Good morning, everyone. Welcome to Petrobras webcast with analysts and investors about the First Quarter 2022 Results. It's great to have you join us today. . After introduction, a Q&A session will begin, you can send us questions by me at petroinvest@petrobras.com.br.

We also inform you that all executives are participating in the event remotely respecting all safety protocols.

Today, we have with us Jose-Mauro-Ferreira-Coelho, Petrobras CEO, Cláudio Mastella, Chief Trading and Logistics Officer; Fernando Borges, Chief Exploration and Production Officer; João Henrique Rittershaussen, Chief Production Development Officer; Juliano Dantas, Chief Digital Transformation and Innovation Officer; Rafael Chaves, Chief Institutional Relations and Sustainability Officer; Rodrigo Araujo, Chief Financial and Investor Relations Officer; Rodrigo Costa, Chief Refining and Natural Gas Officer; and Salvador Dahan, Chief Governance and Compliance Officer.

To initiate I'll pass the floor to Petrobras's CEO, Jose-Mauro. Please Jose-Mauro..

Thank you, Carla. Dear shareholders and investors, good morning. I'm very proud to have the privilege to address you for the first time.

This privilege comes alongside a key sense of responsibility towards all those who trust us with their investments, where there is more investors seeking higher returns for their retirement accounts, such as thousands of workers who used a portion of their state sponsored funds to buy our shares or large investors who regarded Petrobras as a world-class company, showcasing a highly successful Brazil.

First and foremost, I would like to recognize all the efforts made by all the company's employees and executives for carrying out the strategies approved by our Board of Directors, we're able to bring about a historical recovery of its financial situation as well as its image, reputation and governance.

Our privileged story in the corporate world sorts out one of the highest financial debt worldwide. I'm privileged today to be in charge of a solid and resilient company. This is only thanks to the work you have done. And therefore, I'd like to please you all once again.

Remaining solid and resilient you will be key to pave the way for an even better future. We will remain committed and focused on the strategies established in our strategic plan. With a special emphasis in the development of our result assets, where you show deploy 13 of the 15 platforms is related to come online throughout the next five years.

These new units will enable a significant and sustainable growth in oil and natural gas production We will keep on adjusting our portfolio to focus on assets in which we have competitive advantages and to divest out of lower return assets or assets which do not fit our strategy.

We understand that this the investment process besides so up our cash position allows other companies to develop those resources for the benefit of the economy and Brazilian society.

We shall also continue to divest assets that we see as non-core for the company and those agreed with the untrusted authority, such as the refineries in natural gas assets. I must stress that we are not taking those segments. What we are doing is a natural portfolio adjustment, a regular process for a company our size.

These initiatives will result in more competitive, more open, more dynamic and efficient markets. We plan to invest about $7 billion over the next five years in the refining and natural gas segments, with a focus on safety and energy, operational and environmental efficiency.

Speaking of efficiency, I cannot refrain from emphasizing that this will always be a lever for our operations. Therefore, we cannot stray from the proxy of market prices, a necessary condition for wealth generation to attractive investments and to ensure the supply of the fuels which Brazil needs to import you.

I want also to emphasize our commitment to energy transition, especially our net zero ambition and a time frame aligned to the Paris agreement. We shall continue to be a relevant and profitable player in the oil and natural gas business, but we show not overlook society's aspirations or a more sustainable energy mix over the long run.

The first quarter results we are presenting today is strongly demonstrated that Petrobras is a company with our shareholders and Brazilian can be proud off and prestige. A stronger Petrobras generates more value in its operations and therefore, higher returns for its shareholders, including, obviously, Brazilian society.

Petrobras is today one of the largest payers of taxes and government pay, ranking as top tax payer in various states and municipalities in Brazil. In the first quarter of 2022 alone, we have paid $70 billion. Those tax produce more investments, economic development, higher jobs and income generation.

You can rest assured that we show work hard to generate even better results. Thank you very much for your attention. We wish you all an excellent day..

Thank you, Jose-Mauro. I now pass the floor to the Chief Financial Investor Relations Officer, Rodrigo Araujo. Please go ahead..

Thank you, Carla. Thank you, Jose-Mauro. Good afternoon, everyone. Thank you for being with us today and for watching our earnings call. We're very glad to have you with us today and to present our solid operational and financial results for the first quarter of '22.

We start with this relevant picture of the first oil of FPSO Guanabara on April 30, the first production system installed in the Mero field, expected to bring relevant prospects for the company's future and we're quite happy with the potential results that will come from the new system installed. We can go ahead, next slide, please.

So, we have our usual disclaimer about future prospects. So, starting with safety, you already know that safety is a quite relevant value for Petrobras and it's always a priority.

We continue to be highly focused on reducing our total recordable injuries per medium man hours, and we're very happy to see that the results are below our acceptable limit even though we have the ambitions of having zero fatalities, but unfortunately, we had two fatalities in the first quarter of 2022.

And that remind us, unfortunately, why safety needs to be a priority, and we need to be focused on improving our security -- our safety metrics over time, and we're quite engaged on doing that. Next slide, please. Next please. Talking about our ESG agenda. We have recently disclosed our sustainability report mid-April.

And our report is, of course, focused on presenting the top-tier indicators for the market, the GRI, the south indicators and the EPI indicators as well.

So, we're focused on having the most relevant metrics for the market and disclosing Petrobras contribution not only in terms of sustainability of the environment, but also the relevant investments that Petrobras does in terms of social responsibility, so we present a very thoughtful and comprehensive report disclosing our contributions to the environment and to the society overall.

