Ladies and gentlemen, thank you for standing by and welcome to the Petrobras conference call to discuss the First Quarter 2011 results. Later, there will be a question and answer session, and instructions will be given at that time. (Operator instructions) Today with us, we have Mr. Almir Guilherme Barbassa, Petrobras CFO and Investor Relations Officer and his staff. At this time, I would like to turn the conference over to Mr. Theodore Helms, Investor Relations Executive Manager of Petrobras who has some additional comments. Please go ahead, Mr. Helms.

Good afternoon ladies and gentlemen, welcome to our conference call to discuss first quarter and 2011 results. We have a simultaneous webcast on the Internet that can be accessed at the site, www.petrobras.com.br/ri/english. Before proceeding, I’d like to draw your attention to the slide two. We may make forward-looking statements, which are identified by use of the words will, expect and similar that are based on the beliefs and assumptions of the Petrobras management and on information currently available to the company. Finally, let me mention that this conference call will discuss Petrobras results prepared in accordance with the international financial reporting standards and Brazilian legislation. At this moment, we are unable to discuss any issues relating to U.S. GAAP results. The conference call will be conducted by our CFO, Mr. Almir Guilherme Barbassa. He will comment on the company’s operating and financial highlights and the main events during this quarter and he will be available to answer any questions you may have. Mr. Barbassa, you may begin.

Thank you for joining our conference call to discuss first quarter results. The first quarter is more towards for the consistent progress we made throughout the company. Net income for the quarter was a record. Our activity in the Santo Pre-salt is ramping up very rapidly. So far this year, we had already drilled 40% of all the wells we drilled in the prior four years. We made significant discoveries in the Pre-salt and Santos and Campos Basin. We started new extended well test in the Pre-salt of Santos. We connect the final link from our offshore gas facilities into our now completed the gas infrastructure. Our refining system operated at 9% of capacity refining record amounts of domestic oil into diesel, gasoline and jet fuel. We completed our 6 billion bond offering. We are tuning our access to the debt capital markets to supplement our internally generated funds. Sequentially and the year-over-year results for the first quarter were influenced by higher production, rising international oil price, stable product price in Brazil and a strengthening Real. Year over year, quarterly operating income was up 8%, while net income up by 42%. Sequentially, quarterly operating income was up 16% and net income up 4%. Year-over-year production was up 3% globally and 4% in Brazil. Oil production in Brazil 2 million and 44,000 barrels a day, up 3% from a year ago. As expected, first quarter production was below our 2011 oil target of 2.1 million barrels per day due to higher casuals maintenance. We concentrate (inaudible) getting maintenance in the first due to lower demand for production of our associated gas, natural gas in the first quarter. We remain on schedule to reach our target of 2.1 million barrels per day of volume in Brazil for 2011. Natural gas production was…

Thank you. The floor is now open for questions from investors and analysts. We remind you that each participant will be allowed to ask two questions only. (Operator instructions) Our first question is from Frank McGann, Back of America Merrill Lynch. Please go ahead, sir. Frank McGann – Back of America Merrill Lynch: Hello. Good afternoon. Just a question on the refining side. Two questions, one, in terms of the incremental production of diesel and gasoline that you did see in the first quarter based on continuing investments in upgrading projects. I was just wondering what your expectations are for increased production, further production for the rest of this year and in 2012 that might enable better overall earnings in the segment? And then, secondly, import needs in the first quarter were clearly very strong, and not a positive factor. I was just wondering how you are seeing overall demand right now relative to your own production and how you see imports as you go through the rest of this year to get into the second quarter?

Okay, Frank. I have (inaudible) to help us in these two answers.

Alright. In fact, we have these good results with – especially with the cokers and the quality program that is essentially adding hydrotreatment capacity to improve the quality of diesel and gasoline in Brazil. A better diesel yields we will have in 2012 with another coker that will be implement in refinery and mostly of Sudan, we will face the challenge of providing the Brazilian market a better quality diesel and gasoline in this period. So, what we will have then is that that what we’ve seen from the way we see that Brazilian market today that the demand will keep increasing and we will have to still diesel and gas to supply the market until we expand refinery capacity and we will have the first new refinery being implemented by ’13. So, up to then, we will have a hard time importing the significant – rather volumes to supply the market, despite our own production. Frank McGann – Back of America Merrill Lynch: Okay. Thank you, very much.

