Ptt 06

C o n t e n t s

Financial Highlights .................................................................................................................

PTT Information .......................................................................................................................

Message from the Board of Directors ....................................................................................

Report of the Audit Committee ...............................................................................................

World Petroleum Overview .....................................................................................................

Performance Review ...............................................................................................................

PTT and Its Affiliates ...............................................................................................................

Revenue Structure of PTT and Subsidiaries by Product Line .............................................

Connected Transactions .........................................................................................................

Management Discussion and Analysis of Financial Status and Performance ...................

Risk Factors .............................................................................................................................

Organization Chart ..................................................................................................................

PTT Board of Directors ...........................................................................................................

PTT Executives ........................................................................................................................

Shareholding and Management Structure .............................................................................

Corporate Governance ............................................................................................................

Recognitions ............................................................................................................................

Quality, Safety, Health and Environment Performance ........................................................

Social and Environmental Responsibility for Sustainability .................................................

Report of Board of Directors’ Responsibilities ......................................................................

Auditor’s Report .......................................................................................................................

Financial Statements ...............................................................................................................

Audit Fees of the Auditors ......................................................................................................

Glossary of the Technical Terms ............................................................................................

10

13

14

16

18

22

44

45

46

50

56

61

62

70

77

94

108

114

120

128

129

130

200

201

010 P T T P u b l i c C o m p a n y L i m i t e d

F I N A N C I A L H I G H L I G H T S

Notes:

1/ Calculated from the weighted average number of ordinary shares of 2,797.25 million (as of December 31, 2004), 2,797.25 million

(as of December 31, 2005), and 2,799.75 million (as of December 31, 2006).

2/ PTT Board of Directors approved the rate of dividend paid to the shareholders on February 23, 2007 and the rate will be brought to the 2007

AGM for resolution on April 30, 2007.

2 0 0 4 2 0 0 5 2 0 0 6

Statements of Income (Million Baht)

Sales Revenues 644,694 926,269 1,213,985

Earnings before Interest Expenses, Finance Costs, Income Taxes,

Depreciation and Amortization Including Other Expenses

and Income not Relevant to Operations (EBITDA) 79,296 114,045 142,675

Net Income 62,666 85,521 95,261

Balance Sheets (Million Baht)

Assets 487,226 649,807 751,453

Liabilities 302,311 371,374 397,131

Shareholders’ Equity and Minority Interests 184,915 278,433 354,322

Shareholders’ Equity 164,374 230,817 287,832

Shares

Issued and Fully Paid-up Share Capital (Million Shares) 2,797.25 2,797.25 2,804.93

Book Value Per Share1/ (Baht) 58.76 82.52 102.81

Earnings Per Share1/ (Baht) 22.40 30.57 34.02

Dividends Per Share (Baht) 6.75 9.25 10.502/

Dividend Payout Ratio on Net Income (%) 30.13 30.26 30.86

Share Price as of Ending Financial Period (Baht) 173.00 226.00 210.00

Financial Ratios

Net Income on Total Revenues (%) 9.21 8.93 7.57

Return on Equity (%) 39.93 36.91 30.11

Return on Total Assets (%) 15.44 15.04 13.60

Debt to Equity (Times) 1.63 1.33 1.12

Net Debt to Equity (Times) 0.60 0.54 0.38

Net Debt to EBITDA (Times) 1.40 1.31 0.94

Interest Coverage (Times) 10.09 14.10 13.75


P T T P u b l i c C o m p a n y L i m i t e d 011

Unit : Million Baht

Sales Revenues

41%43%

16%

25%

18%

12%

39%

6%

38%

19%

9%

22%

7%5%

62,666

85,521

95,261

644,694

926,269

1,213,985

66%

4%

30%

22%

65% 68%

22%

10%

Growth 44%

Growth 31%

Oil BusinessGroup

Petrochemicals and Refining Business Group

PTTEP

Growth 36%

Growth 11%

PTT

Rayong RefineryCo., Ltd.(RRC)

Gain from selling shares in RRCGain from the debt restructuring in RRC

PTTCH

Associates

200620052004

Unit : Million Baht

Net Income

200620052004

13%

Exploration & Productionand Gas Business Group


Financial Ratio

Unit : Million Baht

Balance Sheets

2004 2005

0.6

0.5

0.4

10.1

14.113.8

1.4

1.3

0.9

195,624

101,415

190,187184,915

201,593

100,718

487,226

649,807

305,378

122,415

222,014

219,610

151,764

278,433

337,132

160,891 219,951

354,322

20062004 2005

751,453

253,430177,180

2004 2005 2006

39.9

36.9

30.1

1.6

1.3

15.4

15.0

13.6

1.1

2006

FixedAssets

OtherAssets

CurrentAssets

Growth 33%

Growth 16%

Shareholders’

Equity

Long-termLoans

OtherLiabilities

Interest Coverage (Times)

Net Debt to EBITDA (Times)

Net Debt to Equity (Times)Return on Equity (%)

Return on Total Assets (%)

Debt to Equity (Times)


Name : PTT Public Company Limited

Initial : PTT

Registered Number : 0107544000108

Type of Business : Engage in integrated gas and petroleum business, and other support activities, including a dominant

position in oil and investment in related business.

