09:12     DAQING PECHEM<00362> - Announcement & Resumption (2)                

    the PVC Factory at RMB290,000 per month. The Lease                        
    is due to expire on 1 October 2005.                                       
                                                                              
    2.      MDGC will hold the assets of the PVC Factory and                  
    will hire not less than 400 employees which is                            
    expected to commence after the expiry of the Lease.                       
                                                                              
    3.      In additional to the Consideration, MDGC will make                
    a payment of RMB20 millions as development funds to                       
    an account designated by the Economic Committee for                       
    use in technological improvements and environmental                       
    protection in respect of the operations of the assets                     
    of the PVC Factory and such payment will be funded                        
    by the Group's internal resources.                                        
                                                                              
    Consideration                                                             
    The consideration for the acquisition of the fixed                        
    assets and land use rights of the PVC Factory is                          
    RMB78.7 millions and will be funded by the Group's                        
    internal resources.                                                       
                                                                              
    Payment terms                                                             
    The Company shall pay the Consideration to the                            
    Liquidation Committee within 15 days from 15 May 2005.                    
    The deposit of RMB30 millions which was paid by the                       
    Company to the Liquidation Committee as a deposit to                      
    secure participation right in the Auction will be                         
    deducted from the Consideration accordingly.                              
                                                                              
    The Company confirms that save as disclosed herein                        
    there is no other material terms to the Acquisition                       
    and the Auction.                                                          
                                                                              
    REASONS FOR THE ACQUISITION                                               
    The Board believes that the Acquisition will expand                       
    the development of coal related chemical production                       
    forming a part of calcium carbide production chain,                       
    increase the range of products that the Group can                         
    offer and reduce the effects of high crude oil price                      
    on the Group's performance. As stated in the Company's                    
    announcement dated 10 March 2005, the Company                             
    considers that the acquisition of the assets is                           
    consistent with the Group's existing strategy of                          
    developing its production chain based principally                         
    upon coal related chemical methodology and the Group                      
    will benefit from economy of scale from bulk purchase                     
    of raw materials. The Group can also utilise its                          
    management experience with the calcium carbide                            
    methodology in relation to improve the efficiency and                     
    effectiveness of the PVC Factory. In addition, the                        
    Group can also consolidate its presence in Mudanjiang                     
    as its another production base in the north-eastern                       
    region of the PRC.                                                        
                                                                              
    Taking into account the reference value of the fixed                      
    assets and land use rights of the PVC Factory (being                      
    RMB 78,155,700) as stated by the Auction Agent in the                     
    auction particulars, the Directors, including the                         
    independent non-executive Directors, consider that                        
    the terms of the Acquisition and the Consideration                        
    are fair and reasonable and in the interests of the                       
    Company and its shareholders as a whole.                                  
                                                                              
    INFORMATION OF THE PARTIES INVOLVED                                       
    The Company is an investment holding company and its                      
    subsidiaries are engaged in manufacturing and sale                        
    of petroleum refined products and other supporting                        
    services such as administrative and marketing                             
    services.                                                                 
                                                                              
    The Liquidation Committee is a committee whose                            
    members are appointed by the Intermediate People's