Annual Report and
Form 20-F 2023
—
[AM_ACTIVE 405510973_17]
CONFIDENCIAL
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, 2023
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)
Sergio Caetano Leite
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, issued by PGF
6.500% Global Notes due 2033, issued 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
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.
**
Series of Notes paid at maturity in March 2024.
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, 2023 was:
7,442,231,382 Petrobras Common Shares, without par value
5,497,905,879 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.
☒
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):
Yes
☒
No
☐
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.
☐
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.
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.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
☐
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.
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).
Item 17
☐
Item 18
☐
Yes
☐
No
☒
Table of Contents
Glossary
About us
About us
Overview
2023 Highlights
Risks
Risks
Cybersecurity Framework and Risk Management
Our Business
Exploration & Production
Refining, Transportation & Marketing
Gas & Low Carbon Energies
Portfolio Management
External Business Environment
Strategic Plan
2024-2028+ Strategic Plan
Research, Development and Innovation (“RD&I”)
Environment, Social and Governance
Environment
Social Responsibility
Corporate Governance
Operating and Financial Review and Prospects
Consolidated Financial Performance
Financial Performance by Business Segment
Liquidity and Capital Resources
Management and Employees
Management
Employees
9
22
23
24
27
29
30
54
58
59
94
117
136
138
143
144
154
157
158
164
169
176
177
183
185
197
198
218
Compliance and Internal Controls
Compliance
Related Party Transactions
Controls and Procedures
Ombudsman and Internal Investigations
Shareholder Information
Listing
Shares and Shareholders
Shareholders’ Rights
Shareholder Remuneration
Additional Information for Non-Brazilian Shareholders
Legal and Tax
Regulation
Material Contracts
Legal Proceedings
Tax
Additional Information
List of Exhibits
Signatures
Abbreviations
Conversion table
Cross-Reference to Form 20-F
Financial Statements
227
228
233
235
236
237
238
239
246
251
255
258
259
265
269
277
297
298
305
306
308
309
312
Disclaimer
Disclaimer
We have presented the information in this annual report and Form 20-F in a manner consistent with how we
view our business. In order to facilitate your review, this annual report and Form 20-F for the year ended
December 31, 2023 (referred to herein as our “annual report”) has a cross reference guide to SEC Form 20-F
under “Cross-Reference to Form 20-F”.
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 information available on our website is not and shall not be deemed to be incorporated by reference to
this annual report.
The 2023 GHG emissions performance results presented in this annual report will be subject to third party
audit, and although we do not expect significant differences, the audited results may differ from the results
presented herein.
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.
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 commitment with respect to ESG practices and low carbon and environmental sustainability;
– Our projected and targeted capital expenditures, commitments and revenues;
PETROBRAS | Annual Report and Form 20-F | 2023
6
Disclaimer
– 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 impact of expanded regional or global conflict, including the conflict between Russia and Ukraine;
– The cost and availability of adequate insurance coverage;
– Our ability to successfully implement asset sales under our portfolio management program;
– Our ability to successfully implement our 2024-2028 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
– 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.
PETROBRAS | Annual Report and Form 20-F | 2023
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Disclaimer
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. For further information about
obtaining copies of our public filings at the NYSE, please call +1 (212) 656-5060. Our SEC filings are
available to the public at the SEC’s website at www.sec.gov and at our website at
www.petrobras.com.br/ir. 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.
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 | 2023
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Glossary
Glossary
Glossary of Certain Terms used in this Annual Report
Unless the context indicates otherwise, the following terms are defined as follows:
Ambiente de Comercialização Livre (Free Marketing Environment). Market segment in
ACL
which the purchase and sale of electric energy are the subject of freely negotiated
bilateral agreements, according to specific marketing rules and procedures.
ACR
ADR
ADS
AIP
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.
The Acordo de Individualização da Produção (Productions Individualization
Agreement). The AIP applies in situations where the reservoirs extend beyond the
areas granted or contracted, as regulated by ANP.
AMS or Saúde Petrobras
replaced the AMS (Assistência Multidisciplinar de Saúde), that continues as the
Saúde Petrobras is the trade name of our health care plan, effective as of 2021, which
registered name in the Agência Nacional de Saúde (National Health Agency) in Brazil.
ANA
ANEEL
ANM
The Agência Nacional de Águas e Saneamento Básico (National Water and Sanitation
Agency).
The Agência Nacional de Energia Elétrica (Brazilian Electricity Regulatory Agency).
The Agência Nacional de Mineração (National Mining Agency).
ANP
Petroleum, Natural Gas and Biofuels Agency) is the federal agency that regulates the
The Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (Brazilian National
oil, natural gas and renewable fuels industry in Brazil.
ANPD
The Autoridade Nacional de Proteção de Dados (National Data Protection Authority).
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Glossary
ANTAQ
The Agência Nacional de Transportes Aquaviários (Brazilian National Agency of
Waterway Transportation).
API GRAVITY
Standard measure of oil density developed by the American Petroleum Institute.
APS
B3
The Associação Petrobras de Saúde (Petrobras Health Association), a non-profit
association that operates our supplementary health care plan (Saúde Petrobras) since
2021.
Brasil, Bolsa, Balcão, the Brazilian Stock Exchange.
Barrels
Standard measure of crude oil volume.
Biofuel
BioQav
BNDES
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.
Aviation turbine fuel used to power aircraft, produced from several biomass sources in
different production processes, also known as “biojet”, “biokerosine” or “SAF”
(sustainable 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.
Banco Nacional de Desenvolvimento Econômico e Social (Brazilian National
Development Bank).
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
Braskem
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
Finance, responsible for financial programming, accounting, management of the
federal public debt, federal financial and securities assets and the Brazilian federal
government’s financial relationship with states and municipalities in Brazil. The
Brazilian National Treasury's mission is to seek fiscal balance through efficient,
proactive and transparent management of public accounts and act in the structuring
of financing channels that can make sustainable public interest policies viable,
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Glossary
contributing to Brazil's intertemporal economic and social 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 do
An arbitration chamber governed and maintained by B3.
Mercado
Capital Expenditures or
“CAPEX”
Capital expenditures based on the cost assumptions and financial methodology
adopted in our Strategic Plan, which includes acquisition of PP&E and intangible
assets, acquisition of equity interests, as well as other items that do not necessarily
qualify as cash flows used in investing activities, comprising geological and
geophysical expenses, research and development expenses, pre-operating charges,
purchase of property, plant and equipment on credit and borrowing costs directly
attributable to works in progress.
Carbon Intensity in E&P
Carbon Intensity in Refining
E&P GHG Emissions Intensity. GHG emissions, in terms of CO₂e, from E&P activities in
relation to the total oil and gas operated production (wellhead) registered in the same
period. Scope 1 and 2 GHG emissions are considered. This indicator represents the rate
of GHG emissions per barrel of oil equivalent produced. It covers oil and gas
exploration and production activities under operational control, and is used to analyze
the carbon performance of the assets in our current and future portfolio.
Refining GHG Emissions Intensity. GHG emissions, in terms of CO₂e, from Refining
activities in relation to the activity unit called Complexity Weighted Tone (“CWT”). CWT
represents a measure of activity, similar to UEDC (Utilized Equivalent Distillation
Capacity), which considers the potential for GHG emissions, equivalent to distillation,
per process unit, allowing better comparability between refineries of different
complexities. This indicator covers refining activities with operational control and
composes the analysis of the carbon performance of the assets in our current and
future portfolio.
CBA
CCUS
Acordo Coletivo de Trabalho (Collective Bargaining Agreement).
Carbon Capture, Utilization and Storage.
Central Bank of Brazil
The Banco Central do Brasil.
Central Depositária
as the custodian of our common and preferred shares (including those represented by
The Central Depositária de Ativos e de Registro de Operações do Mercado, which serves
ADSs) on behalf of our shareholders.
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Glossary
CEO
CFO
CMN
CNODC
CNOOC
Chief Executive Officer.
Chief Financial Officer.
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., a subsidiary in Brazil of the China National
Petroleum Corporation (CNPC).
China National Offshore Oil Corporation (CNOOC), or its subsidiary that operates in
Brazil, CNOOC Petroleum Brasil Ltda.
CNPC
China National Petroleum Corporation (CNPC).
CNPE
by the Minister of Mines and Energy, is an advisory body to the Brazilian President for
The Conselho Nacional de Política Energética (National Energy Policy Council), chaired
the formulation of energy policies and guidelines.
CONAMA
Conselho Nacional do Meio Ambiente (National Council for the Environment in Brazil).
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.
CVM
D&M
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 proved crude oil, Condensate and natural
gas reserves.
Deepwater
Between 300 and 1,500 meters (984 and 4,921 feet) deep.
Depositary
JPMorgan.
Distillation
Physical process involving vaporization and condensation, whereby petroleum is
separated (refined) into oil products.
E&P or Exploration &
Exploration & Production is our business segment that covers the activities of
Production
exploration, development and production of crude oil, NGL and natural gas in Brazil
PETROBRAS | Annual Report and Form 20-F | 2023
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Glossary
and abroad.
Engineering, Procurement, Construction and Installation, a form of contracting
arrangement common within the offshore industry.
Environmental, Social and Governance.
Extended well test.
EPCI
ESG
EWT
Exchange Act
Securities Exchange Act of 1934, as amended.
Fitch
FPSO
Fitch Ratings Inc., a credit rating agency.
Floating production, storage and offloading unit.
Gas & Low Carbon Energies is our business segment that covers the activities of
logistics and trading of natural gas and electricity, the transportation and trading of
G&LCE or Gas & Low Carbon
LNG, the generation of electricity by means of thermoelectric power plants, as well as
Energies
natural gas processing. It also includes renewable energy businesses, low carbon
services (carbon capture, utilization and storage) and the production of biodiesel and
its co-products.
GASLUB or GASLUB Cluster
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 was our subsidiary from which we divested in July 2022,
in which we had 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
Greenhouse gas.
Gross revenues
Gross revenues represent Sales revenues plus sales taxes, which mainly includes the
following taxes imposed in Brazil: Contribution for Intervention in the Economic
Domain (“CIDE”), social contributions PIS and COFINS, and tax over services and goods
(“ICMS”).
GSA
GTB
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
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Glossary
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.
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
Health, Safety and Environment.
IAGEE
Target Achievement Indicator). The indicator of compliance with the Greenhouse Gas
Índice de Atendimento às Metas de Gases do Efeito Estufa (Greenhouse Gas Emissions
Emissions Targets.
IASB
International Accounting Standards Board.
IBAMA
The Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis
(Brazilian Institute of the Environment and Renewable Natural Resources).
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.
ICMBio
IFRS
IOF
IPCA
The Instituto Chico Mendes de Conservação da Biodiversidade (Chico Mendes Institute
for Biodiversity Conservation).
International Financial Reporting Standards.
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.
KPI
Key Performance Indicators.
Lava Jato
LIBOR
Operação Lava Jato (Lava Jato Operation), as detailed in “Risks – Risks Factors” and
“Legal and Tax – Legal Proceedings – Lava Jato Investigation” in this annual report.
The London Interbank Offered Rate was a benchmark interest rate at which major
global banks lend to one another in the international interbank market for short-term
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Glossary
loans until June 30, 2023.
An indicator that represents the unit lifting cost of an equivalent barrel, considering
the relationship between costs and production. It includes expenses for the execution
Lifting Cost
and maintenance of production processes. Costs related to the chartering of third-
party platforms, production taxes, and depreciation, depletion, and amortization are
LNG
LPG
not considered in this indicator.
Liquefied natural gas.
Liquefied petroleum gas, which is a mixture of hydrocarbons with up to four carbon
atoms.
Mixed Capital Company
Mixed capital company means a mixed joint stock corporation (public and private
shareholders).
MME
The Ministério de Minas e Energia (Ministry of Mines and Energy) of Brazil.
Moody’s
Moody’s Investors Service, Inc., a credit rating agency.
MTF
Euro Multilateral trading Facility.
Natural Gasoline (C5+)
pressure intermediate between Condensate and LPG, that may compose a gasoline
Natural Gasoline C5+ is a NGL produced at natural gas processing plants with a vapor
blend.
Nelson Complexity Index or
NCI
NGL
NYSE
The Nelson Complexity Index or NCI is a measure of the sophistication of an oil
refinery, where more complex refineries are able to process heavier oils and produce
lighter and more valuable products from a barrel of oil. The NCI is measured on a scale
of one to 20, where higher numbers correspond to more complex and expensive
refineries.
Natural Gas Liquids (NGL), the liquid resulting from the processing of natural gas and
containing the heavier gaseous hydrocarbons.
The New York Stock Exchange.
NYSE Arca Oil Index or Arca
Oil
(former AMEX Oil Index)
The NYSE Arca Oil Index, formerly the AMEX Oil Index, ticker symbol XOI, is a price-
weighted index of the leading companies involved in petroleum exploration,
production and development. It measures the oil industry’s performance 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.
PETROBRAS | Annual Report and Form 20-F | 2023
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Glossary
OCF
Oil
Oil Products
ONS
Operating Cash Flow (net cash provided by operating activities).
Crude oil, including NGLs and Condensates.
Petroleum products, produced through processing in refineries (diesel, gasoline, LPG
and other products).
The Operador Nacional do Sistema Elétrico (National Electric System Operator) of
Brazil.
Operated Production
Production of a gas or oil field, including Petrobras share and partners’ shares.
Operating income
accounted investments and income taxes derived in our audited consolidated financial
Equivalent to the caption income before net finance expense, results of equity-
statements.
Organic Reserves
Measures the amount of proved reserves added to a company’s reserve base during
Replacement Ratio or
the year, excluding disposals and acquisitions of proved reserves, relative to the
Organic RRR
amount of oil and gas produced.
OSRL
PAI
PDV
Oil Spill Response Limited.
Programa de Aposentadoria Incentivado (Incentive Retirement Program).
Programa de Desligamento Voluntário (Voluntary Severance Program).
Petrochemicals
ethane, ethylene, propane, propylene, benzene, xylenes, polypropylene, polyethylene
Chemicals mainly obtained from oil and natural gas (as opposed to fuels) such as
and others. Renewable resources can also be used as raw materials.
Petros
Fundação Petros de Seguridade Social, Petrobras’ employee pension fund.
Petros 2
Petrobras’ sponsored pension plan.
PGF
PifCo
PLR
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
PETROBRAS | Annual Report and Form 20-F | 2023
16
Glossary
Brazilian Law 10,101/2000 and follows the guidelines of the SEST. These annual
guidelines define various aspects of this type of reward, such as format, flow,
governance, financial and remuneration limits.
PLSV
Pipe laying support vessel.
Post-salt reservoir
A geological formation containing oil or natural gas deposits located above a salt layer.
PP&E
PPP
PPSA
PRD
Property, plant and equipment.
The Prêmio por Performance (Performance Award Program) is part of our Variable
Remuneration Program.
Pré-Sal Petróleo S.A.
The Prêmio por Desempenho – PRD (Accomplishment Award) is part of our Variable
Remuneration Program.
Pre-salt Polygon
Pre-salt reservoir
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.
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).
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
Proved developed reserves
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 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,
PETROBRAS | Annual Report and Form 20-F | 2023
17
Glossary
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 that 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.
Reserves that are expected to be recovered from new wells on undrilled acreage, or
from 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.
Proved undeveloped
reserves
PSC
PTAX
R&D
Production Sharing Contract.
The reference exchange rate for the purchase and sale of U.S. dollars in Brazil, as
published by the Central Bank of Brazil.
Research and development.
Reserves Replacement Ratio
Measures the amount of proved reserves added to a company’s reserve base during
or RRR
the year relative to the amount of oil and gas produced.
Reserves to production ratio
or R/P
Calculated as the amount of proved reserves of the year relative to the amount of oil
and gas produced during the year, indicates a number of years reserves would last if
production remains constant.
RT&M or Refining,
Transportation & Marketing
Refining, Transportation & Marketing is our business segment that covers the
activities of refining, logistics, transport, acquisition and exports of crude oil, as well as
trading of oil products, in Brazil and abroad. This segment also includes the
petrochemical operations (which comprehends holding interests in petrochemical
companies in Brazil), and fertilizer production.
S&P
Standard & Poor’s Financial Services LLC, a credit rating agency.
PETROBRAS | Annual Report and Form 20-F | 2023
18
Glossary
SCC-CO2 production losses
Measures the absolute production loss resulting from stress corrosion cracking -
induced by CO2 in production pipelines.
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 (Secretary of
Coordination and Governance of State-Owned Companies).
Sete Brasil
Sete Brasil Participações, S.A.
Shell
Shell Plc, or its subsidiary that operate in Brazil, Shell Brasil Petróleo Ltda.
SOFR
benchmark interest rate based on transactions in the Treasury repurchase marketing,
Secured Overnight Financing Rate. The Secured Overnight Financing Rate (“SOFR”) is a
for dollar-denominated derivatives and loans that replaced the LIBOR.
SPE
Society of Petroleum Engineers.
Strategic Plan
2024-2028+ Strategic Plan.
Synthetic oil and synthetic
bitumen from oil sands, kerogen from oil shales, or processing of other substances
A mixture of hydrocarbons derived by upgrading (i.e., chemically altering) natural
gas
TAG
such as natural gas or coal. Synthetic oil may contain sulfur or other non-hydrocarbon
compounds and has many similarities to crude oil.
Transportadora Associada de Gás S.A.
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, owner of
2,593 km gas pipeline system, located mainly in the South and Southeast regions of
TBG
Brazil, with installed capacity of 30 million m³/d. TBG is connected to GTB, which is
responsible for the Bolivian side of the gas pipeline, 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.
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
TCU
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.
PETROBRAS | Annual Report and Form 20-F | 2023
19
Glossary
TJLP
the CMN (as defined above). The rate is one of the benchmark rates used by BNDES in
The Taxa de Juros de Longo Prazo (Brazil’s long-term interest rate) is set quarterly by
its loans to companies.
ToR Surplus
agreement in specified pre-salt areas. See “Legal and Tax —Material Contracts” in this
Volume that exceeds what has been contracted under the Transfer of Rights
annual report.
TotalEnergies
TotalEnergies SE, or its subsidiary that operates in Brazil, Total E&P do Brasil Ltda.
Transfer of Rights
Agreement or ToR
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.
Transpetro
Petrobras Transporte S.A.
Total recordable injury per million man-hour frequency rate. Number of fatal
accidents, lost-time injuries, injuries involving substitute work and medical treatment
TRIR
injuries per million hours worked. It is a performance indicator used by the industry to
measure occupational safety performance. This indicator is analyzed at all
management levels, including the board of directors.
Ultra-deepwater
Over 1,500 meters (4,921 feet) deep.
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
UPGN
and 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.
UTE
Usina Termoelétrica (Thermal Power Plant). A thermoelectric plant is a power
generation plant in which heat energy is converted to electrical energy.
Utilization of Refining
Measures how much crude oil refineries are processing or "running" as a percentage of
Capacity
their maximum capacity.
Oil and Oil Products Spilled Volume’ indicator. The total volume of oil or oil products
spilled in events of leakages individually greater than 1 bbl (0.159 m³) that reached
VAZO Indicator
water bodies or soil that wasn’t made impermeable. This volumetric criterion (>1
barrel) is aligned with the ANP Manual for reporting incidents for E&P activities.
Sabotage and theft-related spills are not considered.
PETROBRAS | Annual Report and Form 20-F | 2023
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Glossary
Vibra
Vibra Energia S.A., formerly “Petrobras Distribuidora.”
Well Abandonment Cost
Measures the evolution of the average cost of well abandonment. The KPI represents
the average cost of abandoning wells concluded in the year of analysis.
The reference database only considers planned and executed deepwater well
abandonments in the year being measured.
Well Abandonment Duration
Measures the evolution of the average duration of well abandonment. The KPI
represents the average duration of abandoning wells concluded in the year of analysis.
The reference database only considers planned and executed deepwater well
abandonments in the year being measured.
Measures the evolution of the average connection cost of production development
wells. The KPI is the sum of the total cost of well connections concluded in the year of
Well Connection Cost
analysis over the total cost of well connections planned in the strategic plan for the
same well connections.
It only considers pre-salt wells.
Well Construction Cost
Measures the evolution of the average cost of wells construction. The KPI is the sum of
the average cost of drilling and completion concluded in the year of analysis.
The reference database only considers production development wells drilling and
completion in the year being measured. It is not considering exploratory and reservoir
data acquisition wells.
Well Construction Duration
Measures the evolution of the average duration of well construction. The KPI is the
sum of the average duration of drilling and completion concluded in the year of
analysis.
The reference database only considers production development well drilling and
completion in the year being measured. It is not considering exploratory and reservoir
data acquisition wells.
YPFB
Yacimientos Petroliferos Fiscales Bolivianos.
PETROBRAS | Annual Report and Form 20-F | 2023
21
About us
[AM_ACTIVE 405510973_17]
About us
About us
We are a Brazilian mixed capital company, one of the largest producers of oil and gas in the world according
to Bloomberg, 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. To discover these reserves and operate efficiently in deepwaters, we have
developed our own technology and work in close collaboration with suppliers, universities, and research
centers.
We are committed to being the best energy company in terms of diversification, integration and value
generation, reconciling the focus on oil and gas with low carbon businesses. Accordingly, we seek to build a
more sustainable world, with the principles of safety, respect for the environment, and full attention to
people.
We are one of the largest companies in market capitalization in Latin America according to Bloomberg, with
a market capitalization of US$102.2 billion as of December 31, 2023. We have over 46 thousand employees
(including subsidiaries in Brazil and abroad) and we hire specialized services such as offshore drilling rigs,
production platforms, subsea vessels, and subsea hardware that set the entire energy industry chain into
motion. We design and contract engineering, procurement, construction and installation (“EPCI”) for our
entire business stream.
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 (“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 and www.petrobras.com.br/ir.
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 | 2023
23
Overview
About us
We have a large base of proved reserves and operate and produce most of Brazil’s oil and gas. The most
significant part of our proved reserves is located in the adjacent offshore Campos and Santos Basins in
southeast Brazil. Their proximity allows us to optimize our infrastructure and our costs of exploration,
development and production. The Campos and Santos Basins are expected to remain an important source
of 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 distributed throughout
the southeast, south and northeast regions of Brazil, reaching the largest market share in these and other
regions of the country through direct deliveries, pipelines and also cabotage. We mostly meet our demand
for oil products by domestic refining of crude oil, as defined in a periodic process of integrated operational
planning which constantly seeks to maximize value for the company. We are also involved in the production
of petrochemicals and biofuels through interests in some companies. We distribute oil products through
wholesalers, retailers and direct sales.
We also participate in the Brazilian natural gas market, including the logistics and processing of natural gas.
To meet our clients’ and our own internal 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 LNG through our regasification terminals. We also participate in the domestic
power market primarily through our investments in gas-fired thermoelectric power plants.
On November 23, 2023, our Board of Directors approved, in the context of the Strategic Plan, a new
approach in relation to our capital expenditures, changing the segment “Gas & Power” to “Gas & Low Carbon
Energies”, in addition to key changes in our segments for:
– Biofuels: previously presented in Corporate and other businesses, they are now integrated into the
Gas & Low Carbon Energies (G&LCE) segment.
– Fertilizers: previously presented in Gas & Power, they are now integrated into the Refining,
Transportation & Marketing segment.
PETROBRAS | Annual Report and Form 20-F | 2023
24
About us
As of December 31, 2023, the presentation of information by operation segment reflects the updated
management model used by our Executive Officers (Chief Operating Decision Maker - CODM) to make
decisions regarding resource allocation and performance evaluation.
In this context, the information by segment for the years 2022 and 2021 were not reclassified for
comparability purposes since the total of assets and statement of income balances involved are immaterial.
Thus, we currently divide our business into three main segments:
– Exploration & Production (E&P): this segment covers the activities of exploration, development and
production of crude oil, NGL and natural gas in Brazil and abroad, for the primary purpose of
supplying our domestic refineries. This segment also operates through partnerships with other
companies, including holding interests in non-Brazilian companies in this segment.
– Refining, Transportation & Marketing (RT&M): this segment covers the activities of refining,
logistics, transport, acquisition and exports of crude oil, as well as trading of oil products in Brazil and
abroad. This segment also includes petrochemical operations (which involves holding interests in
petrochemical companies in Brazil), and fertilizer production.
– Gas & Low Carbon Energies (G&LCE): this segment covers the activities of logistics and trading of
natural gas and electricity, the transportation and trading of LNG, the generation of electricity by
means of thermoelectric power plants, as well as natural gas processing. It also includes renewable
energy businesses, low carbon services (carbon capture, utilization and storage) and the production
of biodiesel and its co-products.
Activities that are not attributed to business segments are classified as “Corporate and Other Businesses,”
including general corporate matters, in addition to distribution businesses. Corporate items mainly include
those related to corporate financial management, overhead central administration, and other expenses,
including actuarial costs associated with pension and health plans for beneficiaries. The other businesses
cover the distribution of oil products throughout South America. The 2021 results of other businesses
included the equity interest in our associate Vibra until July, when we sold the remaining interest in this
company.
For further information regarding our business segments, see Note 13 to our audited consolidated financial
statements, as well as “Operating and Financial Review and Prospects” in this annual report.
In 2023, we had activities, as follows, 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 an interest in a joint venture. We have subsidiaries that support our trading
and financial activities in Rotterdam, Houston, Buenos Aires 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. In Africa, we approved the start
of exploratory operations in the Democratic Republic of São Tomé and Príncipe, subject to the approval of
the local regulatory bodies.
We operate through 15 direct subsidiaries (13 incorporated under the laws of Brazil and two incorporated
abroad) and one direct joint operation as listed below. We also have indirect subsidiaries, including
Petrobras Global Trading B.V., Petrobras Global Finance B.V., Petrobras America Inc. and Petrobras
Netherlands B.V.
PETROBRAS | Annual Report and Form 20-F | 2023
25
About us
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 Biocombustível S.A.
Brazil
100.00%
—
—
—
Transportadora Brasileira Gasoduto Bolívia-
Brasil S.A. – TBG
Brazil
51.00%
Procurement Negócios Eletrônicos S.A.
Brazil
72.00%
Araucária Nitrogenados S.A.
Brazil
100.00%
BBPP Holdings Ltda. (29%)
YPFB Transporte S.A. (19.88%)
Corumba Holding S.À.R.L. (0.12%)
SAP Brasil Ltda. (17%)
Accenture do Brasil S.A. (11%)
—
—
Termomacaé S.A.
Termobahia S.A.
Brazil
100.00%
Brazil
98.85%
Petros (1.15%)
Baixada Santista Energia S.A.
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%
Petrobras International Braspetro – PIB BV
Abroad
100.00%
Braspetro Oil Services Company – Brasoil
Abroad
100.00%
Refinaria de Mucuripe S.A
Brazil
100.00%
Associação Petrobras de Saúde - APS(2)
Brazil
93.47%
Albemarle Brazil Holding Ltda.
(50%)
Petrobras Comercializadora de Gás
e Energia e Participações S.A.
(antiga 5283 Participações S.A.)
(0.0007%)
—
—
Transpetro (6.09%)
TBG (0.26%)
Pbio (0.13%)
Termobahia (0.05%)
Joint operations.
(1)
(2) A non-profit association that operates our supplementary health care plan (AMS - 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 30 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 & Production — Overview” for
more details.
PETROBRAS | Annual Report and Form 20-F | 2023
26
2023 Highlights
About us
PETROBRAS | Annual Report and Form 20-F | 2023
27
About us
PETROBRAS | Annual Report and Form 20-F | 2023
28
Risks
[AM_ACTIVE 405510973_17]
Risks
Risks
We are exposed to a number of risks that, individually or jointly, may have an effect on our business and/or
financial performance. The risk factors are presented in the following groups:
Risks related to (1) our company; (2) our shareholders, in particular our controlling shareholders; (3) our
directors; (4) our suppliers; (5) our customers; (6) the sectors of the economy in which we act; (7) the
regulation of the sectors in which we are involved; (8) foreign countries where we are involved; (9) social
issues; (10) environmental issues; (11) climate issues, including physical and transition risks; (12) the use of
our trademark; and (13) our shares and debt securities.
Risk Factors
1) Risks related to our company
1.a) We are exposed to health, safety and environmental 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. In particular, deepwater and ultra-deepwater activities, and refining and
petrochemicals, performed by us, our subsidiaries or our affiliate companies present several risks, such as
oil and product leakage, collapses, aeronautical accidents, fires, and explosions in refineries and exploration
and production units, including platforms, ships, pipelines, mines, terminals, laboratories, and losses of
containment in dams, among other assets owned or operated by us, our subsidiaries or our affiliate
companies. These events can occur due to technical or human failures 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 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 arising 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. Despite our efforts and the actions of public authorities to combat illegal
taps, if this interference continues, it may result in accidents of small or large proportions, including leaks
or damage to our facilities and to communities near our facilities, which may affect the continuity of our
operations and lead to the payment of fines and indemnities to the affected parties, all of which may
negatively impact our results.
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.
1.b) We may incur losses and spend time and financial resources defending pending litigations and
arbitrations.
We are currently party to several administrative, legal and arbitration proceedings related to civil,
administrative, tax, labor, environmental and corporate claims filed against us. These claims involve
substantial amounts of money and other resources, and the total cost of unfavorable decisions can have a
material adverse effect on our results and financial condition.
These legal, administrative and arbitration proceedings can have a negative impact on our results due to
their outcome, such as contracts’ termination and/or revision of governmental authorizations. Depending
PETROBRAS | Annual Report and Form 20-F | 2023
30
Risks
on the outcome, litigation can result in restrictions on our operations and have a material adverse effect on
some of our business.
We can be affected by changes in rules, regulations and jurisprudence that can have a material adverse
effect on our financial condition and results.
1.c) Failures in our information technology systems, information security systems (cybersecurity) and
telecommunications systems and services can adversely impact our operations and reputation.
Our operations are highly dependent on information technology and telecommunications systems and
services, as well as the degree of technological protection and the strength of the associated internal
controls. Interruptions or malfunctions affecting these systems and/or their infrastructure, caused by
obsolescence, technical failures, and/or deliberate acts, or even arising from geopolitical factors or derived
from third-party systems and digital infrastructure and the cloud may harm or even paralyze our business
and adversely impact our operations and reputation. They may also bring unforeseen costs for the recovery
of information and assets, in addition to the imposition of fines or legal sanctions.
Failures in information security (including industrial and automation systems), due to external, intentional
or not (e.g. malware, hackers, cyberterrorism) or internal (e.g. neglect or misuse of IT assets by employees
or contractors who are in a hybrid work environment working on-site and remotely), may also impact our
business and reputation, our relationship with stakeholders and external agents (government, regulatory
bodies, partners, suppliers, among others), our strategic positioning towards our competitors and our
operational and financial results.
Additionally, we are subject to increasing regulations related to cybersecurity and information security,
including among other aspects, adequate protection of data and digital assets, supervision of cyber risks,
and incident reporting. Failure to comply with these regulations at the national and international levels may
result in legal sanctions, as well as impacts on our image and reputation, and affect our operational and
financial results.
1.d) The selection and development of our investment projects have risks that may affect our expected
results.
We constantly evaluate new project opportunities for our investment portfolio. As most projects are
characterized by a long period of development and maturation, we may face changes in market conditions,
such as price changes, new regulatory requirements, consumer preferences, and demand profile, exchange
and interest rates, and financing conditions that may jeopardize our expected rates of return. We may also
change our project approval criteria, including those aimed at decarbonizing operations, resulting in
different risk and return profiles.
We face specific risks for oil and gas projects. Despite our experience in deepwater and ultra-deepwater oil
exploration and production 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 production
phase, which may require adjustments throughout the project life cycle and its expected rate of return.
There are also risks related to potential delays in the execution of oil and gas projects, which may result in
the mismatch of required dates between upstream and downstream projects (e.g., delay in onshore
infrastructure, impacting offshore oil and gas flow, and onshore gas transportation). We also face risks
associated with international conflicts, wars or unplanned unavailability of critical assets and/or resources
(such as drilling rigs, special vessels, and the natural gas and LNG chains) that may also impact the offshore
and onshore flow and may compromise the continuity of our business production chain. Additionally, our
failure to meet obligations established by the regulatory agencies may generate fines and liabilities.
Moreover, despite our expertise in exploration and production and refining, we may face new technical
challenges as we move closer to the technological frontier.
Our Strategic Plan includes initiatives related to climate change, as such commitments are becoming
increasingly relevant in the oil and gas business. Climate change risks may include physical risks, such as
PETROBRAS | Annual Report and Form 20-F | 2023
31
Risks
extreme weather events, as well as risks inherent in the energy transition to a low-carbon economy,
including political and/or regulatory changes and shifting market demands. To address these risks, we may
need to increase our investments in climate change mitigation and adaptation measures, which may result
in increased capital expenditures and significantly impact our Strategic Plan. For further information on how
climate change could impact our results and strategy, please see the risk “11.a) Climate change could impact
our results and strategy” in this section.
Furthermore, we may decide to invest in new energy transition projects that are beyond our current scope
of experience and expertise. In addition to the risks and challenges described above, we may encounter
other risks associated with these new investments and ventures, which could negatively impact our
portfolio’s risk profile and rate of return.
1.e) We have substantial liabilities and may be exposed to significant liquidity constraints in the short
and medium term, which may materially and adversely affect our financial condition and results.
We have substantially reduced the level of our debt in recent years. However, our liabilities are still relevant
and could potentially weaken our liquidity in adverse times. Considering that there may be liquidity
constraints on the debt market to finance our planned investments, pay principal and interest obligations
in contracted terms, and honor our financial commitments, any difficulty in raising significant amounts of
debt capital in the future may affect our results and the ability to fulfill our Strategic Plan or any subsequent
plan adopted.
Our lack of investment grade credit rating and any lowering of our credit ratings may have adverse
consequences on our ability to obtain financing in the market through debt or equity securities, or may
affect our financing cost, making it more difficult and/or costly to refinance maturing obligations. The
impact on our ability to obtain resources and the cost of such resources 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 lowering in the credit ratings of the Brazilian federal government may have additional
adverse consequences on our ability to obtain financing and/or on the cost of our financing and,
consequently, on our results and financial condition.
1.f) Differing interpretations of tax regulation or changes in tax policies may have an adverse effect on
our financial condition and results.
We and our Brazilian and foreign subsidiaries are subject to tax rules and regulations that may, over time,
result in different interpretations between us, our subsidiaries and tax authorities (including federal, state
and municipal authorities), which do not have uniform interpretations. As a result of such divergences, we
and our subsidiaries may have to assume unanticipated provisions and charges. In some cases, when we
and/or our subsidiaries exhaust all administrative remedies related to a tax contingency, further appeals
may be filed in the judicial courts, which may require guarantees, such as the deposit of an amount equal to
the amount of the charge. In some of these cases, the settlement of such charges through tax transactions
or incentivized regularization programs may be a more favorable option for us and our subsidiaries, in which
case we evaluate the alternatives, and make an informed decision on whether to proceed with the
settlement of charges.
In addition, the Brazilian Congress may approve tax law reforms, implementing substantial changes to the
Brazilian tax framework, that could impact our business. The tax authorities of Brazil (including the federal,
state and municipal) and foreign tax authorities may also publish new legislation and/or regulation that
impacts the fulfillment of tax obligations (primary and ancillary) requiring relevant efforts (human and
systemic resources) by taxpayers to implement the obligations within the legal deadline. The obligation to
adapt the taxpayer’s processes to the new legislation in a short time may have an adverse effect on our
results and the results of our subsidiaries.
Any of these occurrences may have a material adverse effect on our financial condition and results.
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1.g) Maintaining our long-term oil production objectives depends on our ability to successfully
incorporate and develop our reserves.
Our ability to incorporate additional reserves depends on exploration activities, which expose us to its
inherent risks and may not lead to the discovery of commercially viable oil or natural gas reserves.
Adding new reserves also depends on our ability to conceive and implement development projects.
Exploration and development activities in deepwater and ultra-deepwater require significant capital
investments and involve several factors that are beyond our control, such as significant changes in
economic conditions, climate and environmental regulations and obtaining and/or renewing environmental
permits, supply market capacity, and unexpected operating conditions, including equipment failures or
incidents, which may restrict, delay or cancel our operations.
In addition, increased competition in the oil and gas sector in Brazil and capital constraints may make it
more difficult or costly to obtain additional acreage in bidding rounds for new contracts and to develop
existing contracted areas.
1.h) 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 geoscience and engineering data demonstrate with reasonable certainty to
be economically producible from a given date forward from known reservoirs under existing economic and
operating conditions according to SEC Regulation S-X, and other applicable regulations.
The reserve estimates presented are prepared based on assumptions and interpretations that are subject
to risks and uncertainties. The geoscience and engineering data that we use to estimate our reserves
present uncertainties that may result in differences between the expected productions in the reported
reserves and those actually produced. In addition, reserve estimates may be affected by significant changes
in economic conditions.
Technical and economic uncertainties may lead to reductions in our reserve estimates and lower future
productions, which may have an adverse effect on our results and financial condition.
1.i) Decommissioning projects have been growing and becoming more relevant in our portfolio, in addition
to being subject to increasing regulatory requirements and stakeholder expectations, which may result in
damage to our image and increased costs.
Decommissioning projects have grown and become more relevant to our portfolio as concession contracts
expire or production systems lose economic viability. Despite the publication of ANP Resolution 817/2020
establishing the rules for conducting the decommissioning of production systems, we may face some
difficulties in defining the scope of these projects and in meeting regulatory requirements, especially due
to our and the industry’s learning curve in this area, as well as the evolution of applicable regulations.
Closure of operations and decommissioning can negatively impact the environment and the surrounding
communities of the sites due to the processes of dismantling structures and facilities. Although our
decommissioning plans have been developed in compliance with applicable law, it is possible that these
plans will also face scrutiny or fail to meet stakeholder demands or expectations regarding environmental,
social and governance practices. As a result, the resource demands for the projects may increase, as well as
the total project and operational costs. In addition, our image and reputation may be adversely affected.
1.j) Obligations relating to Petros and health care benefits are annually revised estimates and may
diverge from future obligations due to changes in market and economic conditions, as well as changes in
actuarial assumptions, which may require additional contributions to rebalance the plans.
The calculation of actuarial obligations, both for our pension plans and for our health care plan benefits, is
based on estimates and actuarial assumptions, as well as on the modeling of business rules, observing the
applicable regulations of each plan and the applicable law. Thus, the value of the obligations corresponds
to an estimate that may change over time, as the assumptions and estimates are not confirmed.
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In addition, we and Petros face risks related to supplementary pension, including a gradual increase in the
longevity of the population covered, legal risks accentuating the level of benefits and risks that affect the
financial assets held by Petros to cover obligations of the benefit plans sponsored by us, which may not
generate the necessary returns to cover the relevant liabilities, in which case additional contributions from
us and participants may be necessary, subject to the constitutional contributory parity rule.
Regarding health benefits, projected cash flows may also be impacted by the following factors:
– higher increase in medical costs than expected;
– additional claims arising from benefits extension; and
– difficulty in adjusting the contributions of participants to reflect increases in health costs.
These factors may result in an increase in our liabilities and may adversely affect our results and our
financial condition.
1.k) Difficulties in attracting, developing and retaining people with the necessary skills and
qualifications can negatively impact the implementation of our strategy.
Our success depends on the capacity to continue training and qualifying our personnel so that they are
qualified to assume senior positions in the future.
The entry of employees in a public position or employment in Brazil is made possible by a public selection
process, as provided for in the Federal Constitution. Since the Consolidação das Leis do Trabalho
(Consolidation of Labor Laws) does not allow us to require more than six months’ previous experience, we
cannot guarantee that new employees have the adequate experience to perform the activities for which
they are designated, that is, with qualifications, experience and skills previously developed in the market.
There is no guarantee that we will adequately allocate and train our employees, nor that we will be able to
do so without incurring additional costs. Any failure may adversely affect our results and business.
1.l) Strikes, work stoppages or labor unrest by our employees or by the employees of our suppliers or of
our contractors may adversely affect our results and our business.
Several factors may lead to legal issues and labor claims, giving rise to strikes and stoppages, such as:
– disagreements and dissatisfaction regarding our business strategy, in particular, those related to
portfolio management and its implications for the workforce;
– human resources policies regarding remuneration, benefits and number of employees;
– workers' contributions to cover the deficit of the pension plan (Petros);
–
– changes in labor legislation.
implementation of regulations recently created for health care and pension plans; and
Strikes, work stoppages or other forms of labor demands at any of our facilities or in our major suppliers,
contractors or their facilities or in sectors of society that affect our business may impair our ability to
continue our operations and complete our projects, adversely impacting our results and our financial
condition.
1.m) Our business may be materially and adversely affected by the emergence of epidemics or pandemics,
such as COVID-19.
Epidemics and pandemics caused by infectious agents, such as the COVID-19 pandemic, can impact the
health of our workforce, our partners and suppliers, as well as demand the redesign of routines, procedures
and organization of work in general, and may consequently affect the continuity of various activities and
our productivity. The operation of facilities such as platforms, refineries, terminals, among others may be
impacted, as well as the full functioning of the supply chain. In addition, such public health events may
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affect oil prices and demand, which, consequently, may negatively impact our results and financial
condition.
1.n) We do not maintain insurance against business interruption in operations in Brazil 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
operations in Brazil, including business interruptions caused by labor disputes. If, for instance, our workers
or those of our main suppliers, vendors and service providers were to strike, the resulting work stoppages
could have an adverse effect on us. In addition, as a general rule, there is no insurance for our assets in case
of war or sabotage. Therefore, an attack or incident that causes the interruption of operations may have a
material adverse effect on our results and financial condition.
Additionally, our insurance policies do not cover all types of risks and liabilities in the area of safety,
environment, health, government fees, fines or punitive damages, which may impact our results. We cannot
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, which may negatively affect our results.
Furthermore, we cannot guarantee that the amounts of insurance coverage contracted for 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.
1.o) Maintaining our competitiveness depends on our ability to develop, adapt and gain access to new
technologies.
Technology and innovation are central elements to ensure our competitiveness, safety and future value
generation. We direct our research, development and innovation efforts both to improve the efficiency and
growth of the current business, as well as to diversify future businesses, whether through incremental or
disruptive innovation.
If we do not innovate in the areas of knowledge of the industry in which we operate, from the improvement
of processes and assets to the conception of the industry of the future, we may face adverse effects on our
competitiveness, our ability to implement our long-term strategy and our ability to expand value creation.
In addition, without technological innovation, we may have difficulties identifying and developing
decarbonization solutions at lower costs to society, as well as difficulties offering access to increasingly
clean energy, compromising our competitiveness and ability to respond to new environmental regulations
and market trends in a timely manner.
1.p) Our developments in the energy transition segment, which includes low-carbon products and services,
is subject to uncertainties that may negatively impact the risk profile and rate of return of our portfolio.
We may carry out acquisition projects or partnerships in the energy transition segment that may negatively
impact the risk profile and rate of return of our portfolio, due to the risks associated with these new
businesses, as already referenced in risk factor "1.d) The selection and development of our investment
projects have risks that may affect our expected results".
The success of acquisition projects or partnerships in energy transition – which includes the development
of low-carbon products and services - depends on the development of new processes, operational
synergies, recruitment and training as new skills may be needed. Therefore, the development of low-carbon
products and services is subject to uncertainties that may have an adverse effect on our expected financial
results.
1.q) As a result of divestments and partnerships, we are exposed to risks that could lead to financial
losses.
Upon completion of each divestment or partnership (post-closing stage), we must perform management
and monitoring of the actions required and provided under the contracts related to each project, taking into
account the rights and compliance with the obligations established in the documents that formalize these
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transactions. Failure to comply with such contractual obligations or non-exercise of rights may result in
financial losses.
Furthermore, as determined by the ANP, in case of the total or partial sale of our participation in E&P
contracts, we remain jointly liable for abandonment costs after the new concessionaire’s production ends,
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 applies to
environmental liabilities, regardless of the segment of which the divested asset is part. According to
environmental legislation, liability for environmental damage is the responsibility of all those who directly
or indirectly contributed to its realization, and the adjustments made between the buyer and seller parties
do not release those parties of their liability.
Additionally, the sale of our assets may negatively impact existing synergies or logistics integration within
our company, which may adversely affect our results.
Our current or future partners may not be able to meet their obligations, including financial ones, which
may jeopardize the viability of some projects in which we participate. Depending on the corporate structure
model that rules the partnership, 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 risks
associated with those operations, including litigation (where joint liability could apply) and the risks of
government sanctions arising from such partnerships, which could have a material adverse effect on our
operations, reputation, cash flow and financial condition.
1.r) We are subject to the risk that internal control over financial reporting may become inadequate due
to changes in the control environment, or that the degree of compliance with our policies and procedures
may deteriorate.
Limitations inherent in internal control over financial reporting may cause them to fail to prevent or detect
errors and may adversely affect our ability to report financial results in future periods accurately and in a
timely manner. In addition, it is difficult to project the effectiveness of internal control over financial
reporting for future periods, as our controls may become inadequate due to changes in the control
environment, or because our degree of compliance with our policies and procedures may deteriorate.
The identification of a material weakness in our internal control over financial reporting or any of the above
occurrences may adversely affect our business and operations and may generate negative market reactions
regarding us, potentially affecting our financial conditions and leading to a decline in the value of our
shares.
1.s) Potential adverse developments related to the Lava Jato investigation or other future investigations
regarding the possibility of noncompliance with the U.S. Foreign Corrupt Practices Act may adversely
affect us. Violations of this or other laws may require us to pay fines and expose us and our employees to
criminal penalties and civil suits.
Potential adverse developments related to the Lava Jato investigation could negatively impact us and could
divert the efforts and attention of our management team from our ordinary business operations. In
connection with any future investigation or proceedings carried by any authorities in Brazil or any other
jurisdiction arising out of Lava Jato investigation, or other possible noncompliance with the U.S. Foreign
Corrupt Practices Act or other laws, we may be required to pay fines or other types of financial convictions,
or to comply with court orders on future conduct or suffer other penalties, any of which may have a material
adverse effect on us.
1.t) We may face additional proceedings related to the Lava Jato investigation.
We are currently party to a collective action commenced in the Netherlands, a collective action and
arbitration proceedings in Argentina and arbitration and judicial proceedings commenced in Brazil, all
related to the Lava Jato investigation. In each case, the proceedings were brought by investors (or entities
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Risks
that allegedly represent investors’ interests) who purchased our shares traded on the B3 Stock Exchange
or other securities issued by us outside the United States, alleging damages caused by facts uncovered in
the Lava Jato investigations.
In Argentina, we are defendants in two criminal lawsuits brought by Consumidores Financieros Asociación
Civil para su Defensa, currently named Consumidores Damnificados Asociación Civil.
In addition, EIG Management Company, LLC (“EIG Management”) and eight of its 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.
For additional information on relevant legal proceedings in which we or our subsidiaries are parties, see
“Legal and Tax - Legal Proceedings” in this annual report.
It is possible that additional demands or claims might be filed in the future in the United States, Brazil or
elsewhere against us relating to the Lava Jato investigation. It is also possible that further information
damaging to us and our interests will come to light in the course of any investigations of corruption by
Brazilian authorities. Our management may be required to direct its time and attention to the defense of
these claims, which could prevent them from focusing on our core business.
In addition, 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 previous 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 from prior years.
1.u) Operations with related parties may not be properly identified and handled.
In accordance with our Related Party Transaction Policy, transactions with related parties must be carried
out under market conditions, executed in our best interest, without conflict of interest and meeting the
necessary requirements: competitiveness, compliance, transparency, equity and commuting. The decision
processes involving these transactions must be objective and documented. In addition, we must comply
with the rules of adequate disclosure of information, in accordance with applicable legislation and as
determined by the CVM and the SEC. Any failure in our process of identification and treatment of these
situations may adversely affect our economic and financial condition, as well as lead to regulatory
assessments by agencies.
1.v) Violations of applicable data protection laws may result in fines and other types of sanctions that
may adversely affect us.
According to Brazilian Law No. 13,709/2018 – Lei Geral de Proteção de Dados Pessoais (General Personal
Data Protection Law - “LGPD”), we will be subject to penalties in cases of disclosure or misuse of personal
data. We process personal data from various stakeholders, such as: employees, outsourced employees,
customers, suppliers, investors, visitors to our physical facilities and websites. Failure to comply with the
requirements set by the LGPD may result in administrative penalties, including warnings, fines, publication
of the infringement, blocking access to personal data and deletion of personal data.
2) Risks related to our shareholders, in particular our controlling shareholder
2.a) Our controlling shareholder may pursue certain objectives that may differ from those of certain
minority shareholders, or that may affect our long-term strategy.
Brazilian law requires that the Brazilian federal government owns the majority of our voting stock and, so
long as it does, it 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. This means that
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the Brazilian federal government has a great deal of control over our operations, governance and strategy,
through the influence of both our management and our Board of Directors.
The interests of our controlling shareholder may differ and not be in the best interest of our minority
shareholders, and the decisions taken by our controlling shareholder may involve different considerations,
strategies and policies than they have in the past.
As our controlling shareholder, the Brazilian federal government has guided, and may continue to guide, in
the future, certain macroeconomic and social policies through us, as permitted by law.
For additional information on our rules for appointment of Senior Management and conflicts of interest,
see “Environment, Social and Governance – Corporate Governance”, “Compliance and Internal Controls –
Compliance” and “Management and Employees – Management – Additional Information on our Board of
Directors and Executive Officers” in this annual report.
2.b) The payment of dividends and the amount allocated for distribution to shareholders depends on our
shareholder remuneration policy, which is subject to change.
Our shareholder remuneration policy provides for the distribution of dividends and interest on capital
values that depend, among other factors, on our level of investments and operating cash flow. If we decide
on a strategic plan that requires a greater volume of investments, or amend our strategic plan to do so, the
amount allocated to the distribution of dividends may be reduced. In addition, operating cash flow can be
impacted by several factors, including oil price and production, thus influencing dividend distribution. Our
ability to pay dividends to shareholders may be affected by a variety of factors, including our financial
performance, capital requirements, future prospects, and other business considerations. Our shareholder
remuneration policy may be amended by the Board of Directors at any time, potentially impacting
parameters such as periodicity of payments, calculation formula, financial indicators, minimum payment (if
any), among others. The payment of dividends above the statutory and legal minimum in previous periods
is not a guarantee of future payments and does not serve as a reference level. In addition, changes to the
composition of our Board of Directors and our management may result in changes to our shareholder
remuneration policy. There is a possibility that any such changes to our shareholder remuneration policy
will be material and may result in the payment of fewer or no dividends in the future.
3) Risks related to our directors
3.a) 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 directors, management, employees, contractors or any person doing
business with us may engage in fraudulent activities, corruption or bribery, circumvent or override our
internal controls and procedures or misappropriate or manipulate our assets for its personal or third party
benefit, against our interest. This risk is heightened by the fact that we have many complex, high value
contracts with local and foreign suppliers and the wide variety of counterparties involved in our business.
In addition, we are subject to the risk of cases of harassment and discrimination, which may involve our
workforce, employees in the supply chain and/or people from the communities where we operate, and which
may impact our image and reputation. We cannot guarantee that all our directors, management, employees,
contractors or any other person doing business with us will comply with our principles and rules of ethical
behavior and professional conduct aimed at guiding our directors, management, employees and service
providers. Any failure, whether actual or perceived, to abide 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.
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4) Risks related to our suppliers
4.a) 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 by such suppliers.
We are susceptible to the risks of contracting, performance, product quality and capacity within our supply
chain. If our suppliers and service providers delay or fail to deliver the goods and services owed to us, we
may not meet our operational goals within the expected cost and/or 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.
Our strategic plan foresees a concentration of contracts for oil production units in the coming years. Due to
new technological obstacles, FPSOs have increased in complexity, size and weight of its process plants and
this will pose a challenge to the supplier market to fully respond to the demand in this timeframe.
Moreover, due to the large volume of resources to be contracted for our project portfolio, the supplier
market may be unable to absorb the total demand, causing delays in the completion of projects, especially
in the procurement of subsea lines and EPC (Engineering Procurement and Construction) for downstream
works.
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, delays or interruptions in supply due to health events such as a pandemic or geopolitical
conflicts could have an impact on our supply chain and results.
5) Risks related to our customers
5.a) We are exposed to credit risks of some of our customers and the associated default risks. Any material
payment default or non-compliance by some of our customers may 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. Serious 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 flow from operations, the
incurrence of short and long-term debts, with no availability of reserves for contingencies.
Declining economic conditions in Brazil and resulting decreased cash flows, combined with the difficulty of
access to financing from our clients, may affect us, since many of our customers are Brazilian.
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.
Due to the possibility of us being obliged in court to guarantee the supply of products or services to
counterparties who are in default, as stated in the risk factor “5.b) We may be required by courts to
guarantee the supply of products or services to counterparties who are in default”, our cash flow may be
reduced, which may have an adverse effect on our results and financial condition.
5.b) We may be required by courts to guarantee the supply of products or services to counterparties who
are in default.
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, natural gas, products
and energy market. In this case, we may be required to provide products and services even in situations in
which these clients and institutions are in default with contractual or legal obligations, where we have no
legal and contractual obligations to provide such services or products or in unfavorable economic and
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commercial conditions. Although we typically appeal these decisions to higher courts, a requirement that
we provide such supply in exceptional situations may adversely affect our economic and financial condition.
For more information on legal proceedings in which we or our subsidiaries are parties, see item ”Legal and
Tax – Legal Proceedings” in this annual report.
6) Risks related to sectors of the economy in which we act
6.a) Our cash flow and profitability are exposed to the volatility of prices of oil, gas, LNG 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 determined by several factors that are beyond our
control. Volatility and uncertainty in international oil prices will likely continue because they are structural
and influenced by conditions and expectations of global supply and demand. Changes in oil prices usually
result in changes in the prices of oil products and natural gas. Substantial or extended declines in
international 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. On May 16, 2023, we announced the approval of our
commercial strategy for setting diesel and gasoline prices, replacing the gasoline and diesel pricing policy
sold by our refineries. The commercial strategy uses market references such as: (a) the customer's
alternative cost, as the value to be prioritized in pricing, and (b) the marginal value for us. The customer's
alternative cost considers the main supply alternatives, whether suppliers of the same or substitute
products, while the marginal value for us is based on the opportunity cost given the various alternatives for
the company, among them, production, imports and exports of the product and/or the oils used in the
refining process. The commercial strategy is premised on competitive prices per sales hub, places where the
ownership of our products is transferred to third parties, in balance with the national and international
markets, taking into account the best alternative accessible to customers.
Price adjustments will continue to be made without a previously defined periodicity, avoiding the transfer
of the conjunctural volatility of international quotations and of the exchange rate to domestic prices. This
periodicity, determined by us, may be influenced by 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 in parity with international product
prices. Actions and legislation imposed by the Brazilian federal government, as our controlling shareholder,
could affect these pricing decisions. Representatives of the Brazilian federal government have at times
expressed their views on the need for our prices to take into account domestic conditions. Our Executive
Board and management team or Board of Directors may propose new changes to our commercial strategy.
Such actions by our controlling shareholder may not be in line with the best interest of our minority
shareholders and could result in material adverse effects on our financial condition and results of operation.
See risk factor 2.a) “Our controlling shareholder may pursue certain objectives that may differ from those
of certain minority shareholders, or that may affect our long-term strategy.”
In our Gas & Low Carbon Energies segment, in addition to natural gas own production, we import gas from
Bolivia and LNG worldwide. The costs of imported gas are volatile and strongly influenced by conditions and
expectations of world supply and demand. They are also influenced by international geopolitics and the
level of thermoelectric plants generation, which are directly related to hydrologic conditions in Brazil.
Changes in sales prices in the domestic market occur influenced by contract lengths and indexes, agreed
when signed, in a way there is a risk of discrepancy between sale prices and costs incurred with LNG.
We cannot guarantee that our way of setting prices will not change in the future. Changes to our commercial
strategy for setting fuel prices could have a material adverse impact on our business, results, financial
condition and the value of our securities.
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6.b) 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.
In 2019, we signed two agreements with the CADE, one related to divestments of the refining market, and
another related to commitments of the natural gas market. On April 17, 2023, we announced that we,
together with CADE, have been seeking to build a solution to reconcile the commitments previously
assumed with the new proposals of the Strategic Planning. If we do not comply with these agreements, we
may face negative impacts, such as administrative proceedings and fines, as well as harm our image and
reputation.
Regulatory changes in antitrust and competition laws may impose penalties, business restrictions and
difficulties in renewing concessions, which could adversely impact our operations and results and
compromise our sustainable growth. Additionally, in the exploration and production segment, we may not
be successful bidding for exploratory blocks in future auctions. In this case, we may have difficulties in
repositioning our portfolio in exploration and production assets that offer greater profitability and
competitive advantage, especially in the pre-salt layer, which could negatively affect our results.
On February 28, 2023, we received an official communication from the MME requesting: “(…) the suspension
of the sales of assets for 90 (ninety) days, due to the reassessment of the National Energy Policy currently
underway and the establishment of a new composition of the National Energy Policy Council (CNPE),
respecting the Company's governance rules, commitments made to government entities and without putting
Petrobras' interests at risk.”
On September 4, 2023, based on the new strategic elements approved by the Board of Directors, we made
decisions regarding the divestment processes that had not yet reached the stage of signing the sales
agreements and communicated these decisions to the market. The permanence of assets in the portfolio is
periodically reassessed based on updated assumptions of profitability, strategic adherence,
decarbonization opportunities and stage of their productive life, among others. Those assets whose
divestments are approved by us will be communicated to the market in due course. These decisions are the
result of a process of active management of our portfolio, through which the various assets are constantly
evaluated in line with our up-to-date strategic drivers.
6.c) Fragility in the performance of the Brazilian economy, instability in the political environment, legal
or regulatory changes and investor perception of these conditions may adversely affect the results of our
operations and our financial performance and may have a relevant 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
and prices of Brazilian securities. Our financial conditions and results may be adversely affected by several
factors, such as:
inflation;
financing of government fiscal deficits;
– exchange rate movements and volatility;
–
–
– price instability;
–
–
–
–
– wages and labor costs;
interest rates;
tax policy;
liquidity of domestic capital and lending market;
legal or regulatory policy for state owned companies and their subsidiaries;
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–
regulatory policy for the oil and gas industry, including pricing, new taxes or tariffs, local content
requirements and new legal requirements associated with a low-carbon economy; and
– other political, diplomatic, social and economic developments affecting Brazil.
Uncertainty about 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.
Increased tension in the Brazilian political environment may result in difficulties for the Brazilian federal
government in obtaining a majority of votes in the National Congress, which may lead to an increase in
political uncertainties and adversely affect Brazil's economic growth with a potential negative impact on our
operating results and financial condition.
6.d) Allegations of political corruption against members of the Brazilian federal government could create
economic and political instability.
In the past, members of the Brazilian federal government and the Brazilian legislature have faced
allegations of political corruption. As a result, a number of politicians, including senior federal officials and
congressmen, resigned and/or were criminally prosecuted.
In the past years, elected officials and other public officials in Brazil were investigated for allegations of
unethical and illegal conduct identified during investigations conducted by the Office of the Brazilian
Federal Prosecutor and the Federal Police. The outcome of these investigations had an adverse impact on
the image and reputation of the implicated legal entities (including us), in addition to the adverse impact
on general market perception of the Brazilian economy. The proceedings related to such allegations, their
conclusions or any further allegations of illicit conduct could have additional adverse effects and instability
on the Brazilian economy. New investigations and allegations against Brazilian federal government officials
may arise in the future, which could have a material adverse effect on us. We cannot predict the outcome of
any such investigations and accusations, nor their effects on the Brazilian economy.
6.e) Market fluctuations related to political instability, acts of terrorism, insurrection, armed conflicts
and wars 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. For example, as a result of the
ongoing military conflict involving Russia and Ukraine, the prices of oil, natural gas and LNG remain
extremely volatile. Such military conflict and the resulting economic sanctions imposed on the Russian
government, certain Russian citizens and enterprises could have a negative effect on the global economy,
including Brazil. We cannot predict the extent of this conflict and its impacts on our business. These events
also impact crude oil flows and the related markets as could other similar events or acts. One example is the
change in oil exports offered by Russia, which have moved to China and India, restricting residual demand
from these markets to other bidders. Another example is the current conflict between Israel and Hamas,
causing political instability to the world's leading oil and gas producing region. This conflict has resulted in
Houthi attacks on vessels crossing the Red Sea. If the conflict expands, more large oil and gas producers
such as Saudi Arabia and Iran could become involved and increase geopolitical instability. Additionally, the
announcement on October 18, 2023 by the U.S. Treasury Department about the temporary suspension of
sanctions on Venezuela's oil, gas and gold production, in addition to the removal of some restrictions on the
transaction of securities in the country may be discontinued and not put into practice. Also, Venezuelan
land claims within the territory of Guyana may also increase volatility in the oil and gas market. In addition,
potential supply chain delays or interruptions, significant increase in costs, as well as high oil, LNG and
natural gas prices, could have an adverse effect on demand for our goods and services and the price of our
securities.
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6.f) 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, 2023, 79.9% of our finance debt was denominated in currencies other than the real. A
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 expenses and incomes. Some
of our operating expenses, capital expenditures, investments and import costs will increase in the event of
a depreciation of the real. In turn, as most of our revenues are denominated in reais, but linked to
international oil and oil products dollar prices, 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.
Debt service can also be impacted by changes in interest rates. To the extent we refinance our maturing
obligations with newly contracted debts, we may incur additional interest expenses.
As of December 31, 2023, 40% of our finance debt consisted of floating rate debt. We generally do not enter
into derivative contracts or similar financial instruments or make other agreements with third parties to
hedge against the risk of an increase in interest rates.
To the extent that 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.
6.g) External factors could impact the successful implementation of our partnerships and portfolio
management.
In accordance with our strategic planning, portfolio management encompasses the acquisitions,
partnerships and divestment movements. In this context, we have assets at different stages.
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 opportunities to buy and/or sell assets, or affect the price at which we can buy and/or sell
them.
Our Strategic Plan is amended from time to time. If our Strategic Plan is amended, including due to decisions
of the Brazilian federal government as our controlling shareholder, our portfolio management guidelines
might be revised. See risk factor “2.a) Our controlling shareholder may pursue certain objectives that may
differ from those of certain minority shareholders, or that may affect our long-term strategy” in this
section. In addition, any changes to our Board of Directors, Executive Board and our management team may
affect not only our ability to implement our Strategic Plan, but also 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.
6.h) Developments in the economic environment, 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.
We evaluate on an annual basis, or more frequently when necessary, the carrying amount of our assets for
possible impairments. 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, whether in operation or in
implementation. Whenever the recoverable amount of an individual asset or cash generating unit is less
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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 may have a material impact on the assumptions used to conduct impairment tests. For example, a
significant decline in international crude oil and gas prices, depreciation of the real, changes in financing
conditions, such as deterioration of risk perception and interest rates for assets and projects, among other
factors, may affect the original profitability estimates of our projects, which could imply impairment and
adversely affect our results.
7) Risks related to the regulation of the sectors in which we are involved
7.a) Divergences in interpretations and new legal and/or regulatory agency requirements in our sectors
of operation may result in the need to increase investments, expenses and operating costs, and it may
cause delays in production or even reduce the market for our products.
Our activities are subject to regulation and supervision by regulatory agencies, such as ANP, ANEEL, ANA,
ANTAQ and ANM, as well as other agencies, such as CADE, ANPD, IBAMA, ICMBio and others in the States
and Municipalities. The following issues, among others, are subject to a regulatory regime overseen by
Brazilian regulatory agencies:
– market concentration along the natural gas and oil products value chains;
– allocation of natural gas transportation costs among market participants;
– oil product specifications;
– percentage of mandatory addition of biofuels to fossil fuels;
– compliance with local content requirements;
– procedures for the unification of areas;
–
– definition of reference prices for the calculation of royalties and government participation;
– procedures for mandatory investment in research, development and innovation; and
– mediation/determination of allocation of handling capacity in pipelines and maritime terminals.
rules related to the monitoring and decommissioning of wells;
Regulatory changes considered unfavorable by the industry, as well as change or differences of
interpretation between us and regulatory agencies may directly affect the technical and economic
assumptions that guide our investment decisions and materially impact our results and financial condition.
Legal changes may impact the markets for aviation fuels, diesel and gasoline, for example, with increased
mandates for biofuels or the imposition of restrictions for internal combustion engines. The Brazilian legal
frameworks related to the low-carbon economy and energy transition, such as carbon capture and storage,
offshore wind power plants and production of hydrogen from renewable sources, are not yet defined.
Therefore, the markets and projects for these initiatives, for now, are in the initial phase. Delays in
establishing such frameworks could hinder us from achieving low-carbon and energy transition goals.
7.b) We do not own any subsoil accumulations of crude oil and natural gas in Brazil.
Under Brazilian law, the Brazilian federal government is the owner of all the country's mineral resources,
including subsoil accumulations of crude oil and natural gas. According to Brazilian regulations, the
concessionaire or contracted party owns the oil and gas it produces from these subsoil accumulations
pursuant to the exploration and production contracts signed 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 and produce the volumes of crude oil and natural gas included in our reserves pursuant to
the respective exploration and production contracts, for a specific time frame. The access to crude oil and
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natural gas reserves is essential to an oil and gas company’s sustained production and generation of
income, and our ability to generate income could be adversely affected if there are restrictions on the
exploitation of these crude oil and natural gas reserves, due to changes in current legislation or
implementation of exception measures.
8) Risks related to foreign countries where we are involved
8.a) We have assets and investments in other countries in South America, where the political, economic
and social situation may negatively impact our business.
We have significantly reduced our participation abroad. However, we still operate and may operate business
in countries where there may be political, economic and social instabilities. In such regions, external factors
may negatively affect the results and financial condition of our subsidiaries, including:
imposition of price control;
fluctuation of local currencies against the real;
imposition of restrictions on hydrocarbon exports;
–
–
–
– nationalization of our oil and gas reserves and our assets;
–
– unilateral (governmental) and contractual institutional changes, including controls on investments
increases in export tax and income tax rates for oil and oil products;
and limitations on new projects; and
– geopolitical crisis.
If one or more of the risks described above occurs, we may 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.
9) Risks related to social issues
9.a) Our projects and operations may negatively affect different communities, especially in relation to
human rights. Such projects and operations may also be affected by the expectations and dynamics of
these populations, impacting our business, image and reputation.
It is part of our policy to respect human rights, remedy violations, and maintain responsible relationships
with the communities where we operate and to be diligent with suppliers and partners. However, throughout
the life of projects and operations, we may inadvertently commit human rights violations in our activities,
operations, and contracts due to non-compliance with the guidelines of the Code of Ethical Conduct, the
Human Rights Guidelines, and the Ethical Conduct Guide for Suppliers, as well as any error in the process of
identifying and assessing human rights risks in HR management, the supply chain, partnerships and
communities.
We require in our contracts with suppliers evidence of compliance with their labor obligations, under penalty
of payment retention and fines. However, considering that our projects and operations involve many
suppliers, the risk of violation of labor legislation by such suppliers is still possible and, consequently, it
could damage our image and reputation.
Our activities can have an impact on the social dynamics of the communities where we operate, including
but not limited to, economy, culture, political system, environment, health and well-being, individual and
property rights, people's fears and aspirations. We have no control over changes in local dynamics or the
expectations of the communities where we operate.
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Our direct and indirect decisions and activities may cause social impacts, especially due to investments,
divestments, decommissioning and operations in new production frontiers, which may affect the schedule
or budget of our projects, hinder our operations due to possible lawsuits, have a negative financial impact
and damage our image and reputation.
Furthermore, 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 taps, crime, theft,
sabotage, roadblocks and protests.
For further information regarding our main activities, initiatives, management practices, indicators and
commitments related to ESG issues, please see our Sustainability Report available on our website at
www.petrobras.com.br/ir.
10) Risks related to environmental issues
10.a) Differing interpretations of numerous health, safety, environmental regulations and industry
standards that are becoming more stringent may result in increased capital and operating expenditures
and reduced production, as well as the application of sanctions and difficulty in obtaining or renewing
licenses.
Our activities are subject to evolving industry standards, best practices and a wide variety of federal, state
and local laws, regulations and permit requirements related to the protection of human health, safety and
the environment, climate change policy, regulation of carbon emissions and the enactment of new
regulatory frameworks for activities of interest, both in Brazil and in other jurisdictions where we operate.
These laws, regulations and requirements may result in significant additional costs, which may have a
negative impact on the profitability of projects that we intend to implement or may make such projects
economically unfeasible.
Any substantial increase in expenditures for compliance with health, safety or environmental 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.
There are constant changes in norms and laws related to occupational health and often there are
divergences between them. In addition, the judicialization of health-related issues is increasingly frequent,
as are issues related to the characterization of work accidents and all its consequences, in the civil, labor,
administrative and even criminal spheres.
In addition, the implementation of the Digital Bookkeeping System of Tax, Social Security and Labor
Obligations (eSocial), established by Decree No. 8373/2014, has resulted in government oversight agencies
having easier access to workers' information (including those related to accidents at work), and
consequently these agencies have been more proactive in their activities.
Additionally, 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. Since 2018, more restrictive
air quality standards were defined by federal and state environmental agencies, which increased the
requirements for the implementation of technological improvements that would reduce air pollution in
industrial units such as refineries, power plants and terminals installed in regions that already have air
quality problems. This may include obstacles to obtaining or renewing operating licenses and the need to
adopt new environmental control practices, such as new types of practices, increasing frequency 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 market loss. It is possible that our efforts to
comply with such regulations result in increased expenditures, and failure to comply with such regulations
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may cause damage to our reputation and lead to the payment of fines and indemnities to the affected
parties.
Situations of water scarcity in a water shed where industrial units are located may also result in the
formulation or expansion of requirements of water resources management agencies in relation to the
restriction of freshwater use for industrial purposes, and may require for example: the installation of water
reuse units in operational units or even purchase of reused water from external sources. Such situations can
lead to the need for investments and increased operating costs for this purpose.
We cannot guarantee that the planned schedules and budgets of our investment projects, acquisitions,
decommissioning and divestments, are not affected by the internal procedures of regulatory and
environmental agencies regarding the issuance of relevant licenses and permits in a timely manner.
Potential delays in obtaining permits and consents can impact our oil and natural gas production goals,
especially in new frontiers, negatively influencing our results and financial condition.
We are also subject to sanctions that may result in delays in the delivery of some of our projects and
difficulties in achieving our oil and gas production goals, such as partial or total embargoes or interdictions.
In addition, changes
interpretations regarding health, safety and
environmental regulations, as well as our decision to settle any claims related to such regulations, may have
a material adverse effect on our financial condition and results.
interpretation or differing
in
11) Risks related to climate issues, including physical and transitional risks
11.a) 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 the advances in agreements and regulations, if we do not prepare for new global challenges, we
may be subject to financial, reputational and legal impacts, which could adversely affect our cash flow, and
result in the reduction of our competitiveness, diminishing shareholder value and failure to meet other
stakeholders’ expectations. Changes in environmental conditions could potentially affect some of the
operating conditions in our assets, such as water availability or meteorological and oceanographic patterns.
There is growing concern that climate change will affect the frequency of regional atmospheric circulation
patterns leading to changes in meteorological and oceanographic conditions. These conditions may result
in extreme weather events, such as waves, wind, and changes in ocean current patterns, which may cause
significant damage and deterioration to our offshore facilities. Our resilience studies for offshore facilities
use a return period of 50 to 100 years to account for extreme wind and wave conditions. However, due to
climate change, this return period may be significantly reduced.
Stricter environmental regulations, including policy-driven responses aimed at mitigating climate change,
such as GHG emission permits and other mitigation responses, can potentially increase operating costs and
reduce production. The Brazilian congress is discussing the creation of a regulatory framework for the
adoption of a carbon pricing instrument to reduce GHG emissions in Brazil. Environmental laws and
international treaties could increase litigation risks and may have a material adverse effect on us.
A growing number of investors are seeking to align their investments with medium and long-term climate
policies. Investors’ increased perception of climate risks and more significant regulatory restrictions related
to carbon-intensive sectors, can lead to greater difficulty accessing capital and increased costs.
We foresee increasing pressure to develop and use more advanced technologies to improve our operational
performance in emissions to keep up with the demands of a world oriented towards a low-carbon economy.
Risk arises from the loss of competitiveness due to the non-implementation of technologies or the
implementation of ineffective technologies that could apply to our business. This could also potentially
impact our reputation related to our climate change mitigation initiatives.
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Increased demand for energy and other products with lower carbon intensity may negatively impact the
demand for oil and cause a drop in oil prices more significant than predicted in our planning. In Brazil, the
replacement of fossil fuels, particularly in the transportation sector, due to public policies such as
Renovabio and other potential initiatives and trends may affect Brazil’s market and compromise our
expected revenues.
These factors may have a negative impact on demand for our products and services and may jeopardize or
even impair the implementation and operation of our business, adversely impacting our results and
financial condition and limiting some of our growth opportunities.
For further information on how climate changes could impact our Strategic Plan, please see risk factor “1.d)
The selection and development of our investment projects have risks that may affect our expected results”
in this section.
11.b) Water scarcity events in some regions where we operate may impact the availability of water in
quantity a n d / o r quality required for our operations, as well as difficulties in obtaining water use
permits, impacting the business continuity of our industrial units.
We have industrial facilities that use water, ranging from large users, such as refineries, to small users, such
as transport terminals that, although not very hydro intensive, are logistically important within our value
chain. In recent years, several regions of the world, including some regions in Brazil, have experienced events
of freshwater shortage, including for public consumption. In case of water scarcity, our water use permits
may be suspended or temporarily modified and, as a result, we may be required to reduce or suspend our
production activities, since the water availability for human and animal consumption has priority over
industrial use. This may temporarily jeopardize our business continuity, as well as generate financial
impacts on us and our image.
Water scarcity may also result in the more intense activation of thermoelectric plants, which have a higher
cost when generating electricity, and increases the cost of this energy for industrial units. In addition, given
that the Brazilian northern region strongly depends on the rivers to carry on logistics, the water scarcity
may affect navigability in that region, impacting, impacting the logistics processes of products and inputs
and, consequently, the operational continuity and the fulfillment of customer commitments.
12) Risks related to the use of our trademark
12.a) The performance of companies licensed to use our brands may impact our image and reputation.
Our former divestment plan, which we followed until 2022, included the partial or total sale of our companies
in the fuel distribution segment and some of these deals involved licensing agreements for our brands.
Once a licensee holds the right to display our brands in products, services and communications, it may be
perceived by stakeholders as us; our legitimate representative or spokesperson. Licensees’ actions or
events related to their business, such as: failures, accidents, errors in business performance, environmental
crisis, corruption scandals and improper use of our brands, among other factors – may negatively impact
our image and reputation, with possible financial losses.
13) Risks related to shares and debt securities
13.a) 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 therefore may be regulated differently from the way in which U.S. investors are
accustomed. Factors that may specifically affect the Brazilian stock markets may limit the ability of holders
of ADSs to sell the common or preferred shares underlying our ADSs for the price and time they desire.
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13.b) Holders of our ADSs may be unable to exercise preemptive rights with respect to the 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 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 shares relating to these
preemptive rights and therefore we may not file such registration statement. If a registration statement is
not filed or there is no exemption from registration, JPMorgan, as the depositary institution, will attempt
to sell the preemptive rights and the 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 the preemptive rights with respect to the common or preferred shares, see “Shareholders
Information – Shareholders’ Rights – Other Shareholders’ Rights” in this annual report.
13.c) If holders of our ADSs exchange their ADSs for shares, they risk losing the ability to timely remit
foreign currency abroad and other related advantages.
The Brazilian custodian of our 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 shares or upon the disposal of the shares.
The conversion of ADSs directly into ownership of the underlying shares is governed by CMN Resolution No.
4,373 and foreign investors wishing 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 of keeping and updating the investors’
certificates of registration 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 pertinent certificates of registration,
investors may incur 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 disposal of the underlying common or preferred shares or
the repatriation of the proceeds from the process will not be imposed in the future.
13.d) 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 the
holders of our shares, as the case may be, to protect their interests, are different under Brazilian Corporate
Law than under the laws of other jurisdictions. The laws concerning insider trading, self-dealing,
shareholder rights, and the preservation of shareholders’ interests may also be different in Brazil compared
to the United States.
Additionally, the structure of a class action in Brazil is different from that in the United States. Under
Brazilian law, shareholders of 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 capital
markets, arbitrate such disputes. For more information, see “Shareholder Information – Shares and
Shareholders – Dispute Resolution” in this annual report.
We are a state-owned company controlled by the Brazilian federal government organized under the laws of
Brazil and all our directors and officers reside in Brazil. Substantially all of our assets and those of our
directors and officers are located in Brazil.
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As a result, it may not be possible for holders of ADSs to effect service of proceedings 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 in U.S. courts for civil liability based on U.S. federal securities laws may only be enforced
in Brazil if certain requirements are met, holders of ADSs may face more difficulties in protecting their
interest in actions against us or our directors and officers than the shareholders of a company incorporated
in a state or other jurisdiction of the United States.
13.e) Holders of our ADSs do not have the same voting rights as the holders of our shares. 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 terms of 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 time 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, holders of preferred shares are entitled to vote on specific agenda items in shareholder meetings.
Holders of ADSs representing preferred shares are not entitled to vote most of decisions. For more
information, see “Shareholder Information – Shareholders’ Rights – Shareholders’ Meetings and Voting
Rights” in this annual report.
13.f) 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 are traded on the NYSE Euronext and MTF markets, respectively, although some trading in
PGF’s notes occurs over-the-counter. PGF can issue new notes that can be listed on markets other than the
NYSE and the Luxembourg Stock Exchange and traded on markets other than the NYSE Euronext and the
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.
13.g) We would be required to pay judgments of Brazilian courts enforcing our obligations under the
guarantee relating to PGF’s notes only in reais.
If proceedings were brought in Brazil seeking to enforce our obligations in respect of the guarantee relating
to PGF’s notes, we would be required to discharge our obligations only in reais. Under Brazilian exchange
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 exchange rate in effect on the date
of payment, as determined by the Central Bank of Brazil.
13.h) A finding that we are subject to U.S. bankruptcy laws and that the guarantee executed by us was a
fraudulent conveyance could result in PGF’s 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 guarantee. We have been advised by our external U.S. counsel that the guarantee 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 guarantee 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 guarantee, and we, at the time we entered into the
relevant guarantee:
– were either insolvent or rendered insolvent by reason of our entry into such guarantee;
PETROBRAS | Annual Report and Form 20-F | 2023
50
Risks
– were either engaged in business or transactions for which the remaining assets with us constituted
unreasonably small capital; or
–
–
intended to incur or incurred, or believe or believed 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 guarantee 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 guarantee 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
guarantee 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 guarantee 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 PGF noteholders relating to any avoided portion of the guarantee.
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 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 and adding value and for
business continuity.
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 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.
PETROBRAS | Annual Report and Form 20-F | 2023
51
Risks
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 flows.
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 an adverse change in the price of the underlying commodity
for options and futures, see Note 35 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.
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, well-control in drilling and workover activities in Brazil, hull insurance
for tankers and auxiliary vessels, third party liability insurance and transportation insurance. The coverages
of these policies are hired 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.
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. In addition, our third-
party liability policies do not cover government fines or punitive damages.
We do not currently maintain insurance coverage for cyber related incidents given the cost and limitations
on obtaining adequate coverage in the insurance and reinsurance markets for a company of our size. We will
continue to evaluate our options for obtaining such insurance coverage.
PETROBRAS | Annual Report and Form 20-F | 2023
52
Risks
In 2023, we changed the maximum deductible amount of our national property damage policies from
US$180 million to US$200 million and their indemnity limits can reach US$2 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 evaluate the
operational risks of our facilities and make recommendations. Until 2022, we used consultants hired by
insurance companies to carry out this inspection program, however, we started to directly hire a consultancy
company for this service from 2022 onwards. These surveys are shared with the insurance market.
