1
Summary
COMMENTS FROM THE CEO
PROFILE
OWNERSHIP STRUCTURE
KEY INDICATORS
STOCK PERFORMANCE
CORPORATE STRATEGY
BUSINESS PERFORMANCE
Exploration and Production
Refining, Transportation, Marketing and Petrochemicals
Transport
Distribution
Gas, Energy and Chemical-Gas
Biofuels
INVESTMENTS
CONTROLLING SHAREHOLDER RELATIONS
Pricing Policy
“LAVA-JATO” OPERATION (“OPERATION CAR WASH”)
CLASS ACTION AND RELATED PROCEEDINGS
MANAGEMENT
Corporate Governance
Risk Management and Compliance
Ethics
INTERNATIONAL SITUATION AND OIL MARKET
CORPORATE FUNCTIONS
Safety, Environment, Energy Efficiency and Health
Social responsibility
Research and Development
Human Resources
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FINANCIAL ANALYSIS
Sales volumes
Impairment
The “Lava Jato (Car Wash) Operation” and its effects on the Company
Consolidated Results
Net income by Business Segment
Liquidity and Capital Resources
Debt
Contractual Obligations
Assets and Liabilities subject to Exchange Variation
Contingent liabilities
Tax Expenses
GLOSSARY
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Comments from the CEO
Dear Shareholders and Investors,
In the face of a new reality for oil prices, 2015 was a year of major challenges for the
entire oil and gas industry. Continuing the efforts made since the beginning of our
journey, we adopted measures to improve the company's efficiency, expanded our
efforts to cut expenses, reegotiated contracts with our suppliers, obtained financing
to roll our debt on more favorable terms, and reduced our capital expenditures.
This strategy ensured not only that we could maintain our productive capacity, but
that we could deliver production growth above our annual target, despite the
adverse scenario under which we operated. In the pre-salt, we surpassed the barrier
of 1 million barrels per day. This milestone was achieved by applying our
technological excellence, and was recognized with another OTC award (Offshore
Technology Conference), the most important in the industry.
Nonetheless, despite the progress made, our result were adversely impacted by the
commodity price decrease and the currency devaluation. But it is important to note
that cash generation exceeded our capital expenditures, thereby reversing the trend
of past years and leading to an increase in our cash balances and a reduction of our
net debt.
We remain absolutely committed to the reduction of leverage and creating value for
the shareholders. And it is for this reason that, in the revision of our Business and
Management Plan, we are prioritizing investments that maximize the return on
capital employed, with particular focus on the exploration and production of the pre-
salt. Also we will continue to work toward meeting the Plan’s divestment targets, a
key components to reducing ourleverage.
Another highlight is the company's new governance model. In addition to adapting
our structure to meet the targets set forth in the Business Plan, these changes
strengthen our management by giving greater control and compliance with our
processes. Furthermore, they expand the accountability of our executives, and will
become part of the daily activity of the entire company, bringing agility,
transparency and the necessary efficiency to overcome our challenges.
I conclude this message by stressing that in 2016 we will work with even more
firmness and dedication to ensure the construction of a promising future.
Aldemir Bendine, CEO.
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PROFILE
We are a publicly-held company operating on an integrated basis and specializing in
the oil, natural gas and energy industry. We are present in the exploration and
production, refining, marketing, transportation, petrochemicals, oil product
distribution, natural gas, electricity, chemical-gas and biofuel segments.
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OWNERSHIP STRUCTURE – December 31, 2015
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KEY INDICATORS
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STOCK PERFORMANCE
In 2015, several factors negatively affected the performance of our shares on the
Stock Exchange, Commodities and Futures Exchange (BM&FBovespa). In this
context, Ibovespa (the exchange’s main index) fell 13% on the previous year.
Reflecting this scenario and falling international oil prices, our shares ended the year
down. Common shares (PETR3) fell 11% and preferred (PETR4) 33%, and were
quoted at R$8.57 and R$6.70, respectively on December 30, 2015. Due to these lower
prices, our market cap on that date was R$101 billion (US$25 billion).
On New York Stock Exchange (Nyse), our common and preferred-stock ADRs (PBR
and PBR/A) fell 41% and 55% respectively and were also impacted by Brazil’s
currency weakening 47% against the US dollar. On December 31, 2015, PBR closed at
US$4.30 and PBR/A at US$3.40.
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10
CORPORATE STRATEGY
2015-2019 Business and Management Plan Adjusted
Our 2015-2019 Business and Management Plan (BMP) approved by the Board of
Directors in June 2015 posed deleveraging the company and creating shareholder
value as fundamental objectives.
The Plan sets the following targets: net leverage 1 below 40% by 2018 and 35% by
2020; net debt/EBITDA ratio below 3.0x by 2018 and 2.5x by 2020.
In January 2016, the Board approved adjustments to the 2015-2019 BMP (Adjusted
2015-2019 BMP), based on new levels of oil prices and exchange rates in order to
preserve the fundamental objectives set by the original plan.
We have reviewed the assumptions we made for Brent oil prices and currency
exchange rates when projecting investments and costs. Our Adjusted 2015-2019
BMP assumes an average Brent price of US$45/barrel for 2016 against the original
plan’s US$70/barrel estimate. The Brazilian currency’s exchange rate for 2016 was
adjusted from R$3.26/US$ to R$4.06/US$.
Our Adjusted 2015-2019 BMP’s investment portfolio continues to prioritize oil
exploration and production projects in Brazil, particularly in the pre-salt fields. For
investments are primarily aimed at
the remaining business segments, our
maintaining oil and natural gas offtake-related operations and projects. The
Adjusted 2015-2019 BMP’s level of investment is US$98.4 billion, which is US$32
billion less than originally planned (US$130.3 billion), to be broken down as follows:
Investments 2015-2019
US$ billions
Exploration and Production*
Downstream **
Gas and Energy
Other segments ***
Total
80.0
10.9
5.4
2.1
98.4
%
81
11
6
2
100
* Includes international investment (US$4.9 billion)
** Includes Petrobras Distribuidora
*** Engineering, Technology and Materials; Finance; Corporate and Services; Governance, Risk and
Compliance; and the Presidency
1 Net Debt / (Net Debt + Shareholders’ Equity)
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Of this total, we invested US$ 23.1 billion in 2015 and we are projecting US$20 billion
for 2016.
Our estimated divestment for the 2015-2016 biennium is still US$15.1 billion, of
which we have already divested US$0.7 billion in 2015.
Our Adjusted 2015-2019 BMP continues to plan measures for optimizing and making
productivity gains in order to reduce Manageable Operating Expenses2. Initiatives
already identified have shown that we may reach this result by managing outsourced
services more efficiently, rationalizing structures and reorganizing businesses;
optimizing personnel costs, and reducing costs of purchasing supplies and transport
logistics. We emphasize that our 2015-2019 BMP is subject to a number of risk
factors that may affect our estimates, such as:
• changes in market variables such as oil prices and currency exchange rates;
• divestments and other business restructuring being subject to market
conditions prevailing at the time of the transactions;
•
reaching oil and natural gas production targets in a scenario of difficulties in
relation to suppliers in Brazil.
BUSINESS PERFORMANCE
Exploration and Production
Our Exploration and Production division’s mission
locating,
identifying, developing, producing and incorporating oil and natural gas onshore and
offshore. The aim is to develop and exploit reserves safely and profitably.
is researching,
As world leaders in deep and ultra-deep water exploration and production, we are
recognized for being at the forefront in introducing new technologies. Thanks to this
leadership, we have earned prestigious local and international oil and gas industry
awards such as the OTC Distinguished Achievement Award in 1992, 2001 and 2015
and the ANP Technological Innovation Award in 2013.
2 Total costs and expenses, excluding purchase of raw materials
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In 2015, there was a major fall in international oil prices. Brent’s average price fell
47% from 2014 to US$52.46, which adversely affected profitability for the entire
industry, particularly exploration and production,
leading to projects being
postponed or canceled. In order to mitigate this effect, we are taking measures such
as:
• prioritizing investments to develop production, focusing on more profitable
and higher cash flow projects;
• optimizing projects reflecting operating gains, such as shorter drilling and
well completion times in the pre-salt fields and revising the number of wells
required based on higher levels of reservoir productivity;
reducing operating costs by improving efficiency and renegotiating contracts
with suppliers;
•
• divesting assets in Brazil and internationally.
In February 2016, FPSO Cidade de Marica (Lula Alto field) started producing and will
now join two new systems to be located in the pre-salt fields in the course of this
year: FPSO Cidade de Saquarema (Lula Central field) and FPSO Cidade de
Caraguatatuba (Lapa field). Having these three platforms coming on stream and
ramping up production from FPSO Cidade de Itaguai (Iracema Norte field) will be a
major boost to cash flow and our ability to reach our production targets for the year.
Operational regions
Brazil
The focus of our business is Brazil. The main process of acquiring exploratory blocks
takes place through bidding processes conducted by the National Petroleum Natural
Gas and Biofuel Agency (ANP). Contracts are governed by three regulatory models:
concession, onerous assignment and shared production.
Our main fields currently producing are operated as concessions. Onerous
assignment and shared production contracts account for a large part of our
medium- and long-term production.
In 2010, we signed an onerous assignment agreement to acquire the right to
produce up to 5 billion barrels of oil equivalent (boe) in selected pre-salt areas. In
relation to shared production contracts, the only one we have signed with the ANP
so far has been for the Santos Basin’s Libra field.
Our domestic exploration portfolio consists of 146 blocks, totaling an area of 82,442
km², of which 33,316 km² are onshore and 49,126 km² offshore. We are working on 43
Discovery Evaluation Plans (DEPs), of which 40 are in exclusively exploration areas
and 3 in ring fenced areas.
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In the production development and operation segment, our domestic portfolio
consists of 362 fields with concession contracts and 10 fields under onerous
assignment agreements, making a total of 372 oil and natural gas fields.
International
Internationally our focus is on Latin America, the United States and Africa.
In Latin America, we operate in Argentina, Bolivia, Colombia, Mexico and Venezuela
with a portfolio of 49 assets (27 production, 21 exploration and 1 transport). Of this
total, we operate 32 assets (15 production and 17 exploration) under four types of
exploration and production contracts: concession (Argentina and Colombia); oil
operation or service (Bolivia); services contract (Mexico); and minority shareholding
(Venezuela).
In the US, we focus on deepwater wells in the Gulf of Mexico, where our portfolio
includes 8 production assets, of which 3 are operated by Petrobras and 47 are
exploration blocks - all under concession agreements.
In Africa, we operate through our 50% stake in PO & G (Petrobras Oil and Gas). Our
activities are mainly concentrated in Nigeria’s Akpo and Agbami fields. We also have
a project for developing production in the Egina field and carrying out exploratory
work in the Egina South and Preowei fields, all under shared production contracts. In
Gabon, we are exploring the Ntsina Marin and Mbeli Marin blocks.
Exploration
Exploratory activity leads to discoveries of hydrocarbon reservoirs whose volumes
are incorporated into our reserves depending on the results of Discovery Evaluation
Plans (DEPs). In 2015, we drilled 51 exploratory wells in Brazil - 35 onshore and 16
offshore - and got a 78% success rate. In the pre-salt fields, we drilled 7 wells for an
86% success rate. Internationally, we drilled 8 wells - 6 onshore in Argentina and 2
offshore in the Gulf of Mexico - also with an 86% success rate.
Our exploratory investments totaled R$7.4 billion in the year, of which R$7 billion in
Brazil. These investments were mainly for drilling costs, seismic surveys and
acquiring blocks.
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Main discoveries in 2015
Countr
y
Basin
Concession
Area/Well
Well name (ANP)
Brazil
Santos
BM-S-8
Carcará NW
3-BRSA-1216DA-
SPS
Environmen
t
Dept
h
(m)
%
Petrobras
Offshore
2,024
66%
Brazil
Santos
Libra
Libra C1
3-BRSA-1267-RJS
Offshore
2,158
40%
Sergipe-
Alagoas
Sergipe-
Alagoas
Campos
BM-SEAL-
11
BM-SEAL-
11
Farfan
9-BRSA-1280D-SES
Offshore
2,496
60%
Farfan
3-BRSA-1286-SES
Offshore
2,469
60%
BM-C-35
Basilisco
1-BRSA-1289-RJS
Offshore
2,215
Santos
BM-S-8
Carcará N
3-BRSA-1290-SPS
Offshore
2,072
Brazil
Amazonas
AM-T-84
Brazil
Sergipe-
Alagoas
BM-SEAL-
10
Jusante do
Anebá
1-BRSA-1293-AM
Onshore
-
Moita Bonita
3-BRSA-1296-SES
Offshore
2,988
100%
Brazil
Espírito Santo
ES-T-495
Guayacan
1-BRSA-1302-ES
Onshore
-
100%
BM-SEAL-4
Poço Verde 4
3-BRSA-1303-SES
Offshore
2,479
75%
Sergipe-
Alagoas
Santos
Santos
Libra
Libra
Libra NW3
3-BRSA-1305A-RJS
Offshore
1,952
Libra C2
3-BRSA-1310-RJS
Offshore
2,050
Potiguar
BM-POT-17
Pitu N 1
3-BRSA-1317-RNS
Offshore
1,805
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
65%
66%
60%
40%
40%
40%
Declarations of Commerciality in 2015
Volume
Country
Field
Basin
Recoverable
Quality (API) % Petrobras
(million boe)
Brazil
Sépia Leste
Santos
Brazil
Jandaia Sul Recôncavo
130
0.8
26
37
80
100
Production
In 2015, in Brazil, we produced an average 2.128 million barrels per day (bpd) of oil,
which was 4.6% up from the previous year and 0.15% more than the 2.125 million bpd
planned for the year under the Business Plan and Management 2015-2019. If we
include natural gas extraction, which was 9.8% up on the previous year, total
production reached 2.597 million barrels of oil equivalent per day (boed) - 5.5% more
than 2014’s 2.461 million.
The pre-salt layer’s average annual production, including Petrobras and partners,
reached record levels in 2015 with an average of 767,000 bpd of oil, beating 2014
production by 56%.
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Petrobras production
Brazil
International
Total
2014
2015
2014
2015
2014
2015
Oil (‘000 bpd)
2.034
2.128
Gas (millions of m³/d)
67,8
74,5
Total (thousands of boed)
2.461
2.597
116
15,9
209
99
15,4
190
2.150
2.227
83,7
89,9
2.670
2.786
Rapid growth of production from the P-58 platform in the Parque das Baleias
complex in the Espírito Santo portion of the Campos Basin, and from FPSO Cidade de
Mangaratiba, which operates in the Lula field in the pre-salt Santos Basin were
highlights. FPSO Itaguai City in Iracema Norte field, in the Santos Basin brought
forward initial operating from November to July.
The other production fronts also played a decisive role in reaching our target for
2015. In the Campos Basin, production from the Marlim field stabilized at over
200,000 bpd’ and the Roncador field reached its peak of over 400,000 bpd.
Internationally, 2015’s average oil production of 99,000 bpd was 14.4% below the
previous year’s 116,000 bpd due mainly to the conclusion of sales of assets in
Colombia and Peru in 2014 and in Argentina in March 2015. These transactions have
had their effects partially offset by the Saint Malo and Lucius fields in the United
States coming on stream in December/2014 and January/2015 respectively.
Internationally average natural gas production was 15.4 million m³ per day - 3.1%
down from 2014’s 15.9 million m³ per day. The start of operations at the Hadrian
South field in March 2015, in the United States, and new wells in Rio Neuquén in
Argentina were partially offset by sales of assets in Peru and Argentina. As a result,
we produced 190,000 boed internationally - which was 9.4% down from 2014’s
209,000 boed.
On consolidating Brazilian and international production, we reached two new
records: our total oil production at 2.227 million bpd was 3.6% up on 2014’s volume
(2.150 million bpd), while total production of oil and gas at 2.786 million boed was
4.3% on the previous year’s (2.670 million boed).
Our 2016 oil production target in Brazil is 2.145 million bpd, which is 0.8% higher
than 2015’s target.
Reserves
Based on ANP/SPE criteria, our proven reserves of oil, condensate and natural gas at
December 31, 2015 amounted to 13.3 billion barrels of oil equivalent (boe), as the
table below shows. In 2014, these volumes totaled 16.6 billion boe.
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Proven reserves
Brazil
International
Total
(ANP/SPE criteria)
2014
2015
2014
2015
2014
2015
Oil (billions of bbl)
13.686
10.705
0.270
0.241
13.956
10.946
Gas (billions of m³)
396.895
347.607
27.146
24.842
424.041
372.450
Total (billions of boe)
16.183
12.891
0.429
0.387
16.612
13.279
In 2015, we incorporated a volume of 16 million boe of proven reserves relating to
discoveries of new deposits near current infrastructure in the fields of Albacora
Leste (Campos Basin), Golfinho (Espírito Santo Basin) and El Mangrullo (Neuquén
Basin in Argentina), and we issued a declaration of commerciality for the Jandaia Sul
field in Bahia.
On account of technical criteria and economic factors, previous estimates were
revised and our proven reserves were reduced by 2.4 billion boe.
Divestments led to a 22 million boe reduction of reserves in Brazil (Campos Basin)
and Argentina (Austral Basin).
Oil and natural gas extraction accounted for a 932 million boe reduction of proven
reserves. This volume includes shale production but not volume extracted from Long
Duration Tests (LDTs) or production in Bolivia. LDTs are in exploratory areas that
have not declared commerciality for fields and therefore have no associated reserve.
In Bolivia, the Constitution does not allow reserves to be registered by a concession
holder.
The balance of appropriations, revisions, sales and production of our reserves in
Brazil and internationally led to a 3.3 billion boe reduction of proven reserves, as the
table below shows.
Proven Reserves - Composition
(Brazil and international, in billions of boe,
ANP/SPE criterion)
2015
2014
2013
Proven reserves at the beginning of the year
16.612
16.565
16.440
Appropriations and Revisions
Sale of reserves in situ
Production
-2.379
+1.107
+1.141
-0.022
-0.164
-0.156
-0.932
-0.896
-0.861
Proven reserves at the end of the year
13.279
16.612
16.565
The ratio of volume reserves/production is 14.2 years overall and 14.6 years in Brazil.
The Development Index (ID), which is the ratio between proven reserves developed
and proven reserves, was 44.5% in 2015.
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Refining, Transportation, Marketing and Petrochemicals
Our Downstream segment is responsible for refining, transporting and marketing oil
and oil-based products, guided by its strategy of boosting the efficiency of our
assets in order to meet domestic demand. In the petrochemical segment, we are
mainly active in partnerships that are integrated with our other business ventures.
Refining
In 2015, with total capacity in Brazil at 2.176 million bpd, our 13 refineries processed
1.976 million bpd of oil and liquid natural gas (LNG) and produced 2.026 million bpd
of oil. Some 86% of the total volume of oil processed came from Brazilian fields.
We produced a record quantity of S-10 diesel oil in Brazil, totaling 201,000 bpd,
which was 40% higher than 2014’s volume. S-10 diesel fuel contains a maximum of
10 parts per million sulfur and its main benefit is reducing vehicle emissions of
pollutant gases.
Our three refineries in other countries processed 138,000 bpd of oil and liquid
natural gas (LNG) and produced 149,000 bpd of oil-based products.
In the United States, through the Pasadena Refining System (PRSI), we are operating
a refinery capable of processing 100,000 bpd of oil.
In April 2015, we decided to end the refining operations of Nansei Sekiyu Kabushiki
Kaisha (NSS) in Okinawa, Japan, which had 100,000 bpd of oil processing capacity.
We will be continuing to operate NSS as a marine terminal.
In Argentina, through our stake in Petrobras Argentina SA (PESA), we operate the
Bahia Blanca refinery, which has 30,500 bpd oil processing capacity.
New ventures
Abreu e Lima Refinery (Rnest)
The first refining train is operating loads limited to 74,000 bpd of oil. This plant
requires structural alterations to lower sulfur emissions (SNOX) before using its full
capacity of 115,000 bpd. We will be restarting work on these alterations in 2016 and
expect to finish them by 2017. The second refinery unit, with a processing capacity
of 115,000 bpd, is expected to begin operating at the end of 2018, according to the
Adjusted 2015-2019 BMP.
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Rio de Janeiro Petrochemical Complex (Comperj)
We are structuring a business model that includes partnerships to conclude work on
Comperj refinery’s first train. Construction work at the complex’s utilities center is
continuing in order to support the natural gas processing unit’s operation.
Marketing
Domestic market
We sell 2,234,000 bpd of oil-based products in the domestic market - this volume
was 9% below the 2014 number.
Our diesel oil sales fell 8% due to the following factors: a fall in economic activity
with far-reaching effects on demand for transport in particular road freight; higher
levels of biodiesel mixed with diesel oil; less investment in infrastructure; our lower
market share due to other companies importing more; and thermoelectric plants
cutting back on use of diesel oil.
Gasoline sales were down 11% due to higher demand for hydrated ethanol. In 2014,
high levels of ethanol stocks ensured more supplies of the product enabling the
proportion of anhydrous ethanol content mixed with gasoline mixture to be raised
from 25% to 27%.
LPG sales were 1% down and were affected by shrinking industrial output, services
and household consumption.
Fuel oil sales were down 13% due to lower volumes delivered to the electric
generating segment and industrial production fell.
Petrochemical naphtha sales were down 18%, mainly due to contractual
renegotiations in 2015 that led to Braskem’s minimum off-take rules and Petrobras
deliveries being suspended for a number of months in the year.
Exports x Imports
Oil exports reached 360,000 bpd, which was 55% up on 2014’s volume due to growth
of domestic oil production. Exports of oil-based products fell 6% to 149,000 bpd due
to lower fuel oil production.
Oil imports totaled 277,000 bpd and were 29% down from 2014, while oil-based
products totaled 256,000 bpd and were down 38%, both due to weak domestic
demand.
We posted a US$651 million trade deficit for oil and oil product exports and imports,
excluding natural gas, LNG and nitrogen.
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Petrochemicals
In the petrochemicals sector, we operate through the following subsidiaries,
associated companies and joint ventures (holdings at December 31, 2015):
• Braskem S.A.
(36.20%) – producing chiefly ethylene, polyethylene,
polypropylene and PVC;
• Deten Química S.A. (27,88%) – (27.88%) - producing raw material for
detergents: linear alkyl benzene (LAB), linear alkyl benzene sulfonic acid
(LAS), and heavy alkylates (ALP);
• Metanor S.A./Copenor S.A. (34.54%) - producing methanol, formaldehyde and
hexamine;
• Fábrica Carioca de Catalisadores (50%) – producing catalysts and additives;
• Petrocoque S.A. (50%) – producing calcined petroleum coke;
• Companhia Petroquímica de Pernambuco – Petroquímica Suape (100%) and
Companhia Integrada Têxtil de Pernambuco – Citepe (100%) - producing
purified terephthalic acid (PTA), polyethylene terephthalate resin (PET), and
polyester filament.
Transport
Transport and storage
Our Petrobras Transporte (Transpetro) subsidiary transports and stores oil, natural
gas, oil-based products and biofuels through operations at 49 terminals (21 on land
and 28 on waterways), 55 ships, 7,517 km of oil pipelines and 7,151 kilometers of gas
pipelines.
In addition to supplying our plant’s requirements for oil and gas production,
logistics, refining and distribution, Transpetro transports imported and exported oil
and other products; in addition to the Petrobras System, its main customers include
distribution and petrochemical companies. Transpetro has facilities in 20 of Brazil’s
27 states.
In 2015, Transpetro’s ships carried 66.3 million tons of oil and oil-based products,
which was 6.9% more than in 2014. Its oil pipelines and terminals carried 620 million
m³ of liquids, which was 5.3% below the previous year’s total. Average daily natural
gas transported at 74.8 million m³ was 1.3% below the 2014 average.
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Maritime transport
Transpetro’s Fleet Modernization and Expansion Program (Promef) includes plans
for shipbuilding at shipyards in Brazil in order to renew the fleet and incorporate new
technologies to its operations.
In 2015, Transpetro took delivery of 4 oil tankers as part of Promef: Marcílio Dias,
André Rebouças and José do Patrocínio (fifth, sixth and seventh in its Suezmax
series), and Oscar Niemeyer, the Petrobras System’s first gas tanker to be built in
Brazil. A total of 13 vessels were delivered.
Road transport
Our road transport service handled 602,000 m3 of light oil-based products and 1.1
million tons of dark oil-based products in addition to bulk solids, chemicals and
gases totaling 132,000 tons. Transpetro’s 50,000 journeys in 2015 moved 744,000
tons of 1A fuel oil and 445,000 m3 of C5+ gasoline.
Oil Terminals and Pipelines
Highlights in this segment:
• starting to provide maintenance services for easement/ROW strips along
some 250 km of oil and gas pipelines operated by Espírito Santo Exploration
and Operations Unit (UO-ES);
• obtaining licensing from the Rio’s State Environmental Institute (INEA) to
operate our Angra dos Reis terminal’s effluent treatment plant, which started
treated effluent disposal making for significant environmental gains and cost
savings;
• starting pre-operations for two plants at our Cabiúnas (RJ) terminal as part
of expanded infrastructures to take natural gas from pre-salt oilfields. By
adding these units, Transpetro boosted
its natural gas condensate
processing capacity from 4,500 to 6,000 m/³ day.
• starting our Nationwide Operational Control Center’s remote control facility
to enable vehicle loading and inter-tank operating at the Itajaí Land Terminal
(SC) where monitoring will ensure more flexibility and safety for operations
while optimizing capacity without requiring new investment.
•
Transpetro’s waterway terminals logged successive record bunker deliveries
to Brazilian ports reaching 456,000 tons in August. The product’s 2015
volume of 5.4 million tons was up 9.47% from 2014;
21
•
replacing monobuoys at our Tramandaí/RS (Tedut) terminal with more
modern ones. Monobuoys are the main equipment items used by the Tedut
terminal which handles supply and off-take logistics for the Alberto
Pasqualini Refinery (Refap).
Gas Pipelines and Natural Gas Processing
Transpetro operated 7,151 km of gas pipelines and 12 compressor stations rated at
a total 432,000 HP and 2015’s average volume of natural gas moved was 74.8 million
m3/day, which was 1.3% below 2014’s average.
At our Cabiúnas (RJ) terminal - which is Brazil’s largest natural gas processing
complex - average volumes processed of natural gas and condensate totaled 11.4
million m3 and 794 m3/day respectively. The terminal’s processing capacity is 28.4
million m3 of natural gas and 6,000 m3 of natural gas condensate per day.
Distribution
Petrobras Distribuidora markets and distributes oil-based products and biofuels in
Brazil through a network of 8,176 service stations and 14,286 consumer-customers.
It is the leader in this segment with a 35.1% market share at December 31, 2015.
Petrobras Distribuidora marketed 53.4 million m³ of fuel in 2015, which was 7% below
2014’s volume sales, due mainly to Brazil’s economic-activity contraction. Net
operating revenue was R $96.9 billion with loss income at R $1.2 billion.
In foreign markets, we operate in the distribution segment in Chile, where we have
279 service stations; Argentina, with 265 stations; Paraguay, with 180; Uruguay, with
87 and Colombia, with 115. Our market shares in these countries are 12.5%, 6.1%,
19.5%, 22.7% and 4.1%, respectively.
Investments
Petrobras Distribuidora invested R $747. 6 million in 2015, of which R $369.8 million
was used to maintain and expand logistics infrastructure; R $135.6 million to develop
and modernize service stations; R $105.9 million for the aviation segment and R
$20.6 million for gas distribution and energy marketing/sales.
Gas, Energy and Chemical-Gas
Our Gas and Energy division processes, transports, distributes and sells natural gas,
generates and sells electricity and produces and sells fertilizers. It operates jointly
with Exploration and Production in Brazil to match supply and demand for gas as
well as domestic consumption of our downstream operations.
22
Monetizing natural gas from Brazil’s sedimentary basins is one of our Gas and
Energy division’s key strategic objectives. As domestic oil production has grown, so
has the supply of gas from associated fields. This has led to more reliable supplies of
gas used for domestic consumption, distribution company contracts, and
thermoelectric generation, thus gradually reducing the need for importing gas.
Natural gas
Natural gas supplied to the Brazilian market was 95 million m³/day. Of this total, an
average of 44.9 million m³/day came from domestic production of natural gas.
Regasification accounted for an average 18 million m³/day at our liquefied natural
gas (LNG) terminals in Pecém (CE), Guanabara Bay (RJ) and Bahia. Imports from
Bolivia contributed an average of 32.1 million m³/day.
Of the total offered, our natural gas transportation system consumed 1.7 million
m³/day. The total length of our oil pipelines remained unchanged at 9,190 km.
Natural Gas Sales
We sell natural gas through 48 contracts with 19 distribution companies for the
thermal and non-thermal segments, including cogenerating units.
In 2015, we supplied an average of 93.3 million m³/day of natural gas to the market.
Of this volume, 41 million m³/day went to the thermoelectric market, 14.7 million
m³/day to refineries and fertilizer plants and 37.5 million m³/day to gas distribution
companies to meet non-thermoelectric demand.
Natural Gas Distribution
In the natural gas distribution business, we hold a 51% controlling interest in
Petrobras Gás – (Gaspetro), the holding company that consolidates our stakes in
state-level natural gas distributors, except for Espírito Santo’s, which is wholly
owned by Petrobras Distribuidora. The distribution companies in which we hold
shares sold 32.6 million m³/day. Volume moved by these companies was down 2.8%
from 2014.
Projects concluded
• We started operations at two natural gas delivery sites - Itapetininga (SP) and
Itirapina (SP).
•
In April, we started operating our Caustic Treatment Unit (UTC) at the
Caraguatatuba Gas Treatment Unit (UTGCA) in São Paulo, to treat liquefied
petroleum gas (LPG) produced there and ensure regulatory compliance through
two LPG processing modules with 2,000 m³/d processing capacity each.
23
• Route 2 Gas Pipeline - this gas oil pipeline will interconnect the Santos Basin’s
pre-salt complex with the Cabiúnas terminal (Tecab) in Macae (RJ). The 401 km
pipeline with off-take capacity for 13 million m³/day started operating in
February 2016.
• Route 2 Natural Gas Processing Unit - located in Cabiúnas, allowed the expansion
daily gas processing capacity of pre-salt complex of Santos Basin’s, at the
Tecab-Reduc System (Duque de Caxias Refinery) from 23 million to 28.4 million
m³/day. New structure also enabled Tecab to boost condensate processing from
4,500 to 6,000 m³/day. This plant started operating in February 2016.
Ongoing projects
Oil pipelines
• Gasfor II (CE) - 83.2 km section from Horizonte to Caucaia due to start
operating in October 2017;
• Route 3 Gas Pipeline - this gas pipeline will interconnect the Santos Basin’s
pre-salt complex to our Natural Gas Processing Unit at the Rio de Janeiro
Petrochemical Complex (Comperj) in Itaboraí, with off-take capacity of 18
million m3/day. The total length of this gas pipeline will be 355 km, of which
307 undersea and 48 on land. Conclusion is scheduled for 2019.
Natural Gas Processing Units (NGPUs)
• Tecab supplementary treatment - this will enable Tecab to process an
additional 2.9 million m³/day of gas from the Santos Basin’s pre-salt complex
with additional off-take through Gasduc II for processing by Comperj’s Route 3
plants. Conclusion is scheduled for May 2016.
• Route 3 Natural Gas Processing Unit located at Comperj will be able to
process 21 million m³/day of natural gas from the Santos Basin’s pre-salt
complex. The two modules will be processing 10.5 million m3/day each and
operational start-up is scheduled for 2019.
Electricity
Our generating facilities’ capacity of 6,100 MW comprises 20 owned and leased
natural-gas or fuel-oil fired thermoelectric plants. Including generating plants using
renewable sources and projects in which we hold a minority interest, our electricity
generation capacity totaled 6,500 MW.
In 2015, we generated 4,600 average megawatts (average MW) of electricity for
Brazil’s National Interconnected System (SIN). This result is similar to 2014’s due to
24
continuous dispatching through the National Electric System Operator (ONS) due to
low water levels at hydroelectric reservoirs. We sold 854 and 3,2000 average MW of
electricity in the free-market and regulated environments respectively.
Projects concluded
Our integrated investments in natural-gas fired thermoelectric generation aim to
ensure energy supply while taking into account our contracts and reserves.
• Baixada Fluminense (RJ) thermoelectric plant with 530 MW capacity for
supplying the 2011 A-3 Energy Auction contract. Single and combined cycles
started operating commercially in March 2014 and January 2015 respectively;
•
Sepé Tiaraju (RS) thermoelectric plant added combined cycle took capacity
from 161 MW to 248 MW in order to boost efficiency and electricity supply.
Concluded in March 2015.
Fertilizers
Our Gas and Energy division runs three fertilizer plants: Fafen-BA, Fafen-SE and
Fafen-PR. In 2015, we produced 1.1 million tons of ammonia (of which 847 000 ton
were used to produce urea) and 1.4 million tons of urea.
Construction work at Nitrogenous Fertilizer III (MS) plant was halted and the
schedule is being reviewed. We canceled the Nitrogen Fertilizer V ammonia plant.
Biofuels
Our biofuels subsidiary Petrobras Biocombustível produces biodiesel and ethanol.
Its mission is managing our involvement in the biofuels market, integrating
production, logistics and marketing/sales activities to exploit synergies with the
Petrobras System. The company has taken measures to boost competitiveness and
cost efficiency thus ensuring its sustainability
Biodiesel and Agricultural Supply
Petrobras Biocombustível (biofuel) has capacity to produce 886,000 m3/year of
biodiesel through its holdings in five plants in Brazil. In 2015, significant operational
improvements were made to the three Petrobras owned plants - Candeias (BA),
Quixadá (CE) and Montes Claros (MG) - that account for 478,000 m³/year of this
total. The Guamaré (RN) plant operated for 4 months and shut down in November
due to its low-scale production.
At the other two plants, located in Marialva (PR) and Passo Fundo (RS), with total
capacity of 390,000 m³/year, Petrobras Biocombustível (biofuel) operates through
25
the company BSBios Sul Brasil, in which we have a stake with shared management.
All plants qualified for the Social Fuel Seal showing conformity with the guidelines of
the National Biodiesel Production and Use program.
In addition to biodiesel production assets, in partnership with Galp Energia, the
company is developing the Belem program for palm-tree cultivation and oil
extraction and export in Brazil and producing 270,000 tons of green diesel in
Portugal. In 2015, the palm tree plantation area in Pará totaled 42,000 hectares. In
order to prioritize investments, plans to install palm oil extractors in Brazil and build
the green-diesel plant in Portugal were postponed until further notice.
Petrobras Biocombustível (biofuel) also extracts and sells castor oil, cottonseed oil
and sunflower oil through its holding in the Bioóleo company located in Feira de
Santana (BA), which has capacity to process 130,000 t/year of grains and refine
60,000 t/year of soybean oil or 48,000 tons/year of cottonseed oil. Its operations
help maintain the right to use the Social Fuel Seal.
Ethanol
Petrobras Biocombustível (biofuel) operates in the ethanol segment with shared
management of three companies: Bambuí Bioenergia, Guarani, and Nova Fronteira
making for a combined total sugarcane milling/crushing capacity of 31.2 million tons
per year.
At the end of 2015, Bambuí Bionergia’s harvest was sufficient to crush 1.2 million
tons of sugarcane and produce 103,000 m³ of hydrated ethanol. Although these
volumes showed increases of 8% and 10% respectively on the previous year’s
harvest, the company posted cash flow difficulties due to rising operating costs and
high indebtedness.
Guarani - in October 2015, Petrobras Biocombustível (biofuel) subscribed to its last
scheduled capital contribution under the investment agreement for this company,
which was paid up in January 2016, thus increasing its stake from 42.95% to 45.97%.
Sugarcane crushed totaled 20.1 million tons while ethanol production reached
681,000 m³ and sugar 1,494 tons.
Nova Fronteira Bioenergia S.A. - the company’s high level of agricultural productivity
and operating efficiency enabled it crush 4.8 million tons of sugarcane and produce
393,000 m³ of ethanol, thus retaining its position as Brazil’s biggest ethanol plant.
Progress on our R&D for 2nd-generation cellulosic ethanol went ahead according to
plan in 2015. However, Petrobras Biocombustível (biofuel) is waiting for the economy
to pick up before restarting studies for a new plant.
26
Impairment
For details of impairment affecting our business units see note 14 to the financial
statements in this Management Report.
INVESTMENTS
Our investments totaled R$ 76.3 billion in 2015, primarily allocated to exploratory
activities, developing production and expanding logistics infrastructure for oil and
oil-based products. Funds were also allocated to maintain and expand refining
facilities and to lay and extend gas pipelines and build natural gas processing units
for out-taking and treating pre-salt production.
Capital expenditures and investments
Exploration & Production
Downstream
Gas and Power
Distribution
Biofuels
Corporate
Total investments
R$ million
Fiscal Year
2014
2015
63,321
8,390
2,581
853
152
1,018
76,315
60,072
18,510
6,064
1,152
281
1,061
87,140
%
5
-55
-57
-26
-46
-4
-12
We invested R$63.3 billion in Exploration & Production. Of this total, R$7.4 billion
was allocated to exploration, R$55.9 billion to development of production, to
infrastructure and support. These investments were used to develop production
from new fields, maintain old fields, and improve logistics infrastructure and
technology. In 2015, we started operating two platforms: Cidade de Itaguaí in the
Iracema Norte area of the Lula field, and P-61 in the Papa-Terra field.
In the Downstream segment, we invested R$ 8.4 billion, mainly to maintain and
expand our refining facilities. We invested R$941 million to conclude work on the
first train of the Abreu e Lima Refinery (Rnest) and R$2.2 billion on the State of Rio
de Janeiro Petrochemical Complex (Comperj), focusing new facilities for its natural
gas treatment plant.
We allocated R$2.6 billion to Gas and Power, some of which was used to build and
expand capacity for gas pipelines and plants processing natural gas produced by the
27
pre-salt projects. We started operating two combined cycle power plants, UTE
Baixada Fluminense and UTE Sepé Tiarajú with generating capacity of 530 MW and
248.6 MW respectively.
In the Distribution segment, we invested R$853 million billion and prioritized work
on expanding logistics capacity to meet domestic demand.
Divestments
We held two asset sales under our 2015-2016 Divestment Plan for an estimated
US$15.1 billion:
• All our assets in Argentina’s Santa Cruz province Austral Basin were sold to
Compañía General de Combustibles S.A. for US $101 million.
• 49% of stock capital of Petrobras Gás S.A. (Gaspetro), the holding company
consolidating our ownership interests in state-level natural gas distributors
in Brazil, was sold to Mitsui Gás e Energia do Brasil Ltda. for R$1.9 billion.
CONTROLLING SHAREHOLDER RELATIONS
We are a mixed-capital company set up by Law No. 2004/53 to run the Federative
Republic of Brazil’s monopoly in oil, gas and their by product business. As of the
promulgation of Law No. 9,478/97, we started to do business under free-
competition conditions.
Brazilian law requires the Federative Republic of Brazil, which is our controlling
shareholder, to hold a majority of our voting shares with the power of electing a
majority of board members and thus the officers responsible for managing the
company.
Pricing Policy
Our pricing policy pursues long-term alignment between domestic international oil
and oil-product prices therefore we avoid passing on short-term effects arising from
volatile prices and currency exchange rates. Although pursuing convergence in the
long run, we may go through periods in which our products’ prices are not aligned
with international levels.
As a result, depending on the quantity and intensity of variations in international
prices for oil and oil-based products and the Brazilian real’s exchange rate against
the US dollar, we may for certain intervals of time decide against adjusting prices of
our products in Brazil, which is reflected in our operating results.
28
“LAVA-JATO” OPERATION (“OPERATION CAR WASH”)
In 2009, the Brazilian Federal Police’s “Operation Car Wash” started to investigate
money laundering practiced by criminal organizations in several of the country’s
states. In 2014 and 2015, federal public prosecutors concentrated part of their
investigations on illegal practices involving Petrobras contractors and suppliers and
discovered an extensive scheme of overpayments involving a numerous participants
that included former Petrobras employees. Based on the information available to
the company, the above scheme involved a group of companies that organized a
cartel to obtain contracts with Petrobras from 2004 through April 2012 involving
additional costs used to make illicit payments to political parties, elected officials or
other political agents, employees of contractors and suppliers, former Petrobras
employees and other persons involved in this scheme.
In connection with the investigation, former Petrobras executives were arrested,
accused and/or convicted in courts of first instance for money laundering, criminal
organization and passive corruption. Other former executives of our company and
executives of companies that supply goods and services to Petrobras have been, or
may be, charged as part of this investigation.
For more details of “Operation Car Wash “, see the notes to this Management
Report.
CLASS ACTION AND RELATED PROCEEDINGS
From December 2014, several lawsuits were filed against Petrobras in the United
States by investors who claim to have suffered losses for having acquired (between
2010 and 2015) the company’s securities traded on the New York Stock Exchange
(NYSE) or due to other transactions that took place in the United States. The Federal
Court for the Southern District of New York is currently judging a class action and
twenty-eight lawsuits filed by individual investors as well as an action brought by an
individual investor in the Court Federal for the Eastern District of Pennsylvania, all
making similar allegations.
The plaintiffs claim that Petrobras reported materially false information and
committed omissions capable of inducing investor error in its filings of material
facts and other information with the Securities and Exchange Commission (SEC),
particularly in relation to the value of its assets, expenses, net income and the
efficacy of its internal controls over the company’s financial statements and anti-
corruption policies, thus supposedly artificially raising the price of the company’s
securities.
In February 2016, the judge issued a decision certifying two classes of investors. The
first, whose claims are based on the Securities Act will be represented by the
29
plaintiffs Employees’ Retirement System of the State of Hawaii and the North
Carolina Department of State Treasurer; the latter, whose claims are based on the
Exchange Act, will be represented by the plaintiff Universities Superannuation
Scheme Limited. Pomerantz LLP will be acting as attorneys for both classes.
The actions are still ongoing and may be appealed; the complex issues involved are
subject to substantial uncertainties and depend on factors such as the originality of
legal arguments; progress on the discovery procedure, the schedule set by the court;
delays for judgments; obtaining evidence in the possession of third parties or
adversaries; the court’s decisions on key issues; expert witnesses’ analyses; potential
for the parties to start negotiating; and the parties’ intention of negotiating any
agreements in good faith. Furthermore, the claims as formulated are wide-ranging,
covering several years, aimed at activities in several areas of Petrobras. The
plaintiffs’ class action and their individual cases have not quantified the alleged
damages. The uncertainties inherent to all of these issues will affect the amount
involved and the date of the final decision on these actions. Consequently, we are
unable to reliably estimate the potential loss involved in this litigation. We have
retained the services of a specialized US law office and will be mounting a steadfast
defense in relation to the allegations made.
MANAGEMENT
Corporate governance
Our corporate governance structure consists of the Shareholders General Meeting;
Board of Directors and its committees; Fiscal Council; internal and external audits;
General Ombudsman and Whistleblower Channel; and Executive Board and its
committees.
Members of the Board of Directors are elected at the General Meeting. We currently
have ten members, of whom seven, including the chairman, are designated by the
controlling shareholder; one by minority holders of common shares; one by holders
of preferred shares (excluding the controlling shareholder); and one by employees,
as stated in the bylaws which as of 2015 require alternate members serving for two-
year periods.
In 2015, five statutory committees were formally attached to the Board of Directors
were set up: Strategic; Financial; Audit; Safety, Environment and Health; and
Compensation and Succession. These committees consist of collegiate members
and/or persons of proven experience and expertise in the market. Their purpose is to
advise the board through analysis and recommendations on matters requiring more
in-depth study before being submitted to the board for decision making.
30
In February 2016, our Audit Committee has been instated and consists exclusively of
members of the Board of Directors as required by bylaws.
Governance, Risk and Compliance (GRC) started to act in 2015 with the mission of
including fraud and
ensuring compliance for processes and mitigating risk,
corruption risk, adherence to laws, standards and internal and external regulations.
The GRC officer was elected from a slate of three prepared by a company
specializing in selecting industry executives. The officer’s three-year mandate may
be renewed and he or she may be removed only by a board resolution voted by at
least one of the directors elected by the minority or preferred shareholders.
In 2015, the Board of Directors approved the General Ombudsman’s Office
restructuring process, which included selecting a new general ombudsman and
setting up an independent reporting channel. The board’s choice of general
ombudsman was based on a list of professionals prepared by a company specializing
in selecting executives which was analyzed by the Audit and Compensation and
Succession committees.
We also started work on a review of our governance and management model, a
project that will lead to new organizational structure and Executive Board advisory
committees. Among the measures being taken to improve and strengthen our
corporate governance, we are reviewing instruments such as our bylaws, corporate
governance guidelines and internal regulations for the board of directors and its
advisory committees and for the executive board.
In addition, senior management has conducted a review of authorizing powers in
place for the Board of Directors and Executive Board and we have adopted a shared
authorization model stipulating collective rather than individual decision-making.
Audit Committee
Composed of independent members, in 2015 the Committee held 29 regular
meetings involving the members of the Executive Board, Executive Managers,
Internal Auditors, Independent Auditors and the Fiscal Council.
The Committee’s responsibilities include the analysis of the integrity of the
quarterly and annual financial statements and the transactions with related parties
report. It also evaluates the effectiveness of the audit processes and the structure
of internal controls.
In addition, the Committee monitored the company’s exposure to risks and called
meetings to discuss its main business strategies.
31
Risk Management and Compliance
Risk management
Risk management’s organizational structure consists of the Enterprise Risk
Executive attached to the Governance, Risk and Compliance officer and units or
departments managing risk in their own business units.
Our Enterprise Risk Executive is tasked with the coordinated performance of the
following duties:
•
•
identifying and monitoring the effects major risks have on our integrated
results and reporting them periodically to the Executive Board and Board of
Directors;
stimulating integration and capturing synergy across risk management
initiatives taken in the organizational units, as well as in other business,
support and management processes;
• establishing a corporate risk management methodology guided by an
integrated systemic view that enables a continuous risk monitoring
environment on different hierarchical levels;
• disseminating knowledge of risk management;
• providing support for managers to develop and implement the measures
required to ensure that exposure to tolerable risk levels is aligned.
In June, the Board of Directors approved our Corporate Risk Management Policy
specifying authorities, responsibilities, principles and guidelines that should guide
risk-management related initiatives taken in the Petrobras System.
Our Enterprise Risk Management Policy is fully compliant with methodological
references recognized worldwide, such as the Committee of Sponsoring
Organizations of the Treadway Commission (COSO-ERM) and ISO 31000, and with
the Corporate Risk Management Guideline issued by the Brazilian Institute of
Corporate Governance (IBGC).
This policy highlights a more comprehensive approach to enterprise risk
management that combines the traditional economic and financial vision with
management of factors that endanger life, health and the environment (SMES);
protects assets and business information (Asset Security); and combats fraud and
corruption (legal compliance), among other enterprise risks.
32
Our enterprise risk management policy allows any employee to access terms and
concepts related to the
issue,
initiatives being developed and the persons
responsible for managing of each of the Enterprise Risk to which we are exposed.
These enterprise risks are classified
into five groups: Strategic, Financial,
Compliance, Business and Operational.
Compliance
Our Compliance Executive has been working to implement control and compliance
activities, aiming the reducing of fraud and corruption risks, among others,
reporting to senior management on measures taken and results across the entire
Petrobras System.
We are officially recognized as victim of crimes discovered during by “Operation Car
Wash “by investigators and the judge in charge of criminal proceedings. We have
therefore taken the measures required to recover damages suffered by the
company, including those related to our corporate image.
We have brought five civil-law actions for acts of administrative misconduct judged
by federal prosecutors in February 2015, and in another action for the same purpose
brought by the Federative Republic, including a compensation claim for moral
damages. In addition, we have joined penal actions as assistant plaintiff and we have
renewed our commitment to continue cooperating in order to elucidate the facts and
disclose them to our investors and the general public on a regular basis.
In as much as “Operation Car Wash “ investigations lead to leniency agreements with
the companies investigated or with individuals who agree to return funds, we may be
entitled to part of the amounts.
In this respect, as compensation for damage to the company, the amount of R$229.7
million related to funds repatriated by the authorities has been returned to our
treasury.
Correction Committee
We set up the Correction Committee to guide, standardize and monitor the
implementation of disciplinary action in cases related to fraud or corruption in the
company. The Committee is attached to the Governance Risk and Compliance officer
and consists of executive managers from Legal, Human Resources and Compliance
plus an executive secretary.
Communication and Training
In order to publicize the activities we are developing, we have started an employee
in Compliance.” We are spreading
awareness campaign called “Petrobras
33
information through messages, emphasizing our ethical values and conduct, and
producing publications, reports and videos with the president and Governance, Risk
and Compliance officer and managers.
We are also partnering Petrobras University for training, both physical-presence and
distance learning courses, as well as talks for the entire workforce. Members of our
senior management attended a course on anti-corruption laws, including the
Foreign Corrupt Practices Act of the United States.
Compliance Agents
We have designated about 100 employees to act as compliance agents and help with
outreach for our control and compliance measures, in particular those aimed at
preventing fraud, corruption and money laundering. These professionals are
committed to encouraging discussions on the subject, which includes explaining
guidelines and other issues related to the Petrobras Program for Preventing
Corruption.
Integrity Due Diligence
In order to mitigate integrity risks in our procurement of goods and services, since
August we have been applying a new criterion for evaluating suppliers which we call
the “Integrity Criterion”.
All companies interested in starting an application process, or renewing or
reclassifying their entries in our database are now required to provide information
concerning their organizational and business structure, relations with government
or public-sector officials, integrity record, relations with outsourcers or other third
parties and their integrity program. This information will be used to support the
Integrity Due Diligence procedure as a result of which a supplier’s Integrity Risk
Level may be rated high, medium or low.
Integrity Risk ratings, as well as the results of technical, legal, economic and Safety,
Environment, and Health (HSE) assessments are taken in to account when selecting
companies that will be invited to participate in our bidding processes. From August
to December, some 8,400 Integrity Due Diligence processes were entered in our
registration system.
Specialized independent whistleblower channel
We are restructuring our General Ombudsman Office, which manages the whistle
blower channel, in order to make its processes and controls more efficacious and to
ensure confidentiality for whistle blowers; secrecy and integrity of information;
traceability of processes; and full treatment of all reports.
