Petrobras Announces Alignment to International Prices Has Not Changed

Source: 2/7/2021, Location: South America

Petrobras comes to clarify news published on the afternoon of Friday, February 5, 2021, based on distorted statements disclosed by the press.

The maintenance of the periodicity for checking the adherence between the realized price and the international price, adopted since June 2020 and confirmed in January 2021, was mistakenly reported by the press as a change in the company's commercial policy.

As a practice previously adopted and maintained since 2019, Petrobras follows fuel pricing in line with international prices converted into reais at the real / US dollar exchange rate. This system has been widely and repeatedly disclosed to the market over time.

In June and August 2019, we publicly disclosed that price adjustments would no longer follow a pre-defined periodicity, which remains unchanged.

Despite Petrobras being practically the only producer of petroleum fuels in Brazil, with 98% of the refining capacity, it faces competition from importers that have participated with 20 to 30% of the domestic market, depending on the product.

Fuels are global commodities, such as soybeans and iron ore, whose prices are typically volatile, as are exchange rates.

In view of the significant increase in the volatility of these variables, the company decided, in June 2020, to change from quarterly to annual, the period for assessing the adherence between the realized price and the international price. Such a change should not be confused in any way with a change in the commercial policy, the setting of periodicity for readjustments or performance targets.

Likewise, the continuous monitoring of the markets by our team remains unchanged, which includes, among other procedures, the computation and daily analysis of the behavior of our prices in relation to international quotations and the planning of actions to correct deviations.

This business routine, unlike strategic goals, policies and results, is not a topic that deserves public disclosure.

As expected, the change in the periodicity of the measurement of adherence between the realized price and the international price did not imply any loss, with the objective of maintaining import price parity in 2020 being met, as it was in 2019.

Even in an extremely challenging period for the global oil industry, the financial results for the first nine months of 2020 revealed strong cash generation and debt reduction, contradicting claims of alleged losses resulting from our commercial policy.

In January 2021, the company maintained the periodicity adopted from June 2020 onwards to check the alignment between the realized price and the international price, without any other changes. The volatility of fuel prices and exchange rates whether it is high or low, it is a permanent phenomenon, which may increase or decrease in the face of specific, unanticipated events.

The simple modification of the period for assessing the adherence between the realized price and the international price, promoted eight months ago, does not constitute a break with our unbelievable commitment to align our prices in Brazil with international prices and the consequent generation of value for the shareholders.

Petrobras reaffirms the declarations of President Roberto Castello Branco, at an event on the morning of last Friday, 02/05/2021, at the Planalto Palace, of independence in relation to possible external interferences in the determination of its prices.

Petrobras remains strongly committed to the generation of value, reliability in the supply of quality fuels to its customers, respect for people, the environment and the safety of its operations.

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