9. Management

9.1 Management Structure

PTTEP’s Board of Directors (‘The Board’) oversees its policy and
operation, with five standing sub-committees in its support, namely the
Corporate Governance Committee, Audit Committee, Remuneration Committee,
Nominating Committee, and Risk Management Committee.

9.1.1 The Board has the authority and the responsibility for providing
directions on corporate governance and code of business conduct,
corporate policy, strategic plans, vision, and annual budget for its
operating plans; appointing or replacing President and monitoring
Company performance. The following matters, however, require approval by
a shareholders’ meeting with the number of votes no less than
three-quarters of the total number of votes cast by the eligible
shareholders present:

(1) Sale or transfer of the entire or essential parts of PTTEP business

(2) Purchase or acquisition of the business of other companies or
    private ones

(3) Drafting, amendment, or termination of contracts on the granting of
    a lease of the entire or essential parts of any PTTEP business; the
    authorization given to other parties to manage PTTEP or the merger
    of PTTEP with other entities for profit/loss sharing

(4) Amendment of the Memorandum or Articles of Association

(5) Increase or decrease of the registered capital, debenture issuance,
    and Company merger and dissolution

(6) A case in which PTTEP or its subsidiaries decide to conclude a
    connected transaction, or one concerning the acquisition or
    disposition of material assets of PTTEP or its subsidiaries, as
    defined in the Notification of SET pertaining to a connected
    transaction of a listed company.

As of 31 December 2007, the Board consists of 14 Directors, with details
of the current ones and those who retired in 2007 shown in Attachment 1

Director’ changes in number of shares held and Board Meeting attendances
in 2007 are summarized below:

+---------------------+------+------+------+-------+---------+--------+
| Director            | Sh   |      | Cha  | N     | Number  | Time   |
|                     | ares |      | nge© | umber | of      | of     |
|                     | as   |      |      | of    | Atte    | Atte   |
|                     | of   |      |      | War   | ndance/ | ndance |
|                     | 31   |      |      | rants | Total   |        |
|                     | D    |      |      |       | Meeting | (%)    |
|                     | ecem |      |      |       |         |        |
|                     | ber© |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
|                     | 2006 | 2007 |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 1. Mr. Cherdpong    | -    | -    | -    | -     | 14/14   | 96.05  |
| Siriwit             |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 2. Mr. Vudhibhandhu | -    | -    | -    | -     | 11/14   | 45.61  |
| Vichairatana^(@)    |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 3. Mr. Chulasingh   | -    | -    | -    | -     | 14/14   | 93.09  |
| Vasantasingh^(@)    |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 4. Mr. Pichai       | 26   | -    | (26, | -     | 12/14   | 63.34  |
| Chunhavajira        | ,500 |      | 500) |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 5. Gen. Lertrat     | -    | -    | -    | -     | 14/14   | 96.37  |
| Ratanavanich^(@)    |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 6. Mr. Sirin        | -    | -    | -    | -     | 12/14   | 82.87  |
| Nimmanahaeminda^(@) |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 7. Mr. Chitrapongse | 168  | 351  | 182  | -     | 13/14   | 73.81  |
| Kwangsukstith       | ,200 | ,000 | ,800 |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 8. Mr. Pala         | 9    | 9    | -    | -     | 13/14   | 74.66  |
| Sookawesh^(@)       | ,500 | ,500 |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 9. Mr. Tongchat     | -    | -    | -    | -     | 13/14   | 90.41  |
| Hongladaromp        |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 10. Mr. Prasert     | 85   | -    | (85, | -     | 14/14   | 64.65  |
| Bunsumpun           | ,000 |      | 000) |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 11. Mr. Chokchai    | -    | -    | -    | -     | 9/11    | 78.15  |
| Aksaranan^(#@)      |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 12. Mr. Viraphol    | -    | -    | -    | -     | 11/11   | 82.91  |
| Jirapraditkul^(#@)  |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 13. Mr. Sanit       | -    | -    | -    | -     | 9/10    | 91.10  |
| Rangnoi^(##@)       |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 14. Mr. Maroot      | 369  | 351  | (18, | 5     | 14/14   | 95.56  |
| Mrigadat            | ,500 | ,200 | 300) | 4,660 |         |        |
+---------------------+------+------+------+-------+---------+--------+
| Ex-Directors in     |      |      |      |       |         |        |
| 2007                |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 1. Mr. Charnchai    | -    | -    | -    | -     | 3/3     | 78.92  |
| Musignisakorn*^(@)  |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 2. Mr. Manu         | -    | -    | -    | -     | 3/3     | 53.57  |
| Leopairote*         |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 3. Mr. Wisudhi      | -    | -    | -    | -     | 2/3     | 45.48  |
| Srisuphan**         |      |      |      |       |         |        |
+---------------------+------+------+------+-------+---------+--------+
| 4. Mr. Krairit      | 4,   | -    | (4,  | -     | 13/14   | 88.02  |
| Nilkuha***^(@)      | 000® |      | 000) |       |         |        |
|                     |      |      | ®    |       |         |        |
+---------------------+------+------+------+-------+---------+--------+

  ----------- -----------------------------------------------------------
  #           Assumed directorship on 29 March 2007

  ##          Assumed directorship on 25 April 2007

  *           Directorship expired on 28 March 2007

  **          Resigned on 2 April 2007

  ***         Resigned on 19 December 2007

  @           Independent Director

  ©           Including shares of spouse and children that have not yet
              become sui juris

  ®           All shares belong to spouse
  ----------- -----------------------------------------------------------

9.1.2 Sub-committees Appointed by the Board to screen specific, critical
matters, these sub-committees consist of experts in suitable specialized
fields who present their views to the Board. PTTEP currently has five
standing sub-committees.

(1) The Corporate Governance Committee has the following
responsibilities:

(1.1) Establishing policies and directions for good corporate governance
along with a code of business conduct, and proposing them to the Board
for approval for implementation across the board.

(1.2) Supervising business operation and actions of the Board, the
sub-committees, the Management, and all personnel to align with (1.1)

(1.3) Assessing and revising policies, directions, code of business
conduct, together with Company guidelines on CG, to align with
international guidelines and recommendations by other institutes, and
proposing to the Board for approval

(1.4) Monitoring movement and trends, and benchmark PTTEP practices with
those of leading companies

(1.5) Promoting implementation under (1.1) for constant effectiveness
and alignment with PTTEP’s business

(1.6) Making CG recommendations for PTTEP, the Board, the Management,
and the Working Committee

(1.7) Regularly reporting CG matters to the Board and immediately
reporting matters critical to PTTEP’s reputation to the Board for
consideration, as well as providing its views on practical guidelines
and recommendations for modification as deemed appropriate

8.  Disclong information about CG of PTTEP to stakeholders and in the
    annual report with prior approval by the Board.

The CG Committee consists of at least three Independent Directors, and
in 2007 these consisted of:

- Mr. Vudhibhandhu Vichairatana Chairman

- Gen. Lertrat Ratanavanich Member

- Mr. Chokchai Aksaranan Member

(2) The Audit Committee has the following responsibilities:

    1.  To review the Company’s financial statement, so as to ensure
        that it is correct and sufficient, with the Company’s auditor
        also to attend the quarterly meeting

    2.  To review the Company’s operations to ensure that they are in
        compliance with the Securities and Exchange Acts, Regulations of
        the Stock Exchange of Thailand, and any other relevant laws

    3.  To consider PTTEP’s information disclosure on matters related to
        connected transactions or conflict-of-interest transactions to
        ensure that they are correct and sufficient

    4.  To review the internal control and internal audit systems to
        ensure that they are appropriate and effective, and, by
        coordinating with the external auditors, ensure that the audit
        report, the audit method and the audit report evaluation are of
        the required standard

    5.  To consider, select and propose the appointment of PTTEP’s
        external auditors, including their fees

    6.  To approve the appointment, rotation, performance appraisal and
        reward /punishment for the Head of the audit department.

    7.  To consider and approve the annual audit plan

    8.  To consider the budget and manpower of the audit department.

    9.  To review the Audit Committee Charter annually

    10. To undertake other assignments for the Board of Directors.

The Audit Committee consists of at least three Independent Directors,
and in 2007 these consisted of:

  - Gen. Lertrat Ratanavanich Chairman

  - Mr. Chulasingh Vasantasingh Member

  - Mr. Sirin Nimmanhaeminda Member

(3) The Remuneration Committee has the following responsibilities:

(3.1) Assessing the annual performance of the Board, the sub-committees,
and the President and proposing to the Board for approval

(3.2) Recommending remuneration for the Board, the sub-committees,
including retainer and meeting fees, bonuses, and fringe benefits (cash
and otherwise), to be proposed to shareholders’ meetings for approval
under a fair and reasonable procedure and structure

(3.3) Recommending for the Board’s approval remuneration for the
President, consisting of salary, bonus, and fringe benefits (cash and
otherwise), as well as the remuneration structure for executives under a
fair and reasonable procedure and structure

(3.4) Reviewing the remuneration for the Board, the sub-committees, the
President, and the remuneration structure for executives, taking into
account individual and Company performances, guidelines of the industry
and leading listed companies on SET, as well as scopes of duties and
responsibilities. Shareholders’ meetings approve remuneration for the
Board and sub-committees while the Board approves the remuneration for
the President and remuneration structure for executives.

(3.5) Disclosing its own performance in the annual report

(3.6) Performing other assignments for the Board.

The Remuneration Committee consists of at least three members, all of
which are Independent Directors. In 2007, these consisted of:

  - Mr. Krairit Nilkuha Chairman

  (Mr. Krairit resigned on 19 December 2007)

  - Mr. Pala Sookawesh Member

  - Mr. Sirin Nimmanhaeminda Member

(4) The Nominating Committee has the following responsibilities:

(4.1) Formulating transparent and standard processes for Director and
President selection

(4.2) Shortlisting candidates for Directors or the President, and
proposing their names to shareholders’ meetings or Board meetings as
needed

(4.3) Preparing the names of shortlisted candidates for Directors or the
President in advance or when there is a vacancy, or both

(4.4) Developing annual performance agreements for the Board, the
sub-committees, and the President, and developing forms for these for
consideration by the Board

(4.5) Nominating for consideration by the Board candidates for members
of the sub-committees to fill vacancies

(4.6) Disclosing its own performance in the annual report

(4.7) Performing other assignments for the Board and concerning Director
and President nomination.

The Nominating Committee consists of at least three members, the
majority of whom must be Independent Directors. In 2007, these consisted
of:

  - Mr. Chulasingh Vasantasingh Chairman

  - Gen. Lertrat Ratanavanich Member

  - Mr. Chitrapongse Kwangsukstith Member.

