourg Stock Exchange. &nbsp;Our Global-Step Up Notes have not been listed on
any securities exchange. &nbsp;Our other debt securities have not been listed on any
other exchange.
</FONT>

<!-- link2 "Item&nbsp;10. Additional Information." -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;10. Additional Information</B>.
</FONT>


<P align="center"><FONT size="2"><B>MEMORANDUM AND ARTICLES OF ASSOCIATION</B>
</FONT>

<P align="left"><FONT size="2"><I>The following represents a summary of certain key provisions of our Memorandum
and Articles of Association. The summary does not purport to be a summary of
all of the provisions of our Memorandum and Articles of Association nor of all
relevant provisions of Cayman Islands law governing the management and
regulation of Cayman Islands exempted companies.</I>
</FONT>


<P align="left"><FONT size="2"><B>Register</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exempted company incorporated with limited liability in the
Cayman Islands under the Companies Law (2002 Revision) with company
registration number 76600. We registered and filed our Memorandum and Articles
of Association with the Registrar of Companies on September&nbsp;24, 1997. We were
initially incorporated with the name Brasoil Finance Company, which name was
changed by special resolution of our shareholders to Petrobras International
Finance Company on September&nbsp;25, 1997. There has been no subsequent amendment
to our Memorandum and Articles of Association.
</FONT>


<P align="left"><FONT size="2"><B>Objects and Purposes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Memorandum of Association grants us full power and authority to carry
out the business of petroleum marketing, sales, financing and transportation
and any business incidental thereto. As a matter of Cayman Islands law, we
cannot trade in the Cayman Islands except in furtherance of the business
carried on outside the Cayman Islands.
</FONT>


<P align="left"><FONT size="2"><B>Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors may vote on a proposal, arrangement or contract in which they
are interested. However, interested directors must declare the nature of their
interest at a directors&#146; meeting. If the interested directors declare their
interest, their votes are counted and they are counted in the quorum of such
meeting.
</FONT>

<P align="center"><FONT size="2">37</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The directors may exercise their powers to borrow money, issue debt
securities and to mortgage or charge any of the undertaking or property of our
company and are generally responsible for its day-to-day management and
administration.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors are not required to own shares.
</FONT>


<P align="left"><FONT size="2"><B>Rights and Obligations of Shareholders</B>
</FONT>


<P align="left"><FONT size="2"><B><I>Dividends</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders may declare dividends in a general meeting but the dividends
cannot exceed the amount recommended by the directors. The directors may pay
the shareholders interim dividends and may, before recommending any dividend,
set aside reserves out of profits. The directors can invest these reserves in
their discretion or employ them in our business.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends may be paid in cash or in kind but may only be paid out of
profits or, subject to certain restrictions of Cayman Islands law, a share
premium account.
</FONT>


<P align="left"><FONT size="2"><B><I>Voting Rights</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Votes may be cast at a general meeting by a show of hands or by a poll.
On a vote by a show of hands, each shareholder or shareholder represented by
proxy has one vote. On a vote by a poll, each shareholder or shareholder
represented by proxy has one vote for each share owned.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors are elected by ordinary resolution by the shareholders at
general meetings or by a board resolution of the directors. Shareholders are
not entitled to vote at a general meeting unless calls or other amounts payable
on their shares have been paid. In lieu of voting on a matter at a general
meeting, the shareholders entitled to vote on that matter may adopt the matter
by signing a written resolution.
</FONT>


<P align="left"><FONT size="2"><B><I>Redemption</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may issue shares which are redeemable by us or by our shareholders.
The amount payable on each share in a redemption is its fair value as
determined by the directors on the basis of a willing seller and a willing
buyer.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where we have agreed to purchase any share from a shareholder, we will
give notice to the other shareholders, if any, specifying the number and class
of shares to be purchased, the name and address of the seller, the price to be
paid for the shares and the portion (if any) of that price which is being paid
out of capital. The notice will also indicate a date on which the purchase is
to be effected and will invite shareholders other than the seller, if any, to
object to the purchase before that date. If any objection is received the
redemption request will be refused by the directors or put to a general meeting
of the shareholders.
</FONT>


<P align="left"><FONT size="2"><B><I>Shareholder Rights Upon Liquidation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are liquidated, the liquidator may (in accordance with an ordinary
shareholder resolution):
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">set a fair value on our assets, divide all or part of our
assets among the shareholders and determine how the assets will be
divided among shareholders or classes of shareholders; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">vest all or part of our assets in trustees.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">38</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders will not be compelled to accept any securities on which there
is a liability.
</FONT>


<P align="left"><FONT size="2"><B><I>Calls on Shares</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors may make calls on the shareholders with respect to any amounts
unpaid on their shares. Each shareholder shall pay to the company the amounts
called on such shares.
</FONT>


<P align="left"><FONT size="2"><B><I>Change to Rights of Shareholders</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders may change the rights of their class of shares by:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">getting the written consent of three-fourths of the shareholders of that class; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">passing a special resolution at a meeting of the shareholders of that class.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no general limitations on the rights to own shares specified by the articles.
</FONT>


<P align="left"><FONT size="2"><B>General Meetings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A general meeting may be convened:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">by the directors at any time; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">by any two shareholders by written request.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice of a general meeting is given to all shareholders.</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All business carried out at a general meeting is considered special business except:</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sanctioning a dividend;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">consideration of the accounts, balance sheets, and ordinary
report of the directors and auditors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">appointment and removal of directors; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fixing of remuneration of the auditors.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder consent is required to carry out special business at a meeting
unless notice of the special business is given in the notice of the meeting. A
quorum of shareholders is required to be present at any meeting in order to
carry out business. Any two shareholders or one shareholder holding a majority
of the shares who are present in person or represented by proxy is a quorum.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no requirement under Cayman Islands law to convene an annual
meeting or to convene any general meeting of the shareholders. The directors
are permitted to designate any general meeting of shareholders as an annual
general meeting.
</FONT>


<P align="left"><FONT size="2"><B>Liability of Shareholders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In normal circumstances, the liability of any shareholder to us is limited
to the amount which such shareholder has agreed to pay in respect of the
subscription of his shares.
</FONT>

<P align="center"><FONT size="2">39</FONT>

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<P align="left"><FONT size="2"><B>Changes in Capital</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may increase our share capital by ordinary resolution. The new shares
will be subject to all of the provisions to which the original shares are
subject.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may also by ordinary resolution:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">consolidate and divide all or any of our share capital into shares of a larger amount;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sub-divide existing shares into shares of a smaller amount,
subject to the provisions of Section&nbsp;13 of the Companies Law; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">cancel any shares which, at the date of the resolution, are
not held or agreed to be held by any person.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may reduce our share capital and any capital redemption reserve by
special resolution in accordance with relevant provision of Cayman Islands law.
</FONT>


<P align="left"><FONT size="2"><B>Indemnity</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and officers are indemnified out of our assets and funds
against all actions, losses, expenses and liabilities which they incur in the
discharge of their respective duties, powers, authorities or discretions.
Under our Memorandum of Association, directors and officers are excused from
all liability to us, except for any losses which arise as a result of such
party&#146;s own dishonesty.
</FONT>


<P align="left"><FONT size="2"><B>Accounts</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts relating to our affairs are kept in such manner as may be
determined from time to time by the directors and may be audited in such manner
as may be determined from time to time by us in a general meeting or failing
any such determination by the directors. There is, however, no requirement as
a matter of Cayman Islands law to have our accounts audited.
</FONT>


<P align="left"><FONT size="2"><B>Transfer out of Jurisdiction</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, by special resolution of the shareholders, transfer out of the
Cayman Islands into any jurisdiction permitting such transfer.
</FONT>


<P align="left"><FONT size="2"><B>EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no governmental laws, decrees or regulations in Cayman
Islands that restrict the export or import of capital, including
dividend and other payments to non-resident holders to the Cayman
Islands, and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no limitations on the right of nonresident or foreign owners
imposed by Cayman Island law or our Memorandum of Association to
hold or vote our shares.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">40</FONT>

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<P align="center"><FONT size="2"><B>TAXATION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of principal Cayman Islands, Brazil and United
States federal income tax considerations that may be relevant to the purchase,
ownership, and disposition of our debt securities. This summary does not
describe any tax consequences arising under the laws of any state, locality or
taxing jurisdiction other than the Cayman Islands, Brazil and the United
States.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is based on the tax laws of the Cayman Islands, Brazil and
the United States as in effect on the date of this annual report, as well as
regulations, rulings and decisions of the Cayman Islands, Brazil and the United
States available on or before the date of this annual report and now in effect.
All of these laws, regulations, rulings and decisions are subject to change,
which could apply retroactively and cause statements in this summary to no
longer be true. There is no reciprocal tax treaty between the Cayman Islands
and the United States, the Cayman Islands and Brazil or Brazil and the United
States.
</FONT>


<P align="left"><FONT size="2"><B>Cayman Islands Taxation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under current law, we are not subject to income, capital, transfer, sales
or other taxes in the Cayman Islands.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were incorporated as an exempted company under the laws of the Cayman
Islands on September&nbsp;24, 1997. We have received an Undertaking as to Tax
Concessions pursuant to Section&nbsp;6 of the Tax Concessions Law (1999 Revision)
which provides that, for a period of twenty years from the date thereof no law
hereafter enacted in the Cayman Islands imposing any tax or duty to be levied
on income or on capital assets, gains or appreciation will apply to any of our
income or property and which is deemed to provide that no tax is to be levied
on profits, income, gains or appreciations or which is in the nature of estate
duty or inheritance tax shall be payable on or in respect of shares, debentures
or other of our obligations, or by way of withholding of any part of a payment
of principal due under a debenture or other of our obligations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Cayman Islands withholding tax applies to distributions by us in
respect of the notes. Noteholders are not subject to any income, capital,
transfer, sales or other taxes in the Cayman Islands in respect of their
purchase, holding or disposition of the notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noteholders whose notes are brought into or issued in the Cayman Islands
will be liable to pay stamp duty of up to C.I.$250 on each note.
</FONT>


<P align="left"><FONT size="2"><B>Brazil Taxation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following discussion is a summary of the Brazilian tax considerations
relating to an
investment in the notes by a nonresident of Brazil. The discussion is based on
the tax laws of Brazil as in effect on the date hereof and is subject to any
change in Brazilian law that may come into effect after such date. The
information set forth below is intended to be a general discussion only and
does not address all possible tax consequences relating to an investment in the
notes.</I>
</FONT>

<P align="left"><FONT size="2"><B>PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE
CONSEQUENCES OF PURCHASING THE NOTES, INCLUDING, WITHOUT LIMITATION, THE
CONSEQUENCES OF THE RECEIPT OF INTEREST AND THE SALE, REDEMPTION OR REPAYMENT
OF THE NOTES OR COUPONS.</B>
<P align="center"><FONT size="2">41</FONT>

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</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, an individual, entity, trust or organization domiciled for tax
purposes outside Brazil (&#147;Nonresidents&#148;) is taxed in Brazil only when income is
derived from Brazilian sources. Therefore, any gains or income paid by us in
respect of the notes issued by us in favor of Nonresident noteholders are not
subject to Brazilian taxes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest (including OID), fees, commissions, expenses and any other income
payable by a Brazilian resident to a Nonresident are generally subject to
income tax withheld at source. As of January&nbsp;1, 1996, the rate of withholding
tax is 15% or such other lower rate as provided for in an applicable tax treaty
between Brazil and another country. If the recipient of the payment is
domiciled in a tax haven jurisdiction, as defined by Brazilian tax regulations,
the rate will be 25%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the payments with respect to the notes are made by a Brazilian source,
the noteholders will be indemnified so that, after payment of all applicable
Brazilian taxes collectable by withholding, deduction or otherwise, with
respect to principal, interest (including the OID) and additional amounts
payable with respect to the notes (plus any interest and penalties thereon), a
noteholder will retain an amount equal to the amounts that such noteholder
would have retained had no such Brazilian taxes (plus interest and penalties
thereon) been payable. The Brazilian obligor will, subject to certain
exceptions, pay additional amounts in respect of such withholding or deduction
so that the holder receives the net amount due.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains on the sale or other disposition of the notes made outside Brazil by
a Nonresident, other than a branch or a subsidiary of Brazilian resident, to
another Nonresident are not subject to Brazilian taxes. Gains made by a
Brazilian Nonresident from the sale or other disposition of notes to a
Brazilian resident, subject to certain assumptions and conditions, are not
subject to Brazilian taxes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, there are no inheritance, gift, succession, stamp, or other
similar taxes in Brazil with
respect to the ownership, transfer, assignment or any other disposition of the
notes by a Nonresident, except for gift and inheritance taxes imposed by some
Brazilian states on gifts or bequests by individuals or entities not domiciled
or residing in Brazil to individuals or entities domiciled or residing
within such states.
</FONT>



<P align="center"><FONT size="2">42</FONT>



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<P align="left"><FONT size="2"><B>U.S. Federal Income Taxation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following summary sets forth certain United States federal income tax
considerations that may be relevant to a holder of a note that is, for U.S.
federal income tax purposes, a citizen or resident of the United States or a
domestic corporation or that otherwise is subject to United States federal
income tax on a net income basis in respect of the notes. This summary is
based upon the Internal Revenue Code of 1986, as amended, or the Code, its
legislative history, existing and proposed U.S. Treasury regulations
promulgated thereunder, published rulings by the U.S. Internal Revenue Service,
or the IRS, and court decisions, all in effect as of the date of this offering
memorandum, all of which authorities are subject to change or differing
interpretations, which changes or differing interpretations could apply
retroactively. This summary does not purport to discuss all aspects of United
States federal income taxation which may be relevant to particular investors,
such as financial institutions, insurance companies, dealers or traders in
securities or currencies, regulated investment companies, tax-exempt
organizations, persons holding notes as part of a position in a &#147;straddle&#148; or
as part of a hedging transaction or &#147;conversion transaction&#148; for U.S. federal
tax purposes, persons that enter into a &#147;constructive sale&#148; transaction with
respect to the notes or U.S. Holders whose functional currency as defined in
Section&nbsp;985 of the Code is not the U.S. dollar. In addition, this summary does
not discuss any foreign, state or local tax considerations. This summary only
applies to original purchasers of notes who purchase notes at the original
issue price and hold the notes as &#147;capital assets&#148; (generally, property held
for investment) within the meaning of Section&nbsp;1221 of the Code.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
TAX CONSEQUENCES OF INVESTING IN THE NOTES, INCLUDING THE EFFECTS OF FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.</B>
</FONT>


<P align="left"><FONT size="2"><B>U.S. Holders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Payments of interest</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of &#147;qualified stated interest&#148; (as defined below) on a note
(including additional amounts, if any) will generally be taxable to a U.S.
Holder as ordinary interest income when such interest is accrued or received,
in accordance with the U.S. Holder&#146;s regular method of tax accounting. In
general, if the &#147;issue price&#148; of a note is less than the &#147;stated redemption
price at maturity&#148; by more than a <I>de minimis </I>amount, such Note will be
considered to have &#147;original issue discount&#148; (&#147;OID&#148;). The issue price of a
note is the first price at which a substantial amount of such notes are sold to
investors. The stated redemption price at maturity of a note generally
includes all payments other than payments of qualified stated interest (as
defined below).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, each U.S. Holder of a note, whether such holder uses the cash
or the accrual method of tax accounting, will be required to include in gross
income as ordinary interest income the sum of the &#147;daily portions&#148; of OID on
the note for all days during the taxable year that the U.S. Holder owns the
note. The daily portions of OID on a note are determined by allocating to each
day in any accrual period a ratable portion of the OID allocable to that
accrual period. In general, in the case of an initial holder, the amount of OID
on a note allocable to each accrual period is determined by (a)&nbsp;multiplying the
&#147;adjusted issue price,&#148; as defined below, of the note at the beginning of the
accrual period by the yield to maturity of the note, and (b)&nbsp;subtracting from
that product the amount of qualified stated interest allocable to that accrual
period. U.S. Holders should be aware that they generally must include OID in
gross income as ordinary interest income for U.S. federal income tax purposes
as it accrues, in advance of the receipt of cash attributable to that income.
The &#147;adjusted issue price&#148; of a note at the beginning of any accrual period
will generally be the sum of its issue price (generally including accrued
interest, if any) and the amount of OID allocable to all prior accrual periods,
reduced by the amount of all payments other than
</FONT>
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<P align="left"><FONT size="2"> payments of qualified stated interest (if any) made with respect to such
note in all prior accrual periods. The term &#147;qualified stated interest&#148;
generally means stated interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually during
the entire term of a note at a single fixed rate of interest or, subject to
certain conditions, based on one or more interest indices.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income, including OID, in respect of the notes will constitute
foreign source income for United States federal income tax purposes and, with
certain exceptions, will be treated separately, together with other items of
&#147;passive income&#148; or, in the case of certain holders, &#147;financial services
income&#148; for purposes of computing the foreign tax credit allowable under the
United States federal income tax laws. The calculation of foreign tax credits,
involves the application complex of rules that depend on a U.S. Holder&#146;s
particular circumstances. U.S. Holders should consult their own tax advisors
regarding the availability of foreign tax credits and the treatment of
additional amounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sale or disposition of Notes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder will generally recognize capital gain or loss upon the sale,
exchange, retirement or other disposition of a note in an amount equal to the
difference between the amount realized upon such sale, exchange, retirement or
other disposition (other than amounts attributable to accrued qualified stated
interest, which will be taxed as such) and such U.S. Holder&#146;s tax basis in the
note increased by any amounts included in gross income by such U.S. Holders as
OID and reduced by any payments other than payments of qualified stated
interest on that note. A U.S. Holder&#146;s tax basis in the note will generally
equal the U.S. Holder&#146;s cost for the note. Gain or loss realized by a U.S.
Holder on the sale, exchange, retirement or other disposition of a note will
generally be United States source gain or loss for United States federal income
tax purposes unless it is attributable to an office or other fixed place of
business outside the United States and certain other conditions are met. The
gain or loss realized by a U.S. Holder will be capital gain or loss, and will
be long-term capital gain or loss if the notes were held for more than one
year. The net amount of long-term capital gain recognized by an individual
holder after May&nbsp;5, 2003 and before January&nbsp;1, 2009 generally is subject to
taxation at a maximum rate of 15%. The net long-term capital gain recognized
by an individual holder before May&nbsp;6, 2003 generally is subject to taxation at
a maximum rate of 20%.
</FONT>


<P align="left"><FONT size="2"><B>Non-U.S. Holder</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion of &#147;backup&#148; withholding below, interest on the
notes is currently exempt from United States federal income taxes, including
withholding taxes, if paid to a Non-U.S. Holder (as defined below) unless the
interest is effectively connected with the conduct by such holder of a United
States trade or business. In addition, (i)&nbsp;subject to the discussion of backup
withholding below, a Non-U.S. Holder will not be subject to United States
federal income tax on any gain realized on the sale or exchange of a note,
provided that such gain is not effectively connected with the conduct by the
holder of a United States trade or business and, in the case of a Non-U.S.
Holder who is an individual, such holder is not present in the United States
for a total of 183&nbsp;days or more during the taxable year in which such gain is
realized and certain other conditions are met and (ii)&nbsp;the notes will be deemed
to be situated outside the United States for purposes of the United States
federal estate tax and will not be includible in the gross estate for purposes
of such tax in the case of a non-resident of the United States who is not a
citizen of the United States at the time of death.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used herein, a &#147;Non-U.S. Holder&#148; is a holder of the notes that is, with
respect to the United States, a foreign corporation or a nonresident alien
individual.
</FONT>

<P align="center"><FONT size="2">44</FONT>

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<P align="left"><FONT size="2"><B>Backup Withholding and Information Reporting</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder may, under certain circumstances, be subject to &#147;backup
withholding&#148; with respect to certain payments to that U.S. Holder, unless the
holder (i)&nbsp;is a corporation or comes within certain other exempt categories,
and demonstrates this fact when so required, or (ii)&nbsp;provides a correct
taxpayer identification number, certifies that it is not subject to backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules generally will be
creditable against the U.S. Holder&#146;s U.S. federal income tax liability. While
Non-U.S. Holders generally are exempt from backup withholding, a Non-U.S.
Holder may, in certain circumstances, be required to comply with certain
information and identification procedures in order to prove entitlement to this
exemption.
</FONT>


<P align="center"><FONT size="2"><B>EXPORT RECEIVABLES ASSET SECURITIZATION PROGRAM</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with Petrobras&#146; asset receivables asset securitization
program, PFL has received senior and junior trust certificates in the aggregate
amount of U.S.$1,800.0&nbsp;million. See Item&nbsp;4. &#147;Information on the
Company&#151;Business Overview Export Receivables
Asset Securitization Program.&#148;
</FONT>


<P align="left"><FONT size="2"><B><I>The Prepayment Agreement</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to a prepayment agreement entered into by Petrobras and PFL,
Petrobras undertook to deliver, for as long as any Senior Trust Certificates
remain outstanding, in each quarterly period, a quantity of Eligible Products
having a market value equal to any scheduled payments of interest on and
principal of the Senior Trust Certificates.
</FONT>


<P align="left"><FONT size="2"><B><I>The Master Export Contract</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As long as any Senior Trust Certificates or any amounts payable to the
insurers remain outstanding, Petrobras will deliver, in each quarterly period,
a quantity of Eligible Products having a market value equal to any scheduled
payments of interest, principal or other amounts due under the Senior Trust
Certificates. Under the Master Export Contract, Petrobras exports and sells
Eligible Products to PFL during each quarterly period:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in an amount equal to at least 80% of the total volume of all
bunker fuel and fuel oil (collectively, Heavy Fuel Oil) exported by
Petrobras during that quarterly period; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">with a value (based upon the net invoice price at which such
Eligible Products are actually sold by PFL) equal to at least:</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">-</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">the highest aggregate amount scheduled to be paid by
the Trustee in any quarterly period during the remaining term of
any series of Senior Trust Certificates at the time outstanding,
with respect to interest, principal and other amounts due under
the Senior Trust Certificates <I>multiplied by</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">-</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">a factor that fluctuates between 2.0 and 3.0, depending
upon the level of sales of Eligible Products by PFL that are
contracted to be made under arrangements that provide for a
minimum price per barrel or other hedging arrangements and the
relevant minimum price or price established by such hedging
arrangements.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">45</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras also agrees that its average daily gross exports of fuel oil and
bunker fuel for any rolling twelve-month period will be equal to at least
70,000 barrels of fuel oil and bunker fuel. Petrobras is not relieved of its
obligations to deliver Eligible Products under the Master Export Contract, or
the Prepayment Agreement, for any reason, including, without limitation, as a
result of force majeure or on non-payment by PFL.
</FONT>


<P align="left"><FONT size="2"><B><I>Risk of Loss</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras fulfills its delivery obligations to PFL by delivering the
Eligible Products directly to buyers on behalf of PFL. Title and risk of loss
remain with Petrobras until the Eligible Products are delivered to the buyers,
at which time both title and risk of loss pass to PFL and simultaneously to the
buyers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxes and Expenses</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras is obligated to indemnify PFL against all costs, expenses,
liabilities, damages and other similar obligations which may be imposed upon,
incurred or suffered by PFL in respect of any present or future taxes of any
nature assessed against PFL by Brazil, the Cayman Islands, the United States or
any other taxing jurisdiction.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Petrobras is obligated to indemnify and hold harmless PFL, its affiliates,
and their respective officers, directors, employees and agents from all suits,
direct damages or other losses arising from or out of the transactions
contemplated by the principal agreements, including: any negligence or willful
misconduct of Petrobras, breach of representations or warranties, claims for
payment (whether in cash or kind) by any and all third parties in respect of
taxes or similar charges upon the distribution, sale and transportation of any
Eligible Products prior to its export, claims for payment by any and all third
parties who purport to be entitled to receive any portion of the proceeds from,
or any payment relating to, the sale of the Eligible Products to PFL, amounts
payable by PFL in respect of any indemnification provided to other persons, and
all expenses arising from or out of any tax which may be levied and assessed
upon PFL in respect of any delivery, sale or resale of Eligible Products to
PFL.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Negative Pledge</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So long as any senior trust certificate remains outstanding or any amount
payable to an Enhancer under any of the insurance documents remains
outstanding, Petrobras will not create or permit any Lien, other than a
Petrobras Permitted Lien, on any of Petrobras&#146; assets or any of its
subsidiaries&#146; assets to secure (i)&nbsp;any of Petrobras&#146; indebtedness, (ii)&nbsp;any of
its subsidiaries&#146; indebtedness or (iii)&nbsp;the indebtedness of any other person,
unless Petrobras contemporaneously creates or permits such Lien to secure
equally and ratably Petrobras&#146; obligations under the Master Export Contract and
the other transaction documents to which it is a party or Petrobras provides
other security for its obligations under the Master Export Contract and the
other transaction documents to which it is a party as is duly approved by a
resolution of the senior certificate holders in accordance with the trust deed.
</FONT>


<P align="left"><FONT size="2"><B><I>Sales Agreements</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFL sells Eligible Products purchased from Petrobras or its affiliates
though the following agreements:
</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Offtake Contracts with Citibank, N.A, as Offtaker, pursuant
to which PFL agreed to deliver and sell, and Citibank N.A. agreed to
accept and purchase, during each quarterly delivery period, Eligible
Products with a value equal to at least 1.1 times the amounts
scheduled to be paid in respect of the Series&nbsp;2001 Senior Trust
Certificates on the payment date immediately following the end of
such quarterly delivery period.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">A Product Sale Agreement with PAI, which may purchase
Eligible Products from time to time from PFL and sell them to buyers
primarily in the United States and its territories; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Sales to other purchasers of Eligible Products in the open
market.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B><I>The Receivables Purchase Agreement</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to a Receivables Purchase Agreement PFL sells to the Trustee the
rights to a specified amount of designated receivables to be generated from the
sale of Eligible Products by PFL. In exchange, the Trustee issued to PFL the
Senior Trust Certificates. The rights to the purchased receivables acquired by
the Trust on the closing date consists of:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Certain receivables to be generated by the sale of Eligible
Products to the Offtaker, following an agreed schedule under the
Offtake Contracts.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Certain additional receivables to be generated by the sale of
Eligible Products to other buyers following an agreed schedule; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If applicable, certain receivables in each quarterly period
equal to any taxes incurred on payments in respect of outstanding
Senior Trust Certificates, together with certain other amounts.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B><I>The Insurance and Reimbursement Agreements</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each series of the Senior Trust Certificates features credit enhancement
by means of a financial guaranty insurance policy. See Item&nbsp;4. &#147;Information on
the Company &#151; Business Overview &#151; Export
Receivables Asset Securization Program&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parties also entered into Insurance and Reimbursement Agreements
pursuant to which, among other things, the Trustee has agreed to reimburse,
with interest, MBIA, Ambac and XL Capital Assurance Inc., as applicable, for
amounts paid pursuant to claims made under their respective financial guaranty
insurance policies.
</FONT>


<P align="center"><FONT size="2"><B>SENIOR NOTES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have issued three series of Senior Notes in the aggregate amount of
U.S.$1,550.0&nbsp;million. See Item&nbsp;5. &#147;Operating and
Financial Review and Prospects&#151;Management&#146;s Discussion and Analysis of
Results of Operation&#151;Liquidity and Capital Resources.&#148; The terms of each of
these series of Senior Notes, and the material agreements which set forth their
terms, are substantially similar and are summarized below.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indentures</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each series of Senior Notes was issued pursuant to an indenture between
us, as the issuer, and The Bank of New York, as trustee. The terms of the
indentures require us and our subsidiaries, among other things, to:
</FONT>

<P align="center"><FONT size="2">47</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pay all amounts owed by us under the indenture and the notes
when such amounts are due, and perform each of our other obligations
under the various transaction documents entered into by it in
connection with the issuance of the notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">comply with all applicable laws and maintain all necessary governmental approvals;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pay all uncontested taxes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">preserve our existence and maintain our properties;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain adequate insurance;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain our books and records in accordance with U.S. GAAP;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain an office or agency in New York for the purpose of service of process;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ensure that the notes continue to be our senior obligations;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">use proceeds from the issuance of the notes for specified
purposes, namely the purchase of oil imports and the repayment of
short-term indebtedness;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">give notice to the trustee of any default or event of default
under the indenture or certain currency control events in Brazil;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">provide certain financial statements to the trustee;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">take actions to maintain the trustee&#146;s or the noteholders&#146;
rights under the relevant transaction documents;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain the required coverage amount;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">provide certain information to noteholders required by Rule&nbsp;144A; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">replace the trustee upon any resignation or removal thereof.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the terms of the indenture restrict our ability and the
ability of our subsidiaries, among other things, to:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">undertake certain mergers, consolidations or similar transactions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">create certain liens on our assets or pledge our assets; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enter into certain transactions with our affiliates.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These covenants are subject to a number of terms, conditions and further qualifications.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture also contains certain events of default, consisting of the following:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to pay principal when due;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to pay interest within 30&nbsp;days of any interest payment date;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">inaccuracy of any representation or warranty made by us or
Petrobras in any transaction document or in certain specified other
certificates when made;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">breach of a covenant or agreement in the indenture, the
standby purchase agreement and other relevant transaction documents
by us or Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">acceleration of or failure to make a payment on our
indebtedness or the indebtedness of Petrobras or a material
subsidiary of Petrobras that equals or exceeds a specified
threshold;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">48</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a final judgment against us, Petrobras or a material
subsidiary of Petrobras that equals or exceeds a specified
threshold;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain events of bankruptcy, liquidation or insolvency of
us, Petrobras or any material subsidiary of Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain events relating to the unenforceability of the
relevant transaction documents against us or Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the cancellation, termination (other than as permitted in the
indenture) or unenforceability of the letter of credit unless an
equivalent letter of credit is promptly provided or an equivalent
amount in U.S. dollars is promptly deposited in the reserve account;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras ceases to own at least 51% of our outstanding
voting shares; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we or Petrobras shall fail to comply with our obligations
with respect to the required coverage amount.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Standby Purchase Agreements</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Senior Notes have the benefit of credit support from Petrobras in the
form of standby purchase agreements under which Petrobras is obligated to make
certain payments to the trustee in the event we fail to make required payments
of principal, interest and other amounts due under the Senior Notes and the
indenture. Subject to certain limitations, Petrobras is required to purchase
from the holders of the notes and pay to the trustee amounts in respect of the
noteholders&#146; right to receive:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the amount of any interest or other amounts not paid by us in
accordance with the terms of the notes and the indenture;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the entire principal amount of the notes in the event we fail
to do so at their expected maturity or earlier upon any redemption
or acceleration of the Senior Notes prior to the expected maturity
date or, if extended, on the final maturity date; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">except where certain events have occurred which limit
Petrobras&#146; ability to convert and transfer Reais and U.S. dollars,
interest on all of the foregoing amounts at a default rate, for
payments beyond the date that we were required to make payment under
the indenture in respect of the full principal amount of the Senior
Notes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will have the right to defer making payments under the indentures for
up to 18&nbsp;months, if an event of inconvertibility, untransferability or
expropriation occurs that prevents Petrobras from making required payments
under the standby purchase agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obligations under the standby purchase agreement constitute direct and
general senior unsecured and unsubordinated obligations of Petrobras and rank
<I>pari passu </I>with other senior, unsecured obligations of Petrobras that are not,
by their terms, expressly subordinated in right of payment to Petrobras&#146;
obligations under the standby purchase agreement.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Letters of Credit/Political Risk Insurance</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the indentures, we established and maintained reserve accounts
with the trustee on behalf of the holders of the Senior Notes. We were also
required to issue an irrevocable standby letter of credit in favor of the
trustee or provide political risk insurance for the trustee, in aggregate
amounts set forth in the terms of the Senior Notes. The required coverage
amount varies for each series of Senior Notes. The funds in the reserve
account may be returned to us, and the required coverage amount may be
</FONT>
<P align="center"><FONT size="2">49</FONT>

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<P align="left"><FONT size="2"> reduced, under certain circumstances. We have paid all premiums on our
insurance policies and/or have funded and issued standby irrevocable letters of
credit, which will be replaced by other standby letters of credit or by funds
in our reserve accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts may be withdrawn from the reserve account and drawings may be made
under the letter of credit or the political risk insurance policy to make
scheduled interest payments on the Senior Notes for up to 18&nbsp;months, if an
event of inconvertibility, untransferability or expropriation occurs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration Rights Agreement</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the registration rights agreement, we are obligated to
consummate exchange offers to cause the Senior Notes to generally become freely
transferable. We met this requirement with respect to the first two series of
Senior Notes on December&nbsp;19, 2001, and with respect to the third series of
Senior Notes on April&nbsp;7, 2003.
</FONT>


