Petrobras follows up on the review of its participation in the fertilizer sector

03/20/2018

Rio de Janeiro, March 20, 2018 – Petróleo Brasileiro S.A. – Petrobras reports that it has decided to mothball its fertilizer plants located in Sergipe ("Fafen-SE") and Bahia ("Fafen-BA").

The decision to mothball these units is aligned with the company’s strategic position to fully withdraw from fertilizer production activities, pursuant to its 2018-2022 Business and Management Plan. Besides, in 2017, Fafen-SE and Fafen-BA featured negative results close to R$ 600 million and R$ 200 million, respectively, and the long-term scenario still shows negative results.

As such, Petrobras made a provision for impairment of the fertilizer plants in the 4Q 2017, resulting in an amount of R$ 1.3 billion. The information relating to this provision is presented in the 2017 financial statements, in Explanatory Note 14 - Impairment.

The mothballing of both units should start by the end of the first half of 2018. This process basically consists in the progressive shutdown of production at the industrial units, adopting for such conservation actions for the equipment and prevention of environmental impacts, while preserving the integrity of the facilities. Petrobras has prepared a transition plan for suppliers and clients, which will be implemented from the disclosure herein, as well as social responsibility actions whose purpose is to mitigate impacts that may occur to the communities.