UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

 

For the month of November, 2022

 

Commission File Number 1-15106

 

 

PETRÓLEO BRASILEIRO S.A. – PETROBRAS

(Exact name of registrant as specified in its charter)

 

Brazilian Petroleum Corporation – PETROBRAS

(Translation of Registrant's name into English)

 

Avenida Henrique Valadares, 28 – 19th floor 
20231-030 – Rio de Janeiro, RJ
Federative Republic of Brazil

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _______ No___X____

 

 

 
 

 

 

Unaudited Condensed

Consolidated Interim

Financial Statements

 

PETRÓLEO BRASILEIRO S.A. - PETROBRAS

 

As of September 30, 2022, with the report of independent registered public accounting firm

 

 

 

 

 
 

INDEX

Petróleo Brasileiro S.A. – Petrobras

 

 

 

     
Unaudited Consolidated Statements of Financial Position 3
Unaudited Consolidated Statements of Income 4
Unaudited Consolidated Statements of Comprehensive Income 5
Unaudited Consolidated Statements of Cash Flows 6
Unaudited Consolidated Statements of Changes In Shareholders’ Equity 7
1 Basis of preparation 8
2 Summary of significant accounting policies 8
3 Cash and cash equivalents and Marketable securities 8
4 Sales revenues 9
5 Costs and expenses by nature 10
6 Other income and expenses 11
7 Net finance income (expense) 11
8 Net income by operating segment 12
9 Trade and other receivables 16
10 Inventories 17
11 Taxes 18
12 Employee benefits 20
13 Provisions for legal proceedings, judicial deposits and contingent liabilities 25
14 Provision for decommissioning costs 29
15 Property, plant and equipment 30
16 Intangible assets 32
17 Impairment 34
18 Exploration and evaluation of oil and gas reserves 35
19 Collateral for crude oil exploration concession agreements 36
20 Investments 36
21 Assets by operating segment 36
22 Disposal of assets and other changes in organizational structure 37
23 Finance debt 41
24 Lease liabilities 44
25 Equity 45
26 Fair value of financial assets and liabilities 47
27 Risk management 47
28 Related-party transactions 52
29 Supplemental information on statement of cash flows 54
30 Subsequent events 54
Report of Independent Registered Public Accounting Firm 56

 

 

2  

Unaudited Consolidated Statements of Financial Position

PETROBRAS

As of September 30, 2022 and December 31, 2021 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Assets Note 09.30.2022 12.31.2021   Liabilities Note 09.30.2022 12.31.2021
Current assets         Current liabilities      
Cash and cash equivalents 3.1 4,374 10,467   Trade payables   5,209 5,483
Marketable securities 3.2 2,411 650   Finance debt 23.1 3,306 3,641
Trade and other receivables 9.1 4,074 6,368   Lease liability 24 5,337 5,432
Inventories 10 9,770 7,255   Income taxes payable 11.1 1,585 733
Recoverable income taxes 11.1 178 163   Other taxes payable 11.2 2,866 4,001
Other recoverable taxes 11.2 1,258 1,183   Employee benefits 12 2,205 2,144
Others   2,099 1,573   Others   2,953 1,875
    24,164 27,659       23,461 23,309
          Liabilities related to assets classified as held for sale 22 1,658 867
Assets classified as held for sale 22 5,305 2,490       25,119 24,176
    29,469 30,149          
          Non-current liabilities      
Non-current assets         Finance debt 23.1 27,549 32,059
Long-term receivables         Lease liability 24 18,076 17,611
Trade and other receivables 9.1 1,945 1,900   Income taxes payable 11.1 297 300
Marketable securities 3.2 49 44   Deferred income taxes 11.1 6,561 1,229
Judicial deposits 13.2 10,046 8,038   Employee benefits 12 8,741 9,374
Deferred income taxes 11.1 494 604   Provisions for legal proceedings 13.1 2,519 2,018
Other recoverable taxes 11.2 3,675 3,261   Provision for decommissioning costs 14 14,890 15,619
Others   940 487   Others   2,315 2,150
    17,149 14,334       80,948 80,360
          Total liabilities   106,067 104,536
                 
                 
          Equity      
          Share capital (net of share issuance costs) 25.1 107,101 107,101
Investments 20 1,672 1,510   Capital reserve and capital transactions   1,144 1,143
Property, plant and equipment 15 124,120 125,330   Profit reserves   67,562 72,811
Intangible assets 16 2,852 3,025   Accumulated other comprehensive (deficit)   (106,909) (111,648)
    145,793 144,199   Attributable to the shareholders of Petrobras   68,898 69,407
          Non-controlling interests   297 405
              69,195 69,812
                 
Total assets   175,262 174,348   Total liabilities and equity   175,262 174,348
The notes form an integral part of these unaudited consolidated interim financial statements.
3  

Unaudited Consolidated Statements of Income

PETROBRAS

Three and nine-month periods ended September 30, 2022 and 2021 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

  Note Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
           
Sales revenues 4 94,303 59,935 32,411 23,255
Cost of sales 5.1 (43,894) (29,712) (15,875) (11,863)
Gross profit   50,409 30,223 16,536 11,392
           
Income (expenses)          
Selling expenses 5.2 (3,638) (3,137) (1,213) (1,103)
General and administrative expenses 5.3 (956) (870) (334) (337)
Exploration costs 18 (230) (538) (107) (133)
Research and development expenses   (613) (415) (187) (151)
Other taxes   (245) (369) (93) (217)
Impairment of assets 17 (422) 2,918 (255) 3,098
Other income and expenses 6 1,690 (550) (177) (157)
    (4,414) (2,961) (2,366) 1,000
           
Income before net finance expense, results of equity-accounted investments and income taxes   45,995 27,262 14,170 12,392
           
Finance income   1,396 555 515 227
Finance expenses   (2,506) (4,270) (790) (1,191)
Foreign exchange gains (losses) and inflation indexation charges   (3,016) (4,767) (1,249) (3,898)
Net finance expense 7 (4,126) (8,482) (1,524) (4,862)
           
Results of equity-accounted investments 20 373 1,500 32 291
           
Net income before income taxes   42,242 20,280 12,678 7,821
           
Income taxes 11.1 (13,763) (5,970) (3,888) (1,867)
           
Net income for the period   28,479 14,310 8,790 5,954
Net income attributable to shareholders of Petrobras   28,378 14,239 8,763 5,938
Net income attributable to non-controlling interests   101 71 27 16
Basic and diluted earnings per common and preferred share - in U.S. dollars 25.3 2.18 1.09 0.67 0.46
           
The notes form an integral part of these unaudited consolidated interim financial statements.
4  

Unaudited Consolidated Statements of Comprehensive Income

PETROBRAS

Three and nine-month periods ended September 30, 2022 and 2021 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Net income for the period 28,479 14,310 8,790 5,954
         
Items that will not be reclassified to the statement of income:        
         
Actuarial losses on post-employment defined benefit plans        
Recognized in equity 2,862 1,143
Deferred income tax (585)
  2,277 1,143
         
Items that may be reclassified subsequently to the statement of income:        
         
Unrealized gains (losses) on cash flow hedge - highly probable future exports        
Recognized in equity 3,067 (2,456) (2,006) (4,907)
Reclassified to the statement of income 3,597 3,339 1,109 1,032
Deferred income tax (2,266) (299) 305 1,318
  4,398 584 (592) (2,557)
         
Translation adjustments (*)        
Recognized in equity 234 (835) (380) (1,704)
Reclassified to the statement of income 41 7
  234 (794) (380) (1,697)
         
Share of other comprehensive income in equity-accounted investments        
Recognized in equity 120 32 (25) (109)
         
Other comprehensive income (loss) 4,752 2,099 (997) (3,220)
         
Total comprehensive income 33,231 16,409 7,793 2,734
Comprehensive income attributable to shareholders of Petrobras 33,117 16,406 7,776 2,755
Comprehensive income (loss) attributable to non-controlling interests 114 3 17 (21)
(*) It includes cumulative translation adjustments in associates and joint ventures.
The notes form an integral part of these unaudited consolidated interim financial statements.        

 

 

5  

Unaudited Consolidated Statements of Cash Flows

PETROBRAS

Nine-month periods ended September 30, 2022 and 2021 (Expressed in millions of US Dollars, unless otherwise indicated)

 
  Note Jan-Sep/2022 Jan-Sep/2021
Cash flows from operating activities      
Net income for the period   28,479 14,310
Adjustments for:      
Pension and medical benefits (actuarial expense) 12 939 1,806
Results of equity-accounted investments 20.2 (373) (1,500)
Depreciation, depletion and amortization 8 9,897 8,786
Impairment of assets (reversals) 17 422 (2,918)
Inventory write-down (write-back) to net realizable value 10 7 (3)
Allowance (reversals) for credit loss on trade and other receivables   42 (14)
Exploratory expenditure write-offs 18 128 214
Results on disposal/write-offs of assets, remeasurement of investment retained with loss of control and reclassification of CTA   (1,138) (182)
Foreign exchange, indexation and finance charges     4,735 8,232
Deferred income taxes, net 11.1 2,239 3,998
Revision and unwinding of discount on the provision for decommissioning costs 14 424 587
PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation   (1) (983)
Results from co-participation agreements in bid areas 16 (2,862) (667)
Assumption of interest in concessions   (98)
Early termination and cash outflows revision of lease agreements   (558) (348)
(Gains) losses with legal, administrative and arbitration proceedings 6 821 545
Decrease (Increase) in assets      
Trade and other receivables   729 (1,487)
Inventories   (2,595) (2,164)
Judicial deposits   (1,312) (835)
Other assets   (756) (125)
Increase (Decrease) in liabilities      
Trade payables   (341) 850
Other taxes   9,129 4,451
Pension and medical benefits   (1,869) (2,055)
Provisions for legal proceedings   (254) (355)
Short-term benefits   (63) (139)
Provision for decommissioning costs   (442) (526)
Other liabilities   243 161
Income taxes paid   (8,801) (946)
Net cash provided by operating activities   36,869 28,595
Cash flows from investing activities      
Acquisition of PP&E and intangible assets   (6,020) (4,640)
Investments in investees   (20) (15)
Proceeds from disposal of assets - Divestment   3,915 2,906
Financial compensation from co-participation agreements 16 5,334 2,938
Divestment (Investment) in marketable securities   (1,615) 117
Dividends received   319 294
Net cash provided by investing activities   1,913 1,600
Cash flows from financing activities      
Changes in non-controlling interest   43 (11)
Proceeds from financing 23.3 2,530 1,754
Repayment of principal - finance debt 23.3 (7,796) (20,490)
Repayment of interest - finance debt 23.3 (1,438) (1,870)
Repayment of lease liability 24 (4,006) (4,381)
Dividends paid to Shareholders of Petrobras   (33,671) (5,828)
Dividends paid to non-controlling interests   (68) (75)
Net cash used in financing activities   (44,406) (30,901)
Effect of exchange rate changes on cash and cash equivalents   (482) (94)
Net change in cash and cash equivalents   (6,106) (800)
Cash and cash equivalents at the beginning of the period   10,480 11,725
       
