Isabela Carneiro da Rocha - Executive Manager of Investor Relations Ivan de Souza Monteiro - Chief Financial and Investor Relations Officer Solange da Silva Guedes - Chief Exploration and Production Officer Jorge Celestino Ramos - Chief Refining and Natural Gas Officer Hugo Repsold - Chief Human Resources, Agency and Services Officer Nelson Luis Costa Silva - Chief Strategy, Organization and Management System Officer

Rodolfo Angele - JP Morgan Vicente Falanga - Bank of America Merrill Lynch Felipe Gouveia - Bradesco Christian Audi - Santander André Natal - Credit Suisse Liliana Yang - HSBC Luis Carvalho - UBS André Hachem - Itaú BBA

Good morning ladies and gentlemen. Welcome to Petrobras conference call with analysts and investors for the presentation concerning the First Quarter of 2017 results. We would like to inform you that participants will be listening to the conference only during the company's presentation, which will be conducted in Portuguese with simultaneous translation into English. Following the presentation, a Q&A session will begin in Portuguese and English, during which instructions on how to participate will be provided. If you need help during the call, please press star 0 to reach the operator. Today with us we have: Mr. Ivan de Souza Monteiro, Petrobras chief Financial and Investor Relations Officer; Mrs. Solange da Silva Guedes, Chief Exploration and Production Officer; Mr. Jorge Celestino Ramos, Chief Refining and Natural Gas Officer; Mr. Hugo Repsold Junior, Chief Human Resources, Agency and Services Officer; and Mr. Nelson Luis Costa Silva, Chief Strategy, Organization and Management System Officer; As well as other company executives. We would like to remind you that this meeting is being recorded and please be mindful of the Slide number 2, which contains a notice to shareholders and investors. The words believe, expect and similar ones related to projections and targets are mere forecasts based on the expectations of the executives regarding the future of Petrobras. To begin, we will hear Mrs. Isabela Carneiro da Rocha, Executive Manager of Investor Relations, who will start the presentation about the first quarter of 2017 results. Afterwards, questions from participants will be answered. Please, Mrs. Isabela Carneiro da Rocha, you may proceed.

