Raymond Industrial Limited - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in CNPC (Hong Kong) Limited (the “Company”), you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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CNPC (HONG KONG) LIMITED
(incorporated in Bermuda with limited liability)
CNPC (HONG KONG)
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CNPC (HONG KONG) LIMITED

(Stock Code: 0135)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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This circular gives you further information of the Zhongyou Zhongtai Acquisition. A letter from the Board is set out on pages 4 to 12 of this circular and a letter from the Independent Board Committee, containing its recommendation to the Independent Shareholders of the Company, is set out on page 13 of this circular. A letter from Guangdong Securities containing its advice to the Independent Board Committee and Independent Shareholders is set out on pages 14 to 24 of this circular.

A notice of SGM to be held at Bowen Room 7/F., Conrad Hong Kong, Pacific Place, 88 Queensway Hong Kong, Hong Kong on Tuesday, 20 October 2009 at 11:00 a.m., is set out on page 158 of this circular. A proxy form for use by the Shareholders at the SGM is enclosed with this circular. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the principal office of the Company at Rooms 3907 – 3910, 39th Floor, 118 Connaught Road West, Hong Kong as soon as practicable but in any event not later than 48 hours before the time for holding the SGM or adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

* For identification purpose only

2 October 2009

		Page
LETTER	FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	ZHONGYOU ZHONGTAI ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	INFORMATION ON ZHONGYOU ZHONGTAI . . . . . . . . . . . . . . . . . . . . .	8
4.	COMPLETION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
5.	REASONS FOR, AND BENEFITS OF,
	THE ZHONGYOU ZHONGTAI ACQUISITION . . . . . . . . . . . . . . . . . . . .	9
6.	RELATIONSHIP AMONG THE PARTIES AND
	CONNECTED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
7.	INFORMATION ON THE COMPANY AND CNPC . . . . . . . . . . . . . . . . . . .	10
8.	SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
9.	RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
10.	ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
LETTER	FROM INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . .	13
LETTER	FROM GUANGDONG SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX I – PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . .		25
APPENDIX II – ASSETS VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . .		118
APPENDIX III – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .		152
NOTICE	OF THE SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	158

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the meanings set out below:

“Acquisition Agreement”
means the agreement dated 16 September 2009 entered into between the Company and CNPC Pipeline Bureau to acquire 49% interest in Zhongyou Zhongtai
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” means the board of directors of the Company
“CNPC” means (China National Petroleum Corporation*), a State-owned enterprise established under the PRC laws
“CNPC Group” means CNPC and its subsidiaries, but excluding members of the Group
“CNPC Pipeline Bureau” means (China Petroleum Pipeline Bureau), a company established under the PRC laws, a wholly-owned subsidiary of CNPC
“Company” means CNPC (Hong Kong) Limited, a company incorporated with limited liability in Bermuda and the shares of which are listed on the Stock Exchange
“connected persons” has the meaning ascribed to it under the Listing Rules
“controlling shareholder” has the meaning ascribed to it under the Listing Rules
“Director(s)” means directors of the Company
“Effective Date” means the date on which the new Certificate of Approval for the Establishment of Foreign Investment Enterprises ( ) in respect of Zhongyou Zhongtai is issued by the relevant PRC authorities
“Group” means the Company and its subsidiaries from time to time
“HK$” means Hong Kong dollars, the lawful currency of Hong Kong

– 1 –

DEFINITIONS

“Independent Financial Adviser” or “Guangdong Securities”
means Guangdong Securities Limited, a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities as defined under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Zhongyou Zhongtai Acquisition
“Independent Shareholders” means the Shareholders other than CNPC and its associates
“Independent Board Committee”
means the independent committee of the Board, comprising Dr. Lau Wah Sum, Mr. Li Kwok Sing Aubrey and Dr. Liu Xiao Feng, the independent non-executive Directors of the Company, established for the purpose of, among other things, making recommendation to the Independent Shareholders in respect of the Zhongyou Zhongtai Acquisition
“Latest Practicable Date” 25 September 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules” means The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“PRC”
means the People’s Republic of China
“PRC GAAP”
means the generally accepted accounting principles in the PRC
“RMB” means Renminbi, the lawful currency of the PRC
“SFO”
means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“SGM” means a special general meeting of the Company to be held at 11 a.m. on Tuesday, 20 October 2009, including any adjournment thereof, notice of which is set out on page 158 of this circular to approve the Acquisition Agreement
“Share(s)” means ordinary share(s) of HK$0.01 each in the share capital of the Company

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DEFINITIONS

“Shareholder(s)” means holder(s) of Shares of the Company “Stock Exchange” means The Stock Exchange of Hong Kong Limited “subsidiaries” has the meaning ascribed to it under the Listing Rules “substantial shareholder” has the meaning ascribed to it under the Listing Rules “Valuation Date” means 31 March 2009 “Zhongyou Zhongtai” means ( ) (China Oil and Gas Co., Ltd.*), a sino-foreign joint venture established under the PRC laws

“Zhongyou Zhongtai Acquisition” means the acquisition of 49% interest in Zhongyou Zhongtai by the Company pursuant to the Acquisition Agreement

Note:

(1) For the purpose of this circular, unless otherwise indicated, the exchange rate at RMB1.00=HK$1.13 has been used, where applicable, for purpose of illustration only and does not constitute a representation that any amount have been, could have been or may be exchanged.
(2) If there is any discrepancy or inconsistency between the Chinese names of the PRC entities and their English translations in this circular, the Chinese version shall prevail.

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LETTER FROM THE BOARD

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CNPC (HONG KONG)
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CNPC (HONG KONG) LIMITED

(incorporated in Bermuda with limited liability)

(Stock Code: 0135)

Directors:

Mr. Li Hualin (Chairman)

Mr. Zhang Bowen (Chief Executive Officer)

Mr. Cheng Cheng

Dr. Lau Wah Sum, GBS, LLD, DBA, JP[#] Mr. Li Kwok Sing Aubrey[#] Dr. Liu Xiao Feng[#]

Independent Non-executive Directors

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Principal office in Hong Kong: Rooms 3907 – 3910 39th Floor 118 Connaught Road West Hong Kong

2 October 2009

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

1. INTRODUCTION

1.1 Zhongyou Zhongtai Acquisition

Reference is made to the announcement of the Company dated 16 September 2009 at which the Company announced that it had on the same day entered into the Acquisition Agreement with CNPC Pipeline Bureau, pursuant to which the Company has conditionally agreed to purchase, and CNPC Pipeline Bureau has conditionally agreed to sell, 49% interest in Zhongyou Zhongtai at a consideration of RMB615,536,824 (equivalent to approximately HK$695,557,000), which is equivalent to the base price of the open tender of RMB615,540,000.

As at the date of the Acquisition Agreement, Zhongyou Zhongtai was owned as to 49% and 51% by CNPC Pipeline Bureau and independent third parties respectively. Upon completion of the Zhongyou Zhongtai Acquisition, Zhongyou Zhongtai will be owned as to 49% and 51% by the Company and independent third parties respectively.

* For identification purpose only

– 4 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, CNPC, the ultimate controlling shareholder of the Company, was deemed to be interested in, directly and indirectly, 2,586,707,342 Shares, representing approximately 58.01% of the issued share capital of the Company. CNPC Pipeline Bureau is a wholly-owned subsidiary of CNPC. To the best of the Directors’ knowledge, CNPC is entitled to control all voting rights in respect of its Shares as at the Latest Practicable Date. Pursuant to the Listing Rules, each of CNPC and CNPC Pipeline Bureau is a connected person of the Company and accordingly, the Zhongyou Zhongtai Acquisition constitutes a connected transaction of the Company.

The applicable percentage ratios referred to in Chapters 14 and 14A of the Listing Rules for the Zhongyou Zhongtai Acquisition is more than 5% but less than 25%, the Zhongyou Zhongtai Acquisition will constitute a discloseable and connected transaction subject to, among other things, the approval by the Independent Shareholders at the SGM by way of poll.

An Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders in relation to the Zhongyou Zhongtai Acquisition. Guangdong Securities has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The purposes of this circular, among other things, are:

(i) to provide you with further details of the Zhongyou Zhongtai Acquisition;
(ii) to set out the recommendation of the Independent Board Committee regarding the Zhongyou Zhongtai Acquisition to the Independent Shareholders;
(iii) to set out the letter of advice from Guangdong Securities containing its advice to the Independent Board Committee and the Independent Shareholders on the Zhongyou Zhongtai Acquisition;
(iv) to set out the valuation report on the properties of Zhongyou Zhongtai;
(v) to set out the extracts of the assets valuation report of Zhongyou Zhongtai; and
(vi) to set out the notice of the SGM.

– 5 –

LETTER FROM THE BOARD

2. ZHONGYOU ZHONGTAI ACQUISITION

2.1 Introduction

As at the Latest Practicable Date, Zhongyou Zhongtai was owned as to 49% and 51% by CNPC Pipeline Bureau and independent third parties respectively.

Set out below is a simplified corporate structure of Zhongyou Zhongtai as at the Latest Practicable Date:

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CNPC Pipeline Independent Third
Bureau Parties
49% 51%
Zhongyou
Zhongtai
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2.2 Acquisition Agreement

The Board announced that the Company entered into the Acquisition Agreement dated 16 September 2009 and the details are set out below.

(a) Date: 16 September 2009 (b) Parties: (i) Purchaser: The Company (ii) Vendor: CNPC Pipeline Bureau

(c) Transfer of 49% interest in Zhongyou Zhongtai to the Company

Pursuant to the Acquisition Agreement, the Company has conditionally agreed to purchase, and CNPC Pipeline Bureau has conditionally agreed to sell, 49% interest in Zhongyou Zhongtai at a consideration of RMB615,536,824 (equivalent to approximately HK$695,557,000), which is equivalent to the base price of the open tender of RMB615,540,000. According to the PRC laws and regulations and the requirements of the relevant PRC authorities, the Acquisition Agreement shall take effect on the date on which the new Certificate of Approval for the Establishment of Foreign Investment Enterprises ( ) in respect of Zhongyou Zhongtai is issued by the relevant PRC authorities (the “Effective Date”). Among other things, the purchaser’s internal approval (including the Independent Shareholders’ approval) is required prior to the issue of the certificate. The consideration shall be paid in cash within 15 working days

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LETTER FROM THE BOARD

from the Effective Date and the refundable deposit of RMB184,660,000 (equivalent to approximately HK$208,660,000) paid by the Company on 28 August 2009 shall become part of the consideration. The Company intends to pay the consideration out of its internal resources.

(d) Consideration

The consideration payable in respect of the Acquisition Agreement was RMB615,536,824 (equivalent to approximately HK$695,557,000), equal to the base price of the 49% interest in Zhongyou Zhongtai put on open tender set by CNPC Pipeline Bureau. The Company understands that such base price was equal to the appraised net asset value of Zhongyou Zhongtai as at the Valuation Date, being 31 March 2009, as set out in a valuation report of Zhongyou Zhongtai prepared by China United Assets Appraisal Co., Ltd. ( ), an independent qualified PRC valuer, the extract of which are set out in Appendix II to this circular. The appraised net asset value of Zhongyou Zhongtai was computed based on the asset-based approach.

According to the audited accountants reports of Zhongyou Zhongtai prepared based on the PRC GAAP, as at the Valuation Date, the audited consolidated net assets value of Zhongyou Zhongtai was approximately RMB703,887,136 (equivalent to approximately HK$795,392,000). The original investment cost of the 49% interest in Zhongyou Zhongtai to CNPC Pipeline Bureau was RMB75,000,000, being the registered capital contributed by CNPC Pipeline Bureau in Zhongyou Zhongtai.

The audited net profit before and after tax of Zhongyou Zhongtai for the year ended 31 December 2008 amounted to approximately RMB222,799,597 (equivalent to approximately HK$251,764,000) and approximately RMB192,359,539 (equivalent to approximately HK$217,366,000) respectively. The audited net profit before and after tax of Zhongyou Zhongtai for the year ended 31 December 2007 amounted to approximately RMB168,411,425 (equivalent to approximately HK$190,305,000) and approximately RMB149,870,415 (equivalent to approximately HK$169,354,000) respectively.

(e) Conditions Precedent

Completion of the Acquisition Agreement is subject to the satisfaction or waiver by the Company of certain conditions precedent, including:

(i) the Company, Zhongyou Zhongtai and CNPC Pipeline Bureau having obtained all necessary governmental and internal authorisations, consents and approvals and having completed all registrations and/ or filings required by laws in relation to the transfer of 49% interests in Zhongyou Zhongtai, unless otherwise provided for in the Acquisition Agreement;

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LETTER FROM THE BOARD

(ii) none of the governmental authorities in the PRC has taken any pending actions or steps or will take any possible actions or steps which might restrict or prohibit the completion of any transactions contemplated under the Acquisition Agreement or any transactions ancillary to the aforesaid transactions, or might obstruct or restrict the operation of Zhongyou Zhongtai;
(iii) none of the governmental authorities in the PRC has enacted any laws, rules or regulations which might render the completion of the Zhongyou Zhongtai Acquisition unlawful;
(iv) the tender process conducted via China Beijing Equity Exchange ( ) has completed and the Company is the only lawful transferee of the 49% interests in Zhongyou Zhongtai as of the date of the Acquisition Agreement;
(v) the Company having obtained the approval at the general meeting of Shareholders pursuant to the requirements under the Listing Rules and articles of association of the Company (if required); and
(vi) the representations, warranties and undertakings given by CNPC Pipeline Bureau in the Acquisition Agreement being true and accurate from the date of the Acquisition Agreement to the date on which the Company being registered as a shareholder of Zhongyou Zhongtai as shown on the documents issued by the relevant industry and commerce authorities.

As at the Latest Practicable Date, to the best of the Directors’ knowledge, save the Independent Shareholders’ approval of the Zhongyou Zhongtai Acquisition at the SGM, the Company, Zhongyou Zhongtai and CNPC Pipeline Bureau have obtained all internal necessary approvals. The registrations and/ or filings required by laws in relation to the Zhongyou Zhongtai Acquisition in the PRC can only be completed upon the Company having obtained the Independent Shareholders’ approval.

3. INFORMATION ON ZHONGYOU ZHONGTAI

Zhongyou Zhongtai is principally engaged in the construction, operation and management of city gas pipeline network and ancillary facilities, comprehensive development and utilization and sale of liquefied petroleum gas, and provision of safety testing, maintenance and emergency repair of the city gas transportation and distribution equipment and other services in the PRC.

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LETTER FROM THE BOARD

4. COMPLETION

Completion of Zhongyou Zhongtai Acquisition shall take place on the date on which all the conditions precedent of the Acquisition Agreement are satisfied.

Upon completion, the Company will account the results of Zhongyou Zhongtai as share of results of associates in respect of the 49% interest in Zhongyou Zhongtai.

Upon completion, Zhongyou Zhongtai will be owned as to 49% and 51% by the Company and the independent third parties respectively. A simplified corporate chart of Zhongyou Zhongtai upon completion is set out below:

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CNPC
58.01%
The Company Independent Third Parties
49% 51%
Zhongyou Zhongtai
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5. REASONS FOR, AND BENEFITS OF, THE ZHONGYOU ZHONGTAI ACQUISITION

The Board considers that the Zhongyou Zhongtai Acquisition is in line with the development strategies of the Group in exploring new business growth opportunities in city gas, vehicle fuel gas and related businesses and would enable the Group to further leverage on its economy of scale, improve its efficient allocation of resources, enhance its competitiveness, bring new development opportunities and strengthen the ability to generate higher return to shareholders.

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LETTER FROM THE BOARD

6. RELATIONSHIP AMONG THE PARTIES AND CONNECTED TRANSACTION

As at the Latest Practicable Date, CNPC, the ultimate controlling shareholder of the Company, was deemed to be interested in, directly and indirectly, 2,586,707,342 Shares, representing approximately 58.01% of the issued share capital of the Company. To the best of the Directors’ knowledge, CNPC is entitled to control all voting rights in respect of its Shares as at the Latest Practicable Date. CNPC Pipeline Bureau is a wholly-owned subsidiary of CNPC. Pursuant to the Listing Rules, each of CNPC and CNPC Pipeline Bureau is a connected person of the Company and the Zhongyou Zhongtai Acquisition constitutes a connected transaction of the Company.

As CNPC is considered to have a material interest in the Zhongyou Zhongtai Acquisition, CNPC and its associates shall abstain from voting on the resolution approving the Zhongyou Zhongtai Acquisition. As far as the Company is aware of, CNPC Pipeline Bureau does not have any shareholding in the Company.

An Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders in relation to the Zhongyou Zhongtai Acquisition. Guangdong Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

7. INFORMATION ON THE COMPANY AND CNPC

(a) Information on the Company

The Company is an investment holding company. The principal activities of the Group are the exploration and production of crude oil and natural gas in the PRC, the Republic of Kazakhstan, the Sultanate of Oman, Peru, the Kingdom of Thailand, the Azerbaijan Republic and the Republic of Indonesia. The Group is also engaged in the city gas, vehicle fuel gas and related businesses in the PRC.

(b) Information on CNPC

CNPC is the controlling shareholder of the Company. CNPC is a petroleum and petrochemical conglomerate that was formed in the wake of the restructuring launched by the State Council to restructure the predecessor of CNPC, China National Petroleum Company ( ). CNPC is also a state-authorised investment corporation and state-owned enterprise. CNPC is an integrated energy corporation with businesses covering oil and gas exploration and development, refining and petrochemical, oil product marketing, oil and gas storage and transportation, oil trading, engineering and technical services and petroleum equipment manufacturing.

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LETTER FROM THE BOARD

8. SGM

The notice convening the SGM to be held at Bowen Room 7/F., Conrad Hong Kong, Pacific Place, 88 Queensway Hong Kong, on Tuesday, 20 October 2009 at 11:00 a.m., at which ordinary resolution will be proposed to approve the Zhongyou Zhongtai Acquisition is set out on page 158 of this circular.

A proxy form for use at the SGM is enclosed. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the principal office of the Company at Rooms 3907 – 3910, 39th Floor, 118 Connaught Road West, Hong Kong as soon as practicable but in any event not later than 48 hours before the time for holding the SGM or adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

9. RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 13 of this circular which contains its recommendation to the Independent Shareholders in relation to the Zhongyou Zhongtai Acquisition. Your attention is also drawn to the letter of advice from Guangdong Securities set out on pages 14 to 24 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Zhongyou Zhongtai Acquisition and the principal factors and reasons taken into account in arriving at its recommendation.

The Independent Board Committee, having taken into account the advice of Guangdong Securities, is of the opinion that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the ordinary resolution in respect of the Zhongyou Zhongtai Acquisition to be proposed at the SGM.

The Board considers that the terms of the Zhongyou Zhongtai Acquisition are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the resolution in respect of the Zhongyou Zhongtai Acquisition to be proposed at the SGM.

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LETTER FROM THE BOARD

10. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

By Order of the Board Li Hualin Chairman

– 12 –

LETTER FROM INDEPENDENT BOARD COMMITTEE

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CNPC (HONG KONG)
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CNPC (HONG KONG) LIMITED

(incorporated in Bermuda with limited liability)

(Stock Code: 0135)

2 October 2009

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

We refer to the circular dated 2 October 2009 of the Company (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings herein unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Zhongyou Zhongtai Acquisition, details of which are set out in the “Letter from the Board” in the Circular to the Shareholders.

Having taken into account the advice of the Independent Financial Adviser, we consider that the terms of the Zhongyou Zhongtai Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Zhongyou Zhongtai Acquisition as set out in the notice of the SGM to be held on 20 October 2009.

Yours faithfully, Independent Board Committee Lau Wah Sum Li Kwok Sing Aubrey Liu Xiao Feng

* For identification purpose only

– 13 –

LETTER FROM GUANGDONG SECURITIES

Set out below is the text of a letter received from Guangdong Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Acquisition Agreement and the transactions contemplated thereunder for the purpose of inclusion in this circular.

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Units 2505-06, 25/F. Low Block of Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

2 October 2009

To: The independent board committee and the independent shareholders of CNPC (Hong Kong) Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 2 October 2009 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

The Zhongyou Zhongtai Acquisition

As referred to in the announcement of the Company dated 4 September 2009, CNPC Pipeline Bureau has arranged to sell 49% interest in Zhongyou Zhongtai through open tender on the China Beijing Equity Exchange on 10 August 2009 pursuant to the relevant PRC laws and regulations governing disposal of State-owned assets. The Company submitted an application to acquire and bid for the 49% interest in Zhongyou Zhongtai on 21 August 2009. A refundable deposit of RMB184,660,000 (equivalent to approximately HK$208,666,000) was paid by the Company on 28 August 2009 which will be deducted from the total consideration payable. The open tender was closed on 4 September 2009 and the Company was informed that it is the sole bidder.

Subsequently on 16 September 2009, the Company entered into the Acquisition Agreement with CNPC Pipeline Bureau, pursuant to which the Company has conditionally agreed to purchase, and CNPC Pipeline Bureau has conditionally agreed to sell, 49% interest in Zhongyou Zhongtai at a consideration of RMB615,536,824 (equivalent to approximately HK$695,557,000) (the “ Consideration ”).

– 14 –

LETTER FROM GUANGDONG SECURITIES

Connected transaction

As at the Latest Practicable Date, CNPC, the ultimate and controlling shareholder of the Company, is deemed to be interested in, directly and indirectly, approximately 58.01% of the issued share capital of the Company. CNPC Pipeline Bureau is a wholly-owned subsidiary of CNPC. Under the Listing Rules, each of CNPC and CNPC Pipeline Bureau is a connected person of the Company, the Zhongyou Zhongtai Acquisition hence constitutes a connected transaction for the Company.

The applicable percentage ratios referred to in Chapter 14A of the Listing Rules for the Zhongyou Zhongtai Acquisition are more than 5%. As such, the Zhongyou Zhongtai Acquisition will be subject to, among other things, the approval by the Independent Shareholders at the SGM by way of poll.

An Independent Board Committee comprising Dr. Lau Wah Sum, Mr. Li Kwok Sing Aubrey and Dr. Liu Xiao Feng (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Acquisition Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Zhongyou Zhongtai Acquisition is in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Acquisition Agreement and the transactions contemplated thereunder at the SGM. We, Guangdong Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

– 15 –

LETTER FROM GUANGDONG SECURITIES

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, CNPC, Zhongyou Zhongtai and CNPC Pipeline Bureau or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Zhongyou Zhongtai Acquisition. In addition, we have no obligation to update this opinion to take into account events occurring after the issue of this letter. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Guangdong Securities is to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Zhongyou Zhongtai Acquisition, we have taken into consideration the following principal factors and reasons:

(1) Background of the Zhongyou Zhongtai Acquisition

The Acquisition Agreement

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LETTER FROM GUANGDONG SECURITIES

As extracted from the Board Letter, according to the PRC laws and regulations and the requirements of the relevant PRC authorities, the Acquisition Agreement shall take effect on the date on which the new Certificate of Approval for the Establishment of Foreign-funded Enterprises ( ) in respect of Zhongyou Zhongtai is issued by the relevant PRC authorities. Among other things, the purchaser’s (i.e. the Company’s) internal approval (including the Independent Shareholders’ approval) is required prior to the issue of said certificate.

The Directors (excluding the independent non-executive Directors) confirmed that they are of the view that the terms and conditions of the Acquisition Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

Information on the Group

The Company is an investment holding company. The principal activities of the Group are the exploration and production of crude oil and natural gas in the PRC, the Republic of Kazakhstan (“ Kazakhstan ”), the Sultanate of Oman, Peru, the Kingdom of Thailand, the Azerbaijan Republic and the Republic of Indonesia. The Group is also engaged in the city gas, vehicle fuel gas and related businesses in the PRC.

