04PO.pdf

Quantifying social responsibility investments toward Sustainable Industrial Growth. Petrobras’s social and environmental policies and its foreign E&P experience in Latin America  André Avila Scartezini, Petrobras, Brazil . Abstract E&P projects are characterized by their impacts on the environment and by a long production period. Therefore it is very important for the company to keep good social relationships throughout its operational activity. This paper aims at discussing the impacts of E&P activities on communities and the environment based on Petrobras’s experience in Latin America. Due to these impacts, Petrobras has developed its social and environmental policies, presented here based mainly on its intensive experience in Bolivia and Colombia. Excellence in environmental management is a factor of competitive differentiation among companies as well as an essential strategy for sustainable development1. In this aspect, the question is how to quantify economic resources for a company to promote social development and industrial growth, both in a sustainable way.  A methodology for social and environmental responsibility budgeting is presented according to the concept of Sustainable Industrial Growth. Two hypothetic projects are evaluated according to the presented concepts, considering the fiscal and contractual parameters of Argentina, Bolivia and Colombia.

Introduction The Petrobras Strategic Plan has been emphasizing growth and profitability in all its businesses, 2 while respecting the environment and increasing its social responsibility awareness . To achieve this, Petrobras believes it is necessary to improve social and environmental results, ensuring the maximum transparence and reliability in its operations, procedures, products and services. Social responsibility and the sustainable economic development help reducing the political risk an oil company may run into. E&P projects are characterized by their impacts on environment and are time consuming. Therefore it is very important for the company to keep good social relationships throughout its operational activity. This generates permanent benefits to the surrounding communities, making it a favorable situation for the company’s operational activities. On the other hand, due to the temporary nature of some E&P projects, social responsibility also means fostering sustainable projects to affected communities. In this paper, Petrobras’s social and environmental policies are presented along with its recent practices in Latin America. The examples of a gas field in Bolivia and an oil Field in Colombia are discussed. Next a method is presented, with the example of two E&P hypothetic projects, to define the budget of a company’s social and environmental policies by introducing the concepts of  Sustainable Industrial Growth and Uniform Contribution (see Section “Quantifying resources…”). The relationship between return and risk obtained by these cases is shown in the fiscal and contractual regimes of Argentina, Bolivia and Colombia.

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Impacts caused by the oil industry Petrobras has a large historic record of E&P activities in South America, having made investments in many countries. Presently it is settled in Colombia and Bolivia, but it is still incipient in Argentina.  A fundamental principle behind Petrobras’s operational activities is its concern about its projects’ social, economic, cultural, political and environmental impacts. E&P activities may cause rupture of  existing balances, changing living conditions, productive activities and existing social and cultural practices. These changes bring about a series of expectations in neighboring communities, whose social reality contrasts with significant investments3. Each of the E&P activities (seismic, wells, stations, plants, ducts, etc.) produces uncertainty and insecurity among locals. They fear the operation might cause damage to the environment and their  households. Petrobras behaves strictly when evaluating its projects’ social and environmental impacts, as well as when acting to eliminate or to alleviate identified environmental risks and damages. The communities, however, seem to be more worried about meeting their needs with the support of  an oil company than with the environmental issues themselves. The risks and impacts from E&P activities are evaluated by the environmental impact study and management plans. Actions are defined both to minimize the impacts and to compensate for  environmental and social damages. Petrobras highlights some social and environmental impacts, as well as some compensatory measures: Floating population increase, as a result of migration in search of job opportunities; Temporary changes in the work market, which compromises the traditional economic activities; Increase of consumer goods’ and real state’s prices; Non acceptance by locals of outside service contracts; Loss of public security quality; Increase of the region’s economic activity; Increase of tax collection; Noise, dust, traffic jam and road deterioration caused by heavy machinery; • • • • • • • •

On the other hand, some compensatory measures are highlighted by Petrobras:

Social improvement promoted by Petrobras’s initiatives; Terrain’s contention and stabilization; Reforesting and landscape recovery, preventing erosion; Treatment and discard of all its liquid, gas and solid waste according to the environmental norms; Water resource, air quality and noise level monitoring; • • • •

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It is during the production that Petrobras gets the most complaints, second only to its production stage when operations are reduced and stabilized. This is a natural and mirrors operation intensive activities.