Cash and cash equivalents at the end of the period   4,374 10,925
The notes form an integral part of these unaudited consolidated interim financial statements.
 

 

6  

Unaudited Consolidated Statements of Changes In Shareholders’ Equity

PETROBRAS

Nine-month periods ended September 30, 2022 and 2021 (Expressed in millions of US Dollars, unless otherwise indicated)

 
  Share capital (net of share issuance costs)   Accumulated other comprehensive income (deficit) and deemed cost Profit Reserves        
  Share Capital Share issuance costs Capital reserve, Capital Transactions and Treasury shares Cumulative translation adjustments Cash flow hedge - highly probable future exports Actuarial gains (losses) on defined benefit pension plans  Other comprehensive income (loss) and deemed cost Legal Statutory Tax incentives Profit retention Additional dividends proposed Retained earnings (losses) Equity attributable to shareholders of Petrobras Non-controlling interests Total consolidated equity
Balance at December 31, 2020 107,380 (279) 1,064 (73,936) (24,590) (15,034) (1,174) 8,813 2,900 1,102 51,974 1,128 59,348 528 59,876
    107,101 1,064       (114,734)         65,917 59,348 528 59,876
Capital increase with reserves 2 2
Capital transactions (691) (691) 753 62
Net income 14,239 14,239 71 14,310
Other comprehensive income (loss) (726) 584 2,277 32 2,167 (68) 2,099
Appropriations:                                
Dividends (1,128) (6,086) (7,214) (69) (7,283)
Balance at September 30, 2021 107,380 (279) 373 (74,662) (24,006) (12,757) (1,142) 8,813 2,900 1,102 51,974 8,153 67,849 1,217 69,066
    107,101 373       (112,567)         64,789 8,153 67,849 1,217 69,066
                                 
Balance at December 31, 2021 107,380 (279) 1,143 (75,122) (24,169) (11,205) (1,152) 9,769 3,084 1,220 52,050 6,688 69,407 405 69,812
    107,101 1,143       (111,648)         72,811 69,407 405 69,812
Capital transactions 1 1 (166) (165)
Net income 28,378 28,378 101 28,479
Other comprehensive income 221 4,398 120 4,739 13 4,752
Appropriations:                                
Dividends (8,564) (6,688) (18,375) (33,627) (56) (33,683)
Balance at September 30, 2022 107,380 (279) 1,144 (74,901) (19,771) (11,205) (1,032) 9,769 3,084 1,220 43,486 10,003 68,898 297 69,195
    107,101 1,144       (106,909)         57,559 10,003 68,898 297 69,195
                                 
The notes form an integral part of these unaudited consolidated interim financial statements.
7  
Table of Contents 
 

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
1. Basis of preparation
1.1. Statement of compliance and authorization of unaudited condensed consolidated interim financial statements

These unaudited condensed consolidated interim financial statements of Petróleo Brasileiro S.A. (“Petrobras” or “Company”) have been prepared and presented in accordance with IAS 34 – “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB). They present the significant changes in the period, avoiding repetition of certain notes to the annual consolidated financial statements previously reported. Hence, they should be read together with the Company’s audited annual consolidated financial statements for the year ended December 31, 2021, which include the full set of notes (2021 Financial Statements).

These unaudited condensed consolidated interim financial statements were approved and authorized for issue by the Company’s Board of Directors in a meeting held on November 3, 2022.

2. Summary of significant accounting policies

The accounting policies and methods of computation followed in these unaudited condensed consolidated interim financial statements are the same as those followed in the preparation of the annual financial statements of the Company for the year ended December 31, 2021.

The IFRS standards that became effective on January 1, 2022 resulted in no material effects on these unaudited condensed consolidated interim financial statements.

Regarding the Interest Rate Benchmark Reform (IBOR Reform), in order to prepare for the transition to alternative reference rates, the Company continues to monitor the pronouncements of regulatory authorities, aimed at adapting its financial instruments to the new benchmark. The Company has debts indexed to Libor (London Interbank Offered Rate), corresponding to 33.5% of total finance debt.

3. Cash and cash equivalents and Marketable securities
3.1. Cash and cash equivalents

They include cash, available bank deposits and short-term financial investments with high liquidity, which meet the definition of cash equivalents.

  09.30.2022 12.31.2021
Cash at bank and in hand 159 299
Short-term financial investments    
- In Brazil    
Brazilian interbank deposit rate investment funds and other short-term deposits 671 1,951
Other investment funds 207 163
  878 2,114
- Abroad    
Time deposits 1,638 4,310
Automatic investing accounts and interest checking accounts 1,671 3,732
Other financial investments 28 12
  3,337 8,054
Total short-term financial investments 4,215 10,168
Total cash and cash equivalents 4,374 10,467

 

 

Short-term financial investments in Brazil primarily consist of investments in funds holding Brazilian Federal Government Bonds that can be redeemed immediately, as well as reverse repurchase agreements that mature within three months as of the date of their acquisition. Short-term financial investments abroad comprise time deposits that mature in three months or less from the date of their acquisition, highly-liquid automatic investment accounts, interest checking accounts and other short-term fixed income instruments.

8  
Table of Contents 
 

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
3.2. Marketable securities
  09.30.2022 12.31.2021
Fair value through profit or loss 655 650
Amortized cost 1,805 44
Total 2,460 694
Current 2,411 650
Non-current 49 44

 

 

Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal Government Bonds. These financial investments have maturities of more than three months and are generally classified as current assets due to their maturity or the expectation of their realization in the short term. Securities classified as amortized cost refer to investments abroad in time deposits with maturities exceeding three months from the contracting date and investments in floating-rate Bank Deposit Certificates with daily liquidity, with maturity of one year.

4. Sales revenues
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Diesel 29,849 17,480 11,685 6,833
Gasoline 12,143 8,148 4,109 3,383
Liquefied petroleum gas 3,978 3,327 1,355 1,291
Jet fuel 3,925 1,456 1,534 629
Naphtha 1,964 1,219 629 526
Fuel oil (including bunker fuel) 1,099 1,268 381 545
Other oil products 4,373 3,080 1,484 1,197
Subtotal oil products 57,331 35,978 21,177 14,404
Natural gas 5,691 4,086 2,007 1,716
Oil 6,418 80 1,975 26
Renewables and nitrogen products 230 34 69 12
Breakage 462 200 188 39
Electricity 543 2,172 141 1,038
Services, agency and others 799 568 254 238
Domestic market 71,474 43,118 25,811 17,473
Exports 20,620 16,103 5,696 5,607
Oil 14,042 11,642 3,638 4,130
Fuel oil (including bunker fuel) 5,904 3,624 1,743 1,169
Other oil products 674 837 315 308
Sales abroad (*) 2,209 714 904 175
Foreign market 22,829 16,817 6,600 5,782
Sales revenues 94,303 59,935 32,411 23,255
(*) Sales revenues from operations outside of Brazil, including trading and excluding exports.

 

 

In the the nine-month period ended September 30, 2022, sales to two clients of the refining, transportation and marketing segment represented individually 15% and 11% of the Company’s sales revenues. In the same period of 2021, one client of the same segment represented 15% of the Company’s sales revenues.

5. Costs and expenses by nature
5.1. Cost of sales
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Raw material, products for resale, materials and third-party services (*) (22,868) (13,505) (9,099) (5,895)
Depreciation, depletion and amortization (7,993) (6,770) (2,649) (2,366)
Production taxes (11,794) (7,962) (3,701) (2,978)
Employee compensation (1,239) (1,475) (426) (624)
Total (43,894) (29,712) (15,875) (11,863)
(*) It Includes short-term leases and inventory turnover.

