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      Petrobras concludes acquisition of Shell’s Paraguayan merchandizing and distribution business

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(Rio de Janeiro, March 31, 2006). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA], a Brazilian international energy company, announces that on March 31 it concluded the acquisition of Shell’s merchandizing and distribution business in Paraguay, with respect to the fuel operations (retail and commercial market). The acquisition includes the service stations together with the convenience stores throughout Paraguay, the LPG merchandizing assets and the installations for the sale of aviation fuels at Asuncion and Cidade Del Este airports.

As from March 30, the service stations under the Shell banner will be operating under Petrobras’ responsibility. The changeover from the Shell to the Petrobras brand name will be concluded within 18 months. Within in this period, all service stations will have been converted to the Petrobras design and livery. The service stations’ customer relationships will be maintained in order to maximize the business potential in Paraguay,

Petrobras will maintain existing employee benefits and will continue to provide employment to Shell’s entire labor force in the country.

Paraguay is geographically strategic to Petrobras given its proximity to Brazil, Argentina and Bolivia. The logistical boost provided by this acquisition presents excellent growth potential as well as possibilities of capturing synergies in conjunction with Petrobras’ existing Southern Cone assets.

This operation is in line with Petrobras’ Strategic Planning objectives of consolidation as an integrated energy company with a strong international presence and as a leader in Latin America.

http: //www.petrobras.com.br/ri/english

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Contacts:

Petróleo Brasileiro S.A – PETROBRAS
Investor Relations Department
Raul Adalberto de Campos– Executive Manager
E-mail: petroinvest@petrobras.com.br
Av. República do Chile, 65 - 22^nd floor
20031-912 – Rio de Janeiro, RJ
(55-21) 3224-1510 / 9947

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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