As referred to in the interim report of the Company for the six months ended 30 June 2009 (the “ 2009 Interim Report ”), during the first half of 2009, the Group acquired for and made capital contribution into three operating companies, namely CNPC Shennan Oil Technology Development Co., Ltd, Xinjiang Xinjie and China Natural Gas Co., Ltd., which are all engaged in the natural gas distribution business (the “ Previous Acquisition ”). According to the 2009 Interim Report, the Previous Acquisition laid a foundation for the Group’s business transition and the development of its natural gas distribution business.

During the first half of 2009, the Company also formed new joint venture companies to further develop its natural gas distribution business in several local locations of the PRC, such as Shannxi Province and Hebei Province. As advised by the Directors, through the Previous Acquisition as well as the establishment of new joint ventures, the Group has officially commenced its business transition, and will pay additional effort on the development of natural gas end users sale. From the 2009 Interim Report, we noted that the Group will actively seek to participate in the construction of distribution of natural gas so as to facilitate the linkage between resources and the market and to develop the user market.

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LETTER FROM GUANGDONG SECURITIES

Set out below is a summary of the unaudited financial information of the Group for the six months ended 30 June 2009 and 2008 as extracted from the 2009 Interim Report:

	For the	For the
	six months	six months
	ended 30	ended 30	Year on
Consolidated income statement	June 2009	June 2008	year change
		(restated)
		(Note)
	HK$’000	HK$’000	%
Turnover	2,005,725	3,602,569	(44.33)
Profit for the period	366,882	2,262,749	(83.79)
Net profit attributable to equity
holders of the Company	316,356	1,649,298	(80.82)

Note: The financial information has been restated to give effect to the acquisitions of the natural gas distribution projects with all periods present as if the operations of the Group and the natural gas distribution projects have always been combined.

As depicted by the above table, the Group’s turnover for the six months ended 30 June 2009 amounted to approximately HK$2,005.73 million, representing a decrease of approximately 44.33% as compared with the corresponding period of last year. The profit attributable to equity holders of the Company for the six months ended 30 June 2009 amounted to approximately HK$316.36 million, representing a decrease of approximately 80.82%. As stated in the 2009 Interim Report, the decrease in profit was mainly due to a drop in oil price and provision of export custom duties by CNPC-Aktobemunaigas Joint Stock Company (“ Aktobe ”) project carried out by the Group in Kazakhstan. As a result of the export custom duties arising from a change in relevant policies by the Kazakhstan government, the Aktobe project is required to bear additional burden. With the drop of the international crude oil price in the first six months of 2009 as compared with the corresponding period of last year, the Group’s weighted average realised price of crude oil per barrel had declined substantially by approximately 52.81% during the first half of 2009 as compared with same period of last year. In this relation, we also noted from the Bloomberg that the Brent crude oil price has been sliding from its peak of US$146 per barrel in July 2008 to around US$45 to US$80 per barrel during the first half of 2009. In view of that the price of crude oil is likely to remain volatile and unpredictable, the Directors expect that the Group’s turnover and profitability will continue to be affected by the fluctuation in crude oil price in the future.

With reference to the 2009 Interim Report, the natural gas distribution business of the Group contributed approximately 43.58% of the Group’s total turnover for the six months ended 30 June 2009, as compared to approximately 21.20% for the six months ended 30 June 2008. Such expansion demonstrates the growing importance of the natural gas distribution business of the Group.

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LETTER FROM GUANGDONG SECURITIES

Information on Zhongyou Zhongtai

As extracted from the Board Letter, Zhongyou Zhongtai is principally engaged in the construction, operation and management of city gas pipeline network and ancillary facilities, comprehensive development and utilisation and sale of liquefied petroleum gas, and provision of safety testing, maintenance and emergency repair of the city gas transportation and distribution equipment and other services in the PRC. The operation of Zhongyou Zhongtai’s natural gas distribution business covers a number of provinces in the PRC, including Shandong Province, Hunan Province, Qinghai Province, Anhui Province, Jiangxi Province, Jiangsu Province and Guangdong Province. Zhongyou Zhongtai is owned as to 49% and 51% by CNPC Pipeline Bureau and independent third parties respectively. Upon completion of the Zhongyou Zhongtai Acquisition, Zhongyou Zhongtai will be owned as to 49% and 51% by the Company and independent third parties respectively.

Set out below is a summary of the audited financial information of Zhongyou Zhongtai for each of the two years ended 31 December 2008 prepared based on the PRC GAAP as provided by the Company:

	For the year	For the year
	ended 31	ended 31
Consolidated Income	December	December	Year on
Statement	2008	2007	year change
	RMB’000	RMB’000	%
Turnover	1,258,001	813,748	54.59
Operating profit	219,079	171,892	27.45
Net profit	192,360	149,870	28.35
Operating profit margin	17.41%	21.12%
Net profit margin	15.29%	18.42%
	As at 31	As at 31
	December	December	Year on
Consolidated Balance Sheet	2008	2007	year change
	RMB’000	RMB’000	%
Cash balance	261,965	201,905	29.75
Total assets	1,407,508	967,562	45.47
Total borrowings	240,286	193,710	24.04
Total liabilities	(791,849)	(564,132)	40.37
Net assets	615,658	403,430	52.61
Net cash (cash balance minus
total borrowings)	21,679	8,195	164.54
Gearing ratio (total liabilities/
total assets)	0.56 times	0.58 times

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LETTER FROM GUANGDONG SECURITIES

As depicted by the above table, the turnover of Zhongyou Zhongtai for the year ended 31 December 2008 amounted to approximately RMB1,258 million, representing an increase of approximately 54.59% as compared with the prior year. Both the operating profit and net profit of Zhongyou Zhongtai illustrated a double digit year-on-year growth from 2007 to 2008. Nevertheless, Zhongyou Zhongtai’s operating profit margin and net profit margin declined from 2007 to 2008.

With regard to the asset and liability, and gearing position of Zhongyou Zhongtai, Zhongyou Zhongtai’s net assets increased by approximately 52.61% to approximately RMB615.66 million as at 31 December 2008; while its gearing ratio (being calculated as total liabilities over the total assets) decreased to approximately 0.56 times as at 31 December 2008.

(2) Reasons for the Zhongyou Zhongtai Acquisition

As aforementioned, it is the business strategy of the Group to expand into the natural gas distribution business. The Group implemented such business strategy through the Previous Acquisitions as well as the aforesaid establishment of new joint ventures for the six months ended 30 June 2009. As extracted from the 2009 Interim Report and as further confirmed by the Directors, under the firm support from CNPC, the Group intends to (i) accelerate the acquisition of the natural gas downstream business; (ii) develop the comprehensive utilisation projects for natural gas actively; and (iii) realize its business transition from the production and exploration of crude oil to the distribution of natural gas, in order to develop a strong and top position of the Group’s businesses rapidly.

To further implement the said strategy, the Company entered into the Acquisition Agreement in respect of the Zhongyou Zhongtai Acquisition and we consider that the Zhongyou Zhongtai Acquisition is conducted in the ordinary and usual course of business of the Company given that the Zhongyou Zhongtai Acquisition is in line with the business strategy of the Group.

In order for us to form a better understanding on the future outlook of the natural gas market in the PRC, we have searched and found an article issued by the National Development and Reform Commission of the PRC dated 5 February 2007 regarding the 11th five-year plan of the PRC. The said article revealed that the PRC government has decided to (i) improve the efficiency of energy utilisation by the development of natural gas, hydraulic power, renewable energy, new energy and other forms of clean energy; and (ii) advocate additional investments in natural gas infrastructure. Furthermore, we noted that a stimulus plan to spur vehicle demand and promote new energy cars ( ) was announced by the State Council of the PRC in 2009 and the plan may have an indirect positive impact on the natural gas market in the PRC in long term as natural gas is one type of new energies used by the new energy cars. In view of also that natural gas is a clean and efficient source of energy which has drawn rising attention and interest from the PRC government and

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LETTER FROM GUANGDONG SECURITIES

enterprises, and has become one of the most rapidly growing sectors in the PRC energy industry according to the 2009 Interim Report, the Directors are optimistic about the future business prospects of Zhongyou Zhongtai.

Having taken into account the potential positive outlook of the natural gas market in the PRC, together with the overall improving financial performance of Zhongyou Zhongtai for the two years ended 31 December 2008 as outlined under the section headed “Information on Zhongyou Zhongtai” of this letter, we consider that the Zhongyou Zhongtai Acquisition is in the interests of the Company and the Shareholders as a whole.

(3) Principal terms of the Acquisition Agreement

Basis of the Consideration

The Consideration of RMB615,536,824 (equivalent to approximately HK$695,557,000) is equivalent to the base price of the 49% interest in Zhongyou Zhongtai in the open tender on the China Beijing Equity Exchange. The Company understands that such base price is the same as the appraised net asset value of Zhongyou Zhongtai as at the Valuation Date, being 31 March 2009, as set out in a valuation report of Zhongyou Zhongtai (the “ Valuation Report ”) prepared by (China United Assets Appraisal Co., Ltd.), an independent qualified PRC valuer. As referred to in the Board Letter and after our self study of the Valuation Report, we noted that the appraised net asset value of Zhongyou Zhongtai was computed based on the asset-based approach, being the valuation approach which is considered to be the most appropriate according to (China United Assets Appraisal Co., Ltd.). In view of the qualification of the said PRC valuer, we are satisfied with the basis of such valuation.

From our calculation, the Consideration of RMB615,536,824 (equivalent to approximately HK$695,557,000) represents (i) an implied historical price to earnings ratio (“ PER ”) of approximately 6.53 times to “49% of the audited net profit of Zhongyou Zhongtai of approximately RMB94.26 million for the year ended 31 December 2008”; and (ii) an implied price to book ratio (“ PBR ”) of approximately 2.04 times to “49% of the audited net assets of Zhongyou Zhongtai of approximately RMB301.67 million as at 31 December 2008”.

Trading multiples analysis for the Consideration

For the purpose of assessing the fairness and reasonableness of the Consideration, we have performed a trading multiples analysis which includes the PER and the PBR analysis. We have searched for companies listed on the Stock Exchange which are in similar lines of business as Zhongyou Zhongtai (the “ Market Comparables ”) for comparison. We have also excluded companies which recorded both losses and net liabilities during their latest financial years as per the relevant published financial information. To the best of our knowledge and endeavor, we found four companies which met the said criteria. It should be noted

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LETTER FROM GUANGDONG SECURITIES

that the businesses, operations and prospects of Zhongyou Zhongtai are not exactly the same as the Market Comparables and we have not conducted any in-depth investigation into the businesses and operations of the Market Comparables. The Market Comparables are hence only used for illustrative purpose.

Set out below are the implied PERs and PBRs of the Market Comparables based on their closing prices as at 16 September 2009, being the date of the Acquisition Agreement, and their latest published financial information:

Company name		Year end	Market
(Stock code)	Principal business	date	capitalization	PER	PBR
			(HK$ million)
			(Note)	(times)	(times)
China Gas Holdings	Property investment,	31 March 2009	8,367	80.70	2.60
Ltd. (384)	financial and
	securities investment,
	gas pipeline
	construction, sales of
	piped gas
China Oil and Gas	Investments in natural	31 December	2,170	29.72	1.45
Group Limited	gas and energy	2008
(603)	related businesses
Towngas China Co.	Sale and distribution of	31 December	5,462	27.00	0.87
Ltd. (1083)	gas fuel and related	2008
	products and gas
	pipelines
Zhengzhou Gas Co.	Sales of natural gas,	31 December	2,045	11.77	2.27
Ltd. (3928)	pressure control	2008
	equipments and gas
	appliances to
	customers and
	construction of gas
	pipelines and the
	provision of
	renovation services
	of gas pipelines to
	local customers
Minimum				11.77	0.87
Maximum				80.70	2.60
Mean				37.30	1.80
The Zhongyou				6.53	2.04
Zhongtai
Acquisition

Source: the Stock Exchange web-site (www.hkex.com.hk)

Note: As at 16 September 2009, being the date of the Acquisition Agreement.

– 22 –

LETTER FROM GUANGDONG SECURITIES

As depicted by the above table, the implied PERs and PBRs of the Market Comparables ranged from approximately 11.77 times to 80.70 times and approximately 0.87 times to 2.60 times respectively; while the implied PER and PBR of the Zhongyou Zhongtai Acquisition are approximately 6.53 times and 2.04 times respectively. We noted that the implied PBR of the Zhongyou Zhongtai Acquisition falls within the range of the Market Comparables; while the implied PER of the Zhongyou Zhongtai Acquisition is below the minimum of the Market Comparables.

Based on the result of the above trading multiple analysis and the fact that the Consideration is equivalent to the base price of the 49% interest in Zhongyou Zhongtai in the open tender, we are of the opinion that the Consideration is fair and reasonable so far as the Independent Shareholders are concerned.

Other terms of the Acquisition Agreement

We have also reviewed the other major terms of the Acquisition Agreement and are not aware of any terms which are uncommon. Consequently, we consider that the terms of the Acquisition Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

(4) Possible financial effects of the Zhongyou Zhongtai Acquisition

Upon completion of the Zhongyou Zhongtai Acquisition, Zhongyou Zhongtai will be owned as to 49% by the Company and the Company’s investments in Zhongyou Zhongtai will be accounted for as “interests in jointly controlled entities” under “non-current assets” in the consolidated balance sheet of the Group. On the other hand, the financial results of Zhongyou Zhongtai will be accounted for in the Group’s consolidated profit and loss statements as “share of results of jointly controlled entities”.

Effect on net assets

As extracted from the 2009 Interim Report, the unaudited consolidated net assets of the Group (net of minority interests) were approximately HK$9,574.45 million as at 30 June 2009. The Directors expected that the Group’s net assets (net of minority interests) would not be affected as the increase in the “investments in jointly controlled entities” under “non-current assets” in the consolidated balance sheet of the Group as a result of the Zhongyou Zhongtai Acquisition would be offset by the payment of the Consideration.

Effect on earnings

In light of the future business prospects of Zhongyou Zhongtai, the Directors are of the view that the Zhongyou Zhongtai Acquisition would likely to have a positive impact on the future earnings of the Group.

– 23 –

LETTER FROM GUANGDONG SECURITIES

Effect on gearing and working capital

As at 30 June 2009, the Group’s gearing level (being calculated as total borrowings divided by the equity attributable to equity holders of the Company according to the 2009 Interim Report) was approximately 24.89%. As confirmed by the Directors, the gearing level of the Group would not be affected as the total borrowings and the net assets of the Group would not be affected as a result of the Zhongyou Zhongtai Acquisition.

Regarding the working capital position of the Group, given that the Company will satisfy the Consideration by the internal resources of the Group, the Group’s working capital would be reduced due to the Zhongyou Zhongtai Acquisition.

It should be noted that the aforementioned analyses are for illustrative purpose only and does not purport to represent how the financial position of the Group will be upon completion of the Zhongyou Zhongtai Acquisition.

RECOMMENDATION

Having considered the above factors and reasons, we are of the opinion that (i) the terms of the Acquisition Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Zhongyou Zhongtai Acquisition is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the relevant resolution(s) to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder and we recommend the Independent Shareholders to vote in favour of the resolution in this regard.

Yours faithfully, For and on behalf of Guangdong Securities Limited Graham Lam Managing Director

– 24 –

PROPERTY VALUATION REPORT

APPENDIX I

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuations as at 31 August 2009 of the properties located in the People’s Republic of China.

==> picture [292 x 98] intentionally omitted <==

2 October 2009

The Directors CNPC (Hong Kong) Limited Rooms 3907-3910, 39[th] Floor No. 118 Connaught Road West Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from CNPC (Hong Kong) Limited (the “Company”) for us to value the properties held by China Oil and Gas Co., Ltd. (“Zhongyou Zhongtai”) and / or its subsidiaries (together referred to as the “Zhongyou Zhongtai Group”) located in the People’s Republic of China (the “PRC”). We confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the properties as at 31 August 2009 (the “date of valuation”).

BASIS OF VALUATION

Our valuations of the properties have been based on the Market Value, which is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION METHODOLOGIES

For Property Nos. 1-7, 9, 13, 41-43 and 59 we have valued them on an open market basis by the Comparison Approach assuming sale in their existing states with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant market. Appropriate adjustments have then been made to account for the differences between the properties and the comparables in terms of age, time, location, floor level and other relevant factors.

In valuing Property Nos. 10-12, 14, 18-20, 23-27, 30-36, 39, 51, 53, and 54, due to the inherent nature of usage and lack of market sales comparables, the properties have been valued by the Depreciated Replacement Cost Approach. Depreciated replacement cost is defined as “the aggregate amount of the value of the land for the existing use or a notional replacement site in the same locality, and the new replacement cost of the buildings and other site works, from which appropriate deductions may then be made to allow for the age, condition, economic and functional obsolescence and environmental factors etc; all of these might result in the existing property being worth less to the undertaking in occupation than would a new replacement.” This basis has been used due to the lack of an established market upon which to base comparable transactions. However this approach generally furnishes the most reliable indication of value for assets without a known used market.

For the remaining properties, no commercial value has been attributed to each of these properties due to the absence of relevant title document.

TITLE INVESTIGATION

We have been provided with copies of title documents and have been advised by the Company that no further relevant documents have been produced. However, we have not examined the original documents to verify ownership or to ascertain the existence of any amendment documents, which may not appear on the copies handed to us. In the course of our valuations, we have relied upon the advice and information given by the Company and its PRC legal adviser, Kaiwen Law Firm ( ), regarding the titles of the properties. All documents have been used for reference only.

In valuing the properties in the PRC, we have relied on the advice given by the Company and its PRC legal adviser that the Company has valid and enforceable titles to the properties which are freely transferable, and has free and uninterrupted rights to use the same, for the whole of the unexpired terms granted subject to the payment of annual government rent/land use fees and all requisite land premium/purchase consideration payable have been fully settled.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION ASSUMPTIONS

Our valuations have been made on the assumption that the properties are sold in the market without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to affect the values of the properties.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the properties and no forced sale situation in any manner is assumed in our valuations.

VALUATION CONSIDERATIONS

We have inspected the properties externally and where possible, the interior of the properties. In the course of our inspections, we did not note any serious defects. However, no structural surveys have been made. We are, therefore, unable to report whether the properties are free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

In the course of our valuations, we have relied to a considerable extent on the information given by the Company and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenures, particulars of occupancy, site/ floor areas, completion dates of the buildings, identification of the properties and other relevant information.

Except otherwise stated, dimensions, measurements and site / floor areas included in the valuation certificates are based on information contained in the leases and other documents provided to us and are therefore only approximations.

We have not carried out detailed on-site measurements to verify the correctness of the site/floor areas in respect of the properties but have assumed that the site/floor areas shown on the documents handed to us are correct.

We have no reason to doubt the truth and accuracy of the information provided to us by the Company and we have relied on your advice that no material facts have been omitted from the information so supplied. We consider that we have been provided with sufficient information for us to reach an informed view.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties or for any expenses or taxation, which may be incurred in effecting a sale or purchase.

Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

Our valuations have been prepared in accordance with the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

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PROPERTY VALUATION REPORT

APPENDIX I

Our valuations have been prepared under the generally accepted valuation procedures and are in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

We hereby certify that we neither have any present nor any prospective interest in the Company and the Zhongyou Zhongtai Group or the appraised properties or the values reported.

Unless otherwise stated, all money amounts stated herein are in Renminbi (RMB) and no allowances have been made for any exchange transfer.

Our Summary of Values and the Valuation Certificates are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Dr. Tony C.H. Cheng Joannau W.F. Chan BSc, MUD, MBA (Finance), MSc (Eng), PhD (Econ), BSc. MSc. MRICS MHKIS RPS(GP) MHKIS, MCIArb, AFA, SIFM, FCIM, Senior Director MASCE, MIET, MIEEE, MASME, MIIE Managing Director

Notes:

Dr. Tony C.H. Cheng is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 16 years’ experience in valuations of properties in Hong Kong and the People’s Republic of China.

Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 16 years’ experience in valuations of properties in Hong Kong and over 10 years’ experience in valuations of properties in the People’s Republic of China.

– 28 –

PROPERTY VALUATION REPORT

APPENDIX I

SUMMARY OF VALUES

No.

1.

2.

3.