(5) The Risk Management Committee has the following responsibilities:

  (5.1)     Defining the policy framework and processes for risk
management and advising the Board and the management team regarding risk
management at corporate level

                            (5.2)     Promoting and implementing the
enterprise wide risk management both in corporate and business level by
enhancing the level of risk awareness within PTTEP, and through the
development of appropriate procedures and commitment of resources

                            (5.3)     Maintaining the assessment of
risks that relate to corporate direction and E&P value chain in
exploration, development, production including SSHE, investment
including geopolitical risk, financial and commercial, and capability
development and then recommending the mitigation strategy to manage
risks to be within the acceptable level

(5.4)     Ensuring adequate level of support is being provided to Risk
manager

(5.5)     Supporting the monitoring of risks across PTTEP and report to
the Board

The Risk Management Committee consists of six Directors, two of whom are
Independent Directors. In 2007, these consisted of:

- Mr. Tongchat Hongladaromp Chairman

- Mr. Pichai Chunhavajira Member

  - Mr. Vudhichai Vichairatana Member & Independent Director

- Mr. Sirin Nimmanahaeminda Member & Independent Director

- Mr. Chitrapongse Kwangsukstith Member

- Mr. Maroot Mrigadat Member

Attendance of Sub-Committees in 2007 (times)

+---------------------+---------+--------+--------+---------+--------+
| Sub-committee       | CG      | Audit  | Remune | Nom     | Risk   |
| Member              | Co      | Com    | ration | inating | Mana   |
|                     | mmittee | mittee | Com    | Co      | gement |
|                     |         |        | mittee | mmittee | Com    |
|                     |         |        |        |         | mittee |
+---------------------+---------+--------+--------+---------+--------+
|                     | (Total  | (Total | (Total | (Total  | (Total |
|                     | 3       | 3      | 3      | 3       | 6      |
|                     | m       | me     | me     | m       | me     |
|                     | embers) | mbers) | mbers) | embers) | mbers) |
+---------------------+---------+--------+--------+---------+--------+
|                     | Total   | Total  | Total  | Total   | Total  |
|                     | Meeting | M      | M      | Meeting | M      |
|                     | 2       | eeting | eeting | 3       | eeting |
|                     | tim     | 6      | 3      | tim     | 4      |
|                     | es/year | time   | time   | es/year | time   |
|                     |         | s/year | s/year |         | s/year |
+---------------------+---------+--------+--------+---------+--------+
| 1. Mr.Vudhibhandhu  | 2/2     |        |        |         | 3/4    |
| Vichairatana ^(@)   |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 2. Gen. Lertrat     | 2/2     | 6/6    |        | 3/3     |        |
| Ratanavanich^(@)    |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 3. Mr. Chulasingh   |         | 6/6    |        | 3/3     |        |
| Vasantasingh^(@)    |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 4. Mr. Tongchat     |         |        |        |         | 4/4    |
| Hongladaromp ^(###) |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 5. Mr. Pichai       |         |        |        |         | 4/4    |
| Chunhavajira        |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 6. Mr. Pala         |         |        | 3/3    |         |        |
| Sookawesh^(@)       |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 7. Mr. Sirin        |         |   5/5  | 3/3    |         | 1/3    |
| Ni                  |         |        |        |         |        |
| mmanahaeminda^(##@) |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 8. Mr. Chitrapongse |         |        |        | 3/3     | 2/4    |
| Kwangsukstith       |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 9. Mr. Chokchai     | 1/1     |        |        |         |        |
| Aksaranan ^(#@)     |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 10. Mr. Maroot      |         |        |        |         | 4/4    |
| Mrigadat            |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| Ex-Sub-Committee    |         |        |        |         |        |
| Members in 2007     |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 1. Mr. Charnchai    | 1/1     | 1/1    |        |         |        |
| Musignisakorn* ^(@) |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+
| 2. Mr. Krairit      |         |        | 3/3    |         |        |
| Nilkuha ** ^(@)     |         |        |        |         |        |
+---------------------+---------+--------+--------+---------+--------+

^(#) Assumed membership of CG Committee on 24 April 2007

^(##) Assumed membership of Audit Committee on 24 April 2007 and Risk
Management Committee on 27 July 2007

^(###) Assumed chairmanship of Risk Management Committee on 24 April
2007

* Directorship expired on 28 March 2007

** Resigned from directorship and chairmanship of remuneration committee
on 19 December 2007

@ Independent Director

3.  The President: The scope of the President’s authority is as follows:

    (1) Authority under Company Regulations granted by shareholders’
    resolutions

The President is the authorized signatory in dealing with external
parties under clause 9, paragraph 5, of the Regulations registered at
the Ministry of Commerce.

(2) Authority under Company Regulations granted by the Board

The President takes charge of, and is authorized for conducting,
business operations under PTTEP Regulations – namely the Budget
Regulations of 1996, the Finance and Accounting Regulations of 1996, the
Procurement Regulations of 2007, and the Human Resource Administration
Regulations of 2005. Administration of this power is comparable with
private companies in the E&P business, and must be in the best interests
of PTTEP. Procurement approval and legal act commitment must be within
the following ceilings:

1.  Each time not exceed 150 million baht for Corporate and wholly-owned
    projects

2.  Up to each annual budget total, joint-ventures Assets approved under
    joint ventures agreements, and international assets approved by
    governments of countries in which PTTEP invested

    (3) Authority vested by the Board

The Board vested its powers in the President to act on the Company’s
behalf in day-to-day business operation under the objectives of the
Articles of Association, dealing with E&P under petroleum concessions or
agreements and with other businesses in benefit of the Company, as well
as the delegation of his authority. However, such use of authority by
the President or his delegated persons is forbidden if the President,
delegated persons, or connected persons are involved in a conflict of
interest in any way with PTTEP or its subsidiaries.

9.1.4 Qualifications of Independent Directors and Recruitment Process

PTTEP defines the composition of its Board of Directors; at least
one-third of whom (or five) are Independent Directors. Their
qualifications, according to its GCG principles, which exceed the
minimum requirements of SEC, are as follows:

(1) Holds no more than 0.5% of total voting stocks of PTTEP, its parent
company, its subsidiaries, and its associated companies, a related
juristic entity defined by section 258 of the Securities and Exchange
Act (SEC) or juristic persons with potential conflicts, including stocks
held by connected persons as defined by section 258 of SEC Act, as well
as nominees.

(2) Is not Board members or the management of its parent company or the
management of PTTEP, its subsidiaries or associated companies, of a
related juristic entity as defined under (1) or a juristic person with
potential conflicts; is not employee, consultant, or any other
professional service provider such as an auditor or a lawyer of PTTEP,
its parent company, its subsidiaries, its associated companies, or a
related juristic entity as defined under (1) or a juristic person with
potential conflicts.

(3) Has no interest or stake, directly or indirectly, in the finance or
management of PTTEP, its parent company, its subsidiaries, its
associated companies, a related juristic entity as defined under (1) or
a juristic entity with potential conflicts, and has no interest or stake
in a similar manner. In addition, he must refrain from having the
benefit or interest of the said nature or resigned from the positions
mentioned under (2) for more than two years.

(4) Is not connected person as defined under (1) or related by blood,
marriage, legal registration, including spouse of such person, of
executive, or of Board member of PTTEP or its parent company.

(5) Does not represent a PTTEP’s or its parent company’s Board member or
a shareholder who is a connected person as defined under (1) with the
parent company.

(6) Can independently perform their duties or deliberate their opinions
or report on their duties assigned by the Board without the influence of
PTTEP’s or its parent company’s management or connected persons under
(1) or close relatives under (4) of these persons.

At least once a year, Independent Directors must re-examine and certify
their independence in their year-end reports concerning their
biographical data for Form 56-1 and the annual report.

The recruitment of Independent Directors relies on the same process used
for that of the Board and the President, as defined under (9.2.1), that
is, for each departing Independent Director, PTTEP will recruit those
with suitable qualifications for replacement as the top choices.
Meanwhile, it will maintain the full requirement for Independent
Directors under the composition of the Board. Nevertheless, should other
Directors become qualified; they will become Independent Directors
immediately.

  9.1.5 Company Secretary

In its CG practices, PTTEP appoints a Company Secretary (currently Mr.
Theerasak Tancharoenlarp) responsible for overseeing and providing
advice to the Board and the Management about rules and regulations, GCG
practices, and is responsible for organizing Board and shareholders’
meetings, as well as helping Directors monitor compliance with the
resolutions of the meetings, and document control.

9.2 Nomination of the Board and Management

9.2.1 Nomination of the Board and President

Each year the Nominating Committee prepares a Director List of those
qualified to become Directors, based on those serving in major listed
companies and those with good business reputation. Whenever there is a
Director or President vacancy, the Nominating Committee is to choose
suitable candidates to become a Director or President by consideration a
Director List and a list of recommended nominees from PTT, the major
shareholder. Priority will be given to those with technical skills,
experience, specific qualifications in areas still lacking among the
Board or critical to Company business. To arrive at the ideal
composition of the Board and best benefit the Company while taking into
consideration possible conflicts of interest among these people, the
Nominating Committee is to scrutinize these qualifications:

(1) Suitable qualifications stipulated by the Public Company Limited
Act, regulations issued by SEC, SET, and PTTEP’s Good Corporate
Governance

(2) Beneficial knowledge and skills with diverse experience in different
fields to the Company

(3) Characteristics complementary to and supporting CG to create value
for PTTEP, including ethics, independence, assertiveness, creativity,
duty of care and duty of loyalty, dedication, a suitable age, good
health, a sound mind, meeting preparation habits, and social acceptance.

Election of Directors to replace retiring ones must win the approval of
the annual shareholders’ meeting through a majority of eligible
shareholders in attendance under the following criteria and procedure:

(1) Nomination to a shareholders’ meeting is to be made by the
Nominating Committee for each Director whose term has ended, with prior
screening by the Board. Shareholders have the right to nominate others
while the Company has added another channel for this purpose, that is,
nominating a person or persons between October 1 and December 31 of each
year, which has been made known to investors through SET’s information
channel and the Company’s website. The website also contains rules for
nominating shareholders’ meeting agenda items and Director candidates,
together with a Director nomination form, for minority shareholders’
use.

(2) Should the number of Director candidates be less than or equal to
the number to be elected, the shareholders’ meeting is to elect these
candidates as Directors.

(3) Should the number of Director candidates exceed the number to be
elected, a ballot is to be held. Each shareholder may vote for as many
candidates as the number of open positions. Voting is done for
individual candidates, and each shareholder or proxy has one vote per
share held. Those with the highest ballots and others with fewer ballots
are to be elected Directors as long as the number of positions is still
open.

For other reasons when Director positions become vacant, the Board is to
elect new Directors through at least a three-fourth majority vote, in
which case such elected Directors are to remain in their positions for
only as long as the remaining terms of the ones they replace.

9.2.2 Nomination of Executives

The President is authorized to appoint those with knowledge, capability,
and experience in Company business to the Management rank in compliance
with the personnel regulations, and must report such appointment to the
Board for acknowledgment. An exception is for the Vice President
positions, which need the Board’s prior approval. Appointments of
outsiders must undergo an interview with a committee. In addition, any
appointment of the internal audit department manager required prior
approval of the Audit Committee.

