Petróleo Brasileiro S.A. - Petrobras Stock

Petróleo Brasileiro S.A. — Petrobras operates as an energy company with a focus on oil and gas.

The company is one of the largest producers of oil and gas in the world, primarily engaged in exploration and production, refining, energy generation and trading. The company has a large proven reserve base and has acquired expertise in deep and ultra-deepwater exploration and production since the company started exploring Brazilian offshore basins decades ago, following the company’s first subsea well in the Campos Basin. To discover these reserves and operate efficiently in deepwaters, the company has developed the company’s own technology and work in close collaboration with suppliers, universities, and research centers.

The company hires specialized services, such as offshore drilling rigs, production platforms, subsea vessels, and subsea hardware that set the entire energy industry chain into motion. The company designs and contracts engineering, procurement, construction and installation (‘EPCI’) for the company’s entire business stream.

The company has a large base of proved reserves and operates and produces most of Brazil’s oil and gas. The most significant part of the company’s proved reserves is located in the adjacent offshore Campos and Santos basins in southeast Brazil.

The company operates the majority of the refining capacity in Brazil. The company’s refining capacity is substantially concentrated in southeast of Brazil, within the country’s most populated and industrialized markets and adjacent to the sources of most of the company’s crude oil, in the Campos and Santos basins. The company meets its demand for oil products through a planned combination of domestic refining of crude oil and oil products imports, seeking value creation. The company is also involved in the production of petrochemicals through stakes in some companies. The company distributes oil products through wholesalers and retailers.

The company also participates in the Brazilian natural gas market, including the logistics and processing of natural gas.

To meet the domestic demand, the company processes natural gas derived from the company’s onshore and offshore production (mainly from fields of the Campos, Espírito Santo and Santos Basins), imports natural gas from Bolivia, and imports liquefied natural gas (‘LNG’) through the company’s regasification terminals. The company also participates in the domestic power market primarily through its investments in gas-fired thermoelectric power plants.

The company divides its business into three main segments:

Exploration and Production (‘E&P’): This segment covers the activities of exploration, development and production of crude oil, natural gas liquids (‘NGL’) and natural gas in Brazil and abroad, for the primary purpose of supplying the company’s domestic refineries. The E&P segment also operates through partnerships with other companies, including holding interests in non-Brazilian companies in this segment.

Refining, Transportation and Marketing (‘Refining’ or ‘RTM’): This segment covers the activities of refining, logistics, transport, marketing and trading of crude oil and oil products in Brazil and abroad, exports of ethanol, petrochemical operations, such as extraction and processing of shale, as well as holding interests in petrochemical companies in Brazil.

Gas and Power (‘G&P’): This segment covers the activities of logistics and trading of natural gas and electricity, transportation and trading of LNG, generation of electricity by means of thermoelectric power plants, as well as holding interests in transportation and distribution companies of natural gas in Brazil and abroad. It also includes natural gas processing and fertilizer operations.

In 2022 the company had activities in six countries besides Brazil (i.e., Argentina, Bolivia, Colombia, the U.S., the Netherlands, and Singapore).

In Latin America, the company’s operations include upstream, marketing and retail services. In North America, the company produces oil and gas through a joint venture. The company has subsidiaries that support its trading and financial activities in Rotterdam, Houston, and Singapore. These companies act as complete and active trading desks for markets worldwide, and are responsible for market intelligence and trading of oil, oil products, natural gas, commodity derivatives and shipping.

The company operates through 17 direct subsidiaries (15 incorporated under the laws of Brazil and two incorporated abroad) and one direct joint operation. The company also has indirect subsidiaries, including Petrobras Global Trading B.V. (‘PGT’), Petrobras Global Finance B.V. (‘PGF’), Petrobras America Inc. (‘PAI’) and PNBV.

Exploration and Production segment

The company’s oil and natural gas exploration and production activities are the major components of the company’s portfolio and include offshore and onshore exploration, appraisal, development, production and incorporation of oil and natural gas reserves, producing oil and natural gas in a safe and profitable way.

The company’s activities are focused on deepwater and ultra-deepwater oil reservoirs in Brazil, which accounted for 92% of the company’s total production in 2022. The company also has activities in mature fields in shallow waters and onshore, as well as outside Brazil. Brazilian exploration and production assets represent 90% of the company’s worldwide blocks and fields, 99% of the company’s global oil production and 99.5% of the company’s oil and natural gas reserves.

The company has 245 blocks and fields in exploration and production, including 87 consortia with other oil and gas companies in Brazil and other countries.

Like most major oil and gas companies, the company operates in partnerships using E&P consortia in the exploration of blocks and the production of oil fields in Brazil, mainly in ultra-deepwaters.

The company leads and operates E&P consortia that are responsible for some major projects under development, such as Mero (Petrobras 38.6%, Shell 19.3%, TotalEnergies 19.3%, CNODC 9.65%, CNOOC 9.65% and PPSA 3.5%), Atapu (Petrobras 65.7%, Shell 16.7%, TotalEnergies 15%, Petrogal 1.7% and PPSA 0.9%), Búzios (Petrobras 88.99%, CNOOC 7.34% and CNODC 3.67%) and Sepia (Petrobras 55.3%, TotalEnergies 16.91%, QatarEnergy 12.69%, Petronas 12.69% and Petrogal 2.41%).

These E&P consortia also comprise some of the biggest production fields in Brazil, such as Tupi (Petrobras 65%, Shell 25%, Petrogal 10%), Sapinhoá (Petrobras 45%, Shell 30%, Repsol Sinopec 25%), Roncador (Petrobras 75%, Equinor 25%), Tartaruga Verde (Petrobras 50%, Petronas 50%) and Berbigão and Sururu (both with Petrobras 42.5%, Shell 25%, TotalEnergies 22.5% and Petrogal 10%).

Other Basins

The company produces oil and gas and hold exploration acreage in 10 other basins in Brazil. The most significant potential for exploratory success of these other basins is within the Equatorial Margin.

International

Outside Brazil, the company has activities in South America and North America. The company has focused on opportunities to leverage the deepwater expertise the company has developed in Brazil. However, since 2012 the company has been substantially reducing its international activities through the sale of assets in accordance with the company’s portfolio management.

South America

The company conducts exploration and production activities in Argentina, Bolivia and Colombia.

In Argentina, through the company’s subsidiary, Petrobras Operaciones S.A., the company has a 33.6% working interest in the Rio Neuquen production asset. The company’s unconventional gas and Condensate production is concentrated in the Neuquen Basin. In 2022, the company’s production of oil and gas in Argentina, including NGL, was 9.7 mboed.

In Bolivia, the company produces gas and Condensate primarily in the San Alberto and San Antonio fields with 35% working interest in each of those service operation contracts, which are operated mainly to supply gas to Brazil and Bolivia. In 2022, the company’s production of oil and gas in Bolivia, including NGL, was 18.03 mboed. The return on such contracts is a proportion of the production.

In Colombia, the company operates and holds a 44.44% working interest in the Tayrona offshore exploration block, which includes the Uchuva gas discovery.