Number of Employee : As of December 31, 2006 employees of PTT, its Subsidiaries and Joint-Ventures numbered : 8,533

● PTT Plc. (PTT) 3,184

● PTT Exploration and Production Plc. (PTTEP) 1,103

● PTT (Cambodia) Co., Ltd. (PTTCL) 59

● Subic Bay Energy Co., Ltd. (SBECL) 90

● Retail Business Alliance Co., Ltd. (RBA) 727

● PTT International Trading Pte., Ltd. (PTTT) 6

● PTT Natural Gas Distribution Co., Ltd. (PTTNGD) 69

● PTT LNG Co., Ltd. (PTTLNG) 20

● PTT Phenol Co., Ltd. (PPCL) 40

● PTT Chemical Plc. (PTTCH) 2,387

● PTT Polymer Marketing Co., Ltd. (PTTPM) -

● PTT Utility Co., Ltd. (PTTUT) 50

● Energy Complex Co., Ltd. (EnCo) 16

● PTT ICT Solutions Co., Ltd. (PTTICT) 395

● PTT Polymer Logistics Co., Ltd. (PTTPL) 3

● Trans Thai-Malaysia (Thailand) Ltd. (TTM (T)) 158

● Trans Thai-Malaysia (Malaysia) Ltd. (TTM (M)) 6

● District Cooling System and Power Plant Co., Ltd. (DCAP) 11

● PTT Asahi Chemical Co., Ltd. (PTTAC) -

● PTT HMC Polymer Co., Ltd. (HMC) 229

Location : 555 Vibhavadi Rangsit Road, Chatuchak, Bangkok 10900, Thailand

Telephone : 0-2537-2000

Telefax : 0-2537-3498-9

Website : http://www.pttplc.com

Registered Capital : Baht 28,572,457,250,

including 2,857,245,725 million common shares, Baht 10 per share (as of December 31, 2006)

Paid-up Capital : Baht 28,049,256,250,

including 2,804,925,625 common shares, Baht 10 per share (as of December 31, 2006)

References

Share Registra : Thailand Securities Depository Company Limited Auditor : Office of the Auditor General

4th, 6th and 7th Floor, SET Building, Bangkok 10500, Thailand Rama VI Road, Phayathai, Bangkok 10400, Thailand

Telephone : 0-2359-1200-1 Telephone : 0-2618-5803

Telefax : 0-2359-1259 Telefax : 0-2618-5807

P T T I N F O R M A T I O N



“ √ ® “ ° § ≥ – ° √ √ ¡ ° “ √M E S S A G E F R O M T H E B O A R D O F D I R E C T O R S

The year 2006 was the year of an auspicious occasion of the 60th Anniversary Celebrations of His

Majesty’s Accession to the Throne, during which all Thais played their homage to our King’s benevolence and

the myriad tasks he has done for the well-being of his subjects. This is evident in the Thais’ collective commitment

to doing good deeds in dedication to His Majesty.

To this end, it is the commitment of PTT Public Company Limited (PTT) to “Develop Sustainably” by

conducting the business with equitable treatment of the stakeholders, as well as the stewardship of communities

and the environment. Our core project in honor of His Majesty, “Vetiver Grass Cultivation Program to honor HM

the King on the auspicious occasion of the 60th Anniversary Celebrations of His Majesty’s Accession to the Throne,”

followed his initiative to support Thai people to grow vetiver to preserve soil and water. PTT also participated in

national activities to honor our King, including a grand exhibition to commemorate this auspicious occasion and

a grand display of fireworks coupled with a light-and-sound show entitled “Ray of Hope and Loyalty.” Toward

year-end, PTT took part as a major sponsor of the Royal Flora Exhibition Ratchaphruek 2006 at the Royal

Agricultural Research Center in Mueang District, Chiang Mai Province.

PTT and its subsidiaries experienced remarkable success in conducting its business this past year under

a management approach focused on creating synergy in the PTT Group, designed to sharpen its international

competitive edge. As a group, we derived Baht 1,213,985 million in sales revenue, a 31.1% rise from the previous

year; Baht 142,675 million in EBITDA, a 25.2% rise; Baht 95,261 million in net income, an 11.4% rise; and Baht 10.50

per share in dividend.

The Exploration & Production and Gas Business Group sold 3,084 MMcf/d, a 2.9% rise from 2005,

while our gas separation plant product sales amounted to 3.67 million tons, a 6% rise from the same period. PTT’s

promotion of Natural Gas for Vehicles (NGV) continued, as it is clean, environmentally benign, and less costly than

gasoline.