 

 

9  
Table of Contents 
 

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
5.2. Selling expenses
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Materials, third-party services, freight, rent and other related costs (2,921) (2,633) (973) (924)
Depreciation, depletion and amortization (611) (448) (194) (159)
Allowance for expected credit losses (34) 13 (20) 7
Employee compensation (72) (69) (26) (27)
Total (3,638) (3,137) (1,213) (1,103)

 

 

5.3. General and administrative expenses
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Employee compensation (637) (637) (223) (261)
Materials, third-party services, rent and other related costs (246) (168) (85) (56)
Depreciation, depletion and amortization (73) (65) (26) (20)
Total (956) (870) (334) (337)

 

 

6. Other income and expenses
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Unscheduled stoppages and pre-operating expenses (1,344) (993) (455) (342)
Gains (losses) with legal, administrative and arbitration proceedings (821) (545) (264) (270)
Pension and medical benefits - retirees (*) (795) (1,255) (304) (816)
Performance award program (400) (347) (153) (152)
Losses with commodities derivatives (135) (56) 87 (14)
Operating expenses with thermoelectric power plants (108) (63) (37) (16)
Profit sharing (103) (93) (38) (35)
Transfer of rights on concession agreements - 298 - 288
Results from co-participation agreements in bid areas (**) 2,862 667 (10) 667
Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control 1,138 222 292 118
Early termination and changes to cash flow estimates of leases 558 347 157 121
Reimbursements from E&P partnership operations 448 425 294 134
Government grants 330 30 124 26
Fines imposed on suppliers 175 124 59 47
Recovery of taxes (***) 53 543 12 37
Amounts recovered from Lava Jato investigation (****) 34 222 22 26
Others (202) (76) 37 24
Total 1,690 (550) (177) (157)
(*) In 2022, it includes US$ 67 referring to the payment of a contribution as provided for in the Pre-70 Term of Financial Commitment (TFC) for the administrative funding of the PPSP-R pre-70 and PPSP-NR pre-70 plans.
(**) It mainly refers to the gain related to the Co-participation Agreement of Atapu and Sépia (see note 16.2).
(***) In the nine-month period ended September 30, 2021, it includes the effects of the exclusion of ICMS (VAT tax) from the basis of calculation of sales taxes PIS and COFINS, except for the effects of inflation indexation.
(****) The total amount recovered from Lava Jato Investigation through December 31, 2021 was US$ 1,522, recognized through collaboration and leniency agreements entered into with individuals and legal entities.

 

 

10  
Table of Contents 
 

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
7. Net finance income (expense)
  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Finance income 1,396 555 515 227
Income from investments and marketable securities (Government Bonds) 872 174 340 100
Other income, net 524 381 175 127
Finance expenses (2,506) (4,270) (790) (1,191)
Interest on finance debt (1,786) (2,325) (563) (669)
Unwinding of discount on lease liabilities (961) (895) (337) (303)
Discount and premium on repurchase of debt securities (120) (1,098) (10) (249)
Capitalized borrowing costs 795 747 260 269
Unwinding of discount on the provision for decommissioning costs (394) (579) (127) (195)
Other finance expenses , net (40) (120) (13) (44)
Foreign exchange gains (losses) and indexation charges (3,016) (4,767) (1,249) (3,898)
Foreign exchange gains (losses) (*) (1) (1,956) (782) (2,957)
Reclassification of hedge accounting to the Statement of Income (*) (3,597) (3,339) (1,109) (1,032)
Monetary restatement of dividends and dividends payable (**) 118 7 398 20
Recoverable taxes inflation indexation income  (***) 74 489 29 15
Other foreign exchange gains (losses) and indexation charges, net 390 32 215 56
Total (4,126) (8,482) (1,524) (4,862)
(*) For more information, see notes 27.3a and 27.3c.
(**) In 2022, it refers to the income on the monetary restatement of paid anticipated dividends, in the amount of US$ 417 (US$ 20 in 2021), and to the expense on the indexation charges on dividends payable, in the amount of US$ 299 (US$ 13 in 2021).
(***) In 2021, includes PIS and Cofins inflation indexation income - exclusion of ICMS (VAT tax) from the basis of calculation.

 

 

8. Net income by operating segment
Consolidated Statement of Income by operating segment
Jul-Sep/2022
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Eliminations Total
Sales revenues 19,293 29,348 4,148 126 (20,504) 32,411
    Intersegments 18,972 529 1,002 1 (20,504)
    Third parties 321 28,819 3,146 125 - 32,411
Cost of sales (7,427) (26,607) (2,646) (137) 20,942 (15,875)
Gross profit (loss) 11,866 2,741 1,502 (11) 438 16,536
Income (expenses) (437) (675) (590) (661) (3) (2,366)
  Selling (7) (440) (760) (3) (3) (1,213)
  General and administrative (6) (48) (15) (265) - (334)
  Exploration costs (107) - - - - (107)
  Research and development (159) (1) (1) (26) - (187)
  Other taxes (8) 10 (16) (79) - (93)
  Impairment of assets (4) (251) - - - (255)
  Other income and expenses (146) 55 202 (288) - (177)
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 11,429 2,066 912 (672) 435 14,170
  Net finance expense - - - (1,524) - (1,524)
  Results in equity-accounted investments 46 (23) 12 (3) - 32
Net income / (loss) before income taxes 11,475 2,043 924 (2,199) 435 12,678
  Income taxes (3,885) (703) (310) 1,158 (148) (3,888)
Net income (loss) for the period 7,590 1,340 614 (1,041) 287 8,790
Attributable to:            
Shareholders of Petrobras 7,591 1,340 595 (1,050) 287 8,763
Non-controlling interests (1) 19 9 27

 

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

Consolidated Statement of Income by operating segment
Jan-Sep/2022
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Eliminations Total
Sales revenues 60,917 85,989 11,247 402 (64,252) 94,303
    Intersegments 59,918 1,460 2,872 2 (64,252)
    Third parties 999 84,529 8,375 400 - 94,303
Cost of sales (23,279) (74,941) (7,897) (409) 62,632 (43,894)
Gross profit (loss) 37,638 11,048 3,350 (7) (1,620) 50,409
Income (expenses) 2,049 (2,055) (2,295) (2,103) (10) (4,414)
  Selling (12) (1,309) (2,297) (10) (10) (3,638)
  General and administrative (30) (127) (49) (750) - (956)
  Exploration costs (230) - - - - (230)
  Research and development (524) (7) (4) (78) - (613)
  Other taxes (47) (15) (35) (148) - (245)
  Impairment of assets (127) (295) 1 (1) - (422)
  Other income and expenses 3,019 (302) 89 (1,116) - 1,690
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 39,687 8,993 1,055 (2,110) (1,630) 45,995
  Net finance expense - - - (4,126) - (4,126)
  Results in equity-accounted investments 154 153 71 (5) - 373
Net income / (loss) before income taxes 39,841 9,146 1,126 (6,241) (1,630) 42,242
  Income taxes (13,495) (3,058) (359) 2,593 556 (13,763)
Net income (loss) for the period 26,346 6,088 767 (3,648) (1,074) 28,479
Attributable to:            
Shareholders of Petrobras 26,349 6,088 696 (3,681) (1,074) 28,378
Non-controlling interests (3) - 71 33 - 101

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

Consolidated Statement of Income by operating segment
Jul-Sep/2021
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Eliminations Total
Sales revenues 14,628 20,500 3,444 89 (15,406) 23,255
    Intersegments 14,289 438 647 32 (15,406)
    Third parties 339 20,062 2,797 57 - 23,255
Cost of sales (6,302) (18,274) (2,666) (91) 15,470 (11,863)
Gross profit (loss) 8,326 2,226 778 (2) 64 11,392
Income (expenses) 3,706 (1,029) (772) (899) (6) 1,000
  Selling 5 (416) (683) (3) (6) (1,103)
  General and administrative (51) (37) (19) (230) - (337)
  Exploration costs (133) - - - - (133)
  Research and development (113) (2) (2) (34) - (151)
  Other taxes (78) (36) (52) (51) - (217)
  Impairment of assets 3,201 (13) (90) - - 3,098
  Other income and expenses 875 (525) 74 (581) - (157)
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 12,032 1,197 6 (901) 58 12,392
  Net finance expense - - - (4,862) - (4,862)
  Results in equity-accounted investments 29 257 12 (7) - 291
Net income / (loss) before income taxes 12,061 1,454 18 (5,770) 58 7,821
  Income taxes (4,090) (408) (2) 2,652 (19) (1,867)
Net income (loss) for the period 7,971 1,046 16 (3,118) 39 5,954
Attributable to:            
Shareholders of Petrobras 7,971 1,046 3 (3,121) 39 5,938
Non-controlling interests - - 13 3 - 16

 

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

Jan-Sep/2021
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Eliminations Total
Sales revenues 39,803 53,480 8,306 360 (42,014) 59,935
    Intersegments 39,013 1,011 1,832 158 (42,014)
    Third parties 790 52,469 6,474 202 - 59,935
Cost of sales (17,142) (46,848) (5,658) (355) 40,291 (29,712)
Gross profit (loss) 22,661 6,632 2,648 5 (1,723) 30,223
Income (expenses) 2,728 (1,951) (2,183) (1,537) (18) (2,961)
  Selling - (1,154) (1,955) (10) (18) (3,137)
  General and administrative (111) (108) (52) (599) - (870)
  Exploration costs (538) - - - - (538)
  Research and development (304) (8) (19) (84) - (415)
  Other taxes (118) (100) (99) (52) - (369)
  Impairment of assets 3,099 (13) (169) 1 - 2,918
  Other income and expenses 700 (568) 111 (793) - (550)
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 25,389 4,681 465 (1,532) (1,741) 27,262
  Net finance expense - - - (8,482) - (8,482)
  Results in equity-accounted investments 85 885 85 445 - 1,500
Net income / (loss) before income taxes 25,474 5,566 550 (9,569) (1,741) 20,280
  Income taxes (8,630) (1,593) (158) 3,819 592 (5,970)
Net income (loss) for the period 16,844 3,973 392 (5,750) (1,149) 14,310
Attributable to:            
Shareholders of Petrobras 16,847 3,972 333 (5,764) (1,149) 14,239
Non-controlling interests (3) 1 59 14 - 71

 

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

The amount of depreciation, depletion and amortization by segment is set forth as follows:

  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Total
 
 
Jan-Sep/2022 7,819 1,692 334 52 9,897
Jan-Sep/2021 6,690 1,640 326 130 8,786
           
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M)

Gas

&

Power (G&P)

Corporate and other business Total
 
 
Jul-Sep/2022 2,561 578 127 1 3,267
Jul-Sep/2021 2,383 568 113 44 3,108

 

 

9. Trade and other receivables
9.1. Trade and other receivables
  09.30.2022 12.31.2021
Receivables from contracts with customers    
Third parties 4,760 4,839
Related parties    
Investees (note 28.1) 89 385
Subtotal 4,849 5,224
Other trade  receivables    
Third parties    
Receivables from divestments (*) 946 2,679
Lease receivables 404 435
Other receivables 732 872
Related parties    
Petroleum and alcohol accounts - receivables from Brazilian Federal Government 572 506
Subtotal 2,654 4,492
Total trade and other receivables, before ECL 7,503 9,716
Expected credit losses (ECL) - Third parties (1,477) (1,428)
Expected credit losses (ECL) - Related parties (7) (20)
Total trade and other receivables 6,019 8,268
Current 4,074 6,368
Non-current 1,945 1,900
(*) At September 30, 2022, it mainly refers to the receivables from the divestments  of the company Breitener, and of the following fields: Rio Ventura, Roncador, Baúna, Miranga, Maromba, Pampo and Enchova, and Cricaré.