34
The new whistleblower channel is managed by an outside company called Contato
Seguro and functions as one single channel for the entire Petrobras System. Its role
is to formally receive and register internal or external reports or complaints relating
to fraud, corruption, money laundering and serious irregularities while guaranteeing
anonymity and commitment on our part that there will be no retaliation for
whistleblowers.
Ethics
Our commitment to ethics is stated in documents such as the Petrobras System
Code of Ethics and the Petrobras Conduct Guide; and initiatives such as the Ethics
Management System.
Our Code of Ethics sets forth the ethical principles and commitments of conduct to
be followed by members of our Board of Directors, Fiscal Council Board and
Executive Board and by Petrobras System employees, trainees and service providers.
The Conduct Guide was adopted in 2014 to reach the same segments and it explains
the principles behind the Code of Ethics, with practical guidelines for day-to-day
work.
We are part of the Ethics Management System of the Federal Executive Branch,
coordinated, evaluated and supervised by the Public Ethics Commission. We have an
Ethics Committee whose attributions are to act as advisory body for our managers
and employees; advise on, disseminate and foster fulfillment of ethical principles
and commitments to good conduct and determine investigation of conduct contrary
to ethical standards by the units concerned. On receiving a consistent report or
complaint, the Ethics Commission will assess the need to set up an Internal
Investigation Commission to examine evidence of or instances of irregularities and
provide support for administrative or disciplinary measures, among other
appropriate procedures.
Through the Ethics Commission, the Petrobras Ethics Management System
implemented to establish and structure institutional initiatives for the promotion,
diagnosis, assessment and monitoring of ethical conduct in our internal activities
and external relationships. We are prioritizing prevention of misconduct and
disseminating educational information and activities through training for the
workforce and new managers.
In 2015 we trained 105 professionals to be multipliers of ethical principles and to
support managers developing local initiatives. We are developing a communication
campaign for the workforce and specifically for managers including guidance on
ethical conduct in the company. We are taking measures to encourage Petrobras
System employees to formally declare their awareness of the Code of Ethics and
Conduct Guide.
35
INTERNATIONAL SITUATION AND OIL MARKET
The world economy’s 2015 growth rate of 3.1% 3 showed a slight slowdown in
relation to 2014’s 3.4%. Slower growth worldwide was mainly due to China’s
continuing to grow at a lower rate, along with the Russian economy’s drastic
contraction and a weak showing from Latin America, particularly South America, as
secondary factors. However, the major advanced economies (the USA, Europe and
Japan) grew at the same rate or slightly faster.
The United States was able to hold its 2015 GDP growth rate to the same level as the
previous year’s with 2.4%4. However, while the 2014 number was due to higher
investment and exports, the key factors driving growth in 2015 were private
consumption and investment in real estate assets picking up. A sharp fall in exports
reflected lower levels of growth in North America’s major trading partners and the
dollar’s generalized strengthening against other currencies.
Unemployment continued to fall in the USA to reach 5% at the end of 2015, thus
contributing to stronger growth in consumer spending. This good result prompted
widespread expectations of a Fed Funds Rate hike particularly in the second half of
the year. However, the Central Bank waited until the last month of 2015 to finally
start basic rate hikes.
Europe continued to meet with difficulties over income and employment growth
policies. Worries arising from spending cuts remained on the fiscal side but were less
pronounced than in 2014. Greece reached another agreement with its creditors,
including renegotiated debt and terms of payment, that settled its fiscal situation
for the time being at least. The United Kingdom (which has major influence despite
not being in the Euro zone) voted stricter tax legislation but Euro zone countries’
internal imbalances continued to give rise to concern. While Germany, the UK and
Spain have succeeded, France and Italy are still struggling to sustain more
consistent recovery. Overall, the European economy’s GDP grew 1.5% in 2015.
Japan saw economic growth rising again to reach 0.7% against a fall of 0.1% in 2014.
Continuing fiscal and monetary stimulus measures may be having an effect.
However, there is persistent doubt domestically as to the Japanese government’s
ability to reach its economic targets, particularly its 2% annual inflation.
China’s economy posted another slowdown to 6.9%5 in 2015 from 7.4% in 2014.
Lower levels of retail sales indicators and fixed-capital investments led to falling
domestic demand. Exports posted even worse results with annual exports of goods
and services showing a fall (in US$) for the first time since 2009.
3 Estimate published in World Economic Outlook, the IMF’s official document issued on January 19, 2016
4 Source: Bureau of Economic Analysis
5 Source: National Bureau of Statistics of China
36
This behavior on the demand side led to a slowdown in China’s industrial output and
a steep rise in levels of idle capacity. In response to these results, the Chinese
government again wagered on monetary stimulus measures such as lower interest
rates and compulsory deposits requirement for commercial banks in order to
stimulate credit.
Other major emerging economies affected by China’s slowdown include Russia and
Latin American countries. This reflected China’s role as a major importer of the
agricultural commodities, minerals and metals, the predominant items exported for
these countries, who saw their volume exports fall. In addition, China’s lower growth
also helped weaken commodity prices, thus affecting income growth in these
countries.
Falling prices for oil and gas, Russia’s main export commodities (70% of the total in
2013, according to the World Bank), worsened its economic situation. This effect
combined with economic embargoes due to Russia’s involvement in the Ukraine
conflict led to its GDP falling 3.9% in 2015. A point to note is the ceasefire in Ukraine
means withdrawing weapons from the conflict zone and holding new regional
elections while recognizing the special status of regions not under the government’s
control. New elections have yet to be held in these territories.
Fast falling commodity prices for South America’s exports adversely affected the
entire region. From July 2014 through October 2015, oil, iron ore, copper and
soybean prices fell 56%, 26.9%, 38%, and 23.6%6 respectively. Given the significant
weight of these products in the continent’s exports, their lower prices have led to
deterioration for almost all of these countries’ current accounts with their currencies
heavily depreciated. In addition to foreign trade, South American countries met with
major fiscal difficulties. Falling commodity prices directly impacted governments
whose revenues are most dependent on their exports, such as Venezuela, Colombia,
Ecuador and Chile. In other cases, such as Argentina’s, the main issue was higher
public spending. These adversities were aggravated by a polarized political
environment, leading to a 0.4% fall in South America’s GDP for the 2014-2015
biennium against 3% growth back in 2012-2013.
Brazil was hit by severe recession in 2015 with GDP down 3,8%, its worst fall since
1990. This contraction largely reflected a significant deterioration in business and
consumer expectations for the economy together with a sharp drop in domestic
demand and particularly investments and private consumption.
The worsening macroeconomic scenario was also decisive for the Brazilian currency’s
sharp fall against the dollar during the year. After starting 2015 at R$2.69, the US$
ended the year at R$3.9. The average exchange rate for the year was R$3.33/US$.
6 Corresponding to the variation between Jun/14 and Oct/15 averages of Bloomberg’s CO1, IOE1, S 1 and HG1
tickers
37
Despite domestic demand falling while idle capacity in industry rose steeply, the
inflation rate measured by 2015’s consumer price index (IPCA) soared over the
Central Bank’s targeting range ceiling of 6.5% to reach 10.7% for the year, due
mainly to steep increases in government controlled prices, particularly electricity
and fuel, on top of the weaker currency itself. Given the high level of imported
content in Brazil’s supply chains, the weakened currency led to much higher costs
that were largely passed through to domestic producers’ final prices.
Fiscal indicators too showed significant deterioration. With sharply falling tax
revenues reflecting weak GDP, the public-sector primary deficit (before interest on
debt) reached 1.9% of GDP. Then the basic interest rate hike pushed the cost of
servicing public debt to about 8.4% of GDP. These factors together led to a nominal
deficit (or public sector borrowing requirement) of 10.3% of GDP.
The above situation was behind a rise of five percentage points in the overall ratio of
the stock of government debt to GDP, from 57.2% to 66.2% in 2015. The worsening
of the fiscal situation was also decisive for the downgrading of the country’s credit
rating, which meant that Brazil passed from investment grade to speculative grade
in the three major credit rating agencies in the world.
Brent oil prices7 remained low in 2015 to end the year at US$35.75/barrel and 2015’s
annual average of US$52.46/barrel showed a fall of 47% on the previous year while
West Texas Intermediate (WTI) referenced from Cushing in the Midwest approached
logistics capacity. At
Brent prices due to higher Gulf of Mexico offtake
US$48.68/barrel, WTI’s annual average per barrel in was down 48% from 2014.
In December 2015, the United States Congress voted to allow oil exports after 40
years of restrictions affecting trade in this commodity. This regulatory change was
immediately reflected in relative prices of American oil. After falling in relation to
Brent year after year since 2011, WTI ended 2015 at US$37.04/barrel, which was
US$1.29/barrel above Brent levels.
World oil consumption8 showed a substantial increase of 1.54 million bpd - 1.7%
more than the 2014 volume. In this period, the United States - in addition to non-
OECD member countries - also made a significant contribution to demand-side
growth. Note that 2015 oil prices remained at significantly lower levels - around
US$50/barrel – and this was a major driver for growth of consumption.
With falling oil prices, there was a change in the dynamics of supply coming from
non-OPEC member countries, which rose by 1.23 million bpd in 2015. However,
although some of these countries have increased their supply, there was a drastic
decline in growth of production during the year, particularly in the USA, where it rose
7 Source: Bloomberg (Brent Dated, WTI).
8 Source: OPEC Monthly Oil Market Report - estimates.
38
by less than 800,000 bpd in the last quarter of 2015 after rising by 1.6 million bpd
during the first half of 2015. Meanwhile, the OPEC countries - particularly Iraq and
Saudi Arabia - substantially boosted production to end the year at 32.18 million bpd,
which is 1.18 million bpd more than 2014’s volume. Note also that the OPEC
countries are characterized by low production costs, so their output is resilient in a
low oil-price context.
In relation to climate issues, the UN Climate Conference (COP 21) was held in Paris in
December and
it adopted the first global extension agreement to reduce
greenhouse gas (GHG) emissions and mitigate climate impacts. For the first time, the
historic Paris Agreement saw 195 signatories to the Climate Convention, thus
admitting that GHG emissions must be cut back.
The main points made in the document, which will come into effect in 2020, involve
voluntary measures to avoid global temperatures rising more than 2°C - preferably
1.5°C - compared to the pre-industrial period; guaranteed financing from the rich
countries (US$100 billion/year) to mitigate impacts on developing countries; and a
5-yearly review of the Nationally Determined Intended Contributions (NDICs) that
countries propose to reduce their emissions. Brazil’s NDIC for COP 21 stipulated a
37% reduction in greenhouse gas emissions (GHG) by 2025 (from base-year 2005),
then 43% by 2030. For the energy sector, the proposal mentions renewable energy’s
share of the energy matrix rising to 45% by 2030 from its current 39.4% - due to
growing use of alternatives such as wind, solar, biomass and hydroelectric sources.
The United States and China presented a joint position in the month prior to the
Paris Conference and underline the commitment assumed
in their bilateral
agreement signed in 2014. China is to reach its maximum level of emissions in 2030,
while the United States promises 26% to 28% lower emissions by 2025 (base-year
2005).
Note that the results obtained at COP 21 and their possible consequences in terms
of national policies and targets may pose new prospects for the transition to a low
carbon economy and should be therefore be monitored as a point to watch for the oil
and gas industry.
Brazil’s windpower capacity totaled 7.8GW at the end of 2015, which was 59% more
than the 2014 number. In addition, the second Reserve Energy auction specifically
for solar sources was held in August with 833.80 MW being committed. Measures
such as tax relief for electric and hybrid (electricity plus combustion) models may
favor the spread of new technologies and these vehicles, which accounted for only
0.007% of Brazil’s total9 in 2015.
9 Source: Estratégia e Organização/Estudos de Mercados e Negócios/ Strategy and Organization / Market and
Business Research
39
This low oil price environment has posed challenges for technological development
and innovation in the oil and gas industry as upstream projects go ahead at a slower
pace or are postponed. In this context, companies are prioritizing technologies and
techniques that hold out the promise of lower costs and higher efficiency in the
short and medium term, although maintaining and increasing oil and gas reserves is
still a long-term objective. In the USA, in addition to efforts to tap unconventional
sources (shale gas and tight oil) more efficiently, companies are looking for lower
reducing/recycling/reusing
impacts by applying
costs and environmental
technologies to water used in their processes.
40
CORPORATE FUNCTIONS
Safety, Environment, Energy Efficiency and Health (HSEE)
In 2015, we invested R$6.9 billion in operations and projects related to integrated
management of safety, environment and health (HSE). In this context, we have
developed initiatives to enhance performance in these areas, comply with specific
legislation and ensure that our plants’ operational practices are safe, profitable and
environmentally responsible.
These initiatives include certification of compliance with ISO 14001 (environmental
management) and OHSAS 18001 (health and safety management) for our HSE
management systems at our plants operating in Brazil and internationally. In 2015,
all oil refined in Brazil was processed at certified plants.
The Board of Directors’ Safety, Environment and Health Committee, consisting of
three members, monitors and evaluates our performance in these areas and guides
the development of strategies that will be adopted to improve results.
Safety
With the spread of fundamentals, concepts and practices and the implementation of
programs and measures in the Process Safety and Occupation Safety disciplines, as
well as the application of solutions to prevent injuries and illnesses, allowed the
Reportable Event Rate indicator to fall by 9% compared with 2014.
Despite the prevention programs developed in all our areas and companies, we
recorded a Rate of Frequency of Accidents with Absence 6% higher than in 2014.
Also, we recorded and regret the 16 fatalities that took place involving our own
employees and contractors’ professionals in the year.
This adverse outcome was impacted by 9 fatalities in one single accident at FPSO
Cidade de São Mateus in February.
Eliminating fatal accidents and any other types involving people is the main
challenge for our safety management, based on the value of “Respect for Life”
stated in our Strategic Plan 2030.
We are investigating all accidents reported in order to identify their root causes. We
recommend preventive and corrective actions, which are monitored once they have
been adopted. In cases of serious accidents, we send out company-wide alerts to
enable plants to assess the probability of similar events occurring in their own
operations and decide on the advisability of adopting the recommended measures.
41
Leakage of oil and oil products
Oil and oil product leaks/spills totaled 71.6m3 in 2015, which 3% higher than the
volume reported in 2014 and 84% below the 461 m³ alert threshold. Spillage levels
remained below 1 m3 per million barrels of oil produced, which in itself is an excellent
number in relation to the world’s oil and gas industry.
By introducing a system for communicating, recording and treating leaks we were
able to ensure daily monitoring of incidents, impacts and mitigating measures.
Moreover, through continuing measures taken under our Zero Leakage Plan
introduced in 2012, we were able to optimize management processes and reduce the
risk of these incidents for our operations.
Spill Response
Our standards, procedures and response plans for leaks/spills are structured at
local, regional and corporate levels. To act effectively in these situations, we have
the following resources: 36 oil collecting vessels; 113 support vessels and other
vehicles; 270 oil collectors; approximately 92,000 meters of containment barriers;
113,000 liters of chemical dispersants, and other items. These resources are
distributed around 12 Environmental Defense Centers and 11 outposts, in addition
to Transpetro’s Emergency Response Centers all over the country.
We are associated with Oil Spill Response Limited, an organization that acts on a
global scale and specializes in providing and mobilizing additional resources to
ensure effective oil spill responses. In 2015, we conducted 22 simulated drills at
regional level, including spill response training.
42
Environment and Energy Efficiency
To increasingly heighten the eco-efficiency of our operations, we work for rational
use of water, energy and other inputs while managing atmospheric emissions and
waste and effluent. Our goal is to minimize environmental impacts of our activities.
Our investment projects systematically assess the main risks on the safety,
environment, energy efficiency and health dimensions. The results of these
evaluations are monitored regularly by our SEH committees and the Board’s audit
committee, verifying alignment with corporate guidelines and compliance with our
Risk Management and Mitigation Plan’s recommendations. In 2015, we issued 26
technical reports/opinions for investment projects, including recommendations to
improve SEH performance. In the same period, assessments of the implementation
of recommendations in 23 projects approved by senior management were submitted
to the Board’s SEH Committee.
Water resources, effluents and biodiversity
We reused 23 million m³ of water in 2015 - a volume equivalent to a year’s supply for
a city of 550,000 inhabitants. The savings from rationalization and reuse help to
ensure the secure supplies required for our operations. After conducting pilot tests,
we started using a Water Scarcity Risk Index developed in partnership with
COPPE/UFRJ to assess areas around our plants and support initiatives and
investments mitigating these risks.
To compile our Annual Biodiversity Report, we centralized the collection and
consolidation of data for biodiversity-risk management and its impacts. With this
information, we plan and develop projects for preventing and mitigating impacts,
and for restoring environments or offsetting impacts. These initiatives may involve
characterizing
recovering ecosystems,
environmental monitoring, protecting endangered or endemic species and
managing fauna.
fauna, protecting and
flora and
Atmospheric emissions, climate change and energy efficiency
In recent years, we have reduced greenhouse gas emissions (GHG) from our
processes through various initiatives, particularly modernizing facilities, using more
efficient equipment, using more natural gas, standardizing projects and operating
practices, and investing in R&D.
We have cut GHG emissions by 3.7% against 2014. This result was due to making
more use of gas associated with oil producing operations, burning less fuel oil at
thermoelectric plants, and reducing emissions from maritime transportation
operations.
43
Health
Our annual healthcare and wellness
initiatives conducted at corporate and
organizational unit levels are based on monitoring strategic health indicators and
analyzing the epidemiological profile of our employees.
Planning for our initiatives is guided by profiles obtained from data we have
collected during occupational exams and data associated with the characteristics of
employees’ activities.
Our time-lost indicator tracks the evolution of absenteeism due to accidents and
illnesses and their main causes, whether workplace related or otherwise. This
stratified monitoring also influences our healthcare and wellness initiatives. In 2015,
time lost was 2.47%, which was above the 2.41% alert threshold set for the year.
Social Responsibility
Human Rights and local development
In 2015, we defined the dimensions of human rights and local development
methodology for Social Responsibility Management in Investment Projects. These
dimensions - determined by mapping critical issues that have major impact for the
oil and gas industry - are the basis for our social risk identification, analysis and
treatment, bearing in mind our relations with stakeholders, particularly local
communities and suppliers. This work helps us select of alternative locations and
technological routes for our projects with the aim of minimizing negative
interference from project activities for communities’ everyday lives, especially when
indigenous peoples and traditional communities are involved.
Managing Social Risks
We have approved a number of management guidelines to identify social risks in
operations, decommissioning and exploration,
investment, acquisition and
divestment projects. The methodology helps managers address these risks by
examining macro processes in the Petrobras system’s value chain. The document
poses the premises, requirements and issues relevant to risk identification that arise
from our Social Responsibility and Business Risk Management policies. These
guidelines are important for the integration of social responsibility into decision-
making and business management.
Social Investment
We invested approximately R$271.2 million in 907 social, environmental, educational
and sports projects. Through the Petrobras Environmental Program, we articulated
44
initiatives that help create solutions and offer alternatives with transformative
potential to tackle the social and environmental issues affecting Brazil.
Community relations
In 193 communities served by the Petrobras Agenda 21 program, we held workshops
on social management to strengthen the program’s community forums and train
leaders from the locality and young people living in the vicinity of our operational
units and plants. Subjects covered include producing written content, social
entrepreneurship, cooperatives and sharing economy, developing community
projects and structuring legal entities.
Research and Development
Our R&D center coordinating our activities in this field is named for Leopoldo
Américo Miguez de Mello, hence its local acronym ‘Cenpes’. We have 1,808
employees at Cenpes, of whom 1,338 are working exclusively on R&D and 300 on
basic engineering projects, while 23% are teachers and 14% doctors. We work in
partnership with over 100 Brazilian and foreign universities and research
institutions, suppliers and other operators.
In 2015, our R&D investments totaled R$ 2 billion. Our goal is to develop
technologies for our Business and Management Plan while staying ahead of new
trends.
Our main accomplishments:
• deploying software known as ‘Pressure While Drilling Analyzer’ (PWDa) which
collects real-time well drilling data to detect hazardous situations and warn
of operational problems. By using this program, we reduced rig use by 43.8
days and posted US$38.3 million cost savings in the year;
• starting operations at the first delayed coker atmospheric residue plant at
the Abreu e Lima Refinery (RNEST). By using this trailblazing proprietary
technology in the refining process at RNEST, we may obtain distillate yields of
around 60%, which is a gain of around 25% in relation to the Petrobras
System’s average using conventional technologies;
•
•
deploying a new version of Octopus software to optimize oil field drainage
networks, maximize their offtake efficiency and recovery factors. We are
using this tool in pre-salt fields too;
Floating Mud Cap Drilling (FMCD) led to US$18 million savings on drilling and
completing a well in the Marlim Leste field. Using this drilling technique, fluids
45
and cuttings are pumped into highly permeable formations rather than
returned to the surface;
•
removing and chemical inhibiting (squeeze) inorganic scaling in wells at the
Rio de Janeiro Operating Unit (UO-RIO) using innovative formulations
developed in cooperation with suppliers. Chemicals are used to remove
scaling in production facilities and chemical inhibitors are injected directly
into the reservoir (squeeze) to prevent further inorganic scaling. These
operations avoided losses of 16,500 bpd at UO-RIO;
• starting operations at the first pumping module using a submerged
centrifugal pump containing Poseidon gas handler specially designed for gas
fractions of up to 70% by volume. The module was fitted to the Jubarte field’s
JUB-04 well for an estimated additional gain of 1,000 bpd;
• developing coke drum inspection and repair techniques that lengthened their
useful life from 2 to 12 years and shortened repair time by 56% compared to
conventional methods. At Gabriel Passos Refinery (REGAP), these techniques
led to R$42 million cost savings by eliminating the need to purchase new
drums;
• defining geological control of variability of petroleum discovered in Sergipe-
Alagoas basin deep waters, which enhanced prediction of subsurface fluid
distribution and connectivity between reservoirs;
• concluding regional characterization projects for the Espirito Santo and
Sergipe-Alagoas basins. All environmentally relevant events were mapped,
thus streamlining licensing procedures. The studies cover an area of 77,800
km2;
• applying innovative biological technology for the new effluent treatment
plant at Ilha Grande Bahia Terminal (TEBIG). By using this alternative to
conventional physical-chemical treatment, definitive operational licensing
was obtained for this effluent plant.
Through Cenpes we also provide technical assistance facilitating solutions for
operational problems and boosting efficiency, thus obtaining gains by optimizing
operations and cutting costs. Our researchers were active in the Long Duration Test
(LDT) at the Iara Oeste field where they collected data from reservoirs and planned
development for the field, thus avoiding the need to drill more wells.
Our R&D center also inspected equipment to verify its integrity, thus avoiding
production downtime and loss of earnings. By inspecting the steam turbine rotor
shaft at the Fernando Gasparian Thermoelectric Plant (SP), for example, we avoided
incurring R$600,000 daily losses.
46
For the third time, Petrobras earned the Distinguished Achievement Award for
Companies, Organizations and Institutions, the top award made by the Offshore
Technology Conference (OTC), for the top ten major technological innovations
related to pre-salt layer production: first riser support buoy; first steel catenary
riser; deepest steel lazy wave riser (SLWR); deepest flexible riser; first application of
flexible risers with integrated monitoring; record water depth for drilling an
underwater well using the pressurized mud cap drilling technique (PMCD); first
intensive use of smart completion in ultra-deep waters in satellite wells with
potential for calcium carbonate scaling; CO2 separation in deep water; deepest
underwater well with CO2 gas injection and first deep-water use of alternating
water-and-gas injection.
Human Resources
Human Resources supports our strategy through a number of initiatives to recruit
talents required in terms of competence and quantity, as well as employee
satisfaction, engagement and productivity.
Headcount
The Petrobras System ended 2015 with 78,470 employees, which was 3% less than
the 2014 total. Petrobras Controladora (holding company) admitted 244.
Headcount per Region
2015
2014
Petrobras Controlling Company
Southeast
South
Northeast
North
Middle West
Controlled Companies – Brazil
Southeast
South
Northeast
North
Middle West
56,874
40,326
2,740
12,344
1,214
250
14,740
9,396
1,816
2,267
655
606
58,618
41,207
2,836
12,818
1,282
475
15,293
9,546
1,852
2,606
667
622
Controlled Companies -
Overseas
6,856
6,997
Total Petrobras System
78,470
80,908
47
Downsizing
Two programs - the Voluntary Termination Incentive Program (local acronym PIDV)
and Mobilize - have helped match headcount to challenges posed by the Business
and Management Plan for 2015-2019 while meshing our requirements with
employees’ interests.
implemented the PIDV
in 2014, based on knowledge
We developed and
management, management succession and operational continuity principles, thus
enabling systemic employment termination to be planned for those enrolled in the
program.
The PIDV targeted employees aged 55 or over who were due for retirement by March
31, 2014. A total of 5,902 employees have left the company since its introduction.
The Mobilize program offers opportunities for internal transfers to departments or
areas in need of manpower, thus cutting new admission costs: 83 employees
transferred to another department during the year.
Human Resource Development
Employee training investments totaled R$174 million and yielded in an average 54
hours training per employee. We logged approximately 196,000 participations in
continuing education courses in Brazil and internationally and training courses for
new employees.
In partnership with Governance, Risk and Compliance, we have developed a portfolio
of education solutions for employees to learn more about means of ensuring
efficiency and compliance in the management of our business. In 2015, we logged
9,300 participations in these courses.
As part of Management Development, our Petrobras Leadership Development
Program trains new managers for the exercise of their attributions. Our
management and business units logged more than 17,800 participations in training
initiatives that involved employees from all departments.
Information on services unrelated to the external audit provided by
the independent auditors – CVM Instruction 381/2003
Our business management instruments are based on the Code of Ethics, Code of
Best Practices and Corporate Governance Guidelines.
Article 29 of the Bylaws determines that the independent auditors may not provide
us consulting services for the duration of their audit contract.
48
On April 27, 2015, we have hired PricewaterhouseCoopers Auditores Independentes
to provide specialized accounting services for fiscal years 2015 and 2016.
During fiscal year 2015, PricewaterhouseCoopers Auditores Independentes provided
the following services for us, our subsidiaries and affiliates:
Auditing of accounts
SOX audit
Additional audit-related services
Tax audit fees
Total
R$ thousand
48,322
9,302
8,506
1,140
67,270
%
71.8
13.8
12.6
1.8
100
FINANCIAL ANALYSIS
Petrobras presents the financial analysis of its consolidated financial statements in
millions of reais, except when indicate otherwise.
Consolidated Economic–Financial Summary
Sales revenues
Gross profit
Net income before financial results, share of profit of equity-accounted investments and income taxes
Net finance income (expense)
Adjusted EBITDA – R$ million 1
Consolidated net income attributable to the shareholders of Petrobras
Basic and diluted earnings per share 2
Market capitalization (Parent Company)
Gross margin (%)
Operating margin (%) 3
Net margin (%)
Adjusted EBITDA margin (%) 4
Total net Assets
Investments, Property, Plant and Equipaments and Intangible
Net Debt 5
Shareholders' equity
Net third parties capital / total net liabilities 6
R$ million
2015
2014
2015 x
2014 (%)
321,638
337,260
98,576
80,437
(12,391)
(28,041)
73,859
(21,322)
(3,900)
59,140
(34,836)
(21,587)
(2.67)
(1.65)
101,316
127,506
31
(4)
(11)
23
24
(4)
(6)
18
900,135
655,675
391,962
257,930
793,375
608,248
282,089
310,722
32/68
43/57
(5)
23
42
(619)
25
(61)
(62)
(21)
7
−
(5)
5
13
8
39
(17)
-
[1]Our adjusted EBITDA (according to CVM Instruction 527 of October 4, 2012) is the net income before net finance income (expense), income taxes, depreciation,
depletion and amortization, share of profit of equity-accounted investments and impairment in order to provide a better information about our ability to pay debt,
carry out investments and cover our working capital needs. Adjusted EBITDA is not an IFRS measure and may not be comparable with the same measure as reported by
other companies.
49
[2] Basic and diluted earnings per share calculated based on the weighted average number of shares.
[3] Calculated based on net income before financial results, share of profit of equity-accounted investments and income taxes.
[4] Adjusted EBITDA margin equals Adjusted EBITDA divided by sales revenues.
[5] Our net debt is not computed in accordance with International Standards -IFRS and should not be considered in isolation or as a substitute for total long-term debt
calculated in accordance with IFRS. Our calculation of net debt may not be comparable to the calculation of net debt by other companies. Management believes that
net debt is an appropriate supplemental measure that helps investors assess our liquidity and assists management in targeting leverage improvements.
[6] Third parties capital net of cash and cash equivalents/financial investments.
RECONCILIATION OF EBTIDA
Net loss
Net finance income (expense)
Income taxes
Depreciation, depletion and amortization
EBITDA
Share of earnings in equity-accounted investments
Impairment losses / (reversals)
Write-off - overpayments incorrectly capitalized
Adjusted EBITDA
R$ million
2015
2014
2015 x
2014 (%)
(35,171)
28,041
(6,058)
38,574
25,386
797
47,676
−
73,859
(21,924)
3,900
(3,892)
30,677
8,761
(451)
44,636
6,194
59,140
(60)
619
(56)
26
190
277
7
-
25
The Company decided not to include write-offs of overpayments incorrectly
capitalized in the calculation of the Adjusted EBITDA, because the Company’s future
cash generation and its current balance of cash and cash equivalents are not
impacted by those adjustments. The Company believes excluding those write-offs
provides more appropriate information about its potential cash generation.
Results, market capitalization and investments
Prices/Rates
Brent crude (R$/bbl)
Brent crude (US$/bbl)
Average commercial selling rate for U.S. dollar
Period-end commercial selling rate for U.S. dollar
Variation of the period-end commercial selling rate for U.S. dollar (%)
Selic interest rate - average (%)
Indicators
Domestic Sales Price
. Crude oil (U.S. dollars/bbl) 7
. Natural gas (U.S. dollars/bbl)
International Sales price
. Crude oil (U.S. dollars/bbl)
. Natural gas (U.S. dollars/bbl)
R$ million
2015
2014
2015 x
2014 (%)
172.65
52.46
3.34
3.90
47.0
231.30
98.99
2.35
2.66
13.4
13.38
10.86
42.16
36.24
55.99
22.62
87.84
47.93
82.93
21.18
(25)
(47)
42
47
34
3
(52)
(24)
(32)
7
[7]Average between the exports prices and the internal transfer prices from Exploration & Production to Refining, Transportation and Marketing
50
Sales volumes
Our domestic sales volumes decreased by 7%, primarily due to:
• Diesel (an 8% decrease):
i) a lower consumption by infrastructure construction projects in Brazil;
ii) a higher share of diesel sales from other market players (based on diesel
imports); and
iii) An increased percentage of mandatory biodiesel content requirements in
diesel (diesel/biodiesel mix).
These effects were partially offset by an increase in the Brazilian diesel-moved light
vehicle fleet (vans, pick-ups and SUVs).
• Gasoline (an 11% decrease):
i) an increase in the anhydrous ethanol content requirement for Type C gasoline
(from 25% to 27%);
ii) a higher share of gasoline sales from other market players;
iii) a higher demand of hydrous ethanol in flex vehicles; and
iv) a decrease in the automotive gasoline-moved fleet.
• Naphtha (an 18% decrease): due to a lower demand from domestic customers,
mainly Braskem;
• Fuel oil (a 13% decrease): due to lower demand from thermoelectric and
industrial sectors in several Brazilian states; and
• Natural Gas (a 3% decrease): lower demand from electric sector.
51
Sales Volumes – (Mbbl/day)
Diesel
Gasoline
Fuel oil
Naphtha
LPG
Jet fuel
Others
Total oil products
Ethanol, nitrogen fertilizers, renewables and other products
Natural gas
Total domestic market
Exports
International sales
Total international market
Total
Impairment
2015
2014
2015 x
2014 (%)
923
553
104
133
232
110
179
2,234
123
432
2,789
510
546
1,056
3,845
1,001
620
119
163
235
110
210
2,458
99
446
3,003
393
571
964
3,967
(8)
(11)
(13)
(18)
(1)
−
(15)
(9)
24
(3)
(7)
30
(4)
10
(3)
2015 Petrobras’ business context, as a result of a decrease in expected future
operating revenues due to the decline of oil prices in the international market, the
revision of the reservoir geological Papa-Terra field and the increase of the discount
rate as a result of higher risk premium for Brazil, for the loss of investment grade
(investment grade), spurred a review of the future prospects of the company, with a
reduction in the pace of the Company’s capital expenditures.
As a result, the Company reported impairment charges of R$ 47,676 million, mainly
related to the following assets:
• Producing properties in Brazil (R$ 33,722 million), related primarily to fields
Papa-Terra, Centro Sul group, Uruguá group, Espadarte, Linguado, CVIT –
Espírito Santo group, Piranema Lapa, Bicudo, Frade, Badejo, Pampo and Trilha.
These impairment losses are mainly due to the impact of the decline in
international crude oil prices on the Company’s price assumptions, the use of a
higher discount rate, as well as the geological revision of Papa-Terra reservoir;
• Comperj (R$ 5,281 million), mainly attributable to the use of a higher discount
rate and the delay in expected future cash inflows resulting from postponing
construction;
• Producing properties in Abroad (R$ 2,466 million), mainly in producing properties
in
in the United States and Bolivia, attributable to the decline
located
international crude oil prices;
52
• Oil and gas production and drilling equipment in Brazil (R$ 1,993 million), mainly
related to the planned idle capacity of two drilling rigs in the future and the use
of a higher discount rate; and
• Fertilizer Plant - UFN III (R$ 1,955) mainly related to the use of a higher discount
rate and the delay in expected future cash inflows resulting from postponing the
project.
The “Lava Jato (Car Wash) Operation” and its effects on the
Company
In the third quarter of 2014, the Company wrote off R$ 6,194 million of capitalized
costs representing amounts that Petrobras overpaid for the acquisition of property,
plant and equipment in prior years, according to the information obtained about the
"Lava Jato" operation.
The Company has continuously monitored the
investigations for additional
information and to assess any potential impact on the adjustments made. No
additional information has been identified that impacted the adopted calculation
methodology or the recorded adjustment in 2014 for the preparation of the financial
statements for the year ended December 31, 2015. Petrobras will continue to
monitor the results of the investigations and the availability of other information
concerning the payment scheme. If information becomes available that indicates
with sufficient precision that the estimate described above should be adjusted,
Petrobras will evaluate whether the adjustment is material and, if so, recognize it.
Petrobras does not believe that new information from investigations of "Lava Jato”
operation by the Brazilian authorities, the independent internal investigation
conducted by law firms or new internal committees of investigation that come to be
established (or revisions of internal commissions already completed) may impact or
change in a relevant way such methodology.
For a more detailed description, see Note 3 of the Company´s audited consolidated
financial statements of the period ended December 31, 2015
53
Consolidated Results
Gross profit increased by 23% (R$ 18,139 million) due to higher decrease of costs
compared to sales revenues reduction.
• Sales revenues of R$ 321,638 million, 5% lower (R$ 15,622 million), resulting
from:
• Decreased domestic demand for oil products (9%), reflecting lower economic
activity in Brazil;
• Lower crude oil and oil product export prices;
• Decreased domestic prices of naphtha, jet fuel and fuel oil;
• Higher diesel and gasoline prices, following prices increases in November
2014 and September 2015; and
• Higher crude oil export volumes (55%) attributable to an increase in domestic
crude oil production (5%) and to a decrease in feedstock processed by our
domestic refineries (6%).
• Cost of sales of R$ 223,062 million in 2015, 13% lower (R$ 33,761 million), due to:
• Lower crude oil and oil product import unit costs, as well as lower production
taxes;
• Decreased domestic demand for oil products that generated lower share of
crude oil imports on feedstock processing and a lower share of oil product
imports in the sales mix; and
• Higher depreciation expenses.
Loss before finance income (expense), share of earnings in equity-accounted
investments, profit sharing and income taxes was R$ 12,391 million in 2015, a 42%
decrease (R$ 8,931 million) compared to an operating loss of R$ 21,322 million in
2014, due to:
• Higher gross profit (R$ 18,139 million);
• Higher tax expenses attributable to the Company’s decision to benefit from
the Tax Recoverable Program (Programa de Recuperação Fiscal – REFIS) and
from the State Tax Amnesty Program (R$ 7,437 million);
• Higher legal proceedings expenses, mainly related to tax and labor claims (R$
5,103 million);
54
• Higher impairment of assets (R$ 3,040 million); and
• Higher pension and medical benefits expenses in 2015 attributable to an
increase in the Company’s net actuarial liability in 2014, as a result of a
decrease in real interest rates, following the Company’s valuation review of
its pension and medical benefits (R$ 1,352 million).
Net finance expense was R$ 28,041 million in 2015, R$ 24,141 million higher when
compared to 2014, resulting from:
• Higher interest expenses (R$ 12,290 million) attributable to:
i) an increase in the net debt (R$ 7,118 million);
ii) a decrease in the level of capitalized borrowing costs due to a lower balance
of assets under construction (R$ 2,590 million), reflecting the relevant
projects concluded during 2014 and the write-offs and impairment of assets
recognized in December 2014; and
iii) interest expenses related to tax expenses arised from the adhesion to
REFIS of Imposto sobre Operações Financeiras – IOF (R$ 1,410 million) and
withholding income tax (R$ 1,074 million);
• Foreign exchange losses of R$ 9,240 million caused by the impact of a 47.0%
depreciation of the Brazilian Real against the U.S. dollar on the Company’s
net debt (compared to a 13.4% depreciation in 2014), partially offset by the
application of cash flow hedge accounting; and
• Foreign exchange losses of R$ 2,100 million caused by the impact of a 31.7%
depreciation of the Brazilian Real against the Euro on the Company’s net debt
(compared to a 0.02% depreciation in 2014).
Net income by Business Segment
Petrobras is an integrated energy company and most of the crude oil and natural gas
production from the Exploration & Production segment is transferred to other
business segments of the Company. Our results by business segment include
transactions carried out with third parties, transactions between companies of
Petrobras’s Group and transfers between Petrobras’s business segments that are
calculated using internal prices defined through methodologies based on market
parameters.
55
Due to international department extinction, the international business management
was transferred to the other segments to which the underlying activities correspond
preserving the specificity of each business which the Company operates.
For comparison purposes, the consolidated results for the year 2014 are presented
herein based on the current business model.
Exploration & Production
Refining, Transportation and Marketing
Gas & Power
Distribution
Biofuel
Exploration & Production
R$ million
2015
2014
(12,963)
32,008
18,034
(39,836)
423
(798)
(966)
(785)
1,339
(298)
2015 x
2014 (%)
(140)
(145)
(154)
(160)
224
The net loss is attributable to lower crude oil sales/transfer prices and to the
impairment of production fields in Brazil and abroad, due to the review of price
assumptions generated by decreased projections of international crude oil prices,
which decreased crude oil and gas reservoirs and cash flow projects, as well as higher
discount rate and geological review of Papa-Terra reservoir.
These effects were partially offset by higher crude oil volume transferred due to
increased production.
Refining, transportation and marketing
Earnings in 2015 were attributable to:
• A decrease
in crude oil purchase/transfer costs due to lower crude oil
international prices;
• Lower shares of crude oil imports on feedstock processing and lower share of oil
product imports in our sales mix; and
• Diesel and gasoline price increases in November 2014 and in September 2015.
The decreased oil product domestic demand, as a result of lower economic activity in
Brazil and the impairment on COMPERJ, partially offset these effects.
Gas & Power
Earnings in 2015 was generated by: i) lower natural gas import acquisition costs
(LNG and Bolivian gas); ii) an increase in natural gas sales margins, resulting from
higher sales average prices; and iii) lower impairment of trade receivables from
companies in the isolated electricity sector.
56
These effects were partially offset by: i) decreased electricity sales margins (due to
the 57% decrease of electricity prices in the spot market); ii) impairment losses
recognized for Nitrogen Fertilizers Plants III and V (Unidade de Fertilizantes
Nitrogenados – UFNs III and V); and iii) tax expenses related to deferred VAT tax on
natural gas purchase and reversal of VAT tax credit on natural gas transportations.
Distribution
The net loss of 2015 was due to lower domestic sales volumes (7%), increased losses
with trade receivables from companies in the isolated electricity sector and
impairment of assets.
Biofuel
Biofuel losses were higher in 2015, when compared to 2014, due to further
impairment charges recognized for ethanol and biodiesel
investees and to
impairment charges in biodiesel plants, as a result of the worsening in market
conditions and of higher discount rate due to higher oil industry risk premium and
Brazilian risk.
Liquidity and Capital Resources
Cash Flow
Adjusted cash and cash equivalents at the beginning of period 8
Government securities at the beginning of period
Cash and cash equivalents at the beginning of period
Net cash provided by operating activities
Net cash used in investing activities
Investments in operating segments
Sale of assets (disinvestments)
Investments in marketable securities
(=) Net cash flow
Net financings
Proceeds from long-term financing
Repayments
Dividends paid to shareholders
Non-controlling interest
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of period
Government securities at the end of period
Adjusted cash and cash equivalents at the end of period 8
R$ million
2015
2014
68,946
(24,707)
44,239
86,407
(42,218)
(70,781)
2,592
25,971
44,189
(14,434)
56,158
(70,592)
−
243
23,608
97,845
3,042
100,887
46,257
(9,085)
37,172
62,241
(85,208)
(81,795)
9,399
(12,812)
(22,967)
35,134
72,871
(37,737)
(8,735)
(250)
3,885
44,239
24,707
68,946
[8] Our adjusted cash and cash equivalents include government bonds with maturities of more than 90 days. This measure is not computed in accordance with
International Financial Reporting Standards – IFRS and should not be considered in isolation or as a substitute for cash and cash equivalents computed in accordance
with IFRS. It may not be comparable to adjusted cash and cash equivalents of other companies, however management believes that it is an appropriate supplemental
measure that helps investors assess our liquidity and assists management in targeting leverage improvements.
As of December 31, 2015, the balance of cash and cash equivalents increased by
121% when compared to the balance as of December 31, 2014 and the balance of
57
adjusted cash and cash equivalents for the same period increased by 46% . Our
principal uses of funds in 2015 were for repayment of long-term financing (and
interest payments) and for capital expenditures. We met these requirements with
cash provided by operating activities of R$ 86,407 million and with proceeds from
long-term financing of R$ 56,158 million. The balance of adjusted cash and cash
equivalents was positively impacted in 2015 by foreign exchange rate variation
applied on our foreign financial investments.
Net cash provided by operating activities increased by 39% in 2015 when compared
to 2014, reflecting higher diesel and gasoline prices, increased crude oil export
volumes, lower production taxes and lower crude oil and oil product imports costs,
along with a higher share of domestic crude oil on feedstock processing.
Capital expenditures and investments in operating segments were 13% lower in 2015
compared to 2014, mainly due to a 55% decrease in capital expenditures in our
Refining, Transportation and Marketing (RTM) segment.
The amount of R$ 25,971 million of divestments in marketable securities relates to
proceeds from the maturity of financial investments with maturities longer than
three months, most of which were invested in other financial investments, with
maturities of less than three months (classified as cash and cash equivalents).
Free cash flow was positive in R$ 15,626 million in 2015, compared to a negative free
cash flow of R$ 19,554 million in 2014.
The Company raised long-term financing of R$ 56,158 million in 2015, mainly
through a US$ 5 billion funding agreement with the Chinese Development Bank
(CDB), US$ 2 billion raised through the issuance of Global Notes maturing in 2115,
and also through bilateral credit agreements with Brazilian banks. The average
maturity of outstanding debt was 7.14 years in 2015 and 6.10 years in 2014.
Repayments of interest and principal were R$ 70,592 million in 2015, 87% higher
than in 2014 and the nominal cash flow (undiscounted), including face value and
interest payments, by maturity, is set out as follows:
Maturity
Principal
Interest
Total
2016
2017
2018
2019
2020
2021 and
thereafter
12.31.2015 12.31.2014
50,764
25,854
76,618
44,709
23,482
68,191
63,124
21,809
84,933
88,529
18,055
106,584
60,325
13,293
73,618
189,838
128,038
317,876
497,289
230,531
727,820
354,226
123,105
477,331
R$ million
Consolidated
58
Debt
The consolidated debts, referring to loans and financing in the country and abroad,
reached R$ 492,849 million, as shown below:
Consolidated debt
Current debt 9
Non-current debt 10
Total
Cash and cash equivalents
Government securities (maturity of more than 90 days)
Adjusted cash and cash equivalents
Net debt
Net debt/(net debt+shareholders' equity)
Total net liabilities 11
(Net third parties capital / total net liabilities)
Net debt/Adjusted EBITDA ratio
Current debt
Non-current debt
Total
Net debt
R$ million
12.31.2015 12.31.2014
Δ%
57,382
435,467
492,849
97,845
3,042
100,887
391,962
60%
799,248
31,565
319,470
351,035
44,239
24,707
68,946
282,089
48%
724,429
68%
5.31
57%
4.77
US$ million
12.31.2015 12.31.2014
Δ%
14,695
11,884
111,521
120,274
126,216
100,379
132,158
106,201
82
36
40
121
(88)
46
39
12
10
11
11
24
(7)
(4)
[9] Includes Capital lease obligations (R$ 82 million on December 31, 2015 and R$ 42 million on December 31, 2014).
[10] Includes Capital lease obligations (R$154 million on December 31, 2015 and R$ 148 million on December 31, 2014).
[11] Total liabilities net of adjusted cash and cash equivalents
Consolidated net debt in Reais increased by 39% when compared to December 31, 2014
as a result of exchange depreciation of 47.0%, being that 74% of the debt is indexed to
the dollar. This higher debt resulted in an increase of R$ 7.118 million in financial
expense.
59
Contractual Obligations
The following table summarizes our contractual obligations and commitments
pending at 12.31.2015:
Items of the financial position statement: 12
Debt obligations
With transfer of benefits, risks and controls of assets
Decommissioning off areas
Total of items of the financial position statement
Other contractual commitments
Natural gas ship or pay
Hired services
Purchase commitment of natural gas
Without transfer of benefits, risks and controls of assets
Purchase commitments
Total other commitments
Total
R$ million
Payments due by period
Total
2016
2017-2020
2021
onwards
492,648
202
35,728
528,578
11,549
265,709
31,042
387,332
85,718
781,350
1,309,928
57,334
15
2,393
59,742
2,566
87,950
4,213
45,631
41,277
181,637
241,379
256,233
38
8,236
264,506
7,973
106,989
20,775
121,398
37,763
294,898
559,404
179,081
150
25,099
204,330
1,010
70,770
6,054
220,303
6,678
304,815
509,145
[12] Does not include employees' postretirement benefit plan obligations. For a more detailed, see Note 22 of the Company´s audited consolidated financial
statements of the period ended December 31, 2015
Assets and Liabilities subject to Exchange Variation
The Company has assets and liabilities subject to foreign exchange rate variation,
for which the main exposure is to the Real relative to the U.S. dollar and the U.S.
dollar relative to the Euro. Beginning in mid-May 2013, the Company extended the
use of the hedge accounting practice to hedge highly probable future exports.
On December 31, 2015, were designated as hedging instruments, the amount of US$
61,520 million (R$ 240,222), as shown in table below:
Changes in the reference value (principal and interest)
Amounts designated as of December 31, 2014
New hedging instruments designated
Exports affecting profit or loss
Principal repayments / amortization
Foreign exchange variation
Amounts designated as of December 31, 2015
US$ million R$ million
50,858
23,336
(5,401)
(7,273)
−
135,088
81,137
(17,704)
(27,038)
68,739
61,520
240,222
60
The balances of assets and liabilities in foreign currency of controlling companies
outside of Brazil are not included on the exposure below when transacted in a
currency equivalent to their respective functional currencies.
On December 31, 2015, the Company had a net liability position regarding foreign
exchange exposure.
Assets
Liabilities
Hedge Accounting
Total
Contingent liabilities
R$ million
12.31.2015 12.31.2014
67,040
30,600
(350,695)
(222,279)
240,222
(43,433)
135,088
(56,591)
Petrobras carries out estimation as to the likelihood of resource output due to
proceedings, based on the opinions of legal advisors and Management judgements,
which resulted in the recognition of expense of R$ 5,583 million during the year 2015
(R$ 480 million in 2014).
The main proceedings recognized with expectation of probable loss were:
• Tax claim related to Brazilian federal tax credits applied that were disallowed;
• Tax claim related to alleged failure to pay VAT (ICMS) tax on jet fuel sales;
• Labor claims, in particular a review of the methodology by which the minimum
compensation based on an employee's position and work schedule (Remuneração
Mínima por Nível e Regime - RMNR) is calculated and lawsuits concerning
remunerated weekly rest; and
• Civil claim related to failure to pay royalties on oil shale extraction.
Tax Expenses
As a result of the assessment of the situation of continuous tax processes, the
Company has adopted the following measures in fiscal year 2015: i)Petrobras paid to
settle a definitive ruling at the administrative stage with respect to a tax deficiency
notice issued by the Brazilian Federal Tax Authorities. The notice is related to the tax
on financial operations (Imposto sobre operações financeiras - IOF) applied to
intercompany loans made by Petrobras to foreign subsidiaries in 2008; ii) opted to
join the Tax amnesty and refinancing program – Programa de Recuperação Fiscal
(REFIS), including debts of IOF in mutual transactions of other exercises, among
other taxes; and iii) the Company elected to settle taxes in cash (VAT tax – ICMS)
through an amnesty settlement programs administered by the states, mainly in Rio
61
de Janeiro, Espírito Santo and Bahia. These accessions will result in the recognition
of tax expenses of R$ 6,136 million and R$ 2,710 million in financial expenses.
GLOSSARY
Boe/d: barrels of oil equivalent per day.
Brent: oil used as a major reference in the international oil market. Dated Brent
contracts or derivatives in the financial market concern multiple contracts of
purchase and sale of petroleum in the world.
Combined cycle: gas and steam turbines combined in a single plant, both generating
electricity from burning the same fuel. For this, the existing heat in the exhaust
gases of the gas turbine is recovered to produce steam for powering the steam
turbine.
Completion: phase of oil exploration in which the equipment required to bring, in a
controllable manner, the desired fluid to surface and enable the installation of well
monitoring equipment is installed in the well.
Condensate: mixture of gaseous hydrocarbons in the reservoir that becomes liquid
at the surface, under normal atmospheric conditions.
Dark derivatives high viscosity petroleum derivatives such as fuel oil, or asphalt.
