SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2008
PETROCHINA COMPANY LIMITED
16 ANDELU, DONGCHENG DISTRICT
BEIJING, THE PEOPLE'S REPUBLIC OF CHINA, 100011
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of 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
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- )
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PetroChina Company Limited (the "Registrant") is furnishing under the cover
of Form 6-K the Registrant's announcement with respect to the renewal of
continuing connected transactions in respect of 2009 to 2011 and the revised
caps of continuing connected transactions in respect of 2008.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any of the contents of this announcement.
(PETROCHINA COMPANY LIMITED LOGO)
(CHINESE CHARACTERS)
PETROCHINA COMPANY LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(STOCK CODE: 857)
1. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2009 TO 2011
2. REVISED CAPS OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2008
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RENEWAL OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2009 TO 2011
References are made to the circular of the Company dated 22 September 2005 in
relation to the Continuing Connected Transactions and the circular of the
Company dated 14 September 2006 revising certain annual caps of the Continuing
Connected Transactions. At the extraordinary general meetings of the Company
held on 8 November 2005 and 1 November 2006 respectively, the Independent
Shareholders and/or Shareholders (as the case may be) approved the Continuing
Connected Transactions and the annual caps for the three years ending 31
December 2008 and the subsequent revision of certain annual caps.
The Company would continue the Continuing Connected Transactions after 31
December 2008 and therefore will, in accordance with the HKEx Listing Rules,
comply with the provisions of Chapter 14A of the HKEx Listing Rules in relation
to the Continuing Connected Transactions for the next three years (i.e. from 1
January 2009 to 31 December 2011), including disclosing further information
thereof in this announcement and seeking approvals from the Independent
Shareholders and/or Shareholders for the Non-Exempt Continuing Connected
Transactions (including the relevant Proposed Caps).
REVISED CAPS OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2008
References are made to the circular of the Company dated 22 September 2005 in
relation to the Continuing Connected Transactions and the circular of the
Company dated 14 September 2006 revising certain annual caps of the Continuing
Connected Transactions. At the extraordinary general meetings of the Company
held on 8 November 2005 and 1 November 2006 respectively, the Independent
Shareholders and/or Shareholders (as the case may be) approved the Continuing
Connected Transactions and the annual caps for the three years ending 31
December 2008 and the subsequent revision of certain annual caps.
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The Company has closely monitored the performance of the Continuing Connected
Transactions. The Board considers that the existing annual cap in respect of
2008 for certain categories of the Continuing Connected Transactions, namely the
Relevant Categories, may not be able to satisfy the Group's requirements for the
whole year. The Board therefore proposes that the existing annual cap for the
Relevant Categories in respect of 2008 be revised in order to cater for the
Group's demand for the year ending 31 December 2008.
APPROVAL BY INDEPENDENT SHAREHOLDERS
As CNPC holds approximately 86.29% of the issued share capital of the Company,
it is a controlling shareholder of the Company. CRMSC, being a substantial
shareholder of the Company's subsidiary, PetroChina & CRMSC Oil Marketing.
Beijing Gas is a substantial shareholder of the Company's subsidiary, Huayou. By
virtue of the above relationships, each of CNPC, CRMSC and Beijing Gas is a
connected person of the Company under the HKEx Listing Rules. Transactions
between the Company and each of CNPC, CRMSC and Beijing Gas constitute connected
transactions of the Company under the HKEx Listing Rules. The Proposed Caps in
respect of the Non-Exempt Continuing Connected Transactions and the Revised
Non-Exempt Annual Caps are subject to approval by the Independent
Shareholders/Shareholders under the HKEx Listing Rules. In view of the interests
of CNPC, CNPC and its associates will abstain from voting in relation to the
resolutions approving the entering into of the New Comprehensive Agreement and
the Proposed Caps in respect of the Non-Exempt Continuing Connected Transactions
and the Revised Non-Exempt Annual Caps under the Comprehensive Agreement. In
view of the interests of CRMSC, CRMSC and its associates will abstain from
voting in relation to the resolutions approving the supplemental agreement to
the CRMSC Products and Services Agreement and the Non-Exempt Continuing
Connected Transaction under the CRMSC Products and Services Agreement.
An Independent Board Committee has been formed to advise the Independent
Shareholders/Shareholders in connection with the terms of the Revised Non-Exempt
Annual Caps and the Proposed Caps in respect of the Non-Exempt Continuing
Connected Transactions, and the Independent Financial Advisor has been appointed
to advise the Independent Board Committee and the Independent
Shareholders/Shareholders on the same.
HKEX LISTING RULES IMPLICATIONS
The views of the Independent Board Committee as well as the advice of the
Independent Financial Advisor to the Independent Board Committee in respect of
the Revised Non-Exempt Annual Caps and the Proposed Caps in respect of the
Non-Exempt Continuing Connected Transactions will be stated in a circular to be
despatched to the Shareholders.
A circular containing, amongst other things, further information on the terms of
the Continuing Connected Transactions, a letter from the Independent Board
Committee, an opinion of the Independent Financial Advisor, together with a
notice to convene the Extraordinary General Meeting to approve the Revised
Non-Exempt Annual Caps and the Proposed Caps in respect of the Non-Exempt
Continuing Connected Transactions, is expected to be issued to the Shareholders
as soon as practicable.
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1. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2009 TO 2011
1.1 Background
References are made to the circular of the Company dated 22 September 2005
in relation to the Continuing Connected Transactions and the circular of
the Company dated 14 September 2006 revising certain annual caps of the
Continuing Connected Transactions. At the extraordinary general meetings
of the Company held on 8 November 2005 and 1 November 2006 respectively,
the Independent Shareholders and/or Shareholders (as the case may be)
approved the Continuing Connected Transactions and the annual caps for the
three years ending 31 December 2008 and the subsequent revision of certain
annual caps.
The Company would continue the Continuing Connected Transactions after 31
December 2008 and therefore will, in accordance with the HKEx Listing
Rules, comply with the provisions of Chapter 14A of the HKEx Listing Rules
in relation to the Continuing Connected Transactions for the next three
years (i.e. from 1 January 2009 to 31 December 2011), including disclosing
further information thereof in this announcement and seeking approvals
from the Independent Shareholders and/or Shareholders for the Non-Exempt
Continuing Connected Transactions (including the relevant Proposed Caps).
1.2 Continuing connected transactions under the Comprehensive Agreement
1.2.1 The existing Comprehensive Agreement
The Company and CNPC initially entered into the Comprehensive Agreement on
10 March 2000 for the provision (1) by the Group to CNPC and (2) by CNPC
to the Group, of a range of products and services which may be required
and requested from time to time by either party and/or its subsidiaries
and relevant units (including their respective subsidiaries, branches and
relevant units). The Comprehensive Agreement was amended by the First
Supplemental Comprehensive Agreement and the Second Supplemental
Comprehensive Agreement. The material terms are as follows:
(1) Products and services to be provided by the Group to CNPC and the
Jointly-held Entities
Under the Comprehensive Agreement, products and services to be
provided by the Group to CNPC include those relating to refined oil
products, chemical products, natural gas, crude oil, supply of
water, electricity, gas, heating, quantifying and measuring, quality
inspection and other products and services as may be requested by
CNPC for its own consumption, use or sale from time to time.
Under the Comprehensive Agreement, it was agreed that, among other
things, the Group shall provide to the Jointly-held Entities
products and services including crude oil, refined products,
petrochemical products, natural gas products on the same pricing
basis as those products and services to be provided by the Group to
CNPC.
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(2) Products and services to be provided by CNPC to the Group
The products and services to be provided by CNPC to the Group are
expected to be more numerous, both in terms of quantity and variety,
than those to be provided by the Group to CNPC. They have been
grouped together and categorised according to the following types of
products and services:
(a) Construction and technical services, mainly associated with
products and services to be provided at the stage prior to
commission and production, including but not limited to
exploration technology service, downhole operation service,
oilfield construction service, oil refinery construction
service and engineering and design service;
(b) Production services, mainly associated with products and
services to be provided after the formal commission and
production has taken place, arising from the day-to-day
operations of the Group, including but not limited to water
supply, electricity generation and supply, gas supply and
communications;
(c) Material supply services, mainly involving the agency services
on the procurement of materials both before and after
commission and production, including but not limited to
purchase of materials, quality control, storage of materials
and delivery of materials, which by virtue of its nature, are
not covered in the construction and technical services and
production services referred to above;
(d) Social and ancillary services, including but not limited to
security services, education, hospitals, property management,
staff canteen, training centers and guesthouses; and
(e) Financial services, including loans and other financial
assistance, deposits services, entrustment loans, settlement
services and other intermediary services.
(3) Financial services to be provided by the Group to jointly controlled
entities
Financial services including but not limited to provision of
entrustment loans and guarantees.
1.2.2 General principles, pricing and terms
The Comprehensive Agreement (as amended) requires in general terms
that:
- the quality of products and services to be provided
should be satisfactory to the recipient;
- the price at which such products and services are to be
provided must be fair and reasonable; and
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- the terms and conditions on which such products and
services are to be provided should be no less favourable
than those offered by independent third parties.
