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                                                                     EXHIBIT 4.3

                         CAPITAL CONTRIBUTION AGREEMENT

This Capital Contribution Agreement is entered into this 9th day of June, 2005
in Beijing by and among:

CHINA NATIONAL OIL AND GAS EXPLORATION AND DEVELOPMENT CORPORATION ("CNODC")
ADDRESS: International Investment Building D, Fuchengmen Beidajie, Xicheng
District, Beijing
LEGAL REPRESENTATIVE: Wang Dongjin

CENTRAL ASIA PETROLEUM COMPANY LTD. ("CAPC")
ADDRESS: Floor 6, Communication Building, No. 2 Andelibeijie, Dongcheng
District, Beijing
LEGAL REPRESENTATIVE: Wu Enlai

PETROCHINA COMPANY LIMITED ("PETROCHINA")
ADDRESS: World Tower,16 Andelu, Dongcheng District, Beijing
LEGAL REPRESENTATIVE: Chen Geng

CHINA PETROLEUM EXPLORATION & DEVELOPMENT COMPANY LIMITED ("CPEDC")
ADDRESS: International Investment Building D, Fuchengmen Beidajie, Xicheng
District, Beijing
LEGAL REPRESENTATIVE: Wang Dongjin



WHEREAS:

1.    CNODC, a collectively-owned company, was established on 13 May 1987 in
      Beijing by law and validly existing, in compliance with laws of the
      People's Republic of China; it is mainly engaged in overseas oil and gas
      exploration and development.

2.    CAPC, a company with limited liabilities, was established on 10 July 1996
      in Beijing by law and validly existing, in compliance with laws of the
      People's Republic of China; 100% of its equity is held by CNODC
      indirectly.

3.    PetroChina, a joint stock company with limited liabilities, was
      established on 5

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      November 1999 in Beijing by law and validly existing, in compliance with
      laws of the People's Republic of China; the shares and American Depositary
      Shares of PetroChina are listed on the Stock Exchange of Hong Kong Limited
      and the New York Stock Exchange.

4.    CPEDC, a company with limited liabilities, was established by CNODC and
      CAPC by law on 14 March 2005 in Beijing and validly existing, in
      compliance with laws of the People's Republic of China; CNODC and CAPC
      control the company by 95%/5%.

5.    CAPC agrees to sign the Equity Transfer Agreement separately with CNODC,
      to transfer its 5% equity of CPEDC to CNODC.

6.    CNODC agrees to transfer the Transferred Assets (see Article 1.9 for the
      definition) held by CNODC, directly or indirectly, to CPEDC Group for free
      of charge. CPEDC agrees, when all closing conditions specified in Article
      3.1 herein are satisfied or considered as satisfied according to Article
      3.2 herein, to make capital increase, and PetroChina also agrees to
      subscribe for all additional registered capital due to CPEDC's capital
      increase ("this Transaction"). Upon the completion of this Transaction,
      PetroChina will hold 50% equity of CPEDC.

NOW, THEREFORE, in consideration of equality and mutual benefit, through
friendly negotiation, and as per relevant laws and regulations of the People's
Republic of China, the parties agree upon this Transaction as follows:


                     ARTICLE 1 DEFINITION AND INTERPRETATION

Unless specified otherwise in this agreement, the terms and expressions herein
have the following meanings:

1.1.  THE AGREEMENT: means the Capital Contribution Agreement and any revision
      and modification hereto duly agreed and executed by and among the parties
      hereto in writing from time to time.

1.2.  REGISTERED CAPITAL SUBSCRIPTION: means that PetroChina subscribes for the
      additional registered capital of CPEDC for the purpose of this
      Transaction, i.e. RMB 50 million, to obtain 50% equity of CPEDC.

1.3.  CLOSING: means that PetroChina pays the consideration specified in Article
      5 herein when all closing conditions specified in Article 3.1 herein are
      satisfied or considered as satisfied according to Article 3.2 herein.

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1.4.  CLOSING DATE: means the date when PetroChina pays the consideration
      specified in Article 5 herein when all closing conditions specified in
      Article 3.1 herein are satisfied or considered as satisfied according to
      Article 3.2 herein.

1.5.  BASE DATE: means 31 December 2004.

1.6.  RELATED PERIOD: means the period from 1 January 2005 to the Closing Date
      (including).

1.7.  MAJOR PROCEEDINGS: means any pending lawsuit, arbitration, administrative
      appeal or other legal processes related to Transferred Assets arising
      before the Closing Date, involving a value of more than US$3 million
      individually.

1.8.  SPECIAL REGIONS: means Sudan, Syria, Iran, Burma, and Iraq.

1.9.  TRANSFERRED ASSETS: means all assets and liabilities located in areas
      other than Special Regions, originally owned by CNODC whether directly or
      indirectly, and listed in the Appraisal Report. See Exhibit 1 for
      Transferred Assets-related projects and Exhibit 2 for Transferred
      Assets-related companies.

1.10. EXAMINING AND APPROVING AUTHORITIES: mean all foreign and domestic
      governmental examining and approving authorities that are entitled to
      approve or authorize this Transaction and other actions related thereto.

1.11. APPRAISAL REPORT: means the report made by China Enterprises Appraisals
      for the assets and liabilities of CPEDC and/or Transferred Assets on Base
      Date.

1.12. CPEDC GROUP: means CPEDC and its owned companies listed in Transferred
      Assets.

1.13. CNPC: means China National Petroleum Corporation. It is the controlling
      parent company of CNODC and PetroChina.

1.14. FORCE MAJEURE: means war, natural disaster and any other unforeseen and
      inevitable event that cannot be controlled by the parties hereto.

1.15. PREEMPTION RIGHTS: means that once CNODC or its controlling companies sell
      their owned assets or equities in relation to oil/gas exploration,
      development, production, pipelines, refining and chemical businesses, or
      CPEDC issues a notice to CNODC or its controlling companies requesting for
      purchase of aforesaid assets or equities, as negotiated by the parties,
      CPEDC is entitled to a preemption, without breaching the governing laws
      and regulations and any relevant agreements signed by CNODC or its
      controlling companies.

                           ARTICLE 2 CAPITAL INCREASE

2.1   Capital Increase: CPEDC and its existing shareholders agree upon the
      capital increase for CPEDC in accordance with the Agreement, i.e.,
      increasing its registered capital from RMB 50,000,000 to RMB100,000,000,
      and PetroChina

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      agrees to subscribe for RMB 50,000,000 of the registered capital of CPEDC
      at the consideration specified in Article 5.1 herein and obtain 50% of
      CPEDC's equity interest.

2.2   From the Closing Date, PetroChina will hold 50% of CPEDC's equity. Within
      20 working days after the Closing Date, CPEDC shall convene the
      shareholders' meeting to elect its directors and amend its articles of
      association, apply to relevant registration authorities for registration
      changes regarding capital increase, and issue to CNODC and PetroChina
      respectively the Capital Contribution Certificate reflecting the changed
      equity structure of CPEDC.

2.3   The parties agree that the Articles of Association of CPEDC after
      PetroChina completes capital increase to it shall be in the form attached
      hereto as Exhibit 4, and the parties shall cause the Shareholders' Meeting
      of CPEDC to approve the form set forth in Exhibit 4.

                ARTICLE 3 CLOSING CONDITIONS FOR THIS TRANSACTION

3.1   The closing herein shall occur on the date agreed by the parties when all
      preconditions below are satisfied or the parties agree unanimously that
      any one or partial or all preconditions below are waived.

      (1)   All procedures (including but not limited to obtaining the approval
            fromor filing with domestic and foreign examining and approving
            authorities and the consent from third party) regarding transfer of
            Transferred Assets from CNODC and/or its subsidiaries to CPEDC
            and/or its subsidiaries have been completed;

      (2)   All necessary approvals from examining and approving authorities and
            consent from third party have been obtained for this Transaction;

      (3)   The Appraisal Report for CPEDC and/or Transferred Assets have been
            confirmed by CNODC and PetroChina, and all necessary formalities for
            filing have been completed;

      (4)   PetroChina has obtained the approval to this Transaction by its duly
            convened extraordinary shareholders' meeting; and

      (5)   The representations and warranties given in Exhibit 3 remain correct
            and free from error, as of the Closing Date.

3.2   If the parties hereof agree, through negotiation, to grant waiver with
      respect to the conditions set forth in (1) and (5) under Article 3.1
      herein when such conditions have not been satisfied, it shall be
      considered that all such conditions have been satisfied, but the waiver
      with respect to item (1) shall be subject to


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      the completion of relevant procedural formalities and conform to the laws
      and regulations.

3.3   The deliverables to be delivered on the Closing Date are the Transferred
      Assets for which the closing conditions have been satisfied or considered
      to be satisfied in accordance with Article 3.2.

3.4   The parties believe and will make all reasonable efforts to ensure that
      the closing will occur no later than 30 December 2005.

                                ARTICLE 4 CLOSING

4.1   If, before 10 December 2005, CNODC believes that the closing conditions
      specified in Article 3.1 herein have been satisfied completely, it shall
      issue a written notice to PetroChina for requesting the closing and
      provide the copies of documents/evidences demonstrating that the closing
      conditions have been satisfied, including but not limited to:

      (1)   Title certificates for Transferred Assets (including but not limited
            to equity certificates, registration documents for changes to
            petroleum contracts);

      (2)   Confirmation documents by the third party (if necessary);

      (3)   Approval/ratification documents by examining and approving
            authorities in countries/regions where the Transferred Assets are
            located (if necessary);

      (4)   Approval/ratification/filing documents by examining and approving
            authorities in the PRC;

      (5)   Legal opinions on the validity of this Transaction and Transferred
            Assets issued by Chinese lawyers of CNODC to PetroChina.

