ANNUAL REPORT
2018
—
2
SUMMARY
MESSAGE FROM THE
CHAIRMAN OF
THE BOARD OF DIRECTORS
3
SAFETY
BUSINESS AND
FINANCIAL
PERFORMANCE
8
Oil & Gas Exploration and Production
Refining and Natural Gas
Consolidated Financial Performance
72
79
98
71
MESSAGE FROM THE
CEO OF PETROBRAS
ABOUT THE REPORT
MATERIALITY
4
6
7
OVERVIEW
AND BUSINESS
MODEL
Who we are
Where we are
How we generate value
Business Model
Human
Intellectual
Social and Relationship
Natural
Productive
Financial
OUR
CAPITALS
EXTERNAL
CONTEXT
13
14
15
16
18
24
32
43
51
55
Strategic Plan and
Business and Management Plan
100
STRATEGIES AND
OUTLOOKS
12
Evolution Management System –
from Strategy to Implementation
106
99
GOVERNANCE
AND
COMPLIANCE
17
Corporate Governance
Compliance and Internal Controls
64
RISKS AND
OPPORTUNITIES
Risk Management
Opportunities
OTHER
INFORMATION
External Audit Services
Acknowledgment
Glossary
Management and Records
108
115
120
122
125
126
127
129
107
119
124
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
3
Message from the Chairman
of the Board of Directors
Over the last years, Petrobras has made important
I assumed the mission of chairing this Board with great
changes that have overcome one of the biggest crises
enthusiasm, which has as its characteristics the diversity
in its history. Significant advances in governance
in its composition and the complementarity of the
and control systems were fundamental to this
experiences of its members, and has as a commitment to
overcoming, as well as the measures taken to reduce its
act in the interests of the company and its shareholders.
indebtedness.
After the crisis, the company faces challenges related
2018, and its perspectives for the future contained in
to the great technological transformations and
this Integrated Report.
We invite everyone to explore the Petrobras' journey in
consumption patterns of society, as well as the opening
of new opportunities and the very development of the
Brazilian market.
In this process, the Board of Directors will contribute
with a vision of the economic environment and the
energy industry in the country and globally, and will seek
to guide and define strategic choices for the company,
aiming at its sustainability in the long term.
Eduardo Bacellar Leal Ferreira
Chairman of the Board of Directors
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 4
Message from
the CEO
The execution of the agreements with the US Securities
for the global oil industry, we humbly acknowledge
and Exchange Commission (SEC) and the US Department
that we are far short of what is desirable. We cannot be
of Justice (DoJ) and the sale on January 30, 2019 of
satisfied with this current situation as we have much to
the Pasadena refinery – whose acquisition had become
do and many challenges to overcome. Non-conformism
a symbol of corruption in Brazil – marked the end of a
forces us to focus on five strategic pillars.
painful cycle for Petrobras, its shareholders, employees
and the Brazilian society, in which the company was the
We have to improve the capital allocation substantially,
victim of prolonged looting perpetrated by a criminal
by focusing on the assets in which we are the natural
organization. Petrobras' performance over the past year
owner and promoting healthy capital competition among
has undoubtedly been the best in many years, which
our investment projects. A company operates at a loss
includes breaking some historical records, involving free
until it manages to return the capital employed in its
cash flow and adjusted EBITDA, and the interruption of
operations, which we have not yet been able to do. Our
four years of losses. An effective liability management
proven oil and gas reserves reached 9.6 billion barrels of
process extended the average debt maturity from
oil equivalent (boe), according to the SEC criteria. This
7.14 years in 2015 to 9.14 years in 2018, which helps
implies replacement of 125% of the volume produced
mitigate refinancing risks. In February 2019, our market
capitalization surpassed the USD 100 billion, which puts
in 2018 (excluding the effect of oilfield divestment)
and a proven reserves/production ratio of 11.1 years.
us back in the position of the largest company in
The important thing to note is that most of these
Latin America.
reserves originate from world-class assets such as the
pre-salt, the frontier of oil exploration in the world
We are celebrating the good results of 2018, but cannot
where Petrobras is the undisputed leader and natural
limit ourselves to the internal vision, the comparison with
owner. Focusing on these low-cost assets, high quality
ourselves even in previous years. Broadening our horizon
and productivity, and long life represents an enormous
Watch here the CEO's video about
our results in 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 5
potential for value creation over time. In the industry,
numerator and the denominator of these fractions:
The goal of maximizing value for shareholders cannot,
the exploitation of world-class assets is one of the keys
reduce the debt and work for the growth of the cash flow
under any circumstances, dismiss the attention to the
to a company's success.
through an increase of production and a reduction
safety of people and operations and the preservation of
in costs.
the environment, nor result in underestimation of risks
The generation of economic profit requires greater
so that goals are achieved.
agility in the decision-making process, which is
In the same way, we must permanently seek to have
being pursued in 2019 with the indispensable care to
low costs, a basic condition in any company for the
We believe that our transformational change agenda is
safeguard the high standards of corporate governance,
generation of value regardless of the economic cycle
capable of creating considerable value for shareholders
and the strict compliance standards implemented
and, more importantly, the oil industry, typically with
and for Brazil in the future. We can say, then, that the
in Petrobras in recent years. In this context, it is
high exposure to the cycles of global economic activity.
best days of Petrobras are still ahead of us.
worth mentioning that, for example, delays in project
The digital transformation, with the massive use of
implementation are generally the largest source of
digitization, data analytics and artificial intelligence, is
Finally, we would like to thank all those who participated
reduction of their rates of return. With the aid of
essential for generating efficiency gains and lower costs.
in the reconstruction efforts of Petrobras and, above
innovations, we are developing initiatives to shorten the
all, our collaborators. The company has a recognized
time interval between the beginning of the exploratory
Respecting people and the environment and preserving
technical expertise that will be crucial in this new era that
activity and the first oil and also the time of the ramp-
the safety of our operations should be a golden rule.
began in 2019.
up phase of the E&P projects, which will contribute to
The oil and gas exploration and production activity is
increase their return.
exposed to a wide range of risks, including operational
risks that, once materialized, have an enormous
We must constantly seek the investment grade rating
potential for destruction of value and even threaten the
and the reduction of the capex through financial
survival of a company. We work tirelessly to minimize
deleveraging and transparent relationship with the
global financial markets. The exposure of cash flow to
them and, at the same time, to strengthen our ability
to respond to the occurrence of any negative events.
the cyclical volatility of oil prices requires its producers
The recordable incident rate reached 1.01 accidents per
to have low leverage. Our gross indebtedness decreased
million man-hours, with a decrease of 6.5% over 2017,
significantly from USD 126.3 billion in 2015 to USD 84.4
but slightly above the warning threshold of 1.0 for 2018.
billion at the end of 2018, but is still high compared
Despite the progress in this indicator, the occurrence of
to the current cash generation capacity: gross debt/
six fatalities saddens and embarrasses us. The loss of
operating cash flow of 3.2x and gross debt/Adjusted
human life, whatever its explanation, is unacceptable.
EBITDA of 2.7x. We will act simultaneously on the
Our permanent goal is zero fatality.
Roberto Castello Branco
CEO of Petrobras
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 6
About the report
NOTICE TO THE READER
The Integrated Reporting is a process that promotes a
In the last year, with the publication of our first Integrated
This document contains forecasts that reflect only
more cohesive and efficient approach to the development
Reporting, we advanced the reporting process, which aims
the expectations of our board of directors. The terms
of corporate reports, aiming at improving the quality of
at improving the transparency and connectivity of
“anticipates," “believes," “expects," “forecast," “intends,"
information available to providers of financial capital, in
information provided and demonstrating how we generate
“plans," “projects," “aims," “shall” and other similar terms are
order to explain how the organization generates value over
value over time.
time and providing subsidies to capital allocation in a more
intended to identify such forecasts, which evidently involve
risks or uncertainties foreseen or not by the company.
efficient and productive way. This publication (2018 Annual
In the Annual Report 2018, we seek to improve this process
Report), along with the Sustainability 2018 and the
and present, in addition to the main highlights of the year,
Therefore, the future results of our operations may differ
Financial Statements, form the basis of our
the review of our materiality and our contributions to the
from the current expectations, and the reader must not rely
Integrated Reporting.
Sustainable Development Goals.
solely on the information contained herein. The company
shall not be liable for updating such forecasts in the light of
The Annual Report is also a Management Report and
This report was validated by our Executive Board and
new information or future developments.
seeks not only to comply with current regulations – such
approved by our Board of Directors. In addition, the
as Law 6404/1976 and the guidelines of the Brazilian
independent auditor (KPMG) read the information contained
Securities and Exchange Commission (CVM) – as well as
herein, in the context of the auditing standards related
We would like to receive your questions regarding this
with principles and content elements recommended by
to the company's financial statements for the fiscal year
report and your suggestions for the next edition.
the Integrated Reporting framework from the International
ended December 31, 2018, as included in its report on such
Integrated Reporting Council (IIRC). In addition, the financial
financial statements issued on February 27, 2019.
Contact us
information in this report was prepared in compliance with
the International Financial Reporting Standards (IFRS) and
Have a good journey!
also with the accounting practices adopted in Brazil by the
Accounting Pronouncements Committee, or CPC (Comitê de
Pronunciamentos Contábeis).
Before you start reading the 2018 Annual Report, please
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ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 7
For more information on the correlation of Global Reporting
Initiative (GRI) indicators with SDG, please refer to
Sustainability 2018.
Materiality
Our activities and operations contribute to several of the
17 Sustainable Development Goals (SDGs) from 2030
Agenda of the United Nations. Our material themes are
mainly related to the following SDGs:
The material issues are the result of the process of
Throughout our Integrated Reporting, we can also find our
identification, evaluation, and prioritization of the relevant
contributions to reach the SDG:
themes that can impact our value generation in the short,
medium, and long term. In 2018 we reviewed
our materiality.
DEFINITION OF
RELEVANT THEMES
THEMES
EVALUATION
PRIORITIZATION
28
ISSUES
61
EVALUATIONS
S
R
E
D
L
O
H
E
K
A
T
S
O
T
E
C
N
A
V
E
L
E
R
IMPACT ON BUSINESS
15
MATERIAL
ISSUES
Elaboration of a list from the
The 28 relevant themes were
The results of this consultation
compilation of previous material
evaluated internally by our senior
gave rise to our materiality
themes, survey of the expectations
management, as recommended
matrix. Thus, material themes
of stakeholders, relevant issues to
by the International Integrated
were defined based on
the Dow Jones Sustainability Index
Reporting Council (IIRC) framework,
objective prioritization criteria
(DJSI) and Sustainability Accounting
and externally by a group of investors,
and were internally approved.
Standards Board (SASB), interactions
by assigning importance in two
with investors and themes of our
dimensions: impact on our business
Strategic Planning and Business and
and relevance to stakeholders.
Management Plan.
OIL PRODUCT PRICES
ACCIDENT PREVENTION AND SPILLS
COMPLIANCE, BUSINESS ETHICS,
PREVENTION AND ANTI- CORRUPTION
RESERVES REPLACEMENT
POLITICAL-ECONOMIC ISSUES
PRODUCTION CURVE EFFECTIVENESS
SAFETY AND COMMITMENT TO LIFE
REGULATORY FRAMEWORK,
MARKET AND COMPETITION
OPERATIONAL AND
INVESTMENTS EFFICIENCY
PORTFOLIO STRATEGY
CORPORATE GOVERNANCE
FINANCIAL STRATEGY
PRODUCT QUALITY AND
CUSTOMER RELATIONSHIP
SUPPLIERS MANAGEMENT
RELATIONSHIP WITH STAKEHOLDERS
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
8
SAFETY
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 9
Safety is a value acknowledged in
our Strategic and Business and
Management Plans.
TRI’s evolution is a direct consequence of the
implementation of several initiatives for the promotion
of our safety culture, among which we highlight the
Commitment to Life Program; the safety trainings; and
SENIOR MANAGEMENT MONITORING OF ACTIONS
Senior management actively participates in the
the Health, Safety and Environment (HSE) Management
Commitment to Life Program. Executive managers, the
In order to materialize this value into strategic objectives
and, above all, to improve safety practices, we established
a set of actions in order to involve all collaborators.
Such actions will be detailed throughout this chapter,
demonstrating the priority of safety at all levels,
processes, and activities.
In our 2018-2022 Business and Management Plan, our
goal was to reduce the Total Recordable Injury (TRI), one
of the metrics monitored by senior management, by 53%,
from a result of 2.15 in 2015 to 1.00 in 2018. We achieved
Assessment Program.
In the 2019-2023 Business and Management Plan, we
established an alert threshold for TRI of 0.99 for the year
2019. This result will places us at the same level as the best
oil and gas companies in the world in terms of safety.
In order to maintain the conditions for the continuous
reduction of safety metrics, the 2018-2019 cycle of the
Commitment to Life Program was initiated in October 2018.
a result of 1.01 in 2018.
COMMITMENT TO LIFE PROGRAM
Executive Board and the Board of Directors systematically
follow-up the metrics in their meetings, and managers
participate in training aimed at leadership, thus
consolidating the HSE culture in Petrobras.
Through the Board Visits Program, members of
our Board of Directors make technical visits to our
operational units with the purpose of checking on
the dissemination of the safety culture, such as the
knowledge and practical use of the Golden Rules on
daily tasks, through behavioral audits with our
collaborators. During 2018 the Board of Directors
made technical visits to the Paulínia Base (Petrobras
TOTAL RECORDABLE INJURY – TRI
1.63
1.08
1.01
0.99
2016
2017
2018
2019
AVERAGE OF MAIN COMPANIES IN SECTOR
A set of initiatives focusing on accidents prevention and
Distribuidora unit), to the São Sebastião Terminal,
preserving life and the environment, the
the National Center of Control and Logistics, the
Commitment to Life Program was launched in October
National Ship Monitoring Center and the Ship
2016 to strengthen the guidelines and standardize safety
Simulator (Transpetro units) and to UO-ES
practices at all stages of the processes.
(Petrobras controller unit).
These initiatives have been structured based upon the
results of our Health, Safety, and Environment (HSE)
management assessments, the root causes identified
in the accident investigation processes and the
environmental scenarios in recent years.
Five visits to the Petrobras facilities (such as refinery
and production platforms), Transpetro and Petrobras
Distribuidora are scheduled to take place in 2019.
Technical visits and behavioral audits are also conducted
by our CEO and executive officers.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
The main highlights of the Program for the 2018-2019 Cycle are:
IMPROVING THE SAFETY MANAGEMENT
PROCESS
Risk assessment review.
Training for employees.
STRENGTHENING THE APPROACH TO
HUMAN FACTORS
Implementation of the Atentamente
and Amigo do Peito programs for all employees.
STRENGTHENING THE HSE CULTURE
Actions resulting from the perception survey.
PROMOTE TRAINING WITH LANGUAGE MORE ACCESSIBLE TO T-HUET APPLICATION
PRESERVING THE ENVIRONMENT
Commitment to climate.
Water resources management.
IMPLEMENTING NEW TECHNOLOGIES
Data analytics to direct actions, virtual reality,
drones, leak identification.
Throughout 2018, we developed a series of campaigns to strengthen the HSE culture based on results of a diagnosis
made at the beginning of the year. The topics covered in the campaigns were: safe positioning, cargo handling, hand care,
use of personal protective equipment (PPE) and fire prevention. In addition to the campaigns, we launched the "Cuidar
e Ser Cuidado" (be careful and be taken care of) concept, which began to permeate all communication actions for HSE,
highlighting the importance of mutual care - care for each other and accept that someone takes care for you.
In 2018, we trained more than 18,500 people on HSE practices, strengthened awareness through campaigns, and
defined the Golden Rules training, which aims to prevent harm to people and strengthen the safety culture as a must
for new employees and hires. With this, since 2017, more than 198 thousand employees and Petrobras' contractors and
subsidiaries were trained in our ten Golden Rules. In addition, a supplier relationship plan foresees the deployment of the
main messages to the leaders of contracted companies, who should work on the topics with their teams.
10
HSE CULTURE PERCEPTION SURVEY
In 2018, we conducted a survey to learn about the
collective perception of employees about the HSE culture.
This was done by assessing the Leadership, Structure,
and Processes dimensions, in order to highlight the main
strengths and opportunities for improvement for each
level of the organization. The survey involved 108,387 of
Petrobras' employees and contractors, representing
80% of respondents.
The safety culture within a company has four levels,
determined according to the maturity of the organization.
The first level is the reactive culture, where the company
only deals with the safety issues in a responsive and
instinctive way, usually delegating all actions to safety
professionals. The second level is the dependent culture
characterized by clear rules and the need for supervision
to be met. The third level is independent culture, in which
employees understand that safety is important and
followed even when their supervision is not present.
The fourth level is the interdependence culture: at this
stage, employees not only are aware and follow the rules,
but also help each other.
The result of the survey revealed that Petrobras was in
the stage of independent culture. Our goal now is to
reach the interdependent stage and therefore, we are
developing actions in this direction in the Commitment to
Life Program.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES EMERGENCY PREPAREDNESS AND RESPONSE
FATAL ACCIDENTS
11
Despite our efforts in the search for continuous improvement in safety management and culture, we recorded and
regretted the occurrence of six fatalities in the year 2018.
In all fatal accidents, our first action was the personal support of the leaderships to the victims’ families. The occurrences
were immediately reported to the senior management, initiating the analysis of the extent of the accident and the
implementation of emergency actions to prevent any similar occurrence.
We conducted the investigation and analysis process, under the coordination of executive managers and a multidisciplinary
team, in order to identify the causes of accidents. We consolidated and disclosed actions to avoid the recurrence of these
accidents. The lessons learned are discussed in forums with managers and disseminated to our employees.
In 2018, we highlight, among other preparatory work and
emergency response, the simulation conducted at the
Santos Basin Exploration Operations unit, which involved
a complex scenario and actions on the field. In addition
to the Organizational Response Framework (ORF) and the
Local Response Structure, the Business Support Team
(BST), consisting of senior management,
has been deployed.
HSE MANAGEMENT ASSESSMENT PROGRAM
In order to ensure compliance with the requirements
established in the HSE Management System, we rely on
the HSE Management Assessment Program.
This is a proactive, independent and integrated
assessment process, whose results are monitored at
critical review meetings with senior management.
Findings identified during assessments are classified
as critical, serious, moderate, and mild. Action plans are
established, with treatment deadlines that take the degree
of criticality into account.
In 2018, 84 assessments were
conducted, comprising 306 facilities,
86% of which in the E&P area.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 12
OVERVIEW AND
BUSINESS
MODEL
Who we are
Where we are
How we generate value
Business Model
13
14
15
16
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Who we are
We are a publicly traded corporation whose
motivation is to provide the energy that moves
society to fulfill its potential. We operate, through
the unique technical capacity of our employees,
in exploration and production, refining, natural
gas, power, logistics, marketing, oil products
distribution, petrochemicals, renewable and
fertilizers.
AN INTEGRATED ENERGY
COMPANY, THAT EVOLVES
WITH SOCIETY, GENERATES
HIGH VALUE AND HAS
A UNIQUE TECHNICAL
CAPABILITY.
N
VISIO
V
A
L
U
E
S
PURPOSE
PROVIDE THE ENERGY
THAT MOVES SOCIETY
TO FULFILL
ITS POTENTIAL.
13
• RESPECT FOR
LIFE, PEOPLE
AND THE
ENVIRONMENT;
• ETHICS AND
TRANSPARENCY;
• MARKET
ORIENTATION;
• RESILIENCE AND
CONFIDENCE;
• RESULTS.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 14
MAIN COUNTRIES WITH ACTIVITIES
IN THE WORLD
J
F
H
K
E
G
D
C
I
L
B
A
H
A
B
C
D
E
F
G
H
I
J
K
L
ARGENTINA
BOLIVIA
CHILE
COLÔMBIA
UNITED STATES
NETHERLANDS
MEXICO
NIGERIA
PARAGUAY
UNITED KINGDOM
SINGAPORE
URUGUAY
ESPÍRITO
SANTO
RIO DE
JANEIRO
Where we are
MAIN EXPLORATION, PRODUCTION, AND REFINING ASSETS
FOZ DO AMAZONAS
PARÁ-MARANHÃO
BARREIRINHAS
2
5
CEARÁ
POTIGUAR
3
4
SERGIPE-ALAGOAS
PARNAÍBA
RECÔNCAVO
6
7
CAMAMU
ALMADA
JEQUITINHONHA
ESPÍRITO SANTO
PARANÁ
8
9
10
CAMPOS
SÃO PAULO
PELOTAS
SANTOS
1
SOLIMÕES/AMAZONAS
ONSHORE BASINS
OFFSHORE BASINS
REFINERIES
1
2
REMAN
(ISAAC SABBÁ)
LUBNOR
(REFINARIA
LUBRIFICANTES E
DERIVADOS DO NORDESTE)
3 RPCC
(POTIGUAR CLARA CAMARÃO)
4
5
6
RNEST
(ABREU E LIMA)
RLAM
(LANDULPHO ALVES)
REGAP
(GABRIEL PASSOS)
PARANÁ
7
8
REDUC
(DUQUE DE CAXIAS)
RPBC
(PRES. BERNARDES)
REVAP
(HENRIQUE LAGE)
REPLAN
(PAULÍNIA)
RECAP
(CAPUAVA)
9
REPAR
(PRES. GETÚLIO VARGAS)
SIX
(UNIDADE DE INDUSTRIALIZAÇÃO DO XISTO)
10
REFAP
(ALBERTO PASQUALINI)
CONCESSION
TRANSFER OF RIGHTS
PRODUCTION SHARING
EXPLORATORY AREAS ACQUIRED IN 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 15
How we generate value
To follow our value generation we have three main metrics, in addition to other indicators
throughout the report:
In our business model, we demonstrate how we use resources and processes to
generate value for our stakeholders.
TRI (x)
NET DEBT/ADJUSTED EBITDA (x)
The resources used in our production process, presented in our business model,
ROCE*** (%)
1.00
2.5
-
1.01
2.34
8.5
Below 1.0 from 2019
Below 1.5 in 2020
Above 11% in 2020
PERFORMANCE METRICS
GOAL 2018*
RESULT 2018
GOAL PNG 2019-2023**
were classified into six categories according to the International Integrated Reporting
Council capital model. Therefore, our capitals represent the inputs and are affected
by our activities within the value generating process.
* Target according to Business and Management Plan 2018-2022.
** Target according to Business and Management Plan 2019-2023.
*** ROCE calculated using Adjusted EBITDA.
For information on our Business Plan and Management,
please refer to Strategy and Perspective.
Our human
capital
is comprised by our employees working with safety, technical capacity,
competence and experience, ethics, accountability and compliance.
Our intelectual
capital
is comprised of our recognized technical capacity, development
of new technologies, and intellectual property.
Our social and
relationship capital
is formed by interactions with our stakeholders. These
interactions are strengthened through our dialog channels, our
social investments and our brand and reputation management
initiatives, seeking to strengthen the bonds of trust with
society.
Our financial
capital
is composed of the available financial resources, whether our
own or from third parties, allocated to our productive activity.
Our productive
capital
consists of our industrial units and all the infrastructure we
use in our productive activity, with emphasis to the platforms,
refineries and logistical assets.
Our natural
capital
is composed of renewable and non-renewable environmental
resources used in or affected by our production process,
especially our oil and gas reserves, in addition to water
resources, ecosystems and biodiversity.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Business Model
OUR
RESOURCES
APPLIED TO
OUR PROCESSES
RESULT
PRODUCTS
HUMAN
Number of
Employess
(thousand)
63.4
INTELLECTUAL
RD&I Investment
(R$ billion)
2.3
D
N
A
N
O
I
T
A
R
O
L
P
X
E
N
O
I
T
C
U
D
O
R
P
G
REFININ
NATURAL
Reserves
(SEC- billion barrels
of oil equivalent)
9.6
RELATIONSHIP
Number of Suppliers
(thousand)
12.7
PRODUCTIVE
Property, Plant and
Equipment
(R$ billion)
609.8
FINANCIAL
Net Debt
(R$ billion)
268,9
R
P O W E
LOGISTIC
COMMERCIALIZATION
N A T U R A L G A S
CULTURA
REV
E
N
L C
H
U
E
O
A
N
G
E
CAPITA
L D
IS
P
T
I
C
I
P
L
I
N
E
M
S
I
Z
A
T
A
F
E
T
Y
I
O
N
I
A
C
T
V
E
P
O
R
T
S
U
S
T
A
I
N
A
B
ILIT
C
O
S
T
A
N
D P
R
FOLIO M
Y INNOVATIO
OCESS EFFICIE
N
DIS
T
RIB
U
TIO
N
P
E
T
R
O
C
H
E
M
I
C
A
L
S
B
I
O
F
U
E
L
S
STRATEGY
EMENT
A
N
A
G
N
C
Y
F
E
R
T
I
L
I
Z
E
R
16
OIL AND GAS
Production
(millions barrels of oil
equivalent per day)
OIL PRODUCTS
Domestic market
sales
(million barrels per day)
NATURAL GAS
Domestic market
sales
(million m³ per day)
ENERGY
Domestic market
sales
(thousand MW average)
2.63
1.9
61.6
3.62
IMPACTS
SAFETY
Total Recordable
Injury Frequency Rate
(TRI)
ENVIRONMENT
Spill
(m³ )
Greenhouse Gas
Emissions
(million ton CO2e)
AND ADD
281.1
R$ billion in
VALUE
to:
1.01
STATE AND
SOCIETY
Federal Taxes
(R$ billion)
100.6
State and Municipal
Taxes
(R$ billion)
50.9
Taxes Abroad
(R$ billion)
3.0
18.5
62
EMPLOYEES
Wages1
(R$ billion)
19.4
Fringe and
Unemployment
Benefits
(R$ billion)
12.9
INVESTORS
AND OTHERS
Financial Intitutions and
Suppliers
(R$ billion)
67.6
Shareholdres2 3
(R$ billion)
25.8
Total Shareholder Return
47%
1 Includes Profit participation and variable compensation program.
2 According to the Capital Ownership, R$ 12 billion belongs to the Union and related entities and R$ 13.8 billion to other shareholders.
3 Does not include R$ 0.9 billion related to the other shareholders of the consolidated companies.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
17
Our
capitals
Human
Intellectual
Social and Relationship
Natural
Productive
Financial
18
24
32
44
52
56
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
18
Our human capital is comprised by our employees working with safety, technical capacity,
competence and experience, ethics, accountability and compliance.
Human
Capital
Our employees'
profile
TOTAL EMPLOYEES AT THE PETROBRAS
TOTAL EMPLOYEES PETROBRAS HOLDING
EDUCATION LEVEL
OF EMPLOYEES
17%
POST-GRADUATION
11%
MASTER'S DEGREE
2%
PHD
68,829
62,703
63,361
51,255
13,936
3,638
46,979
13,914
1,810
47,556
13,935
1,870
TOTAL EMPLOYEES
47,556
1%
40%
59%
ELEMENTARY
EDUCATION
SECONDARY
EDUCATION
HIGHER
EDUCATION
39,789
MEN
7,767
WOMEN
84%
16%
2016
2017
2018
HOLDING
SUBSIDIARIES IN BRAZIL
SUBSIDIARIES ABROAD
CORPORATE
FUNCTION
MANAGER
SUPERVIOR
SPECIALIST
WITHOUT
FUNCTION
10%
5%
3%
82%
11%
3%
4%
82%
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 19
The focus of our human capital management is to work on
New hires and dismissals
strategic topics for the sustainability of the organization,
providing the necessary skills for the business continuity
and developing managers and employees to leverage
our results. We do this by providing people management
services and solutions that add value to the company's
results in a proactive and integrated way, aligned with our
strategy and best practices in the market.
Therefore, in 2018, we implemented a new management
and performance model, restructuring the Human
Resources area, which now is called People Management.
The main focuses of transformation, besides the
workforce adequacy, were career and meritocracy, new
work arrangements, optimized work processes and
modern technologies, making our human capital more
agile and flexible and delivering greater value to
the company.
TURNOVER PETROBRAS HOLDING
2018
2017
2016
2015
2014
DISMISSALS
NEW HIRES
300 PIDV 85
902
4,395 PIDV 4,272
158
6,444 PIDV 6,262
876
2,013 PIDV 1,605
244
4,820 PIDV 4,276
726
The total amount of employees at Petrobras
Holding that have already left the company due
to the 2014 and 2016 PIDVs was16,500 until 31
December 2018. The total severance paid due
to the PIDVs was BRL 5.5 billion, with financial
return of BRL 19.5 billion in avoided costs until
December 2018.
The dismissals through the PIDVs changed the
distribution of ranges by time in the company,
as well as the age pyramid, thus creating a more
balanced professional profile. This new profile
is important for our growth in terms of human
resources and knowledge management.
WORKFORCE ADEQUACY
TIME IN THE COMPANY PETROBRAS HOLDING
(%)
The workforce adequacy process is part of a broad
analysis of the company's structure, which is in line
with our Business and Management Plan and enables
the identification of needs and efficient allocation of
our human capital, making the professional profile
compatible with the opportunities available. Thus, after
planning our personnel needs, we perform the effective
2018
2017
2016
28
37
39
50
40
33
adjustment through actions such as promoting programs
2015
48
18
for voluntary severance (PIDV 2014 and 2016), new hires
(Public Selection Processes), and the internal personnel
2014
50
14
movement program (Mobiliza).
22
23
28
34
36
0 TO 9 YEARS
10 TO 19 YEARS
20 YEARS OR MORE
After the adjustments to our staff made in recent
years, we are conducting occasional adjustments.
In 2018, we published a public selection process
for secondary education and higher education
positions, totaling 108 positions disclosed, in
order to adapt our staff to fulfill our goals.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 20
Mobiliza
OTHER HUMAN CAPITAL MANAGEMENT
In 2018, we implemented the possibility of reducing
Mobiliza is a continuous program of internal movement
INITIATIVES
the weekly workload from five to four days, also with a
proportional reduction of remuneration and for employees
of employees, created to adapt the workforce of the
Based on internal inputs, such as the ambience survey and
without bonus payment. This option was also provided to
units to the company's needs, seeking to reconcile the
interests of the employees. The Mobiliza is exclusively
for employees with no managerial duties and generates
career development opportunities for employees
strategic drivers of the Business and Management Plan,
and external inputs (benchmarks, studies, and market
survey), we structured our human resources initiatives.
employees with fixed working hours and social workers.
The work shift reduction is not definitive. It is valid for one
year and can be renewed automatically for an equal period,
through mobility.
