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                                                                    EXHIBIT 10.1

            SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
                       FOR PURPOSES OF SECTION 303A. 11 OF
                THE NEW YORK STOCK EXCHANGE LISTED COMPANY MANUAL

      On November 4, 2003, the New York Stock Exchange (the "NYSE") adopted new
corporate governance rules. Under these rules, we are required to disclose a
summary of the significant differences between our corporate governance
practices and those that would apply to a U.S. domestic issuer under the NYSE
corporate governance rules.

      We are incorporated under the laws of the People's Republic of China (the
"PRC"), with H shares publicly traded on the Hong Kong Stock Exchange (the
"HKSE") and American Deposit Shares representing H shares on the NYSE. As a
result, our corporate governance framework is subject to the mandatory
provisions of the PRC Company Law and the securities laws and regulations of
Hong Kong and the United States.

      The following discussion summarizes the significant differences between
our corporate governance practices and those that would apply to a U.S. domestic
issuer under the NYSE corporate governance rules.

BOARD INDEPENDENCE

      Under the NYSE corporate governance rule 303A.01, a listed company must
have a majority of independent directors on its board of directors. A company of
which more than 50% of the voting power is held by an individual, a group or
another company (a "controlled company") is not required to comply with this
requirement. Because approximately 90% of our voting power is controlled by
China National Petroleum Corporation ("CNPC"), we, as a controlled company,
would not be required to comply with the majority of independent directors
requirement. In addition, we are not required under the PRC Company Law and the
Rules Governing the Listing of Securities on the Stock Exchange Hong Kong
Limited (the "HKSE Listing Rules") to have a majority of independent directors
on our board of directors. Currently, three of our thirteen directors are
independent non-executive directors.

      Under the NYSE corporate governance rule 303A.03, the non-executive
directors of a listed company must meet at regularly scheduled executive
sessions without management. There are no mandatory requirements under the PRC
Company Law and the HKSE Listing Rules that a listed company should hold, and we
currently do not hold, such executive sessions.

NOMINATING/CORPORATE GOVERNANCE COMMITTEE

      Under the NYSE corporate governance rule 303A.04, a listed company must
have a nominating/corporate governance committee composed entirely of
independent directors, with a written charter that covers certain minimum
specified duties. We are not required under the PRC Company Law and the HKSE
Listing Rules to have, and we do not currently have, a nominating/corporate
governance committee.

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COMPENSATION COMMITTEE

      Under the NYSE corporate governance rule 303A.05, a listed company must
have a compensation committee composed entirely of independent directors, with a
written charter that covers certain minimum specified duties. The compensation
committee of a "controlled company" is not required to be composed entirely of
independent directors. We are not required under the PRC Company Law to have a
compensation committee. Under the Corporate Governance Code of the HKSE Listing
Rules, a listed company must have a remuneration committee composed of a
majority of independent non-executive directors, with a written terms of
references that covers certain minimum specified duties.

      We currently do not have a compensation committee composed entirely of
independent directors. However, we have an evaluation and remuneration committee
including independent non-executive directors. The major responsibilities of our
evaluation and remuneration committee include:

   -  reviewing the current standing of President-appointed Senior Vice
      President, Vice Presidents, Chief Financial Officer and other senior
      management personnel and making recommendations for such review to the
      board of directors;

   -  managing and conducting performance evaluations for our President and
      reporting the results of such evaluations to the board of directors;

   -  monitoring performance evaluations conducted by our President for Senior
      Vice President, Vice Presidents, Chief Financial Officer and other senior
      management personnel; and

   -  studying our incentive plan, compensation plan and stock appreciation
      rights plan, supervising and evaluating the implementation of these plans
      and making recommendations for further improvements to such plans.

CORPORATE GOVERNANCE GUIDELINES

      Under the NYSE corporate governance rule 303A.09, a listed company must
adopt and disclose corporate governance guidelines that cover certain minimum
specified subjects. We are not required under the PRC Company Law and the HKSE
Listing Rules to have, and we do not currently have, formal corporate governance
guidelines. However, we have the Articles of Association, a Manual of Board of
Directors and a Trial Implementation Rules for Compensation of Senior Management
that address the following subjects:

   -  director qualification standards and responsibilities;

   -  key board committee responsibilities;

   -  director compensation; and

   -  director orientation and continuing education

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      In addition, under the HKSE Listing Rules, we are expected to comply with,
but may choose to deviate from, certain code provisions in the Corporate
Governance Code of the Listing Rules which sets forth the principles and
standards of corporate governance for listed companies. Pursuant to the HKSE
Listing Rules, if we choose to deviate from any code provisions of the Corporate
Governance Code, we must disclose such deviations in our annual report.

CODE OF BUSINESS CONDUCT AND ETHICS

      Under the NYSE corporate governance rule 303A.10, a listed company must
adopt and disclose its code of business conduct and ethics for directors,
officers and employees. We adopted our code of business conduct and ethics for
senior management on March 23, 2004 and have disclosed the content of this code
on our website and in the annual report on Form 20-F for the fiscal year ended
December 31, 2003. In addition, we adopted our code of business conduct and
ethics for employees on March 2, 2005 and have disclosed the content of this
code on our website. We are not required under the PRC Company Law and the HKSE
Listing Rules to have, and we do not currently have, a code of business conduct
and ethics for directors. However, pursuant to the HKSE Listing Rules, all of
our directors must comply with the Model Code for Securities Transactions by
Directors of Listed Companies (the "Model Code") as set out in the Listing
Rules. The Model Code sets forth required standards with which the directors of
a listed company must comply in securities transactions of the listed company.

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