9.3 Remuneration of the Board and the Management

9.3.1 Remuneration of Directors and Sub-committee Members

  -------------- ----------------- -------------- ------------ ----------- -------------- ------------ ------------ -------------- --------------
  Directors                        Remuneration                                                                     Bonus paid in  Total
                                                                                                                    2008           

                                   The Board      Audit        CG          Remuneration   Nominating   Risk                        
                                                  Committee    Committee   Committee      Committee    Management                  
                                                                                                       Committee                   

  Mr. Cherdpong  Siriwit           812,500.00                                                                       2,049,180.33   2,861,680.33

  Mr.            Vichairatana      575,000.00                  62,500.00                               75,000.00    1,639,344.26   2,351,844.26
  Vudhibhandhu                                                                                                                     

  Mr. Chulasingh Vasantasingh      650,000.00     150,000.00                              93,750.00                 1,639,344.26   2,533,094.26

  Mr. Pichai     Chunhavajira      600,000.00                                                          100,000.00   1,639,344.26   2,339,344.26

  Gen. Lertrat   Ratanavanich      650,000.00     181,250.00   50,000.00                  75,000.00                 1,639,344.26   2,595,594.26

  Mr. Sirin      Nimmanahaeminda   600,000.00     125,000.00               75,000.00                   25,000.00    1,639,344.26   2,464,344.26

  Mr.            Kwangsukstith     625,000.00                                             75,000.00    50,000.00    1,639,344.26   2,389,344.26
  Chitrapongse                                                                                                                     

  Mr. Pala       Sookawesh         625,000.00                              75,000.00                                1,639,344.26   2,339,344.26

  Mr. Tongchat   Hongladaromp      625,000.00                                                          125,000.00   1,639,344.26   2,389,344.26

  Mr. Prasert    Bunsumpun         650,000.00                                                                       1,639,344.26   2,289,344.26

  Mr. Chokchai   Aksaranan         475,000.00                  50,000.00                                            1,248,596.45   1,773,596.45

  Mr. Viraphol   Jirapraditkul     525,000.00                                                                       1,248,596.45   1,773,596.45

  Mr. Sanit      Rangnoi           450,000.00                                                                       1,127,329.89   1,577,329.89

  Mr. Maroot     Mrigadat          650,000.00                                                                       1,639,344.26   2,314,344.26
  -------------- ----------------- -------------- ------------ ----------- -------------- ------------ ------------ -------------- --------------

  -------------- ---------------- -------------- ----------- ----------- -------------- ------------ ------------ -------------- --------------
  Directors                       Remuneration                                                                    Bonus paid in  Total
                                                                                                                  2008           

                                  The Board      Audit       CG          Remuneration   Nominating   Risk                        
                                                 Committee   Committee   Committee      Committee    Management                  
                                                                                                     Committee                   

  Ex-Directors                                                                                                                   
  in 2007                                                                                                                        

  Mr. Charnchai  Musignisakorn*   150,000.00     31,250.00                                                        390,747.81     571,997.81

  Mr. Manu       Leopairote*      150,000.00                                                                      390,747.81     540,747.81

  Mr. Wisudhi    Srisuphan**      150,000.00                                                                      309,903.44     459,903.44

  Mr. Krairit    Nilkuha***       625,000.00                             93,750.00                                1,585,448.01   2,304,198.01
  -------------- ---------------- -------------- ----------- ----------- -------------- ------------ ------------ -------------- --------------

  ---------------- ------------------------------------------------------
  *                Directorship expired on 28 March 2007

  **               Resigned on 2 April 2007

  ***              Resigned on 19 December 2007
  ---------------- ------------------------------------------------------

2.  Executive’s Remuneration

+--------------+------+--------------+--------+----------------------+
|              | 2006 |              | 2007   |                      |
+--------------+------+--------------+--------+----------------------+
|              | Nu   | Total Amount | Number | Total Amount (Baht)  |
|              | mber | (Baht)       |        |                      |
+--------------+------+--------------+--------+----------------------+
| Salary       | 14   | 5            | 15     | 66,674,790.00        |
|              |      | 8,161,530.00 |        |                      |
+--------------+------+--------------+--------+----------------------+
| Bonus        |      | 2            |        | 33,837,832.00 ⁽²⁾    |
|              |      | 6,359,532.00 |        |                      |
+--------------+------+--------------+--------+----------------------+
| Other        |      | 8,337,829.50 |        | 9,583,906.50         |
| com          |      |              |        |                      |
| pensation⁽¹⁾ |      |              |        |                      |
+--------------+------+--------------+--------+----------------------+
| Total        |      | 9            |        | 110,096,528.50       |
|              |      | 2,858,891.50 |        |                      |
+--------------+------+--------------+--------+----------------------+

⁽¹⁾ Provident Fund

⁽²⁾ Includes bonus for 2007, paid in 2008

Please refer to warrants of the ESOP program on page 65

Allocation of ESOP Warrants

From 2002 to 2006, with the approval of the general shareholders’
meetings, PTTEP allocated

ESOP warrants to buy common shares to Directors serving in 2002, and all
eligible employees in an effort to

give each a sense of belonging and reward those that are devoted to
Company service. The allocation is summarized below:

+-----+-----------------+---------------------+-----------------------+
| Y   | Number of       | Exercise Ratio      | Exercise Price        |
| ear | Warrants        |                     |                       |
|     |                 | (Unit of Warrant :  | (Baht)***             |
|     | (Unit)          | Unit of Share)      |                       |
+-----+-----------------+---------------------+-----------------------+
| 20  | 2,000,000       | 1:5                 | 22.20                 |
| 02* |                 |                     |                       |
+-----+-----------------+---------------------+-----------------------+
| 2   | 2,000,000       | 1:5                 | 23.40                 |
| 003 |                 |                     |                       |
+-----+-----------------+---------------------+-----------------------+
| 2   | 2,800,000       | 1:5                 | 36.60                 |
| 004 |                 |                     |                       |
+-----+-----------------+---------------------+-----------------------+
| 2   | 2,800,000       | 1:5                 | 55.60                 |
| 005 |                 |                     |                       |
+-----+-----------------+---------------------+-----------------------+
| 200 | 2,800,000       | 1:5                 | 91.20                 |
| 6** |                 |                     |                       |
+-----+-----------------+---------------------+-----------------------+

* PTTEP transferred the warrants to buy common shares, allocated in 2002
to six Directors who were government officials, to the Ministry of
Finance. For 2003-2006, the Company offered no warrants to Directors.

Only the Management and employees received such offers.

** In April 2006, PTTEP adjusted par value from 5 Baht to 1 Baht per
share, resulting in a change of Exercise Price and Exercise Ratio of the
warrants for the year 2002-2006.

*** Exercise Price Calculation

2002: Market price calculated by using the average closing price of
Company shares 20 working days before the date on which the warrant’s
issuance and offering date was determined.

2003: Calculated by using the average closing price of Company shares on
the first working day following the period which was used for
calculating the exercise prices of the 2002 ESOP Program, up to the
working day before the date from which the Company determined that the
new shareholders had no right to receive the 2002 dividend payment, or
the Ex-dividend (XD) date, minus the 2002 dividend per share.

2004: Calculated by using the average closing price of Company shares on
the date which the Company determined that the new shareholders have no
right to receive the 2002 dividend payment, up to the working day before
the date from which the Company determined that the new shareholders had
no right to receive the 2003 dividend payment, or the Ex-dividend (XD)
date, minus the 2003 dividend per share.

2005: Calculated by using the average closing price of Company shares on
the date which the Company determined that the new shareholders have no
right to receive the 2003 dividend payment, up to the working day before
the date from which the Company determined that the new shareholders had
no right to receive the 2004 dividend payment, or the Ex-dividend (XD)
date, minus the 2004 dividend per share.

2006: Calculated by using the average closing prices of PTTEP shares
during the period of 90 days lapse prior to the date of the board of
directors’ resolution to propose this agenda (calculated from November
1, 2005 to January 29, 2006) minus the 2005 dividend per share.

Number of PTTEP Shares and Warrants Held by the Management

  --------------------------- ---------- --------- ------------- -----------
  Name                        Shares as            Change in     Warrants
                              of 31                Shares        
                              December                           

                              2006©      2007 ©                  

  1. Mr. Maroot Mrigadat      369,500    351,200   (18,300)      54,660

  2. Mr. Suwit Pitrchart      175,000    160,000   (15,000)      37,280

  3. Mr. Tevin Vongvanich     147,000    129,000   (18,000)      37,300

  4. Mr. Somkiet Janmaha      249,900    197,400   (52,500)      26,340

  5. Mr. Asdakorn Limpiti     194,500    152,000   (42,500)      26,400

  6. Mr. Poawpadet Vorabutr   28,400     30,800    2,400         26,340

  7. Mr. Chatchawal Eimsiri   10,000     10,000    -             26,400

  8. Mr. Somporn              150,500    123,000   (27,500)      26,400
  Vongvuthipornchai                                              

  9. Mr. Nipit Isarankura     50,000     72,000    22,000        50,800

  10. Mr. Prisdapunt          311,500    197,000   (114,500)     26,400
  Pojanapreecha                                                  

  11. Mr. Suppamas Prachakvej 123,500    10,000    (113,500)     26,400

  12. Mr. Luechai             38,200     20,000    (18,200)      35,960
  Wongsirasawad                                                  

  13. Mr. Suraphong Iamchula  63,300     35,300    (28,000)      27,680

  14. Mr. Chalermkiat         15,000     -         (15,000)      29,220
  Tongtaow                                                       

  15. Mr. Somchai Manopinives 80,000     55,000    (25,000)      21,700

  16. Mr. Pairoj              -          53,000    53,000        20,800
  Rangponsumrit*                                                 

  17. Mr. Anutra Bunnag       38,000     -         (38,000)      12,900

  18. Mr. Sermsak             17,500     16,700    (800)         5,960
  Satchawannakul                                                 

  19 Ms. Jaroonsri            -          61,100    61,000        6,900
  Wankertphon **                                                 
  --------------------------- ---------- --------- ------------- -----------

  --------- -------------------------------------------------------------
  *         Appointed on 15 April 2007

  **        Appointed on 1 July 2007

  ©         Including shares of spouse and children that have not yet
            become sui juris
  --------- -------------------------------------------------------------

9.4 Good Corporate Governance

9.4.1 Rights of Shareholders

Recognizing the rights of all shareholders, PTTEP has taken steps to
demonstrate its respect for basic shareholders’ rights, namely to buy,
sell, or transfer shares; to obtain adequate information; to participate
and vote in the shareholders’ meeting on significant issues; and to
share in the profits of the company, as follows:

(1) The Company sends meeting invitations containing agenda details and
related appendices together with the opinions of the Board, proxy forms
designed by the Ministry of Commerce, a list of all Independent
Directors, and a map showing the meeting venue. These invitations also
contain details about the credentials each shareholder needs to bring to
the meeting, together with Company regulations on the meeting, and
voting procedures. In addition, shareholders may view information about
each meeting agenda item on the Company’s website at least 30 days ahead
of the meeting date. PTTEP always allows registration of shareholders at
least an hour before each meeting.