4.2   If PetroChina believes that all closing conditions have been satisfied, it
      shall, within ten (10) days as of its receipt of the above notice from
      CNODC, reply to CNODC in writing which shall specify the Closing Date;
      provided that the closing date shall not be later than 30 December 2005.

4.3   If, on or before 10 December 2005, CNODC believes that the closing
      conditions specified in Article 3.1 herein have not been satisfied
      completely, it shall issue a written notice to PetroChina, stating such
      fact. PetroChina shall, within ten (10) working days upon its receipt of
      such written notice, notify CNODC in writing as to whether such
      unsatisfied conditions will be waived and confirm whether the closing
      conditions should be considered as satisfied in accordance with Article
      3.2 hereinabove. If it is confirmed that the closing conditions should be
      considered as satisfied, PetroChina shall also expressly specify the


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      closing date in such notification; provided that the closing date shall
      not be later than 30 December 2005.

4.4   At the Closing Date, PetroChina shall make the lump sum payment for the
      consideration specified in Article 5.1 hereinbelow, in cash, to the
      account indicated by CPEDC.

4.5   Immediately after CPEDC has received the consideration from Petrochina for
      all of the additional registered capital subscribed for by PetroChina, the
      parties shall duly consider PetroChina having become the shareholder of
      CPEDC and holding 50% of CPEDC's equity. CPEDC shall within ten (10) days
      after the Closing Date, appoint a qualified auditor to verify the
      additional registered capital, who shall issue the capital contribution
      verification report, and CPEDC shall be also responsible for going through
      procedures necessary for registration change at the competent
      administration for industry and commerce regarding its capital increase by
      PetroChina.

                             ARTICLE 5 CONSIDERATION

5.1   The parties agree hereby, that PetroChina shall pay RMB20,741,250,000.00
      (or US$2.5 billion + RMB50.00 million converted on the basis of benchmark
      exchange rate of US$ vs RMB announced by the People's Bank of China on the
      base date ) as the consideration for the additional registered capital of
      CPEDC subscribed by it, and such consideration is based on the fact that
      all Transferred Assets are injected into CPEDC upon the closing. After
      capital verification, RMB 50,000,000 of aforesaid consideration will be
      entered in the registered capital of CPEDC, and the remaining will be
      entered in the capital surplus of CPEDC.

5.2   With respect to any items among the Transferred Assets that have been
      approved by the governments in which such items are located and/or agreed
      by the third party while, for which, the formalities regarding the
      transfer to CPEDC have not been completed by the Closing Date (but CNODC
      and PetroChina acknowledge that no legal obstacles exist in the execution
      of such formalities) , the parties agree that the value of such items will
      not be deducted from the consideration, instead such items will be
      delivered along with those projects for which all the relevant formalities
      have been completed. CNODC also undertakes to complete all the formalities
      for transfer of such items to CPEDC as soon as possible.


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                    ARTICLE 6 REPRESENTATIONS AND WARRANTIES

6.1.  The parties undertake to each other that, unless specified otherwise
      herein, the representations and warranties under the Agreement are true,
      correct and complete in all material aspects, and also covenant to not
      impair the truth, correctness and completeness of each representations and
      warranties by any action or omission.

6.2.  The parties hereby represent and warrant to each other as follows:

      (1)   Such party is duly established and validly existing in compliance
            with the laws of the jurisdiction in which it is incorporated, and
            has obtained all governmental authorizations and approvals required
            for its business operation;

      (2)   Such party has obtained all authorizations and approvals specified
            under relevant laws, regulations and articles, and has the power to
            sign and perform the Agreement;

      (3)   The execution of the Agreement and all documents refereed to herein
            by such party doesn't violate its articles of association, any
            currently effective law or its obligations under any existing
            contract or agreement to which it is a party;

      (4)   such party has never conducted any activity that impairs or would
            impair the interests of any other party hereto, and will make
            efforts to prevent any third party from conducting any such
            activity.

6.3.  CNODC's further representations and warranties regarding CPEDC Group, the
      projects listed in Exhibit 1 as Transferred Assets and other related
      matters, are attached hereto as Exhibit 3.

6.4.  Any representations and warranties herein shall be able to be interpreted
      severally and independently, and subject to any contrary provisions
      herein, shall not be limited or restricted by any other provisions herein
      or under other agreement between the parties or any judgment on aforesaid
      articles.

6.5.  If, from the date when the Agreement is signed to the Closing Date for
      this Transaction, any party hereto is aware of any information that may
      have a material adverse impact on the representations and warranties or
      this Transaction, it shall disclose such information to all the other
      parties, and take effective actions to minimize such adverse impact.

6.6.  The representations and warranties of any party hereto shall constitute
      preconditions for the other parties to perform the Agreement and the other
      parties will enter into the Agreement by reliance on such representations
      and


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warranties.

                 ARTICLE 7 RIGHTS AND OBLIGATIONS OF THE PARTIES

7.1   CNODC and CAPC shall, severally and jointly:

      (1)   prepare and submit all legal documents that shall be prepared and
            submitted by CNODC and CAPC as required by the Examining and
            Approving Authorities, in order to perform the Agreement;

      (2)   apply to the Examining and Approving Authorities and third parties
            for, and make efforts to cause them to issue/provide, approval,
            consent or permission from or filing with such authorities and such
            third parties required to perform the Agreement;

      (3)   provide all necessary documents to assist CPEDC in going through
            related procedures for change of business registration in relevant
            registration authorities;

      (4)   after the conclusion of the Agreement, upon its receipt of any
            notice regarding the progress of the examination and approval
            procedures with the foreign and domestic authorities required for
            the transfer of Transferred Assets, CNODC shall notify PetroChina in
            writing of the information about such notice, as soon as possible;

      (5)   make efforts to assist PetroChina to prepare and submit all legal
            documents that shall be prepared and submitted by PetroChina.

7.2   PetroChina shall:

      (1)   pay the consideration indicated in Article 5.1 in cash to CPEDC,
            pursuant to the Agreement in a timely manner;

      (2)   prepare and submit all legal documents that shall be prepared and
            submitted by it as required by the Examining and Approving
            Authorities, in order to perform the Agreement;

      (3)   exert itself to assist CPEDC, CNODC and CAPC to prepare and obtain
            all legal documents required by the Examining and Approving
            Authorities;

      (4)   exert itself to assist CPEDC, CNODC and CAPC to obtain all approval,
            consent, permission and filing of the government and the third
            party;

      (5)   provide all necessary documents and assist CPEDC with procedures for
            change of business registration in relevant registration
            authorities;

      (6)   notify CNODC as soon as possible of the fact that its shareholders'
            general meeting approves the Agreement by resolution.

7.3   CPEDC shall:


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      Convene the shareholders' meeting of CPEDC as soon as possible, after the
      closing of this Transaction, to elect its directors and amend its Articles
      of Association, apply for change of business registration to relevant
      registration authorities, and issue to CNODC and PetroChina respectively,
      the Capital Contribution Certificate reflecting the changed equity
      structure of CPEDC.

7.4   After the Agreement come into effect, PetroChina shall be entitled to
      appoint two observers to CPEDC, who shall have the right of information
      regarding the operations of CPEDC; CNODC and CPEDC shall enable such
      observers to exercise the aforesaid rights; at the request of such
      observers, CNODC and CPEDC shall provide them with all documents in
      relation to the operations of CPEDC.

                  ARTICLE 8 ARRANGEMENTS IN THE RELATED PERIOD

8.1.  The parties hereby agree that, any change of CPEDC's assets and
      liabilities during the Related Period shall not impact PetroChina's
      payment of the consideration in the amount for the registered capital
      subscribed for by it in accordance with the Agreement. All income,
      expenditure and profit generated during the Related Period shall be
      attributable to the Transferred Assets and CPEDC Group.

8.2.  The parties hereby also agree that, the parties shall, at the Closing
      Date, clear any expenses advanced and any income received on behalf of
      Transferred Assets by CNODC during the Related Period, including but not
      limited to shareholders' loans, borrowings and capital increase, the
      current accounts and the product sales income and profit gains, etc.,
      during the Related Period. Within 30 days after the Closing Date, such
      expenses and income shall be settled by CPEDC and CNODC after the
      qualified auditor reviews and CNODC, PetroChina and CPEDC confirm such
      amount.

8.3.  CPEDC shall not obtain any other assets and liabilities beyond Transferred
      Assets during the Related Period, without consent of PetroChina.

