Climate Change Supplement

Climate Change Supplement —

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

4. VALUE CHAIN EMISSIONS AND INNOVATION

3. REDUCING EMISSIONS IN OUR OPERATIONS

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

OUR APPROACH At Petrobras, we monitor the evolution of climate science and its developments over energy, social and economic systems for more than 15 years. Considering climate change in our planning and decision making is an ethical requirement, included in our safety, environment and health and social responsibility policies. It is also a business need for us in order to stay competitive and profitable in an environment of transition to a low carbon economy with high uncertainty.

PETROBRAS' EVOLUTION

CULTURE TRANSPARENCY AND COLLABORATION INNOVATION

Management Process

Product Quality

Investment Management

Carbon intensity of operations

Risk Management

Metrics

Strategy

Governance

Reducing carbon intensity in the value chain Profitable opportunities in synergy with our competitive advantages Active Portfolio Management

We note the legitimate interest of our stakeholders in knowing how we are prepared to remain competitive in a market in transition. In this supplement you will be able to understand how we see the future of energy, our strategies, how we manage emissions linked to our business, and how we prepare the company's processes to mitigate risk and seize opportunities.

Trends and uncertainties

Carbon in decision-making

When considering climate change, we are aware that our role transcends emissions from our own operations. We recognize our ability to influence the value chain, and even beyond, through our choices regarding portfolio, product innovation, communication, supplier management, customer relationship, and so on. In this sense, our approach to carbon and climate management goes beyond our operational efficiency and contemplates the various decision-making and management processes.

SOCIETY'S EVOLUTION

2

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

WARNINGS

This document contains possible scenarios that reflect only our managers' expectations. The terms “anticipates," “believes," “expects," “forecast," “intends," “plans," “projects," “aims," “shall” and other similar terms are intended to identify such expectations, which evidently involve risks or uncertainties foreseen or not by the company.

Therefore, the future results of our operations may differ from the current expectations, and the reader must not rely solely on the information contained herein. The company shall not be liable for updating such forecasts in the light of new information or future developments.

The goals, ambitions and perspectives presented throughout this supplement may be re-evaluated due to external and/or internal factors.

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

3

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY Access to energy is life transforming and impacts our values and ideals. Energy is in freedom to come and go, experiences, health, comfort, and culture.

How much of your daily life, dreams and values depend on energy?

Life as we know today is linked to energy systems, and systems shape life. Virtually all of the United Nations Sustainable Development Goals require energy and 10% of the world's population (over 700 million people) still live unacceptably in extreme poverty (IEA, 2017 and World Bank, 2018).

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

4

CLIMATE CHANGE SUPPLEMENT 2. VISION OF THE FUTURE AND STRATEGIC PLANNING

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

On the other hand, human activities emit greenhouse gases (GHG) to the atmosphere, mainly CO2. Currently the CO2 concentration in the atmosphere is 408 ppm (parts per million) (NOAA, 2019), which exceeds the natural variation of the last 800 thousand years (from 180 to 300 ppm - IPCC, 2013).

This increase in GHG intensifies the Earth's natural greenhouse effect, with changes in climate patterns and prediction of increased frequency and severity of adverse weather events (IPCC, 2014).

Global Concentration of CO2 in the atmosphere 450

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

Today we are more than seven billion human beings on the planet, occupying mostly built, coastal and densely populated groupings. Our social and economic systems are vulnerable to climatic conditions such as droughts, rains or intense winds. The World Economic Forum points out that extreme weather events and deficiencies in mitigation and adaptation to climate change are among the main risks to global economic development (WEF, 2019).

Society recognizes the need to address climate change globally, with attention to measures to mitigate greenhouse gas emissions and adapt to their impacts, according to the consolidation of the science reported by the Intergovernmental Panel on Climate Change (IPCC).

Human activity must be conducted in a sustainable way.

We are aware of the intrinsic relationship between energy and greenhouse gas emissions. Activities related to the

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

production and use of energy account for about 30% of Brazilian emissions and 70% of global GHG emissions (Sirene/MCTIC, 2018 and CAIT/WRI, 2017).

The challenge of reconciling increased access to energy, energy security, and less greenhouse gas emissions, both in required time frame and at acceptable costs, is far from being achieved by a single government or sector. Each society needs to develop its path in the transition to a low carbon future based on its social and economic needs, emission profile and mitigation options.

We reaffirm our commitment to provide the energy that drives society to realize its potential, while reducing the carbon intensity of our emissions.