(2) Before each meeting, the Chairman explains clearly how ballots are
cast and counted under Company regulations. The Company collects its
count of shareholders who have not yet voted on any agenda item and
shows ballot-counting summaries throughout the process. The Company will
ask shareholder volunteers to witness ballot counts for greater
transparency. To protect the rights of shareholders, PTTEP conducts
balloting for each matter separately.

(3) Allocating enough time for the meeting, the Chairman conducts each
meeting suitably and transparently, allowing thorough expression of
views and queries before each ballot round, and summarizes meeting
resolution(s) on each agenda item. Shareholders are free to send their
meeting-related questions to the Board ahead of the meeting date.

(4) PTTEP gives shareholders who show up late a chance to vote on agenda
items still under deliberation.

(5) All Directors attend each shareholders’ meeting. Each member of the
standing sub-committees may address relevant questions and concerns
posed by shareholders (if any).

(6) PTTEP regularly disseminates information to shareholders via the
Stock Exchange of Thailand’s (SET) channel, media, and publications,
including its website. PTTEP also organized its operation site visit for
shareholders for better understanding of its business.

(7) The Company sets up information request channels for minor
shareholders through the E-mail addresses of Independent Directors on
matters of Directors’ activities, good corporate governance (GCG) and
audit matters. Apart from these channels, minor shareholders can
directly contact the Corporate Secretary or the Investor Relations unit.

(8) PTTEP explicitly discloses shareholding structures in affiliated and
subsidiary companies to ensure shareholders of transparent management
structures that are open to scrutiny.

(9) The Company conducts its business efficiently for its growth and
suitable returns to shareholders.

9.4.2 Equitable Treatment of Shareholders

PTTEP values and treats all shareholders fairly through the following
actions:

(1) Allowing each shareholder to propose agenda items for consideration
at a shareholders’ meeting ahead of the actual meeting date by
announcing to all investors via SET’s news channels up to five months
ahead. Criteria for agenda proposals and screening processes are clearly
defined. The announcement is also publicized on the Company’s website.

(2) Allowing each shareholder to nominate Directors who must meet the
qualifications of Company directorship and must have given their consent
so that PTTEP may process it further through the Nominating Committee.
It announces the names of Director nominees to all investors on SET’s
news channels and its own website at least five months ahead of each
meeting. The criteria of such nomination are also posted on the website.
At the meeting, each director nominee is voted on individually.

(3) Conducting the meeting in sequence of agenda items as specified in
the invitation and not adding agenda items without notifying
shareholders in advance, so that they may have enough time for
investigation before making their decisions.

(4) Providing shareholders with a list of all Independent Directors on
proxy forms that allow balloting direction, to encourage them to decide
their own voting direction. Shareholders have an option to appoint any
Independent Directors as their proxies, and a choice over which
Independent Director(s) to entrust their views.

(5) Encouraging shareholders to use ballots in every agenda item.
‘Voting tickets’, provided for each critical matter separately, are
collected at the meeting and then summed with the pre-cast votes as
prescribed in the proxy forms before announcing the resolution to the
meeting. For transparency and reference, PTTEP files all voting tickets
bearing signatures of witnesses volunteered by shareholders.

(6) Recording the minutes accurately and completely for delivery to all
shareholders after sending it to SET and the Securities and Exchange
Commission (SEC), 14 days after each meeting. The minutes, as well as
the webcast recording the meeting proceeding, is also posted on the
Company’s website.

(7) For fairness to shareholders, PTTEP defines in writing the approach
of confidential-information retention as well as the prevention of
insider trading as part of GCG practices and the Code of Business
Conduct. Also, PTTEP warns its Directors and all employees, their
spouses and children under legal age, and nominees to avoid using inside
information that is material to changes in Company share prices and not
yet publicized in buying Company shares, and encourages retention of
Company shares for at least three months from the last purchase date.
Under the Securities and Exchange Act, B.E. 2535 (1992), all Directors
and Executive Management and the manager or equivalent in Finance and
Accounting Division, must report their PTTEP shareholding when first
appointed to the positions, and within three days of each transaction,
to SEC and send its copy to the Corporate Secretary, who will regularly
report to the Board.

(8) In its GCG principles as well as its Code of Business Conduct, PTTEP
devises practical guidelines for potential conflicts of interest for the
Directors, the Management, and all employees to observe. Should such a
matter arise, the stakeholders must report it to PTTEP and the Corporate
Secretary at once and refrain from deliberating and voting on that
matter.

9.4.3 Roles of Stakeholders

PTTEP values the rights of all internal and external stakeholders, which
includes shareholders, customers, employees, government, partners,
society, communities and environment, suppliers/contractors, lenders,
competitors, local culture and tradition, and human rights, of which the
practical guidelines are stated in its GCG booklet. In addition, an
ethical business framework for balanced consideration of stakeholders
appears in its Code of Business Conduct, also publicized on the
Company’s website. PTTEP takes into consideration stakeholders and their
rights wherever it works.

(1) Treatment of major stakeholders

(1.1) Customers: PTTEP’s mission is to produce and sell crude oil and
natural gas at competitive prices through agreements of both long and
short terms, as well as spot-market sale. For agreements governing new
projects and spot-market sale, the Company treats all customers equally
and in the best interests of all parties. For long-term product sale,
including natural gas, PTTEP strictly honors agreements and regularly
coordinates with its customers to deliver products of quality matching
customers’ needs in a timely manner.

(1.2) Employees:

(a) PTTEP recruits, selects, and hires staff based on qualifications,
experience, and competence for suitable positions, encourages their
continuous development, and promotes their career advancement.

(b) A fair compensation process is in place for PTTEP to attract and
retain competent people in its service so that they may perform their
work efficiently. Key factors include up-to-date pay scales and pay
procedures of other domestic petroleum operators, job value
discrepancies in the required expertise, job complexities, assigned
responsibilities, and expressed competence through job performance.

(c) The Company provides and/or improves mutually fair welfare schemes.
Key factors include its own affordability, both short and long terms,
with a focus on fostering the security of life for employees and their
families; components not easily affordable by most employees, not
adequate provided for by the government; and components provided by most
other domestic petroleum operators to their employees.

(d) PTTEP values timely joint-resolution of problems among employees
themselves, or between subordinates and supervisors, to maintain good
relations among all. Should such a problem arise, employees can file
petitions under the Company’s procedure. Provided that they follow the
criteria and procedure in good faith, their employment status will not
be affected, and PTTEP will refrain from taking action that would harm
them or their witnesses.

(1.3) Government: Below are our guidelines for expressing responsibility
to the public sector.

(a) Strictly follow the provisions of laws and regulations issued by
supervisory agencies.

(b) Support public-sector projects to foster the best interests of
society at large.

(c) Maintain cordial relations with government agencies through
transparent coordination and express PTTEP’s readiness to provide
complete and accurate information in response to requests made by
government agencies to show its transparency, as well as fostering
confidence and mutual trust.

(d) Show goodwill and foster the morale of government agencies through
showing its appreciation for their cooperation and support, particularly
through friendly activities to minimize gaps between the two parties.

(1.4) Partners: As an operator and a business partner in several
projects, PTTEP has sent delegates to project management committee
meetings, which consist of government and all other joint-venture
partners, to jointly deliberate management approaches, annual plans, and
budgets. In each, PTTEP exercises its vote in proportion to its
interest, the conditions under its joint operating agreements, and
related laws.

(1.5) Society, communities, and the environment: PTTEP’s agencies in
charge of these matters are the External Relations Department and the
Safety, Security, Health, and Environment Department.

(a) Society and communities: In tandem with its business operation,
PTTEP continually values and implements social responsibility,
subscribing to its own motto ‘From Natural Treasure to Intellectual
Wisdom and Environmental Conservation’, which underlies all its
community outreach activities in and outside its operating areas. PTTEP
not only supports assorted projects – educational, sports, cultural,
vocational development – to improve lives for community members, but
also values peaceful and cordial co-existence in operating areas through
fostering the understanding and confidence on the part of communities
and society that its projects would not disrupt their ways of life.
Details of such projects are available in the Corporate Social
Responsibility Report 2007 at the Company’s website.

(b) Environment: Valuing its role in environmental preservation and
conservation to restore sustainable ecological balance and biodiversity,
PTTEP constantly dedicates a budget and resources for this purpose. It
also systematically manages environmental matters, assesses impacts, and
formulates preventive and mitigating measures. All projects operated by
PTTEP have achieved ISO 14001 certifications for environmental
management systems.

Besides reforestation projects in various parts of the country, regarded
as social and community outreach activities that can alleviate impacts
from global climate change, PTTEP conducts the feasibility study of
projects to reduce greenhouse gas emissions, including the installation
of an additional flare gas recovery unit (FGRU) at Bongkot production
platforms in July 2007 to cut the gas emission by about 250,000 tons of
carbon dioxide equivalent per year.

In its onshore exploration and production projects, particularly the
Sirikit Field, the Company investigated and conducted a pilot project to
use a portion of the Nong Tum-A flare gas in making liquefied natural
gas (LNG) to fuel fleets of vehicles, and a portion of the Pradu Tao
flare gas to generate power.

In addition, PTTEP deliberated investment through the Clean Development
Mechanism (CDM) under the Kyoto Protocol, designed to facilitate
industrialized countries that are obliged to cut greenhouse gas
emissions to achieve their committed goals by investing in CDM projects
located in developing countries. By definition, such projects must
support sustainable national development. Incidentally, the Company
investigated the feasibility and details of engineering designs to
inject carbon dioxide from gas production from the Carbon Capture and
Storage Project at Bongkot.

Further details are available in the Corporate Social Responsibility
Report 2007 at the Company’s website.

(1.6) Suppliers/contractors: Since PTTEP treats all its
suppliers/contractors fairly, its procurement is based on fair and just
competition for the maximum benefit of PTTEP and abstains from
preclusion of any suppliers/contractors from the competition. The
Company has provided three channels for suppliers/contractors
participation, namely, its website at www.pttep.com/vendorportal/,
E-mail at procurement@pttep.com, and direct contact at the Procurement
Department.

(1.7) Lenders: PTTEP not only issues debentures under relevant terms of
reference, laws, and announcements of SEC, but also strictly follows
policies, objectives, and resolutions made at shareholders’ meetings.
The Company values compliance with all obligations under the terms of
reference on the rights and duties of a debenture issuer and the
conditions of loan contracts.

(1.8) Competitors: PTTEP treats its competitors professionally and
fairly.

(1.9) Local culture and tradition: When operating in different
countries, PTTEP takes into account their local culture and practices
and organizes training by experts, including representatives of the
Ministry of Foreign Affairs or those from embassies on relevant subjects
– including recommendations and information concerning local culture,
what to do, and what to avoid for PTTEP employees assigned there.

(1.10) Human rights: The Company ensures that in all its operating
areas, no illegal labor is used and that the human rights principles of
the United Nations are observed.

(2) Measures concerning reporting and protection mechanism

It is PTTEP’s ultimate business goal to generate long-term value and
shareholders’ satisfaction, as seen in its motto: “growth, prosperity,
stability, sustainability and dignity”. Convinced that GCG will lead to
that goal, the Company has developed CG Hotline channels for complaints,
views, recommendations, and information about possible fraud or
wrongdoing filed by employees and other stakeholders. PTTEP will
seriously treat such information with confidentiality. The complaints
will be involved by concerned and assigned persons only to foster
confidence of the complainer. PTTEP has devised a written procedure to
receive and investigate such complaints through the following CG Hotline
channels.