1.2.3 Pricing determination
The Comprehensive Agreement details specific pricing principles for
the products and services to be provided pursuant to the
Comprehensive Agreement. If, for any reason, the specific pricing
principle for a particular product or service ceases to be
applicable, whether due to a change in circumstances or otherwise,
such product or service must then be provided in accordance with the
following general pricing principles:
(a) government-prescribed price (at present, this applies to
products and services such as refined oil products, natural
gas, oil refinery construction, engineering and design,
project monitoring and management); or
(b) where there is no government-prescribed price, then according
to the relevant market prices (at present, this applies to
products and services such as asset leasing, repair of
machinery, transportation, purchase of material, and regional
facilities); or
(the above definitions were amended by the First Supplemental
Agreement. Please refer to the details set out in the
sub-section headed "First Supplemental Agreement")
(c) where neither (a) nor (b) is applicable, then according to:
(i) the actual cost incurred (at present, this applies to
products and services such as library information and
filing, maintenance of roads, retirement administration
and reemployment training); or
(ii) the agreed contractual price, being the actual cost for
the provision of such product or service plus an
additional margin of not more than:
(1) 15 per cent. (which includes finance costs,
general and administrative expenses and a profit
margin) for certain construction and technical
services (at present, this applies to products and
services such as geological surveying, drilling,
well cementing, logging, mud logging, well testing
and oilfield construction) provided that, such
agreed contractual price shall not be higher than
the prices available for the provision of such
products and services in the international market;
and
(2) 3 per cent. for all other types of products and
services priced in accordance with the agreed
contractual price (at present, this applies to
products and services such as downhole operations,
technology research, equipment repairing and
supporting, equipment antiseptic testing,
communications, fire fighting,
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quality inspection, storage of materials, delivery
of materials and training centers).
The definitions of cost price and agreed contractual price include a
provision that the aggregate value, in each future financial year,
of all products and services which are required to be priced at cost
or at agreed contractual prices to be provided under the
Comprehensive Agreement, shall not exceed the aggregate value,
calculated on an adjusted basis as if the Comprehensive Agreement
had been in effect during the year ended 31 December 1998, of all
products and services which were required to be priced at cost or at
agreed contractual prices during the year ended 31 December 1998,
being RMB36.9 billion (the "1998 Amount"), subject to any necessary
adjustment for inflation or deflation, as appropriate, for the
relevant year.
However, if in any future financial year, the Company, due to any
events or factors beyond the control of the Company (e.g. natural
disasters) or the development of new projects, is required to
purchase additional products and services required to be priced at
cost or at agreed contractual prices exceeds the 1998 Amount (as
adjusted for inflation or deflation as appropriate), then that
decision to purchase such additional products or services should be
authorised by the Board (with affirmative votes from the independent
non-executive Directors) and the management of the Company on the
basis of any revised business plan and comprehensive financial
analysis, to ensure that such purchases will allow for a reasonable
return to the Shareholders. In the event that the relevant Proposed
Caps are to be exceeded, the Company will comply with the
requirements of the HKEx Listing Rules.
1.2.4 Coordination of annual demand of products and services
Two months prior to the end of each financial year, both parties are
required to prepare and submit to each other an annual plan
detailing the estimated demand for products and services to be
rendered in accordance with the Comprehensive Agreement for the
forthcoming financial year.
1.2.5 Rights and obligations
Both the Group and CNPC retain the right to choose to receive
products and services, as contemplated under the Comprehensive
Agreement, from independent third parties where the terms and
conditions as to price or quality of products or services offered by
such third parties may be superior to those offered by either of the
Group or the CNPC, as appropriate.
In addition, the provision of products and services by either party
is on a non-exclusive basis and each party may provide products and
services to other third parties, subject always to the obligation
that each party must be able to provide those products and services
which may be required to be provided in accordance with the
Comprehensive Agreement and the annual plan then in force.
1.2.6 Term and termination
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The term of the Comprehensive Agreement was initially 10 years
starting from the date when the Company's business license was
issued and was amended by the Second Supplemental Agreement to 3
years commencing from 1 January 2006. During the term of the
Comprehensive Agreement (as amended), termination of the product and
service implementation agreements described below may be effected
from time to time by the parties to the product and service
implementation agreements providing at least 6 months' written
notice of termination in relation to any one or more categories of
products or services. Further, in respect of any products or
services already contracted to be provided, termination may not take
place until after such products and services have been provided.
In the event that CNPC proposes to terminate the provision of any
products or services, and the Company is unable to find an
alternative product or service provider (which fact shall be
communicated by the Company to CNPC from time to time), then unless
permitted by the Company, CNPC must continue to provide such
products or services in accordance with the terms of the
Comprehensive Agreement (as amended).
1.2.7 First Supplemental Agreement
The First Supplemental Agreement was entered into by CNPC and the
Company on 9 June 2005 in which the following definitions under the
Comprehensive Agreement were amended as follows:
The definition of "government-prescribed price" was amended to mean
the price in respect of certain category of services determined by
the laws, regulations, decisions, orders or policies, etc. enacted
by governments of the relevant countries or regions (including but
not limited to the central government, federal government,
provincial government, state or coalition government or any
organisation responsible for domestic ruling and foreign affairs in
respect to certain specified territory, irrespective of its name,
organisation or structure) or other regulatory departments; or
The definition of "market price" was amended to mean the price
determined in accordance with the following order:
(i) the price charged by independent third parties in areas where
such type of service is provided and on normal terms in the
area where the service is being provided at that time; or
(ii) the price charged by independent third parties in nearby areas
where such type of service is provided and on normal terms in
the area or country adjacent to the area where the service is
being provided at that time.
1.2.8 Second Supplemental Agreement
The Second Supplemental Agreement was entered into by CNPC and the
Company on 1 September 2005 and took effect on 1 January 2006, in
which
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CNPC and the Company agreed to amend certain terms of the
Comprehensive Agreement, including, among other things, that:
- both CNPC and the Company shall provide and shall
procure their respective entities including their
subsidiaries, branches and other relevant units to
provide products and services in accordance with the
terms and principles of the Comprehensive Agreement;
- CNPC will provide certain risk operation services as
part of the construction and technical services to the
Group, and these include the provision of exploration
and production services within certain and specific
reserves of the Company with exploration and
exploitation difficulties;
- the Group will provide certain financial assistance to
the Jointly-held Entities including entrustment loans
and guarantees; and
- the Jointly-held Entities will provide certain financial
assistance to the Group including entrustment loans and
guarantees.
Under the Second Supplemental Agreement, the products and services
shall be provided at prices to be determined according to the
pricing principles for the corresponding products or services under
the Comprehensive Agreement.
In particular, the Comprehensive Agreement stipulates, among other
things, that:
- the loans and deposit services shall be provided at
prices determined in accordance with the relevant
interest rate and standard for fees as promulgated by
the People's Bank of China. Such prices must also be
more favourable to the Group than those provided by
independent third parties; and
- the guarantees shall be provided at prices not higher
than the fees charged by the state policy banks in
relation to the provision of guarantees. References must
also be made to the relevant government-prescribed price
and market price.
1.3 New Comprehensive Agreement
In October 2007, the Company issued the A Shares which have been listed on
the Shanghai Stock Exchange. In order to comply with the HKEx Listing
Rules and the Shanghai Listing Rules, on the basis of the existing
Comprehensive Agreement, the Company and CNPC entered into a new products
and services comprehensive agreement on 27 August 2008 for a period of
three years which shall take effect on 1 January 2009. The New
Comprehensive Agreement has already incorporated the terms of the First
Supplemental Agreement and the Second Supplemental Agreement and the
following three amendments are introduced to the Comprehensive Agreement:
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The major amendments to the First Supplemental Agreement and the Second
Supplemental Agreement which have already been incorporated into the New
Comprehensive Agreement are as follows:
(1) The following material provisions relating to the regulatory
requirements for A Shares have been added to the New
Comprehensive Agreement following the issue of A Shares by the
Company in 2007:
(a) The following description has been added to the "Background"
section: "PetroChina conducted a placing of H Shares (which
include newly issued Shares and a sale of Shares transferred
from CNPC to the National Council for Social Security Fund) in
September 2005 and issued Renminbi-denominated ordinary A
shares ("A Shares") in the PRC in October 2007 and the A
Shares are listed on the Shanghai Stock Exchange. Upon the
issue and listing of the A Shares, CNPC remains as the
controlling shareholder of PetroChina".
(b) Terms stipulating the requirement for obtaining approval of
the "Hong Kong Stock Exchange" or the application of the
regulatory rules of the Hong Kong Stock Exchange have been
amended to refer to "the relevant stock exchange(s) and
authorized regulatory authorities of the places of listing",
or alternatively, the "Shanghai Stock Exchange" is inserted
where appropriate.
(2) Provisions of the existing Comprehensive Agreement are
modified based on the actual operating requirements of the
Company:
(a) References to "services" provided by a party in the
existing agreement have been changed to "products and/or
services provided by a party".
(b) The scope of financial products and services provided
for in the existing Comprehensive Agreement is modified
as shown below in italics: "Party A (CNPC) shall,
through its subsidiaries or entities including CNPC
Finance and other financial institutions to operate in
accordance with relevant rules the business of Renminbi
and foreign currency deposits and loans, interest
earning, provision of guarantee, entrusted management of
funds guaranteeing safety in refined products and
petrochemical production and other financial services."
(c) The pricing principle applicable to financial products
and services as set out in the existing Comprehensive
Agreement shall be amended as shown below in italics:
"The fees for the financial services provided by CNPC
Finance and other financial institutions shall be
determined by making reference to the interest rate and
the relevant fee rate for the same period published by
the People's Bank of China or a relevant financial
industry regulatory authority, and shall be more
favourable than the interest rate, fee rate and other
terms for the provision of funds and services for the
same period offered by an independent third party to
Party B (the Company)."
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(d) The scope of products and services to be provided by
Party B to Party A under the existing Comprehensive
Agreement shall be modified as shown below in italics:
"Products and services to be provided by the Group to
CNPC include those relating to crude oil, natural gas,
refined oil products, chemical products, supply of
water, electricity, gas, heating, quantifying and
measuring, quality inspection, entrusted operation and
management and other related or similar products and
services.