In 2018, we made major strides in the following initiatives:
if there is no manifestation, to the contrary, from the
MOBILIZA PROGRAM (PUBLISHED X PROVIDES OPPORTUNITIES)
(%)
Telework: Our pilot project for remote work (teleworking)
was implemented with the target audience being
On 31 December 2018, we had 783 employees working
employee or the immediate manager.
266
151
917
417
884
535
57%
45%
61%
2016
2017
2018
PUBLISHED OPPORTUNITIES
PROVIDED OPPORTUNITIES
% PROVIDED
employees in a flexible administrative regime. The
under the optional reduced workday regime.
adherence is voluntary, provided it is negotiated with the
immediate manager of the employee concerned, as well as
the definition of the working day schedule, limited to up to
Career and Remuneration Plan: we modernized our
career plan, with the implementation of the new Career
three days per week.
and Remuneration Plan (PCR).
Identified as an initiative that provides greater flexibility
PCR provides a series of criteria to improve the
and quality of life, positively impacting the commitment
management of people through the enhancement of skills
and satisfaction of employees, we have approximately
and performance, as well as to stimulate the professional
800 employees teleworking in the pilot project, on 31
development of employees, enabling them to achieve
December 2018.
higher levels of responsibility and, consequently, career
development and remuneration.
Simultaneously to the staff suitability process, we
implemented knowledge management and people
Working hours’ reduction: the optional work shift
reduction from eight to six hours a day, with proportional
One of the biggest gains of the PCR is the broad mobility,
development initiatives with the purpose of minimizing
reduction of remuneration, brings together company's
allowing the company a better management of its needs
any impact on the productivity of our human capital and
and employees' interests, starting in 2017. This option
and staff allocation.
add value to such capital.
was provided to employees of the administrative regime,
linked to flexible hours and without bonus payment.
For information on such initiatives,
please refer to Intellectual Capital.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 21
Management Succession: The management succession
process is done through selection and development of our
Cultural Transformation: The Culture Management Project
aims to promote the cultural changes required to achieve
Throughout 2018, the Cultural Diagnostic Report was
developed, an integral part of the second stage
"talent bank." We plan the expansion of the scope of the
organizational results. This project aims at adapting our
of the project, with the main findings of the company's
management succession program, proposing solutions
organizational culture, starting with the leaderships,
current culture. The analysis of the findings recorded in
that allow the identification of high potentials at different
in order to align the behaviors of the employees to
the report will allow the development of our Culture Plan,
levels of the organization.
the strategic, business and management challenges,
which is an essential content for project continuity.
In 2018, we implemented the processes to identify and
select professionals for management positions, promoting
reinforcing values such as safety, results, efficiency,
meritocracy, simplicity and compliance.
meritocracy and the continuous provision of leadership,
The project considers three steps in its strategy:
encouraging career self-management and valuing the
Turning Point Culture, Prosperity Culture, and
professional career. Selection processes were conducted
Sustainability Culture. In its first phase, Turning Point
to fill 267 management positions, covering all areas
Culture, started in 2017, the effort was directed
of the company.
to leadership.
For more information on human capital
management initiatives,
please refer to Sustainability 2018.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 22
MAIN BENEFITS GRANTED
TO EMPLOYEES
From April 2018, the PPSP was split up into two plans:
Health and Pharmacy Benefit Plan
one made up of employees and assistants who adhered
to the new rules of the plan in 2006, 2007 and 2012
We maintain a supplementary health-care plan,
We offer benefits compatible with the size of the company
(PPSP-Renegotiated) and those that did not adhere
Assistência Multidisciplinar de Saúde (AMS), which
and that seek the valuation of employees. All employees
(PPSP-Not Renegotiated). Together, those plans cover
provides medical and hospital and dental care services to
are entitled to the same benefits, regardless of positions
95% of our employees.
or duties. Among the main ones, we highlight the
all active and inactive employees and their dependents,
through the participation of employees.
complementary pension plans, the medical assistance
and the pharmacy benefit.
Due to the effects of the PPSP plans on the sponsor
and participants, Petrobras, together with Petros,
The AMS benefit also offers coverage of complementary
structured a new defined-benefit plan, called the Petros-3
programs, such as the Benefício Farmácia program.
Social Security Plans
Plan. Such plan shall be open for voluntary migration of
participants and beneficiaries as soon as it is approven by
The Benefício Farmácia program was reformulated in 2018,
Until March 2018, we sponsored two complementary
competent bodies.
pension plans, the Plano Petros do Sistema Petrobras
(PPSP), a defined-benefit plan closed to new members,
and the Petros-2 Plan, a variable contribution plan, in force
and opened since 2007.
REORGANIZATION OF PETROS PLANS
In 2017, the Plano Petros do Sistema Petrobras underwent an equation plan due to a total deficit of R$ 27.3 billion and is being
considered based on the rules established in the deficit adjustment plan (PED). The remaining term for this plan is 17 years
and, as of March 2018, has been made through the contribution of extraordinary contributions with the participation of all
participants – active, retired and pensioners - and also of the sponsors, in a similar way – Petrobras, Petrobras Distribuidora,
and Petros –, according to provisions of law.
At this moment, there are judicial discussions regarding the subject, and there has been suspension of extraordinary
contributions for participants benefiting from injunctions, whose merits will still be evaluated and judged. These processes are
being handled by the Fundação Petros de Seguridade Social and monitored by Petrobras.
In the year ended December 31, 2018, the company disbursed R$ 607 million (R$ 562 million in the Holding) in contributions
referring to the PED.
and only covered drugs from a predefined list of chronic
or psychiatric diseases. By choosing to use the Benefício
Farmácia, the beneficiary will be co-participating in the
cost, according to the table defined in the Collective-
Bargaining Agreement, which takes into account the
income of the beneficial owner and the classification
of the drug purchased according to its maximum price
consumer or disease.
In 2018, the number of beneficiaries was 287,676 between
active employees, retired employees, and dependents,
with a disbursement of R$ 2.71 billion, being R$ 2.59
billion with AMS and R$ 121.74 million with the Benefício
Farmácia. With respect to collection, the total was
R$ 699.92 million, of which R$ 677.07 million was collected
with co-participations and AMS monthly payments,
and R$ 22.86 million collected from Benefício Farmácia
beneficiaries.
For more information on benefits granted to employees,
please refer to Sustainability 2018 and Financial
Statements (explanatory notes 22 and 23).
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES SAFETY AND HEALTH
Safety
In our Strategic Plan, we stress the value of "respect for
life" and due to its importance, this issue is being dealt
with in the Safety section.
Health
Our health management is also conducted through
the Commitment to Life program, together with
the Occupational Risk Prevention program, and the
Occupational Health Medical Control and Health
Promotion program, in an integrated approach to health,
safety, environment, and occupational hygiene.
The planning of actions aimed at health prevention,
and promotion is guided by the results obtained from
data collected annually in occupational examinations,
associated with the characteristics and risks identified
in the epidemiological profile of the employees. Also
considered in planning, are the emerging problems in the
country and in the world, as well as successful practices
identified in the market to promote wellness at work.
In 2018, about 3% of absences due to health reasons had
some relation to work.
LABOR LITIGATION
Despite our efforts on the management of our human
capital, we have labor contingencies provisioned in our
financial statements.
LABOR LITIGATIONS PROVISIONED
(R$ MILLION)
3,995
4,513
4,236
2016
2017
2018
LABOR LITIGATIONS NOT PROVISIONED
(R$ MILLION)
23,547
23,825
33,396
For more information about safety,
the Commitment to Life program and health programs, please refer
to Sustainability 2018.
For more information on labor contingencies,
please refer to Financial Statements (explanatory note 31).
2016
2017
2018
23
Main contingencies provisioned:
(i) individual actions related to 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;
(ii) lawsuits relating to overtime pay; and
(iii) actions of outsourced employees
RMNR AND ITS DEVELOPMENTS
The Minimum Compensation by Level and Regime (in
portuguese, Remuneração Mínima por Nível e Regime
– RMNR) corresponds to minimum compensation
values established in specific schedules, based
upon the level in salary schedule, work regime, and
condition and position's geographical area. This
remuneration policy was created and implemented
in 2007, through collective bargaining with the trade
union representatives and approven in meetings by
employees and was questioned only three years after its
implementation. The dispute is around whether or not to
include additional work regimens and special conditions
of work in the RMNR Complement calculation. In June
2018, the company received an adverse decision in the
Superior Labor Court, and the subject is suspended
in court by preliminary determination of the Federal
Supreme Court until final examination of this matter.
We understand the RMNR respects the remuneration
differences of each regime and working condition, and
contemplates additional ones provided by law and those
provided in Collective Agreement.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 24
Intellectual
Capital
Our intelectual capital is comprised of our recognized technical capacity, development of new
technologies, and intellectual property.
The expansion of our boundaries, with the production
PEOPLE DEVELOPMENT
achieved in the pre-salt, is a great milestone, which in
2018 has reached 10 years. It was a conquest achieved
Training and Development
by expanding our technical capacity over the years, and
that has allowed to overcome challenges and develop
We have a corporate university, Petrobras University, as part of our structure to implement the development of our human
technologies that reflect this capital's value.
capital through corporate education. The corporate education program seeks the adherence of the training programs
Knowledge is not only found in documents, books,
of people, aiming at maintaining our unique technical capacity. The investments in training conducted by Petrobras
databases and information systems, but in business
University, in other institutions in Brazil and institutions abroad, are below.
to the new strategic positions of the company, and from this, we define the investments destined to the development
processes as well, group practices, and experience
accumulated by people. And it is precisely here that the
practices of knowledge management enter, a way of
mobilizing knowledge through the sharing of practices
and experiences.
As part of our knowledge management, we enhance our
intellectual capital through the development of people,
processes and technologies.
INVESTMENTS IN TRAINING
(R$ MILLION)
76
33
112
22
47
7
11
16
6
22
61
29
2016
2017
2018
PETROBRAS UNIVERSITY
BRAZIL
ABROAD
In 2018, we have invested
R$ 112.4 million in the training of our
employees, totaling 266.7 thousand
participations in training courses
for new employees and continuing
education in Brazil and abroad, with
an average of 53 hours of training
per employee in the year, number
compatible with market metrics.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 25
In this way, we improve our capacity for critical analysis and
In order to reach the critical competencies, we have structured 45 development paths, which are guides so that
innovation, focusing on improving the skills required for our
managers can assertively identify the training actions to be applied to their teams. Based on them, each employee
activities, prioritizing critical business knowledge.
must track their individual development plan. Thus, we map out the real needs of each area, in a way that is aligned
with the long-term corporate strategy and with a focus on self-development.
CRITICAL COMPETENCES MAPPED
IN PNG 2019 - 2023 AND PE 2040
In addition, other initiatives to ensure the developments of our human capital have been implemented:
E&P
RGN
Knowledge Certification: we implemented the knowledge certification process, creating mechanisms to verify
which employees have critical knowledge for our business, allowing us to assess the employees' level of readiness
for the challenges that our company faces.
Partnership and shared
operations agreements
management
Expansion of
trading activities
Active portfolio management
Active portfolio management
Technical-Educational Service: an initiative that brings Petrobras University closer to the operational areas,
reinforcing its role in generating value for the company's units. During this process, Petrobras University
technicians work together with the units in the resolution of technical and management issues, with the objective
Technological challenges
Business Development
of applying the knowledge generated in the elaboration or updating of development actions.
Assets’ Decommissioning
Competence Development
to Global Gas Market
DP&T
CORPORATE AREAS
Technological Innovation
Prospecting
Large projects’ management
Service culture
People service
Decommissioning
of wells and subsea
systems
Development
of leaders and experts
Relationship
with stakeholders
TRANSVERSAL
CRITICAL
CAPABILITIES
Management and
leadership
Technology
and digital
transformation
International
performance
development
Negotiation
Corporate Education Innovation and Digital Transformation Workshop and Exhibition: the workshop was aimed
at discussing the potential of advances in digital technologies, such as virtual and augmented reality; remote
presence, and adaptive learning, in improving the efficiency and effectiveness of corporate education. As a result,
12 pilot projects were detailed for the deployment of selected technologies throughout 2019. The event was
attended by external exhibitors of educational technologies, in addition to our professionals.
In order to implement knowledge trails, we rely on the project of innovation and digital transformation in corporate
education. Therefore, we have increased the use of new educational technologies, expanding the offers in new
modes of development and knowledge sharing, such as distance learning courses; video conferencing; virtual
and augmented reality; adaptive learning; and telepresence robots, as well as on-the-job training, mentoring,
coaching, practice communities, and more.
For more information about our employees,
please refer to Human Capital and Sustainability 2018.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES KNOWLEDGE AND INFORMATION SHARING
26
CONECTE
It is our collaborative network
with the objective of stimulating
the sharing of information and
knowledge through the creation
of communities that allow the
work organization in teams or
the structuring of projects.
COMMUNITIES OF
PRACTICES
An organizational approach
that consists of formation
groups from the same area
of knowledge, so that those
groups may meet in person or
virtually to share experiences,
ideas, practices and lessons
learned for solving problems.
PETROBRAS MENTORING
PROGRAM
Mentoring is a structured
relationship of development
between an employee with
more experience within the
company and a less experienced
one, focusing on the sharing
the "Petrobras knowledge,”
that is, technical skills, culture,
values and relationship networks.
COACHING
Knowledge management
practice that aims to welcome,
integrate and accompany
the newly arrived employee
to the management or that
identified for requalification,
providing the formation of
safe behavior (Commitment to
Life), adaptation to culture and
organizational values, the work
INTEGRATED
PROCESSING AND
STANDARDIZATION
SYSTEM (SINPEP)
The purpose of SINPEP is to
disclose our policies, guidelines
and procedures, providing
employees with a standard
management and query
mechanism in a single system
that presents all the standards
associated with deployed
processes of the value
environment and training for
chain.
professional activity.
MORE THAN
63,000
ACTIVE PROFILES
24
ACTIVE COMMUNITIES OF PRACTICES
AND MORE THAN
WITH PARTICIPATION OF APPROXIMATELY
3.5 million
19,000
152
904
OF ACCESSES IN 2018.
MEMBERS
EMPLOYEES INVOLVED
COACHING SESSIONS CONDUCTED IN 2018
40
MACROPROCESSES
AND APPROXIMATELY
1,900
MAPPED PROCESSES
APPROXIMATELY
36,000
ACTIVE PATTERNS
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES PROCESSES
RESEARCH, DEVELOPMENT, AND INNOVATION
"Simplifica Petrobras" Program
Innovation and technological development are the pillars of our activities. The year 2018 was marked by the construction
of a technological management process increasingly focused on disruptive content and digital transformation in Research,
The "Simplifica Petrobras" Program, created in 2016, aimed
Development and Innovation (RD&I) projects, without neglecting the short-term activities that generate value to the
at reducing bureaucratic processes and providing agility
company and contribute to the sustainable development of the company.
27
in decision making without compromising compliance and
safety. Its expected gain was the increase of productivity
through the simplification of processes. During its term,
it was formed by projects from different areas, resulting
in over 200 revised processes, achieving benefits such as:
man-hour reduction in process execution, shorter delivery
of service solutions, reduction of procedural deadlines,
reduction of operating costs, anticipation of revenues,
scanning and automation of reports and improvements in
the decision-making process.
Beginning in October 2018, the Simplifica Petrobras
ceased to be a program, becoming an organizational
structure with the main objective of perpetuating the
culture of simplification through the implementation of a
permanent system for capturing and implementing ideas
to the entire company.
DIGITAL TRANSFORMATION
The strategic digital transformation initiative of our Business and
Management Plan aims to prepare for a competitive environment that is
increasingly being influenced by digital technologies and a new way of
working, based on collaboration. The possibilities of transforming operational
and business models bring opportunities to increase the efficiency and
safety of operations, reduce charges and bring more robustness and agility
to decisions. The efforts go beyond the implementation of technological
solutions, seeking to implement as well, a culture of innovation that promotes
experimentation, multifunctional collaboration, and shared information.
Considering the importance we give to this transformation and aligned with
the trends of the big world companies, in 2018, we created an organizational
structure dedicated to the process of digital transformation, which has the
necessary strategic characteristics so that the unfolding of the initiative
permeates every point of our company. In addition to preparing guidelines,
this structure will work in partnership with the other areas and will be
responsible for the realization of high-return digital projects with wide
internal diffusion, and for the acceleration of enabling the activities in all
processes that make this journey feasible.
For more information about digital transformation
please refer to Risks and Opportunities and Sustainability 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
The projects and investments in RD&I add value to our intellectual capital, contributing to the
profitability of our businesses and to the technological advancement of the oil and gas sector.
RD&I INVESTMENT
(R$ MILLION)
2018
2017
2016
2,349
1,831
1,826
· In 2018, investments 28% higher than 2017,
mainly due to the greater investment to
fulfill the legal obligations of research and
development (ANP and ANEEL).
· Today, approximately 27% of our RD&I portfolio
incorporates digital technologies, such as
Big Data, High-Performance Computing
and Artificial Intelligence, in the search for
technological solutions to support business
development.
Our RD&I activities are coordinated by our Research
and Development Center Leopoldo Américo Miguez
de Mello (Cenpes), whose objective is to develop
technologies to enable our Business and Management
Plan, as well as to anticipate trends and invest in
technological routes aligned with our Strategic
Planning. For this, Cenpes has 1,300 employees, of
whom 90% are dedicated exclusively to the RD&I area.
We maintain several
partnerships focused on the
development of technologies
to meet the challenges of our
operations.
For more information on our partnerships with academic
institutions, please refer to Sustainability 2018.
For more information about our technology partnerships,
please refer to Social and Relationship Capital.
28
TECHNOLOGIES AND GAINS
The RD&I project portfolio is based on our
technological focus, which consists of our strategic
choices in technology.
Technology Focus 2018
Process safety, integrity, and reliability
of plant and equipment
Protection of company's value in matters
involving environment and society
Opening new exploratory frontiers
Reducing the investment decisions risks related to
reservoir uncertainty
Increased reservoir recovery factor
Reduced equilibrium oil price and operating cost
Decommissioning assets
Flexibility of downstream productive chain
Adding value to downstream products
Optimization of productive processes and efficient
energy use
Integration and optimization of the logistics chain
Transition to low carbon matrix
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 29
Some of the main technological solutions and results in 2018, the result of our investments in people, processes and technology, were:
PROJECT
IMPACT
ADDED VALUE
Pioneering operation of fouling inhibitor
injection in the Santos Basin pre-salt pole
Prevention of production losses in the pre-salt of approximately
15,000 bpd.
Earnings of US$ 1 million a day, per well, to avoid
business interruption.
Computational methodology for obtaining values of properties
of reservoir rocks (Digital Rock Technology)
Anticipation of development of oil fields.
Reservoir rocks properties result
12 months earlier
Helical-Axial Submarine Pump (BMSHA)
of Barracuda
The pump operation, without fail for 6 years, allowed cumulative
production of more than four million barrels of oil equivalent
in the period
Cumulative gain of
US$ 400 million
Bio-oil co-processing technology in refining
70% reduction in CO2 emissions in fuels produced with bio-oil
Study shows margin gains between US$ 0.5 and US$ 2.0/bbl,
without subsidies, in one of our refining processes
Computational tool
(SimCAP)
Evaluation of Pre-salt oils to be used for the production of petroleum
asphalt cement
Guarantee of service to a market whose turnover is approximately
R$ 4.7 billion/year.
Qualification of metal tubes coated with composite materials, for use
in water and gas injector wells, as an alternative to superduplex steel.
Reduction of acquisition costs and delivery time, as well as greater
local content
Estimated savings of
R$ 83 million over the next 2 years
New test procedure for Blow Out Preventer (BOP), equipment
that prevents spills in oil wells.
Reduction of BOP test duration by 12 hours per event
Estimated cost reduction of
R$ 1.5 million per well from pre-salt
Qualification of bentonite pellets as an alternative
barrier to cement
Reduction of costs in abandonment operations of 11,500 wells
Estimated savings of
R$ 33 thousand per well
Prototype Robot for application to painting on large flat and
80% reduction in cost, 84% in painting service duration and 88%
vertical surfaces on the sea
reduction in human exposure to risk
Reduction of cost of approximately R$ 350 thousand
per FPSO each year
Discovery of the acid formation
mechanism in pre-salt oils
Reduction of corrosion on top of distillation towers
Use of drones to inspect P-62's flare
Prevents unplanned platform shutdown
It will avoid losses of approximately
US$ 37 million/year
Avoided losses of approximately
US$ 2.85 million/day
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 30
INTELLECTUAL PROPERTY
DEPOSITS OF PATENTS IN BRAZIL AND ABROAD
24
38
20
38
58
22
9
10
5
31
7
0
15
5
0
16
17
5
35
18
5
16
6
0
BRAZIL
ABROAD
BRAZIL
ABROAD
BRAZIL
ABROAD
2016
2017
2018
EXPLORATION AND
PRODUCTION
REFINING
AND NATURAL GAS
RENEWABLE ENERGY
By the end of 2018, we
held a total of 443 active
patents in Brazil and
1,047 active patents
abroad.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 31
AWARDS AND RECOGNITION
In 2018, the constant search for overcoming challenges led
to recognition in several areas of activity. As a result of the
recognition of our intellectual capital, we highlight some
awards received:
Transparency Trophy 2018, granted by the National
Association of Executives of Finance, Management and
Accounting (Anefac ). We were recognized for the second
consecutive year by the quality of our financial statements.
Abrasca Annual Report Award, granted by the Brazilian
Association of Public Companies (Abrasca), for the quality
of content and clarity of information in our
Integrated Report.
IG-SEST, a governance indicator prepared by the State
Enterprises Coordination and Governance Secretariat
(Sest).We obtained the maximum grade in the 2nd and
3rd cycles of evaluation.
Recognition for the quality of internal audit processes
granted by the Institute of Internal Auditors of Brazil
(IIA Brasil), through an international certificate attesting
the quality of our internal audit processes.
Compliance On Top, where our Chief Executive Officer for
Governance and Compliance was appointed as one of the
top 20 compliance leaders in companies most admired
for his work.
Top of Mind Award, granted by the Folha de São Paulo
newspaper. Petrobras and lubricant Lubrax won in
three categories: Petrobras won as "Brand representing
Brazil"; our fuel was nominated for the 15th time as
the best in the Brazilian market; and Lubrax won as
"Best Lubricant."
Institutional Investor Award which recognized our
performance in investor relations in four of the seven
categories: CEO, CFO, Best RI Staff and professional.
In addition, the company was recognized by the
Environment, Social & Governance metrics (ESG).
Deals of the Year Award, awarded by the Latin American
magazine LatinFinance, acknowledging the financial
institutions and operations conducted in Latin American
and Caribbean markets in 2018. We won in three
categories:"Best Corporate Debt Management Operation of
the Year," "Issuing Company of the Year," and "Syndicated
Loan of the Year."
Golden Tombstone Award, by the Brazilian Institute of
Finance Executives.We were awarded in the "Best Financial
Operation of the Year" and "Debt" categories for the
same operation.
Value Innovation Brazil 2018, organized by Valor
Econômico newspaper. We were awarded, for the third
consecutive time, the third place as the most innovative
company throughout the country, among 150 participants,
and first in the Oil & Gas category, in recognition to
the development of innovative technologies for the
offshore segment.
Technological Innovation Award 2018, by the National
Agency of Petroleum, Natural Gas, and Biofuels (ANP).
We won in three categories, in partnership with industry's
companies and universities.
Olympus Challenge Award for Production Optimization,
granted by the Dutch Center for Technology and
Applied Research and the European Association of
Geoscientists and Engineers, to the ICARO (Intensive
Computer-Aided Reservoir Optimization) system
developed by Petrobras.
Human Rights Award 2018, granted by the Ministry of
Human Rights, received by our relevant action for the
promotion and defense of human rights.
Certified Citizen Company granted by the Regional
Accounting Council of the State of Rio de Janeiro, for
the social, environmental and accounting information
presented in the tax year report 2017.
Os Melhores (The Best) Award, by the O Estado de São
Paulo (Estadão) newspaper. Our subsidiary Petrobras
Distribuidora won in the category "Best Fuel Oil" for the
Lubrax lubricant. In addition, it was awarded by Exame
Magazine with the "Best and Biggest" award, in the
"Wholesale" category.
Empresas Mais 2018 Award, granted by the newspaper
O Estado de São Paulo. Petrobras Distribuidora won the
general category of Corporate Governance and had its
Board of Directors also recognized.
Época Reclame Aqui Award – The Best Companies
for the Consumer. Petrobras Distribuidora was the
winner in the category "Distributor/Service Stations,"
with the recognition of excellence service provided
to the consumer.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
32
Social and
Relationship
Capital
Our social and relationship capital is formed by interactions with our stakeholders. These
interactions are strengthened through our dialog channels, our social investments and our
brand and reputation management initiatives, seeking to strengthen the bonds of trust
with society.
Our relationship network is organized
in 13 stakeholders.
Featured stakeholders were addressed
in this report. For other stakeholders,
please refer to Sustainability 2018.
I
N
T
E
R
N
A
L
P
U
B
L
I
C
S
T
N
E
I
L
C
S
R
E
L
L
E
S
E
R
P
U
B
L
I
C
A
U
T
H
O
R
I
T
I
E
S
P
A
R
T
N
E
R
S
MERS
NSU
CO
CO M M U NITIES
O
R
G
CIVIL S
NIZ
A
A
O
CIE
TIO
T
Y
N
S
INVESTORS
PRESS
STAKEHOLDERS
S
R
O
T I T
E
P
M
O
C
S C I E N T I F I C A N D
A C A D E M I C C O M M U N I T Y
S U P P L I E R S
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
INVESTORS
We are present on the stock exchanges of São Paulo,
We also maintain relationships with national and
New York, Madrid and Buenos Aires, where we relate to over
international commercial banks, multilateral agencies,
600 thousand investors. Of these, around 300 thousand
export credit agencies and national development banks,
trade their shares in Brazil and 100 thousand abroad.
such as the BNDES, which, on December 31, 2018,
The other investors participate through stock funds.
accounted for 49% of our gross debt.
In 2018, we interacted with investors and market analysts,
In addition, we also deal with fixed income investors in
mainly through meetings (530 one-on-one or group
Brazil and abroad who hold our debt securities, which on
meetings at conferences and roadshows ) and Executive
December 31, 2018 represented 51% of our gross debt.
Board Officers' presentations for investors (Petrobras
Day) in São Paulo, London, and New York. We disclosed
our annual reports (Integrated Report, Form 20-F and
Formulário de Referência) and about 250 notices, material
facts and clarifications of news, in addition to the other
information available on our investor relations website,
which obtained a monthly average of 81 thousand hits.
We also held eight teleconferences/webcasts and three
shareholders' meetings during the year. In addition, we
liaised with risk rating agencies through periodic meetings.
For more information on the profile of our shareholders and
our debt, please refer to Financial Capital.
For information on lawsuits filed by our shareholders,
please refer to Governance and Compliance and Financial
Statements (explanatory note 31.4).
33
INVESTORS CHANNELS
WEBSITE
www.petrobras.com.br/ri
SHAREHOLDERS
AND INDIVIDUAL INVESTORS
Av. República do Chile, 65, sala 1002
Centro, Rio de Janeiro, RJ 20031-912
Telefones: 0800 282 1540 ou (21) 3224-1540
Email: acionistas@petrobras.com.br
SUPPORT TO INSTITUTIONAL INVESTORS AND
MARKET ANALYSTS
Av. República do Chile, 65, sala 1002
Centro, Rio de Janeiro, RJ 20031-912
Telefones:(21) 3224-1510
Email: petroinvest@petrobras.com.br
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
34
CLIENTS
RESELLERS
CONSUMERS
CLIENTS CHANNELS
Petrobras' main clients are buyers of crude oil, natural gas,
energy, liquid oil products and fertilizers.
NON-THERMOELECTRIC SEGMENT
(%) VOL
Crude oil is sold mainly through long-term contracts and
also in the spot market. Our portfolio overseas includes
approximately 60 clients: refiners which have already
processed or process Brazilian oils regularly, distributed
46
throughout the Americas, Europe, China, and Asia.
DISTRIBUTORS
54
DISTRIBUTORS WITH
PARTICIPATION OF
PETROBRAS
WEBSITE
www.canalcliente.com.br
SAC PETROBRAS
0800 728 9001
sac@petrobras.com.br
OIL CLIENTS
(%) VOL
7.8
9.6
THERMOELECTRIC SEGMENT
(%) VOL
13.1
69.5
CHINA
AMERICAS
EUROPE
ASIA (OTHERS)
50
50
DISTRIBUTORS
DISTRIBUTORS WITH
PARTICIPATION OF
PETROBRAS
Natural gas is marketed to 21 clients, 19 of which
We operate in the energy segment in the regulated
are distributors, and two are free consumers (two
market (energy distributors) and free (marketers and free
27
2
3
3
7
With regard to liquid oil products and fertilizers, in Brazil,
we relate with around 500 clients, seven of which account
for about 73% of the total volume sold.
LIQUID OIL PRODUCTS AND FERTILIZER CLIENTS
(%) VOL
28
16
PETROBRAS
DISTRIBUIDORA
GRUPO ULTRA
RAIZEN
COMBUSTÍVEIS S.A
BRASKEM S/A
LIQUIGAS
DISTRIBUIDORA S.A
NACIONAL
GÁS BUTANO
SUPERGASBRAS
ENERGIA LTDA
OTHERS
thermoelectric plants). The total demand for natural gas
consumers/large consumers). We have 142 clients,
14
includes the non-thermoelectric, thermoelectric, diesel and
41 of which are distributors, 48 are marketing companies,
fertilizer segments of Petrobras, as well as the consumption
and 53 are free consumers. All contracts are registered
by natural-gas carriers contracted by Petrobras for the
at the Electricity Trading Chamber (CCEE), a sector agent
provision of transportation services.
responsible for the settlement and accounting of
these contracts.
For more information on natural gas demand, please refer
to Business Performance.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 35
The sale of oil products and biofuels to the distribution companies is done by contracts executed in
accordance with ANP regulations.
LINES OF CUSTOMIZED FUELS
We offer a virtual commercial platform, called "Canal Cliente," to domestic market companies.
The channel works 24 hours a day, seven days a week. In this online environment, clients can place
product orders, schedule withdrawals, and track the entire business process up to payment.
In the oil products’ market, through our subsidiary Petrobras Distribuidora, we relate, among others,
to 16,000 consumer clients, of which 6,200 are large consumers and 46 airlines, as well as retailers
in the retail market, through 7,665 service and 313 Transporters-Retailers (TRRs), which provide a
basis for the distribution of fuels, and which, in turn, serve final consumers.