Petrobras’s social and environmental policies Petrobras has been at the top in the ranking of companies investing in health, security and environment (HSE) in Brazil, as well as in community, educational and cultural projects 1. Unfortunately, however, the Company suffered two oil spills in 2000, which called for a re-evaluation of its HSE policy and its relationship with society 1. As a result, HSE excellence and social responsibility were highlighted in the Petrobras’s strategic plan, which has been in effect since 2001.

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Excellence and leadership in health, security and environment preservation issues, is one of the concerns in Petrobras, whose Units have been certified by the ISO 14009 and BS 8800 norms. Petrobras is the oil company with the greatest number of environmental certifications in the world. The HSE policy is an integral part of the company’s businesses and it is compatible to the concept of  sustainable development. The main commitments of this policy are: To act as a facilitator when dealing with parties involved in HSE issues; To ensure that the HSE legislation and the company’s norms are followed both by Petrobras and by suppliers and partners; To work towards protecting the human being and preventing environmental hazard by identifying and monitoring operational risks; To continuously improve HSE results; To search for HSE excellence standards in terms of conception, operation, maintenance, modernization and demobilization of the facilities, assessing their social, environmental and economic impacts; To educate, update, and promote awareness among employees regarding HSE issues, as well as to encourage suppliers and partners to get involved; To acknowledge employees contributions to improve HSE performance; To be prepared for emergencies and to act promptly in order to mitigate their impacts. • •

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 At the beginning of 2000 the Excellence in Environmental Management and Operational Security Program4 was created, sponsored by a budget of over US$ 1.0 billion between 2000 and 2003. The purpose is to provide maximum security to all operations, to minimize impacts from future accidents and to contribute to sustainable development. The Petrobras’s contingency plans aim at promoting prompt response capacity to emergencies brought about by its activities. The implementation of training programs to communities potentially exposed to risks should be promoted for the purpose of encouraging their commitment to prevention and contingency procedures. Petrobras states responsibility for the well being of communities surrounding its projects, by continuously evaluating the risks and impacts of its operations and keeping the population informed. Permanent communication channels are implemented in every Petrobras project. These channels not only broadcast opinions, suggestions and worries communities may have, but also file and forward their complaints. In its E&P activities in Colombia and Bolivia, Petrobras enforces its corporate guidelines on HSE and social relationship policies. As part of its social responsibility, the company is willing to contribute for  the improvement of life quality in its influence area, by promoting: Programs in partnership with governmental agencies, implementing projects of life quality improvement (health, education, food, etc.) for the low incomers; Employment, trade and service hiring in the operating region; Strengthening of traditional economic activities; Job opportunities by encouraging new micro-companies and cooperatives; Technical and professional qualification; Programs encouraging democratic participation of the community; Strengthening of community organizations active in the influence area; Cultural traditions and values. •

• • • • • • •

Social and environmental projects sponsored by Petrobras are chosen along with civil society representatives, community leaders and local public authorities. This aims at meeting the communities’ expectations and priorities and at the same time avoiding political misuse of  implemented actions.

