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Petrobras signs agreement to increase Brazilian energy supplies

(Rio de Janeiro, May 3, 2007). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that announces that it will sign a Pledge Agreement with the National Electricity Energy Agency (Aneel) to increase available generating capacity at 24 thermoelectric power plants to meet requiirements, including existing contractual commitments.

The terms of the Pledge Agreement are in line with the Company’s strategy of developing the Brazilian natural gas market, operating as an integrated energy company in order to assure returns on its portfolio of thermoelectric generation assets, the consolidation of which was concluded recently with the leasing of the Piratininga plant.

Petrobras’ commitments under the Agreement are a component part of the Company’s Business Plan for the 2007-2011 period. The Plan envisages total investments of approximately US$ 22.1 billion to supply about 70 million cubic meters/day of domestically produced gas by 2010, import of 20 million cubic meters of LNG (Liquefied Natural Gas) by 2009, in addition to maintaining natural gas imports of 30 million cubic meters/day provided under contract with Bolivia.

Implementation of the Agreement will add generating capacity of approximately 4GW by 2011 not only through greater supplies of natural gas but also through the conversion of plants to operate on a bi-fuel basis and the engagement of fuel-oil fired plants. Initially these initiatives will increase generation capacity, and, subsequently, endow Petrobras’ thermoelectric generation complex with greater operational flexibility and reliability.

Petrobras believes that these actions, allied to others, such as the formal contracting of forecast demand and an energy generation capacity reserve, will provide greater operational security to the domestic electricity supply system.

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This document may contain forecasts that merely reflect the expectations of the Company’s management. Such terms as “anticipate”, “believe”, “expect”, “forecast”, “intend”, “plan”, “project”, “seek”, “should”, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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