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  11. Administration and Management

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11.1 Management Structure

  11.1.1 Committees: Board of Directors and Sub-Committes

PTTEP is governed by the PTTEP Board of Directors and 4 sub-committees:
the Audit Committee, the Remuneration Committee, the Nominating
Committee and the Cash Management Committee.

(1) The PTTEP Board of Directors has the authority and the
responsibility for: providing the Company with directions on its
Governance Principles of PTTEP Business (GPPB), policy, strategic plan,
vision, and annual budget for its operational plans; for appointing /
replacing PTTEP Management and for monitoring and following up on
Company performance, except for the following cases, which are to be
approved by a Shareholders’ Meeting with a total number of votes not
less than three-fourths of the total number of votes cast by the
shareholders present and entitled to vote :

(a) Sale or transfer of the whole or important parts of any PTTEP
    business to other entities

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

(c) Creation, amendment or termination of any contracts with respect to
    the granting of a lease of the whole or important parts of any PTTEP
    business, the assignment to any other person(s) to manage the
    Company or the merging of the Company with any other entity to share
    profit and loss

(d) Amendment of the Memorandum or Articles of Association

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

(f) In case PTTEP or its subsidiaries decide to enter into a transaction
which is 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 which is applied to a connected transaction of a listed
company, as the case may be. In the event that such a Notification
requires PTTEP as a listed company to undertake and process the
Notification, PTTEP shall follow such rules and procedures in accordance
with such Notification.

(2) PTTEP Board of Directors composed of 15 directors as details of the
    present and ex-directors in Year 2003 on page 105.

(3) Directors’ changes in number of shares holding and Board Meeting
    attendance of Year 2003 are as follows:

[TABLE]

$ Retainer Fee, Meeting Fee and Bonus in 2003(Paid in 2004)

* Become Directorship on October 6, 2003

# Resigned Directorship on August 9, 2003

(4) The Audit Committee has the following responsibilities:

(a) To review and audit the Company’s financial report, so as to ensure
    that it is correct and sufficient, with the Company’s auditor also
    to attend the quarterly meeting

  (b) To review and audit 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 assess PTTEP’s major risks and provide suggestions to minimize
  such risks

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

  (h) To consider the audit plan

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

  (j) To evaluate the Audit Committee’s performance on corporate
  governance and disclose this evaluation in the annual report

  (k) 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

  (l) To review the Audit Committee Charter for revision (if necessary)
  annually

  (m) To assume any other responsibilities as assigned by the Board of
  Directors as well as to appoint the Chief of the Internal Audit or
  Senior Manager, Corporate Secretary Office to be Secretary of the
  Audit Committee

The Audit Committee comprises three Directors.

-   Mr. Vudhibhandhu Vichairatana: Chairman of the Audit Committee

-   General Lertrat Ratanavanich: Director of the Audit Committee

-   Mr. Chulasingh Vasantasingh: Director of the Audit Committee

(5) 

(6) The Remuneration Committee has the following responsibilities:

(a) To consider the Directors’ and the President’s remuneration
    principles

(b) To establish fair and decent remuneration principles for the
    Directors and propose them at the Shareholders’ Meeting for approval

(c) To establish fair and decent remuneration principles for the
    President and propose them at the Board of Directors’ Meeting for
    approval

The Remuneration Committee comprises three Directors

-   Mr. Prasit Kovilaikool: Chairman of the Remuneration Committee

-   Mr. Prasert Bunsumpun: Director of the Remuneration Committee

-   Mr. Anucha Sihanatkathakul: Director of the Remuneration Committee

(7) The Nominating Committee has the following responsibilities:

  (a) To formulate a transparent and standard process of Directors or
  President selection.

  (b) To select appropriate candidates to be appointed as new Directors
  or President and to propose nominations to the Shareholders’ Meeting
  or the Board of Directors’ Meeting, depending on the case, for further
  consideration

  (c) To prepare list of possible nominee Directors or President in
  advance and/or when there is a Director or President vacancy

  (d) To perform other duties relevant to the selection of Directors or
  President as may be assigned by the Board

The Nominating Committee comprises three Directors

-   Mr. Chulasingh Vasantasingh: Chairman of the Nominating Committee

-   Mr. Prasert Bunsumpun: Director of the Nominating Committee

-   Mr. Anucha Sihanatkathakul: Director of the Nominating Committee

(7) The Cash Management Committee has the responsibility for manage cash
and report to the Board of Directors.