400

Main risks to economic development by the World Economic Forum

Concentration of CO2 (ppm)

350

The top 10 probability risks

300 250 200 150 100 50 0 -800.000

-600.000

-400.000

-200.000

0

Year

Top 10 impact risks

1

Extreme climate events

1

Weapons of mass destruction

2

Deficiency in mitigating and adapting to climate changes

2

Deficiency in mitigating and adapting to climate changes

3

Natural disasters

3

Extreme climate events

4

Data fraud or theft

4

Water crisis

5

Cyber attacks

5

Natural disasters

6

Human-induced environmental disasters

6

Loss of biodiversity and ecosystem collapse

7

Large-scale involuntary migration

7

Cyber attacks

8

Loss of biodiversity and ecosystem collapse

8

Collapse of critical information infrastructure

9

Water crisis

9

Human-induced environmental disasters

10

Assets bubbles in a large economy

Note: Negative values refer to a period before the common era.

Source: EPA, 2018 (https://www.epa.gov/climate-indicators/climate-change-indicatorsatmospheric-concentrations-greenhouse-gases)

Economic Source: WEF, 2019

Environmental

10

Spread of infectious diseases

Geopolitical

Social

Technologi-

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CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

2. VISION OF THE FUTURE AND STRATEGIC PLANNING Since 2003, we have been incorporating energy transition aspects to a low carbon economy in our visions of the future.

As a company in the energy sector, we recognize that the way society's energy needs are met is facing unprecedented transformations. In the first half of the 21st century, we observe a process of energy transition beginning to materialize, which tends to consolidate the necessary decarbonisation of energy systems in order to mitigate climate change.

However, the high level of uncertainty about the timing and form of the energy transition in each country requires an approach that considers different future scenarios. Developing scenarios is an instrument that qualifies the strategic analysis and the consequent positioning decisions in the long term. In this sense, we have been improving the use of scenarios as an input of our strategy and planning, through market monitoring, technology and regulation by company's different areas.

We have prepared three scenarios that guide our vision for the future and support strategic planning, both for the quantification of assumptions and for our risk assessment.

The scenarios are differentiated by the pace and extent of the energy transition:

• slow energy transition scenario; • moderate energy transition scenario; • accelerated energy transition scenario.

We recommend reading our Scenarios Supplementfor more details.

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

6

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

In our scenarios, at least until 2040, the transition takes place in a context of expansion of energy consumption, reflecting economic growth and energy inclusion.

competitive advantages in oil exploration and production (E&P) in deep and ultra deep waters as our main cash generation vector.

In these scenarios, consolidated trends and critical uncertainties combine to shape transition trajectories.

Economic growth models, environmental and climate policies, innovation and behavior change play a key role in the transition. Innovations in the field of renewable energies (such as wind, solar and biofuels), energy storage, vehicular efficiency, CCUS, smart cities, digitization, shared economy and circular economy are vectors that act in a way complementary and synergistic with the implementation of public policies.

The intrinsic competitiveness of liquid fossil fuels remains anchored in the high energy density and in the possibility of transportation and storage, factors with greater or lesser importance in different energy services.

The determining aspect in the resilience of each product in the transition to low carbon is the viable scale of substitutes.

Our scenarios show significant differences in terms of energy and carbon prices evolution. In the accelerated transition scenario, the peak oil demand may happen in the next decade and carbon prices could reach US$ 70.00/t of CO2 in the US and EU. The challenge posed by transitioning to a low-carbon economy, as per our scenarios, was one of the main drivers for updating our strategic positioning, introduced in 2018.

A set of the ten strategies in the 2040 Strategic Plan privileges the balance between profitability and risk in this context of deep transformations.

Our strategies seek to provide resilience to our business models for different energy transition paces.

Our business model is structured based on our

Even in an accelerated transition scenario, we see persistent, although declining demand for oil for the coming decades. Therefore, there is a need for continued investment to prevent the production from falling to below the demand.

In our view, companies will be as competitive for the long-term market as they are able to produce at low costs and with less greenhouse gas emissions, thriving in scenarios of oil price decline, carbon pricing and possible practices of petroleum differentiation due to its carbon intensity in production.

In the strategic planning process, we conduct simulations of emissions, portfolio options carbon intensity, and resilience to scenarios of falling oil prices and carbon pricing. Due to the quality of our reserves, technology and assets, we believe we can maintain ourselves as a competitive producer, supplying products with superior quality in terms of carbon intensity in the production process.

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

OUR STRATEGIES • Maximize the value of Petrobras through the active management of the E&P portfolio; • Ensure sustainability of oil and gas production, prioritizing the operation in deep waters; • Optimize the position in the segment of natural gas and energy in Brazil and develop positions in the global market, through partnerships.

• Maximize the value of Petrobras through active management of the refining, logistics, commercialization and petrochemical portfolio integrated into national oil and gas production activities; • Exit the fertilizer, distribution of LPG and stakes and production of biodiesel and ethanol businesses.

• Operate in renewable-energy businesses in a profitable way, focusing on wind and solar energy in Brazil.

• Develop critical skills and a high-performance culture to meet the company's new challenges; • Prepare Petrobras for a more competitive environment based on cost efficiency, scale and digital transformation; • Evaluate current and future partnerships seeking integrity and value creation; • Strengthen Petrobras' credibility, pride and

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CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

OUR DIRECTION

• Focus on the oil and natural gas

exploration and production, particularly in the Brazilian pre-salt;

• The commercialization and use of natural

gas as a source to generate energy will gain more relevance in our business in the medium term, following the trend of this fuel in the energy transition.

