SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2005
PETROCHINA COMPANY LIMITED
16 ANDELU, DONGCHENG DISTRICT
BEIJING, THE PEOPLE'S REPUBLIC OF CHINA, 100011
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
--- ---
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-______ )
PetroChina Company Limited (the "Registrant") is furnishing under the
cover of Form 6-K the Registrant's announcement with respect to its ongoing
connected transactions.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.
[SUNSHINE GRAPHIC]
[CHINESE CHARACTERS]
PETROCHINA COMPANY LIMITED
(A Joint Stock Company limited by shares
incorporated in the People's Republic of China)
(STOCK CODE: 857)
ONGOING CONNECTED TRANSACTIONS AND
ADDITIONAL ONGOING CONNECTED TRANSACTIONS
CNPC, which directly owns approximately 90% of the issued share capital of the
Company, is the controlling shareholder of the Company. Accordingly, CNPC is a
connected person of the Company and transactions between CNPC and the Company
constitute connected transactions for the Company for the purpose of the Listing
Rules.
Under the Listing Rules, connected transactions are subject to the reporting,
announcement and/or independent shareholders' approval requirements. However, as
such connected transactions have been, and/or will continue to be carried out in
the ordinary and usual course of business and occur on a regular basis on normal
commercial terms and on terms that are fair and reasonable so far as the
Shareholders are concerned, the Directors considered that it would not be
practical to make disclosure or if necessary, obtain the Shareholders' approval
for each transaction as it arises. The Stock Exchange, on 26 November 2002,
granted the Existing Waiver to the Company in respect of the Existing Ongoing
Connected Transactions. The Existing Waiver will expire on 31 December 2005. In
addition to the Existing Ongoing Connected Transactions and the Newco Continuing
CT (recently approved by Independent Shareholders at the Recent EGM), the Board
would also like to draw the Shareholders' attention to the Additional Ongoing
Connected Transactions. The Additional Ongoing Connected Transactions,
comprising the Beijing Gas Transactions and the CRMSC Transactions, are the
connected transactions between the Company and certain connected persons other
than CNPC, namely Beijing Gas and CRMSC.
The Ongoing Connected Transactions, comprising the Existing Ongoing Connected
Transactions, the Newco Continuing CT and the CRMSC Transactions, and the
Proposed Caps will be subject to the reporting, announcement and Independent
Shareholders' approval (or Shareholders' approval in the case of the CRMSC
Transactions) requirements pursuant to the Listing Rules. The Beijing Gas
Transactions will only be subject to the reporting and announcement requirements
pursuant to the Listing Rules.
THE EGM IS TO BE HELD FOR THE PURPOSE OF CONSIDERING AND, IF DEEMED APPROPRIATE,
APPROVING, AMONG OTHERS, THE ONGOING CONNECTED TRANSACTIONS. A CIRCULAR
CONTAINING PARTICULARS OF THE ONGOING CONNECTED TRANSACTIONS, A LETTER FROM THE
INDEPENDENT BOARD COMMITTEE, A LETTER OF ADVICE FROM ICEA AND A NOTICE TO
CONVENE THE EGM TO APPROVE, AMONG OTHER THINGS, THE ONGOING CONNECTED
TRANSACTIONS WILL BE DISPATCHED TO THE SHAREHOLDERS AS SOON AS PRACTICABLE.
1. INTRODUCTION
CNPC, which directly owns approximately 90% of the issued share capital of
the Company, is the controlling shareholder of the Company. Accordingly,
CNPC is a connected person of the Company and transactions between CNPC
and the Company constitute connected transactions for the Company for the
purpose of the Listing Rules.
Under the Listing Rules, connected transactions are subject to the
reporting, announcement and/or independent shareholders' approval
requirements. However, as such connected transactions have been, and/or
will continue to be carried out in the ordinary and usual course of
business and occur on a regular basis on normal commercial terms and on
terms that are fair and reasonable so far as the Shareholders are
concerned, the Directors considered that it would not be practical to make
disclosure or if necessary, obtain the Shareholders' approval for each
transaction as it arises. Accordingly, the Company had previously obtained
from the Stock Exchange a waiver from strict compliance with the relevant
requirements of the Listing Rules in respect of connected transactions
between CNPC and the Company at the time of the Company's IPO in 2000. On
12 September 2002, the Company sought to renew the waiver in respect of
the Existing Ongoing Connected Transactions. Subsequently, the Stock
Exchange, on 26 November 2002, granted the Existing Waiver to the Company
subject to, among other things, the conditions set out in a letter of even
date. The Existing Waiver will expire on 31 December 2005. In addition to
the Existing Ongoing Connected Transactions and the Newco Continuing CT
(approved by Independent Shareholders at the Recent EGM), the Board would
also like to draw the Shareholders' attention to the Additional Ongoing
Connected Transactions. The Additional Ongoing Connected Transactions are
the connected transactions between the Group and certain connected persons
other than CNPC, namely Beijing Gas and CRMSC.
The Ongoing Connected Transactions and the Proposed Caps will be subject
to reporting, announcement and Independent Shareholders' approval (or
shareholders approval in the case of the CRMSC Transactions) requirements
pursuant to the Listing Rules. The Beijing Gas Transactions will only be
subject to the reporting and announcement requirements pursuant to the
Listing Rules. Announcement is hereby made in compliance with the relevant
provisions under the Listing Rules in respect of the Ongoing Connected
Transactions and the Beijing Gas Transactions.
2. EXISTING ONGOING CONNECTED TRANSACTIONS
The connected transaction agreements listed below were initially entered
into between the Company and CNPC at the time of the Company's IPO in the
year 2000. Subsequently, on 26 September 2002, a Supplemental Buildings
Leasing Agreement was entered into between the Company and CNPC. In
addition, on 9 June 2005 and on 1 September 2005, the First Supplemental
Comprehensive Agreement and the Second Supplemental Comprehensive
Agreement were entered into between the Company and CNPC respectively. The
Board expects that the Group will continuously enter into the transactions
with CNPC Group as stated in the following agreements, which will
constitute Ongoing Connected Transactions:
. Comprehensive Agreement (as to be amended by the First Supplemental
Comprehensive Agreement and the Second Supplemental Comprehensive
Agreement), and from time to time and as necessary, various product
and service implementation agreements;
. Land Use Rights Leasing Contract;
. Buildings Leasing Contract (as amended by the Supplemental Buildings
Leasing Agreement);
. Intellectual property licensing contracts, being the Trademark
Licensing Contract, the Patent and Know-how Licensing Contract and
the Computer Software Licensing Contract;
. Contract for the Transfer of Rights under Production Sharing
Contracts; and
. Guarantee of Debts Contract.
The Trademark Licensing Contract, the Patent and Know-how Licensing
Contract and the Computer Software Licensing Contract; the Contract for
the Transfer of Rights under Production Sharing Contracts; and the
Guarantee of Debts Contract, as specified in the Prospectus and Existing
Waiver, are in compliance with the requirements of Chapter 14A of the
Listing Rules which took effect from 31 March 2004 and are exempt from the
reporting, announcement and Independent Shareholders' approval
requirements, as each of the applicable percentage ratio(s) (other than
the profits ratio) in respect of each of these connected transactions is
less than 0.1%. The Directors believe that these transactions had been
entered into in the ordinary course of business for the benefits of the
Company, and are in the interests of the Shareholders as a whole.
