PETRÓLEO BRASILEIRO S.A. - PETROBRAS

Public Company

Material Fact

Petrobras’ Proved Reserves in 2010

Rio de Janeiro, January 14, 2011 – Petróleo Brasileiro S.A. - Petrobras, announces its proved reserves of oil, condensate and natural gas in 2010 according to the Society of Petroleum Engineers – SPE and Security and Exchange Commission – SEC criteria.

Petrobras’ Proved Reserves in 2010 (Brazil and International)

As per as ANP/SPE criteria:

On December 31st, 2010 Petrobras' Proved Reserves of oil, condensate and natural gas amounted to 15,986 billion barrels of oil equivalent (boe), an increase of 7.5% in relation to last year figures, distributed as shown:

During 2010, 1.990 billion boe were appropriated to the Proved Reserves, while 869 million boe were produced, resulting in an increase of 1.121 billion boe compared to the 2009 reserves (14.865 billion boe). The increase in Petrobras’ reserves is the outcome of the incorporation of the new areas discovered in the Pre-Salt in the Santos and Campos Basins, of the new discoveries made in the remaining Basins, and of the projects deployed in the mature fields in both the Basins in Brazil and abroad.

For each barrel of oil equivalent produced in 2010, 2.29 barrels of oil equivalent were appropriated, resulting in a Reserve Replacement Index of 229%. The Reserve/Production (R/P) ratio was 18.4 years.

According to SEC criteria:

On December 31^st, 2010, Proved Reserves were 12.748 billion boe, representing an increase of 5% in relation to 2009, distributed as shown:

During 2010, 1.472 billion boe were incorporated into Proved Reserves during 2010 and 867 million boe were produced, resulting in an increase of 0.605 billion boe in relation to 2009 reserves (12.143 billion boe). 

For each barrel of oil equivalent produced in 2010, 1.70 barrels of oil equivalent were appropriated, resulting in a Reserve Replacement Index of 170 %. The Reserve-Production Ratio was 14.7 years.

In addition to the volumes mentioned above, Petrobras has the right to produce, in pre-salt areas, 5 billion barrels of oil equivalent, acquired in 2010 with the Transfer of Rights Agreement.

Petrobras Proved Reserves in Brazil

According to ANP/SPE criteria:

On December 31st, 2010 the Proved Reserves of oil, condensate and natural gas in the fields under concession of Petrobras in Brazil amounted to 15.283 billion boe, representing an increase of 8% in relation to 2009.

During 2010, 1.911 billion boe were incorporated into Proved Reserves, with production over the same period amounting to 797million boe, as shown in the following table:

For each barrel of oil equivalent produced in 2010, 2.40 boe were incorporated into Proved Reserves, resulting in a Reserve Replacement Index (RRI) of 240%. According to SPE criteria, Petrobras' Reserve/Production (R/P) ratio in Brazil was 19.2 years.

The highlights in 2010, in terms of Proved Reserves incorporation, were:

§       Lula and Cernambi discoveries, at the Santos Basin Operational Unit – UO-BS

§       Discoveries in the Marlim and Pampo fields, at the Campos Basin Operational Unit – UO-BC; in the Barracuda, Caratinga, and Marlim Leste fields, at the Rio de Janeiro Operational Unit – UO-RIO; and in the Socorro Extensão Norte field, at the Bahia Operational Unit – UO-BA;

§       Projects designed to increase oil recovery from the Roncador, Marlim Sul, Albacora Leste, and Marlim Leste fields, at the Rio de Janeiro Operational Unit – UO-RIO; Marimbá and Maromba, at the Campos Basin Operational Unit – UO-BC, and Leste de Urucu, at the Amazonas Operational Unit – UO-AM.

§       1.071 billion boe were appropriated from the Santos Basin Pre-Salt, and 0.210 billion boe from the Campos Basin Pre-Salt as proved reserves.

According to SEC criteria:

On December 31 2010, the Proved oil, condensate, and natural gas Reserves in the fields under concession to Petrobras in Brazil rose to 12.138 billion barrels of oil equivalent (boe), 5 % more than in 2009.

During 2010, 1.372 billion boe were appropriated to the Proved Reserves, compared to a cumulative production of 797million boe, as shown below:

For each barrel of oil equivalent produced in 2010, 1.72 barrels of oil equivalent were appropriated, resulting in a Reserve Replacement Index (RRI) of 172%. The Reserve-Production ratio was 15.2 years.

Eight hundred million boe of proved reserves are being appropriated from the Santos Basin Pre-Salt, while 100 million boe of proved reserves from the Campos Basin Pre-Salt.

The main differences between the SEC and ANP/SPE estimates stem from differences in the criteria: oil valorization price and concession term.

International Proved Reserves

According to SPE criteria:

On December 31 2010, Petrobras’ Proved oil, condensate, and natural gas Reserves abroad, as per the SPE criterion, reached 0.703 billion barrels of oil equivalent (boe), 1.0% more than 2009.

During 2010, 0.079 billion boe were appropriated to the Proved Reserves, compared to a cumulative production of 72 million boe, as shown below:

For each barrel of oil equivalent produced in 2010, 1.10 barrels of oil equivalent were appropriated, resulting in the reserve reposition index of 110%. The Reserve/Production (R/P) ratio was 9.8 years.

The main reserve incorporations were made at Block 57, in Peru, and at the Saint Malo and Cascade projects, both in deep Gulf of Mexico waters.

SEC criteria:

On December 31 2010, Petrobras’ Proved oil, condensate, and natural gas Reserves abroad, as per the SEC criterion, were 0.610 billion boe, 5 % more than a year earlier (0.580 billion boe).

During 2010, 0.100 billion boe were appropriated to the Proved Reserves, compared to a cumulative production of 70 million boe, as shown below:

For each barrel of oil equivalent produced in 2010, 1.43 barrels of oil equivalent we appropriated, according to the SEC criteria the Reserve Replacement Index – RRI in 2009 was of – 143% and the Reserve/Production (R/P) ratio was 8.7 years.

The main reserve incorporation took place at Block 57, in Peru.

Petrobras clarifies that the hydrocarbon reserve properties belong to their respective National States.

Almir Guilherme Barbassa

CFO and Investor Relations Officer

Petróleo Brasileiro S.A. – Petrobras

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