The Cash Management Committee comprises three directors

- Mr. Pichai Chunhavajira: Director

- Mr. Anucha Sihanatkathakul: Director

- Mr. Maroot Mrigadat: Director

(*Replaced Mr. Chitrapongse Kwangsukstith on October 6, 2003)

11.1.2 Senior Manager, Corporate Secretary: Mr. Theerasak Tancharoenlarp

11.1.3 Details of management and their PTTEP shareholding in Year 2003
are on page 110.

11.2 Nomination of the Board of Directors and the Management

11.2.1 Directors Nominating

When there is a Directors or President vacancy, the Nominating Committee
will select appropriate candidates to become Directors or President by
collecting a list of recommended nominees from PTT, the major
shareholders, and to put forward nominations to the Shareholders’
Meeting or the Board of Directors’ Meeting, depending on the case, for
further consideration. If the vacancy occurs because of the completion
of the directorship term, the proposal will be submitted at the
Shareholders’ meeting for approval. Meeting approval requires that the
majority of the shareholders who have assembled at the meeting vote for
the proposal. In case the vacancy occurs because of a director
resignation or any other reason other than completing the term of
directorship, the proposal will be submitted at the PTTEP Board of
Directors’ meeting. Board approval requires a three-fourths vote by the
directors.

11.2.2 Executives’ Nominating

PTTEP’s President is authorized to select and appoint any person(s) with
knowledge, capabilities and experience in PTTEP business to management
level. This selection process is in compliance with PTTEP Personnel
Administration Regulations. In case there is a need to select a person
who is not in PTTEP, an interview of the candidate must be conducted by
the Interview Committee. Thereafter, the appointment must be reported at
the Board of Directors’ meeting. Additionally, any appointment of audit
department management is required to seek prior approval from the Audit
Committee.

11.3 Remuneration of the Board of Directors and Management

  11.3.1 Directors’ Remuneration

+-----------------+---------+---------------+---------+----------------+
| Remuneration    | 2545 •  |               | 2546 •  |                |
|                 | 2002    |               | 2003⁽³⁾ |                |
+-----------------+---------+---------------+---------+----------------+
|                 | No. of  | Total Amount  | No.of   | Total Amount   |
|                 | prs.    | (Baht)        | Prs,    | (Baht)         |
+-----------------+---------+---------------+---------+----------------+
| Meeting Fee     | 16      | 5,337,382     | 16      | 7,261,774      |
+-----------------+---------+---------------+---------+----------------+
| Bonus           |         | 8,973,039 ⁽¹⁾ |         | 12,204,691⁽²⁾  |
+-----------------+---------+---------------+---------+----------------+
| Other           |         | -             |         |                |
| remuneration    |         |               |         |                |
+-----------------+---------+---------------+---------+----------------+
| Total           |         | 14,310,421    |         | 19,466,465     |
+-----------------+---------+---------------+---------+----------------+

(1) This included the2001 bonus of Baht 496,247

(2) This include 2002 bonus of Baht  826,517

(3) See details of each director on page 47

  11.3.2 Executives’ Remuneration

+--------------+--------+-----------------+---+---------+-----------------+
|              | 2002   |                 |   | 2003    |                 |
+--------------+--------+-----------------+---+---------+-----------------+
|              | No. of | Total Amount    | N |         | จำนวนเงินรวม     |
|              | Mgnt.  | (Baht)          | o |         | (บาท)           |
|              |        |                 | . |         |                 |
|              |        |                 | o |         |                 |
|              |        |                 | f |         |                 |
|              |        |                 | M |         |                 |
|              |        |                 | g |         |                 |
|              |        |                 | n |         |                 |
|              |        |                 | t |         |                 |
|              |        |                 | . |         |                 |
+--------------+--------+-----------------+---+---------+-----------------+
| Salary       | 10     | 32,010,330      | 1 |         | 38,499,452.34   |
|              |        |                 | 2 |         |                 |
+--------------+--------+-----------------+---+---------+-----------------+
| Bonus        |        | 11,259,750      |   |         | 15,242,450.00   |
+--------------+--------+-----------------+---+---------+-----------------+
| Other*       |        | 4,569,506       |   |         | 5,554,297.77    |
+--------------+--------+-----------------+---+---------+-----------------+
| Total        |        | 47,839,586      |   |         | 59,296,200.11   |
+--------------+--------+-----------------+---+---------+-----------------+

  * Provident Fund

  Please refer to warrants of the ESOP program on page 52.