COMPREHENSIVE AGREEMENT
The Company and CNPC initially entered into the Comprehensive Agreement on
10 March 2000 for the provision (1) by the Group to the CNPC Group and (2)
by the CNPC Group to the Group, of a range of products and services which
may be required and requested from time to time by either party and/or its
subsidiary companies and affiliates. The Comprehensive Agreement is to be
amended by the First Supplemental Comprehensive Agreement and the Second
Supplemental Comprehensive Agreement. There will be certain new continuing
connected transactions between the Company and the Jointly-owned
Companies, and as a result, the Company and CNPC entered into the Second
Supplemental Comprehensive Agreement in respect of these new connected
transactions, the details of which are set out in the paragraph headed
"Second Supplemental Comprehensive Agreement" of this announcement.
(A) Products and Services to be provided by the Group to the CNPC Group
Under the Comprehensive Agreement, products and services to be
provided by the Group to the CNPC Group include those relating to
refined oil products, chemical products, natural gas, crude oil,
supply of water, electricity, gas, heating, quantifying and
measuring, quality inspection and other products and services as may
be requested by the CNPC Group for its own consumption, use or sale
from time to time.
(B) Products and Services to be provided by the CNPC Group to the Group
The products and services to be provided by the CNPC Group to the
Group are expected to be more numerous, both in terms of quantity
and variety, than those to be provided by the Group to the CNPC
Group. They have been grouped together and categorised according to
the following types of products and services:
Construction and technical services, including but not limited to
exploration technology service, downhole operation service, oilfield
construction service, oil refinery construction service and
engineering and design service;
Production services, including but not limited to water supply,
electricity generation and supply, gas supply and communications;
Supply of materials services, including but not limited to purchase
of materials, quality control, storage of materials and delivery of
materials;
Social services, including but not limited to security services,
education and hospitals;
Ancillary services, including but not limited to property
management, training centers and guesthouses; and
Financial services, including but not limited to loans and deposits
services.
(C) General Principles, Price and Terms
The Comprehensive Agreement requires, in general terms that,
. the quality of products and services to be provided should be
satisfactory to the recipient;
. the price at which such products and services are to be
provided must be fair and reasonable; and
. the terms and conditions on which such products and services
are to be provided should be no less favourable than those
offered by independent third parties.
(D) Price Determination
The Comprehensive Agreement details specific pricing principles for
the products and services to be provided pursuant to the
Comprehensive Agreement. If, for any reason, the specific pricing
principle for a particular product or service ceases to be
applicable, whether due to a change in circumstances or otherwise,
such product or service must then be provided in accordance with the
following general pricing principles:
(a) state-prescribed prices (at present, this applies to
products and services such as refined oil products, natural
gas, oil refinery construction, engineering and design,
project monitoring and management), the definition of
"state-prescribed price" is to be amended by the First
Supplemental Comprehensive Agreement to mean price in respect
of certain category of services determined by the laws,
regulations, decisions, orders or policies, etc. enacted by
governments of the relevant countries or regions (including
but not limited to the central government, federal government,
provincial government, state or coalition government or any
organisation responsible for domestic ruling and foreign
affairs in respect to certain specified territory,
irrespective of its name, organisation or structure) or other
regulatory departments; or
(b) where there is no state-prescribed price, then according to
the relevant market prices (at present, this applies to
products and services such as asset leasing, repair of
machinery, transportation, purchase of material, and regional
facilities), the definition of "market price" is to be amended
by the First Supplemental Comprehensive Agreement to mean the
price determined in accordance with the following order:
(i) the price charged by independent third parties in areas
where such type of service is provided and on normal
terms in the area where the service is being provided at
that time; or
(ii) the price charged by independent third parties in nearby
areas where such type of service is provided and on
normal terms in the area or country adjacent to the area
where the service is being provided at that time;
or
(c) where neither (a) nor (b) is applicable, then according to:
(i) the actual cost incurred (at present, this applies to
products and services such as library information and
filing, maintenance of roads, retirement administration
and re-employment training); or
(ii) the agreed contractual price, being the actual cost for
the provision of such product or service plus an
additional margin of not more than:
(xx) 15 per cent. (which includes finance costs,
general and administrative expenses and a profit
margin) for certain construction and technical
services (at present, this applies to products and
services such as geological surveying, drilling,
well cementing, logging, mud logging, well testing
and oilfield construction) provided that, such
agreed
contractual price shall not be higher than the
prices available for the provision of such
products and services in the international market;
and
(yy) 3 per cent. for all other types of products and
services priced in accordance with the agreed
contractual price (at present, this applies to
products and services such as downhole operations,
technology research, equipment repairing and
supporting, equipment antiseptic testing,
communications, fire fighting, quality inspection,
storage of materials, delivery of materials and
training centers).
The definitions of cost price and agreed contractual price include a
provision that the aggregate value, in each future financial year,
of all products and services which are required to be priced at cost
or at agreed contractual prices to be provided under the
Comprehensive Agreement, shall not exceed the aggregate value,
calculated on an adjusted basis as if the Comprehensive Agreement
had been in effect during the year ended 31 December 1998, of all
products and services which were required to be priced at cost or at
agreed contractual prices during the year ended 31 December 1998,
being RMB36.9 billion (the "1998 Amount"), subject to any necessary
adjustment for inflation or deflation, as appropriate, for the
relevant year.
However, if in any future financial year, the Company, due to any
events or factors beyond the control of the Company (e.g. natural
disasters) or the development of new projects, is required to
purchase additional products and services required to be priced at
cost or at agreed contractual prices exceeds the 1998 Amount (as
adjusted for inflation or deflation as appropriate), then that
decision to purchase such additional products or services should be
authorised by the Board (with affirmative votes from the independent
non-executive directors) and the management of the Company on the
basis of any revised business plan and comprehensive financial
analysis, to ensure that such purchases will allow for a reasonable
return to the Company's shareholders. In the event that the relevant
Proposed Caps are to be exceeded, the Company will comply with the
requirements of the Listing Rules.
(E) Coordination of annual demand of products and services
Two months prior to the end of each financial year, both parties are
required to prepare and submit to each other an annual plan
detailing the estimated demand for products and services to be
rendered in accordance with the Comprehensive Agreement for the
forthcoming financial year.
(F) Rights and Obligations
Both the Group and the CNPC Group retain the right to choose to
receive products and services, as contemplated under the
Comprehensive Agreement, from independent third parties where the
terms and conditions as to price or quality of products or services
offered by such third parties may be superior to those offered by
either of the Group or the CNPC Group, as appropriate.
In addition, the provision of products and services by either party
is on a non-exclusive basis and each party may provide products and
services to other third parties, subject always to the obligation
that each party must be able to provide those products and services
which may be required to be provided in accordance with the
Comprehensive Agreement and the annual plan then in force.
