Offshore Activity

Additional information regarding the interest sale in Nova Transportadora do Sudeste

Rio de Janeiro, October 31, 2016 – Petróleo Brasileiro S.A. – Petrobras, further to the Material Fact disclosed on September 23, 2016 regarding the sale of interest in Nova Transportadora do Sudeste (NTS) to Brookfield Infrastructure Partners and its associates, hereby provides the following additional clarifications.

After the ongoing corporate restructuring, NTS’ remaining debt will be paid at the closing of the transaction. Thus the total transaction amount of US$ 5.19 billion will fully represent a cash entry for Petrobras group, consisting of US$ 4.34 billion on the closing of the operation and US$ 850 million in five years that will be adjusted in the period.

The transaction includes the continuation of the capacity and terms currently contracted by Petrobras through five GTAs (Gas Transportation Agreements) of the firm contract type, with a 100% ship-or-pay obligation, totaling 158.2 million m³ per day or 5,901,390 million Btu per day. The agreements are effective for 20 years, with termination terms between 9 and 15 years, starting in 2016, and sets tariffs between R$ 1.38 and R$ 2.40 per million Btu, applicable to the year 2016. These tariffs are regulated by ANP (the Brazilian National Petroleum, Natural Gas and Biofuels Agency) and adjusted by the market general price index IGP-M.

The payment of these contracts is already included in the operating cost projections of the 2017-2021 Business and Management Plan, published on September 20, 2016. It is worth emphasizing that Petrobras will maintain its contractual assignment rights to third parties under the current conditions.

The transaction also envisages that Transpetro will remain responsible for the operation and maintenance of the assets that comprise the transportation system through a new long-term agreement to be signed on the closing date.

Petrobras and Brookfield are using its best efforts to conclude the transaction by December 2016 once completed the prior conditions and all approvals obtained at Petrobras Shareholders’ Meeting, scheduled for November 30, 2016, and with the applicable regulatory authorities.

Categories: Offshore Activity

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