 

 

Trade and other receivables are generally classified as measured at amortized cost, except for receivables with final prices linked to changes in commodity price after their transfer of control, which are classified as measured at fair value through profit or loss, amounting to US$ 434 as of September 30, 2022 (US$ 1,155 as of December 31, 2021).

The change in Receivable from divestments was mainly due to the receipt of US$ 950 related to the final installment for the sale of block BM-S-8, and to the receipt of US$ 1,000, related to the final installment for the sale of the Company’s 90% interest in Nova Transportadora do Sudeste (NTS).

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
9.2. Aging of trade and other receivables – third parties
  09.30.2022 12.31.2021
  Trade and other receivables Expected credit losses Trade and other receivables Expected credit losses
Current 5,124 (39) 7,059 (77)
Overdue:        
1-90 days 127 (36) 218 (26)
91-180 days 41 (27) 40 (6)
181-365 days 38 (37) 51 (29)
More than 365 days 1,512 (1,338) 1,457 (1,290)
Total 6,842 (1,477) 8,825 (1,428)

 

 

9.3. Changes in provision for expected credit losses
 

2022

Jan-Set

2021

Jan-Set

Opening balance 1,448 1,596
Additions 98 50
Write-offs (21) (40)
Reversals (64) (64)
Transfer of assets held for sale - (8)
Translation adjustment 23 (38)
Closing balance 1,484 1,496
Current 215 155
Non-current 1,269 1,341

 

 

10. Inventories
  09.30.2022 12.31.2021
Crude oil 3,810 3,048
Oil products 3,712 2,495
Intermediate products 645 532
Natural gas and Liquefied Natural Gas (LNG) 590 349
Biofuels 27 19
Fertilizers 1 8
Total products 8,785 6,451
Materials, supplies and others (*) 985 804
Total 9,770 7,255
(*) It mainly comprises production supplies and operating materials used in the operations of the Company, stated at the average purchase cost, not exceeding replacement cost.

 

 

In the nine-month period ended September 30, 2022, the Company recognized a US$ 7 loss within cost of sales, adjusting inventories to net realizable value (a US$ 3 reversal of cost of sales in the nine-month period ended September 30, 2021) primarily due to changes in international prices of crude oil and oil products.

At September 30, 2022, the Company had pledged crude oil and oil products volumes as collateral for the Term of Financial Commitment (TFC) related to plans PPSP-R, PPSP-R Pre-70 and PPSP-NR Pre-70 signed by Petrobras and Petros Foundation in 2008, in the estimated amount of US$ 1,031, after deducting the partial early settlement of the TFC relating to the Pension Difference and TFC Pre-70, made in February 2022, meeting the contractual conditions of the debt coverage as stated in the TCF.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
11. Taxes
11.1. Income taxes
  Current assets Current liabilities Non-current liabilities
  09.30.2022 12.31.2021 09.30.2022 12.31.2021 09.30.2022 12.31.2021
Taxes in Brazil            
Income taxes 174 133 1,181 682 - -
Income taxes - Tax settlement programs - - 47 43 297 300
  174 133 1,228 725 297 300
Taxes abroad 4 30 357 8 - -
Total 178 163 1,585 733 297 300
             

 

 

Reconciliation between statutory income tax rate and effective income tax rate

The following table provides the reconciliation of Brazilian statutory tax rate to the Company’s effective rate on income before income taxes:

  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Net income before income taxes 42,242 20,280 12,678 7,821
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%) (14,361) (6,896) (4,310) (2,660)
Adjustments to arrive at the effective tax rate:        
Tax benefits from the deduction of interest on capital distribution 736 - 353 -
Different jurisdictional tax rates for companies abroad 595 57 201 127
Brazilian income taxes on income of companies incorporated outside Brazil (*) (725) (353) (97) (154)
Tax loss carryforwards (unrecognized tax losses) (11) 82 (10) 103
Non-taxable income (non-deductible expenses), net (**) 92 265 24 22
Post-employment benefits (262) (427) (76) (337)
Results of equity-accounted investments in Brazil and abroad 130 381 10 102
Non-incidence of income taxes on indexation (SELIC interest rate) of undue paid taxes 25 903 10 903
Others 18 18 7 27
Income taxes (13,763) (5,970) (3,888) (1,867)
Deferred income taxes (2,239) (3,998) (250) (115)
Current income taxes (11,524) (1,972) (3,638) (1,752)
Effective tax rate of income taxes 32.6% 29.4% 30.7% 23.9%
(*) It relates to Brazilian income taxes on earnings of offshore investees, as established by Law No. 12,973/2014.
(**) It includes provisions for legal proceedings and payment of an administrative contribution over the TFC Pre-70 for the administrative funding of the PPSP-R pre-70 and PPSP-NE pre-70 plans.

 

 

Deferred income taxes - non-current

The composition of deferred tax assets and liabilities is set out in the following table:

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Nature Realization basis 09.30.2022 12.31.2021
PP&E - Exploration and decommissioning costs Depreciation, amortization and write-offs of assets (584) (1,362)
PP&E - Impairment Amortization, impairment reversals and write-offs of assets 4,554 4,382
PP&E - depreciation methods and capitalized borrowing costs Depreciation, amortization and write-offs of assets (15,726) (12,924)
Loans, trade and other receivables / payables and financing Payments, receipts and considerations 1,909 3,490
Lease liabilities Appropriation of the considerations 697 1,244
Provision for legal proceedings Payments and use of provisions 724 605
Tax loss carryforwards 30% of taxable income compensation 647 1,827
Inventories Sales, write-downs and losses 267 228
Employee Benefits Payments and use of provisions 1,273 1,250
Others   172 635
Total   (6,067) (625)
Deferred tax assets   494 604
Deferred tax liabilities (*)   (6,561) (1,229)
(*) Changes in deferred tax liabilities are mainly due to the offsetting of the tax losses carryforwards and negative basis of CSLL, and to the use of the benefit of accelerated tax depreciation.

 

 

The changes in the deferred income taxes are presented as follows:

  Jan-Sep/2022 Jan-Sep/2021
Opening Balance (625) 6,256
Recognized in the statement of income for the period (2,239) (3,998)
Recognized in shareholders’ equity (2,266) (884)
Translation adjustment 178 (88)
Use of tax loss carryforwards (1,119) (540)
Others 4 (9)
Closing balance (6,067) 737
 

 

 

11.2. Other taxes
  Current assets Non-current assets Current liabilities Non-current liabilities (*)
  09.30.2022 12.31.2021 09.30.2022 12.31.2021 09.30.2022 12.31.2021 09.30.2022 12.31.2021
Taxes in Brazil                
Current / Non-current ICMS (VAT) 925 665 402 379 425 995 - -
Current / Non-current PIS and COFINS (**) 235 418 2,370 2,030 38 499 76 45
Claim to recover PIS and COFINS - - 628 594 - - - -
CIDE 1 6 - - 2 42 - -
Production taxes - - - - 2,181 2,147 68 21
Withholding income taxes - - - - 61 86 - -
Tax Settlement Program - - - - 24 67 7 6
Others 37 48 264 249 114 142 78 70
Total in Brazil 1,198 1,137 3,664 3,252 2,845 3,978 229 142
Taxes abroad 60 46 11 9 21 23 - -
Total 1,258 1,183 3,675 3,261 2,866 4,001 229 142
(*) Other non-current taxes are classified as other non-current liabilities.
(**) It includes US$ 55 (US$ 104 as of December 31, 2021) related to exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS (contributions for the social security).

 

 

Claim to recover PIS and COFINS

The Company filed four civil lawsuits, in the Regional Federal Court of the Second Region, against the Brazilian Federal Government, claiming to recover PIS and COFINS paid over finance income and foreign exchange variation gains, from February 1999 to January 2004.

The court granted to the Company, in all the lawsuits, the definitive right to recover those taxes. Two lawsuits have resulted in judicialized debts (precatórios) in the amounts claimed by the Company.

Regarding the two remaining cases, both had rulings by the court favorable to the Company and, in one of them, the Brazilian Federal Government has already expressed its agreement.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

As of September 30, 2022, the Company had non-current receivables of US$ 628 (US$ 594 as of December 31, 2021) related to PIS and COFINS, which are indexed to inflation.

12. Employee benefits

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment. It also includes expenses with directors and management. Such benefits include salaries, post-employment benefits, termination benefits and other benefits.

  09.30.2022 12.31.2021
Liabilities    
Short-term employee benefits 1,460 1,289
Termination benefits 197 349
Post-employment benefits 9,289 9,880
Total 10,946 11,518
Current 2,205 2,144
Non-current 8,741 9,374

 

 

12.1. Short-term employee benefits

Short-term benefits are expected to be settled wholly before twelve months after the end of the period in which the employees render the related service.