4.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Unit 1124, Block 2,
No. 8 Xing Sheng Lane,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
8
2
1124
460,000
80%
368,000
Unit 132, 3rd Floor,
Block 14,
No. 10 Ning Zhang Road,
Chengbei District,
Xining City,
Qinghai Province,
The PRC
10
14
3
132
130,000
80%
104,000
Unit 132, 3rd Floor,
Block 15,
No. 10 Ning Zhang Road,
Chengbei District,
Xining City,
Qinghai Province,
The PRC
10
15
3
132
130,000
80%
104,000
Unit 621, 2nd Floor,
Block 2,
No. 20 Xi Shan First
Lane,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
20
2
2
621
340,000
80%
272,000

– 29 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
5.
6.
7.
8.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Unit 1125, Block 1,
No. 12 Sheng Li Road,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
12
1
1125
380,000
80%
304,000
Unit 111, Entrance No. 1,
Block 21,
No. 2 Leng Hu Road,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
2
21
1
111
480,000
80%
384,000
Unit 1242, Entrance No. 1,
Block 2,
No. 4 Shang Ye Lane,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
4
2
1
1242
380,000
80%
304,000
The Whole of 17th and
18th Floors,
No. 9 Wu Si Main Street,
Xining City,
Qinghai Province,
The PRC
9
17
18
No Commercial
Value
80%
Nil

– 30 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
9.
10.
11.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
The Whole of 17th Floor,
Block 1,
No. 13 Wu Si Main
Street,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
13
1
17
3,800,000
80%
3,040,000
Land, various buildings
and structures in Bayi
Road Gas Station,
Ba Yi Road,
Chengdong District,
Xining City,
Qinghai Province,
The PRC
1,350,000
80%
1,080,000
Land, various buildings
and structures in
Chaidamu Gas Station,
No. 26 Chai Da Mu Road,
Chengbei District,
Xining City,
Qinghai Province,
The PRC
26
4,000,000
80%
3,200,000

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PROPERTY VALUATION REPORT

APPENDIX I

No.
12.
13.
14.
15.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land, various buildings
and structures in
Chengnan Gas Gate
Station,
No. 143-1 Nan Chuan
Road East,
Chengzhong District,
Xining City,
Qinghai Province,
The PRC
143-1
14,000,000
80%
11,200,000
Carparking Space No. 76,
Haitian Yijing Court,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
76
80,000
80%
64,000
Land and various
structures located at the
south portion of Huang
Zhong Road,
Xining City,
Qinghai Province,
The PRC
900,000
80%
720,000
Land and various
structures located at
Zhangjiawan Village,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
No Commercial
Value
80%
Nil

– 32 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
16.
17.
18.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land and various
structures in Xihuayuan
Village,
Xibao Town,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
No Commercial
Value
80%
Nil
Land and various
structures in
Military Unit,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
No Commercial
Value
80%
Nil
Land, various buildings
and structures in Ningda
Road Gas Station,
No. 18 Ning Zhang Road,
Xining City,
Qinghai Province,
The PRC
18
870,000
80%
696,000

– 33 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
19.
20.
21.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land, various buildings
and structures in a
liquefied natural gas
station located at
No. 33 Jin Kai Road,
Chengdong Economic and
Technological
Development Zone,
Xining City,
Qinghai Province,
The PRC
33
10,000,000
90%
9,000,000
Unit 3152,
Entrance No. 3,
Block A,
No. 7 Kun Lun Road,
Xining City,
Qinghai Province,
The PRC
7
A
3
3153
No Commercial
Value
90%
Nil
Land, various buildings
and structures in Ganhe
Industrial Area,
Xining Economic and
Technological
Development Zone,
Xining City,
Qinghai Province,
The PRC
No Commercial
Value
40%
Nil

==> picture [89 x 41] intentionally omitted <==

– 34 –

PROPERTY VALUATION REPORT

APPENDIX I

==> picture [426 x 468] intentionally omitted <==

----- Start of picture text -----

|||||||||||
|---|---|---|---|---|---|---|---|---|---|
|Value|attributable|to|
|Market|Value|in|Interest|attributable|to|the|Zhongyou|
|existing|state|as|at|the|Zhongyou|Zhongtai|Group|as|at|
|No.|Property|31|August|2009|Zhongtai|Group|31|August|2009|
|RMB|RMB|
|22.|Lands,|various|buildings|No|Commercial|40%|Nil|
|and|structures|in|2|Gas|Value|
|Transportation|Station|
|located|at|
|Hongyahe|Village,|
|Shangxinzhuang|Town,|
|Huangzhong|County,|
|Xining|City,|
|Qinghai|Province,|
|The|PRC|
|23.|Lands,|various|buildings|2,320,000|60%|1,392,000|
|and|structures|in|Qinghai|
|Bio-Technological|Park,|
|Xining|City,|
|Qinghai|Province,|
|The|PRC|
|24.|Land,|various|buildings|550,000|60%|330,000|
|and|structures|in|a|gas|
|station|located|at|
|Gucheng|Village,|
|Weiyuan|Town,|
|Huzhu|County|
|Xining|City,|
|Qinghai|Province,|
|The|PRC|

----- End of picture text -----

– 35 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
25.
26.
27.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land, various buildings
and structures in a gas
station located at
No. 27 Jin Kai Road,
Chengdong Economic and
Technological
Development Zone,
Xining City,
Qinghai Province,
The PRC
27
7,500,000
100%
7,500,000
Land and various
structures in
Maojiatai Village,
Tianjiazhai Town,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
8,000
100%
8,000
Land and various
structures in
Shigou Village,
Tianjiazhai Town,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
2,000
100%
2,000

– 36 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
28.
29.
30.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land and various
structures
located at
Xi Village,
Pingan County
Haidong Region,
Qinghai Province,
The PRC
No Commercial
Value
51%
Nil
Land, various buildings
and structures in a gas
station located at
Honghexian Village,
Qiaotou Town,
Datong County,
Xining City,
Qinghai Province,
The PRC
No Commercial
Value
60%
Nil
Land, various buildings
and structures in an
industrial complex located
in
Ceramics Technology &
Industry Zone,
Liling City,
Hunan Province,
The PRC
12,000,000
60%
7,200,000

==> picture [72 x 63] intentionally omitted <==

– 37 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
31.
32.
33.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land and various
structures in Liling Main
Road Regulation Station,
Dongmentang Village,
Yangsan Town,
Liling City,
Hunan Province,
The PRC
30,000
60%
18,000
Land and various
structures in Dong An
Regulation Station,
Dongan Village,
Lailongmen Town,
Liling City,
Hunan Province,
The PRC
30,000
60%
18,000
Land and various
structures in Shutang
Village Regulation
Station,
Shutang Village,
Wangxian Town,
Liling City,
Hunan Province,
The PRC
20,000
60%
12,000

==> picture [81 x 41] intentionally omitted <==

– 38 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
34.
35.
36.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land and various
structures in Li Zi Tang
Regulation Station,
Dongbao Village,
Dongbao Township,
Liling City,
Hunan Province,
The PRC
20,000
60%
12,000
Land and various
structures in Lengshui
Village Regulation
Station,
Lengshui Village,
Pukou Town,
Liling City,
Hunan Province,
The PRC
40,000
60%
24,000
Land and various
structures in Yang Dong
Regulation Station,
Yangdong Village,
Yangsan Town office,
Liling City,
Hunan Province,
The PRC
40,000
60%
24,000

==> picture [82 x 41] intentionally omitted <==

– 39 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
37.
38.
39.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Various structures in
Dong An Valve Chamber,
Dongan Village,
Lailongmen Town,
Liling City,
Hunan Province,
The PRC
No Commercial
Value
60%
Nil
Various structures in a
Regulation Station
located in
Ceramics Technology &
Industry Zone,
Liling City,
Hunan Province,
The PRC
No Commercial
Value
60%
Nil
Land and various
structures in Sunjiawan
Regulation Station
located in
Sunjiawan Village,
Sunjiawan Township,
Liling City,
Hunan Province,
The PRC
30,000
60%
18,000

==> picture [80 x 41] intentionally omitted <==

– 40 –

PROPERTY VALUATION REPORT

APPENDIX I

No.

40.

41.

42.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Various buildings and
structures in Yang San Shi
Gas Station,
No. 20 Hong Xin Lane,
Yang San Shi Road,
Liling City,
Hunan Province,
The PRC
20
No Commercial
Value
60%
Nil
Shop No. 11,
Blocks 12-13,
Bin Jiang Garden,
No. 168 Shi Mao Road,
5th Hong Gu Road,
Honggutan New District,
Nanchang City,
Jiangxi Province,
The PRC
168
12-13
11
6,800,000
23.65%
1,608,200
Flat 501, 5th Floor,
Entrance No. 3,
Block 35,
Li Jing New Garden,
Binzhou City,
Shandong Province,
The PRC
35
3
5
501
400,000
80%
320,000

– 41 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
43.
44.
45.
46.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Flat 1501, 15th Floor,
Entrance No. 4, Block 8,
Zhong Hai Garden,
No. 698
16th Bohai Road,
Binzhou City,
Shandong Province,
The PRC
698
8
4
15
1501
370,000
80%
296,000
Flat 401,
Entrance No. 3,
Block 39,
Ju Long Garden,
Binzhou City,
Shandong Province,
The PRC
39
3
401
No Commercial
Value
80%
Nil
Flat 102,
Entrance No. 2, Block 9,
Ju Long Garden,
Binzhou City,
Shandong Province,
The PRC
9
2
102
No Commercial
Value
80%
Nil
Flat 302,
Entrance No. 3,
Block 51,
Ju Long Garden,
Binzhou City,
Shandong Province,
The PRC
51
3
302
No Commercial
Value
80%
Nil

– 42 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
47.
48.
49.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Various buildings and
structures in Cheng Xi
Gas Gate Station, No. 268
8th Huang He Road,
Binzhou City,
Shandong Province,
The PRC
268
No Commercial
Value
80%
Nil
Various structures in a
Gas Distribution Station
located at
8th Huang He Road,
Binzhou City,
Shandong Province,
The PRC
No Commercial
Value
80%
Nil
Various buildings and
structures in Hui Min Gas
Filling Station
Da Ji Road,
Huimin County,
Binzhou City,
Shandong Province,
The PRC
No Commercial
Value
99%
Nil

==> picture [53 x 52] intentionally omitted <==

– 43 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
50.
51.
52.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Various structures in a
Gas Distribution Station
located at
Da Ji Road,
Huimin County,
Binzhou City,
Shandong Province,
The PRC
No Commercial
Value
99%
Nil
Land, various buildings
and structures in a Gas
Gate Station
located at
North of Xin Xing East
Road,
Development Zone,
Qingyun County,
Dezhou City,
Shandong Province,
The PRC
480,000
98%
470,400
Various buildings and
structures in a gas station
located at
Zhangzhuang Village,
Huoli Town,
Huashan District,
Binzhou City,
Shandong Province,
The PRC
No Commercial
Value
40%
Nil

==> picture [81 x 52] intentionally omitted <==

– 44 –

PROPERTY VALUATION REPORT

APPENDIX I

No.
53.
54.
55.

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Land, various structures
in Ru Gao Port LNG
Station,
14th Group,
Zhongxinsha Village,
Rugao Port,
Nantong City,
Jiangsu Province,
The PRC
1,430,000
40%
572,000
Land, various buildings
and structures in a gas
gate station located at
Dingji Village,
Dainan Town,
Xinghua City,
Taizhou,
Jiangsu Province,
The PRC
2,590,000
100%
2,590,000
Various buildings and
structures in a LPG filling
station located at
Ren Min East Road,
Dainan Town,
Xinghua City,
Taizhou,
Jiangsu Province,
The PRC
No Commercial
Value
100%
Nil

==> picture [89 x 52] intentionally omitted <==

– 45 –

PROPERTY VALUATION REPORT

APPENDIX I

No.

56.

57.

58

Property
Market Value in
existing state as at
31 August 2009
Interest attributable to
the Zhongyou
Zhongtai Group
Value attributable to
the Zhongyou
Zhongtai Group as at
31 August 2009
RMB
RMB
Various buildings and
structures in Tie Pu LNG
Station,
Kengmen Village,
Tiepu Town,
Chaoan County,
Chaozhou City,
Guangdong Province,
The PRC
No Commercial
Value
100%
Nil
Various buildings and
structures in Xian Quan
Garden Gas Station,
Xian Shui Central Road,
Yingcheng Town,
Yingde City,
Guangdong Province,
The PRC
No Commercial
Value
100%
Nil
An office/residential
development located at
No. 719
22nd Bo Hai Road,
Binzhou City,
Shandong Province,
The PRC
719
/
No Commercial
Value
80%
Nil

– 46 –

PROPERTY VALUATION REPORT

APPENDIX I

Value attributable to Market Value in Interest attributable to the Zhongyou existing state as at the Zhongyou Zhongtai Group as at No. Property 31 August 2009 Zhongtai Group 31 August 2009 RMB RMB 59. An office 4,500,000 100% 4,500,000 development located at No. 10 Ming Hao Road, Cheng Nan New District, Xining City, Qinghai Province, The PRC

Total: 76,460,000

57,754,600

– 47 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Properties held by the Group in the PRC

						Market Value
					Particulars of	in existing state
Property				Description and tenure	occupancy	as at 31 August 2009
						RMB
1. Unit 1124, Block 2,				The property comprises a	As advised by the	460,000
No.	8 Xing		Sheng Lane, residential unit on 12th Floor		Company, the property
Chengxi		District,		of a 14-storey building in a	was occupied by the	(80% interest
Xining City,				residential development which	Zhongyou Zhongtai	attributable to the
Qinghai		Province,		was completed in about 2004.	Group as staff quarter	Zhongyou Zhongtai
The PRC					as at the date of	Group:
	8	2		The gross floor area (“GFA”) of the property is approximately 121.78 sq.m.	valuation.	368,000)
1124				(or about 1,310.84 sq.ft.).
				The land use rights of the
				property have been granted for
				a term expiring on 22 June
				2052 for residential use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Xi Guo Yong (2006) Di No. 2008 ( (2006) 2008 ) issued by Xining City People’s Government ( ) dated 17 May 2006, the land use rights of the property have been granted to for a term expiring on 22 June 2052 for residential use.
Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 32005022765(1-1) ( 32005022765(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 31 August 2005, the property with a GFA of 121.78 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following: a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 48 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Unit 132, 3rd Floor,
Block 14,
No. 10 Ning Zhang Road,
Chengbei District,
Xining City,
Qinghai Province,
The PRC
10
14
3
132
The property comprises a
residential unit on 3rd Floor of
an 8-storey building in a
residential development which
was completed in about 2002.
The gross floor area (“GFA”)
of the property is
approximately 52.81 sq.m. (or
about 568.45 sq.ft.).
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group as staff quarter
as at the date of
valuation.
130,000
(80% interest
attributable to the
Zhongyou Zhongtai
Group:
104,000)

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Bei (Gong) Zi Di No. 42006005320(1-1)( 42006005320(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 11 April 2006, the property with a GFA of 52.81 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows: Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 49 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Unit 132, 3rd Floor,
Block 15,
No. 10 Ning Zhang Road,
Chengbei District,
Xining City,
Qinghai Province,
The PRC
10
15
3
132
The property comprises a
residential unit on 3rd Floor of
an 8-storey building in a
residential development which
was completed in about 2002.
The gross floor area (“GFA”)
of the property is
approximately 52.81 sq.m. (or
about 568.45 sq.ft.).
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group as staff quarter
as at the date of
valuation.
130,000
(80% interest
attributable to
the Zhongyou
Zhongtai Group:
104,000)

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Bei (Gong) Zi Di No. 42006005320(1-1) ( 42006005320(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 11 April 2006, the property with a GFA of 52.81 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows:
Building Ownership Certificate

Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 50 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

==> picture [426 x 184] intentionally omitted <==

----- Start of picture text -----

|||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Market|Value|
|Particulars|of|in|existing|state|as|at|
|Property|Description|and|tenure|occupancy|31|August|2009|
|RMB|
|4.|Unit|621,|2|[nd]|Floor,|The|property|comprises|a|As|advised|by|the|340,000|
|Block|2,|residential|unit|on|2|[nd]|Floor|of|Company,|the|property|
|No.|20|Xi|Shan|First|a|6-storey|building|in|a|was|occupied|by|the|(80%|interest|
|Lane,|residential|development|which|Zhongyou|Zhongtai|attributable|to|
|Chengxi|District,|was|completed|in|about|2002.|Group|as|staff|quarter|the|Zhongyou|
|Xining|City,|as|at|the|date|of|Zhongtai|Group:|
|Qinghai|Province,|The|gross|floor|area|(“GFA”)|valuation.|
|The|PRC|of|the|property|is|272,000)|
|approximately|91.76|sq.m.|(or|
|about|987.70|sq.ft.).|
|20|2|
|2|621|

----- End of picture text -----

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 32005045024(1-1) ( 32005045024(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 9 January 2006, the property with a GFA of 91.76 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows:
Building Ownership Certificate

Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 51 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Unit 1125, Block 1,
No. 12 Sheng Li Road,
Chengxi District,
Xining City,
Qinghai Province,
The PRC
12
1
1125
The property comprises a
residential unit on 12th Floor
of a 17-storey building in a
residential development which
was completed in about 2005.
The gross floor area (“GFA”)
of the property is
approximately 95.67 sq.m. (or
about 1,029.79 sq.ft.).
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group as staff quarter
as at the date of
valuation.
380,000
(80% interest
attributable to
the Zhongyou
Zhongtai Group:
304,000)

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 32007033352(1-1) ( 32007033352(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 24 March 2008, the property with a GFA of 95.67 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows:
Building Ownership Certificate

Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 52 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

==> picture [426 x 184] intentionally omitted <==

----- Start of picture text -----

||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Market|Value|
|Particulars|of|in|existing|state|
|Property|Description|and|tenure|occupancy|as|at|31|August|2009|
|RMB|
|6.|Unit|111,|The|property|comprises|a|As|advised|by|the|480,000|
|Entrance|No.|1,|residential|unit|on|1|[st]|Floor|of|Company,|the|property|
|Block|21,|a|7-storey|building|in|a|was|occupied|by|the|(80%|interest|
|No.|2|Leng|Hu|Road,|residential|development|which|Zhongyou|Zhongtai|attributable|to|
|Chengxi|District,|was|completed|in|about|2002.|Group|as|staff|quarter|the|Zhongyou|
|Xining|City,|as|at|the|date|of|Zhongtai|Group:|
|Qinghai|Province,|The|gross|floor|area|(“GFA”)|valuation.|
|The|PRC|of|the|property|is|384,000)|
|approximately|142.37|sq.m.|
|(or|about|1,532.47|sq.ft.).|
|2|21|
|1|111|

----- End of picture text -----

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 22006024880(1-1) ( 22006024880(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 19 January 2007, the property with a GFA of 142.37 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows: Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Unit 1242, The property comprises a As advised by the 380,000 Entrance No. 1, residential unit on 24[th] Floor Company, the property Block 2, of a 31-storey building in a was occupied by the (80% interest No. 4 Shang Ye Lane, residential development which Zhongyou Zhongtai attributable to Chengxi District, was completed in about 2008. Group as staff quarter the Zhongyou Xining City, as at the date of Zhongtai Group: Qinghai Province, The gross floor area (“GFA”) valuation. The PRC of the property is 304,000) approximately 119.06 sq.m. (or about 1,281.56 sq.ft.).
4 2
1 1242

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 32008055961(1-1) ( 32008055961(1-1) ) issued by Xining City Real Estate Administration Bureau ( ), the property with a GFA of 119.06 sq.m. is legally owned by for residential use.
The status of title in accordance with the information provided by the Company is as follows:
Building Ownership Certificate

Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

							Market Value
						Particulars of	in existing state
	Property				Description and tenure	occupancy	as at 31 August 2009
							RMB
8.	The Whole			of 17th and	The property comprises the	As advised by the	No Commercial
	18th Floors,				whole of 17th and 18th Floors	Company, the property	Value
	No.	9 Wu	Si Main Street,		of a 20-storey office building	was occupied by the
	Xining City,				which was completed in about	Zhongyou Zhongtai
	Qinghai Province,				2002.	Group for office use
	The PRC					as at the date of
		9			The total gross floor area (“GFA”) of the property is approximately 2,020.04 sq.m.	valuation.
	17	18			(or about 21,743.71 sq.ft.).

Notes:

Pursuant to a Joint Venture Agreement of Construction Project ( ) dated 22 December 2002 and an Acknowledgement (2002) Qing Zheng Jing Zi Di No. 4639 ( (2002) 4639 ) dated 27 December 2002, is entitled to be allocated the

property with a total GFA of 2,020.04 sq.m. upon completed of the office development with a total GFA of 17,652.02 sq.m.

Pursuant to a certificate issued by Xining City Real Estate Administration Bureau ( ) dated 31 May 2009, the Building Ownership Certificate of the property with a GFA of 2,020.04 sq.m. is under application.
The status of title in accordance with the information provided by the Company is as follows:

Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

						Market Value
					Particulars of	in existing state
	Property			Description and tenure	occupancy	as at 31 August 2009
						RMB
9.	The Whole		of 17th Floor, The property comprises the		As advised by the	3,800,000
	Block 1,			whole of 17th Floor of a	Company, the property
	No.			20-storey office building	was occupied by the	(80% interest
	13 Wu	Si Main Street, which was completed in about			Zhongyou Zhongtai	attributable to
	Chengxi District,			2006.	Group for office use	the Zhongyou
	Xining	City,			as at the date of	Zhongtai Group:
	Qinghai Province,			The gross floor area (“GFA”)	valuation.
	The PRC			of the property is		3,040,000)
		13		approximately 901.40 sq.m. (or about 9,702.67 sq.ft.).
	1 17

Notes:

Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Xi (Gong) Zi Di No. 32007055333(1-1) ( 32007055333(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 5 December 2007, the property with a GFA of 901.40 sq.m. is legally owned by for office use.
The status of title in accordance with the information provided by the Company is as follows:
Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 1,350,000 and structures in Bayi parcel of land with a site area Company, the property Road Gas Station, of approximately 2,793.5 was occupied by the (80% interest Ba Yi Road, sq.m. (or about 30,069.23 Zhongyou Zhongtai attributable to Chengdong District, sq.ft.) upon which various Group for natural gas the Zhongyou Xining City, buildings and structures for operation as at the Zhongtai Group: Qinghai Province, natural gas operation, date of valuation. The PRC completed in about 2002, were 1,080,000) erected. (Please see
The total gross floor area Note 3 below) (“GFA”) of the property with relevant title document is approximately 543.83 sq.m. (or about 5,853.79 sq.ft.). The land use rights of the property have been granted for a term expiring on 20 May 2049 for other commercial service use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Guo Yong (2009) Di No. 108 ( (2009) 108 ) issued by Xining City People’s Government ( ) dated 21 May 2009, the land use rights of the property with a site area of 2,793.5 sq.m. have been granted to for a term expiring on 20 May 2049 for other commercial service use.
Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Dong (Gong) Zi Di No. 12003024291(1-1) ( 12003024291(1-1) ) issued by Xining City Real Estate Administration Bureau ( ), the property with a total GFA of 543.83 sq.m. is legally owned by for industrial and public utilities uses.
As at the date of valuation, no commercial value has been attributed to the buildings and structures other than those in Note 2 of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes

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PROPERTY VALUATION REPORT

APPENDIX I

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 4,000,000 and structures in parcel of land with a site area Company, the property Chaidamu Gas Station, of approximately 4,689 sq.m. was occupied by the (80% interest No. 26 Chai Da Mu (or about 50,472.40 sq.ft.) Zhongyou Zhongtai attributable to Road, upon which various buildings Group for natural gas the Zhongyou Chengbei District, and structures for natural gas operation as at the Zhongtai Group: Xining City, operation, completed in about date of valuation. Qinghai Province, 2001, were erected. 3,200,000) The PRC The total gross floor area (Please see (“GFA”) of the property with Note 3 below)
26 relevant title document is approximately 2,229.40 sq.m. (or about 23,997.26 sq.ft.).

The land use rights of the property have been granted for a term expiring on 20 May 2059 for other commercial service use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Guo Yong (2009) Di No. 105 ( (2009) 105 ) issued by Xining City People’s Government ( ) dated 21 May 2009, the land use rights of the property with a site area of 4,689 sq.m. have been granted to for a term expiring on 20 May 2059 for other commercial service use.
Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Bei (Gong) Zi Di No. 42003024290(1-1) ( 42003024290(1-1) ) issued by Xining City Real Estate Administration Bureau ( ), the property with a total GFA of 2,229.40 sq.m. is legally owned by for office and public utilities uses.
As at the date of valuation, no commercial value has been attributed to the buildings and structures other than those in Note 2 of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes

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PROPERTY VALUATION REPORT

APPENDIX I

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 14,000,000 and structures in parcel of land with a site area Company, the property Chengnan Gas Gate of approximately 32,714.59 was occupied by the (80% interest Station, sq.m. (or about 352,139.85 Zhongyou Zhongtai attributable to No. 143-1 Nan Chuan sq.ft.) upon which various Group for natural gas the Zhongyou Road East, buildings and structures for operation as at the Zhongtai Group: Chengzhong District, natural gas operation, date of valuation. Xining City, completed in about 2002 and 11,200,000) Qinghai Province, 2005 mainly, were erected. The PRC (Please see The total gross floor area Note 4 below) (“GFA”) of the property is
143-1 approximately 3,905.00 sq.m. (or about 42,033.42 sq.ft.). The land use rights of the property have been granted industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Guo Yong (2009) Di No. 104 ( (2009) 104 ) issued by Xining City People’s Government ( ) dated 21 May 2009, the land use rights of the property with a site area of 32,714.59 sq.m. have been granted to for industrial use.
Pursuant to 3 Building Ownership Certificates, Ning Fang Quan Zheng Zhong (Gong) Zi Di Nos. 22009014682(3-1) to 22009014682(3-3) ( 22009014682(3-1) 22009014682(3-3) ) issued by Xining City Real Estate Administration Bureau ( ) dated 7 May 2009, the property with a total GFA of 3,905.00 sq.m. is legally owned by for office, public utilities, education and industrial uses.
As at the date of valuation, no commercial value has been attributed to the buildings and structures other than those in Note 2 of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificates Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and

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PROPERTY VALUATION REPORT

APPENDIX I

d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

– 62 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

						Market Value
					Particulars of	in existing state
	Property			Description and tenure	occupancy	as at 31 August 2009
						RMB
13.	Carparking		Space	The property comprises a	As advised by the	80,000
	No.76, Haitian Yijing carparking space with a gross				Company, the property
	Court,			floor area (“GFA”) of 34.56	was occupied by the	(80% interest
	Chengxi District,			sq.m. (372.00 sq.ft.) in a	Zhongyou Zhongtai	attributable to
	Xining City,			residential development which	Group for car parking	the Zhongyou
	Qinghai Province,			was completed in about 2002.	use as at the date of	Zhongtai Group:
	The PRC				valuation.
		76		The land use rights of the property have been granted for a term expiring on 16 June		64,000
				2054 for composite use.