In general, the risk ratings of our assets are at or above the market average. In 2023, we had surveys in 23
onshore and offshore units. Based on these surveys, last year we heeded around 80 recommendations 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.
PETROBRAS | Annual Report and Form 20-F | 2023
53
Risks
Cybersecurity Framework and Risk Management
In today's technologically advanced world, data has become increasingly valuable, making information
security crucial for the success of any organization. Moreover, with the rise in global attacks on industrial
systems, particularly critical infrastructure, it has become imperative to prevent damage to business,
operations, reputation, and human lives. Over the years, we have developed a comprehensive set of
processes and policies to address these issues, drawing on global frameworks and best practices that
provide comprehensive protection for our business.
Laws and Regulations
We are subject to various Brazilian regulations regarding information security. Notably, Decree No.
9.637/2018 establishes the National Information Security Policy and Decree No. 11.856/2023
establishes the National Cybersecurity Policy and the National Cybersecurity Committee, while
Normative Instruction 1/2020 GSI/PR (Institutional Security Office) guides the structure for
managing information security, including the establishment of the Information Security Committee
(“CSI”). Additionally, we adhere to general rules such as Brazilian Law No. 12.527/2011 (Access to
Information Law), which governs public access to information.
With regards to privacy, we comply with Brazilian Law No. 13,709/2018 – General Personal Data
Protection Law (LGPD), and are subject to penalties in cases of disclosure or misuse of personal data.
We view the legislation on the protection of personal data as an opportunity to evolve our system
to greater maturity, adding continuous improvements to our privacy processes. To achieve
excellence, the process is conducted through a governance model, and the adoption of technical and
administrative measures to respond to legal requirements, mitigate data breach risks and
guarantee the data rights of our workforce and stakeholders as data subjects.
Governance
Management Structure
We have a dedicated Information Security executive management structure (“SI”), independent from
Information Technology (“IT”), overseeing information security initiatives. It establishes strategies and
guidelines aligned with business objectives, recommends investments to mitigate cyber risks, reduces
vulnerabilities, and provides adequate protection for critical assets. Both SI and IT are reported to the Chief
Corporate Affairs Officer.
We continuously strive to evolve our information security maturity, ensuring that Petrobras remains at a
high level comparable to industry peers.
Our information security strategy covers the entire company and is based on policies, guidelines, and
standards that define the principles and guidelines for information security.
PETROBRAS | Annual Report and Form 20-F | 2023
54
Risks
Our information security efforts are led by Samara Braz, our Chief Information Security Officer (“CISO”).
Samara holds multiple qualifications in IT and Information Security, including CGEIT (Certified in the
Governance of Enterprise IT - ISACA), CRISC (Certified in Risk and Information Systems Control – ISACA),
CDPSE (Certified Data Privacy Solutions Engineer – ISACA), CISM (Certified Information Security Manager –
ISACA), CISA (Certified Information Systems Auditor – ISACA) and CCISO (Certified Chief Information
Security Officer - EC-Council).
To further support our information security endeavors, we have established the CSI, which is comprised of
executive members representing all business units, corporate areas, the CIO, and the President's Chief of
Staff. The CSI advises on information security matters, aligning them with the National Information Security
Policy and our business objectives. Strategic issues are discussed quarterly.
The Security Information Management team holds regular meetings to address operational and strategic
concerns, in addition to routine interactions. Monthly discussions are held to monitor key security
indicators, management processes, and project management.
Our CISO evaluates and approves information security processes at least once every two years, in
compliance with internal corporate governance policies.
Role of the Board of Directors, Executive Board and Committees
Our senior management receives a periodic report relating to the risks that are part of Petrobras’ risk
matrix, according to the level of severity assessed. This review includes strategic risks of very high and high
severity – including risks related to cybersecurity and information security. All reports follow a standardized
model, which includes an annual timeline for taking specific risk management actions and details the risk
under management and the main response actions. Our senior management monitors the maturity
indicators in Petrobras’ risk matrix and the timing of the response plans.
Strategic risks are those business risks that, due to their relevance to meeting our strategic objectives, are
selected to be monitored by the Executive Board and Board of Directors and their respective evaluation
committees. Once the strategic risks are defined, the Executive Board and Board of Directors, and their
respective evaluation committees, structure a quarterly schedule of presentations.
In recent years, cybersecurity risks have been chosen by the Executive Board as strategic risks considering
their relevance, interconnectedness and impact on the business for purposes of monitoring the severity
level and execution of the treatment plan.
Other business risks of very high and high severity, which are not part of the set of strategic risks, are
reported to the Statutory Audit Committee (CAE), except for very high and high severity business risks
under the purview and scope of the Health, Safety and Environmental Committee of the Board of Directors
(“CSMS”), which are reported to the CSMS, in accordance with the committee’s scope of action.
The Board of Directors approves the company's risk profile, as proposed by the Executive Board, and
systematically monitors risk management. The Audit Committee advises the Board of Directors in
establishing global policies relating to risk management.
The Executive Risk Committee monitors actions related to business risks and analyzes and issues
recommendations on risk management policies and processes. This committee also proposes actions to
mitigate the main risks and monitor metrics and risk exposure limits, with a view toward providing advice to
the Executive Board on matters related to the topic. The Executive Risk Committee forwards to the
Executive Board any risk management topic that it deems relevant to be made known or for deliberation by
the Executive Board or the Board of Directors.
The CSI evaluates and monitors the performance of the Information Security Management System at
Petrobras, cyber and information security risks, and the execution of the information security risk
treatment plan, and of the corporate information security guidelines.
PETROBRAS | Annual Report and Form 20-F | 2023
55
Risks
The CISO manages information security initiatives, establishes strategies and guidelines aligned with
business objectives and recommends investments to mitigate risks that strengthen defenses, reduce
vulnerabilities and provide adequate protection of critical assets. In this oversight of cybersecurity risk, the
CISO incorporates strategy metrics, third party assessments, and internal audit and controls.
Cybersecurity Strategy and Risk Management
We adopt a layered defense strategy that combines policies, processes, training programs, and security
tools to protect and monitor our environment.
Our cybersecurity measures have been designed primarily in accordance with the National Institute of
Standards and Technology (“NIST”) Cyber Security Framework and Gartner IT Score for Security & Risk
Management (“SRM”). NIST Best Practices are applied to measure our level of security.
Cyber Defense
Our incident response plan outlines activities to prepare for, detect, respond to, and recover from
cybersecurity incidents while ensuring compliance with applicable legal obligations and minimizing brand
and reputational damage.
We have a Computer Security Incident Response Team (“CSIRT”) that operates 24/7, triaging and
coordinating responses to cybersecurity events. Material incidents, with high potential to impact investors’
decisions will be promptly communicated to the market as required by the SEC.
We are members of FIRST (Forum of Incident Response and Security Teams), a select prominent global
forum of incident response and security teams. This forum brings together a wide variety of cybersecurity
and incident response teams, including industrial, government, commercial, and academic sectors, with
representation from different countries. This organization works primarily with prevention, helping to
increase the level of information security maturity on a global scale.
We also collaborate with global cybersecurity teams, sharing threat intelligence and best practices, and
engage in workshops, conferences, and partnerships with organizations across different sectors to enhance
security, privacy, and technological capabilities.
To reinforce our security measures, we engage independent security companies to conduct monthly
vulnerability tests and annual penetration testing. Regular IT reviews based on the NIST Cybersecurity
Framework are performed by third-party auditors.
We also prioritize protecting the automation networks of our industrial units, including platforms,
refineries, and thermoelectric plants, through our Cybersecurity Program for Automation.
Risk Management and Digital Controls
As part of our comprehensive cybersecurity risk management, we periodically assess and manage risks
associated with cybersecurity breaches, business disruption, financial reporting, industrial and automation
systems, intellectual property theft, fraud, extortion, employee or customer harm, system hacking,
malware, cyberterrorism, IT asset misuse, internal control failures, information leakage, privacy law
violations, litigation, legal risks, and reputational risks.
As part of our risk management process, we identify threats and vulnerabilities as well as controls and
mitigating measures and then determine the likelihood and impact of each risk, using qualitative
methodology. The identified risks are part of the corporate risk matrix and are periodically monitored by
senior management.
PETROBRAS | Annual Report and Form 20-F | 2023
56
Risks
Our cybersecurity risk management processes extend to the oversight and identification of threats
associated with our use of third-party service providers, including the establishment of information
cybersecurity requirements for our third parties (such as service providers and companies with whom we
work) when we enter business transactions with them, and we seek to contractually obligate vendors to
operate their environments in accordance with strict cybersecurity standards.
We do not currently maintain insurance for cybersecurity incidents due to market conditions, but we
regularly evaluate available insurance options.
Our business strategy, results of operations and financial condition have not been materially affected by
risks from cybersecurity threats, including as a result of previous cybersecurity incidents, but we cannot
provide assurance that we will not be materially affected in the future by such risks and any future material
incidents. In the last three fiscal years, we have not experienced any material information security breach
incidences and the expenses we have incurred from information security breach incidences were immaterial.
This includes penalties and settlements, of which there were none.
Digital Continuity Program
To ensure our ability to withstand a cyberattack scenario, we have established a comprehensive Digital
Continuity Plan. This plan aims to guarantee the uninterrupted functioning of critical processes in the event
of a crisis or digital disaster. We have implemented contingency measures for critical digital assets,
documented recovery procedures for these assets, and regularly test the effectiveness of our plans.
In managing serious incidents, we follow the Incident Command System, a corporate crisis handling
methodology. This methodology is also applied in our cybersecurity practices, ensuring a structured and
coordinated response to any significant incident. To further enhance our preparedness, we conduct
cybersecurity tabletop exercises, onboardings, and Tone at the Top trainings for new Board of Directors
members and Executive Officers. These training sessions cover corporate security information rules,
policies, best practices, and expected user behavior.
Training & Awareness
We prioritize the education and awareness of our employees and third parties when it comes to security. We
provide mandatory annual security awareness education and training for our workforce and secondees.
Additionally, we conduct monthly internal "phishing" testing to assess susceptibility to email scams.
Mandatory security training is also a requirement for all new hires, ensuring that security practices are
ingrained from the start. To reinforce the importance of information security, we carry out annual
information security awareness campaigns and publish periodic cybersecurity newsletters, which highlight
emerging and urgent security threats.
Furthermore, we offer specialized training for specific personnel, such as DevSecOps and OT Cybersecurity,
to address their unique requirements.
As stated before, to simulate our response to cybersecurity incidents, we conduct annual tabletop exercises,
allowing us to identify areas for improvement in our practices, procedures, and technologies. These ongoing
training and awareness initiatives contribute to a culture of security throughout our organization.
PETROBRAS | Annual Report and Form 20-F | 2023
57
Our Business
[AM_ACTIVE 405510973_17]
Our Business
Exploration & 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
94% of our total production in 2023. 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 88% of our worldwide blocks and fields, 99% of our global oil production and 99.6% of our oil and
natural gas reserves.
As of December 31, 2023, we had 200 blocks and fields in exploration and production, including 77 owned
by consortia with other oil and gas companies in Brazil and other countries. Of the 200 blocks and fields, 172
are under Concession Agreements, 19 are under Production Sharing Agreements and 9 are regulated by
Transfer of Rights Agreements. Additionally, after December 31, 2023, we entered into 29 contracts signed
in connection with the bidding round held on December 13, 2023, and 3 blocks were acquired in São Tomé
and Príncipe as described below under "Exploration & Production – Overview – International – Africa."
PETROBRAS | Annual Report and Form 20-F | 2023
59
EXPLORATION & PRODUCTION BLOCKS AND FIELDS
(Number of blocks and fields)
Our Business
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, Atapu, Búzios and Sépia.
These E&P consortia also comprise some of the biggest production fields in Brazil, such as Tupi, Sapinhoá,
Roncador, Berbigão and Sururu.
For the names and interests of partners of each consortia, please refer to the section further below, “Our
Business - Production - Shared reservoirs: deposits between different fields”.
PETROBRAS | Annual Report and Form 20-F | 2023
60
Our Business
PETROBRAS | Annual Report and Form 20-F | 2023
61
Our Business
Other Basins
We produce oil and gas and hold exploration acreage in 11 other basins in Brazil. The most significant
potential for exploratory success lies within the basins of the Equatorial Margin (Foz do Amazonas, Para-
Maranhão, Barreirinhas and Potiguar).
International
Outside Brazil, we have E&P activities in South America and North America. We have focused on
opportunities to leverage the deepwater expertise we have developed in Brazil.
Following the 2022 discovery in the Uchuva exploratory well in Colombia, we are planning more exploratory
activities in this country. In addition, we are also planning the drilling of exploratory wells in Bolivia, where
we are the operator. We have also acquired interests in three exploration blocks in the Democratic Republic
of São Tomé and Príncipe, a country on the western coast of Africa. These operations aim to increase
portfolio diversification, aligned with our long-term strategy. For more information, see "Strategic Plan –
Strategic Plan 2024-2028+" in this annual report.
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% interest in the Rio
Neuquén production asset. Our unconventional gas and Condensate production is concentrated in the
Neuquén Basin. In 2023, our production of oil and gas in Argentina, including NGL, was 10.8 mboed.
In Bolivia, we produce gas and Condensate primarily in the San Alberto and San Antonio fields with 35%
interest in each of those service operation contracts, which are operated mainly to supply gas to Brazil and
Bolivia. In 2023, our production of oil and gas in Bolivia, including NGL, was 16.4 mboed. The return on such
contracts is a proportion of the production.
In Colombia, we operate and hold a 44.44% interest in the Tayrona offshore exploration block, which
includes the Uchuva gas discovery.
PETROBRAS | Annual Report and Form 20-F | 2023
62
Our Business
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. in our joint venture with Murphy
Exploration & Production Company, the MPGOM LLC. The main production fields are Chinook, Saint Malo
and Dalmatian. In 2023, our 20% participation represented a production of 7.5 mboed, including NGL.
For more information on our divestments, see “Our Business — Portfolio Management” in this annual
report.
Africa
On February 8, 2024, we concluded the acquisition of interests in three exploratory blocks in the Democratic
Republic of São Tomé and Príncipe, a country on the western coast of Africa. The operation marks the
resumption of exploratory operations on the African continent, with the aim of diversifying the portfolio,
and is in line with our long-term strategy.
Main Assets
Exploration & Production
2023
2022
2021
Production wells (oil and natural gas)(1)
1,067
5,003
5,042
Floating rigs
Operated platforms in production(2)(3)
25
57
19
56
18
57
(1) Includes the total amount of wells of our equity method investees (42, 44 and 50 wells in 2023, 2022 and 2021, 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.
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 differ, 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.
PETROBRAS | Annual Report and Form 20-F | 2023
63
For information on the regulatory models applicable to our exploration and production activities, see “Legal
and Tax” in this annual report.
Our Business
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 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 Second Round Transfer of Rights under
the Production Sharing Regime. With respect to the Atapu field, we acquired the rights to be the
operator in its surplus volumes in partnership with Shell and TotalEnergies. As to the Sépia field, we
exercised our preemptive right to be the operator in the acquisition of its surplus volumes. The other
members of the consortium are TotalEnergies, Petronas and Qatar Petroleum.
In 2022, we acquired the exploration and production rights of three exploratory blocks: Água
Marinha and Norte de Brava, both in the Campos Basin, and Sudoeste de Sagitário, in the Santos
Basin. With respect to the Água Marinha block, we exercised our preemptive right to be the operator
with a 30% interest. The other members of the consortium are TotalEnergies (30% interest),
Petronas (20% interest), and Qatar Petroleum (20% interest). As for the Norte de Brava block, we
acquired the rights to be the operator, with a 100% interest. As for the Sudoeste de Sagitário block,
we acquired the rights to be the operator with 60% interest, with Shell (40% interest).
For the names and interests of partners for the Atapu, Sépia and Brava, please refer to the section
“Our Business - Production - Shared reservoirs: deposits between different fields”. In 2023, we
acquired the exploration and production rights of 29 exploratory blocks in the Pelotas basin. The
Pelotas Basin is located in the southern region of Brazil. All acquired blocks are located in deepwater
areas, around 200 km from the coast.
Exploration Activities
As of December 31, 2023, we had 46 exploratory blocks (including 18 with 100% that had two appraisal wells
drilled in 2023, in Aram block and BM-S-50 block). We serve as the operator in 21 of the exploration
partnership blocks.
The table below breaks down our participation in exploration activities in 2023:
PETROBRAS | Annual Report and Form 20-F | 2023
64
Our Business
OUR PARTICIPATION IN EXPLORATION ACTIVITIES IN 2023
Net exploratory area
Exploratory blocks
Evaluation plans
Wells drilled
(km2)
(number)
(number)
(number)
2023
2022
2021
2023 2022
2021
2023 2022
2021
2023 2022
2021
Brazil
27,924 35,198 37,719
43
65
69
9 13(1)(2)
14(2)
Other S. America
3,474 4,284
5,466
North America
0
0
0
3
0
3
0
4
0
1
0
1
0
1
0
TOTAL
31,398 39,482 43,185
46
68
73
10
14
15
2
0
0
2
5
2
0
7
8
1
0
9
(1) These figures include only contracts signed through December 31, 2023 (which excludes blocks won in Brazil bidding round held on December 13, 2023, or
blocks held in São Tomé and Príncipe).
(2)
In this report we are restating the number of Evaluation Plans (PADs, in the acronym in Portuguese), and using the same premise used to register PADs to
ANP. Petrobras management system for exploration activities comprises numerous activities, grouped in PADs. In previous years, we reported the total
number of activities within the PADs, which is higher than the number of PADs.
In 2023, our exploratory efforts were concentrated on evaluating Brazil’s southeast margin Pre-salt
provinces, with the following highlights:
Santos Basin
In 2023 we drilled two wells in the Santos Basin.
We are currently evaluating the results of an appraisal well in the Aram block where the presence of
hydrocarbons have been identified. The well presented a fluid of excellent quality, confirming the low levels
of contaminants. This discovery increases the possibilities of expanding the accumulation discovered by
the wildcat well drilled in 2022, in this block. We are the operator of the block and hold an 80% interest, in
partnership with CNPC (20% interest).
We are also currently evaluating the results in the BM-S-50 block, where we drilled the second appraisal
well. We are the operators of the consortium, with Shell and Repsol.
Equatorial Margin
In 2023, Petrobras obtained the renewal of the operating license to drill two deep water wells in Potiguar
Basin. Such operations aim to investigate the oil potential of the region.
We began the drilling of the first well (Pitu Oeste well) on December 23, 2023. The second well will be drilled
subsequently and will test an exploratory opportunity in Anhangá block (POT-M-762). We are the exclusive
concessionaire, holding 100% of interests in both concessions.
Other basins
We have decided to return the Dois Irmãos, C-M-411 and C-M-346 exploration blocks, to ANP. The C-M-789
well and the Andurá well are under evaluation.
For information on exploration expenditures written off, see Note 27 Exploration and evaluation of oil and
gas reserves of our audited consolidated financial statements.
PETROBRAS | Annual Report and Form 20-F | 2023
65
Our Business
E&P Strategic Programs Highlights
We continue the development of the strategic program EXP100, that has been designed to access and
process 100% of the technical data and emerging technologies with impact on the exploration projects, by
reducing uncertainties and costs.
This program aims to better estimate and predict geological properties through an integrated data
platform, using data science, machine learning, artificial intelligence and high-performance computing,
that enable the application of more complex algorithms to process large volumes of data.
Several initiatives are already underway, with important advances in the integration and connection of data
and digital solutions on the Geological and Geophysical (G&G) interpretation workflows, that support the
development of ESG solutions towards a fair energy transition.
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.
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.
In 2023, we started a new phase focused on subsea tieback projects, which aims to reduce the time between
the project approval and the beginning of the operation. The initiatives under development seek to
maximize the consumption of the subsea equipment, seeking for an integrated and synergistic approach of
the resources.
We also applied partial schedule reductions in our development projects already incorporated into the
2024-2028 Strategic Plan.
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 optimizations by implementing initiatives and solutions related to well construction.
In 2023 we concluded our strategic well program with excellent deliveries such as the application of new
drilling and completion technologies, optimization in the acquisition of reservoir data and the use of
integrated contracts. Also in 2023, our average offshore Well Construction Duration (total time for drilling
plus completion) was 90 days/well, representing a 17% reduction when compared to 2022. In terms of Well
Construction Cost performance, in 2023, we had a 4% reduction compared to 2022, due to the lower
durations, although balanced by increasing resource rates (inflationary pressures). Since 2021, we have
reached a 8% reduction in average Well Construction Duration, while keeping the same average costs levels.
Specifically in post-salt projects, we achieved a 18% reduction in average duration, when compared to 2021.
In addition, we reduced Well Connections Costs in the Santos Basin pre-salt area by nearly 3% on average
per year during the past three years. In 2023, our performance was at the same level as the previous year.
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, pipelines and other
components, especially those subsea components exposed to corrosion events. In 2023, we reduced/
subsea SCC-CO2 Production Losses by 80% when compared to the forecast, through inspection campaigns
PETROBRAS | Annual Report and Form 20-F | 2023
66
Our Business
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.
Wells and subsea systems KPIs are used as inputs for critical analysis of the interventions operational
performance and for the strategic evaluation of business performance.
As it relates to platforms, the All Electric Design was finished in 2022 for the pre-salt FPSOs, aiming for
higher efficiency and lower GHG emission, representing the new generation of our FPSOs. For these units,
the oil production capacity is 225 mbbl/d and 353.9 mmcf/d of gas. The Sépia 2 and Atapu 2 FPSO bids
incorporate the All Electric Design, and the contracting process will be finalized in the first half of 2024.
We invest in technological solutions combined with the transition to a low-carbon global economy, focusing
on reducing greenhouse gas emissions.
TECHNICAL SOLUTIONS TO REDUCE GREENHOUSE EMISSIONS IN DEVELOPMENT
PRODUTION PROJECTS*
In the last three years, we have installed seven major systems, mainly in the Santos Basin pre-salt area. In
2023, we started the FPSO Anna Nery, located in Marlim and Voador fields, the FPSO Almirante Barroso,
located in Búzios field, the FPSO Anita Garibaldi, also located in Marlim and Voador field and FPSO Sepetiba,
in Mero field. Those seven new systems added new 42 wells (27 production and 15 injection wells) into our
production systems.
In 2024, we expect to install the FPSO Marechal Duque de Caxias in the Mero field. We expect to install 14
new FPSOs in the next five years.
In January 2023, the Guanabara platform reached its maximum production capacity, with the mark of 180
mbbl/d, about eight months after the unit started operating. The FPSO Guanabara achieved this result with
four producing wells and three gas injectors. In October, the FPSO Almirante Barroso also reached its
maximum production capacity, less than five months after entry into operation, with the mark of 150
mbbl/d. The Almirante Barroso platform achieved this result with three producing wells and two gas
injectors. In November, the P-71 platform reached its maximum production capacity, with the mark of 150
mbbl/d with four producing wells and one gas injector. The P-71 reached this mark about 11 months after
the unit started operating.
PETROBRAS | Annual Report and Form 20-F | 2023
67
Our Business
In 2023, our producing platforms had a daily production of 2.24 million barrels of oil and 3.04 million cubic
feet of natural gas (discounting the liquefied volume). In 2023, we owned 30 and leased 19 offshore
producing platforms. Besides these offshore platforms, there are 3 storage and offloading units and five
supporting units, totaling 57 active platforms.
SYSTEMS INSTALLED IN THE PREVIOUS 5 YEARS
Start
up
(year)
2023
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
Santos
Mero
Sepetiba
180,000
423.8
2,000
Production Sharing
Pre-salt
FPSO
Campos
Marlim
Anita
Garibaldi
80,000
247 .2
670
Concession
Pre-salt/
Post-salt
FPSO
Campos
Marlim
Ana Nery
70,000
141.3
927
Concession
Post-salt
FPSO
Santos
Búzios
Almirante
Barroso
150,000
211.9
1,900
2022
Santos
Itapu
P-71
150,000
211,9
2,010
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Production Sharing
Pre-salt
FPSO
Pre-salt
FPSO
Santos
Mero
Guanabara
180,000
423.8
1,930
Production Sharing
Pre-salt
FPSO
2021
Santos
Sépia
Carioca
180,000
211,9
2,200
2020
Santos
Atapu
2019
Santos
Berbigão
Santos
Búzios
Santos
Búzios
Santos
Tupi
Petrobras
70
Petrobras
68
Petrobras
77
Petrobras
76
Petrobras
67
150,000
211.9
2,288
150,000
211.9
2,280
150,000
247.2
1,980
150,000
247.2
2,025
150,000
211.9
2,130
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Concession
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Concession
Pre-salt
FPSO
Pre-salt
FPSO
Pre-salt
FPSO
Pre-salt
FPSO
Pre-salt
FPSO
Pre-salt
FPSO
PETROBRAS | Annual Report and Form 20-F | 2023
68
Our Business
MAIN SYSTEMS TO BE INSTALLED THROUGH 2028
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
2024
Expected
2025
Santos
Mero 3
Campos
Parque das
Baleias
Marechal
Duque de
Caxias
180,000
423.8
2,070
Production Sharing
Pre-salt FPSO
Maria Quitéria
100,000
176.6
1,385
Concession
Pre-salt FPSO
Santos
Búzios 7
Almirante
Tamandaré
225,000
423.8
1,900
Santos
Búzios 6 Petrobras 78
180,000
254.3
2,030
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
Santos
Búzios 8
Petrobras 79
180,000
254.3
1,700
Santos
Búzios 9
Petrobras 80
225,000
423.8
2,100
Santos
Búzios 10
Petrobras 82
225,000
423.8
1,895
Santos
Búzios 11
Petrobras 83
225,000
423.8
2,100
Transfer of Rights/
Production Sharing/
Concession
Transfer of Rights/
Production Sharing/
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
Campos
Albacora To be defined
120,000
211.9
700
Concession
Pre-salt FPSO
Campos
BM-C-33 To be defined
126,000
565.0
2,750
Concession
Pre-salt FPSO
Campos
Barracuda e
Caratinga
To be defined
100,000
211.9
1,100
Concession
Post-salt FPSO
Expected
2026
Expected
2027
Expected
2028
Sergipe
Águas
Profundas
Sergipe
Águas
Profundas
SEAP 1 To be defined
120,000
353.1
2,510
Concession
Post-salt FPSO
SEAP 2
To be defined
120,000
423.8
2,510
Concession
Post-salt FPSO
PETROBRAS | Annual Report and Form 20-F | 2023
69
Our Business
Decommissioning
Decommissioning of oil and gas exploration and production systems is part of the production cycle of the
oil and gas industry and includes several activities, such as disposal of the platform and the subsea system
and the plug and abandonment of wells.
Once the need for decommissioning has been confirmed, we plan in accordance with the applicable legal
requirements, including environmental regulations and consider studies and guidelines on the best
practices of the oil and gas industry worldwide. Therefore, we follow strict safety standards and analyze
project alternatives based on multidisciplinary criteria (environmental, technical, security, social and
economic), in the planning process, which allows us to select the decommissioning alternative that
generates less impact. This decommissioning plan is approved by regulatory bodies before it is carried out.
In 2023, we concluded the first auctions for the sale of platforms P-32 and P-33, both from Campos Basins,
considering our new model for the sustainable destination of vessels. These sales processes stipulated
several technical criteria and requirements for bidders, aimed at guaranteeing that recycling activities and
the final disposal of metallic waste take place in accordance with ESG best practices in the industry across
the globe. The shipyards were also required to have an operating license that explicitly includes dismantling
activities, and an installed capacity for the temporary storage and handling of materials, with a contingency
and emergency plan, in addition to following the best practices in occupational safety.
We will monitor the execution of the plans to ensure compliance with the technical criteria mentioned,
throughout the entire recycling process.
Concerning well abandonments, in 2023, we successfully executed 26 well abandonments, including both
well suspensions and permanent abandonments. We continued to deliver substantial results in 2023 that
allowed us to reach a new performance milestone in deepwater campaigns, with a 12% reduction in
durations and 33% reduction in costs compared to 2019 levels, a period prior to the implementation of a
strategic program aimed at reducing abandonment duration and cost. We utilized bismuth technology as a
temporary barrier component for the first time in the company, resulting in a reduction in costs during the
operation. Additionally, contracts for R&D were signed to promote innovation through tubing technologies
for future campaigns.
Wells abandonment KPIs are used as inputs for critical analysis of the interventions operational
performance and for the strategic evaluation of business performance.
Critical Resources in Exploration & 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 24 rigs with this capacity as of December 31, 2023. We will continue to evaluate our drilling
and special vessel demands and intend to adjust our fleet size as needed.
PETROBRAS | Annual Report and Form 20-F | 2023
70
DRILLING UNITS IN USE BY EXPLORATION & PRODUCTION AS OF DECEMBER 31, 2023 (1)
Our Business
Brazil
Onshore
Offshore, by water depth (WD)
Jack-up rigs
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
2023
2022
2021
Leased
Owned
Leased
Owned
Leased
Owned
27
2(2)
25
0
25
1
0
24
0
0
0
27
0
0
0
0
0
0
0
0
0
0
0
0
20
1(2)
19
0
19
1
0
18
0
0
0
20
0
0
0
0
0
0
0
0
0
0
0
0
18
0
18
0
18
1
0
17
0
0
0
18
0
0
0
0
0
0
0
0
0
0
0
0
(1)
In operated fields.
(2) Does not consider onshore workover rigs, not used for drilling.
To achieve our production goals, we have also secured a number of specialized vessels (such as PLSVs) to
connect wells to production systems. As of December 31, 2023, we had 15 PLSVs in use. Similarly to the rigs,
we intend to 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 2023, we delivered more than 2.6 million tons of materials and transported over 912,000 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, 2023, we had
84 PSV and 79 helicopters and both our fleets were sufficient to meet our needs.
PETROBRAS | Annual Report and Form 20-F | 2023
71
Our Business
Mero Field
Libra Block and Mero Field
Mero field is a field located in the Santos Basin ultra-deepwaters (water depth 2,100 meters), 180
km from the coast of Rio de Janeiro State and inside Brazilian pre-salt province. It has a high
productivity reservoir filled with a large volume of high-quality oil. It is a thick reservoir (oil columns
reaches 420 meters), with high productivity and filled with a large volume of high-quality oil (29°
API). In addition, the associated challenges for project development are also noteworthy,
considering the high gas/oil ratio (420 std m³/std m³) and CO2 content in the associated gas (44%).
In 2013, the consortium we formed with Shell, TotalEnergies, CNODC and CNOOC Limited won the
bid to explore and develop the Libra block for 35 years. The consortium also has the participation of
the state-owned enterprise Pré-Sal Petróleo - PPSA, which operates as a 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.
On December 9, 2021, ANP approved Mero accumulation's AIP. The AIP occurs when the reservoirs
extend beyond the areas granted or contracted, as regulated by ANP. The agreement became
effective on January 1, 2022.
Under the terms of the AIP, the Mero Shared Reservoir comprises two areas, namely (1) the Mero
field area (as defined in the PSC from LIBRA-P1 consortium), representing 96.50% of the reservoir
and (2) the adjacent area (Brazilian federal government, represented by PPSA), representing 3.50%
of the reservoir.
The agreement establishes the interests of each party and the rules of joint execution for the
operations to develop and produce oil and natural gas in the shared reservoir. The interests of each
party in the Mero Shared Reservoir were then updated as follows: Petrobras with 38.60% interest,
Shell with 19.30% interest, TotalEnergies with 19.30% interest, CNODC with 9.65% interest, CNOOC
Limited with 9.65% interest and PPSA, representing the Brazilian Government, with 3.50% interest.
Project development
The start of production (first oil) commenced in 2017, as part of the first Early Production System
(“EPS”) campaign, using two wells (one producer and one injector) and the chartered unit FPSO
Pioneiro de Libra, which has a capacity of 50 mbbl/d of oil and four million m³/day of gas.
The first EPS operated in Mero 2 region until July 2021. In December 2021, a second EPS started in
the Mero 4 area, with the FPSO Pioneiro de Libra and two other wells from this area (one producer
and one injector). This operation is still ongoing.
By December 31, 2023, the combined EPSs have already produced a cumulative production of 71
mmbbl of oil, with a peak of 55 mbbl/d from one single well in each moment. In addition, over 4.7
billion m³ of associated gas has been produced, of which 9% were consumed for power generation
by the FPSO, and 88% were reinjected in the reservoir along with almost 1.9 billion m³ of CO2.
The production arrangement for the Mero field comprises the already operating FPSO Guanabara
and Sepetiba, as well as the upcoming units FPSO Marechal Duque de Caxias and FPSO Alexandre de
Gusmão (both under construction). Each FPSO (all chartered units) will be able to process up to 180
mbbl/d and 12 million m³ of gas daily.
PETROBRAS | Annual Report and Form 20-F | 2023
72
Our Business
The FPSO Guanabara started operating in April 2022 and FPSO Sepetiba in December 2023. Per our
Strategic Plan, FPSO Marechal Duque de Caxias is expected to begin operating in 2024 and FPSO
Alexandre de Gusmão in 2025.
The current estimate for Mero field is a return of over three billion bbl of oil recovery until 2048, with
an annual production peak of 600 mbbl/d in 2028.
FPSO Guanabara Production
In April 2022, we started producing oil and natural gas through the operations of the FPSO
Guanabara, the first definitive production system installed in the Mero field, producing oil and
natural gas from the Mero 1 area.
The FPSO Guanabara unit was built and operated by Modec. It is equipped with gas re-injection
systems, in which the gas production with 45% CO2 content, after self-consumption in the FPSO, is
all re-injected into the reservoir to maintain pressure and improve oil recovery, in addition to
reducing the release of CO2 into the atmosphere.
From April to December 2022, eight months after operations start-up, FPSO Guanabara achieved
the platform nominal capacity for oil production (180 mbbl/d). Moreover, by December 31, 2023, the
unit has already produced a cumulative production of 80 mmbbl of oil, with a production of 5.1 billion
m³ of gas, from which 7.7% were consumed for FPSO power generation, and 91% were reinjected in
the reservoir, along with 1.9 billion tons m³ of CO2.
As of December 2023, the FPSO is connected to 5 producers and 6 injectors wells. One producer and
one injector wells are prepared to be connected and start operations, concluding this module's first
phase of production development.
FPSO Sepetiba Production
In December 2023, we started producing oil and natural gas by operating the FPSO Sepetiba, the
second definitive production system installed in the Mero field, which produces oil and natural gas
from the Mero 2 field area.
The FPSO Sepetiba was built and operated by SBM. Like the FPSO Guanabara (mentioned above),
FPSO Sepetiba is equipped with similar gas re-injection systems, in which the gas production with
45% CO2 content, after self-consumption in the FPSO, is all re-injected into the reservoir to maintain
pressure and enhance oil recovery as well as reduce the release of CO2 into the atmosphere.
New technologies in Libra
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 using
centrifugal pumps. HISEP™ debottlenecks the topsides gas processing plant and extends the oil
production plateau by reducing the gas-oil Ratio (“GOR”) of the oil that reaches the FPSO.
Hence, HISEP™ has the potential to accelerate oil production, increase the recovery factor and
reduce GHG emissions. 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 value for the Mero field and the oil and gas industry.
Therefore, an extensive de-risking program has been carried out over the last five years to increase
the maturity level of the HISEP™ solution.
PETROBRAS | Annual Report and Form 20-F | 2023
73
Our Business
In 2023, part of de-risking project was awarded by the Brazilian National Agency for Petroleum, ANP
with the Technological Innovation Award in the subsea project category.
The first HISEP™ technology for qualification is expected to be installed in Mero 3 area in 2028,
linked to the FPSO Marechal Duque de Caxias. The HISEP™ specific EPCI contract was signed in
January 2024.
CTV
The Cargo Transfer Vessel (“CTV”) is a new oil offloading technology which was qualified in the
second semester of 2023 through an extensive field trials program in Santos Basin. The concept
makes feasible the execution of oil transfer operations from the FPSO directly to conventional oil
tankers with safety levels compatible with the operations with a Dynamic Positioning Shuttle Tanker
(“DPST”), normally used during the offloading process. By eliminating steps in the conventional
logistics, the CTV solution enables a more straightforward and flexible logistic strategy in oil export
scenarios. Therefore, the technology will contribute for future cost reduction, lower GHG emissions,
a shorter time to reach the market and positive impacts on the Health Safety Security Environment
indicators.
PRM
Seismic Permanent Reservoir Monitoring (“PRM”) is a technology that will provide more profound
knowledge about the distribution of fluids in the reservoir via data acquisition. This way, it will also
allow greater efficiency in oil production in the Mero field.
PRM in Mero has unprecedented features in Brazil, considering the water depth, a large application
area (approximately 200 km²), and the high complexity for installation due to many subsea obstacles
(projects infrastructure). It incorporates state-of-the-art 4D seismic monitoring technologies, in
which seismic records obtained on different dates are used to monitor the behavior of reservoirs
over time.
According to our Strategic Plan, the system will be installed in two phases. The first phase in 2025,
covering Mero 1 and Mero 2, and a second phase in 2026 to cover the remaining two modules of the
field. It comprises a network of optical fibers that will be connected to the FPSO Sepetiba and our
offices. It will allow remote and instant access to the data generated by the monitoring system.
Production
In 2023, our total production of oil and gas, including NGL, was 2,782 mboed, of which 2,748 mboed were
produced in Brazil, and 35 mboed were produced abroad, a 4% increase compared to 2022. This production
decline was due to divestment, decommissioning, and the natural decline of the production.
Our 2023 operating performance was partially leveraged by the ramp-up of new production systems in the
Itapu and Mero fields.
Our production in the pre-salt layer reached 1,806 mbbl/d in 2023, representing an increase of 10% in
relation to our production in 2022. In 2023, the oil production in the pre-salt layer represented 81% of all oil
production in Brazil, compared to 76% in 2022.
PETROBRAS | Annual Report and Form 20-F | 2023
74
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.
Our Business
2022
2021
2023 vs 2022
2,648
2,732
2023
2,748
41
3
382
1,806
2,231
516
35
66
7
434
1,635
2,142
505
37
89
9
496
1,616
2,211
521
42
2,774
2,782
2,684
4%
-39%
-60%
-12%
+10%
+4%
+2%
-5%
+4%
(2) Includes the proportional production of our equity method investees, based on the percentage of our interest in these entities.
Pre-salt oil production decreased by 10%, reflecting the ramp-up of new production systems in Búzios and
Mero fields. The pre-salt area comprises large accumulations of light oil of excellent quality and high
commercial value. The post-salt oil production in deep and ultra-deepwaters decreased by 12% due to
divestment, decommissioning, and the natural decline of production.
Shallow waters oil production decreased by 60%, to 3 mbbl/d, due to divestments, decommissioning and
the natural decline of the production. Onshore oil production decreased by 39%, to 41 mbbl/d, due to
divestments, decommissioning, and the natural decline of the production.
We produced 86.1 million m3/d of gas in 2023. From that volume, we used 53.8 million m3/d in our production
processes (reinjected, flared, consumed, liquefied) and allocated 32.3 million m3/d for sale.
Achievement of 2023 Production Target
We achieved our production targets for 2023, established in the 2023-2027 Strategic Plan.
PRODUCTION TARGETS FOR 2023 (mmboed)
Production
Oil and NGL
Oil, NGL and commercial gas
Total production Oil and Gas
Performed
2.2
2.4
2.8
Goal
2.2 + 2%
2.4 + 2%
2.8 + 2%
This result demonstrates our commitment to meeting our goals, which have been reached by maintaining
the focus of our activities on deep and ultra-deepwater assets.
PETROBRAS | Annual Report and Form 20-F | 2023
75
Our Business
Lifting Cost
In 2023, our lifting cost (Brazil and our business outside Brazil), without government participation or leases,
was US$5.6 per boe, which represents a -3% decrease from the 2022 cost of US$5.8 per boe. Including leases,
our lifting cost in 2023 was US$7.6 per boe, which represents a 2% increase from the 2022 cost of US$7.4
per boe.
Shared reservoirs: 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 AIPs, resulting in shared deposits between different fields. Under AIPs,
costs, investments, and production volumes are shared between the parties thereto.
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 Shared Reservoir, located in the Santos Basin, was approved by ANP in March 2019
and has been in effect since April 2019.
The shared reservoir comprises Tupi’s reservoir and is shared between:
– Tupi concession (Concession Contract/BM-S-11), operated by us with a 65% interest, in partnership
with Shell with a 25% interest and Galp with a 10% interest;
– Sul de Tupi (Transfer of Rights), where we have 100% of the interest; and
– Tupi Leste (Non-Contracted Area), which belongs to the Brazilian federal government, represented
by 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 interests of each contract in Tupi’s Shared Reservoir (AIP of Tupi) are as follows:
Contract
Interest (%) of each Contract in the Shared Reservoir
Tupi (Concession Contract / BM-S-11)
Sul de Tupi (Transfer of Rights)
Tupi Leste (Non-Contracted Area)
92.09
7.36
0.55
The interest of each party in Tupi’s Shared Reservoir (AIP of Tupi) are as follows:
Partner
Petrobras (operator)
Shell
Galp
PPSA(1)
Interest (%) of each party in the Shared
Reservoir
67.22
23.02
9.21
0.55
(1) Party of Tupi Leste (Non-contracted area) with 0.55%.
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Our Business
MERO
The AIP of the Mero accumulation, located in the Santos Basin, was approved by ANP in December
2021 and has been in effect since January 2022.
The Mero Shared Reservoir comprises:
– Mero (Production Sharing Contract/Libra): operated by us with 40% interest in partnership with
Shell (20% interest), TotalEnergies (20% interest), CNODC (10% interest), CNOOC (10% interest); and
– Sul de Mero and Norte de Mero (non-contracted areas), which belong to the Brazilian federal
government, represented by PPSA.
The interest of each contract in the Mero Shared Reservoir (AIP of Mero) are as follows:
Contract
Interest (%) of each Contract in the
Shared Reservoir
Mero (Production Sharing Contract / Libra)
Sul de Mero and Norte de Mero (Non-Contracted Area)
96.50
3.50
The interest of each party in the Mero Shared Reservoir (AIP of Mero) are as follows:
Partner
Petrobras (operator)
Shell
TotalEnergies
CNODC
CNOOC
PPSA(1)
Interest (%) of each party in the
Shared Reservoir
38.60
19.30
19.30
9.65
9.65
3.50
(1) PPSA is the manager of the Production Sharing Contract of Mero and party of Sul de Mero and Norte de Mero (Non-Contracted Areas)
with 3.50% interest.
ATAPU
The ANP has approved the AIP of Atapu accumulations, located in the Santos Basin, and it has been
in effect since in September 2019. The ANP approved an amendment in April 2022, to include the
Production Sharing Contract.
The Atapu Shared Reservoir comprises:
– Oeste de Atapu (Concession Contract / BM-S-11A), operated by us with a 42.5% interest, in
partnership with Shell, with a 25% interest, TotalEnergies, with a 22.5% interest, and Galp, with a
10% interest;
– Atapu ECO (ToR Surplus), operated by us with a 52.5% interest, in partnership with Shell (25%
interest), and TotalEnergies (22.5% interest);
– Atapu (Transfer of Rights), operated by us, and where we hold 100% of the interest; and
– Norte de Atapu (Non-Contracted Area), which belongs to the Brazilian federal government,
represented by PPSA.
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Our Business
The interest of each contract in Atapu Shared Reservoir (AIP of Atapu) are as follows:
Contract
Interest (%) of each Contract in the
Shared Reservoir
Oeste de Atapu (Concession Contract / BM-S-11A)
Atapu (Transfer of Rights)
Atapu ECO (ToR Surplus)
Norte de Atapu (Non-Contracted Area)
17.03
32.40
49.62
0.95
The interest of each party in Atapu Shared Reservoir (AIP of Atapu) are as follows:
Partner
Petrobras (operator)
Shell
TotalEnergies
Galp
PPSA (1)
Interest (%) of each party in the
Shared Reservoir
65.69
16.66
15.00
1.70
0.95
(1) PPSA is the manager of the Production Sharing Contract of Atapu ECO and party of Norte de Atapu (non-contracted areas) with 0.95%
interest.
SÉPIA
The AIP of Sépia accumulations, located in the Santos Basin, was approved by ANP and has been in
effect since September 2019. An amendment was approved by ANP in April 2022 to include the
Production Sharing Contract.
The Sépia Shared Reservoir comprises:
– Sépia Leste concession contract (Concession Contract/BM-S-24) operated by us (80% interest), in
partnership with Galp (20% interest); and
– Sépia ECO (ToR Surplus), operated by us (30% interest), in partnership with TotalEnergies (28%
interest), Petronas (21% interest), and QP Brasil (21% interest); and
– Sépia (Transfer of Rights Agreement), operated by us (where we hold a 100% interest).
The interest of each contract in the Sépia shared reservoir (AIP of Sépia) are as follows:
Contract
Sépia Leste (Concession Contract)
Sépia ECO (ToR Surplus)
Sépia (Transfer of Rights Agreement)
Interest (%) of each Contract in the
Shared Reservoir
12.07
60.41
27.52
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Our Business
The interest of each party in the Sépia shared reservoir (AIP of Sépia) are as follows:
Partner(1)
Petrobras (operator)
TotalEnergies
Petronas
QP Brasil
Galp
Interest (%) of each party in the
Shared Reservoir
55.30
16.91
12.69
12.69
2.41
(1) PPSA is the manager of the Production Sharing Contract of Sépia ECO.
BÚZIOS AND TAMBUATÁ
The Búzios Shared Reservoir comprises:
– Tambuatá (Concession Contract / BS-500), operated by us with a 100% interest.
– Búzios (Transfer of Rights), operated by us with a 100% interest.
– Regarding Búzios ECO (ToR Surplus), 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. In 2022, we transferred 5% of our interest in the ToR
Surplus, to CNOOC. This transaction was effective as of December 1, 2022. Our interest in Búzios
ECO is 85%, the interest of CNOOC is 10% and the interest of CNODC is 5%.
The interest of each contract in the Búzios shared reservoir are as follows:
Contract
Búzios (Transfer of Rights)
Búzios ECO (ToR Surplus)
Tambuatá (Concession Contract / BS-500)
Interest (%) of each Contract in the
Shared Reservoir
25.95
73.41
0.64
The interest of each party in the Búzios shared reservoir (AIP of Búzios) are as follows:
Partner(1)
Petrobras (operator)
CNOOC
CNODC
Interest (%) of each party in the
Shared Reservoir
88.9891
7.3406
3.6703
(1) PPSA is the manager of the Production Sharing Contract of Búzios ECO.
The unitization agreement was submitted to ANP and is pending approval.
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Our Business
TARTARUGA MESTIÇA, TARTARUGA VERDE AND ESPADARTE MODULE III
The concession contract BM-C-36 has two producing reservoirs: the Tartaruga Verde reservoir,
which is totally contained within the ring fence limits, and the Tartaruga Mestiça reservoir, which
goes beyond the ring fence limits.
The AIP of the Tartaruga Mestiça Shared Reservoir was signed between us and PPSA and has been
in effect since March 2018. We fully acquired the area of the limits of the concession BM-C-36 in
September 2018 through the block named Sudoeste de Tartaruga Verde (Production Sharing
Contract).
In December 2019, we assigned to Petronas 50% of our interest of Tartaruga Verde Fields (BM-C-
36) and Espadarte Module III. We also established a consortium with Petronas, 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.
In January 2021, the ANP approved an amendment to the AIP.
The interest of each contract in the Tartaruga Mestiça Shared Reservoir:
Contract
Interest (%) of each Contract in the
Shared Reservoir
Tartaruga Verde (Concession Contract / BM-C-36)
Tartaruga Verde Sudoeste (Production Sharing Contract)
82.19
17.81
The interest of each party in the Tartaruga Mestiça Shared Reservoir:
Partner(1)
Petrobras (operator)
Petronas
Interest (%) of each party in the
Shared Reservoir
58.905%
41.095%
(1) PPSA is the manager of the Production Sharing Contract of Tartaruga Verde Sudoeste
The interest of each party in the Tartaruga Verde and Espadarte Module III reservoirs are:
Partner
Petrobras (operator)
Petronas
SAPINHOÁ
Interest (%) of each party in the
Reservoir
50%
50%
In 2000, we, YPF Brasil Ltda (YPF) and BG E&P Brasil LTDA (BG), entered into an agreement to create
the BM-S-9 consortium, and the BM-S-9 concession contract was signed in September 2000. YPF
and BG interests were later acquired by Repsol and Shell, respectively. We operate Sapinhoá
(Concession Contract / BM-S-09), with a 45% interest, in partnership with Shell (30% interest) and
Repsol (25% interest).
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Our Business
In October 2017, the same consortium acquired the rights to produce in the extended area of
Entorno de Sapinhoá (composed of Sudoeste de Sapinhoá, Noroeste de Sapinhoá, and Nordeste de
Sapinhoá). The Production Sharing Contract related to such area was signed in January 2018.
ANP approved the AIP of Sapinhoá Field shared deposit, located in the Santos Basin, which has been
in effect since March 2018, with the following interests of each contract in the Sapinhoá Shared
Reservoir:
Contract
Interest (%) of each Contract in the
Shared Reservoir
Sapinhoá (Concession Contract / BM-S-09)
Entorno de Sapinhoá (Production Sharing Contract)
96.30
3.70
The interest of each party in the Sapinhoá shared reservoir are as follows:
Partner(1)
Petrobras (operator)
Shell
Repsol Sinopec
Interest (%) of each party in the
Shared Reservoir
45.00
30.00
25.00
(1) PPSA is the manager of the Production Sharing Contract of Entorno de Sapinhoá.
BRAVA
We entered into an AIP with PPSA to establish the terms and conditions of the Brava shared
reservoir, located in the Campos Basin, that has been in force since October 2019. PPSA represented
the Brazilian federal government in the non-contracted area, while we owned the Voador and Marlim
concession contract areas.
In May 2023, ANP approved an amendment to the AIP to include the Production Sharing Contract of
Norte de Brava, by means of which we acquired a 100% interest in the Production Sharing Contract
of Norte de Brava.
The interest of each Contract in the Brava shared reservoir are as follows:
Contract
Marlim (Concession Contract)
Voador (Concession Contract)
Norte de Brava (Production Sharing Contract)
Interest (%) of each Contract in the
Shared Reservoir
64.27
33.40
2.33
Petrobras has a 100% interest in the Brava Shared Reservoir. PPSA is the manager of the Production
Sharing Contract of Norte de Brava.
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Our Business
ALBACORA PRE-SALT (FORNO)
We entered into an AIP with PPSA to establish the terms and conditions of the Albacora Pre-salt
(Forno) shared reservoir, located in the Campos Basin, that has been in force since January 2023.
PPSA represented the Brazilian federal government in the non-contracted area, while we owned the
Albacora concession contract area.
In May 2023, ANP approved an amendment to the AIP to include the Production Sharing Contract of
Norte de Brava, by means of which we acquired a 100% interest in the Production Sharing Contract
of Norte de Brava.
The interest of each contract in the Albacora Pre-Salt (Forno) Shared Reservoir are as follows:
Contract
Interest (%) of each Contract in the
Shared Reservoir
Albacora (Concession Contract)
Norte de Brava (Production Sharing Contract)
98.33
1.67
Petrobras has 100% interest in the Albacora Pre-Salt (Forno) Shared Reservoir. PPSA is the manager
of the Production Sharing Contract of Norte de Brava.
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Our Business
MAIN PRODUCTION FIELDS
Production units
Basin
Field
Main
source
Owned
Capacity
(mbbl/d)
Leased
Capacity
(mbbl/d)
Santos
Tupi
Pre-salt
3
3 units with 150
6
1 unit with 100
1 unit with 120
4 units with 150
Santos
Búzios
Pre-salt
4
4 units with 150
—
—
Interest (%) of
each party in
the Shared
Reservoir
Petrobras
(67.22%)
Shell (23.02%)
Petrogal (9.21%)
PPSA (0.55%)
Petrobras (89%)
CNOOC (7.3%)
CNODC (3.7%)
Sulfur
content
(% wt)
2023 oil
production
(mbbl/d)
0.26 – 0.37
592
API gravity
29.5 - 32
28.4 – 28.8
0.31- 0.33
552
Campos
Jubarte
Pre-salt
2
2 units with 180
Campos
Roncador
Post-salt
Campos
Marlim
Sul
Post-salt
4
3
3 units with 180
1 unit with 190
1 unit with 140
1 unit with 180
1 unit with 200
2
—
—
1 unit with 100
1 unit with 110
Petrobras (100%)
17.1 – 30.2
0.29 –0.56
127
—
Petrobras (75%)
Equinor (25%)
17.7 – 28.7
0.54 – 0.7
—
Petrobras (100%)
17.6 – 25.5
0.52 – 0.73
Santos
Sapinhoá
Pre-salt
—
—
2
2 units with 150
Santos
Atapu
Pre-salt
1
1 unit with 150
—
—
Santos
Sépia
Pre-salt
—
—
1
1 unit with 180
Petrobras (45%)
Shell (30%)
Repsol Sinopec
(25%)
Petrobras
(65.69%)
Shell (16.66%)
TotalEnergies
(15%)
Galp (1.7%)
PPSA (0.95%)
Petrobras (55.3%)
TotalEnergies
(16.91%)
Petronas (12.69%)
QP Brasil (12.69%)
Galp (2.41%)
90
78
78
29.7
0.36
27.9
0.38
93
27.3
0.4
90
Campos
Marlim
Leste
Post-salt
1
1 unit with 180
Santos
Mero
Pre-salt
—
—
1
5
1 unit with 100
Petrobras (100%)
23.4 – 28.5
0.50 – 0.52
4 units with 180
Petrobras (40%)
29.1 – 29.7
0.30 – 0.31
1 unit with 150
Shell (20%)
Total (20%)
CNODC (10%)
CNOOC (10%)
Other pre and post-salt fields
Onshore
Shallow waters
TOTAL
61
71
355
41
3
2,231
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2023 PRODUCTION
Our Business
Búzios field
The Búzios field is a highly productive asset with substantial reserves of light oil, light oil, low lifting
costs, and low emissions. It has demonstrated economic resilience even in a low oil price scenario.
As of December 31, 2023, the Buzios field has achieved a total accumulated production of 837
million barrels of oil equivalent (mmboe) under the co-participation agreement.
The composition of participation in the project is detailed in the "Our Business – Production – Shared
reservoirs: deposits between different fields". Further below in this section, please refer to that box
for information on the different partners' shares in Búzios.
Currently, there are five operating units in Búzios. The fifth unit, FPSO Almirante Barroso, started
production in May 2023 and achieved full production in record time, producing 150 thousand barrels
of oil per day after five months. The sixth production system, FPSO Almirante Tamandaré, for the
field, is expected to start production in 2025.
Furthermore, during the period of 2021 and 2022, we have signed construction contracts for five
platforms (P-78, P-79, P-80, P-82, and P-83), which will be owned by us. The production of these
platforms is projected to commence in different years: P-78 in 2025, P-79 and P-80 in 2026, and P-
82 and P-83 in 2027.
In October 2023, the Búzios Shared Reservoir achieved a monthly production record of 653
thousand barrels of oil per day (mbbl/d), due to excellent operational performance.
For more information on our production of crude oil, natural gas, synthetic oil and synthetic gas by
geographic area in 2023, 2022 and 2021, see Exhibit 15.3 to this annual report.
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Our Business
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 2023, the crude oil volume committed through long-term
contracts with quantity subject to final agreement on commercial terms was approximately 445 mbbl/d.
Our domestic and overseas portfolio includes approximately 70 clients, such as refiners that process or have
processed Brazilian oils regularly, distributed throughout the Americas, Europe and Asia, including China.
OIL CLIENTS (% vol)
In 2023, we remain one of the most important exporters of low sulfur fuel oil in the world, even with an
increased participation of the high-sulfur grade in our portfolio. Our fuel oil is available in the major hubs in
the market such as Singapore, Arab Gulf, the Mediterranean and Northwest Europe, the west coast of Africa,
Panama, Caribbean and China. Our counterparties list consists of major companies, trading companies and
barging companies. We have sold fuel oil to approximately 30 different companies this year.
In the exploration and production industry, we deal with several competitors when we participate in bidding
rounds conducted by the ANP.
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Our Business
Reserves
Preparation of reserves estimates
We apply SEC rules for estimating and disclosing oil and natural gas reserve quantities included in
this annual report. In accordance with 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. For the year ended in
2021, reserves volumes of non-traditional reserves such as synthetic oil and gas are also included
in this annual report in accordance with SEC regulation. Since 2022, we no longer had these
quantities due to the sale of Paraná Xisto S.A.
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 available 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 managers responsible for the assets reserves of 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 responsible for the assets
reserves of 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 Executive
Officers, which then informs our Board of Directors about the approval. The technical person
primarily responsible for overseeing our reserves' preparation is the corporate reserves team
manager, who has 21 years of experience in the oil and gas industry and holds a bachelor's degree
in civil engineering from Federal University of Juiz de Fora, a specialization in Petroleum Engineering
from Petrobras University and a MBA in Oil and Gas Management from Fundação Getúlio Vargas.
D&M conducted a reserves evaluation of 97.0% of our proved crude oil, condensate and natural gas
reserves as of December 31, 2023 in Brazil. The amount of reserves reviewed by D&M corresponds
to 96.5% of our total proved reserves company-wide on a 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.
Due to Brazilian regulation, we also estimate our oil and gas reserves pursuant to the ANP and the
SPE definitions. The differences between the reserves estimated according to the ANP/SPE
definitions and those estimated according to SEC regulation are mainly due to different economic
assumptions and the possibility of considering as reserves the volumes expected to be produced
beyond the concession contract expiration date in fields in Brazil according to ANP reserves
regulation.
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Our Business
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.
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 proved oil, condensate and natural gas reserves as of December 31, 2023 were estimated at 10,921
million boe. This estimate includes reserves related to our interest in equity method investees, which
represents 0.2% of our 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.
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87
PROVED RESERVES (1) (million boe)
Our Business
(1) Apparent differences in the sum of the numbers are due to rounding.
(2) The 894 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 include
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.
In 2023, we incorporated 1,498 million boe of proved reserves, including the:
– addition of 1,092 million boe, due to the good performance of assets, mainly in Búzios, Tupi and Atapu
fields, in the Santos Basin; and
– addition of 237 million boe from discoveries and extensions, mainly due to the declaration of
commerciality of Raia Manta and Raia Pintada fields (non-operated), in the Campos Basin; and
– addition of 170 million boe from revisions, mainly due to new projects and other revisions.
– We did not have relevant changes related to the variation in the oil price.
The additions in our proved reserves were partially offset by the reduction of 155 million boe, due to the
asset sales.
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2023 RESERVES INDEXES
Our Business
Proved Undeveloped Reserves
As of December 31, 2023, our proved undeveloped reserves were estimated at 5,194 million boe, a net
decrease of 3% when compared to 2022 year-end.
In 2023, we incorporated 520 million boe of proved undeveloped reserves, including the:
– addition of 235 million boe, due to discoveries and extensions, mainly the declaration of
commerciality of Raia Manta and Raia Pintada fields, in the Campos Basin;
– addition of 159 million boe due to the good performance of assets, mainly in the Santos Basin; and
– addition of 126 million boe due to new projects and other revisions.
The additions in our proved undeveloped reserves were partially offset by:
–
–
the conversion of 629 million boe of proved undeveloped reserves to proved developed reserves,
mainly as a result of the P-71 platform ramp up, the start-up of the FPSO Anna Nery in the Campos
Basin, and the FPSO Almirante Barroso, in the Santos Basin; and
the reduction of 44 million boe, due to asset sales.
CHANGES IN PROVED UNDEVELOPED RESERVES (1)
(million boe)
(1) Apparent differences in the sum of the numbers are due to rounding.
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Our Business
As of December 31, 2023, 21% (1,080 million boe) of our proved undeveloped reserves have remained
undeveloped for five years or more, mainly due to the inherent complexity of deep and ultra-deepwater
development projects in giant fields, particularly in the Santos and Campos Basins, in which we are investing
in the required infrastructure.
In 2023, we invested a total of US$11 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 & 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 interests as of
December 31, 2023. A gross well or acre is a well or acre where we own a interest, while the number of net
wells or acres is the sum of fractional interests in gross wells or acres. We do not have any material acreage
expiring before 2025.
GROSS AND NET PRODUCTIVE WELLS
As of December 31, 2023
Oil
Natural Gas
Gross
Net
Gross
Net
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated
Equity method investees
North America
Total equity method investees
TOTAL GROSS AND NET PRODUCTIVE
WELLS
742
38
780
41
41
821
711
12.08
723.08
3.19
3.19
79
166
245
1
1
73
55.72
128.72
0.01
0.01
726.99
246
128.73
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90
Our Business
GROSS AND NET DEVELOPED AND UNDEVELOPED ACREAGE (in acres)
As of December 31, 2023
Developed acreage
Undeveloped acreage
Gross
Net
Gross
Net
3,090,005
2,630,750
838,280
613,303
Consolidated
Brazil
South America (outside of Brazil)
3,526
1,185
1,310
440.16
Total consolidated
Equity method investees
North America
Total equity method investees
3,093,531
2,631,935
839,590
613,743
30,764
30,764
2,792
2,792
121,030
121,030
9,575
9,575
TOTAL GROSS AND NET ACREAGE
3,124,295
2,634,727
960,620
623,318
For “net” figures, we used our interest held on December 31, 2023. 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.
NET PRODUCTIVE AND DRY EXPLORATORY AND DEVELOPMENT WELLS
2023
2022
2021
Net productive exploratory wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(1)
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(1)
Total dry exploratory wells drilled
Total number of net exploratory wells drilled
PETROBRAS | Annual Report and Form 20-F | 2023
1.80
—
1.80
—
1.80
—
—
—
—
—
1.80
1.90
0.78
2.68
—
2.68
0.45
—
0.45
—
0.45
3.13
3.40
0.32
3.72
—
3.72
0.40
—
0.40
—
0.40
4.12
91
Net productive development wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(1)
Total productive development wells drilled
Net dry development wells drilled
Consolidated subsidiaries
Brazil
South America (outside of Brazil)
Total consolidated subsidiaries
Equity method investees
North America(1)
Total dry development wells drilled
Our Business
2023
2022
2021
30.50
3.70
34.20
0.14
34.34
—
—
—
—
—
41.66
3.02
44.68
0.08
44.76
—
—
—
—
—
26.23
4.67
30.90
0.20
31.10
—
—
—
—
—
TOTAL NUMBER OF NET DEVELOPMENT WELLS DRILLED
34.34
44.76
31.10
(1) Due to the joint venture formed by Petrobras America Inc. and Murphy Exploration & Production Company, 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 interest held as of December 31, 2023.
The following table summarizes the number of wells in the process of being drilled as of December 31, 2023.
NUMBER OF WELLS BEING DRILLED AS OF DECEMBER 31, 2023
Consolidated Subsidiaries
Brazil
International
South America (outside of Brazil)
North America
TOTAL WELLS DRILLING
Gross
Net
10
3
1
14
8.14
1.09
0.05
9.28
The following table sets forth our average sales prices and average production costs by geographic area of
production and by product type for the last three years.
PETROBRAS | Annual Report and Form 20-F | 2023
92
Our Business
AVERAGE SALES PRICES AND AVERAGE PRODUCTION COSTS
(US$)
South America
Brazil
South America
(outside of Brazil)
Total
2023
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(2)
2022
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(2)
2021
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(2)
79.09
11.37
-
-
5.17
95.91
11.54
87.76
8.80
5.68
67.48
7.61
57.46
5.20
3.66
50.75
3.46
-
-
79.07
10.92
-
-
5.24
5.17
51.38
4.27
-
-
6.33
34.43
3.21
-
-
5.05
95.88
11.24
87.76
8.80
5.68
67.45
7.43
57.46
5.20
3.68
(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: one bbl = six cubic feet.
(2) Production costs, net of production taxes, divided per volume produced.
For more information about our capitalized exploration costs, see Note 27 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 | 2023
93
Our Business
Refining, Transportation & Marketing
We processed 69% of all our oil production, which includes oil and LNG and excludes Natural Gasoline (C5+),
in our refineries. In 2023, we produced 1,772 mbbl/d of oil products, from the processing of Brazilian oil (90%
of feedstock) and imported oil (10% of feedstock). We traded these oil products both in Brazil and abroad.
Furthermore, we operate in the petrochemical sector with interests in companies and in the fertilizer sector
with plants in Brazil.
Overview
We own and operate 10 refineries in Brazil, with a total net crude distillation capacity of 1,813 mbbl/d. This
represents 84% of all refining capacity in Brazil, according to the 2023 statistical yearbook published by the
ANP. Until June 2023, we also owned and operated Guamaré Industrial Asset (“AIG”) refinery with a capacity
of 38 mbbl/d. The sale of the AIG refinery was completed on June 8, 2023. 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 37 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 19 third-party terminals and Transpetro operates nine other
third-party terminals.
PETROBRAS | Annual Report and Form 20-F | 2023
94
Our Business
PETROBRAS | Annual Report and Form 20-F | 2023
95
Our Business
In 2019, we signed a commitment with CADE related to the divestment of our refining assets in Brazil
(REMAN, LUBNOR, RNEST, RLAM, REGAP, REPAR and REFAP) and a shale industrialization unit (SIX). As of
December 31, 2023, we had already divested from the RLAM and REMAN refineries and the shale unit SIX.
However, given the new strategic direction presented in the 2024-2028+ Strategic Plan, on November 28,
2023 we formally requested a review of the agreement signed with CADE. At the time of filing this report,
negotiations with CADE were still in progress.
In 2023, we concluded the sale of our interest in the Potiguar Cluster, which includes, among its assets, the
AIG (Former RPCC).
In November 2023, we terminated the agreement signed in 2022 with Grepar Participações Ltda. for the sale
of our shares in a new company that would be formed by LUBNOR and its associated logistics due to non-
compliance with conditions precedent in the agreement.
For more information on our agreement with CADE regarding our divestments in refining assets, see “Risks
– Risk Factors – 6.b”.
For more information on the progress of our divestments, see “Portfolio Management” in this annual report.
For more information on our 2024-2028+ Strategic Plan, see “Strategic Plan – 2024-2028+ Strategic Plan”
in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
96
Our Business
2023
2022
2021
7,768
6,928
840
109
7,768
6,928(1)
840(1)
110
26
83
65
37
28
10
10
-
26
84
65
38
27
11
11
-
7,719
6,812
907
123
26
97
59
40
19
12
12
-
Main Assets
Transport and storage
Pipelines (km)
Own
Third parties(2)
Vessel fleet (owned and chartered)
Own
Chartered
Terminals
Own
Third parties(3)
Refining
Refineries
Brazil
Abroad
Nominal installed capacity (mbbl/d)
Brazil
Abroad
1,813
1,813
-
1,851
1,851
-
1,897
1,897
-
(1) The 2022 figures accounted for the expected divestment of OCAB (a 67 km duct connecting Barra do Furado Station to the Cabiúnas
Terminal), which did not materialize. The values, encompassing both own and third-party assets, were adjusted according to current
parameters.
(2) Third party pipelines that have existing Transpetro transport contracts.
(3) Third party terminals that have existing contracts for the use of the storage service, including nine terminals operated by Transpetro.
PETROBRAS | Annual Report and Form 20-F | 2023
97
Our Business
RefTOP - World Class Refining program
With the objective of being among the best oil refining companies in the world, since 2021 we have
had a specific program for this purpose, known as RefTOP Program. RefTOP consists of a set of
initiatives that seek to improve reliability, productivity, operational and energy performance. In
2023, following the revision of our refining portfolio strategy, the Program has expanded to all
refineries.
In 2023, the utilization factor in our refineries was 92%, the highest yearly utilization since 2014. We
have been focusing on analytics solutions, consistently promoting the integration of maintenance,
inspection, engineering, and operation systems, allowing for more accurate diagnoses, less time for
decision-making and reduction of equipment failures through the prediction of anomalous
behavior.
We keep implementing new projects and OPEX opportunities to increase energy efficiency, which
are leading to a consistent reduction in GHG emissions intensity, energy intensity, flaring emissions,
and natural gas consumption. The GHG emissions intensity has fallen from 37.9 kgCO2e/CWT in
2022 to 36.8 kgCO2e/CWT in 2023, considering all refineries. This GHG intensity reduction
corresponds to a natural gas consumption decrease of 490,000 m³/day (while maintaining
production levels). This achievement was due to the RefTOP initiatives.
We expect to invest approximately US$1.1 billion in all refineries up to 2030.
PETROBRAS | Annual Report and Form 20-F | 2023
98
Our Business
Refining
We serve our oil products clients in Brazil through a coordinated combination of oil processing, importing
and exporting that according to our commercial strategy 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 2023, we processed 1,696 mbbl/d of oil in our 10 refineries. The following graphs show the processed
feedstock and the performance of our refineries.
PROCESSED FEEDSTOCK (mbbl/d)
In 2023, the processed
feedstock was at the same
level as 2022 due to the
increase in domestic demand
of oil products.
Over the past 14 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 Paulínia Refinery
(“REPLAN”), currently in the process of contracting and assembling equipment and installations.
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 economic way, with operational safety and lower impacts to the environment.
The new diesel hydrotreatment unit will have a production capacity of 63 mbbl/d 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 | 2023
99
PERFORMANCE OF REFINERIES
Crude
distillation
capacity
(mbbl/d)
Nelson
Complexity
Index
Average throughput(1)
(mbbl/d)
Operational availability
Total Utilization rate(2 )
(%)
(%)
Our Business
2023
2023
2023
2022
2021
2023
2022
2021
2023
2022
2021
Refinery
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
—
208
434
252
—
170
—
88
—
—
—
3.5
6.8
9
56
8
58
8
97.7
97.6
97.8
107.8
106.7
94.5
54
97.6
97.0
96.4
98.8
102.9
95.5
15.4
221
205
186
91.5
96.0
96.4
93.7
86.8
79.0
6.0
143
155
145
94.2
92.9
95.8
74.7
82.0
75.5
7.9
146
146
134
97.6
97.3
96.5
95.1
94.7
87.4
—
—
28(3)
30
—
98.0
98.0
—
67.3
66.2
7.8
201
157
181
97.8
97.0
97.7
98.2
77.9
87.8
6.9
398
376
355
97.8
97.5
96.8
92.5
87.3
82.5
8.6
235
227
227
96.5
96.9
96.8
93.7
91.6
92.1
—
—
—
179(4)
—
—
95.1
—
—
72.1
10.2
155
173
149
95,3
96.9
95.3
92.0
102.7
88.2
—
10.7
11
74
24
61
29
63
—
1,649
1,619
1,740
—
47
43
40
—
1,696
1,662
1,780
—
93
—
—
—
—
—
—
68.7
63.7
—
84.9
92.2
95.1
83.0
78.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,813
—
—
—
—
(1)
Includes oil and NGL processing (fresh feedstock).
(2) Total utilization rate includes the entire load in the distillation units, consisting of oil, C5 + and reprocessing (of oil and other products).
(3) Average until November 2022.
(4) Average until November 2021.
PETROBRAS | Annual Report and Form 20-F | 2023
100
MAIN PRODUCTS, MARKETS AND STORAGE CAPACITY OF OUR REFINERIES
Our Business
Storage capacity
(mbbl)
Crude
oil
Oil
products
0.3
0.4
0.6
1.7
5.9
11.0
3.1
5.7
2.0
5.4
3.3
5.8
5.6
11.4
4.8
10.5
2.6
7.1
Main products
Main markets in Brazil
Asphalt (49%); Fuel Oil (33%);
Lubricants (12%); Diesel (5%)
Lubricant Oil – sold to distributors and marketed
nationwide; Asphalts – states in Northern and
Northeastern Brazil and Minas Gerais
Diesel (42%); Gasoline (30%); LPG
(8%)
Part of the São Paulo metro region and
petrochemical plants
Diesel (24%); Gasoline (15%); Fuel
Oil (22%); LPG (9%); Jet Fuel (7%);
Naphtha (10%)
Diesel (49%); Gasoline (26%);
Naphtha (5%); LPG (8%)
REGAP
Diesel (45%); Gasoline (26%); Jet
Fuel (6%); 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
Diesel (46%); Gasoline (27%); LPG
(8%)
Paraná, Santa Catarina, Southern São Paulo and
Mato Grosso do Sul
Refinery
LUBNOR
RECAP
REDUC
REFAP
REPAR
REPLAN
Diesel (44%); Gasoline (24%); LPG
(7%); Jet Fuel (4%)
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
Rio Grande do Norte and southern Ceará
0.12
0.12
North and Northeast of Brazil
—(2)
5.6
REVAP
Diesel (28%); Gasoline (24%);
Naphtha (7%); Jet Fuel (14%); Fuel
Oil (13%)
RPBC
Diesel (48%); Gasoline (27%); Fuel
Oil (11%); LPG (5%)
AIG (1)
(Former
RPCC)
RNEST
Fuel Oil (81%); Diesel (10%); Jet
Fuel (9%)
Diesel (59%); Naphtha (14%); Coke
(8%); Fuel Oil (15%)
(1) AIG was divested on June 8, 2023.
(2) Crude oil is supplied directly to RNEST’s tank farms of 4.2 mbbl, with no external crude oil storage.
PETROBRAS | Annual Report and Form 20-F | 2023
101
Our Business
With respect to oil products, we produced 1,772 mbbl/d of oil products in 2023, as shown in the following
graphic:
OIL PRODUCTS PRODUCTION (mbbl/d)
In 2023, compared to 2022, there was an increase in the production of diesel (+3.5%), gasoline (+3.9%), jet
fuel (+6.3%) and asphalt (+9.9%), due to growth in domestic demand, associated with the reduction in the
volume of naphtha (-15.7%) and fuel oil (-3.7%) produced in the same period. This result is supported by
high performance in refineries availability, reliability and profitability.
In 2023, we achieved the annual record in Diesel S-10 production, increased by 10.9% from 2022.
PETROBRAS | Annual Report and Form 20-F | 2023
102
Our Business
Ongoing undertakings
GASLUB
Following our current strategy, the GASLUB Cluster, previously known as COMPERJ, located in Itaboraí,
state of Rio de Janeiro, is being renovated. New solutions are being evaluated, such as a new refining
area, a natural gas process plant and a themoeletric power plant.
The basic engineering design of the new scope for the GASLUB refining area is nearing completion.
This scope considers integration with REDUC refinery and consists of a catalytic hydrocracking,
hydrotreating and hydroisodewaxing plant to produce Group II base lube oils which comprise a new
generation of lube oils with higher viscosity indexes, improved oxidation stability and better overall
performance compared to Group I base oils. The units will be able to produce high-quality fuels as well,
and additional investments included in our Strategic Plan, along integration with REDUC, will increase
S-10 production by 76 mbbl/d. For this scope, construction is expected to be contracted at the end of
2024. Furthermore, a study was initiated to evaluate the implementation of a dedicated plant to
process renewable feedstocks (vegetable oils and animal fat) and to produce advanced fuels such as
biojet SAF and/or HVO applying the Hydroprocessed Esters and Fatty Acids technology and also
petrochemical products.
For the natural gas processing plant, a new construction, management and commissioning contract
was signed in March 2023, which will finalize construction and commissioning of the plant. GASLUB
Cluster was fully connected to the power grid in December 2023. The UPGN is expected to begin
commercial operations in the second half of 2024.
The gas-fired thermoelectric plant is still under study, and its conceptual design has been completed
and further planning steps are in progress.
RNEST
RNEST (Refinery Abreu e Lima) started its operations in 2014 with the first set of units (Train I), making
it the newest and most modern of our refineries. The refinery is located in the Northeast region of
Brazil, and this location defines the plant as our main hub in the North-Northeast of the country.
RNEST is the main project for capacity expansion, with an expected increase in ultra-low sulfur diesel
(“ULSD” or “S-10”) production capacity of 94 mbbl/d. This increase in oil products output capacity
further strengthens our competitive advantage in the optimized use of our refining system. The main
projects for expanding capacity and improving the quality of oil products at RNEST include the revamp
of Train 1, implementation of Train 2, and the SNOX’ project completion. The SNOX project will enable
the processing of heavier crude oils, leading to a potential reduction in feedstock costs and thereby to
an improvement in margin.
The SNOX project and the revamp of Train 1 are under construction, while the Train 2 of RNEST is
currently in the tender process, and it is scheduled to start operation by 2028.
Other ULSD Projects
With respect to the expansion of production capacity of ULSD, in addition to the new hydrotreatment
unit at the REPLAN, with an additional production capacity of 63 mbbl/d of ULSD, we also have another
investment at REVAP, which has focused on modifications to an existing diesel hydrotreating unit (“U-
272D”) in order to improve the S-10 production in 41 mbbl/d, meeting market specifications and
environmental requirements. This project is expected to start in 2026.
PETROBRAS | Annual Report and Form 20-F | 2023
103
Our Business
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.
We directly manage some assets of this system, while we contract others with our wholly owned subsidiary
Transpetro.
Transpetro is a logistics company that performs operations for storing and handling oil and its derivates,
ethanol, gas, and biofuels for the supply of Brazilian industries, thermoelectric plants and oil refineries,
including import and export activities.
The terminals and pipelines operation is an important link in our supply chain. The oil is transported from
the production fields to Transpetro terminals by pipeline or ship. From there, it is transported to refineries
or for export. After refining, the oil products are drained through pipelines to the terminals to be delivered
to fuel distribution companies, which supply the Brazilian and global markets. This operation covers a 7,768
km pipeline network and 46 terminals, of which 25 are marine and are 21 onshore1. Transpetro operates
terminals owned by Petrobras and third parties, with a total nominal storage capacity of 10.73 million m3. In
2023, Transpetro handled 650.3 million m3 of oil, oil products and biofuels, totaling 6,069 operations with
tankers and oil barges.
—
1 It considers the operation of Transbel, a fully-owned subsidiary of Transpetro, established due to the obligation of auctioning public port area.
PETROBRAS | Annual Report and Form 20-F | 2023
104
Our Business
We move oil and oil products, whether by cabotage or long haul navigation, in response to the demands of
our customers. The fleet operated by Transpetro comprises 35 vessels (26 of which Transpetro owns and
nine of which we contract through the subsidiary Transpetro International BV), and this operating fleet has
an average age of nine years. The transport capacity of this fleet is 3.4 million deadweight tons. In 2023, this
fleet handled around 55 million m3 of oil and oil products, about 26% of the cargo handled by Petrobras by
sea.
In addition, we operate 74 ships chartered directly by Petrobras from third parties. This operation has the
capacity to transport 5.3 million deadweight tons and, in 2023, handled 215.8 million m3.
THROUGHPUT OF TERMINALS AND PIPELINES (million m
3
)
In 2023, there was an increase in
the movement of products by
the modals
operated
by
Transpetro compared to 2022.
The increase is the result of the
strategy of greater utilization of
the operational capacity of the
refineries in the country.
We are constantly looking for excellence in the integrity of our assets and operational efficiency.
The operational efficiency of Transpetro’s fleet, represented by the Operational Availability Index (which
calculates the proportion of time the vessel was operationally ready, excluding the time spent in dry dock),
was 99% in 2023 as compared to 98.9% in 2022. The increase in this index in 2023 ensured the company's
best result in the last six years. This is mainly due to our teams' engagement with operational discipline and
the significant improvement of planned and predictive maintenance.
Fuel theft in onshore pipelines
The engagement between Petrobras and Transpetro in 2023 remains a determining factor for considerable
advancement in combating fuel theft actions in our pipeline network, also known as illegal tapping. This
partnership resulted in actions that ensured our commitment to life, the environment, and operational
safety.
In 2023, we strengthened our relationship with Brazil's public security forces, tightened ties with
neighboring communities in our pipeline networks, expanding awareness and social projects, and invested
in the improvement of technological tools, aimed at greater effectiveness in preventing illegal tapping.