<P align="center"><FONT size="2"><B>GLOBAL STEP-UP NOTES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, we issued U.S.$400&nbsp;million of global step-up Notes due 2008,
which bear interest from March&nbsp;31, 2003 at the rate of 9.00% per year until
April&nbsp;1, 2006 and at a rate of 12.375% thereafter. We issued these notes
pursuant to our and Petrobras&#146; U.S.$8&nbsp;billion shelf registration statement on
Form&nbsp;F-3, which was filed with the SEC on July&nbsp;2, 2002. See
Item&nbsp;5. &#147;Operating and Financial Review and
Prospects&#151;Management&#146;s Discussion and Analysis of Results of Operation&#151;Liquidity and
Capital Resources.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of these notes are summarized below.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indenture</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We issued the Global Step-Up Notes pursuant to an indenture between us, as
the issuer, and JP Morgan Chase Bank, as trustee, dated as of July&nbsp;19, 2002, as
supplemented by the first supplemental indenture dated as of March&nbsp;31, 2003,
among us, Petrobras and the trustee. When we refer to the indenture in this
section, we are referring to the indenture as supplemented by the first
supplemental indenture.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of the indenture require us, among other things, to
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pay all amounts owed by us under the indenture and the notes when such amounts are due;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">perform all other obligations under the indenture;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">comply with all applicable laws;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain all necessary governmental approvals;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pay all uncontested taxes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">preserve our existence;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain our properties;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain adequate insurance;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">50</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain our books and records in accordance with U.S. GAAP;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">maintain an office or agent in New York for the purpose of
service of process and maintain a paying agent located in the United
States;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ensure that the notes continue to be our senior obligations;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">use proceeds from the issuance of the notes for specified
purposes, namely the purchase of oil imports and the repayment of
short-term indebtedness</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">give notice to the trustee of any default or event of default under the indenture;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">provide certain financial statements to the trustee;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">take actions to maintain the trustee&#146;s or the noteholders&#146;
rights under the relevant transaction documents; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">replace the trustee upon any resignation or removal thereof.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the terms of the indenture restrict our ability and the
ability of our subsidiaries, among other things, to:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">undertake certain mergers, consolidations or similar transactions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">create certain liens on our assets or pledge our assets; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enter into certain transactions with our affiliates.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These covenants are subject to a number of terms, conditions and further qualifications.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture also contains certain events of default, consisting of the following:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to pay principal within three calendar days of its due date;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to pay interest within 30&nbsp;days of any interest payment date;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">specified representations or warranties made by Petrobras in
the standby purchase agreement not being true when made;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">breach of a covenant or agreement in the indenture or the
standby purchase agreement by us or Petrobras, if not remedy within
60 calendar days;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">acceleration of or failure to make a payment on our
indebtedness or the indebtedness of Petrobras or a material
subsidiary of Petrobras that equals or exceeds U.S.$100&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a final judgment against us, Petrobras or a material
subsidiary of Petrobras that equals or exceeds U.S.$100&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain events of bankruptcy, liquidation or insolvency of
us, Petrobras or any material subsidiary of Petrobras;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain events relating to the unenforceability of the notes,
the indenture or the standby purchase agreement against us or
Petrobras; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Petrobras ceases to own at least 51% of our outstanding
voting shares.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">51</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Standby Purchase Agreement</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Global Step-Up Notes have the benefit of credit support from Petrobras
in the form of a standby purchase agreement under which Petrobras is obligated
to make certain payments to the trustee in the event we fail to make required
payments of principal, interest and other amounts due under the senior Global
Step-Up Notes and the indenture. Subject to certain limitations, Petrobras is
required to purchase from the holders of the notes and pay to the trustee
amounts in respect of the noteholders&#146; right to receive:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the amount of any interest or other amounts not paid by us in
accordance with the terms of the notes and the indenture;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the entire principal amount of the notes in the event we fail
to do so at their expected maturity or earlier upon any redemption
or acceleration of the notes prior to the expected maturity date;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the entire principal amount of the notes in the event that a
holder of a note requires us to repurchase such note in accordance
with the terms of the indenture; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">interest on all of the foregoing amounts at the rate of 1%
above the note rate (the default rate), for payments beyond the date
that we were required to make such payments under the indenture.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obligations under the standby purchase agreement constitute direct and
general senior unsecured and unsubordinated obligations of Petrobras and rank
<I>pari passu </I>with other senior, unsecured obligations of Petrobras that are not,
by their terms, expressly subordinated in right of payment to Petrobras&#146;
obligations under the standby purchase agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Global Step-Up Notes did not include a letter of credit or political
risk insurance.
</FONT>


<P align="center"><FONT size="2"><B>MATERIAL CONTRACTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements contained in this annual report regarding the contents of any
contract or other document are not necessarily complete, and, where the
contract or other document is an exhibit to the annual report, each of these
statements is qualified in all aspects by the provisions of the actual contract
or other documents.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except for the contracts entered into in connection with the transactions
described above, we have no other material contracts.
</FONT>


<P align="center"><FONT size="2"><B>DOCUMENTS ON DISPLAY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the information requirements of the Securities Exchange
Act of 1934 applicable to a foreign private issuer, and accordingly, we file or
furnish reports, information statements and other information with the U.S.
Securities and Exchange Commission. Documents that are exhibits to or
incorporated by reference in this annual report and other information filed by
us can be inspected at, and subject to the payment of any required fees, copies
may be obtained from, the public Reference Section of the U.S. Securities and
Exchange Commission, 450 Fifth Street, N.W., room 1024, Washington, D.C. 20549.
</FONT>

<P align="center"><FONT size="2">52</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a foreign private issuer, we were not required to make filings with the
SEC prior to November 4th, 2002, although we were permitted to do so. Any
filings we make electronically will be available to the Public over the
Internet at the SEC&#146;s website at http://www.sec.gov.
</FONT>

<!-- link2 "Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk." -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We make limited use of derivatives. We do not hold derivative instruments
for trading purposes or for leverage.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the normal course of business, we face market risks, including interest
rate risk and oil and oil products price risk. While Petrobras is in the
process of changing its risk management processes, including those which may
affect us, neither Petrobras nor we have yet entered into derivative contracts
or made other arrangements to hedge against interest rate risk or commodity
price risk. We have historically passed on our financing costs to Petrobras by
selling crude oil and oil products to Petrobras at a premium to compensate for
our financing costs. Although Petrobras and we are considering methods of
continuing this practice in the future, we cannot assure you that this practice
will continue.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our borrowings are derived mainly from commercial banks and include trade
lines of credit and commercial paper, which are primarily intended for the
purchase of crude oil and oil products, and with interest rates ranging from
3.0% to 5.8%. The weighted average annual interest rate for our short-term
debt at December&nbsp;31, 2002 was 3.4%, compared to 2.8% at December&nbsp;31, 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the amounts and related weighted average annual
interest rates by expected maturity dates for our long-term debt obligations at
December&nbsp;31, 2002:
</FONT>


<P align="center"><FONT size="2"><B>CALENDAR YEAR OF EXPECTED MATURITY DATE FOR DEBT<BR>
(in thousands of U.S. dollars, except for percentages)</B>
</FONT>


<P align="center"><FONT size="2"><B>December&nbsp;31, 2002</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Debt Obligations</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2008-2013</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Dec 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Debt
in U.S. Dollars:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fixed rate debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">162,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">20,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">176,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">838,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,624,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,822,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,698,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.81</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.81</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.81</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.61</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.38</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Variable rate debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">426,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">426,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">426,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.34</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total debt obligations</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">162,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">20,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">176,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">838,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,050,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,248,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,124,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="50%">
<TR>
    <TD width="96%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left"><FONT size="1"><B>Total Debt
Portfolio</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="1"><B>2002</B></FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR noshade size="1"></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD align="left"><FONT size="2">US$ Dollars:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left"><FONT size="2">Fixed rate debt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">86.9</FONT></TD>
    <TD align="left"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD align="left"><FONT size="2">Floating rate debt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">13.1</FONT></TD>
    <TD align="left"><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR noshade size="1"></TD>
</TR>

<TR>
    <TD><FONT size="2"><B>Total</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">100.0</FONT></TD>
    <TD align="left"><FONT size="2">%</FONT></TD>

</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR noshade size="4"></TD>
</TR>

</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, 13.1% of our debt was dollar-denominated floating
rate debt and 86.9% of our debt was dollar-denominated fixed rate debt. Since
all of our debt is dollar denominated, we are not subject to material foreign
exchange rate risk.
</FONT>

<!-- link2 "Item&nbsp;12. Description of Securities Other than Equity Securities." -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;12. Description of Securities Other than Equity Securities.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>

<!-- link2 "Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies." -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</FONT>

<P align="center"><FONT size="2">53</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds." -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</FONT>

<!-- link2 "Item&nbsp;15. Controls and Procedures." -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;15. Controls and Procedures.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within the 90&nbsp;days prior to the date of this report, we carried out an
evaluation under the supervision and with the participation of our management,
including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. There are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable assurance of achieving their control objectives. Based upon and as
of the date of our evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed in the
reports we file and submit under the Exchange Act is recorded, processed,
summarized and reported as and when required.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date
of their evaluation.
</FONT>

<!-- link2 "Item&nbsp;16. Reserved" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;16. Reserved</B>
</FONT>

<!-- link2 "Item&nbsp;17. Financial Statements." -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;17. Financial Statements.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have responded to Item&nbsp;18 in lieu of this item.
</FONT>

<!-- link2 "Item&nbsp;18. Financial Statements." -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;18. Financial Statements.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following financial statements, together with the reports of
PricewaterhouseCoopers thereon, are filed as a part of this annual report:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Report of Independent Accountants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated
Balance Sheets as of December&nbsp;31, 2002 and 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated
Statements of Operations for the years ended December&nbsp;31, 2002,
2001 and 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes
in Consolidated Shareholder&#146;s Equity for the years ended
December&nbsp;31, 2002, 2001 and 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statements of Cash Flows for the years ended
December&nbsp;31, 2002, 2001 and 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to Consolidated Financial Information</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Item&nbsp;19. Exhibits.</B>
</FONT>

<P align="center"><FONT size="2">54</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit No:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>



<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Memorandum and Articles of Association of Petrobras
International Finance Company (incorporated by
reference to Exhibit&nbsp;1 to the Annual Report on Form
20-F of Petrobras International Finance Company, filed
with the Securities and Exchange Commission on July&nbsp;1,
2002, and amendments to which were filed on December
13, 2002 and March&nbsp;20, 2003 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture, dated as of May&nbsp;9, 2001, between Petrobras
International Finance Company and The Bank of New York,
as Trustee, relating to the 9 7/8% Senior Notes due
2008 (incorporated by reference to Exhibit&nbsp;4.1 to the
Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4, filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Supplemental Indenture, dated as of November&nbsp;26, 2001,
between Petrobras International Finance Company and The
Bank of New York, as Trustee, relating to the 9 7/8%
Senior Notes due 2008 (incorporated by reference to
Exhibit&nbsp;4.2 to the Registration Statement of Petrobras
International Finance Company and Petr&#243;leo Brasileiro
S.A.&#151;Petrobras on Form&nbsp;F-4, filed with the Securities
and Exchange Commission on December&nbsp;6, 2001 (File No.
333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture, dated as of July&nbsp;6, 2001, between Petrobras
International Finance Company and The Bank of New York,
as Trustee, relating to the 9 3/4% Senior Notes due
2011 (incorporated by reference to Exhibit&nbsp;4.1 to the
Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4, filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14170)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Supplemental Indenture, dated as of November&nbsp;26, 2001,
between Petrobras International Finance Company and The
Bank of New York, as Trustee, relating to the 9 3/4%
Senior Notes due 2011 (incorporated by reference to
Exhibit&nbsp;4.2 to the Registration Statement of Petrobras
International Finance Company and Petr&#243;leo Brasileiro
S.A.&#151;Petrobras on Form&nbsp;F-4, filed with the Securities
and Exchange Commission on December&nbsp;6, 2001 (File No.
333-14170)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture, initially dated as of February&nbsp;4, 2002, as
amended and restated as of February&nbsp;28, 2002, between
Petrobras International Finance Company and The Bank of
New York, as Trustee, relating to the 9 1/8% Senior
Notes due 2007 (incorporated by reference to Exhibit
2.19 to the amended Annual Report on Form&nbsp;20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on December&nbsp;13, 2002
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">55</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit No:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture, dated as of July&nbsp;19, 2002, between Petrobras
International Finance Company and JPMorgan Chase Bank,
as Trustee (incorporated by reference to exhibit 4.5 of
the Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-3, filed with the Securities and Exchange
Commission on July&nbsp;5, 2002, and amendments to which
were filed on July&nbsp;19, 2002 and August&nbsp;14, 2002 (File
No.&nbsp;333-92044-01)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Supplemental Indenture, dated as of March&nbsp;31,
2003, between Petrobras International Finance Company
and JPMorgan Chase Bank, as Trustee, relating to the
9.00% Global Step-Up Notes due 2008 (incorporated by reference to
Exhibit 2.6 report of Petr&#243;leo Brasileiro S.A.&#151;Petrobras on
Form&nbsp;20-F, filed with the Securities and Exchange Commission on
June&nbsp;19, 2002 (File No.&nbsp;1-115106)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated as of May&nbsp;9, 2001,
among Petrobras International Finance Company, Petr&#243;leo
Brasileiro S.A.&#151;Petrobras, and USB Warburg LLC, Banc of
America Securities LLC, J.P. Morgan Securities Inc.,
RBC Dominion Securities Corporation and Santander
Central Hispano Investment Securities Inc.
(incorporated by reference to Exhibit&nbsp;4.4 to the
Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4 filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated as of July&nbsp;6,
2001, among Petrobras International Finance Company,
Petr&#243;leo Brasileiro S.A.&#151;Petrobras, and USB Warburg
LLC, Banc of America Securities LLC, J.P. Morgan
Securities Inc., RBC Dominion Securities Corporation
and Santander Central Hispano Investment Securities
Inc. (incorporated by reference to Exhibit&nbsp;4.4 to the
Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4, filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14170)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, initially dated as of
February&nbsp;4, 2002, as amended and restated as of
February&nbsp;28, 2002, among Petrobras International
Finance Company, Petr&#243;leo Brasileiro S.A.&#151;Petrobras,
UBS Warburg LLC and Morgan Stanley &#038; Co. Incorporated
(incorporated by reference to Exhibit&nbsp;2.20 to the
amended Annual Report on Form&nbsp;20-F of Petrobras
International Finance Company, filed with the
Securities and Exchange Commission on December&nbsp;13, 2002
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Standby Purchase Agreement, dated as of May&nbsp;9, 2001,
between Petr&#243;leo Brasileiro S.A.&#151;Petrobras and The Bank
of New York (incorporated by reference to Exhibit&nbsp;4.5
to the Registration Statement of Petrobras
International Finance Company and Petr&#243;leo Brasileiro
S.A.&#151;Petrobras on Form&nbsp;F-4, filed with the Securities
and Exchange Commission on December&nbsp;6, 2001 (File No.
333-14168)).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">56</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit No:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment No.&nbsp;1 to the Standby Purchase Agreement,
dated as of November&nbsp;26, 2001, between Petr&#243;leo
Brasileiro S.A.&#151;Petrobras and The Bank of New York, as
Trustee (incorporated by reference to Exhibit&nbsp;4.6 to
the Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4, filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Standby Purchase Agreement, dated as of July&nbsp;6, 2001,
between Petr&#243;leo Brasileiro S.A.&#151;Petrobras and The Bank
of New York (incorporated by reference to Exhibit&nbsp;4.5
to the Registration Statement of Petrobras
International Finance Company and Petr&#243;leo Brasileiro
S.A.&#151;Petrobras on Form&nbsp;F-4, filed with the Securities
and Exchange Commission on December&nbsp;6, 2001 (File No.
333-14170)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment No.&nbsp;1 to the Standby Purchase Agreement,
dated as of November&nbsp;26, 2001, between Petr&#243;leo
Brasileiro S.A.&#151;Petrobras and The Bank of New York, as
Trustee (incorporated by reference to Exhibit&nbsp;4.6 to
the Registration Statement of Petrobras International
Finance Company and Petr&#243;leo Brasileiro S.A.&#151;Petrobras
on Form&nbsp;F-4, filed with the Securities and Exchange
Commission on December&nbsp;6, 2001 (File No.&nbsp;333-14170)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Standby Purchase Agreement, initially dated as of
February&nbsp;4, 2002, as amended and restated as of
February&nbsp;28, 2002, between Petr&#243;leo Brasileiro
S.A.&#151;Petrobras and The Bank of New York, as Trustee
(incorporated by reference to Exhibit&nbsp;2.21 to the
amended Annual Report on Form&nbsp;20-F of Petrobras
International Finance Company, filed with the
Securities and Exchange Commission on December&nbsp;13, 2002
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Standby Purchase Agreement dated as of March&nbsp;31, 2003,
between Petr&#243;leo Brasileiro S.A.&#151;Petrobras and JPMorgan
Chase Bank, as Trustee.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Notes Purchase Agreement, dated as of January&nbsp;29, 2002,
between Petrobras International Finance Company and UBS
Warburg LLC and Morgan Stanley &#038; Co. Incorporated
(incorporated by reference to Exhibit&nbsp;2.13 to the
Annual Report on Form&nbsp;20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July&nbsp;1, 2002, and amendments to which
were filed on December&nbsp;13, 2002 and March&nbsp;20, 2003
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Master Export Contract, dated as of December&nbsp;21, 2001,
between Petr&#243;leo Brasileiro S.A.&#151;Petrobras and
Petrobras Finance Ltd. (incorporated by reference to
Exhibit&nbsp;2.14 to the Annual Report on Form&nbsp;20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on July&nbsp;1, 2002, and
amendments to which were filed on December&nbsp;13, 2002 and
March&nbsp;20, 2003 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">57</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit No:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment to the Master Export Contract, dated as of
May&nbsp;21, 2003, among Petr&#243;leo Brasileiro S.A. &#150;
Petrobras and Petrobras Finance Ltd.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Depositary Agreement, dated as of December&nbsp;21, 2001,
among U.S. Bank, National Association, Cayman Islands
Branch, in capacity as Trustee of the PF Export
Receivables Master Trust, Citibank, N.A., in capacity
as Securities Intermediary, and Petrobras Finance Ltd.
(incorporated by reference to Exhibit&nbsp;2.15 to the
Annual Report on Form&nbsp;20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July&nbsp;1, 2002, and amendments to which
were filed on December&nbsp;13, 2002 and March&nbsp;20, 2003
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Letter Agreement relating to the Depositary Agreement,
dated as of May&nbsp;16, 2003.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Administrative Services Agreement, dated as of December
21, 2001, between Petr&#243;leo Brasileiro S.A.&#151;Petrobras,
as Delivery and Sales Agent, and Petrobras Finance Ltd.
(incorporated by reference to Exhibit&nbsp;2.16 to the
Annual Report on Form&nbsp;20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July&nbsp;1, 2002, and amendments to which
were filed on December&nbsp;13, 2002 and March&nbsp;20, 2003
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Letter Agreement relating to the Administrative
Services Agreement, dated as of May&nbsp;16, 2003.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Trust Deed, dated as of December
21, 2001, among U.S. Bank, National Association, Cayman
Islands Branch, in capacity as Trustee of the PF Export
Receivables Master Trust, Citibank, N.A., in capacity
as Paying Agent, Transfer Agent, Registrar and
Depositary Bank, and Petrobras International Finance
Company, as Servicer (incorporated by reference to
Exhibit&nbsp;2.17 to the Annual Report on Form&nbsp;20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on July&nbsp;1, 2002, and
amendments to which were filed on December&nbsp;13, 2002 and
March&nbsp;20, 2003 (File No.&nbsp;333-14168)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Receivables Purchase Agreement, dated as of December
21, 2001, among Petrobras Finance Ltd., Petr&#243;leo
Brasileiro S.A.&#151;Petrobras and U.S. Bank, National
Association, Cayman Islands Branch, solely in capacity
as Trustee of the PF Export Receivables Master Trust
(incorporated by reference to Exhibit&nbsp;2.18 to the
Annual Report on Form&nbsp;20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July&nbsp;1, 2002, and amendments to which
were filed on December&nbsp;13, 2002 and March&nbsp;20, 2003
(File No.&nbsp;333-14168)).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">58</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit No:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Receivables Purchase Agreement,
dated as of May&nbsp;21, 2003, among Petrobras Finance Ltd.,
Petr&#243;leo Brasileiro S.A.&#151;Petrobras and U.S. Bank,
National Association, Cayman Islands Branch, solely in
capacity as Trustee of the PF Export Receivables Master
Trust.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Prepayment Agreement, dated as of December&nbsp;21, 2001,
between Petr&#243;leo Brasileiro S.A.&#151;Petrobras and
Petrobras Finance Ltd.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;2.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Prepayment Agreement, dated as of
May&nbsp;2, 2003, between Petr&#243;leo Brasileiro S.A.&#151;Petrobras
and Petrobras Finance Ltd.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Exhibit&nbsp;10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Certification Pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">59</FONT>

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<!-- link1 "SIGNATURE" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="center"><FONT size="2"><B>SIGNATURE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of Section&nbsp;12 of the Securities Exchange Act
of 1934, Petrobras International Finance Company&#151;PIFCo, hereby certifies that
it meets all the requirements for filing on Form&nbsp;20-F and has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="59%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Petrobras International Finance Company&#151;PIFCo</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ ALMIR GUILHERME BARBASSA</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Name:<BR>
Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Almir Guilherme Barbassa<BR>
Chairman</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">Date: June&nbsp;19, 2003
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>

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<P align="center"><FONT size="2"><B>CERTIFICATION PURSUANT TO RULES 13a-15 and 15d-15 AS ADOPTED UNDER<BR>
SECTION 302 OF THE SARBANES-OXLEY ACT</B>
</FONT>

<P align="left"><FONT size="2">I, Almir Guilherme Barbassa, certify that:
</FONT>

<P align="left"><FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this annual report on Form&nbsp;20-F of Petrobras International
Finance Company&#151;PIFCo.
</FONT>

<P align="left"><FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
</FONT>

<P align="left"><FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
</FONT>

<P align="left"><FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and have:
</FONT>

<P align="left"><FONT size="2">(a)&nbsp; Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
</FONT>

<P align="left"><FONT size="2">(b)&nbsp; Evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures as of a date within 90&nbsp;days prior to the filing date of this annual
report (the &#147;Evaluation Date&#148;); and
</FONT>

<P align="left"><FONT size="2">(c)&nbsp; Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
</FONT>

<P align="left"><FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant&#146;s auditors and the audit committee of
registrant&#146;s board of directors (or persons performing the equivalent
functions):
</FONT>

<P align="left"><FONT size="2">(a)&nbsp; All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to record,
process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and
</FONT>

<P align="left"><FONT size="2">(b)&nbsp; Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant&#146;s internal controls;
and
</FONT>

<P align="left"><FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;19, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ ALMIR GUILHERME BARBASSA</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Name: Almir Guilherme Barbassa<BR>
Title: Chairman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>CERTIFICATION PURSUANT TO RULES
13a-5 and 15d-15 AS ADOPTED UNDER<br>SECTION&nbsp;302 OF THE SARBANES-OXLEY ACT</B>
</FONT>

<P align="left"><FONT size="2">I, Daniel Lima de Oliveira, certify that:
</FONT>

<P align="left"><FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this annual report on Form&nbsp;20-F of Petrobras International
Finance Company&#151;PIFCo.
</FONT>

<P align="left"><FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
</FONT>

<P align="left"><FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
</FONT>

<P align="left"><FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and have:
</FONT>

<P align="left"><FONT size="2">(a)&nbsp; Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
</FONT>

<P align="left"><FONT size="2">(b)&nbsp; Evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures as of a date within 90&nbsp;days prior to the filing date of this annual
report (the &#147;Evaluation Date&#148;); and
</FONT>

<P align="left"><FONT size="2">(c)&nbsp; Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
</FONT>

<P align="left"><FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant&#146;s auditors and the audit committee of
registrant&#146;s board of directors (or persons performing the equivalent
functions):
</FONT>

<P align="left"><FONT size="2">(a)&nbsp; All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to record,
process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and
</FONT>

<P align="left"><FONT size="2">(b)&nbsp; Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant&#146;s internal controls;
and
</FONT>

<P align="left"><FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;19, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ DANIEL LIMA DE
OLIVEIRA</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Name: Daniel Lima de Oliveira<BR>
Title: Financial Manager</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"></FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="5"><B>Petrobras International<BR>
Finance Company</B></FONT><BR>
<FONT size="2">(a wholly-owned subsidiary of Petr&#243;leo<BR>
Brasileiro S.A. &#151; PETROBRAS)<BR>
Consolidated Financial Information<BR>
as of December&nbsp;31, 2002 and 2001 and<BR>
Report of Independent Accountants
</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Report of Independent Accountants</B>
</FONT>

<P align="left"><FONT size="2">To the Board of Directors and Stockholder of<BR>
Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)
</FONT>
<P align="left"><FONT size="2">In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and of changes in stockholder&#146;s equity
and of cash flows, present fairly, in all material respects, the financial
position of Petrobras International Finance Company at December&nbsp;31, 2002 and
2001, and the results of its operations and its cash flows for each of the
three years in the period ended December&nbsp;31, 2002, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company&#146;s management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
</FONT>
<P align="left"><FONT size="2">PricewaterhouseCoopers<BR>
Auditores Independentes<BR>
Rio de Janeiro, Brazil
</FONT>
<P align="left"><FONT size="2">February&nbsp;13, 2003.
</FONT>
<P align="left"><FONT size="2"><B>COPY OF THE ORIGINAL</B>
</FONT>
<P align="center"><FONT size="2">F-2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Consolidated Balance Sheets<BR>
Expressed in Thousands of United States Dollars, except share amounts</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="80%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,838,269</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,584,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable&#151;related party</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,157,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">282,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets held for sale</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expense and other current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,394,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,116,571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Property and equipment</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Other assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable&#151;related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">473,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets related to securitization program</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct financing
leases to related party</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">832,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,302,702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,160,985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,697,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,277,769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-3</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Consolidated Balance Sheets<BR>
Expressed in Thousands of United States Dollars, except share amounts</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Liabilities and stockholder's equity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">291,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">288,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">281,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">231,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans payable&#151;related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,688,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">285,770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">775,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of long term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned income&#151;related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital lease</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other current liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,802,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,893,381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Long-term liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital lease</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">601,733</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,248,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,335,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>



    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,850,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,335,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Commitments and contingencies (Note 8)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Stockholder&#146;s equity</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shares authorized and issued
Common stock&#151;2002 and
2001&#151;50,000 shares,
par value US$1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additional paid in capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated deficit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(76,124</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,662</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total liabilities and stockholder&#146;s equity</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,697,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,277,769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The accompanying notes are an integral part of this financial information.
</FONT>
<P align="center"><FONT size="2">F-4</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Consolidated Statements of Operations<BR>
(Expressed in Thousands of United States Dollars, except share amounts)</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Sales of crude oil
and oil products
and services</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,390,226</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,260,514</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,937,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lease income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,426,288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,271,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,937,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,371,465</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,253,009</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,912,615</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lease expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24,004</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,542</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">General and
administrative
expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,178</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(114</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,396,647</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,263,665</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,912,615</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Gross profit</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">219,580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">158,804</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">221,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(314,683</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(187,101</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(219,637</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on materials
and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(95,103</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(27,862</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,941</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Net income (loss)
for the period</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,462</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,331</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Weighted average
number of shares
outstanding</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The accompanying notes are an integral part of this financial information.
</FONT>
<P align="center"><FONT size="2">F-5</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Petrobras International Financial Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Changes in Consolidated Shareholder&#146;s Equity<BR>
(Expressed in Thousands of United States Dollars, except number of shares and per share amounts)</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="80%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Common stock</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Additional paid in
capital</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance at
January 1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Conversion
of loans to
capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance at
December 31</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Retained earnings</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance at
January 1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,662</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income
(loss)&nbsp;for
the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,462</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,331</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends
declared
(per share: 2000
&#150; US$0.76)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,060</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance at
December 31</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(76,124</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,662</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Total stockholder&#146;s
equity</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,719</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying notes are an integral part of this financial information.
</FONT>
<P align="center"><FONT size="2">F-6</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Consolidated Statements of Cash Flows<BR>
Expressed in Thousands of United States Dollars</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash flows from operating activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)&nbsp;for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,462</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,331</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments to reconcile net loss to
net cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Decrease (increase)&nbsp;in assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,069,800</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">426,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(171,429</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,333</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,132</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(37,279</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expenses and other
assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,205</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(65,602</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase (decrease)&nbsp;in liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">217,226</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,233</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(362,190</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">286,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,916</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,319</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by (used in) operating
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,038,923</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">191,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash flows from investing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(96,385</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of notes receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,247,658</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,147,655</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(745,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Principal receivables of notes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,422,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,210,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">655,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets held for sale</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(144,721</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(37</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(213</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,718</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,309</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additions to net investment in direct
financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(163,414</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(156,017</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,015</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash used in investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,093,090</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,249,532</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(141,991</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash flows from financing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term debt, net issuances and
repayments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(489,657</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">245,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(211,148</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from issuance of long-term
debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">657,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,165,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">245,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Principal payments of long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(215,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds form short term
loans&#151;related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,861,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,654,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,785,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Principal payments of short term
loans&#151;related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,469,866</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>