Diesel S-10: fuel with 10 ppm (Parts per million), Euro V type (high quality and very
low sulfur content) and following international specifications.
Discovery Assessment Plan (PAD): the document containing the set of operations
to be performed in an area where a discovery occurred to assess its economic
viability. A PAD must be submitted by the franchisee for approval by the Brazilian Oil
Agency.
FPSO: ship with capacity to produce, store and dispose of oil and/or natural gas for
shuttle tankers.
Green Diesel: Renewable Diesel which can be mixed in any ratio with petroleum product
without requiring changes in the engines. The production process for green diesel of
Petrobras Biofuel in partnership with Galp generates a clean energy fuel similar to oil-
derivative diesel.
Impairment: a reduction in a value of an asset.
Light products: liquid petroleum and low viscosity derivatives such as gasoline,
kerosene and diesel.
62
Middle distillates: made from petroleum such as diesel, kerosene, naphtha and jet
fuel products.
Ramp up: stage of gradual growth of a platform’s oil and gas production until the
system reaches its production potential. This stage usually begins after the first well
is connected to the system.
Reserve/production ratio: measures the longevity of current proven reserves
considering the constant level of production.
Reserve replacement ratio: measures the replacement of production by reserve
additions, extensions, revisions of estimates or improvement of recovery.
Ring fence: exploration area adjacent to a field where there have been previous
discoveries.
Second-generation Ethanol (2G): ethanol of agricultural residues, obtained by
fermentation of the sugars contained in the cellulosic structure of the sugarcane
bagasse. The final product is chemically identical to first-generation (corn) or
advanced (cane) ethanol. The spread of this technology is to increase production of
ethanol in the same hectare of land, with a large reduction of CO 2 compared to first
generation biofuels.
Shale oil/gas: includes without distinction all source rocks (silty shales, siliceous
shales, siltstones and clay loam) that function as oil source, reservoir and seal. Its
production requires the use of hydraulic fracturing.
Simple cycle: turbine operating solely.
Smart completion: set of operations to case and equip the well for water or gas
production or injection, using different well monitoring sensors and valves with
remote operations to control the flow produced or injected.
Social Fuel Seal: granted by the Ministry of Agrarian Development for biodiesel
producers that use raw material from family farming.
Tight Oil: oil produced from shale or other rock with very low permeability, using
methods similar to the production of shale gas, such as horizontal drilling and
hydraulic fracturing techniques. The production of tight oil is considered a non-
conventional type of oil production.
Type C5 + gasoline: extracted from natural gas, may be mixed with gasoline for
specification, or be reprocessed or added to the oil stream.
Type 1A fuel oil (FO 1): used in industry to heat ovens and boilers or in internal
combustion engines to generate heat.
63
WTI: the acronym WTI means West Texas Intermediate and is used to designate the
current that brings together conventional onshore light and low sulfur content oil
production of the PADD3 region in the U.S.A. The WTI is one of the main references
for contracts for the sale of oil in the Atlantic Basin and is treated as a global
benchmark for the oil market.
64
FINANCIAL
STATEMENTS
—
December 31, 2015 and 2014 with
auditor’s report
(A free translation of the original
in Portuguese)
Index
(Expressed in millions of reais, unless otherwise indicated)
Independent auditor's report .......................................................................................................................... 3
Statement of Financial Position ..................................................................................................................... 5
Statement of Income ...................................................................................................................................... 6
Statement of Comprehensive Income ............................................................................................................ 7
Statement of Cash Flows ............................................................................................................................... 8
Statement of Changes in Shareholders’ Equity ............................................................................................. 9
Statement of Added Value ........................................................................................................................... 10
Notes to the financial statements ................................................................................................................. 11
1. The Company and its operations .......................................................................................................... 11
2. Basis of preparation of financial statements ......................................................................................... 11
3. The “Lava Jato (Car Wash) Operation” and its effects on the Company ............................................. 12
4. Summary of significant accounting policies ........................................................................................ 18
5. Critical accounting policies: key estimates and judgments .................................................................. 28
6. New standards and interpretations ....................................................................................................... 33
7. Cash and cash equivalents and Marketable securities .......................................................................... 34
8. Trade and other receivables .................................................................................................................. 35
Inventories ............................................................................................................................................ 38
9.
10. Disposal of assets and legal mergers ................................................................................................ 38
Investments ....................................................................................................................................... 40
11.
Property, plant and equipment .......................................................................................................... 44
12.
Intangible assets ................................................................................................................................ 46
13.
Impairment ........................................................................................................................................ 47
14.
Exploration for and evaluation of oil and gas reserves..................................................................... 53
15.
Trade payables .................................................................................................................................. 54
16.
Finance debt ...................................................................................................................................... 54
17.
18.
Leases ............................................................................................................................................... 58
19. Related party transactions ................................................................................................................. 58
Provision for decommissioning costs ............................................................................................... 63
20.
Taxes ................................................................................................................................................. 63
21.
Employee benefits (Post-Employment) ............................................................................................ 68
22.
Shareholders’ equity ......................................................................................................................... 76
23.
24.
Sales revenues ................................................................................................................................... 78
25. Other expenses, net ........................................................................................................................... 78
26. Costs and Expenses by nature ........................................................................................................... 79
27. Net finance income (expense), net .................................................................................................... 79
Supplemental information on statement of cash flows ..................................................................... 80
28.
29.
Segment information ........................................................................................................................ 81
Provisions for legal proceedings ....................................................................................................... 85
30.
31. Commitment to purchase natural gas ............................................................................................... 90
32. Collateral for crude oil exploration concession agreements ............................................................. 91
33. Risk management .............................................................................................................................. 91
Fair value of financial assets and liabilities ...................................................................................... 98
34.
35.
Subsequent events ............................................................................................................................. 99
Social Balance (unaudited) ........................................................................................................................ 100
Supplementary information on Oil and Gas Exploration and Production (unaudited) ............................. 102
Board of Directors and Officers ................................................................................................................ 112
2
Independent auditor's report
To the Board of Directors and Shareholders
Petróleo Brasileiro S.A. - Petrobras
We have audited the accompanying parent company financial statements of Petróleo Brasileiro S.A. Petrobras ("Company" or
"Petrobras"), which comprise the balance sheet as of December 31, 2015 and the statements of income, comprehensive income,
changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information.
We have also audited the accompanying consolidated financial statements of Petróleo Brasileiro S.A. - Petrobras and its
subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as of December 31, 2015 and the consolidated
statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the parent company financial statements in accordance
with accounting practices adopted in Brazil, and for the consolidated financial statements in accordance with the International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices
adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the parent company financial statements
In our opinion, the parent company financial statements referred to above present fairly, in all material respects, the financial
position of Petróleo Brasileiro S.A. - Petrobras as of December 31, 2015, and its financial performance and its cash flows for the
year then ended, in accordance with accounting practices adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Petróleo Brasileiro S.A. - Petrobras and its subsidiaries as of December 31, 2015, and their financial performance and their cash
flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and accounting practices adopted in Brazil.
3
Independent auditor's report
Emphasis – Impact of the “Lava Jato Operation” on the Company
We draw attention to note 3 to the financial statements which describes the impact of the "Lava Jato Operation" on the Company,
including:
(i)
financial statements) related to overpayments incorrectly capitalized on the acquisition of property, plant and equipment;
the write-off, in 2014, of R$ 6,194 million in the consolidated financial statements (R$ 4,788 million in the parent company
(ii)
legal counsel under the supervision of a Special Committee created by the Company;
actions being taken in response to this matter, including internal investigations which are being conducted by outside
(iii)
the investigation being conducted by the U.S. Securities and Exchange Commission – SEC; and
(iv)
in the Brazilian stock market.
the Civil Inquiry by the State of São Paulo Public Prosecutor’s Office to determine potential damages caused to investors
We also draw attention to note 30.4 to the financial statements which describes legal actions filed against the Company, for which a
possible loss, or range of possible losses, cannot be reasonably estimated due to their current status.
Our opinion is not modified as a result of these matters.
Other matters
Supplementary information - Statements of added value
We have also audited the parent company and consolidated statements of value added for the year ended December 31, 2015, the
presentation of which is required by Brazilian Corporation Law for publicly listed companies, which are the responsibility of the
Company's management, considered as supplementary information for IFRS, which does not require the presentation of the
statements of value added. These statements were submitted to the same audit procedures described above and, in our opinion,
are fairly presented, in all material respects, in relation to the financial statements taken as a whole.
Rio de Janeiro, March 21, 2016
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 "F" RJ
Marcos Donizete Panassol
Contador CRC 1SP155975/O-8 "S" RJ
4
Consolidated
Parent Company
Note
2015
2014
2015
2014 Liabilities
Consolidated
Parent Company
Note
2015
2014
2015
2014
Current liabilities
Trade payables
Finance debt
Finance lease obligations
Income taxes payable
Other taxes payable
Payroll, profit sharing and related charges
Pension and medical benefits
Other current liabilities
16
17
18
21.1
21.1
22
Liabilities on assets classified as held for sale
10.3
Non-current liabilities
Finance debt
Finance lease obligations
Deferred income taxes
Pension and medical benefits
Provisions for legal proceedings
Provision for decommissioning costs
Other non-current liabilities
Shareholders' equity
Share capital
Capital transactions
Profit reserves
Other comprehensive income
Non-controlling interests
17
18
21.6
22
30.1
20
23.1
23.2
23.3
23.4
11.5
24,913
57,334
48
410
13,139
5,085
2,556
7,599
111,084
488
111,572
435,313
154
906
47,618
8,776
35,728
2,138
530,633
642,205
25,924
31,523
42
657
10,796
5,489
2,115
6,113
82,659
−
28,172
52,913
1,568
−
11,762
4,212
2,436
3,696
104,759
488
26,575
50,130
1,609
−
9,507
4,695
2,026
2,727
97,269
−
82,659
105,247
97,269
319,322
148
8,052
43,803
4,091
21,958
2,620
399,994
482,653
245,439
5,426
−
44,546
7,282
34,641
1,334
338,668
443,915
151,399
4,293
9,062
41,108
3,338
20,630
1,994
231,824
329,093
205,432
21
92,612
(43,334)
205,432
(646)
127,438
(23,376)
205,432
237
92,396
(43,334)
205,432
(430)
127,222
(23,376)
254,731
308,848
254,731
308,848
3,199
257,930
900,135
1,874
310,722
793,375
−
254,731
698,646
−
308,848
637,941
Statement of Financial Position
December 31, 2015 and 2014 (In R$ million, unless otherwise indicated)
Assets
Current assets
Cash and cash equivalents
Marketable securities
Trade and other receivables, net
Inventories
Recoverable income taxes
Other recoverable taxes
Advances to suppliers
Other current assets
Assets classified as held for sale
Non-current assets
Long-term receivables
Trade and other receivables, net
Marketable securities
Judicial deposits
Deferred income taxes
Other tax assets
Advances to suppliers
Other non-current assets
7
7
8
9
21.1
21.1
10.3
8
7
30.2
21.6
21.1
97,845
3,047
22,659
29,057
3,839
6,893
421
5,225
168,986
595
169,581
14,327
342
9,758
23,490
11,017
6,395
9,550
74,879
44,239
24,763
21,167
30,457
2,823
7,300
1,123
3,138
135,010
13
135,023
12,834
290
7,124
2,673
10,645
6,398
10,140
50,104
16,553
10,794
20,863
24,015
1,520
4,986
208
2,979
81,918
535
5,094
15,472
19,319
24,461
1,297
5,609
923
1,965
74,140
10
82,453
74,150
6,361
260
8,590
15,156
9,485
1,017
8,216
49,085
10,671
249
5,927
−
8,943
1,056
8,206
35,052
Investments
Property, plant and equipment
Intangible assets
11
12
13
13,772
629,831
12,072
730,554
15,282
580,990
11,976
115,536
442,439
9,133
82,481
437,150
9,108
658,352
616,193
563,791
900,135
793,375
698,646
637,941
The Notes form an integral part of these Financial Statements.
5
Note
24
15
14
3
25
27
11
22.7
Consolidated
Parent Company
2015
321,638
(223,062)
98,576
2014
337,260
(256,823)
80,437
2015
251,023
(174,717)
76,306
2014
269,568
(208,174)
61,394
(15,893)
(11,031)
(6,467)
(2,024)
(9,238)
(47,676)
−
(18,638)
(110,967)
(15,974)
(11,223)
(7,135)
(2,589)
(1,801)
(44,636)
(6,194)
(12,207)
(101,759)
(15,130)
(7,561)
(5,261)
(2,011)
(7,730)
(33,468)
−
(17,547)
(88,708)
(17,430)
(7,983)
(6,720)
(2,562)
(1,045)
(34,814)
(4,788)
(15,436)
(90,778)
(12,391)
(21,322)
(12,402)
(29,384)
(28,041)
4,867
(21,545)
(11,363)
(3,900)
4,634
(9,255)
721
(26,187)
3,303
(18,951)
(10,539)
(3,737)
3,312
(5,804)
(1,245)
(797)
451
(4,294)
3,730
−
(1,045)
−
(856)
(41,229)
(25,816)
(42,883)
(30,247)
21.7
6,058
3,892
8,047
8,555
(35,171)
(21,924)
(34,836)
(21,692)
(34,836)
(335)
(35,171)
(2.67)
(21,587)
(337)
(21,924)
(1.65)
(34,836)
−
(34,836)
(2.67)
(21,692)
−
(21,692)
(1.66)
Statement of Income
December 31, 2015 and 2014 (In R$ million, unless otherwise indicated)
Sales revenues
Cost of sales
Gross profit
Income (expenses)
Selling expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment of property, plant and equipment, intangible and other assets
Write-off - overpayments incorrectly capitalized
Other expenses, net
Loss before finance income (expense), share of earnings in equity-accounted
investments, profit sharing and income taxes
Net finance income (expenses):
Finance income
Finance expenses
Foreign exchange and inflation indexation charges, net
Share of earnings in equity-accounted investees
Profit sharing
Loss before income taxes
Income taxes
Loss for the year
Loss attributable to:
Shareholders of Petrobras
Non-controlling interests
Basic and diluted loss per common and preferred share (in R$)
23.6
The Notes form an integral part of these Financial Statements.
6
Statement of Comprehensive Income
December 31, 2015 and 2014 (In R$ million)
Loss for the year
Items that will not be reclassified to the statement of income:
Actuarial losses on defined benefit pension plans
Deferred Income tax and social contribution
Unrealized gains / (losses) on cash flow hedge - exports
Recognized in shareholders' equity
Reclassified to the statement of income
Deferred tax
Unrealized gains / (losses) on cash flow hedge - others
Recognized in shareholders' equity
Reclassified to the statement of income
Consolidated
Parent Company
2015
(35,171)
2014
(21,924)
2015
(34,836)
2014
(21,692)
(202)
(53)
(255)
(13,724)
2,695
(11,029)
(208)
(2)
(210)
(12,908)
2,540
(10,368)
(68,739)
7,088
20,961
(40,690)
(15,650)
1,673
4,752
(9,225)
(60,712)
6,200
18,534
(35,978)
(13,918)
1,344
4,275
(8,299)
35
−
35
14
2
16
−
−
−
−
−
−
Cumulative translation adjustments in investees (*)
24,545
4,721
23,826
4,763
Share of other comprehensive results in equity-accounted investments
(2,864)
(647)
(7,586)
(2,218)
Total other comprehensive results
(19,229)
(16,164)
(19,948)
(16,122)
Total comprehensive results
(54,400)
(38,088)
(54,784)
(37,814)
Comprehensive results attributable to:
Shareholders of Petrobras
Non-controlling interests
Total comprehensive results
(54,785)
385
(54,400)
(37,709)
(379)
(38,088)
(54,784)
−
(54,784)
(37,814)
−
(37,814)
(*) Includes, in the consolidated, R$ 2,825 (R$ 756 in 2014) related to cumulative translation adjustments in associates and joint ventures.
The Notes form an integral part of these Financial Statements.
7
Statement of Cash Flows
December 31, 2015 and 2014 (In R$ million, unless otherwise indicated)
Cash flows from Operating activities
Loss for the year
Adjustments for:
Pension and medical benefits (actuarial expense)
Share of earnings in equity-accounted investments
Depreciation, depletion and amortization
Impairment of property, plant and equipment, intangible and other assets
Inventory write-down to net realizable value (market value)
Allowance for impairment of trade receivables
Exploratory expenditures written off
Write-off - overpayments incorrectly capitalized
Gains / (Losses) on disposal / write-offs of non-current assets, E&P returned areas and
cancelled projets
Foreign exchange variation, indexation and unrealized charges and other operations
Deferred income taxes, net
Increase (Decrease) in assets
Trade and other receivables, net
Inventories
Judicial deposits
Other assets
Increase (Decrease) in liabilities
Trade payables
Taxes payable
Pension and medical benefits
Other liabilities
Net cash provided by operating activities
Cash flows from Investing activities
Capital expenditures
Increase (Decrease) in investments
Proceeds from disposal of assets
Divestment (Investments) in marketable securities (*)
Dividends received
Net cash (used in) investing activities
Cash flows from Financing activities
Acquisition of non-controlling interest
Financing and loans, net:
Proceeds from long-term financing
Repayment of principal
Repayment of interest
Dividends paid
Net cash provided by / (used in) financing activities
Consolidated
Parent Company
12.31.2015
12.31.2014
12.31.2015
31.12.2014
(35,171)
(21,924)
(34,836)
(21,692)
6,388
797
38,574
47,676
1,547
3,641
4,921
−
2,893
30,784
(8,911)
(1,496)
1,730
(2,526)
(2,474)
(3,890)
2,716
(2,367)
1,575
86,407
4,773
(451)
30,677
44,636
2,461
5,555
5,048
6,194
743
8,461
(8,025)
(5,929)
1,378
(1,194)
(5,272)
(2,982)
(3,171)
(1,967)
3,230
62,241
(71,311)
(344)
2,592
25,971
874
(42,218)
(81,909)
(787)
9,399
(12,812)
901
(85,208)
5,872
4,294
28,039
33,468
14
669
3,784
−
3,075
26,094
(8,047)
1,485
546
(2,640)
(3,191)
(11,896)
3,740
(2,232)
1,802
50,040
(50,589)
(29,229)
2,157
6,054
4,699
(66,908)
4,225
(3,730)
22,518
34,814
493
4,401
4,828
4,788
4,282
6,254
(8,555)
(5,712)
2,542
(1,067)
(6,515)
856
(2,513)
(1,867)
2,618
40,968
(60,873)
685
2,194
8,908
3,506
(45,580)
243
(250)
−
−
56,158
(49,741)
(20,851)
−
(14,191)
72,871
(23,628)
(14,109)
(8,735)
26,149
117,844
(82,544)
(6,973)
−
28,327
92,540
(76,329)
(5,687)
(8,735)
1,789
Effect of exchange rate changes on cash and cash equivalents
23,608
3,885
−
−
Net increase / (decrease) in cash and cash equivalents in the year
53,606
7,067
11,459
(2,823)
Cash and cash equivalents at the beginning of the year
44,239
37,172
5,094
7,917
Cash and cash equivalents at the end of the year
(*) Reclassification in the parent company, in 2014, of R$ 231, as detailed in note 2.3.
97,845
44,239
16,553
5,094
The Notes form an integral part of these Financial Statements.
8
Statement of Changes in Shareholders’ Equity
December 31, 2015 and 2014 (In R$ million, unless otherwise indicated)
Accumulated other comprehensive income
Profit reserves
Share capital
(including
share
issuance
costs)
205,411
205,411
21
Capital
transactions
1,048
1,048
(1,478)
Cumulative
translation
adjustment
5,196
Losses on
pension
plans
(3,516)
Cash flow
hedge -
highly
probable
future
exports
(8,376)
Other
comprehensi
ve income
(loss) and
deemed cost
(548)
(7,244)
(10)
4,763
(11,029)
(9,225)
(631)
205,432
205,432
(430)
(430)
667
9,959
(14,545)
(17,601)
(1,189)
(23,376)
(10)
23,826
(255)
(40,690)
(2,829)
Legal
16,524
Statutory
4,503
Tax
incentives
1,414
Profit
retention
126,484
(21)
Retained
earnings
−
148,925
10
(21,692)
(21,682)
21,682
16,524
4,503
1,393
104,802
−
127,222
10
(34,836)
(34,826)
34,826
205,432
205,432
237
237
33,785
(14,800)
(58,291)
(4,028)
(43,334)
16,524
4,503
1,393
69,976
−
92,396
Shareholders
' equity
attributable
to
shareholders
of Petrobras
348,140
348,140
−
−
(1,478)
(21,692)
(16,122)
−
−
−
308,848
308,848
−
667
(34,836)
(19,948)
−
−
−
254,731
254,731
Non-
controlling
interests
1,394
1,394
−
−
1,043
(337)
(42)
−
−
(184)
1,874
1,874
Total
consolidated
shareholders
' equity
349,334
349,334
−
−
(340)
(21,924)
(16,164)
−
−
(184)
310,722
310,722
Deferred
charges
(200)
(200)
−
−
95
105
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
1,161
(335)
719
−
−
(220)
3,199
3,199
−
1,828
(35,171)
(19,229)
−
−
(220)
257,930
257,930
Balance as of January 1, 2014
Capital increase with reserves
Realization of deemed cost of associates
Change in interest in subsidiaries
Loss for the year
Other comprehensive income (loss)
Distributions:
Offseting of loss against reserves
Dividends
Balance as of December 31, 2014
Realization of deemed cost of associates
Change in interest in subsidiaries
Loss for the year
Other comprehensive income (loss)
Distributions:
Offseting of loss against reserves
Dividends
Balance as of December 31, 2015
The Notes form an integral part of these Financial Statements.
9
Statement of Added Value
December 31, 2015 and 2014 (In R$ million, unless otherwise indicated)
Income
Sales of products, services provided and other revenues
Gains and losses on impairment of trade receivables
Revenues related to construction of assets for own use
Inputs acquired from third parties
Materials consumed and products for resale
Materials, power, third-party services and other operating expenses
Tax credits on inputs acquired from third parties
Impairment of property, plant and equipment, intangible and other assets
Inventory write-down to net realizable value (market value)
Write-off - overpayments incorrectly capitalized
Consolidated
Parent Company
2015
2014
2015
2014
414,859
(3,641)
68,703
479,921
(94,453)
(109,876)
(22,311)
(47,676)
(1,547)
−
(275,863)
425,341
(5,555)
82,389
502,175
(136,809)
(114,879)
(26,199)
(44,636)
(2,461)
(6,194)
(331,178)
338,059
(669)
53,634
391,024
(67,401)
(88,143)
(19,753)
(33,468)
(14)
−
(208,779)
346,278
(4,401)
68,223
410,100
(108,578)
(97,797)
(24,340)
(34,814)
(493)
(4,788)
(270,810)
Gross added value
204,058
170,997
182,245
139,290
Depreciation, depletion and amortization
(38,574)
(30,677)
(28,039)
(22,518)
Net added value produced by the Company
165,484
140,320
154,206
116,772
Transferred added value
Share of profit of equity-accounted investments
Finance income
Rents, royalties and others
Total added value to be distributed
Distribution of added value
Personnel and officers
Direct compensation
Salaries
Profit sharing
Benefits
Short-term benefits (**)
Pension plan
Medical plan
FGTS
Taxes
Federal (*)
State
Municipal
Abroad (*)
Financial institutions and suppliers
Interest, and exchange and indexation charges
Rental and affreightment expenses
Shareholders
Non-controlling interests
Absorbed losses
(797)
4,867
377
4,447
451
5,355
314
6,120
(4,294)
6,208
420
2,334
3,730
6,080
809
10,619
169,931
146,440
156,540
127,391
19,068
−
19,068
1,452
4,133
3,778
9,363
1,301
29,732
50,297
51,888
725
6,879
109,789
38,768
26,813
65,581
(335)
(34,836)
(35,171)
18,832
1,045
19,877
3,661
3,004
3,253
9,918
1,234
31,029
47,599
48,021
431
6,785
102,836
17,705
16,794
34,499
(337)
(21,587)
(21,924)
14,219
−
14,219
1,110
3,705
3,433
8,248
1,151
23,618
45,198
33,074
377
−
78,649
14,973
856
15,829
3,106
2,606
2,788
8,500
1,093
25,422
40,475
29,313
237
−
70,025
37,180
51,929
89,109
−
(34,836)
(34,836)
17,628
36,008
53,636
−
(21,692)
(21,692)
Added value distributed
169,931
146,440
156,540
127,391
(*) Includes government holdings.
(**) In 2015, include R$ 418 in the Consolidated (R$ 2,443 in 2014), related to spending on Voluntary Separation Incentive Plan - PIDV (R$ 326 in 2015 and R$ 2,285 in 2014 in the
Parent Company), as described in note 22.8.
The Notes form an integral part of these Financial Statements.
10
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
1.
The Company and its operations
Petróleo Brasileiro S.A. - Petrobras is dedicated, directly or through its subsidiaries (referred to jointly as “Petrobras”
or “the Company” or “Petrobras Group”) to prospecting, drilling, refining, processing, trading and transporting crude
oil from producing onshore and offshore oil fields and from shale or other rocks, as well as oil products, natural gas
and other liquid hydrocarbons. In addition, Petrobras carries out energy related activities, such as research,
development, production, transport, distribution and trading of all forms of energy, as well as other related or similar
activities. The Company’s head office is located in Rio de Janeiro – RJ, Brazil.
2. Basis of preparation of financial statements
The financial statements include:
Consolidated financial statements
- The consolidated financial statements are being presented in accordance with accounting practices adopted in
Brazil, including the pronouncements issued by the Accounting Pronouncements Committee (CPC) and with
the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and presents all relevant information related to the financial statements, and only them,
corresponding the information used by the Company’s management.
Individual financial statements
- The individual financial statements are being presented in accordance with accounting practices adopted in
Brazil, observing the provisions contained in the Brazilian Corporation Law, and they incorporate the changes
introduced through Law 11,638/07 and Law 11,941/09, complemented by the standards, interpretations and
orientations of the Accounting Pronouncements Committee (CPC), approved by resolutions of the Federal
Accounting Council (CFC) and by rules of the Brazilian Securities Commission (CVM).
- The standards, interpretations and orientations of the Accounting Pronouncements Committee (CPC),
approved by resolutions of the Federal Accounting Council (CFC) and rules of the Brazilian Securities
Commission (CVM) converge with the International Accounting Standards issued by the International
Accounting Standard Board (IASB). Accordingly, the individual financial statements do not present differences
with respect to the consolidated financial statements under IFRS, except for the maintenance of deferred
assets, which was fully amortized by December 31, 2014, as established in CPC 43 (R1) approved by CVM
deliberation 651/10. See note 4.1.1 for a reconciliation between the parent company’s shareholders’ equity
and net income with the consolidated financial statements.
The financial statements have been prepared under the historical cost convention, as modified by available-for-sale
financial assets, financial assets and financial liabilities measured at fair value (including derivative financial
instruments at fair value through profit or loss), and certain current and non-current assets and liabilities, as detailed
in the “summary of significant accounting policies”, set out below.
The annual financial statements were approved and authorized for issue by the Company’s Board of Directors in a
meeting held on March 21, 2016.
2.1. Statement of added value
The statements of added value present information related to the value added by the Company (wealth created) and
how it has been distributed. These statements are presented as supplementary information under IFRS and were
prepared in accordance with CPC 09 – Statement of Added Value approved by CVM Deliberation 557/08.
11
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
2.2. Functional currency
The functional currency of Petrobras and all of its Brazilian subsidiaries is the Brazilian Real, which is the currency of
its primary economic environment of operation. The functional currency of most of the entities that operate in the
international economic environment is the U.S. dollar. The functional currency of Petrobras Argentina is the Argentine
Peso.
The income statements and statement of cash flows of non-Brazilian Real functional currency subsidiaries, joint
ventures and associates in stable economies are translated into Brazilian Real using the monthly average exchange
rates prevailing during the year. Assets and liabilities are translated into Brazilian Real at the closing rate at the date
of the financial statements and the equity items are translated using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured.
All exchange differences arising from the translation of the financial statements of non-Brazilian Real subsidiaries,
joint ventures and associates are recognized as cumulative translation adjustments (CTA) within accumulated other
comprehensive income in the shareholders’ equity and transferred to profit or loss in the periods when the realization
of the investments affects profit or loss.
2.3. Reclassifications
The Company has reclassified certain amounts from prior periods to conform to current period presentations. Net
income or shareholders’ equity were not affected in any of the periods presented and such reclassifications are set
out below:
• Performance bonuses advanced to customers, in the amount of R$ 1,607, in the consolidated, previously
classified as trade and other receivables, net, in non-current assets, started to be classified as other long-term
receivables, in order to provide a better presentation of its accounts receivable, aligned with market practices.
• Capitalized finance charges from the disposal of performing receivables (FIDC P), in the parent company,
previously classified as a reduction of trade and other receivables, net, in current assets in the amount of
R$ 1,536, started to be classified as current debt, in current liabilities.
• The portion of financial investments in investment funds of performing receivables, previously classified as
cash and cash equivalents, in the parent company, started to be presented as marketable securities. (R$231).
3.
The “Lava Jato (Car Wash) Operation” and its effects on the Company
In 2009, the Brazilian federal police began an investigation called “Lava Jato” (Car Wash) aimed at criminal
organizations engaged in money laundering in several Brazilian states. The Lava Jato investigation is extremely broad
and involves numerous investigations into several criminal practices focusing on crimes committed by individuals in
different parts of the country and sectors of the Brazilian economy.
Beginning in 2014, and over the course of 2015, the Brazilian Federal Prosecutor’s Office focused part of its
investigation on irregularities involving Petrobras’s contractors and suppliers and uncovered a broad payment
scheme that involved a wide range of participants, including former Petrobras personnel. Based on the information
available to Petrobras, the payment scheme involved a group of companies that, between 2004 and April 2012,
colluded to obtain contracts with Petrobras, overcharge the Company under those contracts and use the overpayment
received under the contracts to fund improper payments to political parties, elected officials or other public officials,
individual contractor personnel, former Petrobras personnel and other individuals involved in the scheme. Petrobras
refers to this scheme as the “payment scheme” and to the companies involved in the scheme as “cartel members”.
12
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
In addition to the payment scheme, the investigations identified several specific instances of other contractors and
suppliers that allegedly overcharged Petrobras and used the overpayment received from their contracts with the
Company to fund improper payments, unrelated to the payment scheme, to certain Petrobras employees, including
the former Petrobras personnel. Those contractors and suppliers are not cartel members and acted individually.
Petrobras refers to these specific cases as the “unrelated payments.”
Certain former executives of Petrobras were arrested and/or charged for money-laundering and passive corruption.
Other former executives of the Company as well as executives of Petrobras contractors and suppliers were or are
expected to be charged as a result of the investigation. The amounts paid by Petrobras related to contracts with
contractors and suppliers involved in the payment scheme were included in historical costs of its property, plant and
equipment. However, the Company believes that, under International Accounting Standard IAS 16 – Property, Plant
and Equipment, the portion of the payments made to these companies and used by them to make improper
payments, which represents additional expenses incurred as a result of the payments scheme, should not have been
capitalized. Thus, in the third quarter of 2014, the Company wrote off R$ 6,194 (R$ 4,788 in the parent company) of
capitalized costs representing amounts that Petrobras overpaid for the acquisition of property, plant and equipment
in prior years.
The Company has continuously monitored the investigations for additional information and to assess any potential
impact on the adjustments made. No additional information has been identified that impacted the adopted
calculation methodology or the recorded adjustment in 2014 for the preparation of the financial statements for the
year ended December 31, 2015.
Petrobras will continue to monitor the results of the investigations and the availability of other information
concerning the payment scheme. If information becomes available that indicates with sufficient precision that the
estimate described above should be adjusted, Petrobras will evaluate whether the adjustment is material and, if so,
recognize it.
3.1.
The Company’s response to the facts uncovered in the investigation
The Company has been closely monitoring the investigations and cooperating fully with the Brazilian Federal Police
(Polícia Federal), the Brazilian Public Prosecutor’s Office (Ministério Público Federal), the Brazilian Judiciary, and other
Brazilian authorities (the Federal Audit Court – Tribunal de Contas da União – TCU, and the Federal General Controller
– Controladoria Geral da União – CGU) in the investigation of all crimes and irregularities. We have responded to
numerous requests for documents and information from these authorities.
The Company has also cooperated with the U.S. Securities and Exchange Commission (SEC) and the United States
Department of Justice (DOJ), which, since November 2014, have been investigating potential violations of U.S. law
based on information disclosed as a result of the Lava Jato investigation.
We have been formally recognized as a victim of the crimes identified under the Lava Jato investigation by the
Brazilian Federal Prosecutor’s Office and by the court hearing the case. As a result, we have entered the criminal
proceedings as an assistant to the prosecutor and we have renewed our commitment to continue cooperating to
clarify the issues and report them regularly to our investors and to the public in general.
We do not tolerate corrupt practices and illegal acts perpetuated by any of our employees. Accordingly, in 2015 the
Company continued to implement measures to improve its corporate governance and compliance systems as part of
the process of strengthening the internal control structure.
With respect to Corporate Governance, the Company's bylaws were amended to provide for the Advisory Committees,
including the Audit Committee and the Compensation and Succession Committee, which is responsible for
determining the qualifications for nominations of executive managers, executive officers and Board members. In
addition, the Strategic Committee and Finance Committee were both created. Also, under our new corporate
governance rules, the Company must be represented by two officers, acting jointly.
13
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Additionally, Petrobras’ scope of authority was reviewed and a shared authority procedure was implemented, in which
at least two managers are needed for decision-making.
With respect to the compliance systems, the Company has restructured its General Ombudsman providing for a single
channel for complaints. Petrobras has reviewed and updated the Petrobras Corruption Prevention Program Guide, as
well as its contractual instruments and Procurement Guide. The Company is implementing qualification procedures
related to the integrity measures requirements for all its contractors, providing due diligence integrity and a system
of red flags (alerts). The provisional ban of contracting companies identified by the investigation has also been an
important initiative adopted by the Company. A Correction Committee was formed as part of Company's
organizational structure to guide, standardize and monitor the implementation of disciplinary sanctions in cases
involving fraud or corruption.
In June 2015, the Company approved a revised Business Risk Management Policy (Política de Gestão de Riscos
Empresariais), which outlines authorities, responsibilities, principles and guidelines to guide risk management
initiatives in Petrobras.
Internal investigations are still in progress and are being carried out by two independent firms hired in October 2014,
which report directly to a Special Committee that serves as a reporting line to the Board of Directors. The Special
Committee is composed of our Governance, Risk and Compliance Officer, João Adalberto Elek Junior and two other
independent and recognized experts: Ellen Gracie Northfleet, retired Chief Justice of the Brazilian Supreme Court,
recognized internationally as a jurist with great experience in analyzing complex legal issues; and Andreas Pohlmann
from Germany, who has broad experience in compliance and corporate governance matters.
We established Internal Investigative Committees (Comissões Internas de Apuração) to investigate instances of non-
compliance with corporate rules, procedures or regulations. The Committees’ investigation results are shared with the
Brazilian authorities in accordance with their progresses.
In addition, the Company has been taking the necessary procedural steps to seek compensation for damages suffered
from the improper payments scheme, including those related to its reputation.
Accordingly, the Company joined five public civil suits addressing acts of administrative misconduct, with the Brazilian
Public Prosecutor’s Office on February 20, 2015, and in another suit with the same subject filed by the Federal
Government, including demands for compensation for reputation damages.
In order to secure future compensation to Petrobras for each civil action related to misconduct, the courts granted
cautionary orders to impound defendants’ property.
To the extent that any of the proceedings resulting from the Lava Jato investigation involve leniency agreements with
cartel members or plea agreements with individuals pursuant to which they agree to return funds, the Company may
be entitled to receive a portion of such funds.
Following a plea agreement with the Brazilian authorities, in 2015 the Company received R$ 230 (R$ 157 on May 13,
2015 and R$ 73 on August 25, 2015) from the funds repatriated by Pedro José Barusco Filho (a former executive
manager of the service area) as compensation for damages.
Nevertheless, the Company is unable to reliably estimate further recoverable amounts at this moment. Any
recoverable amount will be recognized as income when received or when their economic benefits become virtually
certain.
14
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
3.2. Approach adopted by the Company to adjust its property, plant and equipment for overpayments
As it is not possible to specifically identify the amounts of each overpayment to contractors and suppliers, or periods
over which such payments occurred, Petrobras developed a methodology to estimate the aggregate amount that it
overpaid under the payment scheme, in order to determine the amount of the write‐off representing the
overstatement of its assets resulting from overpayments used to fund improper payments.
It continues to be impracticable to identify the exact date and amount of each overpayment by the Company to the
contractors and suppliers because of the limitations described below:
- The information available to the Company in the testimony identifies the companies involved in the payment
scheme and the period of time it was in effect and indicates several affected contracts, but does not specify
individual contractual payments that include overcharges or the reporting periods in which overpayments
occurred.
- Petrobras itself did not make or receive any improper payments. They were made by outside contractors and
suppliers, so the exact amounts that the Company overpaid to fund these payments cannot be identified. The
information to determine the amount by which the Company was overcharged by the cartel members is not
contained within the Company’s accounting records. These records reflect the terms of the contract entered
into by the Company, which entailed payments that were inflated because of the conspiracy among the cartel
members and the former Petrobras personnel to overcharge Petrobras. Since the Company cannot identify the
amount of overpayments for specific contractual payments or in specific accounting periods, it cannot
determine the period in which to adjust property, plant and equipment.
- Two independent firms are conducting an independent internal investigation, under the direction of the
Special Committee mentioned above. The independent internal investigation continues and is not expected to
provide additional quantitative information of a kind to support an adjustment to the Company’s financial
statements. The information available to the investigators is limited to internal information of Petrobras, so it
will not be able to produce specific identified information on the amount by which the Company was
overcharged. The money-laundering activities alleged to have occurred were designed to hide the origins and
amounts of the funds involved, so specific accounting should not be expected.
- The ongoing investigations by Brazilian authorities focus on the criminal liability of individuals, and not on
establishing a full accounting of the amounts that Petrobras was overcharged by the cartel members or all
improper payments made by contractors and suppliers from the Company’s contract payments. These
investigations may take several years before all the evidence and allegations are evaluated.
- The Brazilian authorities have filed actions against contractors and suppliers and their respective
representatives. In these actions, the prosecutors have sought judicial remedies for administrative misconduct
(ação de improbidade administrativa) using 3% of the contract prices paid to the contractors and suppliers to
measure the actual damages attributable to the payment scheme, which is consistent with the methodology
used by the Company to account for the effects of the payment scheme. The scope of this process is not
expected to produce a full accounting of all improper payments, even after the significant amount of time the
investigations by Brazilian authorities may take. Brazilian law does not provide for discovery in civil
proceedings, so the information that is produced in these proceedings would not be expected to exceed the
information produced in the investigation and the criminal proceedings.
As it is impracticable to identify the periods and amounts of overpayments incurred, the Company developed a
methodology to estimate the adjustment incurred in property, plant and equipment in the third quarter of 2014 using
the five steps described below:
15
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
(1) Identify contractual counterparties: the Company listed all the companies identified as cartel members, and using
that information the Company identified all of the contractors and suppliers that were either so identified or were
consortia including entities so identified.
(2) Identify the period: the Company concluded from the testimony that the payment scheme was operating from
2004 through April 2012.
(3) Identify contracts: the Company identified all contracts entered into with the counterparties identified in step 1
during the period identified in step 2, which included supplemental contracts when the original contract was entered
into between 2004 and April 2012. It has identified all of the property, plant and equipment related to those
contracts.
(4) Identify payments: the Company calculated the total contract values under the contracts identified in step 3.
(5) Apply a fixed percentage to the amount determined in Step 4: the Company estimated the aggregate overpayment
by applying a percentage indicated in the depositions (3%) to the total amounts for identified contracts.
The calculation considered all the recorded amounts in the Company’s books and records from 2004 through
September 2014 with respect to contracts initially entered into between 2004 and April 2012, and any related
supplemental contracts, between the companies of the Petrobras group and the cartel members (individually or in a
consortium). This broad scope was used to produce the best estimate for quantifying the aggregate amount of the
overpayment, even if there was no specific evidence of overcharging or improper payments under every affected
contract. The Company also identified amounts recorded in its books and records concerning specific contracts and
projects with the non-cartel members to account for the amounts those companies overcharged Petrobras to fund
improper payments they made, unrelated to the payment scheme and the cartel.
The Company clarifies that, since 2015, any supplemental contract involving the Company and companies included in
the scope of this methodology requires specific compliance processes aiming to mitigate risk of fraud and corruption,
and an analysis of the indispensability of the supplemental contract to the Company’s business purposes. The
assessment includes an economic and financial analysis to determine that the supplemental contrac, independently
of the analysis of the original contract, is advantageous for the Company and will not involve improper payments.
Accordingly, supplemental contracts signed since 2015 do not impact the previous adjustment made.
For overpayments attributable to non-cartel members, unrelated to the payment scheme, the Company included in
the write-off for incorrectly capitalized overpayments the specific amounts of improper payments or percentages of
contract values, as described in the testimony, which were used by those suppliers and contractors to fund improper
payments.
The Company has a number of ongoing projects in which the original contract was entered into between 2004 and
April 2012. The approach adopted by the Company considers that the overcharge was applied over total contract
values. These include contract payments to be incurred by Petrobras in future periods, because it is impracticable to
allocate the aggregate overpayments to specific periods and the portion of the overcharge that relates to future
contract payments may have been charged to the Company in prior periods. Therefore, the write-off of overpayments
incorrectly capitalized took into account the total contract values and not only contract payments already incurred.
However, as mentioned above, based on the available information, the Company believes that the activity of the cartel
associated with the improper payment scheme ceased after April 2012 and that, considering all the developments in
the ongoing criminal investigation, the improper payments related to the payment scheme have stopped.
Petrobras believes that this methodology produces the best estimate for the aggregate overstatement of its
property, plant and equipment resulting from the payment scheme, in the sense that it represents the upper bound of
the range of reasonable estimates. The estimate assumes that all contracts with the identified counterparties were
affected and that 3% represents the amount by which the Company overpaid on those contracts. Both assumptions
are supported by the testimony, even though some testimony indicated lower percentages with respect to certain
contracts, a shorter period (2006 to 2011), or fewer contractors involved.
16
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The Company considered all available information for purposes of the preparation of the financial statements for the
year ended December 31, 2015 and did not identify any additional information that would impact the adopted
calculation methodology and consequently require additional write-offs. Information available to the Company
included:
• Testimonies obtained through plea agreement by the Brazilian Public Prosecutor’s Office that have been made
public;
• Actions of administrative misconduct filed by the Brazilian Public Prosecutor’s Office against cartel members for
material damages attributable to the improper payments scheme;
• Criminal actions filed by the Brazilian Public Prosecutor’s Office against individuals involved in the improper
payments scheme, as representatives of contractors, intermediaries or former employees of Petrobras;
• Court decisions in the actions of administrative misconduct and criminal actions filed by the Brazilian Public
Prosecutor’s Office: including a decree of property unavailability of part of defendants, acceptance of provisional
arrest of investigated persons, receipt of complaints, among others;
•
Issuance of lower court judgments in certain of the criminal actions filed by the Brazilian Public Prosecutor’s Office;
• Leniency agreement of a cartel member Setal Engenharia e Construções with Brazilian authorities;
• Statement of Conduct Cessation of Construções e Comércio Camargo Correa, a cartel member, with the Brazilian
authorities;
• Technical Note 38/2015 of the Administrative Council for Economic Defense - CADE , that justified the initiation of
administrative proceedings of the alleged cartel members.
Petrobras closely monitored the progress of both the investigation by Brazilian authorities and the independent law
firms throughout 2015 when substantial progress was made. As a result of their work, no new facts that materially
impact the Company's previously recorded adjustments or change the methodology adopted were discovered. The
Company will continuously monitor the investigations for additional information and will review its potential impact
on the adjustment made.
3.3. Investigations involving the Company
Petrobras is not a target of the Lava Jato investigation and is formally recognized as a victim of the improper
payments scheme by the Brazilian Authorities.
On November 21, 2014, Petrobras received a subpoena from the U.S. Securities and Exchange Commission (SEC)
requesting certain documents and information about the Company. The Company has been complying with the
subpoena and intends to continue to do so, working with the independent Brazilian and U.S. law firms that were hired
to conduct an independent internal investigation.
On December 15, 2015, the State of São Paulo issued the Order of Civil Inquiry Public Prosecutor’s Office 01/2015,
establishing a civil proceeding to investigate the existence of potential damages caused by Petrobras to investors in
the stock market. The Company will provide all relevant information required by the authorities.
3.4. Legal proceedings involving the Company
Note 30 provides information about class actions and other material legal proceedings.
17
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
4.
Summary of significant accounting policies
The accounting policies set out below have been consistently applied to all periods presented in these consolidated
financial statements.
4.1. Basis of consolidation
The consolidated financial statements include the financial information of Petrobras and the entities it controls (its
subsidiaries), joint operations and consolidated structured entities.
Control is achieved when Petrobras: i) has power over the investee; ii) is exposed, or has rights, to variable returns
from involvement with the investee; and iii) has the ability to use its power to affect its returns.
Subsidiaries are consolidated from the date on which control is obtained until the date that such control no longer
exists. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the
policies adopted by Petrobras.
Note 11 sets out the consolidated entities and other direct investees.
Petrobras has no equity interest in certain structured entities and control is not determined by voting rights, but by
the power the Company has over the relevant operating activities of such entities. Consolidated structured entities
are set out below:
Consolidated structured entities
Charter Development LLC – CDC
Companhia de Desenvolvimento e Modernização de Plantas Industriais – CDMPI
PDET Offshore S.A.
Fundo de Investimento em Direitos Creditórios Não-padronizados do Sistema Petrobras
Fundo de Investimento em Direitos Creditórios Padronizados do Sistema Petrobras
Country Main segment
E&P
RT&M
E&P
Corporate
Corporate
U.S.A
Brazil
Brazil
Brazil
Brazil
The consolidation procedures involve combining assets, liabilities, income and expenses, according to their function
and eliminating all intragroup balances and transactions, including unrealized profits arising from intragroup
transactions.
4.1.1. Reconciliation between the parent company’s shareholders’ equity and loss with the
consolidated financial
Consolidated - IFRS / CPC
Non-controlling Interests
Deferred Expenses, Net of Income Tax (*)
Parent company - Brazilian Accounting Standards (CPC)
(*) Deferred expenses were fully amortized by December 31, 2014.
4.2. Business segment reporting
Shareholders' equity
12.31.2015
257,930
(3,199)
−
254,731
12.31.2014
310,722
(1,874)
−
308,848
2015
(35,171)
335
−
(34,836)
Loss
2014
(21,924)
337
(105)
(21,692)
The information related to the Company’s operating segments (business areas) is prepared based on items directly
attributable to each segment, as well as items that can be allocated to each segment on a reasonable basis.
The measurement of segment results includes transactions carried out with third parties and transactions between
business areas, which are charged at internal transfer prices defined by the relevant areas using methods based on
market parameters.
The information by business area is segmented according to the management of the Company's business.
18
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Due to the extinction of the international department in 2015, international business management was transferred to
the E&P, RTM and Gas & Power business areas, based on the respective businesses which they operate.
The Company operates under the following business areas:
a) Exploration and Production (E&P): this segment covers the activities of exploration, development and production of
crude oil, NGL (natural gas liquid) and natural gas in Brazil and abroad, for the primary purpose of supplying its
domestic refineries and the sale of surplus crude oil and oil products produced in the natural gas processing plants to
the domestic and foreign markets. The E&P segment also operates through partnerships with other companies.
b) Refining, Transportation and Marketing (RTM): this segment covers the refining, logistics, transport and trading of
crude oil and oil products activities, in Brazil and abroad, exporting of ethanol, extraction and processing of shale, as
well as holding interests in petrochemical companies in Brazil.
c) Gas and Power: this segment covers the activities of transportation and trading of natural gas produced in Brazil
and abroad, and imported natural gas, transportation and trading of LNG (liquid natural gas), generation and trading
of electricity, as well as holding interests in transporters and distributors of natural gas and in thermoelectric power
plants in Brazil, in addition to being responsible for the fertilizer business.
d) Biofuels: this segment covers the activities of production of biodiesel and its co-products, as well as the ethanol-
related activities: equity investments, production and trading of ethanol, sugar and the surplus electric power
generated from sugarcane bagasse.
e) Distribution: this segment includes the activities of Petrobras Distribuidora S.A., which operates through its own
retail network and wholesale channels to sell oil products, ethanol and vehicle natural gas in Brazil to retail,
commercial and industrial customers, as well as other fuel wholesalers. This segment also includes oil products
distribution operations abroad (South America).
The corporate segment comprises the items that cannot be attributed to the other segments, notably those related
to corporate financial management, corporate overhead and other expenses, including actuarial expenses related to
the pension and medical benefits for retired employees and their dependents.
Assets and the statement of income by business area are presented in note 29.
4.3. Financial instruments
4.3.1. Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, term deposits with banks and short-term highly liquid financial
investments that are readily convertible to known amounts of cash, are subject to insignificant risk of changes in
value and have a maturity of three months or less from the date of acquisition.
4.3.2. Marketable securities
Marketable securities comprise investments in debt or equity securities. These instruments are initially measured at
fair value, are classified according to the Company’s intention and ability and are subsequently measured as set out
below:
- Fair value through profit or loss – includes financial instruments purchased and held for trading in the short
term. These instruments are subsequently measured at fair value with changes recognized in the statement of
income in finance income (expenses).
- Held-to-maturity – includes non-derivative financial instruments with fixed or determinable payments and
fixed maturity, for which Management has the clear intention and ability to hold to maturity. These
instruments measured at amortized cost using the effective interest rate method.
19
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
- Available-for-sale – includes non-derivative financial instruments that are designated as available for sale or
are not classified as financial assets at fair value through profit or loss or held-to-maturity investments. These
instruments are measured at fair value and changes are recognized in other comprehensive income, in the
shareholders’ equity and recycled to the statement of income when the instruments are derecognized.
Subsequent value changes attributable to the change in interest rates (or interest income), foreign exchange rate, and
inflation (price indices) are recognized in the statement of income for all categories, when applicable.
4.3.3. Trade receivables
Trade receivables are initially measured at the fair value of the consideration to be received and, subsequently, at
amortized cost using the effective interest rate method and adjusted for allowances for impairment or uncollectible
receivables.