We are constantly improving product quality, aligned to the demands of our
clients. We supply to the national market a line of customized fuels to meet
specific needs, such as calibration of new engines; application in the first tank
filling; compliance with the official engine type approval tests; and formulation
directed to competition engines, items with great strategic value for Petrobras and
with high economic return. The development and production of these fuels allow
the company to know closely where the future of the automotive market is going
and how it can affect our business, besides contributing to the strengthening of
the national automotive engineering.
SUPPLIERS
In 2018, we signed agreements with approximately
12,700 suppliers through Petrobras Holding.
In line with best practices in compliance and with national
and international anti-corruption laws, we have improven
our contractor management process with the objective
of mitigating potential risks of corruption in contracting
goods and services. Since 2015, companies interested
in doing business with us are subjected to the Integrity
Due Diligence (IDD) process. In 2018, 4,651 companies
were evaluated within the scope of IDD (19,792 since the
beginning of the process) and received the classification
of their Integrity Risk Level, which can vary between high,
medium and low.
Our contractors must comply with our Social Responsibility
Policy, safety, environmental and health standards
and guidelines on policies and procedures to prevent
corruption, through our Code of Ethics and Conduct.
For more information on Integrity Due Diligence and
Integrity Risk Level, please refer to
Compliance and Internal Controls.
For more information about our suppliers, please
refer to Sustainability 2018.
SUPPLIER CHANNELS
SUPPLY CHANNEL
canalfornecedor.petrobras.com.br
PETROBRAS E-PURCHASE PORTFOLIO (PETRONECT)
www.petronect.com.br
REGISTRATION CALL CENTER
4020-9876 (opção 4): Capitais, regiões metropolitanas
e ligações originadas de telefone celular
0800 282 8484 (opção 4): Demais regiões
1 866 791 9432: Estados Unidos
1 713 808 2599: Outros países
Contact Us (for registration system users): Technical Support through
Petronect Portal contractor registration internal area.
Video Remote Support: it must be scheduled through Contact Us or via
the phones above.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
36
PARTNERS
Our undisputed knowledge in exploration and production in deep and ultra-deep waters, as well as the pioneering introduction of new
technologies, allow the execution of several partnerships.
We believe that working in partnership brings benefits by sharing risks, increasing investment capacity, technical and/or technological
exchange, strengthening corporate governance and improving our financial capability.
In 2018, we highlight the following partnerships*:
EQUINOR
TOTAL
MURPHY
Technical agreement to increase
Collaboration agreement in
Partnership to operate in the Gulf of
the recoverable volume of oil in the
the upstream and downstream
Mexico with the formation of a joint
Roncador field;
segments and technological
cooperation in the areas of
venture.
Agreement for sharing gas export
operation, research and technology;
infrastructure;
Assignment of rights in the
Lapa field concession area, with
Assignment of rights in the Iara and
Roncador field; and
an option to sell the remaining of
our participation (10%), already
CNPC
Heads of Agreement in the offshore
exercised;
wind energy segment in Brazil.
Heads of Agreement and Investment
Agreement in onshore solar and
wind energy.
Letter of Intent and Integrated
Agreement for Business Model, for
investments in the Comperj refinery
and in the Marlim cluster.
* Partnerships with CNPC, Equinor (renewable segment) and Total Group (renewable segment) are in progress, and completion of these operations is subject to internal and
external approvals.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 37
COMPETITORS
Additionally, in the first half of 2018, we launched
As we operate in several segments of the oil and natural-
The natural-gas distribution segment consists of a
competitive processes to form partnerships in the refineries
gas sectors in Brazil, we face different types of competition.
monopoly, as provided for in the Brazilian Federal
of the Northeast and South of Brazil. In July 2018, those
Constitution, which can only be exercised through the
processes were suspended by judicial decision until January
In the exploration and production segment, we deal
concession of the public power of each state. We operate
2019. Additional studies are in progress to enable those
with several competitors when we participate in bidding
through indirect participation in state companies, where
partnerships.
procedures conducted by the National Petroleum, Natural
each distributor has the monopoly of its concession area,
Gas and Biofuels Agency.
and there is no competition in this segment.
In the activities of natural gas, petrochemicals and
electric power we operate with interests in companies
In the trading of oil products in the domestic market,
The transportation of natural gas also consists of a
and assets, such as gas carriers and distributors Braskem
we face competition from importers, formulators, other
monopoly from the government with no competition since
petrochemicals and some thermoelectric plants.
domestic producers and petrochemical plants. In 2018, our
the area of activity of the carriers is divided in the national
We also hold interests in companies in the sector of
participation in the diesel and gasoline markets increased,
territory by region.
biofuels through our wholly-owned subsidiary
after the strong performance of the importers in 2017.
Petrobras Biofuel.
It is worth mentioning that for gasoline, demand also
In the energy segment, we operate in generation and
We also signed with McLaren, a sponsorship agreement for
which showed significant sales growth in 2018.
thermoelectric plants, as well as other generators with
our return to Formula 1, including a technical partnership
other energy sources (hydro, wind, solar). In the case of
for product development.
In the commercialization of natural gas, we have as
commercialization, we have as competitors, other
suffers competition from substitute product, ethanol,
sale. In generation, we have as competitors, third-party
competitors, importers and domestic producers, who
energy marketers.
We also maintain partnerships with academic institutions
can directly sell their product to the distributors or
in Brazil and abroad and with the main contractors of the
thermoelectric plants. We expect an increase in competition
All our activities are conducted in compliance with our Code
oil and gas chain, who support us in the development
due to the new regulation under discussion, which aims to
of Conduct for Competitions, which guides our commitment
and delivery of technological solutions and
improve the regulatory framework of the natural-gas sector
to strict compliance with Brazilian antitrust or antitrust laws
technical-scientific support.
and seek to establish the guidelines for a new market
and the foreign jurisdictions in which we conduct business.
design that allows the entry of new agents in the sector,
promoting competition.
For more information on partnerships with academic
institutions, please refer to Sustainability 2018.
For more information on partnerships and divestments, please
refer to Financial Capital and Business Performance.
For more information on new gas regulation, please refer to
External Context.
For more information on our competitors, please refer to the
Reference Form (item 7.3), available on our website:
www.petrobras.com.br/ri
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
38
PUBLIC AUTHORITIES
The relationship with public authorities entities must
the definition of public interest in the Bylaws, the Union
be conducted in an ethical, transparent and impersonal
will compensate us, in each fiscal year, for the difference
manner, and involve more than one member of the
between market conditions and the operating result or
employees during the in-person interactions with
economic return of the assumed obligation.
political agents.
The Federal Government is our controlling shareholder,
In addition, we also liaise with agencies and regulators
related to our activities, such as the National Oil,
which means we have a specific relationship with it,
Natural Gas and Biofuels Agency (ANP), the National
including being monitored by control bodies, such
Electric Energy Agency (Aneel), the Brazilian Institute of
as the Federal Court of Accounts (TCU) and the
Environment and Natural Resources (Ibama), the National
Federal Comptroller's Office (CGU) and interaction
Environment Council (Conama) and the Securities and
with government agencies, such as the Secretariat of
Exchange Commission (CVM), with the commitment to
Coordination and Governance of State Enterprises (Sest),
provide information, in a transparent and reliable way,
Ministry of Mines and Energy, National Treasury,
that allows the correct assessment of the issues inherent
among others.
to our business.
As a mixed capital company, we can have our activities
guided by the Federal Government, with the purpose
of contributing to the public interest that justified our
creation. However, the contribution to this public interest
must be compatible with our corporate purpose and
market conditions and cannot jeopardize our profitability
and financial sustainability. Therefore, if the public interest
service is provided under conditions different from those
of any other private sector company operating in the
same market, as explained in our bylaws, the obligations
or liabilities assumed should be defined as a standard or
regulation and be foreseen in specific document, such
as a contract or agreement, observing the wide publicity
of these instruments, as well as the disclosure of their
detailed costs and revenues, including the accounting
plan. In this case, for the commitments entered after
For more information on the changes to our Bylaws for
governance improvements, please refer to Governance
and Compliance.
For more information on public interest, please refer to
Reference Form (item 7.1.a), available on our website:
www.petrobras.com.br/ri
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 39
TAX STRATEGY
We exercise the tax duties with adherence to national and international tax regulations and laws, evaluating
the management of tax risks and contributing to increase the development of Brazil, within the context of a
corporate society modifying the socioeconomic environment in which we are inserted.
TAX LITIGATION
Despite our efforts and diligence in the determination and payment of
taxes, there are judicial disputes relating to our tax liabilities, partially
provisioned, when it is possible to estimate the losses considered
probable, or not accrued, but disclosed in the notes to the financial
statements when the expectation of loss is considered possible.
We also seek to maintain an ethical and transparent relationship with the society, promoting development
within the regions we operate, considering we are the largest contributors in the country, and our activities have
PROVISIONED TAX CONTINGENCIES (R$ MILLION)
a significant impact on the collection of taxes managed by federal, state and municipal tax authorities, as well
as in the collection of governmental participations related to the oil industry, handled by the ANP.
TAX PAYMENTS* (R$ BILLION)
TAXES PAID AND TAXES WITHHELD BY THIRD PARTIES
2016
2017
2018
ICMS
PIS/Cofins
Royalties
37.3
35.0
45.3
20.9
27.4
38.1
9.7
12.4
17.8
Special participation
4.5
11.0
20.4
IRPJ/CSLL
Cide
-
0.4 8.2
5.1
4.6
3.3
Social security contributions
4.6
4.2
4.8
Other taxes and contributions
3.8
6.4
7.4
TOTAL
85.9
101.4
145.3
THIRD-PARTY TAXES WITHHELD
ICMS tax substitution
28.2
28.4
27.1
Withholding Act no. 10.833
5.9
5.4
5.4
Other taxes and contributions
5.6
4.9
4.6
TOTAL
39.7
38.7
37.1
TOTAL TAXES PAID DOMESTICALLY
125.6
140.0
182.4
* Taxes paid by Petrobras parent company, on a cash basis.The added value distributed to the
State and society, of R$ 154.5 billion, presented in our Business Model, considers the annual tax
obligations Petrobras on the accrual basis.
Federal Government
(including Government
Participation)
R$ 109.0 bilhões
States
R$ 72.4 bilhões
Municipalities
R$ 1.0 bilhão
2016
2017
2018
TAX CONTINGENCIES NOT PROVISIONED (R$ MILLION)
2016
2017
2018
4,981
4,065
1,901
155,882
129,466
144,211
In 2018, following the current process of governance and cost-benefit
analysis, we joined state amnesty and referral programs (Tocantins, Rio
Grande do Norte, Sergipe and Mato Grosso) for cash payment of ICMS
debits, which represented 32% of debts involved, especially by reducing
interest and fines. Consequently, we recognize as tax expenses the total of
R$ 1,120 million.
For more information on state amnesty and remission programs
and tax contingencies, please refer to Financial Statements
(explanatory notes 21.2 e 31).
For more information on relationships with other stakeholders,
please refer to Sustainability 2018.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES MAIN COMMUNICATION CHANNELS
We relate in a digital or personal manner with our stakeholders, seeking constant improvement of our communication to
enable a constructive and transparent dialogue. In addition to the channels already mentioned, we highlight the following:
Our General Ombudsman Office assures the public a
OMBUDSMAN
40
www.petrobras.com.br
www.petrobras.com.br/anticorrupcao
facebook.com/petrobras
twitter.com/petrobras
instagram.com/petrobras
linkedin.com/company/petrobras
petrobras.com.br/fatos-e-dados
youtube.com/petrobras
medium.com/petrobras
SAC Petrobras
0800 728 9001
L
E
N
N
A
H
C
N
A
M
S
D
U
B
M
O
OMBUDSMAN CHANNEL
Independent Reporting Channel:
https://www.contatoseguro.com.br/petrobras
Citizen Information Service:
permanent and independent relationship channel for the
reception and treatment of complaints, including
those of anonymous nature, complaints, requests for
information, requests, suggestions and/ or compliments.
In order to receive complaints, we provide our
Reporting Channel, operated by an independent external
company, guaranteeing anonymity to the reporters.
http://transparencia.petrobras.com.br/servico-
In 2018, we received a total of 19,370 lawsuits,
informacao-cidadao
of which 2,396 were reports. Of these, 33% were about
Contact the Ombudsman:
https://ouvidoria.petrobras.com.br/portal/
ouvidoria/pt_br/fale-com-a-ouvidoria/
fale-com-a-ouvidoria-1.htm
Service counters distributed in our units:
http://transparencia.petrobras.com.br/servico-
informacao-cidadao/balcao-atendimento
0800 282 8280
Postal Address:
Ouvidoria-Geral da Petrobras
Av. República do Chile, 65 I 17º andar I sala 1702
Centro I Rio Janeiro I RJ I Brasil
CEP 20.031-912
fraud and corruption.
REPORTS RECEIVED
1,295 1,225
995
1,428
782 1,614
2016
2017
2018
REPORT - FRAUD AND CORRUPTION
REPORT - OTHER TOPICS
We also provide a Citizen Information
Service, to comply with the Access
to Information Law, which guarantees access
to our non-confidential information to any citizen.
For information on the Ombudsperson and Citizen Information
Service, please refer to Sustainability 2018.
S
L
E
N
N
A
H
C
L
A
N
O
T
U
T
T
S
N
I
I
I
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
41
CULTURAL, SPORTS, AND SOCIO-ENVIRONMENTAL INVESTMENT
Our sponsorship management aligns our portfolio of projects with Petrobras' strategic objectives.
Through the Petrobras Cultural Program, the Petrobras Sports Program and the Business, Science and
Technology Sponsorship Program, we generate a positive association with our brand and approach our
audiences. These sponsors focus upon the areas in which we identify the best possibilities of brand return
and image and reputation strengthening.
We strengthen our work with communities, third sector institutions, government and universities through the
Petrobras Socio-Environmental Program. This initiative contributes to the preservation of the environment
and to the improvement of living conditions in the places where we operate and, in an extended way, to the
society. The program is in line with our Social Responsibility Policy, which advocates a commitment to provide
energy, respecting human rights and the environment, liaising responsibly with communities and overcoming
sustainability challenges.
CULTURAL, SPORTS, AND SOCIO-ENVIRONMENTAL INVESTMENT
(R$ MILLION)
121
120
82
60
133
87
2016
2017
2018
CULTURAL AND SPORTS SPONSORSHIPS AND
BUSINESS, SCIENCE AND TECHNOLOGY EVENTS*
SPONSORSHIPS AND SOCIO-ENVIRONMENTAL AGREEMENTS
* Starting in 2018, we began publishing the values of sponsorships
for business, science and technology events.
For more information on our social and environmental
investments, please refer to Sustainability 2018.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
42
ADVERTISING
In 2018, two main advertising campaigns were conducted
with the aim of contributing to the recovery of the
company's reliability, image, and reputation indicators:
the "Confiança" campaign, which had the role of reporting
to Brazilians, presenting the anti-corruption measures
implemented, and the "Vamos Inventar? "A Journey
through Knowledge" campaign, begun at the end of 2017,
which aimed at contributing to the repositioning process
of the brand.
In addition to these two campaigns, we highlight the effort to
clarify the alignment of our prices with international prices.
ADVERTISING EXPENDITURES ***
(R$ MILLION)
2016
2017
2018
143
170
121
* Data referring to advertising values published in each of the years, including
the purchase of media spaces and the production of advertising materials.
**Values corresponding to 2018 may vary after the end of the relevant period.
Because of this verification, amounts from former years may differ from
those previously disclosed.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 43
Natural
Capital
Our natural capital is composed of renewable and non-renewable environmental resources used
in or affected by our production process, especially our oil and gas reserves, in addition to water
resources, ecosystems and biodiversity.
Since we are an integrated energy company focusing on oil and gas, we use natural resources and we impact the ecosystem
during our activities.
9.606*
BILLION BOE
9.752*
BILLION BOE
177.7
182.3
MILLIONS M3
MILLIONS M3
MAIN
IMPACTS
MAIN
NATURAL
RESOURCES
USED/
TO BE
USED
2017
2018
947,645
TJ
852,600
TJ
OIL, CONDENSATE, AND NATURAL-GAS
RESERVES
WATER
ENERGY
* According to SEC criteria.
EMISSIONS
MILLION TONS CO2 e
BIODIVERSITY AND
ECOSYSTEMS
Events with a confirmed or probable impact
on fauna, flora or habitat.
WASTE
THOUSAND TONS
Hazardous solids generated in
industrial processes.
2017
2018
67
62
20
31
113
120
EFFLUENTS
MILLIONS M3
293.2 289.1
SPILLS
M3
35.8
18.5
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES RELATÓRIO ANUAL 2017
RELATÓRIO ANUAL 2017
PETROBRAS
PETROBRAS
SEGURANÇA
NOSSOS CAPITAIS
DESEMPENHO DOS NEGÓCIOS
VISÃO GERAL E
MODELO DE NEGÓCIOS
CONTEXTO EXTERNO
ESTRATÉGIAS
E PERSPECTIVAS
GOVERNANÇA
E CONFORMIDADE
OUTRAS
INFORMAÇÕES
RISCOS E OPORTUNIDADES
4444
RECURSOS UTILIZADOS/A SEREM UTILIZADOS
RESOURCES USED/TO BE USED
Petróleo e Gás Natural
Oil and Natural Gas
o foco da nossa atuação em exploração e produção de petróleo é o brasil. n osso portfólio é concentrado na região sudeste,
Brazil is the focus of our oil exploration and production operation. Our portfolio is concentrated in the Southeast region,
sendo a maior parte das reservas de petróleo situadas em campos marítimos, em águas profundas e ultraprofundas, localizadas
with most of the oil reserves located in deep and ultra-deep water fields, in the Campos, Santos, and Espírito Santo basins.
nas bacias de c ampos, de santos e do espírito santo. também atuamos em campos terrestres e marítimos em águas rasas.
We also operate in onshore and shallow water fields.
Considerando exclusivamente os direitos da Petrobras,
Considering Petrobras’ exclusively rights, we can explore and
podemos explorar e produzir petróleo e gás no Brasil em uma
produce oil and gas in Brazil in an area of 72,852 km².
área de xx.xxx km².
ONSHORE
te RRa
30.9
xx,x%
%
TOTAL AREA
da área total
OFFSHORE
maR
69.1
xx,x%
%
TOTAL AREA
da área total
xx,x%
25.0
á Reas Desenvo Lv IDas
%
DEVELOPED AREAS
xx,x%
75.0
á Reas a se Rem Desenvo Lv IDas
%
[em fase exploratória]
AREAS TO BE DEVELOPED
[In exploratory and development phase]
72,852
xx.xxx km²
KM2
Pre-salt Polygon
Polígono do Pré-sal
The pre-salt polygon, region in which new exploratory areas can only
O polígono do pré-sal, região na qual novas áreas exploratórias só podem
be granted in the production sharing regime, occupies an area of
ser outorgadas no regime de partilha de produção, ocupa uma área de
approximately 146.7 thousand km² (36.26 million acres), of which we have
aproximadamente xxx mil km² (xx,x milhões de acres), nos quais
exploration and production rights on approximately 18% of the total
temos direitos de produção sobre xx% da área total (cerca de xx mil km²
area (approximately 26.5 thousand km² or 6.55 million acres).
ou x,x milhões de acres).
MAJOR OIL BASINS IN BRASIL
ESPÍRITO SANTO
RIO DE JANEIRO
SÃO PAULO
Mexilhão
Tambau
Uruguá
Búzios
Mero
Uirapuru
Merluza
BM-S-51
Lagosta
Sagitário
Itapú
Berbigão
Sépia
Baúna
PRE-SAL
POLYGON
Noroeste de
Sapinhoá
Lula
Lula
Sapinhoá
Peroba
Sudoeste de
Sapinhoá
Sul de
Sapinhoá
Nordeste de
Sapinhoá
Libra
Atapú
Três
Marias
Sururú
Sépia
Leste
Júpiter
Cachalote
Jubarte
Caxareu
Baleia Anã
Baleia Franca
Baleia Azul
Mangangá
Pirambu
Vermelho
Carapeba
Parati
Corvina
Badejo
Linguado
Frade
Albacora
Roncador
Albacora Leste
Marlim Leste
210
277
344
346
Sudoeste de
Tartaruga Verde
Marlim Sul
411 413
Espadarte
539
Dois Irmãos
Alto de Cabo
l
Frio Central
657
709
753
789
REGULATORY FRAMEWORK
IN EXPLORATION AND PRODUCTION
CONCESSION
TRANSFER OF RIGHTS
PRODUCTION SHARING
EXPLORATORY AREAS ACQUIRED IN 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
45
In Brazil, the Government is the owner of the oil, but it can
be extracted by companies or consortiums upon several
NEGOTIATING THE TRANSFER OF RIGHTS
Sul de Sururu, Atapu), Sul de Guará (Sul de Sapinhoá) and
payment forms, such as royalties, that vary due to the
AGREEMENT
Sul de Tupi (Sul de Lula),
applied regulatory model. Biddings rounds held by ANP
are the main process for the acquisition of rights over the
exploratory blocks.
The Transfer of Rights Agreement signed between
With the volume of information acquired through the
Petrobras and the Federal Government is governed by Law
drilling of more than 50 wells and long-term production
No. 12.276, of June 30, 2010. It regulates the transfer of
tests, and with the extensive knowledge of the Santos Basin
The concession model fully governed the oil and natural
the oil and natural gas exploration and production rights
pre-salt layer, it was possible to characterize the existence of
gas exploration and production until 2010, when laws
instituting the Transfer of Rights Agreement and
Production Sharing Regimeg in the Pre-salt Polygon
were enacted.
Currently, our main production fields
follow the concession regime. On the
other hand, those under the Ttransfer
of Rights Agreement and Production
Sharing Regime will represent a large
part of our production in the medium
and long term
in specific pre-salt areas to Petrobras and establishes
volumes exceeding 5 billion equivalent oil barrels originally
provisions such as:
contracted.
• Volume that can be extracted in these areas, up to
5 billion barrels of oil equivalent;
In November 2017, we formed an internal committee, which
• Price paid for the Transfer of Rights Agreement;
is responsible for negotiating the review of theTransfer of
• Term of the agreement and percentage of local content;
Rights Agreement with Federal Government's
• Provisions that define a later revision on the following
representatives. In January 2018, the government instituted
items: value, maximum volume, term and percentage of
an Interministerial Commission with representatives of
local content.
the Ministries of Mines and Energy (MME), Finance and
Planning, Development and Management, in order to
As a counterpart to the right of exploration and production,
complete the terms of the contract review. The discussions
Petrobras paid the Federal Government the amount of
between the parties evolved, and the National Council for
R$ 74.808 billion, which in 2018 is recorded in its property,
Energy Policy (CNPE) published Resolution no. 12/2018,
plant and equipment.
on September 14, 2018, recommending to the MME
the previous draft of the addendum to the contract
The Transfer of Rights Agreement defined that the
to the Federal Audit Office (TCU) for analysis, and the
revision of its clauses of value, maximum volume
MME followed the orientation. Such draft consolidates a
to be produced, the term of validity and minimum
scenario that results in compensation to Petrobras. After
percentages of local content could occur after the first
the manifestation of the TCU, the negotiations should be
declaration of area's commercial feasibility. Petrobras
continued to close the review process.
has already declared commercial feasibility in fields of all
six blocks provided for in the contract: Franco (Búzios),
The review process is monitored by our
Florim (Itapu), Nordeste de Tupi (Sépia), Entorno de Iara
Minority Committee.
(Norte de Berbigão, Sul de Berbigão, Norte de Sururu,
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Reserves
PROVEN RESERVES
(BILLION BOE)
9.672
9.752
9.606
8.070
1.400
0.202
8.255
1.281
0.216
8.174 1.299 0.133
The oil reserves are measured according to criteria defined
by the Securities and Exchange Commission (SEC), which
take into account technical and economic aspects for the
measurement of existing volumes and the possibility of
producing them in the future.
Through the exploratory activity, we discovered new
areas that, after being declared commercial, started
to constitute oil fields. For each field, a production
development plan is proposed. As the projects included
in this plan acquire adequate technical and economic
maturity, the field is then considered to have proven
reserves. Throughout the field's life, its proven reserves
can be increased from drilling wells, operational
optimizations, implementation of additional recovery
methods, such as water injection, among others.
46
9.752
1.076
-0.359
-0.863
-0.146
9.606
VARIATION IN PROVEN RESERVES
(BILLION BOE)
COMPOSITION OF PROVEN RESERVES
a) Proven Reserves in December 2017
b) Appropriations in 2018
c) Purchase and Sale in 2018
d) Production for the year 2018 *
e) Annual variation (b + c + d)
e) Proven Reserves in December 2018 (a + e)
2016
2017
2018
OIL AND CONDENSATE (BRAZIL)
NATURAL GAS (BRAZIL)
OIL, CONDENSATE AND NATURAL GAS (ABROAD)
*This volume includes the volume produced by the shale and does not
consider the production of the TLDs in exploratory blocks in Brazil, since
they refer to exploratory areas, without declaration of commercial feasibility,
therefore, still without associated reserves.The production also does not
consider the volume of gas injected.In addition, this volume does not include
Bolivia's production, since, according to Article 357 of the Bolivian Constitution
(promulgated on February 7, 2009), reserves in this country cannot be
registered by the concessionaire.
When we begin producing, this volume of oil, condensate
In 2018, we could replenish 125% of the volume
and natural gas is no longer a reserve. In addition, other
produced, disregarding the effects of the acquisitions and
factors, such as the purchase and sale of assets, oil prices
divestments conducted in 2018, mainly due to the drilling
and reservoir characteristics, also influence the variation in
of new wells, the positive responses to water injection and
the volume of our reserves.
the good performance of the reservoirs in the pre-salt of
the Santos and Campos basins.
RESERVES INDEXES
RESERVES
REPLACEMENT RATIO
(RRR)
ORGANIC RESERVES
REPLACEMENT RATIO
(ORGANIC RRR)
83
%
125
%
RESERVES-TO-
PRODUCTION RATIO
(R/P)
11.1
ANOS
DEVELOPMENT
RATIO
54
%
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
47
Water
Energy
We have captured a volume of 182.3 million cubic meters of fresh water for our operational and administrative
In 2018, we recorded a total consumption of 853 thousand
activities in 2018. We have used 209 capture sources, of which 177 were located in Brazil (accounting for around 95%
terajoules (TJ), or 397 thousand boed, a quantity 10%
of the total volume of fresh water we collected) and 32 in the other countries where we operate. We continuously
lower than that of the previous year due to the reduction
invest in assessing the impacts of our activities, observing protected areas and identifying sensitive areas located in
of electricity generation to market. Although production
the regions of influence of our units.
and processing were similar between 2017 and 2018, there
was a significant reduction in Petrobras' distribution of
We reused 84 million m³ of water in 2018, sufficient volume to supply a city of two million inhabitants for one year.
electrical power, which reduced consumption.
The resulting economy of rationalization and reusing actions contributed to ensure the security of supplies necessary
to our operations.
From these reusing actions, we estimate an annual saving of approximately R$ 28.6 million in the costs of water
abstraction and effluent disposal.
CATCHMENT
209
SOURCES
182.3
MILLIONS M3
TOTAL
CATHMENT
84
MILLIONS M3
REUSE
266.3
TOTAL DEMAND
Steps taken to improve energy performance have
enabled us to save 2,300 terajoules a year (TJ/y), or
1,100 BOED, equivalent to power consumption in a city
with 92,000 inhabitants for one year. We had initiatives
that generated energy savings, such as: equipment
adequacy projects; increased load at REGAP refinery, with
improved recovery in preheating battery; and reduction
of losses in refining flares.
ENERGY
CONSUMPTION
853
THOUSAND
TERAJOULES
10%
LESS THAN 2017
Sufficient to
supply a city of
2 million people for
a year.
28.6
R$ MILLION
Estimated annual savings
in water catchment and
effluent disposal costs.
2,300
TERAJOULES
Savings made possible by actions to
improve energy performance.
Equivalent to the electricity
consumption of a city with
92 thousand inhabitants for one year.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 48
MAIN IMPACTS
The relationship with our suppliers also includes aspects
Over the last year, we made progress toward the goals of
We are always seeking to reduce the impacts of our
activities to the environment. In 2018, Petrobras holding
invested resources in initiatives to improve our safety,
environmental and health performance, comply with the
specific legislation and contribute to the safe, profitable
and environmentally responsible operational practices of
our units.
HSE INVESTMENTS
(R$ BILLION)
5.9
5.2
5.6
related to the environmental dimension. Environmental
contributing to climate-change reduction by adhering to
criteria were used in the new commitments formalized
the following initiatives:
by Petrobras Holding in 2018. The contracted companies
must present evidence and certifications related to
compliance with safety, environmental and health
standards, and declare that they comply with all the
requirements, laws and regulations of this topic.
For more information on socio-environmental projects,
please refer to Sustainability 2018 and for our relationship
with suppliers, please refer to Social, Relationship Capital
and Sustainability 2018.
Oil & Gas Climate Initiative (OGCI), which brings
together 13 of the world's largest oil and gas companies,
responsible for more than 30% of O&G's worldwide
production, with the objective of jointly investing at
least US$ 1 billion over the next 10 years to develop
technologies and initiatives, that contribute to the
reduction of GHG emissions;
Zero Routine Flaring by 2030 of the World Bank, an
initiative that seeks to incorporate the sustainable use or
conservation of associated gas from oil exploration fields
Emissions
without routine flaring.
2016
2017
2018
emissions, which is monitored and consolidated through a
to meet requirements related to a low-carbon economy
Our management of pollutants and greenhouse gases
In the Strategic Planning 2040, we established an initiative
(GHG) is based upon the inventory of atmospheric
to develop and implement processes within the company
These investments are directed to our
operations, reduction of emissions
and waste from industrial processes,
management of water and effluent
use, repair of impacted areas,
implementation of new environmental
technologies, modernization of our
pipelines and improvement of our
capacity to respond to emergencies.
In addition, we support several socio-
environmental projects.
computerized system with more than 17 thousand active
with actions and goals until 2025.
sources registered, the SIGEA® (Petrobras' Atmospheric
Emissions Management System).
For more information on our emission targets and ambitions, please
refer to Strategies and Perspectives and Climate change notebook.