(e) Other modifications include amending the registered
addresses, definition of names of companies, etc.
(3) The term of the agreement: "This agreement shall become
effective from 1 January, 2009 for a period of three years
after the authorized representatives of both parties have
signed and affixed the common seals and after this agreement
has been approved by the shareholders of Party B at its
shareholders' meeting. The term of this agreement may be
extended upon mutual agreement of both parties and subject to
the approval of the relevant stock exchange(s) and authorized
regulatory authorities of the places of listing and/or the
approval of shareholders of Party B at a shareholders' meeting
(depending on the requirements of the stock exchanges and
authorized regulatory authorities of the places of listing)."
1.4 Rentals to be paid by the Group to CNPC in respect of land
The Company entered into the Land Use Rights Leasing Contract with CNPC on
10 March 2000 under which CNPC has leased a total of 42,476 parcels of
land in connection with and for the purpose of all aspects of the
operations and business of the Group covering an aggregate area of
approximately 1,145 million square meters, located throughout the PRC, to
the Company for a term of 50 years at an annual fee of RMB2,000 million.
The Board believes that a term of 50 years is appropriate for the Land Use
Rights Leasing Contract, since the Company is China's largest petroleum
company engaging in exploration, development, sale and production of crude
oil, natural gas and chemicals, and the long stability of a 50 year tenure
is required to avoid the unnecessary disruption of its operations; the
relevant land leases are of material significance of its operations; and
such tenure conforms with normal business practice in the PRC property
market. The total fee payable for the lease of all such property may,
after the expiration of 10 years from the date of the Land Use Rights
Leasing Contract, be adjusted (to reflect market conditions prevalent at
such time of adjustment, including current market prices, inflation or
deflation, as appropriate, and such other pertinent factors as may be
considered in negotiating and agreeing to any such adjustment) by
agreement between the Company and CNPC. In addition, any governmental,
legal or other administrative taxes and fees required to be paid in
connection with the leased properties will be borne by CNPC. However, any
additional amount of such taxes payable as a result of changes in the PRC
Government policies after the date of the
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contract shall be shared proportionately on a reasonable basis between
CNPC and the Company.
In view of the increase in the land consumption tax by 200% per square
metre in the PRC with effect from 1 January 2007, the proposed annual cap
for the three years ending 31 December 2011, comprising the annual fee of
RMB2,000 million and the relevant tax, has been increased to approximately
RMB3,800 million per annum.
The Directors (except the independent non-executive Directors, who will,
after the Independent Financial Advisor has opined on the same, form their
views which will be set out in the Company's forthcoming circular)
consider it is normal business practice for the Land Use Rights Leasing
Contract to have a term of 50 years. Savills (Hong Kong) Limited, an
independent valuer, has reviewed the Land Use Rights Leasing Contract and
has confirmed that the term of 50 years and current rentals payable by the
Company to CNPC are fair and reasonable to the Company and are in line
with the market rentals. The date of valuation is 30 June 2008.
The Independent Financial Adviser will opine, in its advice to be
contained in the Company's forthcoming circular, on whether it is normal
business practice for the Land Use Rights Leasing Contract to have a term
of 50 years.
1.5 Rentals to be paid by the Group to CNPC in respect of buildings
The Company entered into the Buildings Leasing Contract with CNPC on 10
March 2000 pursuant to which CNPC has leased to the Company a total of 191
buildings covering an aggregate area of 269,770 square meters, located
throughout the PRC for the use by the Company for its business operation
including the exploration, development and production of crude oil, the
refining of crude oil and petroleum products, the production and sale of
chemicals, etc.
The 191 buildings were leased at a price of RMB145 per square meter per
year, that is, at an aggregate annual fee of RMB39,116,650, for a term of
20 years. The Board believes that a term of 20 years is appropriate for
the Buildings Leasing Contract (as amended), since the Company is China's
largest petroleum company engaging in exploration, development, sales and
production of crude oil, natural gas and chemicals, and the long stability
of a 20 year tenure is required to avoid the unnecessary disruption of its
operations; the relevant building leases are of material significance of
its operations; and such tenure conforms with normal business practice in
the PRC property market. The Company is responsible for the payment of any
governmental, legal or other administrative taxes and maintenance charges
required to be paid in connection with these 191 leased buildings. The
Buildings Leasing Contract details the particulars of the buildings leased
by members of CNPC to the Company.
Members of CNPC which own one or more of the leased buildings will enter
into individual building leasing contracts with the Company. The
individual building leasing contracts may only contain provisions which
are consistent with the terms and conditions of the Buildings Leasing
Contract.
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One month prior to the end of each financial year, CNPC and the Company
shall make and agree upon a rental fee distribution plan setting out
specific prices for the buildings according to their geographical
locations and conditions.
Supplemental Buildings Leasing Agreement
Further to the Buildings Leasing Contract mentioned above, the Company
entered into a Supplemental Buildings Leasing Agreement (the "Supplemental
Buildings Agreement") with CNPC on 26 September 2002 under which CNPC
agreed to lease another 404 buildings to the Group in connection with and
for the purpose of the operation and business of the Group covering an
aggregate of approximately 442,730 square meters. Leasing of the units in
the Supplemental Buildings Agreement is mainly attributable to the
expansion of the Company's operations in the areas of oil and natural gas
exploration, the West-East natural gas pipeline project and the
construction of the Northeast refineries and chemical operation base. The
annual fee payable under the Supplemental Buildings Agreement amounts to
RMB157,439,540. The Company and CNPC will, based on their needs for
production and operation or the changes of the market prices of the
buildings, adjust the scale and the amount of all such buildings under the
Buildings Leasing Contract as well as the Supplemental Buildings Agreement
every three years. The Supplemental Buildings Agreement became effective
on 1 January 2003 and will expire at the same time as the Buildings
Leasing Contract.
The Directors (except the independent non-executive Directors, who will,
after the Independent Financial Advisor has opined on the same, form their
views which will be set out in the Company's forthcoming circular)
consider it is normal business practice for the Buildings Leasing Contract
and the Supplemental Buildings Agreement to have a term of 20 years.
Savills (Hong Kong) Limited, an independent valuer, has reviewed both the
Buildings Leasing Contract and the Supplemental Buildings Agreement and
has confirmed that the term of 20 years and current rentals payable by the
Company to CNPC are fair and reasonable to the Company and in line with
the market rentals. The date of valuation is 30 June 2008.
The Independent Financial Advisor will opine, in its advice to be
contained in the Company's forthcoming circular, on whether it is normal
business practice for the Buildings Leasing Contract and the Supplemental
Buildings Agreement to have a term of 20 years.
1.6 Continuing connected transactions under the CRMSC Products and Services
Agreement
1.6.1 Products and services to be provided by the Company to CRMSC
Under the CRMSC Products and Services Agreement, products and
services to be continuously provided by the Company to CRMSC
include, among other things, refined products (such as gasoline,
diesel and other petroleum products).
1.6.2 General principles, pricing and terms
The CRMSC Products and Services Agreement requires, in general terms
that:
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(a) The quality of goods and services to be provided should be
satisfactory to the recipient;
(b) The price at which such products and services are to be
provided must be fair and reasonable;
(c) The terms and conditions on which such products and services
are to be provided should be no less favourable than those
offered by independent third parties; and
(d) The products and services shall be provided and standardised
by contracting under individual product and service
agreements.
1.6.3 Pricing determination
The price of any product and service provided pursuant to the CRMSC
Products and Services Agreement shall be determined by reference to
the government-prescribed price or the market price where there is
no government-prescribed price.
1.6.4 Coordination of annual demand of products and services
Before November of each year, CRMSC is required to discuss and
confirm with the Company an annual plan detailing the estimated
demand for products and services to be rendered in accordance with
the CRMSC Products and Services Agreement for the forthcoming year.
It is envisaged that from time to time and as required, individual
product and service implementation agreements will be entered into
between the Company and CRMSC and their respective subsidiaries and
units (including subsidiaries, branches and other relevant units),
as appropriate, in connection with the provision of products and
services under the CRMSC Products and Services Agreement.
1.6.5 Rights and obligations
Both the Company and CRMSC agree and guarantee, among other things,
to procure their respective subsidiaries and units (including
subsidiaries, branches and other relevant units) to provide the
products and services thereof in accordance with the terms and
services thereof in accordance with the terms and principles of the
CRMSC Products and Services Agreement.
1.6.6 Term and termination
The term of the CRMSC Products and Services Agreement was initially
3 years commencing from 1 January 2006. Pursuant to the supplemental
agreement to the CRMSC Products and Services Agreement dated 27
August 2008, the term of the CRMSC Products and Services Agreement
shall be extended for a further period of three years commencing
from 1 January 2009 to 31 December 2011.
During the term of the CRMSC Products and Services Agreement (as
amended), the product and service implementation agreements may be
terminated from time to time by the parties to the product and
service
- 13 -
implementation agreements providing at least 6 months' written
notice of termination in relation to any one or more categories of
products or services. Further, in respect of any products or
services already contracted to be provided, termination may not take
place until after such products and services have been provided.
1.7 Continuing connected transactions under the Beijing Gas Products and
Services Agreement
1.7.1 Products and services to be provided by the Company to Beijing Gas
Under the Beijing Gas Products and Services Agreement, products and
services to be continuously provided by the Company to Beijing Gas
include, among other things, natural gas and natural gas related
pipe transportation services.
1.7.2 General principles, pricing and terms
The Beijing Gas Products and Services Agreement requires, in general
terms that:
(a) The quality of goods and services to be provided should be
satisfactory to the recipient;
(b) The price at which such products and services are to be
provided must be fair and reasonable;
(c) The terms and conditions on which such products and services
are to be provided should be no less favourable than those
offered by independent third parties; and
(d) The products and services shall be provided and standardised
by contracting under individual product and service
agreements.