Good afternoon everyone. I would like to thank you all for your presence and go into detail about the results of the first quarter of 17. The main highlights in the quarter on Slide number 3 are: the first one is the most important metrics, which is the safety metrics, when we reached a total recordable injury frequency rate of 1.24; a reduction of 26% on a year on year basis. Talking about the economic financial results, we have an ongoing improvement compared to last year the same period in which we have a BRL4.45 billion net income reversing the previous loss. Operating income BRL14.27 billion; 75% higher on a year on year basis and a highlight of the EBITDA increase of 19% reaching BRL25.25 billion, and this is a major highlight because this is the highest historically recorded ever. The EBITDA margin 37%, which is also the highest since the second quarter of 2011. Free cash flow BRL13.37 billion; positive for eight quarters in a row and represents six times the amount posted in the same period last year. The average of deleveraging with prepayment and amortizations of debt and the active liability management leads to a reduction of 5% in growth debt in reals and 3% in dollars. Comparing to December 2016 we had an increase in the average debt duration from 7.40 to 7.61 years and a reduction in our metrics, very important financial metric, which is the net debt EBITDA ratio, which went from 3.54 to 3.24, reducing our leverage to 54%. Going to the next slide, we can see the operating highlights and we would like to highlight our total production of 2.8 million KBPD per day; 7% higher than the previous year and considering only the production of oil in Brazil, we reached 2.182 million barrels per day; 10% higher than the first quarter of 16. There was a drop of 5% in the sale of oil products in Brazil, we sold about 1.9 million barrels per day of oil products. Petrobras consolidated its position as a strong net exporter due to the increase in exports 72%; a reduction also in imports by 40% and this higher export of oil had higher prices in the market, be it because of the higher Brent price, be it because of the appreciation of the domestic oil stream, which can be seen by the average discount of our basket of $3 per barrel for Brent and these factors helped offset the drop in sales in the domestic market. In terms of efficiency, our cost efficiency is also a major relevance this quarter and reduced 18% in our manageable operating cost and 27% in SG&A, and also, we highlight the reduction in our headcount by 17% during this period. So, these are the main financial highlights and operating highlights, and now we would like to talk about slide number six with more details, in which we talk about growth of production: 2.8 million barrels of oil equivalent per day even after the disposal of our company in Argentina that occurred last year, we saw an increase in this production, and a special highlight is the pre-salt that we expect with the profile of growth, as you can see on this chart, we had a record of 1.54 million barrels of oil per day in the pre-salt layer operated by Petrobras, which has been contributing to our experience in this layer and the learning process. Going to slide number seven, we see the new units that will come on stream this year: two units in Lula field P-66 that is already there at location waiting for the environmental agency to start production, and P-67 which is in the shipyard in China and the commissioning, finishing the commissioning and should start operations this year. We have the production of Libra to the Extended Well Test. In July, we should have the first oil coming from this unit and also our platform that is in Tartaruga Verde field that should start operations in the fourth quarter as well of this year. Now going to slide number eight, we have the integration of upstream with downstream and with the participation of domestic oil in the throughput 96% this quarter, 95%, and below you can see the production of the more noble oil products: gasoline, diesel and jet fuel around 70% of yield in this oil products. On the right, you see the production of oil products, 1.8 million barrels per day; a reduction of 8% vis a vis last year due to the reduction in the volume of sales, 1.9 million barrels per day in this quarter, and this reduction at the sales volume is due to 2 factors. The drop in demand and this factor was more important in the case of diesel and also the higher import by third parties and this was very important in the case of gasoline. Now going to slide number nine, we have the balance of liquids. Export of 609,000 barrels per day of oil and 170,000 barrels per day of oil products, 779,000 barrels per day of exports; a growing trend of exports and decrease in imports. We had a positive liquid balance of 489,000 barrels per day, basically import of oil that happened in the first quarter was only for the production of lubricants, there was no diesel imports and the import of gasoline was very small. On slide number 10, we talk about the supply and demand balance for natural gas and the highlights were the higher supply of gas and the new demand of thermoelectric 73 million cubic meter per day in demand, 52 were supplied by the production of Petrobras, were met by the production of Petrobras in Brazil, 19 million cubic meter imported from Bolivia and the minimum import of liquefied natural gas. So, this has been the profile of supply and demand with the increase in profitability of the business in this area, gas and energy. Now going to the indicators on slide number 12, we highlight the Brent and the exchange rate increases with the raise in Brent, $54 on average for the quarter and 3.15 exchange rate. Now going to our results on the next slide, we highlight our gross profit of BRL23.8 billion; quite higher to the previous one, and also in spite of the lower sales of oil product in Brazil, there were three important factors coming into play: The increase in production; increase in exports at better prices in the market; and lower expenses with the import of oil and natural gas. In terms of the operating income, reduction of operating expenses that we will be focusing afterwards BRL14.5 billion of operating income, a very important increase vis-à-vis last year, and the net financial result we had an impact of the exchange rate variation between the dollar and the euro, and our higher exposure is to the euro in our financial results. In terms of net income BRL4.45 billion in the quarter, much higher than last year, a reverse in the loss of last year in fact. And in terms of net income, I would like to highlight the BR net income our distribution company positive for the second consecutive quarter after a period of successive losses, and even with a small reduction of market share we had good results in our BR Distribuidora. On slide 14, we see that the growth of the EBITDA reached record historical level of BRL25.25 billion and this is due to lower expenses with the import of gas and oil and lower operating expenses, and the EBITDA margin was of the highest since the second quarter of 2009. Now going to Slide number 15, we have the free cash flow BRL13.4 billion; positive for the 8 quarter in a row, thanks to the increase in our operating generation and reduction in investments of the 34%. I would like to mention that the free cash flow was more than enough to cover interest expenses payments of BRL5.2 billion and we had something leftover for our deleverage. Now Slide number 16, we show manageable operating expenses with an important drop of 18% vis-à-vis last year and we would like to highlight that this level should persist in the next few quarters for -- will not persist for the following reasons: Reduction in our headcount by means of a voluntary separating incentive plan, represent a sustainable gain, and 65,220 employees at the end of this quarter, we would expect withdrawals up to the middle of this year. If we consider this reduction was 60,000 people between our own employees and service providers. Talking about selling expenses, this reduction that we saw came from the volumes sold and also from the effect of the exchange rate, and for the next two quarters we are signalizing that this should be repeated because of the payment of the tariff to NTS that has the South and Southeast area, and we sold to Brookfield. So, we have 10% stake in this company and as the close was on April 4, part of the second quarter will have this sell in expenses, this additional expense. Regarding G&A, there was a drop and benefiting from a parcel of reversion vis-à-vis a provision made by the collective bargaining agreement, so part of this drop has a nonrecurring parcel, that is to say a part that will not be repeated. I would like to mention the exploratory cause that were lower, because there have been no write-offs of dry holes or sub commercial wells, which is not natural. What is natural is to have some recognition of dry holes, so because of all these reasons, we expect a reduction of the manageable cost reflecting our efforts, but we do not expect this level to be as low as we had this quarter. On the next slide, we also had the contribution to this drop in operating costs the drop in lifting costs, from BRL32.8 per barrel in this quarter and here we have the amount in dollar and in reals, and net of the exchange rate effect there was a drop in dollars in the lifting costs, and the refining cost was impacted by the reduction of the throughput in refineries and the cost of refining is a cost in reais, most of it is in personnel and another collective bargaining agreement with an increase in wages and productivity gains linked to activities be it of operation. And now going to the next slide, we bring the reduction of our leverage and our liability management, and with the extension of duration without an increase in the average cost, as you can see on the lower part, and the continuous effort of reducing the debt by prepayment and amortization helps us in reducing our leverage, as you can see in terms of growth debt and net debt as well. On the next slide, we talk about the net debt/Ebitda ratio, 3.24 from 5.11. On the next slide, the debt amortization schedule for the next few years. We see still a concentration of debt in 2019, but the schedule has a level of amortization that is possible and it is in our plan. It is important to say that we have at our disposal all funding alternatives with decreasing costs even in spite of the loss of the investment grade. And on the last slide, we talk about the liquidity for this year. Our projection, maintained in the same level of Brent that we had in the first quarter, we expect an operating generation of BRL5 billion, BRL30 billion and earmarking BRL5 billion for judicial guarantees… and this cost is in dollars, interest and amortization US$17 billion, being 6 billion in the tender offer that we have already carried out in this first quarter. In terms of investments expected, we are projecting US$17 billion for the year, divestment of US$8 billion highlighting the fact that all these are divestments have already been signed and we are only waiting for the closing and the inflow of cash, so there is no risk in this part of divestment for this year. The level of borrowings of US$4 billion already carried out in the first quarter with a cash balance of US$19 billion; very comfortable for this year. I would like to thank you very much for your attention, and now we would like to start our Q&A session.