    <TD align="right"><FONT size="2">(4,961,129</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,697,957</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends paid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,060</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by financing
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,344,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,055,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">121,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase (decrease)&nbsp;in cash and cash
equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">212,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,605</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at beginning of
period</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at end of period</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash paid during the period for interest</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">322,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">185,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Non cash investing and financing activities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets acquired through capital lease
obligations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">665,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Receipt of Junior Trust Certificates in
exchange of future export receivables</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase of capital through conversion of
loan payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Receipt of notes receivable in exchange of
Senior Exchangeable issued</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The accompanying notes are an integral part of this financial information.
</FONT>
<P align="center"><FONT size="2">F-7</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>1</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> The Company and its Operations</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Petrobras International Finance Company &#151; PIFCO, a wholly-owned subsidiary
of PETROBRAS, was established on September&nbsp;24, 1997 and is incorporated in
the Cayman Islands.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The primary objective of the Petrobras International Finance Company and
its subsidiaries (collectively, PIFCO or the Company) is to purchase crude
oil and oil products from third parties and sell the products at a premium
to PETROBRAS on a deferred payment basis. Accordingly, intercompany
activities and transactions, and therefore the Company&#146;s financial
position and results of operations, are affected by decisions made by its
parent company, PETROBRAS. Additionally, to a more limited extent, the
Company sells crude oil and oil products to third parties.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PIFCO is also being used by PETROBRAS to take advantage of Brazilian tax
legislation related to the Special Customs System (Regime Aduaneiro
Especial) for the importation and exportation of goods intended for the
research of oil and natural gas fields (referred to as REPETRO). REPETRO
permits petroleum companies operating in Brazil to enter into leasing
arrangements with foreign companies for materials and equipment to be used
in the exploration and production of crude oil and gas, without paying
federal taxes for Import Duty (Imposto de Importa&#231;&#227;o&#151;II), Excise Tax
(Imposto sobre Produtos Industrializados&#151;IPI), Employees&#146; Profit
Participation Program (Programa de Integra&#231;&#227;o Social&#151;PIS), and Tax for
Social Security Financing (Contribui&#231;&#227;o para o Financiamento da Seguridade
Social&#151;COFINS).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following is a brief description of each of the Company&#146;s wolly-owned
subsidiaries:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>PETROBRAS NETHERLANDS B.V.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PETROBRAS NETHERLANDS B.V.&#151;PNBV, based in the Netherlands, is responsible
for acquiring equipment to be utilized in the oil exploration and
production activities related to REPETRO. PNBV raises funds abroad and in
Brazil to acquire equipment, and chartering the acquired equipment to
PETROBRAS.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>PETROBRAS EUROPE LTD.</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PETROBRAS EUROPE LTD.&#151;PEL, based in the United Kingdom, consolidates
PETROBRAS&#146; European trade and finance activities. These activities consist
of advising on and negotiating the
terms and conditions for crude oil and oil products supplied to PIFCO and
PETROBRAS, as well as marketing Brazilian crude oil and other derivative</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-8</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">products exported to the geographic areas in which the Company operates.
PEL plays an advisory role in connection with these activities and
undertakes no additional commercial or financial risk.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>PETROBRAS FINANCE LIMITED</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PETROBRAS FINANCE LIMITED&#151;PFL, based in the Cayman Islands, purchases
bunker and fuel oil from PETROBRAS and sells these products in the
international market via a securitization program of future receivables
for these products (Securitization Program; see Note 6 (a)&nbsp;iii).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>2</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Summary of Significant Accounting Policies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In preparing these consolidated financial statements, the Company has
followed accounting policies that are in accordance with accounting
principles generally accepted in the United States of America (U.S. GAAP).
The preparation of these financial statements requires the use of
estimates and assumptions that affect the assets, liabilities, revenues
and expenses reported in the financial statements, as well as amounts
included in the notes thereto.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Basis of presentation</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These consolidated financial statements have been prepared in accordance
with U.S. GAAP, which differ in certain respects from the Brazilian
accounting principles applied by PIFCO in its statutory financial
statements prepared in accordance with the Brazilian Corporate Law. The
consolidated financial statements include the financial statements of
PIFCO and of each of its wholly-owned subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Foreign currency translation</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The functional currency of the Company is the U.S. dollar, as the majority
of its transactions are denominated in U.S. dollars. When there are
transactions in foreign currencies, exchange gains and losses resulting
from foreign currency transactions are recognized in the Statement of
Operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(c)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Cash equivalents</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Cash equivalents consist of highly liquid investments that are readily
convertible into cash and have an original maturity of three months or
less at their date of acquisition.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-9</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(d)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Marketable Securities</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company accounts for certain investments as held-to-maturity
securities in accordance with SFAS 115 &#150; Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115). The securities are
carried at their amortized cost.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(e)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Finance leasing</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company&#146;s leasing operations consist principally of the leasing of
various types of materials and equipments for the exploration and
production of the oil and gas, and for oil and gas industry in general,
including production and drilling platforms, oil tankers, supply boats and
other types of ships. The Company is also a party to the charter and
subcharter agreements of platforms. With the exception of the leases of
two specific vessels, which are operating leases, the remaining leases are
classified as direct financing leases.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company acquired operating platforms and production equipment under
the terms of purchase agreements (see Note 8), purchase invoices and
charter agreements and subsequently leased this equipment under the terms
of existing and future charter and subcharter agreements with related
parties. These charter and sub charter agreements are considered to be
Direct Finance Leases in accordance with the provisions of Statement of
Financial Accounting Standards No.&nbsp;13 &#147;Accounting for leases&#148; (SFAS 13)
and subsequently issued amendments to and interpretations of SFAS 13.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Income and expense financing leases, consisting of interest income, is
recognized over the lease term. Income and expense from operating leases
is recognized ratably over the term of the leases.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(f)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Deferred financing costs</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Deferred financing costs associated with various debt issuances are
recorded as prepaid expenses and are being amortized over the terms of the
related debt, based on the amount of outstanding debt, using the effective
interest method. The unamortized balance of deferred financing costs was
US$34,497 and US$37,287 as of December&nbsp;31, 2002 and 2001, respectively.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-10</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(g)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Inventories</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Inventories are stated at the lower of cost or market value.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(h)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Unearned Income</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Unearned income represents the unearned premium charged by the Company to
PETROBRAS and REFAP to compensate for its financing costs. The premium is
billed to PETROBRAS and REFAP at the same time the related product is
sold, and is deferred and recognized into earnings as a component of
financial income on a straight-line basis over the collection period,
which ranges from 120 to 270&nbsp;days, in order to match the premium billed
with the Company&#146;s financial expense.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(i)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Revenues, costs and expenses</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Revenues from sales of crude oil and oil products are recognized on an
accrual basis when title has transferred to the customer. Costs and
expenses are also accounted for on an accrual basis.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(j)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Income taxes</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company accounts for income taxes using an asset and liability
approach, which requires the recognition of taxes payable or refundable
for the current year and deferred tax liabilities and assets representing
the future tax consequences of events that have been recognized in the
Company&#146;s financial statements. The measurement of current and deferred
tax liabilities and assets are based on the provisions of the tax laws in
the countries in which the Company and its subsidiaries operate (the
United Kingdom, the Netherlands and the Cayman Islands). Deferred tax
assets are reduced, by the amount of any tax benefits when, based on the
available evidence, that such benefit will not be realized. The Cayman
Islands has no corporate tax requirements, therefore the Company has no
tax provision for the periods. There were no significant operations in the
United Kingdom or the Netherlands that gave rise to taxable income in
these countries that would have created timing differences.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-11</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(k)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Derivative Instruments, Hedging and Risk Management Activities</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">All of the Company&#146;s derivative instruments are recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or in other comprehensive income,
depending on whether the derivative is designated as part of a hedge
transaction and, if it is, depending on the type of hedge relationship.
The ineffective portion of all hedges is recognized in current period
earnings.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(l)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Recently issued accounting pronouncements</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In April 2002, the FASB issued SFAS No.&nbsp;145&#151;Recission of FASB Statements
No.&nbsp;4, No.&nbsp;44 and No.&nbsp;64, Amendment of SFAS No.&nbsp;13, and Technical
Corrections (&#147;SFAS 145&#148;). SFAS 145 rescinds previous accounting guidance,
which required all gains and losses from extinguishment of debt be
classified as an extraordinary item. Under SFAS 145 classification of debt
extinguishment depends on the facts and circumstances of the transaction.
SFAS 145 is effective for fiscal years beginning after May&nbsp;15, 2002. The
company does not expect SFAS 145 to have a material impact on its
financial statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 2002, the FASB issued SFAS No.146&#151;Accounting for Costs Associated
with Exit or Disposal Activities (&#147;SFAS 146&#148;), which is effective for exit
or disposal activities that are initiated after December&nbsp;31, 2002. SFAS
146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. A
company&#146;s commitment to an exit plan, by itself, does not create a
liability. SFAS 146 also establishes that fair value is the objective for
initial measurement of the liability. The company does not expect SFAS 146
to have a material impact on its financial statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>3</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Cash and Cash Equivalents</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>As of December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and banks</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,226</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">259,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-12</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>4</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Marketable Securities</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company classified these investments as held-to-maturity.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Non-</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Foreign</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Security</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Issuer</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Currency</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>assets</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MARLIM 04 (*)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Marlim</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">DOLLAR</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,179</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETRO 03</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Petrobras</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">YEN</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETRO 04</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Petrobras</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">EURO</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MTN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Bear Stearns</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">DOLLAR</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MTN</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Bear Stearns</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">DOLLAR</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(*)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> MARLIM 04</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Consist of &#147;Medium Term Notes (MTN)&#148; issued by Companhia Petrol&#237;fera
Marlim, a special-purpose affiliated company of PETROBRAS. The notes have
rolling maturities with the last note maturing in 2004.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>5</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Net Investment in direct financing leases from related party receivables</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="74%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross receivables:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Floating storage and operating platforms (i)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">573,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Production equipment (ii)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">258,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term lease receivables</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">832,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The contracts related to the P-8, P-15 and P-32 transaction will
run for a period of 8.5&nbsp;years with semi-annual payments, on a
floating interest rate based on the 6-months Libor plus a spread
of 4.25% per year. The subcharter contracts have the same terms
and conditions with the retention of a fixed annual component for
the Company. The contracts related to the P-47 contract will run
for a period of ten years, with semi-annual payments, also on a
floating interest rate based on the 6-months Libor plus a spread
of 1.995% per year, with the retention of a fixed annual
component for the Company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The receivables represent the present value of the minimum lease
payments. The interest associated with the lease is variable,
based upon the 6&nbsp;month Libor plus mark up and a fixed annual
component. Both the interest and the fixed annual component will
be recognized when lease payments become due. The Company has no
residual value in the underlying assets recognized when lease
payments become due. The Company has no residual value in the
underlying assets.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-13</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>6</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Financing and Lease Obligations</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(a)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Financing</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long-term</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Current</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long-term</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financing institutions (i)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">367,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">460,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">540,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">385,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commercial paper</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">449,768</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior notes (ii)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,550,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,050,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Securitization of
Receivables (iii)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior Exchangeable (iv)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">367,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,248,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">990,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,335,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company&#146;s borrowings in U.S. dollars are derived mainly from
commercial banks and include trade lines of credit and commercial
paper, which are primarily intended for the purchase of crude oil and
oil products, and with interest rates ranging from 2.96% to 5.75%.
The weighted average borrowing for short-term debt at December&nbsp;31,
2002 and 2001 was 3.44% and 2.82%, respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At December&nbsp;31, 2002 and December&nbsp;31, 2001 the Company had fully utilized
all available lines of credit for the purchase of imports.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On May&nbsp;9, 2001, the Company
completed an offering of US$450,000 9 7/8% Senior Notes due May 2008. On July&nbsp;6, 2001, the Company
completed an offering of US$600,000 9&#190;% Senior Notes due July
2011. The Company repaid a portion of its notes payable to PETROBRAS
with the proceeds received from both offerings.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On February&nbsp;4, 2002, the Company completed an offering of US$400,000 9
1/8% Senior Notes due February 2007. On February&nbsp;21, 2002, the Company
also issued additional Senior Notes of US$100,000 with the same terms and
maturities as the notes issued on February&nbsp;4, 2002. The Company used these
proceeds principally to finance the purchase of oil imports and to repay
short-term indebtedness.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The interest rates on these offerings are fixed with and interest being
paid semiannually. So long as any note of the issuances remains
outstanding, the Company is prohibited from creating or permitting any
lien, other than a &#147;PIFCO permitted lien&#148; as defined in inssuances the
prospectus, by the Company on any of the</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-14</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Company&#146;s assets to secure additional indebtedness, except under
certain conditions. These issuances are general senior unsecured and
unsubordinated obligations of the Company and will rank equal in
right of payment with all other unsecured and unsubordinated
obligations of the Company that are not expressly subordinated in
right of payment. The failure by the Company to make required
payments of principal, interest or other amounts will compel
PETROBRAS to fulfill payment obligations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PETROBRAS entered into standby purchase agreements in support of the
obligations of PIFCO under the issuances and their respective
indentures. PETROBRAS has the obligation to purchase from the
noteholders any unpaid amounts of principal, interest or other
amounts due under the notes and the indenture. This purchase
obligation exists, subject to certain limitations, irrespective of
whether any such amounts are due at maturity of the notes or
otherwise.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(iii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In December 2001, in connection with the Securitization Program, a
Cayman Islands trust unrelated to PETROBRAS, PF Export Receivables
Master Trust (PF Export or the Trust), issued to PFL Senior Trust
Certificates in three series (US$750,000). The Senior Trust
Certificates represent senior undivided beneficial interests in the
property of the Trust other than the excess of any amounts remaining
after all amounts payable in respect of the Trust Certificates have
been paid in full and the Trust has been terminated. The Trust also
issued to PFL Junior Trust Certificates (US$150,000) representing
junior subordinated undivided beneficial interests in the Trust. The
Securitization Program provides PFL with the funding necessary to
purchase certain oil products (specifically heavy fuel oil and
bunker) from PETROBRAS for export.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In return for the Senior Trust Certificates and the Junior Trust
Certificates, PFL transferred to the Trustee of the Trust, U.S. Bank
National Association, Cayman Islands Branch, the right to a specified
amount of receivables to be generated from PFL&#146;s sale of oil products with
a value equal to the aggregate amount scheduled to be paid in respect of
the Senior Trust Certificates and the Junior Trust Certificates. Also in
December 2001, PFL sold the Senior Trust Certificates at face value
(US$750,000) to a group of purchasers in the international capital market.
The proceeds of the sale of the Senior Trust Certificates were transferred
to PETROBRAS as a prepayment relating to future exports to be made by
PETROBRAS to PFL, in accordance with the &#147;Prepayment Agreement&#148;, and is
presented in the balance sheet within assets related to securitization
program.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As long as any Senior Trust Certificates or amounts payable to the
insurers that are guaranteeing the payments to the holders of</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-15</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the Senior Trust Certificates remain outstanding, PETROBRAS is required to
export to the Company, during each quarterly delivery period, (a)&nbsp;at least
80% of the total volume of heavy fuel oil exported by PETROBRAS during
such period and (b)&nbsp;certain oil products having an aggregate value (based
upon the net invoice amount at which such products are actually sold by
PETROBRAS FINANCE) equal to, at least, the debt service requirements of
the Senior Trust Certificates multiplied by a coverage ratio. PETROBRAS
also agrees that its average daily gross exports of heavy fuel oil for any
rolling 12&nbsp;month period will be equal to at least 70,000 barrels.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The rights to the future export receivables represent a liability of PFL
which will be settled with the transfer to PF Export of the export
receivables as they are generated. Upon transferring the oil products to
be exported to the Company, PETROBRAS surrenders effective control of the
products.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">This liability will incur interest at the same rates of the Junior and
Senior Trust Certificates, as described below and is due as follows:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Principal: Monthly, beginning March&nbsp;1, 2005 through December 2013</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Interest: Quarterly, beginning March&nbsp;1, 2002</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As a way of guaranteeing that exported volumes over the period of
operation will be enough to support the financial obligations, a hedge
operation was contracted in order to determine a minimum price for the
crude oil in US$14/barrel.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">PETROBRAS will not be relieved of its obligations to deliver the oil
products under the Securitization Program in the amounts set forth for any
reason, including, without limitation, as a result of force majeure or of
non-payment by Petrobras Finance. The total amount of US$900,000 recorded
at December&nbsp;31, 2002 and 2001, as long term liabilities is as follows (the
current portion relates to accrued interest on the certificates):</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="26%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Junior Trust Certificates</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Senior Trust Certificates</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Principal</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Principal</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Series</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest rate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest rate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>amount</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Series&nbsp;2001&#151;A1</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,75</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Series&nbsp;2001&#151;A2</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="right"><FONT size="2">LIBOR 3 M &#043; 1%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="right"><FONT size="2">Libor 3 M &#043; 2,05%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Series&nbsp;2001&#151;B</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,60</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,65</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Series&nbsp;2001&#151;C</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="right" nowrap><FONT size="2">LIBOR 3 M &#043; 0,85%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="right" nowrap><FONT size="2">Libor 3 M &#043; 2,10%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-16</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Junior Trust Certificates are presented in the balance sheet, at face
value plus accrued interest, within the non-current asset account Assets
related to securization program and are treated as held-to-maturity
securities.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Junior Certificate Holders do not have any voting rights in respect of any
action to be taken by the Trustee or otherwise. The Junior Trust
Certificates may only be held by PFL or another wholly-owned direct or
indirect subsidiary of PETROBRAS. The principal of the Junior Trust
Certificates will be paid in whole after the latest payment for the Senior
Trust Certificates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(iv)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On October&nbsp;17, 2002, the Company issued Senior Exchangeable Notes in
U.S. dollar due October 2007 with an interest rate of 4.75% p.a. and
interest paid semi-annually.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These notes were issued in connection with PETROBRAS&#146; purchase of a
controlling interest in Perez Companc S.A.&#151;PECOM and the Petrolera Perez
Compac S.A. In exchange, the Company received notes issued by PIB.B.V., a
related party, in the same amount, terms and conditions as the Senior
Exchangeable Notes. The value of the notes is reflected in the non-current
asset-notes receivable (see Note 8). The Company also provided PIB.B.V.
with a loan for US$742,068, with an interest rate of 4.79% p.a. and due in
April 2003, as part of the cash payment for these acquisitions. This loan
is recorded in the current asset &#150; notes receivable (see Note 8).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Long-term maturities:</B></FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">162,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2005</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">176,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">838,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2008</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">450,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thereafter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,600,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,248,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>(b)</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Lease Obligations</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B><I>&nbsp;</I></B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B><I>Platforms P-8, P-15, P-32 and P-47</I></B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On December&nbsp;28, 2001 (the Closing Date), the Company entered into certain
agreements with the PB Platforms 2001 Trust and other parties in order to
refinance three operating platforms (P-8, P-15
and P-32 or the Platforms), with a total value of US$500,000. The
Platforms belonged to Brasoil and Catleia (also subsidiaries of
PETROBRAS).</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-17</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Also, on December&nbsp;28, 2001, the Company entered into certain agreements
with the PB-47 Trust and other parties in order to refinance the P-47
Floating Storage and Offloading platform, with a total value of US$180,000
(the Platform). The Platform was acquired by PIFCO from Brasoil on that
date, for US$142,000, and transferred to PB-47 Trust on August&nbsp;27,2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Pursuant to signed Participation Agreements, certain conditions precedent
should occur on or prior to April&nbsp;30, 2002, in order for the lenders to
fund the transactions. However, due to unfavorable changes in
international financial markets, there were several extensions of this
deadline resulting in the satisfaction of the conditions precedent and
Amended Participation Agreements for the P-47 Trust on August&nbsp;27, 2002 and
for the PB Platforms 2001 on November&nbsp;27, 2002 (each the CP Date).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The parties originally intended that upon satisfaction of the conditions
precedent, the contracts for the Platforms would be effective as of the
Closing Date. However, during negotiations, PB Platforms 2001 Trust and
PB-47 Trust and the other lenders agreed to amend the Participation
Agreements so that the contracts would become effective not on the Closing
Date, but rather as of the CP Dates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As a result of the changes in provisions in the Amended Participation
Agreements, the present value of the future minimum lease payments of P-8,
P-15 and P-32 decreased to US$485,000. The charter contracts with PB
Platforms 2001 and PB-47 Trust will be amortized from November&nbsp;27, 2002
until May&nbsp;27, 2011 and from August&nbsp;27, 2002 until December&nbsp;28, 2011,
respectively, with semi-annual payments commencing on May&nbsp;27, 2003 and
February&nbsp;28, 2003, respectively, with a variable interest rate of 6-month
Libor plus 425 and 199.5 basis points of spread, respectively. The
subcharter agreements with PETROBRAS have the same terms and conditions of
the charter agreements with the retention of a fixed annual component for
the Company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company began to account for the leases of the platforms as of the CP
Dates (August&nbsp;27 and November&nbsp;27, 2002). Accordingly, at December&nbsp;31,
2002, the Company had an outstanding lease obligation to PB Platforms 2001
Trust and PB-47 Trust and lease receivables from PETROBRAS, presented as
Capital lease (Long-term liabilities) and Net investment in direct
financing leases to related party (Other non current assets). PIFCO had
also recognized lease income and expense in the amount of US$5,941 and
US$5,681, respectively, for the year ended December&nbsp;31, 2002.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-18</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P align="left"><FONT size="2">The following is a schedule by year of the future minimum lease payments at
December&nbsp;31, 2002:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="81%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2005</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2008</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thereafter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">272,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Estimated future lease payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">876,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Less amount representing interest at Libor 6 M
&#043; 1.99% to Libor 6 M &#043; 4.25%</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(205,465</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Present value of minimum lease payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">670,681</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Less current portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(68,948</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term portion</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">601,733</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-19</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>7</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Commitments and Contingencies</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> 7.1 Contingencies&#151;Production equipment</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">On December&nbsp;28, 2001 the Company entered into various Purchase agreements
with Brasoil for the purchase of equipment allocated to certain platforms
owned by Brasoil and Catl&#233;ia. During 2002, the Company received a loan
from Brasoil to purchase equipment (from a related party and a third
party) that vary from platform to platform and have a total value of US$
487,586, including assets under construction and advances to suppliers, on
December&nbsp;31, 2002. It is expected that the equipment will be leased to
Brasoil, Catl&#233;ia and PETROBRAS under the terms of a Master Lease
Agreement. The execution of this agreement is contingent upon third party
lender approval to amend existing Charters for the platforms (between
Brasoil/ Catl&#233;ia and PETROBRAS) to include these assets.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In order to mitigate the potential risk for the Company as a result of the
lenders&#146; denial to execute the amendments to the existing Charter
agreements of the financed platforms, the Company, Brasoil and Catl&#233;ia
executed &#145;Option Agreements&#146; with respect to each platform, pursuant to
which Brasoil, Catl&#233;ia and PETROBRAS irrevocably grant to the Company an
option to cause Brasoil, Catl&#233;ia and PETROBRAS to purchase, for the total
amount of US$503,170 all of the equipment. This purchase option shall only
come into force if certain transaction documents, amongst which the Master
Lease Agreement and the Loan agreement have not been executed prior to
June&nbsp;21, 2003.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>7.2 Purchase Commitments</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company entered into various commitments on various dates for the
purchase of production equipment totaling US$ 635,314. The equipment
purchased will become part of a Master Lease Agreement, which has not yet
been executed.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In an effort to ensure procurement of oil products for the Company&#146;s
customers, the Company currently has several contracts which collectively
obligate it to purchase a minimum of approximately 184,413 barrels of
crude oil and oil products per day at market prices.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-20</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>8</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Related Party Transactions</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The Company has numerous transactions with PETROBRAS and other affiliated
companies in the ordinary course of business.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Transactions with all related parties resulted in the following balances:</FONT></TD>
</TR>
</TABLE>

<DIV align="left"></DIV>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BRASPETRO</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PETROBRAS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OIL</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PETR&#211;LEO</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>DOWNSTREAM</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>INTERNATIONAL</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SERVICES&#150;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BRASPETRO</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BRASILEIRO</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PARTICIPA&#199;&#213;ES</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BRASPETRO&#150;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BRASOIL AND</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OIL</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>S.A.&#150;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>S.A AND ITS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PIB.B. V. AND ITS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>ITS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>COMPANY&#150;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PETROBRAS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SUBSIDIARIES</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SUBSIDIARIES</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SUBSIDIARIES</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>BOC</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mainly by sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,359,141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">231,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct
financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable (see Note 6 iv)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">742,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">318,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Other non current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable (see Note 6 iv)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export prepayment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">624,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">207,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,349</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">126,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,194,237</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">494,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR clear="all">
<P align="right"><FONT size="2">&#091;Additional columns below&#093;</FONT>
<P align="left"><FONT size="2">&#091;Continued from above table, first column(s) repeated&#093;</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>December&nbsp;31,
</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>December&nbsp;31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>OTHERS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mainly by sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,237</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,654,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,584,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct
financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">183,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable (see Note 6 iv)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,157,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">282,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Other non current assets</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes receivable (see Note 6 iv)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">473,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export prepayment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net investment in direct financing leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">832,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marketable securities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,349</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Current liabilities</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">291,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">288,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,688,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR clear="all">

<P align="center"><FONT size="2">F-21</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P align="left"><FONT size="2">The principal amounts of business and financial operations carried out with
related parties are as follows:
</FONT>

<DIV align="left"></DIV>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Sales of crude oil
and oil products
and services</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,208,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,115,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">680,460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">738,943</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras
America,
Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">467,728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BR
Distribuidora</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EG3 S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,629</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cost of sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,212,717</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(95,242</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras
America,
Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(947,112</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,320,822</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,197</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(83,320</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Companhia
MEGA S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(158,107</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(148,723</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(34,220</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,542</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PEBIS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,681</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Lease income
(expense)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,681</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,227</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13,096</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">161,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">126,992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Company&#151;BOC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,744</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PIB.B.V</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,726</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">614</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marlim</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial expense</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,571</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(51,979</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,710</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,422</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,613,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,494,319</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,016,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,726,050</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR clear="all">
<P align="right"><FONT size="2">&#091;Additional columns below&#093;</FONT>
<P align="left"><FONT size="2">&#091;Continued from above table, first column(s) repeated&#093;</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expense</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Sales of crude oil
and oil products
and services</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,290,321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras
America,
Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">282,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BR
Distribuidora</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EG3 S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cost of sales</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(81,130</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Petrobras
America,
Inc.&#151;PAI</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,260,335</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Companhia
MEGA S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PEBIS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Lease income
(expense)</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial income</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">217,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REFAP S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Company&#151;BOC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services
Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fronape
International
Company</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PIB.B.V</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Marlim</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financial expense</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PETROBRAS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(152,940</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Braspetro
Oil
Services Company&#151;BRASOIL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(198</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,790,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,494,603</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR clear="all">

<P align="center"><FONT size="2">F-22</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Petrobras International Finance Company<BR>
(a wholly-owned subsidiary of Petr&#243;leo Brasileiro S.A. &#151; PETROBRAS)</B>
</FONT>
<P align="left"><FONT size="2"><B>Notes to Consolidated Financial Information<BR>
(Expressed in Thousands of United States Dollars)</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>9</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Advances for future capital increase</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 2001 and in December 2002, PETROBRAS, upon receiving approval from
the Board of Directors recommendation, converted a total of US$120,000
million of accounts receivable from PIFCo into advance for capital
increase.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>10</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B> Subsequent events</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In 2003, PNBV will be sold to PETROBRAS and, on the same date, PIFCO will
acquire 100% of BEAR INSURANCE COMPANY Ltd.&#151;BEAR from BRASOIL (related
party).</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">F-23</FONT>



