UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 1-15106		Commission File Number: 333-14168
PETRÓLEO BRASILEIRO S.A. – PETROBRAS		Petrobras International Finance Company
(Exact name of registrant as specified in its charter)		(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		Cayman Island
(Jurisdiction of incorporation or organization)		(Jurisdiction of incorporation or organization)

		Harbour Place
		103 South Church Street, 4th floor
Avenida República do Chile, 65		P.O. Box 1034GT — BWI
20031-912 – Rio de Janeiro – RJ		George Town, Grand Cayman
Brazil		Cayman Islands
(Address of principal executive offices)		(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:		Name of each exchange on which registered:
PETROBRAS Common Shares, without par value* PETROBRAS American Depositary Shares (as evidenced by American Depositary Receipts), each representing 4 Common Shares		New York Stock Exchange
PETROBRAS Preferred Shares, without par value* PETROBRAS American Depositary Shares (as evidenced by American Depositary Receipts), each representing 4 Preferred Shares		New York Stock Exchange

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:

Title of each class:
PifCo U.S.$500,000,000 9.125% Senior Notes due 2007
PifCo U.S.$450,000,000 9.875% Senior Notes due 2008
PifCo U.S.$400,000,000 9.00% Global Step-Up Notes due 2008
PifCo U.S.$600,000,000 9.750% Senior Notes due 2011
PifCo U.S.$750,000,000 9.125% Global Notes due 2013
PifCo U.S.$750,000,000 8.375% Global Notes due 2018
PifCo U.S.$600,000,000 7.75% Global Notes due 2014
PifCo U.S.$899,053,000 6.125% Global Notes due 2016

as of the close of the period covered by this Annual Report :
At December 31, 2006, there were outstanding:
2,536,673,672 PETROBRAS Common Shares, without par value
1,850,364,698 PETROBRAS Preferred Shares, without par value

300,050,000 PifCo Common Shares

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.

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.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ [Petrobras]            Accelerated filer o           Non-accelerated filer þ [PifCo]

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).

 

 

EXPLANATORY NOTE

This amendment to our annual report on Form 20-F for the fiscal year ended December 31, 2006 filed on June 26, 2007 is being filed solely for the purpose of amending Item 18 and Item 19, as follows:

	•		to add the Reports of Independent Registered Public Accounting Firm from Ernst & Young Auditores Independentes S/S for Petrobras International Finance Company and Petróleo Brasileiro S.A. — PETROBRAS in Item 18, each dated February 17, 2006 with respect to the financial statements for the two years ended December 31, 2004 and December 31, 2005 in “Item 18—Financial Statements.” The other portions of Item 18 were filed as part of our original filing and are being refiled as part of this amendment, without change; and
	•		to add the following exhibits to “Item 19—Exhibits”:

	•		Exhibit 15.1, the consent of KPMG Auditores Independentes to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-139459) of Petróleo Brasileiro S.A. — PETROBRAS of its report dated April 5, 2007;
	•		Exhibit 15.2, the consent of KPMG Auditores Independentes to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-139459-01) of Petrobras International Finance Company — PifCo of its report dated April 5, 2007;
	•		Exhibit 15.3, the consent of Ernst & Young Auditores Independentes S/S to the incorporation by reference in the Registration Statement on Form F-3 (Nos. 333-139459 and 333-139459-01) of Petróleo Brasileiro S.A. — PETROBRAS and Petrobras International Finance Company — PifCo of its reports dated February 17, 2006; and
	•		Exhibit 15.4, the consent of DeGolyer and MacNaughton to the incorporation by reference in the Registration Statement on Form F-3 (Nos. 333-139459 and 333-139459-01) of Petróleo Brasileiro S.A. — PETROBRAS and Petrobras International Finance Company — PifCo of the references to DeGolyer and MacNaughton contained in the Annual Report of the Registrants on Form 20-F.

This amendment consists of a cover page, this explanatory note, Item 18 (as amended), Item 19 (as amended), signature pages and the required certifications of the companies’ chief executive officers and the chief financial officers.

Except as described above, no change has been made to our annual report on Form 20-F. The filing of this amended annual report does not, and does not purport to, amend, update or restate the information in any other item of the annual report on Form 20-F filed on June 26, 2007 or reflect any events that have occurred after the annual report on Form 20-F was filed on June 26, 2007.

ITEM 18. FINANCIAL STATEMENTS

     See pages F-1 through F-174, incorporated herein by reference.