Now we will start the Q&A session. We would like to ask each participant to ask two questions maximum in a clear manner so that the executives may answer them. We would like to ask you not to use the speakerphone. Questions asked in English will be heard by all participants in the original language and answered by the executives in Portuguese with simultaneous translation into English. [Operator Instructions] Our first question comes from Rodolfo Angele, JPMorgan.

Hello. I have two questions, first I would like to ask the management now that the company will have a few days to choose to participate or not in the pre-salt auctions -- I don't think that you can tell us everything that you are going to do, but -- I think that we would like to hear how are you seeing these options, how do you differentiate between the two pre-salt auctions? What can we expect in terms of strategy for us to see your decisions to bid or not in the upcoming auctions? That's my first question. My second question -- and I want to contextualize it , we have seen investors very concerned about crude oil prices, and of course we see that you are sparing no efforts to control your expenses, so what else is there in the pipeline? Can we expect more coming up? Isabela explained some effects that we can expect for the first quarters, but in terms of costs what else can we expect? Particularly because we see the company facing now a lower crude oil price.

This is Ivan speaking Rodolfo, thank you for the question. I'm going to give the floor to Solange to answer your first question.

This is Solange. Good morning Rodolfo. As we said yesterday in our press conference, Petrobras is following opportunities up-close, opportunities offered by the Brazilian Petroleum Agency ANP in the first two sharing rounds and the concession rounds, the so-called 14th round, that will take place soon. Petrobras intends to rebuild its exploration portfolio, and in that sense, we are following these projects with a lot of attention. Our strategy will become clearer as the auctions come up.

Rodolfo, good morning. What we are seeing now, as you mentioned, are the first results of a project to reduce costs and to generate value through those four pillars of the plan: Revenue, Opex, Capex reduction, partnerships and divestments. We adopted the zero-base budget method because it was one way to reboot the company, not only because of the problems that we had, but because of the strong adjustments that we had to make given a lower Brent price, and we are just getting started in this journey. Our focus remains the same, both to reduce our accidents and also to improve our financial indicators. This effort will continue. zero-base budget continues to be the methodology used, particularly to reduce costs, not only do we look at reducing costs of each and every activity, but we are also discarding everything that does not contribute to the delivery of the plan to improve our indirect indices. These are the first steps in the journey. I am glad that the positive results are surfacing, but we are not going to relax our efforts. They will continue, efforts to do only the activities that will help us deliver our plan and to improve safety of our employees, and we will continue to make an effort to reduce costs, improve productivity through the renegotiation of contracts and techniques that will allow us to do everything that needs to be done at lower costs and less capital investments.

Our next question comes from Felipe Gouveia with Bradesco.

I would like to get an update in terms of drivers and the FPSO to reduce accidents because we saw that some accidents happened in recent months. I would like to know: Have these been solved? And could these accidents happen in other units that deal with extraction of oil, lifting of oil and CO²?