Your next question is from Emerson Leite from Credit Suisse. Please go ahead. Emerson Leite – Credit Suisse: Okay. Good morning. Thank you. I have a question on the plant cell slide. I think it’s number seven. I am trying to understand what was the improvement in net present value X the effect of the rights – and try. The slide shows the plant cell were areas under construction with a net present value, 152% of the initial plant cell and some 20% above of those last year’s plant cell, Does that NPV assessment include or not the transfer of rights?

(inaudible).

Actually, what we see is that on the investment side what the charts try to tell is that we can see a reduction of 45% on the CapEx program especially for the licensed areas. And if we add up the transfer of rights, then we would come back to the initial level of investment of 100%. And on the net present value side, we are saying that only for the license areas NPV grew roughly 50%, especially because of a reduction in the well program and staff utilizations in the FPSL [ph] and topside as well. Emerson Leite – Credit Suisse: Okay. So, only for the areas under construction that –?

Yes. The NPV is now for the areas under construction. Emerson Leite – Credit Suisse: Okay. So now since this NPV is probably 20% or so higher than last year’s NPV and comparing a 162% versus 180%, have you already estimated how much more you have to pay back to the government for the five billion barrels that you acquired last year under assumptions that were not as positive as they were that you now have in your hands?

Well, (inaudible) sorry. We have done the transaction of right transferring last year. So, all the data we have is too valid now when you compare with the ones you have here. The last position you have here is to stretch then. So, the expand was the moment of an acquisition. So, we don’t have this calculation. This is going to happen. The end of the appraisal periods of each area individually, they are not going to happen altogether, but we’ll have – on each one according to the appraisal is concluded. Emerson Leite – Credit Suisse: Okay. Let me see if I understand. What you’re saying is that the evaluation of the rights transfer areas already takes into account all these improvements that you recently announced that were able to drive lower CapEx. So there is no incremental improvement from the assumptions that were made in the exercise of the rights transfer.

We did not do an exercise. On comparing what were the results of 2010 that is presented here that represents a reduction of CapEx of 45%. We did figures we had when we did the appraisal of right transferring. So, we don’t have the answer for you. I’m so sorry. Emerson Leite – Credit Suisse: Okay. So, my second question is on the – on last week, the Board of Petrobras did not approve the plan, strategic plan review and asked for incremental studies, the local press reported the Board instructed the management to lower the total amount of investment. I’d like you to confirm if that reading is correct or if it’s not, what was asked for you to do?

: Emerson Leite – Credit Suisse: Okay. Thank you, very much.

Your next question is from Paul Cheng, Barclays Capital. Please go ahead. Paul Cheng – Barclays Capital: Hi, good afternoon. Almir, in the first quarter spending, one way, that’s much lower than your budget for 2011. And, if you’re going to meet the budget, you need to spend about R$25 billion, $26 billion. I mean, basically that you said possible for the company to spend in such a high run rate. So, we assume that – I mean, in the past that you always underspent your budget. So, we assume that this year, you’re going to underspend maybe more money in the 15% instead of in the past maybe 5% to 10% on the spend?

I tend to agree with you that we’re not going to increase so much the next quarters, our CapEx in the next three quarters. But, I cannot get the conclusion that is going to be at 15% under invested at the end of the – I can agree, we are not is a probability no to do 100%. How less than that? We have to wait for a little bit more. Right? Paul Cheng – Barclays Capital: And, the second question is that in the CapEx for the (inaudible) you dropped 45% present number from the 2008 level. Do you have a breakdown by function that where does the saving come from? You said such as now the reduced tuning time that contribute 5%, 10%, I mean, any kind of maybe a further elaboration of where the saving or by function [ph]?