(G) Term and Termination
The term of the Comprehensive Agreement was initially 10 years
starting from the date when the Company's business license was
issued. This term is to be amended by the Second Supplemental
Comprehensive Agreement to 3 years commencing from the effective
date of the Second Supplemental Comprehensive Agreement, i.e., 1
January 2006.
During the term of the Comprehensive Agreement, termination of the
product and service implementation agreements described below may be
effected from time to time by the parties to the product and service
implementation agreements providing at least 6 months' written
notice of termination in relation to any one or more categories of
products or services. Further, in respect of any products or
services already contracted to be provided, termination may not take
place until after such products and services have been provided.
In the event that CNPC proposes to terminate the provision of any
products or services, and the Company is unable to find an
alternative product or service provider (which fact shall be
communicated by the Company to CNPC from time to time), then unless
permitted by the Company, CNPC must continue to provide such
products or services in accordance with the terms of the
Comprehensive Agreement.
The following table sets forth the historical revenues and expenditures in
relation to the provision of the products and services which are the
subject matters of the Comprehensive Agreement between the Company and
CNPC for the financial years ended 31 December 2003 and 31 December 2004
as well as the period between 1 January 2005 to 30 June 2005:
AS AT 31 DECEMBER AS AT 30 JUNE
2003 2004 2005
RMB HK$ RMB HK$ RMB HK$
(in millions)
REVENUES 9,323 8,964 14,516 13,958 6,932 6,665
EXPENDITURES
Construction and technical services 40,868 39,296 47,499 45,672 19,554 18,802
Production services 16,042 15,425 16,313 15,690 8,945 8,601
Supply of materials services 971 934 884 850 707 680
Social and ancillary services 3,009 2,893 3,006 2,890 1,622 1,560
Financial services
Aggregate of the average daily outstanding principal of loans and the
total amount of interest paid in respect of these loans 25,803 24,810 25,161 24,193 25,651 24,664
Aggregate of the average daily amount of deposits and the total amount
of interest received in respect of these deposits 4,052 3,896 3,441 3,309 3,641 3,501
PRODUCT AND SERVICE IMPLEMENTATION AGREEMENTS
It is envisaged that from time to time and as required, individual product
and service implementation agreements will be entered into between the
relevant service companies and affiliates of the CNPC Group or the Group,
as appropriate, providing the relevant products or services and the
relevant members of the Group or the CNPC Group, as appropriate, requiring
such products or services.
Each product and service implementation agreement will set out the
specific products and services requested by the relevant party and any
detailed technical and other specifications which may be relevant to those
products or services. The product and service implementation agreements
may only contain provisions which are in all material respects consistent
with the binding principles and guidelines and terms and conditions in
accordance with which such products and services are required to be
provided as contained in the Comprehensive Agreement.
As the product and service implementation agreements are simply further
elaborations on the provision of products and services as contemplated by
the Comprehensive Agreement, they do not constitute new categories of
connected transactions.
SECOND SUPPLEMENTAL COMPREHENSIVE AGREEMENT
The Second Supplemental Comprehensive Agreement was entered into by CNPC
and the Company on 1 September 2005, in which they agreed to amend certain
terms of the Comprehensive Agreement, including, among other things, that:
. both CNPC and the Company shall provide and shall procure their
respective entities including their subsidiaries, branches and other
relevant units to provide products and services in accordance with
the terms and principles of the Comprehensive Agreement;
. the CNPC Group will provide certain risk operation services as part
of the construction and technical services to the Group, and these
include the provision of exploration and production services within
certain and specific reserves of the Company with exploration and
exploitation difficulties;
. the Group will provide certain financial assistance to the
Jointly-owned Companies including entrustment loans and guarantees;
. the Jointly-owned Companies will provide certain financial
assistance to the Group including entrustment loans and guarantees;
and
Under the Second Supplemental Comprehensive Agreement, the products and
services shall be provided at prices determined according to the pricing
principles for the corresponding products or services under the
Comprehensive Agreement (as amended).
In particular, the Comprehensive Agreement stipulates, among other things,
that:
(i) the loans and deposits shall be provided at prices determined in
accordance with the relevant interest rate and standard for fees as
promulgated by the People's Bank of China. Such prices must also be
more favourable than those provided by independent third parties;
and
(ii) the guarantees shall be provided at prices not higher than the fees
charged by the state policy banks in relation to the provision of
guarantees. References must also be made to the relevant
state-prescribed price and market price.
The Second Supplemental Comprehensive Agreement will take effect on 1
January 2006, after the approval by the Independent Shareholders at the
EGM.
LAND USE RIGHTS LEASING CONTRACT
The Company entered into the Land Use Rights Leasing Contract with CNPC on
10 March 2000 under which CNPC has leased a total of 42,476 parcels of
land in connection with and for the purpose of all aspects of the
operations and business of the Group covering an aggregate area of
approximately 1,145 million square meters, located throughout the PRC, to
the Company for a term of 50 years at an annual fee of RMB2,000 million.
The Directors believe that a term of 50 years is appropriate for the Land
Use Rights Leasing Contract, since the Company is China's largest
petroleum company engaging in exploration, development, sale and
production of crude oil, natural gas and chemicals, and the long stability
of a 50 year tenure is required to avoid the unnecessary disruption of its
operations; the relevant land leases are of material significance of its
operations; and such tenure conforms with normal business practice in the
PRC property market. The total fee payable for the lease of all such
property may, after the expiration of 10 years from the date of the Land
Use Rights Leasing Contract, be adjusted (to reflect market conditions
prevalent at such time of adjustment, including current market prices,
inflation or deflation, as appropriate, and such other pertinent factors
as may be considered in negotiating and agreeing to any such adjustment)
by agreement between the Company and CNPC. In addition, any governmental,
legal or other administrative taxes and fees required to be paid in
connection with the leased properties will be borne by CNPC. However, any
additional amount of such taxes payable as a result of changes in the PRC
Government policies after the date of the contract shall be shared
proportionately on a reasonable basis between CNPC and the Company.
Savills (Hong Kong) Limited, an independent valuer, has reviewed the Land
Use Rights Leasing Contract and has confirmed that the term of 50 years
and current rental payable by the Company to CNPC are fair and reasonable
to the Company. The date of valuation is 30 June 2005. ICEA, the
independent financial adviser to the Independent Board Committee will
opine, in its advice to be contained in the Company's forthcoming
circular, on whether it is normal business practice for the Land Use
Rights Leasing Contract to have a term of 50 years.
BUILDINGS LEASING CONTRACT
The Company entered into the Buildings Leasing Contract with CNPC on 10
March 2000 pursuant to which the CNPC Group has leased to the Company a
total of 191 buildings covering an aggregate area of 269,770 square
meters, located throughout the PRC for the use by the Company for its
business operation including the exploration, development and production
of crude oil, the refining of crude oil and petroleum products, the
production and sale of chemicals, etc.
