Part 1

Executive Summary

1. Summary of Business Nature

PTTEP conducts its core business in petroleum exploration, development
and production. As of 31 December 2007, PTTEP has 13 petroleum
exploration and production projects currently under production out of a
total of 39 petroleum exploration and production projects and 4
additional investment projects as mentioned in item 2.2.1 and 2.3 of
part 2.

PTTEP’s policy is to supply its products from both domestic and overseas
sources primarily to the Thai market. In fact, at present, only Oman 44
Project disposes of natural gas to an overseas market. In 2007, PTTEP
and its subsidiaries sold crude oil, natural gas, LPG and condensate in
aggregate of 179,767 MMBOE, 6% higher than last year. Sales revenue were
90,764 million Baht, an increased of 5% from 2006.

In 2007, PTTEP entered into two gas sales agreements (GSAs) with PTT.
The first is for Unocal 3 Project, effective from the expiration dates
of the existing GSA. The second is for additional gas volume produced
from the northern area of Arthit project. In 2007, PTTEP also launched
petroleum production and sale from 2 projects, namely Oman 44’s natural
gas and condensate, and S1’s associated gas from PTO-A oilfield.

Competitiveness in the Thai E&P industry can be considered as
non-threatening because of the nature of the market and its typical
sales term and conditions where market is secured through long-term
sales agreement. Furthermore, domestic demand generally exceeds domestic
supply due to the continuous growth and the expansion of the economy.
Threats from overseas supply are also made minimal by the lower
transportation costs plus the beneficial tax privileges of domestic
supply. For overseas project, thorough market studies are analyzed well
in advance of any investments to minimize risk. For example, Oman 44
Project’s gas generates sale at the committed volume, while the crude
oil is sold on a term-contract basis. Incidentally, because of the
continually high demand by Thai refineries, Thailand is a critical
market for the Oman Blend crude oil.

2. Summary of Major Risk

The major risks associated with the Company’s petroleum exploration and
production result from internal and external factors.

Internal factors consist of new project investment risks, exploration
risks, project development risks, production risks, commercial risks,
organization capability risks, and safety, security, health, and
environmental risks.

External factors consist of political risks in other countries,
litigation risks, price risks, exchange rate risks, interest rate risks.

PTTEP has developed a systematic risk management system to effectively
manage the risks. The risk management processes include risk analysis
and identification, risk mitigation including preventive or corrective
measure to bring risk to an acceptable level, and consistent risk
monitoring as mentioned in item 1of part 2.

3. Summary of PTTEP Group’s Structure

PTTEP sets up structuring policy for PTTEP group companies with the aim
of utmost effectiveness of resource management, a transparent
management, strong long-term business strategy and good corporate
governance. On December 31, 2007, PTTEP invested the total of 33
companies, comprising 27 subsidiary companies and 6 associated companies
as presented in item 2.2.3 and 5.2 of part 2.

4. Summary of Connected Transaction

4.1 Regular commercial items

(1) The petroleum products amounted Baht 77,290 million were sold to
PTT.

(2) The agreement on the expenses with PTT incurred with the postponed
installation of the Medium Compression Project (MCP) for the Yadana
Project. PTTEP, with 25% shareholding, was burdened with a USD 1.25
million obligation.

4.2 Property lease

(1) The office space was leased to PTT and The Aromatics (Thailand)
Public Company Limited¹ amounted Baht 18.66 million and Baht 2.72
million respectively.

(2) The land of 2.72 Rai was leased from PTT amounted of Baht 5.49
million.

4.3 Service Agreement

The payment to PTT ICT Solution Company Limited for providing all
information and communication technology services amounted Baht 105.54
million.

For more detail of connected transaction, please see item 11 of part 2.

¹ The Aromatics (Thailand) Public Company Limited (ATC) and Rayong
Refinery Public Company Limited (RRC) have amalgamated their businesses
and become a new entity under the name of " PTT Aromatics and Refining
Public Company Limited (PTTAR)".