• As a long term vision, we will study

opportunities in renewable energies that have synergies with our activities and competitive advantages.

• Digital technology will permeate our

activities with a focus on reducing costs and increasing productivity.

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

We understand that our performance in E&P always requires a focus on efficiency and cost reduction as one of the main pillars of the industry's competitiveness. In this sense, while re-inventing our exploratory portfolio and promoting active portfolio management, we invest in the development of new technologies focused on reducing costs and emissions, as well as on digital transformation as a lever for value generation, in line with our strategies to "Maximize the Petrobras' value through active management of our E&P portfolio" and "Ensure oil and gas production sustainability by prioritizing deep water operations."

In light of the worldwide need for a lower-carbon energy supply, we recognize the role of natural gas as a relevant fuel in the transition. For the medium term, we see in the natural gas business a lever of new skills and abilities. We will develop our operations in these businesses through the specific strategy to "Optimize the position in the segment of natural gas and energy in Brazil and develop positions in the global market through partnerships". That strategy will seek to expand the integrated position in supply of natural gas at competitive cost, through production and/or trading options.

The electrification of economies is a consolidated trend, as well as the renewable sources' scaling up and cost reduction. With a long-term vision, we seek to analyze business opportunities in renewable energies,

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

verifying if they have synergies with the assets that we have already installed and our competitive advantages ("Acting in renewable energy businesses in a profitable way, focused on wind and solar energy in Brazil").

In the biofuels segment, we are planning to divest our stakes in ethanol and biodiesel production for the first generation, for which we have not achieved the desired results. However, investments in R&D aimed at developing technological skills for fuel production by advanced industrial routes, such as the production of BioQAV and renewable diesel in plants integrated with oil refineries mantain relevance. Exit the fertilizer, distribution of LPG and stakes and production of biodiesel and ethanol businesses.

8

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

3. REDUCING EMISSIONS IN OUR OPERATIONS EMISSION MANAGEMENT Good operational performance in greenhouse gas emissions is a strategic requirement for the long term, adding credibility and market options to our products, while contributing to meeting Brazilian climate ambitions.

The adequate operational performance in emissions is even more important in a country like Brazil, which has an energy matrix with a high share of renewable energies (43.2% in 2017, according to data from the National Energy Balance - BEN, 2018) and, consequently, low-cost emission mitigation options have already been partially or fully implemented. This means that the remaining alternatives for reducing emissions in the energy sector are restricted or have a high implementation cost for society.

In this context, we have been dedicated to the issue of emissions and climate change for nearly 20 years.

We have inventoried all the assets under operational control, and we have a computerized system with more than 17 thousand active sources registered, the SIGEA® (Petrobras Emissions Management System). In addition, we are a founding member of the Brazilian GHG Protocol Program and published our inventory in its Public Register of Emissions, having been classified as Gold

Seal in 2017.

The results of our 2009-2015 Goals Cycle are summarized in the table below:

•

73.8 million tons of CO2 avoided in the period;

Exploration and Production

• • • •

Increase of 20% in the use of gas (94% at the end of 2015); 74% reduction in flare emissions; Reduction of 25% in carbon intensity (kg CO2 e/boe); 3 million t CO2 reinjected in the period.

Refining

• •

Improvement in flare gas management between 20092014 (leak measurement and detection); Reduction of 19% of gas to flare from 2014 to 2015.

Power generation

•

Implementation of more efficient power generation cycles (combined cycle) at the Luiz Carlos Prestes (MS), Baixada Fluminense (RJ) and Sepé Tiaraju (RS) plants.

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

9

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

GOALS, AMBITIONS, AND OPERATIONAL PROSPECTS 2025 In order to fulfill our commitment to operational performance and transparency, we have disclosed in our PE 2040 Strategic Plan and 2019-2023 PNG Business and Management Plan our ambitions, goals and perspectives for greenhouse gases operational emissions by 2025 (2015- 2025). In order to meet them, we will adopt active portfolio management decisions and allocate resources of US$ 500 million dedicated to greenhouse gas mitigation projects in the PNG 20192023 horizon.

Goals and Ambitions (In 2025 compared to 2015)

• Zero growth in operational emissions.

E&P Segment • Target of 15 kg CO2e/boe, 32% lower than in 2015;

• Ambition: 13 kg CO2e/boe; • "Zero Routine Flaring by 2030" initiative of the World Bank.

Refining segment

• The target is 36 kg CO2 e/CWT

We highlight our goal of being suppliers of low carbon intensity operational products.

(35.6 kg CO2/CWT), 16% lower than 2015;

• Ambition: 34 kg CO2 e/CWT (33.6

Perspectives (Base 2015) Reinjection • approximately 40 million tonnes CO2 in CCUS-EOR projects by 2025.

