9. Management

9.1 Management Structure

PTTEP is governed by the Board of Directors and has additional five
standing sub-committees, namely the Corporate Governance Committee, the
Audit Committee, the Remuneration Committee, the Nominating Committee, ,
and the Risk Management Committee.

9.1.1 The Board of Directors (“The Board”): The Board has the authority
and the responsibility of providing the Company with directions on good
corporate governance, corporate policy, strategic plan, vision, and
annual budget for its operating plans; appointing or replacing PTTEP
Management; and monitoring and following up on Company performance. The
following matters, however, require approval by a shareholders’ meeting
with a total 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 whole of essential parts of any PTTEP
business to other entities

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

(3) Creation, amendment, or termination of contracts dealing with the
granting of a lease of the whole or essential parts of any PTTEP
business, the assignment to any other person(s) to manage the Company or
the merger of the Company with any other entity to share profits and
losses

(4) Amendment of the Memorandum or Articles of Association

(5) Increase or reduction of registered capital, debentures issuance,
company amalgamation, and company dissolution

(6) A case in which PTTEP or its subsidiaries decide to enter into a
connected transaction or a transaction concerning the acquisition or
disposition of material assets of PTTEP or its subsidiaries, as defined
in the Notification of the Securities Exchange of Thailand (SET) which
applies to a connected transaction of a listed company.

The Board consists of 15 Directors with details of current ones and one
Director who retired during the year shown in Attachment 1.

Director’ changes in number of shares held and Board Meeting attendances
in 2006 are summarized below:

+---------------------+----+----+-----+-----+--------+--------+------+
| Director            | As |    | C   | Num | Total  | Number | Time |
|                     | of |    | han | ber | Comp   | of     | of   |
|                     |    |    | ge© | of  | ensati | Atte   | At   |
|                     | De |    |     | Wa  | on^($) | ndance | tend |
|                     | ce |    |     | rra |        |        | ance |
|                     | mb |    |     | nts | (Baht) | /Total |      |
|                     | er |    |     |     |        | M      |      |
|                     | 3  |    |     |     |        | eeting |      |
|                     | 1© |    |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
|                     | 2  | 2  |     |     |        |        |      |
|                     | 00 | 00 |     |     |        |        |      |
|                     | 5* | 6* |     |     |        |        |      |
|                     | ** | ** |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 1. Mr. Cherdpong    | -  | -  | -   | -   | 2,861, | 14/14  | 8    |
| Siriwit             |    |    |     |     | 680.33 |        | 3.58 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 2. Mr. Vidhibhandhu | -  | -  | -   | -   | 2,383, | 11/14  | 4    |
| Vichairatana^(@)    |    |    |     |     | 094.26 |        | 7.43 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 3. Mr. Charnchai    | -  | -  | -   | -   | 2,551, | 14/14  | 9    |
| Musignisakorn^(@)   |    |    |     |     | 844.26 |        | 6.79 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 4. Mr. Krairit      | -  | 4, | 4,0 | -   | 2,289, | 14/14  | 9    |
| Nilkuha^(@)         |    | 00 | 00® |     | 344.26 |        | 4.85 |
|                     |    | 0® |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 5. Mr. Chulasingh   | -  | -  | -   | -   | 2,389, | 13/14  | 7    |
| Vasantasingh^(@)    |    |    |     |     | 344.26 |        | 3.05 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 6. Mr. Pichai       | 17 | 26 | 9,  | -   | 2,339, | 11/14  | 6    |
| Chunhavajira        | ,0 | ,5 | 500 |     | 344.26 |        | 3.30 |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 7. General Lertrat  | -  | -  | -   | -   | 2,539, | 13/14  | 7    |
| Ratanavanich^(@)    |    |    |     |     | 344.26 |        | 5.76 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 8. Mr.Sirin         | -  | -  | -   | -   | 25,000 | -      | -    |
|   Nimmanahaeminda   |    |    |     |     |        |        |      |
| **^(@)              |    |    |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 9. Mr. Chitrapongse | 2  | 1  | (6  | 7,  | 2,339, | 13/14  | 6    |
| Kwangsukstith       | 29 | 68 | 0,8 | 560 | 344.26 |        | 9.84 |
|                     | ,0 | ,2 | 00) |     |        |        |      |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 10. Mr. Pala        | 8  | 9  | 1,  | -   | 2,239, | 11/14  | 5    |
| Sookawesh           | ,5 | ,5 | 000 |     | 344.26 |        | 3.54 |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 11. Mr. Tongchat    | -  | -  | -   | -   | 1,787, | 11/11  | 8    |
| Hongladaromp*       |    |    |     |     | 665.62 |        | 8.70 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 12. Mr. Prasert     | 75 | 85 | 9,  | -   | 2,364, | 14/14  | 7    |
| Bunsumpun           | ,5 | ,0 | 500 |     | 344.26 |        | 1.43 |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 13. Mr. Manu        | -  | -  | -   | -   | 2,264, | 13/14  | 6    |
| Leopairote          |    |    |     |     | 344.26 |        | 6.32 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 14. Mr. Wisudhi     | -  | -  | -   | -   | 2,239, | 12/14  | 5    |
| Srisuphan           |    |    |     |     | 344.26 |        | 8.19 |
+---------------------+----+----+-----+-----+--------+--------+------+
| 15. Mr. Maroot      | 1  | 3  | 2   | 77, | 2,289, | 14/14  | 100  |
| Mrigadat            | 43 | 69 | 26, | 100 | 344.26 |        |      |
|                     | ,0 | ,5 | 500 |     |        |        |      |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| Ex-director in 2006 |    |    |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 1. Mr. Anucha       | 26 | 35 | 9,  | -   | 6      | 3/3    | 100  |
| S                   | ,0 | ,0 | 000 |     | 81,170 |        |      |
| ihanatkathakul^(@#) | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+
| 2. Mr. Prasit       | 17 | 26 | 9,  | -   | 2,166, | 13/13  | 9    |
| Kovilaikool^(@##)   | ,5 | ,5 | 000 |     | 724.68 |        | 6.92 |
|                     | 00 | 00 |     |     |        |        |      |
+---------------------+----+----+-----+-----+--------+--------+------+

$ Retainer allowance, meeting allowance, and Director bonus for 2006
(paid in 2007)

^(#) Expiration of the term of service on April 6, 2006

^(##) Resigned on November 17, 2006

* Assumed directorship on April 6, 2006

** Assumed directorship on December 20, 2006

*** On April 5, 2006, the shareholders’ meeting approved the adjustment
of par value from 5 Baht to 1 Baht per share, to take effect on the
number of shares from 24 April 2009

@ Independent Director

© Includes shares of spouses and children who have not yet become sui
juris

® All shares belongs to his spouses

9.1.2 Subcommittees: The Board appointed subcommittees consisting of
suitable knowledgeable persons to screen particular issues on their
behalf. In 2006 there were five of them, all reporting to the Board.

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

(a) Establishing policies and directions for good corporate governance
(CG) practice, along with business ethics, and proposing the Board’s
approval for implementation at all levels

(b) Ensuring that the Company’s operation and actions of the Board,
subcommittees, the Management, and employees align with (a)

(c) Assessing and revising policies, directions, business ethics,
together with Company guidelines on CG, in an effort to comply with
international guidelines and recommendations by other institutes, and
proposing to the Board for approval

(d) Monitoring the movement and trends, and benchmark Company practice
with leading companies

(e) Supervising and promoting actions under (a) for ongoing
effectiveness and alignment with Company business

(f) Making recommendations for the Company, the Board, the Management,
and the task force on CG

(g) Regularly reporting CG matters to the Board and immediately
reporting critical matters, that may affect the company’s reputation and
image, as well as providing its views on practical aspects and
recommendations for modification as needed

(h) Disclosing information about CG at PTTEP for stakeholders and in the
annual report with prior approval by the Board.

The Corporate Governance Committee consists of three independent
directors:

- Mr. Vudhibhandhu Vichairatana Chairman of the Corporate Governance
Committee

- Mr. Charnchai Musignisakorn Member of the Corporate Governance
Committee

- General Lertrat Ratanavanich Member of the Corporate Governance
Committee

In 2006, there are altogether 3 meetings of the Corporate Governance
Committee and every member of the Committee attends in every meeting.