The 191 buildings were leased at a price of RMB145 per square meter per
year, that is, at an aggregate annual fee of RMB39,116,650, for a term of
20 years. The Directors believe that a term of 20 years is appropriate for
the Buildings Leasing Contract (as amended), since the Company is China's
largest petroleum company engaging in exploration, development, sales and
production of crude oil, natural gas and chemicals, and the long stability
of a 20 year tenure is required to avoid the unnecessary disruption of its
operations; the relevant building leases are of material significance of
its operations; and such tenure conforms with normal business practice in
the PRC property market. The Company is responsible for the payment of any
governmental, legal or other administrative taxes and maintenance charges
required to be paid in connection with these 191 leased buildings. The
Buildings Leasing Contract details the particulars of the buildings leased
by members of the CNPC Group to the Company.
Members of the CNPC Group which own one or more of the leased buildings
will enter into individual building leasing contracts with the Company.
The individual building leasing contracts may only contain provisions
which are consistent with the terms and conditions of the Buildings
Leasing Contract.
One month prior to the end of each financial year, CNPC and the Company
shall make and agree upon a rental fee distribution plan setting out
specific prices for the buildings according to their geographical
locations and conditions.
Supplemental Buildings Leasing Agreement
Further to the Buildings Leasing Contract mentioned above, the Company
entered into a Supplemental Buildings Leasing Agreement (the "SUPPLEMENTAL
BUILDINGS AGREEMENT") with CNPC on 26 September 2002 under which CNPC
Group agreed to lease another 404 buildings to the Group in connection
with and for the purpose of the operation and business of the Group
covering an aggregate of approximately 442,730 square meters. Leasing of
the units in the Supplemental Buildings Agreement is mainly attributable
to the expansion of the Company's operations in the areas of oil and
natural gas exploration, the West-East natural gas pipeline project and
the construction of the Northeast refineries and chemical operation base.
The annual fee payable under the Supplemental Buildings Agreement amounts
to RMB157,439,540. The Company and CNPC will, based on their needs for
production and operation or the changes of the market prices of the
buildings, adjust the scale and the amount of all such buildings under the
Buildings Leasing Contract as well as the Supplemental Buildings Agreement
every three years. The Supplemental Buildings Agreement became effective
on 1 January 2003 and will expire at the same time as the Buildings
Leasing Contract.
Savills (Hong Kong) Limited, an independent valuer, has reviewed both the
Buildings Leasing Contract and the Supplemental Buildings Agreement and
has confirmed that the term of 20 years and current rental payable by the
Company to CNPC are fair and reasonable to the Company. The date of
valuation is 30 June 2005. ICEA, the independent financial adviser to the
Independent Board Committee will opine, in its advice to be contained in
the Company's
forthcoming circular, on whether it is normal business practice for the
Buildings Leasing Contract and the Supplemental Buildings Agreement to
have a term of 20 years.
3. NEWCO CONTINUING CT
Newco Continuing CT are continuing connected transactions arising as a
result of the completion of the Transactions, and primarily include:
. the sale of products by Newco Group to the CNPC Group;
. the provision of construction and technical services such as
exploration technology services by CNPC Group to Newco Group;
. the provision of social services and ancillary services by CNPC
Group to Newco Group; and
. the provision of financial services by CNPC Group to Newco Group.
The Independent Shareholders have approved at the Recent EGM, among other
things, the Transactions and Newco Continuing CT.
4. ADDITIONAL ONGOING CONNECTED TRANSACTIONS
On 1 September 2005, the Company entered into the Beijing Gas Products and
Services Agreement with Beijing Gas. According to this agreement, the
Company will provide Beijing Gas with products and services including,
among other things, natural gas and natural gas related pipe
transportation services on an ongoing basis.
On 1 September 2005, the Company entered into the CRMSC Products and
Services Agreement with CRMSC. According to this agreement, the Company
will provide CRMSC with products and services including, among other
things, refined products (such as gasoline, diesel and other petroleum
products) on an ongoing basis.
The CRMSC Transactions are subject to the announcement, reporting and
Shareholders' approval requirements pursuant to the Listing Rules, whereas
the Beijing Gas Transactions are only subject to the reporting and
announcement requirements under the Listing Rules.
BEIJING GAS PRODUCTS AND SERVICES AGREEMENT
(A) Products and Services to be provided by the Company to Beijing Gas
Under the Beijing Gas Products and Services Agreement, products and
services to be continuously provided by the Company to Beijing Gas
include, among other things, natural gas and natural gas related
pipe transportation services.
(B) General Principles, Price and Terms
The Beijing Gas Products and Services Agreement requires, in general
terms that:
(a) The quality of goods and services to be provided should be
satisfactory to the recipient;
(b) The price at which such products and services are to be
provided must be fair and reasonable;
(c) The terms and conditions on which such products and services
are to be provided should be no less favourable than those
offered by independent third parties; and
(d) The products and services shall be provided and standardised
by contracting under individual product and service
agreements.
(C) Price Determination
The price of any product and service provided pursuant to the
Beijing Gas Products and Services Agreement shall be determined by
reference to the State-prescribed price or the market price where
there is no State-prescribed price.
(D) Coordination of annual demand of products and services
Before November of each year, Beijing Gas is required to discuss and
confirm with the Company an annual plan detailing the estimated
demand for products and services to be rendered in accordance with
the Beijing Gas Products and Services Agreement for the forthcoming
year. It is envisaged that from time to time and as required,
individual product and service implementation agreements will be
entered into between the Company and Beijing Gas and their
respective subsidiaries, branches and other relevant units, as
appropriate, in connection with the provision of products and
services under the Beijing Gas Products and Services Agreement.
(E) Rights and Obligations
Both the Company and Beijing Gas agree and guarantee, among other
things, to procure their respective subsidiaries, branches and other
relevant units to provide the products and services in accordance
with the terms and principles of the Beijing Gas Products and
Services Agreement.
(F) Term and Termination
The term of the Beijing Gas Products and Services Agreement is 3
years commencing from 1 January 2006.
During the term of the Beijing Gas Products and Services Agreement,
the product and service implementation agreements may be terminated
from time to time by the parties to the product and service
implementation agreements providing at least 6 months' written
notice of termination in relation to any one or more categories of
products or services. Further, in respect of any products or
services already contracted to be provided, termination may not take
place until after such products and services have been provided.
The following table sets forth the historical revenues in relation
to the provision of the products and services which are the subject
matters of the Beijing Gas Products and Services Agreement between
the Company and Beijing Gas for the period between 1 January 2005 to
30 June 2005:
CRMSC PRODUCTS AND SERVICES AGREEMENT
(A) Products and Services to be provided by the Company to CRMSC
Under the CRMSC Products and Services Agreement, products and
services to be continuously provided by the Company to CRMSC
include, among other things, refined products (such as gasoline,
diesel and other petroleum products).
(B) General Principles, Price and Terms
The CRMSC Products and Services Agreement requires, in general terms
that:
(a) The quality of goods and services to be provided should be
satisfactory to the recipient;
(b) The price at which such products and services are to be
provided must be fair and reasonable;
(c) The terms and conditions on which such products and services
are to be provided should be no less favourable than those
offered by independent third parties; and
(d) The products and services shall be provided and standardised
by contracting under individual product and service
agreements.
