New York, September 25, 2012 -- Moody's Investors Service assigned an A3 rating to three series of global notes issued by Petrobras Global Finance B.V. (PGF). The rating outlook is stable. The notes are issued in three series of EUR1.30 billion notes due April 1, 2019, EUR700 million of notes due October 2, 2023, and GBP450 million of notes due October 1, 2029. PGF is a new indirect wholly-owned subsidiary of Petróleo Brasileiro S.A. (Petrobras), which is rated A3 for its foreign currency bond obligations. PGF's A3 note rating is based solely on Petrobras's unconditional guarantee of the notes. PGF will largely replace Petrobras International Finance Company as the chief international financing conduit for Petrobras and its other subsidiaries. Proceeds from the note issuance will be used for general corporate purposes and to help fund capital expenditures related to Petrobras's Business Plan for 2012-2016.

RATINGS RATIONALE

Petrobras's A3 foreign currency bond rating reflects its dominant position in Brazil's upstream and downstream petroleum sectors; its sizable hydrocarbon reserves and strong growth profile in oil and natural gas production, particularly in deepwater Brazil and its emerging pre-salt plays; and the benefit of upstream/downstream integration and growing energy demand in Brazil for earnings and cash flow. It has a solid balance sheet and liquidity, enhanced by the 2010 global rights offering and sizable cash balances.

Petrobras has a massive $236.5 billion capital budget for 2012-2016 that was revised upward some 5% in June 2012, over its prior five year plan. The plan will be heavily upstream focused in Brazil, including large pre-salt discoveries, with production growth expected to be flatter over the next two years. Consequently, Petrobas will continue to significantly outspend cash flow over the next few years. It also faces large external financing needs and a strong Real, and execution risks on its upstream program related to geology, technology, access to rigs and staging of developments, as well as local content requirements and the establishment of a local services industry. It also is subject to an evolving political environment as the state plays a larger role in its strategic direction.

Petrobras's debt has increased significantly as it has ramped up its capital program, with balance sheet debt of about $88.6 billion at June 30, 2012 up some $5.7 billion since year-end 2011, and further expected increases by the end of 2012. While Moody's sees the risk of rising leverage, Petrobras's 2010 recapitalization bolstered its balance sheet and liquidity and secured major future reserves potential in the pre-salt via its Transfer Barrels. The company should show sizable production increases after 2014 from its large offshore developments already underway, including a rising contribution from the pre-salt developments. Moody's believes Petrobras has flexibility to manage its leverage and liquidity, as well as the scale and a rising cash flow and production profile consistent with its current stable rating outlook and baseline credit assessment at baa1. However, successful execution and delivery on production, reserves and cash flow growth in line with rising debt levels will be important to maintaining its ratings in the future.

Petrobras's foreign currency rating is appropriately positioned at two notches above Brazil's Baa2 foreign currency bond rating, based on our assessment of the low likelihood that Petrobras would be affected in the event of a general moratorium in Brazil on foreign currency debt payments.

Please see ratings tab on the issuer/entity page on Moodys.com for the last credit rating action and the rating history.

The principal methodology used in rating Petrobras was the Global Integrated Oil & Gas Industry Methodology published in November 2009. Other methodologies used the Government-Related Issuers methodology published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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Thomas S. Coleman Senior Vice President Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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