These actions enabled, over the last year, a reduction of 52% in the number of cases compared to the
previous year, dropping from 58 occurrences in 2022 to 28 occurrences in 2023. We also reduced the number
of occurrences in urban areas, minimizing risks to the surrounding population.
Finally, the achievements denoted by the results confirm the reduction of risk associated with illegal
tapping.
PETROBRAS | Annual Report and Form 20-F | 2023
105
OWN TERMINALS
Location
Alagoas
Amazonas
Ceará
Espírito Santo
Distrito Federal
Goiás
Maranhão
Minas Gerais
Pará
Pernambuco
Paraná
Rio de Janeiro
Rio Grande do Sul
Santa Catarina
São Paulo
TOTAL
Terminal
Maceió
Coari
Mucuripe
Barra do Riacho
Vitória
Brasília
Senador Canedo
São Luís
Uberaba
Uberlândia
Belém
Suape
Paranaguá
Ilha d’ Água
Angra dos Reis
Campos Elíseos
Ilha Redonda
Ilha Comprida
Japeri
Volta Redonda
Cabiúnas
Niterói
Rio Grande
Osório
Biguaçu
Itajaí
Guaramirim
São Francisco do Sul
Santos
São Sebastião
Barueri
Cubatão
Guararema
Guarulhos
Paulínia
Ribeirão Preto
São Caetano do Sul
37
(1) The terminal only pumps product. There is no product tank on this site.
Our Business
Type
Nominal capacity (m³)
Marine
Marine
Marine
Marine
Marine
Onshore
Onshore
Marine
Onshore
Onshore
Marine
Marine
Marine
Marine
Marine
Onshore
Marine
Marine
Onshore
Onshore
Onshore
Marine
Marine
Marine
Onshore
Onshore
Onshore
Marine
Marine
Marine
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
–
58,266
86,147
N/A (1)
107,834
10,710
72,308
127,778
78,897
54,812
45,812
48,187
108,560
204,567
179,173
1,011,487
547,284
75,484
42,773
37,650
25,502
483,134
21,189
101,422
842,394
36,214
56,482
18,644
473,166
388,873
2,057,493
206,461
161,102
1,026,935
164,181
274,608
50,886
227,308
9,513,723
PETROBRAS | Annual Report and Form 20-F | 2023
106
Marketing
Our Business
PETROBRAS | Annual Report and Form 20-F | 2023
107
Our Business
SALES VOLUMES OF OIL PRODUCTS TO BRAZILIAN MARKET, PER PRODUCT AND TOTAL IN THE YEAR
(mbbl/d)
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 April 2023, the
mandatory level of biodiesel in the fuel increased from 10% to 12%, as decided by the National Energy Policy
Council (“CNPE”).
The decrease in diesel oil sales in 2023 was mainly associated with the divestment of the REMAN refinery
concluded on November 30, 2022, and the increase in the mandatory biodiesel blend content in April 2023.
In the third quarter of 2023, we reached a record for low-sulfur S-10 diesel sales with low-sulfur S-10 sales
representing 62% of the total diesel sales. In 2023, S-10 diesel sales represented 62% of our diesel sales,
surpassing the 59% achieved in 2022.
The record share of S-10 Diesel as it relates to total diesel sales reflects the commercial and operational
actions that we have implemented in order to meet the Brazilian domestic demand for the product with lower
sulfur content, replacing the S-500 Diesel.
PETROBRAS | Annual Report and Form 20-F | 2023
108
Our Business
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) by distributors 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 2023, the “gasoline A” sold by us
represented around 43% of the total Brazilian Cycle-Otto market.
The main factors for the sales growth were the increase in the total Brazilian Cycle-Otto demand, and the
increase of gasoline’s share in the total consumption due to its greater competitiveness compared to hydrated
ethanol for most of the year.
LPG
The 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 2023 was mainly associated with the divestment of the REMAN refinery concluded on
November 30, 2022, the higher temperatures registered in Brazil this year, and the participation of other
suppliers through the Natural Gas Integrated Processing System (“SIP”).
Naphtha
Naphtha is a light petroleum distillate that is mainly used as raw material for the 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 2023 was mainly associated with the decrease in Braskem’s consumption,
especially at the São Paulo site.
PETROBRAS | Annual Report and Form 20-F | 2023
109
Our Business
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. Due to international travel restrictions, domestic flights were responsible for up to 80%
of Brazilian jet-fuel demand during the pandemic. In 2023, we saw a return to the historical share. 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 2023 was the recovery of the aviation industry post COVID-19,
especially in the domestic segment, despite the divestment of the REMAN refinery.
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 (thermoelectric 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 thermoelectric plants participate marginally in the country’s energy supply, entering into operation
only when the water level in reservoirs are very low. In 2023, industrial use of fuel oil represented around 99%
of demand, while the use in power generation represented only 1%.
In 2023, the main factor for the sales shrinkage was the decrease in industrial consumption.
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
Natural gas
Crude oil
Ethanol, nitrogen fertilizers, renewables and other products
Total Brazilian market
Exports(1)
TOTAL BRAZILIAN MARKET AND EXPORTS
(1) Mainly includes crude oil and oil products.
PETROBRAS | Annual Report and Form 20-F | 2023
2023
1,744
226
181
4
2,155
806
2,961
2022
1,753
305
202
3
2,263
714
2,977
2021
1,806
352
24
4
2,186
811
2,997
110
Our Business
Oil products prices
Crude oil is a commodity, the value of which depends on its quality, usually based on its API gravity
and sulfur content. Traditionally, lighter crude oils have greater added value than heavier ones,
given that they can generate higher value products. Lower sulfur content crudes tend to have more
market values compared to higher sulfur ones with similar yields. 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. 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 flexibility to process different grades.
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.
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, gas
oils 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.
Currently, as a result of the ongoing military conflict between Russia and Ukraine and the recent
escalation of tensions involving Israel in the Gaza Strip, benchmark prices for oil, oil products,
natural gas and LNG remain extremely volatile. We cannot predict the extent to which these
conflicts will impact on our business. These events also affect oil flows and related markets. An
example is the change in exports of oil supplied by Russia being diverted to China and India, limiting
the demand from these markets for other suppliers.
Our current positioning on pricing 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.
Since 2022, we have followed our Guideline for Price Formation in the Domestic Market (“Guideline”),
approved by our Board of Directors, in line with its objective of continuously improving our
governance. The Guideline reiterates the Executive Board's competence in executing pricing
policies, preserving and prioritizing our financial result and seeking to maximize its value creation.
Furthermore, the Guideline incorporates an additional layer of supervision of the execution of the
pricing policies by the Board of Directors and the Fiscal Council, based on the Executive Board's
quarterly report, formalizing an already existing practice.
PETROBRAS | Annual Report and Form 20-F | 2023
111
Our Business
Diesel and Gasoline
In May 15, 2023, our Executive Board approved a new commercial strategy to define our diesel and
gasoline prices, replacing the former pricing policy. The commercial strategy considers market
references such as: (a) the customer's alternative cost, as a value to be prioritized in pricing, and (b)
our marginal value. The customer's alternative cost refers to the cost of the main supply
alternatives, whether the same or substitute products, and the marginal value is based on the
opportunity cost given the various alternatives for the company, among them, production, imports
and exports of the product and/or the oils used in refining. The commercial strategy is premised on
competitive prices per sales hub, in balance with the national and international markets, taking into
account the best alternative accessible to customers. This strategy allows us to compete more
efficiently, taking into account our market share, to optimize its refining assets, and to obtain
profitability on a sustainable basis.
Price readjustments will continue to be made without a defined periodicity, avoiding the transfer to
domestic prices of the cyclical volatility of international prices and of the exchange rate to domestic
prices.
The commercial strategy is aligned with the Guideline approved by the Board of Directors on July
27, 2022.
During 2023, we announced adjustments to selling prices at refineries, resulting in a price decrease
of 8.7% for gasoline and a decrease of 22.5% for diesel, when comparing prices in place on December
31, 2023 with those effective as of December 31, 2022.
LPG
LPG prices in the Brazilian market are defined taking into account the balance with the international
prices and the level of market share, 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.
During 2023, we announced adjustments to selling prices at refineries, resulting in price decreases
of 24.7% for LPG, when comparing prices in place on December 31, 2023 with those effective as of
December 31, 2022.
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
in order to balance any shortfall between production from our Brazilian refineries and the market demand
for each product.
In 2023, net exports increased by 164 mbbl/d, reaching 485 mbbl/d. This increase resulted mainly from
higher exports of oil and gasoline and lower imports of oil and diesel.
PETROBRAS | Annual Report and Form 20-F | 2023
112
EXPORTS AND IMPORTS OF CRUDE OIL AND OIL PRODUCTS
(mbbl/d)
2023
2022
2021
Our Business
Exports
Crude oil
Fuel oil
Other oil products
Total exports
Imports
Crude oil
Diesel
Gasoline
Other oil products
Total imports
594
161
51
806
156
63
39
63
321
513
181
20
714
164
118
25
86
393
575
197
39
811
154
118
20
75
367
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, Buenos Aires and Rotterdam and are comprised of crude oil and product traders,
LNG, shipping and support operators.
For more information on our oil and oil products clients, see “Exploration & Production – Customers and
Competitors” and “Refining, Transportation & Marketing – Customers and Competitors” in this annual
report.
Distribution
We sell our oil products to several distribution companies in Brazil.
In 2021, we exited the distribution sector in Brazil, when we completed the sale of our interest in Vibra.
Despite this sale, we remain the owner of the main brands used by Vibra, 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 contract expires in June 2029
and must comply with the established debranding obligations.
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.
PETROBRAS | Annual Report and Form 20-F | 2023
113
Our Business
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 121
service stations and a lubricant plant with a production capacity of 54,000 m3/year. PECOCO is in
Petrobras divestment portfolio;
– Chile: Following the sale of 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; and
– Paraguay: Following the sale of our distribution operations in Paraguay, which was concluded in 2019,
we entered into a brand licensing agreement in Paraguay for the exclusive use of our brands, for the
initial term of five years. The parties have approved an extension of the contract term through 2026.
For more information of the divestment process, see “Portfolio Management” in this annual report.
Customers and Competitors
We interact with approximately 462 clients in Brazil, in regard to liquid and solid products, seven of which
account for 66% of the total volume sold.
LIQUID AND SOLID 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 10 refineries in Brazil.
PETROBRAS | Annual Report and Form 20-F | 2023
114
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 2023, our participation in diesel and
gasoline markets decreased compared to the previous year, mainly due to the divestment of REMAN and to
the increase of the mandatory biodiesel blend from 10% to 12% in April 2023.
Our Business
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
METANOR S.A./COPENOR S.A.(1)
Formaldehyde
Hexamine
Fábrica Carioca de Catalisadores S.A.
Catalysts
Additives
PETROCOQUE S.A.
Calcined petroleum coke
(1) Copernor S.A. is a subsidiary of Metanor S.A.
Brazil
Brazil
Mexico
Brazil
USA
Germany
Brazil
Brazil
3.95
3.06
1.05
1.85
2.02
0.63
0.09
0.01
0.04
0.01
36.15%
Novonor (38.32%);
Others (25.53%)
34.34%
Dexxos Participações
(45.47%);
Others (19.99%)
50.00%
Albemarle (50.00%)
Brazil
0.55
50.00%
Universal
Empreendimentos e
Participações Ltda
(50.00%)
In December 2022, we announced the beginning of the binding phase of the sale of all of our shares in
Metanor, but in 2024, we decided to cancel the divestment process.
In May 2023, we received a letter regarding the non-binding proposal for the acquisition of Novonor S.A.'s
interest in Braskem. The information was forwarded to us due to the fact that we are Braskem's second
largest shareholder and a party to the shareholders' agreement. In July 2023, we started the due diligence
process, according to the rules provided for in the Braskem Shareholders Agreement signed between
Petrobras and Novonor S.A., for the potential exercise of tag along or preemptive rights, in the event of sale
of Braskem’s shares owned by Novonor S.A.
PETROBRAS | Annual Report and Form 20-F | 2023
115
Our Business
Fertilizers
We have three fertilizer plants in Brazil, one located in the state of Bahia (“FAFEN-BA”), one in the state of
Sergipe (“FAFEN-SE”), and one through our subsidiary located in Paraná, Araucaria Nitrogenados S.A.
(“ANSA”). Their main products are ammonia and urea. Together these plants have an installed capacity of
1.852 million t/year of urea, 1.406 million t/y of ammonia, 319,000 t/y of ammonium sulfate and 800,000 t/y
of ARLA-32.
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. Between 2020 and 2022, the unit was subject to an unsuccessful sale process.
Since 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.
ANSA has been mothballed since January 2020. Since September 2020, we had worked on the divestment
process. In December 2022, we announced the cancellation of the competitive process for the sale of all our
shares in ANSA.
In May 2023, our Board of Directors approved the revision of the strategic elements for the 2024-2028+
Strategic Plan, with our new vision to be the best diversified and integrated energy company, including the
fertilizer and Petrochemical segments. Since then, we began studying joint ventures involving opportunities
in the areas of fertilizers, green hydrogen and low-carbon projects.
In June 2023, we signed a non-disclosure agreement with Unigel Participações S.A. (Unigel) to analyze joint
business involving opportunity development in the areas of fertilizers, green hydrogen and low-carbon
projects. Additionally, in 2023 we started studies for the restart of fertilizer production on ANSA, as well as
the resumption of the UFN-III Project.
On December 29, 2023, Petrobras signed a contract with Unigel Participações S.A. for custom
industrialization (tolling) for the production of nitrogen fertilizers in plants located in the States of Sergipe
and Bahia.
On February 28 2024, Petrobras announced a signing of a non-binding Memorandum of Understanding
(MoU) with Yara Brasil Fertilizantes S.A. (Yara) to study potential business partnerships for local initiatives
in the fertilizer segment, production of industrial products and decarbonization of production.
Petrobras thus reinforces its commitment to leading the transformation and driving a sustainable, fair and
safe energy transition.
For more information on our new vision and strategies, see “2024-2028+ Strategic Plan” in this annual
report.
PETROBRAS | Annual Report and Form 20-F | 2023
116
Our Business
Gas & Low Carbon Energies
Overview
We process gas produced in our oil fields in our UPGNs that have the capacity to treat 93.9 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 power generation through thermal power plants fired by natural gas and diesel oil
and in the commercialization of electric energy.
Main Assets
Natural gas
2023
2022
2021
Gas pipelines in Brazil (km)
2,643
2,643
2,643(1)
Processing Units (2)
Brazil (2)
Bolivia
13
10
3
15
12
3
Processing capacity (million m3/day)
138
143 (3)
Brazil
Bolivia
Regasification terminals
Regasification capacity (million m3/day)
Power
Number of thermal power plants
Installed capacity (thousand MWh)
94
44
3(4)
47
14
5.3
99
44
3(3)
47
14
5.3
17
14
3
149
105
44
3
47
14(5)
5.4
(1)
(2)
In April 2021, we concluded the sale of our remaining 10% interest in NTS, which has 2,043 km of pipelines.
In 2023, UPGN RPBC authorization was canceled by ANP due to its continued inactivity for 2 years.
(3) The terminal (TR-BA) was leased to Excelerate Energy Comercializadora de Gás Natural Ltda until December 31, 2023.
(4) PECEM's operation contract was valid until December 31, 2023, when it terminated.
(5)
In 2021, the count included Alto do Rodrigues which is a solar generation unit.
PETROBRAS | Annual Report and Form 20-F | 2023
117
Our Business
PETROBRAS | Annual Report and Form 20-F | 2023
118
Our Business
Natural Gas
Our Gas & Low Carbon Energies segment is comprised of, among other things, gas processing,
transportation, LNG regasification (Bahia and Rio de Janeiro states), gas-fired and oil-fueled power
generation. The Ceará LNG regasification terminal contract was valid until December 31, 2023, when it
terminated.
The Gas & Low Carbon Energies segment strategy is to act in a competitive and integrated manner in the
operation and commercialization of gas and energy, optimize the portfolio and increase the insertion on
renewable sources.
Processing of Natural Gas
Natural gas from our Exploration & Production segment 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 transportation, industrial and residential uses, as well as in the fertilizer industry and thermoelectric
power generation.
Our UPGNs are located in the states of Amazonas, Ceará, Rio Grande do Norte, Bahia, Espírito Santo, Rio de
Janeiro and São Paulo in Brazil as well as in Bolivia, where we have the capacity to process natural gas in its
gaseous and condensed forms.
PROCESSING CAPACITY AND PRODUCTION OF OUR UPGNS IN BRAZIL(1)(2)
Location
2023
Processing
capacity
Unprocessed
natural gas
2023
Processed
natural
gas
LPG
Unprocessed
natural gas
2022
Processed
natural
gas
LPG
Unprocessed
natural gas
2021
Processed
natural
gas
LPG
(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)
UTGCAB
Rio de Janeiro
24.6
21.39
15.07
0.90
21.06
14.11
0.82
21.65
15.55
0.86
UTGCA
São Paulo
20.0
12.16
11.46
0.99
13.27
12.62
0.97
11.17
10.64
0.72
UTGC
Espírito Santo
18.1
UTGSUL
Espírito Santo
2.5
Rio de Janeiro
2.5
2.74
0.06
1.11
2.42
0.34
2.04
1.83
0.24
3.29
2.97
0.44
0.05
-
0.11
0.09
-
0.31
0.26
–
1.05
0.23
1.12
0.49
0.04
1.19
0.90
0.02
Ceará
0.35
0
0
0
0
0
0
-
–
–
Amazonas
12.2
12.15
11.44
0.93
11.79
11.08
11.79
11.08
10.81
1.08
UPGN
GUAMARÉ(3)
Rio Grande do
Norte
5.7
UPGN CATU
Bahia
2.0
EVF
MANATI
TOTAL
Bahia
6.0
—
93.95
0.30
1.60
1.67
0.28
0.05
0.77
0.70
0.77
0.70
0.63
0.1
1.35
0.00
1.35
1.12
0.00
1.16
0.95
0.00
–
–
2.47
–
–
3.12
–
–
53.18
43.12
3.44
54.08
42.14
3.15
55.30
43.81
3.18
(1) We concluded the sale of UPGN Pilar in February 2022.
(2) The UPGN Atalaia was mothballed in 2020.
(3) We concluded the sale of UPGN Guamaré in June 2023, part of Potiguar Cluster.
PETROBRAS | Annual Report and Form 20-F | 2023
119
UPGN
REDUC
UPGN
LUBNOR
UPGN
URUCU
Our Business
Logistics
We use a pipeline system to transport natural gas from processing plants, regasification terminals and the
border with Bolivia, to the local distributors, free consumers, as well as for the internal consumption of 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%) and
Total Gas and Power Brazil
(25%)
TOTAL
2,643
—
—
In addition, outside Brazil we hold an 11% interest in GTB, which is responsible for the Bolivian side of the
Bolivia-Brazil gas pipeline, measuring 557 km.
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
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 381 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. GASMEX is 100% owned by
Petrobras, and we own 65% of Route 1, Shell owns 25% and Petrogal owns the remaining 10%.
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
ROUTE 2: The 401 km pipeline links the Santos Basin pre-salt to the Cabiúnas Gas Treatment Unit
(“UTGCAB”) processing asset, in the city of Macaé in the state of Rio de Janeiro. It had an initial
authorized capacity to flow up to 13 million m3/d, which then increased to 16 million m3/d. In July
2019, ANP authorized the pipeline to operate with 20 million m3/d. We own 65% of Route 2 Tupi-
NE-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 connects the Santos Basin pre-salt to the Itaboraí Gas Treatment
Unit processing asset, in the city of Itaboraí in the state of Rio de Janeiro, with a capacity of up to
18 million m3/d. 307 km of the pipeline is offshore, and the other 48 km is onshore. The natural gas
processing plant will have two units with a total processing capacity of 21 million m3/d of natural
gas, increasing the supply of natural gas, LPG, and Natural Gasoline (C5+) to the market. The
construction of the Route 3 gas pipeline was successfully completed. However, it is not yet in
operation, as it is awaiting the conclusion of the processing plant to allow the flow of gas foreseen
by that route, which is scheduled to begin operations in 2024. We own 100% of Route 3.
Recently installed and upcoming units in the Santos Basin pre-salt will be progressively connected
to Route 2 and to Route 3. All projects will be able to flow through any of the three flow routes when
the system is fully implemented.
Marketing and Sales
The total volume of natural gas we delivered in 2023 was 50.2 million m3/d. The volume of our natural gas
consumption by industrial, gas-fired electric power generation, commercial and retail customers was 38.6
million m3/d, representing a decrease of approximately 14% compared to 2022. This decrease is mainly
attributable to lower thermoelectric dispatch, lower non-thermoelectric demand, as well as the ongoing
opening of the natural gas market.
In 2023, the consumption of natural gas by our refineries was 10.8 million m3/d which was the same level as
in 2022.
Below we present our sources and consumption in 2023:
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
Gas & Energy + Program
In July 2019, we signed an agreement with CADE to increase competition in the natural gas industry in Brazil,
which among other matters included the sale of shareholdings in gas transportation and distribution
companies. Due to a more open market, in 2020 we started the GAS+ Program, an internal set of actions
which aims to increase our competitiveness in the natural gas segment. In 2021, Law No. 14,134, known as
the New Gas Law that set the basis for a profound reform of the Brazilian Gas Market was promulgated. As
a result of the agreement with CADE and the New Gas Law, according to information provided by the ANP,
in 2023 around 14 new players became holders of about 24% of the non-thermoelectric Brazilian natural
gas market.
Given the new strategic direction presented in 2024-2028+ Strategic Plan, on November 28, 2023 we
formally requested a review of the agreement signed with CADE. At the time of filing this report,
negotiations with CADE were still in progress.
For more information on our agreement with CADE, see “Risks – Risk Factors – 6.b.”.
For more information on the progress of our divestments, see “Portfolio Management” in this annual report.
In 2023, the GAS+ Program was renamed as Gas & Energy + Program (also called “Gas and power plus
Program” and “G&E+”), reinforcing actions aimed at the gas business and including actions focused on the
energy business. There was also the separation of the High Performance Assets Front, which became part
of the Asset Management System.
The G&E+ aims to prepare us to act competitively in the natural gas open market. This program focus is on
offering the best customer relationship experience and developing and delivering products with
commercial conditions adherent to the customers needs, to achieve the established market share and
profitability goals. It includes initiatives such as the launch of new commercial products, new forms of
customer relationships, and digital tools (such as digital contracts and sales through automated platforms),
as well as actions in the field of regulation and new business models (such as alignment of regulatory
procedures for the review of the Unit Variable Cost (UVC) thermal and LNG market).
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
Throughout 2023, several G&E+ initiatives were implemented. The development of these initiatives
is monitored periodically, at different levels of management,
following the established project
management structure. The main achievements for 2023 are highlighted below:
– Recontracting our natural gas portfolio;
–
– Development of appropriate processes and tools for the new market (Commercialization
Implementation of the new Customer Relationship Management platform (Evoluir Project);
Planning/Transport Contracting);
– Expansion of sales in the Natural Gas free environment; and
–
Implementation of new digital solutions for operational optimization (G&E Competitive Project).
Natural gas sales contracts and long-term gas purchase and transportation commitments
We sell our gas primarily to local gas distribution companies, free consumers and gas-powered plants,
generally based on standard take-or-pay, long-term supply contracts. Free consumers are consumers that,
if eligible, can freely negotiate their natural gas purchases from multiple suppliers instead of buying directly
from a single distribution company. The price formulas under these contracts are mostly aligned with Brent
oil prices, LNG price markers (Henry Hub and Japan Korea Marker) and the U.S. dollar. They were negotiated
under the new gas law.
In 2023, we offered customers new products with flexible conditions, so that they can build their own
portfolio:
Inclusion of Henry Hub, a gas-to-gas indexer, in addition to the Brent indexer;
–
– Diversified contractual terms, ranging from 4 to 11 years;
– Possibility of starting supply in 2024 or 2026; and
– Two location options for delivering natural gas: (a) at the hub in which Petrobras is responsible for
contracting the entry into the transport system and the customer is responsible for contracting the
exit or (b) at the delivery point (city-gate) in which Petrobras is responsible for contracting the entry
and exit of transport.
In addition to this diversification, our commercial conditions seek to make the competitive environment and
the market opening process more dynamic by enabling, among others, the reduction of volumes contracted
by distributors in the event of migration of volumes from captive customers to the free environment. As
result, new contracts were signed with 12 distributing companies, totalizing 21 MMm³/d of contracted
quantity to 2024. The total estimated value of contracts signed is US$ 35 billion (according to the exchange
rate as of December 31, 2023), valid until 2034. The total commitment of natural gas contracts is 30.5 million
m³/day with local distribution companies, including contracts signed in previous years.
In an effort to extinguish the legal controversies involving our major clients, the company successfully
negotiated an agreement with Companhia Distribuidora de Gás do Rio de Janeiro and CEG RIO S/A ending
the judiciary turmoil and signing a ten year supply commitment that totaled approximately US$10 billion in
contracts value.
It is also worth highlighting the agreement that ended the legal dispute with the Sergipe Gás S/A, a major
achievement that helped bringing economic and legal stability to the Brazilian northeast commercial
environment.
When we started building the GASBOL in 1996, we entered into a GSA with the Bolivian state-owned
company YPFB to purchase certain minimum volumes of natural gas, which were based on an average
delivery or pay of 30 mmm3/day, at prices linked to the global fuel oil price.
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
The supply of gas under the GSA began on July 1, 1999. Adjustments to the contractual balance volumes
agreed upon since December 31, 2023 preview a potential extension of the term of the contract until
December 2027, if delivery or pay conditions are met, or September 2030, if take-or-pay withdraw volumes
are taken into account. The main commitment adjustments were the Addendum 11, celebrated in August
2022, and Addendum 12, celebrated in December 2023, resulting from the negotiation to adjust the GSA to
the declining production of Bolivian natural gas.
Regarding transport contracts, we have signed agreements with (i) GTB, which operates the transmission
network in Bolivia, connecting Bolivian gas production to the Brazilian border, and (ii) TBG, TAG, and NTS,
which operate the Brazilian transmission network. The contracts have different durations, some of which
are long-term. Since 2019, the market opening process has started with public auctions for contracting
capacity in TBG's transport network taking into consideration the reduction of Petrobras, commitments in
that system.
The table below shows the potential effect of the contractual commitments under the above agreements
for the five-year period from 2024 through 2028.
PETROBRAS | Annual Report and Form 20-F | 2023
125
Our Business
FUTURE COMMITMENTS UNDER NATURAL GAS SALES CONTRACTS (1)
To non thermoelectric clients
Related parties (mmm3/d) (2) (3)
Third parties (mmm3/d) (3)
To gas-fired power plants
Related parties (mmm3/d) (2) (3)
Third parties (mmm3/d) (3)
Total (mmm3/d) (2) (3)
2024
2025
2026
2027
2028
0.00
21.80
0.00
4.60
0.00
21.70
0.00
4.25
26.40
25.95
0.00
16.60
0.00
4.28
20.88
0.00
15.60
0.00
5.27
20.87
0.00
15.10
0.00
5.52
20.62
Estimated amounts to be invoiced (US$ million) (3) (4)
3,444.05
3,819.27
3,076.42
2,990.38
2,909.72
Purchase Commitments
Purchase commitments to YPFB
Volume obligation (mmm3/d)
Volume obligation (mmcf/d)
Brent Crude Oil projection (US$)
Estimated payments (US$ million) (5)
Transportation Commitments
Ship-or-pay contract with GTB
Volume commitment (mmm3/d)
Volume commitment (mmcf/d)
Estimated payments (US$ million) (6)
Ship-or-pay contract with TBG (7) (8)
Volume commitment (mmm3/d) (9)
Volume commitment (mmcf/d)
Estimated payments (US$ million) (6)
Ship-or-pay contract with NTS
Volume commitment (mmm3/d)
Volume commitment (mmcf/d)
15.6
8.00
4.00
550.91
282.52
141.26
80.00
77.5
75.00
1,420.30
711.78
322.72
0.00
0.00
72.50
0.00
0.00
0.00
70.00
0.00
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
0.40
43.54
1,537.53
246.85
12.99
458.77
24.76
11.60
409.72
10.78
11.74
414.52
12.48
11.23
396.41
6.55
158.21
158.21
114.40
114.40
114.40
5,586.96
5,586.96
4,040.00
4,040.00
4,040.00
Estimated payments (US$ million) (6) (10)
1,360.75
1,363.45
968.90
978.19
994.59
Ship-or-pay contract with TAG
Volume commitment (mmm3/d)
Volume commitment (mmcf/d)
73.86
73.58
52.00
52.00
52.00
2,608.49
2,598.4
1,836.19
1,836.19
1,836.19
Estimated payments (US$ million) (6) (11)
1,646.60
1,646.63
1,257.63
1,269.69
1,290.98
(1) The table considers information such as estimated volumes, estimated withdrawal and Brent Crude Oil price, based on our Strategic Plan 2024-2028+,
approved on November 23, 2023 (subsequent events shall be incorporated into the next cycle of strategic planning).
(2)
(3)
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.
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)
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.
(6) Amounts calculated based on current prices defined in natural gas transport contracts.
(7) The ship-or-pay contract shown with TBG is eliminated in our audited consolidated financial statements, since such contract is considered intercompany
transactions.
(8) The sum of legacy contracts (TCO and CPAC) was considered with the new entry and exit contracts, object of public calls.
(9) The volumes may increase as a result of public calls for contracting capacity.
(10) The estimated payments from Petrobras to NTS will be monthly reduced in order to reflect the payments made by other companies to NTS in the gas
transportation contracts signed as result of the agreement of reduction of flexibility signed between Petrobras and NTS in September 2022.
(11) The estimated payments from Petrobras to TAG will be reduced monthly in order to reflect the payments made by other companies to TAG in the gas
transportation contracts signed as result of the agreement of reduction of flexibility signed between Petrobras and TAG in December 2021.
PETROBRAS | Annual Report and Form 20-F | 2023
126
Our Business
Power
Brazilian electricity needs are mainly met by hydroelectric power plants and other sources of energy (wind,
solar, 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 14 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 5,313 MW. These plants are designed
to supplement power from the hydroelectric power plants.
In 2023, the total electricity generated in Brazil, according to the ONS, was 74.5 GWavg. Our thermoelectric
power plants contributed 612 MWavg (859 MWavg in 2022 and 3,419 MWavg in 2021). This decrease in total
generated electricity was due to the maintenance of storage levels in the reservoirs of hydroelectric plants
and the significant expansion of wind and photovoltaic plants throughout the year.
In addition, we hold participation in other projects of power generation. This adds up to 215 MW to our
electricity generation capacity.
We also have some investments in renewable power generation sources in Brazil. We own a solar power pilot
plant, Alto do Rodrigues Phototovoltaic Unit with just one MW of solar capacity.
SALES AND GENERATION OF ELECTRICITY(1)
Electricity sales (ACL) – average MW(2)
Electricity sales (ACR) – average MW
Electricity generation – average MW
2023
1,515
1,655
612
2022
1,099
2,053
859
2021
1,150
2,439
3,419
(1) The generation value in the table above includes only the plants where we manage the operation.
(2) Includes electricity sales from the Gas & Low Carbon Energies segment to other operating segments. Service and other revenues from electricity companies.
PETROBRAS | Annual Report and Form 20-F | 2023
127
Our Business
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 2023, the commercial capacity certified by MME for all thermoelectric power plants we control was
3,218 MWavg. Our total generating capacity was 5,313 MWavg. Of the total 4,665 MWavg of
commercial capacity available for sale in 2023, approximately 35% was sold as standby availability
in public auctions in the regulated market (compared to 50% in 2022) and approximately 32% was
committed under bilateral contracts and self-production, i.e. sales to related parties, (compared to
27% in 2022).
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)
Commercial capacity available (Lastro) (MWavg)
2023
5,313
3,218
1,447
4,665
2022
5,313
3,206
873
2021
5,490
3,461
787
4,079
4,248
PETROBRAS | Annual Report and Form 20-F | 2023
128
Our Business
The table below shows the allocation of our sales volume between our customers and our revenues
for each of the past three years:
ELECTRICITY SOLD
Total sale commitments (MWavg)
Bilateral contracts
Internal consumption
Public auctions to distribution companies
Generation volume (MWavg)
Revenues (US$ million)(1)
2023
3,170
1,219
296
1,655
612
1,652
2022
3,152
771
328
2,053
859
1,870
2021
3,605
778
372
2,455
3,419
3,710
(1)
Includes electricity sales revenues from the Power segment to other operating segments, service and other revenues from electricity
companies.
Our power assets and their respective locations are listed in the table below.
OUR POWER ASSETS (1)
(MW)
Type(2)
Region
Power Plant
Fuel(2)
Installed
Capacity
Shareholding
or PIE
Petrobras
Capacity
Partners
Ibirité
NG
235
100%
235
Baixada
Fluminense
NG
Seropédica NG/DO
530
360
Cubatão
NG
249.9
Southeast/
Midwest
Nova
Piratininga
UTE
Piratininga
Termorio
NG
NG
NG
Juiz de Fora
NG/ET
Três Lagoas
Termomacaé
NG
NG
South
Canoas DO/NG
Termobahia
Northeast
Vale do Açu
NG
NG
Termoceará NG/DO
386
190
989.2
87
386
922.6
248.6
186
323
220
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
530
360
249.9
386
190
989.2
87
386
922.6
248.6
186
323
220
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
(
Petrobras Management
5,313
100%
5,313
15
PV
Northeast
Solar Alto do
Rodrigues
Subtotal Petrobras Management
1
5,314
100%
1
5,314
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
PETROBRAS | Annual Report and Form 20-F | 2023
129
Our Business
Type(2)
Region
Power
Plant
Fuel(2)
Installed
Capacity
Shareholding
or PIE
Petrobras
Capacity
Partners
1
2
3
4
Southeast/
Midwest
South
Goiânia II
DO
140.3
30%
Araucária
NG
484
18.80%
Suape II
FO
381
20%
42
91
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%
Subtotal Petrobras Shareholdings
1,055
6,369
215
5,529
i
s
g
n
d
l
o
h
e
r
a
h
S
s
a
r
b
o
r
t
e
P
TOTAL
(1)
(2)
The Termocamaçari plant, powered by natural gas and with an installed capacity of 120MW, is leased to Proquigel Química until August 2030.
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.
Contracts of our thermoelectric power plant in the ACR and their respective contracted power and contract
expiration date are listed in the table below.
OUR CONTRACTS IN THE REGULATED MARKETING ENVIRONMENT
Region
Power plant
Contracted
power
(MWavg)
Contract expiration date
Baixada Fluminense
Seropédica
Cubatão
Termorio
Três Lagoas
Termomacaé
Termoceará
416.4
278.0
141.0
98.3
64.2
352.0
127.0
200.0
141.0
2033
2023
2024
2025 to 2039
2026 to 2040
2024
2023
2025
2023 (64MW) e 2024 (77MW)
Southeast /Midwest
Northeast
Contracts of capacity reserve of our thermoelectric power plants and contract length are listed in the table
below.
PETROBRAS | Annual Report and Form 20-F | 2023
130
Our Business
Power plant
Contracted
available power
(MWavg)
Termorio
Ibirité
922.35
197.87
Contract length
July 2026 to June 2041
July 2026 to June 2041
OUR CONTRACTS OF CAPACITY RESERVE
Region
Southeast/Midwest
Low Carbon Energies
In 2023, we took important steps towards a fair and inclusive energy transition, in line with the guidelines
of our Strategic Plan, to increase diversification in low-carbon businesses, preferably through partnerships
that allow risks and expertise to be shared. Such steps include opportunities for joint investment in onshore
and offshore wind, solar energies, biofuels as well as low-carbon hydrogen and carbon capture and storage
(CCS). We aim to work together with major players to jointly evaluate opportunities. If these opportunities
prove to be viable and attractive for all parties, we can finalize binding agreements and investments in line
with our objectives of promoting the energy transition as well as our profitability.
In September 2023, we submitted a request with Ibama to start the environmental licensing process for ten
areas in the Brazilian sea intended for the development of offshore wind energy projects. It aims to assess
the technical-economic and environmental viability of those areas with strong potential for future project
development. Of the ten areas, seven areas are in the Northeast (three in Rio Grande do Norte, three in
Ceará and one in Maranhão); two in the Southeast (one in Rio de Janeiro and one in Espírito Santo) and one
in the South of the country (in Rio Grande do Sul). Together, these areas, which will be evaluated, have the
potential to develop offshore wind projects with a capacity of up to 23 GW. With such capacity, we could
become the company with the greatest potential for offshore wind power generation in Brazil in terms of
capacity registered with Ibama. Once the areas have been granted, the development of projects will be
assessed and submitted to our competent bodies, with all the necessary requirements for demonstrating
technical and economic viability.
Brazil has the potential to take advantage of offshore wind power generation, which provides some
interesting opportunities for diversifying the country's energy matrix. Offshore wind generation uses
the strength of the wind at sea to produce renewable energy. The major advantage of the sea is the
consistent, high speed winds which are unaffected by barriers such as irregular wind speed, forests,
mountains and buildings, for example.
In 2023, we completed a decade of offshore wind measurements and conducted the largest wind
mapping campaign in some locations in the Brazilian sea, which are fundamental for assessing the
technical feasibility of future offshore wind energy installations. We are also looking at other
opportunities and developing technology in this area, such as the development of the Remote
Offshore Wind Assessment Buoy (known as Bravo), a national technology floating LIDAR, which has
been developed in a partnership with the SENAI Institute for Innovation in Renewable Energies (ISI-ER)
of Rio Grande do Norte and Santa Catarina.
In addition to measuring the offshore wind resources, we will gather the main environmental
information from studies already carried out in the Brazilian marine environment. The use of these
synergies aims to identify and define the best areas for harnessing offshore wind resources in Brazil,
giving us a competitive advantage.
During 2023 we signed the following cooperation agreements in the renewable energy sector, as
specified below:
PETROBRAS | Annual Report and Form 20-F | 2023
131
Our Business
– Strategic Cooperation Framework Agreement with China Energy International Group Co., Ltd., with
the aim of identifying potential business opportunities in Brazil related to renewable energy
generation and the production of sustainable hydrogen and ammonia.
– Letter of Intent with Equinor, expanding on the cooperation between the companies, in order to
assess technical, economic and environmental feasibility of seven offshore wind power generation
projects off the Brazilian coast, set to run until 2028, with the potential to generate up to 14.5 GW.
– Non-Binding Memorandum of Understanding with TotalEnergies and Casa dos Ventos to evaluate
renewable energy projects in Brazil, with the aim of developing joint studies on the business
opportunities in onshore wind, offshore wind, solar and low-carbon hydrogen in the country, using
the expertise of each company.
– Strategic Partnership with WEG, a global Brazilian electronics equipment company, for the joint
development of a 7 megawatt (MW) onshore wind turbine, the first of this size to be manufactured
in Brazil and WEG expects series production of this equipment to begin in 2025. We will invest
approximately US$26 million in the project, which is already underway by WEG. The agreement
covers the development of technologies for the production of wind turbine components, suitable for
Brazilian wind conditions, as well as the construction and testing of a prototype, with technical and
commercial counterparts for us.
The agreements signed are non-binding, and in order to monitor the progress of the studies and
discussions, committees will be formed with representatives from each company. The agreements are
aligned with the strategic elements of Strategic Plan, which aim to prepare us for a more sustainable future,
contributing to the success of the energy transition. Only after the necessary technical analyses have been
completed can potential projects arising from the signed agreements have official cost, time and return
estimates. These estimates will allow the potential project to be assessed by internal approval bodies in the
future, in accordance with our governance and always giving preference to an option merger or acquisition
over the own development of projects.
PETROBRAS | Annual Report and Form 20-F | 2023
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Our Business
Biofuels
BioRefino
We have a biorefining program known as the BioRefino 2030, launched in 2020, with the purpose of
transforming our refining processes into a more sustainable industry, in line with a low-carbon
based economy. In 2022, our projects for the generation of new, modern and sustainable fuels, such
as renewable diesel and biojet, were expanded and gained an even higher priority starting a new
phase of the BioRefino Program. In 2023, the modifications in infrastructure of RPBC, REDUC and
REPLAN refineries allowed the expansion of the Diesel-R production capabilities. Other projects
concerning coprocessing in hydrotreating units are still waiting for the conclusion of the regulatory
framework of advanced fuels to proceed.
Diesel with a renewable content (Diesel-R) is partially composed of an advanced biofuel, produced
from coprocessing conventional diesel with vegetable oils using our proprietary HBIO™ technology.
The renewable part of resulting fuel (Hydrotreated Vegetable Oil or “HVO”) presents the same
structure as conventional diesel fuel and reduces the emission of greenhouse gases compared to
mineral diesel oil. Coprocessed diesel with a renewable content, as well as pure HVO, are free from
contaminants and does not cause any damage to engines, effectively increasing vehicle life and
reducing transportation costs.
Commercialization of Diesel R, our lower carbon intensity product that contains HVO, is focused on
clients who want to meet their voluntary ESG goals. Mandatory consumption of HVO is under
discussion in the Brazilian Parliament.
Ongoing Projects
BioQav (also known as SAF 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 (“ICAO”) and will be mandatory in Brazil in 2027. The production process for BioQav,
through hydrogenation, uses the same raw materials required for the production of HVO, which is
also formed as a coproduct of the same process. On top of coprocessing units, two dedicated plants
for the production of SAF and/or HVO are on the way with Hydroprocessed Esters and Fatty Acids
(“HEFA”) technology. One of the goals of producing the BioQav by these units is to meet the targets
set by the ICAO.
100% renewable feedstock processing in a fluid catalytic cracking unit (“FCC”)
We and Riograndense Oil Refinery (“RPR”), have achieved a historic milestone by processing, for the
first time, 100% soybean oil in an industrial refining unit. The technology, developed at the
Research, Development and Innovation Center of Petrobras (“CENPES”), allows us to convert 100%
renewable feedstock, with innovations in process and catalyst, generating fully renewable products
(petrochemical and fuels). This processing of 100% renewable feedstock in a FCC is the first of its
kind in the world.
The test was made possible by a cooperation agreement signed in May 2023 between the RPR
shareholders companies (Petrobras, Braskem and Ultra), which provided the use of the refinery's
units for testing technologies developed by CENPES. The investment in the test was made in
accordance with the PD&I clauses of the ANP.
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Our Business
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.
Since 2021, CNPE has published several resolutions setting a mandatory blend of biodiesel in all diesel sold
in Brazil. In March 2023, CNPE published Resolution No 03/2023 changing the blend to 12% as of April 2023.
According to the CNPE Resolution No 8, published in December 2023, the mandatory biodiesel blend will be
14% from March 2024 and 15% from March 2025.
PBIO has three biodiesel plants for its own operations. However, the Quixadá biodiesel plant has been
inoperative since November 2016. Our biodiesel production capacity in the other two plants in operation is
8.63 mbbl/d. In 2023, we supplied 1.16% of Brazil’s biodiesel demand, according to the ANP.
Main Assets
Biofuels(1)
Biodiesel production units - PBIO
Biodiesel production capacity (mbbl/d) - PBIO
2023
2022
2021
3
10.5
3
10.5
3
10.5
(1) Includes the capacity of Quixadá biodiesel plant, which has been inoperative since November 2016.
According to our Strategic Plan, we pursue sustainable results, and one of the means to achieve them is the
production of biofuels. The Strategic Plan aims to reinforce the expansion of supply and access to energy
and low-carbon products in a profitable transition to reduce energy shortages and portfolio exposure to
GHG emissions. Historically, we have produced ethanol and biodiesel. Currently, special efforts are
concentrated on producing renewable diesel and Bio jet fuel.
For more information, see “2024-2028+ Strategic Plan” in this annual report.
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Our Business
Customers and Competitors
Natural gas is marketed to 43 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 commercialization of natural gas, we act as importers and domestic producers who can directly sell
our product to distributors, free consumers, or thermoelectric plants. 2023 marked a continuation of the
increase in competition, with new contracts between producers and clients, as expected due to the
regulation which improved the regulatory framework of the natural gas sector and established guidelines
for the open market.
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 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 and operate in the regulated market (power
distributors) and free market (marketers and free consumers/large consumers). We have 114 clients and
suppliers, of which 33 are distributors, 24 are marketing companies, five are generating companies and 52
are free consumers. All contracts are registered at the Electricity Trading Chamber, a sector agent
responsible for the settlement and accounting of these contracts.
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Our Business
Portfolio Management
Portfolio management is a market practice with a main objective of shaping our asset portfolio in a way that
can lead to improved operational efficiency and return on capital and reduced risks.
Our portfolio management covers acquisitions, partnerships and divestments processes. These processes
observe robust governance standards that seek to align public administration principles with best market
practices. The governance for approving a portfolio management project mainly comprises:
identification of opportunities and inclusion of the project in our portfolio;
–
– non-binding stage;
– binding stage; and
– negotiation and signature.
Approval from our Executive Board is required for each project to progress through each of these stages. In
larger projects, approval of the Board of Directors is required.
In 2023, a strategic redirection occurred in our portfolio management process which considers the focus on
increasing oil and gas production while identifying value in integration with downstream process to
generate value for our business. In addition, we aim to act in the energy transition with social justice
prioritizing partnerships.
This new direction led portfolio management to consider acquisition and partnership opportunities to a
greater extent. These opportunities must be aligned with our Strategic Plan drivers, mainly with regard to
our long-term sustainability, making profitable investments, and maintaining capital discipline.
Regarding the divestments of assets in our portfolio, from January 1, 2023 until the filing of this report, we
have:
–
three ongoing public opportunities: Brasympe, Suape 2 and rights for research and mining
potassium salts located in the Amazonas Basin;
– signed the sale agreement for the Uruguá and Tambaú fields, located in deepwaters in the Santos
Basin, state of Rio de Janeiro, jointly called Polo Uruguá-Tambaú. The amount to be received by
Petrobras from the operation is up to US$ 35 million;
– signed the sale agreement for our entire interest (18.8%) held in UEG Araucária (UEGA). The amount
to be received by Petrobras from the operation is up to US$ 13.5 million; and
– closed four sale transactions, from January 1, 2023 until the filing of this report, as per table below:
PETROBRAS | Annual Report and Form 20-F | 2023
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Signing
date
Closing
date
Main transactions
04/28/2022
01/26/2023
Sale of our entire interest held in the Albacora Leste field, located in
deepwaters in the Campos Basin
02/23/2022
04/12/2023
Sale of our entire interest held in four onshore fields located in the
Espírito Santo Basin, jointly known as the Norte Capixaba Cluster
01/31/2022
06/07/2023
06/24/2022
08/28/2023
TOTAL
Sale of our entire interest held in 26 onshore and shallow waters fields
and also the entire interest held in Clara Camarão located in the
Potiguar Basin, jointly known as the Potiguar Cluster
Sale of our entire interest 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) Considers agreed amounts at the signing of the transaction.
Our Business
Transaction
nominal
value(1)
(US$ billion)
2.201
0.544
1.400
0.075
4.220
Agreements with CADE
In 2019, we signed two agreements with CADE, one related to refining and the other to gas where
we committed, among other things, to the divestment of REFAP, REPAR, RNEST, REGAP, LUBNOR
and TBG. However, given the new strategic direction presented in 2024-2028+ Strategic Plan, on
November 28, 2023 we formally requested a review of the agreement signed with CADE. At the time
of filing this report, negotiations with CADE were still in progress.
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Our Business
External Business Environment
We are subject to external variables that can impact the performance of our business and the way we plan
for the future.
Global Economy
In 2023, the global economy continues to recover from the several shocks from the last years including the
effects of the COVID-19 pandemic, the conflict between Russia and Ukraine, and overall geopolitical
fragmentation. New factors have also arisen such as the conflict between Hamas and Israel, attacks on ships
in the Red Sea led by Houthi rebels, increasing concerns with extreme weather conditions, and the rise of
commodity prices.
The effects of COVID-19 have mostly winded down, with the World Health Organization declaring in May
2023 the end of the "emergency" and with the full opening of the Chinese economy. Even so, the Chinese
economy is being heavily affected by the ongoing real state crisis. China's economic slowdown has also
impacted global growth.
The conflict in Ukraine has led to continued disruption of supply chains (but less than in 2022) mainly in
European energy markets leading to higher energy prices (alternatives are less efficient than Russian gas).
Global commodity prices also increased with Ukrainian grain production having issues leaving the country
due to Russian control of the Black Sea.
The rise of commodity prices in 2022 continued throughout the beginning of 2023. Prices have fallen but
are still substantially higher than before the pandemic. Inflation raised as a result, prompting a hike in
interest rates. This hike, among the other factors listed before, has represented an important share of the
burden on economic activity, blocking a stronger recovery. By the end of 2023, inflation started declining
and economic activity is not slowing down too fast. Advanced economies are still reluctant to ease monetary
policy amid inflation concerns, but developing economies have already started the move to bring rates
down.
COMMODITY PRICES – CRB SPOT
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138
Our Business
According to the IMF, the global economy is expected to grow 3.1% in 2024 and 3.2% in 2025, due to the
continuing effects of a tight monetary policy.
GDP GROWTH – IMF ESTIMATES (% YoY)
Global Oil & Gas Market
The year 2023 began with a decline in Brent prices for the third consecutive quarter, reaching its lowest
quarterly average since 2021. Concerns about the global economic dynamics continued to negatively
influence prices at the beginning of the period. However, the downward trajectory was interrupted by signs
of Chinese demand recovery and the release of more favorable economic data.
The first quarter of 2023 was marked by financial and oil markets dynamics, oil supply disruptions and
additional cuts. In February, the return of pessimism about the global economy was offset by a production
cut of 500 mbbl/d announced by Russia, as well as partial supply disruptions from Kazakhstan and Norway,
and the closure of a crude export terminal in Turkey, which contributed to relatively stable prices.
Towards the end of the first quarter, the banking crisis affecting the US and Europe caused a drop in Brent
prices, reaching a low of $71.7/bbl. However, the easing of concerns about the spread of this crisis and the
interruption of approximately 400 mbbl/d of Iraqi oil exports due to a deadlock between the central
government and the semi-autonomous Kurdistan region allowed for a partial recovery of prices.
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139
BRENT – DAILY CRUDE OIL PRICE (US$/bbl)
Our Business
Source: Bloomberg, 2023
The second quarter of 2023 recorded the fourth consecutive quarter of decline in the average Brent price.
The period began with a strong recovery in prices after OPEC+ surprised the market by announcing
voluntary cuts of 1.66 mmbbl/d compared to February levels. However, the momentum faded due to fears
of a global recession and a slower-than-expected recovery in Chinese oil demand. On the supply side, the
resilience of Russian oil production and increased crude exports from Iran, despite the restrictions imposed
on both countries, contributed to the price decline.
On June 4, 2023, Saudi Arabia announced an additional voluntary cut of 1 mmbbl/d for July 2023 following
the OPEC+ meeting. Once again, this announcement surprised the market, but the measure was not enough
to sustain a price recovery. Pessimism about the global economic dynamics and concerns about the
resumption of Chinese oil consumption continued to negatively influence the market.
After five consecutive quarters of decline, Brent ended 3Q23 on an upward trend. The movement was
favored by the supply restrictions imposed by voluntary cuts from OPEC+, as well as signs of robust global
demand despite higher prices.
Following the announcement of an additional 1 mmbbl/d cut for August 23, Saudi Arabia surprised the
market again by extending the additional voluntary cut initially until September 2023 and later until the end
of 2023. In parallel, Russia also announced a reduction of 500 mbbl/d in its crude exports in August 2023
and 300 mbbl/d by the end of 2023.
In the US, successive declines in crude oil stocks were recorded in 2023, with the country's main hub reaching
25% of its capacity by the end of the 2nd quarter. These factors also contributed to sustained upward prices.
Given signs of robust demand, both the IEA and OPEC warned of a tighter oil market by the end of the 2023,
with a significant supply deficit.
Towards the end of second quarter of 2023 concerns about the global economic dynamics once again
negatively influenced prices. However, the announcement by Russia of a ban on derivative exports helped
keep the market under pressure.
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BRENT – ANNUAL CRUDE OIL PRICE (US$/bbl)
Our Business
Source: Bloomberg, 2023
The Russia-Ukraine conflict, which has reduced Russian gas exports, has exerted intense pressure on the
LNG market, affecting gas prices not only in Europe, but throughout the world. After reaching record levels
in natural gas prices in Europe and on the LNG spot market in Asia in 2022, the first half of 2023 saw
significantly lower prices compared to 2022, albeit at historically high levels. The relief in prices was a result
of a sharp reduction in demand, driven by market response to high prices and milder temperatures in the
winter of 2022-2023. Despite prices returning to levels more aligned with historical trends, the global LNG
balance remains highly pressured.
Brazilian Economy
According to the Brazilian Institute for Geography and Statistics (IBGE), the Brazilian economy grew by 2.9%
in 2023. The rate was above the expected growth at the beginning of the year, which was around 0.8%. Most
of the growth came from the agricultural and mining sectors. Agriculture grew 15.1%, while industry and
services only grew 1.6% and 2.4% each. Manufacturing was lower than expected, lagging other sectors.
Exports were on the rise, growing 9.1% (on the back of agriculture and mining), while investment was down
-3.0% due to the slowdown of manufacturing. Imports were also down, -1.2%, improving the goods and
services balance.
Regarding inflation, 2023 was marked by a slowdown in the pace of price increases. The main reasons are
the interest rates staying all year in contractionary territory and the exchange improving. As a result, after
ending 2022 with consumer inflation measured by the IPCA at 5.8%, in 2023 the price expansion of prices
was 4.6% (compared to an expectation of 5.3% at the start of the year), converging to the target of 1.75% -
4.75%. The interest rates have already started to decrease, and this will continue through 2024.
Finally, the trajectory of the Brazilian exchange rate registered low volatility throughout 2023. There was a
strong valuation, taking the Brazilian currency from an exchange rate of approximately R$/US$ 5.20 in
January 2023 to R$/US$ 4.90 in December 2023. The average exchange rate in 2023 was R$/US$ 5.00,
representing an appreciation of 3.2%.
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Our Business
Brazilian Oil and Gas Market
Despite the recovery, the cumulative effect of the rise in commodity prices, the disruption of supply chains
caused by the COVID-19 pandemic and the global energy crisis exacerbated by the Russian invasion of
Ukraine are still having repercussions on fuel markets.
In 2023, despite the return of federal and state tax in the beginning of the year and an increase in ethanol
supply, the downward trend in international oil and gasoline prices impacted the Brazilian market and
sustained demand growth on a year over year basis. Concerning diesel demand, the National Council for
Energy Policies raised biodiesel mandates to 12% in 2023 and announced a 1% increase each year in order
to reach the 15% mandate in 2026, resulting in a diesel demand roughly stable year over year. Jet fuel
demand is firmly ramping up in a post COVID-19 environment and with Brazilian income and jobs also
rebounding but yet to recover to 2019 levels. Therefore, gasoline, diesel and jet fuel demand rose 0.8%, 7%
and 9.7% respectively year over year.
In specific terms, gasoline demand is expected to decrease due to its replacement by hydrous ethanol, the
use of which is incentivized 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 and the anticipated introduction of
Green Diesel (HVO) mandates by the end of the decade.
CONSUMPTION OF SELECTED FUELS IN BRAZIL (mbbl/d)
Source: Petrobras and EPE, 2022
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.
Regarding power generation, with the regularization of rains in early 2023, the level of the reservoirs rose,
and the Electric Sector Monitoring Committee (“CMSE”) decided to reduce power generation by thermal
plants. As a result, according to the Ministry of Mines and Energy, natural gas demand inter-annual data
year-to-date until September 2023 has decreased by 11%, from an average of 69 million cmd in 2022 to 61
million cmd (does not include the gas used in the pipeline transport).
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142
Strategic Plan
[AM_ACTIVE 405510973_17]
Strategic Plan
2024-2028+ Strategic Plan
Our 2024-2028+ Strategic Plan was created to align with our vision "To be the best diversified and integrated
energy company in generating value, building a more sustainable world, reconciling the focus on oil and gas
with diversification in low carbon businesses (including petrochemical products and fertilizers),
sustainability, safety, respect for the environment, and full attention to people.”
Additionally, our Strategic Plan was drawn up considering the following new strategic drivers, established
at the beginning of 2023 to be considered in our strategic planning, in compliance with current governance
practices, the commitment to create value and our long-term financial sustainability:
– Focus on employees with priority placed on the development, retention, and requalification of talent
in order to provide us with a technical staff that is increasingly inclusive, diverse and qualified to
meet the dynamic demands of the market, especially the energy transition.
– Focus on profitable exploration and production assets, with increasing decarbonization of our
operations and those of our suppliers.
– Emphasis on the adequacy and improvement of our current refinery facilities through efficiency
gains and the combination of renewable raw materials in the development of resilient industrial
processes and sustainable products.
– Search for a fair energy transition, in line with similar international companies, primarily through
partnerships of technical excellence and social responsibility programs that mitigate negative
externalities of our activities and promote local production chains.
– Take advantage of Brazil's different potentialities as a country of continental dimensions and energy
capacities that favor sustainable development, through the regionalization of our activities based
on productive chains and local operational units.
– Strengthen the access to markets and seek to be a part of the global vanguard in the energy
international performance by means of technological and operational
transition, through
partnerships.
Accompanying the transformations in the world, especially in the energy, digital, social, and environmental
segments, we are going through a phase of changes and new perspectives, aiming to prepare for the energy
transition and for a fair, inclusive low-carbon economy, with changes in energy use patterns, assessing and
minimizing social impacts for different parties including our employees, communities and the entire supply
chain.
Our Strategic Plan aims to strengthen and prepare us for the future by initiating a process of integrating
energy sources that are essential toward a fair and sustainable energy transition to a low-carbon business.
Therefore, we work toward a number of goals such as attention to people, safety and respect for the
environment, perpetuating value for future generations, with a focus on capital discipline and a
commitment to keeping our indebtedness under control.
Oil and natural gas commodities will continue to be the main drivers of value, with economic and
environmental resilience, financing the fair transition. Profitable low-carbon investments will gain
relevance for long-term value generation. Governance will be respected in all decision-making processes
and project evaluations, guaranteeing sustainability and profitability, with more transparency.
Our business strategies, presented below, are aimed at achieving an effective contribution to a prosperous,
sustainable future:
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Strategic Plan
CAPEX - Capital Expenditure
The CAPEX forecast for the 2024-2028 period totals US$102 billion, 31% higher than the previous plan, with
US$91 billion corresponding to projects under implementation (portfolio under implementation) and US$11
billion composed of projects under assessment (portfolio under evaluation), which are subject to additional
financial feasibility studies before contracting and performance begin. When studies are completed and
their economic viability is proven, these projects can migrate to the Portfolio under Implementation. The
financial feasibility study for projects under evaluation is an additional item to the governance established
for approving projects, which is maintained for both portfolios. This way of presenting the portfolio
demonstrates a commitment to transparency and a further advance in the governance of project approval.
The increase in CAPEX is mainly associated with new projects, including potential acquisitions, assets that
were in divestment and returned to the company's investment portfolio, and cost inflation, which impacted
the entire supply chain.
CAPEX in the E&P segment represents 72% of the total, followed by RTM with 16%, Gas & Low Carbon
Energies with 9% and Corporate with 3%.
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145
CAPEX 2024-2028
Strategic Plan
Exploration & Production
E&P CAPEX for the 2024-2028 period totals US$73 billion, with around 67% allocated to pre-salt, which has
a major economic and environmental competitive advantage, with the production of better-quality oil and
lower emissions of greenhouse gases.
The E&P segment remains relevant to us, with a strategic focus on profitable assets and investments
compatible with a long-term vision aligned with the energy transition. At the same time, we maintain
significant deepwater revitalization projects (REVIT), as well as complementary projects, to increase
recovery factors in mature fields.
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146
Strategic Plan
In terms of exploration, US$7.5 billion are planned for the five-year period, to be distributed as follows: (i)
US$3.1 billion for exploration in the Equatorial Margin; (ii) US$3.1 billion for exploration in the Southeast
Basins; and (iii) US$1.3 billion for other countries. This investment includes the drilling of around 50 wells in
areas where we have exploration rights in acquired blocks.
The E&P segment maintains the premise of double resilience (economic and environmental), and high
economic value with a portfolio that is viable in scenarios of low oil prices in the long term, including Brent
with a prospective average break-even of US$25 per barrel, and with a carbon intensity commitment of up
to 15 KgCO2e/boe by 2030.
Production of Oil, NGL and Natural Gas
The production curve of oil, NGL and Natural Gas considers the entry of 14 new platforms (FPSOs) in the
2024-2028 period, 10 of which have already been contracted. A new generation of platforms is being built,
which will be more modern, more technological, more efficient and with lower emissions.
Based on the Strategic Plan, we aim to produce 3.2 million barrels of oil and gas equivalent per day in five
years.
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Strategic Plan
In line with our strategic focus, E&P activities are concentrated on profitable assets. Pre-salt production will
represent 79% of our total production at the end of the five-year period.
The projections for oil production, total production and commercial production of oil and natural gas for
2024 have been increased by 100 mboed compared to the previous plan, considering the good performance
of the fields, the forecasts for ramp-ups and the entry of new wells.
In 2025 and 2026, oil production, total production and commercial production of oil and natural gas are
projected to be 100 mboed lower than projected in the previous strategic plan. This difference is mainly due
to current market conditions arising from the global context, where some production systems and
complementary deepwater projects have had their schedules impacted. These fluctuations are part of the
dynamics of the industry and are within the range of uncertainty disclosed in the last strategic plan. For
2027, the projections for oil production and total and commercial production of oil and natural gas were
maintained in comparison to the previous strategic plan. To monitor the Strategic Plan, we take into account
a margin of variance of +-4%.
Refining, Transportation & Marketing
RTM CAPEX totals US$ 17 billion for the 2024-2028 period. The segment continues to focus on better use
of refining and logistics assets and higher energy efficiency, aimed at expanding diesel production capacity
and gradually increasing the supply of products for the low-carbon market. It is important to clarify that, in
this Strategic Plan, the forecast for Commercialization and Logistics CAPEX, disclosed in the previous
strategic plan, is now presented in aggregate form as RTM CAPEX, in line with the vision for this segment.
This Strategic Plan foresees an increase in refining capacity of 225 mbbl/d and an increase in low sulfur
diesel production of more than 290 mbbl/d, supported by major projects such as RNEST's Train 2, revamps
of current units and the implementation of new diesel treatment units (HDT) at REVAP, REGAP, REPLAN,
RNEST and GASLUB.
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Strategic Plan
One of the highlights of the new plan is the expansion of the Reftop Program to the entire refining facilities.
Through this program, we have been achieving its efficiency and reliability targets, and aim for the industrial
park to be a global leader in terms of operational and energy efficiency by 2030.
In Biorefining, we plan to invest US$1.5 billion. These investments will support the growth in R5 diesel
production capacity, with 5% renewable content, at REPAR, RPBC, REDUC and REPLAN. We also plan to
install dedicated BioJet Fuel and 100% renewable diesel plants at RPBC and GASLUB, which will be
completed after 2028.
The Strategic Plan strengthens us in the Brazilian market by integrating the value chain from production,
refining, logistics to the market. US$2.1 billion will be invested in initiatives to remove logistical bottlenecks.
This includes expanding and adapting infrastructure, investing in terminals to optimize operations,
expanding modes and improving efficiency and resilience. Among these projects is the construction of four
handy-class ships, which will be operated by Transpetro, as well as studies for other vessels.
In the Petrochemicals segment, we plan to act in an integrated manner, maximizing synergies with its
refining and oil and gas production facilities. Investments in Petrochemicals are under study, considering
both projects in current assets and acquisitions.
In this Strategic Plan, we also mark our return to the fertilizer segment, with plans to resume operations at
ANSA and completing works at UFN-III.
Gas & Low Carbon Energies
G&LCE CAPEX totals US$3 billion in the five-year period. The segment is making progress in competitive
and integrated operations in the gas and energy trade and in improving its portfolio, working towards the
inclusion of renewable sources, in line with decarbonization actions.
One of our priorities in this segment is to expand the infrastructure and portfolio of natural gas offers.
Considering the investments in gas production and disposal in the E&P segment, we plan to increase our
domestic gas supply by investing around US$7 billion over the next five years.
In 2024, Route 3 will begin operating with a processing plant with a capacity of 21 mmm³/d and a pipeline
with a capacity of 18 mmm³/d. In 2028, the Raia Project gas pipeline (BM-C-33) will begin operating, with a
capacity of 16 mmm³/d; and in 2029, the Sergipe Águas Profundas - SEAP project gas pipeline, with a
capacity of 18 mmm³/d.
ESG - Environmental, Social and Governance
In our Strategic Plan, we reaffirm our ambition of zero fatalities and zero leakages, in line with our
commitment to life and the environment, which are non-negotiable values.
The Strategic Plan has integrated ESG elements into a single vision, summarizing our position according to
the diagram below:
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Strategic Plan
This ESG diagram guides planning and stakeholder engagement and is aligned with our strategic elements
and goals. Four key ideas are highlighted: (i) reduce our carbon footprint; (ii) protect the environment; (iii)
caring for people; and (iv) acting with integrity. For each of these key ideas, a set of relevant themes have
been identified to support and guide our actions, projects, programs, and related commitments.
The goals related to each of the four key ideas of the diagram were consolidated into a single list, aligned
with the concept of integrated ESG:
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Strategic Plan
We will allocate up to US$11.5 billion to low carbon projects over the next five years, considering transversal
investments in the various business segments. This includes initiatives and projects to decarbonize
operations, as well as the maturing and development of businesses in the low carbon energy segment, with
an emphasis on biorefining, wind, solar, CCUS, and hydrogen.
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Strategic Plan
In this context, it is important to highlight the focus on profitable projects, prioritizing partnerships to
reduce risk and share learning. With this new initiative, we will also develop Brazil's regional competitive
advantages.
In the 2024-2028 average, low-carbon investment represents 11% of our total investment, indicating
progress in our current position in relation to its market peers. The forecast is that low-carbon investment
will gradually gain ground in our portfolio over the period, reaching 16% by 2028.
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Strategic Plan
Financing
The main assumptions for financing the Strategic Plan are:
– Brent and Real exchange rate:
– The reference cash flow defined in the Strategic Plan is US$8 billion.
– Solid balance sheet with debt of less than US$65 billion, with financial debt lower than leasing debt.
– Dividends in accordance with the current shareholder remuneration policy.
We reiterate that investments should be financed primarily by operating cash flow, at levels equivalent to
those of our peers, and preferably through partnerships that allow for the sharing of risks and expertise,
and should seek a return on investment, a reduction in the cost of capital, and our strengthening as an
integrated energy company, maximizing our value.
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Strategic Plan
Research, Development and Innovation (“RD&I”)
Investing in technology is fundamental to adding value to our business while building competitive
advantages for our long-term sustainability. Our Research, Development and Innovation Center (“Cenpes”)
is responsible for determining our technological solutions that compose our RD&I project portfolio. Cenpes,
one of the largest RD&I centers in the energy sector, aims to develop technologies that will enable the
execution of our Strategic Plan, in addition to being responsible for anticipating future trends and investing
in technological routes. On December 31, 2023, Cenpes had 1,076 employees, of which 90.4% were
exclusively dedicated to RD&I development.
The definition of which technological solutions to pursue starts at identifying the business areas’ needs and
the deployment of our strategy, complying with the principles of operational efficiency and resource
optimization. To build this portfolio, the potential technological solutions to be developed in RD&I projects
go through a process of valuation and prioritization.
Our main research lines are:
R&D RESEARCH LINES
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Strategic Plan
Within the topics above, our innovation portfolio includes projects focused on developing technologies for
oil and gas exploration and for energy transition. In 2023, we can highlight:
– Development of technologies that allow investment optimization as well as a reduction in cost and
uncertainty such as: i) the new Floating Lidar (Light Detection and Ranging) prototype, a sensor to
measure speed and wind direction, among other weather variables, and the first developed in Brazil;
ii) a new kind of seismic sensor which incorporates long duration batteries and includes optical and
acoustic communication capabilities between the Nodes and autonomous underwater vehicles,
allowing for multiple surveys (reservoir monitoring) within a five year period without removing the
nodes from de seabed; and iii) new equipment that enabled new architecture for intelligent well
completion.
– Development and implementation of technologies that contributed to increased operational safety
such as: the Ativo360 Technological Solution, a system to digitally manage the integrity of
production assets by using digital twins and artificial intelligence; the Digital Twin for flexible
pipelines, and monitoring the integrity and useful life of subsea systems; and the Digital Occurrence
Monitoring System to guarantee flow.
– Development of new technologies and new products with a lower carbon footprint such as: Podium
Carbon Neutral Gasoline; CAP PRO AP, a high penetration asphalt; our new proprietary technology
that allows vegetable oil to be used as raw material in catalytic cracking units, processing it
completely and producing bioLPG with a very low sulfur content, bio-aromatics and renewable light
and heavy oils; and ACV Digital, the innovative tool for measuring and making decisions concerning
the carbon intensity of refining products.
Our active portfolio management is carried out efficiently, in order to maximize gains, based on a solid
valuation process, optimizing our resources, accelerating project deliveries, aimed at their fast
implementation and measuring results with innovation indicators that evaluate the success rate of
investments in R&D.
Mandatory investment in RD&I
Our Bylaws require that at least 0.5% of the paid-in share capital is reserved for research and
development expenses. In addition, the obligation to invest in RD&I is also provisioned in contracts
for the exploration, development and production of oil and/or natural gas signed between the ANP
and oil companies, based on the Petroleum Law (Law No. 9,478/1997) and in the pre-salt regulatory
framework (Law No. 12,351/2010). The amount of this mandatory investment is determined in
accordance with the contract of each existing legal-regulatory regime. However, investments in the
development and implementation of innovative technologies are not limited to fulfilling this
obligation to invest in RD&I.
For concession contracts, whose production volume involves the payment of a special participation,
the percentage of RD&I mandatory investment is linked to the gross revenue of the fields (1%). In
production sharing contracts, the percentage is also levied on the total gross revenue (1%). For the
Transfer of Rights contract, the percentage is 0.5% of the value of gross revenue from any given
annual production.
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Strategic Plan
In 2023, we invested US$726 million in research and development. We are one of the companies, among the
major oil and gas companies, that has invested the most in RD&I over the last few years, according to
Evaluate Energy. About 10% of our RD&I portfolio is related to decarbonization and new energies solutions.
Our patents portfolio covers all our areas of activities. Currently, we have 2,597 patents (applications under
review and granted), 1,222 in Brazil and 1,375 abroad, within 50 countries. In 2023, we filed 353 patents: 210
abroad and 143 in Brazil, surpassing, for the third consecutive year, our record for filings in a single year. 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.
Connections for Innovation
Connections for Innovation is our open innovation program, designed to accelerate technological
development and add value to our company. The main objective of the program is to find the best
partners to cooperate and develop, test or commercialize technologies, thus
increasing
competitiveness and generating better alignment between our technological initiatives and the
innovation ecosystem. The program has seven different modules, Pre-Commercial Procurement,
Technology Transfer, Startups, Solution Acquisition, Technological Partnerships, Open Lab and
Residents, tailored to support different types of technological partnerships, as well as different
innovation ecosystem actors.
This year, the open innovation program surpassed the US$200,000 mark in partnerships signed over
the four years of Connections for Innovation. The program has been growing rapidly. When
comparing the partnerships signed along the first four years with 2023's results, the value of
investments increased approximately three times. In 2023 alone, more than 280 opportunities were
published and more than 180 new agreements were signed. This is due to strategic prioritization,
increased communication and dissemination of the program.
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Environment, Social and
Governance
[AM_ACTIVE 405510973_17]
Environment, Social
and Governance
Environment
The protection of human health and the environment is one of our primary concerns and is essential to our
success. Each year, we maintain a set of initiatives focused on the prevention of accidents and the
preservation of life and the environment, aligned with one of our most important HSE program, called
“Programa Compromisso com a Vida” (Commitment to Life Program). This Program, which is composed of
structured projects based on the critical analysis of HSE management, with reference to the best market
practices, seeks to achieve our zero fatalities and zero leaks goals while strengthening our vision of being
an example of HSE for the industry with the following principles of our HSE Policy:
– 1. HSE as value
– 2. Respect for Life
– 3. Risk-Based Management
– 4. Business Sustainability
– 5. Excellence and Transparency in Performance
The main initiatives of the Program for 2023 were the following:
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HSE INVESTMENTS (US$ billion)
Environment, Social
and Governance
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.
Our business development with suppliers also contains 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 2023.
Since 2019, we have been certified by the Association for Supply Chain Management (ASCM) Enterprise
Certification, which was the industry’s first corporate supply chain designation that demonstrates social
responsibility, economic sustainability, and ecological stewardship, recognizing that our Maintenance,
Repair and Operations (MRO) and project materials supply chains are meeting the process, people, practices
and performance standards for ethics, sustainability and economic responsibility.
Total Recordable Injury Rate
Respect for life, people and the environment is a value for Petrobras. Our goal is to operate within the best
global safety standards. One of our top metrics is the Total Recordable Injury Rate (“TRIR”) below 0.7.
Within an evolutionary and continuous improvement process, Petrobras' TRIR – which until 2015 was above
2.0 – has, in the last three years, been consolidating close to 0.7. The historical series demonstrates that the
Oil and Gas industry, together with Petrobras, has been reducing these rates in recent decades, having
achieved the best historical result, in the 2020 – 2021 biennium, during the period of the COVID-19
pandemic. With the full resumption of activities in 2022, a return to 2019 levels can be seen, not only at
Petrobras but throughout the industry. We monitor critical process indicators monthly in its critical analysis
meetings, notably its top metrics such as TRIR.
In 2023, we obtained a TRIR of 0.80, 18% above that achieved in 2022, when we achieved a result of 0.68,
with 0.67 being the average of the last three years. The industry's average TRIR in 2022, according to the
IOGP (International Association of Oil & Gas Producers) Annual Report, was 0.90, which represented an
increase of 17% compared to the industry in 2021 (0.77). It is therefore observed that Petrobras'
performance has been consistently better than the industry average. Furthermore, we halved the number
of serious and fatal incidents at Petrobras compared to 2022.
In accordance with the existing management mechanisms, several initiatives were launched, such as
immediate execution of local actions in the units in order to prevent new events of a similar nature, creation
of a working group with the objective of proposing additional response actions and the continuity of
execution of Petrobras' structuring initiatives that aim to reduce accidents, which make up the Commitment
to Life Program. By carrying out a critical analysis of the events that make up the TRIR, it was possible to
direct strategic initiatives for 2024. These actions also focus on reducing more serious events, in line with
the ambition of ZERO Fatalities.
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TOTAL RECORDABLE INJURY RATE – TRIR
Environment, Social
and Governance
Although we develop prevention programs in all of our operating units, unfortunately we recorded two
fatalities involving our own and contractors’ employees in 2023 (compared to five fatalities in 2022). 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.
Environmental impacts
MAIN IMPACTS
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Our investments enabled lower environmental impacts resulting from our activity as an energy company
focused on oil and gas in 2023, compared to 2022. In 2023, we invested US$1,072 million in environmental
projects, compared to US$810 million in 2022 and US$708 million in 2021. These environmental projects
continue to primarily include actions directed at reducing emissions and waste from industrial processes,
managing effluents, promoting rational use and reuse of water, managing risks and impacts on biodiversity,
remediating contaminated areas, recovering degraded areas,
implementing new environmental
technologies, modernizing pipelines and improving emergency response capacity and safety of our
operations.
For more information on our ESG strategy and goals, see “2024-2028+ Strategic Plan” in this annual report.
Spills and Environmental Remediation Plans
We are constantly seeking to improve our standards, procedures and oil spills response plans, which are
structured at the local, regional and corporate levels.
The “Mar Azul” (Blue Ocean) program integrates the Commitment to Life Program and has the goal to
identify and address the main causes for loss of primary containment events. This program incorporates
lessons learned from the loss of containment events integrating safety barriers, processes, and routine
activities on our units, being part of an active management that keeps continuously searching for
improvement opportunities.
In 2023, we substantially reduced the volume of relevant oil and oil product spills, experiencing seven spills
greater than one barrel, which led our VAZO indicator to reach a value of 16.9 m³, which represents a
reduction of 92% compared to the 2022 result (218.0 m³). The causes of the events were analyzed and the
lessons were incorporated into our processes. Our 2023 result is expressively lower than the average
performance of our Peer Group in 2022 2, of 538.8 m³.
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
IBAMA audits, approves and authorizes the execution of these programs. In order to respond to these
events, we have dedicated oil spill recovery vessels fully equipped for oil spill control and firefighting.
We also have the structure of environmental defense centers, located in strategic areas to ensure rapid and
coordinated response in case of onshore or offshore oil spills. These centers have additional support and
recovery boats available to fight offshore oil spills and leaks, containment booms, absorbent booms and oil
dispersants, among other resources.
We have approximately 290 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 OSRL, an international organization that brings together over
158 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 2023, we conducted 21 emergency drills: 6 in person, 7 fully remote and 8 in a hybrid format.
We continue to evaluate and develop initiatives to address HSE concerns and to reduce our exposure to HSE
risks on capital projects and operations.
—
2 Data on spills consulted in sustainability or similar reports published by companies that make up our peer group (BP, Shell, Total, Exxon Mobil and Equinor). At
the time of preparing this annual report, not all data about 2023 spilled volumes by these companies was available.
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and Governance
Air Emissions and Transition to Low Carbon
Our actions related to climate change are supported by three pillars:
1
2
3
Transparency, Carbon
Management and Just
Transition
Reliable disclosures,
management and decision-
making process
Oil and Gas Competitiveness
Low-carbon Businesses and
Scope 3
Resilience and portfolio value in
energy transition
Mitigating portfolio risk
related to carbon emissions
Our Governance focused on risk
In our understanding, companies will
We acknowledge that the Paris
management of climate change and
become more competitive in the long-
Agreement’s
goals
require
energy transition is structured in such
term market the more they can produce at
significant
reductions
in GHG
a way that these issues are addressed
low costs and with lower GHG emissions,
emissions and changes in energy
at all levels of the company, including
thriving in scenarios of low oil prices,
supply. Our scenarios point to an
senior management.
carbon
pricing,
and
possible
oil
unequivocal energy
transition,
differentiation practices based on the GHG
albeit at an uncertain pace.
We strive to ensure that risks and
opportunities of climate change are
emissions intensity in production.
adequately captured in our scenarios,
We aim to maintain our operations on a
quantified, and considered
in our
decreasing emissions trajectory with lower
choices,
seeking
business
carbon intensity than other companies,
sustainability and value creation for all
safeguarding the competitiveness of our
stakeholders.
The variable compensation of all
company’s employees
incorporates
oil in world markets in a scenario of
slowdown and subsequent contraction in
demand.
performance
linked
to
carbon
We focus on continue supplying oil and gas
intensity
commitments
in
our
in a competitive and environmentally
operations,
promoting
employee
manner, to meet persistent demand for oil
engagement
in achieving expected
compatible with the goals of the Paris
results.
Agreement.
We follow the recommendations of
TCFD for climate-related disclosures,
promoting carbon transparency for all
stakeholders.
We are dedicated to balancing oil
and gas production with society’s
decarbonization scenarios and the
progressive development of new
low-carbon businesses.
Our strategy seeks portfolio
diversification as a
lever for
decarbonization
and
value
creation amid
the
transition,
through
profitable
initiatives
leveraging
our
technological
capacity
and
projects
management skills to explore
Brazil’s
regional
competitive
advantages.
All our projects must be profitable in our 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$45 per barrel in the long
term.
In the “2024-2028+ Strategic Plan” section of this report, we outline the six commitments related to carbon
emissions, with a more ambitious target set for the methane intensity commitment. The review of the
intensity target for E&P methane emissions, from 0.29 tH4/mil tHC to 0.25 t CH4/mil tHC and the aim to
further reduce it to 0.20 tCH4/thousand tHC in 2030, are aligned to initiatives such as Oil and Gas Methane
Partnership 2.0 (OGMP 2.0) and Near Zero Methane Ambition.
