Annual Report
Annual Report
and Form 20-F
and Form 20-F
2021
2021
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2021
Commission File Number 001-15106
Petróleo Brasileiro S.A. — Petrobras
(Exact name of registrant as specified in its charter)
Brazilian Petroleum Corporation — Petrobras
(Translation of registrant’s name into English)
The Federative Republic of Brazil
(Jurisdiction of incorporation or organization)
Avenida República do Chile, 65 - 20031-912 - Rio de Janeiro – RJ - Brazil
(Address of principal executive offices)
Rodrigo Araujo Alves
Chief Financial Officer and Chief Investor Relations Officer
(55 21) 3224-4477—dfinri@petrobras.com.br
Avenida República do Chile, 65 - 20031-912 - Rio de Janeiro – RJ - Brazil
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class:
Petrobras Common Shares, without par value*
Petrobras American Depositary Shares, or ADSs
(evidenced by American Depositary Receipts, or ADRs), each
representing two Common Shares
Trading
Symbol(s):
PBR/PBRA
PBR/PBRA
Petrobras Preferred Shares, without par value*
PBR/PBRA
Petrobras American Depositary Shares
(as evidenced by American Depositary Receipts), each representing
two Preferred Shares
6.250% Global Notes due 2024, issued by PGF
5.299% Global Notes due 2025, issued by PGF
8.750% Global Notes due 2026, issued by PGF
7.375% Global Notes due 2027, issued by PGF
5.999% Global Notes due 2028, issued by PGF
5.750% Global Notes due 2029, issued by PGF
5.093% Global Notes due 2030, issued by PGF
5.600% Global Notes due 2031, isuued by PGF
6.875% Global Notes due 2040, issued by PGF (successor to PifCo)
6.750% Global Notes due 2041, issued by PGF (successor to Pifco)
5.625% Global Notes due 2043, issued by PGF
7.250% Global Notes due 2044, issued by PGF
6.900% Global Notes due 2049, issued by PGF
6.750% Global Notes due 2050, issued by PGF
5.500% Global Notes due 2051, issued by PGF
6.850% Global Notes due 2115, issued by PGF
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
PBR
Name of each exchange on which registered:
New York Stock Exchange*
New York Stock Exchange
New York Stock Exchange*
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
_________________
*
Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the New
York Stock Exchange.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each class of stock as of December 31, 2021 was:
7,442,231,382 Petrobras Common Shares, without par value
5,601,969,879 Petrobras Preferred Shares, without par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes ☐ No ☒
If this report is an annual or transitional report, indicate by check mark if the registrant is not required to file reports pursuant to section 13
or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically if any, every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer ☒
Accelerated filer ☐ Non-accelerated filer ☐
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm
that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has
elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Table of Contents
DISCLAIMER ........................................................................................................................................................................................................................................ 6
GLOSSARY ........................................................................................................................................................................................................................................... 9
ABOUT US ......................................................................................................................................................................................... 21
DATASHEET ...................................................................................................................................................................................................................................... 22
OVERVIEW ......................................................................................................................................................................................................................................... 23
2021 HIGHLIGHTS ........................................................................................................................................................................................................................... 26
RISKS .................................................................................................................................................................................................. 28
RISK FACTORS .................................................................................................................................................................................................................................. 29
CORPORATE RISK MANAGEMENT .............................................................................................................................................................................................. 46
DISCLOSURES ABOUT MARKET RISK ........................................................................................................................................................................................ 47
INSURANCE ....................................................................................................................................................................................................................................... 48
OUR BUSINESS ................................................................................................................................................................................ 49
EXPLORATION AND PRODUCTION ............................................................................................................................................................................................ 50
REFINING, TRANSPORTATION AND MARKETING .................................................................................................................................................................. 83
GAS AND POWER ........................................................................................................................................................................................................................... 109
PORTFOLIO MANAGEMENT ........................................................................................................................................................................................................ 127
EXTERNAL BUSINESS ENVIRONMENT .................................................................................................................................................................................... 132
STRATEGIC PLAN ......................................................................................................................................................................... 141
2022-2026 STRATEGIC PLAN ..................................................................................................................................................................................................... 142
DIGITAL TRANSFORMATION ...................................................................................................................................................................................................... 154
ENVIRONMENT, SOCIAL AND GOVERNANCE ....................................................................................................................... 162
ENVIRONMENT ............................................................................................................................................................................................................................... 163
SOCIAL RESPONSIBILITY ............................................................................................................................................................................................................ 171
CORPORATE GOVERNANCE ....................................................................................................................................................................................................... 176
FINANCIAL REVIEW AND PROSPECTUS ................................................................................................................................ 183
CONSOLIDATED FINANCIAL PERFORMANCE ........................................................................................................................................................................ 184
FINANCIAL PERFORMANCE BY BUSINESS ............................................................................................................................................................................. 192
LIQUIDITY AND CAPITAL RESOURCES .................................................................................................................................................................................... 195
MANAGEMENT AND EMPLOYEES ............................................................................................................................................ 209
MANAGEMENT ............................................................................................................................................................................................................................... 210
EMPLOYEES .................................................................................................................................................................................................................................... 231
COMPLIANCE AND INTERNAL CONTROLS ............................................................................................................................ 240
COMPLIANCE .................................................................................................................................................................................................................................. 241
RELATED PARTY TRANSACTIONS ............................................................................................................................................................................................ 244
CONTROLS AND PROCEDURES ................................................................................................................................................................................................. 246
OMBUDSMAN AND INTERNAL INVESTIGATIONS ................................................................................................................................................................ 247
SHAREHOLDER INFORMATION ................................................................................................................................................ 248
LISTING ............................................................................................................................................................................................................................................. 249
SHARES AND SHAREHOLDERS ................................................................................................................................................................................................. 251
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
SHAREHOLDERS’ RIGHTS ........................................................................................................................................................................................................... 256
DIVIDENDS ...................................................................................................................................................................................................................................... 261
ADDITIONAL INFORMATION FOR NON-BRAZILIAN SHAREHOLDERS .......................................................................................................................... 265
LEGAL AND TAX ............................................................................................................................................................................ 268
REGULATION .................................................................................................................................................................................................................................. 269
MATERIAL CONTRACTS ............................................................................................................................................................................................................... 276
LEGAL PROCEEDINGS .................................................................................................................................................................................................................. 281
TAX .................................................................................................................................................................................................................................................... 289
ADDITIONAL INFORMATION ..................................................................................................................................................... 306
LIST OF EXHIBITS .......................................................................................................................................................................................................................... 307
SIGNATURES ................................................................................................................................................................................................................................... 313
ABBREVIATIONS ............................................................................................................................................................................................................................ 314
CONVERSION TABLE .................................................................................................................................................................................................................... 316
CROSS REFERENCE TO FORM 20-F .......................................................................................................................................................................................... 317
FINANCIAL STATEMENTS .......................................................................................................................................................... 320
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Disclaimer
6
Disclaimer
In order to present information to investors in a manner more consistent with how we view our business, in
2020 we altered the structure and order of the disclosure in our annual report and Form 20-F. In this annual
report and Form 20-F for the year ended December 31, 2021 (referred to herein as our “annual report”), we
have included a cross reference guide to SEC Form 20-F under “Cross-Reference to Form 20-F”, in order to
facilitate your review.
Unless the context otherwise indicates, please consider this report the annual report of Petróleo Brasileiro
S.A. – Petrobras. Unless the context otherwise requires, the terms “Petrobras,” “we,” “us” and “our” refer to
Petróleo Brasileiro S.A. – Petrobras and its consolidated subsidiaries, joint operations and structured
entities.
Our audited consolidated financial statements, presented in U.S. dollars, included in this annual report and
the financial information contained in this annual report that is derived therefrom are prepared in
accordance with the International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board (“IASB”).
Our functional currency and the functional currency of all of our Brazilian subsidiaries is the Brazilian real
and the functional currency of most of our entities that operate outside Brazil, such as Petrobras Global
Finance B.V. or PGF, is the U.S. dollar. We have selected the U.S. dollar as our presentation currency to
facilitate a more direct comparison to other oil and gas companies.
In this annual report, references to “real,” “reais” or “R$” are to Brazilian reais and references to “U.S. dollars”
or “US$” are to United States dollars.
The 2021 GHG emissions performance results presented in this annual report will be subject to third party
audit, and although we do not expect significant differences, some changes may occur.
Forward-Looking Statements
This annual report includes forward-looking statements that are not based on historical facts and are not
assurances of future results. The forward-looking statements contained in this annual report, which
address our expected business and financial performance, among other matters, contain words such as
“believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,”
“likely,” “potential” and similar expressions (which are not the exclusive means of identifying such forward-
looking statements).
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date on which they are made. There is no assurance that the expected events, trends or
results will actually occur.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Disclaimer
7
We have made forward-looking statements that address, among other things:
our marketing and expansion strategy;
our exploration and production activities, including drilling;
our activities related to refining, import, export, transportation of oil, natural gas and oil products,
petrochemicals, power generation, biofuels and other sources of renewable energy;
our projected and targeted Capital Expenditures, commitments and revenues;
our liquidity and sources of funding;
our pricing strategy and development of additional revenue sources; and
the impact, including cost, of acquisitions and divestments.
Our forward-looking statements are not guarantees of future performance and are subject to assumptions
that may prove incorrect and to risks and uncertainties that are difficult to predict. Our actual results could
differ materially from those expressed or forecast in any forward-looking statements as a result of a variety
of assumptions and factors. These factors include, but are not limited to, the following:
our ability to obtain financing;
general economic and business conditions, including crude oil and other commodity prices, refining
margins and prevailing exchange rates;
global economic conditions;
our ability to find, acquire or gain access to additional reserves and to develop our current reserves
successfully;
uncertainties inherent in making estimates of our oil and gas reserves, including recently discovered
oil and gas reserves;
competition;
technical difficulties in the operation of our equipment and the provision of our services;
changes in, or failure to comply with, laws or regulations, including with respect to fraudulent
activity, corruption and bribery;
receipt of governmental approvals and licenses;
international and Brazilian political, economic and social developments, including the role of the
Brazilian government, as our controlling shareholder, in our business;
natural disasters, accidents, military operations, acts of sabotage, wars or embargoes;
global health crises, such as the Covid-19 pandemic;
the cost and availability of adequate insurance coverage;
our ability to successfully implement asset sales under our portfolio management program;
our ability to succesfully implement our Strategic Plan, whether that Strategic Plan remains in place,
and the direction of any subsequent strategic plans;
the outcome of ongoing corruption investigations and any new facts or information that may arise
in relation to the Lava Jato investigation;
the effectiveness of our risk management policies and procedures, including operational risk;
potential changes to the composition of our Board of Directors and our management team; and
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Disclaimer
8
litigation, such as class actions or enforcement or other proceedings brought by governmental and
regulatory agencies.
For additional information on factors that could cause our actual results to differ from expectations
reflected in forward-looking statements, see “Risks” in this annual report.
All forward-looking statements attributed to us or a person acting on our behalf are qualified in their
entirety by this cautionary statement. We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information or future events or for any other reason.
The crude oil and natural gas reserve data presented or described in this annual report are only estimates,
which involve some degree of uncertainty, and our actual production, revenues and expenditures with
respect to our reserves may materially differ from these estimates.
Documents on Display
We are subject to the information requirements of the Exchange Act, and accordingly our reports
and other information filed and furnished by us with the SEC may be inspected and copied at the
public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain further information about the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. You may also inspect our reports and other information at the offices of the
New York Stock Exchange, or NYSE, at 11 Wall Street, New York, New York 10005, on which our ADSs
are listed. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov and at
our website at www.petrobras.com.br/ir. The information available on our website is not and shall
not be deemed to be incorporated by reference to this annual report. For further information about
obtaining copies of our public filings at the NYSE, call (212) 656-5060.
We also furnish reports on Form 6-K to the SEC containing our unaudited consolidated interim
financial statements and other financial information of our company.
We also file audited consolidated financial statements, unaudited consolidated interim financial
information and other periodic reports with the CVM.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
9
Glossary
Glossary of Certain Terms used in this Annual Report
Unless the context indicates otherwise, the following terms are defined as follows:
ACL
ACR
ADR
ADS
AIP
Ambiente de Comercialização Livre (Free Marketing Environment). 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.
Ambiente de Comercialização Regulado (Regulated Marketing Environment). 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.
American Depositary Receipt.
American Depositary Share.
Production Individualization Agreement (AIP, for Acordo de Individualização da Produção).
The AIP occurs in situations where the reservoirs extends beyond the areas granted or
contracted, as regulated by the ANP.
Amex Oil
The NYSE Arca Oil Index is a price-weighted index of the leading companies involved in the
exploration, production, and development of petroleum. It measures the performance of
the oil industry through changes in the sum of the prices of component stocks. The index
was developed with a base level of 125 as of August 27, 1984.
ANEEL
ANP
The Agência Nacional de Energia Elétrica (Brazilian Electricity Regulatory Agency)
The Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (Brazilian National
Petroleum, Natural Gas and Biofuels Agency) is the federal agency that regulates the oil,
natural gas and renewable fuels industry in Brazil.
ANTAQ
The Agência Nacional de Transportes Aquaviários (Brazilian National Agency of Waterway
Transportation).
API
APS
Standard measure of oil density developed by the American Petroleum Institute.
The Associação Petrobras de Saúde (Petrobras Health Association), a non-profit
association that operates our new supplementary health care plan (Saúde Petrobras) since
2021.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
10
B3
BioQav
Brasil, Bolsa, Balcão, the Brazilian Stock Exchange.
Aviation turbine fuel used to power aircraft, produced from several biomass sources in
different production processes, also known as “biojet”, “biokerosine” or “SAF” (synthetic
aviation fuel) and named by the ANP as “Alternative Jet Fuel”, which must be added to
conventional jet fuel up to a maximum limit that varies from 10% to 50% by volume
depending on the production process, as defined in ASTM (American Society for Testing
and Materials) Annex D-7566 and ANP Resolution 778/2019.
Biofuel
Any fuel derived from the conversion of biomass as raw material (vegetable oils, algae
material, crops or animal wastes etc.) and/or produced through biological processes, such
as fermentation and others. Biofuels are considered renewable sources of energy.
Barrels
BNDES
Standard measure of crude oil volume.
Banco Nacional de Desenvolvimento Econômico e Social (Brazilian National Development
Bank).
Braskem
Braskem S.A. is currently the largest producer of thermoplastic resins in the Americas and
the largest producer of polypropylene in the United States. Its production focuses on
polyethylene (PE), polypropylene (PP) and polyvinylchloride (PVC) resins, in addition to
basic chemical inputs such as ethylene, propylene, butadiene, benzene, toluene, chlorine,
soda, and solvents, among others. Together, they make up one of the most
comprehensive portfolios in the industry by also including the green polyethylene
produced from the sugarcane, from 100% renewable sources.
Brazilian Treasury
The Tesouro Nacional (Brazilian National Treasury) is a Secretariat of the Ministry of
Economy, responsible, in Brazil, for financial programming, accounting, management of
federal public debt and financial and securities assets and the relationship with states and
municipalities. The mission of the National Treasury is managing the public accounts in an
efficient and transparent way, ensuring a balanced fiscal policy and the quality of public
expenditure, in order to contribute to the sustainable economic development.
Brent Crude Oil
A major trading classification of light crude oil that serves as a major benchmark price for
commercialization of crude oil worldwide.
CADE
Conselho Administrativo de Defesa Econômica (Administrative Council for Economic
Defense).
Câmara de Arbitragem
An arbitration chamber governed and maintained by B3.
do Mercado
Capital Expenditures or
Capital expenditures based on the cost assumptions and financial methodology adopted
in our strategic plans, which includes acquisition of intangible assets and property, plant
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
“CAPEX”
and equipment, investment in investees and other items that do not necessarily qualify as
cash flows used in investing activities, comprising geological and geophysical expenses,
pre-operating charges, purchase of property, plant and equipment on credit and
borrowing costs directly attributable to works in progress.
Glossary
11
CBA
CCUS
CEO
CFO
Acordo Coletivo de Trabalho (Collective Bargaining Agreement).
Carbon Capture, Utilization and Storage.
Chief Executive Officer.
Chief Financial Officer.
Central Bank of Brazil
The Banco Central do Brasil.
Central Depositária
The Central Depositária de Ativos e de Registro de Operações do Mercado, which serves as
the custodian of our common and preferred shares (including those represented by ADSs)
on behalf of our shareholders.
CGPAR
The Comissão Interministerial de Governança Corporativa e de Administração de
Participações Societárias da União (Interministerial Commission on Corporate
Governance and the Administration of Corporate Holdings of the Federal Government) is
the Brazilian Government institution that establishes procedures related to governance of
state-owned companies.
CGU
The Controladoria Geral da União (General Federal Inspector’s Office) is an advisory body
of the Brazilian Presidency responsible for assisting in matters related to the protection
of federal public property (patrimônio público) and the improvement of transparency in
the Brazilian executive branch, through internal control activities, public audits, and the
prevention and combat of corruption, among others.
CMN
CNODC
CNOOC
The Conselho Monetário Nacional (National Monetary Council) is the highest authority of
the Brazilian financial system, responsible for the formulation of the Brazilian currency,
exchange and credit policy, and for the supervision of financial institutions.
CNODC Brasil Petróleo e Gás Ltda.
CNOOC Petroleum Brasil Ltda.
Condensate
Hydrocarbons that are in the gaseous phase at reservoir conditions but condense into
liquid as they travel up the wellbore and reach separator conditions.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
12
CONAMA
CNPE
CVM
D&M
The Conselho Nacional do Meio Ambiente (National Council for the Environment in Brazil).
The Conselho Nacional de Política Energética (National Energy Policy Council) is an
advisory body of the President of the Republic assisting in the formulation of energy
policies and guidelines.
The Comissão de Valores Mobiliários (Brazilian Securities and Exchange Commission).
DeGolyer and MacNaughton, an independent petroleum engineer consulting firm that
conducts reserves evaluation of part of our net proved crude oil, condensate and natural
gas reserves.
Deepwater
Between 300 and 1,500 meters (984 and 4,921 feet) deep.
Depositary
JPMorgan.
Distillation
The process by which liquids are separated or refined by vaporization followed by
DoJ
E&P
ESG
condensation.
The U.S. Department of Justice.
Exploration & Production is our business segment that covers the activities of exploration,
development and production of crude oil, NGL and natural gas in Brazil and abroad.
Environmental, Social and Governance.
Eletrobras
Centrais Elétricas Brasileiras S.A.
Exchange Act
Securities Exchange Act of 1934, as amended.
EWT
Fitch
Extended well test.
Fitch Ratings Inc., a credit rating agency.
Focus Survey
The Central Bank of Brazil carries out the Focus Survey compiling forecasts of about 140
banks, asset managers and others institutions.
FPSO
Floating production, storage and offloading unit.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
13
G&P
Gas & Power is our business segment that covers the activities of logistics and trading of
natural gas and electricity, transportation and trading of LNG, generation of electricity by
means of thermoelectric power plants, as well as holding interests in transportation and
distribution companies of natural gas in Brazil and abroad. It also includes natural gas
processing and fertilizer operations.
GASLUB Cluster
(formely COMPERJ)
Located in southeastern Brazil (Itaboraí, in the state of Rio de Janeiro), the GASLUB
Cluster is comprised of the GASLUB Itaboraí UPGNs and other underlying utilities.
Gaspetro
Petrobras Gás S.A– GASPETRO is our subsidiary, in which we have a 51% equity interest
and a holding company with equity interests in 18 Brazilian local gas distribution
companies, with Mitsui holding the remaining 49% interest.
GHG
GSA
GTB
Greenhouse gas.
Long-term Gas Supply Agreement entered into with the Bolivian state-owned company
Yacimientos Petroliferos Fiscales Bolivianos.
Gás Transboliviano S.A. is a company operating in the natural gas transportation industry,
responsible for the administration and operation of the 557 km gas pipeline system in the
Bolivian section of the Bolivia-Brazil gas pipeline (“GASBOL”), with an installed capacity of
30 million m³/d. GTB is connected to TBG on the Bolivia-Brazil border in the state of Mato
Grosso do Sul.
HCC or Hydrocracking
Conversion of heavier intermediate streams into the middle distillates boiling range
(kerosene and diesel) in the presence of specific catalyst, hydrogen and severe conditions
of temperature and pressure to produce high quality fuels. Depending on feedstock
quality and operational conditions it is possible to direct production towards high quality
lubes as well.
HDT or Hydrotreating
Process widely used in oil refining industry to remove heteroatoms such as sulfur and
nitrogen from gasoline, kerosene and/or diesel in the presence of specific catalysts,
hydrogen and adequate conditions of temperature and pressure. The aim is to adjust
composition to comply with fuel specifications.
HSE
IASB
IBAMA
Health, Safety and Environment.
International Accounting Standards Board.
The Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis (Brazilian
Institute of the Environment and Renewable Natural Resources).
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
14
Ibovespa or IBOV
The gross total return index weighted by free float market cap and comprised of the most
liquid stocks traded on the B3. It was created in 1968.
IEA
IFRS
Acordo Individual de Trabalho (individual employment agreement).
International Financial Reporting Standards.
Inovar-Auto
This was a government program that proposed automotive industry to invest in research
and development of more efficient and safe vehicles in exchange for tax benefits.
IMO
IOF
IPCA
International Maritime Organization.
Imposto sobre Operações Financeiras (Brazilian taxes over financial transactions).
The Índice Nacional de Preços ao Consumidor Amplo (National Consumer Price Index).
JPMorgan
JPMorgan Chase Bank, N.A.
Lava Jato
Operação Lava Jato, as detailed in “Risks – Risks Factors” and “Legal and Tax – Legal
Proceedings – Lava Jato Investigation” in this annual report.
LIBOR
LNG
LPG
MME
Moody’s
ME
The London Interbank Offered Rate is a benchmark interest rate at which major global
banks lend to one another in the international interbank market for short-term loans.
Liquefied natural gas.
Liquefied petroleum gas, which is a mixture of saturated and unsaturated hydrocarbons,
with up to five carbon atoms, used as domestic fuel.
The Ministério de Minas e Energia (Ministry of Mines and Energy) of Brazil.
Moody’s Investors Service, Inc., a credit rating agency.
The Ministério da Economia of Brazil (Ministry of Economy, former MPDM – Ministério do
Planejamento, Desenvolvimento e Gestão).
Natural Gasoline (C5+)
Natural Gasoline C5+ is a NGL produced at natural gas processing plants with a vapor
pressure intermediate between condensate and LPG, that may compose a gasoline blend.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Nelson complexity index
It is a pure cost index that provides a relative measure of the construction costs of a
Glossary
15
(NCI)
NGL
NYSE
OCF
Oil
particular refinery based on its crude and upgrading capacity. The NCI compares the costs
of various upgrading units to the cost of a pure crude distillation unit, where more
complex refineries are able to produce, more valuable products from a barrel of oil. While
the complexity factor is independent of the refinery capacity, multiple units of the same
process, like multiple hydrotreaters or coking units, do increase complexity. The NCI is
measured on a scale of one to 20, with high numbers corresponding to more complex and
expensive refineries.
The liquid resulting from the processing of natural gas and containing the heavier
gaseous hydrocarbons.
The New York Stock Exchange.
Operating Cash Flow (net cash provided by operating activities).
Crude oil, including NGLs and condensates.
Oil Products
Produced through processing at refineries such as diesel, gasoline, liquid fuel, LPG and
other products.
ONS
OPEC
The Operador Nacional do Sistema Elétrico (National Electric System Operator) of Brazil.
Organization of the Petroleum Exporting Countries.
Operating income (loss) The line equivalent to Net income (loss) before finance income (expense), results in
equity-accounted investments and income taxes derived from our audited consolidated
financial statements.
Organic Reserves
Replacement Ratio or
Organic RRR
Measures the amount of proved reserves added to a company’s reserve base during the
year, excluding disposals and acquisitions of proved reserves, relative to the amount of oil
and gas produced.
OSRL
OTC
The Oil Spill Response Limited.
Offshore Technology Conference.
Petrochemicals
Chemicals obtained in petrochemical industries such as ethane, propene, benzene,
xylenes, polypropylene, polyethylene and others.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
PAI
PDV
Petros
Petros 2
PFLOPS
PGF
PifCo
PLR
PLSV
PPP
Glossary
16
Programa de Aposentadoria Incentivado (Incentive Retirement Program).
Programa de Desligamento Voluntário (Voluntary Severance Program).
Fundação Petros de Seguridade Social, Petrobras’ employee pension fund.
Petrobras’ sponsored pension plan.
One PFLOPS equals the processing capacity of a quadrillion mathematical operations per
second.
Petrobras Global Finance B.V.
Petrobras International Finance Company S.A.
The Participação nos Lucros e Resultados (Profit Sharing Program) is a remuneration
model based on the division of profits with our employees. Our PLR is governed by
Brazilian Law 10,101/2000 and follows the guidelines of the Secretariat of Coordination
and Governance of State-Owned Companies (“SEST”). These annual guidelines define
various aspects of this type of reward, such as format, flow, governance, financial and
remuneration limits.
Pipe laying support vessel.
The Prêmio por Performance (Performance Award Program) is part of our Variable
Remuneration Program (“PRV”), which is also comprised of the Profit Sharing Program
(“PLR”) and is aligned with our strategic objectives, motivating everyone involved to
achieve the results and goals defined by management.
Post-salt reservoir
A geological formation containing oil or natural gas deposits located above a salt layer.
PP&E
PPSA
Property, plant and equipment.
Pré-Sal Petróleo S.A.
Pre-salt Polygon
Underground region formed by a vertical prism of undetermined depth, with a polygonal
surface defined by the geographic coordinates of its vertices established by Law No.
12,351/2010, as well as other regions that may be delimited by the Brazilian Federal
Government, according to the evolution of geological knowledge.
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ANNUAL REPORT AND FORM 20-F | 2021
Glossary
17
Pre-salt reservoir
A geological formation containing oil or natural gas deposits located beneath a salt layer.
PREVIC
The Superintendência Nacional de Previdência Complementar (National Supplementary
Pension Authority).
Proved reserves
Consistent with the definitions of Rule 4-10(a) of Regulation S-X, proved oil and gas
reserves are those quantities of oil and gas, which, by analysis of geoscience and
engineering data, can be estimated with reasonable certainty to be economically
producible – from a given date forward, from known reservoirs, and under existing
economic conditions, operating methods, and government regulations. Existing economic
conditions include prices and costs at which economic producibility from a reservoir is to
be determined. The price is the unweighted arithmetic average of the first-day-of-the-
month price during the twelve- month period prior to December 31, unless prices are
defined by contractual arrangements, excluding escalations based upon future conditions.
The project to extract the hydrocarbons must have commenced or we must be reasonably
certain that we will commence the project within a reasonable time. Reserves which can be
produced economically through application of improved recovery techniques (such as
fluid injection) are included in the “proved” classification when successful testing by a
pilot project, or the operation of an installed program in the reservoir or an analogous
reservoir, provides support for the engineering analysis on which the project or program
was based.
Proved developed
reserves
Reserves that can be expected to be recovered: (i) through existing wells with existing
equipment and operating methods or for which the cost of the required equipment is
relatively minor compared to the cost of a new well; and (ii) through installed extraction
equipment and infrastructure operational at the time of the reserve estimate if the
extraction is by means not involving a well.
Proved undeveloped
Reserves that are expected to be recovered from new wells on undrilled acreage, or from
reserves
existing wells where a relatively major expenditure is required. Reserves on undrilled
acreage are limited to those directly offsetting development spacing areas that are
reasonably certain of production when drilled, unless evidence using reliable technology
exists that establishes reasonable certainty of economic producibility at greater
distances. Undrilled locations are classified as having undeveloped reserves only if a
development plan has been adopted indicating that they are scheduled to be drilled within
five years, unless the specific circumstances justify a longer time. Proved undeveloped
reserves do not include reserves attributable to any acreage for which an application of
fluid injection or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual projects in the same reservoir or an
analogous reservoir or by other evidence using reliable technology establishing
reasonable certainty.
PTAX
The reference exchange rate for the purchase and sale of U.S. dollars in Brazil, as
published by the Central Bank of Brazil.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
18
R&D
RNEST
Research and development.
The Refinaria Abreu e Lima (Abreu e Lima Refinery).
Refining, Transportation
Refining, Transportation and Marketing is our business segment that covers the activities
and Marketing
of refining, logistics, transport and trading of crude oil and oil products in Brazil and
abroad, exports of ethanol, petrochemical operations, such as extraction and processing
of shale, as well as holding interests in petrochemical companies in Brazil.
Reserves Replacement
Measures the amount of proved reserves added to a company’s reserve base during the
Ratio or RRR
year relative to the amount of oil and gas produced.
Reserves to production
Calculated as the amount of proved reserves of the year relative to the amount of oil and
ratio or R/P
gas produced during the year, indicates a number of years reserves would last if
production remains constant.
S&P
Standard & Poor’s Financial Services LLC, a credit rating agency.
Saúde Petrobras
Our new health care plan, since 2021, which replaced the AMS (Assistência Multidisciplinar
de Saúde).
SEC
SELIC
SEST
The United States Securities and Exchange Commission.
The Central Bank of Brazil base interest rate.
The Secretaria de Coordenação e Governança das Empresas Estatais (Secretariat of
Coordination and Governance of State-Owned Companies).
Sete Brasil
Sete Brasil Participações, S.A.
Shell
Shell Brasil Petróleo Ltda.
Synthetic oil and
synthetic gas
A mixture of hydrocarbons derived by upgrading (i.e., chemically altering) natural bitumen
from oil sands, kerogen from oil shales, or processing of other substances such as natural
gas or coal. Synthetic oil may contain sulfur or other non-hydrocarbon compounds and
SPE
SS
has many similarities to crude oil.
Society of Petroleum Engineers.
Semi-submersible platform.
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ANNUAL REPORT AND FORM 20-F | 2021
Glossary
19
Strategic Plan
2022-2026 Strategic Plan
TAG
TCU
TBG
Transportadora Associada de Gás S.A.
The Tribunal de Contas da União (Federal Auditor’s Office) is a constitutionally
established body linked to the Brazilian Congress, responsible for assisting it in matters
related to the supervision of the Brazilian Federal Government and its resources with
respect to accounting, finance, budget, operational and public property (patrimônio
público) matters.
Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. is a company operating in the
natural gas transportation industry, in which we have a 51% equity interest, currently
holding long-term permits to operate and manage a 2,593 km gas pipeline
system, located mainly in the South and Southeast regions of Brazil, with installed
capacity of 30 million m³/d. Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. is
connected to GTB, which permits access to Bolivian natural gas and is connected to Nova
Transportadora do Sudeste S.A.’s (“NTS”) gas pipeline, which permits access to Brazilian
natural gas.
TJLP
The Taxa de Juros de Longo Prazo (Brazil long-term interest rate) is set quarterly by the
CMN (as defined above). The rate is used as the benchmark rate for loans from the BNDES
to companies.
TotalEnergies
Total E&P do Brasil Ltda.
Transfer of Rights
Agreement
An agreement under which the Brazilian Federal Government assigned to us the right to
explore and produce up to five billion barrels of oil equivalent “bnboe”) in specified pre-
salt areas in Brazil. See “Legal and Tax —Material Contracts” in this annual report.
Transfer of Rights
Agreement (ToR)
Surplus
Volume that exceeds what has been contracted under the Transfer of Rights agreement in
specified pre-salt areas. See “Material Contracts” in this annual report.
Transpetro
Petrobras Transporte S.A.
TRI
Total recordable injury per million man-hour frequency rate.
Ultra-deepwater
Over 1,500 meters (4,921 feet) deep.
UPGN
Unidade de Processamento de Gás Natural (Natural-gas processing Units). A natural gas
processing plant is a facility designed to process raw natural gas from the offshore
production fields by separating impurities and various non-methane hydrocarbons and
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Glossary
20
fluids through different technologies to produce specified natural gas for final
consumption. Through the process a gas processing plant can also recover natural gas
liquids (condensate, natural gasoline and liquefied petroleum gas) with higher added
value.
Vibra (Formerly “BR
Vibra Energia, S.A.
Distribuidora”)
YPFB
Yacimientos Petroliferos Fiscales Bolivianos.
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ANNUAL REPORT AND FORM 20-F | 2021
Environment, Social and Governance
21
About Us
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
CONFIDENCIAL \ Qualquer Usuário
About us
22
About us
We are a Brazilian company with 45,532 employees (including subsidiaries in Brazil and abroad) committed
to being the best energy company in terms of value creation, with a focus on oil and gas, sustainability,
safety, and respect for people and the environment. We are one of the largest companies in market
capitalization in Latin America, with a market capitalization of US$69.2 billion as of December 31, 2021. We
are one of the largest producers of oil and gas in the world, primarily engaged in exploration and production,
refining, energy generation and trading. We have a large proven reserve base and have acquired expertise
in deep and ultra-deepwater exploration and production since we started exploring Brazilian offshore
basins decades ago, following our first subsea well in the Campos Basin in 1971.
Datasheet
Name of the company: Petróleo Brasileiro S.A. – Petrobras
Date of Incorporation: 1953
Country of Incorporation: Brazil
Registration number at the CVM: 951-2
Central Index Key (or “CIK”) at the SEC: 0001119639
Address of principal executive office: Avenida República do Chile 65, 20031-912, Rio de Janeiro,
RJ, Brazil
Telephone number: (55 21) 3224 2401
Corporate and investor relations websites: www.petrobras.com.br and www.petrobras.com.br/ir.
The information available on our website is not and shall not be deemed to be incorporated by
reference to this annual report.
Corporate purpose established in our Bylaws: research, extraction, refining, processing, trading
and the transport of oil, its by-products, natural gas and other fluid hydrocarbon from wells, shale
and other rocks, in addition to energy-related activities, and the research, development,
production, transport, distribution, sale and trading of all forms of energy, and other related
activities or similar purposes.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Overview
About us
23
We have a large base of proved reserves and operate and produce the majority of Brazil’s oil and gas. The
majority of our proved reserves are located in the adjacent offshore Campos and Santos Basins in southeast
Brazil. Their proximity allows us to optimize our infrastructure and limit our costs of exploration,
development and production. The Campos and Santos Basins are expected to remain the main source of
our future growth in proved reserves and oil and gas production.
Our business, however, goes beyond oil and gas exploration and production. It entails a long process
through which we get the oil and gas to our refineries and gas treatment units which are themselves in
constant evolution to supply the best products.
We operate the majority of the refining capacity in Brazil. Our refining capacity is substantially concentrated
in southeast of Brazil, within the country’s most populated and industrialized markets and adjacent to the
sources of most of our crude oil, in the Campos and Santos Basins. We meet our demand for oil products
through a planned combination of domestic refining of crude oil and oil products imports, seeking value
creation. We are also involved in the production of petrochemicals through stakes in some companies. We
distribute oil products through wholesalers and retailers.
We also participate in the Brazilian natural gas market, including the logistics, distribution and processing
of natural gas.
To meet the domestic demand, we process natural gas derived from our onshore and offshore production
(mainly from fields of the Campos, Espírito Santo and Santos Basins), import natural gas from Bolivia and
import liquefied natural gas (“LNG”) through our regasification terminals. We also participate in the
domestic power market primarily through our investments in gas-fired, fuel oil and diesel oil thermoelectric
power plants.
We currently divide our business into three main segments:
Exploration and Production (“E&P”): this segment covers the activities of exploration, development
and production of crude oil, Natural Gas Liquids (“NGL”) and natural gas in Brazil and abroad, for the
primary purpose of supplying our domestic refineries. The E&P segment also operates through
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
About us
24
partnerships with other companies, including holding interests in non-Brazilian companies in this
segment.
Refining, Transportation and Marketing (“Refining” or “RT&M”): this segment covers the activities
of refining, logistics, transport, marketing and trading of crude oil and oil products in Brazil and
abroad, exports of ethanol, petrochemical operations, such as extraction and processing of shale, as
well as holding interests in petrochemical companies in Brazil.
Gas and Power (“G&P”): this segment covers the activities of logistics and trading of natural gas and
electricity, transportation and trading of LNG, generation of electricity by means of thermoelectric
power plants, as well as holding interests in transportation and distribution companies of natural
gas in Brazil and abroad. It also includes natural gas processing and fertilizer operations.
Activities that are not attributed to the business segments are classified as “Corporate and Other
Businesses” including, notably those related to corporate financial management, corporate overhead and
other expenses, provision for the class action settlement, and actuarial expenses related to the pension and
medical benefits for retired employees and their dependents. It also comprises biofuels and distribution
businesses. The biofuels business covers the activities of production of biodiesel and its co-products and
ethanol. The distribution business covers the equity interest in our associate Vibra Energia (formerly BR
Distribuidora) until July 2021 (when we sold our remaining interest in this company), and the business for
the distribution of oil products abroad (in South America).
For further information regarding our business segments, see Notes 12 and 30 to our audited consolidated
financial statements, as well as “Operating and Financial Review and Prospects” in this annual report.
Until February 2021 we had activities in eight countries besides Brazil (i.e., Argentina, Bolivia, Colombia,
Uruguay, the U.S., Netherlands, United Kingdom and Singapore). In February 2021 we ended our operational
activities in Uruguay with the sale of our shares in the distribution company, and, in July 2021, we ended our
trading activities in the United Kingdom and have concentrated our European activities in the Netherlands
only. As a result of these changes, as of March 2022 we have activities in six countries besides Brazil (i.e.,
Argentina, Bolivia, Colombia, the U.S., the Netherlands, and Singapore).
In Latin America, our operations include upstream, marketing, and retail services. In North America, we
produce oil and gas through a joint venture. We have controlled companies that support our trading and
financial activities in Rotterdam, Houston, and Singapore. These companies act as complete and active
trading desks for markets worldwide, and are responsible for market intelligence and trading of oil, oil
products, natural gas, commodity derivatives and shipping.
We operate through 20 direct subsidiaries (18 incorporated under the laws of Brazil and two incorporated
abroad) and two direct joint operations as listed below. We also have indirect subsidiaries, including
Petrobras Global Finance B.V. (“PGF”).
Companies
Location
Our
shareholding
Other
shareholders
Petrobras Transporte S.A. – Transpetro
Brazil
100.00%
Petrobras Logística de Exploração e Produção S.A. – PB-
LOG
Brazil
100.00%
—
—
Petrobras Gás S.A. - Gaspetro
Brazil
51.00%
Mitsui Gás e Energia do Brasil
Ltda (49%)
Petrobras Biocombustível S.A.
Brazil
100.00%
—
Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. –
TBG
Brazil
51.00%
BBPP Holdings Ltda. (29%)
YPFB Transporte S.A.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Procurement Negócios Eletrônicos S.A.
Brazil
72.00%
Araucária Nitrogenados S.A.
Brazil
100.00%
Termomacaé S.A.
Termobahia S.A.
Brazil
100.00%
Brazil
98.85%
Petros (1.15%)
About us
25
(19.88%) Corumba Holding
S.À.R.L. (0.12%)
SAP Brasil Ltda. (17%)
Accenture do Brasil S.A. (11%)
—
—
Baixada Santista Energia S.A.
Brazil
100.00%
Petrobras Comercializadora de Energia S.A. – PBEN
Brazil
100.00%
—
—
Fundo de Investimento Imobiliário RB Logística – FII
Brazil
99.15%
Pentágono SA DTVM (0.85%)
Petrobras Comercializadora de Gás e Energia e
Participações S.A. – PBEN-P
Brazil
100.00%
—
Fábrica Carioca de Catalisadores S.A. – FCC(1)
Brazil
50.00%
Albemarle Brazil Holding Ltda.
(50%)
Ibiritermo S.A.(1)
Brazil
50.00%
Edison S.p.A (50%)
Petrobras International Braspetro – PIB BV
Abroad
100.00%
Braspetro Oil Services Company – Brasoil
Abroad
100.00%
Refinaria de Mucuripe S.A(2)
Brazil
100.00%
Refinaria de Canoas S.A.(2)
Brazil
100.00%
Paraná Xisto S.A.(2)
Brazil
100.00%
Refinaria de Manaus S.A.(2)
Brazil
100.00%
—
—
—
—
—
—
Associação Petrobras de Saúde(3)
Brazil
93.47%
Transpetro (6.09%)
TBG (0.26%)
Pbio (0.13%)
Termobahia (0.05%)
Joint operations.
(1)
(2) Companies legally established, with capital contribution of US$58.000 for each company, for the subsequent divestment of these refineries.
(3) A non-profit association that operates our new supplementary health care plan (Saúde Petrobras) since 2021.
For an extended list of our subsidiaries and joint operations, including each of their full names, jurisdictions
of incorporation and our percentage of equity interest, see Exhibit 8.1 to this annual report and Note 29 to
our Financial Statements. Additionally, we participate in consortia that engage in the exploration of blocks
and the production of oil fields in Brazil – see “Our Business— Exploration and Production — Overview” for
more details.
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ANNUAL REPORT AND FORM 20-F | 2021
2021 Highlights
About us
26
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
About us
27
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Environment, Social and Governance
28
Risks
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Risks
29
Risks
The nature of our operations exposes us to a number of risks that could, individually or together, have an
effect on our financial performance. We classify the risks to which we are exposed in the following groups:
(i) operational risks, (ii) financial risks, and (iii) compliance, legal and regulatory risks. We also describe
herein the risks arising from the government ownership and country risks, as well as debt and equity
securities risks.
Risk Factors
Operational Risks
We are exposed to health, environment and safety risks in our operations, which may lead to accidents,
significant losses, administrative proceedings and legal liabilities.
Activities related to the oil and gas business present high risks, generally because they involve high
temperatures and pressures. Our activities, particularly those in deep and ultra-deepwaters and refining,
present several risks, such as oil and product leakage, fires and explosions in refineries and exploration and
production units, including platforms, ships, pipelines, terminals and losses of containment in dams, among
others in assets owned or operated by us. These events can occur due to technical failures, human errors or
natural disasters, among other factors. The occurrence of one of these events, or other related incidents,
may result in health impacts on our workforce and/or surrounding communities, fatalities and
environmental damage. They can also cause material damage, production losses, financial losses and, in
certain circumstances, liability in civil, labor, criminal, environmental and administrative proceedings. As a
result, we may incur expenses related to mitigation, recovery and/or compensation for the damages caused.
We are also exposed to corporate security risks from acts of intentional interference by third parties in our
pipelines and nearby areas, especially illegal taps (thefts) of oil and oil products, mainly in the states of São
Paulo and Rio de Janeiro. If this interference continues, it may result in accidents of small or large
proportions, including leaks or damage in our facilities, increase risk to the people and the communities
around these facilities, which may affect the continuation of our operations, cause damage to our image
and lead to payment of fines and indemnities to the parties affected, all of which can negatively impact our
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Risks
30
results. For more information, please see “Our Business – Exploration and Production” and “Environment,
Social and Governance” in this annual report.
In addition, public health epidemics and pandemics such as the Covid-19 outbreak could cause health
restrictions to our workforce and, therefore, impact the operation of some of our facilities, including our
platforms, refineries, terminals, among others. This condition could have a negative impact on our results
and financial condition.
Finally, due to risks such as those mentioned above, we may face difficulties in obtaining or maintaining
operating licenses and may suffer damages to our image and reputation.
Changes in the competitive environment of the Brazilian oil and gas market may intensify the
requirements for our performance levels to remain in line with the best companies in the sector. The need
to adapt to an increasingly competitive and more complex environment may compromise our ability to
implement our current Strategic Plan or any subsequent plans adopted.
We may face greater competitive forces in the downstream market in Brazil, with the emergence of new
companies competing against us in this sector. If we are unable to maximize return on capital employed,
reduce costs, sell our products competitively, and implement new technologies in our business, we may
encounter adverse effects on our results and operations.
Additionally, in the upstream market, we may not be successful in acquiring exploration blocks in future
bidding rounds if our competitors are able to bid based on better cost and capital structures than us. In that
case, we may therefore have difficulty in repositioning our portfolio towards upstream assets that offer
higher profitability and competitive advantage, especially in the pre-salt layer, which could negatively
affect our results.
In addition, changes in the regulatory framework and inquiries regarding compliance with antitrust and
competition laws may subject us to penalties, business restrictions and difficulties in renewing concessions,
adversely affecting our operations, results and reputation.
We have signed commitment agreements with the Administrative Council for Economic Defense (“CADE”)
and the National Petroleum, Natural Gas and Biofuels Agency (“ANP”). Under the agreements, we
committed to divesting some of our shareholding interests in companies and assets in the gas
transportation and distribution segments and to renounce some of the contracted transportation network
capacity (of injection and withdrawal volumes), in furtherance of creating more competitive conditions to
encourage new economic agents to enter the downstream market. Failure to comply with these
commitment agreements may result in negative impacts such as administrative proceedings and fines, as
well as harm our image and reputation.
Failures in our information technology systems, information security (cybersecurity) systems and
telecommunications systems and services can adversely impact our operations and reputation.
Our operations are highly dependent on information technology and communications systems and services.
Interruption or malfunction affecting these systems and/ or their infrastructure, as a result of
obsolescence, technical failures and/or deliberate acts, may harm or halt our business and adversely impact
our operations and reputation.
Moreover, information security failures, including automation systems, either due to external acts,
deliberate or unintentional, such as malware, hacking and cyberterrorism, or internal ones, such as
negligence and misuse of IT systems by employees or contractors, may also cause impacts on our business,
our reputation, our relationship with stakeholders and external agents (government, regulatory bodies,
partners, suppliers and others), our strategic positioning towards our competitors and our results.
According to Brazilian Law No. 13,709/2018 – Lei Geral de Proteção de Dados Pessoais (“LGPD”), we will be
subject to penalties in cases of disclosure or misuse of personal information.
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Risks
31
Personal data currently in our possession largely includes our employees’ data, such as health information,
but also the data of clients and visitors to our facilities. Failure to comply with the requirements established
by the LGPD may result in administrative sanctions, including warnings, fines, publication of the infraction,
blocking access to personal data and elimination of personal data.
The selection and development of our investment projects have risks that may affect our expected results.
We have numerous project opportunities in our portfolio of investments. Since most projects are
characterized by a long development period, we may face changes in market conditions, such as changes in
prices, consumer preferences and demand profile, exchange and interest rates and financing conditions of
projects that may jeopardize our expected rate of return on these projects.
We also face specific risks for oil and gas projects. Despite our experience in the exploration and production
of oil in deepwater and ultra-deepwater and the continuous development of studies during the planning
stages, the quantity and quality of oil and gas produced in a certain field will only be fully known in the
phases of deployment and operation, which may require adjustments throughout the project lifecycle and
its expected rate of return.
There are also risks related to potential delays in the execution of oil and gas projects, which could result in
the mismatch of required dates between upstream and downstream projects (e.g., delay in onshore
infrastructure, impacting offshore flow of oil and gas, and onshore gas transportation). Additionally, we
face risks associated with unplanned downtime events of critical assets (such as the natural gas and LNG
chain) that can also impact offshore and onshore flow and may compromise the continuity of our business
production chain.
Furthermore, decommissioning projects have grown and become more relevant to our portfolio as
concession contracts and production systems expire. With the recent publication of Resolution ANP
817/2020, we might face some difficulties in defining the scope of these decommissioning projects and
meeting the regulation requirements, particularly in light of our and the industry’s learning curve in this
area. Although our decommissioning plans have been developed in compliance with applicable law, these
plans may face scrutiny from our stakeholders or fail to meet market demand or expectations with respect
to environmental, social and governance practices. As a result, our image and reputation may be adversely
affected, which could in turn have an adverse effect on our business, financial condition and results of
operations.
Moreover, despite our experience in exploration and production, we may face new technical challenges as
we move closer to the technology frontier.
In addition, public health epidemics and pandemics such as the Covid-19 outbreak could cause restrictions
on of our workforce, partners and suppliers, that could have an impact in the productivity of various
activities.
External factors could impact the successful implementation of our partnerships and our portfolio
management.
Pursuant to our Strategic Plan, our divestment portfolio includes several assets in different stages of the
sales process, which we expect to conclude in the coming years.
External factors, such as the decline of oil prices, exchange rate fluctuations, the deterioration of the
Brazilian economy and global economic conditions, the Brazilian political scenario, judicial and
administrative decisions, the passing of new legislation, among other unpredictable factors, may reduce,
delay or hinder sale opportunities for these assets or affect the price at which we can sell them.
Our Strategic Plan is adapted from time to time by our management; we cannot assure you that our
Strategic Plan will not be changed in the future. In the event our Strategic Plan changes based on the
decisions of the Brazilian federal government as our controlling shareholder, our divestment plan might be
revised. See “— Government Ownership and Country Risks —The Brazilian federal government, as our
controlling shareholder, may pursue certain macroeconomic and social objectives through us that may have
a material adverse effect on us” in this annual report. In addition, any changes to our Board of Directors and
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Risks
32
our management team may affect not only our ability to implement our Strategic Plan, but whether that
Strategic Plan remains in place, as well as the direction of any subsequent strategic plans, including
decisions related to the management of our operations and investments.
If we are unable to successfully implement our planned partnerships and divestments, or if our divestment
plan is modified, this may negatively impact our business, results and financial condition, including by
potentially exposing us to short and medium-term liquidity constraints.
Climate change could impact our results and strategy.
Climate change poses new challenges and opportunities for our business. With the aggravation of climate
change and advances in agreements and regulations, if we do not prepare for the new global challenges we
may incur fines and/or higher taxes, impacting our cash flow, and lose competitiveness, diminishing
shareholder value. Changes in environmental conditions could potentially impact some of the conditions
more crucial to our assets, such as water availability for our refineries and thermoelectric plants and wave,
wind and ocean current patterns for our offshore platforms.
More stringent environmental regulations, including policy-driven responses to climate change such as
regulated greenhouse gas (GHG) emission and others mitigation responses, can result in a potential
increase in our operating costs and reduce production. The Brazilian federal legislature is in the final stages
of considering the establishment of a regulatory framework for the adoption of a carbon-pricing instrument
to reduce GHG in Brazil.
Recent increases in numbers of climate litigation around the world highlight this risk. Environmental laws
that may be implemented in the future could increase litigation risks and have a material adverse effect on
us.
A growing number of investors seek to align their investments with medium and long-term climate policies.
The increased perception of climate risks by investors, together with greater regulatory restrictions related
to carbon intensive sectors, can lead to greater difficulty in accessing capital and increased costs. Investors
based in countries that have committed to the Paris Agreement with stronger decarbonization targets tend
to experience even stronger pressures in their investment decisions.
Society's increasing concerns over climate change may have negative impacts on the demand for our
products and services, such as a reduction in fossil fuel consumption due to the energy transition. The
global energy matrix may accelerate towards a more renewable profile, with the inclusion of products that
substitute fossil fuels and the increased use of electricity for urban mobility.
We foresee increasing pressure to develop and utilize technological options to improve the operational
emissions performance in order to keep pace with the demands of a low-carbon world. Risk arises from the
lack of investment and insufficient performance in technologies and products that could be applied to our
business. If we are not able to reduce our carbon emissions and demonstrate this commitment, we could be
exposed to a material adverse effect on our earnings and financial condition.
These factors may have a negative impact on the demand for our products and services and may jeopardize
or even impair the implementation and operation of our businesses, adversely impacting our results and
financial condition and limiting some of our growth opportunities.
Maintaining our long-term objectives for oil production depends on our ability to successfully obtain and
develop oil reserves.
Our ability to maintain our long-term objectives for oil production is highly dependent upon our ability to
obtain additional reserves and to successfully develop our existing reserves.
Our ability to obtain additional reserves depends upon exploration activities, which demand significant
capital investments, expose us to the inherent risks, and may not lead to the discovery of commercially
producible crude oil or natural gas reserves. We may also obtain additional reserves by proposing and
implementing new development projects. Deepwater and ultra-deepwater reservoirs exploitation demands
significant investments and involves numerous factors beyond our control, such as significant changes in
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economic conditions, delays in availability of offshore equipment and critical resources, and unexpected
operational conditions, including equipment failures or incidents, that may cause operations to be curtailed,
delayed or cancelled.
In addition, increased competition in the oil and gas sector in Brazil and our own capital constraints may
make it more difficult or costly to obtain additional acreage in bidding rounds for new contracts and to
explore existing contracted areas.
We are not insured against business interruption for our Brazilian operations, and most of our assets are
not insured against war or sabotage.
We generally do not maintain insurance coverage for business interruptions of any nature for our Brazilian
operations, including business interruptions caused by labor disputes. If, for instance, our workers or those
of our key third-party suppliers, vendors and service providers were to strike, the resulting work stoppages
could have an adverse effect on us. In addition, we do not insure most of our assets against war or sabotage.
Therefore, an attack or an incident causing an interruption of our operations could have a material adverse
effect on our results and financial condition.
Additionally, our insurance policies do not cover all types of risks and liabilities related to safety,
environment, health, government fees, fines or punitive damages, which may impact our results. There can
be no guarantee that incidents will not occur in the future, that there will be insurance to cover the damages
or that we will not be held responsible for these events, all of which may negatively impact our results.
In addition, we cannot guarantee that the amounts of insurance coverage contracted to cover risks related
to our activities will be sufficient to guarantee, in the event of a claim, the payment of all damages caused,
which may adversely affect our business and results.
Strikes, work stoppages or labor unrest by our employees or by the employees of our suppliers or
contractors could adversely affect our results and our business.
Disagreements on how we manage our business, in particular divestments and their implications for our
personnel, changes in our strategy, human resources policies regarding remuneration, benefits and
headcount, employee contributions to cover the deficit of our pension plan, implementation of regulations
recently created relating to health and pension plans and changes in labor law may lead to judicial inquiries,
labor unrest, strikes and stoppages.
Strikes, work stoppages or other forms of labor unrest at any of our facilities or in major suppliers,
contractors or their facilities or in sectors of society that affect our business could impact our ability to
continue our operations.
Our success also depends on our ability to continue to train and qualify our personnel so they can assume
qualified senior positions in the future. We cannot assure you that we will adequately allocate and train our
workforce, nor that we will be able to achieve this goal without incurring additional costs. Any such failure
could adversely affect our results and our business.
We rely on suppliers of goods and services for the operation and execution of our projects and, as a result,
we may be adversely affected by failures or delays of such suppliers.
We are susceptible to the risks of performance, product quality and capability within our supply chain. If our
suppliers and service providers delay or fail to deliver goods and services owed to us, we may not meet our
operational goals within the expected timeframe. In this case, we may ultimately need to postpone one or
more of our projects, which may have an adverse effect on our results and financial condition.
Additionally, there may be risks of delays in the customs clearance process caused by external factors, which
may impact the supply of goods to us and affect our operations and projects.
Furthermore, disruptions due to health events such as Covid-19 could have a negative impact on our results
and on our supply chain as well.
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Our projects and operations may affect, and be affected by, the expectations and dynamics of the
communities where we operate, impacting our business, image and reputation.
It is part of our policy to respect human rights and to maintain responsible relations with the communities
where we operate and to be diligent with suppliers. However, the various locations where we operate are
exposed to a wide range of issues related to political, social and economic instability, as well as intentional
acts, such as illegal diversion, crime, theft, sabotage, roadblocks and protests. We cannot control the
changes in local dynamics and the expectations of the communities where we operate and establish our
businesses.
Social impacts that result from our decisions and direct and indirect activities – especially those related to
divestments and decommissioning – and disagreements with these communities and local governments
may affect the schedule or budget of our projects, hinder our operations due to potential lawsuits, have a
negative financial impact and harm our image and reputation.
Water scarcity in some regions where we operate may impact the availability of water in the quantity
and/or quality required for our operations, as well as difficulties in obtaining grants of the right to use
water resources, impacting the business continuity of our industrial units.
We have industrial facilities that demand the use of water, ranging from large users such as refineries to
small users like distribution bases and terminals that, although not very hydro-intensive, are logistically
important within our chain. In recent years, several regions of the world, including some regions in Brazil,
have experienced events of shortage of freshwater, including for public consumption. Climate change and
related impacts may heighten this risk. In case of water scarcity, the grants pursuant to which we have the
right to use water resources may be suspended or temporarily modified and, as a result, we may be required
to reduce or suspend our production activities, because the availability of water for public consumption and
watering of animals has priority over industrial use. This may temporarily jeopardize our business
continuity, as well as generate financial impacts on us and our image.
Developments in the economic environment and in the oil and gas industry and other factors have
resulted, and may result, in substantial write-downs of the carrying amount of certain of our assets, which
could adversely affect our results and financial condition.
We evaluate on an annual basis, or more frequently when the circumstances require, the carrying amount
of our assets for possible impairment. Our impairment tests are performed by a comparison of the carrying
amount of an individual asset or a cash generating unit with its recoverable amount. Whenever the
recoverable amount of an individual asset value or cash generating unit is less than its carrying amount, an
impairment loss is recognized to reduce the carrying amount to the recoverable amount.
Changes in the economic, regulatory, business or political environment in Brazil or other markets where we
operate, such as significant decline in international crude oil and gas prices, depreciation of the real, as well
as changes in financing conditions, such as deterioration of risk perception and interest rates, for such
projects, among other factors, may affect the original profitability estimates of our projects, which could
adversely affect our results.
The ability to develop, adapt and access new technologies is fundamental to our competitiveness.
The availability of technologies that ensure the maintenance of our reserve rates and the viability of
production in an efficient manner, as well as the development of new products and processes that respond
to environmental regulations to reduce the carbon intensity of our emissions and new market trends, play
a key role in increasing our long-term competitiveness. If we are no longer at the technological frontier for
oil and gas exploration in ultra-deepwaters, our performance could weaken relative to other companies in
the sector, putting our long-term strategy at risk.
Our crude oil and natural gas reserve estimates involve some degree of uncertainty, which could
adversely affect our ability to generate income.
Our proved crude oil and natural gas reserves set forth in this annual report are the estimated quantities of
crude oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be
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economically producible from a given date forward from known reservoirs under existing economic and
operating conditions (i.e. using prices and costs as of the date the estimate is made) according to applicable
regulations. Reserve estimates presented are based on assumptions and interpretations, which are subject
to risks and uncertainties. If the geological and engineering data that we use to estimate our reserves are
not accurate, our reserves may be lower than the ones currently indicated in the volume estimates of our
portfolio and reported by companies that conduct an evaluation on our reserves estimates. In addition,
reserve estimates may be affected by significant changes in economic conditions. Downward revisions in
our reserve estimates indicate lower future production, which could have an adverse effect on our results
and financial condition.
We do not own any of the subsoil accumulations of crude oil and natural gas in Brazil.
Under Brazilian law, the Brazilian federal government owns all subsoil accumulations of crude oil and natural
gas in Brazil and, according to the Brazilian regulation, the concessionaire or contracted party owns the oil
and gas it produces from those subsoil accumulations pursuant to applicable agreements executed with the
Brazilian federal government. We possess, as a concessionaire or contracted party of certain oil and natural
gas fields in Brazil, the exclusive right to develop the volumes of crude oil and natural gas included in our
reserves pursuant to concession and other agreements. Access to crude oil and natural gas reserves is
essential to an oil and gas company’s sustained production and generation of income, and our ability to
generate income would be adversely affected if the Brazilian federal government were to restrict or prevent
us from exploiting these crude oil and natural gas reserves.
As a result of divestments and partnerships, we are exposed to risks that could lead to unforeseen
financial losses.
Upon completion of each divestment or partnership (post-closing stage), we must perform integrated
management and monitoring of the actions required and provided according to the contracts related to
each project, paying attention to the fulfillment of the obligations established for the buyer and the seller.
In the event of non-compliance with these obligations, the financial adjustments between the parties may
show results different from the ones expected at the time of divestment or partnership. In addition, as
determined by the ANP in the event of total or partial sale of our participation in E&P contracts, we remain
jointly liable for abandonment costs after the new concessionaire’s production closes, should it default on
this task. Such joint liability covers obligations arising prior to or after the transfer, provided that it arises
from activities carried out on a date prior to the transfer. The same is true for any environmental liabilities.
Additionally, our sale of assets may negatively impact existing synergies or logistical issues within our
company which may adversely affect our results.
In addition, our partners may not be able to meet their obligations, including financial obligations, which
may jeopardize the viability of some projects in which we participate. When we act as operators, our partners
may have the right to veto certain decisions, which may also affect the viability of some projects. Regardless
of the partner responsible for the operations of each E&P project, we may be exposed to the risks associated
with those operations, including litigation (where joint liability could apply) and the risk of government
sanctions arising from such partnerships, which could have a material adverse effect on our operations,
reputation, cash flow and financial condition.
We have assets and investments in other countries in South America, where the political, economic and
social situation may negatively impact our business.
Although we have significantly reduced our participation abroad, we still operate and have businesses in
several countries, particularly in South America in areas where there may be political, economic and social
instabilities. In such regions, external factors may adversely affect the results and the financial condition of
our subsidiaries in these countries, for example: (i) the imposition of price controls; (ii) the imposition of
restrictions on hydrocarbon exports; (iii) the fluctuation of local currencies against the real; (iv)
nationalization of our oil and gas reserves and our assets; (v) increases in export tax and income tax rates
for oil and oil products; and (vi) unilateral (governmental) and contractual institutional changes, including
controls on investments and limitations on new projects.
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If one or more of the risks described above occurs, we may lose part or all of our reserves in the affected
country and may also fail to achieve our strategic objectives in these countries, or in our international
operations as a whole, which may negatively impact our results and financial resources.
The performance of companies licensed to use our brands may impact our image and reputation.
Our divestment plan includes the partial or total sale of our companies in the fuel distribution segment and
some of these businesses involve licensing agreements for our brands. Once a licensee holds the right to
display our brands in products, services and communications, it can be perceived by stakeholders as
ourselves, our legitimate representative or spokesperson. Licensees’ actions or events related to their
business, such as, failures, accidents, errors in business performance, environmental crises, corruption
scandals and improper use of our brand, among other factors, may negatively impact our image and
reputation, with possible financial losses.
Financial Risks
Our cash flow and profitability are exposed to the volatility of prices of oil, gas and oil products.
Most of our revenue derives primarily from sales of crude oil, oil products and, to a lesser extent, natural
gas. International prices for oil and oil products are volatile and strongly influenced by conditions and
expectations of world supply and demand. In addition, public health epidemics and pandemics (such as the
Covid-19 pandemic) could affect oil prices and demand, which, consequently, may affect our financial
results. Volatility and uncertainty in international oil prices are structural and likely to continue. Changes in
oil prices usually result in changes in the prices of oil products and natural gas.
Currently, diesel and gasoline prices are defined taking into account the international import parity price,
margins to remunerate the risks inherent in our operations and the level of market share. Price adjustments
can be made at any time. Since one of our pricing objectives is to maintain fuel prices in parity with global
market trends, substantial or extended declines in international crude oil prices may have a material adverse
effect on our business, results and financial condition, and may also affect the value of our proved reserves.
Additionally, the periodicity of the fuel readjustments, determined by us, may be revised due to exogenous
factors that affect our customers, such as the transportation sector, among others and consequently, our
business.
In the past, our management has adjusted our pricing of oil, gas and oil products from time to time. In the
future, there may be periods during which our product prices will not be at parity with international product
prices. Actions and legislation imposed by the Brazilian government, as our controlling shareholder, could
affect these pricing decisions. The Brazilian President has, at times, made statements regarding the need
to modify and adjust our pricing policy for domestic conditions. In view of the statements made by the
Brazilian President, a new management team or Board of Directors may propose changes to our pricing
policies, including a decision that such policies may not seek for alignment with international price parity.
See “—Government Ownership and Country Risks —The Brazilian federal government, as our controlling
shareholder, may pursue certain macroeconomic and social objectives through us that may have a material
adverse effect on us.” We cannot guarantee that our way of setting prices will not change in the future.
Changes to our fuel pricing policy could have a material adverse impact on our businesses, results, financial
condition, and the value of our securities.
Market fluctuations, related to political instability, acts of terrorism, armed conflict and war in various
regions of the world, may have a material adverse effect on our business.
Geopolitical risk factors have recently become more prominent in the world. As a result of the ongoing
military conflict involving Russia and Ukraine, the price of WTI and natural gas prices have remained
extremely volatile. Such military conflict and the effect of the resulting economic sanctions imposed on
Russia and certain Russian citizens and enterprises could have a negative effect on the global economy,
including Brazil. As of the date of this annual report, we are unable to predict the extent of this conflict and
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its impacts on our business. Potential supply chain disruptions, as well as high oil and natural gas prices,
could have an adverse effect on the demand for our goods and services and the price of our securities.
Other events that may lead to market fluctuations could affect, directly or indirectly, the oil industry, which
could negatively impact our business and result in substantial losses.
We have substantial liabilities and may be exposed to significant liquidity constraints in the near and
medium term, which could materially and adversely affect our financial condition and results.
We have incurred in a substantial amount of debt related to investments decisions taken in the past and in
order to finance the capital expenditures needed to meet our long-term objectives.
Since there may be liquidity restrictions on the debt market to finance our planned investments and repay
principal and interest obligations under the terms of our debt, any difficulty in raising significant amounts
of debt capital in the future may impact our results and the ability to fulfill our Strategic Plan or any
subsequent plan adopted.
The loss of our investment grade credit rating and any further lowering of our credit ratings could have
adverse consequences on our ability to obtain financing in the market through debt or equity securities, or
may impact our cost of financing, also making it more difficult or costly to refinance maturing obligations.
The impact on our ability to obtain financing and the cost of financing may adversely affect our results and
financial condition.
In addition, our credit rating is sensitive to any change in the credit rating of the Brazilian federal
government. Any further lowering of the Brazilian sovereign’s credit ratings may have additional adverse
consequences on our ability to obtain financing or the cost of our financing, and consequently, on our
results and financial condition.
We are vulnerable to increased debt service resulting from depreciation of the real in relation to the U.S.
dollar and increases in prevailing market interest rates.
As of December 31, 2021, 87.3% of our finance debt was denominated in currencies other than the real. A
further depreciation of the real against other currencies will increase our debt service in reais, as the amount
of reais necessary to pay principal and interest on foreign currency debt will increase with this depreciation.
Foreign exchange variations may have an immediate impact on our reported income. Following a
depreciation of the real, some of our operating expenses, capital expenditures, investments and import
costs will increase. As most of our revenues are denominated in reais but linked to Brent prices in U.S.
dollars, unless we increase the prices of our products in the local market to reflect the depreciation of the
real, our cash generation relative to our capacity to service debt may decline.
To the extent we refinance our maturing obligations with newly contracted debt, we may incur additional
interest expense.
As of December 31, 2021, 37.3% of our finance debt consisted of floating rate debt. We generally do not
enter into derivative contracts or similar financial instruments or make other arrangements with third
parties to hedge against the risk of an increase in interest rates.
To the extent that such floating rates rise, we may incur in additional expenses. Moreover, as we refinance
our existing debt in the coming years, the mix of our indebtedness may change, specifically as it relates to
the ratio of fixed to floating interest rates, the ratio of short-term to long-term debt, and the currencies in
which our debt is denominated or to which it is indexed.
Changes that affect the composition of our debt and cause rises in short or long-term interest rates may
increase our debt service payments, which could have an adverse effect on our results and financial
condition.
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The obligations relating to our pension plan (“Petros”) and health care benefits are estimates, which are
reviewed annually, and may diverge from actual future contributions due to changes in market and
economic conditions, as well as changes in actuarial assumptions.
The criteria used for determining commitments relating to pension and health care plan benefits are based
on actuarial and financial estimates and assumptions with respect to (i) the calculation of projected short-
term and long-term cash flows and (ii) the application of internal and external regulatory rules. Therefore,
there are uncertainties inherent in the use of estimates that may result in differences between the
forecasted value and the actual realized value. In addition, the financial assets held by Petros to cover
pension obligations are subject to risks inherent to investment management and such assets may not
generate the necessary returns to cover the relevant liabilities, in which case extraordinary contributions
from us, as sponsor, and the participants, may be required.
In addition, we and Petros face risks relating to pension funds in lawsuits that may occasionally require
additional disbursements from us.
With respect to health care benefits, the projected cash flows can also be impacted by (i) higher medical
costs than expected; (ii) additional claims arising from the extension of benefits; and (iii) difficulties in
adjusting the contributions of participants to reflect increases in health care costs.
These risks may result in an increase in our liabilities and may adversely affect our results and our financial
conditions.
We are exposed to the credit risks of certain of our customers and associated risks of default. Any
material nonpayment or nonperformance by some of our customers could adversely affect our cash flow,
results and financial condition.
Some of our customers may experience financial constraints or liquidity issues that could have a significant
negative effect on their creditworthiness. Severe financial issues encountered by our customers could limit
our ability to collect amounts owed to us, or to enforce the performance of obligations owed to us under
contractual arrangements.
In addition, many of our customers finance their activities through their cash flows from operations, the
incurrence of short and long-term debt.
Declining economic conditions in Brazil, and resulting decreased cash flows, combined with a lack of debt or
equity financing for our customers may affect us, since many of our customers are Brazilian and may have
significantly reduced liquidity and limited ability to make payments or perform their obligations.
This could result in a decrease in our cash flow and may also reduce or curtail our customers’ future demand
for our products and services, which may have an adverse effect on our results and financial condition.
Compliance, Legal and Regulatory Risks
We may incur losses and spend time and financial resources defending pending litigations and
arbitrations.
We are currently party to numerous legal, administrative and arbitration proceedings relating to civil,
administrative, tax, labor, environmental and corporate claims filed against us. These claims involve
substantial amounts of money and other remedies, and the aggregate cost of unfavorable decisions could
have a material adverse effect on our results and financial condition.
We may be frequently affected by changes in rules and regulation.
In addition, changes in rules and regulations applicable to us may have a material adverse effect on our
financial condition and results.
These legal, administrative and arbitration proceedings can have a negative impact on our results due to
their outcome, such as contracts’ termination and/or the revision of governmental authorizations.
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Depending on the outcome, litigation can result in restrictions on our operations and have a material
adverse effect on some of our businesses.
Failures to prevent, detect in a timely manner, or correct behaviors inconsistent with our ethical principles
and rules of conduct may have a material adverse effect on our results and financial condition.
We are subject to the risk that our management, employees, contractors, or any person doing business with
us may engage in fraudulent activity, corruption or bribery, circumvent or override our internal controls and
procedures or misappropriate or manipulate our assets for their personal benefit or of third parties, against
our interest.
This risk is heightened by the fact that we have many complex, high value contracts with local and foreign
suppliers, as well as the geographic distribution of our operations and the wide variety of counterparties
involved in our business.
We cannot guarantee that all our employees and contractors will comply with our principles and rules of
ethical behavior and professional conduct aimed at guiding our management, employees and service
providers. Any failure, whether actual or perceived, to abide by our ethical principles or to comply with
applicable governance or regulatory obligations could harm our reputation, limit our ability to obtain
financing and have a material adverse effect on our results and financial condition, if not detected in a
timely manner.
We are subject to the risk that our internal controls may become inadequate in the future because of
changes in conditions, or that our degree of compliance with our policies and procedures may deteriorate.
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect
misstatements. It is also difficult to project the effectiveness of internal control over financial reporting for
future periods, as our controls may become inadequate because of changes in conditions, or because our
degree of compliance with our policies or procedures may deteriorate and we cannot be certain that in the
future additional material weaknesses will not occur or otherwise be identified in a timely manner.
Any failure to maintain our internal control over financial reporting could adversely impact our ability to
report our financial results in future periods accurately and in a timely manner, and to file required forms
and documents with government authorities, including the SEC. We may also be unable to detect
accounting errors in our financial reports or may even have to restate our financial results. Any of these
occurrences may adversely affect our business and operation, and may generate negative market reactions,
potentially affecting our financial conditions leading to a decline of our shareholder value.
Potential adverse developments in the Lava Jato investigation or other future investigations regarding
the possibility of noncompliance with the U.S. Foreign Corrupt Practices Act could adversely affect us.
Violations of this or other laws may require us to pay fines and expose us and our employees to criminal
sanctions and civil suits.
The Lava Jato investigation is still in progress by Brazilian authorities and additional relevant information
affecting our interests may come to light. Adverse developments could negatively impact us and could
divert the efforts and attention of our management team from our ordinary business operations. In
connection with any further investigations or proceedings carried out by any authorities in Brazil or in any
other jurisdiction arising out of Lavo Jato, or other possible noncompliance with the U.S. Foreign Corrupt
Practices Act or other laws, we may be required to pay fines or other financial relief, or consent to injunctions
or orders on future conduct or suffer other penalties, any of which could have a material adverse effect on
us.
We may face additional proceedings related to the Lava Jato investigation.
We are currently party to a collective action commenced in the Netherlands, an arbitration proceeding in
Argentina, and arbitration and judicial proceedings commenced in Brazil concerning the Lavo Jato
investigation. In each case, the proceedings were brought by investors (or entities that allegedly represent
investors’ interests) who purchased our shares traded on the B3 Stock Exchange or other securities issued
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by us outside of the United States, alleging damages caused by facts uncovered in the Lava Jato
investigations.
In Argentina, we are the defendant in two criminal lawsuits. The first lawsuit alleges non-compliance by us
with the obligation to disclose to the Argentinian market a pending class action filed by Consumidores
Financieros Asociación Civil para su Defensa before the Judicial Commercial Courts, pursuant to provisions
of Argentine capital markets law. The second criminal action alleges a fraudulent offer of securities
aggravated by allegedly false information included in our financial statements issued prior to 2015.
In addition, EIG Management Company, LLC (“EIG Management”) and eight of EIG Management’s managed
funds (“EIG Funds”) (together with EIG Management, “EIG”) filed a complaint against us on February 23,
2016 before the United States District Court for the District of Columbia. The dispute arises out of the EIG
Funds’ indirect purchase of equity interests in Sete Brasil Participações S.A., and EIG currently has claims
against us for fraud and aiding and abetting fraud related to the Lava Jato investigation. EIG seeks damages
of at least US$221 million.
It is possible that additional complaints or claims might be filed in the United States, Brazil, or elsewhere
against us relating to the Lava Jato investigation in the future. It is also possible that further information
damaging to us and our interests will come to light in the course of the ongoing investigations of corruption
by Brazilian authorities. Our management may be required to direct its time and attention to defending
these claims, which could prevent them from focusing on our core business.
In addition, as a result of the continuing Lava Jato investigation, substantive additional information may
come to light in the future that would make the estimate that we made in 2014 for overpayments incorrectly
capitalized appear, retrospectively, to have been materially low or high. In prior years, we were required to
write off capitalized costs representing amounts that we overpaid for the acquisition of property, plant and
equipment. We may be required to restate our financial statements to further adjust the write offs
representing the overstatement of our assets recognized in our audited consolidated financial statements
for prior years.
Differing interpretations and numerous environmental, health and safety regulations and industry
standards that are becoming more stringent may result in increased capital and operating expenditures
and decreased production.
Our activities are subject to evolving industry standards and best practices, and a wide variety of federal,
state and local laws, regulations and permit requirements relating to the protection of human health, safety
and the environment, both in Brazil and in other jurisdictions where we operate. These laws, regulations and
requirements may result in significant costs, which may have a negative impact on the profitability of the
projects we intend to implement or may make such projects economically unfeasible.
Any substantial increase in expenditures for compliance with environmental, health or safety regulations
may have a material adverse effect on our results and financial condition. These increasingly stringent laws,
regulations and requirements may result in significant decreases in our production, including unplanned
shutdowns, which may also have a material adverse effect on our results and financial condition.
Moreover, we have operational units in several metropolitan regions of the country and, in some of these
locations, the concentration of pollutants generated by a variable set of polluters (industries, passenger
cars, trucks, etc.) may exceed the air quality standards defined by legislation. In 2018, more restrictive air
quality standards were defined by federal and state environmental agencies, which may increase the
demands for implementation of technological improvements that provide the reduction of air pollution on
industrial units like refineries, electric power plants and terminals installed in regions that already have air
quality problems. This could include obstacles to obtaining or renewing operating licenses and the need to
adopt new environmental control practices such as new types of practices, increasing the frequency of
monitoring emissions and installing new environmental protection equipment, generating higher costs for
us. There is also a risk that the use of fuels will be subject to restrictions related to the level of pollutant
emissions, which may increase the need for investments in refineries or loss of market. It is possible that
our efforts to comply with such regulations will result in increased expenditures, and failure to comply with
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such regulations could cause damage to our public image and lead to payment of fines and indemnities to
the parties affected.
In addition, changes in interpretation or differing interpretations regarding environmental, health and
safety regulations, as well as our decision to settle any claims related to such regulations, could have a
material adverse effect on our financial condition and results.
Differing interpretations of tax regulations or changes in tax policies could have an adverse effect on our
financial condition and results.
We are subject to tax rules and regulation that may be interpreted differently over time, or that may be
interpreted differently by us and Brazilian tax authorities (including the federal, state and municipal
authorities), which could have a financial impact on our business. In some cases, when we have exhausted
all administrative appeals relating to a tax contingency, further appeals must be made in the judicial courts,
which may require that, in order to appeal, we provide collateral to judicial courts, such as the deposit of
amounts equal to the potential tax liability in addition to accrued interest and penalties. In certain of these
cases, settlement of the matter may be a more favorable option for us.
We may face similar situations in which our interpretation of a tax regulation may differ from that of tax
authorities, or tax authorities may dispute our interpretation and we may eventually take unanticipated
provisions and charges. In addition, the eventual settlement of one tax dispute may have a broader impact
on other tax disputes. Any of these occurrences could have a material adverse effect on our financial
condition and results.
Differences in interpretations and new regulatory requirements by the agencies in our industry may result
in our need for increased investments, expenses and operating costs, or may cause delays in production.
Our activities are subject to regulation and supervision by regulatory agencies, such as ANEEL, ANP, ANTAQ
and CADE. Issues such as market concentration across the natural gas and downstream value chains, local
content requirements, procedures for the unification of areas, definition of reference prices for the
calculation of royalties and governmental participation, oil products specifications, rules related to the
temporary and definitive abandonment of wells, among others, are subject to a regulatory regime overseen
by Brazilian regulatory agencies.
Any regulatory change, as well as change or differences of interpretation between us and regulatory
agencies may materially impact our results, since such newly enacted or revised pronouncements or
interpretations may directly affect the economic and technical assumptions that guide our investment
decisions.
We are subject to sanctions or the granting of environmental licenses and permits, that may result in
delays to deliver some of our projects and difficulties to reach our crude oil and natural gas production
objectives.
Our activities are subject to and depend on the granting of environmental licenses and permits by a wide
variety of federal, state and local laws, relating to the protection of human health, safety and the
environment, both in Brazil and in other jurisdictions in which we operate. As environmental, health and
safety regulations become increasingly complex, it is possible that our efforts to comply with such laws and
regulations will increase substantially in the future.
We cannot ensure that the planned schedules and budgets of our projects, including the decommissioning
of mature fields and divestments, will not be affected by demands of new regulatory bodies or that the
relevant licenses and permits will be transferred or issued in a timely manner. Potential delays in obtaining
licenses may impact our crude oil and natural gas production objectives, negatively influencing our results
and financial condition.
We are also subject to sanctions that may result in delays in the execution of some of our projects and
difficulties in achieving our oil and natural gas production objectives, such as embargoes or partial or total
interdictions.
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Operations with related parties may not be properly identified and handled.
According to our Related Party Transactions Policy, transactions with related parties must be entered into
on market terms, executed in the best interest of the company, without conflict of interest and in
compliance with the necessary requirements: competitiveness, compliance, transparency, equity and
reciprocity. Decision processes surrounding such transactions must be objective and documented. Further,
we must comply with rules related to adequate disclosure of information, in accordance with the applicable
legislation and as determined by the CVM and the SEC. The possible failure of our process to identify and
deal with these situations may adversely affect our economic and financial condition, as well as lead to
regulatory assessments by agencies.
We may be required by courts to guarantee the supply of products or services to defaulted counterparties.
As a company controlled by the federal government and operating throughout Brazil, we may be required
by the Brazilian courts to provide products and services to clients, whether public or private institutions,
with the purpose of guaranteeing supplies to the domestic oil and gas market, even in situations where
these clients and institutions are in default with contractual or legal obligations or where no contractual or
legal obligation to provide those services or products exists. See “Legal and Tax – Legal Proceedings” in this
annual report. Although we typically appeal these decisions to higher courts, a requirement that we provide
such supply in exceptional situations may adversely affect our financial position.
Government Ownership and Country Risks
The Brazilian federal government, as our controlling shareholder, may pursue certain macroeconomic
and social objectives through us that may have a material adverse effect on us.
Our Board of Directors consists of a minimum of seven and a maximum of eleven members, who are elected
at our shareholders’ meeting for a term of up to two years, with a maximum of three consecutive reelections
allowed. Brazilian law requires that the Brazilian federal government owns a majority of our voting stock,
and so long as it does, the Brazilian federal government will have the power to elect a majority of the
members of our Board of Directors and, through them, the executive officers who are responsible for our
day-to-day management. As a result, we may engage in activities that give preference to the objectives of
the Brazilian federal government rather than to our own economic and business objectives, which may have
an adverse effect on our results and financial condition. The interests of our controlling shareholder may
differ from the interests of our other shareholders, and the decisions taken by our controlling shareholder
may involve different considerations, strategies and policies than they have in the past.
Presidential elections in Brazil occur every four years, and changes in elected representatives may lead to a
change of the members of our Board of Directors appointed by the controlling shareholder or changes in
our management team, which may further impact the implementation of our business strategy, including
our Strategic Plan, Pricing Policy, Dividend Policy and guidelines, as mentioned above.
As our controlling shareholder, the Brazilian federal government has guided and may continue to guide
certain macroeconomic and social policies through us, pursuant to Brazilian law. Accordingly, we may make
investments, incur costs and engage in transactions on terms that may have an adverse effect on our results
and financial condition.
For further information relating to potential changes to the composition of our Board of Directors, see
“Management and Employees – Management – Board of Directors” in this annual report.
Fragility in the performance of the Brazilian economy, regulatory changes and investor perception of
these conditions may adversely affect the results of our operations and our financial performance and
may have a material adverse effect on us.
Our activities are strongly concentrated in Brazil. Economic policies adopted by the Brazilian federal
government may have important effects on Brazilian companies, including us, and on market conditions
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and prices of Brazilian securities. Our financial condition and results may be adversely affected by several
factors, such as:
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43
exchange rate movements and volatility;
inflation;
financing of government fiscal deficits;
price instability;
interest rates;
liquidity of domestic capital and lending markets;
tax policy;
regulatory policy for the oil and gas industry, including pricing policy and local content requirements;
allegations of corruption against political parties, elected officials or other public officials, including
allegations made in relation to the Lava Jato investigation; and
other diplomatic, social and economic developments in or affecting Brazil.
Uncertainty over whether the Brazilian federal government will implement changes in policy or regulations
that may affect any of the factors mentioned above or other factors in the future may lead to economic
uncertainty in Brazil and increase the volatility of the Brazilian securities market and securities issued
abroad by Brazilian companies, which may have a material adverse effect on our results and financial
condition.
Instability in the Brazilian Political Environment.
The Brazilian economy has been and continues to be affected by political events in Brazil, which have also
affected the confidence of investors and the public in general, adversely affecting the performance of the
Brazilian economy and resulting in heightened volatility in the Brazilian securities markets. You should
make your own assessment about Brazil and prevailing conditions in the country before deciding to invest
in us.
The Brazilian political environment has been considered polarized in the past few years. Brazil had not fully
recovered from the impact of the 2015-2016 economic crisis when the country began feeling the effects of
the Covid-19 pandemic in early 2020, which severely affected the economy and increased political tensions.
The Brazilian government’s policies to address economic and fiscal reforms in response to the Covid-19
pandemic remain divisive issues for Brazilian society. Any developments to the current political situation or
any new relevant facts in connection with the Brazilian political situation could adversely affect Brazil’s
economic growth and, in turn, affect our financial condition and results of operations.
In addition, any difficulties of the Brazilian government in obtaining a majority vote in the national congress
to implement reforms may result in congressional gridlock and political unrest, which could adversely affect
us. Uncertainties relating to the implementation by the Brazilian government of changes to monetary, fiscal
and social security policies and related legislation may contribute to economic instability and heighten
market volatility and may materially and adversely affect us.
Allegations of political corruption against members of the Brazilian government could create economic
and political instability.
In the past, members of the Brazilian federal government and the Brazilian legislative branch have faced
allegations of political corruption. As a result, a number of politicians, including senior federal officials and
congressmen, resigned or have been arrested.
Currently, elected officials and other public officials in Brazil are being investigated for allegations of
unethical and illegal conduct identified during the Lava Jato investigation being conducted by the Office of
the Brazilian Federal Prosecutor. The potential outcome of these investigations is unknown, but they have
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already had an adverse impact on the image and reputation of the implicated companies (including us), in
addition to the adverse impact on general market perception of the Brazilian economy. These proceedings,
their conclusions or further allegations of illicit conduct could have additional adverse effects on the
Brazilian economy. Such allegations may lead to further instability, or new allegations against Brazilian
government officials and others may arise in the future, which could have a material adverse effect on us.
We cannot predict the outcome of any such allegations nor their effect on the Brazilian economy.
Equity and Debt Securities Risks
The size, volatility, liquidity or regulation of the Brazilian securities markets may curb the ability of
holders of ADSs to sell the common or preferred shares underlying our ADSs.
Our shares are among the most liquid traded on the B3, but overall, the Brazilian securities markets are
smaller, more volatile and less liquid than the major securities markets in the United States and other
jurisdictions, and may be regulated differently from the way in which U.S. investors are accustomed. Factors
that may specifically affect the Brazilian equity markets may limit the ability of holders of ADSs to sell the
common or preferred shares underlying our ADSs at the price and time they desire.
Holders of our ADSs may be unable to exercise preemptive rights with respect to the common or preferred
shares underlying the ADSs.
Holders of ADSs who are residents of the United States may not be able to exercise the preemptive rights
relating to the common or preferred shares underlying our ADSs unless a registration statement under the
Securities Act is effective with respect to those rights or an exemption from the registration requirements
of the Securities Act is available. We are not obligated to file a registration statement with respect to the
common or preferred shares relating to these preemptive rights, and therefore we may not file any such
registration statement. If a registration statement is not filed and an exemption from registration does not
exist, JPMorgan, as depositary, will attempt to sell the preemptive rights, and holders of ADSs will be
entitled to receive the proceeds of the sale. However, the preemptive rights will expire if the depositary
cannot sell them. For a more complete description of preemptive rights with respect to the common or
preferred shares, see “Shareholder Information – Shareholders’ Rights – Other Shareholders’ Rights” in this
annual report.
If holders of our ADSs exchange their ADSs for common or preferred shares, they risk losing the ability to
timely remit foreign currency abroad and other related advantages.
The Brazilian custodian for our common or preferred shares underlying our ADSs must obtain a certificate
of registration from the Central Bank of Brazil to be entitled to remit U.S. dollars abroad for payments of
dividends and other distributions relating to our preferred and common shares or upon the disposition of
the common or preferred shares.
The conversion of ADSs directly into ownership of the underlying common or preferred shares is governed
by CMN Resolution No. 4,373 and foreign investors who intend to do so are required to appoint a
representative in Brazil for the purposes of CMN Resolution No. 4,373, who will be in charge for keeping and
updating the investors’ certificates of registrations with the Central Bank of Brazil, which entitles registered
foreign investors to buy and sell directly on the B3. Such arrangements may require additional expenses
from the foreign investor. Moreover, if such representatives fail to obtain or update the relevant certificates
of registration, investors may incur in additional expenses or be subject to operational delays which could
affect their ability to receive dividends or distributions relating to the common or preferred shares or the
return of their capital in a timely manner.
The custodian’s certificate of registration or any foreign capital registration directly obtained by such
holders may be affected by future legislative or regulatory changes, and we cannot assure such holders that
additional restrictions applicable to them, the disposition of the underlying common or preferred shares,
or the repatriation of the proceeds from the process will not be imposed in the future.
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Holders of our ADSs may face difficulties in protecting their interests.
Our corporate affairs are governed by our Bylaws and Law No. 6,404/76 (“Brazilian Corporate Law”), which
differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States
or elsewhere outside Brazil. In addition, the rights of an ADS holder, which are derivative of the rights of
holders of our common or preferred shares, as the case may be, to protect their interests are different under
Brazilian Corporate Law than under the laws of other jurisdictions. Rules against insider trading and self-
dealing and the preservation of shareholder interests may also be different in Brazil than in the United
States. In addition, the structure of a class action in Brazil is different from that in the U.S. Under Brazilian
law, shareholders in Brazilian companies do not have standing to bring a class action, and under our Bylaws
must, generally with respect to disputes concerning rules regarding the operation of the capital markets,
arbitrate any such disputes. See “Shareholder Information – Shares and Shareholders – Dispute Resolution”
in this annual report.
We are a state-controlled company organized under the laws of Brazil, and all of our directors and officers
reside in Brazil. Substantially all of our assets and those of our directors and officers are located in Brazil.
As a result, it may not be possible for holders of ADSs to effect service of process upon us or our directors
and officers within the United States or other jurisdictions outside Brazil or to enforce against us or our
directors and officers’ judgments obtained in the United States or other jurisdictions outside Brazil.
Because judgments of U.S. courts for civil liabilities based upon the U.S. federal securities laws may only be
enforced in Brazil if certain requirements are met, holders of ADSs may face greater difficulties in protecting
their interest in actions against us or our directors and officers than would shareholders of a corporation
incorporated in a state or other jurisdiction of the United States.
Holders of our ADSs do not have the same voting rights as our shareholders. In addition, holders of ADSs
representing preferred shares do not have voting rights.
Holders of our ADSs do not have the same voting rights as holders of our shares. Holders of our ADSs are
entitled to the contractual rights set forth for their benefit under the deposit agreements. ADS holders
exercise voting rights by providing instructions to the depositary, as opposed to attending shareholders’
meetings or voting by other means available to shareholders. In practice, the ability of a holder of ADSs to
instruct the depositary as to voting will depend on the timing and procedures for providing instructions to
the depositary, either directly or through the holder’s custodian and clearing system.
In addition, a portion of our ADSs represents our preferred shares. Under Brazilian Corporate Law and our
Bylaws, except for specific situations, holders of preferred shares do not have the right to vote in
shareholders’ meetings. Holders of ADSs representing preferred shares are not entitled to vote most of
decisions as well. See “Shareholders – Shareholders’ Rights – Shareholders’ Meetings and Voting Rights” in
this annual report.
The market for PGF’s debt securities may not be liquid.
Some of PGF’s notes are not listed on any securities exchange and are not quoted through an automated
quotation system. Most of PGF’s notes are currently listed both on the NYSE and the Luxembourg Stock
Exchange and trade on the NYSE Euronext and Euro Multilateral Trading Facility (“MTF”) market,
respectively, although most trading in PGF’s notes occurs over-the-counter. PGF can issue new notes that
can be listed in markets other than the NYSE and the Luxembourg Stock Exchange and traded in markets
other than the NYSE Euronext and the Euro MTF market. We can make no assurance as to the liquidity of or
trading markets for PGF’s notes. We cannot guarantee that the holders of PGF’s notes will be able to sell
their notes in the future. If a market for PGF’s notes does not develop, holders of PGF’s notes may not be
able to resell the notes for an extended period of time, if at all.
We would be required to pay judgments of Brazilian courts enforcing our obligations under the guaranty
relating to PGF’s notes only in reais.
If proceedings were brought in Brazil seeking to enforce our obligations in respect of the guaranty relating
to PGF’s notes, we would be required to discharge our obligations only in reais. Under Brazilian exchange
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controls, an obligation to pay amounts denominated in a currency other than reais, which is payable in Brazil
pursuant to a decision of a Brazilian court, will be satisfied in reais at the rate of exchange in effect on the
date of payment, as determined by the Central Bank of Brazil.
A finding that we are subject to U.S. bankruptcy laws and that the guaranty executed by us was a
fraudulent conveyance could result in PGF noteholders losing their legal claim against us.
PGF’s obligation to make payments on the PGF notes is supported by our obligation under the
corresponding guaranty. We have been advised by our external U.S. counsel that the guaranty is valid and
enforceable in accordance with the laws of the State of New York and the United States. In addition, we have
been advised by our general counsel that the laws of Brazil do not prevent the guaranty from being valid,
binding and enforceable against us in accordance with its terms. In the event that U.S. federal fraudulent
conveyance or similar laws are applied to the guaranty, and we, at the time we entered into the relevant
guaranty:
were or are insolvent or rendered insolvent by reason of our entry into such guaranty;
were or are engaged in business or transactions for which the assets remaining with us constituted
unreasonably small capital; or
intended to incur or incurred, or believed or believe that we would incur, debts beyond our ability to
pay such debts as they mature; and
in each case, intended to receive or received less than reasonably equivalent value or fair
consideration therefor, then our obligations under the guaranty could be avoided, or claims with
respect to that agreement could be subordinated to the claims of other creditors. Among other
things, a legal challenge to the guaranty on fraudulent conveyance grounds may focus on the
benefits, if any, realized by us as a result of the issuance of the PGF notes. To the extent that the
guaranty is held to be a fraudulent conveyance or unenforceable for any other reason, the holders
of the PGF notes would not have a claim against us under the relevant guaranty and would solely
have a claim against PGF. We cannot ensure that, after providing for all prior claims, there will be
sufficient assets to satisfy the claims of the PGF noteholders relating to any avoided portion of the
guaranty.
Corporate Risk Management
We believe that integrated and proactive risk management is essential for the delivery of results in a safe
and sustainable way. Our risk-management process is coordinated by a corporate area, allowing the
standardization and uniformity of risk analysis and the management of risk responsibilities. We have an
executive risk committee to advise our Board of Executive Officers in the analysis of matters relating to risk
management. Each of our organizational units must identify, prioritize, monitor and, together with our
business risks teams, periodically communicate to the executive risk committee the main risks involved in
the activities performed by such unit, as well as planned mitigating actions.
In order to assist in this process, our corporate risk management policy establishes guidelines and
responsibilities and is based on the following fundamental principles:
respect for life and life diversity;
full alignment and consistency with our Strategic Plan;
ethical behavior and compliance with legal and regulatory requirements;
integrated risk management; and
the risk response actions consider the possible long-term cumulative consequences, the possible
impacts on our stakeholders and should be oriented towards preserving or adding value and for
business continuity.
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The risk management organizational structure, that is under the supervision of our CFO, is responsible for:
establishing a corporate methodology for risk management guided by an integrated and systemic
view, which allows for an environment of continuous monitoring of risks in several hierarchical levels;
disseminating knowledge and supporting the use of risk management practices in organizational
units; and
identifying, monitoring and reporting periodically to our Board of Executive Officers and Board of
Directors regarding our major risks.
In order to support the risk management process, our corporate risk management policy specifies
authorities to be consulted, responsibilities to be undertaken, and five principles and ten guidelines that
drive our risk management initiatives.
This policy has a comprehensive approach to corporate risk management, which combines the traditional
economic and financial risk management approach with other relevant areas of interest, such as protection
of life, health and environment, assets and business information protection (property and security) and
combating fraud and corruption (legal and compliance), among other corporate risks.
For further information regarding our revised business risk management policy, please visit our website at
www.petrobras.com.br/ir. The information available on our website is not and shall not be deemed to be
incorporated by reference to this annual report.
Disclosures about Market Risk
Commodity Price Risk
We operate in an integrated manner throughout the various stages of the oil industry. A significant portion
of our results relate directly to oil exploration and production, refining and the sale of natural gas, biofuels,
and electricity in Brazil. As our purchases and sales of crude oil and oil products are linked to international
commodity prices, we are exposed to their price fluctuations, which may influence our profitability, our cash
flow from operations and our financial situation.
We prefer to maintain exposure to the price cycle than use financial derivatives to systematically protect
purchases and sale transactions that focus on fulfilling our operation needs. However, based on crude oil
market conditions and prospects of realization of our Strategic Plan, we may decide to implement
protection strategies using financial instruments to manage our cash flow expenses.
In addition, we are party to derivative contracts in order to protect our margins for short-term commercial
transactions carried out abroad. Our derivatives contracts provide economic hedges for oil product
purchases and sales in the global markets, generally expected to occur within a 30 to 360-day period.
For more information about our commodity derivatives transactions, including a sensitivity analysis
demonstrating the net change in fair value of a 25% (or 50%) adverse change in the price of the underlying
commodity for options and futures, see Note 36 to our audited consolidated financial statements.
Exposure to interest rate and exchange rate risk
For information about interest rate and exchange rate risk, see “Operating and Financial Review and
Prospects” in this annual report.
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Insurance
Regarding operational risks, our policy is to maintain insurance coverage when the obligation to maintain
such coverage derives from a legal or contractual instrument or our Bylaws; or the event covered may cause
significant damage to our financial results, and coverage is economically feasible.
We maintain several insurance policies, including policies against fire, operational risk, engineering risk,
property damage coverage for onshore and offshore assets such as fixed platforms, floating production
systems and offshore drilling units, hull insurance for tankers and auxiliary vessels, third party liability
insurance and transportation insurance. The coverages of these policies are contracted according to the
objectives we define and the limitations imposed by the global insurance and reinsurance markets.
Although some policies are issued in Brazil, most of our policies are reinsured abroad with reinsurers rated
A- or higher by Standard & Poor’s or A3 by Moody’s and/or B ++ or higher by A.M. Best.
Our policies are subject to deductibles, limits, exclusions and limitations, and there is no assurance that such
coverage will adequately protect us against liability from all possible consequences and damages
associated with our activities. Thus, it is not possible to assure that insurance coverage will exist for all
damages resulting from possible incidents or accidents, which may negatively affect our results.
Specifically, we do not maintain insurance coverage to safeguard our assets in case of war or sabotage. We
also do not maintain coverage for business interruption, except for some specific assets in Brazil. Generally,
we do not maintain coverage for our wells in operation in Brazil, except when required by a joint operating
agreement. In addition, our third-party liability policies do not cover government fines or punitive damages.
Our national property damage policies have a maximum deductible of US$180 million and their indemnity
limits can reach US$2.38 billion for refineries and US$2 billion for platforms, depending on the replacement
value of our assets.
Our general third-party liability policy with respect to our onshore and offshore activities in Brazil, including
losses due to sudden pollution, such as oil spills, has a maximum indemnity limit of US$250 million with an
associated deductible of US$10 million. We also maintain marine insurance with additional protection and
indemnity against third parties related to our domestic offshore operations with an indemnity limit of
US$50 million up to US$500 million, depending on the type of vessel. For activities in Brazil, in the event of
an explosion or similar event on one of our non-fixed offshore platforms, these policies may provide third-
party combined liability coverage of up to US$750 million. In addition, although we do not insure most of
our pipelines against property damage, we have insurance against damages or losses to third parties arising
from specific incidents, such as unexpected infiltration and oil pollution.
Furthermore, throughout the year we receive surveys from the insurance market that evaluates the
operational risks of our facilities and make recommendations. In general, the risk ratings of our assets are
at or above the market average. In 2021, we had remote surveys in 35 onshore and offshore units. Based on
these surveys, last year we heededmore than 300 recommendantions that improve the safety of our
company.
Outside Brazil, we maintain different levels of third-party liability insurance, as a result of a variety of
factors, including country risk assessments, whether we have onshore and offshore operations, or legal
requirements imposed by a particular country in which we operate. We maintain separate well-control
insurance policies in our international operations to cover liabilities arising from the uncontrolled eruption
of oil, gas, water or drilling fluid. In addition, such policies cover claims of environmental damage caused by
wellbore explosion and similar events as well as related clean-up costs with coverage limits of up to US$325
million depending on the country.
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Our Business
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Our Business
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Exploration and Production
Overview
Our oil and natural gas exploration and production activities are the major components of our portfolio and
include offshore and onshore exploration, appraisal, development, production and incorporation of oil and
natural gas reserves, producing oil and natural gas in a safe and profitable way.
Our activities are focused on deepwater and ultra-deepwater oil reservoirs in Brazil, which accounted for
95% of our total production in 2021. We also have activities in mature fields in shallow waters and onshore,
as well as outside Brazil as detailed below in this annual report. Brazilian exploration and production assets
represent 91% of our worldwide blocks and fields, 99% of our global oil production and 99.5% of our oil and
natural gas reserves.
We have 286 blocks and fields in exploration and production including 91 consortia with other oil and gas
companies. From the 286 blocks and fields, 262 are under Concession Agreements, 14 are under Production
Sharing Agreements and 10 are regulated by Transfer of Rights Agreements.
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EXPLORATION AND PRODUCTION BLOCKS AND FIELDS (Number of blocks and fields)
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51
Like most major oil and gas companies, we operate in partnerships using E&P consortia in the exploration
of blocks and the production of oil fields in Brazil, mainly in ultra-deepwaters.
We lead and operate E&P consortia that are responsible for some major projects under development, such
as Mero (Petrobras 40%, Shell 20%, TotalEnergies 20%, CNODC 10% and CNOOC 10%), Berbigão, Sururu and
Oeste de Atapu (all with Petrobras 42.5%, Shell 25%, TotalEnergies 22.5% and Petrogal 10%).
These E&P consortia also comprise some of the biggest production fields in Brazil, such as Tupi (Petrobras
65%, Shell 25%, Petrogal 10%), Sapinhoá (Petrobras 45%, Shell 30%, Repsol Sinopec 25%), Roncador
(Petrobras 75%, Equinor 25%), Tartaruga Verde (Petrobras 50%, Petronas 50%) and Búzios (Petrobras
92.612%, CNOOC 3.694% e CNODC 3.694%). We also operate these fields in the Pre-salt Polygon area.
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Other Basins
We produce oil and gas and hold exploration acreage in 17 other basins in Brazil. The most significant
potential for exploratory success within our other basins are the Equatorial Margin and East Margin.
International
Outside Brazil, we have activies in South America and North America. We have focused on opportunities to
leverage the deepwater expertise we have developed in Brazil. However, since 2012 we have been
substantially reducing our international activities through the sale of assets in accordance with our
portfolio management.
South America
We conduct exploration and production activities in Argentina, Bolivia and Colombia.
In Argentina, through our subsidiary Petrobras Operaciones S.A., we have a 33.6% working interest in the
Rio Neuquén production asset. Our unconventional gas and condensate production is concentrated in the
Neuquén Basin. In 2021, our production of oil and gas in Argentina, including NGL, was 7.9 mboed.
In Bolivia, we produce gas and condensate primarily in the San Alberto and San Antonio fields with 35%
working interest in each of those service operation contracts, which are operated mainly to supply gas to
Brazil and Bolivia. In 2021, our production of oil and gas in Bolivia, including NGL, was 24.2 mboed. The return
of those contracts is a proportion of the production.
In Colombia, we operate and hold a 44.44% working interest in the Tayrona offshore exploration block,
which includes the Orca gas discovery. We also operate and hold a 50% working interest in the Villarica Norte
onshore exploration block.
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North America
In the United States, we focus on deepwater fields in the Gulf of Mexico, where we have non-consolidated
production from the 20% participation of Petrobras America Inc. (“PAI”) in the joint venture with Murphy
Exploration & Production Company (“Murphy”), the MPGOM LLC. The main contributors to the production
are the Chinook, Saint Malo and Dalmatian fields. In 2021, our 20% participation represents a production of
10.4 mboed, including NGL.
For more information on our divestments, see “ – Portfolio Management” in this annual report.
Main Assets
2021
2020
2019
Exploration and Production
Production wells (oil and natural gas)(1)
5,042
5,646
7,021(4)
Floating rigs
Operated platforms in production(2)
18
57
20
67(3)
16
107
(1) Includes the total amount of wells of our equity method investees (50, 100 and 164 wells in 2021, 2020 and 2019, respectively).
(2) Includes only definitive production systems, EWT and EPS units.
(3) Does not include mothballed, non-producing and platforms in fields operated by partners.
(4) Adjusted to include wells from affiliated companies.
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55
Exploration
The oil and gas industry value chain begins in the exploratory phase, with the acquisition of exploratory
blocks either through bid rounds conducted by governments or by purchases from other companies.
In Brazil, the Brazilian State owns the oil deposits, but companies and consortia are allowed to extract and
explore such oil upon payment in several forms, such as royalties. Forms of payment vary depending on the
applied regulatory model. Biddings rounds are the main process for the acquisition of rights over the
exploratory blocks.
There are currently three regulatory models in Brazil: Concession Agreements, Transfer of Rights
Agreements and Production Sharing Agreements. The concession model fully governed the oil and natural
gas exploration and production until 2010, when the Brazilian federal government enacted laws
establishing the Transfer of Rights Regime and the Production Sharing Regime in the Pre-salt Polygon.
For information on the regulatory models applicable to our exploration and production activities, see “Legal
and Tax” in this annual report.
Bidding rounds
Over the past few years, we have participated selectively in the bidding rounds carried out by the
ANP, aiming to reorganize our exploratory portfolio and maintain the relationship between our
reserves and our production in order to ensure the sustainability of our future oil and gas
production. Our joint operation with large oil companies in consortia is also aligned with our strategic
goal to strengthen partnerships, with the intent to share risks, combine technical and technological
skills and capture synergies to leverage results.
In 2019, we acquired two new offshore exploratory blocks, with a total area of 5,800 km2. In the Pre-
salt Polygon, we acquired one area under the production sharing regime, in partnership with CNODC.
In the Campos Basin, we acquired one block outside of the Pre-salt Polygon, under the concession
regime, in partnership with BP. Additionally, we acquired 90% of the exploration and production
rights of the surplus volume of the Búzios field during the Transfer of Rights Surplus Production
Sharing Bidding Round, in a partnership with CNODC Brasil Petróleo e Gás Ltda. (5%) and CNOOC
Petroleum Brasil Ltda. (5%). During the same bidding round, we also acquired 100% of the
exploration and production rights of the surplus volume of the Itapu field.
In 2020, due to limitations resulting from the Covid-19 pandemic, the 17th Bidding Round was
postponed. The 2nd Cycle of Open Acreage was the only bidding round of the year and took place on
December 4, 2020. We did not present any offers during this bidding round.
In 2021, we acquired the exploration and production rights of the surplus volumes of the Transfer
of Rights from the Atapu and Sepia offshore fields in the 2nd Round Transfer of Rights under the
Production Sharing Regime. With respect to the Atapu field, we acquired the rights to be the
operator with 52.5% interest in its surplus volumes in partnership with Shell (25%) and TotalEnergies
(22.5%). As to the Sépia field, we exercised our pre-emption right to be the operator with 30%
interest in the acquisition of its surplus volumes. The other members of the consortium are
TotalEnergies (28%), Petronas (21%) and Qatar Petroleum (21%).
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
56
Exploration Activities
As of December 31, 2021, we had 73 exploratory blocks (including 31 with 100% working interest), that had
four discoveries in 2021. We serve as the operator in 33 of the exploration partnership blocks.
The table below breaks down our participation in exploration activities in 2021:
OUR PARTICIPATION IN EXPLORATION ACTIVITIES IN 2021
Net exploratory area
Exploratory blocks
Evaluation plans
Wells drilled
(km2)
(number)
(number)
(number)
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
Brazil
37,719 42,996 40,625
69
82
113
42
32
24
Other S. America
5,466
5,751
6,081
0
0
0
0
0
0
4
0
0
4
0
0
4
0
0
1
0
0
2
0
0
1
0
2
North America
Africa
TOTAL
43,185 48,747 46,706
73
86
117
43
34
27
8
1
0
0
9
9
0
0
0
9
8
1
0
0
9
These investments mainly cover the costs of drilling, seismic surveys and acquisition of blocks, which
contributed to the following endeavors.
In 2021, our exploratory efforts were concentrated on evaluating Brazil’s southeast margin Pre-salt
provinces, with the following highlights:
Santos Basin
Two wells drilled in the Búzios oil field confirmed presence of hydrocarbons. Additional studies are being
conducted to provide better measurements and to assess the best use of these wells throughout the
production phase.
The well located in the block of Aram, operated by us, resulted in hydrocarbon accumulation, with its drilling
concluded in December 2021. Further evaluations of the field’s extension and commerciality are being
made, beginning with a well test planned for the second half of 2022.
Campos Basin
In the C-M-411 and C-M-346 blocks, both operated by us, two wildcat wells resulted in gas accumulations.
The commerciality of both discoveries is currently being evaluated.
Two other prospects were drilled in the ultra-deepwaters of the Campos Basin, one in the block C-M-709,
operated by us, and the second in the C-M-789, operated by ExxonMobil. While the first well did not result
in a discovery, despite having found evidence of gas, the second one is still under additional studies to
assess the economic viability of this area.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
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Espírito Santo Basin
In the deepwaters of the Espírito Santo Basin, in block ES-M-669, we successfully drilled one of the deepest
wells in Brazil. The well also resulted in the discovery of gas, and additional studies are needed to assess the
potential of this new province.
Statements of Commerciality
We submitted to the ANP statements of commerciality of the oil and gas accumulations located in the areas
of the evaluation plans included in the BM-SEAL-4, BM-SEAL-4A, BM -SEAL-10 and BM-SEAL-11
concessions, located in the Sergipe-Alagoas Basin. Production is expected to start in 2026.
E&P Strategic Programs Highlights
We continue to develop the strategic program EXP100 that is designed to access and process 100% of the
technical data available on the exploration projects, reducing uncertainties and costs by anticipating
production development. This program aims to better estimate and predict geological properties through
an integrated data platform, by using data science and high-performance computing capacity, that enable
the application of more complex algorithms in the processing of large volumes of data. Several initiatives
are already underway, with important advances in the integration and connection of data and technological
solutions on the interpretation workflows, giving way to the development of new generation greenfields.
In addition, the PROD1000 strategic program is still in progress, and it aims to shorten the time between
the discovery of the asset and the start of production (first oil), ultimately achieving greater return on
invested capital.
As of 2021, the PROD1000 aims to place us in the first quartile of the oil & gas industry. Our efforts in such
program are related to exploration and reservoir development integration, project design standardization,
processes optimization and parallelization, faster procurement (bidding) and construction and assembly of
the FPSO. The areas that currently contribute most to the reduction of project time are exploration,
reservoir, surface and subsurface systems and procurement.
As an example of our standardization efforts in the FPSO design, we applied for a patent for a Polyvalent
Riser Balcony, which can be applied to different project scenarios and reduce engineering time and late
changes during the FPSO construction phase. With respect to parallelization of processes, we have reduced
the timing of activities between anchoring and connecting the first well in the Sépia project by more than
50%.
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ANNUAL REPORT AND FORM 20-F | 2021
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Production
Production Development
After a field is declared commercially viable, the process of production development begins. The
investments made in this phase are mainly focused on designing and contracting production systems, which
includes platforms, subsea systems, drilling, and the completion of wells.
We continue to achieve substantial cost optimizations related to project development through the
implementation of strategic well construction programs, which enable the application of new drilling and
completion technologies, innovative well configurations, campaign optimization and supply chain
integration initiatives. As an example, in 2021 the average duration of well construction (total time for
drilling plus completion) in the Búzios field was 99 days, which, combined with lower daily rates, allowed a
32% reduction in average construction cost in comparison to 2018 - two years before the implementation
of our strategic well construction programs.
In addition, we reduced well connections costs in the Santos Basin pre-salt area by nearly 7.5% average per
year during the past four years.
Regarding the integrity of subsea systems, we have made progress in the development and application of
new tools for inspection, leading to greater reliability and availability of equipment, pipes and other
components, especially those subsea components exposed to corrosion events. In 2021, we reduced
production losses by 35% when compared to the forecast, through inspection campaigns on flexible pipes
and engineering for life extension. We continue to implement initiatives such as expanding the supplier
base to develop special tools and flexible pipes immune to the effect of corrosion.
As it relates to platforms, the High Capacity Design was finished in 2021 for the pre-salt new generation of
FPSOs, with oil production capacity of 225 kbpd and gas processing of 423 mmcf/d, representing the new
generation of our platforms. This comes as a result of more than a decade of learning by us in the cycles of
design, construction, start-up, and operation of production platforms in the pre-salt layer, with an increase
in production capacity in relation to previous projects. The Búzios 9 FPSO bidding is using the High Capacity
Design.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
We invest in technological solutions combined with the transition to a low-carbon global economy,
focusing on reducing greenhouse gas emissions.
Our Business
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PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
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60
In the last three years, we have installed several major systems, mainly in the Santos Basin pre-salt area,
which helped to mitigate the Santos Basin’s natural decline. In 2019, we started four new production
systems: (i) the P-76 and (ii) P-77 platforms, located in the Búzios field; (iii) the P-67 platform, located in
the Tupi field; and (iv) the P-68, located in the Berbigão and Sururu fields. In 2020, we started the P-70
platform, located in the Atapu field. In 2021, the FPSO Carioca started operations in the Sépia field. Those
six new systems added 48 new wells (29 production wells and 19 injection wells) into our production systems.
In 2021, the P-70 platform, in the Atapu field, reached its full capacity of 161 kbpd, in less than 13 months.
In addition, we started the gas flow in P-76 Platform, in the Búzios field, and in the P-69, in the Tupi field,
enabling a better reservoir management and increased value generation.
In 2021, our producing platforms had a daily production of 2.22 million barrels of oil and 3,101.63 million
cubic feet of natural gas (discounting the liquefied volume). In 2021, we owned 41 and leased 16 offshore
producing platforms. Besides these offshore platforms, there are 2 platforms on fields operated by our
partners and four storage and offloading units, totaling 63 active platforms.
In 2022, we will install the FPSO Guanabara, the first definitive system in the Mero field. This FPSO has the
capacity to process 180 kbpd and 423.8 mmcf/d of natural gas per day. We expect to install 15 new FPSOs
in the next five years.
SYSTEMS INSTALLED SINCE 2010
Basin
Field/Area
Production unit
Start
up
(year)
Crude
oil
nominal
capacity
(bbl/d)
Gas
nominal
capacity
(mmcf/d)
Water
depth
(meters)
Fiscal regime
Type
Main
production
source
2021 Santos
Sépia
Carioca 180,000
211,9
2,200
2020 Santos
Atapu
Petrobras 70 150,000
211.9
2,288
Santos
Berbigão
Petrobras 68 150,000
211.9
2,280
Santos
Búzios 4
Petrobras 77 150,000
247
1,980
Transfer of
Rights/Concession
Transfer of
Rights/Concession
Transfer of
Rights/Concession
Transfer of
Rights/Production
Sharing/Concession
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Pre-Salt FPSO
Pre-Salt FPSO
Pre-Salt FPSO
Pre-Salt
FPSO
2019
2018
Santos
Búzios 3
Petrobras 76 150,000
247
2,030
Santos Tupi Norte
Petrobras 67 150,000
211.9
2,130
Concession
Pre-Salt FPSO
Campos
Tartaruga
Verde
Cid. de Campos dos
Goytacazes
150,000
117
765
Concession
Post-Salt FPSO
Santos
Tupi Ext.
Sul
Petrobras 69 150,000
211.9
2,170
Santos
Búzios 1
Petrobras 74 150,000
247
1,950
Santos
Búzios 2
Petrobras 75 150,000
247
2,015
Transfer of
Rights/Concession
Transfer of
Rights/Production
Sharing/Concession
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Pre-Salt FPSO
Pre-Salt FPSO
2017
Santos
Santos
Tupi Sul
Mero
Petrobras 66
Pioneiro de Libra
150,000
50,000
211.9
141.3
2,150
2,040
Concession
Production Sharing
Pre-Salt
Pre-Salt
FPSO
FPSO
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
2016
Santos
Santos
Tupi
Central
Tupi Alto
Cidade de Saquarema
Cidade de Maricá
150,000
150,000
211.9
211.9
2015 Santos
Tupi
Cidade de Itaguaí 150,000
282.5
2014
2013
Santos
Santos
Campos
Campos
Campos
Santos
Santos
Sapinhoá
Tupi
Roncador
Jubarte
Cidade de Ilhabela
Cidade de Mangaratiba
Petrobras 62
Petrobras 58
150,000
150,000
180,000
180,000
Roncador
Tupi
Sapinhoá
Petrobras 55
Cidade de Paraty
Cidade de São Paulo
180,000
120,000
50,000
211.9
282.5
211.9
211.9
141.3
176.6
76.6
2012 Campos
Jubarte
Cidade de Anchieta 100,000
123.6
2011
Campos
Santos
Marlim Sul
Mexilhão
Petrobras 56
Mexilhão
140,000
20,000
2010
Campos
Santos
Santos
Campos
Jubarte
Tupi
Uruguá
/Tambaú
Jubarte
Petrobras 57
Cidade de Angra dos
Reis
Cidade de Santos
Capixaba
180,000
100,000
25,000
110,000
211.9
529.7
70.6
176.6
353.1
113.0
2,120
2,120
2,240
2,140
2,220
1,560
1,400
1,795
2,120
2,140
1,220
1,645
1,260
2,150
1,300
1,473
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61
Concession
Concession
Pre-Salt
Pre-Salt
FPSO
FPSO
Concession
Pre-Salt FPSO
Concession
Concession
Concession
Concession
Concession
Concession
Concession
Pre-Salt
Pre-Salt
Post-Salt
Pre-Salt
Post-Salt
Pre-Salt
Pre-Salt
FPSO
FPSO
FPSO
FPSO
SS
FPSO
FPSO
Concession
Pre-Salt FPSO
Concession
Concession
Post-Salt
Post-Salt
SS
Fixed
Concession
Concession
Concession
Concession
Post-Salt
Pre-Salt
Post-Salt
Post-Salt
FPSO
FPSO
FPSO
FPSO
MAIN SYSTEMS TO BE INSTALLED THROUGH 2026
Start up (year)
Basin Field/Area Production unit Crude oil
nominal
capacity
(bbl/d)
Gas
nominal
capacity
(mmcf/d)
Water
depth
(meters)
Fiscal regime
Type
Main
production
source
Expected 2022
Santos
Mero 1
Guanabara
180,000
423,8
1.930 Production Sharing
Pre-Salt FPSO
Santos
Búzios 5
Almirante
Barroso
150,000
211,9
2,100
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Campos
Marlim 1 Anita Garibaldi
80,000
247.3
670
Concession
Post-Salt FPSO
Expected 2023
Campos
Marlim 2
Anna Nery
70,000
141.3
927
Concession
Post-Salt FPSO
Santos
Mero 2
Sepetiba
180,000
423.8
2,050 Production Sharing
Pre-Salt FPSO
Santos
Itapu
Petrobras 71
150,000
211.9
2,010
Transfer of Rights/
Production Sharing
Pre-Salt FPSO
Campos
Parque
das
Baleias
Maria Quitéria
100,000
176.6
1,385
Concession
Pre-Salt FPSO
Expected 2024
Santos
Búzios 7
Almirante
Tamandaré
225,000
423.8
1,900
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Santos
Mero 3
Marechal Duque
de Caxias
180,000
423.8
2,070 Production Sharing
Pre-Salt FPSO
Santos
Búzios 6
Petrobras 78
180,000
254.3
2,030
Expected 2025
Santos
Búzios 8
Petrobras 79
180,000
254.3
1,700
Transfer of
Rights/Production
Sharing/Concession
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Pre-Salt FPSO
Santos
Mero 4
Alexandre de
Gusmão
180,000
423.8
1,890 Production Sharing
Pre-Salt FPSO
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
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62
Sergipe
Águas
Profundas
SEAP 1
Petrobras 81
120,000
353.1
2,400
Concession
Post-Salt FPSO
Expected 2026
Santos
Búzios 9
Petrobras 80
225,000
423.8
2,100
Santos Búzios 10
Petrobras 82
225,000
423.8
1,895
Transfer of
Rights/Production
Sharing/Concession
Transfer of
Rights/Production
Sharing/Concession
Pre-Salt FPSO
Pre-Salt FPSO
Decommissioning
Decommissioning of oil and gas exploration and production systems means the disposal of the platform
and the subsea system and the plug & abandonment of wells, upon authorization from regulatory bodies in
accordance with applicable legal requirements.
