10:58     SHANGHAI PECHEM<00338> - Announcement (10)                          

                    2002            2003            2004                      
                    (RMB million)   (RMB million)   (RMB million)             
    Aggregate       Nil             Nil             6                         
    agency                                                                    
    commissions                                                               
    and amount of                                                             
    incentives the                                                            
    Company paid                                                              
    to China                                                                  
    Petroleum &                                                               
    Chemical                                                                  
    Corporation                                                               
    and its                                                                   
    associates                                                                
    (the agency                                                               
    arrangement                                                               
    commenced in                                                              
    July                                                                      
    2004)                                                                     
                                                                              
                                                                              
                                                                              
    The Company proposes to enter into the Sales and Purchases Framework      
    Agreement to continue to appoint China Petroleum & Chemical               
    Corporation and its associates as agents of the Company in respect of     
    agency sales of the Company's petrochemical products for the three        
    years ending 31 December 2007.                                            
                                                                              
    Reasons for such transactions: Trading, distribution and marketing        
    of the Company's products are important elements in the success of        
    the business of the Company. The Company considers that the               
    broadening of its trading, distribution and marketing network will        
    benefit it.                                                               
                                                                              
    China Petroleum & Chemical Corporation is one of the largest              
    petrochemical companies in the world and has a strong global trading,     
    distribution and marketing network. The Company believes that it will     
    benefit from China Petroleum & Chemical Corporation's experience,         
    expertise and strong global network and will increase the sales of        
    its petrochemical products and improve the Company's bargaining           
    position with customers.                                                  
                                                                              
    Pricing: Pursuant to the Sales and Purchases Framework Agreement,         
    the commissions payable to China Petroleum & Chemical Corporation and     
    its associates in connection with the agency sales of the Company's       
    petrochemical products under the Sales and Purchases Framework            
    Agreement are determined on the prevailing market percentage              
    commission of the agency sales of the Company's petrochemical             
    products.                                                                 
                                                                              
     The Company will pay the commissions by way of cash payments.