(2.1) Telephone number: 02-537-4499

(2.2) Facsimile number: 02-537-4949

(2.3) E-mail address: cghotline@pttep.com

(2.4) Direct submission or by mail to the Corporate Secretary Office.

9.4.4 Information Disclosure and Transparency

Disclosure of information represents a vital principle for GCG. PTTEP
values the information that needs to be forwarded to SET and
shareholders, particularly its accuracy, adequacy, timeliness, and equal
access by all recipients. Such information preparation follows the Code
of Business Conduct. The Investor Relations, and the External Relations
Department address inquiries from institutional investors, minor
shareholders, analysts, and those interested in monitoring PTTEP data.
The Company has a clear procedure for information disclosure to SET
under ordinary and urgent circumstances.

PTTEP’s key disclosed information consists of both financial and
non-financial information. In 2007, the financial information,
particularly the reviewed/audited financial statements, according to the
external auditor, is essentially accurate under generally accepted
accounting principles. These financial statements have also been
reviewed by the Audit Committee and endorsed by the Board of Directors
before disclosure to shareholders. The Board also reports of its
responsibility to financial reports in the annual report. To speed up
financial information availability for investors, the Board also
discloses unreviewed quarterly and unaudited annual financial
statements, going beyond SET’s requirements. There has been no material
difference noted between those unreviewed/unaudited and reviewed/audited
reports. As regards non-financial information, PTTEP discloses connected
transactions, management discussions and analyses, risk management
information, and a CG report in the annual report and Form 56-1.

All disclosed information, as well as information made public to
shareholders and investors, is disseminated in Thai and English on
PTTEP’s website, which includes the annual report, Form 56-1,
shareholders’ meeting invitations and its resolutions, roadshow
presentations, quarterly presentations for analysts, press releases, and
the company’s safety, security, health and environment annual report.
The Company has added a webcast (image and sound) of the President’s
annual performance presentations. For greater access and maximum benefit
to users, the website is regularly updated. In 2007, 75 matters were
disclosed via SET’s system. The Company organized visits for
shareholders and analysts to the Sirikit Field in Kamphaeng Phet
province and Oman Project successively, to foster their confidence and
understanding of PTTEP operations. In 2007, the Investor Relations
promoted information disclosure by organizing an IR Corner booth at the
annual general shareholders’ meeting.

PTTEP also discloses the roles and responsibilities of the Board and all
standing sub-committees, including the attendance of each Director under
Item 9 (Management); reports of the Chairmen of each sub-committee under
Item 9.5 (Reports of Standing Sub-committees); and the policy of
Directors and Executive Management remuneration under Item 9.4.5 (6).

PTTEP constantly values the accuracy, completeness, timeliness, and
transparency of information disclosure and is committed to keeping up
this practice.

Investor Relations (IR)

The Investor Relations is responsible for communicating information that
accurately shows PTTEP’s real value to stock analysts, shareholders, and
investors in general under the rules of SET, and for fostering
confidence on the part of analysts and investors as well as a positive
image and attitude in investors through coordination and consultation
with PTTEP’s management. Investors and interested parties can contact
this unit for information on PTTEP, including financial statements,
annual report, and notifications to SET, SEC, etc. To contact the IR
unit, four means are possible:

(1) Telephone number: 0-2537-4512 and 0-2537-4611

(2) E-mail address: ir@pttep.com

(3) Facsimile number: 0-2537-4467

(4) Mailing address: PTTEP Office Building, 555 Vibhavadi Rangsit Road,
Chatuchak, Bangkok 10900.

9.4.5 Responsibilities of the Board

(1) Structure

(1.1) Components

The PTTEP Board consists of 15 Directors, which is considered suitable
for the business as follows:

  (1) Connected Directors

(2) Independent Directors not related to the major shareholders and not
serving as directors or management of major shareholders. PTTEP’s
Independent Directors must always account for at least one-third of the
Board or the number of at least five.

(3) Qualified private-sector Directors, numbering at least three.

All Directors are knowledgeable in diverse fields benefiting Company
business – that is, petroleum exploration and production, energy,
science, public administration, engineering, geology, geophysics,
economics, accounting, marketing, finance, treasury, and law.

(1.2) Qualifications of PTTEP Directors

  (1) Age not over 70 years

(2) Diverse skill mix, among them: industry knowledge, accounting &
finance, business judgment, management skills, international markets,
business strategy, crisis management, corporate governance, and legal
matters.

Only one major shareholder prevails at PTTEP, with minor shareholders so
widely distributed that they cannot form a statistically significant
group. Also, since the current non-Independent Directors and those who
do not represent the major shareholder are diverse in professional
qualifications or organizations, the current Board of Directors,
accordingly, can safeguard the interests of all shareholders as a whole.

(1.3) Terms of Directorship and Number of Companies Where Directors Can
Serve

The Board approved the elevation of PTTEP GCG, followed the Good
Corporate Governance Principles for Listed Companies (2006) by clearly
defining Directorship terms. To enable PTTEP to leverage Directors’
qualifications for maximum suitability and benefit, their services are
limited to three consecutive terms – except when the Company considers
them specialists that could benefit PTTEP’s operation. The Board also
approved that the number of other companies where each Director is
serving as a Board should be considered a critical factor for its
Director recruitment. This information of directors’ holding positions
in other organization is disclosed in Form 56-1, the annual report, and
the Company’s website.

(1.4) Definition of Independent Director Qualifications

This is detailed in 9.1.4

(1.5) Policy and Procedures for Serving as Other Companies’ Directors
for the President and Management

PTTEP values the experience to be acquired by the President and other
Management members through their director service in other
organizations, so they may accept such appointments as necessary and as
long as such positions do not compromise the business interests of
PTTEP. In any case, prior approval is needed from an authorized person,
and the name PTTEP or their positions in PTTEP cannot be used in any way
to involve any other company’s business. Nevertheless, any PTTEP
management or employee assigned to serve as a director, a management
committee member, or a secretary in an organization or party involved in
the exploration and production business, or a business directly related
to it, must return to PTTEP any compensation given to him or her. In
other cases, he or she can keep the compensation.

(1.6) Segregation of the Chairman and the President Positions and their
authority and duties

The Chairman of the Board and the President are two separate persons,
elected from Directors. The Chairman stays away from day-to-day
management, as there is a clear separation between policy-making,
monitoring and assessment, and management execution. The Chairman’s
leadership plays a key role in ensuring the Board’s independence from
the Management, deciding agenda items under the Board’s responsibility,
and efficiently chairing Board and shareholders’ meetings. This is done
by encouraging all Directors to actively take part in such meetings,
including raising critical questions, consulting, guiding, supervising,
and regularly supporting the operation of the Management through the
President. At the same time, the Board refrains from interference in
routine tasks or business activities of the Management. The Chairman
also ensures that the Directors observe PTTEP GCG. Whereas the President
takes full responsibility for Company management execution under the
authority framework assigned by the Board.

(1.7) Independence of Chairman

PTTEP has determined that, in future elections of the Chairman,
independence will be the foremost factor for deliberation. Nevertheless,
PTTEP’s Chairmen have consistently performed their duties independently.
Moreover, PTTEP has instituted the Chairman’s performance evaluation by
the entire Board to gain feedback as guidelines for improving and
auditing his performance. The appraisal outcome has been disclosed in
Form 56-1 and the annual report.

(1.8) Corporate Secretary

This is detailed in 9.1.5

(2) Sub-committees

The Board has appointed standing sub-committees (or simply
‘sub-committees’) to handle specific tasks for the Board. Their
qualifications and responsibilities have been defined in their
respective charters. A majority of their members are Independent
Directors, and so is the Chairman of each sub-committee, with the
exception of the Risk Management Committee. The Chairman of the Board
does not belong to any sub-committee. The sub-committees regularly
report their findings to the Board.

PTTEP constitutes five sub-committees, namely the Audit Committee,
Remuneration Committee, Nominating Committee, Corporate Governance
Committee, and Risk Management Committee. Their names, responsibilities,
and reports appear in 9.1.2 and 9.5 respectively.

(3) Roles and Responsibilities of the Board

(3.1) Corporate Governance Policy

In 2001 the Board issued a written GCG policy, which has constantly been
reviewed. The current GCG policy is Revision 4, approved by the Board
from the recommendation of the Corporate Governance Committee in 2007.
In this revision, the Code of Business Conduct is separated from the
policy for greater clarity in communicating the practices to the Board,
management, and all employees to observe. The GCG policy is explicit
about PTTEP’s governance structure on the part of the Board. A ceremony
was held for the Board and executive management to sign their names on
the GCG and the Code of Business Conduct booklet to serve as commitment
by all to GCG, the ethics of the Board, and the Code of Business Conduct
– which represented the highest practical guidelines. The publications
were handed out to all PTTEP employees for reference and compliance,
replacing the old ones, and to business partners, regulatory agencies,
agencies regularly contacted by PTTEP, as well as interested parties.
They also appear on the Company’s website under Good Corporate
Governance to facilitate viewing by shareholders, investors, and
interested parties.

PTTEP continued to focus on promoting the understanding of GCG to
Directors and all employees through activities including orientation
sessions for new Directors and employees including newly appointed
management. Lectures have been provided to particular groups of
management and employees about the Code of Business Conduct and the role
of GCG in daily work.

PTTEP has developed communication channels of GCG information according
to its nature for its employees as follows:

• PCS CG Information Center, for general information concerning GCG
practices

• PCS Compliance News Alert, for reminders about relevant rules and
laws, including insider trading, or for alerts on relevant, upcoming
rules and laws.

To gauge its annual GCG performance for further improvement, in 2007
PTTEP again commissioned Thai Rating and Information Services Co., Ltd.
(TRIS), to assess its GCG practices based on the criteria of the
Organization for Economic Cooperation and Development (OECD). To
elaborate, they rely on 20% weighting for shareholders’ rights, 40% for
the composition and roles of the Board and the Management, 25% for
information disclosure, and 15% for CG culture. Out of the possible 10,
PTTEP scored 8.37 against 8.31 in 2006. Details appear below:

  -------------------------------------------- ------------ -------------
  Rating Criterion                             Percentage   Scores

  Shareholders’ Rights                         20           8.55

  Composition and Role of the Board and the    40           7.83
  Management                                                

  Information Disclosure                       25           9.15

  CG Culture                                   15           8.25

  Total                                        100          8.37
  -------------------------------------------- ------------ -------------

(3.2) Code of Business Conduct

Valuing ethical business conduct, PTTEP regards the code of business
conduct as a precursor to desirable behavior that defines the framework
and guiding principles for good business conduct for the Board,
management, and all employees to observe with integrity, fairness, and
transparency – all the while taking into account stakeholders’ rights.
This would foster confidence and acceptance of PTTEP’s efficiency and
transparency.