8.4.  From the Effective Date of the Agreement to the Closing Date, unless
      specified otherwise herein or agreed by PetroChina in writing, or as
      mandatorily required by law or by examination and approval authorities,
      CNODC, CAPC and CPEDC shall:

      (1)   operate the Transferred Assets on in the ordinary course of
            business;

      (2)   maintain the Transferred Assets at conditions equivalent to that in
            the Base Date, except for wear and tear;


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      (3)   not transfer, mortgage or pledge the Transferred Assets, or provide
            guarantee for any other person with the Transferred Assets;

      (4)   CPEDC Group shall not sign any agreement, such as loan agreement,
            that may increase the liabilities, unless it is necessary for normal
            operation;

      (5)   not make any revision to any existing contract or agreement that is
            detrimental to the Transferred Assets;

      (6)   perform the Agreement after being executed or any other documents in
            relation to Transferred Assets and its business in a timely manner;

      (7)   not release anyone from any debts owed to CPEDC Group or waive any
            claim of CPEDC Group;

      (8)   not make a compromise, settlement, withdrawal or waiver of rights in
            any form with respect to any action or arbitration or any other
            legal proceedings pending, in relation to CPEDC Group;

      (9)   not issue or plan to issue any additional equity or convertible
            bonds of CPEDC Group or grant any subscription right or similar
            rights to the aforesaid equity or convertible bonds, unless
            otherwise specified in any agreement/contract binding upon CNODC
            and/or CAPC and/or CPEDC.

                   ARTICLE 9 LIABILITY FOR BREACH OF CONTRACT

9.1   CNODC, CAPC and/or CPEDC shall be entitled to claim on PetroChina for
      compensation for any direct loss and damage incurred by them, and any
      costs and expenses arising from any action or claim incurred by them due
      to the nonperformance or incomplete performance by PetroChina of any of
      its obligations under the Agreement or breach of any provision hereof.
      PetroChina shall not recover such compensation from CPEDC after having
      paid the same.

9.2   PetroChina shall be entitled to claim on CNODC for compensation for any
      direct loss and damage incurred by it, and any costs and expenses arising
      from any action or claim incurred by it due to the nonperformance or
      incomplete performance by CNODC, CAPC and/or CPEDC of any of their
      respective obligations under the Agreement or breach of any provision
      hereof. CNODC shall not recover such compensation from CPEDC after having
      paid the same.

9.3   Notwithstanding the provisions in Article 9.2 above, if CPEDC fails to
      fulfill or incompletely fulfills its obligations hereunder after the
      Closing Date, the other parties shall be entitled to claim on CPEDC for
      compensation for any direct loss and damage incurred by them, and any
      costs and expenses arising from any


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      action or claim incurred by them due thereto.

9.4   Notwithstanding any contrary provisions herein, if CNODC's breach of any
      of its representations and warranties set forth in Article 6 hereinabove
      results in any loss and damage to and/or cause any costs and expenses to
      PetroChina arising from any action or claim due thereto, the amount of
      loss that PetroChina can recover from CNODC for any individual claim shall
      be no less than RMB4,000,000 and the accumulative amount of loss that
      PetroChina can recover from CNODC for any individual claim shall be no
      less than RMB20,000,000; provided that the total amount of loss that can
      be recovered by PetroChina from CNODC hereunder shall not exceed 50% of
      the consideration for this Transaction. In case of any breach by CNODC,
      CPEDC or CAPC of any of their respective representations or warranties set
      forth herein, if PetroChina doesn't make any claim with respect thereto
      within twelve (12) months as of the Closing Date, CNODC shall not assume
      any compensation therefor.

9.5   Notwithstanding any contrary provisions herein, if PetroChina's breach of
      any of its representations and warranties set forth in Article 6
      hereinabove results in any loss and damage to and/or cause any costs and
      expenses to CNODC and/or CAPC and/or CPEDC arising from any action or
      claim due thereto, the amount of loss that CNODC, CAPC or CPEDC can
      recover from PetroChina for any individual claim shall be no less than
      RMB4,000,000 and the accumulative amount of loss that CNODC, CAPC or CPEDC
      can recover from PetroChina for any individual claim shall be no less than
      RMB20,000,000; provided that the total amount of loss that can be
      recovered by CNODC, CAPC or CPEDC from PetroChina hereunder shall not
      exceed 50% of the consideration for this Transaction. In case of any
      breach by PetroChina of any of its representations or warranties set forth
      herein, if CNODC, CAPC or CPEDC doesn't make any claim on PetroChina
      within twelve (12) months as of the Closing Date, PetroChina shall not
      assume any compensation therefor.

9.6   Any tolerance, grace, preferential treatment granted by any party to any
      other party or delay of any party to exercise any of its rights hereunder
      shall not affect, damage or limit any rights or interests that such party
      shall have under the Agreement and any laws and regulations, nor shall be
      considered as such party's waiver of any of its rights or interests under
      the Agreement, nor release the other parties from any of their obligation
      under the Agreement.

9.7   All rights under the Agreement shall be cumulative and not prejudice any
      other right or remedy specified in laws.


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9.8   Notwithstanding the above agreement, all of the parties agree that, none
      of the parties hereto shall assume the default responsibility if the
      Closing of this Transaction fails to occur as a result of the failure to
      obtain from any of the Examining and Approving Authorities any
      approval/ratification for any reason, and the parties shall assume their
      respective costs arising out of or from this Transaction.

                            ARTICLE 10 FORCE MAJEURE

10.1  None of the parties shall be considered in default if it is unable to
      perform this Agreement due to the occurrence of a force majeure event;
      provided that such party shall make all necessary remedies if practicable
      to mitigate the loss arising from the occurrence of the force majeure
      event.

10.2  Any party who encountered the force majeure event shall notify the other
      parties thereof in writing as soon as possible, and submit a report to the
      other parties, stating the reasons for its inability to perform its
      obligations under the Agreement either in whole or in part and for any
      extension to perform its obligations, within fifteen (15) days after the
      occurrence of the force majeure event and such party shall take all
      actions practicable to mitigate the loss. If any force majeure event
      occurs, any party shall not be responsible for any damage and additional
      expense and loss suffered by the other parties due to the failure to
      perform or any delay in the performance of obligations hereunder. The
      party claiming force majeure shall take proper measures to mitigate or
      remove the impact thereof and try to resume the performance of the
      obligations hereunder affected by force majeure as soon as practicable.

                           ARTICLE 11 CONFIDENTIALITY

Each party shall treat all details about the Agreement and this Transaction, the
interrelationship among the parties and the documents provided to each other
hereunder as confidential materials, and without prior written approval by the
other parties, shall not disclose any of such materials to any party other than
the parties hereto in any way except for the purpose of this Transaction, except
for any disclosure to relevant agents, financial institutions and regulatory
authorities for the purpose of the Agreement.

                            ARTICLE 12 GOVERNING LAW


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The conclusion, effect, interpretation and performance of and settlement of any
dispute arising from the Agreement shall be governed by the laws of the People's
Republic of China.

                          ARTICLE 13 DISPUTE SETTLEMENT

13.1  Any dispute arising out of or from the Agreement shall be settled through
      friendly negotiations between the parties, and may be referred to
      arbitration if it is failed to be resolved through negotiation.

13.2  Such dispute shall be submitted to and resolved by China International
      Economic and Trade Arbitration Commission for arbitration in Beijing in
      accordance with its arbitration rules.

13.3  The award of China International Economic and Trade Arbitration Commission
      shall be final and binding upon all the parties. The arbitration costs
      shall be assumed by the losing party.

13.4  Pending resolution of any dispute, the parties shall continue to perform
      the Agreement other than any matter under dispute.

                                ARTICLE 14 NOTICE

14.1  All communications between the parties regarding the Agreement shall be
      delivered to each party at the following addresses by mail, facsimile,
      telex or in other written form:

      China National Oil and Gas Exploration and Development Corporation
      Central Asia Petroleum Company Ltd.
      China Petroleum Exploration & Development Company Ltd.

           To:            Zhao Ying
           Tel:           010-58551820
           Fax:           010-58551007

      PetroChina Company Limited
           To:            He Jia
           Tel:           010-84886219
           Fax:           010-84882208

14.2  In case of change of the contact person or any other contact information
      of any


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      party, such party shall notify the other parties in writing seven (7) days
      in advance.

                           ARTICLE 15 ENTIRE AGREEMENT

15.1  The Agreement constitutes the entire and sole agreement among the parties
      regarding this Transaction, and supersedes any other prior understandings,
      arrangements and agreements among the parties regarding this Transaction.

15.2  All of the exhibits hereto shall constitute a valid integral part hereof
      and shall have the equal legal effect as the Agreement.

             ARTICLE 16 EFFECTIVENESS OF AND AMENDMENT TO AGREEMENT

16.1  The Agreement shall be signed by the authorized representatives of all of
      the parties on the date first written above, and shall become effective
      from the date when all of the parties have obtained all necessary internal
      corporate authorizations and approvals required for the execution and
      performance of the Agreement.

16.2  Any amendment and modification to the Agreement shall not be effective
      unless made in accordance with Article 16.1 above.

                    ARTICLE 17 COUNTERPARTS OF THE AGREEMENT

The Agreement shall be executed in Chinese in fifteen (15) originals, with each
party to hold two and the remaining originals to be submitted to the competent
industrial and commercial administrative authorities and other relevant
governmental departments. Each original of the Agreement shall have the equal
legal effect.

                            ARTICLE 18 MISCELLANEOUS

18.1  CNODC hereby agrees to transfer, the Transferred Assets owned by it either
      directly or indirectly, to CPEDC and/or its subsidiaries without any
      consideration. All of the parties will make best to cause the closing
      conditions for all Transferred Assets to be satisfied before 10 December
      2005.

18.2  Any matter not covered hereunder shall be set forth in a supplementary
      agreement by and among the parties which shall be attached hereto as an
      exhibit. Such supplementary agreement shall not be effective unless made
      in accordance


                                       13
<PAGE>

      with Article 16.1 above.