Felipe, I'm sorry to interrupt, but we could not understand your first question. The sound is muffled. Could you please repeat? Perhaps speak slowly and repeat the first question. And I am sorry to interrupt you.

Better now Ivan?

Yes, better. Thank you.

My first question is related to accidents in the risers of the FPSO at Lula. Some accidents were reported to be linked to corrosion, and I would like to understand if this has been solved and whether this can happen in other units that deal with high CO² concentration oils? My second question has to do with the cutting down of costs. Could you give us more granularity regarding the factors leading to such a strong cost cut that we saw in the first quarter? And since Nelson is here, perhaps he could give us more color on the 0-base budget (ZBB). And another question if I may, regarding Capex, Capex annualized will be US$12.5 billion, way below the guidance for 2017, so could you please explain the reason leading to that? And the reason I ask is that another concern of investors is how sustainable is this low Capex vis-à-vis the impacts on production later on in the future more long-term.

Thank you Felipe. The first and third questions Solange will answer and then the second question will be answered by Officer Nelson.

Good morning Felipe, this is Solange speaking. I will try to answer your first question because I understood I guess part of the question that you asked it. It seems that you were referring to some events related to the risers in the pre-salt. What I can share with you is: there were two events linked to a new phenomenon, which happened in a non-operating riser and happened in the end of 2016 with a riser that was not being used and now in January 2017 with another riser, both being used for gas injection. So, we are working very intensely with our manufacturers, with labs, with both Brazilian and international technicians. Apparently, this is a new event in the industry. In the first assessment we had, it is restricted only to a very particular situation, events that have very particular conditions that can happen in very specific situations of gas handling and handling of gas with high concentration of CO2. Again, these are localized events. We are overseeing some other risers that operate in the same operating conditions. But again, this is something that we are working on, it's part of our operational assessment. But it is nothing that in these two cases, this was not an accident. One of the risers, as I mentioned, was not being used, was not operational; there was no impact to the environment or to production. In your third question, I think you were referring to investments that we are investing less now compared to what was in the guidance. Our conclusion was that objectively speaking in the first quarter of 2017, fortunately, we had a reduction, and one quarter of that reduction is linked to the execution at lower cost. Actually, this is one of the pillars of our plan; to have efficient CapEx. There is a small amount about 20% related to delays in environmental licensing and the rest is linked to the delay or postponement of payments that have no relationship with production. So, our better assessment today is that in the short term in 2017 there will be no impact of this reduction in CapEx, and we have no justifications to change the estimates other than what was in the plan.

This is Nelson, Felipe. Giving more color in how we are operating, there was that first effort to have the scorecards, more than 7,000 scorecards and a lot of goals, sub goals so as to deliver our top metrics, reducing leverage and safety. But in addition to the 7,000 scorecards, I would like to remind you that every Petrobras employee is being managed with their own individual goals. We are very much focused on delivering our metrics and goals. How does this work? We have a leadership committee, and this committee and this committee meets weekly to see if we are deviating from our metrics the ones that I mentioned, and this committee works and acts whenever we find a deviation, and we have to find the root cause whenever possible we find a root cause. And then, at the level of the management, we have a directive committee with the participation of all the management officers, the members of the leadership committee and all the contribute first to understand the metrics, and ZBB. We are measuring performance always adjusted to the assumptions of the plan, so we remove exchange rate and other things that are out of our control so that we can have the right assessment, and then once every quarter we discuss this at the board level our quarterly results. So, as you can see, this is very thorough work with weekly control levels. Obviously, we have daily control at the operational level. So, this is very granular work involving from the board of directors every three months to the management once a month, the leadership committee and ZBB team weekly addition to the daily assessment that we do at the operational level. This is how we work.

This is perfect, thank you. One follow-up question about ZBB. Is there any expectation then zero base budget will be 100% implemented, or it is implemented?

Here we have the execution discipline, Felipe, the methodology is implemented, but over time we can refine it and this is the first quarter, as I said in the beginning, these are just the first steps of a very long journey and execution is the key of our success to deliver the plan. The cost reduction results of what we had in this quarter, unfortunately going a little beyond what we had expected in the plan, but it doesn't mean that we are not going to continue to do everything in our power to continue to capture cost reductions in the future.

We would like to ask the participants to ask their questions slowly. Question coming from Christian Audi with Santander.

Good morning and congratulations Ivan on the results. I have two questions. The first is related to deleverage and sale of assets. Do you continue to deleverage the company even without selling assets I guess, right? So, my question is, could this lead to an adjustment of your goals to sell assets or not given that you are able to deleverage the company even without selling assets more recently? And do you expect to resume sale of assets more towards the second half of the year? My second question is related to production CapEx. It became clear on Slide 21 that you lowered the CapEx to this level of 17 billion and I would like to understand the reasons behind that and the impact of that not on 2017 production, but if it is a continuous CapEx reduction perhaps the impacts will be felt in 2018 production. Could Solange enlighten me please about that?