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Social relationship and environmental projects in a Colombian Oil Field 

Petrobras is actively present in Colombia by implementing social and environmental programs in 5 several areas around the country . In 2001, over seventy two thousand people were benefited. The Colombian Oil Field is in a tourism intensive mountain region. As reservoirs are at shallow depths and sub-pressurized, Petrobras plans to start a water injection system, increasing the number of wells to be drilled to about 100. The Colombian Oil Field conditions are challenging and therefore Petrobras had to opt for drilling directional wells, creating production and injection islands. An aqueduct will be built to bring water from a river. Impacts from oil carried by trucks will have been eliminated by 2003. Production will be drained through a 52-kilometer oil pipeline yet to be built, whose way was chosen by the Environment Ministry of Colombia out of three alternatives presented by Petrobras. Due to the seismic acquisitions in the region in 2000 and 2001, 1,307 temporary jobs were created and 133 compensatory actions were carried out for the benefit of affected communities. In the middle of 2000, Petrobras formalized its Community Program for the Colombian Field area, with the participation of community leaders, municipal authorities and the population. In the years 2000 and 2001, Petrobras implemented 71 social projects in the areas of infrastructure, revenue generation, incentive to production, entertainment, education, qualification, culture, health and sanitation. Examples: Rural aqueduct construction, maintenance support in schools and community halls; Improvement of several rural roads around the project; restoring part of an important road, which was damaged by heavy traffic from production drainage; Farming and cattle-raising: 18 month-qualification program to 30 people from communities around the project, followed by the implementation of five sustainable projects with increased job opportunities; Agreements to support community production projects such as livestock and fishery; Acquisition of furniture and computers for schools and the Tolima University; Partnership with the Los Andes University and the municipal administration to provide training to civil servants for the municipal strategic planning; Training of 180 people in arts, theater, dance and related activities; COTIN Petrobras Program ( Colombia Tierra Nuestra ), supporting 130 infant-juvenile leaders; Integral health program for more than 500 people living in the project ‘s influence area; Construction of a cesspool in the Cualamana School, for the benefit of more than 400 pupils. • •

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• • • •

In accordance with the sponsorship law to environmental projects for water collection from natural resources (1% of investments), Petrobras defined a US$ 800 thousand investment program for the 2001 to 2003 period. Some of the projects should be highlighted for this program, some are detachable by their importance: Municipal waste water treatment and discarding, hydrographic basins recovery and maintenance, and construction of an ecological park in the Sumapaz River. Social relationship and environmental projects in a Bolivian Gas Field 

 After the Bolivian discovery in 1999, of one of the largest gas fields of the American continent, Petrobras developed a project, which has been considered a state-of-the-art HSE accomplishment. The field’s high productivity, which ranks Bolivia as the main gas supplier in the South Cone, along with environmental requirements by the Bolivian legislation, ecosystem frailties and an expressive influence area, resulted in a dynamic and diversified environmental and social program. The influence area comprises 11 rural communities and 2 municipalities, which surround 5 productive wells, 32 kilometers of pipelines and an operational base.

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The resources invested in environmental programs6 were used in projects to avoid erosion in impacted areas, to recover degraded areas through reforestation and to recycle used water in order  to minimize solid residues. Since the initial stage, there has been strong involvement with local communities, from which workers were recruited to set up nurseries for the production of seedlings used for reforestation, and vegetables donated to incomers. Petrobras has dedicated special attention to the Aguarague National Park. During the gas pipelines construction, changes were made in the original project in order to minimize impacts on the influence area inside the Park.  As for preservation of the cultural resources, Petrobras, in partnership with the National Archeological  Agency, recovered plenty of ceramic pieces in 5 sites of the Bolivian block.  All the Bolivian National Environmental Legislation requirements have been met, and the environmental management has been satisfactory. Petrobras’s sound and transparent behavior has significantly added to the establishment of a harmonious relationship with local authorities and the population. To complement the environmental program, the Social Action Plan 7 (SAP) was created. A long-term project, the SAP’s program will be executed from 2000 to 2018 and sponsored by US$1,35-million investment. Another US$ 500 thousand were invested until 2000, mainly in education and road construction and maintenance. SAP´s main targets are: To consolidate Petrobras’s social responsibility in the Bolivian Gas Field, implementing actions for the development of communities within the project’s influence area; To improve the life quality of those living in the influence area; To help communities to adjust to changes resulting from the Bolivian Gas Field Project; To compensate for communities affected on a long term and negative basis. •