In 2021, we obtained the approval from Brazilian regulatory bodies overseeing decommissioning plan to
FPSO Capixaba, in the Jubarte field, and for the initial decommissioning activities of P-33, in the Marlim
field, in the Campos Basin.
We performed the removal of the FPSO Piranema in April 2021, the three fixed platforms Units of Cação
field in June 2021 and the P-15 in December 2021. We completed the risers pullout of P-07 in February 2022.
With respect to well abandonments, we achieved substantial results in 2021 that allowed us to consolidate
a 50% cost decrease in comparison with the average cost for the period from 2018-2020.
In 2022, we created an Executive Committee for Decommissioning, with the objective of monitoring the
evolution of worldwide best practices and deliberating strategic guidelines to implement decommissioning
projects.
Critical Resources in Exploration and Production
We seek to procure, develop and retain all of the critical resources that are necessary to meet our
production targets. Drilling rigs, special vessels, supply vessels and helicopters are important resources for
our exploration and production operations and are centrally coordinated to assure both technical
specifications and proper lead time.
Since 2008, we have grown from three rigs capable of drilling in waters with depth greater than 2,000 meters
(6,560 feet) to 17 rigs with this capacity as of December 31, 2021. We will continue to evaluate our drilling
and special vessels demands and will adjust our fleet size as needed.
DRILLING UNITS IN USE BY EXPLORATION AND PRODUCTION AS OF DECEMBER 31, 2021 (1)
Brazil
Onshore
Offshore, by water depth (WD)
Jack-up rigs
2021
2020
2019
Leased
Owned
Leased
Owned
Leased
Owned
18
0
18
0
0
0
0
0
20
0
20
0
0
0
0
0
18
2
16
0
0
0
0
0
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Floating rigs
500 to 999 meters WD
1,000 to 1,999 meters WD
2,000 to 3,200 meters WD
Outside Brazil
Onshore
Offshore
Worldwide
(1) In operated fields.
Our Business
63
18
1
0
17
0
0
0
18
0
0
0
0
0
0
0
0
20
0
1
19
0
0
0
20
0
0
0
0
0
0
0
0
16
0
1
15
1
1
0
19
0
0
0
0
0
0
0
0
To achieve our production goals, we have also secured a number of specialized vessels (such as Pipe Laying
Support Vessels or “PLSVs”) to connect wells to production systems. As of December 31, 2021, we had 14
PLSVs. Similarly to the rigs, we will adjust our fleet size as needed.
The supply of goods and transport of people is also important to achieve our exploration and production
goals. By sea, we transport materials and chemical products. By air, we transport our most important assets:
people. Both materials and people are transported on a daily basis so that the exploration and production
of oil and gas is orchestrated in the most continuous way possible, maintaining the quality and level of
services.
In 2021, we delivered more than two million tons of materials and transported over 650,000 passengers to
our platforms all over the Brazilian coast. To accomplish these results, we also have a secure number of
supply vessels (such as Platform Supply Vessels or “PSV”) and helicopters. As of December 31, 2021, we had
67 PSV and 56 helicopters and both our fleets were sufficient to meet our needs.
Mero Field
Libra Block and Mero Field
In 2013, the consortium formed by us (Operator – 40%), Shell Brasil (20%), TotalEnergies (20%),
CNODC (10%) and CNOOC Limited (10%) won the bid to explore and develop the Libra block for 35
years. The consortium also has the participation of the state-owned enterprise Pré-Sal Petróleo -
PPSA, which operates as contract manager. On November 30, 2017, we announced the submission
of the Declaration of Commerciality regarding oil accumulations in the northwestern portion of the
Libra block, subsequently named Mero.
The Mero field is a world-class field located in the Santos Basin ultra-deepwaters, 180 km from the
coast of Rio de Janeiro State and inside Brazilian pre-salt province. It has a high productivity
reservoir filled with a large volume of high-quality oil. It is a thick reservoir (oil columns reaches 420
meters), with high productivity and filled with a large volume of high-quality oil (29° API). In addition,
the associated challenges for project development are also noteworthy, considering the high
gas/oil ratio (420 std m³/std m³) and CO2 content in the associated gas (44%), water depth (2,100
meters) and distance from the coast (180 km).
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
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64
Project development
The start of production (first oil) occurred in 2017, within the Extended Well Test (“EWT”) campaign,
using 2 wells (1 producer and 1 injector), and the chartered unit FPSO Pioneiro de Libra, which has
the capacity of 50 mbbl/d of oil and four million m³/day of gas.
The Early Production System (“EPS”) has already produced a cumulative production of almost 40
MMbbl of oil, with a peak of 44 mbbl/d from one single well. Moreover, associated gas production
accounted for over 2.6 billion m³ of gas, of which 9.6% were consumed for FPSO power generation,
and approximately 88.5% were reinjected in the reservoir along with almost 1.8 million tons of CO2.
In 2021, four years after the EPS start-up, the production development initial phase was approved,
and we reached the final investment decision, with an associated CAPEX of US$18 billion. To date,
around 33% of the sanctioned CAPEX were already invested.
The production arrangement for the Mero field anticipates the FPSO Mero 1, Mero 2, Mero 3 and
Mero 4. Each FPSO will have the capacity to process up to 180 mbbl/d and 12 million m³ of gas per
day. The Mero 1 production system is expected to start operating in 2022, Mero 2 in 2023, Mero 3 in
2024 and Mero 4 in 2025.
The Mero Project estimates a return over three billion bbl of oil recovery until 2048 with an annual
production peak of 650 mbbl/d. Due to Production Sharing Agreement limitations, production
anticipation is an important lever for project value, and for that reason the development of new
technologies is a strong driver in the Mero field.
HISEP™
HISEP™ is a subsea separation technology that separates, at the seabed, gas with high CO2 content
under high pressure, followed by direct reinjection of this separated stream to the reservoir by the
use of centrifugal pumps. HISEP™ debottlenecks the topsides gas processing plant and extends the
oil production plateau by reducing the GOR of the oil that reaches the FPSO.
Hence HISEP™ has the potential to accelerate oil production, as well as increasing the recovery
factor. It has been developed in a collaborative and integrated environment congregating major oil
companies, including the engagement of reputed and experienced market suppliers to deploy the
solution and generate huge value for the Mero field and for the oil and gas industry. The Mero field
will be the first field to implement HISEP™ technology for qualification.
Production Individualization Agreement
On December 9, 2021, the ANP approved the Production Individualization Agreement (“AIP”) of the
Mero accumulation. The AIP occurs in situations where the reservoirs extend beyond the areas
granted or contracted, as regulated by the ANP. The Agreement became effective on January 1,
2022.
Under the terms of the AIP, the Mero Joint Reservoir comprises two areas, namely (1) Mero Field
area (as defined in the PSC LIBRA-P1), representing 96.50% and (2) Adjacent area (Federal
Government, represented by PPSA), representing 3.50%.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
65
The agreement establishes the stakes of each party and the rules of joint execution of the
operations of development and production of oil and natural gas in the joint reservoir. The stakes
of each party in the Mero Joint Reservoir were then updated as follows: Petrobras with a 38.60%
stake, Shell Brasil with a 19.30% stake, TotalEnergies with a 19.30% stake, CNODC with a 9.65%
stake, CNOOC Limited with a 9.65% stake and Pré-sal Petróleo – PPSA, representing the Brazilian
Government, with a 3.50% stake.
As a result of the process of individualizing the production of the accumulation, in December 2021,
the above-mentioned parties to the Mero Joint Reservoir negotiated the equalization between the
expenses incurred and the revenues obtained with the volumes produced up to the effective date
of the AIP.
Production
In 2021, our total production of oil and gas, including NGL, was 2,774 mboed, of which 2,732 mboed were
produced in Brazil and 42 mboed were produced abroad, a 2% decrease compared to 2020. This production
decline was due to divestment, decomissioning and the natural decline of the production.
Our 2021 operating performance was partially leveraged by the ramp-up of new production systems in the
Tupi, Berbigão and Sururu, Atapu and Sépia fields, offsetting the continuous negative effects derived
during the Covid-19 pandemic.
Our production in the pre-salt layer reached 1.616 mbbl/d in 2021, representing an increase of 5% in relation
to our production in 2020. In 2021, the oil production in the pre-salt layer represented 73% of all oil
production in Brazil, compared to 68% in 2020.
OIL AND GAS PRODUCTION
Crude oil and natural gas – Brazil (mboed)
Onshore (mbbl/d)
Shallow Water (mbbl/d)
Post-salt deep and ultra-deepwaters (mbbl/d)
Pre-salt (mbbl/d)
Crude oil (mbbl/d)(1)
Natural gas (mboed)
Crude oil and natural gas – Abroad(2) (mboed)
TOTAL
(1) Including NGL.
2020
2019
2021 vs 2020
2021
2,732
89
9
496
1,616
2,211
521
42
2,788
2,688
105
32
582
1,546
2,266
522
48
124
66
704
1,277
2,172
516
82
2,774
2,836
2,770
-2%
-15%
-72%
-15%
5%
-2%
0%
-13%
-2%
(2) Includes the proportional production of our equity method investees, based on our percentage interest in these entities.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
66
Pre-salt oil production increased 5%, reflecting the high efficiency and the ramp-up of new units. The pre-
salt area is comprised of large accumulations of light oil, of excellent quality and with high commercial value.
The post-salt oil production, in deep and ultra-deepwaters, decreased by 14.8%. This was due to
divestment, decomissioning and the natural decline of the production.
Shallow waters oil production decreased by 71.9%, to nine mbbl/d, due to divestment, decomissioning and
the natural decline of the production. Onshore oil production decreased by 15.2%, to 89 mbbl/d, due to
divestment, decomissioning and the natural decline of the production.
We produced 87.8 million m3/d of gas in 2021. From that volume, we used 49.9 million m3/d in our production
processes (reinjected, flared, consumed, liquefied) and destined 37.9 million m3/d for sale.
Achievement of 2021 Production Target
We achieved our production targets for 2021, established in the 2021-2025 Strategic Plan, as described
below:
PRODUCTION TARGETS FOR 2021
Production
Oil and NGL (MMbpd)
Oil, NGL and commercial gas (MMboed)
Total production Oil and Gas (MMboed)
Performed
2.22
2.46
2.77
Goal
2.21 + 4%
2.43 + 4%
2.72 + 4%
The achievement of this result demonstrates our commitment to meeting our goals, which have been
reached by maintaining the focus of our activities on deep and ultradeepwater assets.
Revision of the 2022 production target
We have revised our oil and gas production target for 2022, previously included in our Strategic Plan, to
reflect the effect of the result of the 2nd round of bids for the Transfer of Rights Surplus under the
Production Sharing Regime.
With the effectiveness of the Production Sharing Regime in Atapu and Sepia, expected by early May 2022,
our interests in the shared contracts, including the portions of the Production Sharing Agreement and the
Concession Agreements, and excluding the portion of PPSA, will be respectively 65.69% for Atapu and
55.30% for Sepia.
The start of production sharing for FPSOs P-70 and Carioca, operating in the Atapu and Sépia fields,
respectively, will impact our production target disclosed in the Strategic Plan. In the year 2022, we will have
a reduction in the amount of 70 Mboed for the total production of oil and gas, and the change of the range
from 2.7 MMboed to 2.6 MMboed with a variation of +/- 4%. Oil production and commercial production had
an impact of about 60 Mboed, but remained with the same ranges, respectively, 2.1 MMbpd and 2.3 MMboed,
with a variation of +/- 4%. For the period between 2023 and 2026, the average estimated impact for
production is a reduction of 0.1 MMboed.
Our investments forecast for 2022, totaling US$11 billion, remains unchanged. In 2022, the development
plans for the production of the surplus volumes in the Atapu and Sépia fields will be discussed with our
partners and PPSA, which should include the implementation of a new production system in each field.
These adjustments will be reflected and disclosed in the 2023-2027 Strategic Plan.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Lifting Cost
In 2021, our lifting cost, without government participation or leases, was US$5.0 per boe, which represents
a 4% decrease from the 2020 cost of US$5.2 per boe. Including leases, our lifting cost in 2021 was US$6.6
per boe, which represents a 3% decrease from the 2020 cost of US$6.8 per boe.
Our Business
67
Shared deposits between different fields
The participation of consortium members in any fields mentioned refers exclusively to the
participation of such members in the contract related to such field. On certain occasions, some of
these fields are subject to Production Individualization Agreements (“AIPs”), resulting in shared
deposits between different fields. Under AIPs, costs, investments and production volumes are
shared between the parties thereto.
After ANP’s approval, the AIPs are disclosed to the market and published on our Investor Relations
website at www.petrobras.com.br/ir. The information available on our website is not and shall not
be deemed to be incorporated by reference to this annual report.
Below are the most relevant fields subject to AIPs to which we are party. This list is not exhaustive
and other fields not mentioned below may also be subject to AIPs.
TUPI
The AIP of Tupi's joint reservoir, located in the Santos Basin, was approved by ANP in March 2019.
The joint reservoir comprises Tupi’s reservoir and is shared between:
_ BM-S-11 consortium contract (Tupi Field), operated by us (65%), in partnership with Shell (25%)
and Galp (10%);
_ Tupi South Block of the Transfer of Rights (Sul de Tupi field) operated by us with a 100% interest;
and
_ Non-Contracted Area, which belongs to the Federal Government, represented by Pre-Sal Petróleo
– PPSA.
Tupi's AIP does not cover the so-called Iracema reservoir, which remains with the same interests of
the BM-S-11 consortium.
The interest of each party in Tupi's joint reservoir are as follows:
Partner
Petrobras (operator)
Shell
Galp
PPSA
Share (%)
67.22
23.02
9.21
0.55
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
68
MERO
The AIP of the Mero accumulation, located in the Santos Basin, was approved by ANP in December
2021.
The Mero joint reservoir comprises:
_ Production Sharing Contract LIBRA: operated by us (40%) in partnership with Shell (20%),
TotalEnergies (20%), CNPC (10%), CNOOC (10%) and PPSA; and
_ Non-Contracted Area, which belongs to the Federal Government, represented by Pre-Sal Petróleo
– PPSA.
The stakes of each party in the Mero joint reservoir are as follows:
Partner
Petrobras
Shell
TotalEnergies
CNODC
CNOOC
Pré-sal Petróleo - PPSA
Share (%)
38.60
19.30
19.30
9.65
9.65
3.50
ATAPU
The AIP of Atapu accumulations, located in the Santos Basin, was approved by ANP in September
2019
The Atapu Joint Reservoir comprises:
_ BM-S-11A (Oeste de Atapu Field), operated by us (42.5%), in partnership with Shell (25%),
TotalEnergies (22.5%) and Galp (10%);
_ Entorno de Iara Block of the Transfer of Rights Agreement (Atapu field), operated by us, and where
we hold a 100% stake; and
_ Non-Contracted Area belongs to the Federal Union, represented by PPSA.
The interest of each party in Atapu joint reservoir are as follows:
Partner
Petrobras (operator)
Shell
TotalEnergies
Galp
PPSA
Share (%)
89.26
4.26
3.83
1.70
0.95
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
69
The Production Sharing Contract in Atapu is expected to become effective in early May 2022, with
39.5% of Transfer of Rights Agreement and 60.5% of the Surplus Volumes of Transfer of Rights.
As of May 2022, the interest of each party in the Atapu joint reservoir will be:
Partner
Petrobras (operator)
Shell
TotalEnergies
Galp
PPSA
Share (%)
65.69
16.66
15.00
1.70
0.95
SÉPIA
The AIP of Sépia accumulations, located in the Santos Basin, was approved by ANP in September
2019.
The Sépia Joint Reservoir comprises:
_ BM-S-24 (Sépia Leste Field), operated by us (80%), in partnership with Galp (20%); and
_ Nordeste de Tupi Block of the Transfer of Rights Agreement (Sépia field), operated by us (where
we hold a 100% stake).
The interest of each party in Sépia joint reservoir are as follows:
Partner
Petrobras (operator)
Galp
Share (%)
97.59
2.41
The Production Sharing Regime in Sépia is expected to become effective in early May 2022, with
31.3% of Transfer of Rights Agreement and 68.7% of the Surplus Volumes of Transfer of Rights.
As of May 2022 the interest of each party in the Sépia joint reservoir will be:
Partner
Petrobras (operator)
TotalEnergies
Petronas
QP Brasil
Galp
Share (%)
55.30
16.91
12.69
12.69
2.41
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
70
BÚZIOS AND TAMBUATÁ
The ANP approved the AIP of Búzios in October 2019.
In November 2019, we in partnership with CNODC and CNOOC obtained the rights to explore the
Surplus Volumes of Búzios field.
The Production Sharing Regime in Búzios became effective in September 2021. The sharedholdings
in the shared reservoir are:
Partner
Petrobras
CNODC
CNOOC
Share (%)
92.66
3.67
3.67
The interest of each party in the Búzios joint reservoir are:
_ 99.36% - Búzios field;
_ 0.64% - Tambuatá field operated by us with a 100% interest.
TARTARUGA VERDE
In the area of the Tartaruga Verde Field, Concession Contract BM-C-36, there are two producing
reservoirs: Tartaruga Verde Reservoir, which is totally contained within the ring fence limits, and the
Shared Tartaruga Mestiça Reservoir, which goes beyond the ring fence limits area in the pre-salt
polygon. This area was fully acquired by us in 2018, through the block of Sudoeste of Tartaruga
Verde.
The AIP of the Tartaruga Mestiça Shared Reservoir was signed in October 2014 between us and
PPSA, and has been in force since March 2018.
In December 2018, the Production Sharing Contract (CPP de Tartaruga Verde _P5) was signed for
the block of Sudoeste de Tartaruga Verde. This contract was signed between PPSA and us.
In December 2018, we declared the commerciality of the portion of the Tartaruga Mestiça Shared
Reservoir that extends to the block of Sudoeste of Tartaruga Verde under the name of Field of
Tartaruga Verde Sudoeste. The commerciality of this field was confirmed by the ANP in January
2019. The portion of the Tartaruga Mestiça Shared Reservoir present in the CPP of Sudoeste de
Tartaruga Verde became known as Campo de Tartaruga Verde Sudoeste.
In January 2021, the ANP approved Amendment 2 to the AIP, whereupon the following percentages
for the division of the deposit (Tract Participation) became effective:
_ Area under the Concession Agreement (BM-C-36) – 82.19%
_ Area under the Sharing Agreement (Block of Sudoeste de Tartaruga Verde) – 17.81%
In December 2019, we assigned to Petronas 50% of our concessions rights of the Tartaruga Verde
Fields (BM-C-36) and Espadarte Module III. We also established a consortium with Petronas,
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
71
pursuant to which we carry out operator activities in aforementioned operations. The Tartaruga
Verde Sudoeste Field, under the Production Sharing Agreement, remained entirely with us.
Shared Assets are used to produce the Tartaruga Mestiça and Tartaruga Verde deposits, which
include the FPSO Cidade de Campos dos Goytacazes.
SAPINHOÁ
In September 2000, we, YPF Brasil Ltda (YPF) and BG E&P Brasil LTDA (BG) entered into an
agreement to create the BM-S-9 consortium. YPF and BG were later acquired by Shell and Repsol,
respectively.
In September 2011, the consortium informed ANP that Sapinhoá field could extend to a non-
contracted area.
The ANP approved the AIP of Sapinhoá Field shared deposit, located in the Santos Basin, in January
2016
In October 2017, the same consortium acquired the rights to produce in the extended area Entorno
de Sapinhoá.
In March 2018, the ANP approved an amendment of the AIP, including the Entorno de Sapinhoá area
with the following participations:
Partner
Petrobras
Shell
Repsol Sinopec
Share (%)
45.00
30.00
25.00
MAIN PRODUCTION FIELDS
Production units
Basin
Santos
Main
Field
source Owned
Capacity
(mbbl/d)
Leased
Capacity
(mbbl/d)
Tupi
Pre-
salt
3
3 units with 150
6
1 unit with 100
1 unit with 120
4 units with 150
Santos
Búzios
Santos
Sapinhoá
Campos
Jubarte
Campos
Roncador
Pre-
salt
Pre-
salt
Pre-
salt
Post-
salt
4
4 units with 150
—
—
—
—
2
2 units with 150
2
2 units with 180
4
3 units with 180
1 unit with 190
2
—
1 unit with 100
1 unit with 110
—
API
gravity
29.5 –
30.9
28.5 –
28.8
29.8
Sulphur
content
(% wt)
2021 oil
production
(mbbl/d)
0.33 –0.40
620
0.32- 0.33
513
0.4
93
17.1 –
30.2
17.7 –
28
0.29 –0.56
0.54 – 0.73
186
112
Consortium
Petrobras
(65%),
Shell (25%),
Petrogal
(10%)
Petrobras
(100%)(1)
Petrobras
(45%),
Shell (30%),
Repsol
Sinopec (25%)
Petrobras
(100%)
Petrobras
(75%),
Equinor
(25%)
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Santos
Atapu
Pre-
salt
1
1 unit with 150
—
—
Our Business
72
27.7
0.4
15
Petrobras
(90.1%)
Petrogal
(1.7%)
Shell (4.3%)
TotalEnergies
(3.9%)
3
—
7
1 unit with 140
1 unit with 180
1 unit with 200
—
—
Petrobras
(100%)
17.6 –
24.6
0.59 – 0.73
110
—
1
1 unit with 150
—
—
1 unit with 50
1 unit with 75
4 units with 100
1 unit with 180
Petrobras
(50%)
Petronas
(50%)1
Petrobras
(100%)
27.5
0.76
45
19.4
0.77
61
1
1 unit with 180
1
1 unit with 100
Petrobras
(100%)
23.4 –
28.5
0.50 – 0.52
41
Campos
Campos
Marlim
Sul
Post-
salt
Tartaruga
Verde
Post-
salt
Campos
Marlim
Post-
salt
Campos
Marlim
Leste
Post-
salt
Other pre and post-salt fields
Onshore
Shallow waters
TOTAL
(1)
Including operations in 2021. Since September 2021, those Participations were changed to: Petrobras (91.8%), CNODC (3.67%), CNOOC (3.67%)
and PPSA (0.87%).
317
89
9
2,211
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
73
Búzios field
The Búzios field started production in April 2018 under the Transfer of Right Contract (ToR) and, in
December 31, 2021, reached a total accumulated production of 590.9 MMboe (or 584.2 mmboe
considering our share) under the co-participation agreement.
The Búzios field is an asset with significant reserves, high productivity wells, light oil, low lifting
costs and low emissions. It is economically resilient to a low oil price scenario.
In 2019, we acquired 90% of the exploration and production rights of the surplus volume of the ToR
of the Búzios field, in a partnership with CNODC Brasil Petróleo e Gás Ltda. (“CNODC”) (5%) and
CNOOC Petroleum Brasil Ltda. (“CNOOC”) (5%). This acquisition is consistent with our strategy of
focusing our investments in world-class assets.
In March 2020, we entered into the Production Sharing Contract for the Suplus of the ToR of the
Búzios Area, with CNOOC and CNODC as private partners and Pré-Sal Petróleo S.A (PPSA) as its
manager.
The co-participation agreement, which regulates the coexistence of the Transfer of Rights Contract
and Production Sharing Contract for the surplus of the ToR, was approved by ANP on August 12,
2021. As a consequence, we received a compensation of US$2.9 billion from CNOOC and CNODC.
Since September 1, 2021, we have a 92.6594% participation interest in the Búzios/Tambuatá shared
reservoir and CNOOC and CNODC each have a 3.6703% interest.
In September 2021, CNOOC expressed its interest in exercising the option to purchase an additional
share of 5% in the Production Sharing Contract of the ToR Surplus. This purchase option was already
provided for in the contract signed with the partners in the bidding of the surplus volume to the
Transfer of Rights Agreement of the Búzios field, held on November 6, 2019. The effectiveness of
this transaction will change participations interest in the Búzios/Tambuatá shared reservoir as
follows: Petrobras: 88.9891%, CNOOC: 7.3406% and CNODC: 3.6703%. The transaction remains
subject to the approvals by the CADE, ANP and the Ministry of Mines and Energy (“MME”).
The estimated amount that we will receive in cash at the closing of the transaction for CNOOC's
portion, subject to adjustments pursuant to the relevant agreements, is US$ 2.1 billion.
There are currently four units in operation in Búzios. A fifth platform, the FPSO Almirante Barroso,
is under construction, with 90% physical project progress and expected to start production in the
first quarter of 2023. FPSO Almirante Barroso will be the first chartered unit in the Búzios Field,
capable of processing 150,000 barrels of crude oil per day.
FPSO Almirante Tamandaré, a chartered unit that will become the field’s sixth production system,
is expected to start production in 2024. In addition, P-78, P-79, P-80, P-82 and P-83, five platforms
that will be owned by us, are expected to start production in 2025, 2026 and 2027.
In October 2021, with less than three years of operation, the Búzios field surpassed the 655.9 kbpd
production mark due to good operating results and a technical study that allowed its units to
operate above the nominal capacity.
In 2021, investments in the Búzios field totaled US$2 billion. According to the Strategic Plan, US$23
billion will be invested by us over the next five years. The average daily production from 2022 to
2026 is expected to be 651.47 mbbl (our share), with Operational Expenditures around US$6.2 billion
in the period (our share), including leasing of vessels.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
74
We also carry out limited oil shale mining operations in São Mateus do Sul, in the Paraná Basin of Brazil, and
convert the kerogen (solid organic matter) from these deposits into synthetic oil and gas. This operation is
conducted in an integrated facility and its final products are fuel gas, liquefied petroleum gas (“LPG”), shale
naphtha and shale fuel oil. Our business units in Brazil do not utilize the fracking method or the hydraulic
fracturing method for oil production, since they are not appropriate in the context of our operations. Also,
we do not inject any water or chemicals in the soil in connection with our open pit oil shale mining operations.
Our process consists of crushing, screening and subsequently heating all the shale at high temperatures
(pyrolysis) and we have in place a proper segregation process for the by-products derived from such
process.
For more information on our production of crude oil, natural gas, synthetic oil and synthetic gas by
geographic area in 2021, 2020 and 2019, see Exhibit 15.3 to this annual report.
Customers and Competitors
One of our most representative trades in terms of volume and profitability is crude oil. We sell oil through
long-term and spot-market contracts, and in 2021 the crude oil volume committed through long-term
contracts with fixed quantity subject to final agreement on commercial terms was approximately 130,000
bbl/d.
Our overseas portfolio includes approximately 30 clients, such as refiners that process or have processed
Brazilian oils regularly, distributed throughout China, the Americas, Europe, and other countries in Asia.
OIL CLIENTS (% vol)
Fuel oil is one of the most representative types of oil products in terms of volume in exports. In 2021, we
have primarily exported low sulfur fuel oil as well as high sulfur fuel oil to several destinations. Our fuel oil
is available in the major hubs in the market such as Singapore, Arab Gulf (AG), the Mediterranean and
Northwest Europe, the US Gulf Coast, the west coast of Africa, Panama and the Caribbean. Our
counterparties list consists of major companies, trading companies and barging companies. We have sold
fuel oil to more than 40 different companies this year.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
In the exploration and production industry, we deal with several competitors when we participate in bidding
rounds conducted by the ANP.
Our Business
75
Reserves
Preparation of reserves estimates
We apply SEC rules (Rule 4-10(a) of Regulation S-X and Subpart 229.1200 of Regulation S-K) for
estimating and disclosing oil and natural gas reserve quantities included in this annual report. In
accordance with those rules, we estimate reserves by considering average prices calculated as the
unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-
month period prior to the end of the reporting period, except for the reserves of the Amazon fields
for which volumes are estimated using gas prices as set forth in our contractual arrangements for
gas sales. Reserve volumes of non-traditional reserves such as synthetic oil and gas are also
included in this annual report in accordance with the SEC regulation.
We estimate reserves based on forecasts of field production, which depends on an array of technical
information, such as seismic surveys, well logs and tests, rock and fluid samples, and geoscience,
engineering and economic data. All reserve estimates involve some degree of uncertainty. The
uncertainty depends primarily on the amount of reliable geological and engineering data available
at the time of the estimate and the interpretation of that data. Our estimates are thus made using
the most reliable data and technology at the time of the estimate, in accordance with the best
practices in the oil and gas industry and SEC rules and regulations.
Thus, the reserve estimation process begins with an initial evaluation of our assets by geophysicists,
geologists and engineers. Reserves coordinators in each business unit in Brazil and the corporate
reserves team provide guidance for reserves estimates in compliance with SEC requirements to the
asset teams. General managers in our business units in Brazil and executive officers of companies
outside Brazil where we have interests are responsible for regional reserves estimates in compliance
with SEC requirements. The corporate reserves team is responsible for consolidating our reserves
estimates, standardized measures of discounted net cash flows related to proved oil and gas
reserves and other information related to proved oil and gas reserves. Our reserves estimates are
approved by our Board of Executive Officers, which then informs our Board of Directors about the
approval. The technical person primarily responsible for overseeing the preparation of our reserves
is the manager of the corporate reserves team, who has a degree in engineering and 19 years of
experience in the oil and gas industry.
DeGolyer and MacNaughton (“D&M”) conducted a reserves evaluation of 97.5% of our net proved
crude oil, condensate and natural gas reserves as of December 31, 2021 in Brazil. The amount of
reserves reviewed by D&M corresponds to 97.0% of our total proved reserves company-wide on a
net equivalent barrel basis. For disclosure describing the qualification of D&M’s technical person
primarily responsible for overseeing our reserves evaluation, see Exhibit 99.1 to this annual report.
For a description of the risks relating to our reserves and our reserve estimates, see “Risks” in this
annual report.
We discover new areas through exploratory activity. Such areas constitute our fields after the declaration
of commerciality. We then prepare a development plan for each field. As projects achieve adequate
maturity, proved reserves may be reported.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
76
Our fields’ proved reserves can be later increased with additional drilling, operational optimizations and
improved recovery methods, such as water injection, among other activities.
Our net proved oil, condensate and natural gas reserves as of December 31, 2021 were estimated at 9,878
million boe. This estimate includes our interest in our equity method investees, which represents 0.2% of
our net reserves.
PROVED RESERVES (1) (million boe)
(1) Apparent differences in the sum of the numbers are due to rounding.
Oil and gas reserves volumes change yearly. Quantities included in our previous year’s reserves that are
produced during the year are no longer reserves at year-end. Other factors, such as reservoir performance,
revisions in oil prices, discoveries, extensions, purchases and sales of assets that occurred during the year,
also influence year-end reserves quantities.
PROVED RESERVES (1)
(million boe)
(1) Apparent differences in the sum of the numbers are due to rounding.
(2) The 896 million boe production volume is the net volume withdrawn from our proved reserves. It therefore excludes NGL, as we estimate our oil and gas
reserves at a reference point located prior to the gas processing plants, except for the United States of America and Argentina. The production does not
consider injected gas volumes, production of EWTs in exploratory blocks and production in Bolivia, since Bolivian reserves are not included in our reserves
due to restrictions determined by Bolivian Constitution.
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
77
In 2021, we incorporated 1,969 million boe of proved reserves, including:
addition of 1,376 million boe due to new projects, mainly in the Búzios field and in other fields in the
Santos and Campos Basins. The new projects in the Búzios field were made possible due to the
acquisition of the Transfer of Rights Surplus and the approval of the Búzios Coparticipation
Agreement;
addition of 429 million boe related to economic revisions, mainly due to the increase in oil prices; and
addition of 164 million boe arising from technical revisions, mainly due to good performance and
increased production experience in reservoirs in the pre-salt layer of the Santos Basin.
The additions in our proved reserves were partially offset by the reduction of 11 million boe due to sales of
proved reserves.
Proved Undeveloped Reserves
As of December 31, 2021, our proved undeveloped reserves were estimated at 4,192 million boe, a net
increase of 41% when compared to 2020 year-end.
In 2021, we incorporated 1,977 million boe of proved undeveloped reserves, including:
addition of 1,374 million boe due to new projects, mainly in the Búzios field and in other fields in the
Santos and Campos Basins. The new projects in the Búzios field were made possible due to the
acquisition of the Transfer of Rights Surplus and the approval of the Búzios Coparticipation
Agreement;
addition of 312 million boe arising from technical revisions, mainly due to good performance and
increased production experience in reservoirs in the pre-salt layer of the Santos Basin; and
addition of 291 million boe related to economic revisions, mainly due to the increase in oil prices.
The additions in our proved undeveloped reserves were partially offset by the conversion of 767 million boe
of proved undeveloped reserves to proved developed reserves, mainly as a result of FPSO Carioca plataform
start-up in the Santos Basin and offshore drilling and tieback operations, and by the reduction of 1 million
boe due to sales of proved undeveloped reserves.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
CHANGES IN PROVED UNDEVELOPED RESERVES (1) (million boe)
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78
(1) Apparent differences in the sum of the numbers are due to rounding.
As of December 31, 2021, 33% (1,395 million boe) of our proved undeveloped reserves have remained
undeveloped for five years or more, mainly due to the inherent complexity of ultra-deepwater development
projects in giant fields, particularly in the Santos and Campos Basins, in which we are investing in the
required infrastructure.
In 2021, we invested a total of US$6.1 billion in development projects, of which 99% was invested in Brazil.
Most of our investments relate to long-term development projects, which are developed in phases due to
the large volumes and extensions involved, the deep and ultra-deepwater infrastructure and the production
resources complexity. In these cases, the full development of the reserves related to these investments
may exceed five years.
For further information on our reserves, see the unaudited section “Supplementary Information on Oil and
Gas Exploration and Production” in our audited consolidated financial statements.
Oil and Gas Additional Information
The following tables show (i) the number of gross and net productive oil and natural gas wells and (ii) total
gross and net developed and undeveloped oil and natural gas acreage in which we had working interests as
of December 31, 2021. A gross well or acre is a well or acre where we own a working interest, while the number
of net wells or acres is the sum of fractional working interests in gross wells or acres. We do not have any
material acreage expiring before 2025.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
79
GROSS AND NET PRODUCTIVE WELLS
As of December 31, 2021
Oil
Natural Gas
Synthetic
Oil
Synthetic
gas
Gross
Net Gross
Net Gross Net Gross Net
4,518
54
4,572
0
43
43
4,488
218
211
22.8
202
97.7
4,510.8
420
308.7
0
3.29
3.29
0
7
7
0
0.84
0.84
4,615
4,514.09
427 309.54
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated
Equity method investees
South America (outside of Brazil)
North America
Total equity method investees
TOTAL GROSS AND NET PRODUCTIVE
WELLS
GROSS AND NET DEVELOPED AND UNDEVELOPED ACREAGE (in acres)
As of December 31, 2021
Developed acreage
Undeveloped acreage
Gross
Net
Gross
Net
4,232,089.9
3,769,751.4
884,053.1
732,672.7
Consolidated
Brazil
South America (outside of Brazil)
2,304.0
774.1
2,310.0
776.2
Total consolidated
Equity method investees
North America
Total equity method investees
4,234,393.9
3,770,525.5
886,363.1
733,448.9
22,897.0
22,897.0
1,985.2
147,157.1
10,969.3
1,985.2
147,157.1
10,969.3
TOTAL GROSS AND NET ACREAGE
4,257,290.9
3,772,510.7
1,033,520.2
744,418.2
For “net” figures, we used our working interest held on December 31, 2021. The division in oil and gas in the
acreage table was not included because, usually, oil and gas are produced from the same acreage. Gross and
net developed and undeveloped acreage presented in this table does not include exploratory areas.
The following table sets forth the number of net productive and dry exploratory and development wells
drilled in the last three years.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
NET PRODUCTIVE AND DRY EXPLORATORY AND DEVELOPMENT WELLS
Our Business
80
2021
2020
2019(1)
Net productive exploratory wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(2)
Africa
Total productive exploratory wells drilled
Net dry exploratory wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(2)
Africa
Total dry exploratory wells drilled
Total number of net exploratory wells drilled
Net productive development wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(2)
Africa
Total productive development wells drilled
Net dry development wells drilled
Consolidated subsidiaries
Brazil
PETROBRAS
3.4
0.32
3.72
—
—
3.72
0.4
—
0.4
—
—
0.4
4.12
4.6
0
4.6
—
—
4.6
1.5
—
1.5
—
—
1.5
6.1
5.5
1.0
6.5
—
—
6.5
1.0
—
1.0
—
—
1.0
7.5
26.23
79.0
102.0
4.7
30.9
0.336
—
79.3
102.0
0.2042
0.306
0
0
0.14
0.6
31.1
79.64
102.7
—
—
—
—
—
—
ANNUAL REPORT AND FORM 20-F | 2021
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(2)
Africa
Total dry development wells drilled
Our Business
81
2021
2020
2019(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
TOTAL NUMBER OF NET DEVELOPMENT WELLS DRILLED
31.1
79.64
102.7
(1) Data from 2019 has been adjusted to reflect the inclusion of both injection and producing wells.
(2) Due to the joint venture formed by PAI and Murphy, information regarding proved reserves, acreage and wells in the United States are reported
in the “equity method investees” section. For “net” figures, we used the working interest held as of December 31, 2021.
The following table summarizes the number of wells in the process of being drilled as of December 31, 2021.
NUMBER OF WELLS BEING DRILLED AS OF DECEMBER 31, 2021
Consolidated Subsidiaries
Brazil
International
South America (outside of Brazil)
North America
TOTAL WELLS DRILLING
Gross
Net
7.0
0
0
7.0
4.0
0
0
4.0
The following table sets forth our average sales prices and average production costs by geographic area
and by product type for the last three years.
AVERAGE SALES PRICES AND AVERAGE PRODUCTION COSTS (US$)
2021
Average sales prices
Oil and NGL, per barrel
Natural gas, per thousand cubic feet(1)
Synthetic oil, per barrel
South America
Brazil
South America
(outside of Brazil)
Total
67.48
7.61
57.46
34.43
3.21
-
67.45
7.43
57.46
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Synthetic gas, per thousand cubic feet
Average production costs, per barrel – total
2020
Average sales prices
Oil and NGL, per barrel
Natural gas, per thousand cubic feet(1)
Synthetic oil, per barrel
Synthetic gas, per thousand cubic feet
Average production costs, per barrel – total
2019
Average sales prices
Oil and NGL, per barrel
Natural gas, per thousand cubic feet(1)
Synthetic oil, per barrel
Synthetic gas, per thousand cubic feet
Average production costs, per barrel – total
Our Business
82
-
5.05
36.89
3.65
—
—
4.35
36.89
3.65
—
—
4.69
5.20
3.68
39.95
5.47
33.2
2.52
4.11
61.25
7.55
50.55
3.53
7.02
5.20
3.66
39.96
5.63
33.2
2.52
4.11
61.25
7.72
50.55
3.53
7.05
(1) The volumes of natural gas used in the calculation of this table are the production volumes of natural gas available for sale and are also shown
in the production table above. Natural gas amounts were converted from bbl to cubic feet in accordance with the following scale: 1 bbl = 6 cubic
feet.
For more information about our capitalized exploration costs, see Note 26 to our audited consolidated
financial statements and the unaudited supplementary information on oil and gas exploration and
production contained therein.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
83
Refining, Transportation and Marketing
We processed 73% of all our oil production, which includes oil and LNG and excludes natural gasoline (“C5+”),
in our refineries. The remainder was exported. In 2021, we produced 1.852 million bbl/d of oil products, from
the processing of Brazilian oil (91.5% of feedstock) and imported oil (8.5% of feedstock). We traded these
oil products both in Brazil and abroad.
Furthermore, we operate in the petrochemical sector with interests in companies, as well as in the
production of biofuels through our wholly owned subsidiary, Petrobras Biocombustível S.A. (“PBIO”).
Overview
We own and operate 12 refineries in Brazil, with a total net crude distillation capacity of 1,897 mbbl/d. This
represents 86% of all refining capacity in Brazil according to the 2021 statistical yearbook published by the
ANP. Until November 2021 we also owned and operated RLAM refinery with a capacity of 279 mbbl/d. The
sale of the RLAM refinery was completed on November 30, 2021.Most of our refineries are located near our
crude oil pipelines, storage facilities, refined product pipelines and major petrochemical facilities, easing
access to crude oil supplies and end-users.
We also operate a large and complex infrastructure of pipelines and terminals, and a shipping fleet to
transport oil products and crude oil to Brazilian and global markets. We operate 40 of our own terminals
through our wholly-owned subsidiary Petrobras Transporte S.A. (“Transpetro”), and we have contracts for
the use of some of the storage capacity of 13 third-party terminals.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
84
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
85
Our Refining, Transportation and Marketing also include activities such as (i) petrochemicals (ii) extraction
and processing of shale oil and (iii) production of biofuels.
We are repositioning ourselves in the refining business through divestment, a strategy which allows us to
share risks and to establish a dynamic, competitive and efficient industry, while generating liquidity for us.
In line with our repositioning process, in June 2019, we signed a commitment with CADE which consolidates
our understanding on the execution of divestment of refining assets in Brazil. The purpose of the
agreement is to provide competitive conditions, encouraging new economic agents to enter the
downstream market, as well as suspending CADE’s court administrative investigation related to the alleged
abuse of our dominant position in the refining segment. The agreement considered the divestment of
approximately 50% of our refining capacity as of the date of the agreement, which at such time comprised
seven refining units (REMAN, LUBNOR, RNEST, RLAM, REGAP, REPAR and REFAP) and a shale
industrialization unit (SIX).
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – Operational Risks” and “– Portfolio Management” in this annual report.
In August 2021, we signed an agreement with Ream Participações S.A. to sell REMAN and its associated
logistics assets. The transaction is subject to the satisfaction of conditions precedent, such as approval by
the CADE. Until the conditions precedent are met and the transaction is closed, we will maintain the regular
operations of the refinery and all associated assets.
In November 2021 we completed the sale of RLAM refinery.
In November 2021 we signed an agreement with Forbes & Manhattan Resources Inc. (“F&M Resources”), for
the sale of the shares of the company that will own the Shale Industrialization Unit (“SIX”), located in São
Mateus do Sul/PR.
In January 2022, we approved the sale of our stake in the Potiguar Cluster, which includes, among its assets,
the AIG (Former RPCC). Until the conditions precedent are met and the transaction is closed, we will continue
to operate the assets.
For more information on the progress of our divestments, see “ – Portfolio Management” in this annual
report.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Main Assets
Transport and storage
Pipelines (km)
Own
Third parties(1)
Vessel fleet (owned and chartered)
Own
Chartered
Terminals
Own
Third parties(2)
Refining
Refineries
Brazil(3)
Abroad
Our Business
86
2021
2020
2019
7,719
6,812
907
123
26
97
59
40
19
12
12
-
7,719
7,499
220
131
30
101
61
44
17
13
13
-
7,719
7,499
220
128
45
83
63
44
19
13
13
-
Nominal installed capacity (mbbl/d)
Brazil
Abroad
1,897
1,897
-
2,176
2,176
-
2,176
2,176
-
(1) Third party pipelines that have existing Transpetro transport contracts.
(2) Third party terminals that have existing contracts for the use of the storage service, including six terminals operated by Transpetro.
(3) Signing of REMAN in August 2021.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
87
RefTOP - World Class Refining program
In May 2021, we launched the RefTOP - World Class Refining program with the objective of being
among the best oil refining companies in the world in terms of reliability, productivity, operational
performance and energy efficiency. RefTOP consists of a set of initiatives that seek to implement
improvements to increase the efficiency and operational performance of the refineries that are not
in the divestment portfolio - RPBC, REDUC, RECAP, REPLAN, and REVAP - and to position us more
competitively in the opening of the oil refining market in the country. We evaluated world
benchmarks of the main refining indicators to define the program's objectives.
RefTOP provides for initiatives to increase the refineries' energy performance, making better use
of inputs such as natural gas, electricity, and steam in their own operations.
The program will promote the intensive use of digital technologies, automation and robotization in
our refineries. One of the examples of digital technologies that are already being adopted by us and
that will be expanded with RefTOP are the Digital Twins - digital representations of the operational
facilities - for real-time monitoring, failure reduction, and easier decision-making. Another
important driver of the program is the increase in the production of high value-added oil products,
such as diesel and propylene - raw material for the petrochemical industry for the production of
packaging and automotive parts, for example. We will leverage the processing of pre-salt oils, which
have low sulfur content, bringing competitive advantages and opportunities to increase our refining
margin, favoring the production of S-10 diesel and bunker.
The investments in RefTOP through 2025 are approximately US$300 million and are included in the
US$7.1 billion of investments contemplated for Refining, Gas & Power in the Strategic Plan.
Refining
We serve our oil products clients in Brazil through a coordinated combination of oil processing, importing
and exporting that according to our pricing policy seeks to optimize our margins, considering different
opportunity costs of domestic and imported oil, oil products in the different markets, as well as the costs
of related transport, storage and processing.
In 2021, we processed 1,780 mbbl/d of oil in our 12 refineries and RLAM (until its sale in November 2021).
The following graphs show the processed feedstock and the performance of our refineries.
In 2021, our refineries broke an internal production record of S-10 Diesel low-sulfur diesel, producing 21.2
million m³ of the product, a 10% higher volume than in 2020, when production reached 19.2 million m³.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
PROCESSED FEEDSTOCK (mbbl/d)
Our Business
88
The S-10 Diesel records follow the evolution of heavy-duty and utility vehicle engines powered by diesel,
which are responsible for most of the goods circulated in Brazil. There are two types of road diesel in Brazil,
the S-500 and the S-10, with the former being used by vehicles manufactured prior to 2012.
In 2021, there was an increase in the production of oil products and the utilization factor of the refining
system compared to 2020. Despite the concentration of maintenance stoppages in 2021 and the
divestment of RLAM in November 2021, production increased as market recovered, after the low demand in
2020 due to the Covid-19 pandemic.
Diesel production increased in 2021, due to economic growth, mainly in the industrial sector, and reduction
of third-party imports.
Gasoline production increased in 2021 as a result of the increase in the market due to the gain in share of
gasoline over hydrated ethanol in flex-fuel vehicles, the reduction of third-party imports and the low
demand in 2020 due to the Covid-19 pandemic.
In 2021, there was an increase in jet kerosene production following the recovery of the domestic market,
after the impact of the Covid-19 pandemic on commercial jet fuel demand in 2020.
Naphtha production decreased in 2021, following the drop in sales in the domestic market, due to the new
contracts in force with Braskem since December 23, 2020.
LPG production decreased in 2021 due to lower sales resulting from higher bottle prices and lower
residential LPG consumption, which had increased in 2020 as a result of the Covid-19 pandemic.
Over the past 11 years we have made substantial investments in our existing refineries to increase our
capacity to economically process heavier Brazilian crude oil, improve the quality of our oil products to meet
stricter regulatory standards, modernize our refineries, and reduce the environmental impact of our
refining operations.
One such investment is the implementation of a new diesel hydrotreatment unit at the Paulinia Refinery
(“REPLAN”), currently in a bidding process.
With this project, REPLAN will be able to produce 100% ultra-low sulfur diesel (ULSD or S-10) and increase
the production of jet fuel, aiming to meet the specification and quantities demanded by the future market,
in an economical way, with operational safety and lower impacts to the environment.
The new diesel hydrotreatment unit will have a production capacity of 63 Mbpd of S-10 and is scheduled to
start operation in 2025, in line with the Strategic Plan.
The following table sets out the performance of our refineries.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
PERFORMANCE OF REFINERIES
Crude
distillation
capacity
(mbbl/d)
Nelson
Complexity
Index
Average throughput(1)
(mbbl/d)
Operational availability
Total Utilization rate(4 )
(%)
(%)
Refinery
2021
2021
2021
2020
2019
2021
2020
2019
2021
2020
2019
Our Business
89
LUBNOR
RECAP
REDUC
REFAP
REGAP
REMAN
REPAR
REPLAN
REVAP
RLAM
RPBC
AIG
(Former RPCC)
RNEST
Average crude
oil throughput
Average NGL
throughput
Average
throughput
Crude
Distillation
capacity
8
57
239
201
157
46
208
434
252
279
170
38
88
—
—
—
3.5
6.8
8
54
8
39
7
97.8
97.3
95.3
94.5
103.4
86.9
50
96.4
96.8
96.2
95.5
68.5
87.8
15
186
178
190
96.4
96.8
96.9
79.0
76.2
80.4
6
145
129
138
95.8
97.6
93.7
75.5
67.3
71.4
7.9
134
123
134
96.5
97.4
96.3
87.4
79.3
88.2
1.8
30
27
32
98.0
97.9
97.9
66.2
59.3
69.1
7.8
181
179
168
97.7
97.8
94.2
87.8
86.4
81.2
6.9
355
306
326
96.8
96.8
96.2
82.5
71.1
76.1
8.6
227
216
185
96.8
97.1
94.5
92.1
87.0
74.3
7.7
179(2)
239
206
95.1
94.1
92.9
72.1
88.8
80.8
10.2
149
143
133
95.3
96.2
95.3
88.2
84.5
78.5
1
10.7
29
63
29
93
32
—
—
—
—
—
—
74
92.2
96.8
97.8
78.9
115.3
94.5
—
1,740
1,709
1,675
—
—
—
—
—
—
40
45
45
—
—
—
—
—
—
1,780
1,754
1,720
—
—
—
—
—
—
—
—
1,897(3)
—
—
—
—
—
—
—
—
—
—
(1) Considers oil and NGL processing (fresh feedstock).
(2) Average until November 2021.
(3) As of December 31, 2021 (does not consider RLAM).
(4) Total utilization rate considers the entire load in the distillation units, consisting of oil, C5 + and reprocessing (of oil and other products).
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
MAIN PRODUCTS, MARKETS AND STORAGE CAPACITY OF OUR REFINERIES(1)
Refinery
LUBNOR
RECAP
REDUC
REFAP
Main products
Main markets in Brazil
Asphalt (45%); Fuel Oil (35%);
Lubricants (13%); Diesel (7%)
Lubricant Oil – sold to distributors and marketed
nationwide 0.3 0.6 Asphalts – states in Northern
and Northeastern Brazil and Minas Gerais
Diesel (42%); Gasoline (33%); LPG
(9%)
Part of the São Paulo metro region and
petrochemical plants
Diesel (25%); Gasoline (14%); Fuel
Oil (19%); LPG (12%); Jet Fuel
(4%); Naphtha (12%)
Diesel (47%); Gasoline (20%);
Naphtha (14%); LPG (7%)
REGAP
Diesel (48%); Gasoline (24%); Jet
Fuel (4%); LPG (7%)
Rio de Janeiro, São Paulo, Espírito Santo, Minas
Gerais, Bahia, Ceará, Paraná, Rio Grande do Sul
Rio Grande do Sul, part of Santa Catarina and
Paraná, in addition to other states by means of
coastal shipping
Currently supplies the state of Minas Gerais and,
occasionally, the state of Espírito Santo. It can
also expand its reach to the Rio de Janeiro
market
Our Business
90
Storage capacity
(mbbl)
Crude
oil
Oil
products
0.3
0.6
0.5
1.8
5.7
12.5
3.2
1.4
1.7
6.0
REMAN
Gasoline (31%); Diesel (26%);
Naphtha (9%); Jet Fuel (7%); Fuel
Oil (15%)
Amazonas, Acre, Roraima, Rondônia, Amapá and
Pará
0.7
1.5
REPAR
Diesel (47%); Gasoline (27%); LPG
(8%)
Paraná, Santa Catarina, Southern São Paulo and
Mato Grosso do Sul
REPLAN
Diesel (46%); Gasoline (21%); LPG
(7%); Jet Fuel (3%)
REVAP
Diesel (32%); Gasoline (19%);
Naphtha (10%); Jet Fuel (10%);
Fuel Oil (14%)
RPBC
Diesel (45%); Gasoline (25%); Fuel
Oil (13%); LPG (6%)
AIG
(Former
RPCC)
Fuel Oil (76%); Diesel (9%); Jet
Fuel (5%); Gasoline (6%)
RNEST Diesel (50%); Naphtha (13%); Coke
(8%); Fuel Oil (27%)
Countryside of the state of São Paulo, Mato
Grosso, Mato Grosso do Sul, Rondônia and Acre,
Southern Minas Gerais and the so-called
“Triângulo Mineiro”, Goiás, Brasília, and
Tocantins
Paraíba Valley, the northern coast of the state of
São Paulo, southern Minas Gerais, the São Paulo
metro region, Midwestern Brazil and Southern
Rio de Janeiro. It supplies 80% of the demand for
jet fuel in the São Paulo state market and 100%
of the Guarulhos International Airport
Most products are intended for São Paulo’s
capital. A portion is also shipped to Santos and to
the Northern, Northeastern, and Southern
Brazilian regions
2.9
1.9
6.7
12.9
3.3
12.0
2.5
6.8
Rio Grande do Norte and southern Ceará
0.12
0.12
North and Northeast of Brazil
—(2)
0.7
(1) RLAM was divested on November 30, 2021.
(2) Crude oil is supplied directly to RNEST’s tank farms of 5.1 mbbl, with no external crude oil storage.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
With respect to oil products, we produced 1,852 mbbl/d of oil products in 2021, as shown in the following
graphic:
Our Business
91
OIL PRODUCTS PRODUCTION (mbbl/d)
Ongoing undertakings
Located in southeastern Brazil (Itaboraí, in the state of Rio de Janeiro), the GASLUB Cluster is comprised of
the GASLUB Itaboraí UPGNs and other underlying utilities. With respect to the UPGN, all critical bidding for
the UPGN utilities was successfully completed during 2019. In 2020, some utilities systems were
successfully completed. In 2021, several systems, mainly in utilities, have been authorized to work and
tested for operation. The unit start up is scheduled for 4Q2022 (first processing train). Studies concerning
new project alternatives for the GASLUB Cluster are still in progress, which include integration with the
refinery operating in REDUC for the production of basic lubricants G-II and high-quality fuels and the
construction of a Natural Gas Thermoelectric Power Plant.
With respect to the expansion of production capacity of ultra-low sulfur diesel (ULSD or S-10), in addition
to the new hydrotreatment unit at the REPLAN, with an additional production capacity of 63 Mbpd of ULSD,
we also have an ongoing investment at the REDUC. This investment in focused on modifications to an
existing diesel hydrotreating unit (U-2700) in order to improve the S-10 production in 28,000 Mbpd,
meeting market specifications and environmental requirements. This project is currently in its execution
phase, expected to start in 2023. A very similar investment is planned for the REVAP, with modifications on
an existing diesel hydrotreating unit (U-272D) in order to improve the S-10 production in 41,000 Mbpd. This
project is currently developing basic engineering and is expected to start in 2025.
Our Strategic Plan has included additional investments in RNEST, aiming to add overall value to the facility.
See “Strategic Plan” in this annual report.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
92
International Maritime Organization
In 2016, the International Maritime Organization (“IMO”) decided to reduce the allowable upper limit
for sulfur content in marine fuels (bunker oil) from 3.5% to 0.5% from January 1, 2020 onwards.
From 2017 to the first quarter of 2019, we carried out studies and analyses in order to prepare our
refineries and logistics to produce and deliver a compliant fuel. Furthermore, our increasing
production of oil from pre-salt has low sulfur, allowing us to obtain fuel oil that already practically
meets the bunker fuel specifications without requiring the addition of high amounts of diluents
which give us a competitive edge in the global market.
We have a competitive advantage in the production of the IMO 2020 compliant marine fuel, allowing
us to anticipate the market trend and satisfying the needs of our clients.
In the last quarter of 2019, the demand for low sulfur fuel oil (“LSFO”) increased in all ports where
we offered the product while international prices have risen significantly.
In 2020, due to the rising value of the LSFO, we have set new monthly records of exports from Brazil
three times, the last one being in September when 1.14 mmt of fuel oil (mainly LSFO grades) left
Brazilian ports. Even with increasing export quantities during 2020, the average of LSFO grades
from Brazil were commercialized at a positive crackspread against Brent.
In 2021, we have once again exported a large quantity of fuel oil (approximately eight million tons),
with the LSFO cargos being commercialized at positive crackspreads. The Far East was, once again,
the main destination of Brazilian exports of fuel oil.
Logistics
Oil and oil products logistics connect the oil production systems to refineries and markets seeking to
maximize the value of oil refining operations and the commercialization of oil and oil products in Brazil and
abroad through an integrated system of logistics planning, sales, and operations and assets, as depicted
below.
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
93
We directly manage some assets of this system, while we contract others with our wholly owned subsidiary
Transpetro.
Transpetro is a logistics company which performs operations for the storage and handling of oil and its
derivates, ethanol, gas and biofuels for the supply of Brazilian machinery, thermoelectric and refineries,
including import and export activities.
The terminals and pipelines operation are an important link in our supply chain. The oil is transported from
the production fields to Transpetro terminals either by pipeline or by ship. From there, it is transported to
refineries or for export. After refining, the oil products are again drained through pipelines to the terminals
to be delivered to fuel distribution companies, which supply the Brazilian and global markets.
This operation covers a 7,719 km pipeline network and 46 terminals, 25 of which are marine and 21 onshore.
The terminals have a total nominal storage capacity of 10.73 million m3. In 2021, Transpetro handled 600.8
million m3 of oil and oil products, totaling 8,707 operations with tankers and oil barges.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
VOLUME MOVED AT TERMINALS AND PIPELINES (million m3)
Our Business
94
Fuel theft in onshore pipelines
Aiming to strengthen our commitment to life, the environment and operational safety, in 2021 we
strengthened our relationship with the Public Prosecutor’s Office and public security authorities. Upon our
admission to the ICL (Instituto Combustível Legal) and with the active participation of Transpetro, we
started to address the issue of fuel theft in pipelines, also known as illegal taps. With these actions and the
constant investments in detection systems and monitoring of pipelines, combined with the permanent
efforts of several departments of Transpetro, we managed to reduce the number of illegal taps by more
than 49% compared to 2020 and a significant reduction in the volume of stolen product. Increased
promptness in locating illegal taps minimizes the risks to the population, contributes to the environmental
preservation, to the integrity of the pipelines, as well as to avoid interruption of pipeline operations,
reducing financial losses and impacts on our image.
In 2021, we recorded a loss of 1,800 m³ of oil and oil products, a 64% decrease compared to the volume lost
in 2020, when we recorded a loss of 4,973 m³. The number of occurrences of theft of oil and derivatives
reached 102, a decrease of more than 49% compared to the previous year when 201 occurrences were
recorded. Out of the total number of cases, 81% occurred in the state of São Paulo, 10% in the state of Rio
de Janeiro, 5% in the state of Minas Gerais and the remainder in other states. These three states accounted
for 96% of the occurrences in 2021.
In 2021, we continued with the implementation of the Petrobras Integrated Pipeline Protection Program
(Pró-Dutos), launched in 2019 and which we conducted in partnership with Transpetro. The program aims
to expand and integrate all actions planned to mitigate the risks caused by theft of oil and oil products in
pipelines. We also followed the Emergency Action Plan where we managed to achieve 93% of the planned
actions. The programs are multidisciplinary and focus on several areas: intelligence, legislation, social
responsibility, communication, technology and contingency.
We also launched a new advertising campaign to raise public awareness of fuel theft risks, more focused in
sensitive areas and, to encourage the public to report suspicious activities through our communication
channel. We continued to evaluate our crisis procedures and responses to emergencies resulting from fuel
theft from pipelines through a tabletop simulated emergency exercise to test our business operational
capabilities.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
TERMINALS
Location
Alagoas
Amazonas
Ceará
Espírito Santo
Distrito Federal
Goiás
Maranhão
Minas Gerais
Pará
Pernambuco
Paraná
Rio de Janeiro
Rio Grande do Norte
Rio Grande do Sul
Santa Catarina
Sergipe
São Paulo
TOTAL
Terminal
Maceió
Manaus (REMAN)
Coari
Mucuripe
Barra do Riacho
Norte Capixaba
Vitória
Brasília
Senador Canedo
São Luís
Uberaba
Uberlândia
Belém
Suape
Paranaguá
Ilha d’ Água
Angra dos Reis
Campos Elíseos
Ilha Redonda
Japeri
Volta Redonda
Cabiúnas
Guamaré
Niterói
Rio Grande
Osório
Biguaçu
Itajaí
Guaramirim
São Francisco do Sul
Aracaju
Santos
São Sebastião
Barueri
Cubatão
Guararema
Guarulhos
Paulínia
Ribeirão Preto
São Caetano do Sul
40
Our Business
95
Type
Nominal capacity (m³)
Marine
Marine
Marine
Marine
Marine
Marine
Marine
Onshore
Onshore
Marine
Onshore
Onshore
Marine
Marine
Marine
Marine
Marine
Onshore
Marine
Onshore
Onshore
Onshore
Marine
Marine
Marine
Marine
Onshore
Onshore
Onshore
Marine
Marine
Marine
Marine
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
–
58,266
–
86,147
–
107,834
85,205
10,710
72,326
127,778
78,897
54,812
45,876
48,187
108,560
204,567
179,173
1,011,487
547,284
78,662
37,650
25,502
483,134
258,309
21,189
101,695
842,394
36,214
56,482
18,644
473,166
156,940
389,080
2,057,557
206,461
161,102
1,026,935
164,181
274,608
50,886
227,501
9,975,399
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ANNUAL REPORT AND FORM 20-F | 2021
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96
In 2020, aiming to optimize the operational fleet and following the best practices of the shipping market,
Transpetro performed an analysis of its ship portfolio and decided to dispose of assets over 25 years old.
In this way, Transpetro created a divestment plan that was completed in 2021. This action plan, aimed at
improving the operational availability indicator, resulted in a reduction in the average age of the fleet from
13.57 years to 7.31 years in 2021.
For more information on the vessels chartered or owned by us and Transpetro, see Exhibit 15.4 to this
annual report.
Marketing
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
SALES VOLUMES OF OIL PRODUCTS TO BRAZILIAN MARKET, PER PRODUCT AND TOTAL IN THE YEAR
(MBBL/D)
Our Business
97
Diesel
Diesel is a medium petroleum distillate used as fuel in vehicles with compression-ignites internal combustion
engines (diesel cycle engines). It is used mostly for cargo and passenger’s road transport (80%) and in the
agriculture sector (10%). All diesel sold to end users in Brazil must be blended with biodiesel. In March 2021,
the mandatory level of biodiesel in the fuel increased from 12% to 13%. However, due to the lack of raw material
for the manufacture of the renewable fuel and rising prices, the national regulatory agency (“ANP”) temporarily
reduced that percentage to 10% from May to August, raised to 12% in September and October, and reduced
again to 10% in November and December. For 2022, the National Energy Policy Council (“CNPE”) decided to
maintain the 10% biodiesel content in diesel for the entire year.
The increase in diesel oil sales in 2021 was mainly associated with the increase in its market share, as a result
of commercial actions. Other important factor was the economic recovery, especially in the industrial sector,
although this growth was largely due to the depreciated base in 2020, notably after the beginning of the Covid-
19 pandemic. Sectors such as the manufacturing industry and retail trade, played an important role in the
increase in consumption of this product. Other positive points for the consumption growth were the increase
in sales for use in thermal plants and, of course, the reduction in the average content of biodiesel.
In 2021, we reached an annual record for production and sales of low-sulfur S-10 diesel. There was a 34.7%
increase in product sales compared to 2020, with the sale of 25.8 million m³, and a 10% increase in production,
which reached 21.2 million m³. Currently, the sale of the S-10 corresponds to more than half of our total diesel
sales.
The record sales of S-10 Diesel and the growth in total Diesel sales reflect the commercial and operational
actions that we have implemented in order to mitigate the effects of the Covid-19 pandemic on fuel demand
and the successful efforts to expand the supply of the product with lower sulfur content, replacing the S-500
Diesel.
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ANNUAL REPORT AND FORM 20-F | 2021
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98
Gasoline
Gasoline is a light petroleum distillate used in vehicles with spark-ignites internal combustion engines (Otto
cycle engines). Refineries in Brazil produce a distillate called “gasoline A,” which must be blended with 27% of
anhydrous ethanol (current mandate) at distributors sites and then sold to end users as “gasoline C” at gas
stations. Its main competitors are hydrated ethanol (sold directly by producers to distributors, who resell it on
gas stations) and CNG (sold by gas distributors directly to gas stations). In 2021, the “gasoline A” share in
Brazilian Cycle-Otto market was about 53%.
The main factors for the sales growth were the gain in gasoline participation over hydrated ethanol in flex fuel
vehicles consumption, associated with the fall in the sugarcane crop that limited the supply of ethanol, and
also the low comparison basis in 2020, due to the mobility restrictions imposed by the Covid-19 pandemic in
2020.
Another very important factor was the increase in our market share in the Brazilian gasoline market, as a result
of commercial actions.
LPG
The liquefied petroleum gas (LPG) is a light distillate composed by propane and butane. It is used as fuel for
heating appliances such as cooking equipment, rural heating and water boilers, among others. In Brazil, around
70% of LPG is sold by distributors bottled in cylinders of up to 13 kg and primarily used for residential cooking
and its demand is directly driven by population growth and real income growth. On the other hand,
consumption is inversely correlated with local temperatures and the efficiency rate of cooking equipment. The
remaining LPG demand (30%) comes mainly from industrial and services sectors, whose demand is driven by
economic growth. The drop in LPG sales in 2021 was mainly associated with the increase in the supply by others
players, and the positive effect of Covid-19 pandemic on the LPG consumption for cooking in 2020, which has
contributed to increase the basis of comparison.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
99
Jet Fuel
Jet-fuel is a medium petroleum distillate used as aviation fuel in aircrafts powered by gas-turbine engines.
It is used by all commercial aviation companies (passengers and cargo transportation), which represents 90%
of total Brazilian demand. Regarding commercial aviation, prior to the Covid-19 pandemic, domestic flights
comprised up to 60% of Brazilian jet-fuel demand, and the remaining 40% of jet-fuel demand came from
international flights. Jet-fuel demand is strongly correlated with GDP growth, as it directly affects the demand
for travel – business and leisure.
The main factor behind the rise of sales in 2021 was the decrease of restrictions on mobility imposed by the
Covid-19 pandemic, which had strongly impacted the Brazilian market. In April 2020, for example, the sales
volume of jet fuel was less than 10% compared to the previous year.
Domestic flights sales gradually recovered due to the decline in cases and deaths caused by the Covid-19
pandemic in Brazil, mainly in the second half of 2021. The reopening of international borders to the country
also contributed to the increase in international flights.
Fuel Oil
Fuel oil is a residual fraction of the petroleum distillation. It is used in industrial (mostly non-ferrous metallurgy
companies) and electricity generation sectors (thermoeletric plants). The demand for fuel oil for industrial
consumption depends mostly on GDP growth and on the natural gas availability (its main competing product).
The fuel oil thermoeletric plants participate marginally in the country’s energy supply, entering into operation
only when the water level in reservoirs are very low. In 2021, industrial use of fuel oil represented around 60%
of demand, while the use in power generation represented only 40%.
In 2021, the main factor for the significant sales growth was the increase in deliveries of fuel oil for use in
thermoelectric plants. The objective was to recover water reservoirs of the Southeast / Midwest subsystem, as
well as supplement the energy supply in moments of low wind generation in the Northeast Region of Brazil.
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
100
Naphtha
Naphtha is a light petroleum distillate that is mainly used as raw material for petrochemical sector. This
product is sold to three existing petrochemical plants in Brazil, which produce commodity chemicals such as
ethylene, propylene, butadiene and aromatics (benzene, toluene, xylenes).
The drop in naphtha sales in 2021 was mainly associated with the decrease in deliveries to Braskem's plants in
Rio Grande do Sul and Bahia states, due to new contracts with the petrochemicals in force with Braskem since
December 2020, where the committed quantities werelower than the previously negotiated. In the São Paulo
state hub, where we are Braskem's only supplier, there was a decline in sales due to the plant's scheduled stop
for maintenance in April and May.
Besides oil and oil products, we also trade natural gas, nitrogen fertilizers, renewables and other products.
BRAZILIAN SALES VOLUMES AND EXPORTS (mbbl/d)
Total oil products
Ethanol, nitrogen fertilizers, renewables and other products
Natural gas
Total Brazilian market
Exports(1)
TOTAL BRAZILIAN MARKET AND EXPORTS
(1) Mainly includes crude oil and oil products.
Oil products prices
2021
1,806
28
352
2,186
811
2,997
2020
1,663
8
292
1,963
957
2,920
2019
1,738
7
350
2,095
735
2,830
Crude oil is a commodity, the value of which depends on its quality, usually based on its API gravity.
Traditionally, lighter crude oils have greater added value than heavier ones, given that they can
generate higher value products. Recently, however, heavy crudes have shown a strong market value
due to the possibility of high margin production when these crudes are processed in refineries with
more complex hardware. In addition, oils with similar yields and physical properties have a greater
market value if they have lower sulfur content. Different refineries assign different values to the
same crude oil, depending on their conversion capacity and the value of the products they intend to
produce to supply their specific markets. Refineries can process a variety of crude oils, which brings
competition among different grades.
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Crude oils are globally traded and their prices are usually referenced on international quotations,
such as WTI, Brent or Dubai. Depending on factors such as quality, offer, demand, size lot, trading
conditions and logistics costs to make a crude oil cargo available at a certain delivery point, a
premium or a discount can be negotiated between buyer and seller, and added to the reference
quotation.
Refined oil products are commodities and their prices in different regions of the global market are
driven by the local balance between supply and demand, crude oil prices and crack spread. Crack
spread refers to the overall pricing difference between a barrel of crude and the oil products refined
from it. It is an industry-specific type of gross processing margin. “Crack” is a term used in the oil
industry that represents the ability of a crude to produce different products such as gases like
propane and butane; light distillates like naphtha and gasoline; middle distillates like kerosene,
gasoils and diesel fuels; and heavy distillates like heavy fuel oil and asphalt. Typically, a crack is
defined in terms of one specific product versus one specific crude. For example, the diesel crack on
Brent indicates how much the price of the individual product is contributing to the refining
profitability.
The price of a barrel of crude oil and the various prices of the products refined from it are not always
in perfect synchronization. Depending on seasonality and global inventories, among other factors,
the supply and demand for any particular oil product may result in pricing changes that can impact
the profit margins on a barrel of crude oil for the refiner.
As oil products are traded globally and can be transported between markets, prices around the
world tend to fluctuate subject to local conditions.
Our current pricing policy in Brazil takes into account domestic market conditions and seeks to align
the price of oil products with international prices, while avoiding the immediate transfer of volatility
of international quotations and the exchange rate caused by conjunctural issues. Specifically, diesel
oil, gasoline, LPG, jet fuel, fuel oil and other minor product prices are defined taking into account
the international import parity price, margins to remunerate the risks inherent in our operations
and the level of market share.
In 2021, we adjusted our fuel prices according to international price parity as global oil prices
changed and settled at new levels.
Diesel and Gasoline
Diesel and gasoline prices in the Brazilian market are defined taking into account the import parity
price and margins to remunerate the risks inherent in the operation.
According to our pricing policy, prices readjustments of diesel and gasoline are carried out without
defined frequency, according to market conditions and external environment analysis, enabling us
to compete more efficiently and flexibly.
During 2021, we announced adjustments to selling prices at refineries, resulting in price increases
of 68.2% for gasoline and 65.1% for diesel, when comparing prices in place on December 31, 2021
with those effective as of December 31, 2020.
LPG
LPG prices in the Brazilian market are defined taking into account the import parity price and
margins to remunerate the risks
in the residential and
industrial/commercial LPG segments. According to our pricing policy, price adjustments are made
without defined periodicity, according to market conditions and analysis of internal and external
environments.
in the operation,
inherent
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
During 2021, we announced adjustments to selling prices at refineries, resulting in price increases
of 47.6% for LPG, when comparing prices in place on December 31, 2021 with those effective as of
December 31, 2020.
Our Business
102
Imports, Exports, and International Sales
Our import and export of crude and oil products are driven by economic factors involving our domestic
refining, the Brazilian demand levels and international prices. Most of the crude oil we produce in Brazil is
classified as medium API gravity. We import some light crude oil to balance the slate for our refineries, and
export mainly medium crude oil from our production in Brazil. In addition, we continue to import oil products
to fulfill our contracts in order to balance any shortfall between production from our Brazilian refineries and
the market demand for each product.
In 2021, net exports decreased by 299 bbl/d, reaching 444 bbl/d. This decrease resulted mainly from a
reduction in crude oil exports and an increase in diesel imports.
EXPORTS AND IMPORTS OF CRUDE OIL AND OIL PRODUCTS (mbbl/d)
2021
2020
2019
Exports
Crude oil
Fuel oil
Other oil products
Total exports
Imports
Crude oil
Diesel
Gasoline
Other oil products
Total imports
575
197
39
811
154
118
20
75
367
713
194
50
957
97
18
10
89
214
536
133
66
735
168
70
28
88
354
Our crude oil, oil products and LNG trading activities aim to meet our internal demands or potential
businesses opportunities identified by our commercial teams, seeking to optimize the buying and selling
operations in the Brazilian and global markets, as well as offshore operations.
The international trading teams are based in the major global commercial hubs of oil and oil products, such
as Houston, Singapore and Rotterdam and are comprised of crude oil and product traders, shipping and
support operators.
For more information on our oil and oil products clients, see “ – Exploration and Production – Customers and
Competitors” and “Refining, Transportation and Marketing – Customers and Competitors” in this annual
report.
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Our Business
103
Distribution
We sell our oil products to several distribution companies in Brazil. Until July 2019, we had a 71.25% stake
in BR Distribuidora, one of the largest distribution companies in the country. As a result of a secondary
public offering (follow-on) closed in July 2019, we had a 37.5% participation in BR Distribuidora as of
December 31, 2020.
In July 2021, we completed the sale of our entire remaining stake in BR Distribuidora, leaving the
distribution sector in Brazil. Following the sale, BR Distribuidora changed its name to Vibra Energia S.A.
(“Vibra”).
Even after completing the sale of our shareholding in Vibra, we remain the owner of the main brands used
by it, including those that identify service stations, fuel, loyalty program, aviation segments and
certification program, among others.
A 10-year trademark license agreement is in place and grants Vibra a non-exclusive, paid, temporary license
on certain trademarks we own, including but not limited to “Petrobras,” “Petrobras Podium,” “Petrobras
Premmia,” “De Olho no Combustível,” “BR Aviation” and “Petrobras Grid.” The trademark license agreement
was renegotiated in 2019 and amended in June 2021 to incorporate changes necessary for both companies.
The contract expires in June 2029 and is renewable for an additional 10-year period, subject to agreement
between the parties.
Under the terms of this agreement, the license is granted exclusively to the service station and aviation
segments, for which Vibra shall exclusively use the brands licensed by us. Meanwhile, during the term of the
trademark license agreement, we undertake to refrain from operating in the service stations sector across
the Brazilian territory. The definition of a “service station” under this agreement is any facility where oil and
gas products and services and/or services related to any other energy sources (renewable or otherwise)
intended to power automotive vehicles and watercrafts are offered to the Business-to-Consumer (or B2C)
public, including convenience stores.
We also participate in the retail sector in other South American countries, as follows:
Colombia: Our operations through Petrobras Colombia Combustibles S.A. (PECOCO) include 125
service stations and a lubricant plant with a production capacity of 54,000 m3/year. In June 2020, we
announced the binding phase of PECOCO’s divestment process;
Uruguay: Until February 2021, our operations included 88 service stations. In February 2021, we sold
our stake in Petrobras Uruguay Distribución S.A. (PUDSA) and ended the distribution operations in
this country.
Chile: Following the sale of our distribution operations in Chile, which was concluded in January 2017,
we entered into a brand licensing agreement in that country, for the initial term of eight years. To
operate our acquired assets in Chile, Southern Cross created Esmax, a company that operates as our
licensee in the fuel distribution segment;
Paraguay: Following the sale of our distribution operations in Paraguay, which was concluded in
March 2019, we entered into a brand licensing agreement in Paraguay. Our operations were sold to
Paraguay Energy, a subsidiary of Copetrol Group and the sale agreement also included the licensing
for the exclusive use of our brands by Nextar (the successor of Petrobras Paraguay Operaciones y
Logística SRL) in service stations in Paraguay, for the initial term of five years.
For more information of the divestment process, see “ – Portfolio Management” in this annual report.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
104
Customers and Competitors
We interact with approximately 470 clients in Brazil, in regard to liquid oil products, seven of which account
for 67% of the total volume sold.
LIQUID OIL PRODUCTS CLIENTS (% vol)
The sale of oil products to distribution companies is done by contracts executed in accordance with ANP
regulations.
We offer a virtual commercial platform, called Canal Cliente to Brazilian market companies. The platform
works 24 hours a day, seven days a week. Through this online platform, clients can place orders for products,
schedule withdrawals and track the entire business process up to the payment phase.
According to information provided by the ANP, we have a dominant participation in the Brazilian market for
refining. We own and operate 12 refineries in Brazil and a shale industrialization unit (“SIX”). SIX is presented
in the Shale Industrialization section in this annual report.
In June 2019, we signed a commitment with CADE which consolidates the understanding between the
parties on the execution of the divestment of refining assets and SIX in Brazil.
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – Operational Risks” and “ – Portfolio Management” in this annual report.
With respect to the trading of oil products in the Brazilian market, we face competition from importers,
formulators, other domestic producers and petrochemical plants. In 2021, our participation in diesel and
gasoline markets increased compared to the previous year, mainly due to commercial actions.
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
105
Other Activities
Petrochemicals
We engage in the petrochemical sector through the following companies:
OUR SHAREHOLDING IN PETROCHEMICAL COMPANIES IN BRAZIL AND THEIR MAIN PRODUCTS
Company/Main products
Location
Our shareholding
Other shareholding
Nominal
capacity
(mmt/y)
Braskem
Ethylene
Polyethylene
Polypropylene
DETEN Química S.A.
LAB(1)
LABSA(1)
METANOR S.A./COPENOR S.A.(2)
Formaldehyde
Hexamine
FCC Fábrica Carioca de Catalisadores S.A.
Catalysts
Additives
PETROCOQUE S.A.
Calcined petroleum coke
Brazil
Brazil
Mexico
Brazil
USA
Germany
Brazil
Brazil
Brazil
5.00
3.06
1.05
1.85
2.02
0.63
0.22
0.12
0.09
0.01
0.04
0.01
Novonor (38.32%)
Others (25.53%)
Petresa (69.78%);
Others (2.34%)
Dexxos Participações
(45.47%); Others
(19.99%)
36.15%
27.88%
34.34%
50.00%
Albemarle (50.00%)
Brazil
0.55
50.00%
Universal
Empreendimentos e
Participações Ltda
(50.00%)
(1) Feedstock for the production of biodegradable detergents.
(2) Copernor S.A. is a subsidiary of Metanor S.A.
In September 2021, we announced the binding phase for Deten Química S.A. For more information see “ –
Portfolio Management” in this annual report.
In December 2021, we approved the model for the sale of up to 100% of our preferred shares in Braskem
S.A. (Braskem), by means of secondary public offering(s) of shares (follow-on), together with Novonor S.A.
- In Judicial Recovery and NSP Investimentos S.A. - In Judicial Recovery (both referred to as Novonor).
In January 2022, we decided with Novonor to cancel the public offering for secondary distribution of shares,
due to the instability of the conditions in the capital markets, where levels of demand and price were not
appropriate for proceeding with the transaction.
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ANNUAL REPORT AND FORM 20-F | 2021
Our Business
106
Shale Industrialization
We operate shale processing through our shale industrialization unit (“SIX”), an operating unit with installed
capacity of 5,880 t/d, located in São Mateus do Sul, Brazil. We have developed a technology that covers all
stages of the manufacturing process. The products obtained from shale processing are fuel oil, naphtha,
fuel gas, liquefied gas and sulfur.
In line with our risk management policy associated with the management of contingencies and with the
strategy of generating value through the negotiation of amounts in dispute, we and ANP reached an
agreement at the end of 2021 to close all legal and administrative proceedings related to the collection of
royalties and administrative fines arising from the oil shale mining carried out by us at SIX. The execution
of the definitive agreement with the ANP is subject to regulatory approvals after a public hearing to be
conducted by ANP. We expect to sign this agreement by May 2022.
The agreement encompasses both the conclusion of administrative and judicial disputes and the execution
of a concession agreement, aiming to regulate the granting of shale exploration and mining rights granted
to us.
In the agreement, the ANP undertake to adopt a royalty rate of 5% as of the validity of the concession
agreement (for 27 years, renewable for another 27-year term) and to no longer claim from us any royalties
collected by us related to the SIX's, as well as any fines and/or penalties and/or late payment additions prior
to signing the agreement.
Under the agreement, as of December 2021 we undertake to pay US$103 million, representing a 48%
discount in relation to the total amount in dispute.
In conducting our operation, we work to repair mined areas through an environmental program that consists
of reforestation with native species and the return of fauna to rehabilitated land.
In line with our repositioning process, in 2019, we signed a commitment with the CADE which consolidated
our understanding on the execution of divestment of refining assets in Brazil and started the divestment
processes of seven refining units (REMAN, LUBNOR, RNEST, RLAM, REGAP, REPAR and REFAP) and SIX.
In November 2021, we signed an agreement with Forbes & Manhattan Resources Inc. for the sale of SIX. The
transaction is subject to the satisfaction of conditions precedent, such as approval by the CADE and by the
ANP. Until the conditions precedent are met and the transaction is closed, we will maintain normal operation
of the unit.
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – Operational Risks” and “– Portfolio Management” in this annual report.
For more information on the progress of our divestments, see “ – Portfolio Management” in this annual
report.
Biofuels
BioRefino 2030
In 2020, we launched the BioRefino 2030 Program which aimed to transform its refining processes
into a more sustainable industry, in line with a low-carbon based economy. In 2021, we accelerated
our projects for the generation of new, modern and sustainable fuels, such as renewable diesel and
biojet.
Diesel with a renewable content is an advanced biofuel, produced from coprocessing conventional
diesel with vegetable oils using our proprietary HBIO™ technology. The renewable part of resulting
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fuel (Hydrotreated Vegetable Oil or “HVO”) presents the same structure as conventional diesel fuel
and, according to reports from the Biodiesel Producers Association, reduces the emission of
greenhouse gases by 70% compared to mineral diesel oil. Coprocessed diesel with a renewable
content, as well as pure HVO, are free from contaminants and does not cause any damage to
engines, effectively increasing vehicle life and reducing transportation costs. The authorization for
the commercial sale of this biofuel in Brazil depends on a new regulation to be issued by the ANP.
BioQAv (also known as Synthetic Aviation fuel or BioJet fuel) will be used worldwide to reduce the
emissions of greenhouse gases in the aviation sector. This was determined by the International Civil
Aviation Organization and will be mandatory in Brazil in 2027. The production process for BioQAv,
through hydrogenation uses the same raw materials required for the production of HVO, which is
also produced as a coproduct of this process.
We also operate in the production of biodiesel through our wholly owned subsidiary PBIO, which manages
our activities for the production, logistics and marketing of these products.
Brazil is a global leader in the use and production of biofuels. The anhydrous ethanol content requirement
for gasoline sold in Brazil is 27%.
Historically, Brazil is a major producer of ethanol and sugar and some companies that operate in this market
sell the excess electricity generated from the burning of sugarcane bagasse.
There is a mandatory blend of biodiesel in all diesel sold in Brazil. In 2021, CNPE fixed a 13% blend on or
after March 2021, with gradual scheduled increases of 1% per year, until it reaches a mandated 15% in 2023.
However, in November 2021 the CNPE published Resolution No. 25, which changed the previous percentage
of blend by establishing a mandatory blend of 10% for 2022.
PBIO has three biodiesel plants for its own operations. However, the Quixadá biodiesel plant is in a
hibernation state since November 2016. Our biodiesel production capacity in the other two plants in
operation is 8.63 mbbl/d. In 2021 we supplied 4% of Brazil’s biodiesel demand, according to the ANP.
PBIO had a 50% interest in BSBios Indústria e Comércio de Biodiesel Sul Brasil S.A. (“BSBios”), which owns
two biodiesel plants. In February 2021, we announced the sale of PBIO’s entire stake in BSBios to RP
Participações em Biocombustíveis S.A. (“RPBio”), which owned the remaining 50% stake in BSBios.
Main Assets
Biofuels
Biodiesel production units - PBIO
Biodiesel production capacity (mbbl/d) - PBIO
Biodiesel production units - BSBios
Biodiesel production capacity (mbbl/d) - BSBios
2021
2020
2019
3
10.5
N/A(1)
N/A(1)
3
3
10.5(2)
10.0(2)
2
2
14.3(3)
12.1(3)
(1) In February 2021, the sale of PBIO’s entire stake in BSBios to RPBio was concludedd.
(2) Includes the capacity of Quixadá biodiesel plant, which has been in hibernation state since November 2016.
(3) Includes total production capacity in two plants in which we have 50% interest through BSBIOS Sul Brasil.
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108
With respect to divestments, in July 2020, we announced the sale of PBIO’s entire stake in Bambuí
Bioenergia S.A. (“Bambuí”). This stake represented 8.40% of Bambuí shares and was sold to Turdus
Participações S.A. (“Turdus”), which held the remaining 91.60% stake in the company. Prior to the
divestment, Turdus and Bambuí initiated an arbitration process against PBIO; later, we replaced PBIO as the
defendant part in the arbitration process, which is still in progress. In addition, we are in the process of
divesting our stake in PBIO. In September 2020, we announced the beginning of the binding phase of the
sale of all of our shares in this wholly owned subsidiary.
For more information on our divestments, see “ – Portfolio Management” in this annual report.
In accordance with our Strategic Plan, we decided to exit the biodiesel and ethanol production market.
Nevertheless, we are working to produce renewable diesel and BioQav, in response to the sustainability
policies of the Brazilian energy matrix.
BIOFUELS PRODUCTION (1) (thousand m3)
(1)
Includes 100% of the volume of our equity method investees (net production of PBIO in biodiesel, considering PBIO share in the investee, was
67.4% in 2019, 64.5% in 2020, and 75,4% in 2021; net production of PBIO in ethanol was 8.4% of total)
(2) Biodiesel production figure for 2021 is updated as of February 9, 2020, the date on which we sold our share in BSBios
(3)
Ethanol production figures from 2020 are as of July 10, 2020, the date in which we sold our share in Bambuí, our investee in this segment
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109
Gas and Power
Overview
We process gas produced in our oil fields in our natural gas processing units (“UPGNs”) that have the
capacity to treat 103.6 million m3/d of natural gas in Brazil. We market this natural gas, along with gas
imported from Bolivia and LNG acquired in the global market, to several consumers and to the
thermoelectric plants.
We also operate in the generation and sale of electric energy through thermal power plants fired by natural
gas, diesel oil and fuel oil.
Main Assets
Natural gas
2021
2020
2019
Gas pipelines in Brazil (km)
2,643(2)
4,686(1)
9,190
Processing Units
Brazil
Bolivia
Processing capacity (million m3/day)
Brazil
Bolivia
Regasification terminals
Regasification capacity (million m3/day)
Power
Number of thermal power plants
Installed capacity (thousand MW)
22
19
3
149
105
44
3
47
15(3)
5.4
22
19
3
149
105
44
3
47
20
6.1
22
19
3
149
105
44
3
47
20
6.1
(1)
(2)
(3)
In July 2020, we entered into a share purchase and sale agreement for our remaining 10% interest in TAG, which has 4,504 km
of pipelines.
In April 2021, we concluded the sale of our remaining 10% interest in Nova Transportadora do Sudeste S.A. (NTS), which has
2,043 km of pipelines.
In November 2021, we concluded the sale of our participation in Breitener Energética S.A, which has two thermoelectric plants:
Jaraqui and Tambaqui. In December 2021, we concluded the sale of.three thermal power plants: Bahia 1, Muricy and Arembepe.
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110
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Natural Gas
Our Gas and Power segment comprises gas processing, transportation and distribution, LNG regasification
(Ceará, Bahia and Rio de Janeiro states), gas-fired, oil-fuelled and flex fuel power generation.
The Gas and Power segment strategy is:
Act competitively in the trading of its own gas and withdraw completely from gas distribution and
transport.
Optimize the thermoelectric portfolio focusing on self-consumption and trading of its own gas.
Processing of Natural Gas
Natural gas from our exploration and production activities needs to be processed in processing units, to be
transformed into marketable products. These products serve as fuel and raw material for different uses,
such as vehicular, industrial and residential uses, as well as uses in the fertilizer industry and thermoelectric
power generation.
Our UPGNs are located in the states of Amazonas, Ceará, Rio Grande do Norte, Alagoas, Sergipe, Bahia,
Espírito Santo, Rio de Janeiro and São Paulo in Brazil as well as in Bolivia, where we have the capacity to
process natural gas in its gaseous and condensed forms.
In January 2022, we approved the sale of our stake in the Potiguar Cluster, which includes, among its assets,
the AIG (Former RPCC). Until the conditions precedent are met and the transaction is closed, we will continue
to operate the assets.
The current processing capacity and production of our UPGNs in Brazil is:
PROCESSING CAPACITY AND PRODUCTION OF OUR UPGNS IN BRAZIL
Location
Number
of units
2021
Processing
capacity
Unprocessed
natural gas
2021
Processed
natural
gas
2020
Processed
natural
gas
Unprocessed
natural gas
LPG
2019
Processed
natural
gas
LPG
Unprocessed
natural gas
LPG
UTGCAB
Rio de
Janeiro
UTGCA
São Paulo
UTGC
UTGSUL
REDUC
Espírito
Santo
Espírito
Santo
Rio de
Janeiro
RPBC
São Paulo
LUBNOR
Ceará
URUCU
Amazonas
GUAMARÉ
Rio
Grande do
Norte
PILAR
Alagoas
1
1
1
1
1
1
1
4
3
1
(million
m³/d)
(million
m³/d)
(million
m³/d)
(thousand
t/d)
(million
m³/d)
(million
m³/d)
(thousand
t/d)
(million
m³/d)
(million
m³/d)
(thousand
t/d)
24.6
21.65
15.55
0.86
22.58
17.54
0.98
23.37
17.35
0.71
20.0
11.17
10.64
0.72
12.43
11.84
0.62
14.68
14.03
0.70
18.1
3.29
2.97
0.44
3.98
3.50
0.59
4.89
4.36
0.82
2.5
2.2
2.2
0.35
0.31
0.26
-
0.48
0.46
–
0.58
0.57
–
1.19
0.90
0.02
1.05
0.93
0.05
1.46
1.02
0.06
-
-
-
-
-
-
0.08
–
–
–
–
–
0.46
0.43
–
–
–
–
12.20
11.85
11.09
1.00
11.61
10.81
1.08
12.10
11.56
1.21
5.70
0.53
0.47
0.09
0.69
0.63
0.1
1.36
1.25
0.15
1.80
1.03
0.98
0.05
1.24
1.20
0.07
1.24
1.19
0.07
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
0.00
0.00
0.00
0.21
0.20
0.02
0.78
0.73
0.06
Our Business
112
1.16
0.95
0.00
1.22
1.06
1.57
1.45
-
3.12
-
-
-
-
–
–
–
2.32
2.20
–
3.54
–
–
–
–
–
–
–
19
103.55
55.30
43.81
3.18
57.89
50.37
3.51
66.33
53.95
3.78
ATALAIA
Sergipe
CATU
Bahia
CANDEIAS
Bahia
EVF
MANATI
TOTAL
Bahia
1
1
1
1
3.00
2.00
2.90
6.00
(1) The UTGC unit's project was estimated to have a gas richness of approximately 14%. However, it actually presented an approximate richness of
8.5%. Thus, there was an opportunity to increase the nominal capacity of the plant without impacting the process, as the real richness was less
than the projected richness.
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113
Logistics
We use a pipeline system to transport natural gas from processing plants, regasification terminals and the
border with Bolivia, to the local distributors, as well as for the internal consumption of our units. Brazil has
an integrated pipeline system centered around two main interlinked pipeline networks, a gas pipeline
connection with Bolivia and an isolated pipeline in the northern region of Brazil (all together spanning over
9,190 km).
OUR SHARE IN GAS TRANSPORTATION COMPANIES IN BRAZIL
Company
Gas pipeline
extension (km)
Our
shareholding
Other shareholders
Transportadora Brasileira Gasoduto Bolívia Brasil
S.A (“TBG”)
2,593
51%
Transportadora Sulbrasileira de Gás S.A. (“TSB”)
50
25%
BBPP Holdings Ltda. (29%)
YPFB Transporte do Brasil
Holding Ltda. (19,88%)
Corumbá Holding S.À.R.L.
(0,12%)
Ipiranga Produtos de
Petróleo S.A. (25%), Repsol
Exploração Brasil (25%) e
Total Gas and Power Brazil
(25%)
TOTAL
2,643
—
—
In 2021, we concluded the sale of our remaining 10% interest in Nova Transportadora do Sudeste S.A. (NTS).
For more information on our divestments, see “ – Portfolio Management” in this annual report.
In addition, outside Brazil we hold an 11% stake in Gás Transboliviano S.A. (“GTB”), which is responsible for
the Bolivian side of the Bolivia-Brazil gas pipeline, measuring 557 km.
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Gas from Pre-Salt
In order to derive natural gas from our production of the Santos Basin pre-salt pole, in addition to
using part of the existing infrastructure, we invested in the construction of subsea pipelines (routes)
integrated with the processing units, which seek to optimize the use of natural gas.
We have invested in the following flow routes:
ROUTE 1 AND GASMEX: The 359 km pipeline consists of two stretches: Route 1, which is the stretch
connecting the Tupi Platform to the Mexilhão Platform, with capacity to flow up to 10 million m3/d,
and GASMEX, which is the stretch connecting the Mexilhão platform to the Monteiro Lobato Gas
Treatment Unit (“UTGCA”), in the city of Caraguatatuba in the state of São Paulo, with capacity to
flow up to 20 million m3/d of gas produced in the Santos Basin pre-salt. We own 65% of Route 1,
Shell owns 25% and Petrogal owns the remaining 10%.
ROUTE 2: The 401 km pipeline links the Santos Basin pre-salt to the Cabiunas Gas Treatment Unit
(“UTGCAB”) processing asset, in the city of Macaé in the state of Rio de Janeiro. It had an initial
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115
capacity to flow up to 13 million m3/d, which then increased to 16 million m3/d. In July 2019, the ANP
authorized the pipeline to operate with 20 million m3/d. We own 65% of Route 2 Tupi-Cernambi,
Shell owns 25% and Petrogal owns the remaining 10%. We own 55% of Route 2 Cernambi-TECAB,
Shell owns 25%, Petrogal owns 10%, and Repsol owns the remaining 10%.
ROUTE 3: This 355 km gas pipeline will connect the pre-salt to the natural gas processing plant
located in Itaboraí in the state of Rio de Janeiro, for the sale of up to 18 million m3/d. Three hundred
seven km of the pipeline will be offshore, and 48 km onshore. The natural gas processing plant will
have two units with a total capacity of processing 21 million m3/d of natural gas, which will increase
the supply of natural gas, LPG and natural gasoline (C5+) to the market. The construction of Route
3 is scheduled to start in 2022. We own 100% of Route 3.
Recently installed and upcoming units in the Santos Basin pre-salt will be progressively connected
to Route 2 (P-68) and to Route 3 once they become operational (P-67, P-75, P-77, P-70, FPSO
Carioca and FPSO Almirante Barroso). All projects will be able to flow through any of the three flow
routes once the system is fully implemented.
Marketing and Sales
The total volume of natural gas we delivered in 2021 was 84.5 mmm³/d. The volume of our natural gas
consumption by industrial, gas-fired electric power generation, commercial and retail customers in 2021
was 71.9 mmm3/d, representing an increase of approximately 31.4% compared to 2020. This increase is
mainly attributable to a relative economic recovery in 2021, due to lower Covid-19 cases and increase in
gas-fired power plants demand, due to the low levels of water reservoirs (year 2021 with the worst dry
season in 90years).
In 2021, the consumption of natural gas by our refineries was 12.6 mmm³/d, representing a small decrease
compared to 2020.
Below we present our sources and consumption in 2021:
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Opening the gas market
In July 2019, we signed an agreement with CADE, which consolidates the understandings between the
parties on the promotion of competition in the natural gas industry in Brazil. This agreement includes the
sale of shareholdings in gas transportation and distribution companies and, among other matters,
increases the flexibility for third parties to have access to our processing plants and release capacity in
certain gas transportation contracts to which we are part. The purpose of the agreement is to preserve and
protect the competitive conditions, aiming to open the Brazilian natural gas market, encouraging new
agents to enter this market, as well as suspending administrative procedures established by CADE court to
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
investigate our natural gas business. The infographic below shows all the initiatives implemented in 2021
and those still in progress in 2022.
Our Business
117
For more information on our agreement with CADE, see “Risks – Risk Factors – Operational Risks” and “ –
Portfolio Management” in this annual report.
Additionally, in 2020, we initiated the GAS + Program, which aims to increase our competitiveness in the
natural gas segment within Brazil’s current conditions of market opening. This program includes the launch
of new commercial products, new forms of relationships with customers, new tools (such as digital contracts
and sales through automated platforms), and new business models (such as negotiated access to the
outflow infrastructure and gas processing in our Gas Treatment Units), as well as direct the portfolio to high
performance assets.
The Gas + Program includes initiatives aimed at enhancing the efficiency and profitability of our Gas and
Energy segment, thereby contributing to our high performance in a competitive market, and provides for
the incorporation of digital transformation initiatives, utilizing technological advances as an important
resource for improving performance in all processes, whether at the industrial or business level.
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118
Throughout 2021, several initiatives of the GAS + Program were implemented. The development of these
initiatives is periodically monitored, at different management levels, following the established project
management structure. The main achievements of the referenced period are highlighted below.
Associated with the market relationship front:
Design of a negotiated access framework to our gas processing infrastructure.
Development of new commercial products for natural gas customers, network balancing products,
flexible and short-term products offering.
LNG supply prospecting for A-4 / A-5 power auction.
Associated with the digital transformation of assets and businesses front:
Progress in implementation of new CRM - Customer Relationship Management (Projeto Evoluir).
Deployment of digital tools for operational support as alarm management system (BR Alarm) and
personal digital assistants – PDAs (“Conf Online”) in 13 assets.
Associated with the high-performance assets front:
Licensing of Baía de Guanabara LNG regasification terminal for operation at 30 MM m³/d.
Conclusion of gas turbine technical upgrade at the Termobahia power plant.
Progress of retrofit projects at Cabiúnas gas treatment unit.
Natural gas sales contracts and long-term gas purchase and transportation commitments
We sell our gas primarily to local gas distribution companies and to gas-powered plants, generally based on
standard take-or-pay, medium term supply contracts. This represents 64% of total demand volumes. The
price formulas under these contracts are mostly aligned with Brent oil prices and the U.S. dollar. They were
negotiated under the new gas bill.
Throughout 2021, we entered into new commitments to supply natural gas, totaling a commitment for 2022
around 26.4 million m³/day with local distribution companies and 3.1 million m³/day with Free Consumers.
When we began construction of the Bolivia-Brazil pipeline (“GASBOL”) in 1996, we entered into a long-term
Gas Supply Agreement (“GSA”), with the Bolivian state-owned company Yacimientos Petroliferos Fiscales
Bolivianos (“YPFB”), to purchase certain minimum volumes of natural gas at prices linked to the global fuel
oil price. The supply of gas under the GSA began on July 1, 1999.
The GSA will terminate upon delivery to YPFB of all contracted quantity. Considering the contractual
balance as of December 31, 2021, and depending on the level of gas withdrawn, we estimate that the GSA
will terminate between May 2024 and April 2025. The analyses for this estimate considered the maximum
withdrawal of the contracted quantity (20 million m3/day) and the minimum purchase obligation (14 million
m3/day).
In October 2021, we and YPFB entered into Amendment No. 09 to the GSA, which provided for the
provisional inclusion by us, until the end of 2021, of a second delivery point to supply natural gas to the
Cuiabá Thermoeletric Plant, in Mato Grosso State.
The table below shows these contractual commitments under the above agreements for the five-year
period from 2022 through 2026.
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ANNUAL REPORT AND FORM 20-F | 2021
0
0
7.25
5.60
12.85
1.27
0
0
0
0
FUTURE COMMITMENTS UNDER NATURAL GAS SALES CONTRACTS (million m3/d)
2022
2023
2024
2025
2026
Our Business
119
To non thermeletric clients:
Related parties(1) (2) (3)
Third parties(2) (3)
To gas-fired power plants:
Related parties(1) (2) (3)
Third parties (2) (3)
Total(1) (2) (3)
0.00
0.00
0.00
0.00
29.53
26.09
7.64
6.99
9.89
7.95
47.36
8.00
5.82
39.91
8.20
5.69
6.46
5.61
21.53
19.05
Estimated amounts to be invoiced (US$ billion)(3)(4)
6.72
5.68
2.50
1.95
Purchase Commitments
Purchase commitments to YPFB
Volume obligation (mmm3/d)(5)
Volume obligation (mmcf/d)(5)
Brent Crude Oil projection (US$)(6)
Estimated payments (US$ million)(7)
Transportation Commitments
Ship-or-pay contract with GTB
Volume commitment (mmm3/d)
Volume commitment (mmcf/d)
Estimated payments (US$ million)(8)
Ship-or-pay contract with TBG (10)(11)
Volume commitment (mmm3/d)(9)
Volume commitment (mmcf/d)
Estimated payments (US$ million)(8)
Ship-or-pay contract with NTS (10)
Volume commitment (mmm3/d)
14.00
494.41
77.43
14.00
494.41
79.49
14.00
494.41
60.00
1,098.96
1,124.79
883.31
14.00
494.41
55.00
232.58
6.00
6.00
6.00
6.00
6.00
211.89
211.89
211.89
211.89
211.89
0.40
0.40
0.40
0.40
0.48
11.20
395.53
5.89
11.20
395.53
5.95
11.20
395.53
5.97
11.20
395.53
5.95
11.20
395.53
6.74
158.21
158.21
158.21
158.21
114.40
Volume commitment (mmcf/d)
5,586.96
5,586.96
5,586.96
5,586.96
4,040.00
Estimated payments (US$ million)(8)
1,329.62
1,364.75
1,394.80
1,390.99
1024.76
Ship-or-pay contract with TAG (10)
Volume commitment (mmm3/d)
Volume commitment (mmcf/d)
74.28
2,623
73.58
73.58
73.58
52.00
2,598.4
2,598.4
2,598.4
1,836.19
Estimated payments (US$ million)(8)(12)
1,587.16
1,630.2
1,666.11
1,661.56
1,302.65
(1) For purposes of this table, “related parties” include all local gas distribution companies and power generation plants in which we have an equity interest
and “third parties” refer to those in which we do not have equity interest.
(2) Estimated volumes are based on contracts signed as of December 31, 2021.
(3) Estimates are based on outside sales and do not include internal consumption or transfers.
(4) Prices may be adjusted in the future, according to formula defined in contract, and actual amounts may vary.
(5) 23.95% of contracted volume supplied by Petrobras Bolivia.
(6) Brent Crude Oil price forecast based on our Strategic Plan.
(7) Estimated payments are calculated using gas prices expected for each year based on our Brent Crude Oil price forecast. Gas prices may be adjusted in
the future based on contract clauses and amounts of natural gas purchased by us may vary annually.
(8) Amounts calculated based on current prices defined in natural gas transport contracts.
(9) Includes ship-or-pay contracts relating to TBG’s capacity increase.
(10) We undertook divestment processes for TAG in of 2019 and 2020. The ship-or-pay contracts shown with TBG, NTS and TAG are not included in our
audited consolidated financial statements, since such contracts are intercompany transactions.
(11) The sum of legacy point-to-point contracts (TCO, TCX and CPAC) was considered with the new entry and exit contracts, object of public call No.
001/2019.
(12) The estimated payments from Petrobras to TAG will be monthly reduced in order to reflect the payments done by other companies to TAG in the gas
transportation contracts signed as a result of the agreement of reduction of flexibility signed between Petrobras and TAG in December 2021.
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120
Distribution
Distributors provide gas through their distribution networks to commercial consumers, residences,
industries, vehicles and thermoelectric plants.
We hold a 51% interest in Gaspetro, a holding company that, in March 2022, consolidates our equity
interests in 18 of the 27 state natural gas distributors. Mitsui holds the remaining 49% interest. In April
2021, we announced the sale of Gaspetro’s interests in one of these distributors (GASMAR) to Termogás
S.A. which occurred in February 2022. Following our commitment with CADE, in July 2021, we signed the sale
of our interest in Gaspetro to Compass Gás e Energia S.A. The conclusion of the sale is contingent on CADE
approval. Once the sale is concluded we will no longer hold activities in the gas distribution sector.
For more information on our divestment process, see “ – Portfolio Management” in this annual report.
In 2021, of the total of 38.49 million m3/d of gas sold to distributors, 39% was distributed through
distributors which participation is partially held by Gaspetro.
Power
Brazilian electricity needs are mainly met by hydroelectric power plants and other sources of energy (wind,
coal, nuclear, fuel oil, diesel oil, natural gas used in thermoelectrics, and others). The Free Marketing
Environment (“ACL”) and the Regulated Marketing Environment (“ACR”) are involved in the regulation of
the electric energy market in Brazil.
Hydroelectric power plants are dependent on the annual level of rainfall. When rainfall is abundant, Brazilian
hydroelectric power plants generate more electricity. As a result, under these circumstances, there is less
demand for power generation by thermoelectric power plants.
We generate and sell electric power from a generator complex consisting of 15 thermoelectric power plants
that we own or lease, operating under the authorization regime as an independent power producer. They
are powered by natural gas or diesel, with a total installed capacity of 5,375 MW. These plants are designed
to supplement power from the hydroelectric power plants.
In 2021, the total electricity generated in Brazil, according to the ONS, was 68,694 MWavg. Our
thermoelectric power plants contributed 3,419 MWavg (1,756 MWavg in 2020 and 2,028 MWavg in 2019).
This increase in total generated electricity was due to a severe drought in 2021, bringing the reservoirs of
hydroelectric plants to low levels that required thermal generation.
In addition, we hold participation in other projects of power generation. This adds up to 215 MW to our
electricity generation capacity.
SALES AND GENERATION OF ELECTRICITY(1)
Electricity sales (ACL) – average MW(2)
Electricity sales (ACR) – average MW
Electricity generation – average MW
2021
1,150
2,439
3,419
2020
837
2,404
1,756
2019
1,168
2,788
2,028
(1) The generation value in the table above includes only the plants where we manage the operation.
(2) Includes electricity sales from the Gas and Power segment to other operating segments, service and other revenues from electricity companies.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
121
Electricity sales and commitments for future generation capacity
Under Brazil’s power pricing regime, a thermoelectric power plant is only allowed to sell electricity
that is certified by the MME and that corresponds to a fraction of its installed capacity. The
certificate is granted to ensure a constant sale of commercial capacity over the course of years to
each power plant, given its role within Brazil’s system to supplement hydroelectricity power during
periods of unfavorable rainfall. The amount of certified capacity for each power plant is determined
by its expected capacity to generate energy over time.
The total capacity certified by the MME (“garantia física”) may be sold through long-term contracts
in auctions to power distribution companies (standby availability), and through bilateral contracts
executed with free customers and used to meet the energy needs of our own facilities.
In exchange for selling this certified capacity, the thermoelectric power plants must produce energy
whenever requested by ONS. In addition to a capacity payment, thermoelectric power plants also
receive a reimbursement for variable costs (declared to MME to calculate commercial certified
capacity) incurred whenever they are requested to generate electricity.
In 2021, the commercial capacity certified by MME for all thermoelectric power plants we control was
3,461 MWavg. Our total generating capacity was 5,490 MWavg. Of the total 4,248 MWavg of
commercial capacity available for sale in 2021, approximately 58% was sold as standby availability
in public auctions in the regulated market (compared to 57% in 2020) and approximately 27% was
committed under bilateral contracts and self-production, i.e. sales to related parties, (compared to
20% in 2020).
Under the terms of standby availability contracts, we receive a fixed amount whether or not we
generate any power. Additionally, whenever we have to deliver energy under these contracts, we
receive an additional payment for the energy delivered that is set on the auction date and is revised
monthly or annually, based on inflation-adjusted international fuel price indexes.
The table below shows the evolution of our installed thermoelectric power plants’ capacity, our
purchases in the free market and the associated certificated commercial capacity.
INSTALLED POWER CAPACITY AND UTILIZATION
Installed capacity (MW)
Certified commercial capacity (MWavg)
Purchases in the free market (MWavg)
2021
5,490
2020
6,131
3,461
3,524
787
693
2019
6,148
3,770
391
Commercial capacity available (Lastro) (MWavg)
4,248
4,193
4,161
The table below shows the allocation of our sales volume between our customers and our revenues
for each of the past three years:
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
ELECTRICITY SOLD
Total sale commitments (MWavg)
Bilateral contracts
Internal consumption
Public auctions to distribution companies
Generation volume (MWavg)
Revenues (US$ million)(1)
Our Business
122
2021
3,605
778
372
2,455
3,419
3,710
2020
3,242
496
342
2,404
1,756
1,855
2019
3,958
812
356
2,788
2,028
2,334
(1)
electricity companies.
Includes electricity sales revenues from the Power segment to other operating segments, service and other revenues from
Our power assets and their respective locations are listed in the table below.
OUR POWER ASSETS (MW)
Type(1)
Region
Power Plant
Fuel(1)
Installed
Capacity
Shareholding
or PIE
Petrobras
Capacity
Partners
1
2
3
4
5
6
7
8
9
10
11
12
13
14
t
n
e
m
e
g
a
n
a
M
s
a
r
b
o
r
t
e
P
r
e
d
n
u
s
t
e
s
s
A
)
d
e
l
l
o
r
t
n
o
c
r
o
e
s
a
e
l
,
n
w
o
(
Ibirité
Fluminense
NG
NG
Seropédica NG/DO
Cubatão
NG
Nova
Piratininga
Piratininga
Termorio
NG
NG
NG
Juiz de Fora
NG/ET
Três Lagoas
Termomacaé
NG
NG
Southeast/Midwest
UTE
South
Canoas DO/NG
Termobahia
Northeast
Vale do Açu
NG
NG
Termoceará NG/DO
226
530
386
219
386
190
100%
100%
100%
100%
100%
100%
226
530
386
219
386
190
1,058
100%
1,058
87
386
923
249
186
323
220
100%
100%
100%
100%
100%
100%
100%
87
386
923
249
186
323
220
Petrobras Management
5,369
100%
5,369
19
PV
Northeast
Solar Alto do
Rodrigues
1
100%
1
Subtotal Petrobras Management
5,370
5,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
123
Type(1)
Region
Power
Plant
Fuel
Installed
Capacity
Shareholding
or PIE
Petrobras
Capacity
Partners
1
2
3
4
Goiânia II
DO
140.3
30%
42
Southeast/Midwest
Araucária
NG
484
18.80%
91
South
Suape II
FO
381
20%
76
UTE
Northeast
Termocabo
FO
50
12%
6
Enegen
Participações S.A.:
70%; Petrobras:
30%
Copel: 20.3%; Copel
GeT: 60.9%;
Petrobras: 18.8%
Savana SPE
Incorporação Ltda.:
80%, Petrobras:
20%
Brasympe Energia
S.A.: 60%
(Petrobras has 20%
of shareholding at
Brasympe);
EBRASIL S.A.: 24%;
SZF Participações
Ltda: 14%; OZ&M
Incorporação
Participação Ltda:
2%
s
g
n
d
i
l
o
h
e
r
a
h
S
s
a
r
b
o
r
t
e
P
Subtotal Petrobras Shareholdings
TOTAL
1,055
6,424
215
5,584
(1) NG—Natural Gas; FO—Fuel Oil; DO—Diesel Oil; ET—Ethanol; PIE—Independent Power Producer; UTE—Thermoelectric Power Plant; PCH—Small
Hydroelectric Plant; PV—Photovoltaic.
In November 2021, we announced the sale of our participation in Breitener Energética S.A., which has two
thermoelectric plants (Jaraqui e Tambaqui). In November 2021, we also sold our participation in Companhia
Energética Manauara (“CEM”), which has one thermoelectric plant and TEP Termoelétrica Potiguar S.A.
(“TEP”), which has two hydroelectric plants and participation in CEM.
For more information on our divestment process, see “ – Portfolio Management” in this annual report.
Contracts of our thermoelectric power plant in the Regulated Marketing Environment (or “ACR”) and their
respective contracted power and contract expiration date are listed in the table below.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
OUR CONTRACTS IN THE REGULATED MARKETING ENVIRONMENT
Region
Power plant
Contracted
power
(MWavg)
Contract expiration date
Our Business
124
Southeast /Midwest
Northeast
Baixada Fluminense
Seropédica
Cubatão
Termorio
Três Lagoas
Ibirité
Termomacaé
Termoceará
Termobahia
Vale do Açu
416.4
278.0
141.0
98.3
64.2
704.0
127.0
48.5
200.0
141.0
100.0
90.0
2033
2023
2024
2025 to 2039
2026 to 2040
2022 (352MW), 2024
(352MW)
2023
2022
2025
2023 (64MW) e 2024 (77MW)
2021
2021
In addition to the sale in traditional energy auctions at the ACR, in December 2021, we participated in the
2021 Capacity Reserve Auction, selling 1,120 MW of available power from thermoelectric power plants of
Termorio (RJ) and Ibirite (MG).
The amount of 922.35 MW from UTE Termorio were sold at a price of US$152,759.21/MW/year, converted
per rate of the auction (R$876,685.12/MW/year) and 197.87 MW from UTE Ibirité at a price of US$153,014.84
/MW/year, converted per rate of the auction (R$878,152.17/MW/year). This price guaranteed a total fixed
revenue of US$157.1 million/year (R$901.7 million/year) in the period from July 2026 to June 2041, in
addition to the variable revenues that will come from the dispatch of these thermoelectric plants during the
contract period.
We expect to sign the definitive agreements 25 business days after the publication of the notice of
homologation of the results, which is expected to occur by April 14, 2022.
We also invested, independently and in partnership with other companies, in renewable power generation
sources in Brazil. We held indirect interests in two small hydroelectric power plants (Areia and Água Limpa)
through our associate TEP Termoelétrica Potiguar S.A. (“TEP”), and participated in joint ventures in four
wind power plants (Mangue Seco 1, 2, 3 and 5). In 2021, we completed the sale of these assets, leaving the
wind and hydro generation sector. Since May 2021, we own only a solar power plant, Unidade Fotovoltaica
de Alto Rodrigues with 1 MW of solar capacity.
We and our partners sell energy from these plants directly to the Brazilian federal government through
auctions.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
125
Customers and Competitors
Natural gas is marketed to 21 clients, most of which are distributors. The entire demand for natural gas
includes our non-thermoelectric, thermoelectric, refining and fertilizer markets, as well as the consumption
by natural-gas carriers contracted by us for the provision of transportation services.
GAS CLIENTS (% vol)
NON-THERMOELECTRIC
THERMOELECTRIC
MARKET (% vol)
MARKET (% vol)
In the power segment, we operate in the regulated market (power distributors) and free market (marketers
and free consumers/large consumers). We have 133 clients and suppliers, of which 35 are distributors, 28
are marketing companies, 14 are generating companies and 56 are free consumers. All contracts are
registered at the Electricity Trading Chamber, a sector agent responsible for the settlement and accounting
of these contracts.
In the commercialization of natural gas, we act as importers and domestic producers who can directly sell
our product to the distributors or thermoelectric plants. We expect an increase in competition due to new
regulation under discussion which aims to improve the regulatory framework of the natural gas sector and
to establish guidelines for a new design of the market that allows the entry of new agents in the sector in
order to promote competition.
The transportation of natural gas also consists of a monopoly of the Brazilian federal government and may
be exercised upon concession or authorization by companies incorporated under Brazilian law, with
headquarters and administration in the country.
In the natural gas distribution segment we operate through indirect participation in state-owned
companies, where each distributor has a monopoly for its concession area, and there is no competition, since
the Brazilian federal constitution provides that the natural-gas distribution segment can only be exercised
through concession by public authorities of each state.
We concluded the transition to new contracts for the sale of natural gas to local distribution companies in
which the prices of the molecule started to be linked to the variation in the price of Brent oil, replacing the
basket of international quotations of fuel oils that until then prevailed. This improvement brought greater
transparency to the update of contractual prices and allowed selling prices to respond more quickly to
international references, making them more competitive, as observed in the year 2020.
In 2021, mainly in the first quarter, some local distribution companies declared force majeure in their
respective gas purchase contracts, due to a second wave of the Covid-19 pandemic. The effects of these
declarations ended in May 2021.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
126
Additionally, in 2021, the LNG market presented a global scenario that LNG prices increased sharply mainly
due to the recovery of the global demand. The import of LNG is indispensable to meet our commitments
made to the market.
Local distribution companies launched public calls for purchasing gas starting in 2022. We offered such
distribution companies products with terms of six months, one year, two years and four years and
contractual mechanisms to reduce price volatility, such as reference indexers linked to LNG and Brent,
installment options and the possibility of reducing volumes in longer-term contracts.
Although we offered these contractual possibilities to local distribution companies, in December 2021 some
legal injunctions were filed to maintain our natural gas supply at a reduced price from 2022 onwards.
We have obtained the suspension of a preliminary decision regarding the supply of natural gas to Ceará Gás
(“CEGÁS”). We continue to appeal all other preliminary decisions. In the power segment, we operate in
generation and sale. In generation, we compete with third-party thermoelectric plants, as well as other
generators with other energy sources (hydro, wind, solar). In terms of commercialization, we compete with
other energy marketers.
Fertilizers
We have three fertilizer plants in Brazil, one located in the state of Bahia, (“FAFEN-BA”), and other in the
state of Sergipe (“FAFEN-SE”), and one subsidiary located in Paraná, Araucaria Nitrogenados S.A. (“ANSA”).
Their main products are ammonia and urea. Together these plants have an installed capacity of 1.852 million
t/year of urea, 1.406 million t/y of ammonia, 319,000 t/y of ammonium sulfate and 800,000 tons/y of ARLA-
32. We also have an unfinished Nitrogen Fertilizer Unit (UFN-III) in Mato Grosso do Sul. The construction of
UFN-III began in September 2011, but was halted in December 2014, with about 81% of the physical
construction completed.
We continue to pursue our strategy of leaving the fertilizer market and focusing on assets that generate
greater financial return and are more adherent to our business. To this end, since August 2020, after being
mothballed in 2019, our plants located in Bahia and Sergipe have been operating under a lease agreement
with Proquigel Química S.A. (“Proquigel Química”), a company of the Unigel Group for an initial term of 10
years, which may be extended for an additional 10 years.
In January 2020 ANSA was mothballed, and since September 2020 we have started its divestment process,
which is currently in its binding phase.
Additionally, since 2020 we have started the divestment process of UFN-III.
FERTILIZER PRODUCTION (thousand tons)
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
127
Portfolio Management
Our active portfolio management encompasses both investments and divestments, and is driven by our
partnership and divestment process, which aims to improve our operational efficiencies and return on
capital and to generate value for our business. Currently, our partnerships and divestments comprise the
sale of minority, majority, or entire participations in some of our subsidiaries, affiliates, and assets to
strategic or financial investors or by means of public offerings.
Our divestment portfolio contains more than 50 assets at different stages of the sale process. Along with
contributing to the company's leverage target, divestments help improve capital allocation and
consequently create value for the shareholder.
In line with the TCU, guidelines and current legislation, the following stages of our divestment projects are
disclosed to the public:
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
From January 1, 2021 through February 23, 2022, we completed, among others, the following divestitures.