In addition to incorporating the near zero methane 2030 ambition, aligned with the review of the
commitments described above, we have also added to the plan the goal to consolidate the already achieved
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40% reduction in absolute operational emissions, maintaining the current emissions level over the five-year
period despite the projected increase in oil production in the coming years with the commissioning of the
14 FPSOs3.
We are committed to continue improving the GHG emissions efficiency of our E&P activities. After years of
producing oil and gas, it is natural for the fields to change over time. Therefore, to expand production levels,
it is necessary to employ energy-intensive techniques, such as water and/or gas injection. Thus, such fields’
water production and energy demand tend to increase, and the rate of oil production tends to decrease.
This affects GHG emissions intensity, reflecting the challenge to offset the GHG emissions intensity of the
fields that have produced oil for longer periods of time in the portfolio. In this sense, the 13 new operated
FPSOs become a challenge and an opportunity to reduce the carbon intensity.
For more information on our ESG commitments and investments in decarbonization, see the “2024-2028+
Strategic Plan” section of this report.
In 2023, our performance in terms of GHG emissions was as follows:
– Total GHG emissions of 46 million tCO2e, 2 million tCO2e lower than the previous year, maintaining
the decreasing trend observed since 2015;
– Carbon intensity in E&P of 14.2 kgCO2e/boe4, the lowest historical outcome;
– Carbon intensity in Refining of 36.8 kgCO2e/CWT5, the lowest historical outcome; and
– Methane intensity in E&P of 0.22 tCH4/mil tHC, the lowest historical outcome.
Our initiatives related to energy efficiency and reduction of losses in our operations and the low
thermoelectric dispatch contributed to lower GHG emissions in 2023.
Our carbon intensity targets (E&P and Refining) represented a coverage of 84.5% of emissions from
activities we operated in 2023.
In 2023, we took additional steps toward our goal of promoting decarbonization. In September, we acquired
forest conservation credits equivalent to 175 thousand tons of GHG emissions. In the same month, we
signed a letter of intent with Vale for the development of low-carbon solutions. The partnership will last
for two years and includes the evaluation of decarbonization opportunities, such as the development of
initiatives in sustainable fuels like hydrogen, green methanol, biobunker, green ammonia, and renewable
diesel, as well as carbon capture and storage technologies. In December 2023, we received the Gold
Standard certification from the OGMP 2.0 initiative as recognition of our methane emissions quantification,
reporting, and management plan, which is aligned with industry best practices.
We collaborate with climate development initiatives and continue to partner with other companies and the
science, technology and innovation community. We highlight, for instance, our participation in the Oil & Gas
Climate Initiative, our support for the World Bank’s “Zero Routine Flaring by 2030” initiative, which is one of
our sustainability commitments, and our adherence for the Oil & Gas Methane Partnership 2.0 (OGMP) and
the Oil & Gas Decarbonization Charter, an initiative launched in COP28.
is available on our website at
In addition, we note that our Climate Change Supplement
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.
—
3 Thirteen operated by Petrobras and one operated by third party.
4 The kg CO2e / boe indicator considers gross oil and gas production (“wellhead”) in its denominator.
5 The kg CO2e/CWT indicator was developed by Solomon Associates specifically for refineries in Europe, 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 refinery’s 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.
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Environment, Social
and Governance
Social Responsibility
Human Rights
Corporate commitments and initiatives
A commitment to human rights is key to the sustainability of our business. Several documents and
initiatives drive 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.
– Ethical Conduct Guide for Suppliers: reinforces that our suppliers must promote dignified and safe
working conditions for their employees and fight against child and slave labor, in addition to
promoting diversity, gender and racial equality as well as 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. Our human rights operations follow the United Nations’ Guiding Principles on Business
and human rights and are structured along four axes: People Management, Community Relations,
Engagement with Supplier and Partner Chain, and Due Diligence in Human Rights. Each axis
describes the processes through 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 the
identification of potential risks in terms of human rights violations related to operations, products
or services we provide, in addition to remedying any impacts we cause.
– Diversity, Equity, and Inclusion Policy: a set of principles and guidelines that support and drive the
decision-making process and guide behaviors in relation to diversity, equity and inclusion.
– Protective Intelligence and Corporate Security Policy: according to our policy, the protective
intelligence and corporate security actions are carried as per the legislation in force and the respect
of human rights, in compliance with external and internal legal requirements, and with relevant
recommendations and technical standards.
– 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 our respect for human rights and seeks to fight against
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.
– Preventing and Combating Discrimination, Moral Harassment, and Sexual Violence Guideline:
provides the steps for the company to prevent and to combat discrimination, moral harassment, and
sexual violence everywhere it operates throughout the cycle of its projects, operations, and
professional relationships.
– Technical Cooperation Agreement on Human Rights: we entered into a Technical Cooperation
Agreement on Human Rights with the Ministry of Human Rights and Citizenship. The document is
composed of about twenty actions that reinforce human rights policies not only in the company, but
in the entire Brazilian society.
– General Ombudsman's Office: we provide direct contact channels for registering queries and
complaints, such as 0800 728 9001 (Contact Us) and an institutional email directed to the social
responsibility teams that serve the business units. Regarding complaints from communities present
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in the coverage area, records are made via customer service (SAC) and the General Ombudsman's
Office.
– Safety, Health and Environmental Policies: to reduce risks to human health and the environment,
our operations have action plans and emergency drills, and our workforce undergoes frequent
training courses. In addition, we sponsor a series of environmental projects aimed at mitigating
carbon emissions, protecting endangered environments and species, and conserving biodiversity.
– Human Rights Governance: in January 2021, we established the Petrobras Human Rights
Commission, which is responsible for managing, in an integrated, broad and comprehensive manner
across the business, the implementation of the human rights agenda established by the Petrobras
Human Rights Guidelines.
– Guidelines for Removal and Resettlement of Communities: to manage and mitigate the possible
impact of resettlement processes, we have established a corporate approach that covers all our
units. In this approach, we define guidelines for the removal and resettlement of individuals or
communities affected by our projects and/or activities.
Our commitments to respecting and advocating for human rights are also evident through initiatives in
favor of gender equity, racial equality, and the protection of early childhood, for example. We highlight
below our commitment to some of the main human rights initiatives, to which we adhere:
– United Nations Global Compact
– Women’s Empowerment Principle
– National Compact for the Eradication of Slave Labor – InPacto
– Enterprise Racial Equality Initiative
– Open Letter Enterprises for Human Rights
– Gender and Race Pro-Equity Program, of the federal government
– Corporate Statement Against Sexual Exploitation of Children and Adolescents
– Early Childhood National Network
– Brazil without Misogyny Initiative
Our Human Rights Commission, established in 2021, is responsible for implementing the human rights
agenda set by our Human Rights Guidelines, ensuring that this agenda is broadly and cross-sectionally
integrated into our business. The commission is made up of 31 of our executive managers and two
subsidiaries (Transpetro and PBIO) and 77 members, previously appointed by the respective executive
manager, and it is divided into three sub-commissions:
– Human Rights Training
– Diversity, Equity and Inclusion
– Human Rights Due Diligence
We have a Human Rights action plan, established in 2021, that is periodically monitored by the Board of
Directors’ HSE committee. Our Human Rights Commission has been undergoing a review of its operating
rules and improving representation of management and subsidiaries that the group is composed of and its
respective members.
Aimed at strengthening our internal human rights structure, the Human Rights Sector was created in July
2023, to manage the human rights process within the company, ensuring the incorporation of respect for
human rights in all areas including in our relationships with stakeholders, as well as its broad and cross-
sectional integration into the company's business. It has the following strategic objectives:
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– Coordinate Petrobras’ Human Rights Commission
– Manage the implementation of human rights due diligence in operations
– Coordinate strategies for the protection and promotion of the rights of vulnerable groups and
traditional peoples in Petrobras' practices, processes, and strategic projects
– Strengthen the culture of respect of human rights within the company
– Coordinate strategies relating to the respect to human rights in the fair energy transition
These actions align with our goal of building increasingly better, fairer, more diverse and innovative working
environments and improve our management of the human rights process, ensuring that respect for human
rights is incorporated into all areas and into relations with our stakeholders, as well as its broad and cross-
cutting integration into our business.
Also, in 2023, we carried out training initiatives related to human rights. The remote training Human Rights
and Business – A Look at Petrobras provides training aimed at employees about human rights and their
importance for society and the strategic planning of companies, in addition to addressing how we have been
advancing in actions that aim to respect these rights in the development of all our activities. And the remote
training for Preventing and Combating Discrimination, Moral Harassment and Sexual Violence provides
concepts and information about the structure we have in place to deal with cases of discrimination,
harassment or sexual violence, as well as prevention mechanisms and guidance on what to do if you are a
victim or have knowledge of such occurrence.
Additionally, we entered into two Technological Cooperation Terms with Diversity clauses, ensuring the
participation of women, Black people and people with disabilities in the project execution teams. The Terms
were signed with academic and research institutions and give us the opportunity to contribute to the
inclusion of audiences that have historically had limited opportunities for professional development.
Corporate programs
Petrobras Program Against Sexual Violence
In order to provide a diverse, respectful, safe work environment free of sexual violence, in May 2023, we
launched the Petrobras Program against Sexual Violence, which centralizes and monitors the
implementation of ongoing or to be implemented actions to combat harassment and sexual violence.
Women's Mentoring Corporate Program
We launched the third edition of the Women's Leadership Mentoring Program aiming at having more women
prepared to take on leadership positions. In 2023, 60 opportunities were offered to women within our
company, with a special focus on operational areas. The aim is to strengthen and increase the number of
women in various areas within our business, providing a safe environment for the development of skills, the
exchange of knowledge and the building of lasting support networks.
Racial Equity Program
Prepared by a working group composed of Black colleagues representing various corporate departments,
the racial equity program aims to promote racial equity, aiming to build a more diverse, discrimination-free
and welcoming work environment. One of its main goals is already unfolded in the Strategic Plan, which is
to achieve at least 25% diversity of color and race in leadership positions by 2030.
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166
Environment, Social
and Governance
Human rights in our supply chain
In November 2022, we entered into a partnership with the UN Global Compact to offer the Human Rights
and Business Track tool.
The Human Rights Track aimed to engage Petrobras suppliers in self-assessment of their performance,
based on a tangible understanding of the situation of each company from a human rights perspective.
Through the application of this tool, participating companies were able to obtain an initial self-diagnosis
on their governance on human rights issues such as decent work, equality, inclusion, health and
occupational safety, including mental health, impacts on community, environment and climate.
As part of our efforts to involve our supply chain to promote human rights issues, we implemented the
Human Rights Track tool on a pilot basis for 135 suppliers who fully responded to the self-assessment
questionnaire.
In December 2023, the Global Compact presented the consolidated results (diagnostic phase) and offered
the Human Rights Due Diligence Course, aiming to train professionals in our supply chain to incorporate the
due diligence process into their organizations.
Community Relationship
We are committed to maintaining a long-term relationship with communities 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 that are constantly monitored and assessed.
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 are in alignment with the objectives of our business and contributes to the conservation of the
environment and the improvement of the living conditions of the communities where we operate.
In 2023, our community relationship activities carried out 421 voluntary community interactions, including
meetings with community leaders through community committees, as well as visits and events. In addition,
we resumed face-to-face activities full time and technology allowed for greater interaction with community
members.
We carry out social risk assessments to identify and mitigate potential detrimental impacts to human rights
within communities or within supply chain activities. These assessments are considered in our decision-
making process with respect to investment projects, and lead to recommendations such as the review of
emergency response plans through the lens of community relationships, monitoring of community
incidents and complaints, disclosure of projects and operational activities, and the inclusion of social
responsibility clauses in service agreements. In 2023, 14 new risk assessments were required to support
projects passing through formal planning procedures.
Petrobras Socio-Environmental Program and other contributions
We also strengthened our work with communities, civil society organizations, the public sector and
universities through the Petrobras Socio-Environmental Program. The program is aligned with our social
responsibility policy, which has, as one of its guidelines, the development of enduring socio-environmental
initiatives, in alignment with the Sustainable Development Goals of the United Nations' 2030 Agenda.
These initiatives aim to promote the development of the different regions improve the quality of life for
communities and contribute to the recovery and conservation of nature. This is done by considering the
expectations of stakeholders and the contribution to our business, with a priority focus on the areas where
we operate.
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Environment, Social
and Governance
In 2023, we launched the biggest public selection process for the Petrobras Socio-environmental Program,
through which we will invest more than US$86 million in socio-environmental projects in all Brazilian
regions. The public notice covers all lines of action of the Petrobras Socio-Environmental Program: forests,
ocean, education and sustainable economic development. Human rights are a cross-sectional theme of the
program, as it can be applied to all projects in relation to its main theme in order to expand the program’s
scope and potential for transformation.
This public selection process launched opportunities to support projects whose primary audiences were
necessarily indigenous peoples and traditional communities. Besides that, some opportunities focused on
education for human rights, gender equality and appreciation of cultural diversity, as well as promoting
awareness with a focus on environmental justice, combating racism, promoting racial equity and combating
prejudice. The main focus of these opportunities include indigenous people, traditional communities,
fishermen, women, Black people, children, people with disabilities and the LGBTQIA+ community, in addition
to opportunities focused on other communities and initiatives.
With the aim of expanding our investments in a more diverse portfolio of projects in nature-based solutions,
in line with our objectives and strategic commitments, we established a partnership with the BNDES through
match funding Floresta Viva. Targeting joint financial support for reforestation projects of native species
in Brazilian biomes, we intend to follow the path of generating high-integrity carbon credits, which generate
social and environmental benefits.
In November 2023, we announced the results of the first public selection process: “Manguezais do Brasil”
(Brazilian Mangroves). We selected eight projects that will receive the total amount of US$9.5 million for
actions to recover native vegetation in mangrove and restinga areas in Brazil, reaching more than 1,750
hectares of land. This initiative will reinforce our socio-environmental investments in blue carbon, carbon
sequestered, stored and released by coastal and marine ecosystems.
In December 2023, we launched the second public selection process for this project, on COP28, that will
support ecological restoration and strengthening of the restoration production chain in biodiversity
corridors for the conservation of the Cerrado and Pantanal biomes. US$8.4 million will be invested in these
initiatives that will take place over the next four years. We invested US$32 million in socioenvironmental
projects in 2023.
We are committed to the development of initiatives that contribute to the solution of social and
environmental problems, generating opportunities of acting together with our stakeholders, and
customers. Thus, to increase our contribution to society beyond socioenvironmental projects, in 2023, we
allocated US$321 thousand in donations, which included the carrying out of emergency relief for families
affected by heavy rains in São Paulo and Rio Grande do Sul, and for people affected by extreme draughts in
the Northern region. The chosen families were selected through a process conducted by a non-profit
institution. These donations were made in accordance with our internal regulations.
Annually, we report on our actions related to sustainability and human rights in the Sustainability Report
and in the Human Rights and Corporate Citizenship Supplement. In our Sustainability Report, we correlate
the indicators and actions reported with the GRI indicators, the Sustainable Development Goals and the
Global Compact Principles. We also use the IPIECA Oil and Gas Industry Guide for Voluntary Reporting as a
complementary
reports are available on our website at
www.petrobras.com.br/ir.
reporting methodology. These
PETROBRAS | Annual Report and Form 20-F | 2023
168
Environment, Social
and Governance
Corporate Governance
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 good
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:
OUR MAIN GOVERNANCE PRACTICES
Criteria for selection of members of the Board of Directors and the Executive Officers are set out in our
Bylaws and comply with the conditions imposed by art. 147 of the Brazilian Corporation Law, as well as those
provided for in Law No. 13,303/16, in Decree No. 8,945/16 and our Policy for nomination of Senior
Management Members. According to the statutory revision approved in November 2023, for investiture in
such positions, we will consider both material and formal conflicts provided for by Law No. 13,303/16.
Law 13,303/16, among other requirements, requires that our Board of Directors be formed by at least 25%
of independent members. Our Bylaws extended the requirement to 40%; however, this provision can be
amended.
Our Board of Directors nominates the chief governance and compliance officer. The majority of the board
must approve the dismissal of such officer, with the vote of a majority of the directors elected by minority
shareholders. As provided for in our Bylaws and in Law No. 13,303/16, the chief governance and compliance
officer is guaranteed, in the exercise of his duties, the possibility of reporting directly to the Board of
Directors.
In addition to the requirements of the Bylaws and current legislation, in accordance with the guidelines of
our Policy for nomination of Senior Management Members, we seek to achieve diversity in the composition
of the Board of Directors and complementarity of experiences and qualifications. The Executive Officers
consists of members with exclusive dedication, and requires at least 10 years of leadership experience,
preferably in the business or in a related area.
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169
Environment, Social
and Governance
Our nominations process includes the verification of additional integrity criteria, provided for in our Bylaws
and detailed in our Policy for nomination of Senior Management Members, through the Integrity
Background Check (“BCI”). The BCI is an important decision-making support tool, that respects the privacy
and data access laws that are in force in each country.
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
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,
statutory audit 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. For more information on the
functioning and composition of the statutory audit committee, see "Management and Employees –
Management – Statutory Board Committees" in this annual report.
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).
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 good market 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.
For more information on our Whistleblower Channel, Code of Ethical Conduct and Ethical Conduct Guide for
Suppliers, see "Compliance and Internal Controls – Compliance” and "Compliance and Internal Controls –
Ombudsman and Internal Investigations” in this annual report.
Corporate Governance Structure
Our corporate governance structure currently consists of a general shareholders’ meeting, our Fiscal
Council, Board of Directors and its committees, audits, general ombudsman office, Executive Officers and
its committees.
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170
GOVERNANCE STRUCTURE
Environment, Social
and Governance
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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171
Environment, Social
and Governance
Major Recognition
We are members of the Brazilian Institute of Corporate Governance (“IBGC”), which ratifies our commitment
to the continuous improvement of our processes and internal controls, in alignment with good corporate
governance practices in the market, with the objectives and values defined in our Strategic Plan, as well as
with national and international legislation.
We received, for six years 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 Finance, achieving
their best level, Level 1, which shows our high degree of excellence in corporate governance. There was no
evaluation in 2023 because IG-Sest is undergoing restructuring and reevaluation of the issues to be
evaluated, therefore, Petrobras continues with the Level 1 obtained in 2022.
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 2023, 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 65.3% in
2023, an increase of 2.7% compared to the previous year (62.6%).
Additionally, for the seventh consecutive year, in 2023 we won the National Association of Finance,
Administration, and Accounting Executives (Anefac) award, granted to the Brazilian companies with the
best quality and transparency in their financial statements. The classification is made based on a rigorous
technical analysis of the financial statements published by companies based in Brazil that operate in the
commercial, industrial, and service sectors. Criteria such as transparency, clarity and consistency of
information, adherence to accounting standards, among others, are evaluated.
We believe that the results we have achieved prove the recognition of the market and regulatory and control
entities 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.
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 income 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.
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
PETROBRAS | Annual Report and Form 20-F | 2023
172
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.
Environment, Social
and Governance
Section
New York Stock Exchange Corporate
Governance Rules for U.S. Domestic
Issuers
Director Independence
303A.01
303A.03
Listed companies must have a
majority of independent directors.
“Controlled companies” are not
required to comply with this
requirement.
The non-management directors of
each listed company must meet at
regularly scheduled executive
sessions 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.
Our Practices
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.
We have a statutory committee that verifies the
compliance of the appointment of members of our Fiscal
Council, our 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.
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.
Compensation committee
303A.05
Audit committee
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.
PETROBRAS | Annual Report and Form 20-F | 2023
173
Section
303A.06
303A.07
Environment, Social
and Governance
Our Practices
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 –Statutory Board
Committees” 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. In addition,
one of the audit committee members is an external
accounting and auditing expert, who brings valuable
expertise and experience to the committee's work.
New York Stock Exchange Corporate
Governance Rules for U.S. Domestic
Issuers
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.
Corporate Governance Guidelines
303A.09
Listed companies must adopt and
disclose corporate governance
guidelines.
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.
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.
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174
Section
New York Stock Exchange Corporate
Governance Rules for U.S. Domestic
Issuers
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
Our Practices
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.
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 us 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.
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175
Operating and Financial
Review and Prospects
[AM_ACTIVE 405510973_17]
CONFIDENCIAL
Operating and Financial
Review and Prospects
Consolidated Financial Performance
We achieved a net income of US$25.0 billion, cash provided by operating activities of US$43.2 billion, a Free
Cash Flow (a non-GAAP measure defined in Liquidity and Capital Resources – Free Cash Flow) of US$31.1
billion and an Adjusted EBITDA (a non-GAAP measure defined in Liquidity and Capital Resources – Adjusted
EBITDA and Net Debt/Adjusted EBITDA ratio) of US$52.4 billion.
Operating income in 2023 was US$38.0 billion, 33% lower than 2022 primarily due to the 18% depreciation
of the average Brent price in 2023 when compared to 2022 and lower crack spreads of oil products in 2023
when compared to 2022, especially diesel, following the international price scenario. In addition, the result
was impacted by the increase in operating expenses, including lower capital gains from the co-participation
agreements in the Sépia and Atapu fields, and higher impairment (losses) reversals, net, abandonment
costs and other taxes. These effects were partially offset by the increase in the volume of oil exported. Net
income attributable to shareholders was US$24.9 billion in 2023, a 32% decrease compared to US$36.6
billion in 2022. This result was impacted by the same reasons that affected operating income and was
partially offset by improved net finance expense and lower income taxes.
Fluctuations in our financial condition and results of operations are driven by a combination of factors,
including:
the volume of crude oil, oil products and natural gas we produce and sell;
–
– changes in international prices of crude oil and oil products (denominated in U.S. dollars);
– changes in the domestic prices of oil products (denominated in reais);
–
fluctuations in the real vs. U.S. dollar exchange rates and other currencies, as disclosed in Note
34.3(c) to our audited consolidated financial statements;
–
–
–
the demand for oil products in Brazil;
the recoverable amounts of assets for impairment testing purposes; and
the amount of production taxes from our operations that we are required to pay.
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177
Operating and Financial
Review and Prospects
CONSOLIDATED STATEMENT OF INCOME INFORMATION (US$ million)
Sales revenues
Cost of sales
Gross profit
Selling expenses
As reported
Jan-Dec
Variation
2023
102,409
2022
124,474
▲
(22,065)
▲ (%)
(17.7)
(48,435)
(59,486)
11,051
18.6
53,974
64,988
(11,014)
(16.9)
(5,038)
(4,931)
(107)
(2.2)
General and administrative expenses
(1,594)
(1,332)
(262)
(19.7)
Exploration costs
Research and development expenses
Other taxes
(982)
(726)
(890)
(887)
(95)
(10.7)
(792)
66
8.3
(439)
(451)
(102.7)
Impairment (losses) reversals, net
(2,680)
(1,315)
(1,365)
(103.8)
Other income and expenses, net
(4,031)
1,822
(5,853)
(321.2)
Operating income
Net finance expense
38,033
57,114
(19,081)
(33.4)
(2,333)
(3,840)
1,507
39.2
Results of equity-accounted investments
(304)
251
(555)
(221.1)
Net income before income taxes
35,396
53,525
(18,129)
(33.9)
Income taxes
(10,401)
(16,770)
6,369
38.0
Net income for the year
24,995
36,755
(11,760)
(32.0)
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
2.2 to our consolidated financial statements.
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Operating and Financial
Review and Prospects
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)
2023
4.84
7.3%
5.00
3.1%
2022
5.22
6.5%
5.16
4.3%
2021
5.58
(7.4%)
5.40
(4.7%)
IPCA
4.62%
5.79%
10.06%
(1) Based on year-end exchange rate.
(2) Based on average exchange rate for the year.
From January 1, 2024 to April 10, 2024, the real depreciated -4.6% 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.
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 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 35.2.2(a) to our audited
consolidated financial statements.
PETROBRAS | Annual Report and Form 20-F | 2023
179
Operating and Financial
Review and Prospects
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 35.2.2(c) to our audited consolidated financial statements.
Sales Revenues
In 2023, sales revenues decreased 18% compared to 2022, reaching US$102.4 billion, due to lower oil, and
oil product prices.
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 take into account domestic
market conditions and seek to align the price of oil products with international prices while
avoiding the immediate transfer of volatility of international quotations and the exchange rate.
The average price of Brent Crude Oil, as reported by Bloomberg, was US$83 per barrel in 2023,
US$101 per barrel in 2022 and US$71 per barrel in 2021. As of December 31, 2023, the Brent Crude
Oil price was US$77.6 per barrel.
Consolidated sales revenues were US$102,409 million in 2023 as compared to US$124,474 million
in 2022, primarily due to:
– a decrease of US$20,958 million due to lower oil products prices; and
– a decrease of US$1,107 million due to lower oil products volumes sold.
Volume
(mbbl,
except as
otherwise
noted)
272,276
2023
Net
Average
Price
(US$)(1)
118.48
Sales
Revenues
(US$
million)
32,260
For the year ended December 31
2022
Volume
(mbbl,
except as
otherwise
noted)
275,572
Net
Average
Price
(US$)(1)
145.69
Sales
Revenues
(US$
million)
40,149
Volume
(mbbl,
except as
otherwise
noted)
292,488
2021
Net
Average
Price
(US$)(1)
82.86
Sales
Revenues
(US$
million)
24,236
152,509
93.82
14,309
148,647
108.81
16,175
149,132
79.86
11,910
11,949
96.91
1,158
12,239
115.29
1,411
22,125
80.23
1,775
24,997
75,151
73.49
46.65
1,837
26,692
89.76
2,396
3,506
77,149
66.38
5,121
37,911
132.28
5,015
35,879
151.15
5,423
61,607
71.87
4,428
63,717
86.88
5,536
25,020
83,320
27,184
59,892
67.91
53.90
83.54
71.14
1,699
4,491
2,271
4,261
636,400
98.23
62,513
639,895
119.10
76,211
659,161
76.83
50,643
82,536
66,175
68.24
82.74
5,632
111,270
68.96
7,673
128,504
5,475
73,771
104.63
7,719
8,789
45.79
76.35
5,884
671
1,564
60.10
94
1,085
260.83
283
1,422
28.13
40
Diesel
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 | 2023
180
Operating and Financial
Review and Prospects
Electricity,
services and
others
Total Brazilian
market
Exports
International
sales
Total global
market
CONSOLIDATED
SALES
REVENUES
—
—
2,576
—
—
2,406
—
—
3,953
786,675
—
76,290
826,021
—
94,292
797,876
—
61,191
294,291
84.99
25,012
260,734
105.46
27,497
296,055
16,455
67.27
1,107
20,511
130.91
2,685
16,888
72.59
76.03
21,491
1,284
310,746
—
26,119
281,244
—
30,182
312,943
—
22,775
1,097,421
—
102,409
1,107,265
—
124,474
1,110,819
—
83,966
(1) Net average price calculated by dividing sales revenues by the volume for the year.
Cost of Sales
In 2023, the cost of sales decreased 19%, reaching US$48,435 million, mainly reflecting both lower imported
crude oil and oil products prices, and a lower share of imported crude oil in the refined products, which has
a higher price.
Selling Expenses
Selling expenses were US$5,038 million in 2023, an increase of 2% compared to US$4,931 million in 2022,
mainly due to higher crude oil and oil products exports, and higher shipping costs.
General and Administrative Expenses
General and administrative expenses were US$1,594 million in 2023, an increase of 16% compared to
US$1,332 million in 2022, mainly reflecting higher employee expenses (+R$0.1 billion), resulting from salary
increases, actuarial expenses, and training and development.
Exploration Costs
Exploration costs were US$982 million in 2023, a 11% increase when compared to US$887 million in 2022,
mainly due to higher geological and geophysical expenses mostly in the Equatorial Margin Basin.
Impairment (losses) reversals, net
We recognized impairment in the amount of US$2,680 million in 2023, a US$1,365 million increase compared
to an impairment loss of US$1,315 million in 2022.
This increase was mainly in oil and gas producing properties in Brazil (a US$2,717 million impairment in 2023
compared to a US$628 million impairment in 2022).
PETROBRAS | Annual Report and Form 20-F | 2023
181
Operating and Financial
Review and Prospects
Other income and expenses, net
Other income and expenses, net was an expense of US$4,031 million in 2023, a US$5,853 million change
compared to an income of US$1,822 million in 2022, mainly due to:
– a US$4,286 million decrease in other income resulting from lower financial compensation from the
co-participation agreements in bid areas (Sépia and Atapu fields) which occurred in 2022; and
– a US$1,195 million in Losses on decommissioning of returned/abandoned areas, a US$970 million
increase compared to 2022, mainly due to higher expenses with the abandonment provision in fields
being returned in 2023, mainly in SEAL, BC and RNCE.
Net Finance Expense
Net finance expense was US$2,333 million in 2023, a 39% decrease when compared to US$3,840 million in
2022, mainly due to a foreign exchange loss of US$580 million in 2023, as compared to a US$2,172 million
loss in 2022, reflecting a 7.3% appreciation of the real/US$ exchange rate in 2023 compared to a 6.5%
appreciation in 2022, which applied to a lower average net liability exposure to the US$ during 2023 than in
2022.
Results in equity-accounted investments
We had a loss in equity-accounted investments of US$304 million in 2023, compared to a gain of US$251
million in 2022. This reduction was mainly due to losses with Braskem reflecting lower operational results.
Income Taxes
Income tax was an expense of US$10,401 million in 2023, compared to an expense of US$16,770 million in
2022, mainly due to lower operating income.
For information regarding discussion of earlier years, please refer to our previous Annual Report and Form
20-F. Our SEC filings are available to the public on the SEC’s website at www.sec.gov and on our website at
www.petrobras.com.br/ir.
PETROBRAS | Annual Report and Form 20-F | 2023
182
Operating and Financial
Review and Prospects
Financial Performance by Business Segment
SELECTED FINANCIAL DATA BY REPORTABLE OPERATING SEGMENTS AND FOR CORPORATE AND OTHER
BUSINESS
For the year ended December 31
2023
2022
▲ 23-22
(US$ million)
(US$ million)
(%)
Exploration and Production
Third parties(1)(2)
Intersegment
Sales revenues(2)
Cost of sales
Impairment (losses) reversals, net
Net income (loss) attributable to our shareholders
Refining, Transportation and Marketing
Third parties(1)(2)
Intersegment
Sales revenues(2)
Cost of sales
Impairment (losses) reversals, net
Net income (loss) attributable to our shareholders
Gas and Low Carbon Energies
Third parties(1)(2)
Intersegment
Sales revenues(2)
Cost of sales
Impairment (losses) reversals, net
Net income (loss) attributable to our shareholders
Corporate and other Businesses
Third parties(1)(2)
Intersegment
Sales revenues(2)
767
66,113
66,880
1,311
76,579
77,890
(27,239)
(30,465)
(2,105)
22,453
93,464
1,404
94,868
(85,699)
(524)
3,036
7,824
3,285
11,109
(5,685)
(81)
1,286
354
11
365
(1,218)
32,073
111,581
1,950
113,531
(99,154)
(97)
7,426
11,077
3,991
15,068
(10,518)
505
6
511
(41.5)
(13.7)
(14.1)
10.6
(72.8)
(30.0)
(16.2)
(28.0)
(16.4)
13.6
(440.2)
(59.1)
(29.4)
(17.7)
(26.3)
45.9
(29.9)
83.3
(28.6)
42.8
1
(8,200.0)
1,038
23.9
Net income (loss) attributable to our shareholders
(1,723)
(3,014)
(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.
PETROBRAS | Annual Report and Form 20-F | 2023
183
Operating and Financial
Review and Prospects
Exploration and Production
Net income attributable to our shareholders in our E&P segment was US$22,453 million in 2023 compared
to US$32,073 million in 2022, primarily due to:
reduction in sales revenues due to the lower price of Brent, partially offset by higher production;
–
– higher impairment expenses due to the update of economic assumptions, as well as the project
portfolio and reserve volume estimates approved in the Strategic Plan;
–
–
–
increase in expenses with abandonment and dismantling areas due to the growth in provisions in
fields returned in 2023, mainly in SEAL, BC and RNCE;
increase in other taxes expense, due to export tax on oil;
lower other income due to the receipt, in 2022, of compensation relating to the co-participation
agreements in Búzios, Sépia and Atapu.
Refining, Transportation and Marketing
Net income attributable to our shareholders in our RTM segment was US$3,036 million in 2023 compared
to US$7,426 million in 2022, primarily due to:
–
–
lower sales revenues (a decrease of US$18,663 million), primarily due to the decrease in international
prices, mainly diesel, gasoline and petroleum, which was reflected in the domestic market.
International prices were stronger in 2022 as a consequence of the geopolitical conflicts that year.
These effects also had a negative impact on fuel oil and petroleum export revenue in 2023. The
decrease of sales revenues was partially offset by higher volume of petroleum exported;
lower costs of sales due to the decrease in the average Brent, which impacts the price used for
purchase oil from our E&P segment as well as oil and oil products from third parties; and
– higher sales expenses mainly due to the increase in shipping costs, higher impairment losses, mainly
related to the second unit of Abreu e Lima refinery in 2023, gains from disposals and write-offs of
assets that occurred in 2022.
Gas and Low Carbon Energies
In 2023, the net income attributable to our shareholders in our Gas and Low Carbon Energies segment was
US$1,286 million, an increase of US$248 million compared to 2022, mainly due to the lower average cost of
purchasing natural gas.
For information regarding discussion of earlier years, please refer to our previous Annual Report and Form
20-F. Our SEC filings are available to the public on the SEC’s website at www.sec.gov and on our website at
www.petrobras.com.br/ir.
PETROBRAS | Annual Report and Form 20-F | 2023
184
Operating and Financial
Review and Prospects
Liquidity and Capital Resources
We closely monitor liquidity levels in order to effectively meet cash needs from our business operations and
financial obligations. We have a conservative approach to the management of our liquidity, which consists
mainly of (i) cash and cash equivalents (cash in hand, deposits held at call with banks, money market mutual
funds and other short-term highly liquid investments with maturities of three months or less), and
(ii) investments in financial assets (treasury bills). Based on the information presented below, we believe
our working capital is sufficient for our present requirements.
Adjusted Cash and Cash Equivalents is a non-GAAP measure that comprises cash and cash equivalents,
government bonds and time deposits from highly rated financial institutions abroad with maturities of
more than three months from the end of the period, considering the expected realization of those financial
investments in the short-term. This measure is not defined under the IFRS and should not be considered in
isolation or as a substitute for cash and cash equivalents computed in accordance with IFRS. It may not be
comparable to the adjusted cash and cash equivalents of other companies; however, management believes
that it is an appropriate supplemental measure to assess our liquidity and supports leverage management.
LIQUIDITY AND CAPITAL RESOURCES
US$ million
Cash and cash equivalents at the beginning of the period
Net cash provided by operating activities
Acquisition of PP&E and intangibles assets
Acquisition of equity interests
Proceeds from disposal of assets – Divestment
Financial compensation from co-participation agreements
Dividends received
Divestment (Investment) in marketable securities
Net cash (used in) provided by 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
Share repurchase program
Dividends paid to non-controlling interest
Changes in non-controlling interest
Net cash used in financing activities
2023
7,996
43,212
(12,114)
(24)
3,606
391
88
98
(7,955)
35,257
(3,961)
2,210
(6,171)
(6,286)
2022
10,480
49,717
(9,581)
(27)
4,846
7,284
374
(3,328)
(432)
49,285
(8,304)
2.880
(11,184)
(5,430)
(19,670)
(37,701)
(735)
(49)
1
0
(81)
63
(30,700)
(51,453)
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the period
174
12,727
PETROBRAS | Annual Report and Form 20-F | 2023
(316)
7,996
185
Government bonds and time deposits with maturities of more than three months
and post-fixed Bank Deposit Certificates with daily liquidity at the end of the
period
Operating and Financial
Review and Prospects
5,175
4,287
Cash and cash equivalents in companies classified as held for sale at the end of the
period
-
-
Adjusted Cash and Cash Equivalents at the end of the period
17,902
12,283
Free Cash Flow
Free Cash Flow is a non-GAAP measure representing Net cash provided by operating activities minus
Acquisition of PP&E, intangible assets and equity interest (“Free Cash Flow”). We use it 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 shareholder remuneration
policy.
Free Cash Flow is a non-GAAP measure and may not be comparable to the calculation of liquidity
measures presented by other companies, and it should neither be considered in isolation nor as a
substitute for any measures calculated in accordance with IFRS. This metric must be considered
together with other measures and indicators for a better understanding of our financial condition.
RECONCILIATION OF FREE CASH FLOW
US$ million
R$ million(1)
2023
2022
2023
2022
Net cash provided by operating activities
43,212
49,717
215,696
255,410
(-) Acquisition of PP&E and intangible assets
(12,114)
(9,581)
(60,315)
(49,656)
(-) Acquisition of equity interests
(24)
(27)
(120)
(138)
Free Cash Flow
31,074
40,109
155,261
205,616
(1) According to our shareholder remuneration policy, proposed dividends to shareholders are calculated based on the Free Cash Flow measured
in Brazilian reais whose numbers are derived from our annual financial statements filed with the CVM.
The principal uses of funds in the year ended December 31, 2023 were for dividend payments and share
repurchase program amounting to US$20,454 million, debt service obligations, including pre-payment of
debts in the international banking market, interest on finance debt, repurchase of securities in the
international capital market and lease payments totaling US$12,457 million and acquisition of PP&E and
intangibles assets in the amount of US$12,114 million. These funds were principally provided by cash from
operating activities of US$43,212 million, proceeds from divestments of US$3,606 million, proceeds from
financing of US$2,210 million, and financial compensation from co-participation agreements of US$391
million.
PETROBRAS | Annual Report and Form 20-F | 2023
186
Operating and Financial
Review and Prospects
Source of Funds
In 2023, our financing strategy was mainly based in managing our existing financial liabilities, aiming to
extend short-term debt maturities and improving our capital structure, preserving our solvency and
liquidity.
Cash Flows from Operating Activities
Net cash provided by operating activities was US$43,212 million in 2023, a decrease of 13.1% from
US$49,717 million in 2022, mainly due to lower crude oil and oil products prices, and also lower volume of oil
products sold.
Disposal of Assets
We received cash inflow from the sale of assets amounting to US$3,606 million, for the year ended
December 31, 2023, which represents the prices paid to us on the closing of the completed transactions and
the upfront contract signing payments related to certain transactions that have not yet been closed.
Assets
Sale of Albacora Leste field
Sale of Potiguar cluster
Sale of Norte Capixaba cluster
Others
Total
Cash-inflow
(US$ million)
1,586
1,010
427
483
3,606
From January 1, 2024 through February 29, 2024, we received US$298 million from divestments relating
to the last installment for the sale of the Carmópolis cluster which was closed in December 2022.
For additional information on divestments, see “Our Business – Portfolio Management” in this
annual report.
Debt
Our proceeds from financing are comprised of local and global notes issued in the capital markets and funds
raised from banking markets (in Brazil and abroad).
Additionally, our total debt includes lease liabilities. Our Gross Debt (which represents the sum of
current and non-current finance debt and lease liabilities) totaled US$62,600 million, and the Net Debt (a
non-GAAP measure representing Gross Debt minus Adjusted Cash and Cash Equivalents), totaled US
$44,698 million.
We can use our revolving credit lines in case of liquidity needs at any time until their maturity dates, and
they will be considered as part of our Gross Debt and Net Debt only once drawn down.
For reconciliation of Net Debt and Gross Debt, see “Liquidity and Capital Resources – Sources of Funds –
Finance Debt - Adjusted EBITDA and Net Debt/Adjusted EBITDA ratio” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
187
Operating and Financial
Review and Prospects
Finance Debt
Debt profile
In 2023, proceeds from financing amounted to US$2,210 million, reflecting notably: (i) the issuance of Global
Notes in the international capital markets in the amount of US$1,235 million, maturing in 2033; and (ii) funds
raised from domestic banking market in the amount of US$907 million.
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.
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)
2023
6.4
2022
6.5
2021
6.2
11.38
12.07
13.39
30
39
41
(1) This leverage takes into account market capitalization as of December 31 of the respective year and is defined as (Gross Debt – Adjusted cash and cash
equivalents) / (Market Capitalization + Gross Debt – Adjusted cash and cash equivalents).
For additional information on Finance Debt amortization, see “Liquidity and Capital Resources – Use of
Funds – Debt Service Obligations” in this annual report.
FINANCE DEBT PROFILE PER CATEGORY AS OF DECEMBER 31, 2023 (%)
PETROBRAS | Annual Report and Form 20-F | 2023
188
DEBT PROFILE PER CURRENCY AS OF DECEMBER 31, 2023 (%)
Operating and Financial
Review and Prospects
As of December 31, 2023, our finance debt amounted to US$28,801 million, as compared to US$29,945
million as of December 2022. This decrease was primarily due to repayment of finance debt, including early
payment of US$1,218 million. 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.
Rating
In 2023, Moody’s maintained our credit rating at “Ba1”, with a stable outlook. The agency also
maintained our stand alone rating at “Ba1”, one notch above the Brazilian government. S&P
upgraded our credit rating at “BB” with a stable outlook and kept our stand alone rating at “BB+”,
one notch below investment grade. Fitch upgraded our credit rating at “BB”, with a stable outlook.
The agency maintained our stand alone rating at “BBB”, the second level in the investment grade
scale.
As of April 4, 2024, 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 April 4, 2024.
(2) As of December 31.
2024(1)
2023(2)
2022(2)
BB
Ba1
BB
BB
Ba1
BB
BB-
Ba1
BB-
PETROBRAS | Annual Report and Form 20-F | 2023
189
Operating and Financial
Review and Prospects
2024(1)
2023(2)
2022(2)
BB+
Ba1
BBB
BB+
Ba1
BBB
BB+
Ba1
BBB
STAND ALONE RATING
Standard & Poor’s
Moody’s
Fitch
(1) As of April 4, 2024.
(2) As of December, 31.
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 2023 and 2022, 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
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
Brazilian reais
Total
(1) Short term and long term.
2023 (%)
2022 (%)
9.5
10.6
20.1
41.9
29.4
71.3
8.6
8.6
8.8
7.6
16.4
39.9
35.8
75.7
7.9
7.9
100.0
100.0
10.6
29.4
9.5
50.5
100.0
71.3
3.3
5.3
20.1
100.0
7.6
35.8
8.8
47.8
100.0
75.7
3.1
4.8
16.4
100.0
PETROBRAS | Annual Report and Form 20-F | 2023
190
Operating and Financial
Review and Prospects
We aim to 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.
Our foreign currency floating rate debt was principally subject to fluctuations in LIBOR. However,
during 2023, we renegotiated most contracts to include SOFR variations. We are still negotiating two
contracts dependent on LIBOR, but we expect to conclude these negotiations by the end of 2024.
Those two contracts represent less than 1.0% of our outstanding debt. 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 as fixed by the CMN.
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. In 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, the Pound Sterling.
In 2017, we entered into derivative transactions, through our indirect subsidiary PGT, in the form of
cross-currency swaps to hedge against exposure in Pound Sterling 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 2022, after carrying out a broad and
integrated assessment of the main risk factors to which we are exposed, we decided to fully unwind
from the Pound Sterling derivatives contracts.
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 seventh debentures issuance, with the IPCA
x CDI 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. The position in the
derivatives contracts remains unchanged.
In 2022, we approved the first Debenture Repurchase Plan, authorizing the acquisition of debentures
issued by us to be held in treasury or later sold. In July 2023, we closed this repurchase program,
having repurchased a quantity equivalent to 3% of debentures outstanding. All the acquisitions were
made in the secondary market, following market prices.
PETROBRAS | Annual Report and Form 20-F | 2023
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Operating and Financial
Review and Prospects
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 4.7 and 35.3(a) to our audited consolidated financial statements for further information about
our cash flow hedge.
See Note 35.3 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 an adverse change in the underlying variables as of December 31, 2023.
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, 35.5 and 35.6 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, land and buildings. As of
December 31, 2023, the amount of lease liabilities totaled US$33,799 million.
Adjusted EBITDA and Net Debt/Adjusted EBITDA ratio
The Net Debt/Adjusted EBITDA ratio is non-GAAP measure that helps our management assess our liquidity
and leverage, and it is measured in U.S. dollars. Net Debt/Adjusted EBITDA ratio is not defined under IFRS
and should not be considered in isolation or as a substitute for net income or other measures calculated in
accordance with IFRS.
Adjusted EBITDA represents an alternative measure to our net cash provided by operating activities and is
computed by using the net income before net finance expense, income taxes, depreciation, depletion and
amortization, adjusted by results of equity-accounted investments, impairment, translation adjustments -
reclassified to the statement of income, results on disposal/write-offs of assets, and results from co-
participation agreements in bid areas. Adjusted EBITDA is not defined under IFRS and should not be
considered in isolation or as a substitute for net income or other measures calculated in accordance with
IFRS.
US$ million
Net income
Net finance expense
Income taxes
Depreciation, depletion and amortization
Results of equity-accounted investments
Impairment (losses) reversals, net
2023
2022
2021
24,995
36,755
19,986
2,333
3,840
10,966
10,401
16,770
8,239
13,280
13,218
11,695
304
(251)
(1,607)
2,680
1,315
(3,190)
Translation adjustments - Reclassified to the statement of income
0
0
41
Results on disposal/write-offs of assets
(1,295)
(1,144)
(1,941)
Results from co-participation agreements in bid areas
(284)
(4,286)
(631)
Adjusted EBITDA
52,414
66,217
43,558
PETROBRAS | Annual Report and Form 20-F | 2023
192
Operating and Financial
Review and Prospects
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 Adjusted EBITDA, Adjusted Cash and Cash Equivalents, 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.
The following table presents the reconciliation for 2023 and 2022 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 (current and non-current)
Lease liability (current and non-current)
Gross Debt
Net Debt
Net cash provided by operating activities - OCF
Allowance (reversals) for credit loss on trade and other receivables, net
Trade and other receivables, net
Inventories
Trade payables
Taxes payable (1)
Others(2)
Adjusted EBITDA
Gross debt net of Cash and cash equivalents/OCF ratio
Net Debt/Adjusted EBITDA ratio
2023
12,727
5,175
17,902
28,801
33,799
62,600
44,698
43,212
(40)
(88)
(1,564)
954
10,463
(523)
52,414
1.15
0.85
2022
7,996
4,287
12,283
29,954
23,845
53,799
41,516
49,717
(65)
(355)
1,217
359
13,957
1,387
66,217
0.92
0.63
(1)
(2)
It is composed of other taxes payable and Income taxes paid.
In 2023, it mainly comprises the remeasurement of the obligation for variable compensation programs higher than the amount paid in the year, in addition
to the receipt from the legal agreement with Eletrobras. In 2022, it mainly comprises payments related to Pension plans (Term of Financial Commitment).
Our Net Debt/Adjusted EBITDA ratio computed in U.S. dollar increased from 0.63 as of December 31, 2022,
to 0.85 as of December 31, 2023, reflecting the effects derived by the combination of lower Adjusted EBITDA
and higher Net Debt.
PETROBRAS | Annual Report and Form 20-F | 2023
193
Operating and Financial
Review and Prospects
Use of Funds
Capital Expenditures
Our Capital Expenditure was US$12,673 million in 2023 (of which 82% was used in E&P business), a 29%
increase when compared to our Capital Expenditure of US$9,848 million in 2022. It was 21% below what was
originally planned to the year in our previous strategic plan (2023-2027). Our Capital Expenditures in 2023
were primarily directed toward the most profitable investment projects relating to oil and gas production.
These expenditures are based on our plan cost assumptions and financial methodology.
CAPITAL EXPENDITURES BY BUSINESS SEGMENTS (US$ million)
For the Year Ended December 31,
Exploration and Production
Refining, Transportation and Marketing
Gas and Low Carbon Energies
Total business segments
2023
10,424
1,559
277
2022
7,844
1,193
350
2021
7,129
932
412
12,260
9,387
8,474
Corporate and Other Businesses
413
461
298
TOTAL
12,673
9,848
8,772
For information on our future Capital Expenditures, see “2024-2028+ Strategic Plan” in this annual report.
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194
Operating and Financial
Review and Prospects
Distribution to shareholders
Our Board of Directors proposed a distribution to shareholders in 2023 in the amount of US$15,489 million.
This distribution (US$14,754 million through the payment of dividends and interest on capital, and US$735
million through the share repurchase program) was calculated in Brazilian reais, in the amount of R$76,061
million, representing 60% of our Free Cash Flow for the first quarter of 2023, according to the shareholders
remuneration policy in force at the time, and 45% of the free cash flow for the remaining quarters of 2023,
converted 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 shareholder remuneration policy, see “Shareholder Information –
Shareholders’ Rights” in this annual report and Note 34.5 to our audited consolidated financial statements.
Debt Service Obligations
As of December 31, 2023, our debt maturity profile includes, for the next five years, US$38,307 million in
finance debt and lease liability (nominal amounts).
AMORTIZATION PROFILE (1) (US$ million)
(1) Amounts composed by Lease nominal future payments and Finance debt principal.
Finance Debt
In 2023, we repaid the principal and interest on several finance debts, in the amount of US$6,171 million.
Lease Liabilities
We are the lessee in agreements that primarily include oil and gas producing units, drilling rigs and other
exploration and production equipment, vessels and support vessels, helicopters, land and buildings.
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195
Operating and Financial
Review and Prospects
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, 2023, these
agreements amount to US$65,358 million (US$79,913 million on December 31, 2022).
For information on changes in the balance of lease liabilities and on leases by class of underlying assets, see
Note 33 to audited consolidated financial statements.
Ability of Subsidiaries to Transfer Funds to Us
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 loans and/or dividends, except for the prejudgment
attachment levied by a number of EIG entities that currently prevents PIBBV from paying dividends to
Petrobras. As a result, we do not anticipate any impact on our ability to meet our cash obligations. For
further information on the prejudgment attachment see “Legal and Tax - Legal Proceedings - Sete Brasil’s
Investor Claim and Mediation Procedure” in this annual report.
Other Information
Critical Accounting Policies and Estimates
The preparation of the consolidated financial information requires the use of estimates and judgments for
certain transactions. Note 4 to our audited consolidated financial statements presents key judgments and
the main sources of estimation uncertainty with a significant risk of causing material adjustments to our
key accounting estimates over the next fiscal year.
Explanatory notes to our audited consolidated financial statements to each of those areas provide
additional qualitative and quantitative information for a better understanding of our judgments, the
estimation uncertainties and their impacts.
PETROBRAS | Annual Report and Form 20-F | 2023
196
Management and
Employees
PETROBRAS | Annual Report and Form 20-F | 2023
197
Management and Employees
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.
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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198
Management and Employees
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199
Management and Employees
PETROBRAS | Annual Report and Form 20-F | 2023
200
Management and Employees
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201
Management and Employees
PETROBRAS | Annual Report and Form 20-F | 2023
202
Management and Employees
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203
Management and Employees
Our Annual General Meeting announcing new members joining the Board of Directors will take place in April
2024, after the filing of this report. On April 5, 2024, a precautionary decision was issued in connection with
a popular action in progress at the 21st Federal Court of São Paulo, suspending Mr. Sérgio Machado Rezende
from serving as a Board Member of the Company. Unless such decision is reversed or vacated, the Board
position previously held by Mr. Sérgio Machado Rezende will remain vacant until the election of the
members of the Board of Directors in the shareholders' meeting called to be held on April 25, 2024.
Information on the proposal regarding the prospective new members is available to shareholders at the
Company's (www.petrobras.com.br/ri) and SEC website.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
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 Finance, representing the Brazilian Treasury.
CURRENT MEMBERS OF OUR FISCAL COUNCIL
Year of first
appointment
Elected/appointed by
Members
Cristina Bueno Camatta
Daniel Cabaleiro Saldanha
Viviane Aparecida da Silva Varga (Chairman)
João Vicente Silva Machado
Michele da Silva Gonsales Torres
Alternate members
Sidnei Bispo
Gustavo Gonçalves Manfrim
Otávio Ladeira de Medeiros
Lucia Maria Guimarães Cavalcanti
Aloisio Macário Ferreira de Souza
2023
2023
2023
2023
2021
2023
2023
2022
2023
2023
Brazilian federal government
Brazilian federal government
Brazilian federal government/
Ministry of Finance
Minority shareholder
Preferred shareholder
Brazilian federal government
Brazilian federal government
Brazilian federal government/
Ministry of Finance
Minority shareholder
Preferred shareholder
Our Annual General Meeting announcing new members joining the Fiscal Council will take place in April, after
the filing of this report. Information on the proposal regarding the prospective new members is available to
shareholders at the Company's (www.petrobras.com.br/ri) and SEC website.
PETROBRAS | Annual Report and Form 20-F | 2023
205
Executive Officers
Management and Employees
Our Executive Officers is composed of one CEO and eight executive officers. According to our Bylaws, our
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. Our executive officers’ mandate 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 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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Management and Employees
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207
Management and Employees
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208
Management and Employees
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209
Management and Employees
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210
Management and Employees
Additional Information on our Board of Directors and Executive Officers
Requirements for Election
Our bylaws (as amended by the Extraordinary Shareholders Meeting dated November 30, 2023) provide that
the election of Board Members and Executive Officers shall follow the requirements and restrictions
provided by Law n. 6.404/76, Law n. 13.303/2016 and Decree n. 8945/16, as well as our Nomination Policy.
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 with an unfavorable ruling by appellate
courts concerning a matter related to the activities to be performed in our company;
– 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 Ethical Conduct, Compliance Program 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
– our executive officers must 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, 2023, the aggregate amount of compensation we paid to all members of
our Board of Directors and our Executive Officers was US$7.6 million. These amounts include payment of
variable compensation to our executive officers. As of December 31, 2023, we had 9 executive officers and
11 Board of Directors members.
For information regarding our variable compensation programs, and other benefits such as pension and
health plans, see “Employees – Benefits” in this section.
PETROBRAS | Annual Report and Form 20-F | 2023
211
Management and Employees
Average number of members in the period
Average number of paid members in the
period
2023(1)
Executive Officers
Board of Directors
Fiscal Council
9.00
9.00
11.00
6.33
5.00
5.00
Value of maximum compensation (US$)
550,727.35
31,115.94
31,115.94
Value of minimum compensation (US$) (2)
29,634.79
31,115.94
31,115.94
Average value of compensation (US$) (3)
750,833.72(4)
31,434.73
31,323.65
(1) The values consider all installments paid in the 2023 financial year as established by the CVM.
(2) The value of the individual minimum annual remuneration was determined taking into account the remuneration actually paid to members who worked
during the year. The member with the lowest annual salary served for 1 (one) month in the fiscal year.
(3) 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.
(4) The calculation includes 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 Executive Officers who left our company. Consequently, the average value was higher than the value of
the maximum compensation and does not represent the amount actually paid to our current Executive Officers, which is presented in the minimum and
maximum compensation amounts indicated above.
For further information regarding compensation of our employees and officers, see Notes 18 and 36 to our
audited consolidated financial statements.
Besides compensation, the members of our 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, Fiscal Council and the 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 members of our Executive Officers nor any of our subsidiaries are entitled benefits upon
termination of employment.
For information on our advisory committee, see “Statutory Board Committees” below.
We were not required to prepare an accounting restatement that required recovery of erroneously awarded
compensation pursuant to our clawback policy. Additionally, there was no outstanding balance as of
December 31, 2023 of erroneously awarded compensation to be recovered from the application of the policy
to a prior restatement.
See Exhibit 97.1 to this annual report for a copy of Petrobras’ clawback policy.
PETROBRAS | Annual Report and Form 20-F | 2023
212
Management and Employees
Share Ownership
As of December 31, 2023, 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 (2)
Preferred shares (2)
Board of Directors(1)
Executive Officers(1)
Fiscal Council
161,803,827(3)
377
3,110
71,446
-
42
(1)
Jean Paul Prates is our CEO and member of our Board of Directors. To avoid duplication of data, his share ownership was only considered in the total
amount of shares owned by members of the Board of Directors.
(2) Considers CVM criteria which includes the shares owned by a spouse from whom they are not legally or extrajudicially separated, a marriage partner, any
dependents included in their annual income tax return and companies directly or indirectly controlled by them. It does not include the position held by
external members of the Board of Directors' Advisory Committees and alternate members of the Fiscal Council.
(3) Also reflects the beneficial ownership of approximately 2.17% common shares by José João Abdalla Filho.
On an individual basis, our Directors, Executive Officers and Fiscal Council members beneficially owned less
than 1% of any class of our shares, except for Mr. José João Abdalla Filho, who beneficially owned, as of
December 31, 2023, 161,753,800 common shares of the Company, representing approximately 2.17% of
common shares of the Company. 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 hold 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.
PETROBRAS | Annual Report and Form 20-F | 2023
213
Management and Employees
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. In addition, the committee
approves and monitors ESG initiatives.
– 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, and
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, evaluates appeals of terminations of employment
contracts if the Integrity Committee does not reach a consensus on disciplinary measures. 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 in case of transactions outside the ordinary course of our business, 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.
PETROBRAS | Annual Report and Form 20-F | 2023
214
Management and Employees
SUMMARY OF THE COMPOSITION OF OUR STATUTORY ADVISORY COMMITTEES, AS OF THE DATE OF
THIS ANNUAL REPORT
Members
Investment
Audit
Committees
Health, Safety,
and
Environment
People
Minority
Audit of the Petrobras
Conglomerate
●
●
●
●
●
●
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Arthur Cerqueira Valerio
Benjamin Alves Rabello Filho
Bruno Moretti
Eugênio Tiago Chagas Cordeiro e
Teixeira
Evely Forjaz Loureiro
Fábio Veras de Souza
Francisco Petros
José Affonso de Albuquerque Netto
José João Abdalla Filho
Marcelo Gasparino da Silva
Marcelo Mesquita de Siqueira Filho
Maurício Renato de Souza
Newton de Araujo Lopes
Raoni Iago Pinheiro Santos
Renato Campos Galuppo
Rosangela Buzanelli Torres
Sergio Machado Rezende6
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● CHAIRMAN / CHAIRWOMAN OF EACH COMMITTEE
● EXTERNAL MEMBERS OF EACH COMMITTEE
● REMAINING MEMBERS
—
6 Service currently suspended. See “Management” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
Audit Committee
Our statutory audit committee is an advisory committee of our Board of Directors, and aids 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 no more than five members, who must be independent in accordance with the
independence requirements of the Law No. 13,303/2016 and CVM Resolution 23/2021 and at least one of
the members must have recognized experience in corporate accounting. Additionally, CVM Resolution No.
23/2021 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.
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 our statutory audit committee is subject to certain requirements under CVM rules (CVM
Resolution 23/2021), we understand that it complies with these requirements, and we rely on the exemption
provided by Rule 10A-3(c)(3) under the Exchange Act.
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 Resolution No. 23/2021). Until May 2023,
Mr. Valdir Augusto de Assunção remained an external member of our Audit Committee. On June 12, 2023,
the following nominees were elected by our Board of Directors: Mr. Francisco Petros (Board Member and
Chairman of the Audit Committee); Mr. Eugênio Tiago Chagas Cordeiro e Teixeira (External Member), Mr.
Newton de Araujo Lopes (External Member) and Mr. Fábio Veras de Souza (External Member). Mr. Francisco
Petros and Mr. Newton de Araujo Lopes are our audit committee financial experts.
Our audit committee 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.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
– Assessing and monitoring, together with our internal management and audit area, the adequacy of
actions to prevent and combat fraud and corruption.
– 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.
– Conducting the formal evaluation of our internal audit executive manager on an annual basis.
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 an 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. (PCAOB ID 1124) during the fiscal years
ended December 31, 2023 and 2022:
Audit fees(1)
Audit-related fees(2)
Total fees
2023
2022
5.8
0.2
6.0
6.0
0.3
6.3
(1) Audit fees comprise fees billed (including fees for services related to tax review in relation to statutory and regulatory filings) in
connection with the audit of our audited individual and 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.”
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
Employees
Our workforce is our most important asset. Our approach to management is based on care for people,
promoting diversity, equity, inclusion and well-being.
PETROBRAS | Annual Report and Form 20-F | 2023
218
Our employees by region
(not including our subsidiaries, joint operations or structured 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
As of December 31,
2023
2022
2021
34,363
32,985
32,572
3,478
2,372
3,390
3,840
2,307
2,291
40,213
38,682
38,703
4,619
4,596
4,901
729
568
601
734
569
568
744
563
621
6,517
6,467
6,829
46,730
45,149
45,532
We attract and retain talented employees by offering competitive benefits and participation in a variable
compensation program. We also offer 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(1)
Profit-sharing distributions
Variable compensation program
US$ million
2023
2022
3,478
3,006
94
595
416
42
131
547
2021
2,665
8
125
469
(1) Employee training is not considered an employee benefit in our audited consolidated financial statements.
For information regarding profit-sharing distributions and variable compensation program see respectively
“Labor Relations” and “Employees Variable Compensation” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
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.
Our workforce planning methodology is aimed at the optimal mapping of employees‘ needs. It is built
through our business’s processes perspective and considers strategic scenario modifications in the medium
and long terms. It considers operational safety and projects requirements, as well as portfolio management
decisions and organizational restructuring.
In addition, we seek to adapt our current workforce to our strategies through the following: improvement
of internal workforce mobility practices; flexibility for our portfolio management strategy; training and
continuing education 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 our processes, 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 external talent without neglecting the internal talent of employees, who
have grown with us, and understand our organization, 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. Afterward, to determine
the number of new employees to hire, we consider both our business needs and our current vacancies. The
hiring of new employees is made possible mainly by Public Selection Process (“PSP”) or direct hiring. Direct
hiring is basically used for hiring in senior management, not to exceed 40% of our total senior management
positions.
Since 2021, we resumed admissions through PSP, paying special attention to diversity, increasing hiring of
people with disabilities and for Black people.
As a result, in 2023, 2,275 professionals were hired, of which 96% were hired through the PSP, including 104
employees with disabilities, 971 Black people, and 354 women among all new employees.
In addition to new hires, our headcount was impacted by the layoff of employees enrolled in new iterations
of the Voluntary Severance Programs (“PDVs”) that were introduced throughout 2019. In 2023, 475
employees left us through the Incentive Retirement Program and three PDVs, differentiated by three
corresponding target audiences: (i) PDV 2019, aimed at retired employees, (ii) a PDV for employees in
certain areas undergoing the divestment process and (iii) a PDV for administrative employees. In addition
to these 475 employees, another 6 employees were registered with the PDV but were dismissed due to
death and, according to the PDV rules, they were entitled to compensation, totaling 481 employees who
benefited from the provision.
In total, 744 employees left us in 2023, of which 649 were voluntary dismissals (includes PDVs and other
types of dismissals).
PETROBRAS | Annual Report and Form 20-F | 2023
220
OUR TURNOVER (not including our subsidiaries, joint operations or structured entities)
Management and Employees
The employees that were hired in 2023 support our current Strategic Plan and enable workforce renewal.
We believe that our growth helps ensure competitive advantage and value to our business, in terms of
knowledge and talent management.
Hiring new employees through the PSP and the dismissals contributed to a slight change in the range
distribution of our workforce by time spent with us, as well as the age pyramid.
TIME IN PETROBRAS (not including our subsidiaries, joint operations or structured entities) (%)
PETROBRAS | Annual Report and Form 20-F | 2023
221
Management and Employees
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 association.
We also follow the International Labor Organization conventions ratified by Brazil.
According to Brazilian legislation, all of our employees are represented by independent unions. We maintain
relationships with 17 trade unions and two federations (i.e., a top-level union entity) of oil workers, as well
as six unions and one federation of maritime workers. We value our relationships with all our stakeholders.
For this reason, we invest in open and permanent dialogue with trade unions. As of December 31, 2023, 40%
of our employees were unionized.
We have a Collective Bargaining Agreement (2023-2025 CBA) with the oil and maritime trade unions, valid
for two years, until 2025. These agreements include economic and social provisions relating to work, safety
conditions, benefits, and other matters.
Our agreements seek to be aligned with the UN Sustainable Development Goals, contributing mainly to
decent work and gender equality.
Currently, 100% of our employees are covered by Collective Bargaining Agreements.
In 2023, we adjusted the salaries and benefits of oil and maritime employees by 1% above inflation,
according to the conditions negotiated and established in the 2023-2025 CBA.
We also have a Profit Sharing Program (“PLR”) Agreement valid for 2023, 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 we maintain our
activities in full operation using contingency plans. Contingency plans are the way we can deal with several
types of situations by being backup plans for operational continuity and safety we can use in case of
unexpected situations.
Benefits
Employees Variable Compensation
We adopt a compensation policy in line with market practices in which we operate.
The variable remuneration model for our employees is made up of the PLR, a legal requirement and our
main variable remuneration practice, and the Accomplishment Award (“PRD”), which complements the PLR.
The PRD was implemented in 2023 to replace the Performance Award Program (“PPP”), which was
maintained only for members of our Executive Board. While the PLR only considers organizational
performance, the PRD and PPP consider the employee's individual performance as well. These programs are
aligned with the new guidelines of the 2024-2028+ Strategic Plan and our remuneration policy.
PLR
For the 2022 fiscal year the PLR Agreement was only for employees who did not hold leadership and
specialist roles (i.e., it did not include individuals holding positions such as manager, specialist and
supervisor).
Regarding the 2023 fiscal year, we approved the PLR Agreement for all employees, regardless of their
position, except for members of our Executive Board, and it became our main variable remuneration
program.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
For payment of the 2023 PLR to occur in 2024, the following conditions must be met:
- Declaration and payment of shareholder remuneration, for such fiscal year, approved by our Board
of Directors;
- Obtainment of net income for such fiscal year; and
- Achievement of an average percentage (weighted) of at least 80% for target indicators established
by the Board of Directors.
In 2023, the Company provisioned US$591 million referring to PLR for 2023 for Petrobras (US$127 million
for Petrobras, not including our subsidiaries, joint operations or structured entities).
PPP and PRD
The PPP and PRD are programs that seek to recognize the individual effort and performance of employees
in achieving our results.
For the 2022 fiscal year, the PPP was the variable compensation program valid for all our employees. As our
2022 results met all the minimum prerequisites established for such year, in 2023, the Company paid
US$562 million to the employees for Petrobras in relation to the PPP for 2022 (US$521 million to the
employees for Petrobras, not including our subsidiaries, joint operations or structured entities), since the
metrics relating to the Company’s and individual performances were achieved in 2022.
Regarding the 2023 fiscal year, we implemented the PRD, a new variable compensation program that
replaced the PPP for all employees, except for members of the Executive Board, for whom it remained in
force. With the PRD, we reinforce the recognition of individual performance of our employees.
The 2023 fiscal year PRD and PPP will be paid after the results for the year have been calculated, provided
that the following conditions established by the programs are met:
– Declaration and payment of dividends to our shareholders, for such fiscal year, approved by our
Board of Directors; and
– Obtaining net income for the year.
Additionally, the scorecards of the organizational units continue to be considered as input for the
assessment of all employees, which are reflected in the calculation of their variable remuneration, and
include the following items: (i) the results of our main metrics such as Delta Valor Petrobras (which measures
our economic-financial performance based on the value generated by our activities in a given year), IAGEE
and VAZO; and (ii) the scores of specific metrics of each executive scorecard (represented by specific
indicators and strategic initiatives that address economic, environmental and social factors). 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.
For members of the Executive Board that are eligible for PPP and for members of our Management eligible
for PRD, as approved by our Board of Directors and SEST, the variable compensation payments must be
deferred over five years as a long-term incentive. The value of such payments are based on the market value
of our shares without factoring in any option to buy our shares. Consequently, payments to the members
of our Executive Board and Management must be carried out as follows:
– 60% of the value of the compensation must be paid in a cash installment while 40% of the balance
must be settled in four annual deferred installments, the value of which must 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 members of our Executive Board and Management may exercise the right to receive deferred
installments after the established grace periods have been fulfilled.
PETROBRAS | Annual Report and Form 20-F | 2023
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Management and Employees
– The value of each installment must 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.
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 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
We sponsor six post-employment benefit plans, managed by Petros, with pension characteristics:
– Plano Petros do Sistema Petrobras Renegotiated (PPSP-R) – Defined Benefit (DB) type, closed to
new members.
– Plano Petros do Sistema Petrobras Not Renegotiated (PPSP-NR) – Defined Benefit (DB) type, closed
to new members.
– Plano Petros do Sistema Petrobras Renegotiated Pré-70 (PPSP-R Pré-70) – Defined Benefit (DB)
type, closed to new members.
– Plano Petros do Sistema Petrobras Not Renegotiated Pré-70 (PPSP-NR Pré-70) – Defined Benefit
(DB) type, closed to new members.
– Plano Petros -2 (PP-2) – Variable Contribution (VC) type, open to new members.
– Plano Petros-3 (PP-3) – Defined Contribution (DC) type, closed to new members.
Together, these plans cover 96% of our employees, considering that only one plan (PP-2) is currently open
to new members with optional membership.
PETROBRAS | Annual Report and Form 20-F | 2023
224
Management and 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 (named “New DEP” at
its launch, now named “DEP 2018”) of the PPSP-Renegotiated and PPSP-Not Renegotiated,
managed by Petros and in compliance with Brazilian social security legislation.
The DEP 2018, 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 allowed the deficit to be
refinanced for a new term, throughout the life of the plans.
In November 2022, we and Petros approved the plan to resolve the deficit registered by the PPSP-
Renegotiated in 2021 (“DEP 2021”), which was submitted to and approved by SEST. The collection
of extraordinary contributions started in April 2023, in addition to the ordinary and extraordinary
contributions already provided for in the plan.
In December 2022, the actuarial result pointed to a deficit of US$0.29 billion for the PPSP-Not
Renegotiated Pension Plan. The main cause of the deficit, as explained by Petros, was the
profitability of investments which performed below the actuarial target, due to the adverse general
economic situation, mainly impacting stocks and other assets.
Therefore, in accordance with current legislation, in 2023 Petros began the process of creating the
Deficit Equalization Plan 2022 of PPSP-Not Renegotiated (“DEP-2022”), which was approved by the
Petrobras Board of Directors and by SEST, so the extraordinary contributions can be collected from
April 2024.
Pursuant to Brazilian social security legislation, every deficit of each PPSP Plan must be balanced
equally between the sponsors (Petrobras, Vibra and Petros) and participants, retirees, and/or
pensioners.
The remaining balance related to Petrobras to be settled by the extraordinary contributions
contracted through the DEP 2018, DEP 2021 and DEP 2022 (together “Deficit Equalization Plans”)
in the PPSP-Renegotiated and PPSP-Not Renegotiated plans was US$4.3 billion as of December 31,
2023, as recorded in Petros plans balance sheets at present value.
For more information on the Deficit Equalization Plans, see Note 18.3 to our audited consolidated
financial statements.
PETROBRAS | Annual Report and Form 20-F | 2023
225
The table below presents the benefits paid, contributions made, and outstanding pension liabilities for the
years ended December 31, 2023, 2022, and 2021:
Management and Employees
Total benefits paid – pension plans
Total contributions – pension plans(1)
Net actuarial liabilities(2)
US$ million
2022
1,539
1,945
5,433
2023
1,639
746
6,720
2021
1,336
2,100
5,395
(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 4.3 and
18 to our audited consolidated financial statements.
Health and Pharmacy Benefit Plan
We offer a supplementary health care plan, the “AMS” or “Saúde Petrobras”, which provides for medical,
hospital and dental care services to all active and retired employees and their dependents. In 2023, we paid
60% of the health care costs and our employees (active and retired) paid 40%. 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 with a unit cost over R$150.00 and drugs of any value
used in the treatment of certain non-transmissible chronic diseases. By choosing to use the Benefício
Farmácia, the beneficiary must incur costs as determined by the co-participation system.
The table below shows the post-employment benefits paid and outstanding medical liabilities for the years
ended December 31, 2023, 2022 and 2021:
Total benefits paid – medical plan(1)
Net actuarial liabilities(2)
(1) Composed of Saúde Petrobras and Benefício Farmácia amounts.
(2) Unfunded medical plan obligations.
US$ million
2023
413
9,662
2022
384
2021
309
5,813
4,485
For more information on our employee benefits, see Notes 4.3 and 18 to our audited consolidated financial
statements and “Risks – Risk Factors” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
226
Compliance and Internal
Controls
[AM_ACTIVE 405510973_17]
Compliance and Internal Controls
Compliance
Ethical principles guide our business and our relations with third parties. Our activities follow clearly
articulated policies, guidelines, 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.
Our activities are subject to national and international laws aimed at preventing fraud and corruption,
money laundering, trade sanctions, conflicts of interest and antitrust violations, such as the Brazilian Anti-
Corruption Law (Law 12,846/13), the U.S. Foreign Corrupt Practices Act (FCPA), and the UK Bribery Act.
In addition, we continually work to strengthen our integrity system. We have a Code of Ethical Conduct that
provides guidance on the behavior that we require from our workforce and counterparties. The Code of
Ethical Conduct provides tools for self-reflection to help employees to comply with our ethical principles
while performing their duties.
In order to further integrate and strengthen our integrity system, we highlight our corporate Compliance
Policy, our Ethical Conduct Guide for Suppliers and our Compliance Program.
Also, our Competitive Compliance Guideline guides our workforce on the rules that regulate free
competition in order to prevent and mitigate violations of Law No. 12,529/2011 (the Competition Defense
Law) and provide mechanisms to detect and address any instances of anticompetitive practices.
To ensure an ethical environment for our business, we work (i) to promote a culture of integrity; (ii) prevent,
detect and correct incidents of fraud, corruption, conflicts of interest and money laundering, harassment
and discrimination; and (iii) manage 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 Executive Officers and our Board of Directors.
In 2023, we launched an e-learning course on Preventing and Combating Discrimination, Moral Harassment
and Sexual Violence. The course provided concepts and information about the structure that we developed
to handle cases of discrimination, harassment, or sexual violence. It also included preventive mechanisms
and guidance for victims or those aware of such incidents. This training is available to the entire workforce
and is mandatory for all company employees.
This e-learning course reinforces our commitment to promoting a work culture based on mutual respect
and free from violence and harassment. It aims to raise awareness among employees about everyone’s
responsibility in preventing harassment and discrimination. As of December 31, 2023, 39,235 employees,
representing 97.6% of our own personnel, completed this e-learning course.
In addition to the e-learning course, we also launched Corporate Guidelines on Preventing and Combating
Discrimination, Moral Harassment and Sexual Violence. These guidelines comprise a set of integrated
actions based on the Petrobras Compliance Program and the Petrobras Program against Sexual Violence
according to the following pillars: prevention, sheltering, detection, remediation, and transparency.
Attached to the guidelines there is a booklet with the same theme, accessible to the entire company.
In 2023, we also conducted face-to-face and online lectures on the topic of “Prevention and Combating of
Discrimination, Moral Harassment and Sexual Violence” for employees and leadership. We conducted 88
lectures, reaching an audience of over 13,000 professionals in administrative areas and operational units.
PETROBRAS | Annual Report and Form 20-F | 2023
228
Compliance and Internal Controls
In 2023, 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;
– Brazilian anti-corruption law;
– Compliance, internal controls and related party transactions;
– Disclosure of Information to the Market, Information and Securities Trading including blackout
period; and
– Risk management.
Code of Ethical Conduct
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;
–
– Value addition.
Integrity, transparency and meritocracy; and
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.
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.
The six principles that guide our compliance actions are:
– All of our activities and relations with our stakeholders must be based on ethics, integrity, and
transparency, in compliance with the applicable national and international standards, to provide a
safe environment for decision making.
– Our priority is the active prevention of any violations of rules and regulations in order to mitigate
compliance risks.
– All indications of misconduct and harmful actions must be investigated and measures shall be
adopted for the immediate interruption and repair of any damage to us, and proportional
consequences will be imposed on those responsible.
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Compliance and Internal Controls
– Retaliation against whistleblowers is forbidden and we ensure privacy, confidentiality, and
institutional protection to such persons.
– Our directors and managers are responsible for unequivocally and continuously supporting the
development and improvement of our culture of integrity.
– We must encourage an increasingly ethical business environment with integrity and transparency,
setting a positive example for our stakeholders.
Ethical Conduct Guide for Suppliers
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. It
also reaffirms our zero tolerance for 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 document also reinforces that suppliers must promote decent
and safe working conditions for their employees, prevent and combat moral and sexual harassment and
discrimination, combat child and slavery labor and respect the environment. Additionally, it determines that
suppliers must promote diversity, gender and racial equality and the inclusion of people with disabilities
and 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 evaluate
suppliers’ compliance through the performance management system, as reinforced in our Quality Guide for
Suppliers which can be 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.
Petrobras Compliance Program
The Petrobras Compliance Program is the set of mechanisms intended to prevent, detect and remedy any
misconduct and harmful acts carried out against us, including acts related to fraud and corruption, money
laundering, moral and sexual harassment, discrimination and conflicts of interest and antitrust violations.
The Governance and Compliance Officer is responsible for both the Petrobras Compliance Program and our
integrity practices.
The Petrobras Compliance Program is intended for our various stakeholders, including senior management,
employees, subsidiaries and affiliates, clients, suppliers, investors, partners, public authorities and all those
who relate with or represent our interests in our operations.
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 Executive Officers approve each new
appointment.
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Compliance and Internal Controls
Anti-Money Laundering and Sanctions
Our Guidelines for the Anti-Money Laundering and Sanctions, as approved by our Chief Governance &
Compliance Officer, are composed of specific requirements to minimize the risk of money laundering and
violations of sanctions regulations.
The principles that guide our sanctions policy are:
– Before initiating a transaction, our organizational areas should screen the counterparty against the
Sanctions List made available by Compliance.
–
If the organizational area identifies that the intended counterparty is sanctioned, Compliance must
be consulted regarding the applicability and restrictions of the sanction before moving forward with
the transaction. Compliance with the support of our Legal department, advises the area on how to
proceed.
– Training and tools are made available to organizational areas to ensure compliance with applicable
sanctions regulations.
– Members of our senior management, managers and workforce must report irregularities related to
money laundering and sanctions violations through our whistleblower channel.
– We monitor transactions more exposed to risk of money laundering or sanctions and take
appropriate measures when needed.
Below is the list of sanctions we and our subsidiaries must observe:
Country
Organization
List
United States
Trade Department
Consolidated Screening List
Office of Foreign Assets Control
Non-SDN – Non-Specially Designated
Nationals
Office of Foreign Assets Control
SDN – Specially Designated Nationals
System for Award Management
Excluded Parties List
European Union
European External Action Service
United Nations
United Nations Security Council
World Bank
World Bank
Consolidated List of Persons, Groups and
Entities Subject to EU Financial Sanctions
United Nations Security Council Consolidated
List
Debarred & Cross-Debarred Firms &
Individuals / Other Sanctions
United Kingdom
Office of Financial Sanctions
Implementation
Consolidated List of Financial Sanction
Targets
Canada
Global Affairs Canada
France
Direction Générale du Trésor
Consolidated Canadian Autonomous
Sanctions List
Liste Unique de Gels de la Direction Générale
du Trésor
Switzerland
State Secretariat for Economic Affairs –
SECO
Sanctions de la Suisse
United Arab Emirates
The Committee for Goods and Materials
Subject to Import and Export – CGMSIEC
UAE National List of Terrorist Individuals and
Entities
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Compliance and Internal Controls
In 2023, we reorganized the structure of the Governance and Compliance Department with the aim of
strengthening and improving its processes. We highlight the creation of an area that will act as an internal
affairs department to increase accountability and make the company's application process of the Anti-
Corruption Law (Law No. 12,846/13) even more robust.
Another development is the creation of an area that uses advanced technology and data intelligence to
analyze compliance incidents and quickly identify irregularities. In addition, the area is also responsible for
the continuous monitoring of indicators, processes, controls, projects and initiatives, aiming at the constant
improvement of the Integrity System and the achievement of Petrobras' strategic objectives.