GHG EMISSION*
(MILLION TONNES OF CO2E)
66.5
67.1
61.7
2016
2017
2018
* Our emissions are verified annually by third party, with data verification to be
completed as of 2018 to July 2019. After 2017 data verification by third party,
the result went from 67.0 to 67.1.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 49
Biodiversity and Ecosystems
Effluents
In 2018, we recorded 31 events with a confirmed or probable impact on fauna, flora or habitat, such as suppression of
As a result of our operations, we discounted 289.1 million
vegetation, erosion and accidental death of animals in units. For all of these events we have adopted mitigation measures,
cubic meters of water effluents by 2018, including
treatment or recovery of environmental impact, such as the replacement of protected species and revegetation, treatment
industrial effluents and water produced from the oil
and recovery of degraded areas, adaptation of facilities and other measures. In order to prevent and mitigate risks and
extraction process. Our effluent disposal processes meet
impacts to fauna, as well as human health, safety of our employees and operational safety, we have developed and started
the release standards established by law. We use 53
implementing, in 2018, corporate guidelines for fauna management in our operational units.
Waste
HAZARDOUS SOLID
WASTE FROM
INDUSTRIAL PROCESSES
119*
THOUSAND TONNES
E
N
TREATMENT
E
R
G
Y
O
R
M
A
T
E
R
IA
L
S REUS
E
RECYCLING
71%
surface water bodies, 11 underground disposal points
and 33 supply/treatment concessionaires or outsourced
companies to assimilate our effluents.
Specifically, in relation to the discard of produced water,
we executed a Letter of Commitment with IBAMA to
discipline the alteration of the methodology of analysis
in the measurement of the Oils and Greases content
of Produced Water, starting to adopt a more restrictive
method in gravimetric analyzes, adding an improvement
in the management of platforms. All the actions are being
fulfilled by Petrobras in accordance with the established
schedule, which ends in 2020.
We have oily currents reuse and recycling actions for
hydrocarbons’ recovery in the production processes of green
oil coke and other fuels in SIX and Refap. In these two units,
in 2018, we surpassed a total reprocessing of 124 thousand
tonnes of oily streams, an increase of approximately 44% over
the year 2017, when the reprocessed load was approximately
86 thousand tonnes.
We also seek to reduce the waste destiny generated in our
activities for landfills by recycling:
* The amount of hazardous solid waste from industrial processes sent for treatment in 2018
(119 thousand tonnes) was less than the amount generated in the same year (120 thousand tonnes).
93%
OF PAPERS
78%
OF WOODS
We are analyzing the possibility of setting some goals and
ambitions for other environmental issues, such as: water
reuse and waste disposal.
100%
OF SCRAP
90%
OF GLASS
92%
OF PLASTICS
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Spills
As part of our environmental procedures and
ENVIRONMENTAL LITIGATION
50
Oil and oil products spills totaled 18.5 m³ in 2018, 48%
less than the volume registered in 2017, and 63% below
the alert threshold set by the company. We are constantly
improving our standards, procedures and leakage
response plans, which are structured at the local, regional
and corporate levels.
SPILL – SPILLED VOLUME OF OIL OR OIL PRODUCTS
(m3)
efforts, we have detailed response and contingency
remediation plans in place to be implemented in case
of oil spill or leakage in our offshore and onshore
operations.
In order to effectively operate in these types of
emergencies, we have resources such as vessels
specializing in oil containment and fire fighting,
and containment barriers, disseminated in our
Environmental Defense Centers, on advanced
bases and in Emergency Response Centers of our
subsidiary Transpetro, located at several points of the
24
51.9
556.2
20
35.8
517.7
16
18.5
national territory.
Our units are certified by our own Equipment
Inspection Service, a system that seeks to
guarantee the integrity of our facilities through
analyzes, inspections and test techniques
employed in equipment and pipelines. We also
train our operational area leaders on process safety
management, including relevant information
about the layers of protection so as to avoid loss of
containment and leaks.
We are associated with Oil Spill Response Limited, a
global-scale organization specializing in providing
and complementing resources for an effective oil
spill response. In 2018, we conducted 21 regional
simulation exercises, including training in response
2016
2017
2018
TOTAL SPILLS
SPILL PETROBRAS
AVERAGE PEER GROUP
Notes:
a) Spill volumes exceeding one barrel (0.159 m3) that reach the environment are
considered.
b) The total of 18,5 m³ is equivalent to about 116 barrels.
to leaks.
c) Average peer group: volumes spilled data extracted from sustainability
reports or similar reports published by companies that make up the peer group
of Petrobras. At the completion of this report, all the data on volumes leaked by
the peer group companies had not been disclosed.
Suits relating to our value chain are governed by a wide
range of laws, regulations and licensing requirements
related to the protection of human health and the
environment. In this sense, we are subject to a series
of administrative and judicial proceedings related to
environmental issues, which may expose us to civil, criminal
and administrative sanctions, including orders to suspend
activities.
We are aware of five public civil actions challenging
Comperj's environmental licensing, but still without
summonses. These proceedings are suspended because
we are in discussions with the Public Prosecutor's Office to
conclude terms of adjustment of conduct for the closure of
the lawsuits.
PROVISIONED ENVIRONMENTAL CONTINGENCIES
(R$ MILLION)
2016
2017
2018
194
300
432
ENVIRONMENTAL CONTINGENCIES NOT PROVISIONED
(R$ MILLION)
2016
2017
2018
7,079
7,787
16,357
For more information, please refer to Sustainability 2018.
For more information on environmental contingencies,
please refer to Financial Statements (Explanatory Note 31).
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES Productive
Capital
Our productive capital consists of our industrial units and all the infrastructure we use in our
productive activity, with emphasis to the platforms, refineries and logistical assets.
51
The main tangible assets, the majority located in Brazil, are in the following table:
EXPLORATION AND PRODUCTION
2016
2017
2018
NATURAL GAS
Processing Units
Brazil
Bolivia
Production wells (oil and natural gas) 1
10,045
7,888
7,256
Processing capacity 4 (million m3/day)
Floating rigs
Operated platforms in production 2
TRANSPORT AND STORAGE
Pipelines (km)
Gas pipelines in Brazil (km)
Vessel fleet (owned and chartered)
Own
Chartered
Terminals
Own
Third party's 3
REFINING
Refineries
Brazil
Abroad
Nominal installed capacity (thousand barrels per day-
bpd)
Brazil
Abroad
DISTRIBUTION IN BRAZIL
Number of service stations
Number of distribution bases
34
115
7,719
9,190
131
38
93
52
47
5
14
13
1
2,276
2,176
100
8,176
85
30
114
7,719
9,190
128
39
89
55
47
8
14
13
1
2,276
2,176
100
8,277
83
16
113
7,719
9,190
123
43
80
56
47
9
14
13
1
2,286
2,176
110
7,665
84
2016
2017
2018
22
20
2
146
105
41
3
41
20
6.1
5
3
23
20
3
149
105
44
3
41
20
6.1
5
3
23
20
3
149
105
44
3
47
20
6.1
5
3
Brazil
Bolivia
Regasification terminals
Regasification capacity (million m3/day) 5
POWER
Number of thermal power plants
Installed capacity (thousand MW)
PETROCHEMICAL
Interest in companies
FERTILIZERS
Fertilizer plants
Urea production capacity (thousand ton/year)
Ammonia production capacity (thousand ton/year)
1,852
1,406
1,852
1,406
1,852
1,406
BIOFUELS
Biodiesel production units
5
5
5
Biodiesel production capacity (thousand 3/year)
902.8 6
1,054 6
1,054 6
1 Includes information from abroad, corresponding to the share of Petrobras in affiliated companies.
2 Includes only definitive production systems, EWT (Extended Well Test) and EPS (Early Production System)
units. Values of 2016 and 2017 revised to reflect this criterion.
3 Third party terminals that have existent contracts for the use of the storage service.
4 Non-material adjustment to capacity values in the years 2016 and 2017.
5 As of July 2017, in the face of the redelivery of the Golar Spirit vessel, the regasification was conducted using
two vessels.
6 Includes the capacity of Quixadá, which is hibernated.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 52
We own 93 platforms, plus 20 leased and 11 operated by
The processed natural-gas chain transfer system for the
third parties, which allowed us to produce offshore
distributors in Brazil, with Petrobras shareholding, consists
1.96 million barrels of oil per day and 61.6 million cubic
of gas pipelines with total extension of 9,190 km.
meters of natural gas per day in 2018 less the
liquefied volume.
We also own and operate an electricity generating plant
composed of 20 thermoelectric plants, with an installed
Part of the volume of oil is exported, and the other portion
capacity of 6.1 thousand MW.
is transferred through terminals and pipelines to our
13 refineries with processing capacity of
In addition, we operate in Petrochemicals through
2,176 thousand bpd.
interests in five operating companies.
These oil products are sold to fuel distributors, including
Our three fertilizer units have an annual production
our subsidiary Petrobras Distribuidora, which has a
capacity of 1,852 thousand tonnes of urea and 1,406
network of 686 own stations and 6,979 third-party
stations, as well as bases and terminals. The distributors
are responsible for the sale to final consumers.
These operations rely on Transpetro's logistical support in
thousand tonnes of ammonia and our biofuel plants
have a capacity of 945 thousand m3 of biodiesel, without
considering the unit of Quixadá that is hibernated, and
211 thousand m3 of ethanol.
the operation of 57 vessels, of which 43 are owned and
The total of our property, plant and equipment had a book
14 chartered by our subsidiary, in addition to the
value of R$ 609.8 billion at the end of 2018.
66 chartered by Petrobras.
The volume of natural gas produced is transferred to the
processing plants with nominal processing capacity of
149 million m3/day.
In order to complement the total natural-gas supply,
we have three liquefied natural gas (LNG) regasification
terminals. Currently, the total delivery capacity is
47 million m3/d.
For more information about our performance and the entry of new
production systems, please refer to Business Performance and
Strategy and Outlooks, respectively.
For more information, please refer to Financial Statements
(explanatory note 12) and Reference Form (item 9.1), available on
our website: www.petrobras.com.br/ri.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
INVESTMENTS
Our investments totaled R$ 49.37 billion in 2018,
2.4% higher than the previous year.
COMPARATIVES OF TOTAL INVESTMENTS
(R$ BILLION)
2017
2018
82%
86%
16%
2%
12% 2%
For more information on investments by segment, please refer to
Business Performance.
EXPLORATION AND PRODUCTION
REFINING AND NATURAL GAS
OTHER AREAS
53
48.22
49.37
+2.4%
EXPLORATION AND
PRODUCTION
INVESTMENTS
R$ 42.53
BILLION
Production
development of
new oil fields,
primarily in the
pre-salt area of
Santos basin
Production
maintenance in
mature fields
Exploratory
Activities
Improvement
of operational
efficiency
REFINING AND
NATURAL GAS
INVESTMENTS
R$ 5.71
BILLION
Maintenance
of refining
units
Conceptual design
to enable Replan to
Construction and expansion of the
capacity of gas pipelines and natural
produce 100% of S-10
gas processing units to supply the
diesel oil and increase
production of the pre-salt pole of
its production of
aviation fuel
Santos basin
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
54
recognition of impairment losses, mainly in such assets in
the Sergipe-Alagoas Basin and Campos Basin. However,
such losses were partially offset by the project review
effects with consequent lengthening in the expected
production curve in such fields located in the Santos
and Espírito Santo Basins, which generated reversals of
previously recognized impairments . Regarding exploration
and production areas in fields located abroad, we highlight
such ascertained losses for assets within the scope of the
divestment and partnerships plan, especially the oil and
natural gas production fields in the Gulf of Mexico.
In the Refining, Transportation and Commercialization
segment, we recognized impairment losses due to the
deterioration in the scenario of future freight prices
impacting Transpetro's ship fleet, as well as the need to
discontinue equipment operations, besides strategic
decisions on such projects in the fertilizer business and
gas pipelines.
For information on impairment in the business areas, please refer to
Financial Statements (explanatory note 14).
Transpetro, our subsidiary, invested R$ 1.454 billion
strengthening corporate governance and sharing of future
in 2018. Most of the investment was directed to the
risks and investments.
For more information on partnerships and divestments, please refer
to Financial Capital.
IMPAIRMENT
The recoverability assessment of our assets takes place
annually as of December 31, or when there is evidence of
devaluation over the course of the year.
In 2018, losses and reversals in the impairment of assets
were recognized in the net amount of R$ 7,689 million,
mainly in the fourth quarter, resulting from portfolio
management and the updating of our medium and long-
term economic assumptions, within the scope of the
2019-2023 Business and Management Plan, as approved
in the fourth quarter of 2018.
We highlight the increased estimated decommissioning
expenditures for exploration and production areas
in Brazil, which have significantly contributed to the
construction of ships, with the delivery of four new vessels
during the year (three aframax class and one gasser), and
projects related to the maintenance of the company's
logistics infrastructure.
Our subsidiary Petrobras Distribuidora invested R$
448 million in 2018, mainly for the maintenance and
expansion of the logistics infrastructure, the development
and modernization of the network of stations, aviation
segment, gas distribution, and energy sale.
Our investment budget, as well as the investment and
budget of our subsidiaries, is approved on an annual
basis by the National Congress, pursuant to budgeting
legislation in force in Brazil for companies controlled either
directly or indirectly by the Federal Government. The 2018
budget in force was approved by Law 13,587/2018 (2018
Annual Budgetary Law) and supplements thereof.
In compliance with the constitutional rule prohibiting
investments that exceed the budget and additional credits
approved, we made our investments within the limits
approved by the competent authorities.
In parallel to our investments in expanding our
productive capacity, our divestments and partnerships
also contribute to the adequacy of our portfolio, as well
as the disposal of non-strategic assets, as well as our
partnerships, in addition to the benefits of divestments,
sharing and development new technologies,
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 55
Our financial capital is composed of the available financial resources, whether our own or from third
parties, allocated to our productive activity.
Financial
Capital
SHARES
In Brazil, our shares are listed on the São Paulo Stock
Exchange (BM&F Bovespa), under the trading codes
PETR3 (common) and PETR4 (preferred). In the United
States, our ADRs (American Depositary Receipts), which
are certificates issued by American banks that represent
shares of a foreign company in the country, are listed on
the New York Stock Exchange (NYSE) under the codes
PBR (receipts representing common stock) and PBRA
(receipts representing preferred stock). In Spain, receipts
representing our shares are listed on Latibex under the
DISTRIBUTION OF SHARES PER TYPE
(%)
5.54
0.26
10.66
46.16
codes XPBR (representing common stock) and XPBRA
37.38
(representing preferred stock). Our shares are also listed in
Argentina, on the Buenos Aires Stock Exchange, under the
codes APBR (representing common stock) and
APBRA (representing preferred stock).
SHARE CAPITAL
(%)
6.87
PETR3
PETR4
PBR
PBR/A
OTHERS
The controlling block, consisting of
the Federal Government, BNDES,
16.20
BNDESPar, Caixa Economica Federal
and the Social Participation Fund hold
63.52% of our shares with
voting rigths.
7.37
28.67
FEDERAL GOVERNMENT
BRAZILIAN IN B3
FOREIGNERS IN B3
NY STOCK EXCHANGE (ADRs)
BNDESPar
BNDES
19.82
21.07
Note: Information from our shareholders on January 31, 2019.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES Stock performance
STOCK PERFORMANCE SINCE 2016
In 2018 we had an expressive appreciation of our shares.
The upward movement, observed at the beginning of the
year, was partially interrupted by the truck drivers' strike,
which occurred in May 2018, but after the strike until the
end of 2018, we again observed a recovery in our market
value. This movement is part of the recovery process of
credibility and appreciation of the company that has been
observed since 2016.
450
400
350
300
250
200
150
100
50
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+258,5%
+196,4%
+102,7%
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PETR3
PETR4
IBOV
Source: Bloomberg
ADR PERFORMANCE SINCE 2016
500
450
400
350
300
250
200
150
100
50
0
6
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+240,9%
+202,6%
+8,1%
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56
Appreciation in 2018 /
Value on 12/31/2018:
ON Shares (PETR3):
+50.2%/R$ 25.40
PN Shares (PETR4):
+40.9%/R$ 22.68
Market value:
+46.3%/R$ 316 billion
Ibovespa
+15.0%
Appreciation in 2018 /
Value on 12/31/2018:
ON ADRs (PBR):
+26.4%/US$ 13.01
PN ADRs (PBRA):
+17.9%/US$ 11.59
Market value:
+22.9%/US$ 96 billion
AMEXOIL:
-13.2%
BRENT OIL:
-19.5%
PBR
PBR/A
AMEXOIL
Source: Bloomberg
In January 2018, the value of our shares
exceeded our book value, a milestone not
reached since January 2012.
For information on the relationship with our investors, please refer
to Social and Relationship Capital.
For further information on lawsuits filed by our shareholders, please
refer to Governance and Compliance, and Financial
Statements (note 31.4).
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
57
326.9
268.8
84.4
69.4
2018
We achieved
US$ 69.4 billion
net debt at the
end of 2018.
INDEBTEDNESS
385.8
314.1
118.4
96.4
2016
361.5
280.8
109.3
84.9
2017
TOTAL DEBT (R$ BILLION))
NET DEBT (R$ BILlION)
TOTAL DEBT (US$ BILLION)
NET DEBT (US$ BILLION)
DEBT PROFILE PER CURRENCY
(%)
DEBT PROFILE PER CATEGORY
(%)
3
4
4
5
19
74
51
USD
BRL
EURO
OTHER CURRENCIES
40
CAPITAL MARKET
BANKING MARKET
EXPORT CREDIT AGENCY
DEVELOPMENT BANK
DEBT
The indebtedness level is part of our main financial metric.
Since 2015, we have been working to reduce our debt and
improve its profile, redistributing the amortizations over
time and reducing its cost. One of the main goals of our
Strategic Plan is to reach the Net Debt/Adjusted Ebitda
ratio below 1.5x by the end of 2020. In calculating Adjusted
EBITDA, we adjusted our EBITDA for the periods of 2018
by adding foreign exchange gains and losses resulting
from provisions for legal proceedings denominated in
foreign currencies.
LEVERAGE
REDUCTION
NET DEBT/ ADJUSTED EBITDA
FROM
5.1
IN 2015
TO
2.3
IN 2018
NET DEBT/ADJUSTED EBITDA RATIO
(X)
3.54
3.67
2.34
2016
2017
2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Debt Management
According to the 2019-2023 Business and Management
Plan, there is no need for new net funding in the horizon
of the plan. However, we will continue to evaluate funding
opportunities aimed at managing liabilities, aiming at
improving the amortization profile and reducing the cost
Weighted average maturity (in years)
7.5
8.6
of debt, and maintaining a debt profile that is adequate to
the maturity of our investments.
Leverage (%)
55
51
Average interest rate (% p.a.)
6.2
6.1
6.1
9.1
49
58
2016
2017
2018
In 2018, we raised R$ 38,023 million.
We highlight:
We prepaid several loans and financing
in the total amount of R$ 141,483 millions.
We highlight:
We performed debt swap transactions that did not
involve financial settlements. We highlight:
(i) funding in the national and international
banking market, maturing between 4.5 years
(i) the repurchase and / or redemption of R$
49,719 million, (US$ 13,943 million) of securities
(i) debt extension in the international banking
market with maturities in 2020 and 2023, in the
and 6.5 years, in the total amount of R$ 26,227
in the international capital market, with the
total amount of R $ 5,794 million (US $ 1,500
million;
payment of a net premium in the amount of
million), for new debts with maturities in 2023
R$ 1,015 million;
and 2024 and more competitive financial costs.
(ii) offer of securities in the international capital
market (Global Notes) maturing in 2029, in the
amount of R$ 6,359 million, (US$ 1,962 million);
(ii) the prepayment of R$ 55,116 million of
loans in the domestic and international banking
and
market; and
(iii) funding of R$ 3,774 million, in financing with
export credit agencies.
(iii) prepayment of R$ 4,932 million of financing
from the BNDES.
After these operations, our amortization
profile was extended, rebalancing the
volume of payments, especially in the
short term, for the years 2019 to 2022.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
59
Risk rating
Our credit rating is determined by our operational and financial perspectives and is influenced by Brazil's sovereign credit rating. Since 2016,
rating agencies Moody's and Standard & Poor's (S&P) have been acknowledging our efforts to improve governance, debt management,
divestments and reduce leverage, by raising our ratings. Fitch reduced our rating in 2018, as a result of the downgrading of Brazil's credit rating.
Reduction in sovereign rating
Improved performance, improved relationships with domestic and
international banks and the access to capital markets, in addition to
aligning our prices with international prices
Reduction in sovereign rating
BB+
BB
Ba3
BB
B+
B3
BB-
B1
Ba3
B2
Ba2
BB-
Ba2
BB-
BB-
Improved liquidity, reduced leverage, better governance
and debt profile, solid cash generation.
6
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/
G
U
A
7
1
/
P
E
S
7
1
/
T
C
O
7
1
/
V
O
N
7
1
/
C
E
D
8
1
/
N
A
J
8
1
/
B
E
F
8
1
/
R
A
M
8
1
/
R
P
A
8
1
/
Y
A
M
8
1
/
N
U
J
8
1
/
L
U
J
8
1
/
G
U
A
8
1
/
P
E
S
8
1
/
T
C
O
8
1
/
V
O
N
8
1
/
C
E
D
Lower liquidity risk, an expectation of a
better operating performance and success
in cash generation and sale of assets.
Improved liquidity profile, greater cost
efficiency, new process of aligning our prices
with international prices and evolution in the
Brazilian regulatory environment.
Improved liquidity, reduced leverage, better governance
and debt profile, solid cash generation.
Investment Grade
Fitch
S&P
Moodys
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 60
OPERATING CASH FLOW
PARTNERSHIPS AND DIVESTIMENTS
Currently the cash generated in our operating activities
Our active portfolio management combined with our
of liquefied petroleum gas (LPG) and production of
is sufficient to finance our investments. Since 2015, we
partnership strategy results in another important source
fertilizers, preserving technological skills in areas
have recorded positive free cash flow, reflecting efforts
of company resources through the establishment of
with potential for development. In addition, the active
to optimize investments and reduce costs, as well as the
partnerships and divestments.
management of the portfolio contributes to the reduction
practice of prices aligned with international prices.
of our leverage and the availability of resources for
FREE CASH FLOW
(R$ BILLION)
87
90
90
86
42
44
96
55
-48
2016
-42
2017
-41
2018
OPERATING CASH FLOW
INVESTIMENTS
FREE CASH FLOW
The active management of the portfolio is in line with
future investments.
2019-2023 Business and Management Plan and seeks
to maximize our value, through the optimization of
In line with TCU guidelines and current legislation, our
the business portfolio, leaving in full the participation
Disinvestment Systematics comprises the following
and production of biodiesel and ethanol, distribution
stages, which are disclosed to the public:
OPPORTUNITY
DISCLOSURE
(TEASER)
BEGINNING OF
THE NONBINDING PHASE
(WHEN APPLICABLE)
BEGINNING OF
THE BINDING PHASE
GRANTING EXCLUSIVITY
IN THE NEGOTIATION
(WHEN APPLICABLE)
This is when the intention of divestment is made public,
and potential interested parties are invited to take part in
the bidding process.
Optional step, held to identify and select the participants who
are really interested in the acquisition and that see greater value
in the assets/companies.
Step where the selection of the best offer made by the
potential interested parties takes place, in order to maximize
the value of sales.
Optional step, which occurs when exclusivity is formally granted
to a potential buyer, after the binding phase.
TRANSACTION APPROVAL BY
SENIOR MANAGEMENT (EXECUTIVE BOARD AND BOARD
OF DIRECTORS) AND SIGNING OF AGREEMENTS
Step containing the signing of purchase and sale (or assignment of
rights) agreements containing the conditions of the transaction,
including the conditions precedent for the closing.
For more information about our financial results, please
refer to Consolidated Financial Performance and
Financial Statements.
CLOSING OF
THE OPERATION
Step where the transaction is concluded with the fulfillment of
the conditions precedent set forth in the agreement.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
61
In addition, we
have two ongoing
partnerships in
renewable energy.
One with Total, in the
solar and wind energy
segment onshore, and
the other with Equinor,
in the offshore wind
energy segment
in Brazil.
In 2018 and early 2019 we received a total of US$ 6.1 billion* from our partnerships and divestments, and we have completed the following transactions:
TRANSACTIONS COMPLETED IN 2018
SIGNATURE DATE CLOSING DATE
TRANSACTION
12/18/2017
6/15/2018
Strategic partnership with Statoil (current Equinor): technical agreement to increase the recoverable volume of oil in the Roncador
field; agreement to share gas export infrastructure, and assignment of 25% participation in the Roncador field
12/28/2016
1/15/2018
Strategic alliance with Total, including the assignment of 22.5% of the rights in the Iara concession area, and the assignment of
35% rights, as well as the operation, in the concession area of the Lapa field, in Block BM-S -9
10/10/2018
11/30/2018
A joint venture constituting assets in oil and gas production in the Gulf of Mexico between the subsidiary Petrobras America Inc.
(20%) and Murphy Exploration & Production Company (80%),
12/28/2016
4/30/2018
Sale of the Petrochemical Company of Pernambuco (PetroquímicaSuape) and Companhia Integrada Têxtil de Pernambuco (Citepe)
2/16/2018
2/21/2018
Sale of Total shares of São Martinho S.A. (6,593%)
11/22/2017
4/30/2018
Total assignment of Petrobras' stake in the Azulão Field
TOTAL
1Values received or to be received on closing transactions and subsequent payments
NOMINAL VALUE1
(US$ BILLION)
2.9
2.2
1.1
0.44
0.14
0.06
6.8
In addition, we have signed contracts relating to the following transactions that have not yet been completed, as they await the fulfillment of contractual
and legal precedent conditions:
TRANSACTIONS EXECUTED IN 2018 AND EARLY 2019
SIGNATURE DATE TRANSACTION
2/28/2017
6/28/2018
10/31/2018
11/28/2018
12/21/2018
1/30/2019
TOTAL
Sale of 50% of Termobahia S.A., as part of the strategic partnership with Total
Sale of Petrobras' equity interest in Petrobras Paraguay Distribución Limited (PPDL UK), Petrobras Paraguay Operaciones y Logística SRL (PPOL) and
Petrobras Paraguay Gas SRL (PPG)
Disposal of the ownership interest held by Petrobras (50%) in the company Petrobras Oil & Gas B.V. (PO&GBV)
Total assignment of Petrobras' participation in the Pargo, Carapeba and Vermelho fields, northeast pole of the Campos Basin.
Assignment of 10% rights from the Lapa field to Total, in Block BM-S-9. Exercise of the option to sell the remainder of our interest, as provided for in
the agreement signed in January 2018, when Total acquired a 35% stake in Petrobras, within the scope of the strategic partnership, resulting in the
operation of the field.
Complete sale of the shares held by Petrobras America Inc. in the companies that make up the Pasadena refining system in the United States.
NOMINAL VALUE1
(US$ BILLION)
– 2
0.38
1.53
0.37
0.05
0.56
2.9
1 Amounts received or to be received at the close of transactions and subsequent payments;
2 Transaction was executed in 2017 but has not yet been concluded. Transaction value not disclosed yet.
* Amount includes US$ 250 million of dividends distribution from PO&G BV to Petrobras.
For more information about our
partnerships, please refer to
Social and Relationship Capital
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES Regarding to the competitive processes in progress, we have the following announcements to the market related
to divestments:
ANNOUNCEMENTS TO THE MARKET *
PHASE
TRANSACTION SCOPE SUMMARY
R
E
(TEASER)
S
A
E
T
Sale of 60% in refining and logistics in the Northeast and South **
I
G
N
D
N
B
N
O
N
I
I
G
N
D
N
B
BINDING
PHASE
I
Total assignment of the participation in three onshore fields in production, located in Espirito Santo, jointly known as Lagoa Parda
Disposal of 100% of the shares held by Petrobras Biocombustíveis in the company BS BIOS
Total assignment of rights to shallow-water fields in Rio Grande do Norte
Assignment of the total participation in the Maromba field, in the Campos Basin
Total assignment of rights over the poles of Pampo and Enchova, in shallow waters, in Rio de Janeiro
Total assignment of rights over the Sergipe and Merlusa poles, in the shallow waters of Sergipe and São Paulo respectively
Total assignment of the rights over the Ceará pole, located in shallow waters in the Ceará basin
Total assignment of onshore rights in Bahia **
Sale of 90% of the shareholding interest in the Transportadora Associada de Gás S.A. (TAG), a wholly owned subsidiary of
Petrobras **
Disposal of the interest in Araucária Nitrogenados S.A. (ANSA) and in the Nitrogen
Fertilizer Unit III (UFN-III)**
Total assignment of rights in five sets of onshore fields (totaling 19 concessions), in
Ceará, Rio Grande do Norte and Sergipe
Assignment of rights to the Piranema and Piranema Sul fields
Total assignment of rights to the Baúna field in the Santos Basin
Assignment of 50%, without transfer of the operation, of the rights over the fields of Tartaruga Verde and Module III of Espadarte
Partial transfer, without transfer of the operation, of rights in four concessions, located in deep waters in the Sergipe-Alagoas Basin
Assignment of the total participation of Petrobras in 34 onshore production fields located in the Potiguar Basin, in the state
of Rio Grande do Norte
* Information updated until February 1, 2019.
** Processes impacted as described in "Main judicial and administrative decisions that affected our transactions”.
62
MAIN JUDICIAL AND ADMINISTRATIVE
DECISIONS THAT AFFECTED OUR
TRANSACTIONS
The sale of Liquigás Distribuidora S.A. to Ultragaz
was judged and disapproven by Cade. The purchase
and sale agreement, signed in 2016, was terminated,
applying to Ultragaz fines, in our favor, in the amount of
R$ 286.2 million. Alternatives are being analyzed for the
divestment of Liquigás.
The assignment of rights of oil fields located in the
state of Bahia (Buracica and Miranga groups and
related facilities) has been suspended due to a
preliminary injunction since October 2018.
In July 2018, we decided to suspend three of our
disinvestment process due to a non-collegiate
injunction issued by the Federal Supreme Court
(STF). These are: (i) formation of partnerships in
the Northeast and Southern refineries of Brazil; (ii)
total sale of our stake in Araucária Nitrogenados S.A.