1.7.3 Pricing determination
The pricing of any product and service provided pursuant to the
Beijing Gas Products and Services Agreement shall be determined by
reference to the government-prescribed price or the market price
where there is no government-prescribed price.
1.7.4 Coordination of annual demand of products and services
Before November of each year, Beijing Gas is required to discuss and
confirm with the Company an annual plan detailing the estimated
demand for products and services to be rendered in accordance with
the Beijing Gas Products and Services Agreement for the forthcoming
year. It is envisaged that from time to time and as required,
individual product and service implementation agreements will be
entered into between the Company and Beijing Gas and their
respective subsidiaries and units (including subsidiaries, branches
and other relevant units), as appropriate, in connection with the
provision of products and services under the Beijing Gas Products
and Services Agreement.
- 14 -
1.7.5 Rights and obligations
Both the Company and Beijing Gas agree and guarantee, among other
things, to procure their respective subsidiaries and units
(including subsidiaries, branches and other relevant units) to
provide the products and services in accordance with the terms and
principles of the Beijing Gas Products and Services Agreement.
1.7.6 Term and termination
The term of the Beijing Gas Products and Services Agreement was
initially 3 years commencing from 1 January 2006. Pursuant to the
supplemental agreement to the Beijing Gas Products and Services
Agreement dated 27 August 2008, the term of the Beijing Gas Products
and Services Agreement shall be extended for a further period of
three years commencing from 1 January 2009 to 31 December 2011.
During the term of the Beijing Gas Products and Services Agreement
(as amended), the product and service implementation agreements may
be terminated from time to time by the parties to the product and
service implementation agreements providing at least 6 months'
written notice of termination in relation to any one or more
categories of products or services. Further, in respect of any
products or services already contracted to be provided, termination
may not take place until after such products and services have been
provided.
1.8 Historical amounts, existing caps, proposed caps and rationale
The Board has considered and proposed that the following proposed caps in
respect of the Continuing Connected Transactions which will serve as the
maximum annual value of the relevant transactions above for the period
from 1 January 2009 to 31 December 2011:
- 15 -
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TRANSACTIONS HISTORICAL EXCITING 2008 PROPOSED CAPS BASIS OF DETERMINATION
AMOUNT ANNUAL CAP FOR 2009 TO OF THE PROPOSED CAPS
2011
----------------------------------------------------------------------------------------------------
(1) Products and For the two For the year For the three The annual proposed caps
services to be years ended 31 ending 31 years ending for the products and
provided by the December 2007 December 2008, 31 December services to be provided
Group to CNPC and and the six RMB50,129 2011, by the Group to CNPC and
Jointly months ended 30 million RMB96,324 Jointly-held Entities
controlled June 2008, (proposed to be million, have been determined
Entities approximately revised to RMB156,440 with reference to the
RMB27,714 RMB71,289 million and historical transactions
million, million) RMB167,981 and transaction amounts
RMB40,730 million, in providing products
million and respectively and services by the
RMB22,186 Group to CNPC; the
million, estimated business
respectively growth of the Group; the
estimated business growth
of CNPC; the potential
fluctuations and increases
in the prices of crude
oil, petrochemical
products, natural gas and
other oil products and
services both in the
international market and
in the domestic market;
and quantities of crude
oil required (by the Group
as decreed by the
government).
The Group is of the view
that the proposed increase
in annual cap is in line
with the estimated
development of the business
of the Group and the CNPC
Group, and is determined
based on principles of
fairness and
reasonableness.
----------------------------------------------------------------------------------------------------
(2) Products and
services to be
provided by CNPC
to the
----------------------------------------------------------------------------------------------------
- 16 -
----------------------------------------------------------------------------------------------------
Group
----------------------------------------------------------------------------------------------------
(a) Construction For the two For the year For the three The annual proposed caps
and technical years ended 31 ending 31 years ending for the provision of
services December 2007 December 2008, 31 December construction and
and the six RMB105,661 2011, technical services have
months ended 30 million RMB242,967 been determined with
June 2008, (proposed to be million, reference to the
approximately revised to RMB256,937 completed transactions
RMB82,741 RMB165,578 million and and transaction amounts
million, million) RMB215,526 for the construction and
RMB97,257 million, technical services
million and respectively provided by CNPC to the
RMB42,588 Group; the estimated
million, business growth of the
respectively Company and the increase
in capital investment for
pipelines construction and
refinery projects during
2009-2011.
As it is expected that a
significant portion of
these projects will be
completed in 2010, the
estimated cap in 2011 is
lower than that of
2009-2010.
The Group has obtained
construction and technical
services from CNPC in the
ordinary course of
business, and as one of
the most experienced
companies in the world,
the construction and
technical services
provided to the Group are
quality services.
CNPC is also one of the
few companies in the PRC
which provide quality
petrochemical related
construction and technical
services.
The Group is of the view
that the proposed increase
in annual cap is in line
with the estimated
development of the
business of the Group, and
is determined based on
principles of fairness
and reasonableness.
----------------------------------------------------------------------------------------------------
(b) Production For the two For the year For the three The annual proposed caps
services years ended 31 ending 31 years ending for the production
December 2007 December 2008, 31 December services provided by
and the six RMB98,518 2011, CNPC to the Group have
months ended 30 million RMB92,912 been determined with
June 2008, million, reference to the
approximately RMB138,221 previous transactions
RMB32,730 million and conducted and
million, RMB182,798 transaction amounts in
RMB49,455 million, respect of production
million and respectively services provided by
RMB38,391 CNPC to the Group; the
estimated business growth
of the Group; and the
potential fluctuations and
increases in the
international and the
----------------------------------------------------------------------------------------------------
- 17 -
----------------------------------------------------------------------------------------------------
million, PRC market prices of crude
respectively oil, petroleum and
petrochemical products,
leading to higher energy
costs in the production
process.
Production services mainly
consist of water supply,
electricity generation and
supply, gas supply by CNPC
to the Group and the
supply of petroleum and
petrochemical products by
Jointly-held Entities to
the Group. The Group is of
the view that the proposed
increase in annual cap is
in line with the estimated
development of the
business of the Group, and
is determined based on
principles of fairness and
reasonableness.
----------------------------------------------------------------------------------------------------
(c) Material For the two For the year For the three The annual caps for the
supply services years ended 31 ending 31 years ending supply of materials
December 2007 December 2008, 31 December services paid by the
and the six RMB5,574 2011, RMB6,245 Group to CNPC have been
months ended 30 million million, determined by reference
June 2008, (proposed to be RMB7,306 to the estimated
approximately revised to million and business growth of the
RMB3,306 RMB5,850 RMB6,985 Company; and increases
million, million) million, in the volume of
RMB3,573 million respectively purchases by the Group.
and RMB3,818 CNPC is one of the leading
million, buyers of petrochemical
respectively raw materials in the PRC.
With the economy of scale
and to increase the
collective bargaining
power of CNPC, the
centralized materials
purchase by CNPC thus
stabilise the purchase
prices of the Company's
raw materials.
With the Company's
dominant position and
increase in the petroleum
and petrochemical
industries of the PRC, as
well as the increase in
the size of business,
these ongoing connected
transactions and
transaction amounts are
expected to increase.
On the other hand, the
Group is also involved in
a number of pipeline
construction and refinery
projects in which CNPC
provides to the Group
material supply services.
As it is expected that a
significant portion of
these projects will be
completed in 2010, the
estimated cap in 2011 is
lower than that
----------------------------------------------------------------------------------------------------
- 18 -
----------------------------------------------------------------------------------------------------
of 2010.
The Group is of the view
that the proposed increase
in annual cap is in line
with the estimated
development of the
business of the Group, and
is determined based on
principles of fairness
and reasonableness.
----------------------------------------------------------------------------------------------------
(d) Social and For the two For the year For the three The annual proposed caps
ancillary services years ended 31 ending 31 years ending for social and ancillary
December 2007 December 2008, 31 December services have been
and the six RMB5,000 2011, RMB7,045 determined with reference
months ended 30 million million, to the previous
June 2008, (proposed to be RMB7,581 transactions conducted and
approximately revised to million and transaction amounts in
RMB4,759 RMB5,811 RMB8,040 respect of the social
million, million) million, and ancillary services
RMB4,864 million respectively provided by CNPC to the
and RMB2,341 Group; the estimated
million, business growth of the
respectively Group. The Group is of the
view that the proposed
increase in annual cap is
in line with the
development of the
business of the Group, and
is determined based on
principles of fairness and
reasonableness.
----------------------------------------------------------------------------------------------------
(e) Financial services (note)
----------------------------------------------------------------------------------------------------
(i) Aggregate of For the two For the year For the three The annual proposed caps
maximum daily years ended 31 ending 31 years ending for the financial services
deposits made by December 2007 December 2008, 31 December (aggregate of deposits and
the Group with and the six RMB9,126 million 2011, interests) provided by
CNPC and the months ended 30 RMB18,600 CNPC to the Group have
interests thereon June 2008, million, been determined with
approximately RMB18,600 reference to the estimated
RMB8,816 million and business growth of the
million, RMB18,600 Group; the Group's
RMB8,694 million million, historical cashflow and
and RMB7,900 respectively levels of deposits; the
million, competitive interest rates
respectively offered by CNPC Finance
and other financial
institutions.
In order to optimise cash
flow management and
capital efficiency of the
Group and CNPC, there is
the specific target of
providing a centralised
financial management by
CNPC Finance and other
financial institutions,
which provides a full
range of financial
services to the Group and
CNPC. The Group is of the
view that the proposed
increase in annual cap is
in line with
----------------------------------------------------------------------------------------------------
- 19 -
----------------------------------------------------------------------------------------------------
the development of the
business of the Group, and
is determined based on
principles of fairness
and reasonableness.