In addition, we created a department to deal specifically with complaints related to workplace misconducts
(e.g. sexual violence, moral harassment, retaliation and discrimination).
Changes in organizational structure can be found in our General Organizational Chart, available on our
Investor Relations website (www.petrobras.com.br/ir).
PETROBRAS | Annual Report and Form 20-F | 2023
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Compliance and Internal Controls
Related Party Transactions
In order to comply with Brazilian law, such as Law No. 13,303/16, Decree No. 8,945/16 and CVM regulations,
the annual review of our policy for related party transactions was approved in December 2023. We aim to
foster transparency in our procedures and conduct 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.
Some transactions with related parties must be previously analyzed by our audit committee when they meet
certain criteria set out in our policy.
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 our normal course of business by our audit committee, which are within the scope of
approval of our Board of Directors, the following special procedures apply: (i) such transactions be analyzed
by the audit committee and by the minority committee prior to submission to our Board of Directors, and
(ii) such transactions be approved by two-thirds of the members attending our Board of Directors meeting.
For additional information regarding our outstanding related party transactions as of and for the year-
ended December 31, 2023, see Note 36 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 performed 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 29, 2024, we have not entered into any transaction with the
companies of members of our Board of Directors or our executive officers. 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 Executive Officers – Share Ownership” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
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Compliance and Internal Controls
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 US$17,761 million asset and a US$3,605 million liability with the Brazilian
federal government and other entities under its control as of December 31, 2023.
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, 2023, this receivable amounted to US$278 million. We expect to receive
these amounts by 2027, according to the constitutional amendments of December 2021, which established
limits for disbursements by the Brazilian federal government for each fiscal year.
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 we have taken into consideration market’s best practices
and the conservatism that should guide our investments.
As of December 31, 2023, the balance of securities issued by the Brazilian federal government that have
been directly acquired and held by us amounted to US$1,819 million.
For further information on related party transactions, see Note 36 to our audited consolidated financial
statements.
Transactions with associates
On December 23, 2022, we signed a contract with UEG Araucária S.A. in the amount of US$925 million, for
the sale of 2,150,000 m³/d of interruptible gas, to supply energy generation electricity by UTE Araucária.
The contract expired in 2023.
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Compliance and Internal Controls
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, 2023. 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.
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, 2023 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, 2023, as stated in their report, which is included herein.
Changes in Internal Control over Financial Reporting
There were no significant changes in our internal control over financial reporting during the year ended
December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
PETROBRAS | Annual Report and Form 20-F | 2023
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Compliance and Internal Controls
Ombudsman and Internal Investigations
Our general ombudsman office provides channels for receiving comments from our internal and external
audience, such as claims, requests for information, general requests, suggestions, compliments and
complaints, including reports of discrimination and all kinds of harassment.
In order to receive complaints, we provide a specific whistleblower 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 (fraud, corruption and other matters), violence in the workplace (harassment, discrimination and
retaliation) and sexual violence (such as sexual harassment, pedophilia, etc.) 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).
As a measure to reinforce the integrity system, a new executive management team was created to
exclusively conduct the disciplinary accountability process, including the accountability process for
contracted companies provided for in the Anti-Corruption Law, resulting in the separation of investigation
and accountability practices.
We continue to allocate significant resources to investigating allegations of misconduct and responding
appropriately to investigative findings, and 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. We remain cooperative with the authorities, in an effort to uncover wrongdoing
and hold those responsible accountable.
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 measures aimed at improving
corporate governance, including those related to fraud and corruption.
PETROBRAS | Annual Report and Form 20-F | 2023
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Shareholder Information
[AM_ACTIVE 405510973_17]
Listing
Shareholder Information
Corporate Governance of B3 – Level 2
We are 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 roles 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
– our bylaws provide for arbitration as the dispute resolution method.
For more information about our corporate governance practices, see “Environment, Social and
Governance - Corporate Governance” in this annual report.
PETROBRAS | Annual Report and Form 20-F | 2023
238
Shareholder Information
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) 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, 2023, there were 2,078,009,658 outstanding common shares and 710,021,976 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.
Additionally, our common (XPBR) and preferred (XPBRA) shares have been traded on the LATIBEX, Spain,
since 2002 under ISIN codes BRPETRACNOR9 and BRPETRACNPR6, respectively. The LATIBEX is an
electronic market created in 1999 by the Madrid Stock Exchange in order to enable trading of Euro-
denominated Latin American equity securities.
In the beginning of 2024, our stock value 7 decreased, and as of April 4, 2024, our stock price was US$15.52
(PBR) and US$15.03 (PBR/A). In both 2022 and 2023, our stock outperformed IBOV at B3 and ARCA OIL
(formerly AMEXOIL) at NYSE. In 2021, our stock outperformed IBOV at B3 and underperformed ARCA OIL
(formerly AMEXOIL) at NYSE.
—
7 Source: Bloomberg. The stock values in this paragraph consider the dividend adjustments.
PETROBRAS | Annual Report and Form 20-F | 2023
239
Shareholder Information
PETROBRAS | Annual Report and Form 20-F | 2023
240
Shareholder Information
The following table sets forth information concerning the ownership of our common and preferred shares
as of February 29, 2024, by the Brazilian federal government and certain public sector entities:
Shareholders
Common
Shares
%
Preferred
Shares
Brazilian federal government
3,740,470,811
50.26
-
%
-
Total Shares
%
3,740,470,811
28.67
BNDES
BNDES Participações S.A. –
BNDESPar
All members of our Board of
Directors, Executive Officers
and permanent members of
our Fiscal Council(1)
Others
Total
-
-
-
-
135,248,258
2.41
135,248,258
1.04
900,210,496
16.07
900,210,496
6.90
161,806,937
2.17
71,865
0.00
161,878,802
1.24
3,540,176,394
47.57
4,566,512,169
81.52
8,106,688,563
62.15
7,442,454,142
100.00
5,602,042,788
100.00
13,044,496,930
100.00
(1) Considers CVM criteria which includes the shares owned by a spouse from whom they are not legally or extrajudicially separated, a marriage partner, any
dependents included in their annual income tax return and companies directly or indirectly controlled by them. It does not include the position held by
external members of the Board of Directors' Advisory Committees and alternate members of the Fiscal Council.
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, it is required by law to hold a majority of our voting share. As a result, any change in our
control would require a change in applicable laws. Our Bylaws also provide for rules applicable to a potential
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 1,000,000 shareholders at the B3 and ADR accounts at the NYSE.
PETROBRAS | Annual Report and Form 20-F | 2023
241
TOTAL CAPITAL (1)
(%)
NON-VOTING CAPITAL (1)
(%)
Shareholder Information
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 29, 2024.
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.
PETROBRAS | Annual Report and Form 20-F | 2023
242
Shareholder Information
Purchases of equity securities by the issuer and affiliated purchasers
During the fiscal year ended December 31, 2023, we repurchased our equity securities. A Share
Buyback Program covering preferred shares was approved by the Board of Directors on August 3,
2023. The Program is carried out in the context of the current Shareholder Remuneration Policy, which
was amended and was approved by the Board of Directors on July 28, 2023, providing the possibility
of repurchasing shares as a way to remunerate our shareholders.
Period
Total
number of
preferred
shares
purchased
Average
price
paid per
preferred
share
Total number of
preferred shares
purchased as part of
publicly announced
plans or programs (1)
Maximum number (or
approximate dollar
value) of shares that
may yet be purchased
under the plans or
programs
September 2023
(09.06.2023 – 09.29.2023)
October 2023
(10.02.2023 – 10.24.2023)
November 2023
(11.10.2023 – 11.30.2023)
December 2023
(12.01.2023 – 12.27.2023)
28,735,700
27,596,600
17,479,900
30,251,800
Total
104,064,000
6.87
7.03
7.27
7.16
7.07
28,735,700
129,081,247
27,596,600
101,484,647
17,479,900
84,004,747
30,251,800
53,752,947
104,064,000
53,752,947
(1) On August 3, 2023, our Board of Directors approved a share buyback program, with a maximum term of 12 months (beginning on August
4, 2023 and ending on August 4, 2024), limited to 157,816,947.
Self-Dealing Restrictions
In accordance with our Disclosure of Material Act or Fact Disclosure and Securities Negotiation Policy, the
use of material information not yet disclosed, by any person who has had access to it, for the purpose of
gaining advantage, for himself or for others, through trading in securities, is prohibited.
CVM Resolution 44/21, individually or combined, considers the following situations when characterizing the
use of material information not yet disclosed, by any person who has had access to it, for the purpose of
gaining advantage, for himself or for others, through trading in securities, as illicit act ("Insider
Information"):
–
–
–
I – the person who traded securities has material information not yet disclosed and uses such
information in said trading;
II – direct or indirect controlling shareholders, directors, members of the board of directors and the
fiscal council, and the company itself with access to all material information not yet disclosed and
trades securities issued by the company;
III – the persons listed in item II, as well as those who have a commercial, professional or trust
relationship with the company and, upon having access to material information not yet disclosed,
knows that it is Insider Information;
PETROBRAS | Annual Report and Form 20-F | 2023
243
Shareholder Information
–
IV – a Director who leaves the company with awareness of material information not yet disclosed and
uses this information for trading securities issued by the company within a period of three months
after leaving the company;
– V – information shall be considered material from the moment in which studies or analyzes related
to the matter are initiated, or if it is information about corporate operations such as total or partial
spin-offs, mergers, transformations, or any form of corporate reorganization or business
combination, change in control of the company, including the execution, alteration or termination of
a shareholders' agreement, decision to go private or a change in the trading segment of its securities,
notwithstanding other matters that may also constitute a material fact; and
– VI – information about the request for a judicial or extrajudicial corporate reorganization and filing
for bankruptcy made by the company is considered material information, from the moment in which
studies or analyzes related to these requests are initiated.
Restriction Period
In the period of 15 days before the disclosure of our quarterly information and annual information, with the
exception of the provisions on individual investment/divestment plans in our Policy and in CVM Resolution
44/2021; the company, controlling shareholders, executive officers, members of the Board of Directors, the
Fiscal Council and any bodies with technical or advisory functions, established by a statutory provision, shall
be restricted from trading securities issued by the company, or referenced thereto, regardless if these
individuals have knowledge of the content in the company's quarterly accounting information and the
annual financial statements. The restriction period excludes the day of the disclosure of the financial
statements, however, securities may only be traded on the day of the disclosure after the actual disclosure
has occurred.
This restriction does not apply to:
–
–
–
trading of fixed-income securities, when carried out through operations with joint repurchase
commitments by the seller and resale by the buyer, in which settlement has been predefined for a
date that may be prior to, or on the maturity date, of said operations, with profitability or predefined
remuneration parameters;
operations aimed at fulfilling obligations that were committed before the start of the restriction
period arising from loans of shares, exercise of purchase or sale options by third parties, and forward
purchase and sale agreements; and
trading carried out by financial institutions and legal entities that are part of their economic group,
provided that they are carried out in their normal course of business and in compliance with the
parameters that have been established in the Company’s trading policy.
Also, the restriction does not rely on an assessment if material information exists and is pending disclosure
or on the intention for the trading activity.
The Investor Relations Officer (“IRO”) may, regardless of justification, establish periods in which the
Company and Related Parties may not trade securities issued by Petrobras, its Subsidiaries and Affiliates
(that are publicly traded companies). If this option is executed, the IRO must clearly indicate the initial term
and the final term of the Blackout Period, and the Company and the Related Parties should maintain these
periods confidential. The lack of communication by the IRO regarding the Blackout Period shall not exempt
anyone from complying with the Policy, as well as with the provisions of CVM Resolution 44/21 and other
normative acts of the CVM.
PETROBRAS | Annual Report and Form 20-F | 2023
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Shareholder Information
Exceptions to trading Restrictions
Anyone who has a relationship with a publicly-held company that makes them potentially subject to the
presumptions referred to in § 1 of article 13 of CVM Resolution 44/21 may formalize an individual plan
investment or disinvestment regulating their dealings with Securities issued by the Company or referenced
to them Securities issued by the Company or referenced to them, in order to rule out the applicability of
those presumptions. The individual investment plan will be governed by CVM Resolution 44/21.
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 Corporation Law, Law Nº 13,303/16, in the
Company's Bylaws, in the rules issued by the National Monetary Council, Banco Central do Brasil and the
CVM, as well as in other rules applicable to the operation of the general stock market, in addition to those
contained in the Level 2 Regulation, Arbitration Regulation, Participation Agreement and Level 2 Sanctions
Regulation.
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.
PETROBRAS | Annual Report and Form 20-F | 2023
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Shareholder Information
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. In 2023, our meeting
was held partially virtually (via videoconference), in accordance with CVM Resolution No. 81/2022.
Therefore, shareholders can participate in the meeting through the digital platform we provided or in
person at our headquarters.
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 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% 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;
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– 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.
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 – Risks related to shares and debt securities” 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;
reduce the mandatory distribution of dividends;
– merge into another company or to consolidate with another company;
– participate in a centralized group of companies as defined under Brazilian Corporate Law;
–
– 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.
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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
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 us in the cases specified in Brazilian Corporate Law.
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Shareholder Remuneration
Payment of Dividends, Interest on Capital and Buyback
Payments to our shareholders are subject to the provisions of Brazilian Corporate Law and applicable local
laws and regulations, our Bylaws and our shareholder remuneration policy.
Our revised shareholder remuneration policy, approved on July 28, 2023, provides for the payment of
dividends and/or interest on capital (juros sobre capital próprio) and/or the repurchase of shares issued by
Petrobras (“buyback”).
The buyback, when it occurs, must be carried out through a structured program approved by the Board of
Directors. The payment of dividends and/or interest on capital for each fiscal year must be approved by our
shareholders at the annual general meeting of shareholders.
Regarding payment of dividends and/or interest on capital, 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 and/or interest on capital to holders of common shares is subject to the right to dividend
distributions held by the holders of preferred shares. In our current Policy we have defined that dividend
distribution payments should be made quarterly.
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.
Our current shareholder remuneration policy provides the following parameters for the distribution of
remuneration, which should be followed in the decisions of the Board of Directors and in the Management
proposals to the Annual General Meeting:
– 1. We established 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 will 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 lower than the maximum debt level defined in the 2024-2028
strategic plan and accumulated positive result, to be verified in the last quarterly result calculated
and approved by the Board of Directors, we shall distribute to our shareholders 45% of the free cash
flow, 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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Shareholders Remuneration: 45% of Free Cash Flow
Free cash flow: operating cash flow minus acquisitions of property, plant and equipment, intangible
assets and equity interests.
Operating cash flow: net funds generated by operating activities shown in the consolidated
statement of cash flows.
Acquisitions of PP&E and intangible assets and equity interests: payments made by us for the
acquisition of property, plant and equipment, intangible assets and equity interests, presented in
the statement of consolidated cash flows. Acquisitions of equity interest include contributions,
advances for future capital increase and acquisition and/or increase in the percentage of interest,
including in subsidiaries. Receipts and/or payments from other transactions of investment and
financing activities presented in the consolidated statement of cash flows will not be added, as well
as payments related to repurchases of shares issued by us.
– 3. We may, in exceptional cases, distribute extraordinary remuneration to shareholders, exceeding
the mandatory legal minimum dividend and/or the amounts established in items 1 and 2, provided
that our financial sustainability is preserved.
Furthermore, we may exceptionally approve the distribution of remuneration to shareholders even in the
event of no net income, as long as the rules regarding dividends set forth in Law No. 6,404/76 are complied
with and the criteria defined in the shareholder remuneration policy are observed. In all distribution
scenarios, the remuneration to shareholders must follow the rules set forth in Law 6,404/76 (e.g., Articles
201 to 205: mandatory dividend; dividends on preferred shares; interim dividends; payment of dividends) in
our Bylaws, and must not compromise our short, medium, and long-term financial sustainability.
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 distribution of remuneration, our shareholders must also consider the following:
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– 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 – 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 amount is subject to financial charges at the SELIC rate from
the date of the payment until the end of each fiscal year.
– 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.
Our total distributions to shareholders for 2023 are expected to be US$15,489 million and will be voted on
at our shareholder’s annual general meeting to be held in April 2024. For further information, see Note 34.5
to our audited consolidated financial statements.
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 shareholder remuneration 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
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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 Executive Officers are required
to recommend how to allocate net income for the preceding fiscal year. The General Shareholder’s’ Meeting
may disagree with such recommendation and decide for other allocations, such as for the allocation to the
statutory reserves. 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 income, 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.
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. Additionally, we may allocate
up to 70% of the adjusted net income for the year to a capital remuneration reserve, in compliance with
article 202 of the Brazilian Corporation Law and the Shareholder Remuneration Policy, up to the limit of the
share capital. The purpose of the reserve is to ensure resources for the payment of dividends, interest on
equity, or other forms of remuneration to shareholders provided for by law, interim or intermediate
dividends, share buy-backs authorized by law, absorption of losses and incorporation into share capital. The
accumulated balance of the two reserves, together with the balance of the other profit reserves, in
accordance with art. 199 of the Brazilian Corporation Law, may not exceed the share capital.
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.
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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.
ADS Holders
CMN Resolution No. 4,373 allows Brazilian companies to issue depositary receipts in foreign exchange
markets. CVM Resolution 13 is the rule that currently deals with the registration of these investors with the
CVM. 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 programs. 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 – Risks related to shares and debt securities” and “Legal and
Tax – Tax – Taxation Relating to the ADSs and our 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.
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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
Shareholder Information
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)
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.
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[AM_ACTIVE 405510973_17]
Legal and Tax
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.
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 Basin and the Santos
Basin 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 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
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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 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 bn boe. The initial
contract price for our rights under the Transfer of Rights Agreement was US$42.5 billion (R$74.8 billion),
which was paid in full on September 1, 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.
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 commissions and resulted in a credit of US$9.058 billion in our favor, that was fully paid in December
2019. Additionally, 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.
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Refining, Transportation & Marketing
Regarding oil refining, by the Resolution No. 852/2021, the ANP requires a specific notification before
starting the construction of a new process unit, product treatment unit and/or ancillary unit of an oil
refinery and a specific authorization for operation of each of the process units, product treatment units and
ancillary units of an oil refinery (ANP Resolution No. 852/2021 replaced ANP Resolution No. 16/2010 on
September 23, 2021). 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.
Regarding fuel storage, the ANP, through Resolution No. 868/2022, established that information must be
provided both daily and monthly by us and other agents.
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 2019, we signed a commitment with CADE (termo de cessação de conduta) that consolidates our
understanding on the divestment of refining assets in Brazil. In November 2023, we formally requested a
review of the agreement signed with CADE in line with the Strategic Plan. The negotiation for a new
commitment is ongoing. For more information on our agreement with CADE regarding our divestments in
refining assets, see “Risks – Risk Factors – 6.b)” and “Portfolio Management” in this annual report.
In October 2021, in accordance with the guidelines established by the CNPE in Resolution No. 14/2020, the
ANP established 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.
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Gas and Power
Natural Gas Laws
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, 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 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 Brazilian federal government in mid 2019.
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.
In 2022 the CNPE published Resolution No. 3, establishing (i) the strategic guidelines for the new natural
gas market, (ii) the improvement of energy policies related to free competition in this market, (iii) the
fundamentals of the transition period, and (iv) the revocation, among others, of the CNPE Resolution No.
4/2019.
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.
In August 2023, the ANP published the 3rd update of its regulatory agenda for the years 2022-2023. For
more
https://www.gov.br/anp/pt-br/acesso-a-informacao/acoes-e-
programas/agenda-regulatoria.
information
see:
In November 2023, ANP published Resolution ANP No. 961/2023, with a specific revision of Resolutions ANP
No. 51/2013 and No. 11/2016, which regulate, respectively, the loading activity and natural gas
transportation service, in order to adapt and simplify the process of offering and contracting firm
transportation capacity in accordance with the new natural gas legal framework. With this publication, it
became possible to contract capacity in the transportation systems directly through the Capacity Offer
Portal without the need for a previous public call.
In July 2019, we signed a commitment with CADE (termo de cessação de conduta) which consolidates the
understandings between the parties on the promotion of competition in the natural gas sector in Brazil,
including the sale of equity participation in companies operating in this sector. In November 2023, we
formally requested a review of the agreement signed with CADE in line with the Strategic Plan. The
negotiation for a new commitment is ongoing. For more information on our agreement with CADE, see “Our
Business – Portfolio Management” and “Risks—Risk Factors—6.b)” 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 & Marketing” in this annual
report.
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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 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 timeframes defined with Ibama.
A new regional plan is being designed by Ibama related to the social impact of the petroleum chain. We are
already monitoring vessels, aircraft, workforce, inputs and wastes transport as the first part of this
macroplan.
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:
requirements to fund reclamation and environmental projects;
fines;
–
– partial or total suspension of activities;
–
–
– closing of establishments or operations; and
–
forfeiture or restriction of tax incentives or benefits;
forfeiture or suspension of participation in credit lines with official credit establishments.
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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
Executive Offices and the Board of Directors.
The exceptions are the issuance of public debt in the capital markets and collateralized debt obligations
and, specially for 2024, the issuance of unsecured debentures, which requires the approval of our Executive
Officers, within the parameters established by our Board of Directors, and the issuance of secured
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.
See “Risks – Risk Factors – 2.a) Our controlling shareholder may pursue certain objectives that may differ
from those of certain minority shareholders, or that may affect our long-term strategy” in this annual report.
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.
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 Contracts (Contratos de Partilha de Produção)
First Production Sharing Contract – First 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 (with a 10% interest) and CNOOC (with a 10% interest) (the “Libra Consortium”), entered
into a production sharing contract 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 Contract”). Under the First Production Sharing Contract, 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 Contract, see
Exhibit 2.18 to this annual report.
Second and Third Production Sharing Contracts – Second and Third Production Sharing
Bidding Rounds
In 2017, we acquired, in partnership with other international oil companies, three offshore blocks: (i) Entorno
de Sapinhoá; (ii) Peroba; and (iii) Alto de Cabo Frio Central, in the second and third bidding rounds under the
production sharing system held by the ANP. We are the operator of these blocks (“Second and Third
Production Sharing Contracts”). In January 2018, together with our partners, the ANP, PPSA and the
Brazilian federal government, we signed the Second and Third Production Sharing Contracts 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.
Fourth and Fifth Production Sharing Contracts – Fourth and Fifth 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 Contracts” and, together with the First
Production Sharing Contract and the Second and Third Production Sharing Contracts, the “Production
Sharing Contracts”). 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.” 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 contract.
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Sixth Production Sharing Contract and First Transfer of Rights Surplus Production Sharing
Contracts – Sixth Production Sharing Bidding Round and First 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 another
international company, the Aram block, and we will be the operator of such block. The resulting three
production-sharing contracts 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 contracts, 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 compensation, the minimum exploratory program and the local content commitments.
Second 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
contracts were signed on April 27, 2022 and we will be the operator of these blocks under the production-
sharing regime. According to the relevant production-sharing contracts, 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.
Basic Terms:
Operating committee. The Production Sharing Contract 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 Contracts.
Risks, Costs and Compensation. All exploration, development and production activities under the
Production Sharing Contracts 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 Contracts.
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 Contracts.
Duration:
The term of the Production Sharing Contracts is 35 years.
Phases:
Our activities under the Production Sharing Contracts 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 Contracts 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 Contracts.
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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 Contracts. 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 Contracts. 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 Contracts 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.
In compliance with regulatory requirements, the unitization agreements of the shared reservoirs of Atapu
and Sépia were signed on April 27, 2022. As a result, we are the operator of the Units.
Environmental:
We are required to preserve the environment and protect the ecosystem in the area subject to the
Production Sharing Contracts 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 Contracts 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 Contracts.
If we fail to comply with the Brazilian content obligations, we may be subject to fines imposed by the ANP.
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 Contracts 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 Contracts 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 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
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termination may be complete or partial) and (vi) any other basis for termination described in the Production
Sharing Contracts.
Any breach of the Production Sharing Contracts 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 Contracts. If any breach of the Production Sharing Contracts 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 Contracts, 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 United Nations Commission On International Trade Law (“UNCITRAL”), or by the consent
of the parties in interest, to the International Chamber of Commerce (“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, under the
Brazilian Attorney General's Office (Advocacia-Geral da União). 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 Contracts are governed by Brazilian law.
1st cycle of the Permanent Offer under the Production Sharing Regime
On December 16, 2022, in the 1st cycle of the Permanent Offer under the Production Sharing Regime, we
acquired, together with other international companies, the exploration and production rights in the Água
Marinha and Sudoeste de Sagitário blocks. We also acquired 100% of the rights in the Norte de Brava block.
The resulting production-sharing contracts were all signed on May 31, 2023 and we will be the operator of
these blocks. The only criteria adopted by the ANP to define the winning bidder was the amount of profit
oil to the Brazilian federal government.
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 Contracts of the latest ANP bid rounds.
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Legal Proceedings
We are currently party to numerous legal proceedings mainly related to civil tax, labor and environmental
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. We are also party to other claims related to administrative, corporate and criminal matters.
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 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 cooperating 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, 2023 was US$1,727 million (most recently, US$109 million, US$96 million and US$235 million
in 2023, 2022 and 2021, respectively).
Since 2021, Brazil’s higher courts have been deciding cases brought by criminal defendants in Lava Jato
proceedings aimed at nullifying criminal convictions relating to the investigation. As a result, some criminal
convictions have been nullified. Other 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 - 1.t). We may
face additional proceedings related to the Lava Jato investigation” and Note 22 to our audited consolidated
financial statements.
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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), PGF, our former joint venture PO&G Petrobras Oil & Gas B.V. (PO&G)
and some of our former officers.
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 declaratory relief rulings from the Dutch court.
On May 26, 2021, after a number of prior interim judgments in which the Dutch Court accepted jurisdiction
over most of the seven claims of the Foundation, the Dutch Court decided that the collective action shall
continue and that the arbitration clause of our bylaws does not bar our shareholders from access to the
Dutch courts and that the Foundation can represent the interests of these shareholders. Notwithstanding
the foregoing, the Dutch 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 scope of the collective
action.
In 2021 and 2022, the parties presented their written submissions regarding the merits of the case. The
Dutch Court scheduled hearings for the oral arguments, which occurred on January 17 and 24, 2023.
On July 26, 2023, the Dutch Court issued an intermediary decision on the merits, ordering the production of
additional evidence by the parties. In addition, the Dutch Court expressed in advance their decision on the
merits of certain allegations, among which include: (i) the allegations made against PIB BV, PO&G and
certain former members of the Company’s management will be rejected by the Dutch Court, (ii) the Dutch
Court declared that Petrobras and the PGF acted unlawfully in relation to their investors, although the Court
expressed it does not consider itself sufficiently informed about relevant aspects of Brazilian, Argentine
and Luxembourger laws to definitively decide on the merits of the claim, and (iii) the claims under Spanish
law have expired.
We confirm that the Foundation cannot claim compensation under the collective action, because the
compensation claim depends not only on a favorable outcome of the collective action but also on the
outcome of possible subsequent actions to be filed by or on behalf of the investors by the Foundation itself.
In the event such subsequent actions are filed, Petrobras will be able to offer all the defenses already
presented in the collective action and others that it deems appropriate, including in relation to the
occurrence and quantification of any damages, which will have to be proven. This collective action involves
complex issues that are subject to substantial uncertainties and depend on a number of factors such as the
scope of the arbitration clause in the standing of the Foundation as the alleged representative of the
investors' interests, the timing of court decisions and rulings by the court on key issues, possible appeal
and Supreme Court appeal proceedings, and the fact that the Foundation only seeks declaratory relief in
this collective action.
Based on the assessments of our advisors, we consider that there are not enough indicative elements to
qualify the universe of potential beneficiaries of any final decision unfavorable to Petrobras' interests, nor
to quantify the damages allegedly compensable.
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. The Foundation is not able to demand compensation for
damages.
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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 maintain that
we are a victim of the corruption scheme uncovered by the Lava Jato investigation and aim to prove this
before the Dutch Court.
We continue to deny the allegations presented by the Foundation and will continue 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.
These arbitrations do not have 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 that
indicated our liability, but did not determine our payment of amounts, nor did it end the procedure, was
issued. This arbitration is confidential, as well as the others in progress, and the partial award represented
only the position of the three arbitrators of such arbitration panel and was 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 contained serious flaws and improprieties. On November 10, 2020, the first level
judge of Rio de Janeiro state court declared the partial award null. The Rio de Janeiro state court’s decision
after the appeal has not yet been released. In compliance with CAM rules, the cases are 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.
Arbitration and Collective Action in Argentina
In 2018, we were served with an arbitral claim filed by Consumidores Financieros Asociación Civil para su
Defensa, currently named Consumidores Damnificados Asociación Civil, (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 which denied the appeal, and the Association filed a new appeal to the Argentine Supreme
Court, which was also denied. As a result, the arbitration was sent to the Arbitration Court. This arbitration
concerns Petrobras' liability for an alleged loss of market value of Petrobras' shares in Argentina, as a result
of the Lava Jato Operation. We are unable to provide a reliable estimate of the potential loss in this
arbitration.
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At the same time, the Association also filed a class action before the Civil and Commercial Court of Buenos
Aires, Argentina, against us, which we became aware of on April 10, 2023. The Association claims Petrobras
bears responsibility for an alleged loss of market value of its securities in Argentina, as a result of
allegations made within the scope of the Lava Jato Operation and its effects on the Company's financial
statements prior to 2015. We have presented our defense on August 30, 2023. We deny such allegations
and will vigorously defend ourselves against the accusations made by the author of the collective action
proceeding. We are unable to provide a reliable estimate of the potential loss in this proceeding.
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 the Association, before the Judicial
Commercial Courts (Judicial Commercial Claim), pursuant to provisions of Argentine capital market
law. 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 and merit
defenses before the criminal court, but the Criminal Economic Court No. 2 has not yet rendered a
decision.
– Criminal action alleging fraudulent offer of securities aggravated by allegedly having stated false
data in our financial statements issued in 2015. We have filed preliminary defense on the merits,
which has not yet been considered by the judge, in addition to procedural defenses that are currently
the subject of appeals in the appellate courts of the Argentine justice. On October 21, 2021, after an
appeal by the Association, the Court of Appeals revoked the lower court decision that had recognized
our immunity from jurisdiction and recommended that the lower court take steps to certify whether
we could be considered criminally immune in Argentina for further reassessment of the issue. We
appealed this decision before the Court of Cassation, and our appeal was denied. After the lower
court denied our immunity from jurisdiction, we appealed to the Court of Appeals. On December 27,
2022, the Court again considered the first instance decision to be premature, determining that a
third decision be issued. On May 30, 2023, the lower court denied the recognition of our immunity
from jurisdiction. We filed an appeal against this decision, which is still pending judgment. On
another procedural front, on September 14, 2022, the decision that had recognized that the
Association could not act as a representative of financial consumers was reformed by the Court of
Cassation after an appeal by the Association. On November 2, 2022, we have filed an appeal against
this decision before the Argentine Supreme Court, which is still pending judgment. This criminal
action is pending before the Criminal Economic Court No. 2 of the city of Buenos Aires.
Sete Brasil’s Investor Claim and Mediation Procedure
We are currently a party to a lawsuit in the District Court for the District of Columbia in Washington, D.C.
(the “D.C. District Court”) filed by EIG in 2016, 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 D.C. 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 case between the parties. During 2020 and 2021, the parties engaged in extensive fact and expert
Discovery, and filed motions for summary judgment.
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On August 8, 2022, the D.C. District Court issued a ruling holding us liable for the plaintiffs’ claims but denied
the plaintiffs’ summary judgment motion with respect to damages, and any award of damages on these
claims will have to be proven by EIG at trial. In the same ruling, the D.C. District Court denied our motion for
summary judgment to dismiss all of the plaintiffs' claims due to our immunity from jurisdiction and deferred
ruling on two procedural issues. On August 18, 2022, we filed a notice of appeal to inform the Court that we
intend to appeal the denial of our motion to dismiss.
On August 26, 2022, we requested a stay of the lawsuit until the judgment of the aforementioned appeal,
and the stay was granted by the judge on October 26, 2022.
An oral argument took place on October 17, 2023 before the appellate judges at the United States Court of
Appeals for the District of Columbia Circuit. We are currently awaiting a decision about the appeal filed by
us.
In another motion filed by EIG, on August 26, 2022, the District Court of Amsterdam granted an attachment
order against certain of our assets in the Netherlands. Leave to make such pre-judgement attachments was
granted by the Amsterdam District Court on a summary judgment basis and serves to guarantee the
satisfaction of EIG's claims in the aforementioned U.S. proceedings. For the sole purpose of granting leave
to make these attachments, the Amsterdam District Court estimated the claims of EIG at US$297.2 million
in total, although the D.C. District Court ruled that any award of damages on these claims will have to be
proven by EIG at trial as set out above. There is some debate on the scope of assets attached by EIG but
there are no pending proceedings by EIG in the Netherlands. Such pre-judgement attachments do not
prevent us and our Dutch subsidiaries from fulfilling obligations towards third parties.
We were also a party to arbitrations in Brazil filed by investors of Sete Brasil. One of them was concluded in
2017 and the other arbitrations were finished in 2020. In 2017 and 2020, two favorable arbitral awards were
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. The terms of the new eventual agreement were submitted for analysis by
internal governance.
We no longer hold any direct or indirect equity in the companies of the Sete Brasil Group.
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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 and proceedings 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, and our divestments. On June 27,
2018, an
in Direct
injunction was granted by Supreme Court Minister Ricardo Lewandowski
Unconstitutionality Action – ADI 5624 MC/DF, which presumably could affect our divestments. 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. Although these actions and proceedings are still ongoing before the
Supreme Court, currently there are no decisions preventing the divestment of assets and controlled
affiliates or finding our divestments unconstitutional.
Further, we highlight that 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 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, which is an object of TC-002.273/2022-5. Our divestment
projects were reviewed and forwarded to TCU under administrative procedure TC-009.508/2019-8 (related
to 2019-2020) and TC-016.559/2021-5 (related to 2021-2022). Recently, TCU has begun the administrative
procedure TC-008.244/2023-5, which intends to evaluate the adherence of the divestment projects in place
during the biennium 2023-2024, according to the divestment methodology. The most up-to-date
methodology took effect on August 12, 2021.
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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.
In 2023, the First Panel of the STF, with a 3 to 1 vote, recognized the validity of the collective bargaining
agreement freely signed between Petrobras and the unions, regarding the calculation methodology for
calculating the remuneration of our employees. The judgment was officially published in January 2024.
Following this decision, motions for clarification were submitted. However, in March 2024, these motions
were unanimously dismissed, thereby affirming the original decision.
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.
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 arbitral tribunal recognized its
competence to decide on the unification of such fields. The ANP filed a lawsuit in order to annul the arbitral
award, and, the Federal Court of Rio de Janeiro has allowed the arbitration to continue until the hearing.
In relation to the Baúna and Piracaba arbitration, a judicial injunction is keeping it suspended. We filed an
appeal in the Brazilian Superior Court (“STJ”).
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 suspension of the arbitration was
recently reverted by BM-S-11 Consortium in Brazilian Superior Court. BM-S-11 filled a submission in order
to allow the continuity of the arbitration.
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Petros
Since 2013, lawsuits classified as “Petros Class Actions” were filed by unions and associations related to
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 i) payment of contributions for a reinstated
employee (which was settled by an agreement), ii) payment of employer contributions for increased judicial
benefits and iii) 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 and we also filed an action for
accounting due to agreements (Convênio PETROBRAS x PETROS – 1984 e Convênio PETROBRAS x PETROS
– 1986) signed by us and PETROS.
There are no final decisions on the aforementioned proceedings as of the date of this annual report.
Natural Gas Distributors
Since December 2021, 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 some cases, judges granted the injunction
to maintain the previous contracts’ prices. We were able to execute agreements to resolve the arbitrations
and lawsuits, except in two cases, one of which is suspended in order to allow the parties to seek an
agreement.
Environmental
Ibama issued fines as a result of a leak from the OSPAR oil pipeline in Paraná State in July 2000. After the
administrative process, there was a court proceeding, and the current decision was unfavorable to us. We
appealed and decision on our appeal to the Superior Court is pending.
For further information on our material legal proceedings, see Note 19 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 19 to our audited consolidated financial statements.
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Tax
Tax Strategy and Effect of Taxes on Our Income
In January 2023, our Board of Directors approved a Tax Policy, in line with the continuous improvement of
our governance, establishing principles and guidelines.
Our Tax Policy aims to comply with the tax legislation of Brazil and of the countries where we operate,
defining our strategy based on the technical interpretation of the rules, standards and processes, aligned
with the business purpose and our tax risk management. We assume the commitment of not holding equity
interests in low-tax jurisdictions, as well as observing the transfer pricing rules provided for in Brazil and in
the countries where we operate, in relation to all transactions with related or unrelated parties, when
required by law.
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 and other public authorities in an ethical and transparent manner, based on
mutual respect, cooperation and in compliance with the Petrobras’ Code of Ethical Conduct. Considering
that we are the largest contributors in Brazil, our operations can result in various effects on tax collection
at the federal, state, and municipal levels, as well as on government take applicable to the production of oil
and natural gas.
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.
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 (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 “Risk Factors -
2.a) Our controlling shareholder may pursue certain objectives that may differ from those of certain minority
shareholders, or that may affect our long-term strategy” in this annual report.
In December 2023, Constitutional Amendment (EC) nº 132/2023 was enacted, establishing the Tax Reform
on consumption, to be implemented from 2026.
As main measures, the EC created the Contribution on Goods and Services (CBS) and the Tax on Goods and
Services (IBS) replacing the PIS/Pasep and COFINS contributions, the Tax on Operations relating to the
Circulation of Goods and on the Provision of Services Interstate and Intermunicipal Transport and
Communication (ICMS) and the Service Tax (ISS). Furthermore, the EC also created the Selective Tax (IS).
The implementation of these new taxes requires the promulgation of complementary laws and other legal
regulations.
The transition to CBS will begin in 2026, with its definitive implementation in 2027, when PIS/Pasep and
COFINS contributions will be extinguished. In the case of IBS, the transition period will be longer, also
starting in 2026, but with the termination of ICMS and ISS only in 2033.
IS collection will begin in 2027 when most industrialized products will be exempt from the Tax on
Industrialized Products (IPI). The IPI will not be extinguished, but it will not be applied cumulatively with the
Selective Tax.
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Changes to the corporate income tax laws in certain countries as of 2022 may impact our activities and
results. As a reference, we perform our activities through the implementation of Pillar II in target-countries
that follow the OECD Guidelines (such as USA, the Netherlands, and Spain). In the case of the United States,
the Inflation Reduction Act of 2022 introduced a Corporate Alternative Minimum Tax (CAMT) of 15% of the
“adjusted financial statement income” effective for tax years beginning in 2023. In both Pillar II and CAMT,
the countries are seeking a minimum effective tax rate of 15% on the generated profits before tax. In Brazil,
we emphasize the recent changes in the transfer price legislation brought by the Provisional Executive
Order No. 1,152, published on December 29, 2022, converted in Law No. 14.596 published on June 14, 2023.
For further information regarding our Tax Policy or our tax collection disclosed in our Tax Report, please
visit our website at www.petrobras.com.br/ir.
Government Take in Different Regulatory Regimes
Government take is a financial compensation due to the Brazilian Federal Government, paid by companies
that explore and produce oil and natural gas in Brazilian territory. The collection is made to the National
Treasury Secretariat and the amounts are distributed to the beneficiaries defined by legislation, based on
calculations performed by the ANP. Government take consists of royalties, special participation, signature
bonuses and payment for the occupation or retention of the area. Its objective is to make pecuniary
retribution to society for the exploitation of these nonrenewable resources.
In accordance with Law No. 9,478/1997 and due to the concession contracts entered into with ANP, the
exploration and production activities of oil and natural gas are subject to the payment of the following
government shares:
– Royalties established in the concession contracts at a rate ranging from 5% to 15% of the gross
production revenue based on the reference prices for crude oil or natural gas established by ANP in
its normative acts. When establishing the royalty rates, ANP also considers the geological risks and
expected productivity levels for each concession. Most of our crude oil production currently pays the
maximum royalty rate.
– Special participation at a rate ranging from zero to 40% of the net revenue from the production of
fields that reach high production volumes or profitability, according to the criteria established in the
applicable legislation. The calculation takes into account the gross revenue (oil and gas production
volume multiplied by price) from each production field, based on the reference prices for crude oil or
natural gas established by Decree No. 2,705/1998 and ANP regulatory acts, minus the royalties paid,
exploration investments, operational costs, and applicable depreciation and taxes adjustments. In
2023, payments of this government share were made in 12 of our fields, namely, Barracuda,
Berbigão, Jubarte, Leste do Urucu, Marlim Leste, Marlim Sul, Rio Urucu, Roncador, Sapinhoá, Sururu,
Tartaruga Verde, and Tupi.
– The signing bonus corresponds to the amount paid by the winning bidder upon signing the contract,
which can be pre-defined or offered, subject to the minimum values published in the bidding notices.
– Payment for the retention or occupation of contracted areas for exploration and production, at a
rate established by ANP in the relevant bid notices, based on the size, location, and geological
characteristics of the concession block.
Laws No. 9,478/1997 and No. 12351/2010 also require producers in onshore fields to pay landowners a share
equivalent to a percentage of share ranging from 0.5% to 1.0% of the field's production, at the discretion of
ANP.
Below, we describe how government take works in each of the different regimes of exploration and
production of oil, natural gas, and other fluid hydrocarbons we deal with.
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REGULATORY REGIMES: CONCESSION
– Contracting through bidding process.
– Brazilian federal government awards the exploration right to winning companies.
– Production belongs to the concessionaire.
TRANSFER OF RIGHTS
– Petrobras directly contracted for production.
– Right to produce up to 5 billion barrels of equivalent oil.
PRODUCTION SHARING
– Specific regime for pre-salt areas and others considered strategic.
– Hiring by a bidding process, where the winning companies form a consortium with Pré-Sal Petróleo
S.A (PPSA), representing the Brazilian federal government.
– The largest supply of surplus oil for the Brazilian federal government wins.
– Shared production between the State and the contracted consortium, each one’s share calculated
by discounting the royalties due and all investment and operating expenses (“cost in oil”).
Government Take
Frequency
Concession
Sharing
Transfer of
Rights
Royalties
Monthly
10% on the gross income of the field,
which can be reduced up to 5%
15% on Gross
Revenue from the
field
10% on Gross
Revenue from the
field
Special Participation
Quarterly
Signature Bonus
Upon contract
signature
Retention of Area
Yearly
Rates from zero to 40% (nominal)
on net revenue of fields with high
production
Amount offered by companies in
bidding
Value per Km² defined in the notice
and concession contract (updated
by IGP DI index)
Not applicable
Not applicable
Predefined value
Not applicable
Not applicable
Not applicable
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.
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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.
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.
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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
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 –
Shareholder Remuneration – 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.
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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.
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
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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 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
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 Non-Transparency 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 – 2023), 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
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subject to IOF/Exchange at a 0% 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 0% rate. This 0% 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
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).
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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 – Taxation Relating to the ADSs
and our Common and Preferred Shares” 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
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 beneficial owner 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
The amount of any cash and the value of any property we distribute that is paid out of our current or
accumulated earnings and profits, as determined for U.S. federal income tax purposes, will generally be
includible in taxable income as ordinary dividend income when such distribution is received by the
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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. 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.
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.” Subject to
certain exceptions for short-term and hedged positions, 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 2023 or 2022 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 2024 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.
Subject to generally applicable limitations and conditions, Brazilian withholding tax on dividends with
respect to the shares or ADSs that is paid at the appropriate rate applicable to the U.S. Holder may be
eligible for credit against such U.S. Holder’s U.S. federal income tax liability. These generally applicable
limitations and conditions include new requirements adopted by the IRS in regulations promulgated in
December 2021 and any Brazilian tax will need to satisfy these requirements in order to be eligible to be a
creditable tax for a U.S. Holder. In the case of a U.S. holder that consistently elects to apply a modified
version of these rules under recently issued temporary guidance and complies with specific requirements
set forth in such guidance, the Brazilian tax on dividends will be treated as meeting the new requirements
and therefore as a creditable tax. In the case of all other U.S. Holders, the application of these requirements
to the Brazilian tax on dividends is uncertain and we have not determined whether these requirements have
been met. If the Brazilian dividend tax is not a creditable tax or the U.S. Holder does not elect to claim a
foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may
be able to deduct the Brazilian tax in computing such U.S. Holder’s taxable income for U.S. federal income
tax purposes. Dividend distributions will constitute income from sources without the United States and, for
U.S. Holders that elect to claim foreign tax credits, generally will constitute “passive category income” for
foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S.
Holder’s particular circumstances and involve the application of complex rules to those circumstances. The
temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing
amendments to the December 2021 regulations and that the temporary guidance can be relied upon until
additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Holders should
consult their own tax advisors regarding the application of these rules to their particular situations.
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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.
A U.S. Holder generally will not be entitled to credit any Brazilian tax imposed on the sale or other
disposition of the shares against each U.S. Holder’s U.S. federal income tax liability, except in the case of a
U.S. Holder that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is
permitted under recently issued temporary guidance and complies with the specific requirements set forth
in such guidance. Additionally, capital gain or loss recognized by a U.S. Holder on the sale or other
disposition of the shares generally will be U.S. source gain or loss for U.S. foreign tax credit purposes.
Consequently, even if the withholding tax qualifies as a creditable tax, a U.S. Holder may not be able to credit
the tax against its U.S. federal income tax liability unless such credit can be applied (subject to generally
applicable conditions and limitations) against tax due on other income treated as derived from foreign
sources. If the Brazilian tax is not a creditable tax for a U.S. holder, the tax would reduce the amount realized
on the sale or other disposition of the shares even if the U.S. Holder has elected to claim a foreign tax credit
for other taxes in the same year. The temporary guidance discussed above also indicates that the Treasury
and the IRS are considering proposing amendments to the December 2021 regulations and that the
temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the
temporary guidance. U.S. Holders should consult their own tax advisors regarding the application of the
foreign tax credit rules to a sale or other disposition of the shares and any Brazilian tax imposed on such
sale or disposition.
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 Holder that is not a “United States person” (as defined in the Code) 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.
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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.
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 this section only outlines certain material Dutch tax consequences to
holders of the notes that are not resident nor deemed to be resident of the Netherlands 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 (such as trusts or similar arrangements) may be subject to special
rules. In view of its general nature, this general summary should therefore be treated with appropriate
caution.
This section 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, including the tax rates applicable on the date
hereof, and all of which are subject to change or to different interpretation, possibly with retroactive effect.
Any such change may invalidate the contents of this section, which will not be updated to reflect such
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change. 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 2023 and 2024) may apply with respect to
payments of interest 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 (gelieerd) to PGF (within the meaning of the Dutch Withholding Tax
Act 2021, Wet Bronbelasting 2021 see below), if such related entity:
–
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 with the main purpose or one of the main purposes of avoiding
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
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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; or
– 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 another entity's decisions, such as PGF decisions,
and allows it to determine the other entity’s 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
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;
– pension funds,
investment
investment
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
(as defined in the Dutch Income Tax Act 2001 and the Dutch Corporate Income Tax Act 1969, as
applicable) that, in whole or in part, is either effectively managed in the Netherlands or carried on
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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
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.
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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
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
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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 the beneficial owner 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 Code. This summary only applies 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 any amounts withheld and
additional amounts paid with respect thereto, 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
U.S. tax purposes. 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
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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. 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.
In general, if a note is issued with OID at or above a de minimis threshold, a U.S. Holder, 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.
Subject to generally applicable limitations and conditions, Brazilian interest withholding tax paid at the
appropriate rate applicable to the U.S. holder may be eligible for credit against such U.S. holder’s U.S.
federal income tax liability. These generally applicable limitations and conditions include new requirements
adopted by the IRS in regulations promulgated in December 2021and any Brazilian tax will need to satisfy
these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder
that consistently elects to apply a modified version of these rules under recently issued temporary guidance
and complies with specific requirements set forth in such guidance, the Brazilian tax on interest generally
will be treated as meeting the new requirements and therefore as a creditable tax. In the case of all other
U.S. holders, the application of these requirements to the Brazilian tax on interest is uncertain and we have
not determined whether these requirements have been met. If the Brazilian interest tax is not a creditable
tax or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes, the U.S. holder
may be able to deduct the Brazilian tax in computing such U.S. holder’s taxable income for U.S. federal
income tax purposes. Interest and additional amounts will constitute income from sources without the
United States and, for U.S. holders that elect to claim foreign tax credits, generally will constitute “passive
category income” for foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S.
holder’s particular circumstances and involve the application of complex rules to those circumstances. The
temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing
amendments to the December 2021 regulations and that the temporary guidance can be relied upon until
additional guidance is issued that withdraws or modifies the temporary guidance. U.S. holders should
consult their own tax advisors regarding the application of these rules to their particular situations.
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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,
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.
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.
A U.S. holder generally will not be entitled to credit any Brazilian tax imposed on the sale or other disposition
of the Notes against such U.S. holder’s U.S. federal income tax liability, except in the case of a U.S. holder
that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted
under recently issued temporary guidance and complies with the specific requirements set forth in such
guidance. Additionally, capital 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.
Consequently, even if the withholding tax qualifies as a creditable tax, a U.S. holder may not be able to credit
the tax against its U.S. federal income tax liability unless such credit can be applied (subject to generally
applicable conditions and limitations) against tax due on other income treated as derived from foreign
sources. If the Brazilian tax is not a creditable tax, the tax would reduce the amount realized on the sale or
other disposition of the Notes even if the U.S. holder has elected to claim a foreign tax credit for other taxes
in the same year. The temporary guidance discussed above also indicates that the Treasury and the IRS are
considering proposing amendments to the December 2021 regulations and that the temporary guidance
can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance.
U.S. holders should consult their own tax advisors regarding the application of the foreign tax credit rules
to a sale or other disposition of the Notes and any Brazilian tax imposed on such sale or disposition.
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 a Holder that is not a “United States person” (as defined in the Code) generally is exempt
from backup withholding, such Holder may, in certain circumstances, be required to comply with certain
information and identification procedures in order to prove entitlement to this exemption.
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.
PETROBRAS | Annual Report and Form 20-F | 2023
295
Legal and Tax
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 circumstance.
PETROBRAS | Annual Report and Form 20-F | 2023
296
Additional Information
[AM_ACTIVE 405510973_17]
Additional Information
List of Exhibits
No.
1.1
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Description
Amended Bylaws of Petróleo Brasileiro S.A.-Petrobras, dated as of November 30, 2023.
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 (File Nos. 001-15106).
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 (File Nos. 333-235803 and 001-15106).
2.10
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 | Annual Report and Form 20-F | 2023
298
Additional Information
No.
Description
2.11
2.12
2.13
2.14
2.15
2.16
2.17
2.18
2.19
2.20
Petrobras International Finance Company, furnished to the Securities and Exchange Commission on February
6, 2012 (File Nos. 001-15106 and 001-33121)).
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, relating, among others, to the 6.875%
Global Notes due 2040 and the 6.750% Global Notes due 2041 (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 Contract, 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 on 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)).
PETROBRAS | Annual Report and Form 20-F | 2023
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Additional Information
Description
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)).
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)).
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, relating
to, among others, the 6.250% Global Notes due 2026, 6.875% Global Notes due 2040, and 6.750% Global Notes
due 2041 (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, relating to, among others, the 6.250% Global Notes due 2026, 6.875% Global Notes
due 2040, and 6.750% Global Notes due 2041 (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)).
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 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
No.
2.21
2.22
2.23
2.24
2.25
2.26
2.27
2.28
2.29
2.30
2.31
2.32
2.33
PETROBRAS | Annual Report and Form 20-F | 2023
300
Additional Information
No.
Description
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)).
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)).
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 (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)).
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)).
Amended and Restated Guaranty dated as of May 22, 2017, 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)).
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
2.34
2.35
2.36
2.37
2.38
2.39
2.40
2.41
2.42
2.43
2.44
2.45
2.46
PETROBRAS | Annual Report and Form 20-F | 2023
301
Additional Information
No.
Description
2.47
2.48
2.49
2.50
2.51
2.52
2.53
2.54
2.55
2.56
2.57
2.58
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)).
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 6.900% 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 6.900% 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)).
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)).
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’ Registration
Statement on Form F-4, filed with the SEC on July 6, 2020 (as amended on July 28, 2020) (File No. 333-
239714)).
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)).
PETROBRAS | Annual Report and Form 20-F | 2023
302
Additional Information
Description
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)).
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, 2021 (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, 2021 (File No. 001-15106)).
Fifth Supplemental Indenture for the 6.500% Global Notes due 2033, dated as of July 3, 2023, 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 July 3, 2023 (File No. 001-15106)).
Guaranty for 6.500% Global Notes due 2033, dated as of July 3, 2023, 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 July 3, 2023 (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 eleven GSA Amendments have been signed since the original execution of the GSA on August 16,
1996, so the GSA remains in effect.
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.
Petrobras’ Clawback Policy (File No: 001-15106).
PGF’s Clawback Policy.
Third Party Report of DeGolyer and MacNaughton.
No.
2.59
2.60
2.61
2.62
2.63
4.1
4.2
8.1
12.1
13.1
15.1
15.2
15.3
15.4
17.1
97.1
97.2
99.1
PETROBRAS | Annual Report and Form 20-F | 2023
303
Additional Information
No.
Description
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.
Omitted from the exhibits filed with this annual report are certain instruments and agreements with respect
to long-term debt of Petrobras, none of which, individually, authorizes securities in a total amount that
exceeds 10% of the total assets of Petrobras. Petrobras hereby agrees to furnish to the SEC copies of any
such omitted instruments or agreements upon request.
PETROBRAS | Annual Report and Form 20-F | 2023
304
Additional Information
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 April 11, 2024.
Petróleo Brasileiro S.A. — PETROBRAS
By: _/s/ Jean Paul Terra Prates
_______________________
Name: Jean Paul Terra Prates
Title: Chief Executive Officer
By: _/s/ Sergio Caetano Leite
_______________________
Name: Sergio Caetano Leite
Title: Chief Financial Officer and Chief Investor
Relations Officer
PETROBRAS | Annual Report and Form 20-F | 2023
305
Additional Information
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
cmd
GWh
Barrels of oil equivalent
Barrels of oil equivalent per day
Cubic feet
Cubic meters per day
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
PETROBRAS | Annual Report and Form 20-F | 2023
306
Additional Information
mmbbl
Million barrels
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 | 2023
307
Additional Information
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
5,615.65 cf of natural gas 8
0.0063 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)
—
8 In 2023, we standardized the conversion from gas volume to oil equivalent, to 5,615 ft3 = 1 boe. It is equivalent to the conversion used in Brazil. Quantities from
previous years were restated with the new conversion.
PETROBRAS | Annual Report and Form 20-F | 2023
308
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
Key Information
Not applicable
Not applicable
A. Reserved
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)
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
E. Critical Accounting Estimates
Item 6.
Directors, Senior Management and
Employees
A. Directors and senior management
PETROBRAS | Annual Report and Form 20-F | 2023
About Us (About us; Overview);
Disclaimer (Documents on Display)
About Us (Overview); Our Business
(Exploration & Production; Refining,
Transportation & Marketing; Gas & Low
Carbon Energies; Portfolio
Management); Strategic Plan; Legal and
Tax (Regulation; Material Contracts)
About Us (Overview); Exhibit 8.1 – List
of Subsidiaries
Our Business; Strategic Plan; Legal and
Tax (Regulation)
None
Operating and Financial Review and
Prospects
Operating and Financial Review and
Prospects (Liquidity and Capital
Resources)
Environmental, Social and Governance
(Social Responsibility; Corporate
Governance)
Our Business; Risks; Operating and
Financial Review and Prospects
Operating and Financial Review and
Prospects (Liquidity and Capital
Resources)
Management and Employees
(Management)
Additional Information
Pages
6
9
23
24
30
23, 24; 8
24; 59, 94, 117, 136;
143; 259, 265
24
58; 143; 259
176
185
164, 169
58; 30; 176
185
198
309
Form 20-F
Captions
Location in this Annual Report
B. Compensation
C. Board practices
D. Employees
E. Share ownership
Item 7.
F. Disclosure of a registrant’s action to
recover erroneously awarded
compensation
Major Shareholders and Related Party
Transactions
A. Major shareholders
B. Related party transactions
C. Interests of experts and counsel
Item 8.
Financial Information
A. Consolidated Statements and Other
Financial Information
B. Significant Changes
Item 9.
The Offer and Listing
A. Offer and listing details
B. Plan of distribution
C. Markets
D. Selling shareholders
E. Dilution
F. Expenses of the issue
Item 10.
Additional Information
A. Share capital
B. Memorandum and articles of
association
C. Material contracts
D. Exchange controls
E. Taxation
Additional Information
Pages
198
198
218
238, 239; 198
239
233
F-1; 269; 237
Management and Employees
(Management)
Management and Employees
(Management)
Management and Employees
(Employees)
Shareholder Information (Listing;
Shares and Shareholders) and
Management and Employees
(Management)
Not applicable
Shareholder Information (Shares and
Shareholders)
Compliance and Internal Controls
(Related Party Transactions)
Not applicable
Financial Statements; Legal and Tax
(Legal Proceedings); Shareholder
Information
Not applicable
Not applicable
Not applicable
Shareholder Information (Listing)
238
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Environment, Social and Governance
(Corporate Governance); Management
and Employees; Shareholder
Information; Exhibit 1.1; Exhibit 2.4
Legal and Tax (Material Contracts)
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
Not applicable
Disclaimer
Not applicable
J. Annual Report to Security Holders
Not applicable
Item 11.
Qualitative and Quantitative
Disclosures about Market Risk
Risks (Disclosures About Market Risk)
PETROBRAS | Annual Report and Form 20-F | 2023
169; 197; 237
265
255
277
6
52
310
Form 20-F
Captions
Item 12.
Location in this Annual Report
Description of Securities other than
Equity Securities
A. Debt Securities
B. Warrants and Rights
C. Other Securities
Not applicable
Not applicable
Not applicable
D. American Depositary Shares
Shareholder Information
PART II
Item 13.
Item 14.
Item 15.
Defaults, Dividend Arrearages and
Delinquencies
Material Modifications to the Rights of
Security Holders and Use of Proceeds
Controls and Procedures
Item 16.
Reserved
A. Audit Committee Financial Expert
B. Code of Ethics
C. Principal Accountant Fees and
Services
D. Exemptions from the Listing
Standards for Audit Committees
E. Purchases of Equity Securities by
the Issuer and Affiliated Purchasers
F. Change in Registrant’s Certifying
Accountant
G. Corporate Governance
H. Mine Safety Disclosure
I. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
K. Cybersecurity Disclosure
PART III
None
None
Compliance and Internal Controls
(Controls and Procedures)
Not applicable
Management and Employees
(Management)
Compliance and Internal Controls
(Compliance)
Management and Employees
(Management)
Management and Employees
(Management)
Shareholder Information (Shares and
Shareholders)
Not applicable
Environment, Social
and Governance (Corporate
Governance)
Not applicable
Not applicable
Risks (Cybersecurity Disclosure)
Item 17.
Financial Statements
Not applicable
Item 18.
Financial Statements
Financial Statements
Item 19.
Exhibits
Exhibits
Signatures
Abbreviations
Conversion Table
Cross Reference to Form 20-F
Additional Information
Pages
237
235
198
228
198
198
239
169
54
F-1
298
305
306
308
309
PETROBRAS | Annual Report and Form 20-F | 2023
311
Financial Statements 2023
PETRÓLEO BRASILEIRO S.A. - PETROBRAS
December 31, 2023, 2022 and 2021
with the report of independent auditors
INDEX
Petróleo Brasileiro S.A. – Petrobras
Consolidated Statements of Financial Position .............................................................................................................................. F-3
Consolidated Statements of Income .................................................................................................................................................. F-4
Consolidated Statements of Comprehensive Income ................................................................................................................... F-5
Consolidated Statements of Cash Flows ........................................................................................................................................... F-6
Consolidated Statements of Changes In Shareholders’ Equity ................................................................................................. F-7
1. The Company and its operations ............................................................................................................................................... F-8
2. Basis of preparation ....................................................................................................................................................................... F-8
3. Material accounting policies ........................................................................................................................................................ F-9
Judgments and sources of estimation uncertainty ............................................................................................................. F-9
4.
Climate Change .............................................................................................................................................................................. F-17
5.
6. New standards and interpretations ........................................................................................................................................ F-23
Capital Management .................................................................................................................................................................... F-23
7.
Cash and cash equivalents and marketable securities ...................................................................................................... F-24
8.
Sales revenues ............................................................................................................................................................................... F-25
9.
Costs and expenses by nature.............................................................................................................................................. F-28
10.
Other income and expenses, net ......................................................................................................................................... F-29
11.
Net finance income (expense) .............................................................................................................................................. F-30
12.
Information by operating segment .................................................................................................................................... F-30
13.
Trade and other receivables ................................................................................................................................................. F-36
14.
Inventories ................................................................................................................................................................................. F-38
15.
Trade payables ......................................................................................................................................................................... F-39
16.
Taxes ............................................................................................................................................................................................ F-39
17.
Employee benefits ................................................................................................................................................................... F-44
18.
Provisions for legal proceedings, judicial deposits and contingent liabilities ..................................................... F-60
19.
Provision for decommissioning costs ................................................................................................................................ F-71
20.
Other assets and liabilities ................................................................................................................................................... F-73
21.
The “Lava Jato (Car Wash) Operation” and its effects on the Company ................................................................ F-74
22.
Commitment to purchase natural gas .............................................................................................................................. F-74
23.
Property, plant and equipment ........................................................................................................................................... F-75
24.
Intangible assets ...................................................................................................................................................................... F-78
25.
Impairment................................................................................................................................................................................. F-81
26.
Exploration and evaluation of oil and gas reserves ...................................................................................................... F-87
27.
Collateral for crude oil exploration concession agreements ..................................................................................... F-90
28.
Consortia (partnerships) in E&P activities ....................................................................................................................... F-90
29.
Investments ............................................................................................................................................................................... F-93
30.
Disposal of assets and other transactions ....................................................................................................................... F-96
31.
Finance debt .............................................................................................................................................................................. F-99
32.
Lease liability ..........................................................................................................................................................................F-103
33.
Equity .........................................................................................................................................................................................F-106
34.
Risk management ..................................................................................................................................................................F-111
35.
Related-party transactions ................................................................................................................................................F-120
36.
Supplemental information on statement of cash flows ............................................................................................F-125
37.
38.
Subsequent events ................................................................................................................................................................F-125
Supplementary information on Oil and Gas Exploration and Production (unaudited) ..................................................F-127
Management’s Report on Internal Control over Financial Reporting ..................................................................................F-139
Report of Independent Registered Public Accounting Firm ...................................................................................................F-140
F-2
Consolidated Statements of Financial Position
PETROBRAS
As of December 31, 2023 and December 31, 2022 (Expressed in millions of US Dollars, unless otherwise indicated)
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
Current assets
Trade and other receivables
Marketable securities
Judicial deposits
Deferred income taxes
Other recoverable taxes
Others
Long-term receivables
Investments
Property, plant and equipment - PP&E
Intangible assets
Non-current assets
Total assets
Liabilities
Trade payables
Finance debt
Lease liability
Income taxes payable
Other taxes payable
Dividends payable
Provision for decommissioning costs
Employee benefits
Others
Liabilities related to assets classified as held for sale
Current liabilities
Finance debt
Lease liability
Income taxes payable
Deferred income taxes
Employee benefits
Provisions for legal proceedings
Provision for decommissioning costs
Others
Non-current liabilities
Current and non-current liabilities
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
Equity
Total liabilities and equity
The notes form an integral part of these financial statements.
F-3
Note
12.31.2023
12.31.2022
8
8
14
15
17
17
21
31
14
8
19
17
17
21
30
24
25
12,727
2,819
6,135
7,681
218
960
1,570
32,110
335
32,445
1,847
2,409
14,746
965
4,516
2,315
26,798
1,358
153,424
3,042
184,622
7,996
2,773
5,010
8,779
165
1,142
1,777
27,642
3,608
31,250
2,440
1,564
11,053
832
3,778
1,553
21,220
1,566
130,169
2,986
155,941
217,067
187,191
Note
12.31.2023
12.31.2022
16
32
33
17
17
34
20
18
21
31
32
33
17
17
18
19
20
21
34
34
30
4,813
4,322
7,200
1,300
4,166
3,539
2,032
2,932
3,015
33,319
541
33,860
24,479
26,599
299
10,910
15,579
3,305
21,171
1,890
104,232
138,092
5,464
3,576
5,557
2,883
3,048
4,171
−
2,215
3,001
29,915
1,465
31,380
26,378
18,288
302
6,750
10,675
3,010
18,600
1,972
85,975
117,355
107,101
410
72,641
(101,569)
78,583
392
78,975
107,101
1,144
66,434
(105,187)
69,492
344
69,836
217,067
187,191
Consolidated Statements of Income
PETROBRAS
Years ended December 31, 2023, 2022 and 2021 (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 (losses) reversals, net
Other income and expenses, net
Note
9
10
2023
102,409
(48,435)
2022
124,474
(59,486)
2021
83,966
(43,164)
53,974
64,988
40,802
10
10
27
26
11
(5,038)
(1,594)
(982)
(726)
(890)
(2,680)
(4,031)
(15,941)
(4,931)
(1,332)
(887)
(792)
(439)
(1,315)
1,822
(7,874)
(4,229)
(1,176)
(687)
(563)
(406)
3,190
653
(3,218)
Income before net finance expense, results of equity-accounted investments and income taxes
38,033
57,114
37,584
2,169
(3,922)
(580)
(2,333)
1,832
(3,500)
(2,172)
(3,840)
821
(5,150)
(6,637)
(10,966)
(304)
251
1,607
35,396
53,525
28,225
12
30
17
(10,401)
(16,770)
(8,239)
24,995
24,884
111
1.91
36,755
36,623
132
2.81
19,986
19,875
111
1.52
Finance income
Finance expenses
Foreign exchange gains (losses) and inflation indexation charges
Net finance expense
Results of equity-accounted investments
Net income before income taxes
Income taxes
Net income for the year
Net income attributable to shareholders of Petrobras
Net income attributable to non-controlling interests
Basic and diluted earnings per common and preferred share - in U.S. dollars
34
The notes form an integral part of these financial statements.
F-4
Consolidated Statements of Comprehensive Income
PETROBRAS
Years ended December 31, 2023, 2022 and 2021 (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:
Note
2023
24,995
2022
36,755
2021
19,986
Actuarial gains (losses) on post-employment defined benefit plans
18
Recognized in equity
Deferred income tax
Items that may be reclassified subsequently to the statement of income:
Unrealized gains (losses) on cash flow hedge - highly probable future exports
35
Recognized in equity
Reclassified to the statement of income
Deferred income tax
Translation adjustments (1)
Recognized in equity
Reclassified to the statement of income
Share of other comprehensive income (loss) in equity-accounted investments
30
Recognized in equity
Other comprehensive income (loss)
Total comprehensive income
Comprehensive income attributable to shareholders of Petrobras
Comprehensive income attributable to non-controlling interests
(1) It includes cumulative translation adjustments in associates and joint ventures.
The notes form an integral part of these financial statements.
(3,574)
271
(3,303)
(1,583)
212
(1,371)
5,169
(1,340)
3,829
4,554
3,763
(2,830)
5,487
1,186
−
1,186
5,223
4,871
(3,432)
6,662
975
−
975
(3,949)
4,585
(215)
421
(1,314)
41
(1,273)
267
219
22
3,637
6,485
2,999
28,632
28,502
130
43,240
43,084
156
22,985
22,961
24
F-5
Consolidated Statements of Cash Flows
PETROBRAS
Years ended December 31, 2023, 2022 and 2021 (Expressed in millions of US Dollars, unless otherwise indicated)
Cash flows from operating activities
Net income for the year
Adjustments for:
Pension and medical benefits
Results of equity-accounted investments
Depreciation, depletion and amortization
Impairment of assets (reversals), net
Inventory write down (write-back) to net realizable value
Allowance (reversals) for credit loss on trade and other receivables, net
Exploratory expenditure write-offs
Gain on disposal/write-offs of assets
Foreign exchange, indexation and finance charges
Income taxes
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
Losses with legal, administrative and arbitration proceedings, net
Decrease (Increase) in assets
Trade and other receivables
Inventories
Judicial deposits
Other assets
Increase (Decrease) in liabilities
Trade payables
Other taxes payable
Pension and medical benefits
Provisions for legal proceedings
Other employee benefits
Provision for decommissioning costs
Other liabilities
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of PP&E and intangible assets
Acquisition of equity interests
Proceeds from disposal of assets - Divestment
Financial compensation from co-participation agreements
Divestment (Investment) in marketable securities
Dividends received
Net cash (used in) provided by investing activities
Cash flows from financing activities
Changes in non-controlling interest
Proceeds from finance debt
Repayment of principal - finance debt
Repayment of interest - finance debt
Repayment of lease liability
Dividends paid to Shareholders of Petrobras
Share repurchase program
Dividends paid to non-controlling interests
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 year
Cash and cash equivalents at the end of the year
The notes form an integral part of these financial statements.
F-6
Note
2023
2022
2021
24,995
36,755
19,986
18
30
37
26
15
27
11
17
11
11
32
32
32
33
34
34
1,542
304
13,280
2,680
(7)
40
421
(1,295)
2,498
10,401
2,052
−
(284)
−
(415)
797
88
1,564
(1,723)
324
(954)
(431)
(927)
(591)
356
(902)
(569)
(10,032)
43,212
(12,114)
(24)
3,606
391
98
88
(7,955)
1
2,210
(4,193)
(1,978)
(6,286)
(19,670)
(735)
(49)
(30,700)
174
4,731
7,996
1,228
(251)
13,218
1,315
11
65
691
(1,144)
4,557
16,770
745
(1)
(4,286)
−
(629)
1,362
355
(1,217)
(1,709)
(413)
(359)
(2,441)
(2,130)
(380)
(182)
(602)
(95)
(11,516)
49,717
(9,581)
(27)
4,846
7,284
(3,328)
374
(432)
63
2,880
(9,334)
(1,850)
(5,430)
(37,701)
−
(81)
(51,453)
(316)
(2,484)
10,480
2,098
(1,607)
11,695
(3,190)
(1)
(30)
248
(1,900)
10,795
8,239
661
(986)
(631)
(164)
(545)
740
(2,075)
(2,334)
(1,141)
(289)
1,073
2,835
(2,239)
(643)
(312)
(730)
376
(2,138)
37,791
(6,325)
(24)
4,783
2,938
4
781
2,157
(24)
1,885
(21,413)
(2,229)
(5,827)
(13,078)
−
(105)
(40,791)
(402)
(1,245)
11,725
12,727
7,996
10,480
Consolidated Statements of Changes In Shareholders’ Equity
PETROBRAS
Years ended December 31, 2023, 2022 and 2021 (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
adjustments
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, 2021
107,380
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
Capital transactions
Net income
Other comprehensive income (loss)
Expired unclaimed dividends
Appropriations:
Additional dividends proposed last year
approved this year
Transfer to reserves
Dividends
−
−
−
−
−
−
−
107,380
−
−
−
−
−
−
−
Balance at December 31, 2022
107,380
Treasury shares
Capital transactions
Net income
Other comprehensive income (loss)
Expired unclaimed dividends
Appropriations:
Additional dividends proposed last year
approved this year
Transfer to reserves
Dividends
−
−
−
−
−
−
−
−
Balance at December 31, 2023
107,380
The notes form an integral part of these financial statements.
(279)
107,101
−
−
−
−
−
−
−
(279)
107,101
−
−
−
−
−
−
−
(279)
107,101
−
−
−
−
−
−
−
−
(279)
107,101
1,064
1,064
−
79
−
−
−
−
−
1,143
1,143
1
−
−
−
−
−
−
1,144
1,144
(735)
1
−
−
−
−
−
−
410
410
(73,936)
(24,590)
(15,034)
−
−
−
−
−
−
−
−
−
(1,186)
421
3,829
−
−
−
−
−
−
−
(75,122)
−
(24,169)
−
(11,205)
−
−
951
−
−
−
−
−
−
−
−
6,662
(1,371)
−
−
−
−
−
−
−
−
(74,171)
(17,507)
(12,576)
−
−
−
1,167
−
−
−
−
−
−
−
5,487
−
−
−
−
−
−
−
(3,303)
−
−
−
−
(1,174)
(114,734)
−
−
−
22
−
−
−
(1,152)
(111,648)
−
−
219
−
(933)
(105,187)
−
−
−
267
−
8,813
2,900
1,102
51,974
−
−
−
−
−
956
−
9,769
−
−
−
−
−
−
−
−
−
184
−
3,084
−
−
−
−
−
197
−
−
−
−
−
1,805
−
11,574
3,281
1,677
−
−
−
−
−
−
−
−
−
−
−
−
−
−
1,272
−
−
8,544
−
−
−
−
−
−
−
−
−
−
118
−
1,220
−
388
(312)
52,050
−
−
−
−
−
457
−
−
−
−
−
−
−
321
−
−
−
−
−
−
71
(9,083)
43,038
−
−
−
−
−
−
−
−
1,128
65,917
−
−
−
−
(1,128)
−
6,688
6,688
72,811
−
−
−
−
(6,688)
−
6,864
6,864
66,434
−
−
−
−
−
(6,864)
−
2,934
2,934
72,641
−
−
−
−
19,875
−
−
(1,646)
(18,229)
−
−
−
36,623
−
11
−
(2,530)
(34,104)
−
−
−
−
24,884
−
7
−
(10,137)
(14,754)
−
−
59,348
59,348
−
79
19,875
3,086
(1,128)
−
(11,853)
69,407
69,407
1
36,623
6,461
11
(6,688)
−
(36,323)
69,492
69,492
(735)
1
24,884
3,618
7
(6,864)
−
(11,820)
78,583
78,583
528
528
2
(40)
111
(87)
−
−
(109)
405
405
(146)
132
24
−
−
−
(71)
344
344
−
1
111
19
−
−
−
(83)
392
392
59,876
59,876
2
39
19,986
2,999
(1,128)
−
(11,962)
69,812
69,812
(145)
36,755
6,485
11
(6,688)
−
(36,394)
69,836
69,836
(735)
2
24,995
3,637
7
(6,864)
−
(11,903)
78,975
78,975
(73,004)
(12,020)
(15,879)
(666)
(101,569)
12,846
11,825
1,998
43,038
F-7
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 of 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 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-8
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Actual results may differ from these estimates. Relevant estimates and judgments with a higher level of complexity are
disclosed in explanatory note 4.
These consolidated financial statements were approved and authorized for issue by the Company’s Board of Directors
in a meeting held on April 11, 2024.
2.2. 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/23 Sep/23 Jun/23 Mar/23 Dec/22 Sep/22 Jun/22 Mar/22 Dec/21 Sep/21 Jun/21 Mar/21
Quarterly average exchange rate
Period-end exchange rate
4.96
4.84
4.88
5.01
4.95
4.82
5.20
5.08
5.26
5.22
5.25
5.41
4.93
5.24
5.23
4.74
5.59
5.58
5.23
5.44
5.29
5.00
5.48
5.70
3. Material 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.
Judgments and sources of estimation uncertainty
The preparation of the consolidated financial information requires the use of estimates and judgments for certain
transactions. Next is presented key judgments and the main sources of estimation uncertainty with a significant risk of
causing material adjustments to the Company's key accounting estimates over the next fiscal year.
4.1. Recognition of exploration costs and oil and natural gas reserves estimates
After obtaining the legal rights to explore a specific area, the Company uses the successful efforts method to recognize
costs incurred in connection with the exploration and evaluation of mineral resources, before demonstrating technical
and commercial feasibility of extracting those resources. This method requires a direct relationship between costs
incurred and mineral resources for these costs to be characterized as assets. The types of exploration costs and their
respective recognition are presented in note 27.
The moment in which the technical and commercial feasibility of extracting a mineral resource is determined requires
management judgments. An internal commission of technical executives of the Company periodically reviews the
conditions of each well, by analysis of geological, geophysical and engineering data, as well as economic conditions,
operating methods and government regulations.
The Company considers that the technical and commercial feasibility of a mineral resource can be demonstrated when
the project has all the necessary information to characterize the reservoir as a proved reserve. Costs associated with
non-commercial mineral resources are recognized as expenses in the period when identified.
F-9
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
According to the definitions prescribed by the SEC, proved oil and natural 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 feasible from a given date, from known reservoirs and under existing economic conditions, operating
methods and government regulation.
The Company also determines reserves according to the criteria of the ANP/SPE (National Agency for Petroleum,
Natural Gas and Biofuels / Society of Petroleum Engineers). The main differences between these criteria and the SEC
criterion are related to the use of different economic assumptions and the possibility of considering as reserves, in the
ANP/SPE criteria, the volumes expected to be produced beyond the concession contract expiration date in fields in
Brazil, according to the ANP technical reserves regulations.
4.2. Impairment testing
4.2.1. Sources of estimation uncertainty related to impairment testing
Impairment testing involves uncertainties mainly related to: (a) the average Brent prices and to the Brazilian real/U.S.
dollar average exchange rate, whose estimates are relevant to virtually all of the Company's operating segments;
(b) discount rates; and (c) estimated proved and probable reserves (according to the criteria established by the
ANP/SPE, as described in note 4.1). 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
testing.
A sensitivity analysis for assets or CGUs most sensitive to future impairment losses or reversals in the next year is
presented in note 26.
Average Brent prices and average exchange rate
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.
Brent prices and exchange rate projections are derived from the Strategic Plan and are consistent with market evidence,
such as independent macro-economic forecasts, industry analysts and experts. Backtesting analysis and feedback
processes 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 the
Organization of the Petroleum Exporting Countries (OPEC) decisions on the oil market, industry costs, idle capacity, oil
and gas production forecasted by specialized firms, and the relationship between the oil price and the Brazilian
Real/U.S. dollar exchange rate.
The process of projecting Brazilian Real/U.S. dollar exchange rate is based on econometric models that consider long-
term assumptions involving observable inputs, such as commodity prices, country risk, interest rates in the U.S. 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 losses or reversals on certain assets or CGUs. For example, the Company’s sales revenues 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.
Note 26 presents Brent prices and exchange rate estimates.
F-10
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Discount rates
The discount rates used in impairment tests reflect specific risks associated with the estimated cash flows of the assets
or CGUs. For example, changes in the economic and political environment may result in higher country risk projections,
causing increases in the discount rates used in impairment tests, as well as investment decisions that result in the
postponement or interruption of projects considering specific risks related to non-completion or delayed start of
operations.
Note 26 presents the main discount rates applied in impairment tests.
Estimated proved and probable reserves
Reserves estimates, according to the criteria established by the ANP/SPE (as set out in note 4.1) 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 may also result from significant changes in the Company’s strategy for development
projects or in the production capacity.
Although the Company is reasonably certain that proved reserves will be produced, the timing and amount recovered
can be affected by a sort of factors including completion of development projects, reservoir performance, regulatory
aspects and significant changes in long-term oil and gas price levels.
4.2.2. Identifying cash-generating units for impairment testing
A cash-generating unit (CGU) represents the smaller identifiable group of assets that generate cash inflows, which are
largely independent of the cash inflows of other assets or groups of assets. Identifying CGUs requires management
assumptions and judgment, based on the Company’s business and management model. The level of asset
disaggregation in CGUs can reach the limit of assets being tested individually.
Changes in CGUs resulting from the review of investment, strategic or operational factors, may result in changes in the
interdependencies of assets and, consequently, alter the aggregation or breakdown of assets that were part of certain
CGUs, which may influence their ability to generate cash and cause additional losses or reversals in the recovery of such
assets. If the approval for the sale of a CGU’s component occurs between the reporting date and the date of the issuance
of the consolidated financial statements, the Company reassesses whether the value in use of this component,
estimated with the information existing at the reporting date, reasonably represents its fair value, net of disposal
expenses. Such information must include evidence of the stage at which management was committed to the sale of the
CGU’s component.