18.3  After consummation of this Transaction, CNODC will transfer all of its
      equity in CPEDC to CNPC free of consideration, according to CNPC's
      arrangement. PetroChina hereby agrees upon such transfer and also agrees
      to waive its preemption.

18.4  CNODC and CPEDC shall be responsible for any tax and expense arising out
      of or from the transfer of Transferred Assets from CNODC and/or its
      subsidiaries to CPEDC and/or its subsidiaries in accordance with the
      relevant laws and regulations.

18.5  Except as provided in Article 18.4 above, each party shall be solely
      responsible for any tax imposed on it due to its execution and performance
      of the Agreement pursuant to the relevant laws and regulations.

18.6  After the Closing Date, CPEDC will, at the appropriate time, convert part
      of its capital surplus resulted from CNODC's assets transfer to it and
      PetroChina's subscription for its registered capital into its own
      additional capital stock.

18.7  Non-competition

      (1)   Non-competition

            After the Closing Date, CNODC and its controlling enterprises will
            not compete with CPEDC Group in the oil/gas exploration,
            development, production, pipelines, refining and chemical businesses
            in any overseas region other than Special Regions.

      (2)   Pre-emption Rights

            i)    After the Closing Date, for any assets other than the
                  Transferred Assets in relation to oil/gas exploration,
                  development, production, pipelines, refining and chemical
                  businesses in any overseas region other than Special Regions,
                  owned by CNODC or its controlling companies, CPEDC shall have
                  Preemption Rights to such assets after PetroChina becomes its
                  shareholder;

            ii)   After the Closing Date, subject to the consent by CNODC and
                  PetroChina, in case of any adjustment to the Special Regions
                  which makes the countries/regions where the overseas assets in
                  relation to oil/gas exploration, development, production,
                  pipelines, refining and chemicals owned by CNODC or its
                  controlling companies are not covered by the Special Regions
                  any longer, CPEDC shall have Preemption Rights to such assets
                  after PetroChina becomes its shareholder.

18.8  After the Agreement becomes effective till the Closing Date, CNODC shall


                                       14
<PAGE>

      disclose any newly obtained information about any relevant overseas
      oil/gas exploration, development, production, pipelines, refining and
      chemical businesses other than Special Regions, to PetroChina as soon as
      possible, after CNODC has indicated any substantial intention for
      acquisition, without any breach of CNODC's obligations under any contract
      signed by it.










































                                       15
<PAGE>
[Signature Page]


China National Oil and Gas Exploration and Development Corporation (seal)

Authorized representative: Wang Dongjin




Central Asia Petroleum Company Ltd. (seal)

Authorized representative: Wu Enlai




PetroChina Company Limited (seal)

Authorized representative: Wang Guoliang




China Petroleum Exploration & Development Company Ltd. (seal)

Authorized representative: Wu Dongshan












                                       16
<PAGE>

Exhibit 1:

      PROJECTS OWNED BY CPEDC GROUP AFTER CLOSING OF ALL TRANSFERRED ASSETS

1.    Development projects in Caracoles and Intercampo oilfields in Venezuela;

2.    Orimulsion project in Venezuela;

3.    Block 11 project in Ecuador;

4.    Block 1-AB/8 in Peru;

5.    Block 6/7 in Peru;

6.    8 projects in Canada;

7.    Bilma project in Niger;

8.    Tenere project in Niger;

9.    Block H project in Chad;

10.   ADAR upstream and downstream integration project in Algeria;

11.   Block 350 project in Algeria;

12.   Block 102a/112 project in Algeria;

13.   Akjubin projects (Zhanazhol field/Kenkyak (post-salt) field and (per-salt)
      field) and Central territory of eastern part in Kazakhstan;

14.   Kenkiyak-Atyrau Pipeline project in Kazakstan;

15.   North-Buzachi project in Kazakstan;

16.   Bars project in Kazakstan;

17.   KK project in Azerbaijan;

18.   Gobustan project in Azerbaijan;

19.   Block 5 project in Oman;

20.   Projects in 4 blocks, including Yangpu in Beibuwan Basin,
      Huangtong-Bailian in Fushan Depression, Jinfeng in Fushan Depression and
      Huachang in Beibuwan Basin, in Hainan, China.



                                       17

<PAGE>

Exhibit 2:


                     ORGANIZATIONAL STRUCTURE OF CPEDC GROUP
                   AFTER THE CLOSING OF ALL TRANSFERRED ASSETS



























                                       18
<PAGE>

Exhibit 3:

                 FURTHER REPRESENTATION AND WARRANTIES OF CNODC

For the purpose of this Transaction, in addition to the existing representations
and warranties, CNODC further makes the following representations and warranties
in accordance with Article 6.3 in the Agreement. Except for the information
disclosed to PetroChina prior to the execution date of the Agreement, to the
extent that CNODC knows and it should know as a shareholder of CPEDC Group
companies:

1.    CORPORATE STATUS AND FORM OF CPEDC GROUP

1.1   Each of the entities of CPEDC Group is duly established and validly
      existing in compliance with laws in the jurisdiction in which it is
      incorporated, legally owns its assets, and is not subject to receivership,
      liquidation, bankruptcy or winding-up nor does there exist any measure or
      petition for its receivership, liquidation, bankruptcy or winding-up.

1.2   CPEDC Group conducts its businesses legally and has obtained all licenses
      and approvals required for the conduct of its business, which are all
      legal and valid. It has not received any notice of an intention to
      terminate or modify any of the aforesaid licenses and approvals, nor has
      it been aware of any matter that impedes or affects any extension or
      renewal of any of such licenses and approvals.

1.3   CPEDC Group doesn't create any mortgage, pledge, lien, restriction,
      preemption rights, third party interests or encumbrance or security
      interest in any other form or any other preferential arrangements on any
      of its assets, nor does there exist any fact that shall be disclosed or
      any material legal defect.

1.4   CPEDC's existing registered capital is RMB50 million, which have been
      fully paid up by CNODC and CAPC. As the sole shareholders of CPEDC, CNODC
      and CAPC hold all of the interests in CPEDC, free from mortgage, pledge,
      lien, restriction, preemption rights, third party interests, or
      encumbrance or security interest in any other form, or any other
      preferential arrangements, or any fact that shall be disclosed, or any
      material legal defect.

1.5   CPEDC Group complies with its articles of association or other
      organizational documents in all material aspects. It does not surpass its
      power or fail to obtain any authorization in the conduct of its business,
      execution of any contracts, making any undertakings or exercise of any of
      its rights.

1.6   CPEDC's book of minutes of board meetings and shareholders' meetings of



                                       19
<PAGE>

      CPEDC include the complete and accurate records of all resolutions passed
      by the board and shareholders of CPEDC.

1.7   The execution and performance of the Agreement will not constitute any
      violation or any material breach of any provision of any agreement,
      instrument, law, award, order, permit, license or consent by which CPEDC
      Group is bound.

1.8   CPEDC Group's continued operation of its existing business will not
      conflict with or infringe upon any third party's rights in any way,
      including but not limited to land ownership, land use rights, oilfield
      exploration rights and oilfield exploitation rights.

1.9   CPEDC Group does no have any agreement or obligations with respect to its
      share capital, whether issued or not, or the issue of any share, bond,
      subscription right, stock option or other similar securities.

1.10  CPEDC Group has legal title to all of the assets set forth in the
      Appraisal Report and doesn't allow any creditor's right to be created on
      any of such assets. It has legal use rights to the assets used in the
      operation of its business.

1.11  CPEDC Group or CNODC or CAPC has not taken any action or omission that
      would result in circumstances under which CPEDC Group must or may be
      responsible for:

      (1)   refunding any investment and financial support previously granted by
            any government;

      (2)   repaying any governmental loan; or

      (3)   surrendering amount obtained by it under the preferential tax
            treatment or tax reduction or exemption.

1.12  Neither CPEDC Group nor any of its directors is involved, in any criminal
      act that has a material adverse impact on CPEDC Group's operation.

2.    FINANCIAL STATEMENTS AND ACCOUNTING RECORDS OF CPEDC GROUP

2.1   CPEDC Group's financial statements:

      (1)   are complete and accurate in all aspects, and truly and fairly
            reflect CPEDC Group's assets and liabilities on the Base Date, and
            do not omit any debts or responsibilities;

      (2)   are prepared in compliance with relevant laws and/or International
            Accounting Standards;

      (3)   no material adverse changes have occurred to the financial
            conditions and prospects of the relevant business from the Base Date
            to the effective date of the Agreement;

      (4)   reflect that the fixed assets of CPEDC Group have been depreciated
            at the





                                       20
<PAGE>
            depreciated at the depreciation ratio sufficient to reduce the value
            of such assets to nil not later than the expiration of their service
            life, after appropriate residual value of such fixed assets is
            deducted; and

      (5)   disclose all contingent liabilities, commitments and deferred or
            advance taxes and make proper provision therefor.

2.2   All book credits of CPEDC Group, whether indicated on the financial
      statements of CPEDC or accrued since the Base Date, are valid and
      enforceable, and have been or can be liquidated for their nominal value.

2.3   Except as disclosed in the financial statements of CPEDC Group, as of the
      execution date hereof, CPEDC Group:

      (1)   hasn't had any capital expenditure (other than any payment made
            under any contract that has been executed) or provided guarantee or
            made other material commitments;

      (2)   has not made any borrowings except in the ordinary course of
            business.