Methane • reduction of 30-50% in methane emissions intensity in relation to total hydrocarbon production (t CH4/mil t HC) in the E&P segment.

Electricity generation segment • Reduction of up to 29% in carbon intensity in relation to energy production (tCO2e/ MWhe).

Actions

•• Active portfolio management;

•• quality of new assets; •• optimization of refining loads;

•• reduction of gas burning in flare;

•• energy efficiency; •• loss reduction programs.

kg CO2/CWT)

Note 1: All targets consider direct emissions (Scope 1) and indirect greenhouse gas emissions from the electric acquisition and/or thermal energy produced by third parties (Scope 2).

Note 2: The zero growth considers the absolute Petrobras System's emissions for the year 2015, which totaled 78 million tons of CO2e. The Petrobras' commitment is not to exceed 78 million tons of CO2 e in no year until 2025, unless there is a marked pressure for generating electricity from the thermals due to national water stress events.

Note 3: The kg CO2/CWT indicator was developed by Solomon Associates specifically for refineries and was adopted by the EU Emissions Trading System (EU ETS) and by CONCAWE (European Oil Company Organization for Environment, Health and Safety). The CWT (Complexity Weighted Tonne) of a refinery considers the potential for emission of greenhouse gases (GHG), in equivalence to the distillation, for each process unit. Thus, it is possible to compare refinery emissions of various sizes and complexities. Petrobras follows the kg CO2/CWT indicator, according to its original identity. We also have an adapted indicator: kg CO2 e/CWT, to allow inclusion of emissions of other greenhouse gases (e.g. methane), which, however, represent a small part of our refining emissions.

Note 4: The World Bank's "Zero Routine Flaring by 2030" initiative aims at eliminate routine flaring, which is derived from the inability to dispose of or use gas produced in the E&P segment. Non-routine burns, such as during assets startup, malfunction, or maintenance, as well as burning for safety reasons, are outside its scope.

Note 5: Goals, ambitions, and projections presented are representative of Petrobras' internal studies and planned efforts. Their presentation in this supplement is not a guarantee of compliance, which will depend on the technical and/or financial feasibility of the options evaluated.

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CLIMATE CHANGE SUPPLEMENT 2. VISION OF THE FUTURE AND STRATEGIC PLANNING

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

E&P: Exploration and Production The actions envisaged foresee the continuity in improving the carbon efficiency of our exploration and production activities, with a reduction in carbon intensity of more than 32% between 2015 and 2025.

35

Carbon Intensity (kg CO2e/boe)

30

25

"business as usual"

20

15

10

TARGET 2025: 15 kgCO2e/boe AMBITION 2025: 13 kgCO2e/boe

5

0 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

MAIN VECTORS IN E&P VECTORS:

•• Profile of new assets; •• Reduction of flare burning, fugitives, and losses; •• Energy efficiency; •• Portfolio management; •• CCUS (reinjection with EOR).

Note: The lower line represents the successful deployment of all the options mapped in the strategic emissions study. The upper line of the graph represents the partial deployment of the mapped intensity reduction options.

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

In 2018, we announced our support for the World Bank's "Zero Routine Flaring by 2030" initiative and took the opportunity to announce that Petrobras is no longer routinely burning gas in production assets under our operational management, with average gas use, in 2018, of 97%. Reinjection of CO2 in fields, associated with the Enhanced Oil Recovery (EOR), will continue to play a relevant role in the trajectory of reducing the intensity of greenhouse gases.

By 2025 we have planned to reinject some 40 million tCO2, which will contribute to technological evolution, cost reduction and safety demonstration of CCUS technology for application in the oil and gas industry and other sectors. The International Energy Agency projects the need to expand the CCUS scale, from the current 37 million tCO2/year (GCCSI, 2019), to 2.3 billion tCO2/year by 2040, in order to achieve the objectives of the Paris Agreement (IEA, 2019).

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

REINJECTION OF CO2 CO2 re-injection technologies in ultra-deep waters awarded at the OTC 2015 – Offshore Technology Conference (water depths of 2,220 m):

• First carbon dioxide separation (CO2) associated with natural gas with CO2 injection in production reservoirs;

• Deeper underwater gas injection well with CO2;

• First use of the alternating method of water and gas injection.

11

CLIMATE CHANGE SUPPLEMENT 2. VISION OF THE FUTURE AND STRATEGIC PLANNING

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

Refining

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION

Electricity generation

Regarding refining activities, we have set the goal of reducing the segment's carbon intensity by more than 16% from 2015 to 2025, with gains also projected for emissions of other gases (particulate matter, sulfur oxides and nitrogen oxides).

Our electricity generation portfolio consists mainly of gas and we have high energy efficiency units with combined cycle and integrated with our other assets to export the residual steam.