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{"company-data": {"conformed-name": "PETROBRAS INTERNATIONAL FINANCE CO", "cik": "0001163371", "assigned-sic": "1311", "irs-number": "000000000"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "333-14168", "film-number": "03749492"}, "business-address": {"street1": "ANDERSON SQUARE BUILDING", "street2": "PO BOX 714 THE CAYMAN ISLANDS BWI", "city": "GEORGETOWN GRAND CAYMAN", "state": "E9", "zip": "00000"}}
PETROBRAS INTERNATIONAL FINANCE COMPANY
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2002
Commission File Number: 333-14168
Petrobras International Finance Company
(Exact name of registrant as specified in its charter)
Cayman Islands
(Jurisdiction of incorporation or organization)
Anderson Square Building
P.O. Box 714
George Town, Grand Cayman
Cayman Islands
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Title of each class:
U.S.$500,000,000 9.125% Senior Notes due 2007
U.S.$450,000,000 9.875% Senior Notes due 2008
U.S.$600,000,000 9.750% Senior Notes due 2011
U.S.$400,000,000 9.00% Global Step-Up Notes due 2008
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock
as of the close of the period covered by this Annual Report:
At December 31, 2002, there were outstanding:
50,000 common shares of Petrobras International Finance Company
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17
o
Item 18
x
TABLE OF CONTENTS
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
FORWARD LOOKING STATEMENTS
PRESENTATION OF FINANCIAL INFORMATION
Item 1. Identity of Directors, Senior Management, and Advisers.
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information.
Item 4. Information on the Company.
Item 5. Operating and Financial Review and Prospects.
Item 6. Directors, Senior Management and Employees.
Item 7. Major Shareholders and Related Party Transactions.
Item 8. Financial Information.
Item 9. The Offer and Listing.
Item 10. Additional Information.
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
Item 12. Description of Securities Other than Equity Securities.
Item 13. Defaults, Dividend Arrearages and Delinquencies.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
Item 15. Controls and Procedures.
Item 16. Reserved
Item 17. Financial Statements.
Item 18. Financial Statements.
SIGNATURE
STANDBY PURCHASE AGREEMENT
AMENDMENT TO THE MASTER EXPORT CONTRACT
LETTER AGREEMENT RE: THE DEPOSITARY AGREEMENT
LETTER AGREEMENT RE: ADMINISTRATIVE SERVICES AGMT.
AMENDED/RESTATED RECEIVABLES PURCHASE AGREEMENT
PREPAYMENT AGREEMENT
AMENDED AND RESTATED PREPAYMENT AGREEMENT
906 CERTIFICATIONS: CEO AND CFO
Table of Contents
TABLE OF CONTENTS
Page
Incorporation of Certain Documents By Reference
1
Forward Looking Statements
1
Presentation of Financial Information
1
Item 1. Identity of Directors, Senior Management, and Advisers
2
Item 2. Offer Statistics and Expected Timetable
2
Item 3. Key Information
2
Item 4. Information on the Company
17
Item 5. Operating and Financial Review and Prospects
26
Item 6. Directors, Senior Management and Employees
32
Item 7. Major Shareholders and Related Party Transactions
35
Item 8. Financial Information
37
Item 9. The Offer and Listing
37
Item 10. Additional Information
37
Item 11. Quantitative and Qualitative Disclosures About Market Risk
53
Item 12. Description of Securities Other than Equity Securities
53
Item 13. Defaults; Dividend Arrearages and Delinquencies
53
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
54
Item 15. Controls and Procedures
54
Item 16. Reserved
54
Item 17. Financial Statements
54
Item 18. Financial Statements
54
Item 19. Exhibits
54
i
Table of Contents
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The annual report on Form 20-F of Petróleo Brasileiro S.A.—PETROBRAS
("Petrobras") for the year ended December 31, 2002, as first filed with the
United States Securities and Exchange Commission (the "SEC") (Commission file
No. 1-15106) on June 19, 2003, is incorporated herein by reference.
FORWARD LOOKING STATEMENTS
Many statements made in this annual report under the captions "Item 3.
Risk Factors," "Item 4. History and Development of the Company—Business
Overview" relating to the operation and performance of Petrobras International
Finance Company, or PIFCo, and Petrobras and under the caption "Item 5.
Operating and Financial Review and Prospects" and elsewhere are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
that are not based on historical facts and are not assurances of future
results. Many of the forward-looking statements contained in this annual
report may be identified by the use of forward-looking words, such as
"believe," "expect," "anticipate," "should," "planned," "estimate" and
"potential," among others. These forward-looking statements are subject to
certain risks and uncertainties, including, but not limited to, our ability to
obtain financing, changes in Petrobras' use of our services for market
purchases of crude oil and oil products, changes in Brazilian foreign exchange
control regulations and changes in other applicable government regulations.
All forward-looking statements attributed to us or a person acting on our
behalf are expressly qualified in their entirety by this cautionary statement,
and you should not place reliance on any forward-looking statement contained in
this annual report.
The annual report on Form 20-F of Petrobras for the fiscal year ended
December 31, 2002, incorporated herein by reference, also contains
forward-looking statements. For a discussion of the factors affecting the
forward-looking statements contained therein, see "Forward-Looking Statements"
on page 1 thereof.
PRESENTATION OF FINANCIAL INFORMATION
In this annual report, references to "Real," "Reais" or "R$" are to
Brazilian Reais and references to "U.S. dollars" or "U.S.$" are to United
States dollars.
Our functional currency is the U.S. dollar. Substantially all of our
sales are made in U.S. dollars and all of our debt is denominated in U.S.
dollars. Accordingly, our audited consolidated financial statements as of
December 31, 2002 and 2001, and for each of the three years in the period ended
December 31, 2002, and the accompanying notes contained in this annual report
have been presented in U.S. dollars and prepared in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP") and include our three
wholly-owned subsidiaries, since their incorporation: Petrobras Netherlands
B.V. (which we transferred to Petrobras in January 2003), Petrobras Europe Ltd.
and Petrobras Finance Limited. See Item 5. "Operating and Financial Review and
Prospects" and Note 2(a) to our audited consolidated financial statements.
Certain figures included in this annual report have been subject to
rounding adjustments; accordingly, figures shown as totals in certain tables
may not be an arithmetic aggregation of the figures that precede them.
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Item 1. Identity of Directors, Senior Management, and Advisers.
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information.
SELECTED FINANCIAL DATA
The following table of selected financial data is presented in U.S.
dollars and prepared in accordance with U.S. GAAP. The data for each of the
five years in the period ended December 31, 2002 have been derived from our
audited consolidated financial statements, which were audited by
PricewaterhouseCoopers Auditores Independentes. Petrobras is required by
Brazilian Corporate Law to change auditors every five years. Beginning in June
2003 and through 2005, Ernst & Young Auditores Independentes S/C will serve as
Petrobras' and our independent auditors.
The information below should be read in conjunction with, and is qualified
in its entirety by reference to, our financial information set forth below
under "Item 5. Operating and Financial Review and Prospects" and in our audited
consolidated financial statements, and the accompanying notes appearing
elsewhere in this annual report.
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For the Year Ended December 31,
2002
2001
2000
1999
1998
(in millions of U.S. dollars)
Income Statement Data:
Sales of crude oil, oil products and services
$
6,390.2
$
6,260.5
$
7,937.0
$
4,728.0
$
2,873.8
Lease income
36.1
10.7
—
—
—
6,426.3
6,271.2
7,937.0
4,728.0
2,873.8
Cost of sales
(6,371.5
)
(6,253.0
)
(7,912.6
)
(4,723.8
)
(2,873.8
)
Lease expense
(24.0
)
(10.5
)
—
—
—
General and administrative expenses
(1.2
)
(0.1
)
—
—
—
(6,396.7
)
(6,263.6
)
(7,912.6
)
(4,723.8
)
(2,873.8
)
Gross profit
29.6
7.6
24.4
4.2
—
Financial
income
(1)
219.6
158.8
221.6
158.4
63.4
Financial
expense
(1)
(314.7
)
(187.1
)
(219.7
)
(142.2
)
(62.4
)
Gain on materials and equipment
—
0.4
—
—
—
Net income (loss)
$
(65.5
)
$
(20.3
)
$
26.3
$
20.4
$
1.0
Balance Sheet Data (end of period):
Cash and cash equivalents
$
260.6
$
48.6
$
51.2
$
49.4
$
16.5
Total assets
8,697.3
4,277.8
3,244.5
2,900.0
1,729.8
Loans payable to related parties
3,688.2
334.6
1,716.6
1,628.9
570.0
Short-term debt and current portion of
long-term debt
367.5
990.4
530.4
741.5
905.0
Short-term capital lease
68.9
Long-term debt
3,248.7
2,335.0
245.0
—
—
Long-term capital lease
601.7
Total stockholder's equity
43.9
49.4
9.7
21.5
1.1
(1)
Financial income represents primarily the profits realized from our sales
of crude oil and oil products to Petrobras. Financial expense consists
primarily of costs incurred by us in financing our activities in
connection with the importation by Petrobras of crude oil and oil
products.
RISK FACTORS
Risks Relating to Our Company
We may not earn enough money from our own operations to meet our debt obligations.
We are a direct wholly-owned subsidiary of Petrobras incorporated in the
Cayman Islands as an exempted company with limited liability. Accordingly, our
financial position and results of operations are largely affected by decisions
of our parent company. We have limited operations consisting principally of
the purchase of crude oil and oil products from third parties and the resale of
those products to Petrobras, with financing for such operations provided by
Petrobras as well as third-party credit providers. We also resell crude oil and
oil products to third parties on a limited basis. Our ability to pay interest,
principal and other amounts due on our outstanding and future debt obligations
will depend upon a number of factors, including:
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•
the extent to which Petrobras continues to use our services
for market purchases of crude oil and oil products;
•
Petrobras' willingness to continue to make inter-company
loans to us and provide us with other financial support;
•
our ability to access financing sources, including third-party credit facilities; and
•
our ability to transfer our financing costs to Petrobras.
In the event of a material adverse change in Petrobras' financial
condition or results of operations or in Petrobras' financial support of us, we
may not have sufficient funds to repay all amounts due on our indebtedness. See
"Risks Relating to Petrobras" for a more detailed description of certain risks
that may have a material adverse impact on Petrobras' financial condition or
results of operations and therefore affect our ability to meet our debt
obligations.
If Brazilian law restricts Petrobras from paying us in U.S. dollars, we may
have insufficient U.S. dollar funds to make payments on our debt obligations.
We obtain substantially all of our funds from Petrobras' payments in U.S.
dollars for crude oil that it purchases from us. In order to remit U.S. dollars
to us, Petrobras must comply with Brazilian foreign exchange control
regulations, including preparing specified documentation to be able to obtain
U.S. dollar funds for payment to us. If Brazilian law were to impose additional
restrictions, limitations or prohibitions on Petrobras' ability to convert
Reais into U.S. dollars, it could restrict the source of U.S. dollar funds
available for us to make payment on our debt obligations. Such restrictions
could also have a material adverse effect on the Brazilian economy or
Petrobras' business, financial condition and results of operations.
We may be limited in our ability to pass on our financing costs.
We are principally engaged in the purchase of crude oil and oil products
for resale to Petrobras, as described above. At any time, we may incur
indebtedness related to such purchases and/or obtain financing from Petrobras
or third-party credit providers. As of December 31, 2002, approximately 45% of
our indebtedness not having the benefit of Petrobras' standby purchase
obligation or other support was floating-rate debt denominated in U.S. dollars.
Petrobras is in the process of changing its risk management processes,
including those which may affect us, but neither Petrobras nor we have yet
entered into derivative contracts or made other arrangements to hedge against
interest rate risk. We have historically passed on our financing costs to
Petrobras by selling crude oil and oil products to Petrobras at a premium to
compensate for our financing costs. Although we and Petrobras are considering
methods of continuing this practice in the future, we cannot assure you that
this practice will continue. Our inability to transfer our financing costs to
Petrobras could have a material adverse effect on our business and on our
ability to meet our debt obligations.
Risks Relating to Petrobras' Operations
Petrobras' operations are affected by the volatility of prices for crude oil
and oil products
.
Until January 2, 2002, the prices Petrobras was allowed to charge for
crude oil and oil products (and, as a result, its recorded prices for the
calculation of net operating revenues) were determined on the basis of a
pricing formula established by the Brazilian government designed to reflect
changes in the Real/U.S. Dollar exchange rate and international market prices
for relevant benchmark products.
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However, as of January 2, 2002, the crude oil and oil products markets in
Brazil were deregulated in their entirety.
Historically, international prices for crude oil and oil products have
fluctuated widely as a result of many factors. Petrobras does not, and will
not, have control over the factors affecting international prices for crude oil
and oil products. These factors include:
•
global and regional economic and political developments in
crude oil producing regions, particularly in the Middle East;
•
the ability of OPEC and other crude oil producing nations to
set and maintain crude oil production levels and prices;
•
other actions taken by major crude oil producing or consuming countries;
•
global and regional supply and demand for crude oil and oil products;
•
competition from other energy sources;
•
domestic and foreign government regulations;
•
weather conditions; and
•
military action, such as the recent U.S. military action in Iraq.
Changes in crude oil prices typically result in changes to prices for oil
products. Lower crude oil prices have various effects on Petrobras, including
decreasing its net operating revenues, net income and cash flows. In
comparison, higher crude oil prices generally lead to increases in Petrobras'
net operating revenues, net income and cash flows.
Petrobras expects continued volatility and uncertainty in international
prices for crude oil and oil products. Declines in international crude oil
prices may adversely affect Petrobras' business, results of operations and
financial condition and the value of its proved reserves.
Prices remain regulated for natural gas, electricity and certain
petrochemicals. These controls could have an adverse effect on revenues from
these business activities.
Because of changes in government regulations, Petrobras faces increased
competition and may lose market share.
Substantial changes have been occurring in the oil and gas industry in
Brazil as a result of the continuing process of deregulation by the Brazilian
government. As part of this deregulation, the Brazilian government eliminated
all price controls on crude oil and oil products in early 2002. Prices remain
regulated, however, for natural gas, electricity and certain petrochemicals.
The changes in government regulation have enabled multi-national and regional
oil companies to enter the Brazilian energy market. Petrobras expects that
competition in its downstream and upstream activities will increase further, as
existing and new participants expand their activities as a result of these
regulatory changes.
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Although Petrobras' prices for crude oil and oil products are based on
international prices, in periods of high international prices or sharp
devaluations of the Real, Petrobras may not be able to adjust its prices in
Reais sufficiently to maintain parity with international prices.
Since the Brazilian government's elimination of all price controls on
crude oil and oil products in January 2002, there have been periods of high
international prices or sharp devaluations of the Real when Petrobras has been
unable to increase prices in Reais sufficiently to maintain parity with
international prices. While Petrobras does not have an obligation to supply
the Brazilian market, during periods when the local prices of crude oil and oil
products were below prevailing international prices, Petrobras' competitors
were unwilling to supply the local market. In order to ensure adequate supply
of crude oil and oil products in Brazil, Petrobras sold crude oil and oil
products below prevailing international prices.
As a result of deregulation of the Brazilian market, and the elimination
of import tariffs in particular, Petrobras' competitors can sell products in
the Brazilian market at parity with international prices. In light of this
increased competition, Petrobras has less flexibility to maintain local prices
above international prices to compensate for revenues not realized in periods
in which it sold crude oil and oil products below prevailing international
market prices.
Petrobras may be required to sell some of its refining capacity in Brazil.
Petrobras presently owns 98.6% of the existing refining capacity in
Brazil. Petrobras plans to upgrade its present refineries and it may build new
refineries in Brazil, sell participation interests in its present refineries to
new partners or engage in asset swaps, as it did through its business
combination in 2001 involving assets of Repsol-YPF S.A. Although Petrobras is
not presently subject to any requirement to divest any assets, and the
Brazilian government has not made any proposal in that respect, it is possible
that Petrobras will be required to divest a portion of its refining capacity or
other assets in the future. Any such divestiture could have a material adverse
effect on Petrobras' financial condition and results of operations.
Petrobras' ability to achieve growth is dependent upon its finding or acquiring
additional reserves, as well as successfully developing current reserves, and
risks associated with drilling may cause drilling operations to be delayed or
cancelled.
Petrobras' ability to achieve its growth objectives is highly dependent
upon its level of success in finding, acquiring or gaining access to additional
reserves, as well as successfully developing current reserves. In general, the
volume of production from crude oil and natural gas properties declines as
reserves are depleted, with the rate of decline depending on reservoir
characteristics. Unless Petrobras conducts successful exploration and
development activities or acquires properties containing proved reserves, or
both, its proved reserves will decline as reserves are extracted.
Petrobras' exploration and development activities expose it to the
inherent risks of drilling, including the risk that no economically productive
crude oil or natural gas reserves will be discovered. The costs of drilling,
completing and operating wells are often uncertain and numerous factors beyond
Petrobras' control may cause drilling operations to be curtailed, delayed or
cancelled. Petrobras' future drilling, exploration and acquisition activities
may not be successful and, if unsuccessful, could harm its future results of
operations and financial condition.
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Petrobras' crude oil and natural gas reserve estimates involve some degree of
uncertainty and may prove to be incorrect over time.
The proved crude oil and natural gas reserves set forth in Petrobras'
annual report are its estimated quantities of crude oil, natural gas and
natural gas liquids that geological and engineering data demonstrate with
reasonable certainty to be recoverable from known reservoirs under existing
economic and operating conditions (i.e. prices and costs as of the date the
estimate is made). Petrobras' proved developed crude oil and natural gas
reserves are reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods. There are numerous
uncertainties inherent in estimating quantities of proved reserves. The
reliability of proved reserve estimates depends on:
•
the quality and quantity of Petrobras' geological, technical
and economic data;
•
the prevailing crude oil and natural gas prices applicable to
Petrobras' production (which in the past have been subject to
Brazilian government regulation);
•
the production performance of Petrobras' reservoirs; and
•
extensive engineering judgments.
Many of the factors, assumptions and variables involved in estimating
reserves are beyond Petrobras' control and may prove to be incorrect. The
results of Petrobras' future drilling, testing and production activity may lead
it to make significant revisions to its reserve estimates.
Petrobras' equipment, facilities and operations are subject to numerous
environmental and health regulations which may become more stringent in the
future and may result in increased liabilities and increased capital
expenditures.
Petrobras' facilities are subject to a wide variety of federal, state and
local laws, regulations and permit requirements relating to the protection of
human health and the environment. Petrobras could be exposed to civil
penalties, criminal sanctions and closure orders for non-compliance with these
environmental regulations, which, among other things, limit or prohibit
emissions or spills of toxic substances produced in connection with its
operations. Current and past waste disposal and emissions practices may
require Petrobras to clean up or retrofit its facilities at substantial cost
and could result in substantial liabilities. The
Instituto Brasileiro do Meio
Ambiente dos Recursos Naturais Renováveis
(Brazilian Institute of the
Environment and Renewable Natural Resources), or IBAMA, has been investigating
Petrobras' oil platforms in the Campos Basin, and may impose fines,
restrictions on operations or other sanctions in connection with its
investigations.
Petrobras spent approximately U.S.$466 million in 2002, U.S.$473 million
in 2001 and U.S.$356 million in 2000 to comply with environmental laws.
However, since environmental laws are becoming more stringent in Brazil and in
other jurisdictions where it operates, it is likely that Petrobras'
environmental capital expenditures and costs for environmental compliance will
increase, perhaps substantially, in the future. In addition, due to the
possibility of unanticipated regulatory or other developments, the amount and
timing of future environmental expenditures may vary widely from those
currently anticipated. The amount of investments Petrobras makes in any given
year is subject to limitations by the Brazilian government. Accordingly,
expenditures required for compliance with environmental regulation could result
in reductions in other strategic investments that Petrobras has planned, with a
resulting decrease to its profits, and future environmental costs may harm
Petrobras' results of operations or financial condition.
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In the past, significant oil spills have occurred and Petrobras has incurred,
and may continue to incur, liabilities in connection with oil spills, including
clean up costs, government fines, and potential lawsuits.
From time to time, oil spills occur in connection with Petrobras'
operations. Since January 1, 2000, Petrobras has experienced 11 significant
oil spills. In each of these, it undertook cleanup efforts as promptly as
possible. Nevertheless, in some situations, Petrobras was fined by various
state and federal environmental agencies, became the defendant in several civil
and criminal suits, and remains subject to several investigations and potential
civil and criminal liabilities as a result of past oil spills. These or any
future oil spills may have a material adverse effect on Petrobras' financial
condition or results of operations. Accordingly, if one or more of the
potential liabilities resulting from these oil spills were to result in an
actual fine or civil or criminal liability, Petrobras' operations and financial
condition could be negatively affected.
Petrobras may incur losses and spend time and money defending pending
litigation and arbitration.
Petrobras is currently a party to numerous legal proceedings relating to
civil, administrative, environmental, labor and tax claims filed against it.
It is also pursuing discussions with various government authorities and with
Repsol-YPF over its licenses, including its right to operate certain platforms,
in connection with the 2001 Repsol-YPF asset swap. These claims involve a wide
range of issues and seek substantial amounts of money and other remedies.
Several individual disputes account for a significant part of the total amount
of claims against Petrobras. Petrobras' audited financial statements as of
December 31, 2002 include reserves totaling U.S.$50 million as of that date,
for probable and reasonably estimable losses and expenses it may incur in
connection with all of its pending litigation and a separate provision of
U.S.$105 million related to various tax assessments received from the
Instituto
Nacional de Seguridade Social
(National Security Institute, or INSS).
In the event that a number of the claims that Petrobras considers to
represent remote or reasonably possible risks of loss were to be decided
against it, or in the event that the losses estimated turn out to be higher
than the reserves made, the aggregate cost of unfavorable decisions could have
a material adverse effect on Petrobras' financial condition and results of
operations. Additionally, Petrobras' management may be required to direct its
time and attention to defending these claims, which could preclude them from
focusing on its core business. Depending on the outcome, certain litigation,
including matters involving its platforms and asset swaps, could result in
restrictions on Petrobras' operations and have a material adverse effect on
certain of its businesses.
Proposed legislative changes to the ICMS tax imposed by the State of Rio de
Janeiro may have a material adverse effect on Petrobras' results of operation and
financial condition.
The governor of the State of Rio de Janeiro is considering signing a bill
into law that would increase the amount of
Imposto sobre Circulação de
Mercadorias e Serviços
(state value-added tax, or ICMS) that
Petrobras is required to
pay by approximately R$5.4 billion (U.S.$1.9 billion) per year. The proposed
new law would change the point of collection of part of the ICMS from the
refinery level to the wellhead level of production in the State of Rio de
Janeiro. If it becomes effective, Petrobras may be unable to utilize part of the
taxes imposed at the wellhead level in Rio de Janeiro to offset taxes that are
imposed at the refinery level in other states, and therefore would be paying
taxes on the same oil products at both the production and refining level.
Petrobras believes that the proposed new law would be an unconstitutional form of
taxation, and intends to challenge the law if it becomes effective. If the law
becomes effective, it would significantly increase the amount of taxes
Petrobras pays, and such increase could have a material adverse
effect on Petrobras' level of
investments and, therefore, on Petrobras' results of operation and financial
condition.
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Labor disputes, strikes, work stoppages and protests could lead to increased
operating costs.
All of Petrobras' employees, other than its maritime employees, are
subject to a collective bargaining agreement with the Oil Workers' Unified
Federation, which was signed on December 4, 2002, retroactive to September 1,
2002. This collective bargaining agreement will expire on October 31, 2003.
On December 27, 2002, Petrobras signed a separate collective bargaining
agreement with the maritime employees' union retroactive to November 1, 2002,
which will expire on October 31, 2003.
From time to time, Petrobras has been subject to strikes and work
stoppages. In 2001, its oil workers began a five-day strike. While this
strike was settled, it did result in a decrease in crude oil production. If
Petrobras' workers were to strike, the resulting work stoppages could have an
adverse effect on Petrobras, as it does not carry insurance for losses incurred
as a result of business interruptions of any nature, including business
interruptions caused by labor action. As a result, Petrobras' financial
condition and results of operations could be adversely affected by future
strikes, work stoppages, protests or similar activities.
Petrobras' expansion into the domestic power market is relatively recent and
has generated losses, and the regulatory environment remains uncertain.
Consistent with the global trend of other major oil and gas companies and
to secure demand for its natural gas, Petrobras is currently expanding its
business into the domestic power market. Despite a number of incentives
introduced by the former Brazilian government to promote the development of
thermoelectric power plants, development of such plants by private investors
has been slow to progress. Petrobras currently invests in 16 of the 39
gas-fired power generation plants being built or proposed to be built in Brazil
under the program to promote the development of thermoelectric plants, known as
the
Programa Prioritário de Termoelectricidade
(Thermoelectric Priority
Program, or PPT). Petrobras invests in some of these plants with partners,
many of whom may have power purchase agreements with the plants. Petrobras has
had contractual disputes in connection with these investments and other
disputes may occur. Depending on the outcome of any such disputes, they could
have an adverse economic impact on Petrobras, including on the profitability of
its investments.
Petrobras has a limited history of investing in thermoelectric plants, and
thermoelectric plants have not previously operated in a competitive environment
in Brazil. Thermoelectric plants have faced difficulties passing on to
electricity offtakers foreign currency financing costs of developing new
generating capacity, and have had to contend with the reluctance of many
distribution companies to sign power purchase agreements due mainly to their
existing initial contracts, which provide for a guaranteed price from 1998 to
2002, which is phased out over the following four years. In addition, demand
for thermoelectric power in Brazil has been lower than expected. In 2002,
Congress passed a law increasing government intervention in the market, and the
current administration is studying the implementation of changes that could be
material to the natural gas and power sector. It is not clear that
thermoelectric power generation will remain a priority for the country. In
addition, the energy policy of the new administration remains uncertain.
During 2002, Petrobras experienced significant losses relating to its
investments in thermoelectric power generation. As a result, in 2002,
Petrobras created a U.S.$205 million provision for losses related to its
commitments to off-take electricity from certain thermoelectric power plants.
Petrobras increased this provision in the first quarter of 2003 by a further
U.S.$205 million. After deducting the losses incurred in the first quarter of
2003, which amounted to U.S.$111 million, the balance of the provision totaled
U.S.$316 million as of March 31, 2003. Petrobras has limited its investments
in this area, but its
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participation in the domestic power market may never become profitable.
As a result, Petrobras' participation in this market may adversely affect its
operating results and financial condition.
Petrobras is in the process of implementing a new Strategic Plan, which may
have a material adverse effect on its competitive position or ability to expand
its operations.
On April 17, 2003, Petrobras announced the adoption of revisions to its
Strategic Plan for the period 2003-2007. The new Strategic Plan maintains
Petrobras' core strategies and objectives, but reduces its overall budgeted
capital expenditures for the year 2003. The revisions for 2003 reflect an
environment of decreased access to financial markets and increased volatility
in foreign exchange rates and crude oil prices. The changes to Petrobras'
Strategic Plan, particularly the decrease in overall budgeted capital
expenditures, could affect Petrobras' ability to achieve certain of its
strategic goals, and in particular, could negatively impact its competitive
position or ability to expand its operations.
Petrobras may not be able to obtain financing for all of its planned
investments.
The Brazilian government maintains control over Petrobras' budget and
establishes limits on its investments and long-term debt. As a
state-controlled entity, Petrobras must submit its proposed annual budgets to
the Ministry of Planning, Budget and Management, the Ministry of Mines and
Energy and the Brazilian Congress for approval. Petrobras is endeavoring to
obtain financing that does not require Brazilian government approval, such as
structured financings, but there can be no assurance that it will succeed. As
a result, Petrobras may not be free to make all the investments it envisions,
including those it has agreed to make to expand and develop its crude oil and
natural gas fields. If Petrobras is unable to make these investments, its
future operating results and financial condition may be adversely affected. In
addition, failure to make its planned investments in Brazil could hurt its
competitive position in the Brazilian oil and gas sector, particularly as other
companies enter the market.
Currency fluctuations could have a material adverse effect on Petrobras'
financial condition and results of operations, because most of Petrobras'
revenues are in Reais and a large portion of its liabilities are in foreign
currencies.
The principal market for Petrobras' products is Brazil, and over the last
three fiscal years over 86% of Petrobras' revenues have been denominated in
Reais. A substantial portion of Petrobras' indebtedness and some of its
operating expenses and capital expenditures are, and are expected to continue
to be, denominated in or indexed to U.S. Dollars and other foreign currencies.
In addition, during the year ended December 31, 2002, Petrobras imported
U.S.$5.2 billion of crude oil and oil products, the prices of which were all
denominated in U.S. Dollars.
As a result of downward pressure on the Real, on January 15, 1999, the
Central Bank of Brazil allowed the Real to float freely. The Real depreciated
9.3% in 2000, 18.7% in 2001 and 52.3% in 2002 against the U.S. Dollar. As of
June 13, 2003, the exchange rate of the Real to the U.S. Dollar was R$2.857 per
U.S.$1.00, representing an appreciation of approximately 24.0% in 2003
year-to-date. There is no assurance that this trend will continue, and the
Real may depreciate further in the future. Petrobras cannot predict the impact
on its operations of any future substantial devaluation of the Real, which
could adversely affect its operating cash flows and its ability to meet its
foreign currency-denominated obligations. You should consider this risk in
light of past devaluations of the Real caused by inflationary and other
pressures.
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Petrobras is exposed to increases in prevailing market interest rates.
As of December 31, 2002, approximately 45% of Petrobras' total
indebtedness consisted of floating rate debt. Although Petrobras is changing
its risk management practices, it has not yet entered into derivative contracts
or made other arrangements to hedge against interest rate risk. Accordingly,
if market interest rates (principally LIBOR) rise, Petrobras' financing
expenses will increase.
In the aftermath of the U.S. military action in Iraq there may be changes to
the international oil markets, some of which could have an adverse effect on
Petrobras.
Following the U.S. military action in Iraq, the United Nations eliminated
sanctions that had limited Iraq's ability to participate in the international
oil markets. As a result, it is expected that, in the future Iraq will
substantially increase its production and export sales of crude oil and oil
products. Given the uncertainty surrounding the circumstances under which
Iraq's oil industry will be managed over the next few years, it is impossible
to predict the economic or political goals which the United States government
or any other party controlling such industry will seek to achieve. The changes
to the international oil markets that could result from Iraq's re-entry into
such markets could have a material adverse effect on Petrobras' financial
condition and results of operations.
Petrobras' ability to obtain affordable insurance coverage may be adversely
affected by changes in the insurance markets, its recent history of claims
under its insurance policies and changes in the insurance markets following the
September 11, 2001 terrorist attacks.
The insurance premiums charged for some or all of the coverage
historically maintained by Petrobras and its subsidiaries has increased
significantly in the past as a result of changes in the insurance markets and
claims under Petrobras' insurance policies. Following the March 15, 2001
explosion that sank Platform P-36, Petrobras' insurance costs increased
substantially, from U.S.$36.0 million in 2001 to U.S.$46.4 million in 2002.
For 2003, these costs have decreased to U.S.$30.5 million. Petrobras'
insurance costs may increase, or coverage may be unavailable, in the future.
The premiums for war risk and terrorism insurance have also increased
substantially in the past, and in some cases, such insurance is not available.
Following the September 11, 2001 terrorist attacks, insurance underwriters have
issued general notices of cancellations to their customers for war risk and
terrorism insurance in respect of a wide variety of insurance coverage,
including, but not limited to, liability coverage. Petrobras does not know
whether underwriters will offer to reinstate some or all of these types of
coverage and, if reinstatement is offered, the extent to which premiums may be
increased. The failure to obtain insurance against risks inherent in our
business may expose Petrobras to catastrophic losses that may materially affect
its results of operations.
Petrobras may not achieve the anticipated timing, efficiencies and benefits of
integrating Perez Companc into its business.
On October 17, 2002, Petrobras agreed to acquire 58.62% of the capital
stock of Perez Companc S.A. ("Perez Companc"), the second largest Argentine
energy company, from the Perez Companc family and the Perez Companc Foundation
for approximately U.S.$1.03 billion. The completion of the Perez Companc
acquisition was contingent upon antitrust approval from the Argentine
government's
Comisión Nacional de Defensa de la Competencia
(the "National
Council for the Defense of Competition" or the "CNDC"). The CNDC approved the
transaction on May 13, 2003. Upon approval of the transaction, Perez Companc
agreed to divest itself of its equity interest in Transener S.A., which
operates most of Argentina's high-tension electricity lines. This divestiture
is in line with Perez Companc's strategic plan and does not affect Petrobras'
strategic plan in Latin America.
11
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It is possible that Petrobras may not achieve the anticipated timing,
efficiencies and benefits of integrating Perez Companc into its business.
Differing corporate cultures, legal and regulatory environments, personalities,
languages and other factors may pose challenges to the success of the
acquisition. Failure to achieve the anticipated timing, efficiencies and
benefits of integrating Perez Companc into its business may negatively impact
Petrobras and its ability to implement its strategic objectives in South
America.
Perez Companc is subject to substantial risks relating to its business and
operations in Argentina and other South American countries.
Perez Companc is an Argentine
sociedad anonima
with approximately 59.6% of
its total crude oil and natural gas production and 45.6% of its proved crude
oil and natural gas reserves located in Argentina at December 31, 2002. As a
result, Perez Companc's financial condition and results of operation may be
adversely affected by Argentine political instability, fluctuations in the
Argentine economy and governmental actions concerning the economy, including:
•
the imposition of exchange controls, which could restrict the
flow of capital out of Argentina and make it more difficult for
Perez Companc to service its non-Peso denominated debt;
•
the imposition of restrictions on the export of crude oil and
oil products, which could decrease Perez Companc's U.S. Dollar cash
receipts;
•
the devaluation of the Argentine Peso, which could lead to
significant losses in Perez Companc's net foreign currency position
and, therefore, restrict its ability to make payment on its
foreign-currency denominated debt;
•
increases in export tax rates for crude oil and oil products,
which could lead to a reduction in Perez Companc's export margins
and cash flows; and
