Approval of terms and conditions of the Transfer of Rights Agreement and the Global Offering

Petrobras announces that its Board of Directors has approved the following at a meeting dated as of the date hereof:

(i) the terms and conditions of the draft Transfer of Rights Agreement to explore and produce oil, natural gas and other fluid hydrocarbons in certain blocks of the pre-salt area, up to the limit of 5 billion barrels of oil equivalent, as provided under Law No. 12, 276 signed by the President of Brazil on June 30, 2010 (“Law No. 12,276”), including the initial purchase price of the transfer of rights, to be entered into among Petrobras, as assignee, the Brazilian federal government, as assignor, and the National Petroleum, Natural Gas and Biofuels Agency – ANP, as regulator (the “Assignment Agreement”), and the Board of Executive Officers authorized all necessary actions to conclude the transfer of rights, including the execution of the Assignment Agreement, and

(ii) the general terms of the Global Offering of common shares and preferred shares issued by Petrobras, including American depositary shares evidenced by American depositary receipts, and the Board of Executive Officers authorized necessary to conclude the Global Offering, including the execution of all related agreements and documents. A Notice to the Market is expected to be published on September 3, 2010, providing further details about the Global Offering.

As of the date hereof, the National Energy Policy Council – CNPE, has approved all of the terms of the draft of the Transfer of Rights Agreement, which we expect to execute soon. Under the draft of Transfer of Rights Agreement, as compensation for the exploration and production of oil, natural gas and other fluid hydrocarbons in specified offshore areas, subject to a maximum production of 4.99 billion barrels of oil equivalent, Petrobras will make a payment of R$ 74.800 billion, equivalent to US$ 42.533 (“Initial Price”).

The Initial Price was determined by Petrobras and the Brazilian federal government based on technical reports of independent certifying entities hired by Petrobras and the ANP, observing the terms of Law No. 12,276/10, resulting in the average price of R$ 14.96 (US$8.51) per barrel for the areas covered by the Transfer of Rights Agreement (see the map below).

The minority shareholders’ commitee approved the terms and conditions of the draft Transfer of Rights Agreement as well as the average price per barrel. Barclays Capital has acted the committee’s financial advisor and has issued a Fairness Opinion related to the transaction.

Petrobras emphasizes its commitment to transparency and to the observance of best corporate governance practices, and will disclose additional information on the report prepared by the independent certifier DeGolyer and MacNaughton as well as the main terms and conditions of the Transfer of Rights Agreement as soon as it is executed.

In order to pay the Initial Price, Petrobras intends to use proceeds obtained from the Global Offering through the sale of its common shares and preferred shares to the Brazilian federal government, which was approved at a board meeting dated as of the date hereof. Pursuant to Law No. 12,276/10, the Brazilian federal government has agreed to accept Brazilian federal treasury bills (Letras Financeiras de emissão da Secretaria do Tesouro Nacional, or “LFTs”) to pay for such shares and to value them at the same price at which they are valued for purposes of the Global Offering.

We expect to deliver such LFTs to the Brazilian federal government immediately following the settlement of the Global Offering. In accordance with Article 48 of CVM Instruction 400/03, Petrobras will remain in its quiet period until a notice announcing the conclusion of the Global Offering is published, and will continue to publish notices pertaining to the normal course of its activities and the Global Offering, observing applicable regulatory laws.

This announcement is not an offer of Petrobras shares. Petrobras shares may not be offered or sold in the United States absent registration or an exemption from registration, and Petrobras currently intends to register the proposed offering in the United States. Any public offering of Petrobras shares will be made by means of a prospectus containing detailed information about Petrobras and the offering.