The Company recognizes an allowance for impairment of trade receivables when there is objective evidence that a loss
event occurred after the initial recognition of the receivable and has an impact on the estimated future cash flows,
which can be reliably estimated. Impairment losses on trade receivables are recognized in the statement of income in
selling expenses.
4.3.4. Loans and financing (Debt)
Loans and financing are initially recognized at fair value less transaction costs incurred and subsequently measured at
amortized cost using the effective interest rate method.
4.3.5. Derivative financial instruments
Derivative financial instruments are recognized in the statement of financial position as assets or liabilities and are
initially and subsequently measured at fair value.
Gains or losses arising from changes in fair value are recognized in the statement of income in finance income
(expense), unless the derivative is qualified and designated for hedge accounting.
4.3.6. Cash flow hedge accounting
The Company mitigates the risk of its results through the use of derivative and non-derivative instruments, some of
which qualify for cash flow hedge accounting.
Hedging relationships qualify for cash flow hedges when they involve the hedging of the exposure to variability in
cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable
forecast transaction.
Gains or losses relating to the effective portion of the hedge are recognized in other comprehensive income, in the
shareholders’ equity and recycled to the statement of income in finance income (expense) in the periods when the
hedged item affects the statement of income. The gains or losses relating to the ineffective portion are immediately
recognized in the statement of income.
When the hedging instrument expires or is sold, terminated or exercised or no longer meets the criteria for hedge
accounting or the Company revokes the designation, the cumulative gain or loss on the hedging instrument that has
been recognized in other comprehensive income from the period when the hedge was effective is recorded separately
in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the
cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is
immediately reclassified from equity to the statement of income.
20
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
4.4. Inventories
Inventories are determined by the weighted average cost flow method and mainly comprise crude oil, intermediate
products and oil products, as well as natural gas, LNG, fertilizers and biofuels, stated at the lower of the average cost,
and their net realizable value.
Crude oil and LNG inventories can be traded or used for production of oil products and/or electricity generation,
respectively.
Intermediate products are those product streams that have been through at least one of the refining processes, but
still need further treatment, processing or converting to be available for sale.
Biofuels mainly include ethanol and biodiesel inventories.
Maintenance materials, supplies and others are mainly comprised of production supplies, and operating and
consumption materials used in the operations of the Company, stated at the average purchase cost, not exceeding
replacement cost.
Net realizable value is the estimated selling price of inventory in the ordinary course of business, less estimated cost
of completion and estimated expenses to complete its sale.
The amounts presented in the categories above include imports in transit, which are stated at the identified cost.
4.5. Investments in other companies
An associate is an entity over which the Company has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but not the ability to exercise control or joint
control over those polices. The definition of control is set out in note 4.1.
A joint arrangement is an arrangement over which two or more parties have joint control (pursuant to contractual
provisions). A joint arrangement is classified either as a joint operation or as a joint venture depending on the rights
and obligations of the parties to the arrangement.
In a joint operation the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement
and in a joint venture, the parties have rights to the net assets of the arrangement.
In the parent company’s financial statements, investments in associates, subsidiaries and joint ventures are
accounted for by the equity method from the date on which they become an associate, a joint venture or a subsidiary.
In the parent company’s financial statements, only joint operations structured through separate vehicles (i.e.
incorporated entities) are accounted for by the equity method. For other joint operations the Company recognizes the
amount of its share of assets, liabilities and related income and expenses.
Accounting policies of joint ventures and associates have been modified, where necessary, to ensure consistency with
the policies adopted by Petrobras. Distributions received from an investee reduce the carrying amount of the
investment.
4.6. Business combinations and goodwill
Acquisitions of businesses are accounted for using the acquisition method when control is obtained. Combinations of
entities under common control are not accounted for as business combinations.
The acquisition method requires that the identifiable assets acquired and the liabilities assumed be measured at the
acquisition-date fair value. Amounts paid in excess of the fair value are recognized as goodwill. In the case of a
bargain purchase, a gain is recognized in the statement of income when the acquisition cost is lower than the
acquisition-date fair value of the net assets acquired.
21
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Changes in ownership interest in subsidiaries that do not result in loss of control of the subsidiary are equity
transactions. Any excess of the amounts paid/received over the carrying value of the ownership interest
acquired/disposed is recognized in shareholders’ equity as changes in interest in subsidiaries.
4.7. Oil and Gas exploration and development expenditures
The costs incurred in connection with the exploration, appraisal, development and production of crude oil and natural
gas are accounted for using the successful efforts method of accounting, as set out below:
- Costs related to geological and geophysical activities are expensed when incurred.
- Amounts paid for obtaining concessions for exploration of crude oil and natural gas (capitalized acquisition costs)
are initially capitalized.
- Costs directly attributable to exploratory wells pending determination of proved reserves are capitalized within
property, plant and equipment. Unsuccessful exploratory wells are charged to expense when they are considered dry
holes, uneconomic (did not encounter potentially economic oil and gas quantities) or were abandoned due to
mechanical accidents. Exploratory wells that have discovered oil and gas reserves, which cannot be classified as
proved when drilling is completed, continue to be capitalized if the well has found a sufficient quantity of reserves to
justify its completion as a producing well and progress on assessing the reserves and the economic and operating
viability of the project is under way. An internal commission of technical executives of Petrobras reviews these
conditions monthly for each well, by analysis of geoscience and engineering data, existing economic conditions,
operating methods and government regulations.
- Costs related to exploratory wells drilled in areas of unproved reserves are charged to expense when determined to
be dry or uneconomic.
- Costs related to the construction, installation and completion of infrastructure facilities, such as drilling of
development wells, construction of platforms and natural gas processing units, construction of equipment and
facilities for the extraction, handling, storing, processing or treating crude oil and natural gas, pipelines, storage
facilities, waste disposal facilities and other related costs incurred in connection with the development of proved
reserve areas are capitalized within property, plant and equipment.
4.8. Property, plant and equipment
Property, plant and equipment are measured at the cost to acquire or construct, including all costs necessary to bring
the asset to working condition for its intended use and the estimated cost of dismantling and removing the asset and
restoring the site, reduced by accumulated depreciation and impairment losses.
A condition of continuing to operate certain items of property, plant and equipment, such as industrial plants,
offshore plants and vessels is the performance of regular major inspections and maintenance. Those expenditures are
capitalized if the recognition criteria are met or otherwise expensed when incurred. The capitalized costs are
depreciated over the period through to the next major maintenance date.
Spare parts are capitalized when they are expected to be used during more than one period and can only be used in
connection with an item of property, plant and equipment. These are depreciated over the useful life of the item of
property, plant and equipment to which they relate.
General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets are
capitalized as part of the costs of these assets. General borrowing costs are capitalized based on the Company’s
weighted average of the cost of borrowings outstanding applied over the balance of assets under construction.
Borrowing costs are amortized during the useful lives of the assets or by applying the unit-of-production method to
the related assets. The Company suspends capitalization of borrowing costs during extended periods in which it
suspends active development of a qualifying asset.
22
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Except for assets with useful lives shorter than the life of the field, which are depreciated based on the straight-line
method, depreciation, depletion and amortization of proved oil and gas producing properties are accounted for
pursuant to the unit-of-production method.
Assets with useful lives shorter than the life of the field, floating platforms and assets that are unrelated to oil and
gas production are depreciated based on the straight line method.
The unit-of-production method of depreciation (amortization) is computed based on a unit-of-production basis
(monthly production) over the proved developed oil and gas reserves, applied on a field-by-field basis.
Amortization of amounts paid for obtaining concessions for exploration of oil and natural gas of producing properties,
such as signature bonuses (capitalized acquisition costs) and the acquisition costs with respect to the Assignment
Agreement (note 12.3), referring to the right to carry out prospection and drilling activities for oil, natural gas and
other liquid hydrocarbons located in blocks in the pre-salt area is recognized using the unit-of-production method,
computed based on the units of production over the total proved oil and gas reserves, applied on a field-by-field
basis.
Except for land, which is not depreciated, other property, plant and equipment are depreciated on a straight-line
basis. Note 12 provides further information about the estimated useful life by class of assets.
4.9. Intangible assets
Intangible assets are measured at the acquisition cost, less accumulated amortization and impairment losses and
comprise rights and concessions, including the signature bonus paid for obtaining concessions for exploration of oil
and natural gas (capitalized acquisition costs); public service concessions; trademarks; patents; software and goodwill
for expectations of future profitability, resulting from the acquisition of a controlling interest. In the individual
financial statements, this goodwill is presented in investments.
Signature bonuses paid for obtaining concessions for exploration of oil and natural gas are initially capitalized within
intangible assets and are transferred to property, plant and equipment upon the declaration of commerciality. The
acquisition costs with respect to the Assignment Agreement were reclassified to property, plant and equipment, as
set out in note 12.3. On December 29, 2014 the Company submitted the declaration of commerciality of the last area
of the agreement to the Brazilian Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional de Petróleo, Gás
Natural e Biocombustíveis) - ANP. Signature bonuses are not amortized until they are transferred to property, plant
and equipment. Intangible assets with a finite useful life, other than amounts paid for obtaining concessions for
exploration of oil and natural gas of producing properties, are amortized over the useful life of the asset on a
straight-line basis.
Internally generated intangible assets are not capitalized and are expensed as incurred, except for development costs
that meet the recognition criteria related to completion and use of assets, probable future economic benefits, and
others.
Intangible assets with an indefinite useful life are not amortized but are tested annually for impairment considering
individual assets or cash-generating units. Their useful lives are reviewed annually to determine whether events and
circumstances continue to support an indefinite useful life assessment for those assets. If they do not, the change in
the useful life assessment from indefinite to finite is accounted for on a prospective basis.
4.10. Impairment
Property, plant and equipment and intangible assets with definitive lives are tested for impairment when there is an
indication that the carrying amount may not be recoverable. Assets related to development of oil and gas and assets
that have indefinite useful lives, such as goodwill acquired in business combinations are tested for impairment
annually, irrespective of whether there is any indication of impairment.
23
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The impairment test is performed by a comparison of the carrying amount of an individual asset or a cash-generating
unit (CGU) with its recoverable amount. Whenever the recoverable amount is less than the carrying amount, an
impairment loss is recognized to reduce the carrying amount to the recoverable amount. The recoverable amount of
an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use. Considering
the specificity of the Company’s assets, the existing synergies between the Company’s assets and businesses, as well
as the expectation of the use of its assets for their remaining useful lives, value in use is generally used by the
Company for impairment testing purposes, except when specifically indicated.
Value in use is estimated based on the present value of the risk-adjusted (for specific risks) future cash flows
expected to arise from the continuing use of an asset or cash-generating unit (based on assumptions that represent
the Company’s best estimates), discounted at a pre-tax discount rate. This rate is obtained from the Company’s post-
tax weighted average cost of capital (WACC). Cash flow projections are mainly based on the following assumptions:
prices based on the Company’s most recent strategic plan; production curves associated with existing projects in the
Company's portfolio, operating costs reflecting current market conditions, and investments required for carrying out
the projects.
For purposes of the impairment test, assets are grouped at the smallest identifiable group that generates largely
independent cash inflows from other assets or groups of assets (the cash-generating unit). Assets related to
exploration and development of oil and gas are tested annually for impairment on a field-by-field or group of fields
basis, based on cash flow projections.
Reversal of previously recognized impairment losses is permitted for assets other than goodwill.
4.11. Leases
Leases that transfer substantially all the risks and rewards incidental to ownership of the leased item are recognized
as finance leases.
For finance leases, when the Company is the lessee, assets and liabilities are recognized at the lower of the fair value
of the leased property or the present value of the minimum lease payments, both determined at the inception of the
lease.
Capitalized lease assets are depreciated on a systematic basis consistent with the depreciation policy the Company
adopts for property, plant and equipment that are owned. Where there is no reasonable certainty that the Company
will obtain ownership by the end of the lease term, capitalized lease assets are depreciated over the shorter of the
lease term or the estimated useful life of the asset.
When the Company is the lessor, a receivable is recognized at the amount of the net investment in the lease.
If a lease does not transfer substantially all the risks and rewards incidental to ownership of the leased item, it is
classified as an operating lease. Operating leases are recognized as expenses over the period of the lease.
Contingent rents are recognized as expenses when incurred.
4.12. Assets classified as held for sale
Non-current assets, disposal groups and liabilities directly associated with those assets are classified as held for sale
if their carrying amounts will, principally, be recovered through the sale transaction rather than through continuing
use.
The Company approved a divestment plan and is considering opportunities to sell different assets and businesses.
The divestment portfolio is dynamic because changes in market conditions and/or in the Company’s evaluation of its
different businesses may affect any ongoing negotiation or potential transaction.
24
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The condition for classification as held for sale is met only when the sale is approved by the Company’s Board of
Directors and the asset or disposal group is available for immediate sale in its present condition and there is the
expectation that the sale occurs within 12 months after the classification as held for sale. In addition, the sale should
be expected to qualify for recognition as a completed sale within one year from the date of classification as held for
sale.
However, events or circumstances may extend the period to complete the sale beyond one year. An extension of the
period required to complete a sale does not preclude an asset (or disposal group) from being classified as held for sale
if the delay is caused by events or circumstances beyond the Company’s control and there is sufficient evidence that it
remains committed to its plan to sell the assets (or disposal groups).
Assets (or disposal groups) classified as held for sale and the associated liabilities are measured at the lower of their
carrying amount and fair value less costs to sell. Assets and liabilities are presented separately in the statement of
financial position.
4.13. Decommissioning costs
Decommissioning costs are future obligations to perform environmental restoration, dismantle and remove a facility
when it terminates its operations due to the exhaustion of the area or economic feasibility.
Costs related to the abandonment and dismantling of areas are recognized as part of the cost of an asset (with a
corresponding liability) based on the present value of the expected future cash outflows, discounted at a risk-
adjusted rate when a future legal obligation exists and can be reliably measured.
The estimates for abandonment and dismantling of areas are revised annually and depreciated similarly to property,
plant and equipment, based on the class of the asset. Unwinding of the discount of the corresponding liability is
recognized as a finance expense, when incurred.
Future decommissioning costs for oil and natural gas producing properties are initially recognized after a field is
declared to be commercially viable, on a field by field basis, and are revised annually.
4.14. Provisions, contingent assets and contingent liabilities
Provisions are recognized when there is a present obligation (legal or constructive) that arises from past events and
for which it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, which must be reasonably estimable.
Contingent assets are not recognized, except when the realization of income is virtually certain.
Contingent liabilities for which the likelihood of loss is considered to be possible or which are not reasonably
estimable are not recognized in the financial statements but are disclosed unless the expected outflow of resources
embodying economic benefits is considered remote.
4.15. Income taxes
Income tax expense for the period comprises current and deferred tax.
a) Current income taxes
Brazil has enacted corporate tax reform, Law 12.973 as of May 13, 2014. Beginning in 2015, the Company has adopted
the provisions of the enacted law in order to determine its taxable profit for the year. The prior tax regime, called the
Transition Tax Regime (Regime Tributário de Transição - RTT) was revoked and the impact of the adoption of the new
tax regime is set out in note 21.5.
25
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Current tax expense is computed based on taxable profit for the year, calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting period.
Current income taxes are offset when they relate to income taxes levied on the same taxable entity and tax authority ,
when a legally right and intention to set off current tax assets and current tax liabilities exists.
b) Deferred income taxes
Deferred income taxes are recognized on temporary differences between the tax base of an asset or liability and its
carrying amount. Deferred income tax liabilities are generally recognized for all taxable temporary differences.
Deferred tax assets are generally recognized for all deductible temporary differences and carryforward of unused tax
losses or credits to the extent that it is probable that taxable profit will be available against which those deductible
temporary differences can be utilized. When there are insufficient taxable temporary differences relating to the same
taxation authority and the same taxable entity, a deferred tax is recognized to the extent that it is probable that the
entity will have sufficient taxable profit in future periods, based on projections supported by the Company’s Business
and Management plan and approved by Management.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset when they relate to income taxes levied on the same taxable
entity, when a legally enforceable right to set off current tax assets and current tax liabilities exists and when the
deferred tax assets and deferred tax liabilities relate to taxes levied by the same tax authority on the same taxable
entity.
4.16. Employee benefits (Post-Employment)
Actuarial commitments related to post-employment defined benefit plans and health-care plans are recognized as
liabilities in the statement of financial position based on actuarial calculations which are revised annually by an
independent qualified actuary (updating for material changes in actuarial assumptions and estimates of expected
future benefits), using the projected unit credit method, net of the fair value of plan assets, when applicable, from
which the obligations are to be directly settled.
Actuarial assumptions include demographic assumptions, financial assumptions, medical costs estimates, historical
data related to benefits paid and employee contributions.
Under the projected credit unit method, each period of service gives rise to an additional unit of benefit entitlement
and each unit is measured separately to determine the final obligation.
Changes in the net defined benefit liability (asset) are recognized when they occur, as follows: i) service cost and net
interest cost in the statement of income; and ii) remeasurements in other comprehensive income.
Service cost comprises: (i) current service cost, which is the increase in the present value of the defined benefit
obligation resulting from employee service in the current period; (ii) past service cost, which is the change in the
present value of the defined benefit obligation for employee service in prior periods, resulting from a plan
amendment (the introduction, modification, or withdrawal of a defined benefit plan) or a curtailment (a significant
reduction by the entity in the number of employees covered by a plan); and (iii) any gain or loss on settlement.
Net interest on the net defined benefit liability (asset) is the change during the period in the net defined benefit
liability (asset) that arises from the passage of time.
Remeasurement of the net defined benefit liability (asset) is recognized in shareholders’ equity, in other
comprehensive income, and comprises: (i) actuarial gains and losses and; (ii) the return on plan assets, less interest
income earned on these assets.
26
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The Company also contributes amounts to defined contribution plans, that are expensed when incurred and are
computed based on a percentage of salaries.
4.17. Share Capital and Stockholders’ Compensation
Share capital comprises common shares and preferred shares. Incremental costs directly attributable to the issue of
new shares (share issuance costs) are presented (net of tax) in shareholders’ equity as a capital transactions.
To the extent the Company proposes distributions to shareholders, such dividends and interest on capital are
determined in accordance with the limits defined in the Brazilian Corporation Law and in the Company’s bylaws.
Interest on capital is a form of dividend distribution which is deductible for tax purposes in Brazil to the entity
distributing interest on capital. Tax benefits from the deduction of interest on capital are recognized in the statement
of income.
4.18. Other comprehensive income
Other comprehensive income include changes in fair value of available-for-sale financial instruments, effective
portion of cash flow hedge, actuarial gains and losses (remeasurement of the net defined benefit liability) and
cumulative translation adjustment.
4.19. Government grants
A government grant is recognized when there is reasonable assurance that the grant will be received and the
Company will comply with the conditions attached to the grant.
Government grants related to expenses are recognized as revenue in the statement of income on a systematic basis
over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to
compensate. Government grants related to assets are initially recognized as deferred income and transferred to the
statement of income over the useful life of the asset on a straight-line basis.
4.20. Recognition of revenue, costs and expenses
Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the
Company and the amount of revenue and the costs incurred or to be incurred in the transaction can be measured
reliably. Revenue is measured at the fair value of the consideration received or receivable for products sold and
services provided in the normal course of business, net of returns, discounts and sales taxes.
Revenues from the sale of crude oil and oil products, petrochemical products, natural gas, biofuels and other related
products are recognized when the Company retains neither continuing managerial involvement nor effective control
over the products sold and the significant risks and rewards of ownership have been transferred to the customer,
which is usually when legal title passes to the customer, pursuant to the terms of the sales contract. Sales revenues
from freight and other services provided are recognized based on the stage of completion of the transaction.
Finance income and expense mainly comprise interest income on financial investments and government bonds,
interest expense on debt, gains or losses on marketable securities measured at fair value, as well as net foreign
exchange and inflation indexation charges. Finance expense does not include borrowing costs which are capitalized as
part of the costs of these assets.
Revenue, costs and expenses are recognized on the accrual basis.
27
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
5.
Critical accounting policies: key estimates and judgments
The preparation of the consolidated financial information requires the use of estimates and judgments for certain
transactions and their impacts on assets, liabilities, income and expenses. The assumptions are based on past
transactions and other relevant information and are periodically reviewed by Management, although the actual
results could differ from these estimates.
Information about those areas that require the most judgment or involve a higher degree of complexity in the
application of the accounting practices and that could materially affect the Company’s financial condition and results
of operations are set out following:
5.1. Oil and gas reserves
Oil and gas reserves are estimated based on economic, geological and engineering information, such as well logs,
pressure data and drilling fluid sample data and are used as the basis for calculating unit-of-production depreciation,
depletion and amortization rates and for impairment tests.
These estimates require the application of judgment and are reviewed at least annually based on a re-evaluation of
already available geological, reservoir or production data and new geological, reservoir or production data, as well as
changes in prices and costs that are used in the estimation of reserves. Revisions can also result from significant
changes in the Company’s development strategy or in the production capacity of equipment and facilities.
The Company determines its oil and gas reserves both pursuant to the SEC and the ANP/SPE (Brazilian Agency of
Petroleum, Natural Gas and Biofuels / Society of Petroleum Engineers) criteria. The main differences between the two
criteria are: selling price of crude oil (ANP/SPE establishes the use of the Company’s forecasted price, while SEC
determines the use an average price considering the each first day of the last 12 months); concession period (ANP
permits for the use of reserve quantities after the concession period). Additionally, pursuant to the SEC criteria, only
proved reserves are determined, while proved and unproved reserves are determined pursuant to the ANP/SPE
criteria.
a) Oil and gas reserves: depreciation, depletion and amortization
Depreciation, depletion and amortization are measured based on estimates of reserves prepared by the Company’s
technicians in a manner consistent with SEC definitions. Revisions to the Company’s proved developed and
undeveloped reserves impact prospectively the amounts of depreciation, depletion and amortization recognized in
the statement of income and the carrying amounts of oil and gas properties assets.
Therefore all other variables being constant, a decrease in estimated proved reserves would increase, prospectively,
depreciation, depletion and amortization expense, while an increase in reserves would prospectively reduce the
amount of expenses with depreciation, depletion and amortization.
See notes 4.8 and 12 for more detailed information about depreciation, amortization and depletion.
b) Oil and gas reserves: impairment testing
The Company assesses the recoverability of the carrying amounts of oil and gas exploration and development assets
based on their value in use, as defined in note 4.10. In general, analyses are based on proved reserves and probable
reserves pursuant to the ANP/SPE definitions.
The Company performs asset valuation analyses on an ongoing basis as a part of its management program by
reviewing the recoverability of their carrying amounts based on estimated volumes of oil and gas reserves, as well as
estimated future oil and natural gas prices.
Oil and gas exploration and production assets are tested annually for impairment, irrespective of whether there is any
indication of impairment.
28
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The markets for crude oil and natural gas have a history of significant price volatility and although prices can drop
precipitously, industry prices over the long term will continue to be driven by market supply and demand
fundamentals. The impairment tests that the Company performs make use of its long-term price assumptions used in
its planning and budgeting processes and its capital expenditure decisions, which are considered reasonable
estimates, given market indicators and experience. When determining the value in use of those assets, short-term
price volatility affects the cash flow estimates for the first years.
Lower future oil and gas prices, when considered long-term trends, as well as negative impacts of significant changes
in reserve volumes, production curve expectations, lifting costs or discount rates could trigger the need for
impairment assessment.
See notes 4.8 and 12 for more detailed information about oil and natural gas exploration and development assets.
5.2. Identifying cash-generating units for impairment testing
Identifying cash-generating units (CGUs) requires management assumptions and judgment, based on the Company’s
business and management model.
Changes in the aggregation of assets into Cash-Generating units (CGUs) could result in additional impairment charges
or reversals. Such changes may occur when investment, strategic or operational factors result in changes in the
interdependencies between those assets and, consequently, alter the aggregation of assets into CGUs.
The assumptions set out below have been consistently applied by the Company:
a) Exploration and Production CGUs:
i) Crude oil and natural gas producing properties CGU: comprised of exploration and development assets
related to crude oil and natural gas fields and groups of fields in Brazil and abroad. As of December 31, 2015,
the Company changed the aggregation of certain crude oil and natural gas producing properties located in
mid-southern Campos Basin into a cash-generating unit (the Centro-Sul group of crude oil and natural gas
producing properties). Certain fields were disaggregated from the CGU and impairment tests were run
separately for those individual fields. The manner by which the CGU is identified was changed as a result of: (a)
the beginning of production shutdown in the Bicudo field; (b) the sale of Bijupirá and Salema fields; and (c) a
reassessment of the areas’ natural gas production process, reflecting an increase in the domestic demand for
natural gas in the thermoelectric industry, which resulted in a decrease in the need for natural gas reinjection.
Accordingly, the following fields have been disaggregated from the CGU: Espadarte, Linguado, Bicudo, Badejo,
Pampo, Trilha, Tartaruga Verde and Tartaruga Mestiça; and
ii) Drilling Rigs CGU: comprised of drilling rigs, where each drilling rig represents an independent CGU.Refining,
transportation and marketing CGU’s.
b) Downstream CGU:
29
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
i) Downstream CGU: a single CGU comprised of all refineries and associated assets, terminals and pipelines, as
well as logistics assets operated by Transpetro. This CGU was identified based on the concept of integrated
optimization and performance management, which focus on the global performance of the CGU, allowing a
shift of margins from one refinery to another. Pipelines and terminals are an integral part and interdependent
portion of the refining assets, required to supply the market. During the quarter ended December 31,2014,
Complexo Petroquímico do Rio de Janeiro (Comperj) and the second refining unit of Refinaria Abreu e Lima
(RNEST), both assets under construction, were removed from the Downstream CGU and assessed for
impairment individually due to a range of circumstances that include: a) postponement of projects; b) a
decrease in expected future operating revenues following the decline in international crude oil prices, c) the
devaluation of Brazilian Real, d) difficulties in accessing the capital markets, and e) insolvency of contractor
and suppliers and a consequent shortage of qualified contractors and suppliers (as a result of the difficulties
created for suppliers by the Lava Jato investigation or otherwise);
ii) Petrochemical CGU: the PetroquímicaSuape and Citepe petrochemical plants;
iii) Transportation CGU: Transpetro’s fleet of vessels;
iv) SIX CGU: shale processing plant; and
v) other operations in Brazil and abroad defined as the smallest group of assets that generates independent
cash flows.
c) Gas & Power CGU’s:
i) Natural gas CGU: comprised of natural gas pipelines, natural gas processing plants and fertilizers and
nitrogen products plants. During the quarter ended December 31, 2014, after the interruption of the
construction of the fertilizer plant Unidade de Fertilizantes Nitrogenados III (UFN III) (MS), the Company
terminated the construction contract with Consórcio UFN III due to poor performance. After this interruption,
the Company decided to re-evaluate its implementation schedule, postponing the necessary actions of hiring a
new company to execute the remaining scope as long as measures to preserve the Company’s capital are in
place. In addition, during 2015, the updated 2015-2019 Business and Management Plan excluded the fertilizer
plant Unidade de Fertilizantes Nitrogenados V (UFN V). As a result, the Company excluded the assets under
construction UFN III and UFN V from the Gas & Power CGU and each one was assessed for impairment
separately;
ii) Power CGU: thermoelectric power generation plants; and
iii) other operations in Brazil and abroad defined as the smallest group of assets that generates largely
independent cash flows.
d) Distribution CGU: Comprised of the distribution assets related to the operations of Petrobras Distribuidora S.A.
e) Biofuels CGU (Biodiesel CGU): an integrated unit of biodiesel plants defined based on the production planning
and operation process, considering domestic market conditions, the production capacity of each plant, as well
as the results of biofuels auctions and raw materials supply.
Investments in associates and joint ventures including goodwill are individually tested for impairment.
See notes 4.10 and 14 for more detailed information about impairment.
5.3. Pension and other post-retirement benefits
The actuarial obligations and net expenses related to defined benefit pension and health care post-retirement plans
are computed based on several financial and demographic assumptions, of which the most significant are:
30
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
- Discount rate: comprises the projected future inflation in addition to an equivalent real interest rate that
matches the duration of the pension and health care obligations with the future yield curve of long-term
Brazilian Government Bonds; and
- Medical costs: comprise the projected annual growth rates based on per capita health care benefits paid over
the last five years, which are used as a basis for projections, decreasing gradually over 30 years, to converge
with a general price inflation index.
These and other estimates are reviewed at least annually and may differ materially from actual results due to
changing market and financial conditions, as well as actual results of actuarial assumptions.
The sensitivity analysis of discount rates and changes in medical costs as well as additional information about
actuarial assumptions are set out in note 22.
5.4. Estimates related to contingencies and legal proceedings
The Company is a defendant in numerous legal proceedings involving tax, civil, labor, corporate and environmental
issues arising from the normal course of its business for which estimates are made by Petrobras of the amounts of the
obligations and the probability that an outflow of resources will be required. Those estimates are based on legal
advice and Management’s best estimates.
See note 30 for more detailed information about contingencies and legal proceedings.
5.5. Dismantling of areas and environmental remediation
The Company has legal and constructive obligations to remove equipment and restore onshore and offshore areas at
the end of operations at production sites. Its most significant asset removal obligations involve removal and disposal
of offshore oil and gas production facilities in Brazil and abroad. Estimates of costs for future environmental cleanup
and remediation activities are based on current information about costs and expected plans for remediation.
These estimates require performing complex calculations that involve significant judgment because the obligations
are long-term; the contracts and regulations contain subjective definitions of the removal and remediation practices
and criteria involved when the events actually occur; and asset removal technologies and costs are constantly
changing, along with regulations, environmental, safety and public relations considerations.
The Company is constantly conducting studies to incorporate technologies and procedures to optimize the operations
of abandonment, considering industry best practices. However, the timing and amounts of future cash flows are
subject to significant uncertainty.
Notes 4.13 and 20 provides further detailed information about the decommissioning provisions.
5.6. Deferred income taxes
The recognition of deferred tax liabilities and deferred tax assets involves significant estimates and judgments by the
Company. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available
against which a deductible temporary difference can be utilized or it is probable that the entity will have sufficient
taxable profit in future periods. Deferred tax liabilities are recognized for all taxable temporary differences.
In evaluating whether it will have sufficient taxable profit in future periods to support the recognition of deferred tax
assets, the Company uses future projections and estimates based on its Business and Management Plan (BMP),
approved by the Board of Executive Officers annually. Future taxable profits projections are mainly based on the
following assumptions: i) Brent crude oil prices; ii) foreign exchange rates; and iii) the Company’s projected net finance
expenses (income).
Changes in deferred tax assets and liabilities are presented in note 21.6.
31
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
5.7. Cash flow hedge accounting involving the Company’s future exports
For cash flow hedges, a forecast transaction that is the subject of the hedge must be highly probable. The Company
determines the portion of its future exports that meet the criteria of being “highly probable future exports” by
determining a percentage of total forecast exports based on a time series comparing realized and forecast exports
(based on its five-year Business and Management Plan - BMP and its long-term Strategic Plan projections). Forecast
future exports are reviewed whenever the Company reviews its BMP and Strategic Plan assumptions. The ratio of
highly probable future exports to total forecast exports is reviewed annually, at least.
Projections of future exports are determined based on the Company’s operational and capital expenditure
optimization model and are affected by different assumptions, including crude oil and oil products prices, the
Company’s projected crude oil and natural gas production and domestic demand.
See note 33.2 for more detailed information about cash flow hedge accounting and a sensitivity analysis of the cash
flow hedge involving future exports.
5.8. Write-off – overpayments incorrectly capitalized
As described in note 3, in the third quarter of 2014, the Company wrote off US$2,527 of capitalized costs representing
the estimated amounts that Petrobras had overpaid for the acquisition of property, plant and equipment.
To account for these overpayments, the Company developed an estimation methodology, as set out in note 3.
Petrobras acknowledges the degree of uncertainty involved in the estimation methodology and continues to monitor
the ongoing investigations and the availability of other information concerning the amounts it may have overpaid in
the context of the payment scheme. If reliable information becomes available that indicates with sufficient precision
that the Company’s estimate should be modified, it will evaluate materiality and, if so, adjust.
However, as previously discussed, the Company believes it has used the most appropriate methodology and
assumptions to determine the amounts of overpayments incorrectly capitalized and there is no evidence that would
indicate the possibility of a material change in the amounts written-off.
5.9. Allowance for impairment of trade receivables
Management continuously assesses whether there is objective evidence that trade receivables are impaired and
recognizes allowances for impairment of trade receivables to cover losses. Such evidence includes insolvency,
defaults, judicial recovery claims a significant probability of a debtor filing for bankruptcy and others.
See note 8 for more detailed information about allowance for impairment of trade receivables.
32
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
6. New standards and interpretations
a) IASB - International Accounting Standards Board
The following standards and amendments to standards were issued by the IASB and are not effective as of December
31, 2015. The Company did not early adopt those standards:
Standards
Amendment to IFRS 11 “Joint
Arrangements”
Amendment to IFRS 10
“Consolidated Financial Statements”
and to IAS 28 “Investments in
Associates and Joint Ventures”
IFRS 15 – “Revenue from Contracts
with Customers”
IFRS 9 - "Financial Instruments"
Brief Description
Requires an investor to apply the principles of business combination accounting
when it acquires an interest in a joint operation (as defined under IFRS 11) that
constitutes a "business (as defined under IFRS 3)."
States that when an asset is sold to, or contributed in an associate or a joint
venture, and the asset meets the definition of business (IFRS 3), the gain or loss shall
be fully recognized by the investor (regardless of the participation of third parties in
the associate or joint venture). A partial gain or loss is recognized when a
transaction involves assets that do not constitute a business. However, if the sale or
contribution does not meet the definition of business as defined by IFRS 3/CPC 15,
any gain or loss shall be recognized by the investor in proportion to the participation
of third parties in the associate or joint venture.
Sets out requirements for revenue recognition, measurement and disclosure.
According to IFRS 15, revenue is recognized when a customer obtains control of a
good or service sold. It changes the current model, based on which revenue is
recognized when significant risks and rewards of ownership are transferred. In
addition IFRS 15 provides guidance for revenue recognition in more complex cases.
Establishes a new model of financial assets classification, based on their cash flow
characteristics and entity's business model objective for them. This standard also
changes the assumptions of financial assets impairment recognition based on
expected losses.
Adds new requirements regarding hedge accounting.
Effective Date
January 1, 2016
Indefinitely postponed
January 1, 2018
January 1, 2018
The Company is assessing the impact the new standards and amendments to standards may have on future periods.
IFRS 16 – “Leases”
On January 13, 2016, the IASB issued IFRS 16 "Leases", which will be effective for fiscal years beginning on or after
January 1, 2019 and will replace IAS 17 "Leases" and related interpretations.
IFRS 16 sets out requirements for leases identification, recognition, measurement, presentation and disclosure
according to the lessee and lessor perspectives.
Among the changes for lessees, IFRS 16 eliminates classification between financial and operating leases, required by
IAS 17. Therefore, it will be a single model in which all leases will result in the recognition of assets related to the use
of rights of assets leased. If the payments provided for in the commercial leases are due over time, financial liabilities
should be recognized as well.
For lessors, IFRS 16 will maintain the classification as either financial or operating leases as required by IAS 17. IFRS 16
will not substantially change the way leases will be accounted for lessors when compared to IAS 17.
The Company is assessing the impacts of this new standard and believes that the adoption of IFRS 16 may cause a
significant increase in assets and liabilities in its consolidated statement of financial position. Accordingly, the
Company may also need to negotiate some covenants in its loan agreements with BNDES – (Brazilian Development
Bank) when a reliable estimate of these impacts can be made.
b) Brazilian Tax Law
On December 30, 2015, the State of Rio de Janeiro enacted two laws that increase the tax burden on the oil industry,
from March 2016, as follows:
33
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
•
•
Law 7.182 – establishes a new levy for the Rate Control, Monitoring and Supervision of Research, Mining, Oil
and Gas Exploration and Utilization Activities (Taxa de Controle, Monitoramento e Fiscalização das Atividades
de Pesquisa, Lavra, Exploração e Aproveitamento de Petróleo e Gás – TFPG), over each barrel of crude oil or
equivalent unit of natural gas extracted in the State of Rio de Janeiro; and
Law 7.183 – establishes a new tax charge on transactions involving the crude oil cycle - 18% VAT (ICMS).
The Company believes that neither of these laws have a basis as valid legal statutes and plans to file appeals to the
Brazilian Federal Supreme Court to prove that they are unconstitutional.
7.
Cash and cash equivalents and Marketable securities
Cash and Cash Equivalents
Cash at bank and in hand
Short-term financial investments
- In Brazil
Single-member funds (Interbank Deposit) and other short-term deposits
Other investment funds (*)
- Abroad
Time deposits
Automatic investing and interest checking accounts
Other financial investments
Total short-term financial investments
Total cash and cash equivalents
(*) Reclassification in 2014 of R$ 231 in the parent company, as detailed in note 2.3.
Consolidated
Parent Company
12.31.2015
12.31.2014
12.31.2015
12.31.2014
3,157
1,884
4
2
3,599
42
3,641
51,842
34,471
4,734
91,047
94,688
97,845
5,311
107
5,418
23,110
9,491
4,336
36,937
42,355
44,239
1,100
2
1,102
−
15,447
−
15,447
16,549
16,553
4,182
51
4,233
−
−
859
859
5,092
5,094
Short-term financial investments in Brazil comprise highly-liquid investments in exclusive (single-member) funds,
mainly holding Brazilian Federal Government Bonds. Short-term financial investments abroad are comprised of time
deposits, highly-liquid automatic investing accounts, interest checking accounts and other short-term fixed income
instruments with maturities of three months or less.
Marketable securities
12.31.2015
Consolidated
Parent Company
12.31.2014
12.31.2015
12.31.2014
In Brazil
Abroad
Total
In Brazil
Abroad
Total
Total
Total
Trading securities
Available-for-sale securities
Held-to-maturity securities (*)
Current
Non-current
3,042
21
271
3,334
3,042
292
−
5
50
55
5
50
3,042
26
321
3,389
3,047
342
7,146
6
270
7,422
7,146
276
−
50
17,581
17,631
17,617
14
7,146
56
17,851
25,053
24,763
290
2,982
2
8,070
11,054
10,794
260
7,092
52
8,577
15,721
15,472
249
(*) Reclassification in 2014 of R$ 231 in the parent company, as detailed in note 2.3.
Trading securities refer mainly to investments in Brazilian Government Bonds and held-to-maturity securities are
mainly comprised of time deposits in highly-rated financial institutions. These financial investments have maturities
of more than three months and are classified as current assets due to the expectation of their realization in the short
term.
In the parent company the relevant held-to-maturity securities refer to the investments in the Receivables
Investment Fund, as presented in note 19.2.
34
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
8.
Trade and other receivables
8.1. Trade and other receivables, net
Trade receivables
Third parties (*)
Related parties
Investees (note 19.5)
Receivables from the electricity sector (note 8.4)
Petroleum and alcohol accounts - receivables from Federal Government (note 19.6)
Other receivables
Allowance for impairment of trade receivables
Current
Non-current
Consolidated
Parent Company
12.31.2015
12.31.2014
12.31.2015
12.31.2014
28,358
26,620
10,975
10,657
2,085
13,335
857
6,625
51,260
(14,274)
36,986
22,659
14,327
2,293
7,879
843
5,322
42,957
(8,956)
34,001
21,167
12,834
15,176
3,940
857
2,790
33,738
(6,514)
27,224
20,863
6,361
19,913
765
843
2,685
34,863
(4,873)
29,990
19,319
10,671
(*) Reclassification in 2014 of R$ 1,536 in the parent company and of R$ 1,607 in the consolidated, as detailed in note 2.3.
8.2. Trade receivables overdue - Third parties
Up to 3 months
From 3 to 6 months
From 6 to 12 months
More than 12 months
8.3. Changes in the allowance for impairment of trade receivables
Opening balance
Additions (*)
Write-offs
Reversals
Cumulative translation adjustment
Closing balance
Current
Non-current
Consolidated
Parent Company
12.31.2015
1,229
701
3,135
6,775
11,840
12.31.2014
2,186
472
480
4,866
8,004
12.31.2015
328
412
2,775
2,498
6,013
12.31.2014
1,050
187
151
1,218
2,606
Consolidated
Parent Company
12.31.2015
12.31.2014
12.31.2015
12.31.2014
8,956
7,133
(41)
(2,476)
702
14,274
6,599
7,675
3,293
5,801
(5)
(318)
185
8,956
3,845
5,111
4,873
3,830
−
(2,189)
−
6,514
4,022
2,492
473
4,472
−
(72)
−
4,873
2,230
2,643
(*) In 2015, includes additions related to: electricity sector R$ 4,056; losses on fines R$ 1,206; and thermical interconnected system R$ 233.
35
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
8.4. Trade receivables - electricity sector (Isolated Electricity System)
Related parties (Eletrobras Group)
Amazonas Distribuidora De Energia
Centrais Elétricas do Norte
Centrais Elétricas de Rondônia
Others
Trade receivables, net - Eletrobras
Group
Third parties
Cigás
Centrais Elétricas do Pará
Cia de Eletricidade do Amapá
Cia de Energia de Pernambuco -
CELPE
Others
Trade receivables, net - Third
parties
Total trade receivables, net
Trade receivables - Eletrobras
Group
(-) Allowance for impairment of
trade receivables
Trade receivables, net - Eletrobras
Group
Third parties
(-) Allowance for impairment of
trade receivables
Third parties, net
Total trade receivables
(-) Allowance for impairment of
trade receivables
Total trade receivables, net
PCLD
Consolidated
Amounts
received Constitution
Reversal Transfers (*)
Inflation
indexation
As of
12.31.2015
As of
12.31.2014
5,283
127
1,252
344
Sales
2,651
258
1,355
361
(2,206)
(380)
(753)
(211)
(1,436)
(1)
(912)
(269)
7,006
4,625
(3,550)
(2,618)
1,133
92
−
−
18
1,243
8,249
2,379
704
218
318
294
3,913
8,538
(1,457)
(765)
(90)
(310)
(292)
(2,914)
(6,464)
(965)
(140)
(296)
−
(37)
(1,438)
(4,056)
299
−
47
22
368
1,528
196
47
−
41
1,812
2,180
2,179
−
−
−
1,023
−
122
51
7,793
4
1,111
298
2,179
1,196
9,206
(2,179)
−
−
−
−
119
14
156
−
−
558
101
35
8
24
(2,179)
−
289
1,485
726
9,932
7,879
4,625
(3,550)
−
−
3,185
1,196
13,335
(873)
7,006
4,915
(3,672)
1,243
12,794
(4,545)
8,249
−
−
(2,618)
4,625
3,913
−
3,913
8,538
−
8,538
(3,550)
(2,914)
−
(2,914)
(6,464)
−
(6,464)
(2,618)
−
(1,438)
(1,438)
−
(4,056)
(4,056)
368
368
−
1,812
1,812
−
2,180
2,180
(1,006)
2,179
(3,185)
1,006
(2,179)
−
−
−
−
(4,129)
1,196
289
−
289
1,485
−
1,485
9,206
3,018
(2,292)
726
16,353
(6,421)
9,932
(*) Cigás assigned receivables from Amazonas Distribuidora de Energia to Petrobras, pursuant to the purchase and sale agreement, which establishes that overdue payables from
Cigás to Petrobras can be transferred to Amazonas Distribuidora de Energia when certain conditions are met.
As of December 31, 2015, R$ 7,494 of the Company’s net trade receivables from the isolated electricity system in the
northern region of Brazil, related to the sale of fuel oil, natural gas, electricity and other products to thermoelectric
power plants (which are subsidiaries of Eletrobras), state-owned natural gas distribution companies and independent
electricity producers (Produtores Independentes de Energia – PIE) operating in that region, were classified as non-
current assets. The balance of those receivables was R$ 9,932 (R$ 8,249 in 2014) as of December 31, 2015.
A significant portion of the funds used by those companies to pay for products supplied by the Company came from
the Fuel Consumption Account (Conta de Consumo de Combustível – CCC), which provides funds to cover a portion of
the costs related to the supply of fuel to thermoelectric power plants located in the northern region of Brazil
(operating in the isolated electricity system). However, as a result of changes in the CCC regulations over time, funds
transferred from the CCC to these electricity companies have not been sufficient for them to meet their financial
obligations and, as a result, some have experienced financial difficulties and have not been able to pay for the
products supplied by Petrobras.
36
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
In 2013, a new legislation significantly changed the sources of funds that were used to cover the cost of electricity
generated in the Isolated Electricity System and the Brazilian Federal Government started to provide funds to cover
costs that in the past were only borne by the CCC. This assistance from the Federal Government would be made
available through funds deposited in the Energy Development Account (Conta de Desenvolvimento Energético – CDE)
by the Brazilian National Treasury. Those funds, however, proved to be insufficient to cover the operational costs of
the isolated electricity system in the northern region of Brazil.
The funds available in the CCC, which were already insufficient to cover the costs related to fuel supplied by the
Company, decreased significantly. Following an increase in the amounts owed by the thermoelectric power plants
operating in the Isolated Electricity System, the Company put pressure on the negotiations with the state-owned
natural gas distribution companies, the independent electricity producers (PIEs), subsidiaries of Eletrobras and other
private companies. On December 31, 2014, the Company entered into a debt acknowledgement agreement with
subsidiaries of Eletrobras (the Brazilian Ministry of Mines and Energy participated directly in the negotiations) with
respect to the balance of its receivables as of November 30, 2014. Eletrobras acknowledged it owed R$ 8,601 to the
Company. This amount is being adjusted monthly based on the Selic interest rate (Brazilian short-term interest rate).
Under this agreement, the first of 120 monthly installments was paid in February 2015 and, as of May 7, 2015, R$
7,380 had been guaranteed by the collateralization of certain amounts payable by the CDE to the CCC (R$ 6,084 as of
December 31, 2014). This debt acknowledgement agreement is not overdue as of December 31, 2015.
In 2015, the Brazilian government reviewed its electricity price regulations and implemented a new pricing policy for
the electricity sector, which has already resulted in increases in the tariffs charged to end customers beginning in the
first quarter of 2015. The Company had expected that this new policy would have strengthened the financial situation
of the companies in the electricity sector and, consequently to reduce the balance of their accounts payable with
respect to fuel oil and other products supplied by the Company, which has not occurred. Due to the time required for
increasing the amount of electricity tariffs from end-users of electricity distributors in order to provide financial
stability of these companies, the recovery flow of CCC funds is occurring slowly, which is delaying the reimbursements
for fuel acquisition costs provided by Petrobras and deteriorating the default of those customers to the Company.
Pursuant to the issuance of Normative Instruction 679 on September 1, 2015 by the Brazilian National Electricity
Agency (Agência Nacional de Energia Elétrica - ANEEL), the Company expected that the flow of funds it would receive
from the CCC would accelerate. This is because funds would be paid directly from the CCC for products supplied in the
prior month with a limit of 75% of the average payments made by the CCC in the previous three months. However, it
has not occurred and, as a consequence, the insolvency of these receivables increased. However, recent experience
has shown that the Company’s expectations have been frustrated and, as a consequence, theses receivables continue
to be delinquent.
The Company intended to enter into a debt acknowledgement agreement and pledge additional CDE credits as
collateral, reflecting governmental authorization to allow for a renegotiation of CDE’s debt with companies that are
creditors of the CCC and had to overdue receivables between December 1, 2014 and June 30, 2015. However, due to
the current unconcluded negotiation the Company recognized in the last quarter of 2015 an allowance for impairment
by the total amount of these receivables (R$ 2,620).
As a result, and based on Management’s evaluation, the Company has increased the allowance for impairment by
trade receivables, in the statement of income for the year 2015, in the amount of R$ 1,876 (R$ 4,511 in 2014) as
follows:
• Constitution of allowance for impairment by trade receivables, in the amount of R$ 4,056 in 2015 (R$ 4,511 in
2014), including collaterals in negotiation in the amount of R$ 2,620, with respect to uncollateralized receivables
related to products supplied after November 1, 2014, which were not received as of December 31, 2015; and
• Reversal of allowance for impairment of trade receivables of R$ 2,180 following CDE receivables pledged as
collateral and from the existence of restricted funds deposited in an escrow account arising from payments related
to a purchase and sale agreement signed on May 7, 2015.
37
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The Company continues to negotiate additional collaterals with Eletrobras and has implemented procedures to avoid
additional defaults, by requiring prepayments for suppling products, except for customers holding legal injunctions
that forbid the Company to require prepayments, for example.
9.
Inventories
Crude oil
Oil products
Intermediate products
Natural gas and LNG (*)
Biofuels
Fertilizers
Materials, supplies and others
Current
Non-current
(*) LNG - Liquid Natural Gas
12.31.2015
11,305
8,613
2,390
989
616
239
24,152
4,967
29,119
29,057
62
Consolidated
Parent Company
12.31.2014
10,563
11,510
2,268
951
398
91
25,781
4,797
30,578
30,457
121
12.31.2015
10,425
6,612
2,390
436
65
190
20,118
3,935
24,053
24,015
38
12.31.2014
8,883
9,046
2,268
557
45
91
20,890
3,670
24,560
24,461
99
Inventories are presented net of a R$ 607 allowance reducing inventories to net realizable value (R$ 399 as of
December 31, 2014), mainly due to the decrease in international prices of crude oil and oil products. The amount of
write-down of inventories to net realizable value recognized as cost of sales in 2015 is R$ 1,547 (R$ 2,461 in 2014).
A portion of the crude oil and/or oil products inventories have been pledged as security for the Terms of Financial
Commitment (TFC) signed by Petrobras and Petros in the amount of R$ 6,711 (R$ 6,151 as of December 31, 2014), as
set out in note 22.1.
10. Disposal of assets and legal mergers
10.1. Disposal of assets
Disposal of assets in Argentina
On March 30, 2015, Petrobras Argentina S.A., PESA, disposed of its interest in assets located in the Austral Basin in
Santa Cruz to Compañía General de Combustibles S.A. (CGC) for a lump-sum payment of US$ 101 million, made on the
same date. The Company recognized a US$ 77 million gain in other income.
Innova S.A.
On August 16, 2013, the Board of Directors of Petrobras approved the disposal of 100% of the share capital of Innova
S.A. for R$ 870 to Videolar S.A. and its controlling shareholder, subject to certain condition precedent, including
approval by the Brazilian Antitrust Regulator (Conselho Administrativo de Defesa Econômica – CADE).