For the year, the Oil Business Group sold 14,310 million liters or roughly 246,600 bbl/d, a 3.3% drop from

2005, as world oil prices continued their surge and the domestic diesel price was floated, prompting people to save on

diesel. Yet, PTT continued occupying its top market share for the 14th consecutive year with an overall 34.9%


( M r . C h e r d p o n g S i r i w i t ) ( M r . P r a s e r t B u n s u m p u n )C h a i r m a n P r e s i d e n t

market share. This is a proof of domestic oil business leadership committed to developing quality products and

alternative energy, also evident in PTT’s pioneering role in the sales of the high-quality gasohol product known as

“PTT Gasohol 95 Plus” at its service stations nationwide. Another good example is the development of the

Company’s lubricating oil product, “Performa Super Synthetic,” which is a new, 100% synthetic gasoline lubricating oil

that can save 5-8% on gasoline consumption.

For the year, PTT’s international trading of crude oil, condensate, refined products, and petrochemicals

amounted to 35,270 million liters or roughly 607,798 bbl/d, a 10.7% rise from 2005. The Petrochemicals and

Refining Business Group underwent restructuring for sharper business operation, whereby PTT Chemical Public

Company Limited has been the leader in the olefins business and expanded its investment and joint investment

into midstream and downstream industries. Examples included the foundation of PTT Asahi Chemical Company

Limited for acrylonitrile and methyl methacrylate production, and the purchase of Polypropylene producer HMC

Polymers Company Limited shares. For greater efficiency of the refining group, PTT successfully brought Thai

Petrochemical Industries Public Company Limited (TPI) out of the Central Bankruptcy Court’s business rehabilitation

plan. In addition, PTT bought capital increase shares of Bangchak Petroleum Public Company Limited to undertake

product quality improvement, and listed Rayong Refinery Public Company Limited on the Stock Exchange of Thailand.

Thanks to PTT’s potential, PTT has played a key role in generating confidence for investors, domestic

and international, in the Thai economy. In year 2006, PTT received 29 awards and prestigious ranking given by

14 organizations and institutions, including Forbes Magazine, which ranked PTT 372nd among the top 500 largest

companies (in 2005, number 425); Fortune Magazine, which ranked PTT 265th among its Global 500 largest

companies (in 2005, number 373). PTT’s efficient, transparent, and ethical business operation filled with social

and environmental responsibility won an outstanding state enterprise award for 2006 from the Ministry of Finance

in three categories – outstanding performance, outstanding board of directors, and outstanding social programs.

PTT was one of the four winners of the Best Corporate Social Responsibilities (CSR) Awards of the Stock Exchange

of Thailand, and was named Best Managed Company and Best Corporate Governance by FinanceAsia Magazine.

The last two acclaims were repeats of 2005.

The Board of Directors of PTT Public Company Limited managed under the corporate governance with

a firm commitment to ethical transactions to foster economic progress together with the improvement of life and

the environment. On behalf of the Board, we sincerely thank the shareholders, customers, business partners,

financial institutions, the media, employees, and the Thai public for entrusting PTT with these responsibilities and

for supporting PTT through the years.


(M r . O l a r n C h a i p r a v a t)

C h a i r m a n , A u d i t C o m m i t t e e

The Board of Directors of PTT Public Company Limited appointed the Audit Committee, consisting of

three independent directors specializing in finance, and organization management, namely:

1. Mr. Olarn Chaipravat Chairman

2. Mr. Phadhadej Dhamcharee Member

3. Mr. Suchart Thada-Thamrongvech Member

During the year, the Committee held 10 meetings with the Management and relevant departments, one

of which was with the Management alone. Other meetings were meant to allow critical departments to present

their performance, risk management practices, operating problems and obstacles. The Committee held quarterly

meetings with the Office of the Auditor General of Thailand (OAG), which served as PTT’s external auditor, to

review PTT’s financial statements, audit plan, and OAG’s audit independence.

During the year, the Committee performed its duties as assigned by the Board and in compliance with

the criteria and practical guidelines governing the Committee, in line with the regulations of the Stock Exchange

of Thailand (SET), namely review of corporate governance; review of financial statements; review of risk

management; review of internal control assessment; and oversight of internal audits, as summarized below.

1. Review of corporate governance. The Committee ensured transparent information disclosure in line

with the announcements of the Securities and Exchange Commission (SEC), SET, and relevant laws. To illustrate,

it reviewed the stated number of directorships held by Management team members in listed companies; reviewed

connected transactions with a focus on those conducted between the Exploration & Production and Gas

Business Group, the Oil Business Group, the Petrochemicals and Refining Business Group, and Head Office,

to ensure that all transactions were conducted on an arm’s length basis.

2. Review of quarterly, annual, and consolidated financial statements. This was meant to ensure that

PTT observed the accounting standard under the Accounting Act, B.E. 2543 (2000), and the announcements of

SEC and SET; that its accounting procedures and financial statements were both accurate and reliable; that

adequate and timely information was disclosed in financial statements for the benefit of investors or potential

R E P O R T O F T H E A U D I T C O M M I T T E E


investors. The Committee reviewed with the auditor the Company’s complete and accurate financial statements,

its adequacy of information disclosure, and adjustments for accounting entries significantly affecting the statements.