The carbon intensity of this segment is affected by

45

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

the country's regional electricity needs, due to the hydrological regimes, which dictate the dispatching needs of our different thermoelectric power plants.

In the 2025 horizon, we projected a reduction in the carbon intensity of electricity supply, through the implementation of programs to control fugitive emissions (methane) in our thermals, portfolio management and implementation of renewable energy studies.

0,45 "business as usual"

"business as usual" Carbon Intensity (t CO2e/MWhe)

43 41

Carbon Intensity (kg CO2e/CWT)

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

39 37 35 33 31

TARGET 2025: 36 kgCO2e/CWT

29

AMBITION 2025: 34 kgCO2e/CWT

0,4

0,35

0,3

0,25

0,2

27 25 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

0,15 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Methane Given the characteristics of the methane greenhouse gas, whose heating potential is very high in the short term, our mitigation program will have specific attention to its control, mainly in the E&P, where the majority of the emissions of this gas are concentrated in Petrobras.

In addition, the fugitive emissions control program in the RTC (Refining, Transportation and Commercialization) segment is already applied to refining and will be expanded to the gas treatment and thermoelectric plants.

Perspective of a reduction between 30 and 50% in methane emissions in relation to the total hydrocarbons (t CH4/mil t HC) in the E&P segment* (in MAIN VECTORS IN E&P METANE:

MAIN VECTORS IN REFINING:

•• Optimization of loads; •• Reduction of gas delivery to flare; •• Optimization of thermoelectric balance; •• Improvements in energy performance.

Note: The lower line represents the successful deployment of all the options mapped in the strategic emissions study. The upper line of the graph represents the partial deployment of the mapped intensity reduction options.

MAIN VECTORS IN ELECTRICITY GENERATION:

•• Portfolio management; •• Fugitive emission control program; •• Implementation of studies on renewable sources.

Note: The lower line represents the successful deployment of all the options mapped in the strategic emissions study. The upper line of the graph represents the partial deployment of the mapped intensity reduction options.

•• Expansion of use of flare gas recovery system; •• Recovery of ventilation gases; •• Fugitive emission control program; •• Verification of flare efficiency; * Note: According to the IOGP (International Association of Oil & Gas Producers) metric. The Flaring Gas Recovery Unit (FGRU) aims at minimizing the sending of flaring gas through the operation of a closed recovery system. Flare burning occurs only when the required flow rates exceed the design specification, for example, in an emergency situation.

12

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

3. REDUCING EMISSIONS IN OUR OPERATIONS

4. VALUE CHAIN EMISSIONS AND INNOVATION The decisions of our PNG 2019-2023 and PE 2040 result in the prospect of reducing the carbon intensity of our value chain, so that for each unit of energy delivered to our consumers, there will be fewer associated emissions, considering the sum of our operational emissions with the ones from the use of our products.

Innovation is the most important element of the link to enable trajectories with significant reduction of carbon intensity, and we are committed to investing in low carbon research, development and innovation.

VALUE CHAIN We are aware that the Paris Agreement requires neutrality in the net balance of greenhouse gas emissions in the second half of the 21st century, which exceeds the current voluntary commitments of the signatory countries of the agreement and involves challenges for energy systems far beyond emissions in energy production.

In the oil and gas value chain, most emissions come from final consumers. In this sense, since 2012, we have been disclosing the emissions from the use of our products in our Sustainability Report (Category 11 of the Scope 3, according to the GHG Protocol).

4. VALUE CHAIN EMISSIONS AND INNOVATION

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

13

CLIMATE CHANGE SUPPLEMENT 2. VISION OF THE FUTURE AND STRATEGIC PLANNING

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

Value chain GHG emissions (million t of CO2e)

Scope 2 Scope 1

66.6

Scope 3 - use of products Transport Residential Others Industry Electricity Export and International Sales

Note: Scope 1 - direct operation emissions. Scope 2 - indirect emissions from acquisition of electricity and/or thermal energy produced by third parties. Scope 3 - use of products - indirect emissions referring to use of products delivered to market.

5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES

Three key variables account for the improvement in carbon intensity predicted in our current strategic plan: improvements in carbon intensity of operational emissions (as per section 3), increasing national mandates for biofuels mixed with fossil fuels, and long-term investments in renewable sources, connected to technical-economic viability and return on capital.

INNOVATION

In order to consider the value chain emissions calculations in company's strategic decisions, we have incorporated new metrics to the present strategic planning cycle's analysis:

In Brazil and in the world, fossil energy chains have a dynamizing role for the economy, with a positive impact on income, employment and tax collection. Technological advancement is fundamental in identifying energy arrangements that do not increase the cost of energy for society, are profitable without subsidies and maintain their contribution to public financing through taxes.

82 Carbon Intensity (g CO2e/MJ of delivered products)

4. VALUE CHAIN EMISSIONS AND INNOVATION

Our Strategic Plan's decisions reduce the carbon intensity of the energy products delivered when comparing the sum of our operational emissions with our products' use emissions. The reduction starts in the short term and can reach 8% by 2040, when compared to 2015.