On October 30, 2014 the transaction was concluded in accordance with the sales and purchase agreement and a R$
145 gain was recognized in other income.
On March 31, 2015, a final price adjustment was agreed and the Company received an additional of R$ 223 recorded in
other income.
Sale of interest in Gaspetro
On December 28, 2015, Petrobras concluded the disposal of 49% equity interest in its subsidiary Petrobras Gas S.A.
(Gaspetro) to Mitsui Gás e Energia do Brasil Ltda (Mitsui-Gás).
38
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Mitsui Gas paid R$ 1,933 in a single installment after the fulfillment of all conditions set forth in the sales and
purchase agreement signed on October 23, 2015, including the unrestricted final approval by the Brazilian Antitrust
Regulator (Conselho Administrativo de Defesa Econômica - CADE). This disposal did not result in loss of control of
Gaspetro, therefore R$ 988 (R$ 652 net of taxes) was recognized as an adjustment to equity.
Although the Company has been cited in certain lawsuits concerning this transaction, there is no indication to date
that circumstances may affect the disposal and the Company is preparing its legal defense.
10.2. Legal mergers
On January 30, 2015, the Shareholders’ Extraordinary General Meeting of Petrobras approved the mergers of
Arembepe Energia S.A. and Energética Camaçari Muricy S.A. into Petrobras.
The objective of these mergers is to simplify the corporate structure of the Company, reduce costs and capture
synergies. These mergers did not affect share capital or the Company’s consolidated financial statements.
10.3. Assets classified as held for sale
As of December 31, 2015, the Company classified R$ 595 as assets held for sale (R$ 13 in 2014) including: R$ 587
related to the Bijupirá and Salema production fields and R$ 8 regarding PI, PIII and PIV drilling rigs (R$13 in 2014). In
addition, the amount of R$ 488 classified as liabilities on assets classified as held for sale refers to the provision for
decommissioning costs directly associated to Bijupirá and Salema fields.
The Company tested these assets for impairment and recognized impairment losses as set out in note 14.3.
On February 26, 2016, the sales contracts of Bijupirá and Salema were terminated as set out in note 35. Accordingly,
the amounts regarding these fields will be reclassified to property, plant and equipment, and to provision for
decommissioning costs in 2016.
39
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
11.
Investments
11.1. Information about direct subsidiaries, joint arrangements and associates (Parent Company)
Main business
segment
% Petrobras'
ownership
% Petrobras'
voting rights
Shareholders’
equity (deficit)
Net income
(loss) for the
year
Country
Entities that are consolidated
Subsidiaries
Petrobras Netherlands B.V. - PNBV (i)
Petrobras Distribuidora S.A. - BR
Petrobras International Braspetro - PIB BV (i) (ii)
Petrobras Transporte S.A. - Transpetro
Petrobras Logística de Exploração e Produção S.A. - PB-LOG
Transportadora Associada de Gás S.A. - TAG
Petrobras Gás S.A. - Gaspetro
Petrobras Biocombustível S.A. - PBIO
Petrobras Logística de Gás - Logigás
Liquigás Distribuidora S.A.
Araucária Nitrogenados S.A.
Termomacaé Ltda.
Braspetro Oil Services Company - Brasoil (i)
Breitener Energética S.A.
Companhia Integrada Têxtil de Pernambuco S.A. - CITEPE
Termobahia S.A.
Companhia Petroquímica de Pernambuco S.A. - PetroquímicaSuape
Baixada Santista Energia S.A.
Petrobras Comercializadora de Energia Ltda. - PBEN
Fundo de Investimento Imobiliário RB Logística - FII
Petrobras Negócios Eletrônicos S.A. - E-Petro
Termomacaé Comercializadora de Energia Ltda
5283 Participações Ltda.
Downstream Participações Ltda.
Joint operations
Fábrica Carioca de Catalizadores S.A. - FCC
Ibiritermo S.A.
Entities that are not consolidated
Joint ventures
Logum Logística S.A.
Cia Energética Manauara S.A.
Petrocoque S.A. Indústria e Comércio
Refinaria de Petróleo Riograndense S.A.
Brasympe Energia S.A.
Brentech Energia S.A.
Metanol do Nordeste S.A. - Metanor
Eólica Mangue Seco 4 - Geradora e Comercializadora de Energia Elétrica S.A.
Eólica Mangue Seco 3 - Geradora e Comercializadora de Energia Elétrica S.A.
Eólica Mangue Seco 1 - Geradora e Comercializadora de Energia Elétrica S.A.
Eólica Mangue Seco 2 - Geradora e Comercializadora de Energia Elétrica S.A.
Companhia de Coque Calcinado de Petróleo S.A. - Coquepar
Participações em Complexos Bioenergéticos S.A. - PCBIOS
Associates
Sete Brasil Participações S.A.
Fundo de Investimento em Participações de Sondas - FIP Sondas
Braskem S.A.
UEG Araucária Ltda.
Deten Química S.A.
Energética SUAPE II
Termoelétrica Potiguar S.A. - TEP
Nitroclor Ltda.
Bioenergética Britarumã S.A.
E&P
Distribution
Several
segments (iii)
RT&M
E&P
Gas & Power
Gas & Power
Biofuels
Gas & Power
RT&M
Gas & Power
Gas & Power
Corporate
Gas & Power
RT&M
Gas & Power
RT&M
Gas & Power
Gas & Power
E&P
Corporate
Gas & Power
Corporate
Corporate
RT&M
Gas & Power
RT&M
Gas & Power
RT&M
RT&M
Gas & Power
Gas & Power
RT&M
Gas & Power
Gas & Power
Gas & Power
Gas & Power
RT&M
Biofuels
E&P
E&P
RT&M
Gas & Power
RT&M
Gas & Power
Gas & Power
RT&M
Gas & Power
100.00
100.00
99.98
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
99.99
100.00
93.66
100.00
98.85
100.00
100.00
99.91
99.00
99.95
100.00
100.00
99.99
50.00
50.00
20.00
40.00
50.00
33.20
20.00
30.00
34.54
49.00
49.00
49.00
51.00
45.00
50.00
5.00
4.59
36.20
20.00
27.88
20.00
20.00
38.80
30.00
100.00
100.00
99.98
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
99.99
100.00
93.66
100.00
98.85
100.00
100.00
99.91
99.00
99.95
100.00
100.00
99.99
50.00
50.00
20.00
40.00
50.00
33.33
20.00
30.00
34.54
49.00
49.00
49.00
51.00
45.00
50.00
5.00
4.59
47.03
20.00
27.88
20.00
20.00
38.80
30.00
78,231
9,925
(3,387)
(1,161)
Netherlands
Brazil
7,821
5,305
3,486
3,249
1,868
1,124
1,101
940
842
717
625
650
566
485
403
294
103
65
33
14
1
(2)
245
198
318
148
135
88
78
77
50
43
40
35
34
9
−
3,462
3,386
2,023
858
343
233
65
1
−
(2,141)
1,033
773
(2,457)
490
(861)
43
114
81
151
Netherlands
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
33 Cayman Islands
Brazil
87
Brazil
(818)
Brazil
82
Brazil
(808)
Brazil
22
Brazil
25
Brazil
(62)
Brazil
2
Brazil
5
Brazil
344
Brazil
(1)
35
59
(218)
33
32
18
6
9
(4)
3
1
−
−
(1)
−
(4,946)
(6,284)
3,140
243
102
86
3
−
−
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
(i) Companies abroad with financial statements prepared in foreign currency.
(ii) 5283 Participações Ltda holds an 0.0187% interest (an 11.88% interest in 2014,diluted by Petrobras' investments).
(iii) Cover activities abroad in E&P, RTM, Gas & Power and Distribuiton segments.
40
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
11.2. Changes in investments (Parent Company)
Balance at
12.31.2014
Paying in of
capital
Capital
transactions
Restructuring,
capital
decrease and
others
Share of
results of
investments
(*)
Cumulative
translation
adjustments
(CTA)
Other
comprehensiv
e results
Dividends
Balance at
12.31.2015
Subsidiaries
PNBV
BR Distribuidora
PIB BV
Transpetro
PB-LOG
TAG
PBIO
Logigás
Liquigás
Gaspetro
Araucária
Nitrogenados
Termomacaé Ltda.
Breitener
Citepe
Arembepe
Other subsidiaries
Joint operations
Joint ventures
Associates
Braskem
Sete Brasil
Participações
FIP Sondas
Other associates
Subsidiaries,
operations / joint
ventures and
associates
Other investments
Total investments
36,690
11,924
1,183
4,738
3,398
6,490
2,209
−
1,017
2,593
761
813
565
1,049
381
2,472
205
335
4,544
383
363
345
20,570
−
6,947
−
−
−
103
−
−
284
−
−
−
331
−
437
−
40
−
94
82
−
82,458
23
82,481
28,888
−
28,888
25
−
797
−
−
−
−
−
−
−
−
−
−
−
−
(797)
−
−
−
−
−
−
25
−
25
−
−
−
−
−
(398)
−
1,058
−
(2,101)
−
−
−
−
(405)
(611)
−
−
−
−
−
−
(2,457)
(3)
(2,460)
Provision for losses in subsidiaries
Equity in earnings of investments and other comprehensive income
(*) Includes unrealized profits from transactions between companies.
(4,242)
(1,187)
(2,262)
1,102
478
2,360
(861)
43
118
490
81
151
78
(818)
24
(274)
48
(60)
1,188
(420)
(445)
91
(4,317)
−
(4,317)
23
(4,294)
23,281
−
(232)
315
−
−
(6)
−
−
−
−
−
−
−
−
187
−
−
310
(41)
−
−
23,814
23,814
12
23,826
−
(105)
58
29
−
(4,712)
(321)
(1)
2
−
−
1
−
−
−
5
−
4
(2,530)
(16)
−
−
(7,586)
−
(7,586)
−
(7,586)
−
(929)
−
(1,089)
(783)
(908)
−
−
(86)
(316)
−
(248)
(34)
−
−
(366)
(30)
(39)
(370)
−
−
(111)
76,324
9,703
6,491
5,095
3,093
2,832
1,124
1,100
1,051
950
842
717
609
562
−
1,053
223
280
−
3,142
−
−
325
(5,309)
−
(5,309)
115,516
20
115,536
41
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
11.3. Changes in investments in joint ventures and associates (Consolidated)
Petrobras Oil & Gas B.V. - PO&G
Braskem
State-controlled natural gas
distributors
Investees in Venezuela
Guarani S.A.
Nova Fronteira Bionergia
Other petrochemical investees
Compañia Mega S.A. - MEGA
Compañia de Inversiones de Energia
S.A. - CIESA
UEG Araucária
Sete Brasil Participações
FIP - Sondas
Other associates
Other investees
Total
Balance at
12.31.2014
4,554
4,544
Paying in of
capital
−
−
Restructuring,
capital
decrease and
others
−
−
Share of
profits of
investments
(302)
1,188
Cumulative
translation
adjustments
(CTA)
2,123
310
Other
comprehensiv
e income
−
(2,530)
Dividends
(344)
(370)
Balance at
12.31.2015
6,031
3,142
904
828
1,377
433
174
83
181
194
383
363
1,219
45
15,282
−
−
−
−
−
−
−
−
94
82
175
−
351
−
−
−
−
−
−
−
−
−
−
21
−
21
207
(363)
(291)
32
45
119
(20)
49
(420)
(445)
(596)
−
(797)
−
386
(6)
−
−
(28)
9
−
(41)
−
72
−
−
(321)
−
−
−
−
−
(16)
−
3
2,825
(2,864)
(131)
−
−
−
(43)
−
−
(74)
−
−
(84)
−
(1,046)
980
851
759
465
176
174
170
169
−
−
810
45
13,772
During 2015, losses of R$ 922 were recognized as part of the share of losses in equity-accounted investments with
respect to the Company’s investment in Sete Brasil and FIP Sondas. A portion of those losses is attributable to the
impairment loss the Company recognized in its investments, as set out in note 14.2.2.
Those losses resulted from the worsening economic and financial conditions of Sete Brasil Participações S.A., along
with the postponement of a majority of its construction projects and uncertainties about its ability to continue the
projects.
11.4. Investments in listed companies
Company
Indirect subsidiary
Thousand-share lot
Quoted stock exchange prices
(R$ per share)
Market value
12.31.2015
12.31.2014
Type
12.31.2015
12.31.2014
12.31.2015
12.31.2014
Petrobras Argentina S.A.
1,356,792
1,356,792
Common
2.38
1.72
Associate
Braskem S.A.
Braskem S.A.
212,427
75,793
212,427
75,793
Common
Preferred A
15.91
27.62
10.80
17.50
3,229
3,229
3,380
2,093
5,473
2,334
2,334
2,294
1,326
3,620
The market value of these shares does not necessarily reflect the selling realizable value upon sale of a large block of
shares.
11.5. Non-controlling interest
The total amount of non-controlling interest is R$ 3,199 (R$ 1,874 in 2014), of which R$ 1,432 (R$ 1,286 in 2014) is
related to non-controlling interest in Petrobras Argentina S.A. and R$ 916 is related to non-controlling interest in
Gaspetro S.A.
The condensed financial information of Petrobras Argentina and Gaspetro is set out below:
42
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Current assets
Long-term receivables
Investments
Property, plant and equipment, net
Other noncurrent assets
Current liabilities
Non-current liabilities
Shareholders' equity
Sales revenues
Net Income for the year
Net change in cash and cash equivalents
Petrobras Argentina
Gaspetro
2015
3,106
281
1,078
4,234
6
8,705
2,111
2,229
4,365
8,705
810
395
237
2014
2,678
220
1,085
3,598
7
7,588
1,830
1,840
3,918
7,588
342
102
277
2015
317
230
1,183
4
310
2,044
69
106
1,869
2,044
693
490
(549)
Petrobras Argentina S.A. is an integrated energy company, indirectly controlled by Petrobras (directly controlled by
PIB BV, which holds a 67.19% interest in this company) and its main place of business is Argentina.
Gaspetro is a Petrobras’ subsidiary that holds interests in several state distributors of natural gas in Brazil. Petrobras
concluded the sale of 49% of its interest in Gaspetro on December 28, 2015 as set out in note 10.1.
11.6. Summarized information on joint ventures and associates
The Company invests in joint ventures and associates in Brazil and abroad, whose activities are related to
petrochemical companies, gas distributors, biofuels, thermoelectric power stations, refineries and other activities.
Condensed financial information is set out below:
Joint ventures
Other
companies
abroad
1,278
81
PO&G (*)
3,648
196
In Brazil
4,317
1,339
2015
Associates
In Brazil
20,921
10,531
Abroad
8,748
777
In Brazil
3,916
1,163
Joint ventures
Other
companies
abroad
834
61
PO&G (*)
2,745
44
2014
Associates
In Brazil
28,423
7,158
Abroad
5,953
558
4,711
10,896
1,905
37,482
7,087
4,244
6,711
1,295
32,423
9,561
2,164
12,531
17
14,757
5,198
2,498
4,327
508
12,531
12,742
517
20 a 83%
891
5,183
8,683
−
14,757
7,527
816
50%
14
3,278
832
1,185
697
564
3,278
947
155
34 a 50%
11,055
79,989
19,057
48,896
12,762
(726)
79,989
52,654
3,452
5 a 49%
304
16,916
14,083
4,129
(1,296)
2,000
11,323
4,890
1,945
4,464
−
16,916
652
(5,460)
11 a 49%
24
11,323
13,140
339
20 a 83%
37
9,537
764
3,013
5,760
−
9,537
5,120
555
50%
10
2,200
572
806
424
398
2,200
743
37
34 a 50%
11,534
79,538
18,050
35,659
25,974
(145)
79,538
53,050
1,811
5 a 49%
212
16,284
9,250
2,635
4,399
−
16,284
444
779
11 a 49%
Current assets
Non-current assets
Property, plant and
equipment, net
Other non-current
assets
Current liabilities
Non-current liabilities
Shareholders' equity
Non-controlling
interest
Sales revenues
Net Income for the year
Ownership interest - %
(*) Petrobras Oil & Gas (PO&G) is a joint venture located in the Netherlands, with 50% share of Petrobras International BV (PIBBV), for exploration and oil and gas production in
Africa.
43
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
12. Property, plant and equipment
12.1. By class of assets
Balance at January 1, 2014
Additions
Additions to / review of estimates of decommissioning costs
Capitalized borrowing costs
Write-offs
Write-off - overpayments incorrectly capitalized
Transfers (***)
Depreciation, amortization and depletion
Impairment - recognition
Impairment - reversal
Cumulative translation adjustment
Balance at December 31, 2014
Cost
Accumulated depreciation, amortization and depletion
Balance at December 31, 2014
Additions
Additions to / review of estimates of decommissioning costs
Capitalized borrowing costs
Write-offs
Transfers
Depreciation, amortization and depletion
Impairment - recognition
Impairment - reversal
Cumulative translation adjustment
Balance at December 31, 2015
Cost
Accumulated depreciation, amortization and depletion
Balance at December 31, 2015
Weighted average of useful life in years
Land, buildings
and
improvement
18,431
71
−
−
(23)
(85)
6,517
(1,252)
(2,370)
−
52
21,341
29,160
(7,819)
21,341
657
−
−
(27)
4,006
(1,528)
(928)
1
299
23,821
33,561
(9,740)
23,821
Equipment and
other assets
211,781
4,826
−
−
(132)
(2,842)
59,923
(17,409)
(3,682)
45
7,787
260,297
377,259
(116,962)
260,297
4,396
−
−
(192)
28,814
(21,241)
(14,981)
42
31,404
288,539
438,533
(149,994)
288,539
Assets under
construction (*)
186,840
71,410
−
8,431
(9,303)
(2,643)
(86,189)
−
(30,997)
−
3,078
140,627
140,627
−
140,627
60,263
−
5,842
(6,184)
(54,132)
−
(11,489)
21
11,913
146,861
146,861
−
146,861
40
(25 to 50)
(except land)
20
(3 to 31)
(**)
Exploration and
development
costs (oil and
gas producing
properties)
116,828
1,394
5,096
−
(464)
(222)
54,501
(11,500)
(7,540)
7
625
158,725
233,808
(75,083)
158,725
1,745
15,932
−
(1,455)
27,668
(15,296)
(20,324)
90
3,525
170,610
262,480
(91,870)
170,610
Units of
production
method
Consolidated
Parent
Company
Total
533,880
77,701
5,096
8,431
(9,922)
(5,792)
34,752
(30,161)
(44,589)
52
11,542
580,990
780,854
(199,864)
580,990
67,061
15,932
5,842
(7,858)
6,356
(38,065)
(47,722)
154
47,141
629,831
881,435
(251,604)
629,831
Total
402,567
59,820
5,316
7,793
(9,007)
(4,425)
31,921
(22,081)
(34,762)
8
−
437,150
586,684
(149,534)
437,150
50,464
16,511
4,767
(5,994)
664
(27,642)
(33,597)
116
−
442,439
617,596
(175,157)
442,439
(*) See note 29 for assets under construction by business area.
(**) Includes exploration and production assets depreciated based on the units of production method.
(***) Includes R$ 24,419, reclassified from Intangible Assets to Property, Plant and Equipment, as a result of the declaration of commerciality of areas of the Assignment Agreement.
At December 31, 2015, consolidated and Parent Company property, plant and equipment includes assets under
finance leases of R$ 189 and R$ 9,248, respectively (R$ 192 and R$ 8,979at December 31, 2014).
44
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
12.2. Estimated useful life - Consolidated
Estimated useful life
5 years or less
6 - 10 years
11 - 15 years
16 - 20 years
21 - 25 years
25 - 30 years
30 years or more
Units of production method
Buildings and improvements
Equipment and other assets
Buildings and improvements, equipment and
other assets
Balance at
12.31.2015
4,364
16,154
1,855
90,920
47,861
44,412
67,103
38,125
310,794
Accumulated
depreciation
(8,940)
(16,050)
(2,121)
(39,579)
(21,986)
(12,333)
(20,670)
(38,055)
(159,734)
Cost
13,304
32,204
3,976
130,499
69,847
56,745
87,773
76,180
470,528
31,995
438,533
(9,740)
(149,994)
22,255
288,539
12.3. Concession for exploration of oil and natural gas - Assignment Agreement (“Cessão Onerosa”)
Petrobras, the Brazilian Federal Government (assignor) and the Brazilian Agency of Petroleum, Natural Gas and
Biofuels (Agência Nacional de Petróleo, Gás Natural e Biocombustíveis) - ANP (regulator and inspector) entered into
the Assignment Agreement in 2010, which grants the Company the right to carry out prospection and drilling
activities for oil, natural gas and other liquid hydrocarbons located in six blocks in the pre-salt area (Franco, Florim,
Nordeste de Tupi, Entorno de Iara, Sul de Guará and Sul de Tupi), limited to the production of five billion barrels of oil
equivalent in up to 40 years and renewable for a further 5 years subject to certain conditions.
The agreement establishes that the review procedures, which must be based on independent technical appraisal
reports, will commence immediately after the declaration of commerciality for each area. Currently, after the
declarations of commerciality of the six blocks, all the Assignment Agreement areas were included in the review
procedures. The review of the Assignment Agreement will be concluded after the review of all the areas. However, no
specific date has been established for the review procedures to be concluded.
The formal review procedures for each block are based on costs incurred through the exploration stage and estimated
costs and production levels included in the independent technical appraisal reports. The review of the Assignment
Agreement may result in modifications to: (i) local content requirements and commitments; (ii) total volume (in
barrels of oil) to be produced; (iii) term of the agreement and (iv) the minimum percentages of local content.
If the review of the Assignment Agreement determines that the value of acquired rights is greater than initially paid,
the Company may be required to pay the difference to the Federal Government, or may proportionally reduce the
total volume of barrels acquired under the agreement. If the review determines that the value of the acquired rights is
lower than initially paid by the Company, the Federal Government will reimburse the Company for the difference by
delivering cash or bonds, subject to budgetary regulations.
Currently, the Assignment Agreement is being reviewed, including the preparation of the independent technical
appraisal reports and related discussions with the Brazilian Federal Government. The Company will make the
respective adjustments to the purchase prices of the rights according to the conclusion of the review.
As of December 31, 2015 and 2014, the Company’s property, plant and equipment include R$ 74,808 related to the
Assignment Agreement.
45
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
12.4. Oil and Gas fields operated by Petrobras returned to ANP
During 2015 the following oil and gas fields were returned to ANP: Itaparica, Camaçari, Carapicú, Baúna Sul, Salema
Branca, Nordeste Namorado, part of Rio Preto, Pirapitanga, Piracucá, Catuá and part of Mangangá. These fields were
returned to ANP mainly due to their uneconomic feasibility and, as a consequence, the Company wrote off an amount
of R$ 1,032 as other expenses.
13.
Intangible assets
13.1. By class of assets
Balance at January 1, 2014
Addition
Capitalized borrowing costs
Write-offs
Transfers (**)
Amortization
Impairment - recognition
Impairment - reversal
Cumulative translation adjustment
Balance at December 31, 2014
Cost
Accumulated amortization
Balance at December 31, 2014
Addition
Capitalized borrowing costs
Write-offs
Transfers
Amortization
Impairment - recognition
Cumulative translation adjustment
Balance at December 31, 2015
Cost
Accumulated amortization
Balance at December 31, 2015
Estimated useful life in years
Softwares
Developed
in-house
1,162
279
19
(23)
22
(312)
−
−
1
1,148
3,403
(2,255)
1,148
259
18
(7)
36
(325)
−
2
1,131
3,762
(2,631)
1,131
Acquired
332
94
−
(11)
18
(120)
(1)
−
3
315
1,536
(1,221)
315
73
−
−
21
(109)
−
8
308
1,699
(1,391)
308
Consolidated
Parent
Company
Goodwill
937
−
−
−
(3)
−
−
−
37
971
971
−
971
−
−
−
−
−
−
146
1,117
1,117
−
1,117
Total
36,121
587
19
(253)
(24,127)
(516)
(22)
15
152
11,976
16,543
(4,567)
11,976
391
18
(596)
330
(509)
(98)
560
12,072
17,104
(5,032)
12,072
Total
33,289
478
19
(229)
(24,057)
(392)
−
−
−
9,108
12,051
(2,943)
9,108
299
18
(169)
273
(396)
−
−
9,133
12,442
(3,309)
9,133
5
5
Indefinite
Rights and
Concessions
33,690
214
−
(219)
(24,164)
(84)
(21)
15
111
9,542
10,633
(1,091)
9,542
59
−
(589)
273
(75)
(98)
404
9,516
10,526
(1,010)
9,516
(*)
(*) Mainly comprised of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life
assessment.
(**) Includes R$ 24,419, reclassified from Intangible Assets to Property Plant and Equipment, as a result of the declaration of commerciality of areas of the Assignment Agreement.
As of December 31, 2015, the Company did not recognize impairment loss related to goodwill.
13.2. Exploration rights returned to the Brazilian Agency of Petroleum, Natural Gas and Biofuels -
Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (ANP)
Exploration areas returned to ANP in 2015, in the amount of R$ 82 (R$ 195 in 2014) are set out below:
Area
Campos Basin
Santos Basin
Ceará Basin
Espírito Santo Basin
Camamu Almada Basin
Amazonas Basin
Parecis Basin
Exploratory phase
Exclusive
−
1
−
−
−
−
2
Partnership
1
1
1
3
1
2
−
46
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
13.3. Exploration rights - production sharing contract
Following the first pre-salt public auction held on October 21, 2013, the Libra consortium, comprised of Petrobras
(40% interest), Shell (20% interest), Total (20% interest), CNODC (10% interest), CNOOC (10% interest) and the
Brazilian Pre-Salt Oil and Natural Gas Management Company (Empresa Brasileira de Administração de Petróleo e Gás
Natural S.A. - Pré-Sal Petróleo PPSA) as the manager of the agreement, entered into a production sharing contract
with the Federal Government on December 2, 2013.
The contract granted rights to explore and operate oil and gas production in a strategic pre-salt area known as the
Libra block, comprising an area of approximately 1,550 km2, located in ultra-deep waters in the Santos Basin. This was
the first oil and gas production sharing contract signed in Brazil. The contract is for 35 years and cannot be renewed.
A signature bonus (acquisition cost) of R$ 15,000 was paid by the consortium. The Company paid R$ 6,000 (its 40%
share of the acquisition cost paid by the consortium) recognized in its intangible assets as Rights and Concessions.
Currently, the project is in the exploration phase (4 years), which exploration program comprises, at a minimum, 3D
seismic acquisition, two exploratory wells and Extended Well Test (EWT). The seismic data were acquired in 2014.
In February of 2016, the Brazilian Agency of Petroleum ANP approved the Discovery Appraisal Plan – Plano de
Avaliação de Descobertas – PAD of the well 2-ANP-2A-RJS.
13.4. Service concession agreement - Distribution of piped natural gas
As of December 31, 2015, intangible assets include service concession agreements related to piped natural gas
distribution in Brazil, in the amount of R$ 580 (R$ 558 in 2014), maturing between 2029 and 2043, which may be
renewed. According to the distribution agreements, the service is to be provided to customers in the industrial,
residential, commercial, automotive, air conditioning and transport sectors, among others.
The consideration receivable is a factor of a combination of operating costs and expenses, and return on capital
invested. The rates charged for gas distribution are subject to periodic reviews by the state regulatory agency.
The agreements establish an indemnity clause for investments in assets which are subject to return at the end of the
service agreement, to be determined based on evaluations and appraisals.
14.
Impairment
The Company’s property, plant and equipment and intangible assets are tested for impairment on December 31 of
each year or when there is an indication that the carrying amount may not be recoverable.
14.1. Property, plant and equipment and intangible assets
For impairment testing purposes the Company uses the value in use of its property, plant and equipment and
intangible assets (individually or grouped into cash-generating units - CGUs) as their recoverable amount. In
measuring value in use the Company bases its cash flow projections on:
- The estimated useful life of the asset or assets grouped into the CGU, based on the expected use of those
assets and, considering the Company’s maintenance policy;
- Assumptions and financial budgets/forecasts approved by Management for the period corresponding to the
expected life cycle of each different business; and
- A pre-tax discount rate, which is derived from the Company’s post-tax weighted average cost of capital
(WACC).
47
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The main cash flow projections used to measure the value in use of the CGUs were mainly based on the following
assumptions:
Average Brent (US$/barrel)
Average of nominal exchange rate (R$/US$)
The definition of cash generating units (CGU) is described in Note 5.2.
14.1.1. Impairment of property, plant and equipment and intangible assets
Average Long
Term
72
3.55
2016
45
4.06
In 2015 the Company recognized impairment losses and reversals of impairment losses for certain assets and CGUs,
mainly due to the following events occurred in the last quarter of 2015:
•
revision of the Company’s mid and long term assumptions reflecting the new oil price scenario
(international crude oil prices);
• decrease in estimates of proved reserves and probable reserves;
• a significant decrease in estimated future capital expenditures pursuant to a revision of the Company’s
portfolio (based on the latest updated of its 2015-2019 Business and Management Plan in January 2016);
• a revision of geological characteristics of the Papa-Terra field reservoir; and
• higher discount rates used to measure the value-in-use of our assets and CGUs, attributable to an
increase in Brazil’s risk premium resulting from a credit risk downgrade (losing its investment grade
status).
Impairment losses and reversals of impairment losses were recognized in the statement of income and are presented
as follows:
48
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Assets or CGUs, by nature
Carrying
amount
Recoverable
amount
Impairment (*)
/ (**)
Producing properties: assets related to E&P
activities in Brazil (several CGUs)
Comperj
Oil and gas producing properties abroad
Oil and gas production and drilling equipment
UFN III
Suape Petrochemical Complex
Nitrogen Fertilizer Plant - UFN-V
Biodiesel plants
Others
Total
Producing properties: assets related to E&P
activities in Brazil (several CGUs)
Comperj
Oil and gas producing properties abroad
Oil and gas production and drilling equipment
Suape Petrochemical Complex
2nd refining unit of RNEST
Araucária (fertilizers plant)
Nansei Sekiyu K.K. refinery
Others
Total
82,982
6,193
6,045
2,927
3,651
4,463
585
524
1,331
108,701
17,067
25,820
8,302
2,898
7,563
16,488
927
343
71
79,479
47,402
912
3,583
949
1,696
3,681
−
343
611
59,177
12,918
3,987
3,873
1,474
4,585
7,345
667
−
86
34,935
33,722
5,281
2,462
1,978
1,955
782
585
181
720
47,666
4,149
21,833
4,429
1,424
2,978
9,143
260
343
(15)
44,544
(*) Impairment losses and reversals.
(**) Excludes impairment charges on assets classified as held for sale of R$ 10 in 2015 and R$ 92 in 2014.
a1) Producing properties in Brazil - 2015
Consolidated
Business segment
Comments
2015
E&P - Brazil see item (a1)
RTM - Brazil see item (b1)
E&P - Abroad see item (c1)
E&P - Brazil see item (d1)
see item (e)
Gas & Power
RTM - Brazil see item (f1)
Gas & Power
Biofuel - Brazil
Several segments
2014
E&P - Brazil See item (a2)
RTM - Brazil See item (b2)
E&P - Abroad See item (c2)
E&P - Brazil See item (d2)
RTM - Brazil See item (f2)
RTM - Brazil See item (g)
Gas & Power
RTM - Abroad
Impairment losses of R$ 33,722 were recognized in 2015 for certain oil and gas fields under E&P concessions, as their
recoverable values were below their carrying amount. Cash flow projections were based on: financial
budgets/forecasts approved by Management; and an 8.3% p.a post-tax discount rate (real rate, excluding inflation)
derived from the WACC for the E&P business. The impairment losses related primarily to the following fields: Papa-
Terra (R$ 8,723), Centro Sul group (R$ 4,605), Uruguá group (R$ 3,849), Espadarte (R2,315), Linguado (R$ 1,911), CVIT
– Espírito Santo group (R$ 1,463), Piranema (R$ 1,333) Lapa (R$ 1,238), Bicudo (R$ 937), Frade (R$ 773), Badejo
(R$ 740), Pampo (R$ 355) and Trilha (R$ 327). These impairment losses are mainly due to the impact of the decline in
international crude oil prices on the Company’s price assumptions, the use of a higher discount rate, as well as the
geological revision of Papa-Terra reservoir.
a2) Producing properties in Brazil - 2014
In 2014, impairment losses of R$ 4,149 were recognized, mainly with respect to certain oil and gas fields under E&P
concessions, whose recoverable amount was determined to be below their carrying amount. Cash flow projections are
based on: financial budgets/forecasts approved by Management; and a 7.2% p.a. post‐tax discount rate (real rate,
excluding inflation) derived from the WACC for the E&P business. The impairment losses are mainly related to the
impact of the decline in international crude oil prices on the Company’s price assumptions and were principally
recognized for the following fields: Frade, Pirapitanga, Tambuatá, Carapicu and Piracucá.
b1) Comperj - 2015
An impairment loss of R$ 5,281 was recognized in 2015 for refining assets of Comperj. Cash flow projections were
based on: financial budgets/forecasts approved by Management, and; an 8.1% p.a. post-tax discount rate (real rate,
excluding inflation) derived from the WACC for the refining business reflecting a specific risk premium for the
postponed projects. This impairment loss was mainly attributable to: (i) the use of a higher discount rate; (ii) the delay
in expected future cash inflows resulting from postponing construction.
49
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
b2) Comperj – 2014
In 2014, an impairment loss of R$ 21,833 was recognized in Comperj. Cash flow projections are based on: financial
budgets/forecasts approved by Management; and a 7% p.a. post‐tax discount rate (real rate, excluding inflation)
derived from the WACC for the refining business. The impairment loss is mainly attributable to: (i) project planning
deficiencies; (ii) the use of a higher discount rate, reflecting a specific risk premium for the postponed projects; iii) a
delay in expected future cash inflows resulting from postponing the project; and (iv) the Company’s business context
of lower projected economic growth.
c1) Producing properties abroad - 2015
Impairment losses of R$ 2,462 were recognized in E&P assets abroad. Cash flow projections were based on: financial
budgets/forecasts approved by Management; and 5.6% p.a. to 10.4% p.a. post-tax discount rates (real rates, excluding
inflation) derived from the WACC for the E&P business in different countries. The impairment losses were mainly in
producing properties located in the United States, R$ 1,750, and Bolivia , R$ 614, attributable to the decline in
international crude oil prices and the revision from recoverable volume of reservoirs.
c2) Producing properties abroad - 2014
In 2014, impairment losses of R$ 4,429 were recognized in international E&P assets. Cash flow projections are based
on: financial budgets/forecasts approved by Management; and 5.4% p.a. to 11.2% p.a. post tax discount rates (real
rates, excluding inflation) derived from the WACC for the E&P business in different countries. The impairment losses
are mainly in Cascade and Chinook producing properties located in the United States, R$ 4,162 and are mainly
attributable to the decline in international crude oil prices.
d1) Oil and gas production and drilling equipment in Brazil - 2015
Impairment losses of R$ 1,978 were recognized in 2015 for oil and gas production and drilling equipment which were
not directly related to oil and gas producing properties. Cash flow projections were based on: financial
budgets/forecasts approved by Management; and a 9.2% p.a. post‐tax discount rate (real rate, excluding inflation)
derived from the WACC for the oil and gas services and equipment industry. The impairment losses were mainly
related to the planned idle capacity of two drilling rigs in the future and the use of a higher discount rate.
d2) Oil and gas production and drilling equipment in Brazil – 2014
In 2014, impairment losses of R$ 1,424 were recognized in oil and gas production and drilling equipment, unrelated to
oil and gas producing properties. Cash flow projections are based on: financial budgets/forecasts approved by
Management; and an 8% p.a. post‐tax discount rate (real rate, excluding inflation) derived from the WACC for the oil
and gas services and equipment industry. The impairment losses are mainly related to idle capacity of two drilling rigs
in the future and to the demobilization of two oil platforms, which were not deployed in any oil and gas property as of
December 31, 2014.
e) Fertilizer Plant - UFN III - 2015
Impairment losses of R$ 1,955 were recognized in 2015 for the fertilizer plant UFN III (Unidade de Fertilizantes
Nitrogenados III), located on Três Lagoas, (state of Mato Grosso do Sul). Cash flow projections were based on:
financial budgets/forecasts approved by Management; and a 7.1% p.a. (6.7% p.a. in 2014) post tax discount rate (real
rate, excluding inflation) derived from the WACC for the Gas & Power business, reflecting a specific risk premium for
the postponed projects. The impairment losses were mainly related to: (i) the use of a higher discount rate; and (ii) the
delay in expected future cash inflows resulting from postponing the project.
50
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
f1) Suape Petrochemical Complex - 2015
An impairment loss of R$ 782 was recognized in 2015 for Companhia Integrada Têxtil de Pernambuco S.A. - CITEPE
and Companhia Petroquímica de Pernambuco S.A. – PetroquímicaSuape. Cash flow projections were based on:
financial budgets/forecasts approved by Management; and a 7.2% p.a. post-tax discount rate (real rate, excluding
inflation) derived from the WACC for the petrochemical business. The impairment loss was mainly attributable to
changes in market and prices assumptions resulting from a decrease in economic activity in Brazil, a reduction in the
spread for petrochemical products in the international market and the use of a higher discount rate.
f2) Suape Petrochemical Complex - 2014
In 2014, an impairment loss of R$ 2,978 was recognized in Companhia Integrada Têxtil de Pernambuco S.A. CITEPE
and Companhia Petroquímica de Pernambuco S.A. – PetroquímicaSuape. Cash flow projections were based on: 30 year
period and zero growth rate perpetuity; financial budgets/forecasts approved by Management; and a 6.2% p.a. post
tax discount rate (real rate, excluding inflation) derived from the WACC for the petrochemical business. The
impairment loss is mainly attributable to changes in market assumptions and forecasts resulting from a decrease in
economic activity, a reduction in the spread for petrochemical products in the international market and modifications
in tax regulations.
g) Second refining unit in RNEST - 2014
In 2014, an impairment loss of R$ 9.143 was recognized in the second refining unit in RNEST. Cash flow projections are
based on: financial budgets/forecasts approved by Management; and a 7% p.a. post tax discount rate (real rate,
excluding inflation) derived from the WACC for the refining business. The impairment loss was mainly attributable to:
(i) project planning deficiencies; (ii) the use of a higher discount rate, reflecting a specific risk premium for the
postponed projects; (iii) a delay in expected future cash inflows resulting from postponing the project; and (iv) the
Company’s business context of lower projected economic growth.
14.2. Investments in associates and joint ventures (including goodwill)
Value in use is generally used for impairment test of goodwill associated with investments in associates and joint
ventures. The basis for estimates of cash flow projections includes: projections covering a period of 5 to 12 years,
zero-growth rate perpetuity, budgets, forecasts and assumptions approved by management and a pre-tax discount
rate derived from the WACC or the Capital Asset Pricing Model (CAPM), when applicable.
The carrying amount and the value in use of the investments in associates and joint ventures which include goodwill
as of December 31, 2015 are set out below:
Investment
Braskem S.A. (*)
Natural Gas Distributors
Guarani S.A.
% Pos-tax
discount rate
(real interest
rate p.a.) (*)
11.3
5.7
9.3
Segment
RTM
Gas & Power
Biofuels
Value in use
13,478
1,433
759
Carrying
amount
3,142
980
976
(*) Post-tax discount of Braskem is CAPM of petrochemical segment; as the value in use considers the cash flow projections via dividends.
14.2.1. Investment in publicly traded associate (Braskem S.A.)
Braskem’s shares are publicly traded on stock exchanges in Brazil and abroad. The quoted market value as of
December 31, 2015, was R$ 5,473, based on the quoted values of both Petrobras’s interest in Braskem’s common
stock (47% of the outstanding shares) and preferred stock (22% of the outstanding shares) as set out note 11.4.
However, there is extremely limited trading of the common shares, since non-signatories of the shareholders’
agreement hold only approximately 3% of the common shares.
51
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
In addition, given the operational relationship between Petrobras and Braskem, the recoverable amount of the
investment, for impairment testing purposes, was determined based on value in use, considering future cash flow
projections via dividends and other distributions. As the recoverable amount was higher than the carrying amount, no
impairment losses were recognized for this investment.
Cash flow projections to determine the value in use of Braskem were based on the following key assumptions:
(i)
(ii)
(iii)
(iv)
(v)
estimated average exchange rate of R$ 4.06 to U.S.$1.00 in 2016 (converging to R$ 3.55 in the long run);
average Brent crude oil price at US$ 45 in 2016, converging to US$ 72 in the long run;
prices of feedstock and petrochemical products reflecting projected international prices;
petrochemical products sales volume estimates reflecting projected Brazilian and global G.D.P growth; and
increases in the EBITDA margin during the growth cycle of the petrochemical industry in the next years and
declining in the long run.
14.3. Allowance for losses on net investments
The impairment losses in the amount of R$ 2.072 on net investments were recognized in the statement of income as
share of earnings in equity-accounted investments, as a result of the following factors:
a) A decrease in international crude oil prices in 2015 led to impairment losses in our E&P operations of affiliates
of Petrobras Argentina S.A. (a subsidiary of Petrobras International Braspetro B.V. – PIB BV) and of our joint
venture in Africa (Petrobras Oil & Gas B.V. - PO&G, a joint venture of PIB BV), in the amount of R$ 360 and R$
717, respectively.
b) The Company’s impairment tests resulted in impairment losses of R$ 543 in its biofuels segment, mainly as a
result of (i) an increase in post-tax discount rate (real rate, excluding inflation) from 7.3% p.a. in 2014 to 9.3%
p.a. in 2015; and (ii) a postponement of biofuels projects for an extended period of time (outside the scope of
our updated 2015-2019 Business and Management Plan). Those losses include an impairment charge
recognized for goodwill in the amount of R$ 285, mainly related to its associate Guarani S.A. (R$ 217).
c) As a result of worsening economic and financial conditions of Sete Brasil Participações S.A., along with a
postponement of most of its construction projects and uncertainties about its ability to continue the projects,
the Company could not determine the value-in-use of its investment in Sete Brasil Participações S.A. (both
directly and through FIP Sondas) and, therefore, recognized impairment losses of R$ 173 and R$ 155,
respectively in Sete Brasil and FIP Sondas.
d)
Impairment losses of R$ 54 were also recognized in Petrobras Netherlands BV (PNBV) with respect to its associate
Arpoador Drilling B.V. (a subsidiary of Sete Brasil).
The Company is continually monitoring its investment in Sete Brasil and will reassess its recoverability when a
decision with respect to Sete Brasil’s business plan is taken.
14.4. Assets classified as held for sale
Impairment losses were recognized in E&P assets classified as held for sale. The Board of Directors approved the
disposal of the Bijupirá and Salema fields, PI, PIII and PIV drilling rigs and PXIV platform. As their fair values were
below their carrying amount impairment losses in the amount of R$ 10 were recognized in 2015.
52
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
15. Exploration for and evaluation of oil and gas reserves
The exploration and evaluation activities include the search for oil and gas from obtaining the legal rights to explore a
specific area to the declaration of the technical and commercial viability of the reserves.
Changes in the balances of capitalized costs directly associated with exploratory wells pending determination of
proved reserves and the balance of amounts paid for obtaining rights and concessions for exploration of oil and
natural gas (capitalized acquisition costs) are set out in the following table:
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs (*)
Property, plant and equipment
Opening Balance
Additions to capitalized costs pending determination of proved reserves
Capitalized exploratory costs charged to expense
Transfers upon recognition of proved reserves
Cumulative translation adjustment
Closing Balance
Intangible Assets
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs
(*) Amounts capitalized and subsequently expensed in the same period have been excluded from the table above.
Consolidated
2015
2014
18,594
7,310
(2,874)
(3,423)
703
20,310
7,996
28,306
20,619
10,039
(3,145)
(9,300)
381
18,594
8,085
26,679
Exploration costs recognized in the statement of income and cash used in oil and gas exploration and evaluation
activities are set out in the table below:
Exploration costs recognized in the statement of income
Geological and geophysical expenses
Exploration expenditures written off (includes dry wells and signature bonuses)
Other exploration expenses
Total expenses
Cash used in:
Operating activities
Investment activities
Total cash used
15.1. Aging of Capitalized Exploratory Well Costs
Consolidated
2015
2014
1,360
4,921
186
6,467
1,546
8,897
10,443
1,972
5,048
115
7,135
2,087
11,508
13,595
The tables below set out the amounts of exploratory well costs that have been capitalized for a period of one year or
for a period of greater than one year after the completion of drilling, the number of projects to which the costs that
have been capitalized for a period of greater than one year relate and an aging of those amounts by year (including
the number of wells to which those costs relate).
53
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Aging of capitalized exploratory well costs*
Exploratory well costs capitalized for a period of one year
Exploratory well costs capitalized for a period of greater than one year
Ending balance
Number of projects to which the exploratory well costs capitalized for a period of greater than one year relate
2014
2013
2012
2011
2010 and previous years
Ending balance
Consolidated
2014
5,377
13,217
18,594
69
Number of
wells
32
18
21
15
15
101
2015
5,417
14,893
20,310
70
2015
4,118
3,039
4,117
1,931
1,688
14,893
(*) Amounts paid for obtaining rights and concessions for exploration of oil and gas (capitalized acquisition costs) are not included.
Exploratory well costs that have been capitalized for a period of greater than one year since the completion of drilling
amount to R$ 14,893. Those costs relate to 70 projects comprising R$ 12,706 for wells in areas in which there has been
ongoing drilling or firmly planned drilling activities in the near term and for which an evaluation plan (“Plano de
Avaliação”) has been submitted for approval by ANP; and R$ 2,187 relate to costs incurred to evaluate the reserves
and their potential development.
16. Trade payables
Third parties in Brazil
Third parties abroad
Related parties
Balance on current liabilities
+
17.
Finance debt
Consolidated
Parent Company
12.31.2015
13,005
10,020
1,888
24,913
12.31.2014
13,146
11,262
1,516
25,924
12.31.2015
10,734
3,897
13,541
28,172
12.31.2014
10,879
4,869
10,827
26,575
The Company obtains funding through debt financing for capital expenditures to develop crude oil and natural gas
producing properties, construct vessels and pipelines, construct and expand industrial plants, among other uses.
The Company has covenants that were not in default in 2015 in its loan agreements and notes issued in the capital
markets requiring, among other obligations, the presentation of interim financial statements within 90 days of the
end of each quarter (not reviewed by independent auditors) and audited financial statements within 120 days of the
end of each fiscal year. Non-compliance with these obligations do not represent immediate events of default and the
grace period in which the Company has to deliver these financial statements ranges from 30 to 60 days, depending on
the agreement. The Company has also covenants with respect to debt level in some of its loan agreements with the
Brazilian Development Bank (Banco Nacional de Desenvolvimento - BNDES).
A roll-forward of non-current debt is set out as follows:
54
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Non-current
In Brazil
Opening balance at January 1, 2014
Cumulative translation adjustment (CTA)
Additions (new funding obtained)
Interest incurred during the year
Foreign exchange/inflation indexation charges
Transfer from long term to short term
Balance as of December 31, 2014
Abroad
Opening balance at January 1, 2014
Cumulative translation adjustment (CTA)
Additions (new funding obtained)
Interest incurred during the year
Foreign exchange/inflation indexation charges
Transfer from long term to short term
Balance at December 31, 2014
Total Balance as of December 31, 2014
Non-current
In Brazil
Opening balance at January 1, 2015
Cumulative translation adjustment (CTA)
Additions (new funding obtained)
Interest incurred during the year
Foreign exchange/inflation indexation charges
Transfer from long term to short term
Balance as of December 31, 2015
Abroad
Opening balance at January 1, 2015
Cumulative translation adjustment (CTA)
Additions (new funding obtained)
Interest incurred during the year
Foreign exchange/inflation indexation charges
Transfer from long term to short term
Balance as of December 31, 2015
Total Balance as of December 31, 2015
Current
Short term debt (*)
Current portion of long term debt
Accrued interest
Export Credit
Agencies
Banking
Markets
Capital
Markets
Others
Total
Total
Consolidated
Parent
Company
−
−
−
−
−
−
−
13,599
1,154
665
9
250
(1,747)
13,930
13,930
−
−
−
−
−
−
−
13,930
4,772
501
13
1,439
(2,517)
18,138
18,138
67,935
133
10,130
474
2,518
(3,395)
77,795
63,034
7,711
15,633
50
1,004
(8,018)
79,414
157,209
77,795
482
15,962
951
9,662
(8,416)
96,436
79,414
33,669
18,285
110
4,112
(14,671)
120,919
217,355
2,837
−
800
−
192
(373)
3,456
99,730
16,921
32,542
108
(3,392)
(2,979)
142,930
146,386
3,456
−
3,510
1
257
(490)
6,734
142,930
62,702
6,283
161
(3,350)
(18,098)
190,628
197,362
114
−
−
−
3
(43)
74
1,618
135
−
18
50
(98)
1,723
1,797
74
−
−
−
7
(13)
68
1,723
607
−
26
181
(147)
2,390
2,458
70,886
133
10,930
474
2,713
(3,811)
81,325
177,981
25,921
48,840
185
(2,088)
(12,842)
237,997
319,322
81,325
482
19,472
952
9,926
(8,919)
103,238
237,997
101,750
25,069
310
2,382
(35,433)
332,075
435,313
48,319
−
9,088
275
1,641
(870)
58,453
57,418
−
40,106
2,191
11,343
(18,112)
92,946
151,399
58,453
−
6,463
506
6,175
(6,138)
65,459
92,946
−
42,530
5,973
52,077
(13,545)
179,981
245,440
Consolidated
Parent Company
12.31.2015
12.31.2014
12.31.2015
12.31.2014
5,946
44,907
6,481
57,334
9,253
18,182
4,088
31,523
20,779
31,043
1,091
52,913
18,603
29,433
2,094
50,130
(*) Reclassification in 2014 of R$ 1,536 in the parent company, as detailed in note 2.3.