3. Review of risk management. To ensure acceptable risk management practices, the Committee directed

PTT Group’s work by checking the risk management plan of 2006 and its quarterly achievements according to

the plan. The Committee made recommendations on dealing with major risks, including the addition of security

measures concerning gas transmission, gas separation plants, and petroleum depots around the country. For

these, PTT had formulated preventive and preparedness plans. Provided recommendations on financial and

investment risk management, with a focus on PTT Group’s stringent control on investment and risk management

of assets and liabilities in foreign currencies to remain balanced and suitable.

4. Review of internal control assessment. PTT has an adequate internal control system for its business,

and achieves the objectives of internal control as far as efficiency and effectiveness of resource utilization is

concerned including due care of properties, and prevention or minimization of defects, losses, waste, or fraud.

The Committee also investigated the reliability of financial and operation reports, compliance with laws, rules,

regulations, and Cabinet resolutions. The auditors agreed that no significant findings or shortcomings were

encountered. During the year, PTT assessed its internal control against the regulations of the Auditor Commission on

internal control standard, B.E. 2544 (2001). The audit result of the internal control by the management and the

office of internal audit were found adequate and effective.

5. Oversight of internal audit. The Committee oversaw the conduct of internal audit, the audit plan, and

the assessment of the operation, budget, and manpower of the internal audit unit through a review of audit reports

of the approved 2006 plans to ensure efficient and effective practices, a sound internal control system, and

compliance with relevant laws on securities and exchange, and laws related to PTT’s business. For good

corporate governance, the Committee ensured corrective actions of significant items in the audit report. In addition,

it deliberated the 2007 audit plan, developed from the findings of internal control assessment and from PTT’s risk

base. To institute greater cooperation, knowledge and experience sharing, and to achieve world-class, uniform

practices, PTT’s internal auditor and other internal auditors of PTT Group got together during the year and planned

inspection of information technology; finance and accounting and operation; safety, occupational health, and

the environment; and subsidiaries and associated companies. The goal was to have an audit plan that covered all

significant issues; prevented potential risks; and had suitable internal control mechanisms, all these to deal with

company-wide risks for the maximum benefit of PTT and shareholders. Managers of the audited departments

were also asked to assess the performance of the internal auditors and share their recommendations on the

improvement of internal audits.

6. Self-Assessment. The Committee conducted individual (through cross assessment) and collective

self-assessment. For the 2006 performance, either method yielded “very good” findings.

7. Review of audit plans and audit independence. The Committee chose the auditor for PTT and

recommended its fee to the Board, which would table it for the approval of the shareholders at their annual meeting

in 2007. The proposal is to appoint the Office of the Auditor General of Thailand as the auditor for 2007.

The Committee values good corporate governance, internal control, and continuous risk management so

that PTT may command these same qualities in line with its business, together with reliably accurate accounting

practices and financial statements, and compliance with relevant laws and regulations.


W o r l d P e t r o l e u m O v e r v i e w


W O R L D P E T R O L E U M O V E R V I E W

World OverviewThe world economy continued its growth in 2006, as most leading countries on economy found ways to thrive

despite a lack of balance in the global economy, plus volatile consumer product prices, financial and capital markets. The

International Monetary Fund (IMF) has estimated the world GDP for 2006 at 5.1%, the second highest figure in nearly

three decades, eclipsed only by the 2004 GDP growth (5.3%).

And because of the healthy economic expansion above 4.5% for a third straight year, the average price of

Dubai crude oil in 2006 stood at US$ 61.5/bbl, a 25% rise or US$ 12.3/bbl from last year. Significant price rises with high

volatility was the theme of the first three quarters because of political problems in oil-producing nations and those in

the Middle East, in particular Nigeria; Iran, with its nuclear energy development projects, and the more intense movement

of the nationalist in Africa and South America – with threats of nationalizing multinational oil companies’ assets. Such

moves have caused delays to new resource development, efficiency improvement programs, and programs to maintain

production levels. Oil production costs have in the meantime risen by up to threefold, especially for new exploration

and production projects, not to mention the shortage of experienced personnel.

Worldwide capacities of crude distillation units rose by 1.2 million barrels per day (MMbbl/d), outstripping oil

demand growth of 0.8 MMbbl/d, resulting in a net growth in refining capacity but also a still-tight market supply, thereby

causing fluctuations in the prices of refined products and refining margins. For the latter half of the year, oil prices weakened,

and so did refining margins. This has resulted in a net drop in the average refining margins, whereas petrochemical prices,

and demand were still high continuously from last year and were growing in line with the economic expansion. Meanwhile,

turnarounds of several plants and small capacity additions have resulted in the tight supply during certain periods.