When we talk about environment, you already know and our strategy is focused on positioning ourselves as a low-carbon low-cost major operator in the offshore industry in the world.

We're focused on having a low-carbon footprint portfolio, reducing our emissions, mostly Scope 1 and 2, making investments in either upstream or downstream to improve energy efficiency and to reduce the emissions of our portfolio.

We also have a relevant structure in Brazil that is offering natural gas and electricity that represents a relevant portion of the country's thermal power-based plants and contributes to sustaining a very clean energy matrix in Brazil. We have very high content of renewables, mostly hydro.

So, our thermal plants have a very important role in maintaining the stability of the overall system. We're also investing in exploring new possibilities of less carbon-intensive business and products. We have a very strong presence in terms of reducing the level of sulfur of our products and developing products that have a lower carbon footprint.

We are also promoting R&D focused on low carbon solutions, and we talk about biojetfuel, bio bunker, several potential future solutions related to a lower carbon footprint from our own products. And we also have a strong presence in terms of forest -- reforestation and forest conservation that we're going to show following. Next slide, please.

So, Petrobras has a strong presence in terms of reforestation and forest conservation. We have a relevant program called Floresta Viva or Living Forest.

There is a partnership between several companies in Brazil with the National Development Bank in Petrobras has a match fund contribution of BRL100 million for the next five years, focused on improving the management of more than 60 million acres of forest -- sorry may I go back, please.

All right, thank you, so more than 60 million acres of forest, in the Brazilian territory around 3% of the Brazilian territory.

It's a project that involves several partnerships with universities, research institutes and environmental agencies in Brazil, quite relevant project that we're highly focused on alongside with BNDES, the Brazilian Development Bank. Next, please. In terms of emissions, we continue to be focused on delivering our targets of lower emissions.

We have achieved emissions that are below our target or acceptable limit in the first quarter, both in the upstream and the downstream business. And of course, we highlight the levels of CO2 per barrel of oil equivalent from the result fields.

We have 2 billion barrels with a level of 9.5 kilos of CO2 per barrel of oil equivalent that represents less than the industry does have the industry's average. We have also improved our energy efficiency and our carbon intensity in the -- in our refining assets were below the targets.

Of course, we're focused on continually improving those targets, as we have shown and have achieved what favorable results. We also continue to be focused on achieving our goals in terms of reducing emissions on the five-year timeframe and also to achieve lower emissions by 2030. We have very ambitious targets in terms of reducing emissions.

And we're highly focused on delivering having technology and portfolio management as the main tool to deliver our long-term emissions targets. Next, please.

In terms of absolute emissions, we had in the fourth quarter of 2021, our emissions -- our total emissions, operational emissions have increased, given the scenario of higher thermal power plant generation in Brazil, given the low levels of the reservoirs, but it has already came down in the first quarter.

So we continue the trajectory of reducing total operational emissions, and of course, we continue strongly delivering lower oil and gas operational emissions as well. We also have relevant targets on those areas to reduce by 30% our operational emissions in the long run, and we continue to be strongly committed on delivering those targets.

Next, please. So we have a very strong carbon capture utilization and storage program. The industry's largest offshore U.S. program and we continue with our target of re-injecting 40 million tons of CO2. The accumulated re-injection is 32.6 million tons.

And we continue developing high-technology -- and I mentioned HISEP, that is a technology that will provide very good prospects in terms of capturing CO2 in the seabed for future units. And we're focused on, finding that kind of portfolio solution and finding new technological solutions that support our strong CCUS, capture program. Next, please.

In terms of our social investments, we have provided several relevant donations, not only for COVID-19's impacts in Brazil, but also for environmental and disaster situations that happened in 2021 and 2022 in several areas where we operate in Brazil.

We have a very strong social and environment relationship projects focused on culture, sports, developing new small businesses and developing science and technology in the regions that we operate.

We also have programs focused on the natural environment of the areas where we operate in other areas in Brazil as well and projects to mitigate the socioeconomic impacts of our operations. I highlight also our LPG donation program that we started back in 2021. We expect to donate BRL300 million of LPG until the end of 2022.

We have already started delivering part of those donations in the areas that we operate, and we continue to be a company that is highly focused on a relevant corporate social responsibility. Next, please. As our CEO has mentioned before, our contribution in terms of tax payments and government take for the Brazilian society is quite substantial.

Almost 60% of our operational cash flow returns to the Brazilian society. And we're focused on generating more value and having a very solid strategy, so that we continue to be able to create and deliver that value to our shareholders. And, of course, the Brazilian society is our largest individual shareholder.

And so we're quite responsive in terms of delivering and creating more value. Next, please. In terms of governance, we continue our -- continuous improvement agenda for the company's corporate governance.

As you know, alongside with our financial recovery trajectory, we have a very solid agenda in terms of revamping the company's reputational and image and also streamlining and improving over time the company's governance. We have a very solid governance.

We have made several relevant achievements over time, and we continue to be focused on finding new opportunities to improve the company's governance. And that's, of course, one of our main values for the future.

And we have been recognized from -- by several different international institutions and domestic institutions in terms of the quality of our corporate governance, and we expect to continue to do so. Next, please.

In terms of our operational and financial highlights for the first quarter of 2022, we had several relevant milestones, and I start by the discovery of relevant oil in the pre-salt area, Alto do Cabo Frio Central.

Also, we had started the first oil from FPSO Guanabara that we expect to continue to ramp up over the rest of 2022 and in a matter of fuel in the pre-salt of the Santos basin, we expect very good prospects coming from that the development of the Marlim field.

We also had the environmental preliminary license for the revitalization project of the Marlim field, and we have a broken record in terms of reducing the time for construction of wells in Marlim to 35 days.