Remark

PTTEP transferred the warrants to purchase the Company’s common shares,
allotted in 2002 for 6 directors who are governmental officials to the
Ministry of Finance.   PTTEP did not offered any extra warrants to the
directors to purchase the Company’s common shares in  2003.  The Company
offered the warrants only to the management and employees with approval
from the 2003 General Shareholder Meeting.  The allotment of this
2,000,000 units of warrants for the exercise of right under the warrants
issued or 0.31% of the paid-up shares was allocated to management and
employees in 2003 to reward for their responsibility and performance. 
The exercise price of this allotment was 117 Baht which was the market
price calculated by using the average closing price of the Company’s
shares 20 days prior the date which the Company determines the issuance
and exercise of the warrants.  The directors who are not governmental
officials and management exercised the 2002 allotment of warrants under
their rights at the exercise price of 111 Baht per share. 

Management holding shares in the Company

+-------------------------+---------+--------+---+-----------+---+-----------+
| Name List               | Number  |        | D |           | N |           |
|                         | of      |        | i |           | u |           |
|                         | Shares  |        | f |           | m |           |
|                         | as of   |        | f |           | b |           |
|                         | 31      |        | e |           | e |           |
|                         | D       |        | r |           | r |           |
|                         | ecember |        | e |           | o |           |
|                         |         |        | n |           | f |           |
|                         |         |        | t |           |   |           |
|                         |         |        | i |           | P |           |
|                         |         |        | a |           | T |           |
|                         |         |        | t |           | T |           |
|                         |         |        | i |           | E |           |
|                         |         |        | o |           | P |           |
|                         |         |        | n |           | W |           |
|                         |         |        | o |           | a |           |
|                         |         |        | f |           | r |           |
|                         |         |        | N |           | r |           |
|                         |         |        | u |           | a |           |
|                         |         |        | m |           | n |           |
|                         |         |        | b |           | t |           |
|                         |         |        | e |           | s |           |
|                         |         |        | r |           |   |           |
|                         |         |        | o |           |   |           |
|                         |         |        | f |           |   |           |
|                         |         |        | s |           |   |           |
|                         |         |        | h |           |   |           |
|                         |         |        | a |           |   |           |
|                         |         |        | r |           |   |           |
|                         |         |        | e |           |   |           |
|                         |         |        | s |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
|                         | 25      | 254    |   |           |   |           |
|                         | 45/2002 | 6/2003 |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 1. Mr. Maroot Mrigadat  | 2,000   | 5,500  |   | 3,500     |   | 40,500    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 2. Mr. Tevin Vongvanich | 4,700   | 10,900 |   | 6,200     |   | 40,500    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 3. Mr. Suwit Pitrchart  | 6,000   | 9,000  |   | 3,000     |   | 36,900    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 4. Mr. Somkiet Janmaha  | 4,000   | 8,300  |   | 4,300     |   | 31,900    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 5. Mr. Asdakorn Limpiti | 12,000  | 18,300 |   | 6,300     |   | 31,900    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 6. Mr. Poawpadet        | -       | -      |   | -         |   | 36,200    |
| Vorabutr                |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 7. Mr. Chatchawal       | -       | -      |   | -         |   | 31,900    |
| Eimsiri                 |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 8. Mr.Somporn           | 6,600   | 10,900 |   | 4,300     |   | 31,900    |
| Vongvuthipornchai       |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 9. Mr. Nipit Isarankura | 400     | 4,700  |   | 4,300     |   | 31,900    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 10. Mr. Prisdapunt      | -       | 43,400 |   | 43,400    |   | 24,200    |
| Pojanapreecha           |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 11. Mr. Suppamas        | -       | 3,400  |   | 3,400     |   | 10,600    |
| Prachakvej              |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 12. Mr. Anutra Bunnag   | -       | 1,100  |   | 1,100     |   | 11,500    |
+-------------------------+---------+--------+---+-----------+---+-----------+
| 13. Mrs. Nuntiya        | 3,000   | 4,100  |   | 1,100     |   | 8,000     |
| Sathirakul              |         |        |   |           |   |           |
+-------------------------+---------+--------+---+-----------+---+-----------+