The primary considerations in identifying the CGUs are set out as follows:
a) Exploration and Production CGUs:
i)
ii)
Crude oil and natural gas producing properties - individual CGUs: comprise assets related to exploration and
production development of a field or a cluster (group of two or more fields) in Brazil and abroad. At December
31, 2023, there are 33 fields and 15 clusters representing different Exploration and Production CGUs in Brazil.
Equipment not related to crude oil and natural gas producing properties: comprise platforms, drilling rigs and
other assets which 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 serving the market at the lowest overall cost, preserving the strategic value of the whole set of
assets in the long term. The operational planning is made in a centralized manner and these assets are not managed,
F-11
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
measured or evaluated by their individual results. 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. Operational decisions are analyzed
through an integrated model of operational planning for market supply, considering all the options for production,
imports, exports, logistics and inventories, seeking to maximize the Company’s global performance. The decision on
new investments is not based on the profitability of the project where the asset will be installed, but on the additional
result for the CGU as a whole. The model that supports the entire planning, used in technical and economic feasibility
studies of new investments in refining and logistics, seeks to allocate a certain type of oil, or a mix of oil products, define
market supply (area of influence), aiming at achieving the best integrated results. Pipelines and terminals are a
complementary and interdependent portion of the refining assets, required to supply the market.
ii) CGU Itaboraí Utilities: composed of assets that will support the natural gas processing plant (UPGN) of the route 3
integrated project;
iii) CGU GasLub: set of assets that remain in hibernation and are being evaluated for use in other projects.
iv) CGU Second Refining Unit of RNEST: comprises assets of the second refining unit of Abreu e Lima refinery;
v) Transportation CGU: comprises assets relating to Transpetro’s fleet of vessels;
vi) Hidrovia CGU: comprises the fleet of vessels under construction of the Hidrovia project (transportation of ethanol
along the Tietê River);
vii) CGU nitrogen fertilizer plants: formed by hibernated nitrogen fertilizer plants; and
viii) Other operations abroad defined as the smallest group of assets that generates independent cash flows.
c) Gas and Low Carbon Energies CGUs:
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;
ii) CGUs of Natural Gas Processing Plants: each remaining natural gas processing plant represents a separate CGU.
iii) CGU Power: comprises the thermoelectric power generation plants (UTEs). The operation and trade of energy of this
CGU are carried out and coordinated in an integrated manner. The economic results of each of the plants in the
integrated portfolio are highly dependent on each other, due to operational optimization aimed at maximizing the
overall result.
iv) Other CGUs: operations abroad defined as the smallest group of assets that generates largely independent cash
flows.
v) 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.
vi) Quixadá CGU: comprises the assets of Quixadá Biofuel Plant.
Further information on impairment testing is set out in note 26.
F-12
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
4.3. Sources of estimation uncertainty related to depreciation, depletion and amortization
As presented in note 24, assets directly related to the oil and gas production are depleted using the units of production
method, based on monthly production in relation to the respective developed proved reserves, except for the signature
bonuses, where total proved reserves are used.
Proved developed reserves are those for which recovery can be expected: (i) through existing wells, 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 extraction equipment and operational infrastructure installed at the time of the reserves estimate,
if the extraction is carried out by means that do not involve a well.
Estimates of proved reserves volumes used in the unit-of-production method are prepared by Company’s technicians
according to the SEC definitions (as described in note 4.1). 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. Information on uncertainties related to
reserve volume estimates are presented in note 4.1.
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.
4.4. Sources of estimation uncertainty related to pension plan and other post-employment
benefits
The net actuarial liability represents the Company's actuarial obligations, net of fair value of plan assets (when
applicable), at present value, as described in note 18.3.2.
The actuarial obligations and net expenses related to defined benefit pension and health care post-employment plans
are computed based on several financial and demographic assumptions, of which the most significant are:
a) 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
b) 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.
These and other assumptions are revised 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 measurement uncertainties associated with the defined benefit obligation and a sensitivity analysis of discount
rates and changes in medical costs are disclosed in notes 18.3.6 and 18.3.7, respectively.
4.5. Sources of estimation uncertainty related to provisions for legal proceedings and
contingencies
The Company is part 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
F-13
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 on the probability of outflow of resources and on the estimated amounts, according to the
assessment of the legal basis.
Note 19 provides further detailed information about contingencies and legal proceedings.
4.6. Sources of estimation uncertainty related to decommissioning costs
The Company has legal 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. The timing of abandonment and dismantling of areas is based on the length of reserves depletion, in
accordance with the ANP/SPE definitions (as described in note 4.1). Therefore, revisions to reserves estimates that
result in changes in the timing of reserves depletion may impact the provision for decommissioning cost. For additional
information about revisions to the Company’s reserves estimates, see note 4.1.
These obligations are recognized at present value, using a risk-free discount rate, adjusted to the Company's credit risk.
Changes in the discount rate can cause significant variations in the recognized amount, due to the long-term nature
until abandonment. A sensitivity analysis of discount rates used in the calculation of the provision for decommissioning
costs is presented in note 20.
The calculation to determine the amounts to be provisioned are complex, 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 occur; and iii) asset removal technologies and costs are constantly changing, along with regulations,
environmental, safety and public relations considerations.
The Company constantly 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 20 provides further information about provision for decommissioning costs.
4.7. Sources of estimation uncertainty related to 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.
The determination of incremental rates requires estimates based on corporate funding rates (obtained from the yields
on bonds issued by Petrobras), which take into account the risk-free rate and the Company's credit risk premium,
adjusted to also reflect the specific conditions and characteristics of the lease, such as the risk of the country's
economic environment, guarantees, currency and duration of the payment flow.
The present value of lease liabilities is determined based on the incremental rates estimated at the start date of each
lease. Therefore, even in cases where lease agreements have similar characteristics, their cash flows may be discounted
at significantly different incremental rates depending on the Company's corporate funding rates on the start date of
each lease.
Note 33 presents information on lease arrangements by class of underlying assets.
F-14
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
4.8. Sources of estimation uncertainty related to 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
on short-term estimates on a monthly basis. The highly probable future exports are determined by a percentage of
projected exports revenues.
The estimate of the amount of highly probable future exports considers future uncertainty regarding the Brent oil
prices, oil production and demand for products in a model which optimizes the Company's operations and investments,
in addition to considering the historical profile of exported volume in relation to total oil production.
As described in note 35.2.2, foreign exchange gains and losses relating to the effective portion of hedging instrument
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. However, 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 other comprehensive income to the statement of income.
For the long-term, future exports forecasts are reviewed whenever the Company reviews its Strategic Plan
assumptions, while for the short-term future exports are reviewed monthly. The approach for determining exports as
highly probable future exports is reviewed annually, at least.
See note 35.2.2 for more detailed information about cash flow hedge accounting and a sensitivity analysis of the cash
flow hedge involving future exports.
4.9. Sources of estimation uncertainty related to income taxes
Income taxes rules and regulations may be interpreted differently by tax authorities, and situations may arise in which
the tax authorities' interpretations differ from the Company's understanding.
Uncertainties over income taxes 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
income taxes (Imposto de Renda sobre Pessoa Jurídica - IRPJ and Contribuição Social sobre Lucro Líquido - 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, treated and, when applicable, follows a pre-
determined tax risk management methodology.
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 current or deferred income taxes in the financial statements.
The effect of uncertainty for each uncertain tax treatment is estimated by using the method that provides the best
prediction of the resolution of the uncertainty. The most probable amount method provides as an estimate the single
most probable amount in a set of possible outcomes, while the expected amount method represents the sum of the
amounts weighted by the probability in relation to a range of possible outcomes.
Additional information on uncertainty over income taxes treatments is disclosed in Note 17.1.
F-15
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
4.10. Sources of estimation uncertainty related to expected credit losses
Credit losses correspond to the difference between all contractual cash flows owed to the Company and all cash flows
that the entity expects to receive, discounted at the original effective interest rate. The expected credit loss of a
financial asset corresponds to the average of expected credit losses weighted by the respective default risks.
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, 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.
Notes 14.2 and 14.3 provide details on the expected credit losses recognized by the Company.
4.11. Sources of estimation uncertainty related to the compensation for the surplus volume for
the Transfer of Rights Agreement
As a result of the Second Bidding Round for the Surplus Volume of the Transfer of Rights Agreement under the
Production Sharing regime, the Company signed amendments and new agreements in 2022 with partners in the Atapu
and Sépia fields. Such agreements provide, in addition to the compensation already received upon signature,
supplementary amounts that may be owed to the Company, according to the conditions described in note 25.2.
Additionally, over the last few years the Company has sold assets considered non-strategic and established
partnerships in E&P assets aiming, among other objectives, at sharing risks and developing new technologies. Such
transactions were carried out through partnerships (note 29) and divestments, with procedures aligned with current
legislation and regulatory bodies. In some of these transactions, contingent receipts are also provided for, subject to
contractual clauses (note 31.4).
F-16
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
5. Climate Change
Climate change may result in both negative and positive effects for the Company. Potential negative effects of climate
change for the Company are referred to as climate-related risks (climate risks). Conversely, potential positive effects
arising from climate change for the Company are referred to as climate-related opportunities.
Climate risks are categorized as: (i) climate-related transition risks (transition risks); and (ii) climate-related physical
risks (physical risks).
Transition risks arise from efforts to the transition to a low-carbon economy. In this category, the Company has
identified the following risks that can reasonably be expected to affect its cash flows, access to financing or cost of
capital:
Risk
Market
Description
Time length (2)
Worldwide: increasing demand for energy and products with lower
Medium
to
long-
carbon intensity leading to a reduction in oil demand, a consequent
term
decline in prices of fossil fuel products. Preference for fossil fuel
products with lower Greenhouse Gas (GHG) intensity in production
processes.
In Brazil: the demand for our products may be affected, especially by
the increase in demand for alternative fuels, also stimulated by public
policies such as the RENOVABIO(1) program, among others.
Technological
Loss of competitiveness due to the non-implementation or
Medium
to
long-
implementation of inefficient or non-effective technologies to
term
reduce emissions from our operations and products.
Regulatory
Increased requirements for controls over GHG emissions in licensing
Medium
to
long-
processes, which may cause operational restrictions and financial
penalties for our activities.
term
Supplementing regulation for the adoption of a carbon pricing
instrument in Brazil, considering its various aspects and possible
formats.
Legal and Reputational
Litigation and/or reputational damage due to non-compliance with
Medium-term
climate commitments.
(1) National Policy for Biofuels, aiming at increasing the production and use of biofuels in the Brazilian energy chain.
(2) Criteria adopted for the time horizon: short term (1 year), medium term (between 1 and 5 years), and long term (more than 5 years).
Physical risks result from climate change that can be event-driven (acute physical risk) or from long-term shifts in
climate patterns (chronic physical risk). In this category, the Company has identified the following risks that can
reasonably be expected to affect its cash flows, access to financing, or cost of capital:
Risk
Water shortage
Description
Time length(1)
Reduction in water availability affecting onshore facilities.
Medium to long-term
Meteoceanografic changes
Changes in patterns of wind, waves and currents may alter the
Long-term
operational conditions of our assets.
(1) Criteria adopted for the time horizon: short term (1 year), medium term (between 1 and 5 years), and long term (more than 5 years).
F-17
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
5.1. Potential effects of climate risks on accounting estimates
Accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty.
The following information used in relevant accounting estimates of the Company is largely determined based on the
assumptions and projections of the Petrobras Strategic Plan (Strategic Plan):
•
•
value in use for impairment of assets testing purposes (note 4.2.1);
timing and costs used in measuring the provision for decommissioning costs (note 4.6);
• highly probable future exports used in cash flow hedge accounting involving the Company’s future exports
(note 4.8); and
• useful life of PP&E and intangible assets used in measuring depreciation, depletion and amortization expenses
(notes 24 and 25).
As presented in the following topic, the Company considered the effects related to climate risks in its Strategic Plan
approved by the Board of Directors, which is updated annually, including actions to achieve its climate commitments
and its long-term ambition to neutralize GHG emissions in activities under its control (scopes 1 and 2) by 2050.
The aforementioned ambition and commitments are not guarantees of future performance by the Company and are
subject to assumptions that may prove incorrect and to risks and uncertainties that are difficult to predict.
a) Transition risk to low carbon economy
The transition to a low-carbon economy brings market, technological, regulatory, legal and reputational risks, which
were considered in the development of the Company's Strategic Plan. Such consideration was based on the following
external environment assumptions that reflect the dynamics of the energy sector:
• Moderate economic growth compared to the recent past;
• Shifts in consumption habits and behaviors;
• Public policies focusing on mobility, air quality and adaptation of urban infrastructure to climate change;
•
International coordination in efforts to reduce GHG emissions;
• Reduction in the GHG emissions;
• Reduction in the consumption of fossil fuels; and
• Diffusion of end-use technologies that reduce the need for fossil fuel consumption.
As a result of this, demand and prices, both domestic and international, of the main products considered in the Strategic
Plan are negatively affected.
In 2023, the Company adopted three distinct scenarios that are used for different purposes in its planning activities.
These scenarios are called Adaptation, Negotiation, and Commitment. In all of them, there is a slowdown and
subsequent contraction of fossil fuel sources. The Negotiation scenario, which is used as reference scenario for
quantifying the Company's Strategic Plan, considers that fossil fuels, which currently represent approximately 80% of
primary energy sources, will represent around 55% by 2050. The share of oil will decrease from the current 29% to
around 21%.
F-18
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The Brent price considered in the reference scenario of the Strategic Plan decreases from US$80 per barrel in 2024 to
US$65 per barrel in 2050. For additional information about the behavior of the Brent price, considered in the Company's
Strategic Plan reference scenario, please see note 26. The following table compares the oil price used in the reference
scenario of the Strategic Plan for the years 2030 and 2050 with those projected in the Announced Pledges Scenario
(APS) and Net Zero Emission (NZE) scenarios by the International Energy Agency (IEA):
Brent price US$/Barrel
Strategic Plan
APS
NZE
2030
65
74
42
2050
65
60
25
According to the IEA, the APS scenario considers that all climate commitments made by governments around the world,
including Nationally Determined Contributions (NDCs), as well as long-term net-zero targets, will be met in full and on
time, with an increase of approximately 1.7oC in temperature by 2100 (with a 50% probability of occurrence). As for the
NZE scenario, according to the IEA, it presents a pathway for the global energy sector to achieve net-zero CO2 emissions
by 2050, consistent with limiting the temperature increase to 1.5 °C (with at least a 50% probability of occurrence).
The Strategic Plan also includes Company's actions to achieve the carbon sustainability commitments, such as low-
carbon Research and Development (R&D) projects and decarbonization projects for operations. These actions aim to
address transition risks as well as reflect climate opportunities.
The Company's accounting estimates did not incorporate the effect of carbon price. Currently, there are uncertainties
regarding the structure and dynamics of a future carbon market in Brazil, and there is no sufficient and reliable
information available to assess the effects of carbon price.
a.1) Potential effects on the value in use in impairment tests
When measuring the value in use of its assets, the Company bases its cash flow projections on reasonable and
supportable assumptions that represent management's best estimate of the range of economic conditions.
A faster transition to a low-carbon economy than projected in the Strategic Plan could result in Brent prices and demand
for the Company’s products that are lower than the ones considered to estimate the value in use of the Company’s
assets for impairment testing purposes.
Additionally, progress in the establishment of a regulated carbon market in Brazil may lead to the inclusion of the
carbon price in calculations of the value in use of the Company’s assets for impairment testing purposes.
The reduction in the value in use of the Company's assets may result in the recognition of losses due to the non-
recoverability of the carrying amounts of these assets.
Given that the oil price is a variable that decisively influences the recoverable amount of assets, the Company carried
out a sensitivity analysis of the effect of using the Brent prices considered in the APS and NZE scenarios, for the
impairment test of the Company's E&P assets in Brazil.
Using the prices in the APS and NZE scenarios to perform a sensitivity analysis on projected gross revenues deducted
of production taxes, net of income taxes, and keeping unchanged all other components, variables, assumptions and
data for calculating the recoverable amount, the Company's E&P segment, regarding the impairment loss recognized
by the Company, as disclosed in note 26, would have additional impairment reversal of US$ 696 in the APS scenario and
additional impairment losses US$ 6,611ind the NZE scenario, concentrated in the Campos basin fields.
The Company does not consider this sensitivity analysis, based on APS and NZE Brent price scenarios, to be the best
estimates to determine expected effects on the recoverable amount of assets, sales revenues or net income.
Considering that the Company did not incorporate in its accounting estimates the carbon price effects, the Company
carried out a sensitivity analysis of the effect of GHG emissions pricing costs on the impairment test of assets in the
F-19
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
E&P segment in Brazil, considering a monetary charge per ton of CO2 emission starting from 2028, and the existence of
free emission allowances.
In this context, using a base price of US$ 10/CO2 from 2024 to 2030, US$ 31/CO2 in 2035, US$ 52/CO2 in 2040,
US$ 73/CO2 in 2045, and US$ 95/CO2 in 2050, including gradual emission exemptions, to simulate additional cash
outflows (net of income taxes), and keeping all other components, variables, assumptions and data for the calculation
of recoverable amount unchanged, the E&P segment would have an additional US$ 182 impairment loss.
The Company does not consider this sensitivity analysis of the effect of greenhouse gas emissions pricing costs on the
impairment test of assets to be the best estimate to determine expected effects on the recoverable amount, neither
the estimated effects on expenses nor net income.
a.2) Potential effects on decommissioning costs
Due to its operations, the Company has legal obligations to remove equipment and restore onshore and offshore areas.
On December 31, 2023, the provision for decommissioning costs recognized by the Company totaled US$ 23,202, as set
out in Note 20. On an undiscounted basis the nominal amount would be US$ 48,787.
The estimated timing used by the Company to account for decommissioning costs are consistent with the useful lives
of the related assets. The average decommissioning period of oil and gas assets weighted by the carrying amounts of
such assets is 14 years.
During 2023, there were no issuance of government regulations related to climate matters that changed or had
potential to change the period for decommissioning the Company's assets, as well as not identifying any triggers that
would accelerate the expected dates for decommissioning the Company's assets due to the Company’s climate goals
and ambition to neutralize GHG emissions in activities under its control (scopes 1 and 2) by 2050.
A transition to a low-carbon economy that is faster than it was anticipated by the Company may accelerate the timing
to remove equipment and restore onshore or offshore areas. Such acceleration would increase the present value of the
decommissioning obligations recognized by the Company.
To illustrate the effect of a possible acceleration of the transition to a low-carbon economy, the Company estimates
that the provision for decommissioning costs would increase by US$ 1,101, US$ 3,385 and US$ 5,478 if the timing
currently used were brought forward by one, three and five years, respectively. This sensitivity analysis assumed that
all other components, variables, assumptions and data for calculating the provision remained unchanged. The year
ranges used are not intended to be predictions of likely future events or outcomes.
a.3) Potential effects on “highly probable future exports” used in cash flow hedge accounting involving the
Company's future exports
A transition to a low-carbon economy that is faster than it was anticipated by the Company may negatively effect the
Company's future exports. Such effect may result in certain exports, whose foreign exchange gains or losses were
designated for hedge accounting, no longer be considered highly probable, but remain forecasted, or, depending on
the magnitude of the transition and its speed, cease to be considered forecasted. Further details on the consequences
of such effects are described in note 35.2.2 (a) involving the Company's future exports (accounting policy).
The calculation of “highly probable future exports” is based on the projected exports in the Strategic Plan, as set out in
note 4.8. The Company considers only a portion of its projected exports as “highly probable future exports”. When
determining future exports as highly probable, and therefore eligible as a hedged item for application of cash flow
hedge accounting, the Company considers the effects related to the transition to a low-carbon economy. Carbon prices
were not incorporated in such estimates.
Using the prices in the APS and NZE scenarios we carried out a sensitivity analysis to simulate the need to reclassify the
foreign exchange gains or losses recorded in equity to the statement of income. Such sensitivity simulated a new future
F-20
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
cash flow from exports, changing only the oil price, keeping all other components, variables, assumptions and data
unchanged. In such sensitivity, there is no need to reclassify the foreign exchange (gains or losses) recorded in equity
to the statement of income in any of the simulated scenarios.
The simulations used to perform such sensitivity analysis, based on Brent prices of the scenarios APS and NZE, are not
considered by the Company as the best estimates to determine expected effects of the reclassification of foreign
exchange variation recorded in equity to the statement of income.
a.4) Potential effects on the useful lives of PP&E
A transition to a low-carbon economy that is faster than the Company anticipates may reduce the useful life of its
assets, which could lead to an increase in annual depreciation, depletion and amortization expenses.
Assets directly related to the production of oil and gas in a contracted area are depleted using the units of production
method and depreciated or amortized using the straight-line method. As of December 31, 2023, the carrying amount
of these assets in operation in Brazil is US$ 105,498. Out of such assets, the ones that are depreciated or amortized by
the straight-line method do not have a useful life ending in or after 2050. As for assets depleted using the units of
production method, it is estimated that 4 fields in the State of Bahia, with carrying amount of US$ 234 as of December
31, 2023, have production curves used to estimate its useful lives extending beyond 2050 (based on its proved
developed reserves).
As mentioned in item “Transition risk to low carbon economy”, the reference scenario of the Strategic Plan indicates
that there will be persistent global demand for oil in the coming decades. Additionally, calculations of expected
production and oil and gas reserves in this scenario consider the effects of the transition to a low-carbon economy.
The Company's refining plants consist of 10 refineries in Brazil. Based on the current depreciation rates of the assets in
operation applied to the respective carrying amounts at December 31, 2023, which amounts to US$ 11,055, and
assuming no additional investment, all refineries would be fully depreciated prior to 2050.
The Company estimates persistent demand for oil products in the coming decades, although decreasing, which should
be progressively supplied by models with lower carbon intensity. Thus, the depreciation rates used by the Company for
the refining plants are in line with the transition to a low-carbon economy.
The Gas and Energy assets in Brazil, including thermoelectric power plants, are depreciated using the linear method.
Based on the current depreciation rates of the assets in operation applied to their respective carrying amounts as of
December 31, 2023, totaling US$ 3,004, and assuming no additional investment, these assets would be fully depreciated
prior to 2050.
In this context, based on available information, the Company does not foresee significant changes in the useful life of
its refineries, assets directly related to oil and gas production and those related to the Gas and Energy arising from the
transition to a low-carbon economy. Such assets represent 91% of the Company's total assets in operation.
b) Physical Risks
The operating conditions of the Company’s assets are subject to physical risks associated with climate change. The
variables considered most susceptible to these changes include the patterns of waves, winds and ocean currents in the
areas in which the Company operates offshore, as well as the availability of freshwater for our onshore operations.
The Company estimates that the offshore structures in the Brazilian Southeastern basins, which account for the highest
percentage of Petrobras’ production (96%), are adequately sized to the expected changes in the patterns of waves,
winds and ocean currents in that region.
Regarding the availability of freshwater for the operations of our facilities, the risks related to this subject are
monitored, managed and mitigated by the Company. Such risks may arise from various factors that collectively put
F-21
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
pressure on water availability, such as population growth, intensification of consumption patterns, inadequate
infrastructure, pollution, resource misallocation and climate change.
As a result, the Company's water risk management covers both climatic and non-climatic risks and, based on the
Company's assessment, the potential impacts of climate change on the availability of fresh water for our facilities are
not representative of all the risks involved.
Consequently, regarding physical risks, as of December 31, 2023, the Company does not foresee that changes caused
by climate change will have a material effect on accounting estimates, either from the perspective of
meteoceanographic variables or the reduction in freshwater availability.
However, the circumstances that served as the basis for the Company's analyses of climate change scenarios may
change, so the approaches used by the Company to conduct these analyses may also be improved over time.
F-22
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
6. New standards and interpretations
6.1. New International Financial Reporting Standards not yet adopted
Standard
Lease Liability in a Sale and
Leaseback - Amendments to
IFRS 16
Classification of Liabilities as
Current or Non-current /
Non-current Liabilities with
Covenants- Amendments to IAS
1
Supplier Finance Arrangements
- Amendments to IAS 7 and
IFRS 7
Lack of Exchangeability
Amendments to IAS 21
-
Description
The amendments add requirements that specify that the seller-lessee must
subsequently measure the lease liability arising from the transfer of an asset -
which meets the requirements of IFRS 15 to be accounted for as a sale - and sale
and leaseback, so that no gain or loss is recognized related to the right of use
retained in the transaction.
The amendments establish that the liability should be classified as current when
the entity does not have the right, at the end of the reporting period, to defer the
settlement of the liability for at least twelve months after the reporting period.
Effective on
January 1, 2024,
retrospective
application.
January 1, 2024,
retrospective
application.
Among other guidelines, the amendments provide that the classification of a
liability is not affected by the likelihood of exercising the right to defer the
settlement of the liability. Additionally, according to the amendments, only
covenants whose compliance is mandatory before or at the end of the reporting
period should affect the classification of a liability as current or non-current.
Additional disclosures are also required by the amendments, including information
on non-current liabilities with covenants, whose compliance is mandatory within 12
months after the reporting date
The amendments establish the characteristics of finance arrangements involving
suppliers and that certain information related to such arrangements must be
disclosed in order to enable the assessment of their effects on liabilities, cash flows
and exposure to liquidity risk.
The amendments establish that when one currency is not exchangeable for another
on the measurement date, the spot exchange rate must be estimated. In addition,
they provide guidance on how to assess interchangeability between currencies and
how to determine the spot exchange rate when interchangeability is absent.
When the spot exchange rate is estimated because a currency is not exchangeable
for another currency, information must be disclosed to allow the understanding of
how the currency not exchangeable for another currency affects, or is expected to
affect, the statements of income, the statement of financial position and the
statements of cash flows.
January 1, 2024,
with specific
transition rules.
January 1, 2025,
with specific
transition rules.
Regarding the amendments to IFRS 16 and to IAS 1, effective as of January 1, 2024, according to the assessment made,
the Company estimates that there will be no significant impact with the initial application on its consolidated financial
statements. In relation to the amendments to IAS 7 and IFRS 7, the Company expects additional disclosure.
As for the amendment that will be effective as of January 1, 2025, the Company is assessing the impacts that it will have
on the financial statements.
7. Capital Management
The Company’s objective in its capital management is to maintain its capital structure at an adequate level in order to
continue as a going concern, maximizing value to shareholders and investors. In 2023 and 2022, its main source of
funding was cash provided by its operating activities.
The financial strategy of the Strategic Plan 2024-2028 is focused on:
•
•
indebtedness control;
investments and business decisions respecting the ideal capital structure;
• solid governance in decision-making processes ensuring profitability, rationality and value creation for all
stakeholders; and
F-23
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
• distribution of value created through dividends and share repurchase.
The target for the gross debt (composed of current and non-current finance debt and lease liability) is to be maintained
below US$ 65,000 and the reference level for Adjusted Cash and cash equivalents is US$ 8,000 (which is composed of
Cash and cash equivalents, and investments in securities in domestic and international markets that have high liquidity,
i.e., convertible into cash within 3 months, even if maturity is longer than 12 months, held for the purpose of complying
with cash commitments).
As of December 31, 2023, gross debt increased to US$ 62,600, from US$ 53,799 as of December 31, 2022, remaining
within the range defined in the Company’s Strategic Plan.
8. Cash and cash equivalents and marketable securities
8.1. Cash and cash equivalents
They include cash, available bank deposits and short-term financial investments with high liquidity, which meet the
definition of 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
12.31.2023
103
12.31.2022
216
1,742
279
2,021
7,737
2,852
14
10,603
12,624
12,727
2,763
244
3,007
2,388
2,365
20
4,773
7,780
7,996
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.
The main resources constituted were substantially provided by cash provided by operating activities of US$ 43,212,
proceeds from disposal of assets - divestment of US$ 3,606, proceeds from finance debt of US$ 2,210 and financial
compensation from co-participation agreements of US$ 391.
The main use of these funds in 2023 were for payment of dividends and share repurchase program of US$ 20,454,
repayment of principal and interests related to finance debt and repayment of lease liability, amounting US$ 12,457, as
well as for acquisition of PP&E and intangible assets in the amount of US$ 12,114.
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-24
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
8.2. Marketable securities
Fair value through profit or loss
Amortized cost - Bank Deposit Certificates and time deposits
Amortized cost - Others
Total
Current
Non-current
In Brazil
926
4,249
53
5,228
2,819
2,409
12.31.2023
Total
926
4,249
Abroad
−
−
−
−
−
−
53
5,228
2,819
2,409
In Brazil
713
2,548
50
3,311
1,747
1,564
12.31.2022
Total
713
3,574
Abroad
−
1,026
−
1,026
1,026
−
50
4,337
2,773
1,564
Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal
Government Bonds (amounts determined by level 1 of the fair value hierarchy). These financial investments have
maturities of more than three months.
Securities classified as amortized cost refer to investments in Brazil in post-fixed Bank Deposit Certificates with daily
liquidity, with maturities between one and two years, and to investments abroad in time deposits with maturities of
more than three months from the contracting date.
Accounting policy for marketable securities
The amounts invested in operations with terms of more than three months, as from the date of the agreement, are
initially measured at fair value and subsequently according to their respective classifications, which are based on the
way in which these funds are managed and their features of contractual cash flows:
•
•
Amortized cost – financial assets that give rise, on specified dates, to cash flows represented exclusively by
payments of principal and interest on the outstanding principal amount, the purpose of which is to receive its
contractual cash flows. They are presented in current and in non-current asset according to their maturity term.
Interest income from these investments is calculated using the effective interest rate method.
Fair value through profit or loss – financial assets whose purpose is to receive from its sale. They are presented
in current assets due to the expectation of realization within 12 months of the reporting date.
9.
Sales revenues
9.1. 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 13.
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.
F-25
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Diesel
Gasoline
Liquefied petroleum gas
Jet fuel
Naphtha
Fuel oil (including bunker fuel)
Other oil products
Subtotal oil products
Natural gas
Crude oil
Renewables and nitrogen products
Breakage
Electricity
Services, agency and others
Domestic market
Exports
Crude oil
Fuel oil (including bunker fuel)
Other oil products and other products
Sales abroad (1)
Foreign market
Sales revenues
(1) Sales revenues from operations outside of Brazil, including trading and excluding exports.
2023
32,260
14,309
3,506
5,015
1,837
1,158
4,428
62,513
5,632
5,475
94
860
657
1,059
76,290
25,012
18,447
5,114
1,451
1,107
26,119
102,409
2022
40,149
16,175
5,121
5,423
2,396
1,411
5,536
76,211
7,673
7,719
283
669
694
1,043
94,292
27,497
19,332
7,399
766
2,685
30,182
124,474
As of December 31, 2023, the composition of sales revenues by shipping destination is presented as follows:
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
2021
61,191
7,053
4,702
3,110
1,671
2,162
3,913
164
2023
76,290
7,232
4,846
5,534
1,447
3,924
3,063
73
2022
94,292
6,389
7,166
5,932
1,505
4,914
4,271
5
26,119
30,182
102,409
124,474
22,775
83,966
Domestic market
China
Americas (except United States)
Europe
Asia (except China and Singapore)
United States
Singapore
Others
Foreign market
Sales revenues
In 2023, sales to two clients of the refining, transportation and marketing segment represented individually 16% and
11% of the Company’s sales revenues; in 2022, sales to two clients of the same segment individually represented 15%
and 11% of the Company’s sales revenues; and in 2021 one client of the same segment individually represented 10% of
the Company’s sales revenues.
9.2. Remaining performance obligations
The Company is party to sales contracts signed until December 31, 2023 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 in 2023 presented below are based on the contractually agreed
future sales volumes, as well as prices prevailing at December 31, 2023 or practiced in recent sales reflecting more
directly observable information:
F-26
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Domestic market
Gasoline
Diesel
Natural gas
Liquefied petroleum 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
12,161
27,325
7,715
3,120
740
1,497
529
3,013
1,335
2,732
60,167
178
-
38,986
-
3,607
1,497
4,919
3,756
-
5,337
58,280
Total
12,339
27,325
46,701
3,120
4,347
2,994
5,448
6,769
1,335
8,069
118,447
Revenues are 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.
9.3. Contract liabilities
The balance of contract liabilities carried on the statement of financial position in 2023 amounted to US$ 115 (US$ 48
in 2022). 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.
Accounting policy for revenues
The Company evaluates contracts with customers for the sale of oil and oil products, natural gas, electricity, services
and other products, which will be subject to revenue recognition, and identifies the distinct goods and services promised
in each of them.
Sales revenues are recognized when control is transferred to the client, which usually occurs upon delivery of the
product or when the service is provided. At this moment, the company satisfies the performance obligation.
Performance obligations are considered to be promises to transfer to the client: (i) good or service (or group of goods
or services) that is 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 client.
Revenue is measured based on the amount of consideration to which the Company expects to be entitled in exchange
for transfers of promised goods or services to the customer, excluding amounts collected on behalf of third parties.
Transaction prices are based on contractually stated prices, which reflect the Company's pricing methodologies and
policies based on market parameters.
F-27
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Invoicing occurs in periods very close to deliveries and rendering of services, therefore, significant changes in
transaction prices are not expected to be recognized in revenues for periods subsequent to satisfaction of the
performance obligation, except for some exports in which final price formation occurs after the transfer of control of
the products and are subject to the variation in the value of the commodity.
Sales are carried out in short terms of receipt, thus there are no significant financing components.
10. Costs and expenses by nature
10.1. Cost of sales
Raw material, products for resale, materials and third-party services (1)
Depreciation, depletion and amortization
Production taxes
Employee compensation
Total
(1) It Includes short-term leases and inventory turnover.
10.2. Selling expenses
Materials, third-party services, freight, rent and other related costs
Depreciation, depletion and amortization
Allowance for expected credit losses
Employee compensation
Total
10.3. General and administrative expenses
Employee compensation
Materials, third-party services, rent and other related costs
Depreciation, depletion and amortization
Total
2023
(23,858)
(10,779)
(12,108)
(1,690)
2022
(32,354)
(10,514)
(14,953)
(1,665)
(48,435)
(59,486)
2021
(20,869)
(9,277)
(11,136)
(1,882)
(43,164)
2023
(4,296)
(609)
(22)
(111)
2022
(3,987)
(789)
(58)
(97)
(5,038)
(4,931)
2021
(3,542)
(610)
12
(89)
(4,229)
2023
(1,036)
(435)
(123)
2022
(865)
(362)
(105)
(1,594)
(1,332)
2021
(834)
(256)
(86)
(1,176)
F-28
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
11. Other income and expenses, net
Stoppages for asset maintenance and pre-operating expenses
Gains (losses) on decommissioning of returned/abandoned areas
Pension and medical benefits - retirees (1)
Losses with legal, administrative and arbitration proceedings
Profit sharing
Variable compensation programs
Compensation for the termination of vessel charter agreements (2)
Collective bargaining agreement
Expenses with contractual fines received
Operating expenses with thermoelectric power plants
Institutional relations and cultural projects
Gains (losses) with commodities derivatives
Amounts recovered from Lava Jato investigation
Results of non-core activities
Ship/take or pay agreements and fines imposed to suppliers
Fines imposed on suppliers
Results from co-participation agreements in bid areas (3)
Government grants
Early termination and changes to cash flow estimates of leases
Reimbursements from E&P partnership operations
Results on disposal/write-offs of assets
Others
2023
(2,205)
(1,195)
(1,172)
(797)
(595)
(416)
(331)
(217)
(199)
(189)
(156)
11
109
170
238
239
284
315
415
571
1,295
(206)
2022
(1,834)
(225)
(1,015)
(1,362)
(131)
(547)
(13)
-
(91)
(150)
(103)
(256)
96
168
105
228
4,286
471
629
683
1,144
(261)
2021
(1,362)
99
(1,467)
(740)
(125)
(469)
(9)
-
(57)
(88)
(96)
(79)
235
170
96
163
631
154
545
485
1,941
626
Total
(1) In 2022, this includes US$ 67 referring to the payment of a contribution as provided for in the Pre-70 Term of Financial Commitment (TFC) for the administrative
funding of the PPSP-R Pre-70 and PPSP-NR Pre-70 pension plans.
(2) It includes, in 2023, expenses with compensation for the termination of a vessel charter agreement in the amount of US$ 317.
(3) In 2022, it mainly refers to income with the results of the co-participation agreements related to the transfer of rights surplus of Sépia and Atapu fields. In 2021, it
refers to the agreement of the Búzios field.
(4,031)
1,822
653
F-29
2021
821
315
506
(5,150)
(2,870)
(1,220)
(1,102)
976
(761)
(173)
(6,637)
(2,737)
(4,585)
108
−
518
59
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
12. Net finance income (expense)
Finance income
Income from investments and marketable securities (Government Bonds)
Other finance income
Finance expenses
Interest on finance debt
Unwinding of discount on lease liability
Discount and premium on repurchase of debt securities
Capitalized borrowing costs
Unwinding of discount on the provision for decommissioning costs
Other finance expenses
Foreign exchange gains (losses) and indexation charges
Foreign exchange gains (losses) (1)
2023
2,169
1,657
512
(3,922)
(2,264)
(1,785)
(4)
1,290
(857)
(302)
(580)
2,268
2022
1,832
1,159
673
(3,500)
(2,363)
(1,340)
(121)
1,032
(519)
(189)
(2,172)
1,022
Reclassification of hedge accounting to the Statement of Income (1)
(3,763)
(4,871)
Indexation to the Selic interest rate of anticipated dividends and dividends payable (2)
Legal agreement with Eletrobras - compulsory loans (3)
Recoverable taxes inflation indexation income
Other foreign exchange gains and indexation charges, net
Total
(1) For more information, see notes 35.2a and 35.2c.
(299)
236
204
774
994
−
86
597
(2,333)
(3,840)
(10,966)
(2) In 2023, it refers to the income on the indexation to the Selic interest rate of paid anticipated dividends, in the amount of US$ 215 (US$ 1,293 in 2022 and US$ 121 in
2021), and to the expense on the indexation to the Selic interest rate on dividends payable, in the amount of US$ 514 (US$ 299 in 2022 and US$ 13 in 2021).
(3) For more information, see note 19.6.
13.
Information by operating segment
On November 23, 2023, the Board of Directors approved, in the context of the Strategic Plan 2024-2028, a new approach
in relation to capital expenditures that will be made by the Company, changing the vision of the segment from “Gas &
Power” to “Gas and Low Carbon Energies”, in addition to new strategic business drivers for:
• Biofuels: previously presented in Corporate and other businesses, they are now integrated in the Gas and Low
Carbon Energies (G&LCE) segment;
• Fertilizers: previously presented in Gas & Power, they are now integrated in the Refining, Transportation and
Marketing segment.
As of December 31, 2023, the presentation of information by operation segment reflects the updated management
model used by the Board of Executive Officers (Chief Operating Decision Maker - CODM) to make decisions regarding
resource allocation and performance evaluation.
In this context, the information by segment for the years 2022 and 2021 were not reclassified for comparability
purposes due to the fact that the total of assets and statement of income balances involved are immaterial.
F-30
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
13.1. 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 expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment (losses) reversals, net
Other income and expenses, net
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance income (expense)
Results of 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
(E&P)
66,880
66,113
767
(27,239)
39,641
(5,615)
(12)
(74)
(982)
(569)
(454)
(2,105)
(1,419)
Refining,
Transportation
& Marketing
(RT&M)
94,868
1,404
93,464
(85,699)
9,169
(4,086)
(2,156)
(327)
-
(16)
(27)
(524)
(1,036)
Gas and
Low
Carbon
Energies
(G&LCE)
11,109
3,285
7,824
(5,685)
5,424
(3,384)
(2,838)
(80)
-
(3)
(49)
(81)
(333)
Corporate
and other
businesses
365
11
354
(370)
(5)
(2,857)
(33)
(1,113)
-
(138)
(360)
30
(1,243)
Eliminations
(70,813)
(70,813)
-
70,558
(255)
1
1
-
-
-
-
-
-
5,083
-
(318)
4,765
(1,729)
3,036
2,040
-
10
2,050
(693)
1,357
(2,862)
(2,333)
11
(5,184)
3,506
(1,678)
(254)
-
-
(254)
86
(168)
3,036
1,286
(1,723)
(168)
24,884
-
71
45
-
111
2023
Total
102,409
−
102,409
(48,435)
53,974
(15,941)
(5,038)
(1,594)
(982)
(726)
(890)
(2,680)
(4,031)
38,033
(2,333)
(304)
35,396
(10,401)
24,995
34,026
-
(7)
34,019
(11,571)
22,448
22,453
(5)
F-31
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 expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment (losses) reversals, net
Other income and expenses, net
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance expense
Results of 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
(E&P)
77,890
76,579
1,311
(30,465)
47,425
907
(22)
(46)
(887)
(678)
(79)
(1,218)
3,837
48,332
-
170
48,502
(16,433)
32,069
32,073
(4)
Refining,
Transportation
& Marketing
(RT&M)
113,531
1,950
111,581
(99,154)
14,377
(3,132)
(1,841)
(275)
-
(6)
(31)
Gas and
Low
Carbon
Energies
(G&LCE)
15,068
3,991
11,077
(10,518)
4,550
(2,965)
(2,979)
(62)
-
(5)
(44)
Corporate
and other
businesses
511
6
505
(522)
(11)
(2,671)
(76)
(949)
-
(103)
(285)
Eliminations
(82,526)
(82,526)
-
81,173
(1,353)
(13)
(13)
-
-
-
-
(97)
(882)
1
124
(1)
(1,257)
-
-
11,245
-
3
11,248
(3,822)
7,426
7,426
-
1,585
-
83
1,668
(540)
1,128
1,038
90
(2,682)
(3,840)
(5)
(6,527)
3,559
(2,968)
(3,014)
46
(1,366)
-
-
(1,366)
466
(900)
36,755
(900)
-
36,623
132
2022
Total
124,474
−
124,474
(59,486)
64,988
(7,874)
(4,931)
(1,332)
(887)
(792)
(439)
(1,315)
1,822
57,114
(3,840)
251
53,525
(16,770)
F-32
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Exploration
and
Production
(E&P)
Refining,
Transportation
& Marketing
(RT&M)
Gas and
Low
Carbon
Energies
(G&LCE)
Corporate
and other
businesses
Eliminations
Total
2021
Sales revenues
Intersegments
Third parties
Cost of sales
Gross profit (loss)
Income (expenses)
Selling expenses
General and administrative expenses
Exploration costs
Research and development expenses
Other taxes
Impairment (losses) reversals, net
Other income and expenses, net
Income (loss) before net finance income (expense),
results of equity-accounted investments and income
taxes
Net finance expense
Results of 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
55,584
54,479
1,105
(23,673)
31,911
3,240
-
(152)
(687)
(415)
(192)
3,107
1,579
35,151
-
119
35,270
(11,949)
23,321
23,324
(3)
74,524
12,051
1,416
73,108
2,564
9,487
(65,620)
(9,494)
8,904
(1,805)
(1,539)
(245)
-
(11)
(122)
289
(177)
2,557
(2,890)
(2,668)
(73)
-
(25)
(38)
(208)
122
7,099
(333)
-
941
8,040
(2,415)
5,625
5,625
-
-
98
(235)
113
(122)
(219)
97
504
238
266
(503)
1
(1,741)
-
(706)
-
(112)
(54)
2
(871)
(1,740)
(10,966)
449
(12,257)
5,129
(7,128)
(58,697)
(58,697)
83,966
−
-
83,966
56,126
(43,164)
(2,571)
(22)
(22)
-
-
-
-
-
-
40,802
(3,218)
(4,229)
(1,176)
(687)
(563)
(406)
3,190
653
(2,593)
37,584
-
-
(2,593)
883
(1,710)
(10,966)
1,607
28,225
(8,239)
19,986
(7,145)
17
(1,710)
19,875
-
111
The amount of depreciation, depletion and amortization by segment is set forth as follows:
2023
2022
2021
Exploration
and Production
(E&P)
Refining,
Transportation
& Marketing
(RT&M)
Gas and Low
Carbon
Energies
(G&LCE)
Corporate and
other
businesses
10,230
10,415
9,005
2,410
2,248
2,167
525
448
430
115
107
93
Total
13,280
13,218
11,695
F-33
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
13.2. Assets by operating segment
Exploration
and
Production
(E&P)
Refining,
Transportation
& Marketing
(RT&M)
Gas and
Low
Carbon
Energies
(G&LCE)
Corporate
and other
business
Elimina-
tions
2,804
136,064
9,028
344
124,254
108,405
15,849
2,438
138,868
5,224
111,110
6,351
379
101,875
92,087
9,788
2,505
116,334
11,002
23,800
2,068
811
20,786
18,128
2,658
135
34,802
12,035
22,396
1,811
977
19,496
16,851
2,645
112
34,431
370
6,406
83
145
6,101
3,605
2,496
77
6,776
391
7,193
94
173
6,851
4,808
2,043
75
7,584
23,547
18,352
15,619
58
2,283
1,770
513
392
41,899
18,864
15,242
12,964
37
1,947
1,585
362
294
34,106
(5,278)
−
−
−
−
−
−
−
(5,278)
(5,264)
−
−
−
−
−
−
−
(5,264)
Total
32,445
184,622
26,798
1,358
153,424
131,908
21,516
3,042
217,067
31,250
155,941
21,220
1,566
130,169
115,331
14,838
2,986
187,191
Consolidated assets by operating segment - 12.31.2023
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 - 12.31.2022
Current assets
Non-current assets
Long-term receivables
Investments
Property, plant and equipment
Operating assets
Under construction
Intangible assets
Total Assets
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 considers market parameters and are eliminated only to
provide reconciliations to the consolidated financial statements.
The Company's business segments disclosed separately are:
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 Low Carbon Energies segment. These transactions are measured at internal transfer prices based on the
international prices of this commodity.
F-34
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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, acquisition and
exports of crude oil, as well as trading of oil products, in Brazil and abroad. This segment also includes the petrochemical
operations (which comprehends holding interests in petrochemical companies in Brazil), and fertilizer production.
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. This segment also performs the acquisition of natural gas from the
G&LCE segment.
Intersegment revenues primarily reflect the sale of oil products to the distribution business at market prices and the
operations for the G&LCE 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 Low Carbon Energies (G&LCE): this segment covers the activities of logistic and trading of natural gas and
electricity, the transportation and trading of liquefied natural gas (LNG), the generation of electricity by means of
thermoelectric power plants, as well as natural gas processing. It also includes renewable energy businesses, low carbon
services (carbon capture, utilization and storage) and the production of biodiesel and its co-products.
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 and to free consumers, as
well as generation and trading of electricity.
Corporate and other businesses: comprise items that cannot be attributed to business segments, including those with
corporate characteristics, in addition to distribution business. Corporate items mainly include those related to
corporate financial management, trade and other receivables, allowance for credit losses, gains (losses) with derivatives
(except those with commodity derivatives included in their respective segments), corporate overhead and other
expenses, including actuarial expenses related to pension and health care plans for beneficiaries. Other businesses
include the distribution of oil products abroad (South America). In 2021, the results of other businesses included the
equity interest in the associate Vibra Energia, formerly Petrobras Distribuidora, until the date of sale of the remaining
interest in this associate, which took place in July 2021.
F-35
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
14. Trade and other receivables
14.1. Trade and other receivables
Receivables from contracts with customers
Third parties
Related parties
Investees (note 36.1)
Subtotal
Other trade receivables
Third parties
Receivables from divestments and Transfer of Rights Agreement
Lease receivables
Other receivables
Related parties
Petroleum and alcohol accounts - receivables from Brazilian Federal Government
Subtotal
Total trade and other receivables, before ECL
Expected credit losses (ECL) - Third parties
Expected credit losses (ECL) - Related parties
Total trade and other receivables
Current
Non-current
12.31.2023
12.31.2022
6,038
5,210
140
6,178
93
5,303
2,162
352
627
278
3,419
9,597
(1,613)
(2)
7,982
6,135
1,847
1,922
394
765
602
3,683
8,986
(1,533)
(3)
7,450
5,010
2,440
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$ 503 as of December 31, 2023 (US$ 470 as of December 31, 2022).
The balance of receivables from divestments is mainly related to the Earn Out of the Atapu and Sépia fields, totaling
US$ 611(US$ 693 in 2022), from the sale of the Roncador field for US$ 360 (US$ 393 in 2022), the Carmópolis group of
fields for US$ 296 (US$ 275 in 2022), and the Potiguar group of fields for US$ 265.
On September 8, 2023, the Company received US$ 362, net of withholding income taxes, relating to the first installment
of Petroleum and Alcohol Accounts. The second and final installment in the amount of US$ 278 is still in a judicial
account and awaits court clearance to work as a guarantee in a tax enforcement proceeding in the 11th Execution Court.
In 2023, the average term for trade receivables from third parties in the domestic market is approximately 2 days (same
term in 2022) for the sale of derivatives and 20 to 27 days for the sale of crude oil (same term as in 2022). Fuel oil exports
have an average receipt term between 11 and 14 days, while oil exports have a term between 8 and 12 days (in 2022,
exports have average terms ranging from 12 days to 26 days for fuel oil and from 7 to 16 days for oil).
F-36
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
14.2. Aging of trade and other receivables – third parties
Current
Overdue:
1-90 days (1)
91-180 days
181-365 days
More than 365 days
Total
12.31.2023
Trade and
other
receivables
6,948
Expected
credit
losses
(34)
Trade and
other
receivables
6,474
12.31.2022
Expected
credit
losses
(39)
472
19
63
1,677
9,179
(43)
(10)
(57)
(1,469)
(1,613)
189
30
63
1,535
8,291
(48)
(27)
(51)
(1,368)
(1,533)
(1) On January 10, 2024, Petrobras received US$ 298 from Carmo Energy as the last installment relating to the sale of the Carmópolis cluster, due
on December 20, 2023.
14.3. Changes in provision for expected credit losses – third parties and related parties
Opening balance
Additions
Write-offs
Reversals
Translation adjustment
Closing balance
Current
Non-current
31.12.2023
31.12.2022
1,536
1,448
170
(66)
(94)
69
1,615
285
1,330
136
(21)
(81)
54
1,536
245
1,291
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.
ECL is the weighted average of historical credit losses with the respective default risks, which may occur according to
the weightings. The credit loss on a financial asset is measured by the difference between all contractual cash flows due
to the Company and all cash flows the Company expects to receive, discounted at the original effective interest rate.
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.
F-37
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
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.
15.
Inventories
Crude oil
Oil products
Intermediate products
Natural gas and Liquefied Natural Gas (LNG)
Biofuels
Fertilizers
Total products
Materials, supplies and others
Total
12.31.2023
3,375
12.31.2022
3,738
2,196
635
78
13
1
6,298
1,383
7,681
3,278
587
135
14
4
7,756
1,023
8,779
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 2023, the Company recognized a US$ 7 reversal of cost of sales, adjusting inventories to net realizable value (a US$ 11
loss within cost of sales in 2022), primarily due to changes in international prices of crude oil and oil products.
At December 31, 2023, the Company had pledged crude oil and oil products volumes as collateral for the Term of
Financial Commitment (TFC) related to Pension Plans PPSP-R, PPSP-R Pre-70 and PPSP-NR Pre-70 signed by Petrobras
and Fundação Petrobras de Seguridade Social – Petros Foundation in 2008, in the estimated amount of US$ 986.
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, considering the purpose for which the inventories are held.
Inventories with identifiable sales contracts have a net realizable value based on the contracted price, as, for example,
in offshore operations (without physical tanking, with loading onto the ship and direct unloading at the customer) or
auctions. Other items in inventory have a net realizable value based on general selling prices, considering the most
reliable evidence available at the time of the estimate.
F-38
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The net realizable value of inventories is determined by grouping similar items with the same characteristic or purpose.
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.
16. Trade payables
Third parties in Brazil
Third parties abroad
Related parties (note 36.1)
Total
Forfaiting
12.31.2023
3,624
12.31.2022
3,497
1,176
13
4,813
1,935
32
5,464
The Company has a program to encourage the development of the oil and gas production chain called “Mais Valor”
(More Value), operated by a partner company on a 100% digital platform.
By using this platform, the suppliers who want to anticipate their receivables may launch a reverse auction, in which the
winner is the financial institution which offers the lowest discount rate. The financial institution becomes the creditor
of invoices advanced by the supplier, and Petrobras pays the invoices on the same date and under the conditions
originally agreed with the supplier.
Invoices are advanced in the “Mais Valor” program exclusively at the discretion of the suppliers and do not change the
terms, prices and commercial conditions contracted by Petrobras with such suppliers, as well as it does not add financial
charges to the Company, therefore, the classification is maintained as Trade payables in Statements of Cash Flows
(Cash flows from operating activities).
As of December 31, 2023, the balance advanced by suppliers, within the scope of the program, is US$ 110 (US$ 130 as
of December 31, 2022) and has a payment term from 7 to 92 days and a weighted average term of 57 days (24 days as
of December 31, 2022), after the contracted commercial conditions have been met.
17. Taxes
17.1. Income taxes
Taxes in Brazil
Income taxes
Income taxes - Tax settlement programs
Taxes abroad
Total
12.31.2023
Current assets
12.31.2022
Current liabilities
12.31.2022
12.31.2023
Non-current liabilities
12.31.2022
12.31.2023
199
−
199
19
218
160
−
160
5
165
989
58
1,047
253
1,300
2,505
50
2,555
328
2,883
−
299
299
−
299
−
302
302
−
302
Income taxes are calculated based on a 15% rate plus additional 10% on the taxable income for the IRPJ, and 9% on
taxable income for the CSLL, considering the offset of tax loss carryforwards and negative basis of the CSLL, limited to
30% of the taxable income of the year. As of the 2015, due to the release of Law No. 12,973/2014, the net income
obtained abroad by a direct or indirect subsidiary, or by an associated company, adjusted by dividends and by the result
of equity accounted investments, multiplied by the income taxes rates existing in Brazil, comprise the income taxes
expenses.
Income taxes assets 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.
F-39
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
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:
Net income before income taxes
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%)
Adjustments to arrive at the effective tax rate:
Tax benefits from the deduction of interest on capital distributions
Different jurisdictional tax rates for companies abroad
Brazilian income taxes on income of companies incorporated outside Brazil (1)
Tax incentives
Tax loss carryforwards (unrecognized tax losses)
Non-taxable income (non-deductible expenses), net (2)
Post-employment benefits
Results of equity-accounted investments in Brazil and abroad
Non-incidence of income taxes on indexation (SELIC interest rate) of undue paid taxes
Others
Income taxes
Deferred income taxes
Current income taxes
2023
35,396
(12,036)
2022
53,525
(18,197)
2021
28,225
(9,597)
1,329
579
(530)
303
23
322
(348)
(88)
54
(9)
1,234
822
(763)
187
221
(15)
(394)
87
33
15
843
296
(546)
50
59
234
(802)
318
903
3
(10,401)
(876)
(9,525)
29.4%
(16,770)
(906)
(15,864)
31.3%
(8,239)
(4,058)
(4,181)
(29.2)%
Effective tax rate of income taxes
(1) It relates to Brazilian income taxes on earnings of offshore investees, as established by Law No. 12,973/2014.
(2) It includes provisions for legal proceedings and payment of an administrative contribution over the TFC Pre-70 for the administrative funding of the PPSP-R pre-70
and PPSP-NE pre-70 plans.
Deferred income taxes - non-current
The changes in the deferred income taxes are presented as follows:
Opening balance
Recognized in the statement of income for the period
Recognized in shareholders’ equity
Translation adjustment
Use of tax loss carryforwards
Others
Closing balance
The composition of deferred tax assets and liabilities is set out in the following table:
2023
(5,918)
(876)
(2,559)
(602)
−
10
(9,945)
2022
(625)
(906)
(3,220)
(45)
(1,123)
1
(5,918)
F-40
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Nature
PP&E - Exploration and decommissioning costs
PP&E - Impairment
PP&E - Right-of-use assets
PP&E - depreciation methods and capitalized borrowing
Loans, trade and other receivables / payables and financing
Leasings
Provision for decommissioning costs
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
Depreciation, amortization and write-offs of assets
Payments, receipts and considerations
Appropriation of the considerations
Payments and use of provisions
Payments and use of provisions
Taxable income compensation
Sales, write-downs and losses
Payments and use of provisions
Total
Deferred tax assets
Deferred tax liabilities
Timing of reversal of deferred income taxes
12.31.2023
(6,296)
12.31.2022
(6,587)
4,203
(9,369)
(18,784)
(2,479)
9,240
8,010
954
1,140
411
2,036
989
(9,945)
965
3,602
(5,611)
(15,438)
810
6,045
6,745
885
914
333
1,518
866
(5,918)
832
(10,910)
(6,750)
Deferred tax assets were recognized based on projections of taxable profit in future periods supported by the
assumptions within the Company’s Strategic Plan 2024-2028, whose pillars are the preservation of financial strength,
financial and environment resilience of projects, and focus on value creation.
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 Strategic Plan 2024-2028.
The estimated schedule of recovery/reversal of net deferred tax assets (liabilities) as of December 31, 2023 is set out
in the following table:
2024
2025
2026
2027
2028
2029 and thereafter
Recognized deferred tax assets
Assets
138
58
61
73
71
564
965
Liabilities
(1,646)
2,540
402
744
(255)
9,125
10,910
In addition, the Company has tax loss carryforwards arising from offshore subsidiaries, for which no deferred taxes were
recognized.
Brazil
Abroad
Unrecognized deferred tax assets
12.31.2023
368
780
Assets
12.31.2022
-
987
1,148
987
These unrecognized deferred tax assets arise mainly from subsidiaries operating in the oil and gas exploration and
production and refining activities in the United States. In 2023, the Company recognized US$ 26 of previously
unrecognized deferred tax assets due to a reassessment of their recoverability related to expected future taxable
income arising from business operations.
An aging of the unrecognized deferred tax assets from companies abroad is set out below:
F-41
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Unrecognized deferred tax assets
285
299
141
55
2030 - 2032
2033 - 2035
2036 -2038
Undefined
expiration
Total
780
Uncertain tax treatments on income taxes
As of December 31, 2023, the Company had US$ 6,982 (US$ 6,043 as of December 31, 2022) of uncertain tax treatments
on income taxes, related to judicial and administrative proceedings (see note 19.3). Additionally, as of December 31,
2023, the Company has other positions that can be considered as uncertain tax treatments on income taxes amounting
to US$ 4,063 (US$ 30,020 as of December 31, 2022), 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 believes that such positions are likely to be accepted by the tax authorities (including judicial
courts).
Uncertain treatments on Corporate Income Tax (CIT)
In 2023, the Company received additional charges from the Dutch tax authority, due to a final assessment on the
calculation of the Corporate Income Tax (CIT) of subsidiaries in the Netherlands from 2018 to 2020, arising from the
valuation for tax purposes of platforms and equipment nationalized under the Repetro tax regime, in the amount of
US$ 595, updated by applicable interest rate.
Tax treatments of certain subsidiaries from 2020 to 2022 have not yet been assessed by this tax authority. Any charges
by the Dutch tax authority for those years, on a similar basis to the periods already assessed, could reach the amount
of US$ 242. Thus, as of December 31, 2023, the total amount of these uncertain tax treatments is US$ 837, updated by
applicable interest rate.
The Company continues to defend its position but understands that it is not probable that the tax authority will fully
accept this tax treatment. Thus, a liability was recognized with a corresponding effect in income taxes within the
statement of income for the period, by means of the expected value method, constituted by the sum of amounts
weighted by the probability of loss.
Accounting policy for income taxes
The Company calculates income taxes in accordance with current legislation and applying the rates in effect at the end
of reporting period. Income taxes expense for the period are 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.
a) Current income taxes
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.
Uncertain tax treatments are periodically assessed, considering the probability of acceptance by the tax authority.
b) Deferred income taxes
Deferred income taxes are generally 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 provided for in the specific legislation to apply to
the period when the asset is realized or the liability is settled.
Deferred tax assets and liabilities are recognized for all deductible temporary differences and carryforward of unused
tax losses or credits to the extent that it is probable that taxable profit will be available against which those deductible
temporary differences can be utilized. When there are insufficient taxable temporary differences relating to the same
F-42
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 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.
17.2. Other taxes
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
Others
Total in Brazil
Taxes abroad
Total
Current assets
Non-current assets
Current liabilities
Non-current liabilities (1)
12.31.2023
12.31.2022
12.31.2023
12.31.2022
12.31.2023
12.31.2022
12.31.2023
12.31.2022
592
304
−
−
−
−
58
954
6
960
716
378
−
1
−
−
40
1,135
7
1,142
607
2,876
733
−
−
−
290
4,506
10
4,516
473
2,362
657
−
−
−
273
3,765
13
3,778
1,032
265
−
−
2,094
272
443
4,106
60
4,166
699
28
−
5
1,996
149
152
3,029
19
3,048
−
141
−
−
145
−
90
376
−
376
−
89
−
−
114
−
90
293
−
293
(1) Other non-current taxes are classified within other non-current liabilities in the statement of financial position.
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. They include the amounts referring to an agreement with the
ANP to close a legal proceeding involving the recalculation of royalties and special participations relating to oil
production in the Jubarte field, from August 2009 to February 2011 and from December 2012 to February 2015.
From March 1 to June 30, 2023, Export Tax was charged on the exports of crude oil, for which the Company recognized
US$ 285 as other taxes within the statement of income.
Claim to recover PIS and COFINS
The Company filed four civil lawsuits 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. Regarding two actions
relating to Petroquisa, a former subsidiary that had been incorporated by the Company, the corresponding amounts
were paid by the Brazilian Federal Government in 2023. In relation to the two remaining cases, both had rulings by the
court favorable to the Company and, in one of them, the Brazilian Federal Government has already expressed its
agreement and there was a decision in favor of the Company, still subject to appeal. Regarding the other lawsuit, there
is no court decision at this point.
F-43
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pillar Two - Global Minimum Top-up Tax
In December 2021, the Organization for Economic Cooperation and Development (OECD) released the Pillar Two model
rules to reform international corporate taxation that aim to ensure that multinationals with revenues exceeding €750
million pay a minimum top up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15%
per jurisdiction (Global Minimum Top-up Tax).
If the Parent Entity is located in a jurisdiction that has not implemented the top-up tax, this tax will be levied on the
next entity in the organizational structure located in a jurisdiction that has implemented it, following a top-down
approach. On December 19, 2023, the Netherlands enacted the Pillar Two income taxes legislation effective on January
1, 2024.
Petrobras is in the process of assessing if there is any exposure arising from Pillar Two legislation. Based on a
preliminary assessment of the new rules, Petrobras does not expect a material exposure. Considering that the
information for a comprehensive analysis is still being evaluated and due to the complexity of the new legislation,
Petrobras expects to complete the assessment during 2024.
Petrobras applied the temporary exemption described in the amendments to IAS 12, issued by the IASB in May 2023, on
the accounting for income taxes. Accordingly, the Company neither recognizes nor discloses information about
deferred tax assets or liabilities related to the Pillar Two.
18. 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.
12.31.2023
12.31.2022
1,986
143
16,382
18,511
2,932
15,579
1,452
192
11,246
12,890
2,215
10,675
12.31.2023
12.31.2022
464
574
343
605
1,986
1,944
42
489
505
327
131
1,452
1,421
31
Liabilities
Short-term employee benefits
Termination benefits
Post-employment benefits
Total
Current
Non-current
18.1. Short-term employee benefits
Variable compensation programs
Accrued vacation
Salaries and related charges and other provisions
Profit sharing
Total
Current
Non-current (1)
(1) Remaining balance relating to the four-year deferral of 40% of the PPP portion of executive officers and the upper management.
The Company recognized the following amounts in the statement of income:
F-44
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Expenses recognized in the statement of income
Salaries, accrued vacations and related charges
Variable compensation programs (1)
Profit sharing (1)
Management fees and charges
Total
(1) It includes adjustments to provisions related to previous years.
18.1.1. Variable compensation programs
2023
(3,478)
(416)
(595)
(14)
2022
(3,006)
(547)
(131)
(14)
2021
(2,665)
(469)
(125)
(15)
(4,503)
(3,698)
(3,274)
Performance award programs (Programa de Prêmio por Desempenho - PPP and Programa de Prêmio por Performance
- PRD)
In 2023, the Company paid US$ 562 in relation to the PPP for 2022, since the metrics relating to the Company’s and
individual performances were achieved in 2022.
For 2023, Petrobras revised its variable compensation program, implementing the PRD in replacement of the PPP. In
the new model, the PRD is aimed at employees with and without managerial function, as a complementary program to
the Profit Sharing (PLR).
The PRD intends to recognize the effort and individual performance of each employee to achieve the Company’s results.
The amounts to be paid to each employee continues to be defined by the achievement of the key metrics (which
currently are Delta Valor Petrobras - VALOR, Greenhouse Gas Emissions Target Achievement Indicator - IAGEE, and Oil
Leak Volume Indicator - VAZO) and of the individual goals (performance management score for all employees, with
exception of executive managers, for whom the scorecard of their respective departments will be considered).
The PRD establishes that, in order to trigger this payment, it is necessary to have a declaration and payment of
distribution to shareholders approved by the Company’s Board of Directors, as well as net income for the year.
The total amount is limited to a percentage of the net income or the Adjusted EBITDA for the year (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 of assets; results on disposal/write-offs of assets; and results
from co-participation agreements in bid areas). For 2023, the PRD is limited to 5% of the adjusted EBITDA.
In 2023, the Company provisioned US$ 415 relating to the PRD (US$ 553 for 2022), recorded in other income and
expenses, including variable compensation programs from consolidated companies.
Profit Sharing (Participações nos lucros ou resultados - PLR)
In 2023, the Company settled US$ 134 related to the PLR 2022, considering the agreement for the PLR 2021 and 2022,
approved by the Secretariat of Management and Governance of State-owned Companies (SEST), which provided that
only employees without managerial functions would be entitled to receive profit sharing with individual limits according
to their remuneration.
For 2023, considering the change implemented in the Company's variable compensation programs, the PLR will also
include employees with managerial functions, and it becomes the main variable compensation program of the Company.
For the payment of PLR relating to 2023, the Company needs to meet the following triggers: declaration and payment
of distribution to shareholders approved by the Company’s Board of Directors, net income for the year, as well as
achieving at least 80% of the weighted average of a set of proposed indicators.
For 2023, the total amount is limited to the lower of 6.25% of the net income and to 25% of the distribution to
shareholders.
F-45
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
In 2023, the Company provisioned US$ 591 referring to PLR for 2023 (US$ 132 for 2022), recorded in other income and
expenses.
Accounting policy for variable compensation programs (PRD, PPP and PLR)
The provisions for variable compensation programs are recognized on an accrual basis, during the periods in which the
employees provided services. They represent the estimates of future disbursements arising from past events, based
on the criteria and metrics of the PRD, PPP and PLR, provided that the requirements for activating these programs are
met and that the obligation can be reliably estimated.
18.2. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of labor contract as a result of
either: i) the Company’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.
Voluntary severance programs
The Company has voluntary severance programs specific for employees of the corporate segment and of divested
assets, which provide for the same legal and indemnity advantages.
In 2023, 481 employees retired through these programs, while there were 55 enrollments and 179 withdrawals. Changes
to the provisions for termination benefits are presented as follows:
Opening Balance
Effects in the statement of income
Enrollments
Revision of provisions
Effects in cash and cash equivalents
Settlements in the period
Translation adjustment
Closing Balance
Current
Non-current
2023
192
(10)
6
(16)
(53)
(53)
14
143
81
62
2022
349
16
18
(2)
(199)
(199)
26
192
75
117
The provision for expenses is recognized as employees enroll to the programs.
The Company disburse the severance payments in two installments, one at the time of termination and the remainder
one year after the termination.
As of December 31, 2023, from the balance of US$ 143, US$ 26 refers to the second installment of 494 retired employees
and US$ 117 refers to 1,046 employees enrolled in voluntary severance programs with expected termination by
September 2025.
18.3. Post-employment benefits
The Company maintains a health care plan for its employees in Brazil (active and retiree) and their dependents (Saúde
Petrobras - AMS), and five other major plans of post-employment benefits (collectively referred to as “pension plans”).
The following table presents the balance of post-employment benefits:
F-46
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Liabilities
Health Care Plan - Saúde Petrobras - AMS
Petros Pension Plan - Renegotiated (PPSP-R)
Petros Pension Plan - Non-renegotiated (PPSP-NR)
Petros Pension Plan - Renegotiated - Pre-70 (PPSP-R Pre 70)
Petros Pension Plan - Non-renegotiated - Pre-70 (PPSP-NR Pre 70)
Petros 2 Pension Plan (PP-2)
Total
Current
Non-current
12.31.2023
12.31.2022
9,662
4,221
1,338
519
461
181
16,382
907
15,475
5,813
3,606
1,041
284
339
163
11,246
719
10,527
18.3.1. Nature and risks associated with defined benefit plans
Health Care Plan
The health care plan Saúde Petrobras – AMS is managed and run by Petrobras Health Association (Associação Petrobras
de Saúde – APS), a nonprofit civil association, and includes prevention and health care programs. The plan offers
assistance to all employees, retirees, pensioners and eligible family members, according to the rules of the plan, and is
open to new employees.
Currently sponsored by Petrobras, Transpetro, PBIO, TBG and Termobahia, this plan is primarily exposed to the risk of
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, retirees and pensioners make monthly fixed contributions to cover high-risk procedures and variable
contributions for the cost of medical 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 or acquisition and home delivery, with co-participation of
beneficiaries.
Benefits are paid by the Company based on the costs incurred by the beneficiaries. The financial participation of the
Company and the beneficiaries on the expenses are provided for in the Collective Bargaining Agreement (ACT), being
60% by the Company and 40% by the participants.
As provided in clause 37, paragraph 2 of the Collective Bargaining Agreement 2023-2025, if the resolutions No. 42/2022
and No. 49/2023 of the Commission on Corporate Governance and the Administration of Corporate Holdings of the
Brazilian Federal Government (Comissão de Governança Corporativa e de Administração de Participações Societárias
da União – CGPAR) are revoked or amended, allowing adjustments in the cost-sharing of health care plans, the Company
and the labor unions will meet to implement a new cost-sharing arrangement, in order to minimize the impact on the
income of its beneficiaries.
Annual revision of the health care plan
At December 31, 2023, this obligation was revised using the revised actuarial assumptions, which results are shown in
note 18.3.2.
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.
F-47
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 net obligation with pension plans recorded by the Company is measured in accordance with the requirements of
IFRS which has a different measurement methodology to that applicable to pension funds, regulated by the Post-
Retirement Benefit Federal Council (Conselho Nacional de Previdência Complementar – CNPC).
On March 29, 2023, the Deliberative Council of Petros Foundation approved the financial statements of the pension
plans for the year ended December 31, 2022, sponsored by the Company.
The following table below presents the reconciliation of the deficit of Petros Plan registered by Petros Foundation as
of December 31, 2022 with the net actuarial liability registered by the Company at the same date (an updated
reconciliation with the results of the plans as of December 31, 2023 will be disclosed in the first quarter of 2024, after
the approval of Petros Foundation Deliberative Council of its financial statements for the year):
Deficit registered by Petros
Ordinary and extraordinary future contributions - sponsor
Contributions related to the TFC - sponsor
Financial assumptions (interest rate and inflation), changes in fair value of plan assets and actuarial valuation method
Net actuarial liability recorded by the Company
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
PPSP-R (1)
330
4,212
691
(1,343)
3,890
PPSP-NR
( )
341
1,079
391
(431)
1,380
• Sponsor Contributions – in the calculation of the obligation, Petros considers the future cash flow of ordinary and
extraordinary sponsor and participants contributions, discounted to present value, according to the CNPC criteria,
while the Company only considers them as they are made.
•
Financial Assumptions - the main difference is the definition of the real interest rate established by Petros, which
is according to the expected profitability of the current investment portfolios and the parameters published by
the CNPC, considering a moving average of recent years in setting safety limits. On the other hand, the Company
determines the real interest rates through an equivalent rate that combines the maturity profile of pension and
healthcare obligations with the future yield curve of long-term Brazilian Federal Government securities (“Tesouro
IPCA”, formerly known as NTN).
• Changes in the fair value of plan assets – Petros measures government securities based on its curve, with a
portfolio immunization strategy, while in the Company measures at market value.
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-48
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 and Termomacaé.
The PPSP-R and PPSP-NR were created in 2018 as a split of 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-49
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The following table 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.
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
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
Parity contributions made by
participants and the
Company to the plans
It is comprised of:
i) normal contributions
that covers expected
cost of the plans in the
long term; and
It is comprised of:
normal contributions
that covers expected
cost of the plans in the
long term.
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
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
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.
Regular contributions
during the employment
relationship, saving for
the undefined benefit,
accumulated in
individual accounts
ii) extraordinary
contributions that
covers additional costs
that are generally
derived from actuarial
deficits.
Participants are
exempt from paying
any extraordinary
contributions in case of
deficit until the
settlement of the TFC.
ii) extraordinary
contributions that
covers additional costs
that are generally
derived from actuarial
deficits.
Participants are exempt
from paying any
extraordinary
contributions in case of
deficit until the
settlement of the TFC.
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$131
at 12/31/2023.
Financial obligations
with a principal
amounting to US$390
at 12/31/2023.
Financial obligations
settled early in 2021.
Financial obligations with
a principal amounting to
US$267 at 12/31/2023.
N/A
N/A
Terms of Financial
Commitment - TFC (debt
agreements) assumed by the
Company to settle the
deficits. Amounts to be paid
to Petros Foundation (1).
Annually remeasured in accordance with actuarial assumptions, with semi-annual payment of interest
based on the updated balance and maturing in 2028.
(1) This obligation is recorded in these financial statements, within actuarial liabilities.
Debt Assumption Instrument relating to Deficit Settlement Plan 2015 (PED 2015)
On October 18, 2022, the Company assumed its commitment for the payment of extraordinary sponsor’s contributions
in the scope of PED 2015, implemented in 2017, together with the PPSP-R and the PPSP-NR. These contributions were
not previously made due to court injunctions.
F-50
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The amount owed by Petrobras is US$ 230 (R$ 1,114 million) and refers to amounts not charged from July 2020 to
December 2021. The Company paid US$ 44 on October 28, 2022, and the remaining balance will be paid according to the
payroll in return for the collection of the portion of participants and assisted.
The effects of this plan have already been recognized in the financial statements in the years in which they were
implemented.
At December 31, 2023, the balance of this instrument, recorded within actuarial liabilities, is US$ 165 (US$ 168 at
December 31, 2022).
Deficit Settlement Plan 2021 referring to the PPSP-R plan (PED 2021)
On November 10, 2022, Petros' Foundation Deliberative Council approved a plan to settle the deficit registered by the
PPSP-R in 2021. On April 1, 2023, this plan was implemented, following a favorable decision held on March 17, 2023 by
the SEST.
This deficit, amounting to US$ 1,759 (R$ 8,515 million) as of December 31, 2023, is being settled on an equal
basis between sponsors and participants (except in certain situations where it is self-sponsored by the participants) of
which US$ 829 (R$ 4,012 million) paid by Petrobras, during the lifetime of the plan.
Deficit Settlement Plan 2022 referring to the PPSP-NR plan (PED 2022)
On December 22, 2023, the Company's Board of Directors approved a plan to settle the deficit registered by the PPSP-
NR in 2022 (PED 2022), which was submitted for review by the SEST.
The PED 2022 provides for the settlement of a US$ 298 deficit (R$1,557 million) as of December 31, 2022, which meets
the solvency needs of the plan, according to studies conducted by the Petros Foundation. This deficit, updated by the
actuarial target of the plan until December 2023, amounts to US$ 367 (R$ 1,775 million).
According to Supplementary Laws 108/2001 and 109/2001, as well as Resolution No. 30/2018 of the CNPC, the deficit
must be settled in equal parts among sponsors and participants of the PPSP-NR. Therefore, the Company will
contribute with US$ 171 (R$ 827 million) of the deficit updated until December 2023.
Before the implementation of extraordinary collections of the PED 2022 by the Petros Foundation, scheduled to begin
in April 2024, this settlement plan must receive a favorable assessment from the SEST.
The disbursement by the sponsors will decrease over the life of the plan, with an estimated additional average annual
flow of US$ 12 (R$ 60 million) in the first 5 years.
The actuarial liability of the PPSP-NR as of December 31, 2023 reflects the effects of implementing new extraordinary
contributions following the implementation of the PED 2022.
Annual revision of the pension plans
At December 31, 2023, this obligation was revised using the actuarial assumptions in force, which results are shown in
note 18.3.2.
18.3.2. Net actuarial liabilities and expenses, and fair value of plans assets
a) Changes in the actuarial liabilities recognized in the statement of financial position
Net actuarial liabilities represent the obligations of the Company, net of the fair value of plan assets (when applicable),
at present value.
For information on actuarial assumptions used to determine the defined benefit obligation, see the table in Note 18.3.6.
F-51
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in the actuarial liabilities related to pension and healthcare plans with defined benefit characteristics is
presented as follows:
Amounts recognized in the Statement of Financial Position
Present value of obligations
( -) Fair value of plan assets
Net actuarial liability as of December 31, 2023
Changes in the net actuarial liability
Balance as of January 1, 2023
Recognized in the Statement of Income
Current service cost
Net interest
Recognized in Equity - other comprehensive income
Remeasurement effects (2)
Cash effects
Contributions paid
Payments related to Term of financial commitment (TFC)
Other changes
Others
Translation Adjustment
Balance at December 31, 2023
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(2) It includes a complement of US$ 109 related to 2022.
Pension Plans
PPSP-R (1) PPSP-NR (1)
Petros 2
2023
Total
Health Care
Plan
Saúde
Petrobras-AMS
14,941
(10,201)
4,740
4,806
1,357
9,662
30,766
(3,007)
(1,176)
−
(14,384)
1,799
181
9,662
16,382
3,890
1,380
490
11
479
433
433
(385)
(357)
(28)
312
−
312
169
2
167
253
253
(115)
(103)
(12)
112
−
112
163
30
10
20
(14)
(14)
(12)
(12)
−
14
−
14
5,813
11,246
853
144
709
2,902
2,902
(415)
(415)
−
509
1
508
1,542
167
1,375
3,574
3,574
(927)
(887)
(40)
947
1
946
4,740
1,799
181
9,662
16,382
F-52
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pension Plans
Health
Care Plan
Other
plans
2022
Total
PPSP-R (1) PPSP-NR (1)
Petros 2
Saúde
Petrobras-AMS
Amounts recognized in the Statement of Financial Position
Present value of obligations
( -) Fair value of plan assets
Net actuarial liability as of December 31, 2022
12,771
(8,881)
3,890
4,119
(2,739)
1,380
1,102
(939)
163
5,813
−
5,813
−
−
−
23,805
(12,559)
11,246
Changes in the net actuarial liability
Balance as of January 1, 2022 (2)
Recognized in the Statement of Income
Current service cost
Net interest
Recognized in Equity - other comprehensive income
Remeasurement effects recognized in other comprehensive
income
Cash effects
Contributions paid
Payments related to Term of financial commitment (TFC)
Other changes
Others
Translation Adjustment
Balance at December 31, 2022
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
4,050
1,169
457
10
447
420
420
(1,325)
(304)
(1,021)
288
−
288
3,890
129
1
128
417
417
(421)
(94)
(327)
86
−
86
1,380
165
33
13
20
(45)
(45)
−
−
−
10
−
10
163
4,485
11
609
105
504
791
791
(384)
(384)
−
312
1
311
5,813
−
−
−
−
−
−
−
−
(11)
(10)
(1)
−
(2) It includes the payment of US$ 1,324 of a portion of the TFC made on February 25, 2022.
b) Changes in present value of the obligation
Pension Plans
PPSP-R (1) PPSP-NR (1)
Petros 2
Health Care
Plan
Saúde
Petrobras-AMS
9,880
1,228
129
1,099
1,583
1,583
(2,130)
(782)
(1,348)
685
(9)
694
11,246
2023
Total
Present value of obligations at the beginning of the year
12,771
4,119
1,102
5,813
23,805
Recognized in the Statement of Income
Interest expense
Service cost
Recognized in Equity - other comprehensive income
Remeasurement: Experience (gains) / losses (2)
Remeasurement: (gains) / losses - demographic assumptions
Remeasurement: (gains) / losses - financial assumptions (2)
Others
Benefits paid, net of assisted contributions
Contributions paid by participants
Translation Adjustment
Present value of obligations at the end of the year
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(2) It includes a complement of US$ 109 related to 2022.