Notes:

Pursuant to a Xining City Commodity House Sale and Purchase Agreement entered into between and , the property was agreed to be

transferred to the latter at a consideration of RMB80,000.

Pursuant to a Ning Fang Quan Zheng Xi (Gong) Zi Di No.32009018315(1-1) ( 32009018315(1-1) ), issued by Xining City Real Estate Administration Bureau ( ), the property with a GFA of 34.56 sq.m. is legally owned by for storage use.
The status of title in accordance with the information provided by the Company is as follows: Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

14.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures located at the
south portion of Huang
Zhong Road,
Xining City,
Qinghai Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 3,056.88
sq.m. (or about 32,904.26
sq.ft.) upon which various
structures for natural gas
operation, completed in about
2000’s mainly were erected.
The land use rights of the
property have been granted for
a term expiring on 20 May
2059 for industrial use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
900,000
(80% interest
attributable to
the Zhongyou
Zhongtai Group:
720,000)
(Please see Note 2
below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Guo Yong (2009) Di No. 107 ( (2009) 107 ) issued by Xining City People’s Government ( ) dated 21 May 2009, the land use rights of the property with a site area of 3,056.88 sq.m. have been granted to for a term expiring on 20 May 2059 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 15. Land and various The property comprises a As advised by the No Commercial Value structures located at parcel of land with a site area Company, the property Zhangjiawan Village, of approximately 7,192.70 was occupied by the Chengxi District, sq.m. (or about 77,422.25 Zhongyou Zhongtai Xining City, sq.ft.) upon which various Group for natural gas Qinghai Province, structures for natural gas operation as at the The PRC operation, completed in about date of valuation. 2000’s mainly, were erected.

Notes: -

Pursuant to a ( ) entered into between and dated 21 August 2008, the land use rights of the property with a site area of 10.789 mu has been granted to the latter at a consideration of RMB873,909 for public utility use.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:
State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 16. Land and various The property comprises a As advised by the No Commercial Value structures in Xihuayuan parcel of land with a site area Company, the property Village, of approximately 126.67 sq.m. was occupied by the Xibao Town, (or about 1,363.45 sq.ft.) upon Zhongyan Zhongtai Huangzhong County, which various structures for Group for natural gas Xining City, natural gas operation, operation as at the Qinghai Province, completed in about 2000’s date of valuation. The PRC mainly, were erected.

==> picture [87 x 41] intentionally omitted <==

Notes:

Pursuant to a ( ) entered into between and dated 15 December 2008, the land use rights of the property with a site area of 0.19 mu has been granted to the latter.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 17. Land and various The property comprises a As advised by the No Commercial Value structures in Military parcel of land with a site area Company, the property Unit, of approximately 40.0 sq.m. was occupied by the Huangzhong County, (or about 430.56 sq.ft.) upon Zhongyan zhongtai Xining City, which various structures for Group for natural gas Qinghai Province, natural gas operation, operation as at the The PRC completed in about 2000’s date of valuation. mainly, were erected.

Notes:

Pursuant to a ( ) entered into between and dated 15 December 2008, the land use rights of the property with a site area of 0.06 mu has been granted to the latter.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:
State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, effectively owned as to 80% by the Zhongyou Zhongtai Group

– 67 –

PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

									Market Value
								Particulars of	in existing state
	Property						Description and tenure	occupancy	as at 31 August 2009
									RMB
18.	Land,		various buildings				The property comprises a	As advised by the	870,000
	and	structures in Ningda					parcel of land with a site area	Company, the property
	Road		Gas		Station,		of approximately 3,156.10	was occupied by the	(80% interest
	No.	18 Ning Zhang Road,					sq.m. (or about 33,972.26	Zhongyou Zhongtai	attributable to
	Xining City,						sq.ft.) upon which various	Group for natural gas	the Zhongyou
	Qinghai			Province,			buildings and structures for	operation as at date of	Zhongtai Group:
	The PRC						natural gas operation,	valuation.
						18	completed in about 1990’s mainly, were erected.		696,000) (Please see
							The land use rights of the		Note 2 below)
							property have been granted for
							a term expiring on 20 May
							2049 for other commercial
							service use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Ning Guo Yong (2009) Di No. 106 ( (2009) 106 ) issued by Xining City People’s Government ( ) dated 21 May 2009, the land use rights of the property with a site area of 3,156.10 sq.m. have been granted to for a term expiring on 20 May 2049 for other commercial use.
As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title document.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 10,000,000 and structures in a parcel of land with a site area Company, the property liquefied natural gas of approximately 34,993.15 was occupied by the (90% interest station located at sq.m. (or about 376,666.27 Zhongyou Zhongtai attributable to No. 33 Jin Kai Road, sq.ft.) upon which various Group for natural gas the Zhongyou Chengdong Economic buildings and ancillary operation as at date of Zhongtai Group: and Technological structures for natural gas, valuation. Development Zone, completed in 2008, were 9,000,000) Xining City, erected. Qinghai Province, (Please see The PRC The total gross floor area Note 3 below) without relevant title document (“GFA”) of the property is approximately
33 1,197.06 sq.m. (or about 12,885.15 sq.ft.). The land use rights of the property have been granted for a term expiring on 7 December 2056 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Xi Jing Kai Guo Yong (2007) Di No. II-048 ( (2007) II-048 ) issued by Qinghai Province People’s Government ( ), the land use rights of the property with a site area of 34,993.15 sq.m. have been granted to for a term expiring on 7 December 2056 for industrial use.
Pursuant to a certificate issued by Xining City Real Estate Administration Bureau dated 11 June 2009, the Building Ownership Certificate of the property with a total GFA of 1,197.06 sq.m. is under application.
As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;

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PROPERTY VALUATION REPORT

APPENDIX I

c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 90% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 20. Unit 3152, The property comprises a As advised by the No Commercial Entrance No. 3, residential unit in a 16-storey Company, the property Value Block A, building of a residential was occupied by the No. 7 Kun Lun Road, development which was Zhongyou Zhongtai Xining City, completed in about 2002. Group as staff quarter Qinghai Province, as at the date of The PRC The gross floor area (“GFA”) valuation. of the property without 7 relevant title document is A 3 3153 approximately 88.65 sq.m. (or about 954.23 sq.ft.).

Notes:

Pursuant to a Commodity Housing Sale and Purchase Contract ( ), GF-2000-0171 entered into between and dated 20 April 2004, the property with a GFA of 88.65 sq.m. has been agreed to be transferred to latter for residential use.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificates No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 90% by the Zhongyou Zhongtai Group.

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PROPERTY VALUATION REPORT

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the No Commercial and structures in Ganhe parcel of land with a site area Company, the property Value Industrial Area, of approximately 10,000.05 was occupied by the Xining Economic and sq.m. (or about 107,640.54 Zhongyou Zhongtai Technological sq.ft.) upon which various Group for natural gas Development Zone, buildings and structures for operation as at the Xining City, natural gas operation, date of valuation. Qinghai Province, completed in about 2000’s, The PRC were erected.

==> picture [89 x 42] intentionally omitted <==

Notes:

Pursuant to a issued by dated 12 December 2007, has been approved to build an industrial complex on the land parcel of the property with a site area of 15 mu.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 40% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Lands, various buildings The property comprises 2 As advised by the No Commercial and structures in 2 Gas parcels of land with a total Company, the property Value Transportation Station site area of approximately was occupied by the located at 171.78 sq.m. (or about Zhongyou Zhongtai Hongyahe Village, 1,849.04 sq.ft.) upon which Group for natural gas Shangxinzhuang Town, various buildings and operation as at date of Huangzhong County, structures for natural gas valuation. Xining City, operation, completed in about Qinghai Province, 2000’s, were erected. The PRC The land use rights of the property have been allocated by way of administrative allocation for gas transportation station use.

Notes:

Pursuant to 2 State-owned Land Use Rights Certificates, Huang Guo Yong (2008) Di Nos. 505 and 506 ( (2008) 505 506 ) both issued by Huangzhou County People’s Government ( ) dated 18 September 2008, the land use rights of the property with a total site area of 171.78 sq.m. have been allocated to by the way of administrative allocation as gas transportation station.
As at the date of valuation, no commercial value has been attributed to the property as the land use rights of the property was allocated by way of administrative allocation.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificates Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the land use rights of the property have been allocated by way of administrative allocation and the property can be transferred upon the settlement of land costs.
As advised by the Company, is effectively owned as to 40% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Lands, various buildings The property comprises 2 As advised by the 2,320,000 and structures in Qinghai parcels of land with a total Company, the property Bio-Technological Park, site area of approximately was occupied by the (60% interest Xining City, 7,667.84 sq.m. (or about Zhongyou Zhongtai attributable to Qinghai Province, 82,536.63 sq.ft.) upon which Group for natural gas the Zhongyou The PRC various buildings and ancillary operation as at the Zhongtai Group: structures for natural gas date of valuation. operation, completed in about 1,392,000) 2000’s, were erected. (Please see
The land use rights of portion Note 3 below) of land of the property with a site area of 3,667.45 sq.m. have been granted for a term expiring on 27 December 2056 for industrial use. The land use rights of portion of land of the property with a site area of 4,000.39 sq.m. have been granted for a term expiring on 12 June 2047 for commercial services use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Qing Sheng Guo Yong (2009) Di No. 105 ( (2009) 105 ) issued by Qinghai Province People’s government ( ) dated 7 July 2009, the land use rights of the property with a site area of 3,667.45 sq.m. have been granted to for a term expiring on 27 December 2056 for industrial use.
Pursuant to a State-owned Land Use Rights Certificate Qing Sheng Guo Yong (2009) Di No. 106 ( (2009) 106 ) issued by Qinghai Province People’s Government, the land use rights of the property with a site area of 4,000.39 sq.m. have been granted to for a term expiring on 12 June 2047 for commercial services use.
As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificates Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;

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c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

24.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land, various buildings
and structures in a gas
station located at
Gucheng Village,
Weiyuan Town,
Huzhu Tu Autonomous
County,
Haidong Region,
The PRC
The property comprises a
parcel of land with a site area
of approximately 6,362.68
sq.m. (or about 68,487.89
sq.ft.) upon which various
buildings and structures for
natural gas operation
completed in about 2000’s
were erected.
The land use rights of the
property have been granted for
a term expiring on 7 February
2047 for commercial use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
550,000
(60% interest
attributable to
the Group:
330,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Hu Guo Yong (2009) Di No. 037 ( (2009) 037 ) issued by Huzhu County People’s Government ( ), the land use rights of the property with a site area of 6,362.68 sq.m. have been granted to for a term expiring on 7 February 2047 for commercial use.
As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 7,500,000 and structures in a gas parcel of land with a site area Company, the property station located at of approximately 7,396.58 was occupied by the (100% interest No. 27 Jin Kai Road, sq.m. (or about 79,616.79 Zhongyou Zhongtai attributable to Chengdong Economic sq.ft.) upon which various Group for natural gas the Group: and Technological buildings and structures for operation as at the Development Zone, natural gas operation, date of valuation. 7,500,000) Xining City, completed in about 2005, were Qinghai Province, erected. (Please see The PRC Note 3 below) The total gross floor area (“GFA”) of the property with relevant title document is
27 approximately 2,472.18 sq.m. (or about 26,610.55 sq.ft.). The land use rights of the property have been granted for a term expiring on 8 November 2054 for public utilities use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Xi Jing Kai Guo Yong (2005) Di No. II-014 ( (2005) II-014 ) issued by Qinghai Province People’s Government ( ) dated 8 October 2005, the land use rights of the property with a site area of 7,396.58 sq.m. have been granted to for a term expiring on 8 November 2054 for public utilities use.
Pursuant to a Building Ownership Certificate, Ning Fang Quan Zheng Dong (Gong) Zi Di No. 12008001645(1-1) ( 12008001645(1-1) ) issued by Xining City Real Estate Administration Bureau ( ) dated 23 January 2008, the property with a total GFA of 2,472.18 sq.m. is legally owned by for office, storage and public utilities uses.
As at the date of valuation, no commercial value has been attributed to the buildings and structures other than those in Note 2) of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:
State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes
The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;

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c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is wholly owned by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

26.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Maojiatai
Village,
Tianjiazhai Town,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 68.67 sq.m.
(or about 739.16 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2000’s,
were erected.
The land use rights of the
property have been granted for
a term expiring on 18 March
2045 for gas distribution gate
station use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
8,000
(100% interest
attributable to
the Group:
8,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Huang Guo Yong (2009) Di No. 172 ( (2009) 172 ) issued by Huangzhong County People’s Government ( ) dated 5 June 2009, the land use rights of the property with a site area of 68.67 sq.m. have been granted to for a term expiring on 18 March 2045 as gas distribution gate station.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is wholly owned by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

27.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in
Shigou Village,
Tianjiazhai Town,
Huangzhong County,
Xining City,
Qinghai Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 16.0 sq.m.
(or about 172.22 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2000’s,
were erected.
The land use rights of the
property have been granted for
a term expiring on 18 March
2045 for gas distribution gate
station use.
As advised by the
Company, the property
was occupied by the
Zhongyon Zhongtai
Group for natural gas
operation as at the
date of valuation.
2,000
(100% interest
attributable to
the Group:
2,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Huang Guo Yong (2009) Di No. 173 ( (2009) 173 ) issued by Huangzhong County People’s Government ( ) dated 5 June 2009, the land use rights of the property with a site area of 16.0 sq.m. have been granted to for a term expiring on 18 March 2045 as gas distribution gate station.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is wholly owned by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land and various The property comprises a As advised by the No Commercial structures parcel of land with a site area Company, the property Value located at of approximately 3,542.08 was occupied by the Xi Village, sq.m. (or about 38,126.95 Zhongyou Zhongtai Pingan County sq.ft.) upon which various Group for natural gas Haidong Region, structures for natural gas operation as at the Qinghai Province, operation, completed in about date of valuation. The PRC 2000’s, were erected.

Notes:

Pursuant to a certificate issued by Pingan County Land Resources Bureau ( ) dated 5 May 2009, the land use rights of the property with a site area of 5.3131 mu has been agreed to be granted to .
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document of the property is under application and the property cannot be transferred subject to the grant of land use rights certificate.
As advised by the Company, is effectively owned as to 51% by the Zhongyou Zhongtai Group,

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the No Commercial and structures in a gas parcel of land with a site area Company, the property Value station located at of approximately 4,733.33 was occupied by the Honghexian Village, sq.m. (or about 50,949.56 Group for natural gas Qiaotou Town, sq.ft.) upon which various operation as at the Datong Hui and Tu buildings and structures for date of valuation. Autonomous County, natural gas operation, Xining City, completed in about 2000’s Qinghai Province, were erected. The PRC

==> picture [73 x 52] intentionally omitted <==

Notes:

Pursuant to a certificate issued by Datong Hui Zu Tu Zu Autonomous County Land and Resources Bureau ( ) dated 4 June 2009, the State-owned Land Use Rights Certificate of the property with a site area of 4,733.33 sq.m. is under application.
As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 12,000,000 and structures in an parcel of land with a site area Company, the property industrial complex of approximately 49,412.209 was occupied by the (60% interest located in sq.m. (or about 531,873.02 Zhongyou Zhongtai attributable to Ceramics Technology & sq.ft.) upon which various Group for natural gas the Zhongyou Industry Zone, buildings and structures for operation as at the Zhongtai Group: Liling City, natural gas operation, date of valuation. Hunan Province, completed in about 2008 7,200,000) The PRC mainly, were erected. (Please see
The total gross floor area Note 3 below) without relevant title document (“GFA”) of the property is approximately 4,371.97 sq.m. (or about 47,059.89 sq.ft.). The land use rights of the property have been granted for a term expiring on 12 August 2058 for industrial use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2008) Di No. 9199 ( (2008) 9199 ) issued by Liling City People’s Government ( ) dated 19 August 2008, the land use rights of the property with a site area of 49,412.209 sq.m. have been granted to for a term expiring on 12 August 2058 for industrial use.
Pursuant to a Liling City Real Estate Surveying Report No. 20090625001 ( 20090625001) issued by dated 25 June 2009, the total GFA of the

property is 4,371.97 sq.m.

As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and

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d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

31.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Liling Main
Road Regulation Station,
Dongmentang Village,
Yangsan Town,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 139 sq.m.
(or about 1,496.20 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly, were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for nautral gas
operation as at the
date of valuation.
30,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
18,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8479277 ( (2007) 8479277 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 139 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

32.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Dong An
Regulation Station,
Dongan Village,
Lailongmen Town,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 145.9 sq.m.
(or about 1,570.47 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly, were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
30,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
18,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8469276 ( (2007) 8469276 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 145.9 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

33.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Shutang
Village Regulation
Station,
Shutang Village,
Wangxian Town,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 133 sq.m.
(or about 1,431.61 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly, were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for nautral gas
operation as at the
date of valuation.
20,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
12,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8529281 ( (2007) 8529281 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 133 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

34.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Li Zi Tang
Regulation Station,
Dongbao Village,
Dongbao Township,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 123 sq.m.
(or about 1,323.97 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
20,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
12,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8489278 ( (2007) 8489278 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 123 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

35.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Lengshui
Village Regulation
Station,
Lengshui Village,
Pukou Town,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 213 sq.m.
(or about 2,292.73 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
40,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
24,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8499279 ( (2007) 8499279 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 213 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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36.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Yang Dong
Regulation Station,
Yangdong Village,
Yangsan Town office,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 148 sq.m.
(or about 1,593.07 sq.ft.) upon
which various structures for
natural gas operation were
mainly erected in about 2008.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
40,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
24,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8539282 ( (2007) 8539282 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 148 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 37. Various structures in The property comprises As advised by the No Commercial Value Dong An Valve Chamber, various structures for natural Company, the property Dongan Village, gas operation, completed in was occupied by the Lailongmen Town, about 2008, were erected. Zhongyou Zhongtai Liling City, Group for natural gas Hunan Province, operation as at the The PRC date of valuation.

==> picture [65 x 41] intentionally omitted <==

Notes:

As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title documents.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, the property was occupied by , which is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 38. Various structures in a The property comprises As advised by the No Commercial Value Regulation Station various structures for natural Company, the property located in gas operation completed in was occupied by the Ceramics Technology & about 2008, were erected. Zhongyou Zhongtai Industry Zone, Group for natural gas Liling City, operation as at the Hunan Province, date of valuation. The PRC

==> picture [56 x 42] intentionally omitted <==

Notes:

As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title documents.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, the property was occupied by , which is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

39.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land and various
structures in Sunjiawan
Regulation Station
located in
Sunjiawan Village,
Sunjiawan Township,
Liling City,
Hunan Province,
The PRC
The property comprises a
parcel of land with a site area
of approximately 117 sq.m.
(or about 1,259.39 sq.ft.) upon
which various structures for
natural gas operation,
completed in about 2008
mainly, were erected.
The land use rights of the
property have been granted for
a term expiring on 5
December 2057 for industrial
use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
30,000
(60% interest
attributable to
the Zhongyou
Zhongtai Group:
18,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Li Guo Yong (2007) Di No. 8519280 ( (2007) 8519280 ) issued by Liling City People’s Government ( ) dated 14 December 2007, the land use rights of the property with a site area of 117 sq.m. have been granted to for a term expiring on 5 December 2057 for industrial use.
As at the date of valuation, no commercial value has been attributed to the buildings and structures of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, the property was occupied by , which is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 40. Various buildings and The property comprises As advised by the No Commercial Value structures in Yang San various buildings and Company, the property Shi Gas Station, structures for natural gas was occupied by the No. 20 Hong Xin Lane, operation which were mainly Zhongyou Zhongtai Yang San Shi Road, completed in about 2000’s. Group for natural gas Liling City, operation as at the Hunan Province, The total gross floor area date of valuation. The PRC (“GFA”) of the property is approximately 862.53 sq.m. (or about 9,284.27 sq.ft.).

Notes:

Pursuant to a Tenancy Contract ( ) (“Tenancy Contract”) entered into between (“ ”) and (“ ”) dated 1 November 1999, agreed to lease the land parcel which the property was erected on with a site area of approximately 22.9 mu to for a term of 20 years at a total rent of RMB1,900,000 for liquefied petroleum gas station use.
Pursuant to 3 Building Ownership Certificates, Li Fang Quan Zheng Yang San Ban Zi Di Nos. 00003425 to 00003427 ( 0000325 00003427 ) all issued by dated 20 June 2000, the buildings of the property with a total GFA of 862.53 sq.m. are legally owned by .
Pursuant to a Assets Acquisition Contract entered into between , and dated 17 January 2004, agreed to dispose of

the buildings and structures of the property to .

Pursuant to a Contract entered into between , and dated 30 January 2004, all three parties agreed that will take over all the rights and responsibilities of as specified in the Tenancy Contract.
As advised by the Company, rent of the land of the property of RMB1,900,000 as specified in Note 1 has been settled in full.
As at the date of valuation, no commercial value has been attributed to the property due to the non-assignability of the property.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificates Yes

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.

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As advised by the Company, is effectively owned as to 60% by the Zhongyou Zhongtai Group.

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Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Shop No. 11, The property comprises a As advised by the 6,800,000 Blocks 12-13, commercial unit on 1[st] and 2[nd] Company, the property Bin Jiang Garden, levels of a commercial/ was occupied by the (23.65% interest No. 168 Shi Mao Road, residential development Zhongyou Zhongtai attributable to 5[th] Hong Gu Road, completed in about 2008. Group for office use the Zhongyou Honggutan New District, as at the date of Zhongtai Group: Nanchang City, The gross floor area (“GFA”) valuation. Jiangxi Province, of the property is 1,608,200) The PRC approximately 948.1 sq.m. (or about 10,205.35 sq.ft.). The land use rights of the
168 property have been granted for 12-13 a term commencing on 1
11 September 2002 and expiring on 1 September 2042 for commercial use.

Notes:

Pursuant to a Nanchang City Commodity House Sale and Purchase Contract No. 1000099345 ( 1000099345) (“Contract”) entered into between (the “Vendor”) and (the “Purchaser”) dated 21 May 2008, the

Vendor agreed to transfer the property with a GFA of 948.1 sq.m. to the Purchaser at a consideration of RMB6,207,456.

Pursuant to the Contract, land use rights of the land parcel of the development with a site area of 116,934.46 sq.m. have been granted to the Vendor for a term commencing on 1 September 2002 and expiring on 1 September 2042 for commercial use.
Pursuant to a Building Ownership Certificate, Hong Fang Quan Zheng Hong Zi Di No. 408131 ( 408131 ) issued by dated 27 October 2008, the property with a GFA of 948.1 sq.m. are legally owned by for non-residential use.
The status of title in accordance with the information provided by the Company is as follows:

Commodity House Sale and Purchase Contract Yes State-owned Land Use Rights Certificate No Building Ownership Certificate Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.

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As advised by the Company, is effectively owned as to 23.65% by the Zhongyou Zhongtai Group.

