Petrobras Picks Up Blocks in the Gulf of Mexico Lease Sale

Petrobras has successfully tendered for 10 blocks in the central US sector of the Gulf of Mexico at an auction organized by the Minerals Management Service.

In line with the Strategic Plan, Petrobras America bid on 17 blocks, being the highest bidder on 10, representing a total exposure US$ 22.3 million. The blocks successfully tendered include four prospects situated in ultra-deep waters.

With this result, Petrobras Group reinforces its position as one of the leading corporations in ultra-deep water exploration in the US sector of the Gulf of Mexico, where it already has a stake in three of the largest discoveries made in the region, - currently in the phase of demarcation -, as well as a further dozen prospects with major potential for additional finds.

In addition, Petrobras America, as the operator with an 80% share, is developing the Cottonwood field located in the Garden Banks 244 block in water depths of approximately 700 meters. The first gas field to be developed by Petrobras as operator in the deep waters of the Gulf of Mexico, production is expected to begin in the first quarter of 2007.

The Company has been applying innovative exploratory concepts in the extreme western part of the US sector of the Gulf of Mexico in the Corpus Christi, Padre Island and Mustang Island quadrants, with major discovery potential. Following the conclusion of more detailed studies, the Company intends to drill the first wells before the end of the second semester of this year.

The Company has also been testing new exploratory concepts in shallow off-shore waters. In this region, wells are being drilled which will penetrate high temperature and pressure zones with the expectation of enormous economic returns given the potential for the discovery of major reservoirs, the existence of infrastructure for processing and offloading, and demand for gas from the local market.

Petrobras America Inc. estimates this year's capital expenditures at approximately US$ 305 millions, and by 2010, approximately, US$ 1.5 billion in the exploration and development segment for the production of oil and gas.

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