  09.30.2022 12.31.2021
Variable compensation program - PPP 412 461
Accrued vacation and 13th salary 703 440
Salaries and related charges and other provisions 245 270
Profit sharing 100 118
Total 1,460 1,289
Current 1,433 1,286
Non-current (*) 27 3
(*) Remaining balance relating to the four-year deferral of 40% of the PPP portion of executive officers and the upper management

 

In the three and nine-month periods ended September 30, 2022 and 2021, the Company recognized the following amounts in the statement of income:

  Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Salaries, accrued vacations and related charges (2,265) (2,052) (807) (741)
Variable compensation program - PPP (*) (400) (347) (153) (152)
Profit sharing (*) (103) (93) (38) (35)
Management fees and charges (3) 5 3
Total (2,768) (2,495) (993) (925)
(*) In 2022, it includes reversals of provisions related to previous year.

 

 

12.1.1. Variable compensation programs

Performance award program (PPP)

On September 17, 2021, the Company’s Board of Directors approved the pay-out criteria for granting PPP 2021 to employees.

The PPP 2021 model establishes that, in order to trigger this payment, it is necessary to have net income for the year and a declaration and payment of distribution to shareholders.

On December 15, 2021, the Company’s Board of Directors approved the pay-out criteria for the program for 2022, maintaining the criteria of the PPP 2021.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

In the nine-month period ended September 30, 2022, the main changes related to the PPP were:

· payment of US$ 507 relating to the PPP provisioned in 2021;
· provision of US$ 400 for the PPP related to 2022, accounted for within other income and expenses.

Profit Sharing (PLR)

At December 29, 2020, the 17 unions representing onshore employees of Petrobras had signed the agreement for the PLR for 2021 and 2022, before the deadline determined by the Collective Labor Agreement (ACT). Among the offshore employees, only one union had signed the agreement within the period defined by the ACT.

The current agreement for the PLR provides that only employees without managerial functions will be entitled to receive profit sharing with individual limits according to their remuneration. In order for the PLR to be paid for 2021 and 2022, the following requirements must be met: (i) dividend distribution to shareholders approved at the Annual General Shareholders Meeting, (ii) net income for the year, and iii) achievement of the weighted average percentage of at least 80% of a set of indicators.

The maximum amount of PLR to be distributed is limited to 5% of Adjusted EBITDA (a non-GAAP measure defined as net income plus net finance income (expense); income taxes; depreciation, depletion and amortization; results in equity-accounted investments; impairment of assets; results on disposal/write-offs of assets, remeasurement of investment retained with loss of control and reclassification of CTA; and results from co-participation agreements in bid areas), to 6.25% of net income and to 25% of dividends distributed to shareholders, in each year, whichever is lower.

In the nine-month period ended September 30, 2022, the main changes related to the PLR were:

· payment of US$ 129 relating to the PLR provisioned in 2021;
· provision of US$ 103 for the PLR related to 2022, accounted for within other income and expenses.
12.2. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of labor contract as a result of either: i) the Company’s decision to terminate the labor contract before the employee’s normal retirement date; or ii) an employee’s decision to accept an offer of benefits in exchange for the termination of their employment.

The Company has voluntary severance programs (PDV), specific for employees of the corporate segment and of divestment assets, which provide for the same legal and indemnity advantages.

During the second quarter of 2022, the wholly-owned subsidiary Transpetro launched a new voluntary severance program for its offshore employees, whose enrollment occurred between May 4, 2022 and July 14, 2022, and the deadline for the termination of employees will be December 3, 2022.

Thus, for the current programs, there are 11,565 adhesions accumulated through September 30, 2022 (11,418 through December 31, 2021).

  Jan-Sep/2022 Jan-Sep/2021
Opening Balance 349 900
Effects in the statement of income 5 (8)
Enrollments 6 30
Revision of provisions (1) (38)
Effects in cash and cash equivalents (177) (375)
Terminations in the period (177) (375)
Translation adjustment 20 (30)
Closing Balance 197 487
Current 82 315
Non-current 115 172

 

 

Recognition of the provision for expenses occur as employees enroll to the programs.

The Company disburse the severance payments in two installments, one at the time of termination and the remainder one year after the termination.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

As of September 30, 2022, from the balance of US$ 82, US$ 30 refers to the second installment of 565 retired employees and US$ 167 refers to 1,666 employees enrolled in voluntary severance programs with expected termination by September 2025.

12.3. Post-employment benefits

The Company maintains a health care plan for its employees in Brazil (active and retiree) and their dependents (Saúde Petrobras), and five other major plans of post-employment benefits (collectively referred to as “pension plans”).

The following table presents the balance of post-employment benefits:

  09.30.2022 12.31.2021
Liabilities    
Health Care Plan - Saúde Petrobras 4,809 4,485
Petros Pension Plan - Renegotiated (PPSP-R) 3,038 3,233
Petros Pension Plan - Non-renegotiated (PPSP-NR) 685 658
Petros Pension Plan - Renegotiated - Pre-70 (PPSP-R Pré 70) 310 817
Petros Pension Plan - Non-renegotiated - Pre-70 (PPSP-NR Pré 70) 253 511
Petros 2 Pension Plan (PP-2) 194 165
Other plans 11
Total 9,289 9,880
Current 691 651
Non-current 8,598 9,229

 

 

Health Care Plan

The health care plan Saúde Petrobras is managed by Petrobras Health Association (Associação Petrobras de Saúde – APS), a nonprofit civil association, and includes prevention and health care programs. The plan covers all employees and retirees, and is open to future employees.

Benefits are paid by the Company based on the costs incurred by the participants. The financial participation of the Company and the beneficiaries on the expenses are provided for in the Collective Bargaining Agreement (ACT), being 60% by the Company and 40% by the participants.

Pension plans

The management of the Company's supplementary pension plans is under the responsibility of Fundação Petrobras de Seguridade Social – Petros, which was established by Petrobras as a non-profit, private legal entity with administrative and financial autonomy.

The net obligation with pension plans recorded by the Company is measured in accordance with the requirements of IFRS which has a different measurement methodology to that applicable to pension funds, regulated by the Post-Retirement Benefit Federal Council (Conselho Nacional de Previdência Complementar – CNPC).

The table below presents the reconciliation of the deficit of Petros Plan registered by Petros Foundation as of December 31, 2021 with the net actuarial liability registered by the Company at the same date:

  PPSP-R (*) PPSP-NR (*)
Deficit registered by Petros 1,388 139
Financial assumptions (1,120) (364)
Ordinary and extraordinary sponsor contributions 2,190 652
Changes in fair value of plan assets (**) 1,447 543
Others (including Actuarial valuation method) 145 200
Net actuarial liability recorded by the Company 4,050 1,169
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(**) It includes balance of accounts receivable arising from the Term of Financial Commitment - TFC signed with Petrobras, which Petros recognizes as equity.

 

 

On March 28, 2022, the Deliberative Council of Petros approved the financial statements of the pension plans for the year ended December 31, 2021, sponsored by the Company.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
12.3.1. Amounts related to net actuarial liabilities (defined benefit plans)

Net actuarial liabilities represent the obligations of the Company related to defined benefit plans, net of the fair value of plan assets (when applicable), at present value, based on actuarial calculations which are revised annually by an independent qualified actuary.

Changes in the actuarial liabilities is presented as follows:

  Pension Plans Health Care Plan Other plans Total
  PPSP-R (*) PPSP-NR (*) Petros 2 Saúde Petrobras    
Balance at December 31, 2021 4,050 1,169 165 4,485 11 9,880
Recognized in the Statement of Income 346 109 25 459 939
Current service cost 7 1 10 79 97
Net interest 339 108 15 380 842
Cash effects (1,212) (389) (268) (1,869)
Contributions paid (200) (65) (268) (533)
Payments related to Term of financial commitment (TFC) (**) (1,012) (324) (1,336)
Other changes 164 49 4 133 (11) 339
Others 1 1 (11) (9)
Translation Adjustment 164 49 3 132 348
Balance at September 30, 2022 3,348 938 194 4,809 9,289
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(**) It includes the payment of a portion of the TCF made on February 25, 2022.

 

 

 

             
  Pension Plans Health Care Plan

Other

plans

Total
  PPSP-R (*) PPSP-NR (*) Petros 2 Saúde Petrobras    
Balance at December 31, 2020 7,524 2,696 477 5,356 16 16,069
Recognized in the Statement of Income 361 133 56 1,255 1 1,806
Past service cost (1) 852 851
Present value of obligation (730) (33) 852 89
Plan assets transferred to PP-3 496 22 518
Sponsor contribution for PP-3 233 11 244
Current service cost 10 1 30 126 167
Net interest 334 127 26 277 1 765
Interest on the obligations with contribution for the revision of the lump sum death benefit 18 5 23
Recognized in Equity - other comprehensive income (1,343) (345) (1,176) 2 (2,862)
Remeasurement effects recognized in other comprehensive income (1,343) (345) (1,176) 2 (2,862)
Cash effects (1,253) (566) (236) (2,055)
Contributions paid (***) (422) (68) (236) (726)
Payments of obligations with contribution for the revision of the lump sum death benefit (**) (341) (102) (443)
Payments related to Term of financial commitment (TFC) (490) (396) (886)
Other changes (226) (85) (23) (195) (5) (534)
Others (1) (1)
Translation Adjustment (226) (85) (23) (195) (4) (533)
Balance at September 30, 2021 5,063 1,833 510 5,004 14 12,424
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(**) On June 30, 2021, the Company prepaid the remaining balance of US$ 447.
(***) On September 30, 2021, the Company made a contribution to the PP-3 plan relating to the participants who migrated from the PPSP-R and PPSP-NR plans.