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Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Flat 501, 5[th] Floor, The property comprises a As advised by the 400,000 Entrance No. 3, residential unit on 5[th] Floor of Company, the property Block 35, a low-rise building in a was vacant as at the (80% interest Li Jing New Garden, residential development date of valuation. attributable to Binzhou City, completed in about 2006. the Zhongyou Shandong Province, Zhongtai Group: The PRC The gross floor area (“GFA”) of the property is 320,000) approximately 124.28 sq.m.
35 (or about 1,337.75 sq.ft.).
3 5 501 The land use rights of the property have been granted for a term commencing on 29 July 2002 and expiring on 29 July 2072.

Notes:

Pursuant to a Real Estate Sale and Purchase Contract ( ) (Bin) Fang Di Chan Mai Mai Qi Zi No. 36135 (( ) 36135 ) entered into between (the “Vendor”) and (the “Purchaser”) dated 16 August 2006, the

Vendor agreed to transfer the property with a GFA of 124.28 sq.m. to the Purchaser at a consideration of RMB274,600.

Pursuant to a Building Ownership Certificate, Bin Zhou Shi Fang Quan Zheng Kai Fa Qu Zi Di No. 09-09965 ( 09-09965 ) issued by dated 21 August 2006, the property with a GFA of 124.28 sq.m. are legally owned by for a term of land use rights commencing on 29 July 2002 and expiring on 29 July 2072 for residential use.
The status of title in accordance with the information provided by the Company is as follows:

Real Estate Sale and Purchase Contract Yes State-owned Land Use Rights Certificate No Building Ownership Certificate Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Flat 1501, 15[th] Floor, The property comprises a As advised by the 370,000 Entrance No. 4, Block 8, residential unit on 15[th] Floor Company, the property Zhong Hai Garden, of a middle-rise building in a was vacant as at the (80% interest No. 698 residential development date of valuation. attributable to 16[th] Bohai Road, completed in about 2008. the Zhongyou Binzhou City, Zhongtai Group: Shandong Province, The gross floor area (“GFA”) The PRC of the property is 296,000) approximately 110.19 sq.m. (or about 1,186.09 sq.ft.).
698
8 The land use rights of the
4 15 property have been granted for 1501 a term commencing on 25 December 2003 and expiring on 25 December 2073.

Notes:

Pursuant to a Real Estate Sale and Purchase Contract ( ) entered into between (the “Vendor”) and (the “Purchaser”), the Vendor

agreed to transfer the property with a GFA of 110.19 sq.m. to the Purchaser at a consideration of RMB339,077.

Pursuant to a Building Ownership Certificate, Bin Zhou Shi Fang Quan Zheng Zhong Qu Zi Di No. 2009050442 ( 2009050442 ) issued by dated 14 May 2009, the property with a GFA of 110.19 sq.m. is legally owned by for a term of granted land use rights commencing on 25 December 2003 and expiring on 25 December 2073 for residential use.
The status of title in accordance with the information provided by the Company is as follows:

Real Estate Sale and Purchase Contract Yes State-owned Land Use Rights Certificate No Building Ownership Certificate Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 44. Flat 401, The property comprises a As advised by the No Commercial Value Entrance No. 3, residential unit of a low-rise Company, the property Block 39, building in a residential was vacant as at the Ju Long Garden, development completed in date of valuation. Binzhou City, about 2009. Shandong Province, The PRC As advised by the Company, the gross floor area (“GFA”) of the property is approximately 87.03 sq.m. (or 39 3 about 936.79 sq.ft.). 401

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 45. Flat 102, The property comprises a As advised by the No Commercial Value Entrance No. 2, Block 9, residential unit of a low-rise Company, the property Ju Long Garden, building in a residential was vacant as at the Binzhou City, development completed in date of valuation. Shandong Province, about 2009. The PRC As advised by the Company, the gross floor area (“GFA”) 9 2 of the property is 102 approximately 122 sq.m. (or about 1,313.21 sq.ft.).

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 46. Flat 302, The property comprises a As advised by the No Commercial Value Entrance No. 3, residential unit of a low-rise Company, the property Block 51, building in a residential was vacant as at the Ju Long Garden, development completed in date of valuation. Binzhou City, about 2009. Shandong Province, The PRC As advised by the Company, the gross floor area (“GFA”) of the property is 51 3 approximately 87.03 sq.m. (or 302 about 936.79 sq.ft.).

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 47. An office building and The property comprises an As advised by the No Commercial Value various structures in office building and various Company, the property Cheng Xi Gas Gate structures which were was occupied by the Station, No. 268 8[th] completed in about 2005. Zhongyou Zhongtai Huang He Road, Group for natural gas Binzhou City, As advised by the Company, operation as at the Shandong Province, the total gross floor area date of valuation. The PRC (“GFA”) of the property is approximately 369.89 sq.m. (or about 3,981.5 sq.ft.). 268

Notes:

Pursuant to a Land Lease Contract ( ) entered into between (“ ”) as landlord and (“ ”) as tenant dated 1 December 2004, agreed to lease the land use rights of the property with a site area of

approximately 8.38 mu sq.m. for a term of 20 years commencing on 1 January 2005 and expiring on 31 December 2025 at an annual rent of RMB50,000 exclusive of relevant land use tax and water and electricity charges.

As advised by the Company, the property were developed by
in about 2005.
Pursuant to a Merge and Reform Agreement ( ) entered into between and dated 22 December 2007, and have

been merged and reformed as a new company named .

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Property

Various structures in a Gas Distribution Station located at 8[th] Huang He Road, Binzhou City, Shandong Province, The PRC

Market Value Particulars of in existing state Description and tenure occupancy as at 31 August 2009 RMB The property comprises As advised by the No Commercial Value various structures for natural Company, the property gas operation which were was occupied by the completed in about 2007. Zhongyou Zhongtai Group for natural gas operation as at the date of valuation.

==> picture [72 x 41] intentionally omitted <==

Notes:

Pursuant to a Land and Housing Lease Contract ( ) entered into between (“ ”) as landlord and (“ ”) as tenant dated 9

August 2007, agreed to lease the land parcel which the property was erected on with a site area of 845 sq.m. for a term of 10 years commencing on 10 August 2007 and expiring on 10 August 2017 at an annual rent of RMB1,300 exclusive of water and electricity charges for gas distribution station use.

As advised by the Company, the structures of the property were erected by in about 2007.
Pursuant to a Merge and Reform Agreement ( ) entered into between and dated 22 December 2007, and

have been merged and reformed as a new company named .

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Various buildings and The property comprises As advised by the No Commercial Value structures in Hui Min various buildings and Company, the property Gas Filling Station structures for natural gas was occupied by the Da Ji Road, operation which were Zhongyou Zhongtai Huimin County, completed in about 2008. Group for natural gas Binzhou City, operation as at the Shandong Province, As advised by the Company, date of valuation. The PRC the total gross floor area (“GFA”) of the property is approximately 798 sq.m. (or about 8,589.67 sq.ft.).

Notes:

Pursuant to a Contract ( ) entered into between (“ ”) and (“ ”) dated 28 April 2007, agreed to lease the

land parcel which the property was erected on with a site area of 11.15 mu for a term of 50 years at an annual rent which is equivalent to the cost of 6,690 Kg wheat of the year.

As advised by the Company, the property with a total GFA of approximately 798 sq.m. were developed by in about 2008.
As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 99% by the Zhongyou Zhongtai Group.

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Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 50. Various structures in a The property comprises As advised by the No Commercial Value Gas Distribution Station various industrial buildings Company, the property located at and structures for natural gas was occupied by the Da Ji Road, operation which were Zhongyou Zhongtai Huimin County, completed in aobut 2000’s. Group for natural gas Binzhou City, operation as at the Shandong Province, date of valuation. The PRC

==> picture [70 x 41] intentionally omitted <==

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows: State-owned Land Use Rights Certificate No Building Ownership Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 99% by the Zhongyou Zhongtai Group.

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Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. Land, various buildings The property comprises a As advised by the 480,000 and structures in a Gas parcel of land with a site area Company, the property Gate Station of approximately 3,051 sq.m. was occupied by (98% interest located at (or about 32,840.96 sq.ft.) Zhongyou Zhongtai attributable to North of Xin Xing East upon which various buildings Group as a gas gate the Zhongyou Road, and structures for natural gas station as at the date Zhongtai Group: Development Zone, operation, completed in about of valuation. Qingyun County, 2005, were erected. 470,400) Dezhou City, Shandong Province, The total gross floor area (Please see The PRC (“GFA”) of the property with Note 4 below) relevant title document is approximately 189.8 sq.m. (or about 2,043.01 sq.ft.). The land use rights of the property have been granted for a term expiring on 31 January 2055 for composite use.

Notes:

Pursuant to a Land Occupancy Agreement ( ) entered into between Qingyun County People’s Government ( ) and (“ ”) dated 15 April 2003, the former agreed to grant the later the land use rights of the property with a site area of 3,051 sq.m. at a land premium of RMB115,000.
Pursuant to a State-owned Land Use Rights Certificate, Qing Tu Guo Yong (2005) Di No. 205 ( (2005) 205 ), issued by Qingyun County People’s Government dated 14 December 2005, the land use rights of the property with a site area of 3,051 sq.m. have been granted to for a term expiring on 31 January 2055 for composite use.
Pursuant to a Building Ownership Certificate, Fang Quan Zheng Lu Qing Zi Di No. 6341 ( 6341 ), issued by Qingyun County People’s Government dated 23 November 2005, the property with a total GFA of 189.8 sq.m. is legally owned by .
As at the date of valuation, we have attributed no commercial value to the buildings and structures other than those in Note 3 of the property without relevant title documents.
The status of title in accordance with the information provided by the Company is as follows:

Land Occupancy Agreement Yes State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property;
b. The property is not subject to mortgage, attachment or any other material encumbrances;

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APPENDIX I

c. The existing use of the property is in compliance with regular regulations; and
d. The property may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 98% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 52. Land, various buildings As advised by the Company, As advised by the No Commercial Value and structures in a gas the property comprises a Company, the property station located at parcel of land with a site area was occupied by the Zhangzhuang Village, of approximately 14,330 sq.m. Zhongyou Zhongtai Huoli Town, (or about 154,248.12 sq.ft.) Group for natural gas Huashan District, upon which various buildings operation as at the Binzhou City, and structures natural gas date of valuation. Shandong Province, operation, completed in about The PRC 2007 were erected. As advised by the Company, the total gross floor area (“GFA”) of the property is approximately 2,490 sq.m. (or about 26,802.36 sq.ft.).

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 40% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

53.

Property
Description and tenure
Particulars of
occupancy
Market Value
in existing state
as at 31 August 2009
RMB
Land, buildings and
various structures in Ru
Gao Port LNG Station,
14th Group,
Zhongxinsha Village,
Rugao Port,
Nantong City,
Jiangsu Province,
The PRC
The property comprises 2
parcels of land with a total
site area of approximately
13,566.7345 sq.m. (or about
146,032.33 sq.ft.) upon which
various buildings and
structures for natural gas
operation, completed in about
2008, were erected.
As total advised by the
Company, the gross floor area
(“GFA”) of the property
without relevant title
document is approximately
767.1 sq.m. (or about 8,257.06
sq.ft.).
The land use rights of the
property have been granted for
a term expiring on 21 October
2058 for public utilities use.
As advised by the
Company, the property
was occupied by the
Zhongyou Zhongtai
Group for natural gas
operation as at the
date of valuation.
1,430,000
(40% interest
attributable to
the Zhongyou
Zhongtai Group:
572,000)
(Please see
Note 2 below)

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Gao Tu Guo Yong (2008) Di No. 1344 ( (2008) 1344 ), issued by Rugao City People’s Government ( ) (“ ”) dated 30 October 2008, the land use rights of the property with a site area of 6,534 sq.m. have been granted to for a term expiring on 21 October 2058 for public utilities use.
As advised by the Company, the site area of the remaining portion of the land parcel without relevant title document is about 7,032.7345 sq.m.
As at the date of valuation, we have attributed no commercial value to the land detailed in Note 2 and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

  - Yes

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 40% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

==> picture [426 x 294] intentionally omitted <==

----- Start of picture text -----

||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Market|Value|
|Particulars|of|in|existing|state|
|Property|Description|and|tenure|occupancy|as|at|31|August|2009|
|RMB|
|54.|Land,|various|buildings|The|property|comprises|a|As|advised|by|the|2,590,000|
|and|structures|in|a|gas|parcel|of|land|with|a|site|area|Company,|the|property|
|gate|station|located|at|of|approximately|17,638.5|was|occupied|by|the|(100%|interest|
|Dingji|Village,|sq.m.|(or|about|189,860.81|Zhongyou|Zhongtai|attributable|to|
|Dainan|Town,|sq.ft.)|upon|which|various|Group|for|natural|gas|the|Zhongyou|
|Xinghua|City,|buildings|and|structures|for|operation|as|at|the|Zhongtai|Group:|
|Taizhou,|natural|gas|operation,|date|of|valuation.|
|Jiangsu|Province,|completed|in|about|2009,|were|2,590,000)|
|The|PRC|erected.|
|(Please|see|
|As|advised|by|the|Company,|Note|2|below)|
|the|total|gross|floor|area|
|(“GFA”)|of|the|property|
|without|relevant|title|
|document|is|approximately|
|482.72|sq.m.|(or|about|5,196|
|sq.ft.).|
|The|land|use|rights|of|the|
|property|have|been|granted|for|
|a|term|expiring|on|27|October|
|2058|for|public|utilities|use.|

----- End of picture text -----

Notes:

Pursuant to a State-owned Land Use Rights Certificate, Xing Guo Yong (2008) Di No. 006062 ( (2008) 006062 ), issued by Xinghua City People’s Government ( ) (“ ”), the land use rights of the property with a site area of 17,638.5 sq.m. have been granted to for a term expiring on 27 October 2058 for public utilities use.
As at the date of valuation, we have attributed no commercial value to the buildings and structures of the property without relevant title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings and structures without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings and structures without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings and structures without relevant title documents may be freely disposed of in the open market.

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PROPERTY VALUATION REPORT

APPENDIX I

As advised by the Company, is effectively owned as to 100% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 55. Various buildings and The property comprises As advised by the No Commercial Value structures in a LPG various buildings and Company, the property filling station located at structures for natural gas was occupied by the Ren Min East Road, operation which were Zhongyou Zhongtai Dainan Town, completed in about 2000’s. Group for natural gas Xinghua City, operation as at the Taizhou, As advised by the Company, date of valuation. Jiangsu Province, the total gross floor area The PRC (“GFA”) of the property without relevant title document is approximately 560.19 sq.m. (or about 6,029.89 sq.ft.).

Notes:

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 100% by the Zhongyou Zhongtai Group.

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APPENDIX I

VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 56. Various buildings and The property comprises As advised by the No Commercial Value structures in Tie Pu LNG various buildings and Company, the property Station, structures for natural gas was occupied by the Kengmen Village, operation which were Zhongyou Zhongtai Tiepu Town, completed in about 2009. Group for natural gas Chaoan County, operation as at the Chaozhou City, As advised by the Company, date of valuation. Guangdong Province, the total gross floor area The PRC (“GFA”) of the property without relevant title document is approximately 930.6 sq.m. (or about 10,016.98 sq.ft.).

Notes:

Pursuant to a Land Requisition Agreement ( ) entered into between (“ ”) and (“ ”) dated 21 July 2008,

agreed a land parcel with a site area of 33,036.17 sq.m could be occupied by for

public utilities use.

As at the date of valuation, no commercial value has been attributed to property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 100% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value Particulars of in existing state Property Description and tenure occupancy as at 31 August 2009 RMB 57. Various buildings and The property comprises As advised by the No Commercial Value structures in Xian Quan various buildings and Company, the property Garden Gas Station, structures for natural gas was occupied by the Xian Shui Central Road, operation which were Zhongyou Zhongtai Yingcheng Town, completed in 2001. Group for natural gas Yingde City, operation as at the Guangdong Province, The total gross floor area date of valuation. The PRC (“GFA”) of the property without relevant title document is approximately 326 sq.m. (or about 3,509 sq.ft.).

Notes:

Pursuant to a Real Estate Title Certificate ( ), Yue Fang Di Zheng Zi Di No. C0247384 ( C0247384 ) issued by Guangdong Province People’s Government ( ) dated 23 April 2002, the property with a GFA of 326 sq.m. is legally owned by (“ ”) for office use.
Pursuant to a Shareholding Transfer Agreement ( ) entered into between , , , (referred to as

“Party A” – holding 100% shares of ) and the Zhongyou Zhongtai Group, has been acquired by the Zhongyou Zhongtai Group at a consideration of RMB600,000.

As at the date of valuation, no commercial value has been attributed to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate No Real Estate Title Certificate No

The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 100% by the Zhongyou Zhongtai Group,

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. An office/residential The property comprises a As advised by the No Commercial Value development located at parcel of land with a site area Company the property No. 719 of approximately 21,933.44 was under 22[nd] Bo Hai Road, sq.m. (or about 236,091.58 development as at the Binzhou City, sq.ft.) upon which an office/ date of valuation. Shandong Province, residential developemnt, The PRC completed in 2009, were erected.
719 As advised by the Company,
/ the total gross floor area (“GFA”) of the property is approximately 4,941.1 sq.m. (or about 53,186 sq.ft.).

Notes:

Pursuant to a Project Contract ( ) entered into between (“Part A”) and (“Part B”) dated 22 February 2008,

Part A agreed to grant Part B the land use rights of the property with a site area of 32.9 mu for a term of 50 years for composite use. Both parties agreed that the land use rights of the property could not be transferred within 10 years.

As at the date of valuation, we have attributed no commercial value to the property due to the absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:
State-owned Land Use Rights Certificate No
The opinion of the PRC legal adviser to the Company states that the relevant title document has not been obtained and the property cannot be freely transferred in the open market.
As advised by the Company, is effectively owned as to 80% by the Zhongyou Zhongtai Group.

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VALUATION CERTIFICATE

Market Value
Particulars of in existing state
Property Description and tenure occupancy as at 31 August 2009 RMB
1. An office The property comprises a As advised by the 4,500,000 development located at parcel of land with a site area Company the property No. 10 Ming Hao Road, of approximately 5,339.18 was vacant as at the (100% interest Cheng Nan New District, sq.m. (or about 57,470.93 date of valuation. attributable to Xining City, sq.ft.) upon which an office the Zhongyou Qinghai Province, development, completed in Zhongtai Group: The PRC 2009, were erected. 4,500,000)
The total gross floor area
10 (“GFA”) of the property without relevant title document is approximately 1,534.6 sq.m. (or about 16,518.43 sq.ft.). The land use rights of the property have been granted for a term expiring on 20 October 2047 for commerical / office uses.

Notes: -

Pursuant to a State-owned Land Use Rights Certificate, Ning Nan Guo Yong (2008) Di No. 037 ( 2008 037 ) issued by Xining City People’s Government dated 31 March 2008, the land use rights of the property with a site area of 5,339.18 sq.m. have been granted to for a term expiring on 20 October 2047 for commercial/office uses.
As at the date of valuation, no commercial value has been attributed to the buildings of the property due to absence of proper title document.
The status of title in accordance with the information provided by the Company is as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate No

The opinion of the PRC legal adviser to the Company contains, inter alia, the following:
a. is in possession of a proper legal title to the property excluding the buildings without relevant title documents;
b. The property is not subject to mortgage, attachment or any other material encumbrances;
c. The existing use of the property excluding the buildings without relevant title documents is in compliance with regular regulations; and
d. The property excluding the buildings without relevant title documents may be freely disposed of in the open market.
As advised by the Company, is effectively owned as to 100% by the Zhongyou Zhongtai Group.

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APPENDIX II

PROPOSED ACQUISITION OF EQUITY INTEREST IN CHINA OIL AND GAS COMPANY LIMITED BY CNPC (HONG KONG) LIMITED ZHONG LIAN PING BAO ZI [2009] NO. 256

To: CNPC (Hong Kong) Limited

China United Assets Appraisal Co., Ltd. was engaged by the Company to conduct a valuation on assets and liabilities of China Oil and Gas Co. Limited ( ) in accordance with the laws, rules and regulations and valuation standards on assets valuation of China and the generally accepted assets valuation methods under the principles of independence, objectivism and scientism and the relevant economic principles, including the principle of changes in property rights and the principle of substitution. The valuation team implemented on site inspection, market surveys and evidence confirmation to the assets under valuation in accordance with the necessary assets valuation procedures to reflect the market value of the assets appraised as at 31 March 2009. The assets valuation and the valuation conclusion are detailed as follows:

I. PRINCIPAL, ENTITY TO BE VALUED, ASSETS OWNER AND OTHER REPORT USER

The principal, assets owner and entity to be valued under this valuation are CNPC (Hong Kong) Limited (hereinafter referred to as “CNPC (Hong Kong)”), China Petroleum Pipeline Bureau (hereinafter referred to as “CPP”) and China Oil and Gas Co. Limited (hereinafter referred to as “Zhongyou Zhongtai”) respectively.

(I) Principal

Company Name: CNPC (HONG KONG) LIMITED Registration Number: 15322942-000-08-08-5 Address: Room 3907 – 3910, 39th Floor, 118 Connaught Road West, Hong Kong Nature of Business: Investment holding

CNPC (Hong Kong) is a company incorporated in Bermuda with limited liability. Its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (stock code: HK00135). The immediate holding company of CNPC (Hong Kong) is Sun World Limited which is a company incorporated in British Virgin Islands. PetroChina Company Limited (“PetroChina”), the intermediate holding company of CNPC (Hong Kong), was established in the People’s Republic of China (the “PRC”). Its shares are listed in Hong

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APPENDIX II

Kong, the mainland China and the US. As at 31 December 2008, the percentage of shareholding of the Company’s immediate controlling shareholder, Sun World Limited, was 56.8%, with the remaining shares held by the public.

The principal office and the registered office of CNPC (Hong Kong) are Room 3907 – 3910, 39th Floor, 118 Connaught Road West, Hong Kong and Clarendon House, Church Street, Hamilton HM11, Bermuda, respectively.

CNPC (Hong Kong) is an investment holding company. The principal activities of its subsidiaries, associates and jointly controlled entities are the exploration and production of crude oil and natural gas in China, the Republic of Kazakhstan, the Sultanate of Oman, Peru, the Thailand, the Azerbaijan Republic and Indonesia.

The oil operation in China is conducted through production sharing arrangements between CNPC (Hong Kong) and PetroChina (its shares are listed on the Stock Exchange of Hong Kong and Shanghai Stock Exchange), a subsidiary of China National Petroleum Corporation (“CNPC”), whereby CNPC (Hong Kong) is entitled to a fixed percentage of assets, liabilities, income and expense in accordance with the respective oil production sharing contracts entered into with PetroChina.

Apart from the oil exploration and production business in Thailand and Indonesia which are conducted by CNPC (Hong Kong) with independent third parties, the rest of overseas businesses are all conducted jointly with China National Oil and Gas Exploration and Development Corporation (“CNODC”) which is responsible for the overall operation and control.