And as you know, we continue to be quite focused on improving our CapEx efficiency and making sure that we deliver the projects on time and on budget. And, of course, reducing well construction time.

It's one of the project improvements that we have made over time, and we continue to be focused on finding new solutions to streamline our CapEx in the upcoming future. We also had record sales of the 10 ppm, the low sulfur diesel in Brazil, which already accounts for 60% -- almost 60%, 58% of total diesel sales.

We have our refineries producing 60 -- running with 65% of pre-salt oil, low sulfur oil that supports our target of delivering high quality and low sulfur and lower carbon footprint products. So the oil from the pre-salt has substantially improved in terms of participation in our refinery throughputs.

We finished March with a very high utilization factor, 91% and it's important to highlight that is a utilization factor that is not only sustainable in terms of operations and economic conditions. It's also quite profitable in terms of operating our assets and also with very high safety standards. So we're quite concerned.

We're maintaining very high safety standards, and we see very good results in terms of utilization factor maintaining safety and maintaining the profitability of our refining assets. We have also continued on the trajectory of opening up the natural gas market in Brazil.

So we have provided a access to the Guamaré natural gas processing units, and we continue to deliver on our natural gas market opening process and also continue to be focused on opening up the refining market in Brazil and we have seen relevant steps in that direction, and we'll continue to work in that sense.

In terms of financial results for the quarter, it's important to highlight the recurring EBITDA of $15 billion, our operating cash flow of $10 billion, our free cash flow of $8 billion. So we were able to translate our solid operational performance into solid financial performance as well.

We have maintained our leverage pretty close to the optimal range. So our net debt -- our gross debt has continued to stay within the optimal range of $55 billion to $65 billion. We posted a recurring net income of $8.4 billion.

And as our CEO has mentioned, we have only in the first quarter of 2022 already paid BRL 79 billion in terms of taxes and government take a very relevant contribution to the Brazilian society as well.

By having a strong operational result and solid financial conditions, we were able to announce a solid distribution of dividends that reinforces our commitment with value creation and with the distribution of the value that we create. So we announced BRL 3.72, dividend per ordinary and preferred shares for the first quarter of 2022.

And we were also able to maintain our leverage when looking at the net debt to EBITDA below 1.8 times, so it shows that our financial sustainability is well preserved and we continue to be focused on maintaining our cost and our leverage under control. Next, please.

Talking about the external environment, we have seen higher crude oil prices in the first quarter and of course, when compared to the first quarter of 2021 as well. We have seen a slight appreciation of the Brazilian real over the dollar for the average of the period.

And we also saw an appreciation of the Brazilian real when we compare the period end FX for the first quarter of 2022 with Q4 2021. It impacted positively our financial results for the quarter as well. It's a non-cash impact, but we saw an impact in terms of exchange rate impact for the first quarter of 2022. Next, please.

Of course, the external environment is relevant in terms of the company's financial results. But as you know, we're focused on being able to create and add a lot of value even in scenarios that are much more challenging than the one that we're seeing now.

And we have done a very good job in terms of improving the company's operational performance and restructuring the company over next -- the last five to six years. And when we think about the last time we saw Brent prices above $100 per barrel on the first quarter. We can see that it's the same price, but a very different company.

We have relevantly reduced our lifting cost by more than half. We have reduced our refining costs in real terms by 30%, G&A by more than 60%. The interest payments, we have more than $8 billion interest payments over the year in the past. Now it's less than $2 billion.

When we look at our gross debt, of course, and we think about the upcoming future, the debt that is scheduled to mature in the next five years, the first quarter of 2014 was $58.1 billion that represents basically our entire debt now, not only the financial debt, but also the leases and the debt that is expected to mature in the next five years, is less than $17 billion now.

That is a much more healthy level of debt. There is a very healthy debt profile as well in terms of maturity, which gives us very confidence that the company has a very solid financial situation. And of course, in terms of taxes paid, the company's performance is also much higher.

The company is not only generating more favorable results, but also distributing those results with tax payments, dividend payments and corporate social responsibility as well. Next, please. In the first quarter of 2022, we have a very solid EBITDA, $15 billion, as I mentioned, of recurring EBITDA for the quarter.

That's up 35% when we compare to the fourth quarter of 2021. We had higher crude oil exports, and we had a positive impact of crude oil prices in the quarter. Even though it's a lower sales volume quarter when we compare to the fourth quarter, there is a quarter with a higher seasonality in the domestic market.

So it's a lower sales volume in the domestic market. But despite that impact, we have a very solid EBITDA for the Q1 2022. Next, please. When we look at the EBITDA by business segment, our results from the upstream segment have improved substantially by 28% in the quarter.

We have a very relevant impact coming from the ramp-ups of the platforms that we have installed most recently. So we have a ramp-up of FPSO Carioca in the Sépia field in P68, Berbigão and Sururu. We had -- we also had fewer stoppages in the Q1 2022.

We had relevant stoppages in the fourth quarter, given that we had to postpone some of those stoppages because of the COVID situation in 2020. So we had a relevant impact in Q4 2021. Of course, when we look at our management system, we're focused on the long run development of our reservoirs.

So it's important to have those innovations and to have those stoppages, so that we can maximize the return of the reservoirs over the long run, and that's how we manage the definition of interventions. And even though we have a short-term cost increase, it generates a lot of value in the long run.

In terms of the RTC of the Downstream segment, the refining segment, we had higher margins in the domestic market, and that was offset partially by lower sales volumes, as I mentioned. When we compare Q1 with Q4, we have higher sales volumes in Q4 and that offset partially the impact in Q1.