437 0.4

3. REDUCING EMISSIONS IN OUR OPERATIONS

80

78

76

74

72

70 2015

2017

2040

*Intensity =

Total emissions (gCO2e)*

Total energy delivered through our products (MJ)

Renewable generation technologies, liquid fuels less intense in carbon, less energy intensive processes, new thermodynamic cycles, energy storage, mobility efficiency, urban innovation, CCUS, among others, will be essential for the creation of new energy paradigms based on low generating value for society.

6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL

14

CLIMATE CHANGE SUPPLEMENT

1. THE CHALLENGE OF CLIMATE CHANGE AND ENERGY SUPPLY

2. VISION OF THE FUTURE AND STRATEGIC PLANNING

The development of low carbon solutions will remain important in our technological directives, with a minimum allocation of 10% of our annual investment in R&D until the year 2025.

Research and Development

11%

of investment in solutions for a low carbon matrix

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R$ 13 billion

Research to support the projections presented in this supplement and to identify innovations to make feasible and go beyond the current projections.

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OFFSETS Main innovation focuses on low carbon

• CCUS - carbon capture, use, and storage; • Biofuel; • Renewable sources; • Efficiency; • Mobility

R&D in PNG 2019-2023

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Our activities in research, development and innovation are coordinated by the Petrobras Research Center (Cenpes), one of the main centers of energy innovation in the world, the largest in Latin America, with more than one thousand dedicated researchers.

Low carbon solutions were also established as a priority in the relationship with technology-based companies (startups). Renewable sources and CCUS were selected as two of the focus areas for the call for proposals for technology-based companies to be held with Sebrae, in 2019.

The goals, ambitions and projections reported throughout this supplement are related to the actual performance of our processes and products and do not consider the use of offsets to achieve them, whether they come from industrial carbon markets, environmental permit requirements or voluntary projects.

We understand that natural climate solutions (related to forests, soils, oceans, mangroves, etc.) do not replace the need for low carbon energy supply. However, they may play a relevant role, especially while emission mitigation options have high costs or significant challenges in terms of scale.

In a country such as Brazil, where land-use emissions accounted for 24% of total emissions by 2015 (SIRENE/ MCTI, 2018), we consider it relevant to contribute to natural solutions, which are subject to voluntary investment (please see section 6) and have other environmental and social benefits, as well as carbon sequestration.

In addition, since 2009 we have invested in forestry in compliance to permitting requirements, corresponding to a total emission of 1.2 million tCO2 and related to long-term tests in the Exploration and Production segment.

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5. CARBON AND CLIMATE IN MANAGEMENT AND DECISION-MAKING PROCESSES The energy transition involves uncertainties that affect our markets and our cost structure. Our role in the process of transition to a low carbon future requires us to remain a healthy economy agent, creating value for society. Due to the capital intensive and long-cycle nature of our business, adequately considering carbon in governance, strategy, portfolio management, risk assessment, metrics and other processes will be key to increasing our competitiveness.

GOVERNANCE AND METRICS The theme of climate change integrates Petrobras' Health, Safety & the Environment (HSE) and Social Accountability (SA) Policies.

OUR POLICIES

Include HSE requirements and climate change in business decisions.

Contribute to sustainable development and to mitigation of climate change, acting in alignment with national and international covenants of which we are signatories.

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In this sense, the follow-up of the theme is the formal attribution of two committees of our governance with senior management representatives:

HSE Executive Committee, one of the committees that advise our Executive Board.

HSE Committee, a Board of Directors' advisory committee, consisting of directors and external members.

As of 2019, the groups of metrics used in carbon and climate performance and risk assessment was expanded.

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STRATEGY

The transition to a low carbon economy identified in our scenarios was one of the motivators for the recent review of our strategic plan (see sections 2 and 3 of this supplement and also the Petrobras Scenario Book).

RISKS Our risk assessment and prioritization system includes a risk matrix, high management's (executive managers, executive officers and directors) risk perception, and external publications monitoring.

In the recently completed risk assessment cycle, carbon risk was one of the most mentioned among interviews with high management and in external publications mapping, and was selected as one of our strategic risks.

The risks selected as strategic are considered to be of high relevance for achieving the strategic objectives, leading to the need for a risk mitigation plan to be monitored by high management.

Among the dimensions that characterize the carbon risk, we consider, for example, the lower oil prices or carbon pricing impacts. One of the resilience elements in all scenarios, and in particular in accelerated transition scenarios for low carbon, is production cost. In this sense, we have announced in our PNG 2019-2023 the prospect of operating, as of 2020, with extraction cost below US$ 10/boe, being below US$ 7/boe in the case of pre-salt production.

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In addition, we have assessed the physical risk of extreme climate change over our operations and found that, over the useful life of our assets, the magnitude of impacts is within the safety parameters already considered in our projects.