(C) Price Determination
The price of any product and service provided pursuant to the CRMSC
Products and Services Agreement shall be determined by reference to
the State-prescribed price or the market price where there is no
State-prescribed price.
(D) Coordination of annual demand of products and services
Before November of each year, CRMSC is required to discuss and
confirm with the Company an annual plan detailing the estimated
demand for products and services to be rendered in accordance with
the CRMSC Products and Services Agreement for the forthcoming year.
It is envisaged that from time to time and as required, individual
product and service implementation agreements will be entered into
between the Company and CRMSC and their respective subsidiaries,
branches and other relevant units, as appropriate, in connection
with the provision of products and services under the CRMSC Products
and Services Agreement.
(E) Rights and obligations
Both the Company and CRMSC agree and guarantee, among other things,
to procure their respective subsidiaries, branches and other
relevant units to provide the products and services thereof in
accordance with the terms and services thereof in accordance with
the terms and principles of the CRMSC Products and Services
Agreement.
(F) Term and termination
The term of the CRMSC Products and Services Agreement is 3 years
commencing from 1 January 2006.
During the term of the CRMSC Products and Services Agreement, the
product and service implementation agreements may be terminated from
time to time by the parties to the product and service
implementation agreements providing at least 6 months' written
notice of termination in relation to any one or more categories of
products or services. Further, in respect of any products or
services already contracted to be provided, termination may not take
place until after such products and services have been provided.
5. DESCRIPTION OF THE CONNECTED RELATIONSHIP BETWEEN THE PARTIES IN THE
ONGOING CONNECTED TRANSACTIONS AND ADDITIONAL ONGOING CONNECTED
TRANSACTIONS
CNPC
As CNPC directly owns an aggregate of approximately 90% of the issued
share capital of the Company, CNPC is a connected person of the Company
under the Listing Rules.
NEWCO
As Newco will become a non wholly-owned subsidiary of the Company upon the
completion of the Transactions and CNPC will become a substantial
shareholder of Newco, Newco will be a connected person of the Company
under the Listing Rules.
BEIJING GAS
As Beijing Gas is a substantial shareholder of the Company's subsidiary,
Huayou, it is a connected person of the Company under the Listing Rules.
CRMSC
CRMSC, being a substantial shareholder of the Company's subsidiary,
PetroChina & CRMSC Oil Marketing, is a connected person of the Company
under the Listing Rules.
Transactions between the Group and connected persons constitute connected
transactions of the Company under the Listing Rules and are subject to the
reporting, announcement and/or Independent Shareholders' or Shareholders'
approval requirements pursuant the Listing Rules.
6. REASONS FOR AND BENEFITS OF THE ONGOING CONNECTED TRANSACTIONS AND
ADDITIONAL ONGOING CONNECTED TRANSACTION
The Ongoing Connected Transactions are entered into for the necessity and
benefits of the Company. The Company, one of the largest companies in the
PRC in terms of sales, is engaged in a broad range of petroleum and
natural gas-related activities. CNPC, on the other hand, is an enterprise
whose business operations cover a broad spectrum of upstream and
downstream activities, domestic marketing and international trade,
technical services, and equipment manufacturing and supply. CNPC is a
major producer and supplier of petrochemical products. CNPC is also
involved in the provision of operational services and technical support in
such areas as geophysical prospecting, well drilling, logging, well
testing, downhole operations, oilfield surface facilities construction,
pipeline construction, refining and petrochemical projects, and
manufacturing and supply of petroleum equipment.
In view of the strengths and scope of CNPC's business activities and the
strong favourable support that such Ongoing Connected Transactions would
bring to the Company's business activities, the Board believes that the
Ongoing Connected Transactions are entered into for the necessity and
benefits of the Company. The Board also notes the long smooth cooperation
history between the Company and CNPC in relation to such transactions.
The Ongoing Connected Transactions as referred to in this announcement are
and will be conducted in the ordinary and usual course of business of the
Group. These transactions will continue to be agreed on an arm's length
basis with terms that are fair and reasonable to the Company. Due to the
long-term relationships between the Group and CNPC Group, the Board
considers it to be beneficial to the Company and in the interests of the
Shareholders as a whole to continue the Ongoing Connected Transactions
with CNPC Group as these transactions have facilitated and will continue
to facilitate the operation of the Group's business.
REASONS FOR AND BENEFITS OF THE ONGOING CONNECTED TRANSACTIONS WITH
BEIJING GAS
The ongoing connected transactions with Beijing Gas are essential to the
Company. The Company has strengths in terms of resources. Beijing Gas is
one of the large operators of natural gas supply network in the PRC. It
has a dominant position in purchasing and distributing of natural gas in
the market. In view of the overwhelming economic power and market share of
Beijing Gas, the combined strengths of the Company and Beijing Gas in
terms of resources and market share come into play. The ongoing connected
transactions between the Group and Beijing Gas enhance the competitiveness
of both the Group and Beijing Gas. With the Company becoming the natural
gas supplier of Beijing Gas, the Company has found strong and favourable
support for its operations.
The ongoing connected transactions with Beijing Gas are conducted in the
ordinary and normal course of business of the Company, and are at arm's
length. The Directors believe that these transactions are fair and
reasonable to the Company and in the interests of the Shareholders as a
whole. In view of the long-term working relationship of the Company with
Beijing Gas, it is favourable for the Company to expand its market share
and the Company's development.
REASONS FOR AND BENEFITS OF THE ONGOING CONNECTED TRANSACTIONS WITH CRMSC
The ongoing connected transactions with CRMSC are essential to the
Company. The Company has strengths in terms of resources. CRMSC is a major
corporation of materials supply in the PRC. It has a dominant position in
diesel purchase and distribution in the market. In view of the
overwhelming economic power and market share of CRMSC and the new
situation of the refined oil market of the PRC in the wake of China's
accession to the WTO, the combined strengths of the Company and CRMSC in
terms of resources and market share come into play. The ongoing connected
transactions between the Group and CRMSC enhance the competitiveness of
both the Group and CRMSC. With PetroChina & CRMSC Oil Marketing as the
major supplier of diesel for railway engines, the Company has found strong
and favourable support for its operations from CRMSC.
The ongoing connected transactions with CRMSC are conducted in the
ordinary and normal course of business of the Company, and are at arm's
length. The Directors believe that these transactions are fair and
reasonable to the Company and in the interests of the Shareholders as a
whole. In view of the long-term working relationship of the Company with
CRMSC, it is favourable for the Company to expand its market share and the
Company's development.