2.4   None of the secured borrowing as disclosed in the financial statements of
      CPEDC Group exceeds the amount thereof as indicated therein, and all of
      the similar borrowings newly made after the Base Date have been disclosed
      to PetroChina in a timely manner.

2.5   Since the Base Date, there has no major adverse change to the financial
      conditions or prospects of the relevant business.

2.6   CPEDC Group's Accounting Records:

      (1)   With respect to the relevant business and any changes to the
            relevant business occurred during the period from the Base Date to
            the execution date of the Agreement, CPEDC Group has established and
            prepared properly all necessary account books and records, and all
            such account books and documents that belong to or shall be held by
            CPEDC are maintained and held by CPEDC.

      (2)   All accounts, account books, ledgers and all accounting records:

            i)   have been noted and completed adequately, properly and
                 accurately;

            ii)  free from material error and deviation; and

            iii) record and reflect, truly and fairly, all transactions in
                 relation to relevant businesses.

3.    TAXES OF CPEDC GROUP

3.1   All taxes payable by CPEDC Group, including any tax due and advance tax,
      have been paid.

3.2   All tax returns and related materials to be prepared or filed by CPEDC
      Group


                                       21
<PAGE>

      for the purpose of any tax have been prepared or filed in time and on a
      proper basis, and are true and accurate when prepared and consistent to
      the fact at the time of filing thereof; any aforesaid will not or may not
      lead to any dispute with any tax authorities.

3.3   CNODC has disclosed to PetroChina in detail of any and all of the
      transactions entered into by CPEDC Group that are subject to approval or
      permission by the competent tax authorities.

3.4   CPEDC Group and/or CAPC and/or CNODC have not taken any action that causes
      CPEDC Group to assume any tax that is otherwise to be assumed by any party
      other than CPEDC Group.

3.5   All remuneration, compensation, retirement or severance payment and other
      amounts paid or payable to all of the current/former employees or
      executives of CPEDC Group and all interests, annuities, patent royalty,
      rent and other annual payment may be deducted before tax or treated in
      other method as approved by tax authorities.

3.6   All documents to which CPEDC Group is a party, or that constitute part of
      ownership of any entity of CPEDC Group to any assets, or in the
      enforcement of which any entity of CPEDC Group has or may have interests,
      and for which stamp tax or similar taxes shall be paid, have been stamped
      or granted with tax exemption.

3.7   The materials submitted by CPEDC Group to relevant governmental
      authorities and departments with respect to import or export of any goods
      are true and accurate at submission; CPEDC Group has complied with all
      ordinances, rules, orders, instructions or conditions regarding import and
      export of goods and all custom affairs; and all duties payable by CPEDC
      Group have been paid in full within the applicable time limit.

3.8   CPEDC Group has reported in full detail its provision of benefits to its
      directors or employees to relevant tax authorities and the services
      provided by any individual to CPEDC Group as required by applicable tax
      laws.

3.9   CPEDC Group has made withholdings and disclosures to the authorities with
      respect to any item for which it is obligated or entitled to make tax
      withholding.

3.10  CNODC agrees to be fully responsible for or compensate for any accrued
      taxation obligations of CPEDC Group that are payable but not paid, except
      for those disclosed in the financial statements of CPEDC, unless otherwise
      provided herein.

3.11  CPEDC Group does not have any tax dispute or suffer from any tax penalty,


                                       22
<PAGE>

      and the existing tax preferences enjoyed by CPEDC Group have not ceased or
      been deprived of. CNODC agrees to be fully responsible for or compensate
      for any tax penalty incurred during the Related Period.

4.    PROCEEDINGS OF CPEDC GROUP

4.1   CPEDC Group has not been involved in any Major Proceedings and there does
      not exist any fact or situation at present that may involve CPEDC Group in
      any Major Proceedings, other than the collection of accounts receivable in
      the ordinary course of business.

4.2   None of the properties of CPEDC Group has been sealed up, frozen or
      subject to any other enforcement actions by any administrative and/or
      judicial authority.

5.    LABOR RELATIONS OF CPEDC GROUP

CPEDC Group complies with the applicable laws and regulations and all of the
responsibilities to its employees under labor contracts in all material aspects,
and there is no material labor dispute involving a value/claim exceeding US$1
million individually pending between CPEDC Group and any of its employees.

6.    ENVIRONMENTAL PROTECTION

6.1   CPEDC Group complies with the laws and regulations regarding environmental
      protection in all material aspects.

6.2   CPEDC Group is not threatened with any civil, criminal or administrative
      claim, investigation, complaint or lawsuit, in relation to environmental
      protection that may result in a loss of US$3 million or more to CPEDC
      Group.

7.    CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY

7.1   None of the confidential information used by CPEDC Group infringes upon
      the legal rights of any third party to such confidential information.

7.2   CPEDC Group has legal ownership or use rights to any and all of the
      intellectual properties used by it and its ownership or use thereof does
      not infringe upon the intellectual properties of any third party.

8.    INSURANCE

8.1   CPEDC Group has taken out insurance for its production and operation in
      accordance with good commercial practice in international oil industry,
      and CPEDC Group does not take any action or omission that may lead to the


                                       23
<PAGE>

      invalidity of any of its insurance policies.

8.2   All materials provided in order to obtain or renew CPEDC Group's insurance
      policies are correct, detailed and accurate at the time of provision.

8.3   CPEDC Group has not incurred any loss that is not covered under insurance,
      or waived any substantial or valuable right, or allowed any insurance to
      become invalid.

9.    ARRANGEMENTS WITH RELATED PERSONS

All pecuniary arrangements between CPEDC Group and any of its directors, senior
officers or shareholders have been correctly reflected in the account books of
CPEDC Group.

10.   ACCURACY OF MATERIALS PROVIDED

All materials provided by CNODC, CAPC and CPEDC for the purpose of this
Transaction are true, accurate and free of material omission.

11.   FURTHER WARRANTIES

Except the exercise of its rights as a shareholder of CPEDC in accordance with
the Articles of Association of CPEDC and relevant laws and regulations, CNODC
warrants that:

11.1  After the Closing Date, none of the Transferred Assets will be involved in
      or relate to any assets in Special Regions in any way.

11.2  During the Related Period, CNODC will not transfer any assets in Special
      Regions in any way to CPEDC Group.

11.3  After the Closing Date, CPEDC Group will be completely independent of the
      management of CNODC's assets in Special Regions, including but not limited
      to:

      (1)   setting separate management structure and workflow;

      (2)   establishing management functions and personnel independent from
            each other;

      (3)   being independent in financial matters, such as routine finance and
            accounts management, capital flows, preparation of financial
            statements; and

      (4)   CPEDC Group will not enter into any connected transaction with any
            assets in Special Regions of CNODC or with the business activities
            relating thereto.


                                       24
<PAGE>

      Exhibit 4:

                             ARTICLES OF ASSOCIATION
          OF CHINA PETROLEUM EXPLORATION & DEVELOPMENT COMPANY LIMITED

      In order to meet the requirements of the socialist market economy and
improve the productivity, China Petroleum Exploration & Development Company
Limited ("the Company") is jointly established by China National Oil and Gas
Exploration and Development Corporation ("Party A") and PetroChina Company
Limited ("Party B"), in accordance with Company Law of the People's Republic of
China ("Company Law") and other relevant laws and regulations. In this regard,
these Articles of Association are hereby formulated.

                    CHAPTER 1 NAME AND ADDRESS OF THE COMPANY

Article 1   Name of the Company: China Petroleum Exploration & Development
            Company Limited.

Article 2   Address: International Investment Building D, Fuchengmen Beidajie,
            Xicheng District, Beijing, 100034

            CHAPTER 2 OBJECTIVES AND SCOPE OF BUSINESS OF THE COMPANY

Article 3   Scope of business: the development of exploration technologies of
            oil and gas fields; the investments in crude oil, natural gas and
            refining & chemical projects; the investments in crude oil, natural
            gas and oil product pipeline projects; the contracting of oil
            operations and services; the import and export of goods and
            technologies; acting as the import and export agent; the consulting
            service and technical exchange regarding foreign trade; the sale of
            equipment, apparatuses & instruments and parts as well as mud
            materials, crude oil, special chemical and petrochemical products
            for oilfields (excluding hazardous chemicals and Class I precursor
            chemicals) .

                   CHAPTER 3 THE COMPANY'S REGISTERED CAPITAL

Article 4   The registered capital of the Company shall be RMB 100,000,000.

Article 5   Any increase or decrease in the registered capital of the Company
            shall


                                       25
<PAGE>

            be subject to the unanimous approval of all of the shareholders of
            the Company through resolutions adopted at a duly convened
            shareholders' meeting.

Article 6   If the Company intends to increase its registered capital, the
            parties to the Company shall have the right to subscribe for such
            increased registered capital in proportion to the percentage of
            their respective equity interest in the Company. If either party to
            the Company is unwilling to exercise its aforesaid right, the other
            party may subscribe for the portion of the registered capital of the
            Company that should be subscribed for by such party. In such case,
            the parties' shareholding in the Company shall be adjusted
            accordingly.

Article 7   In case the Company intends to reduce its registered capital, it is
            also required to notify its creditors of its intention, within ten
            (10) days, and shall make public announcements on a newspaper at
            least three times within thirty (30) days, as of its adoption of the
            shareholders' resolutions therefor. In the event any change to its
            registered capital, the Company shall carry out procedures for
            registering such change with the registration authority in
            accordance with relevant laws.