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The program counts on boards formed by local authorities, regional institutions and organizations, and community representatives. This helps Petrobras keep direct contact with the communities and identify their needs and expectations more easily. These social activities have favoured economic activity, incentive to education, improved infrastructure, health, community organization, etc. The following examples are highlighted: Support to sustainable production, by encouraging of productive organizations such as associations and cooperatives, organizing qualification programs and providing technical assistance; Support to legalize community properties; Support to Indian organizations and cultural preservation; Support to build 10 schools in the region, with donation of school material and uniforms; Power supply to low income communities; Farming and cattle raising improvements production drainage; •

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Quantifying resources for a company’s social and environmental policies Sustainable development and social responsibility concepts increase the companies’ relationship with the society, promoting the development of HSE and social policies. However, the company according to what is defined herein as Sustainable Industrial Growth should internalise sustainable development. The Sustainable Industrial Growth concept is established at a rate that balances sustainable development and social responsibility, with the need of a return compatible to the business risk, allowing the industry to reinvest in projects of the same segment.

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Quantifying financial resources for promotion of HSE and social relations hip policies relative to an E&P project (or any other kind of investment) implies in the impact analysis of these resources on the cash flow and the project economic indicators. Social and environmental investments become more important as the E&P process advances, reaching its peak during the production development phase. Promoting development and social responsibility with sustainable results requires a relationship whose timeframe is compatible to the E&P activity. For this reason, a long-term investment policy is preferred because it allows for a continuous action planning. This planning promotes social and economic development, as well as the establishment of a sound relationship bond with communities. This cash regime is well represented by a uniform cash flow, whose use should be managed according to the present needs. The uniform cash flow not only simplifies the issue but also is also very fruitful, because it suggests an investment level to be followed. The difference between the foreseen and the actual investments should be compensated through adjustments in the past data of the uniform cash flow, adjusting its future investments. The Net Present Value (NPV) is the indicator chosen for the analysis of the impacts of the social and environmental investments on a project’s cash flow. The discount rate to be adopted (defined as Sustainable Industrial Growth Rate) aims at defining the limit for the uniform series, which should not compromise the concept of Sustainable Industrial Growth. This limit, defined as Endurance Margin, occurs when the discounted uniform series nullifies the project’s discounted cash flow. The Sustainable Industrial Growth Rate should include two items. The first one is the Minimum Rate of Return (MRR), adopted by the industry in investment decisions. The second one’s goal is to make growth feasible through reinvestment in other E&P risk projects. The MRR adopted by an oil company is confidential information, however, 10% can be considered a 8 value representative of the MRR cluster  . Similarly, each company should define its rate for  reinvestment in risk projects, which, at the industry’s discretion 8, sets the Sustainable Industrial Growth Rate for successful projects at an average of 25%. Analysis of the project at zero rate is also important, because it allows for a definition of the maximum value of a uniform series so as for the project not to suffer an accounting loss. The periodic monetary vector that is part of the uniform cash flow is defined in this paper as Uniform Contribution. Depending on the host country’s legislation, the Uniform Contribution series may be treated as investment (if they are depreciable or amortizable), as operational costs (if tax deductible), and as a part of the company’s profit. In practice, what happens is a combination of these three possibilities. To evaluate the proposed method, as well as some parameters derived from it, two E&P hypothetic project examples were simulated, namely, Oil Field and Gas Field. These two fields will be simulated in fiscal and contract regimes in Argentina, Bolivia and Colombia, where Petrobras runs E&P projects. This will allow us to compare and classify return and risk from the Oil and Gas Fields in the three host countries. Figure 1 shows the NPV behaviour (at a 25% discount) of the Oil Field as referring to different Uniform Contribution series in the fiscal and contractual regimes of Colombia’s Oil Field Block. The most unfavourable situation for a company happens when the Uniform Contribution is directly deducted from the project’s profit, and the most favourable one occurs if it is taken as an operational cost, resulting in higher NPV. This behaviour is the same in Argentina and Bolivia. When deducted from profit, the Uniform Contribution does not go through any fiscal deduction, which generates the worst result. But when entered as an operational cost, the Uniform Contribution is wholly deducted from gross revenue, reducing the income and remittance taxes and improving the cash flow result.