7. PROPOSED CAPS
The Board has considered and proposed that the following caps in respect
of the Ongoing Connected Transactions be set for the annual volumes of the
relevant transactions above for the period from 1 January 2006 to 31
December 2008:
(A) In relation to the products and services contemplated under (a) the
Comprehensive Agreement as to be amended by the First Supplemental
Comprehensive Agreement and the Second Supplemental Comprehensive
Agreement; (b) Buildings Leasing Contract and Supplemental Buildings
Agreement; and (c) the CRMSC Products and Services Agreement; the
total annual revenue or expenditure in respect of each category of
products and services will not exceed the proposed maximum annual
aggregate values set out in the following table:
CATEGORY OF PRODUCTS AND SERVICES EXISTING ANNUAL LIMIT FOR PROPOSED ANNUAL CAPS
2005 2006 2007 2008
RMB
(in millions)
(i) Products and services to be provided by RMB39,003 million
the Group to the CNPC Group (Note 1) (approximately HK$37,503
million) 19,134 23,472 26,910
(ii) Products and services to be provided by
the CNPC Group to the Group
(a) Construction and technical services (Note RMB76,413 million
2) (approximately HK$73,474
million) 91,614 88,280 79,636
(b) Production services (Note 3) RMB33,740 million
(approximately HK$32,442
million) 27,513 28,923 32,647
(c) Supply of materials services RMB6,748 million
(Note 4) (approximately HK$6,488
million) 4,471 4,331 4,500
(d) Social and ancillary services RMB5,009 million
(Note 5) (approximately HK$4,816
million) 5,000 5,000 5,000
(e) Financial Services
Aggregate of the average daily outstanding
principal of loans; the total amount of interest
paid in respect of these loans; and other RMB59,413 million
relevant charges (approximately HK$57,128 43,312 50,132 56,547
(Note 6) million)
Aggregate of the average daily amount of
deposits; and the total amount of interest RMB5,657 million
received in respect of these deposits (approximately HK$5,439
(Note 7) million) 9,081 9,102 9,126
(iii) Financial services to be provided by
the Group to the Jointly-owned Companies
(Note 8) -- 21,235 32,840 44,465
(iv) Fee for land leases paid by the Group to RMB2,000 million
CNPC (Note 9) (approximately HK$1,923
million) 2,260 2,260 2,260
(v) Rental for buildings paid by the Group RMB200 million
to CNPC (Note 10) (approximately HK$192
million) 140 140 140
(vi) Products and services to be provided by
the Group to CRMSC (Note 11) -- 10,326 11,359 12,495
(B) In relation to the Trademark Licensing Contract, the Patent and
Know-how Licensing Contract and the Computer Software Licensing
Contract, CNPC has granted the Company the right to use certain
trademarks, patents, know-how and computer software of CNPC at no
cost.
(C) The historical revenue in relation to the provision of the products
and services which are the subject matter of the Beijing Gas
Products and Services Agreement between the Company and Beijing Gas
was RMB103 million in the month of July 2005. Beijing Gas only
became the shareholder of Huayou (and hence a connected person of
the Company) in June 2005 and there had not been any connected
transactions between the Company and Beijing Gas before June 2005.
In relation to the Beijing Gas Products and Services Agreement, the
total revenue in respect of the relevant products and services will
be RMB4,939 million, RMB5,983 million and RMB7,097 million for each
of 2006, 2007 and 2008 respectively. Such annual proposed caps have
been determined with reference to (i) the relevant pricing
principles, i.e., the state-prescribed prices; (ii) the historical
transaction levels for the same type of transaction before Beijing
Gas became a connected person of the Company; and (iii) the
estimated future transaction levels based on market needs in the
coming 3 years. As each of the applicable percentage ratio(s) (other
than the profits ratio) in respect of this type of connected
transaction is, on an annual basis, expected to be more than 0.1%
but less than 2.5%, such type of transaction is only subject to the
reporting and announcement requirements under the Listing Rules but
does not require approval by the Independent Shareholders.
(D) the Company's annual report and accounts shall contain a statement
that, in the opinion of the Directors, the arrangement has been
entered into in the manner as stated in the table above.
Notes:
Bases for the Proposed Caps:
1. The annual proposed caps for the products and services to be
provided by the Group to the CNPC Group have been determined
with reference to the historical transactions and transaction
amounts in providing products and services by the Group to the
CNPC Group; the estimated business growth of the Group; the
estimated business growth of the CNPC Group; the potential
fluctuations and increases in the prices of crude oil,
petrochemical products, natural gas and other oil products and
services both in the international market and in the domestic
market; and the increase in transaction amounts as a result of
the completion of the Transactions.
2. The annual proposed caps for the provision of construction and
technical services have been determined with reference to the
completed transactions and transaction amounts for the
construction and technical services provided by the CNPC Group
to the Group; the estimated business growth of the Company;
and the transaction amounts as a result of increase in size of
the Group upon the completion of the Transactions.
The Group has obtained construction and technical services
from CNPC Group in the ordinary course of business, and as one
of the most experienced companies in the world, the
construction and technical services provided to the Group are
quality services. The CNPC Group is also one of the few
companies in the PRC which provide quality petrochemical
related construction and technical services.
3. The annual proposed caps for the production services provided
by the CNPC Group to the Group have been determined with
reference to the previous transactions conducted and
transaction amounts in respect of production services provided
by the CNPC Group to the Group; the estimated business growth
of the Group; and the potential fluctuations and increases in
the international and the PRC market prices of crude oil,
petroleum and petrochemical products, leading to higher energy
costs in the production process.
Production services mainly consist of water supply,
electricity generation and supply, gas supply by CNPC Group to
the Group and the supply of petroleum and petrochemical
products by Jointly-owned Companies to the Group. The Group is
of the view that annual proposed caps have provided sufficient
increment for the Company to implement its future business
development plans and have been determined on a fair and
reasonable basis.
4. The annual caps for the supply of materials services paid by
the Group to the CNPC Group have been determined by reference
to the estimated business growth of the Company; and changes
in the volume of purchases by the Group.
The CNPC Group is one of the leading buyers of petrochemical
raw materials in the PRC. With the economy of scale and to
increase the collective bargaining power of the CNPC Group,
the centralised materials purchase by the CNPC Group thus
stabilise the purchase prices of the Company's raw materials.
With the Company's dominant position and increase in the
petroleum and petrochemical industries of the PRC, as well as
the increase in the size of business, these ongoing connected
transactions and transaction amounts are expected to increase.
The Group is of the view that the Proposed Caps provide
sufficient increment for the Company to implement future
business development and planning.
5. The annual proposed caps for social and ancillary services
have been determined with reference to the previous
transactions conducted and transaction amounts in respect of
the social and ancillary services provided by the CNPC Group
to the Group; the estimated business growth of the Group; and
the transaction amounts as a result of increase in size of the
Group upon the completion of the Transactions.
Considering the future development and acquisitions of the
Group which will increase the demand for certain social and
ancillary services, the Group has prudently set the annual
proposed caps at the same level as the existing annual caps.
6. The annual proposed caps for the financial services (aggregate
of loans, interests and other relevant charges) provided by
CPFC to the Group have been determined with reference to the
estimated business growth of the Group; the competitive
interest rates and charges offered by CPFC; and the
transaction amounts as a result of increase in size of the
Group upon the completion of the Transactions, in particular,
the financing provided by CPFC to Newco.
To optimise cash flow management and capital efficiency of the
Group and the CNPC Group, there is the specific target of
providing a centralised financial management by CPFC, which
provides a full range of financial services to the Group and
the CNPC Group, including but not limited to deposit services,
loan services, project financing, clearing services, financial
advisory and insurance services.
The Group is of the view that the annual proposed caps have
provided increments sufficient for the Group to implement
future business development and planning, and that the annual
proposed caps have been determined on a reasonable basis.
