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
corporate governance and the code of business conduct, corporate policy,
strategic plan, vision, and annual budget for its operating plans;
appointing or replacing the CEO; and monitoring and following up on
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.

As of year-end 2008, The Board consisted of 13 Directors with details of
current ones and Directors who resigned/retired during the year shown in
Attachment 1.

[TABLE]

9.1.2 Sub-committees: Appointed by the Board to screen specific,
critical matters, these
sub-committees consist of experts in suitable specialized fields who
present their views to the Board. PTTEP currently has five standing
sub-committees.

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

(1.1) To establish the company’s corporate governance policy including
the code of business conduct, which will be proposed to the Board for
approval and implemented at every level.

(1.2) To ensure that the company’s operation and the functioning of the
Board, Sub-Committees, Management, and all personnel, comply with the
Company’s good corporate governance policy and code of business conduct.

(1.3) To review the company’s corporate governance policy, the code of
business conduct, along with the guidelines and good corporate
governance practices, and compare with law, the practice of
international and leading companies, the recommendation of leading
institutions, and propose to the board for approval.

(1.4) To oversee the Company’s evaluation of the compliance of PTTEP
good corporate governance policy and code of business conduct.

(1.5) To disclose the information of the company’s good corporate
governance to stakeholders in the annual report which must have prior
approval of the Board.

The Corporate Governance Committee consists of three independent
directors:

  --------------------- ----------------- -------------------------------
  - Mr. Vudhibhandhu    Vichairatana      Chairman

  - Mr. Chokchai        Aksaranan         Member

  - Mr. Sommai          Khowkachaporn     Member
  --------------------- ----------------- -------------------------------

In 2008, there were altogether 4 meetings of the Corporate Governance
Committee. Mr. Chokchai Aksaranan was absent from the meeting once,
whereas, the other 2 committee members attend in every meeting.

(2) The Audit Committee has the following responsibilities:

    1.  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.

    2.  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.

    3.  To consider connected transactions or potential
        conflict-of-interest transactions to ensure that they were
        reasonably conducted in the best interests of the Company.

    4.  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.

    5.  To consider, select and propose the appointment of PTTEP’s
        external auditors, including their fees, as well as to attend a
        non-management meeting with an auditor at least once a year.

    6.  Deliberated the independence of the internal audit department
        and endorsed the appointment, transfer, and performance merit
        considerations for the chiefs of the internal audit department.

    7.  To consider and approve the annual audit plan.

    8.  To screen and consider the budget and manpower of the audit
        department.

    9.  The Chairman of Audit Committee or Committee member must attend
        PTTEP’s shareholders Meeting in order to answer the questions
        related to Audit Committee or the appointment of external
        auditor.

    10. To review the Audit Committee Charter annually.

    11. To undertake other assignments for the Board of Directors.

The Audit Committee comprises three Directors, each member is
knowledgeable and experienced in reviewing financial statements:

  ------------------ -------------------- --------------------------------
  - Mr. Chokchai     Aksaranan            Chairman

  - Mr. Chulasingh   Vasantasingh         Member

  - Mr. Sirin        Nimmanahaeminda      Member
  ------------------ -------------------- --------------------------------

In 2008, there were altogether eight meetings of the Audit Committee,
with all three members in attendance at each. A total of 37 agenda items
were deliberated and the sub-committee duly reported its annual
performance in the Report of the Audit Committee.

(3) The Remuneration Committee has the following responsibilities:

  (3.1) To consider remuneration packages for the Board and
  sub-Committees with fair and reasonable principles in accordance with
  work performance, Company performance, the guidelines of the industry,
  as well as the scope of duties and responsibilities, and proposed them
  to the shareholders’ meeting for approval.

  (3.2) To evaluate the annual performance of the Chief Executive
  Officer (CEO) and propose the findings to a Board meeting for
  approval.

  (3.3) To consider the remuneration package for the CEO and the salary
  structure of senior management executives with fair and reasonable
  principles and propose them to a Board meeting for approval.

  (3.4) To evaluate the performance of the Remuneration Committee,
  report its performance to a Board meeting and disclose the findings to
  the shareholders every year.

  (3.5) To review its charter consistently to ensure appropriateness and
  timeliness.

  (3.6) To undertake any other duties assigned by Board.

  The Remuneration Committee consists of at least three members, the
  majority of whom are independent directors, and the Chairman is an
  independent director. In 2008, these consisted of:

  -------------------- ------------------- ------------------------------
  - Mr. Pala           Sookawesh           Chairman and
                                           Independent Director

  - Mr. Sirin          Nimmanhaeminda      Member and Independent
                                           Director

  - Mr. Viraphol       Jirapraditkul       Member and Independent
                                           Director

  - Mr. Chitrapongse   Kwangsukstith       Member
  -------------------- ------------------- ------------------------------

  In 2008, the Remuneration Committee held three meetings, with all
  members attending each.

(4) The Nominating Committee has the following responsibilities:

(4.1) To Shortlist candidates for election/appointment as new Directors
or Chief Executive Officer, and proposing their names to the Board or
shareholders’ meetings

(4.2) To prepare the names of shortlisted candidates for Directors or
Chief Executive Officer in advance and/or when there is a vacancy

(4.3) To develop annual performance agreements (PAs) for the Board, and
the Chief Executive Officer and propose to the Board for approval, and
setting the annual assessment forms of Chairman, Directors,
Sub-committees and Chief Executive Officer

(4.4) To nominate Directors to sub-committees for appointment by the
Board when there are vacancies

(4.5) To regularly review the appropriateness and up-to-date of the
Nominating Committee Charter

(4.6) To disclose its own performance in the Company’s annual report

(4.7) To undertake any other assignment for the Board, relevant to the
selection of Directors or the CEO

The current Nominating Committee consists of three Directors:

  ----------------------- ----------------- ------------------------------
  - Mr. Chulasingh        Vasantasingh      Chairman and Independent
                                            Director

  - Mr. Sanit             Rangnoi           Member and Independent
                                            Director

  - Mr. Chitrapongse      Kwangsukstith     Member
  ----------------------- ----------------- ------------------------------

In 2008, Mr. Prasert Bunsumpun was a member during 1 February – 30
September. The Board later appointed Mr. Chitrapongse Kwangsukstith to
replace Mr. Prasert. The Nominating Committee conducted a total of seven
meetings with full attendance.

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

(5.1) To formulate PTTEP’s risk management policy and framework, and
advising the Board and the Management on issues relating to corporate
risk management

(5.2) To supervise and promote Enterprise-Wide Risk Management with a
focus on raising risk awareness for business management processes and
resources allocation

(5.3) Consideration of PTTEP’s key risks in line with corporate
direction and value chain of petroleum E&P business. Those risks are
exploration, development, production (concerning safety, security,
health, and environment), investment (concerning geopolitics), financial
and commercial, organizational capability, legal and regulatory risks.
The Committee also recommends preventive methods and risk mitigating
actions to reduce risks to an acceptable level. It consistently
monitors, assesses, and modifies mitigating actions in ways compatible
with PTTEP’s business management.

(5.4) Supporting the Risk Manager in continuously assessing major
factors in risk management actions with respect to corporate plans and
on a par with standards of leading international companies.

(5.5) Regularly reporting to the Board the outcome of risk assessment
and mitigating actions. Critical issues will require an immediate
report.

PTTEP Risk Management Committee consists of five Directors, two of whom
are Independent Directors. The current composition is:

  ---------------------- ------------------- -----------------------------
  - Mr. Pichai           Chunhavajira        Chairman

  - Mr. Vudhibhandhu     Vichairatana        Member and Independent
                                             Director

  - Mr. Sirin            Nimmanahaeminda     Member and Independent
                                             Director

  - Mr. Chitrapongse     Kwangsukstith       Member

  - Mr. Anon             Sirisaengtaksin     Member
  ---------------------- ------------------- -----------------------------

Attendance of Sub-Committees in 2008 (times)

+----------+---------+--------+---------+---------+--------+---------+
| Sub-c    |         | CG     | Audit   | Remun   | Nomi   | Risk    |
| ommittee |         | Com    | Co      | eration | nating | Man     |
| Member   |         | mittee | mmittee | Co      | Com    | agement |
|          |         |        |         | mmittee | mittee | Co      |
|          |         |        |         |         |        | mmittee |
+----------+---------+--------+---------+---------+--------+---------+
|          |         | (Total | (Total  | (Total  | (Total | (Total  |
|          |         | 3      | 3       | 4       | 3      | 5       |
|          |         | me     | m       | m       | me     | m       |
|          |         | mbers) | embers) | embers) | mbers) | embers) |
+----------+---------+--------+---------+---------+--------+---------+
|          |         | Total  | Total   | Total   | Total  | Total   |
|          |         | M      | Meeting | Meeting | M      | Meeting |
|          |         | eeting | 8       | 3       | eeting | 9       |
|          |         | 4      | tim     | tim     | 7      | tim     |
|          |         | time   | es/year | es/year | time   | es/year |
|          |         | s/year |         |         | s/year |         |
+----------+---------+--------+---------+---------+--------+---------+
| 1. Mr.   | Aksara  | 4/4    |   7/7   |   -     |   -    | -       |
| Chokchai | nan^(#) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 2. Mr.   | Vasan   | -      |   8/8   |   -     |   7/7  | -       |
| Ch       | tasingh |        |         |         |        |         |
| ulasingh |         |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 3. Mr.   | N       | -      |   8/8   |   3/3   |   -    | 8/9     |
| Sirin    | immanah |        |         |         |        |         |
|          | aeminda |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 4. Mr.   | So      | -      |   -     |   3/3   |   -    | -       |
| Pala     | okawesh |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 5. Mr.   | Jirapr  | -      |   -     |   2/2   |        | -       |
| Viraphol | aditkul |        |         |         |  ~~-~~ |         |
+----------+---------+--------+---------+---------+--------+---------+
| 6. Mr.   | Kwan    | -      |   -     |   0/1   |   3/3  | 4/9     |
| Chit     | gsuksti |        |         |         |        |         |
| rapongse | th^(##) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 7. Mr.   | Vicha   | 4/4    |   -     |   -     |   -    | 6/9     |
| Vudh     | iratana |        |         |         |        |         |
| ibhandhu |         |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 8. Mr.   | Khowk   | 3/4    |   -     |   -     |   -    | -       |
| Sommai   | achapor |        |         |         |        |         |
|          | n^(###) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 9. Mr.   | Rangnoi | -      |   -     |   -     |   2/2  | -       |
| Sanit    | ^(####) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 10.      | Chunh   | -      |   -     |   -     |   -    | 9/9     |
| Pichai   | avajira |        |         |         |        |         |
|          | ^(@)    |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 11. Mr.  | S       | -      |   -     |   -     |   -    | 7/8     |
| Anon     | irisaen |        |         |         |        |         |
|          | gtaksin |        |         |         |        |         |
|          | ^(@@)   |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| Ex-Sub-C |         |        |         |         |        |         |
| ommittee |         |        |         |         |        |         |
| Members  |         |        |         |         |        |         |
| in 2008  |         |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 1.       | Ra      | 1/1    | 1/1     | -       | 3/3    |   -     |
|  General | tanavan |        |         |         |        |         |
|          | ich^(*) |        |         |         |        |         |
|  Lertrat |         |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 2. Mr.   | Mrigad  | -      | -       | -       | -      |   1/1   |
| Maroot   | at^(**) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 3. Mr.   | Hongl   | -      | -       | -       | -      |   3/3   |
| Tongchat | adaromp |        |         |         |        |         |
|          | ^(***)  |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+
| 4. Mr.   | Bu      | -      | -       | 1/2     | 3/3    |   -     |
| Prasert  | nsumpun |        |         |         |        |         |
|          | ^(****) |        |         |         |        |         |
+----------+---------+--------+---------+---------+--------+---------+