North America

In the United States, the company focuses on deepwater fields in the Gulf of Mexico, where the company has non-consolidated production from the 20% participation of Petrobras America Inc. (‘PAI’) in the company’s joint venture with Murphy Exploration & Production Company (‘Murphy’), the MPGOM LLC. The main production fields are Chinook, Saint Malo and Dalmatian. In 2022, the company’s 20% participation represented a production of 8.9 mboed, including NGL.

Exploration Activities

As of December 31, 2022, the company had 68 exploratory blocks (including 28 with 100% working interest), that had three discoveries in 2022 (in the Sepia Coparticipated Area, in the Alto de Cabo Frio block and in the Tayrona block). The company serves as the operator in 30 of the exploration partnership blocks.

Santos Basin

The Sepia Transfer of Rights (ToR) Surplus Consortium confirmed an oil discovery in the northwestern part of the Sepia Coparticipated Area. The well is located 250 km south of the city of Rio de Janeiro, under a water depth of 2,197 meters. The company is analyzing the oil-bearing interval, but the net oil column is one of the thickest ever recorded in Brazil. The consortium will continue operations to characterize the reservoirs’ conditions of the reservoirs found and verify the extent of the discovery.

The Sepia Coparticipated Area composed of comprises the Sepia block and the Sepia ToR Surplus. The Sepia ToR Surplus was purchased by a consortium comprising Petrobras (Operator), TotalEnergies, QatarEnergy, and Petronas, with Pre-Sal Petróleo S.A. (PPSA) as manager.

The company is evaluating the results in the Três Marias block. The company is the operators of the consortium, with Shell and Chevron.

Campos Basin

The company confirmed a discovery of a pre-salt reservoir in the Alto de Cabo Frio block in the southern portion of the Campos Basin. The wildcat well was drilled in Alto de Cabo Frio Central Noroeste. The new discovery, announced on April 1st, is located 230 km away from the city of Rio de Janeiro-RJ, in a water depth of 1,833 meters. The test hick interval of pre-salt carbonate reservoir rocks and confirmed good productivity. The consortium will continue operations to characterize the conditions of the reservoirs found and verify the extent of the discovery.

The company is the operators of consortium with BP and Equinor, and the company is evaluating the ’results of the well.

Espírito Santo Mar Basin

In the Espírito Santo Basin, the company is evaluating the results of the prospect Andurá. The company is the operators and sole owners of the exploratory block ES-M-596.

Colombia

The discovery of natural gas accumulation was confirmed in the Uchuva-1 exploratory well, drilled in the deepwaters of Colombia, 32 kilometers off the coast and 76 kilometers from the city of Santa Marta, in a water depth of approximately 830 meters.

The Uchuva-1 well was drilled in the Tayrona Block, with Petrobras as the operator of the consortium (44.44% work interest), in partnership with Ecopetrol, with 55.56% work interest.

The consortium will continue its activities in the Tayrona Block, aiming to assess the dimensions of the new gas accumulation.

Production

Production Development

The company continue to achieve optimizations by implementing strategic well construction programs, which enable the application of new drilling and completion technologies, innovative well configurations, campaign optimization, and supply chain integration.

The company continues to implement initiatives, such as expanding the supplier base to develop special tools and flexible pipes immune to the effect of corrosion.

The company invests in technological solutions combined with the transition to a low-carbon global economy, focusing on reducing greenhouse gas emissions.

The company has installed several major systems, mainly in the Santos Basin pre-salt area, which helped mitigate the Santos Basin’s natural decline. In 2020, the company started the P-70 platform, located in the Atapu field. In 2021, the FPSO Carioca started operations in the Sepia field and in 2022 the FPSO Guanabara started up as the first definitive system in the Mero field. In the end of 2022, the P-71 started operation in the Itapu Field. Those four new systems added new 24 wells (14 production and 10 injection wells) into the company’s production systems.

In 2022, the P-68 platform, in the Berbigão and Sururu field, reached its full capacity of 152 mbbl/d in June and the daily production record of 161 mbbl/d in October, above nominal capacity due to the optimizations achieved in the production plant. The FPSO Carioca continued in production ramp up in 2022 and reached production of 175 mbbl/d with the fourth producing well start up.

In January 2023, the Guanabara platform reached its maximum production capacity, with the mark of 180 mbbl/d, about eight months after the unit started operating. The FPSO Guanabara achieved this result with four producing wells and three gas injectors.

In 2022, the company’s producing platforms had a daily production of 2.15 million barrels of oil and 2,989 million cubic feet of natural gas (discounting the liquefied volume). In 2022, the company owned 39 and leased 17 offshore producing platforms. Besides these offshore platforms, there are five storage and offloading units, totaling 61 active platforms.

Considering that the P-71 started operating in December 2022, earlier than planned, the company expects to install four more FPSOs in 2023: the FPSO Anna Nery and the FPSO Anita Garibaldi in the Marlim field, the FPSO Almirante Barroso in the Búzios field and the FPSO Sepetiba in the Mero field. The company also expects to install 17 new FPSOs in the next five years.

Decommissioning

In 2022, the company obtained approval from Brazilian regulatory bodies to remove the FPSO Capixaba in the Jubarte field.

Critical Resources in Exploration and Production

Since 2008, the company has grown from three rigs capable of drilling in waters with depth greater than 2,000 meters (6,560 feet) to 18 rigs with this capacity as of December 31, 2022. The company will continue to evaluate its drilling and special vessel demands and intend to adjust the company’s fleet size as needed.

As of December 31, 2022, the company had 17 PLSVs (Pipe Laying Support Vessels). In 2022, the company delivered more than 2.2 million tons of materials and transported over 800,000 passengers to the company’s platforms all over the Brazilian coast. To accomplish these results, the company also has a secure number of supply vessels (such as Platform Supply Vessels or ‘PSV’) and helicopters. As of December 31, 2022, the company had 78 PSV and 67 helicopters and both the company’s fleets were sufficient to meet the company’s needs.

Mero Field

Libra Block and Mero Field

The Mero field is a world-class field located in the Santos Basin ultra-deepwaters (water depth 2,100 meters), 180 km from the coast of Rio de Janeiro State and inside Brazilian pre-salt province. It has a high productivity reservoir filled with a large volume of high-quality oil. It is a thick reservoir (oil columns reaches 420 meters), with high productivity and filled with a large volume of high-quality oil (29° API). In addition, the associated challenges for project development are also noteworthy, considering the high gas/oil ratio (420 std m³/std m³) and CO2 content in the associated gas (44%), water depth (2,100 meters) and distance from the coast (180 km).

In 2013, the consortium the company formed with Shell Brasil, TotalEnergies, CNODC and CNOOC Limited won the bid to explore and develop the Libra block for 35 years. The consortium also has the participation of the state-owned enterprise Pre-Sal Petróleo - PPSA, which operates as a contract manager. On November 30, 2017, the company announced the submission of the Declaration of Commerciality regarding oil accumulations in the northwestern portion of the Libra block, subsequently named Mero.

On December 9, 2021, ANP approved Mero accumulation's Production Individualization Agreement (‘AIP’). The AIP occurs when the reservoirs extend beyond the areas granted or contracted, as regulated by ANP. The agreement became effective on January 1, 2022.