----------------------------------------------------------------------------------------------------
(ii) Insurance, Nil The annual caps For the three To optimise cash flow
fees and expenses for 2006 to years ending management and capital
for entrustment 2008 approved 31 December efficiency of the Group
loans, settlement by the 2011, RMB1,864 and CNPC, there is the
services and Independent million, specific target of
other Shareholders RMB1,928 providing a centralised
intermediary were combined million and financial management by
services into the annual RMB2,016 CNPC Finance and other
caps in respect million, financial institutions,
of the loans respectively which provides a full
and other range of financial
financial services to the Group
services and CNPC.
provided by
CNPC to the
Groupand
therefore, no
separate annual
caps are
available.
----------------------------------------------------------------------------------------------------
(3) Financial For the two For the year For the three The annual proposed caps
services to be years ended 31 ending 31 years ending for the financial
provided by the December 2007 December 2008, 31 December services, including but
Group to and the six RMB44,465 2011, not limited to guarantees
Jointly-held months ended 30 million RMB23,582 and entrustment loans, to
Entities June 2008, million, be provided by the Group
approximately RMB36,484 to the Jointly-held
RMB1,515 million and Entities have been
million, RMB51,839 determined with reference
RMB2,138 million million, to the business
and RMB353 respectively development and financing
million, needs of the Jointly-held
respectively Entities; and the
acquisition opportunities
which may arise from time
to time in the
international market.
The Group's strategic
objective of becoming an
international petroleum
company with significant
oil assets both onshore
and offshore as well as in
both the PRC and
international markets. The
Group is of the view that
the provision of financial
services to the Jointly-
held Entities will enable
them to have sufficient
funding for future
expansion.
----------------------------------------------------------------------------------------------------
(4) Rentals to be For the two For the year For the three Each of the annual
paid by the Group years ended 31 ending 31 years ending proposed caps comprises
to CNPC in December 2007 December 2008, 31 December of the annual leasing
respect of land and the six RMB2,260 2011, RMB3,795 fee and the relevant PRC
months ended 30 million million, tax, which are in
June 2008, (proposed to be RMB3,781 accordance with the Land
Use Rights Leasing
Contract. Savills
----------------------------------------------------------------------------------------------------
- 20 -
----------------------------------------------------------------------------------------------------
approximately revised to million and (Hong Kong) Limited, an
RMB2,135 RMB3,506 RMB3,786 independent valuer, has
million, million) million, appraised the lands
RMB2,152 million respectively leased to the Group.
and RMB978
million,
respectively
----------------------------------------------------------------------------------------------------
(5) Rentals to be For the two For the year For the three The Board considers that
paid by the Group years ended 31 ending 31 years ending pursuant to the Buildings
to CNPC in December 2007 December 2008, 31 December Leasing Contract (as
respect of and the six RMB140 million 2011, RMB210 amended by the
buildings months ended 30 (proposed to be million, Supplemental Buildings
June 2008, revised to RMB217 million Agreement), the annual
approximately RMB196 million) and RMB221 proposed caps in respect
RMB140 million, million, of the building leases
RMB140 million respectively provided by CNPC to the
and RMB58 Group can support future
million, business development and
respectively planning. The annual
proposed caps are in
accordance with Buildings
Leasing Contract (as
amended by the
Supplemental Buildings
Agreement), and Savills
(Hong Kong) Limited, an
independent valuer, has
appraised the buildings
leased to the Group.
----------------------------------------------------------------------------------------------------
(6) Products and For the two For the year For the three The annual proposed caps
services to be years ended 31 ending 31 years ending have been determined
provided by the December 2007 December 2008, 31 December with reference to (i) the
Group to CRMSC and the six RMB13,152 2011, relevant pricing
months ended 30 million RMB19,814 principles, i.e., the
June 2008, (proposed to be million, government-prescribed
approximately revised to RMB22,012 price; (ii) the
RMB11,046 RMB16,833 million and historical transaction
million, million) RMB23,729 levels for the same type
RMB12,022 million, of transaction; and
million and respectively (iii) the estimated future
RMB7,229 transaction levels based
million, on the market needs in the
respectively coming 3 years.
----------------------------------------------------------------------------------------------------
(7) Products and For the two For the year For the three The annual proposed caps
services to be years ended 31 ending 31 years ending have been determined
provided by the December 2007 December 2008, 31 December with reference to (i) the
Group to Beijing and the six RMB7,097 2011, RMB8,296 relevant pricing
Gas months ended 30 million million, principles, i.e., the
June 2008, (proposed to be RMB11,775 government-prescribed
approximately revised to million and price; (ii) the historical
RMB4,170 RMB7,936 RMB16,200 transaction levels for the
million, million) million, same type of transaction;
RMB4,865 million respectively and (iii) the estimated
and RMB3,331 future transaction levels
million, based on the market needs
respectively in the coming 3 years.
----------------------------------------------------------------------------------------------------
- 21 -
Note: The New Comprehensive Agreement also provides for loans and other
financial assistance to be provided by CNPC to the Group. These are
exempted under Rule 14A.65(4) of the HKEx Listing Rules from the
reporting, announcement and the independent shareholders' approval
requirements set out in Chapter 14A of the HKEx Listing Rules. Please
refer to paragraph 1.10.1 for details.
1.9 Reasons for and benefits of the Continuing Connected Transactions
The Continuing Connected Transactions are and will be conducted in the
ordinary and usual course of business of the Company. This category of
transactions will continue to be agreed on an arm's length basis with
terms that are fair and reasonable to the Company. Due to the long-term
relationship between the Company and CNPC and between the Company and
Beijing Gas/ CRMSC, the Directors (including the independent
non-executive Directors) consider that: (a) it is beneficial to the
Company to continue to enter into the Continuing Connected Transactions
as these transactions have facilitated and will continue to facilitate
the operation and growth of the Group's business; (b) the Continuing
Connected Transactions have been conducted on normal commercial terms or
on terms no less favourable than those available to the Group from
independent third parties, under prevailing local market conditions, and
were entered into in the ordinary and usual course of business of the
Group, are fair and reasonable and in the interests of the Company and
the Shareholders as a whole, and that the Proposed Caps are fair and
reasonable.
The independent non-executive Directors constituting the Independent
Board Committee will give their view on the Non-Exempt Continuing
Connected Transactions and the Proposed Caps in respect of the Non-Exempt
Continuing Connected Transactions after considering the advice from the
Independent Financial Adviser, and their view will be given in the
circular to be despatched to the Shareholders.
1.10 Disclosure and independent shareholders' approval requirements
1.10.1 Under the HKEx Listing Rules, loans and other financial assistance
to be provided by CNPC to the Group, being financial assistance
provided by a connected person for the benefit of the listed
issuer on normal commercial terms (or better to the listed issuer)
where no security over the assets of the listed issuer is granted
in respect thereof, is exempted under Rule 14A.65(4) of the HKEx
Listing Rules from the reporting, announcement and the independent
shareholders' approval requirements set out in Chapter 14A of the
HKEx Listing Rules.
1.10.2 Under the HKEx Listing Rules, the following category of Continuing
Connected Transactions is exempted from the reporting,
announcement and the independent shareholders' approval
requirements set out in Chapter 14A of the HKEx Listing Rules, as
each of the percentage ratios under Rule 14.07 of the HKEx Listing
Rules (other than the profits ratio), where applicable, in
relation of each of these categories is, on an annual basis,
expected to be less than 0.1% under Rule 14A.33(3)(a) of the HKEx
Listing Rules:
- 22 -
(5) Rentals to be paid by the Group to CNPC in respect of
buildings
1.10.3 Under the HKEx Listing Rules, the following categories of
Continuing Connected Transactions are exempted from the
independent shareholders' approval requirement but are subject to
the reporting and announcement requirements set out in Rules
14A.45 to 14A.47 of the HKEx Listing Rules, as each of the
percentage ratios under Rule 14.07 of the HKEx Listing Rules
(other than the profits ratio), where applicable, in relation of
each of these categories is, on an annual basis, expected to be
less than 2.5% under Rule 14A.34(1) of the HKEx Listing Rules:
2(c) Material supply services to be provided by CNPC to the
Group
2(d) Social and ancillary services to be provided by CNPC to
the Group
(2)(e)(i) Aggregate of the maximum daily amount of deposits and
the total amount of interest received in respect of
these deposits
(2)(e)(ii) Insurance, fees and expenses for entrustment loans,
settlement services and other intermediary services
(4) Rentals to be paid by the Group to CNPC in respect of
land
(7) Products and services to be provided by the Group to
Beijing Gas
1.10.4 Under the HKEx Listing Rules, the following transactions are
Non-Exempt Continuing Connected Transactions which are subject to
the reporting, announcement and independent shareholders' approval
(in respect of products and services to be provided by the Group
to CRMSC, Shareholders' approval only) requirements
(1) Products and services to be provided by the Group to
CNPC and Jointly-held Entities
(2)(a) Construction and technical services to be provided by
CNPC to the Group
(2)(b) Production services to be provided by CNPC to the Group
(3) Financial services to be provided by the Group to the
Jointly-held Entities
(6) Products and services to be provided by the Group to
CRMSC
The Company will seek the Independent Shareholders'/Shareholders'
approval at the Extraordinary General Meeting for the Non-Exempt
Continuing Connected Transactions and the relevant proposed caps
on the condition that:
(I) the annual amount of each category of the Non-Exempt
Continuing Connected Transactions shall not exceed the
relevant proposed cap;
- 23 -
(II) (i) the Non-Exempt Continuing Connected Transactions
will be entered into in the ordinary and usual
course of business of the Group and either (A) on
normal commercial terms or (B) if there is no
available comparison, on terms no less favourable
than terms available to the Group from independent
third parties; and
(ii) the Non-Exempt Continuing Connected Transactions
will be entered into in accordance with the
Comprehensive Agreement (for transactions (1),
(2)(a)-(b) and (3)), or the CRMSC Products and
Services Agreement (for transaction (6)) and on
terms that are fair and reasonable and in the
interests of the Company and the Shareholders as a
whole.