To make it more suitable for the business conditions of PTTEP, on 17
October 2007 the Board approved the latest amendment of the Code of
Business Conduct. To encourage broad participation, a task force was
formed comprising volunteers representing both management and employees.
On the process of developing the Code of Business Conduct, the task
force has held meetings at various PTTEP sites, including presentations
to Management meetings, the CG Committee, and the Remuneration Committee
(as related to compensation). This move was designed to foster initial
understanding and to listen to views and recommendations, which were
then incorporated in the revised draft before tabling it for the
approval of the Board.

The Code of Business Conduct consists of 13 subjects governing desirable
behavior and reflects the organization values in business operation, as
the Company is convinced that these can contribute to long-term value
for stakeholders in a sustainable and fair manner. The significant
amendment is to identify two matters consist of ‘respecting the law and
political neutrality’, and ‘disclosure of information’ as distinct
subjects for greater clarity. The subjects of the Code of Business
Conduct are as follows:

-   Respecting the law and political neutrality

-   Internal control

-   Human resources

-   Confidentiality

-   Disclosure of information

-   Misuse of PTTEP’s information

-   Conflict of interest

-   Procurement and contracts

-   Gifts, entertainment, and bribery

-   Accounting and finance

-   Use of information technology and telecommunications

-   Safety, security, health, and environment

-   Corporate social responsibility.

    (3.3) Conflicts of interest

Published in the GCG Policy, PTTEP demands that all Directors and
employees avoid any conflict between personal and corporate interests.
Here are the essences.

• Decisions about Company business by all Directors and employees must
solely be for the best interests of PTTEP. No one is to engage in
transactions posing a potential conflict of interest.

• All Directors, management, and employees must review and report all
conflicts of interest to the Company.

In addition, PTTEP has devised the following measures:

• All Directors, management, and employees strictly comply with laws,
rules, and regulations, particularly those of SET concerning connected
transactions.

• Avoidance of financial involvement and relationship with external
parties by all Directors, management, and employees, that could
compromise PTTEP’s interests, bring about conflicts of interest, or
hamper efficient business conduct

-   Reporting to supervisors or those with joint approval authority
    where the Directors, management, and employees are connected with
    PTTEP interests, in which case they must withdraw from such
    transactions. The transaction pricing must be set as under general
    business terms and conditions.

-   All Directors, management, and employees reviews and self assess on
    conflicts of interest as specified in annual self-appraisal forms.

-   All Directors, management, and employees immediately notify their
    potential conflicts of interest, when in doubt.

In deliberating connected transactions during 2007, PTTEP complied with
the above-mentioned policy, SET rules and regulations on connected
transaction of 2003 and 2004 (revision 2), effective from 21 July 2004.
Board resolutions concerning these transactions were strictly made among
non-connected Directors. Please refer to Connected Transaction of 2007
under Item 11.

 (3.4) Internal Control and Internal Audit 

PTTEP implements an internal control policy that is sufficient and
acceptable for Company risks and prevailing business circumstances, or
the activities of individual departments. To ensure suitable control
measures with prevailing circumstances, environment, and risks, the
Internal Audit Department regularly monitors internal control practices.

The Board, management, and all employees collectively decide business
procedures to ensure achievement of the objectives with reasonable
confidence:

-   Efficient and effective operations, including prudent use of
    resources

-   Accurate, reliable, and timely financial reporting

-   Compliance with Company policies, laws, and regulations.

The Company’s internal control process was based on the regulations of
The Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and that of the Office of the Auditor General of Thailand, and
consists of five components:

-   Control Environment: A proper control environment fosters control
    awareness in those conducting business with competence, integrity,
    and a code of conduct. It covers the formulation of business
    directions and policies, business expansion, organization, and clear
    definition of responsibilities. It entails proper delegation of
    authorities and responsibilities. In short, PTTEP is determined to
    uphold the GCG principles.

-   Risk Assessment: Recognizing the value of risk management, the
    Company has set up a risk management department to take charge of
    risk analysis, assessing probabilities and potential impacts, and
    taking action to ensure acceptable risk management. PTTEP classifies
    risk management at the corporate level, linking to its strategic
    directions and strategies, and the operating level, to be managed by
    departments. With clear risk management procedures, all risks come
    under the supervision of the Risk Management Committee. (Details as
    under Risk Management)

-   Control Activities: PTTEP has designed its business to function
    systematically and efficiently. Also, to prevent and minimize
    operation risks, the Company operates under four essential
    regulations: human resource management, finance and accounting,
    budgeting, and procurement regulations, including the charters of
    the five sub-committees. These regulations frame PTTEP’s management
    and operation control.

The Company has also devised a Delegation of Authority and Signatures
(DAS) table for the President to clearly delegate authority to the
Company’s functional management, resulting in practical and
easily-tracked courses of action. As regards human resources management,
the Company’s HRM Policies and Guidelines for Branches/subsidiaries
apply.

The Company has allocated responsibilities to four main departments to
verify, control, and supervise to ensure strict compliance with laws and
regulations. These consist of Legal Department; Corporate Secretary
Office; Accounting Department; and Safety, Security, Health and
Environment Department. They are also required to alert all parties when
new rules and regulations come into effect. When doubts arise, all must
seek advice from Legal Department to ensure accurate interpretation and
compliance.

-   Information and Communication: The Company institutes efficient and
    effective communication procedures for information, both internally
    and externally, for complete, accurate, and timely decision-making.
    Information is either financial or non-financial. Internally,
    through the Intranet (via Internal Communication as the information
    center), PTTEP provides employees with adequate and timely
    information needed for doing their work, as well as communication
    between management and employees to improve job coordination and
    execution to fulfill goals. Externally, the Company has an effective
    procedure in place to provide sufficient information and deliver
    reports on its performance to various institutions in a timely and
    efficient way as required by relevant regulations, for good
    coordination and business appreciation.

PTTEP has an information control system for the transmission and
reception of information and clearly allocates tasks along with
responsible persons, authority, and units concerning information and
communication technology. In addition, the Company has classified levels
of access to confidential information in all its departments to give
access to authorized personnel only.

-   Monitoring and Evaluation: PTTEP has clear control and operating
    performance assessment, as well as that of risk management
    performance. Under the risk assessment monitoring procedure,
    findings are regularly reported to the Risk Management Committee.
    Corporate performance is assessed every quarter of the year, with
    each department reporting its results against plans and performance
    indicators. In addition, the Internal Audit department monitors and
    assesses internal control outcome, and then reports its findings to
    the Audit Committee. Findings of internal control assessment for
    2007 appear under Item 10.

(3.5) Risk Management

Defining a risk management policy for the Company, the Board appointed
the Risk Management Committee as a standing sub-committee under a
charter of 2005. This sub-committee ensures that PTTEP business
operation follows the risk management policy.

In 2007, PTTEP set up the Risk Management Department under the Strategy
and Capability Development Division to take direct responsibility for
risk management. The department not only investigates and indicates
risks or anomalies hampering business operation, but alleviates or
eliminates such risks in a systematic and efficient way. It periodically
reports to the Risk Management Committee and the Board, and summarizes
its year-round activities for reporting in the first quarter of the
following year to the Board for consideration of process adequacy.

(4) The Board of Directors’ Meetings

As a rule, for a given year the Board plans its meeting dates with
regular agenda items scheduled for each month. In 2007, the Board met
every fourth Tuesday of the month for a total of 14 times, including an
offsite meeting to deliberate strategic plans and another extraordinary
meeting to deliberate human resources management. The Board held one
meeting without the presence of management before the July meeting. The
Independent Directors held one meeting among themselves before the
November meeting. Directors consistently received an invitation to each
meeting along with draft minutes and supporting information ahead of
each meeting.

As a rule, agenda items are jointly decided by the Chairman and the
President, but Directors may also propose matters they consider
important. For instance, they proposed items for the meeting in the
absence of management and the meeting of the Independent Directors. In
2007 a total of 68 agenda items were deliberated, including the annual
strategy formulation, work plans, and budget; GCG policy; financial
statements; petroleum purchase agreements and negotiations; bidding for
international exploration and production; joint ventures; Arthit project
operation; deliberation of assets obtained or disposed of; procurement
under major projects; long-term leases of areas under Energy Complex
Co., Ltd.; and amendments of the company’s regulations. Matters for
acknowledgment consisted of 162 items, most of which were reports on
operation and updates on various projects; status of Company shares;
changes in Directors during the year; appointment and transfer of
management; human resources administration updates; reports on
activities in support of social and environmental development; reports
on safety, security, health and environment; and reports of
sub-committees. A typical Board meeting took two hours, with the
Corporate Secretary in attendance each time to take the minutes and file
complete information along with meeting documents; he also advised the
Board on pertinent regulations.

In 2007, critical project milestones regularly appeared on screens at
Board meetings to keep the Board updated of such project status, which
facilitates project monitoring. In addition, the Board requested that
follow-up reports be given on previous resolutions, as agenda item 2 of
each Board meeting, effective from July 2007, to facilitate the Board’s
provision of views and monitoring of management performance. In December
2007, one additional agenda item was added for the items deliberated in
previous meetings, intended to follow up actions against past Board
resolutions.

The meeting minutes covered all essential issues and all the minutes
were unanimously approved. Questions raised during Board meetings were
addressed along with additional explanations, and Directors’ views were
clearly recorded. All documents were systematically filed under tight
security. As a rule, all Directors attended each Board meeting except
for legitimate reasons of absence. Whenever possible, Directors sent an
apology letter to the Chairman when they could not attend a meeting. The
Board attendance record for 2007 appears under Item 9.1.1.

(5) Self-assessment of the Board and Sub-committees

PTTEP has stipulated under the continuous improvement element of its GCG
(item 4.3.2) – the assessment of the performance of the Board, the
Chairman, and the Sub-committees - that, for the checks & balances, the
Remuneration Committee is to evaluate the performance of the Board
against the annual Performance Agreements, reviewed by the Nominating
Committee, taking into account the self-assessment findings of all
Directors.

The Board assessment divided into two parts: individual self-assessment
and the entire Board assessment. All sub-committees are evaluated by
both the committee member themselves and other directors as well. The
Chairmen performance is also assessed by all directors. PTTEP will
propose these scores for the consideration of the Remuneration Committee
before securing an approval from the Board and disclosing the scores in
the annual report. PTTEP then gathers the comments and suggestions made
in the evaluation forms as guidelines for improving the performance of
the Board and the Company.

As regards the grading scale for these assessments, a ‘1’ stands for
‘needs improvement’, a ‘2’ for ‘fair’, a ‘3’ for ‘standard’, a ‘4’ for
‘good,’ and a ‘5’ for ‘very good’.

-   Self-assessment scores by Directors averaged 4.94 against 4.65 in
    the previous year.

