10:19     SINOPEC KANTONS<00934> - Announcement (3)                           

    into account. Also, the Directors were informed of the Sinopec            
    Guangzhou Branch Expansion, being the planned improvement and             
    expansion of the crude oil refinery of Sinopec Guangzhou Branch           
    from an annual crude refining capacity of 7.7 million to an annual        
    refining capacity of 10 million tonnes grade crude oil refinery.          
    This is expected to be completed in 2006, which will lead to              
    a corresponding increase in consumption of service and                    
    facilities of Huizhou Jetty. Sinopec Guangzhou Branch is the              
    largest customer of Huizhou Jetty.                                        
                                                                              
    However, Sinopec Guangzhou Branch is only a customer of the Group         
    and the Group has no control over it. That being the case, there          
    may be changes or amendments to the plan and the implementation           
    of Sinopec Guangzhou Branch Expansion which may affect the                
    increase in the consumption of services and facilities in                 
    relation to Huizhou Jetty.                                                
                                                                              
    The Directors have also considered that (a) due to the planned            
    increase of crude oil processing capacity of Sinopec Guangzhou            
    Branch and the expected increase in demand for petroleum and              
    petrochemical products in the PRC market, Sinopec Guangzhou               
    Branch is expected to import more crude oil and thus will consume         
    more crude oil jetty services and its facilities; (b) the planned         
    improvement and expansion of the crude oil jetty and its                  
    ancillary facilities to cope with the expected increase in demand         
    for crude oil jetty services of Sinopec Guangzhou Branch; and             
    (c) given the nature of mutual dependence and reliance of the             
    supply and consumption of the services and facilities in relation         
    to the Huizhou Jetty, it is in the interest of the Company to             
    capture any increase in the volume and quantity of this business.         
                                                                              
    2.      Supplies of petroleum products to the Kantons Petrol Stations     
                                                                              
    Nature of the transaction and connected party                             
                                                                              
    The Group has purchased and will continue to purchase gasoline            
    and other petroleum products from Guangdong Company and its               
    subsidiaries for resale through the Kantons Petrol Stations.              
    Guangdong Company is a branch of Sinopec Corp.                            
                                                                              
    Pricing basis and cap                                                     
                                                                              
    Pursuant to the Sinopec Corp. Framework Master Agreement, the             
    Group will enter into, from time to time, separate written                
    petroleum products purchase agreements not exceeding 3 years              
    with Guangdong Company and its subsidiaries for the supply of             
    petroleum products on a transaction by transaction basis. The             
    parties will negotiate with reference to, among other factors,            
    market conditions, normal commercial terms, trade customs and             
    the principle of fairness and will conclude the detailed terms            
    and provisions in the contracts and the agreements.                       
                                                                              
    Pursuant to the Sinopec Corp. Framework Master Agreement, the             
    purchase prices payable for the petroleum products supplied by            
    Guangdong Company to the Group are to be agreed between the               
    parties on an arm's length basis through negotiations, are to             
    be based on government guidance prices, are to be fair and                
    reasonable and the qualities of the products are to be in                 
    compliance with the State's prescribed standard. The current              
    government guidance price is based on the notice re price                 
    restructuring plan of crude oil and petroleum products * issued by the    
    State Development and Planning                                            
    Commission *, now State Development and Reform                            
    Commission * in June 1998.                                                
                                                                              
    The aggregate amounts paid by the Group in respect of this                
    connected transaction for each of the two years ended 31