•
other measures enacted by the Argentine government to address
Argentina's economic crisis, including the pesification of utility
rates, which combined with the devaluation of the Argentine Peso,
resulted in payment defaults by three of Perez Companc's affiliated
utility companies, TGS, CIESA (the parent of TGS) and Transener, and
which could lead to defaults by other affiliated utility companies.
Perez Companc is also active in Venezuela, Ecuador, Bolivia, Peru and
Brazil. Production from Venezuela accounted for approximately 28.7% of Perez
Companc's total average production in barrels of oil equivalent in 2002,
constituting the largest operation outside Argentina. Accordingly, Perez
Companc's operations may be negatively affected by:
•
the continuing political and economic instability in
Venezuela, particularly the labor strikes and other forms of
political protest directed against the Hugo Chavez administration;
•
any decisions by the Organization of Petroleum Exporting
Countries ("OPEC") to decrease production volumes, as Venezuela is a
member of OPEC; and
•
any decision by the Venezuelan government to modify the terms
and conditions of Perez Companc's operating agreements in Venezuela.
If one or more of the risks described above were to materialize, Petrobras
may not be able to realize the benefits that it currently intends to realize
from the Perez Companc acquisition, and that
12
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development might negatively impact it and its ability to implement its
strategic objectives in South America.
Risks Relating to the Relationship between Petrobras and the Brazilian
Government
The interests of the Brazilian government, as Petrobras' controlling
shareholder, may conflict with the interests of our other shareholders and
creditors.
The Brazilian government, as Petrobras' controlling shareholder, has
pursued, and could continue to pursue, certain of its macroeconomic and social
objectives through Petrobras. These initiatives have not always been in
Petrobras' best interests or the best interests of its other shareholders and
creditors. Brazilian law requires the Brazilian government to own a majority
of Petrobras' voting stock, and so long as it does, the Brazilian government
will have the power to elect a majority of the members of Petrobras' board of
directors and, through them, a majority of the executive officers who are
responsible for Petrobras' day-to-day management. As a result, Petrobras may
engage in activities that give preference to the Brazilian government's agenda
rather than to its own economic and business objectives. In particular,
Petrobras continues to assist the Brazilian government to ensure that the
supply of crude oil and oil products in Brazil meets Brazilian consumption
requirements. Accordingly, Petrobras may continue to make investments, incur
costs and engage in sales on terms that are not necessarily in its best
interests or in the best interests of its shareholders and creditors.
Luiz Inácio Lula da Silva was elected President of Brazil in October 2002
and took office on January 1, 2003. As a result, there have been significant
changes in Petrobras' board of directors and senior management in recent
months. The reconstituted board of directors and new senior management may
pursue a strategy or conduct operations in a manner that diverges significantly
from the strategy and operations pursued by Petrobras' previous management.
Changes in government or government policy could have a material adverse effect
on Petrobras and its business, results of operations, financial condition or
prospects.
If the Brazilian government reinstates controls over the prices Petrobras can
charge for crude oil and oil products, such price controls could affect
Petrobras' financial condition and results of operations.
In the past, the Brazilian government set prices for crude oil and oil
products in Brazil, often below prevailing prices on the world oil markets.
These prices involved elements of cross-subsidy among different oil products
sold in various regions in Brazil. The cumulative impact of this price
regulation system on Petrobras is recorded as an asset on Petrobras' balance
sheet under the line item "Petroleum and Alcohol Account—Receivable from the
Brazilian government." The balance of the account at December 31, 2002 was
U.S.$182 million. Effective January 2, 2002, all price controls for crude oil
and oil products ended, and while no price controls were imposed in 2002, the
Brazilian government could decide to reinstate price controls in the future as
a result of market instability or other conditions. If this were to occur,
Petrobras' financial condition and results of operations could be adversely
affected.
Brazilian political and economic conditions may have a material adverse effect
on Petrobras.
The Brazilian economy has been characterized by significant involvement by
the Brazilian government, which often changes monetary, credit and other
policies to influence Brazil's economy. The Brazilian government's actions to
control inflation and other economic policies have often involved wage and
price controls, modifications to the Central Bank's base interest rates, and
other measures, such as the freezing of bank accounts, which occurred in 1990.
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The Brazilian government's economic policies may have important effects on
Brazilian corporations and other entities, including Petrobras, and on market
conditions and prices of Brazilian securities. Petrobras' financial condition
and results of operations may be adversely affected by the following factors
and the Brazilian government's response to these factors:
•
devaluations and other exchange rate movements;
•
inflation;
•
exchange control policies;
•
social instability;
•
price instability;
•
energy shortages;
•
interest rates;
•
liquidity of domestic capital and lending markets;
•
tax policy; and
•
other political, diplomatic, social and economic developments in or affecting Brazil.
In addition, Petrobras cannot predict the effect that the policies of the
new Brazilian administration may have on Brazilian economic conditions or on
Petrobras' financial condition and results of operations.
The current Argentine economic, political and social crisis could adversely
affect the financial condition and results of operation of Perez Companc and
Petrobras' other Argentine operations.
Since 1999, the Argentine economy has been in a recession marked by
reduced levels of consumption and investment, increased unemployment, declining
gross domestic product and capital flight.
On December 20, 2001, President Fernando de la Rúa resigned, and since
then, Argentina has had several presidents, including President Eduardo
Duhalde, who held office from January 2002 to May 2003. During his term,
President Duhalde and his government underook a number of far-reaching
initiatives, including:
•
ratifying the suspension of payment of certain of Argentina's
sovereign debt;
•
amending Argentina's Convertibility Law to allow the exchange
rate of the Argentine Peso to float, breaking the Peso's decade-old
one-to-one relationship to the U.S. Dollar, and resulting in a 66.4%
decline in the value of the Peso against the U.S. Dollar from
January 7, 2002 to March 31, 2003;
•
converting certain U.S. dollar-denominated debts into
peso-denominated debts at a one-to-one exchange rate and U.S.
dollar-denominated bank deposits into peso-denominated bank deposits
at an exchange rate of 1.4 Argentine Pesos per U.S.$1.00;
14
Table of Contents
•
restructuring bank deposits and maintaining restrictions on
bank withdrawals;
•
enacting an amendment to the Argentine Central Bank's charter
to (i) allow it to print currency in excess of the amount of the
foreign reserves it holds, (ii) make short-term advances to the
Argentine federal government and (iii) provide financial assistance
to financial institutions with liquidity constraints or solvency
problems;
•
imposing restrictions on transfers of funds abroad subject to
certain exceptions; and
•
requiring the deposit into the banking system of foreign
currency earned from exports, subject to certain exceptions.
The rapid and radical nature of recent changes in the Argentine social,
political, economic and legal environment created an atmosphere of great
uncertainty in the banking system. As a result, commercial and financial
activities were virtually paralyzed during 2002, further aggravating the
economic recession which precipitated the current crisis. Moreover, due to the
depth of the social and political crisis that affected Argentina in 2002,
Argentina continues to face risks, including: (i) civil unrest, rioting,
looting, nation-wide protests, widespread social unrest and strikes, (ii)
expropriation, nationalization and forced renegotiation or modification of
existing contracts and (iii) changes in taxation policies, including royalty
and tax increases and retroactive tax claims.
On May 25, 2003, a new president, Néstor Kirchner, took office. There is
uncertainty as to the nature and scope of the measures to be adopted by Mr.
Kirchner's government to address many of the country's unresolved economic
problems, including the renegotiation of its external debt. Petrobras cannot
predict the policies the new Kirchner administration may adopt or the effect
that those policies could have on Argentine economic conditions and our
investments in Argentina.
Petrobras has acquired a majority interest in several entities with
operations in Argentina, including Perez Companc. The financial condition and
results of operation of Perez Companc and other acquisitions may be adversely
affected by Argentine political instability, fluctuations in the Argentine
economy and governmental actions concerning the economy, which could result in
Petrobras' failure to realize the benefits it currently expects to realize from
those acquisitions.
Historical Brazilian government control of Petrobras' sales prices and
regulation of its operating revenues mean that Petrobras' results of operations
cannot be easily compared from year to year.
One of the tools available to the Brazilian government to control
inflation and pursue other economic and social objectives has been the
regulation of oil product prices. The method by which the Brazilian government
has controlled Petrobras' prices has varied from year to year. Until December
31, 2001, the Brazilian government regulated the prices at which Petrobras was
permitted to sell its oil products. The Brazilian government also established
freight subsidies to ensure uniform oil product prices throughout Brazil, but
these subsidies have since been phased out. Beginning in July 1998, and until
the institution of price deregulation on January 2, 2002, the Brazilian
government established a new methodology for calculating Petrobras' net
operating revenues.
Because of this government price control and the change in methodology:
•
the various line items in Petrobras' financial statements are
not necessarily comparable from period to period; and
15
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•
Petrobras' results of operations reflect not only its
consolidated operations, but also the results of economic activity
undertaken on behalf of the Brazilian government.
Additionally, from time to time, the Brazilian government may impose
specific taxes or other special payment obligations on Petrobras' operations
that may affect its results of operations.
Petrobras does not own any of the crude oil and natural gas reserves in Brazil.
A guaranteed source of crude oil and natural gas reserves is essential to
an oil and gas company's sustained production and generation of income. As a
result, many oil and gas companies own crude oil and natural gas reserves.
Under Brazilian law, the Brazilian government owns all crude oil and natural
gas reserves in Brazil. Petrobras possesses the exclusive right to develop its
reserves pursuant to concession agreements awarded to it by the Brazilian
government, but if the Brazilian government were to restrict or prevent
Petrobras from exploiting these crude oil and natural gas reserves, its ability
to generate income would be adversely affected.
The Brazilian government is no longer contingently liable for Petrobras'
liabilities in the event of its insolvency.
On March 1, 2002, an amended Brazilian corporate law became effective.
Among other changes, the amended law provides for the termination of the
contingent liability of the Brazilian government for the liabilities and
obligations of mixed capital companies, such as Petrobras and, as a
consequence, for the termination of mixed capital companies' immunity from
bankruptcy legal proceedings. Accordingly, the Brazilian government will not
be contingently liable, as it was in the past, for any of Petrobras'
obligations incurred after the enactment of this law.
Risks Relating to Brazil
The Brazilian government's actions to maintain economic stability, as well as
public speculation about possible future actions, may contribute significantly
to economic uncertainty in Brazil and to heightened volatility in the Brazilian
securities markets.
Petrobras' principal market is Brazil, which has periodically experienced
extremely high rates of inflation. Inflation, along with recent governmental
measures to combat inflation and public speculation about possible future
measures, has had significant negative effects on the Brazilian economy. The
annual rates of inflation, as measured by the National Consumer Price Index
(
Índice Nacional de Preços ao Consumidor
), have decreased from 2,489.1% in 1993
to 929.3% in 1994, to 8.4% in 1999 and to 5.3% in 2000. The same index
increased to 9.4% during 2001 and to 14.7% in 2002.
Brazil may experience high levels of inflation in the future. The lower
levels of inflation experienced since 1994 may not continue. Future
governmental actions, including actions to adjust the value of the Real, could
trigger increases in inflation.
Over the last three fiscal years, approximately 86% of Petrobras' revenues
have been denominated in Reais, although prices for crude oil and oil products
have been based on international prices. A substantial portion of Petrobras'
indebtedness and some of its operating expenses and capital expenditures are,
and are expected to continue to be, denominated in or indexed to the U.S.
Dollar and other foreign currencies. In addition, during the year ended
December 31, 2002, Petrobras imported approximately U.S.$5.2 billion of crude
oil and oil products, the prices of which were all denominated in U.S. Dollars.
16
Table of Contents
As a result of inflationary pressures, the Real and its predecessor
currencies have been devalued periodically during the last four decades.
Through this period, the Brazilian government has implemented various economic
plans and utilized a number of exchange rate policies, including sudden
devaluations, periodic mini-devaluations during which the frequency of
adjustments has ranged from daily to monthly, floating exchange rate systems,
exchange controls and dual exchange rate markets. From time to time, there
have been significant fluctuations in the exchange rates between the Real and
the U.S. Dollar and other currencies. For example, the Real declined in value
against the U.S. Dollar by 9.3% in 2000, 18.7% in 2001 and 52.3% in 2002.
Devaluation of the Real relative to the U.S. Dollar could create
additional inflationary pressures in Brazil by generally increasing the price
of imported products and requiring recessionary governmental policies to curb
aggregate demand. On the other hand, appreciation of the Real against the U.S.
Dollar may lead to a deterioration of the country's current account and the
balance of payments, as well as dampen export-driven growth. The potential
impact of the floating exchange rate and of measures by the Brazilian
government aimed at stabilizing the Real is uncertain. In addition, a
substantial increase in inflation may weaken investor confidence in Brazil.
Future devaluation of the Real could adversely affect our results of operations
and financial condition.
The current crisis in Argentina could adversely affect the Brazilian economy,
adversely affecting Petrobras' ability to finance its operations and Petrobras'
investments in Argentina.
In the past, the Brazilian economy and the securities of Brazilian
companies have been, to varying degrees, influenced by economic and market
conditions in other emerging market countries, particularly in Latin America,
as well as by investors' responses to those conditions.
Any further deterioration of the Argentine economy and further devaluation
of the Argentine Peso could adversely affect the Brazilian economy, as
Argentina is one of Brazil's principal trading partners, accounting for 26% of
Brazil's exports in 2002. Adverse developments in the Brazilian economy could,
in turn, negatively impact Petrobras' business and results of operations.
Item 4. Information on the Company.
HISTORY AND DEVELOPMENT OF THE COMPANY
We were established on September 24, 1997 as a wholly-owned subsidiary of
Braspetro Oil Services Company, or Brasoil, a wholly-owned subsidiary of
Petrobras Internacional S.A. (Braspetro), which has since been absorbed by
Petrobras. We were initially incorporated under the name Brasoil Finance
Company, which was changed by special resolution of our shareholders to
Petrobras International Finance Company on September 25, 1997. On January 14,
2000, the board of directors of Braspetro and Petrobras approved the transfer
of 100% of our voting shares from Brasoil to Petrobras. Since April 1, 2000,
we have operated as a wholly-owned subsidiary of Petrobras.
We are an exempted company incorporated with limited liability under the
laws of the Cayman Islands. Our registered office is located at Anderson
Square Building, P.O. Box 714, George Town, Grand Cayman, Cayman Islands, and
our telephone number is 55-21-2534-1410.
BUSINESS OVERVIEW
We were incorporated in order to facilitate and finance the import of
crude oil and oil products by Petrobras into Brazil. Accordingly, our primary
function is to act as an intermediary between third-party oil suppliers and Petrobras by engaging in crude oil and oil product
purchases from international suppliers
17
Table of Contents
and reselling crude oil and oil products
in U.S. dollars to Petrobras on a deferred payment basis, at a price which
represents a premium to compensate us for our financing costs. We are
generally able to obtain credit to finance purchases on the same terms granted
to Petrobras, and we buy crude oil and oil products at the same price that
suppliers would charge Petrobras directly.
As part of Petrobras' strategy to expand its international operations and
facilitate its access to international capital markets, we engage in borrowings
in international capital markets supported by Petrobras, primarily through
standby purchase agreements.
In addition, we also engage in a number of activities that are conducted
by three wholly-owned subsidiaries incorporated in 2001:
•
Petrobras Netherlands B.V., or PNBV, a Dutch company,
incorporated to engage in leasing activities of primarily offshore
exploration and production of crude oil and natural gas equipment to
be used by Petrobras, while taking advantage of the import and
export tax benefits provided by the Netherlands and Brazil. As part
of Petrobras' restructuring of its international business segment,
PNBV became a wholly-owned subsidiary of Petrobras, effective as of
January, 2003;
•
Petrobras Europe Ltd., or PEL, a U.K. company, intended to
act as an agent and advisor in connection with Petrobras' activities
in Europe, the Middle East, the Far East and North Africa; and
•
Petrobras Finance Limited, or PFL, a Cayman Islands company,
incorporated with the purpose of facilitating an export receivables
securitization program linked to the resale of fuel oil and bunker
fuel bought from Petrobras.
In January 2003, we received Bear Insurance Company Ltd. – BEAR
from Brasoil. BEAR is a captive insurance company incorporated in Bermuda.
Our Principal Commercial Activities
Our principal activity is the purchase of crude oil and oil products for
resale to Petrobras and, to a limited extent, third parties. We acquire the
crude oil and oil products either through purchases on the spot market or
long-term supply contracts. Our crude oil and oil product purchase obligations
are, in most instances, guaranteed by Petrobras. We sell the products to
Petrobras at our purchase price, plus a premium, which until December 31, 2002
was determined by a formula based on LIBOR to compensate us for our financing
costs. In 2003, the interest component of this formula was modified to a formula based on a rate which more fully passes on our average
costs of capital to Petrobras.
In addition, we finance our oil trading activities through a combination
of inter-company loans from Petrobras, commercial paper programs, lines of
credit and the issuance of notes in the international capital markets.
18
Table of Contents
The following chart illustrates how we act as the intermediary between
international crude oil suppliers and Petrobras.
We purchase crude oil and oil products from international oil suppliers on
a free-on-board (F.O.B.) basis under standard terms that traditionally require
payment within 30 days from the bill of lading. Petrobras buys crude oil and
oil products from us under terms that allow for payment up to 270 days from the
date of the bill of lading. Petrobras would typically be unable to meet the
30-day payment term imposed by international suppliers because of the
complexity of producing a full set of documents for a single bill of lading
when, for example, the shipment to which that bill of lading relates must be
delivered to different parts of Brazil and different sets of documents must be
delivered with respect to each delivery point. Depending on the unloading
ports' locations, this process may be completed up to 120 days from the
vessel's departure. We can pay the international supplier on time without
having to produce these different sets of documents. To cover our financing
costs, we include a LIBOR-based premium when we sell crude oil and oil products
to Petrobras.
Our Principal Suppliers
Our eight principal suppliers represented 65.7% of our total imports as of
December 31, 2002, as compared to 69.1% of our total imports as of December 31,
2001 and 70.3% of our total imports as of December 31, 2000. The chart below
sets forth information with respect to our principal suppliers for the years ended
December 31, 2002, 2001 and 2000.
19
Table of Contents
OUR PRINCIPAL SUPPLIERS
(1)
Year Ended
Year Ended
Year Ended
December 31, 2002
December 31, 2001
December 31, 2000
Imports
% of
Imports
% of
Imports
% of
Country of
(in millions of
Total
(in millions of
Total
(in millions of
Total
Supplier
Headquarters
U.S dollars)
Imports
U.S. dollars)
Imports
U.S. dollars)
Imports
Petrobras America, Inc.
United States
$
947.1
18.3
%
$
1,320.8
21.2
%
$
1,254.6
15.9
%
Sonatrach Group
Algeria
604.0
11.7
970.8
15.6
1,473.6
18.6
Saudi Aramco
Saudi Arabia
534.1
10.3
587.3
9.4
890.7
11.3
PDVSA Petróleo
Venezuela
413.6
8.0
515.9
8.2
1,072.9
13.6
Shell
England
279.5
5.4
—
—
—
—
Sinochem
England
240.9
4.7
—
—
—
—
Reliance
India
217.7
4.2
224.2
3.6
—
—
Mega
Argentina
158.1
3.1
—
—
—
—
AGIP
Italy
—
—
318.3
5.1
—
—
Ryttsa (Repsol-YPF)
Argentina
—
—
248.8
4.0
350.8
4.4
Chevron San Jorge
Argentina
—
—
126.5
2.0
303.7
3.8
Somo
Iraq
—
—
—
—
211.3
2.7
Total
$
3,395.0
65.7
%
$
4,312.6
69.1
%
$
5,557.6
70.3
%
(1)
Excluding suppliers to our subsidiaries
Our Principal Customers
In 2002, Petrobras conducted 99.9% of its crude oil and oil products
import activities through us in order to give it the flexibility it needs to
meet various delivery and funding requirements. During the year ended December
31, 2002, we sold crude oil and oil products with a total value of U.S.$5,191.1
million. During the year ended December 31, 2001, we sold crude oil and oil
products with a total value of U.S.$6,250.0 million and during the year ended
December 3, 2000, we sold crude oil and oil products with a total value of
U.S.$7,937.0 million.
Our sales of crude oil and oil products to Petrobras and the Alberto
Pasqualini refinery ("Refap," which is 70% owned by Petrobras) represented
U.S.$4,884.7 million (94.1%) of our total sales in the year ended December 31,
2002 and U.S.$5,842.0 million (93.5%) of our total sales in the year ended
December 31, 2001. Our sales of crude oil and oil products to third parties
and other related parties (excluding Petrobras and Refap) totaled U.S.$306.4
million during the year ended December 31, 2002, U.S.$407.6 million during the
year ended December 31, 2001 and U.S.$646.7 million during the year ended
December 31, 2000. Our nine principal clients, excluding Petrobras and Refap,
represented 80.5% of our sales to third parties and related parties as of
December 31, 2002, 68.0% of our sales to third parties and related parties as
of December 31, 2001 and 71.6% of our sales to third parties and related
parties as of December 31, 2000.
20
Table of Contents
THIRD PARTY AND RELATED PARTY SALES
(1)
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
2002
2001
2000
% of Total
% of Total
% of Total
Sales
Sales
Sales
Sales
Sales
Sales
(in millions
(in millions
(in millions
of U.S.
of U.S.
of U.S.
dollars)
dollars)
dollars)
PAI
$
104.3
34.0
%
$
6.3
1.6
%
$
283.0
43.8
BP
28.8
9.4
30.5
7.5
15.5
2.4
Gases y Graneles
24.6
8.0
—
—
—
—
Ancap
19.2
6.3
—
—
—
—
Vitol
16.4
5.4
—
—
—
—
EG3
14.6
4.8
—
—
—
—
Ferrel
14.0
4.5
20.5
5.3
—
—
Ipiranga
12.5
4.1
60.5
14.8
—
—
Gazocean
12.2
4.0
—
—
—
—
Glencore
—
—
56.4
13.8
—
—
Cargill
—
—
39.0
9.6
16.4
2.5
Contigroup
—
—
25.7
6.3
23.9
3.7
Trafigura
—
—
22.5
5.5
—
—
Hin Leong
—
—
14.8
3.6
67.4
10.4
Gontichen
—
—
—
—
56.6
8.8
Total
$
246.6
80.5
%
$
276.2
68.0
%
$
462.8
71.6
%
(1)
Excludes Petrobras and Refap, as we do not generate profits from sales to
Petrobras and Refap. For each year, includes only our nine principal clients
during that year.
Petrobras Netherlands B.V. (PNBV)
As part of Petrobras's restructuring of its international business
segment, in January 2003 we transferred our subsidiary, PNBV, to Petrobras.
PNBV became a wholly-owned subsidiary of Petrobras, and, therefore, leasing
activities are no longer included in our results of operations (see note 10 to
our audited consolidated financial statements for the year ended December 31,
2002).
We
established PNBV in May 2001 as a wholly-owned subsidiary incorporated
in the Netherlands, to engage in leasing activities of primarily offshore
equipment and vessels for the exploration and production of crude oil and
natural gas, which we lease or freight to Petrobras for its use in Brazil.
PNBV was created in order to capture tax benefits and segregate our leasing
activities from our imports of crude oil and oil products.
By purchasing exploration and production equipment through PNBV, we
enabled Petrobras to benefit from Brazil's Special Customs System (
Regime
Aduaneiro Especial
), or Repetro. Repetro is a tax benefit program that grants
exemptions from some Brazilian taxes on the imports and exports of certain
goods engaged in exploration and development activities (upstream activities)
in the crude oil and natural gas industries.
With respect to goods manufactured within Brazil, we, as a foreign entity
acting alone or through PNBV, would purchase goods from a Brazilian supplier
and benefit from the tax exemptions provided by the Repetro laws that seek to
provide incentives for Brazilian industrial exports related to exploration and
development activities. In the case of goods manufactured abroad, we would
import these goods and
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lease or freight them to Petrobras, thereby capturing the tax exemption
benefits the Repetro law provides for imported goods, so long as such goods are
used in Brazilian exploration and production activities and remain in Brazil on
a temporary basis. In order to take advantage of Repetro, the use of the
goods, produced either domestically or abroad, must ultimately be related to
the offshore exploration and production of crude oil and natural gas, and the
items must remain within Brazilian territory. As a practical matter, the
period during which the goods may remain in Brazil under the Repetro laws
typically exceeds the period during which their value depreciates to zero for
tax purposes.
We entered into capital lease transactions for equipment and production
platforms and acquired other materials and equipment totaling U.S.$1,015.9
million in the year ended December 31, 2002 to be leased to Petrobras under the
Repetro regime.
Petrobras Europe LTD. (PEL)
In May 2001, we established PEL, a wholly-owned subsidiary incorporated
and based in the United Kingdom, to consolidate Petrobras' trade and finance
activities in Europe, the Middle East, the Far East and North Africa. These
activities consist of advising on, and negotiating the terms and conditions
for, crude oil and oil products supplied to us and Petrobras, as well as
marketing Brazilian crude oil and crude oil products exported to the geographic
areas in which PEL operates. PEL plays an advisory role in connection with
these activities and undertakes no direct or additional commercial or financial
risk. PEL provides these advisory and marketing services as an independent
contractor, pursuant to a services agreement between PEL and Petrobras. In
exchange, Petrobras compensates PEL for all costs incurred in connection with
these activities, plus a margin.
Petrobras Finance Limited (PFL)
In December 2001, we established PFL, a wholly-owned subsidiary
incorporated and registered in the Cayman Islands, to facilitate an export
receivables asset securitization program established by Petrobras. PFL
primarily purchases bunker fuel and fuel oil and limited amounts of crude oil
and gasoline from Petrobras and sells the products in the international market.
Bear Insurance Company LTD. (BEAR)
In January 2003, we received BEAR from Brasoil. This transaction took
place as part of the restructuring of Petrobras' international business
segment. Bear currently serves as an intermediary for Petrobras, advising on,
and negotiating the terms and conditions of, certain of Petrobras' insurance
policies.
Export Receivables Asset Securitization Program
Petrobras sells and delivers bunker fuel and fuel oil and, subject to
certain conditions, other oil products (collectively, the "Eligible Products")
to PFL under two principal agreements: the Master Export Contract and the
Prepayment Agreement. The PF Export Receivables Master Trust (the "Trust") was
formed under the laws of the Cayman Islands to provide PFL with the funding
necessary to purchase Eligible Products from Petrobras and resell these
products through the arrangements described below.
On December 21, 2001, the Trust issued to PFL U.S.$750 million of Senior
Trust Certificates in four series (collectively, the "Series 2001 Senior Trust
Certificates") and U.S.$150 million of Junior Trust Certificates (the "Series
2001 Junior Trust Certificates," and together with the Series 2001 Senior Trust
Certificates, the "Series 2001 Trust Certificates"). PFL in turn offered the
Series 2001 Senior Trust Certificates in four series (series A-1, A-2, B and C)
to certain certificate holders.
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On May 21, 2003, the Trust issued to PFL U.S.$550 million of Senior Trust
Certificates (the "Series 2003-A Senior Trust Certificates"), maturing on June
1, 2015. On the same date, the Trust issued U.S.$200 million of Senior Trust
Certificates (the "Series 2003-B Senior Trust Certificates" ), maturing on June
1, 2013. The Series 2003-A Senior Trust Certificates, along with the Series
2003-B Senior Trust Certificates and the Series 2001 Senior Trust Certificates,
represent senior undivided beneficial interests in the property of the Trust
(other than certain charitable property held by the Trust).
On the same date, the Trust also issued to PFL U.S.$110 million in Series
2003-A Junior Trust Certificates and U.S.$40 million in Series 2003-B Junior
Trust Certificates (collectively, the "Series 2003 Junior Trust Certificates,
and together with the Series 2003-A Senior Trust Certificates and the Series
2003-B Senior Trust Certificates, the "Series 2003 Trust Certificates"). The
Series 2003 Junior Trust Certificates represent, together with the 2001 Junior
Trust Certificates, junior subordinated undivided beneficial interests in the
property of the Trust (other than the charitable property).
PFL agreed to transfer to the Trustee, in return for the Series 2001
Senior Trust Certificates and Series 2001 Junior Trust Certificates, the right
to a specified amount of receivables to be generated from PFL's sale of
Eligible Products with a value equal to the aggregate amount scheduled to be
paid in respect of the Series 2001 Senior Trust Certificates and the Series
2001 Junior Trust Certificates. PFL also agreed to transfer to the Trustee, in
return for the Series 2003 Senior Trust Certificates and Series 2003 Junior
Trust Certificates, the right to an additional specified amount of receivables
to be generated from PFL's sale of Eligible Products with a value equal to the
aggregate amount scheduled to be paid in respect of the Series 2003 Senior
Trust Certificates and the Series 2003 Junior Trust Certificates.
The value of receivables scheduled to be designated for sale in any
quarterly period represents a portion, but not all, of the receivables expected
to be generated from the sale of Eligible Products by PFL in such period. The
remainder of such receivables remain the property of PFL.
The timely payment of interest on, and scheduled principal of, each series
of the Series 2001 Senior Trust Certificates is unconditionally and irrevocably
guaranteed under financial guaranty insurance policies issued by XL Capital
Assurance Inc., MBIA Insurance Corporation or Ambac Assurance Corporation
(collectively, the "Enhancers"). The timely payment of interest on, and
scheduled principal of, the Series 2003-B Senior Trust Certificates is
unconditionally and irrevocably guaranteed under a financial guaranty insurance
policy issued by MBIA Insurance Corporation. The Series 2003-A Senior Trust
Certificates do not have the benefit of any financial guaranty insurance
policy.
In addition to the Series 2001 Senior Trust Certificates and the Series
2003 Senior Trust Certificates currently outstanding, additional series of
senior trust certificates (which may or may not benefit from a financial
guaranty insurance policy) may be issued to PFL from time to time if Petrobras
agrees to sell additional Eligible Products to PFL in an amount that is
adequate to make all required payments under the additional series of senior
trust certificates and certain other conditions are met.
Petrobras' Bunker Fuel Business
Bunker fuel is a common term for marine fuels that are burned in the
boilers or engines of ships. Petrobras produces and exports two types of
bunker fuel: intermediate fuel oil or marine fuel (for ships' main engines
and, occasionally, auxiliary engines) and marine diesel fuel and marine gas oil
(for auxiliary engines and main engines of military vessels).
Petrobras' bunker fuel production in 2002 was 29,869 Mbbl ("Mbbl" stands
for thousand barrels), compared to 27,468 Mbbl in 2001. Petrobras' total
bunker fuel production totaled 126,564 Mbbl for the period from January 1, 1998
to December 31, 2002. Petrobras exports approximately 92% of the bunker
23
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fuel it produces, with the exception of bunker fuel used by Petrobras'
fleet. Bunker fuel sold in Brazil by Petrobras to ships owned by non-Brazilian
companies is considered an export under Brazilian regulations.
PETROBRAS' ANNUAL BUNKER FUEL PRODUCTION
2002
2001
2000
1999
1998
(Mbbl)
Export
23,653
21,438
18,985
16,866
14,688
Domestic Consumption
1,620
1,533
1,476
2,047
1,677
Petrobras Fleet
4,596
4,497
4,113
4,623
4,752
Total
29,869
27,468
24,574
23,536
21,117
Approximately 27% of Petrobras' bunker fuel sales in 2002 were to shipping
companies or ship owners, 40% to brokers who purchase fuel on behalf of
shipping companies and the remaining 33% to traders. In 2002, Petrobras
delivered bunker fuel to approximately 35% of the ships calling at Brazilian
ports.
Petrobras' Bunker Fuel Buyers
Total bunker fuel customers currently total approximately 300, with the
top ten customers representing approximately 35% of Petrobras' total sales in
2002. Petrobras has been increasing its sales to shipowners, either directly
or through brokers. Sales to shipowners have increased from 64% of bunker fuel
sales in 1998 to 67% in 2002.
Competition
As a result of the changes in Brazilian government regulation in 1995, the
bunker fuel business is deregulated. However, Petrobras remains the only
producer of bunker fuel in Brazil. Petrobras' competition consists of other
providers of bunker fuel in ports outside of Brazil.
Bunker Fuel Delinquencies
The following table sets forth information concerning bunker fuel
delinquencies and charge-offs for the five year period from 1998 to December
31, 2002:
PETROBRAS' DELIQUENCY DATA
Delinquencies
(1)
2002
2001
2000
1999
1998
Current
93.1
%
94.0
%
94.1
%
97.4
%
94.6
%
More than 2 working days
5.01
4.07
5.47
2.47
5.02
More than 5 working days
0.93
1.44
0.41
0.00
0.38
More than 360 working days
0.91
0.36
0.26
0.00
0.00
Charge-offs
0.06
0.12
0.00
0.19
0.04
(1)
As a percentage of total year-end sales.
Petrobras' Fuel Oil Business
Fuel oil originates from residual fractions or distillation units at the
refinery and from other processes such as deasphalting. Dilutents in the form
of lighter cutter stocks are mixed into the residue pool to create the desired
viscosity for different types of fuel oil.
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Major buyers of Petrobras' fuel oil include utilities, refineries and
traders. Fuel oil is used by industries and utilities to run machinery and
generate electricity. Commercial buildings and homes employ fuel oil for
heating purposes, and refineries use fuel oil for blending purposes.
Fuel oil prices are a function of the supply, demand and price of crude
oil. Price is also affected by the relationship of heavy fuel oil and lighter
oil product prices to crude oil prices. Heavy fuel oil prices for Brazilian
production are determined by New York Harbor prices net of freight and
insurance. Other factors affecting fuel oil prices include sulfur content,
season and other specifications, including viscosity and metal content.
The following table sets forth a comparison between fuel oil prices at New
York Harbor and Brazil on an F.O.B. basis for the years 1998 to 2002:
HISTORICAL AVERAGE FUEL OIL PRICES (1998-2002) PER Bbl
New York Harbor 1%
Brazil (FOB) 0.5%
Brazil (FOB) 1%
Sulfur
Sulfur
Sulfur
(expressed in billions of barrels)
2002
$
22.30
$
22.01
$
22.04
2001
20.56
20.24
17.45
2000
24.87
25.20
21.48
1999
15.29
15.16
13.56
1998
12.15
11.75
10.22
Source
: PIRA Energy Group
Fuel Oil Export Sales
The following table sets forth Petrobras' fuel oil export sales for the
period 1998-2002:
FUEL OIL EXPORT SALES (1998-2002)
2002
2001
2000
1999
1998
Millions of U.S.$
697.0
658.0
482.2
170.8
151.0
Millions of Barrels
30.8
31.5
20.1
14.9
13.1
Petrobras' Fuel Oil Buyers
The market for Petrobras' fuel oil is concentrated, with 20 to 30
participants representing approximately 80% of the market. The primary market
for fuel oil produced by Petrobras is the U.S. East Coast, where sales are made
by Petrobras Americas, Inc. (PAI), and Argentina, where sales are carried out
by Petrobras.
Competition
Price, sulfur content and service are the bases of competition in the fuel
oil market. The principal competitors of Petrobras in the fuel oil market are
refineries in the Caribbean and the U.S. East Coast.
Most of Petrobras' and PAI's sales are transacted on a spot basis. In
addition, PAI has a multi-shipment fuel oil supply contract with the Puerto
Rico Electric Power Authority (PREPA) and a six month contract with Florida
Power and Light Company. PAI believes that the contract with PREPA will
comprise approximately 25% of Petrobras' fuel oil exports in 2003. These sales
are based on market prices.
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Table of Contents
Fuel Oil Delinquencies
There have not been any charge-offs on receivables arising from the sale
of fuel oil in the last four years, but price reductions have been granted to
customers on occasion due to quality disputes or operational problems. Past
due accounts are typically of short duration and are typically the result of
operational problems or disputes with a customer.
ORGANIZATIONAL STRUCTURE
Petrobras conducts its operations through its Brazilian and international
subsidiaries. We are a wholly-owned subsidiary of Petrobras and we conduct
certain of our operations through our three wholly-owned subsidiaries. For a
description of our subsidiaries and their respective businesses, see "—Business
Overview."
PROPERTY PLANT AND EQUIPMENT
We do not own or lease any materially important physical properties or
fixed assets. The majority of the assets reflected in our
consolidated financial statements for the year ended
December 31, 2002 consisted of investments in
direct-finance leases with Petrobras. These investments included contracts to
lease various types of materials and equipment utilized for the exploration and
production of crude oil and natural gas, including production and drilling
platforms, oil tankers, supply boats and other types of ships. We
would then lease
these assets to Petrobras. We received lease payments for these assets, which
were calculated to include the cost of capital and a fee for acting as
Petrobras' agent. As of
December 31, 2002, we will no longer engage in leasing
activities. See "– Business Overview – Petrobras Netherlands B.V.
(PNBV)."
Item 5. Operating and Financial Review and Prospects.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and