Looking at the Gas & Power segment, we had lower costs with imports of LNG. They had a very relevant impact in Q4. This impact was mitigated in Q1 2022. We're also working on improving the conditions of our commercial contracts. And we have recently hosted an event to detail and explain a little bit more how the Gas & Power segment works.

The nature of the contracts, the supply distribution in terms of different supply sources in our portfolio, and also how the company's strategy for that segment is designed and I invite you to look at our website, those slides are in our website, and I think they're quite relevant to understand in more detail the Gas & Power segment. Next, please.

As I mentioned before, we had a very strong cash generation in the quarter going from EBITDA to operating cash flow. Apart from income taxes, we see an increase in working capital given the high level of prices that we have now. And we have also prepaid part of our pension liability.

I've mentioned this before, but whenever we look at liability management, we look at it in a very broad sense, not only focused on the finance debt, but we also manage the pension liability, and we also look for potential opportunities to settle contingent liabilities for whenever we have relevant and favorable terms for the company.

After the investments, we have a free cash flow of $7.9 billion in the quarter. Investments in the first quarter were impacted by the payment of the bidding round, the latest building around the signature bonus for the surplus, the Transfer of Rights areas Sépia and Atapu, almost $1 billion that were paid in the first quarter of 2022.

Including divestments and the Buzios Transfer of Right -- Surplus Transfer of Rights agreement, we go to 9.7% free cash flow after divestments. That free cash flow was mainly used to either prepay debt or to maintain the expected service payments for the debt.

The dividend payments from the fourth quarter of 2022 are expected to be made now in May and the dividend payments from the Q1 will also be made in the next month. So, we ended the first quarter with a very high cash balance that we don't expect to maintain over time.

As you guys know, our optimal level is between $8 million and $10 million of optimal cash level. We expect to go back to that level over time. And after investments and maintaining our leverage, our expectation is, of course, to continue to distribute the free cash flow that we generate.

It's also important to highlight, in the first quarter, we were quite active in terms of open market repurchase transactions. We prepaid almost $1 billion, $0.7 billion in the first quarter, given the volatility that we had. So, as I've mentioned a couple of times before, we use those opportunities whenever we had we have a higher volatility.

We use those opportunities to prepay debt and to reduce our exposure to more expensive debt managing our liability over time. Next, please. We continue to maintain our leverage within the optimal range from $55 billion to $65 billion and as we look at the maturity profile, as I've mentioned before, is a quite healthy maturity profile.

We've been able to increase the duration of our debt and to bring that closer to the maturity of the upstream projects, especially after the end of the quarter, we also announced by mid-April, we also announced a tender offer repurchase transaction, and we closed that on April 14.

So we prepaid around $2 billion, mostly from the bonds maturing in the beginning of the curve, but from bonds maturing between 24 and 2051. Next, please. When we look at our portfolio management projects, we have important developments in the first quarter of 2022. We started the binding phase for the Gulf of Mexico assets.

We have signed Deten Química, and Albacora Leste those were welcome projects that were signed after we had our latest earnings calls earnings call for the Q4 2021. We have also closed the exploratory blocks in Paraná Basin. In the first quarter of 2022, we also had relevant cash inflows coming from projects that we signed and closed in the past.

We had contingent payments and earn-outs coming from those projects. I mean Carcara, that is now Bacalhau and NPS, transport the midstream, the transporting asset that we saw in the past.

So we had almost $2 billion of additional cash flow coming from those assets that were sold a couple of years ago, they impacted positively our cash generation in Q1 2022. Next, please. Overall, we had a very good quarter. Our recurring net income was $8.4 billion. As I mentioned before, the company has had a very solid operational performance.

We had a positive impact from foreign exchange rate gains non-cash, as I mentioned before, but they impacted positively net income. We also had lower gains from asset sales and from impairment reversals that impacted positively Q4 and didn't impact Q1. So that offset a little bit the results for Q1 2022.

But again, we had a very, very solid result in Q1 2022. Next, please. So finally, as I've mentioned before, we have also approved distribution of relevant dividends based on not only the formula, the 60% formula of our dividend policy that results in BRL 1.86 per share per ordinary common share preferred share.

But also, we have approved extraordinary dividends given the company's substantial cash flow in the first quarter, of course, we focus on the pillars of our dividend policy, respecting the company's financial sustainability, but committing ourselves to distribute the maximum we can from our results and from our cash flow generation.

That was the case in the first quarter of 2022, and we announced those additional dividends for the quarter. We think it's quite important to maintain our focus on creating value on having solid and profitable investments that generate value that we can distribute for our shareholders.

And of course, in our group of shareholders, the most relevant individual shareholder. Shareholder is the Brazilian government and the Brazilian society as well. Next, please. So that's the overall picture of our first quarter 2022.

That was a very solid quarter, not only in terms of our operational performance, but also we have a very solid cash flow generation, we were able to maintain our leverage and costs under control.

And of course, we're able to announce a relevant dividend distribution coming from all the value that we've created and all the cash flow that we generated over the quarter. Thank you. Thank you for being with us today for our earnings call. I'll pass the floor back to Carla. Thank you, Carla..

Thank you, Rodrigo. We can now move to our Q&A session. And the first question that we received comes from Frank McGann with Bank of America Merrill Lynch. The first question is for Fernando and João Henrique.

Given the strong global demand environment, does the company have any potential to increase output from short-cycle projects?.

Okay. Good afternoon, Frank. Right now I’ll start and then Fernando can complement to the external. Petrobras remains committed to implement the Strategic Plan 2022-2026, where we approved the CapEx of the upstream 20% higher than the previous plan.