(ANSA) and the Nitrogenated Fertilizer Unit III (UFN-
III); and (iii) sale of 90% of the shareholding interest
in Transportadora Associada de Gás S.A. (TAG), our
wholly-owned subsidiary. In January 2019, after the
Brazilian Federal Attorney-General’s Office (AGU) stated
that Petrobras meets the requirements, we resumed
all the divestment processes related above. Regarding
the partnerships in the in the Northeast and Southern
refineries of Brazil, additional studies are underway to
make it viable.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Liquidity and Capital Resources
63
CASH FLOW
(BRL BILLION)
74
20
38
96
-41
S
T
N
E
M
T
S
E
V
N
I
I
G
N
D
N
U
F
-121
Principal
Interests
8
54
-141
I
S
N
O
T
A
Z
T
R
O
M
A
I
*
S
R
E
H
T
O
I
D
O
R
E
P
T
A
E
C
N
A
L
A
B
E
H
T
F
O
D
N
E
E
H
T
I
G
N
N
N
G
E
B
I
I
D
O
R
E
P
E
H
T
F
O
I
G
N
T
A
R
E
P
O
W
O
L
F
H
S
A
C
T
N
E
M
T
S
E
V
D
I
E
H
T
T
A
E
C
N
A
L
A
B
With prudence in managing our liquidity, we adopted a methodology to establish the minimum cash level and
access to revolving credit lines.
* Includes changes in the balance of Government bonds and time deposits with maturities of more than 90 days at the beginning of period, investments in
marketable securities, dividends paid to non- controlling interest, acquisition of non-controlling interest and effect of exchange rate changes on cash and
cash equivalents.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
64
EXTERNAL
CONTEXT
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 65
We are subject to external variables that can impact the performance of our business and the way we plan the future.
In 2018, the following variables stood out:
REGULATION
OIL AND GAS
INTERNATIONAL
MARKET
EXTERNAL
VARIABLES
COMPETITIVENESS
OF ALTERNATIVE
ENERGY SOURCES
DOMESTINC MARKET
AND ECONOMY
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 66
OUR
PROSPECTS
From the supply side, investments in logistics in the Gulf
of Mexico will unlock the bottlenecks of unconventional
oil from the Permian Basin to US export terminals. This
dynamic will sustain an upward trend for the share of
tight oil in the international market, and to a large extent
in Asia. Despite a significant increase in supply in North
America, there is a prospect of shrinking the oil production
of major world producers, such as Venezuela and Iran.
From a demand point of view, the growth rate will
remain positive in the coming years in response to the
dynamics of fossil fuel consumption in the emerging
Asian countries, notably China and India. In this context,
the fundamentals of supply and demand justify the
rebalancing of the market around US $ 70 / bbl.
OIL AND GAS INTERNATIONAL MARKET
WHAT
HAPPENED
In 2018, oil geopolitics drove prices to high levels. The Brent average for the year was US$ 71/bbl.
The USA has created significant uncertainty in the international market with threats of breaking the nuclear deal with Iran,
a fact made in the second half. The Brent price hit its peak in October 2018, when it hit the US$ 86/bbl mark.
In the early months of 2018, the Organization of Petroleum Exporting Countries (OPEC) cut-offs were more than 100% due
to production problems in several of the Organization's member countries. Therefore, in July 2018, concerned with the
possibility of production shortages, OPEC and Russia agreed to increase their oil supply to compensate mainly for declines
in oil production in Venezuela and instability in other countries, such as Angola, Libya and Nigeria, as well as the impact
of the new sanctions on Iran. It was not immediate, but after a few months, the production growth of the world's largest
producers (Russia and Saudi Arabia) brought the market back into balance and led to a high inventory increase during
the last months of the year. Although it contributed to this move, US production growth in 2018 was limited by logistical
bottlenecks in the flow of oil from the Permian producing region.
In early November, the United States confirmed the temporary waivers of sanctions in some countries that claimed they
were not prepared to stop importing Iranian oil. Eight countries have benefited from waivers for six months (China, India,
Turkey, Taiwan, South Korea, Italy, Japan and Greece), allowing greater availability of oil in the international market. The
combination of an increase in inventories and waivers granted produced expectations of oversupply in the international oil
market. In this context, oil prices fell from their peak of the year in October (US$ 86/bbl) to US$ 55/bbl in December 2018.
EVOLUTION OF BRENT
PER QUARTER IN 2018
(US$/BBL)
75
75
67
68
1Q18
2Q18
3Q18
4Q18
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES DOMESTIC MARKET AND ECONOMY
WHAT
HAPPENED
67
OUR
PROSPECTS
The trade disputes between the US and China, and the US interest rate normalization have increased international
uncertainty and lowered investor risk appetite.
Despite the advancements in negotiations for a US-China
trade agreement, the world scenario remains uncertain.
On the positive side, the indications of the Federal
Domestically, the level of activity recorded another year of slow recovery and strong exchange rate volatility. The Brazilian
Reserve Board (Fed) chairman, considering the 2.5% level
economy grew around 1.0%, driven by investment and household consumption. Cumulative inflation in the year, as
of the interest rate near the neutral level, may be signaling
measured by the Extended Consumer Price Index (IPCA), ended the year with a 3.75% increase, lower than the Central
that the upward cycle is reaching its end.
Bank's target, due to the still weak domestic demand.
In relation to the BRL/USD exchange rate, the year 2018 was very unstable, especially when compared to the previous year.
The exchange rate ranged from a monthly average of BRL/USD 3.21 to BRL/USD 4.11, ending the year with an average of
BRL/USD 3.66.
In spite of economic growth, the domestic market for oil products fell by 6% in 2018 compared to 2017, close to
2.2 million bpd. This movement mainly reflects the improvement over the competitiveness conditions of ethanol against
gasoline in 2018. While gasoline lost nearly a sixth of its market, growth in sales of hydrated ethanol surpassed 40%.
The increase in the biodiesel mandate from 8% to 10% in February 2018 also contributed to the negative performance
of the derivatives market.
EXCHANGE RATE (BRL/USD)
BRAZILIAN OIL PRODUCTS’ MARKET
3.48
3.19
3.66
4.00
3.50
3.00
2.50
2.00
2,500
2,000
1,500
1,000
500
I
I
A
D
R
O
P
S
R
R
A
B
L
M
M
E
I
2016
2017
2018
2016
2017
2018
VARIATION BETWEEN THE HIGHEST AND THE LOWEST
GASOLINE
DIESEL
OTHERS
With regard to the Brazilian economy, the outlook is
for growth to accelerate again in 2019. There is room
to increase production by only occupying idle installed
capacity, which facilitates the recovery process. There is
an expectation that the pension reform will be approved
in 2019, contributing to fiscal adjustment and lower
exchange rate volatility.
In 2019, the domestic oil products’ market is expected
to show a modest reaction, rising by approximately 1%
against the level of 2018. Although there is still some
shrinkage in the gasoline market, this should be more
than offset by the positive movement in demand for the
other oil products.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
68
COMPETITIVENESS OF ALTERNATIVE ENERGY SOURCES
WHAT
HAPPENED
OUR
PROSPECTS
Renewable energies have shown increased competitiveness in many markets and conditions,
Brazil is one of the countries which most expands the generation of energy from
bringing increasing economic opportunities for governments and investors. According to the
International Renewable Energy Agency (IRENA), the costs of onshore wind power generation
have already fallen almost a quarter since 2010. By 2020, the trend is for renewable-energy
generation technologies to allow average costs to be in the lower range of fossil-fuel cost
range due to factors such as technological improvements, competitive acquisitions and
growth of the project developer base.
Renewable sources accounted for 85% of the Brazilian electricity matrix. Wind power, in the
last ten years, has reached the 7% share, with an installed capacity of 13 GW. This source has
presented a competitive level of generation cost with that of traditional sources, such as gas-
fired power plants. In 2018, photovoltaic solar energy represented 1% of the electrical matrix,
with approximately 2 GW of installed power (1.5 GW of centralized generation and 0.5 GW of
renewable sources, ranking 9th and 26th among the nations with the highest installed
capacity of wind and solar energy, respectively. The expectation is of strong growth of
these sources due to the Brazilian potential, with high solar radiation and winds, mainly
in the Northeast, with speeds, predominantly unidirectional and constant.
Brazil's onshore wind potential was estimated at 140 GW in 2001 when the Brazilian
Wind Atlas was drawn up (a document currently under review, which should
demonstrate a much higher potential, given the source's technological evolution).
As for offshore wind, the expectation is that Brazil will advance in investments.
Although it shows a low degree of maturity in terms of development, there is a strong
expectation of reducing costs of this source in the world. The flat cost of commissioned
plants in 2017 was US$ 0.14/kWh and is expected to reach $ 0.10/kWh in projects to
distributed micro and mini generation). The number of photovoltaic distributed generation
be commissioned in 2020, according to IRENA.
systems surpassed 48 thousand, more than double that of 2017.
COST BENEFIT INDEX (ICB)
ENERGY AUCTIONS - 2014 TO 2018* (RS/MWh)
400
350
300
250
200
150
100
50
0
190
LEN
060
LER
200
LEN
030
LFA
210
LEN
220
LEN
070
LER
080
LER
230
LEN
250
LEN
260
LEN
270
LEN
280
LEN
NATURAL GAS
WIND
SOLAR
Note:
LEN - New Energy Auction;
LER - Reserve Power Auction;
LFA - Auction of Alternative Sources
* Values updated for November 2018.
Technological improvements in turbines and solar panels, whether in more advanced or
efficient components or materials, it is expected to apply digital technologies that allow
the use of real-time data and big data gains in maintenance, reduction of costs of O&M
and energy lost in downtime, thus contributing to a greater competitiveness
of renewable energies.
In addition, digital solutions can be used as a link for integrating renewable sources and
distributed generation systems into the transmission network, enabling advances in
productivity, integration and reliability, and providing a conducive environment for the
development of more resilient and intelligent equipment.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
69
REGULATION
WHAT
HAPPENED
Gas Act: in 2017, several measures to change
the Gas Act (Act No. 11,909 / 2009) were under
discussion, through the substitution of Bill
6,407/2013, which has as its objective the
establishment of a new regulatory framework for the
natural gas. The bill was expected to be passed in
2018, which did not happen.
Repetro: the change in the tax regime for the
exploration and development activities of oil and
gas production occurred with the publication of Act
No. 13,586 in December 2017, led to the issuance
(i) 25% for well construction; (ii) 40% for collection and
disposal; and (iii) 40% for the stationary production unit
(divided among three groups – engineering, machinery
and equipment, and construction, integration
of a Normative Instruction that regulated the newly
and assembly).
created Repetro-Sped. This regime allows the
incorporation of the permanent asset, such as an
FPSO, to fixed assets, and there is no longer a need
The option for the addition has as a counterpart the
extinction of the right to the waiver and adjustment of the
By contrast, in December 2018, Decree No. 9,616/2018
was published, which amends Decree No. 7,382/2010,
which regulated the Gas Act. The referred decree had,
among other objectives, to enable ANP to: implement
to return the asset abroad at the end of the contract,
local content. In addition, companies must expressly waive
eliminating its future cost of removal. Therefore,
this normative instruction enabled the migration
any litigation they may have against the ANP due to fines
already paid for failure to comply with the local content
of all the goods acquired in the old Repetro to the
obligation.
the Entry and Exit model, with system forecast for the
Repetro-Sped.
transport network (and no more duct to duct treatment);
develop guidelines for the common access code for
essential facilities and articulate, together with the
Ministry of Mines and Energy, the states for free
consumer regulation.
Assignment Agreement: Assignment agreement,
executed in 2010 between Petrobras and the Federal
Government, is under negotiation process.
For more information on assignement agreement negotiation,
please refer to Natural Capital.
Local content: the publication of ANP Resolution No.
726/2018 regulated the addition of the Concession,
Assignment of Assignment and Production Sharing
contracts with new rules for the local content clause
and exemption of the local content obligations
(waiver) provided for in these same contracts.
The option for the amendment of such a clause can be
made for all contracts in force, in effect, for the non-
closed phases. The new local content rules set the
following percentages: 50% for onshore exploration and
development projects; 18% for offshore exploration
projects and for the development of production at sea:
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 70
OUR
PROSPECTS
RenovaBio: in 2017, a new regulatory framework
for biofuels was established, named RenovaBio
(Law 13.576/2017). This new program aims to
Gas Act: for the year 2019, it is expected that the
ANP will regulate Decree No. 9.616/2018 and that
discussions will be resumed for the approval of the
recognize the strategic role of biofuels in reducing
substitute to Bill 6.407/2013, providing the legal
greenhouse-gas emissions with the establishment
changes necessary for the development of the
of decarbonization targets for a period of
natural-gas market in Brazil.
10 years, to be met by fuel distributors by proving
the acquisition of decarbonization (CBIOs).
RenovaBio: at the PNG 2019-2023 horizon,
our projections for fuel consumption within the
In 2018, two important resolutions were published by the
transportation sector are in line with the carbon
National Energy Policy Council (CNPE).
reduction target set in the CNPE resolution.
Resolution No. 5, which addresses the decarbonization
targets, setting a goal to reduce the carbon intensity of
the transportation sector by 10.1% by 2028. In effect,
distributors are obliged to purchase decarbonization
credits in proportion to their sales of fossil fuels. No.
16, set the schedule for lifting the mandatory blend of
biodiesel to mineral diesel, pointing to an increase of one
percentage point per year, starting in 2019, reaching 15%
in 2023. This schedule is conditioned upon the completion
of the engine tests.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
71
BUSINESS AND
FINANCIAL
PERFORMANCE
Oil & Gas Exploration and Production 72
Refining and Natural Gas
79
Consolidated Financial Performance
98
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
72
Oil & Gas Exploration and Production
Manage the E&P project portfolio in an integrated manner
Prioritize development of deep-water production, with a focus on strategic partnerships,
combining technical competencies and technologies
Manage the exploratory portfolio in order to maximize economic viability thereby ensuring
the sustainability of oil and gas production
Strengthen reservoir management to maximize the value of E&P contracts
in all the regulatory regimes, seeking opportunities to continuously
Startup of four new production systems, three of them in the pre-salt. In February
2019, an additional system went into production.
Approval by the ANP of the extension until 2052 of the concession contracts for
Marlim Leste, Marlim Sul, Canto do Amaro and Fazenda Alegre fields.
Seven new blocks were contracted in Brazil under the concession regime and four new
blocks under the production sharing regime in the Campos and Santos basins, three
within the Pre-salt Polygon.
incorporate reserves
Partnerships to increase the recovery factor in Marlim and Roncador.
Continually improve upon productivity and cost reduction while following best
international practices
Formation of a joint venture with assets in oil and natural gas production in the US
Gulf of Mexico to share risks and investments.
Facilitate the design and implementation of projects with lower breakeven price, with
safety and compliance with environmental requirements.
Providing integrated logistic services to all deepwater and ultra deepwater
partnerships through PB-LOG.
* Strategies related to Business and Management Plan 2018-2022.
RATE GIE S *
T
S
MAIN A
C
HIE
MAIN
STRATEGIES
IN THE SEGMENT
V
E
M
E
N
T
S
For information on partnerships and divestments, please refer to
Social and Relationship Capital and Financial Capital.
HIGHLIGHTS 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
PERFORMANCE INDICATORS
RESERVES*
(BILLION BOE)
INVESTMENT – E&P
(R$ MILLION)
LIFTING COST (USD/BOE)
9.672
9.752
9.606
47,250
39,650
42,528
10.3
11.0
10.7
73
2016
2017
2018
2016
2017
2018
2016
2017
2018
PRODUCTION
(MILLIONS BOED)
ADJUSTED EBITDA – E&P
(R$ MILLION)
GHG EMISSIONS – E&P**
(MILLION TON CO2 E)
2.79
2.77
2.63
53,648
65,302
103,206
22.27
21.60
20.94
2016
2017
2018
2016
2017
2018
2016
2017
2018
Note:
The information by operating segment considers the scope of each
segment, as defined in our Financial Statements.
*According to SEC criterion
** Our emissions are verified annually by third party, with prediction of completion of verification of data from 2018 until
July 2019. After the 2017, data were verified by third party, the result became 21.60.
Nota:
As informações por segmento operacional consideram a abrangência de cada segmento, conforme definido em nossas Demonstrações Financeiras.
2015
2016
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 74
BUSINESS PERFORMANCE
Exploração
EXPLORATION
EXPLORATION
PRODUCTION
DEVELOPMENT
PRODUCTION
EXPLORATION
PRODUCTION
DEVELOPMENT
PRODUCTION
Our oil and gas exploration and production activities are
The oil and gas industry value chain starts in the exploratory phase, with the contracting of exploratory blocks, either
the major components of our investment portfolio and
through bid rounds conducted by governments or by purchases from other companies. From the acquisition, processing,
are focused on oil, gas, offshore and onshore exploration,
interpretation of geological and geophysical data and drilling of wells, we may come upon the discovery of an reservoir
discovery, identification, production and incorporation of
containing oil, gas, or both.. After the discovery, the reservoir goes through an evaluation process, where the volumes of
oil and gas reservoirs, producing hydrocarbons in a safe
hydrocarbons that are technically recoverable from that area are estimated.
and profitable way .
We are world leaders in deepwater and ultra deep-water
process. In addition, five other discoveries were being evaluated in production areas. In the following table, we detail our
On December 31, 2018, we had 137 exploration blocks, in which 24 oil and/or gas discoveries were under an evaluation
production. Our activities are focused on deep and ultra
exploratory assets:
deep-water oil reservoirs in Brazil, which accounted for
85% of our total production in 2018 and accounted for
92% of our proven reserves as of December 31, 2018.
We also work in mature fields in shallow waters and
onshore. Outside Brazil, we operate in South America, the
US Gulf of Mexico and West Africa.
EXPLORATORY AREA*
(KM2)
EXPLORATOTION
BLOCKS
EVALUATION
PLANS
DRILLED
WELLS
SUCCESS RATE
(%)
BRAZIL
ABROAD
South America
North America
Africa
TOTAL
82,382
14,615
14,615
0
0
133
4
4
0
0
96,997
137
26
3
1
0
2
29
8
0
0
0
0
8
50
0
0
0
0
50
*Regarding the total area (Petrobras' and partners' share), on which we have the right to explore.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES ESPÍRITO
SANTO
RIO DE
JANEIRO
SÃO PAULO
Southwest of
Tartaruga Verde
SECTOR SC-AP3
Uirapuru
Alto de Cabo
Frio Central
Três Marias
Dois Irmãos
657
709
753
789
We also acquired
Blocks M-762,
M-859 and M-952
in the Potiguar Basin
during the 15th
Concession
Round
PRE-SALT
POLYGON
Sapinhoá
Peroba
CONCESSION
PRODUCTION SHARING
75
EXPLORATORY
BLOCK
CONSORTIUM
BONUS
R$ MILLION
OIL
PROFIT
(%)
AREA
ACQUIRED
(thousand Km2)
15th ROUND
CONCESSION
C-M-657
C-M-709
C-M-753
C-M-789
Petrobras* (30%), Equinor
(30%), and ExxonMobil (40%)
Petrobras* (40%), Equinor
(20%), and ExxonMobil (40%)
ExxonMobil* (40%), QPIi
(30%) and Petrobras (30%)
ExxonMobil* (40%), QPI
(30%) and Petrobras (30%)
POT-M-762
Petrobras* (100%)
POT-M-859
POT-M-952
Petrobras* (60%) and Shell
(40%)
Petrobras* (60%) and Shell
(40%)
4th ROUND
PRODCUTION SHARING
Uirapuru
Dois Irmãos
Três Marias
Petrobras* (30%),
Petrogal (14%),
ExxonMobil (28%) and
Equinor (28%)
Petrobras* (45%),
Equinor (25%) and BP (30%)
Petrobras* (30%),
Chevron (30%) Shell (40%)
2,210.25
5.07
638.55
N/A
0.45
600.00
N/A
0.87
99.00
N/A
0.67
847.44
N/A
0.66
5.13
8.10
N/A
0.77
N/A
1.05
12.03
N/A
0.60
1,005.00
3.50
795.00
75.49
1.28
180.00
16.43
1.40
30.00
49.95
0.82
70.00
0.13
NATIONAL AGENCY OF PETROLEUM, NATURAL GAS AND BIOFUELS (ANP)
BID ROUNDS
5th ROUND
PRODUCTION SHARING
In 2018, ANP held three bidding rounds for exploratory blocks in Brazil (4th and 5th round
under the Production Sharing Regime and 15th round under the concession regime).
We act selectively in these auctions, reflecting our strategic vision and marking the
strengthening of our exploration portfolio's recovery, while at the same time seeking to
recover the relationship between reserve and production and ensure the sustainability
of our future production of oil and gas. In alignment with the objective of strengthening
partnerships, sharing risks, combining technical and technological capabilities and
capturing synergies, we followed our strategy of acting in competitive consortia.
The map and the table summarize the areas acquired by Petrobras.
Southwest of
Tartaruga Verde
Petrobras* (100%)
70.00
10.01
0.13
TOTAL
* Operator company.
3,285.25
8.70
Regarding the 6th Bidding Round of exploratory blocks under the production sharing
regime, scheduled to be held in the second half of 2019, we informed the Ministry
of Mines and Energy, in January 2019, a manifestation of interest in exercising the
preemptive rights in three blocks: Aram, Norte de Brava and Sudoeste de Sagitário.
For information about our oil and natural gas reserves, please refer
to Natural Capital.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
76
Our investments in exploration totaled R$ 5.15 billion, in 2018, being 97% in Brazil. These investments mainly cover
the costs of drilling, seismic surveys and acquisition of blocks, which contributed to the following discoveries and
LIBRA AREA AND MERO FIELD
declarations of commercial feasibility:
MAIN DISCOVERIES IN 2018
COUNTRY
BASIN
BLOCK
Brazil
Brazil
Campos
Potiguar
Marlim East
Field
Estreito
Field
AREA
2.92
1.38
DECLARATIONS OF COMMERCIALITY IN 2018
WATER
DEPTH (M)
PETROBRAS
PARTICIPATION
(%)
1692
–
100
100
COUNTRY
FIELD
Brazil
Cancã East
BASIN
Espírito
Santo Terra
Brazil
Noroeste de Sapinhoá
Santos
Brazil
Sudoeste de Sapinhoá
Santos
Brazil
Nordeste de Sapinhoá
Santos
Brazil
Tartaruga Verde Sudoeste
Campos
RECOVERABLE
VOLUME
(MILLION BOE)
OIL QUALITY
(° API)
PETROBRAS
PARTICIPATION
(%)
0.3
9.51
16.36
1.98
35.92
11
26
26
26
27
100
45
45
45
100
Libra is one of the largest offshore exploration and
production projects in the world and is developed by a
consortium (Libra Consortium), led by Petrobras (40%), in
partnership with Shell ( 20%), Total (20%), CNPC (10%) and
CNOOC Limited (10%). The consortium also counts on the
participation of the state-owned company Pré-Sal Petróleo
S.A. (PPSA) as contract manager.
Since the signing of the production sharing agreement
in 2013, 17 wells have been drilled in the Libra area, 14 of
which are in the Mero field.
In 2017, on behalf of the consortium, we announced the
declaration of commerciality in the northwestern portion
of Libra block, which became the Mero field. In 2018, we
completed the Extended Well Test (EWT), a stage that
precedes the beginning of the definitive production and
aims to better understand the reservoir, through the FPSO
Pioneiro de Libra, which has the capacity to process 50
thousand barrels per day of oil and 4 million m³/day of
associated gas, being able to reinject in the reservoir all the
produced gas, thus reducing CO2emissions.
The first definitive production systems are scheduled to
start operating in 2021 (Mero 1) and 2022 (Mero 2) with
capacity to process 180,000 bpd of oil and 12 million
m³/day of gas. The development plan consists of four
production systems in this field.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES Desenvolvimento da produção
EXPLORATION
PRODUCTION
DEVELOPMENT
PRODUCTION
EXPLORATION
PRODUCTION
DEVELOPMENT
PRODUCTION
77
After the declaration of commerciality of a field, the
process of production development is begun. The
PRODUCTION
(THOUSAND BOED)
investments made in this phase are mainly focused on
designing and contracting production systems, which
includes platforms and subsea systems and drilling and
completion of the wells.
2016
In 2018, we put onstream three owned platforms:
FPSOs P-74 and P-75, located in the Búzios field; and
FPSO P-69, located in the Lula field; and a leased unit,
FPSO Campos dos Goytacazes, located in the field of
Tartaruga Verde. In addition, we also completed the first
stage of production testing in the Mero field, the first
field of the sharing regime to be put into production in
Brazil. The development of these systems will allow the
significant growth of our production, which should reach
an average growth of 5% a year in the period between
2019 and 2023. In February 2019, two more platforms
came onstream: FPSO P-67, in the Lula field, and FPSO
P-76, in the Búzios field.
Our investments in production development in 2018
were R$ 32.4 billion, an increase of 9% in relation to the
previous year, mainly due to the entry into operation of
the five new systems mentioned.
2.14
0.49
2.79
0.16
2.15
2017
0.50
2.77
0.11
2,04
In 2018, our total oil and gas production, including natural-gas
liquids (NGL), was 2.63 million barrels of oil equivalent per day
(boed), 2.53 million boed produced in Brazil and 101 thousand
boed outside, 5% less than 2017, due to the divestments in Lapa
and Roncador’s fields, at the end of the Early Production Systems
(in portuguese, Sistemas de Produção Antecipada – SPAs) of
Tartaruga Verde and Itapu and the natural decline of production.
The annual daily average of the company's total production
(including Petrobras' and partners' share) in 2018 was 3.29 million
boed, of which 3.16 million boed in Brazil.
Our average lifting cost (Brazil and abroad) in 2018 was US$ 10.7
per boe, excluding government take, which represents a 3.2%
2018
0.49
2.63
reduction compared to the average cost of US$ 11,0 per boe
0.10
registered in 2017, even considering the start-up of new units.
OIL AND NGL - BRAZIL
NATURAL GAS BRAZIL
OIL AND NATURAL GAS - ABROAD
AVERAGE OIL AND GAS
PRODUCTION IN PRE-SALT
AVERAGE OIL PRODUCTION IN
PRE-SALT
GAS UTILIZATION
INDEX
1.7
MILLION BOED
1.4
MILLION BOED
97
%
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 10 YEARS OF PRE-SALT PRODUCTION*
78
RIO DE
RIO DE
JANEIRO
JANEIRO
EVOLUTION OF PETROBRAS' OPERATED PRODUCTION
ANNUAL AVERAGE OF THOUSANDS BARRELS OF OIL PRODUCED PER DAY (KBPD)
Pre-salt
POLYGON
JUBARTE FIELD,
JUBARTE FIELD,
Campos Basin
Campos Basin
1st oil
1st oil
in the Pre-salt
in the Pre-salt
extracted
extracted
in 2008
in 2008
10 YEARS
10 YEARS
after the first oil,
after the first oil,
pre-salt accounts for
pre-salt accounts for
55%
55%
of the oil
of the oil
produced in Brazil
produced in Brazil
STATIONARY PRODUTION UNITS
STATIONARY PRODUTION UNITS
WELLS
WELLS
21 PLATFORMS
21 PLATFORMS
in the fields operated by Petrobras
in the fields operated by Petrobras
56 most productive wells
56 most productive wells
of the country are in the pre-salt area
of the country are in the pre-salt area
14
14
PLATFORMS
PLATFORMS
producing exclusively
producing exclusively
from the pre-salt
from the pre-salt
6
6
PLATFORMS
PLATFORMS
producing from post-
producing from post-
and pre-salt
and pre-salt
1
1
EARLY PRODUCTION
EARLY PRODUCTION
System (SPAs)
System (SPAs)
Start of production in more than 11 platforms and
Start of production in more than 11 platforms and
investments of R$ 27 billion by 2023.
investments of R$ 27 billion by 2023.
Three out of four production projects planned for the
Three out of four production projects planned for the
coming years are in the pre-salt area.
coming years are in the pre-salt area.
* December 31, 2018.
Each producing, on average, 26 kbpd,
Each producing, on average, 26 kbpd,
above the offshore industry average.
above the offshore industry average.
BENEFITS FOR SOCIETY
BENEFITS FOR SOCIETY
(Government take, including royalties and
(Government take, including royalties and
special participations)
special participations)
2008-2018
2008-2018
R$70 BILLION
R$70 BILLION
2019-2023
2019-2023
R$150 BILLION
R$150 BILLION
Cumulative production
of more than
2 BILLION
barrels of oil equivalent
1,393
million
1,287
million
1,019
million
767
mil
3
mil
15
mil
41
mil
119
mil
169
mil
491
mil
302
mil
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
REDUCTION OF CONSTRUCTION TIME OF WELLS IN SANTOS BASIN
DAYS/WELL
300
200
100
0
UP TO 2010
2012
2014
2016
2018
3X FASTER
REDUCTION OF LIFTING COST
US$/BOE
2010
2018
0
2
4
6
8
10
12
14
REDUCTION OF OVER 50%
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 79
Refining and Natural Gas
Promote the alignment of our prices with international market prices and maximize
margins in the value chain.
Optimization of the global margin and recovery of market share with alignment
to international prices.
Reducing Petrobras' risk, adding value in E&P, refining, transportation, logistics,
distribution and commercialization through active portfolio management through
Implantation of hedge strategy for the princing of diesel and gasoline,
maintaining the financial result equivalent to daily adjustments.
partnerships, acquisitions and divestments.
Optimize business portfolio, by fully abandoning biofuel production activities, liquefied
petroleum gas (LPG) distribution, fertilizer production, and petrochemical interests,
preserving technological skills in areas with development potential;
Maximize the generation of value of the gas chain as transition
fuel for the long term.
Restructure the electric power business, seeking the alternative that maximizes the value
for the company.
Advances in partnerships: CNPC for the Comperj and Marlim cluster; Equinor, in
the offshore wind energy segment; and the Total group, in the solar and onshore
wind energy segments.
Optimization of operations and conclusion of contracts with partners for the
purchase of pre-salt natural gas.
Signing of contract for construction of the natural gas processing unit in
Comperj.
* Strategies related to Business and Management Plan 2018-2022.
RATE GIE S *
T
S
MAIN A
C
HIE
MAIN
STRATEGIES
IN THE SEGMENT
V
E
M
E
N
T
S
For information on partnerships and divestments,
please refer to Social and Relationship Capital
and Financial Capital.
HIGHLIGHTS 2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
PERFORMANCE INDICATORS
DOMESTIC SALES AND OIL PRODUCTS
PRODUCTION
(THOUSAND BBL/DAY)
INVESTMENT – RTC*
(R$ MILLION)
REFINING COSTS
(R$/BBL)
2,064
1,940
1,887
4,032
4,093
4,103
8.89
9.26
9.12
80
2016
PRODUCTION
2017
SALES
2018
2016
2017
2018
2016
2017
2018
ADJUSTED EBITDA – RTC*
(R$ MILLION)
GHG EMISSIONS – RTC* **
(MILLION TON CO2 E)
47,475
28,592
20,331
27.77
26.79
26.33
2016
2017
2018
2016
2017
2018
2015
2015
2016
Nota:
As informações por segmento operacional consideram a abrangência de cada segmento, conforme definido em nossas Demonstrações Financeiras.