results of operations together with the attached audited consolidated financial
statements and the accompanying notes for the year ended December 31, 2002
beginning on page F-2. You should also read our audited consolidated financial
statements for the year ended December 31, 2001 and the accompanying notes,
which are included in our annual report on Form 20-F for the year ended
December 31, 2001, but which are not presented in this annual report. The
audited consolidated financial statements for the years ended December 31, 2002
and December 31, 2001 and the accompanying notes have been presented in U.S.
dollars and prepared in accordance with U.S. GAAP. In addition, as a
subsidiary of Petrobras, we also prepare financial statements in accordance
with Brazilian Corporate Law.
Overview
We earn income from:
•
sales of crude oil and oil products to Petrobras;
•
limited sales of crude oil and oil products to third parties;
•
financial income derived from financing of sales to Petrobras
and inter-company loans to Petrobras, investments in marketable
securities and other financial instruments; and
•
leasing income derived from financing leases entered into with Petrobras.
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Our operating expenses include:
•
cost of sales, which is comprised mainly of purchases of crude oil and oil products;
•
financial expense, mainly from interest on our lines of
credit and capital markets indebtedness, securitization of
receivables and inter-company loans from Petrobras; and
•
leasing expenses derived from financing leases entered into
with third parties and Petrobras.
Purchases and Sales of Crude Oil and Oil Products
We typically purchase crude oil and oil products in transactions with
payment terms of approximately 30 days. Petrobras typically pays for shipments
of crude oil and oil products that we sell to it over a period ranging up to
270 days, which allows Petrobras sufficient time to assemble the necessary
documentation under Brazilian law to commence the payment process for its
shipments. During this period, we typically finance the purchase of crude oil
and oil products through either funds previously provided by Petrobras or
third-party trade finance arrangements. Financial income from sales to
Petrobras was, until December 31, 2002, calculated according to a formula based
on LIBOR, which was designed to reimburse us for estimated financing expenses
we may incur in connection with these sales. The difference between the amount
we pay for crude oil and oil products and the amount Petrobras pays for that
same crude oil and oil products is deferred and recognized as part of our
financial income on a straight-line basis over the period in which Petrobras'
payments to us come due. In January 2003, the interest component of
the formula
was modified to a formula based on a rate which more fully passes on our average costs of capital
to Petrobras.
Results of Operations
Results of operations for 2002 compared to 2001.
Sales
Our sales of crude oil and oil products (including sales of imported crude
oil and oil products) and services remained relatively stable, increasing 2.1%
from U.S.$6,260.5 million in 2001 to U.S.$6,390.2 million in 2002, primarily
due to a slight increase in the average price of Brent crude oil from
U.S.$24.42 per barrel in 2001 to U.S.$24.76 per barrel in 2002 and sales made
by our subsidiary PFL in connection with Petrobras' export receivables
securitization program. This increase was partially offset by a reduction in
the volume of oil products we sold to Petrobras as a result of the deregulation
of the Brazilian market for oil products.
Lease income
Our lease income reflects interest income from direct financing leases of
platforms and equipment and operating leases for vessels by us to Petrobras. In
2002, our lease income increased to U.S.$36.1 million from U.S.$10.7 million in
2001. This increase is mainly due to the fact that we derived revenue in 2001
exclusively from operating leases of vessels, while in 2002, we also derived
revenue from direct financing leases of equipment and platforms that we
acquired in 2002. See Note 6(b) to our audited consolidated financial
statements.
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Table of Contents
Cost of Sales
Our cost of sales remained relatively stable, increasing 1.9% from
U.S.$6,253.0 million in 2001 to U.S.$6,371.5 million in 2002, primarily due to
a slight increase in the average price of Brent crude oil in 2002, as compared
to 2001, and to sales made by our subsidiary PFL in connection with Petrobras'
exports receivables securitization program. This increase was partially offset
by a reduction in the volume of oil products sold to Petrobras as a result of
the deregulation of the Brazilian market for oil products.
Lease Expense
Our lease expense reflects interest expense from direct financing leases
of platforms and equipment and operating leases for vessels. Our lease expense
increased to U.S.$24.0 million in 2002 from U.S.$10.5 million in 2001. This
increase was mainly due to the fact that we incurred lease expenses in 2001
exclusively from operating leases of vessels, while in 2002, we also incurred
lease expense from direct financing leases of equipment and platforms. See Note
6(b) to our audited consolidated financial statements.
General and Administrative Expenses
Our general and administrative expenses consist primarily of fees for
services. Our general and administrative expenses increased from U.S.$0.1
million in 2001 to U.S.$1.2 million in 2002, as a result of fees for financial,
consulting and advisory services.
Gross Profit
Our gross profit reflects profits from our third-party sales of crude oil
and oil products and services (since we record profits from sales of crude oil
and oil products to Petrobras as financial income) and from our leasing
transactions. Our gross profit increased from U.S.$7.6 million in 2001 to
U.S.$29.6 million in 2002, due primarily to U.S.$12.1 million in profits
generated by a leasing transaction for platforms, equipment and vessels with
Petrobras, as well as, to a lesser extent, our ability to achieve more
favorable terms on our third-party sales.
Financial Income
Our financial income increased 38.3% from U.S.$158.8 million in 2001 to
U.S.$219.6 million in 2002, primarily due to an increase in loans to related
parties and interest received as a result of increases in the time period for
receipt of payments related to sales of crude oil and oil products to Petrobras
from 120 days to 270 days in the second quarter of 2002 and increases in the periods of time for receipt of
payments beyond the time periods previously agreed with Petrobras. The increase
in financial income was partially offset by a reduction in LIBOR,
which was a
component of the formula designed to reimburse us for financing expenses
incurred, and a reduction in volume of sales of oil products to Petrobras.
Financial Expense
Financial expense increased 68.2% from U.S.$187.1 million in 2001 to
U.S.$314.7 million in 2002, primarily due to the increase in the amount of our
long-term indebtedness.
Net Loss
Net loss increased from U.S.$20.3 million in 2001 to U.S.$65.5 million in
2002.
28
Table of Contents
Results of operations for 2001 compared to 2000.
Sales
Our sales of crude oil and oil products (including sales of imports of
crude oil and oil products and sales of services) decreased 21.1% from
U.S.$7,937.0 million in 2000 to U.S.$ 6,260.5 million in 2001, primarily due to
a decrease in the average price of Brent crude oil from U.S.$28.50 per barrel
during 2000 to U.S.$24.42 per barrel during 2001 and a reduction in the volume
of crude oil and oil products imported by Petrobras resulting from an increase
in Petrobras' crude oil and oil products production in Brazil.
Lease Income
Our lease income for 2001 reflects interest income from operating leases
of vessels by us to Petrobras. In 2001, our lease income was U.S.$10.7
million. Prior to 2001, we had no income from leases.
Cost of Sales
Costs of sales decreased 21.0% from U.S.$7,912.6 million in 2000 to
U.S.$6,253.0 million in 2001, due primarily to a reduction in the volume of
crude oil and oil products imported by Petrobras, resulting from an increase in
Petrobras' crude oil and oil products production in Brazil, as well as a
decrease in the average price of Brent crude oil.
Lease Expense
Our lease expense for 2001 reflects interest expense from operating leases
for vessels. In 2001, our lease expense was U.S.$10.5 million. Prior to 2001,
we had no lease expense.
General and Administrative Expenses
Our general and administrative expenses were U.S.$0.1 million in 2001.
Gross Profit
Our gross profit decreased 71.0% from U.S.$24.4 million in 2000 to
U.S.$7.6 million in 2001, due primarily to a decrease in sales to third
parties, as a result of a decrease of imports of crude oil and oil products.
Sales to third parties are typically conducted when we have imported crude oil
and oil products that we no longer need because of decreased Brazilian demand
or operational changes.
Financial Income
Our financial income decreased 28.3% from U.S.$221.6 million in 2000 to
U.S.$158.8 million in 2001, primarily due to the reduction of LIBOR rates used
in the formula designed to reimburse us for our financing expenses. This
resulted in our financing costs not being fully reimbursed. See Item 4.
"Information on Our Company—Business Overview—Our Principal Commercial
Activities."
Financial Expense
Financial expense decreased 14.8% from U.S.$219.7 million in 2000 to
U.S.$187.1 million in 2001, primarily due to a reduction in the credit terms we
extend to Petrobras from 180 days to 120 days and a decrease in crude oil
prices, which together decreased our need for financing. The reduced
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financing costs resulting from this trend were offset by higher interest
rates as a result of our replacement of a significant amount of short-term debt
with long-term debt and the issuance of senior notes in the capital markets.
Gains on Material and Equipment
In 2001, we realized a gain on material and equipment of U.S.$0.4 million,
mainly as a result of the sale of equipment by us to Catléia.
Net Loss
Net income decreased from U.S.$26.3 million in 2000 to a loss of U.S.$20.3
million in 2001.
Liquidity and Capital Resources
We finance our oil trading activities through a combination of
inter-company loans from Petrobras, commercial paper programs, lines of credit
and the issuance of notes in the international capital markets. In our opinion,
our working capital is sufficient for our present requirements.
Our Indebtedness
As an offshore non-Brazilian company, we are not legally obligated to
receive prior approval from the Brazilian National Treasury to incur debt or
register debt with the Central Bank. However, as a matter of policy, the
issuance of any debt is recommended by either of Petrobras' Chief Financial
Officer, Executive Board or Board of Directors, depending on the aggregate
principal amount and the tenor of the debt to be issued.
Our Short-Term Indebtedness
Our
short-term indebtedness is denominated in U.S. dollars and consists of
commercial paper and lines of credit. At December 31, 2002, we had fully
utilized all lines of credit for the purchase of crude oil and oil products. In
2002, we accessed U.S.$367.5 million in lines of credit, including the current
portion of long-term debt, as compared to US$990.4 million accessed at December
31, 2001. The weighted average annual interest rate on these short-term
borrowings was 3.4% at December 31, 2002, as compared to 2.8% at December 31,
2001.
In April 2002, we renewed our commercial paper program in an amount of
U.S.$335.0 million in order to finance our working capital requirements (at
December 31, 2002, no commercial paper notes were outstanding under this
program). In May 2003, we again renewed this program in an amount of
U.S.$160.0 million. Our commercial paper program is rated A1+ by Standard & Poor's and
P-1 by Moody's and is supported by a letter of credit issued by Barclays Bank
and a standby purchase agreement with Petrobras. At December 31, 2002, we also
had access to short-term capital through U.S.$380.6 million in irrevocable
letters of credit supporting oil imports.
Our loans payable to related parties (inter-company loans) increased from
U.S.$334.6 million at December 31, 2001 to U.S.$3,688.2 million at December 31,
2002 due to our increased working capital needs resulting from an increase in
the average time period for receipt of payments related to sales of crude oil
and oil products to Petrobras, from 120 days to up to 270 days. Although our sales
to Petrobras decreased in 2002, accounts receivable from Petrobras increased
87.2% from U.S.$2,584.9 million at December 31, 2001 to U.S.$4,838.3 million at
December 31, 2002, as a result of the increased time periods for receipt of
payment and an increase in inter-company loans from U.S.$283.0 million at
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December 31, 2001 to U.S.$1,157.9 million at December 31, 2002, primarily
as a result of inter-company loans we granted in connection with Petrobras'
purchase of a controlling interest in Perez Companc S.A.
Our
Long-Term Indebtedness
At December 31, 2002, we had outstanding U.S.$460.3 million in long-term
lines of credit due between 2003 and 2012 and U.S.$1,550 million in three
series of long-term senior notes due between 2007 and 2011,
U.S.$750 million in Senior Trust Certificates and
U.S.$150 million in Junior Trust Certificates received by
our subsidiary, PFL, in connection with Petrobras' asset
securitization program. On October 17,
2002, we also issued U.S.$338.4 million in 4.75% Senior Exchangeable Notes due
2007 in connection with Petrobras' purchase of Perez Companc S.A. In exchange,
we received notes issued by Petrobras International Braspetro BV (PIB BV), a
related party, in the same amount, terms and conditions as the Senior
Exchangeable Notes. In connection with the acquisition of Perez Companc, we
also provided PIB BV with a loan for U.S.$738.9 million, with an interest rate
of 4.79%, which was renewed in the amount of U.S.$750.3 million in April 2003.
Pursuant to Petrobras' strategy to obtain a wider range of medium- and
long-term financial instruments and to channel more of its financings through
us, in March 2003, we issued U.S.$400 million of Global Step-Up Notes due 2008,
using the net proceeds principally to finance the purchase of oil product
imports and repay existing related-party debt and inter-company loans. These notes bear interest from
March 31, 2003 at the rate of 9.00% per year until April 1, 2006 and at a rate
of 12.375% thereafter.
In connection with Petrobras' export receivables asset securization
program, on May 21, 2003, PF Export Trust issued to us
U.S.$550 million in 6.436% Senior Trust
Certificates due 2015 and U.S. $200 million in 3.748% Senior Trust Certificates due
2013. PF Export Trust also issued to us U.S.$100 million in 6.436% Junior
Trust Certificates due 2015 and U.S.$40 million in 3.478%
Junior Trust Certificates due 2013.
The following table shows the sources of our current and long-term debt at
December 31, 2002 and December 31, 2001:
CURRENT AND LONG-TERM DEBT
December 31, 2002
December 31, 2001
(in millions of U.S. dollars)
Current
Long-term
Current
Long-term
Financing institutions
U.S.$367.5
U.S.$460.3
U.S.$540.6
U.S.$385.0
Commercial paper
—
—
449.8
—
Senior notes
—
1,550.0
—
1,050.0
Securitization of Receivables
—
900.0
—
900.0
Senior exchangeable notes
—
338.4
—
—
U.S.$367.5
U.S.$3,248.7
U.S.$990.4
U.S.$2,335.0
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The following table shows the sources of our capital markets debt outstanding at
December 31, 2002:
CAPITAL MARKETS DEBT
OUTSTANDING
(1)
Notes
Principal Amount
(in millions of U.S. dollars)
9.125% Senior Notes due 2007
(2)
U.S.$500
4.750% Senior Exchangeable Notes due 2007
(3)
338
9.875% Senior Notes due 2008
(2)
450
6.750% Senior Trust Certificates due 2010
(4)
95
Floating Rate Senior Trust Certificates due 2010
(4)
55
9.750%
Senior Notes due 2011
(2)
600
6.600% Senior Trust Certificates due 2011
(4)
300
Floating Rate Senior Trust Certificates due 2013
(4)
300
(1)
Does not include Junior Trust
Certificates issued by PF Export Trust in connection with
Petrobras'
export receivables asset securitization program, because we are the
beneficiary of such Junior Trust Certificates.
(2)
Issued by us, with support from Petrobras through a standby
purchase agreement.
(3)
Issued by us on October 17, 2002 in connection with Petrobras'
acquistion of Perez Companc S.A.
(4)
Issued in connection with Petrobras' export receivables asset
securitization program.
Contractual obligations
In the
table below, we set forth our outstanding contractual obligations as
of December 31, 2002, consisting of long-term debt including
financial leases, and the period in which the contractual obligations
come due.
Payments
Due
Total
2003
2004
2005
2006
2007 and
thereafter
(millions of U.S. dollars)
Contractual
obligations as of December 31, 2002:
Long-term debt including financial leases
3,932,149
81,700
229,250
87,250
243,300
3,290,649
Critical Accounting Policies
We
believe that there are no critical accounting policies in connection with
the preparation of our financial statements.
Item 6. Directors, Senior Management and Employees.
We are managed by a board of directors, which currently consists of two
members, and our executive officers. The executive officers work as a board
and are responsible for our day-to-day management. The board of directors is
responsible for preparing our year-end accounts, convening shareholders'
meetings and reviewing and monitoring our financial performance and strategy.
Although not required by our bylaws, it is our policy that the Chairman and all
of our executive officers be Petrobras employees. All of the current executive
officers are experienced managers from Petrobras, some of whom have served on
the boards of directors of Petrobras subsidiaries and in representative offices
abroad.
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Our board of directors serve indefinite terms and can be removed with or
without cause. The following table sets forth certain information about our
board of directors.
BOARD OF DIRECTORS
Name
Date of Birth
Position
Year of Appointment
Amir Guilherme Barbassa
May 19, 1947
Chairman
1999
Carlos Ney Martin de Andrade
April 29, 1950
Director
2001
Almir Guilherme Barbassa.
Mr. Barbassa has been our Chairman and Executive
Manager of Corporate Finance of Petrobras since July 12, 1999. He joined
Petrobras in 1974 and served in Braspetro as Financial Manager in the Middle
East, North Africa, the United States and Brazil. He served as Financial
Director of Braspetro from 1993 to 1999. In addition, he was a professor in
the economics department of the Petrópolis Catholic University and of the
Faculdades Integradas Bennett from 1973 to 1979.
Carlos Ney Martin de Andrade.
Mr. Andrade joined Petrobras in 1974. He has
served as Commercial Department Manager for Bunkering Crude Oil Supply and
Petroleum Products Trading. He has also served as Director of BR and Trading
Manager for Petrobras América International. Prior to serving in his current
role as Executive Manager for Marketing and Trading, Mr. Andrade was General
Manager for Trading.
The following table sets forth certain information about our executive
officers.
EXECUTIVE OFFICERS
Name
Date of Birth
Position
Cláudia Valéria Carreiro de Souza
March 8, 1963
Commercial Manager
Daniel Lima de Oliveira
December 29, 1951
Financial Manager
Mariângela Monteiro Tizatto
August 9, 1960
Accounting Manager
Geraldo Vieira Baltar
August 25, 1944
Procurement Manager
Nilton Antônio de Almeida Maia
June 21, 1957
Legal Manager
Ana Celia Fleischman
February 21, 1957
Secretary
Gérson Luiz Gonçalves
September 29, 1953
Auditor Manager
Cláudia Valéria Carreiro de Souza.
Ms. Carreiro became an executive officer
of our company on March 19, 2000. She joined Petrobras in 1990 and has served
as Commercial Department Manager for Petroleum Products Supply and Trading
since 1994.
Daniel Lima de Oliveira
. Mr. Lima de Oliveira became an executive officer of
our company on April 19, 2000. He joined Petrobras in 1976 as a supply
engineer in the Commercial Department. In 1982 he moved to the Financial
Department where he worked in the short-term credit division and served as
Assistant to the General Manager. From 1984 until 1988, he served as Financial
Manager of the London office. Since 1998, he has served as a manager at
Braspetro and a financial manager of the New York office. Since January 2002,
he has been a director of Petrobras International—BRASPETRO and Braspetro Oil
Services—BRASOIL.
Mariângela Monteiro Tizatto.
Ms. Tizatto became an executive officer of our
company on April 4, 1998. She joined Petrobras in 1989 as an accountant in the
Accounting Department. Since 1999, she has served as Petrobras' General
Manager for Accounting Operations. From 1990 to 1995, she was Manager of Petrobras' Consolidated Accounting System, and from 1995 to 1999, she served
as Manager of Petrobras' Division of Corporate Accounting. Before joining
Petrobras, Ms. Tizatto was Manager of
33
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Auditing for Deloitte Touche Tohmatsu,
where she worked for seven years. She was also a professor of advanced
accounting at the Faculdade Moraes Junior in Rio de Janeiro (1990).
Geraldo Vieira Baltar.
Mr. Baltar became an executive officer of our company
on August 11, 2001. He joined Petrobras in 1970 and currently serves as the
Executive Manager of Energy under the Gas and Energy Directorship. He has held
several positions with Petrobras, including Senior Equipment Engineer and
Executive Manager of Materials.
Nilton Antônio de Almeida Maia.
Mr. Maia became an executive officer of our
company on April 19, 2000. He joined Petrobras in 1984 as an internal auditor.
He has served as a tax consultant to Petrobras' Legal Department, and since
early 2000, has served as General Manager for the Finance and Tax Division.
Mr. Maia is also a professor at the Universidade Federal do Rio de Janeiro.
Ana Celia Fleischman.
Ms. Fleischman became an executive officer of our
company on August 15, 2001. She joined Petrobras in 1980 as Analyst for
Trading and Supply in the Commercial Department, where she worked in the
natural gas, financial and pricing areas.
Gerson Luiz Gonçalves.
Mr. Gonçalves became an executive officer of our
company on April 19, 2000. He joined the Internal Audit Department of
Petrobras in 1976 and has been Petrobras' Executive Manager for Internal
Auditing for the last six years. He is responsible for all of Petrobras'
internal accounting control activities. Mr. Gonçalves is a member of the
Brazilian Institute of Internal Auditors (AUDIBRA) and of the United States'
Institute of Internal Auditors (IIA).
Compensation of Directors and Executive Officers
Our directors and executive officers are paid by Petrobras in respect of
their function as Petrobras employees, but they do not receive any additional
compensation, pension or other benefits from us or Petrobras in respect of
their functions as our directors and officers.
Board Practices
The dates of appointment of our current directors and executive officers
are set forth above under "Item 6. Directors and Senior Management and
Employees." Our directors and executive officers do not have set terms of
appointment. We have not entered into any service or employment contracts with
any of our directors and executive officers. We do not have any audit or
remuneration committees.
Employees
With the exception of twelve employees of PEL, our personnel consists
solely of Petrobras employees, and we rely on Petrobras to provide all
administrative functions.
Share Ownership
As of June 16, 2003, we had 50,000 shares of common stock outstanding.
All of our issued and outstanding shares of common stock are owned by
Petrobras. In June 2001 and in December 2002, Petrobras
upon receiving approval from its Board of Directors, converted a
total of U.S.$120 million in accounts receivable from us into an
advance for a capital increase.
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Table of Contents
Item 7. Major Shareholders and Related Party Transactions.
We are a wholly-owned subsidiary of Petrobras. We have numerous
transactions with Petrobras and other affiliated companies in the ordinary
course of business, as our primary function is to purchase crude oil and oil
products for sale to Petrobras.
Transactions with related parties resulted in the following balances:
December 31, 2002
December 31, 2001
Assets
Liabilities
Assets
Liabilities
(in millions of U.S. dollars)
Assets
Current
Accounts receivable
$
4,838.3
$
2,584.9
Notes
receivable
(1)
1,157.9
283.0
Marketable securities
51.9
Other
1.0
Other non current
Notes receivable
473.7
Export prepayment
750.0
750.0
Net investment in direct financing leases
832.3
208.0
Marketable securities
2.4
Other
3.3
Liabilities
Current
Trade accounts payable
292.0
288.1
Loans payable
(1)
3,688.2
334.6
Unearned income
48.6
8.3
Total
$
8,110.8
$
4,028.8
$
3,825.9
$
631.0
Current
$
6,049.1
$
4,028.8
$
2,867.9
$
631.0
Long-term
$
2,061.7
$
958.0
(1)
Our notes receivable from and payable to Petrobras bear interest at LIBOR
plus 3.0% per year.
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The principal transactions with related parties are as follows:
Years ended December 31,
2002
2001
2000
(in millions of U.S. dollars)
Income
Expense
Income
Expense
Income
Expense
Sales of crude oil and oil products and services
PETROBRAS
$
4,208.2
$
5,115.2
$
7,290.3
REFAP S.A.
680.5
738.9
Petrobras America, Inc.—PAI
467.7
6.4
283.0
BR Distribuidora
4.5
EG3 S.A.
14.6
Cost of sales
PETROBRAS
(1,212.7
)
(95.3
)
(81.1
)
Petrobras America, Inc.—PAI
(947.1
)
(1,320.8
)
(1,260.3
)
Braspetro Oil Services Company—BRASOIL
(55.2
)
(83.3
)
Companhia MEGA S.A.
(158.1
)
(148.7
)
Fronape International Company
(34.2
)
(10.5
)
PEBIS
(1.7
)
Lease income (expense)
PETROBRAS
22.9
(5.7
)
Braspetro Oil Services Company—BRASOIL
13.1
(5.2
)
Fronape International Company
(13.1
)
Financial income
PETROBRAS
161.6
127.0
217.1
REFAP S.A.
8.2
14.4
Braspetro Oil Company—BOC
6.9
5.0
0.2
Braspetro Oil Services Company—BRASOIL
5.8
3.7
Fronape International Company
6.8
4.8
PIB.B.V
10.7
0.6
Marlim
2.0
Financial expense
PETROBRAS
(55.6
)
(52.0
)
(153.0
)
Braspetro Oil Services Company—BRASOIL
(5.7
)
(15.4
)
(0.2
)
Total
$
5,613.5
$
(2,494.3
)
$
6,016.0
$
(1,726.0
)
$
7,790.7
$
(1,494.6
)
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Item 8. Financial Information.
Consolidated Statements and Other Financial Information
See Item 18. "Financial Statements."
There is no litigation or governmental proceeding pending or, to our knowledge,
threatened against us or any of our subsidiaries that, if adversely determined,
would have a significant effect on our financial position or profitability.
For a description of our dividend distribution policy, see "Item 10.
Additional Information—Memorandum and Articles of Association—Rights and
Obligations of Shareholders—Dividends."
Item 9. The Offer and Listing.
Our
common stock is not listed.  Our Senior Notes are listed in the
Luxembourg Stock Exchange.  Our Global-Step Up Notes have not been listed on
any securities exchange.  Our other debt securities have not been listed on any
other exchange.
Item 10. Additional Information
.
MEMORANDUM AND ARTICLES OF ASSOCIATION
The following represents a summary of certain key provisions of our Memorandum
and Articles of Association. The summary does not purport to be a summary of
all of the provisions of our Memorandum and Articles of Association nor of all
relevant provisions of Cayman Islands law governing the management and
regulation of Cayman Islands exempted companies.
Register
We are an exempted company incorporated with limited liability in the
Cayman Islands under the Companies Law (2002 Revision) with company
registration number 76600. We registered and filed our Memorandum and Articles
of Association with the Registrar of Companies on September 24, 1997. We were
initially incorporated with the name Brasoil Finance Company, which name was
changed by special resolution of our shareholders to Petrobras International
Finance Company on September 25, 1997. There has been no subsequent amendment
to our Memorandum and Articles of Association.
Objects and Purposes
Our Memorandum of Association grants us full power and authority to carry
out the business of petroleum marketing, sales, financing and transportation
and any business incidental thereto. As a matter of Cayman Islands law, we
cannot trade in the Cayman Islands except in furtherance of the business
carried on outside the Cayman Islands.
Directors
Directors may vote on a proposal, arrangement or contract in which they
are interested. However, interested directors must declare the nature of their
interest at a directors' meeting. If the interested directors declare their
interest, their votes are counted and they are counted in the quorum of such
meeting.
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The directors may exercise their powers to borrow money, issue debt
securities and to mortgage or charge any of the undertaking or property of our
company and are generally responsible for its day-to-day management and
administration.
Directors are not required to own shares.
Rights and Obligations of Shareholders
Dividends
Shareholders may declare dividends in a general meeting but the dividends
cannot exceed the amount recommended by the directors. The directors may pay
the shareholders interim dividends and may, before recommending any dividend,
set aside reserves out of profits. The directors can invest these reserves in
their discretion or employ them in our business.
Dividends may be paid in cash or in kind but may only be paid out of
profits or, subject to certain restrictions of Cayman Islands law, a share
premium account.
Voting Rights
Votes may be cast at a general meeting by a show of hands or by a poll.
On a vote by a show of hands, each shareholder or shareholder represented by
proxy has one vote. On a vote by a poll, each shareholder or shareholder
represented by proxy has one vote for each share owned.
Directors are elected by ordinary resolution by the shareholders at
general meetings or by a board resolution of the directors. Shareholders are
not entitled to vote at a general meeting unless calls or other amounts payable
on their shares have been paid. In lieu of voting on a matter at a general
meeting, the shareholders entitled to vote on that matter may adopt the matter
by signing a written resolution.
Redemption
We may issue shares which are redeemable by us or by our shareholders.
The amount payable on each share in a redemption is its fair value as
determined by the directors on the basis of a willing seller and a willing
buyer.
Where we have agreed to purchase any share from a shareholder, we will
give notice to the other shareholders, if any, specifying the number and class
of shares to be purchased, the name and address of the seller, the price to be
paid for the shares and the portion (if any) of that price which is being paid
out of capital. The notice will also indicate a date on which the purchase is
to be effected and will invite shareholders other than the seller, if any, to
object to the purchase before that date. If any objection is received the
redemption request will be refused by the directors or put to a general meeting
of the shareholders.
Shareholder Rights Upon Liquidation
If we are liquidated, the liquidator may (in accordance with an ordinary
shareholder resolution):
•
set a fair value on our assets, divide all or part of our
assets among the shareholders and determine how the assets will be
divided among shareholders or classes of shareholders; and
•
vest all or part of our assets in trustees.
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Table of Contents
Shareholders will not be compelled to accept any securities on which there
is a liability.
Calls on Shares
Directors may make calls on the shareholders with respect to any amounts
unpaid on their shares. Each shareholder shall pay to the company the amounts
called on such shares.
Change to Rights of Shareholders
Shareholders may change the rights of their class of shares by:
•
getting the written consent of three-fourths of the shareholders of that class; or
•
passing a special resolution at a meeting of the shareholders of that class.
There are no general limitations on the rights to own shares specified by the articles.
General Meetings
A general meeting may be convened:
•
by the directors at any time; or
•
by any two shareholders by written request.
Notice of a general meeting is given to all shareholders.
All business carried out at a general meeting is considered special business except:
•
sanctioning a dividend;
•
consideration of the accounts, balance sheets, and ordinary
report of the directors and auditors;
•
appointment and removal of directors; and
•
fixing of remuneration of the auditors.
Shareholder consent is required to carry out special business at a meeting
unless notice of the special business is given in the notice of the meeting. A
quorum of shareholders is required to be present at any meeting in order to
carry out business. Any two shareholders or one shareholder holding a majority
of the shares who are present in person or represented by proxy is a quorum.
There is no requirement under Cayman Islands law to convene an annual
meeting or to convene any general meeting of the shareholders. The directors
are permitted to designate any general meeting of shareholders as an annual
general meeting.
Liability of Shareholders
In normal circumstances, the liability of any shareholder to us is limited
to the amount which such shareholder has agreed to pay in respect of the
subscription of his shares.
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Table of Contents
Changes in Capital
We may increase our share capital by ordinary resolution. The new shares
will be subject to all of the provisions to which the original shares are
subject.
We may also by ordinary resolution:
•
consolidate and divide all or any of our share capital into shares of a larger amount;
•
sub-divide existing shares into shares of a smaller amount,
subject to the provisions of Section 13 of the Companies Law; and
•
cancel any shares which, at the date of the resolution, are
not held or agreed to be held by any person.
We may reduce our share capital and any capital redemption reserve by
special resolution in accordance with relevant provision of Cayman Islands law.
Indemnity
Our directors and officers are indemnified out of our assets and funds
against all actions, losses, expenses and liabilities which they incur in the
discharge of their respective duties, powers, authorities or discretions.
Under our Memorandum of Association, directors and officers are excused from
all liability to us, except for any losses which arise as a result of such
party's own dishonesty.
Accounts
Accounts relating to our affairs are kept in such manner as may be
determined from time to time by the directors and may be audited in such manner
as may be determined from time to time by us in a general meeting or failing
any such determination by the directors. There is, however, no requirement as
a matter of Cayman Islands law to have our accounts audited.
Transfer out of Jurisdiction
We may, by special resolution of the shareholders, transfer out of the
Cayman Islands into any jurisdiction permitting such transfer.
EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are:
•
no governmental laws, decrees or regulations in Cayman
Islands that restrict the export or import of capital, including
dividend and other payments to non-resident holders to the Cayman
Islands, and
•
no limitations on the right of nonresident or foreign owners
imposed by Cayman Island law or our Memorandum of Association to
hold or vote our shares.
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TAXATION
The following is a summary of principal Cayman Islands, Brazil and United
States federal income tax considerations that may be relevant to the purchase,
ownership, and disposition of our debt securities. This summary does not
describe any tax consequences arising under the laws of any state, locality or
taxing jurisdiction other than the Cayman Islands, Brazil and the United
States.
This summary is based on the tax laws of the Cayman Islands, Brazil and
the United States as in effect on the date of this annual report, as well as
regulations, rulings and decisions of the Cayman Islands, Brazil and the United
States available on or before the date of this annual report and now in effect.
All of these laws, regulations, rulings and decisions are subject to change,
which could apply retroactively and cause statements in this summary to no
longer be true. There is no reciprocal tax treaty between the Cayman Islands
and the United States, the Cayman Islands and Brazil or Brazil and the United
States.
Cayman Islands Taxation
Under current law, we are not subject to income, capital, transfer, sales
or other taxes in the Cayman Islands.
We were incorporated as an exempted company under the laws of the Cayman
Islands on September 24, 1997. We have received an Undertaking as to Tax
Concessions pursuant to Section 6 of the Tax Concessions Law (1999 Revision)
which provides that, for a period of twenty years from the date thereof no law
hereafter enacted in the Cayman Islands imposing any tax or duty to be levied
on income or on capital assets, gains or appreciation will apply to any of our
income or property and which is deemed to provide that no tax is to be levied
on profits, income, gains or appreciations or which is in the nature of estate
duty or inheritance tax shall be payable on or in respect of shares, debentures
or other of our obligations, or by way of withholding of any part of a payment
of principal due under a debenture or other of our obligations.
No Cayman Islands withholding tax applies to distributions by us in
respect of the notes. Noteholders are not subject to any income, capital,
transfer, sales or other taxes in the Cayman Islands in respect of their
purchase, holding or disposition of the notes.
Noteholders whose notes are brought into or issued in the Cayman Islands
will be liable to pay stamp duty of up to C.I.$250 on each note.
Brazil Taxation
The following discussion is a summary of the Brazilian tax considerations
relating to an
investment in the notes by a nonresident of Brazil. The discussion is based on
the tax laws of Brazil as in effect on the date hereof and is subject to any
change in Brazilian law that may come into effect after such date. The
information set forth below is intended to be a general discussion only and
does not address all possible tax consequences relating to an investment in the
notes.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE
CONSEQUENCES OF PURCHASING THE NOTES, INCLUDING, WITHOUT LIMITATION, THE
CONSEQUENCES OF THE RECEIPT OF INTEREST AND THE SALE, REDEMPTION OR REPAYMENT
OF THE NOTES OR COUPONS.
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Generally, an individual, entity, trust or organization domiciled for tax
purposes outside Brazil ("Nonresidents") is taxed in Brazil only when income is
derived from Brazilian sources. Therefore, any gains or income paid by us in
respect of the notes issued by us in favor of Nonresident noteholders are not
subject to Brazilian taxes.
Interest (including OID), fees, commissions, expenses and any other income
payable by a Brazilian resident to a Nonresident are generally subject to
income tax withheld at source. As of January 1, 1996, the rate of withholding
tax is 15% or such other lower rate as provided for in an applicable tax treaty
between Brazil and another country. If the recipient of the payment is
domiciled in a tax haven jurisdiction, as defined by Brazilian tax regulations,
the rate will be 25%.
If the payments with respect to the notes are made by a Brazilian source,
the noteholders will be indemnified so that, after payment of all applicable
Brazilian taxes collectable by withholding, deduction or otherwise, with
respect to principal, interest (including the OID) and additional amounts
payable with respect to the notes (plus any interest and penalties thereon), a
noteholder will retain an amount equal to the amounts that such noteholder
would have retained had no such Brazilian taxes (plus interest and penalties
thereon) been payable. The Brazilian obligor will, subject to certain
exceptions, pay additional amounts in respect of such withholding or deduction
so that the holder receives the net amount due.
Gains on the sale or other disposition of the notes made outside Brazil by
a Nonresident, other than a branch or a subsidiary of Brazilian resident, to
another Nonresident are not subject to Brazilian taxes. Gains made by a
Brazilian Nonresident from the sale or other disposition of notes to a
Brazilian resident, subject to certain assumptions and conditions, are not
subject to Brazilian taxes.
Generally, there are no inheritance, gift, succession, stamp, or other
similar taxes in Brazil with
respect to the ownership, transfer, assignment or any other disposition of the
notes by a Nonresident, except for gift and inheritance taxes imposed by some
Brazilian states on gifts or bequests by individuals or entities not domiciled
or residing in Brazil to individuals or entities domiciled or residing
within such states.
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U.S. Federal Income Taxation
The following summary sets forth certain United States federal income tax
considerations that may be relevant to a holder of a note that is, for U.S.
federal income tax purposes, a citizen or resident of the United States or a
domestic corporation or that otherwise is subject to United States federal
income tax on a net income basis in respect of the notes. This summary is
based upon the Internal Revenue Code of 1986, as amended, or the Code, its
legislative history, existing and proposed U.S. Treasury regulations