Our Business
128
Signing date
Closing date
Main transactions
11/28/2019
02/05/2021
Sale of our entire stake in the Frade concession, located in the
Campos Basin in the north coast of the state of Rio de Janeiro
10/2/2020
02/05/2021
Sale of the entire stake held in Petrobras Uruguay Distribuición
S.A. (PUDSA)
01/07/2021
04/09/2021
Sale of the entire stake held in Eólica Mangue Seco 1
01/07/2021
04/05/2021
Sale of the entire stake held in Eólica Mangue Seco 3 and Eólica
Mangue Seco 4
04/30/2021
04/30/2021
Sale of the remaining stake (10%) held in Nova Transportadora do Sudeste
S.A. (“NTS”)
02/26/2021
05/31/2021
Sale of the entire stake held in Eólica Mangue Seco 2
06/30/2021
07/05/2021
Petrobras Distribuidora S.A. Secondary Public Offer (sale of 37.5%
Petrobras’ shares)
08/21/2020
07/14/2021
12/21/2018
08/31/2021
Sale of the entire stake held in eight onshore exploration and
production concessions, located in the state of Bahia, jointly
known as the Rio Ventura Complex
Assignment of 10% rights from the Lapa field to Total, in Block BM-S-9.
Exercise of the put option for the remainder of our stakeas provided for in
the contract signed in January 2018 when Total acquired 35% of our stake
within the scope of the strategic partnership, taking over field operations
07/29/2021
11/05/2021
Sale of the entire stake held in five electricity generation
companies: TEP Termoelétrica Potiguar S.A. (“TEP”) and
Companhia Energética Manauara (“CEM”)
08/27/2021
11/10/2021
Sale of the entire stake held in Breitener Energética S.A.
(“Breitener”)
03/24/2021
11/30/2021
Sale of refining and associated logistics assets in Brazil of
Landulpho Alves Refinery (“RLAM”) in Bahia
05/03/2021
12/06/2021
Sale of the entire stake held in three thermal power stations Bahia
1, Muricy and Arembepe located in Camaçari – BA
02/24/2021
12/06/2021
Sale of the entire stake held in nine onshore fields, located in
Bahia, jointly known as the Miranga Complex
12/23/2020
12/22/2021
Sale of the entire stake held in 12 onshore exploration and
production concessions, located in the state of Bahia, jointly
known as the Remanso Complex
8/27/2020
12/28/2021
Total assignment of rights in 27 mature onshore fields, located in
Espírito Santo, jointly known as the Cricaré Complex
07/05/2021
02/04/2022
Sale of the entire stake held in seven onshore and shallow water
fields located in the state of Alagoas, jointly called Polo Alagoas
TOTAL
(1) Considering agreed amounts at the signing of the transaction.
Transaction
nominal
value(1)
(US$ billion)
0.100
0.062
0.008
0.017
0.333
0.007
2.238
0.094
0.049
0.032
0.058
1.650
0.018
0.220
0.030
0.155
0.300
5.369
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
129
From January 1, 2019 through February 23, 2022, we have signed agreements for transactions that are
currently pending closing. Completion of such transactions is subject to compliance with certain contractual
and legal conditions precedent.
Signing date
Main transactions
7/9/2020
8/14/2020
Sale of the entire stake in the offshore field of Pescada, Arabaiana and Dentão,
located in the state of Rio Grande do Norte
Sale of the entire stake in the onshore field of Fazenda Belém and Icapuí, located in
the state of Ceará
12/17/2020
Sale of the entire stake held in 14 onshore exploration and production concessions,
located in the state of Bahia, jointly known as the Recôncavo Complex
01/29/2021
Sale of the entire stake in the Peroá and Cangoá shallow water fields and in the
BM-ES-21 deepwater concession, jointly known as Peroá Complex
07/12/2021
Sale of the entire stake held in the Papa-Terra field, located in deepwaters of the
Campos Basin
07/28/2021
Sale of the stake (51%) held in Petrobras Gas S.A. (“Gaspetro”)
08/25/2021
Sale of refining and associated logistics assets of Isaac Sabbá Refinery (“REMAN”)
in Amazonas
11/11/2021
Sale of Shale Industrialization Unit (SIX) in Paraná
12/23/2021
Sale of the entire stake held in 11 onshore fields located in the Sergipe-Alagoas
Basin, jointly known as the Carmopolis Cluster
Sale of the entire stake held in 26 onshore and shallow waters fields and also the
entire stake held in Clara Camarão located in the Potiguar Basin, jointly known as
the Potiguar Cluster
Sale of the entire stake held in four onshore fields located in the Espírito Santo
Basin, jointly known as the Norte Capixaba Cluster
01/31/2022
02/23/2022
TOTAL
Transaction
nominal
value (1)
(US$ billion)
0.002
0.035
0.250
0.055
0.106
0.394
0.190
0.033
1.100
1.385
0.544
4.093
(1) Agreed amounts at the signing of each transaction, subject to adjustment at closing.
(2) These operations were traded in R$. Thus, for purposes of this table, the amounts were converted using the exchange rate (PTAX) of
the signing date.
Agreements with CADE
In 2019, we signed two agreements with CADE, which consolidates agreements between the parties
related to (i) the execution of divestment of refining assets, and (ii) promoting competition in the
natural gas industry in Brazil. In 2021, we signed three amendments for these agreements, changing
the signing deadlines for divestment for some assets.
Refining agreement
With the execution of the refining agreement, among other related commitments, we are
committed to divest approximately 50% of our refining capacity as of the date of the agreement,
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
130
which represents the full sale of seven refineries (REPAR, REFAP, RLAM, RNEST, REGAP, LUBNOR,
REMAN) and a shale industrialization unit (SIX) with their associated logistics.
The agreement also provides that, of the following subgroups (i), (ii) and (iii) below, the companies
listed may not be acquired by the same buyer or by companies of the same economic group, as the
companies listed in each subgroup are considered competitors with one another: (i) RLAM and
RNEST; (ii) REPAR and REFAP; and (iii) REGAP and RLAM. An external agent that we contract,
according to specifications to be established by mutual agreement, will accompany the schedule
and compliance with the commitments assumed with CADE.
In August 2021, we finalized the sale of REMAN to Ream Participações S.A. In November 2021, we
divested from SIX by selling our stake in the company to Forbes & Manhattan Resources Inc. and
completed the sale of RLAM to Mubadala Capital group. The sale of SIX and REMAN are still subject
to conditions precedent, such as CADE’s approval or agreement with ANP.
On the other hand, we terminated the divestment process for REPAR, RNEST and REFAP in February,
August and October 2021, respectively. We plan to restart the divestment process at a later date.
LUBNOR and REGAP divestments are still underway. Currently, the signing of purchase and sale
agreements is the focus of these transactions.
We are negotiating new terms with CADE for the refineries that have not yet been sold, reaffirming
our commitment to the divestment.
Natural gas agreement
The natural gas agreement includes the sale of our shareholding participation in companies of the
gas transportation and distribution segments:
10% stake in NTS;
10% stake in TAG;
51% stake in TBG; and
indirect participation in gas distribution companies, either by selling our 51% stake in Gaspetro, or
by selling indirect participation in distribution companies.
The process of closing this agreement is in its advanced stages. In July 2020, we sold our remaining
10% stake in TAG. In April 2021, we announced the conclusion of the sale of our remaining 10%
interest in NTS and in July 2021 we signed the sale of our 51% stake in Gaspetro. Additionally, we
announced the beginning of the binding phase in connection with our 51% stake in TBG.
In our transportation systems, we work to specify the maximum injection and withdrawal volumes
at each receiving point and delivery area for further adjustments to the current transportation
service contracts so that transportation companies, under the supervision of the ANP, can offer the
remaining capacity to the market, thus enabling other companies to use the remainder of the
transportation network. Furthermore, we are committed to other actions to allow greater
competitiveness in the natural gas market, such as: (i) negotiating access to outflow and processing
assets, (ii) refraining from purchasing new gas volumes from partners/third parties, except in
certain situations provided for in the agreement, and (iii) leasing the regasification terminal in the
state of Bahia.
In 2021, we made progress on several fronts, including leasing a regasification terminal in the state
of Bahia and signing a contract for the use of a natural gas processing plant in UPGN Guamaré.
Regarding the commitment to negotiate access to processing systems, we started the commercial
operation with Potiguar E&P in Guamaré on January 1, 2022. We also advanced to negotiations with
Shell, Petrogal, Equinor, Petroreconcavo, Origin and Repsol, and proposed an interim solution. In
this context, in December 2021, we signed swap contracts with these companies. The swap contracts
are short-term and put forth the anticipation of access to the necessary infrastructure. Under these
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Our Business
131
swap contracts, we process the gas produced, it is subsequently reacquired by the companies,
allowing them to directly access the natural gas and market starting January 1, 2022.
The purpose of the agreement is to preserve and protect competitive conditions, aiming to open
the Brazilian natural gas market, encouraging new agents to enter this market, as well as
suspending administrative procedures established by CADE to investigate our natural gas business.
In addition, we have in our portfolio other projects in their structuring phase, and believe in a strategy for
our portfolio management that focuses on core assets, in order to improve our capital allocation, enable
capital cost reduction, and ultimately increase value generation for us and our shares.
We have disclosed the teasers, non-binding and binding phases related to the following assets that are
currently part of our divestment portfolio.
Phase
Summary scope of main transactions (1)
Non-binding
Sale of the entire stake (20%) held in MP Golf of Mexico LLC. (MPPG) located in Texas, USA, owner of offshore oil
fields in the Golf of Mexico
Full sale of equity interest (51%) in Transportadora Brasileira Gasoduto Bolívia-Brasil (TBG)
Full sale of equity interest (25%) in Transportadora Sulbrasileira de Gás S.A. (TSB)
Sale of the entire stake held in 28 onshore fields located in the Recôncavo and Tucano Basins, jointly known as the
Bahia Terra Cluster
Sale of the entire stake held in the Albacora field, located in deepwaters, in the Campos Basin
Sale of the entire stake held in the Albacora Leste field, located in deepwaters in the Campos Basin
Sale of the entire stake (27.88%) held in Deten Quimica S.A. (Deten)
Sale of refining and associated logistics assets in Brazil: Gabriel Passos Refinery (REGAP) in Minas Gerais and
Lubricants and Oil Products of the Northeast (LUBNOR) in Ceará
Sale of the entire stake held in Petrobras Colombia Combustibles (PECOCO)
Binding
Sale of the entire stake held in 11 production fields located in shallow waters in the Campos Basin, jointly known as
the Garoupa Complex
Sale of the entire stake (100%) held in the Araucária Nitrogenados S.A. (ANSA)
Sale of the entire stake (100%) held in the Petrobras Biocombustiveis S.A. (PBIO), including the biodiesel plants.
Sale of the entire stake held in five electricity generation companies: Brasympe Energia S.A.(“Brasympe”),
Energética Suape II S.A. (“Suape II”) and Brentech Energia S.A. (“Brentech”)
Sale of the entire stake held in one thermal power stations Canoas located in Canoas – RS
Sale of the entire stake (100%) held in the Nitrogenated Fertilizer Unit III (UFN-III)
Sale of the entire stake held in the Manati field, a shallow water marine production concession located in the
Camamu Basin, in the Bahia state
Sale of the entire stake held in seven onshore exploration and production concessions, located in the Solimões
Basin in the Amazonas state, jointly known as the Polo Urucu
Sale of the entire stake held in the Atum, Curimã, Espada and Xaréu fields, located in shallowwaters in the Mundaú
sub-Basin, State of Ceará, jointly called Polo Ceará
Sale of the entire stake held in two sets of maritime concessions in the post-salt layer deepwaters, known as the
Golfinho Complex and the Camarupim Complex, located in the Espírito Santo Basin
(1)
Information updated as of February 23, 2022.
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We are subject to external variables that can impact the performance of our business and the way we plan
for the future. We describe key variables in 2021 below.
Global Economy
The performance of the global economy in 2021 was marked by the heterogeneous recovery of countries as
a result of the Covid-19 pandemic and by the disruption of some crucial global supply chains. For example,
within the semiconductor industry segment, production was lower than demand, causing an increase in
prices and delays in several segments such as the auto industry. With regards to the Covid-19 pandemic,
while the number of cases and deaths was significantly higher in 2021 when compared to 2020, restrictions
on the circulation of goods and services were lifted. According to WHO data, in 2021, the number of
recorded Covid-19 cases was 202.9 million people and 3.5 million deaths worldwide. Meanwhile, according
to the database Our World in Data, 9.2 billion vaccinations were administered in this same timeframe.
Additionally, widespread fiscal and monetary stimulus plans carried out around the world also contributed
to a faster recovery in demand in some key countries. The following graph and figure show the level of fiscal
spending worldwide in response to Covid-19 and interest rates.
ADDITIONAL SPENDING AND FORGONE REVENUE IN RESPONSE TO THE COVID-19 PANDEMIC
(Percent of 2020 GDP)
Less than 2.5%
2.5%-5.0%
5.0% - 7.5%
7.5% - 10%
More than 10%
no data
Source: IMF
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INTERNATIONAL INTEREST RATES, SELECTED COUNTRIES (%A.A.)
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Dec-21
Source: FED, BCE, BBA and BoJ
These events and economic policies allowed for a faster recovery of the global economy in 2021 and started
to increase inflation in several regions of the world, since the stimulus plans were enacted in a context of
disruptions in the supply side. This change can be seen in the rise in commodity prices and in consumer
prices in several countries. In the U.S., the 12-month accumulated inflation (CPI) recorded a peak of 7.1%,
the highest number in the last 31 years. During the same period in Europe, that same indicator leaped to
5.0%. In developing countries, such as Brazil and Mexico, the pressure on commodity and consumer prices
was similar.
INTERNATIONAL COMMODITIES PRICES (INDEX, JAN2019=1)
Source: Bloomberg
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In 2021, the global economy grew 5.9%, compared to a fall of 3.1% in 2020, according to the IMF. For 2022,
the uncertainty lies in the pace of the tapering of monetary stimulus once there are signs of the price
increases discussed above. According to the IMF, global activity level is expected to increase 4.4%.
GDP GLOBAL GROWTH RATE (%)
Source: IMF
On February 24, 2022, Russia started a military operation against Ukraine. The conflict impacts the
international economic outlook, increasing global uncertainty and reinforcing trends and risks associated
with the economic recovery from the Covid-19 pandemic. A series of economic sanctions on Russian citizens
and enterprises have been imposed by the U.S., the United Kingdom and the European Union, such as: (i)
freezing of assets; (ii) exclusion of banks and financial services companies from the international financial
system, including the international payment system - SWIFT; and (iii) restrictions on companies’ activities,
such as GAZPROM by the U.S. and ROSTEC by the United Kingdom and the European Union.
Since the beginning of the military conflict, the Emerging Markets Bond Index (EMBI+) reported a 40%
increase, Euronext retracted 10% and commodities prices have increased substantially, specifically,
Brent oil (+57%), Japan Korea Marker (JKM) natural gas (+14%) and wheat (+45%).
The surge trend in commodities prices takes place at a moment in which the main world economies are
facing the return of inflation – for example, the inflation in the 12 months ended in January 2022 was
7.5% in the U.S. (highest since May 1982) and 5.1% in Europe (the highest since such data began to be
recorded in January 1997).
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Global Oil & Gas Market
The year 2021 began with a higher Brent price due to the signs of a tighter market as a consequence of the
OPEC+ decision to suspend its planned production increases and the announcement by Saudi Arabia of an
additional voluntary production cut of one million barrels per day for 1Q21.
On the demand side, the recovery in oil products consumption in the U.S. together with decreasing
inventories led Brent price to reach its highest level in over one year. However, such gains in oil price lost
momentum with new lockdowns in Europe and signs of decreases in demand in Asia by the end of the 1Q21.
Nonetheless, the average Brent price for the period was 22% higher in comparison to the 1Q20 and close to
pre Covid-19 levels.
BRENT – DAILY CRUDE OIL PRICE (US$/BBL)
Source: Bloomberg, 2021
Oil prices for 2Q21 started at lower levels in response to a higher number of Covid-19 infections in India and
Europe. Separately, there were signs that negotiations between Iran, the U.S., and other countries to revive
the nuclear deal, which would remove sanctions on Iranian production, were advancing.
However, in the second half of April 2021, Brent price started to increase again. The IEA, OPEC and EIA-DOE
forecast a tighter oil market in the 2H21, despite the OPEC+’s decision to gradually increase its production
between May and July 2021.
Price recovery gained momentum in June, supported by the recovery of Indian demand, along with strong
compliance with the OPEC+ and the lower probability that Iran would reach an agreement with the U.S. in
the short term. By the end of the month, Brent price had reached US$76/bbl.
3Q21 began with oil prices down in response to the new lockdowns in China and other Asian countries due
to the increasing number of Covid-19 cases by the Delta variant. At the same time, the OPEC+ decided to
increase its production by 400 mbbl/d per month starting in September 2021.
By the end of September 2021, high natural gas prices increased the expectation of growth in crude oil
demand due to the gas-to-oil switch. Brent price surpassed the US$79/bbl level for the first time since
October 2018. Meanwhile, on the supply side, damage caused by hurricane Ida in the Gulf of Mexico resulted
in the loss of more than 30 mmbbl by the end of 3Q21. As a result, 3Q21 was the sixth consecutive quarter
with an increase in Brent price.
At the beginning of November 2021, OPEC+ decided to maintain its policy of gradually restoring production,
announcing the return of 400 mbbl/d to the market in December 2021, despite the requests of big oil
consumers for a quicker supply ramp-up. In response, several countries decided to release oil from their
emergency reserves to reduce fossil fuel prices, but Brent oil price remained around the US$80/bbl level
until mid-November 2021. However, by the end of the month, the discovery of a new Covid-19 variant,
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Omicron, in Africa, led to a steep fall in the Brent price, which reached US$73.3/bbl on November 26, 2021,
a drop of 10.9%.
The oil market rallied in the following weeks as market changes were supported by easing concerns over the
Omicron variant’s impact on global economic growth and transport fuel demand. The Brent price weekly
average rose during the month of December, closing at US$77.02/bbl on December 31, 2021.
BRENT – ANNUAL CRUDE OIL PRICE (US$/BBL)
Source: Bloomberg, 2021
The conflict between Russia and Ukraine is impacting the oil and gas market. According to the International
Energy Agency (“IEA”), Russian oil and oil products exports reached 7.8 MMbpd in November 2021 - 64% of
this volume is represented by crude oil. Hence, a total of 5 MMbpd is at risk of being subject to sanctions.
Replacing such large volumes of supply in the short-term could pose difficulties. For instance, OPEC’s spare
capacity in January was around 3 MMbpd.
The uncertainty in relation to the developments of the conflict in Ukraine has contributed to a 57% increase
of the Brent price from January 1 until March 21, 2022.
In 2021, international natural gas prices showed widespread increases, with historic highs in the Asian (JKM)
and European (NBP/TTF) benchmarks, as well as strong increases in the North American market, as a result
of the combination of several supply shocks and rising demand.
The increase in natural gas prices occurs due to two distinct dynamics. Prices in the major import markets,
such as Europe and East Asia, are strongly influenced by the LNG spot trade. In contrast, prices in the U.S.
and the export market, are still largely dictated by domestic dynamics.
On the supply side, global liquefaction capacity, which was impacted in 2020 by significant downtime due to
unplanned maintenance, proved to be fairly incapable of accommodating high prices. New shortages at
different exporters put the supply available in 2021 at levels similar to those of the previous year despite a
resistant price environment. The rise in prices and demand, therefore, takes place in a context of limited
supply availability LNG cargoes.
In Asia, the expansion of demand was due to the economic recovery of the region over the course of the
Covid-19 pandemic in conjunction with disruptions in the coal supply chain, low reservoir levels in Chinese
hydropower plants, lower output by nuclear power plants in South Korea and efforts to replenish natural
gas stocks for the coming winter that left little stock during the winter of 2020-2021.
In Europe, the rise in prices stemmed from the diversion of LNG cargoes from the European market to the
Asian market. In December 2021, prices reached levels higher than JKM, a rare situation. A lot of factors led
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to this growing LNG need: climate accounted to a higher demand for both heating and for air conditioning;
lower wind power generation that needed to be replaced by gas, the UK being the one who suffered the
most; high carbon prices increased the price of coal for power generation; an overall decline in European
natural gas production; and lower supply from Russia.
There were reports that Russia was withholding supplies for geopolitical reasons and pushing for new long-
term deals with Europe. Russia denied these allegations, merely declaring that it was fulfilling its
contractual obligations on gas deliveries. By the end of 2021, tensions increased with the movement of
Russian troops on the border with Ukraine On February 24, 2022, Russia invaded Ukraine. The rise in prices
in the European market has interrupted a period of years with persistent low-price levels.
In the U.S., cost-cutting actions by gas producers to protect cash generation amid the effects of the Covid-
19 pandemic in 2020 led to capital discipline and focus on reducing debt. This was a major factor that
explains the rise in prices in the U.S., resulting from a supply that is not very reactive to a global market with
high demand for LNG exports.
The current conflict between Russia and Ukraine, has brought concerns and high volatility to the natural
gas market. Russia is the fourth largest global exporter of LNG, after Qatar, Australia, and the U.S., in
addition to being a relevant supplier of natural gas to Europe through gas pipelines. In 2021, Russian
exports amounted to 45% of the European Union imports and about 40% of the total consumption. The
most drastic development would be a reduction in the Russian supply through pipelines to Europe, together
with restrictions on the Yamal LNG placement in Europe.
From the beginning of the year until March 21, 2022, JKM gas prices recorded an increase of 14%.
Brazilian Economy
The Brazilian economy grew by 4.6% in 2021, according to the Brazilian Institute for Geography and
Statistics (“IBGE”). This growth rate is the highest since 2010, however, this is mainly due to the high
statistical effect, so-called “carry-over”, which was of 3.7% in 2021, meaning that if the economy had zero
growth since the last quarter of 2020, the annual growth rate for 2021 would be 3.7%.
Due to the worsening of the Covid-19 pandemic at the beginning of 2021, a new assistance program for the
most vulnerable segments of the population was introduced. However, the scope was more limited, with
smaller transferred values in comparison to the aid distributed in 2020. The more expansive recovery of the
services sector is mainly associated with the lifting of restrictive measures on mobility and was mainly
driven by the middle and upper classes through the disbursement of a large part of savings accumulated
throughout 2020 from reduced service-related expenses.
The growth of the service sector was not accompanied by the expansion of industrial production. In 2020,
the industry, the non-durable consumer goods segment in particular, was one of the main beneficiaries of
emergency aid. In this category, the food sector (which represents the largest relative share in the Brazilian
industry), whose expansion was 4%, was the main driver. In 2021, this same segment showed a drop close to
7.5%. The sharp drop in food production can be explained not only by the reduction in the aid transferred
by the government, but also by growing inflation in Brazil. An important part of the rise in domestic prices
are external factors arising from disruptions and imbalances in the global supply chain. For example, the
prices of agricultural and mineral commodities (including oil and natural gas prices) also rose significantly,
putting pressure on prices in several supply chains that use these commodities as input.
In terms of internal factors, the water crisis played a crucial role, as more than 65% of electricity comes from
hydropower sources. With the lack of rain and the sharp drop in the level of the reservoirs, a crucial
component of the hydroelectric plants was unable to operate, requiring the use of other sources of electrical
energy. The main source that replaced hydropower was natural gas, which was used to generate power in
thermoelectric plants. As gas prices rose sharply in 2021, the cost of power generation also increased.
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In addition, the maintenance of the exchange rate at highly devalued levels during most of the year (above
R$/US$5.20) also contributed to inflation, with inflation exceeding 10% in accumulated terms at the end of
2021. In annual terms, the Brazilian currency has lost almost 40% of its value related to the U.S. dollar since
2019.
This rise in inflation required the Central Bank to take stricter measures, raising the basic interest rate
(SELIC), which after reaching a historic low of 2% in August 2020, rose to 9.25% in December 2021, reaching
11.75% in March 2022. This macroeconomic context of rising inflation and interest rates poses some
challenges for both GDP and employment recovery. Concerning the GDP, the Focus Bulletin, published by
the Brazilian Central Bank, forecasts a growth of 0.5% for 2022.
Brazilian Oil and Gas Market
Demand for oil products in Brazil reached its all-time record in 2014. Since then, the average annual GDP
growth has remained negative, explaining most of the drop in demand for oil products in the same period.
The Covid-19 pandemic has had extensive effects on oil products demand, starting in the 2Q20. Strong
social distancing measures, personal mobility restrictions, and temporary lockdowns led to an
unprecedented fall in oil-related demand for passenger transportation activities. Gasoline and jet fuel were
the most severely impacted products. Although goods and cargoes kept moving around the country, the
slowdown in economic activity also slightly reduced diesel demand. Despite the overall slowdown, the
higher use among residential users strengthened LPG consumption in the same period.
During subsequent quarters, restriction measures were lifted gradually amid the decrease in the daily
number of Covid-19 related cases and deaths. In 2021, the bulk of oil products demand has already
surpassed the levels seen before the pandemic with jet fuel and naphtha being the only products whose
demand is still below pre-pandemic levels.
CONSUMPTION OF SELECTED FUELS IN BRAZIL (MBBL/D)
11
Source: Petrobras and EPE, 2021
Despite the recovery, the cumulative effect of the water crisis, the rise in commodity prices and the
disorganization of supply chains caused by the Covid-19 pandemic are still having repercussions on fuel
markets. Ethanol supply has retracted, causing the rise of ethanol prices and the loss of its competitiveness
—
11 Includes energy sector demand.
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against gasoline. To mitigate the effects of higher biodiesel prices, the Brazilian government has
temporarily reduced the diesel/biodiesel blend requirements, which has led to an increase in the demand
for fossil diesel. In response to the severe water crisis experienced in the southern and central part of Brazil,
the fuel oil demand for power plants skyrocketed. As a result, overall demand for fuel oil rose by roughly
50% in 2021 when compared to 2020.
Diesel sales rose 7.5% in 2021. Temporary basic income policies to mitigate the effects of the Covid-19
pandemic stimulated the demand for necessary goods such as food and beverages. Additionally, record
grain harvests boosted freight and diesel demand. In turn, jet fuel demand was the most affected by travel
restrictions put into place due to the Covid-19 pandemic. In 2021, jet fuel demand gradually recovered to
pre pandemic levels, rising by roughly 25% in comparison to 2020, but still remains 40% below 2019 levels.
Despite this extraordinary and impactful event, the long-term trends that are forming in the Brazilian
market for oil products are expected to keep their course. In specific terms, gasoline demand is expected to
diminish due to its substitution by hydrous ethanol, the use of which is motivated by public policies such as
RenovaBio that induce competitive prices of hydrous ethanol compared to fossil fuel. Additionally,
exclusively gasoline-fueled vehicles are being replaced by flex fuel and, in the future, the latter will be
gradually replaced by electric automobiles. Moreover, the development of diesel demand is expected to be
slowed by the mandatory increase of the biodiesel percentage in the fuel blend that is delivered to the final
consumer.
Fuel oil is consumed in three main segments: industrial, power generation and as a marine fuel. For at least
two decades now, fuel oil has been undergoing a process of substitution by other sources, especially natural
gas, and there is still some room for this process to continue in the next years. In the maritime transport
segment, a strong demand for decarbonization is starting to emerge, which will certainly have negative
repercussions on the demand for bunker in the medium and long term.
According to the Ministry of Mines and Energy, in 2021, natural gas demand inter-annual data increased by
30% to 94 million m3/d, from an average of 72 million m3/d in 2020 (not considering the gas used in pipeline
transport). This growth reflects post-Covid-19 economic recovery and the worst hydro crisis the country
has ever experienced. In the same period, the consumption of gas for power generation grew by 64%.
Because the 2020 market was affected by the Covid-19 pandemic, it is also relevant to examine 2021 growth
compared to 2019. Natural gas demand increased by 20% from 78 million m3/d in 2019 and demand for
power generation increased by 48%.
Technology and alternative sources
The Brazilian energy mix (i.e., different types of primary energy sources) is going through change, especially
in terms of power generation. This change is influenced by the development of renewable sources, such as
wind (1.7%) and solar photovoltaic power (0.3%) that have become less costly in the recent years.
In terms of motorization, there was a trend towards more efficient-consumption vehicles, influenced by
Inovar-Auto and the introduction of the first hybrid flex fuel vehicle manufactured in Brazil. Today, the
government program Rota 2030 implies further investments in energy efficiency and vehicles safety,
resulting in less taxes for automobile manufacturers.
Regulation
In 2021, the new natural gas regulatory framework was finalized via presidential approval of Law 14,134, of
April 8, 2021, and the corresponding regulatory decree (Decree No. 10,712, of June 2, 2021).
This new regulatory framework results from an intense debate, started in 2016 and led by the executive
authority, which aimed at identifying legal and regulatory constraints for the promotion of a competitive,
liquid, and efficient market, considering the reduction of our market share.
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The new regulatory framework approval provides vital legal support for the administrative measures that
had already been implemented while also enabling modifications in Law 11,909/2009 (previously known as
the New Gas Law) in relation to issues that were incompatible with the creation of a new natural gas market.
For the effective implementation of this legal milestone, the ANP must establish a new regulation for the
operation of this market while individual states must establish local regulations recognizing dealers and
free consumers, including their right to contract at a national level.
According to the updated Regulatory Agenda ANP 2021-2022, published in September 2021, the regulation
process will take place in 2022 and 2023. In any case, the Decree No. 10,172/2021 allows ANP to adopt
individual solutions, though it must follow current judicial decisions until the regulation process is
completed by the regulatory entity.
In April 2021, the Natural Gas Regulatory Good Practices Guidance Manual was published by the Natural Gas
Opening Market Monitoring Committee (CMGN, in Portuguese), which sets forth general guidelines about
the sector regulation, aiming at supporting state regulators and promoting the standardization in the
distribution sector.
Another new development for the sector was the promulgation in July 2021 of Law 14,182 in connection to
the Eletrobras privatization. In addition to determining the company capitalization, the law included an
indication for contracting 8GW from natural gas power plants from 2026 until 2030, among other measures.
Concerning the refining segment, in June 2019, we signed a commitment with CADE that consolidates the
understanding between the parties on the execution of divestment of refining assets in Brazil. Among other
conditions, the agreement considers the divestment of approximately 50% of our refining capacity and we
are taking further action to fulfill such commitments. Divestments are ongoing and in 2021, we successfully
reached agreements for the sale of Landulpho Alves Refinery (“RLAM”), Isaac Sabbá Refinery (“REMAN”)
and Shale Industrialization Unit (“SIX”).
For more information on our divestment process, see “ – Portfolio Management”.
For more information on our agreement with CADE regarding our divestments in the natural gas industry,
see “Risks – Risk Factors – Operational Risks” and “– Gas and Power – Marketing and Sales” in this annual
report.
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – Operational Risks” and “ – Portfolio Management” in this annual report.
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Strategic Plan
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2022-2026 Strategic Plan
Our Strategic Plan maintains a consistent strategy of focusing on projects with full potential to generate
value, resources and contributions to Brazilian society. We prioritize monetizing resources into wealth for
Brazil while following the sustainability guidelines for energy transition. We have expanded 24% our
investment plans for the next five years, an endeavor that we are pursuing with high responsibility and
diligence with regards to the allocation of resources.
We continue to strengthen our initiatives related to ESG matters, with a firm commitment to accelerate
decarbonization in our operations and prioritize acting ethically and transparently, with a particular focus
on safe operations and respect for people and the environment. The strategic model we have adopted
remains anchored in the assumption that producing oil and gas can be compatible with accelerated general
decarbonization efforts, by adopting the concept of double resilience. Double resilience is composed of two
parts: (1) economic, which means resiliency towards low oil price scenarios, and (2) environmental,
characterized by a focus on a low carbon footprint. Currently, we have reached a prominent position in the
production of low carbon emission oil, particularly with respect to our pre-salt fields, which makes us a
relevant player in the offshore oil and gas industry in relation to this requirement. We will keep pushing for
further reductions, investing in new technology and CO2 injection.
The Strategic Plan maintains active portfolio management, with expected divestments ranging from US$15
to US$25 billion, which we believe will contribute to further business efficiency improvements, value
creation, higher return on capital and strong cash flow to maintain an adequate level of debt. This active
portfolio management allows us to explore better investments opportunities by focusing our activities on
assets that have more potential to raise our portfolio's expected rate of return in a sustainable way.
Our Strategic Plan presents four key metrics that quantify the attributes of our vision and provide more
explicit guidance on our main short-term goals.
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In order to incentivize the achievement of our goals, three of these metrics will have a direct impact on the
remuneration of our executives and employees in 2022. The TRI indicator (total recordable injuries per
million man-hours) is one of the top metrics, but it is not used for employee variable compensation
purposes. We consider life as a non-negotiable value for us and, therefore, one of our most important goals
is to reach zero fatalities. For 2022, the alert limit remains below 0.7, which reaffirms our commitment to
life and places us in the top industry quartile.
A gross debt metric of US$60 billion was excluded from our Strategic Plan objectives due to our
achievement of this metric in the third quarter of 2021. However, to keep the incentives for proper leverage
management, the maintenance of gross debt below US$65 billion will be considered as a trigger for the
target, Delta EVA®. If this value is surpassed, our Delta EVA® score will be zero.
The Strategic Plan encompasses a set of strategies that incorporate and give visibility to events and issues
that are relevant to our future, such as: (i) transparency and focus on sustainability (ESG), particularly
in relation to decarbonizing operations; (ii) maximizing portfolio value, with a focus on deepwater and
ultra-deepwater assets; (iii) adding value to our refineries, with more efficient processes and new products;
and (iv) strengthening the integration of commercialization and logistics activities with all operations to
reduce costs, achieve our desired markets and increase their economic value to our company.
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Our projected Capital Expenditure (CAPEX) for the 2022-2026 period is US$68 billion, a 24% increase over
the 2021-2025 Strategic Plan, of which 84% or US$57 billion will be allocated to the Exploration and
Production segment. This CAPEX amount is consistent with our strategic guidelines, which focuses our
investments on deep and ultra-deepwater assets and projects to maximize portfolio value.
For 2022, we have already commited 79% of our total CAPEX amount. On the other hand, in the last year of
this Strategic Plan (2026) only 24% of the total projected CAPEX amount is already committed, which
indicates a greater level of investment flexibility due to the lower proportion of commitments assumed,
according to our 2022-2026 Strategic Plan. It is worth noting that, throughout the life cycle of such projects,
the maturity level will increase and a greater proportion of the CAPEX will be utilized.
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The amount of CAPEX was adjusted from US$55 billion in our 2021-2025 Strategic Plan to US$68 billion in
our current Strategic Plan. The majority of our expenses (60% of our CAPEX) is planned in U.S. Dollars, while
the remaining part will be in Brazilian Reais.
The main drivers for this CAPEX increase are the procurement strategy of the Búzios platforms; new
projects prioritization; Marlim divestment revision (i.e. keeping Marlim in our portfolio); and impacts of the
Covid-19 pandemic, among others. In contrast, there were also factors that reduced our investments, which
include (i) CNOOC’s acquisition of an additional share of 5% in the Production Sharing Contract of the Búzios
Surplus Transfer of Rights and (ii) the depreciation of the Brazilian real against the U.S. Dollar.
The increased investment in E&P in our portfolio is aligned with our strategic focus: increasingly
concentrating funds in deep and ultra-deepwaters assets, where we have been increasing our competitive
advantage over the years, resulting in the production of a better-quality oil with lower greenhouse gas
emissions. We continue to focus on deepwater offshore assets, especially in the pre-salt, because that is
where we are able to extract the greatest possible value. Our pre-salt discoveries are among the most
important in the industry in recent decades. Such pre-salt assets comprise large accumulations of excellent
quality, low sulphur high commercial value light oil. It is in this area that we are internationally recognized
for our presence, technical capacity and developed technology. In order to retain this focus, we are
substantially reducing the number of our assets, through the divestment of onshore and shallow water
production fields. The reduction in non-core assets represents roughly 90% of our number of production
fields and is part of the strategy to focus on high productivity fields, as is the case for our large fields of
pre-salt.
Thus, in our Strategic Plan, we are investing 67% of our total CAPEX amount in E&P, concentrating
specifically on pre-salt assets and projects, particularly the Búzios field, ultimately allocating approximately
US$23 billion out of US$57 billion towards this segment.
In the 2022-2026 period, the Campos Basin remains an important area for investments, and we plan to
allocate US$16 billion of the total investment planned for the E&P segment. We will invest in more than 100
new wells and three new FPSOs. These projects have a potential to increase the oil and natural production
from 0.7 mmboed in 2021 to 0.9 mmboed in 2026. Without investment in projects in the Campos Basin, the
production expected for this area would decrease to 0.3 mmboed in 2026. In other words, by making a
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significant investment in this area, we plan to produce 0.6 million more barrels of oil equivalent per day in
2026.
Besides the Campos Basin, the plan contemplates relevant investments in other Brazilian basins outside
the Southeast, in deep and ultra-deepwaters. We will invest US$2 billion in the Equatorial Margin, where
there is a potential frontier for exploration, and will continue to invest in the Sergipe deep-water
development project (>2,400 m), with the allocation of the first FPSO unit in 2026 with a capacity of 120
mbbl/d.
Our planned CAPEX also includes the amount of US$1.8 billion in projects related to decarbonization
initiatives for our operations, with an emphasis on CO2 separation, methane detection systems,
commissioning of closed flares, HISEPTM technology and projects to reduce carbon in refineries, among
others. Most of these initiatives are associated with production optimization and/or operational efficiency,
resulting in important effects on emissions reduction.
In the Refining segment, our strategy is focused on assets near the largest oil supply and the largest
Brazilian consumer market, taking advantage of greater synergy and integration with our E&P assets.
Consistent with our portfolio management strategy, we are maintaining our divestment plan, with respect
to our current refining units and, in contrast, increase our investment in upgrades to our remaining
refineries in order to increase S-10 diesel production, biorefining capabilities and operational efficiency
while still lowering emissions.
We have 12 refineries located in different regions across Brazil and a shale processing unit in Paraná. Our
strategic goal is to keep only five refineries in the Southeast. For the next five years, the estimated CAPEX
is US$7.1 billion, of which US$6.1 billion will be invested in the Refining segment and US$1 billion will be
allocated to the G&E segment. Investments will be concentrated in the projects highlighted below.
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The Refining RefTOP program is a noteworthy investment of US$0.3 billion, which aims to place our
refineries among the best in the world in terms of energy efficiency and operational performance in natural
gas, steam and electricity use. Ultimately, this would result in an optimization of greenhouse gas emissions.
Our Strategic Plan provides for an investment of US$2.6 billion for the expansion of our refining capacity
for the completion of RNEST’s Train 1 and the construction of Train 2. By 2026, the total diesel production
will be oriented towards S-10 grade. To achieve this goal, we plan to invest in a new hydrotreatment unit at
REPLAN, as well as in adaptations at REDUC and REVAP. Additionally, we are planning on investing in the
operational integration of REDUC and GASLUB, which will increase S-10 diesel and QAV production, as well
as create a new basic oil unit for Group II lubricants.
In the Gas and Power segment, our investments are focused on Route 3 and natural gas processing unit to
enable a natural gas outflow from pre-salt production. The Route 3 Project is our third pre-salt gas route,
which will increase the amount of gas exported and the processing capacity from the pre-salt assets. It is
expected to start operating in 2022.
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Trading and Logistics (“T&L”) investments are focused on improving operational efficiency (59%),
operational safety (21%), expansion (19%) and others (1%). We are investing US$1.8 billion in pipeline and
terminal maintenance, diversification methods to access new markets, pipeline replacements and oil
transshipments.
The divestments forecast in our Strategic Plan are between US$15-25 billion, with the highest
concentration expected in 2023. We have maintained our divestment plans for assets and companies that
we previously announced in our 2021-2025 Strategic Plan, except for Marlim, which is once again a part of
our Strategic Plan. The potential sale of such assets may depend on market and strategic conditions.
Our principal planned divestitures during the 2022-2026 period are presented below.
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Production of Oil, NGL and Natural Gas
The oil and gas outlook for the 2022-2026 period indicates continued growth, even with divestments. In line
with our strategic focus, E&P activities are concentrated in deep and ultra-deepwaters in Brazil,
representing 92% of total production in 2022, with potential to reach 100% in 2026. Production from the
pre-salt will represent 79% of our total production by the end of the five-year period. The production curve
considers the start up of 15 new platforms in the period of 2022-2026, nine chartered and six owned.
The production curve estimated in our Strategic Plan, published in November 2021, is shown in the following
chart:
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Revision of the 2022 production outlook
On December 17, 2021, we acquired the exploration and production rights to the volumes exceeding those
of the Transfer of Rights in the Atapu and Sepia offshore fields in the 2nd Bidding Round for the Transfer
of Rights surplus under the Production Sharing Regime. As a result, we revised the oil and gas production
outlook for 2022 to reflect the effect of the aforementioned auction.
The start of production sharing for FPSOs P-70 and Carioca, operating in the Atapu and Sepia fields,
respectively, will impact the production outlook disclosed in the Strategic Plan. In 2022, the total production
of oil and gas will be decreased to 70 mboed and the range will decrease from 2.7 mmboed to 2.6 mmboed
with a variation of +/- 4%. Oil production and commercial production had an impact of about 60 mboed, but
remained with the same ranges, 2.1 mmbpd and 2.3 mmboed, respectively, with a variation of +/- 4%. For
the period between 2023 and 2026, the average estimated impact for production is a reduction of 0.1
mmboed.
Below, we present the schedule of our new units up to 2026. We believe we are the worldwide leader in
investment in these kind of projects. In the next five years, we will have 15 new FPSOs that will come into
operation, 12 in pre-salt and three in post-salt. Together, the 15 new platforms will have an installed
capacity of 2.4 MMbbl/d. The pre-salt in the Búzios field will receive the largest number of units with six new
systems, matching the magnitude and high productivity of this asset. With substantial reserves, low risk
and high value generation potential, Búzios is the largest deepwater field in the world.
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From the portfolio of new projects, FPSO Guanabara will be the first to begin operations, with the capacity
to process up to 180 thousand bpd. The expectation is that FPSO Guanabara will produce its first oil in the
first half of 2022 in the Mero field, in the Santos Basin pre-salt.
The units that we plan to start operating by 2025 are already contracted. The three units planned for the
year 2026 are currently in the contracting stage.
Crude Oil Price and Exchange Rate
Future calculations have been carried out assuming an average Brent Crude Oil price of US$72/bbl in 2022,
US$65/bbl in 2023, US$60/bbl in 2024 and US$55/bbl until 2026 and in the long-term. We assume an
average real/U.S. dollar exchange rate of R$5.4, R$5.3, R$5.2, R$5.2 and R$5.1, to US$1.00 for the 2022-
2026 period, for each year respectively.
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Financing
We expect to make our investments outlined by our Strategic Plan without the need for new net fundraising.
Through the controlling of costs and a commitment to profitability, we foresee sources of funds in the
amount of US$175 billion in the 2022-2026 period, arising from operating cash generation and divestments.
These resources will cover our planned investments, as well as the quest to maintain indebtedness and
distribute dividends, as shown in the following figure:
Our Strategic Plan mirrors the importance of a strong company that is healthy and generates resources. In
the Strategic Plan’s future, we forecast the payment of total taxes and government’s share of US$65-70
billion. When added to our dividends, this amount, which will go to the federal government and all the other
shareholders, represent over 86% of our expected operational revenue generation.
Low Carbon and Sustainability Commitments
We contribute to economic, social and environmental development through the following actions: (i)
investing resources and technologies in the production of low carbon oil in Brazil, generating energy, and
relevant revenues to finance a responsible transition; (ii) investing in the ability to offer gas and
dispatchable energy to enable the high share of renewables in the Brazilian electricity matrix; (iii) investing
and prospecting new possibilities in products and businesses with lower carbon intensity; (iv) promoting
research and development of new technologies and low carbon solutions and (v) investing in socio-
environmental projects for the recovery and conservation of forests.
We have reinforced our ten sustainability commitments and plan to invest approximately US$2.8 billion
over the next five years in our low carbon and sustainability commitments, which will be distributed through
initiatives in the decarbonization of our operations, biorefining (renewable diesel and bio jet fuel) and the
development of competencies for the future through Research and Development (“R&D”) in modern
renewables, low carbon products and CCUS. For more information on our ten commitments, see
“Environment, Social and Governance - Environment” in this annual report. We reinforce our commitment
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to the environment and the use of new technologies for decarbonization, which involve, for example, the
reduction of natural gas flaring, CO2 reinjection and energy efficiency gains in our operations.
In September 2021, we announced our ambition to achieve net zero greenhouse gas emissions from
operations under our control (scopes 1 and 2), and our intention to leverage our influence to achieve the
same ambition in non-operated assets in a timeframe compatible with that established by the Paris
Agreement.
The Carbon Neutral Program aims to speed up and reduce costs related to decarbonization solutions,
placing us in a more competitive position. The program also involves opportunities related to scope 3, which
describes indirect greenhouse gas emissions related to customer use of our energy products, and will be
supported by a dedicated decarbonization fund with a budget of US$248 million for the next five years,
which may be used in initiatives involving scopes 1, 2 and 3.
Over the past 12 years, we have improved our carbon efficiency in the E&P segment by 48% and our pre-salt
fields have already low upstream GHG intensities when compared to other global oil fieds.
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Digital Transformation
We believe that, as an energy leading company, it is important to continuously evolve and deploy high value
innovative industrial solutions leveraged by digital technologies. Therefore, we continue to develop a
consistent and integrated innovation system aligned with our strategic pillars.
In 2019, with the aim to accelerate value creation with innovation and digital transformation, we have
consolidated all technology units into one integrated structure.
Our digital transformation and innovation strategy is anchored in five fundamental goals to pursue the
exponential trajectory of generating value:
Go Digital: Focuses on technology platforms boosting digital evolution.
Be Digital: Focuses on digital and agile innovation – practices, mindset and cultural change.
Go Lean: Focuses on optimizing and automating processes.
Innovate to value: R&D CENTER - Portfolio thinking, enhancing time to market and technology adoption,
Connections for Innovation ecosystem and new revenue channels.
Protect to expand: Information security facilitating and accelerating Digital and Cultural Transformation
through personnel, enabling innovation.
In addition, we implemented the Connections for Innovation program, a systematic effort to foster our
innovation ecosystem, create and leverage the potential of new technology and our human capital,
accelerating the rate of innovation in our businesses.
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Go Digital
The Go Digital strategy aims to put technology at the core of every one of our businesses and, therefore,
create value throughout our value chain. Through the adoption of agile methodology at scale and cloud
computing technology, we are seeking innovation as well as a modern IT architecture that enables value
extraction from our data. This opens up the path to digital solutions with integrated data platforms and up-
to-date technologies, such as artificial intelligence.
Our main achievements in 2021 were:
The deployment of DRAGÃO, the largest and most environmentally friendly supercomputer in Latin
America1. Together with Atlas and Fênix, these supercomputers are part of a project that, combined
with intense use of public cloud technology, have greatly increased our high-performance
computing capacity by 1,200% since 2018, measured in computing performance. We achieved 42.4
PetaFLOPS RPeak in 2021 in comparison to 3.4 PetaFLOPS RPeak in 2018. Our high-performance
computing investments are essential to support upstream strategic programs, such as EXP100 and
PROD1000. For more information about EXP100 and PROD1000, see “Our Business – Exploration and
Production.”
in management, data
The deployment of the first phase of SAP EHS, part of the #Trans4mar program, which will support
integration, standardization and simplifications for
a step change
environment, health and safety processes, as well as the deployment of SAP Ariba (Procurement),
SAP Concur (expend management), Blackline (accounting reconciliation),
Intelligent Asset
Management (industrial asset reliability) and Celonis (process mining). #Trans4mar is a program that
brings together initiatives for the implementation of SAP S/4 HANA at our company, acting as a
digital enabler for Industry 4.0 through corporate and business selective processes review,
simplification, digitization and integration. This program began in 2020 and is expected to be fully
implemented by 2023.
Our Digital Twins efforts in both upstream and downstream, have won the distinguished “IT Midia”
national award in the Energy sector for us. The implementation of Digital Twins tool in downstream
efforts starting in 2020 has enabled our refineries (REPLAN, REVAP, REPAR, RECAP, REGAP, REDUC,
REFAP, RPBC, REMAN, RNEST and LUBNOR), to operate in 2021 above 80% of the time in the optimal
yield range, with gains of US$255 million in 2021, by reducing costs through a global optimization of
our refineries that are able to operate at optimal performance at all times, at any market conditions
and regardless of the types of oil at our disposal.
We have started the implementation of a new Customer Relationship Management (“CRM”) digital
platform that will consolidate and enhance quality in interaction channels with clients and
stakeholders through a cloud-based, market solution for internal and external market trading, as
well as natural gas commercialization.
The launch of a Center of Excellence in Cloud Computing (“CCC”), which will direct and accelerate our
cloud adoption journey. This gradual cloud adoption will be accomplished in partnership with large
players in the technology sector, such as Amazon and Microsoft. The CCC joins the Center of
Excellence in Analytics and Artificial Intelligence (“CoE”) and the Center of Excellence for Process
Robotization and Digitalization (“CERD”), which combine expertise, process and technology
platforms and deliver value across our value chain through digital technology.
—
1 According to the TOP500 and GREEN500 list, published in June 2021, at www.top500.org.
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Be Digital
In 2021, we continued the adoption of methodologies and mindsets that support a culture of digital
innovation aimed at generating results. In this regard, we highlight the expansion of: (i) corporate
innovation initiative; (ii) safety innovation labs; (iii) digital academy; and (iv) the application of agile
methodologies and practices.
Corporate Innovation Initiative
Our Corporate Innovation Initiative seeks to enable the entire company to innovate by providing
mentorship, training, and channels to access the external innovation ecosystem. In 2021, the initiative has
delivered: (i) the internal startups program; (ii) challenge-based students’ programs; and (iii) startups and
innovation ecosystem connection. We seek to go beyond financial benefits in order to also promote
intrapreneurship that strengthens our culture of ownership and accountability. The way forward is to
expand its role as an innovation hub and accelerator, enabling the company to deliver the first step on
innovation life cycle quickly and accurately, while connected with innovation ecosystems.
Safety Innovation Lab
We also consolidated the Safety Innovation Lab (“SafetyLab”), a laboratory focused on operational safety
and health by implementing digital solutions that have been developed and tested in an agile way in
controlled and representative environments. This is done in order to offer solutions to predict and prevent
risks by actively monitoring work or reducing risk exposure by improving the use of wearables, intelligent
video analytics, robotics and drones, for example. The main Lab deliveries were: (i) success of wearables
aimed at attention monitoring, geolocation and more comfortable and safe personal protective equipment
(“PPE”); (ii) implementation of intelligent video analysis systems for smoke and fire detection and for
detection of use of masks and equipment stockpiles; (iii) use of robots and drones in risky activities such as
underwater mini drones for offshore inspection and monitoring activities, drones to inspect electric power
transmission lines, cargo drones to support the mooring and unmooring operations of Relief Vessels and
drone for visual inspection inside spheres; and (iv) applications to promote physical health, such as new fire
resistant materials for improving overall safety and wrist straps with fatigue sensors. The actions
developed throughout the year contributed to the safety and health of our workers.
Digital Transformation Academy
Companies are transformed by its people and our digital transformation is supported by investments in
digital education programs for employees. Since the second half of 2020, our Digital Transformation and
Innovation Academy ensures that employees would have the necessary upskilling and reskilling training
available. Since its creation, our employees have completed 21,850 courses provided by the Academy. The
current portfolio has 61 reskilling programs, allowing the company to increase the number of skilled
professionals such as data scientists, data analysts, cloud architects, security analysts and product owners,
among other critical tech specialists.
Expansion of agile methodologies and practices
We continued advancing the use of agile principals to accelerate results and stimulate innovation. In 2021,
we expanded from 100 to 400 agile teams that are now present in 70% of our business units. The Center of
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Excellence in Agility offers training and direct support of agile coaches to enable transformative initiatives
such as the adoption of agility at scale across the entire organization.
Go Lean
In 2021, our Center of Excellence for Process Robotization and Digitalization (CERD) has continued to
rethink our internal processes, enabling them for digital transformation. Since its creation, in 2020, CERD
has optimized, digitized or automated more than 250 processes.
We have strengthened the role of the Process Architect, who is responsible for ensuring an integrated and
lean view of our processes, with a focus on meeting customer needs, and leading the implementation of
technology in partnership with technology professionals as per business requirements.
In addition, we have identified some key factors as being a priority for our current focus, such as
guaranteeing availability, digitization of information and inserting concepts from smart office and our
digital shared services center.
We continue to accelerate the modernization of workplace environments in connection with the
implementation of a hybrid work model, which combines teleworking and office work, by using smart office
and coworking concepts according to each local business chain needs in order to maximize building
occupancy.
Another part of our strategy is to use our Shared Service Center capabilities as digital process powerhouses
fostering and leading process simplification and digitalization as levers for increased workforce
productivity, cost optimization, value creation and enabling our front office team to focus on our core
business. To this end, we began the evolution of our Shared Service Center. Over 600 processes were
reviewed based on the feedback from our internal customers and a series of opportunities identified by our
teams. Around more than 2,000 hours of online training were carried out by our workers to implement new
or revised processes and new internal customer service channels were launched, including an integrated
platform to measure and evolve our customer service.
Innovate to value
We use innovation and ideas from our research and development center as tools to expand the value
creation and influence our strategy, focusing on new production frontiers, continuous improvement in
operations and new opportunities.
We have a history of successfully developing and implementing innovative technologies, from oil basin
exploration, deployment of production systems in deep waters to refining and production of oil derivatives
and Petroleum products. Our efforts received four OTC awards (1992, 2001, 2015 and 2020). Furthermore,
in 2019, the Brazilian edition of the Conference (OTC Brasil) also granted us a Distinguished Achievement
Award.
We are investing in digital technologies to optimize the refineries’ operation in an even more efficient way,
with flexibility and safety. Our R&D is working towards the development of new process technologies to
modernize our refineries, aiming to be positioned at the top quartile considering Solomon Associate's
worldwide fuels refinery performance analysis.
Furthermore, our R&D project portfolio supports market diversification initiatives in an energy transition
context, to prospective revenue channels where technology is an advantage, such as CO2 Capture, Use and
Sequestration (“CCUS”), Biofuels and renewable products, as well as the development of new products and
commercialization methods.
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We also have several semi-industrial scale prototype plants that are located at our industrial facilities and
are aimed at fast prototyping and scaling up new industrial technologies at reduced cost.
Our research and development center (“CENPES”) is one of the largest facilities of its kind in the energy
sector as well as one of the largest in the Southern Hemisphere. The CENPES facility has a total area of
308,000 m2 and includes 116 laboratories and more than 4,700 pieces of equipment with cutting edge
technology. The facility’s laboratories are dedicated to pre-salt technologies, which is our main source of
value. CENPES’ mission is to “imagine, create and make today the future of Petrobras.” As of December 31,
2021, this facility had 1,106 employees, 246 and 320 of which have doctorates and master’s degrees in the
sciences, respectively, and a team of 990 professionals that are dedicated to R&D. In 2021, we engaged in
several activities relating to research and development; we also conducted joint research projects with
universities and research centers in Brazil and abroad, as well as with suppliers, startups and other
operators in order to develop technologies to support the Strategic Plan, in addition to anticipating trends
that can create new strategic options.
In 2021 we invested US$563 million in research and development. Currently, about 25.2% of our R&D
portfolio is intensive digital technologies such as big data, high performance computing and artificial
intelligence in order to support the development of our business.
Additionally, in the three-year period ended December 31, 2021, our research and development operations
were awarded 327 patents in Brazil and 83 overseas. Our patents portfolio covers all of our areas of
activities. Currently, we have 996 patent applications under examination, 420 in Brazil and 576 abroad,
within more than 40 countries.
In 2021, we filed 118 patents, surpassing our all-time record in 2005 and the record for filings in a single
year among national institutions.
As we pursue valuable results in research and development, we are exploring new ways to innovate through
disruptive technologies, digital transformation and start-up engagement.
Protect to expand
Information security plays a crucial role in our day-to-day operations and is being treated as a priority and
an innovation-enabler in our journey of digital transformation. Since 2020, we have utilized the Center for
Excellence in Treatment and Response to Security Events. This Center for Excellence is focused on the cyber
protection of our technological and operational assets, including industrial and control systems, so that we
have solid processes to protect our digital environments in line with the best market practices, and is
subject to constant improvements. Based on reference frameworks and with oil and gas industry peer
benchmarks, we developed a work plan that has elevated us in our market regarding security management
maturity, both in corporate and automation environments.2
We carry out penetration tests throughout the year, as part of our operational routines. All detected cyber-
attack attempts were promptly identified and properly managed by our security ecosystem, including
people, processes and security technology. We did not suffer successful cyber-attack penetrations into our
systems that caused impacts in our operation.
We also lead a national intelligence network with 50 organizations that share information about cyber-
attacks, considerably improving our preventive processes and defenses.
In 2021, we were accepted as a member of a selected world reference forum in information security. This
forum brings together a wide variety of cyber security and incident response teams, including industrial,
government, commercial and academic sectors with representation from different countries. This
—
2 According to NIST (National Institute of Standards and Technology) Cybersecurity Framework (“CSF”) and Gartner´s IT Score for Security and Risk Management.
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organization works mainly with prevention, helping to increase the level of maturity of information security
on a global scale.
Privacy is another relevant topic for us. We see the legislation on the protection of personal data as an
opportunity to evolve our system to greater maturity, adding continuous improvements our privacy
processes. According to Brazilian Law No. 13,709/2018 – Lei Geral de Proteção de Dados Pessoais (“LGPD”),
we will be subject to penalties in cases of disclosure or misuse of personal information.
To this end, we have created a program to conform to the LGPD with a multidisciplinary and dedicated
approach. This process is conducted through a governance model, adoption of technical and administrative
measures to respond to legal requirements, mitigate data breaches risks and guarantee the data rights of
its employees and stakeholders as data subjects.
Connections for Innovation / Centers of Excellence (CoE)
In the last three years, we have increased our efforts to foster our innovation ecosystem, both internally
and externally, to create and leverage the potential of new technologies and our human capital, accelerating
the application of innovation in our businesses. The following diagram summarizes our main areas of
interest and the several different components of our innovation ecosystem.
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Centers of Excellence: Digital transformation is a strategic priority for us as it is a powerful ally for the
technology and R&D activities needed to enable our strategic plans. To accelerate innovation and deliver
best in class technologies and digital products, our projects incorporate agile methodologies and digital
technologies, such as AI and analytics, high-performance computing, IoT and robotics, using integrated
data platforms, cloud, composable architecture, cyber-security, agility at scale and digital process
optimization. To support our digitalization, we created centers of excellence such as the Center of
Excellence in Analytics and Artificial Intelligence and the Center of Excellence in Robotization and
Digitization (CERD).
An important development in 2021 was the launch of the website https://tecnologia.petrobras.com.br,
which aims to be a systematic approach with the external ecosystem. The site hosts the program called
‘Petrobras Conexões para Inovação’ (Connections for Innovation), which compiles all of our open innovation
initiatives. The information on this website, which might be accessible through the hyperlink resulting from
this URL, is not and shall not be deemed to be incorporated into this annual report.
Our Connections for Innovation program includes the following modules:
Startups: Search for and develop innovative solutions with startups from different areas such as
digital technologies, robotics, energy efficiency, catalysts, corrosion, carbon reduction, geological
modeling, inspection technologies and water treatment. Currently we have 38 startups working in
this module
Technological Order: Development of innovative solutions for our problems where there is a
technological risk. The module has already acted in 22 development opportunities.
Ignition: Technological Innovation Program promoted in partnership with a Brazilian university to
encourage experimentation, challenging young people to co-create solutions for the digital
transformation of the oil and gas sector. The ignition module has engaged 25 students.
Solution Acquisition: As part of our open innovation strategy, we look for startups and other
innovative companies that present validated solutions or solutions in the market validation phase,
with the potential to meet our selected challenges, running tests in our production environments
and validating our requirements for implementation. We already achieved the participation of 15
companies in this module.
Technological Partnerships: Universities, companies and science and technology institutions from
all over Brazil and abroad are our great partners in research, development and innovation. The
opportunities are endless and everyone wins. The technological partnerships module achieved 900
partnerships and 9,000 researchers.
Technology Transfers: We license technologies for third parties to use in their products, processes,
applications, materials and services. There are already 23 contracts using this technology transfer
module.
Apart from the Connections for Innovation program, we are also supporting a broader initiative related to
the development of innovation ecosystems, participating in the Regional Entrepreneurship Acceleration
Program of the Massachusetts Institute of Technology (“MIT Reap”) that engages universities,
corporations, government, entrepreneurs and venture capital investors.
As a result of the number of partnerships and contracts established with startups, in 2021 we won first place
in the Oil and Gas category in the Top Open Corps ranking, promoted by 100 Open Startups, which qualifies
the level of engagement of companies in the sector with the open innovation ecosystem in Brazil.
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In addition to engaging with the entrepreneurial ecosystem, we also stimulate intrapreneurial activities by
promoting the development of innovative solutions by multidisciplinary teams that act as internal startups,
using agile methodologies to accelerate our digital transformation.
The internal startup program is intended to contribute to our competitive advantage by seeking innovative
and disruptive ideas that can transform our operations, enhancing efficiency and safety. It also plays an
important role in our cultural transformation by strengthening entrepreneurship and a mindset of
experimentation.
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Environment,
Social and
Governance
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Environment
The protection of human health and the environment is one of our primary concerns and is essential to our
success. Each year, we maintain a set of initiatives focused on the prevention of accidents and the
preservation of life and the environment. For this purpose, in 2016, we launched the Commitment to Life
Program, with the launch of the first cycle taking place in October 2016. This Program is composed of
structured projects based on the critical analysis of health, safety and environment (“HSE”) management,
with reference to the best market practices, and seeks to achieve our zero fatalities and zero leaks goals
while strengthening our vision of being an example of HSE for the industry with the following principles:
1.
2.
3.
4.
5.
HSE as value;
Respect for Life;
Risk-Based Management;
Business Sustainability; and
Excellence and Transparency in Performance.
The main initiatives of the Program for 2021 are the following:
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Our HSE investments are
directed towards: 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 prevent
and respond to emergencies.
In addition, we support
several socioenvironmental
projects.
The development of business with suppliers also comprises environmental requirements according to the
best practices in the industry. Contracted companies must present evidence and certifications related to
compliance with HSE standards and confirm that they comply with all applicable requirements, laws,
regulations and ESG best practices, according to new commitments formalized in 2021.
Since 2019, we have been certified by ASCM Enterprise Certification, which is the first-of-its-kind corporate
level designation that demonstrates supply chain excellence and transparency – a growing value for
consumers as they become more educated about supply chain supporting ethical and sustainable business
practices. The certification is valid for three years, with the annual requirement to demonstrate adherence
to ASCM defined standards for certificate maintenance throughout the validity period. By obtaining the
certification, we reinforce our commitment to continuously improve our capacity to manage goods and
services supply processes, contributing to our increased credibility in a competitive market.
Total Recordable Injury
Safety is one of our core values. The TRI rate is one of the metrics monitored by our senior management for
matters of health and safety. The evolution of the TRI reflects the implementation of several initiatives for
the promotion of our safety culture, trainings and our HSE management assessment program.
After obtaining a record TRI result of 0.54 and three fatalities, in 2021, in our Strategic Plan we established
the alert threshold for TRI below 0.7 for 2022, which is lower than the industry benchmark. We expect this
result to place us among top oil and gas companies in terms of safety.
Eliminating fatal accidents and achieving top-notch performance when it comes to the prevention of
injuries to our employees and to third parties are the two key important goals of our HSE management. In
2021, we trained our employees in process safety, HSE aspects in contracts, behavioral auditing and began
the construction of the Human Factors Journey, with a greater emphasis on ergonomics in projects and
operations.
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(1) The TRI result achieved in 2021 showed a slight improvement compared to the already historic TRI result of 2020.
Although we develop prevention programs in all of our operating units, we recorded three fatalities
involving our own and contractors’ employees in 2021 (compared to zero fatalities in 2020). Our procedure
is to investigate all incidents reported in order to identify their causes and take preventative and corrective
actions. These actions are regularly monitored once they are adopted. In case of serious accidents, we send
company-wide alerts to enable other operating units to assess the probability of similar events occurring
in their own operations.
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We are an energy company focusing on oil and gas. We therefore use natural resources and impact the
ecosystem through our activities. However, we seek to reduce the impacts of our activities on the
environment. In 2021, we invested US$708 million in environmental projects, compared to US$508 million
in 2020 and US$891 million in 2019. These investments continued to be primarily directed at reducing
emissions and waste from industrial processes, managing water use and effluents, remedying impacted
areas, implementing new environmental technologies, upgrading our pipelines and improving our ability to
prevent and respond to emergencies.
We have established ten commitments in our Strategic Plan for the low carbon and sustainability agenda 1:
—
1 Carbon commitments related to 2015 base. Other commitments based on 2018.
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For more information, see “Strategic Plan” in this annual report.
Spills and Environmental Remediation Plans
Oil and oil product spills totaled 11.6 m3 in 2021, compared to 216.5 m3 in 2020.
We are constantly seeking to improve our standards, procedures and leakage response plans, which are
structured at the local, regional and corporate levels.
In 2019, we set up a plan called “Mar Azul” (Blue Ocean) with the aim of identifying and addressing the main
causes for loss of primary containment events, mainly those with potential environmental impacts. This
plan consists of investments for improving the management of processes and for ensuring the integrity of
our equipment and installations. We adopt our operational and sanitary procedures in order to ensure not
only the readiness of the contingency bases but also a safety and efficient response on the field from
specialized personnel. We also conduct major table-top exercises, including in the Búzios field, in the Santos
Basin pre-salt, which involved more than 200 people.
In 2020, the “Mar Azul” plan moved forward, proceeding to the structuring of phase two, and it was
integrated to “Programa Compromisso com a Vida” (Commitment to Life Program), one of our major HSE
programs. In 2021, “Mar Azul” continued, incorporating lessons learned from the events of 2020, which were
subsequently transformed into structures and local measures by delivering and improving operating
systems, activities and processes, acting jointly on all fronts and acting through active and continuous
management in search of improvement opportunities. These actions resulted in a significant reduction of
spilled volumes when compared to the beginning of the plan in 2019.
As part of our environmental plans, procedures and efforts, we maintain detailed response and remediation
contingency plans to be implemented in the event of an oil spill or leak from our offshore operations. The
Brazilian Institute of the Environment and of Renewable Natural Resources (“IBAMA”) audits, approves and
authorizes the execution of these programs.
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In order to respond to these events, we have dedicated oil spill recovery vessels fully equipped for oil spill
control and firefighting, support boats and other vehicles, additional support and recovery boats available
to fight offshore oil spills and leaks, containment booms, absorbent booms and oil dispersants, among
other resources. These resources are distributed in Environmental Defense Centers, located in strategic
areas, in order to ensure rapid and coordinated response to onshore or offshore oil spills.
We have approximately 300 trained workers available to respond to oil spills 24 hours a day, seven days a
week, and we can mobilize additional trained workers for shoreline cleanups on short notice from a large
group of trained environmental agents in the country. While these workers are located in Brazil, they are
also available to respond to an offshore oil spill outside of Brazil.
Since 2012, we have been a member of the Oil Spill Response Limited (“OSRL”), an international organization
that brings together over 160 corporations, including major, national and independent oil companies,
energy related companies as well as other companies operating elsewhere in the oil supply chain. OSRL
participates in the Global Response Network, an organization composed of several other companies
dedicated to fighting oil spills. As a member of the OSRL, we have access to all resources available through
that network, and also subscribe to their Subsea Well Intervention Services, which provide swift
international deployment of response-ready capping and containment equipment. The capping equipment
is stored and maintained at bases worldwide, including Brazil.
In 2021, even with the Covid-19 pandemic, we conducted 12 remote emergency drills of regional scope using
remote communication tools.
We continue to evaluate and develop initiatives to address HSE concerns and to reduce our exposure to HSE
risks on capital projects and operations.
Air Emissions and Transition to Low Carbon
Our actions related to climate change are supported by three pillars: (1) carbon quantification and
transparency, (2) resilience of our position in oil and gas facing low carbon transition and (3) strengthening
of our skills to create value in low carbon. To that end,
we strive to ensure that carbon risks and opportunities are properly captured in scenarios,
quantified, and considered in our decisions, for the sustainability and resilience of our business. We
adopted transparency in carbon as a value and we highlight our public support to the TCFD (Task
Force for Climate Related Financial Disclosures), and our adoption of SASB as a reference, as well as
IPIECA
Environmental
and Social Issues), GRI and IOGP as external references of disclosures and performance.
Association
Industry
(Global
and
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for
Oil
Our scenarios point to the persistence and importance of oil and gas in the global energy matrix,
even though their demand and relative share may decrease in an environment of accelerated energy
transition. It is our priority to operate at low costs and with superior performance in carbon,
safeguarding the competitiveness of our oils in world markets in the context of deceleration and
subsequent retraction in demand in order to thrive in scenarios of low oil prices, carbon prices and
possible oil differentiation based on their carbon intensity during production. We reviewed our oil
price key assumptions for the 2022-2026 period, with values ranging from US$72 per barrel in 2022
and assuming a long term price of crude oil of US$55 per barrel. In order to guarantee the resilience
of our portfolio, all projects must also be profitable in our resilience scenario, which provides an
accelerated energy transition with a significant reduction in the price of fossil fuels, assuming a value
of crude oil of US$35 per barrel. These are stringent assumptions for the price of oil, compatible with
the scenarios contemplated in the Paris Agreement.
Our current focus is investing in the decarbonization of our operations, development of bioproducts
and the acquisition of skills that may allow future diversification in renewables and low carbon
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products. In this context, a new governance framework focused on diversifying our portfolio was
created for project approval process related to new energy and/or new products that are not in our
current Strategic Plan.
It is important to note that the Strategic Plan CAPEX includes the amount of US$1.8 billion in projects
related to decarbonization of operations initiatives, with emphasis on CO2 separation, methane detection
systems, commissioning of closed flare, HISEPTM technology and projects to reduce carbon in refineries,
among others. The Carbon Neutral program aims to speed up and reduce costs related to decarbonization
solutions, making us more competitive. The program involves opportunities and will be supported by a
dedicated decarbonization fund with a budget of US$248 million for the next five years, which may be used
in initiatives involving greenhouse gas emissions resulting from our activities (Scopes 1 and 2) and indirect
greenhouse gas emissions related to customer use of our energy products (Scope 3). We also intend to
invest approximately US$130 million over the next five years in development of competencies for the future
through R&D of modern renewables, low carbon products and CCUS.
Our set of carbon targets and goals were reaffirmed in our Strategic Plan. Our operational emissions
reduction target covers 100% of operated assets in all our businesses (including power generation), for all
greenhouse gases and we believe that this target represents a material, relevant and short-term
contribution to halting climate change. We include direct (Scope 1) and indirect GHG emissions from the
acquisition of electric and/or thermal energy produced by third parties (Scope 2). Since 2019, metrics
related to carbon intensity in our downstream and upstream operations have been integrated into
executive remuneration, and since 2020, these metrics were incorporated as one of our four top indicators,
influencing variable remuneration not only for executives, but for all company employees.
In September, we announced our ambition to achieve net zero greenhouse gas emissions from operations
under our control (scopes 1 and 2), and our intention to leverage our influence to achieve the same ambition
in non-operated assets, in a timeframe compatible with that established by the Paris Agreement. The
decision is aligned with the global positioning of the 12 member companies of the Oil and Gas Climate
Iniciative (“OGCI”), of which we have been part of since 2018.
In 2021, our performance in terms of GHG emissions was as follows:
Total GHG emissions of 62 million tCO2e, compatible with our target to reduce total operational GHG
emissions by 25% by 2030, compared to 2015;
Carbon intensity in E&P of 15.7 kgCO2e/boe22, on track for achieving the medium-term target of 15
kgCO2e/boe in 2025, maintained until 2030;
Carbon intensity in refining of 39.7 kgCO2e/CWT33on track for achieving the medium-term target of
36 kgCO2e/CWT in 2025 and of 30 kgCO2e/CWT in 2030.
Our carbon intensity targets (E&P and Refining) represented a coverage of 67% of emissions from activities
that we operated in 2021.
Our strategy also focuses on collaboration, and we have continued to partner with other companies and
with the science, technology and innovation community. We highlight, for instance, our participation in the
Oil & Gas Climate Initiative and our support for the World Bank’s “Zero Routine Flaring by 2030” initiative.
The Connections for Innovation – Startups Module, conducted in partnership with SEBRAE, the Brazilian
support service for micro and small entreprises and a non-profit private entity, included cabon reduction as
—
22 The kg CO2e / boe indicator considers gross oil and gas production (“wellhead”) in its denominator.
33 The kg CO2/CWT indicator was developed by Solomon Associates specifically for refineries and was adopted by the European Emissions
Trading System (EU Emissions Trading System, EU ETS) and by CONCAWE (association of European oil refining and distribution companies
and gas). A refinerys CWT (Complexity Weighted Tonne) considers the potential for GHG emissions, in equivalence to distillation, for each
process unit. Thus, it is possible to compare emissions from refineries of various sizes and complexities. We monitor the kg CO2/CWT
indicator, according to our original identity. We also monitor an adapted indicator: kg CO2e / CWT, to enable the inclusion of emissions from
other GHG (for example methane), which, however, represents a small portion of our refining emissions.
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a topic for both iterations in 2019 and 2020. The selected companies in 2020, Alfa Sense, Immer Messen and
Energética Resíduos e Energia, will work in a cooperation agreement to achieve GHG emissions reductions
in our operations. Pam Selective Membranes, which was one of the winning companies in the 2019
competition, is working on carbon capture technology.
In addition, we note that our Climate Change Supplement
is available on our website at
www.petrobras.com.br/ir, which details our contributions to reducing the carbon intensity of our energy
supply and how we aim to remain competitive in an evolving context. The information available on our
website is not and shall not be deemed to be incorporated by reference to this annual report.
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Social Responsibility
Human Rights
A commitment to human rights is key for the sustainability of our business. Several documents governing
our activities detail our approach to human rights, as follows:
Code of Ethical Conduct: addresses issues such as respect for diversity, equal opportunities, fair
labor relations, health and safety assurance for workers and the right to free association.
Guide to Ethical Conduct for Suppliers: reinforces that our suppliers must promote dignified and
safe working conditions for their employees and combat child and slave labor, in addition to
promoting diversity, gender and racial equality and the inclusion of people with disabilities.
Human Rights Guidelines: direct our actions, as far as respect for human rights is concerned, in all
the activities and regions where we operate and throughout the life cycle of our projects and
operations.
Human Resources Policy: states that we must provide employees with a good working environment
that promotes diversity and relationships based on trust and respect, without tolerating any form
of harassment or discrimination.
Social Responsibility Policy: seeks to prevent and mitigate negative impacts on our direct activities,
supply chain and partnerships. It is based on respect for human rights and seeks to combat
discrimination in all its forms, setting forth standards related to social risk management, community
relations and social investment present in the guidelines related to these subjects.
Sustainability Report: our reported indicators and actions follow the Sustainable Development
Goals outlined in the sustainability report: Correlation with Global Reporting Initiative (“GRI”)
Indicators, Sustainable Development Goals (“SDGs”) and Global Compact Principles. We use the
IPIECA Oil and Gas Industry Guide for Voluntary Reporting as a supplementary reporting
methodology.
Our respect and defense of human rights commitments are also evident through initiatives in favor of
gender equity, racial equality, and the protection of early childhood. We list below our main human rights
initiatives.
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In 2021, we once more secured recognition in the 2021 UN Women’s Empowerment Principles (“WEPs”)
Brazil Award, which is organized by a partnership between UN Women, the International Labor Organization,
and the European Union, geared towards companies promoting gender equity and women’s empowerment.
In 2021, we also won the 6th Seal of the Federal Government's Pro-Gender and Race Equality Program.
We also promote a commitment to human rights in our supply chain. Each year, the most distinguished
suppliers are awarded with "Prêmio Melhores Fornecedores da Petrobras" (“Award for Best Petrobras
Suppliers”).
The 4th Edition of the Best Suppliers Award in 2021 included the Human Rights Emphasis in the ESG
Category, with the following themes:
Diversity and Inclusion;
Fight against prejudice, discrimination, and harassment;
Eradication of child labor;
Eradication of slave labor, or practices similar to slavery;
Confronting the sexual exploitation of children and adolescents.
In May 2021, we launched a public selection of socio-environmental projects. Until 2024, we will allocate
approximately US$7.3 million for initiatives that will be developed within strategic themes for the business
and in communities neighboring its operations, covering 57 municipalities in the states of Espírito Santo,
Rio de Janeiro, São Paulo, Paraná, and Santa Catarina. Of the total amount to be invested, approximately
US$2.5 million will be directed to social projects with incentives, i.e., supported by the Sports and Culture
Incentive Law of the State of Rio de Janeiro (State Law No. 8,266/2018). In this selection process, 23 new
projects were considered in the four lines of action of the Petrobras Socio-environmental Program -
Education, Sustainable Economic Development, Climate (now called Forest) and Ocean.
These initiatives will contribute to overcoming sustainability challenges related to our business, including
the transition to a low-carbon energy matrix. Projects were selected in 2021 from several ocean-related
proposals that work with endangered marine species and important coastal ecosystems such as Guanabara
Bay in Rio de Janeiro, and the coasts of the states of São Paulo, Paraná and Santa Catarina. In the climate
line of action, now called Forest, the selected projects aim to contribute to the sustainability of the business
insofar as they work to reverse the environmental degradation processes in watersheds that are critical for
the units and for the environment, as well as in sensitive ecosystems such as mangroves.
All these climate projects have among their goals the conservation and/or recovery of the environments in
which they operate, promoting carbon sequestration and contributing to reduce emissions. Additionally,
both the projects selected in the Climate and Ocean performance lines work in areas covered by Petrobras
units, contributing to biodiversity conservation and, therefore, also positively related to this sustainability
commitment.
To ensure respect for human rights, our business strategies are guided by our Human Rights Guidelines,
which are recognized nationally and internationally in all regions where we operate and throughout the life
cycle of our projects and operations. Our human rights operations follow the United Nations’ Guiding
Principles on Business and human rights and are structured along four axis: People Management,
Community Relations, Engagement with the Supplier and Partner Chain, and Due Diligence in human rights.
Each axis describes the processes from which we aim to ensure the incorporation of respect for human
rights in all areas of our business and in our relations with our stakeholders, as well as to identify potential
risks of human rights violations related to operations, products, or services we provide, and to remedy the
impacts we cause.
Regarding the support given to projects through the Petrobras Socio-Environmental Program, we consider
that actions aimed at the promotion of human rights are a high value attribute. Human rights are a
transversal theme of the Program, as it can be applied to all projects in relation to its main theme, to expand
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the scope and potential for transformation of the Program. The projects that carry out affirmative action
to promote Gender Equity, Racial Equality, and Inclusion of People with Disabilities must demonstrate the
association between their actions and the expected results.
Across all our activities, we carry out social risk assessments to identify and mitigate potential human rights
impacts to communities or within supply chain activities. These assessments lead to recommendations
including the review of emergency response plans through the lens of community relationships, monitoring
of community occurrences and complaints, disclosure of projects and operational activities, and the
inclusion of social responsibility clauses in service contracts, among others.
In January 2021, the Petrobras Human Rights Commission was established, enlisting 20 areas of the
company. The Commission is responsible for implementing the Human Rights agenda, set by Petrobras
Human Rights Guidelines, ensuring that this agenda is broadly and transversally integrated into our
business.
The Human Rights Commission is divided into three subcommissions: Human Rights Training, Diversity and
Inclusion and Human Rights Due Diligence.
In June 2021, we approved an action plan with an annual average of 70 actions to be implemented until
2025. Our Human Rights Action Plan is monitored periodically by the ESG Corporate Forum and HSE
committee of the Board of Directors.
As a result, we were one of the 12 companies selected by the UN Global Compact Network Brazil to include
a case related to Human Rights in the UN Human Rights Guiding Principles publication which celebrated its
tenth anniversary in 2021. The case "Integration of the agenda of respect for Human Rights in Petrobras'
Business" was evaluated in the Public Commitment category.
Community Relationship
We are committed to maintaining a long-term community relationship based on dialogue and transparency.
To achieve this, we seek to understand the dynamics of the communities that neighbor the sites where we
operate and to develop relationship plans which we monitor and evaluate.
We foster collaborations to strengthen ties, promote networking, and generate mutual benefits while
respecting the social, environmental, territorial, and cultural rights of communities. We promote
committees, meetings, lectures, visits and investment in social and environmental programs and projects,
which aligns with the objectives of our business and contributes to the conservation of the environment
and improvement of the living conditions of the communities where we operate.
In 2021, our community relationship activities carried out 193 interactions in communities, including online
meetings with community leaders through community committees, visits, and events.
We have also incorporated guidelines in our decision-making process related to capital investment projects,
including social risk analysis and human rights violations performed by a multidisciplinary group. In 2021,
28 new risk assessments were required to support projects passing through formal planning procedures.
Additionally, we strengthened our work with communities, civil society organizations, the public sector and
universities through the Petrobras Socio-Environmental Program. This
initiative contributes to
environmental conservation and the improvement of living conditions where we operate. The program is
aligned with our social responsibility policy, which seeks to provide energy, respect human rights and the
environment, responsibly manage our relationship with communities, and overcome sustainability
challenges. Our portfolio included 94 projects in 2021.
In 2021, investments and donations directly transferred to society via social and environmental projects
totaled US$33.9 million compared to US$22.2 million in 2020. We invested US$15.9 million in social and
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environmental projects while donations grew significantly during 2021, amounting to a total of US$18.0
million as a result of contributions to society related to the Covid-19 pandemic.
Additionally, in order to align our social performance with those practiced by the industry while recognizing
the importance of helping those who became even more vulnerable during the pandemic, we launched a
program to support families in socially vulnerable situations in September 2021. This social program will
last 15 months and aims to help ensure that vulnerable families neighboring the sites where we operate
have access to essential resources, especially food and cooking gas, or more specifically, LPG. The program
amounts to US$53.8 million (of which US$4.8 million was spent during 2021) and will last until December
2022.
Our Responses to the Covid-19 Pandemic
Employee and suppliers’s health
The outbreak of the Covid-19 pandemic and the measures necessary to contain the virus transformed 2020
and 2021 into unprecedented years. In line with our commitment to health and safety, we are engaged in
the effort to mitigate the effects of the Covid-19 pandemic, the largest in the last century.
Our core operational activities during the Covid-19 pandemic were not interrupted and were carried out
consistently and in accordance with the strictest standards of safety and health, in full compliance with
guidelines provided by the responsible health agencies and current scientific findings.
Per the pandemic Decree issued by the World Health Organization, we have internally established an
Organizational Response Structure (“EOR”), based on the Incident Command System (“ICS”) management
tool. This temporary structure, composed of many of our internal professionals, guided, in a uniform
manner, all our actions to prevent and combat the advance of Covid-19 and mitigate its consequences on
all possible fronts.
We acted quickly and adopted a series of measures to preserve the health of our employees in the
operational and administrative areas. These initiatives are in line with the recommendations from the World
Health Organization and the Ministry of Health and aim to contribute to efforts to mitigate the risks of the
disease. Preventative measures were adopted, such as:
(i) extensive testing, including carrying out more than 631,843 tests in our workforce by December 2021; (ii)
pre-shipment and preshift health monitoring, reinforcement in hygiene measures, distance and mandatory
mask use at the units; (iii) reducing the number of personnel aboard platforms, rigs and other vessels to
what is necessary for the safe operation of each unit; (iv) intensification of the inspection of compliance
with the prevention rules in all operational units offshore or onshore, with audits at all units and immediate
correction of any deviations; (v) extension of remote work for all activities that can be carried out remotely;
(vi) awareness and orientation actions for employees and contractors about individual care; and (vii) health
monitoring and access to telemedicine services.
All employees and contractors were instructed to report any symptoms immediately. We provide specific
communication channels (24-hour call center and e-mail), as well as an online form for self-reporting
suspected Covid-19 symptoms, to be completed weekly. We monitor suspected cases and their contacts
from the first report, taking all preventive measures to avoid contagion, guiding employees and contractors
and applying RT-PCR (Protein Transcriptase Reverse Chain Reaction) tests when indicated by the health
team. We also provide our employees with medical service, including telemedicine 24 hours a day, seven
days a week.
For the offshore sector, considering the special containment characteristic, we have adopted even more
stringent measures, always maintaining constant contact with regulatory bodies, service companies and
other entities in this sector to align practices. We implemented monitored home isolation and screening by
health professionals in pre-boarding platforms, with the suspension of boarding for those who show any
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symptoms in the previous 14 days, as well as carrying out diagnostic tests before boarding. We assess, by
means of a dedicated health team, all employees and contractors with symptoms on board and provide for
the immediate disembarkation of suspected cases and their contacts.
In order to ensure that the best practices are also adopted by our suppliers, we monitor the practices and
measures related to the prevention of Covid-19 in our charted units, ships and contracted teams to ensure
legal compliance with our protocols.
In the second half of 2021, as the Covid-19 cases were consistently declining in Brazil, we decided to begin
our return to in-person work. Leading by example, our Board of Directors and high-ranking officers returned
to the office in August 2021. For our administrative workforce, we have a permanent model (voluntary
adhesion) of remote work up to three days a week. The return to in-person work and the actual application
of this model, has been implemented in waves since October 2021, according to the context of the Covid-
19 pandemic.
To this end, we implemented several health safety measures in our administrative and operational facilities,
such as (i) reinforcement of cleaning routines; (ii) installation of touchless drinking fountains; (iii)
distribution of thermos bottles for personal use and PFF-2 masks for employees; (iv) development and
deployment of technologies for pandemic safety.
In December 2021, 96.9% of our workers were fully immunized (having had at least two doses of vaccines
requiring a two-dose regimen or one dose of vaccines requiring only a single-dose).
These efforts have allowed the continuity of our operational activities that ensure the provision of essential
goods and services, while always preserving the safety and health of all of our employees.
Contributions to Society
In 2021, we supported governmental or non-profit institutions in responding to the emergency situation
resulting from the Covid-19 pandemic through mobilization of resources and various donations towards
social and health initiatives, mainly aimed at the existing communities in the scope of our business. The
communication channels we traditionally use in such communities continued to publicize our solidarity
campaigns, as well as health information to combat Covid-19.
Additionally, in 2021, Cenpes had a relevant role in our efforts to combat and mitigate the effects caused
by Covid-19. At our research center, our scientists and technicians led an effort to return oxygen cylinders
to suppliers in order to make them available to help fight the Covid-19 pandemic, resulting in the return of
900 oxygen cylinders throughout 2021, contributing to the increased availability of oxygen cylinders in our
country.
Our scientists also used their expertise to study and develop, in a very short time, technical specifications
for the acquisition of micro plants for the production of oxygen. We purchased and donated 12 micro-
oxygen plants to states in which we have operating units and had high rates of Covid-19 infection and
mortality. Each micro plant had the capacity to produce 25 m³/h, a volume that can supply oxygen to 100
hospital beds, 21% of which are in the intensive treatment unit, which represents up to 80% of a hospital's
consumption, depending on the size of the unit. These plants were donated as part of a set of actions we
led to help society fight the Covid-19 pandemic.
Our 2021 financial contributions to projects to combat the Covid-19 pandemic by way of donating fuel,
oxygen cylinders, micro-oxygen plants, food baskets, medicine kits and LPG cylinders totaled US$18 million
for the year ended December 31, 2021.
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Good corporate governance and compliance practices are a pillar of support for our business. In recent
years, we have made significant advances in our corporate governance and in our integrity, compliance and
internal controls systems. We have also adopted rigorous ethics and integrity standards through initiatives
that reinforce our purpose, values, and commitment to continuous improvement and alignment with the
best market practices.
Our corporate governance model has a set of rules and procedures that seek to ensure that our decisions
are aligned with good governance:
Law 13,303/16 requires that our Board of Directors be formed by at least 25% of independent members.
Our Bylaws extended the requirement to 40%. Technical criteria for the selection of members of the Board
of Directors and executive officers set forth in Law 13,303/16 and in our Bylaws banned the appointment of
ministers, secretaries and others in certain positions of public administration. Our Bylaws also provided
additional requirements in addition to those of Law 13,303/16 for assessing the reputation of the
administrators and members of the Fiscal Council.
Our Board of Directors nominates the chief governance and compliance officer. The majority of the board
must approve the dismissal of such an officer, with the vote of at least one of the directors elected by
minority shareholders.
As we are a mixed-capital company, the Brazilian federal government can guide our activities, with the
purpose of contributing to the public interest that justified our creation, aiming to guarantee the supply of
oil products throughout the national territory. However, this contribution to the public interest must be
compatible with our corporate purpose and with market conditions and cannot jeopardize our profitability
and financial sustainability.
Thus, if providing for the public interest calls for conditions different from those of any other private sector
company operating in the same market, as explained in our Bylaws, the obligations or responsibilities that
we assume must be defined in rules or regulations and outlined in a specific document, such as a contract
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or agreement, widely publicized and with disclosure in such instruments of detailed costs and revenues,
including in the accounting plan. Then, the Brazilian federal government will compensate us, each fiscal
year, for the difference between market conditions and the operating result or economic return of the
assumed obligation.
Transactions with the Brazilian federal government that require our Board of Directors’ approval and occur
outside the normal course of business must have been previously reviewed by the minority committee and
approved by two-thirds of the board. The minority committee is formed by two members of our Board of
Directors appointed by minority common shareholders and preferred shareholders, as well as one
independent member, according to our Bylaws.
Regarding our decision-making process, our Bylaws define the board advisory committees that review all
matters submitted to the Board of Directors prior to a decision. Additionally, in order to ensure
transparency in our most relevant decisions, we use a shared authorization model, where at least two people
must come to a decision (the four-eyes principle).
Our whistleblower channel is an independent, confidential and impartial tool. It is available to our external
and internal audiences and our controlled companies to register denouncements of fraud, corruption,
money laundering, harassment, discrimination, HSE and other issues.
We also made continuous efforts and moved forward on this issue by approving our Code of Ethical Conduct
and the Ethical Conduct Guide for Suppliers that contributed to our return to the World Economic Forum’s
Partnership Against Corruption Initiative (“PACI”).
We are part of the special Level 2 corporate governance listing segment of the B3, which demands
compliance with differentiated governance regulation and the improvement of the quality of the
information we provide. This voluntary move to Level 2 of the B3 reinforces our advances in corporate
governance and ratifies our commitment to the continued improvement of processes and to our alignment
with market best practices.
Possible initiatives related to changes for governance improvements require formality and transparency of
process. In most cases, a shareholders’ meeting is required if the proposed change is to a governance rule
provided for in our Bylaws or stems from a legislative amendment if relates to a Law 13,303/16 provision.
Corporate Governance Structure
Our corporate governance structure consists of a general shareholders’ meeting, our Fiscal Council, Board
of Directors and its committees, internal and external audits, general ombudsman office, Board of Executive
Officers and its committees.
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Our Code of Best Practices gathers our main governance policies and aims to improve and strengthen our
governance mechanisms, guiding the performance of our directors, executive officers, managers,
employees and collaborators.
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Major Recognition
In 2021, we rejoined the Brazilian Institute of Corporate Governance (“IBGC”). We were a member of IBGC
from 2002 to 2015 and we rejoined after having implemented several improvements in our governance and
adoption of compliance measures.
This return ratifies our commitment to the continuous improvement of our processes and internal controls,
as well as our alignment with the market's best corporate governance practices and our commitment to
redeem and reinforce our corporate values: respect for life, people and the environment; ethics and
transparency; overcoming and trust; market orientation and results. We continue to strengthen our
governance, in line with the best market practices, with the objectives defined in our Strategic Plan, and
with the applicable legislation and regulations.
We also received, for the fifth time in a row, the certification in the Governance Indicator of the Secretariat
for Coordination and Governance of State-Owned Companies (“IG-Sest”), of the Ministry of the Economy,
achieving their best level, Level 1, which shows our high degree of excellence in corporate governance.
This certification, besides acknowledging our advances in recent years, is an opportunity to assess our
processes at a new level of quality and reaffirm our commitment to the continuous improvement of our
corporate governance.
In 2021, we reached 94% adherence to the Brazilian Code of Corporate Governance (“CBGC”). According to
the latest survey released by the IBGC, the degree of adherence of companies in the market averaged 58.7%
in 2021.
We believe that the results we have achieved prove the recognition of the market and control bodies
regarding the improvement of our culture of integrity and of our governance mechanisms. We believe that
a high degree of integrity reinforces our reputation among our stakeholders and, consequently, within
society as a whole.
As a result of our efforts and initiatives in the environmental, social and governance sectors, in 2021, we
once again were listed on the Dow Jones Sustainability Index World (“DJSI World”) of S&P Global’s
Corporate Sustainability Assessment. We received the highest score in the Materiality, Environmental
Report, Water-Related Risks and Social Report criteria. We also stood out in the criteria of Climate Change,
Operational Eco-efficiency, Corporate Citizenship and Philanthropy, Labor Practices and Social Impact in
the Community. We had left the index in 2015 and this result was great recognition of our progress.
Shareholders’ Meeting
The shareholders’ meetings must take place on an ordinary or extraordinary basis. An ordinary
shareholders’ meeting must take place once a year in order to: (i) examine the administrators' account,
examine, discuss and vote on the financial statements; (ii) decide on the allocation of net profit for the year
and the distribution of dividends; and (iii) elect the members of the Board of Directors and Fiscal Council. In
addition to the matters provided for by law, an extraordinary shareholders’ meeting must take place if called
to decide on matters of our best interest, as defined in our Bylaws.
For more detailed information on our shareholders’ meetings, see “Shareholder Information” in this annual
report.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Environment, Social and Governance
180
Comparison of our Corporate Governance Practices with NYSE
Corporate Governance Requirements Applicable to U.S. Companies
Under the rules of the NYSE, foreign private issuers are subject to a more limited set of corporate
governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with four
principal NYSE corporate governance rules: (i) we must satisfy the requirements of Rule 10A-3 under the
Exchange Act; (ii) our Chief Executive Officer must promptly notify the NYSE in writing after any executive
officer becomes aware of any material non-compliance with the applicable NYSE corporate governance
rules; (iii) we must provide the NYSE with annual and interim written affirmations as required under the
NYSE corporate governance rules; and (iv) we must provide a brief description of any significant differences
between our corporate governance practices and those followed by U.S. companies under NYSE listing
standards.
The table below briefly describes the significant differences between our corporate governance practices
and the NYSE corporate governance rules.
Section
New York Stock Exchange
Corporate Governance Rules for
U.S. Domestic Issuers
Our Practices
Director Independence
303A.01
Listed companies must have a
majority of independent directors.
“Controlled companies” are not
required to comply with this
requirement.
303A.03
The non-management directors of
each listed company must meet at
regularly scheduled executive
sessions without management.
We are a controlled company because more than a
majority of our voting capital (at least 50% plus one
share) is controlled by the Brazilian federal
government. As a controlled company, we would
not be required to comply with the majority of
independent directors requirement if it were a U.S.
domestic issuer. According to our Bylaws, we are
required to have at least 40% of independent
directors.
Except for our CEO (who is also a director), all of our
directors are non-management directors. The
regulation of our Board of Directors provides that if
a particular matter may represent a conflict of
interests, the CEO must recuse himself from the
meeting, which will continue without his presence.
Additionally, the board’s regulation also establishes
a regular executive session for our Board of
Directors matters without management.
Nominating/Corporate governance committee
303A.04
Listed companies must have a
nominating/ corporate governance
committee composed entirely of
independent directors, with a written
charter that covers certain minimum
specified duties. “Controlled
companies” are not required to
comply with this requirement.
We have a statutory committee that verifies the
compliance of the appointment of members of our
Fiscal Council, our Board of Executive Officers, and
our Board of Directors and the external members of
the committees that advise our Board of Directors.
Our people committee has a written charter that
requires the majority of its members to be
independent.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Section
New York Stock Exchange
Corporate Governance Rules for
U.S. Domestic Issuers
Our Practices
Environment, Social and Governance
181
Compensation committee
303A.05
Audit committee
303A.06
303A.07
Our Board of Directors develops, evaluates and
approves corporate governance principles. As a
controlled company, we would not be required to
comply with the nominating/corporate governance
committee requirement if we were a U.S. domestic
issuer.
Listed companies must have a
compensation committee composed
entirely of independent directors,
with a written charter that covers
certain minimum specified duties.
“Controlled companies” are not
required to comply with this
requirement.
We have a committee that advises our Board of
Directors with respect to compensation and
management succession. Our people committee
has a written charter that requires the majority of
its members to be independent.
As a controlled company, we are not required to
comply with the compensation committee
requirement.
Our audit committee is a statutory advisory
committee to our Board of Directors and satisfies
the exemption set forth in Rule 10A-3(c)(3) under
the Exchange Act. See “Management and
Employees–Audit Committee” for a description of
our audit committee. Our audit committee has a
written charter that sets forth its responsibilities
that include, among other things: (i) assess the
independent auditor's qualifications and
independence, and the performance of the
independent audit functions, (ii) assuring legal and
regulatory compliance, including with respect to
internal controls, compliance procedures and
ethics, and (iii) monitoring our financial position,
especially as to risks, internal auditing work and
financial disclosure; (iv) carry out prior analysis of
transactions with related parties that meet the
criteria established in the Related Party
Transactions Policy, approved by our Board of
Directors.
Generally, listed companies must
have an audit committee with a
minimum of three independent
directors that satisfy the
independence requirements of Rule
10A-3 under the Exchange Act, with
a written charter that covers certain
minimum specified duties. However,
pursuant to Exchange Act Rule 10A-
3(c)(3), a foreign private issuer is not
required to have an audit committee
equivalent to or comparable with a
U.S. audit committee if the foreign
private issuer has a body established
and selected pursuant to home
country legal or listing provisions
expressly requiring or permitting
such a body, and if the body meets
the requirements that (i) it be
separate from the full board, (ii) its
members not be elected by
management, (iii) no executive
officer be a member of the body, and
(iv) home country legal or listing
provisions set forth standards for
the independence of the members of
the body.
Equity Compensation Plans
303A.08
Shareholders must have the
opportunity to vote for
compensation plans through shares
and material reviews, with limited
exceptions as set forth by the NYSE’s
rules.
Under Brazilian Corporate Law, shareholder
approval is required for the adoption and revision
of any equity compensation plans. We do not
currently have any equity compensation plans.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Section
New York Stock Exchange
Corporate Governance Rules for
U.S. Domestic Issuers
Corporate Governance Guidelines
303A.09
Listed companies must adopt and
disclose corporate governance
guidelines.
Code of Ethics for Directors, Officers and Employees
303A.10
Listed companies must adopt and
disclose a code of business conduct
and ethics for directors, officers and
employees, and promptly disclose
any waivers of the code for directors
or executive officers.
Environment, Social and Governance
182
Our Practices
We have a set of Corporate Governance Guidelines
(Diretrizes de Governança Corporativa) that
address general ombudsman qualification
standards, responsibilities, composition, appraisals
and access to information by the management. The
guidelines do not reflect the independence
requirements set forth in Sections 303A.01 and
303A.02 of the NYSE rules. Certain portions of the
guidelines, including the responsibilities and
compensation sections, are not discussed with the
same level of detail set forth in the commentaries
to the NYSE rules. The guidelines are available on
our website at www.petrobras.com.br/ir. The
information available on our website is not and
shall not be deemed to be incorporated by
reference to this annual report.
We also have a Corporate Governance Policy,
approved by our Board of Directors, which
establishes our governance principles and
guidelines. This policy applies to our company and
our affiliates, pursuant to Article 16 of our Bylaws.
We have a Code of Ethical Conduct (Código de
Conduta Ética), applicable to the members of the
Board of Directors and its advisory committees,
members of the Fiscal Council, members of the
Executive Board, employees, interns, service
providers and anyone acting on our behalf
(“collaborators”), including its subsidiaries in Brazil
and abroad, and a Code of Best Practices (Código de
Boas Práticas) applicable to our directors, executive
officers, senior management, employees and
collaborators. No waivers of the provisions of the
Code of Ethical Conduct or the Code of Best
Practices are permitted. These documents are
available on our website at
www.petrobras.com.br/ir. The information
available on our website is not and shall not be
deemed to be incorporated by reference to this
annual report.
Certification Requirements
303A.12
Each listed company CEO must
certify to the NYSE each year that he
or she is not aware of any violation
by the company of NYSE corporate
governance listing standards.
Our CEO will promptly notify the NYSE in writing if
any executive officer becomes aware of any
material noncompliance with any applicable
provisions of the NYSE corporate governance rules.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Environment, Social and Governance
183
Operating and
Financial Review
and Prospects
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
184
Consolidated Financial Performance
We achieved net income of US$19.9 billion, cash provided by operating activities of US$37.8 billion, a Free
Cash Flow (a non-GAAP measure defined below) of US$31.5 billion and Adjusted EBITDA (a non-GAAP
measure defined below) of US$43.6 billion.
Operating income in 2021 was US$37.6 billion, 273% higher than 2020 primarily due to higher Brent prices,
which increased 70% year-over-year. This result was also influenced by higher sales of oil products in the
domestic market, with higher margins for diesel and gasoline. On the other hand, in 2021 there were lower
oil exports volumes, higher LNG acquisition costs and losses with health care plan actuarial review (such
losses were related to a partial reversal of a gain obtained in 2020, when there was a reduction of our
payments to the plan). Net income attributable to our shareholders was US$19.9 billion in 2021, an 1,642%
increase compared to US$1.1 billion in 2020, mainly as a result of higher Brent prices and reversal of
impairment in 2021 as compared to impairment expenses in 2020.
Fluctuations in our financial condition and results of operations are driven by a combination of factors,
including:
the volume of crude oil, oil products and natural gas we produce and sell;
changes in international prices of crude oil and oil products (denominated in U.S. dollars);
changes in the domestic prices of oil products (denominated in reais);
fluctuations in the real vs. U.S. dollar exchange rates and other currencies, as disclosed in Note
36.3(c) to our audited consolidated financial statements;
the demand for oil products in Brazil;
the recoverable amounts of assets for impairment testing purposes; and
the amount of production taxes from our operations that we are required to pay.
CONSOLIDATED STATEMENT OF INCOME
Sales revenues
Cost of sales
Gross profit
Selling expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment of assets
Other income and expenses
As reported (US$ million)
Jan-Dec
2021
83,966
2020
53,683
Variation
▲
30,283
▲ (%)
56.4
(43,164)
(29,195)
(13,969)
(47.8)
40,802
(4,229)
(1,176)
(687)
(563)
(406)
3,190
653
24,488
(4,884)
(1,090)
(803)
(355)
(952)
(7,339)
998
16,314
655
(86)
116
66.6
13.4
(7.9)
14.4
(208)
(58.6)
546
57.4
10,529
143.5
(345)
(34.6)
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
185
Operating income
Net finance expense
Results of equity-accounted investments
Net income (loss) before income taxes
Income taxes
Net income for the year
37,584
10,063
27,521
273.5
(10,966)
(9,630)
(1,336)
(13.9)
1,607
28,225
(8,239)
(659)
(226)
1,174
2,266
343.9
28,451
12,588.9
(9,413)
(801.8)
19,986
948
19,038
2,008.2
Exchange rate and variation impacts
As we are a Brazilian company and most of our operations are carried out in Brazil, we prepare our
financial statements primarily in reais, which is our functional currency and that of all of our Brazilian
subsidiaries. We also have entities that operate outside Brazil, the functional currency of which is the
U.S. dollar. We have selected the U.S. dollar as our presentation currency in this annual report to
facilitate the comparison with other oil and gas companies. We have used criteria set forth in IAS 21
– “The effects of changes in foreign exchange rates” to translate the consolidated financial
statements from reais into U.S. dollars. Based on IAS 21, we have translated (i) all assets and liabilities
into U.S. dollars at the exchange rate as of the date of the statement of financial position; (ii) all
accounts in the statements of income, other comprehensive income and cash flows using the average
exchange rates prevailing during the relevant period and (iii) equity items at the exchange rates
prevailing at the respective transactions dates.
For more information regarding our functional and presentation currency, see “About Us” and Note
2.3 to our consolidated financial statements.
EXCHANGE AND INFLATION RATES
Year-end exchange rate (reais/US$)
Appreciation (depreciation) during the year(1)
Average exchange rate for the year (reais/US$)
Appreciation (depreciation) during the year(2)
2021
5.58
(7.4%)
5.40
(4.7%)
2020
5.20
2019
4.03
(28.9%)
(4.1)%
5.16
3.95
(30.7%)
(8.2)%
Inflation rate (IPCA)
10.06%
4.52%
4.31%
(1) Based on year-end exchange rate.
(2) Based on average exchange rate for the year.
From January 1, 2022 to March 29, 2022,, the real appreciated 14.9%against the U.S. dollar.
Most of our export revenues are denominated in U.S. dollars and our domestic sales are also
indirectly linked to the U.S. dollar due to our current policy to generally seek to maintain parity with
international product price. Therefore, the devaluation of the real is generally favorable to our
results as the positive impact in revenues is higher than the negative impact on operating costs,
the majority of which are denominated in Brazilian reais.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
186
Exchange rate fluctuations may affect the results of variables such as the following:
Margins: The relative pace at which our total revenues and expenses in reais increase or decrease
as a result of exchange rate fluctuations, and its impact on our margins, is affected by our pricing
policy in Brazil. Absent changes in the international prices of crude oil, oil products and natural gas,
when the real appreciates against the U.S. dollar, and we do not adjust our prices in Brazil, our
margins increase. On the other hand, absent changes in the international prices of crude oil, oil
products and natural gas, when the real depreciates against the U.S. dollar and we do not adjust
our prices in Brazil, our margins decline. For further information on our prices and recent
developments in our pricing policies, see “Sales Volumes and Prices” in this section.
Debt service: The depreciation of the real against the U.S. dollar also increases our debt service
expenses in reais, as the amount of reais necessary to pay principal and interest on foreign
currency debt increases with the depreciation of the real. As our Debt denominated in other
currencies increases, the negative impact of a depreciation of the real on our results and net
income when expressed in reais also increases, thereby reducing earnings available for
distribution.
Retained earnings available for distribution: Exchange rate variation also affects the amount of
retained earnings available for distribution by us when expressed in U.S. dollars. Amounts reported
as available for distribution in our statutory accounting records are calculated in reais and
prepared in accordance with IFRS. They may increase or decrease when expressed in U.S. dollars as
the real appreciates or depreciates against the U.S. dollar.
We designated hedging relationships to account for the effects of the existing hedge between a
foreign exchange gain or loss from portions of our long-term debt obligations (denominated in U.S.
dollars) and foreign exchange gain or loss of our highly probable U.S. dollar denominated future
export revenues, so that gains or losses associated with the hedged transaction (the highly
probable future exports) and the hedging instrument (debt obligations) are recognized in the
statement of income in the same periods.
For more information about our cash flow hedge, see Notes 4.8 and 36.3(a) to our audited
consolidated financial statements.
For information about our related foreign exchange exposure related, see “Liquidity and Capital
Resources – Exposure to Interest Rate and Exchange Rate Risk” in this section.
For more information about our foreign exchange exposure related to assets and liabilities, see
Note 36.3(c) to our audited consolidated financial statements.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
187
Sales Revenues
In 2021, sales revenues increased 56% compared to 2020, reaching US$83,966 million, due to the 70%
increase in Brent price and the increase in demand in the domestic market, mainly due to the economic
recovery after the height of the Covid-19 pandemic. An additional factor was the increase in sales of natural
gas and electricity, as a result of the increase in thermoelectric generation in 2021 and industrial demand
recovery.
Sales volumes and prices
As a vertically integrated company, we process most of our crude oil production in our refineries
and sell the refined oil products primarily in the Brazilian market. Therefore, the price of oil products
in Brazil has a significant impact on our financial results. International oil product prices vary over
time as the result of many factors, including the price of crude oil. We seek to sell our products in
Brazil at par with international product prices, when possible. The average price of Brent Crude Oil,
as reported by Bloomberg, was US$71 per barrel in 2021, US$42 per barrel in 2020 and US$64 per
barrel in 2019. As of December 31, 2021, the Brent Crude Oil price was US$77 per barrel.
Consolidated sales revenues were US$83,966 million in 2021 compared to US$53,683 million in
2020, primarily due to:
An increase of US$29,742 million due to increased margins explained primarily by higher
oil products prices;
An increase of US$541 million due to higher oil products volumes sold.
2021
Net
Average
Price (US$)(1)
Volume
(mbbl,
except as
otherwise
noted)
For the year ended December 31
2020
2019
Sales
Revenues
(US$
million)
Volume
(mbbl,
except as
otherwise
noted)
Net
Average
Price
(US$)(1)
Sales
Revenues
(US$
million)
Volume
(mbbl,
except as
otherwise
noted)
Net
Average
Price
(US$)(1)
Sales
Revenues
(US$
million)
292,488
149,132
22,125
25,020
83,320
27,184
59,892
659,161
128,504
8,789
82.86
24,236
251,400
55.39
13,924
264,462
87.00
23,007
79.86
11,910
125,536
50.29
6,313
137,928
71.12
9,810
80.23
67.91
53.90
83.54
1,775
1,699
4,491
2,271
14,669
54.20
795
14,408
71.21
1,026
42,544
39.82
1,694
29,942
55.74
1,669
86,170
39.26
3,383
83,486
49.82
4,159
21,887
66.48
1,455
43,528
88.04
3,832
71.14
4,261
66,470
40.80
2,712
60,453
56.41
3,410
76.83
50,643
608,676
49.74
30,276
634,207
73.97
46,913
45.79
76.35
5,884
106,890
34.14
3,649
127,583
46.47
5,929
671
1,279
37.53
48
-
-
-
1,422
28.13
40
1,620
36.42
59
2,621
93.48
245
Diesel(1)
Automotive
gasoline
Fuel oil
(including
bunker fuel)
Naphtha
Liquefied
petroleum gas
Jet fuel
Other oil
products
Subtotal oil
products
Natural gas
(boe)
Oil
Ethanol,
nitrogen
products,
renewables and
other non-oil
products
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
188
Electricity,
services and
others
Total Brazilian
market
Exports
International
sales
Total global
market
CONSOLIDATED
SALES
REVENUES
—
797,876
296,055
16,888
312,943
—
3,953
—
—
2,302
—
—
61,191
718,465
—
36,334
764,411
—
—
2,907
55,994
72.59
21,491
350,090
45.55
15,945
268,344
67.39
18,085
76.03
1,284
31,190
45.02
1,404
36,885
68.05
2,510
—
22,775
381,280
—
17,349
305,229
—
20,595
1,110,819
—
83,966
1,099,745
—
53,683
1,069,640
—
76,589
(1) Net average price calculated by dividing sales revenues by the volume for the year.
Cost of Sales
In 2021, the cost of sales increased 48%, reaching US$43,164 million, mainly reflecting higher import costs,
as a result of higher volumes of oil, oil products and natural gas and higher Brent and LNG purchase prices.
It is worth highlighting the higher share of LNG in our total natural gas purchases following the 188%
increase in LNG import volumes to meet higher demand, alongside the 214% increase in acquisition costs.
Selling Expenses
Selling expenses were US$4,229 million in 2021, a decrease of 13.4% compared to US$4,884 million in 2020,
mainly due to lower freight prices and lower volumes of exports.
General and Administrative Expenses
General and administrative expenses were US$1,176 million in 2021, an increase of 7.9% compared to
US$1,090 million in 2020, mainly reflecting, the enactment of Legislative Decree No. 26/2021, on the date
of its publication, which suspended the effects of CGPAR Resolution No. 23/2018, which had established a
parity limit for the cost of the health care benefit between state-owned enterprises and employees 50% by
us and 50% by the participants). Considering the conditions that we and the labor unions established in the
collective agreement 2020-2022, the participation that, as of January 2022, would have been in the
proportion of 50% between us and the participants, will remain 60% of the expenses covered by us and the
remaining 40% by the participants. As a result of this change, the actuarial liability of the health care plan
was remeasured, resulting in an expense of US$ 58 million presented as General and Administrative
Expenses in 2021 as compared to a gain of US$ 237 million in 2020. This effect was partially compensated
by the reduction in the headcount.
Exploration Costs
Exploration costs were US$687 million in 2021, a 14.4% decrease when compared to US$803 million in 2020,
mainly due to less exploratory costs due to fewer dry wells, partially compensated by higher costs related
to geology and geophysics.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Operating and Financial Review and Prospects
189
Impairment of Assets
We recognized impairment reversals in the amount of US$3,190 million in 2021, a US$10,529 million positive
variation compared to the impairment losses of US$7,339 million in 2020.
This positive variation was mainly in oil and gas producing properties in Brazil (a US$3,373 million
impairment reversal in 2021 compared to a US$7,316 million impairment loss in 2020). This result reflects
the revision of the key assumptions of the Strategic Plans in 2021 and 2020, especially the increase in
average Brent prices in 2021 and the decrease in average Brent prices, as well as the economic slowdown
and reduction on demand for oil and oil products, in 2020.
Other Income and Expenses
Other operating income was US$653 million in 2021, 34.6% lower than 2020 (US$998 million), mainly due to:
higher expenses with pension and medical benefits (a US$1,467 million expense in 2021 compared
to a US$889 million income in 2020), mainly due to a US$616 million expense in 2021 relating to the
remeasurement of the actuarial liability of the health care plan for retired participants with the
suspension of CGPAR Resolution No. 23/2018, compared to a US$1,808 million income in 2020, which
resulted from the remeasurement of the actuarial liability of the health care plan following the
approval of the reduction of our participation in the expenses of the plan in the Collective Labor
Agreement (“ACT”) for 2020-2022;
lower income from the recovery of taxes (a US$561 million income in 2021 compared to a US$1,580
income in 2020), primarily due to the effects of the favorable court decisions in relation to the
exclusion of ICMS (VAT tax) from the PIS/COFINs tax base (US$507 million in 2021 compared to
US$1,516 in 2020);
expenses resulting from equalization of expenses agreements with partners in production
individualization agreements in 2021 as compared to income in 2020 (a US$74 million expense in
2021 compared to a US$701 million income in 2020). The income recognized in 2020 was primarily a
result of the Agreements for the Equalization of Expenses and Volumes (“AEGV”) signed with the
Company’s E&P consortium partners in the shared deposits of Tupi, Sépia and Atapu on April 30,
2020, which resulted in gains of US$725 million;
higher expenses related to legal, administrative and arbitration proceedings (a US$740 million
expense in 2021 compared to a US$493 million expense in 2020) , mainly due to: i) increased provision
for losses on civil litigation involving contractual matters; and ii) expenses related to the lawsuit for
environmental damage occurred in Santa Catarina – Paraná oil pipeline, due to the approval of the
agreement, in October 2021, aiming to terminate the case;
higher income from agreements related to the assumption of interest in concessions (a US$363
million income in 2021 compared to a US$84 million income in 2020), mainly relating to six blocks in
the State of Amapá (a US$287 million income) and Potiguar Basin (a US$65 million income);
a US$99 million reversal of costs related to the decommissioning of returned/abandoned areas in
2021, compared to a US$342 million expense in 2020, due to the update, in 2021, of the 2022-2026
Strategic Plan assumptions (mainly resulting from higher forecasted Brent prices), and to the sales
of concessions in 2021 (resulting in the write-off of the related provisions), compared to the update,
in 2020, of the 2021-2025 Strategic Plan assumptions (mainly related to the anticipation of timing
the abandonments in Tupi, Marlim Sul, Roncador and Jubarte fields);
income from the co-participation agreements related to the Búzios concession signed in 2021 (a
US$631 million income in 2021, with no effect in 2020);
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a reversal of provisions related to Voluntary Severance Programs in 2021 (a US$11 million income in
2021 compared to a US$1,017 million expense in 2020), due to the higher number of enrollments in
2020 and to the revision in the provisions in 2021; and
higher income from disposals and write-offs of assets and on remeasurement of investment
retained with loss of control (a US$1,941 million income in 2021 compared to a US$499 million
income in 2020). In 2021, the income primarily relates to the contingent payment to us following the
approval by the ANP of the individualization agreement in Bacalhau field (a US$950 million income)
and to the sale of Mataripe Refinery (“RLAM”) (a US$574 million income), while in 2020 the income
primarily relates to the sale of our interest in Liquigás Distribuidora S.A. (US$531 million)
Net Finance Income (Expense)
Net finance expense was US$10,966 million in 2021, a 13.7% increase when compared to US$9,630 million in
2020, mainly due to:
foreign exchange losses of US$ 2,737 million in 2021, as compared to US$ 1,363 million losses in 2020
reflecting a 7.3% devaluation of the real/US$ exchange rate in 2021 (2021: R$ 5.58/US$, 2020: R$
5.20/US$, 2019: R$ 4.09/US$) which applied to a higher average net liability exposure to the US$
during 2021 than in 2020;
recoverable taxes inflation indexation income of US$ 518 million in 2021, as compared to US$ 1,807
million in 2020, mainly due to lower income from the recovery of taxes related to the exclusion of
ICMS tax from the PIS/COFIN tax calculation in 2021 as compared to 2020; and
the above factors were partially offset by lower interest on finance debt of US$ 2,870 million in 2021,
as compared to US$ 3,595 million in 2020, due to a decrease in the amount of our debt.
Results in equity-accounted investments
We had a gain in equity-accounted investments of US$1,607 million in 2021, compared to loss of US$659
million in 2020. This positive variation was mainly due to the investment in BR Distribuidora, which
presented a US$404 million impairment reversal in 2021, compared to a US$144 million impairment loss in
2020, and to the increase of the value of our equity in Braskem due to its positive operating results.
Income Taxes
Income tax was an expense of US$8,239 million in 2021, compared to a benefit of US$1,174 million in 2020,
mainly due to:
(i) higher net income before income taxes (US$28,225 million of income in 2021 compared to a
US$226 million loss in 2020)
(ii) higher post-employment benefits, which is a non-deductible expense (US$802 million expense in
2021 compared to a US$ 559 million gain in 2020), mainly due to the remeasurement in the health
care and pension plans which occurred in 2021, compared to the non-taxable gain from the health
care plan revision that occurred in 2020.
For information regarding discussion of earlier years, please refer to our previous Annual Report and Form
20-F. Our SEC filings are available to the public on the SEC’s website at www.sec.gov and on our website at
PETROBRAS
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191
www.petrobras.com.br/ir. The information available on our website is not and shall not be deemed to be
incorporated by reference to this annual report.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
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192
Financial Performance by Business Segment
SELECTED FINANCIAL DATA BY REPORTABLE OPERATING SEGMENTS AND FOR CORPORATE AND OTHER
BUSINESS
Exploration and Production
Sales revenues to third parties(1)(2)
Intersegment sales revenues
Total sales revenues(2)
Cost of sales
Impairment of assets
Net income (loss) attributable to our shareholders
Refining, Transportation and Marketing
Sales revenues to third parties(1)(2)
Intersegment sales revenues
Total sales revenues(2)
Cost of sales
Impairment of assets
Net income (loss) attributable to our shareholders
Gas and Power
Sales revenues to third parties(1)(2)
Intersegment sales revenues
Total sales revenues(2)
Cost of sales
Impairment of assets
Net income (loss) attributable to our shareholders
Corporate and other Businesses
Sales revenues to third parties(1)(2)
Intersegment sales revenues
Total sales revenues(2)
For the year ended December 31
2021
2020
▲ 21-20
(US$ million)
(US$ million)
(%)
1,105
54,479
55,584
871
26.9
33,524
34,395
62.5
61.6
(23,673)
(18,098)
30.8
3,107
23,353
73,108
1,416
74,524
(7,364)
(142.2)
4,475
421.9
46,917
55.8
865
63.7
47,782
56.0
(65,620)
(44,011)
289
5,746
9,487
2,564
12,051
(9,494)
(208)
(206)
266
238
504
164
111
5,270
2,455
7,725
(3,985)
(697)
49.1
76.2
5,076.6
80.0
4.4
56.0
138.2
(70.2)
821
(125.1)
625
251
876
(57.4)
(5.2)
(42.5)
Net income (loss) attributable to our shareholders
(7,308)
(4,670)
(56.5)
(1) Not all of our segments have significant third-party revenues. For example, our Exploration and Production segment accounts for a large part of our
economic activity and capital expenditures but has little third-party revenues.