55
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
17.1. Summarized information on current and non-current finance debt
Maturity in
up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 years and
onwards
Total (*)
Fair value
Consolidated
Financing in Brazilian Reais (R$):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in U.S. Dollars (US$):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in R$ indexed to US$:
Floating rate debt
Fixed rate debt
Average interest rate
Financing in Pound Sterling (£):
Fixed rate debt
Average interest rate
Financing in Japanese Yen (¥):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in Euro (€):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in other currencies:
Fixed rate debt
Average interest rate
Total as of December 31, 2015
Total Average interest rate
9,175
7,637
1,538
15.1%
42,333
21,752
20,581
4.1%
2,237
93
2,144
7.2%
267
267
5.8%
2,183
332
1,851
2.0%
1,102
49
1,053
3.6%
36
36
14.3%
57,333
5.9%
6,712
4,900
1,812
16.4%
34,629
20,276
14,353
4.5%
2,751
90
2,661
7.0%
−
−
−
367
332
35
0.8%
46
44
2
1.6%
−
−
−
8,170
6,356
1,814
15.0%
39,886
30,394
9,492
4.1%
2,747
85
2,662
7.1%
−
−
−
332
331
1
0.6%
11,692
44
11,648
3.8%
−
−
−
13,611
11,835
1,776
13.8%
66,335
47,334
19,001
4.3%
2,737
75
2,662
7.0%
−
−
−
−
−
−
−
5,548
44
5,504
3.9%
−
−
−
19,725
17,291
2,434
11.4%
37,376
21,826
15,550
4.6%
2,737
75
2,662
7.1%
−
−
−
−
−
−
−
832
665
167
4.1%
−
−
−
22,876
18,267
4,609
11.2%
110,413
33,028
77,385
6.0%
21,173
138
21,035
7.0%
9,930
9,930
6.1%
−
−
−
−
14,689
−
14,689
4.4%
−
−
−
80,269
66,286
13,983
13.0%
330,972
174,610
156,362
4.9%
34,382
556
33,826
7.0%
10,197
10,197
6.1%
2,882
995
1,887
1.7%
33,909
846
33,063
4.1%
36
36
14.3%
64,269
258,647
27,662
6,465
2,829
25,108
37
44,505
6.4%
62,827
5.6%
88,231
5.8%
60,670
6.9%
179,081
6.7%
492,647
6.3%
385,017
Total as of December 31, 2014
31,523
33,397
31,742
47,254
64,252
142,677
350,845
325,946
* The average maturity of outstanding debt as of December 31, 2015 is 7.14 years, (6.10 years as of December 31, 2014).
The fair value of the Company's finance debt is determined primarily by quoted prices in active markets for identical
liabilities (level 1), when applicable - R$ 167,631, as of December 31, 2015. When a quoted price for an identical liability
is not available, the fair value is determined based on a theoretical curve derived from the yield curve of the
Company's most liquid bonds (level 2) - R$ 217,386, as of December 31, 2015.
The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 33.2.
56
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
17.2. Capitalization rate used to determine the amount of borrowing costs eligible for capitalization
The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was the weighted
average of the borrowing costs applicable to the borrowings that were outstanding during the period, other than
borrowings made specifically for the purpose of obtaining a qualifying asset. In 2015, the capitalization rate was 5.03%
p.a. (4.91% p.a. in 2014).
17.3. Lines of credit – Outstanding balance
Financial institution
Date
Maturity
7/16/2013
JBIC
UKEF - JPMORGAN 12/17/2015
12/31/2018
12/22/2016
5/30/2016
7/15/2016
12/26/2017
3/26/2018
1/31/2007 Not defined
4/10/2038
Caixa Econômica Federal 11/23/2010 Not defined
BNDES 12/17/2012
7/31/2013
BNDES
4/16/2014
FINEP
BNDES
9/3/2013
BNDES
Banco do Brasil
7/9/2010
Available
(Lines of
Credit)
1,500
500
2,000
2,199
502
255
9,878
5,129
452
389
18,804
Amount
Used
Balance
-
181
181
1,750
422
177
1,631
554
239
20
4,793
1,500
319
1,819
449
80
78
8,247
4,575
213
369
14,011
Company
Abroad (Amount in US$ million)
Petrobras
PGT BV
Total
In Brazil
Petrobras
Petrobras
Petrobras
PNBV
Transpetro
Transpetro
Transpetro
Total
17.4. Collateral
The financial institutions that have provided financing to the Company usually do not require Petrobras to provide
collateral related to loans. However, certain specific funding instruments to promote economic development are
collateralized, as well as certain debt agreements of the subsidiary Petrobras Distribuidora are based on the
Company’s future exports.
The loans obtained by structured entities are collateralized based on the projects’ assets, as well as liens on
receivables of the structured entities.
The Company’s capital market financing relates primarily to unsecured global notes.
57
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
18. Leases
18.1. Future minimum lease payments / receipts – finance leases
Estimated commitments
2016
2017 – 2020
2021 and thereafter
As of December 31, 2015
Current
Non-current
As of December 31, 2015
Current
Non-current
As of December 31, 2014
Future value
629
2,880
6,032
9,541
Future value
68
171
681
920
Receipts
(408)
(1,685)
(1,751)
(3,844)
Annual
interest Present value
221
1,195
4,281
5,697
256
5,441
5,697
157
3,866
4,023
Consolidated
Parent
Company
Payments
Payments
(18)
(102)
(598)
(718)
Annual
interest Present value Present value
1,568
3,809
1,617
6,994
1,568
5,426
6,994
50
69
83
202
48
154
202
42
148
190
1,609
4,293
5,902
18.2. Future minimum lease payments – operating leases
Operating leases mainly include oil and gas production units, drilling rigs and other exploration and production
equipment, vessels and support vessels, helicopters, land and building leases.
2016
2017 - 2020
2021 and thereafter
As of December 31, 2015
As of December 31, 2014
Consolidated
45,631
121,398
220,303
387,332
Parent
Company
65,349
191,805
330,122
587,276
314,505
432,452
As of December 31, 2015, the balance of estimated future minimum lease payments under operating leases includes
R$ 236,739 in the Consolidated and R$ 211,634 in the Parent Company (in 2014, R$ 184,778 in the Consolidated and R$
159,466 in the Parent Company) with respect to assets under construction, for which the lease term has not
commenced.
During 2015, the Company recognized expenditures of R$ 32,485 for consolidated operating lease installments and R$
49,620 in the Parent Company (during 2014, R$ 25,110 for consolidated and R$ 35,495 in the Parent Company).
19. Related party transactions
19.1. Commercial transactions and other operations
Petrobras carries out commercial transactions with its subsidiaries, joint arrangements, consolidated structure
entities and associates at market prices and market conditions.
58
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
19.1.1. By transaction (Parent Company)
Assets
Trade and other receivables
- Trade and other receivables, mainly from sales
- Dividends receivable
- Intercompany loans
- Capital increase (advance)
- Amounts related to construction of natural gas pipeline
- Finance leases
- Other operations
Liabilities
Finance leases
Financing on credit operations
Intercompany loans
Prepayment of exports
Accounts payable to suppliers
- Purchases of crude oil, oil products and others
- Affreightment of platforms
- Advances from clients
Other operations
Profit or Loss
Revenues, mainly sales revenues
Foreign exchange and inflation indexation charges
Financial income (expenses), net
19.1.2. By company (Parent Company)
Current Non-current
Total
Current Non-current
Total
12.31.2015
12.31.2014
8,916
1,595
−
−
−
61
637
11,209
(1,568)
−
−
(18,346)
(13,541)
(7,251)
(5,778)
(512)
−
(33,455)
−
−
266
1,364
1,050
873
414
3,967
(5,354)
−
(51,465)
(109,607)
−
−
−
−
(99)
(166,525)
8,916
1,595
266
1,364
1,050
934
1,051
15,176
(6,922)
−
(51,465)
(127,953)
(13,541)
(7,251)
(5,778)
(512)
(99)
(199,980)
10,224
1,053
−
−
−
−
410
11,687
(1,608)
(5,010)
−
(20,907)
(10,827)
(7,101)
(3,312)
(414)
−
(38,352)
−
−
6,828
397
868
−
133
8,226
(4,229)
−
(29,816)
(46,607)
−
−
−
−
(143)
(80,795)
2015
147,898
(11,624)
(11,580)
124,694
10,224
1,053
6,828
397
868
−
543
19,913
(5,837)
(5,010)
(29,816)
(67,514)
(10,827)
(7,101)
(3,312)
(414)
(143)
(119,147)
2014
156,614
(2,139)
(5,012)
149,463
Income (expense)
12.31.2015
12.31.2014
12.31.2015
12.31.2014
Subsidiaries (*) (**)
BR
PIB-BV Holanda
Gaspetro
PNBV
Transpetro
Fundo de Investimento
Imobiliário
Thermoelectrics
TAG
Other subsidiaries
Structured Entities (**)
CDMPI
PDET Off Shore
Associates (**)
Companies from the
petrochemical sector
Other associates
2015
2014
90,203
7,394
10,150
2,106
864
(153)
(192)
(1,573)
5,328
114,127
(939)
(564)
(1,503)
94,780
19,872
9,721
1,861
725
(178)
(165)
(851)
5,878
131,643
(131)
(120)
(251)
12,041
29
12,070
18,066
5
18,071
Current
Assets
2,588
2,149
977
2,202
654
158
120
202
1,533
10,583
−
−
−
559
67
626
Non-current
Assets Total Assets Total Assets
Current
Liabilities
Non-current
Liabilities
Total
Liabilities
Total
Liabilities
20
138
97
34
132
−
335
873
2,333
3,962
−
−
−
−
5
5
2,608
2,287
1,074
2,236
786
158
455
1,075
3,866
14,545
−
−
−
559
72
631
8,981
2,373
2,320
2,859
356
63
292
402
1,722
19,368
−
−
−
535
10
545
(262)
(19,646)
(307)
(7,632)
(1,125)
(216)
(123)
(1,990)
(1,412)
(32,713)
(316)
(280)
(596)
(94)
(52)
(146)
(20)
(161,072)
−
−
−
(1,614)
(1,004)
−
−
(163,710)
(282)
(180,718)
(307)
(7,632)
(1,125)
(1,830)
(1,127)
(1,990)
(1,412)
(196,423)
(295)
(104,879)
(440)
(4,031)
(941)
(1,331)
(1,094)
(2,233)
(960)
(116,204)
(1,856)
(881)
(2,737)
(2,172)
(1,161)
(3,333)
(1,702)
(926)
(2,628)
(78)
−
(78)
(172)
(52)
(224)
(236)
(79)
(315)
124,694
149,463
11,209
3,967
15,176
19,913
(33,455)
(166,525)
(199,980)
(119,147)
(*) Includes its subsidiaries and joint ventures.
(**) The list of companies is presented in note 11.
59
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
19.1.3. Annual rates for intercompany loans
Up to 5%
From 5.01% to 7%
From 7.01% to 9%
More than 9.01%
12.31.2015
−
81
128
57
266
Assets
12.31.2014
−
−
−
6,828
6,828
Parent Company
12.31.2015
(5,623)
(45,842)
−
−
(51,465)
Liabilities
12.31.2014
(4,269)
(23,713)
(1,834)
−
(29,816)
19.2. Receivables investment fund
The Parent Company invests in the receivables investment fund (FIDC-NP and FIDC-P), which comprises mainly
receivables and non-performing receivables arising from the operations performed by subsidiaries of the Petrobras
Group.
Investments in FIDC-NP and FIDC-P are recognized as marketable securities.
The assignment of performing and non-performing receivables is recognized as current debt within current liabilities.
Marketable securities
Assignments of non-performing receivables
Finance income FIDC P and NP
Finance expense FIDC P and NP
Net finance income (expense)
19.3. Guarantees Granted
Parent Company
12.31.2015
7,812
(20,779)
12.31.2014
8,334
(18,603)
2015
891
(2,129)
(1,238)
2014
1,000
(1,525)
(525)
Petrobras guarantees certain financial operations carried out by its subsidiaries in Brazil and abroad.
Petrobras, based on contractual clauses that support the financial operations between the subsidiaries and third
parties, offers guarantees, mainly fidejussory, the payment of debt service in the event that a subsidiary defaults on a
debt.
The outstanding balance of financial operations carried out by these subsidiaries and guaranteed by Petrobras is set
out below:
Maturity date of the loans
2015
2016
2017
2018
2019
2020
2021 and thereafter
(*) Petrobras Global Finance B.V., subsidiary of PIBBV.
(**) Petrobras Global Trading B.V., subsidiary of PIBBV.
(**) The list of companies is presented in note 11.
PGF (*)
−
23,193
18,548
20,774
29,931
18,383
104,222
215,051
PGT (**)
−
1,952
−
9,762
23,038
20,813
32,932
88,497
PNBV (***)
−
3,944
2,387
11,783
9,411
2,460
13,891
43,876
TAG (***)
−
−
−
−
−
−
17,474
17,474
Others
−
−
1,197
3,160
861
7,024
10,813
23,055
12.31.2015
12.31.2014
Total
−
29,089
22,132
45,479
63,241
48,680
179,332
387,953
Total
14,433
18,123
16,121
33,121
46,258
28,715
97,997
254,768
60
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
19.4. Investment fund of subsidiaries abroad
As of December 31, 2015, a subsidiary of PIB BV had R$ 15,623 (R$ 17,594 as of December 31, 2014) invested in an
investment fund abroad that held debt securities of Petrobras, of TAG (a subsidiary of Petrobras) and its subsidiaries,
and of consolidated structured entities, mainly with respect to the following projects: Gasene, Malhas, CDMPI, CLEP
and Marlim Leste (P-53).
19.5. Transactions with joint ventures, associates, government entities and pension funds
The balances of significant transactions are set out in the following table:
Joint ventures and associates
State-controlled gas distributors
Petrochemical companies
Other associates and joint ventures
Government entities
Government bonds
Banks controlled by the Federal Government
Receivables from the Electricity sector (note 8.4)
Petroleum and alcohol account - receivables from Federal
government (note 19.6)
Federal Government (Dividends and interest on capital)
Others
Pension plans
Revenues, mainly sales revenues
Foreign exchange and inflation indexation charges, net
Finance income (expenses), net
Current assets
Non-current assets
Current liabilities
Non-current liabilities
2015
Income
(expense)
9,849
12,020
1,878
23,747
1,090
(13,641)
5,821
14
−
30
(6,686)
−
17,061
28,331
(4,730)
(6,540)
12.31.2015
Assets
Liabilities
2014
Income
(expense)
Consolidated
12.31.2014
Assets
Liabilities
996
565
524
2,085
4,352
10,181
13,335
857
−
1,190
29,915
141
32,141
8,806
23,335
281
174
1,768
2,223
−
95,034
−
−
−
1,230
96,264
431
98,918
12,683
86,235
98,918
10,592
18,153
1,183
29,928
1,553
(7,698)
5,929
7
61
198
50
2
29,980
33,793
(1,037)
(2,776)
1,343
545
405
2,293
11,525
10,131
7,879
843
−
639
31,017
−
33,310
17,837
15,473
29,980
33,310
519
219
699
1,437
−
75,181
−
−
−
595
75,776
358
77,571
4,928
72,643
77,571
17,061
32,141
19.6. Petroleum and Alcohol accounts - Receivables from Federal Government
As of December 31, 2015, the balance indexed by inflation of receivables related to the Petroleum and Alcohol
accounts was R$ 857 (R$ 843 at December 31, 2014). Pursuant to Provisional Measure 2,181 of August 24, 2001, the
Federal Government may settle this balance by using National Treasury Notes in an amount equal to the outstanding
balance, or allow the Company to offset the outstanding balance against amounts payable to the Federal
Government, including taxes payable, or both options.
The Company has provided all the information required by the National Treasury Secretariat (Secretaria do Tesouro
Nacional - STN) in order to resolve disputes between the parties and conclude the settlement with the Federal
Government.
Following several negotiation attempts at the administrative level, the Company filed a lawsuit in July 2011 to collect
the receivables.
61
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The lawsuit is pending court-ordered expert proceedings, on which the Company has already agreed with the expert
report. This report mentions the existence of the Company’s receivables from the Federal Government, as well as
states that the supporting documents of alleged credit by the Federal Government were not found.
The conclusion of court-ordered expert proceedings is pending, awaiting the Federal Government response.
19.7. Compensation of employees and officers
The criteria for compensation of employees and officers are established based on the current labor legislation and the
Company’s policies related to positions, salaries and benefits (plano de cargos e salários e de benefícios e vantagens).
The compensation of employees (including those occupying managerial positions) and officers in the months of
December 2015 and December 2014 were:
Compensation of employees
Lowest compensation
Average compensation
Highest compensation
Compensation of highest paid Petrobras officer
The total compensation of Petrobras’ key management is set out below:
Amounts in reais
2015
2,812.74
16,582.21
90,078.93
2014
2,710.19
15,031.44
82,241.33
106,748.22
98,758.65
Parent Company
Wages and short-term benefits
Social security and other employee-related taxes
Post-employment benefits (pension plan)Pension
Variable compesation (*)
Total compensation recognized in the statement of income
Total compensation paid
Number of members
Board
(members and
alternates)
1.4
0.3
−
−
1.7
1.7
18
Officers
12.7
3.4
0.8
−
16.9
16.9
8
2015
Total
14.1
3.7
0.8
−
18.6
18.6
26
Officers
9.7
2.6
0.7
3.3
16.3
15.4
7
Board
(members)
1.2
0.2
−
−
1.4
1.4
10
2014
Total
10.9
2.8
0.7
3.3
17.7
16.8
17
(*) Due to the net loss of the year, the Extraordinary General Meeting decided to cancel the full payment of Annual Variable Compensation (Remuneração Variável Anual - RVA 2014)
for the year 2014, and also of all the deferred installments not yet paid, of officers' Annual Variable Compensation for the year 2013, according to corporate goals program and to law
6,404/76, article 152, paragraph 2.
In 2015 board members and officers of the consolidated Petrobras group received R$ 67.4 as compensation (R$ 72.6 in
2014).
The Extraordinary General Meeting held on July 1, 2015 amended the following:
• The article 18 of the Company's Bylaws to allow board members to have alternates with mandates limited to a
two-year period; article 29 to establish that five Advisory Committees will support the Board of Directors with
their appraisals and recommendations regarding specific issues related to the Board; article 41 to permit that
board members alternates may participate in all board meetings and receive a fixed monthly compensation as
defined by the Board and in accordance with compensation limits established in the General Meeting;
• This Extraordinary General Meeting also voted to increase the total Board members compensation established
at the Annual General Meeting, by R$ 754 thousand, in order to cover the fees of the alternate Board
members from July 2015 to March 2016.
The compensation of the Advisory Committees to the Board of Directors is apart from the fixed compensation set for
the Board members and, therefore, has not been classified under compensation of Petrobras’ key management.
62
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
In 2015, the alternates of Board members which are also members of these committees received the amount of R$ 83
thousand as compensation (R$ 99 thousand including related charges).
20. Provision for decommissioning costs
Non-current liabilities
Opening balance
Adjustment to provision
Payments made
Interest accrued
Others
Closing balance
Consolidated
Parent Company
12.31.2015
21,958
16,812
(4,149)
753
354
35,728
12.31.2014
16,709
6,196
(1,603)
475
181
21,958
12.31.2015
20,630
16,789
(3,306)
721
(193)
34,641
12.31.2014
15,320
6,286
(1,422)
446
−
20,630
The Company revises annually its estimated costs with well abandonment and dismantling of oil and gas production
areas.
As a result, for 2015, there was a R$ 14.1 billion increase in the provision for decommissioning costs, mainly due to: (i)
an R$ 11.1 billion, due to the higher exchange rate, with direct impact on costs in dollars (ii) a R$ 7.1 billion increase
attributable to an acceleration of abandonment resulting from a shorter economic life of fields attributable to lower
crude oil prices (Brent); (iii) a R$ 6.7 billion increase due to an experience revision based on additional information
obtained from 2015 well abandonments. These effects were partially offset by an R$ 11.2 billion decrease, related to a
higher risk-adjusted discount rate of 6.73% p.a. at December 31, 2015 (3.76% p.a. in 2014).
The Company reviews and revises annually its estimated costs associated with well abandonment and dismantling of
oil and gas producing properties.
21.
Taxes
21.1. Current taxes
Taxes in Brazil
Taxes Abroad
Ativo Circulante
Passivo Circulante
Consolidado
Controladora
Ativo Circulante
31.12.2015
3,743
96
3,839
31.12.2014
2,705
118
2,823
31.12.2015
242
168
410
31.12.2014
370
287
657
31.12.2015
1,520
−
1,520
31.12.2014
1,297
−
1,297
63
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Other taxes and contributions
Current assets
Non-current assets
Current liabilities
Non-current liabilities
12.31.2015
12.31.2014
12.31.2015
12.31.2014
12.31.2015
12.31.2014
12.31.2015
12.31.2014
Consolidated
Taxes In Brazil:
ICMS/ Deferred ICMS (VAT)
PIS and COFINS/ Deferred PIS
and COFINS (Taxes on Revenues)
CIDE
Production Taxes (Special
Participation / Royalties)
Withholding income tax and social
contribution
Refis and Prorelit
Others
Taxes abroad
ICMS/ Deferred ICMS (VAT)
PIS and COFINS/ Deferred PIS
and COFINS (Taxes on Revenues)
CIDE
Production Taxes (Special
Participation / Royalties)
Withholding income tax and social
contribution
Refis and Prorelit
Others
3,151
4,707
2,363
2,090
4,081
3,386
2,913
72
2,201
35
7,913
−
7,923
−
1,902
449
784
20
−
−
−
−
2,428
4,031
−
−
585
6,721
172
6,893
−
−
195
7,138
162
7,300
−
−
719
10,995
22
11,017
−
−
610
10,623
22
10,645
1,698
1,068
956
12,582
557
13,139
1,290
−
745
10,256
540
10,796
2,700
3,829
2,291
1,940
3,830
3,080
1,762
72
1,639
35
7,194
−
7,003
−
1,745
449
625
20
−
−
−
−
2,428
4,031
−
−
452
4,986
−
−
106
5,609
−
−
−
9,485
−
−
−
8,943
1,621
1,068
621
11,762
1,233
−
518
9,507
−
−
−
−
−
−
−
−
60
43
−
103
−
103
−
−
−
−
−
−
Parent Company
−
−
−
−
−
−
43
−
43
−
−
−
−
−
−
−
(*) The values of other taxes in non-current liabilities are classified in "other non-current liabilities"
21.2. Tax amnesty program - Programa de Recuperação Fiscal (REFIS)
On July 16, 2015 Petrobras paid R$ 1,580 (R$ 1,183 in cash and R$ 397 in tax credits) related to a definitive ruling at
the administrative stage with respect to a tax deficiency notice issued by the Brazilian Federal Tax Authorities. The
notice is related to the tax on financial operations (Imposto sobre operações financeiras - IOF) applicable to
intercompany loans made by Petrobras to foreign subsidiaries in 2008.
In addition, Joint Ordinance 1,064 (Portaria Conjunta RFB/PGFN 1.064) issued by the Brazilian Federal Tax Authorities
and by the Brazilian Federal Tax Attorney General's Office, and Normative Instruction 1,576/15 (Instrução Normativa
RFB 1.576/15) issued by the Brazilian Federal Tax Authorities, both published on August 3, 2015, clarified that
taxpayers had an opportunity for relief in connection with additional existing federal tax debts, through the tax
amnesty program created under Law 12,996/14 – Programa de Recuperação Fiscal (REFIS). The Company has decided
to adhere to the REFIS to pay for the tax liabilities set out as follows:
- Pay amounts due according to the tax deficiency notices issued by the Brazilian Federal Tax Authorities related
to the tax on financial operations (IOF) applicable to intercompany loans made by Petrobras to its foreign
subsidiaries in 2007, 2009 and 2010 and to pay amounts due related to the IOF applicable to similar
intercompany loans made in other periods, for which a tax deficiency notice has not been issued (2011 and
2012), in the amount of R$ 3,118. The Company modified its procedures with respect to the payment of the
IOF applicable to transactions in 2013 and, therefore, it does not expect any additional tax deficiency notices.
- Pay the tax deficiency notices issued by the Brazilian Federal Tax Authorities related to the alledged failure to
withhold income tax (imposto de renda retido na fonte- IRRF) on amounts Petrobras paid to its former
subsidiary Petrobras International Finance Company (PifCo) with respect to crude oil and oil product imports
between 1999 and 2002, 2004, 2005 and 2007 to 2012, in the amount of R$ 2,840.
- Penalties for noncompliance with customs clearance procedures on crude oil and oil product imports from
2008 to 2013, in the amount of R$ 46.
64
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
-
Inflation indexation of REFIS in the amount of R$ 33 in the period relating to the fourth quarter of 2015.
The Company will pay those federal tax liabilities in 30 monthly installments following an immediate payment of 20%
of the total amount due (after the reductions provided by the tax amnesty program) and using tax credits (tax loss
carryforwards) to pay for interest and penalties. The deadline to adhere to the REFIS was September 25, 2015.
As a result, in the period from January to December, 2015, the Company recognized a total expense of R$ 7,617 in
2015, of which R$ 5,090 was recognized as other taxes expenses and R$ 2,527 as finance expenses. In the same period,
the Company paid a total amount of R$ 6,527, of which R$ 3,467 was paid in cash, R$ 1,806 by using tax credits and R$
1,254 by using judicial deposits.
21.3. Tax amnesty programs – State Tax (Programas de Anistias Estaduais)
In 2015, due to amnesty for settlement of taxes administered by the states, VAT tax (ICMS), the Company joined the
payment programs in cash of tax liabilities.
Date
July/15
September/15
November/15
December/15
December/15
2015
Total
Tax
Law/Decree
State
RJ
7,020/2015
ES 10,376/2015
5,463/2015
DF
BA 13,449/2015
1,439/2015
PA
Several
Amount
619
348
75
146
32
9
1,229
As a result of those settlement agreements, the Company recognized a total expense of R$ 1,229, including R$ 1,046
as other taxes expenses and R$ 183 as finance expense.
21.4. Reduction tax litigation program (Programa de Redução de Litígios Tributários – PRORELIT)
On October 30, 2015, Petrobras entered into the PRORELIT, established by Law No. 13,202/15 (Measure Conversion
Act No. 685/15) paying R$ 67, of which R$ 20 in cash and R$ 47 in tax credits in order to reduce debts related to
customs fines against the Company in 2014 and 2015 and to tax fines raised by to improper deduction of tax bases in
2003 and 2004. Therefore, the Company charged to income R$ 67, of which R$ 28 was recognized in other taxes
expenses and R$ 39 in finance expenses.
21.5. Brazilian income taxes on income of companies incorporated outside Brazil
As of December 31, 2015 the Company has recognized additional income taxes expenses of R$ 2,528 related to
Brazilian income taxes on income generated during the year ended December 31, 2015 by companies incorporated
outside Brazil, as set out in the amendments to Brazilian Tax Law (Law 12.973/2014).
65
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
21.6. Deferred income tax and social contribution - non-current
a) Changes in deferred income tax and social contribution are set out below:
Balance at January 1, 2014
Recognized in the statement of income for the year
Recognized in shareholders’ equity
Cumulative translation adjustment
Others (*)
Balance at December 31, 2014
Recognized in the statement of income for the period
Recognized in shareholders’ equity
Cumulative translation adjustment
Use of tax credits - REFIS and PRORELIT
Others
Balance at December 31, 2015
Deferred tax assets
Deferred tax liabilities
Balance at December 31, 2014
Deferred tax assets
Deferred tax liabilities
Balance at December 31, 2015
(*) Relates, primarily, to disposal of interests in investees or mergers.
Imobilizado
Emprésti-
mos, contas a
receber /
pagar e
financia-
mentos
4,648
1,238
4,752
9
(15)
10,632
739
20,961
2
−
296
32,630
Outros
(9,143)
8,908
−
(314)
(46)
(595)
5,894
−
106
−
(362)
5,043
Arrenda-
mentos
mercantis
financeiros
(1,214)
(85)
(97)
−
(177)
(1,573)
186
−
−
−
21
(1,366)
Custo com
prospecção
(31,405)
(4,844)
−
−
−
(36,249)
(4,061)
−
−
−
−
(40,310)
Provisão para
processos
judiciais
Prejuízos
fiscais
957
420
−
(4)
24
1,397
1,712
−
(14)
−
(3)
3,092
9,354
5,932
−
35
(130)
15,191
6,789
(336)
501
(1,853)
73
20,365
Juros sobre
capital
próprio
3,163
(3,163)
−
−
−
−
(1)
−
1
−
−
Estoques
1,292
4
−
6
−
1,302
74
−
(4)
7
1,379
Consolidado Controladora
Outros
Total
Total
1,789
(385)
2,698
258
156
4,516
(2,421)
(54)
(274)
(16)
1,751
(20,559)
(24,259)
8,025
7,353
(10)
(188)
(5,379)
8,911
20,571
318
(1,853)
16
22,584
2,673
(8,052)
(5,379)
23,490
(906)
22,584
8,555
6,815
−
(173)
(9,062)
8,047
17,991
−
(1,853)
33
15,156
−
(9,062)
(9,062)
15,156
−
15,156
66
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
b) Timing of reversal of income taxes
Deferred tax assets were recognized based on projections of taxable profit in future periods supported by the
Company’s 2015-2019 Business and Management Plan (BMP). The main goals and objectives outlined in its business
plan include business restructuring, a divestment plan, demobilization of assets and reducing operating expenses.
Management considers that the deferred tax assets will be realized to the extent the deferred tax liabilities are
reserved and expected taxable events occur, based on its 2015-2019 Business and Management Plan.
The estimated schedule of recovery/reversal of net deferred tax assets (liabilities) recoverable (payable) as of
December 31, 2015 is set out in the following table:
2016
2017
2018
2019
2020
2021
2022 and thereafter
Recognized deferred tax credits
In Brazil
Abroad
Unrecognized deferred tax credits
Total
Deferred income tax and social contribution
Consolidated
Parent Company
Assets
Liabilities
Assets
Liabilities
5,116
1,622
483
3,860
2,691
7,781
1,937
23,490
3,917
9,513
13,430
36,920
83
76
101
128
102
105
311
906
−
−
−
906
3,202
−
−
3,026
2,205
6,723
−
15,156
−
−
−
15,156
−
−
−
−
−
−
−
−
−
−
−
−
Unrecognized tax loss carryforwards in Brazil, in the amount of R$ 2,242, arising from accumulated tax losses of
subsidiaries that have a history of losses, subject to offset them against future taxable profits in the companies that
they were generated without limitation of period. Note that there is not, for companies that have a history of loss,
forecast taxable income to allow the offsetting of such claims.
As of December 31, 2015, the Company had tax loss carryforwards from companies abroad, for which no deferred tax
assets have been recognized, in the amount of R$ 9,513 (R$ 8,501 as of December 31, 2014) resulting from net
operating losses, mainly from oil and gas exploration and production and refining activities in the United States in the
amount of R$ 7,816 (R$ 4,868 as of December 31, 2014), as well as Spanish companies in the amount of R$ 1,697
(R$1,289 in 2014). In 2014 the Company had tax loss carryforwards from Dutch companies in the amount of R$ 2,344
which were fully offset in 2015, not leaving tax credit unrecognized for that country.
An aging of the unrecognized tax carryforwards, from companies abroad, classified by lapse of the applicable statute
of limitations is set out below:
Year
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030 and thereafter
Total
67
Lapse of
Statute of
Limitations
152
537
243
228
293
23
442
508
613
772
5,702
9,513
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
21.7. Reconciliation between statutory tax rate and tax expense
A reconciliation between tax expense and the product of “income before income taxes” multiplied by the Brazilian
statutory corporate tax rates is set out in the table below:
Loss before income taxes
Consolidated
Parent Company
2015
(41,229)
2014
(25,816)
2015
(42,883)
2014
(30,247)
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%)
14,018
8,777
14,580
10,284
Adjustments to arrive at the effective tax rate:
Different jurisdictional tax rates for companies abroad
Brazilian income taxes on income of companies incorporated outside Brazil
Tax incentives
Tax loss carryforwards (unrecognized tax losses)
Write-off - overpayments incorrectly capitalized (note 3)
Non taxable income (deductible expenses), net (*)
Others
Income tax and social contribution
Deferred income tax and social contribution
Current income tax and social contribution
(1,388)
(2,528)
43
(1,864)
−
(2,081)
(142)
6,058
8,911
(2,853)
6,058
1,212
−
60
(3,271)
(2,223)
(665)
2
3,892
8,025
(4,133)
3,892
−
(2,528)
−
−
−
(3,997)
(8)
8,047
8,047
−
8,047
−
−
9
−
(1,699)
(39)
−
8,555
8,555
−
8,555
Effective Tax Rate of income tax and social contribution
14.7%
15.1%
18.8%
28.3%
(*) Includes the principal portion of the IOF tax contingency (as set out in note 21.2) and share of earnings in equity-accounted investees.
22. Employee benefits (Post-Employment)
The balance of employee benefits (post-employment) are set out below:
Liabilities
Petros pension plan
Petros 2 pension plan
AMS medical plan
Other plans
Current
Non-current
Consolidated
Parent Company
2015
2014
2015
2014
23,185
277
26,369
343
50,174
2,556
47,618
50,174
20,916
762
23,957
283
45,918
2,115
43,803
45,918
22,110
231
24,641
−
46,982
2,436
44,546
46,982
19,924
664
22,546
−
43,134
2,026
41,108
43,134
22.1. Petros Plan and Petros 2 Plan
The Company’s post-retirement plans are managed by Fundação Petrobras de Seguridade Social (Petros), which was
established by Petrobras as a nonprofit legal entity governed by private law with administrative and financial
autonomy.
a) Petros Plan - Fundação Petrobras de Seguridade Social
The Petros Plan was established by Petrobras in July 1970 as a defined-benefit pension plan and currently provides
post-retirement benefits for employees of Petrobras and Petrobras Distribuidora S.A., in order to complement
government social security benefits. The Petros Plan has been closed to new participants since September 2002.
68
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Petros performs an annual actuarial review of its costs using the capitalization method for most benefits. The
employers (sponsors) make regular contributions in amounts equal to the contributions of the participants (active
employees, assisted employees and retired employees), on a parity basis.
The Conselho Nacional de Previdência Complementar - CNPC (National Post-retirement Benefits Council) enacted the
Resolução 22/2015 determining that, in case of a deficit amount higher than 1% of the duration less four times the
total actuarial liability (ceiling amount), a deficit equating planning must be prepared and approved by the Executive
Council of the Pension Plan.
Petros’ financial statements for 2015 will be presented to the Superintendência de Previdência Complementar –
PREVIC (Superintendency of Post-retirement Benefits) by July 31, 2016 and in the event of a deficit higher than the
ceiling amount established by the Resolution 22/2015, the Pension Plan will be require to initiate a deficit equating
planning in 60 calendar days, beginning on the date of Executive Council approval. Accordingly, participants of the
plan and their employers (sponsors) will be called to cover this deficit, pursuant to Brazilian Law (Constitutional
Amendment 20/1998 and Complementary Law 109/2001), based on their respective proportions of regular
contributions.
The limit established by Resolução 22/2015 is determined by the following formula: 1% (duration of liabilities
deducted by 4 years) x (total actuarial obligation).
As of December 31, 2015, the balance of the Terms of Financial Commitment (TFC), signed by Petrobras and Petros in
2008 is R$ 11,856 (R$ 11,484 in the parent company). The TCF is a financial commitment agreement to over
obligations with the pension plan, which amounts are due in 20 years, with 6% p.a. semiannual coupon payments
based on the updated balance. The Company has provided crude oil and oil products pledged as security for the TFC
totaling R$ 6,711, which are been reviewed.
The employers' expected contributions to the plan for 2016 are R$ 701 (R$ 665 in the parent company) and interest
payments on TCF R$ 736 (R$ 713 in the parent company).
The duration of the actuarial liability related to the plan as of December 31, 2015 is 10.06 years.
b) Petros 2 Plan - Fundação Petrobras de Seguridade Social
Petros 2 Plan was established in July 2007 by Petrobras and certain subsidiaries as a variable contribution plan
recognizing past service costs for contributions for the period from August 2002 to August 29, 2007. The Petros 2
Plan currently provides post-retirement benefits for employees of Petrobras, Petrobras Distribuidora S.A., Stratura
Asfaltos, Termobahia, Termomacaé, Transportadora Brasileira Gasoduto Brasil-Bolívia S.A. – TBG, Petrobras
Transporte S.A. – Transpetro and Petrobras Biocombustível. The plan is open to new participants although there will
no longer be payments relating to past service costs.
Certain elements of the Petros 2 Plan have defined benefit characteristics, primarily the coverage of disability and
death risks and the guarantee of minimum defined benefit and lifetime income. These actuarial commitments are
treated as defined benefit components of the plan and are accounted for by applying the projected unit credit
method. Contributions paid for actuarial commitments that have defined contribution characteristics are accrued
monthly in the statement of income and are intended to constitute a reserve for programmed retirement. The
contributions for the portion of the plan with defined contribution characteristics were R$ 866 in 2015 (R$ 751 in the
Parent Company).in 2015.
The defined benefit portion of the contributions was suspended from July 1, 2012 to June 30, 2015, as determined by
the Executive Council of Petros, based on advice of the actuarial consultants from Petros. Therefore, the entire
contributions are being appropriated to the individual accounts of plan participants.
For 2016 the employers' expected contributions to the defined contribution portion of the plan are R$ 1,013 (R$ 846 in
the Parent Company).
69
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
The duration of the actuarial liability related to the plan, as of December 31, 2015 is 29.58 years.
22.2. Other plans
The Company also sponsors other pension and health care plans of certain of its Brazilian and international
subsidiaries, including plans with defined benefit characteristics abroad, for subsidiaries in Argentina, Japan and
other countries. Most of these plans are unfunded and their assets are held in trusts, foundations or similar entities
governed by local regulations.
22.3. Pension Plans assets
Pension plans assets follow a long term investment strategy based on the risks assessed for each different class of
assets and provide for diversification, in order to lower portfolio risk. The portfolio profile must comply with the
Brazilian National Monetary Council (Conselho Monetário Nacional – CMN) regulations.
Petros establishes investment policies for 5-year periods, reviewed annually. Petros uses an asset liability
management model (ALM) to address net cash flow mismatches of the benefit plans, based on liquidity and solvency
parameters, simulating a 30-year period.
Portfolio allocation limits for the period between 2016 and 2020 for the Petros Plan of the Petrobras Group are 30% to
90% in fixed-income securities, 6% to 45% in variable-income securities, 2% to 8% in real estate, 0% to 15% in loans to
participants, 0% to 10% in structured finance projects and up to 0% in variable-income securities abroad. Allocation
limits for Petros 2 Plan for the same period are: 60% to 90% in fixed-income securities, 0% to 20% in variable-income
securities, 0% to 5% in real estate, 0% to 15% in loans to participants, 0% to 8% % in structured finance projects and
0% in variable-income securities abroad.
The pension plan assets by type of asset are set out following:
Type of asset
Fixed income
Corporate bonds
Government bonds
Other investments
Variable income
Common and preferred shares
Other investments
Structured investments
Private equity funds
Venture capital funds
Real estate funds
Real estate properties
Loans to participants
Quoted prices
in active
markets
17,033
−
17,033
−
16,826
16,826
−
−
−
−
−
−
33,859
−
Unquoted
prices
4,250
620
−
3,630
658
−
658
3,819
3,490
37
292
4,203
12,930
2,074
Total fair
value
21,283
620
17,033
3,630
17,484
16,826
658
3,819
3,490
37
292
4,203
46,789
2,074
48,863
2015
%
43
36
8
9
96
4
100
Total fair
value
20,493
994
15,621
3,878
23,067
22,108
959
4,252
3,791
53
408
3,814
51,626
1,898
53,524
Consolidated
2014
%
38
43
8
7
96
4
100
As of December 31, 2015, the investment portfolio included Petrobras’ common and preferred shares in the amount
of R$ 256 and R$ 223, respectively, and real estate properties leased by the Company in the amount of R$ 525.
Loans to participants are measured at amortized cost, which is considered to be an appropriate estimate of fair value.
70
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
22.4. Medical Benefits: Health Care Plan - Assistência Multidisciplinar de Saúde (“AMS”)
Petrobras, Petrobras Distribuidora - BR, Petrobras Transporte S.A. – Transpetro, Petrobras Biocombustível,
Transportador Brasileira Gasoduto Brasil-Bolívia S.A. – TBG and Termobahia operate a medical benefit plan for their
employees in Brazil (active and retired) and their dependents: the AMS health care plan. The plan is managed by the
Company based on a self-supporting benefit assumption and includes health prevention and health care programs.
The plan is most significantly exposed to the risk of an increase in medical costs due to new technologies and new
types of coverage or to a higher level of usage of medical benefits. The Company continuously improves the quality of
its technical and administrative processes, as well as the health programs offered to beneficiaries in order to hedge
such risks.
The employees make fixed monthly contributions to cover high-risk procedures and variable contributions for a
portion of the cost of the other procedures, both based on the contribution tables of the plan, which are determined
based on certain parameters, such as salary and age levels. The plan also includes assistance towards the purchase of
certain medicines in registered drugstores throughout Brazil. There are no health care plan assets. Benefits are paid
and recognized by the Company based on the costs incurred by the participants
The duration of the actuarial liability related to this health care plan, as of December 31, 2015 is 21.54 years.
22.5. Net actuarial liabilities and expenses calculated by independent actuaries and fair value of plans
assets
Aggregate information is presented for other plans, whose total assets and liabilities are not material.
71
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
a) Movement in the actuarial liabilities, in the fair value of the assets and in the amounts recognized in the statement of financial position
Pension Plan
Petros
Petros 2
Medical Plan
Other
plans
Total
Petros
Petros 2
Medical Plan
Pension Plan
2015
Other
plans
2014
Total
Changes in the present value of obligations
Obligations at the beginning of the year
Interest expense:
· Term of financial commitment (TFC)
· Actuarial
Current service cost
Employee contributions
Benefits paid, net of assisted contributions
Remeasurement: Experience (gains) / losses
Remeasurement: (gains) / losses - demographic assumptions
Remeasurement: (gains) / losses - financial assumptions
Others
Obligations at the end of the year
Changes in the fair value of plan assets
Fair value of plan assets at the beginning of the year
Interest income
Contributions paid by the sponsor (Company)
Contributions paid by participants
Term of financial commitment (TFC) paid by the Company
Benefits paid, net of assisted contributions
Remeasurement: Return on plan assets lower than interest income
Others
Fair value of plan assets at the end of the year
Amounts recognized in the Statement of Financial Position
Present value of obligations
( -) Fair value of plan assets
Net actuarial liability as of December 31,
Changes in net actuarial liability
Balance as of January 1,
(+) Remeasurement effects recognized in other comprehensive income
(+) Costs incurred in the period
(-) Contributions paid
(-) Payments related to Term of financial commitment (TFC)
Others
Balance as of December 31,
73,601
1,441
23,957
−
3,065
148
−
(1,155)
(2,544)
10
2,888
−
26,369
−
−
1,155
−
−
(1,155)
−
−
−
26,369
−
26,369
23,957
354
3,213
(1,155)
−
−
26,369
1,428
7,926
254
341
(4,041)
(1,735)
(152)
(6,670)
−
70,952
52,685
6,729
644
341
550
(4,041)
(9,141)
−
47,767
70,952
(47,767)
23,185
20,916
584
2,879
(644)
(550)
−
23,185
−
188
107
−
(16)
13
(162)
(411)
−
1,160
679
88
−
−
−
(16)
132
−
883
1,160
(883)
277
762
(692)
207
−
−
−
277
72
65,134
830
16,397
354
82,715
443
−
60
38
1
(14)
(12)
(2)
(33)
75
556
160
9
18
1
−
(14)
(3)
42
213
99,442
−
1,428
11,239
547
342
(5,226)
(4,278)
(306)
(4,226)
75
99,037
53,524
6,826
1,817
342
550
(5,226)
(9,012)
42
48,863
1,041
7,427
137
386
(2,908)
2,621
(4,758)
4,522
(1)
73,601
52,619
6,724
579
386
478
(2,908)
(5,191)
(2)
52,685
−
106
79
−
(23)
373
(129)
206
(1)
1,441
546
69
−
−
−
(23)
87
−
679
556
(213)
343
99,037
(48,863)
50,174
73,601
(52,685)
20,916
1,441
(679)
762
283
(44)
89
(18)
−
33
343
45,918
202
6,388
(1,817)
(550)
33
50,174
12,515
7,576
1,881
(579)
(478)
1
20,916
284
363
116
−
−
(1)
762
−
2,292
422
−
(930)
(824)
(1,781)
8,382
(1)
23,957
−
−
930
−
−
(930)
−
−
−
23,957
−
23,957
16,397
5,777
2,714
(930)
−
(1)
23,957
−
45
25
1
(15)
16
(13)
14
16
443
97
8
12
1
−
(15)
9
48
160
1,041
9,870
663
387
(3,876)
2,186
(6,681)
13,124
13
99,442
53,262
6,801
1,521
387
478
(3,876)
(5,095)
46
53,524
443
(160)
283
99,442
(53,524)
45,918
257
8
62
(12)
−
(32)
283
29,453
13,724
4,773
(1,521)
(478)
(33)
45,918
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
b) Components of defined benefit cost
Current service cost
Interest cost over net liabilities / (assets)
Net costs for the year
Related to active employees:
Included in the cost of sales
Operating expenses in the statement of income
Related to the assisted
Net costs for the year
Current service cost
Interest cost over net liabilities / (assets)
Net costs for the year
Related to active employees:
Included in the cost of sales
Operating expenses in the statement of income
Related to the assisted
Net costs for the year
Pension Plan Medical Plan
Petros
Petros 2
AMS
Other
Plans
254
2,625
2,879
841
437
1,601
2,879
137
1,744
1,881
602
329
950
1,881
107
100
207
105
86
16
207
79
37
116
61
50
5
116
148
3,065
3,213
638
406
2,169
3,213
422
2,292
2,714
812
424
1,478
2,714
38
51
89
6
79
4
89
25
37
62
−
57
5
62
Consolidated
Total
2015
547
5,841
6,388
1,590
1,008
3,790
6,388
2014
663
4,110
4,773
1,475
860
2,438
4,773
c) Sensitivity analysis of the defined benefit plans
The effect of a 100 basis points (bps) change in the assumed discount rate and medical cost trend rate is as set out
below:
Pension Benefits
Discount rate
Medical Benefits
Consolidated
Rate of changes of medical
and hospital changes
Medical Benefits
+ 100 bps
- 100 bps
+ 100 bps
- 100 bps
+ 100 bps
- 100 bps
Pension Obligation
Current Service cost and interest cost
(5,830)
(305)
6,940
369
(2,818)
(238)
3,426
282
3,519
618
(2,947)
(512)
73
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
d) Significant actuarial assumptions
Assumptions
Discount rate - (real rate )
Expected Inflation (Brazilian price
index - IPCA)
Nominal discount rate (real rate +
inflation)
Expected salary growth - real rate
Expected salary growth - nominal
(real rate + Inflation)
Medical plan turnover
Pension plan turnover
Expected changes in medical and
hospital costs
Mortality table
Disability table
Mortality table for disabled
participants
Age of retirement
2015
7.33% (1) / 7.28% (2) / 7.32% (3)
2014
6.14% (1) / 6.20% (2) / 6.15% (3)
6.87% (1) (2) (3) (4)
6.50% (1) (2) (3) (4)
14.70% (1) / 14.65% (2) / 14.69% (3)
1.48% (1) / 2.79% (2)
13.04% (1) / 13.10% (2) / 13.05% (3)
1.761% (1) / 3.77% (2)
8.45% (1) / 9.85% (2)
0.753% p.a (5)
Null
8.37% (1) / 10.52% (2)
0.642% p.a (5)
Null
14.92% to 3.70%p.a (6)
EX-PETROS 2013 (both genders) (1) (3)
AT-2000 female, smoothed in a 10% coefficient (2)
TASA 1927 (1) (3) / Álvaro Vindas (2)
AT 49 male increased in 10% (1) (3)
IAPB 1957 low (2)
Male, 57 years / Female, 56 years (7)
14.47% to 3.00% p.a (6)
EX-PETROS 2013 (both genders) (1) (3)
AT-2000 female, smoothed in a 10% coefficient (2)
TASA 1927 (1) (3) / Álvaro Vindas (2)
AT 49 male increased in 10% (1) (3)
IAPB 1957 low (2)
Male, 57 years / Female, 56 years (7)
(1) Petros Plan for Petrobras Group.
(2) Petros 2 Plan.
(3) AMS Plan.
(4) Inflation effects market at 6.87% for 2016, reaching 3.70% in 2030.
(6) Decreasing rate, converging in 30 years to the long-term expected inflation. Refers only to Petrobras (sponsor) rate.
(7) Except for Petros 2 Plan, for which it was used the eligibility as the rules of Regime Geral de Previdência Social(RGPS), and rules of the plan.
e) Expected maturity analysis of pension and medical benefits
Up to 1 year
1 to 2 years
2 to 3 years
3 to 4 years
Over 4 years
Total
Pension plan Medical plan
Petros
5,005
4,832
4,666
4,491
51,958
70,952
Petros 2
58
59
60
59
924
1,160
AMS
1,116
1,148
1,189
1,221
21,695
26,369
Consolidated
2015
Total
6,188
6,047
5,921
5,777
75,104
99,037
Other
plans
9
8
6
6
527
556
22.6. Other defined contribution plans
Petrobras, through its subsidiaries in Brazil and abroad, also sponsors other defined contribution pension plans for
employees. Contributions paid in 2015, in the amount of R$ 25 were recognized in the statement of income.
74
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
22.7. Profit sharing
Profit sharing benefits comply with Brazilian legal requirements and those of the Brazilian Department of
Coordination and Governance of State‐Owned Enterprises (DEST), of the Ministry of Planning, Budget and
Management, and of the Ministry of Mines and Energy, and are computed based on the consolidated net income
attributable to the shareholders of Petrobras.
In March, 2014, the Company and the labor unions reached an agreement regarding a new profit sharing regulation,
following negotiations started in the context of the 2013/2015 Collective Bargaining Agreement.
Pursuant to the amended rules, profit sharing benefits will be computed based on the results of six corporate
indicators, for which annual goals are defined by management.
The results of the six individual goals are factored into a consolidated result that will determine the percentage of the
profit to be distributed as a profit sharing benefit to employees.
Pursuant to the rules, in the event the Company records a net loss for the period, profit sharing benefit will be one
half of the benefit paid in the prior year in addition to half a month’s salary for each employee.
2014 profit sharing benefit
For the year ended December 31, 2014, the goals set by management were achieved and, despite the absence of
income for the year and based on the methodology negotiated in the Collective Bargaining Agreement, the Company
accrued R$ 1,045 as profit sharing.