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Hypothetic Oil Field: Uniform Contribuiton x NPV @ 25% 2 1    % 0    5    2    @    ) -1    M    M    $ -2    S    U    (    P -3    V    N

Operational Cost Investment

-4

Compa ny Profit

-5 0,0

0,4

0,8 1,2 Uniform Co ntribution (US$ MM)

1,6

2,0

Figure 1 – Uniform Contribution as operational cost, investment, and company’s profit

The Uniform Contribution impact on the Oil Field’s NPV discounted at preset rates (0%, 10% and 25%) is shown in Figure 2. The Uniform Contribution, that nullifies the undiscounted cash flow (0% discount rate), defines the limit to avoid accounting loss, and therefore is defined as Zero Profit Margin (a+b+c). Discounting the project’s cash flow at 10% (MRR), a new Uniform Contribution is defined to nullify the NPV. The difference between the Zero Profit Margin and this new Uniform Contribution value, defines the Minimum Margin of Return ( c). The Uniform Contribution that nullifies the NPV discounted at 25% (Sustainable Industrial Growth Margin) defines the uniform series’ maximum value, which does not compromise the E&P activity growth, defined as Endurance Margin (a). The difference between the Zero Profit Margin and the Endurance Margin is the Sustainable Industrial Growth Margin (b+c). Zero Profit Margin

200

=

Sustainable Industrial Growth Margin

+

Endurance Margin

Hypothetic Oil Field: Uniform Contribuiton as Operational Costs 0%

160    )    M    M    $    S    U    (    P    V    N

10% 25%

120 80

Zero Gain Uniform Margin

40

b

c

0

a

-40 0,0

5,0

10,0

15,0

20,0

25,0

30,0

Uniform Contr ibution (US$ MM)

Figure 2 – The Uniform Contribution impact on NPV, discounted at preset rates, defining Margin concept

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When dealing with the uniform series as Investments, operational cost or part of the company’s profit, different values of the aforementioned Margin concepts are obtained. However, the relationship shown in Figures 1 and 2 is preserved. The Oil Field’s cash flow compared to the uniform series of the Margin concepts is shown in Figure 3: Hypothetic Oil Field: Cash Flow and Margins as Investment (IRR = 25,9%)

30

Cash Flow

25

Investment

Zero Profit M argins as:

20 15

Company's Profit Operational Cost

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 .    M    M    $    S    U

5 0

a

-5

b

-10 c

-15 -20 -25 -30 1

3

5

7

9

11

13

15

17

19

21

23

25

Figure 3 – Oil Field cash flow and Margins

This same method was also applied to the hypothetic Gas Field in Bolivia, whose results are summarized in Figure 4. Hypothetic Gas Field: Cash Flow and Uniform Margins as Company's Profit (IRR = 29 %) 120 Cash Flow

100 80

Company's Profit Investments Operational Costs

Zero Profit M argins as :

60 40 20

   M    M 0    $    S    U -20

a

 b c

-40 -60 -80 -100 -120 1

3

5

7

9

11

13

15

17

19

21

23

25

Ano

Figure 4 – Gas Field cashflow and Margins

The Uniform Contribution and Margin concepts introduced herein are useful since they allow for the creation of project investment indicators. The Endurance Margin indicates the financial limit for the policy for the company’s continuous investment in social and environmental actions, without compromising the expected economic result in terms of Sustainable Industrial Growth. The Endurance Margin should also absorb any other  unexpected or underestimated expenses in a project’s economic analysis. On the other hand, compulsory social and environmental investments foreseen in a project’s environmental impact study should not be assessed within this concept. These investments have to be included in the project’s cash flow in order to contribute to the Endurance Margin calculation.