Under the terms of the AIP, the Mero Joint Reservoir comprises two areas, namely the Mero field area (as defined in the PSC from LIBRA-P1 consortium), representing 96.50% and the adjacent area (Brazilian federal government, represented by PPSA), representing 3.50%.

The agreement establishes the stakes of each party and the rules of joint execution for the operations to develop and produce oil and natural gas in the joint reservoir. The stakes of each party in the Mero Joint Reservoir were then updated as follows: Petrobras with a 38.60% stake, Shell Brasil with a 19.30% stake, TotalEnergies with a 19.30% stake, CNODC with a 9.65% stake, CNOOC Limited with a 9.65% stake and Pre-sal Petróleo – PPSA, representing the Brazilian Government, with a 3.50% stake.

Project Development

The start of production (first oil) occurred in 2017, within the Early Production System (‘EPS’) campaign, using two wells (one producer and one injector) and the chartered unit FPSO Pioneiro de Libra, which has a capacity of 50 mbbl/d of oil and four million m³/day of gas.

So far, two EPSs are already concluded, and both used the FPSO Pioneiro de Libra, which was anchored for two years in each location. The combined EPSs have already produced a cumulative production of almost 54 mmbbl of oil, with a peak of 52 mbbl/d from one single well. Moreover, associated gas production accounted for over 3.6 billion m³ of gas, of which 12.1% were consumed for FPSO power generation, and approximately 86.7% were reinjected in the reservoir along with almost 1.3 million m³ of CO2.

The production arrangement for the Mero field comprises the already operating FPSO Guanabara and the units FPSO Sepetiba, FPSO Marechal Duque de Caxias and FPSO Alexandre de Gusmão. Each FPSO (charted unit) will be able to process up to 180 mbbl/d and 12 million m³ of gas daily.

The FPSO Guanabara started operating in April 2022. Per the company’s Strategic Plan, FPSO Sepetiba production is expected to begin operating in 2023, FPSO Marechal Duque de Caxias in 2024 and FPSO Alexandre de Gusmão in 2025.

The current estimate for Mero field is a return of over three billion bbl of oil recovery until 2048, with an annual production peak of 600 mbbl/d.

FPSO Guanabara Production

In April 2022, the company started producing oil and natural gas in the Mero 1 field through the operations of the FPSO Guanabara, the first definitive production system installed in the Mero field, producing oil and natural gas from the Mero field — it 1 area.

The FPSO Guanabara unit was built and operated by Modec and it is located more than 150 km off the coast of the state of Rio de Janeiro in water depths that reach 1,930 meters.

The FPSO Guanabara unit is capable of processing up to 180 mbbl/d and 12 million m3/d of gas, which represents 6% of the production operated by Petrobras.

The FPSO Guanabara unit is equipped with gas re-injection systems, in which the gas production with 45% CO2 content, after self-consumption in the FPSO, is all re-injected into the reservoir to maintain pressure and improve oil recovery, in addition to reducing the release of CO2 into the atmosphere.

From April to December 2022, eight months after operations start-up, FPSO Guanabara achieved the platform nominal capacity for oil production (180 mbbl/d). Moreover, the unit has already produced a cumulative production of almost 20.8 mmbbl of oil, with a production of 1.3 billion m³ of gas, from which 13.8% were consumed for FPSO power generation, and 80.3% were reinjected in the reservoir, along with 444 million tons m³ of CO2.

Production

In 2022, the company’s total production of oil and gas, including NGL, was 2,684 mboed, of which 2,648 mboed were produced in Brazil, and 37 mboed were produced abroad.

The company’s 2022 operating performance was partially leveraged by the ramp-up of new production systems in the Itapu and Mero fields.

The company’s production in the pre-salt layer reached 1,635 mbbl/d in 2022. In 2022, the oil production in the pre-salt layer represented 76% of all oil production in Brazil.

Oil and Gas Production

The company produced 84.6 million m3/d of gas in 2022. From that volume, the company used 51.3 million m3/d in its production processes (reinjected, flared, consumed, and liquefied) and allocated 33.3 million m3/d for sale.

MERO

The AIP of the Mero accumulation, located in the Santos Basin, was approved by ANP in December 2021.

The Mero joint reservoir comprises:

Libra Production Sharing Contract: operated by the company (40%) in partnership with Shell (20%), TotalEnergies (20%), CNPC (10%), CNOOC (10%) and PPSA; and

Sul de Mero and Norte de Mero, non-contracted areas, which belong to the Brazilian federal government, represented by PPSA.

ATAPU

The AIP of Atapu accumulations, located in the Santos Basin, was approved by ANP in September 2019, and an amendment was approved by ANP in April 2022 to include the Production Sharing Contract.

The Atapu joint reservoir comprises:

Oeste de Atapu concession contract operated by the company (42.5%), in partnership with Shell (25%), TotalEnergies (22.5%), and Galp (10%);

Atapu (Transfer of Rights Surplus), operated by the company (52.5%), in partnership with Shell (25%), and TotalEnergies (22.5%);

Atapu (Transfer of Rights Agreement), operated by the company, and where the company holds 100% of the participating interest; and

Norte de Atapu - Non-contracted area, which belongs to the Brazilian federal government, represented by PPSA.

SEPIA

The AIP of Sepia accumulations, located in the Santos Basin, was approved by ANP in September 2019 and an amendment was approved by ANP in April 2022 to include the Production Sharing Contract.

The Sepia joint reservoir comprises:

BM-S-24 (Sepia Leste), concession contract operated by the company (80%), in partnership with Galp (20%); and

Sepia (Transfer of Rights Surplus), operated by the company (30%), in partnership with TotalEnergies (28%), Petronas (21%), and QP Brasil (21%); and

Sepia (Transfer of Rights Agreement), operated by the company (where the company holds a 100% stake).

BÚZIOS AND TAMBUATÁ

In November 2019, the company, in partnership with CNODC and CNOOC, obtained the rights to explore the surplus volumes of Búzios field.

The Production Sharing Regime in Búzios became effective in September 2021. In 2022, the company transferred 5% of its interest in the Transfer of Rights Agreement Surplus, to CNOOC. This transaction was effective as of December 1, 2022.

Búzios has also a reservoir that communicates with Tambuatá field. The unitization agreement was submitted to the ANP and is pending approval.

The participating interest of each party in the Búzios joint reservoir are 99.36% - Búzios field; and 0.64% - Tambuatá field operated by the company with a 100% interest.

Tartaruga Verde

The concession contract BM-C-36 has two producing reservoirs: the Tartaruga Verde reservoir, which is totally contained within the ring fence limits, and the Tartaruga Mestiça reservoir, which goes beyond the ring fence limits.

The company fully acquired the area of the limits of the concession BM-C-36 in December 2018 through the block named Sudoeste de Tartaruga Verde (Production Sharing Regime). In December 2018, the company declared the commerciality of the portion of the Tartaruga Mestiça shared reservoir that is off the limits of the concession BM-C-36, from then on named Tartaruga Verde Sudoeste.

The AIP of the Tartaruga Mestiça shared reservoir was signed between the company and PPSA and has been in force since March 2018.

In January 2021, the ANP approved an amendment to the AIP, at which point the following percentages for the division of the deposit (participation interest) became effective: Tartaruga Mestiça (Concession Contract): 82.19% and Tartaruga Verde Sudoeste (Production Sharing Contract): 17.81%.