This increase is building on our strategy of maximizing the value of our portfolio for deep and ultra-deepwater assets. Our production development cycle is a long cycle, and is based on a long-term resilient plan scenario. And you can see no relevant opportunities for first hand production fields.

The only opportunities that you have in fuel the drillings, but this is not relevant for the total Petrobras production. Fernando you want to….

Yes. What I can say that Petrobras, it’s production growth raise around 20% in the five coming years, mainly resulting from the startup of the 15 new FPSOs. In short-term, the FPSO Carioca and FPSO Guanabara ramp-up are a very relevant production growth.

We have actions related to the start of complementary wells such as Bacalhau field with two new wells that came on stream this first quarter. In addition to the implementation of those 15 new production systems, we have many complementary projects we're seeing in our strategic plan.

Petrobras constantly monitors the effects on the oil and gas markets, additional -- any additional opportunities that may arise in the response of the change in the environment will be analyzed in the context of the strategic plan 2023-2027 currently under development. Thank you..

Thank you, João Henrique and thank you Fernando. The next question from Frank is for Rodrigo Araujo. Rodrigo the inflation trends globally become more pronounced.

Are there any particular areas where cost trends are particularly struggling?.

Thank you. Thank you, Frank, for the question.

As João Henrique has mentioned before in Portuguese call, out of our 15 units that are coming online within the business plan, we have 12 of them already contracted, and we have a strategy to tackle critical resources in advance and have longer-term contracts for critical resources, such as flow lines, PLSVs, et cetera.

Of course, that some of the suppliers in the supply chain that are most impacted by commodities are already discussing with the company that the scenario of the commodities increase, but it's not something that we have seen any impact up to now.

And given the company's procurement strategy and the scenario over time, we expect that we can navigate that without major problems. And of course, we don't see and forecast any impacts for the business plan up to now. João, if you want to add something..

That's exactly what we have a long term plan, our projects are robust even in a scenario of the inflation. And you are good shape for facing all these challenges of the coherent or that they are putting a lot of pressure in our suppliers..

Thank you, João Henrique. Thank you, Rodrigo. The next question comes from Vicente Falanga with Bradesco. Vicente Falanga sent us a message that I'm going to read for us. Congratulations for the excellent financial management and all the best for Jose-Mauro in the new endeavor. The first question is for Mastella.

Has Petrobras been seeing more opportunities to export oil to India? What is the company's commercial strategy in case China increased its oil imports from Russia?.

Well, thank you for your question. And sorry for my voice. I'll try to do my best. Well, but your question over the last years, Petrobras has been focusing on market developments for the Brazilian grades.

We have commercial offices in Asia, Europe and USA across the coring and monitoring market opportunities in order to find the best complex for Petrobras crude oil production. Petrobras is a very solid and diversified client portfolio distributed in all geographic regions that permit fast reaction to market changes, like China buying more region oil.

And this allows the company to take advantage of the arbitrage. Average sales is made considering all the alternatives and ensuring the maximization of results. Petrobras different markets, the Europe, Americas, China and other designations in AsiA - and there is – we have no particular dependency on any market.

Regarding the Indian market, in particular, Petrobras already established close relationship with the private and state owned refineries. We do sell regular volumes every time the destination is among the best alternatives for the Brazilian rates..

Thank you Mastella. The next question comes from Gabriel Barra with Citi. And I'm going to read his message once again. Congratulations on the results and good luck for the new management. The first question is also for you, Mastella. We see the company currently trading at prices below the international parity for both gasoline and diesel.

Could you explain to us Petrobras's decision-making process in relation to pricing?.

Thank you, Gabriel. Keep on trying to speak clear as possible. We are first -- it's important to stress on building international parity price could be estimated with market public information.

The competitivity of any company may vary a lot depending on its logistics scale and international markets starting hard our decision-making process, evenly price position compared to the international market on a daily basis. But we do not react instantly to the volatility of the international market codes or the exchange rate in Brazil.

Hence international prices and exchange rate stand to the level, we adjust for prices market. Thank you. .

Thank you, Mastella. The next question also from Gabriel is to Salvador. Salvador, could you tell us what additional measures are being studied or taken in addition to those already included in the bylaws in current legislations to strengthen the company's corporate governance..

Thanks, Gabriel. Good morning. We have several initiatives already ongoing for this in the next few years. I'd like to highlight some of them here.

First, we are focusing on applying automation, artificial intelligence and data mining in our internal control environment to secure those critical transactions in terms of integrity, real-time monitoring, early detection and response.

We've been working on enhancing and identifying what can be automated in order to avoid human error, to avoid delays and so on.

The second, I'd like to mention is we are focusing not only on fraud and corruption risks as we originally started the program in the beginning in 2015, but also focusing now on what we call emerging risks in line with our strategic plan and our ESG ambition and commitment.

So to foster transparency, integrity and fair competition in the oil, gas, energy market. So we are tackling with data privacy, for example, human rights due diligence in our supply chain network, enhancing comfort mineral, diversity and inclusion. Now with the war in Ukraine, the sanctions and export controls program are especially important.

And my last comment on the continuous improvement process we have in our corporate governance. So we have an ongoing revision already in place for our policies, procedures by law, et cetera to secure a strong, a timely and effective decision-making process. This is not something that we started now. Our governance has been enhanced year-over-year.

For example, having a diverse Board of Directors composition and actually today, 80% -- 8-0 of our Board members are independent, having a solid eligibility criteria and appointment process, formal delegation of authorities, limited individual decisions, always supported by technical and statutory committees.

So there is no single critical decision for Petrobras that is taken by one individual only. Every decision must be taken by a committee level at least.