Prices of Dubai Crude and Petrochemical Products in 2006Petrochemical Price ($/Ton)

Prices of Dubai Crude, Refined Products, and Gross Refining Margin in 2006$/bbl

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Refining margin of Dubai - High Conversion, Singapore * ($/bbl)

Crude Oil Price ($/bbl)

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.


Domestic OverviewBuoyed by surprising export and service-sector performance, the Thai economy grew by 5% in 2006 against

4.5% recorded in 2005. The positive result help compensate the consumption and investment slowdown caused by high

oil prices, low interest rates, and low confidence of consumers and investors. In the latter half of the year, inflation steadily

fell along with falling oil prices, thereby causing the average annual inflation rate to stand at 4.7%, slightly higher than the

previous year. From early on in the year, the baht steadily strengthened as a result of the eroded confidence in the US dollar,

evident in the US economic slowdown. What therefore happened was an enormous influx of new capital to regional

securities and financial instrument markets, including Thailand. Toward year-end, the baht has become much stronger than

regional currencies, prompting the Bank of Thailand to announce its measures to maintain imported foreign currencies in

the short term on December 18, 2006, to stem speculation of the baht. This measure has slightly weakened the baht to

an all-year average of 38 against the US dollar.

Domestic fuel use, consisting of oil and natural gas, registered a total of 1,260.6 Kbd equivalent, a drop of

0.1% from last year. Thanks to the government’s continued price subsidy, LPG expanded by the highest rate of 14.2%

and its extensive use in vehicles continued. On the contrary, diesel consumption fell by 6.2% because of the

discontinued price subsidy last year, and gasoline consumption fell by 0.5%. Fuel supply from the domestic production

and aboard for petrochemical feedstock totalled at 1,610.1 Kbd equivalent, a 1.6% rise from last year, which signified

62.2% import dependence. Total petroleum exports rose by about 12.9% from last year, registering 210.8 Kbd equivalent,

a result of the 2% shrink in domestic consumption. A rise in the domestic petrochemical was in line with the country’s

economic expansion.

Outlook for 2007The world economy is apparently slowing down in 2007; especially the US, where domestic demand will likely

be moderated by the stagnant real-estate market, a result of the previously stringent financial policy implementation.

Consequently, the central banks in several countries must try to balance inflation control with economic growth. According

to analysts, the interest rate policy of the US have peaked and will start declining in 2007 in order to maintain the US

economic growth. Meanwhile, interest rate policy in Europe and Japan will continue to rise by 0.25-0.5% to stem inflation,

while in Asia the economy looks bright but exports will probably be affected by the economic slowdowns of their business

counterparts. IMF has predicted that the world economic growth would slow down to 4.9% in 2007.

As regards Dubai crude, its price in 2007 will continue to be balanced with some 5-10% price weakening,

and the average is projected at US$ 50-55/bbl. Volatility will continue to prevail as in the past three years. Non-OPEC

countries are likely to gain 1-1.8 MMbbl in capacity, which will fairly balance the global call on oil, projected to rise by

1.2-1.5 MMbbl – 50-60% of which will be coming from Asia. A critical development is political problems in oil exporting

countries and the Middle East countries, as there is no quick end in sight, thereby causing worries on the part of the

oil market and affecting the prices of refined products and refining margins. Volatility will also prevail in the product

markets – but prices will decline proportionally to crude prices. Petrochemical prices are projected to remain high,

as the incremental demand will outgrow the incremental capacity. New projects are being postponed from 2007

to 2008-2010, particularly in the Middle East countries – which is when the down cycle is expected to begin in earnest.



Unit : Kbd

Thailandûs Petroleum Balance in 2006*

Supply Demand/Distribution

Refined Products25.9

-30.6%

Crude Oil825.5-0.3%

Natural Gas149.51.5%

Crude Oil129.013.3%

Condensate75.48.6%

Natural Gas404.72.7%

Import

62.2%

Indigenous

37.8%

Combined GSP Capacity

1,755 MMcf/d

Gas Use 90.9 8.1%

Summary

Total 1,610.11.6%

Total Demand 1,260.6 -0.1%

Oil Products 705.9 -2.0%

Natural Gas 554.7 2.4%

LPG Domestic Export

(Exclude Petrochemical 85.9 18.4

feed stocks) 14.2% -15.4%

Domestic Export

Gasoline 124.3 33.1

-0.5% -5.0%

Domestic Export

Jet / Kerosene 78.2 18.1

5.2% 74.3%

Domestic Export

Diesel 316.6 50.7

-6.2% 62.5%

Domestic Export

Fuel Oil 100.8 24.4

-5.7% 57.0%

Commercial / Industry /

Transport Sector 672.8

-2.1%

Power Sector 33.1

1.1%

Export

Crude Oil 66.1

0.8%

Power Generation 411.1

1.1%

Industry 50.4

10.5%

Export 210.8 12.9%

Refined Products 144.7 18.4%

Crude / Condensate 66.1 0.8%

Combined Capacity of7 Refineries1,017 Kbd

Utilization Rate 91.0%

Oil

Gas

LPG form GSPs

72.3

13.2%

* Source: DOEB, DMF, EPPO, PTT, as of February 9, 2007

As for the Thai economic outlook, the government is speeding up its disbursement of the national budget