In December 2019, the company assigned to Petronas 50% of its participating interest of the Tartaruga Verde Fields (BM-C-36) and Espadarte Module III. The company also established a consortium with Petronas, pursuant to which the company carries out operator activities in aforementioned operations. The Tartaruga Verde Sudoeste Field, under the Production Sharing Agreement, remained entirely with the company.

Sapinhoá

In 2000, the company, YPF Brasil Ltda (YPF) and BG E&P Brasil LTDA (BG), entered into an agreement to create the BM-S-9 consortium, and the BM-S-9 concession contract was signed in September 2020. YPF and BG participating interests were later acquired by Repsol and Shell, respectively.

In September 2011, the consortium informed ANP that Sapinhoá field could extend to a non-contracted area.

The ANP approved the AIP of Sapinhoá Field shared deposit, located in the Santos Basin, in January 2016.

In October 2017, the same consortium acquired the rights to produce in the extended area of Entorno de Sapinhoá (composed of Sudoeste de Sapinhoá, Noroeste de Sapinhoá, and Nordeste de Sapinhoá). The Production Sharing Contract related to such area was signed in January 2018.

Main Production Fields

Búzios field

The Búzios field started production in April 2018 under the Transfer of Right Contract (ToR) and, on December 31, 2022, reached a total accumulated production of 837 mmboe under the co-participation agreement.

The Búzios field is an asset with significant reserves, high productivity wells, light oil, low lifting costs and low emissions. It is economically resilient to a low oil price scenario.

In 2019, the company acquired 90% of the exploration and production rights of the surplus volume of the ToR of the Búzios field, in a partnership with Brasil Petróleo e Gás Ltda. (‘CNODC’) and CNOOC Petroleum Brasil Ltda. (‘CNOOC’), each with 5%. This acquisition is consistent with the company’s strategy of focusing the company’s investments in assets.

In March 2020, the company entered into the Production Sharing Contract for the surplus of the ToR of the Búzios area, with CNOOC and CNODC as private partners and Pre-Sal Petróleo S.A (PPSA) as its manager.

The co-participation agreement, which regulates the coexistence of the Transfer of Rights Agreement and Production Sharing Contract for the surplus of the ToR, was approved by ANP on August 12, 2021. From September 1, 2021 to November 30, 2022, the company had a 92.6594% participation interest in the Búzios/Tambuatá shared reservoir and CNOOC and CNODC each have a 3.6703% interest.

In September 2021, CNOOC expressed its interest in exercising the option to purchase an additional share of 5% in the Production Sharing Contract of the ToR Agreement Surplus. This purchase option was already provided for in the contract signed with the partners in the bidding of the surplus volume to the Transfer of Rights Agreement of the Búzios field, held on November 6, 2019.

The FPSO Almirante Tamandare, a chartered unit that will become the field’s sixth production system, had its charter agreement signed in October 2021 and is expected to start production in 2024. In addition, P-78, P-79, P-80, P-82 and P-83, five platforms that the company will own and for which construction contracts were signed in 2021 and 2022, are expected to start production in 2025, 2026 and 2027. In June 2022, the Búzios shared reservoir reached a monthly record of the 616 mbbl/d production mark due to good operating results.

In January 2023, ANP approved the Búzios Development Plan submitted in 2021 by the consortium, and extended the Tambuatá concession until March 2055.

Until October 2022, the company had oil shale mining operations in São Mateus do Sul, in the Paraná Basin, in Brazil, in which kerogen (solid organic matter) from these deposits was converted into synthetic oil and gas. This operation was carried out in an integrated facility and its final products were fuel gas, liquefied petroleum gas (‘LPG’), shale naphtha and shale fuel oil. The company sold this asset in November 2022 as part of the company’s divestment project. The new operator, Forbes and Manhattan, took over the asset, but the company continues to operate under a transition agreement that could last up to 15 months from the date of the sale.

Customers

The company sells oil through long-term and spot-market contracts, and in 2022, the crude oil volume committed through long-term contracts with fixed quantity subject to final agreement on commercial terms was approximately 141 mbbl/d.

The company’s overseas portfolio includes approximately 37 clients, such as refiners that process or have processed Brazilian oils regularly, distributed throughout China, the Americas, Europe, and other countries in Asia.

In 2022, the company has primarily exported low sulfur fuel oil to several destinations. In response to the conflict between Russia and Ukraine, the company has also developed a new marketing approach for the company’s high sulfur fuel oil concentrating the sales in the U.S. Gulf Coast as a replacement for the Russian fuel oil that has been excluded from this market as a result of sanctions imposed on Russia.

The company’s fuel oil is also available in the major hubs in the market, such as Singapore, Arab Gulf (AG), the Mediterranean and Northwest Europe, the west coast of Africa, Panama and the Caribbean. The company’s counterparties list consists of major companies, trading companies and barging companies. The company has sold fuel oil to more than 40 different companies this year.

Refining, Transportation and Marketing segment

The company processed 70% of all its oil production, which includes oil and LNG and excludes Natural Gasoline (‘C5+’), in the company’s refineries. The remainder was exported. In 2022, the company produced 1,743 mbbl/d of oil products, from the processing of Brazilian oil (90% of feedstock) and imported oil (10% of feedstock). The company traded these oil products both in Brazil and abroad.

Furthermore, the company operates in the petrochemical sector with interests in companies, as well as in the production of biofuels through the company’s wholly owned subsidiary, Petrobras Biocombustível S.A. (‘PBIO’).

The company owns and operates 11 refineries in Brazil, with a total net crude distillation capacity of 1,851 mbbl/d, disregarding REMAN, whose sale was completed in November 2022. Until November 2022, the company also owned and operated REMAN refinery with a capacity of 46 mbbl/d. Most of the company’s refineries are located near the company’s crude oil pipelines, storage facilities, refined product pipelines, and major petrochemical facilities, easing access to crude oil supplies and end-users.

The company also operates a large and complex infrastructure of pipelines and terminals, and a shipping fleet to transport oil products and crude oil to Brazilian and global markets. The company operates 38 of its own terminals through the company’s wholly-owned subsidiary Petrobras Transporte S.A. (‘Transpetro’), and the company has contracts for the use of some of the storage capacity of 19 third-party terminals.

The company’s Refining, Transportation and Marketing also include activities, such as petrochemicals and production of biofuels.

In June 2019, the company signed a commitment with CADE, which consolidates its understanding on the execution of divestment of refining assets in Brazil. The purpose of the agreement is to provide competitive conditions, encouraging new economic agents to enter the downstream market, as well as suspending CADE’s court administrative investigation related to the alleged abuse of the company’s dominant position in the refining segment. The agreement considered the divestment of approximately 50% of the company’s refining capacity as of the date of the agreement, which at such time comprised seven refining units (REMAN, LUBNOR, RNEST, RLAM, REGAP, REPAR and REFAP) and a shale industrialization unit (SIX).

As of December 31, 2022, the company had already divested from the RLAM and REMAN refineries and the shale unit SIX.

In January 2022, the company signed an agreement for the sale of the company’s stake in the Potiguar Cluster, which includes, among its assets, the AIG (Former RPCC). Until the conditions precedent are met, and the transaction is closed, the company will continue to operate the assets.