We have carried out a research on regional climate models for our regions, and our action plan contemplates the development of adaptation plans for our assets. Among the adaptation management measures, the actions related to water stress management and the wind and wave patterns change stand out.

INVESTMENT PROCESS HSE (Health, Safety and Environment) assessments are an integral part of the investment projects phase-out process.

Capital investments are only approved if they remain viable in all our scenarios. This premise applies to all projects and represents the guarantee that our investments maintain economic viability even in less favorable scenarios.

During 2019, we will implement the following additional measures to increase the robustness of the investment decision process:

• Project planning should include a documented

search for less carbon-intense solutions. In the

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selection of conceptual alternatives, the main options (in terms of location, technological route, arrangement, etc.) should be evaluated for their impact on the applicable metrics on greenhouse gases;

• In the alternatives selection phase, carbon mitigation measures should be evaluated for application in the selected project options.

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the following additional measure:

• Assessments shall include information on said

acquisition, partnership or disinvestment impact on total greenhouse gas emissions and applicable carbon intensity metrics.

INITIATIVES FOR SUPPORTING PE 2040 AND PNG 2019-2023

ACQUISITIONS, PARTNERSHIPS, AND DISINVESTIMENTS

Our carbon management improvement will be supported by two initiatives with high management monitoring:

The current process for acquisitions, partnerships and disinvestments provides for a health, safety, and environment evaluation. In 2019, we will be implementing

• Developing and implementing processes in

company to meet requirements low carbon economy requirements;

• Defining a technological portfolio that enables implementing projects of greater potential in renewable sources and low carbon energies.

The initiatives were planned based on the analysis of requirements and trends in regulation, industry, transparency and investors' questionnaires and aims at considering the necessary improvements in all Petrobras' processes.

The greenhouse gas mitigation program to be implemented in 2019 will be managed under the principles of open innovation, with channels for capturing ideas.

With integrated portfolio vision, ideas will be received throughout the value chain and in all stages of maturity, which can be forwarded to the research and development process, investment and business evaluation, supplier management, customer relationships or others.

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6. TRANSPARENCY, COLLABORATION AND SOCIAL-ENVIRONMENTAL INVESTMENT We value transparency by adhering to the leading global codes of conduct and reporting. In addition, we believe that the transition to a low carbon economy is an area where collaboration is essential and we partner with other companies and the science, technology and innovation (ST&I) community.

TRANSPARENCY AND COLLABORATION We report on our evolution with transparency and use the GRI (Global Reporting Initiative) benchmarks, correlated with the United Nations Global Compact Principles, which we have supported since 2003 and the UN Sustainable Development Goals (SDG) in our sustainability reports. Since 2006, we have been part of the Carbon Disclosure Project (CDP), a non-profit institution that manages a system for transparency in the actions of companies in climate change, having received the grade B (Management Level) in 2018.

In addition, as of 2018, we have adopted the integrated reporting model in accordance with the principles of the International Integrated Reporting Council (IIRC), intensifying the integration of social, environmental and financial dimensions into our annual report.

In recognition, we have received the Abrasca 2018 (Brazilian Association of Publicly-Held Companies)

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Award for content quality and information clarity, the Transparency Trophy by ANEFAC (National Association of Finance, Administration and Accounting) and the Citizen Company Certificate by CRC-RJ (Regional Accounting Council of the State of Rio de Janeiro). As of 2018, we include the recommendations of the TCFD (Task Force on Climate Related Financial Disclosure), among the references to our management process and external reporting on carbon and climate.

We have opted for collaborative models for innovation and, in 2017, we have worked in partnership with more than 120 science, technology and innovation institutions in Brazil and worldwide.

We have been active in partnering with other companies in the sector, and we have been affiliated to IPIECA, the Global Oil and Gas Industry Association for Environmental and Social Issues, for 12 years, which has 40-year experience in promoting and exchanging good practices in sustainability in our industry.

We are also affiliates of IOGP, The International Association of Oil and Gas Producers, and we participate in the Brazilian Petroleum Institute, where we are deputy coordinators of the Commission on Climate Change.

In addition, in 2018 we have joined the Oil and Gas Climate Initiative (OGCI), which brings together 13 of the world's largest oil and gas companies, responsible for more than 30% of the world's oil and gas production.

OGCI member companies have committed to jointly invest at least US$ 1 billion over the next ten years to develop technologies and initiatives that contribute to the reduction of GHG emissions.

Petrobras will participate in this fund with resources

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that will add up to US$ 100 million over this period. In 2018, OGCI announced a commitment to reduce its aggregate methane emissions by 2025 with our support and contribution (see 2018 OGCI Report). In 2019, OGCI will continue to collaborate in activities and investments to reduce the carbon intensity of the oil and gas value chain.

