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  13. Connected Transaction

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13.1 Connected Person

13.1.1 Between PTTEP and PTT Affiliated Companies

+---------------+-----------------+-----------------+-----------------+
| Item          | PTTEP           | PTT Plc.        | Thai Olefins    |
|               |                 |                 | Plc. (TOC)      |
+---------------+-----------------+-----------------+-----------------+
| List of       | Position        | Position        | Position        |
| Directors     |                 |                 |                 |
| Involved      |                 |                 |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr. Manu      | Chairman of the | Director        | Chairman of the |
| Leopairote    | Board           |                 | Board           |
+---------------+-----------------+-----------------+-----------------+
| Mr. Prasert   | Director        | President       | Director        |
| Bunsumpun     |                 |                 |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr. Pala      | Director        | Director        |   Director      |
| Sookawesh     |                 |                 |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr. Pichai    | Director        | Senior          |   Director      |
| Chunhavajira  |                 | Executive Vice  |                 |
|               |                 | President,      |                 |
|               |                 | Corporate       |                 |
|               |                 | Finance and     |                 |
|               |                 | Accounting      |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr.           | Director        | Senior          |   -             |
| Chitrapongse  |                 | Executive Vice  |                 |
| Kwangsukstith |                 | President, Gas  |                 |
|               |                 | Business Group  |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr. Chakrawut | Director        | Director        |   -             |
| Salyabong     |                 |                 |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr.Cherdpong  | Director        | Chairman of the |   -             |
| Siriwit       |                 | Board           |                 |
+---------------+-----------------+-----------------+-----------------+
| Mr.Wisudhi    | Director        | Director        |   -             |
| Srisuphan     |                 |                 |                 |
+---------------+-----------------+-----------------+-----------------+
| Affiliation   | -   PTT holds   | -   PTT is the  | -   PTT, the    |
|               |     63.61 %     |     shareholder |     major       |
|               |     share in    |     of PTTEP    |     shareholder |
|               |     PTTEP       |     and TOC     |     of PTTEP,   |
|               |                 |                 |     holds 44.92 |
|               | -   Some        |                 |     % share in  |
|               |     Directors   |                 |     TOC         |
|               |     sit on both |                 |                 |
|               |     the PTT’s   |                 | -   Some        |
|               |     and PTTEP’s |                 |     Directors   |
|               |     Board of    |                 |     sit on both |
|               |     Directors   |                 |     PTTEP’s and |
|               |                 |                 |     TOC’s Board |
|               |                 |                 |     of          |
|               |                 |                 |     Directors   |
+---------------+-----------------+-----------------+-----------------+

13.1.2 Within PTTEP Affiliated Companies

+--------+-----------+-----------+-----------+-----------+-----------+
| List   | PTTEP     | PTTEPI    | PTTEPO    | PTTEP KV  | PTTEP SV  |
+--------+-----------+-----------+-----------+-----------+-----------+
| List   | Position  | Position  | Position  | Position  | Position  |
| of     |           |           |           |           |           |
| Di     |           |           |           |           |           |
| rector |           |           |           |           |           |
| In     |           |           |           |           |           |
| volved |           |           |           |           |           |
+--------+-----------+-----------+-----------+-----------+-----------+
|   Mr.  | President | President |           |           |           |
| Maroot |           |           |  Chairman |  Chairman |  Chairman |
|   Mr   | Director  | Director  |   of the  |   of the  |   of the  |
| igadat | &         | &         |   Board   |   Board   |   Board   |
|        |           |           |           |           |           |
|        | Secretary |           |           |           |           |
|        | of the    | Secretary | President | President | President |
|        | Board     |   of the  |           |           |           |
|        |           |   Board   |   &       |   &       |   &       |
|        |           |           |           |           |           |
|        |           |           | Secretary | Secretary | Secretary |
|        |           |           |   to the  |   to the  |   to the  |
|        |           |           |   Board   |   Board   |   Board   |
+--------+-----------+-----------+-----------+-----------+-----------+
| Mr     | Vice      | Director  | Director  | -         | -         |
| .Tevin | President |           |           |           |           |
| Vong   |           |           |           |           |           |
| vanich |           |           |           |           |           |
+--------+-----------+-----------+-----------+-----------+-----------+
| Mr     | Vice      | -         |           |           |           |
| .Suwit | President |           |  Director |  Director |  Director |
| Pit    |           |           |           |           |           |
| rchart |           |           |           |           |           |
+--------+-----------+-----------+-----------+-----------+-----------+
| Affil  | -   Some  | -   PTTEP | -   PTTEP | -         | -         |
| iation |     e     |     holds |     holds |    PTTEPO |    PTTEPO |
|        | xecutives |     100%  |     75 %  |     holds |     holds |
|        |     are   |           |           |     100 % |     100%  |
|        |           |    shares |    shares |           |           |
|        | directors |     in    |     and   |    shares |    shares |
|        |     of    |           |           |     in    |     in    |
|        |     both  |    PTTEPI |    PTTEPI |           |           |
|        |           |           |     holds |   PTTEPKV |   PTTEPSV |
|        |    PTTEPI |           |     25%   |           |           |
|        |     and   |           |     in    |           |           |
|        |           |           |           |           |           |
|        |    PTTEPO |           |    PTTEPO |           |           |
+--------+-----------+-----------+-----------+-----------+-----------+