In May 2022, the company signed an agreement with Grepar Participações Ltda, for the sale of the company’s shares of a new company that will be formed by LUBNOR and its associated logistics. The transaction is subject to the satisfaction of conditions precedent, such as approval by the CADE. Until the conditions precedent are met and the transaction is closed, the company will maintain the regular operations of the refinery and all associated assets.

In June 2022 the company announced the start of a new divestment process for the REPAR, RNEST and REFAP refineries.

In November 2022, the company ended REGAP´s divestment bidding process, and the sale was not concluded since the terms of the presented proposal did not meet the company’s economic and financial evaluation.

RefTOP - World Class Refining Program

In May 2021, the company launched the RefTOP Program - World Class Refining – with the intention of being among the best oil refining companies in the world. The RefTOP Program consists of a set of initiatives that seek to improve reliability, productivity, operational and energy performance, comprising five refineries (REDUC, RECAP, REPLAN, REVAP and RPBC).

In 2022, eight of the company’s 11 refineries (including REMAN) have reached Solomon’s first quartile for North American Operational Availability. The company has been focusing on analytics solutions, consistently promoting the integration of maintenance, inspection, engineering, and operation systems, allowing for more accurate diagnoses, less time for decision-making and reduction of equipment failures through the prediction of anomalous behavior. At REPLAN, the company completed the connection to the high voltage electrical grid, improving the reliability of its electrical system.

The company improved its Digital Twins models, based on Process Simulation Software, to account for all important process and energy variables, and economic aspects.

At the five refineries of the Program (RPBC, RECAP, REPLAN, REVAP and REDUC), the company implemented new projects and a series of OPEX opportunities to increase energy efficiency, which led to a consistent reduction in GHG emissions intensity, energy intensity, flaring emissions, and natural gas consumption. The GHG emissions intensity has fallen from 38.2 kgCO2e/CWT in 2021 to 36.6 kgCO2e/CWT in 2022, while energy intensity has decreased from 109.7 in 2021 to 105.4 in 2022. The company’s natural gas consumption has been consistently decreasing in all the company’s refineries: the RefTOP Program contributed to reducing the company’s consumption by 1 million m³/day or 6% in 2022 compared to the previous year while maintaining production levels. The company’s targets for refining are 36kgCO2e/CWT and 89, respectively, for GHG emissions and energy intensity by 2025.

Refining

The company serves its oil products clients in Brazil through a coordinated combination of oil processing, importing and exporting that according to the company’s pricing policy seeks to optimize the company’s margins, considering different opportunity costs of domestic and imported oil, oil products in the different markets, as well as the costs of related transport, storage and processing.

In 2022, the company processed 1,662 mbbl/d of oil in the company’s 11 refineries and REMAN (until its sale in November 2022). The following graphs show the processed feedstock and the performance of the company’s refineries.

Logistics

The company directly manages some assets of this system, while the company contracts others with its wholly owned subsidiary Transpetro.

Transpetro is a logistics company that performs operations for storing and handling oil and its derivates, ethanol, gas, and biofuels for the supply of Brazilian industries, thermoelectric plants and oil refineries, including import and export activities.

Fuel Theft In Onshore Pipelines

2022 was marked by the integration between Petrobras and Transpetro in the fight against pipeline fuel theft, also known as illegal tapping. This partnership resulted in actions that ensured the company’s commitment to life, the environment, and operational safety.

In 2022, the company strengthened the relationship with Brazil’s public security forces, tightened ties with neighboring communities in the company’s pipeline bands by expanding awareness and social projects and invested in technological tools improvement, aiming at greater effectiveness in avoiding illegal tapping.

Marketing

Diesel

In the fourth quarter of 2022 the company reached a record for low-sulfur S-10 diesel sales with low-sulfur S-10 sales representing 60.3% of the total diesel sales.

The record share of S-10 Diesel as it relates to total diesel sales reflects the commercial and operational actions that the company has implemented in order to meet the Brazilian domestic demand for the product with lower sulfur content, replacing the S-500 Diesel.

Gasoline

In 2022, the ‘gasoline A’ sold by the company represented around 41% of the total Brazilian Cycle-Otto market.

LPG (Liquefied Petroleum Gas)

The drop in LPG sales in 2022 was mainly associated with the divestment of the RLAM refinery.

Jet Fuel

The main factor behind the rise of sales in 2022, despite the divestment of the RLAM refinery, was the recovery of the aviation post-Covid-19, especially in the domestic segment.

Fuel Oil

In 2022, the main factor for the significant sales shrinkage were the divestment of the RLAM refinery and, most of all, the fact that there were sales for thermoelectric generation only in January.

Naphtha

The rise in naphtha sales in 2022 was mainly associated with the additional sales of naphta to Braskem.

Besides oil and oil products, the company also trades natural gas, nitrogen fertilizers, renewables and other products.

Imports, Exports, and International Sales

The company’s import and export of crude and oil products are driven by economic factors involving the company’s domestic refining, the Brazilian demand levels and international prices. Most of the crude oil the company produces in Brazil is classified as medium API gravity. The company imports some light crude oil to balance the slate for its refineries, and exports mainly medium crude oil from its production in Brazil. In addition, the company continues to import oil products to fulfill its contracts in order to balance any shortfall between production from the company’s Brazilian refineries and the market demand for each product.

The company’s crude oil, oil products and LNG trading activities aim to meet the company’s internal demands or potential businesses opportunities identified by the company’s commercial teams, seeking to optimize the buying and selling operations in the Brazilian and global markets, as well as offshore operations.

Distribution

The company sells its oil products to several distribution companies in Brazil.

In July 2021, the company completed the sale of its entire remaining stake in BR Distribuidora, started in 2019, exiting the distribution sector in Brazil. Following the sale, BR Distribuidora changed its name to Vibra Energia S.A. (‘Vibra’).

Even after completing the sale of the company’s shareholding in Vibra, the company remains the owner of the main brands used by it, including those that identify service stations, fuel, loyalty program, aviation segments and certification program, among others.

A 10-year trademark license agreement is in place and grants Vibra a non-exclusive, paid, temporary license on certain trademarks the company owns, including but not limited to ‘Petrobras,’ ‘Petrobras Podium,’ ‘Petrobras Premmia,’ ‘De Olho no Combustível,’ ‘BR Aviation’ and ‘Petrobras Grid.’ The trademark license agreement was renegotiated in 2019 and amended in June 2021 to incorporate changes necessary for both companies. The contract expires in June 2029 and is renewable for an additional 10-year period, subject to agreement between the parties.

Under the terms of this agreement, the license is granted exclusively to the service station and aviation segments, for which Vibra shall exclusively use the brands licensed by the company. Meanwhile, during the term of the trademark license agreement, the company undertakes to refrain from operating in the service stations sector across the Brazilian territory.

The company also participates in the retail sector in other South American countries, as follows:

Colombia: The company’s operations through Petrobras Colombia Combustibles S.A. (PECOCO) include 125 service stations and a lubricant plant with a production capacity of 54,000 m3/year. PECOCO is in Petrobras divestment portfolio.