(II) Assets owner

1. Summary of Assets owner

Company Name: China Petroleum Pipeline Bureau Registered Capital: RMB 5,214,632,000 Registered Address: No. 87 Guangyang Road, Langfang City, Hebei Province Type of Enterprise: collectively owned Legal representative: Zhao Yujian

Scope of operation: The company is engaged in the business of transporting oil, gas, coal and water pipeline, the exploration, design, construction and transportation of pipeline projects, manufacturing of large-caliber steel pipes, processing and repairing of petroleum machinery, construction and design of electricity and telecommunication projects, pipeline, overseas

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APPENDIX II

contracting business of oil tanks; the electrical products, equipment sets, and instruments and devices, spare and supplies, parts and components were manufactured by the company and the imported technology of business (except for the 14 types of import commodities operated by the state-approved companies). It develops the business involving processing and assembly with supplied materials and parts and compensation trade of the enterprise. It is qualified with premium grade certification as a general contractor for petrochemical engineering construction works, grade one certification as a contractor specialising in leveling and foundation works, grade one certification as a contractor specialising in steel structure works, grade one certification as a contractor specialising in installation works of petrochemical equipment and pipelines, grade one certification as a contractor specialising in pipeline engineering, grade two certification as a contractor specialising in fire safety facilities works (see qualification certifications for details of the above scopes). It serves as a contractor for overseas engineering projects and international tender projects in China. It is engaged in the export of equipment and materials required for the said overseas engineering projects; the provision of labours required for the said overseas engineering projects; catering and accommodation services (only for branch establishments); manufacturing of pressure vessels (see licences for the specific scope of classifications; only for branch establishments permitted by the licence). It is qualified with grade one certification as a general contractor for engineering construction of urban utilities (only for pipeline works for urban gas and water supply and drainage), grade one certification as a contractor specialising in offshore petroleum engineering projects. It is also engaged in the development of pipeline technology, transportation and repairing of vehicles within the company, supply of production materials, mechanised construction of leveling and foundation works; leasing, repairing, sales of parts and components and technical services for equipment for pipeline works.

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APPENDIX II

2. History and Development

China Petroleum Pipeline Bureau was established in 1973 with the approval from the State Council. It is under China National Petroleum Corporation (CNPC) and is a multi-national company specialising in pipeline engineering and construction with premium grade qualification as a general contractor for petrochemical engineering projects, including the exploration, design, consultation, sourcing, construction and management of engineering projects of long-haul pipelines and their auxiliary facilities, medium-to-large-sized storage tanks, electricity and telecommunication.

(III) Party appraised

1. Summary of Entity to be valued

Name: China Oil and Gas Co. Limited

Address:

Level 12, International Technology Building, No.288 Hong Shan Avenue, Xiangzhou District, Zhuhai City, Guangdong Province

Business Licence 440301501125569 Number:
Authorised Su Shifeng Representative:
Registered Capital: Renminbi two hundred fifty-three million and sixty thousand only
Paid-up Capital: Renminbi two hundred fifty-three million and sixty thousand only

Type of Company: company with limited liability

Scope of operation: It is engaged in the construction and operation of urban natural gas pipeline networks and relevant ancillary facilities, the design and installation of urban natural gas pipeline networks, the safety inspection, maintenance and emergency repairing of transportation and distribution equipment of urban natural gas. It is also engaged in the general development and application of natural gas and liquefied petroleum gas and relevant technical services, management and consultation.

Shareholder (Promoter): China Petroleum Pipeline Bureau, Zhongda Industrial Group Inc. and Alta Financial Holdings Limited.

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APPENDIX II

2. Company Profile

Established on 13 March 2002, China Oil and Gas Co. Limited is a sino-foreign joint venture jointly set up by China Petroleum Pipeline Bureau, Zhongda Industrial Group Inc. of Hong Kong and Alta Financial Holdings Limited of Hong Kong. According to the “Articles of Association”, its shareholding structure was as follow: the registered capital of the company is Renminbi one hundred fifty million, of which Renminbi fifty-five million and five hundred thousand was contributed by China Petroleum Pipeline Bureau (paid by the valuation surplus of RMB50.65 million of the equity interest of Xining and Tianjin projects), representing 37% of the registered capital; Renminbi fifty-four million and seven hundred fifty thousand was contributed by Zhongda Industrial Group Inc. of Hong Kong, representing 36.5% of the registered capital; and Renminbi thirty-nine million and seven hundred fifty thousand was contributed by Alta Financial Holdings Limited of Hong Kong, representing 26.5% of the registered capital. Details are set out in the following table:

Shareholders of China Oil and Gas Co. Limited

Name China Petroleum Pipeline Bureau Zhongda Industrial Group Inc. Alta Financial Holdings Limited Total	Amount of contribution RMB55.5 million RMB54.75 million RMB39.75 million RMB150 million	Percentage of contribution 37.00% 36.5% 26.5%
		100.00%

On 5 July 2002, the percentage of equity interest was changed without altering the registered capital after negotiation among the three shareholders, so that the percentage of equity interest of China Petroleum Pipeline Bureau, Zhongda Industrial Group Inc. of Hong Kong and Alta Financial Holdings Limited of Hong Kong became 50%, 36.5% and 13.5% respectively. Details are set out in the following table:

Shareholders of China Oil and Gas Co. Limited

Name China Petroleum Pipeline Bureau Zhongda Industrial Group Inc. Alta Financial Holdings Limited Total	Amount of contribution RMB75 million RMB54.75 million RMB20.25 million RMB150 million	Percentage of contribution 50.00% 36.5% 13.5%
		100.00%

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APPENDIX II

On 12 November 2007, China Oil and Gas Co. Limited increased its registered capital by RMB3.06 million with the increment contributed by Alta Financial Holdings Limited of Hong Kong at a premium amounted to RMB23.06 million. The capital increase was completed in March 2008. Changes in the equity interest after the capital increase are set out in the following table:

Shareholders of China Oil and Gas Co. Limited

Name China Petroleum Pipeline Bureau Zhongda Industrial Group Inc. Alta Financial Holdings Limited Total	Amount of contribution RMB75 million RMB54.75 million RMB23.31 million RMB153.06 million	Percentage of contribution 49.00% 35.77% 15.23%
		100%

On 25 October 2008, the capital contributors of China Oil and Gas Co. Limited agreed to increase the registered capital by RMB100 million. The capital was converted from the undistributed profit of RMB100 million as at 31 December 2007 according to the respective percentage of equity interest held, of which RMB49 million was converted and added by China Petroleum Pipeline Bureau, RMB35.77 million was converted and added by Zhongda Industrial Group Inc. and RMB15.23 million was converted and added by Alta Financial Holdings Limited. The change in commercial and business registration completed on 21 January 2009.

After increasing the capital for two times, the registered capital of China Oil and Gas Co. Limited was Renminbi two hundred fifty-three million and sixty thousand, of which Renminbi one hundred twenty-four million, Renminbi ninety million and five hundred twenty thousand and Renminbi thirty-eight million and five hundred forty thousand were held by China Petroleum Pipeline Bureau, Zhongda Industrial Group Inc. and Alta Financial Holdings Limited, representing 49%, 35.77% and 15.23% of the registered capital respectively. Details of equity interests as at the valuation date after the changes are set out in the following table:

Shareholders of China Oil and Gas Co. Limited

Name China Petroleum Pipeline Bureau Zhongda Industrial Group Inc. Alta Financial Holdings Limited Total	Amount of contribution RMB124 million RMB90.52 million RMB38.54 million RMB253.06 million	Percentage of contribution 49.00% 35.77% 15.23%
		100%

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APPENDIX II

3. Long-term Investment

As at the valuation date, Zhongyou Zhongtai had 20 investees as detailed in the following table:

Long-term investment of Zhongyou Zhongtai

Unit: RMB

			Percentage
Serial		Date of	of	Carrying
No.	Name of investee	investment	investment	value
1	Xining China Oil and Gas	2000-3-1	80.00%	55,999,200.00
	Co., Ltd. Head Office
2	Liling China Oil and Gas Co.,	2002-5-1	60.00%	47,000,000.00
	Ltd. Head Office
3	Binzhou China Oil and Gas	2002-9-1	80.00%	16,000,000.00
	Co., Ltd.
4	Huimin China Oil and Gas	2002-10-1	99.00%	7,920,000.00
	Co., Ltd.
5	Qingyun China Oil and Gas	2002-10-1	98.00%	1,960,000.00
	Co., Ltd.
6	Xining China Oil Engineering	2003-9-1	62.50%	500,000.00
	Design Consultancy Co.,
	Ltd. Head Office
7	Hunan China Oil and Gas	2004-4-1	60.00%	40,800,000.00
	Co., Ltd.
8	Qinghai Zhongtai China Oil	2006-12-1	90.00%	10,800,000.00
	Gas Technology
	Development Co., Ltd.
9	Nanchang China Oil and Gas	2007-8-1	23.65%	8,100,000.00
	Co., Ltd.
10	Nantong China Oil and Gas	2008-1-1	40.00%	6,000,000.00
	Co., Ltd.
11	Taizhou China Oil and Gas	2005-7-1	100.00%	19,800,000.00
	Co., Ltd.
12	Anhui China Oil and Gas	2005-8-1	40.00%	10,800,000.00
	Co., Ltd.
13	Chaozhou China Oil and Gas	2008-1-1	100.00%	15,000,000.00
	Co., Ltd.
14	Qinghai China Oil Ganhe	2008-1-1	40.00%	10,400,000.00
	Industrial Park Gas
	Corporation

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APPENDIX II

Serial No. Name of investee Date of investment Percentage of investment 15 Zhongyou Zhongtai Logistics (Zhuhai) Co., Ltd. 2008-5-1 100.00% 16 Qinghai East China Oil and Gas Co., Ltd. 2008-6-1 51.00% 17 Yingde China Oil and Gas Co., Ltd. 2008-6-1 100.00% 18 Qinghai China Oil Pipeline Gas Co., Ltd. 2004-7-1 100.00% 19 Jiangdu China Oil and Gas Co., Ltd. 2008-11-1 49.00% 20 Yangzhou Zhongtai Gas Co., Ltd. 2008-12-1 40.00% Total	Carrying value 10,000,000.00 2,550,000.00 1,900,000.00 45,200,000.00 19,600,000.00 6,000,000.00
	336,329,200.00

Serial
No.
Name of investee
Date of
investment
Percentage
of
investment
15
Zhongyou Zhongtai Logistics
(Zhuhai) Co., Ltd.
2008-5-1
100.00%
16
Qinghai East China Oil and
Gas Co., Ltd.
2008-6-1
51.00%
17
Yingde China Oil and Gas
Co., Ltd.
2008-6-1
100.00%
18
Qinghai China Oil Pipeline
Gas Co., Ltd.
2004-7-1
100.00%
19
Jiangdu China Oil and Gas
Co., Ltd.
2008-11-1
49.00%
20
Yangzhou Zhongtai Gas Co.,
Ltd.
2008-12-1
40.00%
Total

Carrying
value
10,000,000.00
2,550,000.00
1,900,000.00
45,200,000.00
19,600,000.00
6,000,000.00

336,329,200.00

4. Assets, Liabilities and Financial Position of Zhongyou Zhongtai

The financial data in the consolidated statements of China Oil and Gas Co. Limited for the years 2006 to 2008 and as at 31 March 2009 are as follows:

Assets, liabilities and financial position of

Assets, liabilities and financial position of	Assets, liabilities and financial position of	Assets, liabilities and financial position of
Zhongyou Zhongtai (consolidated statements)			_Unit: _	RMB’0000
		31	31	31
	31 March	December	December	December
Item	2009	2008	2007	2006
Total assets	142,069.50	140,750.79	88,600.24	73,317.50
Net assets	70,388.71	61,565.85	30,393.01	23,818.83
	January
	to March
Item	2009	2008	2007	2006
Revenue from principal
operations	38,833.40	125,800.06	60,814.03	45,664.50
Total profits	6,341.71	22,279.96	9,465.43	7,886.03
Net profits attributable to
parent company	4,011.67	14,376.42	5,777.76	5,239.76

The above financial data as extracted from the consolidated statements was audited by Shenzhen Jingye CPA (for 2006 and 2007), Zhuhai Zhengde CPA (for 2008) and Zhongtianyun Certified Public Accountants (for January to March 2009). The above auditors had issued unqualified auditors’ reports in this respect.

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APPENDIX II

(IV) Other users of the valuation report, excluding the principal

Other users of the report, excluding the principal, are the principals of the economic activity corresponding to this valuation as stated in the assets valuation engagement agreement and other report users stipulated in the laws and regulations of China.

II. PURPOSE OF VALUATION

According to the “Approval in relation to the Transfer of Equity Interest in China City Natural Gas Company Limited by China Petroleum Pipeline Bureau” (Zhong You Zi [2009] No. 277), China Petroleum Pipeline Bureau intended to transfer its 49% equity interests in China Oil and Gas Co. Limited, whereby CNPC (Hong Kong) intended to acquire the 49% equity interests in China Oil and Gas Co. Limited held by China Petroleum Pipeline Bureau.

The purpose of this valuation is to reflect the market value of the entire interests of shareholders of China Oil and Gas Co. Limited as at the valuation date for the purpose of providing pricing reference of the proposed acquisition of equity interests in China Oil and Gas Co. Limited held by China Petroleum Pipeline Bureau.

III. SCOPE AND SUBJECT OF VALUATION

The subject of this valuation is the entire interests of shareholders of China Oil and Gas Co. Limited. The scope of valuation is all the audited assets and liabilities of China Oil and Gas Co. Limited as at the valuation date. As at 31 March 2009, China Oil and Gas Co. Limited had assets with a carrying value of RMB407,376,259.43, liabilities with a carrying value of RMB88,732,572.19 and net assets with a carrying value of RMB318,643,687.24. The carrying value of assets particularly comprised current assets with a carrying value of RMB67,319,487.13 and non-current assets with a carrying value of RMB340,056,772.30, including long-term investment in equity interests with a carrying value of RMB336,329,200.00 and fixed assets with a carrying value of RMB3,727,572.30. The carrying value of current liabilities was RMB88,732,572.19. The above carrying values were audited by Zhongtianyun Certified Public Accountants who had issued an unqualified report in this respect.

The major assets of Zhongyou Zhongtai are long-term investment in equity interests. It had a total of 20 investees in various provinces, including Qinghai, Shandong, Hunan, Guangdong, Jiangxi, Jiangsu and Anhui. Among which, the business licence for the corporate legal person status of Hunan China Oil and Gas Co., Ltd. had not proceeded with annual review since 2005 and its shareholder and shareholding structures had changed after 2006 but relevant changes had not filed with the industrial and commercial registration authority. The shareholding structures of the remaining investees were consistent with their respective industrial and commercial registration.

Fixed assets under this valuation were under normal usage, but the owners as shown in the licences of some vehicles were inconsistent with company names.

The above scope and subject of valuation were consistent with those entrusted to be valued.

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IV. TYPE OF VALUE AND DEFINITION

Based on the purpose of this valuation, it is confirmed that a market value will be concluded hereunder.

Market value refers to the estimated transaction value of assets in a normal and fair deal made on the valuation date between a willing buyer and a willing seller wherein both parties act knowledgeably and without compulsion.

V. VALUATION DATE

The date of this valuation is 31 March 2009. All the pricing reference applicable to this assets valuation refer to the effective price standard on the valuation date.

VI. BASIS OF VALUATION

The basis of valuation adopted in this assets valuation mainly include the basis of economic activities, the basis of laws, rules and regulations, the basis of valuation standards, the basis of assets ownership and the pricing reference and other reference material used when determining this valuation. Details are set out as follows:

(I) Basis of economic activities

“Approval in relation to the Transfer of Equity Interest in China City Natural Gas Company Limited by China Petroleum Pipeline Bureau” (Zhong You Zi [2009] No. 277);
assets valuation engagement agreement.

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(II) Basis of laws, rules and regulations

“Company Law of the People’s Republic of China” (revised on the 18th meeting of the Standing Committee of the 10th National People’s Congress held on 27 October 2005);
“Administration Measures on Appraisal of State-owned Assets” (Decree No. 91 of the State Council, 1991);
“Opinions of the Ministry of Finance with regard to the Reform of Administrative Methods of State-owned Assets Appraisal and the Strengthening of Supervision and Administration of Assets Appraisal” (Guo Ban Fa [2001] No. 102, 2001);
“Provisional Regulations on the Supervision and Administration of State-owned Assets of Enterprises” (Decree No. 378 of the State Council, 2003);
“Provisional Measures on the Administration of Transfer of State-owned Property of Enterprises” (Decree No. 3 of the State-owned Assets Supervision and Administration Commission and the Ministry of Finance of the State Council, 31 December 2003);
“Provisional Measures on the Administration of Appraisal of State-owned Property of Enterprises” (Decree No. 12 of the Stated-owned Assets Supervision and Administration Commission of the State Council, 25 August 2005);
“Notice of Related Issues in Strengthening Administration on State-owned Assets Appraisal” (Guo Zi Wei Chan Quan [2006] No. 274);
“The Administrative Licence Law of the People’s Republic of China”;
other laws, rules and regulations and regulatory frameworks relevant to valuation.

(III) Basis of valuation principles

“Principles for Assets Appraisal – Basic Principles” (Cai Qi (2004) No. 20);
“Ethical Norms for Assets Appraisal – Basic Norms” (Cai Qi (2004) No. 20);
“Principles for Assets Appraisal – Appraisal Report” (Zhong Ping Xie [2007] No. 189);
“Principles for Assets Appraisal – Appraisal Procedures” (Zhong Ping Xie [2007] No. 189);

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“Guidance on Price Model of Assets Appraisal” (Zhong Ping Xie [2007] No. 189);
“Principles for Assets Appraisal – Machine and Equipment” (Zhong Ping Xie [2007] No. 189);
“Guidance on Appraisal of Enterprise Value (Trial)” (the China Appraisal Society, 30 December 2004);
“Guidelines on Appraisal Reports of State-owned Assets of Enterprises” (Zhong Ping Xie [2008] No. 218);
“Regulatory Opinions on Operations of Assets Appraisal (Trial)” (promulgated by the China Appraisal Society on 7 May 1996);
“Guidance to Entitlement of Valuation Object for Certified Assets Appraisers” (the Chinese Institute of Certified Public Accountants, 2003);
“Enterprise Accounting Standard – Basic Standards” (Decree No. 33 of the Ministry of Finance of the People’s Republic of China);
38 specific accounting standards including “Enterprise Accounting Standard No. 1 – Inventories” (Cai Hui [2006] No. 3 of the Ministry of Finance of the People’s Republic of China);
“Enterprise Accounting Standard – Application Guide) (Cai Hui [2006] No. 18 of the Ministry of Finance of the People’s Republic of China).

(IV) Basis of assets ownership

Licences of motor vehicles;
Contracts or invoices for acquisition of major assets;
Other evidential documents for assets ownership.

(V) Pricing reference

“Provisional Regulations on Vehicle Purchase Tax of the People’s Republic of China” (Decree No. 294 of the State Council of the People’s Republic of China, 22 October 2000);
“Obsolescence Standards on Motor Vehicle” (the former State Economic and Trade Commission Guo Jing Mao Jing [1997] No. 456);
“The Notice on the Amendments to Obsolescence Standards on Motor Vehicle” (the former State Economic and Trade Commission Guo Jing Mao Zi Yuan [2000] No. 1202);

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“Loan Interest Rate Lists of the People’s Bank of China” implemented on 23 December 2008;
the foreign exchange rate quotation as at 31 March 2009 announced by the State Foreign Exchange Administration;
“Pricing Handbook for Mechanical and Electrical Products 2009” (China Machinery Industry Information Research Institute);
“Hui Cong Business Information” and the price information of computer and office automation equipment and the information of the local electronic market offered through online enquiries;
Vehicle pricing from Topcars, the website of BitAuto.com and information of local vehicle markets;
Related information from the price information data base of China United Assets Appraisal Co., Ltd.;
Other reference material.

(VI) Other reference material

Accounting statements and audit reports of Zhongyou Zhongtai for 2006, 2007 and 2008 and as at 31 March 2009;
“Handbook for Common Data and Parameter in Assets Appraisal (Second Edition)” (Beijing Science and Technology Press, 1996);
Wind information Financial Terminal;
“Investment Valuation” (US by Damodanran; Canada translated by Lin Qian, published by Tsinghua University Press in 2004);
“Valuation: Measuring and Managing the Value of Companies” (Third Edition) (US by Copeland, T., etc.; translated by Hao Shaolun and Xie Guanping; published by Publishing House of Electronics Industry in 2002);
Other reference material.

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VII. VALUATION METHOD

Based on the economic activity and the purpose of this valuation as well as the characteristics of the valuation subject, the assets-based method and the income method were adopted in the valuation of the entire interests of shareholders of Zhongyou Zhongtai. The results were then analysed to determine the outcome of a particular method as the valuation conclusion.

(I) Assets-based method

The cost method in the valuation of enterprise value is also known as the assets-based method. According to the cost method, the value of the valuation subject will be determined on the basis of reasonable assessment of all assets value and liabilities of a company.

The valuation method for each category of assets is briefly described below:

I) Current assets

Current assets under this valuation include monetary funds, accounts receivable, prepayments, dividends receivable and other receivables.

Monetary funds: refer to cash and bank deposits. The validated and adjusted carrying value will be the appraised value;
Prepayments: the individual identification method will be applied in assessing the risks of being suffered from losses. The validated and adjusted carrying value, having deducted the estimated loss, will be the appraised value;
Receivables: include accounts receivable and other receivables. After validating the mix of the value and the status of debtors, the valuer will, with reference to the specific situations of each of these debtors, adopt the individual identification method in assessing the risks of being suffered from losses. The value after deducting the estimated losses will be the appraised value;
Dividends receivable refer to the dividends to be received from Binzhou China Oil and Gas Co., Ltd. for 2008. The validated and adjusted carrying value will be the appraised value.

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II) Non-current assets

Non-current assets comprise long-term investments and fixed assets.

1. Long-term investments

Firstly, the valuers investigate and validate the reasons, the carrying value and actual status of long-term investments, and then review the investment agreements, resolutions of shareholders’ meetings, memorandum and articles of association and relevant account records to ensure the truthfulness and completeness of long-term investments. Consequently, different valuation methods are applied according to the conditions of individual investees.

(1) As to companies established for short periods only and those at the preliminary stage, including Jiangdu China Oil and Gas Co. Ltd., Yangzhou Zhongtai Gas Co. Ltd. and Qinghai Dongbu China Oil and Gas Co. Ltd., the valuation was based on the investment cost incurred at inception.
(2) As to companies having their projects under construction and pending for commencement of production, including Nantong China Oil and Gas Co. Ltd., Chaozhou China Oil and Gas Co., Ltd. and Qinghai China Oil Ganhe Industrial Park Gas Co., Ltd, the assets-based method was adopted to appraise the entire assets of the individual company. That is, the appraised value of net assets of an investee was determined in an individual assets valuation and the appraised value of the particular long-term investment was then calculated according to the percentage of attributable shareholding interests.

Appraised value of long-term investments = appraised value of entire net assets of investees × shareholding percentage

(3) As to companies other than those mentioned in (1) and (2) above, we adopted assets-based method and income method in valuation according to the prevailing laws and regulations of China and relevant standard requirements of the industry and 2 apprised values were attained. Having taken into account various factors such as the applicable conditions of the assets-based method and the income method as well as the assets mix, state of affairs and profit expectations of investees, either the valuation conclusion of the assets-based valuation method or that of the income method was selected as the appraised value of each investee; and the appraised value of each long-term investee was then determined separately according to the percentage of attributable shareholding interests in each investee.

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x If the investee is incepted within one year and the production and operation is still unstable or its operation may change in future so that the availability of any future income is subject to the fulfillment of certain conditions, the conclusion of the assets-based method will be the appraised value of the investee.
y If the investee is an well-established one, engaged in activities related to the principal business of companies mentioned above and has stable operation or development, the conclusion of the income method will be the appraised value of the investee because the assets-based method can not fully reflect the intangible assets, including the gas pipeline license granted by the local government and its goodwill etc.