^($) A second appointment spans 27 November 2008 and 26 November 2011.
There were a total of six members as of 2 August 2008

^(#) Assumed Chairmanship of the Audit Committee on 9 April 2008

## Became a member of the Remuneration Committee on 27 November 2008 and
a member of the Nominating Committee on 15 December 2006 to 1 February
2008, and on 27 November 2008

^(###) Became a member of the Corporate Governance Committee on 10 April
2008

^(####)Became a member of the Nominating Committee on 9 April 2008

^(@) Assumed Chairmanship of the Risk Management Committee on 27
November 2008

^(@@) Became a member of the Risk Management Committee on 9 April 2008

^(*) Resigned from the Board and the Chairmanship of the Audit Committee
on 18 February 2008

^(**) Resigned from the Board and the Risk Management Committee on 8
April 2008

^(***) Retired from the Board and the Chairmanship of the Risk
Management Committee on 2 August 2008 on reaching the age of 70

^(****)Became a member of the Remuneration Committee and the Nominating
Committee from 9 April to 30 September

3.  The Chief Executive Officer: The scope of the Chief Executive
    Officer’s authority is as follows:

    (1) Authority under Company Regulations granted by shareholders’
    resolutions

The CEO is the authorized signatory in dealing with external parties
under clause 9, paragraph 6, of the Regulations registered at the
Ministry of Commerce.

(2) Authority under Company Regulations granted by the Board

The CEO takes charge of, and is authorized for conducting, business
operations under PTTEP Regulations – namely the Budget Regulations of
1996, Finance and Accounting Regulations of 1996, Procurement
Regulations of 2007, and 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 limits:

1.  Up to 300 million baht each time for corporate and PTTEP-owned
    projects

2.  Up to each annual budget total, joint-venture assets approved under
    joint-venture agreements, and international assets approved by the
    government of each respective country in which PTTEP invested

    (3) Authority vested by the Board

The Board vested its powers in the CEO 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 the interests of the Company, as well as
the delegation of his authority. However, such exercise of authority by
the CEO or his delegated persons is forbidden if the CEO, 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 Recruitment Process

PTTEP determines the Board must always comprise at least one-third (or
at least five members) of Independent Directors. The Company has made
the qualifications of such Directors, by the Good Corporate Governance
of PTTEP, even more stringent than those defined by the Securities and
Exchange Commission (SEC), as seen below:

(1) Holds no more than 0.5% of total voting stocks of PTTEP, its parent
company, its subsidiaries, and its associated companies, a related
juristic entity defined by section 258 of the Securities and Exchange
Act or juristic persons with potential conflicts, including stocks held
by connected persons as defined by section 258 of SEC Act, as well as
nominees.

(2) Is not Board members or the management of its parent company or the
management of PTTEP, its subsidiaries or associated companies, of a
related juristic entity as defined under (1) or a juristic person with
potential conflicts; is not employee, consultant, or any other
professional service provider such as an auditor or a lawyer of PTTEP,
its parent company, its subsidiaries, its associated companies, or a
related juristic entity as defined under (1) or a juristic person with
potential conflicts.

(3) Has no interest or stake, directly or indirectly, in the finance or
management of PTTEP, its parent company, its subsidiaries, its
associated companies, a related juristic entity as defined under (1) or
a juristic entity with potential conflicts, and has no interest or stake
in a similar manner. In addition, he must refrain from having the
benefit or interest of the said nature or resigned from the positions
mentioned under (2) for more than two years.

(4) Is not connected person as defined under (1) or related by blood,
marriage, legal registration, including spouse of such person, of
executive, or of Board member of PTTEP or its parent company.

(5) Does not represent a PTTEP’s or its parent company’s Board member or
a shareholder who is a connected person as defined under (1) with the
parent company.

(6) Can independently perform their duties or deliberate their opinions
or report on their duties assigned by the Board without the influence of
PTTEP’s or its parent company’s management or connected persons under
(1) or close relatives under (4) of these persons.

The independent directors, at least once a year, will certify the
qualification when submitting their biography at the end of the year,
which will be disclosed in the Form 56-1 and the annual report.

The procedure of independent director selection is similar to the
nominating procedure of PTTEP Directors and Chief Executive Officer,
detailed under 9.2.1., that is, if an independent director is retired
from the office, to fill the vacancy, PTTEP will give priority to the
qualified candidate who also has such qualification of independent
director, and will keep the Board composition to have the right number
of the independent director. However, if any other director, from time
to time, has qualified to be an independent director, he will
automatically assume the position of independent director.

9.1.5 Business transactions or professional services between Independent
Director and the parent company, subsidiaries, associates, or other
juristic persons that may have conflicts which exceed the values
determined by the filing rules

None

  9.1.6 Company Secretary

Good Corporate Governance of PTTEP prescribes the Company to designate
the Corporate Secretary, (at present, the person in charge is Mr.
Theerasak Tancharoenlarp), to responsible for overseeing and advising
the Board and the management regarding the applicable laws, rules,
regulations and Good Corporate Governance of PTTEP, and to have
responsibility to hold the Board and Shareholders’ meetings. The
additional tasks include assisting the Board to comply with the
resolutions and safeguard the Company’s documents and information.

9.1.7 Details of the current management are as in attachment 1

9.2 Nomination of the Board and Management

9.2.1 Nomination of the Board and Chief Executive Officer

The Nominating Committee prepares the Director List, a pool of qualified
candidates, which is selected from list of directors of state own
enterprises, large sized listed companies and remarkable ones in
business. When there is a Director or Chief Executive Officer vacancy,
the Nominating Committee is to choose suitable candidates to become a
Director or President by consideration the Director List and a
recommended nominees from PTT, the major shareholder. Priority will be
given to those with skill mixes, experience, specific qualifications in
areas still lacked by the Board or critical to the Company business. To
arrive at the ideal composition of the Board and best benefit to the
Company, including awareness of the possibilities of the conflict of
interest, the Nominating Committee is to scrutinize these
qualifications:

(1) Suitable qualifications stipulated by the Public Company Limited
Act, SEC Act, regulations issued by SEC, SET, and under PTTEP Good
Corporate Governance.

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

(3) Characteristics complementary to Good Corporate Governance so as to
benefit Company business, i.e. ethics, independence, assertiveness,
creativity, accountability, care and loyalty, dedication, a suitable
age.

Election of Directors to replace retiring ones must obtain 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 31 of
each year. This has been made known to investors through SET
notification 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 Executives’ Nominating

PTTEP’s the Chief Exexcutive Officer 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 and reported to the
PTTEP Board of Directors’ meeting, with the exception of Vice President
Level that is required to be approved by PTTEP Board of Directors. In
case there is a need to select a person who is not in PTTEP, an
interview of the candidate has to be conducted by the Interview
Committee. Additionally, any appointment of internal audit department
management is required to seek prior approval from the Audit Committee

9.3 Remuneration of the Board and the Management

9.3.1 Remuneration of Directors and Sub-committee Members

[TABLE]

[TABLE]

2.  Executive’s Remuneration

The Remuneration Committee reviews and recommends the compensation
criteria or procedures for defining the compensation packages and salary
structure for executive management that are fair and reasonable while
conforming to prevailing practices in this business for the Board’s
endorsement. Executives’ compensation packages 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 accountability.

The Chief Executive Officer decides individual executive management’s
compensation. Annual merit increases of executive management 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.

+--------------+------+--------------+--------+----------------------+
|              | 2007 |              | 2008   |                      |
+--------------+------+--------------+--------+----------------------+
|              | Nu   | Total Amount | Number | Total Amount (Baht)  |
|              | mber | (Baht)       |        |                      |
+--------------+------+--------------+--------+----------------------+
| Salary       | 15   | 6            | 15     | 72,293,944.00        |
|              |      | 6,674,790.00 |        |                      |
+--------------+------+--------------+--------+----------------------+
| Bonus        |      | 3            |        | 36,156,955.00 ⁽²⁾    |
|              |      | 3,837,832.00 |        |                      |
+--------------+------+--------------+--------+----------------------+
| Other        |      | 9,583,906.50 |        | 10,393,394.40        |
| com          |      |              |        |                      |
| pensation⁽¹⁾ |      |              |        |                      |
+--------------+------+--------------+--------+----------------------+
| Total        |      | 11           |        | 112,863,498.40       |
|              |      | 0,096,528.50 |        |                      |
+--------------+------+--------------+--------+----------------------+