7. The annual proposed caps for the financial services (aggregate
of deposits and interests) provided by the CNPC Group to the
Group have been determined with reference to the estimated
business growth of the Group; the Group's historical cashflow
and levels of deposits; the competitive interest rates offered
by CPFC; and the transaction amounts as a result of increase
in size of the Group upon the completion of the Transactions.
As mentioned above, in order to optimise cash flow management
and capital efficiency of the Group and the CNPC Group, there
is the specific target of providing a centralised financial
management by CPFC, which provides a full range of financial
services to the Group and the CNPC Group.
The Group is of the view that the annual proposed caps have
provided increments sufficient for the Group to implement
future business development and planning, and that the annual
proposed caps have been determined on a reasonable basis.
8. The annual proposed caps for the financial services, including
but not limited to guarantees and entrustment loans, to be
provided by the Group to the Jointly-owned Companies (such as
Newco) have been determined with reference to the business
development and financing needs of the Jointly-owned
Companies; and the acquisition opportunities which may arise
from time to time in the international market. It has been
pointed out by the Group in the Recent Circular to the
Shareholders dated 30 June 2005 that it is the Group's
strategic objective of becoming an international petroleum
company with significant oil assets both onshore and offshore
as well as in both the PRC and international markets. The
Group is of the view that the provision of financial services
to the Jointly-owned Companies will enable them to have
sufficient funding for future expansion.
9. The Directors consider that pursuant to the Land Use Rights
Leasing Contract, the annual proposed caps in respect of the
land leases provided by the CNPC Group to the Group are
sufficient for the Group to implement future business
development and planning. Each of the annual proposed caps
comprises of the annual leasing fee of RMB2,000 million and
the relevant PRC tax of RMB260 million, which are in
accordance with the Land Use Rights Leasing Contract. Savills
(Hong Kong) Limited, an independent valuer, has appraised the
lands leased to the Group.
10. The Directors consider that pursuant to the Buildings Leasing
Contract (as amended by the Supplemental Buildings Agreement),
the annual proposed caps in respect of the building leases
provided by the CNPC Group to the Group are sufficient for the
Group to implement future business development and planning.
The annual proposed caps are in accordance with Buildings
Leasing Contract (as amended by the Supplemental Buildings
Agreement), and Savills (Hong Kong) Limited, an independent
valuer, has appraised the buildings leased to the Group.
11. The historical revenue in relation to the provision of the
products and services which are the subject matter of CRMSC
Products and Services Agreement between the Company and CRMSC
was RMB4,041 million for the six months ended 30 June 2005.
There had not been any connected transactions between the
Company and CRMSC before 1 January 2005.
The annual proposed caps have been determined with reference
to (i) the relevant pricing principles, i.e., the
State-prescribed prices; (ii) the historical transaction
levels for the same type of transaction before CRMSC became a
connected person of the Company; and (iii) the estimated
future transaction levels based on the market needs in the
coming 3 years.
8. DISCLOSURE AND INDEPENDENT SHAREHOLDERS' APPROVAL REQUIREMENTS
Under the Listing Rules, the Ongoing Connected Transactions as stated
above are subject to the reporting, announcement and Independent
Shareholders' approval (or Shareholders' approval in the case of CRMSC
Transactions) requirements. The Company will seek the Independent
Shareholders' approval (or Shareholders' approval in the case of CRMSC
Transactions) at the EGM of the Ongoing Connected Transactions and the
Proposed Caps that:
1. The annual amount of each individual type of the Ongoing Connected
Transactions shall not exceed the applicable Proposed Cap;
2. (i) The Ongoing Connected Transactions will be entered into in the
usual and ordinary course of businesses of the Group and
either (A) on normal commercial terms or (B) if there is no
available comparison, on terms no less favourable to the Group
than terms available from independent third parties; and
(ii) The Ongoing Connected Transactions will be entered into in
accordance with the relevant agreements and on terms that are
fair and reasonable and in the interests of the Shareholders
as a whole;
The Company will comply with the Listing Rules.~In view of the interests
of CNPC, CNPC will abstain from voting in relation to the shareholders
resolution necessary to approve the Ongoing Connected Transactions (except
the CRMSC Transactions). In the case of CRMSC Transactions, no Shareholder
is required to abstain from voting. An Independent Board Committee of the
Company (comprising Messrs. Chee-Chen Tung, Liu Hong Ru and Franco
BernabE) has been appointed to advise the Independent Shareholders on
whether or not the terms of the Ongoing Connected Transactions are in the
interest of the Company and are fair and reasonable so far as the
Independent Shareholders are concerned. An independent financial adviser,
ICEA, has been appointed to advise the Independent Board Committee of the
Company regarding the terms of the Ongoing Connected Transactions.
9. EGM
The EGM is to be held for the purpose of considering and, if deemed
appropriate, approving, among others, the Ongoing Connected Transactions.
A circular containing particulars of the Ongoing Connected Transactions, a
letter from the Independent Board Committee, a letter of advice from ICEA,
a reply slip and a notice to convene the EGM to approve, among other
things,
the Ongoing Connected Transactions will be dispatched to the Shareholders
as soon as practicable.
10. GENERAL INFORMATION
The Company is engaged in a broad range of petroleum and natural
gas-related activities.