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The greater the Endurance Margin is, the smaller the project’s probability to result in negative NPV is.  As this is an undesired result associated to a probability, it is characterized as a risk. Figures 5 and 6 show the return (NPV) of the hypothetic Oil and Gas Fields under the fiscal and contractual regimes in Argentina, Bolivia and Colombia (Oil Field’s Block Contract). These Figures demonstrate that Argentina offers the best return (NPV) to E&P projects, followed by Bolivia and Colombia. Hypothetic Oil Field (56 MM bbl) NPV with different discount Rates

Hypothetic Gas Fie ld (3,2 TCF) NPV with different discount Rates

350  .    )    M    M    $    S    U    (    V    P    N

300

0%

250

10%

200

25%

150 100 50

1500 1300

 .

0%

   ) 1100    M    M900    $    S700    U    ( 500    V300    P    N100

-100

0

10% 25%

 Argentina

Bolivia

Colombia

0%

1589,75

1361,45

438,59

50,99

10%

379,67

305,80

90,60

1,28

25%

33,16

15,27

-7,56

 Argentina

Bolivia

Colombia

0%

332,46

317,08

192,19

10%

98,40

82,51

25%

11,45

1,87

Figure 5 and 6 – NPV of Oil and Gas Fields under Argentina, Bolivia and Colombia’s regimes

Tables 1 and 2 show the values of the defined Margin concepts in the cases under study. Margins (US$ MM) as Investment a+b+c (0%) a+b (10%) a (25%) s (example)  Argentina Bolivia Colombia

Zero Profit

Minimum

Endurance

SIG

76,38 72,52 63,48

50,14 39,81 24,90

8,41 4,10 0,00

67,97 68,42 63,48

s Example 0,20 0,20 0,20

s/a 2% 5% infinite

Table 1 – Hypothetic Gas Field (3,2 TCF and 46,7 MM bbl of condensate) Margins (US$ MM) as Expenses a+b+c (0%) a+b (10%) a (25%) s (example)  Argentina Bolivia Colombia

Zero Profit

Minimum

Endurance

SIG

15,01 21,30 27,26

14,34 13,66 18,65

3,55 0,64 1,06

11,46 20,66 26,20

s Example 0,20 0,20 0,20

s/a 6% 31% 19%

Table 2 - Hypothetic Oil Field (56,5 MM bbl)

The Endurance Margin (a) is a useful indicator for comparison among E&P projects discounted at the same rate, even in distinct fiscal and contract regimes. The Gas Field in the Colombian contract and fiscal regime shows negative NPV (@ 25%), which means its Endurance Margin would be zero. Such a fact is so because it is an example with expressive reserves enough to trigger the R Factor, increasing royalties to 16.3% and reducing the private partner’s share from 50% to 25%. Based on the hypothetic Gas Field example, Argentina would offer the best return, along with the smallest risk (higher Endurance Margin), followed by Bolivia and, finally, Colombia. In the Oil Field analysis, there is a certain inversion in this classification. Argentina would still hold the best situation with the greatest return and the smallest risk. Bolivia’s return again surpasses Colombia, despite of  the fact that the latter’s royalties do not exceed 6% and there is no R Factor implementation.