⁽¹⁾ Provident Fund

⁽²⁾ Includes bonus for 2008, paid in 2009

Please refer to warrants of the ESOP program on page 66

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       |             | Shares |       | Change in  | Warrants |
|            |             | as of  |       | Shares     |          |
|            |             | 31     |       |            |          |
|            |             | De     |       |            |          |
|            |             | cember |       |            |          |
+------------+-------------+--------+-------+------------+----------+
|            |             | 2007©  | 2008  |            |          |
|            |             |        | ©     |            |          |
+------------+-------------+--------+-------+------------+----------+
| 1.  Mr.    | Siri        | N/A    | 5     | N/A        | -        |
|     Anon   | saengtaksin |        | 2,000 |            |          |
|            | *           |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 2.  Mr.    | Mrigadat    | 3      | 33    | (15,500)   | 47,160   |
|     Maroot |             | 51,200 | 5,700 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 3.  Mr.    | Pitrchart   | 1      | 16    | 7,100      | 18,860   |
|     Suwit  |             | 60,000 | 7,100 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 4.  Mr.    | Vongvanich  | 1      | 16    | 32,000     | 18,900   |
|     Tevin  |             | 29,000 | 1,000 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 5.  Mr.    | Janmaha     | 1      | 24    | 49,200     | 15,900   |
|            |             | 97,400 | 6,600 |            |          |
|    Somkiet |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 6.  Mr.    | Limpiti     | 1      | 17    | 21,500     | 12,700   |
|            |             | 52,000 | 3,500 |            |          |
|   Asdakorn |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 7.  Mr.    | Eimsiri     | 10,000 | 2     | 10,000     | 12,700   |
|            |             |        | 0,000 |            |          |
| Chatchawal |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 8.  Mr.    | Vongvu      | 1      | 16    | 38,500     | 12,700   |
|            | thipornchai | 23,000 | 1,500 |            |          |
|    Somporn |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 9.  Mr.    | Isarankura  | 72,000 | 17    | 105,200    | 14,100   |
|     Nipit  |             |        | 7,200 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 10. Mr.    | Po          | 1      | 26    | 68,500     | 12,700   |
|            | janapreecha | 97,000 | 5,500 |            |          |
| Prisdapunt |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 11. Mr.    | Prachakvej  | 10,000 | 3,000 | (7,000)    | 17,700   |
|            |             |        |       |            |          |
|   Suppamas |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 12. Mr.    | Wo          | 20,000 | 5     | 31,300     | 26,700   |
|            | ngsirasawad |        | 1,300 |            |          |
|    Luechai |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 13. Mr.    | Iamchula    | 35,300 | 3     | 1,600      | 16,100   |
|            |             |        | 6,900 |            |          |
|  Suraphong |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 14. Mr.    | Tongtaow    | -      | 1     | 10,000     | 24,420   |
|     C      |             |        | 0,000 |            |          |
| halermkiat |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 15. Mr.    | Manopinives | 55,000 | 10    | 51,500     | 9,400    |
|            |             |        | 6,500 |            |          |
|    Somchai |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 16. Mr.    | Ra          | 53,000 | 9     | 37,000     | 67,000   |
|     Pairoj | ngponsumrit |        | 0,000 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 17. Mr.    | Thavisin**  | N/A    | 11    | N/A        | 10,100   |
|     P      |             |        | 5,500 |            |          |
| hongsthorn |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 18. Mr.    | Bunnag      | -      | 3     | 33,100     | 6,280    |
|     Anutra |             |        | 3,100 |            |          |
+------------+-------------+--------+-------+------------+----------+
| 14. Mr.    | Sat         | 16,700 | 2     | 4,000      | 3,360    |
|            | chawannakul |        | 0,700 |            |          |
|    Sermsak |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 19. Ms.    | Wankertphon | 61,100 | 7     | 16,700     | 2,760    |
|            |             |        | 7,800 |            |          |
|  Jaroonsri |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| Ex-        |             |        |       |            |          |
| management |             |        |       |            |          |
| in 2008    |             |        |       |            |          |
+------------+-------------+--------+-------+------------+----------+
| 1. Mr.     | Vorabutr*** | 30,800 | 6     | 38,200     | 12,700   |
| Poawpadet  |             |        | 9,000 |            |          |
+------------+-------------+--------+-------+------------+----------+

* Appointed CEO on 18 February 2008

** Appointed Vice President, Production Development Division, on 15 July
2008

*** Resigned on 16 August 2008

©Including shares of spouse and children that have not yet become sui
juris

9.4 Good Corporate Governance

9.4.1 Rights of Shareholders

Recognizing the rights of all shareholders, PTTEP has taken steps 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 issues
affecting PTTEP; and to share in the profits of the company, as follows:

(1) The Company sends meeting invitations containing agenda details and
related appendices together with the opinions of the Board, proxy forms
designed by the Ministry of Commerce, a list of all Independent
Directors together with all possible conflicts of interest of each
Independent Director. These invitations also contain details about the
credentials each shareholder needs to bring to the meeting and meeting
attendance procedure, together with the Company’s Articles of
Association (AOA) regarding the meeting and voting procedures, and a map
showing the meeting venue. In addition, shareholders may view
information about each meeting agenda item on the Company’s website at
least 30 days ahead of the meeting date once the Board of Directors has
decided on it, which will be the same version as the notice passed on to
the shareholders.

(2) PTTEP always allows registration of shareholders at least an hour
before each meeting, for which a barcode system detailing each
shareholder is reproduced on the registration form or the proxy form and
is used to facilitate the registration for time-saving.

(3) Before each meeting, the Chairman explains clearly how ballots are
cast and counted under Company’s AOA. The Company collects its count of
shareholders who have not yet voted on each agenda item and shows
ballot-counting summaries derived from barcode counting to facilitate
the process, with the summary of each item clearly displayed in the
meeting room. The Company will ask shareholder volunteers together with
an independent legal advisor to witness ballot counts for greater
transparency. To protect the rights of shareholders, PTTEP conducts
balloting for each matter separately.

(4) Allocating enough time for the meeting, the Chairman conducts each
meeting suitably and transparently, allowing thorough expression of
views and queries of shareholders before each ballot round, and
summarizes meeting resolution(s) on each agenda item. PTTEP is open for
shareholders to send their meeting-related questions to the Board ahead
of the meeting date.

(5) PTTEP gives shareholders who show up late a chance to vote on agenda
items still under deliberation.

(6) All Directors attend each shareholder’s meeting. Each member of the
standing
sub-committees may address relevant questions and concerns posed by
shareholders (if any).

(7) PTTEP regularly disseminates information to shareholders via the
Stock Exchange of Thailand’s (SET) channel, media, and publications,
including its website. PTTEP also organized its operation site visit for
shareholders for better understanding of its business.

(8) The Company sets up information request channels for minor
shareholders through the E-mail addresses of Independent Directors on
matters of Directors’ activities, good corporate governance (GCG) and
audit matters. Apart from these channels, minor shareholders can
directly contact the Corporate Secretary or the Investor Relations unit.

(9) PTTEP explicitly discloses shareholding structures in subsidiary and
affiliate companies to ensure shareholders of transparent and auditable
management structures.

(10) The Company conducts its business efficiently for its growth and
suitable returns to shareholders.

9.4.2 Equitable Treatment of Shareholders

PTTEP values and treats all shareholders equally and fairly through the
following actions:

(1) Allowing each shareholder to propose agenda items for consideration
at the annual general shareholders’ meeting (AGM) or nominate qualified
people for election as Directors ahead of the AGM date between October 1
and December 30, 2008, PTTEP announces such acceptance and deliberation
criteria via SET’s news channels up to five months ahead. Criteria for
agenda proposals and screening processes are also clearly defined. The
announcement is also publicized on the Company’s website to illustrate
equitable treatment of shareholders. That is to say, each matter or
nominee was to be considered against PTTEP’s criteria, deemed as the
screening of genuinely useful agenda items and a selection of qualified
names through the Nominating Committee before submission to the Board’s
consideration. The Board would inform the meeting of its findings,
together with its reasons, at the AGM.

(2) Conducting the meeting in sequence of agenda items as specified in
the invitation and not adding agenda items without notifying
shareholders in advance, so that they may have enough time for
investigation before making their decisions.

(3) Providing shareholders with a list of all Independent Directors on
proxy forms as another option for them to decide their own voting. PTTEP
recommended that shareholders make use of proxy forms which could direct
their own voting patterns.

(4) Encouraging shareholders to use ballots in every agenda item.
‘Voting tickets’, provided for each critical matter separately, are
collected at the meeting for dissenting and abstained votes Except for
the case of directors selection, all ballots will be collected, whether
the votes are for, against, or abstained. All votes are then summed with
the pre-cast votes as prescribed in the proxy forms before announcing
the final resolution to the meeting. For transparency and reference,
PTTEP files all voting tickets bearing signatures of the witnessed
volunteered shareholders and the independent legal advisor.

(5) Recording the minutes accurately and completely, PTTEP disseminate
to all shareholders after sending it to SET and the Securities and
Exchange Commission (SEC), 14 days after each meeting. The minutes, as
well as the web cast recording the meeting proceeding, are also posted
on the Company’s website.

(6) Ensuring strict supervision of the use of inside information by
defining in writing explicitly the Misuse of Inside Information as part
of GCG practices and the Code of Business Conduct in compliance with
securities laws. It will be regularly revised for fairness to all
stakeholders. The following summarizes the major actions taken.

(6.1) Related laws and regulations will be regularly warned to
Directors, management and all employees through various communication
channels in order to prevent any misuse of inside information either for
themselves or others. The Company clearly stipulated punitive
disciplinary measures. All supervisors, as CG leaders, must stress or
advise their own subordinates as well.

(6.2) Defining periods for transaction abstention of Company shares all
Directors, Executive Management and the manager or equivalent in Finance
and Accounting Division cooperate to refrain from engaging in Company
share transactions through themselves, spouses, children under legal age
– whether directly or indirectly (e.g., through nominees or private
funds) before PTTEP disclosed significant information, e.g., one month
before disclosure of quarterly and annual financial statements and 24
hours after such disclosure – to allow public distribution of such
information. PTTEP encouraged retention of Company shareholding for
long-term, or at least three months from the last purchase date; this
excluded purchase or sale of shares by exercising right over warrants.

(6.3) PTTEP completely discloses in the annual report the PTTEP
shareholding of the Directors, Executive Management, and the manager of
equivalent in Finance and Accounting Division in compliance with the
regulations of the Office of Securities and Exchange Commission and
always reports to the Board each time any of these people make any
changes in their shareholding. PTTEP has no direct unit in charge of
monitoring compliance with the Code of Business Conduct regarding the
Misuse of Inside Information.

(7) In its GCG principles as well as its Code of Business Conduct, PTTEP
devises practical guidelines for potential conflicts of interest for the
Directors, Management, and all employees to observe. Should such a
matter arise, the stakeholders must report it to PTTEP and the Corporate
Secretary at once and refrain from deliberating and voting on that
matter.

9.4.3 Roles of Stakeholders

PTTEP values the rights of all internal and external stakeholders, which
includes shareholders, customers, employees, government, partners,
society, communities and environment, suppliers/contractors, lenders,
competitors, local culture and tradition, and human rights, of which the
practical guidelines are stated in its GCG booklet. In addition, an
ethical business framework for balanced consideration of stakeholders
appears in its Code of Business Conduct, also publicized on the
Company’s website. PTTEP takes into consideration stakeholders and their
rights wherever it works.

(1) Treatment of major stakeholders

(1.1) Employees

(a) PTTEP recruits, selects, and hires staff based on qualifications,
experience, and competence for suitable positions, encourages their
continuous development, and promotes their career advancement.