2015 profit sharing benefits
In 2015, the Company recorded a loss for the year and the annual goals were not achieved, mainly lifting cost
excluding production taxes and feedstock processed. Therefore, no provision for profit sharing benefits has been
recognized in 2015.
22.8. Voluntary Separation Incentive Plan
In January 2014, the Company launched a Voluntary Separation Incentive Plan (PIDV), which was developed within the
context of its Productivity Optimization Plan (POP) to contribute to the achievement of the goals set out in the
Business and Management Plan.
On March 31, 2014 the Company recognized in other expenses in the statement of income a provision for the
estimated charges. The amounts are subject to changes resulting from employees who cancel their requests for
voluntary separation, impacts of Collective Bargaining Agreements, which might increase salaries before separation,
inflation-indexation of the floor and the cap based on the Brazilian Consumer Price Index (IPCA), as well as variable
additional incentives earned by employees.
In the period from November 30, 2015 to December 18, 2015, the Company re-opened the plan for dropouts or
excluded employees of the PIDV 2014, on a voluntary basis, achieving 374 revalidations of enrolment.
On October 13, 2015, the Petrobras Distribuidora S.A., launched a Voluntary Separation Incentive Plan (PIDV), aligning
the expectations of the employees. The enrollment period ended on December 30, 2015 at which time 345 employees
had enrolled. On December 31,2015, the Petrobras Distribuidora S.A. recognized the estimated disbursement of
financial incentives of R$ 92.
75
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
As of December 31, 2015, 6,554 separations and 249 cancellations of requests were made for voluntary separation of
employees who enrolled in the PIDV 2014. Changes in the provision are set out as follows:
Opening balance at December 31, 2014
Revision of provision (*)
Use for separations
New enrolments PIDV BR 2015
Closing balance at December 31, 2015
Current
Non-current
Consolidated
1,035
326
(676)
92
777
606
171
(*) Includes enrollment revalidation of the PIDV 2014, cancellation of requests for voluntary separation, compensation increases and inflation indexation charges of the floor and cap
amounts.
23. Shareholders’ equity
23.1. Share capital
At December 31, 2015, subscribed and fully paid share capital was R$ 205,432, represented by 7,442,454,142
outstanding common shares and 5,602,042,788 outstanding preferred shares, all of which are registered, book-entry
shares with no par value.
Preferred shares have priority on returns of capital, do not grant any voting rights and are non-convertible into
common shares.
23.2. Capital transactions
a)
Incremental costs directly attributable to the issue of new shares
Include any transaction costs directly attributable to the issue of new shares, net of taxes.
b) Change in interest in subsidiaries
Include any excess of amounts paid/received over the carrying value of the interest acquired/disposed. Changes in
ownership interest in subsidiaries that do not result in loss of control of the subsidiary are equity transactions. The
main changes in interest in subsidiaries are set out in note 11.
23.3. Profit reserves
a) Legal reserve
The legal reserve represents 5% of the net income for the year, calculated pursuant to article 193 of the Brazilian
Corporation Law.
b) Statutory reserve
The statutory reserve is appropriated by applying a minimum of 0.5% of the year-end share capital and is retained to
fund technology research and development programs. The balance of this reserve may not exceed 5% of the share
capital, pursuant to article 55 of the Company’s bylaws.
76
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
c) Tax incentives reserve
Government grants are recognized in the statement of income and are appropriated from retained earnings to the tax
incentive reserve in the shareholders’ equity pursuant to article 195-A of Brazilian Corporation Law. This reserve may
only be used to offset losses or increase share capital.
In the years 2014 and 2015, subsidy of investments within the Superintendências de Desenvolvimento do Nordeste
(SUDENE) and Amazônia (SUDAM) was not destined to reserve for tax incentives due to the absence of profit.
However, the establishment of incentive reserve with this portion will occur in subsequent periods, pursuant to Law
12,973 / 14, Chapter I.
The accumulated amount of tax incentives in the statement of income of 2014 and 2015 that can be used to be
allocated to the tax incentives reserve is R$ 50, with R$ 25 for each year.
d) Profit retention reserve
Profit retention reserve appropriates funds intended for capital expenditures, primarily in oil and gas exploration and
development activities, included in the capital budget of the Company, pursuant to article 196 of the Brazilian
Corporation Law.
On December 31, 2015, the balance of accumulated losses of R$ 34,826 will be necessarily absorbed by the profit
retention reserve.
23.4. Accumulated other comprehensive income
In 2015 the Company recognized the following charges as other comprehensive income:
- cumulative translation adjustment of R$ 24,545, resulting from the translation of financial statements of
subsidiaries with functional currencies other than the Brazilian Real;
-
foreign exchange variation losses of R$ 58,291 (R$ 40,690 after taxes) recognized in the Company's
shareholders' equity in 2015 as a result of its cash flow hedge accounting policy, as set out in note 33.
- Share of other comprehensive income (losses) in equity-accounted investments in the amount of R$ 2,864.
23.5. Dividends
Shareholders are entitled to receive minimum mandatory dividends (and/or interest on capital) of 25% of the adjusted
net income for the year proportional to the number of common and preferred shares, pursuant to Brazilian
Corporation Law. To the extent the Company proposes dividend distributions, preferred shares have priority in
dividend distribution, which is based on the highest of 3% of the preferred shares’ net book value, or 5% of the
preferred share capital. Preferred shares participate under the same terms as common shares in capital increases
resulting from the capitalization of profit reserves or retained earnings.
The Board of Directors did not propose a dividend distribution in 2015 and in 2014 considering the net losses reported
for these years.
77
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
23.6. Earnings per share
Noss attributable to Shareholders of Petrobras
Weighted average number of common and preferred shares outstanding
Basic and diluted earnings per common and preferred share (R$ per share)
24. Sales revenues
Gross sales
Sales taxes
Sales revenues (*)
Diesel
Automotive gasoline
Jet fuel
Liquefied petroleum gas
Naphtha
Fuel oil (including bunker fuel)
Other oil products
Subtotal oil products
Natural gas
Ethanol, nitrogen products and renewables
Electricity, services and others
Domestic market
Exports
Sales abroad (**)
Foreign market
Sales revenues (*)
(*) Analysis of sales revenues by business segment is set out in note 29.
(**) Sales revenues from operations outside of Brazil, other than exports.
25. Other expenses, net
(Losses) / Gains related to legal, administrative and arbitration proceedings
Unscheduled stoppages and pre-operating expenses
Pension and medical benefits (retirees)
Gains / (Losses) on disposal / write-offs of assets
Institutional relations and cultural projects
Losses on fines (*)
E&P areas returned and cancelled projects
Results of decommissioning areas
Voluntary Separation Incentive Plan - PIDV
Health, safety and environment
Expenditure on the provision of evictions
Collective bargaining agreement
Government grants
Amounts recovered – “overpayments incorrectly capitalized”
Losses / Reimbursements from E&P partnership operations
Others
(*) Amounts disclosed in "Others" in 2014.
78
Consolidated
Parent Company
2015
(34,836)
2014
(21,692)
13,044,496,930 13,044,496,930 13,044,496,930 13,044,496,930
(1.66)
2015
(34,836)
2014
(21,587)
(2.67)
(1.65)
(2.67)
2015
401,320
(79,682)
321,638
100,804
53,903
11,003
9,585
8,487
7,414
11,409
202,605
19,405
12,872
15,916
250,798
32,179
38,661
70,840
321,638
2015
(5,583)
(4,156)
(3,790)
(1,860)
(1,401)
(1,206)
(1,033)
(550)
(417)
(314)
(148)
−
62
230
1,863
(335)
(18,638)
Consolidated
Parent company
2014
408,631
(71,371)
337,260
100,023
55,706
13,059
8,750
13,188
10,237
13,543
214,506
18,878
9,111
19,683
262,178
32,633
42,449
75,082
337,260
2015
328,747
(77,724)
251,023
87,559
42,344
11,718
8,042
8,487
5,951
10,332
174,433
18,815
9,681
19,249
222,178
28,845
−
28,845
251,023
2014
336,103
(66,535)
269,568
90,493
45,931
14,265
7,404
13,188
9,136
12,131
192,548
18,312
7,706
18,745
237,311
32,257
−
32,257
269,568
Consolidated
Parent Company
2014
(480)
(2,565)
(2,438)
(133)
(1,742)
(447)
(610)
(1,128)
(2,443)
(336)
−
(1,002)
139
−
855
123
(12,207)
2015
(4,708)
(4,113)
(3,619)
(2,042)
(1,165)
(1,175)
(1,033)
(550)
(326)
(306)
(148)
−
50
230
1,863
(505)
(17,547)
2014
(817)
(2,363)
(2,316)
(3,673)
(1,504)
(427)
(610)
(1,128)
(2,285)
(323)
−
(883)
54
−
855
(16)
(15,436)
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
26. Costs and Expenses by nature
Raw material and products for resale
Materials, third-party services, freight, rent and other related costs
Impairment (losses) / reversals
Depreciation, depletion and amortization
Employee compensation
Production taxes
Other taxes
(Losses) / Gains on legal, administrative and arbitration proceedings
Exploration expenditures written-off (includes dry wells and signature bonuses)
Unscheduled stoppages and pre-operating expenses
Allowance for impairment of trade receivables
Gains / (Losses) on disposal / write-offs of assets
Changes in inventories
Institutional relations and cultural projects
E&P areas returned and cancelled projects
Gains / (losses) on decommissioning of returned/abandoned areas
Health, safety and environment
Write-off - overpayments incorrectly capitalized
Amounts recovered – “overpayments incorrectly capitalized”
Statement of Income
Cost of sales
Selling expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment (losses) / reversals
Write-off - overpayments incorrectly capitalized
Other expenses, net
Profit sharing
27. Net finance income (expense), net
Debt interest and charges
Foreign exchange gains/ (losses) and inflation indexation charges on net debt (*)
Income from investments and marketable securities
Financial result on net debt
Capitalized borrowing costs
Gains (losses) on derivatives
Interest income from marketable securities
Other foreign exchange gains/ (losses) and indexation charges, net
Other finance expenses and income, net (**)
Finance income (expenses), net
Income
Expenses
Foreign exchange gains/ (losses) and inflation indexation charges, net
2015
(94,453)
(69,855)
(47,676)
(38,574)
(29,732)
(19,812)
(9,238)
(5,583)
(4,921)
(4,156)
(3,641)
(1,860)
(1,460)
(1,401)
(1,033)
(550)
(314)
−
230
(334,029)
(223,062)
(15,893)
(11,031)
(6,467)
(2,024)
(9,238)
(47,676)
−
(18,638)
−
(334,029)
Consolidated
Parent Company
2014
(136,809)
(56,427)
(44,636)
(30,677)
(31,029)
(31,589)
(1,801)
(480)
(5,048)
(2,565)
(5,555)
(133)
(2,868)
(1,742)
(610)
(1,128)
(336)
(6,194)
−
(359,627)
(256,823)
(15,974)
(11,223)
(7,135)
(2,589)
(1,801)
(44,636)
(6,194)
(12,207)
(1,045)
(359,627)
2015
(67,401)
(65,788)
(33,468)
(28,039)
(23,618)
(18,734)
(7,730)
(4,708)
(3,784)
(4,113)
(669)
(2,042)
(507)
(1,165)
(1,033)
(550)
(306)
−
230
(263,425)
(174,717)
(15,130)
(7,561)
(5,261)
(2,011)
(7,730)
(33,468)
−
(17,547)
−
(263,425)
2014
(108,578)
(49,520)
(34,814)
(22,518)
(25,422)
(30,441)
(1,045)
(817)
(4,828)
(2,363)
(4,401)
(3,673)
(3,035)
(1,504)
(610)
(1,128)
(323)
(4,788)
−
(299,808)
(208,174)
(17,430)
(7,983)
(6,720)
(2,562)
(1,045)
(34,814)
(4,788)
(15,436)
(856)
(299,808)
2015
(22,935)
(12,775)
2,315
(33,395)
5,860
986
77
1,341
(2,910)
(28,041)
4,867
(21,545)
(11,363)
(28,041)
Consolidated
Parent Company
2014
(15,817)
(1,420)
2,364
(14,873)
8,450
837
(94)
2,174
(394)
(3,900)
4,634
(9,255)
721
(3,900)
2015
(19,903)
(11,268)
1,207
(29,964)
4,785
(74)
906
652
(2,492)
(26,187)
3,303
(18,951)
(10,539)
(26,187)
2014
(12,689)
(2,638)
1,798
(13,529)
7,812
(291)
845
1,428
(2)
(3,737)
3,312
(5,804)
(1,245)
(3,737)
(*) Includes debt raised in Brazil (in Brazilian reais) indexed to the U.S. dollar.
(**) Includes, in 2015, R$ 2,749 (R$ 2,694 in the parent company) of finance expense related to the REFIS and tax amnesty programs - State Tax, and PRORELIT, as set out in note 21.
79
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
28. Supplemental information on statement of cash flows
Amounts paid / received during the period
Income tax and social contribution
Withholding income tax paid on behalf of third-parties
Capital expenditures and financing activities not involving cash
Purchase of property, plant and equipment on credit
Contract with transfer of benefits, risks and control of assets
Recognition (reversal) of provision for decommissioning costs
Use of deferred taxes and judicial deposits for the payment of contingency
Consolidated
Parent Company
2015
2014
2015
2014
1,794
3,355
591
−
15,932
3,634
1,987
4,323
312
−
5,096
375
4
2,696
−
374
16,511
3,583
5
3,770
−
−
5,316
359
80
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
29. Segment information
Due to international department extinction, the international businesses of exploration and production, RTM (Refining, Transportation and Marketing), gas & power and
distribution were transferred to the correlated business area in Brazil, preserving the specificity of each business which the Company operates.
The amounts presented in consolidated assets as of December 31, 2014 and consolidated statement of income for the year 2014 were reclassified in order to reflect the
Company’s current business model.
Consolidated assets by Business Area - 12.31.2015
Current assets
Non-current assets
Long-term receivables
Investments
Property, plant and equipment
Operating assets
Under construction
Intangible assets
Total Assets
Consolidated assets by Business Area - 12.31.2014
Current assets
Non-current assets
Long-term receivables
Investments
Property, plant and equipment
Operating assets
Under construction
Intangible assets
Total Assets
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power
Biofuels Distribution
Corporate Eliminations
Total
14,215
469,181
25,250
7,054
428,447
310,761
117,686
8,430
35,247
142,384
9,309
3,431
128,982
112,470
16,512
662
10,398
65,625
5,303
1,781
57,300
47,611
9,689
1,241
176
1,709
12
1,339
358
317
41
−
8,979
11,609
3,355
134
7,296
6,175
1,121
824
112,715
41,350
32,792
33
7,610
5,798
1,812
915
(12,149)
(1,304)
(1,142)
−
(162)
(162)
−
−
169,581
730,554
74,879
13,772
629,831
482,970
146,861
12,072
483,396
177,631
76,023
1,885
20,588
154,065
(13,453)
900,135
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power
Biofuels Distribution
Corporate Eliminations
Total
17,864
410,146
22,112
6,030
373,412
271,293
102,119
8,591
41,147
148,707
9,607
4,876
133,533
109,910
23,623
690
11,114
65,491
3,780
1,658
59,068
47,741
11,327
986
173
2,774
8
2,221
545
502
43
−
10,323
11,354
3,349
111
7,134
5,462
1,672
760
64,293
24,985
16,185
386
7,465
5,622
1,843
949
(9,892)
(5,105)
(4,938)
−
(167)
(167)
−
−
135,023
658,352
50,104
15,282
580,990
440,363
140,627
11,976
428,010
189,854
76,606
2,947
21,677
89,278
(14,997)
793,375
81
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated Statement of Income per Business Area – 12.31.2015 (*)
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit
Expenses
Selling, general and administrative
Exploration costs
Research and development
Other taxes
Impairment of property, plant and equipment, intangible and other assets
Other operating expenses, net
Net income (loss) before financial results, profit sharing and income taxes
Financial income (expenses), net
Share of profit of equity-accounted investments
Net Income (loss) before income taxes
Income tax and social contribution
Net income (loss)
Net income (loss) attributable to:
Shareholders of Petrobras
Non-controlling interests
(*) A list of the Company's investees by business segment is set out in note 11.1.
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power
Biofuels Distribution
Corporate Eliminations
Total
12.31.2015
117,098
112,071
5,027
(82,908)
34,190
(52,128)
(2,128)
(6,467)
(499)
(552)
(38,292)
(4,190)
(17,938)
−
(1,145)
(19,083)
6,099
(12,984)
(12,963)
(21)
(12,984)
245,613
73,635
171,978
(199,596)
43,185
6,827
36,358
(34,490)
46,017
(20,579)
(8,112)
−
(386)
(2,488)
(6,399)
(3,194)
25,438
−
1,192
26,630
(8,649)
17,981
18,034
(53)
17,981
8,695
(7,878)
(2,752)
−
(169)
(1,295)
(2,507)
(1,155)
817
−
403
1,220
(277)
943
423
520
943
769
716
53
(846)
(77)
(346)
(102)
−
(30)
(6)
(181)
(27)
(423)
−
(687)
(1,110)
144
(966)
(966)
−
(966)
110,030
1,808
108,222
(101,623)
8,407
(9,656)
(8,204)
−
(4)
(244)
(297)
(907)
(1,249)
−
31
(1,218)
425
(793)
(798)
5
(793)
−
−
−
−
(195,057)
(195,057)
−
196,401
−
(21,076)
(6,330)
−
(936)
(4,653)
−
(9,157)
(21,076)
(28,041)
(591)
(49,708)
9,010
(40,698)
(39,912)
(786)
(40,698)
1,344
696
704
−
−
−
−
(8)
2,040
−
−
2,040
(694)
1,346
1,346
−
1,346
321,638
−
321,638
(223,062)
98,576
(110,967)
(26,924)
(6,467)
(2,024)
(9,238)
(47,676)
(18,638)
(12,391)
(28,041)
(797)
(41,229)
6,058
(35,171)
(34,836)
(335)
(35,171)
82
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated Statement of Income per Business Area – 12.31.2014
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit
Expenses
Selling, general and administrative
Exploration costs
Research and development
Other taxes
Impairment of property, plant and equipment, intangible and other assets
Write-off - overpayments incorrectly capitalized
Other operating expenses, net
Net income (loss) before financial results, profit sharing and income taxes
Financial income (expenses), net
Share of profit of equity-accounted investments
Profit sharing
Net Income (loss) before income taxes
Income tax and social contribution
Net income (loss)
Net income (loss) attributable to:
Shareholders of Petrobras
Non-controlling interests
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power
Biofuels Distribution
Corporate Eliminations
Total
12.31.2014
160,706
155,380
5,326
(87,475)
73,231
(22,903)
(1,479)
(7,135)
(1,290)
(176)
(10,094)
(1,975)
(754)
50,328
−
(233)
(366)
49,729
(17,659)
32,070
32,008
62
32,070
268,539
83,319
185,220
(277,281)
43,213
4,088
39,125
(36,853)
(8,742)
(50,034)
(6,686)
−
(452)
(276)
(34,297)
(3,438)
(4,885)
(58,776)
−
301
(298)
(58,773)
18,917
(39,856)
(39,836)
(20)
(39,856)
6,360
(7,839)
(6,041)
−
(199)
(322)
(245)
(654)
(378)
(1,479)
−
492
(48)
(1,035)
297
(738)
(785)
47
(738)
624
560
64
(728)
(104)
(158)
(118)
−
(32)
(2)
−
−
(6)
(262)
−
(124)
(2)
(388)
90
(298)
(298)
−
(298)
110,178
2,653
107,525
(101,680)
−
−
−
−
(246,000)
(246,000)
−
247,194
8,498
(6,411)
(5,944)
−
(4)
(79)
−
(26)
(358)
2,087
−
11
(60)
2,038
(698)
1,340
1,339
1
1,340
−
(14,943)
(7,467)
−
(612)
(946)
−
(101)
(5,817)
(14,943)
(3,900)
4
(271)
(19,110)
3,531
(15,579)
(15,152)
(427)
(15,579)
1,194
529
538
−
−
−
−
−
(9)
1,723
−
−
−
1,723
(586)
1,137
1,137
−
1,137
337,260
−
337,260
(256,823)
80,437
(101,759)
(27,197)
(7,135)
(2,589)
(1,801)
(44,636)
(6,194)
(12,207)
(21,322)
(3,900)
451
(1,045)
(25,816)
3,892
(21,924)
(21,587)
(337)
(21,924)
83
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated Statement of the activities abroad
Information on activities Abroad - 2015
Assets
31,683
5,459
1,577
3,057
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power Distribution
Income statement
Sales revenues
Intersegments
Third parties
Gross profit
Net income (loss) before financial results, profit sharing and income taxes
Net income (loss) attributable to shareholders of Petrobras
Information on activities Abroad - 2014
6,175
3,224
2,951
1,866
(2,680)
(3,562)
15,340
6,890
8,450
607
(287)
(246)
1,849
109
1,740
333
247
354
13,714
5
13,709
1,207
254
220
Exploration
and
Production
Refining,
Transportatio
n & Marketing Gas & Power Distribution
Assets
25,557
4,944
1,255
2,497
Income statement
Sales revenues
Intersegments
Third parties
Gross profit
Net income (loss) before financial results, profit sharing and income taxes
Net income (loss) attributable to shareholders of Petrobras
7,022
2,903
4,119
1,969
147
(1,395)
17,313
3,584
13,729
(668)
(1,403)
(1,210)
1,151
79
1,072
219
167
213
12,168
5
12,163
934
222
182
84
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
30. Provisions for legal proceedings
30.1. Provisions for legal proceedings, contingent liabilities and not provisions for legal proceedings
The Company recognizes provisions for the best estimate of the costs of proceedings for which it is probable that an
outflow of resources embodying economic benefits will be required and that can be reliably estimated. These
proceedings are mainly comprised of:
- Labor claims, in particular a review of the methodology by which the minimum compensation based on an
employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated and
lawsuits concerning remunerated weekly rest;0
- Tax claims, including claims related to Brazilian federal tax credits applied that were disallowed and related to
the payment of VAT (ICMS) tax on jet fuel sales;
- Civil claims related to losses and damages proceedings resulting from the cancellation of an assignment of
excise tax (IPI) credits to a third party and failure to pay royalties on oil shale extraction; and
- Environmental claims related to fishermen seeking indemnification from the Company for a January 2000 oil
spill in the State of Rio de Janeiro.
Provisions for legal proceedings are set out as follows:
Non-current liabilities
Labor claims
Tax claims
Civil claims
Environmental claims
Other claims
Opening Balance
Additions
Use of provision
Accruals and charges
Others
Closing Balance
30.2. Judicial deposits
Consolidated
Parent Company
12.31.2015
3,323
3,087
2,069
282
15
8,776
12.31.2014
1,904
276
1,770
105
36
4,091
12.31.2015
2,998
2,323
1,768
193
−
7,282
4,091
5,294
(989)
346
34
8,776
2,918
1,775
(740)
155
(17)
4,091
3,338
4,368
(764)
340
−
7,282
12.31.2014
1,668
121
1,490
59
3,338
2,280
1,494
(581)
145
−
3,338
Judicial deposits made in connection with legal proceedings are set out in the table below according to the nature of
the corresponding lawsuits:
85
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Non-current assets
Tax
Civil
Labor
Environmental
Others
30.3. Contingent liabilities
Consolidated
Parent Company
12.31.2015
4,076
2,693
2,670
305
14
9,758
12.31.2014
2,671
1,760
2,464
213
16
7,124
12.31.2015
3,352
2,540
2,417
281
−
8,590
12.31.2014
1,872
1,618
2,232
205
−
5,927
Contingent liabilities for which either the Company is unable to make a reliable estimate of the expected financial
effect that might result from resolution of the proceeding, or when a cash outflow is not probable, are not recognized
as liabilities in the financial statements but are disclosed in notes, unless the likelihood of any outflow is considered
remote.
The estimated contingent liabilities for legal proceedings at December 31, 2015 for which the likelihood of loss is
considered to be possible are set out in the table below:
Nature
Tax
Labor
Civil - General
Civil - Environmental
Others
Consolidated
114,318
22,071
19,952
5,748
7
162,096
A brief description of the nature of the main contingent liabilities (tax, civil, environmental and labor) for which the
likelihood of loss is considered to be possible is set out in the table below.
Description of tax matters
Plaintiff: Secretariat of the Federal Revenue of Brazil
1) IWithholding income tax (IRRF) and Contribution of Intervention in the Economic Domain (CIDE) on remittances for payments of vessel
charters.
Current status: This claim involves lawsuits in different administrative and judicial stages.
2) Immediate deduction from taxable income (income tax - IRPJ and social contribution - CSLL) of crude oil production development costs in
2008 and 2009.
Current status: Awaiting the hearing of an appeal at the administrative level.
3) Requests to compensate federal taxes disallowed by the Brazilian Federal Tax Authority.
Current status: Awaiting the hearing of an appeal at the administrative level.
4) Deduction from taxable income (income tax - IRPJ and social contribution - CSLL) of amounts payed to Petros Plan, as well as several
expenses occurred in 2007 and 2008, related to employee benefits and PETROS.
Current status: Awaiting the hearing of an appeal at the administrative level.
5) Income from subsidiaries and associates located outside Brazil, from 2005 to 2010, not included in the basis of calculation of income tax
(IRPJ and CSLL).
Current status: Awaiting the hearing of an appeal at the administrative level.
6) Incidence of social security contributions over contingent bonuses paid to employees.
Current status: Awaiting the hearing of an appeal at the administrative level.
7) Collection of CIDE (Contribution of Intervention in the Economic Domain) from March 2002 to October 2003 on transactions with fuel
retailers and service stations protected by judicial injunctions determining that fuel sales were made without gross-up of such tax.
Current status: This claim involves lawsuits in judicial stages.
Plaintiff: State of São Paulo Finance Department
8) Penalty for the absence of a tax document while relocating a rig to an exploratory block, and on the return of this vessel, as well as
collection of the related VAT (ICMS), as a result of the temporary admission being unauthorized, because the customs clearence has been
done on the city of Niteroi (on the state of Rio de Janeiro) and not on the state of São Paulo.
Current status: This claim involves lawsuits in judicial stages.
9) Deferral of payment of VAT (ICMS) taxes on B100 Biodiesel sales and the charge of a 7% VAT rate on B100 on Biodiesel inter-state sales,
including states in the Midwest, North and, Northeast regions of Brazil and the State of Espírito Santo.
Current status: This claim involves lawsuits at administrative level.
Plaintiff: States of PR, AM, BA, ES, PA, PE and PB Finance Departments
10) Incidence of VAT (ICMS) over alleged differences on initial and closing inventory, on crude oil and gas sales.
Current status: This claim involves lawsuits in different administrative and judicial levels.
Plaintiff: States of RJ, MG and BA Finance Departments
Estimate
32,238
11,800
9,817
7,481
6,579
2,376
2,017
5,161
2,416
1,108
86
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
11) VAT (ICMS) on dispatch of liquid natural gas (LNG) and C5 (tax document not accepted by the tax authority), as well as challenges on the
rights to this credit.
Current status: Awaiting the hearing of an appeal at the administrative level.
12) Additional VAT (ICMS) rate on jet fuel sales to airlines in the domestic market.
Current status: Awaiting the hearing of an appeal at the administrative level.
13) Alleged failure to write-down VAT (ICMS) credits related to zero tax rated or non-taxable sales made by the Company's customers.
Current status: Two Tax Deficiency Notices have been issued and are being disputed at the administrative level, but have not yet been
judged.
Plaintiff: States of RJ, SP, ES and BA Finance Departments
14) Misappropriation of VAT tax credit (ICMS) that, per the tax authorities, are not related to property, plant and equipment
Current status: This claim involves several tax notices from the states in different administrative and judicial stages.
Plaintiff:Municipal governments of the cities of Anchieta, Aracruz, Guarapari, Itapemirim, Marataízes, Linhares, Vila Velha and Vitória
15) Alleged failure to withhold and pay tax on services provided offshore (ISSQN) in favor of some municipalities in the State of Espírito
Santo, under the allegation that the service was performed in their coastal waters.
Current status: TThis claim involves lawsuits in administrative and judicial stages.
Plaintiff: States of SP, RS and SC Finance Departments
16) Collection of VAT (ICMS) related to natural gas imports from Bolivia to the State of Mato Grosso do Sul (MS), alleging that these states
were the final destination (consumers) of the imported gas.
Current status: This claim involves lawsuits in different administrative and judicial stages, as well as three civil lawsuits in the Supreme
Court.
Plaintiff:States of RJ, SP, SE and BA Finance Departments
17) Alleged failure to withhold VAT (ICMS) credits on the purchase of drilling rig bits and chemical products used in formulating drilling fluid.
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: States of SP, CE, PB, RJ, BA and PA Finance Departments
18) VAT (ICMS) and VAT credits on internal consumption of bunker fuel and marine diesel, destined to chartered vessels.
Current status: TThis claim involves tax notices in different administrative and judicial stages.
Plaintiff: State of Pernambuco Finance Department
19) VAT (ICMS) on interstate sales of natural gas destined to the distributors. The tax authority understand that the operations are in fact
transfs, due to the trading/industrialization activities at the city-gate, that would define it as an establishment, and consequently charging
the difference between the sale and the transfers.
Current status: This claim involves several tax notices in different administrative and judicial stages.
20) Other tax matters
Total tax matters
Description of civil matters
Plaintiff: Agência Nacional de Petróleo, Gás Natural e Biocombustíveis - ANP
1) Proceedings challenging an ANP order requiring Petrobras to pay special participation fees (government take) with respect to several
fields and alleged failure to comply with the minimum exploration activities program, as well as alleged irregularities in platform
measurement systems.
Current status: This claim involves lawsuits in administrative and judicial stages.
2) Proceeding challenging an ANP order requiring Petrobras to unite Lula and Cernambi fields on the BM-S-11 joint venture; to unite Baúna
and Piracicaba fields; and to unite Baleia Anã, Baleia Azul, Baleia Franca, Cachalote, Caxaréu, Jubarte and Pirambu, in the Parque das Baleias
complex, which would cause changes to the payment of special participation charges.
Current status: The claim is being disputed in court and in an arbitration proceedings. As a result of a judicial decision the arbitrations have
been suspended. On the Lula and Cernanbi proceeding, for the alleged differences on the special participation, the Company made judicial
deposits. However, with the cancellation of the favorable injunction, currently the payment of these alleged differences have been made
directly to ANP, until a final judicial decision is handed down. On the Baúna and Piracicaba proceeding, Petrobras made court-ordered judicial
deposits. On the Parque das Baleias proceeding, as a result of a judicial decision and of a Chamber of Arbitration ruling, the collection of the
alleged differences has been suspended.
Plaintiff: Refinaria de Petróleo de Manguinhos S.A.
3) Lawsuit seeking to recover damages for alleged anti-competitive practices with respect to gasoline and other oil products (Diesel and
LPG) sales in the domestic market.
Current status: This claim is in the judicial stage and was ruled in favor of the plaintiff in the first stage. The Company is taking legal actions
to ensure its rights. The Brazilian Antitrust regulator (CADE) has analyzed this claim and did not consider the Company's practices to be anti-
competitive.
Plaintiff: Vantage Deepwater Company e Vantage Deepwater Drilling Inc
4) Arbitration in the United States about terminating uniliteral service contract of perforation tied to ship-probe Titanium Explorer.
Current status: the process is in phase of knowledge, where the Company seeks their rights presenting documents to prove that the author
delinquent contractual obligations.
5) Other civil matters
Total for civil matters
3,794
3,709
2,042
1,272
2,725
2,551
1,271
1,206
1,406
13,349
114,318
Estimate
4,866
4,764
1,605
1,562
7,155
19,952
87
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Description of labor matters
Plaintiff : Sindipetro of ES, RJ, BA, MG, SP, PE, RN, PR, SC and RS (*).
1) Class actions requiring a review of the methodology by which the minimum compensation based on an employee's position and work
schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated.
Current status: The Company filed its collective bargaining agreement with the Superior Labor Court, and on October 19, 2015, the Court
ruled in favor of the Company and notified the Regional Labor Courts of its understanding of the matter.
Plaintiff : Sindipetro of Norte Fluminense and Sindipetro of the State of Bahia
2) Class Actions regarding wage underpayments to certain employees due to alleged changes in the methodology used to factor overtime
into the calculation of paid weekly rest, allegedly computed based on ratios that are higher than those established by Law No. 605/49.
Current status: The Company has appealed a decision with respect to the claim filed by Sindipetro/BA and awaits judgment by the Superior
Labor Court. The Company has filed an appeal in the Superior Labor Court to overturn a decision with respect to the claim filed by Sindipetro
Norte Fluminense (NF) and awaits judgment.
Plaintiff : Sindipetro of Norte Fluminense – SINDIPETRO/NF
3) The plaintiff claims Petrobras failed to pay overtime for standby work exceeding 12-hours per day. It also demands that Petrobras
respects a 12-hour limit per workday, subject to a daily fine.
Current status: Awaiting the Superior Labor Court to judge appeals filed by both parties.
4) Other labor matters
Total for labor matters
Description of environmental matters
Plaintiff: Ministério Público Federal, Ministério Público Estadual do Paraná,
AMAR - Associação de Defesa do Meio Ambiente de Araucária and IAP - Instituto Ambiental do Paraná
1) Legal proceeding related to specific performance obligations, indemnification and compensation for damages related to an environmental
accident that occurred in the State of Paraná on July 16, 2000.
Current status: The court partially ruled in favor of the plaintiff, however both parties (the plaintiff and the Company) filed an appeal.
Plaintiff: Instituto Brasileiro de Meio Ambiente - IBAMA and Ministério Público Federal.
2) Administrative proceedings arising from environmental fines related to Upstream operating contested because of disagreement over the
interpretation and application of standards by IBAMA, as well as a public civil action filed by the ministério Público Federal for alleged
environmental damage due to the accidental sinking of P-36 Platform.
Current status: Defense trial is pending and the administrative appeal regarding the fines and, when it comes to civil action, Petrobras
appealed the ruling that was unfavorable in the lower court and monitors the use of the procedure that will be judged by the Regional
Federal Court.
3) Other environmental matters
Total for environmental matters
Estimate
11,547
1,263
1,105
8,156
22,071
Estimate
2,388
1,057
2,303
5,748
30.4. Class actions and other related proceedings
Between December 8, 2014 and January 7, 2015, five putative securities class action complaints were filed against the
Company in the United States District Court for the Southern District of New York (SDNY). These actions were
consolidated on February 17, 2015 (the “Consolidated Securities Class Action”). The Court appointed a lead plaintiff,
Universities Superannuation Scheme Limited (“USS”), on March 4, 2015. USS filed a consolidated amended complaint
(“CAC”) on March 27, 2015 that purported to be on behalf of investors who: (i) purchased or otherwise acquired
Petrobras securities traded on the NYSE or pursuant to other transactions in the U.S. during the period January 22,
2010 and March 19, 2015, inclusive (the “Class Period”), and were damaged thereby; (ii) purchased or otherwise
acquired during the Class Period certain notes issued in 2012 pursuant to a registration statement filed with the SEC
filed in 2009 , or certain notes issued in 2013 or 2014 pursuant to a registration statement filed with the SEC in 2012 ,
and were damaged thereby; and (iii) purchased or otherwise acquired Petrobras securities on the Brazilian stock
exchange during the Class Period, who also purchased or otherwise acquired Petrobras securities traded on the NYSE
or pursuant to other transactions in the U.S. during the same period.
The CAC alleged, among other things, that in the Company’s press releases, filings with the SEC and other
communications, the Company made materially false and misleading statements and omissions regarding the value of
its assets, the amounts of the Company’s expenses and net income, the effectiveness of the Company’s internal
controls over financial reporting, and the Company’s anti-corruption policies, due to alleged corruption purportedly in
connection with certain contracts, which allegedly artificially inflated the market value of the Company’s securities.
On April 17, 2015, Petrobras, Petrobras Global Finance - PGF and the underwriters of notes issued by PGF (the
“Underwriter Defendants”) filed a motion to dismiss the CAC.
88
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
On July 9, 2015, the judge presiding over the Consolidated Securities Class Action ruled on the motion to dismiss,
partially granting the Company’s motion. Among other decisions, the judge dismissed claims relating to certain debt
securities issued in 2012 under the Securities Act of 1933, as time barred by the Securities Act’s statute of repose and
ruled claims relating to securities purchased on the Brazilian stock exchange must be arbitrated, as established in the
Company’s bylaws. The judge rejected other arguments presented in the motion to dismiss the CAC and, as a result,
the Consolidated Securities Class Action continued with respect to other claims.
As allowed by the judge, a second consolidated amended complaint was filed on July 16, 2015, a third consolidated
amended complaint was filed on September 1, 2015, among other things extending the Class Period through July 28,
2015 and adding Petrobras America, Inc. as a defendant, and a fourth consolidated amended complaint (“FAC”) was
filed on November 30, 2015. The FAC, brought by lead plaintiff and three other plaintiffs – Union Asset Management
Holding AG (“Union”), Employees’ Retirement System of the State of Hawaii (“Hawaii”), and North Carolina
Department of State Treasurer (“North Carolina”) (collectively, “class plaintiffs”) – brings those claims alleged in the
CAC that were not dismissed or were allowed to be re-pleaded under the judge’s July 9, 2015 ruling.
On December 7, 2015, Petrobras, PGF, Petrobras America, Inc. and the Underwriter Defendants filed a motion to
dismiss the FAC.
On December 20, 2015, the judge ruled on the motion to dismiss the FAC, partially granting the motion. Among other
decisions, the judge dismissed the claims of USS and Union based on their purchases of notes issued by PGF for
failure to plead that they purchased the notes in U.S. transactions. The judge also dismissed claims under the
Securities Act of 1933 for certain purchases for which class plaintiffs had failed to plead the element of reliance. The
judge rejected other arguments presented in the motion to dismiss the FAC and, as a result, the Consolidated
Securities Class Action will continue with respect to the remaining claims.
On October 15, 2015, class plaintiffs filed a motion for class certification in the Consolidated Securities Class Action,
and on November 6, 2015, Petrobras, PGF, Petrobras America, Inc. and the Underwriter Defendants opposed the
motion. On February 2, 2016, the judge granted plaintiffs’ motion for class certification, certifying a Securities Act
Class represented by Hawaii and North Carolina and an Exchange Act Class represented by USS.
In addition to the Consolidated Securities Class Action, to date, 28 lawsuits have been filed by individual investors
before the same judge in the SDNY, consisting of allegations similar to those in the Consolidated Securities Class
Action. On August 21, 2015, Petrobras, PGF and the Underwriters Defendants filed a motion to dismiss certain of the
individual lawsuits, and on October 15, 2015, the judge ruled on the motion to dismiss, partially granting the motion.
Among other decisions, the judge dismissed several Exchange Act, Securities Act and state law claims as barred by the
relevant statutes of repose. The judge denied other portions of the motion to dismiss and, as a result, these actions
will continue with respect to other claims brought by these class plaintiffs. In addition, a similar lawsuit by individual
investors has been filed in the United States District Court for the Eastern District of Pennsylvania.
The judge ordered that (i) the individual lawsuits and the Consolidated Securities Class Action shall be tried together
in a single trial that will not exceed a total of eight weeks; (ii) the trial shall begin on September 19, 2016; and (iii) any
individual action filed after December 31, 2015 will be stayed in all respects until after the completion of the
scheduled trial.
On March 17, 2016, an additional lawsuit was filed by individual investors before the same judge in the SDNY
consisting of allegations similar to those in the Consolidated Securities Class Action. Pursuant to the judge’s order,
this case will be stayed until after the completion of the scheduled trial.
These actions are in their early stages and involve highly complex issues that are subject to substantial uncertainties
and depend on a number of factors such as the novelty of the legal theories, the information produced in discovery,
the timing of court decisions, discovery from adverse parties or third parties, rulings by the court on key issues,
analysis by retained experts, and the possibility that the parties negotiate in good faith toward a resolution.
89
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
In addition, the claims asserted are broad, span a multi-year period and involve a wide range of activities, and the class
plaintiffs have not specified an amount of alleged damages in the Consolidated Securities Class Action or the
additional individual actions.
The uncertainties inherent in all such matters affect the amount and timing of the ultimate resolution of these
actions. As a result, the Company is unable to make a reliable estimate of eventual loss arising from the litigation.
Depending on the outcome of the litigation, we may be required to pay substantial amounts, which could have a
material adverse effect on the Company’s financial condition, its consolidated results of operations or its consolidated
cash flows for an individual reporting period. The Company has engaged a U.S. firm as legal counsel and intends to
defend these actions vigorously.
30.5. Contingent assets
30.5.1. Recovery of PIS and COFINS
The Company filed civil lawsuits against the Federal Government claiming to recover, through offsetting amounts
paid as taxes on finance income and foreign exchange variation gains (PIS) in the period between February 1999 and
November 2002 and COFINS between February 1999 and January 2004 claiming that paragraph 1 of article 3 of Law
9,718/98 is unconstitutional.
On November 9, 2005, the Federal Supreme Court declared this paragraph to be unconstitutional.
On November 18, 2010, the Superior Court of Justice upheld the claim filed by Petrobras in 2006 to recover the
COFINS for the period from January 2003 to January 2004. Petrobras then recognized the amount of R$ 497 as
recoverable taxes.
The Company recognized R$ 2,177 as recoverable taxes in September 2014 (R$ 820 in other income and R$ 1,357 in
finance income) for the lawsuit filed in 2005 to recover PIS and COFINS taxes overpaid on finance income in the period
from February 1999 to December 2002, after its right to recover those taxes has been definitely recognized and the
amounts and documents necessary to request judicial payment were presented.
As of December 31, 2015, the Company had non-current receivables of R$ 2,960 related to PIS and COFINS, which are
inflation indexed and awaiting settlement, are set out in the following table
COFINS - January 2003 to January 2004
PIS / COFINS - February 1999 to November 2002
Inflation indexation
Non-current receivables
31. Commitment to purchase natural gas
12.31.2015
497
2,209
254
2,960
On August 18, 2014, Petrobras reached an agreement with Yacimientos Petroliferos Fiscales Bolivianos (YPFB) to
settle controversies regarding several aspects of the Bolivian natural gas import contract to supply the Brazilian
domestic market (GSA). This agreement sets out payment schedules and compensations for both parties to resolve
different interpretations of the GSA, and includes a contract to secure Bolivian natural gas supply to for a
thermoelectric power plant - UTE Cuiabá from April 2014, resulting in a net charge of R$ 872. Then, after the
acceptance of compensations by each part, this agreement has generated a net positive cash flow for Petrobras
during its period of assessment.
As of December 31, 2015, the total amount of agreement (GSA) for the 2016 to 2023 period is approximately 43.95
billion cubic meters (m³) of natural gas (equivalent to 30.08 million cubic meters (m3) per day) and corresponds to a
total value of US$ 6.46 billion.
90
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
32. Collateral for crude oil exploration concession agreements
The Company has granted collateral to the Brazilian Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional
de Petróleo, Gás Natural e Biocombustíveis - ANP) in connection with the performance of the Minimum Exploration
Programs established in the concession agreements for petroleum exploration areas in the total amount of R$ 6,229,
of which R$ 4,798 were still in force as of December 31, 2015, net of commitments that have been undertaken. The
collateral comprises crude oil from previously identified producing fields, pledged as security, amounting to R$ 4,153
and bank guarantees of R$ 645.
33. Risk management
The Company is exposed to a variety of risks arising from its operations, including price risk (related to crude oil and
oil products prices), foreign exchange rates risk, interest rates risk, credit risk and liquidity risk. The Company takes
account of risks in its business decisions and manages any such risk in an integrated manner in order to enjoy the
benefits of diversification.
The Company created a Governance, Risk and Compliance function (and a Chief Governance, Risk and Compliance
position) that is responsible for ensuring compliance, with respect to the Company’s processes, and for mitigating risk
in the Company’s operations, including those related to fraud and corruption. The Chief Governance, Risk and
Compliance officer, with respect to governance risk and compliance issues, must previously approve any matter
submitted to the Executive Board for approval.
Corporate risk management is part of the Company’s commitment to act ethically and comply with legal and
regulatory requirements of the countries where it operates. The Company accounts for risk whenever it makes a
decision and manages risk based on an integrated approach.
To manage market and financial risks the Company preferably takes structuring measures through an adequate
capital and leverage management.
A summary of the derivative financial instruments positions held by the Company and recognized in other current
assets and liabilities as of December 31, 2015, as well as the amounts recognized in the statement of income and
other comprehensive income and the guarantees given is set out following:
Derivatives not designated for hedge accounting
Future contracts (*)
Long position/Crude oil and oil products
Short position/Crude oil and oil products
Options (*)
Call/Crude oil and oil products
Put/Crude oil and oil products
Forward contracts
Long position/ Foreign currency forwards (ARS/USD) (**)
Long position/ Foreign currency forwards (BRL/USD) (**)
Short position/Foreign currency forwards (BRL/USD) (**)
Derivatives designated for hedge accounting
Swap
Foreign currency - Cross-currency Swap (**)
Interest - Libor / Fixed rate (**)
Total recognized in the Statement of Financial Position
(*) Notional value (thousand bbl)
(**) Amounts in USD are presented in million.
Notional value
Statement of Financial Position
Fair value
Asset Position (Liability)
Maturity
12.31.2015
12.31.2014
12.31.2015
12.31.2014
(5,694)
53,735
(59,429)
123
−
123
USD 0
USD 217
USD 50
(4,314)
84,544
(88,858)
(594)
(364)
(230)
USD 10
USD 0
USD 249
USD 298
USD 396
USD 298
USD 419
149
−
−
38
−
38
24
−
23
1
186
−
−
2
(1)
3
3
(3)
−
6
(130)
(62)
(68)
(113)
(59)
(54)
81
78
2016
2016
2016
2016
2016
2016
2016
2016
2017
91
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Commodity derivatives
Foreign currency derivatives
Interest rate derivatives
Cash flow hedge on exports (***)
Gains/ (losses) recognized in
the statement of income (*)
Gains/ (losses) recognized in
the Shareholders’ Equity (**) Guarantees given as collateral
2015
927
90
(31)
986
(7,088)
(6,102)
2014
910
(49)
(24)
837
(1,673)
(836)
2015
−
30
5
35
(61,651)
(61,616)
2014
−
22
(5)
17
(13,977)
(13,960)
12.31.2015
36
−
−
36
−
36
12.31.2014
17
−
−
17
−
17
(*) Amounts recognized in finance income in the period.
(**) Amounts recognized as other comprehensive income in the period.
(***) Using non-derivative financial instruments as designated hedging instruments, as set out in note 33.2.
A sensitivity analysis for the different types of market risks, to which the Company is exposed, based on the derivative
financial instruments held as of December 31, 2015 is set out following:
Financial Instruments
Derivatives not designated for hedge accounting
Future contracts
Forward contracts
Forward contracts
Swap
Options
Risk
Crude oil and oil products - price changes
Foreign currency - depreciation of the BRL against the USD
Foreign currency - appreciation of the ARS against the USD
Interest - Euribor decrease
Crude oil and oil products - price changes
Derivatives designated for hedge accounting
Swap
Debt
Net effect
Swap
Debt
Net effect
Foreign currency - appreciation of the JPY against the USD
Interest - LIBOR increase
Stressed
Scenario
Consolidated
Stressed
Scenario
(∆ of 25%)
(∆ of 50%)
Probable
Scenario (*)
149
6
−
−
37
192
(33)
33
−
15
(15)
−
(173)
(163)
−
−
36
(300)
(232)
232
−
(7)
7
−
(494)
(326)
−
−
35
(785)
(387)
387
−
(11)
11
−
(*) The probable scenario was computed based on the following risks: R$ x U.S. Dollar - a 3.7% depreciation of the Real; Japanese Yen x U.S. Dollar - a 2.9% depreciation of the
Japanese Yen; Peso x U.S. Dollar - a 12% depreciation of the Peso; LIBOR Forward Curve - a 0.31% increase throughout the curve. Source: Focus and Bloomberg.
33.1. Risk management of price risk (related to crude oil and oil products prices)
Petrobras does not regularly use derivative instruments to hedge exposures to commodity price cycles related to
products purchased and sold to fulfill operational needs. Derivatives are used as hedging instruments to manage the
price risk of certain short-term commercial transactions.
33.2. Foreign exchange risk management
Petrobras seeks to identify and manage foreign exchange rate risks based on an integrated analysis of its businesses
with the benefits of diversification. The Company’s short-term risk management involves choosing the currency in
which to hold cash, such as the Brazilian Real, U.S. dollar or other currency.
The foreign exchange risk management strategy may involve the use of derivative financial instruments to hedge
certain liabilities, minimizing foreign exchange rate risk exposure.
a) Cash Flow Hedge involving the Company’s future exports
The Company designates hedging relationships to account for the effects of the existing hedge between a portion of
its long-term debt obligations (denominated in U.S. dollars) and its highly probable U.S. dollar denominated future
export revenues, so that gains or losses associated with the hedged transaction (the highly probable future exports)
and the hedging instrument (debt obligations) are recognized in the statement of income in the same periods.
92
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
A portion of principal amounts and accrued interest (non-derivative financial instruments), as well as foreign
exchange rate forward contracts (derivative financial instruments) have been designated as hedging instruments.
Derivative financial instruments expired during the year were replaced by principal and interest amounts in the
hedging relationships for which they had been designated. Individual hedging relationships were designated in a one-
to-one proportion, meaning that a portion of the highly probable future exports for each month will be the hedged
transaction of an individual hedging relationship, hedged by a portion of the Company’s long-term debt. Only a
portion of the Company’s forecast exports are considered as highly probable.
Whenever a portion of future exports for a certain period for which a hedging relationship has been designated is no
longer highly probable, the Company revokes the designation and the cumulative foreign exchange gains or losses
that have been recognized in other comprehensive income remain separately in equity until the forecast exports
occur.
Whenever a portion of future exports for a certain period for which a hedging relationship has been designated is no
longer not considered highly probable, but is also no longer expected to occur, any related cumulative foreign
exchange gains or losses that have been recognized in other comprehensive income from the date the hedging
relationship was designated to the date the Company revoked the designation is immediately recycled from equity to
the statement of income as a reclassification adjustment.