and continuing its mega-projects to assure investors. The falling interest rates will make domestic investments a key

economic driving factor together with exports. Exports will lose some steam in line with the world economy and that

of trading partners, and with the stronger baht. According to the National Economic and Social Development Board,

the domestic economic growth should register 4-5%, inflation down to 2.5-3%, and refined petroleum products will

slow down by 1-2% - as the third gas pipeline has been completed, thereby inducing more gas demand for power

generation. The volume of fuel oil expected to be displaced is 14,000 bbl/d, causing gas consumption to rise by 8% in 2007.

Also, the call for petrochemical products will amount to 1.2-1.5 times of the GDP growth.



P e r f o r m a n c e R e v i e w


28.5

64.0

76.7

45.7

40.8

49.2

49.2

61.5

33.7

47.2

62.0

73.1

350

1,080

431

512

905

770

823829

869849

956

1,126

929 911

1,161

20062004 2005 20062004 2005

P E R F O R M A N C E R E V I E W

It was another remarkable year for PTT and its subsidiaries in business performance and stewardship

of society. Business continued to be managed under a synergistic approach known as the PTT Group, which

defines strategies to add business value through the PTT Group Value Chain while developing critical processes

suitable for current circumstances of volatile economic conditions and energy prices. Notably, for the PTT Group’s

highest business efficiency and effectiveness in the move toward a High Performance Organization to contest in the

international arena, risk management needs to be implemented together with change management. Recognizing its

role as the national oil company, PTT is committed to supporting the government’s energy policy in various aspects:

security of supply, promotion of alternative forms of energy to cut imports, and promotion of economical and efficient

use of energy. Above all, PTT is committed to laying down a solid foundation for sustainable energy management in line

with His Majesty the King’s sufficiency approach, a royal initiative for Thailand.

Exploration & Production and Gas Business GroupThe year continued to see greater natural gas and product output, rising with elevated prices of petroleum

and petrochemicals. To add value to and maximize the benefit of natural gas, new businesses have come into

existence, and gas transmission networks have been expanded to meet the rising demand and fulfill national energy

security.

Prices of Petroleum and PetrochemicalsIncorporating the prices of olefins and aromatics, these continued to be high. The price of Saudi Arabia-based

LPG surged from US$ 431/ton to US$ 512/ton, as did the Southeast Asia spot prices of ethylene and propylene –

going from US$ 911/ton and US$ 956/ton in 2005 to US$ 1,161/ton and US$ 1,126/ton in 2006. Similarly, the prices of

benzene (Bz) and paraxylene (Px) rose from US$ 829/ton and US$ 905/ton in 2005 to US$ 869/ton and US$ 1,080/ton

respectively in 2006.

Petroleum Price Petrochemical Price

Dubai

HSD

ULG 95

Fo

Propylene

Unit : US$/bbl Unit : US$/ton

LPG (CP)

Benzene

Ethylene

Paraxylene


20062004 2005

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

1,933

207

20062004 2005

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2,9963,084

2,773

2,749

3,462

3,668

418

547

1,577

221

832

1,969

239

980

480

993

389

251

417

723

491

264

429

802

1,010

527

301

824

1,015

417

476

Gas Product SalesUnit : Thousand Tons

Gas SalesUnit : MMcf/d at 1,000 Btu per Cubic Foot

Ethane LPG NGLPropane

EGAT SPP GSPIndustriesIPP

Natural Gas DistributionNatural gas sales volume totaled 3,084 MMcf/d, a 2.9% rise from last year, resulting from gas producers’

expanded capacity and the emerging transmission capacity of the western pipeline system due to the completed

compressor unit at Block Valve Station #7 in Kanchanaburi. This completion allowed gas transmission through the

Sai Noi - South Bangkok pipeline to the South Bangkok Power Plant in December 2006. As a result, the gas delivered

to power-sector users rose by 0.8% to 2,257 MMcf/d in line with the rising domestic consumption. Also, industrial gas

users received 14% more gas, or about 301 MMcf/d, in line with the constantly expanding economy, and gas separation

plants received 6.9% more gas to 526 MMcf/d. In summary, PTT sold 73% of the gas to power-sector users, 10% to

users in the industrial and transport sectors, and 17% to gas separation plants during the year. Indigenous gas accounted

for 73% with the rest coming from Myanmar.

Gas Separation Plant (GSP) Product SalesGSP sales totaled 3,668 thousand tons, a 6% rise from last year. Capacity utilization rates remained

high because of the continued efficiency improvement of GSPs. The five GSPs commanded 1,760 MMcf/d in gas

feed capacity and their products included ethane, propane, LPG, and natural gasoline. These products served as

petrochemical feedstock and fuels for domestic consumption and export.