Appraised value of long-term investments = appraised value of entire net assets of investees × shareholding percentage

z As to Yingde China Oil and Gas Co. Ltd., the appraised value of entire net assets is null because the company is a company with limited liability and shareholders are responsible for limited liability only.

2. Fixed Assets

Fixed assets refer to equipment.

According to the purpose of this valuation, the valuation of fixed assets is conducted with the assumption of ongoing utilization and with the market price as a basis, as well as taking into account the characteristics of equipment to be valued and the data collected. The replacement cost method is mainly adopted in the valuation.

Appraised value = full price of replacement × residue ratio

(1) Determining the full price of replacement
1) Full price of replacement of transportation vehicles

Prices of transportation vehicles as at the valuation date were determined according to the information of vehicle markets and the latest market price information of vehicles from “Information Advertisement from Topcars” ( ), Hc360.com ( ) and Bitauto.com ( ), following which the full price of replacement of vehicles was arrived after taking into account the vehicle purchase tax and charge of new car registration according to the “Provisional Regulations on Vehicle Purchase Tax of the People’s Republic of China” and relevant documents issued in Zhuhai City.

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Full price of replacement = prevailing purchase price (including tax) + vehicle purchase tax + handling charges for new vehicle registration etc.

x Purchase price: it was determined with reference to the latest traded market price of the comparable class at the district where the vehicle was located. As to vehicles purchased long ago and the purchase price of the same model and specification were unavailable, the prices of vehicles of the comparable class and the same engine displacement was taken as purchase prices. Although the entity under valuation was a general payer of value-added tax, the input value-added tax of the tax payers’ motorcycles, vehicles and yachts for their own use was not eligible to be charged against the output value-added tax according to the “Provisional Regulations of VAT of the People’s Republic of China” effective from 1 January 2009. Therefore, the purchase prices of these vehicles were the prices after tax.
y Vehicle purchase tax: pursuant to provisions of “Provisional Regulations on Vehicle Purchase Tax of the People’s Republic of China” (Decree No.294 of the State Council, 2001): tax payable for vehicle purchase = assessable price × 10%. The “assessable price of the vehicle for the taxpayer’s personal use would exclude value-added tax”, therefore: vehicle purchase tax = purchase price ÷ (1+17%) × 10%. The vehicle purchase tax applicable to vehicles of Zhongyou Zhongtai entrusted for valuation was determined according to the specific local circumstances.
z Handling charges for new vehicle registration: it was determined according to the particular fees and amount of the area where the vehicles were located.
2) Full price of replacement of electronic equipment

The price of the electronic equipment as at the valuation date was based on local market information and recent market price information e.g. Hc360.com ( ) etc. As to electronic equipment with free transportation and installation provided by manufacturers, the full price of replacement was determined.

Since the entity under valuation was a general taxpayer of value-added tax, the purchase price of the machinery and equipment entrusted for valuation represented the price before tax.

Full price of replacement = purchase price (before tax)

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Note: Certain electronic equipment was valued with the market method.

(2) Determining the residue ratio

1) Residue ratio of vehicles

Pursuant to provisions of “The Notice on the Issue of Obsolescence Standards on Motor Vehicle” (Guo Jing Mao Jing [1997] No. 456) and “The Notice on the Amendments to Obsolescence Standards on Motor Vehicle” (Guo Jing Mao Zi Yuan [2000] No. 1202, 18 December 2000), the residue ratio calculated through the following method (whichever is lower) was selected as the final residue ratio, whereas:

Useful life residue ratio = (1 – useful life consumed / useful life stipulated) x 100%

Mileage residue ratio = (1 – mileage covered / mileage stipulated) x 100%

Residue ratio = Min (useful life residue ratio or mileage residue ratio)

Meanwhile, inspections and assessments were necessary for vehicles to be valued. Where the result of inspections and assessments greatly differed from the residue ratio calculated according to the above method, proper adjustments would be made to determine the final residue ratio. If they were similar, no adjustment would be made, whereas: Residue ratio = Min (useful life residue ratio or mileage residue ratio) + a

a: coefficient of adjustment for vehicles under particular circumstances

2) Residue ratio for electronic equipment

Residue ratio = (1 – useful life consumed ÷ useful economic life) x 100%

Or residue ratio = remaining useful life ÷ (useful life consumed + remaining useful life) x 100%

Note: As to electronic equipment valued on the basis of secondary market price, no residue ratio was calculated.

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(3) Determining the appraised value

Appraised value = full price of replacement x residue ratio

III) Liability

The actual debtor and incurred amount of each liability item upon the realisation of the purpose of this valuation were inspected and verified. The appraised value was then determined on the basis of the liability item and amount actually undertaken by the assets owner after realising the purpose of this valuation.

(II) Income method

According to the income method in the valuation of enterprise value, the value of the valuation subject was determined by capitalizing or discounting the expected income of the entity under valuation. The basic procedures are as follows:

As to the assets and principal business included in the financial statements, the expected income (net cash flow) was estimated according to the development trend of the historical operation for recent years and the business category respectively, which would then be discounted to the value of operating assets;
As to the long-term investment included in the financial statements, appropriate valuation method was selected according to the particular conditions of the long-term investee for the purpose of assets valuation;
As to current assets (liabilities), including monetary funds, dividends receivable and payable as at the valuation date, and non-current assets (liabilities), including doubtful or idle fixed assets as at the valuation date, included in the financial statements but had not taken into account in estimating the expected income (net cash flow), they were classified as surplus or non-operating assets (liabilities) subsisted as at the valuation date. The value of this category was appraised separately;
The enterprise value of the valuation subject was obtained by aggregating the values of the above assets and liabilities while the value of shareholders’ total equity in the valuation subject was arrived after netting of the value of interest bearing debts.

The basic model of this valuation is E = B – D

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Whereas:

E : Value of shareholders’ total equity (net assets) in the valuation subject;

B : Enterprise value of the valuation subject;

B = P + I + � Ci

P : Value of operating assets of the valuation subject;

==> picture [114 x 27] intentionally omitted <==

Whereas:

Ri : Expected income for the i th year in future (free cash flow) of the valuation subject;

r : Discount rate;
n : Operating period for the valuation subject in future;

I : Long-term investment value of the valuation subject as at the valuation date;

�Ci : Value of surplus or non-operating assets (liabilities) of the valuation subject as at the valuation date;

� [C][i][=][C][1][+][C][2]

C1 : Value of current surplus or non-operating assets (liabilities) of the valuation subject as at the valuation date;

C2 : Value of non-current surplus or non-operating assets (liabilities) of the valuation subject as at the valuation date;

D : Value of interest bearing debts of the valuation subject as at the valuation date.

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VIII. IMPLEMENTATION AND PROCEDURE OF VALUATION

The entire valuation was conducted in four stages:

(I) Preparation

In mid-April 2009, we reached an agreement through negotiation with the principal and the entity to be valued in respect of the purpose for this valuation, the valuation date and the scope and prepared an assets valuation working plan.
We worked together with the entity to be valued in verifying assets and preparing assets valuation declaration lists. On 25 April 2009, a training course was given to financial staff and various management officers to explain the way to complete the declaration list, aiming at ensuring the accuracy of assets, economic and technical indicators and carrying values and that all these would be corresponding to one another. On 27 April 2009, staff of the valuation team visited the site to have a general understanding of assets to be valued, assist the entity in reporting assets to be valued and collect documents and information required for assets valuation.

(II) On site valuation

The valuation team had an on site valuation from 28 April 2009 to 21 May 2009, which was mainly involved in:

Listened to the general introduction to the entity and the history and current status of assets to be valued made by the relevant staff from the principal and the entity to be valued, getting to know more about the financial system, the operating status and the technical status of fixed assets;
Verified and identified the assets declaration list provided by the entity, verified relevant financial records of the entity and worked with the entity to make adjustments for any discovered problems;
Conducted an overall check-up and validation to fixed assets according to the assets declaration list and based on the requirements of valuation standards, with the focus on inventories in kind and classified as current assets, whereas 40% (in terms of quantity) and 60% (in terms of value) of those inventories were checked respectively;
Inspected and collected documentary evidence of title rights of assets to be valued;
Determined specific valuation methods for each type of assets with reference to the actual status and characteristics of assets to be valued;

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Looked up technical information, final account records and acceptance material of major fixed assets; as to subordinate fixed assets, collected pricing information mainly by means of market investigation and enquiries; and collected and consolidated information of various parameters relating to the valuation of intangible assets;
Made primary valuation estimation for assets and liabilities within the valuation scope on the basis of check-up and verification.

(III) Compilation of valuation

We analyzed and summarized the primary results after valuing various assets and reviewing liabilities during the period from 22 May 2009 to 20 June 2009 for the adjustment, modification and perfection of the valuation conclusion.

(IV) Submission of report

We drafted the assets valuation report based on the works aforementioned as well as exchanged views on valuation conclusion with the principal. After taking all relevant opinions into consideration, we modified and proofread the report repeatedly according to our internal triple check system and procedures specially designed for assets valuation reports. Consequently, we issued a formal assets valuation report.

We performed this stage of work during the period from 20 June 2009 to 30 June 2009.

IX. VALUATION ASSUMPTION

The valuer was subject to the following assumptions in this valuation.

(I) General Assumption

1. Assumption of going concern

It is an assumption that the valuation method, parameter and basis used in the valuation are determined on the basis that the assets under valuation will be utilised continuously for current purposes and under the prevailing pattern, scope, frequency and environment, or will be used under changed conditions.

2. Assumption of trading

It is assumed that all the assets to be valued are being transacted. The valuer evaluates the assets price by simulating a market transaction with reference to, among others, trading conditions of assets to be valued. It is one of the most basic precedent assumptions for a feasible assets valuation.

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3. Assumption of open market

It is an assumption that both parties of the transaction of assets traded or to be traded in the market rank pari passu and have been provided with sufficient opportunities and time to acquire market information for the purpose of making rational judgment on the function, use and transacted price of the assets. The assumption of open market is on the basis that assets can be traded in the open market.

(II) SPECIAL ASSUMPTION

There is no material change to the prevailing macroeconomic situation of China.
There is no material change to the social economic circumstances in which the entity is operating and the applicable taxation policy and tax rate.
The future management of the entity duly performs their duties and maintains the existing management pattern on an ongoing concern.
No inflation factor will be considered in this valuation. Subject to the assumptions of this valuation and based on the purpose of this valuation, it is confirmed that a market value will be concluded hereunder. All the price references in the valuation are the pricing standard and value system subsisting as at the valuation date.
No premium or discount of share transfer will be considered in this valuation.

X. VALUATION CONCLUSION

China United Assets Appraisal Co., Ltd. performed necessary procedures of assets valuation based on relevant laws, rules and regulations on assets valuation of China with the principle of being independent, fair, scientific and objective in the valuation of all the assets and liabilities of China Oil and Gas Co. Limited within the scope of the economic activity mentioned herein. Assets-based method and income method had been applied in this valuation and the valuation conclusion are as follows:

Valuation conclusion of assets-based method:

The carrying amount of assets was RMB 407,376,300, the adjusted carrying amount was RMB 407,376,300, the appraised value was RMB 1,344,954,200 and the surplus from valuation was RMB 937,577,900. The appreciation rate was 230.15%.

The carrying amount of liabilities was RMB 88,732,600, the adjusted carrying amount was RMB 88,732,600, the appraised value was RMB 88,756,600 and the surplus from valuation was RMB 24,000. The appreciation rate was 0.03%.

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The net carrying amount of assets was RMB 318,643,700, the adjusted carrying amount was RMB 318,643,700, the appraised value was RMB 1,256,197,600 and surplus from valuation was RMB 937,553,900. The appreciation rate was 294.23%.

According to the income method, the appraised value of the capital value of the entire interests was RMB 1,252,728,800.

The assets-based method appraised the present fair value of the carrying amount of assets and liabilities of an entity. As to the income method, which appraised the value of the valuation subject based on the expected profitability of the said subject, it determined the enterprise value by discounting the expected net cash flow generated during the term of operation through estimating the future earnings of the valuation subject. This valuation conclusion was taken as the basis of the proposed acquisition by CNPC (Hong Kong) Limited of 49% equity interests in China Oil and Gas Co. Limited held by China Petroleum Pipeline Bureau. China Oil and Gas Co. Limited is a management company which started its distribution business of natural gas in September 2008. Due to the relatively short operation period, together with the significant volatility in the natural gas market, the availability of any expected future income is uncertain and subject to the fulfillment of certain conditions. Moreover, the valuation conclusions of both the assets-based method and the income method are similar. We hence considered that the valuation conclusion of the assets-based method would be able to reflect the shareholding value as at the valuation time more accurately, and it would be more reasonable to take it as the pricing reference for the proposed acquisition by CNPC (Hong Kong) Limited of 49% equity interests in China Oil and Gas Co. Limited held by China Petroleum Pipeline Bureau.

XI. EXPLANATION ON SPECIAL ITEMS

(I) The valuation conclusion determined the prevailing market value based on the purpose of this valuation with the assumption of ongoing usage in the open market. In the course of determining the appraised value, no allowance had been made to any charge and guarantee that might be assumed in the future, any additional bid that might be resulted from special transaction patterns, any change on China’s marco-economic policy and other impact on asset prices caused by acts of god and other force majeure.
(II) The entity to be valued was responsible for the accuracy and completeness of the scope of this valuation, and the data, statements and relative information provided by itself.
(III) Relevant title documents and relevant information involved in the valuation report were provided by the entity to be valued and the legal responsibility in relation to the accuracy and legality of these documents and information were assumed by the said entity.

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(IV) The valuer did not conducted any technical testing for all kinds of equipment in respect of their technology parameters and performance as at the valuation date, and only made judgement based on on site visit without using any testing equipment on the assumption that all related technical information and the track records provided by the entity to be valued were true and valid.
(V) As at 31 March 2009, China Oil and Gas Co. Limited provided the following guarantees for its subsidiaries:

China Oil and Gas Co. Limited was extended a short-term loan facilities for working capital up to RMB 500 million by the headquarter of China Minsheng Banking Corp., Ltd. for a term from 29 July 2008 to 29 July 2009;

Both parties agreed on the following in the banking facility contract (Gong Shou Xin Zi No. 99012008290467):

1) RMB 200 million is actually available for Party A under this banking facility;
2) This banking facility is only available to companies in which Party A has more than 50% controlling interests. Whenever such credit facility is utilized, Party A shall provide guarantee for incidental liability and sign a separate guarantee contract;
3) This banking facility includes all the banking facility balance under the contract of 2007 Shou Zi No.005;
4) There is no intermediate business deposit under this banking facility;
5) The letter of intent for granting loans under this banking facility shall be in the standard form as required by Party B;
6) The specific expiry date for businesses under this banking facility shall not exceed that of such facility.

Table of External Guarantee

Unit: RMB’0000

Serial
No.
1
2
3

Name of guaranteed unit
Lending bank or
issuing bank
No. of
guarantee
contract
Maximum
guaranteed
amount
Period of guarantee
(Taizhou China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012008288180
30,000,000.00
25 September 2008
to 29 July 2009
(Liling China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012008290206
15,000,000.00
5 August 2008 to
29 July 2009
(Liling China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012009299668
60,000,000.00
12 January 2009 to
29 July 2009

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Serial
No.

4
5
6
7

Name of guaranteed unit
Lending bank or
issuing bank
No. of
guarantee
contract
Maximum
guaranteed
amount
Period of guarantee
(Taizhou China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012009299698
15,000,000.00
12 January 2009 to
29 July 2009
(Chaozhou China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012008288092
15,000,000.00
26 September 2008 to
29 July 2009
(Binzhou China Oil and Gas
Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012008289197
10,000,000.00
1 September 2008 to
29 July 2009
(Zhongyou Zhongtai Logistics
(Zhuhai) Co., Ltd.)
Headquarter, China
Minsheng Banking
Corp., Ltd.
Gong Dan Bao
An No.
99012008288103
25,000,000.00
26 September 2008 to
29 July 2009
Total
170,000,000.00

(VI) After checking the status, vehicle registration certificates of three sedans of China Oil and Gas Co. Limited were inconsistent with the actual cases. Owners as set out in the certificate were: China Petroleum Pipeline Bureau Beijing Oil and Gas Transportation Company for Audi A6-2.4 (Jing G93369); a natural person, Zhang Cheng, for BMW740Li (Yue B70158); and Beijing Gangda Management Consulting Company Limited for Toyota Camry 240G (Jing LD0391). The explanation on ownership and conditions was provided by Zhongyou Zhongtai, and the ownership of the above vehicles was vested on Zhongyou Zhongtai.
(VII)After checking the investee subsidiaries of China Oil and Gas Co. Limited, it was found that, as to some investees, formalities of land use certificates were pending or the assets owner as shown in the certificates was inconsistent with the entity to be valued or formalities of building ownership certificates were pending or the assets owner as shown in the certificates was inconsistent with the entity to be valued, and that the assets owner as shown in the licence of vehicles was inconsistent with the entity to be valued. As to lands for which formalities of land use certificates were pending, proof or documents were obtained from the local land administration authorities and the area covered by the land use rights were determined according to relevant proof and land appropriation materials. Once the land use certificates are available, the area as set out in the certificates shall prevail. As to the buildings for which formalities of building ownership certificates were pending, proof or information of construction project planning were obtained from the housing administration authorities on a best effort basis. The floor area were determined according to the area as set out in the proof from the housing administration authorities, information of construction project planning or the area arrived at upon the on site measurement by the valuers and assets management personnel of the entity to be valued. Once the building ownership certificates are available, the area as set out in the certificates shall prevail. As to vehicles for which assets owners as shown in the licences are inconsistent with the entity to be valued, explanations have been obtained from the entity to be valued. For details, please refer to the explanation on long-term investments.

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(VIII)In the course of this valuation, the shareholdings of the following companies were found as follows:
Hunan China Oil and Gas Co., Ltd. was established in April 2004. According to its articles of association, its shareholding structure was as follows: the registered capital of the company was RMB 27 million, of which contributed RMB 10.80 million,

representing 40% of the total capital; contributed RMB8.10 million, representing 30% of the total capital and contributed RMB 8.10 million, representing 30%

of the total capital. On 11 December 2006, 40% equity interest of the former shareholder was transferred to China Oil and Gas Co., Ltd. at par. On 10 July 2007, all shareholders agreed that transferred its 20% equity interests in Hunan

China Oil and Gas Co., Ltd. to China Oil and Gas Co. Limited. Meanwhile, transferred its remaining equity interests to

. As at the valuation date, the shareholding structure

of Hunan China Oil and Gas Co., Ltd. was as follow:

					Percentage of
				Contributed	capital
Name				amount	contribution
China	Oil and Gas	Co.	Limited	RMB 16.20 million RMB 8.10 million RMB 2.70 million	60.00% 30.00% 10.00%

The business licence for the corporate legal person status of Hunan China Oil and Gas Co., Ltd. had not proceeded with annual review since 2005 and its shareholder and shareholding structures had changed after 2006 but relevant changes had not filed with the industrial and commercial registration authority.

The shareholding of , a wholly-owned subsidiary of was held on behalf of and Guan Yijun, which held RMB 14.85 million and RMB 150,000

respectively. On 10 March 2009, the shareholders’ meeting of agreed to transfer all the shares to Anhui

China Oil and Gas Co., Ltd.. Upon which became a sole beneficial and nominal shareholder of the company. As at the valuation date, the company neither filed the change with the industrial and commercial registration authority nor amended its articles of association.

In this valuation, we based on the shareholding structure as set out in the resolution of last shareholders’ meeting.

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(IX) The buildings and structures of Taizhou China Oil and Gas Co. Ltd. were assets constructed by its predecessor, , and were mainly located in the Laozhan at Renmin East Road, Dainan Town. The land occupied by the buildings and structures was under leasehold and the land lease contract was entered into between Pan Gang and the land administration office of Dainan Town in 2005. Pursuant to the purchase agreement of Laozhan entered into between and Pan Gang in 2007, the Laozhan was operated by Pan
Gang at no consideration for 15 years commencing from the date of purchase whereas any related liability would also be assumed by Pan Gang.
(X) In this appraisal, the land occupied by following companies was found as follows:

1. Binzhou China Oil and Gas Co., Ltd

(i) Land for stations in Chengdong

On 11 February 2009, Binzhou China Oil and Gas Co., Ltd and the Liangcai Street Office (previously known as Liangcai Township Government), Bincheng District, Binzhou City entered into a land appropriation compensation agreement, under which a land with an area of 14.82 mu was appropriated for a term of 50 years at a total consideration of RMB 1,263,300, comprising a land compensation fee of RMB 963,300 and a relocation fee of RMB 300,000. It was also agreed that the ownership of the land involved in this agreement would be changed from collective land ownership to State land ownership, and the Street Office had no right to interfere with activities of Binzhou China Oil and Gas Co., Ltd within the land. It was guaranteed by the Liangcai Street Office, Bincheng District, Binzhou City that Binzhou China Oil and Gas Co., Ltd would be entitled to the land use rights for a term of 50 years. As at 31 March 2009, Binzhou China Oil and Gas Co., Ltd paid the land use fee of RMB 1,263,300 to the Liangcai Street Office, Bincheng District, Binzhou City.

Article 57 of “Land Administration Law” of the People’s Republic of China stipulates that in the case of temporary use of State-owned land or land collectively owned by peasants for the purposes of construction projects or geological surveys, approval shall be obtained from the land administration authority of local governments above the county level. Where the land to be temporarily used is found within the urban zoning area, the consent of the urban planning administration department shall be obtained before filing the application. Meanwhile, it is stipulated that temporary users of the land shall use the land according to purposes agreed upon in the relevant temporary land use contract and no permanent structure is allowed. Article 63 stipulates that the land use right of the land collectively owned by peasants shall not be granted, transferred or leased for non-agricultural purposes.

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As at 17 May 2009, the Liangcai Street Office, Bincheng District, Binzhou City completed the relocation work in relation to the land. However, the consent of the land administration authority of the people’s government above the county level had not been sought.

Given the special prevailing conditions of the land, the land use fee of RMB 1,263,300 paid to the Liangcai Street Office, Bincheng District, Binzhou City by Binzhou China Oil and Gas Co., Ltd was accounted as prepayments.

(ii) In respect of the land use rights for the Economic and Technology Development Zone

On 22 February 2008, Binzhou China Oil and Gas Co., Ltd (“Party B”) and the Management Committee of Binzhou City Economic and Technology Development Zone (“Party A”) entered into a “Project Contract” in which it was agreed that: 1. The Management Committee of the Development Zone provided land with an area of 32.9 mu for project construction; 2. Party A would proceed with project land grant procedures for Party B on a priority basis. In the course of the formal land grant procedures of the project land, Party B should pay the land premium in full at the bid-winning price (the bidding price was approximately RMB 305.00/square meter). Upon completion of the formal land grant procedures, Party A should deduct the land application fee (RMB 37,000 per mu) and refund the remaining amount to Party B for project construction; 3. Upon commencement of production of Party B’s project, once the local fiscal revenue received in the form of tax payment during the year reached or exceeded the compensation cost for land appropriation (as required by the city government), Party B would no longer assume the compensation for land appropriation; failing which, Party B should make up the difference; 4. Party B should pay the compensation for land appropriation of RMB 213,850 for 5 years to the account designated by Party A within 10 days upon the signing of the contract. Party A would reward Party B according to the local fiscal revenue received in the form of tax payment arising from this project during the year. The reward would become applicable if the local fiscal revenue received in the form of tax payment arising from this project during the year exceeded the compensation for land appropriation (RMB 1,300.00/mu, subject to adjustment according to the standard of the city) and the amount of the reward would be 30.00% of the exceeding portion. The reward would be effective for 10 years but the total amount of reward should not exceed the land application fee paid by Party B. The reward would become effective from the date of the registration of the company and the change in registration for taxation purpose. Fees of administrative affairs at or under the city fiscal level were exempted while fees of administrative affairs above the provincial level were be charged at the lower end of the applicable fee schedule.