OGCI MISSION AND FOCUS AREAS

OGCI's mission is to leverage collective forces to reduce the carbon footprint of energy, industry, and transportation value chains through engagements, policies, investments and the roll-out of innovation projects.

focus areas Reduce the energy value chain's carbon footprint Accelerate low-carbon solutions Promote a circular carbon model

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We also seek to cooperate outside our industry, with dialogue and search for solutions, working together with the Brazilian Forum on Climate Change (FBMC), World Economic Forum (WEF), Brazilian Business Council for Sustainable Development (CEBDS), National Industry Confederation (CNI), Ethos Institute, and other institutions.

Social and environmental investment IN FOREST PRESERVATION One directive of our Social Responsibility Policy provides for investments in social and environmental programs and projects, contributing to communities where we operate and, consequently, to the society at large.

The Social and Environmental Petrobras Program structures our social and environmental investment of a voluntary nature, aligned with the guidelines and international principles of social responsibility, such as the United Nations Global Compact, ISO 26000 and the United Nations Sustainable Development Goals (SDG).

The current portfolio of the Social and Environmental Petrobras Program consists of 100 projects, with an expected implementation of R$ 235 million by 2020.

Among the various lines of action that make up this Program, there is a specific one focused on "Forests and Climate", currently with 15 projects that work in productive reconversion, reforestation of degraded areas and conservation of forests and natural areas.

The projects are developed in strategic locations in relevant Brazilian biomes (Amazon, Caatinga, Cerrado, Mata Atlântica and Pampa) and total investment of R$ 36 million for the period 2018-2020. Together, these

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projects aim to recover an area of around 600 hectares by reforestation or productive reconversion actions.

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times the area of the city of São Paulo, thus contributing to maintain a relevant carbon stock.

According to information provided by the institutions supported, there are plans involving the preservation of more than 440 thousand hectares, equivalent to about 3 LOCATION MAP

Through these projects, Petrobras seeks to contribute to the conservation of carbon stocks and provides for the direct participation in the actions of the projects of more than 9,600 people and the involvement of about 110 partners, which increase the company's results.

Ten new projects were selected in December 2018, with an estimated investment of R$ 40 million until 2021 and not yet included in the estimates.

Scope of 15 projects in the current portfolio Scope of the ten new projects selected, beginning in 2019

Note: Petrobras does not consider the contributions of its social and environmental investment projects to meet the commitments and projections related to the actual performance of our processes and products, informed throughout this supplement.

Petrobras does not disclose data on emissions prevented in company's voluntary projects, as they have not been verified by validated methodology.

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BIBLIOGRAPHIC REFERENCES BEN, 2018: Balanço Energético Nacional 2018 (Brazilian Energy Balance 2018) / Empresa de Pesquisa Energética - EPE (Energy Research Office) / Ministry of Mines and Energy - MME; CAIT/WRI, 2017: CAIT Climate Data Explorer. 2017.

Washington, DC: World Resources Institute (WRI). Available at: http://cait.wri.org; GCCSI, 2019: Global CCS Institute: CCS Facilities Database. Web page> https://www.globalccsinstitute.com/ resources/ccs-database-public/, accessed in feb/2019; IEA, 2017: pg 11, “Energy Access Outlook 2017, From Poverty to Prosperity”. World Energy Outlook 2017 Special Report. Organization for Economic Co-operation and Development (OECD) / International Energy Agency (IEA), OECD/IEA, 2017; IEA, 2019: International Energy Agency, Meeting climate and energy goals/Carbon capture, utilization and storage. Organization for Economic Co-operation and Development (OECD) / International Energy Agency (IEA), OECD/IEA, 2019. Web page: https://www.iea.org/topics/ carbon-capture-and-storage/, accessed in Feb/2019; IPCC, 2013: pg 468, Carbon and Other Biogeochemical Cycles, Chapter 06, In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel

on Climate Change, AR5 WGI/IPCC 2013; IPCC, 2014: pages 10 e 11, IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), AR5/IPCC 2014; NOAA, 2019: November 2018 / Recent Global CO2, Trends in Atmospheric Carbon Dioxide / Global. Earth System Research Laboratory: Global Monitoring Division. U.S. Department of Commerce: National Oceanic & Atmospheric Administration (NOAA) Research, 2019.

Web page: https://www.esrl.noaa.gov/gmd/ccgg/trends/ global.html, accessed in Feb/2019; Sirene/MCTIC, 2018: SIRENE - Sistema de Registro Nacional de Emissões (System of National Emissions Record) / Ministry of Science, Technology, Innovation and Communications - MCTIC. Web page: http://sirene.mctic. gov.br,” accessed in Nov/2018; WEF, 2019: pages 5 a 8, “The Global Risks Report 2019, 14th Edition”: World Economic Forum (WEF), Geneva, 2019; World Bank, 2018: pg 2, FIGURE 0.1 Global Poverty Rate and Number of Poor, 1990–2015. “Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle”.

World Bank, Washington, DC, 2018;

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