ITEM 19. EXHIBITS

No.		Description
1.1		Amended By-Laws of Petróleo Brasileiro S.A.-Petrobras (together with an English version) (incorporated by reference to the Annual Report on Form 20-F of Petróleo Brasileiro S.A.—Petrobras, filed with the Securities and Exchange Commission on June 30, 2004 (File No. 1-15106)).
1.2		Memorandum and Articles of Association of Petrobras International Finance Company (incorporated by reference to Exhibit 1 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)). PifCo’s Memorandum and Articles of Association were last amended on May 7, 2007. PifCo’s Registered Office is currently working with the Company’s Registrar in the Cayman Islands to file PifCo’s new Amended Memorandum and Articles of Association that reflect the following changes: a) a total capital contribution in the amount of U.S.$300,050,000.00; b) the resulting new number of 300,050,000 shares, with the par value of U.S.$1.00; and c) wider objects through which the company plans to carry out its business in the near future.
2.1		Deposit Agreement dated as of July 14, 2000, among Petrobras and Citibank, N.A., as depositary, and registered holders and beneficial owners from time to time of the American Depositary Shares, representing the common shares of Petrobras (incorporated by reference to exhibit of Petrobras’ Registration Statement on Form F-6 filed with the Securities and Exchange Commission on July 17, 2000 (File No. 333-123000)).
2.2		Amended and Restated Deposit Agreement dated as of February 21, 2001, among Petrobras and Citibank, N.A., as depositary, and the registered holders and beneficial owners from time to time of the American Depositary Shares, representing the preferred shares of Petrobras (incorporated by reference to exhibit 4.1 of Amendment No. 1 to Petrobras’ Registration Statement on Form F-1 filed with the Securities and Exchange Commission on July 3, 2001 (File No. 333-13660)).
2.3		Amendment No. 1, dated as of March 23, 2001, to the Amended and Restated Deposit Agreement, dated as of February 21, 2001, among Petrobras, Citibank N.A., as depositary, and the registered holders and beneficial owners from time to time of the American Depositary Shares representing the preferred shares of Petrobras (incorporated by reference to Exhibit 4.2 of Amendment No. 1 to Petrobras’ Registration Statement on Form F-1 filed with the Securities and Exchange Commission on July 3, 2001 (File No. 333-13660)).
2.4		Indenture, dated as of July 19, 2002, between Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to exhibit 4.4 of the Registration Statement of Petrobras International Finance Company and Petrobras on Form F-3, filed with the Securities and Exchange Commission on July 5, 2002, and amendments to which were filed on July 19, 2002 and August 14, 2002 (File No. 333-92044-01)).
2.5		Indenture, dated as of July 19, 2002, between Petrobras International Finance Company and JPMorgan Chase Bank, as Trustee (incorporated by reference to exhibit 4.5 of the Registration Statement of Petrobras International Finance Company and Petrobras on Form F-3, filed with the Securities and Exchange Commission on July 5, 2002, and amendments to which were filed on July 19, 2002 and August 14, 2002 (File No. 333-92044-01)).
2.6		First Supplemental Indenture, dated as of March 31, 2003, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, relating to the 9.00% Global Step-Up Notes due 2008 (incorporated by reference to exhibit 2.6 of Petrobras’ annual report on Form 20-F for the fiscal year ended December 31, 2002, filed with the Securities and Exchange Commission on June 19, 2002 (File No. 1-15106)).
2.7		Second Supplemental Indenture, dated as of July 2, 2003, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, relating to the 9.125% Global Notes due 2013 (incorporated by reference to the Annual Report on Form 20-F of Petróleo Brasileiro S.A.—Petrobras, filed with the Securities and Exchange Commission on June 30, 2004 (File No. 1-15106)).
2.8		Amended and Restated Second Supplemental Indenture, initially dated as of July 2, 2003, as amended and restated as of September 18, 2003, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, relating to the 9.125% Global Notes due 2013 (incorporated by reference to the Annual Report on Form 20-F of Petróleo Brasileiro S.A.—Petrobras, filed with the Securities and Exchange Commission on June 30, 2004 (File No. 1-15106)).

No.		Description
2.9		Third Supplemental Indenture, dated as of December 10, 2003, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, relating to the 8.375% Global Notes due 2018 (incorporated by reference to the Annual Report on Form 20-F of Petróleo Brasileiro S.A.—Petrobras, filed with the Securities and Exchange Commission on June 30, 2004 (File No. 1-15106)).
2.10		2.10-Indenture, dated as of May 9, 2001, between Petrobras International Finance Company and The Bank of New York, as Trustee, relating to the 9 7/8% Senior Notes due 2008 (incorporated by reference to Exhibit 4.1 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14168)).
2.11		Supplemental Indenture, dated as of November 26, 2001, between Petrobras International Finance Company and The Bank of New York, as Trustee, relating to the 9 7/8% Senior Notes due 2008 (incorporated by reference to Exhibit 4.2 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14168)).
2.12		Indenture, dated as of July 6, 2001, between Petrobras International Finance Company and The Bank of New York, as Trustee, relating to the 9 3/4% Senior Notes due 2011 (incorporated by reference to Exhibit 4.1 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14170)).
2.13		Supplemental Indenture, dated as of November 26, 2001, between Petrobras International Finance Company and The Bank of New York, as Trustee, relating to the 9 3/4% Senior Notes due 2011 (incorporated by reference to Exhibit 4.2 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14170)).
2.14		Indenture, initially dated as of February 4, 2002, as amended and restated as of February 28, 2002, between Petrobras International Finance Company and The Bank of New York, as Trustee, relating to the 9 1/8% Senior Notes due 2007 (incorporated by reference to Exhibit 2.19 to the amended Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on December 13, 2002 (File No. 333-14168)).
2.15		Registration Rights Agreement, dated as of May 9, 2001, among Petrobras International Finance Company, Petróleo Brasileiro S.A.—Petrobras, and USB Warburg LLC, Banc of America Securities LLC, J.P. Morgan Securities Inc., RBC Dominion Securities Corporation and Santander Central Hispano Investment Securities Inc. (incorporated by reference to Exhibit 4.4 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4 filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14168)).
2.16		Registration Rights Agreement, dated as of July 6, 2001, among Petrobras International Finance Company, Petróleo Brasileiro S.A.—Petrobras, and USB Warburg LLC, Banc of America Securities LLC, J.P. Morgan Securities Inc., RBC Dominion Securities Corporation and Santander Central Hispano Investment Securities Inc. (incorporated by reference to Exhibit 4.4 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14170)).
2.17		Registration Rights Agreement, initially dated as of February 4, 2002, as amended and restated as of February 28, 2002, among Petrobras International Finance Company, Petróleo Brasileiro S.A.—Petrobras, UBS Warburg LLC and Morgan Stanley & Co. Incorporated (incorporated by reference to Exhibit 2.20 to the amended Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on December 13, 2002 (File No. 333-14168)).
2.18		Standby Purchase Agreement, dated as of May 9, 2001, between Petróleo Brasileiro S.A.—Petrobras and The Bank of New York (incorporated by reference to Exhibit 4.5 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14168)).
2.19		Amendment No. 1 to the Standby Purchase Agreement, dated as of November 26, 2001, between Petróleo Brasileiro S.A.—Petrobras and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement of Petrobras International Finance Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14168)).
2.20		Standby Purchase Agreement, dated as of July 6, 2001, between Petróleo Brasileiro S.A.—Petrobras and The Bank of New York (incorporated by reference to Exhibit 4.5 to the Registration Statement of Petrobras International Finance