-   The Board as a group averaged 4.51 or ‘good’ – against 4.49 in the
    previous year. In 2007, topics and scores ranked, in descending
    order, as shown below:

  ------------------------------- ------------- -------- ------------- --------
  Assessed Item                   2007                   2006          

                                  Performance   %        Performance   %

  Teamwork                        4.63          92.53    4.43          88.60

  Board Structure                 4.58          91.52    4.65          93.00

  Accountability                  4.53          90.60    4.50          90.00

  Meetings                        4.53          90.60    4.52          90.40

  Formulation and Monitoring of   4.49          89.71    4.37          87.40
  Strategic Plan                                                       

  Overseeing the Management       4.41          88.24    4.41          88.20

  Training and Development        4.40          88.00    4.47          89.40

  Average                         4.51          90.18    4.49          89.70
  ------------------------------- ------------- -------- ------------- --------

-   The Audit Committee scored 4.52 or ‘good’ against 4.74 in 2006

-   The Risk Management Committee scored 4.52 or ‘good’ against 4.76 in
    2006

-   The Remuneration Committee scored 4.35 or ‘good’ against 4.79 in
    2006

-   The Nominating Committee scored 4.34 or ‘good’ against 4.69 in 2006

-   The Corporate Governance Committee scored 4.49 or ‘good’ against
    3.93 in 2006

-   The Board Chairman earned 4.34 or ‘good’ against 4.52 in 2006.

(6) Directors and Executives’ Remuneration

(6.1) Directors’ Remuneration

PTTEP’s policy for remuneration paid to the Directors and members of the
Sub-committees is clear and transparent. The Remuneration Committee
decides and reviews such remuneration based on not only suitability, but
also individual and Company performance, industry practices, practices
of leading SET-listed companies, and the scope of accountability. The
2006 Annual General Shareholders Meeting approved Directors’ and
Sub-committee members’ remuneration, effective from 2006 onward unless
otherwise approved. The 2007 Annual General Shareholders’ Meeting
adopted the same pay resolutions from the previous year, recommended by
the Remuneration Committee as follows:

-   Retainer fee at Baht 25,000/person/month, paid in full each month.

-   Meeting fee at Baht 25,000/person/meeting, paid only to those in
    attendance.

-   Annual bonuses for all Directors amount to Baht 17-25 million/year,
    depending on the Company’s net income. If the net income was Baht
    10,000 million, the Board would receive Baht 17 million in total
    bonuses. If the income was more than Baht 10,000 million, directors
    would receive an additional 0.08 percent of the increment over Baht
    10,000 million, with a bonus ceiling of Baht 25 million. The bonuses
    are to be prorated to individual Directors’ periods in office and
    meeting attendance. If a Director was absent from more than 25
    percent to 50 percent of the meetings in a given year, his or her
    bonus would be deducted by 25 percent. If a Director was absent from
    more than 50 percent to 75 percent, his or her bonus would be
    halved. If a Director was absent from more than 75 percent, his or
    her bonus would be deducted by 75 percent. A notable change was that
    bonus payment is now made once the shareholders’ meeting has
    approved dividend payment to shareholders that year; previously, it
    was made once the Company had submitted its audited annual financial
    statements to SET.

-   Members of all standing sub-committees would receive meeting fees of
    Baht 25,000/person/meeting. This, however, excluded members who were
    concurrently PTTEP management that is the President position
    downward, and does not apply when meetings concerned circulating
    resolutions.

-   The Chairman of the Board and the Chairmen of sub-committees
    received an extra 25 percent of the fees allocated to regular
    Directors or members.

    Individual director’s compensation details appear under 9.3.1

    (6.2) Compensation Policy for Subsidiaries and Associated Companies’
    Board Members

    This has to do with entities set up by PTTEP or directly and
    indirectly joined in joint ventures by PTTEP to serve as mechanisms
    for conducting businesses for PTTEP for its best interests under
    various business conditions. These are treated as Company assets in
    line with legal criteria or investment conditions. As a rule, the
    boards of these companies are kept to a bare minimum, for instance,
    the President and management directly responsible for the success of
    the joint ventures, under PTTEP’s policies and strategies. PTTEP
    rules and procedures therefore apply, as these are assets managed in
    the best interests of the Company.

    The President and management assigned to serve on behalf of PTTEP as
    directors of affiliates and subsidiaries engaged in petroleum
    exploration and production, or directly related ones, including
    PTTEP Services Co., Ltd., are not entitled to extra compensation, as
    this is considered PTTEP’s direct business and part of routine work.
    For other cases, the President and management may receive such
    compensation, as it is considered extra duties, including service
    for PTT ICT Solutions Co., Ltd., and Energy Complex Co., Ltd. This
    provision is clearly stated in the GCG principles and the Code of
    Business Conduct.

    (6.3) President’s Remuneration

    The President’s remuneration package is clearly and transparently
    decided by the Remuneration Committee with the endorsement of the
    Board. Consideration is given to Company performance and performance
    appraisal outcome, prevailing industry and business practices, as
    well as those in particular leading SET-listed companies, and his or
    her job responsibilities.

    Assessment of the President’s performance is made against his or her
    performance agreement for a given year, duly filled on the form
    decided by the Remuneration Committee and endorsed by the Board as
    checks-and-balances to monitor the performance of the President
    against short-term and long-term goals. Besides allowing for GCG
    practices, this would make the deliberation of the President’s
    compensation transparent and suitable while also enabling him or her
    to apply the findings to improve performance.

    (6.4) Executive Management’s Remuneration

The Remuneration Committee reviews and recommends the compensation
criteria or procedures for defining the compensation for executive
management that are fair and reasonable while conforming to prevailing
practices in this business for the Board’s endorsement. Executives’
compensation packages and salary structures are determined by market
comparison with other leading oil and gas companies’ criteria,
procedures, pay rates, salary surveys, and with consideration to their
individual scopes of accountability.

The President decides individual executive management’s compensation.
Annual merit increases of executive management are tied to individual
performance, the Company’s performance, and key performance indicators
(KPIs) achievement of each division.

To maintain its competitiveness in the oil and gas market, PTTEP
participates in annual compensation surveys along with other leading oil
and gas companies to obtain sufficient information to report to the
Board for possible adjustment in competitive compensation strategy when
there is a significant compensation change in the marketplace.

In compliance with GCG and transparency, PTTEP discloses the
Management’s compensation, including their PTTEP shares and ESOP
warrants in the annual report.

(7) The Board of Directors’ Training

(7.1) Directors’ Development

Directors regularly upgrade themselves by attending seminars, courses,
and meetings organized by the Institute of Directors of Thailand (IOD),
SET, SEC, and the Capital Market Academy. When there is a new Director,
PTTEP provides a Director manual and an orientation program, which in
turn induces appreciation of PTTEP business and Directors’
responsibilities, as well as acknowledgment of essential information for
their tasks and duties.

(7.2) Executive Development and Succession Planning

PTTEP actively primes its management for internal rotation. As regards
succession planning for the President position, the major shareholder’s
policy prevails.

(8) Awards of 2007

PTTEP was one of the 19 SET-listed companies with a score of over 100
and admired as a good example under the 2007 AGM Checklist Project of
SEC. The Company scored 106.79 out of 110 marks.

As an SET-listed company, PTTEP won one of ten Shareholders’ Awards by
Thailand Securities Depository Co., Ltd. (TSD).

The Board of Directors won the ‘Outstanding Board of the 2006/2007’
acclaim from the National Corporate Governance Committee.

9.5 Sub-committees Report

9.5.1 Corporate Governance Committee Report

Valuing the compliance with PTTEP’s Good Corporate Governance (GCG)
Policy, which was firstly published in 2001, the Board of Directors
appointed a Corporate Governance Committee (CG Committee) on 22 February
2005, consisting of three Independent Directors. This sub-committee has
to oversee that PTTEP’s business comply with GCG practices and encourage
compliance across the board – in line with the regulations of the Stock
Exchange of Thailand (SET), best practices by other leading companies,
and generally-accepted international best practices.

The Corporate Governance Committee held a total of three meetings in
2007 to conduct its roles and responsibilities under the relevant
charter and reported the outcome of each meeting to the Board, as
summarized below.

(1) Supervised the preparation of a Code of Business Conduct (CBC) as a
separate publication from the GCG Policy, in line with international
best practices and for the benefit of clear communication, while
encouraging the Board, the Management, and employees to strictly observe
the contents of this publication in conducting their businesses

(2) Ensured launches of lectures on the interpretation, preparation, and
components of the CBC for top executives and the multi-department task
force charged with developing the publication so that they might master
the principles involved in preparing the CBC to reflect the company
culture and sound practices

(3) Supervised the amendment of the GCG Policy to make it compatible
with SET’s principles of GCG for listed companies (2006 edition) and the
Organization for Economic Co-operation and Development (OECD) Principles
of Corporate Governance, as well as with the Sufficiency Economy
principles. In 2007, a third amendment proceeded, culminating in the
fourth edition of the policy, which featured greater clarity about the
suitable CG structure for PTTEP, particularly on the part of the Board
itself. This has now been distributed to the Board and all employees to
observe, including all business partners and relevant agencies, for use
as a general reference about PTTEP’s GCG.

(4) Deliberated PTTEP’s qualifications of Independent Directors, which
were more stringent than those set by the Securities and Exchange
Commission (SEC) and SET, particularly the shareholding of Independent
Directors; and modifying the definitions in line with relevant laws

(5) Supervised PTTEP’s compliance with the GCG policy approved by the
Board and encouraging regular auxiliary communication activities for the
Board, the Management, and employees

(6) Ensured that reports about GCG practices of PTTEP, together with
relevant articles and information, were regularly made accessible to the
Board

(7) Encouraged and promoted PTTEP’s annual CG rating to keep all parties
informed of its current GCG performance and, using the findings from the
assessment, to improve its performance. In 2007, the Company
commissioned Thai Rating Information Service Co., Ltd. (TRIS), for the
task, as it had done in 2006. The assessment findings served as an index
under the Performance Agreement of 2007 for the Board and the President,
as well as a key performance indicator (KPI) for the Company

(8) Formulated a guideline of the annual GCG report for reporting to all
stakeholders in the annual report.

In 2007 the Company achieved a score of 8.37 CG rating (out of 10, or
‘very good’) according to TRIS, against 8.31 in 2006. Outstanding CG
practices by PTTEP in 2007 were both visible and widely accepted as
follows:

(1) Being one of 19 companies to have scored over 100 marks on holding
    the 2007 annual general meeting of shareholders (awarded by the
    Office of the SEC)

(2) Being one among the top 10 listed companies to win a Shareholders’
    Award for taking good care of shareholders (awarded by Thailand
    Security Depository Co., Ltd.)

(3) Being awarded Board of the Year for Distinctive Practices 2006/07.

Such outstanding awards reflected PTTEP’s continuous commitment to
developing good corporate governance in line with national and
international best practices.

Vudhibhandhu Vichairatana

(Mr. Vudhibhandhu Vichairatana)

Chairman of the Corporate Governance Committee

7 February 2008

2.  The Audit Committee Report

The Audit Committee is composed of 3 Independent Directors with
knowledge, expertise and experience in finance & accounting, law, and
related technical practices; it is chaired by General Lertrat
Ratanavanich, with Mr. Chulasingh Vasantasingh and Mr. Sirin
Nimmanahaeminda as members.