(b) A fair compensation process is in place for PTTEP to attract and
retain competent people in its service so that they may perform their
work efficiently. Key factors include up-to-date pay scales and pay
procedures of other domestic petroleum operators, job value
discrepancies in the required expertise, job complexities, assigned
responsibilities, and expressed competence through job performance.

(c) The Company provides and/or improves mutually fair welfare schemes.
Key factors include its own affordability, both short and long terms,
with a focus on fostering the security of life for employees and their
families; components not easily affordable by most employees, not
adequate provided for by the government; and components provided by most
other domestic petroleum operators to their employees.

(d) PTTEP values timely joint-resolution of problems among employees
themselves, or between subordinates and supervisors, to maintain good
relations among all. Should such a problem arise, employees can file
petitions under the Company’s procedure. Provided that they follow the
criteria and procedure in good faith, their employment status will not
be affected, and PTTEP will refrain from taking action that would harm
them or their witnesses.

(1.2) Customers

PTTEP’s mission is to produce and sell crude oil and natural gas at
competitive prices through agreements of both long and short terms, as
well as spot-market sales. For agreements governing new projects and
spot-market sales, the Company treats all customers equally and in the
best interests of all parties. For long-term product sales, including
natural gas, PTTEP strictly honors agreements and regularly coordinates
with its customers to deliver products of quality matching customers’
needs in a timely manner.

(1.3) Suppliers/contractors

Regarding suppliers/contractors as instrument for its business, PTTEP
treats all its suppliers/contractors fairly. Its procurement is based on
fair and just competition for the maximum benefit of PTTEP. Agreements
are made in writing and honored by the Directors, the Management, and
all employees, all of whom strictly avoid benefits of procurement
activities and abstain from preclusion of any suppliers/contractors from
the competition. The Company has provided channels for
suppliers/contractors access and participation, namely its website at
http://vendorportal.pttep.com, where preliminary information is
presented on the procurement policy and hiring and purchasing terms and
conditions; suppliers/contractors can register to become suppliers with
PTTEP, and can verify their financial transaction status after the
hiring and purchase. Also, they can directly contact the Procurement
Department.

(1.4) Lenders

PTTEP not only issues debentures and bills of exchange under relevant
terms of reference, laws, and announcements of the Securities and
Exchange Commission (SEC), but also strictly follows policies,
objectives, and resolutions made at shareholders’ meetings. The Company
values compliance with all obligations under the terms of reference on
the rights and duties of a debenture issuer and the conditions of loan
contracts.

(1.5) Communities/society

PTTEP conducts its business in parallel with its social commitment,
mindful that its success is measured not only by profits or the size of
business, but by its responsibility to stakeholders in society, in and
outside the Company; continuous public-service project undertaking;
sound environmental management; sustainable conservation of natural
resources; encouragement of employee participation in social activities,
as well as natural resource and environmental conservation, with full
awareness of being a good member of society.

Activities in promotion of society, natural resources, and the
environment

Under the concept of “From Natural Treasure to Intellectual Wisdom and
Environmental Conservation”, PTTEP divides its activities into two
groups:

(1) Quality of life improvement

Education

To improve lives for communities, PTTEP has put a stress on educational
and sports projects. Scholarships were conferred on youths from the
primary-education level to the undergraduate level. Beyond that,
master’s degree scholarships were presented to students in countries
where PTTEP operated. In addition, the Company established a “PTTEP-From
Natural Treasure to Intellectual Wisdom and Environmental Conservation”
fund, worth 65 million Baht, to assist youths in the S1 Project areas.
It also supported the handover and construction of computer centers for
schools in operating areas under the “Teach Me Computer Knowledge
Project”, launched the “Science Camp” and the “English Quiz” programs to
develop youths’ learning projects in science and the English language.

Health Development

Projects along this line represented another area where PTTEP has
consistently extended its support. The “Mini-farm Project” focused on
nutritional activities by students, who cultivated plants and reared
fish for lunch purposes. Another project, “I Love Sports”, fostered
sports skills and physical development for youths.

Occupational Development

With the Population and Community Development Association (PDA), PTTEP
ran a project called “Thai Rice College” to develop the potential of
Thai farmers in Tambon Khok Klang, Amphoe Lam Plai Mat, Buri Ram, by
training them on technological knowledge concerning productivity and
quality of the Jasmine 105 rice species, as well as cost reduction. This
has led to the establishment of a “Community Enterprise, Khok Klang
Pathana Rice College”, managed by the farmers’ group themselves.

PTTEP commands a sound environmental management system that promotes
natural resource conservation and fosters sound awareness for employees
alike. It ran a project on “Thai Heritage, World Heritage” to develop
media interpretation system for natural world heritage sites at Dong
Phya Yen-Khao Yai and Thung Yai Naresuan-Huay Kha Khaeng and the
cultural world heritage sites at Sukhothai-Si Satchanalai-Kamphaeng
Phet, Phra Nakhon Si Ayutthaya, and the Ban Chiang archeological site.

Under the “PTTEP Tree Planting in the Human Heart Project”, its
employees in 2008 planted trees in 33,120 rai.

The “Ruam Jai Rak Talay Saab Songkhla” fostered knowledge and
understanding of natural resource and environmental conservation for
youths and residents around Lake Songkhla, while the “PTTEP Thai Youths
Conserve Thai Marine Heritage Project” focused on developing leadership
roles of Thai youths in the conservation of Thai seas.

Employee volunteering represents another mechanism to drive social
development in a sustainable way. Along this line, PTTEP promoted and
supported their participation in showing social responsibility in
natural resource conservation, for instance, the “Volunteers Conserve
Tiger”, “Volunteers Conserve Hornbills”, “PTTEP-Children Nature Lover
Project” (where limb-handicapped children and those hard of hearing were
taken on nature-studying trips at Huay Kha Khaeng Wildlife Preserve),
and the underprivileged community development project. The Company
provided opportunities for employees to leverage their skills and drive
service activities for communities and society, for instance, the
“Neighborly Love Project” in the S1 operating area, the support lent to
the Bongkot Asa Club (led by those working on the Bongkot Field in the
Gulf of Thailand), and the PTTEP Ruam Jai Pathana Club (led by
volunteers committed to public service).

(1.6) Environment and society

Valuing its role in environmental preservation and conservation to
restore sustainable ecological balance and biodiversity, PTTEP
constantly dedicates a budget and resources for this purpose. It also
systematically manages environmental matters, assesses impacts, and
formulates preventive and mitigating measures. Almost all projects
operated by PTTEP have achieved ISO 14001 certifications for
environmental management systems.

Besides reforestation projects in various parts of the country, regarded
as social and community outreach activities that can alleviate impacts
from global climate change, PTTEP conducts the feasibility study of
projects to reduce greenhouse gas emissions, including the installation
of an additional flare gas recovery unit (FGRU) at Bongkot production
platforms since July 2007 to cut the gas emission by about 250,000 tons
of carbon dioxide equivalent per year.

PTTEP contributed to the support and promotion of a two-megawatt power
generation project fueled by flare gas derived from the Pradu Tao Field
and a project to use natural gas as fuel for a community enterprise (for
community agricultural products) at Tambon Nong Tum, Amphoe Kong Krai
Lat, Sukhothai. Gas from Nong Tum-A found application as a substituted
fuel for cooking gas for the production of community goods, thus
reducing about 30 million Baht’s worth of cooking gas consumption a
year. In addition, PTTEP supported and promoted a project designed to
turn the flare gas, part of the Sirikit Field development, into
Liquefied Natural Gas (LNG) for vehicle use; the project was under
construction. It is expected that greenhouse gas reduction of about
6,000 tons equivalent of carbon dioxide emission will result from this
effort.

In addition, PTTEP deliberated investment through the Clean Development
Mechanism (CDM) under the Kyoto Protocol, designed to facilitate
industrialized countries that are obliged to cut greenhouse gas
emissions to achieve their committed goals by investing in CDM projects
located in developing countries. By definition, such projects must
support sustainable national development. Incidentally, the Company
investigated the feasibility and details of engineering designs to
inject carbon dioxide from gas production from the Carbon Capture and
Storage Project at Bongkot.

It is the Company’s intention to conduct business without creating
impacts concerning safety, security, and health on its employees,
contract employees, business partners, and the general public while
ensuring environmental sustainability in operating areas. Stressing
continuous development, the Company dearly values the protection of its
employees, contract employees, business partners, and the general public
from harmful operations.

In 2008, PTTEP unfortunately had a higher accident trend than in
previous years. To reverse this trend, the Company instituted
improvement initiatives in the belief that engineering control measures
together with sound management could lead to more efficient
environmental and safety performance.

For details, please refer to the 2008 Corporate Social Responsibility
report at the Company’s website.

(1.7) Government

Below are our guidelines for expressing responsibility to the public
sector.

(a) Strictly follow the provisions of laws and regulations issued by
supervisory agencies.

(b) Support public-sector projects to foster the best interests of
society at large.

(c) Maintain cordial relations with government agencies through
transparent coordination and express PTTEP’s readiness to provide
complete and accurate information in response to requests made by
government agencies to show its transparency, as well as fostering
confidence and mutual trust.

(d) Show goodwill and foster the morale of government agencies through
showing its appreciation for their cooperation and support, particularly
through friendly activities to minimize gaps between the two parties.

(1.8) Partners

As an operator and a business partner in several projects, PTTEP has
sent delegates to project management committee meetings, which consist
of government and all other joint-venture partners, to jointly
deliberate management approaches, annual plans, and budgets. In each,
PTTEP exercises its vote in proportion to its interest, the conditions
under its joint operating agreements, and related laws.

(1.9) Competitors

PTTEP treats its competitors professionally and fairly.

(1.10) Local culture and tradition

When operating in different countries, PTTEP takes into account their
local culture and practices and organizes training by experts, including
representatives of the Ministry of Foreign Affairs or those from
embassies on relevant subjects – including recommendations and
information concerning local culture, what to do, and what to avoid for
PTTEP employees assigned there.

(1.11) Human rights

The Company ensures that in all its operating areas, no illegal labor is
used and that the human rights principles of the United Nations are
observed.

(2) It is PTTEP’s policy to promote stakeholders’ business participation
with the Company by giving shareholders and other stakeholders
opportunities to submit recommendations in assorted matters concerning
its business and matters dealing with their individual rights by the
e-mailing Independent Directors directly at
independentdirector@pttep.com. All such input will be screened for
submission to the Board to ensure that their rights are catered to and
that they are fairly treated.