Thank you Christian. No, there will be no changes. The last material fact about divestments, the company confirmed our goal of $21 billion, there was no change to that. And it's always important to mention the program in a context. It has a strategic context in our business and management plan. The company declared that it will prioritize investments in E&P and in the pre-salt, and in addition, the company in this material fact disclosure we mentioned some assets, Pasadena and some assets in Africa that the company will divest from. So, the fact that we had a better performance will not change the attitude of the company given our strategic decision or our go to deleverage. We have to reach the goal by December '18. If the company, as our CEO Pedro Parente mentioned, even if we reach that goal before hand, still we would be in an uncomfortable condition in terms of the goals to deleverage. So, we would definitely not stop this trajectory. This is the first landmark. Great, if we can bring thanks forward, great. But the company will not stop there because compared to the industry we still need to improve our metrics as you probably know. And as for your question about Capex, I will turn the floor to Officer Solange.

Good morning Christian, thank you for the question and your comments. In answering a question prior to yours, I was explaining the events that led us to change our projection from US$20 to US$17 billion investment in 2017. I stress and I repeat that there is part of that coming from optimization and part of that coming from postponements, and these delays and postponements are not necessarily linked to production, but to disbursements and payments that Petrobras planned to do along 2017. But these payments will not be paid in 2017, and this is one of the reasons that led to this reduction. Of those events, for example, related to environmental licensing processes that made us stop allocating resources in payments because the licensing process is not complete, with possible impact on production, we are mitigating these impacts. In that sense, I stress that we maintain our production curve estimate for 2017. We do not envision any significant impact in our goals announced in the horizon our business and management plan.

Christian, just to add to your question something I forgot before (this is Ivan speaking), regarding when we are going to have a return, the company has been working intensively since the decision by TCU (the Federal Auditing Court) we’ve been working. I don't know if you will remember, we decided to resume all projects and to apply our systematic approach to all of them. In the beginning, we have to identify the assets and we have to prepare assets, we had to identify the strategy together with the business area of the company in how to best present the strategy to the market. Then, we had to define the criteria, how to prepare the teasers and we are working intensively and expect that we can disclose information to the market in the first half of the year in terms of which assets will be part of our divestiture portfolio.

Okay, thank you very much.

Thank you Christian.

Our next question comes from André Natal, Credit Suisse. André Natal: Thank you very much for allowing these questions, and again I would like to join the others in congratulating you on very strong results. My first question is about the voluntary separation incentive program (PIDV). I'd like you to talk about the program because we started seeing people joining last year, but people are leaving the company little by little. You have provisioned most of the cost for this last year, and as I understood now there were some reversals of that. I understand that these are people who decided not to join of the program. So, I guess that the cost reduction coming from PIDV is coming little by little. So, could you please explain how many people left along the first quarter, how many people gave it up and how many people are expected to leave along the second quarter? How much of the intended cost reduction that you announced at the beginning of the program has materialized and to what extent this can materialize in the coming quarters? Because I understand that the first time that we would see a quarter with a complete benefit of this would be the third quarter. I don't know if I understood this right, but that's what I understood.

André, this is Ivan. I'll give the floor to Officer Hugo. Thank you for the congratulations. I'll give your questions to Officer Hugo. André Natal: My goal was to as only one question, but I guess I asked too many.

No problem. Our officer will answer your question.

André, thank you for the nice words. I will try to give you a general overview of the PIDV. The voluntary separation incentive program actually there were two programs: One that started in 2014 and it hasn't finished yet, in other words, there are still employees that will leave as a consequence of joining the PIDV in 2014; and there was a second one created in 2016. So, I’m going to give you the numbers for the 2014 PIDV and for the 2016 PIDV. And you are correct when you say that the deadline for PIDV would be May, but we are still going to take June and July to operationalize some employees leaving because there was a greater concentration more towards close to the deadline. So, to operationalize these terminations we should use of June and July for that, and then for the third quarter that's when we are going to see the global effect of that. So, the 2014 numbers were: We had a total of, actually we are at the position where we have 6871 people who have already left, and there are still 292 to leave the company, but 420 people gave it up and we had a total of about 7,600 people leaving under the 2014 PIDV. For the 2016, 7,659 people have left, 2,591 still have to leave the company, that's why it's so difficult to handle all of these terminations in these last few months, and that's why we should take until June/July to end everything. Of this program, 1,400 people, 1,415 to be exact gave it up. So, to give you global numbers, so far 14,500 people have left Petrobras through the PIDV, adding both programs there are still 2,883 people who are leaving the company soon and 1,835 gave it up, had joined and went back. We should have about 19,500 people altogether leaving. Again, there are some inaccuracies here because some people died, some people got sick and could not be terminated, so there are some differences, but the global number would be 19,500, 14,500 have left and the remaining of 2,800 will leave by the end of July. Now the objective effect of these people leaving on cost I cannot give you this effect now, but we can calculate and we can give it to you later. André Natal: Excellent, thank you very much.