             CHAPTER 4 FORM, AMOUNT AND PERCENTAGE OF SHAREHOLDERS'
                              CAPITAL CONTRIBUTIONS

Article 8   The form, amount and percentage of shareholders' capital
            contributions shall be as follows:

                             FORM          AMOUNT            PERCENTAGE(%)
                                        (RMB'0000)
            PARTY A:         Cash           5000                50%
            PARTY B:         Cash           5000                50%

Article 9   The Company, is a limited liability company established in
            compliance with laws of the People's Republic of China (the "PRC"),
            and Party A and Party B shall be responsible to the Company to the
            limit of their respective contributions to the registered capital of
            the Company as specified in the Capital Contribution Agreement.
            Party A and Party B

                                       26
<PAGE>

            shall share the profit of the Company and be responsible for the
            risks and losses of the Company in proportion to their respective
            percentage of contribution to the registered capital of the Company.

Article 10  After both Party A and Party B have paid in full their respective
            subscribed contributions to the registered capital of the Company as
            specified above, the Company shall retain an accounting firm
            registered in the PRC to verify the capital contribution of each
            party and issue a capital contribution verification report, and on
            the basis thereof, the Company shall issue the certificate of
            capital contribution to each of the shareholders. The capital
            contribution certificate shall set forth the corporate name, date of
            establishment, name of each shareholder of the Company, amount of
            contribution to the registered capital of the Company subscribed for
            by each Party A and Party B, the date of payment of capital
            contribution, and date of issue of the capital contribution
            certificate.

                 CHAPTER 5 SHAREHOLDERS' RIGHTS AND OBLIGATIONS

Article 11  Each shareholder of the Company shall enjoy the following rights:

            (1)   to attend in person or by proxy shareholders' meetings of the
                  Company and to have and exercise voting rights in proportion
                  to its respective capital contributions;

            (2)   to understand the Company's operational and financial status;

            (3)   to elect members of the board and of the supervisory
                  committee;

            (4)   to receive dividends and transfer the contributions in
                  accordance with relevant laws, regulations and these Articles
                  of Association;

            (5)   to pre-emption rights to the contribution transferred by the
                  other shareholder;

            (6)   to subscribe for the increased registered capital of the
                  Company on a priority basis;

            (7)   to share the residual proprieties of the Company upon its
                  termination;

            (8)   to have the right to review and audit the minutes of
                  shareholders' meetings and the financial reports of the
                  Company.

Article 12  The shareholders of the Company shall assume the following
            obligations:

            (1)   to comply with the Company's Articles of Association;


                                       27
<PAGE>

            (2)   to pay in full their subscribed capital contributions on time;

            (3)   to assume limited liabilities for the Company's debts to the
                  limit of their respective subscribed capital contributions to
                  the Company;

            (4)   not to withdraw their capital contributions after completion
                  of the required procedures for registration of the the
                  Company.

    CHAPTER 6 CONDITIONS FOR SHAREHOLDERS' TRANSFER OF CAPITAL CONTRIBUTIONS

Article 13  Shareholders may transfer between themselves all or part of their
            capital contributions; provided that such transfer shall ensure that
            the number of shareholders of the Company shall meet the number as
            specified under the Company Law.

Article 14  Any shareholders' transfer of any capital contribution of the
            Company shall be subject to consideration and approval by the
            shareholders' meeting of the Company. Where any shareholder
            transfers its capital contribution to a person other than a
            shareholder, the unanimous consent of all shareholders is required.
            Any shareholder who does not consent to such transfer shall purchase
            the capital contribution to be transferred, and shall be deemed to
            have agreed to such transfer if it does not purchase such capital
            contribution. With respect to any capital contribution that may be
            transferred by any shareholder upon the consent of all of the
            shareholders, other shareholders shall have Preemption Rights
            thereto on the same conditions.

Article 15  When any shareholder of the Company transfers its capital
            contribution to any third party other than the existing shareholders
            of the Company, and/or the Company admits new shareholders in any
            way, the transferor and/or the existing shareholder of the Company
            shall cause such transferee and/or new shareholder of the Company to
            accept, comply with and perform all regulations herein, including
            but not limited to the provisions set forth in Articles 23 to 28
            (meaning the provisions hereinbelow regarding the shareholders'
            authorization to the board for consideration and approval and the
            composition of the board), unless the aggregate shares of the
            Company held by Party A and party B after such transfer and/or
            capital increase are less than 50% (not inclusive) of the Company's
            registered capital. Such transferee and/or new shareholder shall,
            commencing from the date on which it becomes a shareholder of


                                       28
<PAGE>

            the Company formally, accept, comply with and perform all provisions
            of these Articles of Association, including but not limited to the
            provisions set forth in Articles 23 to 28.

Article 16  After the consummation of a shareholder's transfer of its capital
            contribution in accordance with the law, the Company shall record in
            its shareholder register the name, domicile and amount of the
            capital contribution by the transferee.

                         CHAPTER 7 SHAREHOLDERS' MEETING

Article 17  The shareholders' meeting of the Company shall be composed of all
            shareholders of the Company. It shall be the Company's highest
            authority and exercise the functions and powers as follows:

            1.    to decide on the Company's annual operational policies and
                  investment plans;

            2.    to elect and replace directors and to decide on matters
                  relating to the remuneration of directors;

            3.    to elect and replace supervisors and to decide on matters
                  relating to the remuneration of supervisors;

            4.    to examine and approve the annual report of the board of
                  directors;

            5.    to examine and approve the annual report of the supervisory
                  committee;

            6.    to examine and approve the Company's proposed annual financial
                  budget and final accounts;

            7.    to examine and approve the Company's profit distribution plans
                  (including cash and bonus) and loss recovery plans;

            8.    to resolve on the increase or decrease of the Company's
                  registered capital;

            9.    to resolve on the issue of bonds by the Company;

            10.   to resolve on the transfer by either shareholder of its
                  capital contribution to any person other than shareholders of
                  the Company;

            11.   to resolve on such issues as the merger, division, change in
                  corporate form, dissolution or liquidation of the Company;

            12.   to amend the Company's Articles of Association.

Article 18  With respective any matter set forth in items 1, 6, 7 and 9 under
            Article 17, the board of directors shall first make a proposal and
            then submit the same to the shareholders' meeting for consideration.
            All of the


                                       29
<PAGE>

            shareholders shall vote in favor of such proposal and the
            shareholders' meeting shall adopt unanimous resolutions approving
            such proposal.

Article 19  The shareholders' meeting shall be convened by the board of
            directors and presided over by Chairman of the board. If the
            Chairman of the board of directors is unable to perform his/her
            duties for a particular reason, the vice-chairman or another
            director designated by the Chairman shall preside over the meeting.

Article 20  Shareholders shall exercise their voting rights at shareholders'
            meetings in proportion to their respective capital contributions to
            the Company.

Article 21  Shareholders' meetings may be regular meetings or extraordinary
            meetings. The Company shall notify all of its shareholders of each
            shareholders' meeting fifteen (15) days before the date on which
            such meeting is to be held. Subject to unanimous consent of all
            shareholders, the above notice period of the shareholders' meeting
            may be shortened. The regular shareholders' meetings shall be
            convened once a year. The extraordinary shareholders' meetings
            cannot be held unless Party A or Party B, three or more board
            directors or the supervisory committee of the Company shall propose
            to do so.

Article 22  A shareholders' meeting shall adopt resolutions on the matters
            submitted to it for consideration. Any resolution of the Company at
            the shareholders' meeting shall require the approval of the
            affirmative votes of the shareholders representing more than
            two-thirds or more of the voting rights of the Company, except as
            otherwise provided herein. A resolution of the Company at the
            shareholders' meeting for any increase or decrease of the registered
            capital, division, merger, dissolution or change in corporate form
            of the Company, or amendment of these Articles of Association shall
            require the unanimous approval of all of the shareholders. Minutes
            shall be made for each shareholders' meeting to record decisions on
            each matter considered at such meeting, which shall be signed and
            sealed by the shareholders present at such meeting.

                          CHAPTER 8 BOARD OF DIRECTORS

Article 23  The Company shall have a board of directors, which shall consist of
            seven members (including the chairman), three of them shall be
            elected from the candidates nominated by Party A and four of them
            shall be elected from the candidates nominated by Party B, all of
            whom shall be


                                       30
<PAGE>

            elected and appointed by the shareholders' meeting. Either
            shareholder shall cast the affirmative vote on any candidate for
            director of the Company nominated by the other party and the
            shareholders' meeting shall unanimously approve the election of such
            candidates and appoint such candidates as directors of the Company.

Article 24  The term of office of each director is three years, and may be
            renewable upon re-election at the expiry of his/her term. The term
            of office of each director shall commence on the date when he/she is
            elected as director of the Company at a shareholders' meeting. The
            shareholders' meeting may not without reason remove any director
            (including the chairman) from office before the expiry of the term
            of office of such director.

Article 25  Any candidate for director of the Company nominated by Party B may
            not hold a concurrent post in China National Petroleum Corporation
            or any of its affiliated companies (excluding Party B or any of its
            subsidiaries covered in Party B's consolidated financial
            statements); otherwise, he/she must resign from aforesaid post
            before the formal appointment as director of the Company by the
            shareholders' meeting of the Company.

