9. Management 1 Management Structure

@ Independent Director

® All shares belongs to his spouses

(a) Establishing policies and directions for good corporate governance (CG) practice, along with business ethics, and proposing the Board’s approval for implementation at all levels

(b) Ensuring that the Company’s operation and actions of the Board, subcommittees, the Management, and employees align with (a)

(c) Assessing and revising policies, directions, business ethics, together with Company guidelines on CG, in an effort to comply with international guidelines and recommendations by other institutes, and proposing to the Board for approval

(d) Monitoring the movement and trends, and benchmark Company practice with leading companies

(e) Supervising and promoting actions under (a) for ongoing effectiveness and alignment with Company business

(f) Making recommendations for the Company, the Board, the Management, and the task force on CG

(g) Regularly reporting CG matters to the Board and immediately reporting critical matters, that may affect the company’s reputation and image, as well as providing its views on practical aspects and recommendations for modification as needed

(h) Disclosing information about CG at PTTEP for stakeholders and in the annual report with prior approval by the Board.

The Corporate Governance Committee consists of three independent directors:

- Mr. Vudhibhandhu Vichairatana Chairman of the Corporate Governance Committee

- Mr. Charnchai Musignisakorn Member of the Corporate Governance Committee

- General Lertrat Ratanavanich Member of the Corporate Governance Committee

In 2006, there are altogether 3 meetings of the Corporate Governance Committee and every member of the Committee attends in every meeting.

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 PTTEP’s information disclosure on matters related to connected transactions or conflict-of-interest transactions to ensure that they are correct and sufficient
   
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
   
6. 
   To approve the appointment, rotation, performance appraisal and reward / punishment for the Head of the department responsible for auditing
   

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

(i) To ensure that the Chairman of the Audit Committee, or a Director to the Audit Committee, attends the Shareholders’ meetings to clarify any matters pertaining to the Audit Committee or the appointment of the external auditors

(j) To review the Audit Committee Charter annually

(k) To undertake other assignments for the Board of Directors including the appointment of the Head of the Internal Audit or Corporate Secretary to be Secretary of the Audit Committee
The Audit Committee consists of three independent directors:

- Mr. Charnchai Musiknisakorn Chairman of the Audit Committee

- General Lertrat Ratanavanich Member of the Audit Committee

- Mr. Chulasingh Vasantasingh Member of the Audit Committee

In 2006, there are altogether 6 meetings of the Audit Committee and every member of the Committee attends in every meeting.

(a) To evaluate the performance of the Board of Directors, Sub-Committee, President according to each year's performance agreement.

(b) To recommend guidelines in determining the remuneration package of the Board of Directors and Sub-Committee, including meeting fees, bonus and other fringe benefits both in monetary and non-monetary term. The remuneration principles are established fairly and decently in order to propose at Shareholders' Meeting.

(3) To recommend guidelines in determining the remuneration package of President , including salary, bonus and other fringe benefits both in monetary and non-monetary term and recommend the remuneration structure of Executives. The remuneration principles are established fairly and decently in order to propose at the Board of Directors' Meeting.

(4) To review the remuneration package of the Directors, Sub-Committee, President and the remuneration structure of Executives according to the work performance, the company's performance, the practices guidelines of the industry and leading listed companies in the Stock Exchange of Thailand, as well as related to the scope of duties and responsibilities.

(5)  To perform any other scope of duties and responsibilities assigned by the Board.

The Remuneration Committee consists of three Directors, the majority of whom are independent ones, and the Chairman must be an independent director, as follows:

- Mr. Krairit Nilkuha Chairman of the Remuneration Committee

and Independent Director

- Mr. Sirin   Nimmanahaeminda  Member of the Remuneration Committee and Independent Director

- Mr. Pala Sookawesh Member of the Remuneration Committee

Mr. Krairit Nilkuha was appointed by the Board on March 17, 2006 in replacement of Mr. Anucha Sihanatkathakul, effective from April 6, 2006. At the meeting on December 15, 2006, the Board appointed Mr. Pala Sookawesh to replace Mr. Prasert Bunsumpun, who resigned on November 15, 2006 and Mr. Sirin   Nimmanahaeminda to replace Mr. Prasit Kovilaikool, who resigned on November 17, 2006 as well as Mr. Krairit Nilkuha , Member of the Remuneration Committee, to be the Chairman of the Remuneration Committee, effective from the meeting date, except for the effective date of Mr. Sirin   Nimmanahaeminda, which was the date he accepted the directorship on December 20, 2006.

In 2006, there is no meeting of the Remuneration Committee since the number of members was less than the requirement of the Remuneration Committee Charter B.E. 2006

(4) The Nominating Committee: has the following responsibilities:

(a) Formulating a transparent and standard process for Director or President selection

(b) Shortlisting candidates for appointment as new Directors or President, and proposing their names to shareholders’ or Board meetings

(c) Preparing the names of shortlisted candidates for Directors or President or when there is a Director or President vacancy, or both

(d) Developing performance agreements (PAs) each year for the Board, committees, and the President, and developing their annual performance assessment forms for consideration by the Board

(e) Nominating candidates for Directors to the committees for consideration by the Board to fill vacancies

(f) Disclosing its own performance in the Company’s annual report

(g) Performing any other assignment for the Board, relevant to the selection of Directors or President.