  (2) The Audit Committee has the following responsibilities:

(a) 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

(b) 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

(c) 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

(d) 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

(e) To consider, select and propose the appointment of PTTEP’s external
    auditors, including their fees

(f) To approve the appointment, rotation, performance appraisal and
    reward / punishment for the Head of the department responsible for
    auditing

  (g) To consider and approve the annual audit plan

(h) To consider the budget and manpower of the audit unit

(i) To ensure that the Chairman of the Audit Committee, or a Director to
the Audit Committee, attends the Shareholders’ meetings to clarify any
matters pertaining to the Audit Committee or the appointment of the
external auditors

  (j) To review the Audit Committee Charter annually

(k) To undertake other assignments for the Board of Directors including
the appointment of the Head of the Internal Audit or Corporate Secretary
to be Secretary of the Audit Committee

The Audit Committee consists of three independent directors:

- Mr. Charnchai Musiknisakorn Chairman of the Audit Committee

- General Lertrat Ratanavanich Member of the Audit Committee

- Mr. Chulasingh Vasantasingh Member of the Audit Committee

General Lertrat Ratanavanich was appointed by the Board on March 17,
2006 in replacement of Mr. Anucha Sihanatkathakul, effective from April
6, 2006. Mr. Chulasingh Vasantasingh was appointed by the Board on
December 15, 2006 in replacement of Mr. Prasit Kovilaikool, who resigned
on November 17, 2006.

In 2006, there are altogether 6 meetings of the Audit Committee and
every member of the Committee attends in every meeting.

  (3) The Remuneration Committee has the following responsibilities:

(a) To evaluate the performance of the Board of Directors,
Sub-Committee, President according to each year's performance agreement.

(b) To recommend guidelines in determining the remuneration package of
the Board of Directors and Sub-Committee, including meeting fees, bonus
and other fringe benefits both in monetary and non-monetary term. The
remuneration principles are established fairly and decently in order to
propose at Shareholders' Meeting.

(3) To recommend guidelines in determining the remuneration package of
President , including salary, bonus and other fringe benefits both in
monetary and non-monetary term and recommend the remuneration structure
of Executives. The remuneration principles are established fairly and
decently in order to propose at the Board of Directors' Meeting.

(4) To review the remuneration package of the Directors, Sub-Committee,
President and the remuneration structure of Executives according to the
work performance, the company's performance, the practices guidelines of
the industry and leading listed companies in the Stock Exchange of
Thailand, as well as related to the scope of duties and
responsibilities.

(5)  To perform any other scope of duties and responsibilities assigned
by the Board.

The Remuneration Committee consists of three Directors, the majority of
whom are independent ones, and the Chairman must be an independent
director, as follows:

- Mr. Krairit Nilkuha Chairman of the Remuneration Committee

and Independent Director

- Mr. Sirin   Nimmanahaeminda  Member of the Remuneration Committee and
Independent Director

- Mr. Pala Sookawesh Member of the Remuneration Committee

Mr. Krairit Nilkuha was appointed by the Board on March 17, 2006 in
replacement of Mr. Anucha Sihanatkathakul, effective from April 6, 2006.
At the meeting on December 15, 2006, the Board appointed Mr. Pala
Sookawesh to replace Mr. Prasert Bunsumpun, who resigned on November 15,
2006 and Mr. Sirin   Nimmanahaeminda to replace Mr. Prasit Kovilaikool,
who resigned on November 17, 2006 as well as Mr. Krairit Nilkuha ,
Member of the Remuneration Committee, to be the Chairman of the
Remuneration Committee, effective from the meeting date, except for the
effective date of Mr. Sirin   Nimmanahaeminda, which was the date he
accepted the directorship on December 20, 2006.

In 2006, there is no meeting of the Remuneration Committee since the
number of members was less than the requirement of the Remuneration
Committee Charter B.E. 2006

(4) The Nominating Committee: has the following responsibilities:

(a) Formulating a transparent and standard process for Director or
President selection

(b) Shortlisting candidates for appointment as new Directors or
President, and proposing their names to shareholders’ or Board meetings

(c) Preparing the names of shortlisted candidates for Directors or
President or when there is a Director or President vacancy, or both

(d) Developing performance agreements (PAs) each year for the Board,
committees, and the President, and developing their annual performance
assessment forms for consideration by the Board

(e) Nominating candidates for Directors to the committees for
consideration by the Board to fill vacancies

(f) Disclosing its own performance in the Company’s annual report

(g) Performing any other assignment for the Board, relevant to the
selection of Directors or President.

The current Nominating Committee consists of three Directors, the
majority of whom are independent ones, and the Chairman must be an
independent director, as follows:

- Mr. Chulasingh Vasantasingh Chairman of the Nominating Committee

and Independent Director

- General Lertrat Ratanavanich Member of the Remuneration Committee and
Independent Director

- Dr. Chitrapongse Kwangsukstith Member of the Remuneration Committee

At Meeting on 17 March 2006, the Board reappointed Mr. Chulasingh
Vasantasingh and General Lertrat Ratanavanich. Dr. Chitrapongse
Kwangsukstith was appointed by the Board on 15 December 2006 to replace
Mr. Prasert Bunsumpun, who resigned on 15 November 2006.

In 2006, there are altogether 4 meetings of the Nominating Committee and
every member of the Committee attends in every meeting.

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

(a) Define the policy framework and processes for risk management and
advice board and management team regarding risk management at corporate
level

(b) Promote and implement 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

(c) Maintain 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 recommend the mitigation strategy to
manage risks to be within the acceptable level

  (d) Ensure adequate level of support is being provided to Risk manager

  (e) Support the monitoring of risks across PTTEP and report to the
  Board

The current Risk Management Committee consists of five Directors, one of
whom is independent director, as follows:

- Mr. Pichai Chunhavajira Chairman of the Risk Management Committee

- Mr. Vudhibhandhu Vichairatana Member of the Risk Management Committee

- Mr. Tongchat Hongladaromp Member of the Risk Management Committee

- Mr. Chitrapongse Kwangsukstith Member of the Risk Management Committee

- Mr. Maroot Mrigadat Member of the Risk Management Committee

At Meeting on 17 March 2006, the Board appointed Mr. Vudhibhandhu
Vichairatana to replace Mr. Anucha Sihanatkathakul, and appointed two
additional members, Mr. Tongchat Hongladaromp and Dr. Chitrapongse
Kwangsukstith, effective from April 6, 2006.

In 2006, there are altogether 4 meetings of the Risk Management
Committee and every member of the Committee attends in every meeting.

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 1998, 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:

-   150 million baht for Corporate procurement and wholly-owned projects

-   Up to each annual budget total, approved by partners under
    joint-operations agreements

-   Up to each annual budget total, 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 Their Nomination

The Board must always consist of at least one-third (or at least five
members) who are Independent Directors. The Company has made the
qualifications of such Directors even more stringent than those defined
by the Securities and Exchange Commission (SEC) and the Stock Exchange
of Thailand (SET), as seen below:

(a) Holds no more than one percent of the paid-up capital of the Company
and its affiliated, associated, or related companies, including the
shares held by his or her spouse, children under legal age, or
nominee(s), and private fund

(b) Is not a Director or an executive of PTT, PTTEP, affiliated,
associated, or related companies; is not an employee, an advisor, an
attorney, an auditor on the payroll(s) of PTT or PTTEP, affiliated,
associated, or other related companies

(c) Has resigned from such a position under (b) for more than two years

(d) Is a Director with no benefits or interests whatsoever in the
finance and management of PTTEP, affiliated, associated, or related
companies of PTT, including such benefits or interests during the period
of two years before appointment to the Board, except where the Board has
ruled that such previous benefits or interests have no bearing on the
performance and the expression of independent views

(e) Is not related to or an immediate relative of any management member
of PTTEP or PTT

(f) Discloses all other relationships that may undermine his or her
independence under the policies on conflicts of interest, contained in
the CG Principles of PTTEP.

Their nominating procedure follows that of PTTEP Directors and
President, detailed under 9.2.1.

5.  Details about Current Company Management appear in Attachment 1.

9.2 Nomination of the Board and Management

9.2.1 Nomination of the Board and President

When there is a Director or President vacancy, the Nominating Committee
is to choose suitable candidates to become a Director or President by
collecting for consideration 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 lacked by the
Board or critical to Company business. To arrive at the ideal
composition of the Board and best benefit the Company, the Nominating
Committee is to scrutinize these qualifications:

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

(2) Knowledge and skills with diverse experience in different fields of
benefit to the Company

(3) Characteristics complementary to GCG so as to benefit Company
business, 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 other
persons and the Company has added another channel for this purpose, that
is, nominating a person or persons between October 1 and December 30 of
each year. This has been made known to investors through SET’s
information channel and the Company’s website. The website also contains
rules for nominating Director candidates, together with a Director
nomination form, for minority shareholders’ use.