No.		Description
		Company and Petróleo Brasileiro S.A.—Petrobras on Form F-4, filed with the Securities and Exchange Commission on December 6, 2001 (File No. 333-14170)).
2.21		Standby Purchase Agreement, initially dated as of February 4, 2002, as amended and restated as of February 28, 2002, between Petróleo Brasileiro S.A.—Petrobras and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.21 to the amended Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on December 13, 2002 (File No. 333-14168)).
2.22		Standby Purchase Agreement dated as of March 31, 2003, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to Exhibit 2.15 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.23		Standby Purchase Agreement dated as of July 2, 2003, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 30, 2004 and amendment filed on July 26, 2004 (File No. 333-14168)).
2.24		Amended and Restated Standby Purchase Agreement initially dated as of July 2, 2003, as amended and restated as of September 18, 2003, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 30, 2004 and amendment filed on July 26, 2004 (File No. 333-14168)).
2.25		Standby Purchase Agreement dated as of December 10, 2003, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 30, 2004 and amendment filed on July 26, 2004 (File No. 333-14168)).
2.26		Notes Purchase Agreement, dated as of January 29, 2002, between Petrobras International Finance Company and UBS Warburg LLC and Morgan Stanley & Co. Incorporated (incorporated by reference to Exhibit 2.13 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.27		Master Export Contract, dated as of December 21, 2001, between Petróleo Brasileiro S.A.—Petrobras and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.14 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.28		Amendment to the Master Export Contract, dated as of May 21, 2003, among Petróleo Brasileiro S.A.—Petrobras and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.18 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.29		Depositary Agreement, dated as of December 21, 2001, among U.S. Bank, National Association, Cayman Islands Branch, in capacity as Trustee of the PF Export Receivables Master Trust, Citibank, N.A., in capacity as Securities Intermediary, and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.15 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.30		Letter Agreement relating to the Depositary Agreement, dated as of May 16, 2003 (incorporated by reference to Exhibit 2.20 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.31		Administrative Services Agreement, dated as of December 21, 2001, between Petróleo Brasileiro S.A.—Petrobras, as Delivery and Sales Agent, and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.16 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.32		Letter Agreement relating to the Administrative Services Agreement, dated as of May 16, 2003 (incorporated by reference to Exhibit 2.22 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).

No.		Description
2.33		Amended and Restated Trust Deed, dated as of December 21, 2001, among U.S. Bank, National Association, Cayman Islands Branch, in capacity as Trustee of the PF Export Receivables Master Trust, Citibank, N.A., in capacity as Paying Agent, Transfer Agent, Registrar and Depositary Bank, and Petrobras International Finance Company, as Servicer (incorporated by reference to Exhibit 2.17 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.34		Receivables Purchase Agreement, dated as of December 21, 2001, among Petrobras Finance Ltd., Petróleo Brasileiro S.A.—Petrobras and U.S. Bank, National Association, Cayman Islands Branch, solely in capacity as Trustee of the PF Export Receivables Master Trust (incorporated by reference to Exhibit 2.18 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on July 1, 2002, and amendments to which were filed on December 13, 2002 and March 20, 2003 (File No. 333-14168)).
2.35		Amended and Restated Receivables Purchase Agreement, dated as of May 21, 2003, among Petrobras Finance Ltd., Petróleo Brasileiro S.A.—Petrobras and U.S. Bank, National Association, Cayman Islands Branch, solely in capacity as Trustee of the PF Export Receivables Master Trust (incorporated by reference to Exhibit 2.25 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.36		Prepayment Agreement, dated as of December 21, 2001, between Petróleo Brasileiro S.A.—Petrobras and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.26 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.37		Amended and Restated Prepayment Agreement, dated as of May 2, 2003, between Petróleo Brasileiro S.A.—Petrobras and Petrobras Finance Ltd. (incorporated by reference to Exhibit 2.27 to the Annual Report on Form 20-F of Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 19, 2003 (File No. 333-14168)).
2.38		Fourth Supplemental Indenture, dated as of September 15, 2004, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, and Petróleo Brasileiro S.A.—Petrobras relating to the 7.75% Global Notes due 2014 (incorporated by reference to Exhibit 2.38 to the Annual Report on Form 20-F of Petrobras and Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 30, 2005 (File No. 333-14168)).
2.39		Standby Purchase Agreement dated as of September 15, 2004, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee (incorporated by reference to Exhibit 2.39 to the Annual Report on Form 20-F of Petrobras and Petrobras International Finance Company, filed with the Securities and Exchange Commission on June 30, 2005 (File No. 333-14168)).
2.40		Fifth Supplemental Indenture, dated as of October 6, 2006, between Petrobras International Finance Company (PifCo) and JPMorgan Chase Bank, as Trustee, and Petróleo Brasileiro S.A.—Petrobras relating to the 6.125% Global Notes due 2016.
2.41		Standby Purchase Agreement dated as of October 6, 2006, between Petróleo Brasileiro S.A.—Petrobras and JPMorgan Chase Bank, as Trustee.
2.42		Amended and Restated Fifth Supplemental Indenture, initially dated as of October 6, 2006, as amended and restated as of February 7, 2007, between Petrobras International Finance Company (PifCo) and the Bank of New York, as successor to JPMorgan Chase Bank, N.A., as Trustee, and Petróleo Brasileiro S.A.—Petrobras relating to the 6.125% Global Notes due 2016.
2.43		Standby Purchase Agreement, initially dated as of October 6, 2006, as amended and restated as of February 7, 2007, between Petróleo Brasileiro S.A.—Petrobras and the Bank of New York, as successor to JPMorgan Chase Bank, N.A., as Trustee.
		The amount of long-term debt securities of Petrobras authorized under any given instrument does not exceed 10% of its total assets on a consolidated basis. Petrobras hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1		Form of Concession Agreement for Exploration, Development and Production of crude oil and natural gas executed