Article 26  Party B hereby undertakes irrevocably that, in no case (including
            when Party A transfers all of its capital contribution in the
            Company to a third party), Party B will abandon its seats of
            directors granted by Article 23 herein, and also undertakes that,
            when any director nominated by Party B resigns or is dismissed by
            the board of directors of the Company, Party B shall nominate new
            candidate for director within a reasonable period and submit such
            nomination to the shareholders' meeting of the Company for election
            and appointment. Party A respects and agrees upon Party B's above
            arrangements.

Article 27  The board of directors of the Company shall have a chairman, who
            will be elected and appointed by the board of directors.

Article 28  The board of directors shall be responsible to the shareholders'
            meeting and shall exercise the following powers:

            1.    to be responsible for convening shareholders' meetings and
                  reporting on its work to the shareholders' meeting;

            2.    to implement the resolutions of the shareholders' meetings;

            3.    to decide on the annual operational plan and investment plan
                  of the Company;

            4.    to formulate the Company's proposed annual financial budget
                  and


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<PAGE>

                  final accounts;

            5.    to formulate plans for profit distribution and recovery of
                  losses;

            6.    to formulate plans for any increase or decrease of the
                  Company's registered capital;

            7.    to formulate plans for issuing the corporate bond;

            8.    to formulate plans for the merger, division, change in
                  corporate form and dissolution of the Company;

            9.    to decide on the structure of the Company's internal
                  management;

            10.   to formulate the Company's basic management system;

            11.   to appoint or dismiss the Company's general manager and
                  pursuant to the general manager's nomination to appoint or
                  dismiss the deputy manager and the chief financial officer of
                  the Company and decide on their respective remunerations;

            12.   to decide on any external borrowing or guarantee with a value
                  exceeding 10% of the annual budget and not covered under the
                  Company's annual operational plan.

Article 29  The rules for board meetings of the Company shall be as follows:

            1.    Meetings of the board of directors shall be held at least
                  twice each year and shall be convened and presided over by the
                  Chairman. The Chairman shall convene an extraordinary meeting
                  of the board of directors if it so requested by two or more
                  directors or the supervisory committee or the General Manager.

            2.    In the case of a regular board meeting, the Chairman shall
                  issue a notice in writing to all directors ten (10) working
                  days prior to the convention of such meeting, stating the
                  date, time, venue and agenda of such meeting. In the case of
                  an extraordinary meeting, the Chairman shall notify all
                  directors in writing of aforesaid items five (5) working days
                  prior to the convention of the meeting.

            3.    Notice of a meeting shall be deemed to have been given to any
                  director who attends the meeting without protesting against,
                  before or at its commencement, any lack of notice.

            4.    The board meeting may be held by telephone or any other
                  electronic audiovisual means in which ways the participants
                  can hear and communicate with each other at all times. Any
                  directors or proxies attending a board the meeting by
                  aforesaid means shall be deemed to be present the meeting in
                  person.

            5.    Where the Chairman is unable to hold, attend or preside over
                  the


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<PAGE>

                  meeting for any reason, he/she shall authorize the Vice
                  Chairman or any other director to do so on his/her behalf.

            6.    Any director who is unable to attend a board meeting may by
                  issuing a power of attorney entrust any other person (who must
                  also be a director of the Company) to participate in the
                  meeting on his/her behalf. The power of attorney shall be
                  submitted to the Chairman or convener of the relevant board
                  meeting at the commencement of such meeting. The proxy so
                  entrusted is entitled to equivalent rights and powers to that
                  of the entrusting director, including vote casting. One proxy
                  may represent one or more directors if so entrusted. Except
                  for his/her own rights and powers as a director, the proxy
                  entrusted may have more than one voting rights.

            7.    Where a director is unable to attend a meeting of the board of
                  directors and has not appointed a representative to attend
                  such meeting on his/her behalf, he/she shall be deemed to have
                  waived his/her right to vote at such meeting.

            8.    Each director shall have one (1) vote. The Chairman shall not
                  have a second vote or the power of veto

            9.    If a director or any other enterprise in which he/she is
                  employed is interested, directly or indirectly, in any
                  existing or potential contract, transaction or arrangement
                  (excluding the employment contract) of the Company, no matter
                  whether related things need to be approved by the board of
                  directors generally, such director shall disclose to the board
                  of directors the nature and extent of such interest as soon as
                  possible.

                  If a director is interested in any matter as mentioned above
                  to be resolved at the board meeting, such director shall
                  excuse him/herself from such meeting, shall not have any
                  voting right in respect of such matter and shall not be
                  counted in the quorum of such board meeting. When there is
                  dissent as to the existence of such interest, it shall first
                  be discussed whether such director has any interest in such
                  matter before such matter is reviewed, and the aforesaid
                  avoidance procedure shall be carried out if more than
                  two-thirds of directors consider such interest does exist.

            10.   Detailed minutes shall be kept for each board meeting and
                  signed by all directors and proxies present at such meeting.
                  Such minutes shall


                                       33
<PAGE>

                  be kept by the Company in the period when the Company
                  survives. All of the shareholders and directors of the Company
                  may review the minutes of board meetings in the office of the
                  Company during normal business hours.

            11.   The Company shall be responsible for reasonable expenses
                  incurred by directors and proxies in their attendance at board
                  meetings, including travel and accommodation costs. For the
                  purpose of voting at a board meeting, directors may seek the
                  assistance of legal, financial and management professionals
                  when they believe necessary, at the Company's cost.

            12.   Board meetings shall be conducted in accordance with the
                  procedures stipulated herein and every item on the agenda
                  shall be properly discussed as necessary and set forth in
                  written board resolutions if necessary. All such written
                  records, including any resolutions passed, shall be
                  distributed to all directors for review and approval after
                  each board meeting.

            13.   Each director shall keep secret all matters discussed at the
                  board meetings, and shall not reveal the information thereof
                  to any third party without the approval of the board of
                  directors, unless required otherwise by laws or regulations.

Article 30  Unless otherwise provided herein, any decisions made by the board of
            directors on any matters discussed at any board meeting shall
            require the affirmative votes of more than half of all of the
            directors, and shall be set forth in meeting minutes which shall be
            signed by the directors present at such meeting.

Article 31  The directors shall be responsible for all the resolutions of the
            board of directors. If any resolution of the board of directors
            violates any law, administrative regulation or the Company's
            Articles of Association, which results in serious losses to the
            Company, the directors participating in the adoption of such
            resolution shall be liable for compensating the Company. However, if
            it can be proven that a director expressly objected to the
            resolution when the resolution was voted on, and that such
            objections were recorded in the minutes of the meeting, such
            director may be free of liability.

Article 32  The Chairman of the board of directors shall be the legal
            representative of the Company, and shall be elected and removed by
            the board of directors, for a term of three (3) years. At the expiry
            of such term, such


                                       34
<PAGE>

            term is renewable if the Chairman is re-elected. Before the expiry
            of the term, the board of directors shall not remove the Chairman
            without proper reason.

Article 33  The Chairman of the board of directors shall exercise the following
            powers:

            1.    to exercise his/her authority as legal representative of the
                  Company;

            2.    to preside over shareholders' meetings;

            3.    to convene and preside over meetings of the board of
                  directors;

            4.    to check on the implementation of resolutions passed by the
                  board of directors and report to the shareholders' meeting the
                  result of such checking;

            5.    to sign relevant documents on behalf of the Company;

            6.    to exercise extraordinary power of decision and disposition on
                  the Company's affairs in event of emergency such as war and
                  ultra serious natural disaster, provided that such decision
                  and disposition shall be in the Company's interests, and shall
                  report to the board of directors and/or the shareholders'
                  meeting after having made such decision and disposition;

            7.    to exercise other powers conferred by the board of directors.\

            When the Chairman is unable to exercise his/her powers, he/she shall
            designate a Vice Chairman/director to exercise such powers on
            his/her behalf.

Article 34  The Company shall have one Secretary to the Board, who shall be
            appointed by the board of directors.

Article 35  The Company may formulate detailed Rules of Procedure of the Board
            of Directors as required. The Rules of Procedure of the Board of
            Directors shall not conflict with these Articles of Association and
            shall be subject to the consideration and approval by the
            shareholders' meeting.

         CHAPTER 9 THE COMPANY'S OPERATION AND MANAGEMENT ORGANIZATIONS

Article 36  The Company shall set up operation and management organizations
            subordinate to the board of directors to be responsible for the
            Company's routine operations and managements of the Company. Such
            organizations shall have one general manager who will be appointed
            by the board of directors, and several vice general managers who
            will be nominated by the general manager, appointed by the board of
            directors


                                       35
<PAGE>

            and be responsible to the board of directors. The Company shall have
            a chief financial officer, who will be nominated by the general
            manager, appointed by the board of directors and be responsible to
            the board of directors.

Article 37  The general manager is responsible to the board of directors and
            exercises the following powers:

            1.    to be in charge of the company's production, operation and
                  management and direct the implementation of the resolutions of
                  the board of directors;

            2.    to direct the implementation of the Company's annual
                  operational plan and investment plan;

            3.    to make plans for the set up of the Company's internal
                  management structure;

            4.    to formulate the Company's basic management system;

            5.    to formulate specific rules and regulations for the Company;

            6.    to propose the appointment or dismissal of the Company's
                  senior management including vice general managers and
                  financial officers;

            7.    to draft the employee salary, welfare and rewards and
                  punishment systems, and to decide on the appointment and
                  dismissal of the Company's employees;

            8.    to handle important businesses on behalf of the Company with
                  external parties subject to the authorization of the board of
                  directors;

            9.    to propose the convention of extraordinary board meetings;

            10.   other powers conferred by the Company's Articles of
                  Association and the board of directors.