11.4 Corporate Governance Report

 11.4.1 Corporate Governance Policy/ Business Ethics/Leadership and Vision 

In recognition of the importance of Good Corporate Governance, the PTTEP
Board of Directors issued a written statement in 2001 concerning this
critical company policy. The Board also regularly reviews this document,
entitled The Corporate Governance of PTTEP [CG], which can also be
easily accessed through the PTTEP website. Business Ethics at PTTEP are
based on the six main principles of PTTEP’s Corporate Governance:
Accountability, Responsibility, Fairness and Integrity, Transparency,
Creation of long-term Value for all stakeholders and Promotion of Best
Practices.

In 2003 PTTEP focused on the practice of good corporate governance at
the employee level by building increased employee understanding of its
principles. Previously, the Company focused its greatest attention at
the levels of director and management. As a part of this effort, PTTEP
targeted a 2-year period, from June 2003 until June 2005, as a period
dedicated to the Strengthening of Corporate Governance Period of PTTEP.
A primary goal is to create a better understanding of how good Corporate
Governance benefits our business, particularly as employees are
stakeholders in the Company and they help to strengthen the long-term
security of the Company. Many activities have been conducted: exhibition
of the six main principles of Corporate Governance of PTTEP; soft-talks
with divisional employees; induction for all new employees on Corporate
Governance, along with the distribution of Handbooks that all employees
must sign and be accountable. Additionally, hotline channels have been
provided for stakeholders to communicate with the Company for any
inquiry. Furthermore, other internal communication channels were created
for employees, such as the CG Website, the CG Web Board and a CG
videotape, to enlighten employees understanding of Corporate Governance.
Most important of all, starting from 2003 PTTEP, began to use the CG
Index as one of the KPIs that are linked to the employees’ special
annual payment or bonus.

Directors and management still have important roles as leaders in
corporate governance as they realize their responsibility to the
shareholders. They are to govern and manage the Company effectively in
accordance with the vision and strategy set up for the sake of its
shareholders, partners, lenders, suppliers, the government, employees,
and also, the society and environment.

PTTEP’s Directors are capable and knowledgeable Eight of our Directors
have already participated in IOD [Institute of Director] Directorship
Programs and other interesting IOD courses through out the year. The
Directors of the Board and Sub-have evaluated their 2003 performance
with tangible and reasonable indicators to increase efficiency.
valuation survey results reflected satisfactory and efficient
performance as related to the level of importance given. These overview
results are disclosed in the 2003 Chairman’s Message and the Audit
Committee Report.

 11.4.2 Controlling System and Internal Audit 

PTTEP employs a thorough and efficient internal audit that integrates
acceptable levels of Company risk and the diverse activities of
individual departments. The Internal Audit Department oversees constant
internal controls to ensure improved control measurements related to all
possible events as well as, environmental and other variable risks.

PTTEP personnel at all levels, including Directors, management and staff
employees, have collectively devised work procedures intended to achieve
the following:

1.  Efficient and effective operations, including prudent use of
    resources

2.  Accurate, reliable and prompt financial reporting

3.  Full compliance with the Company’s policies, laws and regulations

PTTEP has implemented its internal control system in accordance with the
regulations of The Committee of Sponsoring Organizations of the Treadway
Commission (COSO) and that of the Committee of the Auditor General of
Thailand. The PTTEP internal control system, comprises the five
following components:

1.  Control Environment: PTTEP has strategically planned its operations
    and projects, organization and human resources management as well as
    its business and financial management. The Company is determined to
    uphold the principles of Good Corporate Governance and has set up
    this policy in its statement: Corporate Governance of PTTEP.

2.  Risk Assessment: PTTEP has assessed prominent risks by dividing them
    into two categories: 1) Organization Level: to be watched over by
    top executives and 2) Activity Level: to be watched over either by
    management or the activity/work process owner.

3.  Control Activities: PTTEP has organized its business to function
    systematically, efficiently and competitively within the industry as
    well as with our partners. Also, to prevent and minimize operational
    risks, the Company operates under four essential Company
    Regulations: Human Resources Management Regulations, Finance and
    Accounting Regulations, Budgeting Regulations and the Procurement
    Regulations.