André, your second question, what was your second question? André Natal: I believe my question will be to Mrs. Guedes, Solange Guedes. It has to do with exploratory expenses that were quite lower than the historical levels. So, it would be very useful if you could explain the reasons why this figure was so much lower. Is it because you decided to decelerate exploration for some time and should this number continue to be low in the next few quarters or was just a one-off situation? And related to this, I would like to understand what kind of consequences we could expect for the necessary rig fleet. Ms. Solange said about 30 as a minimum level necessary to carry out the plan, and this was based on a reality that was quite different from the one now, efficiency of drilling and etc. So, I would like to understand if with this new productivity data, a more recent data that you have, and together with that when you include these lower exploratory expenses, what would be the new minimum level of fleet necessary to carry out the plan?

Good morning André, thank you for the question. Well this was quite an unprecedented situation regarding exploration expenses in this quarter, but I believe that Isabela was able to explain in her presentation that it was a one-off situation, it was a non-recurrent event because during the first months of 2017 we have all the internal processes in order to write-off some wells, and this is the reason why we didn't have this effect on the balance sheet of 2016, and this is the only reason why they do not appear in this first quarter of 2017. We do not expect this to be repeated in the second and third and fourth quarters of this year, it might be an amount lower than 2016, but anyway, they will have to do with the write-off of those exploratory events. And you asked about our requirement for rigs, and you mentioned a level of rigs that would meet the requirements of Petrobras, this is your question, so you are correct in part when you make this association, but it's not because of the exploratory events because we are maintaining a decision that was made regarding a reduction of our exploratory activities and there has been no change whatsoever in this dynamic, and this was a one-off effect regarding the accounting write-off in the first quarter. When you talk about the increase in productivity, we are having increasing productivity in our operation of wells and this allows us to have a more and more effective fleet management and these lead us to postpone contracts that are ending now in 2017 and we evaluate with more attention and more carefully this return to the market because of this increase in productivity that is already happening and that has been contributing a lot to our results. André Natal: Thank you very much, Solange. And very quickly, I'd like to make a follow-up on the first question that I asked. We learned through the press about a measure that you took regarding offering employees an optional reduction in their day, workday with a rebate in the salaries. So, could you give us an update about this voluntary separation incentive plan and what kind of cost reduction could come from this?

André, this is a program, there is and enrollment deadline and we already have with our target audience of these people who are under administrative regime and that have the opportunity to reduce this to six hours. This is an optional reduction. We have already about 50% enrolled of our target audience and we still have one month for enrollment to be possible, and we believe that around 70% to 80% of these employees should enroll, and by that we will have a reduction of about BRL300 to BRL400 million per year with this reduction in the working hours per day. André Natal: Congratulations again. Thank you very much.

Thank you, André.

Next question Liliana Yang, HSBC.

Thank you for the opportunity. One first question, you have already financed, you have already signed a financing with the Chinese Bank one year ago, so what is the interest rate? Do you have certain oil prices and what is the date? And the second question is the following. In relation to the assets that are in your divestment plan, in the case of the gas pipeline, are you more interested in the northeast than in the southeast in terms of gas pipelines? And what about the interest on NPR in the past, what could be changed in order to make these assets more interesting and with the potential of a better competition? And BR Distribuidora margins are better, but they are still lower than their peers’, and in your diagnoses, is there room for improvement in efficiency and do you have a plan for BR underway right now of operational efficiency?

Could you repeat the first question, please? Because it was not understood by the company.

Financing of $10 billion with the Chinese bank, have you already signed it? What is the implicit cost of this credit facility? And in terms of the oil supply commitment, what is the definition of price for this commitment of supply oil?

I will answer your first question and Mr. Jorge Ramos will talk about distribution [Indiscernible] of which we have already dispersed 5. Our commitment is to export oil, Petrobras exporting oil and this commitment is already underway. I don't know whether you are following this because the volume of exports grew substantially and it started in the fourth quarter and it was even stronger in the first quarter of '17. So, we are fully complying with our agreement. And regarding the second part, that you say is $5 billion, we will start the process to discuss with the Chinese Development Bank regarding the second part it’s another alternative of funding, such as others that Petrobras has on the table right now. Afterwards, I would like to repeat your question afterwards. Could you please repeat your questions afterwards?

