Approval of the new taxation model for the oil and gas sector

Rio de Janeiro, January 02, 2017 - Petróleo Brasileiro S.A. – Petrobras, further
to the press release of 08/23/2017, reports that Law no. 13.586 was sanctioned
on 12/28/2017 as a result of the approval of Provisional Measure no. 795/2017.

The aforementioned Law, together with Decree no. 9,128/2017, ensures the
maintenance of the tax rules in force at the 14th bidding round of the
concession regime and in the 2nd and 3rd rounds of the production sharing
regime, which were carried out by the National Agency of Petroleum, Natural Gas
and Biofuels (ANP), respectively in September and October of the current year,
as well as guaranteeing a secure legal environment for investments in the
country. The new legislation partially incorporates the amendments proposed by
the National Congress and will take effect as of January 1, 2018, as detailed
below.

i) Deductibility of the calculation basis of the Corporate Income Tax (IRPJ) and
the Social Contribution on Net Profits (CSLL) of investments made in the
exploration and production phases of oil and natural gas:

 (a) Revokes Decree Law no. 62, dated November 21, 1966, which ensured the
immediate deduction for tax purposes on the outcome of investments related to
the exploration and production of oil and natural gas; and

 (b) Allows investments made in exploration and production to be immediately
deductible in the years in which they were incurred into. However, the expenses
associated with assets formation for the development of production may be
deducted in an accelerated manner, according to the method of units produced.
The original text of the Provisional Measure submitted to Congress appreciation
limited the accelerated deduction to December 2022, a restriction that was
suppressed during its processing and maintained in the conversion into Law.

 (ii) Taxation by Withholding Income Tax (IRRF) on remittances for the payment
abroad of vessels chartering:

(a) Increases the tax burden on charting remittances from 2018;

(b) Offers an installment program to close part of the litigation associated
with such matter, only in respect to IRRF, upon payment of the difference in
relation to the defined legal limits, added default interests, with amnesty of
default and exofficio fines, subject to the withdrawal of administrative and
judicial suits. The portion of litigation related to social contributions
(CIDE-Serviços, PIS and COFINS), although its cancellation was foreseen in the
text approved by the National Congress, was object of presidential veto, not
being achieved by the program.

 (iii) Adjustment of the terminology used in the special regime of taxation of
profits earned abroad by subsidiaries that carry out vessel chartering, rental
of goods or service provision activities related to the exploration and
production of oil and natural gas, instituted by Law no. 12,973, of May 13,
2014.

(iv) Creation of REPETRO-Sped. After changes made by the National Congress and
accepted by the President of the Republic, the provisions of REPETRO-Sped
ensured the elimination of federal tax charges levied on investments related to
the exploration and production of oil and natural gas, both for assets under
temporary and permanent nature, until 2040. The company awaits approval of the
legislation by the National Finance Policy Council (CONFAZ), which will define
the state taxation applicable on such investments. Once this step is closed, the
signatory States must also incorporate the provisions of CONFAZ in their
respective laws, for the full effectiveness of the regime.

Petrobras believes that the new taxation model together with the improvement of
regulatory legislation was an important milestone for the oil and gas industry,
as they allow greater legal security for investments.  However, one of the main
objectives expressed in the explanatory statements of the MP 795/2017, the
reduction of litigation, was not entirely achieved due to the veto to the
provision that allowed the total termination of the litigation related to one of
the essential activities of the industry: ship chartering.


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www.petrobras.com.br/ir
Contacts:
PETRÓLEO BRASILEIRO S.A. – PETROBRAS | Investor Relations Department | e-mail:
petroinvest@petrobras.com.br
Av. República do Chile, 65 – 10th floor, 1002 – B – 20031-912 – Rio de Janeiro,
RJ | Phone: 55 (21) 3224-1510 / 3224-9947

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The Company’s actual results could differ materially from those expressed or
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following: (i) failure to comply with laws or regulations, including fraudulent
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Company’s Annual Report on Form 20-F for the year ended December 31, 2016, and
the Company’s other filings with the U.S. Securities and Exchange Commission.