(2) Revenues from commercialization of oil to third parties are classified in accordance with the points of sale, which could be either the Exploration and
Production or Refining, Transportation and Marketing segments.
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193
Exploration and Production
Net income attributable to our shareholders in our E&P segment was US$23,353 million in 2021 compared
to US$4,475 million in 2020, primarily due to:
higher sales revenues (an increase of US$21,189 million), primarily due to higher oil prices;
higher cost of sales (an increase of US$5,575 million), mainly due to higher royalties and
governmental participation expenses reflecting higher oil prices; and
lower impairment losses (a decrease of US$10,471 million). As part of its impairment testing
process, during 2021 our management increased the Brent short term price assumption established
in our 2021 -2025 Strategic Planning and, subsequently, on November 24, 2021, our management
concluded and approved its 2022 -2026 Strategic Plan, including the complete update of the
economic assumptions (including Brent price assumptions), as well as its project portfolio and
estimates of reserve volumes. These updates resulted in the increase of the recoverable amount of
a number of Cash Generating Units which led to the reversal of impairment previously recognized.
See Note 25 to our audited consolidated financial statements for further information about
impairment losses.
Refining, Transportation and Marketing
Net income attributable to our shareholders in our RTM segment was US$5,746 million in 2021 compared
to US$111 million in 2020, primarily due to:
higher sales revenues (an increase of US$26,742 million), primarily due to the increase in
international prices and the increase in domestic demand mainly due to the economic recovery after
the impact of the Covid-19 pandemic in 2020; partially offset by lower revenues from oil exports
higher operating income (US$7,283 million in 2021 compared to US$779 million in 2020) primarily
due to higher positive inventory turnover (sale of inventories formed at lower prices over the last
two years, as a result of the increase in Brent prices between 2020 and 2021, from US$42/bbl to
US$71/bbl);
lower selling expenses (a decrease of US$977 million) mainly due to the decrease in shipping
expenses;
lower expenses with our voluntary separation plan that occurred in 2020 (a decrease of US$324
million);
lower impairment (a decrease of U$125 million) mainly due the reversal related to the second unit of
Abreu e Lima refinary in 2021;
higher results from disposal/write-offs of assets primarily due to the gain with the sale of the RLAM
refinery on November 30, 2021, of US$574 million; and
higher results in equity-accounted investments (an increase of US$1,378 million, an income of US$
941 million in 2021 from a US$437 million loss in 2020), primarily due to positive operating results in
Braskem.
Gas and Power
Despite the strong recovery in natural gas demand, net income attributable to our shareholders in our Gas
and Power segment was a loss of US$206 million in 2021 compared to income of US$821 million in 2020,
primarily due to:
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194
higher Cost of Sales (an increase of US$ 5,509 million) mainly due to higher natural gas acquisition
costs, especially LNG costs with higher volume imported and higher unit cost due to (i) the
maintenance of below average temperatures in the northern hemisphere, (ii) supply restrictions, (iii)
lower gas inventories in Europe, and (iv) the heating up of the Chinese economy;
impairment of UTG Sul (US$ 61 million) and;
loss on the sales of oil thermal plants (Arembepe, Bahia 1 and Muricy) of US$ 79 million.
For information regarding discussion of earlier years, please refer to our previous Annual Report and Form
20-F. Our SEC filings are available to the public on the SEC’s website at www.sec.gov and on our website at
www.petrobras.com.br/ir. The information available on our website is not and shall not be deemed to be
incorporated by reference to this annual report.
PETROBRAS
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195
Liquidity and Capital Resources
We closely monitor liquidity levels in order to effectively meet cash needs from our business operations and
financial obligations. We have a conservative approach to the management of our liquidity, which consists
mainly of (i) cash and cash equivalents (cash in hand, deposits held at call with banks, money market mutual
funds and other short-term highly liquid investments with maturities of three months or less), and
(ii) investments in financial assets (treasury bills). Based on the information presented below, we believe
our working capital is sufficient for our present requirements.
LIQUIDITY AND CAPITAL RESOURCES
US$ million
Cash and cash equivalents at the beginning of period
Government bonds and time deposits with maturities of more than three months
at the beginning of period
Adjusted Cash and Cash Equivalents at the beginning of period (1)
Net cash provided by operating activities
Acquisition of PP&E and intangibles assets
Investments in investees
Proceeds from disposal of assets – Divestment
Financial compensation for the Búzios Co-participation Agreement
Dividends received
Divestment (Investment) in marketable securities
Net cash provided by (used in) investing activities
(=) Net cash provided by operating and investing activities
Net change in finance debt
Proceeds from financing
Repayments
Repayment of lease liability
Dividends paid to our shareholders
Dividends paid to non-controlling interest
Investments by non-controlling interest
2021
11,725
659
12,384
37,791
(6,325)
(24)
4,783
2,938
781
4
2,157
39,948
2020
7,377
888
8,265
28,890
(5,874)
(942)
1,997
−
243
66
(4,510)
24,380
(21,757)
(11,861)
1,885
17,023
(23,642)
(28,884)
(5,827)
(13,078)
(105)
(24)
(5,880)
(1,367)
(84)
(67)
Net cash used in financing activities
(40,791)
(19,259)
Effect of exchange rate changes on cash and cash equivalents
Adjusted Cash and Cash Equivalents at the end of period (1)
Government bonds and time deposits with maturities of more than three months
at the end of period
Cash and cash equivalents at the end of period
(402)
11,130
(650)
10,480
(773)
12,384
(659)
11,725
(1) Adjusted Cash and Cash Equivalents is a non-GAAP measure that comprises cash and cash equivalents, government bonds and time deposits from
highly rated financial institutions abroad with maturities of more than three months from the end of the period, considering the expected realization of
those financial investments in the short-term. This measure is not defined under the IFRS and should not be considered in isolation or as a substitute for
cash and cash equivalents computed in accordance with IFRS. It may not be comparable to the adjusted cash and cash equivalents of other companies;
however, management believes that it is an appropriate supplemental measure to assess our liquidity and supports leverage management.
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196
Free Cash Flow
We use Free Cash Flow as a supplemental measure to assess our liquidity and to support liability
management. In addition, this measure is the basis for the distribution of dividends according to our
dividend policy.
Free Cash Flow is not defined under IFRS and should not be considered in isolation or as a substitute
for cash and cash equivalents calculated in accordance with IFRS. Additionally, it may not be
comparable to the Free Cash Flow of other companies.
Our Free Cash Flow metric comprises net cash provided by operating activities less acquisition of
PP&E and intangibles assets. Compared to the calculation presented in our annual report on Form
20-F for the year ended December 31, 2020, we excluded “Investments in investees” from the
deductions of “Net cash provided by operating activities”, in order to align with the definition in the
most recent update in our dividend policy which occurred in 2021. In addition, the adjustment in 2020
is only for comparative purposes and does not affect prior dividends.
RECONCILIATION OF FREE CASH FLOW
US$ million
R$ million(1)
2021
2020
2021
2020
Net cash provided by operating activities
37,791
28,890
203,126
148,106
(-) Acquisition of PP&E and intangible assets
(6,325)
(5,874)
(34,134)
(29,974)
FREE CASH FLOW
31,466
23,016
168,992
118,132
(1) According to our dividend policy, proposed dividends to shareholders is calculated based on the Free Cash
Flow measured in Brazilian reais.
The principal uses of funds in the year ended December 31, 2021 were for debt service obligations, including
pre-payment of debts in the international banking market, repurchase and redemption of securities in the
international capital market and lease payments totaling US$29,469 million, acquisition of PP&E and
intangibles assets in the amount of US$6,325 million and dividend payments amounting to US$13,183
million. These funds were principally provided by cash from operating activities of US$37,791 million,
financial compensation for the Búzios co-participation agreement of US$2,938 million, proceeds from
financing of US$1,885 million and proceeds from divestments of US$4,783 million.
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197
Source of Funds
In 2021, our financing strategy was to fund our necessary capital expenditures and to continue our debt
deleveraging process, preserving our cash balance, solvency and liquidity.
We pursued our financing strategy in 2021 in the following ways:
using cash flow from operations;
moving forward with our portfolio management program and continuing with divestments; and
moving forward with our liability management program, incurring new long-term debt from funding
sources to prepay expensive loans of shorter maturities.
Cash Flows from Operating Activities
Net cash provided by operating activities was US$37,791 million in 2021, an increase of 31% from US$28,890
million in 2020, mainly due to higher oil prices and refining margins, partially compensated by higher
working capital and income tax.
Disposal of Assets
We received cash inflow from the sale of assets amounting to US$4.8 billion, for the year ended December
31, 2021, which represents the prices paid to us on the closing of the completed transactions and the
upfront contract signing payments related to certain transactions that have not yet been closed.
Assets
Sale of the remaining interest (37.5%) in BR Distribuidora
Sale of the entire interest in RLAM
Sale of the remaining interest (10%) in NTS
Others
TOTAL
Cash-inflow
(US$ million)
2,184
1,811
277
511
4,783
From January 1, 2022 through February 28, 2022, we have received US$1,680 million from divestments,
primarily related to the receipt of US$950 million related to the final contingent installment from the sale
of exploratory block BM-S-8; the receipt of US$421 million related to the signing of the sale of the
Carmópolis, Norte Capixaba, and Potiguar clusters, as well as the receipt of US$240 million related to the
closing of the sale of Alagoas cluster.
For additional information on divestments, see “Our Business – Portfolio Management” in this annual
report.
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Operating and Financial Review and Prospects
198
Debt
Our proceeds from financing are comprised of local and global notes issued in the capital markets, funds
raised from banking markets (in Brazil and abroad) and use of revolving credit lines.
Additionally, our total debt includes lease liabilities. Our Gross Debt (a non-GAAP measure representing the
sum of short and long-term finance debt and lease liabilities) totaled US$58,743 million, and the Net Debt
(a non-GAAP measure representing Gross Debt less cash and cash equivalents, Brazilian federal
government securities and time deposits maturing over three months), totaled US$47,626 million.
For reconciliation of Net Debt and Gross Debt, non-GAAP measures, see “ – Liquidity and Capital Resources
– Sources of Funds – Finance Debt - Adjusted EBITDA and Net Debt/Adjusted EBITDA ratio” in this annual
report.
Finance Debt
Debt profile
In 2021, proceeds from financing amounted to US$1,885 million, principally reflecting global notes issued
in the international capital market in the amount of US$1,442 million maturing in 2051.
We currently issue notes in the international capital markets through our wholly-owned finance subsidiary
PGF. We fully and unconditionally guarantee such notes issued by PGF, and PGF is not required to file
periodic reports with the SEC.
Information on weighted average interest rate and weighted average maturity of our finance debt is
presented below:
Weighted average interest rate (%)
Weighted average maturity (in years)
Leverage (%)(1)
2021
2020
2019
6.2
5.9
5.9
13.39
11.71
10.79
41
47
44
(1) This leverage takes into account market capitalization and it is defined as (Gross Debt – Cash Equivalents) / (Market Capitalization + Gross Debt
– Cash Equivalents).
For additional information on Finance Debt amortization, see “ – Liquidity and Capital Resources – Use of
Funds – Debt Service Obligations” in this annual report.
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ANNUAL REPORT AND FORM 20-F | 2021
DEBT PROFILE PER CATEGORY (%)
Operating and Financial Review and Prospects
199
DEBT PROFILE PER CURRENCY (%)
As of December 31, 2021, our finance debt due in the short-term, including accrued interest, amounted to
US$3,641 million, compared to US$4,186 million as of December 31, 2020.
Our outstanding long-term finance debt amounted to US$32,059 million as of December 31, 2021,
compared to US$49,702 million as of December 31, 2020. This decrease was primarily due to repurchase of
global bonds and pre-payment of debt.
See Note 32 to our audited consolidated financial statements for a breakdown of our finance debt, a roll-
forward schedule of our finance debt by source and other information.
For more information about our securities, including our bonds, see Exhibit 2.4 to this annual report.
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200
Rating
In 2021, Moody’s upgraded our credit rating by one notch, from "Ba2" to "Ba1," one notch below
investment grade, with a stable outlook. The agency also upgraded our stand alone rating by one
notch, from "Ba2" to "Ba1." With this upgrade we are rated one notch above the Brazilian
government. S&P upgraded our stand alone rating to BB+, also one notch below investment grade.
There were no changes on our global rating and outlooks in 2021 by S&P and Fitch (BB- / stable and
BB- / negative, respectively). There were no changes in stand alone rating by Fitch (BBB).
As of February 28, 2022, there were no changes to our stand-alone credit profile rating or to our
global rating.
GLOBAL RATING
Standard & Poor’s
Moody’s
Fitch
(1) As of February 28, 2022.
(2) As of December 31, 2021.
STAND ALONE RATING
Standard & Poor’s
Moody’s
Fitch
(1) As of February 28, 2022.
(2) As of December 31, 2021.
2022(1)
2021(2)
2020(2)
BB-
Ba1
BB-
BB-
Ba1
BB-
BB-
Ba2
BB-
2022(1)
2021(2)
2020(2)
BB+
Ba1
BBB
BB+
Ba1
BBB
BB
Ba2
BBB
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201
Exposure to interest rate and exchange rate risk
The table below provides a summary of information regarding our exposure to interest rate and
exchange rate risk in our finance debt for 2021 and 2020, including short-term and long-term debt.
TOTAL FINANCE DEBT(1)
Real - denominated
Fixed rate
Floating rate
Sub-total
U.S. dollar - denominated
Fixed rate
Floating rate
Sub-total
Other currencies
Fixed rate
Floating rate
Sub-total
TOTAL
Floating rate debt
Real-denominated
Foreign currency-denominated
Fixed rate debt
Real-denominated
Foreign currency denominated
TOTAL
U.S. dollars
Euro
Gbp
Japanese yen
Brazilian reais
TOTAL
(1)
Short term and long term.
2021 (%)
2020 (%)
7.2
5.4
12.6
46.9
31.9
78.8
8.6
0.0
8.6
5.1
10.0
15.1
46.4
31.9
78.3
6.6
0.0
6.6
100.0
100.0
5.4
31.8
7.2
55.6
100.0
78.7
3.4
5.2
0.0
12.7
100.0
10.0
31.9
5.1
53.0
100.0
78.3
3.1
3.5
0.0
15.1
100.0
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202
We practice integrated risk management in every decision-making process. Thus, we do not focus
solely on the individual risks of our operations or business units, but, rather, we take a broader view
of our consolidated activities, capturing possible natural hedges where and when available. With
respect to the management of financial risks, including market risks, we preferentially use more
structural actions through the management of our equity and indebtedness levels, instead of using
financial derivative instruments.
Market risk management focuses on the uncertainties inherent in meeting our objectives and aims
at establishing action plans towards a balanced combination of risk, return and liquidity. Acceptable
limits for market risks depend on the conditions of the business environment, such as price levels,
rates and volatility of risk factors, political, macroeconomic and other uncertainties that
significantly influence our economic and financial performance. We define the limits for market
risks when elaborating each new strategic plan we adopt, considering our strategic objectives,
goals, expected value and the liquidity of financial resources required for the implementation of
that strategic plan. The use of financial instruments, such as derivatives, may be necessary to meet
our needs.
In general, our foreign currency floating rate debt is principally subject to fluctuations in LIBOR. Our
floating rate debt denominated in reais is subject to fluctuations in the Brazilian interbank offering
rate (or “DI”) and Brazilian long-term interest rate (or “TJLP”) as fixed by the CMN.
We are taking actions to mitigate the potential impact of the discontinuation of LIBOR on our debt
contracts in order to substitute LIBOR with another reference rate but according to information
that we have through the date of this annual report, we do not believe this event should represent
a material risk to our consolidated results and financial condition.
We generally do not use derivative instruments to manage our exposure to interest rate fluctuation,
but we may utilize these financial instruments in the future.
The exchange rate risk to which we are exposed has greater impact on the balance sheet and derives
principally from the presence of non-real denominated obligations in our debt portfolio. With
respect to the management of foreign exchange risks, we take a broader view of our consolidated
activities, capturing possible natural hedges whenever they are available, benefiting from the
correlation between our income and expenses. For the short term, the management of our foreign
exchange risk involves allocating our cash investments between the real and other foreign
currencies. Our strategy, reevaluated annually in the revision of our Strategic Plan, may also involve
the use of financial instruments, such as derivatives, to hedge certain liabilities, minimizing foreign
exchange rate risk exposure, especially when we are exposed to a foreign currency in which no cash
inflows are expected, for example, Pound Sterling.
In 2017, we entered into derivative transactions, through our indirect subsidiary Petrobras Global
Trading BV (“PGT”), in the form of cross-currency swaps to hedge against exposure in sterling
pounds versus U.S. dollars, arising from past issues of bonds in that currency. During 2021, the
notional amount was reduced, adjusting the protection to a lower exposure to the Pound Sterling
provided by the prepayment of related-party loans in this currency over the course of this period.
In September 2019, we contracted derivative operations to hedge against cash flow exposure
arising from debt issued in Brazilian reais, the first series of the 7th debentures issuance, with the
IPCAxCDI interest rate swap maturing in September 2029 and September 2034 and the CDI x Dollar
cross-currency swap operations maturing in September 2024 and September 2029.
In 2021, no operations were carried out in derivative financial instruments.
We have designated cash flow hedging relationships to reflect the economic essence of the
structural hedge mechanism between U.S. dollar-denominated debt and future sales revenues.
See “ – Consolidated Financial Performance – Exchange Rate and Variation Impacts” in this section
and Notes 4.8 and 36.3(a) to our audited consolidated financial statements for further information
about our cash flow hedge.
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Operating and Financial Review and Prospects
203
See Note 36.3 to our audited consolidated financial statements for more information about our
interest rate and exchange rate risks, including a sensitivity analysis demonstrating the potential
impact of a 25% (or 50%) adverse change in the underlying variables as of December 31, 2021.
For further information regarding expected maturity schedule and currency, the principal and
interest cash flows, related average interest rates of our debt obligations, credit risk and liquidity
risk, see Notes 32, 36.5 and 36.6 to our audited consolidated financial statements.
Lease Liabilities
We are the lessee in agreements primarily including oil and gas producing units, drilling rigs and other
exploration and production equipment, vessels and support vessels, helicopters, lands and buildings. As of
December 31, 2021, the amount of lease liabilities totaled US$23,043 million.
Adjusted EBITDA and Net Debt/Adjusted EBITDA ratio
The Net Debt/Adjusted EBITDA ratio is a metric that helps our management in assessing our liquidity and
leverage, and it is measured in U.S. dollars.
Adjusted EBITDA represents an alternative measure to our net cash provided by operating activities and is
computed by using the EBITDA (net income before net finance income (expense), income taxes,
investments,
depreciation, depletion and amortization) adjusted by results
impairment, cumulative foreign exchange adjustments reclassified to the income statement, results from
disposal and write-offs of assets, results from co-participation agreements in bid areas and foreign
exchange gains or losses on provisions for legal proceedings denominated in foreign currencies.
in equity-accounted
US$ million
Net income (loss) from continuing operations
Net finance income (expense)
Income taxes
Depreciation, depletion and amortization
EBITDA
Results in equity-accounted investments
Impairment
Reclassification of comprehensive income (loss) due to the disposal of equity-
accounted investments
Results on disposal/write-offs of assets and on remeasurement of investment
retained with loss of control
Results from co-participation agreements in bid areas
Foreign exchange gains or losses on provisions for legal proceedings
Adjusted EBITDA from continuing operations
Adjusted EBITDA from discontinued operations
Adjusted EBITDA
PETROBRAS
2021
2020
2019
19,986
948
7,803
10,966
9,630
8,764
8,239
(1,174)
4,200
11,695
11,445
14,836
50,886
20,849
35,603
(1,607)
659
(153)
(3,190)
7,339
2,848
41
43
34
(1,941)
(499)
(6,046)
(631)
−
−
−
−
120
43,558
28,391
32,406
−
−
301
43,558
28,391
32,707
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Net Debt reflects the Gross Debt, net of Adjusted Cash and Cash Equivalents (see definition in “ – Liquidity
and Capital Resources” in this annual report). Gross Debt reflects the sum of current and non-current
finance debt and lease liabilities.
Our EBITDA, Adjusted EBITDA, Adjusted Cash and Cash Equivalents, Gross Debt, Net Debt and Net
Debt/Adjusted EBITDA ratio are non-GAAP measures and may not be comparable to the calculation of
liquidity measures presented by other companies, and they should neither be considered in isolation nor as
substitutes for any measures calculated in accordance with IFRS. These metrics must be considered
together with other measures and indicators for a better understanding of our financial condition.
We applied the same foreign exchange translation method as set forth in Note 2 to our audited consolidated
financial statements for presenting this metric in U.S. dollars. Accordingly, assets and liabilities items were
translated into U.S. dollars at the exchange rate as of the date of the statement of financial position, and
all items pertaining to the statement of income and statement of cash flows were translated at the average
rates prevailing at each period.
The following table presents the reconciliation for 2021 and 2020 of the Net Debt/Adjusted EBITDA ratio
measure to the most directly comparable measure derived from IFRS captions, which is, in this case, is the
finance debt plus lease liability minus cash and cash equivalents, divided by the net cash provided by
operating activities:
US$ million
Cash and cash equivalents
Government securities and time deposits (maturity of more than three
months)
Adjusted Cash and Cash Equivalents
Finance debt
Lease liability
Current and non-current debt—Gross Debt
Net Debt
Net cash provided by operating activities—OCF
Income taxes
Allowance for credit loss on trade and other receivables
Trade and other receivables, net
Inventories
Trade payables
Deferred income taxes, net
Taxes payable
Others
Total Adjusted EBITDA
Gross debt net of cash and cash equivalents/OCF ratio
Net debt/Adjusted EBITDA ratio
2021
10,467
650
11,117
35,700
23,043
58,743
47,626
37,791
8,239
30
2,075
2,334
(1,073)
(4,058)
(4,878)
3,098
43,558
1.26
1.09
2020
11,711
659
12,370
53,888
21,650
75,538
63,168
28,890
(1,174)
(144)
(1)
(724)
(216)
1,743
(2,914)
2,931
28,391
2.21
2.22
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Our Net Debt/Adjusted EBITDA ratio computed in U.S. dollar decreased from 2.22 as of December 31, 2020
to 1.09 as of December 31, 2021, reflecting the effects derived by the combination of higher Adjusted
EBITDA and lower Net Debt.
Use of Funds
Capital Expenditures
We disbursed a total of US$8,772 million in 2021 (of which 81% was used in E&P business), a 9% increase
when compared to our Capital Expenditures of US$8,056 million in 2020. In line with our previous 2021-2025
strategic plan, our Capital Expenditures in 2021 were primarily directed toward the most profitable
investment projects relating to oil and gas production. These expenditures are based on our plan cost
assumptions and financial methodology.
CAPITAL EXPENDITURES BY BUSINESS SEGMENTS (US$ million)
For the Year Ended December 31,
Exploration and Production
Refining, Transportation and Marketing
Gas and Power
Corporate and Other Businesses
TOTAL
2021
7,129
932
412
298
2020
6,557
947
352
200
2019
25,080
1,463
543
328
8,772
8,056
27,413
For information on our future Capital Expenditures, see “Strategic Plan” in this annual report.
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Dividends
Our Board of Directors proposed a distribution of dividends in 2021 in the amount of US$18,541 million.
Such dividends were calculated in Brazilian reais, according to our dividend policy, in the amount of
R$101,395 representing 60% of our Free Cash Flow, translated to U.S. dollars based on the exchange rate
prevailing at the date of approval for each anticipation and on the closing exchange rate for the
complementary dividends.
For more information on our dividend policy, see “Shareholder Information – Dividends” in this annual
report and Note 34.5 to our audited consolidated financial statements.
Debt Service Obligations
As of December 31, 2021, our debt maturity profile includes, for the next five years, US$33,560 million in
finance debt and lease liability (nominal amounts).
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1)
Amounts composed by Lease nominal future payments and Finance debt principal.
Finance Debt
In 2021, we repaid several finance debts, in the amount of US$23,642 million notably: (i) prepayment of
banking loans in the domestic and international market totaling US$6,344 million; (ii) US$9,840 million to
repurchase global bonds previously issued by us in the capital market, with net premium paid to bond
holders amounting to US$1,090 million; and (iii) prepayment of loans with development agencies, in the
amount of US$593 million.
Lease Liabilities
We are the lessee in agreements primarily including oil and gas producing units, drilling rigs and other
exploration and production equipment, vessels and support vessels, helicopters, land and buildings.
Payments in certain lease agreements vary due to changes in facts or circumstances occurring after their
inception other than the passage of time. These payments are not included in the measurement of the lease
obligations.
In addition, there are nominal amounts of lease agreements for which the lease term has not commenced,
as they relate to assets under construction or not yet available for use. As of December 31, 2021, these
agreements amount to US$79,557 million (US$67,408 million at December 31, 2020). The increase in the
year ended December 31, 2021 corresponds to new contractual commitments, including two floating
production units.
For information on changes in the balance of lease liabilities and on leases by class of underlying assets, see
Note 33 to our audited consolidated financial statements.
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Ability of Subsidiaries to Transfer Funds to the Company
As of the date hereof, we have no knowledge of any legal or economic restrictions on the ability of our
subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. As a result, we do not
anticipate any impacts on our ability to meet our cash obligations.
Other Information
Critical Accounting Policies and Estimates
Information on critical accounting policies and estimates, which involves a higher degree of complexity in
the application of the accounting policies that currently affect our financial condition and results of
operations is provided in our audited consolidated financial statements. Note 4 to our audited consolidated
financial statements addresses the estimates that we consider most significant based on the degree of
uncertainty, the potential events that may negatively affect our estimates and the likelihood of a material
impact if we used a different estimate. These assumptions are based on past transactions and other
relevant information and are periodically reviewed by our management. Actual results could differ from
these estimates.
Additional information, including our significant accounting policies, are provided in each of our explanatory
notes to our audited consolidated financial statements.
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Management and
Employees
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Management
Board of Directors
Our Board of Directors is composed of a minimum of seven and maximum of eleven members and is
responsible for, among other things, establishing our general business policies. Our Bylaws specifically
provide that our Board of Directors must be composed of external members only, without any current
statutory or employment relationship with us, except for the member designated as our CEO and the
member elected by our employees.
The Brazilian federal government controls a majority of our voting shares and has the right to elect a
majority of the members of our Board of Directors. Our Board of Directors, in turn, elects our management.
On March 5, 2022, the Brazilian federal government, through the Ministry of Mines and Energy (MME), issued
a formal notice (oficio) designating eight individuals as candidates to our Board of Directors. On March 28,
2022, the Brazilian federal government further updated the list of its designated individuals. The eight
individuals designated by the Brazilian federal government for election to the Board of Directors are: Luiz
Rodolfo Landim Machado (for Chairman of the Board of Directors), Adriano José Pires Rodrigues, Carlos
Eduardo Lessa Brandão, Eduardo Karrer, Luiz Henrique Caroli, Márcio Andrade Weber, Ruy Flaks Schneider
and Sonia Julia Sulzbeck Villalobos. The election of the Board of Directors will take place at the Annual
General Meeting, expected to be held on April 13, 2022. The notice issued on March 28, 2022 also designated
Mr. Adriano José Pires Rodrigues for the position of CEO, to be considered by our Board of Directors at a
later date following the Annual General Meeting.
As a mixed-capital company with 200 or more employees, in which the Brazilian federal government directly
or indirectly holds a majority of the voting rights, our employees have the right to elect one member of our
Board of Directors to represent them, by means of a separate voting procedure.
Our Bylaws also provide that, regardless of the rights granted to minority shareholders, the Brazilian federal
government always has the right to elect the majority of our directors, regardless of the number of
directors.
The term of office of our directors may not exceed two years and any member of our Board of Directors may
be re-elected for up to three consecutive times.
In accordance with Brazilian Corporate Law, shareholders may remove any director from office at any time
with or without cause at an extraordinary shareholders’ meeting, and in case of removal of any board
member elected through cumulative voting procedure, it will result in the removal of all of the other
members elected under the same procedure, after which new elections must occur.
Our Board of Directors must be composed of, at least, 40% independent members, in compliance with
Brazilian Corporate Law and B3 Level 2 rules. In case of contradictions between these rules, the stricter rules
prevail.
For further information on Level 2 listing segment, see “Shareholder Information” in this annual report.
For further information regarding the composition, attributions and duties of our Board of Directors, see
Exhibit 1.1 to this annual report for a copy of our Bylaws.
As of the date of this annual report, we have the following 11 directors:
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Fiscal Council
We have a permanent Fiscal Council composed of up to five members, which is independent of our
management and independent registered accounting firm. Our Fiscal Council’s responsibilities, as a
supervisory body, include, among others: (i) representing the shareholders, monitoring management
activities; (ii) verifying compliance with legal and statutory duties; and (iii) reviewing the annual
management report and the audited consolidated financial statements, issuing an opinion at the end of the
year.
The members of our Fiscal Council and their corresponding alternates are elected by our shareholders at
the annual shareholders’ meeting for a one-year term. Two consecutive re-elections are permitted under
Brazilian Corporate Law. Holders of preferred shares and minority holders of common shares are each
entitled, as a class, to elect one member and the corresponding alternate of our Fiscal Council. The Brazilian
federal government has the right to appoint the majority of the members of our Fiscal Council and their
alternates, of which one member and the corresponding alternate will be necessarily appointed by the
Minister of Economy, representing the Brazilian Treasury.
On March 5, 2022, the Brazilian federal government, through the Ministry of Mines and Energy (MME), issued
a formal notice (oficio) designating four individuals as candidates to our Fiscal Council and the National
Treasury Secretariat of the Ministry of Economy issued a formal notice with two designations. The four
individuals designated by the Brazilian federal government for election to our Fiscal Council are: Agnes
Maria de Aragão da Costa (Main), Marisete Fátima Dadald Pereira (Alternate), Sérgio Henrique Lopes de
Sousa (Main) and Alan Sampaio Santos (Alternate). The two individuals designated by the National Treasury
for election to our Fiscal Council are: Janete Duarte Mol (Main) and Otavio Ladeira de Medeiros (Alternate).
The designated candidates will be considered for our Fiscal Council at the Annual General Meeting, expected
to be held on April 13, 2022.
CURRENT MEMBERS OF OUR FISCAL COUNCIL
Members of our Fiscal Council
Agnes Maria de Aragão da Costa (Chairman)
Sergio Henrique Lopes de Sousa
Jeferson Luís Bittencourt
Patrícia Valente Stierli
Michele da Silva Gonsales Torres
Alternate members of our Fiscal Council
Jairez Elói de Sousa Paulista
Alan Sampaio Santos
Robert Juenemann
Antonio Emilio Bastos Aguiar Freire
Year of first
appointment
2020
2020
2021
2021
2021
2020
2020
2021
2021
Elected/appointed by
Brazilian federal government
Brazilian federal government
Brazilian federal government/Ministry of
Economy
Minority shareholder
Preferred shareholder
Brazilian federal government
Brazilian federal government
Minority shareholder
Preferred shareholder
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Executive Officers
Our Board of Executive Officers is composed of one Chief Executive Officer (“CEO”) and eight executive
officers. According to our Bylaws, our Board of Executive Officers is responsible for our day-to-day
management. Our executive officers are not required to be Brazilian citizens but must reside in Brazil.
Pursuant to our Bylaws, our Board of Directors elects our executive officers, including the CEO, and must
consider personal qualifications, expertise and specialization when electing executive officers. The mandate
of our executive officers lasts for two years, and no more than three consecutive re-elections are allowed.
Our Board of Directors may remove any executive officer from office at any time and without cause, with a
special procedure for the removal of the Executive Director of Governance and Compliance pursuant to the
Internal Regiment of Board of Directors. According to the Internal Regiment of Board of Directors, in order
to decide on the removal of the Executive Director of Governance and Compliance the Board of Directors
must follow a qualified quorum which requires the vote of the Director elected by the minority shareholders
or the Director elected by the preferred shareholders.
For further information regarding our Board of Executive Officers, see Exhibit 1.1 to this annual report for
a copy of our Bylaws.
As of the date of this annual report, we have the following nine executive officers:
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Additional Information on our Board of Directors and Board of
Executive Officers
Requirements for Election
Our Bylaws determine certain limitations on the election of our executive officers, members of our
management and members of our Board of Directors in addition to criteria set forth by our nomination
policy, Law No. 13,303/16, and Decree No. 8,945/16. Thus, in order to be elected, each of our executive
officers and each member of our Board of Directors must:
not be a defendant in any legal or administrative proceedings concerning a matter related to the
activities to be performed in our company, with an unfavorable ruling by appellate courts;
not have commercial or financial pending issues claimed or included in official debtor registers,
although clarification on such issues may be provided to us;
demonstrate diligence in solving issues raised in reports of internal or external control bodies in
processes and/or activities under their management, when applicable;
not have violated our Code of Ethics, Code of Conduct, Manual of our Program for Corruption
Prevention or other internal rules, when applicable;
not have been included in the disciplinary system of any of our subsidiaries or affiliates, nor have
been subject to labor or administrative penalty in any other legal entity in the last three years as a
result of internal investigations, when applicable; and
have 10 years of experience in leadership, preferably, in business or in a related area, as specified in
our nomination policy.
Compensation
Under our Bylaws, our shareholders establish the aggregate compensation, or allocate the compensation
on an individual basis, payable to our directors, executive officers, members of our Fiscal Council and
advisory committees to our Board of Directors. In case shareholders do not allocate the compensation on
an individual basis, our Board of Directors is allowed to do so.
For the year-ended December 31, 2021, the aggregate amount of compensation we paid to all members of
our Board of Directors and our Board of Executive Officers was US$6.1 million. As of December 31, 2021 we
had nine executive officers and 11 Board of Directors members.
For more information on the amounts set aside or accrued by us to provide pension, retirement or similar
benefits, see “– Employees – Benefits” in this section.
2021
Board of Executive Officers
Board of Directors
Fiscal Council
Average number of members in the period
Average number of paid members in the period
9.00
9.00
10.58
4.5
5.17
5.17
Value of maximum compensation (US$)
562,252.58
32,374,18
32,374,18
Value of minimum compensation (US$) (1)
555,796.58
32,374,18
32.374,18
Average value of compensation (US$) (2)
723,823.67 (3)
31,555.30 (4)
30,507.33 (4)
(1) The value of the minimum individual annual compensation was determined after the exclusion of all members who have held the position
for less than 12 months.
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(2) The average value of compensation corresponds to the total value of the annual compensation paid divided by the average number of
paid members in the period.
(3) The calculation takes into account the values related to the termination of the position (gardening leave) and payment of the deferred
installments of Variable Remuneration referring to former members of the Board of Executive Officers who left the Company.
Consequently, the average value was higher than the value of the maximum compensation.
(4) The paid positions were not fully occupied during the 12 months of the year. Consequently, the average value was lower than the
value of the minimum individual compensation.
For further information regarding compensation of our employees and officers, see Notes 17 and 37 to our
audited consolidated financial statements.
In addition, the members of our Board of Executive Officers receive additional benefits, such as medical
assistance, supplementary social security benefits and a housing allowance.
The members of the Board of Directors are entitled to supplementary social security benefits. Members of
the Board of Directors and the Board of Executive Officers may be legally entitled to gardening leave
(“Quarentena”) upon termination of office, which rules and exceptions are provided by Brazilian law. None
of the Directors are engaged with us or any of our subsidiaries providing for benefits upon termination of
employment. We have a people committee (“COPE”) in the form of an advisory committee.
For information on our advisory committee, see “Statutory Board Committees” below.
Share Ownership
As of December 31, 2021, the members of our Board of Directors, executive officers and members of Fiscal
Council beneficially held the following shares of our capital stock:
Common shares
Preferred shares
Board of Directors
Board of Executive Officers
Fiscal Council
-
4,264
-
63,213
-
400
Accordingly, on an individual basis, and as a group, our Directors, Executive Officers and Fiscal Council
members beneficially owned less than one percent of any class of our shares. The shares held by our
Directors, Executive Officers and Fiscal Council members have the same voting rights as the shares of the
same type and class that are held by our other shareholders. None of our Directors, Executive Officers and
Fiscal Council members holds any options to purchase common shares or preferred shares, nor does any
other person have any option to purchase our common or preferred shares. We do not have a stock option
plan for our Directors, Officers or employees.
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Statutory Board Committees
Our Board of Directors has a total of six statutory advisory committees:
Investment Committee: responsible for advising our Board of Directors with respect to the
definition of our strategic guidelines, the strategic plan, the annual business plan, among other
strategic matters and financial issues. The committee also assists our Board of Directors in
evaluating the structure and conditions of investment and divestment transactions, including new
business opportunities, mergers, consolidations, and spin-offs in which we are involved, and which
are within the responsibility of the Board of Directors. In addition, the committee provides advice to
our Board of Directors on analyzing our annual financing program.
Audit Committee: for further information on our audit committee, please see “Audit Committee” in
this section.
Health, Safety and Environmental Committee: responsible for advising our Board of Directors on
policies and guidelines related to the strategic management of HSE, climate change, transition to a
low carbon economy and social responsibility issues, among other matters. This committee
monitors, among other issues, indicators and research on our image and reputation, related to the
HSE and sustainability matters, suggesting actions when necessary.
People Committee: responsible for assisting our Board of Directors in aspects regarding the
management of senior level human assets, including, but not limited to: compensation (fixed and
variable), appointments and succession policies as well as the selection and eligibility processes. The
People Committee stands in compliance with Brazilian Law No. 13,303/12 and Decree No. 8,945/16,
acting as an eligibility committee for assisting shareholders to nominate members to the Board of
Directors and Fiscal Council and overseeing the implementation of the required background checks
on integrity and compliance regarding of the Board of Directors, Fiscal Council and Executive
Officers nominees, as well as external members of the Board of Directors advisory committees,
having a deliberative role in these cases. The committee advises our Board of Directors on the
possible application of penalties for the Executive Officers and members of the Board of Directors
and its Statutory Advisory Committees and acts as our last resource when our Integrity Committee
does not reach a unanimous decision in a disciplinary procedure. The committee also monitors image
and reputation surveys, recommending actions when necessary.
Minority Committee: responsible for advising our Board of Directors on transactions with related
parties involving, the Brazilian federal government, its entities and foundations, or federal state-
owned enterprises on a permanent basis, including following up the revision process of the Transfer
of Rights Agreement. The minority committee also advises our shareholders issuing its opinion on
certain matters that require approval in shareholders’ meetings, pursuant to article 30, §4 of our
Bylaws.
Conglomerate Audit Committee: approved to meet the requirements of Law No. 13,303/16, which
provides the possibility that controlled companies share the costs and structures of their
corresponding parent companies. The committee is responsible for the companies of the Petrobras
Conglomerate that do not have internal audit committees. In addition, the committee provides
advice to our Board of Directors regarding guidelines for companies of the Petrobras Conglomerate
in matters provided in its bylaws.
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SUMMARY OF THE COMPOSITION OF OUR STATUTORY ADVISORY COMMITTEES, AS OF THE DATE OF
THIS ANNUAL REPORT
Members
Investment
Audit
Health,
Safety, and
Environment
People
Minority
Audit of the
Petrobras
Conglomerate
Committees
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Ana Silvia Corso Matte
Carlo Linkevieius Pereira
Cynthia Santana Silveira
Durval José Soledade Santos
Edson Chil Nobre
Evely Forjaz Loureiro
Marcelo Gasparino da Silva
Marcelo Mesquita de Siqueira Filho
Marcio Andrade Weber
Murilo Marroquim de Souza
Rodrigo de Mesquita Pereira
Rosangela Buzanelli Torres
Ruy Flaks Schneider
Sonia Julia Sulzbeck Villalobos
Tales José Bertozzo Bronzato
Valdir Augusto de Assunção
●
●
●
●
● CHAIRMAN / CHAIRWOMAN OF EACH COMMITTEE
● EXTERNAL MEMBERS OF EACH COMMITTEE
● REMAINING MEMBERS
●
●
●
●
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Audit Committee
Our statutory audit committee is an advisory committee of our Board of Directors, and provides assistance
in matters involving our accounting, internal controls, financial reporting and compliance. Our statutory
audit committee also recommends the appointment of our independent registered accounting firm to our
Board of Directors and evaluates the effectiveness of our internal financial and legal compliance controls.
In accordance with Law No. 13,303/2016 and Decree No. 8,945/2016, our statutory audit committee must
have at least three members, and not more than five members, who must be independent in accordance
with the independence requirements of the Law No. 13,303/2016 and CVM Instruction No. 509/2011 and at
least one of whom must have recognized experience in corporate accounting. Additionally, CVM Instruction
No. 509/2011 requires at least one member of the audit committee to be a board member, although they
permit the appointment of other members who are not members of the Board of Directors provided that
such other members meet the independence requirements of the CVM. On November 30, 2020, our
shareholders approved an amendment to our bylaws requiring our audit committee to be composed of
members of our Board of Directors and external individuals. On March 24, 2021, our Board of Directors
nominated Mr. Valdir Augusto de Assunção as an external member of our audit committee.
Due to its composition, our statutory audit committee is not equivalent to or comparable with a U.S. audit
committee. Pursuant to Exchange Act Rule 10A-3(c)(3), which provides for an exemption under the rules of
the SEC regarding the audit committees of listed companies, a foreign private issuer is not required to have
an audit committee equivalent to or comparable with a U.S. audit committee if the foreign private issuer
has a body established and selected pursuant to home country legal or listing provisions expressly requiring
or permitting such a body, and if the body meets the requirements that (i) it be separate from the full board,
(ii) its members not be elected by management, (iii) no executive officer be a member of the body, and (iv)
home country legal or listing provisions set forth standards for the independence of the members of the
body.
Given that in 2011, the CVM approved an Instruction (No. 509/2011) governing the comitê de auditoria
estatutário (statutory audit committee), an audit committee established under the bylaws of the issuer and
subject to certain requirements under the CVM rules, we understand that our statutory audit committee
complies with these requirements, and we rely on the exemption provided by Rule 10A-3(c)(3) under the
Exchange Act.
Mr. Valdir Augusto de Assunção is our audit committee financial expert. Our audit committee is currently
composed of four members (all independent, in accordance with the independence requirements of the Law
No. 13,303/2016 and CVM Instruction No. 509/2011 and is responsible for, among other matters:
monitoring, analyzing, and making recommendations to our Board of Directors with respect to the
appointment and dismissal of our independent registered accounting firm, as well as evaluating the
independence of our independent registered accounting firm for issuing an opinion on the financial
statements and their qualifications and expertise;
advising our Board of Directors on the review of our annual and quarterly consolidated financial
statements, monitoring compliance with relevant legal and listing requirements and ensuring
appropriate disclosure of our economic and financial situation filed with the CVM and the SEC;
advising our Board of Directors and our management, in consultation with internal and independent
registered accounting firm and our risk management and internal controls units, in monitoring the
quality and integrity of our internal control over financial reporting systems, our audited
consolidated financial statements and related financial disclosures;
reviewing and submitting proposals to our Board of Directors relating to the resolution of conflicts
between management and the independent registered accounting firm relating to our audited
consolidated financial statements;
assessing and monitoring, together with our internal management and audit area, the adequacy of
actions to prevent and combat fraud and corruption;
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evaluating and monitoring, jointly with our management and our internal auditors, our transactions
with related parties, including a review, at least once a year, of all related party transactions and a
previous analysis of related party transactions involving amounts higher than certain levels;
establishing and reviewing procedures for the receipt, retention and processing of complaints
regarding accounting, internal control and auditing matters, including procedures for the
confidential submission of internal and external complaints relating to the scope of the committee’s
activities, as well as receiving, retaining and processing any such complaints;
evaluating the parameters underlying the actuarial calculations, as well as the actuarial result of the
benefit plans maintained by our social security foundation, Fundação Petrobras de Seguridade
Social; and
conducting the formal evaluation of our internal audit executive manager on an annual basis.
For further information relating to potential changes to the composition of our Board of Directors, see
“Management and Employees – Management – Board of Directors” in this annual report.
With respect to the relationship of our audit committee with our independent registered accounting firm,
as provided in our Bylaws, our Board of Directors is responsible for deciding, among other matters, the
appointment and dismissal of independent registered accounting firm, which are prohibited from providing
consulting services to us during the term of an audit’s contract. Our audit committee has the authority to
recommend pre-approval policies and procedures for the engagement of our independent registered
accounting firm’s services. Our management is required to obtain the audit committee’s pre-approval
before engaging independent registered accounting firm to provide any audit or permitted non-audit
services to us or any of our consolidated subsidiaries. Our audit committee has pre-approved a detailed list
of audit services, up to specified monetary thresholds. The list of pre-approved services is updated from
time to time. The audit services that are not included in the list, or that exceed the thresholds specified
therein, must be directly approved by our audit committee. Our audit committee monitors the performance
of the services provided by our independent registered accounting firm and reviews and monitors our
independent registered accounting firm’s independence and objectivity.
Principal accountant fees and services
The following table sets forth the fees billed to us, in US$ million, by our independent registered
accounting firm KPMG Auditores Independentes Ltda.during the fiscal years ended December 31,
2021 and 2020:
Audit fees(1)
Audit-related fees(2)
Tax fees(3)
TOTAL FEES
2021
2020
6.2
0.1
0.4
6.7
6.7
1.2
0.3
8.2
(1) Audit fees comprise fees billed in connection with the audit of our audited consolidated financial statements (IFRS and Brazilian GAAP),
interim reviews (IFRS and Brazilian GAAP), audits of our subsidiaries (IFRS and Brazilian GAAP, among others), consent letters and review
of periodic documents filed with the SEC.
(2) Audit-related fees refer to assurance and related services that are reasonably related to the performance of the audit or reviews of our
audited consolidated financial statements and are not reported under “audit fees.”
(3) Tax fees are fees billed for services related to tax compliance reviews conducted in connection with the audit procedures on our audited
consolidated financial statements.
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230
Additional Information on Members of our Audit Committee
Relying on the exemption set forth in Rule 10A-3(b)(1)(iv)(E), two members of our audit committee, Mr.
Márcio Andrade Weber and Mr. Murilo Marroquim de Souza have been appointed by the Brazilian federal
government, which is our controlling shareholder. In our assessment, Mr. Weber and Mr. Marroquim act
independently in performing the responsibilities of an audit committee as defined in Rule 10A-3 under the
Exchange Act and in accordance with the CVM Rules.
Mr. Rodrigo de Mesquita Pereira is also a member of our audit committee, designated by holders of our
preferred shares. Mr. Pereira is independent, as defined in Law No. 13,303/2016 and CVM Instruction No.
509/2011.
For further information relating to potential changes to the composition of our Board of Directors, see
“Management and Employees – Management – Board of Directors” in this annual report.
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231
Employees
Our workforce is our most important asset. Our people management is based on meritocracy, inclusion,
diversity, dialogue and respect for our employees.
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ANNUAL REPORT AND FORM 20-F | 2021
Our employees by region
(not including our subsidiaries, joint operations or structure entities)
Southeastern Brazil
Northeastern Brazil
Other locations
Total
Our subsidiaries’ employees by region
Southeastern Brazil
Northeastern Brazil
Other locations in Brazil
Abroad
Total
TOTAL
Management and Employees
232
As of December 31,
2021
2020
2019
32,572
34,047
36,077
3,840
4,910
2,291
2,528
7,400
2,939
38,703
41,485
46,416
4,901
5,216
5,697
744
563
621
856
717
776
2,328
2,666
876
6,829
7,565
11,567
45,532
49,050
57,983
We attract and retain talented employees by offering competitive benefits and participation in a variable
compensation program, as well as the possibility for professional growth and development based on
performance and meritocracy in addition to monthly compensation.
The table below sets forth the main expenses related to our employees for the last three years:
Salaries, accrued vacations and related charges
Employee training
Profit-sharing distributions
Variable compensation program
US$ million
2021
2,665
8
125
469
2020
3,064
6
7
439
2019
4,313
49
43
643
For more information on profit-sharing distributions and variable compensation program see respectively
“ – Labor Relations” and “ – Employees Variable Compensation” in this annual report.
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Workforce
One of the main current and future challenges for our people management is to ensure the continuous
adequacy of our workforce to the business portfolio.
At the end of 2020, we implemented a new headcount planning methodology, called optimal headcount,
which aims to determine our workforce needs, considering operational safety and projects requirements.
The main goals of the new methodology is to focus on optimizing overhead and meeting business needs.
In addition, we seek to implement the following initiatives to adapt our current workforce to our strategies:
improvement of internal workforce mobility practices; flexibility for our portfolio management strategy;
training and continuing education programs related to mobility programs; analysis of impacts and costs;
critical thinking; knowledge management; and improvement of our workforce profile. These programs,
which facilitate the increase of productivity and optimize processes, will also allow us to better adjust our
workforce to our business needs.
Employees are one of the most important intangible assets to us and the ability to attract qualified and
talented employees, as well as retain and nurture internal talent is critical to our success and sustainability.
We focus on attracting the best talent without neglecting our internal talents that have grown with the
company, understand the organization, its mission and culture.
In order to meet workforce needs, we prioritize the filling of open positions internally, through organized
internal career mobility processes to retain talent and reduce external hiring costs.
We also have been hiring external employees through different recruitment processes. In order to
determine the number of new employees, we consider both our business needs and our current vacancies.
In 2021, 7,326 open positions were filled internally, representing 98.8% of the total amount of vacancies.
As one of the measures adopted to achieve our workforce needs, after three years without conducting a
public recruitment processes (PSP), in 2021 we launched a PSP to fill 757 vacancies, with 8% of vacancies
reserved for disabled people. We had approximately 212,000 applicants and the PSP is expected to be
completed in the first half of 2022. In 2021, a total of 90 employees were hired, of which 90% were hired
through public recruitment processes from previous years.
Another important tool adopted for workforce adjustments is the Voluntary Severance Program (“PDV”). In
2021, 2,579 employees left the company through the Incentive Retirement Program (“PAI”) and the three
PDVs, differentiated by target audience: (i) PDV 2019, focused on retired employees, (ii) a program for
employees of certain areas undergoing divestment processes and (iii) one focused on administrative
employees.
In total, 2,847 employees left the company in 2021, of which 2,702 were voluntary dismissals (includes PDVs
and other types of dismissals).
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Management and Employees
234
As the number of dismissals exceeded the number of our new employees in the last several years, the range
distribution of our employees by time spent at our company, as well as the age pyramid, underwent
significant changes. These changes promoted a more balanced professional profile distribution by
seniority. Our current workforce profile is appropriate for our growth in terms of knowledge and talent
management, which we believe ensures competitive advantage and value to our business.
TIME IN PETROBRAS (not including our subsidiaries, joint operations or structure entities) (%)
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235
Labor Relations
We respect the freedom of association and recognize the right to collective bargaining, as recommended
by United Nations Global Pact. This commitment is reinforced by our Human Resources Policy, which
determines the implementation of sustainable agreements built through dialogue, ethics and transparency
with employee representatives, and by our Code of Ethical Conduct which ensures freedom of union
association. We also follow the International Labor Organization (“ILO”) conventions ratified by Brazil.
We maintain relationships with 17 trade unions and two federations (i.e., a top-level union entity) of oil
workers, as well as eight unions and one federation of maritime workers. We value our relationships with all
our stakeholders, including trade unions. For this reason, we invest in open dialog and maintain a permanent
bargaining process. As of December 31, 2021, 41% of our employees were unionized.
We have a Collective Bargaining Agreement (“2020-2022 CBA”) with all of the oil and maritime trade unions,
valid for two years, until August 2022. These agreements include economic and social provisions relating to
work, safety conditions, benefits, and other matters. In 2020, there was a negotiation regarding the
automatic adjustment of wages and benefits by the cost-of-living index in 2021.
We also set several Individual Employment Agreements with employees who desire this format of
agreement and meet the minimum requirements determined by law. In the past years we have used a two-
year term agreement that covers the same conditions offered in our CBA.
Currently, 92% of our employees are covered by collective bargaining agreements and 8% of our employees
are under individual employment agreements.
In 2021, we increased the salaries and benefits of oil and maritime employees by 10.42% and 11.08%,
respectively, according to the conditions negotiated and established in the 2020-2022 CBA.
We also have a Profit Sharing Program (“PLR”) Agreement valid for 2021 and 2022, which determines the
rules regarding profit sharing payment.
Another right defined in Brazilian legislation is the power of employees to embrace their causes and
promote strikes under the principles defined by law. We respect the right to strike but maintain our
activities in full operation using contingency plans. The contingency plans represent are the way we can deal
with several types of situation, being a and backup plans for operational continuity we may use in case of
unexpected situations.
Benefits
Employees Variable Compensation
We adopt a compensation policy in line with market practices in which we operate.
Performance Award Program
Since 2019 we have used the Performance Award Program (“PPP”), a variable remuneration model for all
employees. In line with our Strategic Plan, the PPP aims to align the interest between shareholders,
executives, career and non-career employees, encourage result-oriented behavior, variable compensation
based on results achieved, variable remuneration for task delivery (meritocracy) and contribution to
attracting and retaining talent.
In the 2020 fiscal year, the PPP was activated after compliance with the established minimum prerequisites:
For employees, the PPP was triggered by the achievement of positive net income for the year,
excluding the impacts of impairment and exchange variation contained in our net financial result.
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For the members of the Executive Board, the activation was triggered by the achievement of positive
net income during the 2020 fiscal year.
As a result, US$461 million was provisioned as of December 31, 2021, to be paid after approval during the
next Annual General Meeting.
During 2021, the scorecards of the organizational units continued to be considered as input for the
assessment of members of the board, executive managers and other members of our general structure,
which are reflected in the calculation of variable remuneration. As in 2020, these scorecards include the
following items: (i) the results of our main metrics such as: Gross Debt (corresponds to the total outstanding
balance of contracted debts), Delta EVA® (Economic Value Added - measures the economic profit in a given
period minus the cost of invested capital from its operating profit), IGEE (Monitors our performance in
relation to the direct emission of greenhouse gases into the atmosphere) and VAZO (calculates the total
volume of oil leaked in occurrences with volume above one barrel and which reached bodies of water or non-
impermeable soil); (ii) the scores of specific metrics of each executive scorecard (represented by specific
indicators and strategic initiatives that address economic, environmental and social factors); and (iii)
discretionary assessment made by the immediate superior according to the employee's profile and
performance.
The higher the hierarchical level, the greater the weight of the top metrics and, therefore, the multiple
remunerations associated with the award reflecting the greater degree of responsibility of the manager in
relation to the metrics of his or her area and to our performance metrics.
As approved by our Board of Directors and SEST, program payments will be deferred over five years as a
long-term incentive (“LTI”) for members of the Executive Board (President and Directors) and, since the
2020 fiscal year, for our Executive Managers and General Managers. The value of such payments will be
based on the market value of our shares without factoring in any option to buy our shares. Consequently,
Executive Board and Management payments will be carried out as follows: 60% of the value of the Program
will be paid in a cash installment while 40% of the balance will be settled in four annual deferred
installments, the value of which will be symbolically converted into the corresponding number of our
common shares (PETR3), using as a base value their weighted average during the last 60 trading sessions
of the applicable fiscal year. The President, Executive Director, Executive Managers or General Managers
may exercise the right to receive deferred installments after the established grace periods have been
fulfilled. The value of each installment will be equivalent to the conversion of symbolic shares into cash
value based on the weighted average of our common shares during the last 20 trading sessions prior to the
request date.
Profit Sharing Program (“PLR”)
We also have a Profit Sharing Program (“PLR”) agreement for the 2021-2022 period for all employees who
do not hold leadership and specialist roles (i.e., it would not include individuals holding positions such as
managers, specialists and supervisors). The amount provisioned for fiscal year 2021 is equivalent to
US$106.8 million (R$596.2 million) and will be paid in 2022.
For the payment of the PLR to occur, the following conditions must be met:
Dividend distribution approval by the Annual General Meeting;
Net Income Calculation of the reference year; and
Achievement of an average percentage (weighted) of at least 80% for target indicators established
by the Board of Directors in the PLR agreement.
For the 2020 fiscal year, the PLR only applied to maritime employees, since only their unions accepted the
proposal, although it was offered to all unions that represent our employees. In June 2021, the amount of
profit sharing paid to maritime employees was approximately US$169,447.00 (R$896,500,00) corresponding
to the results obtained in fiscal year 2020.
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Management and Employees
237
Main Benefits Granted to Employees
We offer benefits that are commensurate with our size and seek to value our employees. All of our
employees are entitled to the same benefits, regardless of their positions or duties. There are no
differences between the benefit plans and contribution rates of the highest governance body, senior
executives and all other employees. We offer complementary pension plans, medical assistance and
pharmacy benefits. In addition, some of our consolidated subsidiaries have their own benefit plans.
Pension Plans
Until March 2018, we sponsored two pension plans: (i) the Plano Petros do Sistema Petrobras (“PPSP”), a
defined-benefit plan closed to new members, and (ii) the Petros-2 Plan (“Petros 2”), a variable contribution
plan (mixed type plan that combines defined benefit and defined contribution characteristics), open and in
force since 2007, and managed by Petrobras Social Security Foundation – Petros.
In April 2018, the PPSP was split up into two plans: (i) one made up of employees and pensioners, who
adhered to the new rules of the plan in 2006, 2007 and 2012 (“PPSP-Renegotiated”) and (ii) one for those
employees and pensioners that did not adhere (“PPSP-Not Renegotiated”). In December 2019, once again,
the PPSP-Renegotiated and PPSP-Not Renegotiated plans were split into two new plans each: (i) one for
employees and pensioners who joined the plan before 1970 and (ii) one for employees and pensioners who
joined the plan after 1970.
In August 2021, Petros, after attesting to its economic viability, started the operation of the new Petros-3
Plan (“Petros 3”). This is a defined contribution plan, originated from the voluntary option of the PPSP-
Renegotiated and PPSP-Not Renegotiated plans participants both for employees and retired employees
who joined the PPSP plan after 1970. At the end of the option process, the Petros 3 plan had a total of 2,174
participants.
Thus, there are currently six pension plans in place: four defined-benefit plans, one variable contribution
plan and one defined contribution plan which, together, cover 96% of our employees.
Equalization of Petros Plans
The main purpose of our pension plans is to supplement the social security pension benefits of our
retired employees. Thus, our employees make mandatory monthly contributions as participants of
our plans, and we do the same as sponsors.
In March 2020, our Board of Directors deliberated on a new equalization plan (“New DEP”) of the
PPSP-Renegotiated and PPSP-Not Renegotiated, managed by Petros and in compliance with
Brazilian social security legislation.
The New DEP, approved in May 2020 by PREVIC and SEST, came into effect in June 2020. It replaced
the DEP 2015, mitigated the deficit registered in 2018, considered the utilization of the plans’
actuarial results achieved in 2019, and the actuarial impacts related to changes in PPSP-
Renegotiated and PPSP-Not Renegotiated plans regulations, which was approved by the Board of
Directors, in compliance with new Brazilian social security legislation, which allowed the deficit to be
refinanced for a new term, throughout the life of the plans.
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The remaining balance to be settled by the extraordinary contributions contracted through the New
DEP in the PPSP-Renegotiated and PPSP-Not Renegotiated plans was US$ 2.9 billion as of
December 31, 2021, as recorded in Petros plans balance sheets at present value.
The effects of the New DEP on our financial statements have been accounted for since the second
quarter of 2020, when the New DEP was approved.
In 2021, due to the adverse economic scenario, the final projection is for negative profitability for
all PPSPs. The PP2 plan, on the other hand, has been showing positive profitability, but below the
actuarial targets also due, especially, to the challenging market environment.
Petros will carry out solvency assessments of the plans in compliance with the procedures guided
by the applicable rule and, in each specific case, will indicate the most appropriate measures for the
treatment of results in order to contribute to the economic and actuarial stability of the plans
managed by Petros.
By any means in our liability management process we continuously monitor opportunities related
to pension liability management
For more information on the New DEP, see Note 17.3 to our audited consolidated financial
statements.
The table below presents the benefits paid, contributions made, and outstanding pension liabilities for the
years ended December 31, 2021, 2020 and 2019:
Total benefits paid – pension plans
Total contributions – pension plans(1)
Net actuarial liabilities(2)
US$ million
2021
1,336
2,100
2020
1,185
917
2019
1,552
1,682
5,395
10,286
14,508
(1) Contributions of sponsors, including defined contributions recognized in the statement of income (PP-2 and PP-3).
(2) Unfunded pension plans obligations.
For more information on the Petros plan, see “Risks – Risk Factors” in this annual report and Notes 4.4 and
17 to our audited consolidated financial statements.
Health and Pharmacy Benefit Plan
We offer a supplementary health care plan, the Saúde Petrobras, which provides for medical, hospital and
dental care services to all active and retired employees and their dependents, through the co-participation
of all the health care plan participants.
Since April 2021, the Saúde Petrobras plan has been operated through a non-profit association called
Associação Petrobras de Saúde (“APS”). This new management model was created to provide greater
corporate security with technology, governance and compliance, through professional management and
with expertise in supplementary health. The purpose is to improve the quality of services and assistance to
beneficiaries, as well bring more transparency in their administration, cost efficiency and risk segregation,
without any changes to the benefits and scope under the plan.
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239
During 2021, we had to absorb 60% of these costs and 40% must be paid by health insurance associates.
The agreement settled with unions that represents our employees provides that this cost ratio will be
maintained until a new agreement is established.
An independent actuary consultant calculates our commitment related to future benefits for plan
participants on an annual basis, based on the projected unit credit method. The health care plan is not
funded or otherwise collateralized by assets. Instead, we make benefit payments based on annual costs
incurred by plan participants.
The Saúde Petrobras benefit also offers coverage of complementary programs, such as the Benefício
Farmácia program. This program only covers drugs from a predefined list of chronic or psychiatric diseases.
By choosing to use the Benefício Farmácia, the beneficiary must incur costs as determined in the co-
participation system.
The table below shows the post-employment benefits paid and outstanding medical liabilities for the years
ended December 31, 2021, 2020 and 2019:
Total benefits paid – medical plan(1)
Net actuarial liabilities(2)
(1) Composed of Saúde Petrobras and Benefício Farmácia amounts.
(2) Unfunded medical plan obligations.
US$ million
2021
309
2020
310
2019
442
4,485
5,356
11,986
For more information on our employee benefits, see Notes 4.4 and 17 to our audited consolidated financial
statements and “Risks – Risk Factors” in this annual report.
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Environment, Social and Governance
240
Compliance and
Internal Controls
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Compliance and Internal Controls
241
Compliance
Ethical principles guide our business and our relations with third parties. Our activities follow clearly
articulated policies, standards, and procedures that have been formally established by us. These policies
and procedures are communicated to all employees and accessible from any company device, with our main
corporate policies also available on our website. The information on our website is not and shall not be
deemed to be incorporated into this annual report.
We have continually worked to strengthen our Integrity System. We have a Code of Ethical Conduct that
provides guidance on the commitments and conduct that we require from our personnel. The Code of
Ethical Conduct increases the focus on our values and commitments, providing tools for self-reflection to
help employees to comply with our ethical principles while performing their duties.
In order to integrate and strengthen our Integrity System, in addition to our Code of Ethical Conduct we
highlight our corporate Compliance Policy, our Guide to Ethical Conduct for Suppliers and our Petrobras
Corruption Prevention Program (“PCPP”).
To ensure an ethical environment for our business, we work to promote a culture of integrity, the
prevention, detection and correction of incidents, including fraud, corruption, conflict of interests and
money laundering, the management of our internal controls and the integrity analysis of managers and
counterparts.
We offer training for all our employees, particularly employees working on activities with greater exposure
to compliance risks, as well as the members of our Board of Executive Officers and our Board of Directors.
In 2021, we launched the Conflict of Interest Prevention Course with the goal of disseminating a culture of
integrity. By December 30, 2021, this e-learning training was completed by 37,985 employees or 99.6% of
all our personnel. Through practical examples and real cases, the training helps to identify and prevent
situations of conflicts of interest in a clear and didactic way. It also teaches how we should act on a daily
basis and how to use the available consultation tools. Training was made available and is mandatory to all
our employees, including managers and senior management.
In 2021, we also provided training sessions to directors and executive officers, covering mainly the following
topics:
Code of Ethical Conduct;
Our corporate governance and decision-making process;
Compliance, internal controls and related party transactions;
Risk management;
Business performance;
Brazilian anti-corruption law;
Antitrust Compliance;
Environmental, Social and Governance; and
Information security.
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Compliance and Internal Controls
242
Code of Ethical Conduct
Created in 2020, our Code of Ethical Conduct is an improvement of the “Code of Ethics” and the “Conduct
Guide,” which were merged. The unification of the previous documents is a simple approach, improving the
organization’s values, the principles and conduct it expects, promoting elements such as trust,
transparency, responsibility, innovation, meritocracy, and best market practices.
Our Code of Ethical Conduct defines the ethical principles that guide our system’s actions and our conduct
commitments, both corporate and that of our employees, explaining the ethical sense of our mission, of our
vision, and of our Strategic Plan.
The Code of Ethical Conduct also applies to the members of the Board of Directors and its advisory
committees, members of the Fiscal Council, members of the Executive Board, employees, interns, service
providers and anyone acting on our behalf, including our subsidiaries in Brazil and abroad.
The Code of Ethical Conduct is aligned with the best corporate integrity practices and represents another
step towards strengthening our integrity culture. It is based on our values such as respect for life, people
and the environment, ethics and transparency, resilience and trust, market orientation and results. Based
on these values, the three main principles that support the guidelines of the Code of Ethical Conduct are:
Respect for life, people and the environment;
Integrity, transparency and meritocracy; and
Value addition.
Our commitments of conduct are: example, accountability, trust, courage, union, cooperation, innovation,
continuous improvement, results, reputation and transparency.
Our Code of Ethical Conduct is available on our website. The information on our website is not and shall not
be deemed to be incorporated into this annual report.
Compliance Policy
The purpose of the Compliance Policy is to ensure that we comply with the laws and rules of regulatory
bodies, acting to correct and prevent misconduct.
Drafted in 2014, the Compliance Policy was updated in 2020 with principles and guidelines approved by our
Board of Directors. The five principles that guide our compliance actions are:
All our business and relationships must be guided by the highest values of ethics, integrity and
transparency, following all national and international standards and laws, and with zero tolerance
for any type of misconduct.
Our vision, mission, strategies, goals, operations, processes, and activities must reflect our
commitment to compliance actions, providing a safe environment for decision making. Our goal is to
be a reference in ethics, integrity and transparency in Brazil and worldwide.
Our actions must be preventive as a priority, to inhibit violations of the rules and reduce the risk of
misconduct, such as fraud, corruption, money laundering and financing of terrorism.
All indications of misconduct must be investigated and measures adopted for the immediate
interruption and repair of any damage to the company, generating proportional consequences for
those responsible.
Our actions must convey credibility and act as a positive example to companies and society,
exercising leadership in the promotion of a business environment that is increasingly more ethical,
honest and transparent, aligned with high performance and our values.
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243
Ethical Conduct Guide for Suppliers
Created in 2020, our Ethical Conduct Guide for Suppliers is the first document exclusively aimed at our
suppliers, with guidelines on expected values and ethical behavior. It applies to all suppliers, in Brazil or
abroad, that are involved in business processes and have signed contracts, agreements and terms of
cooperation with us. The Ethical Conduct Guide for Suppliers reaffirms our zero tolerance to any form of
fraud and corruption, demanding the same stance from our supply chain, and was elaborated in accordance
with the best international practices and is aligned with the guidelines of the Dow Jones Sustainability
Index, the B3 Corporate Sustainability Index and the Corporate Human Rights Benchmark. The Ethical
Conduct Guide for Suppliers reinforces that suppliers must promote decent and safe working conditions for
their employees, combat child and slavery labor and respect the environment. It also determines that
suppliers must promote diversity, gender and racial equality and the inclusion of people with disabilities.
The Ethical Conduct Guide for Suppliers brings an evolution by consolidating the principles and ethical
guidelines applicable to suppliers in a single document. The observance of this Ethical Conduct Guide by all
suppliers is crucial for us to achieve our goals in an ethical and transparent way and is aligned with our ESG
standards. Therefore, we monitor suppliers' compliance through the performance management system, as
reinforced
found at
https://canalfornecedor.petrobras.com.br/en. The information on this website is not and shall not be
deemed to be incorporated by reference into this annual report.
for Suppliers which can be
released Quality Guide
in our
recent
Petrobras Corruption Prevention Program
The Petrobras Corruption Prevention Program (“PCPP”) is another document that is part of our Integrity
System. The PCPP is based on continuous actions of prevention, detection and correction of misconducts,
including fraud, corruption and money laundering.
The program targets our various stakeholders, including senior management, workforce, clients, suppliers,
investors, partners, sponsored entities, government and those who relate to and/or represent our interests
in the Company’s business relations.
Together with the Code of Ethical Conduct and the Compliance Policy of Petrobras, the Program contributes
to the commitment of everyone in preventing and fighting against fraud, corruption and money laundering.
Ethics Commission
Our ethics commission acts as a forum for discussion of subjects related to ethics. It also serves in an
advisory capacity to our management and workforce, providing recommendations with respect to topics
related to ethics management issues, proposing rules for the incorporation of new concepts, and adopting
measures to comply with legislation and following best practices that reinforce our zero tolerance approach
to acts of misconduct.
Our ethics commission is composed of employees appointed after an internal selection process consisting
of background checks and interviews. Our Board of Directors and our Board of Executive Officers approve
each new appointment.
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244
Related Party Transactions
In October 2021, in order to comply with Brazilian legislation, as Law No. 13,303/16, Decree No. 8,945/16
and the CVM regulation, our Board of Directors approved the annual review of our policy for related party
transactions, aiming at fostering transparency in our procedures, conducting better corporate governance
practices. This policy also aims to guarantee the adequate and diligent decision-making process by our
management, observing market conditions or appropriate compensatory payment, in the event of potential
conflicts of interest.
Any related-party transaction in which we are involved and that meets the criteria established in our policy,
must be previously analyzed by our audit committee, which has to report its conclusions to our Board of
Directors on a monthly basis.
Our policy provides for a strict governance procedure for proposed transactions directly or indirectly
involving our controlling shareholder. In the specific case of transactions with related parties involving the
Federal government, its autarchies, foundations and federal state-owned companies, the latter when
classified as outside the normal course of business of the Company by our audit committee, which are within
the scope of approval of our Board of Directors, must observe the following special procedure: (i) be
analyzed by the audit committee and by the minority committee prior to submission to our Board of
Directors, (ii) fall within the purview of our Board of Directors for approval. Any such transaction must be
approved by two-thirds of the members present at our Board of Directors meeting.
For additional information regarding our outstanding related party transactions as of December 31, 2021,
see Note 37 to our audited consolidated financial statements.
Transactions with our Board of Directors or Executive Officers
Direct transactions with the companies of members of our Board of Directors or our executive officers must
follow the conditions of a commercial transaction and market practice guiding transactions with third
parties. None of our Board of Directors members, our executive officers or close members of their families
has had any direct interest in any transaction we effected that is or was unusual in its nature or conditions,
or material to our business during the year, and which remains in any way outstanding or unperformed.
From the preceding financial year until February 28, 2022, we have not entered into any transaction with
related parties which is or was unusual in its nature or conditions. We have no outstanding loans or
guarantees to the members of our board of directors, executive officers, key management personnel or any
close member of their families.
For a description of the shares beneficially held by the members of our board of directors and close
members of their families, see “Management and Employees – Management – Additional Information on
our Board of Directors and Board of Executive Officers – Share Ownership” in this annual report.
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Transactions with the Brazilian Federal Government
We have engaged, and expect to continue to engage, in the ordinary course of business in numerous
transactions with our controlling shareholder, the Brazilian federal government, and with banks and other
entities under its control, including financing and banking, asset management and other transactions.
These transactions resulted in a net asset of US$9,076 million due from the Brazilian federal government
and other entities under its control as of December 31, 2021.
On November 30, 2020, there was a final decision in relation to the Petroleum and Alcohol Account lawsuit
filed in 2011. As of December 31, 2021, this receivable amounted to US$506 million.
In 2021, constitutional amendments changed the form of payment of judicial debts by the Brazilian Federal
Government (precatórios), establishing that there will be a limit for annual payments until the end of 2026,
including budgetary limitations. Consequently, we expect to receive the amounts of the Petroleum and
Alcohol Accounts between 2022 and 2027, depending on the yearly budgetary limitations of the Brazilian
federal government.
In addition, we are allowed to invest in securities issued by the Brazilian federal government, provided that
the legal and regulatory requirements are met and taking into consideration market’s best practices and
the conservatism that should guide our investments.
As of December 31, 2021, the balance of securities issued by the Brazilian federal government that have
been directly acquired and held by us amounted to US$1,446 million.
For further information on related party transactions, see Note 37 to our audited consolidated financial
statements.
Transactions with associates
On December 29, 2021, we signed five contracts with our associate Braskem for the sale and purchase of
petrochemicals products. These contracts amount to US$7.5 billion, equivalent to the remaining values of
the prior contracts that were canceled. The new contracts are effective as of January 1, 2022 with maturities
between May 2026 and December 2029.
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Controls and Procedures
Disclosure Controls and Procedures
We, together with our CEO and CFO, have evaluated the effectiveness of our disclosure controls and
procedures as of December 31, 2021. Our CEO and CFO concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that the information we are required to disclose
in the reports that we file or submit under the Exchange Act was being recorded, processed, summarized
and reported within the time periods specified in the applicable rules and forms. They also concluded that
such disclosure was compiled for and communicated to our management, including our CEO and CFO, as
appropriate, to allow for timely decisions regarding the required disclosure.
Although we have faced the Covid-19 pandemic and, as a consequence, have adopted preventive measures,
the effects of the Covid-19 pandemic did not materially affect our internal control over financial reporting.
For more information, see “Business Environmental, Social and Governance — Our responses to the Covid-
19 Pandemic” in this annual report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing, adequately maintaining and assessing the effectiveness
of internal control over financial reporting. Such internal control is a process designed by, or under the
supervision of our CEO and CFO, and effected by our board of directors, management and other employees.
The internal control over financial reporting is designed to provide reasonable assurances regarding the
reliability of financial reporting and of the preparation of our consolidated financial statements for external
purposes, in accordance with IFRS, as issued by the IASB.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. In addition, projections of any evaluation of effectiveness of internal control over financial
reporting to future periods are subject to the risk of becoming inadequate because of changes in its
conditions and assumptions.
Our management has assessed the effectiveness of our internal control over financial reporting as of
December 31, 2021 based on the criteria established in “Internal Controls – Integrated Framework (2013)”
issued by the Committee of Sponsoring Organizations of Treadway Commission (“COSO”). Our
management has concluded that our internal control over financial reporting was effective.
Audit of the Effectiveness of Internal Control over Financial
Reporting
Our independent registered accounting firm has audited the effectiveness of our internal control over
financial reporting as of December 31, 2021, as stated in their report, which is included herein.
Changes in Internal Control over Financial Reporting
Since April 2021, our supplementary health care plan has been operated through a non-profit association
(APS) and, as a consequence, controls related to its activities have been executed by APS, under our
supervision. There were no other significant changes during the fiscal year 2021 that have materially
affected or are reasonably likely to materially affect our internal control over financial reporting.
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Ombudsman and Internal Investigations
Our general ombudsman office provides channels for receiving comments from our internal and external
audience, such as complaints, requests for information, general requests, suggestions, compliments and
denouncements.
In order to receive complaints, we provide a specific denouncement channel, operated by an independent
external company, and allowing for anonymity of the informants.
All complaints received through the whistleblower channel are forwarded to the ombudsman’s office, which
analyzes, classifies, and directs them to the relevant office for follow-up. Allegations regarding compliance
issues, which include fraud, corruption and other matters, are sent to the governance and compliance office,
which has full access, independence, qualification and autonomy to thoroughly investigate allegations of
this nature.
Upon the conclusion of each investigation, we use any material findings to improve our compliance efforts.
If the findings in some instances indicate that any of our current or former employees did not comply with
certain internal policies, the matter is submitted to the integrity committee, a collegial body that acts
independently and reports to the Board of Directors, and appropriate disciplinary measures and remedial
actions may apply (or are taken, according with applicable labor laws and internal policies).
We continue to fully cooperate with Brazilian and U.S. authorities, even though the Non-Prosecution
Agreement with the DoJ terminated in September 2021 (See “Legal and Tax – Legal Proceedings –
Investigations Carried out by Authorities” in this annual report), in an effort to uncover wrongdoing and
hold those responsible accountable. We continue to allocate significant resources to investigating
allegations of misconduct and responding appropriately to investigative findings. We continue to improve
our internal investigation procedures to ensure that investigations are conducted completely and
efficiently and that disciplinary measures are imposed fairly, uniformly and promptly.
Irrespective of the findings of our internal investigations, in order to mitigate potential risks of further non-
compliance with our internal policies, we continue to develop and implement a number of measures aimed
at improving corporate governance, our management of processes and risk management and controls,
including those related to fraud and corruption.
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248
Shareholder
Information
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Listing
Shareholder Information
249
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250
Corporate Governance of B3 – Level 2
Since 2018, we have been listed in the corporate governance Level 2 listing segment of the B3. Below
are some of our corporate governance practices due to our listing on the Level 2 listing segment:
the attributions of our minority committee are expanded;
our Board of Directors is composed of at least 40% independent members;
we disclose an annual calendar of corporate events;
we must assure 100% of tag along to holders of our preferred shares – under the same
conditions granted to holders of our common shares; and
we provide an arbitration procedure for matters arising from, and relating to, Level 2
rules and regulation.
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251
Shares and Shareholders
Our capital stock is composed of common and preferred shares, all without par value and denominated in
reais. Under Brazilian Corporate Law, the number of our preferred shares may not exceed two-thirds of the
total number of our shares.
Our shares are negotiated on the B3 and registered in book-entry form. Banco Bradesco performs services
of safekeeping and transfer of shares.
Holders of our common shares are entitled to one voting right for each unit of common shares held. Holders
of our preferred shares are not entitled to voting rights, except for: (i) the right to appoint one member of
our Board of Directors and one member of our Fiscal Council; and (ii) certain matters relating to preferred
shares (such as creation, increasing, changes in the preferences or creation of a new class), whenever rights
of holders of preferred shares are adversely affected.
In the U.S., our common or preferred shares, which are evidenced by ADRs, are listed in the form of ADSs on
the NYSE. The ADSs are registered and delivered by a depositary bank, JPMorgan Chase Bank, N.A
(“JPMorgan” or “Depositary”) which, since January 2, 2020, acts as the depositary for both of our common
and preferred ADSs. The ratio of ADR to our common and preferred shares is two shares to one ADR.
The rights of ADS holders differ from shareholders’ rights. With respect to voting rights, ADS holders may
only vote by means of proxy voting cards mailed to the ADR depositary bank while shareholders have the
right to vote directly at the shareholders’ meeting.
On December 31, 2021, there were 1,987,233,964 outstanding common shares and 590,961,930 outstanding
preferred shares represented by ADSs. There has been no change in the past five fiscal years in the amount
of our issued share capital, as well as in the number of our common and preferred shares or in the voting
rights of our common and preferred shares. See Exhibit 1.1 to this annual report for a copy of our Bylaws.
In the beginning of 2022, our stock value increased, and as of March 29, 2022, our stock price was US$14.49
(PBR) and US$ 13.58 (PBR/A). In 2021, our stock value was nearly flat, despite the rising Brent prices and
improvements in our financial and operational performance. Our stock outperformed IBOV at B3 and
underperformed AMEXOIL at NYSE. In 2020, our stock value was affected by the impact of Covid-19
pandemic and Brent prices reduction, underperforming the IBOV at the B3. Our stock value increased in
2019 and outperformed our peers at the NYSE (Amex Oil index or AMEXOIL), as well as performed slightly
below the Ibovespa index (or IBOV) at the B3.
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The following table sets forth information concerning the ownership of our common and preferred shares
as of February 28, 2022, by the Brazilian federal government and certain public sector entities:
Shareholders
Brazilian federal
government
BNDES
BNDES Participações
S.A. – BNDESPar
All members of our
Board of Directors,
Executive Officers and
members of our Fiscal
Council (permanent
and alternate) (28
people in total)
Others
TOTAL
Common
Shares
%
Preferred
Shares
%
Total Shares
%
3,740,470,811
50.26
—
—
3,740,470,811
28.67
—
—
—
—
135,248,258
2.41
135,248,258
1.04
900,210,496
16.07
900,210,496
6.90
—
—
67,877
0.00
67,877
0.00
3,701,983,331
49.74
4,566,516,157
81.52
8,268,499,488
63.39
7,442,454,142
100.00
5,602,042,788
100.00
13,044,496,930
100.00
For detailed information on the shares held by the members of our Board of Directors, Executive Officers
and members of our Fiscal Council, see “Management and Employees” in this annual report.
Under Brazilian Corporate Law and Law No. 13,303/16, the Brazilian federal government is required to own
at least a majority of our voting shares.
Although the Brazilian federal government does not have different voting rights than our other
shareholders, as long as it holds a majority of our voting share, any change in our control would require a
change in applicable laws. Our Bylaws also provide for rules applicable to any eventual transfer of control
of our major shareholders.
The majority of our voting shares also gives the Brazilian federal government the right to elect a majority
of our directors, regardless of the rights our minority shareholders may have to such election according to
our Bylaws.
Additionally, our Bylaws clearly state that we may have our activities guided by the Brazilian federal
government in order to contribute to the public interest that justified our creation. However, if the Brazilian
federal government’s guidelines lead us to undertake obligations and responsibilities under conditions
different from those of any other company in the private sector that operates in the same market, such
obligations and responsibilities shall be defined in law or regulation and shall have their costs and revenues
broken down and disclosed. In addition, the Brazilian federal government shall compensate us, at each fiscal
year, for the difference between market conditions and the operational result or economic return from such
obligation.
Our shareholding base includes over 800,000 shareholders at the B3 and ADR accounts at the NYSE.
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TOTAL CAPITAL (1) (%)
NON-VOTING CAPITAL (1) (%)
Shareholder Information
254
VOTING CAPITAL (1) (%)
The majority of our voting
rights are held by the
Brazilian federal government,
which holds 50.26% of our
shares with voting rights.
(1)
Information about our shareholders as of February 28, 2022.
Pursuant to CVM rules, any (i) direct or indirect controlling shareholder, (ii) shareholder who has elected
members of a Brazilian public company’s Board of Directors or Fiscal Council, and (iii) person or group of
persons representing the same interest, in each case that has directly or indirectly acquired or sold an
interest that exceeds (either upward or downward) the threshold of 5%, or any multiple thereof, of the total
number of shares of any type or class, must be disclosed by such Brazilian public company, immediately
after the acquisition or sale of shares, to the CVM and the B3.
Self-Dealing Restrictions
In accordance with our Relevant Act or Fact Disclosure and Negotiation of Securities Policy, the trading by
us or any related party of securities issued by us, our subsidiaries or our associates (that are public
companies) is forbidden, in the following periods:
(i) 15 days before the disclosure of our quarterly information and annual information; and (ii) in the period
between the decision taken by the competent corporate body to increase or reduce the share capital, to
distribute dividends, bonus shares or issue other securities by us, and the publication of the respective
notices or announcements.
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Our directors, the members of our audit committee, their respective alternates and members with any
technical or advisory functions created by provisions of our Bylaws, are obliged to inform us in the event of
ownership and trading of securities issued by us or our subsidiaries, which are public companies. They
should also indicate the securities issued by us and/or our subsidiaries, which are public companies, owned
by related persons.
Dispute Resolution
As a company listed on the B3’s Level 2, our Bylaws provide for mandatory dispute resolution, by means of
arbitration before the Câmara de Arbitragem do Mercado, or the Market Arbitration Chamber, concerning
any dispute or controversies that may arise among us, our shareholders, our management and members of
our Fiscal Council, related to or arising from the application, validity, effectiveness, interpretation, violation
and effects of the provisions contained in the applicable Brazilian law, regulations and our Bylaws.
Entities that are part of the direct and indirect public administration, as our company and our controlling
shareholder, may use arbitration as a dispute resolution mechanism only for disputes involving negotiable
economic rights. As a result, such entities cannot submit to arbitration any rights deemed non-negotiable
under Brazilian law (direitos indisponíveis), such as those deemed to relate to public interest. Therefore,
decisions of the Brazilian federal government exercised at any general shareholders’ meeting, if based or
related to public interest, will not be subject to an arbitration proceeding.
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Shareholders’ Rights
Shareholders’ Meetings and Voting Rights
Our shareholders have voting rights at the shareholders’ meeting to decide on any matters related to our
corporate purposes and to pass any resolutions they deem necessary for our protection and development,
except for certain matters whose authority to resolve are exclusively held by our corporate governing
bodies.
Our annual shareholders’ meeting takes place at our headquarters, in Rio de Janeiro, Brazil, in April of each
year. Additionally, our Board of Directors or, in some specific situations set forth in Brazilian Corporate Law,
our shareholders or Fiscal Council, may call our extraordinary shareholders’ meetings. Given the effects of
the Covid-19 pandemic in Brazil and the measures taken by health authorities and governments to address
the pandemic, particularly regarding social distance measures, the annual shareholders’ meeting was held
exclusively virtually, as permitted by Instruction CVM No. 622/2020.
The notice of the annual shareholders’ meeting and related documents must be published at least 30
calendar days prior to the scheduled meeting date.
For ADS holders, we are required to provide notice to the ADS depositary at least 30 calendar days prior to
a shareholders’ meeting. Upon receipt of our shareholders’ meeting notice, the depositary must fix the ADS
record date and distribute to ADS holders a notice. This notice must contain (i) final information particular
to such vote and meeting and any solicitation materials, (ii) a statement that each holder on the record date
set by the depositary will be entitled to instruct the depositary as to the exercise of the voting rights,
subject to any applicable provisions of Brazilian law as well as our Bylaws, and (iii) a statement as to the
manner in which these instructions can be given, including instructions to give a discretionary proxy to a
person designated by us. Our shareholders may vote in person, at the meeting, or remotely, prior to the
date of the meeting. Electronic participation in shareholders’ meetings is not available to ADS holders,
which may only vote by means of proxy voting cards mailed to the ADR depositary bank.
Quorum
Attendance quorum. In order to start, shareholders representing at least one-fourth of our issued and
outstanding common shares must attend our shareholders’ meeting, except when the matter to be decided
aims to amend our Bylaws. In this case, a valid meeting requires the attendance of shareholders
representing at least two-thirds of our issued and outstanding common shares. If the required quorum is
not reached, our Board of Directors may call a second meeting by sending a notice at least eight calendar
days prior to the new scheduled meeting. The attendance quorum requirements will not apply to such
second meeting, but the voting quorum requirements described below shall be observed.
Voting quorum. Matters to be approved at our shareholders’ meeting must be approved by the quorums
specified below.
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Matter approved by majority vote (of holders of common shares attending the meeting):
amend our Bylaws;
approve any capital change;
elect or dismiss members of our Board of Directors and Fiscal Council (and its respective alternates),
subject to the right of our preferred shareholders to elect or dismiss one member of our Board of
Directors and to elect one member of our Fiscal Council (and its respective alternates) and to the right
of our employees to elect or dismiss one member of our Board of Directors;
receive the yearly financial statements prepared by our management and accept or reject management’s
financial statements, including the allocation of net income for payment of the mandatory dividend and
allocation to the various reserve accounts;
authorize the issuance of debentures, except for the issuance of non-convertible unsecured debentures
or the sale of such debentures when in treasury, which may be approved by our Board of Directors;
accept or reject the valuation of assets contributed by a shareholder in consideration for increase of
capital stock;
approve the disposal of convertible debentures issued by our wholly-owned subsidiaries and held by us;
establish the compensation of the former members of our Board of Executive Officers, our Board of
Directors, our Fiscal Council, including the compensation due during the period of six months of
forfeiture provided for in our Bylaws, and of advisory committees to our Board of Directors;
approve the cancellation of our registration as a publicly-traded company;
approve the requirements of our nomination policy, in addition to the requirements provided by law
applicable to boards of directors and fiscal councils; and
approve in the case of publicly-traded company, the execution of transactions with related parties, and
the sale or contribution of assets to another company, if the value of the transaction corresponds to
more than 50% (fifty percent) of the value of the total assets listed in the last approved balance sheet.
Matter approved by at least one-half of the common shares of our total capital stock:
reduce of the mandatory dividend distribution;
merge into another company or consolidate with another company, subject to the conditions set forth
in Brazilian Corporate Law;
participate in a group of companies subject to the conditions set forth in Brazilian Corporate Law;
change our corporate purpose, which must be preceded by an amendment to our Bylaws by federal law,
as we are controlled by the Brazilian federal government and our corporate purpose is established by
law;
spin-off of a portion of us, subject to the conditions set forth in Brazilian Corporate Law;
waive the right to subscribe to shares or convertible debentures issued by our wholly-owned subsidiaries
or associate;
decide on our dissolution;
create preferred shares or increase the existing classes of preferred shares, without preserving the
proportions to any other class of preferred shares, except as set forth in or authorized by our Bylaws;
change the preferences, privileges or redemption or amortization conditions of any class of preferred
shares; and
create new class of preferred shares entitled to more favorable conditions than the existing classes.
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Matter approved by a special quorum:
select a specialized company to work out the appraisal of our shares by economic value in the event of
the cancellation of our registry as a publicly-traded company, which matter must be approved by the
majority of votes from the holders of the outstanding shares that are present at the meeting. According
to B3´s Level 2 regulation, outstanding shares means all the shares issued by a company, except for the
shares held by the controlling shareholder, by persons linked to such controlling shareholder and by our
managers, as well as those shares in treasury and special class of preferred shares which purpose is to
guarantee differentiated political rights and, be non-transferable and exclusive property of the
privatizing entity. This matter must only be discussed in a shareholders’ meeting installed with the
presence of at least 20% of the holders of the outstanding shares in a first call, or the presence of any
number of holders of the outstanding shares in a second call.
Pursuant to Law No. 13,303/16, no decision taken at any shareholders’ meeting can change the corporate
status of our company (i.e. sociedade anônima).
Under Brazilian Corporate Law, if a shareholder has a conflict of interest with a company in connection with
any proposed transaction, the shareholder may not vote in any decision regarding such transaction. Any
transaction approved with the vote of a shareholder having a conflict of interest may be annulled and such
shareholder may be liable for any damages caused and be required to return to us any gain it may have
obtained as a result of the transaction.
Also under Brazilian Corporate Law, minority shareholders representing at least 10% of our voting capital
have the right to demand that a cumulative voting procedure be adopted to entitle each common share to
as many votes as there are board members and to give each common share the right to vote cumulatively
for only one candidate of our Board of Directors or to distribute its votes among several candidates.
Pursuant to regulations promulgated by the CVM, the 10% threshold requirement for the exercise of
cumulative voting procedures may be reduced depending on the amount of capital stock we possess. For a
company like us, the threshold is 5%. Thus, shareholders representing 5% of our voting capital may demand
the adoption of the cumulative voting procedure.
Regarding the right to appoint members of our Board of Directors and our Fiscal Council, the following
should be highlighted:
our minority preferred shareholders that together hold at least 10% of the total capital stock (excluding
the shares held by our controlling shareholder) have the right to elect and remove one member to our
Board of Directors at a shareholders’ meeting, by a separate voting procedure;
our minority common shareholders have the right to elect and remove one member to our Board of
Directors, if a greater number of directors is not elected by such minority shareholders by means of the
cumulative voting procedure;
our employees have the right to directly elect one member to our Board of Directors by means of a
separate voting procedure, pursuant to Law No. 12,353/10; and
subject to the provisions of applicable law, the Brazilian Minister of Economy has the right to elect and
remove one member of our Board of Directors.
Brazilian Corporate Law and our Bylaws provide that, regardless of the exercise by our minority
shareholders of the rights related to the cumulative voting process, the Brazilian federal government
always has the right to appoint the majority members of our directors and our Fiscal Council.
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Other Shareholders’ Rights
In addition to their voting rights, shareholders have the following rights:
Preemptive rights: Each of our shareholders has a general preemptive right to subscribe for shares or
securities convertible into shares in any capital increase, in proportion to his or her shareholding. A
minimum period of 30 days following the publication of notice of a capital increase is assured for the
exercise of the right, and the right is transferable. Under our Bylaws and Brazilian Corporate Law, and
subject to the requirement for shareholder approval of any necessary increase to our authorized share
capital, our Board of Directors may decide not to extend preemptive rights to our shareholders, or to reduce
the 30-day period for the exercise of preemptive rights, in each case with respect to any issuance of shares,
debentures convertible into shares or warrants in the context of a public offering.
In the event of a capital increase by means of the issuance of new shares, holders of ADSs and holders of
common or preferred shares would have, except under circumstances described above, preemptive rights
to subscribe for any class of our newly issued shares. However, holders of ADSs may not be able to exercise
the preemptive rights relating to the common and preferred shares underlying their ADSs unless a
registration statement under the Securities Act is effective with respect to those rights or an exemption
from the registration requirements of the Securities Act is available.
For more information, see “Risks – Risk Factors – Equity and Debt Securities Risks” in this annual report.
Redemption and rights of withdrawal: Brazilian Corporate Law provides that, under limited circumstances,
shareholders have the right to withdraw their equity interest from a company and to receive payment for
the portion of shareholder’s equity attributable to their equity interest.
This right of withdrawal may be exercised by the holders of the adversely affected common or preferred
shares, provided that certain conditions set forth in Brazilian Corporate Law are met, in the event that we
decide to:
increase the existing classes of preferred shares, without preserving the proportions to any other class
of preferred shares;
change the preferences, privileges, redemption or amortization conditions of any class of preferred
shares or to create a new class of preferred shares entitled to more favorable conditions than the
existing classes;
merge into another company or to consolidate with another company;
participate in a centralized group of companies as defined under Brazilian Corporate Law;
reduce the mandatory distribution of dividends;
change our corporate purposes;
spin-off a portion of us;
transfer all of our shares to another company or to receive shares of another company in order to make
us, whose shares are transferred a wholly-owned subsidiary, known in Brazil as incorporação de ações;
or
acquire control of another company at a price that exceeds the limits set forth in Brazilian Corporate
Law.
This right of withdrawal may also be exercised in the event that the entity resulting from a merger,
consolidation or spin-off of a listed company and us do not negotiate new shares in the secondary market,
within 120 days from the date of the shareholders’ meeting approving the transaction, in accordance with
the applicable SEC regulations.
Considering that our Bylaws do not provide for rules to determine any value for redemption, under Brazilian
Corporate Law, any redemption of shares arising out of the exercise of such withdrawal rights would be
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made based on the book value per share, determined on the basis of the last balance sheet approved by our
shareholders. However, if a shareholders’ meeting giving rise to redemption rights occurred more than 60
days after the date of the last approved balance sheet, a shareholder would be entitled to demand that his
or her shares be valued on the basis of a new balance sheet dated within 60 days of such shareholders’
meeting. In this case, we would immediately pay 80% of the amount of reimbursement calculated based on
the last balance sheet and, after the special balance sheet has been drawn up, we would pay the balance
within 120 days from the date of the shareholders’ meeting resolution. The right of withdrawal lapses 30
days after publication of the minutes of the shareholders’ meeting that approved the matters described
above. We would be entitled to reconsider any action giving rise to withdrawal rights within ten days
following the publication of the minutes of the meeting ratifying the decision if the payment of the price of
reimbursement of the shares to the dissenting shareholders would jeopardize our financial stability.
Liquidation: In the event of a liquidation, holders of preferred shares are entitled to receive, prior to any
distribution to shareholders, payment for the portion of shareholder’s equity attributable to their equity
interest.
Conversion rights: Our common shares are not convertible into preferred shares, nor are preferred shares
convertible into common shares.
Liability of our shareholders for further capital calls: Neither Brazilian Corporate Law nor our Bylaws
provide liability for our shareholders for further capital calls. Our shareholders’ liability for capital stock is
limited to the payment of the issuance price of the shares subscribed or acquired.
Rights not subject to waiver: According to Brazilian Corporate Law, neither a company’s Bylaws nor
decisions taken at a shareholders’ meeting may deprive a shareholder of some specific rights, such as the
right to:
participate in the distribution of profits;
participate in any remaining residual assets in the event of our liquidation;
supervise the management of the corporate business as specified in Brazilian Corporate Law;
exercise preemptive rights in the event of a subscription of shares, debentures convertible into shares
or subscription warrants (other than with respect to a public offering of such securities, as may be set
out in the Bylaws); and
withdraw from our company in the cases specified in Brazilian Corporate Law.
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Dividends
Payment of Dividends and Interest on Capital
Our dividend payments are subject to the provisions of Brazilian Corporate Law and applicable local laws
and regulations, our Bylaws and our dividend distribution policy.
Our distributions can include dividends and/or interest on capital (juros sobre capital próprio). The payment
of interest on capital to our shareholders is subject to withholding income tax, pursuant to the Brazilian tax
laws, which is not levied upon payments of dividends. The holders of ADSs are also subject to withholding
income tax, unless provided otherwise by their applicable law.
Dividend payments for each fiscal year must be approved by our shareholders at the annual general
meeting of shareholders. The profits are distributed to outstanding shares in proportion to the number of
shares owned by each shareholder on the applicable record date. Our preferred shares have preference in
the distribution of dividends and interest on capital. Thus, the payment of dividends to holders of common
shares is subject to the right to dividend distributions held by the holders of preferred shares.
In 2021, we improved our dividend policy. The enhancement of the dividend policy became important
because of the anticipated and ultimate achievement of the target of gross debt below US$60 billion in the
third quarter of 2021, originally scheduled for 2022.
We set an ideal gross debt level of US$60 billion, including commitments related to leasing. For the
purposes of the dividend policy, we will exercise flexibility around this debt target, applying a gross debt of
US$65 billion as a criterion to define the method to calculate the remuneration to be distributed.
Additionally, we defined that dividend distribution payments should be made quarterly. The acquisition of
PP&E and intangibles assets of the original free cash flow formula was also adjusted to include the signing
bonus of the bidding rounds.
The improvement also had the goal of simplifying the dividend policy and establishing an annual minimum
remuneration, promoting greater predictability to the cash flow payments to shareholders.
In all distribution parameters, the remuneration to shareholders must follow the rules set forth in Law
6,404/76, in our Bylaws, and must not compromise our short, medium, and long-term financial
sustainability.
The dividend policy provides the following parameters for the distribution of dividends, which should be
followed in the decisions of the Board of Directors and in the Management proposals to the Annual General
Meeting:
1. We establish a minimum annual compensation of US$4 billion for fiscal years in which the average
price of Brent is above US$40/bbl, which may be distributed regardless of our level of indebtedness,
as long as the principles set forth in the policy are observed.
1.1 The minimum annual compensation should be the same for common shares and preferred
shares, provided that it exceeds the minimum amount for preferred shares set forth in our Bylaws.
2. In case of gross debt equal to or less than US$65 billion and positive net income for the year, to be
verified in the last quarterly result and approved by the Board of Directors, we should distribute to
our shareholders 60% of the difference, calculated in Brazilian reais, between Net cash provided by
operating activities and acquisition of PP&E and intangibles assets, according to the equation below,
provided that the result of this formula is higher than the amount provided in item 1 and does not
compromise our financial sustainability:
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Shareholder remuneration = 60% x (Net cash from operating activities -
Acquisition of PP&E and intangible asset)
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3. Regardless of our level of indebtedness, we may, in exceptional cases, pay extraordinary dividends,
exceeding the minimum legal mandatory dividend and/or the amounts established in items 1 and 2,
as long as our financial sustainability is preserved.
Furthermore, we may exceptionally approve the distribution of extraordinary dividends even in the event of
no net income, as long as the rules set forth in Law No. 6,404/76 are complied with and the criteria defined
in the dividend policy are observed.
Pursuant to our Bylaws, intermediate and interim dividends and interest on capital shall be allocated as
minimum mandatory dividend as set forth by the Brazilian Corporate Law, including for the purpose of
paying the minimum priority dividends of preferred shares.
Law No. 9,249/95, as amended, provides for distribution of interest on capital to shareholders as an
alternative form of distribution. Such interest is limited to the daily pro rata variation of the TJLP interest
rate. The effective payment or credit of interest on capital depends on the existence of profits, calculated
before deducting interest, or accumulated profits and profit reserves, in an amount equal to or greater than
twice the amount of the interest to be paid or credited.
We may treat these payments of interest on capital as a deductible expense for calculating real profit, but
the deduction cannot exceed the greater of:
50% of net income before taking into account such distribution, in case these are considered expenses,
based on the calculated profit after taking into account any deductions for social contributions on net
income and before deducting income tax for the period in respect of which the payment is made; or
50% of retained earnings and profit reserves.
With respect to the payment of dividends, our shareholder must also consider the following:
Taxation: Any payment of interest on capital to ADS holders or shareholders, whether or not they are
Brazilian residents, is subject to Brazilian withholding taxes at the rate of 15% or 25%, subject to possible
reduction by an applicable tax treaty. The 25% rate applies only if the beneficiary is resident in a tax
haven. The amount paid to shareholders as interest on capital, net of any withholding tax, may be
included as part of any mandatory distribution of dividends. Under Brazilian Corporate Law, we are
required to distribute to shareholders an amount sufficient to ensure that the net amount received, after
payment by us of applicable Brazilian withholding taxes in respect of the distribution of interest on
capital, is at least equal to the minimum mandatory dividend as set forth by the Brazilian law.
For more information on Brazilian taxation of ADSs and our shares, see “Legal and Tax – Taxation
Relating to the ADSs and our Common and Preferred Shares” in this annual report.
Date of payment: Under Brazilian Corporate Law and our Bylaws, dividends are generally required to be
paid within 60 days following the date they are declared, unless a shareholders’ resolution sets forth for
another date of payment, which, in any case, must occur prior to the end of the fiscal year in which the
dividend was declared.
Adjustments: Our board of directors may approve the payment of anticipated dividends or interest on
capital to our shareholders which amountis subject to financial charges at the SELIC rate from the end
of each fiscal year through the date we actually pay such dividends or interest on capital.
Unclaimed dividends: Shareholders have a three-year period from the dividend payment date to claim
dividends or interest on capital payments with respect to their shares, after which the amount of the
unclaimed dividends reverts to us.
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Our total distributions to shareholders for 2021 are expected to be US$18,541 million and will be voted on
at our shareholder’s annual general meeting to be held in April 2022. For further information, see Note 34.5
to our audited consolidated financial statements.
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Mandatory distribution
Pursuant to Brazilian Corporate Law and our Bylaws, we must comply with two minimum mandatory
distributions of dividends, both of which are provided in our dividend policy.
We must pay at least 25% of our adjusted net income, after deducting allocations to the legal
reserve and further allocations eventually required by Brazilian Corporate Law; and
Holders of our preferred shares have priority to receive the mandatory dividend amount, as
well as to receive a payment in the event of reimbursement of capital. They are also entitled
to minimum annual non-cumulative preferential dividends in case we declare dividends equal
to the higher of (a) 5% of their pro rata share of our paid-in capital, or (b) 3% of the book value
of their preferred shares.
To the extent that we declare dividends on our common shares in any particular year in an amount
that exceeds the minimum preferential dividends, holders of preferred shares are entitled to an
additional dividend amount per share in the same amount per share paid to holders of common
shares. Holders of preferred shares also participate equally with common shareholders in share
capital increases derived from the incorporation of reserves and profits.
Brazilian Corporate Law, however, permits a publicly held company such as ours to suspend the
minimum mandatory distribution of dividends in case our Board of Directors and our Fiscal Council
report to the annual general shareholders’ meeting that the distribution would not be advisable due
to our financial condition. In this case, our Board of Directors must file with the CVM an explanation
for suspending the dividend distribution. Profits not distributed due to such suspension must be
allocated to a special reserve and, if not absorbed by subsequent losses, must be distributed as soon
as our financial condition allows such payments.
Allocation of net income
At each annual general shareholders’ meeting, our Board of Directors and Board of Executive Officers are
required to recommend how to allocate net income for the preceding fiscal year. Under Brazilian Corporate
Law, net income is obtained after deducting statutory holdings of the employees, managers and beneficiary
parties.
In accordance with Brazilian Corporate Law, an amount equal to our net profits, as further reduced by
amounts allocated to the legal reserve, to the fiscal incentive investment reserve, to the contingency
reserve or to the unrealized income reserve established by us in compliance with applicable law (discussed
below) and increased by reversals of reserves constituted in prior years, is available for distribution to
shareholders in any given year. After the distribution of preferred dividends, a percentage of net income
may be allocated to a contingency reserve for anticipated losses that are deemed probable for future years.
Any amount so allocated in a prior year must be either (i) reversed in the fiscal year in which the reasons
justifying the reserve cease to exist, or (ii) written off in the event that the anticipated loss occurs.
A portion of the net income from donations or government grants for investments may also be allocated to
the creation of a tax incentive reserve.
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If the mandatory distribution amount, determined without deducting the amount of unrealized profits from
its calculation basis, exceeds the sum of realized net income in a given year, this excess may be allocated to
an unrealized revenue reserve. Brazilian Corporate Law defines realized net income as the amount of net
income that exceeds the sum of the net positive result of equity adjustments and profits or revenues from
operations whose financial results take place after the end of the next succeeding fiscal year. As long as we
are able to make the minimum mandatory distribution described below, we must allocate an amount
equivalent to 0.5% of subscribed and fully paid-in capital at year-end to a statutory reserve. The reserve is
used to fund the costs of research and technological development programs. The accumulated balance of
this reserve cannot exceed 5% of the subscribed and fully paid-in capital stock.
Brazilian Corporate Law also provides for the retention of profits, which cannot be approved in the event
there is mandatory dividend distribution and must be in accordance with the terms of our capital budget
previously approved by the shareholders’ meeting.
A portion of our net income that exceeds the minimum mandatory distribution may be allocated to fund
working capital needs and investment projects, as long as such allocation is based on a capital budget
previously approved by our shareholders. Capital budgets for more than one year must be reviewed at each
annual shareholder meeting.
The creation of statutory reserves and the retention of profits cannot be approved to the detriment of the
mandatory dividend.
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Additional Information for Non-Brazilian
Shareholders
Foreign investors may trade their shares directly on the B3 (non-Brazilian holders) or through ADSs on the
NYSE. There are no restrictions on ownership of our common or preferred shares in Brazil by individuals or
legal entities domiciled outside Brazil and all of them are entitled to the rights and preferences of our
common or preferred shares, as the case may be.
The ability to convert dividend payments and proceeds from the sale of common or preferred shares or
preemptive rights into foreign currency and to remit such amounts outside Brazil is subject to restrictions
under foreign investment legislation (Brazilian foreign exchange controls). However, if foreign investors are
registered with the CVM, in accordance with CMN Resolution No. 4,373, they may use the dividend payments
and proceeds from the sale of shares to buy and sell securities directly on the B3, which generally requires,
among other steps, the registration of the relevant investment with the Central Bank of Brazil. Nonetheless,
any non-Brazilian holder who registers with the CVM in accordance with CMN Resolution No. 4,373 may buy
and sell securities directly on the B3. Such non-Brazilian holders must appoint a local representative in
Brazil who will be required, among other duties, to register and keep updated with the Central Bank of Brazil
the record of all transactions of such investors on the B3.
The right to convert dividend payments and proceeds from the sale of shares into foreign currency and to
remit such amounts outside Brazil may also be subject to restrictions under foreign investment legislation.
If any restrictions are imposed on the remittance of foreign capital abroad, they could hinder or prevent the
Central Depositária, as custodian for the common and preferred shares represented by the ADSs, or
registered holders who have exchanged ADSs for common or preferred shares, from converting dividends,
distributions or the proceeds from any sale of such common or preferred shares, as the case may be, into
U.S. dollars and remitting the U.S. dollars abroad.
Non-Brazilian Holders on B3
Under CMN Resolution No. 4,373, foreign investors may invest in almost all financial assets and engage in
almost all transactions available in the Brazilian financial and capital markets, provided that certain
requirements are fulfilled. Therefore, a foreign investor must:
appoint at least one representative in Brazil, with powers to perform actions relating to the investor’s
investment;
register as a foreign investor with the CVM;
appoint at least one authorized custodian in Brazil for the investor’s investments;
register all portfolio investments of the foreign investor in Brazil, through the investor’s representative,
with the Central Bank of Brazil; and
comply with other requirements provided for under CVM Resolution No. 13/20.
After the fulfillment of these requirements, the foreign investor will be able to trade in the Brazilian
financial and capital markets.
Securities and other financial assets held by investors under CMN Resolution No. 4,373 must be registered
or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank of
Brazil or the CVM. In addition, any transfer of securities held under CMN Resolution No. 4,373 and CVM
Resolution No. 13/20 must be carried out in the stock exchanges or through organized over-the-counter
markets licensed by the CVM, except for transfers resulting from private transactions.
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ADS Holders
CMN Resolution No. 4,373 allows Brazilian companies to issue depositary receipts in foreign exchange
markets. We currently have an ADR program for our common and preferred shares duly registered with the
CVM and the Central Bank of Brazil. The proceeds from the sale of ADSs by holders outside Brazil are free
of Brazilian foreign exchange controls.
JPMorgan is the depositary for both of our common and preferred ADSs since January 2, 2020. The
Depositary will register and deliver the ADSs, each of which currently represents (i) two shares (or a right to
receive two shares) deposited with an agent of the Depositary acting as custodian, and (ii) any other
securities, cash or other property which may be held by the Depositary. The Depositary’s corporate trust
office at which the ADSs will be administered is located at 383 Madison Avenue, Floor 11, New York, New
York 10179, United States.
The Depositary has obtained from the Central Bank of Brazil an electronic certificate of registration with
respect to our existing ADR program. Pursuant to the registration, the custodian and the Depositary will be
able to convert dividends and other distributions with respect to the relevant shares represented by ADSs
into foreign currency and to remit the proceeds outside Brazil.
In the event that an ADS holder exchanges ADSs for the underlying common or preferred shares, the holder
will be required to obtain registration as a foreign investor in Brazil pursuant to CMN Resolution No. 4,373
by appointing a local representative and obtaining a certificate of registration from the Central Bank of
Brazil. Failure to take these measures may subject the holder to the inability of converting the proceeds
from the disposition of, or distributions with respect to, the relevant shares, into foreign currency and to
remit proceeds outside of Brazil. Additionally, the holder may be subjected to a less favorable Brazilian tax
treatment than a holder of ADSs. If the foreign investor resides in a tax haven jurisdiction, the investor will
also be subject to less favorable tax treatment.
For more information, see “Risks – Risk Factors – Equity and Debt Securities Risks” and “Legal and Tax – Tax
– Taxation Relating to Our ADSs and Common and Preferred Shares” in this annual report.
Fees Payable by ADS holders
ADS holders are required to pay various fees to the Depositary, including: (i) an annual fee of US$0.05 (or
less) per ADS for administering the ADR program, and (ii) amounts in respect of expenses incurred by the
Depositary or its agents on behalf of ADS holders, including expenses arising from compliance with
applicable law, taxes or other governmental charges, facsimile transmission, or conversion of foreign
currency into U.S. dollars. In both cases, the Depositary may decide in its sole discretion to seek payment by
directly billing investors or by deducting the applicable amount from cash distributions. ADS holders may
also be required to pay additional fees for certain services provided by the Depositary, as set forth in the
table below.
Depositary Services
Issuance and delivery of ADSs, including issuances resulting from a distribution of
shares or rights or other property
Distribution of dividends
Cancellation of ADSs for the purpose of withdrawal
Fees Payable by ADS Holders
US$5.00 (or less) per 100 ADSs
(or portion thereof)
US$0.05 (or less) per ADS per year
US$5.00 (or less) per 100 ADSs
(or portion thereof)
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Fees Payable by the Depositary
The Depositary reimburses us for certain expenses we incur in connection with the administration and
maintenance of the ADR program. These reimbursable expenses comprise, among others, investor relations
expenses, listing fees and legal fees.
Purchases of equity securities by the issuer and affiliated purchasers
During the fiscal year ended December 31, 2021, neither any “affiliated purchaser,” as defined in Rule
10b-18(a)(3) under the Exchange Act, nor we, have purchased any of our equity securities.
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268
Legal and Tax
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Regulation
Business Regulation
Exploration & Production
Under Brazilian law, the federal government owns all crude oil and natural gas subsoil accumulations in
Brazil, and any state- or privately-owned company can carry out the exploration and production of such oil
and natural gas accumulations in the country. There are three different types of E&P contracts: (i)
Concession Regime; (ii) Production Sharing; and (iii) Transfer of Rights.
Concession Regime
Until 1997, we were the Brazilian federal government’s exclusive agent to carry out exploration and
production of oil and gas in Brazil.
In 1997, the Brazilian federal government established a concession-based regulatory framework and
created an independent regulatory agency to regulate the oil, natural gas and renewable fuel industry in
Brazil, namely the ANP. This framework and the ANP created a competitive environment in the oil and gas
sector.
The concession-based regulatory framework granted us the right to explore crude oil reserves in each of
our already existing producing fields under concession contracts for an initial term of 27 years from the
date when they were declared commercially profitable. These are known as the “Round Zero” concession
agreements. This initial 27-year period for production can be extended at the request of the concessionaire,
subject to approval from the ANP.
Starting in 1999, all areas that were not already subject to concessions became available for public bidding
conducted by the ANP. We participated in these biddings both independently or through partnerships with
private companies (as operator or as non-operator, in a case-by-case analysis).
According to Law No. 9,478/1997, and as per our concession agreements for exploration and production
activities, we are entitled to the oil and gas exploited from the concession areas and we are required to
distribute to the Brazilian federal government a portion of the corresponding proceeds.
For information related to Taxation under Concession Regime for Oil and Gas, see item “Legal and Tax –
Tax” in this annual report.
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Production-Sharing Contract Regime for Unlicensed Pre-Salt and Potentially Strategic Areas
Discoveries of large oil and natural gas reserves in the pre-salt areas of the Campos and Santos Basins
prompted a change in the legislation regarding oil and gas exploration and production activities. In 2010,
laws were enacted to regulate contracts under a production-sharing regime in the pre-salt area, as defined
under Law No. 12,351/2010 and in potentially strategic areas. The enacted legislation did not impact the
concession contracts.
We are not required to be the exclusive operator of the pre-salt areas, but prior to any bid round, the
Brazilian federal government must offer us the right to express our interest to exercise the preemption
right to operate the blocks under production-sharing regime with minimum 30% of participating interest.
Should there be no proposal for the areas to which we have expressed such interest that area will not be
awarded and therefore, we have no remaining obligations. The preemption right only becomes effective in
(i) cases of winning proposals above the minimum profit oil, should we decide to be part of such consortium
and have previously expressed interest and (ii) cases in which the winning proposal is in the minimum profit
oil, then we are required to be the operator, with minimum 30% of participating interest, as applicable
according to the relevant Governmental Resolution. Regardless of whether we exercise our preemption
right, we will also be able to participate, at our discretion, in the bidding process to increase our interest in
any of the pre-salt areas.
The winning bidder will be the company that offers to the Brazilian federal government the highest
percentage of “profit oil,” which is the gross revenue of the production of a certain field after deduction of
royalties and “cost oil,” which is the cost associated with oil production. The royalty rate is 15% applicable
to the gross production of oil and natural gas and there is no other government fee payable to the Brazilian
federal government.
The production-sharing contracts are executed by and between the private companies that are winning
bidders, the state-owned non-operating company PPSA, which represents the interests of the Brazilian
federal government in the production-sharing contracts and manages the Brazilian federal government’s
share of the profit oil, and the ANP. The PPSA participates in operational committees, with a casting vote
and veto powers and manages and controls the relevant costs, all of it according to each specific
production-sharing contract.
Transfer of Rights (Cessão Onerosa)
In 2010, we entered into an agreement with the Brazilian federal government under which the government
assigned to us the right to conduct activities for the exploration and production of oil, natural gas and other
fluid hydrocarbons in specified pre-salt areas, subject to a maximum production of five bnboe. The initial
contract price for our rights under the Transfer of Rights Agreement was US$14,395 million, as of December
31, 2020, which was paid in full in 2010. See “ – Material Contracts” in this annual report.
Both Law No. 12,276/2010 (the “Transfer of Rights Law”) and the Transfer of Rights Agreement provide for
a review procedure. The main purpose of the review procedure is to verify whether the price paid to the
Brazilian federal government by us in 2010 was appropriate in relation to the price for granting us the rights
to explore and produce five billion barrels of oil equivalent in certain pre-salt areas.
According to the Transfer of Rights Agreement, the review must be based on technical reports prepared by
independent certifying entities to be contracted by the ANP and the assignee, which shall consider the best
practices of the oil industry, including the following items: (a) information contained in the final report of
the mandatory exploration program (as such term is defined in the Transfer of Rights Agreement); (b) the
market prices of oil and natural gas; and (c) specification of the product being produced. In addition, as
provided in the Transfer of Rights Agreement, the review must follow the assumptions set forth in such
agreement.
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An internal committee to negotiate the revision of the Transfer of Rights Agreement with representatives
of the Brazilian federal government (i.e. representatives of the MME, the Ministry of Finance, and the ANP)
was created. The negotiations resulted in a revision of the Transfer of Rights Agreement that was submitted
to the TCU for analysis, by recommendation of the MME.
In 2019, the amendment to the Transfer of Rights Agreement was approved by us, the TCU and the National
Council for Energy Policy.
The amendment consolidates one of several scenarios discussed among the Brazilian federal government
and our comissions and resulted in a credit of US$9,058 billion in our favor, that was fully paid in December
2019. Additionaly, the amendment establishes new percentages for local content: 25% for well construction;
40% for production collection and disposal system; and 25% for stationary production unit. For information
related to the new taxation model for the oil and gas industry (“REPETRO”) see “Legal and Tax – Tax” in this
annual report.
Refining, Transportation and Marketing
Regarding oil refining, the ANP requires specific authorization for the construction and operation of each
of the process units, product treatment units and ancillary units of an oil refinery. The oil products
commercialization is subject to compliance with the specifications established by the ANP for each product
(e.g. gasoline, diesel, jet fuel, liquefied petroleum gas).
The ANP requires information on import, export, production, processing, handling, transportation and
transfer, storage and distribution of oil, oil products, natural gas products and shale products activities on
a monthly basis.
Since 2013, the ANP requires oil product producers (refineries and other agents) and fuel distributors to
ensure minimum inventories of gasoline and diesel. In 2015, the ANP established the same obligation for
producers of LPG and jet fuel.
The ANP also requires that refineries and importers of oil products publicly release their price lists
electronically (standard prices) as well as the prices for the previous 12 months, with a description of the
specific commercial terms for: (i) regular and premium gasoline; (ii) diesel oil and marine diesel; (iii) jet fuel;
(iv) LPG; (v) fuel oil; and (vi) asphalt.
Failure to comply with the ANP rules can lead to a range of fines and penalties, including the revocation of
the authorization.
In December 2016, the Brazilian federal government launched the “RenovaBio” program to stimulate the
production of biofuels in the local market, namely ethanol, biodiesel, biogas and biojet fuel. In June 2019,
the CNPE fixed the mandatory annual reduction of carbon emission targets and the ANP established (i) the
individualization of the annual mandatory greenhouse gas emission reduction targets for the
commercialization of fuels (Resolution No. 791/2019) and (ii) the procedures for the primary emission of
carbon emission reduction credits (Resolution No. 802/2019).