Of course, having the independence and oversight for the governance and the compliance officer, we have an active Board committee structure responsible to pre-validate any relevant subject before Board decisions. So we have People Committee, Investment Committee, Auditors Committee and so on and so forth.

So there is no specific action here, but it's important to mention this is a continuous improvement process that every year we update our rules, our procedures, and it's important to say that we are absolutely engaged and committed to ensure the respect, the value creation and the right balance among our shareholders. So thanks for your question..

Thank you, Salvador. The next question comes from Lilyanna Yang with HSBC. She is very glad to see Petrobras delivering consistent results. The first question is to Rafael. Rafael, in our view the tax regime is benign in Brazil.

Are you seeing any discussion or proposals by the Brazilian government or Brazilian Congress towards higher government take or a special tax that would capture your windfall profits?.

Good afternoon, Carla. Good afternoon, everybody. Thanks for being here with us today. Thanks, Lilyanna, for your comments. I'm very glad as well.

Regarding your questions, looking to the actions performance and not only actions, but announcements performed by the Brazilian policymakers in charge of economic actions Recently, we have seen fiscal adjustments moving Brazilian fundamentals to a strong situation, targeting Brazilian local currency appreciation with good effects on reducing inflation, and also in some sectors, some tax reductions to attract more investors and more investments in Brazil.

So, of course, it is -- this is a type of decision that has not to do with Petrobras as a company. But in my view, I do not expect any policymakers increasing their share in our profits.

So I have no expectations of increasing tax, especially if you look to other countries with the energy crisis, every country is trying to -- on the other hand, reducing tax rates to release this sector. So objectively, I do not expect increase in tax. Thanks for your questions and for your comments..

Thank you, Rafael. The next question comes from André and it's for João Henrique Rittershaussen. The business plan stated $8.8 billion for E&P CapEx in 2022, which is an average of 2.2 billion per quarter.

What drove the $1.4 billion level of CapEx in the first quarter of 2022? The company still sees the $8.8 million E&P CapEx for 2022?.

Thank you. Thanks for the question, André. Our CapEx outlook for 2022 remains $8.8 billion. In our planning, an increasing level of activity was already planned during the year of 2022. In addition, we had some COVID effects in January, and we have some postponements and the reduction in activities on that month due to pandemic.

However, we see recovered by the end of the year of these spendings. Fernando, any comments.

I would like to compliment that the level of investment will increase during throughout this year. I could such as buses payments milestones for buses 6 and 8 happens during this year.

The interconnection of new wells in the Libra for the FPSO Guanabara are some events that you contribute for this increasing level of activating investments during 2022. Thank you..

Thank you, Fernando. Thank you, João Henrique. The next question comes from over the last few months, we have seen a new dynamic in the domestic fuel market with big users, gaining prominence in imports and playing a major role in guaranteeing that demand is met.

In this new context, how does Petrobras evaluate the need for the company to step in to contribute to meeting total demand, either by increasing refinery utilization rates or by importing some cases..

I may start -- Well, -- thank you, Leonardo this is not very good now. Answering your question. Yes, it is true that distributors large and medium-size ones took on the leading role of imports, played by the trading companies. But I would say that this dynamic is not a month not on years.

This change took place only due to the company of these companies and also due to the scale of operations in the national market and also to their logistics infrastructure which represented a competitive advantage over the three economies.

So the distributors diversified their supply and making responsible for part of the imports that all are now decent as were carried out exclusively higher better.

Today, we have a more dynamic or competitive market, which is certainly challenging, but also a great time sharing risks and investments which is good for both economic agents and for the site.

In this context, we will continue working to meet our contractual commitments and evaluating business opportunities with safe and profitability based on our internal production, which may even be supplemented by imports. Rodrigo.

Yes, Mastella. I think that you’ll cover all the aspects. I have forced Leonardo that we are already operating at the maximum level that we are currently available in our facilities. We must take in account the capacity of each unit process, the safe conditions, as Mastela said, the logistics restrictions, the profile of the demand.

Our company produced more than 60 products and must taking account the restrictions of our clients and the behavior of these markets, the grade of the oils and the profitability of this process.

So, consider all of these on April, we closed the month around 19% -- 92% of the utilization factor and in these current days of May, we are around 92%, 93% of utilization factor..

Thank you Rodrigo, thank you Mastella. The second question from Leonardo is to João Henrique. What progress has been made on the new FPSO projects announced in the last business plan.

Should any reprogramming be expected considering the recent high volatility in oil prices and the inflationary pressure on onshore service costs?.

Hi Leonardo, we had the Bonaparte started exploration last -- at the end of April and we continue to implement our planning to set up another 14 units until 2026. 11 of them are already under construction and -- on the contract phase was this in was nine, 10 and 30.

For the unit to be scheduled for 2022, the modest lifting activities are completed and the -- are in progress. We can say bull's eye nearer to Marlin 2 and already completed in the progress for Marlin 1. We are constantly monitoring our project costs and schedule impact, trying to anticipate problems in developed mitigation plans.

Until now, we have -- we don't have an impact in the strategic plan released last year. And because -- as I said, most of them are already contracted. So, the forecast for the new units in our point of view is very good. thank you..

Thank you, João Henrique. The next question is from and it's for you as well.

João considering the contracts for the production systems expected to start in the next two years, is there a protection for higher costs in light of the current high inflation rate?.

Yes. Petrobras, like you already discussed, Petrobras have had a very large mix of content. And this is helping us to deal with these effects for new bids, we are discussing with the suppliers mechanisms in order to reduce the risks for both parts with the mainly but Ukraine war. But we see no major impact in for the near future of your projects.