1,559
1,548
11
737
(318)
929
126
(126)
(1,165)
25
1,014
14,941
496
494
2
274
(107)
80
301
(83)
(413)
6
324
141
131
10
73
(94)
(1)
168
41
(61)
9
93
4,806
1,357
853
709
144
2,902
54
127
2,721
94
3,049
2,882
167
3,986
(465)
1,135
3,316
(74)
(413)
(2,052)
−
507
9,662
40
1,938
30,766
F-53
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pension Plans
PPSP-R (*) PPSP-NR (*)
Petros 2
Health
Care Plan
Saúde
Petrobras-AMS
Other
plans
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
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.
11,481
1,277
1,267
10
281
1,367
−
(1,086)
(268)
(1,088)
23
−
797
12,771
3,485
382
381
1
380
687
4
(311)
(128)
(379)
6
−
245
4,119
987
129
116
13
(6)
95
6
(107)
(8)
(72)
−
1
63
1,102
4,485
609
504
105
791
(277)
(25)
1,093
(72)
(384)
−
−
312
5,813
9
−
−
−
−
−
−
−
(9)
−
−
(9)
−
−
2022
Total
20,447
2,397
2,268
129
1,446
1,872
(15)
(411)
(485)
(1,923)
29
(8)
1,417
23,805
c) Changes in the fair value of plan assets
Petrobras has four pension plans (PPSP-R, PPSP-NR, PPSP-R Pre-70) which are currently making use of plan assets,
and one plan (PP-2) in which most of participants are in the phase of accumulating funds.
Therefore, changes to the fair value of plan assets reflect these effects, including inflows of contributions, outflows of
funds for payment of benefits, and the return of these assets.
Pension Plans
PPSP-R (1) PPSP-NR (1)
Petros 2
Health Care
Plan
Saúde
Petrobras-AMS
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: Higher/(lower) return on plan assets compared to
discount rate
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
Translation Adjustment
Fair value of plan assets at the end of the year
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
8,881
1,069
1,069
304
304
385
357
28
(438)
25
(1,165)
702
10,201
2,739
327
327
21
21
115
103
12
(195)
6
(413)
212
3,007
939
111
111
87
87
12
12
−
27
9
(61)
79
1,176
F-54
2023
Total
12,559
1,507
1,507
412
412
927
887
40
−
−
−
−
−
415
415
−
(415)
(1,021)
−
40
(413)
(2,052)
(2)
−
991
14,384
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Pension Plans
PPSP-R (1) PPSP-NR (1)
Petros 2
Health
Care Plan
Saúde
Petrobras-AMS
7,431
820
820
(139)
(139)
1,325
304
1,021
(556)
23
(1,088)
−
509
8,881
2,316
822
253
253
(37)
(37)
421
94
327
(214)
6
(379)
−
159
2,739
96
96
39
39
−
−
−
(18)
−
(72)
−
54
939
−
−
−
−
−
384
384
−
(384)
−
(384)
−
−
−
Other
plans
2022
Total
(2)
10,567
−
−
−
−
−
−
−
2
−
−
2
−
−
1,169
1,169
(137)
(137)
2,130
782
1,348
(1,170)
29
(1,923)
2
722
12,559
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: Higher/(lower) return on plan assets
compared to discount rate
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
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.
Investment management of pension plan assets
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, using 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.
Pension plan assets by type of asset are set out as follows:
F-55
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
Fair value of plan assets at the end of the year
Quoted
prices in
active
markets
−
3,212
1,756
786
670
735
735
−
−
185
4,132
−
4,132
Unquoted
prices
Total fair
value
1,466
7,698
7,694
−
4
210
−
210
31
541
9,946
306
10,252
1,466
10,910
9,450
786
674
945
735
210
216
541
14,078
306
14,384
2023
2022
Total fair
%
10%
75%
5%
−
−
−
−
−
4%
4%
98%
2%
100%
value
1,353
8,845
7,450
864
531
1,427
1,184
243
159
490
12,274
285
12,559
%
11%
70%
9%
−
−
−
−
−
4%
4%
98%
2%
100%
There is no plan asset for the health care plan. Loans to participants of pension plans are measured at amortized cost,
which is considered an appropriate estimate of fair value.
As of December 31, 2023, the investment portfolio included Company’s common shares in the amount of US$ 1
(US$ 1 in 2022) and real estate properties leased by the Company in the amount of US$ 26 (US$ 2 in 2022).
d) Net expenses relating to benefit plans
Pension Plans
PPSP-R (1) PPSP-NR (1)
(9)
(160)
(169)
(129)
(178)
(48)
(442)
(490)
(457)
(469)
Petros 2
(14)
(16)
(30)
(33)
(72)
Health Care
Plan
Saúde
Petrobras-AMS
(299)
(554)
(853)
(609)
(1,388)
Other
Total
Plans
(370)
−
(1,172)
−
(1,542)
−
(1,228)
−
(2,098)
9
Related to active employees (cost of sales and expenses)
Related to retirees (other income and expenses)
Net expenses for 2023
Net expenses for 2022
Net expenses for 2021
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
18.3.3. Contributions
In 2023, the Company contributed US$ 927 to the defined benefit plans (US$ 2,130 in 2022), reducing the balance of
obligations of these plans, as presented in note 18.3.2. In addition, the Company contributed with US$ 232 and US$ 2,
respectively, to the defined contribution portions of PP-2 and PP-3 plans (US$ 197 for PP-2 and US$ 2 for PP-3 in 2022),
which were recognized in the statement of income.
For 2024, the expected contributions for the PPSP-R, PPSP-NR, PPSP-R pre-70, PPSP-NR pre-70 and for the defined
benefit portion of PP-2, amounts to US$ 524, while for the defined contribution portion of PP-2 amounts to US$ 238.
The contribution to the defined benefit portion of the PP-2, which had been suspended since July 2012, was
reestablished in April 2023, according to the decision of the Petros Foundation's Deliberative Council, Thus, a portion
of the monthly contribution became allocated to risk coverage (mainly for the payment of benefits such as lump sum
death benefit and for the coverage of minimum guarantees), reducing the balance of the actuarial obligation as
contributions are made.
F-56
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
18.3.4. Expected future cash flows
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
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
Pension Plan
PPSP-R (1) PPSP-NR (1)
387
1,602
1,125
747
945
225
4,915
3,579
2,514
3,708
Petros 2
84
361
276
205
431
Health Care
Plan
Saúde
Petrobras-AMS
388
2,077
1,990
1,646
3,561
2023
2022
Total
Total
1,084
8,955
6,970
5,112
8,645
1,728
7,021
5,367
3,762
5,927
14,941
4,806
1,357
9,662
30,766
23,805
18.3.5. 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
PPSP-R
Pré-70
PPSP-NR
PPSP-NR
Pré-70
11.18
7.29
10.92
7.22
18.3.6. 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-57
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
PPSP-R
PPSP-NR
PPSP-R
Pré-70
PPSP-NR
Pré-70
9.53%
5.42%
4.89%
9.52%
5.41%
4.63%
9.46%
5.35%
4.89%
9.46%
5.35%
4.63%
Pension Plans
PP2
9.56%
5.45%
7.07%
2023
Health
Care Plan
Saúde
Petrobras-AMS
9.56%
5.45%
n/a
n/a
n/a
n/a
n/a
Assumptions
Nominal discount rate
(including inflation)(1)
Real discount rate
Nominal expected salary
growth (including inflation)
(2)
Expected changes in medical
and hospital costs (3)
n/a
13.11% a 3.75%
p.a.
Employees:
according to
pension plan
Assisted: PPSP-
R: Ex Petros 2016
Assets: PP-2:
Disability
Experience PP-2
2022
Assisted: n/a
PPSP-R: AT-49
male
Male, 56 years /
Female, 55 years
AT-2012 IAM
basic fem 10%
smoothed
Disability
Experience PP-2
2022
IAPB-57
strong, 30%
smoothed
1st eligibility
according to
RGPS Male, 65
years / Female,
60 years
Mortality table
Petros
Experience 2016
Petros
Experiences 2025
Petros
Experiences 2020
Petros
Experiences 2023
Disability table
American group
American group
n/a
n/a
Mortality table for disabled
participants
AT-49 male
AT-83 Basic by
gender
MI 2006, by
gender, 20%
smoothed
Petros
Experience 2014
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
(1) Inflation reflects market projections: 3.90% for 2024 and converging to 3.75% in 2031 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.
F-58
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
PPSP-R
PPSP-NR
PPSP-R Pre-70 PPSP-NR Pre-70
11,95%
6.16%
11,95%
6.16%
11.93%
6.15%
11.93%
6.15%
2022
Health
Pension Plans
Care Plan
PP2
11.97%
6.18%
Saúde
Petrobras-AMS
11,97%
6.18%
6.27%
6.16%
6.27%
6.16%
7.74%
n/a
n/a
n/a
n/a
n/a
n/a
Assumptions
Nominal discount rate
(including inflation)(1)
Real discount rate
Nominal expected salary
growth (including inflation)
(2)
Expected changes in medical
and hospital costs (3)
9.87% a 3.25%
p.a.
Employees:
according to
pension plan
Assisted: Ex
Petros 2013
Mortality table
Petros
Experience 2013
Petros
Experiences 2020
Petros
Experiences 2016
Petros
Experiences 2020
AT-2012 IAM
basic fem 10%
smoothed
Disability table
American group
American group
n/a
n/a
Disability
Experience PP-2
2022
Assets: PP-2:
Disability
Experience PP-2
Mortality table for disabled
participants
AT-49 male
AT-83 Basic by
gender
MI 2006, by
gender, 20%
smoothed
Petros
Experience 2014
IAPB-57
strong, 30%
smoothed
2022
AT-49 male
Age of retirement
Male, 56 years /
Female, 55 years
Male, 58 years /
Female, 56 years
n/a
n/a
1st eligibility
Male, 56 years /
Female, 55 years
(1) Inflation reflects market projections: 5.45% for 2023 and converging to 3.25% in 2027 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.
18.3.7. 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
Pension Benefits
Medical Benefits
Discount Rate
Expected changes in
medical and hospital
costs
Medical Benefits
+100 bps
-100 bps
+100 bps
-100 bps
+100 bps
-100 bps
(1,804)
(31)
2,357
73
(1,102)
(67)
1,364
82
1,388
198
(1,133)
(157)
Accounting policy for post-employment defined benefits
The obligations 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 credit unit 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 estimate, historical data related to benefits paid and employee contributions, as
set out in note 4.
F-59
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Service cost are accounted for within the statement of income 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 is the change during the period in the net defined benefit liability
that arises from the passage of time. Such interest is accounted for in the statement of income.
Remeasurement of the net defined benefit liability is recognized in shareholders’ equity, in other comprehensive
income, and comprises: (i) actuarial gains and losses and; (ii) return on plan assets, excluding net interest on the
net defined liability, net of defined benefit plan assets.
The Company also contributes to defined contribution plans, on a parity basis in relation to the employee's contribution,
that are expensed when incurred.
19. Provisions for legal proceedings, judicial deposits and contingent liabilities
19.1. Provisions for legal proceedings
The Company recognizes provisions for legal, administrative and arbitral proceedings based on the best estimate of
the costs 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) several individual and collective labor claims; (ii) 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 (iii) actions of outsourced employees.
• Tax claims including: (i) tax notices for alleged non-compliance with ancillary obligations; (ii) claims relating to
benefits previously taken for Brazilian federal tax credits applied that were subsequently alleged to be
disallowable; (iii) claims for alleged non-payment of CIDE on imports of propane and butane; and (iv) claims for
alleged non-payment of social security contributions on allowances and bonuses.
• Civil claims, in particular: (i) lawsuits related to contracts; (ii) legal and administrative proceedings involving fines
applied by the ANP - Brazilian Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional de Petróleo, Gás
Natural e Biocombustíveis), mainly relating to production measurement systems; and (iii) legal and administrative
proceedings that discuss differences of royalties and special participation charges in several fields.
• Environmental claims, specially: (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-São Paulo State Park.
Provisions for legal proceedings are set out as follows:
Non-current liabilities
Labor claims
Tax claims
Civil claims
Environmental claims
Total
12.31.2023
806
544
1,614
341
3,305
12.31.2022
737
466
1,504
303
3,010
F-60
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Opening Balance
Additions, net of reversals
Use of provision
Revaluation of existing proceedings and interest charges
Others
Translation adjustment
Closing Balance
2023
3,010
389
(709)
376
(5)
244
2022
2,018
1,072
(487)
273
(2)
136
3,305
3,010
In preparing its consolidated financial statements of 2023, 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.
19.2. Judicial deposits
The Company makes deposits in judicial phases, mainly to suspend the chargeability of the tax debt and to maintain its
tax compliance. Judicial deposits are set out in the table below according to the nature of the corresponding lawsuits:
Non-current assets
Tax
Labor
Civil
Environmental
Others
Total
Opening Balance
Additions
Use
Accruals and charges
Others
Translation adjustment
Closing Balance
12.31.2023
10,607
12.31.2022
7,876
979
2,977
115
68
14,746
2023
11,053
1,735
(148)
1,167
(7)
946
907
2,089
109
72
11,053
2022
8,038
1,710
(115)
897
(9)
532
14,746
11,053
The Company maintains a Negotiated Legal Proceeding (NJP) agreement with the Brazilian National Treasury Attorney
General's Office (PGFN), aiming to postpone judicial deposits related to federal tax lawsuits with values exceeding
US$ 41 (R$ 200 million), which allows judicial discussion without the immediate disbursement.
To achieve this, the Company makes production capacity available as a guarantee from the Tupi, Sapinhoá, and
Roncador fields. As the judicial deposits are made, the mentioned capacity is released for other processes that may be
included in the NJP.
The Company’s management understands that the mentioned NJP provides greater cash predictability and ensures the
maintenance of federal tax regularity. As of December 31, 2023, the balance of production capacity held in guarantee
in the NJP is US$ 7,997.
19.3. 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.
F-61
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The estimates of contingent liabilities are indexed to inflation and updated by applicable interest rates. As of December
31, 2023, estimated contingent liabilities for which the possibility of loss is classified as possible are set out in the
following table:
Nature
Tax
Labor
Civil
Environmental
Total
12.31.2023
37,189
10,150
11,455
1,427
12.31.2022
32,094
8,272
7,548
1,257
60,221
49,171
19.3.1. Information on contingent liabilities
The tables below detail the main causes of tax, civil, environmental and labor nature, whose expectations of losses are
classified as possible:
F-62
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 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. In 2023, the amounts increased mainly due to inflation indexation, partially offset by the
reduction in amounts of three cases already in the judicial phase that had unfavorable decisions in the Conselho
Administrativo de Recursos Fiscais - CARF by the casting vote, and, as a result, the amounts of the fines were excluded
from the active debt, in accordance with paragraph nine-A, article 25, of Law no. 14,689/2023.
2) Income from foreign subsidiaries 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. In 2023, there was a reduction in amounts, partially offset by the inflation indexation, considering that, in four
cases already in the judicial phase, there were unfavorable decisions in the CARF by the casting vote, and, as a result, the
amounts of the fines were excluded from the active debt, in accordance with paragraph nine-A, article 25, of Law no.
14,689/2023.
3) Collection of Import tax (II), PIS/COFINS and customs fines including Petrobras as jointly liable.
Current status: Awaiting judgment of the Brazilian Federal Government appeal, at the CARF, because of a lower court
administrative decision favorable to the Company. In 2023, the increase refers, in particular, to inflation indexation.
4) 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 2023, new tax notices were
issued.
5) Collection of IRPJ and CSLL - Transfer price - Charter contracts
Current status: The processes are in the administrative level. There are two decisions, one favorable and the other
unfavorable to Petrobras in the first instance. The appeals from the Company and the Brazilian Federal Government are
awaited. In 2023, the Company received a new tax notice relating to 2018.
6) Deduction of the PIS and COFINS tax base, including in ship or pay contracts and charters of aircraft and vessels.
Estimate
12.31.2023 12.31.2022
11,409
10,386
4,260
4,396
2,872
2,414
1,816
705
1,418
498
Current status: The claims involve lawsuits in different administrative and judicial stages. In 2023, the increase refers, in
particular, to inflation indexation.
1,370
986
7) Collection of PIS/COFINS – Incidences on Amnesties.
Current status: Collection of social contributions PIS/COFINS, resulting from the tax transaction provided for in article 3
of Law 13,586/2017. The Embargoes on Execution are in the stage of producing expert evidence. In 2023, the increase
refers, in particular, to the registration of the debt in Active Debt of the Brazilian Federal Government.
8) Incidence of social security contributions over contingent bonuses paid to employees.
Current status: Awaiting defense judgment and appeals at the administrative and judicial levels.
9) Deduction of the IRPJ and CSLL tax base of the amounts paid as an incentive to the Petros Plan renegotiation and past
service.
Current status: This claim involves lawsuits in different judicial stages.
10) Income taxes (IRPJ and CSLL) - Capital gains and Amortization of goodwill on the acquisition of equity interests.
Current status: This claim involves lawsuits in different administrative stages.
11) 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.
12) Import tax, PIS/COFINS and customs fines - Import of vessels through Repetro's Special Customs Regime.
1,263
870
1,064
922
723
578
646
501
544
485
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2023, a new tax notice was
issued against the Company.
403
294
13) Customs – Fines of 1% and 5% on the Customs Value.
Fines applied to the customs value of imported products due to inaccurated information in import declarations.
Current status: This claim involves lawsuits in different administrative and judicial stages.
273
240
F-63
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Plaintiff: States of SP, RJ, BA, PA, AL, MA, PB, PE, AM and SE Finance Departments
14) VAT (ICMS) and VAT credits on internal consumption of bunker fuel and marine diesel, destined to chartered vessels.
Current status: This claim involves lawsuits in different administrative and judicial stages.
514
425
Plaintiff: States of RJ and BA Finance Departments
15) 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 PE and RJ Finance Departments
16) VAT Tax (ICMS) on imports required by Brazilian States.
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2023, the reduction refers, in
particular, to the change in the expectation of loss of several processes, from possible to remote, due to the effects of the
decision of the Constitutional Declaratory Action (ADC) 49 of the Federal Supreme Court.
Plaintiff: States of RJ, AM, PA, BA, MA, SP, RO, PE and RS Finance Departments
17) 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. In 2023, the increase resulted,
in particular, from the receipt of new tax notices and inflation indexation.
Plaintiff: States of RJ, BA, PE and MT Finance Departments
18) 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. In 2023, the increase refers, in
particular, to the inflation indexation, partially offset by the change in the expectation of loss of several processes, from
possible to remote, due to the effects of the decision of the Constitutional Declaratory Action (ADC) 49 of the Supreme
Federal Court.
Plaintiff: States of RJ, BA, PB, SE, SP, ES, CE and PE Finance Departments
19) 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 2023, the reduction refers, in
particular, to the change in the expectation of several processes, from possible to remote loss, due to the effects of the
decision of the Constitutional Declaratory Action (ADC) 49 of the Supreme Federal Court.
Plaintiff: States of RJ, PR, AM, BA, PA, PE, SP, PB and AL Finance Departments
20) 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.
Plaintiff: State of SP Finance Department
21) 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.
Plaintiff: States of RJ, SP, BA, PE, PR and CE Finance Departments
22) 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: This claim involves lawsuits in different administrative and judicial stages. In 2023, the increase resulted,
in particular, from the receipt of new tax notices and inflation indexation.
Plaintiff: States of RJ, SP, BA, PA and AM Finance Departments
23) 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. In 2023, the reduction refers, in
particular, to the change in the expectation of several processes from possible to remote loss, due to the effects of the
decision of the Constitutional Declaratory Action (ADC) 49 of the Brazilian Superior Court.
Plaintiff: States of AC, PA, AM, MA, BA, PB, PE, SE, TO, GO, MT, RJ, SP, SC and PR Finance Departments
24) VAT Tax (ICMS) under substitution regime required by states.
960
842
355
440
1,257
916
1,027
929
374
687
913
799
299
263
576
478
81
486
Current status: This claim involves lawsuits in different administrative and judicial stages. In 2023, the increase resulted,
in particular, from the receipt of new tax notices.
223
160
Plaintiff: Municipal government of Angra dos Reis/RJ
25) Added value of ICMS on oil import operations.
Current status: This claim involves lawsuits in several judicial stages. In 2023, due to a decision in favor of the Company's
thesis, in the Brazilian Superior Court, which dismissed the Municipality's Special Appeal, the expectation of some
processes was changed from possible to remote loss. A new tax notice was also received.
311
347
F-64
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Plaintiff: Several Municipalities
26) Alleged failure to withhold and pay tax on services (ISSQN).
Current status: There are lawsuits in different administrative and judicial stages.
27) Other tax matters
Total for tax matters
Description of labor matters
Plaintiff: Employees and Sindipetro Unions.
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). On 07/28/2021, Petrobras filed an appeal and 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. The judgment of the appeals filed by the author of the action and by several amici
curiae in light of the aforementioned decision of the Minister Rapporteur was concluded by the judging panel on
11/10/2023, confirming, by 3 votes to 1, the decision that recognized the merit of the collective bargaining agreement
signed between Petrobras and the unions. In 2023, the increase was due, in particular, to the inflation indexation and
amounts added in the period. In January 2024, the ruling was published by the Supreme Court. Against the aforementioned
ruling, the complainant and union entities filed an appeal for clarification, which was discussed in a virtual plenary session
started on 02/23/2024 and ended on 03/01/2024. The declaratory embargoes were not recognized by unanimous decision
of the first Panel of the Supreme Court, maintaining the decision in favor of Petrobras. This decision is still pending
publication.
2) Other labor matters
Total for labor matters
254
2,052
37,189
223
1,756
32,094
Estimate
12.31.2023 12.31.2022
8,362
1,788
10,150
6,806
1,466
8,272
F-65
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Description of civil matters
Plaintiff: Several goods and service providers
Estimate
12.31.2023 12.31.2022
1) 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 judicial stages. In 2023, there was an increase in value due to new
lawsuits and decisions unfavorable to Petrobras.
3,547
2,988
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 charge.
Current status: This list involves claims that are disputed in court and in arbitration proceedings, as follows. In 2023, there
was an increase in the value, due to the judicial deposits that are made by Petrobras:
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. The suspension of the arbitration was
reversed by the BM-S-11 Consortium at the Brazilian Superior Court, so that the arbitration resumed its progress.
b) Baúna and Piracicaba: the Federal Regional Court of the Second Region upheld the suspension of arbitration. Petrobras
filed appeals with the Superior Courts.
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 up to item 6 of the joint schedule (pre-hearing meeting) formulated by the parties.
Plaintiff: Federations Oil Workers, Unions, employees and retired personnel from Petros
3) Collective and individual actions that discuss topics related to Petros plans.
Current status: The matter involves proceedings at different judicial stages. In 2023, the increase refers, in particular, to
the change in the expectation of remote to possible loss in a collective action request.
2,225
6
Plaintiff: Agência Nacional de Petróleo, Gás Natural e Biocombustíveis - ANP and other agencies
2,245
1,531
4) 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.
Current status: The claims involve lawsuits in different administrative and judicial stages.
Plaintiff: Legal entities that participated in the purchase and sale of Petrobras assets
5) Judicial and arbitration proceedings that discuss asset sales carried out by Petrobras.
Current status: The matter involves proceedings in different judicial and arbitration stages. In 2023, there was an increase
in value due to the receipt of new processes.
6) Several civil proceedings, with emphasis on those related to expropriation and easement of passage and civil
liability.
Total for civil matters
Description of environmental matters
Plaintiff: Several authors, notably: Ministério Público Federal, Ministérios Públicos Estaduais and public environmental
bodies, such as IBAMA - Instituto Brasileiro de Meio Ambiente e Recursos Naturais Renováveis, state and municipal
public bodies.
1) Several lawsuits of an environmental nature, with emphasis on fines related to the Company's operations and public
civil action for alleged environmental damage due to the sinking of Platform P-36.
Total for environmental matters
2,214
1,980
240
156
984
11,455
887
7,548
Estimate
12.31.2023 12.31.2022
1,427
1,427
1,257
1,257
F-66
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
19.3.2. Minimum Compensation Based on Employee's Position and Work Schedule (Remuneração Mínima
por Nível e Regime - RMNR)
There are lawsuits related to the Minimum Compensation Based on Employee's Position and Work Schedule (RMNR),
with the objective of reviewing its calculation criteria.
The RMNR consists of a minimum remuneration guaranteed to employees, based on salary level, work schedule and
geographic location. This policy was created through collective bargaining with union entities and was approved at
employee meetings, being finally put into practice by Petrobras in 2007, but started being the subject of lawsuits three
years after its implementation.
In 2018, the Brazilian Superior Labor Court (TST) ruled against the Company, which filed extraordinary appeals to the
Brazilian Supreme Federal Court (STF) which suspended the effects of the decision issued by the TST and determined
the national suspension of the ongoing proceedings related to the RMNR.
In July 2021, a monocratic decision was published in which the STF’s Judge-Rapporteur granted an extraordinary appeal
filed, accepting the Company's thesis and recognizing the validity of the collective bargaining agreement freely signed
between Petrobras and the unions, reversing the decision of the TST.
In November 2023, the First Panel of the Supreme Federal Court decided in favor of the Company (with 3 votes against
1), confirming that there is an understanding of recognizing the merit of the collective bargaining agreement signed
between the companies and the unions. In January 2024, the ruling was published by the STF. Against this ruling, the
complainant and union entities filed an appeal for clarification, which was discussed in a virtual plenary session which
occurred from February 23 to March 1, 2024. The declaratory embargoes were not recognized by unanimous decision of
the first Panel of the Supreme Court, maintaining the decision in favor of Petrobras. This decision is still pending
publication.
As of December 31, 2023, the balance of provisions for legal proceedings regarding RMNR amounts to US$ 135, while
the contingent liabilities amount to US$ 8,362.
19.4. Class action and related proceedings
19.4.1. Class action in the Netherlands
On January 23, 2017, Stichting Petrobras Compensation Foundation ("Foundation") filed a class action in the
Netherlands, at the District Court of Rotterdam, against Petróleo Brasileiro S.A. – Petrobras, Petrobras International
Braspetro B.V. (PIB BV), Petrobras Global Finance B.V. (PGF), Petrobras Oil & Gas B.V. (PO&G) and some former Petrobras
managers. The Foundation alleges that it represents the interests of an unidentified group of investors and asserts
that, based on the facts revealed by the Lava-Jato Operation, the defendants acted illegally before the investors. On
May 26, 2021, the District Court of Rotterdam decided that the class action should proceed and that the arbitration
clause of Petrobras' bylaws does not prevent the Company's shareholders from having access to the Dutch Judiciary
and have their interests represented by the “Foundation”. However, investors who have already started 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 scope of the action. The collective action moved to the discussion phase
of merit issues.
On July 26, 2023, the Court issued an intermediary decision on the merits, ordering the production of evidence, in
relation to which the parties may express their views before the publication of the decision on the merits, which is
appealable. In addition, the Court expressed in advance some understanding, which must be included in the decision on
the merits, among which: (i) the requests made against PIB BV, PO&G and certain former members of the Company’s
management were rejected; (ii) the Court declared that Petrobras and the PGF acted illegally in relation to their
investors, although the Court expressed it does not consider itself sufficiently informed about relevant aspects of
Brazilian, Argentine and Luxembourger laws to definitively decide on the merits of the action; and iii) the alleged rights
under Spanish legislation are prescribed.
F-67
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The Foundation cannot claim compensation under the class action, which will depend not only on a result favorable to
the interests of the investors in the class action, but also on the filing of subsequent actions by or on behalf of the
investors by the Foundation itself, an opportunity in which Petrobras will be able to offer all the defenses already
presented in the class action and others that it deems appropriate, including in relation to the occurrence and
quantification of any damages that must be proven. Any compensation for the alleged damages will only be determined
by court decisions in subsequent actions mentioned above.
This class action involves complex issues and the outcome is subject to substantial uncertainties, which depend on
factors such as: the scope of the arbitration clause of the Petrobras Statute, the jurisdiction of the Dutch courts, the
scope of the agreement that ended the Class Action in the United States, the Foundation's legitimacy to represent the
interests of investors, the several laws applicable to the case, the information obtained from the production phase of
evidence, the expert analyses, the timetable to be defined by the Court and the judicial decisions on key issues of the
process, possible appeals, including before the Dutch Supreme Court, as well as the fact that the Foundation seeks only
a declaratory decision in this class action.
The Company, based on the assessments of its advisors, considers that there are not enough indicative elements to
qualify the universe of potential beneficiaries of a possible final decision unfavorable to Petrobras' interests, nor to
quantify the supposedly compensable damages.
Thus, it is currently not possible to predict whether the Company will be liable for the effective payment of damages in
any future individual claims, as this analysis will depend on the outcome of these complex procedures. In addition, it is
not possible to know which investors will be able to bring subsequent individual actions related to this matter against
Petrobras.
Furthermore, the claims formulated are broad, cover a multi-year period and involve a wide variety of activities and, in
the current scenario, the impacts of such claims are highly uncertain. The uncertainties inherent in all of these issues
affect the value and duration of final resolution of this action. As a result, Petrobras is unable to estimate an eventual
loss resulting from this action. However, Petrobras reiterates its condition as a victim of the corruption scheme revealed
by the Lava-Jato operation and intends to present and prove this condition before the Dutch court.
The Company denies the allegations made by the Foundation and will continue to defend themselves vigorously.
19.4.2. Arbitration and other legal proceedings in Argentina
In relation to the arbitration in Argentina, the Argentine Supreme Court denied the appeal, but the Consumidores
Damnificados Asociación Civil para su Defensa (formerly Consumidores Financieros Asociación Civil, "Association") filed
a new appeal to the Argentine Supreme Court, which was also denied, thus the arbitration was sent to the Arbitration
Court. This arbitration discusses Petrobras' liability for an alleged loss of market value of Petrobras' shares in Argentina,
as a result of the Lava Jato Operation. The Company is unable to provide a reliable estimate of the potential loss in this
arbitration.
In parallel to such arbitration, the Association also initiated a collective action before the Civil and Commercial Court of
Buenos Aires, in Argentina, with Petrobras appearing spontaneously on April 10, 2023, within the scope of which it
alleges Petrobras' responsibility for an alleged loss of the market value of Petrobras' securities in Argentina, as a result
of allegations made within the scope of Lava Jato Operation and their impact on the company's financial statements
prior to 2015. Petrobras presented its defense on August 30, 2023. Petrobras denies the allegations presented by the
Association and will vigorously defend itself against the accusations made by the author of the class action. The
Company is unable to provide a reliable estimate of the potential loss in this arbitration.
Regarding criminal proceeding in Argentina related to an alleged fraudulent offer of securities, aggravated by the fact
that Petrobras allegedly declared false data in its financial statements prior to 2015, the Court of Appeals revoked, on
October 21, 2021, the lower court decision that had recognized Petrobras' immunity from jurisdiction and recommended
that the lower court judge take steps to certify whether the Company could be considered criminally immune in
Argentina for further reassessment of the issue. Petrobras appealed against this decision, but the higher courts upheld
F-68
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
the decision of the Court of Appeals. After carrying out the steps determined by the Court of Appeals, on May 30, 2023,
the lower court denied the recognition of immunity from jurisdiction to Petrobras. Petrobras filed an appeal against this
decision, which is still pending judgment. The Court of Appeals previously 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,
which was also the subject of an appeal upheld by the Court of Appeals on September 15, 2022, recognizing the
Association the right to represent financial consumers. The Company presented its defense, as well as other procedural
defenses, still subject to assessment by the Argentine Court of Appeals. This criminal action is being processed before
the Economic Criminal Court No. 2 of the City of Buenos Aires.
As for the other criminal action for alleged non-compliance with the obligation to publish a “press release” in the
Argentine market about the existence of a class action filed by Consumidores Damnificados Asociación Civil para su
Defensa before the Commercial Court, there are no developments in 2023.
19.4.3. Lawsuit in United States regarding Sete Brasil Participações S.A (“Sete”)
The EIG Energy Fund XIV, L.P. and affiliates (“EIG”) filed a lawsuit against Petrobras, before the District Court of
Columbia, United States, to recover alleged losses related to its investment in Sete Brasil Participações S.A. On August
8, 2022, the judge upheld EIG's claim as to Petrobras' responsibility for the alleged losses (which was recorded in 2022
as provisions for legal proceedings) but denied the motion for summary judgment with respect to damages, whereby
the award of compensation will be subject to the proof of damages by EIG at a hearing and to the consideration of the
defenses by the Company. In the same decision, the judge denied the request to dismiss the case based on Petrobras'
immunity from jurisdiction, when an appeal was filed with the Federal Court of Appeals for the District of Columbia,
which is still pending judgement. Considering the filing of the appeal, Petrobras requested the suspension of the
process, which was granted by the lower court judge on October 26, 2022.
On August 26, 2022, on another procedural front initiated by the EIG, the District Court of Amsterdam granted a
precautionary measure to block certain Petrobras assets in the Netherlands. This granting was based on the decision
of the District Court of Columbia, on August 8, 2022, and was intended to ensure the satisfaction of EIG's claims
contained in the aforementioned US lawsuit. For the purpose of this injunction, the District Court of Amsterdam limited
EIG's claims to a total of US$ 297, although the US Court ruled that any award of damages would depend on evidence
of damages by EIG at a trial hearing. There are some discussions about the scope of the assets blocked by EIG, but there
is no related lawsuit pending in the Netherlands. This precautionary block does not prevent Petrobras and its
subsidiaries from complying with their obligations to third parties.
19.5. Arbitrations proposed by non-controlling shareholders 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 non-controlling 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.
F-69
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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. 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.
In 2023, there were no events that changed the assessment and information arbitrations proposed by non-controlling
shareholders in Brazil.
19.6. Tax recoveries under dispute - Compulsory Loan - Eletrobras
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 Eletrobras, which was the operator of this system. The loan was
charged to consumers' electricity bills.
In 2010, the Company filed a lawsuit to recognize its right to receive the differences in inflation indexation 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 December 2022, the court issued a final decision in favor of the Company in relation to the merits of the case. On
December 18, 2023, once the judgment settlement procedure began, a legal agreement was signed between the parties
to end the discussion upon payment, by Eletrobras, of US$ 239, received by the Company on December 26, 2023, ending
the contingent asset.
19.7. Lawsuits brought by natural gas distributors and others
In 2023, Petrobras entered into agreements with CEG, CEG Rio and SERGÁS, with the aim of putting an end to existing
litigation and pacifying controversial issues regarding the price of natural gas supplied, based on current economic
conditions in the natural gas market. Currently, Petrobras still has one arbitration against a gas distributor at the
Northeast of Brazil, which is confidential.
In relation to the State of Minas Gerais, the matter remains in court, where there is no ongoing arbitration, since the gas
price collection continues to be carried out in accordance with the current agreement signed between Petrobras and
GASMIG.
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.
F-70
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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, considering the best information available to the date
of the issuance of these financial statements.
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 and the amount is considered material. However, if the inflow of economic benefits is virtually
certain, which, in general, considers the final and unappealable decision, and if the value can be reliably measured, the
related asset is not a contingent asset anymore and it is recognized.
20. Provision for decommissioning costs
The following table details the amount of the provision for decommissioning costs by producing area:
Onshore
Shallow waters
Deep and ultra-deep post-salt
Pre-salt
Total
Changes in the provision for decommissioning costs are presented as follows:
Non-current liabilities
Opening balance
Adjustment to provision
Transfers related to liabilities held for sale (1)
Use of provisions
Interest accrued
Others
Translation adjustment
Closing balance
Current
Non-current
12.31.2023
447
6,253
10,872
5,630
12.31.2022
418
4,399
9,988
3,795
23,202
18,600
2023
18,600
3,821
(339)
(1,227)
837
(8)
1,519
23,203
2,032
21,171
2022
15,619
3,484
(1,258)
(854)
476
(5)
1,138
18,600
−
18,600
Decommissioning projects in Brazil are relatively recent and present specifications that can turn them complex and
challenging to comply with the requirements of the ANP, the Brazilian Navy, and the Brazilian Institute of Environment
and Renewable Natural Resources (IBAMA). The better understanding of the regulatory environment, together with
recent decommissioning practices adopted, have allowed the Company to align its Strategic Plan with this new reality,
including the adoption of advanced Environmental Social and Governance (ESG) practices, such as the implementation
of a green model for the disposal of its own floating platforms used in the decommissioning of platform P-32.
The Company is approaching the moment when it will have to decommission various systems where oil and gas
production has become unfeasible or assets have ended their useful life, as seen in the Marlim field revitalization
project, which has led to the closure of several platforms in recent years. In 2023, several Facility Decommissioning
Programs (PDI) related to this field were approved, with the majority concentrated in December. With the approved
PDIs, the Company commits to executing the activities outlined in the programs. While there is no firm commitment
regarding the execution timeline, it allows the Company to estimate with reasonable certainty the short-term portion
of the provision for decommissioning costs, which is disclosed in the current liabilities.
Even small variations in the discount rate can result in significant changes in the recognized value. The following table
contains information about sensitivities in this key assumption:
F-71
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Sensitivity to the discount rate (1)
Increase of 0.5 percentage points
Decrease of 0.5 percentage points
(1) It includes liabilities held for sale.
Effects on
provision for
decommissioning
Effects on carrying
amounts of assets
(1,462)
1,615
(1,331)
1,486
Effects on other
income and
expenses
(130)
130
The transfer to liabilities held for sale refers to the register and revision of the provision associated with E&P assets in
the divestment process and classified as assets held for sale. In 2023, it includes the provision established for the
Uruguá group of fields (US$ 381) in Rio de Janeiro and the reduction of the provision related to the Pescada group of
fields (US$ 41) in Rio Grande do Norte. In 2022, it refers to: the Potiguar groups of fields (US$ 551), in Rio Grande do
Norte state; the Albacora Leste Field (US$ 490), in Rio de Janeiro; Golfinho and Camarupim (US$ 175) and Norte
Capixaba (US$ 44) group of fields, in the state of Espírito Santo, as set out in note 31.
The due date estimates for the obligations are presented below:
Maturity
Provision for decommissioning costs
2024
2,032
2025
2,095
2026
2,031
2027
2,283
2028
1,952
2029
onwards
12.31.2023
12,810
23,203
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 declaration of commercial feasibility of an oil and gas field. The calculations of the cost estimates for
future environmental removals and recoveries are complex and involve significant uncertainties (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, if a decrease in the liability exceeds the carrying amount of the
asset, the excess shall be recognized immediately in profit or loss, within other income and expenses.
F-72
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
21. Other assets and liabilities
Assets
Escrow account and/ or collateral
Advances to suppliers
Prepaid expenses
Derivatives transactions
Assets related to E&P partnerships
Others
Current
Non-Current
Liabilities
Obligations arising from divestments
Contractual retentions
Advances from customers
Provisions for environmental expenses, research and development and fines
Other taxes
Unclaimed dividends
Derivatives transactions
Obligations arising from acquisition of equity interests
Various creditors
Others
Current
Non-Current
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(d)
(l)
12.31.2023
12.31.2022
1,009
1,814
453
92
255
262
3,885
1,570
2,315
1,087
1,561
363
54
71
194
3,330
1,777
1,553
12.31.2023
12.31.2022
1,200
1,355
716
692
708
376
337
62
156
138
520
4,905
3,015
1,890
601
906
674
293
241
147
138
95
523
4,973
3,001
1,972
The following references detail the nature of the operations that make up the balances of other assets and liabilities:
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 when the start of operations has been postponed due to legal
requirements or to 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 contractual indemnities and 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 oil
fields.
F-73
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 advances or cash receipt from third parties, related to the sale of products or services.
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 taxes (see note 17).
k) Dividends made available to shareholders and not paid due to the existence of pending registration issues for which
the shareholders are responsible with the custodian bank for the shares and with Petrobras, according to note 34.
l) Obligations arising from the acquisition of equity interests in Araucária Nitrogenados, which will be settled by the end
of 2030.
Accounting policy for other assets and liabilities
The accounting recognition of obligations arising from divestment is at present value, using a risk-free discount rate,
adjusted to reflect the Company's credit risk, being the best estimate of the disbursement required to settle the present
obligation on the statement of financial position date. The obligations are subject to significant changes as activity
execution schedules are updated and detailed by buyers.
22. 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, 2023, 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 investigation of the competent authorities and will continue to
do so in the future.
During 2023, new leniency and plea agreements entitled the Company to receive funds with respect to compensation
for damages, in the amount of US$ 109 (US$ 96 in 2022 and US$ 235 in 2021), accounted for as other income and
expenses. Thus, the total amount recovered from Lava Jato investigation through December 31, 2023 was US$ 1,727.
23. Commitment to purchase natural gas
The Gas Supply Agreement (GSA) entered into with Petrobras and Yacimientos Petrolíferos Fiscales Bolivianos - YPFB
was initially effective until December 31, 2019. Given the agreement provided for an extension clause, the GSA was
automatically extended until the entire volume contracted is delivered by YPFB and withdrawn by Petrobras.
Since December 31, 2019, the contract has been adjusted, mainly to adapt the Guaranteed Daily Quantity (QDG) to the
YPFB's supply availability. On December 15, 2023, through a new amendment to the GSA, the supply commitment was
last revised by request of YPFB.
According to the contractual balance, the Company expects purchases to continue through December 2027, considering
the withdrawal based on the QDG by YPFB, which means the maximum volume contracted every day, ranging from 6
million m³ per day to 18 million m³ per day (on a monthly basis), representing an estimated additional amount of
US$ 3.04 billion, from January 2024 to December 2027, according to price assumptions included in the Strategic Plan
2024-2028.
F-74
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
If the withdrawal occurs based on the take-or-pay choice, ranging from 4.2 million m³ per day to 12.6 million m³ per day
(on a monthly basis), there will be an additional extension until August 2030, representing an estimated additional total
value of US$ 2.88 billion from January 2024 to August 2030.
24. Property, plant and equipment
24.1. By class of assets
Balance at January 1, 2023
Cost
Accumulated depreciation and impairment (4)
Additions
Decommissioning costs - Additions to / review of
estimates
Capitalized borrowing costs
Signature Bonuses Transfers (5)
Write-offs
Transfers (6)
Transfers to assets held for sale
Depreciation, amortization and depletion
Impairment recognition (note 26)
Impairment reversal (note 26)
Translation adjustment
Balance at December 31, 2023
Cost
Accumulated depreciation and impairment (4)
Balance at January 1, 2022
Cost
Accumulated depreciation and impairment (4)
Additions
Decommissioning costs - Additions to / review of
estimates
Capitalized borrowing costs
Signature Bonuses Transfers (5)
Write-offs
Transfers (6)
Transfers to assets held for sale
Depreciation, amortization and depletion
Impairment recognition (note 26)
Impairment reversal (note 26)
Translation adjustment
Balance at December 31, 2022
Cost
Accumulated depreciation and impairment (4)
Land,
buildings
and
improvement
2,538
4,343
(1,805)
−
Equipment and
other assets (1)
55,147
105,429
(50,282)
528
Assets under
construction
(2)
14,838
23,938
(9,100)
11,919
Exploration
and
development
costs (3)
38,434
67,581
(29,147)
12
Right-of-
use assets
19,212
29,670
(10,458)
15,177
Total
130,169
230,961
(100,792)
27,636
2,672
1,277
16
(631)
286
(279)
(15,306)
(2,925)
142
10,367
153,424
273,912
(120,488)
125,330
216,407
(91,077)
15,540
3,269
1,021
1,177
(5,054)
300
(4,427)
(14,618)
(1,453)
290
8,794
2,672
−
16
(74)
1,754
(241)
(4,711)
(314)
1
2,883
40,432
74,809
(34,377)
35,847
61,906
(26,059)
48
3,269
−
1,177
(667)
3,617
(1,976)
(5,306)
(142)
52
2,515
−
−
−
(156)
1
(85)
(5,432)
(39)
28
1,674
30,380
44,829
(14,449)
17,052
26,382
(9,330)
7,126
−
−
−
(1,469)
2
(140)
(4,478)
(13)
−
1,132
38,434
67,581
(29,147)
19,212
29,670
(10,458)
130,169
230,961
(100,792)
−
−
−
(11)
58
(16)
(84)
−
3
199
2,687
4,634
(1,947)
2,383
4,080
(1,697)
−
−
−
−
(20)
130
(27)
(88)
−
−
160
2,538
4,343
(1,805)
−
−
−
(304)
5,531
(36)
(5,079)
(1,689)
101
4,210
58,409
118,173
(59,764)
53,126
98,085
(44,959)
841
−
−
−
(746)
5,162
(1,874)
(4,746)
(693)
223
3,854
55,147
105,429
(50,282)
−
1,277
−
(86)
(7,058)
99
−
(883)
9
1,401
21,516
31,467
(9,951)
16,922
25,954
(9,032)
7,525
−
1,021
−
(2,152)
(8,611)
(410)
−
(605)
15
1,133
14,838
23,938
(9,100)
(1) 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.
(2) See note 13 for assets under construction by operating segment.
(3) 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.
(4) In the case of land and assets under construction, it refers only to impairment losses.
(5) Transfers from intangible assets. In 2023, it refers to the declaration of commerciality of the Manjuba, Espadim, Raia Manta and Raia Pintada fields. In 2022, it
relates to Itapu, Sépia and Atapu.
(6) It mainly includes transfers between classes of assets and transfers from advances to suppliers.
F-75
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The additions in right of use are mainly due to the entry into operation of FPSO Anita Garibaldi, FPSO Anna Nery, FPSO
Almirante Barroso and FPSO Sepetiba, and the respective effect on lease liability (note 25).
24.2. Estimated useful life
The useful life of assets subject to depreciation are shown below:
Asset
Buildings and improvement
Equipment and other assets
Exploration and development costs
Right-of-use
Weighted average useful life in years
40 (between 25 and 50)
20 (between 3 to 31) - except assets by the units of production method
Units of production method
8 (between 2 and 47)
The estimated useful life of buildings and improvements, equipment and other assets is as follows:
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
24.3. Right-of-use assets
Buildings and improvements, equipment and other assets
Cost
6,065
8,312
5,811
31,428
33,217
12,915
5,417
19,503
122,668
4,495
118,173
Accumulated
depreciation
Balance at
December 31, 2023
(5,111)
(6,477)
(2,357)
(19,908)
(9,294)
(4,270)
(2,138)
(12,150)
(61,705)
(1,941)
(59,764)
954
1,835
3,454
11,520
23,923
8,645
3,279
7,353
60,963
2,554
58,409
The table below shows the split by type of asset and readjustment clauses with possible impacts on accumulated
depreciation and impairment, as follows:
Balance at December 31, 2023
Cost
Accumulated depreciation and impairment
Without contractual readjustment clauses
With contractual readjustment clauses - Brazil
With contractual readjustment clauses – abroad
Balance at December 31, 2022
Cost
Accumulated depreciation and impairment
Without contractual readjustment clauses
With contractual readjustment clauses - Brazil
With contractual readjustment clauses – abroad
Accounting policy for property, plant and equipment
Platforms
Vessels Properties
19,056
23,859
(4,803)
−
(4,803)
−
9,211
12,604
(3,393)
−
(3,393)
−
9,204
18,000
(8,796)
(7,103)
(225)
(1,468)
8,254
14,788
(6,534)
(5,322)
(218)
(994)
2,120
2,970
(850)
(168)
−
(682)
1,747
2,278
(531)
(64)
−
(467)
Total
30,380
44,829
(14,449)
(7,271)
(5,028)
(2,150)
19,212
29,670
(10,458)
(5,386)
(3,611)
(1,461)
F-76
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Property, plant and equipment are measured at the cost of acquisition or construction, 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, and 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.
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.
Assets directly associated to the production of oil and gas in a contracted area whose useful lives are not less than
the life of the field (reserve exhaustion time), including rights and concessions such as signature bonus, are depleted
by the unit-of-production method.
The unit-of-production method of depreciation (amortization) is computed based on the monthly production volume
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 24.2 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.
24.4. Oil and Gas fields operated by Petrobras returned to ANP
In 2023, the following oil and gas fields, in Campos basin, were returned to ANP: Atum, Curimã, Espada and Xaréu. These
fields were returned to ANP mainly due to their economic unfeasibility and, as a consequence, the Company wrote off
the amount of US$ 45 in addition to impairments recognized in prior years.
In 2022, the following oil and gas fields, in Ceará basin, were returned to ANP: Anequim, Congro, Corvina, Garoupa,
Garoupinha, Malhado, Namorado, Parati and Viola. These fields were returned to ANP mainly due to their economic
unfeasibility and, as a consequence, the Company wrote off the amount of US$ 619 in addition to impairments
recognized in prior years.
In 2021, the following oil and gas fields, in Santos basin, 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.
F-77
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
24.5. 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 31,2023, the
capitalization rate was 7% p.a. (6.55% p.a. for the year ended December 31, 2022).
25.
Intangible assets
25.1. By class of assets
Balance at January 1, 2023
Cost
Accumulated amortization and impairment
Addition
Capitalized borrowing costs
Write-offs
Transfers
Signature Bonuses Transfers (2)
Amortization
Impairment recognition (note 26)
Translation adjustment
Balance at December 31, 2023
Cost
Accumulated amortization and impairment
Estimated useful life in years
Balance at January 1, 2022
Cost
Accumulated amortization and impairment
Addition
Capitalized borrowing costs
Write-offs
Transfers
Signature Bonuses Transfers (2)
Amortization
Impairment recognition (note 26)
Translation adjustment
Balance at December 31, 2022
Cost
Accumulated amortization and impairment
Rights and
Concessions (1)
2,523
2,578
(55)
148
−
(41)
(11)
Software
439
1,560
(1,121)
200
13
−
2
(16)
(4)
(364)
190
2,425
2,489
(64)
(3)
2,695
2,744
(49)
898
−
(12)
(11)
(1,177)
(4)
−
134
−
(100)
−
38
592
1,891
(1,299)
5
308
1,321
(1,013)
181
11
(6)
(1)
−
(73)
(1)
20
Goodwill
24
24
−
−
−
−
−
−
−
−
1
25
25
−
Indefinite
22
22
−
−
−
−
−
−
−
−
2
2,523
2,578
(55)
(3)
439
1,560
(1,121)
5
24
24
−
Indefinite
Total
2,986
4,162
(1,176)
348
13
(41)
(9)
(16)
(104)
(364)
229
3,042
4,405
(1,363)
3,025
4,087
(1,062)
1,079
11
(18)
(12)
(1,177)
(77)
(1)
156
2,986
4,162
(1,176)
Estimated useful life in years
(1) 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.
(2) Transfers to PP&E. In 2023, it refers to the declaration of commerciality of the Manjuba, Espadim, Raia Manta and Raia Pintada fields. In 2022, it relates to the Itapu,
Atapu and Sepia.
(3) Mainly composed of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an indefinite
useful life assessment.
F-78
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
25.2. ANP Bidding Result
Atapu and Sépia
On April 27, 2022, Petrobras signed the Production Sharing Contract for the surplus volume of the Transfer of Rights
Agreement related to the Atapu field, in partnership with Shell Brasil Petróleo Ltda (25% interest) and TotalEnergies EP
Brasil Ltda. (22.5% interest), and related to the Sépia field in consortium with TotalEnergies (28% interest), Petronas
Petróleo Brasil Ltda. (21% interest) and QP Brasil Ltda. (21% interest), according to the results of the Second Bidding
Round for the Surplus Volume of the Transfer of Rights Agreement in the Production Sharing regime, which was held
on December 17, 2021.
Also on April 27, 2022, the Company signed the Co-participation Agreements and the Amendments to the Agreement
for the Individualization of Atapu and Sépia Production (AIPs), which are necessary to manage the coexisting deposits
of the Transfer of Rights Agreement and the Production Sharing Contract (related to the surplus volume) of these
areas.
The compensation to Petrobras for Atapu and Sépia, including an estimate of the gross-up of the taxes levied, pursuant
to Ordinance No. 8 of April 19, 2021 of the Ministry of Mines and Energy (MME), were paid by the partners in April 2022,
totaling US$ 2,093 for Atapu and US$ 3,059 for Sépia.
The agreements became effective on May 2, 2022, when Pré-Sal Petróleo S.A. (PPSA) confirmed there was no settlement
pending for this transaction, in accordance with the provisions of Ordinance No. 519 of May 21, 2021 of the MME.
Additionally, as established in Ordinance No. 8 of April 19, 2021, between 2022 and 2032, whenever the price of Brent
oil reaches an annual average ranging from US$ 40.00 to US$ 70.00, an earn out is due to Petrobras, for which the
Company expects to receive a maximum of US$ 5,244.
In 2022, the Company recognized a portion of this contingent asset related to the Earn Out for 2022 and 2023,
amounting to US$ 693, as follows: (i) US$ 384 received in January 2023; and (ii) US$ 309 relating to 2023, at present
value, considering the inflow of economic benefits as virtually certain.
During 2023, the portion of the Earn Out for 2023 had a US$ 44 update and, in January 2024, the Company received
US$ 371, including price adjustments.
Additionally, in December 2023, the Company recognized a portion of the contingent asset related to the Earn Out for
2024, amounting to US$ 241, at present value, expected to be received in 2025.
These amounts were recognized as other operating income and expenses.
Sudoeste de Sagitário, Água Marinha e Norte de Brava Blocks - 1st Cycle of Permanent Offer for Production Sharing
On December 16, 2022, Petrobras acquired the right to explore and produce oil and natural gas in Sudoeste de Sagitário
and Água Marinha blocks in partnership, and the full right of the Norte de Brava block in the 1st Cycle of Permanent
Offer for Production Sharing, carried out by the ANP. In May 2023, the Production Sharing Agreements were signed and
the signature bonus was recognized in intangible assets, in the amount of US$ 146 (US$ 4 from Sudoeste de Sagitário
block, US$ 40 from Água Marinha block and US$ 102 from Norte de Brava block).
The acquisition of the Southwest Sagitário block occurred jointly with Shell Brasil, with a 40% interest, with Petrobras
being the operator with a 60% interest.
In Água Marinha, Petrobras acts as the operator, with a 30% interest, in partnership with TotalEnergies EP (30%
interest), Petronas (20% interest), and QatarEnergy (20% interest).
The North Brava block was fully acquired by Petrobras.
F-79
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Blocks in the Pelotas Basin - 4th Permanent Concession Offering Cycle
On December 13, 2023, Petrobras acquired exploration and production rights for oil and natural gas in 29 blocks in the
Pelotas Basin in the 4th Permanent Concession Offering Cycle, conducted by ANP.
The total amount of the signing bonus, in the amount of US$ 24 (R$ 116 million), to be paid by Petrobras in the second
quarter of 2024, will be recorded as an intangible asset at the time of payment.
Petrobras will operate all blocks, acquired in partnership:
•
•
26 blocks with 70% interest from Petrobras and 30% from Shell;
3 blocks with 50% interest from Petrobras, 30% from Shell Brasil, and 20% from CNOOC Brasil.
25.3. Exploration rights returned to the ANP
In 2023, 8 exploration areas located in the pre-salt area of the Campos Basin were returned to ANP, totaling US$ 414
(R$ 2,006 million) in exploration rights written-off. In 2022, there were no basins returned to the ANP.
For more information see note 27 regarding exploration and evaluation of oil and gas reserves.
Accounting policy for intangible assets
Intangible assets are measured at the acquisition cost, less accumulated amortization and impairment losses.
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
registered 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 technical and commercial feasibility of 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.
F-80
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
26. Impairment
Statement of income
Impairment (losses) reversals
Exploratory assets
Impairment on equity-accounted investments
Net effect within the statement of income
Losses
Reversals
Statement of financial position
Property, plant and equipment
Intangible assets
Assets classified as held for sale
Investiments
2023
2022
(2,680)
(1,315)
(364)
(2)
(3,046)
(3,307)
261
2023
(2,783)
(364)
103
(2)
−
(6)
(1,321)
(1,640)
319
2022
(1,163)
(1)
(151)
(6)
Net effect within the statement of financial position
(3,046)
(1,321)
2021
3,190
−
383
3,573
(654)
4,227
2021
3,414
1
(225)
383
3,573
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.
On November 23, 2023, management concluded and approved its Strategic Plan 2024-2028, considering a complete
update of economic assumptions, as well as its project portfolio and estimates of reserve volumes.
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, 14 new production systems are expected to enter into operation,
all of which to be allocated to deep and ultra-deep water projects.
F-81
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
26.1. Impairment of property, plant and equipment and intangible assets
Asset or CGU by nature (1)
Carrying
amount
before
impairment
testing
Recoverable
amount (2)
Impairment
(losses) /
reversals (3)
Business
segment
Comments
Producing properties relating to oil and gas activities in Brazil (several CGUs)
Second refining unit in RNEST
Oil and gas exploratory assets (several CGUs)
Others
Total
8,332
943
371
6,108
455
−
Producing properties relating to oil and gas activities in Brazil (several CGUs)
8,307
7,747
Oil and gas production and drilling equipment in Brazil (several CGUs)
Itaboraí utilities
Second refining unit in RNEST
Others
Total
486
919
792
7
777
882
Producing properties relating to oil and gas activities in Brazil (several CGUs)
23,734
36,396
Oil and gas production and drilling equipment in Brazil (several CGUs)
Second refining unit in RNEST
Others
Total
(1) It only refers to CGUs or assets which presented impairment losses or reversals in the period.
(2) The recoverable amounts of assets for impairment computation were their value in use, unless otherwise indicated.
250
404
−
767
2023
Item (a1)
Item (b1)
Item (c)
2022
Item (a2)
Item (d1)
Item (d)
Item (b2)
2021
Item (a3)
Item (d2)
Item (b3)
E&P
RT&M
E&P
Several
E&P
E&P
G&LCE
RT&M
Several
E&P
E&P
RT&M
Several
(2,217)
(486)
(364)
(80)
(3,147)
(628)
(478)
(142)
89
(5)
(1,164)
3,373
(250)
359
(67)
3,415
(3) Impairment losses and reversals are calculated individually for each CGU. However, there are certain line items of this table which represent several CGUs. Thus, as
impairment reversals are limited to pre-impairment carrying amounts less subsequent depreciation or amortization recognized, the "Impairment (losses) / reversals" of
the line items representing several CGUs may not represent a direct relation between "Carrying amount" and "Recoverable Amount".
In assessing the recoverable amount of property, plant and equipment and intangible assets, individually or grouped in
CGUs, 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 forecasts approved by management for the period corresponding to the expected life
cycle of each different business; and
• 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 by specific country-risks, in case of assets
abroad. The use of post-tax discount rates in determining value in use does not result in different recoverable
amounts if pre-tax discount rates had been used.
The cash flow projections used to measure the value in use of the CGUs, at December 31, 2023, were mainly based on
the following updated assumptions for average Brent prices and Brazilian real/U.S. dollar average exchange rates:
Strategic Plan 2024-2028
Average Brent (US$/barrel)
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate
2024
80
5.05
2025
78
5.04
2026
75
5.03
2027
73
4.98
2028
70
4.90
At December 31, 2022, average Brent prices and Brazilian real/U.S. dollar average exchange rates used were:
Strategic Plan 2023-2027
Average Brent (US$/barrel)
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate
2023
85
5.02
2024
80
5.00
2025
75
5.00
2026
70
4.97
2027
65
4.88
Long term
Average
65
4.65
Long term
Average
55
4.76
F-82
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
At December 31, 2021, average Brent prices and Brazilian real/U.S. dollar average exchange rates used were:
Strategic Plan 2022-2026
Average Brent (US$/barrel)
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate
2022
72
5.40
2023
65
5.33
2024
60
5.19
2025
55
5.15
2026
55
5.14
Long term
Average
55
5.08
Post-tax discount rates, excluding inflation, applied in the tests which presented the main impairment losses and
reversals for the period were:
Activity
Producing properties relating to oil and gas activities in Brazil
RT&M in Brazil – postponed projects
In 2023, the main changes in the CGUs were:
12.31.2023
7.6% p.a.
7.0% p.a.
12.31.2022
7.3% p.a.
7.1% p.a.
•
inclusion of the Manjuba and Espadim fields in the CGU North Cluster (in the E&P segment), since these new
producing fields had their technical and economic feasibility demonstrated in 2023. Now, CGU North Cluster
comprises the Marlim, Voador, Albacora, Manjuba and Espadim fields and their production facilities; creation of the
CGU Raia Cluster, composed of the Raia Manta and Raia Pintada fields, resulting from the Evaluation Plan for the
Discoveries of Pão-de-Açúcar, Seat and Gávea (block BM-C-33); extinction of UGC Uruguá Cluster, formed by the
Uruguá and Tambaú fields, due to the signing of an agreement for the sale of Petrobras' entire interests in these
fields; extinction of the CGUs P-33 platform and SC-106 drilling rig, due to disposal of these assets. As of December
31, 2023, the Uruguá cluster and P-33 platform are classified as held for sale; and
•
return of the LUBNOR refinery to CGU Downstream (in the RT&M segment), due to the cancellation of its disposal.
Additional information on key assumptions for impairment testing and on CGU definitions is presented in note 4.2.2.
Information on the main impairment losses of property, plant and equipment and intangible assets is presented as
follows:
a1) Producing properties in Brazil – 2023
Impairment losses on producing properties in Brazil amount to US$ 2,217, mainly in Roncador field (US$ 2,004), due to
the revision of the production curve, in the Strategic Plan 2024-2028, arising from below-expected performance of its
wells observed in 2023, due to the interruption of production in some wells and to the accelerated decline of production
due to the increase in the percentage of water in other wells.
a2) Producing properties in Brazil – 2022
Impairment losses on producing properties in Brazil amount to US$ 628, mainly in Roncador field (US$ 518), reflecting
the revision of abandonment costs and of the recovery of areas, as well as changes in operational efficiency estimates,
which had a negative effect over production curves of this field.
a3) 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 2022-2026, mainly the increase in
average Brent prices.
b1) Second refining unit of RNEST – 2023
In 2023, the Company recognized a US$ 486 loss on this asset, mainly due to: (i) the review of the scope for the
implementation of logistics infrastructure, with an increase in necessary investments; and (ii) the revision of the
assumptions of the Strategic Plan 2024-2028, resulting in an increase in operational costs.
F-83
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
b2) Second refining unit of RNEST – 2022
The cash flows to measure the value in use of the second refining unit of RNEST considers operational optimization and
the margins for the refining segment estimated in the Strategic Plan 2023-2027, triggering impairment reversals in the
amount of US$ 89.
b3) Second refining unit of RNEST – 2021
The cash flows to measure the value in use of the second refining unit of RNEST took into account the decision to
resume the works, according to the Strategic Plan 2022-2026, triggering impairment reversals in the amount of
US$ 359.
c) Oil and gas exploratory assets
The assessment carried out on exploratory assets located in the pre-salt layer of the Campos basin (blocks C-M-210, C-
M-277, C-M-344, C-M-346, C-M-411 and C-M-413) resulted in the recognition of a US$ 364 loss, due to the economic
unfeasibility of projects in the phase of production development. In October 2023, the Company’s management
approved the full and voluntary return of these blocks to the ANP.
d1) Oil and gas production and drilling equipment in Brazil - 2022
Impairment losses of US$ 478 relates to equipment and structures in the E&P segment, mainly due to the decision to
cease the use of platforms P-18, P-19, P-20, P-35 and P-47 in the Marlim field, leading to the recognition of losses in
the amount of US$ 402.
d2) 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.
e) Itaboraí utilities - 2022
The postponement of the beginning of operations of the Natural Gas Processing Unit (UPGN) of the Gaslub plant in
Itaboraí, in the state of Rio de Janeiro, due to the termination of the agreement with the contractor responsible for the
works, impacted revenue estimate, resulting in the recognition of a US$ 142 impairment loss.
26.1.1. 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 as follows 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-84
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 (CGU Roncador)
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 (CGU Roncador)
Second refining unit of RNEST
Itaboraí utilities
Business
segment
Carrying
amount
Recoverable
amount
Sensitivity
E&P
RT&M
G&LCE
5,863
455
924
7,242
5,277
409
832
6,518
(586)
(46)
(92)
(724)
Business
segment
Carrying
amount
Recoverable
amount
Sensitivity
(1)
E&P
RT&M
G&LCE
5,863
455
924
7,242
6,449
501
1,016
7,966
586
46
92
724
(1) 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.
Accounting policy for impairment of property, plant and equipment and intangible assets
Property, plant and equipment and intangible 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 4.2 presents detailed
information about the Company’s CGUs.
Assets related to development and production of oil and gas assets (fields or clusters) 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-85
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
26.2. Assets classified as held for sale
Asset or CGU by nature (1)
Carrying
amount
before
impairment
testing
Recoverable
amount (2)
Impairment
(losses) /
reversals (3)
Business
segment
Producing properties relating to oil and gas activities
230
334
Others
Total
Producing properties relating to oil and gas activities
Refinery and associated logistics assets
Others
Total
Thermoelectric power plants
Investments in associates and joint ventures
Oil and gas production and drilling equipment
Refinery and associated logistics assets
Others
Total
(1) It only refers to assets or groups of assets which presented impairment losses or reversals in the period.
(2) The recoverable amounts of assets for impairment computation were their fair value.
376
77
91
107
47
255
300
34
12
44
−
218
2023
E&P
Several
2022
E&P
RT&M
Several
2021
G&LCE
G&LCE
E&P
RT&M
Several
103
1
104
(116)
(44)
9
(151)
(79)
(67)
(46)
(37)
4
(225)
(3) Impairment losses and reversals are calculated individually for each CGU. However, certain line items of this table may represent several CGUs. Thus, as impairment
reversals are limited to pre-impairment carrying amounts less subsequent depreciation or amortization recognized, the "Impairment (losses) / reversals" of each line
item may not represent a direct relation between "Carrying amount" and "Recoverable Amount".
In 2023, the Company recognized reversals on assets held for sale in the amount of US$ 104 arising from the assessment
at the fair value of assets, net of disposal expenses, mainly arising from the approval for the disposal of Uruguá Cluster
(US$ 103).
In 2022, the Company recognized losses on assets held for sale in the amount of US$ 151, arising from the assessment
at the fair value of assets, net of disposal expenses, mainly:
i. producing properties relating to oil and gas activities – a US$ 116 impairment loss, due to the revision of
abandonment costs and of the recovery of areas of several concessions in clusters Golfinho (a US$ 72 impairment
loss), Pescada (a US$ 29 impairment loss) and Camarupim (a US$ 15 impairment loss); and
ii. refinery and associated logistics assets: approval for the disposal of LUBNOR refinery, in the state of Ceará, resulting
in the recognition of a US$ 44 impairment loss.
In 2021, the Company recognized losses on assets held for sale, in the amount of US$ 225, 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
F-86
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
The accounting policy for assets and liabilities held for sale is set out in note 31.
26.3. 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.
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.
26.3.1. Investment in publicly traded associates
Braskem S.A.
Braskem’s shares are publicly traded on stock exchanges in Brazil and abroad. As of December 31, 2023, the quoted
market value of the Company’s investment in Braskem was US$ 1,294 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, see note 30.4). However, there is extremely limited trading of the common shares, since non-signatories of the
shareholders’ agreement hold only approximately 3% of the common shares.
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 6.7% 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 26.1.
27. Exploration and evaluation of oil and gas 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:
F-87
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs (1)
Property plant and equipment
2023
2022
Opening Balance
Additions
Write-offs
Transfers
Translation adjustment
Closing Balance
Intangible assets
Opening Balance
Additions
Write-offs
Transfers
Losses on exploration expenditures written off
Translation adjustment
Closing Balance
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs
(1) Amounts capitalized and subsequently expensed in the same period have been excluded from this table.
1,876
505
(8)
(1,000)
139
1,512
2,406
147
(41)
(16)
(364)
181
2,313
3,825
1,994
379
(545)
(83)
131
1,876
2,576
840
−
(1,187)
−
177
2,406
4,282
The transfers which occurred in Property plant and equipment during 2023 were destined for the production
development projects of the Raia Pintada and Raia Manta fields, related to the BM-C-33 block (US$ 968), and the Sépia
field (US$ 46).
The additions occurred in Intangible assets during 2023 mainly refer to the signature bonuses paid by the Company to
obtain exploration rights in the blocks North Brava (US$ 103) and Southwest Sagitário (US$ 40). In 2022 refer to the
Sépia field (US$ 424), Atapu field (US$ 416), while the transfers mainly refer to these fields, as well as the Itapu field
(US$ 337).
In 2023, the recognition of losses in Intangible assets (US$ 364) was due to the economic unfeasibility of projects in
blocks C-M-210, C-M-277, C-M-344, C-M-346, C-M-411, and C-M-413, which were in the phase of production
development. In October 2023, the Company’s Management approved the voluntary full return of these blocks to the
ANP, in addition to the return of Dois Irmãos block (US$ 37) and Três Marias block (US$ 6). All blocks are located in the
pre-salt layer of the Campos basin and the corresponding assets were written-off.
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 on local content requirements
Other exploration expenses
Total expenses
Cash used in:
Operating activities
Investment activities
Total cash used
2023
2022
2021
(566)
(421)
12
(7)
(982)
574
671
1,245
(342)
(691)
165
(19)
(887)
360
1,253
1,613
(358)
(248)
(47)
(34)
(687)
393
555
948
In 2023 and 2022, Petrobras approved the execution, with the ANP, of a Term of Conduct Adjustment (TAC) to offset
local content fines related to:
•
24 concessions in which Petrobras has a 100% interest, located in the Barreirinhas, Campos, Espírito Santo, Parecis,
Potiguar, Recôncavo, Santos, Sergipe-Alagoas and Solimões basins; and
F-88
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
•
22 concessions in which Petrobras operates in partnership with other concessionaires, located in the Almada,
Campos, Espírito Santo, Mucuri, Parnaíba, Pelotas, Pernambuco-Paraíba, Potiguar, Recôncavo, Santos and Sergipe
basins.
The TAC provides for the conversion of fines into investment commitments in the Exploration and Production segment
with local content. As a result, all administrative proceedings related to the collection of fines arising from alleged non-
compliance with local content in these concessions were closed, resulting in a US$ 54 gain in 2023 due to the reversal of
liabilities whose settlement approvals by the ANP occurred in 2023 (a US$ 180 gain in 2022 due to the approvals which
occurred in that year).
As of December 31, 2023, under the terms of the agreement, Petrobras commits to investing US$ 347 (R$ 1,681 million)
in local content by December 31, 2027.
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 are demonstrated are immediately recognized as an expense;
•
•
•
•
•
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 are demonstrated. More information on intangible assets accounting policy, see note 25;
costs directly attributable to exploratory wells, including their equipment, installations and other costs necessary
to identify the technical and commercial feasibility, 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 well 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 technical and commercial feasibility of the project is
under way (for more information see note 27.1);
an internal commission of technical executives of the Company monthly reviews these conditions for each well, by
analysis of geoscience and engineering data, existing economic conditions, operating methods and government
regulations (for more information 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; and
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 (technically and commercially feasible) are capitalized within property, plant and equipment.
27.1. 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):
F-89
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Aging of capitalized exploratory well costs (1)
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
2022
2021
2020
2018 and previous years
Exploratory well costs that have been capitalized for a period greater than one year
(1) Amounts paid for obtaining rights and concessions for exploration of oil and gas (capitalized acquisition costs) are not included.
2023
211
1,301
1,512
17
2022
406
1,470
1,876
15
Capitalized
costs
(2023)
238
87
20
956
1,301
Number of
wells
3
2
1
16
22
Exploratory well costs that have been capitalized for a period greater than one year since the completion of drilling relate
to 17 projects comprising 22 wells, are composed of (i) US$ 1,301 of wells in areas in which there has been ongoing
drilling or firmly planned drilling activities for the near term and for which an evaluation plan has been submitted for
approval by the ANP; and (ii) US$ 131 relates to costs incurred to evaluate technical and commercial feasibility necessary
for the decision on the production development and on definition of proved reserves.
28. 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$ 1,770 (US$ 1,748
as of December 31, 2022), which is still in force as of December 31, 2023, net of commitments undertaken. As of
December 31, 2023, the collateral comprises future crude oil production capacity from Marlim and Buzios producing
fields, already in production, pledged as collateral, in the amount of US$ 1,756 (US$ 1,648 as of December 31, 2022) and
bank guarantees of US$ 14 (US$ 100 as of December 31, 2022).
29. Consortia (partnerships) in E&P activities
In line with its strategic objectives, Petrobras operates in association with other companies in consortia in Brazil as
holder of oil and natural gas exploration and production rights in concessions and production sharing regimes.
As of December 31, 2023, the Company holds interests in 67 consortia with 32 companies, among which Petrobras is the
operator in 39 (in 2022, 78 consortia with 36 companies and operator in 50).
The consortia formed in 2023 and 2022 are described below:
Consortium
Location
Petrobras
interest
Partners
interest
Operator
Year
Additional Information
Água-Marinha Campos basin
30.0%
Petronas - 20%
Quatar Energy - 20%
Total Energies - 30% Petrobras
2023
1st Cycle of Permanent
Offer for Production
Sharing
1st Cycle of Permanent
Offer for Production
Sharing
Petrobras
2023
Petrobras
2022
Production sharing
Petrobras
2022
Production sharing
ANP Bonus
Petrobras
portion (1)
4
40
402
409
Sudoeste de
Sagitário
Santos basin
60.0%
Atapu
Santos basin
52.5%
Sépia
30.0%
Santos basin
(1) PPSA manages the Production Sharing Agreements.
Shell - 40%
Shell - 25%
TotalEnergies - 22.5%
TotalEnergies - 28%
Petronas - 21%
F-90
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Consortia bring 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 consortium:
Field
Tupi
Búzios
Roncador
Location
Santos basin pre-salt
Santos basin pre-salt
Campos basin
Sapinhoá
Santos basin pre-salt
Mero
Atapu
Santos basin pre-salt
Santos basin pre-salt
Petrobras
interest
65%
85%
75%
45%
40%
52.5%
Sépia
Santos basin pre-salt
30%
Sururu
Santos basin pre-salt
42.5%
Berbigão
Santos basin pre-salt
Tartaruga Verde
Campos basin
42.5%
50%
Total
Accounting policy for joint operations
Partners
interest
Shell - 25%
Petrogal - 10%
CNODC - 10%
CNOOC - 5%
Equinor - 25%
Shell - 30%
Repsol Sinopec - 25%
TotalEnergies - 20%
Shell - 20%
CNODC - 10%
CNOOC – 10%
Shell - 25%
TotalEnergies - 22.5%
TotalEnergies - 28%
Petronas - 21%
Qatar - 21%
Shell - 25%
TotalEnergies - 22.5%
Petrogal - 10%
Shell - 25%
TotalEnergies - 22.5%
Petrogal - 10%
Petronas - 50%
Petrobras production
portion in 2023
(kboed)
Regime
705
Concession
488 Production sharing
105
98
Concession
Concession
96 Production sharing
45 Production sharing
35 Production sharing
32
28
28
1,660
Concession
Concession
Concession
The E&P consortia are classified as joint operations, where the assets, liabilities, revenues and expenses relating to
these consortia are accounted for in the financial statements individually, observing the applicable specific accounting
policies and reflecting the portion of the contractual rights and obligations that the company has.
29.1. 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 Agulhinha, Albacora Leste, Berbigão, Brava, Budião Noroeste, Budião Sudeste, Caratinga and
Sururu.
Provision for equalizations (1)
The table below presents changes in the reimbursements payable relating to the execution of the AIP submitted to the
approval of the ANP:
F-91
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
Translation adjustments
Closing balance
(1) Berbigão, Sururu, Albacora Leste and others
2023
407
17
(56)
62
32
462
2022
364
(7)
−
26
24
407
In 2023, these agreements resulted in additions and write-offs in PP&E, in addition to US$ 62 of 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.
Closed agreements
In December 2023, a Payment Adjustment Agreement was signed, resulting from the redetermination process provided
for in the Tartaruga Mestiça Individualization of Production Agreement (AIP) (BM-C-36 concession agreement). The
amount paid by Petrobras to Petronas on December 26, 2023, was US$ 56.
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 (shared reservoir) 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.
The compensation will be the difference between the expenses actually incurred by each party up to the reference date
and those that should have been incurred by each party if the established participations in the shared reservoir by the
AIP were already in effect during that period.
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. The provision will be offset by an increase or decrease in
PP&E, revenues and/or expenses, according to the nature of the events to be reimbursed.
F-92
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
30.
Investments
30.1. Information on direct subsidiaries, joint arrangements and associates
Main
business
segment
%
Petrobras'
ownership
%
Petrobras'
voting
rights
Sales
revenues
(1)
Share-
holders’
equity
(deficit)
Net
income
(loss)for
the year
Country
Netherlands
Brazil
Brazil
Brazil
Brazil
Brazil
Cayman
Brazil
Brazil
Brazil
Brazil
3,410
93
202
(18)
(1)
12
8
89
2
5
2
100.00
100.00
100.00
100.00
100.00
100.00
100.00
98.85
100.00
99.15
72.00
56,131
967
116
157
32
62
9
100
64
19
8
42,379
2,223
669
96
−
17
−
−
−
−
20
100.00
100.00
100.00
100.00
100.00
100.00
100.00
98.85
100.00
99.15
49.00
−
RT&M
E&P
G&LCE
RT&M
G&LCE
Corporate, others
G&LCE
G&LCE
E&P
Corporate, others
Subsidiaries
Petrobras International Braspetro - PIB BV
Petrobras Transporte S.A. - Transpetro
Petrobras Logística de Exploração e Produção S.A. - PB-LOG
Petrobras Biocombustível S.A.
Araucária Nitrogenados S.A.
Termomacaé S.A.
Braspetro Oil Services Company - Brasoil (2)
Termobahia S.A.
Baixada Santista Energia S.A.
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 Mucuripe S.A (3)
Associação Petrobras de Saúde (4)
Joint operations
Fábrica Carioca de Catalizadores S.A. - FCC
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
Associates
Braskem S.A. (5)
UEG Araucária Ltda.
Energética SUAPE II S.A.
Nitrocolor Produtos Químicos LTDA.
Bioenergética Britarumã S.A.
Transportadora Sulbrasileira de Gás - TSB
(1) Sales revenues refers to the home country of companies. Regarding PIBBV, the composition of sales revenue is: 56% in the Netherlands, 25% in the United States, and 19% in Singapore.
Corporate, others
G&LCE
RT&M
Corporate, others
RT&M
RT&M
RT&M
G&LCE
G&LCE
RT&M
RT&M
RT&M
G&LCE
G&LCE
RT&M
G&LCE
G&LCE
30.00
50.00
33.33
20.00
30.00
50.00
45.00
30.00
50.00
33.20
20.00
30.00
34.54
45.00
1,038
66
104
−
−
3
36.15
18.80
20.00
38.80
30.00
25.00
47.03
18.80
20.00
38.80
30.00
25.00
(601)
(22)
29
−
−
2
(31)
23
4
2
1
4
−
216
20
25
15
13
24
−
100.00
51.00
100.00
93.41
100.00
51.00
100.00
93.41
26
349
−
823
14
104
−
144
4
153
−
18
−
−
−
−
−
−
−
−
−
−
−
−
−
RT&M
50.00
50.00
64
21
57
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
(2 )In December 2023, Braspetro Oil Services Company - Brasoil repurchased 105,000,000 common shares for the amount of US$1 per share.