Note:
The information by operating segment considers the scope of each
segment, as defined in our Financial Statements.
*RTC - Refining, Transportation and Commercialization
** Our emissions are verified annually by third party, with prediction
of completion of verification of data from 2018 until July 2019.
After the 2017 data were verified by a third party, the result
became 26.79.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES NATURAL GAS DEMAND
MILLION M3/DAY)
POWER GENERATION
(AVERAGE MW)
76
83
78
2,252
3,165
2,205
INVESTMENT - GAS AND POWER
(R$ MILLION)
2,426
3,602
1,607
81
2016
2017
2018
2016
2017
2018
2016
2017
2018
ADJUSTED EBITDA - GAS AND POWER
(R$ MILLION)
GHG EMISSIONS – GAS AND POWER*
(MILLION TON CO2 E)
7,934
6,485
5,830
15.75
18.06
13.86
2016
2017
2018
2016
2017
2018
Nota:
As informações por segmento operacional consideram a abrangência de cada segmento, conforme definido em nossas Demonstrações Financeiras.
Note:
The information by operating segment considers the scope of
each segment, as defined in our Financial Statements.
* Our emissions are verified annually by third party, with data
verification to be completed as of 2018 TO July 2019. After the
2017 data were verified by third party, the result became 18.06.
2016
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 82
Business Performance
21% of our oil production was exported, and the remainder destined to our refineries.
In 2018, our national production of oil products, equivalent to 1,765 million barrels per day,
was obtained from the processing of 91.3% of national oil, complemented by imported oil.
Those oil products were traded both in Brazil and abroad.
Regarding natural gas, our processing units (UPGN) have the capacity to treat 104.85 million
m3/day in Brazil. This natural gas, along with imported from Bolivia and liquefied natural gas
(LNG) acquired in the international market, is marketed to several consumers, in addition to
the thermoelectric plants where we have participation and our units of fertilizer production.
Additionally, we operate in the petrochemical sector with interests in companies and
subsidiaries and in the production of biofuels, through our wholly-owned subsidiary,
Petrobras Biocombustível.
OIL PRODUCTS
LIQUID OIL PRODUCTS CHAIN
REFINING
LOGISTICS
MARKETING
DISTRIBUTION
We serve our oil products clients in Brazil through a planned combination of oil processing, import and export that seeks to
optimize our margins, taking into account the different opportunity costs of domestic and imported oil, oil products in the
several markets, as well as the costs for transport, storage and processing involved.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 83
REFINING
LOGISTICS
MARKETING
DISTRIBUTION
ON-GOING UNDERTAKINGS
We own 99% of all refining capacity in Brazil*. Six of our
In the United States, the Pasadena Refining System (PRSI)
Abreu e Lima Refinery
thirteen refineries are located in the southeast of the
operates with a processing capacity of 110 thousand bbl/
country, close to the most populous and industrialized
day of oil and processed 100 thousand bbl/day of oil and
markets, and the source of most of our crude oil in the
natural gas (NGL) in 2018, producing 107 thousand bbl/
Campos and Santos Basins.
Petrobras is repositioning itself in refining through the
process of partnerships and divestment, allowing the
sharing of business risks and the establishment of a
dynamic, competitive, efficient sector, in addition to
generating liquidity for the company.
* According to ANP's Statistical Yearbook 2018.
day of oil products. In January 2019, we signed a purchase
and sale agreement with Chevron U.S.A. Inc. (Chevron),
relating to the entire disposal of Pasadena.
The completion of the transaction is subject to compliance
with the usual prevailing conditions.
For more information on partnerships, please refer to Social
and Relationship Capital and Financial Capital.
PROCESSED FEEDSTOCK (THOUSAND BBL/DAY)
OIL PRODUCTS PRODUCTION (THOUSAND BBL/DAY)
Located in Ipojuca, Pernambuco, it is expected
to operate two sets of processing units, known
as refining trains. The first train went into
operation in 2015, and since 2016 is authorized
to process up to 100 thousand bbl/day of oil.
In 2017, we resumed the works of the Sulfur
Emission Abatement Unit (SNOX), whose start
is under evaluation due to the notification
of a contractual suspension issued by the
contractor in December 2018. To conclude the
second train, we will prioritize the establishment
of partnership according to our 2019-2023
Business and Management Plan.
2016
2017
2018
1,699
150
1,615
121
1,566
149
1,819
1,736
1,715
2016
2017
2018
NATIONAL OIL, NGL AND C5+
IMPORTED OIL
Note: Non-material adjustment on the processed load values in the year 2017.
Small reduction in processed feedstock seeking
economic optimization and alignment with lower sales
volume. We highlight a high share of national oil in the
processed feedstock.
1,887
(Comperj)
Petrochemical Complex of Rio de Janeiro
775
444
196
54
125
100
193
692
439
200
53
126
106
185
715
393
178
67
126
110
176
DIESEL
1,801
GASOLINE
FUEL OIL
NAPHTHA
GLP
1,765
JET FUEL
OTHER OIL PRODUCTS
It is formed by the Comperj refinery, Natural-gas
processing Units (UPGN) and other underlying
utilities. In 2018 we started the UPGN operations
that will process pre-salt gas from the Santos
Basin. As for the Comperj refinery, we began
a technical and economic feasibility study of
train 1, which will be carried out through the
partnership with China National Petroleum
Corporation (CNPC), which is in the non-binding
phase.
Following the demand, the production of oil products
remained at the same level as the previous year, with a
focus on higher diesel production.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES REFINING
LOGISTICS
MARKETING
DISTRIBUTION
Oil and oil products logistics connect the oil production systems to refineries and markets, seeking to minimize the costs
involved with transportation and storage and optimizing the result of oil refining operations and the commercialization of
oil and oil products in Brazil and abroad.
Some assets of this system are directly managed by Petrobras controlling company and others are contracted with our
wholly owned subsidiary Petrobras Transporte (Transpetro).
VOLUME MOVED AT TERMINALS AND PIPELINES
(MILLION M3)
2016
2017
2018
603
572
564
The 1.4% drop in the handling of products at
terminals and pipelines operated by Transpetro
in 2018 reflected lower cargoes processed at our
refineries, mainly as a result of the operational
occurrence at Replan in August 2018.
84
OPERATIONAL HIGHLIGHTS IN 2018
Increased efficiency in the scheduling and use of ships
led to a 1.1% decrease of the size of the fleet of vessels
(in tonnage), even with an increase of 7.9% in the tonne-
mile produced by maritime transport.
In comparison to 2017, there was an increase in the
use of the fleet by 10.8%, especially oil offloading
operations, which generated savings of US$ 202,000 per
day. Such economy was allowed by the implementation
of a joint initiative of our Refining and Natural Gas
and Exploration & Production areas, aiming at the
integration of people, planning and systems, providing
Despite the partial recovery of its participation in
greater reliability in scheduling data and speed in work
the oil products market, this was not sufficient
processes.
to compensate for the loss of oil movement
resulting from the occurrence.
The expansion of direct ship-to-ship operations
allowed for better use of the maritime fleet, reducing
the number of ships at terminals. Additionally, at the
Suape and Rio Grande terminals, the expansion of these
operations guaranteed compliance with our distribution
targets and reduction of transportation costs.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
REFINING
LOGISTICS
MARKETING
DISTRIBUTION
85
MAIN SOURCES
CONSUMPTION
FROM THE TOTAL SUPPLY
OF OIL PRODUCTS
WE SOLD
1.77
MILLION BBL/DAY
come from the
production of our
refineries
195
THOUSAND BBL/DAY
were imported
An average of
1.89
MILLION BBL/DAY
of oil product for the
domestic market
178
THOUSAND BBL/DAY
to the foreign market
through agreements
with approximately
400
CLIENTS
OIL PRODUCTS PRODUCTION
(THOUSAND BBL/DAY)
DOMESTIC MARKET SALES
(THOUSAND BBL/DAY)
1,887
1,800
1,765
2,064
1,940
1,887
2016
2017
2018
2016
2017
2018
IMPORT OF OIL PRODUCTS
(THOUSAND BBL/DAY)
EXPORT OF OIL PRODUCTS
(THOUSAND BBL/DAY)
239
181
195
155
157
178
2016
2017
2018
2016
2017
2018
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86
SALES VOLUME OF OIL PRODUCTS IN DOMESTIC MARKET, PER PRODUCT AND TOTAL IN THE YEAR
(THOUSAND BBL/DAY)
2,064
1,940
1,887
780
545
234
151
101
67
186
717
521
235
134
101
61
171
784
459
231
97
108
45
163
CONSIDERING THE TOTAL SALES OF OUR OIL
PRODUCTS,
91%
WERE DESTINED TO THE DOMESTIC
MARKET. THESE VOLUMES COME FROM OUR
REFINERIES AND IMPORTS.
For more information on new gas regulation, please refer to
External Context.
DIESEL
GASOLINE
LPG
NAPHTA
JET FUEL
FUEL OIL
OTHERS
2016
2017
2018
DIESEL
GASOLINE
LPG
NAPHTA
JET FUEL
FUEL OIL
Sales in 2018 were down
from the previous year. In
May 2018, the truck drivers'
strike had a negative impact
on the demand for the oil
product, which affected
not only the sales, which
was not fully offset in the
following month, and the
consumption, since the
product did not reach the
end consumer.
The increase in sales in 2018
compared to 2017 is related
to the increase in GDP and,
mainly, to the reduction
of third-party product
placement via imports. The
strike of the truck drivers in
2018 had negative impacts
on consumption and product
deliveries, even with the
recovery of part of the
market loss in June 2018.
In the analysis of 2018 in
relation to 2017, there is
a retraction in gasoline
consumption, reflecting
the decrease in the average
price of hydrous ethanol and
gasoline, which reduced the
share of gasoline in flex-
fuel vehicles. This has also
contributed to the increase
in fuel prices. The reduction
of imports by third parties
contributed positively to our
sales. In addition, strike of
the truck drivers affected
the deliveries and the final
consumption itself, as
vehicles stopped circulating
due to the lack of fuel in the
stations.
The drop of sales in 2018
versus 2017 was due to
the reduction in sales
to Braskem which, since
September 2017, increased
its own import share.
Demand for 2018 was higher
than in the previous year,
which can be explained by
the resumption of growth
within the sector that has
been taking place since
May 2017.
There was a strong
reduction in consumption
in 2018 compared to 2017.
The greater supply of energy
through wind farms and
large hydroelectric plants
led to the smaller dispatch
of complementary thermals
in 2018. In addition,
there were operational/
environmental problems
with a large consumer and
the availability of product
during the truck drivers'
strike.
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DIESEL AND GASOLINE
Diesel and gasoline prices are defined taking into account the international parity price, margins to remunerate the risks
inherent in the operation and the level of market share. Price adjustments can be made at any time, including daily.
For gasoline, in September 2018 we approved a derivative mechanism, aiming to give additional flexibility to the
management of prices of this product, reconciling our business interests with the demands of our clients and other
87
LIQUEFIED PETROLEUM GAS (LPG)
In June 2017, the price for the sale to Liquefied
Petroleum Gas to distributors marketed in cylinders
of up to 13 kg and residential use (GLP-P13) began to
be formed by the average monthly prices of butane
and propane in the European market, translated into
Brazilian reals by the daily average of the dollar's
selling prices, as disclosed by the Central Bank, plus a
agents of the market. In December 2018, we approved a similar derivative mechanism for diesel. The derivative
margin of 5%.
mechanism may be applied in times of high market volatility, in order to give a result equivalent to that obtained by the
practice of daily adjustments, which also remains the Company's option.
Thus, in 2018, we announced adjustments to selling prices at refineries, resulting in reductions of -10.9% for gasoline and
-4.5% for diesel, comparing prices in force on December 31, 2018 with those that were effective as of December 31, 2017.
In January 2018, we revised the LPG price policy for
residential use, with the aim of smoothing the transfer
of price volatility in the international market to the
domestic price, changing the frequency of adjustments,
which changed to quarterly rather than monthly.
DIESEL SUBSIDY PROGRAM
On May 31, 2018, the Federal Government established the Economic Subsidy Program for the Diesel
Oil Commercialization, with the purpose of encouraging the agents who act in the commercialization of
the product to reduce their prices and to maintain them stabilized during predetermined periods of up
to 30 days. Those who opted to join the Program, extended to all producers and importers, obtained
reimbursement through evidence.
We joined the three phases of the Grant Program, receiving R$ 6,02 billion until February 15, 2019.
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88
Exports X Imports
NET TRADE BALANCE RESULTS
(THOUSAND BBL/DAY)
Our oil exports reached 428 thousand bbl/day, a reduction of 16%, mainly due to the reduction of domestic oil
production. Our exports of oil products totaled 178 thousand bbl/day, an increase of 13% compared to 2017.
251
-84
385
-24
274
-17
Our oil imports totaled 154 thousand bbl/day, an increase of 21%, and oil products imports totaled 195 thousand bpd,
an increase of 8%. The increase in the volume of imported oil products was mainly due to the increase in diesel demand
due to the increase in market share. In addition, there was a need for imports due to the Replan accident.
In 2018, we maintained the position of net exporters of oil and oil products. The financial balance of our trade balance,
based on oil and oil products' exports and imports, disregarding natural gas, liquefied natural gas (LNG) and
nitrogenous, featured US$ 7.2 billion in surplus.
2016
2017
2018
OIL
OIL PRODUCTS
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REFINING
LOGISTICS
MARKETING
DISTRIBUTION
In the distribution of fuels and lubricants, we operate through our subsidiary Petrobras Distribuidora,
In 2018, Petrobras Distribuidora's sales volume was 3.5% lower than 2017.
which in 2017 opened its capital, ceasing to be a wholly owned subsidiary.
Petrobras Distribuidora is Brazil's largest distributor in sales volume* and operates in the
commercialization and distribution of oil products and biofuels throughout Brazil, through a network
of 7,665 service stations and 16,000 consuming clients. It also operates in the chemical, aviation,
asphalt, energy business and locally in the state of Espírito Santo, in the distribution of piped
It is worth noting that the lower dispatch to the thermals, the greater
representativeness of ethanol in the Otto cycle mix in detriment to gasolines,
as well as the operational restriction of a large fuel oil customer, as of March
2018, were relevant factors for the lowest sales volume in the period.
natural gas.
MARKET SHARE PER SEGMENT
(%)
25.4
45.5
55.1
24.4
42.8
56.3
23.9
39.6
54.2
2016
2017
2018
SERVICE STATIONS
CONSUMER MARKET
(FORMER LARGE CONSUMERS)
AVIATION MARKET
Our total participation in the domestic oil products’ market in 2018 was 28.7%*, being the leader in
the network of service stations, consumer market (former large consumers) and aviation market, with
23.9%, 39.6%, and 54.2% of market share, respectively.
SALES VOLUME OF OIL PRODUCTS IN THE DOMESTIC
MARKET, PER PRODUCT AND TOTAL IN THE YEAR
(THOUSAND BBL/DAY)
2016
2017
2018
316
192
64
53
165
296
186
65
52
144
300
161
67
35
153
789
744
716
* Source: Plural/ANP
DIESEL
GASOLINE
JET FUEL
FUEL OIL
OTHERS
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In the foreign market, we worked in the distribution segment in
NATURAL GAS
Colombia, Paraguay and Uruguay with 116, 196 and 88 service
stations and 4%, 16.7% and 24.4% market share, respectively.
NATURAL GAS CHAIN
With regard to Paraguay, the operation is in the process of
divesting, with a contract of sale already signed, depending on
PROCESSING
LOGISTICS
MARKETING
DISTRIBUTION
the approval of the local authorities.
We also operate in the bottling, distribution and sale of
liquefied petroleum gas (LPG) through the subsidiary
Liquigás Distribuidora. The company has operations in 24
Brazilian states and in the Federal District, and its activities
are segmented into two business areas: bottled, to serve
residential consumption through approximately five thousand
direct resellers; and bulk, in about 21 thousand customers of
commerce, industry, condominium, agribusiness and services.
We are analyzing alternatives to Liquigás' divestment,
in line with our Business and Management Plan, which aims
to optimize the business portfolio, fully exiting LPG
distribution activities.
For more information on the liquidation process of Liquigás, please
refer to Financial Capital.
One of our main strategic objectives in this segment is to maximize the value generation of the gas chain, based on the
adequacy of our participation in each link in the production chain. In implementing this strategy, we will remain in a relevant
position in the natural gas value chain, serving the market based on our supply portfolio.
Processing of Natural Gas
PROCESSING
LOGISTICS
MARKETING
DISTRIBUTION
Natural gas from our exploration and production process needs to be processed in processing units, to be transformed into
marketable products, which will serve as fuel and raw material for different uses, such as vehicular, industrial, residential, in
the fertilizer industry and thermoelectric power generation.
Our natural-gas processing units are located in Amazonas, Ceará, Rio Grande do Norte, Alagoas, Sergipe, Bahia, Espírito
Santo, Rio de Janeiro, São Paulo, and Bolivia, and have the capacity to process natural gas in its gaseous form and condensed.
2018
65
MILLION M³/DAY
AVERAGE TOTAL VOLUME OF
NATURAL GAS
processed in our units
9,3% lower than 2017
After processing the natural gas the
main products were:
53,1*
3,5
MILLION M3/DAY
PROCESSED NATURAL GAS
THOUSAND TON/DAY
LPG
In addition to the natural
gas produced in Brazil, we
also received natural gas
from Bolivia through pipeline
and liquefied natural
gas, imported from other
countries on special ships
and regasified at terminals
in Brazil.
The total average volume of natural
gas processed in Bolivia in 2018:
17
MILLION M3/DAY
13% lower than 2017
* In addition to the consumer market, a portion of the volume of processed gas is destined for reinjection in isolated areas and consumption in the processing units themselves.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 91
Logística de Gás Natural
PROCESSING
LOGISTICS
MARKETING
DISTRIBUTION
We use a pipeline network that transports natural gas from processing plants, regasification terminals and the border
with Bolivia, and takes the product to the local distributors and own units. We have the following shareholdings in gas
transportation companies in Brazil:
OUR PARTICIPATION IN THE NATURAL-GAS TRANSPORT SYSTEM IN BRAZIL
COMPANY
Transportadora Brasileira Gasoduto Bolívia Brasil S.A. (TBG)
Transportadora Associada de Gás S.A. (TAG)
Nova Transportadora do Sudeste S.A. (NTS)
Transportadora Sulbrasileira de Gás S.A. (TSB)
TOTAL
GAS
PIPELINE
EXTENSION (KM)
2,593
4,504
2,043
50
9,190
OUR
SHAREHOLDING
(%)
51% (via Logigás)
100%
10%
25% (via Logigás)
-
In addition, abroad, we indirectly hold, via Logigás, an 11% stake in Gás Transboliviano S.A. (GTB), responsible for the
Bolivian side of the Bolivia-Brazil gas pipeline, totaling 557 km.
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GERAIS
CABIÚNAS
TECAB
RIO DE
JANEIRO
MARICÁ
COMPERJ
SÃO PAULO
CARAGUATATUBA
UTGCA
ROTA 1
ROTA 2
ROTA 3
92
GAS FROM PRE-SALT
In order to leach natural gas from our production of the Santos
Basin pre-salt pole, in addition to using part of the existing
infrastructure, we invest in the construction of flow routes
integrated to the processing units, which seek to optimize the
use of natural gas.
Route 1: 359 km pipeline consists of two stretches: the Lula-
Plataforma stretch of Mexilhão and the stretch connecting the
Mexilhão platform to the Monteiro Lobato Gas Treatment Unit,
in the city of Caraguatatuba (SP), with capacity to flow up to
10 million m3/day of gas produced in the Santos Basin pre-salt.
Route 2: pipeline linking the Santos Basin pre-salt to the
Cabiúnas Processing Asset, in the city of Macaé (RJ), with
401 km and initial capacity to flow 13 million m³/day, later
increased to 16 million m3/ day, with the implementation of
a complementary treatment unit in the Cabiúnas Processing
Asset.This complementary unit will also allow the disposal of
this additional for processing in the units of Route 3 in the
Comperj, when completed.
Route 3: gas pipeline that will connect the pre-salt to the
Natural-gas processing Unit located at the Rio de Janeiro
Petrochemical Complex (Comperj), in Itaboraí (RJ), for the
disposal of up to 18 million m3/day. This gas pipeline will be
355 km long, of which 307 km will be offshore and 48 km
onshore. The Natural-gas processing Unit will have two units
with a total capacity of processing 21 million m³/day of natural
gas, which will increase the supply of natural gas, LPG and
natural gasoline (C5+) to the market.The start of operation of
Route 3, which was scheduled for 2020, was rescheduled
to 2021.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 93
PROCESSING
LOGISTICS
MARKETING
DISTRIBUTION
SOURCES
TOTAL OFFER
NATURAL GAS
48.9
originated from national
production
22.1
MILLION DE M3/DAY
were imported from
Bolivia
6.8
MILLION DE M3/DAY
liquefied natural gas
(LNG) were subject
to regasification at
the LNG terminals in
Pecém (CE), at Baía
de Guanabara (Rio de
Janeiro) and in Bahia
(BA)
CONSUMPTION
WE SUPPLY
WE SELL
The average of
76.6
MILLION DE M3/DAY
natural gas
15
MILLION DE M3/DAY
for the internal
consumption of
our units
61.6
MILLION DE M3/DAY
to the market
Through
41
AGREEMENTS
with
19
DISTRIBUTION
COMPANIES
both for the
thermoelectric
segment, as for the
non-thermal segment,
including cogeneration
units. Additionally,
we serve two free
consumers
TOTAL VOLUME
DELIVERED
We delivered
23
MILLION DE M3/DAY
to the thermoelectric market
15
MILLION DE M3/DAY
to the refining units and
fertilizer manufacturers
38.6
MILLION DE M3/DAY
to the gas distributors
for supplying the non-
thermoelectric market
1.2
MILLION DE M3/DAY
was consumed by the natural gas
carriers hired by Petrobras for the
provision of transport service.
NATURAL GAS OFFER
(MILLION M3/DAY)
76
83
78
44
28
4
54
24
5
49
22
7
2016
2017
2018
NATIONAL
BOLIVIA
LNG
DEMAND FOR NATURAL GAS
MILLION M3/DAY)
76
83
78
35
24
15
2
37
29
15
2
39
23
15
1
2016
2017
2018
NON-THERMOELECTRIC
THERMOELECTRIC
REFINERIES
SYSTEM GAS
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PROCESSING
LOGISTICS
MARKETING
DISTRIBUTION
The distributors provide the gas through their distribution networks to commercial establishments, residences, industries,
vehicles and thermoelectric. This is how the end customer receives the natural gas.
In the natural-gas distribution business, we operate in Brazil and Uruguay.
In Brazil, we control 51% of Petrobras Gás S.A. (Gaspetro), a holding company that consolidates our equity interests
in 19 of the 27 state natural gas distributors. In addition, Petrobras Distribuidora operates the distribution of natural gas
in the state of Espírito Santo.
In Uruguay, through Petrobras Uruguay S.A. de Inversión, we hold stakes in two companies in the natural gas distribution
business, responsible for distribution throughout the Uruguayan territory.
NATURAL-GAS DISTRIBUTORS
NATURAL GAS VOLUME SOLD AND NUMBER OF CLIENTS
BRAZIL1
Number of clients (thousands)
Volume (million m3/d)
URUGUAY
Number of clients (thousands)
Volume (million m3/d)
1Distributors with participation of Gaspetro
2016
2017
2018
351
402
456
21
24
21
59
59
59
0.18
0.16
0.16
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 95
ELECTRICITY
We operate in the generation and sale of electric power from a generator park consisting of 20 thermoelectric
plants, owned and leased, powered by natural gas, diesel or fuel oil, with a total installed capacity of 6,100 MW.
In 2018, due to the increase in the storage of the reservoirs supplying the hydroelectric plants of the National
Interconnected System (SIN), as a consequence of the favorable hydrological scenario observed throughout the
year, the thermoelectric dispatched of our plants decreased, especially in the second half of the year due to the
higher cost of imported natural gas, reducing the generation by 30% compared to 2017.
We also have plants with generation through renewable sources and minority participation in other projects, which
add up to 325 MW to our electricity generation capacity.
The segments of the electric energy market in Brazil involve the Free Marketing Environment (ACL) and the
Regulated Marketing Environment (ACR).
SALES AND GENERATION OF ELECTRICITY
Electricity Sales (ACL) - average MW
Electricity Sales (ACR) - average MW
Electricity generation - average MW
2016
835
3,172
2,252
2017
788
3,058
3,165
2018
832
2,788
2,205
The sales of electricity in the ACR reduced in
average 270 MW, due to the termination of the
contracts of the 14th Existing Energy Auction,
category of auctions intended to serve the
distributors from energy coming from
operating projects.
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OTHER SEGMENTS
We are also present in the petrochemical, renewable energy and fertilizer sectors. Our strategy is to maximize our
value through active portfolio management, as in the case of petrochemicals, which should be integrated with
national oil and gas production activities. In addition, we anticipate the exit of some of our businesses, such as
fertilizers and production of biodiesel and ethanol, maintaining the investment in research and development in
these areas, in order to enable us to act future in these segments.
Petrochemicals
Our operations in the petrochemical industry occur through participation in the following companies:
CORPORATE PARTICIPATIONS IN THE PETROCHEMICAL SECTOR
COMPANY
Braskem S.A.
Deten Química S.A.
PRODUCT
PARTICIPATION (%)
Ethene, polyethylene, polypropylene and PVC
Raw material for detergents: linear alkylbenzene (LAB), linear
alkylbenzene sulfonic acid (LAS), heavy alkylation (ALP)
Metanor S.A./Copenor S.A.
Methanol, formaldehyde and hexamine
Fábrica Carioca de Catalisadores
Catalysts and additives
Petrocoque S.A.
Calcined petroleum coke
Companhia Petroquímica de Pernambuco
(Petroquímica-Suape)
Purified terephthalic acid (PTA)
Companhia Integrada Têxtil de Pernambuco
(Citepe)
PET resin (polyethylene terephthalate) and polyester
filaments
36.2
27.88
34.54
50
50
0
0
96
There is an ongoing negotiation between the Dutch
company LyondellBasell and Odebrecht S.A. for the
purchase of its shares in Braskem. If the negotiation
is successfully concluded, we will analyze the terms
and conditions of the LyondellBasell offer, in order
to evaluate the exercise of our rights set forth in the
Shareholders' Agreement of Braskem S.A.
In April 2018, 100% of the shares held by Petrobras
in the companies PetroquímicaSuape and Citepe
were sold to Grupo Petrotemex S.A. de C.V. and Dak
Americas Exterior, SL, both subsidiaries of Alpek.
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Renewables
In solar energy, we have the Alto Rodrigues Photovoltaic
Fertilizers
Unit (UFVAR), a pilot plant located in Rio Grande do
In our Business and Management Plan 2019-2023, we
Norte, consisting of five different photovoltaic generation
plan to operate in the renewable-energy businesses in a
technologies, with installed capacity of 1.1 MW.
FERTILIZER PRODUCTION
(THOUSAND TONS)
profitable way, focusing on wind and solar in Brazil.
We will implement the first offshore wind pilot plant in
ethanol, through our wholly owned subsidiary Petrobras
Brazil. The pilot plant will consist of an anemometric
Biocombustível, which manages our activities in the areas
tower and an offshore wind generator with a 6 MW power
of production, logistics and marketing of these products.
We also operate in the production of biodiesel and
1,076
1,312
782
867
713
864
or more, electrically connected to one of our platforms.
Installed about 20 km off the coast of Guamaré, Rio
Grande do Norte, the full operation of the pilot plant is
expected in 2022.
In addition, in 2018, we signed a memorandum of
understanding with the Norwegian company Equinor
to jointly develop business in the offshore wind energy
segment in Brazil.
These initiatives seek to increase our activity in wind
energy, since we already have holdings in four onshore
generation plants in Guamaré/RN.
ONSHORE WIND ENERGY PARTICIPATIONS
PETROBRAS
PARTICIPATION
PLANTS
CAPACITY (MW)
Mangue Seco 1
Mangue Seco 2
Mangue Seco 3
Mangue Seco 4
26.0
26.0
26.0
26.0
%
49
51
49
49
TOTAL
104.0
49.5
MW
12.7
13.3
12.7
12.7
51.5
BIOFUELS PRODUCTION*
(THOUSAND M3)
690
1,152
678
98
865
93
2016
2017
2018
BIODIESEL
ETHANOL (anhydrous and hydrated)
2016
2017
2018
AMMONIA
UREA
We currently have three plants located in the states
of Bahia, Sergipe and Paraná, whose main products
are ammonia and urea. Together these plants have an
installed capacity of 1.852 million tonnes/year of urea,
1.406 million tonnes/year of ammonia, 319 thousand
tonnes/year of ammonium sulphate and 800 thousand
tonnes/year of ARLA-32.
* Considers 100% of the volume of affiliates.
The process of selling the company Araucária
In February 2018, Petrobras Biocombustível sold the
shares of São Martinho S.A. owned by the company. In the
same month, we announced the non-binding phase
of the divestment process regarding the sale of 100%
of the shares held by Petrobras Biocombustíveis in the
company BS BIOS.
For information on our wind and solar-energy partnerships, please
refer to Social and Relationship Capital and Financial Capital.
For more information on partnerships and divestments, please
refer to Financial Capital.
Nitrogenados S.A. (Ansa), and the Fertilizer Unit-III (UFN-
III), was suspended due to a judicial decision in June 2018,
and resumed in January 2019.
In March 2018, we decided to hibernate our nitrogen
fertilizer plants located in Sergipe ("Fafen-SE") and Bahia
("Fafen-BA"), whose process was postponed until February
1, 2019, when we started the hibernation of Fafen- SE.
In relation to Fafen-BA, the intention of its hibernation
remains, which, by a preliminary decision of January 31,
2019, is suspended. We continue with the bidding process
to lease these units to third parties.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES Consolidated Financial
Performance
We presented a solid result in 2018, achieving historical records in
the free cash flow and adjusted EBITDA, and the interruption of four
consecutive years of losses.