promulgated thereunder, published rulings by the U.S. Internal Revenue Service,
or the IRS, and court decisions, all in effect as of the date of this offering
memorandum, all of which authorities are subject to change or differing
interpretations, which changes or differing interpretations could apply
retroactively. This summary does not purport to discuss all aspects of United
States federal income taxation which may be relevant to particular investors,
such as financial institutions, insurance companies, dealers or traders in
securities or currencies, regulated investment companies, tax-exempt
organizations, persons holding notes as part of a position in a "straddle" or
as part of a hedging transaction or "conversion transaction" for U.S. federal
tax purposes, persons that enter into a "constructive sale" transaction with
respect to the notes or U.S. Holders whose functional currency as defined in
Section 985 of the Code is not the U.S. dollar. In addition, this summary does
not discuss any foreign, state or local tax considerations. This summary only
applies to original purchasers of notes who purchase notes at the original
issue price and hold the notes as "capital assets" (generally, property held
for investment) within the meaning of Section 1221 of the Code.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
TAX CONSEQUENCES OF INVESTING IN THE NOTES, INCLUDING THE EFFECTS OF FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
U.S. Holders
Payments of interest
Payments of "qualified stated interest" (as defined below) on a note
(including additional amounts, if any) will generally be taxable to a U.S.
Holder as ordinary interest income when such interest is accrued or received,
in accordance with the U.S. Holder's regular method of tax accounting. In
general, if the "issue price" of a note is less than the "stated redemption
price at maturity" by more than a
de minimis
amount, such Note will be
considered to have "original issue discount" ("OID"). The issue price of a
note is the first price at which a substantial amount of such notes are sold to
investors. The stated redemption price at maturity of a note generally
includes all payments other than payments of qualified stated interest (as
defined below).
In general, each U.S. Holder of a note, whether such holder uses the cash
or the accrual method of tax accounting, will be required to include in gross
income as ordinary interest income the sum of the "daily portions" of OID on
the note for all days during the taxable year that the U.S. Holder owns the
note. The daily portions of OID on a note are determined by allocating to each
day in any accrual period a ratable portion of the OID allocable to that
accrual period. In general, in the case of an initial holder, the amount of OID
on a note allocable to each accrual period is determined by (a) multiplying the
"adjusted issue price," as defined below, of the note at the beginning of the
accrual period by the yield to maturity of the note, and (b) subtracting from
that product the amount of qualified stated interest allocable to that accrual
period. U.S. Holders should be aware that they generally must include OID in
gross income as ordinary interest income for U.S. federal income tax purposes
as it accrues, in advance of the receipt of cash attributable to that income.
The "adjusted issue price" of a note at the beginning of any accrual period
will generally be the sum of its issue price (generally including accrued
interest, if any) and the amount of OID allocable to all prior accrual periods,
reduced by the amount of all payments other than
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payments of qualified stated interest (if any) made with respect to such
note in all prior accrual periods. The term "qualified stated interest"
generally means stated interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually during
the entire term of a note at a single fixed rate of interest or, subject to
certain conditions, based on one or more interest indices.
Interest income, including OID, in respect of the notes will constitute
foreign source income for United States federal income tax purposes and, with
certain exceptions, will be treated separately, together with other items of
"passive income" or, in the case of certain holders, "financial services
income" for purposes of computing the foreign tax credit allowable under the
United States federal income tax laws. The calculation of foreign tax credits,
involves the application complex of rules that depend on a U.S. Holder's
particular circumstances. U.S. Holders should consult their own tax advisors
regarding the availability of foreign tax credits and the treatment of
additional amounts.
Sale or disposition of Notes
A U.S. Holder will generally recognize capital gain or loss upon the sale,
exchange, retirement or other disposition of a note in an amount equal to the
difference between the amount realized upon such sale, exchange, retirement or
other disposition (other than amounts attributable to accrued qualified stated
interest, which will be taxed as such) and such U.S. Holder's tax basis in the
note increased by any amounts included in gross income by such U.S. Holders as
OID and reduced by any payments other than payments of qualified stated
interest on that note. A U.S. Holder's tax basis in the note will generally
equal the U.S. Holder's cost for the note. Gain or loss realized by a U.S.
Holder on the sale, exchange, retirement or other disposition of a note will
generally be United States source gain or loss for United States federal income
tax purposes unless it is attributable to an office or other fixed place of
business outside the United States and certain other conditions are met. The
gain or loss realized by a U.S. Holder will be capital gain or loss, and will
be long-term capital gain or loss if the notes were held for more than one
year. The net amount of long-term capital gain recognized by an individual
holder after May 5, 2003 and before January 1, 2009 generally is subject to
taxation at a maximum rate of 15%. The net long-term capital gain recognized
by an individual holder before May 6, 2003 generally is subject to taxation at
a maximum rate of 20%.
Non-U.S. Holder
Subject to the discussion of "backup" withholding below, interest on the
notes is currently exempt from United States federal income taxes, including
withholding taxes, if paid to a Non-U.S. Holder (as defined below) unless the
interest is effectively connected with the conduct by such holder of a United
States trade or business. In addition, (i) subject to the discussion of backup
withholding below, a Non-U.S. Holder will not be subject to United States
federal income tax on any gain realized on the sale or exchange of a note,
provided that such gain is not effectively connected with the conduct by the
holder of a United States trade or business and, in the case of a Non-U.S.
Holder who is an individual, such holder is not present in the United States
for a total of 183 days or more during the taxable year in which such gain is
realized and certain other conditions are met and (ii) the notes will be deemed
to be situated outside the United States for purposes of the United States
federal estate tax and will not be includible in the gross estate for purposes
of such tax in the case of a non-resident of the United States who is not a
citizen of the United States at the time of death.
As used herein, a "Non-U.S. Holder" is a holder of the notes that is, with
respect to the United States, a foreign corporation or a nonresident alien
individual.
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Backup Withholding and Information Reporting
A U.S. Holder may, under certain circumstances, be subject to "backup
withholding" with respect to certain payments to that U.S. Holder, unless the
holder (i) is a corporation or comes within certain other exempt categories,
and demonstrates this fact when so required, or (ii) provides a correct
taxpayer identification number, certifies that it is not subject to backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules generally will be
creditable against the U.S. Holder's U.S. federal income tax liability. While
Non-U.S. Holders generally are exempt from backup withholding, a Non-U.S.
Holder may, in certain circumstances, be required to comply with certain
information and identification procedures in order to prove entitlement to this
exemption.
EXPORT RECEIVABLES ASSET SECURITIZATION PROGRAM
In connection with Petrobras' asset receivables asset securitization
program, PFL has received senior and junior trust certificates in the aggregate
amount of U.S.$1,800.0 million. See Item 4. "Information on the
Company—Business Overview Export Receivables
Asset Securitization Program."
The Prepayment Agreement
Pursuant to a prepayment agreement entered into by Petrobras and PFL,
Petrobras undertook to deliver, for as long as any Senior Trust Certificates
remain outstanding, in each quarterly period, a quantity of Eligible Products
having a market value equal to any scheduled payments of interest on and
principal of the Senior Trust Certificates.
The Master Export Contract
As long as any Senior Trust Certificates or any amounts payable to the
insurers remain outstanding, Petrobras will deliver, in each quarterly period,
a quantity of Eligible Products having a market value equal to any scheduled
payments of interest, principal or other amounts due under the Senior Trust
Certificates. Under the Master Export Contract, Petrobras exports and sells
Eligible Products to PFL during each quarterly period:
•
in an amount equal to at least 80% of the total volume of all
bunker fuel and fuel oil (collectively, Heavy Fuel Oil) exported by
Petrobras during that quarterly period; and
•
with a value (based upon the net invoice price at which such
Eligible Products are actually sold by PFL) equal to at least:
-
the highest aggregate amount scheduled to be paid by
the Trustee in any quarterly period during the remaining term of
any series of Senior Trust Certificates at the time outstanding,
with respect to interest, principal and other amounts due under
the Senior Trust Certificates
multiplied by
-
a factor that fluctuates between 2.0 and 3.0, depending
upon the level of sales of Eligible Products by PFL that are
contracted to be made under arrangements that provide for a
minimum price per barrel or other hedging arrangements and the
relevant minimum price or price established by such hedging
arrangements.
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Petrobras also agrees that its average daily gross exports of fuel oil and
bunker fuel for any rolling twelve-month period will be equal to at least
70,000 barrels of fuel oil and bunker fuel. Petrobras is not relieved of its
obligations to deliver Eligible Products under the Master Export Contract, or
the Prepayment Agreement, for any reason, including, without limitation, as a
result of force majeure or on non-payment by PFL.
Risk of Loss
Petrobras fulfills its delivery obligations to PFL by delivering the
Eligible Products directly to buyers on behalf of PFL. Title and risk of loss
remain with Petrobras until the Eligible Products are delivered to the buyers,
at which time both title and risk of loss pass to PFL and simultaneously to the
buyers.
Taxes and Expenses
Petrobras is obligated to indemnify PFL against all costs, expenses,
liabilities, damages and other similar obligations which may be imposed upon,
incurred or suffered by PFL in respect of any present or future taxes of any
nature assessed against PFL by Brazil, the Cayman Islands, the United States or
any other taxing jurisdiction.
Indemnification
Petrobras is obligated to indemnify and hold harmless PFL, its affiliates,
and their respective officers, directors, employees and agents from all suits,
direct damages or other losses arising from or out of the transactions
contemplated by the principal agreements, including: any negligence or willful
misconduct of Petrobras, breach of representations or warranties, claims for
payment (whether in cash or kind) by any and all third parties in respect of
taxes or similar charges upon the distribution, sale and transportation of any
Eligible Products prior to its export, claims for payment by any and all third
parties who purport to be entitled to receive any portion of the proceeds from,
or any payment relating to, the sale of the Eligible Products to PFL, amounts
payable by PFL in respect of any indemnification provided to other persons, and
all expenses arising from or out of any tax which may be levied and assessed
upon PFL in respect of any delivery, sale or resale of Eligible Products to
PFL.
Negative Pledge
So long as any senior trust certificate remains outstanding or any amount
payable to an Enhancer under any of the insurance documents remains
outstanding, Petrobras will not create or permit any Lien, other than a
Petrobras Permitted Lien, on any of Petrobras' assets or any of its
subsidiaries' assets to secure (i) any of Petrobras' indebtedness, (ii) any of
its subsidiaries' indebtedness or (iii) the indebtedness of any other person,
unless Petrobras contemporaneously creates or permits such Lien to secure
equally and ratably Petrobras' obligations under the Master Export Contract and
the other transaction documents to which it is a party or Petrobras provides
other security for its obligations under the Master Export Contract and the
other transaction documents to which it is a party as is duly approved by a
resolution of the senior certificate holders in accordance with the trust deed.
Sales Agreements
PFL sells Eligible Products purchased from Petrobras or its affiliates
though the following agreements:
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•
Offtake Contracts with Citibank, N.A, as Offtaker, pursuant
to which PFL agreed to deliver and sell, and Citibank N.A. agreed to
accept and purchase, during each quarterly delivery period, Eligible
Products with a value equal to at least 1.1 times the amounts
scheduled to be paid in respect of the Series 2001 Senior Trust
Certificates on the payment date immediately following the end of
such quarterly delivery period.
•
A Product Sale Agreement with PAI, which may purchase
Eligible Products from time to time from PFL and sell them to buyers
primarily in the United States and its territories; and
•
Sales to other purchasers of Eligible Products in the open
market.
The Receivables Purchase Agreement
Pursuant to a Receivables Purchase Agreement PFL sells to the Trustee the
rights to a specified amount of designated receivables to be generated from the
sale of Eligible Products by PFL. In exchange, the Trustee issued to PFL the
Senior Trust Certificates. The rights to the purchased receivables acquired by
the Trust on the closing date consists of:
•
Certain receivables to be generated by the sale of Eligible
Products to the Offtaker, following an agreed schedule under the
Offtake Contracts.
•
Certain additional receivables to be generated by the sale of
Eligible Products to other buyers following an agreed schedule; and
•
If applicable, certain receivables in each quarterly period
equal to any taxes incurred on payments in respect of outstanding
Senior Trust Certificates, together with certain other amounts.
The Insurance and Reimbursement Agreements
Each series of the Senior Trust Certificates features credit enhancement
by means of a financial guaranty insurance policy. See Item 4. "Information on
the Company — Business Overview — Export
Receivables Asset Securization Program"
The parties also entered into Insurance and Reimbursement Agreements
pursuant to which, among other things, the Trustee has agreed to reimburse,
with interest, MBIA, Ambac and XL Capital Assurance Inc., as applicable, for
amounts paid pursuant to claims made under their respective financial guaranty
insurance policies.
SENIOR NOTES
We have issued three series of Senior Notes in the aggregate amount of
U.S.$1,550.0 million. See Item 5. "Operating and
Financial Review and Prospects—Management's Discussion and Analysis of
Results of Operation—Liquidity and Capital Resources." The terms of each of
these series of Senior Notes, and the material agreements which set forth their
terms, are substantially similar and are summarized below.
Indentures
Each series of Senior Notes was issued pursuant to an indenture between
us, as the issuer, and The Bank of New York, as trustee. The terms of the
indentures require us and our subsidiaries, among other things, to:
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•
pay all amounts owed by us under the indenture and the notes
when such amounts are due, and perform each of our other obligations
under the various transaction documents entered into by it in
connection with the issuance of the notes;
•
comply with all applicable laws and maintain all necessary governmental approvals;
•
pay all uncontested taxes;
•
preserve our existence and maintain our properties;
•
maintain adequate insurance;
•
maintain our books and records in accordance with U.S. GAAP;
•
maintain an office or agency in New York for the purpose of service of process;
•
ensure that the notes continue to be our senior obligations;
•
use proceeds from the issuance of the notes for specified
purposes, namely the purchase of oil imports and the repayment of
short-term indebtedness;
•
give notice to the trustee of any default or event of default
under the indenture or certain currency control events in Brazil;
•
provide certain financial statements to the trustee;
•
take actions to maintain the trustee's or the noteholders'
rights under the relevant transaction documents;
•
maintain the required coverage amount;
•
provide certain information to noteholders required by Rule 144A; and
•
replace the trustee upon any resignation or removal thereof.
In addition, the terms of the indenture restrict our ability and the
ability of our subsidiaries, among other things, to:
•
undertake certain mergers, consolidations or similar transactions;
•
create certain liens on our assets or pledge our assets; and
•
enter into certain transactions with our affiliates.
These covenants are subject to a number of terms, conditions and further qualifications.
The indenture also contains certain events of default, consisting of the following:
•
failure to pay principal when due;
•
failure to pay interest within 30 days of any interest payment date;
•
inaccuracy of any representation or warranty made by us or
Petrobras in any transaction document or in certain specified other
certificates when made;
•
breach of a covenant or agreement in the indenture, the
standby purchase agreement and other relevant transaction documents
by us or Petrobras;
•
acceleration of or failure to make a payment on our
indebtedness or the indebtedness of Petrobras or a material
subsidiary of Petrobras that equals or exceeds a specified
threshold;
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•
a final judgment against us, Petrobras or a material
subsidiary of Petrobras that equals or exceeds a specified
threshold;
•
certain events of bankruptcy, liquidation or insolvency of
us, Petrobras or any material subsidiary of Petrobras;
•
certain events relating to the unenforceability of the
relevant transaction documents against us or Petrobras;
•
the cancellation, termination (other than as permitted in the
indenture) or unenforceability of the letter of credit unless an
equivalent letter of credit is promptly provided or an equivalent
amount in U.S. dollars is promptly deposited in the reserve account;
•
Petrobras ceases to own at least 51% of our outstanding
voting shares; and
•
we or Petrobras shall fail to comply with our obligations
with respect to the required coverage amount.
Standby Purchase Agreements
Our Senior Notes have the benefit of credit support from Petrobras in the
form of standby purchase agreements under which Petrobras is obligated to make
certain payments to the trustee in the event we fail to make required payments
of principal, interest and other amounts due under the Senior Notes and the
indenture. Subject to certain limitations, Petrobras is required to purchase
from the holders of the notes and pay to the trustee amounts in respect of the
noteholders' right to receive:
•
the amount of any interest or other amounts not paid by us in
accordance with the terms of the notes and the indenture;
•
the entire principal amount of the notes in the event we fail
to do so at their expected maturity or earlier upon any redemption
or acceleration of the Senior Notes prior to the expected maturity
date or, if extended, on the final maturity date; and
•
except where certain events have occurred which limit
Petrobras' ability to convert and transfer Reais and U.S. dollars,
interest on all of the foregoing amounts at a default rate, for
payments beyond the date that we were required to make payment under
the indenture in respect of the full principal amount of the Senior
Notes.
We will have the right to defer making payments under the indentures for
up to 18 months, if an event of inconvertibility, untransferability or
expropriation occurs that prevents Petrobras from making required payments
under the standby purchase agreement.
Obligations under the standby purchase agreement constitute direct and
general senior unsecured and unsubordinated obligations of Petrobras and rank
pari passu
with other senior, unsecured obligations of Petrobras that are not,
by their terms, expressly subordinated in right of payment to Petrobras'
obligations under the standby purchase agreement.
Letters of Credit/Political Risk Insurance
Pursuant to the indentures, we established and maintained reserve accounts
with the trustee on behalf of the holders of the Senior Notes. We were also
required to issue an irrevocable standby letter of credit in favor of the
trustee or provide political risk insurance for the trustee, in aggregate
amounts set forth in the terms of the Senior Notes. The required coverage
amount varies for each series of Senior Notes. The funds in the reserve
account may be returned to us, and the required coverage amount may be
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reduced, under certain circumstances. We have paid all premiums on our
insurance policies and/or have funded and issued standby irrevocable letters of
credit, which will be replaced by other standby letters of credit or by funds
in our reserve accounts.
Amounts may be withdrawn from the reserve account and drawings may be made
under the letter of credit or the political risk insurance policy to make
scheduled interest payments on the Senior Notes for up to 18 months, if an
event of inconvertibility, untransferability or expropriation occurs.
Registration Rights Agreement
Pursuant to the registration rights agreement, we are obligated to
consummate exchange offers to cause the Senior Notes to generally become freely
transferable. We met this requirement with respect to the first two series of
Senior Notes on December 19, 2001, and with respect to the third series of
Senior Notes on April 7, 2003.
GLOBAL STEP-UP NOTES
In 2003, we issued U.S.$400 million of global step-up Notes due 2008,
which bear interest from March 31, 2003 at the rate of 9.00% per year until
April 1, 2006 and at a rate of 12.375% thereafter. We issued these notes
pursuant to our and Petrobras' U.S.$8 billion shelf registration statement on
Form F-3, which was filed with the SEC on July 2, 2002. See
Item 5. "Operating and Financial Review and
Prospects—Management's Discussion and Analysis of Results of Operation—Liquidity and
Capital Resources."
The terms of these notes are summarized below.
Indenture
We issued the Global Step-Up Notes pursuant to an indenture between us, as
the issuer, and JP Morgan Chase Bank, as trustee, dated as of July 19, 2002, as
supplemented by the first supplemental indenture dated as of March 31, 2003,
among us, Petrobras and the trustee. When we refer to the indenture in this
section, we are referring to the indenture as supplemented by the first
supplemental indenture.
The terms of the indenture require us, among other things, to
•
pay all amounts owed by us under the indenture and the notes when such amounts are due;
•
perform all other obligations under the indenture;
•
comply with all applicable laws;
•
maintain all necessary governmental approvals;
•
pay all uncontested taxes;
•
preserve our existence;
•
maintain our properties;
•
maintain adequate insurance;
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•
maintain our books and records in accordance with U.S. GAAP;
•
maintain an office or agent in New York for the purpose of
service of process and maintain a paying agent located in the United
States;
•
ensure that the notes continue to be our senior obligations;
•
use proceeds from the issuance of the notes for specified
purposes, namely the purchase of oil imports and the repayment of
short-term indebtedness
•
give notice to the trustee of any default or event of default under the indenture;
•
provide certain financial statements to the trustee;
•
take actions to maintain the trustee's or the noteholders'
rights under the relevant transaction documents; and
•
replace the trustee upon any resignation or removal thereof.
In addition, the terms of the indenture restrict our ability and the
ability of our subsidiaries, among other things, to:
•
undertake certain mergers, consolidations or similar transactions;
•
create certain liens on our assets or pledge our assets; and
•
enter into certain transactions with our affiliates.
These covenants are subject to a number of terms, conditions and further qualifications.
The indenture also contains certain events of default, consisting of the following:
•
failure to pay principal within three calendar days of its due date;
•
failure to pay interest within 30 days of any interest payment date;
•
specified representations or warranties made by Petrobras in
the standby purchase agreement not being true when made;
•
breach of a covenant or agreement in the indenture or the
standby purchase agreement by us or Petrobras, if not remedy within
60 calendar days;
•
acceleration of or failure to make a payment on our
indebtedness or the indebtedness of Petrobras or a material
subsidiary of Petrobras that equals or exceeds U.S.$100 million;
•
a final judgment against us, Petrobras or a material
subsidiary of Petrobras that equals or exceeds U.S.$100 million;
•
certain events of bankruptcy, liquidation or insolvency of
us, Petrobras or any material subsidiary of Petrobras;
•
certain events relating to the unenforceability of the notes,
the indenture or the standby purchase agreement against us or
Petrobras; and
•
Petrobras ceases to own at least 51% of our outstanding
voting shares.
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Standby Purchase Agreement
Our Global Step-Up Notes have the benefit of credit support from Petrobras
in the form of a standby purchase agreement under which Petrobras is obligated
to make certain payments to the trustee in the event we fail to make required
payments of principal, interest and other amounts due under the senior Global
Step-Up Notes and the indenture. Subject to certain limitations, Petrobras is
required to purchase from the holders of the notes and pay to the trustee
amounts in respect of the noteholders' right to receive:
•
the amount of any interest or other amounts not paid by us in
accordance with the terms of the notes and the indenture;
•
the entire principal amount of the notes in the event we fail
to do so at their expected maturity or earlier upon any redemption
or acceleration of the notes prior to the expected maturity date;
•
the entire principal amount of the notes in the event that a
holder of a note requires us to repurchase such note in accordance
with the terms of the indenture; and
•
interest on all of the foregoing amounts at the rate of 1%
above the note rate (the default rate), for payments beyond the date
that we were required to make such payments under the indenture.
Obligations under the standby purchase agreement constitute direct and
general senior unsecured and unsubordinated obligations of Petrobras and rank
pari passu
with other senior, unsecured obligations of Petrobras that are not,
by their terms, expressly subordinated in right of payment to Petrobras'
obligations under the standby purchase agreement.
The Global Step-Up Notes did not include a letter of credit or political
risk insurance.
MATERIAL CONTRACTS
Statements contained in this annual report regarding the contents of any
contract or other document are not necessarily complete, and, where the
contract or other document is an exhibit to the annual report, each of these
statements is qualified in all aspects by the provisions of the actual contract
or other documents.
Except for the contracts entered into in connection with the transactions
described above, we have no other material contracts.
DOCUMENTS ON DISPLAY
We are subject to the information requirements of the Securities Exchange
Act of 1934 applicable to a foreign private issuer, and accordingly, we file or
furnish reports, information statements and other information with the U.S.
Securities and Exchange Commission. Documents that are exhibits to or
incorporated by reference in this annual report and other information filed by
us can be inspected at, and subject to the payment of any required fees, copies
may be obtained from, the public Reference Section of the U.S. Securities and
Exchange Commission, 450 Fifth Street, N.W., room 1024, Washington, D.C. 20549.
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As a foreign private issuer, we were not required to make filings with the
SEC prior to November 4th, 2002, although we were permitted to do so. Any
filings we make electronically will be available to the Public over the
Internet at the SEC's website at http://www.sec.gov.
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
We make limited use of derivatives. We do not hold derivative instruments
for trading purposes or for leverage.
In the normal course of business, we face market risks, including interest
rate risk and oil and oil products price risk. While Petrobras is in the
process of changing its risk management processes, including those which may
affect us, neither Petrobras nor we have yet entered into derivative contracts
or made other arrangements to hedge against interest rate risk or commodity
price risk. We have historically passed on our financing costs to Petrobras by
selling crude oil and oil products to Petrobras at a premium to compensate for
our financing costs. Although Petrobras and we are considering methods of
continuing this practice in the future, we cannot assure you that this practice
will continue.
Our borrowings are derived mainly from commercial banks and include trade
lines of credit and commercial paper, which are primarily intended for the
purchase of crude oil and oil products, and with interest rates ranging from
3.0% to 5.8%. The weighted average annual interest rate for our short-term
debt at December 31, 2002 was 3.4%, compared to 2.8% at December 31, 2001.
The table below sets forth the amounts and related weighted average annual
interest rates by expected maturity dates for our long-term debt obligations at
December 31, 2002:
CALENDAR YEAR OF EXPECTED MATURITY DATE FOR DEBT
(in thousands of U.S. dollars, except for percentages)
December 31, 2002
Fair
Value
Debt Obligations
2004
2005
2006
2007
2008-2013
Total
Dec 31, 2002
Debt
in U.S. Dollars:
Fixed rate debt
$
162,750
$
20,750
$
176,800
$
838,416
$
1,624,000
$
2,822,716
$
2,698,528
Average interest rate
3.81
%
3.81
%
3.81
%
7.61
%
9.38
%
Variable rate debt
—
—
—
—
426,000
426,000
426,000
Average interest rate
6.34
%
Total debt obligations
$
162,750
$
20,750
$
176,800
$
838,416
$
2,050,000
$
3,248,716
$
3,124,528
Total Debt
Portfolio
2002
US$ Dollars:
Fixed rate debt
86.9
%
Floating rate debt
13.1
%
Total
100.0
%
At December 31, 2002, 13.1% of our debt was dollar-denominated floating
rate debt and 86.9% of our debt was dollar-denominated fixed rate debt. Since
all of our debt is dollar denominated, we are not subject to material foreign
exchange rate risk.
Item 12. Description of Securities Other than Equity Securities.
Not applicable.
Item 13. Defaults, Dividend Arrearages and Delinquencies.
None.
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Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
None.
Item 15. Controls and Procedures.
Within the 90 days prior to the date of this report, we carried out an
evaluation under the supervision and with the participation of our management,
including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. There are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable assurance of achieving their control objectives. Based upon and as
of the date of our evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed in the
reports we file and submit under the Exchange Act is recorded, processed,
summarized and reported as and when required.
There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date
of their evaluation.
Item 16. Reserved
Item 17. Financial Statements.
We have responded to Item 18 in lieu of this item.
Item 18. Financial Statements.
The following financial statements, together with the reports of
PricewaterhouseCoopers thereon, are filed as a part of this annual report:
Page
Report of Independent Accountants
F-2
Consolidated
Balance Sheets as of December 31, 2002 and 2001
F-3
Consolidated
Statements of Operations for the years ended December 31, 2002,
2001 and 2000
F-5
Changes
in Consolidated Shareholder's Equity for the years ended
December 31, 2002, 2001 and 2000
F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000
F-7
Notes to Consolidated Financial Information
F-8
Item 19. Exhibits.
54
Table of Contents
Exhibit No:
Description
Exhibit 1
Memorandum and Articles of Association of Petrobras
International Finance Company (incorporated by
reference to Exhibit 1 to the Annual Report on Form
20-F of Petrobras International Finance Company, filed
with the Securities and Exchange Commission on July 1,
2002, and amendments to which were filed on December
13, 2002 and March 20, 2003 (File No. 333-14168)).
Exhibit 2
Indenture, dated as of May 9, 2001, between Petrobras
International Finance Company and The Bank of New York,
as Trustee, relating to the 9 7/8% Senior Notes due
2008 (incorporated by reference to Exhibit 4.1 to the
Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4, filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14168)).
Exhibit 2.1
Supplemental Indenture, dated as of November 26, 2001,
between Petrobras International Finance Company and The
Bank of New York, as Trustee, relating to the 9 7/8%
Senior Notes due 2008 (incorporated by reference to
Exhibit 4.2 to the Registration Statement of Petrobras
International Finance Company and Petróleo Brasileiro
S.A.—Petrobras on Form F-4, filed with the Securities
and Exchange Commission on December 6, 2001 (File No.
333-14168)).
Exhibit 2.2
Indenture, dated as of July 6, 2001, between Petrobras
International Finance Company and The Bank of New York,
as Trustee, relating to the 9 3/4% Senior Notes due
2011 (incorporated by reference to Exhibit 4.1 to the
Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4, filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14170)).
Exhibit 2.3
Supplemental Indenture, dated as of November 26, 2001,
between Petrobras International Finance Company and The
Bank of New York, as Trustee, relating to the 9 3/4%
Senior Notes due 2011 (incorporated by reference to
Exhibit 4.2 to the Registration Statement of Petrobras
International Finance Company and Petróleo Brasileiro
S.A.—Petrobras on Form F-4, filed with the Securities
and Exchange Commission on December 6, 2001 (File No.
333-14170)).
Exhibit 2.4
Indenture, initially dated as of February 4, 2002, as
amended and restated as of February 28, 2002, between
Petrobras International Finance Company and The Bank of
New York, as Trustee, relating to the 9 1/8% Senior
Notes due 2007 (incorporated by reference to Exhibit
2.19 to the amended Annual Report on Form 20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on December 13, 2002
(File No. 333-14168)).
55
Table of Contents
Exhibit No:
Description
Exhibit 2.5
Indenture, dated as of July 19, 2002, between Petrobras
International Finance Company and JPMorgan Chase Bank,
as Trustee (incorporated by reference to exhibit 4.5 of
the Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-3, filed with the Securities and Exchange
Commission on July 5, 2002, and amendments to which
were filed on July 19, 2002 and August 14, 2002 (File
No. 333-92044-01)).
Exhibit 2.6
First Supplemental Indenture, dated as of March 31,
2003, between Petrobras International Finance Company
and JPMorgan Chase Bank, as Trustee, relating to the
9.00% Global Step-Up Notes due 2008 (incorporated by reference to
Exhibit 2.6 report of Petróleo Brasileiro S.A.—Petrobras on
Form 20-F, filed with the Securities and Exchange Commission on
June 19, 2002 (File No. 1-115106)).
Exhibit 2.7
Registration Rights Agreement, dated as of May 9, 2001,
among Petrobras International Finance Company, Petróleo
Brasileiro S.A.—Petrobras, and USB Warburg LLC, Banc of
America Securities LLC, J.P. Morgan Securities Inc.,
RBC Dominion Securities Corporation and Santander
Central Hispano Investment Securities Inc.
(incorporated by reference to Exhibit 4.4 to the
Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4 filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14168)).
Exhibit 2.8
Registration Rights Agreement, dated as of July 6,
2001, among Petrobras International Finance Company,
Petróleo Brasileiro S.A.—Petrobras, and USB Warburg
LLC, Banc of America Securities LLC, J.P. Morgan
Securities Inc., RBC Dominion Securities Corporation
and Santander Central Hispano Investment Securities
Inc. (incorporated by reference to Exhibit 4.4 to the
Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4, filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14170)).
Exhibit 2.9
Registration Rights Agreement, initially dated as of
February 4, 2002, as amended and restated as of
February 28, 2002, among Petrobras International
Finance Company, Petróleo Brasileiro S.A.—Petrobras,
UBS Warburg LLC and Morgan Stanley & Co. Incorporated
(incorporated by reference to Exhibit 2.20 to the
amended Annual Report on Form 20-F of Petrobras
International Finance Company, filed with the
Securities and Exchange Commission on December 13, 2002
(File No. 333-14168)).
Exhibit 2.10
Standby Purchase Agreement, dated as of May 9, 2001,
between Petróleo Brasileiro S.A.—Petrobras and The Bank
of New York (incorporated by reference to Exhibit 4.5
to the Registration Statement of Petrobras
International Finance Company and Petróleo Brasileiro
S.A.—Petrobras on Form F-4, filed with the Securities
and Exchange Commission on December 6, 2001 (File No.
333-14168)).
56
Table of Contents
Exhibit No:
Description
Exhibit 2.11
Amendment No. 1 to the Standby Purchase Agreement,
dated as of November 26, 2001, between Petróleo
Brasileiro S.A.—Petrobras and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.6 to
the Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4, filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14168)).
Exhibit 2.12
Standby Purchase Agreement, dated as of July 6, 2001,
between Petróleo Brasileiro S.A.—Petrobras and The Bank
of New York (incorporated by reference to Exhibit 4.5
to the Registration Statement of Petrobras
International Finance Company and Petróleo Brasileiro
S.A.—Petrobras on Form F-4, filed with the Securities
and Exchange Commission on December 6, 2001 (File No.
333-14170)).
Exhibit 2.13
Amendment No. 1 to the Standby Purchase Agreement,
dated as of November 26, 2001, between Petróleo
Brasileiro S.A.—Petrobras and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.6 to
the Registration Statement of Petrobras International
Finance Company and Petróleo Brasileiro S.A.—Petrobras
on Form F-4, filed with the Securities and Exchange
Commission on December 6, 2001 (File No. 333-14170)).
Exhibit 2.14
Standby Purchase Agreement, initially dated as of
February 4, 2002, as amended and restated as of
February 28, 2002, between Petróleo Brasileiro
S.A.—Petrobras and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 2.21 to the
amended Annual Report on Form 20-F of Petrobras
International Finance Company, filed with the
Securities and Exchange Commission on December 13, 2002
(File No. 333-14168)).
Exhibit 2.15
Standby Purchase Agreement dated as of March 31, 2003,
between Petróleo Brasileiro S.A.—Petrobras and JPMorgan
Chase Bank, as Trustee.
Exhibit 2.16
Notes Purchase Agreement, dated as of January 29, 2002,
between Petrobras International Finance Company and UBS
Warburg LLC and Morgan Stanley & Co. Incorporated
(incorporated by reference to Exhibit 2.13 to the
Annual Report on Form 20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July 1, 2002, and amendments to which
were filed on December 13, 2002 and March 20, 2003
(File No. 333-14168)).
Exhibit 2.17
Master Export Contract, dated as of December 21, 2001,
between Petróleo Brasileiro S.A.—Petrobras and
Petrobras Finance Ltd. (incorporated by reference to
Exhibit 2.14 to the Annual Report on Form 20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on July 1, 2002, and
amendments to which were filed on December 13, 2002 and
March 20, 2003 (File No. 333-14168)).
57
Table of Contents
Exhibit No:
Description
Exhibit 2.18
Amendment to the Master Export Contract, dated as of
May 21, 2003, among Petróleo Brasileiro S.A. –
Petrobras and Petrobras Finance Ltd.
Exhibit 2.19
Depositary Agreement, dated as of December 21, 2001,
among U.S. Bank, National Association, Cayman Islands
Branch, in capacity as Trustee of the PF Export
Receivables Master Trust, Citibank, N.A., in capacity
as Securities Intermediary, and Petrobras Finance Ltd.
(incorporated by reference to Exhibit 2.15 to the
Annual Report on Form 20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July 1, 2002, and amendments to which
were filed on December 13, 2002 and March 20, 2003
(File No. 333-14168)).
