Objective
To reduce excess cash and adjust the capital structure, contributing to the reduction in the Company’s cost of capital.

Background
The “Share Buyback Policy” was approved by the Board of Directors on December 20 2002.

On December 15 2006, the Board of Directors authorized the buyback of Petrobras’ free float of preferred shares for future cancellation, using profit reserves under the following conditions:

• Quantity: up to 91,500,000 (ninety-one million, five hundred thousand) shares, corresponding 4.9% of the total free float of 1,850,364,700 (one billion, eight hundred and fifty million, three hundred and sixty-four thousand, seven hundred);
• Price: the purchase will be executed on the Stock Exchange at market prices on the dates of the acquisitions during the period established for the buyback;
• Intermediating financial institutions: Bradesco SA. Corretora de Títulos e Valores Mobiliários, CITIGROUP GMB CCTVM, CITIGROUP Global Markets, Credit Suisse Brasil SA. Corretora de Títulos e Valores Mobiliários, Itaú Corretora de Valores, JP Morgan CCVM SA., JP Morgan Securities Inc., Morgan Stanley Dean Witter CTVM AS, Morgan Stanley & CO. Incorporated, Santander Brasil Corretora de Títulos e Valores Mobiliários.
• Period: 365 days (final date: December 19 2007)

• During periods which precede the disclosure of annual (30 days prior to the event) and quarterly (15 days before hand) earnings results;
• On the days prior to options exercise dates (two days prior to the event and on the exercise date itself);
• During the periods when the Company has information on Material Facts as yet not announced to the market.