Brazil's CNPE (National Energy Policy Council) has approved to directly contract Petrobras to produce the volume that exceeds what has been contracted under the transfer of rights agreement at four pre-salt areas - Buzios, Iara Surround, Florim and Tupi Northeast.

On June 24, 2014, at its 28th meeting, the CNPE approved Resolution No. 1/2014, which recommends the direct contracting of Petrobras for the production of oil, natural gas and fluid hydrocarbons, under a production sharing regime, from the volumes exceeding the limits specified under the transfer of rights agreement and/or that are negotiated during the review process provided for in this agreement, on Buzios, Iara Surround, Florim and Tupi Northeast. The Production Sharing agreement for these four areas will have a duration of 35 years.

This resolution covers volumes exceeding the 5 billion barrels of oil equivalent contracted under the transfer of rights agreement and establishes parameters that include:

(i) signing of production sharing agreements for the surplus volumes to come into effect as of the date of the first oil produced under the transfer of rights regime, for each one of the four areas;

(ii) payment of a R$ 2 billion signature bonus in 2014 to the Federal Government;

(iii) anticipation of part of the profit oil to be paid according to the following distribution: R$ 2,0 billion in 2015, R$ 3,0 billion in 2016, R$ 4,0 billion in 2017 and R$ 4,0 billion in 2018;

(iv) percentage of the profit oil to be paid to the Federal Government: 47,42% for Buzios, 48,53% for Iara Surround, 46,53% for Florim and 47,62% for Tupi Northeast.

Petrobras believes that the parameters approved by the CNPE will give this project (surplus of the transfer of rights) the same level of attractiveness expected from the Libra field.

The National Petroleum, Natural Gas and Biofuels Agency (ANP) estimates indicate that these 4 areas may contain additional volumes between 9.8 and 15.2 billion barrels of oil equivalent, according to the table below, published in the aforementioned resolution:

The actions related to CNPE’s decision will be initiated by the Ministry of Mines and Energy and the ANP, after approval by the Company´s management, aiming at signing the production sharing agreements for the surplus volumes of the transfer of rights.Estimates of recoverable oil volumes, costs, investments and the timetable for the production systems for the surplus will be disclosed as production sharing agreements are signed and activities under this regime get underway, alongside projects being developed under the transfer of rights. The plans for the development of the 5 billion barrels of oil equivalent contracted under the transfer of rights and/or the review process provided for in the transfer of rights agreement will not be changed.

This contract is an opportunity for Petrobras to secure the sustainability of its production in line with the 2030 Strategic Plan and consistent with the underlying principles of the 2014-2018 Business and Management Plan, with a focus on capital discipline, integrated portfolio management and priority for upstream projects in Brazil.

The commitments to be taken by Petrobras in this project for the period of the 2014-2018 Business and Management Plan, besides not materially impacting its results and financials, will also contribute to increase, in the scope of the 2030 Strategic Plan, the return on capital for the Company, as it substantially expands the participation of upstream projects in its investment portfolio.