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Pursuant to the requirements in the “Project Contract”, Binzhou China Oil and Gas Co., Ltd should assume the bidding price of the land of RMB 6,693,000, of which RMB 1,217,300 was the land application fee. Upon completion of formal land grant procedures, the Management Committee of Binzhou City Economic and Technology Development Zone should refund RMB 5,475,700 to Binzhou China Oil and Gas Co., Ltd for project construction. Upon formal commencement of production, the compensation for land appropriation should be refunded according to the local fiscal revenue received in the form of tax payment.

On 6 May 2008, the company prepaid RMB 350,000 to the Finance Bureau of Binzhou Economic and Development Zone as the compensation for land appropriation for 5 years, which was accounted as “prepayments”

2. Huimin China Oil and Gas Co., Ltd

Two pieces of land which were under collective ownership were leased to Huimin China Oil and Gas Co., Ltd. Formalities for conversion from agricultural usage were not completed and the approval from the land administration authority of the people’s government above the county level had not been sought also.

3. Nanchang China Oil and Gas Co., Ltd

Pursuant to the opinion of the Management Committee of Honggutan New Zone of Nanchang City, and the spirit of the notice from the Branch Land Resources Bureau of New Zone, Nanchang Ruisheng Natural Gas Company Limited, the predecessor of Nanchang China Oil and Gas Co., Ltd, entered into an agreement of intent for a project on 9 October 2005 with the Management Committee of Honggutan New Zone of Nanchang City. According to terms of the said agreement, the Management Committee provided the company with a land with an area of 21.6 mu, for which Nanchang Ruisheng Natural Gas Company Limited paid RMB 1.00 million as the deposit and moved the temporary gas station to such land as scheduled. Since the Management Committee of the New Zone did not arrange formalities for the land use procedures of such land, Nanchang China Oil and Gas Co., Ltd occupied the land together with Xinjian County Slaughterhouse and did not own the land use rights within the site. Nanchang China Oil and Gas Co., Ltd accounted the prepayment of RMB 1.00 million as other receivables.

4. Nantong China Oil and Gas Co., Ltd

In order to attract business and investment and to accelerate the economic development, the government of Rugao City entered into an agreement of intent for investment with Nantong China Oil and Gas Co., Ltd on 12 September 2007 through the Management Committee of Rugao Port Area. According to the agreement, it was agreed to grant a site with an area of 13,566.7345 square meters (equivalent to 20.35 mu) located at Team 14, Zhongxinsha Village, Changjiang Town within the Rugao Economic Development Zone as required by

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the project at a consideration of RMB 80,000/mu, totaling RMB 1,628,000. Nantong China Oil and Gas Co., Ltd would construct LNG gas stations on the site. Accordingly, Nantong China Oil and Gas Co., Ltd occupied a site with an area of 13,566.7345 square meters (equivalent to 20.35 mu), of which the State-owned Land Use Certificate covering an area of 6,534 square meters (equivalent to 9.8mu) was obtained by way of grant on 30 October 2008 at a land premium of RMB 1,463,600 and land grant formalities for the remaining 7,032.7345 square meters (equivalent to 10.55 mu) were pending.

On 30 April 2009, the Management Committee of Rugao Port undertook in writing that it would complete formalities of land grant procedures for the remaining 7,032.7345 square meters (equivalent to 10.55 mu) within 2009 and duly completed the procedures of the State-owned Land Use Certificate. Nantong China Oil and Gas Co., Ltd would then pay the remaining RMB 164,400 (the paid land premium of RMB 1,463,600 had been deducted from the contractual amount of RMB 1,628,000) as required by the contract. However, pursuant to the unit price of the land grant as set out in the State-owned Land Use Certificate obtained for the 6,534 square meters (equivalent to 9.8 mu) by Nantong China Oil and Gas Co., Ltd from the people’s government of Rugao and the agreement in relation to the grant of such portion of land, the unit price was RMB 224 per square meter (equivalent to RMB 149,300/mu). Based on this unit price, the land premium for the remaining 7,032.7345 square meters (equivalent to 10.55 mu) would be RMB 1,575,300, which was inconsistent with the remaining amount of RMB 164,400 as committed in writing by the Management Committee of Rugao Port, which brought about uncertainties to the land premium for the land for which land use certificates were pending. As at the valuation date, the construction of roads, greenery and office buildings had begun on the land for which land use certificates were pending.

Since the land with an area of 7,032.67 square meters did not obtain land use certificates or proof from the local land administration authority, and the amount of land premium to be paid in future had been uncertain, it was not included in this valuation. As a result, only the land with an area of 6,534 square meters for which the land use rights certificate had been obtained was included in this valuation.

5. Anhui China Oil and Gas Co., Ltd

The land located at Huoli Town, Huashan Zone, Maanshan City and owned by Anhui China Oil and Gas Co., Ltd did not obtain the State-owned Land Use Certificate. Maanshan City Land Resources Bureau filed Ma Guo Tu Zi 2009 No. 32 “Opinions on ’Application for the Provision of Construction Land to Anhui China Oil and Gas Co., Ltd by Way of Allocation’ by the People’s Government of Huashan District” with the people’s government of Maanshan City for approval. The land with an area of 1.5178 hectare would be for the purpose of urban infrastructure only. Currently, Anhui China Oil and Gas Co., Ltd is proceeding with registration procedures for land allocation. However, according to [2006] No. 035 “Construction Land Planning Certificate”, the area was 14,330.00 square

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meters. Since the State-owned Land Use Certificate of the land was pending, this valuation was based on the land area of 14,330.00 square meters as shown in the “Construction Land Planning Certificate”.

6. Chaozhou China Oil and Gas Co., Ltd

On 21 July 2008, Chaozhou China Oil and Gas Co., Ltd, the Villagers Committee of Kengmen, Tiepu Town, Chaoan County and the people’s government of Tiepu Town, Chaoan County entered into the “Land Appropriation Agreement” in which it was stipulated that the actual area of the appropriated land was 42.133 mu. If the land appropriation procedures were not proceeded with, it would be deemed as a 50-year lease for the period between 21 July 2008 and 20 July 2058. As at 31 March 2009, the land appropriation procedures were pending and Chaozhou China Oil and Gas Co., Ltd temporarily accounted the land as leasehold.

7. Qinghai China Oil Ganhe Industrial Park Gas Corporation

On 12 December 2007, pursuant to the document of Ning Gan Guan Zi (2007) No. 76 “Reply in relation to the Entry of Qinghai China Oil Ganhe Industrial Park Gas Corporation from the Management Committee of Ganhe Industrial Park of Xining Economic and Technology Development Zone” of the Management Committee of Ganhe Industrial Park of Xining (National Grade) Economic and Technology Development Zone, it was agreed that the stations of Qinghai China Oil Ganhe Industrial Park Gas Corporation would occupy a site with an area of 15 mu. As at the valuation date, Qinghai China Oil Ganhe Industrial Park Gas Corporation utilized the land for project construction. However, land grant procedures were pending and no land premium had been paid for the land. The land was not included in this valuation.

(XI) Significant events subsequent to the valuation date of the report:

Where the quantity of assets and the basis of consideration change within the valid period after the valuation date, the following principles shall apply: (1) Where there is any change in the quantity of assets, the value of assets shall be adjusted correspondingly according to the original valuation methods; (2) Where there is any change in the basis of assets valuation and where the change constitutes obvious effects on the results of assets valuation, the principal shall promptly engage a qualified valuation firm for revaluation; and (3) Where there is any change in the quantity of assets and the basis of assets valuation subsequent to the valuation date, the principal shall take these factors into account when quoting the actual consideration of assets, and corresponding adjustments shall be made accordingly.

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XII. EXPLANATION ON LIMITATION ON THE USE OF VALUATION REPORT

(I) The precedent conditions for the effectiveness of the valuation report is that the economic activity of the transfer of equity interests by CPP complies with relevant requirements of regulations of China and is approved by relevant authorities.

It is the legal responsibility of the valuer and the valuation firm to make professional judgment on the value of assets according to the purpose of valuation as stated in this report. However, no judgment on any economic activity corresponding to the purpose of the valuation will be given by the valuer or the valuation firm. Our valuation work, to a great extent, relied on the related information provided by the principal and the entity to be valued. Accordingly, our valuation work is on the basis that documents relating to economic activity and assets ownership, certificates, accounting documents and other relevant legal documents are true and lawful.

(II) The precedent condition for the effectiveness of the valuation report is that the assets to be valued will be used on a continuous basis.
(III) The effective period of the valuation conclusion is one year, i.e. from 31 March 2009 to 30 March 2010. Where the purpose of this valuation is realized within one year after the valuation date, the valuation conclusion may be used as a reference in determining the consideration of the realized economic activity corresponding to the purpose of the valuation. After one year, the valuation conclusion will cease to be valid, and the assets shall be revalued to serve the original purpose.
(IV) This valuation conclusion shall only be used by the principal and its competent authorities for the examination of the valuation report and shall be filed with competent assets appraisal authorities for the examination of the work of valuers. The valuation report is for the exclusive use of the principal and the whole and part of its content shall not be distributed and disclosed to any other unit or individual, nor be published in public media without the consent of the principal.

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XIII.DATE OF VALUATION REPORT

The valuation report is issued on 30 June 2009.

China United Assets Appraisal Co., Ltd.

Legal Representative: Shen Qi

Registered Certified Asset Valuer: Zou Hong

Registered Certified Asset Valuer: Su Cheng

30 June 2009

DOCUMENTS FOR INSPECTION

“Approval in relation to the Transfer of Equity Interest in China City Natural Gas Company Limited by China Petroleum Pipeline Bureau (Zhong You Zi [2009] No. 277);
Copy of Legal Person Business License of the principal;
Information of the entity to be valued and the long-term investee:
(1) Copies of Legal Person Business License;
(2) Copies of accounting reports and auditors’ report as at the valuation date;
(3) Copies of title documents of assets;
Letters of Undertaking from the principal and the entity to be valued;
Letters of Undertaking from the assets valuation firm and the registered valuers;
Copies of Asset Appraisal Qualification Certificate for China United Assets Appraisal Co., Ltd.;
Copies of Corporate Legal Person Business License for China United Assets Appraisal Co., Ltd.;
Copies of Qualification Certificates of valuers of this project;
Copy of Assets Valuation Engagement Agreement.

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GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular includes the particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director and chief executive of the Company is taken or deemed to have under such provisions of the SFO); or which (b) were required to be entered into the register maintained by the Company, pursuant to section 352 of the SFO; or which (c) were required to be notified to the Company and the Stock Exchange, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules are set out below.

2.1 Ordinary Shares of HK$0.01 Each of the Company

		Capacity and
	Number of	Nature of	Percentage of
Name	Shares	Interests	Issued Shares
Li Kwok Sing Aubrey(1)	1,000,000	Beneficial owner	0.02%

Notes:

(1) The interests held by Mr. Li Kwok Sing Aubrey represent long position in the Shares of the Company.

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APPENDIX III

2.2 Share Options

Shares options were granted to the Directors and chief executives of the Company under the executive share option scheme approved by the Board on 3 June 2002, details of which are set out below:

							Outstanding
							at the
				Outstanding	Number of		Latest
	Date of	Exercise	Exercise	at 1 January	Share	Options	Practicable
Name	Grant	Period	Price	2009	Granted	Exercised	Date
			HK$
Directors
Li Hualin	27 Apr 2005	27 Jul 2005 –	1.224	20,000,000	–	–	20,000,000
		26 Apr 2010
	8 Jan 2007	8 Apr 2007 –	4.186	25,000,000	–	–	25,000,000
		7 Jan 2012
	26 May 2008	26 Aug 2008 –	4.240	3,200,000	–	–	3,200,000
		25 May 2013
	26 Mar 2009	26 Jun 2009 –	3.250	–	3,200,000	–	3,200,000
		25 Mar 2014
Zhang	8 Jan 2007	8 Apr 2007 –	4.186	20,000,000	–	–	20,000,000
Bowen		7 Jan 2012
	26 May 2008	26 Aug 2008 –	4.240	2,400,000	–	–	2,400,000
		25 May 2013
	26 Mar 2009	26 Jun 2009 –	3.250	–	2,400,000	–	2,400,000
		25 Mar 2014
Cheng	25 Jun 2004	25 Sep 2004 –	0.940	15,640,000	–	(15,640,000)	–
Cheng		24 Jun 2009
	8 Jan 2007	8 Apr 2007 –	4.186	10,000,000	–	–	10,000,000
		7 Jan 2012
	26 May 2008	26 Aug 2008 –	4.240	1,500,000	–	–	1,500,000
		25 May 2013
	26 Mar 2009	26 Jun 2009 –	3.250	–	1,500,000	–	1,500,000
		25 Mar 2014
Liu Xiao	27 Apr 2005	27 Jul 2005 –	1.224	1,600,000	–	(1,600,000)	–
Feng		26 Apr 2010

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GENERAL INFORMATION

APPENDIX III

Name Date of Grant Exercise Period Exercise Price HK$ Employees 27 Apr 2005 27 Jul 2005 – 26 Apr 2010 1.224 8 Jan 2007 8 Apr 2007 – 7 Jan 2012 4.186 14 Sep 2007 14 Dec 2007 – 13 Sep 2012 4.480 26 May 2008 26 Aug 2008 – 25 May 2013 4.240 26 Mar 2009 26 Jun 2009 – 25 Mar 2014 3.250	Outstanding at 1 January 2009 26,000,000 25,000,000 20,000,000 7,000,000 –	Number of Share Options Granted Exercised – (1,000,000) – – – – – – 7,000,000 – 14,100,000 (18,240,000)	Number of Share Options Granted Exercised – (1,000,000) – – – – – – 7,000,000 – 14,100,000 (18,240,000)	Outstanding at the Latest Practicable Date 25,000,000 25,000,000 20,000,000 7,000,000 7,000,000
	177,340,000	14,100,000	(18,240,000)	173,200,000

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, the chief executive of the Company nor their associates, had any other interests or short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or the chief executive of the Company is taken or deemed to have under such provisions of the SFO); or which (b) were required to be entered into the register maintained by the Company, pursuant to section 352 of the SFO; or which (c) were required to be notified to the Company or the Stock Exchange, pursuant to the Model Code for Securities Transaction by Directors of Listed Issuers contained in the Listing Rules, and none of the Directors, nor their spouse or children under the age of 18, had any right to subscribe for securities of the Company, or had exercised any such right since 31 December 2008 (being the date of the Company’s latest published audited accounts).

2.3 Competing Business

As at the Latest Practicable Date, none of the Directors and their respective associates had any interest in a business which competes or may compete with the businesses of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controlling shareholder).

2.4 Additional Disclosure of Interest

There was no contract or arrangement subsisting as at the Latest Practicable Date, in which any of the Directors was materially interested and which was significant in relation to the businesses of the Group.

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APPENDIX III

Save as disclosed herein, none of the Directors, directly or indirectly, has had any interest in any assets which had since 31 December 2008 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the register of substantial shareholders maintained under section 336 of the SFO, showed that the Company has been notified of the following interests, being 5% or more of the Company’s issued share capital. These interests are in addition to those disclosed above in respect of the Directors and the chief executive of the Company.

			Percentage of the
	Number of Shares		total number of
Name	Direct Interest	Indirect Interest	Shares in issue
Sun World Limited (1)	2,513,917,342 (L)	–	56.38%
PetroChina Hong Kong (BVI)
Ltd. (1)	–	2,513,917,342 (L)	56.38%
PetroChina Hong Kong Ltd. (1)	–	2,513,917,342 (L)	56.38%
PetroChina Company Limited (1)	–	2,513,917,342 (L)	56.38%
China National Oil and Gas
Exploration and Development
Corporation (“CNODC”) (2)	–	72,790,000 (L)	1.63%
CNPC International Ltd
(“CNPCI”) (2)	–	72,790,000 (L)	1.63%
Fairy King Investments Ltd	72,790,000 (L)	–	1.63%
CNPC (1) (2)	–	2,586,707,342 (L)	58.01%
Notes:

(1) Sun World Limited is a wholly-owned subsidiary of PetroChina Hong Kong (BVI) Ltd., which in turn is wholly-owned by PetroChina Hong Kong Ltd.. PetroChina Hong Kong Ltd. is wholly-owned by PetroChina Company Limited, which is in turn owned as to 86.42% by CNPC. Accordingly, CNPC is deemed to have interest in the 2,513,917,342 shares held by Sun World Limited. Mr Li Hualin, the Chairman of the Company and Mr Zhang Bowen, the Chief Executive Officer of the Company are also directors of Sun World Limited, which is a substantial shareholder of the Company (within the meaning of Part XV of the SFO).
(2) Fairy King Investments Ltd is a wholly-owned subsidiary of CNPCI, which in turn is wholly owned by CNODC, which is in turn wholly-owned by CNPC. Accordingly, CNPC is deemed to have interest in the 72,790,000 shares held by Fairy King Investments Ltd.

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GENERAL INFORMATION

APPENDIX III

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any person (other than a Director or chief executive of the Company) who had any interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO.

As at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any person (other than a Director or chief executive of the Company) who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group, or any options in respect of such capital.

4. SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors or proposed directors has any existing service contract or proposed service contract with the Company or any of its subsidiaries which was not terminable by the Company within one year without payment of consideration.

5. MATERIAL ADVERSE CHANGE

The Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2008 (being the date to which the latest published financial statements of the Company have been made up) and up to the Latest Practicable Date.

6. QUALIFICATION AND CONSENT OF EXPERTS

The following are the qualifications of the experts who have given opinion or advice which is contained in this circular:

Name Qualification Guangdong Securities a licensed corporation for type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO BMI Appraisals Limited Independent Professional Valuer China United Assets Appraisal China Certified Public Assets Valuer Co., Ltd.

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GENERAL INFORMATION

APPENDIX III

Each of the experts referred to above has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/ or reference to its name or opinion in the form and context in which it appears.

As at the Latest Practicable Date, the experts referred to above were not beneficially interested in the share capital of any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

None of the experts referred to above, directly or indirectly, has had any interest in any assets which had since 31 December 2008 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the principal place of business of the Company at Rooms 3907-3910, 39th Floor, 118 Connaught Road West, Hong Kong from the date of this circular up to and including 19 October 2009:

(i) The Acquisition Agreement dated 16 September 2009 entered into between the Company and CNPC Pipeline Bureau; and
(ii) this circular.

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NOTICE OF THE SGM

==> picture [254 x 53] intentionally omitted <==

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CNPC (HONG KONG) LIMITED
(incorporated in Bermuda with limited liability)
CNPC (HONG KONG)
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(Stock Code: 0135)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Special General Meeting of CNPC (Hong Kong) Limited (the “Company”) will be convened at Bowen Room 7/F., Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 20 October 2009 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution as an ordinary resolution of the Company:–

“ THAT :

(i) the transactions contemplated under the Acquisition Agreement (as defined in the circular of the Company dated 2 October 2009 (the “Circular”)) (a copy of which is tabled at the meeting and marked “A” and initialled by the chairman of the meeting for identification purposes) be and are hereby generally and unconditionally approved; and
(ii) any one director (if execution under the common seal of the Company is required, any two directors) of the Company be and is/ are hereby authorised for and on behalf of the Company to sign, and where required, to affix the common seal of the Company to any documents, instruments or agreements, and to do any acts and things deemed by him to be necessary or expedient in order to give effect to the Zhongyou Zhongtai Acquisition.”

By Order of the Board Lau Hak Woon Company Secretary

Hong Kong, 2 October 2009

Notes:

A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his/ her stead. A proxy need not be a member of the Company. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the meeting or any adjourned meeting should he so wish.
To be valid, the form of proxy, together with a power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power of attorney or authority, must be deposited at the Company’s principal office at Rooms 3907 – 3910, 39th Floor, 118 Connaught Road West, Hong Kong not less than 48 hours before the time appointed for holding the meeting or adjourned meeting. The form of proxy must be completed strictly in accordance with the instructions set out therein.
For identification purpose only

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NOTICE OF THE SGM

CNPC (as defined in the Circular) and its associates will abstain from voting in respect of the resolution proposed at the SGM.
Unless otherwise defined, terms use in this notice shall have the same meanings as those defined in the Circular.

– 159 –

AI assistant

Raymond Industrial Limited — Proxy Solicitation & Information Statement 2009

49052_rns_2009-10-02_cd81fc3b-aa5e-41b4-adfc-3f716f2a80d5.pdf

CNPC (HONG KONG) LIMITED

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CNPC (HONG KONG) LIMITED

(Stock Code: 0135)

Directors:

Independent Non-executive Directors

To the Shareholders

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

1. INTRODUCTION

1.1 Zhongyou Zhongtai Acquisition

LETTER FROM THE BOARD

2. ZHONGYOU ZHONGTAI ACQUISITION

2.1 Introduction

2.2 Acquisition Agreement

(c) Transfer of 49% interest in Zhongyou Zhongtai to the Company

(d) Consideration

(e) Conditions Precedent

3. INFORMATION ON ZHONGYOU ZHONGTAI

4. COMPLETION

5. REASONS FOR, AND BENEFITS OF, THE ZHONGYOU ZHONGTAI ACQUISITION

6. RELATIONSHIP AMONG THE PARTIES AND CONNECTED TRANSACTION

7. INFORMATION ON THE COMPANY AND CNPC

(a) Information on the Company

(b) Information on CNPC

8. SGM

9. RECOMMENDATION

10. ADDITIONAL INFORMATION

CNPC (HONG KONG) LIMITED

(Stock Code: 0135)

To the Independent Shareholders

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE ZHONGYOU ZHONGTAI ACQUISITION

INTRODUCTION

The Zhongyou Zhongtai Acquisition

LETTER FROM GUANGDONG SECURITIES

Connected transaction

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Background of the Zhongyou Zhongtai Acquisition

LETTER FROM GUANGDONG SECURITIES

Information on the Group

LETTER FROM GUANGDONG SECURITIES

Information on Zhongyou Zhongtai

(2) Reasons for the Zhongyou Zhongtai Acquisition

(3) Principal terms of the Acquisition Agreement

Basis of the Consideration

Trading multiples analysis for the Consideration

LETTER FROM GUANGDONG SECURITIES

Other terms of the Acquisition Agreement

(4) Possible financial effects of the Zhongyou Zhongtai Acquisition

Effect on net assets

Effect on earnings

RECOMMENDATION

INSTRUCTIONS

BASIS OF VALUATION

VALUATION METHODOLOGIES

TITLE INVESTIGATION

VALUATION ASSUMPTIONS

VALUATION CONSIDERATIONS

REMARKS

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

SUMMARY OF VALUES

APPENDIX I

APPENDIX I

APPENDIX I

APPENDIX I

APPENDIX I

APPENDIX I

APPENDIX I

VALUATION CERTIFICATE

Properties held by the Group in the PRC

VALUATION CERTIFICATE

Raymond Industrial Limited Proxy Solicitation & Information Statement 2009