+-----------+-------------+-------------+-------------+-------------+
| List      | PTTEP HV    | PTTEP HL    | PTTEP ME    | PTTEPAG     |
+-----------+-------------+-------------+-------------+-------------+
| List of   | Position    | Position    | Position    | Position    |
| Director  |             |             |             |             |
| Involved  |             |             |             |             |
+-----------+-------------+-------------+-------------+-------------+
|           | Chairman of | Chairman of | Chairman of | Chairman of |
| Mr.Maroot | the Board   | the Board   | the Board   | the Board   |
|           |             |             |             |             |
|  Mrigadat | President   | President   | President   | President   |
|           |             |             |             |             |
|           | Secretary   | Secretary   | Secretary   | Secretary   |
|           | to the      | to the      | to the      | to the      |
|           | Board       | Board       | Board       | Board       |
+-----------+-------------+-------------+-------------+-------------+
| Mr.Suwich |   Director  |   Director  |   Director  | Director    |
| Pitrchart |             |             |             |             |
+-----------+-------------+-------------+-------------+-------------+
| Af        | -   PTTEPO  | -   PTTEPO  | -   PTTEPO  | -   PTTEPO  |
| filiation |     holds   |     holds   |     holds   |     holds   |
|           |     100 %   |     100 %   |     100 %   |     100 %   |
|           |     in      |     in      |     in      |     in      |
|           |     PTTEP   |     PTTEP   |     PTTEP   |     PTTEP   |
|           |     HV      |     HL      |     ME      |     AG      |
+-----------+-------------+-------------+-------------+-------------+

13.2 Connected Transactions

PTTEP’s transactions in 2003 qualified as items under the Stock Exchange
of Thailand announcement on the disclosure of information and operations
of listed companies on connected transactions B.E. 2546 (2003). As all
these items occurred before the announcement came into enforcement, the
Company followed the previous practice, namely that the Board of
Directors or the management, or both, considered the appropriateness and
maximum benefit of the Company, including the disclosure of these items.
Details appear below:

13.2.1 Regular commercial items with market-based prices were endorsed
by the Board of Directors or the management.

  1. Petroleum product sales

According to sale agreements, petroleum product sales between PTT and
PTTEP instantly happens upon production, and petroleum delivery is
covered for the entire life of the project. In 2003, approximately
96.92% of PTTEP’s petroleum products were sold to PTT at the same price
as its partners. Details are shown below:

Unit of Value: million baht

+--------------------------------------+---------------+---------------+
| Product                              | 2002          |               |
+--------------------------------------+---------------+---------------+
|                                      | Volume        | Value         |
+--------------------------------------+---------------+---------------+
| Crude Oil (million barrels)          | 2.1           | 2,255         |
+--------------------------------------+---------------+---------------+
| Natural Gas (million cubic feet)     | 196,544       | 24,882        |
+--------------------------------------+---------------+---------------+
| LPG (metric tons)                    | 25,226        | 260           |
+--------------------------------------+---------------+---------------+
| Condensate (million barrels)         | 4.99          | 5,603         |
+--------------------------------------+---------------+---------------+

In addition, PTTEP and the consortium of the Arthit Project signed the
Gas Sales Agreement (GSA) with PTT Plc. The first gas production is
expected in 2006.

 2. Pailin Project gas price discounts

On October 10, 2003, the Pailin Project consortium signed with PTT an
amendment to the Gas Sales Agreement covering the deal to reduce the
Pailin gas price by 3%, effective from October 1 of the same year to the
date when PTT’s Third Pipeline in the Gulf of Thailand is completed
(around early 2006). In return, PTT agreed to raise the Pailin Daily
Contract Quantity (DCQ) from 330 to 353 million standard cubic feet per
day (MMSCFD). On this signing date, the consortium paid PTT a cash
amount of Baht 410 million as part of the discount. The Pailin gas price
discount will grow to 5% from the date of completion of the Third
Pipeline to the expiry date of the Agreement, for which PTT agreed in
return to raise the DCQ from 353 to 368 MMSCFD.