No.		Description
		between Petrobras and 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)).
4.2		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)).
8.1		List of subsidiaries.
10.1		Consent letter of DeGolyer and MacNaughton.
12.1		Petrobras’ Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2		PifCo’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1		Petrobras’ Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2		PifCo’s Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1		Consent letter of KPMG.
15.2		Consent letter of KPMG.
15.3		Consent letter of Ernst & Young.
15.4		Consent letter of DeGolyer and MacNaughton.

SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, 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 June 27, 2007.

SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, 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 June 27, 2007.

Petróleo Brasileiro S.A. — Petrobras and subsidiaries

Consolidated Financial Statements
December 31, 2006, 2005 and 2004
with Report of Independent
Registered Public Accounting Firm

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Contents

Report of Independent Registered Public Accounting Firm, KPMG			F-1
Report of Independent Registered Public Accounting Firm, Ernst & Young			F-3
Consolidated Balance Sheets			F-5
Consolidated Statements of Income			F-7
Consolidated Statements of Cash Flows			F-9
Consolidated Statements of Changes in Shareholders’ Equity			F-11
Notes to the Consolidated Financial Statements
1. The Company and its Operations			F-13
2. Summary of Significant Accounting Policies			F-14
3. Income Taxes			F-27
4. Cash and Cash Equivalents			F-31
5. Marketable Securities			F-32
6. Accounts Receivable, Net			F-33
7. Inventories			F-34
8. Recoverable Taxes			F-35
9. Property, Plant and Equipment, Net			F-36
10. Investments in Non-Consolidated Companies and Other Investments			F-43
11. Petroleum and Alcohol Account — Receivable from Federal Government			F-45
12. Financings			F-46
13. Financial Income (Expenses), Net			F-55
14. Project Financings			F-56
15. Capital Lease Obligations			F-61
16. Employees’ Post-retirement Benefits and Other Benefits			F-62
17. Shareholders’ Equity			F-77
18. Domestic and International Acquisitions			F-85
19. Commitments and Contingencies			F-93
20. Derivative Instruments, Hedging and Risk Management Activities			F-109
21. Natural Gas Derivative Contract			F-114
22. Financial Instruments			F-115
23. Segment Information			F-116
24. Related Party Transactions			F-128
25. Accounting for Suspended Exploratory Wells			F-130
26. Subsequent Events			F-134
Supplementary Information on Oil and Gas Exploration and Production			F-138

Report of Independent Registered Public Accounting Firm

The Executive Board and Shareholder of
Petróleo Brasileiro S.A. — Petrobras

We have audited the accompanying consolidated balance sheet of Petróleo Brasileiro S.A. — Petrobras (and subsidiaries) as of December 31, 2006, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the year then ended. We also have audited management’s assessment, included in the accompanying Management’s Report on the Internal Control over Financial Reporting, that Petróleo Brasileiro S.A. — Petrobras (and subsidiaries) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Petróleo Brasileiro S.A. — Petrobras’ 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. Our responsibility is to express an opinion on these consolidated financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits. The accompanying consolidated balance sheet of Petróleo Brasileiro S.A. — Petrobras as of December 31, 2005 and the related consolidated statements of income, shareholders’ equity and cash flows for each of the years ended December 31, 2005 and 2004, were audited by other auditors whose report thereon dated February 17, 2006, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleo Brasileiro S.A. — Petrobras as of December 31, 2006, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, management’s assessment that Petróleo Brasileiro S.A. — Petrobras maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, in our opinion, Petróleo Brasileiro S.A. — Petrobras maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As discussed in the Note 2(k) to the consolidated financial statements, the Company adopted the recognition and disclosure provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006.

KPMG Auditores Independentes

Rio de Janeiro, Brazil
April 5, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
PETRÓLEO BRASILEIRO S.A. - PETROBRAS

1.		We have audited the accompanying consolidated balance sheet of PETRÓLEO BRASILEIRO S.A - PETROBRAS and its subsidiaries as of December 31, 2005, and the related consolidated statements of income, changes in shareholders’ equity and cash flows, for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
2.		We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
3.		In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PETRÓLEO BRASILEIRO S.A. - PETROBRAS and its subsidiaries as of December 31, 2005, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

4.