(3) The contract for the sale of Refinaria de Mucuripe S.A was rescinded due to the non-fulfillment of established precedent conditions.
(4) APS is a non-profit civil association, which carries out health assistance activities, and is consolidated in the Company’s financial statements.
(5) Equity and net income at September 30, 2022, most current public information.
The main investees of PIB BV are:
• 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);
• Petrobras Singapore Private Limited. - PSPL (100%, based in Singapore), which operates primarily in the trading
of crude oil, oil products, biofuels and liquefied natural gas (LNG); 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
F-93
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Frade Inversiones SA - PFISA (100%) and BJOOS BV (20%), dedicated to the construction and lease of
equipment and platforms for Brazilian E&P consortia. Currently, the Company is assessing the liquidation of
Guara BV, Libra BV, Agri Development BV, Papa-Terra BV, Roncador BV and PFISA, where conditions precedent
are pending. Subsequently, the Company will assess the liquidation of Tupi BV and Iara BV.
On December 28, 2023, the company approved the liquidation and dissolution of Ibiritermo S.A.
30.2. Investments in associates and joint ventures
Balance at
12.31.2022
Investments
Restructuring,
capital decrease
and others
Results in
equity-
accounted
investments
CTA
OCI Dividends
Balance at
12.31.2023
Joint Ventures
MP Gulf of Mexico, LLC/PIB BV
Compañia Mega S.A. - MEGA
Other joint ventures
Associates
Other investments
Total
546
374
149
23
1,016
4
1,566
12
−
−
12
12
−
24
−
−
−
−
(1)
−
(1)
Balance at
12.31.2021
Investments
Transfer to
assets held
for sale
Restructuring,
capital decrease
and others
(2)
(3)
4
(3)
2
(1)
1
2
(302)
(114)
−
−
(304)
(112)
Results in
equity-
accounted
investments
1
−
−
1
266
−
267
(78)
(30)
(35)
(13)
(4)
−
(82)
481
340
119
22
873
4
1,358
CTA
OCI Dividends
Balance at
12.31.2022
Joint Ventures
MP Gulf of Mexico, LLC/PIB BV
Compañia Mega S.A. - MEGA
Other joint ventures
Associates
Other investments
Total
509
387
98
24
998
3
1,510
16
−
−
16
11
−
27
1
−
−
1
(58)
−
(57)
(2)
−
−
(2)
(13)
−
(15)
256
170
55
31
(5)
−
1
1
1
(1)
(27)
1
−
−
−
−
219
−
251
(25)
219
(235)
(184)
(5)
(46)
(109)
−
(344)
546
374
149
23
1,016
4
1,566
30.3. Investments in non- consolidated listed companies
Associate
Braskem S.A.
Braskem S.A.
Thousand-share lot
12.31.2022
12.31.2023
Quoted stock exchange
prices (US$ per share)
12.31.2022
12.31.2023
Type
12.31.2023
Fair value
12.31.2022
212,427
75,762
212,427
75,762
Common
Preferred A
4.48
4.52
4.83
4.55
952
342
1,294
1,025
345
1,370
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 26.
30.4. Non-controlling interest
The total amount of non-controlling interest at December 31, 2023 is US$ 392 (US$ 344 in 2022) primarily comprising
US$ 331 of FIDC (US$ 277 in 2022); and US$ 51 of Transportadora Brasileira Gasoduto Brasil-Bolívia – TBG (US$ 58 in
2022).
Condensed financial information is set out as follows:
F-94
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Current assets
Property, plant and equipment
Other non-current assets
Current liabilities
Non-current liabilities
Shareholders' equity
Sales revenues
Net income (loss)
Increase (decrease) in cash and cash equivalents
(1) In July 2022, the Company completed the sale of its entire stake in Gaspetro (51%).
2023
7,803
1
−
7,804
8
−
7,796
7,804
−
1,203
(1,133)
FIDC
2022
3,951
−
−
3,951
1
−
3,950
3,951
−
416
2
2023
260
314
4
578
250
224
104
578
349
153
39
TBG
2022
200
298
3
501
145
237
119
501
350
181
72
Gaspetro(1)
2022
−
−
−
−
−
−
−
−
100
21
(14)
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.
30.5. 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:
2023
2022
Joint ventures Associates(1)
Joint ventures Associates(1)
MP Gulf of
Mexico,
LLC
Other
companies
abroad
In Brazil
MP Gulf of
Mexico,
LLC
Other
companies
abroad
In Brazil
330
272
525
41
1,168
313
533
315
7
1,168
1,036
5
537
66
1,863
1
2,467
365
424
1,336
342
2,467
907
408
275
9
189
−
473
70
52
351
−
473
−
21
7,910
2,591
8,082
1,263
19,846
5,096
13,182
1,690
(122)
19,846
14,199
(849)
295
231
508
37
1,071
294
494
277
6
1,071
1,159
72
481
139
2,690
1
3,311
344
548
2,045
374
3,311
1,408
887
410
17
191
−
618
145
32
291
150
618
32
162
6,642
2,491
7,380
605
17,118
4,473
11,263
1,587
(205)
17,118
18,709
(146)
20 to 50%
20%
34 to 45% 18.8 to 38.8%
20 to 50%
20%
34 to 45% 18.8 to 38.8%
Current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Current liabilities
Non-current liabilities
Shareholders' equity
Non-controlling interest
Sales revenues
Net Income (loss) for the year
Ownership interest - %
(1) It is mainly composed of Braskem.
Accounting policy for investments
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.
F-95
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Intragroup balances and transactions, including unrealized profits arising from intragroup transactions, are eliminated
in the consolidation of the financial statements.
Investments in other companies
Profit or loss, assets and liabilities related to joint ventures and associates are accounted for by the equity method.
Business combination
A business combination is a transaction in which the acquirer obtains control of another business, regardless 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.
31. Disposal of assets and other transactions
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
Inventories
Investments
Property, plant and equipment
Total
Liabilities on assets classified as held for sale
Finance debt
Provision for decommissioning costs
Total
31.1. Sales pending closing at December 31, 2023
a) Urugua and Tambau fields
Corporate
and other
businesses
12.31.2023
12.31.2022
Total
Total
−
−
−
−
99
-
99
-
-
335
335
99
442
541
21
-
3,587
3,608
133
1,332
1,465
E&P
-
-
335
335
-
442
442
On December 21, 2023, the Company signed agreements with Enauta Energia S.A. for the sale of its entire interest in
the Uruguá and Tambaú fields located in the Santos basin.
The transaction amounts to up to US$ 35, corresponding to: (a) US$ 3 paid on the date of signing, (b) US$ 7 to be paid
at the closing of the transaction, and (c) up to US$ 25 in contingent payments, depending on future Brent prices and
events related to the development of the assets.
F-96
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
31.2. Sales closed in 2023
Transaction
Sale of the Company's entire interest in Albacora Leste
producing field, located in the Campos Basin
Sale of the Company's entire interest in a set of four
onshore production fields, with integrated facilities,
located in the state of Espírito Santo, jointly called Norte
Capixaba cluster
Sale of the Company's entire interest (100%) in a set of 22
production onshore and shallow water fields, together
with their associated infrastructure, located in the
Potiguar Basin, in the state of Rio Grande do Norte, jointly
called Potiguar cluster
Sale of the Company's entire interest in a set of maritime
concessions called Golfinho and Camarupim groups of
fields, in deep waters of the post-salt layer, located in the
Espírito Santo Basin.
Total
Acquirer
Signature date (S)
Closing date (C)
Sale
amount
(1) (2)
Gain/
(loss)
(3)
Further
infor-
mation
Petro Rio Jaguar Petróleo
LTDA (PetroRio), a subsidiary
of Petro Rio S.A.
Seacrest Petróleo SPE Norte
Capixaba Ltda., a wholly-
owned subsidiary of Seacrest
Exploração e Produção de
Petróleo Ltda.
April 2022 (S)
January 2023 (C)
1,947
604
a
February 2022 (S)
April 2023 (C)
485
352
b
3R Potiguar S.A., a wholly-
owned subsidiary of 3R
Petroleum Óleo e Gás S.A.
January 2022 (S)
June 2023 (C)
1,455
484
BW Energy Maromba do Brasil
Ltda (BWE)
June 2022 (S)
August 2023 (C)
35
3,922
(15)
1,425
c
d
(1) Value agreed on the signing date, plus price adjustments on the closing date, when provided for in the contract.
(2) 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.
(3) Recognized in “Results on disposal/write-offs of assets” (note 11).
a) Sale of Albacora Leste field
The transaction was closed after the fulfillment of conditions precedent, with the receipt of US$ 1,635 (of which
US$ 1,586 was received in cash and US$ 49 relates to sale of inventories, as provided for in the agreement), in addition
to US$ 293 received at the transaction signing and to US$ 10 related to a final price adjustment as provided for in the
contract. In addition, Petrobras is expected to receive up to US$ 250 in contingent payments provided for in the
contract, depending on future Brent prices. Of this amount, the Company recognized US$ 58 as a receivable in 2023.
b) Sale of Norte Capixaba cluster
The transaction was closed with the receipt of US$ 427, including price adjustments provided for in the contract, in
addition to US$ 36 received at the transaction signing. In addition, there is up to US$ 66 in contingent payments for
Petrobras provided for in the contract, depending on future Brent prices, of which the Company recognized US$ 22 as
a receivable in 2023.
c) Sale of Potiguar cluster
The transaction was closed with the receipt of US$ 1,100 in addition to US$ 110 received at the transaction signing, and
to US$ 10 relating to a final price adjustment as provided for in the contract. The Company will also receive US$ 235 in
4 equal annual installments starting March 2024.
d) Sale of Golfinho and Camarupim groups of fields
The transaction was closed with the receipt of US$ 12, including price adjustments provided for in the contract, in
addition to US$ 3 received at transaction signing. In addition, there is up to US$ 60 in contingent payments for
Petrobras provided for in the contract, depending on future Brent prices and asset development. Of this amount, the
Company recognized US$ 20 as a receivable in 2023.
F-97
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
31.3. Transaction interrupted
On December 31, 2022, the main assets and liabilities classified as held for sale included the LUBNOR refinery and its
associated logistics assets in the Ceará state.
In November 2023, the sales contract was interrupted due to the failure of the acquirer to fulfill the conditions
precedent within the deadline foreseen in the agreement. As a result, the assets and liabilities under the transaction
are no longer classified as held for sale. Petrobras has returned the advance received, in the updated amount of US$ 3.
31.4. Contingent assets from disposed investments and other transactions
Some disposed assets and other agreements provide for receipts subject to contractual clauses, especially related to
the Brent variation in transactions related to E&P assets.
The transactions that may generate revenue recognition, accounted for within other income and expenses, are
presented below:
Transaction
Sales in previous years
Riacho da Forquilha cluster
Pampo and Enchova cluster
Baúna field
Miranga cluster
Cricare cluster
Peroá cluster
Papa-Terra field
Sales in the period
Albacora Leste field
Norte Capixaba cluster
Golfinho and Camarupim groups of fields
Surplus volume of the Transfer of Rights Agreement
Sepia and Atapu
Total
Contingent
assets at the
closing date
Assets
recognized in
2023
Assets
recognized in
previous
periods
Balance of
contingent
assets as of
December 31,
2023
62
650
285
85
118
43
90
250
66
60
5,244
6,953
30
15
27
−
−
−
1
10
11
−
43
137
28
180
132
55
22
10
15
−
−
−
4
455
126
30
96
33
74
240
55
60
693
1,135
4,508
5,681
Closing date
December 2019
July 2020
November 2020
December 2021
December 2021
August 2022
December 2022
January 2023
April 2023
August 2023
April 2022
31.5. Cash flows from sales of equity interest with loss of control
In 2022 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:
2022
Mataripe refinery (former RLAM)
REMAN
Total
In 2023, there were no sales of equity interests resulting in loss of control.
F-98
Cash in
subsidiary
before
losing
control
Net
Proceeds
Cash
received
391
233
624
(22)
(22)
(44)
369
211
580
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 disposal expenses. Assets and liabilities are presented separately in the statement
of financial position.
In the classification of non-current assets as held for sale, provisions for decommissioning costs related to these assets
are also disclosed. Any commitments with decommissioning assumed by the Company resulting from the sale process
are recognized after the closing of the transaction, in accordance with the contractual terms.
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 and cash flows are
presented in separate line items until the date of the closing of the operation.
32. Finance debt
32.1. Balance by type of finance debt
In Brazil
Banking market
Capital market
Development banks (1)
Others
Total
Abroad
Banking market
Capital market
Export credit agency
Others
Total
Total finance debt
Current
Non-current
(1) It includes BNDES, FINAME and FINEP.
Current finance debt is composed of:
Short-term debt
Current portion of long-term debt
Accrued interest on short and long-term debt
Total
F-99
12.31.2023
2,262
3,130
698
1
6,091
12.31.2022
1,285
2,896
723
4
4,908
6,303
14,384
1,870
153
22,710
28,801
4,322
24,479
8,387
14,061
2,443
155
25,046
29,954
3,576
26,378
12.31.2023
12.31.2022
4
3,776
542
4,322
−
3,111
465
3,576
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The capital market balance is mainly composed of US$ 13,739 in global notes issued abroad by the wholly owned
subsidiary PGF, as well as US$ 2,029 in debentures and US$ 980 in commercial notes issued by Petrobras 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%, 2% and 11%, of the total global notes, respectively.
The debentures and the commercial notes, with maturities between 2024 and 2037, do not require collateral and are
not convertible into shares or equity interests.
32.2. Changes in finance debt
Balance at December 31, 2022
Proceeds from finance debt
Repayment of principal (1)
Repayment of interest (1)
Accrued interest (2)
Foreign exchange/ inflation indexation charges
Translation adjustment
Modification of contractual cash flows
Balance at December 31, 2023
Balance at December 31, 2021
Proceeds from finance debt
Repayment of principal (1)
Repayment of interest (1)
Accrued interest (2)
Foreign exchange/ inflation indexation charges
Translation adjustment
Balance at December 31, 2022
(1) It includes pre-payments.
In Brazil
4,907
925
(331)
(324)
436
111
383
(17)
6,090
Abroad
25,047
1,285
(3,907)
(1,640)
1,822
(150)
254
−
22,711
In Brazil
Abroad
4,517
853
(1,013)
(292)
396
120
326
4,907
31,183
2,027
(8,183)
(1,554)
1,867
(580)
287
25,047
Total
29,954
2,210
(4,238)
(1,964)
2,258
(39)
637
(17)
28,801
Total
35,700
2,880
(9,196)
(1,846)
2,263
(460)
613
29,954
(2) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.
In 2023, the Company repaid several finance debts, in the amount of US$ 6,171.
In the same period, the Company raised funds in the amount of US$ 2,210, notably: (i) the issuance of Global notes in
the international capital market in the amount of US$ 1,235 due in 2033; and (ii) proceeds in the domestic banking
market, in the amount of US$ 907.
The Company carried out an exchange operation under the terms of a US$ 519 debt in the domestic banking market,
changing the term from 2024 to 2030. The modification of the contractual terms was not substantial and resulted in a
gain of US$ 17 per modification.
32.3. Reconciliation with cash flows from financing activities
2023
2022
Changes in finance debt
Repurchase of debt securities
Deposits linked to finance debt (1)
Proceeds from
finance debt
2,210
Repayment of
principal
(4,238)
Repayment of
interest
(1,964)
Proceeds from
finance debt
2,880
Repayment of
principal
(9,196)
Repayment of
interest
(1,846)
78
(33)
−
(14)
(121)
(17)
−
(4)
Net cash used in financing activities
2,210
(4,193)
(1,978)
2,880
(9,334)
(1,850)
(1) Deposits linked to finance debt with China Development Bank, with semiannual settlements in June and December.
F-100
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
32.4. Summarized information on current and non-current finance debt
Maturity in
Financing in U.S.Dollars (US$):
Floating rate debt (2)
Fixed rate debt
Average interest rate p.a.
Financing in Brazilian Reais (R$):
Floating rate debt (3)
Fixed rate debt
Average interest rate p.a.
Financing in Euro (€):
Fixed rate debt
Average interest rate p.a.
Financing in Pound Sterling (£):
Fixed rate debt
Average interest rate p.a.
Total as of December 31, 2023
Average interest rate
Up to 1
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
5 years
onwards
Total (1) Fair Value
3,578
2,773
805
5.5%
653
118
535
6.9%
51
51
4.7%
40
40
6.3%
4,322
5.8%
2,509
1,915
594
5.5%
257
145
112
6.6%
300
300
4.7%
−
−
0.0%
3,066
5.8%
1,460
1,119
341
6.2%
503
145
358
6.7%
−
−
0.0%
588
588
6.2%
2,551
6.3%
2,398
1,716
682
5.8%
149
40
109
7.2%
−
−
0.0%
−
−
0.0%
2,547
6.1%
1,529
524
1,005
5.4%
151
40
111
7.4%
136
136
4.6%
−
−
0.0%
1,816
5.9%
9,056
428
8,628
6.6%
4,076
2,557
1,519
6.6%
472
472
4.7%
895
895
6.6%
14,499
6.5%
13,941
6.6%
20,530
8,475
12,055
6.3%
5,789
3,045
2,744
6.8%
959
959
4.7%
1,523
1,523
6.4%
28,801
6.4%
29,954
6.5%
20,661
6,206
970
1,492
29,329
29,853
2,892
3,576
Total as of December 31, 2022
Average interest rate
6.0%
6.7%
(1)The average maturity of outstanding debt as of December 31, 2023 is 11.38 years (12.07 years as of December 31, 2022).
(2) Operations with variable index + fixed spread.
(3) Operations with variable index + fixed spread, if applicable.
3,943
6.5%
3,079
6.1%
2,523
6.2%
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$ 13,971 of
December 31, 2023 (US$ 13,061 of December 31, 2022); 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$ 15,358 as of December 31, 2023 (US$ 16,792 as of December 31, 2022).
Regarding the Interest Rate Benchmark Reform (IBOR Reform), there was a necessity to amend the Company's
contracts referenced in these indexes, considering the end of the publication of LIBOR (London Interbank Offered Rate)
in dollars (US$), of one, three and six months.
As of December 31, 2023, 23% of the Company's finance debt has been indexed to SOFR (Secured Overnight Financing
Rate) and has the CSA (Credit Spread Adjustment) negotiated with the creditors serving as a parameter, while 1.0% will
still undergo contractual changes to switch to this new index.
The renegotiations performed so far have been solely for the replacement of the LIBOR benchmark and are necessary
as a direct consequence of the reform of the reference interest rate. In these renegotiated cash flows, the change of
the index is economically equivalent to the previous basis. Thus, the changes were prospective with the recognition of
interest at the new index in the applicable periods.
Therefore, the Company does not expect material effects for the contracts that will still undergo contractual changes
for the new index, considering that they will occur under market conditions.
The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 35.2.2.
A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set
out as follows:
F-101
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Maturity
Principal
Interest
Total (1)
(1) A maturity schedule of the lease arrangements (nominal amounts) is set out in note 33.
2026
2,606
1,492
4,098
2025
3,135
1,627
4,762
2024
3,814
1,922
5,736
32.5. Lines of credit
2027
2,600
1,242
3,842
2029 and
thereafter
15,075
15,237
30,312
2028
1,951
1,022
2,973
12.31.2023
29,181
22,541
51,722
12.31.2022
31,703
24,815
56,518
Financial
institution
Date
Maturity
Available
(Lines of Credit)
12.31.2023
Used
Balance
Company
Abroad
PGT BV
PGT BV (1)
Total
In Brazil
Petrobras
Petrobras
Syndicate of banks
Syndicate of banks
12/16/2021
3/27/2019
11/16/2026
2/27/2026
Banco do Brasil
Banco do Brasil
3/23/2018
10/4/2018
9/26/2026
9/5/2025
5,000
2,050
7,050
413
413
68
−
−
−
−
−
−
5,000
2,050
7,050
413
413
68
894
Transpetro
Caixa Econômica Federal
11/23/2010
Not defined
Total
(1) On June 30, 2023, Petrobras reduced part of the Revolving Credit Facility to US$ 2,050 compared to the US$ 3,250 contracted in 2019. Thus, US$ 2,050 will be
available for withdrawal from July 1st, 2023, to February 27, 2026.
894
−
32.6. Covenants and Collateral
32.6.1. Covenants
The Company has covenants that were not in default at December 31, 2023 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; ii) Negative Pledge / Permitted Liens clause.
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.
If the Company breaches any of the aforementioned covenants and either is incapable of remedy or continues to fail to
comply with the covenants for a period ranging from 30 to 60 calendar days (depending on the contract) after it has
received a written notice from the creditors specifying such default or breach and requiring it to be remedied and
stating that such notice is a “Notice of Default”, this may be declared an Event of Default, and in certain cases the debt
related to that contract becomes due and payable.
32.6.2. Collateral
Most of the Company’s debt is unsecured, but certain specific funding instruments to promote economic development
are collateralized. Such contracts represent 13.9% of the total financing, notably a Financing agreement with China
Development Bank (CDB).
The loans obtained by structured entities are collateralized based on the projects’ assets, as well as liens on receivables
of the structured entities.
F-102
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
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
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 of the period.
33. Lease liability
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, land and buildings. Changes in the
balance of lease liabilities are presented below:
Balance at December 31, 2022
Remeasurement / new contracts
Payment of principal and interest (1)
Interest expenses
Foreign exchange losses
Translation adjustment
Transfers
Balance at December 31, 2023
Current
Non-current
(1) The Statement of Cash Flows comprises US$ 14 relating to changes on liabilities held for sale.
Balance at December 31, 2021
Remeasurement / new contracts
Payment of principal and interest
Interest expenses
Foreign exchange losses
Translation adjustment
Transfers
Balance at December 31, 2022
Current
Non-current
Lessors
in Brazil
6,020
2,276
(2,273)
519
(223)
472
1
6,792
Lessors
in Brazil
4,604
2,730
(1,785)
365
(169)
287
(12)
6,020
Lessors
abroad
17,825
12,094
(3,999)
1,290
(1,635)
1,531
(99)
27,007
Lessors
abroad
18,439
2,219
(3,638)
991
(1,221)
1,170
(135)
17,825
Total
23,845
14,370
(6,272)
1,809
(1,858)
2,003
(98)
33,799
7,200
26,599
Total
23,043
4,949
(5,423)
1,356
(1,390)
1,457
(147)
23,845
5,557
18,288
A maturity schedule of the lease arrangements (nominal amounts) is set out as follows:
F-103
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Nominal Future Payments
Without readjustment
Vessels
Others
With readjustment - abroad (1)
Vessels
Platforms
With readjustment - Brazil
Vessels
Properties
Others
Nominal amounts on December 31, 2023
Nominal amounts on December 31, 2022
(1) Contracts signed in the U.S. Dollars.
2024
2025
2026
2027
2028
3,426
127
352
2,115
786
334
302
7,442
5,710
2,448
83
324
2,275
542
219
246
6,137
4,621
1,380
49
303
2,120
287
210
198
4,547
3,380
521
25
258
2,109
87
196
171
3,367
2,394
307
2
19
2,078
7
167
128
2,708
2,122
2029
onwards
1,221
−
−
22,939
5
1,384
390
25,939
14,498
Total
9,303
286
1,256
33,636
1,714
2,510
1,435
50,140
32,725
Recoverable
taxes
275
26
−
−
159
97
133
690
555
The following table presents the main information on leases by class of underlying assets, where platforms and vessels
represent 92.3% of the lease liability:
Present Value of Future Payments (1)
Without readjustment
Vessels
Others
With readjustment - abroad
Platforms
Vessels
With readjustment - Brazil
Vessels
Properties
Discount
rate (%)
Average
Period
Recovera
ble taxes 12.31.2023
12.31.2022
5.0001
4.6 years
4.8405
3.1 years
275
26
8,311
264
6.2966 17.7 years
6.3550
3.5 years
−
−
20,336
1,127
10.9330
2.5 years
7.9769 21.4 years
159
97
1,506
1,230
1,025
33,799
7,421
149
12,340
838
1,298
1,010
789
23,845
Others
133
Total (2)
690
(1) Incremental nominal rate on company debt calculated from the yield curve of bonds and credit risk of the Company, as well as terms.
(2) Total amount, except for the average period column.
6.6 years
6.0418 14.4 years
11.2737
In certain contracts, there are variable payments and terms of less than 1 year recognized as expenses:
Variable payments
Up to 1 year maturity
Variable payments x fixed payments
12.31.2023
1,067
109
12.31.2022
1,060
118
17%
20%
At December 31, 2023, 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$ 65,358 (US$ 79,913 at December 31, 2022).
The sensitivity analysis of financial instruments subject to exchange variation is presented in note 35.2.
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.
F-104
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 35.2.2).
In the E&P segment, some activities are conducted by joint operations with partner companies 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-105
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, 2023 and December 31, 2022, 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.
34.2. Capital reserve
Capital reserve comprises treasury shares owned by Petrobras, in the amount of US$ 2, at December 31, 2023 and
December 31, 2022.
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 issuance 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$ 737, at December 31, 2023 and US$ 2 at December 31, 2022, represented
by 222,760 common shares and 104,136,909 preferred shares.
34.4. Appropriation of net income
34.4.1. Profit reserves
Legal reserve
It represents the accumulated balance of 5% of the net income for each year, calculated pursuant to article 193 of the
Brazilian Corporation Law, limited to 20% of the share capital (calculated in Brazilian reais). The balance of this reserve
reached the legal limit on December 31, 2023.
Statutory reserves
On November 30, 2023, the shareholders approved, in an Extraordinary General Meeting, the revision of article 56 of
Petrobras' Bylaws, creating a new statutory reserve named Capital remuneration reserve.
Thus, in accordance with the Company's Bylaws, the constitution of the statutory reserves below must be considered in
the proposal for distribution of net income, observing the following order of priority:
• Reserve for research and development (R&D): constituted with the appropriation of net income by applying
0.5% of the year-end share capital, with the accumulated balance not exceeding 5% of the share capital,
F-106
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
aiming at funding technological R&D. The balance of this reserve reached the legal limit on December 31,
2023.
• Capital remuneration reserve: may be constituted through the appropriation of up to 70% of the adjusted
net income for the year, subject to article 202 of the Brazilian Corporation Law and to the Shareholders
Remuneration Policy, limited to the share capital, with the purpose of ensuring resources for the payment of
dividends, interest on capital or other form of shareholder remuneration provided for by law, its
anticipations, shares repurchases authorized by law, absorption of losses and, as a remaining purpose,
incorporation into the share capital.
The changes in the statutory reserves are presented as follows:
Balance at December 31, 2021
Transfers to reserves
Balance at December 31, 2022
Transfers to reserves
Balance at December 31, 2023
Tax incentives reserve
R&D
reserve
3,084
197
3,281
116
3,397
Capital
remuneration
reserve
−
−
−
8,428
8,428
Total
Statutory
reserves
3,084
197
3,281
8,544
11,825
Government grants are recognized in the statement of income and are appropriated from retained earnings to the tax
incentive reserve pursuant to article 195-A of Brazilian Corporation Law. This reserve may only be used to offset losses
or increase share capital.
As of December 31, 2023, this reserve amounts to US$ 1,998 (US$ 1,677 as of December 31, 2022), referring to a subsidy
incentive for investments, granted by the Superintendencies for Development of the Northeast Region of Brazil
(SUDENE) and of the Amazon (SUDAM).
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.
34.4.2. Distributions to shareholders
Distributions to shareholders are made by means of dividends, interest capital and share repurchases based on the
limits defined in the Brazilian Corporation Law, in the Company’s bylaws and in the shareholders remuneration policy.
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%.
F-107
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Shareholders Remuneration Policy
The Company’s policy on distributions to shareholders, approved by the Company’s Board of Directors on July 28, 2023,
defines the following:
• minimum distribution of US$ 4,000 for fiscal years when the average Brent price exceeds US$ 40 per barrel, which
shall be distributed regardless of its level of indebtedness, provided that the parameters set forth in the policy are
observed. 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 the event of gross debt (comprising current and non-current finance debt and lease liability) equal to or less
than the maximum debt level defined in the strategic plan (US$ 65,000 in the 2024-2028 Strategic Plan), in addition
to the existence of net income attributable to shareholders of Petrobras, to be verified at the end of the year, the
Company shall distribute to its shareholders 45% of the difference between consolidates net cash provided by
operating activities and consolidated cash used in the acquisition of PP&E and intangibles assets and on the
acquisition of equity interests, 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. This calculation will be applied on a
quarterly basis;
any amounts related to share repurchases, as disclosed in the consolidated statement of cash flows, will be
deducted from the amount resulting of the formula applied each quarter;
the Company may, in exceptional cases, distribute extraordinary remuneration to its shareholders, higher than the
minimum mandatory dividends or than the amount calculated according to this policy, provided that the financial
sustainability of the Company is preserved;
the distribution of remuneration to shareholders shall be made on a quarterly basis;
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 shareholders remuneration policy, to ensure short, medium and long-term financial
sustainability, providing predictability to the dividend payments to shareholders.
Share Repurchase Program
On August 3, 2023, the Board of Directors approved a Share Repurchase Program, for the acquisition of up to
157.8 million preferred shares issued by the Company, on the Brazilian Stock Exchange (B3), to be held in treasury with
subsequent cancellation, without reduction of share capital. This program will be carried in the scope of the revised
Shareholders Remuneration Policy, within a maximum period of 12 months.
Proposed remuneration to the shareholders of Petrobras
For 2023, the proposed remuneration to the shareholders of Petrobras amounts to US$ 15,489, to be carried out based
on the shareholders remuneration policy, considering 60% of the free cash flow for the first quarter of 2023, according
to the policy in force at the time, and 45% of the free cash flow for the remaining quarters of 2023 (both calculated in
Brazilian Reais), by means of dividends, interest on capital and the share repurchase program.
F-108
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Dividends and interest on capital
Share repurchase program (1)
Total capital remuneration reserve
(1) It excludes US$ 293 thousand of transaction costs on the repurchase of shares.
2023
14,754
735
15,489
2022
43,187
−
43,187
For 2022, the proposed remuneration to the shareholders of Petrobras amounted to US$ 43,187, which was higher than
the amount calculated based on the shareholders remuneration policy (US$ 23,660).
Anticipation of dividends relating to 2023
On 2023, the Board of Directors approved the anticipation of dividends and interest on capital in the total amount of
US$ 11,605 (R$ 57,152 million), equivalent to US$ 0.8910 (R$ 4.3882) per common and preferred shares, based on the
net income of the period from January to September 2023 (interim), as shown in the following table:
Interim dividends and interest on capital - 1st quarter 2023
Interim dividends and interest on capital - 2nd quarter 2023
Interim dividends and interest on capital - 3rd quarter 2023 (1)
Total anticipated dividends
Indexation to the SELIC interest rate on anticipated dividends paid (2)
Total of anticipated dividends including indexation to the SELIC interest rate
Date of
approval
05.11.2023
08.03.2023
11.09.2023
Date of
record
06.12.2023
08.21.2023
11.21.2023
Amount per
common
and
preferred
share
0.381
0.2355
0.2745
0.8910
0.0166
0.9076
Amount
4,970
3,072
3,563
11,605
215
11,820
(1) The amount per share of anticipated dividends for the 3rd quarter of 2023 was updated due to the change in the number of treasury shares resulting from the
current Share repurchase program.
(2) The amount per share of the indexation to the SELIC interest rate on anticipated dividends paid was calculated based on the the outstanding shares on December
31, 2023.
According to the Company’s bylaws, these amounts are indexed to the Selic interest rate, from the date of the payment
to the end of the fiscal year (US$ 215) and are considered in determining the remaining dividends to be paid relating to
2023.
The interest on capital anticipated for the year 2023 resulted in a deductible expense which reduced the income tax
expense by US$ 1,234. This amount was subject to withholding income tax (IRRF) of 15%, except for immune and exempt
shareholders, as established in applicable law.
Proposed dividends for 2023
The Dividends for 2023, proposed by management for approval at the Annual General Shareholders Meeting, amounts
to US$ 14,754 (US$ 1.1415 per outstanding share), including the minimum mandatory dividend of 25% of the adjusted
net income (US$ 6,036) and additional dividends proposed (US$ 8,718), arising from the remaining portion of retained
earnings. This proposal is superior to the priority of preferred shares and in accordance with the shareholders
remuneration policy.
The amount per share of the proposed dividends may vary up to the date of the Annual General Shareholders Meeting
(date of record), due to the share repurchase program that may reduce the number of outstanding shares.
Dividends payable
As of December 31, 2023, dividends payable within current liabilities, amounting to US$ 3,501, relate to the anticipation
of dividend approved on November 9, 2023, related to the third quarter of 2023. The first installment of these dividends
was paid on February 20, 2024 and the second installment was paid on March 20, 2024.
F-109
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Consolidated opening balance of dividends payable
Opening balance of dividends payable to non-controlling shareholders
Opening balance of dividends payable to shareholders of Petrobras
Additions relating to complementary dividends
Additions relating to anticipated dividends
Payments made
Indexation to the Selic interest rate
Transfers to unclaimed dividends
Withholding income taxes over interest on capital and over Indexation to the Selic interest rate (1)
Translation adjustment
Closing balance of dividends payable to shareholders of Petrobras
Closing balance of dividends payable to non-controlling shareholders
Consolidated closing balance of dividends payable
(1) It includes US$ 359 over dividends paid and US$ 51 over dividends payable.
2023
4,171
(2)
4,169
6,864
11,605
(19,670)
(512)
(84)
(410)
1,539
3,501
−
3,501
2022
−
−
−
6,688
35,030
(37,701)
(298)
(165)
(366)
981
4,169
2
4,171
Additional dividends proposed, amounting to US$ 2,934 (US$ 0.2270 per outstanding share), will be maintained in
shareholders' equity until its approval on the Annual General Shareholders Meeting, expected to be held on April 25,
2024, when it will be reclassified to liabilities, if approved.
Share Repurchase Program for 2023
Since the start of Share Repurchase Program in September 2023, the Company repurchased 104,064,000 preferred
shares for the amount of US$ 735, including transaction costs (US$ 293 thousand).
34.4.3. Unclaimed Dividends
As of December 31, 2023, the balance of dividends not claimed by shareholders of Petrobras is US$ 337 recorded as
other current liabilities, as described in note 21 (US$ 241 as of December 31, 2022). The payment of these dividends was
not carried out due to the lack of registration data for which the shareholders are responsible with the custodian bank
for the Company's shares.
Changes in unclaimed dividends
Opening balance
Prescription
Transfers from dividends payable
Translation adjustment
Closing Balance
2023
2022
241
(7)
84
19
337
81
(11)
165
6
241
Prescribed dividends amounting to US$ 7 in 2023 were transferred to equity, within retained earnings.
The following table presents the Company’s expectation of prescription of unclaimed dividends if missing registration
data is uninformed by shareholders of Petrobras.
Expectation of prescription of unclaimed dividends
2023
2024
2025
12.31.2023
67
180
90
337
F-110
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Accounting policy on distributions to shareholders
Interest on capital is a deductible expense, since it is part of the dividend for the year, as provided for in the Company’s
bylaws, and accounted for in the statement of income, as required by tax legislation, resulting in a tax credit for income
taxes recognized in the statement of income of the year.
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.
Dividends not claimed by Petrobras’ shareholders are transferred from dividends payable to other current liabilities.
After 3 years from the date these dividends are made available to shareholders, they are reclassified from other current
liabilities to equity within retained earnings, in accordance with Petrobras' bylaws.
34.5. Earnings per share
Common
Preferred
2023
Total
Common
Preferred
2022
Total
Common
Preferred
2021
Total
Net income
attributable to
shareholders of
Petrobras
Weighted average
number of
outstanding
Basic and diluted
earnings per share
- in U.S. dollars
Basic and diluted
earnings (losses)
per ADS
equivalent - in U.S.
dollars (1)
14,221
10,663
24,884
20,895
15,728
36,623
11,339
8,536
19,875
7,442,231,382 5,580,057,862 13,022,289,244 7,442,231,382 5,601,969,879 13,044,201,261 7,442,231,382 5,601,969,879 13,044,201,261
1.91
1.91
1.91
2.81
2.81
2.81
1.52
1.52
1.52
3.82
3.82
3.82
5.62
5.62
5.62
3.04
3.04
3.04
(1) 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.
35. 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.
F-111
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
The Company presents a sensitivity analysis of factors relating to its corporate risk management process. The possible
and remote scenarios are related to events with low and very low probability of occurrence, respectively. The period of
application of the sensitivity analysis is one year, except for operations with commodity derivatives, for which a three-
month period is applied, due to the short-term nature of these transactions.
35.1. Derivative financial instruments
Assets and liabilities
Fair value Asset Position (Liability)
Open derivatives transactions
Closed derivatives transactions awaiting financial settlement
Recognized in Statements of Financial Position
Other assets (note 21)
Other liabilities (note 21)
12.31.2023
12.31.2022
20
10
30
92
-62
-120
27
-93
54
-147
The following table presents the details of the open derivative financial instruments held by the Company as of
December 31, 2023, and represents its risk exposure:
F-112
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Derivatives not designated for hedge accounting
Future contracts - total (1)
Long position/Crude oil and oil products
Short position/Crude oil and oil products
Swap (2)
Short position/ Soybean oil
Forward contracts (3)
Short position/Foreign currency forwards (BRL/USD)
Swap (3)
Swap - CDI X IPCA
Foreign currency / Cross-currency Swap (3)
Total open derivative transactions
(1) Notional value in thousands of bbl.
(2) Notional value in thousands of tons.
(3) Amounts in US$ and R$ are presented in million.
Profit or loss
Commodity derivatives
Other commodity derivative transactions - Note 35.2.1 (a)
Recognized in Other Income and Expenses
Currency derivatives
Swap Pounds Sterling x Dollar
NDF – Pounds Sterling x Dollar
Swap CDI x Dollar - Note 35.2.2 (b)
Others
Interest rate derivatives
Swap - CDI X IPCA
Cash flow hedge on exports -Note 35.2.2 (a)
Recognized in Net finance income (expense)
Total open derivative transactions
Comprehensive income
Cash flow hedge on exports - Note 35.2.2 (a)
Collateral
Commodity derivatives
12.31.2023
Notional value
12.31.2022
Asset Position (Liability)
12.31.2022
12.31.2023
Maturity
Statement of Financial Position
Fair value
(1,053)
2,527
(3,580)
(1)
(1)
683
9,058
(8,375)
(3)
−
-
R$ 3,008
US$ 729
R$ 3,008
US$ 729
1
−
−
−
-
68
(49)
20
(40)
-
-
−
-
−
(16)
(64)
(120)
2024
2024
−
2024
2024
2029/2034
2024/2029
Gains/ (losses) recognized in the
statement of income
2023
2022
2021
11
11
−
−
81
−
81
25
25
(3,763)
(3,657)
(3,646)
(256)
(256)
(297)
−
211
5
(81)
(50)
(50)
(4,871)
(5,002)
(5,258)
(79)
(79)
(85)
9
(3)
1
(78)
(41)
(41)
(4,585)
(4,704)
(4,783)
Gains/ (losses) recognized in other
comprehensive income
2021
636
2022
10,094
2023
8,317
Guarantees given as collateral
12.31.2023
12.31.2022
18
96
F-113
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
35.2. Market risks
35.2.1. Risk management of products prices
The Company is exposed to commodity price cycles, and 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)
Other commodity derivative transactions
Petrobras, by use of its assets, positions and market knowledge from its operations in Brazil and abroad, may seek to
optimize some of its commercial operations in the international market, with the use of commodity derivatives to
manage price risk.
b)
Sensitivity analysis of commodity derivatives
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, 2023. 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 20%
and 40%, 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.
Financial Instruments
Risk
Derivatives not designated for hedge accounting
Future and forward contracts
Future and forward contracts
Forward contracts
Crude oil and oil products - price changes
Soybean oil - price changes
Foreign currency - depreciation BRL x USD
Probable
Scenario
Reasonably
possible
scenario
Remote
Scenario
-
-
-
−
−
(18)
−
-
(18)
(18)
(37)
−
−
(37)
(37)
35.2.2. 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.
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.
F-114
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
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, 2023, 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$ 4.8413 exchange rate are set out below:
Present value of hedging instrument notional value at
12.31.2023
Hedging Instrument
Hedged Transactions
Nature
of the Risk
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
Maturity
Date
January
2024 to
December
2033
Changes in the present value of hedging instrument notional value
Amounts designated as of December 31, 2022
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, 2023
Nominal value of hedging instrument (finance debt and lease liability) at December 31, 2023
US$ million
R$ million
65,138
315,350
US$ million
62,119
28,945
(9,380)
(16,546)
-
65,138
84,028
R$ million
324,121
144,095
(46,894)
(82,733)
(23,239)
315,350
406,807
In 2023, the Company recognized a US$ 172 gain within foreign exchange gains (losses) due to ineffectiveness (a US$ 62
loss in the same period of 2022).
The average ratio of future exports for which cash flow hedge accounting was designated to the highly probable future
exports is 54.87%.
A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of
December 31, 2023 is set out below:
F-115
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Balance at January 1, 2023
Recognized in Other comprehensive income
Reclassified to the statement of income - occurred exports
Balance at December 31, 2023
Balance at January 1, 2022
Recognized in Other comprehensive income
Reclassified to the statement of income - occurred exports
Balance at December 31, 2022
Exchange
rate
variation
(26,527)
4,554
3,763
(18,210)
Exchange
rate
variation
(36,621)
5,223
4,871
(26,527)
Tax effect
Total
9,020
(1,550)
(1,280)
6,190
(17,507)
3,004
2,483
(12,020)
Tax effect
Total
12,452
(1,776)
(1,656)
9,020
(24,169)
3,447
3,215
(17,507)
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 the Strategic Plan 2024-2028, 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, 2023 is set out below:
Expected realization
(7,439)
(4,145)
(3,020)
(3,714)
(2,024)
2,132
(18,210)
2024
2025
2026
2027
2028
2029 to
2033
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 exports 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.
F-116
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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.
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 other comprehensive income 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
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, which was 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.
In July 2023, the 1st repurchase plan for these debentures was closed. During the term of this plan, which started in July
2022, only an immaterial amount of this debt had been effectively repurchased. Thus, the position in this swap remains
unchanged.
Changes in interest rate forward curves (CDI interest rate) may affect the Company's results, due to the market value
of these swap contracts. In preparing a sensitivity analysis for these curves, a parallel shock on this curve was estimated
based on the average maturity of these swap contracts, in the scope of the Company’s Risk Management Policy. For
possible and remote scenarios, the effects of 40% (400 b.p.) and 80% (800 b.p.) variations, respectively, on the interest
rate forward curves were estimated. The effects of this sensitivity analysis, keeping all other variables remaining
constant, are shown in the following table:
SWAP Exchange rate (IPCA x USD)
Possible
Result
Remote
Result
(9)
(19)
The methodology used to calculate the fair value of this swap operation consists of calculating the future value of the
operations, using rates agreed in each contract and the projections of the forward curves, IPCA coupon and foreign
exchange coupon, discounting to present value using the risk-free rate. Curves are obtained from Bloomberg based on
forward contracts traded in stock exchanges.
Finally, the mark-to-market is adjusted to the credit risk of the financial institutions, which is not relevant in terms of
financial volume, since the Company makes contracts with highly rated banks.
F-117
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 (20% and 40% changes in the
foreign exchange rates prevailing on December 31, 2023, 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.
Risk
Financial Instruments
Dollar/Real
Assets
Liabilities
Exchange rate - Cross currency swap
Cash flow hedge on exports
Total
Euro/Dollar
Assets
Liabilities
Total
Pound/Dollar Assets
Pound/Real
Euro/Real
Liabilities
Total
Assets
Liabilities
Total
Assets
Liabilities
Total
Peso/Dollar
Assets
Total
Exposure at
12.31.2023
Probable
Scenario (1)
8,519
(102,102)
(621)
65,136
(29,068)
1,286
(2,193)
(907)
1,547
(3,051)
(1,504)
1
(33)
(32)
5
(15)
(10)
279
(3,347)
(20)
2,135
(953)
18
(30)
(12)
23
(45)
(22)
−
(2)
(2)
−
(1)
(1)
Reasonably
possible
scenario
1,741
(20,458)
(124)
13,027
(5,814)
257
(439)
(182)
309
(610)
(301)
−
(7)
(7)
1
(3)
(2)
Remote
Scenario
3,483
(40,916)
(248)
26,055
(11,626)
514
(877)
(363)
619
(1,220)
(601)
−
(13)
(13)
2
(6)
(4)
12
12
(31,509)
(6)
(6)
(996)
(2)
(2)
(6,308)
(4)
(4)
(12,611)
Total at December 31, 2023
(1) At December 31, 2023, the probable scenario was computed based on the following risks: R$ x U.S. dollar - a 3.28% depreciation of the real; peso x U.S. dollar - a
98,7% depreciation of the peso; euro x dollar: a 1.3% appreciation of the euro; pound sterling x U.S. dollar - a 1.42% appreciation of the pound sterling; real x euro: a
4.7% depreciation of the real; real x pound sterling - a 4.7% depreciation of the real;. Source: Focus and Thomson Reuters.
35.2.3. Interest rate risk management
The Company considers that interest rate risk does not create a significant exposure and therefore, preferably does not
use derivative financial instruments to manage interest rate risk, except for specific situations faced by certain
subsidiaries of Petrobras.
The sensitivity analysis of interest rate risk presented in the table below is carried out for a twelve-month term.
Amounts referring to reasonably possible and remote scenarios mean the total floating interest expense if there is a
variation of 40% and 80% in these interest rates, respectively, maintaining all other variables constant.
The following table presents the amounts to be disbursed by Petrobras with the payment of interest related to debts
with floating interest rates at December 31, 2023:
F-118
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Risk
LIBOR 6M
SOFR 3M (2)
SOFR 6M (2)
SOFR O/N (2)
CDI
TR
TJLP
IPCA
Probable
Scenario (1)
16
97
133
131
Reasonably
possible
scenario
19
125
158
183
233
6
64
102
782
327
9
90
143
Remote
Scenario
22
153
182
235
420
11
116
184
1,054
1,323
(1) The probable scenario was calculated considering the quotations of currencies and floating rates to which the debts are indexed.
(2) It represents the Secured Overnight Financing Rate.
35.3. Liquidity risk management
The possibility of insufficient cash to settle obligations on the scheduled dates is continuously managed by the
company. The Company mitigates its liquidity risk by defining reference parameters for treasury management and by
periodically analyzing the risks of the projected cash flows, quantifying its main risk factors through Monte Carlo
simulations. These risks comprise oil prices, exchange rates, gasoline and international diesel prices, among others.
Thus, the Company is able to predict cash needs for its operational continuity and for the execution of its strategic plan.
In this context, even in the case of the financial statements presenting a negative net working capital, management
believes it does not compromise its liquidity.
Additionally, the Company maintains revolving credit facilities contracted as a liquidity reserve to be used in adverse
scenarios (see note 32.5). The Company regularly assesses market conditions and may enter into transactions to
repurchase its own securities or those of its subsidiaries, through a variety of means, including tender offers, make
whole exercises and open market repurchases, since they are in line with the Company's liability management strategy,
in order to improve its debt repayment profile and cost of debt.
The maturity schedules for the Company’s undiscounted finance debt and lease liability are presented in note 32.4 and
33, respectively.
35.4. 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.
35.4.1. 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-119
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
35.5. Fair value of financial assets and liabilities
Assets
Commodity derivatives
Interest rate derivatives
Balance at December 31, 2023
Balance at December 31, 2022
Liabilities
Foreign currency derivatives
Balance at December 31, 2023
Balance at December 31, 2022
Cash and cash equivalents
Marketable securities
12.31.2023
12.31.2022
12.31.2023
12.31.2022
593
6,890
20
3,251
1,966
−
7
12,727
−
3,806
212
917
3,034
1
26
7,996
651
464
−
−
4,113
−
−
5,228
−
820
−
205
3,311
1
−
4,337
Level I
Level II
Level III
1
-
1
−
-
−
(40)
-
68
68
−
(49)
(49)
(81)
-
-
-
−
-
-
−
Total fair
value
recorded
1
68
69
−
(49)
(49)
(121)
The fair value of other financial assets and liabilities is presented in the respective notes: 8 – Marketable securities; 14
– Trade and other receivables; and 32 – Finance debt (estimated amount).
The fair values of cash and cash equivalents, current debt and other financial assets and liabilities are equivalent or do
not differ significantly from their carrying amounts.
36. 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 bylaws.
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, compliance, transparency, fairness and commutability.
The Statutory Audit Committee (CAE) must approve in advance transactions between the Company and: i) the Brazilian
Federal Government, including its agencies or similar bodies; ii) Petros Foundation; iii) Petrobras Health Association;
iv) entities controlled by Petrobras in which there is a participation in the share capital of the controlled company by the
Brazilian Federal Government, its Entities, or any authority of a public entity to which Petrobras is linked, or by
individuals connected to it; v) Petrobras’ associated entities (including entities controlled by its associates); and vi)
F-120
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
entities controlled by key management personnel or by their close family members, taking into account the materiality
established by this policy.
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.
36.1. 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
Petrochemical companies (associates)
Other associates and joint ventures
Subtotal
Brazilian government – Parent and its controlled entities
Government bonds
Banks controlled by the Brazilian Government
Petroleum and alcohol account - receivables from the Brazilian Government (note 14.1)
Brazilian Federal Government (1)
Pré-Sal Petróleo S.A. – PPSA
Others
Subtotal
Petros
Total
Current
Non-Current
(1) It includes amounts related to lease liability.
12.31.2023
Liabilities
Assets
12.31.2022
Liabilities
Assets
45
95
140
1,819
15,526
278
−
−
138
17,761
64
17,965
2,684
15,281
4
10
14
−
2,119
−
1,378
28
80
3,605
305
3,924
1,676
2,248
21
72
93
1,689
11,811
602
−
−
58
14,160
56
14,309
2,603
11,706
10
21
31
−
1,567
−
1,422
57
71
3,117
301
3,449
2,119
1,330
The income/expenses of significant transactions are set out in the following table:
F-121
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Joint ventures and associates
BR Distribuidora (now called Vibra Energia)
Natural Gas Transportation Companies
State-controlled gas distributors (joint ventures) (1)
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
Pré-Sal Petróleo S.A. – PPSA
Others
Subtotal
Petros
Total
Revenues, mainly sales revenues
Purchases and services
Income (expenses)
Foreign exchange and inflation indexation charges, net
Finance income (expenses), net
Total
(1) In July 2022, the Company disposed its entire interest in Gaspetro.
2023
2022
2021
−
−
−
3,402
57
3,459
210
(19)
233
15
(124)
(361)
(204)
(250)
(19)
3,190
3,450
12
(582)
(267)
577
3,190
−
−
1,196
4,465
96
5,757
204
71
−
62
288
(657)
(79)
(111)
(21)
5,625
5,821
(4)
(804)
299
313
5,625
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
Information on the judicialized debts from the Brazilian Federal Government (precatórios) issued in favor of the
Company arising from the petroleum and alcohol accounts is disclosed in note 14.
The liability related to pension plans of the Company's employees and managed by the Petros Foundation, including
debt instruments, is presented in note 18.
36.2. 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) in December 2023 and December
2022 were:
Compensation of employees, excluding officers (amounts in U.S. dollars)
Lowest compensation
Average compensation
Highest compensation
Employees
Number of employees
2023
920
4,921
21,516
2023
40,213
2022
759
4,367
20,790
2022
38,682
The annual compensation of Executive Officers, including variable compensation, for the years 2023 and 2022 were:
F-122
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
Compensation of the Director of Petrobras (includes variable compensation)
Lowest compensation (1)
Average compensation (2)
Highest compensation (3)
(1) It corresponds to the lowest annual compensation, including former members, according to the Annual Circular Letter CVM/SEP of March 28, 2023. In 2023, no
members have served for 12 months in the fiscal year. The value of the minimum annual individual compensation was determined based on the actual remuneration
paid to members who worked throughout the year. The member with the lowest remuneration served for 1 month in the fiscal year. On the other hand, if we consider
the member who served for the longest period in the fiscal year (11 months), the lowest remuneration corresponds to US$ 342,459. If the Company excluded from the
calculation the amounts paid to former members, as termination of office and deferred variable compensation, and considered the amounts paid to members who held
the position for less than 12 months, the lowest amount would be US$ 14,318 in 2023 and US$ 65,172 in 2022.
(2) It corresponds to the total value of the annual compensation, including expenses with former members, divided by the number of remunerated positions (9),
according to the Annual Circular Letter CVM/SEP of March 28, 2023. If the Company excluded from the average compensation the amounts paid to former members, as
termination of office and deferred variable compensation, the average amount would be US$ 359,629 in 2023 and US$ 414,854 in 2022.
750,378
551,477
29,707
2023
586,324
437,916
322,668
2022
(3) It corresponds to the annual compensation, without any exclusions, of the officer with the highest individual compensation, according to the Annual Circular Letter
CVM/SEP of March 28, 2023. In the years 2023 and 2022, it corresponds to members who held the position for 4 and 12 months in the fiscal year, respectively.
The criteria for compensation of members of the Board of Directors and the Board Executive Officers is based on the
guidelines established by the Secretariat of Management and Governance of the State-owned Companies (SEST) of the
Ministry of Management and Innovation in Public Services, and by the Ministry of Mines and Energy. The total
compensation is set out as follows:
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 (1)
Monthly average number of members in the period
Monthly average number of paid members in the period
(1) It includes Variable Compensation Program (PPP) for Executive Officers.
Executive
Officers
3.0
0.9
0.3
2.9
0.9
8.0
7.6
9.00
9.00
Board of
Directors
0.1
−
−
−
−
0.1
−
11.00
6.33
2023
Total
3.1
0.9
0.3
2.9
0.9
8.1
7.6
20.00
15.33
Executive
Officers
2.7
0.8
0.4
2.8
0.3
7.0
6.3
9.00
9.00
Parent Company
2022
Board of
Directors
0.1
−
−
−
−
0.1
−
11.00
3.83
Total
2.8
0.8
0.4
2.8
0.3
7.1
6.3
20.00
12.83
In 2023, expenses related to compensation of the board members and executive officers of Petrobras amounted to
US$ 13.9 (US$ 13.7 in 2022 and US$ 14.7 in 2021).
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 Statutory Audit Committees are only compensated with respect to their Audit
Committee duties. The total compensation concerning these members was US$ 403 thousand for 2023 (US$ 484
thousand with tax and social security costs). For 2022, the total compensation concerning these members was US$ 613
thousand (US$ 728 thousand with tax and social security costs). For 2021, it was US$ 544 thousand (US$ 642 thousand
with tax and social security costs).
On April 27, 2023, the shareholders, at the Company’s Annual General Shareholders Meeting, set the threshold for the
overall compensation for executive officers and board members at US$ 8.9 (R$ 44.99 million) from April 2023 to March
2024.
The average annual remuneration of the members of Petrobras' Fiscal Council, in fiscal year 2023, was US$ 31 (US$ 38,
considering social security costs). In 2022, the average annual remuneration was US$ 28 (US$ 33, considering social
security costs). In 2021, the average annual remuneration was US$ 25 (US$ 29, considering social security costs).
F-123
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
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 2023, the Company provisioned US$ 2.9 referring to the Performance Award Program – PPP 2023 for Executive
Directors.
Exemption from damage (indemnity)
The Company's Bylaws establish since 2002 the obligation to indemnify and keep its managers, members with statutory
functions and other employees and agents who legally act by delegation of the Company's managers, in order to cover
certain expenses due to complaints, inquiries, administrative, arbitration or judicial investigations and proceedings, in
Brazil or in any other jurisdiction, which aim to impute any responsibility for regular management acts practiced
exclusively in the exercise of its activities since the date of its investiture or the beginning of the contractual
relationship with the Company.
The first Indemnity Commitment was approved by the Board of Directors on December 18, 2018, starting from its
signature until the Ordinary General Meeting of 2020. The maximum exposure established by the Company (global limit
for all eventual damages) was US$ 500.
The second Indemnity Commitment was approved by the Board of Directors on March 25, 2020, starting from its
signature until the Ordinary General Meeting of 2022. The maximum exposure established by the Company (global limit
for all possible damages) was US$ 300.
The third Indemnity Commitment was approved by the Board of Directors on March 30, 2022, starting from its signature,
until the Ordinary General Meeting of 2024. The maximum exposure established by the Company (global limit for all
possible damages) was US$ 200.
The term of coverage provided for in the Commitment begins from the date of signature until the occurrence of the
following events, whichever comes last: (i) the end of the fifth year following the date on which the beneficiary leave,
for any reason, to exercise the mandate or function/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 or at
any time when there is an indemnifiable event based on an imprescriptible fact.
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, observing the principle of presumed innocence; (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 where a manifest conflict of interest with the Company is established.
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. eventually claimed by the Beneficiaries, with
compensation or reimbursement limited to the cases provided for in the Indemnity Commitment.
In the case of conviction for an intentional act or committed with gross error, final and unappealable in criminal, public
civil, impropriety, popular action, action proposed by a third party, or by shareholders in favor of the Company, or, still,
of an unappealable administrative decision in which if it concludes by the practice of a malicious act or committed with
gross error and that has not been subject to judicial suspension, the beneficiary undertakes, regardless of any
manifestation of the independent third party, to reimburse the Company for all amounts spent by the Company within
F-124
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
the scope of this Commitment, including all expenses and costs related to the process, refunding them within a period
of up to 30 (thirty) days from the competent notification.
In order to avoid the configuration of conflicts of interest, notably as provided for in art. 156 of Law 6,404/76, the
Company will hire external professionals, who may act individually or jointly, with an unblemished, impartial and
independent reputation (“Independent Third Party”), and with robust experience to analyze any claim by the
Beneficiaries on the characterization of Regular Management Act or on the hypothesis of exclusions. In addition,
Beneficiaries who are claiming said amounts are prohibited from participating in meetings or discussions that deal with
the approval of the payment of expenses, in compliance with the provisions of art. 156, head provision of Law 6,404/76,
Brazilian Corporate Law.
37. 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 for decommissioning costs
Use of tax credits and judicial deposit for the payment of contingency
Assets received due to the increase of interest in concessions without disbursement
Remeasurement of property, plant and equipment acquired in previous periods
Earn Out related to Atapu and Sépia fields
2023
2022
2021
1,403
1,413
904
−
14,992
2,641
144
−
5
280
19
6,923
3,260
1,236
−
24
694
−
6,945
(1,082)
1,173
165
−
54
The opening balance of Cash and cash equivalents in the Statements of Cash Flows includes amounts related to assets
classified as held for sale, as shown in the reconciliation below:
Reconciliation of the balance at the beginning of the period
Cash and cash equivalents in statements of financial position
Cash and cash equivalents classified as assets held for sale
Cash and cash equivalents according to Statements of Cash Flows (opening balance)
2023
2022
7,996
−
7,996
10,467
13
10,480
37.1. Reconciliation of Depreciation, depletion and amortization with Statements of Cash Flows
Depreciation of Property, plant and equipment
Amortization of Intangible assets
Capitalized depreciation
Depreciation of right of use - recovery of PIS/COFINS
Depreciation, depletion and amortization in the Statements of Cash Flows
38. Subsequent events
Receipt of Earn Out relating to Sépia and Atapu
2023
15,306
104
(1,965)
(165)
13,280
2022
14,618
77
(1,343)
(134)
13,218
2021
12,955
60
(1,240)
(80)
11,695
In January 2024, the Company received the amount of US$ 371 for the complement of the earnout of 2023 relating to
the Sépia and Atapu fields. This amount includes the gross-up of the taxes levied on the 28%, 21%, and 21% interests
held in Sépia by TotalEnergies EP Brasil Ltda., PETRONAS Petróleo Brasil Ltda., and QatarEnergy Brasil Ltda.,
respectively, and on the 25% and 22.5% held in Atapu by Shell Brasil Petróleo Ltda. and TotalEnergies EP Brasil Ltda.,
respectively. For more information, see note 25.
Petrobras signs agreement with ANP
F-125
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
On January 30, 2024, Petrobras signed an agreement with ANP to settle a lawsuit relating to the recalculation of
production taxes (royalties and special participation) related to oil production in the Jubarte field, from August 2009 to
February 2011 and December 2012 to February 2015.
The agreement involves the payment of US$ 172 (R$ 832 million), updated as of December 2023, to be adjusted until
the date of payment of the first installment. The amounts of the agreement will be paid in an initial installment of 35%
and the remaining balance in 48 installments adjusted by the SELIC rate. On March 4, 2024, this agreement was
approved by the 23rd Federal Court of the Judicial Section of Rio de Janeiro State.
As of December 31, 2023, these amounts are accounted for within other non-current liabilities. For further information,
see note 17.2.
F-126
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Supplementary information on Oil and Gas Exploration and Production (unaudited)
In accordance with Codification Topic 932 - Extractive Activities – Oil and Gas, this section provides supplemental
information on oil and gas exploration and 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, 2023, 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 the USA, in which Murphy Exploration & Production Company
("Murphy") has an 80% stake and Petrobras America Inc ("PAI") a 20% stake. The Company reports its reserves in Brazil,
United States of America and Argentina. Volumes in Bolivia are not registered as the Constitution of this country does
not allow. 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 27, the Company uses the successful efforts method of accounting for appraisal and development
costs of crude oil and natural gas production. In addition, notes 24 and 25 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, 2023
Unproved oil and gas properties
Proved oil and gas properties
Support Equipment
Gross Capitalized costs
Depreciation, depletion and amortization
Net capitalized costs
December 31, 2022
Unproved oil and gas properties
Proved oil and gas properties
Support Equipment
Gross Capitalized costs
Depreciation, depletion and amortization
Net capitalized costs
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
Brazil
3,764
82,396
103,285
189,444
(63,003)
126,442
4,227
83,030
69,735
156,993
(52,836)
104,156
4,455
80,523
67,988
152,967
(51,621)
101,345
Consolidated entities
Abroad
Total
South
America
Others
Total
Equity
Method
Investees
−
−
1
1
(1)
−
−
−
1
1
(1)
−
−
−
1
1
(1)
−
61
243
759
1,063
(812)
251
55
205
733
993
(770)
223
115
172
778
1,065
(734)
331
3,825
82,639
104,044
190,507
(63,815)
126,692
4,282
83,235
70,468
157,986
(53,606)
104,380
4,570
80,695
68,766
154,032
(52,355)
101,677
−
607
−
607
(289)
318
−
762
−
762
(224)
538
−
832
−
832
(296)
536
61
243
758
1,062
(811)
251
55
205
732
992
(769)
223
115
172
777
1,064
(733)
331
F-127
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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:
December 31, 2023
Acquisition costs:
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2022
Acquisition costs:
Proved
Unproved
Exploration costs
Development costs
Total
December 31, 2021
Acquisition costs:
Proved
Unproved
Exploration costs
Development costs
Total
Brazil
−
146
862
10,929
11,937
−
892
707
6,883
8,482
−
−
682
6,035
6,717
Consolidated entities
Abroad
Total
South
America
Total
Equity
Method
Investees
−
−
11
53
64
−
−
51
31
82
−
−
5
44
49
−
−
11
53
64
−
−
51
31
82
−
−
5
44
49
−
146
873
10,982
12,001
−
892
758
6,914
8,564
−
−
687
6,079
6,766
−
−
10
37
47
−
−
1
30
31
−
−
−
37
37
(iii) Results of operations for oil and gas producing activities
The Company’s results of operations from oil and gas producing activities for the years ended December 31, 2023, 2022
and 2021 are shown in the following table. The Company transfers substantially all of its Brazilian crude oil and gas
production to the RT&M and G&LCE segments, respectively, 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-128
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
South
America
North
America
Others
Total
Consolidated entities
Abroad
Total
Equity
Method
Investees
−
−
−
−
−
−
−
(8)
(8)
3
(5)
−
−
−
−
−
−
−
(8)
(8)
−
(8)
−
−
−
−
−
−
−
114
114
−
114
−
−
−
−
−
−
−
(1)
(1)
1
(1)
−
−
−
−
−
−
−
21
21
(3)
19
−
−
−
−
−
−
−
(118)
(118)
43
136
−
136
(63)
(1)
(44)
−
(24)
3
(1)
767
66,113
66,880
(17,009)
(982)
(10,230)
(2,105)
(2,528)
34,026
(11,569)
2
22,457
158
−
158
(75)
(168)
(42)
(2)
12
(117)
41
1,311
76,579
77,890
(20,050)
(887)
(10,415)
(1,218)
3,012
48,332
(16,433)
(76)
31,899
131
−
131
(67)
(2)
(46)
−
11
27
33
1,105
54,479
55,584
(14,668)
(687)
(9,005)
3,107
820
35,151
(11,951)
(75)
59
23,200
159
−
159
(36)
−
(26)
(75)
(25)
(3)
−
(3)
275
−
275
(41)
−
(42)
−
(22)
170
−
170
220
−
220
(44)
−
(38)
−
(17)
121
−
121
December 31, 2023
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, 2022
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, 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)
Brazil
631
66,113
66,744
(16,946)
(981)
(10,186)
(2,105)
(2,504)
34,023
(11,568)
22,455
1,153
76,579
77,732
(19,975)
(719)
(10,373)
(1,216)
3,000
48,449
(16,474)
136
−
136
(63)
(1)
(44)
−
(15)
12
(4)
8
158
−
158
(75)
(168)
(42)
(2)
(1)
(130)
44
31,975
(86)
974
54,479
55,453
(14,601)
(685)
(8,959)
3,107
809
35,124
(11,984)
23,141
131
−
131
(67)
(2)
(46)
−
15
31
(11)
20
F-129
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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 2023, 2022 and 2021 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 (*)
At January 1, 2023
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2023
At January 1, 2022
Revisions of previous estimates
Sales of reserves (1)
Production for the year
Reserves at December 31, 2022
At January 1, 2021
Crude oil in
Brazil
8,908
95
1,140
(147)
(786)
9,210
8,406
1,705
(455)
(748)
8,908
7,534
−
1,654
(9)
(773)
8,406
Crude Oil in
South
America
2
−
−
−
−
2
2
−
−
−
2
−
−
2
−
−
2
Synthetic Oil
in Brazil
−
−
−
−
−
−
10
−
(10)
(1)
−
−
−
11
−
(1)
10
Consolidated
Total
8,910
95
1,140
(147)
(786)
9,212
8,419
1,705
(465)
(749)
8,910
7,534
−
1,667
(9)
(774)
8,419
Crude Oil in
North
America
16
−
2
−
(2)
16
17
3
(1)
(3)
16
18
−
1
−
(3)
17
Total
8,926
95
1,142
(147)
(789)
9,228
8,435
1,708
(465)
(752)
8,926
7,552
−
1,668
(9)
(777)
8,435
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2021
(1) Includes the effects of the write-offs related to the Co-Participation Agreements of Atapu and Sepia fields.
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
F-130
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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 (*)
At January 1, 2023
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2023
At January 1, 2022
Revisions of previous estimates
Sales of reserves (1)
Production for the year
Reserves at December 31, 2022
At January 1, 2021
Natural Gas in
Brazil
8,504
779
673
(47)
(573)
9,335
7,912
1,560
(382)
(586)
8,504
7,062
−
1,512
(14)
(647)
7,912
Natural Gas in
South
America
173
15
(5)
−
(20)
163
177
16
−
(20)
173
26
−
167
−
(16)
177
Synthetic Gas
in Brazil
−
−
−
−
−
−
17
−
(15)
(1)
−
−
−
18
−
(1)
17
Consolidated
Total
8,677
794
668
(47)
(594)
9,498
8,106
1,575
(397)
(606)
8,677
7,088
−
1,697
(14)
(664)
8,106
Natural Gas in
North
America
6
−
1
−
(1)
7
7
−
(1)
(1)
6
8
−
−
−
(1)
7
Total
8,683
794
669
(47)
(595)
9,504
8,113
1,575
(398)
(607)
8,683
7,095
−
1,697
(14)
(666)
8,113
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2021
(1) Includes the effects of the write-offs related to the Co-Participation Agreements of Atapu and Sepia fields.
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
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 35% of our total proved reserves of natural gas as of December 31, 2023.
F-131
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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 2023, 2022 and 2021:
Proved developed and undeveloped
reserves (*)
At January 1, 2023
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2023
At January 1, 2022
Revisions of previous estimates
Sales of reserves (1)
Production for the year
Reserves at December 31, 2022
At January 1, 2021
Consolidated Entities
Oil equivalent
in Brazil
10,423
233
1,260
(155)
(888)
10,873
9,816
1,983
(523)
(852)
10,423
8,792
−
1,923
(11)
(888)
9,816
Oil equivalent
in South
America
33
3
(1)
−
(4)
31
33
3
−
(4)
33
5
−
32
−
(3)
33
Synthetic Oil
in Brazil
−
−
−
−
−
−
13
−
(12)
(1)
−
−
−
14
−
(1)
13
Consolidated
Total
10,455
236
1,259
(155)
(892)
10,904
9,862
1,986
(536)
(857)
10,455
8,797
−
1,969
(11)
(892)
9,862
Equity Method
Investees
Oil equivalent in
North
America
17
−
2
−
(2)
17
18
3
(1)
(3)
17
19
1
2
−
(3)
18
Total
10,473
237
1,262
(155)
(894)
10,921
9,880
1,989
(536)
(860)
10,473
8,816
1
1,971
(11)
(896)
9,880
Extensions and discoveries
Revisions of previous estimates
Sales of reserves
Production for the year
Reserves at December 31, 2021
(1) Includes the effects of the write-offs related to the Co-Participation Agreements of Atapu and Sepia fields.
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
In 2023, we incorporated 1,262 million boe of proved reserves by revising previous estimates, including:
(i) addition of 1,092 million boe arising from the good performance of assets, mainly in Búzios, Tupi and Atapu fields, in
the Santos Basin;
(ii) addition of 170 million boe due to new projects and other revisions.
We did not have relevant changes related to the variation in the oil price.
In addition, we incorporated 237 million boe from discoveries and extensions, mainly due to the declaration of
commerciality of Raia Manta and Raia Pintada fields (non-operated), in the Campos Basin.
Moreover, proved reserves were reduced by 155 million boe, resulting from sales.
The Company's total proved reserve resulted in 10,921 million boe in 2023, considering the variations above and the
reduction from 2023 production of 894 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 of America 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 registration of reserves by the Company.
In 2022, we incorporated 1,989 million boe of proved reserves by revising previous estimates, including:
(i) addition of 1,279 million boe due to new projects, mainly in Búzios field and in other fields in the Santos and Campos
Basins; and
F-132
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
(ii) addition of 710 million boe arising from other revisions, mainly due to good performance of reservoirs in the pre-
salt layer of Santos Basin and to the contract term extension of Rio Urucu and Leste do Urucu fields.
We did not have relevant changes related to the variation in the oil price.
The addition in our proved reserves were partially offset by the reduction of 536 million boe, due to the effects of the
transfer of interests of 5% of the Surplus Volume of the Transfer of Rights of Búzios field, of the write-offs related to
the Co-Participation Agreements of Atapu and Sepia fields and of sales of properties in mature fields.
The Company's total proved reserve resulted in 10,473 million boe in 2022, considering the variations above and the
reduction from 2022 production of 860 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 of America 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 registration of reserves by the Company.
In 2021, we incorporated 1,971 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 Coparticipation Agreement;
(ii) addition of 429 million boe related to economic revisions, mainly due to the increase in oil prices; and
(iii) addition of 166 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 9,880 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 of America 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 registration of reserves by the Company.
F-133
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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 (1)
Total Consolidated Entities
Equity Method Investees
North America (1)
Total Equity Method Investees
Total developed 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 undeveloped 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)
2023
4,710
1
4,711
14
14
4,726
4,500
1
4,501
2
2
4,503
9,228
−
−
−
−
−
−
−
−
−
−
−
−
−
5,522
92
5,614
6
6
5,620
3,814
70
3,884
1
1
3,885
9,504
−
−
−
−
−
−
−
−
−
−
−
−
−
5,694
17
5,711
15
15
5,727
5,179
13
5,193
2
2
5,194
10,921
(1) South America oil reserves includes 25% of natural gas liquid (NGL) in proved developed reserves and 26% of NGL in proved undeveloped reserves. North America oil reserves includes 6% of
natural gas liquid (NGL) in proved developed reserves and 7% of NGL in proved undeveloped reserves.
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
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 developed 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 undeveloped Consolidated and Equity Method Investees
Crude Oil
Synthetic Oil
Natural Gas
Synthetic Gas
(mmbbl)
(bncf)
Total oil and gas
(mmboe)
2022
4,185
1
4,186
14
14
4,200
4,723
1
4,724
2
2
4,726
−
−
−
−
−
−
−
−
−
−
−
−
5,097
91
5,188
5
5
5,193
3,407
82
3,489
1
1
3,490
−
−
−
−
−
−
−
−
−
−
−
−
5,093
17
5,110
15
15
5,125
5,330
15
5,346
2
2
5,348
Total proved reserves (developed and undeveloped)
(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 4% of NGL in proved undeveloped reserves.
8,683
8,926
−
−
10,473
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
F-134
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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 developed 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 undeveloped Consolidated and Equity Method Investees
Crude Oil
Synthetic Oil
Natural Gas
Synthetic Gas
Total oil and gas
(mmbbl)
(bncf)
(mmboe)
2021
4,711
1
4,712
15
15
4,727
3,695
1
3,696
2
2
3,698
10
−
10
−
−
10
−
−
−
−
−
−
5,232
79
5,310
6
6
5,316
2,681
98
2,779
1
1
2,780
17
−
17
−
−
17
−
−
−
−
−
−
5,656
15
5,671
16
16
5,687
4,173
18
4,191
2
2
4,193
Total proved reserves (developed and undeveloped)
(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.
8,096
8,425
17
10
9,880
(*) Apparent differences in the sum of the numbers are due to rounding.
In 2023, we standardized the conversion between gas and oil equivalent to 5,614.65 ft3 = 1 boe, which is equivalent to the conversion used in contracts in Brazil. Quantities from previous years were
restated with the new conversion.
F-135
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (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, including abandonment 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-136
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Standardized measure of discounted future net cash flows:
December 31, 2023
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, 2022
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, 2021
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
Apparent differences in the sum of the numbers are due to rouding.
Brazil
819,428
(348,787)
(64,121)
(140,774)
265,745
(120,216)
145,529
983,826
(399,655)
(62,548)
(178,412)
343,211
(151,828)
191,383
612,924
(264,158)
(44,027)
(104,568)
200,171
(85,391)
114,780
Consolidated entities
Abroad
South
America
650
(354)
(113)
(43)
139
(46)
93
837
(357)
(128)
(88)
264
(124)
141
587
(261)
(107)
(61)
159
(70)
89
Total
820,078
(349,142)
(64,235)
(140,818)
265,884
(120,262)
145,622
984,663
(400,012)
(62,676)
(178,500)
343,475
(151,951)
191,524
613,511
(264,419)
(44,134)
(104,628)
200,330
(85,461)
114,869
Equity
Method
Investees
1,213
(191)
(13)
−
1,009
(319)
691
1,581
(273)
(21)
−
1,287
(401)
886
1,129
(329)
(28)
−
772
(303)
470
F-137
Petróleo Brasileiro S.A. – Petrobras
Supplementary information (unaudited)
(Expressed in millions of US Dollars, unless otherwise indicated)
Changes in discounted net future cash flows:
Balance at January 1, 2023
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, 2023
Balance at January 1, 2022
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, 2022
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
Apparent differences in the sum of the numbers are due to rounding.
Consolidated entities
Abroad
South
America
141
(54)
53
−
19
3
(97)
(27)
20
30
5
93
89
(62)
31
−
−
17
122
(39)
14
(17)
(15)
141
1
(43)
44
−
−
205
58
(119)
−
(47)
(9)
89
Total
191,524
(49,851)
10,982
(3,894)
5,876
31,619
(64,004)
(16,436)
19,159
20,641
5
145,622
114,869
(54,291)
6,913
(17,030)
−
64,553
129,584
(23,356)
11,492
(41,194)
(15)
191,524
45,979
(38,117)
6,079
(246)
−
41,416
108,326
(20,019)
4,598
(33,136)
(9)
114,869
Brazil
191,383
(49,797)
10,929
(3,894)
5,858
31,616
(63,907)
(16,409)
19,138
20,611
−
145,529
114,780
(54,230)
6,883
(17,030)
−
64,535
129,462
(23,317)
11,478
(41,178)
−
191,383
45,978
(38,074)
6,035
(246)
−
41,211
108,268
(19,900)
4,598
(33,089)
−
114,780
Equity
Method
Investees
886
(123)
37
−
11
82
(201)
(17)
68
−
(53)
691
470
(235)
29
−
10
82
349
(4)
93
−
92
886
74
(177)
37
−
10
30
401
3
49
48
(7)
470
F-138
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,
2023 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.
Jean Paul Prates
Chief Executive Officer
Sergio Caetano Leite
Chief of Financial and Investor Relations Executive Officer
F-139
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
Opinions 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,
2023 and 2022, 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, 2023, 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, 2023, 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, 2023 and
2022, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2023, 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, 2023 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.
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-140
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.
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.
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-141
Assessment of the measurement of the defined benefit obligations for pension and
health care plans
As discussed in notes 4.4 and 18.3 to the consolidated financial statements, the Company
sponsors defined benefit pension and health care plans that provide supplementary
retirement benefits and medical care to its employees. As of December 31, 2023, the
defined benefit obligations for these pension and health care plans were US$ 16,382
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 rates and projected medical and hospital costs. The Company hires an
external actuarial firm 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 changes to the discount rates and projected medical and hospital 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 and hospital costs;
• we assessed the scope of the work, competency, and objectivity of the external actuarial
firm 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
the external actuarial firm and its qualifications and professional experience; and
• we involved actuarial professionals with specialized skills and knowledge, who assisted in
evaluating the Company’s discount rates and projected medical and hospital costs
including comparisons to data obtained from external sources.
Evaluation of the impairment testing of exploration and production cash generating
units
As discussed in notes 4.2.1, 4.2.2 and 26 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 before the impairment
testing of the exploration and production CGUs as of December 31, 2023 was US$ 8,332
million. For the year ended December 31, 2023, the amount of impairment losses
recognized in relation to the exploration and production CGUs was US$ 2,217 million.
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-142
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 determination of these CGUs and the estimate
of the recoverable amount. The determination 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 and natural gas prices; exchange rate (Brazilian
Real / US Dollar); capital and operating expenditures and volume and timing of recovery
of the oil and gas reserves. The recoverable amount is also sensitive to 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;
• we assessed the operational factors considered by the Company for changes in
exploration and production CGUs during the year, when determining these changes by
comparing to information obtained from internal and external sources;
• we evaluated the Company’s internally prepared projections of recovery of oil and gas
reserves, by comparing them 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 internal
engineers responsible for the estimate of the oil and gas reserves, as well as the
external reservoir specialist 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 qualifications and professional 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, 2023 with actual cash flows in this year; and
• we involved valuation professionals with specialized skill and knowledge, who assisted
in evaluating certain assumptions used in the impairment testing such as the discount
rates, average Brent oil and natural gas 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-143
Evaluation of the estimate of the provision for decommissioning costs
As discussed in notes 4.6 and 20 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, 2023, the carrying amount of the provision for
decommissioning costs was US$ 23,202 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 the external reservoir specialist hired by the Company;
• we assessed the estimated costs of decommissioning by comparing certain key
assumptions with external market data;
• 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 specialist 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 qualifications and professional experience; and
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-144
• 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 at the prior year-end.
/s/ KPMG Auditores Independentes Ltda.
KPMG Auditores Independentes Ltda.
We have served as the Company’s auditor since 2017.
Rio de Janeiro – Brazil
April 11, 2024
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-145
Operating and Financial
Review and Prospects