11. Connected Transactions

11.1 Connected Transaction in 2008

11.1.1 Regular Commercial Items

+----------+--------+----------------------+-------+------------------+
| C        | Shares | Transaction          | 2008  | Necessity and    |
| onnected | in     |                      | Value | Reason           |
| Company  | PTTEP  |                      |       |                  |
+----------+--------+----------------------+-------+------------------+
| PTT Plc. | 65.55% | 1.1 Petroleum        | Baht  | Prices were      |
| (PTT)    |        | product sales        | 11    | market-based,    |
|          |        | volumes:             | 5,774 | reflecting those |
|          |        |                      | mi    | quoted by        |
|          |        | -   Crude oil: 8.65  | llion | project partners |
|          |        |     MMBBL            |       | to PTT.          |
|          |        |                      |       |                  |
|          |        | -   Natural gas:     |       |                  |
|          |        |     303,137.87 MMSCF |       |                  |
|          |        |                      |       |                  |
|          |        | -   LPG: 89,650      |       |                  |
|          |        |     Metric Tons      |       |                  |
|          |        |                      |       |                  |
|          |        | -   Condensate:      |       |                  |
|          |        |     11.30 MMBBL      |       |                  |
+----------+--------+----------------------+-------+------------------+

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

-   On 26 March 2008, the Arthit Project came on stream and began gas
    delivery to PTT, which has now reached the contractual obligation of
    330 MMSCFD.

-   On 23 June 2008, PTTEP International Co., Ltd. (PTTEPI), the
    operator and sole shareholder in the M9 Block exploration project,
    signed the Head of Agreement (HOA) between the sellers (PTTEPI and
    Myanmar Oil and Gas Enterprise) and the buyer (PTT Plc.) These
    contained the average gas delivery rate from M9 at 300 MMSCFD, of
    which Thailand would buy 240 MMSCFD and Myanmar, 60 MMSCFD, at
    prices to be based on that in the current GSA between the two
    countries.

  11.1.2 Property Leases

+----------+---------+----------------------+-------+-----------------+
| C        | Shares  | Transaction          | 2008  | Necessity and   |
| onnected | in      |                      | Value | Reason          |
| Company  | PTTEP   |                      |       |                 |
+----------+---------+----------------------+-------+-----------------+
| PTT Plc. | 65.55%  | 2.1 Office space     | Baht  | The rates for   |
|          |         | leases and services: | 19.68 | such space      |
|          |         |                      | mi    | leases and      |
|          |         | 2.1.1 PTTEP agreed   | llion | services were   |
|          |         | to renew its office  |       | compatible with |
|          |         | lease with           |       | market rates.   |
|          |         | associated services  |       |                 |
|          |         | to PTT for 2,800     |       |                 |
|          |         | square 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 146       |       |                 |
|          |         | square meters for    |       |                 |
|          |         | two and a half years |       |                 |
|          |         | from 1 February 2008 |       |                 |
|          |         | to 30 September      |       |                 |
|          |         | 2010.                |       |                 |
+----------+---------+----------------------+-------+-----------------+
| PTT      | PTT     | 2.1.2 PTTEP leased   | Baht  | The rates for   |
| A        | held    | 333 square meters of | 1.50  | such space      |
| romatics | 48.66%  | office space and     | mi    | leases and      |
| and      | in      | associated services  | llion | services were   |
| Refining | PTTAR   | to PTTAR for three   |       | compatible with |
| Public   | and     | years from 1 October |       | market rates.   |
| Company  | 65.55%  | 2007 to 30 September |       |                 |
| Limited  | in      | 2010. Then on 1      |       |                 |
|          | PTTEP   | February 2008, an    |       |                 |
| (PTTAR)  |         | amendment was made   |       |                 |
|          |         | to the contract,     |       |                 |
|          |         | whereby PTTAR        |       |                 |
|          |         | reduced its lease    |       |                 |
|          |         | area to 187 square   |       |                 |
|          |         | meters. Then on 1    |       |                 |
|          |         | December 2008, PTTAR |       |                 |
|          |         | sought abolishment   |       |                 |
|          |         | of the contract.     |       |                 |
+----------+---------+----------------------+-------+-----------------+
| PTT Plc. | 65.55%  | 2.2 Land lease       | Baht  | A third party   |
|          |         |                      | 5.49  | was             |
|          |         | PTT formally leased  | mi    | commissioned to |
|          |         | 2.72 Rai of land     | llion | assess and      |
|          |         | (about 4,344 square  |       | calculate this  |
|          |         | meters) to PTTEP.    |       | lease.          |
+----------+---------+----------------------+-------+-----------------+

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

  ----------- ------------ ----------------------- --------- ------------------
  Connected   Shares in    Transaction             2008      Necessity and
  Company     PTTEP                                Value     Reason

  PTT ICT     PTTEP held   The PTTEP Board of      Baht      This was in
  Solutions   20% in PTT   Directors, at Meeting   120.93    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., and    technology services               
              Thai Oil     (ICT services) for the            
              Plc., 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.                          
  ----------- ------------ ----------------------- --------- ------------------

11.1.4 Prorated Financial Assistance to Subsidiaries

  ----------- ---------- ----------------------- --------- ------------------
  Connected   Shares in  Transaction             2008      Necessity and
  Company     PTTEP                              Value     Reason

  Energy      PTTEP held The PTTEP Board of      Baht      PTT and PTTEP each
  Complex     50% in     Directors, at Meeting   1,835     entered into a
  Co., Ltd.   Energy     No. 3/2550/261 on 27    million   loan agreement
              Complex    March 2007, passed a              whereby the loan
              Co., Ltd., resolution for PTTEP to           interest rate
              as did PTT lend to Energy Complex            would be an
              Plc.       Co., Ltd., prorated to            average of the
                         its 50% shareholding              MLRs announced by
                         and up to Baht 4                  four given
                         billion under a 13-year           commercial banks.
                         contract, with effect             
                         from 15 February 2008.            
                         The remaining portion             
                         of up to the same limit           
                         was to be provided by             
                         PTT Plc.                          
  ----------- ---------- ----------------------- --------- ------------------

11.2 Procedure for approving connected transactions

PTTEP’s Board considers all transactions that may involve conflicts of
interest, including related or connected transactions, to ensure that
they are in compliance with sound business ethics and meet the scrutiny
of the Audit Committee 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
(SEC). Information disclosure on potential conflicts must be considered
by the Board to ensure accurate and adequate disclosure.

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

11.3 Comments of the Audit Committee

PTTEP’s Audit Committee reviewed and determined that the decisions and
actions taken by the Board of Directors or the Management, or both, were
based on the appropriateness and fairness of all connected transactions
that occurred in 2008.

11.4 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.