The current Nominating Committee consists of three Directors, the majority of whom are independent ones, and the Chairman must be an independent director, as follows:

- Mr. Chulasingh Vasantasingh Chairman of the Nominating Committee

and Independent Director

- General Lertrat Ratanavanich Member of the Remuneration Committee and Independent Director

- Dr. Chitrapongse Kwangsukstith Member of the Remuneration Committee

At Meeting on 17 March 2006, the Board reappointed Mr. Chulasingh Vasantasingh and General Lertrat Ratanavanich. Dr. Chitrapongse Kwangsukstith was appointed by the Board on 15 December 2006 to replace Mr. Prasert Bunsumpun, who resigned on 15 November 2006.

(a) Define the policy framework and processes for risk management and advice board and management team regarding risk management at corporate level

(b) Promote and implement the enterprise wide risk management both in corporate and business level by enhancing the level of risk awareness within PTTEP, and through the development of appropriate procedures and commitment of resources

(c) Maintain the assessment of risks that relate to corporate direction and E&P value chain in exploration, development, production including SSHE, investment including geopolitical risk, financial and commercial, and capability development and then recommend the mitigation strategy to manage risks to be within the acceptable level

(d) Ensure adequate level of support is being provided to Risk manager

(e) Support the monitoring of risks across PTTEP and report to the Board

The current Risk Management Committee consists of five Directors, one of whom is independent director, as follows:

- Mr. Pichai Chunhavajira Chairman of the Risk Management Committee

- Mr. Vudhibhandhu Vichairatana Member of the Risk Management Committee

- Mr. Tongchat Hongladaromp Member of the Risk Management Committee

- Mr. Chitrapongse Kwangsukstith Member of the Risk Management Committee

- Mr. Maroot Mrigadat Member of the Risk Management Committee

At Meeting on 17 March 2006, the Board appointed Mr. Vudhibhandhu Vichairatana to replace Mr. Anucha Sihanatkathakul, and appointed two additional members, Mr. Tongchat Hongladaromp and Dr. Chitrapongse Kwangsukstith, effective from April 6, 2006.

In 2006, there are altogether 4 meetings of the Risk Management Committee and every member of the Committee attends in every meeting.

3. 
   The President
   

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

The President is the authorized signatory in dealing with external parties under clause 9, paragraph 5, of the Regulations registered at the Ministry of Commerce.

(2) Authority under Company Regulations granted by the Board

The President takes charge of, and is authorized for conducting, business operations under PTTEP Regulations – namely the Budget Regulations of 1996, the Finance and Accounting Regulations of 1996, the Procurement Regulations of 1998, and the 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 ceilings:

• 
  150 million baht for Corporate procurement and wholly-owned projects
  
• 
  Up to each annual budget total, approved by partners under joint-operations agreements
  
• 
  Up to each annual budget total, approved by governments of countries in which PTTEP invested.
  

The Board vested its powers in the President 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 benefit of the Company, as well as the delegation of his authority. However, such use of authority by the President or his delegated persons is forbidden if the President, delegated persons, or connected persons are involved in a conflict of interest in any way with PTTEP or its subsidiaries.

The Board must always consist of at least one-third (or at least five members) who are Independent Directors. The Company has made the qualifications of such Directors even more stringent than those defined by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET), as seen below:

(a) Holds no more than one percent of the paid-up capital of the Company and its affiliated, associated, or related companies, including the shares held by his or her spouse, children under legal age, or nominee(s), and private fund

(b) Is not a Director or an executive of PTT, PTTEP, affiliated, associated, or related companies; is not an employee, an advisor, an attorney, an auditor on the payroll(s) of PTT or PTTEP, affiliated, associated, or other related companies

(c) Has resigned from such a position under (b) for more than two years

(d) Is a Director with no benefits or interests whatsoever in the finance and management of PTTEP, affiliated, associated, or related companies of PTT, including such benefits or interests during the period of two years before appointment to the Board, except where the Board has ruled that such previous benefits or interests have no bearing on the performance and the expression of independent views

(e) Is not related to or an immediate relative of any management member of PTTEP or PTT

(f) Discloses all other relationships that may undermine his or her independence under the policies on conflicts of interest, contained in the CG Principles of PTTEP.

Their nominating procedure follows that of PTTEP Directors and President, detailed under 9.2.1.

5. 
   Details about Current Company Management appear in Attachment 1.
   

When there is a Director or President vacancy, the Nominating Committee is to choose suitable candidates to become a Director or President by collecting for consideration a list of recommended nominees from PTT, the major shareholder. Priority will be given to those with technical skills, experience, specific qualifications in areas still lacked by the Board or critical to Company business. To arrive at the ideal composition of the Board and best benefit the Company, the Nominating Committee is to scrutinize these qualifications:

(1) Suitable qualifications stipulated by the Public Company Limited Act, regulations issued by SEC, SET, and under PTTEP’s GCG

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

(3) Characteristics complementary to GCG so as to benefit Company business, including ethics, independence, assertiveness, creativity, duty of care and duty of loyalty, dedication, a suitable age, good health, a sound mind, meeting preparation habits, and social acceptance.

Election of Directors to replace retiring ones must win 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 30 of each year. This has been made known to investors through SET’s information 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.

The President is authorized to appoint any person(s) with knowledge, capability, and experience in Company business to the management rank in compliance with PTTEP personnel administration regulations, and is to report to the Board for acknowledgement. An exception is for the Vice President positions, which need the Board’s prior approval. For appointments of those from outside the Company, they must pass an interview by the interview committee. In addition, any appointment of internal audit department manager requires prior approval from the Audit Committee.