Good morning Liliana. Regarding the BR margins, we have already improved the BR margins and we have been making comparisons with our peers, and we are implementing some program for margin improvement. This program includes three actions: one action regarding the cost of goods sold cogs; the balance of the product mix to meet our clients’ needs; and another one that has to do with capturing margin vis-à-vis our clients’ sale distribution and in which way we implement and we improve the overall margins of this segment. This is a program with quite a lot of actions in this direction, and also another program for the reduction of operating costs with reduction of cost of our operations and transportation and also with the voluntary separation incentive plan, and this has been reflected on our EBITDA margins and in spite of a lower market in 2017 walking sideways so to say we will be able to tap into better margins in distribution.

Could you repeat your second question, please, about the gas pipelines?

In case of NTS, I would like to understand what prevented prospective buyers? Was it something in the contract or was it because of the amount involved? Because, now you have more people interested in your Northeast gas pipelines.

The NTS process was a competitive one, if I'm not mistaken we teasers to over 50 companies and ultimately we had the engagement with Brookfield exclusive one and with disbursement on April 4 for Petrobras, and when a decision is made about the next assets in our divestment program, this will be very useful in terms of the learning curve because this asset belonged to Petrobras alone in Brazil practicably, and there is a law, specific law in which Petrobras would not be able to make new investments if Petrobras did not dispose of this asset. This is very recent law in Brazil, so the whole array of norms and regulations regarding these assets in Brazil is very different from what we see in Canada, in the U.S. and in Europe, and the objective is to continue to develop the market, accelerate the development of the market and it tells this movement, well, you know very well that the pre-salt is a very big gas component and there will be a very big volume of gas in Brazil and we will need infrastructure in order to transport that, and we will have to encourage consumers by means of the local distributors for the participation of gas in the Brazilian energy matrix. This is a natural trend and by itself when the time comes, it should lead to a higher interest in the NTN asset.

Thank you very much. And what about the US$5 billion?

Well, we do not disclose that, Petrobras only carries out operations in which we will have a cost below or similar to your cost in the long-term secondary market.

Thank you.

Our next question from Luis Carvalho, UBS.

Good morning everyone. I have a couple of questions. Three. First is geared to Celestino: Looking at the press conference presentation yesterday, I saw that you updated the chart on the refining cost, it was showing a drop yesterday, but you kind of fixed it. So, my question is: uooking at your utilization rate close to 77%, refining cost tends to show an upward trend if you continue to look at the utilization sector, so Celestino, I want to understand, given the pricing policy, utilization policy, what would be the minimum utilization rate given your fixed costs in your refining facilities? My second question goes to Ivan: Ivan, we know that the discussion of transfer of rights is close to being resolved; at least in the perspective of the Minister of Planning and Mines, and the Gaffney & Cline Associates and DeGolyer report is almost ready, so we discussed Petrobras option to produce the first 5 billion barrels. So, I would like to understand how is this going to influence the negotiation? What do you see about this right? How could you monetize this and how is this being handled with the committee of minority shareholders? And if I may one last question to Ivan, as you said it yourself, regarding the profile of the debt in this agreement with the Chinese bank, now it seems that the company is taking on a more exporting approach, so I would like to know about your discussion with the CVM about hedge accounting, and if you could give us a timing perspective that would be interesting too. Thank you.

Thank you Luis. I would like to ask Isabela to correct what you stated about the chart. Isabela?

Hello Luis, this is Isabela. I just want to clarify: we did not fix the numbers compared to the figures that we presented yesterday; the figures are exactly the same. However, we added the perspective in dollars and reais, so the refining cost in reais is exactly the same as yesterday, but we now added information in dollars, and Jorge Celestino will make a comment on that.

Okay Luis, good morning. Regarding the operation of our refining park and what is the minimum utilization sector, what you have to understand is our model to operate our park always runs trying to get the maximum profitability for the park possible, so obviously we will look at the market share, we look at utilization factor for our refineries, we look at the margins, we look at the spreads, Brent, crude oil and based on the set of variables we decide what is the refining capacity that we are going to use, what volumes we are going to import, what volumes we are going to export and what will be the trade options that we will have. So, the number that we are operating the park with is quite comfortable in terms of profitability considering this set of assumptions that we mentioned to you, so we can get good profitability, good margins given the market conditions at this point. If the market conditions change, in other words, if margins and spreads change, it is possible that I will need to use another utilization factor for the refineries. So, I’m going to give you an example: if spreads start to drop and the Brent/ gasoline difference would be $2 to $3 per barrel then that would be a different, that would have a different impact on refining costs and on margins. So, the setup of the refining park has to look and take into account this set of assumptions so that we can decide what the best option is.