The Company will comply with relevant provisions of the HKEx
Listing Rules in relation to each category of the Non-Exempt
Continuing Connected Transactions.
2. REVISED CAPS OF CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF 2008
2.1 Background
References are made to the circular of the Company dated 22 September
2005 in relation to the Continuing Connected Transactions and the
circular of the Company dated 14 September 2006 revising certain annual
caps of the Continuing Connected Transactions. At the extraordinary
general meetings of the Company held on 8 November 2005 and 1 November
2006 respectively, the Independent Shareholders and/or Shareholders (as
the case may be) approved the Continuing Connected Transactions and the
annual caps for the three years ending 31 December 2008 and the
subsequent revision of certain annual caps.
The Company has closely monitored the performance of the Continuing
Connected Transactions. However, due to the surge in the international
crude oil prices in 2008, the increase in the volume of the refined
products, estimated increase in the level of exploration activities by
the Group within the PRC, the rise of exploration costs and the expansion
of overseas exploration, and taking into account the fact that, based on
historical trends, the amount of transactions settled for the second half
of each year often accounts for more than two-thirds of the value for the
full year, the Board considers that the existing annual cap in respect of
2008 for certain categories of the Continuing Connected Transactions,
namely the Relevant Categories, may not be able to satisfy the Group's
requirements for the whole year. The Board therefore proposes that the
existing annual cap for the Relevant Categories in respect of 2008 be
revised in order to cater for the Group's demand for the year ending 31
December 2008.
2.2 The Relevant Categories
2.2.1 Products and services to be provided by the Group to CNPC and
Jointly-held Entities
- 24 -
Under the Comprehensive Agreement, products and services to be
provided by the Group to CNPC include those relating to refined
oil products, chemical products, natural gas, crude oil, supply of
water, electricity, gas, heating, quantifying and measuring,
quality inspection and other products and services as may be
requested by CNPC for its own consumption, use or sale from time
to time.
Under the Comprehensive Agreement, it was agreed that, among other
things, the Group shall provide to the Jointly-held Entities
products and services including crude oil, refined products,
petrochemical products, natural gas products on the same pricing
basis as those products and services to be provided by the Group
to CNPC.
2.2.2 Products and services to be provided by CNPC to the Group
The products and services to be provided by CNPC to the Group are
expected to be more numerous, both in terms of quantity and
variety, than those to be provided by the Group to CNPC. They have
been grouped together and categorised into various types. The
Board has proposed to revise the annual cap in respect to the
following types of products and services for the year ending 31
December 2008:
(a) Construction and technical services, mainly associated with
products and services to be provided at the stage prior to
commission and production, including but not limited to
exploration technology service, downhole operation service,
oilfield construction service, oil refinery construction
service and engineering and design service;
(c) Material supply services, mainly involving the agency
services on the procurement of materials both before and
after commission and production, including but not limited
to purchase of materials, quality control, storage of
materials and delivery of materials, which by virtue of its
nature, are not covered in the construction and technical
services and production services referred to above; and
(d) Social and ancillary services, including but not limited to
security services, education, hospitals, property
management, staff canteen, training centers and
guesthouses.
2.2.3 Rentals to be paid by the Group to CNPC in respect of land
The Company entered into the Land Use Rights Leasing Contract with
CNPC on 10 March 2000 under which CNPC has leased a total of
42,476 parcels of land in connection with and for the purpose of
all aspects of the operations and business of the Group covering
an aggregate area of approximately 1,145 million square meters,
located throughout the PRC, to the Company for a term of 50 years
at an annual fee of RMB2,000 million.
2.2.4 Rentals to be paid by the Group to CNPC in respect of buildings
- 25 -
The Company entered into the Buildings Leasing Contract with CNPC on
10 March 2000 pursuant to which CNPC has leased to the Company a
total of 191 buildings covering an aggregate area of 269,770 square
meters, located throughout the PRC for the use by the Company for
its business operation including the exploration, development and
production of crude oil, the refining of crude oil and petroleum
products, the production and sale of chemicals, etc.
Further to the Buildings Leasing Contract mentioned above, the
Company entered into a Supplemental Buildings Leasing Agreement with
CNPC on 26 September 2002 under which CNPC agreed to lease another
404 buildings to the Group in connection with and for the purpose of
the operation and business of the Group covering an aggregate of
approximately 442,730 square meters.
2.2.5 Products and services to be provided by the Company to CRMSC
Under the CRMSC Products and Services Agreement, products and
services to be continuously provided by the Company to CRMSC
include, among other things, refined products (such as gasoline,
diesel and other petroleum products).
2.2.6 Products and services to be provided by the Company to Beijing Gas
Under the Beijing Gas Products and Services Agreement, products and
services to be continuously provided by the Company to Beijing Gas
include, among other things, natural gas and natural gas related
pipe transportation services.
2.3 Historical amounts, existing caps, revised caps and rationale of the
Relevant Categories
The Board has proposed that the following revised caps in respect of the
Relevant Categories be set as the maximum annual amount of such
transactions for the year ending 31 December 2008:
-----------------------------------------------------------------------------------------------------------------
TRANSACTIONS HISTORICAL EXISTING 2008 REVISED CAPS IN BASIS OF DETERMINATION
AMOUNT ANNUAL CAP RESPECT OF 2008 OF THE REVISED CAPS
-----------------------------------------------------------------------------------------------------------------
(1) Products and For the two years For the year ending For the year ending The reason for the increase
services to be ended 31 December 31 December 2008, 31 December 2008, in the transaction amounts
provided by the 2007 and the six RMB50,129 million RMB71,289 is mainly due to increases
Group to CNPC and months ended million in the transaction volume
the Jointly-held 30 June 2008, and the prices for both the
Entities approximately crude oil and refined
RMB27,714 products. In particular,
million, there have been increases
RMB40,730 in both the import of
million and crude oil reserve and
RMB22,186 export/import trading of
million, crude oil (by the Group as
respectively decreed by the government)
as well as the production
of crude oil (by the Group
as decreed by the
government).
-----------------------------------------------------------------------------------------------------------------
- 26 -
-----------------------------------------------------------------------------------------------------------------
(2) Products and
services to be
provided by CNPC
to the Group
-----------------------------------------------------------------------------------------------------------------
(a) Construction For the two years For the year ending For the year ending The volume of crude oil and
and technical ended 31 December 31 December 2008, 31 December 2008, natural gas deployed in the
services 2007 and the six RMB105,661 million RMB165,578 million two-dimension seismic
months ended (CHINESE CHARACTERS),
30 June 2008, three-dimension seismic
approximately (CHINESE CHARACTERS),
RMB82,741 drilling and risk
million, operations has increased
RMB97,257 continuously, which is an
million and important reason for the
RMB42,588 increased in the
million, transaction. Following the
respectively commencement of a number of
pipeline construction
projects and refining
construction projects, the
direct deployment of
materials from CNPC
increases.
-----------------------------------------------------------------------------------------------------------------
(b) Production - - No revision -
Services
-----------------------------------------------------------------------------------------------------------------
(c) Material For the two years For the year ending For the year ending Following the commencement
supply services ended 31 December 31 December 2008, 31 December 2008, of construction of oil and
2007 and the six RMB5,574 million RMB5,850 million gas facilities and other
months ended construction projects,
30 June 2008, transaction amounts for
approximately materials purchase and the
RMB3,306 million, agency fees are therefore
RMB3,573 million increased.
and RMB3,818
million,
respectively
-----------------------------------------------------------------------------------------------------------------
(d) Social and For the two years For the year ending For the year ending The main reasons for the
ancillary services ended 31 December 31 December 2008, 31 December 2008, increase are the
2007 and the six RMB5,000 million RMB5,811 million enhancement of property
months ended management services and
30 June 2008, increases in the prices of
approximately water and electricity
RMB4,759 million, supplies.
RMB4,864 million
and RMB2,341
million,
-----------------------------------------------------------------------------------------------------------------
- 27 -
respectively
-----------------------------------------------------------------------------------------------------------------
(3) Financial - - No revision -
Services
-----------------------------------------------------------------------------------------------------------------
(4) Rentals to be For the two years For the year ending For the year ending The proposed revision of
paid by the Group ended 31 December 31 December 2008, 31 December 2008, the annual cap for the year
to CNPC in 2007 and the six RMB2,260 million RMB3,506 million ending 31 December 2008 is
respect of land months ended resulted from an increase
30 June 2008, in the land consumption tax
approximately by 200% per square metre in
RMB2,135 million, accordance with the
RMB2,152 million relevant PRC regulations.
and RMB978 Municipal and prefectural
million, governments may also make
respectively classifications on local
land.