11. DEFINITIONS
In this announcement, the following expressions have the following meanings
unless the context requires otherwise:
"Additional Ongoing
Connected Transactions" means the the Beijing Gas Transactions and the CRMSC
Transactions
"associates" has the meaning ascribed to it in the Listing Rules
"Beijing Gas" means [CHINESE CHARACTERS] (Beijing Gas Group
Company Limited*), a company established under the laws
of the PRC, and a substantial shareholder of Huayou,
holding 40% interests in Huayou
"Beijing Gas Products means the agreement dated 1 September 2005 entered into
and Services Agreement" between the Company and Beijing Gas in relation to the
provision of certain products and services, the details
of which are set out in the paragraph headed "Beijing
Gas Products and Services Agreement" of this
announcement
"Beijing Gas means the transactions contemplated under the Beijing
Transactions" Gas Products and Services Agreement
"Board" means the board of Directors of the Company, including
the independent non-executive Directors
"Chairman" means the chairman of the Board
"CNPC" means [CHINESE CHARACTERS] (China National Petroleum
Corporation*), a State-owned enterprise established
under the laws of PRC, and the controlling shareholder
of the Company, holding approximately 90% of the issued
share capital of the Company
"CNPC Group" means CNPC and its subsidiaries and affiliates,
excluding the Group
"CPFC" means [CHINESE CHARACTERS] (China Petroleum Finance
Company Limited*), a 92.5% non-wholly owned subsidiary
of CNPC
"CRMSC" means [CHINESE CHARACTERS] (China Railway Materials and
Suppliers Corporation), a State-owned enterprise
established under the laws of the PRC, and a substantial
shareholder of PetroChina & CRMSC Oil Marketing
"CRMSC Products means the agreement dated 1 September 2005 entered into
and Services between the Company and CRMSC in relation to the
Agreement" provision of certain products and services, the details
of which are set out in the paragraph headed "CRMSC
Products and Services Agreement" of this announcement
"CRMSC Transactions" means the transactions contemplated under the CRMSC
Products and Services Agreement
"Company" means [CHINESE CHARACTERS]
(PetroChina Company Limited), a joint stock company
limited by shares incorporated in the PRC on 5 November
1999 under the Company Law of PRC, and listed on the
Stock Exchange with American depository shares listed on
the New York Stock Exchange
"Comprehensive means the comprehensive products and services agreement
Agreement" dated 10 March 2000 entered into between CNPC and the
Company regarding the provision by the Group to the CNPC
Group and by the CNPC Group to the Group, of a range of
products and services from time to time, effective as of
5 November 1999
"Director(s)" means the director(s) of the Company
"EGM" means an extraordinary general meeting of the Company to
be held to approve, among other things, the Ongoing
Connected Transactions and the Proposed Caps
"Existing Waiver" means the waiver granted by the Stock Exchange on 26
November 2002 to the
Company in respect of the Existing Ongoing Connected
Transactions
"Existing Ongoing means the connected transactions which have been and
Connected will continue to be entered into between the Group and
Transactions" the CNPC Group, which were the subject of the Existing
Waiver
"First Supplemental means the supplemental comprehensive products and
Comprehensive services agreement dated 9 June 2005 entered into
Agreement" between the Company and CNPC in relation to certain
amendments of the Comprehensive Agreement, which was
approved by the Independent Shareholders at the Recent
EGM, the details of which are set out in the Recent
Announcement and Recent Circular
"Group" means the Company and its subsidiaries
"HK$" means Hong Kong dollars, the lawful currency of Hong
Kong
"Huayou" means [CHINESE CHARACTERS] (Beijing Huayou Natural Gas
Company Limited*), a company established under the laws
of the PRC with limited liability and a subsidiary of
the Company (where the Company has 60% interests in
Huayou)
"ICEA" means ICEA Capital Limited a licensed corporation
carrying out Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated activities
under the SFO
"Independent means the shareholders of the Company other than the
Shareholders" CNPC and its associates
"Independent Board means the independent committee of the Board, comprising
Committee" Messrs. Chee-Chen Tung, Liu Hong Ru and Franco Bernabe,
the independent non-executive Directors of the Company,
established for the purpose of reviewing and advising
Independent Shareholders in respect of the Ongoing
Connected Transactions and the Proposed Caps
"IPO" means the initial pubic offering of the Company's H
Shares in 2000
"Jointly-owned means a company in which both the Company and CNPC are
Companies" shareholders, and where CNPC and/or its subsidiaries
and/or affiliates (individually or together) is/are
entitled to exercise, or control the exercise of, 10% or
more of the voting power at any general meeting of such
company
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited
"Newco" means [CHINESE CHARACTERS] (Zhong You Kan Tan Kai Fa
Company Limited), a company established under the laws
of the PRC on 14 March 2005 with limited liability
"Newco Continuing CT" means additional continuing connected transactions
arising as a result of the completion of the
Transactions, the details of which are set out in the
paragraph headed "Newco Continuing CT" of this
announcement, the Recent Announcement and the Recent
Circular (or previously referred to as the Prospective
Continuing CT in the Recent Announcement and the Recent
Circular)
"Newco Group" means Newco and its subsidiaries
"Ongoing Connected means the Existing Ongoing Connected Transactions, the
Transactions" Newco Continuing CT and the CRMSC Transactions
"PetroChina & CRMSC means [CHINESE CHARACTERS] (PetroChina & CRMSC Oil
Oil Marketing" Marketing Company Limited*), a company established on 13
December 2004 under the laws of the PRC with limited
liability and a subsidiary of PetroChina ROP Marketing
"PetroChina means PetroChina International Ltd., a company
International" incorporated under the laws of the British Virgin
Islands, which is currently a direct wholly-owned
subsidiary of the Company
"PetroChina ROP means [CHINESE CHARACTERS] (PetroChina Refined Oil
Marketing" Product Marketing Company Limited*), a company
established under the laws of the PRC with limited
liability, which is currently a direct wholly-owned
subsidiary of the Company
"PRC" or "China" means the People's Republic of China
"Proposed Caps" the proposed maximum annual aggregate values of
the Ongoing Connected
Transactions of the Company as set out in the paragraph
headed "Proposed Caps" of this announcement
"Prospectus" means the prospectus dated 27 March 2000 issued by the
Company relating to its IPO and the listing of its H
shares on the Stock Exchange
"Recent Announcement" means the announcement of the Company dated 9 June 2005
in respect of, among other things, the Transactions and
Newco Continuing CT
"Recent Circular" means the circular dated 30 June 2005 issued by the
Company to its shareholders in respect of, among other
things, the Transactions and the Newco Continuing CT
"Recent EGM" means the extraordinary general meeting of the Company
held at Kempinski Hotel, No. 50 Liangmaqiao Road,
Chaoyang District, Beijing, People's Republic of China
at 9:00 a.m. on 16 August 2005 to approve, among other
things, the Transactions and the Newco Continuing CT
"RMB" means Renminbi yuan, the lawful currency of the PRC
"Second Supplemental means the supplemental comprehensive products and
Comprehensive services agreement dated 1 September 2005 entered into
Agreement" between the Company and CNPC in relation to certain
amendments of the Comprehensive Agreement, the details
of which are set out in the paragraph headed "Second
Supplemental Comprehensive Agreement" of this
announcement
"SFO" means Securities and Futures Ordinance (Chapter 571 of
the Laws of Hong Kong)
"Shareholder(s)" means the holder(s) of shares of the Company
"Stock Exchange" means The Stock Exchange of Hong Kong Limited
"subsidiaries" has the meaning ascribed to it in the Listing Rules
"Transactions" the acquisition of interest in Newco by the Company and
the transfer of interest in PetroChina International
from the Company to Newco, the details of which are set
out in the Recent Announcement and the Recent Circular
For the purpose of this announcement, unless otherwise indicated, the exchange
rates at HK$1.00 = RMB$1.04 have been used, where applicable, for purpose of
illustration only and not constitute a representation that any amount have been,
could have been or may be exchanged.
By Order of the Board
PETROCHINA COMPANY LIMITED
CHEN GENG
Chairman
Beijing, the PRC
1 September 2005
* For identification purpose only
As at the date of this announcement, the Board comprises Mr. Chen Geng as the
Chairman, Mr. Jiang Jiemin and Mr. Ren Chuanjun as Vice Chairmen, Mr. Su Shulin,
Mr. Duan Wende and Mr. Wang Fucheng, as executive Directors, Mr. Zheng Hu, Mr.
Zhou Jiping, Mr. Gong Huazhang and Mr. Zou Haifeng as non-executive Directors
and Mr. Chee-Chen Tung, Mr. Liu Hongru and Mr. Franco Bernabe(C) as independent
non-executive Directors.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
PetroChina Company Limited
Dated: September 2, 2005 By: /s/ Li Huaiqi
--------------------------------
Name: Li Huaiqi
Title: Company Secretary