Article 38  General manager shall be present at meetings of the board of
            directors; provided that if he/she is not a director, he/she shall
            not have voting right at any board meeting.

Article 39  In exercising their powers, general manager and vice general
            managers shall not alternate the resolutions of the shareholders'
            meeting or the board of directors or go beyond their powers.

Article 40  In exercising their powers, general manager and vice general
            managers shall act honestly and diligently and in accordance with
            laws, administrative regulations and the Company's Articles of
            Association.

Article 41  General manager and vice general managers shall serve a term of
            three (3) years, and may be appointed by the board of directors
            successively


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<PAGE>

            through re-nomination.

Article 42  The board of directors may remove the general manager and the vice
            general managers from their position and terminate their term at any
            time by resolutions.

                        CHAPTER 10 SUPERVISORY COMMITTEE

Article 43  The Company shall have a supervisory committee. It shall be the
            permanent supervisory organization and responsible for supervising
            the board of directors and its members as well as such senior
            management as general manager, vice general managers and chief
            financial officer, to prevent them from abusing their positions and
            infringing the legal interests of any shareholders, the Company or
            employees of the Company.

Article 44  The supervisory committee shall be made up of representatives of
            shareholders and a reasonable proportion of representatives from the
            Company's employees. The Company shall have three supervisors, one
            of whom shall be selected from the candidates nominated by Party A,
            one from the candidates nominated by Party B and one from the
            representatives of employees.

Article 45  The representatives of shareholders in the supervisory committee
            shall be elected by shareholders' meeting, and the representatives
            of employees shall be elected by the Company's employees
            democratically. The supervisory committee shall have a convener who
            shall be unanimously nominated by all of the supervisors.

Article 46  The term of office of the supervisors is three years. At the expiry
            of his/her term of office, the supervisor may serve consecutive
            terms if re-appointed. The directors, general manager, vice general
            managers and chief financial officer of the Company may not act
            concurrently as supervisors.

Article 47  The supervisors exercise the following powers:

            1.    to examine the Company's financial conditions, and to review
                  the Company's accounting books and other accounting materials;

            2.    to exercise supervision over acts of the directors, general
                  manager, vice general managers and other senior management
                  taken in connection with their performance of their duties
                  which violate laws, regulations or the Company's Articles of
                  Association;


                                       37
<PAGE>

            3.    to demand remedies from a director, general manager, vice
                  general manager and other senior management when any act of
                  them is detrimental to the Company's interests;

            4.    to propose the convention of an extraordinary shareholder's
                  meeting;

            5.    other powers conferred to supervisors in the Company's
                  Articles of Association.

            Supervisors shall be present at meetings of the board of directors.

Article 48  Meeting of the supervisory committee shall be held at least once
            every year. All such meetings shall be convened and presided over by
            the convener of the meeting. An extraordinary meeting of the
            supervisory committee may be held if requested by two or more
            supervisors or the Chairman of the board of directors.

Article 49  The convener shall issue a notice in writing to all supervisors ten
            (10) working days prior to the convention of each meeting of the
            supervisory committee, stating the time, date, venue and agenda of
            such meeting.

Article 50  Any supervisor who is unable to attend any meeting of the
            supervisory committee may by issuing a power of attorney, entrust
            any other person (who must also be a supervisor of the Company) to
            participate in such meeting on his/her behalf. The power of attorney
            shall be submitted to the convener of such meeting at the
            commencement of such meeting.

Article 51  The supervisory committee shall make decisions by voting, one vote
            for each supervisor. The supervisory committee' decisions shall
            require the approval of more than half of all of the supervisors.

Article 52  The Company shall be responsible for any reasonable expenses
            incurred by the supervisory committee in retaining such
            professionals as legal counsels and accountants in exercising its
            powers.

Article 53  The supervisory committee shall set forth their decisions on any
            matters discussed at any of their meetings in meeting minutes, which
            shall be signed by all supervisors and the clerk present at such
            meeting. The supervisors are entitled to make in the meeting minutes
            for any meeting, any illustrative note for their speeches made at
            such meeting. The minutes of the supervisory committee shall be kept
            as files of the Company for 15 years.

Article 54  The supervisors shall fulfill their supervision responsibilities
            honestly in accordance with laws, administrative regulations and the
            Company's Articles of Association.


                                       38
<PAGE>

Article 55  The Company may formulate detailed Rules of Procedure of the
            supervisory committee as required. The Rules of Procedure of the
            supervisory committee shall not conflict with these Articles of
            Association and shall be subject to consideration and approval by
            the shareholders' meeting.

             CHAPTER 11 FINANCE, ACCOUNTING AND PROFIT DISTRIBUTION

Article 56  The Company shall pay taxes in accordance with laws and regulations
            of the PRC and withhold and pay the individual income tax payable by
            its employees.

Article 57  The Company shall establish its financial and accounting systems
            according to laws and regulations of the PRC and the Company's
            Articles of Association, and put them into implementation after
            being approved by its board of directors. Any significant changes to
            the Company's financial and accounting systems may not be put into
            implementation until after being approved by the board of directors.

Article 58  At the end of each fiscal year, the Company shall prepare a
            financial report, which shall be examined and verified in accordance
            with law. The Company's financial statements shall include the
            following accounting statements and schedules:

            1.    balance sheets;

            2.    profit and loss statement;

            3.    statement of cash flows;

            4.    explanation of financial condition;

            5.    profit distribution statement.

Article 59  The Company shall adopt a calendar year as its fiscal year, which
            shall commence from 1 January and expire on 31 December of the same
            calendar year. The first fiscal year of the Company commences from
            the establishment date of the Company and expires on 31 December of
            the current year. The last fiscal year of the Company expires on the
            dissolution date of the Company.

Article 60  The Company shall distribute its after-tax profits among its
            shareholders in proportion to the shareholders' capital
            contributions after the Company has made up for losses or made
            allocations to the statutory common reserve fund and the statutory
            common welfare fund.


                                       39
<PAGE>

                     CHAPTER 12 LABOR AND EMPLOYMENT SYSTEM

Article 61  The Company shall recruit and employ its employees in accordance
            with the rules established by the board of directors, with the
            supervision and approval of general manager, in light of the
            qualifications of the candidates.

Article 62  The Company shall sign a labor contract with each employee in
            accordance with the Labor Law of the People's Republic of China and
            relevant regulations. Such labor contract shall include provisions
            regarding employee dismissal, resignation, salary, insurance,
            welfare, reward, labor disciplines, penalty and other related
            matters.

Article 63  Employees employed by the Company shall keep secret any information
            obtained from the Company and shall not disclose such information to
            any third party without approval of the Company.

Article 64  The standards on qualifications, compensation, social insurances,
            welfare, travel and accommodation expenses of senior management
            nominated and recommended by the shareholders shall be determined by
            the board of directors.

Article 65  The labor and employment system shall be carried out in accordance
            with relevant PRC laws and regulations and relevant rules of the
            relevant labor departments under the State Council.

              CHAPTER 13 DISSOLUTION AND LIQUIDATION OF THE COMPANY

Article 66  The Company shall have a term of thirty (30) years, commencing on
            the date when its business license is issued.

Article 67  The Company may be dissolved upon the occurrence of any of the
            following:

            1.    pursuant to the provisions of the Company's Articles of
                  Association, the term of the Company has expired or any other
                  event that shall constitute a cause for dissolution has
                  occurred;

            2.    a resolution for dissolution is passed by a shareholder's
                  meeting of the Company;

            3.    dissolution is necessary due to a merger or division of the
                  Company;

            4.    the Company is ordered to close down because of its violation
                  of laws and administrative regulations;


                                       40
<PAGE>

            5.    the Company goes bankrupt.

Article 68  A liquidation group shall be appointed in accordance with the
            Company Law upon dissolution of the Company, to carry out
            liquidation for the Company. After the completion of the
            liquidation, the liquidation group shall prepare a liquidation
            report and present it to the shareholders' meeting or to the
            relevant regulatory authority for confirmation, and apply to the
            original registration authority of the Company for cancellation of
            the Company's registration.

                            CHAPTER 14 MISCELLANEOUS

Article 69  The Company may modify these Articles of Association as necessary or
            in event of changes to any items registered. The Articles of
            Association, after being so modified, shall not conflict with any
            laws or regulations, and the modification shall be subject to the
            approval by all shareholders unanimously. The Articles of
            Association, after being so modified, shall be submitted to and
            filed with the Company's original registration authority. Where such
            modification involves any change to any registered items of the
            Company, procedures shall be carried out with the registration
            authority of the Company for changing such registered items.

Article 70  The board of directors is entitled to interpret the articles of
            association.

Article 71  These Articles of Association shall be jointly formulated by both
            shareholders and come into effect upon approval by the shareholders'
            meeting of the Company. These Articles of Association shall
            supercede the original articles of association of the Company as of
            the date of effectiveness hereof.

Article 72  The expression such as "above", "within", "before" and "below" (a
            specific number) herein shall include the specific number itself,
            while "less than", "lower than", "beyond" and "over" (a specific
            number) shall not include the specific number itself.


                                       41