Petrobras, in compliance with the provision set forth in CVM Instruction No. 358/02, announces that its Board of Directors approved the proposal to merge Refinaria Abreu e Lima S.A. - RNEST, which is a wholly-owned subsidiary of Petrobras. The merger will be submitted for analysis and discussion of shareholders during a Special Meeting to be convened at the appropriate time.

RNEST was formed, among other purposes, to facilitate possible partnerships with investors interested in refining activities in Brazil. Negotiations with interested parties, within the premises established by Petrobras, were unsuccessful.

The merger of Refinaria Abreu e Lima S.A. into Petrobras is aimed at improving the execution of construction work currently in progress and at facilitating the coordination of refining activities and distribution of oil products produced by Petrobras' refining portfolio.

Since the merger involves a wholly-owned subsidiary, there will be no capital increase at Petrobras or new stock issue. RNEST shares will be extinguished.

Tags: Petrobras