PTTEP has formed an Authority Table, known as the PTTEP Delegation of
Authority and Signatures (DAS), which the President can use to clearly
delegate authority to the Company’s functional management, resulting in
practical and easily-tracked courses of action.

4.  Information and Communication: PTTEP realizes the importance of the
    Information Technology and Communication and thus has provided an
    effective system, including internal and external channels as
    detailed below:

  - Internal/External Communication: The Company has forged ahead with
  technically sophisticated and up-to-date computerized communication
  systems and equipment, for both internal and external communications,
  so that management and staff can readily achieve work objectives.
  Moreover, for more elaborate external communication, these systems
  guarantee that adequate information and the required reports are
  available for all institutions as required by law. Also, it is a PTTEP
  policy to always undertake efficiency and promptness as goals that
  will result in better understanding and improved networking for the
  business.

  - Secure Data Transmission: With a dependable information control
  system moderating the sending and receiving of data, PTTEP has
  attained clear distinction of authority and easily-understood
  responsibilities for all its staff and functional units. Furthermore,
  PTTEP has laid out levels for access to confidential information and
  applications in all its divisions which allow access to authorized
  personnel only.

5. Monitoring and Evaluation: PTTEP features performance monitoring and
evaluation systems in which employees at the operational level are
evaluated on their performance once a year. Management at divisional and
departmental levels are evaluated quarterly. These evaluation reports
are systematically managed through reports to the Management, the Board
of Directors, the Stock Exchange of Thailand (SET) and Shareholders.
Furthermore, PTTEP’s Internal Audit Department, which reports directly
to the Audit Committee, monitors and evaluates the efficiency and
effectiveness of all PTTEP operations.

11.4.3 Risk Management

Risk Management involves predicting and understanding the causes of
business changes which may affect the Company’s targeted business goals,
and the standard practices required to manage these changes adequately
and appropriately.

PTTEP’s Risk Management policy has been set up for the proper and
efficient handling, tracking and monitoring of risks. For any risk that
confronts Company business, PTTEP has prepared standard practices to
respond in an appropriate, systematic and efficient manner. It should
also be noted, however, that the Company remains committed to enhancing
its efforts through further campaign promotion and employee
encouragement. By continuing to build a new working culture with
increased employee risk awareness, improved work procedures and the most
suitable employment of resources, PTTEP will not only be able to reduce
possible loss, but also gain value-adding new business opportunities for
the Company.

PTTEP has developed its risk management system into 5 steps: setting
objectives; identification; assessment; mitigation and monitoring, so as
to be able to cope with 2 levels of risks: the corporate level, taken
care of by management and the departmental level taken care of by
individual departments.

In 2003 PTTEP established it Risk Management Committee composed of top
Company executives and the Organization and Process Development
Department who are accountable for the following duties:

1.  To define the policy framework and processes for Risk Management;

2.  To promote and implement the risk strategy and policy by enhancing
    the level of risk awareness within PTTEP, and through the
    development of appropriate procedures and commitment of resources;

3.  To audit, monitor and assess risks and means of mitigation.

In practice, PTTEP held 6 Risk Management Committee Meetings in 2003 to
set up a policy and risk management framework; and also to follow up on
detailed assignments. This was to assure that the system functioned
efficiently and reported accurately to the Board of Directors.
Significant projects approved by the Risk Management Committee were as
follows:

-   Risk management and coping solution plan

-   Departmental risk management plans for six departments

-   Preparation of early warning system for management, enabling them to
    foresee changes determine solutions for risk protection and
    incorporate reviews of the risk management manual accordingly.

 11.4.4 Balance of Power, Aggregation or Segregation of Positions

There are 15 Directors in PTTEP’s Board, with the President as a
non-executive Director. The composition of the PTTEP Board of Directors
can be further specified as four groups, namely, independent Directors,
connected Directors, private-sector Directors, and the Director General
of Department of Mineral Fuels. PTTEP’s Directors are both capable and
knowledgeable personnel, a good mixture of experts from the petroleum,
legal, and finance. They are able to express their opinions
independently regarding the operation of the Company and its annual
strategic plan. The Directors are free to make comments about as well as
object to any issue, based on their own viewpoints, with no
intervention. Currently, one-third of the Board of Directors are
Independent Directors. In all Board meetings, Directors remain free of
undue free influence and are unlimited in any role they may wish to
assume. It can be categorically stated that in 2003 the PTTEP Board of
Directors efficiently oversaw the effectiveness of the Company and
protected the assets of all PTTEP stakeholders.