Operating income in 2018 was R $ 62,957 million, 77% higher, reflecting
higher prices of oil products in the domestic market, mainly diesel and
98
OPERATING INCOME (LOSS)
(R$ MILLION)
NET INCOME – PETROBRAS' SHAREHOLDERS
(R$ MILLION)
17,111
35,624
62,957
25,779
-14,824
-446
gasoline and exports, in line with the 31% increase in Brent's price and
2016
2017
2018
2016
2017
2018
a 14% real depreciation. Such factors were mitigated by the decrease
in the total volume of sales of oil products and exports, in addition to
the increase in selling expenses, higher expenses with government
participation and imports and the occurrence of special items.
Net income in 2018 was R$ 25,779 million, reflecting the higher
operating income and the improvement in the financial result, due to
lower interest expenses, as a result of lower indebtedness and higher
financial income due to gains from the renegotiation of debts of the
electric sector.
Adjusted EBITDA reached R$ 114,852 million, an increase of 50%,
because of higher margins in domestic and export sales, in line with the
increase in Brent and the reduction in operating expenses. The Adjusted
EBITDA margin increased significantly, from 27% to 33%.
Free cash flow of R$ 54,600 billion was 24% higher than in 2017,
reflecting the 11% increase in operating cash generation and
maintaining the same level of investments as the previous year.
FREE CASH FLOW
(R$ MILLION)
ADJUSTED EBITDA
(R$ MILLION)
41,572
44,064
54,600
88,693
76,557
114,852
2016
2017
2018
2016
2017
2018
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 99
STRATEGIES
AND OUTLOOK
Strategic Plan and
100
Business and Management Plan
Evolution Management System – 106
from Strategy to Implementation
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 100
Strategic Plan
and Business and
Management Plan
Technological innovations, regulatory advancement and the adoption of
new strategies by companies point to a period of energy transition towards
low carbon economy. The scope and pace of these transformations are
still uncertain. In the same way, it is not clear what the prevailing business
models will be in this new environment. These issues not only make
long-term strategic planning even more complex, but also reinforce its
importance for business resilience in this context of major challenges.
LONG-TERM SCENARIOS
To better deal with this high degree of uncertainty, we are constantly
improving our methodology and monitoring our scenarios. During the year
2018, we carried out an intense process of updating our scenarios, as well as
extending our horizon of analysis until 2040. Now our visions of the future
are better suited to evaluating long-term maturing projects. It is based
on the scenarios that elaborate the premises used for the analysis of the
investment projects and for the quantification of the company's strategic
and business plans.
For more information about our employees,
please refer to: www.petrobras.com.br/cenarios
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES STRATEGIC PLAN 2040
Our 2040 Strategic Plan and our 2019-2023 Business
Plan are focused on oil and natural gas exploration and
production, notably in the Brazilian pre-salt area, which is
one of our greatest strengths and source of value creation.
In the medium term, we expect that the use of natural gas
as a source of energy generation will gain more relevance
in our operations, in accordance with energy transition
trends. In the long term, we plan to study opportunities in
renewable energies that have synergies with our activities
and competitive advantages. In this way, we will work
towards a more environmentally sustainable portfolio.
Digital technology should permeate our activities along
this timeframe with the goal of cost reduction and increase
in productivity.
The company's strategies were adjusted, defining the
focus of our actions by business segment:
For more information on our competitors, please refer to Reference
Form (item 10.8), available at our website:
www.petrobras.com.br/ri
101
EXPLORATION &
PRODUCTION
Maximize our value through active management of the E&P portfolio;
Ensure the sustainability of oil and gas production, prioritizing
activities in deepwaters.
NATURAL GAS
Optimize the position in the natural gas and energy segment in Brazil
and develop positions in the global market, through partnerships.
REFINING,
TRANSPORTATION,
MARKETING AND
PETROCHEMICAL
Maximize our value through active management of our portfolio for
refining, logistics, trading and petrochemicals integrated into the
activities of national oil and gas production;
Leave the fertilizer business, LPG distribution, biodiesel and ethanol
holdings and production.
RENEWABLES
Operate in profitable renewable energy businesses, with focus on wind
and solar energy in Brazil.
CORPORATE
STRATEGIES
Develop critical skills and a culture of high performance to meet the
company's new challenges;
Prepare us for a more competitive environment based on cost and
scale efficiency and digital transformation;
Assess current and future partnerships seeking integrity and
value creation;
Strengthen the credibility, the pride and the reputation of Petrobras
among our stakeholders.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 102
BUSINESS AND MANAGEMENT PLAN 2019-2023
Our Plan also brings a commitment to the decarbonization of processes and products, with establishment of a zero growth
of the absolute operational emissions* in the horizon until 2025, considering 2015 as a reference, even with the increase
in production.
Our 2019-2023 Business and Management Plan (PNG
2019-2023) details operational planning, focusing
on safety, as well as financial performance and the
profitability in our business for the next five years.
PNG incorporates a new metric, seeking to ensure
profitability, in addition to maintaining the safety and
debt reduction metrics originally defined in PNG 2017-
2021 and maintained in PNG 2018-2022. These metrics
guide our strategic actions and are deployed at all
Targets are being set to reduce our emissions intensity by 32% in E&P and 16% in Refining between 2015 and 2025, when
we aim to reach 15 kg CO2e/boe in E&P and 36 kg CO2e/t CWT in Refining.
* Excluding situations of national water stress.
For more information on our emissions’ targets, please refer to
Sustainability 2018. and Climate change notebook.
organizational levels.
ASSUMPTIONS OF THE PNG 2019-2023
Among the main assumptions that impact our business are the Brent oil price and the exchange rate.
In our PNG 2019-2023, we consider the following values for these variables:
BRENT PRICES
(US$/BARREL)
NOMINAL EXCHANGE RATE
(R$/US$)
71
66
67
72 75
75
3,3
3,5
3,2
3,7
3,6
3,6
3,7
3,7
3,8
57
57
47
2015
2016
2017
2018
2019
2020
2021
2022
2023
2015
2016
2017
2018
2019
2020
2021
2022
2023
FORECAST RANGE
FORECAST RANGE
SAFETY
TRI
TOTAL
RECORDABLE
INJURY
FREQUENCY RATE
DEBT
REDUCTION
ND/EBITDA
NET DEBT/
ADJUSTED EBITDA
PROFITABILITY
ROCE
RETURN OVER
CAPITAL
EMPLOYED
BELOW 1
IN 2019
BELOW 1.5
IN 2020
ABOVE 11%
IN 2020
For more information on TRI,
please refer to Safety
For more information on ND/Ebitda,
please refer to Financial Capital.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 103
Investments
Exploration and production continue as the company's most important value-generating engine, with a focus
on the development of deepwater and ultra-deepwater production, particularly in the pre-salt areas. Refining,
The PNG 2019-2023 investment portfolio totals
transportation and marketing will continue to operate in an integrated manner with E&P, but with a new
US$ 84.1 billion.
INVESTMENTS PNG 2019-2023
(%)
2 0.5
6
10
CAPEX
84.1
US$ BILLION
82
E&P
REFINNING, TRANSPORTATION, MARKETING
AND PETROCHEMICALS
GAS AND POWER
CORPORATE
RENEWABLES
participation model from Petrobras, considering the partnership with other companies. With the expansion of gas
production, the company will seek greater value generation, considering natural gas as a vehicle for growth and
establishing a global position for Petrobras. In the long term, we will study opportunities in renewable energies
that have synergies with our activities and competitive advantages.
E&P INVESTIMENTS 2019-2023
(%)
16
14
68.8
US$ BILLION
70
56
PRODUCTION
DEVELOPMENT
48.4
US$ BILLION
44
EXPLORATION
PRODUCTION DEVELOPMENT
INFRASTRUCTURE + R&D
PRE-SALT
POST-SALT
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES OIL, NGL AND NATURAL GAS PRODUCTION CURVE
In 2019, the oil production growth will be 10% in Brazil and 7% in total production, due to the entry into operation of four new
systems in 2018 and four in 2019. For the period between 2020 and 2023, total production of oil and natural gas will grow at an
average rate of 5% a year.
2,7
2,8
2,1
+10%
2,3
5% OF ANNUAL AVERAGE GROWTH
OIL + GAS ABROAD
GAS IN BRAZIL
OIL IN BRAZIL
DIVESTIMENTS
2018
-0,1
2019
2020
2021
2022
2023
104
With regard to refining, the plan provides for
repositioning in the segment through partnerships
and divestments, allowing the sharing of business risks
and the establishment of a more dynamic, competitive and
efficient sector, in addition to generating liquidity for
the company.
REFINING AND NATURAL GAS INVESTIMENTS 2019-2023
(%)
3
LULA NORTE
P-67*
ATAPU
P-70
MERO 1
INTEGRADO PQ
DAS BALEIAS
SERGIPE ÁGUAS
PROFUNDAS
36
13.9
US$ BILLION
61
BÚZIOS 1
P-74
TARTARUGA
VERDE
LULA EXTREMO
SUL P-69
BÚZIOS 2
P-75
BÚZIOS 3
P-76
BERBIGÃO
P-68
BÚZIOS 4
P-77
SÉPIA
MERO 2
ITAPU
BÚZIOS 5
REVITALIZAÇÃO
MARLIM
REVITALIZAÇÃO
MARLIM 2
REFINNING, TRANSPORTATION, MARKETING
PETROCHEMICALS AND DISTRIBUTION
NATURAL GAS AND POWER
RENEWABLES
* Unit, previously scheduled to come
into operation in December 2018, began
production on February 1, 2019.
CONTRACTED
TO BE CONTRACTED
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Operational Costs
We continue our efforts to identify opex optimization
Petrobras will continue the divestment projects already announced and will continue with
105
partnerships and divestments guided by active portfolio management, with potential cash
inflow in the plan period of US$ 26.9 billion.
SOURCES AND USES 2019 - 2023
(US$ BILLION)
143.1
143.1
26.9
2.0
114.2
20
39
CASH FLOW GENERATION AFTER
DIVIDENDS, TAXES AND LIABILITIES
USE OF CASH
ACTIVE PORTFOLIO MANAGEMENT
84.1
FINANCIAL EXPENSES
AMORTIZATIONS
INVESTMENTS
SOURCES
USES
These initiatives, coupled with an operating cash generation estimated at US$ 114.2 billion,
after dividends, taxes and contingencies, will allow us to realize our investments.
opportunities.
OPEX 2019-2023
(US$ BILLION)
11
55
55
123
169
PURCHASE OF
FEEDSTOCK
OPERATIONAL
EXPENSES
GOVERNMENT
TAKE
DEPRECIATION
OTHERS
We intend to perpetuate a culture of cost optimization with
the objective of obtaining a greater efficiency and rationality
in the use of resources.
This ongoing cost efficiency and cost of extraction, on average
in the pre-salt less than US$ 7/boe, will lead to an average
extraction cost of less than US$ 10/boe from 2020.
Through cost discipline, debt reduction and commitment to
profitability, the company estimates a generation of robust
free cash flow in the PNG period.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 106
Evolution
Management
System - from
Strategy to
implementation
Our strategies and metrics defined in the Business and
Management Plan (BMP) are broken down into individual
goals and make up the scorecard of the company's areas.
All leadership is involved, both in setting goals and in
periodic follow-up.
BMP monitoring is performed through the called Evolution
Management System. Through corporate governance,
we monitor the results on a monthly basis and define
recovery actions if deviations are identified. In this way,
the areas become clear about their contribution to the
achievement of our results, and managers are evaluated
in a meritocratic way, according to their performance in
meeting the goals defined for the organizational units
under their management.
ATION
O
R
L
M
F
T
E
TIVE P O
ANA G E
M
C
A
M
R
O
F
S
N
A
R
T
The Evolution Management System tracks four fronts of
value generation to comply with our strategies: capital
discipline, processes and costs efficiency, active portfolio
management and revenue optimization. Security, cultural
transformation, innovation and sustainability are the
pillars that sustain actions on these four fronts.
L
A
R
U
T
L
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C
S A FETY
R
OP
I O
N T
E
TIM
I
Z
N
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V
A
U
E
T
I
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N
E
S
U
S
T
A
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N
A
B
I
L
I
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EVOLUTION
SYSTEM
E
N
L
I
L
A
T
P
I
C
I
P
A
DIS
C
C
P
O
STS EFFICIENY
R
OCESSES A
Y INNOVATION
D
N
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
107
GOVERNANCE AND
COMPLIANCE
Corporate Governance
Compliance and Internal Controls
108
115
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Corporate
Governance
Since 2015, we announced and implemented a series of
measures to improve our governance and reverse the
problems and challenges highlighted by Operation Car
Wash (Lava Jato). As one of the key actions, we have
established a new corporate governance model and
created a set of rules and procedures that seek to ensure
that future decisions are in line with good governance.
Our corporate governance structure consists of: General
Shareholders' Meeting, Audit Committee/ Fiscal Council,
Board of Directors and its committees, Audits (Internal and
External), General Ombudmans Office, Executive Board
and its committees, as shown below.
GOVERNANCE STRUCTURE
Setting
strategies and
monitoring its
execution.
SHAREHOLDERS’
GENERAL MEETING
FISCAL COUNCIL
BOARD OF
DIRECTORS
BOARD OF DIRECTORS COMMITTEES
A
B
C
D
E
F
G
AUDITING
OMBUDSMAN
CEO
EXECUTIVE
BOARD
EXECUTIVE OFFICERS
Proposal and execution
of strategies.
Management and
supervision
of operations.
TECHNICAL
STATUTORY
COMMITTEES
1
5
2
6
3
7
4
8
ADVISORY
OR DELIBERATIVE
COMMITTEES*
*THE EXECUTIVE BOARD MAY CREATE ADVISORY OR DELIBERATIVE
COMMITTEES ACCORDING TO THE RELEVANCE OF TOPICS AND SUBJECTS.
108
BOARD OF DIRECTORS STATUTORY
COMMITTEES:
A Estrategic
B Finance
C Audit
D Health, Safety and Environment
E Nomination, Compensation and
Succession
F Minority
G Petrobras Conglomerate Audit
TECHNICAL STATUTORY
COMMITTEES:
1 Production and Technology
Development
2 Exploration and Production
3 Refining and Natural Gas
4 Financial and Investor Relations
5 Corporate Affairs
6 Governance and Compliance
7 Strategy, Organization and
Management System
8
Investments and Divestment
For more information on the Committees of the Board of Directors
and of the Executive Board, please refer to on our website the item:
Corporate Governance/Governance Bodies/Committees
For more information related to profile and attributions of the
members of our management, see Reference Form (Item 12)
Until November 2018, we had a Special Investigation Committee, created in December 2014, to act as an interlocutor for
independent investigations conducted by external offices, regarding the implications of Car Wash Operation.
The recommendations from this committee allowed us to strengthen our internal controls; advances in relation to
corporate governance; and the implementation of additional mechanisms for prevention, detection, internal investigation
and remediation of irregularities
The activities of the Special Committee and external offices are now carried out, on a permanent basis, by the relevant
areas of Petrobras, which are duly structured for this purpose. Thus, there will be no impact to our actions to determine
irregularities, including in relation to Car Wash Operation, which is still ongoing.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 109
BOARD OF DIRECTORS
The Board of Directors shall be formed by seven to eleven members, where at least 40% of such
members must meet the independence criteria.
EXECUTIVE BOARD
The Executive Board must be composed of one CEO and
seven Executive Officers.
EMPLOYEES
CONTROLLING SHAREHOLDER
MINORITY SHAREHOLDERS
CEO
EXECUTIVE OFFICERS
CEO
CHAIRMAN
ON
PN
INDEPENDENT MEMBERS
CURRENT BOARD PROFILE
10%
10%
40%
10
DIRECTORS
20%
ECONOMICS
ENGINEERING
MANAGEMENT/
ACCOUNTING
MILITARY
LAW
Experience in executive positions and in the board
of public and private sector companies
70% of independent members
30% female participation
Diversity in composition and complementarity
experience of members
STRATEGIC3
FINANCIAL
AUDIT
HEALTH,
SAFETY, AND
ENVIRONMENT.3
NOMINATION,
COMPENSATION
AND SUCCESSION 3 MINORITY3
AUDIT OF THE
PETROBRAS
CONGLOMERATE3
COMMITTEES
20%
BOARD OF
DIRECTORS
MEMBERS 1 2
Ana Lúcia Poças Zambelli
Clarissa de Araújo Lins
Jerônimo Antunes
Marcelo Mesquita de Siqueira Filho
Segen Farid Estefen
Sonia Julia Sulzbeck Villalobos
1 Eduardo Bacellar Leal Ferreira and João Cox Neto have recently been vested in office and do not participate in any committee as members.
2 CEO and employee representatives participation as members in the committees is prohibited.
3 Committee with external member in the composition.
The CEO is chosen by the Board of Directors from
among Board members.
The nomination of the members must abide by the
professional capacity, undisputed knowledge and
expertise in the area of performance.
The appointment of members must meet minimum
requirements, including ten years leadership
experience in the business or in related area.
We have specific rules and requirements in place for
the election and dismissal of the Governance and
Compliance Executive Officer, who is guaranteed
the possibility of reporting directly to the Board of
Directors in certain cases.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES GOVERNANCE: MAIN IMPROVEMENTS
In recent years, we have promoted a number of actions to strengthen our governance, whether voluntary, legal or in compliance with the
requirements of the governance regulations adopted by the company, in order to establish best practices in line with our strategy and to
contribute to the long-lasting and perennial evolution of our governance.
110
Public Policies and Corporate
Governance Annual Charter.
Definition of Public Interest – Transparency
and mechanisms of compensation in the
performance of public policies.
Transparency Portal.
Report on the Brazilian Code of
Corporate Governance.
Restructuring of the Ombudsman’s
Office and of the external and
independent whistleblowing channel.
Integrity Criteria and tighter Requirements
for the appointment of the senior managers,
executive officers and Directors.
Implementation of shared authorization in
Company�s decision.
Q
Y
C I A
C
EQ
E
TRE
N º 13.303/2016
L E I
L A W N O. 13,303
E D ECRETO
T
8 . 945/2016
N º
E
D
E D E R A L GOVERNMEN
C R E E NO 8,945/20
6
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TRA N S P A
TRA N S P A
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GOVERNANCE
MAIN
3
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IMPROVEMENTS
DA B3
PANIES O
ÇA DE EST
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M FOR ST
RATE GO
BIENTAL
BILITY
F B3
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COMPLIANCE W I T H
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-OWNED LE
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AIS
S
E
E EM
NÔMICA,
NMENTAL
S
NANCE
À LEGISLAÇ Ã O
LEGISLATIO N
P
E
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Minority Shareholders Committee with
expanded duties.
Ban on the appoitment of Ministers, Secretaries
and some positions of the public administration.
2/3 Quorum to approve transactions with the
Federal Government.
Minimum of 40% independent members.
Integrity Due Diligence Process of supplier.
Process of succession of Executives
and Talent Bank to select the
managers of Petrobras.
Creation of the Statuory Audit Committee of
the Petrobras conglomerate.
Performance evaluation of executive
officers, directors and members of advisory
committees by external and independent
consulting company.
Creation of statutory technical committees to
advise the Executive Board members and Board of
Directors members.
Improve the decision-making process,
with new advisory committees of the Board.
Independent Governance and Compliance Department.
The appointment and dismissal of Governance and
Compliance Officer is subject to specific requirements.
Possible initiatives to change these practices requires formality and transparency,
being necessary, in most cases, a shareholders’ meeting or a legislative amendment.
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Our advances in governance, reaffirming our commitment
BYLAWS
to continuous improvement in governance and alignment
INTEGRATED GOVERNANCE PANEL
with best market practices, have been recognized:
The revision of the Bylaws in 2018 included, among other
We implemented the Integrated Governance Panel
things, the following changes:
allowing the analysis of the portfolio of invested
• We maintained the maximum score (10) in the 2nd
and 3rd cycles of the Governance Indicator (IG-SEST),
prepared by the Secretariat of Coordination and
Greater independence of directors: approval of the
minimum percentage of 40% of independent members
companies from the perspective of the investor/holding,
measuring the added value of each part for the result of
Petrobras, and using corporate measures on the return
Governance of State Enterprises (Sest). With these
for the Board of Directors, with this percentage applied to
and minimum rates of attractiveness, in addition to the
results, we have maintained Level 1 of governance in all
the total number of directors. In addition, the members of
monitoring of corporate information. We held a strategic
assessment cycles conducted by Sest.
the Council to be nominated by the Federal government
alignment event of the companies of the Petrobras, and
•Adherence to B3's special Corporate Governance
Level 2 listing segment.
For other acknowledgments about our governance improvements,
please refer to Intellectual Capital.
Among the changes in 2018, we highlight the revision
of the Bylaws, the implementation of the Integrated
Governance Panel and the Tenders and Contracts
Regulation, as well as revisions in some of our policies that
are part of our constant search for the improvement of our
Code of Good Practices.
for meeting the minimum number of independents shall
methodological and content evaluation of the 2019-2023
be selected from a triple list, drawn up by a specialized
Business and Management Plans of the most significant
company with proven experience, and interference in this
controlled companies.
list shall not be allowed and shall be the sole responsibility
of the company.
Creation of the Statutory Audit Committee of the
Petrobras Conglomerate, in compliance with the Act
No. 13,303/2016 and Decree No. 8.945/2016.
The purpose of this committee is to advise the Board of
Directors of Petrobras, for companies that do not have
their own Statutory Audit Committee.
Indemnity Agreement: inclusion of the possibility of
entering into indemnity agreements with the members of
the Board of Directors, Audit Committee, Executive Board,
committees and all other employees and agents legally
acting by delegation of the company's administrators, in
order to cope to certain expenses related to arbitration,
judicial or administrative proceedings involving acts
committed in the exercise of their duties or powers,
subject to certain established rules and conditions.
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REGULATION OF BIDS AND CONTRACTS
OUR POLICIES
The Act 13.303/2016 (State Companies Act) introduced
In compliance with the State Companies Act, the B3
new procedures for public companies' bids and contracts.
Achievement in State Governance Program and the new
In compliance with such law, the Petrobras Bid and
CVM instructions, we made changes to the following
Contracts Regulation (RLCP) was issued, which came
policies in 2018:
into force in January 2018, and was fully implemented in
May 2018, before the legal deadline. The RLCP presents
the new ways of contracting, the stages to be covered in
Corporate and Shareholding Governance Policy:
created for application to the entire, its objectives
the bids, the contractual management and the auxiliary
are to contribute to ensure our sustainability and the
procedures, including the suppliers register. One of the
perpetuation of best governance practices; improve
main themes brought by the new legislation concerns
decision making in senior management, as well as the
the regulation of hiring, with changes and innovations
company's planning processes, controls and performance;
in relation to the standards in force until then. The law
increase transparency and dissemination of information;
determines that all contracting must be carried out, as
strengthen the company's corporate image and
a rule, through public bidding, that is, they will be open
reputation; and generate value for shareholders and other
PETROBRAS' CODE OF GOOD PRACTICES
Our Code of Good Practices brings together the main
governance policies:
Policy for Relevant Act or Fact Disclosure and
Securities Trading
Policy for Nomination of Members of the Audit
Committee, Board of Directors, Executive
Board and Positions of the General Structure
of Petrobras and Petrobras System Companies
Petrobras' Corporate Compliance Policy
to any interested parties that are able to comply with the
stakeholders in an ethical and sustainable manner.
Corporate Risk Management Policy
bidding rules. This innovation increases the participation
of suppliers and the transparency of processes.
For more information about the changes brought by Act
13.303/2016, please refer to our website Contract Rules:
https://canalfornecedor.petrobras.com.br
Shareholder Remuneration Policy: replaces the Dividend
Distribution Policy and its principles are, inter alia,
to establish the rules and procedures related to the
distribution of dividends and/or interest on shareholders'
equity, in a transparent manner and in accordance with the
Ombudsperson Activities’ Policy
Shareholder Remuneration Policy
legal, statutory and other internal regulations.
Communications Policy
For more information on Corporate Governance, visit our website:
Corporate Governance/Governance Instruments.
Related Party Transactions Policy
Shareholder and Corporate Governance Policy
Our policies are available at:
www.petrobras.com.br/ri
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OPERATION CAR WASH (LAVA JATO)
process, which includes verification of the existence and
Exchange Commission and the US Department of
application of an effective integrity program based on
Justice (DoJ) in 2014, with which Petrobras has fully
We do not tolerate any practices of corruption and
the parameters set forth in article
cooperated. In September 2018, we announced the
consider inadmissible any practice of unlawful acts
42 of Decree No. 8,420/2015.
involving our employees and suppliers. We are officially
closing of agreements related to the company's internal
controls, accounting records and financial statements
recognized as a victim of the crimes determined in
In addition to the search for the application of sanctions
for the period 2003 to 2012, which completely closed the
Operation Car Wash. For this reason, we serve as
to individuals and legal entities that perpetrated the
investigations of the US authorities.
prosecution assistants and interested parties in 59
crimes revealed by Operation Car Wash, we have taken
criminal actions filed as a result of Operation Car Wash.
the necessary measures to recover all damages suffered
Under its terms, Petrobras will pay US$ 85.3 million to
We await deferral of the authorization in three more
as a result of these acts, including those related to our
the DoJ and US$ 85.3 million to the SEC. In addition, the
suits. The suits aim at imputations of crimes of criminal
corporate image. In order to do so, we joined 16 public
agreements recognize the allocation of US$ 682.6 million
organization, corruption, money laundering and fraud in
civil actions for acts of administrative misconduct up to
to Brazilian authorities. This amount was deposited by
bidding, among others.
November 2018, and thus, Petrobras participates as a
Petrobras in January 2019, according to the Assumption
co-author (sometimes alongside the MPF, others jointly
of Commitments’ Agreement signed with the Federal
We continue to follow up the investigations and to
otwith the Federal government, or with the integration
Public Prosecutor's Office.
collaborate effectively with the work of the competent
of both) of demands that aim at full reparation, including
authorities to elucidate the facts.
a request for compensation for moral damages. In
We present to the competent authorities the results of
with investigated companies or plea agreements with
developments in Petrobras' compliance program,
investigations of non-conformities made by internal
individuals who agree to return assets, we may be
internal controls and anti-corruption procedures.
committees established to investigate possible
entitled to receive a portion of them. Therefore, R$
We have agreed to continue evaluating and improving
irregularities in contracts with service providers.
3,240,183,809.53 have already been returned to our
these measures.
addition, as investigations result in leniency agreements
Through the agreements, DoJ and SEC recognize
cash account as compensation for damages, provided
For certain companies investigated by Operation Car
for in leniency agreements and plea and repatriation
Wash, since 2014 we have had precautionary blocking
agreements, until December 2018.
measures that prevent them from participating in new
bids and concluding new contracts with us. On a case-
by-case basis, these blockages may be lifted to the
extent that the supplier cooperates with the authorities'
In addition, due to the existence of American Depositary
Receipts (ADRs) traded on the New York Stock Exchange,
the facts disclosed in Operation Car Wash led to the
investigations and undergoes the Integrity Due Diligence
initiation of investigations by the US Securities and
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CLASS ACTION AND RELATED PROCESSES
Collective action in the Netherlands
Between December 2014 and January 2015, five
In January 2017, the Stichting Petrobras
In Argentina, an arbitration claim was filed by
Consumidores Financieros Asociación Civil para
su Defensa ("Association") against the company
class actions were filed against Petrobras before the
Compensation Foundation filed a lawsuit in The
and other individuals and legal entities, before
Federal Court for the Southern District of New York, in
Netherlands, in the District Court of Rotterdam,
the Arbitral Tribunal of the Buenos Aires Stock
the United States. These lawsuits were subsequently
against Petrobras, some of its subsidiaries and former
Exchange. Among other issues, the Association
consolidated in a class-action lawsuit, where the
managers of the company.
plaintiffs alleged that we had allegedly reported
claims that Petrobras is responsible for a supposed
loss of market value of our shares in Argentina, due
materially false information and committed omissions
The Foundation alleges that it represents an
to the proceedings related to Operation Car Wash.
For more information on collective actions and related
proceedings, please refer to Financial Statements
(explanatory note 31.4).
capable of misleading investors.
unidentified group of investors and requires a judicial
declaration attesting to the illegality of acts allegedly
In January 2018, we announced that an agreement
carried out by the defendants, based on facts
was reached to terminate the collective action in
revealed by Operation Car Wash and on alleged false
which we pledged to pay US$ 2.95 billion in three
financial information disclosed by the company.
installments, the last being paid in January 2019.
This agreement was subject to appeal by some
In view of the present uncertainties, it is impossible
investors, with one remaining pending judgment.
to make any secure assessment of risks related to
If the higher courts annul the agreement, or if the
this litigation. We deny the allegations made by the
agreement does not become final for other reasons,
Foundation, and we are firmly defending ourselves in
the company will return to the position it was in prior
this action.
to the Collective Action Agreement.
Other related proceedings
Individual Actions
In addition to the consolidated collective action,
in Brazil, which, from a representative point of view,
34 individual lawsuits were filed by investors in the
are currently in their initial stages. These lawsuits
United States, with claims similar to those filed in the
were filed by investors who bought shares in B3 and
class-action lawsuit, all of which were terminated,
alleged losses resulting from the actions revealed by
We are parties to arbitrations and judicial proceedings
either by agreement or by the adhesion of some
Car Wash Operation
investors to the class action agreement.
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Compliance and
Internal Controls
We work in the dissemination of a compliance culture,
in the prevention, detection and correction of incidents
of fraud, corruption and money laundering, in the
management of our internal controls, in the integrity
analysis of managers and counterparts, in order to
guarantee an ethical environment for our Business.
We have a Compliance Policy that describes and discloses
our commitments to the promotion of the highest ethical
and transparency values in conducting our business, with
zero tolerance to fraud, corruption and money laundering.
In order to integrate and strengthen compliance initiatives,
we have, in addition to the Corporate Compliance
Policy, the Code of Ethics, the Conduct Guide and the
Petrobras Corruption Prevention Program (PCPP).
115
ETHICS
We believe the Code of Ethics is a commitment of each for the good of all. We are constantly seeking that the ethical behavior
permeates the relationships with the various publics through the dissemination of a set of ethical principles and commitments
of conduct, among other references, that regulate the conduct of employees. Petrobras makes express reference to ethical
documents in the contracting of service providers, requiring them to comply with ethical principles and commitments of
conduct by its employees.
In the Code of Ethics, we present ethical principles (respect for life and
all human beings, integrity, truth, honesty, justice, equity, institutional
loyalty, responsibility, diligence, merit, transparency, lawfulness,
impersonality and coherence between discourse and practice) and the
commitments of conduct to be followed by the members of the Board
of Directors, the Audit Committee and the Executive Board, as well as
by our employees, trainees, businesses and service providers.
