12:35 PETROCHINA<00857> - Announcement (2) outstanding capital commitment remains to be fulfilled by CNPC in respect of the Refinery and Petrochemical Businesses and the Company will not assume any such commitments as a result of the Asset Acquisition. For the purposes of the Listings Rules, the consideration for the Asset Acquisition was based on the above net liabilities as adjusted according to IFRS. The difference between the aggregate net asset value as valued by the independent valuer and the aggregate value of the net liabilities as adjusted according to the IFRS is due to the requirement under IFRS that transactions between enterprises under common control shall be valued at their historical cost, which has resulted in the granted land use rights to be acquired by the Company pursuant to the Asset Acquisition not being able to be recognized at their appraised value under IFRS. The granted land use rights held by Dayuan and Qingyang were previously booked at relatively low historical costs of approximately RMB39 million (approximately HK$36.45 million) which do not reflect their current fair market value of approximately RMB172.23 million (approximately HK$160.96 million). Accordingly, the current valuation prepared by the independent valuer is a reflection of the current fair market value of the Asset Acquisition. China Enterprise Appraisal Company Limited, Beijing is the independent valuer and Shenzhen Nanfang Minhe Certified Public Accountants (), a local accounting firm in Beijing is the auditors for the Asset Acquisition. Conditions Precedents for the Completion of the Asset Acquisition: The completion of the Asset Acquisition is subject to the satisfaction of certain conditions precedent, including: (a) the Company having completed due diligence review on the business conditions of the Refinery and Petrochemical Businesses; (b) the Company having completed the procedures and requirements in connection with the Asset Acquisition stipulated by the regulatory authorities of its place of listing; (c) CNPC having obtained the consents of the relevant creditors and other third parties in connection with the Asset Acquisition; (d) there having been no material adverse change to the business operations and technical performance of Dayuan and Qingyang; and (e) the representations, warranties and undertakings given by CNPC in relation to the Asset Acquisition being true, accurate, complete and valid as at the date of completion of the Asset Acquisition. Completion of the Asset Acquisition The Asset Acquisition shall be completed on the date of 1 April 2005 or the date on which the above conditions precedents have been satisfied, whichever is the later. As of the date of this announcement, all the above conditions have been fulfilled and completion of the Asset Acquisition shall take place on 1 April 2005. Land Use Rights Leasing Arrangement It is a term in the Acquisition Agreement that after completion of the Asset Acquisition, CNPC will lease the 28 pieces of allocated land owned by CNPC with a total gross floor area of 1,658,400 square meters, which was not included as part of the Asset Acquisition, to the Company in connection with the operation of the Refinery and Petrochemical Businesses for an initial period commencing from the completion of the Asset Acquisition and up to 31 December 2005 for a total consideration of RMB 2.45 million, payable in cash by the Company to CNPC within 10 working days from the effective date of the Acquisition Agreement. CNPC shall pay all taxes and other statutory expenses in connection with the lease of such allocated land. The percentage ratios calculated based on the annual consideration for the Land Use Rights Leasing Arrangement would be less than 0.1% and thus the Land Use Rights Leasing Arrangement by itself is exempted from the disclosure obligations under the connected transaction requirements under Rule 14A.31(2) of the Listing Rules. It is expected that after the initial period of up to 31 December 2005, the Company will enter into a new leasing agreement with CNPC covering the leases in relation to the Land Use Rights Leasing Contract together with the leasing of the allocated land in connection with the Refinery and Petrochemical Businesses. The Company will comply with the relevant requirements under the Listing Rules in connection with such continuing leasing arrangements with CNPC. REASONS FOR THE ASSET ACQUISITION The market for refined petroleum and natural gas-related products is a competitive and fairly active one in the PRC. As an integrated oil company with a core focus on upstream businesses, one of the Company's established strategies is to develop its refinery and