10. Connected Transactions

10.1 Connected Transaction in 2008

(1) Regular Commercial or Business-Supporting Items

+-------+------+-----------------------+------+----------------------+
| Conn  | Sh   | Transaction           | 2009 | Necessity and Reason |
| ected | ares |                       | V    |                      |
| Co    | in   |                       | alue |                      |
| mpany | P    |                       |      |                      |
|       | TTEP |                       |      |                      |
+-------+------+-----------------------+------+----------------------+
| PTT   | 65.  | 1.1 Petroleum product | Baht | Prices were          |
| Plc.  | 462% | sales:                | 10   | market-based,        |
| (PTT) |      |                       | 0,14 | reflecting those     |
|       |      | -   Crude oil: 8.68   | 7.28 | quoted by project    |
|       |      |     MMBBL             | mil  | partners to PTT.     |
|       |      |                       | lion |                      |
|       |      | -   Natural gas:      |      |                      |
|       |      |     324,753.83 MMSCF  |      |                      |
|       |      |                       |      |                      |
|       |      | -   LPG: 72,410       |      |                      |
|       |      |     Metric Tons       |      |                      |
|       |      |                       |      |                      |
|       |      | -   Condensate: 11.42 |      |                      |
|       |      |     MMBBL             |      |                      |
+-------+------+-----------------------+------+----------------------+
|       |      | 1.2 Petroleum product | Baht | The Board of         |
|       |      | purchase:             | 1,12 | Directors approved   |
|       |      |                       | 8.05 | this contract with   |
|       |      | -   Jet fuel: 1.593   | mil  | PTT under price      |
|       |      |     million liters    | lion | formulas and an      |
|       |      |                       |      | agreement from 2009  |
|       |      | -   High-speed        |      | to 2013, with the    |
|       |      |     diesel: 45.8256   |      | endorsement of the   |
|       |      |     million liters    |      | Audit Committee,     |
|       |      |                       |      | which considered     |
|       |      |                       |      | such formulas to be  |
|       |      |                       |      | based on market      |
|       |      |                       |      | competitiveness and  |
|       |      |                       |      | reasonable           |
|       |      |                       |      | conditions.          |
+-------+------+-----------------------+------+----------------------+

During the year, the following significant transactions were engaged in
the normal course of business:

-   In August 2009, PTTEP and its joint ventures (as sellers) signed a
    Gas Sales Agreement (GSA) for Bongkot South Field with PTT (the
    buyer), under which the Daily Contractual Quantity (DCQ) was 320
    MMSCFD. The projected on-stream date is the middle of 2012 to 2013.
    Such GSA would raise Bongkot Field’s total sales to 870 MMSCFD.

(2) Property Leases

+-------+------+---------------------------+-----+-------------------+
| Conn  | Sh   | Transaction               | 2   | Necessity and     |
| ected | ares |                           | 009 | Reason            |
| Co    | in   |                           | Va  |                   |
| mpany | P    |                           | lue |                   |
|       | TTEP |                           |     |                   |
+-------+------+---------------------------+-----+-------------------+
| PTT   | 65   | 2.1 Office space leases   | B   | The rates for     |
| Plc.  | .55% | and services:             | aht | such space leases |
|       |      |                           | 20  | and services were |
| (PTT) |      | PTTEP agreed to renew its | .26 | compatible with   |
|       |      | office lease with         | m   | market rates.     |
|       |      | associated services to    | ill |                   |
|       |      | PTT for 2,800 square      | ion |                   |
|       |      | meters for three years    |     |                   |
|       |      | from 15 August 2006 to 14 |     |                   |
|       |      | August 2009, an           |     |                   |
|       |      | additional                |     |                   |
|       |      | 201-square-meter-office   |     |                   |
|       |      | lease contract for three  |     |                   |
|       |      | years, from 1 October     |     |                   |
|       |      | 2007 to 30 September      |     |                   |
|       |      | 2010. PTTEP also engaged  |     |                   |
|       |      | in another office lease   |     |                   |
|       |      | with associated services  |     |                   |
|       |      | to PTT for 211.5 square   |     |                   |
|       |      | meters for two years and  |     |                   |
|       |      | three months from 1 July  |     |                   |
|       |      | 2008 to 30 September      |     |                   |
|       |      | 2010. All these           |     |                   |
|       |      | agreements mentioned      |     |                   |
|       |      | above have now been       |     |                   |
|       |      | revoked.                  |     |                   |
+-------+------+---------------------------+-----+-------------------+
| PTT   | 65   | 2.2 Land lease:           | B   | A third party was |
| Plc.  | .55% |                           | aht | commissioned to   |
| (PTT) |      | PTT formally leased 2.72  | 5   | assess and        |
|       |      | Rai of land (about 4,344  | .49 | calculate this    |
|       |      | square meters) to PTTEP.  | m   | lease.            |
|       |      |                           | ill |                   |
|       |      |                           | ion |                   |
+-------+------+---------------------------+-----+-------------------+