 

The net expense with pension and health plans is presented below:

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

    Pension Plans Health Care Plan Other Plans Total
  PPSP-R (*) PPSP-NR (*) Petros 2 Saúde Petrobras
Related to active employees (cost of sales and expenses) (25) (4) (15) (167) (211)
Related to retirees (other income and expenses) (321) (105) (10) (292) (728)
Net costs for Jan-Sep/2022 (346) (109) (25) (459) (939)
Related to active employees (cost of sales and expenses) (40) (7) (45) (458) (1) (551)
Related to retirees (other income and expenses) (303) (121) (11) (797) (1,232)
Obligations with contribution for the revision of the lump sum death benefit (18) (5) (23)
Net costs for Jan-Sep/2021 (361) (133) (56) (1,255) (1) (1,806)
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
             
    Pension Plans Health Care Plan Other Plans Total
  PPSP-R (*) PPSP-NR (*) Petros 2 Saúde Petrobras
Related to active employees (cost of sales and expenses) (8) (1) (5) (55) (69)
Related to retirees (other income and expenses) (105) (34) (3) (95) (237)
Net costs for Jul-Sep/2022 (113) (35) (8) (150) (306)
Related to active employees (cost of sales and expenses) (13) (3) (15) (320) (1) (352)
Related to retirees (other income and expenses) (100) (43) (4) (670) 1 (816)
Obligations with contribution for the revision of the lump sum death benefit
Net costs for Jul-Sep/2021 (113) (46) (19) (990) (1,168)
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.

 

 

12.3.2. Contributions

In the nine-month period ended September 30, 2022, the Company contributed with US$ 1,869 to the defined benefit plans (reducing the balance of obligations of these plans, as presented in note 12.13.1), which includes the payment of the Term of Financial Commitment, in the amount of US$ 1,336.

In addition, the Company contributed with US$ 135 and US$ 1, respectively, to the defined contribution portions of PP-2 and PP-3 plans (US$ 77 for PP-2 in 2021), whose amounts were expensed in the nine-month period ended September 30, 2022.

The collection of contributions for PP-3 started August 31, 2021.

13.           Provisions for legal proceedings, judicial deposits and contingent liabilities
13.1. Provisions for legal proceedings

The Company recognizes provisions for legal, administrative and arbitral proceedings based on the best estimate of the costs for which it is probable that an outflow of resources embodying economic benefits will be required and that can be reliably estimated. These proceedings mainly include:

· Labor claims, in particular: (i) several individual and collective labor claims; (ii) opt-out claims related to a review of the methodology by which the minimum compensation based on an employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated; and (iii) actions of outsourced employees.
· Tax claims including: (i) claims relating to benefits previously taken for Brazilian federal tax credits applied that were subsequently alleged to be disallowable; (ii) tax notices for alleged non-compliance with ancillary obligations; and (iii) claims for alleged non-payment of CIDE on imports of propane and butane.
· Civil claims, in particular: (i) lawsuits related to contracts; (ii) royalties and special participation charges; and (iii) penalties applied by ANP, mainly relating to production measurement systems.
· Environmental claims, specially: (i) fines relating to an environmental accident in the State of Paraná in 2000; (ii) fines relating to the Company’s offshore operation; and (iii) public civil action for oil spill in 2004 in Serra do Mar-São Paulo State Park.
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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

Provisions for legal proceedings are set out as follows:

Non-current liabilities 09.30.2022 12.31.2021
Labor claims 744 716
Tax claims 389 306
Civil claims 1,135 820
Environmental claims 251 176
Total 2,519 2,018

 

 

  Jan-Sep/2022 Jan-Sep/2021
Opening Balance 2,018 2,199
Additions, net of reversals 552 416
Use of provision (356) (383)
Revaluation of existing proceedings and interest charges 264 74
Others - 9
Translation adjustment 41 (111)
Closing Balance 2,519 2,204

 

 

In preparing its unaudited consolidated interim financial statements for the nine-month period ended September 30, 2022, the Company considered all available information concerning legal proceedings in which the Company is a defendant, in order to estimate the amounts of obligations and probability that outflows of resources will be required.

In the nine-month period ended September 30, 2022, the increase in liabilities arises mainly from changes in the following cases: (i) US$ 376 in the provision for civil claims involving contractual matters; (ii) US$ 77 in the provision for tax claims for alleged non-compliance with ancillary obligations; partially offset by: (iii) US$ 91 decrease related to an agreement in arbitration for the collection of royalties on shale extraction.

13.2. Judicial deposits
Non-current assets 09.30.2022 12.31.2021
Tax 7,158 5,790
Labor 863 796
Civil 1,847 1,275
Environmental 106 101
Others 72 76
Total 10,046 8,038

 

 

  Jan-Sep/2022 Jan-Sep/2021
Opening Balance 8,038 7,281
Additions 1,314 827
Use (98) (67)
Accruals and charges 635 153
Others (6) 2
Translation adjustment 163 (348)
Closing Balance 10,046 7,848

 

 

In the nine-month period ended September 30, 2022, the Company made judicial deposits in the amount of US$ 1,314, mainly: (i) US$ 429 relating to the unification of Fields (Cernambi, Tupi, Tartaruga Verde and Tartaruga Mestiça); (ii) US$ 196 referring to IRPJ and CSLL for not adding profits of subsidiaries and affiliates domiciled abroad to the IRPJ and CSLL calculation basis; (iii) US$ 219 related to CIDE and PIS/COFINS on the chartering of platforms; and (iv) US$ 102 referring to IRPJ and CSLL in the deduction of expenses with Petros.

13.3. Contingent liabilities

The estimates of contingent liabilities for legal proceedings are indexed to inflation and updated by applicable interest rates. Estimated contingent liabilities for which the possibility of loss is classified as possible are set out in the following table:

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Nature 09.30.2022 12.31.2021
Tax 28,799 24,785
Labor 7,719 7,172
Civil - General 6,579 5,720
Civil - Environmental 1,329 1,192
Total 44,426 38,869

 

 

The main contingent liabilities are:

· Tax matters comprising: i) withholding income tax (IRRF), Contribution of Intervention in the Economic Domain (CIDE), Social Integration Program (PIS) and Contribution to Social Security Financing (COFINS) on remittances for payments of vessel charters; (ii) income from foreign subsidiaries and associates located outside Brazil not included in the computation of taxable income (IRPJ and CSLL); (iii) requests to compensate federal taxes disallowed by the Brazilian Federal Tax Authority; (iv) collection and crediting of ICMS by several states; (v) collection of social security contributions over payments of bonuses; and (vi) collection of customs taxes and fines related to imports under the Repetro regime in the Frade consortium.
· Labor matters comprising mainly actions requiring a review of the methodology by which the minimum compensation based on an employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated.
· Civil matters comprising mainly: (i) administrative and legal proceedings challenging an ANP order requiring Petrobras to pay additional special participation fees and royalties (production taxes) with respect to several fields; (ii) regulation agencies fines; and (iii) lawsuits related to contracts.
· Environmental matters comprising indemnities for damages and fines related to the Company operation.

In the nine-month period ended September 30, 2022, the increase in the balance of contingent liabilities is mainly due to: (i) US$ 2,316 relating to the notice of infraction for the collection, by joint liability, of customs taxes and fines arising from imports under the Repetro regime, for use in the Frade consortium; (ii) US$ 734 in lawsuits in administrative and judicial stages discussing the difference in special interest and royalties in different fields, including unitization; (iii) US$ 437 referring to CIDE and PIS/COFINS on the chartering of platforms; (iv) US$ 331 in proceedings related to federal tax deductions taken that were subsequently challenged; and (v) US$ 295 referring to lawsuits involving ICMS collection on imports in operations with liquified petroleum gas derived from natural gas.; (vi) US$ 276 lawsuits requesting a review of the methodology by which the minimum compensation based on an employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated; and (vii) US$ 292 in civil matters involving contractual issues.

These effects were partially offset by: (i) US$ 1,206 transferred to remote loss relating to tax on services provided offshore; and (ii) US$ 292 for the write-off due to the conclusion of an agreement and review of amounts in lawsuits in which the state monopoly of piped gas services was discussed.

13.4. Minimum Compensation Based on Employee's Position and Work Schedule (Remuneração Mínima por Nível e Regime - RMNR)

As of September 30, 2022, there are lawsuits related to the Minimum Compensation Based on Employee's Position and Work Schedule (RMNR), with the objective of reviewing its calculation criteria.

The RMNR consists of a minimum remuneration guaranteed to employees, based on salary level, work schedule and geographic location. This policy was created and implemented by Petrobras in 2007 through collective bargaining with union representatives, and was approved at employee meetings, and started being the subject of lawsuits three years after its implementation.

In 2018, the Brazilian Superior Labor Court (TST) ruled against the Company, which filed extraordinary appeals against its decision. Therefore, the Brazilian Supreme Federal Court (STF) suspended the effects of the decision issued by the TST and determined the national suspension of the ongoing proceedings related to the RMNR.

On July 29, 2021, a monocratic decision was published in which the STF’s Judge-Rapporteur granted an extraordinary appeal filed, accepting the Company's thesis and recognizing the validity of the collective bargaining agreement freely signed between Petrobras and the unions, reversing the decision of the TST.

In February 2022, the judgment of the appeals filed by the plaintiff and several amicus curiae was started. The judgment is currently underway in the First Panel of the Supreme Federal Court, with 3 votes in favor of the Company, confirming that there is an understanding of recognizing the merit of the collective bargaining agreement signed between Petrobras and the unions. Considering that the last minister to vote requested additional time for analysis, the trial was suspended, and is pending the presentation of the vote by this last minister.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

As of September 30, 2022, the balance of provisioned proceedings regarding RMNR amounts to US$ 150, while the contingent liabilities amount to US$ 6,389. During the period from July to September 2022, one of these actions became final in the Company’s favor and therefore there was a decrease in contingent liabilities related to this claim.