In June 2017, the CNPE established strategic guidelines for the development of the local market for fuels,
other oil products and biofuels. As part of the guidelines, the MME launched the “Abastece Brasil” program
on April 24, 2019, which aims to develop Brazil’s local fuel market, promote competition in the sector,
diversification of players, new investments in refining and logistics, and combating tax evasion and
adulteration of fuels.
Our oil and natural gas refining area is also subject to the preventive and stringent control of CADE.
In June 2019, we signed a commitment with CADE (termo de cessação de conduta) that consolidates our
understanding on the divestment of refining assets in Brazil.
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In October 2021, in accordance with the guidelines established by CNPE in Resolution No. 14/2020, ANP
estabilished the new marketing model for biodiesel acquisition to substitute the relevant bidding procedure
that will be in force by January 2022 (Resolution No. 857/2021). Consequently, biodiesel producers may be
sold directly to distributors in order to observe the mandatory percentage of biodiesel in diesel and there
is no other regulatory requirement for us to intermediate this commercial relationship.
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – Operational Risks” and “– Portfolio Management” in this annual report.
Gas and Power
Natural Gas Laws
In 2011, ANP Resolution No. 52 was enacted, which (i) establishes that ANP is responsible for authorizing
the activity of commercialization of natural gas, within the competence of the Brazilian federal government;
(ii) regulates the registration of the gas seller agent; and (iii) regulates the registration of gas sales and
purchase agreements. This resolution was modified in July 2019 by Resolution No. 794/2019, which requires
the publication, by the ANP, of all natural gas sales and purchase agreements signed with local gas
distributors to attend captive markets.
In June 2016, the MME created the program Gas to Grow, or Gás para Crescer, which aims to promote a
competitive market environment to achieve the effective development of gas trading in Brazil, enabling the
entry of new agents into the gas market.
In December 2018, Decree No. 9,616 amended Decree No. 7,382/2010 to allow the change of gas
transmission system from capacity hired under the point-to-point system on long-term contracts to an
entry-exit system.
In June 2019, the CNPE established guidelines for promoting competition in the natural gas market, and in
July 2019, the New Gas Market program, or Novo Mercado de Gás, was created and Decree No. 9,934 was
signed. This decree establishes a committee that monitors the implementation of the actions required for
the entry of new agents into the natural gas market.
In July 2019, we signed an agreement with CADE (termo de compromisso de cessação), which consolidates
understandings between the parties on the promotion of competition in the natural gas industry in Brazil.
This agreement includes the sale of shareholdings in gas transportation and distribution companies and,
among other matters, establishes measures to release capacity in gas transportation pipelines and includes
our commitment to negotiate, in good faith, third party access to our processing plants. The purpose of the
agreement is to preserve and protect the competitive conditions, aiming to open the Brazilian natural gas
market, encouraging new agents to enter this market, as well as suspending administrative procedures
established by CADE to investigate our natural gas business.
In 2021, the Brazilian Congress enacted Law No. 14,134, the so-called “New Gas Law”, which revoked the Law
No. 11,909 and represents a new regulatory framework for the Brazilian natural gas market, introducing
relevant legal innovations.
Among other matters, the New Gas Law provides: (i) negotiated access to flow pipelines, natural gas
processing units (UPGNs) and LNG Terminals; (ii) the implementation of the entry and exit model for the
transport of natural gas; (iii) the change in the regime of use of transportation pipelines and storage
facilities (from concession to authorization); (iv) the unbundling of the natural gas transportation and
distribution segments; and (v) the change of competence to approve the import and export of natural gas
(from the Ministry of Mines and Energy (MME) to the ANP).
In addition, the New Gas Law will ensure legal certainty for administrative rules that arose from the “New
Gas Market” Program, instituted by the Federal Government in mid 2019.
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Also in 2021, Decree No. 10,712 / 2021 was published, which regulates the New Gas Law, and formally
revokes Decree No. 7,382 and Decree No. 9,616.
Despite the significance of the publication of the New Gas Law, we expect further action by the ANP to
establish measures that will be necessary to implement most of the changes brought about by the new law.
For more information on our agreement with CADE, see “Our Business – Portfolio Management” and
“Risks—Risk Factors—Operational Risks” in this annual report.
Price Regulation
Until 1997, the Brazilian federal government had the power to regulate all aspects of the pricing of crude
oil, oil products, ethanol, natural gas, electric power and other energy sources. In 2002, the Brazilian federal
government eliminated price controls for crude oil and oil products, although it retained regulation over
certain existing natural gas sales agreements and electricity agreements (specifically the electric power
trade contracts in the regulated market – CCEAR).
For information on our price policy, see “Our Business – Refining, Transportation and Marketing” in this
annual report.
Environmental Regulation
All phases of the crude oil and natural gas business present environmental risks and hazards. Our facilities
in Brazil are subject to a wide range of federal, state and local laws, regulations and permit requirements
relating to the protection of human health and the environment, and they fall under the regulatory
authority of CONAMA.
Our offshore activities are subject to the administrative authority of IBAMA, which issues operating and
drilling licenses. We are required to submit reports on a regular basis, including safety and pollution
monitoring reports to IBAMA and third party environmental audits in order to maintain our licenses. This
way, we maintain an ongoing communication channel with the environmental authorities, in order to
improve issues connected with the environmental management of our exploration, production and refining
processes of oil and natural gas. In 2018, we designed actions and measures, together with IBAMA, to adjust
the treatment and discharge of produced water in some of our offshore platforms in order to accommodate
recently issued requirements by IBAMA. All of these actions are being met by us within the schedules
defined with IBAMA.
Costs related to these actions are US$138.2 million. From this total amount, US$ 75 million has already been
spent since 2018 and US$ 63.2 million will be used according to the progress of the realization of the
contractual commitments and guidelines of IBAMA. The main ones are:
Operational, technological or process adequacy adjustments in 28 marine production platforms for
the disposal of produced water, to be framed according to the measurement method of TOG SM
5520-B;
Hiring of third party laboratory for TOG analysis;
Installation of radars on 8 platforms;
Providing air and orbital monitoring;
Vessel supply for monitoring; and
Payment of compensatory measure.
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In addition, in order to help ensuring the safety of navigation, the Brazilian maritime authority also works
towards the prevention of environmental pollution, with random or periodic surveys of offshore units.
Most of the onshore environmental, health and safety conditions are controlled either at the federal or the
state level depending on where our facilities are located and the type of activity under development.
However, it is also possible for these conditions to be controlled on a local basis whenever the activities
generate a local impact or are established in a county conservation unit. Under Brazilian law, there is strict
and joint liability for environmental damage, mechanisms for enforcement of environmental standards and
licensing requirements for polluting activities.
Individuals or entities whose conduct or activities cause harm to the environment are subject to criminal,
civil and administrative sanctions. Government environmental protection agencies may also impose
administrative sanctions for noncompliance with environmental laws and regulations, including:
fines;
partial or total suspension of activities;
requirements to fund reclamation and environmental projects;
forfeiture or restriction of tax incentives or benefits;
closing of establishments or operations; and
forfeiture or suspension of participation in credit lines with official credit establishments.
Government Regulation
As a federal state-owned company, we are subject to certain rules that limit our investments, and we are
required to submit our annual capital expenditures budget (Orçamento Anual de Investimentos, or OAI) to
the ME and the MME. Following the review by these governmental authorities, the Brazilian Congress must
approve our budget. Thus, there may be a reduction or change in our planned investments. As a result, we
may not be able to implement all of our planned investments, including those related to the expansion and
development of our oil and natural gas fields, which may adversely affect our results of operation and
financial condition.
All medium and long-term debt incurred by us or our subsidiaries requires the approval of the Finance
Executive Manager jointly with another Executive Manager within the parameters established by our Board
of Executive Offices and the Board of Directors.
The exceptions are the issuance of public debt in the capital markets and collateralized debt obligations,
which require the approval of our Board of Executive Officers, within the parameters established by our
Board of Directors, and the issuance of debentures, which requires the approval of our Board of Directors.
In addition, Law No. 13,303/16 requires us to define in our Bylaws the public interest we pursue and which
publicly-oriented actions we are allowed to take in the pursuit of such public interest. In order to comply
with Law No. 13,303/16, we amended our Bylaws to include the definition of public interest and to state that
the Brazilian federal government may orient our activities to pursue the public interest under certain
circumstances, which distinguishes us from any other private company operating in the oil and gas market.
More specifically, the Brazilian federal government may guide us to take publicly-oriented obligations or
responsibilities, including executing investment projects and undertaking certain operating costs, when two
conditions are met: (i) the undertaking of obligations or responsibilities must be defined by law or
regulation and provided for in a contract or agreement entered into with any public entity with powers to
negotiate such contract or agreement; and (ii) the investment projects must have their cost and revenues
broken down and disclosed in a transparent manner.
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Our financial committee and our minority committee, exercising their advisory role to our Board of
Directors, are in charge of evaluating whether the obligations and responsibilities undertaken by us, in
connection with the pursuit of the public interest, are different from those of any other private company
operating in the oil and gas market. The evaluation by our committees is based on certain technical and
economic aspects of the planned investment projects and on the analysis of certain operating costs
previously adopted by our management.
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Material Contracts
Production-Sharing Agreements
(Contratos de Partilha de Produção)
First Production Sharing Agreement – 1st Production Sharing Bidding Round
In 2013, a consortium formed by us (with a 40% interest), Shell (with a 20% interest), Total S.A (with a 20%
interest), CNODC Brasil Petróleo e Gás Ltda. (with a 10% interest) and CNOOC Petroleum Brasil Ltda. (with a
10% interest) (the “Libra Consortium”), entered into a production sharing agreement with the Brazilian
federal government, which holds 41.65% of the Libra Consortium’s profit oil, the ANP, as regulator and
supervisor, and PPSA, as manager (the “First Production Sharing Agreement”). Under the First Production
Sharing Agreement, the Libra Consortium was awarded the rights and obligations to operate and explore a
strategic pre-salt area known as Libra block, located in the ultra-deepwaters of the Santos Basin. For
further information on the Production Sharing Agreement, see Exhibit 2.18 to this annual report.
Second and Third Production Sharing Agreements – 2nd and 3rd Production
Sharing Bidding Rounds
In 2017, we acquired, in partnership with other international oil companies, three offshore blocks in the 2nd
and 3rd bidding rounds under the production sharing system held by the ANP. We are the operator of these
blocks (“Second and Third Production Sharing Agreements”). In January 2018, together with our partners,
the ANP, PPSA and the Brazilian federal government, we signed the Second and Third Production Sharing
Agreements for exploration and production of oil and natural gas.
Under the production sharing system, the consortium submits to the government a percentage of the so-
called “surplus in oil profit for the Brazilian federal government,” which is applied to revenue discounted of
the production costs and royalties. The only criteria adopted by the ANP to define the winning bidder was
the amount of profit oil to the Brazilian federal government, since the bidding rules provided for the fixed
value of the signing bonus, the minimum exploratory program and the local content commitments.
The following table summarizes the blocks we acquired, in partnership, in the 2nd and 3rd bidding rounds as
part of the production sharing system:
Area
Entorno de Sapinhoá
Peroba
Alto de Cabo Frio Central
Consortium composition
Petrobras Bonus
(R$ million)
Surplus in profit
oil (%)
Petrobras (45%)
Shell (30%)
Repsol Sinopec (25%)
Petrobras (40%)
BP (40%)
CNODC (20%)
Petrobras (50%)
BP (50%)
90
80.00
800
250
76.96
75.86
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Fourth and Fifth Production Sharing Agreements – 4th and 5th Production
Sharing Bidding Rounds
On June 7, 2018, we acquired, together with other international companies, three offshore blocks: (i) Dois
Irmãos, (ii) Três Marias and (iii) Uirapuru (“Fourth Production Sharing Agreements”) and, together with the
First Production Sharing Agreement and the Second and Third Production Sharing Agreements, the
“Production Sharing Agreements”). We will be the operator of these three additional blocks under the
production sharing regime. According to the regime, the consortium submits to the Brazilian federal
government a percentage of the “surplus in oil profit for the Brazilian federal government.” Again, the only
criteria adopted by the ANP to define the winning bidder was the amount of oil profit to the Brazilian federal
government.
The bidding rules established the fixed value of the signing bonus, the minimum exploratory program, and
the local content commitments.
On September 28, 2018, we acquired the block Sudoeste de Tartaruga Verde under the production sharing
regime and, as a result, we will be the operator of the corresponding agreement.
Sixth and First Transfer of Rights Surplus Production Sharing Agreements – 6th
and 1st ToR Surplus Production Sharing Bidding Rounds
On November 6, 2019, we acquired, together with other international companies, the Búzios block, and with
100% of participation, the Itapu block.
On November 7, 2019, we acquired, together with other international company, the Aram block, and we will
be the operator of such block.
The resulting three production-sharing agreements were all signed on March 30, 2020. We will be the
operator of these blocks under the production-sharing regime. According to the relevant production-
sharing agreements, the appointed operator, on behalf of the parties, offers to the Brazilian federal
government a percentage of the “surplus in oil profit for the Brazilian federal government.” The only criteria
adopted by the ANP to define the winning bidder was the amount of oil profit to the Brazilian federal
government too, since the bidding rules provided for the fixed value of the signing bonus, the minimum
exploratory program and the local content commitments.
2nd ToR Surplus Production Sharing Bidding Round
On December 17, 2021, we acquired, together with other international companies, the exploration and
production rights over the surplus volumes in the Atapu and Sépia blocks. The production-sharing
agreements are expected to be signed by April 2022 and we will be the operator of these blocks under the
production-sharing regime.
According to the relevant production-sharing agreements, the appointed operator, on behalf of the parties,
offers to the Brazilian federal government a percentage of the surplus in oil profit. The only criteria adopted
by the ANP to define the winning bidder was the amount of oil profit to the Brazilian federal government,
since the bidding rules provided for the fixed value of the signing bonus, the minimum exploratory program
and the local content commitments.
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Basic Terms:
Operating committee. The Production Sharing Agreement Consortia are managed by an operating
committee in which we, our partners and PPSA all participate. PPSA represents the interests of the Brazilian
federal government and although it will not invest in the blocks, PPSA holds 50% of the operating
committee voting rights and also has a casting vote and veto powers, as defined in the Production Sharing
Agreements.
Risks, Costs and Compensation. All exploration, development and production activities under the
Production Sharing Agreements will be conducted at the expense and risk of the members of the
consortium. For commercial discoveries of crude oil and/or natural gas in the blocks, the consortium will be
entitled to recover, on a monthly basis, (i) a portion of the production of oil and gas in the block
corresponding to its royalty expenses and (ii) the “cost oil” corresponding to costs incurred (which is the
amount associated with capital expenditures incurred and operating costs of the consortium’s exploration
and production activities), subject to the conditions, proportions and terms set forth in the Production
Sharing Agreements. In addition, for each commercial discovery, the consortia are entitled to receive, on a
monthly basis, their share of “profit oil” as defined under the Production Sharing Agreements.
Duration:
The term of the Production Sharing Agreements is 35 years.
Phases:
Our activities under the Production Sharing Agreements are divided into two phases, as follows:
Exploration phase. This phase comprises appraisal activities for purposes of determining the commerciality
of any discoveries of crude oil and natural gas. The exploration phase begins upon the execution of the
Production Sharing Agreements and will end for each discovery upon the declaration of commerciality. We
will have four years (which may be extended upon the ANP’s prior approval) to comply with the minimum
work program and other ANP-approved activities provided for in the Production Sharing Agreements.
Production Phase. The production phase for each particular discovery begins as of the date of the
declaration of commerciality by the consortia to the ANP, and lasts until the termination of the Production
Sharing Agreements. It comprises a development period, during which we will carry out activities pursuant
to a development plan approved by the ANP.
Minimum Work Program:
During the exploration phase, we are required to undertake a minimum work program, as specified in the
Production Sharing Agreements. We may perform other activities outside the scope of the minimum work
program, provided that such activities are approved by the ANP.
Unitization:
A reservoir covered by a block granted to us in the Production Sharing Agreements may extend to adjacent
areas outside the block. In such case, we must notify the ANP immediately after identifying the extension
and we will be prevented from performing development and production activities within such block, until
we have negotiated unitization agreement with the third-party concessionaire or contractor who has rights
over such adjacent area, unless otherwise authorized by the ANP. The ANP will determine the deadline for
the execution of unitization agreement by the parties. If the adjacent area is not licensed (i.e., not granted
for E&P activities to any other party), the Brazilian federal government, represented by PPSA or by the ANP,
shall negotiate with us.
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If the parties are unable to reach an agreement within a deadline established by the ANP, the ANP will
determine the terms and obligations related to such unitization, on the basis of an expert report, and will
also notify us and the third-party or the Brazilian federal government representative, as applicable, of such
determination. Until the unitization agreement is approved by the ANP, operations for the development
and production of such reservoir must remain suspended, unless otherwise authorized by the ANP. The
refusal of any party to execute the unitization agreement will result in the termination of the Production
Sharing Agreements and the return to the Brazilian federal government of the area subject to the
unitization process.
Environmental:
We are required to preserve the environment and protect the ecosystem in the area subject to the
Production Sharing Agreements and to avoid harming local fauna, flora and natural resources. We will be
liable for damages to the environment resulting from our operations, including costs related to any
remediation measures.
Brazilian Content:
The Production Sharing Agreements specify certain equipment, goods and services, as well as different
levels of required local content, in accordance with the different phases under the Production Sharing
Agreements. If we fail to comply with the Brazilian content obligations, we may be subject to fines imposed
by the ANP.
The original Libra Production Sharing Agreement (“Production Sharing Bidding Round 1”) gave the Libra
consortium the right to waive the local content obligations in terms of technology, price and schedule. This
right was used once, and the ANP conceded waiver to the hull items and certain items of the process plants.
By Resolution No. 726/2018, the ANP gave the Libra consortium the possibility of changing the local content
requirements to lower levels, but the possibility of waiver was excluded.
On the Production Sharing Bidding Round 2, the fields bid on had the same local content requirements of
their adjacent fields contracts, according to the CNPE Resolution No. 7/2017. Such resolution established
new local content levels for the Production Sharing Agreements, and the Bidding Rounds 3, 4, 5 and 6 used
those levels.
Royalties and Expenses with Research and Development:
Once we begin production in each field, members of the consortia (other than PPSA) will be required to pay
monthly royalties of 15% of the oil and natural gas production, to be recovered from a portion of the
production of oil and gas in the block. All members of the consortia (other than PPSA) will also be required
to invest 1.0% of their annual gross revenues from crude oil and natural gas production under the
Production Sharing Agreements in research and development activities related to the oil, gas and biofuel
sectors.
Miscellaneous Provisions:
Under the Brazilian production-sharing regime, we can assign our rights and obligations inherent to our
participation above 30% in the areas in which we exercised our preemptive right to be the operator.
All members of the consortia (other than PPSA) have a right of first refusal with respect to an assignment
of rights and obligations by any other member of the consortium (other than PPSA).
The Production Sharing Agreements shall be terminated in the following circumstances: (i) the expiration
of their terms; (ii) if the minimum work program has not been completed by the end of the exploration
phase; (iii) if there has not been any commercial discovery by the end of the exploration phase; (iv) if the
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consortium members (other than PPSA) exercise their withdrawal rights during the exploration phase; (v) if
the consortium refuses to execute a unitization agreement after the ANP makes such determination (which
termination may be complete or partial) and (vi) any other basis for termination described in the Production
Sharing Agreements.
Any breach of the Production Sharing Agreements or of any regulations issued by the ANP may result in
sanctions and fines imposed by the ANP on the relevant party, in accordance with applicable legislation and
the terms of the Production Sharing Agreements. If any breach of the Production Sharing Agreements is
considered by the Brazilian federal government not to be significant, intentional, or a result of negligence,
imprudence or recklessness, or it is proved that the consortium has worked diligently to cure such breach,
the Brazilian federal government may, instead of terminating the Production Sharing Agreements, propose
that the ANP apply designated sanctions on the relevant parties.
We and other consortium members will use our best efforts to settle any disputes. If we are unable to do so,
any consortium member may submit such dispute or controversy to an ad hoc arbitration following the rules
established by the UNCITRAL, or by the consent of the parties in interest, to the ICC, or any other well-
regarded arbitration chamber. If a dispute involves only public administration entities, it may be submitted
to conciliation service of the Câmara de Conciliação e Arbitragem da Administração Federal, or CCAF, under
the AGU. In the event of a dispute involving non-negotiable rights, the parties shall submit the dispute to
the federal courts in Brasília, Brazil.
The Production Sharing Agreements are governed by Brazilian law.
Amendment to the Transfer of Rights Agreement
The Transfer of Rights Agreement was executed in 2010. Its amendment was approved in 2019 by the TCU
and the CNPE and our governing bodies.
The parties involved discussed several scenarios about the revision of the original agreement, as both of
them could be simultaneously creditor and/or debtor. The amendment consolidates one such scenario,
resulting in a credit of US$9,058 billion in our favor, which was fully paid in December 2019.
In addition to such credit, the main changes as a result of the amendment to the Transfer of Rights
Agreement were (i) the local content clauses that lowered the local content requirements for the production
phase (development and production stages) and (ii) the dispute resolution provisions that became similar
to the provisions of the Production Sharing Agreements of the latest ANP bid rounds.
For more information concerning our other material contracts, see “Our Business” and “Operating and
Financial Review and Prospects” in this annual report.
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Legal Proceedings
We are currently party to numerous legal proceedings relating to civil, administrative, tax, labor, criminal,
environmental and corporate issues arising in the normal course of our business. These proceedings involve
claims for substantial amounts of money and other remedies. Several individual disputes account for a
significant part of the total amount of claims against us. Our audited consolidated financial statements only
include provisions for probable and reasonably estimable losses and expenses we may incur in connection
with pending proceedings.
Some of our main legal proceedings are listed below.
Lava Jato Investigation
In 2009, the Brazilian federal police began an investigation aimed at criminal organizations engaged in
money laundering in several Brazilian states, known as “Car wash” operation (“Lava Jato”). The Lava Jato
investigation is extremely broad and comprises numerous investigations into several criminal practices,
spanning crimes and conduct committed by individuals in different parts of the country and different
sectors of the Brazilian economy. In 2014, Lava Jato started to focus part of its investigation on
irregularities involving our contractors and suppliers and uncovered a broad payment scheme that involved
a wide range of participants, including our former personnel. It is possible that further information
damaging us and our interests will come to light in the course of the ongoing investigations of corruption
by Brazilian authorities.
We are not a target of the Lava Jato investigation and we are formally recognized, by the Brazilian
authorities, as a victim of the improper payments scheme. We will continue to pursue legal measures
against companies and individuals, including former employees and politicians, who have caused financial
and image damages to us. We have been working together with the Brazilian Federal Prosecutor’s Office,
the Brazilian federal police, the Federal Revenue Services and other competent authorities since the
beginning of the investigation. The total amount of restitution paid to us since the beginning of Lava Jato
through December 31, 2021 was US$1,522 million (about US$235 million in 2021, US$155 million in 2020,
US$220 million in 2019, US$457 million in 2018, and US$252 million in 2017).
In 2021, the Brazilian Supreme Court started to decide cases brought by criminal defendants in Lava Jato
proceedings aimed at nullifying criminal convictions relating to the investigation. These cases are still in
progress and their outcomes may affect our interests.
For further information regarding Lava Jato and its impacts on us, see “Risks–Risk Factors—We may face
additional proceedings related to the Lava Jato investigation” and Note 21 to our audited consolidated
financial statements.
Investigations Carried out by Authorities
U.S.: SEC, DoJ and the US Commodity Futures Trading Commission (“CFTC”)
Because our ADRs are traded on the NYSE, we are subject to SEC and DoJ regulations. In 2014, the SEC and
DoJ initiated investigations in connection with the facts disclosed in connection with Lava Jato. We have
fully cooperated with their investigations.
In September 2018, we entered into agreements with the SEC and the DoJ related to our internal controls,
accounting records and financial statements for the period 2003 to 2012, which fully resolved their
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respective investigations. Under the terms of these agreements, we paid US$85.3 million to the DoJ,
US$85.3 million to the SEC and US$682.6 million to Brazilian authorities.
In our agreements with them, the DoJ and SEC recognized improvements to our compliance program,
internal controls and anti-corruption procedures. We have committed to continue evaluating and improving
these and other efforts.
We fulfilled the obligations set forth in the agreement with the DoJ, including continuing to enhance our
integrity program and self-reporting during the agreement’s three-year term. Accordingly, in 2021 the
agreement was fulfilled.
In May 2019, the CFTC contacted us with an inquiry regarding trading activities related to Lava Jato. We
reiterate that we will continue to cooperate with regulatory authorities, including the CFTC, regarding any
inquiry, reinforcing our commitment to integrity and transparency.
Brazil: Prosecutor’s Office
In 2015, the state of São Paulo Prosecutor’s Office established a civil proceeding to investigate the
existence of potential damages caused by us to investors listed in the Brazilian stock market. However, the
Brazilian Federal Prosecutor’s Office assessed this civil proceeding and determined that the São Paulo
Public Prosecutor’s Office has no authority over this matter, which must be presided over by the Brazilian
Federal Prosecutor’s Office. We have provided all relevant information required by the authorities.
Investor Claims
Netherlands: Collective action in the Netherlands
On January 23, 2017, the Stichting Petrobras Compensation Foundation (“Foundation”) filed an action
before the district court in Rotterdam, in the Netherlands, against us and our subsidiaries Petrobras
International Braspetro B.V. (PIBBV), Petrobras Global Finance B.V. (PGF BV), our former joint venture PO&G
Petrobras Oil & Gas B.V. (PO&G) and some of our former managers.
The Foundation allegedly represents the interests of an unidentified group of investors and alleges that,
based on the facts uncovered by the Lava Jato investigation, the defendants acted unlawfully towards
investors. Based on the allegations, the Foundation seeks a number of declaratory relief from the Dutch
court.
On August 23, 2017, a hearing was held at the District Court in Rotterdam (“Court”) to establish the
timeframe for proceedings. We (and other defendants) presented preliminary defenses on November 29,
2017 and the Foundation presented its response on March 28, 2018. On June 28, 2018, a hearing was held
for the parties to present oral arguments. On September 19, 2018, the Court rendered its interim decision
in the motion proceedings in which it accepted jurisdiction in most of the Foundation´s claims, without any
assessment on the merits of the case.
On January 29, 2020, the Court determined that shareholders who understand Portuguese and / or who
bought shares through intermediaries or other agents who understand that language, among other
shareholders, are subject to the arbitration clause provided for in our Bylaws, remaining out of the collective
action proposed by the Foundation. The Court also considered the binding effect of the agreement signed
to close the United States' Class action. In this way, the Foundation needs to demonstrate that it represents
a sufficient number of investors to justify pursuing collective action in the Netherlands. The Foundation
and us presented the oral arguments at a hearing held on January 26, 2021.
On May 26, 2021, the Court decided that the collective action shall continue and that the arbitration clause
of our bylaws does not bar its shareholders from access to the Dutch courts and that the Foundation can
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represent the interests of these shareholders. Notwithstanding the foregoing, the Court decided that our
investors who have commenced arbitration proceedings, as well as our investors who have commenced
proceedings in which the independent public court has ruled by final decision that they are bound by the
arbitration clause, are excluded from the collective action. The lawsuit has entered the merits phase.
This collective action involves complex issues that are subject to substantial uncertainties and depend on a
number of factors such as the standing of the Foundation as the alleged representative of the investors'
interests, the applicable rules to this complaint, the information produced the evidentiary phase of the
proceedings, analysis by experts, the timing of court decisions and rulings by the court on key issues, and
the Foundation only seeks declaratory reliefs in this collective action. Currently, it is not possible to
determine if we will be found responsible for the payment of compensation in subsequent individual
complaints after this action as this assessment depends on the outcome of these complex issues. Moreover,
it is uncertain which investors will be able to file subsequent individual complaints related to this matter
against us.
In addition, the allegations asserted are broad, span a multi-year period and involve a wide range of
activities, and, at the current stage, the impacts of such allegations are highly uncertain. The uncertainties
inherent in all such matters affect the amount and timing of the ultimate resolution of these actions. As a
result, we are unable to make a reliable estimate of eventual loss arising from this action. We are a victim of
the corruption scheme uncovered by the Lava Jato investigation and aims to present and prove this before
the Dutch Court.
The uncertainties inherent in all such matters do not enable us to make a reliable estimate of an eventual
loss arising from this action. Compensation for the alleged damages will only be determined by court rulings
on complaints to be filed by individual investors. The Foundation is not able to demand compensation for
damages.
We deny the allegations presented by the Foundation and intend to defend ourselves vigorously.
Other Related Investor Claims
Arbitration in Brazil
We are also currently a party to seven arbitration proceedings brought by Brazilian and foreign investors
that purchased our shares traded on the B3, alleging financial losses caused by facts uncovered in Lava
Jato.
Due to substantial uncertainties inherent to these kinds of proceedings and the highly uncertain impacts
of such allegations, it is not possible for us to identify possible risks related to this action and to produce a
reliable estimate of eventual loss.
Depending on the outcome of these claims, we may have to pay substantial amounts, which may have a
significant effect on our financial condition.
Most of these arbitrations are far from a definitive judgment by the respective arbitral tribunals. However,
in one of the arbitrations, proposed by two institutional investors, on May 26, 2020, a partial arbitration
award has been issued. The partial award indicates our liability, but does not determine our payment of
amounts, nor does it end the procedure. This arbitration is confidential, as well as the others in progress,
and the partial award represents only the position of the three arbitrators of such arbitration panel and it
is not extendable to the other existing arbitrations. On July 20, 2020, we filed a lawsuit for the annulment
of this partial arbitration award, considering our view that it contains serious flaws and improprieties. On
November 10, 2020, the first level judge of Rio de Janeiro state court declared the partial award null. The
appeals against this decision are pending. In compliance with CAM rules, the lawsuit is confidential. We
reiterate that we will continue to defend ourselves vigorously, out of respect for our current shareholders,
in all arbitrations to which we are a party.
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In 2021, there were no material developments that could change the position described in the paragraph
above.
Arbitration in Argentina
In 2018, we were served with an arbitral claim filed by Consumidores Financieros Asociación Civil para su
Defensa (the “Association”) against us and other individuals and legal entities, before the “Tribunal de
Arbitraje General de la Bolsa de Comercio de Buenos Aires” (“Arbitral Tribunal”).
Among other issues, the Association alleged our liability for a supposed loss of market value of our shares
in Argentina, due to proceedings related to Lava Jato.
In June 2019, the Arbitral Tribunal decided that the arbitral claim should be considered withdrawn due to
the lack of payment of the arbitral fee by the Association. The Association has filed appeals that were
rejected by the court of appeals on November 20, 2019. The Association has appealed to the Argentinian
Supreme Court, and a final decision is still pending.
Criminal Actions in Argentina
We were accused of these two criminal actions in Argentina, as described below:
Criminal action alleging non-compliance by us with the obligation to publish as “relevant fact” in the
Argentine market the existence of a class action claim filed by Consumidores Financieros Asociación
Civil para su Defensa before the Judicial Commercial Courts (Judicial Commercial Claim), pursuant
to provisions of Argentine capital market law. It is worth mentioning that the Judicial Commercial
Claim had never been served to us. On March 4, 2021, the court (Room A of the Economic Criminal
Chamber) decided that this criminal action should be transferred from the Criminal Economic Court
No. 3 of the city of Buenos Aires to the Criminal Economic Court No. 2 of the same city. We have filed
procedural defenses before the criminal court and some of them are still pending.
Criminal action alleging fraudulent offer of securities aggravated by allegedly having stated false
data in our financial statements issued in 2015. This criminal court docket is being handled by
Criminal Economic Court No. 2 of the city of Buenos Aires. We have filed procedural defenses before
the criminal court, currently under review by Argentine Courts of Appeal. On October 21, 2021, the
Court of Appeals overturned the lower court decision that had recognized our immunity from
jurisdiction in Argentina on the grounds that the matter should be reassessed after the production
of evidence. We have appealed against this decision before the Court of Cassation, which is still
pending judgment. On the same occasion, the Court of Appeals recognized that the Association
could not act as a representative of financial consumers, due to the loss of its registration with the
competent Argentine bodies.
Sete Brasil’s Investor Claim and Mediation Procedure
We are currently a party to a lawsuit in the District Court of the District of Columbia in Washington, D.C. filed
by EIG in 2016, a complaint against us concerning its indirect purchase of equity interests in Sete Brasil, a
company created in order to build rigs with high local content. In this proceeding, EIG alleges that we
induced investors to invest in Sete Brasil and that we were among the parties responsible for the financial
crisis of Sete Brasil, which filed judicial recovery proceedings (“recuperação judicial”), in Brazil.
The District Court denied our motion to dismiss on various grounds including sovereign immunity and ruled
that the claims could proceed to discovery, which is the exchange of legal information and known facts of a
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case between the parties. During 2020 and 2021, the parties engaged in extensive fact and expert Discovery,
and filed motions for summary judgment.
We were also a party to arbitrations in Brazil filed by investors of Sete Brasil, which concluded in 2020 when
a favorable arbitration award was granted to us. On April 1, 2020, July 29, 2020, and on December 17, 2020,
we disclosed the settlement of three other arbitrations related to the investment in Sete Brasil.
In addition, as result of an extrajudicial mediation initiated in 2017 in Brazil, in 2019 our Board of Directors
approved the final terms of an agreement to be executed between us and Sete Brasil, the key terms of which
include: (i) maintenance of charter and operation contracts referring to four drilling rigs, with termination
of signed contracts in relation to the other twenty-four drilling rigs; (ii) the contracts shall have effect for
ten years, with a daily rate of US$299 thousand, including the chartering and operation of the units; (iii) and
our removal and the removal of our subsidiaries from the shareholding structure of the companies of Grupo
Sete Brasil and FIP Sondas until we no longer hold any shares in such company; and (iv) the resulting
dissolution of all other contracts that are not compatible with the terms of the agreement. Magni Partners
shall charter the rigs to us and the rigs shall be operated by Etesco.
In 2020, the settlement agreement was executed by PNBV, Sete Brasil, other group companies and us,
however Sete Brasil notified us in late January 2021 that certain required conditions would not be fulfilled
prior to the deadline of January 31, 2021. As a result, our Executive Board authorized the beginning of a
new negotiation with Sete Brasil, which is still ongoing.
We no longer hold any direct or indirect equity in the companies of the Sete Brasil Group.
Other Legal proceedings
Legal Proceedings and Preliminary Procedure on TCU – Divestments
There are some judicial proceedings (mainly civil suits), which allege a supposed lack of publicity and
competitiveness in our proceedings, and in some cases the purchase price, for the sale of participation
shares in controlled companies and assets, such as exploration and production rights in Oil & Gas Fields
(“Divestment Bids”). Some bids were suspended due to injunctions granted under preliminary analysis,
which were reversed after we presented our statement of defense and/or appeals. Although the
aforementioned court proceedings are still pending on the final awards, there is no injunction preventing
any Divestment Bid.
There are constitutional actions filed before the Brazilian Supreme Court challenging the constitutionality
of the Decree No. 9,188/2017, which sets forth rules for divestment of assets and controlled affiliates by
federal mixed-capital corporations, including us. Due to the preliminary injunction granted on June 27, 2018
by the Supreme Court’s Minister Ricardo Lewandowski in Direct Unconstitutionality Action – ADI 5624
MC/DF, which presumably could affect its Divestments, we have suspended some sales, according to the
press release dated July 3, 2018. On June 6, 2019, the court partially revised the injunction to the extent
that state-owned companies are allowed to sell their corporate control in affiliates’ companies provided
that such state-owned companies were granted a general authorization to do so by their law of
incorporation and that the sale process is competitive and executed in accordance with the constitutional
principles applicable to the public administration, pursuant to Federal Decree No. 9,188/2017. Hence, we
may seek the divestment of assets and controlled affiliates, without any constraint. Another constitutional
action (Direct Unconstitutionality Action 5841), with the same purpose, was filed and the Brazilian Supreme
Court has denied the injunction in virtual sessions held in December 2020. As of December 2021, the final
decision of both constitutional procedures are still pending.
Also, there is a Direct Unconstitutionality Action filed against Federal Decree No. 9,355/18 (“Federal
Decree”) that aims at the immediate suspension of its effects and a declaration of unconstitutionality for
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allegedly disregarding the provisions of articles 28 to 84 of Law No. 13,303/16 and the principles of legality,
morality, impersonality and efficiency (Direct Unconstitutionality Action – ADI -5942).
On December 19, 2018, a preliminary injunction was granted to suspend the effectiveness of the Federal
Decree and order us to follow the rules of Law No. 13,303/16 in relation to the procedures for the
assignment of exploration and production rights in Brazil (“Decision”). On January 11, 2019, the President
of the Supreme Court granted a preliminary injunction to suspend the effects of the Decision until the
judgment by the plenary of the court, which occurred in virtual sessions in October, 2020. The court has
ruled the claim groundless by a decision published in the Federal Official Gazette on February 8, 2021.
With respect to TCU, all projects included in our divestment portfolio (excluding partnerships and
acquisitions, subject to another set of rules) follow the methodology deemed appropriate by TCU under
administrative procedure TC-013.056/2016 -6. Recently, our divestment process methodology was
reviewed and forwarded to TCU under administrative procedure TC-009.508/2019 -8. The most up-to-date
methodology took effect on August 12, 2021.
Labor Proceedings
RMNR
There are a number of lawsuits relating to Minimum Compensation per Level and Working Regime (“RMNR”)
with the purpose to review its calculating criteria.
The RMNR consists of a minimum compensation guaranteed to the workforce, based on the salary level, the
work regime and condition and the geographic location. This compensation policy was created and
implemented in 2007 as a result of collective bargaining with union representatives and approval in
employee assemblies, and it was only challenged three years after its implementation. The matter at
dispute is whether to include additional working arrangements and special working conditions as a
complement to RMNR.
In 2018, the Brazilian Superior Labor Court (“TST”) ruled against us and we filed an appeal against its
decision. The Brazilian Supreme Court (“STF”) suspended the effects of the decision issued by the TST and
called for the national suspension of the ongoing proceedings relating to RMNR.
In 2021, the Justice Rapporteur of STF recognized the validity of the collective bargaining agreement freely
entered into between us and the unions, reversing the Superior Labor Court decision. An appeal was filed
against Reporting Justice’s decision.
Currently, the judgment of the appeals filed by the plaintiff and by several amici curiae against the decision
of the Justice Rapporteur is in progress at the first chamber of STF, formed by five Justices. As of March 25,
2022, three Justices deliberated in favor of the company, one Justice recused himself from the case and
one Justice requested to see the case records. Judgment of this appeal is therefore still pending.
Applicable rate
Since several judges were considering the application of the rate provided for by the law (“Taxa
Referencial”) to be unconstitutional, the matter was referred to the STF. In December 2020, the STF decided
that, in labor litigation, the IPCA-E rate should be applied up until the date that the process is initiated, and
the SELIC rate should be applied as of the date that the process has been initiated. The effect on our largest
provisions, including RMNR provisions, is already taken into account in our results.
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Unification of Fields
We filed four arbitrations under the ICC administration challenging the ANP’s decision to unify our
unconnected oil fields (Parque das Baleias, Tupi and Cernambi; Baúna and Piracaba; Tartaruga Verde and
Tartaruga Mestiça). The Parque das Baleias arbitration was terminated by means of an agreement executed
by the parties.
In the case of the Tartaruga Mestiça and Tartaruga Verde arbitration, the Federal Court of Rio de Janeiro
upheld the competence-competence principle, in which the arbitral tribunal is entitled to rule on its own
jurisdiction of the case. Thus, this arbitration was resumed and the parties are waiting for the arbitration
award.
In relation to the Baúna and Piracaba arbitration, a judicial injunction is keeping it suspended. The Federal
Court of Rio de Janeiro will decide an appeal filed by us to resume the arbitration proceeding.
In addition, the BM-S-11 Consortium, formed with Shell and Petrogal, of which we are the operator,
challenged the ANP’s decision on unifying Tupi and Cernambi fields. The arbitration remains suspended due
to a judicial injunction. Currently, the Brazilian Superior Court decided to annul the former judgment issued
by the Federal Court of Rio de Janeiro in order to determine a new trial. Therefore, the Federal Court will
once again decide which court (the state court or arbitral tribunal) should decide the merits of the case.
Petros
Since 2013, lawsuits classified as “Petros Class Actions” were filed by unions and associations related to
Fundação Petrobrás de Seguridade Social (Petros), whereby we are being sued to contribute directly to the
pension plan scheme, suspension of the balancing plan (plano de equacionamento), payment of increased
benefits to participants and beneficiaries, payment of all actuarial and financial insufficiencies of the plan
and estimated economic value of the participants in solving the entity's accumulated deficits based on
allegation of fraud and mismanagement of Petros.
There are also lawsuits filed by Petros against us, requesting payment of contributions for a reinstated
employee, payment of employer contributions for increased judicial benefits and payment of amounts to
restore the mathematical reserve. We filed a lawsuit against PETROS to obtain the reimbursement of
amounts paid by us as a consequence of judicial rulings according to which PETROBRAS and PETROS would
have a joint and several liability.
Natural Gas Distributors
Recently, we were sued by some natural gas distributors and/or public entities. The requests in the lawsuit
seek the extension of the terms of natural gas supply contracts that would have expired in December 2021.
Since the prices of natural gas showed a large increase in the last months of 2021, we offered to the natural
gas distributors proposals for new contracts with prices aligned with the current natural gas market.
However, some natural gas distributors and/or public entities intend to avoid the adjusted prices alleging
that we abused our economic power. In these cases, judges granted the injuction to maintain the previous
contracts´ prices. We appealed against such decisions to the Brazilian Courts, and the appeals are pending
judgment. In addition, since the parties had agreed to resolve the disputes by arbitration, we filed
arbitration proceedings, which are all confidential.
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Drilling contract with Vantage
Furthermore, we were a party to an arbitration with Vantage Deepwater Company and Vantage Deepwater
Drilling, Inc. (collectively, “Vantage”) administered by the International Centre for Dispute Resolution and
related to a drilling contract we entered into with Vantage. In July 2018, a tribunal of three members
concluded by majority, with one dissenting opinion, Vantage was entitled to receive US$622.02 million, plus
interest of 15.2% per annum compounded monthly, as compensation for the early termination of said
contract and invoices related to the drilling of a well in the Gulf of Mexico. After an unsuccessful motion to
vacate the award, in 2019, we paid the amount of the award to Vantage while preserving our right to appeal.
In 2020, the Court of Appeals affirmed Vantage’s judgment on the award. In January 2021, we filed a
petition for a writ of certiorari before the Supreme Court of the United States, which was denied.
Environmental
Since 2000, we are party to another public civil action regarding the OSPAR pipeline, related to the
obligation to compensate damages and alleged moral damages resulting from the environmental accident
that occurred in the state of Paraná in July 2000. In September 2019, we were sentenced in the mentioned
civil action which leaded us to sign an agreement (“acordo judicial”) in October 2021, in the amount of
US$253 million (to be paid in four quarterly installments starting in October 2021), to terminate the
obligation mentioned above. The agreement has been signed with the Federal Prosecutor’s Office, the State
of Paraná Prosecutor’s Office, the State of Paraná, Brazilian Institute of the Environment and Renewable
Natural Resources (“IBAMA”), the State of Paraná Environmental Agency (Instituto Água e Terra - IAT) and
Araucária County. The judicial procedures follow only to discuss lawyer’s fees.
For further information on our material legal proceedings, see Note 18 to our audited consolidated financial
statements.
Tax Proceedings
We are currently party to legal proceedings relating to tax claims. For further information on our material
tax proceedings, see Note 18 to our audited consolidated financial statements.
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Tax
Tax Strategy and Effect of Taxes on Our Income
Our tax strategy outlines the compliance with tax laws of Brazil and other countries, where we operate as a
corporation that influences the economic and social environment of which we are part. We also aim at
engaging with tax authorities in an ethical and transparent manner. Considering that we are the biggest
taxpayers in Brazil, our engagement with tax authorities may result in various effects on tax collection at
the federal, state and municipal levels, as well as production taxes under the ANP.
We are subject to tax on our income at a Brazilian statutory corporate rate of 34%, comprising of a 25% rate
of income tax and a social contribution tax at a 9% rate. Since 2015, we have been recognizing the accounting
results of our foreign subsidiaries for Brazilian income tax purposes based on Brazilian statutory corporate
rates as established by Law No. 12,973/2014.
We follow the tranfer princing rules in transactions involving related parties in the countries that we
perform our activities.
In addition to taxes paid on behalf of consumers to the Brazilian federal government, as well as state and
municipal governments, such as the value-added tax (Imposto sobre Circulação de Mercadorias e Serviços,
or “ICMS”), we are required to pay three main charges on our oil production activities in Brazil under the
scope of the ANP: (i) royalties, (ii) special participation and (iii) retention bonuses. See “– Taxation under
Concession Regime for Oil and Gas” below and “Risks – Risk Factors – Government Ownership and Country
Risks” in this annual report. These charges imposed by the Brazilian federal government are included in our
cost of sales.
For further information regarding our tax collection disclosed in our Tax Report 2021, please visit our
website at www.petrobras.com.br/ir. The information available on our website is not and shall not be
deemed to be incorporated by reference to this annual report.
Taxation under Concession Regime for Oil and Gas
According to Law No. 9,478/1997 and under our concession agreements for exploration and
production activities with the ANP, we are required to pay the government the following:
Signing bonuses paid upon the execution of the concession agreement, which are based on the
amount of the winning bid, subject to the minimum signing bonuses published in the relevant
bidding guidelines (edital de licitação);
Annual retention bonuses for the occupation or retention of areas available for exploration and
production, at a rate established by the ANP in the relevant bidding guidelines based on the size,
location and geological characteristics of the concession block;
Special participation charges at a rate ranging from zero to 40% of the net income derived from the
production of fields that reach high production volumes or profitability, according to the criteria
established in the applicable legislation. Net revenues are gross revenues, based on reference prices
for crude oil or natural gas established by Decree No. 2,705 and ANP regulatory acts, less royalties
paid, investments in exploration, operational costs and depreciation adjustments and applicable
taxes. In 2021, we paid this government take on 13 of our fields, namely Barracuda, Jubarte, Leste
do Urucu, Marlim Leste, Marlim Sul, Mexilhão, Rio Urucu, Roncador, Sapinhoá, Tartaruga Verde,
Manati, Albacora Leste and Tupi.
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Royalties to be established in the concession contracts at a rate ranging between 5% and 10% of
gross revenues from production, based on reference prices for crude oil or natural gas established
in its regulatory acts. In establishing royalty rates in the concession contracts, the ANP also takes
into consideration the geological risks and expected productivity levels for each concession. Most of
our crude oil production is currently paid at the maximum royalty rate.
Law No. 9,478/1997 also requires concessionaires of onshore fields to pay to the owner of the land a
participation fee that varies between 0.5% and 1.0% of the sales revenues derived from the production of
the field.
Taxation Model for the Oil and Gas Industry (Repetro-SPED)
On December 28, 2017, the Brazilian federal government enacted Law No. 13,586, which outlined a new
taxation model for the oil and gas industry and, along with the Decree No. 9,128/2017, established a new
special regime for exploration, development and production of oil, gas and other liquid hydrocarbons
named Repetro-Sped, which will expire in December 2040.
This regime provides for the continuation of total tax relief over goods imported with temporary
permanence in Brazil, as previously established by the former Repetro (special customs regime for the
export and import of goods designated to exploration and production of oil and natural gas reserves), and
adds this relief to goods permanently held in Brazil. This benefit allowed for the migration of all the goods
acquired in the former Repetro to the Repetro-Sped.
In 2018, we started to transfer the ownership of oil and gas assets under this regime from our foreign
subsidiaries to our parent company and the joint ventures (consortia) in Brazil. The transfer was completed
in 2020.
In addition, the legislation prescribes the Repetro-Industrialização, a special tax regime, regulated in 2019,
which exempts acquisitions from the oil and gas supply chain established in Brazil.
Following the creation of Repetro-Sped and Repetro-Industrialização, some Brazilian states, pursuant to a
decision by the Brazilian National Council of Finance Policies (“CONFAZ”), agreed to grant tax incentives
relating to the value added tax (“ICMS”) over transactions under these regimes to the extent each state
enacts its specific regulation providing for the tax relief on the oil and gas industry.
Taxation Relating to the ADSs and our Common and Preferred Shares
The following summary contains a description of material Brazilian and U.S. federal income tax
considerations that may be relevant to the purchase, ownership and disposition of preferred or common
shares or ADSs by a holder. This summary does not describe any tax consequences arising under the laws
of any state, locality or taxing jurisdiction other than Brazil and the United States.
This summary is based upon the tax laws of Brazil and the United States as in effect on the date of this
annual report, which are subject to change (possibly with retroactive effect). This summary is also based
upon the representations of the depositary and on the assumption that the obligations in the deposit
agreement and any related documents will be performed in accordance with their respective terms.
This description is not a comprehensive description of the tax considerations that may be relevant to any
particular investor, including tax considerations that arise from rules that are generally applicable to all
taxpayers or to certain classes of investors or rules that investors are generally assumed to know.
Prospective purchasers of common or preferred shares or ADSs should consult their own tax advisors as to
the tax consequences of the acquisition, ownership and disposition of common or preferred shares or ADSs.
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There is no income tax treaty between the United States and Brazil. In recent years, the tax authorities of
Brazil and the United States have held discussions that may culminate in such a treaty. We cannot predict,
however, whether or when a treaty will enter into force or how it will affect the U.S. holders of common or
preferred shares or ADSs.
Brazilian Tax Considerations
General
The following discussion summarizes the material Brazilian tax consequences of the acquisition, ownership
and disposition of preferred or common shares or ADSs, as the case may be, by a holder that is not deemed
to be domiciled in Brazil for purposes of Brazilian taxation, also called a non-Brazilian holder.
Under Brazilian law, investors (non-Brazilian holders) may invest in the preferred or common shares under
CMN Resolution No. 4,373 or under Law No. 4,131/1962. The rules of CMN Resolution No. 4,373 allow foreign
investors to invest in almost all instruments and to engage in almost all transactions available in the
Brazilian financial and capital markets, provided that certain requirements are met. In accordance with CMN
Resolution No. 4,373, the definition of foreign investor includes individuals, legal entities, mutual funds and
other collective investment entities, domiciled or headquartered abroad.
Pursuant to this rule, foreign investors must: (i) appoint at least one representative in Brazil with powers to
perform actions relating to their foreign investment (such as registration and keeping updated records of
all transactions with the Central Bank of Brazil); (ii) complete the appropriate foreign investor registration
form; (iii) register as a foreign investor with the CVM; and (iv) register the foreign investment with the
Central Bank of Brazil.
On October 1, 2020, CMN Resolution No. 4,852 amended Resolution No. 4,373, allowing CVM to release non-
resident individual investors from the obligation to obtain registration with CVM.
Securities and other financial assets held by foreign investors pursuant to CMN Resolution No. 4,373 must
be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the CVM.
In addition, securities trading is restricted to transactions carried out in the stock exchanges or organized
over-the-counter markets authorized by the CVM.
Taxation of Dividends
Generally speaking, dividends paid by us, including stock dividends and other dividends paid in property to
the Depositary in respect of the ADSs, or to a non-Brazilian holder in respect of the preferred or common
shares, are not subject to withholding income tax in Brazil, to the extent that such amounts are related to
profits generated after January 1, 1996.
We must pay to our shareholders (including non-Brazilian holders of common or preferred shares or ADSs)
interest on the amount of dividends payable to them, updated by the SELIC rate, from the end of each fiscal
year through the date of effective payment of those dividends. These interest payments are considered
fixed-yield income and are subject to withholding income tax at varying rates depending on the length of
period of interest accrual. The tax rate for payments made to beneficiaries resident or domiciled in Brazil
varies from 15%, in case of interest accrued for a period greater than 720 days, 17.5% in case of interest
accrued for a period between 361 and 720 days, 20% in case of interest accrued for a period between 181
and 360 days, and to 22.5%, in case of interest accrued for a period up to 180 days. However, when the
beneficiary is a non-Brazilian holder, under CMN Resolution No. 4,373 rules, the general applicable
withholding income tax rate over interest is 15% except in case the beneficiary is resident or domiciled in a
country or other jurisdiction that does not impose income tax or imposes it at a maximum income tax rate
lower than 17% (a Low or Nil Tax Jurisdiction) or, based on the position of the Brazilian tax authorities, a
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country or other jurisdiction where the local legislation does not allow access to information related to the
shareholding composition of legal entities, to their ownership or to the identity of the effective beneficiary
of the income attributed to shareholders (the “Non-Transparency Rule”), when the applicable withholding
income tax rate will be 25%. See “Tax – Taxation of Dividends – Clarifications on Non-Brazilian Holders
Resident or Domiciled in a Low or Nil Tax Jurisdiction” in this annual report.
Taxation on Interest on Capital
Any payment of interest on capital to holders of ADSs or preferred or common shares, whether or not they
are Brazilian residents, is subject to Brazilian withholding income tax at the rate of 15% at the time we record
such liability, whether or not the effective payment is made at that time. See “Shareholder Information –
Dividends – Payment of Dividends and Interest on Capital” in this annual report. In the case of non-Brazilian
residents that are resident in a Low or Nil Tax Jurisdiction (including in the view of Brazilian authorities the
jurisdictions to which the Non-Transparency Rule applies), the applicable withholding income tax rate is
25%. See “Tax – Taxation of Dividends – Clarifications on Non-Brazilian Holders Resident or Domiciled in a
Low or Nil Tax Jurisdiction” in this annual report. The payment of interest with respect to updating recorded
distributions by the SELIC rate that is applicable to payments of dividends applies equally to payments of
interest on capital. The determination of whether or not we will make distributions in the form of interest
on capital or in the form of dividends is made by our Board of Directors at the time distributions are to be
made. We cannot determine how our Board of Directors will make these determinations in connection with
future distributions.
Taxation of Gains
For purposes of Brazilian taxation on capital gains, two types of non-Brazilian holders have to be
considered: (i) non-Brazilian holders of ADSs, preferred shares or common shares that are not resident or
domiciled in a Low or Nil Tax Jurisdiction, and that, in the case of preferred or common shares, have
registered before the Central Bank of Brazil and the CVM in accordance with CMN Resolution No. 4,373; and
(ii) any other non-Brazilian holder, including non-Brazilian holders who invest in Brazil not in accordance
with CMN Resolution No. 4,373 (including registration under Law No. 4,131/1962) and who are resident or
domiciled in a Low or Nil Tax Jurisdiction. See “Tax – Taxation of Dividends – Clarifications on Non- Brazilian
Holders Resident or Domiciled in a Low or Nil Tax Jurisdiction” in this annual report.
According to Law No. 10,833/2003, capital gains realized on the disposition of assets located in Brazil by
non-Brazilian holders, whether or not to other non-residents and whether made outside or within Brazil,
may be subject to taxation in Brazil. With respect to the disposition of common or preferred shares, as they
are assets located in Brazil, the non-Brazilian holder may be subject to income tax on any gains realized,
following the rules described below, regardless of whether the transactions are conducted in Brazil or with
a Brazilian resident. It is possible to argue that the ADSs do not fall within the definition of assets located
in Brazil for the purposes of this law, but there is still neither pronunciation from tax authorities nor judicial
court rulings in this respect. Therefore, we are unable to predict whether such understanding will prevail in
the courts of Brazil.
Although there are grounds to sustain otherwise, the deposit of preferred or common shares in exchange
for ADSs may be subject to Brazilian taxation on capital gains if the acquisition cost of the preferred or
common shares is lower than the average price per preferred or common share.
The difference between the acquisition cost and the market price of the preferred or common shares will be
considered realized capital gain that is subject to taxation as described below. There are grounds to sustain
that such taxation is not applicable with respect to non-Brazilian holders registered under the rules of CMN
Resolution No. 4,373 and not resident or domiciled in a Low or Nil Tax Jurisdiction.
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The withdrawal of ADSs in exchange for preferred or common shares should not be considered as giving
rise to a capital gain subject to Brazilian income tax, provided that on receipt of the underlying preferred or
common shares, the non-Brazilian holder complies with the registration procedure with the Central Bank of
Brazil as described below in “Registered Capital.”
Capital gains realized by a non-Brazilian holder on a sale or disposition of preferred or common shares
carried out on a Brazilian stock exchange (which includes transactions carried out on the organized over-
the-counter market) are:
exempt from income tax when the non-Brazilian holder (i) has registered its investment in
accordance with CMN Resolution No. 4,373 and (ii) is not resident or domiciled in a Low or Nil Tax
Jurisdiction;
subject to an income tax at a 25% rate, in cases of gains realized by a non-Brazilian holder resident
or domiciled in a Low or Nil Tax Jurisdiction or a jurisdiction to which the Non-Transparency Rule
applies. In this case, a withholding income tax at a rate of 0.005% of the sale value is levied on the
transaction which can be offset against the eventual income tax due on the capital gain; or
in all other cases, including a case of capital gains realized by a non-Brazilian holder that is not
registered in accordance with CMN Resolution No. 4,373, subject to income tax at the following
progressive rates: 15% that do not exceed R$5 million, 17.5% on the gains between R$5 million and
R$10 million, 20% on the gains between R$10 million and R$30 million and 22.5% on the gains that
exceed R$30 million. In these cases, a withholding income tax at a rate of 0.005% of the sale value is
levied on the transaction, which can be offset against the eventual income tax due on the capital
gain.
Any capital gains realized on a disposition of preferred or common shares that is carried out outside the
Brazilian stock exchange are subject to income tax above rates in case of gains realized by a non-Brazilian
holder that is domiciled or resident in a Low or Nil Tax Jurisdiction or a jurisdiction to which the Non-
Transparency Rule applies. In this last case, for the capital gains related to transactions conducted on the
Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of
0.005% will also apply and can be offset against the eventual income tax due on the capital gain.
In the case of a redemption of preferred or common shares or ADSs or a capital reduction made by us, the
positive difference between the amount received by the non-Brazilian holder and the acquisition cost of the
preferred or common shares or ADSs redeemed or reduced is treated as capital gain derived from the sale
or exchange of shares not carried out on a Brazilian stock exchange market and is therefore generally
subject to the above rates. See “Tax – Taxation of Dividends – Clarifications on Non-Brazilian Holders
Resident or Domiciled in a Low or Nil Tax Jurisdiction” in this annual report.
Any exercise of preemptive rights relating to the preferred or common shares will not be subject to Brazilian
taxation. Any gain on the sale or assignment of preemptive rights will be subject to Brazilian income taxation
according to the same rules applicable to the sale or disposition of preferred or common shares.
No assurance can be made that the current preferential treatment of non-Brazilian holders of the ADSs and
some non-Brazilian holders of the preferred or common shares under CMN Resolution No. 4,373 will
continue to apply in the future.
Additional Recent Rules Regarding Taxation of Gains
On March 16, 2016, the Brazilian federal government converted the Provisional Executive Order (Medida
Provisória) No. 692 into Law No. 13,259, which established progressive income tax rates applicable to capital
gains derived from the disposition of assets by Brazilian individuals. Law No. 13,259 provides for new rates
that range from 15% to 22.5% depending on the amount of the gain recognized by the Brazilian individual,
as follows: (i) 15% on gains not exceeding R$5 million; (ii) 17.5% on gains that exceed R$5 million and do not
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exceed R$10 million; (iii) 20% on gains that exceed R$10 million and do not exceed R$30 million; and (iv)
22.5% on gains exceeding R$30 million. Pursuant to Section 18 of Law No. 9,249/95, the tax treatment
applicable to capital gains earned by Brazilian individuals also applies to capital gains earned by non-
Brazilian residents (except in cases that remain subject to the application of specific rules).
Clarifications on Non-Brazilian Holders Resident or Domiciled in a Low or Nil Tax
Jurisdiction
Law No. 9,779/1999 states that, except for limited prescribed circumstances, income derived from
transactions by a person resident or domiciled in a Low or Nil Tax Jurisdiction will be subject to withholding
income tax at the rate of 25%. A Low or Nil Tax Jurisdiction is generally considered to be a country or other
jurisdiction which does not impose any income tax or which imposes such tax at a maximum rate lower than
17%. Under certain circumstances, the NonTransparency Rule is also taken into account for determining
whether a country or other jurisdiction is a Low or Nil Tax Jurisdiction. In addition, Law No. 11,727/2008
introduced the concept of a “privileged tax regime,” which is defined as a tax regime which (i) does not tax
income or taxes it at a maximum rate lower than 17%; (ii) grants tax benefits to non-resident entities or
individuals (a) without the requirement to carry out a substantial economic activity in the country or other
jurisdiction or (b) contingent on the non-exercise of a substantial economic activity in the country or other
jurisdiction; (iii) does not tax or that taxes foreign source income at a maximum rate lower than 17%; or (iv)
does not provide access to information related to shareholding composition, ownership of assets and rights
or economic transactions carried out. We believe that the best interpretation of Law No. 11,727/2008 is that
the concept of a “privileged tax regime” will apply solely for purposes of the transfer pricing rules in export
and import transactions, deductibility for Brazilian corporate income taxes and the thin capitalization rules
and, would therefore generally not have an impact on the taxation of a non-Brazilian holder of preferred or
common shares or ADSs, as discussed herein. However, we are unable to ascertain whether the privileged
tax regime concept will also apply in the context of the rules applicable to Low or Nil Tax Jurisdictions,
although the Brazilian tax authorities appear to agree with our position, in view of the provisions of the
Withholding Income Tax Manual (MAFON – 2020), issued by the Brazilian Revenue Service.
Taxation of Foreign Exchange Transactions (IOF/Exchange)
Brazilian law imposes the IOF/Exchange on the conversion of reais into foreign currency and on the
conversion of foreign currency into reais. Currently, for most foreign currency exchange transactions, the
rate of IOF/Exchange is 0.38%. However, foreign exchange transactions related to inflows of funds to Brazil
for investments made by foreign investors in the Brazilian financial and capital markets are generally
subject to IOF/Exchange at a zero percent rate. Foreign exchange transactions related to outflows of
proceeds from Brazil in connection with investments made by foreign investors in the Brazilian financial and
capital markets are also subject to the IOF/Exchange tax at a zero percent rate. This zero percent rate
applies to payments of dividends and interest on capital received by foreign investors with respect to
investments in the Brazilian financial and capital markets, such as investments made by a non-Brazilian
holder as described in CMN Resolution No. 4,373. The Brazilian tax authorities may increase such rates at
any time, up to 25% of the amount of the foreign exchange transaction, but not with retroactive effect.
Taxation on Bonds and Securities Transactions (IOF/Bonds)
Brazilian tax legislation imposes IOF/Bonds on transactions involving equity securities, bonds and other
securities, including those carried out on a Brazilian stock exchange. The rate of IOF/Bonds applicable to
transactions involving preferred or common shares is currently zero. However, the Brazilian tax authorities
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may increase such rate at any time up to 1.5% of the transaction amount per day, but the tax increase cannot
be applied retroactively.
The IOF on transfer of shares traded on the Brazilian Stock Exchange which have the specific purpose of
backing the issuance of depositary receipts traded abroad, have been reduced from 1.5% to zero since
December 24, 2013.
Other Brazilian Taxes
There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or
disposition of preferred or common shares or ADSs by a non-Brazilian holder, except for gift and inheritance
taxes which are levied by certain states of Brazil on gifts made or inheritances bestowed by a non-Brazilian
holder to individuals or entities resident or domiciled within such states in Brazil. There are no Brazilian
stamp, issue, registration, or similar taxes or duties payable by holders of preferred or common shares or
ADSs.
Registered Capital
The amount of an investment in preferred or common shares held by a non-Brazilian holder who obtains
registration under CMN Resolution No. 4,373, or by the depositary representing such holder, is eligible for
registration with the Central Bank of Brazil; and such registration allows the remittance outside Brazil of
foreign currency, converted at the commercial market rate, acquired with the proceeds of distributions on,
and amounts realized with respect to dispositions of, such preferred or common shares. The amount
registered (“registered capital”) for each preferred or common share purchased as part of the international
offering or purchased in Brazil after the date hereof, and deposited with the depositary, will be equal to its
purchase price (in U.S. dollars). The registered capital for a preferred or common share that is withdrawn
upon surrender of an ADS will be the U.S. dollar equivalent of:
the average price of a preferred or common share on the Brazilian stock exchange on which the
highest volume of such shares were traded on the day of withdrawal; or
if no preferred or common shares were traded on that day, the average price on the Brazilian stock
exchange on which the highest volume of preferred or common shares were traded in the 15 trading
sessions immediately preceding the date of such withdrawal.
The U.S. dollar value of the average price of preferred or common shares is determined on the basis of the
average of the U.S. dollar/real commercial market rates quoted by the Central Bank of Brazil information
system on that date (or, if the average price of preferred or common shares is determined under the second
option above, price will be determined by the average quoted rates verified on the same 15 preceding
trading sessions as described above).
A non-Brazilian holder of preferred or common shares may be subject to delays in effecting such
registration, which in turn may delay remittances abroad. Such a delay may adversely affect the amount, in
U.S. dollars, received by the non-Brazilian holder. See “Risks – Risk Factors – Equity and Debt Securities
Risks” in this annual report.
U.S. Federal Income Tax Considerations
This summary describes material U.S. federal income tax consequences that may be relevant to a U.S.
Holder (as defined below) from the ownership and disposition of common or preferred shares or ADSs. This
summary is based on the U.S. Internal Revenue Code of 1986, as amended (“the Code”), its legislative
history, existing and proposed U.S. Treasury regulations promulgated thereunder, published rulings by the
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U.S. Internal Revenue Service (IRS), and court decisions, all as in effect as of the date hereof, and all of which
are subject to change or differing interpretations, possibly with retroactive effect. This summary does not
purport to be a comprehensive description of all of the tax consequences that may be relevant to a decision
to hold or dispose of common or preferred shares or ADSs. This summary applies only to purchasers of
common or preferred shares or ADSs who hold the common or preferred shares or ADSs as “capital assets”
(generally, property held for investment), and does not apply to special classes of holders such as dealers
or traders in securities or currencies, holders whose functional currency is not the U.S. dollar, holders of 10%
or more of our shares, measured by voting power or value (taking into account shares held directly or
through depositary arrangements), tax-exempt organizations, partnerships or partners therein, financial
institutions, life insurance companies, holders liable for the alternative minimum tax, securities traders who
elect to account for their investment in common or preferred shares or ADSs on a mark-to-market basis,
persons that enter into a constructive sale transaction with respect to common or preferred shares or ADSs,
persons holding common or preferred shares or ADSs in a hedging transaction or as part of a straddle or
conversion transaction, or nonresident alien individuals present in the United States for more than 182 days
in a taxable year. Moreover, this summary addresses only U.S. federal income tax consequences and does
not address state, local or foreign taxes or the U.S. federal estate and gift taxes or the Medicare tax on net
investment income.
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING THE OVERALL TAX
CONSEQUENCES IN ITS PARTICULAR CIRCUMSTANCES, INCLUDING THE CONSEQUENCES UNDER LAWS
OTHER THAN U.S. FEDERAL INCOME TAX LAWS ADDRESSED HEREIN, OF AN INVESTMENT IN COMMON
OR PREFERRED SHARES OR ADSs.
Shares of our preferred stock will be treated as equity for U.S. federal income tax purposes. In general, a
holder of an ADS will be treated as the holder of the shares of common or preferred stock represented by
those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange ADSs
for the shares of common or preferred stock represented by that ADS.
In this discussion, references to ADSs refer to ADSs with respect to both common and preferred shares, and
references to a “U.S. Holder” are to a holder of a common or preferred share or ADS that is:
an individual who is a citizen or resident of the United States;
a corporation organized under the laws of the United States, any state thereof, or the District of
Columbia; or
otherwise subject to U.S. federal income taxation on a net basis with respect to the share or the ADS.
Taxation of Distributions
A U.S. Holder will recognize ordinary dividend income for U.S. federal income tax purposes in an amount
equal to the amount of any cash and the value of any property we distribute as a dividend to the extent that
such distribution is paid out of our current or accumulated earnings and profits, as determined for U.S.
federal income tax purposes, when such distribution is received by the depositary, in the case of ADSs, or
by the U.S. Holder in the case of a holder of common or preferred shares. The amount of any distribution
will include distributions characterized as interest on capital and the amount of Brazilian tax withheld on
the amount distributed, and the amount of a distribution paid in reais will be measured by reference to the
exchange rate for converting reais into U.S. dollars in effect on the date the distribution is received by the
depositary, in the case of ADSs, or by a U.S. Holder in the case of a holder of common or preferred shares. If
the depositary, in the case of ADSs, or U.S. Holder in the case of a holder of common or preferred shares,
does not convert such reais into U.S. dollars on the date it receives them, it is possible that the U.S. Holder
will recognize foreign currency loss or gain, which would be U.S. source ordinary loss or gain, when the reais
are converted into U.S. dollars. Dividends paid by us will not be eligible for the dividends received deduction
allowed to corporations under the Code.
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Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends
received by a non-corporate U.S. Holder with respect to the ADSs will generally be subject to taxation at
preferential rates if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as
qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United
States and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the
year in which the dividend is paid, a “passive foreign investment company” as defined for U.S. federal income
tax purposes (a PFIC). The ADSs are listed on the NYSE, and will qualify as readily tradable on an established
securities market in the United States so long as they are so listed. Based on our audited consolidated
financial statements and relevant market and shareholder data, we believe that we should not be treated
as a PFIC for U.S. federal income tax purposes with respect to the 2021 or 2020 taxable year. In addition,
based on our audited consolidated financial statements and our current expectations regarding the value
and nature of our assets, the sources and nature of our income, and relevant market and shareholder data,
we do not anticipate becoming a PFIC for our 2022 taxable year. Based on existing guidance, it is not clear
whether dividends received with respect to the shares will be treated as qualified dividends, because the
shares are not themselves listed on a U.S. exchange. U.S. Holders of our ADSs should consult their own tax
advisors regarding the availability of the reduced dividend tax rate in the light of their particular
circumstances.
Distributions out of earnings and profits with respect to the shares or ADSs generally will be treated as
dividend income from sources outside of the United States and generally will be treated as “passive
category income” for U.S. foreign tax credit purposes. Subject to certain limitations, Brazilian income tax
withheld in connection with any distribution with respect to the shares or ADSs may be claimed as a credit
against the U.S. federal income tax liability of a U.S. Holder, or, at the U.S. Holder’s election, such Brazilian
withholding tax may be taken as a deduction against taxable income (provided that the U.S. Holder elects
to deduct, rather than credit, all foreign income taxes paid or accrued for the relevant taxable year). A U.S.
foreign tax credit may not be allowed for Brazilian withholding tax imposed in respect of certain short-term
or hedged positions in securities or in respect of arrangements in which a U.S. Holder’s expected economic
profit is insubstantial. U.S. Holders should consult their own tax advisors regarding the availability of the
U.S. foreign tax credit, including the translation of reais into U.S. dollar for these purposes, in light of their
particular circumstances.
Holders of ADSs that are foreign corporations or nonresident alien individuals (non-U.S. Holders) generally
will not be subject to U.S. federal income tax, including withholding tax, on distributions with respect to
shares or ADSs that are treated as dividend income for U.S. federal income tax purposes unless such
dividends are effectively connected with the conduct by the holder of a trade or business in the United
States.
Taxation of Capital Gains
Upon the sale or other disposition of a share or an ADS, a U.S. Holder will generally recognize U.S. source
capital gain or loss for U.S. federal income tax purposes, equal to the difference between the amount
realized on the disposition and the U.S. Holder’s tax basis in such share or ADS. Any gain or loss will be long-
term capital gain or loss if the shares or ADSs have been held for more than one year. Non-corporate U.S.
Holders of shares or ADSs may be eligible for a preferential rate of U.S. federal income tax in respect of
long-term capital gains. Capital losses may be deducted from taxable income, subject to certain limitations.
For U.S. federal income tax purposes, such disposition would not result in foreign source income to a U.S.
Holder. As a result, a U.S. Holder may not be able to use the foreign tax credit associated with any Brazilian
income taxes imposed on such gains, unless such holder can use the credit against U.S. tax due on other
foreign source income. U.S. Holders should consult their own tax advisors regarding the availability of the
U.S. foreign tax credit.
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Information Reporting and Backup Withholding
The payment of dividends on, and proceeds from the sale or other disposition of, the ADSs or common or
preferred shares to a U.S. Holder within the United States (or through certain U.S. related financial
intermediaries) will generally be subject to information reporting, and may be subject to “backup
withholding” unless the U.S. Holder (i) is an exempt recipient, and demonstrates this fact when so required,
or (ii) timely provides a taxpayer identification number and certifies that no loss of exemption from backup
withholding has occurred and otherwise complies with applicable requirements of the backup withholding
rules. Backup withholding is not an additional tax. The amount of any backup withholding collected from a
payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability
and may entitle the U.S. Holder to a refund, so long as the required information is furnished to the IRS in a
timely manner.
U.S. Holders should consult their own tax advisors about any additional reporting requirements that may
arise as a result of their purchasing, holding or disposing of our ADSs, or common or preferred shares.
A non-U.S. Holder generally will be exempt from these information reporting requirements and backup
withholding tax, but may be required to comply with certain certification and identification procedures in
order to establish its eligibility for such exemption.
Specified Foreign Financial Assets
Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of
US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally
required to file an information statement along with their tax returns, currently on Form 8938, with respect
to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial
institution, as well as securities issued by a non-U.S. issuer (which would include our common and preferred
shares and ADSs) that are not held in accounts maintained by financial institutions. Higher reporting
thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend
this reporting requirement to certain entities that are treated as formed or availed of to hold direct or
indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who
fail to report the required information could be subject to substantial penalties. In addition, the statute of
limitations for assessment of tax would be suspended, in whole or part. Prospective investors should
consult their own tax advisors concerning the application of these rules to their investment, including the
application of the rules to their particular circumstances.
Taxation Relating to PGF’s Notes
The following summary contains a description of material Brazilian, Dutch, European Union and U.S. federal
income tax considerations that may be relevant to the purchase, ownership and disposition of PGF’s debt
securities (the “notes”). This summary does not describe any tax consequences arising under the laws of
any state, locality or taxing jurisdiction other than the Netherlands, Brazil and the United States.
This summary is based on the tax laws of the Netherlands, Brazil and the United States as in effect on the
date of this annual report, which are subject to change (possibly with retroactive effect). This description is
not a comprehensive description of all tax considerations that may be relevant to any particular investor,
including tax considerations that arise from rules generally applicable to all taxpayers or to certain classes
of investors or that investors are generally assumed to know. Prospective purchasers of notes should
consult their own tax advisors regarding the tax consequences of the acquisition, ownership and disposition
of the notes.
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There is no tax treaty to avoid double taxation between Brazil and the United States. In recent years, the
tax authorities of Brazil and the United States have held discussions that may culminate in such a treaty.
We cannot predict, however, whether or when a treaty will enter into force or how it will affect the U.S.
Holders of notes.
Dutch Taxation
The following is a general summary of certain material Dutch tax consequences to holders of the notes in
connection with the acquisition, ownership and disposal of notes in a Dutch company. This summary does
not purport to describe all possible Dutch tax considerations or consequences that may be relevant to a
holder or prospective holder of the notes and does not purport to deal with the tax consequences applicable
to all categories of investors, some of which may be subject to special rules. In view of its general nature,
this general summary should therefore be treated with appropriate caution.
This summary is based on the tax laws of the Netherlands, published regulations thereunder and published
authoritative case law, all as in effect on the date hereof, and all of which are subject to change or to
different interpretation, possibly with retroactive effect. Where the text refers to the “Netherlands” or
“Dutch”, it refers only to the part of the Kingdom of the Netherlands located in Europe. In addition, the
summary is based on the assumption that the notes issued by PGF do not qualify as equity of the for Dutch
tax purposes.
For Dutch tax purposes, a holder of notes may include, without limitation:
an owner of one or more notes who, in addition to the title to such notes, has an economic interest
in such notes;
a person who or an entity that holds the entire economic interest in one or more notes;
a person who or an entity that holds an interest in an entity, such as a partnership or a mutual fund,
that is transparent for Dutch tax purposes, the assets of which comprise one or more notes; and
an individual who or an entity that does not have the legal title to the notes, but to whom the notes
are attributed based either on such individual or entity holding a beneficial interest in the notes or
based on specific statutory provisions, including statutory provisions pursuant to which the notes
are attributed to an individual who is, or who has directly or indirectly inherited the notes from a
person who was, the settlor, grantor or similar originator of a trust, foundation or similar entity that
holds the notes.
The discussion below is included for general information purposes only and is not Dutch tax advice or a
complete description of all Dutch tax consequences relating to the acquisition, holding and disposal of the
notes. Holders or prospective holders of notes should consult their own tax advisers as to the Dutch tax
consequences of purchasing, including, without limitation, the consequences of the receipt of interest and
the sale or other disposition of notes or coupons, in light of their particular circumstances.
Withholding Tax
All payments of interest and principal made by or on behalf of PGF under the notes to holders of notes may
be made free of withholding or deduction of, for or on account of any taxes of any nature imposed, levied,
withheld or assessed by the Netherlands or any political subdivision or taxing authority thereof or therein
except that Dutch withholding tax at a rate of 25.8% (rate for 2022) may apply with respect to payments of
interest and principal made or deemed to be made by or on behalf of PGF, if such payments are made or
deemed to be made to an entity related to PGF (within the meaning of the Dutch Withholding Tax Act 2021,
Wet Bronbelasting 2021 see below), if such related entity:
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is considered to be resident (gevestigd) in a jurisdiction that is listed in the yearly updated Dutch
Regulation on low-taxing states and non-cooperative jurisdictions for tax purposes (Regeling
laagbelastende staten en niet-coöperatieve rechtsgebieden voor belastingdoeleinden) (a "Listed
Jurisdiction"); or
has a permanent establishment located in a Listed Jurisdiction to which the interest payment is
attributable; or
is entitled to the interest payment for the main purpose or one of the main purposes to avoid taxation
for another person or entity and there is an artificial arrangement or transaction or a series of artificial
arrangements or transactions; or
is not considered to be the recipient of the interest in its jurisdiction of residence because such
jurisdiction treats another entity as the recipient of the interest (a hybrid mismatch); or
is not resident in any jurisdiction (also a hybrid mismatch); or
is a reverse hybrid (within the meaning of Article 2(12) of the Dutch Corporate Income Tax Act; Wet op
de vennootschapsbelasting 1969), if and to the extent (x) there is a participant in the reverse hybrid
holding a Qualifying Interest in the reverse hybrid, (y) the jurisdiction of residence of the participant
holding the Qualifying Interest in the reverse hybrid treats the reverse hybrid as transparent for tax
purposes and (z) such participant would have been subject to Dutch withholding tax in respect of the
payments of interest without the interposition of the reverse hybrid,
all within the meaning of the Dutch Withholding Tax Act 2021.
Related entity
For purposes of the Dutch Withholding Tax Act 2021, an entity is considered a related entity in respect of
PGF if:
such entity has a Qualifying Interest (as defined below) in PGF; or
PGF has a Qualifying Interest in such entity; or
a third party has a Qualifying Interest in both PGF and such entity.
The term "Qualifying Interest" means a direct or indirectly held interest – either by an entity individually or
jointly if an entity is part of a collaborating group (samenwerkende groep) – that enables such entity or such
collaborating group to exercise a definite influence over the entity's decisions and allows the holder of such
interest to determine its activities (within the meaning of case law of the European Court of Justice on the
right of freedom of establishment (vrijheid van vestiging).
Taxes on Income and Capital Gains
Please note that the summary in this section does not describe the Dutch tax considerations for:
holders of the notes if such holders, and in the case of an individual, his or her partner or certain of
his or her relatives by blood or marriage in the direct line (including foster children), have a
substantial interest (aanmerkelijk belang) or deemed substantial interest (fictief aanmerkelijk
belang) in PGF under the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001). Generally
speaking, a holder of notes has a substantial interest in PGF if it has, directly or indirectly (and, in the
case of an individual, alone or together with certain relatives) (i) the ownership of, a right to acquire
the ownership of, or certain rights over, shares representing 5% or more of either the total issued
and outstanding capital of PGF or the issued and outstanding capital of any class of shares of PGF,
or (ii) the ownership of, or certain rights over, profit participating certificates (winstbewijzen) that
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relate to 5% or more of either the annual profit or the liquidation proceeds of PGF. A deemed
substantial interest may arise if a substantial interest (or part thereof) has been disposed of, or is
deemed to have been disposed of, on a non-recognition basis;
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investment
investment
pension funds,
institutions (vrijgestelde beleggingsinstellingen) (as defined in the Dutch Corporate Income Tax Act
1969 (Wet op de vennootschapsbelasting 1969)) and other entities that are, in whole or in part, not
subject to or exempt from Dutch corporate income tax; and
institutions (fiscale beleggingsinstellingen), exempt
holders of notes who are individuals and for whom the notes or any benefit derived from the notes
are a remuneration or deemed to be a remuneration for activities performed by such holders or
certain individuals related to such holders (as defined in the Dutch Income Tax Act 2001).
A holder of notes will not be subject to any Dutch taxes on income or capital gains in respect of the notes,
including such tax on any payment under the notes or in respect of any gain realized on the disposal,
deemed disposal, redemption or exchange of the notes, provided that:
such holder is neither a resident nor deemed to be a resident of the Netherlands;
such holder does not have, and is not deemed to have, an enterprise or an interest in an enterprise
that, in whole or in part, is either effectively managed in the Netherlands or carried on through a
(deemed) permanent establishment (vaste inrichting) or a permanent representative (vaste
vertegenwoordiger) in the Netherlands and to which enterprise or part of an enterprise the notes are
attributable;
if such holder is an individual, such income or capital gains do not form “benefits from miscellaneous
activities in the Netherlands” (resultaat uit overige werkzaamheden in Nederland), including without
limitation activities in the Netherlands with respect to the notes that exceed “normal asset
management” (normaal, actief vermogensbeheer);
if such holder is an entity, the holder is not entitled to a share in the profits of an enterprise nor a
co- entitlement to the net worth of an enterprise, which is effectively managed in the Netherlands,
other than by way of securities, and to which enterprise the notes are attributable; and
if such holder is an individual, the holder is not entitled to a share in the profits of an enterprise that
is effectively managed in the Netherlands, other than by way of securities, and to which enterprise
the notes are attributable.
A holder of notes will not be treated as a resident of the Netherlands by reason only of the execution,
delivery or enforcement of its rights and obligations connected to the notes, the issue of the notes or the
performance by PGF of its obligations under the notes.
Gift and Inheritance Taxes
No gift or inheritance taxes will arise in the Netherlands with respect to an acquisition or deemed acquisition
of notes by way of a gift by, or on the death of, a holder of notes who is neither resident nor deemed to be
resident in the Netherlands for the relevant provisions, unless:
in case of a gift of the notes under a suspensive condition by an individual who at the date of the gift
was neither resident nor deemed to be resident in the Netherlands, such individual is resident or
deemed to be resident in the Netherlands at the date of (i) the fulfillment of the condition or (ii)
his/her death and the condition of the gift is fulfilled after the date of his/her death; or
in case of a gift of notes by an individual who at the date of the gift or, in case of a gift under a
suspensive condition, at the date of the fulfillment of the condition was neither resident nor deemed
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to be resident in the Netherlands, such individual dies within 180 days after the date of the gift or
fulfillment of the condition, while being resident or deemed to be resident in the Netherlands.
For purposes of Dutch gift and inheritance taxes, amongst others, a person who holds the Dutch nationality
will be deemed to be resident in the Netherlands if such person has been resident in the Netherlands at any
time during the ten years preceding the date of the gift or such person's death. Additionally, for purposes
of Dutch gift tax, amongst others, a person not holding the Dutch nationality will be deemed to be resident
in the Netherlands if such person has been resident in the Netherlands at any time during the twelve months
preceding the date of the gift.
Value added tax (VAT)
No Dutch VAT will be payable by a holder of the notes in respect of any payment in consideration for the
issue of the notes or with respect to any payment by PGF of principal, interest or premium (if any) on the
notes.
Other Taxes and Duties
No other Dutch registration taxes, or any other similar taxes of a documentary nature, such as capital tax or
stamp duty, will be payable in the Netherlands by or on behalf of a holder of the notes by reason only of the
purchase, ownership and disposal of the notes.
Brazilian Taxation
The following discussion is a summary of the Brazilian tax considerations relating to an investment in the
notes by a non-resident of Brazil. The discussion is based on the tax laws of Brazil as in effect on the date
hereof and is subject to any change in Brazilian law that may come into effect after such date. The
information set forth below is intended to be a general discussion only and does not address all possible
consequences relating to an investment in the notes.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE CONSEQUENCES OF
PURCHASING THE NOTES, INCLUDING, WITHOUT LIMITATION, THE CONSEQUENCES OF THE RECEIPT OF
INTEREST AND THE SALE, REDEMPTION OR REPAYMENT OF THE NOTES OR COUPONS.
Generally, an individual, entity, trust or organization domiciled for tax purposes outside Brazil, or a
“Nonresident,” is taxed in Brazil only when income is derived from Brazilian sources or when the transaction
giving rise to such earnings involves assets in Brazil. Therefore, any gains or interest (including original issue
discount), fees, commissions, expenses and any other income paid by PGF in respect of the notes issued by
them in favor of non-resident holders are not subject to Brazilian taxes.
Interest, fees, commissions, expenses and any other income payable by us as guarantor resident in Brazil to
a non-resident are generally subject to income tax withheld at source. The rate of withholding income tax
in respect of interest payments is generally (in case of fixed yields – See “Taxation of Dividends”) 15%,
unless (i) the holder of the notes is resident or domiciled in a “tax haven jurisdiction” (that is deemed to be
a country or jurisdiction which does not impose any tax on income or which imposes such tax at a maximum
effective rate lower than 17% or where the local legislation imposes restrictions on disclosing the identities
of shareholders, the ownership of investments, or the ultimate beneficiary of earnings distributed to the
non-resident – “tax haven jurisdiction”), in which case the applicable rate is 25% or (ii) such other lower rate
as provided for in an applicable tax treaty between Brazil and another country where the beneficiary is
domiciled. In case the guarantor is required to assume the obligation to pay the principal amount of the
notes, Brazilian tax authorities could attempt to impose withholding income tax at the rate of up to 25% as
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described above. Although Brazilian legislation does not provide a specific tax rule for such cases and there
is no official position from tax authorities or precedents from the Brazilian court regarding the matter, we
believe that the remittance of funds by us as a guarantor for the payment of the principal amount of the
notes will not be subject to income tax in Brazil, because the mere fact that the guarantor is making the
payment does not convert the nature of the principal due under the notes into income of the beneficiary.
If the payments with respect to the notes are made by us, as provided for in the guaranties, the non-resident
holders will be indemnified so that, after payment of all applicable Brazilian taxes collectable by
withholding, deduction or otherwise, with respect to principal, interest and additional amounts payable with
respect to the notes (plus any interest and penalties thereon), a non-resident holder will receive an amount
equal to the amount that such non-resident holder would have received as if no such Brazilian taxes (plus
interest and penalties thereon) were withheld. The Brazilian obligor will, subject to certain exceptions, pay
additional amounts in respect of such withholding or deduction so that the non-resident holder receives
the net amount due.
Gains on the sale or other disposition of the notes made outside of Brazil by a non-resident, other than a
branch or a subsidiary of Brazilian resident, to another non-resident are not subject to Brazilian income tax.
In addition, payments made from Brazil are subject to the tax on foreign exchange transactions
(IOF/Câmbio), which is levied on the conversion of Brazilian currency into foreign currency and on the
conversion of foreign currency into Brazilian currency at a general rate of 0.38%. Other IOF/Câmbio rates
may apply to specific transactions. In any case, the Brazilian federal government may increase, at any time,
such rate up to 25% but only with respect to future transactions.
Generally, there are no inheritance, gift, succession, stamp, or other similar taxes in Brazil with respect to
the ownership, transfer, assignment or any other disposition of the notes by a non-resident, except for gift
and inheritance taxes imposed by some Brazilian states on gifts or bequests by individuals or entities not
domiciled or residing in Brazil to individuals or entities domiciled or residing within such states.
U.S. Federal Income Taxation
The following summary sets forth material United States federal income tax considerations that may be
relevant to a holder of a note that is, for U.S. federal income purposes, a citizen or resident of the United
States or a domestic corporation or that otherwise is subject to U.S. federal income taxation on a net income
basis in respect of the notes (a “U.S. Holder”). This summary is based upon the Code, its legislative history,
existing and proposed U.S. Treasury regulations promulgated thereunder, published rulings by the IRS, and
court decisions, all as in effect as of the date hereof, all of which are subject to change or differing
interpretations, possibly with retroactive effect. This summary does not purport to discuss all aspects of
the U.S. federal income taxation which may be relevant to special classes of investors, such as financial
institutions, insurance companies, dealers or traders in securities or currencies, securities traders who elect
to account for their investment in notes on a mark-to-market basis, regulated investment companies, tax-
exempt organizations, partnerships or partners therein, holders that are subject to the alternative minimum
tax, certain short-term holders of notes, persons that hedge their exposure in the notes or hold notes as
part of a position in a “straddle” or as part of a hedging transaction or “conversion transaction” for U.S.
federal tax purposes, persons that enter into a “constructive sale” transaction with respect to the notes,
nonresident alien individuals present in the United States for more than 182 days in a taxable year, or U.S.
Holders whose functional currency is not the U.S. dollar. U.S. Holders should be aware that the U.S. federal
income tax consequences of holding the notes may be materially different for investors described in the
prior sentence.
In addition, this summary addresses only U.S. federal income tax consequences and does not discuss any
foreign, state or local tax considerations or the Medicare tax on net investment income or under special
timing rules prescribed under section 451(b) of the U.S. Internal Revenue Code. This summary only applies
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to original purchasers of notes who have purchased notes at the original issue price and hold the notes as
“capital assets” (generally, property held for investment). U.S. Holders of notes denominated in a currency
other than US$ should consult their tax advisors regarding the application of foreign currency gain or loss
rules to the notes and the treatment of any foreign currency received in respect of the notes.
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING THE OVERALL TAX
CONSEQUENCES IN ITS PARTICULAR CIRCUMSTANCES, INCLUDING THE CONSEQUENCES UNDER LAWS
OTHER THAN U.S. FEDERAL INCOME TAX LAWS ADDRESSED HEREIN, OF AN INVESTMENT IN THE NOTES.
Payments of Interest
Payment of “qualified stated interest,” as defined below, on a note (including additional amounts, if any)
generally will be taxable to a U.S. Holder as ordinary interest income when such interest is accrued or is
actually or constructively received, in accordance with the U.S. Holder’s applicable method of accounting
for U.S. federal tax purposes. In general, if a note is issued with an “issue price” that is less than its “stated
redemption price at maturity” by an amount equal to or greater than a de minimis amount, such note will be
considered to have “original issue discount,” or OID. For this purpose, the “issue price” generally is the first
price at which a substantial amount of such notes is sold to investors for money. A U.S. Holder should
consult its own tax advisors regarding the issue price for a note, in particular where the note has been issued
pursuant to an exchange offer or a reopening or the note’s terms have been amended. The stated
redemption price at maturity of a note generally includes all payments on the note other than payments of
qualified stated interest.
In general, each U.S. Holder of a note, whether such holder uses the cash or the accrual method of tax
accounting, will be required to include in gross income as ordinary interest income the sum of the “daily
portions” of OID on the note, if any, for all days during the taxable year that the U.S. Holder owns the note.
The daily portions of OID on a note are determined by allocating to each day in any accrual period a ratable
portion of the OID allocable to that accrual period. In general, in the case of an initial holder, the amount of
OID on a note allocable to each accrual period is determined by (i) multiplying the “adjusted issue price,” as
defined below, of the note at the beginning of the accrual period by the yield to maturity of the note, and
(ii) subtracting from that product the amount of qualified stated interest allocable to that accrual period.
U.S. Holders should be aware that they generally must include OID in gross income as ordinary interest
income for U.S. federal income tax purposes as it accrues, in advance of the receipt of cash attributable to
that income. The “adjusted issue price” of a note at the beginning of any accrual period will generally be the
sum of its issue price (generally including accrued interest, if any) and the amount of OID allocable to all
prior accrual periods, reduced by the amount of all payments other than payments of qualified stated
interest (if any) made with respect to such note in all prior accrual periods. The term “qualified stated
interest” generally means stated interest that is unconditionally payable in cash or property (other than
debt instruments of the issuer) at least annually during the entire term of a note at a single fixed rate of
interest, or subject to certain conditions, based on one or more interest indices.
Interest income, including OID, in respect of the notes will constitute foreign source income for U.S. federal
income tax purposes and, with certain exceptions, will be treated separately, together with other items of
“passive category income,” for purposes of computing the foreign tax credit allowable under the U.S. federal
income tax laws. The calculation of foreign tax credits involves the application of complex rules that depend
on a U.S. Holder’s particular circumstances. U.S. Holders should consult their own tax advisors regarding the
availability of foreign tax credits and the treatment of additional amounts.
Sale or Disposition of Notes
A U.S. Holder generally will recognize capital gain or loss upon the sale, exchange, retirement or other
disposition of a note in an amount equal to the difference between the amount realized upon such sale,
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exchange, retirement or other disposition (other than amounts attributable to accrued qualified stated
interest, which will be taxed as such) and such U.S. Holder’s adjusted tax basis in the note. A U.S. Holder’s
adjusted tax basis in the note generally will equal the U.S. Holder’s cost for the note increased by any
amounts included in gross income by such U.S. Holder as OID, if any, and reduced by any payments other
than payments of qualified stated interest on that note. Gain or loss realized by a U.S. Holder on the sale,
exchange, retirement or other disposition of a note generally will be U.S. source gain or loss for U.S. federal
income tax purposes unless it is attributable to an office or other fixed place of business outside the United
States and certain other conditions are met. The gain or loss realized by a U.S. Holder will be capital gain or
loss, and will be long-term capital gain or loss if the notes were held for more than one year. The net amount
of long-term capital gain recognized by an individual holder generally is subject to taxation at preferential
rates. Capital losses may be deducted from taxable income, subject to certain limitations.
Backup Withholding and Information Reporting
A U.S. Holder may, under certain circumstances, be subject to “backup withholding” with respect to certain
payments to that U.S. Holder, unless the holder (i) is an exempt recipient, and demonstrates this fact when
so required, or (ii) provides a correct taxpayer identification number, certifies that it is not subject to backup
withholding and otherwise complies with applicable requirements of the backup withholding rules. Any
amount withheld under these rules generally will be creditable against the U.S. Holder’s U.S. federal income
tax liability. While non-U.S. Holders generally are exempt from backup withholding, a non-U.S. Holder may,
in certain circumstances, be required to comply with certain information and identification procedures in
order to prove entitlement to this exemption.
U.S. Holders should consult their own tax advisors about any additional reporting requirements that may
arise as a result of their purchasing, holding or disposing of the notes.
Specified Foreign Financial Assets
Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of
US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are
generally required to file an information statement along with their tax returns, currently on Form 8938,
with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a
non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the
notes) that are not held in accounts maintained by financial institutions. Higher reporting thresholds
apply to certain individuals living abroad and to certain married individuals. Regulations extend this
reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect
interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to
report the required information could be subject to substantial penalties. In addition, the statute of
limitations for assessment of tax would be suspended, in whole or part. Prospective investors should
consult their own tax advisors concerning the application of these rules to their investment in the notes,
including the application of the rules to their particular circumstances.
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Additional
Information
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List of Exhibits
No.
1.1
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
Description
Amended Bylaws of Petróleo Brasileiro S.A.-Petrobras, dated as of November 30, 2020.
Indenture, dated as of December 15, 2006, between Petrobras International Finance Company and The Bank
of New York, as Trustee (incorporated by reference to Exhibit 4.9 to the Registration Statement of
Petrobras and Petrobras International Finance Company on Form F-3, filed with the Securities and
Exchange Commission on December 18, 2006 (File Nos. 333-139459 and 333-139459-01)).
Fourth Supplemental Indenture, dated as of October 30, 2009, among Petrobras International Finance
Company, Petrobras and The Bank of New York Mellon, as Trustee, relating to the 6.875% Global Notes due
2040 (incorporated by reference to Exhibit 2.36 to the Annual Report and Form 20-F of Petrobras and
Petrobras International Finance Company, filed with the Securities and Exchange Commission on May 20,
2010 (File Nos. 001-15106 and 001-33121)).
Guaranty for the 6.875% Global Notes due 2040, dated as of October 30, 2009, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 2.38 to the Annual Report and
Form 20-F of Petrobras and Petrobras International Finance Company, filed with the Securities and
Exchange Commission on May 20, 2010 (File Nos. 001-15106 and 001-33121)).
Description of Securities.
Transfer of Rights Agreement, dated as of September 3, 2010, among Petrobras, the Brazilian Federal
Government and the ANP (incorporated by reference to Exhibit 2.47 to the Annual Report and Form 20-F of
Petrobras and Petrobras International Finance Company, filed with the Securities and Exchange
Commission on May 26, 2011 (File Nos. 001-15106 and 001-33121)).
Tenth Supplemental Indenture, dated as of December 12, 2011, among Petrobras International Finance
Company, Petrobras, The Bank of New York Mellon, as Trustee, The Bank of New York Mellon, London
Branch, as Principal Paying Agent and The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg
Paying Agent, relating to the 6.250% Global Notes due 2026 (incorporated by reference to Exhibit 4.2 to
Form 6-K of Petrobras and Petrobras International Finance Company, furnished to the Securities and
Exchange Commission on December 12, 2011 (File Nos. 001-15106 and 001-33121)).
Guaranty for the 6.250% Global Notes due 2026, dated as of December 12, 2011, between Petrobras and
The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to Form 6-K of Petrobras
and Petrobras International Finance Company, furnished to the Securities and Exchange Commission on
December 12, 2011 (File Nos. 001-15106 and 001-33121)).
Further Amended and Restated Deposit Agreement, dated as of January 2, 2020, among Petrobras,
JPMorgan Chase Bank, N.A., as depositary, and registered holders and beneficial owners from time to time
of the ADSs, representing the common shares of Petrobras, and Form of ADR evidencing ADSs representing
the common shares of Petrobras.
Further Amended and Restated Deposit Agreement, dated as of January 2, 2020, among Petrobras,
JPMorgan Chase Bank, N.A., as depositary, and registered holders and beneficial owners from time to time
of the ADSs, representing the preferred shares of Petrobras, and Form of ADR evidencing ADSs
representing the preferred shares of Petrobras.
Amended and Restated Seventh Supplemental Indenture, dated as of February 6, 2012, among Petrobras
International Finance Company, Petrobras and The Bank of New York Mellon, as Trustee, relating to the
6.750% Global Notes due 2041 (incorporated by reference to Exhibit 4.5 to Form 6-K of Petrobras and
Petrobras International Finance Company, furnished to the Securities and Exchange Commission on
February 6, 2012 (File Nos. 001-15106 and 001-33121)).
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No.
2.11
2.12
2.13
2.14
2.15
2.16
2.17
2.18
2.19
2.20
2.21
Description
Amended and Restated Guaranty for the 6.750% Global Notes due 2041, dated as of February 6, 2012,
between Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4
to Form 6-K of Petrobras and Petrobras International Finance Company, furnished to the Securities and
Exchange Commission on February 6, 2012 (File Nos. 001-15106 and 001-33121)).
Thirteenth Supplemental Indenture, dated as of February 10, 2012, among Petrobras International Finance
Company, Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit
2.60 to the Annual Report and Form 20-F of Petrobras and Petrobras International Finance Company, filed
with the Securities and Exchange Commission on April 2, 2012 (File Nos. 001-15106 and 001-33121)).
Indenture, dated as of August 29, 2012, between Petrobras Global Finance B.V. and The Bank of New York
Mellon, as Trustee (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form F-3 of
Petrobras, Petrobras International Finance Company and Petrobras Global Finance B.V., filed with the
Securities and Exchange Commission on August 29, 2012 (File Nos. 333-183618, 333-183618-01 and 333-
183618-02)).
Third Supplemental Indenture, dated as of October 1, 2012, among Petrobras Global Finance B.V.,
Petrobras, The Bank of New York Mellon, as Trustee, The Bank of New York Mellon, London Branch, as
principal paying agent, and The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent,
relating to the 5.375% Global Notes due 2029 (incorporated by reference to Exhibit 4.8 to Form 6-K of
Petrobras, furnished to the Securities and Exchange Commission on October 1, 2012 (File No. 001-15106)).
Guaranty for the 5.375% Global Notes due 2029, dated as of October 1, 2012, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.7 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on October 1, 2012 (File No. 001-15106)).
Seventh Supplemental Indenture, dated as of May 20, 2013, between Petrobras Global Finance B.V.,
Petrobras and The Bank of New York Mellon, as Trustee, relating to the 5.625% Global Notes due 2043
(incorporated by reference to Exhibit 4.11 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on May 20, 2013 (File No. 001-15106)).
Guaranty for the 5.625% Global Notes due 2043, dated as of May 20, 2013, between Petrobras and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.10 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on May 20, 2013 (File No. 001-15106)).
Production Sharing Agreement, dated as of December 2, 2013, among Petrobras, Shell Brasil Petróleo Ltda.,
Total E&P do Brasil Ltda., CNODC Brasil Petróleo e Gás Ltda. and CNOOC Petroleum Brasil Ltda., the
Brazilian Federal Government, Pré-Sal Petróleo S.A.—PPSA and the ANP (incorporated by reference to the
Annual Report and Form 20-F of Petrobras, filed with the Securities and Exchange Commission on April 30,
2014 (File No. 001-15106)).
Twelfth Supplemental Indenture, dated as of January 14, 2014, among Petrobras Global Finance B.V.,
Petrobras, The Bank of New York Mellon, as Trustee, The Bank of New York Mellon, London Branch, as
principal paying agent, and The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent,
relating to the 4.750% Global Notes due 2025 (incorporated by reference to Exhibit 4.8 to Form 6-K of
Petrobras, furnished to the Securities and Exchange Commission on January 14, 2014 (File No. 001-15106)).
Thirteenth Supplemental Indenture, dated as of January 14, 2014, among Petrobras Global Finance B.V.,
Petrobras, The Bank of New York Mellon, as Trustee, The Bank of New York Mellon, London Branch, as
principal paying agent, and The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent,
relating to the 6.625% Global Notes due 2034 (incorporated by reference to Exhibit 4.11 to Form 6-K of
Petrobras, furnished to the Securities and Exchange Commission on January 14, 2014 (File No. 001-15106)).
Guaranty for the 4.750% Global Notes due 2025, dated as of January 14, 2014, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.7 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on January 14, 2014 (File No. 001-15106)).
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No.
2.22
2.23
2.24
2.25
2.26
2.27
2.28
2.29
2.30
2.31
2.32
2.33
Description
Guaranty for the 6.625% Global Notes due 2034, dated as of January 14, 2014, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.10 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on January 14, 2014 (File No. 001-15106)).
Sixteenth Supplemental Indenture, dated as of March 17, 2014, among Petrobras Global Finance B.V.,
Petrobras and The Bank of New York Mellon, as Trustee, relating to the 6.250% Global Notes due 2024
(incorporated by reference to Exhibit 4.8 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on March 17, 2014 (File No. 001-15106)).
Seventeenth Supplemental Indenture, dated as of March 17, 2014, among Petrobras Global Finance B.V.,
Petrobras and The of New York Mellon, as Trustee, relating to the 7.250% Global Notes due 2044
(incorporated by reference to Exhibit 4.11 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on March 17, 2014 (File No. 001-15106)).
Guaranty for the 6.250% Global Notes due 2024, dated as of March 17, 2014, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.7 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on March 17, 2014 (File No. 001-15106)).
Guaranty for the 7.250% Global Notes due 2044, dated as of March 17, 2014, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.10 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on March 17, 2014 (File No. 001-15106)).
Seventh Supplemental Indenture, dated as of December 28, 2014, among Petrobras International Finance
Company S.A., Petrobras Global Finance B.V., Petrobras and The Bank of New York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on January 15, 2015 (File No. 001-15106)).
Fourteenth Supplemental Indenture, dated as of December 28, 2014, among Petrobras International
Finance Company S.A., Petrobras Global Finance B.V., Petrobras and The Bank of New York Mellon, as
Trustee (incorporated by reference to Exhibit 4.2 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on January 15, 2015 (File No. 001-15106)).
First Amendment to the Guaranties, dated as of December 28, 2014, between Petrobras and The Bank of
New York Mellon, as Trustee (incorporated by reference to Exhibit 4.3 to Form 6-K of Petrobras, furnished
to the Securities and Exchange Commission on January 15, 2015 (File No. 001-15106)).
Twentieth Supplemental Indenture, dated as of June 5, 2015, among Petrobras Global Finance B.V.,
Petrobras and The Bank of New York Mellon, as Trustee, relating to the 6.850% Global Notes due 2115
(incorporated by reference to Exhibit 4.2 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on June 5, 2015 (File No. 001-15106)).
Guaranty for the 6.850% Global Notes due 2115, dated as of June 5, 2015, between Petrobras and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on June 5, 2015 (File No. 001-15106)).
Twenty-Second Supplemental Indenture, dated as of May 23, 2016, among Petrobras Global Finance B.V.,
Petrobras and The Bank of New York Mellon, relating to the 8.750% Global Notes due 2026 (incorporated by
reference to Exhibit 4.5 to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on
May 23, 2016 (File No. 01-15106)).
Amended and Restated Twenty-Second Supplemental Indenture, dated as of July 13, 2016, among
Petrobras Global Finance B.V., Petrobras and The Bank of New York Mellon, relating to the 8.750% Global
Notes due 2026 (incorporated by reference to Exhibit 4.5 to Form 6-K of Petrobras, furnished to the
Securities and Exchange Commission on July 13, 2016 (File No. 01-15106)).
2.34
Twenty-Fourth Supplemental Indenture, dated as of January 17, 2017, among Petrobras Global Finance
B.V., Petrobras and The Bank of New York Mellon, relating to the 7.375% Global Notes due 2027
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No.
Description
2.35
2.36
2.37
2.38
2.39
2.40
2.41
2.42
2.43
2.44
2.45
2.46
2.47
(incorporated by reference to Exhibit 4.5 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on January 17, 2017 (File No. 01-15106)).
Guaranty for the 8.750% Global Notes due 2026, dated as of May 23, 2016, between Petrobras and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on May 23, 2016 (File No. 01-15106)).
Amended and Restated Guaranty for the 8.750% Global Notes due 2026, dated as of July 13, 2016, between
Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 to Form 6-
K of Petrobras, furnished to the Securities and Exchange Commission on July 13, 2016 (File No. 01-15106)).
Amended and Restated Guaranty for the 7.375% Global Notes due 2027, dated as of May 22, 2017, between
Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 to Form 6-
K of Petrobras, furnished to the Securities and Exchange Commission on May 22, 2017 (File No. 01-15106)).
Amended and Restated Twenty-Fourth Supplemental Indenture, dated as of May 22, 2017, among
Petrobras Global Finance B.V., Petrobras and The Bank of New York Mellon, relating to the 7.375% Global
Notes due 2027 (incorporated by reference to Exhibit 4.5 to Form 6-K of Petrobras, furnished to the
Securities and Exchange Commission on May 22, 2017 (File No. 01-15106)).
Amended and Restated Seventeenth Supplemental Indenture, dated as of May 22, 2017, among Petrobras
Global Finance B.V., Petrobras and The Bank of New York Mellon, as Trustee, relating to the 7.250% Global
Notes due 2044 (incorporated by reference to Exhibit 4.8 to Form 6-K of Petrobras, furnished to the
Securities and Exchange Commission on May 22, 2017 (File No. 01-15106)).
Indenture, dated as of September 27, 2017, among Petrobras Global Finance B.V., Petrobras and The Bank
of New York Mellon, as trustee, relating to the 5.299% Global Notes due 2025.
Indenture, dated as of September 27, 2017, among Petrobras Global Finance B.V., Petrobras and The Bank
of New York Mellon, as trustee, relating to the 5.999% Global Notes due 2028.
Guaranty for the 5.299% Global Notes due 2025, dated as of September 27, 2017, between Petrobras and
The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.96 to Form 6-K of
Petrobras, furnished to the Securities and Exchange Commission on July 27, 2018 (File No. 333-226375)).
Guaranty for the 5.999% Global Notes due 2028, dated as of September 27, 2017, between Petrobras and
The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.97 to Form 6-K of
Petrobras, furnished to the Securities and Exchange Commission on July 27, 2018 (File No. 333-226375)).
Twenty-Fifth Supplemental Indenture, dated as of February 1, 2018, among Petrobras Global Finance B.V.,
Petrobras and The Bank of New York Mellon, relating to the 5.750% Global Notes due 2029 (incorporated by
reference to Exhibit 4.2 to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on
February 1, 2018 (File No. 001-15106)).
Guaranty for the 5.750% Global Notes due 2029, dated as of February 1, 2018, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on February 1, 2018 (File No. 001-15106)).
Indenture, dated as of August 28, 2018 between Petrobras and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.3 to the Registration Statement of Petrobras and Petrobras Global
Finance on Form F-3, filed with the Securities and Exchange Commission on August 28, 2018 (File Nos. 333-
227087 and 333-227087-01)).
Indenture, dated as of August 28, 2018 between Petrobras Global Finance B.V. and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.4 to the Registration Statement of Petrobras and Petrobras
Global Finance B.V. on Form F-3, filed with the Securities and Exchange Commission on August 28, 2018
(File Nos. 333-227087 and 333-227087-01)).
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No.
2.48
2.49
2.50
2.51
2.52
2.53
2.54
2.55
2.56
2.57
2.58
2.59
Description
Amended And Restated Guaranty for the 5.750% Global Notes due 2029, dated as of March 19, 2019,
between Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1
to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on March 19, 2019 (File No.
001-15106).
Amended And Restated Twenty-Fifth Supplemental Indenture for the 5.750% Global Notes due 2029, dated
as of March 19, 2019, between Petrobras and The Bank of New York Mellon, as Trustee (incorporated by
reference to Exhibit 4.2 to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on
March 19, 2019 (File No. 001-15106).
Guaranty for the 6.90% Global Notes due 2049, dated as of March 19, 2019, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.5 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on March 19, 2019 (File No. 001-15106).
First Supplemental Indenture for the 6.90% Global Notes due 2049, dated as of March 19, 2019, between
Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.6 to Form 6-
K of Petrobras, furnished to the Securities and Exchange Commission on March 19, 2019 (File No. 001-
15106).
Amended and Restated Guaranty of the Amended and Restated Guaranty of the 7.250% Global Notes due
2044, dated as of March 17, 2014, between Petrobras and The Bank of New York Mellon, as Trustee
(incorporated by reference to Exhibit 4.7 to Form 6-K of Petrobras, furnished to the Securities and
Exchange Commission on May 22, 2017 (File No. 001-15106)).
Second Supplemental Indenture for the 5.600% Global Notes due 2031, dated as of June 3, 2020, between
Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.2 to Form 6-
K of Petrobras, furnished to the Securities and Exchange Commission on June 3, 2020 (File No. 001-15106).
Guaranty for the 5.600% Global Notes due 2031, dated as of June 3, 2020, between Petrobras and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on June 3, 2020 (File No. 001-15106).
Third Supplemental Indenture for the 6.750% Global Notes due 2050, dated as of June 3, 2020, between
Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.5 to Form 6-
K of Petrobras, furnished to the Securities and Exchange Commission on June 3, 2020 (File No. 001-15106).
Guaranty for the 6.750% Global Notes due 2050, dated as of June 3, 2020, between Petrobras and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on June 3, 2020 (File No. 001-15106).
Amended and Restated Second Supplemental Indenture for the 5.600% Global Notes due 2031, dated as of
October 21, 2020, between Petrobras and The Bank of New York Mellon, as Trustee (incorporated by
reference to Exhibit 4.2 to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on
October 21, 2020 (File No. 001-15106).
Amended and Restated Guaranty for the 5.600% Global Notes due 2031, dated as of October 21, 2020,
between Petrobras and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1
to Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on October 21, 2020 (File
No. 001-15106).
Indenture, dated as of September 18, 2019 between Petrobras Global Finance B.V. and The Bank of New
York, as Trustee (incorporated by reference to Exhibit 4.75 to the Registration Statement of Petrobras and
Petrobras Global Finance B.V. on Form F-4, filed with the Securities and Exchange Commission on July 6,
2020 (as amended on July 28, 2020) (File Nos. 333-239714 and 333-239714-01).
2.60
Guaranty for the 5.093% Global Notes due 2030, dated as of September 18, 2019, between Petrobras and
The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.73 to Petrobras’
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
No.
Description
Additional Information
312
Registration Statement on Form F-4, filed with the SEC on July 6, 2020 (as amended on July 28, 2020) (File
No. 333-239714).
Fourth Supplemental Indenture for the 5.500% Global Notes due 2051, dated as of June 10, 2021, between
Petrobras, PGF and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.2 to
Form 6-K of Petrobras, furnished to the Securities and Exchange Commission on June 10, 2020 (File No.
001-15106).
Guaranty for the 5.500% Global Notes due 2051, dated as of June 10, 2021, between Petrobras and The
Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.3 to Form 6-K of Petrobras,
furnished to the Securities and Exchange Commission on June 10, 2020 (File No. 001-15106).
Form of Concession Agreement for Exploration, Development and Production of crude oil and natural gas
executed between Petrobras and the ANP (incorporated by reference to Exhibit 10.1 of Petrobras’
Registration Statement on Form F-1 filed with the Securities and Exchange Commission on July 14, 2000
(File No. 333-12298)). This was a paper filing, and is not available on the SEC website.
Purchase and Sale Agreement of natural gas, executed between Petrobras and Yacimientos Petroliferos
Fiscales Bolivianos-YPFB (together with and English version) (incorporated by reference to Exhibit 10.2 to
Petrobras’ Registration Statement on Form F-1 filed with the Securities and Exchange Commission on July
14, 2000 (File No. 333-12298)). This was a paper filing, and is not available on the SEC website. Until the
moment eight GSA Additives have been concluded since its celebration on August 16, 1996, so the GSA
remains in force.
List of Subsidiaries.
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Consent letter of KPMG.
Consent letter of DeGolyer and MacNaughton.
Hydrocarbon Production by Geographic Area.
List of Our Vessels.
Subsidiary Guarantors and Issuers of Guaranteed Securities
Third Party Report of DeGolyer and MacNaughton.
2.61
2.62
4.1
4.2
8.1
12.1
13.1
15.1
15.2
15.3
15.4
17.1
99.1
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
313
Signatures
The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and has duly caused
this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of
Rio de Janeiro, on March 30, 2022.
Petróleo Brasileiro S.A.— PETROBRAS
By: ________________________________________
Name: Joaquim Silva e Luna
Title: Chief Executive Officer
By: ________________________________________
Name: Rodrigo Araujo Alves
Title: Chief Financial Officer and Chief Investor
Relations Officer
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
314
Abbreviations
bbl
Barrels
bbl/d
Barrels per day
bcf
bn
Billion cubic feet
Billion (thousand million)
bnbbl
Billion barrels
bncf
bnm3
Billion cubic feet
Billion cubic meters
bnboe
Billion barrels of oil equivalent
boe
boed
cf
Barrels of oil equivalent
Barrels of oil equivalent per day
Cubic feet
GWh
One gigawatt of power supplied or demanded for one hour
kgCO2e/boe
Kilogram of carbon dioxide equivalent per barrel of oil equivalent
KgCO2e/CWT Kilogram of carbon dioxide equivalent per complexity weighted ton
km
km2
m3
Kilometer
Square kilometers
Cubic meter
mbbl
Thousand barrels
mbbl/d
Thousand barrels per day
mboe
Thousand barrels of oil equivalent
mboed
Thousand barrels of oil equivalent per day
mcf
Thousand cubic feet
mcf/d
Thousand cubic feet per day
mm3
mm3/d
mm3/y
Thousand cubic meters
Thousand cubic meters per day
Thousand cubic meter per year
mmbbl
Million barrels
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
315
mmbbl/d
Million barrels per day
mmboe
Million barrels of oil equivalent
mmboed
Million barrels of oil equivalent per day
mmcf
Million cubic feet
mmcf/d
Million cubic feet per day
mmm3
Million cubic meters
mmm3/d
Million cubic meters per day
mmt
Million metric tons
mmt/y
Million metric tons per year
MW
Megawatts
MWavg
Amount of energy (in MWh) divided by the time (in hours) in which such energy is produced or consumed
MWh
ppm
R$
t
One megawatt of power supplied or demanded for one hour
Parts per million
Brazilian reais
Metric ton
tCO2e
Tonnes of carbon dioxide equivalent
t/d
Tcf
US$
/d
Metric ton per day
Trillion cubic feet
United States dollars
Per day
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
316
Conversion table
1 acre
1 barrel
1 boe
1 m3 of natural gas
1 km
1 meter
=
=
=
=
=
=
43,560 square feet
42 U.S. gallons
1 barrel of crude oil equivalent
35.315 cf
0.6214 miles
3.2808 feet
=
=
=
=
0.004047 km2
Approximately 0.13 t of oil
6,000 cf of natural gas
0.0059 boe
1 t of crude oil
=
1,000 kilograms of crude oil
=
Approximately 7.5 barrels of crude oil
(assuming an atmospheric pressure
index gravity of 37°API)
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
317
Pages
6
9
22
23
29
23
8, 23, 127;
142, 269, 276
23
49, 142, 269
Cross-Reference to Form 20-F
Form 20-F
Captions
Location in this Annual Report
Disclaimer
Glossary of Certain Terms used in this Annual Report
About us
Overview
PART I
Item 1.
Item 2.
Item 3.
Identity of Directors, Senior Management
and Advisers
Offer Statistics and Expected Timetable
Not applicable
Not applicable
Key Information
A. Selected Financial Data
Not applicable
B. Capitalization and indebtedness
Not applicable
C. Reasons for the offer and use of
proceeds
D. Risk Factors
Not applicable
Risks (Risk Factors)
About us (Overview)
Disclaimer (Documents on Display); About
us (Overview); Our Business (Portfolio
Management); Strategic Plan; Legal and Tax
(Regulation); Legal and Tax (Material
Contracts)
About us (Overview); Exhibit 8.1 – List of
Subsidiaries
Our Business; Strategic Plan; Legal and Tax
(Regulation)
None
Item 4.
Information on the Company
A. History and development of the
company
B. Business overview
C. Organizational structure
D. Property, plants and equipment
Item 4A.
Unresolved Staff Comments
Item 5.
Operating and Financial Review and
Prospects
A. Operating results
B. Liquidity and capital resources
C. Research and development, patents
and licenses, etc.
D. Trend Information
Item 6.
E. Critical Accounting Estimates
Directors, Senior Management and
Employees
A. Directors and senior management
Operating and Financial Review and
Prospects
Operating and Financial Review and
Prospects (Liquidity and Capital Resources)
Strategic Plan (Digital Transformation)
183
195
154
Our Business; Risks; Operating and Financial
Review and Prospects
Not applicable
49, 28, 183
Management and Employees (Management)
210
209, Note 18
to Financial
Statements
210
B. Compensation
Management and Employees
C. Board practices
D. Employees
Management and Employees (Management)
Management and Employees (Employees)
231
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Additional Information
318
Form 20-F
Captions
Location in this Annual Report
E. Share Ownership
Item 7.
Major Shareholders and Related Party
Transactions
A. Major shareholders
B. Related party transactions
Shareholder Information (Listing; Shares
and Shareholder) and Management and
Employees (Management)
Shareholder Information (Shares and
Shareholders)
Management and Employees (Management)
C. Interests of experts and counsel
Not applicable
Item 8.
Financial Information
A. Consolidated Statements and Other
Financial Information
B. Significant Changes
Item 9.
