09:41     SHANGHAI PECHEM<00338> - Announcement (4)                           

    Science and Technology Development Company was a subsidiary of the        
    Company. The company was involved in the development of auxiliary         
    agent catalysts, water treatment agents, finish for fibres and fine       
    chemical products mainly made of ethylene oxide. The company              
    specialised in the research and production of CTA acrylonitile, BCTP      
    terephthalic acid purification palladium carbon catalyst and CTV          
    vinylacetate catalysts.                                                   
                                                                              
    Science and Technology Development Company was unsuccessful in            
    securing a significant market share of the catalyst sector and its        
    research and production capabilities were not as competitive as its       
    competitors.                                                              
                                                                              
    Research and development as well as the production of catalysts had       
    always been considered as a peripheral part of the business of the        
    Company. Given that Science and Technology Development Company was        
    only a small player in the catalyst market, the Company believed that     
    it was more beneficial to devote its efforts and resources on the         
    core and more profitable part of the business, namely processing          
    crude oil into synthetic fibres, resins and plastics. As such, the        
    Company decided to dispose of its interest in the Catalysts-Related       
    Business.                                                                 
                                                                              
    7.                                                                        
    Opinion from the Independent Non-Executive Directors                      
    Gu Chuanxun, Wang Yongshou, Wang Xingyu and Chen Xinyuan,                 
    independent non-executive directors of the Company, formed the            
    following opinion in relation to this connected transaction:              
                                                                              
    (1)                                                                       
    For the purpose of considering and voting for the `Resolutions in         
    Relation to the Transfer of the Catalysts-Related Business and a          
    Connected Transaction' at the meeting of the Board of Directors, both     
    Liu Wenlong and Zhang Baojian, the Directors who were deemed to be        
    interested in this transaction, abstained from the decision-making        
    procedures. This was in compliance with the relevant laws and             
    regulations as well as the provisions of the articles of association      
    of the Company.                                                           
                                                                              
    (2)                                                                       
    This connected transaction in question was conducted on normal            
    commercial terms and the pricing method and all other terms under the     
    Assets Transfer Agreement related thereto were reasonable and fair.       
    This connected transaction in question was also reasonable and fair       
    as to the Company and all its shareholders.                               
                                                                              
    (3)                                                                       
    It was in the interest of the Company and the shareholders as a           
    whole to enter into the transaction and as such the independent           
    non-executive directors of the Company voted in favour of the             
    transaction.                                                              
                                                                              
    8.                                                                        
    Documents for inspection                                                  
    The following documents will be available for inspection at the           
    legal address of the Company from the date of this announcement to 31     
    December 2004 during normal office hours:                                 
                                                                              
    (1)                                                                       
    Assets Transfer Agreement;                                                
    (2)                                                                       
    The Resolution of the Board of Directors of the Company dated 30          
    November 2004;                                                            
                                                                              
    (3)                                                                       
    The Opinion of the Independent Non-executive Directors executed and       
    confirmed by the independent non-executive directors of the Company,      
    i.e. Gu Chuanxun, Wang Yongshou, Wang Xingyu and Chen Xinyuan;            
                                                                              
    (4)                                                                       
    The Assets Valuation Report (Zhong Zheng Ping Gu Zi                       
    [2004] No. 054) issued by Beijing Zhong Zheng Appraisal Co., Ltd.         
    As of the date of this announcement, the executive directors of the       
    Company are Lu Yiping, Rong Guangdao, Du Chonyjun, Han Zhihao, Wu         
    Haijun and Gao Jinping; the non-executive directors of the Company        
    are Lin Wenlong and Zhang Baojian, and the independent non-executive      
    directors of the Company are Gu Chuanxun, Wang Yongshou, Wang Xingyu      
    and Chen Xinyuan.                                                         
                                                                              
                                   By order of the Board                      
                                   Zhang Jingming                             
                                   Company Secretary                          
                                                                              
    Shanghai, 30 November 2004