Petrobras Biocombustível closes deal for the incorporation of Nova Fronteira by
São Martinho S.A

Rio de Janeiro, December 15, 2016 – Petróleo Brasileiro S.A. – Petrobras reports
that its wholly-owned subsidiary Petrobras Biocombustível S.A. (PBIO) closed, on
this date, with group São Martinho S.A. (“São Martinho”) an Agreement (Acordo de
Incorporação e Outras Avenças) under which Nova Fronteira Bioenergia S.A. (“Nova
Fronteira”), in which PBIO holds 49% participation, will be incorporated by São
Martinho.

Nova Fronteira is a joint venture, composed of PBIO and São Martinho, and its
main asset is Usina Boa Vista, dedicated exclusively to ethanol production,
located in Quirinópolis, in the state of Goiás.

São Martinho is one of the largest sugar and ethanol producers in Brazil. After
the transaction, São Martinho will have a 12.3% increase in total milling,
reaching 21.6 million tons of sugarcane and an approximate 18% growth in its
Adjusted EBITDA, compared to the last 12 months (as of 09/30/2016).

PBIO will receive 24 million new common shares issued by São Martinho,
representing 6.593% of its voting and total capital stock, in substitution and
in proportion to the shares that Petrobras holds in Nova Fronteira. Those shares
will not be subject to any kind of lock-up and PBIO may sell its interest in São
Martinho in the future through a structured process.

This transaction is part of the 2015-2016 Divestment Program and it will be
accounted for the divestment target in the amount of US$ 133 million, based on
the average volume-weighted price for the last 30 days of trading of São
Martinho shares in BM&FBovespa.

The closing of this transaction is subject to approval by the Shareholders’
Meeting of São Martinho and to compliance with the usual preceding conditions,
including the approval of the Administrative Council for Economic Defense
(Cade).

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

FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are subject to risks and uncertainties.
The forward-looking statements, which address the Company’s expected business
and financial performance, among other matters, contain words such as “believe,”
“expect,” “estimate,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,”
“will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. There is no
assurance that the expected events, trends or results will actually occur. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or future events or for any
other reason.

The Company’s actual results could differ materially from those expressed or
forecast in any forward-looking statements as a result of a variety of
assumptions and factors. These factors include, but are not limited to, the
following: (i) failure to comply with laws or regulations, including fraudulent
activity, corruption, and bribery; (ii) the outcome of ongoing corruption
investigations and any new facts or information that may arise in relation to
the “Lava Jato Operation”; (iii) the effectiveness of the Company’s risk
management policies and procedures, including operational risk; and (iv)
litigation, such as class actions or proceedings brought by governmental and
regulatory agencies.  A description of other factors can be found in the
Company’s Annual Report on Form 20-F for the year ended December 31, 2015, and
the Company’s other filings with the U.S. Securities and Exchange Commission.