-----------------------------------------------------------------------------------------------------------------
(5) Rentals to be For the two years For the year ending For the year ending The proposed revision of
paid by the Group ended 31 December 31 December 2008, 31 December 2008, the annual cap for the year
to CNPC in respect 2007 and the six RMB140 million RMB196 million ending 31 December 2008 is
of buildings months ended resulted from full
30 June 2008, execution of the area
approximately leased under the Building
RMB140 million, Leasing Contract and its
RMB140 million supplemental agreement.
and RMB58
million,
respectively
-----------------------------------------------------------------------------------------------------------------
(6) Products and For the two years For the year ending For the year ending As a result of the rapid
services to be ended 31 December 31 December 2008, 31 December 2008, expansion of the railway
provided by the 2007 and the six RMB13,152 million RMB16,833 million network in the PRC, demand
Group to CRMSC months ended for goods rose markedly. In
30 June 2008, addition, the increase in
approximately the transaction amounts is
RMB11,046 also due to the increase
million, in the refined product
RMB12,022 price.
million and
RMB7,229
million,
respectively
-----------------------------------------------------------------------------------------------------------------
(7) Products and For the two years For the year ending For the year ending The increase in the
services to be ended 31 December 31 December 2008, 31 December 2008, transaction volume is due
provided by the 2007 and the six RMB7,097 million RMB7,936 million to the 2008 Beijing Olympic
Group to Beijing months ended Games where demand for
Gas 30 June 2008, green and clean energy
approximately surged. In addition, the
RMB4,170 million, increase in the transaction
amounts is due to the
increase in the
-----------------------------------------------------------------------------------------------------------------
- 28 -
-----------------------------------------------------------------------------------------------------------------
RMB4,865 million natural gas selling price
and RMB3,331 in accordance with the
million, relevant PRC regulations.
respectively
-----------------------------------------------------------------------------------------------------------------
The continuing connected transactions under the Relevant Categories are
and will be conducted in the ordinary and usual course of business of the
Company. This category of transactions will continue to be agreed on an
arm's length basis with terms that are fair and reasonable to the Company.
Due to the long-term relationship between the Company and CNPC and between
the Company and CRMSC/Beijing Gas, the Directors (including the
independent non-executive Directors) consider that: (a) it is beneficial
to the Company to continue to enter into the Relevant Categories of the
continuing connected transactions as these transactions have facilitated
and will continue to facilitate the operation and growth of the Group's
business; (b) the continuing connected transactions under the Relevant
Categories have been conducted on normal commercial terms or on terms no
less favourable than those available to the Group from independent third
parties, under prevailing local market conditions, and were entered into
in the ordinary and usual course of business of the Group, are fair and
reasonable and in the interests of the Company and the Shareholders as a
whole, and that the Revised Caps for the Relevant Categories are fair and
reasonable.
The independent non-executive Directors constituting the Independent Board
Committee will give their view on the Revised Non-Exempt Annual Caps after
considering the advice from the Independent Financial Adviser, and their
view will be given in the circular to be dispatched to the Shareholders.
2.4 Disclosure and independent shareholders' approval requirements
2.4.1 Under the HKEx Listing Rules, the Revised Caps of the following
category of Continuing Connected Transactions is exempted from the
reporting, announcement and the independent shareholders' approval
requirements set out in Chapter 14A of the HKEx Listing Rules, as
each of the percentage ratios under Rule 14.07 of the HKEx Listing
Rules (other than the profits ratio), where applicable, in relation
of each of these categories is, on an annual basis, expected to be
less than 0.1% under Rule 14A.33(3)(a) of the HKEx Listing Rules:
(5) Rentals to be paid by the Group to CNPC in respect of
buildings
2.4.2 Under the HKEx Listing Rules, the Revised Caps of the following
categories of the Continuing Connected Transaction are exempted from
the independent shareholders' approval requirement but are subject
to the reporting and announcement requirements set out in Rules
14A.45 to 14A.47 of the HKEx Listing Rules, as each of the
percentage ratios under Rule 14.07 of the HKEx Listing Rules (other
than the profits ratio), where applicable, in relation of each of
these categories is, on an annual basis, expected to be less than
2.5% under Rule 14A.34(1) of the HKEx Listing Rules:
- 29 -
(2)(c) Material supply services
(2)(d) Social and ancillary services
(4) Rentals to be paid by the Group to CNPC in respect of land
(6) Products and services to be provided by the Group to CRMSC
(7) Products and services to be provided by the Group to Beijing
Gas
2.4.3 Under the HKEx Listing Rules, the Revised Non-Exempt Annual Caps of
the following categories of the Continuing Connected Transactions
are subject to the reporting, announcement and independent
shareholders' approval requirements.
(1) Products and services to be provided by the Group to CNPC and
the Jointly-held Entities
(2)(a) Construction and technical services to be provided by CNPC to
the Group
The Company will seek the Independent Shareholders' approval at the
Extraordinary General Meeting for the Revised Non-Exempt Annual Caps
and the relevant revised caps on the condition that:
(a) the annual amount of each of the above category for the year
ending 31 December 2008 shall not exceed the Revised
Non-Exempt Annual Caps;
(b) (i) the above continuing connected transactions will be
entered into in the ordinary and usual course of
business of the Group and either (A) on normal
commercial terms or (B) if there is no available
comparison, on terms no less favourable than terms
available to the Group from independent third parties;
and
(ii) the above continuing connected transactions will be
entered into in accordance with the relevant agreements
and on terms that are fair and reasonable and in the
interests of the Company and the Shareholders as a
whole.
The Company will comply with relevant provisions of the HKEx Listing Rules
and the Shanghai Listing Rules in relation to the continuing connected
transactions under the Relevant Categories.
3. APPROVAL BY INDEPENDENT SHAREHOLDERS
As CNPC holds approximately 86.29% of the issued share capital of the
Company, it is a controlling shareholder of the Company. CRMSC, being a
substantial shareholder of the Company's subsidiary, PetroChina & CRMSC
Oil Marketing. Beijing Gas is a substantial shareholder of the Company's
subsidiary, Huayou. By virtue of the above relationships, each of CNPC,
CRMSC and Beijing Gas is a connected person of the Company under the HKEx
Listing Rules. Transactions between the Company and each of CNPC, CRMSC
and Beijing Gas constitute connected transactions of the Company
- 30 -
under the HKEx Listing Rules. The Proposed Caps in respect of the
Non-Exempt Continuing Connected Transactions and the Revised Non-Exempt
Annual Caps are subject to approval by the Independent
Shareholders/Shareholders under the HKEx Listing Rules. In view of the
interests of CNPC, CNPC and its associates will abstain from voting in
relation to the resolutions approving the entering into of the New
Comprehensive Agreement and the Proposed Caps in respect of the Non-Exempt
Continuing Connected Transactions and the Revised Non-Exempt Annual Caps
under the Comprehensive Agreement. In view of the interests of CRMSC,
CRMSC and its associates will abstain from voting in relation to the
resolutions approving the supplemental agreement to the CRMSC Products and
Services Agreement and the Non-Exempt Continuing Connected Transaction
under the CRMSC Products and Services Agreement.
An Independent Board Committee has been formed to advise the Independent
Shareholders/Shareholders in connection with the terms of the Revised
Non-Exempt Annual Caps and the Proposed Caps in respect of the Non-Exempt
Continuing Connected Transactions, and the Independent Financial Advisor
has been appointed to advise the Independent Board Committee and the
Independent Shareholders/Shareholders on the same.
4. GENERAL INFORMATION
4.1 Information on the Company
The Company and its subsidiaries are mainly engaged in petroleum and
natural gas-related activities, including:
(1) the exploration, development, production and sale of crude oil and
natural gas;
(2) the refining, transportation, storage and marketing of crude oil and
petroleum products;
(3) the production and sale of basic petrochemical products, derivative
chemical products and other petrochemical products; and
(4) the transmission of natural gas, crude oil and refined products, and
the sale of natural gas.
4.2 Information on CNPC
The controlling shareholder of the Company is CNPC. CNPC is a petroleum
and petrochemical conglomerate that was formed in the wake of the
restructuring launched by the State Council to restructure the predecessor
of CNPC, China National Petroleum Company (CHINESE CHARACTERS). CNPC is
also a state-authorised investment corporation and state-owned enterprise.
CNPC is an integrated energy corporation with businesses covering oil and
gas exploration and development, refining and petrochemical, oil product
marketing, oil and gas storage and transportation, oil trading,
engineering and technical services and petroleum equipment manufacturing.
4.3 Information on CNPC Finance
- 31 -
As approved by the People's Bank of China and the China Banking Regulatory
Commission, the principal business activities of CNPC Finance include
receipt and payment of transaction amounts, insurance agency services,
provision of guarantees, entrustment loans and entrustment investments,
settlement and clearance of commercial notes, settlement of internal
transfers, deposits, loans, financial leases and foreign exchange
services.
4.4 Information on CRMSC
CRMSC is a corporation of materials supply in the PRC. China Petroleum
Sales Company Limited (CHINESE CHARACTERS), a wholly-owned subsidiary of
the Company, and CRMSC jointly established PetroChina & CRMSC Oil
Marketing in December 2004, holding respectively 51% and 49% of its equity
interest. As far as the Company is aware of, CRMSC is independent of CNPC
and Beijing Gas and does not have any relationship with CNPC or Beijing
Gas.
4.5 Information on Beijing Gas
Beijing Gas is an operator of natural gas supply network in the PRC. As
far as the Company is aware of, Beijing Gas is independent of CNPC and
CRMSC and does not have any relationship with CNPC or CRMSC.
5. HKEX LISTING RULES IMPLICATIONS
The views of the Independent Board Committee as well as the advice of the
Independent Financial Advisor to the Independent Board Committee in
respect of the Revised Non-Exempt Annual Caps and the Proposed Caps in
respect of the Non-Exempt Continuing Connected Transactions will be stated
in a circular to be despatched to the Shareholders.
A circular containing, amongst other things, further information on the
terms of the Continuing Connected Transactions, a letter from the
Independent Board Committee, an opinion of the Independent Financial
Advisor, together with a notice to convene the Extraordinary General
Meeting to approve the Revised Non-Exempt Annual Caps and the Proposed
Caps in respect of the Non-Exempt Continuing Connected Transactions, is
expected to be issued to the Shareholders as soon as practicable.
