Fitch Ratings Affirms Petrobras Energia at 'B'.

BUENOS AIRES, Argentina & CHICAGO -- Fitch Ratings has affirmed the following ratings of Petrobras Energia (PE) :

-- International local currency rating at 'B';

-- Foreign currency rating at 'BB-';

-- Argentine national scale rating at ' AA-(arg)'.

All ratings have a Stable Outlook.

PE's ratings incorporate its solid credit profile, significant oil and gas reserves, geographic diversification of its assets, significant cash generation outside of Argentina, and its ability to retain a material amount of export revenues offshore. The international ratings continue to be constrained by the Argentine sovereign environment. Currently, a high level of uncertainty exists as to the company's activities in Venezuela, which represent approximately 30% of the PE's EBITDA and oil production. The measures adopted in 2005 by the Venezuelan government may have a material impact on the cash flow generation of the company, potentially pressuring its credit quality. Nevertheless, PE's proven access to financing sources, the potential support of its controlling shareholder, and the improvement in credit protection measures in 2005 should mitigate the possible reduction in cash flow.

PE reported solid credit protection measures that have benefited from the global increase in the price of oil, refined, and petrochemical products limited by the effect of its hedging policy and export taxes. Through September 2005, the company reported interest coverage of 6.2 times (x), net debt-to-EBITDA of 1.8x, and debt-to-capitalization of 48%, consistent with the assigned ratings. Although for the current year the company anticipated a gradual reduction of its indebtedness, through September 2005 this has not yet materialized. Still, PE maintains a leverage position consistent with higher rated entities outside of Argentina, and as such, its debt levels are not a constraint on the ratings.

PE is one of the most vertically integrated energy conglomerates in Latin America, with operations encompassing virtually all segments of the energy value chain. Core business activities include oil and gas exploration and production; refining and marketing; petrochemicals; and electricity. PE is controlled by Petrobras Energia Participacoes S.L. (Participacoes), a holding company that is in turn controlled by Brazil's national oil company, Petrobras (senior unsecured foreign currency rating of 'BB-' by Fitch).

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.