Risk management (Tables)

12 Months Ended

Dec. 31, 2018

Summary of the Positions of the Derivative Financial Instruments Held by the Company

A summary of the positions of the derivative financial instruments held by the Company and recognized in other current assets and liabilities as of December 31, 2018 , as well as the amounts recognized in the statement of income and other comprehensive income and the guarantees given is set out as follows:


	Statement of Financial Position
	Notional value						Fair value Asset Position (Liability)						Maturity
	12.31.2018			12.31.2017			12.31.2018			12.31.2017
Derivatives not designated for hedge accounting
Future contracts - total (*)		(14,043	)		(15,561	)		108			(98	)

Long position/Crude oil and oil products		40,017			43,862			—			—			2019/2020
Short position/Crude oil and oil products		(54,060	)		(59,423	)		—			—			2019/2020
Forward contracts - total
Long position/Foreign currency forwards (BRL/USD) (**)	US$	137		US$	55			(2	)		0.3			2019
Short position/Foreign currency forwards (BRL/USD) (**)	US$	92		US$	78			(1	)		(0.3	)		2019
Long position/Foreign currency forwards (EUR/USD) (**)	EUR	3000			—			(123	)					2019
Long position/Foreign currency forwards (GBP/USD) (**)	GBP	419			—			(11	)
Swap								—			—
Foreign currency / Cross-currency Swap (**)	GBP	700		GBP	700			0.5			92			2026
Foreign currency / Cross-currency Swap (**)	GBP	600		GBP	600			(70.5	)		13			2034

Total recognized in the Statement of Financial Position								(99	)		7

(*)	Notional value in thousands of bbl.

(**)	Amounts in US$, GBP and EUR are presented in million.

Summary of Amounts Recognized and Guarantees Given Related to Derivative Financial Instruments


	Gains/(losses) recognized in the *statement of income ()**									Gains/(losses) recognized in the Shareholders’ Equity ()**
	2018			2017			2016			2018			2017			2016
Commodity derivatives		(409	)		(144	)		(48	)		—			(9	)		—
Foreign currency derivatives		(366	)		89			(55	)		—			1			7
Interest rate derivatives		—			(9	)		(8	)		—			6			4

		(775	)		(64	)		(111	)		—			(2	)		11
Cash flow hedge on exports (***)		(3,315	)		(3,154	)		(2,841	)		(5,635	)		2,611			13,620

Total		(4,090	)		(3,218	)		(2,952	)		(5,635	)		2,609			13,631

(*)	Amounts recognized in finance income in the period.

(**)	Amounts recognized as other comprehensive income in the period.

(***)

Using non-derivative financial instruments as designated hedging instruments, as set out in note 34.2.


	Guarantees given as collateral
	12.31.2018			12.31.2017
Commodity derivatives		(48	)		205
Foreign currency derivatives		70			(50	)

Total		22			155

Summary of Sensitivity Analysis of the Derivative Financial Instruments


Financial Instruments	Risk		Probable Scenario (*)		Reasonably possible *scenario ()**			Remote *Scenario ()**
Derivatives not designated for hedge accounting
Future contracts		Crude oil and oil products - price changes		—		(134	)		(268	)
Forward contracts		Foreign currency - depreciation BRL x USD		1		(11	)		(23	)

				1		(145	)		(291	)

(*)

The probable scenario was computed based on the following risks: oil and oil products prices: fair value on December 31, 2018 / R$ x U.S. Dollar - a 2.7% appreciation of the Real.Source: Focus and Bloomberg. Reasonably possible and remote scenarios consider 25% and 50% deterioration in the associated risk variables, respectively.

Summary of Carrying Amounts, the Fair Value and Schedule of Expected Reclassifications

Present value of hedging instrument notional value at

12.31.2018

Hedging Instrument

Hedged Transactions

Nature

of the Risk

Maturity

Date

(US$ million)

(R$ million)

Foreign exchange gains and losses on proportion ofnon-derivative financial instruments cash flows

Foreign exchange gains and losses on a portion of highly probable future monthly exports revenues

Foreign Currency – Real vs U.S. Dollar Spot Rate

January 2019 to December 2028

66,168

256,390


Changes in the present value of hedging instrument notional value	US$			R$ million
Amounts designated as of December 31, 2017		58,400			193,189

Additional hedging relationships designated, designations revoked and hedging instruments re-designated		31,521			116,927
Exports affecting the statement of income		(6,881	)		(25,151	)
Principal repayments / amortization		(16,872	)		(61,277	)
Foreign exchange variation		—			32,702

Amounts designated as of December 31, 2018		66,168			256,390

Nominal value of of hedging instrument at December 31, 2018		75,223			291,476

Schedule of Expected Reclassification of Cumulative Foreign Exchange Losses Recognized

A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of December 31, 2018 is set out below:


	Exchange rate			Tax effect			Total
Balance at January 1,2017		(17,119	)		5,822			(11,297	)

