Petrobras Executive Board approves protection mechanism complementary to the diesel pricing policy

Rio de Janeiro, December 28, 2018 – Petróleo Brasileiro SA – Petrobras, in addition to the material facts disclosed on 10/14/2016 and 06/30/17, informs that its Executive Board approved, yesterday, a complementary protection mechanism, aiming to give additional flexibility to the management of the diesel price policy, as it already exists for gasoline, as disclosed to the market on 09/06/18.

Petrobras believes that it is important to implement mechanisms that allow it, at times of high market volatility, to have the option to change the frequency of daily domestic diesel price adjustments, and may even keep it stable for short periods of time, up to seven days, reconciling its business interests with the demands of their clients and market agents in general.

The company will have the option to apply the mechanism after the end of the Union’s economic subvention program for the commercialization of diesel, predicted for 12/31/2018, whenever it deems necessary, and in order to give a financial result equivalent to that which would be obtained with the company’s current pricing policy.

The principles of international parity price (PPI), margins to remunerate the risks inherent to the operation and level of market participation remain in force, as well as the correlation with the variations of the price of diesel in the international market and the exchange rate.

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