As discussed in Note 3, effective December 31, 2004 the Company adopted a new actuarial methodology respective to the calculation of the Accumulated Benefit Obligation under FAS 87.

ERNST & YOUNG
Auditores Independentes S/S

Paulo José Machado
Partner

Rio de Janeiro, Brazil
February 17, 2006

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
Expressed in Millions of United States Dollars

		As of December 31,
		2006				2005
Assets
Current assets
Cash and cash equivalents (Note 4)			12,688				9,871
Marketable securities (Note 5)			346				456
Accounts receivable, net (Note 6)			6,311				6,184
Inventories (Note 7)			6,573				5,305
Deferred income taxes (Note 3)			653				479
Recoverable taxes (Note 8)			2,593				2,087
Advances to suppliers			948				652
Other current assets			843				750
			30,955				25,784
Property, plant and equipment, net (Note 9)			58,897				45,920
Investments in non-consolidated companies and other investments (Note 10)			3,262				1,810
Other assets
Accounts receivable, net (Note 6)			513				642
Advances to suppliers			852				462
Petroleum and alcohol account — receivable from Federal Government (Note 11)			368				329
Government securities			479				364
Marketable securities (Note 5)			94				129
Restricted deposits for legal proceedings and guarantees (Note 19 (a))			816				775
Recoverable taxes (Note 8)			1,292				639
Deferred income taxes (Note 3)			61				7
Goodwill (Note 18)			243				237
Prepaid expenses			244				246
Inventories (Note 7)			210				236
Fair value asset of gas hedge (Note 20)			—				547
Other assets			394				511
			5,566				5,124
Total assets			98,680				78,638

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)
December 31, 2006 and 2005
Expressed in Millions of United States Dollars

		As of December 31,
		2006				2005
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable			5,418				3,838
Short-term debt (Note 12)			1,293				950
Current portion of long-term debt (Note 12)			2,106				1,428
Current portion of project financings (Note 14)			2,182				2,413
Current portion of capital lease obligations (Note 15)			231				239
Accrued interest			247				221
Income taxes payable			235				409
Taxes payable, other than income taxes			3,122				3,014
Deferred income taxes (Note 3)			8				6
Payroll and related charges			1,192				918
Dividends and interest on capital payable (Note 17)			3,693				3,068
Contingencies (Note 19)			25				72
Advances from customers			880				609
Employees’ post-retirement benefits obligation — Pension (Note 16)			198				206
Other payables and accruals			956				770
			21,786				18,161
Long-term liabilities
Long-term debt (Note 12)			10,510				11,503
Project financings (Note 14)			4,192				3,629
Capital lease obligations (Note 15)			824				1,015
Employees’ post-retirement benefits obligation — Pension (Note 16)			4,645				3,627
Employees’ post-retirement benefits obligation — Health care (Note 16)			5,433				3,004
Deferred income taxes (Note 3)			2,916				2,166
Provision for abandonment (Note 9 (d))			1,473				842
Contingencies (Note 19)			208				238
Deferred purchase incentive (Note 21)			—				144
Other liabilities			428				318
			30,629				26,486
Minority interest			1,966				1,074
Shareholders’ equity
Shares authorized and issued (Note 17)
Preferred share — 2006 — 1,850,394,698 shares and 2005 — 1,849,478,028 shares			7,718				4,772
Common share — 2006 and 2005 — 2,536,673,672 shares			10,959				6,929
Capital reserve — fiscal incentive (Note 17)			174				159
Retained earnings
Appropriated (Note 17)			23,704				20,095
Unappropriated			10,541				11,968
Accumulated other comprehensive income
Cumulative translation adjustments			(6,202	)			(9,432	)
Postretirement benefit reserves adjustments net of tax — pension cost			(2,052	)			(1,930	)
Postretirement benefit reserves adjustments net of tax- health care cost			(987	)			—
Unrealized gains on available-for-sale securities, net of tax			446				356
Unrecognized loss on cash flow hedge, net of tax			(2	)			—
			44,299				32,917
Total liabilities and shareholders’ equity			98,680				78,638

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars
(except number of shares and earnings per share)

		Year ended December 31,
		2006				2005				2004
Sales of products and services			93,893				74,065				51,954
Less:
Value-added and other taxes on sales and services			(17,906	)			(14,694	)			(10,906	)
Contribution of intervention in the economic domain charge — CIDE			(3,640	)			(3,047	)			(2,620	)
Net operating revenues			72,347				56,324				38,428
Cost of sales			40,061				29,828				21,279
Depreciation, depletion and amortization			3,673				2,926				2,481
Exploration, including exploratory dry holes			934				1,009				613
Selling, general and administrative expenses			4,989				4,474				2,901
Impairment (Note 9 (e))			21				156				65
Research and development expenses			727				399				248
Other operating expenses			1,081				1,453				480
Total costs and expenses			51,486				40,245				28,067
Equity in results of non-consolidated companies (Note 10)			28				139				172
Financial income (Note 13)			1,165				710				956
Financial expenses (Note 13)			(1,340	)			(1,189	)			(1,733	)
Monetary and exchange variation on monetary assets and liabilities, net (Note 13)			75				248				450
Employee benefit expense for non-active participants (Note 16)			(1,017	)			(994	)			(650	)
Other taxes			(594	)			(373	)			(440	)
Other expenses, net			(17	)			(28	)			(181	)
			(1,700	)			(1,487	)			(1,426	)
Income before income taxes, minority interest and extraordinary item			19,161				14,592				8,935