Chile: Following the sale of the company’s distribution operations in Chile, which was concluded in January 2017, the company entered into a brand licensing agreement in that country, for the initial term of eight years. To operate the company’s acquired assets in Chile, Southern Cross created Esmax, a company that operates as the company’s licensee in the fuel distribution segment.

Paraguay: Following the sale of the company’s distribution operations in Paraguay, which was concluded in March 2019, the company entered into a brand licensing agreement in Paraguay. The company’s operations were sold to Paraguay Energy, a subsidiary of Copetrol Group and the sale agreement also included the licensing for the exclusive use of the company’s brands by Nextar (the successor of Petrobras Paraguay Operaciones y Logística SRL) in service stations in Paraguay, for the initial term of five years.

Customers

The company interacts with approximately 470 clients in Brazil, in regard to liquid oil products, seven of which account for 63% of the total volume sold.

The company offers a virtual commercial platform, called Canal Cliente to Brazilian market companies. The platform works 24 hours a day, seven days a week. Through this online platform, clients can place orders for products, schedule withdrawals and track the entire business process up to the payment phase.

In June 2019, the company signed a commitment with CADE, which consolidates the understanding between the parties on the execution of the divestment of refining assets and SIX in Brazil. From the signing date in June 2019 through January 2023, the company has divested from RLAM, REMAN, and SIX.

Other Activities

Petrochemicals

The company engages in the petrochemical sector through the following companies: Braskem, METANOR S.A./COPENOR S.A., FCC Fábrica Carioca de Catalisadores S.A., and PETROCOQUE S.A.

With respect to divestments, in July 2022 the company announced the sale of the company’s entire stake in DETEN Química S.A. (‘DETEN’). This stake represented 27.88% of DETEN shares and was sold to Cepsa Química S.A, which indirectly held 69.78% stake in DETEN. In December 2022, the company announced the beginning of the binding phase of the sale of all of the company’s shares in Metanor. For more information see ‘Portfolio Management’ in this annual report.

In December 2021, the company approved the model for the sale of up to 100% of the company’s preferred shares in Braskem S.A. (‘Braskem’), by means of secondary public offering(s) of shares (follow-on), together with Novonor S.A. - In Judicial Recovery and NSP Investimentos S.A. - In Judicial Recovery (both referred to as Novonor).

In January 2022, the company decided with Novonor to start and subsequently to cancel the public offering for secondary distribution of shares, due to the instability of the conditions in the capital markets, where levels of demand and price were not appropriate for proceeding with the transaction.

Biofuels

BioRefino

In 2020, the company launched the BioRefino 2030 Program, which aimed to transform the company’s refining processes into a more sustainable industry, in line with a low-carbon based economy. In 2022, the company’s projects for the generation of new, modern and sustainable fuels, such as renewable diesel and biojet were expanded and gained an even higher priority starting a new phase of the BioRefino Program. An example of such expansion is the additional presence of co-processing in REDUC and an expansion at REPAR.

Diesel with a renewable content (Diesel-R) is an advanced biofuel, produced from coprocessing conventional diesel with vegetable oils using the company’s proprietary HBIO technology. The renewable part of resulting fuel (Hydrotreated Vegetable Oil or ‘HVO’) presents the same structure as conventional diesel fuel and reduces the emission of greenhouse gases compared to mineral diesel oil. Coprocessed diesel with a renewable content, as well as pure HVO, are free from contaminants and does not cause any damage to engines, effectively increasing vehicle life and reducing transportation costs. Commercial sales of the company’s production are focused on clients with ESG goals. CNPE (National Energy Policy Council) is evaluating the inclusion of advanced biofuels on national biodiesel mandate.

BioQAv (also known as Sustainable Aviation fuel or BioJet fuel) will be used worldwide to reduce the emissions of greenhouse gases in the aviation sector. This was determined by the International Civil Aviation Organization and will be mandatory in Brazil in 2027. The production process for BioQAv, through hydrogenation uses the same raw materials required for the production of HVO, which is also formed as a coproduct of the same process.

The company also operates in the production of biodiesel through the company’s wholly owned subsidiary PBIO, which manages the company’s activities for the production, logistics and marketing of these products.

The company’s biodiesel production capacity in the other two plants in operation is 8.63 mbbl/d. In 2022, the company supplied 3.3% of Brazil’s biodiesel demand, according to the ANP.

With respect to divestments, the company is in the process of divesting its stake in PBIO. In September 2020, the company announced the beginning of the binding phase of the sale of all of its shares in this wholly owned subsidiary. The sale process is still in the binding phase.

Gas and Power segment

The company processes gas produced in its oil fields in its natural gas processing units (‘UPGNs’) that have the capacity to treat 103.6 million m3/d of natural gas in Brazil. The company markets this natural gas, along with gas imported from Bolivia and LNG acquired in the global market, to several consumers and to the thermoelectric plants.

The company also operates in the generation and sale of electric energy through thermal power plants fired by natural gas and diesel oil.

Natural Gas

The company’s Gas and Power segment comprises gas processing, transportation, LNG regasification (Ceará, Bahia and Rio de Janeiro states), gas-fired, oil-fuelled and flex fuel power generation.

The Gas and Power segment strategy is to act competitively in the trading of its own gas and withdraw completely from gas distribution and transport; and optimize the thermoelectric portfolio focusing on self-consumption and trading of its own gas.

Processing of Natural Gas

Natural gas from the company’s exploration and production activities needs to be processed in processing units, to be transformed into marketable products. These products serve as fuel and raw material for different uses, such as vehicular, industrial and residential uses, as well as uses in the fertilizer industry and thermoelectric power generation.

The company’s UPGNs are located in the states of Amazonas, Ceará, Rio Grande do Norte, Bahia, Espírito Santo, Rio de Janeiro and São Paulo in Brazil, as well as in Bolivia, where the company has the capacity to process natural gas in its gaseous and condensed forms.

In December 2022, the company concluded the sale of its stake in the Carmópolis Cluster, which includes, among its assets, the Atalaia UPGN. In February 2022 the company concluded the sale of the company’s stake in Alagoas Cluster, which includes, among its assets, the Pilar UPGN.

Logistics

The company uses a pipeline system to transport natural gas from processing plants, regasification terminals and the border with Bolivia, to the local distributors, free consumers, as well as for the internal consumption of the company’s units.

TBG and TSB are still in the binding phase of divestment, as announced in 2021.

In addition, outside Brazil the company holds an 11% stake in Gás Transboliviano S.A. (‘GTB’), which is responsible for the Bolivian side of the Bolivia-Brazil gas pipeline, measuring 557 km.

The company has invested in the following flow routes:

ROUTE 1 AND GASMEX: The 359 km pipeline consists of two stretches: Route 1, which is the stretch connecting the Tupi Platform to the Mexilhão Platform, with capacity to flow up to 10 million m3/d, and GASMEX, which is the stretch connecting the Mexilhão platform to the Monteiro Lobato Gas Treatment Unit (‘UTGCA’), in the city of Caraguatatuba in the state of São Paulo, with capacity to flow up to 20 million m3/d of gas produced in the Santos Basin pre-salt. The company owns 65% of Route 1, Shell owns 25% and Petrogal owns the remaining 10%.