(2) Should the number of Director candidates not exceed the number to be
elected, the shareholders’ meeting is to elect those 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 for Directors 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 the number of open positions may
accommodate.

For other reasons when Director positions become vacant, the Board is to
elect new Directors through at least a three-fourth majority vote. 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 any person(s) with knowledge,
capability, and experience in Company business to the management rank in
compliance with PTTEP personnel administration regulations, and is to
report to the Board for acknowledgement. An exception is for the Vice
President positions, which need the Board’s prior approval. For
appointments of those from outside the Company, they must pass an
interview by the interview committee. In addition, any appointment of
internal audit department manager requires prior approval from the Audit
Committee.

9.3 Compensation of the Board and Management

9.3.1 Directors’ Compensation

+------------------+------+------------------+-------+-----------------+
| Compensation^(@) | 2005 |                  | 2006  |                 |
|                  |      |                  | ⁽³⁾   |                 |
+------------------+------+------------------+-------+-----------------+
|                  | Nu   | Total Amount     | N     | Total Amount    |
|                  | mber | (Baht)           | umber | (Baht)          |
+------------------+------+------------------+-------+-----------------+
| Meeting and      | 16   | 11,275,000       | 1     | 10,943,750      |
| Retainer Fee*    | ^(#) |                  | 7^(#) |                 |
+------------------+------+------------------+-------+-----------------+
| Bonus            |      | 24,518,302.27⁽¹⁾ |       | 2               |
|                  |      |                  |       | 4,806,871.75⁽²⁾ |
+------------------+------+------------------+-------+-----------------+
| Other            |      | -                |       | -               |
| compensation     |      |                  |       |                 |
+------------------+------+------------------+-------+-----------------+
| Total            |      | 35,793,302.27    |       | 35,750,621.75   |
+------------------+------+------------------+-------+-----------------+

@Criteria for payment of Directors’ compensation appear in 9.4.5 (6) (a)

(1) Includes bonus for 2005, paid in 2006

(2) Includes bonus for 2006, paid in 2007

(3) See details of each Director on page 46

# The President also receives compensation for Senior Management, shown
in (9.3.2)

* Including the retainer fee and meeting fee of the Board and
Sub-Committee

2.  Senior Management’s Compensation

+---------------+-------+---------------+--------+-------------------+
|               | 2005  |               | 2006   |                   |
+---------------+-------+---------------+--------+-------------------+
|               | N     | Total Amount  | Number | Total Amount      |
|               | umber | (Baht)        |        | (Baht)            |
+---------------+-------+---------------+--------+-------------------+
| Salary        | 12    | 46,878,192.00 | 14     | 58,161,530.00     |
+---------------+-------+---------------+--------+-------------------+
| Bonus         |       | 22,129,817.00 |        | 26,359,532.00     |
+---------------+-------+---------------+--------+-------------------+
| Other         |       | 6,680,653.20  |        | 8,337,829.50      |
| compensation* |       |               |        |                   |
+---------------+-------+---------------+--------+-------------------+
| Total         |       | 75,688,662.20 |        | 92,858,891.50     |
+---------------+-------+---------------+--------+-------------------+

* Provident Fund

Please refer to warrants of the ESOP program on page 57

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                       | Number |       | Change in  | Number   |
|                            | of     |       |            | of       |
|                            | Shares |       | Number of  |          |
|                            | as of  |       | Shares     | PTTEP    |
|                            | 31     |       |            | Warrants |
|                            | De     |       |            |          |
|                            | cember |       |            |          |
+----------------------------+--------+-------+------------+----------+
|                            | 20     | 200   |            |          |
|                            | 05^(#) | 6^(#) |            |          |
+----------------------------+--------+-------+------------+----------+
| 1. Mr. Maroot Mrigadat     | 1      | 36    | 226,500    | 77,100   |
|                            | 43,000 | 9,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 2. Mr. Suwit Pitrchart     | 89,000 | 17    | 86,000     | 61,700   |
|                            |        | 5,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 3. Mr. Tevin Vongvanich    | 1      | 14    | 45,000     | 61,700   |
|                            | 02,000 | 7,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 4. Mr. Somkiet Janmaha     | 1      | 24    | 92,400     | 44,720   |
|                            | 57,500 | 9,900 |            |          |
+----------------------------+--------+-------+------------+----------+
| 5. Mr. Asdakorn Limpiti    | 1      | 19    | 37,000     | 44,800   |
|                            | 57,500 | 4,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 6. Mr. Poawpadet Vorabutr  | -      | 2     | 28,400     | 44,720   |
|                            |        | 8,400 |            |          |
+----------------------------+--------+-------+------------+----------+
| 7. Mr. Chatchawal Eimsiri  | -      | 1     | 10,000     | 44,800   |
|                            |        | 0,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 8. Mr. Somporn             | 1      | 15    | 32,000     | 44,900   |
| Vongvuthipornchai          | 18,500 | 0,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 9. Mr. Nipit Isarankura    | 57,500 | 5     | (7,500)    | 77,800   |
|                            |        | 0,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 10. Mr. Prisdapunt         | 2      | 31    | 41,500     | 43,500   |
| Pojanapreecha              | 70,000 | 1,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 11. Mr. Suppamas           | 25,500 | 12    | 98,000     | 43,500   |
| Prachakvej                 |        | 3,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 12. Mr. Luechai            | 20,500 | 3     | 17,700     | 42,060   |
| Wongsirasawad              |        | 8,200 |            |          |
+----------------------------+--------+-------+------------+----------+
| 13. Mr. Suraphong Iamchula | -      | 6     | 63,300     | 37,940   |
|                            |        | 3,300 |            |          |
+----------------------------+--------+-------+------------+----------+
| 14. Mr. Chalermkiat        | -      | 1     | 15,000     | 41,320   |
| Tongtaow                   |        | 5,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 15. Mr. Somchai            | -      | 8     | 80,000     | 30,300   |
| Manopinives^(*)            |        | 0,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 16. Mr. Anutra Bunnag      | 15,000 | 3     | 23,000     | 21,700   |
|                            |        | 8,000 |            |          |
+----------------------------+--------+-------+------------+----------+
| 17. Mr. Sermsak            | -      | 1     | 17,500     | 11,800   |
| Satchawannakul ^(**)       |        | 7,500 |            |          |
+----------------------------+--------+-------+------------+----------+
| 18. Mr. Chaiyaphon         | 20,500 | 5     | 36,000     | 93,500   |
| Chirakorn                  |        | 6,500 |            |          |
+----------------------------+--------+-------+------------+----------+

^(#) On April 5, 2006, the shareholders’ meeting approved the adjustment
of par value from 5 Baht to 1 Baht per share, to take effect on the
number of shares from 24 April 2009

^(*) Appointed on May 1, 2006

^(**)Appointed on August 1, 2006

9.4 Good Corporate Governance

9.4.1 Rights of Shareholders

Recognizing the rights of all shareholders, PTTEP has taken actions 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 notices containing agenda details and
related appendices together with the opinions of the Board, proxy forms
determined by the Ministry of Commerce, a list of all Independent
Directors, and a map showing the meeting venue. These notices 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 before receiving the notice
by mail. As a rule, PTTEP allows registration of shareholders at least
an hour prior to each meeting.

(2) Before each meeting, the Chairman explains clearly how ballots are
cast and counted under Company regulations. The Company keeps 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, the Company
conducts balloting for each agenda separately.

(3) Allocating a suitable period of 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.

(4) The meeting 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 subcommittees may address relevant questions and concerns,
posed by shareholders (if any).

(6) The Company regularly disseminates information to shareholders via
the Stock Exchange of Thailand’s (SET) channel, medias and publications,
including its website.

(7) The Company sets up a channel for minor shareholders, to contact
Independent Directors directly via E-mail addresses concerning matters
of Directors’ activities, good corporate governance and audit matters.
Apart from these channels, minor shareholders can directly contact the
Company Secretary or the Investor Relations unit.

(8) The Company explicitly discloses shareholding structures in
affiliated and subsidiary companies so that shareholders feel confident
of transparent management structures that are open to scrutiny.

(9) The Company conducts its business efficiently for the growth of the
Company 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, announced
to all investors via SET’s news portal and Company’s website up to five
months ahead. Criteria for agenda proposals and screening processes are
clearly defined on the Company’s website.