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars
(except number of shares and earnings per share)

		Year ended December 31,
		2006				2005				2004
Income tax expense (Note 3)
Current			(5,011	)			(4,223	)			(2,114	)
Deferred			(680	)			(218	)			(117	)
			(5,691	)			(4,441	)			(2,231	)
Minority interest in results of consolidated subsidiaries			(644	)			35				(514	)
Income before extraordinary item			12,826				10,186				6,190
Extraordinary gain net of tax (Note 10 (b))			—				158				—
Net income for the year			12,826				10,344				6,190
Net income applicable to each class of shares
Common			7,417				5,982				3,580
Preferred			5,409				4,362				2,610
Net income for the year			12,826				10,344				6,190
Basic and diluted earnings per share (Note 17 (c))
Common and preferred
Before effect of extraordinary item			2.92				2.32				1.41	*
After effect of extraordinary item			2.92				2.36				1.41	*
Basic and diluted earnings per ADS
Before effect of extraordinary item			11.68				9.28				5.64	*
After effect of extraordinary item			11.68				9.44				5.64	*
Weighted average number of shares outstanding
Common			2,536,673,672				2,536,673,672				2,536,673,672	*
Preferred			1,849,903,144				1,849,478,028				1,849,478,028	*

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars

		Year ended December 31,
		2006				2005				2004
Cash flows from operating activities
Net income for the year			12,826				10,344				6,190
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization			3,673				2,926				2,481
Dry hole costs			493				597				520
Loss on property, plant and equipment			225				292				231
Minority interest in results of consolidated subsidiaries			644				(35	)			514
Deferred income taxes			680				218				117
Foreign exchange and monetary loss (gain)			465				140				23
Accretion expense — asset retirement obligation			32				51				33
Impairment of oil and gas properties			21				156				65
Provision for uncollectible accounts			78				118				164
Equity in the results of non-consolidated companies			(28	)			(139	)			(172	)
Financial income (loss) on hedge operations			434				170				(466	)
Others			—				(8	)			23
Decrease (increase) in operating assets
Accounts receivable			308				(1,510	)			(1,027	)
Petroleum and alcohol account			(7	)			(9	)			(20	)
Interest receivable on government securities			4				3				(38	)
Inventories			(533	)			38				(1,527	)
Advances to suppliers			(552	)			(167	)			3
Prepaid expenses			32				38				(70	)
Recoverable taxes			(552	)			(540	)			(578	)
Others			261				82				173
Increase (decrease) in operating liabilities
Trade accounts payable			1,385				275				838
Payroll and related charges			200				215				(20	)
Taxes payable, other than income taxes			(133	)			566				(65	)
Income taxes payable			(190	)			(56	)			120
Employees’ post-retirement benefits obligation — Pension			489				647				353
Employees’ post-retirement benefits obligation — Health care			656				557				380
Accrued interest			21				8				18
Contingencies			(79	)			(65	)			81
Provision for abandonment			(57	)			325				(171	)
Other liabilities			281				(122	)			(18	)
Net cash provided by operating activities			21,077				15,115				8,155

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars

		Year ended December 31,
		2006				2005				2004
Cash flows from investing activities
Additions to property, plant and equipment			(14,643	)			(10,365	)			(7,718	)
Investment in non-consolidated companies			(187	)			(71	)			(142	)
Investment in marketable securities			205				169				678
Acquisition of Liquigás Distribuidora S.A.			—				—				(511	)
Acquisition of USA trading and refining companies			(416	)			—				—
Received cash related to investment in Nigeria			199				—				—
Dividends received from non-consolidated companies			130				60				53
Restricted deposits for legal proceedings			31				—				(103	)
Net cash used in investing activities			(14,681	)			(10,207	)			(7,743	)
Cash flows from financing activities
Short-term debt, net issuances and repayments			228				(1,058	)			(680	)
Proceeds from issuance and draw-down of long-term debt			2,251				1,697				1,457
Principal payments of long-term debt			(2,555	)			(1,120	)			(1,160	)
Repurchase of securities — Notes (see Note 12(c))			(1,046	)			—				—
Proceeds from project financings			1,524				1,492				971
Payments of project financings			(1,209	)			(1,392	)			(652	)
Payment of capital lease obligations			(334	)			(134	)			(331	)
Dividends paid to shareholders			(3,144	)			(2,104	)			(1,785	)
Dividends paid to minority interests			(69	)			(6	)			(24	)
Net cash provided by (used) in financing activities			(4,354	)			(2,625	)			(2,204	)
Increase (decrease) in cash and cash equivalents			2,042				2,283				(1,792	)
Effect of exchange rate changes on cash and cash equivalents			775				732				304
Cash and cash equivalents at beginning of year			9,871				6,856				8,344
Cash and cash equivalents at end of year			12,688				9,871				6,856

		Year ended December 31,
		2006				2005				2004
Supplemental cash flow information:
Cash paid during the year for
Interest, net of amount capitalized			877				1,083				995
Income taxes			4,686				3,843				2,054
Withholding income tax on financial investments			26				29				69
Non-cash investing and financing transactions during the year
Recognition of asset retirement obligation — SFAS 143			632				356				158
Consummation of gas hedge asset with deferred purchase incentive liability			—				—				169