Growth 3%Growth 8%

Growth 26%

Growth 6%


GSA signing for use of natural gas in power generation

at Nam Phong, Khon Kaen

GSA signing for use of natural gas in power generation

at Bangpakong and South Bangkok

Highlights of Exploration & Production and Gas Business GroupSecuring Supply

● PTT signed an amendment agreement to the export gas sales agreement as the buyer, with the Yadana

consortium of gas sellers – PTTEP International, Total E&P Myanmar, Unocal Myanmar Offshore, and Myanmar

Oil & Gas Enterprise (MOGE) – to raise the daily contract quantity from 525 to 565 MMcf/d, effective September 1, 2006.

● PTT signed a preliminary agreement with Pars LNG of Iran to import 3 million tons/year (about 400 MMcf/d)

of LNG produced under the Pars LNG Project for 20 years, effective from 2011, to raise the national security of supply

and meet the rising and long-term demand for natural gas, in addition to diversifying the sources of energy.

Expanding the Market

● PTT signed the second amendment to the gas sales agreement (GSA) with the Electricity Generating

Authority of Thailand (EGAT), whereby PTT would raise the volume of gas delivered to EGAT to 960 MMcf/d through

the expiry of the agreement. The gas would be used in fueling Bangpakong and South Bangkok Power Plants,

thereby lowering the volume of fuel oil used for power generation.

● Natural gas delivery from Myanmar began via the Sai Noi - South Bangkok transmission line, a new

segment of PTT’s western pipeline system, to EGAT’s South Bangkok Power Plant to replace fuel oil. The delivered

volume of 50 MMcf/d will in time rise to 160 MMcf/d.

● PTT and EGAT signed a GSA on the supply of natural gas to the Nam Phong Power Plant. Natural gas

from Phu Hom Field of Udon Thani has been introduced to the plant. Initially, Phu Hom would supply about 30 MMcf/d

and this would in time rise to 105 MMcf/d, which, when combined with the Nam Phong gas, would raise the total gas

delivery to 135 MMcf/d.

● PTT, Dhanarak Asset Development Company, and the Metropolitan Electricity Authority (MEA) signed

an agreement on the supply of chilled water to the Bangkok Metropolitan Administration Government Agency Center

Project on Chaeng Wattana Road in Bangkok. Under the agreement, Dhanarak will transfer the land for PTT and MEA

to build a combined heat and power system plant within one year. PTT will supply natural gas to the plant, which is

expected to come on stream by March 1, 2008 under a 30-year contract that ends on June 30, 2038.

● PTT and Dawood Hercules Chemicals Limited of Pakistan signed a memorandum of understanding for

joint investigation of opportunities to conduct gas business in that country.


Gas

Ch

ain

Oil

Ch

ain

Pet

roch

emic

al C

hai

n

Exploration & Production(PTTEP)

Natural Gas

Pipeline

Crude OilProcurement

Crude &Condensate

TradingCrude &Condensate

PetroleumProducts

Olefins &Aromatics Plants

Petrochemical IntermediatePlants : MEG, Phenol, etc.

C r e a t e V a l u e T h r o u g h B u s i n e s s C h a i n

Upstream Intermediate


Export Markets

End Customers

Natural Gas

Gas SeparationPlants

GasProducts

Power Plants

Industry

NGV

Electricity

District Cooling System

Logistics

Refineries

PTT Stations

Oil

LPG

LubeBase Plant

Plastic Resins End Products

Downstream


≈ßπ“¡∫—π∑÷°¢âÕμ°≈ß„™â NGV „π‡√◊Õ‡øÕ√å√’ËSigning of agreement for NGV application in ferriesSigning of agreement for chilled-water supply to

Government Agency Center Project

Promoting Natural Gas for Vehicles (NGV)

● To promote taxis’ conversion to NGV, PTT launched a conversion program for LPG-powered taxis

and brand-new taxis, with PTT sponsoring up to Baht 30,000 to 40,000 each in conversion costs from May 8, 2006 to

the end of April 2007. The target number of taxis was 30,000.

● PTT and Rooks Homes Company signed an agreement on the installation and retrofitting of NGV

equipment in ferries at the Center Point port in the province of Trat. PTT, Ruea Duan Chao Phraya Company, and GFS

Asia Pacific Company (a Diesel Dual Fuel NGV equipment expert) signed an agreement on the installation of NGV

equipment in express passenger boats plying the Chao Phraya River. In both cases, the intention was for the two

operators to modify or change their diesel engines to NGV.

● PTT and Bangchak Petroleum Plc. (BCP) launched the first Bangchak NGV service stations and planned

to launch up to 20 stations, with PTT sponsoring the costs of all such stations under the Bangchak brand. BCP is to

allocate a certain area at each station for the installation of NGV equipment and NGV sale. PTT and Petronas (Retail)

Thailand Company also signed a similar memorandum of understanding on NGV service at Petronas outlets.