(2) Allowing each shareholder to propose director nominee who must meet
the qualifications of Company directorship and must have given their
consent so that the Company may process further via the Nominating
Committee. The Company announces the director nominee proposal to all
investors via SET’s news portal and Company’s website five months ahead
of the Annual General Shareholders’ Meeting. The criteria for 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 notice and not adding agenda items without notifying shareholders in
advance, so that shareholders may have enough time for data
investigation before making their decisions.

(4) Providing shareholders with a list of all Independent Directors on
the proxy forms that can decide balloting directions, to encourage them
to dictate how they want to vote. These proxy forms serve as an option
to appoint Independent Directors as their proxies, and a choice over
which Independent Director(s) to entrust their views.

(5) Encouraging shareholders to use ballots. ‘Voting tickets’ provided
for each significant agenda item, are collected at the meeting and then
added up the pre-cast votes before announcing the resolution to the
meeting. For transparency and reference, PTTEP will file all voting
tickets bearing witnesses’ signatures.

(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 the meeting. The minutes, as well as the
webcast of the meeting, will also be posted on the Company’s website.

(7) For fairness to shareholders, defining in writing the approach for
confidential information retention and defining in writing the
prevention of insider trading as part of good CG practices. Also,
notifying Directors and all employees, their spouses and children under
legal age, and nominees, not to use inside information that is material
to changes in Company share prices and not yet publicized in buying
Company shares, and encouraging retention of Company shares for at least
three months. Under the Securities and Exchange Act, B.E. 2535 (1992),
all Directors and the Management must report their PTTEP shareholding
when first appointed to the positions, and within three days of each
transaction, to report to SEC, which PTTEP will regularly report to the
Board.

9.4.3 Roles of Stakeholders

PTTEP recognizes the importance of internal and external stakeholders,
shareholders, customers, suppliers, traders, creditors, partner
companies, government, society, the environment, and employees, as
stated in the policy on equitable treatment of all stakeholders in its
Good Corporate Governance (GCG), which is also publicized on the
Company’s website. PTTEP takes into consideration stakeholders and their
rights. For instance, in procurement processes, the Company needs to
have checks and balances to make bidding transparent, which is achieved
through procurement committees. Technical and commercial procurement
subcommittees are set up for high-value bidding under major projects.

As regards the roles and contribution of employees to GCG, a workplace
welfare committee has been set up where employee representatives can
query or voice their concerns openly with Management representatives.
Communication channels are in place to allow employees to report dubious
cases of non-compliance to Company business policies and codes of
conduct, directly and safely, to the authority. Discussion and seminar
sessions allow employees to learn more about Company business code of
conduct and share views.

Departments in charge of social and environmental activities and other
stakeholders include External Relations and Safety, Security, Health and
Environment.

As the national petroleum exploration, development, and production
company, PTTEP is committed to conducting its business with due care for
nature and the environment. “From Underground Assets to Wisdom” is the
Company’s approach to organizing activities to improve its quality of
life and environmental conservation activities and enabling learning by
society through joint thinking and joint actions to bring about
sustainable development. The Company joined hands with the government in
the conservation of land and national parks in their pristine states.
This is seen in its natural and environmental activities over the years.
Phase 2 Ruam Jai Ruk Talay Saab Songkhla Project, a cooperative project
with the conservation station of wildlife and lake development and
promotion, was a case in point. Year 2 PTTEP Reforestation and
Improvement of Saline-Alkaline Land project was another instance of
cooperation with the Department of National Park, Wildlife, and Plant
Conservation, in which PTTEP rehabilitated 200 rai of forest areas
around the Dong Phya Yen-Khao Yai World Heritage. In conjunction with
the Department of National Park, Wildlife, and Plant Conservation, the
Fine Arts Department, and the Office of National Identity, PTTEP planned
to commemorate His Majesty the King’s 80^(th) Birthday Anniversary in
2007 by launching a ‘Thai Heritage, World Heritage’ publication, to
instill awareness among employees and society at large. In addition, the
Company supported activities on cultivating awareness for actively
conserving world heritage areas in Thailand, to be carried out by
employees. These UNESCO-registered heritage land areas consisted of Dong
Phya Yen-Khao Yai and Huay Kha Khaeng, Thung Yai Naresuan, and
Historical Parks in Sukhothai, Si Satchanalai, Kamphaeng Phet, and Phra
Nakhon Si Ayutthaya. This project took employees to jointly study
ecological systems in Huay Kha Khaeng Forest Preserve, Uthai Thani.
Other -supported projects included a research project for tiger
conservation in western forest land and, in conjunction with the
Chumphon Office of Disaster Prevention and Mitigation and the Chumphon
Nature Study Center, sponsorship of training sessions for civil
volunteers on provincial emergency plan coordination.

PTTEP supports activities designed to improve the quality of life of
communities in a sustainable way through improved skills in youths and
occupational development for communities to achieve stronger communities
under the sufficiency economy.  The key factor is that projects are
long-term with a focus on upgrading community members.  In 2006, these
activities included scholarship presentation at all levels, including
primary and secondary education scholarships in Suphan Buri, Songkhla,
Sukhothai, Kamphaeng Phet, Phitsanulok, and Chumphon.  Also, many
undergraduate scholarships in various fields were granted nationwide to
Thais, in addition to six students from Vietnam, Myanmar, and Bangladesh
to attend universities in Thailand.  The ‘PTTEP I Love Sports’ Project
encouraged children to strengthen their bodies and master sports skills,
apart from staying away from drugs.  The Thai Rice College Project was
designed to improve and develop Jasmine rice productivity.  The Company
also contributed computer sets to the establishment of an educational
network center to promote learning and skill development for teachers
and students alike.  It launched a Mini-farm Project to provide school
lunch foodstuff.  PTTEP supported an educational trip project, whereby
students were taken to Sirikit Field in Amphoe Lan Krabue in Kamphaeng
Phet, as well as a Youth Science Camp in 2006.

It is PTTEP’s ultimate business goal to generate long-term value and
shareholders’ satisfaction, as seen in its motto: “Prosperity, Security,
Sustainability, and Dignity”. With a firm conviction 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. The four
channels consist of the following:

(1) Telephone number: 02-537-4499

(2) Facsimile number: 02-537-4949

(3) Email address: cghotline@pttep.com

(4) Direct submission to Company Secretary Office or submission by mail.

The Company takes confidentiality of such information seriously. Written
procedures include acknowledgment and investigation, and involve only
group of responsible people as concerned.

9.4.4 Information Disclosure and Transparency

Information disclosure represents a vital principle of good corporate
governance. PTTEP pays close attention to the information that needs to
be disseminated to SET and shareholders, particularly for its accuracy,
adequacy, timeliness, and equitability. The Investor Relations unit, the
Company Secretary Office, 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 the SET under ordinary and
urgent circumstances.

Information that has been disclosed consists of financial and
non-financial information. According to the external auditor, financial
information, particularly the reviewed/audited financial statements, is
essentially accurate under generally accepted accounting principles. The
reviewed/audited financial statements have also been endorsed by the
Audit Committee/the Board of Directors before disclosure to
shareholders. Since 2005, to speed up financial information availability
for investors, the Board has also disclosed unreviewed/unaudited
quarterly and annual financial statements, going beyond SET’s
requirements. As a rule, no material difference has been seen between
these reports and final ones. As regards non-financial information,
PTTEP has disclosed 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, together with the annual report, Form 56-1, roadshow
presentations, quarterly presentations, press releases, and the
company’s annual report on safety, security, health and environment.
Since the second quarter of 2005, the Company has added a webcast (image
and sound of the company’s president) of the President’s quarterly
performance presentations. For greater access and maximum benefit to
users, the website is regularly updated. For 2006, 71 matters were
disclosed via SET’s system. The Company has organized visits by
shareholders and analysts to Sirikit Field in Kamphaeng Phet and the
Navamindra Petroleum Area in the Gulf, which has increased business
knowledge and appreciation of PTTEP operations. In 2007, the Investor
Relations Unit plans to promote information disclosure and such
appreciation by organizing an IR Corner booth at the general
shareholders’ meeting.

PTTEP also discloses the roles and responsibilities of the Board and all
standing subcommittees, including the number of meetings and attendance
of each director under Item 9; reports of the Chairmen of each
subcommittee were published under Item 9.5; and the policy of Directors
and Senior Management remuneration under Item 9.4.5.

PTTEP always valued the accuracy, completeness, timeliness, and
transparency of information disclosure and is committed to its best
practices.