The Offer and Listing
Financial Statements; Legal and Tax (Legal
Proceedings); Shareholder Information
(Dividends)
Not applicable
Pages
249, 251, 210
251
210, Note 37
to Financial
Statements
F-1; 281, 261
A. Offer and listing details
B. Plan of distribution
C. Markets
D. Selling shareholders
E. Dilution
F. Expenses of the issue
Not applicable
Not applicable
Shareholder Information (Listing)
249
Not applicable
Not applicable
Not applicable
Item 10.
Additional Information
A. Share capital
Not applicable
B. Memorandum and articles of
association
C. Material contracts
D. Exchange controls
E. Taxation
Shareholder Information (Shareholders
Rights); Environment, Social and
Governance (Corporate Governance)
Legal and Tax (Material Contracts)
256, 176,
Exhibit 1.1,
Exhibit 2.4
276
Shareholder Information (Additional
Information for non-Brazilian Shareholders)
Legal and Tax (Tax)
F. Dividends and paying agents
Not applicable
G. Statement by experts
H. Documents on display
I. Subsidiary Information
Item 11.
Item 12.
Qualitative and Quantitative Disclosures
about Market Risk
Description of Securities other than
Equity Securities
A. Debt Securities
B. Warrants and Rights
C. Other Securities
D. American Depositary Shares
PART II
Our Business (Exploration and Production)
Disclaimer
Not applicable
Risks (Disclosures About Market Risk)
Not applicable
Not applicable
Not applicable
Shareholder Information (Additional
information for non-Brazilian shareholders)
265
Item 13.
Item 14.
Defaults, Dividend Arrearages and
Delinquencies
Material Modifications to the Rights of
Security Holders and Use of Proceeds
None
None
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
265
289
50
6
47
Additional Information
319
Pages
241
210
241
210
210
265
Form 20-F
Captions
Item 15.
Location in this Annual Report
Controls and Procedures
Item 16A.
Audit Committee Financial Expert
Compliance and Internal Control
(Compliance)
Management and Employees (Management)
Item 16B.
Code of Ethics
Compliance and Internal Control
Item 16C.
Principal Accountant Fees and Services
Management and Employees (Management)
Item 16D.
Item 16E.
Item 16F.
Item 16G.
Exemptions from the Listing Standards
for Audit Committees
Purchases of Equity Securities by the
Issuer and Affiliated Purchasers
Change in Registrant’s Certifying
Accountant
Corporate Governance
Item 16H.
Mine Safety Disclosure
Item 16I.
Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
PART III
Item 17.
Financial Statements
Item 18.
Financial Statements
Item 19.
Exhibits
Management and Employees (Management)
Shareholder Information (Additional
Information for non-Brazilian Shareholders)
Not applicable
Management and Employees (Management)
210
Not applicable
Not applicable
Not applicable
Financial Statements
Exhibits
Signatures
Abbreviations
Conversion Table
Cross Reference to Form 20-F
F-1
307
313
314
316
317
PETROBRAS
ANNUAL REPORT AND FORM 20-F | 2021
Financial Statements 2021
December 31, 2021, 2020 and 2019 with
Demonstrações
report of independent registered
Financeiras 2021
public accounting firm
INDEX
PETROBRAS
Report of Independent Registered Public Accounting Firm .......................................................................................................... F-3
Management’s Report on Internal Control over Financial Reporting .......................................................................................... F-8
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ............................................................................................................. F-9
CONSOLIDATED STATEMENTS OF INCOME ..................................................................................................................................... F-10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME .................................................................................................. F-11
CONSOLIDATED STATEMENTS OF CASH FLOWS ........................................................................................................................... F-12
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ........................................................................... F-13
The Company and its operations ............................................................................................................................................... F-14
1.
2. Basis of preparation ...................................................................................................................................................................... F-14
Significant accounting policies .................................................................................................................................................. F-15
3.
4.
Critical accounting policies: key estimates and judgments ................................................................................................ F-15
5. New standards and interpretations .......................................................................................................................................... F-22
Capital Management ..................................................................................................................................................................... F-23
6.
Cash and cash equivalents and Marketable securities ......................................................................................................... F-23
7.
Sales revenues ................................................................................................................................................................................ F-24
8.
Costs and expenses by nature .................................................................................................................................................... F-26
9.
Other income and expenses ................................................................................................................................................... F-27
10.
Net finance income (expense) ............................................................................................................................................... F-28
11.
Net income by operating segment ....................................................................................................................................... F-28
12.
Trade and other receivables .................................................................................................................................................. F-32
13.
Inventories .................................................................................................................................................................................. F-34
14.
Trade payables .......................................................................................................................................................................... F-35
15.
Taxes ............................................................................................................................................................................................ F-35
16.
Employee benefits .................................................................................................................................................................... F-41
17.
Provisions for legal proceedings ........................................................................................................................................... F-55
18.
Provision for decommissioning costs .................................................................................................................................. F-64
19.
Other Assets and Liabilities ................................................................................................................................................... F-66
20.
The “Lava Jato (Car Wash) Operation” and its effects on the Company .................................................................... F-67
21.
Commitment to purchase natural gas ................................................................................................................................. F-68
22.
Property, plant and equipment ............................................................................................................................................. F-69
23.
Intangible assets ....................................................................................................................................................................... F-72
24.
Impairment ................................................................................................................................................................................. F-76
25.
Exploration and evaluation of oil and gas reserves ......................................................................................................... F-85
26.
Collateral for crude oil exploration concession agreements ......................................................................................... F-87
27.
Partnerships in E&P activities ................................................................................................................................................ F-87
28.
Investments ................................................................................................................................................................................ F-90
29.
Assets by operating segment ................................................................................................................................................ F-94
30.
Disposal of assets and other changes in organizational structure ............................................................................. F-95
31.
Finance debt .............................................................................................................................................................................F-103
32.
Lease liabilities ........................................................................................................................................................................F-107
33.
Equity .........................................................................................................................................................................................F-109
34.
Fair value of financial assets and liabilities ......................................................................................................................F-113
35.
Risk management ...................................................................................................................................................................F-113
36.
Related-party transactions ..................................................................................................................................................F-121
37.
Supplemental information on statement of cash flows ...............................................................................................F-125
38.
Subsequent events .................................................................................................................................................................F-125
39.
Supplementary information on Oil and Gas Exploration and Production (unaudited) .......................................................F-128
KPMG Auditores Independentes Ltda.
Rua do Passeio, 38 - Setor 2 - 17º andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400
kpmg.com.br
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Petróleo Brasileiro S.A. - Petrobras
Rio de Janeiro
Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Petróleo Brasileiro S.A. –
Petrobras and subsidiaries (“the Company”) as of December 31, 2021 and 2020, the related consolidated
statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the
years in the three-year period ended December 31, 2021, and the related notes (collectively, the “consolidated
financial statements”). We also have audited the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2021, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the
Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de
responsabilidade limitada e firma-membro da organização global KPMG de
firmas-membro independentes licenciadas da KPMG International Limited, uma
empresa inglesa privada de responsabilidade limitada.
KPMG Auditores Independentes Ltda., a Brazilian limited liability company
and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company
limited by guarantee.
F-3
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Assessment of the measurement of the defined benefit obligations for pension and health care plans
As discussed in notes 4.4 and 17 of the consolidated financial statements, the Company sponsors defined benefit
pension and health care plans that provide supplementary retirement benefits to its employees. As of December
31, 2021, the defined benefit obligations for these pension and health care plans were US$ 9,880 million. The
measurement of the Company’s defined benefit obligations with respect to these plans requires the determination
of certain actuarial assumptions. These assumptions include the discount rate and projected medical costs. The
Company hires external actuarial professionals to assist in the process of determining the actuarial assumptions
and the valuation of the defined benefit obligations for its pension and health care plans.
We identified the assessment of the measurement of the defined benefit obligations for the pension and health care
plans as a critical audit matter. Subjective auditor judgment was required because minor changes to the discount
rates and projected medical costs used to determine the defined benefit obligations can cause significant changes
to the measurement of the defined benefit obligations for the pension and health care plans.
The following are the primary procedures we performed to address this critical audit matter:
• we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s
process for determining the defined benefit obligations for pension and health care plans. This included
controls related to the determination, review and approval of the discount rates and projected medical costs;
• we evaluated the scope of the work, competency, and objectivity of the external actuarial professionals hired
by the Company to assist in the process of determining the actuarial assumptions and the measurement of the
defined benefit obligations for the pension and health care plans. This included assessing the nature and
scope of the work performed by these external actuarial professionals and their professional qualifications and
experience; and
• we involved actuarial professionals with specialized skills and knowledge, who assisted in evaluating the
Company’s discount rates and projected medical costs including comparisons to external sources.
KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de
responsabilidade limitada e firma-membro da organização global KPMG de
firmas-membro independentes licenciadas da KPMG International Limited, uma
empresa inglesa privada de responsabilidade limitada.
KPMG Auditores Independentes Ltda., a Brazilian limited liability company
and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company
limited by guarantee.
F-4
Evaluation of the impairment testing of exploration and production cash generating units (“CGUs”)
As discussed in notes 4.1(b), 4.2, 4.3 and 25 to the consolidated financial statements, for the purposes of
impairment testing, the Company identifies its cash generating units (“CGUs”), estimates the recoverable amount
of these CGUs and compares the recoverable amount with the carrying amount of these CGUs. The carrying
amount of the exploration and production CGUs as of December 31, 2021 was US$ 23,734 million. For the year
ended December 31, 2021, the amount of impairment reversals recognized in relation to the exploration and
production CGUs was US$ 3,373 million.
We identified the evaluation of the impairment testing of exploration and production CGUs as a critical audit matter.
A high degree of complexity and subjectivity of auditor judgment was involved in evaluating the Company’s
definition of these CGUs and the estimate of the recoverable amount. The definition of exploration and production
CGUs requires auditor judgment in the consideration of operational factors that impact the interdependencies
between oil and gas assets. These interdependencies alter the aggregation or segregation of the oil and gas
assets into CGUs. The expected future cash flows used to determine the recoverable amount depend on certain
assumptions about the future including average Brent oil price; exchange rate; capital and operating expenditure
and volume and timing of recovery of the oil and gas reserves. The recoverable amount is also sensitive to minor
changes in the discount rate. The assessment of these assumptions required significant auditor judgment.
The following are the primary procedures we performed to address this critical audit matter:
• we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s
impairment assessment process. These included controls related to the review and approval of the Company’s
determination of the CGUs and of the key assumptions used to estimate the recoverable amount;
•
for changes in exploration and production CGUs during the year, we assessed the operational factors
considered by the Company when defining these changes by comparing to information obtained from internal
and external sources;
• we evaluated the Company’s projected recovery of oil and gas reserves by comparing it with estimated
volumes certified by an external reservoir specialist hired by the Company and, for a selection of CGUs, with
historical production;
• we evaluated the scope of the work, competency, and objectivity of the external reservoir specialists hired by
the Company that certified the estimated reserve volumes. This included assessing the nature and scope of
the work they were engaged to perform and their professional qualifications and experience;
• we evaluated, for a selection of CGUs, the Company’s projected future capital and operating expenditures by
comparing these projections with the latest approved business and management plan and long-term budgets;
• we evaluated the Company’s ability to accurately project cash flows by comparing, for a selection of CGUs,
the prior years’ estimated cash flows for the year ended December 31, 2021 with actual cash flows in this
year; and
• we involved a valuation professional with specialized skill and knowledge, who assisted in evaluating certain
assumptions used in the impairment testing such as the discount rates, average Brent oil prices and the
exchange rates by comparing them against available external market data.
KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de
responsabilidade limitada e firma-membro da organização global KPMG de
firmas-membro independentes licenciadas da KPMG International Limited, uma
empresa inglesa privada de responsabilidade limitada.
KPMG Auditores Independentes Ltda., a Brazilian limited liability company
and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company
limited by guarantee.
F-5
Evaluation of provisions and disclosures for certain specific labor, civil and tax lawsuits
As discussed in notes 4.5 and 18 to the consolidated financial statements, the Company is involved in labor, civil
and tax lawsuits during the normal course of its activities. The Company records provisions for these lawsuits when
it is probable that an outflow of resource embodying economic benefits will be required to settle a present
obligation and when the outflow can be reasonably estimated. The Company discloses a contingent liability
whenever the likelihood of an outflow to settle a present obligation is considered possible, or when the likelihood is
considered probable, but it is not possible to reasonably estimate the amount of the outflow.
We identified the evaluation of the provisions and / or disclosures for certain specific labor, civil and tax lawsuits as
a critical audit matter. Challenging auditor judgment and effort was required due to the subjective nature of the
estimates and assumptions. Specifically, judgments about the likelihood of an outflow and estimates of the
amounts of outflows.
The following are the primary procedures we performed to address this critical audit matter:
• we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s
evaluation of lawsuits. These included controls related to the review and approval of the determination of the
likelihood of an outflow to settle a present obligation and the estimate of amounts of outflows, as well as over
the financial statement disclosures;
• we evaluated the scope of work, competency, and objectivity of the internal and external legal counsel that
determined the likelihood of an outflow to settle a present obligation and the estimate of the amounts of
outflows. This included assessing the nature and scope of the work performed by the internal and external
legal counsel and their professional qualifications and experience;
• we obtained and evaluated letters received directly from the Company’s external legal counsel that included
an assessment of the likelihood of loss and the estimate of the amounts of outflows. For certain specific legal
proceedings, we compared these assessments and estimates to those used by the Company and evaluated
the sufficiency of the Company’s legal contingency disclosures; and
• we evaluated the Company’s ability to accurately estimate amounts to be paid related to labor, civil and tax
lawsuits by comparing the amounts paid upon resolution of legal proceedings during the year to the provision
amounts as of the prior year end.
Evaluation of the estimate of the provision for decommissioning costs
As discussed in notes 4.1(c), 4.6 and 19 to the consolidated financial statements the Company records a provision
for decommissioning costs which reflects its obligations to restore the environment and dismantle and remove oil
and gas production facilities upon abandonment. As of December 31, 2021, the carrying amount of the provision
for decommissioning costs was US$15,619 million. The Company’s estimate of the provision for decommissioning
costs includes assumptions in relation to the nature and extent of the environmental restoration and the
dismantlement and removal work as well as the cost and timing of this work.
We identified the evaluation of the estimate of the provision for decommissioning costs as a critical audit matter.
Subjective auditor judgment was necessary to evaluate the key assumptions used in the estimate such as the
extent of the decommissioning work that will be required by contract and regulations, the criteria to be met when
the decommissioning actually occurs and the costs and related timing of the future payments that will be incurred in
the decommissioning process.
The following are the primary procedures we performed to address this critical audit matter:
• we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s
process to estimate the provision for decommissioning costs. This included controls related to the
determination, review and approval of the key assumptions, including estimates of the timing of abandonment
and estimated costs of decommissioning;
• we assessed the estimates of timing until abandonment used by the Company by comparing the production
curves and life of the oil and gas reserves used with estimated reserve volumes certified by external reservoir
specialists hired by the Company;
KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de
responsabilidade limitada e firma-membro da organização global KPMG de
firmas-membro independentes licenciadas da KPMG International Limited, uma
empresa inglesa privada de responsabilidade limitada.
KPMG Auditores Independentes Ltda., a Brazilian limited liability company
and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company
limited by guarantee.
F-6
• we assessed the estimated costs of decommissioning by comparing certain key assumptions with external
industry reports;
• we evaluated the scope of the work, competency, and objectivity of the internal engineers that estimated the
production curves and life of the oil and gas reserves and the external reservoir specialists hired by the
Company that certified the estimated reserve volumes. This included assessing the nature and scope of the
work they were engaged to perform and their professional qualifications and experience;
• we evaluated the Company´s ability to accurately forecast costs of decommissioning work, by comparing a
selection of actual expenditure incurred with the decommissioning of oil and gas production facilities during the
year to the Company´s forecasts of that expenditure in the prior year.
/s/ KPMG Auditores Independentes Ltda.
KPMG Auditores Independentes Ltda.
We have served as the Company’s auditor since 2017.
Rio de Janeiro – Brazil
March 30, 2022
KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de
responsabilidade limitada e firma-membro da organização global KPMG de
firmas-membro independentes licenciadas da KPMG International Limited, uma
empresa inglesa privada de responsabilidade limitada.
KPMG Auditores Independentes Ltda., a Brazilian limited liability company
and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company
limited by guarantee.
F-7
Petróleo Brasileiro S.A. – Petrobras
Management Report on Internal Control over Financial Reporting
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing, adequately maintaining and assessing the effectiveness of internal
control over financial reporting. Such internal control is a process designed by, or under the supervision of our CEO and
CFO, and effected by our board of directors, management and other employees.
The internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of
financial reporting and of the preparation of our consolidated financial statements, in accordance with IFRS, as issued
by the IASB.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In
addition, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are
subject to the risk of becoming inadequate because of changes in its conditions and assumptions.
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31,
2021 based on the criteria established in “Internal Controls – Integrated Framework (2013)” issued by the Committee
of Sponsoring Organizations of Treadway Commission (“COSO”). Our management has concluded that our internal
control over financial reporting was effective.
Joaquim Silva e Luna
Chief Executive Officer
Rodrigo Araujo Alves
Chief Financial Officer and Chief Investor Relations Officer
F-8
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
PETROBRAS
As of December 31, 2021 and December 31, 2020 (Expressed in millions of US Dollars, unless otherwise indicated)
Note
12.31.2021
12.31.2020
Assets
Current assets
Cash and cash equivalents
Marketable securities
Trade and other receivables
Inventories
Recoverable income taxes
Other recoverable taxes
Others
Assets classified as held for sale
Non-current assets
Long-term receivables
Trade and other receivables
Marketable securities
Judicial deposits
Deferred income taxes
Other recoverable taxes
Others
Investments
Property, plant and equipment
Intangible assets
7.1
7.2
13.1
14
16.1
16.2
20
31
13.1
7.2
18.2
16.1
16.2
20
29
23
24
10,467
650
6,368
7,255
163
1,183
1,573
27,659
2,490
30,149
1,900
44
8,038
604
3,261
487
14,334
11,711
659
4,731
5,677
418
2,177
1,230
26,603
785
27,388
2,631
44
7,281
6,451
3,158
635
20,200
Liabilities
Current liabilities
Trade payables
Finance debt
Lease liability
Income taxes payable
Other taxes payable
Dividends payable
Employee benefits
Others
Liabilities related to assets classified as held for sale
Non-current liabilities
Finance debt
Lease liability
Income taxes payable
Deferred income taxes
Employee benefits
Provisions for legal proceedings
Provision for decommissioning costs
Others
Total liabilities
Equity
1,510
125,330
3,025
144,199
3,273
124,201
14,948
162,622
Share capital (net of share issuance costs)
Capital reserve and capital transactions
Profit reserves
Accumulated other comprehensive (deficit)
Attributable to the shareholders of Petrobras
Non-controlling interests
Note
12.31.2021
12.31.2020
15
32.1
33
16.1
16.2
34.5
17
20
31
32.1
33
16.1
16.1
17
18.1
19
20
34.1
29.5
5,483
3,641
5,432
733
4,001
−
2,144
1,875
23,309
867
24,176
32,059
17,611
300
1,229
9,374
2,018
15,619
2,150
80,360
104,536
107,101
1,143
72,811
(111,648)
69,407
405
69,812
174,348
6,859
4,186
5,698
198
2,636
858
3,502
1,603
25,540
685
26,225
49,702
15,952
357
195
14,667
2,199
18,780
2,057
103,909
130,134
107,101
1,064
65,917
(114,734)
59,348
528
59,876
190,010
Total assets
174,348
190,010
Total liabilities and equity
The notes form an integral part of these financial statements.
F-9
CONSOLIDATED STATEMENTS OF INCOME
PETROBRAS
Years ending December 31, 2021, 2020 and 2019 (Expressed in millions of US Dollars, unless otherwise indicated)
Sales revenues
Cost of sales
Gross profit
Income (expenses)
Selling expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment of assets
Other income and expenses
Income before net finance expense, results of equity-accounted investments
and income taxes
Finance income
Finance expenses
Foreign exchange gains (losses) and inflation indexation charges
Net finance expense
Results of equity-accounted investments
Note
8
9.1
9.2
9.3
26
25
10
11
29.2
2021
83,966
(43,164)
40,802
(4,229)
(1,176)
(687)
(563)
(406)
3,190
653
(3,218)
2020
53,683
(29,195)
24,488
(4,884)
(1,090)
(803)
(355)
(952)
(7,339)
998
(14,425)
2019
76,589
(45,732)
30,857
(4,476)
(2,124)
(799)
(576)
(619)
(2,848)
1,199
(10,243)
37,584
10,063
20,614
821
(5,150)
(6,637)
(10,966)
551
(6,004)
(4,177)
(9,630)
1,330
(7,086)
(3,008)
(8,764)
1,607
(659)
153
Net income (loss) before income taxes
28,225
(226)
12,003
Income taxes
16.1
(8,239)
1,174
(4,200)
Net income from continuing operations for the year
Net income from discontinued operations for the year
Net income for the year
Net income attributable to shareholders of Petrobras
Net income from continuing operations
Net income from discontinued operations
Net income (loss) attributable to non-controlling interests
Net income (loss) from continuing operations
Net income from discontinued operations
Basic and diluted earnings per common and preferred share - in U.S. dollars
34.6
From continuing operations
From discontinued operations
The notes form an integral part of these financial statements.
19,986
−
19,986
19,875
19,875
−
111
111
−
1.52
1.52
−
948
−
948
1,141
1,141
−
(193)
(193)
−
0.09
0.09
−
7,803
2,560
10,363
10,151
7,660
2,491
212
143
69
0.78
0.59
0.19
F-10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PETROBRAS
Years ending December 31, 2021, 2020 and 2019 (Expressed in millions of US Dollars, unless otherwise indicated)
Net income for the year
Items that will not be reclassified to the statement of income:
Actuarial gains (losses) on post-employment defined benefit plans
Recognized in equity
Deferred income tax
Unrealized gains (losses) on equity instruments measured at fair value through other
comprehensive income
Recognized in equity
Deferred income tax
Share of other comprehensive income (losses) in equity-accounted investments
Items that may be reclassified subsequently to the statement of income:
Unrealized gains (losses) on cash flow hedge - highly probable future exports
Recognized in equity
Reclassified to the statement of income
Deferred income tax
Cumulative translation adjustments (*)
Recognized in equity
Reclassified to the statement of income
Share of other comprehensive income in equity-accounted investments
Recognized in equity
Reclassified to the statement of income
Other comprehensive income (loss)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to shareholders of Petrobras
Comprehensive income (loss) attributable to non-controlling interests
(*) It includes cumulative translation adjustments in associates and joint ventures.
The notes form an integral part of these financial statements.
2021
19,986
2020
948
2019
10,363
5,169
(1,340)
3,829
2,415
(127)
2,288
(5,589)
1,491
(4,098)
−
−
−
−
(3,949)
4,585
(215)
421
(1,314)
41
(1,273)
22
−
22
(2)
1
(1)
46
(21,460)
4,720
5,690
(11,050)
(5,211)
−
(5,211)
(378)
43
(335)
−
−
−
−
(3,510)
3,136
126
(248)
(1,465)
34
(1,431)
69
−
69
2,999
(14,263)
(5,708)
22,985
(13,315)
22,961
24
(13,126)
(189)
4,655
4,469
186
F-11
CONSOLIDATED STATEMENTS OF CASH FLOWS
PETROBRAS
Years ending December 31, 2021, 2020 and 2019 (Expressed in millions of US Dollars, unless otherwise indicated)
Note
2021
2020
2019
Cash flows from operating activities
Net income (loss) for the year
Adjustments for:
Net income from discontinued operations
Pension and medical benefits (actuarial expense)
Results of equity-accounted investments
Depreciation, depletion and amortization
Impairment of assets (reversal)
Inventory write-down (write-back) to net realizable value
Allowance (reversals) for credit loss on trade and other receivables
Exploratory expenditure write-offs
Disposal/write-offs of assets, remeasurement of investment retained with loss of control
Foreign exchange, indexation and finance charges
Deferred income taxes, net
Revision and unwinding of discount on the provision for decommissioning costs
PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation
Results from co-participation agreements in bid areas
Assumption of interest in concessions
Early termination and cash outflows revision of lease agreements
17
29.2
25
14
13.3
26
16.1
19
16
24
24
Decrease (Increase) in assets
Trade and other receivables, net
Inventories
Judicial deposits
Escrow account - Class action agreement
Other assets
Increase (Decrease) in liabilities
Trade payables
Other taxes payable
Pension and medical benefits
Provisions for legal proceedings
Short-term benefits
Provision for decommissioning costs
Agreement with US authorities
Other liabilities
Income taxes paid
Net cash provided by operating activities from continuing operations
Net cash provided by operating activities - discontinued operations
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of PP&E and intangible assets (*)
Bidding for oil surplus of Transfer of rights agreement
Investments in investees
Proceeds from disposal of assets - Divestment
Reimbursement on the Transfer of rights agreement
Financial compensation for the Búzios Co-participation Agreement
Divestment (Investment) in marketable securities
Dividends received
Net cash provided by (used in) investing activities from continuing operations
Net cash provided by investing activities - discontinued operations
Net cash provided by (used in) investing activities
Cash flows from financing activities
Changes in non-controlling interest
Proceeds from financing
Repayment of principal - finance debt
Repayment of interest - finance debt
Repayment of lease liability
Dividends paid to Shareholders of Petrobras
Dividends paid to non-controlling interests
Net cash used in financing activities from continuing operations
Net cash used in financing activities - discontinued operations
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The notes form an integral part of these financial statements.
(*) In 2019, it does not include bidding for oil surplus of Transfer of rights agreement
F-12
24
32.2
32.2
32.2
33
34
19,986
−
2,098
(1,607)
11,695
(3,190)
(1)
(30)
248
(1,900)
10,795
4,058
661
(986)
(631)
(164)
(545)
(2,075)
(2,334)
(1,032)
−
(289)
1,073
7,016
(2,239)
(12)
(312)
(730)
−
376
(2,138)
37,791
−
37,791
(6,325)
−
(24)
4,783
−
2,938
4
781
2,157
−
2,157
(24)
1,885
(21,413)
(2,229)
(5,827)
(13,078)
(105)
(40,791)
−
(40,791)
(402)
(1,245)
11,725
10,480
948
10,363
−
(1,001)
659
11,445
7,339
375
144
456
(456)
11,094
(1,743)
981
(3,173)
−
−
(276)
1
724
(859)
−
159
216
3,246
(1,048)
(261)
781
(482)
−
(47)
(332)
28,890
−
28,890
(5,874)
−
(942)
1,997
−
−
66
243
(4,510)
−
(4,510)
(67)
17,023
(25,727)
(3,157)
(5,880)
(1,367)
(84)
(19,259)
−
(19,259)
(773)
4,348
7,377
11,725
(2,560)
2,086
(153)
14,836
2,848
15
87
308
(6,012)
8,460
2,798
950
−
−
−
(60)
2,233
(281)
(2,144)
1,819
(219)
(989)
225
(1,882)
(3,767)
185
(512)
(768)
(259)
(2,330)
25,277
323
25,600
(8,556)
(15,341)
(7)
10,413
8,361
−
198
1,436
(3,496)
1,812
(1,684)
(29)
7,464
(27,273)
(4,501)
(5,207)
(1,877)
(138)
(31,561)
(508)
(32,069)
1,631
(6,522)
13,899
7,377
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
PETROBRAS
Years ending December 31, 2021, 2020 and 2019 (Expressed in millions of US Dollars, unless otherwise indicated)
Share capital (net
of share issuance
costs)
Accumulated other comprehensive income (deficit)
and deemed cost
Profit Reserves
Share
Capital
Share
issuance
costs
Capital reserve,
Capital
Transactions
and Treasury
shares
Cumulative
translation
adjustment
Cash flow
hedge -
highly
probable
future
exports
Actuarial
gains
(losses) on
defined
benefit
pension
plans
Other
comprehensive
income (loss)
and deemed cost
Legal Statutory
Tax
incentives
Profit
retention
Additional
dividends
proposed
Retained
earnings
(losses)
Equity
attributable to
shareholders
of Petrobras
Non-
controlling
interests
Total
consolidated
equity
Balance at January 1, 2019
107,380
Realization of deemed cost
Treasury shares
Capital transactions
Net income
Other comprehensive income (loss)
Appropriations:
Transfer to reserves
Dividends
Balance at December 31, 2019
Capital increase with reserves
Realization of deemed cost
Capital transactions
Net income
Other comprehensive income (loss)
Appropriations:
Transfer to reserves
Dividends
Balance at December 31, 2020
Capital increase with reserves
Capital transactions
Net income
Other comprehensive income (loss)
Appropriations:
Additional dividends proposed last year
approved this year
Transfer to reserves
Dividends
Balance at December 31, 2021
−
−
−
−
−
−
−
107,380
−
−
−
−
−
−
−
107,380
−
−
−
−
−
−
−
107,380
The notes form an integral part of these financial statements.
(279)
107,101
−
−
−
−
−
−
−
(279)
107,101
−
−
−
−
−
−
−
(279)
107,101
−
−
−
−
−
−
−
(279)
107,101
1,067
1,067
−
−
(3)
−
−
−
−
1,064
1,064
−
−
−
−
−
−
−
1,064
1,064
−
79
−
−
−
−
−
1,143
1,143
(67,316)
(13,292)
(13,224)
−
−
−
−
−
−
−
−
−
−
−
−
(1,405)
(248)
(4,098)
−
−
(68,721)
−
−
(13,540)
−
−
(17,322)
−
−
−
−
(5,215)
−
−
−
(73,936)
−
−
−
−
−
−
−
(11,050)
−
−
−
(24,590)
−
−
−
−
−
−
−
2,288
−
−
−
(15,034)
−
−
−
(1,186)
421
3,829
−
−
−
(75,122)
−
−
−
(24,169)
−
−
−
(11,205)
(953)
(94,785)
(2)
−
−
−
69
−
−
(886)
(100,469)
−
2
−
−
(290)
−
−
−
(1,174)
(114,734)
−
−
−
22
−
−
−
(1,152)
(111,648)
8,257
2,452
923
46,529
−
−
−
−
−
488
−
8,745
−
−
−
−
−
−
68
−
8,813
−
−
−
−
−
956
−
9,769
−
−
−
−
−
250
−
2,702
−
−
−
−
−
−
198
−
2,900
−
−
−
−
−
184
−
3,084
−
−
−
−
−
−
−
−
−
−
179
−
1,102
6,549
−
53,078
−
−
−
−
−
−
−
−
1,102
−
−
−
−
−
−
−
−
−
−
(226)
(878)
51,974
−
−
−
−
−
118
−
1,220
−
388
(312)
52,050
−
58,161
−
−
−
−
−
−
−
−
65,627
−
−
−
−
−
−
−
1,128
1,128
65,917
−
−
−
−
(1,128)
−
6,688
6,688
72,811
−
−
2
−
−
10,151
−
(7,466)
(2,687)
−
−
−
(2)
−
1,141
−
−
(40)
(1,099)
−
−
−
−
19,875
−
−
(1,646)
(18,229)
−
−
71,544
71,544
−
−
(3)
10,151
(5,682)
−
(2,687)
73,323
73,323
−
−
−
1,141
(14,267)
−
−
(849)
59,348
59,348
−
79
19,875
3,086
(1,128)
−
(11,853)
69,407
69,407
1,631
1,631
−
−
(658)
212
(26)
−
(267)
892
892
(13)
−
(81)
(193)
4
−
−
(81)
528
528
2
(40)
111
(87)
−
−
(109)
405
405
73,175
73,175
−
−
(661)
10,363
(5,708)
−
(2,954)
74,215
74,215
(13)
−
(81)
948
(14,263)
−
−
(930)
59,876
59,876
2
39
19,986
2,999
(1,128)
−
(11,962)
69,812
69,812
F-13
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
1. The Company and its operations
Petróleo Brasileiro S.A. (Petrobras), hereinafter referred to as “Petrobras” or “Company,” is a partially state-owned
enterprise, controlled by the Brazilian Federal Government, of indefinite duration, governed by the terms and
conditions under the Brazilian Corporate Law (Law 6,404 of December 15, 1976), Law 13,303 of June 30, 2016 and its
Bylaws.
Petrobras’ shares are listed on the Brazilian stock exchange (B3) in the Level 2 Corporate Governance special listing
segment and, therefore, the Company, its shareholders, its managers and fiscal council members are subject to
provisions under its regulation (Level 2 Regulation - Regulamento de Listagem do Nível 2 de Governança Corporativa
da Brasil Bolsa Balcão – B3). The provisions of the Level 2 Regulation, which are based on high standards of corporate
governance, shall prevail over statutory provisions in the event of harm to the rights of public offers investors provided
for in the Company's Bylaws, except when otherwise determined by other regulation.
The Company is dedicated to prospecting, drilling, refining, processing, trading and transporting crude oil from
producing onshore and offshore oil fields and from shale or other rocks, as well as oil products, natural gas and other
liquid hydrocarbons. In addition, Petrobras carries out energy related activities, such as research, development,
production, transport, distribution and trading of all forms of energy, as well as other related or similar activities.
Petrobras may perform any of the activities related to its corporate purpose, directly, through its wholly-owned
subsidiaries, controlled companies, alone or through joint ventures with third parties, in Brazil or abroad.
The economic activities linked to its business purpose shall be undertaken by the Company in free competition with
other companies according to market conditions, in compliance with the other principles and guidelines of Laws no.
9,478/97 and 14,134/21 (oil and gas regulations, respectively). However, Petrobras may have its activities, provided
they are in compliance with its corporate purpose, guided by the Brazilian Federal Government to contribute to the
public interest that justified its creation, aiming to meet national energy policy objectives when:
I – established by law or regulation, as well as under agreements provisions with a public entity that is competent to
establish such obligation, abiding with the broad publicly stated of such instruments; and
II – the cost and revenues thereof have been broken down and disseminated in a transparent manner.
In this case, the Company’s Investment Committee and Minority Shareholders Committee, exercising their advisory role
to the Board of Directors, shall assess and measure the difference between such market conditions and the operating
result or economic return of the transaction, based on technical and economic criteria for investment valuation and
specific operating costs and results under the Company's operations. In case a difference is identified, for every financial
year, the Brazilian Federal Government shall compensate the Company.
2. Basis of preparation
2.1. Statement of compliance and authorization of consolidated financial statements
These consolidated financial statements have been prepared and are being presented in accordance with the
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The consolidated financial statements have been prepared under the historical cost convention, except when otherwise
indicated. The significant accounting policies used in the preparation of these financial statements are set out in their
respective explanatory notes.
The preparation of the financial statements requires the use of estimates based on assumptions and judgements, which
may affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses.
F-14
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Although our management periodically reviews these assumptions and judgments, the actual results could differ from
these estimates. For further information on accounting estimates, see note 4.
These consolidated financial statements were approved and authorized for issue by the Company’s Board of Directors
in a meeting held on March 30, 2022.
2.2. Discontinued operation
After the conclusion of a secondary public offering in July 2019, the Company no longer controlled Petrobras
Distribuidora S.A. – BR (later renamed to Vibra Energia).
As a result, this investment is classified as a discontinued operation for 2019, since it represented a separate major line
of business. Thus, in the consolidated statement of income and cash flows, the net income, operating, investing and
financing cash flows relating to BR are presented in separate line items, as a net amount for discontinued operations.
2.3. Functional and presentation currency
The functional currency of Petrobras and all of its Brazilian subsidiaries is the Brazilian Real. The functional currency of
the Petrobras direct subsidiaries that operate outside Brazil is the U.S. dollar.
Petrobras has selected the U.S. dollar as its presentation currency to facilitate a more direct comparison to other oil
and gas companies. The financial statements have been translated from the functional currency (Brazilian real) into the
presentation currency (U.S. dollar). All assets and liabilities are translated into U.S. dollars at the closing exchange rate
at the date of the financial statements; income and expenses, as well as cash flows are translated into U.S. dollars using
the average exchange rates prevailing during the period. All exchange differences arising from the translation of the
consolidated financial statements from the functional currency into the presentation currency are recognized as
cumulative translation adjustments (CTA) within accumulated other comprehensive income in the consolidated
statements of changes in shareholders’ equity.
Brazilian Real x U.S. Dollar
Dec/21 Sep/21 Jun/21 Mar/21 Dec/20 Sep/20 Jun/20 Mar/20 Dec/19 Sep/19 Jun/19 Mar/19
Quarterly average exchange rate
Period-end exchange rate
5.59
5.58
5.23
5.44
5.29
5.00
5.48
5.70
5.39
5.20
5.38
5.64
5.39
5.48
4.47
5.20
4.12
4.03
3.97
4.16
3.92
3.83
3.77
3.90
3. Significant accounting policies
To aid cohesion and comprehension, the significant accounting policies are set out at the end of each explanatory note
to which they relate.
4. Critical accounting policies: key estimates and judgments
The preparation of the consolidated financial information requires the use of estimates and judgments for certain
transactions and their impacts on assets, liabilities, income and expenses. The assumptions are based on past
transactions and other relevant information and are periodically reviewed by management, although the actual results
could differ from these estimates.
Information about areas that require significant judgment or involve a higher degree of complexity in the application
of the accounting policies and that could materially affect the Company’s financial condition and results of operations
is set out as follows.
F-15
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
4.1. Oil and gas reserves
Oil and gas reserves are estimated based on economic, geological and engineering information, such as well logs,
pressure data and fluid sample data. The reserves are used as the basis for calculating unit-of-production depreciation,
depletion and amortization rates, impairment testing and decommissioning costs estimates, and for projections of
highly probable future exports subject to the cash flow hedge.
Reserves estimates are revised at least annually, based on updated geological and production data of reservoirs, as well
as on changes in prices and costs used in these estimates. Revisions can also result from significant changes in the
Company’s development strategy or in the production capacity.
The Company determines its oil and gas reserves both pursuant to the U.S. Securities and Exchange Commission - SEC
and the ANP/SPE (Brazilian Agency of Petroleum, Natural Gas and Biofuels / Society of Petroleum Engineers) criteria.
The main differences between these criteria relate to the use of different economic premises and to the possibility,
under the ANP/SPE criteria, to include volumes expected to be produced after the expiration of contracts related to the
Brazilian fields, according to the ANP criteria.
According to the definitions prescribed by the SEC, proved oil and gas reserves are those quantities of oil and gas which,
by analysis of geoscientific and engineering data, can be estimated with reasonable certainty to be economically
producible from a given date forward, from known reservoirs and under existing economic conditions, operating
methods and government regulation. Proved reserves are subdivided into developed and undeveloped reserves.
Proved developed oil and gas reserves are those that can be expected to be recovered through: (i) existing wells with
existing equipment and operating methods, where the cost of the required equipment is relatively minor compared to
the cost of a new well; (ii) installed extraction equipment and infrastructure operational at the time of the reserves
estimate, if the extraction is by means not involving wells.
Although the Company is reasonably certain that proved reserves will be produced, the timing and amount recovered
can be affected by a number of factors including completion of development projects, reservoir performance,
regulatory aspects and significant changes in long-term oil and gas price levels.
Detailed information on reserves is presented as unaudited supplementary information.
a)
Impacts of oil and gas reserves on depreciation, depletion and amortization
Estimates of proved reserves volumes used in the calculation of depreciation, depletion and amortization rates, under
the unit-of-production method, are prepared by the Company’s technicians according to SEC definitions. Revisions to
the Company’s proved developed and undeveloped reserves impact prospectively the amounts of depreciation,
depletion and amortization recognized in the statement of income and the carrying amounts of oil and gas properties
assets.
Therefore, considering all other variables being constant, a decrease in estimated proved reserves would increase,
prospectively, depreciation, depletion and amortization expense, while an increase in reserves would reduce
depreciation, depletion and amortization.
Note 23 provides more detailed information on depreciation, amortization and depletion.
b)
Impacts of oil and gas reserves on impairment testing
The measurement of the value in use of oil and gas exploration and development assets is based on proved and
probable reserves pursuant to the ANP/SPE definitions. Note 25 provides further information on impairment testing.
F-16
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
c)
Impacts of oil and gas reserves on decommissioning costs estimates
The timing of abandonment and dismantling areas is based on the length of reserves depletion, in accordance with
ANP/SPE definitions. Therefore, the review of the timing of reserves depletion may impact the provision for
decommissioning cost estimates. Note 4.6 provides further information on other assumptions used in estimating the
provision for decommissioning costs.
d)
Impacts of oil and gas reserves on highly probable future exports subject to cash flow hedge accounting
The Company estimates highly probable future exports in accordance with future exports forecasted in the current
Strategic Plan projections and based on short-term estimates on a monthly basis. Changes in the expected oil and gas
production may affect future exports forecasts and, consequently, hedge relationship designations may also be
impacted.
4.2. Main assumptions for impairment testing
Impairment testing involves uncertainties mainly related to its key assumptions: average Brent prices and Brazilian
Real/U.S. dollar average exchange rate. These assumptions are relevant to virtually all of the Company’s operating
segments and a significant number of interdependent variables are derived from these key assumptions and there is a
high degree of complexity in their application in determining value in use for impairment tests.
The markets for crude oil and natural gas have a history of significant price volatility and although prices can drop or
increase precipitously, industry prices over the long term tends to continue being driven by market supply and demand
fundamentals.
Projections relating to the key assumptions are derived from the Strategic Plan and are consistent with market
evidence, such as independent macro-economic forecasts, industry analysts and experts. Back testing analysis and
feedback process in order to continually improve forecast techniques are also performed.
The Company’s oil price forecast model is based on a nonlinear relationship between variables reflecting market supply
and demand fundamentals. This model also takes into account other relevant factors, such as the effects of OPEC
decisions on the oil market, industry costs, idle capacity, the oil and gas production forecasted by specialized firms, the
relationship between the oil price and the U.S. dollar exchange rate.
The Real/U.S. dollar exchange rate projections are based on econometric models that take into account long-term
assumptions involving observable inputs, such as country risk, commodity prices, interest rates and the value of the
U.S. Dollar relative to a basket of foreign currencies (U.S. Dollar Index – USDX).
Changes in the economic environment may result in changing assumptions and, consequently, the recognition of
impairment charges or reversals on certain assets or CGUs. For example, the Company’s sales revenue and refining
margins are directly impacted by Brent price variations, as well as Brazilian Real/U.S. dollar exchange rate variations,
which also impacts our capital and operating expenditures.
Changes in the economic and political environment may also result in higher country risk projections that would increase
discount rates for impairment testing.
Reductions in future oil and natural gas price scenarios resulting from structural changes, adverse effects arising from
significant changes in reserve volumes, production curve expectations, lifting costs or discount rates, as well as capital
expenditure decisions that result in the postponement or termination of projects, could trigger the need for impairment
assessment.
The recoverable amount of certain assets may not substantially exceed their carrying amounts and, therefore, it is
reasonably possible that outcomes in future periods that are different from the current assumptions may result in the
recognition of additional impairment charges on these assets, as described in note 25.
F-17
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
4.3. Identifying cash-generating units for impairment testing
Identifying cash-generating units (CGUs) requires management assumptions and judgment, based on the Company’s
business and management model. Changes in the aggregation of assets into CGUs may occur due to a review of
investment, strategic or operational factors, which could result in changes in the interdependencies between those
assets and, consequently, alter the aggregation or breakdown of assets into CGUs or individual assets. Therefore, this
change could result in additional impairment charges or reversals. The primary considerations in relation to identifying
the CGUs are set out below:
a)
Exploration and Production CGUs:
i) Crude oil and natural gas producing properties CGUs: comprises exploration and development assets related to crude
oil and natural gas fields and groups of fields in Brazil and abroad. At December 31, 2021, Exploration and Production
CGUs in Brazil had 90 fields and 25 groups of fields. Changes in the aggregation of CGUs are presented in note 25.
ii) Drilling rigs are not part of any CGU and are assessed for impairment separately.
b)
Refining, transportation and marketing CGUs:
i) Downstream CGU: comprises refineries and associated assets, terminals and pipelines, as well as logistics assets
operated by Transpetro, with a combined and centralized operation of such assets in Brazil. These assets are managed
with a common goal of achieving efficiency, profitability and strategic value long term on a nationwide basis. They are
not operated for the generation of profit by asset/location. The operational planning is made in a centralized manner
and these assets are not managed, measured or evaluated by their individual results. The refineries do not have
autonomy to choose the oil to be processed, the mix of oil products to produce, the markets in which these products
will be traded, which amounts will be exported, which intermediaries will be received and to decide the sale prices of oil
products. The operational decisions are analyzed through an integrated model of operational planning for market
supply. This model evaluates the solutions to supply the market considering all the options for production, importing,
exporting, logistics and inventories seeking a comprehensive optimum for Petrobras and not for the profit of each unit.
The decision regarding a new investment is not based on the profitability of the project for the asset where it will be
installed, but for Petrobras as a whole. The model that supports the entire planning, used in the studies of technical
and economic feasibility of new investments in refining, may, in its indications, allocate a lower economic kind of oil to
a certain refinery or define a lower economic mix of products to it, or even force it to supply more distant markets (area
of influence), leading it to operate with reduced margins if seen individually, in case this is the best for the integrated
system as a whole. Pipelines and terminals are an integral part and interdependent portion of the refining assets,
required to supply the market.
In 2021, management approved the sale of the Landulpho Alves (RLAM) and Isaac Sabbá (REMAN) refineries, whose
assets were excluded from the CGU. The sale of RLAM was closed on November 30, 2021. The sale of REMAN is not yet
closed, and its assets are classified as held for sale as of December 31, 2021 (see note 31.1).
ii) CGU Comperj: with the cancellation of the first refining unit of Comperj, the remaining assets were allocated into 2
CGUs: the CGU Itaboraí Utilities, composed of assets that will support the natural gas processing plant (UPGN) of the
route 3 integrated project; and the CGU GasLub, a set of assets that remain in hibernation and are being evaluated for
use in other projects.
iii) CGU Second Refining Unit of RNEST: comprises assets of the second refining unit of Abreu e Lima refinery;
iv) Transportation CGU: comprises assets relating to Transpetro’s fleet of vessels;
v) Hidrovia CGU: comprises the fleet of vessels under construction of the Hidrovia project (transportation of ethanol
along the Tietê River);
vi) SIX CGU: shale processing plant (classified as held for sale, as described in note 31.1) ; and
F-18
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
vii) Other operations abroad defined as the smallest group of assets that generates independent cash flows.
c)
Gas & Power CGUs:
In 2021, the New Legal Framework for Gas (Law 14,134/21 and Decree nº 10,712/21) established significant regulatory
changes applicable to the natural gas market in Brazil, allowing private companies to access certain assets that
constituted the CGU Natural Gas. As a result, the assets that composed this CGU were reorganized as follows:
i) CGU Integrated Processing System: set of assets formed by natural gas processing plants in Itaboraí, Cabiúnas and
Caraguatatuba, grouped together due to the contractual characteristics of the Integrated Processing System and the
Integrated Transportation System; and
ii) CGUs of Natural Gas Processing Plants: remaining natural gas processing plants each of which represents a separate
CGU.
The gas pipelines Route 2 and Route 3, which were also part of the Natural Gas CGU, are now tested with E&P assets
that benefit from this infrastructure. In relation to the LNG terminals and the Brazil-Bolivia Gas Pipeline, impairment
testing are made in conjunction with the Company's natural gas processing plants.
Other Gas & Power CGUs are:
iii) CGU nitrogen fertilizer plants: formed by nitrogen fertilizer plants;
iv) CGU Power: comprises the thermoelectric power generation plants (UTEs). In December 2021, occurred the closing
of the sale of plants Arembepe, Muryci and Bahia 1 (see note 31), at which point these assets were excluded from the
CGU.
v) CGU Termocamaçari: comprises the assets from the Termocamaçari thermoelectric plant;
vi) Other CGUs: operations abroad defined as the smallest group of assets that generates largely independent cash
flows.
d)
Biofuels business CGUs:
i) Biodiesel CGU: an integrated unit of biodiesel plants defined based on the production planning and operation process,
that takes into consideration domestic market conditions, the production capacity of each plant, as well as the results
of biofuels auctions and raw materials supply.
ii) Quixadá CGU: comprises the assets of Quixadá Biofuel Plant.
Further information on impairment testing is set out in note 25.
4.4. Pension and other post-retirement benefits
The actuarial obligations and net expenses related to defined benefit pension and health care post-retirement plans
are computed based on several financial and demographic assumptions, of which the most significant are:
•
•
Discount rate: comprises the projected future inflation in addition to an equivalent discounted interest rate that
matches the duration of the pension and health care obligations with the future yield curve of long-term Brazilian
Government Bonds; and
Medical costs: comprise the projected growth rates based on per capita health care benefits paid over the last
five years, which are used as a basis for projections, converged to the general price inflation index within 30 years.
F-19
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
These and other estimates are reviewed at least annually and may differ materially from actual results due to changing
market and financial conditions, as well as actual results of actuarial assumptions.
The sensitivity analysis of discount rates and changes in medical costs as well as additional information about actuarial
assumptions are set out in note 17.
4.5. Estimates related to contingencies and legal proceedings
The Company is defendant in arbitrations and in legal and administrative proceedings involving civil, tax, labor and
environmental issues arising from the normal course of its business and makes use of estimates to recognize the
amounts and the probability of outflow of resources, based on reports and technical assessments from legal advisors
and on management’s assessment.
These estimates are performed individually, or aggregated if there are cases with similar characteristics, primarily
considering factors such as assessment of the plaintiff’s demands, consistency of the existing evidence, jurisprudence
on similar cases and doctrine on the subject. Specifically for lawsuits by outsourced employees, the Company estimates
the expected loss based on a statistical procedure, due to the number of actions with similar characteristics.
Arbitral, legal and administrative decisions against the Company, new jurisprudence and changes of existing evidence
can result in changes regarding the probability of outflow of resources and on the estimated amounts, according to the
assessment of the legal basis.
Note 18 provides further detailed information about contingencies and legal proceedings.
4.6. Decommissioning costs estimates
The Company has legal and constructive obligations to remove equipment and restore onshore and offshore areas at
the end of operations. Its most significant asset removal obligations relate to offshore areas. Estimates of costs for
future environmental cleanup and remediation activities are based on current information about costs and expected
plans for remediation. These obligations are recognized at present value, using a risk-free discount rate, adjusted to
the Company's credit risk. Due to the long term until the abandonment, changes in the discount rate can cause
significant variations in the recognized amount.
These estimates require performing complex calculations that involve significant judgment since: i) the obligations are
long-term; ii) the contracts and regulations contain subjective definitions of the removal and remediation practices and
criteria involved when the events actually occur; and iii) asset removal technologies and costs are constantly changing,
along with regulations, environmental, safety and public relations considerations.
The Company conducts studies to incorporate technologies and procedures to optimize the process of abandonment,
considering industry best practices. However, the timing and amounts of future cash flows are subject to significant
uncertainty.
Note 19 provides further detailed information about the decommissioning provisions.
4.7. Deferred income taxes
The recognition of deferred taxes involves significant estimates and judgments by the Company. Deferred tax assets
are recognized to the extent that it is probable that taxable profit will be available against which a deductible temporary
difference can be utilized or it is probable that the entity will have sufficient taxable profit in future periods. In
evaluating whether it will have sufficient taxable profit in future periods to support the recognition of deferred tax
assets, the Company uses future projections and estimates based on its Strategic Plan, which is approved by the Board
of Directors annually. Future taxable profits projections are mainly based on the following assumptions: i) Brent crude
oil prices; ii) foreign exchange rates; and iii) the Company’s projected net finance expenses (income).
F-20
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in deferred tax assets and liabilities are presented in note 16.1.
4.8. Cash flow hedge accounting involving the Company’s future exports
The Company determines its future exports as “highly probable future exports” based on its current Strategic Plan and,
based on short-term estimates on a monthly basis. The highly probable future exports are determined by a percentage
of projected exports revenue, taking into account the Company’s operational and capital expenditure optimization
model, limited to a threshold based on a historical percentage of the oil production that is usually sold abroad. For the
long-term, future exports forecasts are reviewed whenever the Company reviews its Strategic Plan assumptions, while
for the short-term it is reviewed monthly. The approach for determining exports as highly probable future exports is
reviewed annually, at least.
See note 36 for more detailed information about cash flow hedge accounting and a sensitivity analysis of the cash flow
hedge involving future exports.
4.9. Write-off – overpayments incorrectly capitalized
As described in note 21, in the third quarter of 2014, the Company developed an estimation methodology and wrote off
US$2,527 of capitalized costs representing the estimated amounts that Petrobras had overpaid for the acquisition of
property, plant and equipment.
The Company has continuously monitored the results of the Lava Jato investigation and the availability of other
information related to the scheme of improper payments. In preparing the financial statements for the year ended
December 31, 2021, the Company has not identified any additional information that would affect the adopted
calculation methodology and consequently require additional write-offs.
4.10. Expected credit losses on financial assets
Expected credit losses on financial assets are based on assumptions relating to risk of default, the determination of
whether or not there has been a significant increase in credit risk and expectation of recovery, among others. The
Company uses judgment for such assumptions in addition to information from credit rating agencies and inputs based
on collection delays.
4.11. Leases
The Company uses incremental borrowing rates to determine the present value of the lease payments, when the
interest rate implicit in the lease cannot be readily determined. These incremental borrowing rates are determined
mainly based on the Company’s cost of funding based on yields of bonds issued by the Company, adjusted by currency
and duration of cash outflows of the lease arrangements, economic environment of the country where the lessee
operates and similar collateral.
4.12. Uncertainty over Income Tax Treatments
Uncertainties over income tax treatments represent the risks that the tax authority does not accept a certain tax
treatment applied by the Company, mainly related to different interpretations of deductions and additions to the IRPJ
and CSLL calculation basis. The Company evaluates each uncertain tax treatment separately or in a group where there
is interdependence in relation to the expected result.
The Company estimates the probability of acceptance of an uncertain tax treatment by the tax authority based on
technical assessments by its legal advisors, considering precedent jurisprudence applicable to current tax legislation,
which may be impacted mainly by changes in tax rules or court decisions which may affect the analysis of the
fundamentals of uncertainty. The tax risks identified are evaluated following a pre-determined tax risk management
methodology.
F-21
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
If it is probable that the tax authorities will accept an uncertain tax treatment, the amounts recorded in the financial
statements are consistent with the tax records and, therefore, no uncertainty is reflected in the measurement of current
or deferred income taxes. If it is not probable that the tax authorities will accept an uncertain tax treatment, the
uncertainty is reflected in the measurement of income taxes in the financial statements.
Information on uncertainty over income tax treatments is disclosed in Note 16.1.
5. New standards and interpretations
5.1. New International Financial Reporting Standards not yet adopted
Standard
Annual Improvements to
IFRS Standards 2018–
2020.
Reference to the
Conceptual Framework -
Amendments to IFRS 3
Onerous Contracts - Cost
of Fulfilling a Contract -
Amendments to IAS 37
Description
The amendments change requirements related to: (i) simplifying the application
of IFRS 1 by a subsidiary that becomes a first-time adopter of IFRS after its
parent company has already adopted IFRS; (ii) clarifying the fees a company
includes in assessing the terms of a new or modified financial liability in order to
determine whether to derecognize a financial liability (IFRS 9); and (iii) aligning
the fair value measurement requirements in IAS 41 with those in other IFRS
Standards. Additionally, the amendments change an illustrative example
accompanying IFRS 16 regarding lease incentives.
The amendments (i) update a certain reference in IFRS 3 to the most recent
conceptual framework and (ii) include additional requirements related to
obligations under the scope of IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets and IFRIC 21 - Levies. In addition, the amendments provide
that the buyer should not recognize contingent assets acquired in a business
combination.
The amendments specify which costs an entity includes in determining the cost
of fulfilling a contract in assessing whether the contract is onerous.
Property, Plant and
Equipment: Proceeds
before Intended Use
Amendments to IAS 16
-
The amendments prohibit a company from deducting plant and equipment
amounts received from selling items produced while the company is preparing
the asset for its intended use from the cost of property. Instead, a company will
recognize such sales proceeds and related cost in profit or loss.
Effective on
January 1, 2022,
prospective application.
January 1, 2022,
prospective application.
January 1, 2022,
retrospective application
with specific rules.
January 1, 2022,
retrospective application
with specific rules.
of
Classification
Liabilities as Current or
Non-current
-
Amendments to IAS 1
IFRS 17 – Insurance
Contracts (and
Amendments)
Disclosure of Accounting
Policies – Amendments to
and Practice
1
IAS
Statement 2
Definition of Accounting
Estimates – Amendments
to IAS 8
Deferred Tax related to
Assets and Liabilities
from a Single
arising
–
Transaction
Amendments to IAS 12
The amendments establish requirements for the classification of a liability as
current or non-current.
January 1, 2023,
retrospective application.
IFRS 4 – Insurance Contracts will be superseded by IFRS 17, which establishes,
among other things, the requirements to be applied in the recognition,
measurement, presentation and disclosure of insurance and reinsurance
contracts.
In place of the requirement to disclose significant accounting policies, the
amendments to IAS 1 - Presentation of Financial Statements establish that
accounting policies must be disclosed when they are material. Among other
things, the amendment provides guidance for determining such materiality.
According to the amendments to IAS 8, the definition of “change in accounting
estimate” no longer exists. Instead, a definition was established for the term
“accounting estimates”: monetary values in the financial statements that are
subject to measurement uncertainty.
The amendments have reduced the scope of the exemption from recognition of
deferred tax assets and deferred tax liabilities described in paragraphs 15 and 24
of IAS 12 - Income Taxes, so that it no longer applies to transactions that, among
other things, on initial recognition, give rise to equal taxable and deductible
temporary differences.
January 1, 2023,
retrospective application
with specific rules.
January 1, 2023,
prospective application to
amendments to IAS 1.
January 1, 2023,
prospective application.
January 1, 2023,
retrospective application
with specific rules.
Regarding the amendments effective as of January 1, 2022, according to the assessment made, the Company estimates
that there will be no significant impact with the initial application on its consolidated financial statements.
As for the amendments that will be effective as of January 1, 2023, the Company is assessing the impacts that they will
have on the financial statements and is unable to make a reasonable estimation of these impacts at this stage.
F-22
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
6. Capital Management
The Company’s objectives in its capital management is to achieve an adequate level of return on its capital structure in
order to safeguard its ability to continue as a going concern, adding value to its shareholders and investors. Its main
sources of funding have been cash provided by its operating activities and divestments.
The financial strategy of the 2022-2026 Strategic Plan is based on maintaining an optimal capital structure, maximizing
value creation, mitigating risks through litigation management and improving capital allocation.
The Company's goal of reducing gross debt (composed of current and non-current finance debt and lease liability) to
US$ 60 billion by 2022 was met in September 2021, which, in accordance with the Shareholders Dividends Policy, allows
the distribution to its shareholders of 60% of the difference between net cash provided by operating activities and
acquisition of PP&E and intangibles assets.
As of December 31, 2021, gross debt decreased to US$ 58,743, from US$ 75,538 as of December 31, 2020, and the
weighted average maturity of outstanding debt increased to 13.39 years as of December 31, 2021 (from 11.71 years as
of December 31, 2020).
7. Cash and cash equivalents and Marketable securities
7.1. Cash and cash equivalents
Cash at bank and in hand
Short-term financial investments
- In Brazil
Brazilian interbank deposit rate investment funds and other short-term deposits
Other investment funds
- Abroad
Time deposits
Automatic investing accounts and interest checking accounts
Other financial investments
Total short-term financial investments
Total cash and cash equivalents
12.31.2021
299
12.31.2020
552
1,951
163
2,114
4,310
3,732
12
8,054
10,168
10,467
2,592
28
2,620
2,574
5,633
332
8,539
11,159
11,711
Short-term financial investments in Brazil primarily consist of investments in funds holding Brazilian Federal
Government Bonds that can be redeemed immediately, as well as reverse repurchase agreements that mature within
three months as of the date of their acquisition. Short-term financial investments abroad comprise time deposits that
mature in three months or less from the date of their acquisition, highly-liquid automatic investment accounts, interest
checking accounts and other short-term fixed income instruments.
7.1.1. Accounting policy for cash and cash equivalents
Cash and cash equivalents comprise cash on hand, term deposits with banks and short-term highly-liquid financial
investments that are readily convertible to known amounts of cash, are subject to insignificant risk of changes in value
and have a maturity of three months or less from the date of acquisition.
F-23
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
7.2. Marketable securities
Fair value through profit or loss
Amortized cost
Total
Current
Non-current
12.31.2021
12.31.2020
In Brazil
650
Abroad
−
Total
650
In Brazil
652
Abroad
−
44
694
650
44
−
−
−
−
44
694
650
44
44
696
652
44
7
7
7
−
Total
652
51
703
659
44
Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal
Government Bonds. These financial investments have maturities of more than three months and are generally classified
as current assets due to their maturity or the expectation of their realization in the short term.
7.2.1. Accounting policy for marketable securities
Marketable securities are initially measured at fair value and their subsequent measurement depends on their
classification:
•
•
Amortized cost: when the contractual terms of the security give rise on specified dates to cash flows arising only
from payments of principal and interest on the principal amount outstanding, and the business model’s objective
is to hold the security in order to collect contractual cash flows. The interest income is based on the effective
interest method.
Fair value through profit or loss: all other marketable securities.
8. Sales revenues
8.1. Revenues from contracts with customers
As an integrated energy company, revenues from contracts with customers derive from different products sold by the
Company’s operating segments, taking into consideration specific characteristics of the markets where they operate.
For additional information about the operating segments of the Company, its activities and its respective products sold,
see note 12.
The determination of transaction prices derives from methodologies and policies based on the parameters of these
markets, reflecting operating risks, level of market share, changes in exchange rates and international commodity
prices, including Brent oil prices, oil products such as diesel and gasoline, and the Henry Hub Index.
Revenues from sales are recognized at the moment the control is transferred to the client, which occurs upon delivery
at the contractually agreed place or when the service is provided. Generally, prices for products and services are fixed
prior to or shortly after delivery. Therefore, no significant changes in transactions prices are expected to be recognized
in periods after the satisfaction of the performance obligations, except for some exports in which final prices are linked
to changes in commodity price after their transfer of control. Sales proceeds are generally collected in the short-term,
thus there are no significant financing components.
In addition, the Company acts as an agent in the biofuel business, where there is no control of the biodiesel purchased
from the producers and sold to distributors at any time during the sale operation. Those revenues totaled US$ 38
(US$ 37 in 2020).
F-24
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
8.2. Net sales revenues
Diesel
Gasoline
Liquefied petroleum gas
Jet fuel
Naphtha
Fuel oil (including bunker fuel)
Other oil products
Subtotal oil products
Natural gas
Oil
Renewables and nitrogen products
Breakage
Electricity
Services, agency and others
Domestic market
Exports
Oil
Fuel oil (including bunker fuel)
Other oil products
Sales abroad (*)
Foreign market
Sales revenues (**)
(*) Sales revenues from operations outside of Brazil, including trading and excluding exports.
(**) Sales revenues by business segment are set out in note 8.
2021
24,236
11,910
4,491
2,271
1,699
1,775
4,261
50,643
5,884
671
40
243
2,902
808
61,191
21,491
14,942
5,480
1,069
1,284
22,775
83,966
2020
13,924
6,313
3,383
1,455
1,694
795
2,712
30,276
3,649
48
59
438
1,109
755
36,334
15,945
11,720
3,525
700
1,404
17,349
53,683
2019
23,007
9,810
4,159
3,832
1,669
1,026
3,410
46,913
5,929
-
245
645
1,322
940
55,994
18,085
13,180
3,321
1,584
2,510
20,595
76,589
In 2021, sales to Vibra Energia (formerly BR Distribuidora) represent more than 10% of the Company’s sales revenues,
mainly associated with the refining, transportation and marketing segment.
8.3. Remaining performance obligations
The Company is party to sales contracts with original expected duration of more than 1 year, which define the volume
and timing of goods or services to be delivered during the term of the contract, and the payment terms for these future
sales.
The estimated remaining values of these contracts at December 31, 2021 presented below are based on the
contractually agreed future sales volumes, as well as prices prevailing at December 31, 2021 or practiced in recent sales
reflecting more directly observable information:
Domestic market
Gasoline
Diesel
Natural gas
Services and others
Naphtha
Electricity
Other oil products
Jet fuel
Foreign market
Exports
Total
Expected
recognition
within 1 year
Expected
recognition after
1 year
9,964
20,531
11,809
6,173
1,751
624
25
910
2,930
54,717
-
-
11,768
8,743
5,254
2,163
-
-
-
11,592
39,520
Total
9,964
20,531
23,577
14,916
7,005
2,787
25
910
14,522
94,237
F-25
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Revenues will be recognized once goods are transferred and services are provided to the customers and their
measurement and timing of recognition will be subject to future demands, changes in commodities prices, exchange
rates and other market factors.
The table above does not include information on contracts with original expected duration of less than one year, such
as spot-market contracts, variable considerations which are constrained, and information on contracts only
establishing general terms and conditions (Master Agreements), for which volumes and prices will only be defined in
subsequent contracts.
In addition, electricity sales are mainly driven by demands to generate electricity from thermoelectric power plants, as
and when requested by the Brazilian National Electric System Operator (ONS). These requests are substantially affected
by Brazilian hydrological conditions. Thus, the table above presents mainly fixed amounts for the electricity to be
available to customers in these operations.
8.4. Contract liabilities
The balance of contract liabilities carried on the statement of financial position at December 31, 2021 amounted to
US$ 19 (US$ 69 as of December 31, 2020). This amount is classified as other current liabilities and primarily comprises
advances from customers in ship and take or pay contracts to be recognized as revenue based on future sales of natural
gas or following the non-exercise of the right by the customer.
8.5. Accounting policy for revenues
The Company evaluates contracts with customers that will be subject to revenue recognition and identifies the distinct
goods and services promised in each of them.
Performance obligations are promises to transfer to the customer: (i) goods or services (or a bundle of goods or
services) that are distinct, and (ii) a series of distinct goods or services that have the same characteristics or are
substantially the same and that have the same pattern of transfer to the customer.
Revenues are measured based on the amount of consideration to which an entity expects to be entitled in exchange for
transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
Transaction prices are based on contractually stated prices, reflecting the Company's pricing methodologies and
policies based on market parameters.
When transferring a good, that is, when the customer obtains its control, the company satisfies the performance
obligation and recognizes the respective revenue, which usually occurs at a point in time upon delivery.
9. Costs and expenses by nature
9.1. Cost of sales
Raw material, products for resale, materials and third-party services (*)
Depreciation, depletion and amortization
Production taxes
Employee compensation
Total
(*) It Includes short-term leases and inventory turnover.
2021
(20,869)
(9,277)
(11,136)
(1,882)
(43,164)
2020
(12,699)
(8,847)
(5,920)
(1,729)
(29,195)
2019
(20,694)
(12,036)
(9,741)
(3,261)
(45,732)
F-26
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
9.2. Selling expenses
Materials, third-party services, freight, rent and other related costs
Depreciation, depletion and amortization
Allowance for expected credit losses
Employee compensation
Total
9.3. General and administrative expenses
Employee compensation
Materials, third-party services, rent and other related costs
Depreciation, depletion and amortization
Total
10. Other income and expenses
Pension and medical benefits - retirees
Unscheduled stoppages and pre-operating expenses
Losses with legal, administrative and arbitration proceedings
Performance award program
Profit sharing
Gains/(losses) with commodities derivatives
Equalization of expenses - Production Individualization Agreements
Reclassification of comprehensive income (loss) due to the disposal of equity-
accounted investments
Results on disposal/write-offs of assets and on remeasurement of investment retained
with loss of control
Results from co-participation agreements in bid areas (*)
Recovery of taxes (**)
Early termination and changes to cash flow estimates of leases
Reimbursements from E&P partnership operations
Assumption of interest in concession agreements (*)
Amounts recovered from Lava Jato investigation
Fines imposed on suppliers
Gains / (losses) on decommissioning of returned/abandoned areas
Voluntary severance programs - PDV
Others
Total
(*) Further information in note 24.
2021
(3,542)
(610)
12
(89)
(4,229)
2020
(4,163)
(564)
2
(159)
(4,884)
2021
(834)
(256)
(86)
2020
(749)
(252)
(89)
(1,176)
(1,090)
2021
(1,467)
(1,362)
(740)
(469)
(125)
(79)
(74)
(41)
1,941
631
561
545
485
363
235
163
99
11
(24)
653
2020
889
(1,441)
(493)
(439)
(7)
(308)
701
(43)
499
-
1,580
276
912
84
155
95
(342)
(1,017)
(103)
998
2019
(3,664)
(549)
(49)
(214)
(4,476)
2019
(1,427)
(539)
(158)
(2,124)
2019
(1,371)
(1,321)
(1,520)
(643)
(43)
(370)
2
(34)
6,046
-
99
60
480
-
220
260
(155)
(198)
(313)
1,199
(**) It Includes the effects of the exclusion of ICMS (VAT tax) from the basis of calculation of sales taxes PIS and COFINS, except for the effects of inflation indexation, as
set out in note 16.
F-27
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
11. Net finance income (expense)
Finance income
Income from investments and marketable securities (Government Bonds)
Other income, net
Finance expenses
Interest on finance debt
Unwinding of discount on lease liabilities
Discount and premium on repurchase of debt securities
Capitalized borrowing costs
Unwinding of discount on the provision for decommissioning costs
Other finance expenses and income, net
Foreign exchange gains (losses) and indexation charges
Foreign exchange gains (losses) (*)
Reclassification of hedge accounting to the Statement of Income (*)
Recoverable taxes inflation indexation income (**)
Other foreign exchange gains (losses) and indexation charges, net
Total
(*) For more information, see notes 36.3c and 36.3a.
2021
821
315
506
(5,150)
(2,870)
(1,220)
(1,102)
976
(761)
(173)
(6,637)
(2,737)
(4,585)
518
167
(10,966)
2020
551
202
349
(6,004)
(3,595)
(1,322)
(1,157)
941
(638)
(233)
(4,177)
(1,363)
(4,720)
1,807
99
(9,630)
(**) Includes PIS and Cofins inflation indexation income - exclusion of ICMS (VAT tax) from the basis of calculation. See note 16.
12. Net income by operating segment
Consolidated Statement of Income by operating segment
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit (loss)
Income (expenses)
Selling
General and administrative
Exploration costs
Research and development
Other taxes
Impairment of assets
Other income and expenses
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance income (expense)
Results in equity-accounted investments
Net income / (loss) before income taxes
Income taxes
Net income (loss) for the year
Attributable to:
Shareholders of Petrobras
Non-controlling interests
Exploration
and
Production
55,584
54,479
1,105
(23,673)
31,911
3,283
-
(152)
(687)
(415)
(192)
3,107
1,622
Refining,
Transportation
& Marketing
74,524
1,416
73,108
(65,620)
8,904
(1,621)
(1,543)
(148)
-
(11)
(122)
289
(86)
35,194
-
119
35,313
(11,963)
23,350
23,353
(3)
7,283
-
941
8,224
(2,478)
5,746
5,746
-
Gas
&
Power
12,051
2,564
9,487
(9,494)
2,557
(2,871)
(2,653)
(73)
-
(25)
(38)
(208)
126
(314)
-
98
(216)
107
(109)
(206)
97
Corporate
and other
business
504
238
266
(503)
1
(1,987)
(11)
(803)
-
(112)
(54)
2
(1,009)
(1,986)
(10,966)
449
(12,503)
5,212
(7,291)
(7,308)
17
F-28
2019
1,330
558
772
(7,086)
(4,847)
(1,514)
(860)
1,332
(795)
(402)
(3,008)
(72)
(3,136)
125
75
(8,764)
2021
Total
83,966
−
83,966
(43,164)
40,802
(3,218)
(4,229)
(1,176)
(687)
(563)
(406)
3,190
653
37,584
(10,966)
1,607
28,225
(8,239)
19,986
Eliminations
(58,697)
(58,697)
-
56,126
(2,571)
(22)
(22)
-
-
-
-
-
-
(2,593)
-
-
(2,593)
883
(1,710)
(1,710)
-
19,875
111
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit (loss)
Income (expenses)
Selling
General and administrative
Exploration costs
Research and development
Other taxes
Impairment of assets
Other income and expenses
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance income (expense)
Results in equity-accounted investments
Net income / (loss) before income taxes
Income taxes
Net income (loss) for the year
Attributable to:
Shareholders of Petrobras
Non-controlling interests
Exploration
and
Production
34,395
33,524
871
(18,098)
16,297
(9,247)
-
(155)
(803)
(232)
(478)
(7,364)
(215)
Refining,
Transportation
& Marketing
47,782
865
46,917
(44,011)
3,771
(2,992)
(2,520)
(161)
-
(11)
(137)
164
(327)
7,050
-
(181)
6,869
(2,398)
4,471
4,475
(4)
779
-
(437)
342
(265)
77
111
(34)
Gas
&
Power
7,725
2,455
5,270
(3,985)
3,740
(2,581)
(2,320)
(85)
-
(10)
(31)
36
(171)
1,159
-
128
1,287
(393)
894
821
73
Corporate
and other
business
876
251
625
(832)
44
419
(20)
(689)
-
(102)
(306)
(175)
1,711
463
(9,630)
(169)
(9,336)
4,438
(4,898)
(4,670)
(228)
Eliminations
(37,095)
(37,095)
-
37,731
636
(24)
(24)
-
-
-
-
-
-
612
-
-
612
(208)
404
404
-
2020
Total
53,683
−
53,683
(29,195)
24,488
(14,425)
(4,884)
(1,090)
(803)
(355)
(952)
(7,339)
998
10,063
(9,630)
(659)
(226)
1,174
948
1,141
(193)
F-29
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Exploration
and
Production
Refining,
Transportation
& Marketing
Gas
&
Power
Corporate
and other
business
Eliminations
Total
2019
67,538
11,493
9,432
58,106
3,308
8,185
1,221
226
995
(54,125)
(54,125)
-
76,589
8,241
68,348
(61,578)
(7,713)
(1,167)
52,030
(45,732)
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit (loss)
Income (expenses)
Selling
General and administrative
Exploration costs
Research and development
Other taxes
Impairment of assets
Other income and expenses
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance income (expenses)
Results in equity-accounted investments
Net income / (loss) before income taxes
Income taxes
Net income from continuing operations for the year
Net income from discontinued operations for the year
Net income for the year
Net income attributable to shareholders of Petrobras
Net income from continuing operations
Net income from discontinued operations
Non-controlling interests
Net income from continuing operations
Net income from discontinued operations
50,462
49,400
1,062
(27,304)
23,158
(4,181)
-
(254)
(799)
(394)
(127)
(1,956)
(651)
5,960
(4,334)
(2,164)
(336)
-
(11)
(151)
(697)
(975)
3,780
2,580
(2,260)
(134)
-
(15)
(152)
(194)
5,335
54
(4,282)
(31)
(1,401)
-
(156)
(189)
1
(2,506)
(4,228)
(8,764)
115
18,977
1,626
6,360
-
86
19,063
(6,451)
12,612
-
12,612
12,624
12,624
-
(12)
(12)
-
-
(151)
1,475
(552)
923
-
923
1,021
1,021
-
(98)
(98)
-
-
103
6,463
(12,877)
(2,162)
4,301
3
4,304
4,180
4,179
1
124
121
3
4,245
(8,632)
2,557
(6,075)
(6,273)
(8,763)
2,490
198
132
66
(2,095)
30,857
(26)
(21)
1
-
-
-
(2)
(4)
(10,243)
(4,476)
(2,124)
(799)
(576)
(619)
(2,848)
1,199
(2,121)
-
-
(2,121)
720
(1,401)
-
(1,401)
(1,401)
(1,401)
−
-
-
-
20,614
(8,764)
153
12,003
(4,200)
7,803
2,560
10,363
10,151
7,660
2,491
212
143
69
In the year ended December 31, 2019, the consolidated amounts of intersegment sales (remaining after eliminations)
relate to sales from the Refining, Transportation & Marketing to BR, which is presented as discontinued operation, in
2019, within Corporate and other business.
12.1. Accounting policy for operating segments
The information related to the Company’s operating segments is prepared based on available financial information
directly attributable to each segment, or items that can be allocated to each segment on a reasonable basis. This
information is presented by business activity, as used by the Company’s Board of Executive Officers (Chief Operating
Decision Maker – CODM) in the decision-making process of resource allocation and performance evaluation.
The measurement of segment results includes transactions carried out with third parties, including associates and joint
ventures, as well as transactions between operating segments. Transfers between operating segments are recognized
at internal transfer prices derived from methodologies that take into account market parameters and are eliminated
only to provide reconciliations to the consolidated financial statements.
The Company's business segments disclosed separately are:
F-30
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Exploration and Production (E&P): this segment covers the activities of exploration, development and production of
crude oil, NGL (natural gas liquid) and natural gas in Brazil and abroad, for the primary purpose of supplying its domestic
refineries. The E&P segment also operates through partnerships with other companies and includes holding interest in
foreign entities operating in this segment.
As an energy Company with a focus on oil and gas, intersegment sales revenue refers mainly to oil transfers to the
Refining, Transportation and Marketing segment, aiming to supply the Company's refineries and meet the domestic
demand for oil products. These transactions are measured by internal transfer prices based on international oil prices
and their respective exchange rate impacts, taking into account the specific characteristics of the transferred oil stream.
In addition, the E&P segment revenues include transfers of natural gas to the natural gas processing plants within Gas
and Power segment. These transactions are measured at internal transfer prices based on the international prices of
this commodity.
Revenue from sales to third parties mainly reflects services rendered relating to E&P activities, sales of the E&P’s
natural gas processing plants, as well as the oil and natural gas operations carried out by subsidiaries abroad.
Refining, Transportation and Marketing (RT&M): this segment covers the refining, logistics, transport and trading of
crude oil and oil products activities in Brazil and abroad, as well as exports of ethanol. This segment also includes the
petrochemical operations, such as extraction and processing of shale and holding interests in petrochemical companies
in Brazil.
This segment carries out the acquisition of crude oil from the E&P segment, imports oil for refinery slate, and acquires
oil products in international markets taking advantage of the existing price differentials between the cost of processing
domestic oil and that of importing oil products.
Intersegment revenues primarily reflect the sale of oil products to the distribution business at market prices and the
operations for the Gas and Power and E&P segments at internal transfer price.
Revenues from sales to third parties primarily reflect the trading of oil products in Brazil and the export and trade of oil
and oil products by foreign subsidiaries.
Gas and Power (G&P): this segment covers the activities of logistic and trading of natural gas and electricity,
transportation and trading of LNG (liquefied natural gas), generation and electricity by means of thermoelectric power
plants, as well as holding interests in transporters and distributors of natural gas in Brazil and abroad. It also includes
natural gas processing and fertilizers production.
Intersegment revenues primarily reflect the transfers of natural gas processed, liquefied petroleum gas (LPG) and NGL
to the RT&M segment. These transactions are measured at internal transfer prices.
This segment purchases national natural gas from the E&P segment, from partners and third parties, imports natural
gas from Bolivia and LNG to meet national demand.
Revenues from sales to third parties primarily reflect natural gas processed to distributors, as well as generation and
trading of electricity.
Corporate and other businesses comprise items that cannot be attributed to the other segments, as well as the
distribution and biofuels businesses. Corporate items comprise those related to corporate financial management,
corporate overhead and other expenses, including actuarial expenses related to the pension and medical benefits for
retired employees and their dependents. The distribution businesses reflect the equity interest in the associate Vibra
Energia, formerly Petrobras Distribuidora, until July 2021, when the Company sold its remaining interest in this
associate, and oil products distribution businesses abroad (South America). The biofuels business reflects the activities
of producing biodiesel, and its co-products and ethanol.
F-31
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
13. Trade and other receivables
13.1. Trade and other receivables
Receivables from contracts with customers
Third parties
Related parties
Investees (note 30.5)
Receivables from the electricity sector
Subtotal
Other trade receivables
Third parties
Receivables from divestments (*)
Lease receivables
Other receivables (**)
Related parties
Petroleum and alcohol accounts - receivables from Brazilian Government
Subtotal
Total trade and other receivables, before ECL
12.31.2021
12.31.2020
4,839
3,081
385
-
5,224
2,679
435
872
506
4,492
9,716
664
205
3,950
1,523
467
2,536
482
5,008
8,958
(1,528)
Expected credit losses (ECL) - Third parties
(68)
Expected credit losses (ECL) - Related parties
7,362
Total trade and other receivables
4,731
Current
Non-current
2,631
(*) It mainly refers to receivables (including interest, exchange rate variation and inflation indexation) from the divestment in Nova Transportadora do Sudeste (NTS), of
Block BM-S-8 in the Bacalhau field (former Carcará group), in addition to the values referring to Rio Ventura, Roncador, Pampo Enchova, Baúna and Miranga fields.
(**) As of December 31, 2020, it mainly includes amounts related to the purchase and sale of production platforms and equipment from our partners in E&P consortia,
with financial settlement in the first quarter of 2021.
(1,428)
(20)
8,268
6,368
1,900
Trade and other receivables are generally classified as measured at amortized cost, except for receivables with final
prices linked to changes in commodity price after their transfer of control, which are classified as measured at fair value
through profit or loss, amounting to US$ 1,155 as of December 31, 2021 (US$ 507 as of December 31, 2020).
In 2021, constitutional amendments changed the form of payment of judicialized debts by the Brazilian Federal
Government (precatórios), establishing that there will be a limit for yearly payments until the end of 2026, including
budgetary limitations. For that reason, the Company expects to receive the amounts of Petroleum and Alcohol Accounts
between 2022 and 2027, depending on the yearly budgetary limitations of the Brazilian Federal Government.
13.2. Aging of trade and other receivables – third parties
Current
Overdue:
1-90 days
91-180 days
181-365 days
More than 365 days
Total
12.31.2021
12.31.2020
Trade and other
receivables
7,059
Expected
credit losses
(77)
Trade and other
receivables
5,850
Expected
credit losses
(130)
218
40
51
1,457
8,825
(26)
(6)
(29)
(1,290)
(1,428)
205
15
42
1,495
7,607
(8)
(9)
(28)
(1,353)
(1,528)
F-32
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
13.3. Changes in provision for expected credit losses
Opening balance
Additions
Write-offs
Reversals
Transfer of assets held for sale
Cumulative translation adjustment
Closing balance
Current
Non-current
31.12.2021
31.12.2020
1,596
69
(40)
(112)
(8)
(57)
1,448
158
1,290
2,331
209
(667)
(31)
(3)
(243)
1,596
218
1,378
In 2020, the write-offs are primarily related to the write-off of receivables from suppliers, relating to the construction
and renovation of platforms.
Agreement with Companhia de Eletricidade do Amapá
On May 11, 2021, Petrobras signed with Companhia de Eletricidade do Amapá (CEA) a legal agreement for the
termination of litigation and credit recovery in the amount of US$ 58 (R$ 314 million). The agreement establishes the
payment of US$ 24 (R$ 133 million) to Petrobras, to be settled in 24 monthly installments. A discount will be granted on
the remaining US$ 34 (R$ 181 million), provided that the payments occur on time. In case of default, as provided for in
the agreement, Petrobras may demand the outstanding debt without discount.
The suspensive conditions of the contract were fulfilled in November 2021 with the transfer of control to Equatorial
Energia. Thus, the Company recognized this receivable, with a gain in the statement of income of US$ 24, before taxes.
13.4. Accounting policy for trade and other receivables
Trade and other receivables are generally classified at amortized cost, except for certain receivables classified at fair
value through profit or loss, whose cash flows are distinct from the receipt of principal and interest, including
receivables with final prices linked to changes in commodity price after their transfer of control.
When the Company is the lessor in a finance lease, a receivable is recognized at the amount of the net investment in the
lease, consisting of the lease payments receivable and any unguaranteed residual value accruing to the Company,
discounted at the interest rate implicit in the lease.
The Company measures expected credit losses (ECL) for short-term trade receivables using a provision matrix which is
based on historical observed default rates adjusted by current and forward-looking information when applicable and
available without undue cost or effort.
The Company measures the allowance for ECL of other trade receivables based on their 12-month expected credit
losses unless their credit risk increases significantly since their initial recognition, in which case the allowance is based
on their lifetime ECL.
When determining whether there has been a significant increase in credit risk, the Company compares the risk of default
on initial recognition and at the reporting date.
Regardless of the assessment of significant increase in credit risk, a delinquency period of 30 days past due triggers
the definition of significant increase in credit risk on a financial asset, unless otherwise demonstrated by reasonable
and supportable information.
F-33
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The Company assumes that the credit risk on the trade receivable has not increased significantly since initial recognition
if the receivable is considered to have low credit risk at the reporting date. Low credit risk is determined based on
external credit ratings or internal methodologies.
In the absence of controversy or other issues that may result in the suspension of collection, the Company assumes
that a default occurs whenever the counterparty does not comply with the legal obligation to pay its debts when due
or, depending on the instrument, when it is at least 90 days past due.
The measurement of ECL comprises the difference between all contractual cash flows that are due to the Company and
all the cash flows that the Company expects to receive, discounted at the original effective interest rate weighted by
the probability of default.
14. Inventories
Crude oil
Oil products
Intermediate products
Natural gas and Liquefied Natural Gas (LNG)
Biofuels
Fertilizers
Total products
Materials, supplies and others
Total
12.31.2021
3,048
12.31.2020
2,242
2,495
532
349
19
8
6,451
804
7,255
1,925
396
122
30
8
4,723
954
5,677
Crude oil and LNG inventories can be traded or used for production of oil products.
Intermediate products are those product streams that have been through at least one of the refining processes, but
still need further treatment, processing or converting to be available for sale.
Biofuels mainly include ethanol and biodiesel inventories.
Materials, supplies and others mainly comprise production supplies and operating materials used in the operations of
the Company, stated at the average purchase cost, not exceeding replacement cost.
In the year ended December 31, 2021, the Company recognized a US$ 1 gain within cost of sales, adjusting inventories
to net realizable value (a US$ 375 loss within cost of sales in the year ended December 31, 2020) primarily due to changes
in international prices of crude oil and oil products.
At December 31, 2021, the Company had pledged crude oil and oil products volumes as collateral for the Terms of
Financial Commitment (TFC) signed by Petrobras and Petros in 2008, amounting to US$ 2,384, considering the
prepayments made in January 2021.
14.1. Accounting policy for inventories
Inventories are determined by the weighted average cost method adjusted to the net realizable value when it is lower
than its carrying amount.
Net realizable value is the estimated selling price of inventory in the ordinary course of business, less estimated cost of
completion and estimated expenses to complete its sale. Changes in sales prices after the reporting date of the financial
statements are considered in the calculation of the net realizable value if they confirm the conditions existing on that
reporting date.
F-34
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
15. Trade payables
Third parties in Brazil
Third parties abroad
Related parties
Total in current liabilities
16. Taxes
16.1. Income taxes
Income taxes
Taxes in Brazil
Income taxes
Income taxes - Tax settlement programs
Taxes abroad
Total
(*) See note 20.2 for detailed information.
12.31.2021
3,556
12.31.2020
2,828
1,861
66
5,483
3,603
428
6,859
12.31.2021
Current assets
12.31.2020
Current liabilities
12.31.2020
12.31.2021
Non-current liabilities
12.31.2020
12.31.2021
133
-
133
30
163
391
-
391
27
418
682
43
725
8
733
111
45
156
42
198
-
300
300
-
300
-
357
357
-
357
Income taxes credits refer mainly to tax credits resulting from the monthly process for estimation and payment of
income taxes, in addition to the negative balance of IRPJ and CSLL related to 2017, 2018, 2019 and 2021. Income taxes
within current liabilities refer to the current portion of IRPJ and CSLL to be paid.
Tax settlement programs amounts relate mainly to a notice of deficiency issued by the Brazilian Federal Revenue
Service due to the treatment of expenses arising from the Terms of Financial Commitment (TFC) as deductible in
determining taxable profit for the calculation of income taxes. The payment term is 145 monthly installments, indexed
by the Selic interest rate, as of January 2018.
16.1.1. Reconciliation between statutory income tax rate and effective income tax rate
The following table provides the reconciliation of Brazilian statutory tax rate to the Company’s effective rate on income
before income taxes:
F-35
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Net income before income taxes
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%)
Tax benefits from the deduction of interest on capital distribution
Different jurisdictional tax rates for companies abroad
Brazilian income taxes on income of companies incorporated outside Brazil (*)
Tax incentives
Tax loss carryforwards (unrecognized tax losses)
Non-taxable income (non-deductible expenses), net (**)
Post-employment benefits (***)
Results of equity-accounted investments in Brazil and abroad
Non-incidence of income taxes on indexation charges (SELIC interest rate) over
undue paid taxes
Others
Income taxes
Deferred income taxes
Current income taxes
2021
28,225
(9,597)
843
296
(546)
50
59
234
(802)
318
903
3
(8,239)
(4,058)
(4,181)
2020
(226)
77
(16)
1,874
(743)
(9)
(428)
(280)
559
49
-
91
1,174
1,743
(569)
2019
12,003
(4,081)
728
1,056
(175)
443
(682)
(1,556)
(417)
53
-
431
(4,200)
(2,798)
(1,402)
Effective tax rate of income taxes
(*) It relates to Brazilian income taxes on earnings of offshore investees, as established by Law No. 12,973/2014.
(**) It includes provisions for legal proceedings.
(***) It is impacted by non-deductible expenses for health care and pension plans in 2021, compared to the non-taxable gain from the health care plan revision occurred
in 2020.
(519)%
(29)%
(35)%
16.1.2. Deferred income taxes - non-current
The changes in the deferred income taxes are presented as follows:
Balance at January 1
Recognized in the statement of income for the period
Recognized in shareholders’ equity
Cumulative translation adjustment
Use of tax loss carryforwards
Others
Balance at December 31,
Deferred tax assets
Deferred tax liabilities
2021
6,256
(4,058)
(1,555)
(124)
(1,172)
37
(625)
604
(1,229)
2020
(372)
1,743
5,564
(623)
(60)
4
6,256
6,451
(195)
The composition of deferred tax assets and liabilities is set out in the following table:
Nature
PP&E - Exploration and decommissioning costs
PP&E - Impairment
PP&E - Others (*)
Loans, trade and other receivables / payables and financing
Finance leases
Provision for legal proceedings
Tax loss carryforwards
Inventories
Employee Benefits
Others
Realization basis
Depreciation, amortization and write-offs of assets
Amortization, impairment reversals and write-offs of
assets
Depreciation, amortization and write-offs of assets
Payments, receipts and considerations
Appropriation of the considerations
Payments and use of provisions
30% of taxable income compensation
Sales, write-downs and losses
Payments and use of provisions
12.31.2021 12.31.2020
(3,205)
(1,362)
4,382
(12,924)
3,490
1,244
605
1,827
228
1,250
635
6,626
(8,690)
3,913
1,190
664
2,501
158
2,882
217
Total
(*) It includes accelerated depreciation, difference between units of production method and straight line method, as well as capitalized borrowing
(625)
6,256
F-36
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Non-incidence of income taxes on indexation (SELIC interest rate) of undue paid taxes
On September 24, 2021, the Supreme Federal Court (Supremo Tribunal Federal – STF), in a judgment of extraordinary
appeal with general repercussion, without final decision, decided that the incidence of income taxes (IRPJ and CSLL) on
the indexation income from applying SELIC interest rate (indexation charges and default interest) over undue paid taxes
is unconstitutional.
The Company has a writ of mandamus in which it claims the right to recover the amounts of IRPJ and CSLL charged on
the income arising from the indexation of undue paid taxes and judicial deposits by the SELIC rate since March 2015, as
well as the definitive removal of this income from the IRPJ and CSLL tax base.
On October 20, 2021, a judicial decision was published in the writ of mandamus recognizing the right of the Company to
the non-incidence of income taxes on indexation by the SELIC rate of undue paid taxes.
Based on the STF's decision, as well as on the legal grounds presented, Petrobras reassessed the expectation for this
matter, considering that it is probable that this tax treatment will be accepted.
Thus, in 2021, a US$ 903 gain was recognized in the income statement, within income taxes, arising from:
(i) a US$ 266 increase in recoverable income taxes, within non-current assets, relating to periods when the Company
recorded taxable income;
(ii) a US$ 611 decrease in deferred income taxes, within non-current liabilities, relating to periods when the Company
recorded tax losses; and
(iii) a US$ 26 loss within cumulative translation adjustments.
16.1.3. Timing of reversal of deferred income taxes
Deferred tax assets were recognized based on projections of taxable profit in future periods supported by the
Company’s 2022-2026 Strategic Plan, aiming at the maximization of returns on capital employed, reduction of cost of
capital and search for low costs and efficiencies.
Management considers that the deferred tax assets will be realized to the extent the deferred tax liabilities are reversed
and expected taxable events occur based on its 2022-2026 Strategic Plan.
The estimated schedule of recovery/reversal of net deferred tax assets (liabilities) as of December 31, 2021 is set out
in the following table:
2022
2023
2024
2025
2026
2027 and thereafter
Recognized deferred tax assets
Assets
59
177
19
18
16
315
604
Liabilities
(2,403)
(881)
92
265
(4,513)
8,669
1,229
In addition, at December 31, 2021, the Company has tax loss carryforwards arising from offshore subsidiaries, for which
no deferred taxes were recognized.
F-37
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Brazil
Abroad
Unrecognized deferred tax assets
Total
Assets
1
1,351
1,352
1,956
Liabilities
-
-
-
1,229
These tax losses arise mainly from oil and gas exploration and production and refining activities in the United States.
An aging of the unrecognized deferred tax assets from companies abroad is set out below:
Unrecognized deferred tax assets
410
571
303
−
67
1,351
2027 - 2029
2030 - 2032
2033 - 2035
2036 -2038
Undefined
expiration
Total
Uncertain tax treatments
As of December 31, 2021, the Company had US$ 4,983 (US$ 4,900 as of December 31, 2020) of uncertain tax treatments
for IRPJ and CSLL related to judicial and administrative proceedings (see note 18.3). Additionally, as of December 31,
2021, the Company has other positions that can be considered as uncertain tax treatments for IRPJ and CSLL amounting
to US$ 10,712 (US$ 7,908 as of December 31, 2020), given the possibility of different interpretation by the tax authority.
These uncertain tax treatments are supported by technical assessments and tax risk assessment methodology.
Therefore, Petrobras understands that such positions will be accepted by the tax authorities.
16.1.4. Accounting policy for income taxes
Income tax expense for the period includes current and deferred taxes, recognized in the statement of income of the
period, except when the tax arises from a transaction or event which is recognized directly in equity.
The calculations of these taxes are based on the rates of 25% for income tax (IRPJ) and 9% for social contribution on
net income (CSLL), and the offsetting of the carryforward of credit losses and negative basis of CSLL, limited to 30% of
taxable income for the year.
Income taxes expenses on profits arising from subsidiaries abroad are accounted for in the statement of income using
the same income tax rates as used in Brazil, adjusted by dividends and results of equity-accounted investments.
a) Current income taxes
Current income taxes are computed based on taxable profit for the year, determined in accordance with the rules
established by the taxation authorities, using tax rates that have been enacted or substantively enacted at the end of
the reporting period.
Current income taxes are offset when they relate to income taxes levied on the same taxable entity and by the same tax
authority, when there is a legal right and the entity has the intention to set off current tax assets and current tax
liabilities, simultaneously.
b) Deferred income taxes
Deferred income taxes are recognized on temporary differences between the tax base of an asset or liability and its
carrying amount. They are measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end
of the reporting period.
Deferred tax assets are generally recognized for all deductible temporary differences and carryforward of unused tax
losses or credits to the extent that it is probable that taxable profit will be available against which those deductible
F-38
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
temporary differences can be utilized. When there are insufficient taxable temporary differences relating to the same
taxation authority and the same taxable entity, a deferred tax is recognized to the extent that it is probable that the
entity will have sufficient taxable profit in future periods, based on projections approved by management and
supported by the Company’s Strategic Plan.
Deferred tax assets and deferred tax liabilities are offset when they relate to income taxes levied on the same taxable
entity, when a legally enforceable right to set off current tax assets and current tax liabilities exists and when the
deferred tax assets and deferred tax liabilities relate to taxes levied by the same tax authority on the same taxable
entity.
16.2. Other taxes
Other taxes
Non-current liabilities
(*)
12.31.2021 12.31.2020 12.31.2021 12.31.2020 12.31.2021 12.31.2020 12.31.2021 12.31.2020
Non-current assets
Current liabilities
Current assets
Taxes in Brazil
Current / Non-current ICMS (VAT)
Current / Non-current PIS and COFINS (**)
Claim to recover PIS and COFINS
CIDE
Production taxes
Withholding income taxes
Tax Settlement Program
Others
Total in Brazil
Taxes abroad
665
418
-
6
-
-
-
48
1,137
46
507
1,570
-
4
-
-
-
87
2,168
9
379
2,030
594
-
-
-
-
249
3,252
9
293
2,055
681
-
-
-
-
119
3,148
10
995
499
-
42
2,147
86
67
142
3,978
23
642
544
-
41
1,173
106
-
117
2,623
13
-
45
-
-
21
-
6
70
142
-
-
37
-
-
94
-
-
275
406
-
Total
(*) Other non-current taxes are classified as other non-current liabilities.
(**) It includes US$ 104 (US$ 1,230 as of December 31, 2020) related to exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and
COFINS (contributions for the social security).
1,183
2,177
3,261
4,001
3,158
2,636
142
406
Current and non-current ICMS (VAT) credits arise from requests for extemporaneous and overpaid tax, offset in
accordance with the legislation of each state. They also arise on the acquisition of assets for property, plant and
equipment, which are offset in a straight line over 4 years.
Current and non-current PIS/COFINS credits mainly refer to the acquisition of goods and services for assets under
construction, since their use is permitted only after these assets enter into production, as well as to extemporaneous
tax credits.
Production taxes are financial compensation due to the Brazilian Federal Government by companies that explore and
produce oil and natural gas in Brazilian territory. They are composed of royalties, special participations, signature
bonuses and payment for retention or occupation of area.
Exclusion of ICMS (VAT tax) from the basis of calculation of PIS and COFINS
In 2020, the Company obtained a favorable and definitive court decision regarding the exclusion of ICMS (VAT tax) in
the basis of calculation of sales taxes PIS and COFINS. Following this decision, the amounts overpaid in the period from
October 2001 to August 2020 were calculated by excluding the ICMS effectively paid from the basis of calculation of PIS
and COFINS, and the Company recognized US$ 3,226 as other recoverable taxes.
The Company recognized this asset since the economic benefits for Petrobras was virtually certain, given that: (i) the
final and unappealable decision in 2020 constitutes a right that ceased to be contingent on the date of that decision;
and (ii) the measurement methodology adopted is uncontroversial as it is the one accepted by the Brazilian Federal
Revenue Service
F-39
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
On May 14, 2021, the Supreme Federal Court (STF) determined that the ICMS amount to be excluded from the
calculation basis of PIS and COFINS are the amounts reported in the invoices, which were higher than the amounts
effectively collected. Thus, an additional credit of US$ 890 was recognized as other recoverable taxes.
The net gain in income in 2021 was US$ 542 (US$ 2,050 in 2020).
At December 31, 2021, the Company had already used US$ 910 (US$ 1,857 in 2020) in lieu of payment of other federal
taxes.
As of December 31, 2021, the remaining balance for compensation relating to the exclusion of ICMS from the basis of
calculation of PIS and COFINS, indexed to the SELIC rate, is US$ 104 classified as other recoverable taxes.
Nature
Effects in the Financial Statements
Recovery of taxes
Inflation indexation
Translation effects
Exclusion of ICMS from basis of calculation of
PIS/COFINS
Pis and Cofins
Tax effects (*)
Net effects
Other income and expenses
Foreign exchange gains (losses) and inflation indexation
Cumulative translation adjustments
Credit in other recoverable taxes
Other taxes
Income taxes
Statement of income
(*) A portion of the inflation indexation credit was recovered with the decision of the STF, as described in note 16.1.2.
2021
507
479
(96)
890
(20)
(328)
542
2020
1,516
1,709
−
3,226
(78)
(1,097)
2,050
Recovery of PIS and COFINS
The Company filed civil lawsuits, in the Regional Federal Court of the Second Region, against the Brazilian Federal
Government, claiming to recover PIS and COFINS paid over finance income and foreign exchange variation gains, from
February 1999 to January 2004.
The court granted to the Company, in all the lawsuits, the definitive right to recover those taxes. These proceedings are
in settlement phase, and until this moment solely the undisputed portion of one of the lawsuits has been effectively
received.
As of December 31, 2021, the Company had non-current receivables of US$ 594 (US$ 681 as of December 31, 2020)
related to PIS and COFINS, which are indexed to inflation.
16.3. Tax amnesty programs – State Tax
As part of its on-going process of litigation management, in 2021, Petrobras adhered to tax amnesty programs of the
states of Rio de Janeiro, Bahia Rio Grande do Sul, generating a US$ 187 gain (a US$ 209 gain, a US$ 21 loss and a US$ 1
loss for each state, respectively), arising from the reversal of part of the related provisions, of which a US$ 147 gain as
other income and expenses, and a US$ 40 gain as finance income.
The main state amnesty programs to which the Company has adhered are the following:
State of Rio de Janeiro
The State of Rio de Janeiro created a tax debt settlement program called PEP-ICMS, under the terms of state law
189/2020 (extended through state law 191/2021) which allowed a 90% reduction of amounts due as a fine and interest.
By adhering to the program, the Company settled US$ 322 of ICMS disputes disbursing US$ 125 during 2021, of which
US$ 97 relates to disputes involving tax credits due to the cancellation of a plant of Gaslub (former Comperj) and US$ 27
relates to payment of tax notices regarding ancillary obligations, misapplication of ICMS credit, as well as self-
denunciation related to the ICMS calculation process.
F-40
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
As a result, the Company recognized a US$ 209 gain due to the reversal of the provisions.
State of Bahia
The adhesion to the amnesty program with the state of Bahia, entered into under the terms of state law 14,286/2020,
allowed a 50% reduction of the debt and a 90% reduction of fines and interest. The tax debts, arisen from the
disallowance of tax credits, were settled in the amount of US$ 21, in 2021.
17. Employee benefits
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or
for the termination of employment. It also includes expenses with directors and management. Such benefits include
salaries, post-employment benefits, termination benefits and other benefits.
Liabilities
Short-term employee benefits
Termination benefits
Post-retirement benefits
Total
Current
Non-current
17.1. Short-term benefits
12.31.2021
12.31.2020
1,290
348
9,880
11,518
2,144
9,374
1,200
900
16,069
18,169
3,502
14,667
Short‑term benefits are expected to be settled wholly before twelve months after the end of the annual reporting
period in which the employees render the related service.
12.31.2021
12.31.2020
Variable compensation program - PPP
Accrued vacation
Salaries and related charges and other provisions
Profit sharing
Total
Current
Non-current (*)
461
440
270
118
1,289
1,286
3
(*) Remaining balance relating to the four-year deferral of 40% of the PPP portion of executive managers.
In 2021, 2020 and 2019, the Company recognized the following amounts in the statement of income:
522
470
204
5
1,201
1,199
2
2019
(4,313)
(643)
(43)
(21)
2021
(2,665)
(469)
(125)
(15)
2020
(3,064)
(439)
(7)
(14)
(3,274)
(3,524)
(5,020)
F-41
Salaries, accrued vacations and related charges
Variable compensation program - PPP
Profit sharing
Management fees and charges
Total
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
17.1.1. Variable compensation programs
Performance award program (PPP)
On September 17, 2021, the Company’s Board of Directors approved changes in the criteria for granting PPP 2021 to
employees (in relation to the criteria previously approved by the Company’s Board of Directors on December 16, 2020).
The criteria for this variable compensation program establish that, in order to trigger this payment, it is necessary to
have net income for the year and declaration and payment of distribution to shareholders, associated with the
achievement of the Company’s performance metrics and the individual performance of employees.
Profit Sharing (PLR)
At December 29, 2020, the 17 unions representing onshore employees of the Parent Company had signed the
agreement for the PLR for 2021 and 2022, before the deadline determined by the Collective Labor Agreement (ACT).
Among the offshore employees, only one union had signed the agreement within the period defined by the ACT.
The current agreement for the PLR provides that only employees without managerial functions will be entitled to
receive profit sharing with individual limits according to their remuneration.
In order for the PLR to be paid in 2021 and 2022, the following requirements must be met: (i) dividend distribution to
shareholders approved at the Annual General Shareholders Meeting, (ii) net income for the year, and iii) achievement of
the weighted average percentage of at least 80% of a set of indicators.
The maximum amount of PLR to be distributed is limited to 5% of Adjusted EBITDA (a non-GAAP measure defined as
net income plus net finance income (expense), income taxes, depreciation, depletion and amortization, results in equity-
accounted investments, impairment, cumulative foreign exchange adjustments reclassified to the income statement,
results from disposal and write-offs of assets, foreign exchange gains and losses resulting from provisions for legal
proceedings denominated in foreign currencies and results from the compensation of investments in bid areas), to
6.25% of net income and to 25% of dividends distributed to shareholders, in each year, whichever is lower.
Accounting policy for variable compensation programs (PPP and PLR)
The provision for variable compensation programs is recognized on an accrual basis and represents the estimate of
future disbursements arising from past events, based on the criteria and metrics of the PPP and PLR, provided that the
requirements for activating these programs are met.
17.2. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of labor contract as a result of
either: i) an entity’s decision to terminate the labor contract before the employee’s normal retirement date; or ii) an
employee’s decision to accept an offer of benefits in exchange for the termination of their employment.
The Company has voluntary severance programs (PDV), specific for employees of the corporate segment and of
divestment assets, which provide for the same legal and indemnity advantages, whose enrollment deadlines have
already closed, totaling 11,418 adhesions accumulated until December 31, 2021 (11,117 until December 31, 2020).
Recognition of the provision for expenses occur as employees enroll to the programs.
During January 2021, the Company reopened the voluntary termination program for retired employees under the
Brazilian Social Security Institute (INSS) before the enactment of the pension reform, for employees not yet enrolled or
who have canceled enrollment for any reason until December 29, 2020, when 195 employees enrolled in this program.
The Company will disburse the severance payments in two installments, one at the time of termination and the
remainder one year after the termination.
F-42
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in the provision for expenses relating to voluntary severance programs are set out as follows:
Opening Balance
Effects in the statement of income
Enrollments
Revision of provisions
Effects in cash and cash equivalents
Separations in the period
Cumulative translation adjustment
Closing Balance
Current
Non-current
12.31.2021
900
(11)
30
(41)
(497)
(497)
(43)
349
207
142
12.31.2020
140
1,017
1,076
(59)
(245)
(245)
(12)
900
754
146
As of December 31, 2021, from the balance of US$ 349, US$ 156 refers to the second installment of 2,607 retired
employees and US$ 193 refers to 1,961 employees enrolled in voluntary severance programs with expected termination
by December 2024.
17.3. Employee benefits (post-employment)
The Company maintains a health care plan for its employees in Brazil (active and retiree) and their dependents (Saúde
Petrobras), and five other major types of post-retirement pension benefits (collectively referred to as “pension plans”).
Liabilities
Health Care Plan
Petros Pension Plan - Renegotiated (PPSP-R) (*)
Petros Pension Plan - Non-renegotiated (PPSP-NR) (*)
Petros Pension Plan - Renegotiated - Pre-70 (PPSP-R Pré 70)
Petros Pension Plan - Non-renegotiated - Pre-70 (PPSP-NR Pré 70)
Petros 2 Pension Plan (PP-2)
Other plans
Total
Current
Non-current
(*) In 2020, it includes obligations with contribution for the revision of the lump sum death benefit.
17.3.1. Nature and risks associated with defined benefit plans
Health Care Plan
12.31.2021
12.31.2020
4,485
3,233
658
817
511
165
11
9,880
651
9,229
5,356
6,016
1,621
1,508
1,075
477
16
16,069
1,549
14,520
The health care plan is managed by Petrobras Health Association (Associação Petrobras de Saúde – APS), a nonprofit
civil association, and includes prevention and health care programs. The plan covers all employees and retirees, and is
open to future employees.
Currently sponsored by Petrobras, Transpetro, PBIO, TBG and Termobahia, this plan is primarily exposed to the risk of
an increase in medical costs due to inflation, new technologies, new types of coverage and an increase in the utilization
of medical benefits. The Company continuously improves the quality of its technical and administrative processes, as
well as the health programs offered to beneficiaries in order to mitigate such risks.
Employees and retirees make monthly fixed contributions to cover high-risk procedures and variable contributions for
a portion of the cost of other procedures, both based on the contribution tables of the plan, which are determined based
on certain parameters, such as salary and age levels. The plan also includes assistance towards the purchase of certain
medicines through reimbursement, with co-participation of employees and retirees.
F-43
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Benefits are paid by the Company based on the costs incurred by the participants. The financial participation of the
Company and the beneficiaries on the expenses are provided for in the Collective Bargaining Agreement (ACT), as
follows:
•
•
Until 2020, this benefit was covered 70% by the Company and 30% by the participants;
As from January 2021, this benefit is covered 60% by the Company and 40% by participants.
Intermediate revision of the health care plan
On September 30, 2021, the Brazilian Federal Senate approved the Legislative Decree No. 26/2021, suspending the
effects of CGPAR Resolution No. 23/2018, which had established parity contribution (50%-50%) for the coverage of
costs between state-owned companies and employees.
On December 31, 2020, the Company had carried out a remeasurement of the actuarial liabilities of this plan to reflect
the provisions of the CGPAR Resolution, in force at that time. However, with the suspension of this resolution, in
September 2021, the Company carried out an intermediate remeasurement of the actuarial liabilities of this plan, to
reflect the costing ratio for 2022 onwards, to be covered 60% by the Company and 40% by the participants, as provided
for in the Collective Labor Agreement (ACT) for 2020-2022, which resulted in a US$ 852 expense recognized within the
income statement, due to the change in the benefit costing (past service cost), and a US$ 1,176 gain within other
comprehensive income, due to the revision of actuarial assumptions.
Annual revision of the health care plan
At December 31, 2021, this obligation was revised using the actuarial assumptions in force, which results are shown in
note 17.5.2.
Pension plans
The Company’s post-retirement plans are managed by Petros Foundation (Fundação Petrobras de Seguridade Social),
a nonprofit legal entity governed by private law with administrative and financial autonomy.
Pension plans in Brazil are regulated by the National Council for Supplementary Pension (Conselho Nacional de
Previdência Complementar – CNPC), which establishes all guidelines and procedures to be adopted by the plans for their
management and relationship with stakeholders.
Petros Foundation periodically carries out revisions of the plans and, when applicable, establishes measures aiming at
maintaining the financial sustainability of the plans.
The major post-retirement pension benefits sponsored by the Company are:
. Petros Plan - Renegotiated (PPSP-R)
. Petros Plan - Renegotiated - Pre-70 (PPSP-R Pre-70)
. Petros Plan - Non-renegotiated (PPSP-NR)
. Petros Plan - Non-renegotiated - Pre-70 (PPSP-NR Pre-70)
. Petros 2 Plan (PP-2)
. Petros 3 Plan (PP-3)
F-44
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Currently, PPSP-R, PPSP-NR, PPSP-R Pre-70, PPSP-NR Pre-70 and PP-3 are sponsored by Petrobras, and PP-2 by
Petrobras, Transpetro, PBIO, TBG, Termobahia, Termomacaé and Araucária Nitrogenados (the latter in process of
withdrawing sponsorship).
The PPSP-R and PPSP-NR are splits derived from Petros Plan (PPSP) originally established by the Company in July 1970.
On January 1, 2020, PPSP-R Pre-70 and PPSP-NR Pre-70 were created as a split of PPSP-R and PPSP-NR, respectively.
Pension plans supplement the income of their participants during retirement, in addition to guaranteeing a pension for
the beneficiaries in case of the death of a participant. The benefit consists of a monthly income supplementing the
benefit granted by the Brazilian Social Security Institute.
F-45
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The table below provides other characteristics of these plans:
PPSP-R
PPSP-R
Pre-70
PPSP-NR
PPSP-NR
Pre-70
PP-2
PP-3
Modality
Defined Benefit
Defined Benefit
Defined Benefit
Defined Benefit
Participants of the plan
Generally covers
employees and former
employees who joined
the company after
1970 that agreed with
changes proposed by
the Company in its
original pension plan
(P0) and amendments.
Generally covers
employees and former
employees hired prior
to July 1, 1970, who
enrolled in the P0 until
January 1, 1996 and
remained continuously
linked to the original
sponsor obtaining the
condition of assisted.
Generally covers
employees and former
employees who joined
the company after
1970 that did not agree
with changes proposed
by the Company in its
original pension plan
(P0) and amendments
Generally covers
employees and former
employees hired prior to
July 1, 1970, who enrolled
in the P0 until January 1,
1996 and remained
continuously linked to the
original sponsor obtaining
the condition of assisted
and did not agreed with
changes in in its original
pension plan (P0) and
amendments.
Variable Contribution
(defined benefit and
defined contribution
portions)
This Plan was established
in 2007, also covering
employees and former
employees that moved
from other existing plans.
Defined Contribution
This plan was
implemented in 2021,
exclusive option for
voluntary migration of
employees and retirees
from the PPSP-R and
PPSP-NR plans.
New enrollments
Closed
Closed
Closed
Closed
Open
Closed
Retirement payments
Lifetime monthly payments supplementing the benefit granted by the Brazilian National Institute of
Social Security.
Lifetime defined benefit
monthly payments or
non- defined benefit
monthly payments in
accordance with the
participant's election.
Undefined benefit with
monthly payments, in
accordance with the
participant election.
Lump sum death benefit
(insured capital) and
monthly payments
related to the following
events: death, disability,
sickness, and seclusion.
Undefined benefit
monthly payments:
based on the variation of
individual account
quota.
Undefined benefit
monthly payments:
based on the variation of
individual account
Regular contributions
during the employment
relationship, saving for
the undefined benefit,
accumulated in
individual accounts
Other general benefits
Lump sum death benefit (insured capital) and monthly payments related to the following events: death, disability, sickness, and
seclusion.
Indexation of Retirement
payments by the plan
Parity contributions made by
participants and the
Company to the plans
Terms of Financial
Commitment - TFC (debt
agreements) assumed by the
Company to settle the
deficits. Amounts to be paid
to Petros Foundation. This
obligation is recorded in
these financial statements,
within actuarial liabilities.
0
Based on the Nationwide Consumer Price Index.
Based on the current index levels applicable to
active employees’ salaries and the indexes set out
by the Brazilian National Institute of Social Security.
Lifetime monthly
payments: based on the
Nationwide Consumer
Price Index
It is comprised of:
i) normal contributions
that covers expected
cost of the plans in the
long term; and
ii) extraordinary
contributions that
covers additional costs
that are generally
derived from actuarial
deficits.
It is comprised of:
normal contributions
that covers expected
cost of the plans in the
long term.
Participants are
exempt from paying
any extraordinary
contributions in case of
deficit.
It is comprised of:
It is comprised of:
It is comprised of:
i) normal contributions
that covers expected
cost of the plans in the
long term; and
ii) extraordinary
contributions that
covers additional costs
that are generally
derived from actuarial
deficits.
normal contributions that
covers expected cost of
the plans in the long term.
i) normal contributions
that covers expected cost
of the plans in the long
term; and
Participants are exempt
from paying any
extraordinary
contributions in case of
deficit.
ii) extraordinary
contributions that covers
additional costs that are
generally derived from
actuarial deficits (these
contributions are not
currently being made but
may occur in the future).
Financial obligations
with a principal
amounting to US$508
at 12/31/2021.
Financial obligations
with a principal
amounting to US$893
at 12/31/2021.
Financial obligations
settled early in 2021.
Financial obligations with
a principal amounting to
US$519 at 12/31/2021.
N/A
N/A
Annually remeasured in accordance with actuarial assumptions, with semi-annual payment of interest
based on the updated balance and maturing in 20 years.
F-46
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
New Deficit Settlement Plan (New PED)
On April 28, 2020, the New Deficit Settlement Plan for the PPSP-R and PPSP-NR (New PED) was approved by the
Secretariat of Management and Governance of the State-owned Companies (SEST) and by the Superintendency of
Post-retirement Benefits (PREVIC), also approving changes in regulation regarding the reduction of the lump sum
death benefit.
The New PED covers 2015 and 2018 deficits and incorporates 2019 results. Total settlement amounts to US$ 6,485
(R$ 33.7 billion). Of the total amount, US$ 3,006 (R$ 15,620 million) will be paid by Petrobras, in compliance with
contributory parity provided for by relevant legislation, of which US$ 2,611 (R$ 13,566 million) will be paid through
lifelong additional contributions and US$ 395 (R$ 2,054 million) as a counterpart contribution for the reduction of the
lump sum death benefit. On June 30, 2021, the Company prepaid the remaining balance of this contribution, in the
amount of US$ 447.
The rest of the deficit will be paid by other sponsors and participants of the PPSP-R and PPSP-NR plans.
The current model differs from that applied in PED-2015, aiming at reducing the additional contributions of most of
the participants by: (i) extending the collection time from 18 years to a lifetime; (ii) specific fixed contribution rates for
active and assisted employees; (iii) the implementation of an annual contribution of 30% on the 13th salary; and (iv) the
reduction in the amount of the lump sum death benefit.
The New PED sets forth changes in some rights and regulation of the PPSP-R and PPSP-NR, in accordance with
Resolution No. 25 of CGPAR, which establishes guidelines and parameters for federal state companies regarding the
sponsorship of pension plans.
Migration to PP-3 and intermediate revision of PPSP-R and PPSP-NR
On January 27, 2021, the Secretariat of Management and Governance of the State-owned Companies (SEST) and the
Superintendency of Post-retirement benefits (PREVIC), approved the establishment of Petros Plan 3 (PP-3), as well as
changes in regulations of Petros Plan - Renegotiated and Petros Plan Non-renegotiated (PPSP-R and PPSP-NR), not
including pre-70 plans, determining the process of migration of participants to PP-3.
The PP-3 is a new pension plan with defined contribution characteristics, implemented as an exclusive option for
voluntary migration of participants from the PPSP-R and PPSP-NR plans, not including pre-70 plans, whose deadline
for enrollment was on April 30, 2021. The choice for migration is irreversible and irrevocable, in addition to terminating
any link with the plan of origin.
On June 15, 2021, the validation of the PP-3 enrollments was completed, totaling 2,176 registrations, as well as
technical and administrative feasibility studies were performed, allowing its implementation as of August 2021.
Thus, in the second quarter of 2021, the Company carried out an intermediate revision of the PPSP-R and PPSP-NR
plans, which resulted in a US$ 1,731 reduction in liabilities, comprising: (i) a US$ 1 gain in the statement of income for
the past service cost of the 2,176 participants who opted for the migration (as detailed in table “Changes in the net
actuarial liability”); (ii) a US$ 1,721 gain in shareholders' equity within other comprehensive income, mainly due to the
increase in the discount rate applied to actuarial liabilities; and the remaining US$ 9 as cumulative translation
adjustments.
On September 9, 2021, Petrobras made a contribution in the amount of US$ 241 (of which US$ 231 relates to
participants originally from the PPSP-R, and US$ 10 from the PPSP-NR), in addition to US$ 18 paid in June 2021 for the
revision of the lump sum death benefit, as set forth in the deficit settlement plan for PPSP-R and PPSP-NR.
F-47
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Annual revision of the pension plans
At December 31, 2021, this obligation was revised using the actuarial assumptions in force, which results are shown in
note 17.5.2.