(3) Measures concerning reporting and protection mechanism

It is PTTEP’s ultimate business goal to generate long-term value and
stakeholders’ satisfaction, as seen in its goals: “growth, prosperity,
stability, sustainability and dignity”. Convinced that GCG will lead to
those goals, the Company instituted channels for employees and external
parties to report or to provide information concerning wrongdoing or
violations of laws and rules, GCG, the Code of Business Conduct,
policies, procedures, terms of reference, or regulations of PTTEP
through the CG Hotline channels. And to foster confidence that such
whistleblowers would not face persecution, PTTEP has instituted a policy
for the receiving of such complaints and protection of whistleblowers.
This includes mitigation of trouble for whistleblowers if their
reporting were done in goodwill, without any malice to PTTEP or any
other party. PTTEP will treat such information with strict
confidentiality; the complaints will be involved by concerned and
assigned persons only, and the investigation policy is to be strictly
followed. For correct understanding, the Company organized talks to
clarify this policy to the Management and employees. The following CG
Hotline channels are available:

(3.1) Telephone number: 0-2537-4499

(3.2) Facsimile number: 0-2537-4949

(3.3) E-mail address: cghotline@pttep.com

(3.4) CG Hotline Box located at the fourth and fifth floors of Head
Office, the 12^(th) and 29^(th) floors of Shinawatra Tower III, and the
24^(th) and 26^(th) floors of Rasa Tower.

(3.5) Direct submission or by mail to the Corporate Secretary Office.

In 2008, 10 cases were reported, 7 were closed.

9.4.4 Information Disclosure and Transparency

Disclosure of information represents a vital principle for GCG. PTTEP
values the information that needs to be notified to the Stock Exchange
of Thailand (SET) and shareholders, particularly its accuracy, adequacy,
timeliness, and equal access by all recipients. Such information
preparation follows the Code of Business Conduct. The Investor
Relations, and the External Relations Departments 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 SET under ordinary and urgent
circumstances.

PTTEP’s key disclosed information consists of both financial and
non-financial information.
In 2008, the financial information, particularly the reviewed/audited
financial statements, according to the external auditor, is essentially
accurate under generally accepted accounting principles. These financial
statements have also been reviewed by the Audit Committee and endorsed
by the Board of Directors before disclosure to shareholders. The Board
also reports of its responsibility to financial reports in the annual
report. To speed up financial information availability for investors,
the Board also discloses unreviewed quarterly and unaudited annual
financial statements, going beyond SET’s requirements. There has been no
material difference noted between those unreviewed/unaudited and
reviewed/audited reports. As regards non-financial information, PTTEP
discloses 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, which includes the annual report, Form 56-1,
shareholders’ meeting invitations and its resolutions, roadshow
presentations, quarterly presentations for analysts, press releases, and
the company’s safety, security, health and environment annual report.
For greater access and maximum benefit to users, the website is
regularly updated. In 2008, 52 matters were disclosed via SET’s system.
The Company organized visits for shareholders and analysts to operating
areas, such as the Sirikit Oil Field in Kamphaeng Phet province and the
Arthit Production Platform, off Songkhla province, to foster their
confidence and understanding of PTTEP operations. The Investor Relations
promoted information disclosure by organizing an IR Corner booth at the
2008 AGM.

PTTEP also discloses the roles and responsibilities of the Board and all
standing sub-committees, including the attendance of each Director under
Topic 9, Management; reports of the Chairman of each sub-committee
(Topic 9.5, Reports of Standing Sub-committees); and the policy of
Directors and Executive Management remuneration under Topic 9.4.5,
Responsibility of the Board, (6) Remuneration.

PTTEP constantly values the accuracy, completeness, timeliness, and
transparency of information disclosure and is committed to keeping up
this practice.

Investor Relations (IR)

The Investor Relations is responsible for communicating information that
accurately shows PTTEP’s real value to stock analysts, shareholders, and
investors in general under the rules of SET, and for fostering
confidence on the part of analysts and investors as well as a positive
image and attitude in investors through coordination and consultation
with PTTEP’s management. Investors and interested parties can contact
this unit for information on PTTEP, including financial statements,
annual report, and notifications to SET, SEC, etc. To contact the IR
unit, three means are possible:

  (1) Telephone number: 0-2537-4512 and 0-2537-4611

  (2) E-mail address: ir@pttep.com

  (3) Facsimile number: 0-2537-4467.

9.4.5 Responsibilities of the Board

(1) Structure

(1.1) Components

The PTTEP Board of Directors has assigned the Nominating Committee to
recruit Directors or the Chief Executive Officer to fill vacant
positions, when it arises; in so doing, the Nominating Committee selects
from those qualified, competent, and experienced people to serve the
interests of PTTEP.

The Board consists of 15 Directors, a size considered suitable for the
business, who are:

(a) Connected Directors

(b) Non-connected Directors who have no relation with the major
shareholders and not serving as directors or management of major
shareholders. PTTEP’s Independent Directors must always account for at
least one-third of the Board or the number of at least five.

(c) Qualified Directors from private-sector, numbering at least three.

All Directors are knowledgeable in diverse fields benefiting Company
business – those are, petroleum exploration and production, energy
business, science, public administration, engineering, geology,
geophysics, economics, accounting, marketing, finance, treasury, and
law.

(1.2) Qualifications of PTTEP Directors

(1) Age not over 70 years

(2) Diverse skill mix, among them: industry knowledge, accounting &
finance, business judgment, management skills, international markets,
business strategy, crisis management, corporate governance, and legal
matters.

Only one major shareholder prevails at PTTEP, with minor shareholders so
widely distributed that they cannot form a statistically significant
group. Also, since the current non-Independent Directors and those who
do not represent the major shareholder are diverse in professional
qualifications or organizations, the current Board of Directors,
accordingly, can safeguard the interests of all shareholders as a whole.

(1.3) Terms of Directorship and Number of Companies Where Directors Can
Serve

PTTEP decided that one-third of the Directors will retire at each AGM
annually. The 15 Directors it has, therefore, results in each person
holding a three-year term. To enable PTTEP to leverage Directors’
qualifications for maximum suitability and benefit, their services are
limited to three consecutive terms – except when the Company considers
them specialists that could benefit PTTEP’s operation. The Board also
approved that the number of other companies where each Director is
serving as a Board should be considered a critical factor for its
Director recruitment. This information of directors’ holding positions
in other organization is disclosed in Form 56-1, the annual report, and
the Company’s website.

(1.4) Definition of Independent Director Qualifications

This has been detailed under item 9.1.4.

(1.5) Policy and Procedures for Serving as Other Companies’ Directors
for the Chief Executive Officer (CEO) and Management

PTTEP values the experience to be acquired by the CEO and other
Management members through their director service in other
organizations, so they may accept such appointments as necessary and as
long as such positions do not compromise the business interests of
PTTEP. In any case, prior approval is needed from an authorized person,
and the name PTTEP or their positions in PTTEP cannot be used in any way
to involve any other companies’ business. Nevertheless, any PTTEP
management or employee assigned to serve as a director, a management
committee member, or a secretary in an organization or party involved in
the exploration and production business, or a business directly related
to it, must return to PTTEP any compensation given to him or her. In
other cases, he or she can keep the compensation.

(1.6) Segregation of the Chairman and the CEO Positions and their
authority and duties

The Chairman of the Board and the CEO are two separate persons, elected
from Directors. The Chairman stays away from day-to-day management, as
there is a clear separation between policy-making, monitoring and
assessment, and management execution. The Chairman’s leadership plays a
key role in ensuring the Board’s independence from the Management,
deciding agenda items under the Board’s responsibility, and efficiently
chairing Board and shareholders’ meetings. This is done by encouraging
all Directors to actively take part in such meetings, including raising
critical questions, consulting, guiding, supervising, and regularly
supporting the operation of the Management through the CEO. At the same
time, the Board refrains from interference in routine tasks or business
activities of the Management. The Chairman also ensures that the
Directors observe PTTEP GCG. Whereas the CEO takes full responsibility
for Company management execution under the authority framework assigned
by the Board in line with PTTEP’s rules.

(1.7) Independence of Chairman

PTTEP has determined that, in future elections of the Chairman,
independence will be the foremost factor for deliberation. In the
absence of qualified persons, other Directors are to be considered.
Nevertheless, PTTEP’s Chairmen have consistently performed their duties
independently. Moreover, PTTEP has instituted the Chairman’s performance
evaluation by the entire Board to gain feedback as guidelines for
improving and auditing his performance. The appraisal outcome has been
disclosed in Form 56-1 and the annual report.

(1.8) Corporate Secretary

This is detailed under item 9.1.6.

(2) Sub-committees

The Board has appointed standing sub-committees (or simply
‘sub-committees’), consisting of qualified Directors, to handle specific
tasks for the Board as defined by the Company’s Articles of Association.
Their qualifications, terms, and scopes of responsibility have been
defined in their respective charters. A majority of their members are
Independent Directors, and so is the Chairman of each sub-committee,
with the exception of the Risk Management Committee. The Chairman of the
Board does not belong to any sub-committee. The sub-committees regularly
report their findings to the Board and each year report their
performance to the shareholders in Form 56-1 and the annual report.

PTTEP constitutes five sub-committees, namely the Audit Committee,
Remuneration Committee, Nominating Committee, Corporate Governance
Committee, and Risk Management Committee. Their names, responsibilities,
number of meetings, individual attendances, and reports appear under
item 9.1.2 and 9.5.

(3) Roles and Responsibilities of the Board

(3.1) Corporate Governance Policy

In 2001 the Board issued a written GCG policy, which has constantly been
reviewed. The current GCG policy is Revision 4, approved by the Board
from the recommendation of the Corporate Governance Committee in 2007.
In this revision, the Code of Business Conduct is separated from the
policy for greater clarity in communicating the practices to the Board,
management, and all employees to observe. The GCG policy is explicit
about PTTEP’s governance structure on the part of the Board. Copies of
the GCG manual and the Code of Business Conduct were handed out to all
PTTEP employees for reference and compliance, replacing the old ones.
All were requested to sign their names as a commitment to abide by
these, and to the Ethics of Directors, as applicable, as guiding
principles under the highest standard. Besides, these were given to
business partners, regulatory agencies, agencies regularly contacted
with PTTEP, as well as interested parties. They also appear on the
Company’s website under Good Corporate Governance to facilitate viewing
by shareholders, investors, and interested parties.

PTTEP continued to focus on promoting the understanding of GCG to
Directors and all employees through activities including orientation
sessions for new Directors and employees including newly appointed
management.

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

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

• CCS Compliance News Alert, for reminders about relevant rules and
laws, including insider trading, or for alerts on relevant, upcoming
rules and laws.

