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____

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(Rio de Janeiro, January 3, 2007). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that it has signed a Lease Agreement and an Operation and Maintenance Service-Rendering Agreement with UEG Araucaria – UEG and COPEL.

The Lease Agreement for the Araucaria Gas Thermoelectric Plant, signed between Petrobras and UEG, will be in effect through December 31st 2007, with the possibility to be extended for an additional period of up to 12 (twelve) months pursuant to an agreement between the parts; meanwhile, the second agreement, for UEG Araucaria Operation and Maintenance Service-Rendering, signed between Petrobras and COPEL Geração, will be in effect through December 31st 2008, or until the Lease Agreement expires, whichever occurs first.

According to the two agreements, a fixed monthly installment of R$19.00 per MWh multiplied for the reference power (428.35 MW) plus a variable monthly installment of R$33.23 per MWh, will be paid based on the actual energy generated. These resources will be destined to cover all of the costs and taxes owed by UEG.

By signing these agreements, it will be possible to better allocate the gas that is produced to attend to the ballast commitments regarding the energy the company sells.

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 - 22nd floor 20031-912 – Rio de Janeiro, RJ (55-21) 3224-1510 / 9947

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This document may contain forecasts that merely reflect the expectations of the Company’s management. Such terms as “;;anticipate”, “;;believe”, “;;expect”, “;;forecast”, “;;intend”, “;;plan”, “;;project”, “;;seek”, “;;should”, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.

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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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