5.  Summary of Financial Position and Operation Result

    1.  Financial position

As of 31 December 2007, PTTEP and its subsidiaries had total assets of
Baht 190,039 million, or Baht 32,226 million (20%) higher than at the
end of 2006. This increase was mainly due to an increase in oil and gas
properties for production, mainly from the Arthit, Oman 44, S1, Pailin,
Projects in Vietnam, MTJDA and Myanmar M7&M9 projects. In addition,
higher cash and cash equivalents from the bond issuance during the year,
in which the Company invested its surplus cash in short-term financial
instruments carrying low risk, such as Treasury Bills, Promissory Notes
and deposits with commercial banks, where emphasis is given to security
and liquidity

PTTEP and its subsidiaries had total liabilities of Baht 83,252 million,
which were higher than at the end of 2006 by Baht 13,964 million, mainly
due to the net of Baht bond issuance and bond repayment in foreign
currency amounting to Baht 9,293 million; as a result, the Company’s
remaining debt profile amounted to Baht 18,500 million and the interest
rate changed from 100% fixed to 70% fixed and 30% floated.

PTTEP and its subsidiaries had total shareholder’s equity of Baht
106,787 million, which were higher than at the end of 2006 by Baht
18,262 million or 21%.

2.  Results of Operations

For the results of operations for the year 2007, PTTEP and its
subsidiaries’ net profit was Baht 28,455 million or Baht 8.63 per
share-diluted, an increase of Baht 408 million when compared with the
year 2006’s net profit of Baht 28,047 million (2006: Baht 8.53 per
share-diluted). Return on shareholders’ equity for this year was 29%

For the year 2007, total revenues of PTTEP and its subsidiaries amounted
to Baht 96,773 million, an increase of Baht 5,050 million or 6% when
compared with Baht 91,723 million for the last year. This increase was
mainly due to an increase in sales of petroleum of Baht 4,425, resulting
from the average petroleum sales price in USD currency in this year rose
to USD 39.78 per barrel of oil equivalent (BOE), which resulted from the
higher world market price, against last year at USD36.52 BOE; however,
the average sales exchange rate for this year decreased to Baht 34.77
per USD against last year’s Baht 38.24 per USD as a result of the
strengthened Baht; and the higher sales volume for the year 2007 rose to
179,767 barrels of oil equivalent per day (BOED) compared with last year
(169,348 BOED). This increased sales volume mainly came from petroleum
production sales from the Oman 44 and Phu Horm projects (first
production began last year) including the crude sales from the S1
project and the natural gas sales from the Pailin and Yadana projects.
However, there was a decrease in petroleum production sales from the
B8/32&9A project.

PTTEP and its subsidiaries incurred expenses for this year amounting to
Baht 44,489 million, an increase of Baht 3,552 million or 9% when
compared with Baht 40,937 million last year.

For more detail of financial position and result of operation please see
item 12 of part 2.

6.  Any facts that are critical for the business operation and may
    significantly affect the shareholders’ benefits.

None

7.  Summary of PTTEP Securities

PTTEP currently has a total registered share of Baht 3,322 million
consisting of 3,322 million ordinary shares at the par value of 1 Baht
per share. The Company’s registered paid-up capital was at Baht 3,297.42
million which was an increase of Baht 11.42 million from year 2006, from
the exercise of warrants to purchase the Company’s common shares by the
management and employees according to the 2002-2006 Employee Stock
Ownership Plan or ESOP.

PTTEP’s General Shareholders’ Meeting consented to issue and offer a
total of 12,400,000 units of warrants to its directors (only ESOP for
the year 2002), management and employees. At the end of 2007, a total of
7,484,060 units of warrants had been exercised.

As reported on the SET website as of January 29, 2008, the Company’s
common shares of NVDRs issued and outstanding amounted to 40,376,732
shares or 1.22% of total registered paid-up shares, which amounted to
3,297,420,300 shares. The NVDR holders will not participate and vote in
shareholder’s meeting, except in the case where a listed company wishes
to delist its shares from the SET.

PTTEP has issued a substantial amount of bonds to the market during
2007. In February 2007 the Company issued Baht 3,500 million unsecured,
unsubordinated bonds with a tenor of 3 years (due in 2010), and in June
2007 the Company issued Baht 12,500 million unsecured, unsubordinated
bonds. PTTEP’s Baht 12,500 million bonds issuance won the Best Thailand
Deal 2007 by Finance Asia because it was the largest Thai corporate bond
offering to date and incorporated the markets fist call feature (15
non-call-five).

For more detail of PTTEP securities, please see item 8 of part 2.