The contracts that are already in place, will have mechanisms that where we can control impacts of these events..

Thank you. The next question comes from Luiz Carvalho with UBS. And he also send us a message about the results. Congratulations on the results and for dividend submission. This first question is Mastella.

Mastella, on supply imports and pricing, specifically of this view, several agents in the industry have become more vocal and challenge to find these volumes in the international market and an unfavorable scenario for imports.

How is the company seeing the supply to the country? And how are preparations for an eventual challenge in the supply to the country?.

Thank you, Luiz. First, I'd like to do a legal disclaimer. We have to highlight that the market is served by agents other than Petrobras. In this way, our operational planning takes into account. Our commercial commitments, which we have always been fulfilling and other opportunities that we commit can be met safely and profitably.

In other words, we do not have visibility of what the other agents that serve a relevant share of the countries market are doing. As they are doing different movements, they have their own supply and logistics and business models that how I can talk about how Petrobras treasure itself and seen these risks.

We see the current scenario with in a great caution. We have low diesel inventories in the main storage hubs in high, very high volatility. We understand that these symptoms are a result of recent delays such as the conflict in Ukraine.

To deal with these scenarios, we strengthened our -- we have strengthened our trading companies abroad which operate in the main hall markets, executive commercial operations and maintaining contact with various agents, refiners, traders, customers, owners and service providers.

So we monitor the diesel of those inventories, fragile demands and main movements. As we can anticipate risks and adopt short and long positions in physical or contract in line with the use of our assets refineries and logistics to provide resilience and competitiveness to our supply -- to supply our customers. Thank you..

Thank you, Mastella. The second question from Luiz is to Rafael. Rafael, in the latest strategic plan, Petrobras announced a new governance structure to evaluate potential portfolio diversification.

We'd like to ask on how these discussions have advanced, if there is a specific time line in the market that the market could wait for future announcements or if this is a more timely process?.

Okay, Carla, hi, Luiz. Yes, you should expect formal position on such evaluation by the end of this year after our broad approved, our next strategic plan some decisions will be taken. And you can expect either this decision can be to keep the focus on oil and gas and also processing the use of oil and gas and also processing the use of oil and gas.

Of course, with ESG responsible, decarbonize in our operations, social actions and also strong governance, which is what we are doing right now. Or it can be, one can expect a Petrobras Brazil investing in a second core of value creation in our new operations, aligned with energy transitions.

There are much discussions at place right now, we are looking in a multidisciplinary way, for example, a financial look to be sure that NPV is strong and positive, even in resilience of prices, just also a technological look to be sure that we have all the conditions to provide a new business, and also culture in our type of company, which are the attributes and vocations that Petrobras have for big projects, intense in capital, intense in technological solutions.

So we need to find a business that, it must be a good business. And at the same time, Petrobras must be a good owner and a good operator for this business. So I'm not going to give any spoiler. We need to wait a little bit more.

Just to highlight that there are many discussions right now inside Petrobras, and we expect by the end of the year, when the strategic plan is approved by the Board, we may have some decisions on this subject. Thanks for your question.

-- Rafael. The next question comes from Bruno Montanari with Morgan Stanley. He also sent us a message. Thanks for taking my questions. It's very good to see the company following its strategic plan and the shareholder remuneration policy. His first question goes to Rodrigo Costa.

Rodrigo, on the back of a tight environmental, for global fertilizer prices recently, would Petrobras consider reviewing its strategy to fully exit this business or cut some of the prior projects of the company in this area that were made in the past, makes sense at this point in terms of returns.

What is the current strategy for the Três Lagoas plant? Could Petrobras pursue a similar strategy as Rnest in this case, invest more to conclude construction before offering it again to the market..

Our strategic plan, 2022-2026 does not consider any kind of investment in fertilizer segment. And this segment doesn't belong to our core business, and that's very clear to us in our strategic plan.

In relation to Três Lagoas plant, we have been taking internal steps to close the current sales process, and we're trying to learn as soon as possible the new process. Regarding Rnest, we are speaking with our antitrust authorities about our new schedule of the divestment process, and as soon as possible, we will have news about this.

And we try to synchronize our plans to finish the second train with this new divestment schedule..

Thank you, Rodrigo. The next question comes from Rodolfo Angele with JPMorgan. He also sent us a message. So it's very good to see the results you posted this quarter. From an operations standpoint, everything is going rather well. The company is healthy and generating a lot of cash.

Besides the dividend announcements show the commitment to shareholder value, and it's easy to have a buy rating at the company in this conference. And his question is for Rodrigo. Rodrigo, the company has a large free cash flow and continues to divest.

Can you comment about potential use of that cash or dividend?.

Thank you. Thank you for your question, Rodolfo. We had also a similar question from Bruno Amorim, Portuguese call as well. So I'll give you a broader perspective. So first of all, in terms of portfolio management, you know that we've done a very solid job and we still have relevant portfolio management job to do.

So, we're going to continue focusing our portfolio on the world-class assets, that we're the best owner and the ones that we have a higher competitive advantage. Of course, whenever we look at our cash flow generation, we are going to continue to apply our 60% of free cash flow formula.

But given the level of free cash flow that we're generating and the inflows that the additional inflows that are coming, we look at the cash generation, and we focus on, of course, making the investments that are committed. And as you well know, we don't expect to make relevant changes to the short-term investments.

Most of our investments for 2022 to 2024 are already committed and the level of commit. And this is something that we included in the latest business plan as well. The level of commitment of CapEx for the first year of the business plan is pretty high as Fernando and João has mentioned before.