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars (except per-share amounts)

		Year ended December 31,
		2006				2005				2004
Preferred shares
Balance at January 1,			4,772				4,772				2,973
Capital increase from undistributed earnings reserve (Note 17(a))			2,939				—				1,799
Capital increase from issue of preferred shares (Note 17(b))			7				—				—
Balance at December 31,			7,718				4,772				4,772
Common shares
Balance at January 1,			6,929				6,929				4,289
Capital increase from undistributed earnings reserve (Note 17( c ))			4,030				—				2,640
Balance at December 31,			10,959				6,929				6,929
Capital reserve — fiscal incentive
Balance at January 1,			159				134				118
Transfer from unappropriated retained earnings			15				25				16
Balance at December 31,			174				159				134
Accumulated other comprehensive loss
Cumulative translation adjustments
Balance at January 1,			(9,432	)			(12,539	)			(14,450	)
Change in the year			3,230				3,107				1,911
Balance at December 31,			(6,202	)			(9,432	)			(12,539	)
Postretirements benefit reserves adjustments net of taxs — pension cost
Balance at January 1,			(1,930	)			(1,975	)			(1,588	)
Accounting change — SFAS 158			(131	)			—				—
Other decreases (increases)			(38	)			68				(586	)
Tax effect on above			47				(23	)			199
Balance at December 31,			(2,052	)			(1,930	)			(1,975	)
Postretirements benefit reserves adjustments net of tax — health care cost
Balance at January 1,			—				—				—
Accounting change — SFAS 158			(987	)			—				—
Balance at December 31,			(987	)			—				—
Unrecognized gains (losses) on available-for-sale securities, net of tax
Balance at January 1,			356				460				157
Unrealized gains (losses)			137				(158	)			459
Tax effect on above			(47	)			54				(156	)
Balance at December 31,			446				356				460

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)
December 31, 2006, 2005 and 2004
Expressed in Millions of United States Dollars (except per-share amounts)

		Year ended December 31,
		2006				2005				2004
Unrecognized loss on cash flow hedge, net of tax (Note 20 (e))
Balance at January 1			—				—				—
Unrealized losses			(3	)			—				—
Tax effect on above			1				—				—
			(2	)			—				—
Appropriated retained earnings
Legal reserve
Balance at January 1,			2,225				1,520				1,089
Transfer from unappropriated retained earnings, net of gain or loss on translation			820				705				431
Balance at December 31,			3,045				2,225				1,520
Undistributed earnings reserve
Balance at January 1,			17,439				9,688				9,372
Capital increase			(6,969	)			—				(4,439	)
Transfer from unappropriated retained earnings, net of gain or loss on translation			9,604				7,751				4,755
Balance at December 31,			20,074				17,439				9,688
Statutory reserve
Balance at January 1,			431				318				235
Transfer from unappropriated retained earnings, net of gain or loss on translation			154				113				83
Balance at December 31,			585				431				318
Total appropriated retained earnings			23,704				20,095				11,526
Unappropriated retained earnings
Balance at January 1,			11,968				13,199				14,141
Net income for the year			12,826				10,344				6,190
Dividends (per share: 2006 — US$0.83 to common and preferred share; 2005 — US$0.68 to common and preferred shares; 2004 — US$0.42 to common and preferred shares)			(3,660	)			(2,982	)			(1,847	)
Appropriation to fiscal incentive reserve			(15	)			(24	)			(16	)
Appropriation to reserves			(10,578	)			(8,569	)			(5,269	)
Balance at December 31,			10,541				11,968				13,199
Total shareholders’ equity			44,299				32,917				22,506
Comprehensive income (loss) is comprised as follows:
Net income for the year			12,826				10,344				6,190
Cumulative translation adjustments			3,230				3,107				1,911
Postretirements benefit reserves adjustments net of tax — pension cost			(25	)			45				(387	)
Unrealized gains (losses) on available-for-sale securities			90				(104	)			303
Unrecognized loss on cash flow hedge			(2	)			—				—
Total comprehensive income			16,119				13,392				8,017

See the accompanying notes to the consolidated financial statements.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Millions of United States Dollars
(except when specifically indicated)

1.		The Company and its Operations
		PETRÓLEO BRASILEIRO S.A. — PETROBRAS is Brazil’s national oil company and, directly or through its subsidiaries (collectively, “Petrobras” or the “Company”), is engaged in the exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and in the refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy related activities. Additionally, Petrobras may promote the research, development, production, transport, distribution and marketing of all sectors of energy, as well as other related or similar activities.
		Petrobras was incorporated under Law No. 2,004 on October 3, 1953. Until November of 1995, Petrobras was the exclusive agent of the Brazilian Federal Government (the “Federal Government”) for purposes of exploiting the Federal Government’s constitutional and statutory control over activities involving exploration, production, refining, distribution, import, export, marketing and transportation of hydrocarbons and oil products in Brazil and its continental waters. When adopted in 1953, the relevant provisions of the Brazilian constitution and statutory law gave the Federal Government a monopoly in these areas subject only to the right of companies then engaged in oil refining and the distribution of oil and oil products to continue those activities in Brazil. Therefore, except for limited competition from those companies in their grandfathered activities, Petrobras had a monopoly over its businesses for approximately 42 years. As a result of a change in the Brazilian constitution in November of 1995, and the subsequent and ongoing implementation of that change, Petrobras has ceased to be the Federal Government’s exclusive agent in Brazil’s hydrocarbons sector and up to 2001 had been operating in an environment of gradual deregulation and increasing competition.
		In accordance with Law No. 9,478 (“Petroleum Law”) and Law No. 9,990, dated August 6, 1997 and July 21, 2000, respectively, the fuel market in Brazil was totally liberalized beginning January 1, 2002 permitting other companies to produce and sell on the domestic market, and also to import and export oil products.
		The Company also has oil and gas operations in international locations, with the most significant international operations being in other Latin American countries.