PTTEP’s Chairman of the Board and the President are not the same person.
The Chairman takes the role as the leader involved with Company
strategy. Company business policy, however, is determined jointly by the
Board of Directors and the Management. It is also the Board’s role to
challenge the Company’s business management in accordance with Good
Corporate Governance guidelines and to assure that Board of Directors’
Meetings are conducted successfully. During the meeting, all Directors
are urged to participate as well as raise any searching questions they
may have. As a result of these meetings, the Board can provide
suggestions, by way the PTTEP President, to the Company’s Management
team. At the same time, the Board will not intervene regarding any
routine tasks or business activities under the responsibility of their
respective team(s). Only the President or the Acting President is
authorized to make such an endorsement and assume such responsibility
over Company matters. Presidential authority and power are thus
correctly channeled Management. As a result of the above, the authority
of the Chairman and the Management are clearly defined and separated.

11.4.5 Subcommittees

Shareholders at the 2003 General Shareholders Meeting approved the
amendment of PTTEP’s Articles of Association to also include the
requirement to appoint a Nominating Committee, besides an Audit
Committee and a Remuneration Committee. (Details on page 47-49)

In 2003, PTTEP held five Audit Committee Meetings. Agendas were sent to
the Committee members to study at least 7 days in advance and all
members of the Committee attended the meetings, all of which required
two hours or more. The Audit Committee considered a total of 38 issues.
Conclusions regarding the performance of the Audit Committee are in the
Report of the Audit Committee as referred to in item 12 : Internal
Control.

PTTEP held four Remuneration Committee Meetings in 2003 to consider 4
issues regarding (1) the 2003 remuneration package of the Directors (2)
the 2004 remuneration package of the President and his performance
evaluation (3) the remuneration structure of Executives and (4) key
performance indicators (KPIS) and target for the linked reward.

PTTEP held two Nominating Committee Meetings in 2003 with full
attendance of the members. The meetings were to select the appropriate
persons to be elected as new directors and the President, for later
submission to the Board of Directors for their consideration. Particular
concern was paid to overall group composition.

11.4.6 Shareholders’ and Stakeholders’ Rights and Investor Relations

PTTEP organized fair Shareholders’ Meetings that facilitated equitable
rights among shareholders at these meetings by declaring clear voting
procedures to all shareholders present. These voting procedures are also
stipulated in the Articles of Association. Shareholders can also grant
their proxy to independent directors.

PTTEP is highly concerned about timely and accurate information
disclosure to the Stock Exchange of Thailand (SET). The Company has set
up a transparent disclosure procedure with regard to both the types of
information and time appropriateness for these reports. To assure the
correctness and sufficiency of information, the Company’s financial
reports have been reviewed by the Office of the Auditor General, the
Company’s appointed Auditor and also approved by the Audit Committee
before release to the public. Additionally, a report covering the Board
of Directors’ responsibilities regarding Company Financial Statements is
included in the Annual Report. Disclosure of non-financial information,
especially connected transactions, must also be revealed in the Annual
Information Disclosure Report (Form 56-1) and the Annual Report. A MD&A
was also revealed quarterly. The Company’s Investor Relations Department
maintained close communication with shareholders and analysts. The PTTEP
website has been developed to serve as an easily-accessible resource for
shareholders. Since the beginning of 2004, information has been provided
in both Thai and English In 2003 PTTEP disclosed 45 pieces of Company
Information through the Elcid System to SET.

PTTEP has clearly stated its policy on equivalence treatment toward
stakeholders in its statement Corporate Governance of PTTEP. The
Company’s regulations also deal with stakeholders’ rights in its
Regulations of Human Resources Management, which provides for a Welfare
Committee to look after employees’ benefits. Moreover, the Company’s
Procurement Regulation policy furthers fairness between the Company and
its suppliers by way of a transparent procurement system. Other assigned
departments, such as the Health, Safety and Environment Department, and
the External Relations Department assume responsibility for social and
environmental activities. The Investor Relations Section of the
Financial Department and the Office of the Corporate Secretary both also
serve to answer inquiries from shareholders and investors.