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Colombia’s performance is due to the fact that the state-owned company takes part in the project, based on the acceptance of the Gas Field’s marketability, which substantially affects NPV. However, since Colombia’s Endurance Margin is higher than Bolivia’s, this means a smaller risk to the project’s economic return. The best E&P project performance in Argentina is due to its fiscal regime. However, the creation of a new oil export tax might bring about changes in the described results. This scenario has not been evaluated in this paper due to uncertainties regarding the subject while it was being written. Periodic investments in social and environmental project policies due to company initiative (s) are represented on Tables 1 and 2 at a hypothetic US$ 200 thousand value per year. The relationship of  that value with the Endurance Margin ( s/a) defines the Social and Environmental Commitment Index. If convenient, the social and the environmental items can be separated from each other, allowing a more detailed control of each of them. In the Gas Field, the Index values are lower than those values of the Oil Field, due to the former’s greater reserves. As for the Colombian contract, it is seen that a single dollar would increase the Social and Environmental Commitment Index to an infinite value. This is so because the project’s NPV at the Sustainable Growth Rate is negative, nullifying the Endurance Margin. The value of this Index adds to defining the investment for the social and environmental policies, in such a way that these investments will be compatible with the Sustainable Industrial Growth.

Conclusions The oil industry may cause changes on the previously existing social and environmental balances in areas where it operates. Environmental management and social responsibility are not only essential strategies for the Sustainable Industrial Growth, but also reduce the political risk an oil company is subject to. The Sustainable Industrial Growth concept is established at a rate that balances sustainable development and social responsibility, with the need of a return compatible to the business risk, allowing the industry to reinvest in projects of the same segment. Petrobras displays social and environmental policies in its projects, having well-structured policies, whose application is confirmed in its operating units in Bolivia and Colombia. The long-term social and environmental investment policies are advantageous, because they enable social and economic development planning and foster sound relationships with communities. The uniform cash flow stands well for these long-term investment policies and it determines an investment level to be pursued by a company. Endurance Margin occurs when the discounted Uniform Contribution series nullifies the project’s discounted cash flow (both at the Sustainable Industrial Growth Rate). Applying the Social and Environmental Commitment Index chosen by a company, it is possible to define the investments available for social and environmental policies. The proposed methodology to quantify a company’s social and environmental investments matches social responsibility and sustainable development to Sustainable Industry Growth. The discount rates to be adopted depend on each company. The Uniform Contribution to be applied, as social and environmental policies, should be periodically reviewed. High Sustainable Industrial Growth rate and fiscal and contractual severe regimes may compromise a company’s social responsibility.

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Since an oil company’s E&P portfolio has projects with different returns and Endurance Margins, its social and environmental investments should be quantified at the portfolios level before being distributed among projects.

Acknowledgements The views and ideas expressed in this paper reflect the author’s beliefs and understanding, not his employer’s or its partners. All the information about Petrobras presented herein is of public access.  A lot of Petrobras authors contributed for the making of this paper. I thank them very much. I would also like to highlight all the discussions, suggestions and reviews by several of my co-workers in Petrobras, and especially the suggestions and encouragement by Adauto Pereira Carneiro, E&P International Portfolio Manager. I also thank Luiz Gustavo Primo, HSE Manager of Petrobras in Colombia, for his valuable contribution.

References 1. Petrobras, Balanço Social da Petrobrás 2000, Petrobrás, 2001. In (http://www.petrobras.com.br/). 2. Petrobras, Atualização do Plano Estratégico da Petrobras 2010, outubro de 2001, Petrobrás. In http://www.petrobras.com.br/ . 3. Petrobras Colombia, Impactos Generados por la Industria Petrolera, Petrobras Colombia, 2002. 4. Petrobras, PEGASO, 2000, http://www.petrobras.com.br/. 5. Petrobras Colombia, Informe anual Socio-Ambiental, Petrobras UN-COL, enero de 2001, Petrobrás Colombia, 2002. 6. Petrobras Bolivia, Relatorio Anual de Atividades 1999 ASEMA, Petrobras Bolivia, 2000. 7. Petrobras Bolivia, Balance Social 2000, Petrobras Bolivia, 2001. 8. Pereira, A.C., A Abertura do Mercado Brasileiro para Exploração e Produção de Petróleo, FGV, 2000.

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