:

The gross figures, that’s been even higher than that because the costs go up. So, I mean, without an inflation that your copy is reducing or saving more like this 60% to 70%. Is that a fair estimate, because I think inflation probably over the last two or three years has been in the 15% plus a year for you guys?

: :

Okay. Thank you.

The next question is from Denis Parisien, Deutsche Bank. Please go ahead. Denis Parisien – Deutsche Bank: Hi, thanks very much for the call, ladies and gentlemen. I’m wondering about your financing plans for the rest of the year, after having executed the jumbo 6 billion in us dollar, what markets you intend to tap next? And will you come back to the dollar markets this year or not? If you can give us any kind of color on your financing front for rest of the year, I’d appreciate it very much. Thank you

We have always working with different financiers for financing the company. As I showed you, we have very liquidity at the moment, but this does not mean that we’ll be out of the market, we’ll be looking not to go back to the dollar markets. And, this we did well and that’s for now for the year. We may go for euro or the currency as well as in the bilateral of the international bank where we had a very good source, important source for the company to remain (inaudible) for the development bank like the ENDEAS [ph] that is very important supplier of funds in Brazil. So, we’re always looking for opportunity and as it arises, we may approach the market. Denis Parisien – Deutsche Bank: Any thoughts on liability management, (inaudible) inefficient. Now, it’s an exchange for some new lower class notes. There’s a lot of other companies in Latin America, especially Brazil have been executing.

We are the – we have the – maybe, other companies have a different situation. Petrobras, total cost is not more as much as other Brazilian companies that are doing the liability management. We have done that in the past and always where we see an opportunity, we do. But, this is not the case for the time being. Denis Parisien – Deutsche Bank: Thanks very much.

Your next question is from Marcus Sequeira, Deutsche Bank. Please go ahead. Marcus Sequeira – Deutsche Bank: Yes, good afternoon. Two questions, one related to the domestic oil production for this year. If you guys, – how do you guys think of your guidance for average for the year for Sakhalin-I, if you guys still expect to see more maintenance shutdowns in the upcoming months? And, the second question is with regards to Comperj, you said the Comperj is, the project is going ahead. I heard in the – I saw in the local press sometime ago that you guys could use natural gas as the main feedstock of this plant instead of heavy oil. I just would like to hear from you guys if that is really the case?

2.1 million barrels a day is a good number. We’ll stick to that and we’re going to deliver. Could you please your recite your questions on Comperj? Marcus Sequeira – Deutsche Bank: :

Comperj is an excellent effect – refined product, petrochemical product that are associated with refinery – the refinery – the steel using heavy oil. While it’s being stated today by Petrobras and evaluated is that there’s an alternative, instead of using for the petrochemical production using the natural gas. That’s a business that’s under evaluation. Marcus Sequeira – Deutsche Bank: : :

We’re still studying and we cannot anticipate business plan presentation – information that will be presented in the future. Okay? Marcus Sequeira – Deutsche Bank: Okay. Thank you very much.

Your next question is from Allen Good, Morningstar. Please go ahead. Allen Good – Morningstar: Good morning. I wonder if you could address the potential need or like they are out for the future rigs given the lower CapEx demand and how that may translate into the needed or the built 2011 rates on these lines on building in Brazil?

Actually, we don’t see a reduction on the rig necessarily for us. We have an entire trans operate area to appraise and to develop. E&P is a lease that will still need all of that portfolio of rigs and, of course, this can change in the future. But mainly related to my exploratory success. And, the last years, we’ve been very, very fortunate to find lots of oil. And, in summary, from now on I don’t see a lowering our demand for rigs on a 10-year periods.

To that, I’d like to add that in the where anticipated as necessary into 2008. And last year, we added to the Pre-salt all the 5 billion barrels to be produced. This will bring a lot of new needs. So, even if we were to use the initial smaller shorter time, we have much more to do. Allen Good – Morningstar: Do you still have confidence that the 21 rigs you’re planning to build in Brazil would still be built there and delivered on time?