11.4.7 Shareholders’ Meetings and Board of Directors’ Meetings

PTTEP organized Shareholders’ Meetings, with equitable treatment for all
participants and in strict accordance with legal procedures, from
meeting invitations, distributing meeting documents to informing all
concerned of the meeting agendas. Meeting procedures as well as the
submission of meeting reports have been in line with the SET’s
requirements. Thus, PTTEP has announced the names and necessary personal
records of new Directors, chosen to replace those Directors who resigned
because of their term completion , only to the shareholders prior to the
meeting on the meeting date.

The Company has clearly stated its method for the counting of
shareholder votes and on every occasion prior to a meeting, such method
has been announced. The Board Chairman, the Audit Committee,
Remuneration Committee, Nominating Committee, Independent Directors,
President, and the Company’s auditor were present at the Shareholders’
Meetings to answer any questions raised. In 2003, The General
Shareholders Meeting was held on April 24, 2003, and agenda items
considered were the Company’s annual operating results and dividend
payment; the appointment of the auditor and consideration of the
auditing fee, the appointment of the new directors replacing those who
resigned because of their term completion. Also considered were the
remuneration of the Board of Directors, and the amendment of the
Company’s Articles of Association to ensure they are in line with the
SET’s Good Corporate Governance guidelines to include the appointment of
a Nominating Committee. At the Shareholders’ Meeting, participants also
considered the cancellation of and the issuance and offering of warrants
for the Company’s management and employees as well as the increase of
registered capital to be a reserve for the exercise of the warrants to
be issued. All proposed agenda items were approved by the shareholders.
The minutes of the Shareholders’ Meeting were properly recorded with
vote counting, questions, and comments from shareholders and finally,
disclosure within the allotted time and in the appropriate manner. The
2003 General Shareholders Meeting took about one hour.

At the Board of Directors’ Meeting, the Board agreed on future meeting
dates throughout the year; additionally, the monthly meeting agenda
items were also agreed upon, including the monthly report on operating
results. During 2003, the monthly meetings were held on the last
Wednesday of each month, resulting in a total of 13 meetings. PTTEP’s
Directors received the invitation letter, a draft of the meeting report,
and information regarding the meeting agenda items each occasion at
least 7 days prior the meeting date. There were altogether 32 agendas
for consideration and 86 agendas for acknowledgement and 7 agendas
reported from the Audit Committee. Each meeting normally required about
two hours. The Company Secretary attended all the meetings, recorded the
minutes and managed all documents as well as giving advice to the Board
of Directors and executives regarding compliance issues.

The PTTEP Board of Directors’ Meeting Minutes covered all-important
issues, including all comments made by the Directors. Ultimately, all
the minutes were unanimously approved and were systematically filed. In
most cases, all PTTEP’s Directors attended meetings regularly unless
there was a legitimate and necessary reason to be absent. If having
known in advance, the Chairman of the Board was always informed prior
the relevant meeting. Attendance reports for the Board of Directors for
year 2003 appear on page 47.

11.4.8 Directors’ and Executive Remuneration

At the 2003 General Shareholders Meeting, the shareholders approved the
new remuneration of the directors as proposed by the Remuneration
Committee. From 2003 onwards, directors will receive 20,000
Bath/person/month for the meeting fee; 20,000 Bath/person/month for the
retainer fee and a bonus for all directors within the performance year
at an amount limited to 11.5 million Baht/year. The Board of Directors
will consider the distribution of the allotment and the amount is to be
adjusted according to the directors’ attendance at the meetings. Details
of the remuneration are displayed on Page 50.

Within the Board of Directors approval of the salary structure in 2002,
the Remuneration Committee approved 4% increase to the executives’
salary structure off January 1, 2002 to December 31, 2003. The new
salary structure will be effective from January 1, 2003 to December
31,2003.