13.5. Class action and related proceedings

On May 26, 2021, the District Court of Rotterdam decided that the class action against Petróleo Brasileiro S.A. – Petrobras, Petrobras International Braspetro B.V. (PIB BV), Petrobras Global Finance B.V. (PGF), Petrobras Oil & Gas B.V. (PO&G) and some former Petrobras managers must proceed and that the arbitration clause of Petrobras' bylaws does not prevent the Company's shareholders from having access to the Dutch Judiciary and being represented by the Stichting Petrobras Compensation Foundation (“Foundation”). However, investors who have already started arbitration against Petrobras or who are parties to legal proceedings in which the applicability of the arbitration clause has been definitively recognized are excluded from the action. The class action is in the merit discussion stage.

In relation to the arbitration in Argentina, the Argentine Supreme Court has not yet judged the appeal filed by the Consumidores Financieros Asociación Civil para su Defensa ("Association"). This arbitration discusses Petrobras' liability for an alleged loss of market value of Petrobras' shares in Argentina, as a result of the Lava Jato Operation.

Regarding criminal proceeding in Argentina related to an alleged fraudulent offer of securities, aggravated by the fact that Petrobras allegedly declared false data in its financial statements prior to 2015, the Court of Appeals revoked on October 21, 2021, the lower court decision that had recognized Petrobras' immunity from jurisdiction and recommended that the lower court judge take steps to certify whether the Company could be considered criminally immune in Argentina for further reassessment of the issue. Petrobras appealed against this decision, but the higher courts upheld the decision of the Court of Appeals, thus the immunity will have to be reassessed by the lower court. The Court of Appeals recognized that the Association could not act as a representative of financial consumers, due to the loss of its registration with the competent Argentine bodies, which was also the subject of an appeal upheld by the Court of Appeals on September 15, 2022, recognizing the Association the right to represent financial consumers. Petrobras presented other procedural defenses, still subject to assessment by the Argentine Court of Appeals. This criminal action is being processed before the Economic Criminal Court No. 2 of the City of Buenos Aires.

As for the other criminal action for alleged non-compliance with the obligation to publish “press release” in the Argentine market about the existence of a class action filed by Consumidores Financieros Asociación Civil para su Defensa before the Commercial Court, there are no developments during the nine-month period ended September 30, 2022.

The EIG Energy Fund XIV, L.P. and affiliates (“EIG”) filed a lawsuit against Petrobras, before the District Court of Columbia, United States, to recover alleged losses related to its investment in Sete Brasil Participações S.A. On August 8, 2022, the judge upheld EIG's claim as to Petrobras' responsibility for the alleged losses, which are recorded as provisions for legal proceedings, but denied the motion for summary judgment with respect to damages, whereby the award of compensation will be subject to the proof of damages by EIG at a hearing and to the consideration of the defenses by the Company. In the same decision, the judge denied the request to dismiss the case based on Petrobras' immunity from jurisdiction, which is why an appeal was filed with the Federal Court of Appeals for the District of Columbia.

13.6. Arbitrations in Brazil

In the nine-month period ended September 30, 2022, there were no events that changed the assessment and information on arbitrations in Brazil.

13.7. Legal proceedings - Compulsory Loan – Eletrobrás

In the nine-month period ended September 30, 2022, there were no events that changed the assessment on this proceeding.

13.8. Lawsuits brought by natural gas distributors and others

In the nine-month period ended September 30, 2022, the Company obtained a favorable decision from the Superior Court of Justice (Superior Tribunal de Justiça - STJ) suspending the interim decision in favor of CEGÁS, which granted the extension of its gas supply contract for 6 months. With the loss of effectiveness of the preliminary decision due to the passage of time, the suspension previously granted became unnecessary, being extinguished. In another decision, the injunction that had been obtained by SC GÁS and that had extended, until April 2022, the price of the gas supply contract that was terminated on December 31, 2021, was revoked in a lower court judgement handed down on June 29, 2022. In relation to the lawsuit filed by the State of Minas Gerais, a request was granted to grant a suspensive effect to the appeal filed by Petrobras in view of the preliminary decision.

In October, 2022, agreements were signed between Petrobras, CEGÁS and SCGÁS, with the objective of ceasing the litigation and controversial issues in relation to the price of natural gas supplied, following the current economic conditions of this market.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

The commercialization of gas by Petrobras, in the states of Espírito Santo, Rio de Janeiro and Sergipe, has been taking place under the terms of the injunctions granted.

14. Provision for decommissioning costs

The following table details the amount of the decommissioning provision by producing area:

  09.30.2022 12.31.2021
Onshore 483 873
Shallow waters 3,689 3,732
Deep and ultra-deep post-salt 8,086 8,420
Pre-salt 2,632 2,594
  14,890 15,619

 

 

Non-current liabilities

2022

Jan-Sep

2021

Jan-Sep

Opening balance 15,619 18,780
Adjustment to provision 38 7
Transfers related to liabilities held for sale (*) (1,075) (536)
Payments and use of provisions (629) (526)
Interest accrued 362 551
Others (1) 3
Translation adjustment 576 (827)
Closing balance 14,890 17,452
(*) In the nine-month period ended September 30, 2022, it refers to the Golfinho and Camarupim Group (US$ 103), in Espírito Santo;  the Albacora Leste Field (US$ 374), in Rio de Janeiro; the Norte Capixaba Group (US$ 32), in Espírito Santo state; and the Potiguar Group (US$ 566), in Rio Grande do Norte state, as set out in note 22.  In the nine-month period ended September 30, 2021, it includes transfers to held for sale mainly related to: Alagoas Group (US$ 153), Papa-Terra Field (US$ 148), Peroá Group (US$ 109), Miranga Group (US$ 97) and Búzios Field (US$ 31).

 

 

15. Property, plant and equipment
15.1. By class of assets
 

Land, buildings

and

improvement

Equipment and other assets (*)

Assets under

construction (**)

Exploration and development costs (***) Right-of-use assets Total
Balance at December 31, 2021 2,383 53,126 16,922 35,847 17,052 125,330
Cost 4,080 98,085 25,954 61,906 26,382 216,407
Accumulated depreciation and impairment (****) (1,697) (44,959) (9,032) (26,059) (9,330) (91,077)
Additions - 656 4,943 47 5,580 11,226
Decommissioning costs - Additions to / review of estimates - - - 11 - 11
Capitalized borrowing costs - - 787 - - 787
Signature Bonuses Transfers (*****) - - - 1,177 - 1,177
Write-offs (2) (758) (990) (614) (1,464) (3,828)
Transfers (******) 83 3,713 (6,682) 3,016 - 130
Transfers to assets held for sale (11) (1,977) (342) (1,418) (27) (3,775)
Depreciation, amortization and depletion (65) (3,561) - (3,938) (3,344) (10,908)
Impairment recognition (note 17) - (53) (269) (42) - (364)
Impairment reversal (note 17) - 12 2 11 - 25
Translation adjustment 71 1,933 595 1,240 470 4,309
Balance at September 30, 2022 2,459 53,091 14,966 35,337 18,267 124,120
Cost 4,187 100,792 24,267 63,236 27,953 220,435
Accumulated depreciation and impairment (****) (1,728) (47,701) (9,301) (27,899) (9,686) (96,315)

 

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Balance at December 31, 2020 3,043 58,680 15,443 31,166 15,869 124,201
Cost 5,450 107,199 27,544 60,902 23,780 224,875
Accumulated depreciation and impairment (****) (2,407) (48,519) (12,101) (29,736) (7,911) (100,674)
Additions - 997 4,307 2 5,304 10,610
Decommissioning costs - Additions to / review of estimates - - - 1 - 1
Capitalized borrowing costs - - 744 - - 744
Signature Bonuses Transfers (****) - - - 11,625 - 11,625
Write-offs               - (638) (372) (1,641) (128) (2,779)
Transfers (******) (44) 557 (2,981) 2,521 3 56
Transfers to assets held for sale (2) (1,521) (569) (623) 2 (2,713)
Depreciation, amortization and depletion (76) (3,131) - (3,136) (3,163) (9,506)
Impairment recognition - (186) - (8) - (194)
Impairment reversal - 1,374 100 1,784 32 3,290
Translation adjustment (101) (2,679) (686) (1,665) (802) (5,933)
Balance at September 30, 2021 2,820 53,453 15,986 40,026 17,117 129,402
Cost 4,294 99,757 27,030 68,191 26,244 225,516
Accumulated depreciation and impairment (****) (1,474) (46,304) (11,044) (28,165) (9,127) (96,114)
(*) It is composed of production platforms, refineries, thermoelectric power plants, natural gas processing plants, pipelines, and other operating, storage and production plants, including subsea equipment for the production and flow of oil and gas, depreciated based on the units of production method.
(**) See note 21 for assets under construction by operating segment.
(***) It is composed of exploration and production assets related to wells, abandonment and dismantling of areas, signature bonuses associated with proved reserves and other costs directly associated with the exploration and production of oil and gas (oil and gas production properties).
(****) In the case of land and assets under construction, it refers only to impairment losses.
(*****) Transfer from intangible assets related to Atapu, Sepia and Itapu fields in 2022 (related to Búzios in 2021).
(*****) It includes mainly transfers between classes of assets and transfers from advances to suppliers.