These are the assumptions we are working. We give timing for the shipyards that – they are then delivered, the first one. And then they have – next one to be built, they have a number of them in case of the first building was giving seven rigs. Of the seven rigs, allow them to invest what they need to do, to do what they need to increase their productivity and delivering on time. Allen Good – Morningstar: Okay. Thank you.

Your next question is from Gustavo Gataz [ph] PKJ. Please go ahead. Gustavo Gataz – PKJ: Hi, guys. I had two quick questions. The first one; on the business plan, is there any internal estimates from you guys for how long it might take to run the sensitivities and effectively get back to the Board? And ultimately in the event that you have to go with something that’s smaller than what the management initially proposed last week, is there enough flexibility in the investments that you guys have on outside of E&P which have some as pretty much locked up for a long period to cut back on something or is that going to be something impossible? That would be the first question. The second question is a very quick one on the natural gas prices question from the ANP that we had on the other call. I just wanted to understand as you reduce your E&P price. Is that something that the ANP also does for the calculation of royalties or are the royalties calculated on a separate pricing mechanism? And that’s it.

Gustavo, we’re working hard on the demands of the Board. We hope to have the answer in the shortest period of time, but I cannot tell you how long it’s going to take. For sure, all the companies working to get the answer as soon as possible and the kickbacks on E&P.

You are pretty right when you that the E&P CapEx is pretty much locked out for the period. And, the general management of a planning area of E&P is conducting all those sensitivity analysis, but when you say that we are locked up for quite some time, it takes you three years. You’re quite right. And on the royalty side that you have asked, not necessarily our internal prices are the same that ANP uses for taxation purposes, you see, but the good news is that think that they disclosed in their website what price they are using, but not necessarily the same that we use internally. Gustavo Gataz – PKJ: Okay, thank you guys.

Your next question is from Fernando Valley [ph] from Citibank. Please go ahead. Fernando Valley – Citibank: :

Would you please, the second?

Yes, we had a limitation on that project because of the – well, we had a delay on the environmental license for the gas pipeline, see, but we expect that till this semester we’ll be able to normalize the production there on the Uruguay field and then there is some biofuels we’ll also be starting yet this year. I’m quite sure that in this semester we’ll be able to normalize the situation on the Uruguay field. Fernando Valley – Citibank: –:

: Fernando Valley – Citibank: Sure, that quarter you said there was some revenue that I believe due to exports they were still in transit that weren’t recognized, you sold but they were still in transit, so you didn’t recognize that revenue on the fourth quarter and part of those sales were going to be recognized on this quarter, so I just wanted to know how much of the revenues from this quarter were actually sales from last quarter that were recognized now?

: Fernando Valley – Citibank: Okay, great thank you very much.

Next question is from Frank McGann, Back of America Merrill Lynch. Frank McGann – Back of America Merrill Lynch: Yes, just a follow up on something, the rigs that you mentioned that will be in place by year end are less, I was under the impression that it would be 13 and I was just wondering are the other two just pushed into 2012? And then, secondly in terms of gas prices and I unfortunately got cut off for a second from the call, but I don’t think this is asked, what drove the decline really in the quarter?

Regarding the number of rigs..

What we have stated that we’ll have a – those two have split, one for 2012 and one for 2013, you see. On the clients side that’s a self question. I would have to get back to you on that. What we’ve seen in 2010 was 9.5%. I would have to get back to you on that. I don’t have a precise figure now. Frank McGann – Back of America Merrill Lynch: :

Okay, the general transfer of price weekly is (inaudible) a component related to the international price and (inaudible). Okay. Frank McGann – Back of America Merrill Lynch: Okay. And then, not other – there are no factors that drove that was the only thing?

Yeah, it’s basically that you consider also another five in the calculation of the price that is partly related to the infrastructure, that these then come together in some way related to infrastructure pipeline that we had given, so – but it’s not a (inaudible) Frank McGann – Back of America Merrill Lynch: Okay, thank you very much.

Thank you. Ladies and gentlemen, this concludes the question and answer session. Mr. Barbassa, please proceed with your closing remarks.

Thank you all for being with this in the release of our results and quarter. We will be here in the (inaudible) results as we have at this moment. Thank you very much.