9.4.5 Responsibilities of the Board

(1) Structure

(a) Composition

The Board consists of 15 Directors, which is considered suitable for the
business. At Extraordinary Shareholders’ Meeting No. 1/2548 on 15
December 2005, the composition of the Board was approved as follows:

-   Connected Directors

-   Independent Directors with no relationship to major shareholders;
    not serving as directors or executives of major shareholders; and
    not serving as executives of or representing major shareholders. At
    PTTEP, Independent Directors must always account for one-third of
    the Board or number at least five.

-   Qualified private-sector Directors who, at PTTEP, may be Connected
    Directors and number at least three.

The Board consists of Directors 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.

At Meeting No. 12/2548/242 on 21 October 2005, the Board determined the
qualifications of its members as follows:

-   Age not over 70 years

-   Diverse skill mix in industry knowledge, accounting & finance,
    business judgment, management skills, international markets,
    business strategy, crisis management, corporate governance, and
    legal matters.

(b) Definition of Terms and Number of Companies Where Directors Can
Serve

At Meeting No. 8/2548/252 on 28 July 2006, the Board approved the
upgrading of PTTEP GCG, issued in accordance with Good Corporate
Governance Principles of Listed Companies (2006). To enable PTTEP to
leverage Directors’ qualifications for the greatest suitability and
benefit, Directors’ terms were limited to three consecutive periods.

Moreover, the Board also approved to include the number of other
companies where a Director is serving for consideration as a critical
factor for its Director selection. This information will be disclosed in
attachement 1 of Form 56-1, in the annual report, and disseminated
through the Company website. Currently, there is one director who serves
more than 5 boards of the listed companies. However, this doesn’t cause
any effect on the performance since the director commit himself to his
responsibility by attending the board meetings regularly and expressing
his opinion beneficial for the company. Additionally, in order to assess
the board performance more effectively, the number and time of
attendance will be one of the key factors for the board assessment.

(c) Definition of Independent Director Qualifications

This has been detailed under Item 9.1.4

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

Under the code of practice found in PTTEP’s GCG Principles, an employee
may take part in external activities for good reasons or if such
participation expands the vision and broadens the experience of that
employee, or if it improves the employee’s performance for the benefit
of the Company – given no conflict of interest. Such appointment of the
President or management team members needs prior approval of the Board
or the President respectively, and is not entitled to extra
compensation, as this is considered part of routine work.

(e) Aggregation or Segregation of Positions

The Chairman of the Board and the President are two separate persons.
The Chairman is elected by Directors, whereas the President comes from
nomination. The Chairman is the ultimate leader, with significant input
to decision-making on PTTEP matters, jointly considered and established
by the Board and the Management. He or she ensures that Board meetings
proceed efficiently and effectively. During each meeting all Directors
are urged to actively participate and raise essential questions.
Directors also occasionally meet to advise and support the Management
through the President. At the same time, the Board is to stay away from
routine tasks or business activities under the responsibility of the
Management. Only the President or acting President is authorized by the
Board to commit the Company through his or her signature. Presidential
authority is therefore efficiently channeled through the Management, and
therefore there is a clear distinction between the roles of the Board
and the Management.

(f) Independence of Chairman

PTTEP recognizes that, in future elections of the Chairman, independence
will be a key factor for deliberation. Nevertheless, PTTEP’s Chairmen
have always performed their duties independently. Moreover, PTTEP has
instituted the Chairman’s performance evaluation since 2005 as
guidelines for improving and auditing his performance. The outcome has
been disclosed in Form 56-1 and the annual report.

(g) Corporate Secretary

The Company has chosen Mr. Theerasak Tancharoenlarp, whose
responsibilities consist of:

(a) Providing recommendations and support to the work of the Board on
legal and regulatory matters

(b) Ensuring good CG practices and following up actions to ensure that
Board policy directions and recommendations effectively implemented

(c) Supervising actions by the Board and the Management to ensure their
compliance with related laws and regulations

(d) Ensuring suitable and prudent actions taken by the Board

(e) Communicating with shareholders and ensuring that they are properly
taken care of

(f) Communicating with related regulatory agencies.

(2) Subcommittees

The Board has appointed standing subcommittees (or simply ‘committees’)
to handle specific aspects 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 subcommittee, with the exception of the Risk Management
Committee. The Chairman of the Board does not belong to any
subcommittee. The subcommittees are to regularly report their findings
to the Board.

To date, PTTEP has appointed five subcommittees, namely the Corporate
Governance Committee, Audit Committee, Remuneration Committee,
Nominating Committee, and Risk Management Committee. Their member names,
responsibilities, and reports are elaborated under Items 9.1.2 and 9.5
respectively.

(3) Roles and Responsibilities of the Board

(a) Corporate Governance Policy

The Board issued a written Good Corporate Governance (GCG) policy in
2001, and this policy has constantly been reviewed and publicized on the
Company’s website. The current GCG policy is Revision 3, consisting of
two parts: first, the GCG policy approved by the Board, second, the
Company’s code of conduct and policies approved by President. These have
been distributed to Directors and all employees for reference and
compliance. PTTEP also disseminates them to its joint-venture partners,
regulators and government agencies, those with regular contacts with
PTTEP, and interested persons. Again, this material is disseminated on
the PTTEP website under Corporate Governance for the reference of
shareholders, investors, and interested persons.

In 2006, PTTEP still focused on constantly promoting knowledge and
understanding of GCG to Directors and all employees through activities,
including orientation sessions for new Directors and employees and a
special talk on GCG principles for Directors and the Management. CG
Champions have improved processes to achieve international standards and
reported the progress made every quarter to the CG Committee. PTTEP also
joined in the PTT CG Group Day to jointly determine GCG policy in
accordance with international standards and apply uniform practices.
This would enhance business efficiency, transparency, merit, and ethics
internationally accepted, and yield sustainable organization development
toward excellence. Decisions and actions are made responsibly with due
consideration of all stakeholders.

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

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

• PCS Compliance News Alert, for a reminder about relevant rules and
laws, including insider trading, or for advice on relevant, upcoming
rules and laws.

To clearly measure its annual GCG performance for further improvement,
in 2006, PTTEP commissioned Thai Rating and Information Services Company
(TRIS) to assess its GCG practices. The rating criteria used by TRIS
were based on those of the Organization for Economic Cooperation and
Development. 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 8.31 against 8.14 in 2004, also by
TRIS, and 8.21 by internal assessment in 2005. Details appear below:

+----------------------------------------------+------------+---------+
| Rating Criterion                             | Percentage | Scores  |
+----------------------------------------------+------------+---------+
| -   Shareholders’ Rights                     | 20         | 8.60    |
+----------------------------------------------+------------+---------+
| -   Composition and Role of the Board and    | 40         | 7.74    |
|     the Management                           |            |         |
+----------------------------------------------+------------+---------+
| -   Information Disclosure                   | 25         | 8.99    |
+----------------------------------------------+------------+---------+
| -   CG Culture                               | 15         | 8.30    |
+----------------------------------------------+------------+---------+
| Total                                        | 100        | 8.31    |
+----------------------------------------------+------------+---------+

(b) Business Ethics

PTTEP Board stipulated its business ethics in the Good Corporate
Governance of PTTEP document to guide its conduct toward equitable
treatment, transparency, openness to enquiry, and respect to the rights
of all stakeholders – to create confidence and acceptance of its
operation. The code of ethics is based on six principles:

-   Accountability

-   Responsibility

-   Fairness and Integrity

-   Transparency

-   Creation of Long-term Value to All Stakeholders

-   Promotion of Best Practices, using four yardsticks, namely
    righteousness, suitability, transparency, and fairness.

    (c) Conflicts of interest

PTTEP’s policy, published in the GCG Policy, is for all Directors and
employees to avoid any conflict between personal and corporate interest.

• Decisions about Company business by all Directors and employees must
solely be in the best interest of PTTEP.

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

In addition, PTTEP has formulated the following measures:

• Strict compliance with laws, rules, and regulations, particularly
those of SET concerning connected transactions.

• Adherence to a fair and suitable pricing policy for its
products/services under general business terms and conditions.

• Prohibition from considering and approving cases where Directors,
employees, or connected persons would benefit from connected
transactions. Pricing must be set as under general business terms and
conditions.

• Formulating procedures to treat conflicts of interest involving all
Directors and employees, whereby he or she must report them immediately
on the CG form together with all details attached.

Connected transactions must be deliberated by the Board for suitability,
while the Audit Committee will approve its disclosure in the annual
report and Form 56-1.