All Audit Committee members performed their duties and responsibilities
as assigned by the Board of Directors in accordance with PTTEP’s Audit
Committee Charter. During 2007, the Audit Committee held 6 meetings,
completing the work items which are summarized below :

(1) Reviewed the quarterly and annual financial statements with PTTEP
    management and the External Auditor (The Office of the Auditor
    General) with comments and recommendations to ensure the accuracy
    and creditability of the accounting system and financial information
    as well as sufficient and timely disclosure of significant matters
    to meet the accounting standards and requirements of relevant laws
    and regulations.

(2) Reviewed PTTEP internal control and internal audit system to ensure
    both sufficiency and appropriateness for PTTEP’s business
    operations.

(3) Reviewed PTTEP performance to ensure the Company’s compliance with
    the securities and stock exchange laws, the Stock Exchange of
    Thailand’s rules and regulations and other laws related to PTTEP’s
    business.

(4) Considered and supported the disclosure of any connected
    transactions to ensure accuracy and completeness together with the
    opinion that they were reasonably executed for the benefit of
    shareholders. PTTEP also issued a quarterly Management Discussion
    and Analysis Report (MD&A), which is useful for all investors.

(5) Considered and approved the additional agenda items as assigned by
    the Board of Directors.

(6) Considered and approved the annual internal audit plan, reviewed the
    internal audit report and evaluated the internal control system to
    ensure that internal control system was functioning effectively,
    with acceptable level of risk and in appropriate manner for the
    changing business environment.

(7) Considered and proposed that the Office of the Auditor General
    continue to serve as PTTEP’s external auditor; also considered and
    decided upon the relevant audit fees for 2007.

(8) Assessed the Audit Committee’s 2007 performance by completing a
    self–assessment and by soliciting feedback from the Board of
    Directors to improve overall committee effectiveness. The result of
    the assessment revealed that the performance of the Audit Committee
    remain effective.

(9) Supported Good Corporate Governance implementation by participating
    in Corporate Governance Rating as conducted by TRIS Rating Co., Ltd.

  The Audit Committee regularly submitted all Minutes of the meetings to
  the Board of Directors.

  In conclusion, for the year:

(1) PTTEP’s accounting system and financial reports were accurate,
    reliable, and contained complete, adequate, and timely essential
    information

(2) The Company’s internal control was adequate, suitable, and
    efficiently adaptable to evolving circumstances; as a result, the
    businesses of PTTEP and its subsidiaries achieved their objectives
    while complying with all relevant laws and regulations.

General Lertrat Ratanavanich

(General Lertrat Ratanavanich)
Chairman of the Audit Committee

5 February 2008

9.5.3 The Remuneration Committee Report

The Remuneration Committee was appointed by the Board of Directors. The
Committee comprises three independent directors, chaired by Mr. Krairit
Nilkuha, and the two others being Mr. Pala Sookawesh and Mr. Sirin
Nimmanhaeminda.

During the year, in performing its roles as assigned by the Board, the
committee put in its best efforts with due care, prudence, independence,
and thoroughness in compliance with its charter of 2003, which deals
with the assessment of Board performance and its compensation, together
with those of Sub-Committees and the President. Three meetings were held
during the year with 100% attendance. On 19 December 2007, however, Mr.
Krairit Nilkuha resigned from Board membership as well as the
chairmanship of this committee.

As regards the compensation details for the Board, Sub-Committees, and
the President, which appear under ‘Board and Management Compensation’ in
the annual report, the committee took into account their respective
duties and responsibilities, performances, company performance, industry
and leading listed company practices, as well as factors potentially
affecting PTTEP’s business or the overall economic situation. This is to
ensure suitability and transparency while bolstering the confidence of
all stakeholders.

Pala Sookawesh Sirin Nimmanahaeminda

(Mr. Pala Sookawesh) (Mr. Sirin Nimmanahaeminda)

Director to the Remuneration Committee Director to the Remuneration
Committee

21 January 2008 21 January 2008

9.5.4 Nominating Committee Report

Under the Good Corporate Governance principles of PTTEP, the Nominating
Committee consists of three members, two of whom are Independent
Directors, including the Chairman.

The Nominating Committee, whose current term runs from 23 June 2006 to
22 June 2009, consists of Mr. Chulasingh Vasantasingh (the Chairman and
Independent Director), General Lertrat Ratanavanich (Independent
Director), and Mr. Chitrapongse Kwangsukstith.

During the year, this sub-committee duly performed its duties under the
Nominating Committee Charter B.E. 2546 (2003). Three meetings were held
with all members in attendance. The essences of the three meetings
appear below:

(1) Deliberating the qualifications of candidates for Board members and
preparing a director list with the Company’s best interests in mind.
Views were also sought from PTT, the major shareholder.

(2) Deliberating the list of those under (1) and proposing it to the
Board and shareholders’ meetings for election in place of those whose
terms expired.

(3) Deliberating the list of those under (1) and proposing it to the
Board for election in place of those who resigned. Incidentally, Mr.
Wisudhi Srisuphan resigned on 2 April 2007.

(4) Deliberating the list of qualified Directors to fill vacancies on
the standing sub-committees, and proposing them to the Board for
appointment as follows:

(4.1) Audit Committee: proposing reappointment of Mr. Chulasingh
Vasantasingh and General Lertrat Ratanavanich, who was proposed as
Chairman; and appointment of Mr. Sirin Nimmanahaeminda

(4.2) Corporate Governance Committee: proposing reappointment of General
Lertrat Ratanavanich, and appointment of Mr. Chokchai Aksaranun

(4.3) Risk Management Committee: proposing reappointment of Mr. Pichai
Chunhavajira, and appointment of Mr. Tongchat Hongladaromp as Chairman.

Neither Mr. Chulasingh Vasantasingh nor General Lertrat Ratanavanich
voted on the agenda in which they had interests.

Reporting its meeting outcome to the Board every time, through the year
the Nominating Committee duly performed all its assignments with
caution, prudence, competence, and independence and provided candid
views in the best interests of all shareholders and stakeholders.

Chulasingh Vasantasingh

(Mr. Chulasingh Vasantasingh)

Chairman of the Nominating Committee

23 January 2008

9.5.5 Risk Management Committee Report

Chaired by Mr. Tongchat Hongladaromp, the 2007 Risk Management Committee
also consisted of Mr. Sirin Nimmanahaeminda, Mr. Pichai Chunhavajira,
Mr. Vudhibhandhu Vichairatana, Mr. Chitrapongse Kwangsukstith, and Mr.
Maroot Mrigadat.

During the year, the committee performed its roles as assigned by the
Board of Directors under the relevant charter and held four meetings as
summarized below.

(1) Considered risk management processes and plans to ensure efficient
    risk management and internal control compatible with acceptable risk
    levels in changing environment

(2) Approved risk management and mitigation plan to manage risks
    significant to PTTEP relating to new investment projects, together
    with a Hedging policy, for the Board’s approval

(3) Considered relevant corporate risk profiles in support of the
    Company’s strategic directions. The committee conducted careful
    analysis of potential risk, providing recommendations to mitigate
    risk, and oversee monitoring of mitigating actions – whether it is
    strategic, operational, or organizational structure risk.

  The committee continually reported the findings to the Board.

In summary, it is our view that this committee has performed its duties
in 2007 prudently, competently, and independently while providing candid
views to all parties for the benefit of PTTEP, all shareholders, and
stakeholders.

Tongchat Hongladaromp

(Mr. Tongchat Hongladaromp)

Chairman of the Risk Management Committee

25 January 2008

9.6 Use of Inside Information

As stated in its Good Corporate Governance and the Code of Business
Conduct, PTTEP stringently supervises the use of inside information. In
compliance with securities laws, this constantly-revised practice aims
at both fair treatment of all stakeholders and prevention of conflicts
of interest. To achieve these goals, the Company regularly informs its
Directors and employees of relevant regulations through its assorted
channels to pre-empt exploitation of such information for themselves and
others, and clear disciplinary measures are in place. In addition, as CG
leaders, superiors are to reiterate these measures and guide their
subordinates.

In the annual report, PTTEP fully discloses shareholding by the Board,
senior Management, and department managers or equivalent in the Finance
and Accounting Division, as required by SEC. It also reports to the
Board each time these people have their shareholding proportions
changed. PTTEP also encourages Directors, the management, and employees
to hold stocks for at least three months from the last purchase date,
except selling stocks acquired through excising rights in warrants. And
to ensure practical compliance with GCG principles, PTTEP has taken the
following action:

(1) Limiting access to nonpublic information to only those concerned and
    necessary.

(2) Security procedures are in place to safeguard information files and
    confidential documents.

(3) Owners of inside information must also remind related parties to
    strictly observe these procedures.

9.7 Personnel

9.7.1 As of year-end 2007, PTTEP and its subsidiaries (namely PTTEPS and
PTTEP Services) had a total staff and secended staff count of 2,015,
classified as follows:

(1) Division under the President 100

(2) Strategy and Capability Development Division 73

(3) Thai Offshore Assets Division 483

(4) Joint Venture and Thai Onshore Assets Division 245

(5) Business Development and International Division 119

(6) Geosciences Division 115

(7) Operations Support Division 296

(8) Finance and Accounting Division 132

(9) Human Resources and Business Service Division 226

(10) Production Development Division 226

Total 2,015

9.7.2 PTTEP’s payroll in 2007 featured no significant changes. No
significant labor disputes have arisen over the past three years.

9.7.3 The total compensation (salaries, bonuses, and provident fund
contributions) of PTTEP, PTTEPS, PTTEP Services staff as well as
seconded staff under the payrolls of PTTEP and its subsidiaries in 2007
under 6.1 amounted to Baht 2,277,252,665.74 million.

9.7.4 Human Resources (HR) Development Policy

To improve staff competency and strengthen organizational capability for
the continuing expansion of business, both in Thailand and overseas,
PTTEP has improved its HR development systems and training processes by
earnestly reinforcing the implementation of its competency-based
training and development approach to accelerate the development of its
people.  Based on this competency concept, the Company has provided
training through the year via the following channels:

                 (1)      In-house and External Training

                                The Company provided in-house training
and external training, both local and overseas, to staff at all levels,
including the Management.  This extensive training comprised training
courses in technical and professional skills, SSHE, IT, English, and
business administration and management.

(2)        Long-term Training and Development Programs

                                Our long-term training and development
programs are aimed to prepare staff for future roles and assignments
under various PTTEP current and upcoming projects.  Provided for
selected technical staff, the programs were one to three years long,
under which staff undertook on-the-job training, both in Thailand and
overseas, with PTTEP’ s joint venture partners as well as service
companies, such as Total, Chevron, and Schlumberger.

  (3)          Master’s Degree Scholarship Programs

                        Scholarships are awarded to selected staff for
further studies, culminating in master’s degrees in Geosciences and
Petroleum Engineering at universities at the forefront of the USA, UK,
Canada, and Australia, as well as management fields at Sasin Graduate
Institute of Business Administration of Chulalongkorn University.  In
2006, the scholarship programs were extended to the master’s degree
program in Offshore Technology and Management (OTM) at the Asian
Institute of Technology (AIT) in Thailand.