11.4.8 Conflict of Interest

PTTEP has established rules and regulations to manage any conflict of
interest which might occur, and there are systematic procedures to treat
any conflict of interest that involves any PTTEP personnel, from the
Director to the employee level. It is also clearly stated in the
Company’s Articles of Association that the SET’s requirements must be
followed regarding such matters to avoid conflict of interest.
Therefore, for any connected transactions, approval must be granted by
the Audit Committee to ensure the appropriateness of the transaction.
Such transactions must also be revealed in the Company’s Annual Report
PTTEP urges the Company’s executives and employees involved in sensitive
information for disclosure to the public not to make any transaction or
trade any Company shares, especially during the quarterly and yearly
financial disclosure preparation period

Directors’ authority has also been balanced through the number of
dependent and Independent Directors. If there were any connected
transactions involved, such as in the setting of petroleum product
price, dependent directors who are from PTT, the main shareholders,
would vote on this agenda item after the independent directors and the
resolution would use only the votes of the independent directors to
determine for the final decision.

11.5 Inside Information Handling

The Corporate Governance of PTTEP clearly stipulates policies on
Confidential Information and on Securities Exchange. The handling of all
inside information must be restricted to the scope of one’s
responsibility only, and measures are in place to dissuade particular
individuals from making any transaction of PTTEP shares during periods
in which PTTEP is about to disclose information to the Stock Exchange of
Thailand, such as reports on the Company’s annual and quarterly
financial statements and the acquisition of assets. Directors and
management, including secondees of high positions and staff involved in
the preparation of these reports and other inside information, are
instructed not to involve themselves in any transaction of PTTEP shares,
and personnel at all levels are encouraged to become long-term
shareholders for at least three months from the latest buying or selling
of PTTEP shares. In year 2003, PTTEP announced 4 restricted periods:
during the periods of the announcement of 2002 financial statement at
the beginning of 2003, the first, second and third quarter financial
statements and during the acquisition of the Thai Shell Exploration and
Production Co., Ltd. assets. All participated quite well to this
measure.

6.  Personnel

11.6.1 As of 31 December 2003 PTTEP had 718 employees.

11.6.2 Number of employees by divisions:

  (1) Lines under the President 51 employees

  (2) Strategy & Capability Development Division 29 employees

  (3) Thai Offshore Assets 210 employees

  (4) Regional Assets 21 employees

  (5) Business Development Division 42 employees

  (6) Geosciences Division 58 employees

  (7) Business Services Division 152 employees

  (8) Finance & Accounting Division 61 employees

  (9) Human Resources Division 42 employees

(10) Production Development Division 52 employees

11.6.3 PTTEP had no significant change in number of employees and had no
Labor Dispute in the past three year.

11.6.4 Total remuneration (include of salary bonus and provident fund)
of all employees as of 31 December 2003 is Bath 722,074,047.89.

  11.6.5 Human Resources Development Policy

The Company realizes that human resources are the most important factors
in creating competitiveness and becoming an international organization. 
In line with the vision and mission, the Company accelerated the
development and management of the human resourced department, and has
set up employee development plans at all levels which are summarized
below:

1)            Created a human resource development policy in accordance
with the Company’s vision.  Mission and corporate values to meet its
business growth.  The main focus is on the development of technical and
other professional competencies. Other areas focus included safety and
environment, information technology, English language and managerial
skills.  Along this line, the Company is establishing a Corporate
Culture and creating an environment that support the development of
ethical employees who are willing to learn and develop themselves,
thereby enhancing the strength of the company’s learning organization
and supporting those employees who are devoted to work to achieve
excellence.      

2)      Conducted Performance Development Appraisal and Competencies
Development Assessment and used  the results as a basis for analyzing
employees’ development needs.

3)  Developed  career development plans that meet the human resource
development policy and needs, and used the plans as guidelines for the
development of management’s and employees’ skills knowledge and
capability needed for performing their current jobs, thereby  helping to
further future growth ; as well as for enhancing teamwork, decision
making and solving problems skills required for  various situations. 
The career development plans are established together with employees,
line managers and all others concerned both for specific group of
employees and for each individual through the use of a systematic and
continuous approach. 

4)     Provided training in accordance with the established plan through
internal/external courses, on the job training, international
assignments, secondment programs, study visits, job rotations, project
assignments and coaching (which has been intended to provide
developmental advice), seminars, knowledge sharing forums and
self-development through the use of information technology and library
resources. 

5)        Established a mechanism for efficient employee development by
involving line managers, home base managers, career counselors and all
concerned in the preparation of manpower plans, individual development
plans, follow-up and assessment of employee development projects to
ensure target achievements.