6. APPROVAL OF AGREEMENTS
Pursuant to the HKEx Listing Rules and the Shanghai Listing Rules,
(a) the New Comprehensive Agreement shall be approved or ratified by the
Independent Shareholders at the Extraordinary General Meeting, and
CNPC and its associates will abstain from voting in view of its
interests thereon; and
(b) the supplemental agreement to the CRMSC Products and Services
Agreement shall be approved or ratified by the Shareholders at the
Extraordinary General Meeting, and CRMSC and its associates will
abstain from voting in view of its interests thereon.
- 32 -
7. DEFINITIONS
In this announcement, unless the context otherwise requires, the following
terms shall have the meanings set out below:
"associate(s)" has the meanings ascribed to it under
the HKEx Listing Rules
"ADS(s)" the American Depository Share(s) issued
by the Bank of New York as the
depository bank and listed on the New
York Stock Exchange, with the ADS
representing 100 H Shares
"A Shares" the domestic ordinary shares issued by
the Company to domestic investors for
subscription and trading and denominated
in Renminbi
"Beijing Gas" (CHINESE CHARACTERS) (Beijing Gas Group
Company Limited*), a company established
under the laws of the PRC, and a
substantial shareholder of Huayou,
holding 40% interests in Huayou
"Beijing Gas Products and the agreement dated 1 September 2005
Services Agreement" entered into between the Company and
Beijing Gas in relation to the provision
of certain products and services
"Board" the board of directors of the Company
"Buildings Leasing Contract" the buildings leasing contract dated 10
March 2000 entered into between the
Company and CNPC pursuant to which CNPC
has leased to the Company buildings
located throughout the PRC for the use
by the Company for its business
operation including the exploration,
development and production for a term of
20 years, as amended by a supplemental
agreement dated 26 September 2002
"CNPC" China National Petroleum Corporation, a
state-owned enterprise incorporated
under the laws of the PRC, and the
controlling shareholder of the Company,
holding approximately 86.29% of the
issued share capital of the Company and
for the purpose of this announcement,
unless otherwise specified, shall
include other subsidiaries and units of
CNPC (including subsidiaries, branches
and relevant units) other than the Group
"CNPC Finance" (CHINESE CHARACTERS) (China Petroleum
Finance Company Limited), a subsidiary
of CNPC
"Company" PetroChina Company Limited, a joint
stock company
- 33 -
limited by shares incorporated in the
PRC on 5 November 1999 under the PRC
Company Law, the H shares of which are
listed on the Hong Kong Stock Exchange
with American Depository Shares listed
on the New York Stock Exchange and the A
shares are listed on the Shanghai Stock
Exchange
"Comprehensive Agreement" the comprehensive products and services
agreement dated 10 March 2000 entered
into between CNPC and the Company
regarding the provision by the Group to
CNPC and by CNPC to the Group, of a
range of products and services from time
to time, effective as of 5 November 1999
"Continuing Connected the continuing connected transactions
Transactions" which have been and will continue to be
entered into between (1) the Group and
CNPC; (2) the Group and Beijing Gas; and
(3) the Group and CRMSC, details of
which are set out in section 2 of this
announcement
"controlling shareholder" has the meanings ascribed to it under
the HKEx Listing Rules
"CRMSC" (CHINESE CHARACTERS) (China Railway
Materials and Suppliers Corporation), a
State-owned enterprise established under
the laws of the PRC, and a substantial
shareholder of PetroChina & CRMSC Oil
Marketing
"CRMSC Products and Services the agreement dated 1 September 2005
Agreement" entered into between the Company and
CRMSC in relation to the provision of
certain products and services
"Director(s)" directors of the Company
"Extraordinary General Meeting" an extraordinary general meeting of the
Company to be held at Crowne Plaza
Beijing Park View Wuzhou Hotel, No. 8
North Si Huan Zhong Road, Chaoyang
District, Beijing, PRC at 9 a.m. on 21
October 2008 to approve, among other
things, the Revised Non-Exempt Annual
Caps, the Non-Exempt Continuing
Connected Transactions and the Proposed
Caps of the Non-Exempt Continuing
Connected Transactions
"First Supplemental Agreement" the supplemental comprehensive products
and services agreement dated 9 June 2005
entered into between the Company and
CNPC in relation to certain amendments
of the Comprehensive Agreement
- 34 -
"Group" the Company and its subsidiaries
"H Share(s)" the overseas-listed foreign share(s) in
the Company's share capital, with a
nominal value of RMB1.00 each, which are
listed on the Hong Kong Stock Exchange
and subscribed for in Hong Kong dollars,
and which include the H Share(s) and the
underlying ADS(s)
"Hong Kong" the Hong Kong Special Administrative
Region of the PRC
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"Huayou" (CHINESE CHARACTERS) (Beijing Huayou
Natural Gas Company Limited*), a company
established under the laws of the PRC
with limited liability and a subsidiary
of the Company (where the Company has
60% interests in Huayou)
"Independent Board Committee" the independent committee of the Board,
comprising Messrs. Chee-Chen Tung, Liu
Hong Ru, Franco Bernabe, Mr Li Yongwu
and Mr Cui Junhui, the independent
non-executive Directors of the Company,
established for the purpose of reviewing
and advising the Independent
Shareholders or the Shareholders (as the
case may be) in respect of the Revised
Non-Exempt Annual Caps, the Non-Exempt
Continuing Connected Transactions and
the relevant Proposed Caps
"Independent Financial Advisor" ICEA Capital Limited, a licensed
corporation carrying out Type 1 (dealing
in securities) and Type 6 (advising on
corporate finance) regulated activities
under the SFO, and the independent
financial adviser appointed to advise
the Independent Board Committee and the
Independent Shareholders in respect of
the Revised Non-Exempt Annual Caps, the
Non-Exempt Continuing Connected
Transactions and the relevant Proposed
Caps
"Independent Shareholders" the shareholders of the Company other
than the CNPC and its associates
"Jointly-held Entities" a company in which both the Company and
CNPC are shareholders, and where CNPC
and/or its subsidiaries and/or
affiliates (individually or together)
is/are entitled to exercise, or control
the exercise of, 10% or more of the
voting power at any general meeting of
such
- 35 -
company
"Land Use Rights Leasing the land use rights leasing contract
Contract" dated 10 March 2000 entered into between
the Company and CNPC pursuant to which
CNPC has leased to the Company parcels
of land in connection with and for the
purpose of all aspects of the operations
and business of the Group for a term of
50 years
"HKEx Listing Rules" the Rules Governing the Listing of
Securities on the Hong Kong Stock
Exchange
"New Comprehensive Agreement" the comprehensive products and services
agreement dated 27 August 2008 entered
into between CNPC and the Company
regarding the provision by the Group to
CNPC and by CNPC to the Group, of a
range of products and services from time
to time which shall come into effect on
1 January 2009
"Non-Exempt Continuing the Continuing Connected Transactions
Connected Transactions" under the categories of (1), (2)(a)-(b),
(3) and (6), as set out in the section
headed "Renewal of Continuing Connected
Transactions in respect of 2009-2011" in
this announcement
"PetroChina & CRMSC Oil (CHINESE CHARACTERS) (PetroChina & CRMSC
Marketing" Oil Marketing Company Limited*), a
company established under the laws of
the PRC with limited liability
"Proposed Caps" the proposed annual caps in respect of
the Continuing Connected Transactions,
including the Non-Exempt Continuing
Connected Transactions
"PRC" or "China" the People's Republic of China
"Relevant Categories" the relevant categories of the
Continuing Connected Transactions the
annual caps of which for the year ending
31 December 2008 will be subject to
revision
"Revised Caps" the revised annual caps in respect of
the Relevant Categories, including the
Revised Non-Exempt Annual Caps
"Revised Non-Exempt Annual Caps" the revised annual caps in respect of
the Relevant Categories which are not
exempted
"RMB" Renminbi, the lawful currency of the PRC
"Second Supplemental the supplemental comprehensive products
and services
- 36 -
Agreement" agreement dated 1 September 2005 entered
into between the Company and CNPC in
relation to certain amendments of the
Comprehensive Agreement
"Shanghai Stock Exchange" The Shanghai Stock Exchange Limited
"Shanghai Listing Rules" the listing rules of the Shanghai Stock
Exchange
"Share(s)" shares of the Company, including the A
Share(s) and the H Share(s)
"Shareholder(s)" holder(s) of Shares of the Company
"subsidiaries" has the meanings ascribed to it under
the HKEx Listing Rules
"substantial shareholder" has the meanings ascribed to it under
the HKEx Listing Rules
By order of the Board
PETROCHINA COMPANY LIMITED
LI HUAIQI
Secretary to the Board
Beijing, the PRC 27 August 2008
As at the date of this announcement, the Board of Directors comprises Mr Jiang
Jiemin as the Chairman; Mr Zhou Jiping (Vice Chairman) and Mr Liao Yongyuan as
executive Directors; Mr Wang Yilin, Mr Zeng Yukang, Mr Wang Fucheng, Mr Li
Xinhua, Mr Wang Guoliang and Mr Jiang Fan as non-executive Directors; and Mr
Chee-Chen Tung, Mr Liu Hongru, Mr Franco Bernabe, Mr Li Yongwu and Mr Cui Junhui
as independent non-executive Directors.
- 37 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this announcement to be signed on its behalf by the
undersigned, thereunto duly authorized.
PetroChina Company Limited
Dated: August 29, 2008 By: /s/ Li Huaiqi
-----------------------------
Name: Li Huaiqi
Title: Company Secretary