We don't have relevant short-term opportunities to boost CapEx or anything like this. And on the other hand, we didn't have any capital restrictions in the latest business plan. All the projects that are resilient to low price levels and our NPV positive were sanctioned, were approved.

So we didn't have CapEx restrictions, so we don't expect to have additional CapEx in the short-term. Given the prospects of our debt portfolio and the maturity of our debt, we expect to continue to manage our debt, but we don't expect the level to change relevantly.

So, all the additional cash flow is going to be directed towards dividend distribution. And the way we expect to run this is, of course, applying the 6% formula, as I mentioned. And whenever we decide like we did this quarter on additional dividend distribution, we try to look at a longer time frame from 12 to 24 months.

And we have a very solid risk analysis to evaluate the prospects for the upcoming months. We look at the price scenarios, the leverage scenario and the cash flow generation scenario to see whether we're confident to maintain the company's financial sustainability.

And of course, we look at the framework focusing not only on the 55% to 65% range for the gross debt, but also bringing the cash level closer to the optimal level from $8 billion to $10 billion. So that's how we view this question. But again, as I mentioned, the additional cash flow is going to be directed towards dividends. Thank you..

Thank you, Rodrigo. The next question comes from Pedro Soares with BTG Pactual. He also sent us a message. First of all, I would like to congratulate management and the company for the full transformation deliver over the past years. He has a question for a Rafael.

Rafael, you have mentioned the importance of improving Petrobras communication with all its stakeholders, including society so that, there's a better understanding of fuel pricing dynamics.

Could you address this further in order to make it more tangible for us – this improving communication means having a more active participation with government in order to find solutions to price volatility that are not incurred by Petrobras. Any color in that sense will be welcome..

Thank you, Carla. Thank you, Pedro, for your questions and for your first note regarding our consistent strategic plan.

Explaining our communication is more focused on general public that to follow market prices regarding prices, as your question addressed that to follow market price is the best and the only practice that mitigates the risk of undersupplying the markets.

And also, it's a requirement as Petrobras not complies with the law and the bylaws we must follow market price. So we need to explain this for general population. We sense that, it is very important to show that we are practicing the best company practice.

So of course, we are available to discuss technical insights as an experienced operator in energy markets, both in oil and gas and also in refining in solution. So we are very open to – available to provide technical insights.

But as I said in the previous questions, in my previous answer, we separate our company view as a company, we are a company listed. So we have a very specific mission.

We separate these actions from policymakers decisions and public policy that has not to do with Petrobras, but we are more than happy than provide any insights that policymakers requires. Thank you..

Thank you, Rafael. The next question comes from Christian Audi with Santander. He also sent us a message I would like to congratulate you all for the continuous free cash flow generation, which allows the payment of this excellent amount of dividends. His first question is for Rodrigo Araujo.

Rodrigo any updates regarding the sale of your stake at Braskem..

Thank you, Christian. Thank you for the question. And thank you for the message. We continue to be focused on divesting our stake in Braskem. We tried divesting our preferred shares in the beginning of the year and market conditions were unfavorable. So we continue to monitor market conditions for the best time to return with the sale of our stake.

Of course, we monitor potential other venues of divesting of our interest in Braskem. We don't have anything concrete as of the moment. And we're not conducting any specific M&A transaction, but we continue to a significant interest in divesting our interest and continue to monitor the market to do that as soon as we can. Thank you for your question..

Thank you, Rodrigo. The second question from Christian is also for you.

So Rodrigo, can you give us an update regarding the refinery sales process, what's still feasible for 2022 versus only 2023 any changes in the format of potential sales?.

Thank you, Christian. So I'll give you an overall perspective. So first of all, with respect to understand that we've already signed talking about and six and nine month, we're expecting for the Brazilian antitrust authorities to conclude their analysis and so that we can go on and close those transactions. We're still negotiating for LUBNOR and REGAP.

LUBNOR is more advanced. REGAP is a little bit behind. And with respect to BA and PBIO ones that we've already attempted once to divest. We're discussing with the antitrust authorities and monitoring the market to evaluate the best timing to re-launch the process. We don't expect, at least for now any relevant changes to the format of the divestment.

We're mostly waiting on the right timing and more favorable market conditions so that we can re-launch and we expect to re-launch those processes soon. Thank you..

Thank you, Rodrigo. The next question comes from Régis Cardoso with Credit Suisse. He also sent us a message that I'm going to lead. Congratulations for the excellent results. They are equivocal evidence that good professional management can add significant value to the company and to society. His question is, for Fernando.

Fernando, what are the expectations around timing for the closing of the transaction of 5% stake purchase option exercised by which are the remaining precedent conditions for the closing..

Régis, we expect the transition to be closed in July. The effectiveness of this transaction is subject to the approvals of the National Petroleum Agency, the Ministry of Mines and Energy and the payment to be made by. It's good to emphasize that this transaction has an effective date in September 1st of last year because of the agreements.

And on the final closing all the balances and the balances will be done really closed. How this income of in his additional 5% in Búzios production sharing contract. Thank you..

Thank you, Fernando. Thank you all. At this time, the Q&A session is over. If you have any further questions, you can send it to our Investor Relations team. Jose we will now make his final remarks. Please Rodeo..

Thank you, Jose. Thank you, Carla. Thanks, everyone, for being with us today for our First Quarter of 2022 Earnings Call. We're very glad with the company's operational and financial results.

And we expect to continue to create a lot of value with sensible and investment and responsible investments and generate a lot of value and distribute the value that we create from our investments. Thank you for taking part of our earnings call. And we see you again in the next quarter. Thank you..