To gauge its annual GCG performance for further improvement, in 2008
PTTEP assessed its corporate governance practices on its own by using CG
Self-Assessment forms devised by the Stock Exchange of Thailand (SET),
which was based on the criteria of the Organization for Economic
Cooperation and Development (OECD). The assessment was conducted in four
parts, as previously done by Thai Rating and Information Services Co.,
Ltd. (TRIS), namely (1) 20% weighting for shareholders’ rights and fair
treatment of shareholders, (2) 40% for the composition and roles of the
Board and the Management, (3) 25% for information disclosure, and (4)
15% for CG culture. Departments directly in charge of certain matters
were assigned to conduct the self-assessment; on the roles of
stakeholders, various groups of stakeholders were asked to respond to
the assessment, based on the same approach as TRIS, namely employees,
government, business partners, lenders, and suppliers/contractors.
Scoring was based on the 2007 scores, with drawbacks as seen by TRIS
considered; given improvements made, scores were added to the 2007
bases, using what was derived from the average of the number of
questions in the CG Self-Assessment (82 items), which resulted in a
possible mark of 10. Out of the possible 10, PTTEP scored 8.65 against
8.37 in 2007. Details appear below:

+----------------------------------------------+------------+---------+
| Rating Criterion                             | 2007       | 2008    |
+----------------------------------------------+------------+---------+
| -   Shareholders’ Rights and Fair Treatment  | 8.55       | 8.79    |
|     of Shareholders                          |            |         |
+----------------------------------------------+------------+---------+
| -   Role of Stakeholders                     | 8.25       | 8.37    |
+----------------------------------------------+------------+---------+
| -   Information Disclosure and Transparency  | 9.15       | 9.27    |
+----------------------------------------------+------------+---------+
| -   Responsibility of the Board              | 7.83       | 8.31    |
+----------------------------------------------+------------+---------+
| Total                                        | 8.37       | 8.65    |
+----------------------------------------------+------------+---------+

(3.2) Code of Business Conduct

Valuing ethical business conduct, PTTEP regards the code as a precursor
to desirable behavior that defines the framework and guiding principles
for good business conduct for the Board, management, and all employees
to observe with integrity, fairness, and transparency – all the while
taking into account stakeholders’ rights. This would not only foster
confidence and acceptance of PTTEP’s efficiency and transparency, but
also foster long-term value for the stakeholders and fairness to all.

To make it more suitable for the business conditions of PTTEP, on 17
October 2007 the Board approved the latest amendment of the Code of
Business Conduct. The code consists of 13 subjects governing desirable
behavior and reflects the organization values in business operation that
the Directors, the Management, and all employees must observe. The
subjects of the Code of Business Conduct are as follows:

-   Respecting the law and political neutrality

-   Internal control

-   Human resources

-   Confidentiality

-   Disclosure of information

-   Misuse of PTTEP’s information

-   Conflict of interest

-   Procurement and contracts

-   Gifts, entertainment, and bribery

-   Accounting and finance

-   Use of information technology and telecommunications

-   Safety, security, health, and environment

-   Corporate social responsibility.

In 2008 the Company focused on cultivating the awareness of all PTTEP
employees of performance in compliance with the Code of Business
Conduct; to this end, it organized assorted activities to promote
employees’ knowledge and appreciation of the code, which ranged from
group training to open entertaining and knowledge-based activities,
voting of role models in compliance with various aspects, and contests
on presentation of implementing GCG principles at work. Opinion surveys
were conducted around year-end, with their findings included in the GCG
assessment.

(3.3) Conflicts of interest

Published in the GCG Policy, PTTEP demands that all Directors,
management and employees avoid any conflicts between personal and
corporate interests. Here are the essences.

• Decisions about Company business by all Directors, management and
employees must solely be for the best interests of PTTEP. No one is to
engage in transactions posing a potential conflict of interest.

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

In addition, PTTEP has devised the following measures to prevent any
conflicts of interest:

• All Directors, management, and employees strictly comply with laws,
rules, and regulations, particularly those of SET concerning connected
transactions.

• Avoidance of financial involvement and relationship with external
parties by all Directors, management, and employees, that could
compromise PTTEP’s interests, bring about conflicts of interest, or
hamper efficient business conduct

• Reporting to supervisors or those with joint approval authority where
the Directors, management, and employees are connected with PTTEP
interests, in which case they must withdraw from such transactions. The
transaction pricing must be set as under general business terms and
conditions.

• All Directors, management, and employees reviews and self assess on
conflicts of interest as specified in annual self-appraisal forms.

• All Directors, management, and employees immediately notify their
potential conflicts of interest, when in doubt.

In deliberating connected transactions during 2008, PTTEP complied with
the above-mentioned policy, Notification of SET’s Commission, Re: Rule
on Connected Transactions B.E. 2003 and Notification of the Capital
Market Supervisory Board, no. TorChor. 21/2551, Re: Rules on Connected
Transactions. Board resolutions concerning these transactions were
strictly made among non-connected Directors only. Details of connected
transactions in 2008 are in item 11.

(3.4) Internal Control and Internal Audit

PTTEP implements an internal control policy that is sufficient and
acceptable for Company risks and prevailing business circumstances, or
the activities of individual departments. To ensure suitable control
measures with prevailing circumstances, environment, and risks, the
Internal Audit Department regularly monitors internal control practices.

The Board, management, and all employees collectively decide business
procedures to ensure achievement of the objectives with reasonable
confidence:

-   Operations: Efficient and effective including prudent use of
    resources

-   Financial reporting: Accurate, reliable, and timely

-   Compliance: Comply with Company policies, laws, and regulations.

The Company’s internal control process was based on the regulations of
The Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and that of the Office of the Auditor General of Thailand, and
consists of five components:

-   Control Environment: A proper control environment fosters control
    awareness in those 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. In short, PTTEP is determined to
    uphold the GCG principles.

-   Risk Assessment: Recognizing the value of risk management, the
    Company has set up a risk management department to take charge of
    risk analysis, assessing probabilities and potential impacts, and
    taking action to ensure acceptable risk management. PTTEP classifies
    risk management at the corporate level, linking to its strategic
    directions and strategies, and the operating level, to be managed by
    departments. With clear risk management procedures, all risks come
    under the supervision of the Risk Management Committee. (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 resource management, finance and accounting,
    budgeting, and procurement regulations, including the charters of
    the five sub-committees. These regulations frame PTTEP’s management
    and operation control.

The Company has also devised a Delegation of Authority and Signatures
(DAS) table for the CEO to clearly delegate authority to the Company’s
functional management, resulting in practical and easily-tracked courses
of action. As regards human resources management, the Company’s HRM
Policies and Guidelines for Branches/Subsidiaries apply.

The Company has allocated responsibilities to all supervisors to verify,
control, and supervise to ensure strict compliance with laws and
regulations concerning each unit. They are also required to alert all
parties when new rules and regulations come into effect.

-   Information and Communication: The Company institutes efficient and
    effective communication procedures for information, both internally
    and externally, for complete, accurate, and timely decision-making.
    Information is either financial or non-financial. 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 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 good
    coordination and business appreciation.

PTTEP has an information control system for the receiving, distribution
and information input and clearly allocates tasks along with responsible
persons, authority, and units concerning information and communication
technology. In addition, the Company has classified levels of 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. Under the risk assessment monitoring procedure,
    findings are regularly reported 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 Internal Audit department monitors and
    assesses internal control outcome, and then reports its findings to
    the Audit Committee.

  Findings of internal control assessment for 2008 appear under item 10.

(3.5) Risk Management

Defining a risk management policy for the Company, the Board appointed
the Risk Management Committee as a standing sub-committee under a
charter of 2005. This sub-committee ensures that PTTEP business
operation follows the risk management policy.

In charge of the adequacy of risk management systems and the
effectiveness of risk management for the Company, the Risk Management
Department not only investigates and indicates risks or anomalies
hampering business operation against strategic and operating goals;
alleviates or eliminates such risks in a systematic and efficient way;
periodically reporting to risk owners, the Management, the Risk
Management Committee, and the Board, and summarizes its activities for
reporting to the Board for consideration of process adequacy,
cultivation of a culture, and awareness for risk management in its
business for each company unit.

(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. In 2008, the Board met
every fourth Thursday of the month for a total of 17 times, including an
offsite meeting to deliberate strategic plans, which is considered
crucial and thus time-consuming in deliberation. The Board held one
meeting without the presence of management before the August 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 supporting information ahead of
each meeting.

As a rule, agenda items are jointly decided by the Chairman and the CEO,
but Directors may also propose matters they consider important. For
instance, they proposed items for the meeting in the absence of
management and the meeting of the Independent Directors. In 2008 a total
of 83 agenda items were deliberated, including major ones such as the
direction and policy approach for strategic implementation; the annual
budget; approval of the procurement budget for the CEO; financial
statements; petroleum purchase agreements and negotiations; bidding for
international exploration and production; joint ventures; Arthit Project
operation; Bongkot South Project development; transactions with PTT or
companies under PTT’s control; procurement under major projects;
election of the Chairman; and amendments of the company’s regulations.
Matters for acknowledgment consisted of 171 items, most of which were
reports on operation and updates on various projects; status of Company
shares; changes in Directors during the year; appointment and transfer
of management; human resources administration updates; reports on
activities in support of social and environmental development; reports
on safety, security, health and environment; procurement and change in
financial contract limit within the approval authority of the CEO; and
reports of sub-committees. A typical Board meeting took two hours, with
the Corporate Secretary in attendance each time to take the minutes and
file complete information along with meeting documents; the Corporate
Secretary 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 were
addressed 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 of absence. Whenever possible, Directors sent an
apology letter to the Chairman when they could not attend a meeting. The
Board attendance record for 2008 appears under Topic 9.1.1.

(5) Self-assessment of the Board

PTTEP has stipulated under the continuous improvement element of its GCG
(item 4.3.2) – the assessment of the performance of the Board, the
Chairman, and the Sub-committees – that their performance must be
annually assessed against the performance assessment forms and the
annual Performance Agreements, as reviewed by the Nominating Committee.

The Board assessment divided into three parts: individual assessment by
self; individual cross-assessment by other 2 directors; and the entire
Board assessment. All sub-committees are evaluated by both the committee
member themselves and other directors as well. The Chairmen performance
is also assessed by all directors. PTTEP will propose these scores for
the consideration of the Remuneration Committee before securing a prior
approval from the Board and disclosing the scores in the annual report.
PTTEP then gathers the comments and suggestions made in the evaluation
forms as guidelines for improving the performance of the Board and the
Company.

For 2008, apart from devising performance assessment forms for the
Board, the Sub-committees, and the Chairman, the Nominating Committee
added a weighting factor for each topic. As regards the grading scale
for these assessments, a ‘1’ stands for ‘seriously needs improvement’, a
‘2’ for ‘fair’, a ‘3’ for ‘standard’, a ‘4’ for ‘good,’ and a ‘5’ for
‘very good’.

-   Individual assessment by self averaged 4.53 against 4.61 in the
    previous year.