17.3.2. Net actuarial liabilities and expenses, and fair value of plans assets
a)
Changes in the actuarial liabilities recognized in the statement of financial position
Pension Plans
Health Care
Plan
Other
plans
Total
2021
PPSP-R (*) PPSP-NR (*)
Petros 2
Amounts recognized in the Statement of Financial Position
Present value of obligations
( -) Fair value of plan assets
Net actuarial liability as of December 31, 2021
Changes in the net actuarial liability
Balance as of January 1, 2021 (**)
Recognized in the Statement of Income
Past service cost
Present value of obligation
Plan assets transferred to PP-3
Sponsor contribution for PP-3
Current service cost
Net interest
Interest on the obligations with contribution for the revision
of the lump sum death benefit
Recognized in Equity - other comprehensive income
Remeasurement effects recognized in other comprehensive
Cash effects
Contributions paid (***)
Payments of obligations with contribution for the revision of
the lump sum death benefit
Payments related to Term of financial commitment (TFC)
Other changes
Cumulative Translation Adjustment
Balance of actuarial liability as of December 31, 2021
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
11,481
(7,431)
4,050
7,524
469
(1)
(730)
496
233
13
438
19
(2,223)
(2,223)
(1,339)
(475)
(340)
(524)
(381)
(381)
4,050
3,485
(2,316)
1,169
2,696
178
−
(33)
22
11
1
172
5
(989)
(989)
(591)
(86)
(101)
(404)
(125)
(125)
1,169
987
(822)
165
477
72
−
−
−
−
37
35
−
(362)
(362)
−
−
−
−
(22)
(22)
165
4,485
−
4,485
5,356
1,388
845
845
−
−
158
385
−
(1,601)
(1,601)
(309)
(309)
−
−
(349)
(349)
4,485
9
2
11
20,447
(10,567)
9,880
16
(9)
−
−
−
−
(10)
1
−
6
6
−
−
−
−
(2)
(2)
11
16,069
2,098
844
82
518
244
199
1,031
24
(5,169)
(5,169)
(2,239)
(870)
(441)
(928)
(879)
(879)
9,880
(**) It includes obligations with contribution for the revision of the lump sum death benefit
(***) It includes the contribution for the migration to PP-3 (US$ 241).
F-48
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Amounts recognized in the Statement of Financial Position
Present value of obligations
( -) Fair value of plan assets
Net actuarial liability as of December 31, 2020
Changes in the net actuarial liability
Balance as of January 1, 2020
Recognized in the Statement of Income
Service cost (**)
Costs incurred in the period
Recognized in Equity - other comprehensive income
Remeasurement effects recognized in other comprehensive
Cash effects
Contributions paid
Payments related to Term of financial commitment (TFC)
Other changes
Others
Cumulative Translation Adjustment
Balance of actuarial liability as of December 31, 2020
Obligations with contribution for the revision of the lump sum
death benefit
Cumulative Translation Adjustment
Total obligation for pension and medical benefits as of
December 31, 2020
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
Pension Plans
Health Care
Plan
Other
plans
2020
Total
PPSP-R (*) PPSP-NR (*)
Petros 2
15,847
(8,650)
7,197
10,231
84
(298)
382
(344)
(344)
(474)
(255)
(219)
(2,300)
−
(2,300)
7,197
315
12
4,811
(2,213)
2,598
3,264
40
(93)
133
285
285
(265)
(80)
(185)
(726)
−
(726)
2,598
99
(1)
1,177
(700)
477
989
131
64
67
(391)
(391)
−
−
−
(252)
−
(252)
477
−
−
5,356
−
5,356
11,986
(1,672)
(2,348)
676
(1,957)
(1,957)
(308)
(308)
−
(2,693)
−
(2,693)
5,356
−
−
26
(12)
14
27,217
(11,575)
15,642
24
2
−
2
(8)
(8)
(1)
(1)
−
(3)
2
(5)
14
−
2
26,494
(1,415)
(2,675)
1,260
(2,415)
(2,415)
(1,048)
(644)
(404)
(5,974)
2
(5,976)
15,642
414
13
7,524
2,696
477
5,356
16
16,069
(**) It includes the gain from past service cost, in the amount of US$ 374, due to the change in the Renegotiated and Non-renegotiated Petros Plans, and US$ 2,538 due
to the change in the AMS Medical Plan.
b)
Changes in the present value of the obligation
Pension Plans
Health Care
Plan
Other
plans
PPSP-R (*) PPSP-NR (*)
Petros 2
Present value of obligations at the beginning of the year
Recognized in the Statement of Income
Interest expense
Service cost
Past service cost
Recognized in Equity - other comprehensive income
Remeasurement: Experience (gains) / losses (**)
Remeasurement: (gains) / losses - demographic assumptions
Remeasurement: (gains) / losses - financial assumptions
Others
Benefits paid, net of assisted contributions
Contributions paid by participants
Transfer and contribution for PP-3
Others
Cumulative Translation Adjustment
Present value of obligations at the end of the year
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(**) It includes additional contributions - New PED.
15,847
1,179
1,166
13
(1)
(2,969)
(313)
−
(2,656)
(2,576)
(952)
26
(680)
−
(970)
11,481
F-49
4,811
355
354
1
−
(1,041)
(301)
−
(740)
(640)
(319)
7
(31)
−
(297)
3,485
1,177
122
85
37
−
5,356
543
385
158
845
(168)
(1,601)
315
(5)
(478)
(144)
(65)
−
−
−
(79)
987
(239)
96
(1,458)
187
(309)
−
−
−
496
4,485
26
(8)
2
(10)
−
(7)
(8)
−
1
(2)
−
−
−
−
(2)
9
2021
Total
27,217
2,191
1,992
199
844
(5,786)
(546)
91
(5,331)
(3,175)
(1,645)
33
(711)
−
(852)
20,447
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pension Plans
Health Care
Plan
Other
plans
PPSP-R (*) PPSP-NR (*)
Petros 2
Present value of obligations at the beginning of the year
Recognized in the Statement of Income
Interest expense
Service cost
Recognized in Equity - other comprehensive income
Remeasurement: Experience (gains) / losses (**)
Remeasurement: (gains) / losses - demographic assumptions
Remeasurement: (gains) / losses - financial assumptions
Others
Benefits paid, net of assisted contributions
Contributions paid by participants
Others
Cumulative Translation Adjustment
20,919
589
887
(298)
(148)
(436)
−
288
(5,513)
(920)
75
−
(4,668)
5,955
190
283
(93)
211
231
−
(20)
(1,545)
(228)
15
−
(1,332)
1,672
176
112
64
(228)
55
(20)
(263)
(443)
(35)
−
−
(408)
11,986
(1,672)
676
(2,348)
(1,957)
(671)
1
(1,287)
(3,001)
(310)
−
−
(2,691)
37
3
3
−
(7)
−
1
(8)
(7)
(2)
−
2
(7)
2020
Total
40,569
(714)
1,961
(2,675)
(2,129)
(821)
(18)
(1,290)
(10,509)
(1,495)
90
2
(9,106)
Present value of obligations at the end of the year
15,847
4,811
1,177
5,356
26
27,217
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(**) It includes additional contributions - PED 2015.
c)
Changes in the fair value of plan assets
Pension Plans
Health Care
Plan
Other
plans
PPSP-R (*) PPSP-NR (*)
Petros 2
Fair value of plan assets at the beginning of the year
Recognized in the Statement of Income
Interest income
Recognized in Equity - other comprehensive income
Remeasurement: Return on plan assets due to lower interest
Cash effects
Contributions paid by the sponsor (Company) (*)
Term of financial commitment (TFC) paid by the Company
Other Changes
Contributions paid by participants
Benefits paid, net of assisted contributions
Transfer and contribution for PP-3
Cumulative Translation Adjustment
Fair value of plan assets at the end of the year
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
8,650
728
728
(746)
(746)
999
475
524
(2,200)
26
(952)
(680)
(594)
7,431
2,213
182
182
(52)
(52)
490
86
404
(517)
7
(319)
(31)
(174)
2,316
700
50
50
194
194
−
−
−
(122)
−
(65)
−
(57)
822
−
−
−
−
−
309
309
−
(309)
−
(309)
−
−
−
F-50
2021
Total
11,575
961
961
(617)
(617)
1,798
870
928
12
1
1
(13)
(13)
−
−
−
(2)
(3,150)
−
−
−
(2)
(2)
33
(1,645)
(711)
(827)
10,567
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pension Plans
Health Care
Plan
Other
plans
Fair value of plan assets at the beginning of the year
Recognized in the Statement of Income
Interest income
Recognized in Equity - other comprehensive income
Remeasurement: Return on plan assets due to lower interest
income
Cash effects
Contributions paid by the sponsor (Company) (*)
Term of financial commitment (TFC) paid by the Company
Other Changes
Contributions paid by participants
Benefits paid, net of assisted contributions
Cumulative Translation Adjustment
PPSP-R (*) PPSP-NR (*)
2,691
150
150
(74)
10,688
505
505
196
Petros 2
683
45
45
163
196
474
255
219
(3,213)
75
(920)
(2,368)
(74)
265
80
185
(819)
15
(228)
(606)
163
−
−
−
(191)
−
(35)
(156)
−
−
−
−
−
308
308
−
(308)
−
(310)
2
13
1
1
1
1
1
1
−
(4)
−
(2)
(2)
2020
Total
14,075
701
701
286
286
1,048
644
404
(4,535)
90
(1,495)
(3,130)
Fair value of plan assets at the end of the year
8,650
2,213
700
−
12
11,575
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
Pension Plan assets
Seeking to maintain an appropriate investment performance, Petros Foundation annually prepares Investment Policies
(PI) specific to each plan, following two models:
(i) for Petros 2, the achievement of the actuarial goal with the lowest value at risk; and
(ii) for defined benefit plans, the minimal mismatch in net cash flows, conditioned to the achievement of the actuarial
target.
Pension plans assets follow a long-term investment strategy based on the risks assessed for each different class of
assets and provide for diversification, in order to lower portfolio risk. The portfolio profile must comply with the
Brazilian National Monetary Council (Conselho Monetário Nacional – CMN) regulations.
Petros Foundation establishes investment policies for 5-year periods, reviewed annually. Petros uses an asset liability
management model (ALM) to address net cash flow mismatches of the benefit plans, based on liquidity and solvency
parameters, simulating a 30-year period.
The pension plan assets by type of asset are set out as follows:
F-51
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Type of asset
Receivables
Fixed income
Government bonds
Fixed income funds
Other investments
Variable income
Common and preferred shares
Other investments
Structured investments
Real estate properties
Loans to participants
Total
Quoted prices
in active
markets
-
3,820
3,771
-
49
1,686
1,686
-
33
-
5,539
-
5,539
2021
2020
Total fair
Unquoted
prices
Total fair
value
846
3,044
751
860
1,433
232
-
232
151
475
4,748
280
5,028
846
6,864
4,522
860
1,482
1,918
1,686
232
184
475
10,287
280
10,567
%
8%
67%
-
-
-
16%
-
-
2%
4%
97%
3%
100%
value
847
7,186
4,824
1,500
862
2,514
2,377
137
113
563
11,223
352
11,575
%
8%
62%
-
-
-
21%
-
-
1%
5%
97%
3%
100%
There is no plan asset for the health care plan. Loans to participants are measured at amortized cost, which is considered
an appropriate estimate of fair value.
As of December 31, 2021, the investment portfolio included debentures of US$ 6 (US$ 9 in 2020), Company’s common
shares in the amount of US$ 1 (US$ 1 in 2020) and real estate properties leased by the Company in the amount of
US$ 243 (US$ 254 in 2010).
d)
Net expenses relating to benefit plans
Related to active employees (cost of sales and expenses)
Related to retirees (other income and expenses)
Obligations with contribution for the revision of the lump
sum death benefit
Net expenses for the year - 2021
Net expenses for the year - 2020 (**)
Net expenses for the year - 2019
PPSP-R (*)
54
397
18
469
399
561
PPSP-NR (*)
10
163
Pension Plans Health Care
Plan
519
869
Petros 2
58
14
5
178
139
211
−
72
131
75
−
1,388
(1,672)
1,232
Other
Plans
(9)
−
Total
632
1,443
−
(9)
2
7
23
2,098
(1,001)
2,086
(*) It includes amounts of PPSP-R pre-70 and PPSP-NR pre-70
(**) It includes US$ 1,415 related to the actuarial remeasurement and US$ 414 to the update of the obligation with the contribution for the reduction of the lump sum
death benefit.
17.3.3. Contributions
In 2021, the Company contributed with US$ 2,239 to the defined benefit plans (reducing the balance of obligations of
these plans, as presented in note 17.5.2), and with US$ 169 and US$ 1, respectively, to the defined contribution portions
of PP-2 and PP-3 plans (US$ 177 for PP-2 in 2020).
For 2022, the expected contributions for the PPSP-R, PPSP-NR, PPSP-R pre-70 and PPSP-NR pre-70 plans, amounts to
US$ 396, and for PP-2 amounts to US$ 172, relating to the defined contribution portion.
The contribution to the defined benefit portion of the PP-2 is suspended between July 1, 2012 and June 30, 2022,
according to the decision of the Petros Foundation's Deliberative Council, based on the recommendation of actuarial
specialists of the Petros Foundation, since there is sufficient reserve to cover the value at risk. Thus, all contributions
made during this period are being allocated to the participant's individual account.
F-52
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
17.3.4. Expected future cash flow
The estimate below reflects only the expected future cash flows to meet the defined benefit obligation recognized at
the end of the reporting period.
Up to 1 Year
1 to 5 Years
6 to 10 Years
11 To 15 Years
Over 15 Years
Total
PPSP-R (*)
904
3,780
2,659
1,780
2,358
11,481
PPSP-NR (*)
303
1,231
837
530
584
3,485
Pension Plan
Petros 2
57
245
189
145
351
987
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
Health Care
Plan
Other
Total
Plans
Total
2021
2020
247
894
930
738
1,676
4,485
9
−
−
−
−
9
1,520
6,150
4,615
3,193
4,969
20,447
1,484
5,444
5,755
5,077
9,457
27,217
17.3.5. Future payments to participants of defined benefit plans that are closed to new members
The following table provides the period during which the defined benefit obligation associated with these plans are
expected to continue to affect the Company's financial statements.
Number of years during which benefits must be paid to participants of
defined benefit plans.
PPSP-R
10.72
PPSP-R
Pré-70
PPSP-NR
PPSP-NR
Pré-70
6.95
11.51
7.57
17.3.6. Measurement uncertainties associated with the defined benefit obligation
The significant financial and demographic actuarial assumptions used to determine the defined benefit obligation are
presented in the following table:
F-53
5.24% a 3.25%
p.a.
Employees:
according to
pension plan
Assisted: Ex
Petros (Bidecr
2013)
Assets: Alvaro
Vindas 50%
smoothed
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Assumptions
PPSP-R
PPSP-NR
PPSP-R
PPSP-NR
PP2
Nominal discount rate
(including inflation)(1)
8.11% (05/2021)
10.64% (12/2021)
8.07% (05/2021)
10.62% (12/2021)
10.55%
10.54%
10.73%
8.92% (09/2021)
10.68% (12/2021)
2021 Health
Pension Plans
Care Plan
Nominal expected salary
growth (including inflation)
(2)
Expected changes in medical
and hospital costs (3)
5.83%
5.63%
5.83%
5.63%
7.20%
n/a
n/a
n/a
n/a
n/a
n/a
Mortality table
Petros
Experience
(Bidecrem 2013)
Petros
Experiences
(Bidecrem 2020)
Petros
Experiences
(Bidecrem 2016)
Petros
Experiences
(Bidecrem 2020)
AT-2012 IAM
basic fem 10%
smoothed
Disability table
American group
American group
n/a
n/a
Álvaro Vindas
50% smoothed
Mortality table for disabled
participants
AT-49 male
AT-49 male
MI 2006, by
gender, 20%
smoothed
Petros
Experience 2014
IAPB-57
strong, 10%
smoothed
AT-49 male
Age of retirement
Male, 56 years /
Female, 55 years
Male, 58 years /
Female, 56 years
Male, 56 years /
Female, 55 years
Male, 58 years /
Female, 56 years
1st eligibility
Male, 56 years /
Female, 55 years
(1) Inflation reflects market projections: 3.61% for 2020 and converging to 3.5% in 2035 onwards.
(2) Expected salary growth only of Petrobras, the sponsor, based on the Salaries and Benefits Plan.
(3) Decreasing rate, converging in 30 years to the long-term expected inflation. Refers only to Petrobras (sponsor) rate.
2020 Health
Pension Plans
Care Plan
Assumptions
Nominal discount rate
(including inflation)(1)
Nominal expected salary
growth (including inflation)
(2)
Expected changes in medical
and hospital costs (3)
PPSP-R
5.83% (05/2020)
7.03% (12/2020)
PPSP-NR
5.77% (05/2020)
6.97% (12/2020)
PPSP-R Pre-70 PPSP-NR Pre-70
6.55%
6.55%
PP2
7.44%
7.20%
4.75%
4.54%
4.75%
4.54%
6.20%
n/a
n/a
n/a
n/a
n/a
n/a
6.17% a 3.90%
p.a.
Mortality table
EX-PETROS 2013
(bidecremental)
EX-PETROS 2020
(bidecremental)
EX-PETROS 2016
(bidecremental)
EX-PETROS 2020
(bidecremental)
AT-2012 IAM
basic fem 10%
smoothed
EX-PETROS 2013
(bidecremental)
Disability table
American group
American group
n/a
n/a
Álvaro Vindas
40% smoothed
Álvaro Vindas
40% smoothed
Mortality table for disabled
participants
AT-49 male
AT-49 male
MI 2006, by
gender, 20%
smoothed
Petros
Experience 2014
IAPB 1957
strong, 20%
smoothed
AT-49 male
Age of retirement
Male, 56 years /
Female, 55 years
Male, 58 years /
Female, 56 years
Male, 56 years /
Female, 55 years
Male, 58 years /
Female, 56 years
1st eligibility
Male, 56 years /
Female, 55 years
(1) Inflation reflects market projections: 3.61% for 2020 and converging to 3.5% in 2035 onwards.
(2) Expected salary growth only of Petrobras, the sponsor, based on the Salaries and Benefits Plan.
(3) Decreasing rate, converging in 30 years to the long-term expected inflation. Refers only to Petrobras (sponsor) rate.
The most significant assumptions are described in Note 4.4.
F-54
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
17.3.7. Sensitivity analysis of the defined benefit plans
The effect of a 100 basis points (bps) change in the discount rate and in the estimated future medical costs is set out
below:
Pension Obligation
Current Service cost and interest cost
Discount Rate
Expected changes in
medical and hospital costs
Pension Benefits
Medical Benefits
Medical Benefits
+100 bps
-100 bps
+100 bps
-100 bps
+100 bps
-100 bps
(1,341)
(20)
1,704
27
(480)
(31)
593
37
628
96
(511)
(77)
Accounting policy for post-employment defined benefits
Actuarial commitments related to post-employment defined benefit plans and health-care plans are recognized as
liabilities in the statement of financial position based on actuarial calculations which are revised annually by an
independent qualified actuary (updating for material changes in actuarial assumptions and estimates of expected
future benefits), using the projected unit credit method, net of the fair value of plan assets, when applicable, from which
the obligations are to be directly settled.
Under the projected credit unit method, each period of service gives rise to an additional unit of benefit entitlement
and each unit is measured separately to determine the final obligation. Actuarial assumptions include demographic and
financial assumptions, medical costs estimates, historical data related to benefits paid and employee contributions, as
set out in note 4 - Critical accounting policies: key estimates and judgments.
Service cost are accounted for within results and comprises: (i) current service cost, which is the increase in the present
value of the defined benefit obligation resulting from employee service in the current period; (ii) past service cost, which
is the change in the present value of the defined benefit obligation for employee service in prior periods, resulting from
a plan amendment (the introduction, modification, or withdrawal of a defined benefit plan) or a curtailment (a
significant reduction by the entity in the number of employees covered by a plan); and (iii) any gain or loss on
settlement.
Net interest on the net defined benefit liability (asset) is the change during the period in the net defined benefit liability
(asset) that arises from the passage of time. Such interest is accounted for in results.
Remeasurement of the net defined benefit liability (asset) is recognized in shareholders’ equity, in other comprehensive
income, and comprises: (i) actuarial gains and losses and; (ii) the return on plan assets, excluding amounts included in
net interest on the net defined benefit liability (asset).
The Company also contributes amounts to defined contribution plans, on a parity basis in relation to the employee's
contribution, that are expensed when incurred.
18. Provisions for legal proceedings
18.1. Provisions for legal proceedings, judicial deposits and contingent liabilities
The Company recognizes provisions based on the best estimate of the costs of proceedings for which it is probable that
an outflow of resources embodying economic benefits will be required and that can be reliably estimated. These
proceedings mainly include:
•
Labor claims, in particular: (i) opt-out claims 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; and (ii) actions of outsourced employees;
F-55
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
•
•
•
Tax claims including: (i) claims relating to Brazilian federal tax credits applied that were disallowed; and (ii) lack
of payment of Social Security Contribution levied on bonuses paid to employees;
Civil claims, in particular: (i) lawsuits related to contracts; (ii) royalties and special participation charges, including
royalties over shale extraction; and (iii) penalties applied by ANP relating to measurement systems.
Environmental claims mainly regarding: (i) fines relating to an environmental accident in the State of Paraná in
2000; (ii) fines relating to the Company’s offshore operation; and (iii) public civil action for oil spill in 2004 in Serra
do Mar State Park in the state of Sao Paulo.
Provisions for legal proceedings are set out as follows:
Current and Non-current liabilities
Labor claims
Tax claims
Civil claims
Environmental claims
Total
Opening Balance
Additions, net of reversals
Use of provision
Revaluation of existing proceedings and interest charges
Transfer to assets held for sale
Others
Cumulative translation adjustment
Closing Balance
12.31.2021
716
306
820
176
2,018
12.31.2020
706
488
713
292
2,199
2021
2,199
540
(715)
150
(3)
11
(164)
2,018
2020
3,113
464
(744)
28
−
20
(682)
2,199
In preparing its consolidated financial statements for the year ended December 31, 2021, the Company considered all
available information concerning legal proceedings in which the Company is a defendant, in order to estimate the
amounts of obligations and probability that outflows of resources will be required.
18.2. Judicial deposits
Judicial deposits made in connection with legal proceedings are set out in the table below according to the nature of the
corresponding lawsuits:
Non-current assets
Tax
Labor
Civil
Environmental
Others
Total
12.31.2021
5,790
796
1,275
101
76
8,038
12.31.2020
5,154
831
1,095
113
88
7,281
Opening Balance
Additions
Use
Accruals and charges
Others
Cumulative translation adjustment
Closing Balance
2021
7,281
1,145
(109)
263
3
(545)
8,038
2020
8,236
937
(86)
90
(4)
(1,892)
7,281
In the year ended December 31, 2021, the Company made judicial deposits in the amount of US$ 1,144, including: (i)
US$ 359 referring to IRPJ and CSLL for not adding profits of subsidiaries and affiliates domiciled abroad to the IRPJ
and CSLL calculation basis; (ii) US$ 339 relating to the unification of Fields (Cernambi, Tupi, Tartaruga Verde and
Tartaruga Mestiça); (iii) US$ 224 related to CIDE and PIS/COFINS on the chartering of platforms; (iv) US$ 116 referring
F-56
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
to IRPJ and CSLL in the deduction of expenses with Petros; (v) US$ 66 referring to several judicial deposits of a tax
nature; and (vi) US$ 57 relating to the lack of payment of Social Security Contribution levied on bonuses paid to
employees, mainly offset by (vii) US$ 132 referring to indemnity action due to the unilateral termination of contract for
the securitization of IPI credits.
18.3. Contingent liabilities
Contingent liabilities for which either the Company is unable to make a reliable estimate of the expected financial effect
that might result from resolution of the proceeding, or a cash outflow is not probable, are not recognized as liabilities
in the financial statements but are disclosed in the notes to the financial statements, unless the likelihood of any
outflow of resources embodying economic benefits is considered remote.
The estimates of contingent liabilities for legal, administrative and arbitrations proceedings are indexed to inflation
and updated by applicable interest rates. As of December 31, 2021, estimated contingent liabilities for which the
possibility of loss is not considered remote are set out in the following table:
Nature
Tax
Labor
Civil - General
Civil - Environmental
Total
12.31.2021
24,785
7,172
5,412
1,192
38,561
12.31.2020
24,511
8,179
4,621
1,465
38,776
The tables below detail the main causes of tax, civil, environmental and labor nature, whose expectations of losses are
classified as possible:
F-57
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Description of tax matters
Plaintiff: Secretariat of the Federal Revenue of Brazil
1) Withholding income tax (IRRF), Contribution of Intervention in the Economic Domain (CIDE), Social Integration Program
(PIS) and Contribution to Social Security Financing (COFINS) on remittances for payments of vessel charters.
Current status: The claim about the incidence of withholding income tax (Imposto de Renda Retido na Fonte- IRRF) on
remittances for payments of vessel charters, occurred from 1999 to 2002, involves the legality of the normative rule issued
by the Federal Revenue of Brazil, which ensured no taxation over those remittances. The Company considers the likelihood
of loss as possible, since there are decisions from Superior Courts favorable to the understanding of the Company, and will
continue to defend its opinion.
The other claims, concerning CIDE and PIS/COFINS, involve lawsuits in different administrative and judicial stages, for
which the Company understands there is a possible likelihood of loss, since there are legal predictions in line with the
position of the Company.
2) Income from foreign subsidiaries and associates located outside Brazil not included in the computation of taxable
income (IRPJ and CSLL).
Current status: This claim involves lawsuits in different administrative and judicial stages. The Company considers the
likelihood of loss as possible, since there are decisions from Superior Courts favorable to the understanding of the
Company.
3) Requests to compensate federal taxes disallowed by the Brazilian Federal Tax Authority.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2019, the Company obtained
a final decision at CARF, canceling part of the debts. In 2021, new tax notices were issued against the Company.
4) Incidence of social security contributions over contingent bonuses paid to employees.
Current status: Awaiting defense judgment and appeals at the administrative and judicial levels. In 2021, there was a
reduction in the value due to a decision favorable to the Company.
5) Collection of Contribution of Intervention in the Economic Domain (CIDE) on transactions with fuel retailers and service
stations protected by judicial injunctions determining that fuel sales were made without gross-up of such tax.
Current status: This claim involves lawsuits in different judicial stages.
6) Deduction from the basis of calculation of taxable income (income tax - IRPJ and social contribution - CSLL) of several
expenses related to employee benefits.
Current status: The claim involves lawsuits in different administrative and judicial stages. The expected loss in one lawsuit
is now deemed possible (formerly remote), due to an unfavorable decision by the Regional Court of the 2nd Region in a
similar case.
7) Income taxes (IRPJ and CSLL) - Amortization of goodwill on the acquisition of equity interests.
Current status: This claim involves lawsuits in different administrative and judicial stages.
8) Deduction of the PIS and COFINS tax base on ship or pay contracts and charters of aircraft and vessels.
Current status: New notice issued in 2021. The claims involve lawsuit in administrative stage. An appeal was filed. A decision
of the first administrative instance is awaited.
9) Collection of IRPJ and CSLL - Transfer price - Charter contracts
Current status: New notice issued in 2021. An appeal was filed. A decision of the first administrative instance is awaited.
10) Import tax, PIS/COFINS and customs fines - import of vessels through Repetro's Special Customs Regime.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2021, new notices were issued.
Plaintiff: States of SP, RJ, BA, PA, AL, MA, PB, PE, AM and SE Finance Departments
11) VAT (ICMS) and VAT credits on internal consumption of bunker fuel and marine diesel, destined to chartered vessels.
Current status: This claim involves several tax notices from the states which are in different administrative and judicial
stages.
Plaintiff: States of RJ, AL and BA Finance Departments
12) VAT (ICMS) on dispatch of liquid natural gas (LNG) and C5+ (tax document not accepted by the tax authority), as well
as challenges on the rights to this VAT tax credit.
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: States of RJ, AL, AM, PA, BA, GO, MA, SP and PE Finance Departments
13) Alleged failure to write-down VAT (ICMS) credits related to zero tax rated or non-taxable sales made by the Company
and its customers.
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: States of RJ, BA, PE, SE and AM Finance Departments
14) The plaintiff alleges that the transfers between branches, especially in RJ, without segregating VAT (ICMS), under the
special regime, reduced the total credits of the central department.
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: States of GO, RJ, PA, BA, SE, SP, PR, AM, CE, MT, RN and PE Finance Departments
F-58
Estimate
12.31.2021 12.31.2020
9,092
9,532
3,890
4,106
827
781
706
812
428
454
570
234
330
287
468
326
−
−
249
86
367
384
746
788
788
818
800
812
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
15) Appropriation of ICMS credit on the acquisition of goods (products in general) that, in the understanding of the
inspection, would fit into the concept of material for use and consumption, being the tax credit undue.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2021, new notices were issued.
Plaintiff: States of RJ, PR, AM, BA, PA, PE, SP and AL Finance Departments
16) Incidence of VAT (ICMS) over alleged differences in the control of physical and fiscal inventories.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2021, new notices were issued.
Plaintiff: State of SP Finance Department
17) Deferral of payment of VAT (ICMS) taxes on B100 Biodiesel sales and the charge of a 7% VAT rate on B100 on Biodiesel
interstate sales, including states in the Midwest, North and Northeast regions of Brazil and the State of Espírito Santo.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2021, there was a review of
the expected loss of a case, from possible to remote, due to a favorable Court decision.
Plaintiff: States of RJ, SP, BA, PE, PR, SE and CE Finance Departments
18) Misappropriation of VAT tax credit (ICMS) on the acquisitions of goods that, per the tax authorities, are not related to
property, plant and equipment.
Current status: New notices issued in 2021. This claim involves lawsuits still in administrative stages and other lawsuits in
judicial stages.
Plaintiff: States of RJ, SP, BA, AL, PE, CE and AM Finance Departments
19) Misappropriation of VAT tax credit (ICMS) on the acquisitions of drills and chemicals used in the formulation of drilling
fluid, per the tax authorities.
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: Municipal government of Angra dos Reis/RJ
20) Added value of ICMS on oil import operations.
Current status: This claim involves lawsuits in several judicial stages. The lawsuits are in different procedural stages, still
without a decision on the merits in the first instance. In 2021, new lawsuits were filed.
Plaintiff: Municipal governments of the cities of Anchieta, Aracruz, Guarapari, Itapemirim, Marataízes, Linhares, Vila
Velha and Vitória
21) Alleged failure to withhold and pay tax on services provided offshore (ISSQN) in favor of some municipalities in the
State of Espírito Santo, under the allegation that the service was performed in their "respective coastal waters".
Current status: This claim involves lawsuits in different administrative and judicial stages.
Plaintiff: Several Municipalities
22) Alleged failure to withhold and pay tax on services (ISSQN).
Current status: There are lawsuits in different administrative and judicial stages.
23) Other tax matters
Total for tax matters
Description of labor matters
Plaintiff: Employees and Sindipetro Union of ES, RJ, BA, MG, SP, PE, PB, RN, CE, PI, PR and SC.
1) Actions requiring a review of the methodology by which the minimum compensation based on an employee's position
and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated.
Current status: The dispute is in the Federal Supreme Court (STF). Petrobras filed an appeal and, On 07/28/2021, the
Minister Rapporteur decided favorably to the Company, reforming the decision of the Plenary of the Superior Labor Court
(TST) which was contrary to Petrobras. Currently, the judgment of the appeals filed by the plaintiff and by several amicus
curiae is in progress, with 3 votes in favor of the Company, recognizing the merit of the collective bargaining agreement
signed between Petrobras and the unions. Considering that the last minister to vote requested additional information, the
trial was suspended, and is pending the presentation of the vote by this last minister.
2) Other labor matters
Total for labor matters
569
517
446
392
232
416
417
331
421
418
289
99
1,071
1,056
201
1,825
24,785
190
1,725
24,511
Estimate
12.31.2021 12.31.2020
5,916
1,256
7,172
6,679
1,500
8,179
F-59
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Description of civil matters
Plaintiff: Agência Nacional de Petróleo, Gás Natural e Biocombustíveis - ANP and other agencies
1) Administrative and legal proceedings that discuss:
a) Difference in special participation and royalties in different fields;
b) Fines imposed by ANP due to alleged failure to comply with the minimum exploration activities program, as well as
alleged irregularities relating to compliance with oil and gas industry regulation. It also includes fines imposed by other
agencies.
Estimate
12.31.2021 12.31.2020
Current status: The claims involve lawsuits in different administrative and judicial stages.
1,197
1,319
Plaintiff: Agência Nacional de Petróleo, Gás Natural e Biocombustíveis - ANP
2) Proceedings challenging an ANP order requiring Petrobras to unite Tupi and Cernambi fields on the BM-S-11 joint
venture; to unite Baúna and Piracicaba fields; and to unite Tartaruga Verde and Mestiça fields, which would cause changes
in the payment of special participation charges.
Current status: This list involves claims that are disputed in court and in arbitration proceedings, as follows:
a) Tupi and Cernanbi: initially, the Company made judicial deposits for the alleged differences resulting from the special
participation. However, with the reversal of the favorable injunction, the payment of these alleged differences were made
directly to ANP, and such judicial deposits were resumed in the 2nd Quarter of 2019. Arbitration remains suspended by
court decision;
b) Baúna and Piracicaba: the Court reassessed previous decision that disallowed judicial deposits, therefore the Company
is currently depositing the controversial amounts. The arbitration is stayed.
c) Tartaruga Verde and Mestiça: The Company has authorization to make the judicial deposits relating to these fields. The
Regional Federal Court of the Second Region has the opinion that the Chamber of Arbitration has jurisdiction on this claim
and the arbitration is ongoing.
Plaintiff: Agência Estadual de Regulação de Serviços Públicos de Energia, Transportes e Comunicações da Bahia
(AGERBA) and State Gas Companies
3) Public Civil Action (ACP) to discuss the alleged illegality of the gas supply made by the company to its Nitrogenated
Fertilizer Production Unit (FAFEN / BA).
Current status: In March 2022, the Company entered into an agreement to extinguish the litigation involving AGERBA,
classifying a portion of this amount under dispute as probable and other portion as remote. The claims also involve other
lawsuits in different legal stages.
Plaintiff: Several service providers
4) Claims related to goods and services supply contracts, with emphasis on discussions about economic and financial
imbalance, contractual breach, fines and early termination of contracts.
Current status: The claims involve lawsuits in different administrative and judicial stages.
5) Several lawsuits of civil nature, with emphasis on those related to expropriation and easement of passage, corporate
disputes and civil liability.
Total for civil matters
Description of environmental matters
Plaintiff: Ministério Público Federal, Ministério Público Estadual do Paraná, AMAR - Associação de Defesa do Meio
Ambiente de Araucária, IAP - Instituto Ambiental do Paraná and IBAMA - Instituto Brasileiro de Meio Ambiente e
Recursos Naturais Renováveis.
1) Legal proceeding related to specific performance obligations, indemnification and compensation for damages related
to an environmental accident that occurred in the State of Paraná on July 16, 2000.
Current status: The parties entered into an agreement and resolved the issue of merit, pending only the discussion relating
to the amount of attorney fees.
2) Several lawsuits of an environmental nature, with emphasis on fines related to the company's operations and public civil
Total for environmental matters
18.4. Class action in Netherlands and Arbitrations in Brazil and in Argentina
18.4.1. Class action in Netherlands
829
471
29
308
2,472
1,687
885
5,412
836
4,621
Estimate
12.31.2021 12.31.2020
36
1,156
1,192
425
1,040
1,465
On January 23, 2017, the Stichting Petrobras Compensation Foundation (“Foundation”) filed a class action before the
district court in Rotterdam, in the Netherlands, against Petrobras parent company and Petrobras International
F-60
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Braspetro B.V. (PIBBV), Petrobras Global Finance B.V. (PGF), Petrobras Oil & Gas B.V. (PO&G) and some former managers
of Petrobras.
The Foundation allegedly represents the interests of an unidentified group of investors and alleges that based on the
facts uncovered by the Lava Jato investigation the defendants acted unlawfully towards investors. Based on the
allegations, the Foundation seeks a number of declaratory relieves from the Dutch court.
The Company filed their first response to the claim on May 3, 2017 (first docket date), presenting the law firms that will
defend these companies and requesting a hearing to discuss some aspects of the case.
On August 23, 2017, a hearing was held at the District Court in Rotterdam (“Court”) to establish the timeframe for
proceedings. Petrobras (and other defendants) presented preliminary defenses on November 29, 2017 and the
Foundation presented its response on March 28, 2018. On June 28, 2018, a hearing was held for the parties to present
oral arguments. On September 19, 2018, the Court rendered its interim decision in the motion proceedings in which it
accepted jurisdiction in most of 7 claims of the Foundation.
On January 29, 2020, the Court determined that shareholders who understand Portuguese and / or who bought shares
through intermediaries or other agents who understand that language, among other shareholders, are subject to the
arbitration clause provided for in the Company's Bylaws, remaining out of the collective action proposed by the
Foundation. The Court also considered the binding effect of the agreement signed to close the United States' Class
action. In this way, the Foundation needs to demonstrate that it represents a sufficient number of investors to justify
pursuing collective action in the Netherlands. The Foundation and the Company presented the oral arguments at a
hearing held on January 26, 2021.
On May 26, 2021, the Court ruled that the class action must proceed and that the arbitration clause in Petrobras' Bylaws
does not prevent the company's shareholders from having access to the Dutch Judiciary and being represented by the
Foundation. However, investors who have already initiated arbitration against Petrobras or who are parties to legal
proceedings in which the applicability of the arbitration clause has been definitively recognized are excluded from the
action. On the same date, the class action moved to the merits discussion phase.
This collective action involves complex issues that are subject to substantial uncertainties and depend on a number of
factors such as the standing of the Foundation as the alleged representative of the investors' interests, the applicable
rules to this complaint, the information produced the evidentiary phase of the proceedings, analysis by experts, the
timing of court decisions and rulings by the court on key issues, and the Foundation only seeks declaratory reliefs in
this collective action. Currently, it is not possible to determine if the Company will be found responsible for the payment
of compensation in subsequent individual complaints after this action as this assessment depends on the outcome of
these complex issues. Moreover, it is uncertain which investors will be able to file subsequent individual complaints
related to this matter against the Company.
In addition, the allegations asserted are broad, span a multi-year period and involve a wide range of activities, and, at
the current stage, the impacts of such allegations are highly uncertain. The uncertainties inherent in all such matters
affect the amount and timing of the ultimate resolution of these actions. As a result, the Company is unable to make a
reliable estimate of eventual loss arising from this action. The company reiterates its victim condition of the corruption
scheme uncovered by the Lava Jato investigation and aims to present and prove this before the Dutch Court.
The uncertainties inherent in all such matters do not enable the company to identify possible risks related to this action.
Compensation for the alleged damages will only be determined by court rulings on complaints to be filed by individual
investors. The Foundation is not able to demand compensation for damages, since the final decision will be merely
declaratory in nature.
The Company denies the allegations presented by the Foundation and intend to defend themselves vigorously.
F-61
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
18.4.2. Arbitrations in Brazil
Petrobras is also currently a party to seven arbitrations proceedings before the Market Arbitration Chamber (Câmara
de Arbitragem do Mercado - CAM), linked to the Brazilian Stock Exchange (B3), brought by investors who purchased
Petrobras’ shares traded on B3. Six of these arbitrations were initiated by national and foreign investors. The other
proceeding was brought by an association that is not a shareholder of the Company and intends to be a collective
arbitration, through representation of all minority shareholders of Petrobras that acquired shares on B3 between
January 22, 2010 and July 28, 2015. Investors claim alleged financial losses caused by facts uncovered in the Lava Jato
investigation.
These claims involve complex issues that are subject to substantial uncertainties and depend on a number of factors
such as the novelty of the legal theories, the timing of the Chamber of Arbitration decisions, the information produced
in discovery and analysis by retained experts.
Moreover, the claims asserted are broad and span a multi-year period. The uncertainties inherent in all such matters
affect the amount and timing of their ultimate resolution. As a result, the Company is unable to make a reliable estimate
of eventual loss arising from such arbitrations.
Depending on the outcome of these complaints, the Company may have to pay substantial amounts, which may have a
significant effect on its consolidated financial position, financial performance and cash flows in a certain period.
However, Petrobras does not recognize responsibility for the losses alleged by investors in these arbitrations.
Most of these arbitrations are still in the preliminary stages and a final decision is not expected in the near future.
However, in relation to one of the arbitrations, proposed by two institutional investors, on May 26, 2020, a partial arbitral
award was issued indicating the Company's responsibility, but not determining the payment of amounts by Petrobras,
nor ending the procedure. This arbitration, as well as the other arbitrations in progress, are confidential and the partial
arbitral award - which does not represent a CAM position, but only of the three arbitrators that make up this arbitration
panel - does not extend to the other ongoing arbitrations.
On July 20, 2020, Petrobras filed a lawsuit for the annulment of this partial arbitral award, as the Company understands
that the award contains serious flaws and improprieties. This lawsuit is still without any assessment on the merits of
the case and its judgement is pending. On November 11, 2020, the 5th Business Court of Rio de Janeiro annulled the
partial arbitration award, due to these serious flaws and improprieties pointed out by Petrobras. The appeals against
this decision are still pending judgement. In compliance with CAM rules, the lawsuit is confidential and only available to
those involved in the original arbitration proceeding. Petrobras will continue to defend itself in this and other
arbitrations.
18.4.3. Arbitrations in Argentina
On September 11, 2018, Petrobras was served of an arbitral claim filed by Consumidores Financieros Asociación Civil
para su Defensa ("Association") against the company and other individuals and legal entities, before the “Tribunal de
Arbitraje General de la Bolsa de Comercio de Buenos Aires”. Among other issues, the Association alleges Petrobras'
liability for a supposed loss of market value of Petrobras' shares in Argentina, due to proceedings related to Lava Jato
investigation.
On June 14, 2019, the Company informed that the Chamber of Arbitration recognized the withdrawal of the arbitration
due to the fact that the Association had not paid the arbitration fee within the established period. The Association
appealed to the Argentine Judiciary against this decision, which was rejected on November 20, 2019. The Association
filed a new appeal addressed to the Argentine Supreme Court, pending a final decision.
Petrobras denies the allegations presented by the Association and intends to defend itself vigorously.
F-62
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
18.5. Other legal proceedings in Argentina
Petrobras was included as a defendant in criminal actions in Argentina:
•
•
Criminal action for alleged non-compliance with the obligation to publish “press release” in Argentina about the
existence of a class action filed by Consumidores Financieros Asociación Civil para su Defensa before the
Commercial Court, according to the provisions of the Argentine capital market law. Petrobras was never
mentioned in the scope of the referred collective action. Petrobras presented procedural defenses in the criminal
action but some of them have not yet been judged by the court. On March 4, 2021, the Court (Room A of the
Economic Criminal Chamber) decided that the jurisdiction for the trial of this criminal action should be
transferred from the Criminal Economic Court No. 3 of the city of Buenos Aires to the Criminal Economic Court
No. 2 from that same city;
Criminal action related to an alleged fraudulent offer of securities, when Petrobras allegedly declared false data
in its financial statements prior to 2015. Petrobras presented procedural defenses, currently the subject of
appeals in Argentine courts. On October 21, 2021, after an appeal by the Association, the Court of Appeals
revoked the lower court decision that had recognized Petrobras' immunity from jurisdiction and recommended
that the lower court take some steps to certify whether the Company could be considered criminally immune in
Argentina for further reassessment of the issue. Petrobras appealed against this decision, and its judgment is
still pending. On the same occasion, the Court of Appeals recognized that the Association could not act as a
representative of financial consumers, due to the loss of its registration with the competent Argentine bodies.
This criminal action is pending before the Criminal Economic Court No. 2 of the city of Buenos Aires.
18.6. Tax recoveries under dispute
18.6.1. Deduction of VAT tax (ICMS) from the basis of calculation of PIS and COFINS
The Company filed complaints against Brazilian Federal Government challenging the constitutionality of the inclusion,
from 2001 to 2020, of ICMS within the calculation basis of PIS and COFINS. In 2020, the Company obtained a favorable
and definitive court decision on this claim, and the Company recognized the corresponding credit. The tax credit relates
to the exclusion of the ICMS effectively collected when included in the basis of calculation of PIS and COFINS, as
deliberated by the Federal Revenue of Brazil, as set out in note 16.
In relation to the amounts corresponding to the difference between the criterion established in the regulation and the
ICMS amount reported in the invoices, these were not recognized as tax credit, since it was pending final decision of the
Federal Supreme Court (STF).
On May 14, 2021, the extract from the minutes of the judgment of the STF on the motion for clarification filed by the
Brazilian Federal Government was published and made it clear that the criterion to be used for the purposes of
calculating the ICMS in the calculation basis of the PIS and COFINS is the amount presented in the invoice. Based on the
decision of the STF, Petrobras recognized the asset related to the difference between these criteria. This amount is
being offset in the Company's tax calculation.
The recognized effects relating to the exclusion of ICMS on the PIS and COFINS basis, as well as the offset of these
amounts, are presented in note 16.1.
18.6.2. Compulsory Loan - Eletrobrás
The Brazilian Federal Government, aiming to finance the expansion of the national electricity system, established the
compulsory loan that lasted until 1993 in favor of Eletrobrás, which was the operator of this system. The loan was
charged to consumers' electricity bills.
F-63
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
In 2010, the Company filed a lawsuit to recognize its right to receive the differences in monetary correction and interest
on a compulsory loan from Eletrobrás, in relation to the third conversion of Eletrobrás shares, in the period from 1987
to 1993.
In 2021, the Company changed to probable the expectation of a gain on this lawsuit, based on recent judicial decisions
on the subject. Considering that legal discussions are still pending regarding the methodology for calculating the credit,
the Company is still unable to estimate the amount of the contingent asset.
Considering that legal discussions are still pending regarding the calculation methodology for calculating the credit,
the value of the contingent asset will be determined in the course of the process
18.6.3. Lawsuits brought by natural gas distributors and others
Some natural gas distributors and other entities have filed lawsuits against Petrobras, in which they claim the extension
of the effects of the natural gas supply contracts that expired in December 2021. As the prices of liquefied natural gas
imported by Petrobras, necessary to meet to new commitments showed a great increase in the last months of 2021,
Petrobras offered for new contracts with start of supply from January 1, 2022 proposals with prices in line with the
current market situation. However, some natural gas distributors and other entities rejected the new prices, claiming
that Petrobras allegedly abuses its economic power.
In these lawsuits, the judges granted injunctions to maintain the prices of the old contracts. Petrobras appealed these
decisions and the appeals are awaiting judgment. At the same time, the Company proposed arbitration, given that this
is the dispute settlement method defined in the contracts.
18.7. Accounting policy for provisions for legal proceedings, contingent liabilities and contingent
assets
Provisions are recognized when: (i) the company has a present obligation as a result of a past event; (ii) it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and (iii) the amount
of the obligation can be reliably estimated.
Contingent liabilities are not recognized but are disclosed in explanatory notes when the likelihood of outflows is
possible, including those whose amounts cannot be estimated.
The methodology used to estimate the provisions is described in note 4.5.
Contingent assets are not recognized, but are disclosed in explanatory notes when the inflow of economic benefits is
considered probable. However, if the inflow of economic benefits is virtually certain, the related asset is not a contingent
asset and it is recognized.
19. Provision for decommissioning costs
The following table details the amount of the decommissioning provision by production area:
Onshore
Shallow waters
Deep and ultra-deep post-salt
Pre-salt
Changes in the provision are presented below:
F-64
12.31.2021
12.31.2020
873
3,732
8,420
2,594
1,627
4,309
9,775
3,069
15,619
18,780
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Non-current liabilities
Opening balance
Adjustment to provision
Transfers related to liabilities held for sale
Payments made
Interest accrued
Others
Cumulative translation adjustment
Closing balance
2021
18,780
(1,186)
(704)
(730)
723
5
(1,269)
15,619
2020
17,460
5,720
(519)
(446)
571
15
(4,021)
18,780
The reduction in the balance of the provision in 2021 mainly relates to the update of the 2022-2026 Strategic Plan
premises; the review of technical assumptions and contractual renegotiations; the extension of the concessions'
economic cut-off year, mainly due to the increase in the price of Brent; as well as the conclusion of sales of concessions.
19.1. Accounting policy for decommissioning costs
The initial recognition of legal obligations to remove equipment and restore land or sea areas at the end of operations
occurs after the technical and commercial feasibility of producing oil and gas in a field has been demonstrated. The
calculations of the cost estimates for future environmental removals and recoveries are complex and involve significant
judgments (as set out in note 4.6).
The estimates of decommissioning costs are reviewed annually based on current information on expected costs and
recovery plans. When the revision of the estimates results in an increase in the provision for decommissioning costs,
there is a corresponding increase in assets. Otherwise, in the event that a decrease in the liability exceeds the carrying
amount of the asset, the excess shall be recognized immediately in profit or loss.
In the classification of non-current assets as held for sale, provisions for decommissioning costs related to these assets
are also included. Any commitments assumed with future environmental removals and recoveries resulting from the
sale of assets are recognized after the closing of the sale operation, in accordance with the contractual terms.
F-65
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
20. Other Assets and Liabilities
Assets
Escrow account and/ or collateral
Prepaid expenses
Advances to suppliers
Derivatives Transactions
Agreements and covenants
Others
Current
Non-Current
Liabilities
Obligations arising from divestments
Contractual retentions
Advances from customers and partners
Provisions for environmental expenses, R&D and fines
Other recoverable taxes
Derivatives Transactions
Various creditors
Others
Current
Non-Current
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(d)
12.31.2021
12.31.2020
961
308
297
31
262
201
2,060
1,573
487
780
394
263
119
71
238
1,865
1,230
635
12.31.2021
12.31.2020
1,106
521
606
568
143
282
84
715
4,025
1,875
2,150
936
536
433
460
406
283
123
483
3,660
1,603
2,057
a) Amounts deposited for payment of obligations related to the finance agreement with China Development Bank, as
well as margin in guarantee for futures and over-the-counter derivatives. In addition, there are amounts in investment
funds from escrow accounts related to divestment of TAG and NTS.
b) Amounts whose compensation must be made by supplying materials or providing services contracted with these
suppliers.
c) Spending on platform charters and equipment rentals to be appropriated in situations in which the start of operations
has been postponed due to legal requirements or the need for technical adjustments.
d) Fair value of open positions and transactions closed but not yet settled.
e) Cash and amounts receivable from partners in E&P consortia operated by Petrobras.
f) Provisions for financial reimbursements assumed by Petrobras to be made to the acquirer, referring to abandonment
costs of divested assets. The settlement of these provisions follows decommissioning schedules, with payments
beginning between two and three months after the date expected for the execution of operations, according to the
contractual terms for reimbursement of abandonment of the respective concessions.
g) Retained amounts from obligations with suppliers to guarantee the execution of the contract, accounted for when
the obligations with suppliers are due. Contractual retentions will be paid to suppliers at the end of the contract, upon
issuance of the contract termination term.
h) Amounts related to the advanced or cash receipt from third parties, related to the sale of products or services in
Brazil.
F-66
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
i) Accrued amounts for environmental compensation assumed by the Company in the course of its operations and
research projects.
j) Non-current portion of other recoverable taxes (see note 16).
20.1. Accounting policy for obligations arising from divestments
Obligations arising from divestments are recognized at present value, using a risk-free discount rate, adjusted to the
Company's credit risk, as the best estimate of disbursement required to settle the present obligation at the reporting
date and may be subject to changes as activity execution schedules are updated and detailed by acquirers.
21. The “Lava Jato (Car Wash) Operation” and its effects on the Company
The Company has monitored the progress of investigations under the “Lava Jato” Operation and, in the preparation of
these annual consolidated financial statements for the the year ended December 31, 2021, did not identify any
additional information that would affect the adopted calculation methodology to write off, in the third quarter of 2014,
amounts overpaid for the acquisition of property, plant and equipment. The Company will continue to monitor these
investigations for additional information in order to assess their potential impact on the adjustment made.
In addition, the Company has fully cooperated with the Brazilian Federal Police (Polícia Federal), the Brazilian Public
Prosecutor’s Office (Ministério Público Federal), the Federal Auditor’s Office (Tribunal de Contas da União – TCU) and
the General Federal Inspector’s Office (Controladoria Geral da União) in the investigation of all crimes and irregularities.
During 2021, new leniency and plea agreements entitled the Company to receive funds with respect to compensation
for damages, in the amount of US$ 235 (US$ 155 in 2020), accounted for as other income and expenses. Thus, the total
amount recovered from Lava Jato investigation through December 31, 2021 was US$ 1,522.
21.1. Investigations involving the Company
21.1.1. U.S. Securities and Exchange Commission and Department of Justice inquiries
On September 27, 2018, the Company entered into agreements to settle the open matters with the U.S. Department of
Justice (DoJ) and the U.S. Securities and Exchange Commission (SEC) investigations, which encompassed the
Company’s internal controls, books and records, and financial statements from 2003 to 2012.
Subsequently, Petrobras has concluded the obligations set forth in the agreement with the DoJ, including continuing
to enhance its integrity program and self-reporting during the agreement’s three-year term.
21.1.2. U.S. Commodity Futures Trading Commission - CFTC
In May 2019, the U.S. Commodity Futures Trading Commission (“CFTC”) contacted Petrobras with an inquiry regarding
trading activities related to the Lava Jato Operation. Petrobras reiterates that it continues to cooperate with the
regulatory authorities, including the CFTC, regarding any inquiry.
21.1.3. Order of civil inquiry - Brazilian Public Prosecutor’s Office
On December 15, 2015, the State of São Paulo Public Prosecutor’s Office issued the Order of Civil Inquiry 01/2015,
establishing a civil proceeding to investigate the existence of potential damages caused by Petrobras to investors in
the Brazilian stock market. The Brazilian Attorney General’s Office (Procuradoria Geral da República) assessed this civil
proceeding and determined that the São Paulo Public Prosecutor’s Office has no authority over this matter, which must
be presided over by the Brazilian Public Prosecutor’s Office. The Company has provided all relevant information
requested by the authorities.
F-67
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
22. Commitment to purchase natural gas
The GSA agreement (Gas Supply Agreement) entered into with Petrobras and Yacimientos Petrolíferos Fiscales
Bolivianos - YPFB was initially effective until December 31, 2019. In addition, according to agreement provision, after
December 31, 2019, the GSA was automatically extended until the entire volume contracted is delivered by YPFB and
withdrawn by Petrobras. On March 6, 2020, by means of a contractual amendment, the Parties changed the daily
contracted quantity (QDC) from 30.08 million m³ per day to 20 million m³ per day, which became effective as from March
11, 2020.
Thus, as of December 31, 2021, the total amount of the GSA for 2022 is nearly 7.5 billion cubic meters of natural gas
(equivalent to 20.5 million cubic meters per day) and corresponds to a total estimated value of US$ 1.7 billion.
Based on the aforementioned extension clause, the Company expects purchases to continue through May 2024, on the
same volume basis according to current indicators, representing an estimated additional amount of US$ 1.86 billion,
from January 2021 to May 2024.
F-68
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
23. Property, plant and equipment
Balance at January 1, 2020
Additions
Additions to / review of estimates of decommissioning
costs
Capitalized borrowing costs
Write-offs
Transfers
Transfers to assets held for sale
Depreciation, amortization and depletion
Impairment recognition
Impairment reversal
Cumulative translation adjustment
Balance at December 31, 2020
Cost
Accumulated depreciation, amortization, depletion and
impairment (****)
Balance at December 31, 2020
Additions
Additions to / review of estimates of decommissioning
costs
Capitalized borrowing costs
Signature Bonuses Transfers (note 24)
Write-offs
Transfers
Transfers to assets held for sale
Depreciation, amortization and depletion
Impairment recognition (note 25)
Impairment reversal (note 25)
Cumulative translation adjustment
Balance at December 31, 2021
Cost
Accumulated depreciation, amortization, depletion and
impairment (****)
Balance at December 31, 2021
Land,
buildings
and
improvement
4,450
-
Equipment
and other
assets (*)
70,378
4,587
Assets under
construction
(**)
21,952
3,090
Exploration
and
development
costs (oil and
gas
producing
properties)
(***)
40,897
365
Right-of-
use assets
21,588
4,338
Total
159,265
12,380
5,421
941
(2,361)
558
(1,068)
(12,326)
(15,102)
7,760
(31,267)
124,201
224,875
(100,674)
124,201
14,370
(1,069)
971
11,629
(3,149)
1,263
(4,240)
(12,955)
(409)
3,823
(9,105)
125,330
216,407
-
-
(1,271)
(21)
(13)
(4,022)
(337)
124
(4,517)
15,869
23,780
(7,911)
15,869
6,954
-
-
-
(279)
3
(14)
(4,281)
(4)
34
(1,230)
17,052
26,382
-
-
(4)
(258)
(8)
(142)
(14)
-
(981)
3,043
5,450
(2,407)
3,043
-
-
-
-
(38)
(295)
(53)
(97)
-
-
(177)
2,383
4,080
(1,697)
2,383
-
-
(438)
2,676
(226)
(4,298)
(7,293)
5,542
(12,248)
58,680
107,199
(48,519)
58,680
1,650
-
-
-
(588)
2,934
(2,776)
(4,235)
(377)
1,796
(3,958)
53,126
98,085
(44,959)
53,126
20
(3 to 31)
-
941
(461)
(3,175)
27
-
(2,855)
482
(4,558)
15,443
27,544
5,421
-
(187)
1,336
(848)
(3,864)
(4,603)
1,612
(8,963)
31,166
60,902
(12,101)
15,443
5,761
(29,736)
31,166
5
(1,069)
-
11,629
(1,645)
1,781
(822)
(4,342)
(27)
1,879
(2,708)
35,847
61,906
-
971
-
(599)
(3,160)
(575)
-
(1)
114
(1,032)
16,922
25,954
(9,032)
16,922
40
(25 to 50)
(except land)
(26,059)
35,847
(9,330)
17,052
(91,077)
125,330
Units of
production
method
8
(2 to 47)
Weighted average useful life in years
(*) It is composed of production platforms, refineries, thermoelectric power plants, natural gas processing plants, pipelines, and other operating, storage and
production plants, including subsea equipment for the production and flow of oil and gas, depreciated based on the units of production method.
(**) See note 30 for assets under construction by operating segment.
(***) It is composed of exploration and production assets related to wells, abandonment and dismantling of areas, signature bonuses associated with proved reserves
and other costs directly associated with the exploration and production of oil and gas.
(****) In the case of land and assets under construction, it refers only to impairment losses.
The investments made by the company in 2021 were mainly in the development of production of oil and natural gas
fields, primarily in the pre-salt complex (Búzios Co-participation Agreement, unitized Atapu, Mero, unitized Sépia,
among others), including the contracting of new leases. In 2021, the transfer of intangible assets to property, plant and
equipment, in the amount of US$ 11,629, relating to the value of the signature bonus paid in the auction of the Surplus
of the Transfer of Rights in the Búzios field after the Co-participation Agreement from Búzios became effective.
F-69
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Regarding the right-of-use assets, the readjustment clauses with possible effects on depreciation, amortization,
depletion and accumulated impairment are presented as of December 31, 2021 as follows:
Balance at December 31, 2021
Cost
Accumulated depreciation, amortization and depletion
Balance at December 31, 2020
Cost
Accumulated depreciation, amortization and depletion
23.1. Estimated useful life
Platforms
Vessels
Properties
9,840
13,362
(3,522)
7,979
11,144
(3,165)
5,997
11,267
(5,270)
7,167
11,256
(4,089)
1,215
1,753
(538)
723
1,379
(656)
Total
17,052
26,382
(9,330)
15,869
23,779
(7,910)
Estimated useful life
5 years or less
6 - 10 years
11 - 15 years
16 - 20 years
21 - 25 years
25 - 30 years
30 years or more
Units of production method
Total
Buildings and improvements
Equipment and other assets
Buildings and improvements, equipment and other assets
Cost
3,931
7,997
4,982
27,614
26,847
10,271
4,478
15,931
102,051
3,966
98,085
Accumulated
depreciation
Balance at
December 31, 2021
(3,436)
(5,991)
(1,358)
(15,434)
(6,200)
(3,042)
(1,944)
(9,244)
(46,649)
(1,690)
(44,959)
495
2,006
3,624
12,180
20,647
7,229
2,534
6,687
55,402
2,276
53,126
23.2. Accounting policy for property, plant and equipment
Property, plant and equipment are measured at the cost to acquire or construct, including all costs necessary to bring
the asset to working condition for its intended use and the estimated cost of dismantling and removing the asset and
restoring the site, reduced by accumulated depreciation and impairment losses.
A condition for continuing to operate certain items of property, plant and equipment, such as industrial plants, offshore
plants and vessels is the performance of regular major inspections and maintenance. Those expenditures are
capitalized if a maintenance campaign is expected to occur, at least, 12 months later. Otherwise, they are expensed
when incurred. The capitalized costs are depreciated over the period through the next major maintenance date.
Spare parts are capitalized when they are expected to be used during more than one period and can only be used in
connection with an item of property, plant and equipment. These are depreciated over the useful life of the item of
property, plant and equipment to which they relate.
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized as part of
the costs of these assets. General borrowing costs are capitalized based on the Company’s weighted average cost of
borrowings outstanding applied over the balance of assets under construction. Loans, directly attributable to the
construction of qualifying assets are excluded from this calculation until the completion of all activities necessary to
set the asset in conditions for use or sale intended by management. In general, the Company suspends capitalization
of borrowing to the extent investments in a qualifying asset hibernates during a period greater than one year or
whenever the asset is prepared for its intended use.
F-70
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Assets directly associated to oil and gas production of a contract area without useful life lower than the estimated
length of reserves depletion, such as signature bonuses, are depreciated or amortized based on the unit-of-production
method.
The unit-of-production method of depreciation (amortization) is computed based on a unit of production basis
(monthly production) over the proved developed oil and gas reserves, except for signature bonuses for which unit of
production method takes into account the monthly production over the total proved oil and gas reserves on a field-by-
field basis.
Assets related to oil and gas production with useful lives shorter than the life of the field; floating platforms and other
assets unrelated to oil and gas production are depreciated on a straight-line basis over their useful lives, which are
reviewed annually. Note 25.2 provides further information on the estimated useful life by class of assets. Lands are not
depreciated.
Right-of-use assets are presented as property, plant and equipment and, according to the useful lives of their
respective underlying assets and the characteristics of lease agreements (term, asset transfer or exercise of call option),
are depreciated using the straight-line method based on contractual terms.
23.3. Oil and Gas fields operated by Petrobras returned to ANP
In 2021, the following oil and gas fields were returned to ANP: Bijupirá, Lagosta, Merluza e Salema. These fields were
returned to ANP mainly due to their economic unfeasibility and, as a consequence, the Company wrote off the amount
of US$ 27 in addition to impairments recognized in prior years.
In 2020, the following oil and gas fields were returned to ANP: Agulha, Caioba, Camorim, Dourado, Guaricema, Piranema,
Piranema Sul, Salgo e Tatuí. These fields were returned to ANP mainly due to their economic unfeasibility and, as a
consequence, the Company wrote off the amount of US$ 12 in addition to impairments recognized in prior years.
In 2019, the following oil and gas fields were returned to ANP: Juruá, Iraúna, Barra do Ipiranga, Lagoa Branca, Nativo
Oeste, Jacupemba, Mariricu Oeste, Rio Barra Seca, Rio Itaúnas Leste, Rio São Mateus Oeste and Sul de Sapinhoá. These
fields were returned to ANP mainly due to their economic unfeasibility and, as a consequence, the Company wrote off
the amount of US$ 74 in addition to impairments recognized in prior years.
23.4. Capitalization rate used to determine the amount of borrowing costs eligible for
capitalization
The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was the weighted
average of the borrowing costs applicable to the borrowings that were outstanding during the period, other than
borrowings made specifically for the purpose of obtaining a qualifying asset. For the year ended December 31,2021, the
capitalization rate was 6.17% p.a. (6.12% p.a. for the year ended December 31, 2020).
F-71
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
24. Intangible assets
Balance at January 1, 2020
Addition
Capitalized borrowing costs
Write-offs
Transfers
Amortization
Rights and
Concessions (*)
19,168
31
-
(173)
(2)
(8)
Software
242
Goodwill
63
88
1
(3)
(1)
(58)
-
-
-
(26)
-
Total
19,473
119
1
(176)
(29)
(66)
Impairment recognition
Cumulative translation adjustment
Balance at December 31, 2020
Cost
Accumulated amortization and impairment
Balance at December 31, 2020
Addition
Capitalized borrowing costs
Write-offs
Transfers
Signature Bonuses Transfers
Amortization
Impairment reversal
Cumulative translation adjustment
Balance at December 31, 2021
Cost
Accumulated amortization and impairment
Balance at December 31, 2021
Estimated useful life in years
(*) It comprises mainly signature bonuses (amounts paid in concession contracts for oil or natural gas exploration and production sharing), in addition to public service
concessions, trademarks and patents and others.
(**) Mainly composed of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an
(6)
(7)
24
24
-
24
-
-
-
-
-
-
-
(2)
22
22
-
22
Indefinite
-
(4,302)
14,714
14,803
(89)
14,714
106
-
(12)
(94)
(11,629)
(6)
-
(384)
2,695
2,744
(49)
2,695
(**)
(6)
(53)
210
1,245
(1,035)
210
165
5
(3)
3
-
(54)
1
(19)
308
1,321
(1,013)
308
5
(12)
(4,362)
14,948
16,072
(1,124)
14,948
271
5
(15)
(91)
(11,629)
(60)
1
(405)
3,025
4,087
(1,062)
3,025
24.1. Surplus volumes of Transfer of Rights Agreement
Búzios
On November 6, 2019, the ANP held the Bidding Round for the Surplus Volume of the Transfer of Rights Agreement,
when the Company acquired a 90% interest in the exploration and production rights of the surplus volume of Búzios
field, in the pre-salt layer of Santos basin, in partnership with CNODC Brasil Petróleo e Gás Ltda. (5%) and CNOOC
Petroleum Brasil Ltda. (5%).
The signature bonus corresponding to the Company's interest in the amount of US$ 14,912 was paid in the last quarter
of 2019 and Production Sharing Contract was signed with PPSA, MME and ANP in the first quarter of 2020.
a) Búzios Co-participation Agreement
On June 11, 2021, the Company signed with Pré-sal Petróleo S.A. (PPSA) and its partners CNODC and CNOOC a Co-
participation Agreement (Agreement) for Búzios field, to regulate the coexistence of the Transfer of Rights Agreement
and the Production Sharing Contract for the surplus volume of the Búzios field. The total compensation due to the
Transfer of Rights Agreement (100% Petrobras) by the Production Sharing Contract is US$ 29 billion, which will be
recovered in cost oil by the contractors.
The amount was calculated based on the Ordinance 213/2019 of MME guidelines and took into account current market
parameters, as well as the deferral of the production of the volume contracted under the Transfer of Rights regime, in
F-72
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
order to maximize the Net Present Value (NPV) of the Brazilian Government and maintain Petrobras' NPV calculated
based on the effective date of the Co-participation Agreement.
According to the agreement for the formation of the consortium to participate in the bid which occurred in 2019, the
amount of US$ 2.9 billion was paid by the partners CNODC and CNOOC to Petrobras in August 2021, after conditions
precedent were met, including the approval by the ANP. Thus, the contract became effective on September 1, 2021.
On this date, the partial disposition of the undivided economic interest of assets associated with Búzios field was carried
out, including the part of the signature bonus paid by Petrobras for this field, in exchange for financial compensation,
resulting in a transaction analogous to a sale.
The partners and PPSA defined the Development Plan for the field, which is expected to result in a recoverable volume
of 10,346 million barrels of oil equivalent during the term of the Agreement, which expires in September 2050. This
recoverable volume results in participations in the co-participated area of 26% for the Transfer of Rights Agreement
and 74% for the Production Sharing Agreement. Considering the participation of each company in its respective
contract and the participation of each contract in the co-participated area, the participation in the area is 92.6594% for
Petrobras and 3.6703% for each of the partners.
b) Reimbursement of expenses
Expenses incurred by Petrobras in the ordinary operations of the bidding area for the benefit of the consortium, made
prior to the start of the Agreement and not included in the total compensation amount, in the estimated amount of
US$ 57 (R$ 316 million), will be reimbursed to Petrobras by the partners CNODC and CNOOC.
c) Exercise of partners’ call option
Within 30 days after the Agreement's effective date, Petrobras' partners in the consortium had the right to exercise a
call option, provided for in the agreement that established the consortium for bidding in 2019, to acquire, each of them,
an additional 5% interest.
On September 29, 2021, the partner CNOOC expressed its interest in exercising the call option. The estimated amount
to be received by Petrobras at the closing of the operation for the portion of CNOOC is US$ 2,080, as follows: (i)
US$ 1,450 for the compensation, subject to the adjustments provided for in the contract, which considers the same
effective date of the Agreement on September 1, 2021, and; (ii) US$ 630 for the reimbursement of the signature bonus
referring to the additional participation of CNOOC. The values will be updated until the transaction closing, expected
to occur in the first quarter of 2022.
The assets related to this transaction were reclassified to assets held for sale (note 31).
The effectiveness of this transaction is subject to approval by the Administrative Council for Economic Defense (CADE),
ANP and MME.
The CNODC partner did not express interest in the exercise of the call option. Thus, after the completion of purchase of
additional 5% interest by CNOOC, Petrobras will hold 85% of the exploration and production rights of the surplus
volumes of the Transfer of Rights Agreement of Búzios field, while CNOOC will hold 10% and CNODC, 5%. Moreover,
considering all contracts in Búzios field (Transfer of Rights, Production Sharing and Concession of Tambuatá),
Petrobras will hold an 88.99% interest, while CNOOC will hold 7.34% and CNODC, 3.67%.
d) Further information
The result of the operation is shown below:
F-73
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Financial compensation received
Reimbursement of expenses
Disposition of other assets and liabilities – PP&E and Decommissioning
Disposition of signature bonuses
Total effect in the statement of income (within Other income and expenses)
2,938
59
(976)
(1,390)
631
Since this bidding relates to the surplus volume of fields with technical and commercial feasibility already defined, the
signature bonus paid, in the amount of US$ 11,625, was transferred from intangible assets to property, plant and
equipment after the Co-Participation Agreement became effective.
The volumes of reserves, considering the beginning of the effectiveness of the Búzios Field Agreement, will be
progressively incorporated according to the certification criteria and are partially reflected in the estimates of proved
reserves for December 31, 2021.
Atapu and Sépia
Petrobras acquired the rights for the exploration and production on these fields in the Second Bidding Round for the
Surplus Volume of the Transfer of Rights Agreement in the Production Sharing Regime, carried out by the ANP,
The rights in Atapu field were acquired in partnership with Shell Brasil (25%) and TotalEnergies EP (22.50%). Petrobras
will hold a 52.50% interest and will operate the field.
Regarding Sépia field, Petrobras will be the operator with a 30% interest, in partnership with TotalEnergies EP (28%),
Petronas (21%), and QP Brasil (21%).
The amounts corresponding to the signature bonus to be paid, are US$ 384 (R$ 2,141 million) for Atapu and US$ 376
(R$ 2,101 million) for Sépia, expected to be paid in the first quarter of 2022, when it will be recognized within intangible
assets.
The effective date of the Co-participation Agreement was defined in MME Ordinance No. 519/2021, as the first business
day subsequent to the certification by PPSA of the settlement of the compensation to Petrobras. On that date,
Petrobras will sign this agreement with PPSA and the partners, which will regulate the coexistence of the Transfer of
Rights Agreement with the Production Sharing Agreement.
The compensation for Atapu and Sépia will be paid by the partner companies to Petrobras, in proportion to their
participation in the consortia, and corresponds, respectively, to US$ 1,545 and US$ 2,240. Petrobras expect to receive
the compensation for Atapu until April 15, 2022, while for Sépia it will be defined with the consortium members. These
values may be complemented based on positive changes in future Brent prices (earn out), between 2022 and 2032,
according to MME Normative Ordinance No. 08/2021.
On the effective date of the agreements, assets associated with these fields will be partially written off, including the
portion of the signature bonus paid by Petrobras due to the Transfer of Rights Agreement applicable to this field, in
exchange for financial compensation, resulting in a transaction analogous to a sale. Then, the result of this transaction
will be presented as other income or expenses. Any adjustments to reserve estimates will be incorporated by Petrobras
in due course.
Itapu Co-participation Agreement
On July 9, 2021, Petrobras signed with Pré-sal Petróleo SA (PPSA) a Co-participation Agreement of Itapu, which will
regulate the coexistence of the Transfer of Rights Agreement and the Production Sharing Contract for the Surplus
volume of the Itapu field, in the pre-salt layer of Santos Basin.
Negotiations began after the bidding, held on November 6, 2019, in which Petrobras acquired 100% of the exploration
and production rights of the surplus volume of the Transfer of Rights Agreement of Itapu field.
F-74
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Petrobras and PPSA defined the Development Plan for the field, including estimates for production and recoverable
volume. As a result, the Company’s share in the area is 51.708% for the Transfer of Rights Agreement, with a total
recoverable volume of 350 million boe, and 48.292% for the Production Sharing Agreement, with a total recoverable
volume of 319 million boe.
The assumptions for oil and gas prices, discount rate and cost metrics used for the purpose of calculating the
compensation for the deferral of the cash flow of the transfer of rights and which will be recognized as cost in oil were
established in MME Ordinance No. 213/2019.
According to ANP Board Resolution No. 811/2021 of December 22, 2021, the Agreement was approved, becoming
effective on January 1, 2022
24.2. Assumption of interest in concessions
Six blocks in the state of Amapá
In September 2020 and April 2021, respectively, the Company closed agreements with Total E&P Brasil Ltda
(TotalEnergies), and BP Energy do Brasil Ltda (BP) regarding the participations of these companies in blocks located in
ultra-deep waters in northern Brazil. TotalEnergies was the operator in 5 blocks with a 40% interest, while Petrobras
and BP had 30% each one. BP also had a 70% interest in another block, also a partner of Petrobras (30%). With the closing
of these agreements, Petrobras will hold 100% interest in these six blocks and become the sole operator.
As a result of these agreements, firmed between the parties and ANP in September 2021, Petrobras will receive
US$ 199 as a compensation for the total assumption of the minimum exploratory program, of which US$ 139 was
received at the closing of the operation, and the remaining balance to be received in June 2022.
The Company also registered an US$ 88 addition within intangible assets, measured at fair value, for the assumption of
participation in these concessions, without disbursement made by the Company.
Thus, the Company recognized a US$ 287 gain (including the compensation and the addition of assets) recognized in
other income and expenses.
Potiguar basin
In the last quarter of 2021, Petrobras and the ANP signed an amendment to the Concession Agreement relating to the
deep waters in the Potiguar Basin, for the total assignment of the partners interest to Petrobras (BP 40% e Petrogal
20%), which will hold a 100% interest in this area.
Thus, the Company recorded an US$ 1 addition in intangible assets and of US$ 64 within property, plant and equipment,
measured at fair value, due to the assumption of participation in the concession, and a US$ 65 gain within other income
and expenses, without cash effects.
24.3. Exploration rights returned to the Brazilian Agency of Petroleum, Natural Gas and Biofuels
- Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (ANP)
In 2021, 3 exploration areas in Santos and Potiguar basins were returned to the ANP (49 in 2020 in Camamu-Almada,
Espírito Santo, Jequitinhonha, Potiguar, Recôncavo, Pelotas, Pernambuco-Paraíba, Santos and Sergipe-Alagoas
basins), totaling US$ 3 (US$ 172 in 2020).
24.3.1. Accounting policy for intangible assets
Intangible assets are measured at the acquisition cost, less accumulated amortization and impairment losses.
F-75
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Internally-generated intangible assets are not capitalized and are expensed as incurred, except for development costs
that meet the recognition criteria related to the completion and use of assets, probable future economic benefits, and
others.
When the technical and commercial feasibility of oil and gas production is demonstrated for the first field in an area,
the value of the signature bonus is reclassified to property, plant and equipment at their full value. While they are in
intangible assets, they are not amortized. Other intangible assets with defined useful lives are amortized on a straight-
line basis over their estimated useful lives.
If, when defining the first field of a block, there are exploratory activities being carried out in different locations in the
block, so that oil and gas volumes can be estimated for other possible reservoirs in the area, then the value of the
signature bonus is partially reclassified to PP&E, based on the ratio between the volume of oil and gas expected (oil in
place - VOIP) of a specific reservoir and the total volume of oil and gas expected for all possible reservoirs in the area.
If exploratory activities in the remaining areas do not result in technical and commercial viability, the corresponding
value of the signature bonus is not written off, but transferred to PP&E and added to the value of the signature bonus
related to the location that was previously assessed as technically and commercially viable.
Intangible assets with an indefinite useful life are not amortized but are tested annually for impairment. Their useful
lives are reviewed annually.
25. Impairment
(Losses) / reversals
Property, plant and equipment
Intangible assets
Assets classified as held for sale
Impairment (losses) / reversals
Investments
Net effect within the statement of income
Losses
Reversals
2021
3,414
1
(225)
3,190
383
3,573
(654)
4,227
2020
(7,342)
(12)
15
(7,339)
(514)
(7,853)
(15,680)
7,827
2019
(2,882)
(1)
35
(2,848)
(4)
(2,852)
(3,662)
810
The Company annually tests its assets for impairment or when there is an indication that their carrying amount may not
be recoverable, or that there may be a reversal of impairment losses recognized in previous years.
During the third quarter of 2021, observing the oil and gas market scenario, the Company’s management reassessed
the Brent prices provided for in the 2021-2025 Strategic Plan (in force on that date) and updated the short-term
assumptions established in that plan, recognizing US$ 3,098 impairment reversals in that quarter.
On November 24, 2021, management concluded and approved its 2022-2026 Strategic Plan, considering a complete
update of economic assumptions, as well as its project portfolio and estimates of reserve volumes, which support the
impairment tests conducted in the last quarter of this year.
The oil and gas production estimated in the scope of this plan indicates a continuous growth focused on the
development of projects that generate higher value, with an increase in the participation of assets in the pre-salt layer,
which present lower lifting costs. During this period, 13 new production systems are expected to enter into operation,
all of which to be allocated to deep and ultra-deep water projects.
F-76
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
25.1. Impairment of property, plant and equipment and intangible assets
Asset or CGU by nature (*)
Property, plant and equipment and intangible assets
Producing properties relating to oil and gas activities in Brazil
(several CGUs)
Oil and gas production and drilling equipment in Brazil
Second refining unit in RNEST
Others
Property, plant and equipment and intangible assets
Producing properties relating to oil and gas activities in Brazil
(several CGUs)
Oil and gas production and drilling equipment in Brazil
Second refining unit in RNEST
Comperj
Corporate facilities
Others
Property, plant and equipment and intangible assets
Producing properties relating to oil and gas activities in Brazil
(several CGUs)
Oil and gas production and drilling equipment in Brazil
Second refining unit of RNEST
Comperj
Transpetro’s fleet of vessels
Fertilizer plant - UFN III
Oil and gas production and drilling equipment abroad
Others
Carrying
amount
Recoverable
amount (**)
Impairment
(losses) /
reversals
23,734
250
404
36,396
-
767
42,421
120
410
266
152
105,532
314
1,043
330
1,347
204
343
33
40,511
−
388
526
−
196,994
−
498
117
1,453
−
15
−
3,373
(250)
359
(67)
3,415
(7,316)
(119)
(22)
260
(161)
2
(7,354)
(1,859)
(307)
(534)
(209)
103
(200)
(333)
(67)
(3,406)
Business
segment Comments
2021
E&P
E&P
RT&M
Several
item (a1)
item (b1)
item (c1)
2020
E&P
E&P
RT&M
RT&M
Corporate, others
Several
item (a2)
item (b2)
item (c2)
item (d1)
item (e)
2019
item (a3)
item (b3)
item (c3)
item (d2)
item (f)
item (g)
item (h)
E&P
E&P
RT&M
RT&M
RT&M
RT&M
E&P
Several
(*) It only includes carrying amounts and recoverable amounts of impaired assets or assets for which reversals were recognized.
(**) The recoverable amounts of assets for impairment computation were their value in use, except for assets held for sale, for which is used fair value.
For impairment testing purposes, the Company bases its cash flow projections on:
•
•
•
The estimated useful life of the asset or assets grouped into the CGU, based on the expected use of those assets,
considering the Company’s maintenance policy;
Assumptions and financial budgets/forecasts approved by management for the period corresponding to the
expected life cycle of each different business; and
Pre-tax discount rates derived from the Company’s post-tax weighted average cost of capital (WACC), adjusted by
specific risk-premiums in case of projects postponed for an extended period, or specific country-risks, in case of
assets abroad. The use of post-tax discount rates in determining value in use does not result in materially different
recoverable amounts if pre-tax discount rates had been used.
25.1.1. Planning assumptions used in impairment testing
The cash flow projections used to measure the value in use of the CGUs at December 31, 2021, were mainly based on
the following updated assumptions for average Brent prices and Brazilian real/U.S. dollar average exchange rates:
F-77
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
2021-2025 Strategic Plan (*)
Average Brent (US$/barrel)
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate
2022
72
5.40
2023
65
5.33
2024
60
5.19
2025
55
5.15
2026
55
5.14
Long term
Average
55
5.08
(*) In the impairment testing in the third quarter, projected average Brent prices were US$ 69.40 for 2021 and US$ 69.20 for 2022, kept constant for the other years.
At December 31, 2020, average Brent prices and Brazilian real/U.S. dollar average exchange rates used were:
Average Brent (US$/barrel)
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate
2021
2022
2023
2024
45
5.50
45
4.69
50
4.46
50
4.28
2025
50
4.07
Long term
Average
50
3.76
Post-tax discount rates, excluding inflation, applied in the tests were:
Activity
Producing properties relating to oil and gas activities in Brazil
RT&M in Brazil
RT&M in Brazil – postponed projects
Gas logistics
Transport in Brazil
25.1.2. Revision of Cash Generating Units
12.31.2021
6.4% p.a.
5.5% p.a.
6.2% p.a.
5.4% p.a.
4.9% p.a.
12.31.2020
7.1% p.a.
6.1% p.a.
7.4% p.a.
6.4% p.a.
5.4% p.a.
During 2021, management identified and assessed the following changes in CGUs:
E&P Segment
(i)
(ii)
(iii)
(iv)
(v)
Annexation of the following areas approved by the ANP: Guriatã, Guriatã Sul, Canário da Terra, Canário da Terra
Sul, Riacho da Barra and Rio Sauípe fields to Fazenda Imbé concession; and of Jandaia and Rio da Serra fields
to the Tangará concession. As a result, assets of these fields were incorporated by Imbé and Tangará CGUs;
Closing of the divestment process of the following concessions (with their related assets written-off): São
Mateus 8, Ventura and Miranga group of Fields, and of several other individual fields;
Return of the following concessions to the ANP (with their related assets written-off): Bijupirá and Salema
group of fields (CGU Bijupirá-Salema) and Merluza and Lagosta group of fields (CGU Merluza);
North group of fields: exclusion of platforms P-26, P-32 and P-33 from this CGU, due to management's decision
to sell and definitively cease the operations of the platforms in the Marlim field;
Creation of the CGU SEAP I, comprising Agulhinha, Agulhinha Oeste, Cavala and Palombeta fields and of the
CGU SEAP II, comprising Budião, Budião Noroeste and Budião Sudeste fields, arising from the successful
appraisal for discoveries in blocks BM-SEAL-4, BM-SEAL-4A, BM-SEAL-10 and BM-SEAL-11.
Gas & Power Segment
(i)
Exclusion of Natural Gas CGU: Management reassessed the interdependence of the cash flows of assets in the
natural gas business in view of the new regulatory framework for the sector, deciding to exclude the Natural
Gas CGU and to create new CGUs: Integrated Processing System CGU; Cacimbas UGC UTG; Sul Capixaba CGU;
Guamaré CGU; Urucu CGU and Catu CGU.
(ii)
Exclusion of the thermoelectric power plants Arembepe, Muryci and Bahia 1 from the CGU Power, due to the
closing of the sale on December 6, 2021, with the consequent write-off of the related assets.
F-78
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
RT&M Segment
(i)
(ii)
(iii)
CGU Downstream: exclusion of refineries Landulpho Alves (RLAM) and Isaac Sabbá (REMAN) from this CGU, due
to the divestment process. The sale of RLAM was closed in November 2021 and its assets were written-off, while
the closing for the sale of REMAN is still pending at December 31, 2021, and its assets are held for sale (see note
31.1);
CGU SIX: in November 2021, the Company signed an agreement for the sale of Shale Industrialization Unit (SIX),
in the state of Paraná, when these assets were classified as held for sale (see note 31.1);
CGU Comperj: exclusion of this CGU, comprising assets from the first refining unit of the of Petrochemical
Complex of Rio de Janeiro, due to the cancellation of this project, with part of the remaining assets incorporated
by the CGU Itaboraí Utilities, composed of assets destined to support the natural gas processing plant (UPGN)
of the route 3 integrated project; and part incorporated by the CGU GasLub, referring to the set of assets that
remain hibernated and that are under evaluation for use in other projects.
Information on key assumptions for impairment testing and on CGU definitions is presented in notes 4.2 and 4.3,
respectively.
25.1.3. Information on the main impairment losses
Information on the main impairment losses and reversals of property, plant and equipment and intangible assets are
described below:
a1) Producing properties in Brazil – 2021
Impairment reversals on producing properties in Brazil amount to US$ 3,373, most of it related to CGUs of producing
properties, reflecting the revision on the key assumptions of the Strategic Plan, mainly the increase in average Brent
prices.
The following table presents significant impairment reversals for 2021:
CGU
Roncador
North
Carmópolis
Berbigão-Sururu
Albacora Leste
Marlim Leste
Papa-Terra
Uruguá
Marlim Sul
Others (*)
Total
(*) It comprises 39 CGUs.
Basin
Campos basin
Campos basin
Sergipe basin
Santos basin
Campos basin
Campos basin
Campos basin
Santos basin
Campos basin
Several
a2) Producing properties in Brazil – 2020
Area
Post-Salt
Post-Salt
Onshore and shallow-water
Pre-Salt
Post-Salt
Post-Salt
Post-Salt
Post-Salt
Post-Salt
Several
Impairment reversals
860
Carrying amount after
impairment
7,075
714
611
388
369
48
41
35
32
275
3,373
4,861
840
3,072
1,502
2,435
39
82
5,002
2,023
26,931
Impairment losses on producing properties in Brazil amounted to US$ 7,316, most of it related to CGUs that provided
service in E&P fields, also reflecting the hibernation of producing assets on the first quarter of 2020, as well as the
revision on the key assumptions of the Strategic Plan, mainly expected Brent prices, depreciation of Brazilian real
against U.S. dollar, economic slowdown and reduction on demand for oil and oil products.
F-79
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
a3) Producing properties in Brazil – 2019
Impairment assessment for producing properties in Brazil resulted in US$ 1,859 impairment losses, mainly comprising:
•
•
Impairment losses in the amount of US$ 2,092, mainly related to the CGUs of Papa-Terra (US$ 369), Uruguá group
(US$ 344), CVIT group (US$ 206), Corvina (US$ 158), Piranema (US$ 128), Camorim (US$ 109), Pirambu (US$ 102),
Merluza group (US$ 98), Miranga group (US$ 76), Guaricema (US$ 76) and Água Grande group (US$ 72), mainly due
to the decrease in estimates for the average Brent price on the projection horizon, to higher estimates for future
decommissioning costs, due to the reduction in risk-free discount rates, and to changes in the schedule for removal
and treatment of oil and gas production facilities;
Impairment reversals totaling US$ 53 primarily relating to Peroá group (US$ 30) and Castanhal (US$ 12), mainly
due to gains in the production curve and accelerated depreciation tax benefit related the new tax model for oil and
gas activities.
b1) Oil and gas production and drilling equipment in Brazil - 2021
Impairment losses of US$ 250 relates to equipment and structures in the E&P segment, mainly due to the decision to
cease the use of platforms P-26 and P-33 in the Marlim field, leading to the recognition of losses in the amount of
US$ 210.
b2) Oil and gas production and drilling equipment in Brazil - 2020
Impairment losses of US$ 120 relates to equipment and structures in the E&P segment, mainly due to the decision to
cease with the Estaleiro Inhaúma project, leading to the recognition of losses in the amount of US$ 69.
b3) Oil and gas production and drilling equipment in Brazil - 2019
In 2019, the Company decided to discontinue the use of P-37 platform in Marlim field, resulting in its exclusion of North
group and its independent assessment for impairment, resulting in losses in the amount of US$ 307.
c1) Second refining unit of RNEST – 2021
The cash flows to measure the value in use of the second refining unit of RNEST take into account the decision to resume
the works and to start operating in August 2027, according to the 2022-2026 Strategic Plan, triggering impairment
reversals in the amount of US$ 359.
c2) Second refining unit of RNEST – 2020
The cash flows to measure the value in use of the second refining unit of RNEST took into account the postponing of
the beginning of the operation, triggering impairment losses in the amount of US$ 22.
c3) Second refining unit of RNEST – 2019
The cash flows to measure the value in use of the second refining unit of RNEST took into account the postponing of
the beginning of the operation, triggering impairment losses in the amount of US$ 534.
d1) Comperj – 2020
Impairment reversals amounted to US$ 260, mainly due to the reduction in the estimated investments for the
completion of the project relating to the first refining unit facilities, resulting from the depreciation of the Brazilian Real
in relation to the U.S. Dollar, as well as to optimization measures adopted.
F-80
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
d2) Comperj – 2019
Impairment losses amounted to US$ 209, arising from the investments made due to the Conduct Adjustment
Declaration (“TAC”) to close the public civil action requesting the environmental licensing, as well as to the investments
made in the first refining unit facilities, which are part of the infrastructure for transporting and processing natural gas
from the pre-salt layer in the Santos Basin.
e) Corporate facilities – 2020
The Company decided to hibernate a corporate building, in the state of Bahia, due to its permanent vacancy, resulting
in a US$ 161 impairment loss on the right of use asset.
f) Oil and gas production and drilling equipment abroad – 2019
In January 2020, the sale of drillship Sonda Vitória 10,000 (NS-30), owned by Drill Ship International B.V. - DSI, a
subsidiary of PIB BV, was closed. Thus, impairment losses in the amount of US$ 333 were recognized, due to the
difference between the expected sale value and its carrying amount.
g) Transpetro’s fleet of vessels - 2019
The depreciation of Reais against U.S. Dollars used in the projections of the Strategic Plan 2020-2024, compared to the
assumptions used in the previous plan, had a positive effect on the cash generation projected in Reais for the CGU,
given that freight rates (cash inflows) are quoted in U.S. dollars. Thus, a US$ 103 reversal of impairment was accounted
for in 2019.
h) Fertilizer plant - UFN III – 2019
Following the Company’s decision to quit the conclusion of this plant located in the state of Mato Grosso do Sul, this
asset was written-off, in the amount of US$ 200.
25.1.4. Assets most sensitive to future impairment
Whenever the recoverable amount of an asset or CGU falls below the carrying amount, an impairment loss is recognized
to reduce the carrying amount to the recoverable amount. The following table presents the assets and CGUs most
sensitive to future impairment losses, presenting recoverable amounts close to their current carrying amounts.
The analysis presented below considers CGUs with estimated impairment losses or reversals if there was a 10%
reduction or increase in their recoverable amounts, arising from changes in material assumptions:
F-81
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Potential impairment losses - 10% reduction in the recoverable amount
Assets with impairment losses
Producing properties relating to oil and gas activities in Brazil (2 CGUs)
Second refining unit of RNEST
Itaboraí utilities
Potential impairment reversals - 10% increase in the recoverable amount
Assets with impairment losses
Producing properties relating to oil and gas activities in Brazil (2 CGUs)
Second refining unit of RNEST
Itaboraí utilities
Business
segment
Carrying
amount
Recoverable
amount
Sensitivity
E&P
RT&M
G&P
178
769
763
196
690
686
1,710
1,572
18
79
77
174
Business
segment
Carrying
amount
Recoverable
amount
Sensitivity
(*)
E&P
RT&M
G&P
178
769
763
196
844
839
1,710
1,879
18
75
76
169
(*) When calculating a 10% increase in the recoverable amount, the amount of impairment to be reversed is limited to the accumulated impairment of the CGU or to their
recoverable amounts, whichever is lower.
25.1.5. Accounting policy for impairment of property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets with definitive lives are tested for impairment when there is an
indication that the carrying amount may not be recoverable. Assets are assessed for impairment at the smallest
identifiable group that generates largely independent cash inflows from other assets or groups of assets (CGU). Note
4.3 presents detailed information about the Company’s CGUs.
Assets related to development and production of oil and gas assets (fields or group of fields) that have indefinite useful
lives, such as goodwill, are tested for impairment at least annually, irrespective of whether there is any indication of
impairment.
Considering the existing synergies between the Company’s assets and businesses, as well as the expectation of the use
of its assets for their remaining useful lives, value in use is generally used by the Company for impairment testing
purposes. When specifically indicated, the Company assesses differences between its assumptions and assumptions
that would be used by market participants in the determination of the fair value of an asset or CGU.
Reversal of previously recognized impairment losses may occur for assets other than goodwill.
F-82
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
25.2. Assets classified as held for sale
Asset or CGU by nature (*)
Thermoelectric power plants
Investment in Breitener
Oil and gas production and drilling equipment in Brazil
Refineries and associated logistics assets
Others
Total
Producing properties relating to oil and gas activities
Cartola and Ataulfo Alves vessels
Others
Total
Producing properties - Pampo and Enchova fields
Producing properties - Frade field
Producing properties - Maromba field
PO&G BV
Others
Total
Carrying
amount
Recoverable
amount (**)
Impairment
(losses) /
reversals
Business
segment
91
107
47
255
−
80
328
19
−
444
592
12
44
-
218
279
19
808
105
68
354
468
(79)
(67)
(46)
(37)
5
(224)
67
(62)
10
15
494
84
67
(89)
(521)
35
2021
G&E
G&E
E&P
RT&M
2020
E&P
RT&M
2019
E&P
E&P
E&P
E&P
Several
(*) It only includes carrying amounts and recoverable amounts of impaired assets or assets for which reversals were recognized.
(**) The recoverable amounts of assets for impairment computation were their value in use, except for assets held for sale, for which is used fair value.
In 2021, the Company recognized losses on assets held for sale, in the amount of US$ 224, arising from the assessment
at the fair value of assets, net of disposal expenses, mainly due to:
i. Camaçari power plants – following the closing of the sale of thermoelectric power plants Arembepe, Muryci and Bahia
1, located in Camaçari, in the state of Bahia, these assets were measured at fair value net of selling expenses, and a
US$ 79 impairment loss was accounted for in the second quarter of 2021.
ii. Breitener Energética S.A – following the sale of this company, in the state of Amazonas, Petrobras recognized a
US$ 67 loss;
iii. Oil and gas production and drilling equipment in Brazil: approval for the disposal of P-32 platform, resulting in the
recognition of US$ 46 losses; and
iv. Refineries and associated logistics assets: following the approval for the sale of refinery Isaac Sabbá (REMAN), in
the state of Amazonas, a US$ 12 impairment loss was recognized, and of the refinery Shale Industrialization Unit
(SIX), in the state of Paraná, a US$ 25 impairment loss was recognized.
In 2020, the Company recognized reversals in the amount of US$ 17 arising from the fair value of assets, net of disposal
expenses, with the most significant relating to:
i. the sale of Recôncavo group of fields (14 concessions located onshore and in shallow waters) in the amount of
US$ 35;
ii. the sale of Rio Ventura group of fields (8 concessions located onshore) in the amount of US$ 18;
iii. the sale of Fazenda Belém group of fields, in the amount of US$ 14.
These reversals were partially offset by a US$ 62 impairment loss relating to Cartola and Ataulfo Alves vessels.
F-83
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
In 2019, as a result of the sale of several assets of the E&P segment, the Company recognized reversals in the amount
of US$ 558, considering the net fair value of disposal expenses, mainly: US$ 494 relating to Pampo and Enchova Project
(10 concessions located in shallow waters); US$ 84 relating to Bispo project (in Frade field); US$ 67 relating to
Mangalarga project (in Maromba field), partially offset by a US$ 89 impairment loss recognized on the sale of Petrobras
Oil & Gas B.V. (PO & GBV).
The accounting policy for assets and liabilities held for sale is set out in note 31.
25.3. Investments in associates and joint ventures (including goodwill)
Value in use is generally used for impairment test of investments in associates and joint ventures (including goodwill).
The basis for estimates of cash flow projections includes: projections covering a period of 5 to 12 years, zero-growth
rate perpetuity, budgets, forecasts and assumptions approved by management and a post-tax discount rate derived
from the WACC or the Capital Asset Pricing Model (CAPM) models, specific for each case.
25.3.1. Accounting policy for impairment of associates and joint ventures
Investments in associates and joint ventures are tested individually for impairment. When performing impairment
testing of an equity-accounted investment, goodwill, if it exists, is also considered part of the carrying amount to be
compared to the recoverable amount.
Except when specifically indicated, value in use is generally used by the Company for impairment testing purposes in
proportion to the Company’s interests in the present value of future cash flow projections via dividends and other
distributions.
25.3.2. Investment in publicly traded associates
a) Braskem S.A.
Braskem’s shares are publicly traded on stock exchanges in Brazil and abroad. As of December 31, 2020, the quoted
market value of the Company’s investment in Braskem was US$ 2,943 based on the quoted values of both Petrobras’
interest in Braskem’s common stock (47% of the outstanding shares), and preferred stock (22% of the outstanding
shares). However, there is extremely limited trading of the common shares, since non-signatories of the shareholders’
agreement hold only approximately 3% of the common shares.
Given the operational relationship between Petrobras and Braskem, the recoverable amount of the investment for
impairment testing purposes was determined based on value in use, considering future cash flow projections and the
manner in which the Company can derive value from this investment via dividends and other distributions to arrive at
its value in use. As the recoverable amount was higher than the carrying amount, no impairment losses were recognized
for this investment.
Cash flow projections to determine the value in use of Braskem were based on estimated prices of feedstock and
petrochemical products reflecting international trends on prices, petrochemical products sales volume estimates
reflecting projected Brazilian and global G.D.P. growth, post-tax discount rate (excluding inflation) of 6.2% p.a., (WACC),
and decreases in the EBITDA margin during the growth cycle of the petrochemical industry in the next years and
increases in the long-term. Estimated exchange rates and Brent prices are the same as those set out in note 27.1.1.
On December 16, 2021, Petrobras' Board of Directors approved the model for the sale of up to 100% of its preferred
shares of Braskem, to be conducted through a secondary public offering (follow-on), according to an agreement
entered into with Novonor (Braskem's parent company).
On January 17, 2022, Petrobras filed a follow-on request with the CVM. However, on January 28, 2022, the offer was
canceled due to unstable market conditions, which resulted in demand and price levels unfavorable for the transaction.
F-84
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
b) Petrobras Distribuidora S.A. (renamed Vibra Energia S.A.)
On August 26, 2020, the Company’s Board of Directors approved the disposal of the remaining interest in this associate.
Accordingly, it was tested for impairment, when the recoverable value of this investment took into account the value in
use, including the disposal value, considering the intention to sell the shares. As the value in use of this investment was
lower than the book value, an impairment loss of US$ 144 was recognized in the third quarter of 2020. The post-tax
discount rate in constant currency applied was 11.1% p.a., considering the cost of equity.
On June 30, 2021, the Company’s Board of Directors approved the price per common share of BR Distribuidora in the
amount of US$ 5.20 (R$ 26.00) for the secondary public offering (follow on) of these shares, totaling US$ 2,252
(R$ 11,264 million), net of transaction costs.
Accordingly, considering the sale of the shares and the cash flows arising from this sale, a US$ 404 impairment reversal
was accounted for within results of equity-accounted investments, in the second quarter of 2021. The transaction was
closed on July 5, 2021 (note 31.2).
25.3.3. Investments in state-controlled natural gas distributors
On July 28, 2021, management approved the sale of its entire interest (51%) in Petrobras Gás S.A. – Gaspetro (see note
31.1), which holds interests in 19 companies that explore with exclusivity natural gas distribution in several Brazilian
states. This investment was classified as held for sale, with no indication of impairment losses.
25.3.4. Impairment losses in other equity-accounted investments
In 2021, the Company recognized impairment losses in other equity-accounted investments the amount of US$ 21. In
2020, the Company recognized impairment losses amounting to US$ 59, mainly in joint venture MP Gulf of Mexico
(US$ 59), due to the revised Brent prices projections (with a 5.4% p.a. post-tax discount rate in constant currency,
applied for the E&P segment in the USA), and in BSBIOS (US$ 22), resulting from the classification of this investment as
held for sale, after the signing of the purchase and sale agreement by the Company’s subsidiary Petrobras
Biocombustível with RP Participações em Biocombustíveis, in December 2020. In 2019, the Company recognized a US$ 4
loss relating to other equity-accounted investments.
26. Exploration and evaluation of oil and gas reserves
The exploration and evaluation activities include the search for oil and gas reserves from the date of obtaining the legal
rights to explore a specific area to the declaration of the technical and commercial viability of the reserves.
Changes in the balances of capitalized costs directly associated with exploratory wells pending determination of proved
reserves and the balance of amounts paid for obtaining rights and concessions for exploration of oil and natural gas
(capitalized acquisition costs) are set out in the following table:
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs (*)
Property plant and equipment
Opening Balance
Additions
Write-offs
Transfers
Cumulative translation adjustment
Closing Balance
Intangible Assets (**)
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs
2021
2020
3,024
459
(188)
(1,097)
(204)
1,994
2,576
4,570
4,262
428
(197)
(494)
(975)
3,024
14,526
17,550
(*) Amounts capitalized and subsequently expensed in the same period have been excluded from this table.
(**) The amount of the signature bonuses paid in the Surplus Oil of Transfer of Rights Agreement was transferred from intangible assets to property, plant and
equipment after the Búzios Co-participation Agreement came into effect, as described in Note 24.1.
F-85
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Exploration costs recognized in the statement of income and cash used in oil and gas exploration and evaluation
activities are set out in the following table:
Exploration costs recognized in the statement of income
Geological and geophysical expenses
Exploration expenditures written off (includes dry wells and signature bonuses)
Contractual penalties
Other exploration expenses
Total expenses
Cash used in:
Operating activities
Investment activities
Total cash used
2021
2020
2019
358
248
47
34
687
393
555
948
296
456
38
13
803
307
532
839
477
308
4
10
799
0
485
17,265
17,750
Exploration expenditures written off arise from projects without economic feasibility. In 2021, write-offs were mainly
related to exploratory wells in the concessions of Golfinho and Marlim Leste and in the Campos and Potiguar basins.
In 2021, the Company recognized provisions arising from potential contractual penalties for non-compliance with
minimum percentages of local content in 158 blocks for which the exploratory phases were concluded (186 blocks in
2020).
26.1. Accounting policy for exploration and evaluation of oil and gas reserves
The costs incurred in connection with the exploration, appraisal and development of crude oil and natural gas
production are accounted for using the successful efforts method of accounting, as set out below:
• Geological and geophysical costs related to exploration and appraisal activities incurred until economic and technical
feasibility can be demonstrated are expensed.
• Amounts paid for obtaining concessions for exploration of crude oil and natural gas (capitalized acquisition costs) are
initially capitalized as intangible assets and are transferred to property, plant and equipment once the technical and
commercial feasibility can be demonstrated. More information on intangible assets accounting policy, see note 24.
• Costs directly attributable to exploratory wells, including their equipment and installations, pending determination of
proved reserves are capitalized within property, plant and equipment. In some cases, exploratory wells have discovered
oil and gas reserves, but at the moment the drilling is completed they are not yet able to be classified as proved. In such
cases, the expenses continue to be capitalized if the well has found a sufficient quantity of reserves to justify its
completion as a producing well and progress on assessing the reserves and the economic and operating viability of the
project is under way (for more information see note 26.2).
• An internal commission of technical executives of the Company reviews these conditions monthly for each well, by
analysis of geoscience and engineering data, existing economic conditions, operating methods and government
regulations. For additional information on proved reserves estimates, see note 4.1.
• Costs related to exploratory wells drilled in areas of unproved reserves are charged to expense when determined to be
dry or uneconomic by the aforementioned internal commission.
• Costs related to the construction, installation and completion of infrastructure facilities, such as drilling of
development wells, construction of platforms and natural gas processing units, construction of equipment and facilities
for the extraction, handling, storing, processing or treating crude oil and natural gas, pipelines, storage facilities, waste
disposal facilities and other related costs incurred in connection with the development of proved reserve areas are
capitalized within property, plant and equipment.
F-86
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
26.2. Aging of Capitalized Exploratory Well Costs
The following tables set out the amounts of exploratory well costs that have been capitalized for a period of one year
or more after the completion of drilling, the number of projects whose costs have been capitalized for a period greater
than one year, and an aging of those amounts by year (including the number of wells relating to those costs):
Aging of capitalized exploratory well costs (*)
Exploratory well costs capitalized for a period of one year
Exploratory well costs capitalized for a period greater than one year
Total capitalized exploratory well costs
Number of projects relating to exploratory well costs capitalized for a period greater than one year
2020
2017
2016 and previous years
Exploratory well costs that have been capitalized for a period greater than one year
(*) Amounts paid for obtaining rights and concessions for exploration of oil and gas (capitalized acquisition costs) are not
2021
136
1,858
1,994
22
2020
118
2,906
3,024
38
Capitalized
costs (2021)
49
39
1,770
1,858
Number of
wells
2
1
31
34
Exploratory well costs that have been capitalized for a period greater than one year since the completion of drilling
relate to 22 projects comprising (i) US$ 1,858 for wells in areas in which there has been ongoing drilling or firmly planned
drilling activities in the near term and for which an evaluation plan (“Plano de Avaliação”) has been submitted for
approval by ANP; and (ii) US$ 415 relate to costs incurred to evaluate the reserves and their potential development.
27. Collateral for crude oil exploration concession agreements
The Company has granted collateral to ANP in connection with the performance of the Minimum Exploration Programs
established in the concession agreements for petroleum exploration areas in the total amount of US$ 1,574 (US$ 1,631
as of December 31, 2020) of which US$ 1,574 were still in force as of December 31, 2021 (US$ 1,543 as of December 31,
2020), net of commitments undertaken. The collateral comprises crude oil from previously identified producing fields,
pledged as collateral, amounting to US$ 1,243 (US$ 1,256 as of December 31, 2020) and bank guarantees of US$ 331
(US$ 287 as of December 31, 2020).
28. Partnerships in E&P activities
In line with its strategic objectives, Petrobras operates in association with other companies in partnerships in Brazil as
holder of oil and natural gas exploration and production rights in concessions and production sharing regimes.
As of December 31, 2021, the Company holds interests in 85 partnerships with 37 companies, among which Petrobras is
the operator in 55 (in 2020, 98 partnerships with 40 companies and operator in 55). There were no new partnerships
signed in 2021. The partnerships formed in 2020 are described below:
Consortium
Location
%
Petrobras
%
Partners
Operator
Year
Additional Information
ANP Bonus
Petrobras portion
(*)
ARAM (*)
BT-SEAL-13A
BÚZIOS – ECO (*)
Santos basin
Sergipe
Alagoas basin
Santos basin
C-M-477
Campos basin
80%
50%
90%
70%
CNODC – 20%
Petrogal –
50%
CNODC – 5%
CNOOC – 5%
BP Energy do
Brasil – 30%
Petrobras
Petrogal
2020
2020
Production sharing
Concession – split
496
N/A
Petrobras
2020
Production sharing
14,985
Petrobras
2020
Concession
N/A
(*) The bonuses referring to Aram and Búzios were paid in 2019, the year in which the respective rounds were held - First Round of Bidding for Surplus
Transfer of Rights and 6th Round of Bidding in the Production Sharing Regime.
F-87
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Partnerships brings benefits through risk sharing, increased investment capacity, technical and technological
interchange, aiming at the growth in oil and gas production. The following table presents the production referring to
Petrobras's participation in the main fields in which the Company is the operator in the partnership:
Field
Tupi (BMS-11)
BÚZIOS – ECO
Roncador
Sapinhoá (BMS-9)
Location
Santos basin pre-salt
Santos basin
Campos basin
Santos basin pre-salt
Tartaruga Verde
Campos basin
%
Petrobras
65%
90%
75%
45%
50%
Sururu
Santos basin pre-salt
42.5%
Albacora Leste
Berbigão
Campos basin
Santos basin pre-salt
90%
42.5%
Mero
Santos basin pre-salt
40%
Oeste de Atapu
Santos basin pre-salt
42.5%
Total
%
Partners
Shell – 25%
Petrogal – 10%
CNODC – 5%
CNOOC – 5%
Equinor – 25%
Shell – 30%
Repsol Sinopec – 25%
Petronas – 50%
Shell – 25%
Total – 22.5%
Petrogal – 10%
Repsol Sinopec - 10%
Shell – 25%
Total – 22.5%
Petrogal – 10%
Total – 20%
Shell – 20%
CNODC – 10%
CNOOC – 10%
Shell – 25%
Total – 22.5%
Petrogal – 10%
Petrobras production
portion in 2020 (kboed)
756.0
Regime
Concession
150.8
Production sharing
116.1
114.8
43.0
26.2
24.9
18.7
Concession
Concession
Concession
Concession
Concession
Concession
10.4
Production sharing
10.4
Concession
1271.3
28.1. Accounting policy for joint operations
The E&P partnerships are classified as joint operations, where the Company recognizes according to its interests: i) its
assets, including its stake in any assets held jointly ii) its liabilities, including its stake in any liabilities assumed jointly;
iii) its sales revenues corresponding to the proportion of its participation in the production resulting from the joint
operation; and iv) its expenses, including the portion of any expenses incurred together.
Assets, liabilities, revenues and expenses relating to the participation in a joint operation are accounted for in
accordance with the specific accounting policies applicable to assets, liabilities, revenues and expenses.
28.2. Unitization Agreements
Petrobras has Production Individualization Agreements (AIP) signed in Brazil with partner companies in E&P consortia,
as well as contracts resulting from divestment operations and strategic partnerships related to these consortia. These
agreements result in reimbursements payable to (or receivable from) partners regarding expenses and production
volumes mainly related to Berbigão, Sururu, Albacora Leste, Tartaruga Verde and Mero.
Berbigão, Sururu, Albacora Leste and others
The table below presents changes in the reimbursements payable relating to these fields:
F-88
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Opening balance
Additions/(Write-offs) on PP&E
Payments made
Other income and expenses
Cumulative translation adjustments
Closing balance
12.31.2021
12.31.2020
370
(64)
−
84
(26)
364
113
278
(17)
11
(15)
370
As of December 31, 2021, Petrobras has reimbursements payable amounting to US$ 364 (US$ 370 on December 31,
2020). In 2021, these agreements resulted in additions and write-offs in PP&E, in addition to other income and expenses,
reflecting the best available estimate of the assumptions used in the calculation base and the sharing of assets in areas
to be equalized.
Agreements concluded
a) Mero, Alagamar, Upanema, Brava and pre-salt of Albacora
In December 2021, several Agreements for the Equalization of Expenses and Volumes (AEGV) were signed with the
partners Shell, Total, Sonangol, CNODC and CNOOC and PPSA, referring to the Mero, Alagamar, Upanema, Brava and
Pre-Salt of Albacora, which resulted in the total amount receivable of US$ 86, of which US$ 8 was recognized within
other income and expenses in 2021.
In the AEGV relating to Mero, Brava and Albacora pre-salt layer, the PPSA, representing the Brazilian Federal
Government, will pay US$ 79 to Petrobras through a share of production over the next years. Regarding the pre-salt of
Albacora, the settlement will begin after the approval of the unitization agreement by the ANP.
28.3. Accounting Policy for unitization agreements
A unitization agreement occurs when a reservoir extends across two or more license or contract areas. In this case,
partners pool their individual interests in return for an interest in the overall unit and determine their new stake in the
single producing unit.
Events that occurred prior to the unitization agreement may lead to the need for compensation between the partners.
At the signing of the AIP, an amount to be reimbursed to the Company will be recognized as an asset only when there is
a contractual right to reimbursement or when the reimbursement is practically certain. An amount to be reimbursed by
the Company will be recognized as a liability when it derives from a contractual obligation or, when the outflow of funds
is deemed probable and the amount can be reliable estimated.
F-89
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
29. Investments
29.1. Information on direct subsidiaries, joint arrangements and associates
Subsidiaries
Petrobras International Braspetro - PIB BV
Petrobras Transporte S.A. - Transpetro
Petrobras Logística de Exploração e Produção S.A. - PB-LOG
Petrobras Gás S.A. - Gaspetro
Petrobras Biocombustível S.A.
Araucária Nitrogenados S.A.
Termomacaé S.A.
Braspetro Oil Services Company - Brasoil
Termobahia S.A.
Baixada Santista Energia S.A.
Petrobras Comercializadora de Energia S.A.. - PBEN
Fundo de Investimento Imobiliário RB Logística - FII
Procurement Negócios Eletrônicos S.A.
Petrobras Comercializadora de Gás e Energia e Participações S.A.
Transportadora Brasileira Gasoduto Bolívia - Brasil S.A.
Refinaria de Canoas S.A. (i)
Paraná Xisto S.A. (i)
Refinaria de Mucuripe S.A (i)
Refinaria de Manaus S.A. (i)
Associação Petrobras de Saúde
Joint operations
Fábrica Carioca de Catalizadores S.A. - FCC
Ibiritermo S.A.
Joint ventures
Logum Logística S.A.
Petrocoque S.A. Indústria e Comércio
Refinaria de Petróleo Riograndense S.A.
Brasympe Energia S.A.
Brentech Energia S.A.
Metanor S.A. - Metanol do Nordeste
Companhia de Coque Calcinado de Petróleo S.A. - Coquepar
Participações em Complexos Bioenergéticos S.A. - PCBIOS
Associates
Braskem S.A. (ii)
UEG Araucária Ltda.
Deten Química S.A.
Energética SUAPE II S.A.
Nitrocolor Produtos Químicos LTDA.
Bioenergética Britarumã S.A.
Transportadora Sulbrasileira de Gás - TSB
%
Main
business
segment
Petrobras'
ownership
%
Petrobras'
voting
rights
Share-
holders’
equity
(deficit)
Net
income
(loss) for
the year
Several
RT&M
E&P
Gas & Power
Corporate, others
Gas & Power
Gas & Power
Corporate, others
Gas & Power
Gas & Power
Gas & Power
E&P
Corporate, others
Corporate, others
Gas & Power
RT&M
RT&M
RT&M
RT&M
Corporate, others
RT&M
Gas & Power
RT&M
RT&M
RT&M
Gas & Power
Gas & Power
RT&M
RT&M
Corporate, others
RT&M
Gas & Power
RT&M
Gas & Power
RT&M
Gas & Power
Gas & Power
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
98.85
100.00
100.00
99.20
72.00
100.00
51.00
100.00
100.00
100.00
100.00
93.47
50.00
50.00
30.00
50.00
33.20
20.00
30.00
34.54
45.00
50.00
36.15
18.80
27.88
20.00
38.80
30.00
25.00
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
98.85
100.00
100.00
99.15
49.00
100.00
51.00
100.00
100.00
100.00
100.00
93.47
50.00
50.00
30.00
50.00
33.33
20.00
30.00
50.00
45.00
50.00
47.03
18.80
28.56
20.00
38.80
30.00
25.00
48,950
1,104
67
405
215
26
88
111
106
50
12
9
6
−
60
−
−
−
−
89
52
13
159
21
7
13
(4)
15
−
−
2,287
107
143
82
−
−
2
1,896
226
260
46
(45)
4
10
1
6
(4)
6
7
3
−
150
−
−
−
−
−
22
4
(21)
46
−
3
(22)
6
−
−
2,501
86
91
55
−
−
1
Country
Netherlands
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Cayman
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
(i) Companies legally established, with capital contribution of US$ 58 thousand for each company.
(ii) Equity and net income at September 30, 2021, most current public information.
In 2021, the Company sold some equity interests, including the following significant divestments:
•
•
•
Nova Transportadora do Sudeste S.A. (NTS) – selling of the remaining interest of 10%;
Petrobras Distribuidora S.A. (BR), now Vibra Energia S.A. - selling of the remaining interest of 37.5%;
Refinaria de Mataripe S.A., company that owns the Landulpho Alves Refinery (RLAM) and its associated logistics
assets in the state of Bahia - sale of 100% of the shares.
For more information on the operations mentioned above and other corporate transactions, see note 31;
The main investees of PIB BV are:
F-90
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
•
•
•
•
Petrobras Global Trading B.V. – PGT (100%, based in the Netherlands), dedicated to the trade of oil, oil products,
biofuels and LNG (liquefied natural gas), as well as to the funding of its activities in light of Petrobras;
Petrobras Global Finance B.V. – PGF (100%, based in the Netherlands); the finance subsidiary of Petrobras, raising
funds through bonds issued in the international capital market;
Petrobras America Inc. – PAI (100%, based in the United States), dedicated to trading and E&P activities (MP Gulf
of Mexico, LLC); and
PNBV (100%, based in the Netherlands), operates through joint operations in Tupi BV (67.59%), Guará BV (45%),
Agri Development BV (90%), Libra (40%), Papa Terra BV (62.5%), Roncador BV (75%), Iara BV (90.11%), Petrobras
Frade Inversiones SA (100%) and BJOOS BV (20%), dedicated to the construction and lease of equipment and
platforms for Brazilian E&P consortia.
29.2. Investments in associates and joint ventures
Balance at
12.31.2020
Investments
Transfer to
assets held
for sale
Restructuring,
capital decrease
and others
Results in
equity-
accounted
investments
CTA
OCI Dividends
Balance at
12.31.2021
813
366
298
82
−
67
2,455
176
1,862
417
5
3,273
9
−
−
−
−
9
15
−
−
15
−
24
(325)
−
(308)
−
−
(17)
(2,139)
−
(2,129)
(10)
−
(2,464)
−
−
−
−
−
−
(172)
(176)
−
4
−
202
122
38
31
(23)
34
1,405
18
450
937
−
1
1
(2)
2
23
(23)
(32)
(3)
(62)
33
(2)
(172)
1,607
(33)
(1)
−
−
−
−
(1)
23
−
−
23
−
22
(190)
(102)
(26)
(17)
−
(45)
(557)
(15)
(121)
(421)
−
(747)
509
387
−
98
−
24
998
−
−
998
3
1,510
Joint Ventures
MP Gulf of Mexico, LLC/PIB BV
State natural gas distributors
(Gaspetro)
Compañia Mega S.A. - MEGA
Petrochemical joint ventures
Other joint ventures
Associates
Nova Transportadora do Sudeste
BR (current Vibra Energia)
Others Associates (*)
Other investments
Total
(*) It includes Braskem.
29.3. Investments in non- consolidated listed companies
Associate
Braskem S.A.
Braskem S.A.
Thousand-share lot
12.31.2020
12.31.2021
Quoted stock exchange
prices (US$ per share)
12.31.2020
12.31.2021
Type
12.31.2021
Fair value
12.31.2020
212,427
75,762
212,427
75,762
Common
Preferred A
10.17
10.33
4.85
4.54
2,160
782
2,942
1,031
344
1,375
The fair value of these shares does not necessarily reflect the realizable value upon sale of a large block of shares.
Information on the main estimates used in the cash flow projections to determine the value in use of Braskem is set out
in Note 25.
29.4. Non-controlling interest
The total amount of non-controlling interest at December 31, 2021 is US$ 405 (US$ 528 in 2020) primarily comprising
US$ 199 of Gaspetro (US$ 213 in 2020), US$ 165 of FIDC (US$ 192 in 2020), and US$ 29 of Transportadora Brasileira
Gasoduto Brasil-Bolívia – TBG (US$ 39 in 2020) and Consolidated Structured Entities (US$ 65 in 2020).