The Conduct Guide is aimed at the same public, and it brings
unfolding principles of the Code of Ethics, with guidelines for
behavior in professional life situations or as a result of it.
In order to update the documents, in 2018 Petrobras' Ethics Committee conducted a revision of the Petrobras Group Conduct
Guide and Code of Ethics – based on the experience accumulated by the Committee, benchmark in related documents;
compliance with relevant legislation and internal regulations; recommendations of control bodies; and consultations with
employees, areas and subsidiaries of Petrobras.
Additionally, ethics management training was conducted among the members of the Board of Directors, with the participation of
members of the Executive Board.
For more information on ethics, please refer to
Sustainability 2018.
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In line with our goal of being a benchmark in ethics and integrity, in 2018, we enhanced initiatives to mitigate the possibility
PROGRAM (PCPP)
of acts being taken to nullify or violate existing or acting controls inconsistent with our internal policies and standards, as
116
· The PCPP is driven by continuous actions of prevention,
detection and correction of acts of fraud, corruption and
money laundering.
· Intended for our various stakeholders, such as
customers, suppliers, investors, partners, public
authorities, employees and contractors.
· The program is continually improved and adheres to best
market practices and anti-corruption laws, especially Law
No. 12.846/2013; Foreign Corrupt Practices Act (FCPA),
the United States anti-corruption law from 1977; and
UK Bribery Act (UKBA), the British anti-corruption law
from 2010.
well as laws applicable to our operations. All controls are part of a set of new procedures and actions for governance and
compliance improvements. The main actions implemented were:
INITIATIVE
DEFINITION
IMPROVEMENTS 2018
Compliance
Policy
It describes and publicizes our commitments
to the promotion of the highest ethical
values and transparency in the conduct of
our business, with zero tolerance to fraud,
corruption or money laundering.
Revised and approved by the Top Management, it includes an even
more accessible language with updating and strengthening of
themes such as prevention actions; transparency and accessibility of
information; leaders' responsibility for strengthening the business
environment; influence of Petrobras in relation to other companies in
the adoption of compliance practices.
In 2018, in addition to changing the name to Disciplinary Measures
Committee, the new structure of the body was approved, and the
Disciplinary
Measures
Committee
Created to strengthen our system of
scope of action and its attribution were broadened. The Committee will
consequences, guiding, standardizing and
be composed by three members dedicated exclusively to the activity,
monitoring the application of sanctions in
with at least two selected externally, responsible for defining the
(formerl Sanctions
cases related to fraud, corruption, nepotism
sanction for matters related to fraud, corruption, nepotism or conflict
Committee)
or conflict of interest.
of interests, and for the new topics included within the scope which
deal with patrimonial and off-balance damages, sexual and moral
harassment and Administrative Accountability Procedures (PAR).
Ethics and
A moment dedicated to discussing issues
Integrity Moment
related to ethics and integrity
Inclusion of the ethical and integrity moment before the opening
of the meetings of the Executive Board, Board of Directors and
institutional events.
Internal
Investigation
Process
Internal investigations of suspition of non-
compliance, regarding issues of fraud and
corruption, clarifying facts and defining
responsibilities.
Review of the investigation process of issues related to fraud and
corruption, expanding the mechanisms for prevention and detection
of misconduct, based on greater use of technology, increase in
the structure and specialization of the teams responsible for the
investigation.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES In 2018, we continued the initiatives of previous years, with emphasis on the following.
INTERNAL CONTROLS
Integrity Background Check, a procedure that aims to assist the manager in making decisions related to the degree
of exposure to integrity risks of those appointed by Petrobras to act in key positions at the company, its subsidiaries,
As part of our compliance process, we have an internal
control system that ensures the mitigation of corporate
subsidiaries and affiliated companies. In 2018, 2,307 integrity evaluations were conducted by Petrobras to key positions at
risks of strategic, business, financial and compliance
117
the company.
Compliance Training: We have started a continuous cycle of mandatory training, called "Commitment to Compliance
Trail,” which will help employees identify compliance risks and how to act in these situations. The training involves top
management, managers, consultants and employees of all careers. For those employees who work in activities with greater
exposure to compliance risks, such as procurement staff and contract supervisors and managers specific modules are
offered. In 2018, more than 40 thousand employees were trained.
Integrity Due Diligence (IDD) of counterparties: aims to evaluate integrity risks inherent to our relationship with suppliers
of goods and services, clients in the trading of oil and oil products, institutions in projects of sponsorship and agreements
related to the duties of Communication and Social Responsibility and companies interested in asset divestment processes
and/or corporate equity, strategic and operational partnerships. The result of IDD is expressed by the Degree of Integrity
Risk (GRI) and is considered by our managers in the decision-making process. In 2018, 4,873 counterparties
were evaluated.
nature, providing reasonable security in achieving
our objectives.
From a risk analysis, we identify the most sensitive
processes and develop appropriate controls. The
effectiveness of these controls is tested internally and
by independent auditors as well. Once identified a
deficiency of control, we tirelessly act in the remediation
and proposition of improvement actions, as well as in the
diagnosis of potential occurrences in other areas.
Throughout 2018, we continued our actions to maintain
an effective control environment and implemented
improvements, such as those related to the management
of our investment projects. In addition, we are constantly
evaluating and implementing new controls for relevant
processes, among which we highlight those related to the
Diesel Price Subsidy Program.
At the end of 2018, our management evaluated the
internal control environment for financial reporting and
concluded its effectiveness.
For more details about the improvement actions of our Internal
Controls system, please refer to Reference Form (item 5.3), available
at our website: www.petrobras.com.br/ri.
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LINES OF DEFENSE
With the “three lines of defense” model, we strengthened our internal control system and contributed to allowing
the organization to reach its objectives through risk management in a standardized manner and to the resulting
implementation of effective controls. In this model, each group of managers that comprises the lines of defense
performs a distinct role in the internal control system, according to our governance structure.
BOARD OF DIRECTORS/AUDIT COMMITTEE
MANAGERS AND TEAMS
OPERATIONAL UNITS
BUSINESS AREAS
FIRST LINE OF DEFENSE
The business area managers have the duty
to manage risks and are responsible for
implementing corrective actions to resolve
deficiencies in processes and controls.
F
I
R
S
T
L
I
N
E
O
F
D
E
F
E
N
S
T
N
SENIOR MANAG E M E
E SECOND LINE OF D E F E N S E T
E
S
N
H IR D LINE OF DEFE
INTERNAL AUDIT
INTERNAL CONTROLS
COMPLIANCE RISK
MANAGEMENT
INFORMATION
SECURITY
OMBUDSMAN
OTHER
CORPORATE DUTIES
SECOND LINE OF DEFENSE
The different corporate duties of risk control
and compliance supervision support the
development and/or monitor the control
activities performed by the managers.
CHECK LIST
EXTERNAL
REGULATORS
CHECK LIST
EXTERNAL
AUDIT
THIRD LINE OF DEFENSE
The Internal Audit assesses, in and
independent manner, the efficiency of the
risk management and the effectiveness
of the internal control system, reporting
any deficiencies and proposing
improvement actions.
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RISKS AND
OPPORTUNITIES
Risk Management
Opportunities
120
122
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Risk Management
To assist in this process, our Corporate Risk Management
RISK GROUPS
Policy establishes guidelines and responsibilities and is
based on the following fundamental principles:
The integrated and proactive risk management is
fundamental for the delivery of results in a safe and
sustainable way.
respect for life in all its diversity;
full alignment and consistency with our Strategic Plan;
ethical performance and compliance with legal and
Our risk-management process is centralized in a corporate
regulatory requirements;
area, allowing the standardization and uniformity of
risk analysis Petrobras and the management of risk
responsibilities, which are structured according to a three-
line defense model.
We have an Executive Risk Committee with the purpose
integrated risk management;
orientation of risk response actions aimed at
aggregating or preserving shareholder value and
business continuity.
of advising the Executive Board in the analysis of specific
The risks to which we are exposed (business risks) are
risk management matters. Thus, each organizational unit
classified in the following groups: Business, Financial,
must identify, prioritize, monitor and, together with the
Compliance and Operational. Among these risks, the
Business Risks area, periodically communicate to the
most relevant ones are classified as Strategic Risks and
Executive Risk Committee the main risks and mitigating
monitored in the scope of the Business and Management
actions planned.
Plan and the Strategic Plan.
For more information on the three-line defense model, please refer
to Governance and Compliance
For information about the risks of each group, please refer to the
section Risk Factors in the Reference Form and Form 20-F, available
on our website: www.petrobras.com.br/ri.
In Form 20-F, in addition to the four groups mentioned above and
Strategic, we describe two others: one related to Brazil and our
relationship with the Brazilian Federal Government and the other
with risks related to our investors.
BUSINESS
Risks related to the company's business,
according to its value chain, specific to an
integrated oil company (exploration and
production, refining, distribution, natural gas,
transportation, etc.).
FINANCIAL
It gathers risks arising from market fluctuations,
defaults on counterparties and mismatches
between assets and liabilities.
COMPLIANCE
Risks arising from non-compliance with the
legislation and regulations applicable to
Petrobras' business, as well as internal rules and
procedures, especially those related to fraud,
corruption, money laundering and the reliability
of financial reports.
OPERATIONAL
It gathers risks due to failures, deficiencies
or inadequacies of internal and industrial
processes, the supply of goods and services,
systems, as well as natural disasters and/or
actions from third parties.
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RISKS IN PNG HORIZON
2019 - 2023
MAJOR
PROJECTS
COMMERCIAL
POLICY
PARTNERSHIPS AND
DIVESTMENTS
LITIGATION
OPERATIONAL
CONTINUITY
MAIN
MITIGATING
ACTIONS
Continuous
monitoring of the
main risks of project
implementation
Monitoring of
margin and market
share
Active portfolio
management
Continuous
evaluation of
litigation risks.
Business
continuity plan for
critical assets.
Liaison with
regulatory bodies
(ANP, Ibama ...)
Prices that reflect
international
market conditions
RIsks sharing
Integrated asset
inspection plan.
Hedging
strategy.
STRATEGIC RISKS
Annually, from the list of business risks, analysis
of business performance and the company's
external and internal environment, the Board of
Directors defines those risks that, individually or
in a consolidated manner, should be monitored
more closely. These risks, called "Strategic
Risks,” are selected due to their importance for
the implementation of the Business Plan and
Management and of the Strategic Plan, its scope,
its degree of severity and/or resources demanded
for its treatment. The Strategic Risks in the
horizon of PNG 2019-2023 disclosed in
our Strategic Plan 2040, and in the Business
and Management Plan 2019-2023 are
presented beside:
HEDGE POLICY
We maintain, preferably the exposure to the price cycle, avoiding the use of derivatives to systematically protect the goods’ purchase or sale operations, whose purpose is to meet our
operational needs. However, subject to the analysis of the business environment and the prospects of realization of the business plan, the execution of an occasional protection strategy
may be applicable.
In 2018, Petrobras implemented a strategy to protect part of its expected oil production in 2018, in a volume equivalent to 128 million barrels. Put options were purchased at an exercise
price referenced to the mean price of the Brent oil in the months following the completion of the operations until the end of 2018, with an average cost of US$ 3.48 per barrel and average
exercise price of approximately US$ 65/barrel.
In addition, we approve a derivative strategy, aiming to give additional flexibility to the process of aligning gasoline and diesel prices with international prices.The objective is to have the
option to change the frequency of readjustments, being able to keep prices stable for short periods of time, reconciling the company's business interests with the demands of its clients
and market agents in general.
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CRISIS MANAGEMENT
We have the Crisis-Management system, in line with
the recommendations of the Guidance Manual for
Corporate Risk Management of the Brazilian Institute
of Corporate Governance (IBGC) and the Corporate
Sustainability Index (ISE) of B3.
This system formalizes and addresses, in a
structured and integrated manner, procedures and
response teams for unscheduled events (leaks, fires,
operational unavailability, intentional acts, fraud,
legal issues, etc.) with the potential to generate a
crisis. The system also recommends the internal
communication flow and the teams' performance
in operational or strategic scope, according to the
result of the analysis of the event before the impact
matrix in the dimensions: life/environment image/
reputation, legal/compliance and productive
chain/financial.
In 2018, the said system was applied in the national
strike of the truck drivers occurred in May.
Our refineries and other industrial facilities did not
interrupt their activities during the strike, which
allowed rapid normalization of the fuel supply
throughout the country as soon as the strike
was closed.
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Opportunities
Our Corporate Risk Management Policy considers not
only anticipating threats that may adversely affect our
strategic, economic, financial, operational or compliance
objectives, but also take advantage of the positive
aspects of risks, identifying and maximizing new business
opportunities, processes and products, or by perfecting
existing ones, resulting in actions and projects that are
continually captured in our strategic planning. In the
context of the challenges associated with transformations
in the energy industries, we identify opportunities as:
Recomposition of the exploration portfolio: Aligned with
our strategic planning, we are rebuilding our exploratory
portfolio with acquisition of new areas in the 15th round
of concession and in the 4th and 5th rounds of production
sharing, with a forecast to increase the exploratory
wells average per year. We will continue to be active and
selective in the upcoming auctions in the production
and concession sharing regimes already announced by
the ANP in 2019. Our investments in exploration for PNG
2019-2023 total US$ 10.8 billion, an increase of 59% over
the previous PNG. These investments aim to ensure the
sustainability of the E&P segment in the long term.
Strategic Partnerships: Our partnerships are carried out
together with companies that excel in all areas where we
operate. We believe that establishing these relationships
allows us to reduce our debt, helps us to support future
Specific studies on the oil and gas industry point to
investments, enables us to share the risks of the business
several opportunities for value adding with the adoption
and geographical concentration, as well as contribute to
of digital solutions of low uncertainty and high maturity.
technical and/or technological exchange and to better
The order of great potential and the need to prepare for
governance in the making long-term decisions.
a new competitive environment are causing the main
companies within the sector to structure their journeys of
Our notorious knowledge in deep and ultra deep
digital transformation.
water, as well as the pioneering in the introduction of
new technologies, allows the celebration of several
The company is gearing up for a competitive environment
partnerships in exploration and production projects in
in which excellence in the core business of industries will
the last two decades. More recently, we have expanded
increasingly depend on the domain of digital technologies
our partnerships to explore opportunities in natural gas,
and skills for innovation. With digital transformation, we
transportation and marketing of our products, as well as
will seek to capture even more opportunities for efficiency
low carbon initiatives. We are studying a model that will
gains in both the business and corporate segments.
allow us to extend the benefits of the partnerships to the
refining segment.
For more information about our partnerships, please refer to Social
and Relationship Capital.
For more information on digital transformation, please refer to
Sustainability 2018.
Digital Transformation: Recent advances in data
acquisition and analysis, connectivity, artificial intelligence,
robotics and other technologies are changing the sources
of competitive advantage. The growing perception among
investors is that, increasingly, the generation of expected
value of companies will depend on the adoption of digital
technologies and their new forms of work, collaboration
and innovation.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 124
OTHER
INFORMATION
External Audit Services 125
Acknowledgement
Glossary
Management and Records
126
127
129
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
125
SERVICES PROVIDED BY THE EXTERNAL AUDIT
Our independent auditors cannot provide consulting services during the term
of the audit contract, pursuant to Article 30 of our Bylaws. On December 20,
2016, we hired KPMG Auditores Independentes (KPMG) to provide independent
auditing services for fiscal years 2017 to 2019, with the possibility of renewal
for another two years.
KPMG provided the following services during the 2018 fiscal year*, including for
our subsidiaries and controlled companies:
SERVICES
Accounting Audit
SOX Audit
Additional services related to audits
Tax Audit
TOTAL SERVICES
*CVM Instruction 381/2003
R$ THOUSAND
31,110
5,594
2,501
1,038
40,243
%
77
14
6
3
100
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 126
Acknowledgement
We would like to thank our managers and our employees
for the dedication and commitment to recovering the
company, as well as to our shareholders, the market and
society for their confidence in this process of rescuing the
company, the pride of all Brazilians.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 127
Glossary
The terms not listed in this glossary are defined along
the text.
Free Trade Agreements (FTA): market segment in which
the purchase and sale of electric energy are the subject of
freely negotiated bilateral agreements, according to specific
marketing rules and procedures.
Regulated marketing environment (ACR): market segment
in which the purchase and sale of electric power between
selling agents and distribution agents, preceded by a bidding
process, except for cases provided by law, according to specific
marketing rules and procedures.
Boed: barrels of oil equivalent per day.
Brent: oil used as one of the main references of the
international oil market. Dated contracts for Brent or its
by-products in the financial market reference several
contracts of purchase and sale of oil in the world.
Otto Cycle: Otto cycle sales volumes represent the sum of
the volumes of gasoline, ethanol and vehicular natural gas for
light vehicles.
Transfer of Rights Agreement: regime of exploration and
production of oil and natural gas in which a company or a
consortium of companies performs these activities in an area
granted by the government. Petrobras was contracted directly
by the Federal Government to discover and produce reserves
with a maximum limitation of production of up to five billion
barrels of oil and natural gas.
Declaration of Commerciality: a written notification of the
concessionaire to the ANP declaring a deposit as a commercial
discovery in the area of concession or sharing.
Decree No. 8.945/2016: which regulates, within the scope
of the Federal government, the Act No.13,303 of June 30,
2016, which provides for the legal status of public companies,
mixed companies and their subsidiaries within the Federal
government, the States, the Federal District and the
Municipalities.
Local Response Structure: set of resources (human, material),
defined in the emergency response plan, to control the
accident and mitigate the potential damages in the initial
emergency phase.
Organizational Response Framework: a previously
established emergency management structure designed to
plan response actions to control the accident and mitigate
potential damage by defining the required resources.
Class action: it is a kind of collective action under foreign law
that allows a class consisting of people who suffered the same
loss, or who are prejudiced by the same fact and therefore,
with a common interest, jointly claim an indemnity for
losses suffered.
Occupational examinations: examinations carried out
periodically for monitoring, prevention and promotion of
workers' health. They comprise medical, dental and nutritional
assessments with a personalized clinical and occupational
history approach.
CO2: carbon dioxide.
Completion: oil exploration phase in which occurs the
installation in the well of the equipment necessary to
controllably bring to the surface the desired fluid, and allow
the installation of monitoring equipment in the well.
Condensate: mixture of hydrocarbons in a gaseous state
in the reservoir, which on the surface becomes liquid under
normal atmospheric conditions.
Foreign Corrupt Practices Act (FCPA) of 1977: US federal
anti-corruption law, to which we are subject by American
Depositary Receipts (ADRs ) traded on the New York Stock
Exchange.
FPSO: vessel with capacity to produce, store and offload oil
and/or natural gas to shuttle tankers.
GLP-P13: Liquefied Petroleum Gas for residential use,
marketed in cylinders of up to 13 kg.
Hedge: transaction or combination of transactions, financial
or otherwise, which have the effect of fully or partially
offsetting the price or value variation of a good, right or
obligation.
Impairment: loss in the value of asset recovery.
Development Ratio (DR): relationship between developed
proved reserves and total proved reserves
Reserve Replacement Ratio (RRR): measures the replacement
of production by the addition of reserves, either by
discoveries, extensions, revisions of estimates or enhanced
recovery.
Organic Reserve Replacement Ratio (Organic RRR): is the
Reserve Replacement Index disregarding the acquisitions and
divestments made.
Reserves/Production ratio (R/P): measures the longevity of
the current proved reserves, considering constant the current
level of production.
Act No. 12.846/2013 – Anticorruption Act: provides for
administrative and civil liability of legal persons for the
practice of acts against the public administration, national or
foreign.
Act No. 13.303/2016 – State Companies Act: provides for the
legal status of the state company, the mixed-capital company
and its subsidiaries, within the Federal government, the
States, the Federal District and the Municipalities.
Act No. 13.587/2018 – Annual Budgetary Law: estimates the
revenue and fixes the Union's expenditure for a given
financial year
Existing Energy Auction: Bidding process for the contracting
of energy generated by plants already built and in operation,
whose investments have been amortized and, therefore, have
a lower cost.
Alert Limit: maximum permissible parameter of a given
indicator in a defined period, used to apply corrective actions
and improvements in processes.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 128
Concession model: regime for the exploration and production
of oil and natural gas in which a company or a consortium of
companies carries out these activities in an area granted by
the government. In the Brazilian case, if there is oil or gas
discovery, the companies will title the volumes produced and,
in return, pay the governmental participation – royalties and
special participations (the latter when applicable to the field
in production). In Brazil, the concessions are granted through
bid rounds for areas for exploration and production of oil,
promoted by the National Agency of Natural Gas and Biofuels
(ANP), which also carries out the technical regulation of
exploration and production activities. The concession model
is applied in all Brazilian sedimentary basins, except for the
areas within the pre-salt polygon.It should be noted that the
concession model is adopted in cases where the areas were
contracted before the validity of the sharing regime that
defined the polygon of the pre-salt.
Sharing Model: regime of exploration and production of oil
and natural gas in which a company performs these activities
through a production sharing contract between a state-
owned company, which represents government interests,
and a company or consortium of companies (contractors) for
the exploration and production of oil by compensating the
parties upon sharing the production of an oil field. Companies
or consortia responsible for production must pay royalties to
the government. In Brazil, Pre-Salt S.A. (PPSA) inspects the
costs and has specific powers in consortia formed to carry
out the activities under sharing. The current production
sharing model is adopted only for areas within the pre-salt
polygon, without the effect of amending concession contracts
for the areas already under contracts executed prior to the
Act No. 12.351/2010.With the advent of the recent Act No.
13.365, dated November 29, 2016, Petrobras no longer has
the obligation to be the operator and hold a 30% stake in the
blocks to be granted under this regime, however, providing
the company, with the option to express its preference in
being contracted by the government.
Profit Oil: the oil surplus corresponding to the share of the
production of oil and/or natural gas to be distributed between
the Federal government and the company, according to the
criteria defined in the contract, resulting from the difference
between the total volume of production and the related share
of oil necessary to cover for costs and royalties due.
SMS Behaviour Management System: system to assist
managers in making decisions in relation to expected
behaviors in SMS, valuing positive practices and/or attitudes,
and to behaviors not expected in SMS, differentiating error
and violation and providing the application of the employee
recognition program and the disciplinary regime of Petrobras.
Project Rota 2 Gas Pipeline: Joint Operating Agreement
(JOA), consists of three sections: (i) Section 1 – offshore
(Lula-NE to Cernambi): 18-inch gas pipeline / approximately
19 km.BM-S-11 Consortium: Petrobras-65%; BG-25% and
Petrogal-10%; (ii) Section 2 – maritime (Cernambi to Lagomar
Beach - Macaé): 24-inch pipeline / approximately 377.5 km.
Consortium Cabiúnas 1; and (iii) Section 3 – (Lagomar Beach
to Tecab): 24-inch gas pipeline / approximately 4.5 km.
Cabiúnas Consortium 1 represents sections 2 and 3 of
the pipeline.
RenovaBio: an initiative of the Ministry of Mines and Energy,
launched in December 2016, to expand biofuel production.
Repetro: special customs’ regime for the export and import
of goods that are used for research and mining of oil and
natural-gas deposits.
Total Shareholder Return: weighted average of the annual
variation of the prices of common and preferred shares, in
addition to the proceeds distributed throughout the year.
ROCE: Return on Capital Employed is an indicator that
expresses the result of a company based on the capital
employed. The ratio determined by the ROCE indicates how
efficiently capital has being used in order to generate results.
The “Adjusted ROCE” aim to eliminate the non-recurring
effects of the result for calculation of the indicator, using
the same criteria of Adjusted EBITDA. The indicator consists
of the adjusted operating income, net of taxes on capital
employed, considering the following formula:
Adjusted ROCE = (Adjusted EBITDA last 12 months x
(1 – standard rate of Income taxes/social contribution)) /
Capital Employed.
SNOX: catalytic process in the reduction of emissions from
gas streams, removing solid, liquid and gaseous contaminants
and generating commercial sulfuric acid.
RIR: Reportable Injury Rate or number of reportable injuries
with or without lost time, and with fatalities for every
million person-hours of exposure to risk during the period
considered.
Extended Well Test (EWT): activity performed during the
exploration phase with the purpose of obtaining data and
information to extend the knowledge of the reservoirs.
Refining train: a set of processing units that mainly
involves the separation of petroleum into oil products, the
transformation of heavier and lower oil parts into smaller
molecules, giving rise to nobler oil products, and the
treatment to adapt the oil products to the required quality by
the market.
TRR: Transportador-Revendedor-Retalhista (Carrier-Reseller-
Retailer), a company authorized to purchase bulk diesel oil,
lubricating oils and greases; storing and transporting the
product; and resell retail with consumer delivery.
UK Bribery Act of 2010: UK anti-corruption law that allows
UK courts to prosecute crimes related to fraud and corruption
committed by companies incorporated in or operating in the
United Kingdom.
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES 129
Management
DIRETORIA EXECUTIVA
AUDIT COMMITTEE
BOARD OF DIRECTORS
CEO
ROBERTO
DA CUNHA
CASTELLO BRANCO
Exploration and
Production Executive
Officer
CARLOS ALBERTO
PEREIRA DE OLIVEIRA
Financial and
Investor Relations
Executive Officer
RAFAEL SALVADOR
GRISOLIA
Refining and Natural
Gas Executive Officer
Interim
EBERALDO DE
ALMEIDA NETO
Production Development
and Technology Executive
Officer
RUDIMAR ANDREIS
LORENZATTO
Strategy, Organization
and Management
System Executive
Officer Interim
RAFAEL SALVADOR
GRISOLIA
Governance
and Compliance
Executive Officer
RAFAEL MENDES
GOMES
Corporate
Affairs Executive
Officer
EBERALDO
DE ALMEIDA NETO
ELECTED BY THE CONTROLLING SHAREHOLDER
Eduardo Bacellar Leal Ferreira
Marisete Fátima Dadald Pereira
(Chair of the Audit Committee)
Deputy: Agnes Maria de Aragão da Costa
ELECTED BY THE CONTROLLING SHAREHOLDER
Adriano Pereira de Paula
Deputy: José Franco Medeiros de Morais
ELECTED BY THE CONTROLLING SHAREHOLDER
Eduardo César Pasa
Deputy: Mauricyo José Andrade Correia
ELECTED BY PREFERENTIAL SHAREHOLDERS
Daniel Alves Ferreira
Deputy: Rodrigo de Mesquita Pereira
ELECTED BY COMMON SHAREHOLDERS
Reginaldo Ferreira Alexandre
Deputy: Susana Hanna Stiphan Jabra
President of the Board of Directors elected by the Controlling
Shareholder
Ana Lúcia Poças Zambelli
Independent director appointed by the Controlling Shareholder
Clarissa de Araújo Lins
Independent director appointed by the Controlling Shareholder
Jerônimo Antunes
Independent director Appointed by the Controlling Shareholder
João Cox Neto
Independent director appointed by the Controlling Shareholder
Roberto da Cunha Castello Branco
Director appointed by the Controlling Shareholder
Segen Farid Estefen
Independent director appointed by the Controlling Shareholder
Sonia Julia Sulzbeck Villalobos
Independent director appointed by Preferred Shareholders
Marcelo Mesquita de Siqueira Filho
Independent director appointed by Common Shareholders
Danilo Ferreira da Silva
Director elected by Employees
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES
Editorial Staff
GENERAL COORDINATION, PRODUCTION AND EDITION
Investors Relationship
Communication and Brands
ADDRESS
Petróleo Brasileiro S.A – Petrobras
Avenida República do Chile, nº 65 Centro
20031-912 – Rio de Janeiro, RJ
WEBSITE
www.petrobras.com.br is our website, it contains general
information about the Company, including a specific investor
relations room, with notes on results, statements, annual
reports, audio and transcription of presentations to investors,
By-laws, share prices, shareholder information, etc.
ANNUAL GENERAL MEETING
The Ordinary General Meetings (AGO) are held until the fourth
month following the end of the fiscal year, pursuant to Article 39
of the Bylaws, at our headquarters located at Avenida República
do Chile, 65, Centro, Rio de Janeiro.
130
SUPPORT TO SHAREHOLDERS
DEPOSITORY BANKS
INDIVIDUALS
PETROBRAS
Shareholder Support
Av. Av. República do Chile, 65, sala 1002
20031–912 Centro, Rio de Janeiro, RJ
Tel: (21) 3224.1540
0800.282,1540
acionistas@petrobras.com.br
SUPPORT TO SHAREHOLDERS
INSTITUTIONAL
PETROBRAS
Investor Relations Management
Av. República do Chile, 65 / sala 1002
20031–912 Centro, Rio de Janeiro, RJ
Tel: (21) 3224.1510 / 9947
petroinvest@petrobras.com.br
Graphic design and layout
Flávia da Matta Design
Photos
Alexandre Salgado (page 117)
Andre Motta (pages 21,45, 56, 64, 71, 94, 103, 106
107, 119, 122, 124, 125 e, 126)
Andre Ribeiro (pages 8, 41, 53, 70 , 100 e 123)
Andre Valentim (pages 52, 82 e 87)
BANCO BRADESCO S.A.
Departamento de Ações e Custódia
Escrituração de Ativos
Tel: (11) 3684.9441
Shareholders: 0800.701,1616
Cidade de Deus, s/n, Prédio Amarelo, 2ª Andar
06029-900, Osasco, SP
dac.escrituracao@bradesco.com.br
Note: The support to shareholders is available
throughout the Bradesco branch network in Brazil.
ADR
The Bank of New York Mellon Corporation
101 Barclay Street, 22 West, New York, NY, 10286
Tel: 1-888-269-2377
shrrelations@bnymellon.com
https://www.adrbnymellon.com/resources/contact-us
Fernando Cesar (page 91)
Flavio de Aquino Carvalho (page 36)
Flavio Emanuel (pages 3, 4, 12,17, 30, 53, 54, 63, 88 e 99)
Flavio Roberto Berger (page 84)
Geraldo Falcão (page 38)
Taís Peyneau (page 46)
Pexels (page 2)
Shutterstock (page 27)
Stockphotos (pages 55 e 65)
ANNUAL REPORT 2018PETROBRASSAFETYOVERVIEW AND BUSINESS MODELOUR CAPITALSEXTERNAL CONTEXT BUSINESS PERFORMANCE STRATEGIES AND OUTLOOKSOTHER INFORMATIONGOVERNANCE AND COMPLIANCERISKS AND OPPORTUNITIES