09:11     DAQING PECHEM<00362> - Announcement & Resumption (1)                

    The Stock Exchange of Hong Kong Limited takes no                          
    responsibility for the contents of this announcement,                     
    makes no representation as to its accuracy or                             
    completeness and expressly disclaims any liability                        
    whatsoever for any loss howsoever arising from or in                      
    reliance upon the whole or any part of the contents                       
    of this announcement.                                                     
                                                                              
    DAQING PETROLEUM AND CHEMICAL GROUP LIMITED                               
                                                                              
    (Incorporated in the Cayman Islands with limited                          
    liability)                                                                
    (Stock Code: 362)                                                         
                                                                              
    DISCLOSEABLE TRANSACTION                                                  
                                                                              
    Reference is made to the Announcements.                                   
                                                                              
    The Board is pleased to announce that the Auction took                    
    place on 15 May 2005 and the Company through MDGC has                     
    won the bid at the Auction. The Consideration is                          
    RMB78.7 millions. The Consideration will be payable                       
    within 15 days from 15 May 2005 and will be funded                        
    by the Group's internal resources.                                        
                                                                              
    DISCLOSEABLE TRANSACTION                                                  
    The Acquisition constitutes a discloseable                                
    transaction for the Company under Chapter 14 of the                       
    Listing Rules and the Company will send a circular                        
    containing further details regarding the Acquisition                      
    as soon as practicable and in accordance with the                         
    Listing Rules.                                                            
                                                                              
    SUSPENSION AND RESUMPTION OF TRADINGS                                     
    Trading in the shares of the Company was suspended                        
    from 9:30 a.m. on 17 May 2005. An application has been                    
    made by the Company to the Stock Exchange for                             
    resumption of trading in its shares with effect from                      
    9:30 a.m. on 18 May 2005.                                                 
                                                                              
    INTRODUCTION                                                              
    Reference is made to the Announcements.                                   
                                                                              
    The Board is pleased to announce that the Auction took                    
    place on 15 May 2005 and the Company through MDGC has                     
    won the bid at the Auction.                                               
                                                                              
    THE AUCTION                                                               
    Assets Acquired and Undertaking to the Liquidation                        
    Committee                                                                 
    On 15 May 2005, the auction of the fixed assets and                       
    land use rights of the PVC Factory took place in the                      
    auction hall of the Auction Agent in Mudanjiang, the                      
    PRC. The fixed assets and land use rights of the PVC                      
    Factory included four production lines housed in the                      
    production facilities located at 51 Daqing Road,                          
    Mudanjiang, Heilongjiang Province, PRC for the                            
    manufacturing of sodium hydroxide, suspension PVC                         
    resins, liquid chloride and hydrochloric acid using                       
    the calcium carbide method.                                               
                                                                              
    Under the Auction terms, MDGC has undertaken, amongst                     
    other things, to the Liquidation Committee as                             
    follows:                                                                  
                                                                              
    1.      MDGC shall honour the existing lease agreement (the               
    "Lease") entered into between the PVC Factory and *                       
     (Mudanjiang Xin Li Chemical                                              
    Engineering Company Limited) (the "Lessee"), who is                       
    an independent third party not related to any of the                      
    Company and its connected persons (as defined in the                      
    Listing Rules), on 4 March 2002 whereby the Lessee                        
    has leased all the fixed assets and land use rights                       
    of the PVC Factory from