F-91
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Condensed financial information is set out as follows:
Current assets
Long-term receivables
Investments
Property, plant and equipment
Other non-current assets
Current liabilities
Non-current liabilities
Shareholders' equity
Sales revenues
Net income
Increase (decrease) in cash and cash
equivalents
Gaspetro
Consolidated
Structured entities (*)
2021
462
−
−
−
−
462
58
−
404
462
132
47
2020
81
50
298
−
53
482
25
23
434
482
83
64
2021
−
−
−
−
−
−
−
−
−
−
−
(133)
2020
897
460
−
−
1
1,358
1,043
132
183
1,358
−
(195)
2021
11,969
−
−
−
−
11,969
4
−
11,965
11,969
−
454
FIDC
2020
3,951
−
−
−
−
3,951
1
−
3,950
3,951
−
416
2021
134
−
−
279
2
415
109
246
60
415
327
150
TBG
2020
228
−
−
313
3
544
206
257
81
544
310
111
7
(4)
(333)
227
(315)
2
42
25
Gaspetro, a Petrobras’ subsidiary, holds interests in several state distributors of natural gas in Brazil. The Company
holds 51% of interests in this indirect subsidiary. On July 28, 2021, the Company signed a contract for the sale of its
entire interest in Gaspetro. For more information see note 31.
The structured entities are Charter Development LLC (CDC), dedicated to construct, acquire and charter FPSOs, and
Companhia de Desenvolvimento e Modernização de Plantas Industriais (CDMPI), which is dedicated to coking and
hydrotreating of coke naphtha from Henrique Lage refinery (REVAP). On January 5, 2021, Petrobras acquired 100% of
shares of the structured entity Companhia de Desenvolvimento e Modernização de Plantas Industriais (CDMPI) for
US$ 9 thousand. On December 28, 2021, PIB BV acquired 100% of shares of Charter Development LLC - CDC for one
Dollar.
The Credit Rights Investment Fund (FIDC) is a fund mainly intended to securitize “performed” and “non-performed”
credits for operations carried out by the Company’s subsidiaries, aiming to optimize cash management.
TBG is an indirect subsidiary which operates in natural gas transmission activities mainly through Bolivia-Brazil Gas
Pipeline. The Company holds 51% of interests in this indirect subsidiary.
29.5. Summarized information on joint ventures and associates
The Company invests in joint ventures and associates in Brazil and abroad, whose activities are related to petrochemical,
refining, production, trade and logistics of oil products, gas distribution, biofuels, thermoelectric power plants, and
other activities. Condensed financial information is set out below:
F-92
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
2021
2020
Joint ventures Associates
Joint ventures Associates
MP Gulf of
Mexico,
LLC
Other
companies
abroad
In Brazil
In Brazil (*)
In Brazil
MP Gulf of
Mexico,
LLC
Other
companies
abroad
Current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Current liabilities
Non-current liabilities
Shareholders' equity
Non-controlling interest
832
371
461
460
2,124
728
517
874
5
2,124
Sales revenues
Net Income (loss) for the year
Ownership interest - %
(*) In 2021, balance mainly composed by Braskem.
2,947
156
20 to 83%
425
203
2,683
1
3,312
324
623
1,979
386
3,312
1,138
635
20%
253
11
195
1
460
126
36
196
102
460
7,308
2,334
6,845
539
17,026
4,632
10,967
1,688
(261)
17,026
795
385
492
482
2,154
573
661
887
33
2,154
−
91
2,056
93
34 to 45% 18.8 to 38% 23.5 to 83%
20,625
2,821
277
259
2,380
2
2,918
228
789
1,535
366
2,918
748
(607)
20%
In Brazil
9,968
3,941
9,914
761
24,584
7,279
15,246
2,358
(299)
24,584
137
4
62
−
203
58
17
81
47
203
−
9
28,425
(241)
34 to 45% 4.59 to 40%
29.6. Accounting policy for investments in subsidiaries, joint operations, joint ventures and
associates
Basis of consolidation
The consolidated financial statements include the financial information of Petrobras and the entities it controls
(subsidiaries), joint operations (at the level of interest the Company has in them) and consolidated structured entities.
Control is achieved when Petrobras: i) has power over the investee; ii) is exposed, or has rights, to variable returns from
involvement with the investee; and iii) has the ability to use its power to affect its returns.
Subsidiaries are consolidated from the date on which control is obtained until the date that such control no longer
exists, by using accounting policies consistent with those adopted by Petrobras. Note 11 sets out the consolidated
entities and other direct investees.
Investments structured through a separate vehicle are set up so that the voting rights, or similar rights, are not the
dominant factor to determine who controls the entity.
Intragroup balances and transactions, including unrealized profits arising from intragroup transactions, are eliminated
in the consolidation of the financial statements.
Investments in other companies
An associate is an entity over which the Company has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but not the ability to exercise control or joint
control over those polices. The definition of control is set out in note 4.1.
A joint arrangement is an arrangement over which two or more parties have joint control (pursuant to contractual
provisions). A joint arrangement is classified either as a joint operation or as a joint venture depending on the rights
and obligations of the parties to the arrangement.
F-93
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
In a joint operation, the parties have rights to the assets and obligations for the liabilities related to the arrangement,
while in a joint venture the parties have rights to the net assets of the arrangement. Some of the Company's activities
in the E&P segment are conducted through joint operations.
Profit or loss, assets and liabilities related to joint ventures and associates are accounted for by the equity method. In
a joint operation the Company recognizes the amount of its assets, liabilities and related income and expenses.
Accounting policies of joint ventures and associates have been adjusted, where necessary, to ensure consistency with
the policies adopted by Petrobras. Distributions received from an investee reduce the carrying amount of the
investment.
Business combination and Goodwill
A business combination is a transaction in which the acquirer obtains control of another business, regardless of it legal
form. Acquisitions of businesses are accounted for using the acquisition method when control is obtained.
Combinations of entities under common control are accounted for at cost. The acquisition method requires that the
identifiable assets acquired and the liabilities assumed be measured at the acquisition-date fair value, with limited
exceptions.
Goodwill is measured as the excess of the aggregate amount of: (i) the consideration transferred; (ii) the amount of any
non-controlling interest in the acquiree; and (iii) in a business combination achieved in stages, the fair value of the
acquirer’s previously held equity interest in the acquiree at the acquisition-date; over the net of the amounts of the
identifiable assets acquired and the liabilities assumed. When this aggregate amount is lower than the net of the
amounts of the identifiable assets acquired and the liabilities assumed, a gain on a bargain purchase is recognized in
the statement of income.
Changes in ownership interest in subsidiaries that do not result in loss of control of the subsidiary are equity
transactions. Any excess of the amounts paid/received, including directly attributable costs, over the carrying value of
the ownership interest acquired/disposed of is recognized in shareholders’ equity as changes in interest in subsidiaries.
30. Assets by operating segment
The segmented information reflects the decision-making process for resource allocation and performance evaluation
carried out by the Company’s Board of Executive Officers (as Chief Operating Decision Makers).
F-94
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Consolidated assets by operating segment - 12.31.2021
Current assets
Non-current assets
Long-term receivables
Investments
Property, plant and equipment
Operating assets
Under construction
Intangible assets
Total Assets
Consolidated assets by operating segment - 12.31.2020
Current assets
Non-current assets
Long-term receivables
Investments
Property, plant and equipment
Operating assets
Under construction
Intangible assets
Total Assets
Exploration
and
Production
Refining,
Transportation
& Marketing
Gas
&
Power
Corporate
and other
business
Elimina-
tions
6,034
107,112
5,042
393
99,033
87,210
11,823
2,644
113,146
5,333
114,947
4,745
390
95,222
84,916
10,305
14,590
120,280
12,691
21,697
2,212
970
18,419
16,086
2,333
96
34,388
3,838
6,751
322
119
6,241
3,739
2,502
69
10,589
8,170
1,975
23,879
2,539
400
20,842
18,304
2,537
98
32,049
8,321
976
607
6,614
4,300
2,315
124
10,296
13,259
8,639
6,758
28
1,637
1,373
264
216
21,898
15,337
15,473
11,938
1,876
1,523
1,238
286
136
30,810
(5,673)
−
−
−
−
−
−
−
(5,673)
(3,427)
2
2
−
−
−
−
−
(3,425)
Total
30,149
144,199
14,334
1,510
125,330
108,408
16,922
3,025
174,348
27,388
162,622
20,200
3,273
124,201
108,758
15,443
14,948
190,010
Accounting practices for segment information are described in note 12 – Net Income by Operating Segment.
31. Disposal of assets and other changes in organizational structure
The Company has an active partnership and divestment portfolio, which takes into account opportunities for disposal
of non-strategic assets in several areas in which it operates, whose development of transactions also depends on
conditions beyond the control of the Company. The divestment projects and strategic partnerships follow the
procedures aligned with the guidelines of the Brazilian Federal Auditor’s Office (Tribunal de Contas da União – TCU)
and the current legislation.
The major classes of assets and related liabilities classified as held for sale are shown in the following table:
Assets classified as held for sale
Cash and cash equivalents
Trade receivables
Inventories
Investments
Property, plant and equipment
Others
Total
Liabilities on assets classified as held for sale
Trade payables
Finance debt
Provision for decommissioning costs
Others
Total
E&P
RT&M Gas & Power
Corporate and
other business
Total
Total
12.31.2021
12.31.2020
-
-
-
-
1,841
-
1,841
-
-
833
-
833
−
−
68
−
134
1
203
-
-
-
-
−
13
31
5
210
−
187
446
2
-
-
31
33
−
−
−
−
−
−
−
-
1
-
-
1
13
31
73
210
1,975
188
2,490
2
1
833
31
867
14
24
4
68
640
35
785
22
13
640
10
685
F-95
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
31.1. Transactions pending closing at December 31, 2021
The assets and liabilities corresponding to the transactions pending closing are classified as held for sale at December
31, 2021, as follows:
Transaction
Date of
approval /
signing
Transaction
amount (*)
Further
informa-
tion
Acquirer
Sale of the Company’s entire interest in Fazenda Belem and Icapuí onshore fields
(Fazenda Belem group of fields), located in Potiguar basin, in the state of Ceará
Sale of the Company’s entire interest in Recôncavo group of 14 onshore fields, in
the state of Bahia
Sale of E&P assets in the state of Espírito Santo (Polo Peroá)
SPE Fazenda Belém S.A., a wholly
owned subsidiary of 3R Petroleum e
Participações S.A
Ouro Preto Energia Onshore S.A, a
wholly owned subsidiary of 3R
Petroleum Óleo e Gás S.A.
DBO Energy and OP Energy (renamed
3R Offshore)
Sale of the Company's entire interest in a set of seven onshore and shallow water
fields called Alagoas group, and of Alagoas Natural Gas Processing Unit, in the
state of Alagoas
Petromais Global Exploração e
Produção S.A. (renamed Origem
Energia S.A.)
August
2020
December
2020
January
2021
June 2021
Sale of the Company’s 62,5% interest in Papa-Terra field, in the Campos basin
3R Petroleum Offshore S.A.
July 2021
Sale of the Company’s entire interest (51%) in Petrobras Gas S.A (Gaspetro)
Compass Gas e Energia S.A.
July 2021
Sale of shares of the company that will hold the Isaac Sabbá Refinery (REMAN)
and its associated logistics assets, in the state of Amazonas
Ream Participações S.A. (a company
controlled by the partners of Atem
Distribuidora de Petróleo S.A.)
August
2021
Exercise of the call option for additional 5% interest in the surplus volume of the
Transfer of Rights Agreement of Búzios field
CNOOC Petroleum Brasil Ltda
(CNOOC)
September
2021
Sale of shares of the company that will hold the Shale Industrialization Unit (SIX),
in the state of Paraná.
Sale of the Company's entire interest in 11 onshore production fields
(Carmópolis group of fields), including integrated facilities, in the state of
Sergipe
,
Forbes & Manhattan Resources Inc., a
wholly owned subsidiary of Forbes &
Manhattan Inc.
Carmo Energy S.A.
November
2021
December
2021
35
250
13
300
16
373
(R$ 2,030 million)
190
2,080
33
1,100
a
b
c
d
e
f
g
h
I
j
a)
Sale of Fazenda Belem group of onshore fields
The agreement provides for the receipt of US$ 9 at the transaction signing, US$ 16 at the transaction closing, and
US$ 10 to be received one year after the closing. This transaction is subject to price adjustments and conditions
precedent, such as approval by the ANP.
b)
Sale of Recôncavo group of onshore fields
The agreement provides for the receipt of US$ 10 at the transaction signing, and US$ 240 at the transaction closing,
subject to price adjustments and conditions precedent, such as approval by the ANP.
c)
Sale of E&P assets of Peroá group of fields
Amounts due to Petrobras are composed of: (i) US$ 5 was received at the contract signing; (ii) US$ 8 to be received at
the transaction closing; (iii) up to US$ 42 as contingent receivables provided for in the contract, related to factors such
as Malombe's declaration of commerciality, future oil prices and extension of the concession terms. This transaction is
subject to price adjustments and to the fulfillment of conditions precedent, such as approval by the Brazilian Agency
of Petroleum, Natural Gas and Biofuels (ANP).
d)
Sale of Alagoas group of onshore and shallow water fields, and of a natural gas processing unit in the state of
Alagoas
The agreement provides for the receipt of US$ 60 at the transaction signing and US$ 240 at the transaction closing,
subject to price adjustments and conditions precedent, such as approval by the ANP.
F-96
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
e)
Sale of Papa-Terra field
The agreement provides for the receipt of US$ 6 at the transaction signing and US$ 10 at the transaction closing,
subject to price adjustments and conditions precedent, such as approval by the ANP. In addition, there is a total of US$
90 in contingent receivables provided for in the contract (contingent assets), related to production volume of the asset
and future oil prices.
f)
Sale of Gaspetro
The payment to Petrobras of US$ 373 (R$ 2,030 million) will be made at the transaction closing, subject to price
adjustments and the fulfillment of certain conditions precedent, such as approval by the Administrative Council for
Economic Defense (CADE). In addition, until closing, Petrobras will comply with the provisions contained in the
shareholders' agreements of Gaspetro and natural gas distributors, including preemptive rights.
g)
Sale of REMAN refinery assets
The agreement provides for the receipt of US$ 29 at the transaction signing and US$ 161 at the transaction closing,
subject to price adjustments and conditions precedent, such as approval by the CADE.
h)
Exercise of the call option in Búzios field
For more information, see note 24.1.
i)
Sale of interest in SIX shale processing plant
The agreement provides for (i) US$ 3 received at the transaction signing, and (ii) US$ 30 to be received at the transaction
closing, subject to price adjustments and contingent payments (earn out). The transaction is subject to the fulfillment
of conditions precedent, such as approval by CADE and ANP.
j)
Sale of Carmópolis group of onshore fields
The agreement provides for (i) US$ 275 received in January 2022, (ii) US$ 550 to be received at the transaction closing,
and (iii) US$ 275 to be received one year after the closing.
The transaction is subject to price adjustments and to the fulfillment of conditions precedent, such as approval by CADE
and ANP.
F-97
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
31.2. Closed transactions in 2021
Transaction
Acquirer
Signature date (S)
Closing date (C)
Sale amount (*)
Gain/
(loss)
(**)
Further
informa-
tion
a
b
c
d
e
f
g
h
i
j
k
l
Sale of 30% of the Frade field concession. The transaction also
includes the sale of the entire stake held by the subsidiary Petrobras
Frade Inversiones S.A. (PFISA), in the company Frade BV
PetroRio
November 2019 (S)
February 2021 (C)
Sale of the Company’s entire interest in Petrobras Uruguay
Distribución S.A. (PUDSA)
DISA Corporación
Petrolífera S.A.
August 2019 (S)
February 2021 (C)
44
68
Petrobras Biocombustível S.A. (PBio) sale of all of its shares issued by
BSBios Indústria e Comércio de Biodiesel Sul Brasil S.A. (BSBios) (50%
of the share capital)
Sale of the Company’s entire interest (49%) in companies Eólica
Mangue Seco 1, 3 and 4, wind power generation plants, in the state of
Rio Grande do Norte
RP Participações em
Biocombustíveis S.A
December 2020 (S)
February 2021 (C)
47
(R$ 253 million)
V2I Transmissão de
Energia Elétrica S.A.
December 2020 (S)
April 2021 (C)
26
(R$ 145 million)
88
(3)
(1)
19
Sale of the Company’s remaining 10% interest in NTS
Sale of the Company’s entire interest (51%) in company Eólica Mangue
Seco 2, a wind power generation plant, in the state of Rio Grande do
Norte
Sale of the Company’s entire interest in eight onshore fields, called Rio
Ventura group, located in the state of Bahia
Nova Infraestrutura
Gasodutos Participações
S.A.
Fundo de Investimento
em Participações
Multiestratégia Pirineus
(FIP Pirineus)
3R Rio Ventura S.A.,
subsidiary of 3R
Petroleum e
Participações S.A
April 2021 (S and C)
277
(R$ 1,539 million)
109
February 2021 (S)
May 2021 (C)
6
(R$ 34 million)
4
August 2020 (S)
July 2021 (C)
97
109
Sale of the Company’s remaining 37.5% interest in BR Distribuidora
(renamed Vibra Energia)
Several (public offering)
June 2021 (S)
July 2021 (C)
2,203
(R$ 11,358 million)
Transfer of the Company’s remaining 10% interest in Lapa field and in
Lapa Oil & Gas BV
TotalEnergies
December 2018 (S)
August 2021 (C)
49
Sale of the Company’s 40% interest in the company GNL Gemini
Comercialização e Logística de Gás Ltda. (GásLocal)
White Martins Gases
Industriais Ltda.
September 2020 (S)
September 2021 (C)
12
(R$ 61 million)
−
13
(1)
Sale of 100% of the shares of Refinaria Mataripe S.A., controller of
Landulpho Alves Refinery - RLAM and its associated logistics assets, in
the state of Bahia
Sale of the Company's entire interest in Termelétrica Potiguar S.A. -
TEP (20% ) and in Companhia Energética Manauara S.A. - CEM (40%)
Sale of the Company's entire 93.7% interest in Breitener Energética
S.A., in the state of Amazonas
Sale of the Company's entire interest in 9 onshore production fields
(Miranga group of fields), in the state of Bahia
MC Brazil Downstream
Participações, a company
of the Mubadala Capital
group
Global Participações
Energia S.A., through
subsidiaries
Breitener Holding
Participações S.A., a
wholly-owned subsidiary
of Ceiba Energy LP.
SPE Miranga S.A.,
subsidiary of
PetroRecôncavo S.A.
Sale of the Company's entire interest in 12 onshore production fields
(Remanso group of fields), in the state of Bahia
PetroRecêncavo S.A.
Sale of the Company's entire interest in 27 onshore production fields
(Cricaré group of fields), in the state of Espírito Santo
Sale of three thermoelectric plants powered by fuel oil, located in
Camaçari, in the state of Bahia
Total
Karavan Seacrest SPE
Cricare
São Francisco Energia
S.A., a subsidiary of
Global Participações em
March 2021 (S)
November 2021 (C)
1,811
574
July 2021 (S)
November 2021 (C)
28
(R$ 156 million)
4
August 2021 (S)
November 2021 (C)
35
(R$ 192 million)
(10)
m
February 2021 (S)
December 2021 (C)
December 2020 (S)
December 2021 (C)
August 2020 (S)
December 2021(C)
154
130
16
25
38
36
May 2021 (S)
December 2021(C)
11
(R$ 61 million)
4,914
(25)
1,071
n
o
p
q
(*) The amount of "Proceeds from disposal of assets" in the Statement of Cash Flows is composed of amounts received this period, including installments of operations
from previous years, and advances referring to operations not completed.
(**) Recognized in “Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control” within other income and expenses (note
6).
F-98
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
a) Sale of the Frade field
The transaction was closed with the payment of US$ 36 to Petrobras, after price adjustments (including cash inflows
from the sale of crude oil from the concession), in addition to US$ 8 paid to Petrobras upon the contract signing. In
addition, there is a contingent amount of US$ 20 linked to a potential new commercial discovery in the field.
The original sale amounting to US$ 100 was adjusted considering the cash flows arising from the Company’s interest in
the field from July 1, 2019 (inception date of the negotiation) to February 5, 2021 (closing date). In addition, there is a
contingent payment amounting to US$ 20 subject to a new discovery in the field.
b) Sale of Petrobras Uruguay Distribución S.A. (PUDSA)
The transaction was closed with the payment of US$ 62 to Petrobras, in addition to US$ 6 paid upon the contract signing,
totaling US$ 68. As a result of this operation, a US$ 34 loss was reclassified to the statement of income, within other
income and expenses, relating to cumulative translation adjustments arising from exchange rate variations recognized
in PUDSA's shareholders' equity since de acquisition of this investment.
c) Sale of BSBios
The transaction was closed with the payment of US$ 47 to Petrobras, including price adjustments. Moreover, US$ 12 is
held in an escrow account for indemnification of eventual contingencies, to be released according to terms and
conditions set forth in the contract.
d) Sale of Mangue Seco 1, 3 and 4
The sale of Mangue Seco 1 was closed with the payment of US$ 8 to Petrobras, including price adjustments. The sale of
Mangue Seco 3 and 4 was closed with the payment of US$ 14 to Petrobras, including price adjustments, in addition to
US$ 4 received at the signing, totaling US$ 18.
e) Sale of remaining 10% interest in NTS
The transaction was closed with the payment of US$ 277 to Petrobras, on the date of signing and closing of the
transaction, including price adjustments.
f) Sale of Eólica Mangue Seco 2
The transaction results from the exercise of the preemptive right by FIP Pirineus, in accordance with the shareholders'
agreement of Eólica Mangue Seco 2, and was closed with the payment of US$ 6 to Petrobras, including price
adjustments.
g) Sale of Rio Ventura group of onshore fields
The operation was concluded in July 2021 with the payment of US$ 34 to Petrobras, including price adjustments, in
addition to US$ 4 paid to Petrobras at the contract signing.
The agreement provides for further US$16 to be paid in January 2024 and up to US$ 44 in contingent payments related
to future oil prices, already received in September 2021 (US$ 22) and in December 2021 (US$ 22).
h) Sale of remaining 37.5% interest in BR Distribuidora (renamed Vibra Energia)
On June 17, 2021, Petrobras filed a request for registration of a secondary public offering (follow on) of common shares
issued by (renamed Vibra Energia), with the release of a preliminary offering prospectus. The Company offered 37.5%
of the share capital of BR Distribuidora, corresponding to the remaining interest held by Petrobras.
F-99
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
On June 30, 2021, Petrobras approved the price per common share of BR Distribuidora in the amount of US$ 5.20 (R$
26.00), totaling US$ 2,203 (R$11,358 million). Thus, a US$ 404 impairment reversal was recognized, as detailed in note
19.
On July 5, 2021, the follow-on was closed with the Company receiving US$ 2,184, net of transactions costs.
i) Transfer of interest in Lapa field and in Lapa BV
In 2018, Petrobras exercised its put option, as provided in the contract, transferring its remaining 10% interest in Lapa
field to Total Energies, including the remaining 10% interest held by Petrobras Netherlands BV (PNBV) in Lapa BV. In
September 2021, the operation was concluded with the payment of US$ 49 to Petrobras.
In addition, there was a price adjustment relating to the transfer of rights of Lapa and Iara fields by Petrobras, as well
as of the interests held by PNBV in Lapa BV and Iara BV, with the recognition of a US$ 22 gain within other income and
expenses.
j) Sale of interest in GásLocal
The agreement resolved controversies arising from the activities of the Gemini consortium and GasLocal, in particular
pending arbitration and judicial proceedings. It also provides for the commercial conditions for the supply of gas by
Petrobras, as an integrant of Gemini consortium, until the end of 2023, as required by CADE.
The transaction was closed with the payment of US$ 11 (R$56 million) to Petrobras upon the signing of the agreement,
and US$ 1 (R$ 4.6 million), to be paid up to 13 months from the closing of the agreement.
k) Sale of RLAM refinery assets
The transaction was closed in November 2021 after the payment of US$ 1,811 to Petrobras, including price adjustments
provided for in the contract, arising from changes in working capital, net debt and investments until the transaction
closing.
l) Sale of interest in electricity companies
The total payment to Petrobras will be made at the transaction closing, US$ 14 from each of the two acquirers, totaling
US$ 28.
m) Sale of the Company’s interest in Breitener Energética
The transaction was closed in November 2021 after the payment of US$ 45 to Petrobras, including price adjustments
provided for in the contract. In addition, there is a contingent amount of US$ 9 depending on future sales revenues of
the plant.
n) Sale of Miranga group of onshore fields
The transaction was closed in December 2021 after the payment of US$ 48 to Petrobras, in addition to US$ 11 received
upon the contract signing.
The agreement also provides for the receipt of US$ 80, deferred in three installments over three years from the
transaction closing, and up to US$ 85 in contingent receivables related to future average Brent prices. Of this amount,
in December 2021 the Company met the agreed conditions for the receipt of US$ 15, recognized within other income
and expenses.
F-100
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
o) Sale of Remanso group of onshore fields
The transaction was closed in December 2021 after the payment of US$ 7 to Petrobras, in addition to US$ 4 received
upon the contract signing.
The agreement also provides for the receipt of US$ 5 in December 2022, subject to price adjustments.
p) Sale of Cricaré group of onshore fields
The transaction was closed in December 2021 after the payment of US$ 27 to Petrobras, in addition to US$ 11 received
upon the contract signing.
The agreement provides for up to US$ 116 in contingent payments related to future oil prices.
q) Sale of three thermoelectric plants in Camaçari
The transaction was closed in December 2021 after the payment of US$ 11 to Petrobras.
31.3. Other operation
On January 5, 2021, Petrobras acquired 100% of shares of the structured entity Companhia de Desenvolvimento e
Modernização de Plantas Industriais (CDMPI) for US$ 9 thousand. On December 28, 2021, Petrobras acquired 100% of
shares of the structured entity Charter Development LLC (CDC)) for US$ 1 dollar.
The difference between the amount paid and the shareholders' equity of this structured entities was recorded as a
capital transaction, increasing the shareholders' equity attributable to shareholders of Petrobras, while increasing non-
controlling interests, in the amount of US$ 79,since Petrobras already controlled its operations and consolidated this
structured entities prior to these transactions.
31.4. Contingent assets from disposed investments – transactions closed in previous years
31.4.1. Pampo and Enchova
In July 2020, Petrobras closed the sale of its entire interest in Pampo and Enchova groups of fields to Trident Energy
do Brasil Ltda (see note 33.2 of the annual consolidated financial statements for 2020), with additional conditions
providing for the payment to Petrobras of amounts of up to US$ 650 classified as contingent assets, to be recognized
when the agreed conditions, relating to Brent prices, are met. Of this amount, the Company has already recognized
US$ 36, within other income and expenses. The contract provides for revaluations until 2030.
31.4.2. Contingent installment of the exploratory block BM-S-8 sale
On July 28, 2016, the Company disposed its 66% interest in the exploratory block BM –S-8 to Equinor Brasil Energia
Ltda, which includes the Bacalhau field (former Carcará) located in the pre-salt layer of Santos basin, for the amount of
US$ 2,500, to be paid in three installments, of which the last two were contingent payments to Petrobras.
The first installment (US$ 1,250) was received on November 22, 2016, and the second installment (US$ 300) on March
21, 2018.
On December 9, 2021, the ANP approved the Production Individualization Agreement (AIP) for the Bacalhau and Norte
de Bacalhau fields, the condition for the receipt by Petrobras of the final installment, in the amount of US$ 950. This
gain was recognized in the statement of income in December 2021, within other income and expenses, and received in
February 2022.
F-101
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
31.5. Cash flows from sales of interest with loss of control
In 2021, 2020 and 2019, the Company disposed of its interest in certain subsidiaries over which control was lost. The
following table summarizes cash flows arising from losing control in subsidiaries:
Jan-Dec/2021
Mataripe refinery - RLAM
PUDSA
Total
Jan-Dec/2020
Petrobras Oil & Gas B.V.(PO&GBV)
Liquigas
Total
Jan-Dec/2019
Petrobras Paraguay
Total
Cash in
subsidiary
before losing
Cash received
control Net Proceeds
1,868
62
1,930
276
784
1,060
381
381
(119)
(15)
(134)
−
(10)
(10)
(45)
(45)
1,749
47
1,796
276
774
1,050
336
336
31.6. Accounting Policy for assets and liabilities held for sale
Non-current assets, disposal groups and liabilities directly associated with those assets are classified as held for sale if
their carrying amounts will, principally, be recovered through the sale transaction rather than through continuing use.
The condition for classification as held for sale is met only when the sale is approved by the Company’s Board of
Directors and the asset or disposal group is available for immediate sale in its present condition and there is the
expectation that the sale will occur within 12 months after its classification as held for sale. However, an extended period
required to complete a sale does not preclude an asset (or disposal group) from being classified as held for sale if the
delay is caused by events or circumstances beyond the Company’s control and there is sufficient evidence that the
Company remains committed to its plan to sell the assets (or disposal groups).
Assets (or disposal groups) classified as held for sale and the associated liabilities are measured at the lower of their
carrying amount and fair value less costs to sell. Assets and liabilities are presented separately in the statement of
financial position.
When a component of the Company is disposed of or classified as held for sale, and it represented a separate major line
of business, the disposed interest is considered a discontinued operation, thus its net income, operating, investing and
financing cash flows are presented in separate line items until the date of the closing of the operation.
F-102
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32. Finance debt
32.1. Balance by type of finance debt
In Brazil
Banking Market
Capital Market
Development banks (*)
Others
Total
Abroad
Banking Market
Capital Market
Development banks (*)
Export Credit Agency
Others
Total
Total finance debt
Current
Non-current
(*) It includes BNDES, FINAME, FINEP and New Development Bank (NDB)
Current finance debt is composed of:
Short-term debt
Current portion of long-term debt
Accrued interest on short and long-term debt
Total
12.31.2021
1,237
2,504
769
7
4,517
12.31.2020
5,016
2,512
1,315
11
8,854
8,525
19,527
-
2,951
180
31,183
35,700
3,641
32,059
13,581
27,625
201
3,424
203
45,034
53,888
4,186
49,702
12.31.2021
12.31.2020
108
3,063
470
3,641
1,140
2,383
663
4,186
The capital market balance is mainly composed of US$ 18,823 in global notes, issued by PGF and US$ 2,352 in
debentures issued in reais in Brazil. The balance in global notes has maturities between 2024 to 2115 and does not
require collateral. Such financing was carried out in dollars, euros and pounds, 87%, 3% and 10%, of the total global
notes, respectively.
The debentures, with maturities between 2024 and 2034 and without guarantees, are not convertible into shares.
F-103
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32.2. Changes in finance debt and reconciliation with cash flows from financing activities
Balance at
12.31.2019 Additions
1,488
10,730
Principal
amorti
zation (*)
(1,080)
Interest
amorti
zation (*)
(352)
52,530
15,535
(23,471)
(2,967)
63,260
17,023
(24,551)
(3,319)
Accrued
interest
(**)
399
3,187
3,586
Foreign
exchange/
inflation
indexation
charges
142
Cumulative
translation
adjustment
(CTA)
(2,474)
Modification
of
contractual
cash flows
-
Transfer to
liabilities
classified
as held for
sale
-
Balance at
12.31.2020
8,853
1,667
1,809
(1,201)
(3,675)
(245)
(245)
-
−
45,035
53,888
In Brazil
Abroad
Debt
restructuring
Deposits linked
to financing
Net cash used in financing
(*) It includes pre-payments.
(1,176)
−
−
(25,727)
162
(3,157)
(**) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.
Balance at
12.31.2020 Additions
-
1,885
1,885
8,853
45,035
53,888
Principal
amorti
zation (*)
(4,274)
(15,971)
(20,245)
Interest
amorti
zation (*)
(267)
(2,034)
(2,301)
Accrued
interest
(**)
316
2,407
2,723
Foreign
exchange/
inflation
indexation
charges
233
186
419
Cumulative
translation
adjustment
(CTA)
(344)
(325)
(669)
Modification
of
contractual
cash flows
-
-
−
Transfer to
liabilities
classified
as held for
sale
-
-
−
Balance at
12.31.2021
4,517
31,183
35,700
(1,102)
(66)
-
72
In Brazil
Abroad
Debt
restructuring
Deposits linked
to financing
Net cash used in financing
activities
(*) It includes pre-payments.
(**) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.
(21,413)
(2,229)
(***) Deposits linked to financing with China Development Bank (CDB), with semiannual settlements in June and December.
In 2021, the Company used its cash, in addition to raising funds in the international capital market, to pay off older
debts and manage liabilities, aiming at improving the debt repayment profile taking into account its alignment with
investments returns over the long run.
The Company repaid several finance debts, in the amount of US$ 23,642 notably: (i) prepayment of banking loans in the
domestic and international market totaling US$ 6,344 and (ii) US$ 9,840 to repurchase and withdraw global bonds
previously issued by the Company in the capital market, with net premium paid to bond holders amounting to US$ 1,090;
and (iii) total prepayment of US$ 593 for loans with development agencies.
The company raised US$ 1,442 through bonds issued in the international capital market (Global Notes) maturing in
2051.
F-104
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32.3. Summarized information on current and non-current finance debt
Maturity in
Up to 1
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 years
onwards
Total (**) Fair Value
Financing in U.S. Dollars (US$)(*):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in Brazilian Reais (R$):
Floating rate debt
Fixed rate debt
Average interest rate
Financing in Euro (€):
Fixed rate debt
Average interest rate
Financing in Pound Sterling (£):
Fixed rate debt
Average interest rate
Total as of December 31, 2021
Average interest rate
Total as of December 31, 2020
Average interest rate
(*) Includes debt raised in Brazil (in Brazilian reais) indexed to the U.S. dollar.
(**)The average maturity of outstanding debt as of December 31, 2021 is 13.39 years (11.71 years as of December 31, 2020).
15,228
897
14,331
6.6%
1,870
496
1,374
4.6%
664
664
4.7%
1,055
1,055
6.4%
18,817
6.5%
28,338
6.4%
2,540
2,154
386
5.0%
1,006
663
343
5.9%
49
49
4.7%
46
46
6.2%
3,641
5.2%
4,186
4.6%
3,354
2,676
678
5.5%
620
263
357
5.0%
14
14
4.7%
-
-
-
3,988
5.5%
5,892
4.8%
1,686
1,143
543
6.2%
402
130
272
4.1%
-
-
-
744
744
6.2%
2,832
5.9%
6,229
5.2%
2,564
2,564
-
5.2%
409
263
146
5.5%
-
-
-
-
-
-
2,973
5.3%
3,282
4.8%
2,746
1,934
812
5.7%
211
130
81
4.5%
492
492
4.7%
-
-
-
3,449
5.6%
5,961
5.1%
28,118
11,368
16,750
6.3%
4,518
1,945
2,573
4.9%
1,219
1,219
4.7%
1,845
1,845
6.3%
35,700
6.2%
53,888
5.9%
30,063
4,462
1,347
2,019
37,891
61,517
The fair value of the Company's finance debt is mainly determined and categorized into a fair value hierarchy as follows:
Level 1- quoted prices in active markets for identical liabilities, when applicable, amounting to US$ 20,769 of December
31, 2021 (US$ 33,236 of December 31, 2020); and
Level 2 – discounted cash flows based on discount rate determined by interpolating spot rates considering financing
debts indexes proxies, taking into account their currencies and also Petrobras’ credit risk, amounting to US$ 17,122 as
of December 31, 2021 (US$ 28,281 as of December 31, 2020).
The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 36.3.
A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set
out as follows:
2022
Maturity
3,171
Principal
1,806
Interest
Total
4,977
(*) A maturity schedule of the lease arrangements (nominal amounts) is set out in note 23.
2024
4,071
1,549
5,620
2023
3,066
1,631
4,697
2025
3,524
1,381
4,905
2026
2,909
1,295
4,204
2027 and
thereafter
19,816
22,895
42,711
12.31.2021
36,557
30,557
67,114
12.31.2020
55,130
38,953
94,083
F-105
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32.4. Lines of credit
Company
Abroad
PGT BV
PGT BV (*)
Total
Financial
institution
Date
Maturity
Available
(Lines of Credit)
Syndicate of banks
Syndicate of banks
12/16/2021
3/27/2019
11/16/2026
2/27/2024
5,000
3,250
8,250
12.31.2021
Used
Balance
−
−
−
5,000
3,250
8,250
In Brazil
Petrobras
Petrobras
Petrobras
Transpetro
Total
(*) In April 2021, PGT extended part of the Revolving Credit Facility. As such, US$ 2,050 will be available for withdrawal from February 28, 2024 until February 27, 2026.
Banco do Brasil
Bradesco
Banco do Brasil
Caixa Econômica Federal
9/26/2026
5/31/2023
9/5/2025
Not defined
3/23/2018
6/1/2018
10/4/2018
11/23/2010
358
358
358
59
1,133
358
358
358
59
1,133
−
−
−
−
−
32.5. Covenants and Collateral
32.5.1. Covenants
The Company has covenants that were not in default at December 31, 2021 in its loan agreements and notes issued in
the capital markets requiring, among other obligations i) the presentation of interim financial statements within 90
days of the end of each quarter (not reviewed by Independent Registered Public Accounting Firm) and audited financial
statements within 120 days of the end of each fiscal year, with a grace period ranging from 30 to 60 days, depending on
the agreement; ii) Negative Pledge / Permitted Liens clause; and iii) covenants with respect to debt level in some of its
loan agreements with the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social -
BNDES).
Additionally, there are other non-financial obligations that the Company has to comply with: i) clauses of compliance
with the laws, rules and regulations applicable to the conduct of its business including (but not limited to)
environmental laws; (ii) clauses in financing agreements that require both the borrower and the guarantor to conduct
their business in compliance with anti-corruption laws and anti-money laundering laws and to institute and maintain
policies necessary for such compliance; and (iii) clauses in financing agreements that restrict relations with entities or
even countries sanctioned primarily by the United States (including, but not limited to, the Office of Foreign Assets
Control - OFAC, Department of State and Department of Commerce), the European Union and United Nations.
32.5.2. Collateral
Most of the Company’s debt is unsecured, but certain specific funding instruments to promote economic development
are collateralized.
A Financing agreement with China Development Bank (CDB) maturing in 2026 is also collateralized based on future oil
exports for specific buyers limited to 200 thousand barrels per day. This collateral may not exceed the amount of the
related debt (US$ 5,005 at December 31, 2020 and US$ 5,006 at December 31, 2019).
The loans obtained by structured entities are collateralized based on the projects’ assets, as well as liens on receivables
of the structured entities. Bonds issued by the Company in the capital market are unsecured.
The global notes issued by the Company in the capital market through its wholly-owned subsidiary Petrobras Global
Finance B.V. – PGF are unsecured. However, Petrobras fully, unconditionally and irrevocably guarantees these notes, as
set out in note 37.5.
F-106
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32.6. Accounting policy for loans and finance debt
Loans and finance debt are initially recognized at fair value less transaction costs that are directly attributable to its
issue and subsequently measured at amortized cost using the effective interest method.
When the contractual cash flows of a financial liability measured at amortized cost are renegotiated or modified and
this change is not substantial, its gross carrying amount will reflect the discounted present value of its cash flows under
the new terms using the original effective interest rate. The difference between the book value immediately prior to
such modification and the new gross carrying amount is recognized as gain or loss in the statement of income. When
such modification is substantial, the original liability is extinguished and a new liability is recognized, impacting the
statement of income for the period.
Regarding the interest rate benchmark reform (Interbank offered rate - IBOR Reform), the company continues to
monitor the standards of the regulatory authorities, as well as the measures that have been adopted, aiming at
adapting the various financial instruments to the new benchmarks. Petrobras and its subsidiaries have debts indexed
to Libor, corresponding to 32% of total finance debt (see note 32.3).
33. Lease liabilities
The Company is the lessee in agreements primarily including oil and gas producing units, drilling rigs and other
exploration and production equipment, vessels and support vessels, helicopters, lands and buildings.
Changes in the balance of lease liabilities are presented below:
In Brazil
Abroad
Total
Balance at
12.31.2020
4,340
17,310
21,650
Remeasure
ment / new
contracts
1,655
4,474
6,129
Payment of
principal and
interest (*)
(1,560)
(4,267)
(5,827)
Interest
expenses
243
990
1,233
Foreign
exchange gains
and losses
151
1,288
1,439
Cumulative
translation
adjustment
(272)
(1,310)
(1,582)
Transfers
47
(46)
1
Balance at
12.31.2021
4,604
18,439
23,043
A maturity schedule of the lease arrangements (nominal amounts) is set out as follows:
Nominal Future Payments
Without readjustment
Vessels
Others
With readjustment - abroad (*)
Vessels
Platforms
With readjustment - Brazil
Vessels
Properties
Others
TOTAL
(*) Contracts signed in the U.S. Dollars.
up to 1
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 years
onwards
2,620
110
471
1,700
361
94
211
1,644
62
288
1,434
272
89
155
885
23
276
1,460
184
90
109
380
13
215
1,414
101
90
96
243
−
176
1,339
43
90
81
Total
6,922
208
1,150
−
186
11,986
1,612
19,333
18
869
399
979
1,322
1,051
Recoverable
taxes
218
16
−
−
87
9
16
346
5,567
3,944
3,027
2,309
1,972
14,608
31,427
The following table presents information on leases by class of underlying assets:
F-107
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Present Value of Future Payments
Without readjustment
Vessels
Others
With readjustment - abroad (*)
Platforms
Vessels
With readjustment - Brazil
Vessels
Properties
Others
Discount
rate (%)
Average
Period
Recoverabl
e taxes
Closing
Balance
Opening
Balance
3,5155
5.4 years
1,5029
2.5 years
205
16
6,201
202
5,5194 14.6 years
4,3124
4.7 years
6,8752
3.3 years
8,7184 21.5 years
−
−
76
7
13,059
1,431
850
590
9,7347
7.9 years
11.7 years
14
318
710
23,043
7,462
262
10,747
1,530
794
643
212
21,650
TOTAL
(*) Incremental nominal rate on company debt calculated from the yield curve of bonds and credit risk of the Company, as well as terms .
5,2637
Payments in certain lease agreements vary due to changes in facts or circumstances occurring after their inception
other than the passage of time. Such payments are not included in the measurement of the lease obligations. Variable
lease payments in the year ended December 31,2021 amounted to US$ 898, representing 15% in relation to fixed
payments (US$ 785 and 13% in the same period of 2020).
In the year ended December 31, 2021, the Company recognized lease expenses in the amount of US$ 110 relating to
short-term leases (US$ 118 in the same period of 2020).
At December 31, 2021, the nominal amounts of lease agreements for which the lease term has not commenced, as they
relate to assets under construction or not yet available for use, is US$ 79,557 (US$ 67,408 at December 31, 2020). The
increase in the year ended December 31, 2021 corresponds to new contractual commitment, including 2 floating
production units.
The sensitivity analysis of financial instruments subject to exchange variation is presented in note 36.3.
33.1. Accounting policy for lease liabilities
Lease liabilities, including those whose underlying assets are of low value, are measured at the present value of lease
payments, which includes recoverable taxes, non-cancellable periods and options to extend a lease when they are
reasonably certain. These payments are discounted at the Company's nominal incremental rate on loans, as the interest
rates implicit in lease agreements with third parties usually cannot be readily determined.
Lease remeasurements reflect changes arising from contractual rates or indexes, as well as lease terms due to new
expectations of lease extensions or terminations.
Unwinding of discount on the lease liability is classified as finance expense, while payments reduce their carrying
amount. According to the Company’s foreign exchange risk management, foreign exchange variations on lease liabilities
denominated in U.S. dollars are designated as instruments to protect cash flow hedge relationships from highly
probable future exports (see note 36.3).
In the E&P segment, some activities are conducted by joint operations where the company is the operator. In cases
where all parties to the joint operation are primarily responsible for the lease payments, the Company recognizes the
lease liability in proportion to its share. When using underlying assets arising from a specific contract in which the
Company is solely responsible for the lease payments, the lease liabilities remain fully recognized and the partners are
charged in proportion to their interests.
Payments associated with short-term leases (term of 12 months or less) are recognized as an expense over the term of
the lease.
F-108
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
34. Equity
34.1. Share capital (net of share issuance costs)
As of December 31, 2021 and December 31, 2020, subscribed and fully paid share capital, net of issuance costs, was
US$ 107,101, represented by 7,442,454,142 common shares and 5,602,042,788 preferred shares, all of which are
registered, book-entry shares with no par value.
Preferred shares have priority on returns of capital, do not grant any voting rights and are non-convertible into common
shares.
34.1.1. Accounting policy for share capital
Share capital comprises common shares and preferred shares. Transaction costs attributable to the issue of new shares
(share issuance costs) are presented (net of tax) in shareholders’ equity, within capital transactions, as a deduction from
the proceeds.
As of December 31, 2021 and December 31, 2020, the Company held treasury shares, of which 222,760 are common
shares and 72,909 are preferred shares.
34.2. Capital reserves
Capital reserve comprises treasury shares owned by Petrobras, in the amount of US$ 2, at December 31, 2021.
34.3. Capital transactions
34.3.1. Incremental costs directly attributable to the issue of shares
It includes any transaction costs directly attributable to the issue of new shares, net of taxes.
34.3.2. Change in interest in subsidiaries
It includes any excess of amounts paid/received over the carrying value of the interest acquired/disposed. Changes in
interests in subsidiaries that do not result in loss of control of the subsidiary are equity transactions.
34.3.3. Treasury shares
Shares held in treasury in the amount of US$ 2, represented by 222,760 common shares and 72,909 preferred shares.
34.4. Profit reserves
34.4.1. Legal reserve
It represents 5% of the net income for the year, calculated pursuant to article 193 of the Brazilian Corporation Law.
34.4.2. Statutory reserve
Appropriated by applying 0.5% of the year-end share capital and is retained to fund technology research and
development programs. The balance of this reserve may not exceed 5% of the share capital, pursuant to article 56 of
the Company’s bylaws.
F-109
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
34.4.3. Tax incentives reserve
Government grants are recognized in the statement of income and are appropriated from retained earnings to the tax
incentive reserve in the shareholders’ equity pursuant to article 195-A of Brazilian Corporation Law. This reserve may
only be used to offset losses or increase share capital.
In 2021, the amount of US$ 118 was appropriated from retained earnings to the tax incentive reserve referring to a
subsidy incentive for investments, granted from the Superintendencies for Development of the Northeast Region of
Brazil (SUDENE) and of the Amazon (SUDAM).
34.4.4. Accounting policy for tax incentives reserve
A government grant is recognized when there is reasonable assurance that the grant will be received and the Company
will comply with the conditions attached to the grant.
34.4.5. Profit retention reserve
It Includes funds intended for capital expenditures, primarily in oil and gas exploration and development activities, as
per the capital budget of the Company, pursuant to article 196 of the Brazilian Corporation Law.
34.5. Distributions to shareholders
Pursuant to Brazilian Corporation Law, the Company’s shareholders are entitled to receive minimum mandatory
dividends (and/or interest on capital) of 25% of the adjusted net income for the year in proportion to the number of
common and preferred shares held by them.
To the extent the Company proposes dividend distributions, preferred shares have priority in dividend distribution,
which is based on the highest of 3% of the preferred shares’ net book value or 5% of the preferred share capital.
Preferred shares participate under the same terms as common shares in capital increases resulting from the
capitalization of profit reserves or retained earnings. However, this priority does not necessarily grant dividend
distributions to the preferred shareholders in the event of loss for a year.
The payment of dividends may be made only to preferred shareholders if the priority dividends absorb all the adjusted
net income for the year or reach an amount equal to or greater than the mandatory minimum dividend of 25%.
The Company’s policy on distributions to shareholders, over and above those required by the Brazilian Corporate Law,
approved by the Board of Directors in 2019 and updated in November 2021, defines the following:
•
•
•
•
minimum distribution of US$ 4,000 for fiscal years when the average Brent price exceeds US$ 40 per barrel,
regardless its level of indebtedness. This distribution will be equal to both common and preferred shares, once it
exceeds the minimum value for preferred shares provided for in the Company's bylaws;
in case of gross debt (comprising current and non-current finance debt and lease liability) equal to or less than
US$ 65,000, in addition to the existence of net income attributable to shareholders of Petrobras, to be verified
on a quarterly basis, the Company will distribute to shareholders 60% of the difference between net cash
provided by operating activities and cash used in the acquisition of PP&E and intangibles assets, calculated in
Brazilian reais, provided that the result of this calculation exceeds US$ 4,000 and does not compromise the
financial sustainability of the Company;
regardless its level of indebtedness, the Company may, in exceptional cases, pay extraordinary dividends,
exceeding the minimum mandatory dividend or the values established in the policy, provided that the Company's
financial sustainability is preserved;
the distribution of remuneration to shareholders must be made on a quarterly basis; and
F-110
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
•
the Company may exceptionally distribute dividends even if there is no net income for the year, in accordance
with the rules provided for the Brazilian Corporation Law and the criteria defined in this policy.
Petrobras seeks, through its policy on distributions to shareholders, to ensure short, medium and long-term financial
sustainability, providing predictability to the dividend payments to shareholders.
34.5.1. Accounting policy for distributions to shareholders
Distributions to shareholders are made by means of dividends and interest on capital, determined in accordance with
the limits defined in the Brazilian Corporation Law and in the Company’s bylaws. Interest on capital is a deductible
expense in the income tax calculation, while dividend is not deductible.
The dividends portion provided for in the bylaws or that represents the minimum mandatory dividends is recognized as
a liability within the statement of financial position. Any excess must be maintained in shareholders' equity, as
additional dividends proposed, until its approval on the Annual General Shareholders Meeting.
34.5.2. Proposed dividends
Distribution to shareholders for 2021, proposed by management for approval at the Annual General Shareholders
Meeting, amounting to US$ 18,541, is superior to the minimum mandatory dividend of 25% of the adjusted income and
will be paid in equal proportions for common and preferred shares.
Considering the net income for the year and the achievement of the indebtedness target, the amount of dividends
proposed by the Company was based on the policy on distribution to shareholders, equivalent to 60% of the difference
between net cash provided by operating activities (R$ 203,126 million) and cash used in the acquisition of PP&E and
intangibles assets (R$ 34,134 million), resulting in a R$ 101,395 million distribution, which is equivalent to US$ 18,541
translated based on the exchange rate prevailing at the date of approval for each anticipation and in the closing
exchange rate for the complementary dividends.
Date of
Board of
Directors
approval
Payment
Date of
register
Date of
Payment
Amount
Amount
per share
Amount
Amount
per share
Common Shares
Preferred Shares
1st installment – dividends
08.04.2021 08.16.2021 08.25.2021
2nd installment - interest on capital
08.04.2021 12.01.2021 12.15.2021
2nd installment - dividends
10.28.2021 12.01.2021 12.15.2021
Indexation charges on paid anticipations
Complementary dividends
02.23.2022 04.13.2022 05.16.2022
Total for 2021
Total for 2020
2,300
1,483
2,911
0.3091
0.1993
0.3911
1,731
0.3091
1,116
0.1993
2,191
0.3911
69
0.0093
52
0.0093
3,816
10,579
1,128
0.5127
1.4215
0.1515
2,872
7,962
849
0.5127
1.4215
0.1515
Total
4,031
2,599
5,102
121
6,688
18,541
1,977
Amounts translated into U.S. dollar based on the exchange rate prevailing at the date of the approval, except for the complementary dividends, based on the closing
exchange rate at the date of the financial statements.
Distributions to shareholders for 2020 amounted to US$ 1,977, including the minimum mandatory dividend to preferred
shareholders (US$ 849) and the additional dividends proposed (US$ 1,128) to ordinary shareholders, arising from the
remaining portion of the net income for that year and the profit retention reserve, considering cash generation in the
year and the Company's preserved financial sustainability.
34.5.3. Dividends payable
As of December 31, 2021, there are no dividends payable to shareholders within current liabilities, given that
anticipation of dividends have already been paid throughout 2021, while the complementary dividends will be
F-111
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
maintained in shareholders' equity until its approval on the Annual General Shareholders Meeting. As of December 31,
2020 this balance amounted to US$ 858.
34.6. Earnings per share
Common
Preferred
2021
Total
Common
Preferred
2020
Total
Common
Preferred
2019
Total
Net income (loss)
attributable to
shareholders of
Petrobras
Continuing
operations
Discontinued
operations
Weighted average
number of
outstanding
shares
Basic and diluted
earnings (losses)
per share - in U.S.
dollars
Continuing
operations
Discontinued
operations
Basic and diluted
earnings (losses)
per ADS
equivalent - in
U.S. dollars (*)
Continuing
operations
Discontinued
operations
11,339
8,536
19,875
11,339
8,536
19,875
−
−
−
651
651
−
490
490
−
1,141
5,791
4,360
10,151
1,141
4,370
3,290
7,660
−
1,421
1,070
2,491
7,442,231,382 5,601,969,879 13,044,201,261 7,442,231,382 5,601,969,879 13,044,201,261 7,442,231,382 5,601,969,879 13,044,201,261
1.52
1.52
−
3.04
3.04
−
1.52
1.52
−
3.04
3.04
−
1.52
1.52
−
3.04
3.04
−
0.09
0.09
−
0.18
0.18
−
0.09
0.09
−
0.18
0.18
−
0.09
0.09
−
0.18
0.18
−
0.78
0.59
0.19
1.56
1.18
0.38
0.78
0.59
0.19
1.56
1.18
0.38
0.78
0.59
0.19
1.56
1.18
0.38
(*) Petrobras' ADSs are equivalent to two shares.
Basic earnings per share are calculated by dividing the net income (loss) attributable to shareholders of Petrobras by
the weighted average number of outstanding shares during the period.
Diluted earnings per share are calculated by adjusting the net income (loss) attributable to shareholders of Petrobras
and the weighted average number of outstanding shares during the period taking into account the effects of all dilutive
potential shares (equity instrument or contractual arrangements that are convertible into shares).
Basic and diluted earnings are identical as the Company has no potentially dilutive shares.
F-112
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
35. Fair value of financial assets and liabilities
Assets
Marketable securities
Foreign currency derivatives
Balance at December 31, 2021
Balance at December 31, 2020
Liabilities
Foreign currency derivatives
Commodity derivatives
Interest rate derivatives
Balance at December 31, 2021
Balance at December 31, 2020
Level I
Level II
Level III
650
-
650
652
-
(1)
−
(1)
(10)
-
23
23
115
(271)
−
(1)
(272)
(269)
-
-
-
−
-
-
-
-
−
Total fair
value
recorded
650
23
673
767
(271)
(1)
(1)
(273)
(279)
The estimated fair value for the Company’s long-term debt, computed based on the prevailing market rates, is set out
in note 32.
Certain receivables are classified as fair value through profit or loss, as presented in note 13.
The fair values of cash and cash equivalents, short-term debt and other financial assets and liabilities are equivalent or
do not differ significantly from their carrying amounts.
36. Risk management
The Company is exposed to a variety of risks arising from its operations, including price risk (related to crude oil and oil
products prices), foreign exchange rates risk, interest rates risk, credit risk and liquidity risk. Corporate risk
management is part of the Company’s commitment to act ethically and comply with the legal and regulatory
requirements of the countries where it operates. To manage market and financial risks the Company prefers structuring
measures through adequate capital and leverage management. While managing risks, the Company considers its
corporate governance and controls, technical departments and statutory committees monitoring, under the guidance
of the Board of Executive Officers and the Board of Directors. The Company takes account of risks in its business
decisions and manages any such risk in an integrated manner in order to enjoy the benefits of diversification.
36.1. Derivative financial instruments
A summary of the positions of the derivative financial instruments held by the Company and recognized in other current
assets and liabilities as of December 31, 2021 , as well as the amounts recognized in the statement of income and other
comprehensive income and the guarantees given is set out as follows:
F-113
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Statement of Financial Position
Fair value
12.31.2021
Notional value
12.31.2020
Asset Position (Liability)
12.31.2020
12.31.2021
Maturity
Derivatives not designated for hedge accounting
Future contracts - total (*)
Long position/Crude oil and oil products
Short position/Crude oil and oil products
SWAP (**)
Short call/Soybean oil (**)
Forward contracts
(1,308)
1,380
(2,688)
(240)
3,927
(4,167)
(11)
−
Long position/Foreign currency forwards (GPD/USD) (***)
−
GBP 354
Swap
Foreign currency / Cross-currency Swap (***)
Foreign currency / Cross-currency Swap (***)
Swap - IPCA
Foreign currency / Cross-currency Swap (***)
Total recognized in the Statement of Financial Position
(*) Notional value in thousands of bbl.
(**) Notional value in thousands of tons.
(***) Amounts in US$ million.
GBP 583
GBP 442
3,008
US$ 729
GBP 615
GBP 600
R$ 3,008
US$ 729
(1)
(10)
-
-
−
-
23
(50)
(1)
(221)
(250)
-
-
-
2022
2022
−
2022
23
2021
44
(26)
2026
2034
47
2029/2034
2024/2029
(244)
(166)
Gains/ (losses) recognized in the statement of income
2019
2021
2020
Commodity derivatives
Crude oil - 36.2 (a)
Gasoline - 36.2 (b)
Diesel - 29.2 (b)
Other commodity derivative transactions - 29.2 (b)
Recognized in Other Income and Expenses
Currency derivatives
Swap Pounds Sterling x Dollar - 36.3 (b)
NDF – Euro x Dollar - 36.3 (b)
NDF – Pounds Sterling x Dollar - 36.3 (b)
Swap CDI x Dollar - 36.3 (c)
Others
Interest rate derivatives
Swap - CDI X IPCA
Cash flow hedge on exports (*)
Recognized in Net finance income (expense)
Total
(*) As presented in note 29.3
Commodity derivatives
Currency derivatives
Total
−
−
−
(79)
(79)
(85)
−
9
(3)
1
(78)
(41)
(41)
(4,585)
(4,704)
(4,783)
(502)
−
−
194
(308)
11
(23)
20
(284)
(2)
(278)
(36)
(36)
(4,720)
(5,034)
(5,342)
(216)
11
(12)
(153)
(370)
(18)
(153)
(8)
7
6
(166)
6
6
(3,136)
(3,296)
(3,666)
Guarantees given as collateral
12.31.2021
15
12.31.2020
13
27
42
78
91
A sensitivity analysis of the derivative financial instruments for the different types of market risks as of December 31,
2021 is set out as follows:
F-114
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Financial Instruments
Risk
Derivatives not designated for hedge accounting
Probable
Scenario (*)
Reasonably
possible
scenario (*)
Remote
Scenario
(*)
Future and forward contracts
Future and forward contracts
Crude oil and oil products - price changes
Soybean oil - price changes
Non-deliverable forwards (NDF)
Foreign currency - depreciation BRL x USD
-
-
-
(23)
(8)
(8)
-47
-17
(16)
(80)
(*) The probable scenario was computed based on the fair value of oil and oil products prices at December 31, 2021. Reasonably possible and remote scenarios consider
25% and 50% deterioration in the associated risk variables, respectively.
(39)
−
The probable scenario uses market references, used in pricing models for oil, oil products and natural gas markets, and
takes into account the closing price of the asset on December 31, 2021. Therefore, no variation is considered arising
from outstanding operations in this scenario. The reasonably possible and remote scenarios reflect the potential
effects on the statement of income from outstanding transactions, considering a variation in the closing price of 25%
and 50%, respectively. To simulate the most unfavorable scenarios, the variation was applied to each asset according
to open transactions: price decrease for long positions and increase for short positions.
36.2. Risk management of crude oil and oil products prices
The Company is usually exposed to commodity price cycles, although it may use derivative instruments to hedge
exposures related to prices of products purchased and sold to fulfill operational needs and in specific circumstances
depending on business environment analysis and assessment of whether the targets of the Strategic Plan are being
met.
a)
Crude Oil
In March 2020, in order to preserve the Company's liquidity, Petrobras approved a hedge strategy for exported oil
already shipped but not priced mainly due to the high volatility at that time, both due to the effects of the oil price drop
and the effects of the COVID-19 pandemic on the global oil consumption.
As a result of this strategy, from April 2020, transactions using forward (swap) and futures contracts were carried out.
Forward transactions do not require initial disbursement, whereas future transactions require margin deposits,
depending on the volume contracted. .
b)
Other commodity derivative transactions
Petrobras, by use of its assets, positions and market knowledge from its operations in Brazil and abroad, occasionally
seeks to optimize some of its commercial operations in the international market, with the use of commodity derivatives
to manage price risk.
36.3. Foreign exchange risk management
The Company’s Risk Management Policy provides for, as an assumption, an integrated risk management that extends
to the whole corporation, pursuing the benefit from the diversification of its businesses.
By managing its foreign exchange risk, the Company takes into account the cash flows derived from its operations as a
whole. This concept is especially applicable to the risk relating to the exposure of the Brazilian Real against the U.S.
dollar, in which future cash flows in U.S. dollar, as well as cash flows in Brazilian Real affected by the fluctuation between
both currencies, such as cash flows derived from diesel and gasoline sales in the domestic market, are assessed in an
integrated manner.
Accordingly, the financial risk management mainly involves structured actions encompassing the business of the
Company.
F-115
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in the Real/U.S. dollar spot rate, as well as foreign exchange variation of the Real against other foreign
currencies, may affect net income and the statement of financial position due to the exposures in foreign currencies,
such as high probable future transactions, monetary items and firm commitments.
The Company seeks to mitigate the effect of potential variations in the Real/U.S. dollar spot rates mainly raising funds
denominated in US dollars, aiming at reducing the net exposure between obligations and receipts in this currency, thus
representing a form of structural protection that takes into account criteria of liquidity and cost competitiveness.
Foreign exchange variation on future exports denominated in U.S. Dollar in a given period are efficiently hedged by the
US dollar debt portfolio taking into account changes in such portfolio over time.
The foreign exchange risk management strategy may involve the use of derivative financial instruments to hedge
certain liabilities, mitigating foreign exchange rate risk exposure, especially when the Company is exposed to a foreign
currency in which no cash inflows are expected, for example, the pounds sterling.
In the short-term, the foreign exchange risk is managed by applying resources in cash or cash equivalent denominated
in Brazilian Real, U.S. Dollar or in another currency.
a)
Cash Flow Hedge involving the Company’s future exports
The carrying amounts, the fair value as of December 31, 2021, and a schedule of expected reclassifications to the
statement of income of cumulative losses recognized in other comprehensive income (shareholders’ equity) based on
a US$ 1.00 / R$ 5.5805 exchange rate are set out below:
Hedging Instrument
Hedged Transactions
Present value of hedging instrument
notional value at
12.31.2021
Nature
of the Risk
Maturity
Date
US$ million
R$ million
Foreign exchange gains and losses
on proportion of non-derivative
financial instruments cash flows
Foreign exchange gains and losses of
highly probable future monthly
exports revenues
Foreign Currency
– Real vs U.S. Dollar
Spot Rate
January
2022 to
December
2031
72,640
405,370
Changes in the present value of hedging instrument notional value
Amounts designated as of January 1, 2021
Additional hedging relationships designated, designations revoked and hedging instruments re-designated
Exports affecting the statement of income
Principal repayments / amortization
Foreign exchange variation
Amounts designated as of December 31, 2021
Nominal value of hedging instrument (finance debt and lease liability) at December 31, 2021
US$ million
61,502
40,924
(14,354)
(15,432)
-
72,640
84,083
R$ million
319,608
224,721
(77,269)
(83,366)
21,676
405,370
469,225
According to the 2022-2026 Strategic Plan, there is an increase in expected exports, mainly as a result of the increase
in Brent prices and, consequently, an increase in the value of highly probable future exports. As a result, the net
exposure Dollar/Real observed during 2021 is reduced as of December 31, 2021, as presented in item (c) below.
In the year ended December 31, 2021, the Company recognized a US$ 15 gain within foreign exchange gains (losses)
due to ineffectiveness (a US$ 1 loss in the same period of 2020).
The average ratio of future exports for which cash flow hedge accounting was designated to the highly probable future
exports is 100%.
A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of
December 31, 2021 is set out below:
F-116
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Balance at January 1,2020
Recognized in Other comprehensive income
Reclassified to the statement of income - occurred exports
Reclassified to the statement of income - exports no longer expected or not occurred
Balance at December 31, 2020
Recognized in Other comprehensive income
Reclassified to the statement of income - occurred exports
Balance at December 31, 2021
Exchange rate
variation
Tax effect Total
(20,517)
(21,460)
4,172
548
(37,257)
(3,949)
4,585
(36,621)
6,977
7,296
(1,419)
(187)
12,667
1,343
(1,557)
12,453
(13,540)
(14,164)
2,753
361
(24,590)
(2,606)
3,028
(24,168)
Additional hedging relationships may be revoked or additional reclassification adjustments from equity to the
statement of income may occur as a result of changes in forecasted export prices and export volumes following a
revision of the Company’s strategic plan. Based on a sensitivity analysis considering a US$ 10/barrel decrease in Brent
prices stress scenario, when compared to the Brent price projections in our Strategic Plan 2022-2026, would not indicate
a reclassification from equity to the statement of income.
A schedule of expected reclassification of cumulative foreign exchange losses recognized in other comprehensive
income to the statement of income as of December 31, 2021 is set out below:
Expected realization
(8,460)
(6,908)
(5,390)
(3,824)
(3,384)
(3,475)
(5,180)
(36,621)
2022
2023
2024
2025
2026
2027 2028 a 2031
Total
Accounting policy for hedge accounting
At inception of the hedge relationship, the Company documents its objective and strategy, including identification of
the hedging instrument, the hedged item, the nature of the hedged risk and evaluation of hedge effectiveness
requirements.
Considering the natural hedge and the risk management strategy, the Company designates hedging relationships to
account for the effects of the existing hedge between a foreign exchange gain or loss from proportions of its long-term
debt obligations (denominated in U.S. dollars) and foreign exchange gain or loss of its highly probable U.S. dollar
denominated future export revenues, so that gains or losses associated with the hedged transaction (the highly
probable future exports) and the hedging instrument (debt obligations) are recognized in the statement of income in
the same periods.
Foreign exchange gains and losses on proportions of debt obligations and lease liability (non-derivative financial
instruments) have been designated as hedging instruments.
The highly probable future exports for each month are hedged by a proportion of the debt obligations with an equal US
dollar nominal amount. Only a portion of the Company’s forecast exports are considered highly probable.
The Company’s future exports are exposed to the risk of variation in the Brazilian Real/U.S. dollar spot rate, which is
offset by the converse exposure to the same type of risk with respect to its debt denominated in US dollar.
The hedge relationships are assessed on a monthly basis and they may cease and may be re-designated in order to
achieve the risk management strategy.
Foreign exchange gains and losses relating to the effective portion of such hedges are recognized in other
comprehensive income and reclassified to the statement of income within finance income (expense) in the periods when
the hedged item affects the statement of income.
F-117
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Whenever a portion of future exports for a certain period, for which their foreign exchange gains and losses hedging
relationship has been designated is no longer highly probable, the Company revokes the designation and the
cumulative foreign exchange gains or losses that have been recognized in other comprehensive income remain
separately in equity until the forecast exports occur.
If future exports for which foreign exchange gains and losses hedging relationship has been designated is no longer
expected to occur, any related cumulative foreign exchange gains or losses that have been recognized in other
comprehensive income from the date the hedging relationship was designated to the date the Company revoked the
designation is immediately recycled from equity to the statement of income.
In addition, when a financial instrument designated as a hedging instrument expires or settles, the Company may
replace it with another financial instrument in a manner in which the hedge relationship continues to occur. Likewise,
whenever a hedged transaction effectively occurs, its financial instrument previously designated as a hedging
instrument may be designated for a new hedge relationship.
Gains or losses relating to the ineffective portion are immediately recognized in finance income (expense).
Ineffectiveness may occur as hedged items and hedge instruments have different maturity dates and due to discount
rate used to determine their present value.
b)
Information on ongoing contracts
Cross currency swap – Pounds Sterling x Dollar
In 2017, the Company, through its wholly owned subsidiary Petrobras Global Trading B.V. (PGT), entered into cross
currency swaps maturing in 2026 and 2034, with notional amounts of £ 700 million and £ 600 million, respectively, in
order to hedge its Pound/U.S. Dollar exposure arising from bonds issued amounting to £ 1,300.
After the repurchase of bonds, the current notional amount is £ 1,025.
Non-Deliverable Forward (NDF) – Euro x Dollar and Pounds Sterling x Dollar
In 2018, the Company, also through PGT, entered into non deliverable forwards, in other to reduce its euro x dollar and
pounds sterling x dollar exposures raised by bonds issued.
The net notional amount of derivatives originally contracted were reduced to € 2,245 million and 164 million pounds
sterling, respectively, in line with a lower exposure to the euro, provided by the repurchase of bonds in that currency
throughout 2019.
As of December 31, 2020, net notional amount of pounds sterling x dollar derivative changed to 354 million pounds
sterling, while the position in euros was terminated.
Swap contracts – IPCA x CDI and CDI x Dollar
In September 2019, Petrobras contracted a cross currency swap aiming to protect against exposure arising from the
7th issuance of debentures, settled on October 9, 2019, in the total notional amount of US$ 367 for IPCA x CDI
operations, maturing in September 2029 and September 2034, and US$ 240 for CDI x U.S. Dollar operations, maturing
in September 2024 and September 2029.
Changes in future interest rate curves (CDI) may have an impact on the Company's results, due to the market value of
these swap contracts. The parallel shock was estimated from the average term of swap contracts (25% of the future
interest rate). A sensitivity analysis on CDI through a parallel shock keeping all other variables remaining constant,
would result in the impacts shown in the following table:
F-118
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Sensitivity Analysis
Parallel increase of 300 basis points
Parallel reduction of 300 basis points
Result
(7)
21
c)
Sensitivity analysis for foreign exchange risk on financial instruments
A sensitivity analysis is set out below, showing the probable scenario for foreign exchange risk on financial instruments,
computed based on external data along with reasonably possible and remote scenarios (25% and 50% changes in the
foreign exchange rates prevailing on December 31, 2021, respectively), except for assets and liabilities of foreign
subsidiaries, when transacted in a currency equivalent to their respective functional currencies. This analysis only covers
the exchange rate variation and maintains all other variables constant.
Financial Instruments
Exposure at
12.31.2021
Risk
Probable
Scenario (*)
Reasonably
possible
Scenario (**)
Remote
Scenario (**)
Euro/Real
Dollar/Real
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Exchange rate - Cross currency swap
Cash flow hedge on exports
2,243
(46,274)
(270)
36,320
(7,981)
1
(9)
(8)
624
(1,236)
(612)
1
(11)
(10)
955
(1,843)
691
(197)
Total at December 31, 2021
(8,808)
(*) At December 31, 2021, the probable scenario was computed based on the following risks: R$ x U.S. Dollar - a 0% depreciation of the Real; Euro x U.S. Dollar: a 1.1%
depreciation of the Euro; Pounds Sterling x U.S. Dollar: a 0.5% depreciation of the Pounds Sterling; Real x Euro: a 1.1% depreciation of the Real; and Real x Pounds Sterling
- a 0.1% depreciation of the Real. Source: Focus and Thomson Reuters.
4,487
(92,548)
(539)
72,641
(15,959)
2
(18)
(16)
1,247
(2,472)
(1,225)
2
(22)
(20)
1,909
(3,685)
1,381
(395)
(17,615)
1,122
(23,137)
(135)
18,160
(3,990)
1
(5)
(4)
312
(618)
(306)
1
(6)
(5)
477
(921)
345
(99)
(4,404)
Assets
Liabilities
Derivative - cross currency swap
−
8
−
(6)
2
−
−
−
(14)
27
13
−
−
−
(1)
2
(1)
−
15
Assets
Liabilities
Pound/Dollar
Pound/Real
Euro/Dollar
(**) Reasonably possible and remote scenarios consider 25% and 50% change in the foreign exchange rates prevailing on December 31, 2021, respectively.
36.4. Interest rate risk management
The Company considers that interest rate risk does not create a significant exposure and therefore, preferably does not
use derivative financial instruments to manage interest rate risk, except for specific situations faced by certain
subsidiaries of Petrobras.
The sensitivity analysis of interest rate risk presented in the table below is carried out for a 12-month term. Amounts
referring to reasonably possible and remote scenarios mean the total floating interest expense if there is a variation of
25% and 50% in these interest rates, respectively, maintaining all other variables constant.
F-119
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Risk
LIBOR 1M
LIBOR 3M
LIBOR 6M
CDI
TJLP
IPCA
Probable
Scenario (*)
−
2
333
128
57
82
Reasonably
possible
Scenario (*)
−
3
376
160
71
102
Remote
Scenario
(*)
−
3
419
192
85
122
602
712
821
(*) The probable scenario was calculated considering the quotations of currencies and floating rates to which the debts are indexed.
36.5. Liquidity risk management
The possibility of a shortage of cash or other financial assets in order to settle the Company’s obligations on the agreed
dates is managed by the Company based on policies such as:
•
centralization of cash management, optimization of the level of cash and cash equivalents held and reduction of
working capital;
• maintenance of an adequate cash balance to ensure that cash need for investments and short-term obligations is
met even in adverse market conditions;
•
•
•
increase in the average debt maturity, increase in funding sources from domestic and international markets (new
markets and financial products); and
funds under the partnership and divestment program; and
revolving credit facilities with several financial institutions.
Following its liability management strategy, the Company regularly evaluates market conditions and may enter into
transactions to repurchase its own securities or those of its affiliates, through a variety of means, including tender
offers, make whole exercises and open market repurchases, in order to improve its debt repayment profile and cost of
debt.
36.6. Credit risk
Credit risk management in Petrobras aims to mitigate risk of not collecting receivables, financial deposits or collateral
from third parties or financial institutions through efficient credit analysis, granting and management based on
quantitative and qualitative parameters that are appropriate for each market segment in which the Company operates.
The commercial credit portfolio is broad and diversified and comprises clients from the domestic and foreign markets.
Credit granted to financial institutions is related to collaterals received, cash surplus invested and derivative financial
instruments. It is spread among “investment grade” international banks rated by international rating agencies and
Brazilian banks with low credit risk.
36.6.1. Credit quality of financial assets
a)
Trade and other receivables
Most of Petrobras's clients do not have a risk rating granted by rating agencies. Thus, for the definition and monitoring
of credit limits, management evaluates the customer's field of activity, commercial relationship, financial relationship
with Petrobras and its financial statements, among other aspects.
F-120
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
b)
Other financial assets
Credit quality of cash and cash equivalents, as well as marketable securities is based on external credit ratings provided
by Standard & Poor’s, Moody’s and Fitch. The credit quality of those financial assets, that are neither past due nor
considered to be credit impaired, are set out below:
AA
A
BBB
BB
AAA.br
AA.br
Other ratings
Cash and cash equivalents
Marketable securities
12.31.2021
12.31.2020
12.31.2021
12.31.2020
1,152
1,145
2,308
3,672
530
1,639
21
1,995
2,363
168
4,154
673
1,960
398
10,467
11,711
−
−
−
−
694
−
−
694
−
−
−
−
652
43
8
703
37. Related-party transactions
The Company has a related-party transactions policy, which is annually revised and approved by the Board of Directors
in accordance with the Company’s by-laws.
In order to ensure the goals of the Company are achieved and to align them with transparency of processes and
corporate governance best practices, this policy guides Petrobras while entering into related-party transactions and
dealing with potential conflicts of interest on these transactions, based on the following assumptions and provisions:
•
•
•
•
Competitiveness: prices and conditions of services compatible with those practiced in the market;
Compliance: adherence to the contractual terms and responsibilities practiced by the Company;
Transparency: adequate reporting of the agreed conditions, as well as their effects on the company's financial
statements;
Fairness: establishment of mechanisms that prevent discrimination or privileges and the adoption of practices
that ensure the non-use of privileged information or business opportunities for the benefit of individuals or
third parties; and
•
Commutability: arm’s length basis.
The Audit Committee must approve in advance transactions between the Company and the Brazilian Federal
Government, including its agencies or similar bodies; Petros Foundation; Petrobras Health Association; controlled and
associated entities (including entities controlled by its associates); and entities controlled by key management
personnel or by their close family members, taking into account the materiality established by this policy. The Audit
Committee (CAE) reports monthly to the Board of Directors.
Transactions with the Brazilian Federal Government, including its agencies or similar bodies and controlled entities (the
latter when classified as out of the Company's normal course of business by the CAE), which are under the scope of
Board of Directors approval, must be preceded by the CAE and Minority Shareholders Committee assessment and must
have prior approval of, at least, 2/3 of the board members.
The related-party transactions policy also aims to ensure an adequate and diligent decision-making process for the
Company’s key management.
F-121
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
37.1. Transactions with joint ventures, associates, government entities and pension plans
The Company has engaged, and expects to continue to engage, in the ordinary course of business in numerous
transactions with joint ventures, associates, pension plans, as well as with the Company’s controlling shareholder, the
Brazilian Federal Government, which include transactions with banks and other entities under its control, such as
financing and banking, asset management and other transactions.
The balances of significant transactions are set out in the following table:
Joint ventures and associates
BR Distribuidora, current Vibra Energia
Natural Gas Transportation Companies
State-controlled gas distributors (joint ventures)
Petrochemical companies (associates)
Other associates and joint ventures
Subtotal
Brazilian government – Parent and its controlled entities
Government bonds
Banks controlled by the Brazilian Government
Receivables from the Electricity sector
Petroleum and alcohol account - receivables from the Brazilian Government
Brazilian Federal Government - dividends
Others
Subtotal
Pension plans
Total
Current
Non-Current
Total
12.31.2021
12.31.2020
Assets
Liabilities
Assets
Liabilities
−
−
255
26
104
385
1,446
8,417
−
506
2
26
10,397
51
10,833
2,110
8,723
10,833
−
−
42
12
13
67
-
1,267
−
-
−
54
1,321
61
1,449
315
1,134
1,449
196
74
225
17
152
664
1,632
7,676
205
482
2
38
10,035
52
10,751
2,663
8,088
10,751
39
191
68
9
120
427
-
3,707
−
-
−
47
3,754
65
4,246
1,225
3,021
4,246
F-122
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The income/expenses of significant transactions are set out in the following table:
Joint ventures and associates
BR Distribuidora, current Vibra Energia
Natural Gas Transportation Companies
State-controlled gas distributors (joint ventures)
Petrochemical companies (associates)
Other associates and joint ventures
Subtotal
Brazilian government – Parent and its controlled entities
Government bonds
Banks controlled by the Brazilian Government
Receivables from the Electricity sector
Petroleum and alcohol account - receivables from the Brazilian Government
Brazilian Federal Government - dividends
Empresa Brasileira de Administração de Petróleo e Gás Natural – Pré-Sal Petróleo S.A. –
Others
Subtotal
Pension plans
Total
Revenues, mainly sales revenues
Purchases and services
Income (expenses)
Foreign exchange and inflation indexation charges, net
Finance income (expenses), net
Total
2021
2020
2019
7,936
(308)
2,410
3,553
418
14,009
64
(157)
131
58
31
(139)
(34)
(46)
−
13,963
14,672
(494)
(315)
(59)
159
13,963
11,038
(1,478)
1,723
2,769
265
14,317
41
(456)
72
235
(4)
(135)
(15)
(262)
(177)
13,878
16,202
(2,074)
(93)
(102)
(55)
13,878
7,242
(1,858)
2,812
2,926
208
11,330
107
(652)
300
8
(4)
(110)
(130)
(481)
−
10,849
13,748
(2,591)
−
(395)
87
10,849
On December 29, 2021, the Company signed five new contracts with the associate Braskem for the sale and purchase of
petrochemical products. These contracts amount to US$ 7.5 billion, equivalent to the remaining values of the prior
contracts that were canceled. The new contracts are effective from January 1, 2022 with maturities between May 2026
and December 2029.
Information on the precatories (judicialized debts from the Brazilian Federal Government) issued in favor of the
Company arising from the petroleum and alcohol accounts is disclosed in note 13.1.
The liability related to pension plans of the Company's employees and managed by the Petros Foundation, including
debt instruments, is presented in note 17.
Petrobras agreement with Amazonas Energia
On April 7, 2021, Petrobras and its subsidiaries Breitener Tambaqui S.A. and Breitener Jaraqui S.A. signed a legal
agreement with Amazonas Energia S.A. (debtor) and Centrais Elétricas Brasileiras S.A. - Eletrobras (jointly responsible),
in the amount of US$ 77 (R$ 438 million), for the receipt of amounts relating to seven lawsuits, which will be suspended
until the full settlement of the negotiated credits. The debt will be settled in 60 installments updated based on 124.75%
of the CDI interest rate, from January 18, 2021 until full settlement.
The signing of the agreement generated a positive effect on the Company’s statement of income in the second quarter
of 2021 of US$ 59 (R$ 329 million), net of tax effects, since these receivables had already been written-off in previous
years. In November 2021, the Company sold its entire interest in Breitener as set out in explanatory note 31.
37.2. Compensation of key management personnel
The criteria for compensation of employees and officers are established based on the relevant labor legislation and
the Company’s Positions, Salaries and Benefits Plan (Plano de Cargos e Salários e de Benefícios e Vantagens).
The compensation of employees (including those occupying managerial positions) and officers in December 2021 and
December 2020 were:
F-123
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Compensation of employees, excluding officers (amounts in U.S. dollars)
Lowest compensation
Average compensation
Highest compensation
Compensation of highest paid Petrobras officer
2021
678
3,775
19,220
21,642
2020
614
3,617
18,799
20,700
The total compensation of Executive Officers and Board Members of Petrobras is set out as follows:
Jan-Dec/2021
Jan-Dec/2020
Wages and short-term benefits
Social security and other employee-related taxes
Post-employment benefits (pension plan)
Variable compensation
Benefits due to termination of tenure
Total compensation recognized in the statement of income
Total compensation paid (*)
Average number of members in the period (**)
Average number of paid members in the period (***)
(*) The variable compensation (PPP) paid to management is included in the Executive Officers columns.
(**) Monthly average number of members.
(***) Monthly average number of paid members.
Executive
Officers
2.6
0.7
0.3
2.5
0.6
6.7
6.0
9.00
9.00
Board of
Directors
0.1
−
−
-
-
0.1
0.1
10.58
4.50
Executive
Officers
2.8
0.9
0.2
2.4
0.1
6.4
4.8
9.00
9.00
Board of
Directors
0.1
−
−
-
-
0.1
−
10.00
4.42
Total
2.9
0.9
0.2
2.4
0.1
6.5
4.8
19.00
13.42
Total
2.7
0.7
0.3
2.5
0.6
6.8
6.1
19.58
13.50
In 2021, expenses related to compensation of the board members and executive officers of Petrobras amounted to
US$ 15 (US$ 14 for the same period of 2020).
On April 14, 2021, the Company’s Annual Shareholders’ Meeting set the threshold for the overall compensation for
executive officers and board members at US$ 8 (R$ 47.06 million) from April 2021 to March 2022.
The compensation of the Advisory Committees to the Board of Directors is separate from the fixed compensation set
for the Board Members and, therefore, has not been classified under compensation of Petrobras’ key management
personnel.
In accordance with Brazilian regulations applicable to companies controlled by the Brazilian Federal Government, Board
members who are also members of the Audit Committee or Audit Committee of Petrobras and its subsidiaries are only
compensated with respect to their Audit Committee duties. The total compensation concerning these members was
US$ 544 thousand for the year ended December 31, 2021 (US$ 642 thousand with tax and social security costs). For the
same period of 2020, the total compensation concerning these members was US$ 441 thousand (US$ 529 thousand
with tax and social security costs).
The Variable Compensation Program for Executive Officers is subject to compliance with prerequisites and performance
indicators. The variable remuneration to be paid changes according to the percentage of goals achievement and its
payment is deferred in 5 years.
In 2021, the Company provisioned US$ 3 referring to the Performance Award Program – PPP 2021 for Executive
Directors.
Exemption from damage (indemnity)
The company's bylaws establishes the obligation to indemnify and keep the officers without losses, members with
statutory functions and other employees and agents that legally act through officers’ delegation, so as to cope with
certain expenses due to claims, inquiries, investigations and administrative, arbitration or judicial proceedings in Brazil
or in any other jurisdiction, which aim to impute any responsibility for regular acts of management performed
exclusively in the exercise of its activities since the date of your possession or since the beginning of the contractual
relation with the Company.
F-124
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The first period of the agreement coverage began on December 18, 2018 and continues until the occurrence of the
following events, whichever comes last: (i) the end of the fifth (5th) year following the date on which the beneficiary
leave, for any reason, to exercise the mandate, function or position; (ii) the course of the time required in transit of any
Process in which the Beneficiary is partly due to the practice of Regular Management Act; or (iii) the course of the
limitation period according to law to events that can generate the obligations of indemnification by the Company,
including, but not limited to, the criminal statute applicable deadline, even if such period is applied by administrative
authorities. The maximum exposure established by the company (global limit for all eventual claims) until March 24,
2020 is US$ 500.
The second period of the agreement coverage began on April 25, 2020 and continues until the occurrence of the same
kind of events of the first period. The maximum exposure established by the company (global limit for all eventual
claims) until March, 2022 is US$ 300.
Indemnity agreements shall not cover: (i) acts covered under Directors and Officers (D&O) insurance policy purchased
by the Company, as formally recognized and implemented by the insurance company; (ii) acts outside the regular
exercise of the duties or powers of the Beneficiaries; (iii) acts in bad faith act, malicious acts, fraud or serious fault on
the part of the Beneficiaries; (iv) self-interested acts or in favor of third parties that damage the company’s social
interest; (v) obligation to pay damages arising from social action according to article 159 of Law 6,404/76 or
reimbursement of the damages according to art. 11, § 5°, II of Law 6,385/76; (vi) other cases provided for in the
indemnity contract; (vii) other cases where a manifest conflict of interest with the company is established. It is worth
noting that after a final unappealable decision, if it is proved that the act performed by the beneficiary is not subject to
indemnification, the beneficiary is obligated to return the advanced amounts to the company. Petrobras will have no
obligation to indemnify the Beneficiaries for loss of profits, loss of business opportunity, interruption of professional
activity, moral damages or indirect damages.
In case of potential conflicts of interest, the Company may hire outside professionals, with a principled, impartial and
independent reputation and with a strong experience to evaluate eventual indemnity lawsuits, verifying whether or not
the act will be covered. In addition, the beneficiary of an indemnity agreement would be prevented from attending
meetings or discussions concerning the payment approval of his or her own expenses.
38. Supplemental information on statement of cash flows
Amounts paid/received during the year:
Withholding income tax paid on behalf of third-parties
Transactions not involving cash
Purchase of property, plant and equipment on credit
Lease
Provision/(reversals) for decommissioning costs
Use of deferred tax and judicial deposit for the payment of contingency
Assets received due to assumption of participation in concessions
Receivables from Búzios Agreement
39. Subsequent events
Sale of Potiguar group of fields and related assets
2021
904
-
6,945
(1,082)
1,173
165
54
2020
2019
770
1,165
310
4,255
5,174
2
-
-
76
2,301
5,497
3
-
-
On January 31, 2022, Petrobras signed with the company 3R Potiguar SA, a wholly-owned subsidiary of 3R Petroleum
Óleo e Gás SA, a contract for the sale of its entire interest (100%) in a set of 22 production onshore and shallow water
field concessions, together with its associated infrastructure, located in the Potiguar Basin, in the state of Rio Grande
do Norte, jointly called the Potiguar group of fields.
This sale amounts to US$ 1,385, of which (a) US$ 110 was received on the transaction signing; (b) US$ 1,040 to be
received at the closing of the transaction and (c) US$ 235 to be paid in 4 annual installments of US$ 58.75, starting in
F-125
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
March 2024. The contract provides for price adjustments until the closing of the transaction, and it is also subject to the
fulfillment of conditions precedent, such as approval by the ANP.
Sale of Alagoas group of fields and related assets
On February 4, 2022, Petrobras closed the sale of Alagoas group of fields to Origin Energia S.A. (formerly Petro+), with
the sale of its entire interest (100%) in seven concessions, six onshore (Anambé, Arapaçu, Cidade of São Miguel dos
Campos, Furado, Pilar and São Miguel dos Campos) and one in in shallow water (Paru field), jointly called the Alagoas
Pole.
This sale amounts to US$ 300, with US$ 60 received on the transaction signing and US$ 240 at the transaction closing.
Minimum compensation based on employee's position and work schedule - RMNR
In February 2022, the judgment of the appeals filed by the plaintiff and several amicus curiae was started. The judgment
is currently underway in the First Panel of the Supreme Federal Court, with 3 votes in favor of the Company, confirming
that there is an understanding of recognizing the merit of the collective bargaining agreement signed between
Petrobras and the unions. Considering that the last minister to vote requested additional time for analysis, the trial was
suspended, and is pending the presentation of the vote by this last minister.
Additional information on the subject is presented in Note 18.
Partial prepayment to Petros
On February 22, 2022, the Company’s Board of Directors approved the partial prepayment of the Term of Financial
Commitment relating to the plans PPSP-R Pre-70 and PPSP-NR Pre-70, and of the Term of Financial Commitment
relating to the Pension Difference, entered into with the Petros Foundation, in the amount of US$ 1,233 (R$ 6,882
million), scheduled to occur on February 25, 2022.
Both commitments are recorded in these financial statements, within the actuarial liability amount (note 17).
Sale of Norte Capixaba group of fields
On February 22, 2022, the Company’s Board of Directors approved the sale of its entire interest (100%) in a set of four
onshore production fields, with integrated facilities, located in the state of Espírito Santo, jointly called Norte Capixaba
group of fields, to Seacrest Petróleo SPE Norte Capixaba Ltda., a wholly-owned subsidiary of Seacrest Exploração e
Produção de Petróleo Ltda..
This sale amounts to US$ 478, of which (a) US$ 36 was paid at the contract signing; (b) US$ 442 to be paid at the
transaction closing. In addition, there are up to US$ 66 in contingent payments provided for in the contract, depending
on future Brent prices. The agreement provides for price adjustments and to the fulfillment of conditions precedent,
such as the approval by the ANP.
Transfer of participation in the Búzios field
On March 4, 2022, Petrobras signed an agreement with its partner CNOOC Petroleum Brasil Ltda. (CNOOC) for the
transfer of 5% of its interest in the Production Sharing Contract for the Surplus Volume of the Transfer of Rights
Agreement of the Búzios field, in the pre-salt layer of the Santos basin. The agreement results from the call option
exercised by CNOOC on September 29, 2021.
The amount to be received by Petrobras at the closing of the operation is US$ 2,120, referring to the compensation and
reimbursement of the signature bonus of CNOOC's additional interest, subject to price adjustments and to the
fulfillment of conditions precedent, such as CADE, ANP and Ministry of Mines and Energy (MME) approval.
F-126
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
After the transaction becomes effective, Petrobras will hold an 85% interest in the Production Sharing Contract of the
Surplus Volume of the Transfer of Rights Agreement of the Búzios field, CNOOC will hold a 10% interest and CNODC
Brasil Petróleo e Gás Ltda. a 5% interest. The total participation in this Búzios Co-participation Agreement, including
the portions of the Transfer of Rights Agreement and of the BS-500 Concession Agreement (100% of Petrobras) will be
88.99% of Petrobras, 7.34% of CNOOC and 3.67% of CNODC.
Diligence on the sale of the REMAN refinery
On March 8, 2022, CADE published a statement declaring the Act of Concentration to be complex and ordering the
execution of diligence concerning the sale process of REMAN refinery to Ream Participações S.A., which was signed in
August 2021.
The Act of Concentration process requires diligence related to the further analysis of the operation and its effects on
the downstream refining markets and possible competitive impacts, and the conclusion of this process is expected to
occur between 240 and 330 days as from November 2021.
Petrobras will continue to collaborate with CADE in order to obtain the approval of the transaction within the legal
deadline.
F-127
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Supplementary information on Oil and Gas Exploration and Production (unaudited)
This section provides supplemental information on oil and gas exploration and production activities of the Company.
The information included in items (i) through (iii) provides historical cost information pertaining to costs incurred in
exploration, property acquisition and development, capitalized costs and results of operations. The information
included in items (iv) and (v) presents information on Petrobras’ estimated net proved reserve quantities, standardized
measure of estimated discounted future net cash flows related to proven reserves, and changes in estimated
discounted future net cash flows.
The Company, on December 31, 2021, maintains activities mainly in Brazil, in addition to activities in Argentina,
Colombia and Bolivia, in South America. The equity-accounted investments are comprised of the operations of the joint
venture company MP Gulf of Mexico, LLC (MPGoM), in which Murphy Exploration & Production Company ("Murphy" ) has
80% stake and Petrobras America Inc ("PAI") 20% stake in United States of America, North America. The Company
reports its reserves in Brazil, United States of America and Argentina. Bolivian reserves are not included due to
restrictions determined by Bolivian Constitution. In Colombia, our activities are exploratory, and therefore, there are no
associated reserves.
i) Capitalized costs relating to oil and gas producing activities
As set out in note 26, the Company uses the successful efforts method of accounting for appraisal and development
costs of crude oil and natural gas production. In addition, notes 23 and 24 presents the accounting policies applied by
the Company for recognition, measurement and disclosure of property, plant and equipment and intangible assets.
The following table summarizes capitalized costs for oil and gas exploration and production activities with the related
accumulated depreciation, depletion and amortization, and asset retirement obligations:
December 31, 2021
Unproved oil and gas properties
Proved oil and gas properties
Support Equipment
Gross Capitalized costs
Depreciation, depletion and amortization
Net capitalized costs
December 31, 2020
Unproved oil and gas properties
Proved oil and gas properties
Support Equipment
Gross Capitalized costs
Depreciation, depletion and amortization
Net capitalized costs
December 31, 2019
Unproved oil and gas properties
Proved oil and gas properties
Support Equipment
Gross Capitalized costs
Depreciation, depletion and amortization
Net capitalized costs
Brazil
4,455
80,523
67,988
152,967
(51,621)
101,345
17,438
61,857
73,199
152,494
(43,008)
109,486
23,063
81,063
88,289
192,414
(51,332)
141,081
Consolidated entities
Abroad
South
America
Others
Total
Total
Equity
Method
Investees
-
-
1
1
(1)
-
-
-
1
1
(1)
-
-
-
1
1
(1)
-
115
172
778
1,065
(734)
331
112
140
762
1,014
(688)
326
117
135
688
941
(582)
359
4,570
80,695
68,766
154,032
(52,355)
101,677
17,550
61,997
73,961
153,508
(43,696)
109,812
23,180
81,198
88,977
193,355
(51,914)
141,441
-
832
-
832
(296)
536
-
792
-
792
(316)
476
-
4,202
-
4,202
(1,690)
2,513
115
172
777
1,064
(733)
331
112
140
761
1,013
(687)
326
117
135
687
940
(581)
359
F-128
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
ii) Costs incurred in oil and gas property acquisition, exploration and development activities
Costs incurred are summarized below and include both amounts expensed and capitalized:
Consolidated entities
Abroad
Brazil
South
America
Others
Total
Total
Equity
Method
Investees
December 31, 2021
Acquisition costs:
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2020
Acquisition costs:
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2019
Acquisition costs:
-
−
682
6,035
6,717
315
24
805
5,664
6,808
-
-
5
44
49
-
-
10
3
13
-
Proved
-
Unproved (*)
11
Exploration costs
6
Development costs
Total
17
(*) Mainly acquisition of oil exploration rights - Transfer of Rights, according to note 24.1.
-
16,670
1,069
6,819
24,558
(iii) Results of operations for oil and gas producing activities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
44
49
-
-
10
3
13
-
-
11
6
17
-
−
687
6,079
6,766
315
24
815
5,667
6,821
-
16,670
1,080
6,825
24,575
-
-
−
37
37
-
-
−
57
57
-
-
3
150
153
The Company’s results of operations from oil and gas producing activities for the years ended December 31, 2021, 2020
and 2019 are shown in the following table. The Company transfers substantially all of its Brazilian crude oil and gas
production to the Refining, Transportation & Marketing segment in Brazil. The internal transfer prices calculated by the
Company’s model may not be indicative of the price the Company would have realized had this production been sold in
an unregulated spot market. Additionally, the prices calculated by the Company’s model may not be indicative of the
future prices to be realized by the Company. Gas prices used are those set out in contracts with third parties.
Production costs are lifting costs incurred to operate and maintain productive wells and related equipment and
facilities, including operating employees’ compensation, materials, supplies, fuel consumed in operations and operating
costs related to natural gas processing plants.
Exploration expenses include the costs of geological and geophysical activities and projects without economic
feasibility. Depreciation and amortization expenses relate to assets employed in exploration and development
activities. In accordance with Codification Topic 932 – Extractive Activities – Oil and Gas, income taxes are based on
statutory tax rates, reflecting allowable deductions. Interest income and expense are excluded from the results
reported in this table.
F-129
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Consolidated entities
Abroad
Brazil
South
America
North
America
Others
Total
Total
Equity
Method
Investees
974
54,479
55,453
(14,601)
(685)
(8,959)
3,107
852
35,167
(11,957)
131
-
131
(67)
(2)
(46)
-
15
31
(11)
-
-
-
-
-
-
-
114
114
(39)
-
-
-
-
-
-
-
(118)
(118)
40
131
-
131
(67)
(2)
(46)
-
11
27
(10)
1,105
54,479
55,584
(14,668)
(687)
(9,005)
3,107
863
35,194
(11,967)
220
-
220
(44)
-
(38)
-
(17)
121
(41)
23,210
20
75
(78)
17
23,227
80
763
33,524
34,287
(9,378)
(796)
(8,611)
(7,364)
(885)
7,253
(2,466)
108
−
108
(59)
(7)
(50)
−
(2)
(10)
3
−
−
−
−
−
−
−
(167)
(167)
57
−
−
−
−
−
−
−
(26)
(26)
9
108
−
108
(59)
(7)
(50)
−
(195)
(203)
69
871
33,524
34,395
(9,437)
(803)
(8,661)
(7,364)
(1,080)
7,050
(2,398)
148
−
148
(54)
−
(57)
−
(158)
(121)
41
4,786
(7)
(110)
(17)
(134)
4,652
(80)
888
49,400
50,288
(15,749)
(793)
(11,436)
(1,535)
(1,420)
19,354
(6,579)
174
−
174
(69)
(6)
(37)
−
(13)
50
(17)
−
−
−
−
−
−
−
41
41
(14)
−
−
−
−
−
(13)
(421)
(34)
(468)
159
174
−
174
(69)
(6)
(50)
(421)
(6)
(377)
128
1,062
49,400
50,462
(15,818)
(799)
(11,486)
(1,956)
(1,426)
18,977
(6,451)
1,114
−
1,114
(124)
(5)
(292)
−
(20)
672
(229)
12,775
33
27
(309)
(249)
12,526
443
December 31, 2021
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding corporate
overhead and interest costs)
December 31, 2020
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding corporate
overhead and interest costs)
December 31, 2019
Net operation revenues:
Sales to third parties
Intersegment
Production costs
Exploration expenses
Depreciation, depletion and amortization
Impairment of oil and gas properties
Other operating expenses
Results before income tax expenses
Income tax expenses
Results of operations (excluding corporate
overhead and interest costs)
F-130
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
(iv) Reserve quantities information
As presented in note 4.1, proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible from a given date
forward, from known reservoirs, and under existing economic conditions, operating methods, and government
regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that
renewal is reasonably certain. The project to extract the hydrocarbons must have commenced or there must be
reasonable certainty that the project will commence within a reasonable time. Reserves estimate involves a high degree
of judgment and complexity and its application affects different items of these Financial Statements.
The Company’s estimated net proved oil and gas reserves and changes thereto for the years 2021, 2020 and 2019 are
presented in the following table. Proved reserves are estimated in accordance with the reserve definitions prescribed
by the Securities and Exchange Commission.
Proved developed oil and gas reserves are proved reserves that can be expected to be recovered: (i) through existing
wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor
compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at
the time of the reserves estimate if the extraction is done by means not involving a well.
Proved reserves for which substantial new investments in additional wells and related facilities will be required are
named proved undeveloped reserves.
Reserve estimates are subject to variations due to technical uncertainties in the reservoir and changes in economic
scenarios. A summary of the annual changes in the proved reserves of oil is as follows (in millions of barrels):
Consolidated Entities
Equity Method Investees
Proved developed and undeveloped
reserves(*)
Reserves at December 31, 2018 (1)
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Crude oil in
Brazil
8,169
719
18
−
(68)
−
(754)
8,083
269
35
−
(61)
−
(792)
7,534
−
1,654
(9)
(773)
8,406
Crude Oil in
South
America
2
−
−
−
−
−
−
1
(1)
−
−
−
−
−
−
−
2
−
−
2
Synthetic
Oil in Brazil
5
−
4
−
−
−
(1)
8
(7)
−
−
−
−
(1)
−
−
11
−
(1)
10
Consolidated
Total
8,175
719
21
−
(68)
−
(755)
8,092
261
35
−
(61)
−
(793)
7,534
−
1,667
(9)
(774)
8,419
Crude Oil in
North
America
27
1
−
−
−
−
(5)
23
−
−
−
−
−
(4)
18
−
1
−
(3)
17
Crude Oil in
Africa
60
(7)
1
−
−
−
(12)
42
−
−
−
(41)
−
(1)
−
−
−
−
−
−
Reserves at December 31, 2019 (1)
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2020
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2021
(1) In 2018, total proved reserves includes 60 million barrels related to PO&G assets held for sale. In 2019, total proved reserves include 42 million barrels of assets held for sale (PO&G).
Total
8,262
713
22
−
(68)
−
(772)
8,156
261
35
−
(102)
−
(798)
7,552
−
1,668
(9)
(777)
8,435
(*) Apparent differences in the sum of the numbers are due to rounding off.
F-131
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
A summary of the annual changes in the proved reserves of natural gas is as follows (in billions of cubic feet):
Consolidated Entities
Equity Method
Investees
Proved developed and undeveloped
reserves (*)
Reserves at December 31, 2018 (1)
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Natural Gas
in Brazil
7,790
1,416
15
−
(24)
−
(817)
8,381
(93)
36
−
(42)
−
(735)
7,547
−
1,615
(15)
(692)
8,455
Natural Gas
in South
America
214
(42)
−
−
−
−
(16)
156
(119)
−
−
−
−
(12)
26
−
167
−
(16)
177
Synthetic
Gas in Brazil
6
−
8
−
−
−
(1)
12
(11)
−
−
−
−
(1)
−
−
19
−
(1)
18
Consolidated
Total
8,010
1,373
23
−
(24)
−
(834)
8,549
(222)
36
−
(42)
−
(749)
7,572
−
1,802
(15)
(709)
8,650
Reserves at December 31, 2019 (1)
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Reserves at December 31, 2020
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2021
(1) In 2018, total proved reserves includes 47 billion cubic feet related to Africa assets held for sale. In 2019, total proved reserves includes 47 billion cubic feet related to Africa assets held for sale.
Gas
Natural in
North
America
11
−
−
−
−
−
(2)
9
−
−
−
−
−
(2)
8
−
−
−
(1)
7
Gas
Natural in
Africa
47
11
−
−
−
−
(11)
47
−
−
−
(47)
−
−
−
−
−
−
−
−
Total
8,068
1,384
23
−
(24)
−
(847)
8,605
(222)
36
−
(90)
−
(750)
7,580
−
1,802
(15)
(710)
8,657
(*) Apparent differences in the sum of the numbers are due to rounding off.
Natural gas production volumes used in these tables are the net volumes withdrawn from our proved reserves, including
gas consumed in operations and excluding reinjected gas. Our disclosure of proved gas reserves includes gas consumed
in operations, which represent 36% of our total proved reserves of natural gas as of December 31, 2021.
F-132
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
The tables below summarize information about the changes in total proved reserves of crude oil and natural gas, in
millions of barrels of oil equivalent, in our consolidated entities and equity method investees for 2021, 2020 and 2019:
Consolidated Entities
Equity Method
Investees
Proved developed and undeveloped
reserves(*)
Reserves at December 31, 2018 (1)
Revisions of previous estimates
Extensions and discoveries
Improved Recovery
Sales of reserves
Purchases of reserves
Production for the year
Total
9,606
944
26
−
(72)
−
(913)
9,590
Reserves at December 31, 2019 (1)
224
Revisions of previous estimates
41
Extensions and discoveries
−
Improved Recovery
(117)
Sales of reserves
−
Purchases of reserves
(923)
Production for the year
8,816
Reserves at December 31, 2020
1
Extensions and discoveries
1,969
Revisions of previous estimates
(11)
Sales of reserves
(896)
Production for the year
Reserves at December 31, 2021
9,878
(1) In 2018, includes 68 million barrels of oil equivalent related to PO&G assets held for sale in Africa; and in 2019, includes 49 million barrels of oil equivalent related to assets held for sale in Africa.
Consolidated
Total
9,510
948
25
−
(72)
−
(894)
9,517
224
41
−
(68)
−
(918)
8,796
−
1,967
(11)
(892)
9,860
Synthetic Oil
in Brazil
6
−
5
−
−
−
(1)
10
(9)
−
−
−
−
(1)
−
−
14
−
(1)
13
Oil
equivalent in
Brazil
9,467
955
20
−
(72)
−
(890)
9,480
253
41
−
(68)
−
(914)
8,792
−
1,923
(11)
(888)
9,816
Oil
equivalent
in Africa
68
(5)
1
−
−
−
(14)
49
−
−
−
(49)
−
(1)
−
−
−
−
−
−
Oil
equivalent in
South
America
37
(7)
−
−
−
−
(3)
27
(21)
−
−
−
−
(2)
5
−
30
−
(3)
31
Oil
equivalent
in North
America
28
1
−
−
−
−
(5)
24
−
−
−
−
−
(5)
19
1
2
−
(3)
18
(*) Apparent differences in the sum of the numbers are due to rounding off.
In 2021, we incorporated 1,969 million boe of proved reserves by revising previous estimates, including:
(i) addition of 1,376 million boe due to new projects, mainly in Búzios field and in other fields in the Santos and Campos
Basins. The new projects in Búzios field were made possible due to the acquisition of the Transfer of Rights Surplus and
the approval of Búzios Co-participation Agreement;
(ii) addition of 429 million boe related to economic revisions, mainly due to the increase in oil prices; and
(iii) addition of 164 million boe arising from technical revisions, mainly due to good performance and increased
production experience in reservoirs in the pre-salt layer of Santos Basin.
The additions in our proved reserves were partially offset by the reduction of 11 million boe due to sales of proved
reserves.
The company's total proved reserve resulted in 9,878 million boe in 2021, considering the variations above and the
reduction from 2021 production of 896 million boe. Production refers to volumes that were previously included in our
reserves and, therefore, does not consider natural gas liquids, since the reserve is estimated at a reference point prior
to gas processing, except in the United States and Argentina. The production also does not consider volumes of injected
gas, the production of Extended Well Tests in exploratory blocks and production in Bolivia, since the Bolivian
Constitution does not allow the disclosure of reserves.
In 2020, we incorporated 224 million boe of proved reserves by revising previous estimates, including:
F-133
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
(i) addition of 637 million boe arising from technical revisions, mainly due to good performance and increased
production experience in reservoirs in the pre-salt layer of Santos Basin;
(ii) addition of 254 million boe due to approvals of new projects in the Santos and Campos Basins; and
(iii) reduction of 667 million boe related to economic revisions, mainly due to the decrease in oil prices.
In addition, we added 41 million boe to our proved reserves due to extensions and discoveries in the pre-salt of Santos
Basin, and reduced 117 million boe due to sales of proved reserves.
The company's total proved reserve resulted in 8,816 million boe in 2020, considering the variations above and the
reduction from 2020 production of 923 million boe. Production refers to volumes that were previously included in our
reserves and, therefore, does not consider natural gas liquids, since the reserve is estimated at a reference point prior
to gas processing, except in the United States and Argentina. The production also does not consider volumes of injected
gas, the production of Extended Well Tests in exploratory blocks and production in Bolivia, since the Bolivian
Constitution does not allow the disclosure of reserves.
In 2019, we incorporated 944 million boe of reserves proved by revisions of previous estimates, composed of:
(i) addition of 529 million boe due to technical reviews, mainly associated with good performance and increased
production experience of pre-salt reservoirs in the Santos Basin;
(ii) addition of 267 million boe referring to contractual revisions, including the reallocation of volumes due to the
revision of the Transfer of Rights agreement, and the extension of concession contracts in Brazil;
(iii) addition of 243 million boe due to the approval of new projects in the Santos, Campos and Espírito Santo Basins;
and
(iv) a 95 million boe reduction due to economic revisions, mainly due to the price reduction.
We also incorporated 26 million boe into our proved reserves due to discoveries and extensions, mainly in the Santos
Basin pre-salt, and reduced 72 million boe from our proved reserves due to proved reserve sales.
Considering the production of 913 million boe in 2019 and the variations above, the company's total proved reserve
resulted in 9,590 million boe in 2019. Production refers to volumes that were included in our reserves and, therefore,
does not consider natural gas liquids, since the reserve is estimated at a reference point prior to gas processing, except
in the United States and Argentina. The production also does not consider volumes of injected gas, the production of
Extended Well Tests in exploratory blocks and production in Bolivia, since the Bolivian Constitution does not allow the
disclosure of reserves.
F-134
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
The tables below present the volumes of proved developed and undeveloped reserves, net, that is, reflecting Petrobras'
participation:
Net proved developed reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (2)
Total Consolidated Entities
Equity Method Investees
North America (2)
Africa
Total Equity Method Investees
Total Consolidated and Equity Method Investees (1)
Net proved undeveloped reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (2)
Total Consolidated Entities
Equity Method Investees
North America (2)
Africa
Total Equity Method Investees
Total Consolidated and Equity Method Investees (1)
Total proved reserves (developed and undeveloped)
Crude Oil
Synthetic Oil
Natural Gas
Synthetic Gas
Total oil and gas
(mmbbl)
(bncf)
(mmboe)
2019
4,999
1
5,000
18
37
55
5,055
3,084
1
3,084
4
4
9
3,093
8,148
8
−
8
−
−
−
8
−
−
−
−
−
−
−
8
5,716
67
5,783
7
45
52
5,834
2,665
89
2,754
2
2
5
2,759
8,593
12
−
12
−
−
−
12
−
−
−
−
−
−
−
12
5,961
12
5,973
19
45
64
6,037
3,528
15
3,543
5
5
10
3,553
9,590
(1) It includes amounts related to assets held for sale (37 million barrels of oil and 45 billion cubic feet of natural gas in net proved developed reserves and 4 million barrels of oil and 2 billion
cubic feet of natural gas in net proved undeveloped reserves) in Africa (PO&G).
(2) South America oil reserves includes 20% of natural gas liquid (NGL) in proved developed reserves and 59% of NGL in proved undeveloped reserves. North America oil reserves includes 4 %
of natural gas liquid (NGL) in proved developed reserves and 5% of NGL in proved undeveloped reserves.
(*) Apparent differences in the sum of the numbers are due to rounding off.
F-135
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Net proved developed reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (1)
Total Consolidated Entities
Equity Method Investees
North America (1)
Total Equity Method Investees
Total Consolidated and Equity Method Investees
Net proved undeveloped reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (1)
Total Consolidated Entities
Equity Method Investees
North America (1)
Total Equity Method Investees
Total Consolidated and Equity Method Investees
Total proved reserves (developed and undeveloped)
Crude Oil
Synthetic Oil
Natural Gas
Synthetic Gas
(mmbbl)
(bncf)
Total oil and gas
(mmboe)
2020
4,858
−
4,858
17
17
4,875
2,676
−
2,676
1
1
2,678
7,552
−
−
−
−
−
−
−
−
−
−
−
−
−
5,714
26
5,740
7
7
5,747
1,833
−
1,833
1
1
1,833
7,580
−
−
−
−
−
−
−
−
−
−
−
−
−
5,810
5
5,815
18
18
5,833
2,982
−
2,982
1
1
2,983
8,816
(1) South America oil reserves includes 21% of natural gas liquid (NGL) in proved developed reserves. North America oil reserves includes 6% of natural gas liquid (NGL) in proved developed
reserves and 5% of NGL in proved undeveloped reserves.
(*) Apparent differences in the sum of the numbers are due to rounding off.
Net proved developed reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (1)
Total Consolidated Entities
Equity Method Investees
North America (1)
Total Equity Method Investees
Total Consolidated and Equity Method Investees
Net proved undeveloped reserves (*):
Consolidated Entities
Brazil
South America, outside Brazil (1)
Total Consolidated Entities
Equity Method Investees
North America (1)
Total Equity Method Investees
Total Consolidated and Equity Method Investees
Total proved reserves (developed and undeveloped)
Crude Oil
Synthetic Oil
Natural Gas
Synthetic Gas
(mmbbl)
(bncf)
Total oil and gas
(mmboe)
2021
4,711
1
4,712
15
15
4,727
3,695
1
3,696
2
2
3,698
8,425
10
−
10
−
−
10
−
−
−
−
−
−
10
5,591
79
5,670
6
6
5,676
2,865
98
2,963
1
1
2,964
8,640
18
−
18
−
−
18
−
−
−
−
−
−
18
5,656
14
5,670
16
16
5,686
4,173
17
4,190
2
2
4,192
9,878
(1) South America oil reserves includes 24% of natural gas liquid (NGL) in proved developed reserves and 24% of NGL in proved undeveloped reserves. North America oil reserves includes 2%
of natural gas liquid (NGL) in proved developed reserves and 3% of NGL in proved undeveloped reserves.
(*) Apparent differences in the sum of the numbers are due to rounding off.
F-136
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
(v) Standardized measure of discounted future net cash flows relating to proved oil and gas quantities and changes
therein
The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is
calculated in accordance with the requirements of Codification Topic 932 – Extractive Activities – Oil and Gas.
Estimated future cash inflows from production in Brazil are computed by applying the average price during the 12-
month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic
average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual
arrangements, excluding escalations based upon future conditions. Future price changes are limited to those provided
by contractual arrangements existing at the end of each reporting year. Future development and production costs are
those estimated future expenditures necessary to develop and produce year-end estimated proved reserves based on
current costs, assuming continuing economic conditions. Estimated future income taxes (including future social
contributions on net income - CSLL) are calculated by applying appropriate year-end statutory tax rates. The amounts
presented as future income taxes expenses reflect allowable deductions considering statutory tax rates. Discounted
future net cash flows are calculated using 10% mid-period discount factors. This discounting requires a year-by-year
estimate of when the future expenditures will be incurred and when the reserves will be produced.
The valuation prescribed under Codification Topic 932 – Extractive Activities – Oil and Gas requires assumptions as to
the timing and amount of future development and production costs. The calculations are made as of December 31 each
year and should not be relied upon as an indication of Petrobras’ future cash flows or the value of its oil and gas reserves.
F-137
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Standardized measure of discounted future net cash flows:
Consolidated entities
Abroad
Brazil
South
America
North
America
Total
Total
Equity
Method
Investees (2)
December 31, 2021
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
612,924
(264,158)
(44,027)
(104,568)
200,171
587
(261)
(107)
(61)
159
10 percent midyear annual discount for timing of
estimated cash flows (1)
(85,391)
(70)
Standardized measure of discounted future net
cash flows
December 31, 2020
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
10 percent midyear annual discount for timing of
estimated cash flows (1)
Standardized measure of discounted future net
cash flows
December 31, 2019
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
Undiscounted future net cash flows
10 percent midyear annual discount for timing of
estimated cash flows (1)
Standardized measure of discounted future net
cash flows
(1) Semiannual capitalization
114,780
333,248
(182,534)
(31,236)
(46,862)
72,616
(26,638)
45,978
535,788
(272,381)
(34,346)
(86,012)
143,049
(54,928)
88,121
(2) It includes the amount of US$ 1,047 related to PO&G assets classified as held for sale in 2019.
Apparent differences in the sum of the numbers are due to rounding off.
89
69
(51)
(16)
-
2
-
1
609
(285)
(141)
(31)
152
(83)
69
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
587
(261)
(107)
(61)
159
613,511
(264,419)
(44,134)
(104,628)
200,330
(70)
(85,461)
89
114,869
69
(51)
(16)
-
2
-
1
609
(285)
(141)
(31)
152
333,317
(182,585)
(31,252)
(46,862)
72,618
(26,638)
45,979
536,397
(272,666)
(34,487)
(86,044)
143,200
(83)
(55,010)
69
88,190
1,129
(329)
(28)
-
772
(303)
470
667
(465)
(48)
(79)
75
(1)
74
4,045
(1,349)
(515)
(438)
1,743
(332)
1,412
F-138
Petróleo Brasileiro S.A. – Petrobras
Supplementary information on Oil and Gas Exploration and Production (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in discounted net future cash flows:
Balance at January 1, 2021
Sales and transfers of oil and gas, net of production
cost
Development cost incurred
Net change due to purchases and sales of minerals
in place
Net change due to extensions, discoveries and
improved recovery related costs
Revisions of previous quantity estimates
Net change in prices, transfer prices and in
production costs
Changes in estimated future development costs
Accretion of discount
Net change in income taxes
Other - unspecified
Balance at December 31, 2021
Balance at January 1, 2020
Sales and transfers of oil and gas, net of production
cost
Development cost incurred
Net change due to purchases and sales of minerals
in place
Net change due to extensions, discoveries and
improved recovery related costs
Revisions of previous quantity estimates
Brazil
45,978
(38,074)
6,035
(246)
−
41,211
108,268
(19,900)
4,598
(33,089)
−
114,780
88,121
(24,908)
5,664
(847)
509
3,160
South
America
1
North
America
−
(43)
44
−
−
205
58
(119)
−
(47)
(9)
89
69
(14)
3
−
−
(35)
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Consolidated entities
Abroad
Total
1
(43)
44
−
−
205
58
(119)
−
(47)
(9)
89
69
(14)
3
−
−
(35)
Total
45,979
(38,117)
6,079
(246)
−
41,416
108,326
(20,019)
4,598
(33,136)
(9)
114,869
88,190
(24,922)
5,666
(847)
509
3,125
Equity
Method
Investees (1)
74
(177)
37
−
10
30
401
3
49
48
(7)
470
1,412
(94)
57
(1,047)
−
(10)
−
−
−
−
−
−
−
(145)
97
9
24
(7)
1
185
(145)
97
9
24
(7)
1
185
(375)
67
12
51
1
74
2,290
(54,751)
(4,618)
8,821
24,812
(7)
45,979
111,305
(54,606)
(4,716)
8,812
24,788
-
45,978
111,121
Net change in prices, transfer prices and in
production costs
Changes in estimated future development costs
Accretion of discount
Net change in income taxes
Other - unspecified
Balance at December 31, 2020
Balance at January 1, 2019
Sales and transfers of oil and gas, net of production
cost
Development cost incurred
Net change due to purchases and sales of minerals
in place
Net change due to extensions, discoveries and
improved recovery related costs
Revisions of previous quantity estimates
Net change in prices, transfer prices and in
(505)
production costs
(97)
Changes in estimated future development costs
244
Accretion of discount
363
Net change in income taxes
(249)
Other - unspecified
Balance at December 31, 2019
1,412
(1) It includes the amount of US$ 1,675 related to PO&G assets classified as held for sale at January 1st, 2019. Includes the amount of US$ 1,047 related to PO&G assets classified as held for sale at
December 31, 2019.
(34,114)
(5,324)
11,112
15,714
−
88,121
(34,259)
(5,265)
11,137
15,755
7
88,190
(145)
60
25
41
7
69
(145)
60
25
41
7
69
(34,587)
6,826
(34,522)
6,819
385
18,273
385
18,317
(792)
150
−
−
−
−
−
−
−
(44)
−
(44)
(65)
6
(65)
6
(1,387)
(1,387)
−
−
−
8
−
−
−
−
−
−
Apparent differences in the sum of the numbers are due to rounding off.
F-139