As of December 31, 2015, a portion of 2016 future exports for which a hedging relationship had been designated was
no longer expected to occur and, therefore, the hedging relationship was revoked with respect to that portion of
forecast exports and cumulative foreign exchange losses that had been recognized in other comprehensive income
from the date the hedging relationship was designated to the date the Company revoked the designation was
immediately reclassified from equity to the statement of income as a reclassification adjustment. An R$ 199 foreign
exchange loss was recognized in the statement of income in the quarter ended December 31, 2015.
The principal amounts, the fair value as of December 31, 2015, and a schedule of expected reclassifications to the
statement of income, of cumulative losses recognized in other comprehensive income (shareholders’ equity) based on
a USD 1.00 / R$ 3.9048 exchange rate are set out below:
Hedging Instrument
Non-derivative financial instruments (debt: principal and interest)
Hedged
Transactions
Portion of
highly probable
future monthly
exports
Nature of the
Risk
Foreign
Currency
– Real vs U.S.
Dollar
Spot Rate
Changes in the reference value (principal and interest)
Amounts designated as of December 31, 2014
Additional hedging relationships designated, designations revoked and hedging instruments re-designated
Exports affecting profit or loss
Amortization
Foreign exchange variation
Amounts designated as of December 31, 2015
Principal
Amount (US$
million)
Period
Carrying
amount as of
December 31,
2015
January 2016 to
November
2026
61,520
240,222
US$ million
50,858
23,336
(5,401)
(7,273)
−
61,520
R$
135,088
81,137
(17,704)
(27,038)
68,739
240,222
The ratio of highly probable future exports to debt instruments for which a hedging relationship has been designated
in future periods is set out as follows:
2016
2017
2018
2019
2020
2021
2022
2023 2024 to 2026
Average
Consolidated
Highly probable future
exports (%)
82
83
80
78
71
61
57
55
49
60
A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of
December 31, 2015 is set out below:
93
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Balance at January 1, 2015
Recognized in shareholders' equity
Reclassified to the statement of income affecting profit or loss
Reclassified to the statement of income for not concluded export
Balance at December 31, 2015
Exchange rate
(26,668)
(68,739)
6,889
199
(88,319)
Tax effect
9,067
23,371
(2,342)
(68)
30,028
Total
(17,601)
(45,368)
4,547
131
(58,291)
Additional hedging relationships may be revoked or additional reclassification adjustments from equity to the
statement of income may occur as a result of changes in forecast export prices and export volumes following a review
in the Company’s business plan. Based on a sensitivity analysis considering a US$ 10/barrel decrease in Brent prices
stress scenario, when compared to the Brent price projections in our most recent update of the 2015-2019 Business
and Management Plan (Plano de Negócios e Gestão – PNG), a R$ 1.600 reclassification adjustment from equity to the
statement of income would occur.
A schedule of the timing of the losses recognized in other comprehensive income (shareholders’ equity) to be recycled
to the statement of income as of December 31, 2015 is set out below:
Realization expected
2016
(10,708)
2017
(12,357)
2018
(12,795)
2019
(11,325)
2020
(9,516)
2021
(9,188)
2022
(9,413)
2023
(6,630)
Consolidated
2024 to
2026
(6,387)
Total
(88,319)
b) Cash flow hedges involving swap contracts - Yen x Dollar
The Company has a cross currency swap to fix in U.S. dollars the payments related to bonds denominated in Japanese
yen and does not intend to settle these contracts before the maturity. The relationship between the derivative and
the bonds was designated for cash flow hedge accounting.
c)
Sensitivity analysis for foreign exchange risk on financial instruments
A sensitivity analysis is set out below, showing the probable scenario for foreign exchange risk on financial
instruments, computed based on external data, along with stressed scenarios (a 25% and a 50% change in the foreign
exchange rates), except for assets and liabilities of foreign subsidiaries, when transacted in a currency equivalent to
their respective functional currencies.
94
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Financial Instruments
Assets
Liabilities
Cash flow hedge on exports
Liabilities (**)
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Exposure at
12.31.2015
21,213
Risk
(258,554) Dollar/ Real
Yen/ Dollar
240,222
2,881
(2,180)
(2,180)
111
(8,798)
(8,687)
34,250 Euro/ Dollar
Euro/ Real
(59,238)
(24,988)
29
(102)
(73)
9,106
(19,347)
(10,241)
2,331
(2,476)
(145)
(43,433)
Pound
Sterling/ Real
Pound
Sterling/
Dollar
Dollar/ Peso
Stressed
Scenario
(∆ of 25%)
5,303
(64,638)
60,056
721
(545)
(545)
28
(2,199)
(2,171)
8,562
(14,809)
(6,247)
7
(25)
(18)
2,277
(4,837)
(2,560)
583
(619)
(36)
(10,856)
Consolidated
Stressed
Scenario
(∆ of 50%)
10,607
(129,277)
120,111
1,441
(1,091)
(1,091)
56
(4,399)
(4,343)
17,125
(29,619)
(12,494)
14
(51)
(37)
4,553
(9,674)
(5,121)
1,165
(1,238)
(73)
(21,718)
Probable
Scenario (*)
789
(9,614)
8,933
108
65
65
−
(4)
(4)
(1,256)
2,173
917
2
(6)
(4)
176
(375)
(199)
259
(275)
(16)
867
(*)On December 31, 2015, the probable scenario was computed based on the following risks: Real x Dollar – a 3.7% depreciation of the Real / Yen x Dollar – a 2.9% depreciation of the
Yen / Peso x Dollar: a 12.0% depreciation of the Peso/ Euro x Dollar: a 3.5% depreciation of the Euro / Pound Sterling x Dollar: a 1.9% appreciation of the Pound Sterling/ Real x Euro -
a 0.1% depreciation of the Real / Real x Pound Sterling - 5.7% depreciation of the Real. Source: Focus and Bloomberg.
(**) A portion of the foreign currency exposure is hedged by a cross-currency swap.
33.3. Interest rate risk management
The Company considers that interest rate risk does not create a significant exposure and therefore, preferably does
not use derivative financial instruments to manage interest rate risk, except for specific situations encountered by
certain subsidiaries of Petrobras.
33.4. Capital management
The Company’s objectives when making its financial decisions is to achieve an adequate capital management and
indebtedness level in order to safeguard its ability to continue as a going concern, adding value to its shareholders
and investors. Its main sources of funding have been cash provided by its operating activities, debt issuance in the
international capital markets, loan agreements with commercial banks and cash provided by asset disposals
(divesting). The duration of the Company’s debt matches the maturity of its capital expenditures (an average maturity
of approximately seven years).
Net debt is calculated as total debt (short-term debt and long-term debt) less cash, cash equivalents and government
bonds and time deposits with maturities higher than three months. Adjusted EBITDA is calculated by adding back net
finance income (expenses), income taxes, depreciation/amortization, share of earnings in equity-accounted
investments and impairment charges. These measures are not defined by the International Financial Reporting
Standards – IFRS (non-GAAP measures) and should neither be considered in isolation or as substitutes for profit,
indebtedness and cash flow provided by operating activities as defined by the IFRS, nor be compared to those
measures of other companies.
95
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Total debt (current and non-current)
Cash and cash equivalents
Government securities and time deposits (maturity of more than three months)
Net debt
Net debt/(net debt+shareholders' equity)
Adjusted EBITDA
Net debt/Adjusted EBITDA ratio
12.31.2014
492,849
97,845
3,042
391,962
60%
73,859
5.31
Consolidated
12.31.2013
351,035
44,239
24,707
282,089
48%
59,140
4.77
Undertaking capital expenditures in the oil and gas industry is financial-capital intensive and involves long-term
maturity. Thus cash used in investing activities may exceed cash provided by operating activities during certain
periods. Cash provided by operating activities may be negatively affected if oil prices remain at the current level for a
significant period of time. Thus the Company’s financial ratios may be negatively affected during the period when
there is no cash flows provided by the operations of its ongoing capital expenditures or when changes resulting from a
revision of the Company’s Business and Management Plan – BMP are being implemented.
In addition, the recently revised divestment plan for the 2015 to 2016 period (projecting divestments of US$ 15.1
billion) is part of the Company's financial planning, aimed at reducing leverage, preserving cash and prioritizing capital
expenditures, primarily in oil and gas production in Brazil in highly productive and profitable areas.
However, this divestment portfolio is dynamic and the occurrence of the transactions depend on business conditions,
market conditions and the Company’s continuing assessment of its businesses, due to these reasons the rating
conditions for assets available for sale were not fulfilled as set out in note 4.12.
33.5. Credit risk
Credit risk management in Petrobras aims at minimizing risk of not collecting receivables, financial deposits or
collateral from third parties or financial institutions through efficient credit analysis, granting and management
based on quantitative and qualitative parameters that are appropriate for each market segment in which the
Company operates.
The commercial credit portfolio is broad and diversified and comprises clients from the domestic market and from
foreign markets. Credit granted to financial institutions is related to collaterals received, cash surplus invested and
derivative financial instruments. It is spread among “investment grade” international banks rated by international
rating agencies and highly rated Brazilian banks.
33.5.1. Credit quality of financial assets
a) Trade and other receivables
Most of the company’s customers have no credit agency ratings. Thus, credit commissions assess creditworthiness
and define credit limits, which are regularly monitored, based on the costumer’s main activity, commercial relationship
and credit history with Petrobras, solvency, financial situation and external market assessment of the customer.
b) Other financial assets
Credit quality of cash and cash equivalents, as well as marketable securities is based on external credit ratings
provided by Standard & Poor’s, Moody’s and Fitch. The credit quality of those financial assets, that are neither past
due nor have been impaired, are set out below:
96
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
AAA
AA
A
BBB
BB
B
AAA.br
AA.br
Other ratings
33.6. Liquidity risk
Cash and cash equivalents
Marketable securities
Consolidated
2015
−
2,214
73,986
14,063
653
29
6,590
42
268
97,845
2014
55
266
21,635
3,988
−
−
13,867
2,459
1,969
44,239
2015
−
−
−
260
−
−
3,043
−
86
3,389
2014
−
−
53
243
−
−
24,655
−
102
25,053
Liquidity risk is represented by the possibility of a shortage of cash or other financial assets in order to settle the
Company’s obligations on the agreed dates and is managed by the Company based on policies such as: centralized
cash management, in order to optimize the level of cash and cash equivalents held and to reduce working capital; a
minimum cash level to ensure that cash needed for investments and short-term obligations is met even in adverse
market conditions; increasing the number of investors in the domestic and international markets through funding
opportunities, preserving a strong presence in the international capital markets and searching for new funding
sources, including new markets and financial products.
During 2015, the Company used traditional funding sources (export credit agencies – ECAs, banking market, capital
markets and development banks) to obtain the necessary funding to repay debt and fund its capital expenditures. In
2016 the Company expects to count on traditional funding sources, other financing options and on proceeds from the
divestment program, in order to meet its funding needs.
A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set
out following:
Maturity
Principal
Interest
Total
2016
50,764
25,854
76,618
2017
44,709
23,482
68,191
2018
63,124
21,809
84,933
2019
88,529
18,055
106,584
2020
60,325
13,293
73,618
2021 and
thereafter
189,838
128,038
317,876
Consolidated
12.31.2015
497,289
230,531
727,820
12.31.2014
354,226
123,105
477,331
33.7. Insurance (unaudited)
The Company’s insurance strategy involves acquiring insurance to cover risks that may produce material impacts and
also to cover risks that are subject to compulsory insurance coverage (pursuant to legal or contractual requirements).
The remaining risks are self-insured and Petrobras intentionally assumes the entire risk by abstaining from
contracting insurance. The Company assumes a significant portion of its risk, by entering into insurance policies that
have deductibles that may reach an amount equivalent to US$ 25 milion.
The Company’s risk assumptions for insurance are not part of the audit scope of the financial statements audit and
therefore were not examined by independent auditors.
The main information concerning the insurance coverage outstanding at December 31, 2015 is set out below:
97
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
Assets
Facilities, equipment inventory and products inventory
Tankers and auxiliary vessels
Fixed platforms, floating production systems and offshore drilling units
Total
Types of
coverage Consolidated
Amount insured
Parent
company
Fire,
operational
risks and
engineering
risks
Hulls
Oil risks
485,410
10,094
102,905
598,409
304,375
23,791
328,166
Petrobras does not have loss of earnings insurance or insurance related to well control, automobiles and pipeline
networks in Brazil.
34. Fair value of financial assets and liabilities
Fair values are determined based on market prices, when available, or, in the absence thereof, on the present value of
expected future cash flows. The fair values of cash and cash equivalents, short term debt and other non-current
assets and liabilities are equivalent as or do not differ significantly from their carrying amounts.
The hierarchy of the fair values of the financial assets and liabilities, recorded on a recurring basis, is set out below:
- Level 1: inputs are the most reliable evidence of fair value: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement date.
- Level 2: inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
- Level 3: inputs are unobservable inputs for the asset or liability.
Assets
Marketable securities
Commodity derivatives
Foreign currency derivatives
Balance at December 31, 2015
Balance at December 31, 2014
Liabilities
Foreign currency derivatives
Interest derivatives
Balance at December 31, 2015
Balance at December 31, 2014
Level I
Level II
Fair value measured based on
Total fair
value recorded
Level III
3,068
187
−
3,255
7,390
−
−
−
−
−
−
24
24
6
(62)
(68)
(130)
(116)
−
−
−
−
−
−
−
−
−
3,068
187
24
3,279
7,396
(62)
(68)
(130)
(116)
There are no material transfers between levels.
The estimated fair value for the Company’s long term debt as of December 31, 2015, computed based on the
prevailing market rates is set out in note 17.
98
Notes to the financial statements
(Expressed in millions of reais, unless otherwise indicated)
35. Subsequent events
Revision on governance and management model
On January 28, 2016, the Company presented its new organization structure and its new governance and management
model. The revision of the model has been made to align the organization with the new conditions faced by the oil and
gas industry and to prioritize profitability and capital discipline. The new model does not propose discontinuing
operations, however, it does consider merge of operations.
Accordingly, the Company has been reviewing its current business segment structure in order to improve
management business analysis, as well as decision-making regarding investments and resources allocation.
EIG Claim Involving Sete Brasil
On February 23, 2016, EIG Management Company (EIG) and affiliates filed a complaint against Petrobras before the
federal court in Washington, DC, alleging that the Company had committed fraud by inducing plaintiffs to invest in
Sete Brazil Participações SA ( "Sete"), through communications that failed to disclose the alleged corruption scheme
in which the Company and Sete were allegedly involved and that plaintiffs’ investments in Sete allowed Petrobras to
perpetuate and expand the corruption scheme. Petrobras has not yet been served in this action.
Line of credit
On February 26, 2016, Petrobras signed a term sheet with the China Development Bank -CDB, for a financing of US$10
billion. The parties are also negotiating financing contracts including an agreement to supply crude oil to Chinese
companies with similar terms to the contracts executed by them in 2009.
Contracts regarding the sale of its 20% interest in the concessions of Bijupirá and Salema
On February 26, 2016, Petro Rio S.A. terminated the sales contracts signed with the Company on July 1, 2015,
regarding the sale of the 20% interest in the concessions of Bijupirá and Salema (BJS) and in the Dutch joint operation
BJS Oil Operations B.V. (BJSOO BV). Therefore, Petrobras maintains its 20% stake in those fields, in partnership with
Shell, which owns the remaining 80% and operates the fields.
According to the contractual conditions, with the approval of CADE on August 10, 2015, the Company received the
amount of US$ 5 as an advance, which will be fully returned.
Measures of incentive to the exploration and production of oil and natural gas
On March 3, 2016, the Conselho Nacional de Política Energética - CNPE enacted the Resolution No. 2 which authorizes
the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP to extend the periods of the “Round Zero”
concession agreements, establishes guidelines for this process, as well as determines that the ANP must notify
operators whose fields have not been producing for the last six months, applying for a response to the production
restart, transfers of rights, or return the fields. The resolution also extends the special customs procedure of goods
for the research and exploitation of oil and gas activities, REPETRO, and requests to complete the studies for
proposing the parameters of hiring under the production sharing model in unitized areas in the Pre-Salt.
Financing Agreement with ICBC Leasing (sale and leaseback)
On March 8, 2016, the Company received the amount of US$ 1 billion related to sale and leaseback agreement entered
into by Petrobras and ICBC Leasing (Industrial and Commercial Bank of China Leasing), with respect to P-52 platform,
as announced on October 13, 2015. P-52 was sold to the bank and the debt will be settled by lease payments. The
ownership will be transferred back to the Company by the of lease term. The transaction has a 10 year maturity.
99
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Social Balance (unaudited)
1 - Calculation basis
Consolidated sales revenues (SR)
Consolidated net income (loss) before profit sharing and taxes (OI)
Consolidated gross payroll (GP) (i)
2 - Internal Social Indicators
Meal and food
Compulsory payroll charges
Pension
Health Care
Health and Safety
Education
Culture
Professional training and development
Day-care assistance
Profit sharing
Others
Total - Internal social indicators
3 - External Social Indicators
Social and environmental (I)
Culture (II)
Sport (III)
Total contributions for the community
Taxes (excluding payroll charges)
Total - External social indicators
4 - Environmental Indicators
Investments related to the Company’s production/operation (i)
With respect to establishing “annual goals” for minimizing
wastage, input general consumption in production/operation and
for increasing efficiency in the use of natural resources, the
Company:
2015
321,638
(41,229)
30,637
% of
SR
0.38
1.92
0.68
0.52
0.07
0.08
−
0.10
0.02
−
0.03
3.81
% of
SR
0.08
0.04
0.03
0.15
35.39
35.55
% of
SR
1.14
Consolidated
2014
337,260
(24,771)
31,671
% of
SR
0.36
1.71
0.59
0.44
0.07
0.07
0.01
0.11
0.02
0.31
0.01
3.69
% of
SR
0.12
0.06
0.03
0.21
31.52
31.73
% of
SR
0.94
Amount
1,222
5,774
1,978
1,477
225
242
18
365
58
1,045
50
12,454
Amount
405
194
94
693
106,319
107,012
GP
3.86
18.23
6.25
4.66
0.71
0.76
0.06
1.15
0.18
3.30
0.16
39.32
OI
(1.63)
(0.78)
(0.38)
(2.80)
(429.21)
(432.00)
Amount
3,169
OI
(12.79)
Amount
1,226
6,162
2,190
1,685
233
263
7
309
79
−
92
12,246
Amount
271
139
86
496
113,840
114,336
GP
4.00
20.11
7.15
5.50
0.76
0.86
0.02
1.01
0.26
−
0.30
39.97
OI
(0.66)
(0.34)
(0.21)
(1.20)
(276.12)
(277.32)
Amount
3,678
OI
(8.92)
( ) does not have goals ( ) attains from 51% to 75%
( ) attains from 0 to 50% (x) attains from 76 to
100%
( ) does not have goals ( ) attains from 51% to 75%
( ) attains from 0 to 50% (x) attains from 76 to
100%
100
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Social Balance (continuation)
5 - Indicators for the staff
Nº of employees at the end of the period
Nº of hirings during the period (IV)
Nº of contracted employees (outsourcing) (V)
Nº of student trainees (VI)
Nº of employees older than 45 (VII)
Nº of women that work in the Company
% of leadership positions held by women (VII)
Nº of Negroes that work in the Company (VIII)
% of leadership positions held by Negroes (IX)
Nº of handicapped workers (X)
6 - Significant information with respect to the exercise of
corporate citizenship
Ratio between the Company’s highest and lowest compensation (XI)
Total number of work accidents (XII)
The social and environmental projects developed by the Company
were defined by:
The health and safety standards in the work environment were
defined by:
With respect to union freedom, the right to collective bargaining
and internal representation of the employees, the Company:
The pension benefits include:
Profit-sharing includes:
In the selection of suppliers, the same ethical standards and
standards of social and environmental responsibility adopted by
the Company:
With respect to the participation of employees in voluntary work
programs, the Company:
Total number of complaints and criticisms from consumers: (XIII)
% of claims and criticisms attended or resolved:
Total value added to distribute (in thousand of R$):
Distribution of added value:
7 - Other information
2015
78,470
804
158,076
1,438
31,268
13,695
15.3%
20,098
25.3%
444
2015
32.0
3,096
Consolidated
2014
80,908
3,786
203,705
1,746
33,767
13,625
15.2%
19,959
20.3%
286
Goals 2016
32.0
−
(X) directors and
(X) directors and
( ) directors
managers ( ) all employees
( ) directors
managers ( ) all employees
(X) directors and
managers
( ) all the
employees
( ) everyone +
Cipa
(X) directors and
managers
( ) all the
employees
( ) is not
involved
( ) directors
( ) directors
( ) follows ILO
standards
( ) directors and
managers
( ) directors and
managers
(X) encourages
and follows ILO
(X) all
employees
(X) all
employees
( ) will not be
involved
( ) directors
( ) directors
( ) will follow ILO
standards
( ) directors and
managers
( ) directors and
managers
( ) everyone +
Cipa
(X) will
encourage and
follow ILO
(X) all
employees
(X) all
employees
( ) are not
considered
( ) are
suggested (X) are required
( ) will not be
considered
( ) will be
suggested
(X) will be
required
( ) is not
involved ( ) gives support
in Procon
36
in Procon
47.2%
in the Company
9,455
in the Company
99.1%
(X) organizes
and encourages
in court
30
in court
40%
( ) will not be
involved
in the Company
5,564
in the Company
98%
( ) will give
support
in Procon
-
in Procon
-
(X) will organize
and encourage
in court
0
in court
0
In 2015:
169,931
65% government 17% employees
In 2014:
146,440
70% government 22% employees
0% shareholders 39% third parties -21%
retained
0% shareholders 23% third parties -15%
retained
I. From 2015, includes the amounts allocated to support social, environmental and educational sports projects. Includes the former lines of "Income and Work Opportunities
Generated", "Education for Professional Skills", "Rights of Children and Adolescents Guarantee", "Other" and "Investments in programs and / or projects" in addition portion of line
"Sport" aimed at educational sports projects.
II. The value differs from the Social Balance released last year, according to figures published then did not include investments in cultural projects unlinked to the sponsorship
program in 2014, which totaled R$ 51.6.
III. From 2015, it does not include the values of educational sports projects already included in the Socio-Environmental line. The value differs from the Social Balance released last
year, according to figures published then did not include investments in cultural projects unlinked to the sponsorship program in 2014, which totaled R$ 25,2, in sports projects.
IV. Information for the Petrobras Group in Brazil, related to hiring through public selection processes.
V. In 2015, began to reflect only the service providers who work at Petrobras facilities. The number 2014 has been adjusted for comparison purposes.
VI. Information related to the student trainees of the Parent Company, Petrobras Distribuidora, Transpetro, Breitener and Gas Brasiliano, other subsidiaries do not have internship
programs
VII. Information related to the employees of the Parent Company, Petrobras Distribuidora, Transpetro, Liquigás, Petrobras Biofuel and subsidiaries outside Brazil
VIII. Information related to the employees of the Parent Company, Petrobras Distribuidora, Transpetro and Liquigás who declared to be Negroes.
IX. Of the total leadership positions in the Parent Company held by employees who informed their color/race, 25.3% are held by people who declared to be Negroes.
X. Data obtained through the records in the Information System of Health, from the self-declaration of the employee and medical analysis during the occupational exams.
XI. Information related to the Parent company.
XII. It refers to the number of casualties. There is no specific target for the total number of work accidents. The number presented in 2016 was estimated based on the alert limit
established for the TOR indicator, which is 4.40 and HHER projected for the year (636.68 million hours-men of risk exposure).
XIII. The information on the Company includes the number of complaints and criticisms received by the Parent Company, Petrobras Distribuidora and Liquigás. The goals for 2016
include only the Parent Company and Liquigás.
(i) Consisting of salaries, benefits, FGTS, Social Security and other benefits to employees.
101
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Supplementary information on Oil and Gas Exploration and Production (unaudited)
In accordance with Codification Topic 932 - Extractive Activities – Oil and Gas, this section provides supplemental
information on oil and gas exploration and producing activities of the Company. The information included in items (a)
through (c) provides historical cost information pertaining to costs incurred in exploration, property acquisition and
development, capitalized costs and results of operations. The information included in items (d) and (e) present
information on Petrobras’ estimated net proved reserve quantities, standardized measure of estimated discounted
future net cash flows related to proved reserves, and changes in estimated discounted future net cash flows.
The Company, on December 31, 2015, maintains activities in South America, which includes Argentina, Colombia and
Bolivia; North America, which includes Mexico and the United States of America; and Turkey (others), comprised of
Turkey. The equity-accounted investments are comprised of the operations of Petrobras Oil and Gas B.V. (PO&G) in
Africa, mainly Nigeria, as well as Venezuelan companies involved in exploration and production activities. However,
only in the countries Argentina, United States, Nigeria and Venezuela, the Company estimates reserves.
a) Capitalized costs relating to oil and gas producing activities
The following table summarizes capitalized costs for oil and gas exploration and production activities with the related
accumulated depreciation, depletion and amortization, and asset retirement obligation assets:
Abroad
Total
2,067
23,909
4,436
30,412
(14,117)
16,295
1,980
16,613
3,351
21,944
(8,048)
13,896
3,329
19,748
175
23,251
(7,020)
16,232
Consolidated
Total
28,306
300,453
281,408
610,167
(173,290)
436,877
26,678
272,989
214,510
514,177
(132,068)
382,109
53,135
212,751
190,948
456,833
(111,561)
345,273
Equity
Method
Investees
−
11,318
345
11,663
(5,006)
6,657
24
12,065
69
12,158
(4,831)
7,327
−
9,304
2
9,306
(3,408)
5,898
Brazil
South America North America
Africa
Others
December 31, 2015
Unproved oil and gas properties
Proved oil and gas properties
Support equipments
Gross capitalized costs
Depreciation and depletion
Net capitalized costs
December 31, 2014
Unproved oil and gas properties
Proved oil and gas properties
Support equipments
Gross capitalized costs
Depreciation and depletion
Net capitalized costs
December 31, 2013
Unproved oil and gas properties
Proved oil and gas properties
Support equipments
Gross capitalized costs
Depreciation and depletion
Net capitalized costs
26,239
276,544
276,972
579,755
(159,173)
420,582
24,698
256,376
211,159
492,233
(124,020)
368,213
49,806
193,003
190,773
433,582
(104,541)
329,041
520
7,872
4,164
12,556
(7,955)
4,601
192
5,332
3,136
8,660
(4,656)
4,004
1,936
5,646
842
8,424
(4,790)
3,634
−
−
−
−
−
−
−
−
−
−
−
−
51
−
(35)
16
−
16
−
−
16
16
(16)
−
−
−
9
9
(9)
−
−
−
10
10
(9)
1
1,547
16,037
256
17,840
(6,146)
11,694
1,788
11,281
206
13,275
(3,383)
9,892
1,342
14,102
(642)
14,802
(2,221)
12,581
102
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
b) Costs incurred in oil and gas property acquisition, exploration and development activities
Costs incurred are summarized below and include both amounts expensed and capitalized:
December 31, 2015
Acquisition of properties
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2014
Acquisition of properties
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2013
Acquisition of properties
Proved
Unproved
Exploration costs
Development costs
Total
Brazil
South America North America
Africa
Others
−
−
9,989
47,906
57,895
−
120
12,833
42,726
55,679
−
6,538
13,206
39,197
58,941
−
−
179
1,486
1,665
209
−
288
1,285
1,782
−
−
429
1,576
2,005
−
−
275
1,310
1,585
−
−
317
983
1,300
−
−
830
2,765
3,595
−
−
−
−
−
−
−
36
−
36
−
−
3
660
663
−
−
−
−
−
−
−
−
−
−
−
−
2
6
7
Consolidated
Total
−
−
10,443
50,702
61,145
209
120
13,474
44,994
58,797
−
6,538
14,470
44,204
65,212
Abroad
Total
−
−
454
2,796
3,250
209
−
641
2,268
3,118
−
−
1,264
5,007
6,271
Equity
Method
Investees
−
−
34
1,420
1,454
−
−
−
1,501
1,501
−
−
−
556
556
c) Results of operations for oil and gas producing activities
The Company’s results of operations from oil and gas producing activities for the years ended December 31, 2015,
2014 and 2013 are shown in the following table. The Company transfers substantially all of its Brazilian crude oil and
gas production to the Refining, Transportation & Marketing segment in Brazil. The internal transfer prices calculated
by the Company’s model may not be indicative of the price the Company would have realized had this production been
sold in an unregulated spot market. Additionally, the prices calculated by the Company’s model may not be indicative
of the future prices to be realized by the Company. Gas prices used are those set out in contracts with third parties.
Production costs are lifting costs incurred to operate and maintain productive wells and related equipment and
facilities, including operating employees’ compensation, materials, supplies, fuel consumed in operations and
operating costs related to natural gas processing plants.
Exploration expenses include the costs of geological and geophysical activities and projects without economic
feasibility. Depreciation and amortization expenses relate to assets employed in exploration and development
activities. In accordance with Codification Topic 932 – Extractive Activities – Oil and Gas, income taxes are based on
statutory tax rates, reflecting allowable deductions. Interest income and expense are excluded from the results
reported in this table.
103
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Brazil
South America North America
Africa
Others
December 31, 2015
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and
amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding
corporate overhead and interest
costs)
December 31, 2014
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and
amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding
corporate overhead and interest
costs)
December 31, 2013
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and
amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding
corporate overhead and interest
costs)
2,076
108,846
110,922
(53,863)
(5,262)
(24,735)
(35,739)
(6,581)
(15,258)
5,188
1,002
3,225
4,227
(1,853)
(66)
(1,005)
(796)
182
689
(261)
1,949
−
1,949
(629)
(1,139)
(823)
(1,757)
(352)
(2,751)
5
(10,070)
428
(2,746)
1,190
152,515
153,705
(64,366)
(6,720)
(18,091)
(5,665)
(6,722)
52,141
(17,728)
1,975
2,903
4,878
(2,459)
(69)
(852)
(230)
2,610
3,878
(1,206)
2,144
−
2,144
(489)
(308)
(1,208)
(4,183)
(276)
(4,320)
(10)
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
(38)
−
(16)
6
(48)
−
Consolidated
Total
5,027
112,071
117,098
(56,345)
(6,467)
(26,563)
(38,292)
(7,369)
(17,938)
4,985
Abroad
Total
2,951
3,225
6,176
(2,482)
(1,205)
(1,828)
(2,553)
(788)
(2,680)
(203)
Equity
Method
Investees
1,853
62
1,915
(698)
(110)
(624)
(1,077)
(166)
(760)
(286)
−
−
−
−
−
−
−
(618)
(618)
53
(565)
(2,883)
(12,953)
(1,046)
−
−
−
−
−
−
−
279
279
41
4,119
2,903
7,022
(2,948)
(415)
(2,060)
(4,429)
2,619
(211)
(1,175)
5,309
155,418
160,727
(67,314)
(7,135)
(20,151)
(10,094)
(4,103)
51,930
(18,903)
1,578
3,279
4,857
(1,398)
(675)
(421)
(180)
(20)
2,163
(1,576)
34,413
2,672
(4,330)
(48)
320
(1,386)
33,027
587
2,472
144,809
147,281
(57,050)
(6,057)
(16,867)
(9)
(2,883)
64,415
2,201
3,624
5,826
(3,057)
(132)
(1,117)
2
(552)
969
1,093
−
1,093
(381)
(189)
(693)
(30)
(161)
(361)
438
1,429
1,867
(141)
(61)
(192)
(1,205)
(108)
160
−
−
−
−
(7)
(1)
−
3,763
3,756
3,732
5,053
8,786
(3,580)
(388)
(2,004)
(1,233)
2,943
4,524
6,204
149,862
156,067
(60,630)
(6,445)
(18,871)
(1,242)
60
68,939
1,176
1,640
2,816
(423)
(4)
(565)
−
−
1,823
(21,901)
(304)
(3)
(790)
(1)
(1,099)
(23,000)
(750)
42,514
665
(365)
(630)
3,754
3,425
45,939
1,073
d) Reserve quantities information
The Company’s estimated net proved oil and gas reserves and changes thereto for the years 2015, 2014 and 2013 are
shown in the following table. Proved reserves are estimated by the Company’s reservoir geoengineers in accordance
with the reserve definitions prescribed by the Securities and Exchange Commission.
104
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data,
can be estimated with reasonable certainty to be economically producible from a given date forward, from known
reservoirs, and under existing economic conditions, operating methods, and government regulations-prior to the time
at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain,
regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the
hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project
within a reasonable time.
Developed oil and gas reserves are reserves of any category that can be expected to be recovered: (i) through existing
wells with existing equipment and operating methods or in which the cost of the required equipment is relatively
minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure
operational at the time of the reserves estimate if the extraction is by means not involving a well.
In some cases, substantial new investments in additional wells and related facilities will be required to recover these
proved reserves. Due to the inherent uncertainties and the limited nature of reservoir data, estimates of reserves are
subject to change as additional information becomes available.
A summary of the annual changes in the proved reserves of oil is as follows (in millions of barrels):
Proved developed and
undeveloped reserves
Reserves at December 31, 2012
Transfers by loss of control*
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Production for the year
Reserves at December 31, 2013
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2014
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Production for the year
Reserves at December 31, 2015
Brazil
10,539.2
−
(110.0)
818.3
124.2
(42.3)
(671.0)
10,658.4
629.3
267.7
−
−
−
(704.6)
10,850.9
(1,968.9)
407.1
0.4
(2.3)
(743.1)
8,544.1
South America North America
74.0
−
21.9
33.0
−
(1.5)
(4.3)
123.1
5.3
1.6
−
(0.1)
−
(10.0)
119.9
(18.1)
−
−
−
(11.2)
90.6
175.4
−
13.4
−
−
−
(22.8)
166.0
(3.2)
3.0
0.5
(104.4)
22.9
(18.3)
66.5
(3.5)
4.8
0.7
(4.5)
(11.7)
52.3
Africa
140.2
(140.2)
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Consolidated
Abroad **
Total
8.3
−
1.3
−
−
−
(0.8)
8.8
0.2
−
−
−
−
(1.1)
7.9
0.1
−
−
−
(1.0)
6.9
Total
10,937.1
(140.2)
(73.4)
851.4
124.2
(43.8)
(698.9)
10,956.4
631.6
272.3
0.5
(104.5)
22.9
(734.0)
11,045.1
(1,990.4)
411.9
1.1
(6.8)
(767.0)
8,693.9
Equity
Method
Investees
24.3
140.2
1.8
−
−
(65.4)
(16.5)
84.5
(1.1)
−
−
−
−
(11.3)
72.1
3.1
−
16.2
−
(10.9)
80.4
Others
389.6
(140.2)
35.4
33.0
−
(1.5)
(27.1)
289.2
2.1
4.6
0.5
(104.5)
22.9
(28.3)
186.5
(21.6)
4.8
0.7
(4.5)
(22.8)
142.9
(*) Amounts transferred from consolidated entities to equity-method entities, as the Company ceased to consolidate PO&G.
(**) In 2013 includes 105 million barrels related to assets classified as held for sale.
Apparent differences in the sum of the numbers are due to rounding off.
Bolivian proved reserves are not included due to restrictions determined by Bolivian Constitution.
105
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
A summary of the annual changes in the proved reserves of natural gas is as follows (in billions of cubic feet):
Proved developed and
undeveloped reserves
Reserves at December 31, 2012
Transfers by loss of control*
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2013
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2014
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2015
*Amounts transferred from consolidated entities to equity-method entities, as the Company ceased to consolidate PO&G.
** In 2013 includes 363 billion cubic feet related to assets classified as held for sale.
South America North America
67.7
−
2.6
80.4
−
(13.4)
−
(4.4)
132.9
46.1
6.0
−
(0.1)
−
(4.9)
180.0
(17.0)
−
−
−
−
(24.5)
138.5
Brazil
10,344.6
−
(291.2)
1,113.0
916.0
(17.3)
0.4
(773.8)
11,291.7
468.0
216.0
−
−
−
(805.4)
11,170.3
(1,178.3)
417.6
0.2
(1.3)
−
(820.8)
9,587.7
1,083.7
−
75.2
−
−
−
−
(100.4)
1,058.5
25.5
42.1
10.8
(351.7)
47.1
(101.5)
730.8
16.8
74.6
27.7
(90.2)
−
(79.2)
680.5
Africa
45.5
(45.5)
−
−
−
−
−
−
0.0
−
−
−
−
−
−
0.0
−
−
−
−
−
−
−
Others
1,196.9
(45.5)
77.8
80.4
−
(13.4)
−
(104.8)
1,191.4
71.6
48.1
10.8
(351.8)
47.1
(106.4)
910.8
(0.2)
74.6
27.7
(90.2)
−
(103.7)
819.1
Consolidated
Abroad **
Total
13.3
−
(0.1)
−
−
−
−
(1.4)
11.8
0.1
−
−
−
−
(1.4)
10.6
0.2
−
−
−
−
(1.4)
9.3
Total
11,554.8
(45.5)
(213.5)
1,193.4
916.0
(30.7)
0.4
(880.0)
12,494.8
539.7
264.1
10.8
(351.8)
47.1
(913.2)
12,091.5
(1,178.3)
492.2
27.9
(91.5)
−
(925.9)
10,416.1
Equity
Method
Investees
47.8
45.5
(8.0)
−
−
(22.8)
−
(0.6)
61.9
(14.4)
−
−
−
−
(0.6)
46.9
(13.1)
−
−
−
−
(0.3)
33.5
Apparent differences in the sum of the numbers are due to rounding off.
Bolivian proved reserves are not included due to restrictions determined by Bolivian Constitution.
106
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
The tables below present the volumes of proved developed and undeveloped reserves, net:
Net proved developed reserves:
Consolidated Entities
Brazil
South America
North America
Abroad
Total Consolidated Entities
Nonconsolidated Entities
South America
Africa
Abroad
Total Nonconsolidated Entities
Total Consolidated and Nonconsolidated Entities
Net proved undeveloped reserves:
Consolidated Entities
Brazil
South America
North America
Abroad
Total Consolidated Entities
Nonconsolidated Entities
South America
Africa
Abroad
Total Nonconsolidated Entities
Total Consolidated and Nonconsolidated Entities
Apparent differences in the sum of the numbers are due to rounding off.
Crude Oil Synthetic Oil Natural Gas
2015
Synthetic
Gas
Crude Oil Synthetic Oil Natural Gas
2014
Synthetic
Gas
Crude Oil Synthetic Oil Natural Gas
2013
Synthetic
Gas
(millions of barrels)
(billions of cubic feet)
(millions of barrels)
(billions of cubic feet)
(millions of barrels)
(billions of cubic feet)
4,266.5
39.7
53.6
93.4
4,359.9
6.6
28.0
34.7
34.7
6.9
−
−
−
6.9
−
−
−
−
5,320.5
366.3
122.5
488.8
5,809.3
8.0
10.4
18.4
18.4
9.3
−
−
−
9.3
−
−
−
−
7,002.7
52.0
63.6
115.6
7,118.3
9.4
30.8
40.2
40.2
7.9
−
−
−
7.9
−
−
−
−
6,661.0
358.2
146.2
504.3
7,165.4
15.7
14.4
30.1
30.1
10.6
−
−
−
10.6
−
−
−
−
6,509.3
86.0
46.2
132.2
6,641.6
12.4
37.3
49.8
49.8
8.8
−
−
−
8.8
−
−
−
−
6,578.9
368.4
9.9
378.3
6,957.3
14.9
15.7
30.5
30.5
11.8
−
−
−
11.8
−
−
−
−
4,394.5
6.9
5,827.7
9.3
7,158.5
7.9
7,195.5
10.6
6,691.4
8.8
6,987.8
11.8
4,277.7
12.5
37.0
49.5
4,327.2
7.9
37.8
45.7
45.7
4,372.9
−
−
−
−
−
−
−
−
−
−
4,267.2
314.2
16.0
330.3
4,597.5
8.9
6.2
15.1
15.1
4,612.6
−
−
−
−
−
−
−
−
−
−
3,848.2
14.6
56.4
71.0
3,919.2
8.6
23.3
31.9
31.9
3,951.1
−
−
−
−
−
−
−
−
−
−
4,509.2
372.5
33.8
406.3
4,915.5
11.9
4.9
16.8
16.8
4,932.3
−
−
−
−
−
−
−
−
−
−
4,149.1
80.1
77.0
157.1
4,306.2
8.8
25.9
34.7
34.7
4,340.8
−
−
−
−
−
−
−
−
−
−
4,712.7
690.1
123.1
813.2
5,525.9
26.4
4.9
31.3
31.3
5,557.2
−
−
−
−
−
−
−
−
−
−
107
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
e) Standardized measure of discounted future net cash flows relating to proved oil and gas quantities
and changes therein
The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is
calculated in accordance with the requirements of Codification Topic 932 of the SEC – Extractive Activities – Oil and
Gas.
Estimated future cash inflows from production are computed by applying the average price during the 12-month
period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average
of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual
arrangements, excluding escalations based upon future conditions. Future price changes are limited to those provided
by contractual arrangements in existence at the end of each reporting year. Future development and production costs
are those estimated future expenditures necessary to develop and produce year-end estimated proved reserves
based on year-end cost indications, assuming continuation of year-end economic conditions. Estimated future income
taxes are calculated by applying appropriate year-end statutory tax rates. In Brazil, together with the income tax, is
included future social contribution These amounts include allowable deductions which are subject to the statutory
rates. The discounted future net cash flows are calculated using discount factors of 10% applied to mid-period. This
discounted future net cash flows requires a estimate of when the future expenditures will be incurred and when the
reserves will be produced year-by-year.
The valuation prescribed under Codification Topic 932 of the SEC– Extractive Activities - Oil and Gas requires
assumptions as to the timing and amount of future development and production costs. The calculations are made as
of December 31 each year and should not be relied upon as an indication of Petrobras’ future cash flows or the value
of its oil and gas reserves.
Information relating to the standardized measure of discounted future net flows are presented originally in U.S.
dollars on Form 20-F of the SEC were converted to the real for these financial statements. Therefore, in order to
maintain consistency with the criteria used in measuring the estimates of future cash flows, as described above, the
exchange rate used for converting each period follows the average prices calculated as the unweighted arithmetic
average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the
reporting period. Exchange differences arising on translation are shown as cumulative translation adjustments in
handling flows tables, as follows.
108
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Discounted future net cash flows:
At December 31, 2015
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
10 percent midyear annual discount for timing of
estimated cash flows *
Standardized measure of discounted future net
cash flows
At December 31, 2014
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
10 percent midyear annual discount for timing of
estimated cash flows *
Standardized measure of discounted future net
cash flows
Brazil
1,524,183
(844,332)
(215,751)
(202,433)
261,667
South America North America
15,560
(8,847)
(3,272)
(76)
3,365
21,563
(10,434)
(3,481)
(1,736)
5,912
(120,677)
(1,939)
(488)
140,990
3,973
2,877
2,529,273
(1,098,425)
(164,084)
(441,802)
824,962
16,770
(8,762)
(2,798)
(1,447)
3,763
26,530
(8,630)
(5,504)
(955)
11,441
(418,349)
(1,230)
(3,703)
406,613
2,533
7,738
At December 31, 2013
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
10 percent midyear annual discount for timing of
estimated cash flows *
Standardized measure of discounted future net
cash flows
(*) Semiannual capitalization
(**) In 2013 includes the amount of R$ 3,790 million related to assets held for sale, carried out in 2014.
Bolivian proved reserves are not included due to restrictions determined by Bolivian Constitution.
2,444,936
(1,011,789)
(156,636)
(443,858)
832,653
36,145
(18,843)
(4,626)
(3,649)
9,028
(426,231)
406,422
(3,093)
5,935
26,017
(7,509)
(6,025)
(365)
12,118
(4,931)
7,187
Consolidated Entities
Abroad**
Total
37,123
(19,281)
(6,753)
(1,812)
9,277
Total
1,561,306
(863,613)
(222,504)
(204,245)
270,944
Equity
Method
Investees
12,995
(4,629)
(4,050)
(1,151)
3,165
(2,427)
(123,104)
(1,480)
6,850
147,840
1,685
43,300
(17,392)
(8,302)
(2,402)
15,204
2,572,573
(1,115,817)
(172,386)
(444,204)
840,166
14,704
(4,456)
(3,775)
(2,152)
4,321
(4,933)
(423,282)
(1,296)
10,271
416,884
3,025
62,162
(26,351)
(10,651)
(4,014)
21,146
2,507,098
(1,038,140)
(167,287)
(447,872)
853,799
18,802
(6,576)
(4,153)
(2,633)
5,441
(8,024)
(434,256)
(1,768)
13,122
419,543
3,673
Africa
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
109
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Balance at January 1, 2015
Sales and transfers of oil and gas,
net of production cost
Development costs incurred
Net change due to purchases and
sales of minerals in place
Net change due to extensions,
discoveries and improved, less
related costs
Revisions of previous quantity
estimates
Net change in prices, transfer prices
and in production costs
Changes in estimated future
development costs
Accretion of discount
Net change in income taxes
Others - unspecified
Cumulative translation adjustment
Balance at December 31, 2015
Brazil
406,613
South America North America
7,739
2,532
Africa
−
Others
−
(57,037)
47,906
(1,845)
1,486
(1,329)
1,310
(113)
(191)
21,499
1,068
−
−
(97,550)
6
(2,161)
(610,081)
499
(9,258)
(22,904)
40,661
226,167
−
185,829
140,990
(1,221)
517
220
(133)
1,035
3,973
1,775
1,035
305
303
3,158
2,877
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Consolidated Entities
Abroad
Total
10,271
(3,174)
2,796
Total
416,884
(60,211)
50,702
Equity
Method
Investees
3,025
(818)
1,420
(191)
(304)
−
1,068
22,567
1,606
(2,155)
(99,705)
441
(8,759)
(618,840)
(5,728)
554
1,552
525
170
4,193
6,850
(22,350)
42,213
226,692
170
190,022
147,840
(399)
429
1,110
599
−
1,685
110
Consolidated Entities
Abroad**
Total
13,121
−
Total
419,543
−
Equity
Method
Investees
3,672
−
(3,163)
2,268
(92,493)
44,994
(2,228)
1,501
(2,306)
(2,306)
−
−
17,274
427
434
39,675
(71)
(1,483)
(79,597)
(1,347)
(756)
1,111
(486)
(14)
1,118
10,271
18,321
(7,303)
(3,356)
2,594
(28,435)
41,753
17,234
(14)
39,256
416,884
385,144
(7,303)
(76,610)
38,657
(273)
412
202
−
1,157
3,025
800
7,303
(1,584)
512
338
(1,835)
(4,047)
1,451
72,944
2,076
(6,707)
−
180
(2,225)
(23,152)
(897)
(1,615)
1,546
380
(278)
1,192
13,121
(42,900)
38,228
(1,511)
(278)
44,866
419,542
(185)
541
586
−
463
3,672
−
−
−
−
−
−
−
−
−
−
−
−
7,303
(7,303)
−
660
−
−
−
(660)
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
6
−
−
−
(5)
−
−
−
−
(1)
−
Brazil
406,422
−
South America North America
7,186
−
5,935
−
Africa
−
−
Others
−
−
Supplementary information (unaudited)
(Expressed in millions of reais, unless otherwise indicated)
Balance at January 1, 2014
Transfers by loss of control*
Sales and transfers of oil and gas,
net of production cost
Development costs incurred
Net change due to purchases and
sales of minerals in place
Net change due to extensions,
discoveries and improved, less
related costs
Revisions of previous quantity
estimates
Net change in prices, transfer prices
and in production costs
Changes in estimated future
development costs
Accretion of discount
Net change in income taxes
Others - unspecified
Cumulative translation adjustment
Balance at December 31, 2014
(89,330)
42,726
(1,525)
1,285
(1,638)
983
−
(2,555)
249
16,847
39,241
427
(64)
−
498
(78,114)
(599)
(884)
(27,679)
40,642
17,720
−
38,138
406,613
(846)
308
(266)
(71)
503
2,532
90
803
(220)
57
615
7,739
587
(249)
(2,173)
(857)
390
4,795
−
6,223
−
(2,499)
1,538
366,823
−
(73,254)
36,063
Balance at January 1, 2013
Transfers by loss of control*
Sales and transfers of oil and gas,
net of production cost
Development costs incurred
Net change due to purchases and
sales of minerals in place
Net change due to extensions,
discoveries and improved, less
related costs
Revisions of previous quantity
estimates
Net change in prices, transfer prices
and in production costs
Changes in estimated future
development costs
Accretion of discount
Net change in income taxes
Others - unspecified
Cumulative translation adjustment
Balance at December 31, 2013
(*) Amount transferred due to deconsolidation of PO&G.
(**) In 2013 includes the amount of R$ 3,790 million related to assets held for sale, carried out in 2014.
(41,285)
36,682
(1,891)
−
43,674
406,422
(870)
962
407
(343)
674
5,935
(745)
584
(27)
65
519
7,186
(20,927)
(8,783)
71,493
1,451
2,016
(756)
(804)
60
−
Bolivian proved reserves are not included due to restrictions in accordance with Bolivian Constitution.
111
Board of Directors and Officers
BOARD OF DIRECTORS
LUIZ NELSON GUEDES DE CARVALHO
President
ALDEMIR BENDINE
Member
LUCIANO GALVÃO COUTINHO
Member
LUIZ AUGUSTO FRAGA NAVARRO DE BRITTO FILHO
(*)
Member
SEGEN FARID ESTEFEN
Member
GUILHERME AFFONSO FERREIRA
Member
WALTER MENDES DE OLIVEIRA FILHO
Member
ROBERTO DA CUNHA CASTELLO BRANCO
Member
DEYVID SOUZA BACELAR DA SILVA
Member
EXECUTIVE COMMITTEE (OFFICERS)
ALDEMIR BENDINE
Chief Executive Officer (CEO) - President
HUGO REPSOLD JÚNIOR
Director of Gas and Power
JOÃO ADALBERTO ELEK JÚNIOR
Director of Governance, Risk and Compliance
ANTÔNIO SÉRGIO OLIVEIRA SANTANA
Corporate and Services Director
ROBERTO MORO
Director of Engineering, Technology and Materials
IVAN DE SOUZA MONTEIRO
Chief Financial and Investor Relations Officer
JORGE CELESTINO RAMOS
Director of Refining, Transportation and Marketing
SOLANGE DA SILVA GUEDES
Director of Exploration and Production
PAULO JOSE ALVES
Chief Accounting Officer (CAO)
CRC-RJ-060.073/O-0
(*) Abstention to approve the financial statements.