3. PTTEP’s guaranty for subsidiary’s oil price hedging contracts

PTTEP Offshore Investment Company Limited, a subsidiary of PTTEP, has
executed oil price hedging contracts to guarantee the selling price for
its petroleum products from various PTTEP projects in the amount of
450,000 BBL to mitigate risks from oil price fluctuations. PTTEP, as the
parent company, is the guarantor for the contracts, which is considered
as ordinary business within the PTTEP group.

4. Deferred income

Deferred income arises from PTTEPI receipt of advance payments from PTT
for natural gas that PTT was not yet able to take receipt of in
1998-2001, in accordance with the volumes stimulated in the gas sales
contract of the Yadana and Yetagun Project. PTTEP will recognize the
deferred income when PTT takes receipt of the gas in the future years.
Please see details in item 16 of Notes to Consolidated and Company
Financial Statements.

13.2.2 Assets and service

Office Space Rental: PTTEP has agreed to extend the office lease and
service agreement to PTT and to Thai Olefins Plc. (TOC). The lease term
is for 3 years from August 15, 2003 to August 14, 2006 and August 1,
2003 to July 31, 2006, respectively.

Unit of Value : Baht

+----------------------------+--------------------+-------------------+
| Organization/Company Name  | Item               | 2003 Renta        |
|                            |                    | l and Service Fee |
+----------------------------+--------------------+-------------------+
| The Petroleum A            | Office Space R     | 17,136,000        |
| uthority of Thailand (PTT) | ental and Service  |                   |
+----------------------------+--------------------+-------------------+
| Thai Olefins Plc. (TOC)    | Office Space       | 4,717,800         |
|                            | Rental and Service |                   |
+----------------------------+--------------------+-------------------+

The management based its consideration on market rents and on the fact
that the lease renewals in question contained clear statements on
compensation and renewals.

Regarding the use of 2 rai of land and 286 square wah, which was part of
PTT’s rented land from the State Railways of Thailand, this item was
disclosed in previous years, and since PTTEP had not paid any
compensation, this item was not regarded as a connected transaction of
any value.

3.  Financial assistance involving subsidiary companies or loans

Loans provided to these units by PTTEP were regarded by the management
as reasonable and suitable since such loans were provided at the cost of
funds, and the interest rates were in line with the sources of funds.

Details of loans outstanding among PTTEP’s subsidiaries as of December
31, 2003;

1)  PTTEP International Limited borrowed from PTT Exploration and
    Production Public Company Limited Baht 1,978.98 million at an
    interest rate of 4.625% per annum.

2)  PTTEP Offshore Investment Company Limited borrowed from PTTEP
    International Limited Baht 4,892.65 million and USD 174.97 million
    at an interest rate of 7.625% per annum and at 4.625% per annum from
    December 1, 2003 onwards.

3) PTTEP Southwest Vietnam Company Limited borrowed from PTTEP Offshore
Investment Company Limited USD 6.92 million at an interest rate of
7.625% per annum and at 4.625% per annum from December 1, 2003 onwards.

4) PTTEP Kim Long Vietnam Company Limited borrowed from PTTEP Offshore
Investment Company Limited USD 9.89 million at an interest rate of
7.625% per annum and at 4.625% per annum from December 1, 2003 onwards.

5) PTTEP Hoan-Vu Company Limited borrowed from PTTEP Offshore Investment
Company Limited USD 50.57 million at an interest rate of 7.625% per
annum and at 4.625% per annum from December 1, 2003 onwards.

6) PTTEP Hoang-Long Company Limited borrowed from PTTEP Offshore
Investment Company Limited USD 20.80 million at an interest rate of
7.625% per annum and at 4.625% per annum from December 1, 2003 onwards.

7) PTTEP Middle East Company Limited borrowed from PTTEP Offshore
Investment Company Limited USD 7.39 million at an interest rate of
7.625% per annum and at 4.625% per annum from December 1, 2003 onwards.

8) PTTEP Algeria Company Limited borrowed from PTTEP Offshore Investment
Company Limited USD 0.0025 million at an interest rate of 7.625% per
annum and at 4.625% per annum from December 1, 2003 onwards.

13.3 Comments of the Audit Committee

PTTEP’s Audit Committee acknowledged and agreed with the decisions and
action taken by the Board of Directors or the management, or both, based
on the appropriateness and suitability of all connected transactions
occurring in 2003.

13.4 Future Connected Transactions

PTTEP will strictly comply with the regulations of the Stock Exchange of
Thailand or any other regulatory authorities with regard to connected
transactions concerning persons/parties with conflict of interest in the
future for the maximum benefit of all shareholders.