-   Individual cross-assessment, conducted for the first time this year,
    averaged 4.53.

-   The Board as a group performed in two aspects:

(1) Against Performance Agreements, with a 20% weighting factor,
    averaged 3.60 against 2.10 in the previous year

(1) Against self-assessment forms of the entire Board, with an 80%
    weighting factor, averaged 4.55.

On the whole, the Board averaged 4.36 against 4.02 in the previous year.

-   The Audit Committee scored 4.70 or ‘good’ against 4.52 in 2007

-   The Remuneration Committee scored 4.71 or ‘good’ against 4.35 in
    2007

-   The Nominating Committee scored 4.58 or ‘good’ against 4.34 in 2007

-   The Corporate Governance Committee scored 4.82 or ‘good’ against
    4.49 in 2007

-   The Risk Management Committee scored 4.63 or ‘good’ against 4.52 in
    2007

-   The Board Chairman, who is in charge from April 9 through September
    30 2008, earned 4.70 or ‘good’ against 4.34 in 2007.

(6) Directors’ and Executives’ Compensation

(6.1) Directors’ Compensation

PTTEP’s policy for compensation paid to the Directors and members of the
Sub-committees is clear and transparent. The Remuneration Committee
decides and reviews such compensation based on not only suitability, but
also the Board’s and Company performance, industry practices, practices
of leading SET-listed companies, and the scope of responsibility. The
2008 AGM approved Directors’ and Sub-committee members’ remuneration,
effective from 2008 onward as proposed by the Remuneration Committee,
was adjusted in retainer fees and Directors’ bonuses to be in line with
listed companies of similar sizes in the same industry, as well as
leading listed companies on SET, matching the rising responsibilities,
as detailed below:

-   Retainer fee at Baht 37,500/person/month paid in full each month,
    from Baht 25,000/person/month.

-   Meeting fee at Baht 25,000/person/meeting, paid only to those in
    attendance (same as in 2007).

-   Annual bonuses for all Directors will be paid out if dividends are
    paid to shareholders in a given year; payouts would amount to 0.1%
    of the net profit for the same year but no more than Baht 30
    million, against the previous sum of Baht 17-25 million/year, paid
    according to the tenure of each Director.

-   Members of all standing sub-committees – namely the Corporate
    Governance Committee, the Audit Committee, the Remuneration
    Committee, the Nominating Committee, and the Risk Management
    Committee – would continue to receive meeting fees of Baht
    25,000/person/meeting. This, however, excludes members who were
    concurrently PTTEP management and does not apply when meetings
    concerned circulating resolutions.

-   The Chairman of the Board receives an extra 25 percent of all items,
    whereas the Chairmen of sub-committees receives an extra 25 percent
    of the sub-committee meeting fees allocated to regular Directors or
    members.

    Individual director’s compensation details concerning retainer fees,
    meeting fees, and bonuses, as well as meeting fees for
    sub-committees, appear under item 9.3.1.

    (6.2) Compensation Policy for Affiliates’/Subsidiaries’ Board
    Members

    Its subsidiaries are set up by PTTEP to serve as mechanisms for
    conducting businesses for PTTEP’s best interests under various
    business conditions. These are treated as Company assets in line
    with legal criteria or investment conditions. Some of these have
    operated as full-fledged companies. As a rule, the boards of these
    companies are kept to a bare minimum, for instance, the CEO and
    management directly responsible for the success of the joint
    ventures, under PTTEP’s policies and strategies. PTTEP rules and
    procedures therefore apply, as these are assets managed in the best
    interests of the Company.

    Executives assigned to serve on behalf of PTTEP as directors of
    affiliates and subsidiaries engaged in petroleum exploration and
    production, or directly related ones, including PTTEP Services Co.,
    Ltd., are not entitled to extra compensation, as this is considered
    PTTEP’s direct business and part of routine work. For other cases,
    they may receive such compensation, as it is considered extra
    duties, including service for PTT ICT Solutions Co., Ltd., and
    Energy Complex Co., Ltd. This provision is clearly stated in the GCG
    principles and the Code of Business Conduct.

    (6.3) CEO’s Compensation

    The CEO’s compensation package is clearly and transparently decided
    by the Remuneration Committee with the endorsement of the Board.
    Consideration is given to Company performance and the CEO’s
    performance appraisal outcome, prevailing industry and business
    practices, as well as those in particular leading SET-listed
    companies, together with his or her job responsibilities.

    Assessment of the CEO’s performance is made against his or her
    performance agreement for a given year, duly filled on the form
    decided by the Remuneration Committee and endorsed by the Board as
    checks-and-balances to monitor the performance of the CEO against
    short-term and long-term goals. Besides allowing for GCG practices,
    this would make the deliberation of the CEO’s compensation
    transparent and suitable while also enabling him or her to apply the
    findings to improve performance.

    (6.4) Executive Management’s Compensation

The Remuneration Committee reviews and recommends the compensation
criteria or procedures for defining the compensation for executive
management that are fair and reasonable while conforming to prevailing
practices in this business for the Board’s endorsement. Executive
management’s compensation packages and salary structures 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 responsibility.

The CEO decides individual executive management’s compensation. Annual
merit increases of executive management 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 Executive
management’s compensation, including their PTTEP shares and ESOP
warrants, in the annual report.

(7) The Board of Directors’ Training

(7.1) Directors’ Development

Directors regularly develop themselves by attending seminars, courses,
and meetings organized by the Thai Institute of Directors (IOD), SET,
SEC, and the Capital Market Academy. When there is a new Director, PTTEP
provides a Director manual and an orientation program, which in turn
induces appreciation of PTTEP business and Directors’ responsibilities,
as well as acknowledgment of essential information for their tasks and
duties, including operating site visits.

(7.2) Executive Development and Succession Planning

At PTTEP, the management potential is assessed through the 360-degree
survey method, including notification of assessment results and joint
planning of management potential development to supplement their
competency in management and organizational leadership. Succession
planning is systematically practiced to replace retiring personnel or to
fill new positions resulting from company business expansion. As regards
succession planning for the CEO position, the major shareholder’s policy
prevails.

(8) Awards of 2008

PTTEP achieved a score of 107.50 under the 2008 AGM Checklist Project of
SEC.

PTTEP won the Best Performance Award and the Top Corporate Governance
Award at the 2008 SET Awards event, hosted by SET and the Finance &
Banking Magazine.

As a SET-listed company, PTTEP won a Shareholders’ Award from Thailand
Securities Depository Co., Ltd. (TSD).

PTTEP achieved a score of 92, classified as Excellent, from a survey of
Corporate Governance Report of Thai Listed Companies 2008, organized by
Thai Institute of Directors (IOD).

PTTEP garnered the Asset Corporate Governance Award 2008 from The Asset
Magazine, based in Hong Kong.

9.5 Sub-committees Report

9.5.1 Corporate Governance Committee Report

Valuing the compliance with the Good Corporate Governance (GCG) Policy
and Code of Business Conduct in its operation, PTTEP has consistently
developed its corporate governance practices in line with the
regulations of the Stock Exchange of Thailand (SET), best practices of
other leading companies, and generally-accepted international best
practices. The Board of Directors has assigned this Committee the role
of supervising the Company’s operation as well as encouraging compliance
at all levels with both documents mentioned above.

The Corporate Governance Committee held a total of four meetings in 2008
to conduct its roles and responsibilities as specified in the Corporate
Governance Committee Charter and reported the outcome of each meeting to
the Board, as summarized below.

-   Supervised the promotion of knowledge and understanding the
    Management and employees to perform in compliance with both the GCG
    Policy and the Code of Business Conduct

-   Reviewed the GCG Policy to make it compatible with SET’s principles
    of GCG for listed companies (2006), adapted from the Organization
    for Economic Co-operation and Development (OECD) Principles of
    Corporate Governance, to enable PTTEP’s practices to be in line with
    those of international practices

-   Supervised PTTEP’s self-assessment of its compliance with the GCG
    Policy and Code of Business Conduct through appropriate procedures
    and criteria so that it might be compatible with the assessment by
    external organization and that the assessment outcome was disclosed
    to stakeholders

-   Formulated a reporting guideline for GCG practices in the annual
    report and for all stakeholders

-   Encouraged that a lecture on amended relevant laws be held for the
    Board and the Management, in particular those rules concerning the
    roles and responsibilities of the Management under good corporate
    governance principles, to foster understanding and awareness as well
    as proper and accurate implementation.

Mr. Vudhibhandhu Vichairatana

(Mr. Vudhibhandhu Vichairatana)

Chairman of the Corporate Governance Committee

Date : 16 December 2008

9.5.2 The Audit Committee Report

The Audit Committee is composed of three Independent Directors with
knowledge, expertise, and experience in finance & accounting, law, and
related technical practices; it is chaired by Mr. Chokchai Aksaranan,
with Mr. Chulasingh Vasantasingh and Mr. Sirin Nimmanahaeminda as
members. Each member is knowledgeable and experienced in reviewing
financial statements.

All Audit Committee members performed their duties and responsibilities
as assigned by the Board of Directors in accordance with PTTEP’s Audit
Committee Charter. During 2008, the Audit Committee held eight meetings,
with perfect attendance each time, completing the work items which are
summarized below:

(1) Reviewed the quarterly and annual financial statements with PTTEP
    Management and the external auditor (The Office of the Auditor
    General) with comments and recommendations to ensure the accuracy
    and creditability of the accounting system and financial
    information, as well as accurate, sufficient, and timely disclosure
    of significant matters to meet the accounting standards and
    requirements of relevant laws and regulations.

(2) Reviewed PTTEP’s performance to ensure the Company’s compliance with
    the securities and stock exchange laws, the Stock Exchange of
    Thailand’s rules and regulations, and other laws related to PTTEP’s
    business.

(3) Considered and supported the disclosure of connected transactions to
    ensure accuracy and completeness together with the opinion that they
    were reasonably executed for the benefit of shareholders;
    deliberated PTTEP’s issuing of quarterly Management Discussion and
    Analysis Reports (MD&As), which were useful for all investors.

(4) Reviewed PTTEP’s internal control and internal audit system to
    ensure both sufficiency and appropriateness for business operations.

(5) Considered and proposed that the Office of the Auditor General
    continue to serve as the external auditor; considered and decided
    upon the relevant audit fees for 2008; attended meetings with the
    external auditor and the internal audit department in the absence of
    the Management.

(6) Deliberated the independence of the internal audit department and
    endorsed the appointment, transfer, and performance merit
    considerations for the chiefs of the internal audit department.

(7) Endorsed audit plans of the internal audit department, reviewed
    audit findings and approach taken, and assessed audit performance.

(8) Screened the budget and manpower requirements of the internal audit
    department.

