Petrobras and Total advance their strategic alliance with new agreements

Rio de Janeiro, December 21, 2016 - Petróleo Brasileiro S.A.- Petrobras informs
that today it signed a Master Agreement with the French company Total, in
connection with the Strategic Alliance established in the Memorandum of
Understanding executed on 10/24/2016, as previously announced to the market.

Entering into strategic partnerships is an important part of Petrobras’
2017-2021 Business and Management Plan, as it contributes to the mitigation of
risks, the strengthening of  corporate governance and the sharing of
information, experiences and technologies, in addition to improving the
Company’s financeability through cash inflows and release of investments.

Petrobras and Total have strong similarities in the upstream segment, sharing a
relevant common base of E&P assets and the search for technological development
in similar themes.

The companies are jointly participating in 19 consortiums worldwide in
exploration and production in key projects as the giant Libra area, which is the
first production sharing contract in the Brazilian pre-salt in Santos Basin,
besides exploration areas in Equatorial Margin, Espírito Santo Basin and Pelotas
Basin. In addition, the two companies are partners in the Brazil-Bolívia gas
pipeline.

With this new agreement, the two companies will strongly reinforce their
technological cooperation in the areas of geoscience, subsea systems and joint
studies in mutual interest areas, aiming at reducing investment risks and
increasing the probability of exploratory success in the next years. The
companies will also become partners in Iara and Lapa fields, in the Santos Basin
pre-salt, and in two thermal plants, sharing the use of the regasification
terminal infrastructure located in Bahia state.

The companies also undertake to expand their joint activities outside Brazil,
with Petrobras having the option of taking a stake in the Perdido Foldbelt area
in the Mexican Gulf of Mexico.

The transaction has a global estimated value of US$ 2.2 billion including cash,
contingent payments and the carry of investments in the production development
of common assets to both companies, to be paid by Total to Petrobras and its
subsidiaries as appropriate.

The signing of the relevant Sale and Purchase Agreements (SPA) related to the
assets from this Master Agreement is subject to internal and external control
and regulatory approvals, including the Brazilian Federal Accounting Court
(TCU), potential preemptive rights from the current partners of Iara, plus other
precedent conditions. The companies have a mutual commitment to make all the
necessary effort to sign all the contracts within 60 days.

The main terms and conditions of this Agreement are as follows:

- the sale of 22.5% interest to Total, in the Iara area (Sururu, Berbigão and
Oeste de Atapu fields) in Block BM-S-11. Petrobras will remain the operator and
will keep the largest stake in that consortium, with a 42.5% interest.

-the sale of 35% interest to Total in Lapa field in Block BM-S-9, with transfer
of the operation to Total. Petrobras will have a 10% interest in this
concession.

- Petrobras’ option to enter at a 20% participation in block 2 of Perdido
Foldbelt area in the Mexican Gulf of Mexico, acquired by Total in partnership
with Exxon in the bidding round carried out by the Mexican government on
12/05/2016.

- shared use of the Bahia regasification terminal, with a capacity of 14 million
m3/day.

- partnership, with a 50% interest by Total, in the thermal plants Rômulo de
Almeida and Celso Furtado, located in Bahia, with energy generation capacity of
322 MW.

- joint studies in the exploratory areas of Equatorial Margin and in the
southern area of Santos Basin, taking advantage of the existing synergy between
the two companies, as each has outstanding geological knowledge of the oil
basins located on both shores of the Atlantic.

- technological partnership agreement in geological processing and subsea
engineering, in which the companies have complementary knowledge, which can
boost the gains from the application of new technologies in the partnership
areas.

The information below refers to the concessions established in the Agreement:


Concessions in Upstream

In the Iara concession Petrobras holds 65% interest and is the operator. Shell,
with 25%, and Galp with 10%, are partners in this area, which is part of Block
BMS-11. The reservoirs of this concession have higher complexity and are in the
production development phase. The partnership with Total in this area will bring
benefits such as release of investments and new technological solutions for its
development, maximizing profitability and the volume of oil to be recovered.

The limits of this consortium extend into the Entorno de Iara area, from the
Transfer of Rights agreement, in which Petrobras holds 100% interest. The fields
Berbigão, Sururu and Oeste de Atapu must celebrate Individualization Production
Agreements (unitization) with this area of the Transfer of Rights.

In the Lapa field Petrobras holds 45% interest and is the operator. Shell, with
30%, and Repsol with 25%, are partners in this field, which is part of BM-S-9
block. The development of the Lapa field is at an advanced stage, with the
recent start of production, as announced on 12/20/2016, and presents geological
characteristics and oil quality different from other pre-salt fields. Total, as
future operator of this field, will bring benefits to the consortium, by
incorporating its experience and knowledge in the continuity of its development
plan.

The technological partnerships in the Iara and Lapa areas will develop and apply
certain subsea technologies in a pioneering way in Brazil. The efforts to reduce
risks and increase the probability and the success in exploration will rely on a
4D seismic application in the context of carbonate reservoirs, with specific
studies on CO2 migration and geomechanical studies, in addition to the
development of a methodology for the construction of models to support
investment decisions.


Gas & Energy Concessions

In the case of the G&E area, Petrobras and Total are forming an innovative
partnership in the Brazilian thermal market. The initiative is aligned with the
strategies of Petrobras for the Gas and Energy segment in 2017-2021 Business and
Management Plan, which establishes the restructuring of the Energy Businesses
and the maximization of the value creation in the gas chain. This vision
considers a regulatory evolution, that is already under discussion with
Brazilian federal authorities, forecasting an improvement of the procurement
rules, access to pipeline network and LNG regasification terminals.

The partnership with Total includes two thermal plants (Rômulo Almeida and Celso
Furtado), connected to the Regasification Terminal located in São Francisco do
Conde, in Bahia.

Facts deemed relevant will be timely communicated to the market.

______________________________________________________________
www.petrobras.com.br/ir
Contacts:
PETRÓLEO BRASILEIRO S.A. – PETROBRAS | Investor Relations Department I e-mail:
petroinvest@petrobras.com.br
Av. República do Chile, 65 – 10th floor, 1002 – B – 20031-912 – Rio de Janeiro,
RJ | Phone: 55 (21) 3224-1510 / 3224-9947

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