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Expressed in Millions of United States Dollars
(except when specifically indicated)

2.		Summary of Significant Accounting Policies
		In preparing these consolidated financial statements, the Company has followed accounting policies that are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires the use of estimates and assumptions that affect the assets, liabilities, revenues and expenses reported in the financial statements, as well as amounts included in the notes thereto.
		Estimates adopted by management include: oil and gas reserves, pension and health care liabilities, environmental obligations, depreciation, depletion and amortization, abandonment costs, contingencies and income taxes. While the Company uses its best estimates and judgments, actual results could differ from those estimates as future confirming events occur.
		Certain prior years amounts have been reclassified to conform to current year presentation standards. These reclassifications had no impact on the Company’s net income.

	(a)		Basis of financial statements preparation
			The accompanying consolidated financial statements of PETRÓLEO BRASILEIRO S.A. - PETROBRAS (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC). U.S. GAAP differs in certain respects from Brazilian accounting practice as applied by Petrobras in its statutory financial statements prepared in accordance with Brazilian Corporate Law and regulations promulgated by the Brazilian Securities and Exchange Commission (CVM).

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Expressed in Millions of United States Dollars
(except when specifically indicated)

2.

Summary of Significant Accounting Policies (Continued)

	(a)		Basis of financial statements preparation (Continued)
			The U.S. dollar amounts for the years presented have been translated from the Brazilian Real amounts in accordance with Statement of Financial Accounting Standards SFAS No. 52 - Foreign Currency Translation (“SFAS 52”) as applicable to entities operating in non-hyperinflationary economies. Transactions occurring in foreign currencies are first remeasured to the Brazilian Real and then translated to the U.S. dollar, with remeasurement gains and losses being recognized in the statements of income. While Petrobras has selected the U.S. Dollar as its reporting currency, the functional currency of Petrobras and all Brazilian subsidiaries is the Brazilian Real. The functional currency of PIFCo and certain of the special purpose companies is the U.S. dollar, and the functional currency of Petrobras Energia Participaciones S.A. — PEPSA is the Argentine Peso.
			The Company has translated all assets and liabilities into U.S. dollars at the current exchange rate (R$2.138 and R$2.3407 to US$1.00 at December 31, 2006 and 2005, respectively), and all accounts in the statements of income and cash flows (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the year. The net translation gain in the amount of US$3,230 in 2006 (2005 — US$3,107 and 2004 — US$1,911) resulting from this remeasurement process was excluded from income and presented as a cumulative translation adjustment (“CTA”) within Accumulated Other Comprehensive Income in the consolidated statements of changes in shareholders’ equity.
	(b)		Basis of consolidation
			The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries in which (a) the Company directly or indirectly has either a majority of the equity of the subsidiary or otherwise has management control, or (b) the Company has determined itself to be the primary beneficiary of a variable interest entity in accordance with FIN 46(R).

PETRÓLEO BRASILEIRO S.A. — PETROBRAS
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Expressed in Millions of United States Dollars
(except when specifically indicated)

2.

Summary of Significant Accounting Policies (Continued)

	(b)		Basis of consolidation (Continued)
			The following majority-owned subsidiaries and variable interest entities are consolidated:

Subsidiary companies		Activity
Petrobras Química S.A. – PETROQUISA and subsidiaries		Petrochemical
Petrobras Distribuidora S.A. – BR and subsidiaries		Distribution
BRASPETRO Oil Services Company – BRASOIL and subsidiaries		International operations
BRASPETRO Oil Company – BOC and subsidiaries		International operations
Petrobras International BRASPETRO B.V. – PIB and subsidiaries (1)		International operations
Petrobras Gás S.A. – GASPETRO and subsidiaries		Gas transportation
Petrobras International Finance Company – PIFCo and subsidiaries		Financing
Petrobras Transporte S.A. – TRANSPETRO and subsidiaries		Transportation
Downstream Participações Ltda. and subsidiaries		Refining and distribution
Petrobras Netherlands BV – PNBV and subsidiaries		Exploration and Production
Petrobras Comercializadora de Energia Ltda. – PCEL		Energy
Petrobras Negócios Eletrônicos S.A. – E-PETRO and subsidiaries		Corporate
5283 Participações Ltda.		Corporate
Fundo de Investimento Imobiliário RB Logística – FII		Corporate
UTE Nova Piratininga Ltda.		Energy
FAFEN Energia S.A.		Energy
Baixada Santista Energia Ltda.		Energy
Sociedade Fluminense de Energia Ltda. – SFE (2)		Energy
TERMOAÇU S.A.		Energy
TERMOBAHIA Ltda. (3)		Energy
TERMOCEARÁ Ltda.		Energy
TERMORIO S.A. (3)		Energy
TERMOMACAÉ Ltda. (4)		Energy
TERMOMACAÉ Comerc. de Energia Ltda. (4)		Energy
Ibiritermo S.A.		Energy