(9) Assessed the Audit Committee’s 2008 performance by completing a
    self–assessment and by soliciting feedback from the Board of
    Directors and related parties to improve overall committee
    effectiveness. The result of the assessment revealed that the
    performance of the Audit Committee remained effective.

(10) Deliberated and endorsed other matters assigned by the Board of
     Directors.

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

In conclusion, for the year:

(1) PTTEP’s accounting system and financial reports were accurate,
    reliable, and contained complete, adequate, and timely essential
    information.

(2) The Company’s internal controls were adequate, suitable, and
    efficiently adaptable to evolving circumstances; as a result, the
    businesses of PTTEP and its subsidiaries achieved their objectives
    while complying with all relevant laws and regulations.

(3) The Office of the Auditor General, the external auditor, was
    independent and experienced in auditing the Company’s financial
    reports to ensure accuracy and reliability, as well as complete,
    adequate, and timely disclosure of significant information.

(4) Based on its review of connected transactions or items with
    potential conflicts of interest, the Audit Committee regarded
    PTTEP’s disclosure of information as accurate and complete, and such
    items carried fair conditions and prices, which had won the prior
    approval of the Management or the Board of Directors.

Mr. Chokchai Aksaranan

(Mr. Chokchai Aksaranan)
Chairman of the Audit Committee

Date : 23 January 2009

9.5.3 The Remuneration Committee Report

Appointed by the Board of Directors, the Remuneration Committee consists
of four committee members, of which three are independent directors. The
chairman, Mr. Pala Sookawesh, is also the independent director; other
members are Mr. Sirin Nimmanahaeminda, Mr. Viraphol Jirapraditkul, and
Mr. Chitrapongse Kwangsukstith.

During the year, in performing its roles as assigned by the Board, this
committee puts in its best efforts with due care, prudence,
independence, and thoroughness in compliance with its charter, which
deals with the compensation of the Board, Sub-committees, and Chief
Executive Officer, including the revision of the charter for
appropriateness and timeliness. Three meetings were held during the year
with perfect attendance and all meeting outcomes were reported to the
Board.

As regards the compensation details for the Board, Sub-committees, and
Chief Executive Officer, which appear under ‘Board and Management
Compensation’ in the 2008 annual report, the committee – with the
approval of the Board and the 2008 annual general shareholders meeting –
took into account their respective duties and responsibilities,
performances, Company performance, industry and leading listed company
practices, as well as factors potentially affecting PTTEP’s business or
the overall economic situation. This is to ensure suitability and
transparency while bolstering the confidence of all stakeholders.

Mr. Pala Sookawesh

(Mr. Pala Sookawesh)

Chairman of the Remuneration Committee

Date : 23 December 2008

9.5.4 Nominating Committee Report

Under the Good Corporate Governance of PTTEP, the Nominating Committee
consists of three Directors, two of whom are Independent Directors,
including the Chairman.

This committee consists of Mr. Chulasingh Vasantasingh (Chairman), Mr.
Sanit Rangnoi (Independent Director), and Mr. Chitrapongse
Kwangsukstith. Their terms run from 23 June 2006 to 22 June 2009.

During the year, this committee duly performed its duties under the
Nominating Committee Charter B.E. 2546 and held seven meetings with
perfect attendance. The essences of those meetings appear below:

(1) Deliberating the qualifications of candidates for Directors and
preparing a Director List with the Company’s maximum benefit in mind and
input from PTT, the major shareholder.

(2) Deliberating the list of those under (1) and proposing it to the
Board and the 2008 annual general meeting of shareholders for election
in place of those whose terms expired.

(3) Deliberating the list of those under (1) and proposing it to the
Board for election to fill four vacancies, namely Mr. Metta Banturngsuk
(effective from 31 January 2008), Mr. Anon Sirisaengtaksin (effective
from 9 April 2008), Mr. Sommai Khowkachaporn (effective from 10 April
2008), and Mr. Bhusana Premanode (effective from 5 January 2009).

(4) Deliberating the appointment of the candidate for Chief Executive
Officer as well as his authority, relevant organization restructuring,
and the relevant amendment to the articles of association.

(5) Deliberating qualified Directors to fill vacancies on standing
sub-committees and proposing them to the Board for appointment as
follows:

(5.1) Mr. Prasert Bunsumpun as a member of the Nominating Committee in
place of Mr. Chitrapongse Kwangsukstith from 1 February to 30 September
2008

(5.2) Mr. Chokchai Aksaranan as the Chairman of the Audit Committee in
place of General Lertrat Ratanavanich, effective from 9 April 2008

(5.3) Mr. Sanit Rangnoi as a member of Nominating Committee in place of
General Lertrat Ratanavanich, effective from 9 April 2008

(5.4) Mr. Sirin Nimmanahaeminda to continue his membership of the
Remuneration Committee, and Mr. Prasert Bunsumpun as an additional
member of that committee, effective from 9 April 2008

(5.5) Mr. Vudhibhandhu Vichairatana to continue his chairmanship of the
Good Corporate Governance Committee, effective from 9 April 2008, and
Mr. Sommai Khowkachaporn as a member of that committee in place of
General Lertrat Ratanavanich, effective from 10 April 2008

(5.6) Mr. Vudhibhandhu Vichairatana, Mr. Sirin Nimmanahaeminda, and Mr.
Chitrapongse Kwangsukstith to continue their membership of the Risk
Management Committee, and Mr. Anon Sirisaengtaksin as a member of the
same committee in place of Mr. Maroot Mrigadat, effective from 9 April
2008

(5.7) Mr. Chitrapongse Kwangsukstith as a member of the Nominating
Committee and the Remuneration Committee in place of Mr. Prasert
Bunsumpun, effective from 27 November 2008

(5.8) Mr. Pichai Chunhavajira, Mr. Sirin Nimmanahaeminda, Mr.
Vudhibhandhu Vichairatana, Mr. Chitrapongse Kwangsukstith, and Mr. Anon
Sirisaengtaksin as members of the Risk Management Committee for another
term; that committee was to be chaired by Mr. Pichai Chunhavajira,
effective from 27 November 2008.

(6) Deliberating the status of Directors and the President under the law
for state own enterprises.

(7) Deliberating the appropriateness of merging the Nominating Committee
with the Remuneration Committee.

(8) Deliberating the 2008 Performance Agreement of the Board and the
Chief Executive Officer, and the 2009 Performance Agreement of the Chief
Executive Officer, as well as the assessment forms of the Board,
Directors, Sub-committees, and Chief Executive Officer in 2008.

(9) Amending the responsibilities and terms of the Nominating Committee
Charter.

The Nominating Committee reported its meeting outcome to the Board every
time. Through the year, it duly performed all assignments with caution,
prudence, competence, and independence, providing candid views for the
maximum benefit of the Company, all shareholders, and stakeholders.

  Mr. Chulasingh Vasantasingh

  (Mr. Chulasingh Vasantasingh)

  Chairman of the Nominating Committee

Date : 22 January 2009

9.5.5 Risk Management Committee Report

The PTTEP Risk Management Committee is chaired by Mr. Pichai
Chunhavajira with Mr. Sirin Nimmanahaeminda, Mr. Vudhibhandhu
Vichairatana, Mr. Chitrapongse Kwangsukstith, and Mr. Anon
Sirisaengtaksin performing their duties as members.

During 2008, this committee performed its roles as assigned by the Board
of Directors under the relevant charter and held nine meetings as
summarized below.

(1) Considered risk management processes and plans to ensure efficient
    risk management and internal control compatible with acceptable risk
    levels and evolving circumstances.

(2) Considered the corporate risk profile in support of the Company’s
    strategic directions. Each risk – whether strategic or operational -
    was contemplated in both qualitative and quantitative terms, with
    constructive recommendations given to mitigate it. Mitigating
    actions were also closely monitored.

(3) Reviewed and approved actions to manage risks significant to PTTEP
    relating to strategy, operations, new investments, and the risk
    assurance policy before submission for final approval from the
    Board.

(4) Considered the Corporate Strategic Plan, Key Performance Indicators,
    2009 Annual Corporate Budget, and relevant risks before submission
    for approval from the Board.

The committee continually reported its findings to the Board on a
regular basis.

In summary, it is our view that the committee has performed its duties
in 2008 prudently, competently, and independently while providing candid
views to all parties for the benefit of PTTEP,
all shareholders, and stakeholders.

Mr. Pichai Chunhavajira

(Mr. Pichai Chunhavajira)

Chairman of the Risk Management Committee

Date : 23 December 2008

9.6 Use of Inside Information

Details as prescribed in item 9.4.2

7.  Personnel

    9.7.1 As of year-end 2008, PTTEP and its subsidiaries (namely PTTEPS
    and PTTEP Services) had a total staff and seconded staff count of
    2,438, classified as follows:

  (1) Division under the Chief Executive Officer 82

  (2) Division under the President 32

  (3) Strategy and Capability Development Division 84

  (4) Thai Offshore Assets Division 544

  (5) Joint Venture and Thai Onshore Assets Division 272

  (6) Business Development and International Group 46

  (7) International Assets Division 62

  (8) Myanmar Assets Division 55

  (9) Geosciences Division 114

  (10) Operations Support Division 393

  (11) Finance and Accounting Division 145

  (12) Human Resources and Business Service Division 365

  (13) Production Development Division 244

Total 2,438

9.7.2 PTTEP’s number of staff in 2008 featured no significant changes.
No significant labor disputes have arisen over the past three years.

9.7.3 In 2008, the total compensation (salaries, bonuses, and provident
fund contributions) of PTTEP, PTTEPS, PTTEP Services staff as well as
seconded staff under 9.7.1 amounted to Baht 2,977,325,067.88.

  9.7.4 Human Resources Development Policy

In order to improve staff competency and strengthen organizational
capability for the continuing expansion of Company 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 such training, both locally and overseas, to its
staff at all levels, including management. This training comprised a
large 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 these programs was to prepare its staff for future
roles and assignments in various current and upcoming projects. The
programs were provided to selected technical staff and conducted from 1
to 3 years in duration. By this approach, the staff undertook on-the-job
training, both in Thailand and overseas, with business partners as well
as services companies, such as Total, Chevron, 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 geosciences and petroleum
engineering at top universities in the USA, UK, Canada and Australia as
well as 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 offshore
technology and management at the Asian Institute of Technology, located
in Thailand.

9.7.5 Management Development and Succession Plan

PTTEP has management competency evaluation through a 360-degree program,
with the feedback provided to the Management for identifying a
development plan to enhance management competency and leadership. In
addition, PTTEP has a systematic succession plan for key positions to
replace retirement, including filling new positions as a result of
Company expansion. For the position of CEO, the succession plan follows
the policy of the major shareholder.