(3) Service Agreement with PTT ICT Solutions Co., Ltd.

  ----------- ------------ ----------------------- --------- ------------------
  Connected   Shares       Transaction             2009      Necessity and
  Company                                          Value     Reason

  PTT ICT     PTTEP held   The PTTEP Board of      Baht      This was in
  Solutions   20% in PTT   Directors, at Meeting   121.02    compliance with
  Co., Ltd.   ICT along    No. 10/2549/254 on 29   million   the ICT policy
  (PTT ICT)   with PTT and September 2006, passed            under the PTT
              three        the resolution for                Group management
              companies    PTTEP to sign the                 concept for
              under PTT    service agreement with            synergy.
              Group,       PTT ICT to provide all            
              including    information and                   
              PTT Chemical communication                     
              Plc., Thai   technology services               
              Oil Plc.,    (ICT services) for the            
              and PTTAR    Company for a 5-year              
              Plc., each   term, starting from 1             
              holding 20%  July 2006. Total                  
                           service charge for                
                           PTTEP portion will be             
                           approximately Baht 702            
                           million.                          
  ----------- ------------ ----------------------- --------- ------------------

(4) Prorated Financial Assistance to Subsidiary

  ----------- ------------ ----------------------- --------- ------------------
  Connected   Shares       Transaction             2009      Necessity and
  Company                                          Value     Reason

  Energy      PTTEP held   4.1 The PTTEP Board of  Baht 490  PTT and PTTEP each
  Complex     50% in       Directors, at Meeting   million   entered into a
  Co., Ltd.   Energy       No. 3/2552/292 on 27              loan agreement
  (Energy     Complex Co., March 2009, approved              whereby the loan
  Complex)    Ltd., as did PTTEP’s new loan                  interest rate
              PTT          contract with Energy              would be a
                           Complex Co., Ltd.,                commercial rate,
                           amounting to Baht 1.25            that is, the
                           billion of subordinated           commercial rate
                           loans. The other Baht             for six-month
                           1.25 billion (50%) is             fixed deposits
                           to come from PTT. The             plus 2.5% per
                           old contract dated 15             year.
                           February 2008, with a             
                           ceiling of Baht 4                 
                           billion, was revoked.             

  Connected   Shares       Transaction             2009      Necessity and
  Company                                          Value     Reason

                           4.2 Recapitalization of           
                           Energy Complex by Baht            
                           500 million to raise              
                           PTTEP’s portion to Baht           
                           900 million, as is                
                           PTT’s portion.                    
  ----------- ------------ ----------------------- --------- ------------------

10.2 Procedure for approving connected transactions

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

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

10.3 Comments of the Audit Committee

PTTEP’s Audit Committee reviewed and determined that the decisions and
actions taken by the Board of Directors or the Management, or both, were
based on the appropriateness and fairness of all connected transactions
that occurred in 2009.

10.4 Future connected transactions

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