 

 

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

The useful life of assets depreciated by the linear method are shown below:

Asset Weighted average useful life in years
Buildings and improvement 40 (25 to 50) (except land)
Equipment and other assets 20 (3 to 31) (except assets by the units of production method)
Right-of-use 8 (2 to 47)

 

 

The right-of-use assets comprise the following underlying assets:

  Platforms Vessels Properties Total
Balance at September 30, 2022 9,071 7,976 1,220 18,267
Cost 12,410 13,809 1,734 27,953
Accumulated depreciation and impairment (3,339) (5,833) (514) (9,686)
Balance at December 31, 2021 9,840 5,997 1,215 17,052
Cost 13,362 11,267 1,753 26,382
Accumulated depreciation and impairment (3,522) (5,270) (538) (9,330)

 

 

15.2. Unitization agreements

Petrobras has Production Individualization Agreements (AIP) signed in Brazil with partner companies in E&P consortia. These agreements result in reimbursements payable to (or receivable from) partners regarding expenses and production volumes related to Atapu, Berbigão, Sururu, Albacora Leste, Tartaruga Verde and other fields.

The table below presents changes on the reimbursements payable by Petrobras relating to AIPs submitted for approval by the ANP, presented within trade payables. This estimate reflects the best available estimate of the assumptions used in calculating the calculation base and the sharing of relevant assets in areas to be equalized.

          Jan-Sep/2022 Jan-Sep/2021
Opening balance         364 370
Additions/(Write-offs) on PP&E         (26) (80)
Other income and expenses         12 36
Translation adjustments         10 (14)
Closing balance         360 312

 

 

15.3. Capitalization rate used to determine the amount of borrowing costs eligible for capitalization

The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was the weighted average of the borrowing costs applicable to the borrowings that were outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. For the nine-month period ended September 30, 2022, the capitalization rate was 6.62% p.a. (6.24% p.a. for the nine-month period ended September 30, 2021).

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PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
16. Intangible assets
16.1. By class of assets
  Rights and Concessions (*) Software Goodwill Total
Balance at December 31, 2021 2,695 308 22 3,025
Cost 2,744 1,321 22 4,087
Accumulated amortization and impairment (49) (1,013) (1,062)
Addition 895 129 1,024
Capitalized borrowing costs 8 8
Write-offs (12) (1) (13)
Transfers (9) (1) (10)
Signature Bonuses Transfers (**) (1,177) (1,177)
Amortization (3) (53) (56)
Impairment recognition (1) (1)
Translation adjustment 46 5 1 52
Balance at September 30, 2022 2,435 394 23 2,852
Cost 2,488 1,488 23 3,999
Accumulated amortization and impairment (53) (1,094) (1,147)
Estimated useful life in years (***) 5 Indefinite  
         
Balance at December 31, 2020 14,714 210 24 14,948
Cost 14,803 1,245 24 16,072
Accumulated amortization and impairment (89) (1,035) (1,124)
Addition 3 98 101
Addition - Signature Bonuses 98 98
Capitalized borrowing costs 3 3
Write-offs (10) (10)
Transfers (92) 3 (89)
Signature Bonuses Transfers (**) (11,625) (11,625)
Amortization (5) (41) (46)
Translation adjustment (314) (13) (1) (328)
Balance at September 30, 2021 2,769 260 23 3,052
Cost 2,819 1,290 23 4,132
Accumulated amortization and impairment (50) (1,030) (1,080)
Estimated useful life in years (***) 5 Indefinite  
(*) It comprises mainly signature bonuses (amounts paid in concession contracts for oil or natural gas exploration and production sharing), in addition to public service concessions, trademarks and patents and others.
(**) Transfer to PP&E relating to Sépia, Atapu and Itapu in 2022 (Búzios in 2021).
(***) Mainly composed of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment.

 

 

16.2. Surplus volumes of Transfer of Rights Agreement

Búzios

Expenses incurred by Petrobras in the ordinary operations of the bidding area for the benefit of the consortium, in the amount of US$ 61, made prior to the start of the Co-Participation Agreement and not included in the total compensation amount, were reimbursed to Petrobras by the partners CNODC Brasil Petróleo e Gás Ltda. (CNODC) and CNOOC Petroleum Brasil Ltda. (CPBL) in February 2022.

In addition, on March 4, 2022, Petrobras signed an agreement with its partner CPBL for the transfer of 5% of its interest in the Production Sharing Contract for the Surplus Volume of the Transfer of Rights Agreement of the Búzios field, in the pre-salt layer of the Santos basin, to this company. The agreement results from the call option exercised by CNOOC on September 29, 2021.

The amount to be received by Petrobras at the closing of the operation is US$ 2,120, referring to the compensation and reimbursement of the signature bonus of CNOOC's additional interest, subject to price adjustments and to the fulfillment of conditions precedent, such as CADE, ANP and Ministry of Mines and Energy (MME) approval.

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NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

After the transaction becomes effective, Petrobras will hold an 85% interest in the Production Sharing Contract of the Surplus Volume of the Transfer of Rights Agreement of the Búzios field, CNOOC will hold a 10% interest and CNODC a 5% interest. The total participation in this Búzios Co-participation Agreement, including the portions of the Transfer of Rights Agreement and of the BS-500 Concession Agreement (100% of Petrobras) will be 88.99% of Petrobras, 7.34% of CNOOC and 3.67% of CNODC.

At September 30, 2022, the assets and liabilities related to the transfer of 5% of its interest in the Production Sharing Contract to the Transfer of Rights Agreement are classified as held for sale.

Atapu and Sépia

On April 27, 2022, Petrobras signed the Production Sharing Contract for the surplus volume of the Transfer of Rights Agreement related to the Atapu field, in partnership with Shell Brasil Petróleo Ltda (Shell, 25%) and TotalEnergies EP Brasil Ltda. (TotalEnergies, 22.5%), and related to the Sépia field in consortium with TotalEnergies (28%), Petronas Petróleo Brasil Ltda. (Petronas, 21%) and QP Brasil Ltda. (QP, 21%), according to the results of the Second Bidding Round for the Surplus Volume of the Transfer of Rights Agreement in the Production Sharing regime, which was held on December 17, 2021.

Also on April 27, 2022, the Company signed the Co-participation Agreements and the Amendments to the Agreement for the Individualization of Atapu and Sépia Production (AIPs), which are necessary to manage the coexisting deposits of the Transfer of Rights Agreement and the Production Sharing Contract (related to the surplus volume) of these areas.

The compensation to Petrobras for Atapu and Sépia, including an estimate of the gross-up of the taxes levied, pursuant to Ordinance No. 8 of April 19, 2021 of the MME, were paid by the partners in April 2022, totaling US$ 2,093 for Atapu and US$ 3,059 for Sépia.

The agreements became effective on May 2, 2022, when Pré-Sal Petróleo S.A. (PPSA) confirmed there was no settlement pending for this transaction, in accordance with the provisions of Ordinance No. 519 of May 21, 2021.

On the same date, a partial write-off of the assets associated with these fields was carried out, in exchange for the financial compensation, resulting in a transaction similar to a sale.

Furthermore, the Company accounted for an additional US$ 129 gain corresponding to the difference between the estimate and the final calculation of the gross-up of taxes levied on the gain on the transfer of assets to the Production Sharing regime, as provided for in the mentioned ordinance (US$ 60 for Atapu and US$ 69 for Sépia). These amounts were paid to Petrobras in July 2022.

The total gain in this operation was US$ 2,861 (US$ 1,018 for Atapu and US$ 1,843 for Sépia), accounted for within other income and expenses.

The signature bonus corresponding to the Company's participation in the Production Sharing Contract was US$ 416 for Atapu and US$ 424 for Sépia.

Since these agreements relate to the surplus volume of fields with technical and commercial feasibility already identified, the signature bonuses paid by the Company in the first quarter of 2022, totaling US$ 840, were transferred from intangible assets to property, plant and equipment after the Co-participation Agreements came into effect.

17. Impairment
(Losses) / reversals Jan-Sep/2022 Jan-Sep/2021 Jul-Sep/2022 Jul-Sep/2021
Property, plant and equipment (339) 3,096 (256) 3,202
Intangible assets (1)
Assets classified as held for sale (82) (178) 1 (104)
Impairment losses (422) 2,918 (255) 3,098
Investments (8) 383 2 (8)
Net effect within the statement of income (430) 3,301 (253) 3,090
Losses (475) (427) (256) (115)
Reversals 45 3,728 3 3,205

 

 

The Company annually tests its assets for impairment or when there is an indication that their carrying amount may not be recoverable, or that there may be a reversal of impairment losses recognized in previous years.

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PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

In the nine-month period ended September 30, 2022, the Company recognized net impairment losses amounting to US$ 422, mainly due to:

· postponement of the beginning of operations of the Natural Gas Processing Unit (UPGN) of the Gaslub plant in Itaboraí, in the state of Rio de Janeiro, due to the termination of the agreement with the contractor responsible for the works, resulting in the recognition of a US$ 251 impairment loss in the CGU Itaboraí Utilities (taking into account a discount rate in constant currency of 5.40% p.a.);
· definitive cessation of the operations of platform P-35, in the Marlim field, which led to the exclusion of this asset from the CGU North group and classification as a separate asset, resulting in the recognition of a US$ 52 impairment loss;
· approval for the disposal of Golfinho group of fields, which comprises Golfinho field (which produces oil), Canapu field, which produces non-associated gas, and the exploratory block BM-ES-23. As a result, the Company assessed the recoverability of the carrying amount of these assets, considering the fair value net of disposal expenses, resulting in the recognition of a US$ 51 impairment loss;
· approval for the disposal of LUBNOR Refinery, in the state of Ceará, separating it from the Downstream CGU. As a result, the Company assessed the recoverability of the carrying amount of the refinery, considering the fair value net of disposal expenses, resulting in the recognition of a US$ 44 impairment loss.

In the nine-month period ended September 30, 2021, impairment reversals were recognized in the amount of US$ 2,918 (US$ 3,098 of impairment reversals in the third quarter of 2021), mainly relating to: