11. Connected Transactions

1.  Connected Transactions in 2007

    1.  Regular commercial items

+--------+------+---------------------------+-------+-----------------+
| Con    | Sh   | Transaction               | 2007  | Necessity and   |
| nected | ares |                           | Value | Reason          |
| C      | in   |                           |       |                 |
| ompany | P    |                           |       |                 |
|        | TTEP |                           |       |                 |
+--------+------+---------------------------+-------+-----------------+
| PTT    | 65   | 1.1 Petroleum product     | Mi    | Prices were     |
|        | .36% | sales volumes:            | llion | market-based,   |
|        |      |                           | Baht  | reflecting      |
|        |      | -   Crude oil: 8.45 MMBBL | 7     | those quoted by |
|        |      |                           | 7,290 | project         |
|        |      | -   Natural gas:          |       | partners to PTT |
|        |      |     249,972.14 MMSCF      |       |                 |
|        |      |                           |       |                 |
|        |      | -   LPG: 96,387.70 Metric |       |                 |
|        |      |     Tons                  |       |                 |
|        |      |                           |       |                 |
|        |      | -   Condensate: 6.76      |       |                 |
|        |      |     MMBBL                 |       |                 |
+--------+------+---------------------------+-------+-----------------+
| PTT    | 65   | 1.2 Agreement on the      | Mi    | Postponement    |
|        | .36% | expenses incurred with    | llion | was because the |
|        |      | the postponed             | USD   | former schedule |
|        |      | installation of the       |       | coincided with  |
|        |      | Medium Compression        | 1.25  | peak gas        |
|        |      | Project (MCP) for the     |       | consumption     |
|        |      | Yadana Project:           |       |                 |
|        |      |                           |       |                 |
|        |      | In July 2007, the         |       |                 |
|        |      | joint-venture partners of |       |                 |
|        |      | PTTEP (the sellers)       |       |                 |
|        |      | signed an agreement with  |       |                 |
|        |      | PTT (the buyer), equally  |       |                 |
|        |      | splitting the resulting   |       |                 |
|        |      | expenses (the total       |       |                 |
|        |      | amount estimated at USD   |       |                 |
|        |      | 10 million) due to the    |       |                 |
|        |      | postponed installation.   |       |                 |
|        |      | PTTEP, with 25%           |       |                 |
|        |      | shareholding, was         |       |                 |
|        |      | burdened with a USD 1.25  |       |                 |
|        |      | million obligation.       |       |                 |
+--------+------+---------------------------+-------+-----------------+

In addition, during the year the following Gas Sales Agreements (GSA)
were signed in the normal course of business:

-   In November, the joint-venture partners of the B8/32 Project and the
    G4/43 Project (the sellers) signed the Amendment Agreement to the
    B8/32 GSA with PTT (the buyer) to incorporate the G4/43 Project with
    the B8/32 GSA. PTTEPI’s interest in the G4/43 Project was 21.375%,
    and the sales volume remained at 125 MMSCFD.

-   In December, the joint-venture partners of the Unocal I, II, III and
    V Project (the sellers) signed a new GSA with PTT (the buyer), as
    the former GSA was expiring. The total gas sales would rise from 740
    to 1,240 MMSCFD from 2012 onward. PTTEP has a 5% interest in the
    Unocal III Project.

-   On December 27, PTTEP (the seller) signed a supplementary GSA
    covering North Arthit, thereby adding 120 MMSCFD for three years,
    with PTT (the buyer). Production is due to begin in August 2008.

    1.  Property Leases

+--------+------------+--------------------+------+--------------------+
| Con    | Shares in  | Transaction        | 2007 | Necessity and      |
| nected | PTTEP      |                    | V    | Reason             |
| C      |            |                    | alue |                    |
| ompany |            |                    |      |                    |
+--------+------------+--------------------+------+--------------------+
| PTT    | 65.36%     | Office Space       | Mil  | The rates for such |
|        |            | leases and         | lion | space leases and   |
|        |            | services:          | Baht | services were      |
|        |            |                    | 1    | compatible with    |
|        |            | (1) PTTEP agreed   | 8.66 | market rates       |
|        |            | to renew its       |      |                    |
|        |            | office lease with  |      |                    |
|        |            | associated         |      |                    |
|        |            | services to PTT    |      |                    |
|        |            | for 2,800 square   |      |                    |
|        |            | meters for three   |      |                    |
|        |            | years from 15      |      |                    |
|        |            | August 2006 to 14  |      |                    |
|        |            | August 2009, an    |      |                    |
|        |            | additional         |      |                    |
|        |            | 201-s              |      |                    |
|        |            | quare-meter-office |      |                    |
|        |            | lease contract for |      |                    |
|        |            | three years, from  |      |                    |
|        |            | 1 October 2004 to  |      |                    |
|        |            | 30 September 2007, |      |                    |
|        |            | which was renewed  |      |                    |
|        |            | for another three  |      |                    |
|        |            | years from 1       |      |                    |
|        |            | October 2007 to 30 |      |                    |
|        |            | September 2010.    |      |                    |
+--------+------------+--------------------+------+--------------------+

+--------+------------+--------------------+------+--------------------+
| Con    | Shares in  | Transaction        | 2007 | Necessity and      |
| nected | PTTEP      |                    | V    | Reason             |
| C      |            |                    | alue |                    |
| ompany |            |                    |      |                    |
+--------+------------+--------------------+------+--------------------+
| Aro    | PTT held   | (2) PTTEP leased   | Mil  | The rates for such |
| matics | 48.66% in  | 333 square meters  | lion | space leases and   |
| (Tha   | ATC¹ and   | of office space    | Baht | services were      |
| iland) | 65.36% in  | and associated     | 2.72 | compatible with    |
| Plc    | PTTEP      | services to ATC¹   |      | market rates       |
|        |            | for 3 years from 1 |      |                    |
| (ATC)  |            | October 2004 to 30 |      |                    |
| ¹      |            | September 2007,    |      |                    |
|        |            | which was renewed  |      |                    |
|        |            | for another 3      |      |                    |
|        |            | years from 1       |      |                    |
|        |            | October 2007 to 30 |      |                    |
|        |            | September 2010.    |      |                    |
+--------+------------+--------------------+------+--------------------+
| PTT    | 65.36%     | Land lease         | Mil  | A third party was  |
|        |            |                    | lion | commissioned to    |
|        |            | PTT formally       | Baht | assess and         |
|        |            | leased 2.72 Rai of | 5.49 | calculate this     |
|        |            | Land (about 4,344  |      | lease              |
|        |            | square meters) to  |      |                    |
|        |            | PTTEP.             |      |                    |
+--------+------------+--------------------+------+--------------------+

11.1.3 Service Agreement with PTT ICT Solutions Co., Ltd.

  ----------- ------------- -------------------- --------- --------------------
  Connected   Shares in     Transaction          2007      Necessity and Reason
  Company     PTTEP                              Value     

  PTT ICT     PTTEP held    PTTEP Board of       Million   This was in
  Solutions   20% in PTT    Directors, at        Baht      compliance with the
  Co., Ltd.   ICT along     Meeting No.          105.54    ICT policy under the
              with PTT and  10/2549/254 on                 PTT Group management
              three         September 29, 2006,            concept for synergy
              companies     passed the                     
              under PTT     resolution for PTTEP           
              Group,        to sign the service            
              including,    agreement with PTT             
              ATC¹ Plc, PTT ICT to provide all             
              Chemical Plc, information and                
              and Thai Oil  communication                  
              Plc, each     technology services            
              holding 20%   (ICT services) for             
                            the Company for a              
                            5-year term,                   
                            starting from July             
                            1, 2006. Total                 
                            service charge for             
                            PTTEP portion will             
                            be approximately               
                            Baht 702 million.              
  ----------- ------------- -------------------- --------- --------------------

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)".

11.2 Procedure for approving connected transactions

PTTEP’s Board considers all transactions that may involve conflicts of
interest, including related or connected transactions, to ensure that
they are in compliance with sound business ethics and meet the scrutiny
of the Audit Committee. As well, the Board supervises all transactions
to see that they meet the criteria of SET and the Securities and
Exchange Commission. Information disclosure on potential conflicts must
be considered by the Board to ensure accurate and adequate disclosure.

PTTEP has clearly set up a policy on conflict of interest, covering the
procedures to report such conflicts, in order to ensure the Board and
employees strictly comply with the principles concerned. In addition,
for any transactions in which directors, employees or related persons
could derive personal benefit from entering into transactions with the
company, the Board and employees are not permitted to participate in the
approval of such transactions, and the price must be properly defined in
a manner consistent with that offered to the general person.

11.3 Comments of the Audit Committee

PTTEP’s Audit Committee reviewed and determined that the decisions and
actions taken by the Board of Directors or the Management, or both, were
based on the appropriateness and fairness of all connected transactions
that occurred in 2007

4.  Future Connected Transactions

All future connected transactions will be conducted as part of the
normal course of business with neither special favors nor transfers of
benefits between PTTEP and its subsidiaries or any connected person.
PTTEP will strictly comply with the regulations of the Stock Exchange of
Thailand and other regulatory authorities related to connected
transactions, based on reasonableness, appropriateness and fairness, and
for the utmost benefit of all shareholders and stakeholders, which is
consistent with PTTEP good corporate governance policy.