The O&G sector is characterized by being capital intensive. The review of the investment portfolio takes place annually as part of the process of drawing up the Strategic Plan for the five-year period. The Petrobras investment portfolio, disclosed in Strategic Plan 2023-2027, reveals that the company plans to invest USD 78 billion in the next five years. This volume of funds will materialize in orders for goods and services that will meet the company's need to modernize and increase its production capacity. This is what guarantees our future, with the fulfillment of production and efficiency targets. But that's not all. These resources will trigger a multiplier process of income and employment. Especially in the Brazilian economy, where most of the investments will be made. 

In addition, it is important to highlight the role that our products play as a fundamental input for economic growth. We produce the energy needed to expand agricultural production, our industry, and our services, as well as the energy that guarantees mobility, heat, electricity, and comfort. 

Our operations result in wealth generation in the societies where we operate through taxes, as well as jobs and income generation. On the other hand, our portfolio management may indicate an exit from certain businesses or assets where we are not the best owners, which can impact employment, the supply chain, and the tax base in the regions where they are located. 

On July 27, 2022, our Board of Directors approved the Price Formation Guideline for Oil Products and Natural Gas in the Domestic Market. The guideline reiterated the competence of the Executive Board in the execution of pricing policies, preserving and prioritizing the company's economic result, seeking to maximize its value generation, and incorporated an additional layer of supervision by the Board of Directors itself and by the Fiscal Council. Said guideline can be found on our Investor Relations website. 

Additionally, on May 15, 2023, our Executive Board approved the commercial strategy for setting gasoline and diesel prices, in line with the aforementioned guideline, based on competitive prices by sales center, in balance with the national and international markets. This strategy allows Petrobras to compete more efficiently, taking into account its market share, to optimize its refining assets, under the premise of maintaining the company's financial sustainability. 

This commercial strategy uses market benchmarks such as: (a) the customer's alternative cost, as a value to be prioritized in pricing, and (b) the marginal value for Petrobras. The customer's alternative cost includes the main supply alternatives, whether suppliers of the same products or substitute products, while the marginal value for Petrobras is based on the opportunity cost given the various alternatives for the company, including production, imports and exports of said product and/or oils used in refining.

As we are aware of the importance of our products to Brazilian society, we point out that, when setting our prices, we seek to avoid passing on the volatility of the international market and the exchange rate, while preserving a healthy competitive environment under the terms of the current legislation.

Finally, it is essential to differentiate Petrobras' sales prices for the distribution companies from those perceived by the final consumer. Petrobras' sales price at refineries and terminals is just a portion of the resale price perceived by consumers at service stations. Before the fuel reaches the consumer, taxes are added, costs for the mandatory mixture of anhydrous ethanol in gasoline, and biodiesel in diesel; and costs and margins of distribution companies and resellers. Each parcel has its own formation dynamics, without any influence from Petrobras. Historically, the final price of fuels is highly influenced by the tax burden on these products.

In 2022 we had an added value distribution of around BRL 483 billion. Through our activities, we distribute value to our employees and federal, state, and municipal governments, through the payment of taxes, royalties and special participations, financial institutions, the supply chain and our shareholders.

In addition to other contributions to society such as voluntary socio-environmental projects, donations and environmental monitoring and impact mitigation projects, as detailed in the table below:

DISTRIBUTION OF VALUE ADDED (consolidated data in BRL million) [1]

In 2022, Petrobras reached a record annual tax contribution, collecting a total of BRL 279 billion in the form of taxes and Government Holdings (PGOV) in Brazil and USD 134 million paid abroad. The collection of taxes and PGOV considerably increases the municipal, state and federal investment capacity, expanding the possibility of greater investment in urban infrastructure and services to serve the population. 

TAXES AND PGOV (data in BRL billion)

In the last five years, Petrobras has already collected more than BRL 1 trillion in taxes and government contributions for the Federal Government, States and Municipalities, providing a greater government budget for the execution of public policies that serve society. 

Additionally, we have the legal duty to pay the ANP the amounts owed from government holdings (PGOV). Such disbursements are financial compensation for our oil production activities in the Brazilian territory, which aim to make a pecuniary return to society for the exploration of non-renewable resources. They are: royalties, special participation, signing bonus and payment for occupying or retaining an area.

In 2022, a total of BRL 82.7 billion was collected as government holdings. The amounts of PGOV paid are mainly formed by royalties (BRL 42.4 billion) and special participation (BRL 35.8 billion). In addition to these two recurring PGOV items, there was also the non-recurring payment of BRL 4.2 billion in signature bonus, referring to the acquisition of 30% of the Sépia block and 52.5% of the Atapu block for BRL 2 .1 billion each and BRL246 million paid for occupying or retaining the area.

Information about our tax payments can be found in our Tax Report.

Our businesses generate jobs and income, not only because of the direct impacts of our activities, but also because of our indirect impact on the production chain. The purchase of goods and services by the company will become income for suppliers, who, in their production processes, will pay for new inputs, suppliers and labor in the production chain, driving the economy.

Throughout 2022, we signed an agreement with more than 15,000 suppliers, with a transaction amount of approximately BRL 250 billion.

Regarding the contracting of local suppliers, considering the total amount of contracts and purchase orders entered into by the parent company during the year, 56.47%  are for contracts with suppliers based in Brazil*. These transactions were carried out with 9,344 suppliers in 2022, of which 94% are domestic companies.

In 2022, our subsidiary Transpetro entered into commitments with 4,089 suppliers. When considering the total amount of transactions carried out, 97.18% of them were with suppliers headquartered in Brazil.

Of the commitments made 2022 by our subsidiary Petrobras Biocombustível, 36.2% went to local suppliers. In this case, local suppliers are considered to be all those established in the same State as the destination of the product and/or service procured by the biodiesel plant.

As for the profile of the contracted goods and services, there were no significant changes in 2022 compared to the previous year, with the main contracted categories being:

- Parent Company: Chartering of production platforms, chartering of rigs, well services, Engineering, Procurement, Construction and Installation - EPCI, underwater operations, flexible lines, valves, tubes, aerial chartering, chartering of ships and special vessels, chemicals and catalysts, geophysical services, Engineering, Procurement and Construction (EPC) services, and equipment maintenance.

- Transpetro: Operational support services, infrastructure maintenance, logistics, inspection, docking and complementary services, such as transportation and property security.

- Petrobras Biocombustível:   National manufacturers and traders of vegetable oils (soybean, cotton, palm and residual oils and fats), animal fats (beef, pork, fish, and poultry), in addition to methanol and sodium methylate, which are the main inputs used in the industrial process.

* Excluding contracting of production vessels (FPSO), the percentage of amounts committed to domestic suppliers was 83.71%.