In deliberating connected transaction during 2006, PTTEP complied with
SET rules and regulations of 2003 and its amendment in all details.
Board resolutions concerning these transactions were strictly made among
non-connected Directors. Please refer to Connected Transaction of 2006
under Item 13.

(d) Internal Control and Internal Audit

PTTEP employs an internal control policy that is proportional with
acceptable Company risks and prevailing business circumstances, or the
activities of individual departments. The Internal Audit Department
regularly monitors internal control practices to ensure suitable control
measures with current circumstances, environment, and risks.

The Board, the Management, and all employees have collectively decided
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 procedure was based on the regulations of
The Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and that of the Committee of the Auditor General of Thailand, and
consists of five components:

-   Control Environment: A proper control environment fosters control
    awareness in personnel 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. (See details under
    Personnel Development). Determined to uphold the principles of CG,
    the Company has disseminated the CG Policy in its previously
    mentioned documents.

-   Risk Assessment: The Company has not only assessed major types of
    risk facing it, together with their probability and impacts, but has
    also taken steps to manage them to acceptable levels. PTTEP
    classifies risk management at the corporate level, linking to its
    strategic directions and strategies, and the operating level, to be
    managed by departments. All risks come under the supervision of the
    Risk Management Committee, equipped with clear risk management
    procedures. (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 resources management; finance and accounting;
    budgeting; and procurement regulations; including the charters of
    the five subcommittees. 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.

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

-   Information and Communication: The Company executes this aspect by
    instituting efficient and effective communication procedures for
    information both internally and externally for complete, accurate,
    and timely decision-making. The systems contain both financial and
    non-financial information. 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 the 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 coordination and business
    image.

PTTEP has an information control system concerning 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
for 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. A risk assessment monitoring procedure reports its
    findings regularly 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 Office of the Internal Audit monitors
    and assesses internal control outcome, and then reports its findings
    to the Audit Committee. Results of internal control assessment for
    2006 appear under Item 10.

    (e) Risk Management

Risk management is the appreciation of the causes of changes affecting
businesses and obstructing the accomplishment of the organization’s
objectives, followed by formulation of suitable management measures to
handle them.

PTTEP’s Risk Management policy was set up for the proper and efficient
identification, mitigation, and monitoring of risks. For any risk
confronting Company business, PTTEP has prepared suitable, systematic,
and efficient measures. The Company remains committed to enhancing a
risk awareness culture, improving business procedures and resource
utilization to proactively manage the risks. Therefore, PTTEP will not
only be able to reduce possible losses, but could also gain new business
opportunities.

The Company has defined five stages of risk management, namely Set
Objective, Identification, Assessment, Mitigation, and Monitoring, along
with a suitable warning system, to manage the two levels of risk –
strategic risks linking to its strategic directions and strategies, and
the operating level, to be managed by relevant departments. All risks
come under the supervision of the Risk Management Committee.

Critical activities of 2006 that had the approval of the Risk Management
Committee consisted of the following.

-   Ensuring that the risk management processes and plans produced
    efficient risk management and internal control practices in
    proportion with acceptable risk levels and suitable for changing
    circumstances

-   Ensuring that an effective corporate risk profile at both strategic
    and operating levels was in line with the Company’s strategic
    direction, and provided recommendations that were considered useful
    for monitoring performance to reduce such risks

-   Deliberating significant Company risks in detail and providing
    recommendations for monitoring its performance to reduce such risks,
    including those having to do with geopolitics, investment,
    portfolio, organization capability, human resource planning,
    exploration, project development, and currency exchange rates.

(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. Other agenda items are
jointly decided by the Chairman and the President, as needed. Each
Director may also propose matters they consider important. In 2006, the
Board met every third Friday of the month for a total of 14 times,
including an offsite meeting to deliberate strategic plans and another
meeting to deliberate human resource administration. The Board held one
meeting without the presence of the 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 complementary information ahead of
each meeting.

In 2006 a total of 97 agenda items were deliberated, including the
annual strategy formulation, work plans, and budget GCG policy;
financial statements; petroleum purchase agreements and negotiations;
bidding for exploration and production; joint venturing; deliberation of
assets obtained or disposed of; procurement under major projects; and
amendments to regulations. Matters for acknowledgment consisted of 142
items, most of which were reports on operation and updates on various
projects; status of Company shares; changes in PTTEP directorship during
the year; appointment of executives; reports on activities in support of
social and environmental development; reports on safety, security,
health and environment; report on direction, principles, or best GCG
practices; and reports of subcommittees. A typical Board meeting took
two hours, with the Company 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.

The meeting minutes covered all essential issues and all the minutes
were unanimously approved. Questions raised during Board meetings 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 for absence. Whenever possible, Directors sent an
apology letter to the Chairman if they could not attend a meeting. Board
attendance records for the year appear under Item 9.1.1.

(5) Self-assessment of the Board and Subcommittees

PTTEP has stipulated in the CG of PTTEP Item 5.1.8 that for the sake of
checks & balances, the Remuneration Committee is to evaluate the
performance of the Board and subcommittees against the annual
Performance Agreements, reviewed by the Nominating Committee and
approved by the PTTEP Board. Besides, performance evaluation will be
made of the Chairman of the Board, the outcome of which is reported in
the annual report.

The Board and its subcommittees prepare performance agreements (PA)
annually for use in their performance rating. All Directors conducted
self-assessment together with that of the entire Board and all
subcommittees, including the Chairmen. PTTEP will then propose the final
assessment outcome to the Remuneration Committee for scoring purposes
before getting an approval from the Board and disclosing the scores in
the annual report. PTTEP will then gather 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, a ‘1’ stands for ‘needs improvement’, a
‘2’ for ‘fair’, a ‘3’ for ‘standard’, a ‘4’ for ‘good,’ and a ‘5’ for
‘very good’. The Remuneration Committee has compiled the findings below
for the Board’s approval.

(a) Self-assessments by Directors averaged 4.65.

(b) The Board as a group averaged 4.49 or ‘good’ – against 4.53 the year
before.

In 2006, topics ranked, in descending order, as shown below:

+-------------------------+----------+-----------+----------+----------+
| Assessed Item           | 2006     |           | 2005     |          |
+-------------------------+----------+-----------+----------+----------+
|                         | Per      | %         | Per      | %        |
|                         | formance |           | formance |          |
+-------------------------+----------+-----------+----------+----------+
| 5. Board Structure      | 4.65     | 93.00     | 4.63     | 92.65    |
+-------------------------+----------+-----------+----------+----------+
| 2. Formulation of       | 4.53     | 90.60     | 4.58     | 91.61    |
| Policies                |          |           |          |          |
+-------------------------+----------+-----------+----------+----------+
| 8. Meetings             | 4.52     | 90.40     | 4.59     | 91.83    |
+-------------------------+----------+-----------+----------+----------+
| 4. Accountability       | 4.50     | 90.00     | 4.61     | 92.18    |
+-------------------------+----------+-----------+----------+----------+
| 7. Training and         | 4.47     | 89.40     | 4.51     | 90.11    |
| Development             |          |           |          |          |
+-------------------------+----------+-----------+----------+----------+
| 6. Teamwork             | 4.43     | 88.60     | 4.35     | 86.92    |
+-------------------------+----------+-----------+----------+----------+
| 3. Overseeing the       | 4.41     | 88.20     | 4.44     | 88.74    |
| Management              |          |           |          |          |
+-------------------------+----------+-----------+----------+----------+
| 1. Formulation and      | 4.37     | 87.40     | 4.52     | 90.49    |
| Monitoring of           |          |           |          |          |
|                         |          |           |          |          |
| Strategic Plan          |          |           |          |          |
+-------------------------+----------+-----------+----------+----------+
| Average                 | 4.49     | 89.70     | 4.53     | 90.57    |
+-------------------------+----------+-----------+----------+----------+

(c) The Audit Committee scored 4.74 or ‘good’ against 4.53 of 2005.

(d) The Risk Management Committee scored 4.76 or ‘good’ against 4.44 of
2005.

(e) The Remuneration Committee scored 4.79 or ‘good’ against 4.38 of
2005.

(f) The Nominating Committee scored 4.69 or ‘good’ against 4.35 of 2005.

(g) The Corporate Governance Committee scored 3.93 or ‘good’ against
4.55 of 2005.

(h) The Chairman earned 4.52 or ‘good’ against 4.57 of 2005.