Luis, as for the transfer of right, the one leading this discussion at Petrobras internally is Officer Solange, so she will answer your question.

Good morning Luis Carvalho, you asked about our right in the contract signed for the transfer of rights.

Actually Solange, my question is regarding your option to produce the first 5 billion barrels. This is in the initial contract and this option to produce the first 5 billion barrels and perhaps leave the rest for 30 years, this option has a value and I would like to understand how do you see this option, how do you see the possibility to monetize this and are you discussing this with the committee of minority shareholders?

Oh, thank you for clarifying, this has been great so that I can answer exactly what you expect from us. Petrobras has the right in five areas to produce up to 5 billion barrels of oil equivalent, this is in the contract, you know it well, you just mentioned it. Possible surplus, anything above the 5 billion barrels this will not be produced unless we come to an agreement. So, what we are assessing today, what could be beneficial both for the company and for the government is that, somehow, we can find alternatives and possibilities that can help us monetize possible surplus, any production beyond this volume of 5 billion. But this is what we call eventual discussions as the way of getting a reimbursement. The committee of minority shareholders exists in the company for discussions of the related parties, which is the case, and this committee will follow these discussions up-close. And as you probably know, these discussions have not happened yet and ANP has not decided yet regarding the findings of a consulting company that they hired to support the positions of the government regarding the updating of the amounts paid at the time. As soon as the report from ANP is sent to the federal government, that's when the formal discussions will begin, and that's when Petrobras and the committee of minority shareholders will be involved.

Luis, regarding hedge accounting, the company has submitted this defense at the collegiate of CVM. I'd like to remind you that the technical area of CVM had given the company an authorization to publish the balance sheet based on the methodologies that we've been using, which we believe is correct. We submitted our defense, the collegiate has not a deadline to manifested their opinion and we are waiting, and we remain available to CVM to answer any question that they might have.

Our next question comes from Vicente Falanga with Bank of America Merrill Lynch.

Hello, hello everyone. Could you please remind me what is the average dollar rate in the average petroleum crude oil price that you are using for you 2017 projections?

Thank you. Isabela will answer.

Vicente, we are using Brent at the same level of the first quarter, about US$54 per barrel, and the exchange rate of about 3.2.

Our next question comes from André Hachem with Itaú BBA. André Hachem: Hello everyone. In terms of liability management, you've been doing excellent work to manage this debt. What would be a good amortization schedule looking forward, and which would be a comfortable payment schedule?

André, your question is very good because, as I mentioned yesterday in the press conference, this is the first time since this management took over that we have a number of alternatives and all of them available at the same time. It includes the Brazilian capital market, foreign capital market, bilateral banks, Brazilian commercial banks, bilateral agreements with global banks, agency to foster experts and development agencies of many countries. It's all available and Petrobras looks at this in two ways: first, to reduce the cost of debt, the cost of funding; and then redistributing the payment of the debt. And I think that this has this links with the Ebitda of the company, the Capex of the company and the free cash flow of the company. What we did in this period there was a mismatch between what the company in the past projected in terms of its production oil curve, oil production curve, and the profile of maturities based on that projection. You might remember that at the very beginning we made an important change in the projection of our oil production, in 2016 we delivered exactly what we had projected to the market, and that links to the profile of the debt, which in our view was too concentrated and mismatched comparing to the new production curve profile. So, you should continue to see, we’ve made important operations for liability management, active liability management and this will continue. The upside is that we now have more alternatives for these transactions in these fields and we have a clear willingness and a change in our relationship with commercial banks, all of them, not only domestic, but foreign as well for future maturities, and they are coming, they are approaching the company to discuss possible changes, possible prepayments, possible rescheduling to match the new production curve and to match the new free cash flow of the company, which for us is extremely positive. André Hachem: Perfect. Thank you very much, and congratulations on the results.

Thank you, André.

Thank you very much. We are now closing the Q&A session. I now turn the floor back to Mr. Ivan de Souza Monteiro, who will make his final remarks. Mr. Monteiro, please, go ahead.

Thank you very much. I would like to thank you all for participating in this event and I put our IR department available to answer any further questions you might have. I wish you a great day.

Thank you. Ladies and gentlemen, the audio of this conference call for replay and slide presentation will be available at the Petrobras IR website at www.petrobras.com.br/ir. This concludes today's conference call. Thank you very much for your participation. Please, hang up your telephones now and have a great day.