Exhibit 2.20
Letter Agreement relating to the Depositary Agreement,
dated as of May 16, 2003.
Exhibit 2.21
Administrative Services Agreement, dated as of December
21, 2001, between Petróleo Brasileiro S.A.—Petrobras,
as Delivery and Sales Agent, and Petrobras Finance Ltd.
(incorporated by reference to Exhibit 2.16 to the
Annual Report on Form 20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July 1, 2002, and amendments to which
were filed on December 13, 2002 and March 20, 2003
(File No. 333-14168)).
Exhibit 2.22
Letter Agreement relating to the Administrative
Services Agreement, dated as of May 16, 2003.
Exhibit 2.23
Amended and Restated Trust Deed, dated as of December
21, 2001, among U.S. Bank, National Association, Cayman
Islands Branch, in capacity as Trustee of the PF Export
Receivables Master Trust, Citibank, N.A., in capacity
as Paying Agent, Transfer Agent, Registrar and
Depositary Bank, and Petrobras International Finance
Company, as Servicer (incorporated by reference to
Exhibit 2.17 to the Annual Report on Form 20-F of
Petrobras International Finance Company, filed with the
Securities and Exchange Commission on July 1, 2002, and
amendments to which were filed on December 13, 2002 and
March 20, 2003 (File No. 333-14168)).
Exhibit 2.24
Receivables Purchase Agreement, dated as of December
21, 2001, among Petrobras Finance Ltd., Petróleo
Brasileiro S.A.—Petrobras and U.S. Bank, National
Association, Cayman Islands Branch, solely in capacity
as Trustee of the PF Export Receivables Master Trust
(incorporated by reference to Exhibit 2.18 to the
Annual Report on Form 20-F of Petrobras International
Finance Company, filed with the Securities and Exchange
Commission on July 1, 2002, and amendments to which
were filed on December 13, 2002 and March 20, 2003
(File No. 333-14168)).
58
Table of Contents
Exhibit No:
Description
Exhibit 2.25
Amended and Restated Receivables Purchase Agreement,
dated as of May 21, 2003, among Petrobras Finance Ltd.,
Petróleo Brasileiro S.A.—Petrobras and U.S. Bank,
National Association, Cayman Islands Branch, solely in
capacity as Trustee of the PF Export Receivables Master
Trust.
Exhibit 2.26
Prepayment Agreement, dated as of December 21, 2001,
between Petróleo Brasileiro S.A.—Petrobras and
Petrobras Finance Ltd.
Exhibit 2.27
Amended and Restated Prepayment Agreement, dated as of
May 2, 2003, between Petróleo Brasileiro S.A.—Petrobras
and Petrobras Finance Ltd.
Exhibit 10.1
Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
59
Table of Contents
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, Petrobras International Finance Company—PIFCo, hereby certifies that
it meets all the requirements for filing on Form 20-F and has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Petrobras International Finance Company—PIFCo
By:
/s/ ALMIR GUILHERME BARBASSA
Name:
Title:
Almir Guilherme Barbassa
Chairman
Date: June 19, 2003
Table of Contents
CERTIFICATION PURSUANT TO RULES 13a-15 and 15d-15 AS ADOPTED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Almir Guilherme Barbassa, certify that:
1.     I have reviewed this annual report on Form 20-F of Petrobras International
Finance Company—PIFCo.
2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4.     The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a)  Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
(b)  Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
(c)  Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5.     The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a)  All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b)  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6.     The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: June 19, 2003
By:
/s/ ALMIR GUILHERME BARBASSA
Name: Almir Guilherme Barbassa
Title: Chairman
Table of Contents
CERTIFICATION PURSUANT TO RULES
13a-5 and 15d-15 AS ADOPTED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Daniel Lima de Oliveira, certify that:
1.     I have reviewed this annual report on Form 20-F of Petrobras International
Finance Company—PIFCo.
2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4.     The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a)  Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
(b)  Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
(c)  Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5.     The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a)  All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b)  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6.     The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: June 19, 2003
By:
/s/ DANIEL LIMA DE
OLIVEIRA
Name: Daniel Lima de Oliveira
Title: Financial Manager
Table of Contents
Petrobras International
Finance Company
(a wholly-owned subsidiary of Petróleo
Brasileiro S.A. — PETROBRAS)
Consolidated Financial Information
as of December 31, 2002 and 2001 and
Report of Independent Accountants
Table of Contents
Report of Independent Accountants
To the Board of Directors and Stockholder of
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and of changes in stockholder's equity
and of cash flows, present fairly, in all material respects, the financial
position of Petrobras International Finance Company at December 31, 2002 and
2001, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
PricewaterhouseCoopers
Auditores Independentes
Rio de Janeiro, Brazil
February 13, 2003.
COPY OF THE ORIGINAL
F-2
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Consolidated Balance Sheets
Expressed in Thousands of United States Dollars, except share amounts
December 31,
December 31,
Assets
2002
2001
Current assets
Cash and cash equivalents
260,629
48,593
Marketable securities
60,086
Accounts receivable
Related parties
4,838,269
2,584,851
Trade
57,073
44,740
Notes receivable—related party
1,157,930
282,975
Assets held for sale
144,721
Inventories
4,506
Prepaid expense and other current assets
15,997
10,691
6,394,490
3,116,571
Property and equipment
110
213
Other assets
Marketable securities
36,299
Advances to suppliers
19,027
11,309
Prepaid expense
41,425
41,644
Notes receivable—related parties
473,632
Assets related to securitization program
900,000
900,000
Net investment in direct financing
leases to related party
832,319
208,032
2,302,702
1,160,985
Total assets
8,697,302
4,277,769
F-3
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Consolidated Balance Sheets
Expressed in Thousands of United States Dollars, except share amounts
December 31,
December 31,
Liabilities and stockholder's equity
2002
2001
Current liabilities
Trade accounts payable
Related parties
291,980
288,068
Other
281,133
231,000
Loans payable—related parties
3,688,249
334,564
Short-term debt
285,770
775,427
Current portion of long term debt
81,700
215,000
Unearned income—related parties
48,563
8,318
Capital lease
68,948
Other current liabilities
56,584
41,004
4,802,927
1,893,381
Long-term liabilities
Capital lease
601,733
Long-term debt
3,248,716
2,335,000
3,850,449
2,335,000
Commitments and contingencies (Note 8)
Stockholder's equity
Shares authorized and issued
Common stock—2002 and
2001—50,000 shares,
par value US$1
50
50
Additional paid in capital
120,000
60,000
Accumulated deficit
(76,124
)
(10,662
)
43,926
49,388
Total liabilities and stockholder's equity
8,697,302
4,277,769
The accompanying notes are an integral part of this financial information.
F-4
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Consolidated Statements of Operations
(Expressed in Thousands of United States Dollars, except share amounts)
Years ended December 31,
2002
2001
2000
Sales of crude oil
and oil products
and services
6,390,226
6,260,514
7,937,003
Lease income
36,062
10,682
6,426,288
6,271,196
7,937,003
Cost of sales
(6,371,465
)
(6,253,009
)
(7,912,615
)
Lease expense
(24,004
)
(10,542
)
General and
administrative
expenses
(1,178
)
(114
)
(6,396,647
)
(6,263,665
)
(7,912,615
)
Gross profit
29,641
7,531
24,388
Financial income
219,580
158,804
221,578
Financial expense
(314,683
)
(187,101
)
(219,637
)
Gain on materials
and equipment
435
(95,103
)
(27,862
)
1,941
Net income (loss)
for the period
(65,462
)
(20,331
)
26,329
Weighted average
number of shares
outstanding
50,000
50,000
50,000
The accompanying notes are an integral part of this financial information.
F-5
Table of Contents
Petrobras International Financial Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Changes in Consolidated Shareholder's Equity
(Expressed in Thousands of United States Dollars, except number of shares and per share amounts)
Years ended December 31,
2002
2001
2000
Common stock
50
50
50
Additional paid in
capital
Balance at
January 1
60,000
Conversion
of loans to
capital
60,000
60,000
Balance at
December 31
120,000
60,000
Retained earnings
Balance at
January 1
(10,662
)
9,669
21,400
Net income
(loss) for
the year
(65,462
)
(20,331
)
26,329
Dividends
declared
(per share: 2000
– US$0.76)
(38,060
)
Balance at
December 31
(76,124
)
(10,662
)
9,669
Total stockholder's
equity
43,926
49,388
9,719
The accompanying notes are an integral part of this financial information.
F-6
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Consolidated Statements of Cash Flows
Expressed in Thousands of United States Dollars
Years ended December 31,
2002
2001
2000
Cash flows from operating activities
Net income (loss) for the year
(65,462
)
(20,331
)
26,329
Adjustments to reconcile net loss to
net cash
Depreciation and amortization
9,347
8,041
Decrease (increase) in assets
Accounts receivable
Related parties
(2,069,800
)
426,316
(171,429
)
Trade
(12,333
)
(5,132
)
(37,279
)
Prepaid expenses and other
assets
(38,205
)
(65,602
)
8,065
Increase (decrease) in liabilities
Trade accounts payable
Related parties
3,912
217,226
(77,233
)
Other
50,133
(362,190
)
286,353
Other liabilities
83,485
(6,916
)
(12,319
)
Net cash provided by (used in) operating
activities
(2,038,923
)
191,412
22,487
Cash flows from investing activities
Marketable securities
(96,385
)
Issuance of notes receivable
(2,247,658
)
(2,147,655
)
(745,000
)
Principal receivables of notes
1,422,122
1,210,383
655,024
Assets held for sale
(144,721
)
Property, plant and equipment, net
(37
)
(213
)
Advances to suppliers, net
(7,718
)
(11,309
)
Additions to net investment in direct
financing leases
(163,414
)
(156,017
)
(52,015
)
Net cash used in investing activities
(1,093,090
)
(1,249,532
)
(141,991
)
Cash flows from financing activities
Short-term debt, net issuances and
repayments
(489,657
)
245,075
(211,148
)
Proceeds from issuance of long-term
debt
657,000
2,165,000
245,000
Principal payments of long-term debt
(215,000
)
(10,000
)
Proceeds form short term
loans—related parties
6,861,572
3,654,629
6,785,453
Principal payments of short term
loans—related parties
(3,469,866
)
(4,961,129
)
(6,697,957
)
Dividends paid
(38,060
)
Net cash provided by financing
activities
3,344,049
1,055,515
121,348
Increase (decrease) in cash and cash
equivalents
212,036
(2,605
)
1,844
Cash and cash equivalents at beginning of
period
48,593
51,198
49,354
Cash and cash equivalents at end of period
260,629
48,593
51,198
Cash paid during the period for interest
322,286
209,062
185,421
Non cash investing and financing activities
Assets acquired through capital lease
obligations
665,000
Receipt of Junior Trust Certificates in
exchange of future export receivables
150,000
Increase of capital through conversion of
loan payable
60,000
60,000
Receipt of notes receivable in exchange of
Senior Exchangeable issued
338,416
The accompanying notes are an integral part of this financial information.
F-7
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
1
The Company and its Operations
Petrobras International Finance Company — PIFCO, a wholly-owned subsidiary
of PETROBRAS, was established on September 24, 1997 and is incorporated in
the Cayman Islands.
The primary objective of the Petrobras International Finance Company and
its subsidiaries (collectively, PIFCO or the Company) is to purchase crude
oil and oil products from third parties and sell the products at a premium
to PETROBRAS on a deferred payment basis. Accordingly, intercompany
activities and transactions, and therefore the Company's financial
position and results of operations, are affected by decisions made by its
parent company, PETROBRAS. Additionally, to a more limited extent, the
Company sells crude oil and oil products to third parties.
PIFCO is also being used by PETROBRAS to take advantage of Brazilian tax
legislation related to the Special Customs System (Regime Aduaneiro
Especial) for the importation and exportation of goods intended for the
research of oil and natural gas fields (referred to as REPETRO). REPETRO
permits petroleum companies operating in Brazil to enter into leasing
arrangements with foreign companies for materials and equipment to be used
in the exploration and production of crude oil and gas, without paying
federal taxes for Import Duty (Imposto de Importação—II), Excise Tax
(Imposto sobre Produtos Industrializados—IPI), Employees' Profit
Participation Program (Programa de Integração Social—PIS), and Tax for
Social Security Financing (Contribuição para o Financiamento da Seguridade
Social—COFINS).
The following is a brief description of each of the Company's wolly-owned
subsidiaries:
PETROBRAS NETHERLANDS B.V.
PETROBRAS NETHERLANDS B.V.—PNBV, based in the Netherlands, is responsible
for acquiring equipment to be utilized in the oil exploration and
production activities related to REPETRO. PNBV raises funds abroad and in
Brazil to acquire equipment, and chartering the acquired equipment to
PETROBRAS.
PETROBRAS EUROPE LTD.
PETROBRAS EUROPE LTD.—PEL, based in the United Kingdom, consolidates
PETROBRAS' European trade and finance activities. These activities consist
of advising on and negotiating the
terms and conditions for crude oil and oil products supplied to PIFCO and
PETROBRAS, as well as marketing Brazilian crude oil and other derivative
F-8
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
products exported to the geographic areas in which the Company operates.
PEL plays an advisory role in connection with these activities and
undertakes no additional commercial or financial risk.
PETROBRAS FINANCE LIMITED
PETROBRAS FINANCE LIMITED—PFL, based in the Cayman Islands, purchases
bunker and fuel oil from PETROBRAS and sells these products in the
international market via a securitization program of future receivables
for these products (Securitization Program; see Note 6 (a) iii).
2
Summary of Significant Accounting Policies
In preparing these consolidated financial statements, the Company has
followed accounting policies that are in accordance with accounting
principles generally accepted in the United States of America (U.S. GAAP).
The preparation of these financial statements requires the use of
estimates and assumptions that affect the assets, liabilities, revenues
and expenses reported in the financial statements, as well as amounts
included in the notes thereto.
(a)
Basis of presentation
These consolidated financial statements have been prepared in accordance
with U.S. GAAP, which differ in certain respects from the Brazilian
accounting principles applied by PIFCO in its statutory financial
statements prepared in accordance with the Brazilian Corporate Law. The
consolidated financial statements include the financial statements of
PIFCO and of each of its wholly-owned subsidiaries.
(b)
Foreign currency translation
The functional currency of the Company is the U.S. dollar, as the majority
of its transactions are denominated in U.S. dollars. When there are
transactions in foreign currencies, exchange gains and losses resulting
from foreign currency transactions are recognized in the Statement of
Operations.
(c)
Cash equivalents
Cash equivalents consist of highly liquid investments that are readily
convertible into cash and have an original maturity of three months or
less at their date of acquisition.
F-9
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
(d)
Marketable Securities
The Company accounts for certain investments as held-to-maturity
securities in accordance with SFAS 115 – Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115). The securities are
carried at their amortized cost.
(e)
Finance leasing
The Company's leasing operations consist principally of the leasing of
various types of materials and equipments for the exploration and
production of the oil and gas, and for oil and gas industry in general,
including production and drilling platforms, oil tankers, supply boats and
other types of ships. The Company is also a party to the charter and
subcharter agreements of platforms. With the exception of the leases of
two specific vessels, which are operating leases, the remaining leases are
classified as direct financing leases.
The Company acquired operating platforms and production equipment under
the terms of purchase agreements (see Note 8), purchase invoices and
charter agreements and subsequently leased this equipment under the terms
of existing and future charter and subcharter agreements with related
parties. These charter and sub charter agreements are considered to be
Direct Finance Leases in accordance with the provisions of Statement of
Financial Accounting Standards No. 13 "Accounting for leases" (SFAS 13)
and subsequently issued amendments to and interpretations of SFAS 13.
Income and expense financing leases, consisting of interest income, is
recognized over the lease term. Income and expense from operating leases
is recognized ratably over the term of the leases.
(f)
Deferred financing costs
Deferred financing costs associated with various debt issuances are
recorded as prepaid expenses and are being amortized over the terms of the
related debt, based on the amount of outstanding debt, using the effective
interest method. The unamortized balance of deferred financing costs was
US$34,497 and US$37,287 as of December 31, 2002 and 2001, respectively.
F-10
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
(g)
Inventories
Inventories are stated at the lower of cost or market value.
(h)
Unearned Income
Unearned income represents the unearned premium charged by the Company to
PETROBRAS and REFAP to compensate for its financing costs. The premium is
billed to PETROBRAS and REFAP at the same time the related product is
sold, and is deferred and recognized into earnings as a component of
financial income on a straight-line basis over the collection period,
which ranges from 120 to 270 days, in order to match the premium billed
with the Company's financial expense.
(i)
Revenues, costs and expenses
Revenues from sales of crude oil and oil products are recognized on an
accrual basis when title has transferred to the customer. Costs and
expenses are also accounted for on an accrual basis.
(j)
Income taxes
The Company accounts for income taxes using an asset and liability
approach, which requires the recognition of taxes payable or refundable
for the current year and deferred tax liabilities and assets representing
the future tax consequences of events that have been recognized in the
Company's financial statements. The measurement of current and deferred
tax liabilities and assets are based on the provisions of the tax laws in
the countries in which the Company and its subsidiaries operate (the
United Kingdom, the Netherlands and the Cayman Islands). Deferred tax
assets are reduced, by the amount of any tax benefits when, based on the
available evidence, that such benefit will not be realized. The Cayman
Islands has no corporate tax requirements, therefore the Company has no
tax provision for the periods. There were no significant operations in the
United Kingdom or the Netherlands that gave rise to taxable income in
these countries that would have created timing differences.
F-11
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
(k)
Derivative Instruments, Hedging and Risk Management Activities
All of the Company's derivative instruments are recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or in other comprehensive income,
depending on whether the derivative is designated as part of a hedge
transaction and, if it is, depending on the type of hedge relationship.
The ineffective portion of all hedges is recognized in current period
earnings.
(l)
Recently issued accounting pronouncements
In April 2002, the FASB issued SFAS No. 145—Recission of FASB Statements
No. 4, No. 44 and No. 64, Amendment of SFAS No. 13, and Technical
Corrections ("SFAS 145"). SFAS 145 rescinds previous accounting guidance,
which required all gains and losses from extinguishment of debt be
classified as an extraordinary item. Under SFAS 145 classification of debt
extinguishment depends on the facts and circumstances of the transaction.
SFAS 145 is effective for fiscal years beginning after May 15, 2002. The
company does not expect SFAS 145 to have a material impact on its
financial statements.
In June 2002, the FASB issued SFAS No.146—Accounting for Costs Associated
with Exit or Disposal Activities ("SFAS 146"), which is effective for exit
or disposal activities that are initiated after December 31, 2002. SFAS
146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. A
company's commitment to an exit plan, by itself, does not create a
liability. SFAS 146 also establishes that fair value is the objective for
initial measurement of the liability. The company does not expect SFAS 146
to have a material impact on its financial statements.
3
Cash and Cash Equivalents
As of December 31,
2002
2001
Cash and banks
1,226
5,241
Short-term investments
259,403
43,352
260,629
48,593
F-12
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
4
Marketable Securities
The Company classified these investments as held-to-maturity.
Non-
Foreign
Interest
Current
current
Security
Issuer
Maturity
Currency
Rate
assets
assets
Total
MARLIM 04 (*)
Marlim
2004
DOLLAR
13
%
8,179
21,129
29,308
PETRO 03
Petrobras
2003
YEN
4
%
51,907
51,907
PETRO 04
Petrobras
2004
EURO
9
%
2,370
2,370
MTN
Bear Stearns
2008
DOLLAR
18
%
10,300
10,300
MTN
Bear Stearns
2008
DOLLAR
21
%
2,500
2,500
60,086
36,299
96,385
(*)
MARLIM 04
Consist of "Medium Term Notes (MTN)" issued by Companhia Petrolífera
Marlim, a special-purpose affiliated company of PETROBRAS. The notes have
rolling maturities with the last note maturing in 2004.
5
Net Investment in direct financing leases from related party receivables
2002
2001
Gross receivables:
Floating storage and operating platforms (i)
573,510
Production equipment (ii)
258,809
208,032
Long-term lease receivables
832,319
208,032
(i)
The contracts related to the P-8, P-15 and P-32 transaction will
run for a period of 8.5 years with semi-annual payments, on a
floating interest rate based on the 6-months Libor plus a spread
of 4.25% per year. The subcharter contracts have the same terms
and conditions with the retention of a fixed annual component for
the Company. The contracts related to the P-47 contract will run
for a period of ten years, with semi-annual payments, also on a
floating interest rate based on the 6-months Libor plus a spread
of 1.995% per year, with the retention of a fixed annual
component for the Company.
(ii)
The receivables represent the present value of the minimum lease
payments. The interest associated with the lease is variable,
based upon the 6 month Libor plus mark up and a fixed annual
component. Both the interest and the fixed annual component will
be recognized when lease payments become due. The Company has no
residual value in the underlying assets recognized when lease
payments become due. The Company has no residual value in the
underlying assets.
F-13
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
6
Financing and Lease Obligations
(a)
Financing
December 31, 2002
December 31, 2001
Current
Long-term
Current
Long-term
Financing institutions (i)
367,470
460,300
540,659
385,000
Commercial paper
449,768
Senior notes (ii)
1,550,000
1,050,000
Securitization of
Receivables (iii)
900,000
900,000
Senior Exchangeable (iv)
338,416
367,470
3,248,716
990,427
2,335,000
(i)
The Company's borrowings in U.S. dollars are derived mainly from
commercial banks and include trade lines of credit and commercial
paper, which are primarily intended for the purchase of crude oil and
oil products, and with interest rates ranging from 2.96% to 5.75%.
The weighted average borrowing for short-term debt at December 31,
2002 and 2001 was 3.44% and 2.82%, respectively.
At December 31, 2002 and December 31, 2001 the Company had fully utilized
all available lines of credit for the purchase of imports.
(ii)
On May 9, 2001, the Company
completed an offering of US$450,000 9 7/8% Senior Notes due May 2008. On July 6, 2001, the Company
completed an offering of US$600,000 9¾% Senior Notes due July
2011. The Company repaid a portion of its notes payable to PETROBRAS
with the proceeds received from both offerings.
On February 4, 2002, the Company completed an offering of US$400,000 9
1/8% Senior Notes due February 2007. On February 21, 2002, the Company
also issued additional Senior Notes of US$100,000 with the same terms and
maturities as the notes issued on February 4, 2002. The Company used these
proceeds principally to finance the purchase of oil imports and to repay
short-term indebtedness.
The interest rates on these offerings are fixed with and interest being
paid semiannually. So long as any note of the issuances remains
outstanding, the Company is prohibited from creating or permitting any
lien, other than a "PIFCO permitted lien" as defined in inssuances the
prospectus, by the Company on any of the
F-14
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
Company's assets to secure additional indebtedness, except under
certain conditions. These issuances are general senior unsecured and
unsubordinated obligations of the Company and will rank equal in
right of payment with all other unsecured and unsubordinated
obligations of the Company that are not expressly subordinated in
right of payment. The failure by the Company to make required
payments of principal, interest or other amounts will compel
PETROBRAS to fulfill payment obligations.
PETROBRAS entered into standby purchase agreements in support of the
obligations of PIFCO under the issuances and their respective
indentures. PETROBRAS has the obligation to purchase from the
noteholders any unpaid amounts of principal, interest or other
amounts due under the notes and the indenture. This purchase
obligation exists, subject to certain limitations, irrespective of
whether any such amounts are due at maturity of the notes or
otherwise.
(iii)
In December 2001, in connection with the Securitization Program, a
Cayman Islands trust unrelated to PETROBRAS, PF Export Receivables
Master Trust (PF Export or the Trust), issued to PFL Senior Trust
Certificates in three series (US$750,000). The Senior Trust
Certificates represent senior undivided beneficial interests in the
property of the Trust other than the excess of any amounts remaining
after all amounts payable in respect of the Trust Certificates have
been paid in full and the Trust has been terminated. The Trust also
issued to PFL Junior Trust Certificates (US$150,000) representing
junior subordinated undivided beneficial interests in the Trust. The
Securitization Program provides PFL with the funding necessary to
purchase certain oil products (specifically heavy fuel oil and
bunker) from PETROBRAS for export.
In return for the Senior Trust Certificates and the Junior Trust
Certificates, PFL transferred to the Trustee of the Trust, U.S. Bank
National Association, Cayman Islands Branch, the right to a specified
amount of receivables to be generated from PFL's sale of oil products with
a value equal to the aggregate amount scheduled to be paid in respect of
the Senior Trust Certificates and the Junior Trust Certificates. Also in
December 2001, PFL sold the Senior Trust Certificates at face value
(US$750,000) to a group of purchasers in the international capital market.
The proceeds of the sale of the Senior Trust Certificates were transferred
to PETROBRAS as a prepayment relating to future exports to be made by
PETROBRAS to PFL, in accordance with the "Prepayment Agreement", and is
presented in the balance sheet within assets related to securitization
program.
As long as any Senior Trust Certificates or amounts payable to the
insurers that are guaranteeing the payments to the holders of
F-15
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
the Senior Trust Certificates remain outstanding, PETROBRAS is required to
export to the Company, during each quarterly delivery period, (a) at least
80% of the total volume of heavy fuel oil exported by PETROBRAS during
such period and (b) certain oil products having an aggregate value (based
upon the net invoice amount at which such products are actually sold by
PETROBRAS FINANCE) equal to, at least, the debt service requirements of
the Senior Trust Certificates multiplied by a coverage ratio. PETROBRAS
also agrees that its average daily gross exports of heavy fuel oil for any
rolling 12 month period will be equal to at least 70,000 barrels.
The rights to the future export receivables represent a liability of PFL
which will be settled with the transfer to PF Export of the export
receivables as they are generated. Upon transferring the oil products to
be exported to the Company, PETROBRAS surrenders effective control of the
products.
This liability will incur interest at the same rates of the Junior and
Senior Trust Certificates, as described below and is due as follows:
•
Principal: Monthly, beginning March 1, 2005 through December 2013
•
Interest: Quarterly, beginning March 1, 2002
As a way of guaranteeing that exported volumes over the period of
operation will be enough to support the financial obligations, a hedge
operation was contracted in order to determine a minimum price for the
crude oil in US$14/barrel.
PETROBRAS will not be relieved of its obligations to deliver the oil
products under the Securitization Program in the amounts set forth for any
reason, including, without limitation, as a result of force majeure or of
non-payment by Petrobras Finance. The total amount of US$900,000 recorded
at December 31, 2002 and 2001, as long term liabilities is as follows (the
current portion relates to accrued interest on the certificates):
Junior Trust Certificates
Senior Trust Certificates
Principal
Principal
Series
Interest rate
amount
Interest rate
amount
Series 2001—A1
6,75
%
19,000
7,8
%
95,000
Series 2001—A2
LIBOR 3 M + 1%
11,000
Libor 3 M + 2,05%
55,000
Series 2001—B
6,60
%
60,000
7,65
%
300,000
Series 2001—C
LIBOR 3 M + 0,85%
60,000
Libor 3 M + 2,10%
300,000
150,000
750,000
F-16
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
The Junior Trust Certificates are presented in the balance sheet, at face
value plus accrued interest, within the non-current asset account Assets
related to securization program and are treated as held-to-maturity
securities.
Junior Certificate Holders do not have any voting rights in respect of any
action to be taken by the Trustee or otherwise. The Junior Trust
Certificates may only be held by PFL or another wholly-owned direct or
indirect subsidiary of PETROBRAS. The principal of the Junior Trust
Certificates will be paid in whole after the latest payment for the Senior
Trust Certificates.
(iv)
On October 17, 2002, the Company issued Senior Exchangeable Notes in
U.S. dollar due October 2007 with an interest rate of 4.75% p.a. and
interest paid semi-annually.
These notes were issued in connection with PETROBRAS' purchase of a
controlling interest in Perez Companc S.A.—PECOM and the Petrolera Perez
Compac S.A. In exchange, the Company received notes issued by PIB.B.V., a
related party, in the same amount, terms and conditions as the Senior
Exchangeable Notes. The value of the notes is reflected in the non-current
asset-notes receivable (see Note 8). The Company also provided PIB.B.V.
with a loan for US$742,068, with an interest rate of 4.79% p.a. and due in
April 2003, as part of the cash payment for these acquisitions. This loan
is recorded in the current asset – notes receivable (see Note 8).
Long-term maturities:
December 31, 2002
2004
162,750
2005
20,750
2006
176,800
2007
838,416
2008
450,000
Thereafter
1,600,000
3,248,716
(b)
Lease Obligations
Platforms P-8, P-15, P-32 and P-47
On December 28, 2001 (the Closing Date), the Company entered into certain
agreements with the PB Platforms 2001 Trust and other parties in order to
refinance three operating platforms (P-8, P-15
and P-32 or the Platforms), with a total value of US$500,000. The
Platforms belonged to Brasoil and Catleia (also subsidiaries of
PETROBRAS).
F-17
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
Also, on December 28, 2001, the Company entered into certain agreements
with the PB-47 Trust and other parties in order to refinance the P-47
Floating Storage and Offloading platform, with a total value of US$180,000
(the Platform). The Platform was acquired by PIFCO from Brasoil on that
date, for US$142,000, and transferred to PB-47 Trust on August 27,2002.
Pursuant to signed Participation Agreements, certain conditions precedent
should occur on or prior to April 30, 2002, in order for the lenders to
fund the transactions. However, due to unfavorable changes in
international financial markets, there were several extensions of this
deadline resulting in the satisfaction of the conditions precedent and
Amended Participation Agreements for the P-47 Trust on August 27, 2002 and
for the PB Platforms 2001 on November 27, 2002 (each the CP Date).
The parties originally intended that upon satisfaction of the conditions
precedent, the contracts for the Platforms would be effective as of the
Closing Date. However, during negotiations, PB Platforms 2001 Trust and
PB-47 Trust and the other lenders agreed to amend the Participation
Agreements so that the contracts would become effective not on the Closing
Date, but rather as of the CP Dates.
As a result of the changes in provisions in the Amended Participation
Agreements, the present value of the future minimum lease payments of P-8,
P-15 and P-32 decreased to US$485,000. The charter contracts with PB
Platforms 2001 and PB-47 Trust will be amortized from November 27, 2002
until May 27, 2011 and from August 27, 2002 until December 28, 2011,
respectively, with semi-annual payments commencing on May 27, 2003 and
February 28, 2003, respectively, with a variable interest rate of 6-month
Libor plus 425 and 199.5 basis points of spread, respectively. The
subcharter agreements with PETROBRAS have the same terms and conditions of
the charter agreements with the retention of a fixed annual component for
the Company.
The Company began to account for the leases of the platforms as of the CP
Dates (August 27 and November 27, 2002). Accordingly, at December 31,
2002, the Company had an outstanding lease obligation to PB Platforms 2001
Trust and PB-47 Trust and lease receivables from PETROBRAS, presented as
Capital lease (Long-term liabilities) and Net investment in direct
financing leases to related party (Other non current assets). PIFCO had
also recognized lease income and expense in the amount of US$5,941 and
US$5,681, respectively, for the year ended December 31, 2002.
F-18
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
The following is a schedule by year of the future minimum lease payments at
December 31, 2002:
December 31, 2002
2003
100,140
2004
105,181
2005
100,692
2006
96,311
2007
99,888
2008
101,280
Thereafter
272,654
Estimated future lease payments
876,146
Less amount representing interest at Libor 6 M
+ 1.99% to Libor 6 M + 4.25%
(205,465
)
Present value of minimum lease payments
670,681
Less current portion
(68,948
)
Long-term portion
601,733
F-19
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
7
Commitments and Contingencies
7.1 Contingencies—Production equipment
On December 28, 2001 the Company entered into various Purchase agreements
with Brasoil for the purchase of equipment allocated to certain platforms
owned by Brasoil and Catléia. During 2002, the Company received a loan
from Brasoil to purchase equipment (from a related party and a third
party) that vary from platform to platform and have a total value of US$
487,586, including assets under construction and advances to suppliers, on
December 31, 2002. It is expected that the equipment will be leased to
Brasoil, Catléia and PETROBRAS under the terms of a Master Lease
Agreement. The execution of this agreement is contingent upon third party
lender approval to amend existing Charters for the platforms (between
Brasoil/ Catléia and PETROBRAS) to include these assets.
In order to mitigate the potential risk for the Company as a result of the
lenders' denial to execute the amendments to the existing Charter
agreements of the financed platforms, the Company, Brasoil and Catléia
executed 'Option Agreements' with respect to each platform, pursuant to
which Brasoil, Catléia and PETROBRAS irrevocably grant to the Company an
option to cause Brasoil, Catléia and PETROBRAS to purchase, for the total
amount of US$503,170 all of the equipment. This purchase option shall only
come into force if certain transaction documents, amongst which the Master
Lease Agreement and the Loan agreement have not been executed prior to
June 21, 2003.
7.2 Purchase Commitments
The Company entered into various commitments on various dates for the
purchase of production equipment totaling US$ 635,314. The equipment
purchased will become part of a Master Lease Agreement, which has not yet
been executed.
In an effort to ensure procurement of oil products for the Company's
customers, the Company currently has several contracts which collectively
obligate it to purchase a minimum of approximately 184,413 barrels of
crude oil and oil products per day at market prices.
F-20
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
8
Related Party Transactions
The Company has numerous transactions with PETROBRAS and other affiliated
companies in the ordinary course of business.
Transactions with all related parties resulted in the following balances:
BRASPETRO
PETROBRAS
OIL
PETRÓLEO
DOWNSTREAM
INTERNATIONAL
SERVICES–
BRASPETRO
BRASILEIRO
PARTICIPAÇÕES
BRASPETRO–
BRASOIL AND
OIL
S.A.–
S.A AND ITS
PIB.B. V. AND ITS
ITS
COMPANY–
PETROBRAS
SUBSIDIARIES
SUBSIDIARIES
SUBSIDIARIES
BOC
Current assets
Accounts receivable:
Mainly by sales
4,359,141
231,245
53,842
8,186
Net investment in direct
financing leases
93,201
90,417
Notes receivable (see Note 6 iv)
33,552
742,068
63,880
318,430
Marketable securities
51,906
Others
970
Other non current assets
Notes receivable (see Note 6 iv)
338,416
135,216
Export prepayment
750,000
Net investment in direct financing leases
624,676
207,643
Marketable securities
2,370
Others
3,349
Current liabilities
Trade accounts payable
120,030
4,631
126,027
39,283
Loans payable
3,194,237
494,009
3
Unearned income
47,296
1,267
[Additional columns below]
[Continued from above table, first column(s) repeated]
December 31,
December 31,
OTHERS
2002
2001
Current assets
Accounts receivable:
Mainly by sales
2,237
4,654,651
2,584,851
Net investment in direct
financing leases
183,618
Notes receivable (see Note 6 iv)
1,157,930
282,975
Marketable securities
51,906
Others
970
Other non current assets
Notes receivable (see Note 6 iv)
473,632
Export prepayment
750,000
750,000
Net investment in direct financing leases
832,319
208,032
Marketable securities
2,370
Others
3,349
Current liabilities
Trade accounts payable
2,009
291,980
288,068
Loans payable
3,688,249
334,564
Unearned income
48,563
8,318
F-21
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
The principal amounts of business and financial operations carried out with
related parties are as follows:
Years ended December 31,
2002
2001
Income
Expense
Income
Expense
Sales of crude oil
and oil products
and services
PETROBRAS
4,208,159
5,115,232
REFAP S.A.
680,460
738,943
Petrobras
America,
Inc.—PAI
467,728
6,390
BR
Distribuidora
4,508
EG3 S.A.
14,629
Cost of sales
PETROBRAS
(1,212,717
)
(95,242
)
Petrobras
America,
Inc.—PAI
(947,112
)
(1,320,822
)
Braspetro
Oil
Services
Company—BRASOIL
(55,197
)
(83,320
)
Companhia
MEGA S.A.
(158,107
)
(148,723
)
Fronape
International
Company
(34,220
)
(10,542
)
PEBIS
(1,681
)
Lease income
(expense)
PETROBRAS
22,934
(5,681
)
Braspetro
Oil
Services
Company—BRASOIL
13,128
(5,227
)
Fronape
International
Company
(13,096
)
Financial income
PETROBRAS
161,548
126,992
REFAP S.A.
8,213
14,388
Braspetro
Oil
Company—BOC
6,891
4,992
Braspetro
Oil
Services
Company—BRASOIL
5,793
3,711
Fronape
International
Company
6,792
4,744
PIB.B.V
10,726
614
Marlim
1,975
Financial expense
PETROBRAS
(55,571
)
(51,979
)
Braspetro
Oil Services Company—BRASOIL
(5,710
)
(15,422
)
5,613,484
(2,494,319
)
6,016,006
(1,726,050
)
[Additional columns below]
[Continued from above table, first column(s) repeated]
Years ended December 31,
2000
Income
Expense
Sales of crude oil
and oil products
and services
PETROBRAS
7,290,321
REFAP S.A.
Petrobras
America,
Inc.—PAI
282,961
BR
Distribuidora
EG3 S.A.
Cost of sales
PETROBRAS
(81,130
)
Petrobras
America,
Inc.—PAI
(1,260,335
)
Braspetro
Oil
Services
Company—BRASOIL
Companhia
MEGA S.A.
Fronape
International
Company
PEBIS
Lease income
(expense)
PETROBRAS
Braspetro
Oil
Services
Company—BRASOIL
Fronape
International
Company
Financial income
PETROBRAS
217,102
REFAP S.A.
Braspetro
Oil
Company—BOC
238
Braspetro
Oil
Services
Company—BRASOIL
28
Fronape
International
Company
PIB.B.V
Marlim
Financial expense
PETROBRAS
(152,940
)
Braspetro
Oil
Services Company—BRASOIL
(198
)
7,790,650
(1,494,603
)
F-22
Table of Contents
Petrobras International Finance Company
(a wholly-owned subsidiary of Petróleo Brasileiro S.A. — PETROBRAS)
Notes to Consolidated Financial Information
(Expressed in Thousands of United States Dollars)
9
Advances for future capital increase
In June 2001 and in December 2002, PETROBRAS, upon receiving approval from
the Board of Directors recommendation, converted a total of US$120,000
million of accounts receivable from PIFCo into advance for capital
increase.
10
Subsequent events
In 2003, PNBV will be sold to PETROBRAS and, on the same date, PIFCO will
acquire 100% of BEAR INSURANCE COMPANY Ltd.—BEAR from BRASOIL (related
party).
F-23