(6) Directors’ and Executives’ Compensation

(a) Directors’ Compensation

The 2006 Annual General Shareholders Meeting approved Directors and
subcommittees’ remuneration, taking into account the Company’s business,
size, correlation with Company performance; conformity with the market
and industry norms; as well as the duties and responsibilities of the
Board and subcommittees. The Directors’ and subcommittees’ remuneration
packages for 2006 and beyond were kept constant, as for 2005:

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

-   Meeting fee at Baht 25,000/person/meeting, paid only for 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
    deducted by 50 percent. If a Director was absent from more than 75
    percent, his or her bonus would be deducted by 75 percent. The
    bonuses are to be paid after the audited annual financial statements
    have been announced to SET.

-   Members of all standing subcommittees would receive meeting fees of
    Baht 25,000/person/meeting. This, however, excluded members who were
    concurrently PTTEP executives, including the president and all
    management, and does not apply when meetings concerned circulating
    resolutions.

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

Compensation details appear under Items 9.1.1 and 9.3.1.

(b) Compensation Policy for Subsidiaries’ 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
the businesses for PTTEP best interest under 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 the senior management executive
directly responsible for the success of the joint venture, under PTTEP’s
policies and strategies. PTTEP rules and procedures therefore apply, as
these are assets managed in the best interest of the Company. The
President and such an executive are not entitled to extra compensation,
as this is considered part of routine work. This practice is clearly
stipulated in the GCG policy of the Company.

(c) President’s Compensation

The President’s compensation package is clearly and transparently
decided by the Remuneration Committee, with the endorsement of the
Board. Consideration is given to standard and prevailing industry and
business practices, in particular leading listed companies on SET; and
to his or her job responsibilities, linked to the annual Company
performance and performance appraisal outcome.

Assessment of the President’s performance is made against the
performance agreement for a given year, decided by the Remuneration
Committee and endorsed by the Board as checks-and-balances and 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,
and would also enable the findings to improve his or her performance.

(d) Executives’ Compensation

The Remuneration Committee reviews and recommends the compensation
criteria or procedures for defining the compensation of executives that
is fair and reasonable, while conforming to prevailing practices in this
business, for the Board’s endorsement. Executives’ compensation package
and salary structure 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 duties and
responsibilities.

The President has the responsibility of deciding senior executives’
compensation packages. Annual merit increases of executives 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

Directors regularly upgrade themselves by attending seminars, courses,
and meetings organized by the Institute of Directors of Thailand (IOD),
SET, SEC, and the National Corporate Governance Committee. Apart from
that, PTTEP holds sessions for Directors to meet and discuss GCG matters
with those recognized as having GCG expertise. When there is a new
Director, PTTEP provides a Director manual and an orientation program,
which in turn provides appreciation of PTTEP business and Directors’
responsibilities, as well as acknowledgment of essential information for
their tasks and duties.

(a) Awards of 2006

SEC ranked PTTEP among the top three listed companies for organizing the
2006 annual general shareholders’ meeting, with a score of 105 out of
the total 110 under the 2006 AGM Checklist Project.

On July 26, PTTEP won two awards at the 2006 SET Awards event. The first
was “Best Performance of the Resources Sector” for 2005 performance
including disclosure of information and liquidity. The second was
“Distinction in Maintaining Excellent Corporate Governance Report”,
awarded for continually maintaining outstanding reports on GCG
compliance for the second year in a row. Incidentally, PTTEP has won
this award for the past four years since the inaugural SET Awards in
2003.

Finally, PTTEP achieved 91% in a survey of CG practices among listed
companies in 2006, and was one of the nine top performers (with 90-100%)
among 402 companies. The survey was conducted by the Institute of
Directors (IOD) with the support of SET and SEC.

9.5 Subcommittees Report

9.5.1 2006 Corporate Governance Committee Report

PTTEP Board of Directors has established a written good Corporate
Governance (CG) policy since 2001 and continually adheres to it. In
order for PTTEP to constantly improve its good corporate governance in
compliant with rules of the Stock Exchange of Thailand, best practice of
leading companies as well as international approach which is widely
accepted, the Corporate Governance Committee has been formed. The
committee constitutes of wholly 3 independent directors to perform
duties of overseeing the company’s operation in accordance with its good
corporate governance and promoting the adherence with PTTEP good
corporate governance of personnel at all levels.

The Corporate Governance Committee had altogether 3 meetings in 2006
with the purpose of to perform its duties as indicated in the Corporate
Governance Committee Regulation. The Committee also reported the meeting
results to the PTTEP Board which can be concluded as follows:

(1) Oversee that PTTEP adheres and complies with the Good Corporate
Governance policy approved by the PTTEP Board.

(2) Disseminate information concerning good corporate governance to all
concerned parties. PTTEP has published and distributed the Good
Corporate Governance of PTTEP to all directors and personnel at all
levels including partners and other organization that the Company has
connection with.

(3) Review the policy, direction, code of conduct together with best
practice of PTTEP good corporate governance so as to upgrade the
Company’s practice to be in line with the 2005 Corporate Governance
Principles of the Stock Exchange of Thailand which measured up to the
principles of The Organization for Economic Co-Operation and Development
(OECD Principles of Corporate Governance).

(4) Organize a talk session on good corporate governance for directors
and executives to promote their knowledge and understanding in addition
to exchanging views with the organization whose CG performance has been
well recognized.

(5) Monitor that PTTEP consistently report the matters concerning good
corporate governance to PTTEP Board. Moreover, the committee has
instructed PTTEP to formulate the same standard report of all CG
Champions apart from giving advice and making suggestions for
improvement of CG practice as deem appropriate.

(6) Support and encourage PTTEP to conduct the annual CG rating by the
independent and recognized outside organization. In this year PTTEP has
agreed with Thai Rating and Information Service Co. Ltd. (TRIS) to
evaluate the CG practice of the company as same as in year 2004. The
rating result will be assessed as one index of 2006 Performance
Agreement of the Corporate Governance Committee, President, Board of
Directors and the Company as well.

(7) Determine 2007 Performance Agreement of the Corporate Governance
Committee as one index to assess its annual performance. The Nominating
Committee will review the proposed Performance Agreement for
appropriateness prior to present for Board of Directors’ approval
eventually.

(8) Determine the outline of the report on PTTEP Performance of Good
Corporate Governance which will be disclosed to stakeholders in the
annual report.

In 2006, PTTEP has been rated by TRIS at score 8.31 or at level “very
good” which is improved from year 2004 with the scoring 8.14. In the
past year, PTTEP was complimented by the Office of the Securities and
Exchange Commission (SEC) with regard to being 1 of the 3 listed
companies as best practice in organizing the 2006 annual general
shareholders’ meeting. Besides PTTEP has acquired 2 awards from 2006 SET
Award, which are: Best Performance of the Resources Sector; and
Distinction in Maintaining Excellent Corporate Governance Report for
constantly recounting the annual corporate governance report at good
level for 4^(th) consecutive year since 2003. In addition, Thai
Institute of Directors (IOD) with the support of the Stock Exchange of
Thailand and the SEC announced the survey result of 2006 CG of listed
companies that PTTEP scored 91% being 1 among 9 companies in the first
rank who attained 90 – 100 scores from altogether 402 companies.

As a result of all accomplishments, it apparently reflects PTTEP’s
commitment and dedication to incessantly develop its good corporate
governance progressively in accordance with the international best
practices and consistent with the Stock Exchange of Thailand

Vudhibhandhu Vichairatana

(Mr. Vudhibhandhu Vichairatana)

Chairman of the Corporate Governance Committee

29 January 2007

9.5.2 Audit Committee Report

The Audit Committee consists of three Independent Directors equipped
with knowledge, expertise, and experience in finance & accounting, law,
and related technical practices. It is chaired by Mr. Charnchai
Musignisakorn, with Mr. Prasit Kovilaikool and General Lertrat
Ratanavanich as members.

On November 17, 2006, Mr. Prasit Kovilaikool resigned from the Board,
including the chairmanship of the Remuneration Committee and the Audit
Committee. In his place, the Board appointed Mr. Chulasingh Vasantasingh
to the Audit Committee, effective from December 15, 2006.

All Audit Committee members performed their duties and responsibilities
as assigned by the Board and in compliance with the Audit Committee
Charter. In 2006, it held six meetings, summarized below:

(1) Reviewed the quarterly and annual financial statements with the
management and the external auditor (The Office of the Auditor General),
providing 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 the Company’s internal control and internal audit
procedures to ensure sufficiency and suitability.