ROUTE 2: The 423 km pipeline links the Santos Basin pre-salt to the Cabiúnas Gas Treatment Unit (‘UTGCAB’) processing asset, in the city of Macae in the state of Rio de Janeiro. It had an initial authorized capacity to flow up to 13 million m³/d, which then increased to 16 million m³/d. In July 2019, ANP authorized the pipeline to operate with 20 million m³/d. The company owns 65% of Route 2 Tupi-Cernambi, Shell owns 25% and Petrogal owns the remaining 10%. The company owns 55% of Route 2 Cernambi-TECAB, Shell owns 25%, Petrogal owns 10%, and Repsol owns the remaining 10%.

ROUTE 3: This 355 km gas pipeline connects the Santos Basin pre-salt to the Itaboraí Gas Treatment Unit (‘UTGITB’) processing asset, in the city of Itaboraí in the state of Rio de Janeiro, with a capacity of up to 18 million m³/d. 307 km of the pipeline is offshore, and the other 48 km is onshore. The natural gas processing plant will have two units with a total processing capacity of 21 million m³/d of natural gas, increasing the supply of natural gas, LPG, and Natural Gasoline (C5+) to the market. The construction of the Route 3 gas pipeline was successfully completed. However, it is not yet in operation, as it is awaiting the conclusion of the processing plant to allow the flow of gas foreseen by that route, which is scheduled to begin operations in 2024. The company owns 100% of Route 3.

Recently installed and upcoming units in the Santos Basin pre-salt will be progressively connected to Route 2 (P-68) and to Route 3 (P-67, P-70, P-71, FPSO Carioca, FPSO Almirante Barroso, P-78 and P-79). All projects will be able to flow through any of the three flow routes when the system is fully implemented.

Marketing and Sales

The company sells its gas primarily to local gas distribution companies, free consumers and gas-powered plants, generally based on standard take-or-pay, medium-term supply contracts.

Distribution

Distributors provide gas through their distribution networks to commercial consumers, residences, industries, vehicles and thermoelectric plants.

The company held a 51% interest in Gaspetro, a holding company that consolidated the company’s equity interests in 18 of the 27 state natural gas distributors. Mitsui holds the remaining 49% interest. Following the company’s commitment with CADE, in July 2021, the company signed the sale of the company’s interest in Gaspetro to Compass Gás e Energia S.A. The conclusion of the sale occurred in July 2022. This sale marked the company’s exit of the gas distribution sector in Brazil.

Power

The company generates and sells electric power from a generator complex consisting of 14 thermoelectric power plants that the company owns or leases, operating under the authorization regime as an independent power producer. They are powered by natural gas or diesel, with a total installed capacity of 5,313 MW. These plants are designed to supplement power from the hydroelectric power plants.

In 2022, the total electricity generated in Brazil, according to the ONS, was 74.76 GWavg. The company’s thermoelectric power plants contributed 859 MWavg (3,419 MWavg in 2021 and 1,756 MWavg in 2020). This decrease in total generated electricity was due to better rainfall conditions compared to the previous year, resulting in increased storage level of reservoirs.

In addition, the company holds participation in other projects of power generation. This adds up to 215 MW to the company’s electricity generation capacity.

In 2022, the commercial capacity certified by MME for all thermoelectric power plants the company controls was 3,206 MWavg. The company’s total generating capacity was 5,313 MWavg. Of the total 4,079 MWavg of commercial capacity available for sale in 2022, approximately 50% was sold as standby availability in public auctions in the regulated market and approximately 27% was committed under bilateral contracts and self-production, i.e. sales to related parties.

The company also has some investments in renewable power generation sources in Brazil. The company owns a solar power plant, Alto do Rodrigues Phototovoltaic Unit with one MW of solar capacity.

Customers

The entire demand for natural gas includes the company’s non-thermoelectric, thermoelectric, refining and fertilizer markets, as well as the consumption by natural-gas carriers contracted by the company for the provision of transportation services.

In the commercialization of natural gas, the company acts as importers and domestic producers who can directly sell the company’s product to distributors, free consumers, or thermoelectric plants.

The company sold its interest in TAG, in July 2020, and NTS, in April 2021, and are negotiating the sale of the company’s interest in TBG.

The company operated in the natural gas distribution segment until July 2022. through indirect participation in state-owned distribution companies. In July 2022, the company sold its interest in Gaspetro, the holding company that own participations in state distribution companies.

Throughout 2022, the company was successful in negotiating a solution to some of the disputes initiated in 2021 to maintain natural gas supply conditions with local distribution companies. ending the disputes with Companhia de Gás do Ceará (‘CEGÁS’), with Companhia de Gás de Santa Catarina (‘SCGÁS’) and with Companhia de Gás do Espírito Santo (‘ESGAS’). For certain other disputes, the company has filed appeals in court and filed arbitration requests, but the company is still negotiating a solution with certain other local distribution companies.

In the second half of 2022, local distribution companies launched public calls for the purchase of natural gas starting in 2023. The company offered such distribution companies products with terms of five and nine years, indexed to Brent, with supply starting in January 2024. Among these public calls, by the end of 2022, the company signed new contracts with SCGÁS, Companhia de Gás de Minas Gerais (‘GASMIG’), Companhia Paranaense de Gás (‘COMPAGAS’), and Companhia de Gás do Estado do Rio Grande do Sul (‘SULGÁS’).

In the power segment, the company operates in generation and sale. The company has 114 clients and suppliers, of which 34 are distributors, 20 are marketing companies, seven are generating companies and 53 are free consumers. All contracts are registered at the Electricity Trading Chamber, a sector agent responsible for the settlement and accounting of these contracts.

Fertilizers

The company has three fertilizer plants in Brazil, one located in the state of Bahia. (‘FAFEN-BA’), one in the state of Sergipe (‘FAFEN-SE’), and one through the company’s subsidiary located in Paraná, Araucaria Nitrogenados S.A. (‘ANSA’). Their main products are ammonia and urea. Together these plants have an installed capacity of 1.852 million t/year of urea, 1.406 million t/y of ammonia, 319,000 t/y of ammonium sulfate and 800,000 t/y of ARLA-32. The company also has an unfinished Nitrogen Fertilizer Unit (UFN-III) in Mato Grosso do Sul. The construction of UFN-III began in September 2011, but was halted in December 2014, with about 81% of the physical construction completed.

The company continues to pursue its strategy of leaving the fertilizer market and focusing on assets that generate greater financial return and are more adherent to the company’s business. To this end, since August 2020, after being mothballed in 2019, the company’s plants located in Bahia and Sergipe have been operating under a lease agreement with Proquigel Química S.A. (‘Proquigel Química’), a company of the Unigel Group for an initial term of 10 years. which may be extended for an additional 10 years.

In January 2020, ANSA was mothballed, and since September 2020 the company has worked on the divestment process. In December 2022, the company announced the cancelation of the competitive process for the sale of all the company’s shares in ANSA and that the company will evaluate its next steps related to the divestment of ANSA.

Additionally, since 2020 the company has continued the divestment process of UFN-III. In April 2022, the company announced the cancelation of the UFN-III sale process after the prospective buyer's proposed business plan was rejected due to their failure to obtain certain government approvals necessary for the transaction to proceed. In May 2022, the company resumed the divestment process bid. In January 2023, the company announced the termination of the competitive process for the sale, and will evaluate next steps in alignment with the company’s Strategic Plan.