Recognized in shareholders’ equity		(543	)		185			(358	)
Reclassified to the statement of income - occurred exports		3,151			(1,071	)		2,080
Reclassified to the statement of income - exports no longer expected or not occurred		3			(1	)		2

Balance at December 31, 2017		(14,508	)		4,935			(9,573	)

Recognized in shareholders’ equity		(8,950	)		3,043			(5,907	)
Reclassified to the statement of income - occurred exports		3,315			(1,127	)		2,188

Balance at December 31, 2018		(20,143	)		6,851			(13,292	)

Summary of Sensitivity Analysis for Foreign Exchange Risk on Financial Instruments


Financial Instruments	Exposure at 12.31.2018			Risk		Probable Scenario (*)			Reasonably possible scenario			Remote Scenario
Assets		7,182					(194	)		1,795			3,591
Liabilities (**)		(73,199	)		Dollar/Real		1,980			(18,300	)		(36,600	)
Cash flow hedge on exports		66,169					(1,790	)		16,542			33,084

		152					(4	)		37			75
Liabilities		—			Yen/Dollar		—			—			—

		—					—			—			—
Assets		8			Euro/Real		—			2			4
Liabilities		(20	)		Euro/Real		1			(5	)		(10	)

		(12	)				1			(3	)		(6	)
Assets		3,520			Euro/Dollar		13			880			1,760
Liabilities		(6,738	)				(25	)		(1,684	)		(3,369	)
Non Deliverable Forward (NDF)		3,437					13			859			1,718

		219					1			55			109
Assets		1			Pound Sterling/Real		—			—			1
Liabilities		(20	)		Pound Sterling/Real		—			(5	)		(10	)

		(19	)				—			(5	)		(9	)
Assets		2,337			Pound Sterling /Dollar		35			584			1,169
Liabilities		(4,031	)		Pound Sterling /Dollar		(60	)		(1,008	)		(2,016	)
Derivative - cross currency swap		1,665					25			416			832
Non Deliverable Forward (NDF)		537					8			134			268

		508					8			126			253

Total		848					6			210			422

(*)

On December 31, 2018, the probable scenario was computed based on the following risks: R$ x U.S. Dollar - a 2.7% appreciation of the Real / Japanese Yen x U.S. Dollar - a 1% depreciation of the Japanese Yen/ Euro x U.S. Dollar: a 0.4% appreciation of the Euro / Pound Sterling x U.S. Dollar: a 1.5% appreciation of the Pound Sterling / Real x Euro - a 2.3% appreciation of the Real / Real x Pound Sterling - a 1.2% appreciation of the Real. Source: Focus and Bloomberg.

(**)	It includes the Class Action provision as set out note 31.4.

Summary of Credit Quality of Cash and Cash Equivalents, and Marketable Securities

Credit quality of cash and cash equivalents, as well as marketable securities is based on external credit ratings provided by Standard & Poor’s, Moody’s and Fitch. The credit quality of those financial assets, that are neither past due nor have been impaired, are set out below:


	Cash and cash equivalents				*Marketable securities ()**
	2018		2017		2018		2017
AAA		—		—		1		—
AA		811		752		—		609
A		8,421		14,864		—		—
BBB		51		801		—		—
BB		2,599		3,566		—		—
B		2		4		—		—
AAA.br		706		126		1,077		—
AA.br		1,299		818		58		—
A.br		—		1,239		—		—
BB.br		—		317		—		1,162
Other ratings		10		32		—		—

		13,899		22,519		1,136		1,771

(*)

In 2017, it does not include the former investiment in São Martinho shares as described in note 10.

Summary of Maturity Schedule of the Company's Finance Debt

A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set out as follows:


Maturity	2019		2020		2021		2022		2023		2024 and thereafter		Balance at December 31, 2018		Balance at December 31, 2017
Principal		2,408		4,069		7,148		10,441		12,118		49,095		85,279		110,530
Interest		4,952		4,839		4,574		4,148		3,516		29,330		51,359		60,728

Total		7,360		8,908		11,722		14,589		15,634		78,425		136,638		171,258

Summary of Information Concerning the Insurance Coverage Outstanding

The main information concerning the insurance coverage outstanding at December 31, 2018 is set out below:


Assets	Types of coverage		Amount insured
Facilities, equipment inventory and products inventory		Fire, operational risks and engineering risks		145,891
Tankers and auxiliary vessels		Hulls		3,341
Fixed platforms, floating production systems and offshore drilling units		Oil risks		28,611

Total				177,843

Foreign Exchange Losses [Member]

Statement [LineItems]

Schedule of Expected Reclassification of Cumulative Foreign Exchange Losses Recognized

A schedule of expected reclassification of cumulative foreign exchange losses recognized in other comprehensive income to the statement of income as of December 31, 2018 is set out below:


	2019			2020			2021			2022			2023			2025			2025		2026 to 2028		Total
Expected realization		(4,670	)		(4,085	)		(3,875	)		(4,230	)		(2,543	)		(1,353	)		152		461		(20,143	)