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

(4) Considered and supported the disclosure of connected transactions to
ensure accuracy and integrity, together with the opinion that they had
been executed for good reasons for the benefit of shareholders. PTTEP
also issued quarterly Management Discussion and Analysis Reports (MD&A).

(5) Approved additional items as assigned by the Board of Directors.

(6) Approved the annual internal audit plan, reviewed internal audit
reports, and evaluated internal control system to ensure the Company’s
internal control’s efficiency in proportion with acceptable risks and
suitability with current business circumstances.

(7) Considered and proposed that the Office of the Auditor General
continue to serve as the external auditor; also considered and decided
upon the relevant audit fees for 2006.

(8) Reviewed and proposed that the Board of Directors revise the Audit
Committee Charter B.E. 2542.

(9) Assessed its performance of 2006 through self–assessment and through
solicited feedback from the Board of Directors and related parties. The
assessment found that the composition, qualifications, meetings, and
performance of the Committee remained effective.

(10) Supported good corporate governance implementation by undergoing
the corporate governance rating by Thai Rating and Information Service,
Co., Ltd.

(11) Establish its own Key Performance Indicators for 2006.

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

In conclusion, the Audit Committee performed its assigned duties and
responsibilities related to Corporate Governance in 2006 with care,
knowledge and independence at its fullest ability, as well as providing
forthright opinions to all parties for the benefit of PTTEP,
shareholders and stakeholders in an appropriate manner.

Charnchai Musignisakorn

(Mr. Charnchai Musignisakorn)
Chairman

4 January 2007

9.5.3 Report of the Nominating Committee

Under the Company’s GCG Principles, the Nominating Committee consists of
three Directors, two of whom are independent, including the Chairman.

The Chairman is Mr. Chulasingh Vasantasingh (Independent), with General
Lertrat Ratanavanich (Independent) and Mr. Prasert Bunsumpun serving as
members, all of whom were reappointed for the second term from 23 June
2006 to 22 June 2009.

On 15 November 2006, Mr. Bunsumpun resigned from the committee,
prompting the Board to appoint Dr. Chitrapongse Kwangsukstith in his
place as nominated by the committee, effective from 15 December 2006.

During the year, the Nominating Committee duly performed its duties
under the rules issued in 2003. Four meetings were held with all
committee members in attendance except for the last meeting, which was
caused by Mr. Bunsumpun’s resignation; only Mr. Vasantasingh and General
Ratanavanich attended that meeting. The essences of the four meetings
appear below:

(1) Deliberating the qualifications of candidates for Board Members and
preparing a Director List with the Company’s maximum benefit in mind.
Views were also sought from PTT, the major shareholder.

(2) Deliberating the list of those under (1) and proposing 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 to the Board
for election in place of those who resigned.

(4) Deliberating qualified Director candidates for standing
sub-committees whose members’ terms had expired or members had resigned,
and proposing them to the Board for appointment. These consisted of the
Audit, Remuneration, Risk Management, and Nominating Committees.

(5) Devising 2006 performance evaluation forms for the Board, standing
sub-committees, the Chairman, and the President.

(6) Devising 2007 performance agreements for the Board, standing sub-
committees, and the President.

(7) Revising and amending rules of 2003 governing the committee itself,
so that they may be in line with the Good Corporate Governance
Principles for Listed Companies (2006).

The Nominating Committee reported 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 for the maximum benefit of all shareholders and
stakeholders.

Chulasingh Vasantasingh

(Mr. Chulasingh Vasantasingh)

Chairman

30 January 2007

9.5.4 Risk Management Committee Report

The Risk Management Committee is composed of five members; it is chaired
by Mr. Pichai Chunhavajira, with Mr. Vudhibphandhu Vichairatana, Mr.
Tongchat Hongladaromp, Mr. Chitrapongse Kwangsukstith, Mr. Maroot
Mrigadat as member.

The Risk Management Committee members performed their duties and
responsibilities as assigned by the Board of Director and in accordance
with the Risk Management Charter. During 2006, the Risk Management
Committee held 4 meetings which can be summarized as follows:

(1) Considered the Risk Management plan and procedure to ensure the
    effectiveness of risk management and internal control that can
    manage risk into an acceptable level and in appropriate with the
    dynamic environment.

(2) Considered the PTTEP Corporate Risk Profile in strategic and
    operational level that linked to and supported the strategic
    direction and made suggestions to mitigate those risks.

(3) Focused on PTTEP critical risks in detail and made suggestions to
    mitigate and monitor those risks such as Geopolitical risk,
    Investment and Portfolio risk, Organization capability risk,
    Exploration risk, Project development risk, and Financial risk.

(4) Established 2006 Key Performance Indicators of the Risk Management
    Committee.

The Risk Management Committee regularly informed all the activities and
progress report to the Board of Directors.

In conclusion, the Risk Management Committee performed its assigned
duties and responsibility with care, knowledge, and independence at its
fullest capability, as well as providing forthright opinions to parties
for the benefit of PTTEP, shareholders and stakeholders in an
appropriate manner.

Pichai Chunhavajira

(Mr. Pichai Chunhavajira )

Chairman of the Risk Management Committee

15 February 2007

9.6 Use of Inside Information

To create fair and equitable treatment for all shareholders, Good
Corporate Governance of PTTEP stipulates policies on PTTEP confidential
information and securities exchange. Directors and all employees are
dissuaded from disclosing confidential information not yet publicized,
for buying or selling shares, advertising or soliciting shares, by
themselves, with or for others. Such actions represent speculative share
trading, which is unfair practice – with the exception of buying Company
shares under the rights given by warrants. PTTEP has stipulated
disciplinary actions for these violations, about which each supervisor
must remind and advise their own subordinates as appropriate.

PTTEP also encourages all employees to hold on to their shares at least
three months from the late date of purchase – again with the exception
of selling Company shares obtained with warrant privileges. To ensure
strict compliance, the Company took the following actions:

(1) Limiting access to confidential information strictly to those who
    need to know

(2) Instituting office security procedures to protect confidential
    information and files

(3) Announcing that owners of confidential information not yet
    publicized must remind relevant people to strictly observe the
    security procedures

9.7 Personnel

9.7.1 As of year-end 2006, PTTEP and its subsidiaries (namely PTTEPS and
PTTEP Services) had a total employee count of 1,779 classified as
follows:

(1) Division under the President 100

(2) Strategy and Capability Development Division 71

(3) Thai Offshore Assets Division 388

(4) Joint Venture and Thai Onshore Assets Division 223

(5) Business Development and International Division 111

(6) Geoscience Division 102

(7) Operations Support Division 256

(8) Finance and Accounting Division 126

(9) Human Resources and Business Services Division 202

(10) Production Development Division 200

Total 1,779

9.6.2 PTTEP payroll in 2006 featured no significant changes. No
significant labor disputes have arisen over the past three years.

9.6.3 The total compensation (salaries, bonuses, and provident fund
contributions) of employees under the payrolls of PTTEP and its
subsidiaries in 2006 under 9.6.1 amounted to 1,889,942,623.47 Baht.

9.6.4 Human Resources Development Policy

In order to improve staff competency and strengthen organizational
capability for the continuing expansion of company’s business, both in
Thailand and overseas, PTTEP has made much of the effort in improving
its HR development systems and processes. In this endeavor, the company
has reinforced implementation of its competency-based training and
development approach with an aim to accelerate the development of its
human resources. Based on this competency concept, the company has
provided training throughout the past year via the following channels:

(a) In-house and External Training

The company provided in-house training and external training, both
locally and overseas, to its staff at all levels, including management.
This training comprised a great variety of courses, including courses in
technical and professional training, SSHE training, IT training, English
language training and business administration and management training.

(b) Long-term Training and Development Programs

The objective of long-term company training and development programs was
to prepare its staff for future roles and assignments in various PTTEP
current and upcoming projects. The programs were provided to selected
technical staff and were conducted from 1-3 years in duration. By this
approach, the staff undertook on-the-job training, both in Thailand and
overseas, with PTTEP business partners as well as services companies,
such as Total, ChevronUnocal and Schlumberger.

(c) Master’s Degree Scholarship Programs

The company provided scholarships to selected staff to help them pursue
studies culminating in Master’s Degrees in the fields of Geoscience and
Petroleum Engineering at top universities in the USA and UK as well as
the field of Management at SASIN Graduate Institute of Business
Administration of Chulalongkorn University. In 2006, the scholarship
programs were extended to the Master’s degree program in the field of
Offshore Technology and Management in the Asian Institute of Technology
in Thailand.