Portfolio Management

The company’s active portfolio management encompasses investment processes through the company’s own projects or partnerships with other companies and divestment processes. The company’s active portfolio management process comprises the sale, acquisition and partnership of various participations stakes in some of the company’s subsidiaries, affiliates, and assets to strategic or financial investors or by means of public offerings.

The company’s actively managed portfolio contains more than 50 assets at different stages of the process. The company’s active portfolio management contributes to improve capital allocation and consequently create value for the shareholder.

Natural Gas Agreement

The natural gas agreement includes the sale of the company’s stake participation in transportation companies: 10% stake in NTS; 10% stake in TAG; 51% stake in TBG; and of the company’s indirect participation in gas distribution companies, either by selling the company’s 51% stake in Gaspetro or by selling indirect participation in distribution companies.

In the company’s transportation systems, the company has worked to specify the maximum injection and withdrawal volumes at each receiving point and delivery area for further adjustments to the current transportation service contracts so that transportation companies, under the supervision of ANP, can offer the remaining capacity to the market, thus enabling other companies to use the remainder of the transportation network. Furthermore, the company is committed to other actions, such as negotiating access to outflow and processing assets, refraining from purchasing new gas volumes from partners/third parties, except in certain situations provided for in the agreement, and leasing the regasification terminal in the state of Bahia.

In 2021, the company made progress on several fronts, including leasing a regasification terminal in the state of Bahia and signing a contract for using a natural gas processing plant in UPGN Guamare. In 2022, the company signed a flexibility agreement with NTS, which allows for the access of other agents to their transportation system.

Regarding the commitment to negotiate access to the company’s evacuation pipelines and processing plants, the company started the commercial operation with Potiguar E&P in Guamare on January 1, 2022. On the same date, Shell, Petrogal, Equinor, Petroreconcavo, Origem, and Repsol Sinopec, started the commercial operation of the ‘swap agreements’. In May 2022, the company also signed swap contracts with 3R for the gas from the RecÔncavo and Rio Ventura basins. These agreements are an interim solution developed to grant access to these companies to some of the company’s evacuation pipelines and processing facilities. In contrast, negotiations, access agreements, or preconditions of other agreements are being completed. Under these swap contracts, the company purchases the rich gas from the producer, evacuate and/or process it, and subsequently, the company sells back the processed gas to the same company, allowing them access the Brazilian natural gas market directly.

Strategic Plan

The company’s 2023-2027 Strategic Plan maintains a consistent strategy of focusing on projects with full potential to generate value, resources and contributions to Brazilian society. The company prioritizes monetizing resources into wealth for Brazil while following the sustainability guidelines for energy transition. The company has expanded its investment plans by 15% for the next five years, an endeavor that the company is pursuing with high responsibility and diligence with regards to the allocation of resources.

Throughout 2022, the company has delivered operational and financial performance in line with the company’s commitment to generate value for the company’s shareholders and Brazilian society and in full adherence with the 2022-2026 Strategic Plan.

The company’s 2023-2027 Strategic Plan has been prepared in a way that preserves the company’s vision, values and purpose. The business strategies were maintained, and the Environmental, Social and Governance (ESG) and innovation strategies were improved.

The company preserves its values in the 2023-2027 Strategic plan: respect for life, people and the environment; ethics and transparency; overcoming challenges and trust; and market and results orientation.

Furthermore, the company maintained its purpose of ‘providing energy that ensures prosperity in an ethical, safe, and competitive way.’

The IAGEE and VAZO targets are aligned with the 2023-2027 Strategic Plan’s low-carbon and environmental sustainability commitments, while the Delta EVA indicator represents a measure of economic value creation.

The company reaffirms in the 2023-2027 Strategic Plan the intention of zero fatalities and zero leakage. The company’s commitment to life is a non-negotiable value, and the company’s renowned safety culture continues to be reinforced every day to strengthen the people and the operational safety.

The company is implementing green recycling policies for platforms in the decommissioning process, in line with the best ESG practices available in the market.

In the company’s 2023-2027 Strategic Plan, the company streamlined its ESG strategies into two key strategies: an ESG integrated strategy covering the three aspects of ESG and another one focused on innovation and its importance for the company’s business.

In the Refining segment, the company’s strategy is focused on assets near the largest oil supply and the largest Brazilian consumer market, taking advantage of greater synergy and integration with the company’s E&P assets. Consistent with the company’s portfolio management strategy, the company is maintaining its divestment plan, with respect to its refining units and, in contrast, increase the company’s investment in upgrades to the company’s remaining refineries to increase S-10 diesel production, biorefining capabilities and operational efficiency while still lowering emissions.

The company has 10 refineries located in different regions in Brazil. The company continues to focus on the operational and energy efficiency of the company’s refining units and on higher quality products with a lower carbon footprint, with the spotlight on investments in biorefining. The plan foresees investments in eight new processing units, in addition to six large-scale adaptation works in existing units.

In the Gas & Power segment, the 2023-2027 Strategic Plan highlights the continuity of the strategy of own gas commercialization, with commercial actions aligned with the increases in capacity, resulting from investments in infrastructure expansion and own natural gas supply. The company’s investments are focused on Route 3 and natural gas processing unit to enable a natural gas outflow from pre-salt production. The Route 3 Integrated Project, of which the Natural Gas Processing Unit (UPGN) is a part, is strategic for the company, as it will make it feasible to flow and process 21 million m³/d of natural gas produced in the Santos Basin's pre-salt pole and increase the offer of natural gas to the Brazilian market. The company estimates to start gas processing operations at the GasLub Cluster in 2024.

The company’s strategy also focuses on collaboration, and it has continued to partner with other companies and with the science, technology and innovation community.

Research and Development

In 2022, the company invested U.S.$792 million in research and development.

Intellectual Property

The company has 1,218 patent applications under review, 478 in Brazil and 740 abroad, within 45 countries. In 2022, the company filed 351 patents: 223 abroad and 128 in Brazil, surpassing, for the second consecutive year, the company’s record for filings in a single year among Brazilian institutions.

Environmental Regulation

The company’s facilities in Brazil are subject to a wide range of federal, state and local laws, regulations and permit requirements relating to the protection of human health and the environment, and they fall under the regulatory authority of CONAMA.

The company’s offshore activities are subject to the administrative authority of IBAMA, which issues operating and drilling licenses. The company is required to submit reports on a regular basis, including safety and pollution monitoring reports to IBAMA and third-party environmental audits in order to maintain its licenses.

Government Regulation

Law No. 13,303/16 requires the company to define in its Bylaws the public interest the company pursues and which publicly-oriented actions the company is allowed to take in the pursuit of such public interest. In order to comply with Law No. 13,303/16, the company amended its Bylaws to include the definition of public interest and to state that the Brazilian federal government may orient the company’s activities to pursue the public interest under certain circumstances, which distinguishes the company from any other private company operating in the oil and gas market.

History

Petróleo Brasileiro S.A. – Petrobras was founded in 1953. The company was incorporated in 1953.