● The Ministry of Energy and PTT launched a program called “Thai NGV, Innovative Motor Fuel” to

drum up support for the use of NGV in the transport sector. Under the program, a memorandum of understanding on

a 7,000-million-baht NGV credit program was signed by PTT and eight commercial banks, namely Bangkok Bank,

Siam Commercial Bank, Bank Thai, Thai Military Bank, Government Savings Bank, Kasikorn Bank, Bank of Ayudhya, and

Krung Thai Bank. Another memorandum of understanding on the promotion of NGV in buses and trucks was signed

by PTT and four transport operators, namely Siri Project Construction, Bunyarith Transport Plc., Wangsakankit, and

Saraburi Truck Sales Companies on one side, and P.S. Natural Gas Company (an NGV equipment installation expert) and

three commercial banks, namely Kasikorn Bank, Bank of Ayudhya, and Krung Thai Bank. The four transport operators

were to install or modify their buses and trucks to run on NGV using the credit given by the three banks while PTT

was to sponsor the construction of NGV service stations in areas provided by the operators.

● PTT launched loan service campaigns for NGV installation with GE Capital (Thailand) Co., Ltd., Capital OK

Co., Ltd., and Aeon Thana Sinsap (Thailand) Plc. It also launched “NGV Loan Service at Installation Companies

with Thanachart Bank” which customers were offered loans and NGV installation at 10 PTT certified installation

companies. These campaigns targeted to encourage the public and operators in transportations sector to use natural

gas fuel instead of oil. Moreover, the company extended the “PTT for People” program which would approve Baht 10,000

reduction for every customer who paid for the NGV installation in cash.



‚§√ß°“√ ‘π‡™◊ËÕ ”À√—∫μ‘¥μ—ÈßÕÿª°√≥å NGVNGV conversion credit projectLaunch of Thai NGV, Innovative Motor Fuel Project

● Towards the year end, PTT was accelerating the NGV service station expansion to reach 102 stations, with

the aim to alleviate the public burden on fuel prices and attract more people and transport operators to turn to NGV.

To this end, PTT still maintains the natural gas price for vehicles at Baht 8.5/kg. until the end of 2007.

● PTT and Dhiphaya Insurance Plc. signed an agreement on the collaboration to provide insurance for NGV

equipment in cars, whereby PTT would take out insurance against damage to gasoline engines of four-wheeled

passenger cars if the damage is due to NGV equipment installation and a new engine is needed. Dhiphaya would

take care of the expenses for the new NGV engines to cars that need new NGV engines for up to Baht 60,000

under a one-year protection period. As regards the portion of the cost beyond this limit, PTT would pay the amount.

The above conditions applied to NGV engines installed by PTT’s garages and those garages certified by PTT, effective

April 26, 2006.

● PTT and the National Electronics and Computer Technology Center, Ministry of Science and Technology,

signed an agreement on a pilot experiment of the electronics control system (ECU) in NGV engines. This embedded

system is the key to efficient distribution of NGV and supports modification to suit engine types, thereby benefiting

NGV promotion and development of the domestic motor-engine electronics industry.

Expanding the Transmission Network

To enhance the potential for natural gas transmission to meet the domestic demand, PTT launched gas

transmission pipeline construction to raise the ability to receive natural gas under the modified Third Gas Pipeline

Project, 2001-2011, as described below:

● The offshore portion of the Third Gas Pipeline, due for completion in early 2007, commands 1,900 MMcf/d

in capacity.

● The onshore portion of the Third Gas Pipeline, due for completion in March 2006, commands 1,200 MMcf/d

in capacity.

● The Sai Noi - North & South Bangkok Power Plant gas transmission project, designed to expand the network

in Bangkok and its perimeter, was completed in December 2006 with a capacity of 480 MMcf/d.

● The Wang Noi - Kaeng Khoi gas transmission project, designed to supply natural gas to power plants

and industrial gas users around Amphoe Kaeng Khoi, Sara Buri, started up in October 2006 with a capacity of 510 MMcf/d.

● Construction of the Compressor Unit Installation Project at Block Valve Station #7, designed to raise the

transmission capacity for the gas from Myanmar to 1,300 MMcf/d, was completed in July 2006.



N a t u r a l G a s T r a n s m i s s i o n P i p e l i n eS y s t e m a n d F u t u r e P r o j e c t s

Nam Phong

Phu Hom

Unit 1 350 MMcf/d

Unit 2 250 MMcf/d

Unit 3 350 MMcf/d

Unit 4 230 MMcf/d

Unit 5 530 MMcf/d

Gas Separation Plant Capacity

Myanmar

Vietnam

Laos

Cambodia

Malaysia

Thailand

Wang Noi

Samut Prakan

Bang Pakong

Chon Buri

Rayong

SBKRatchaburi

ESB

Thap Sakae

NBK

Yadana

Yetagun

Ban I Tong

Tha Luang

Benchamas

Tantawan

Platong

KhanomErawan

Pailin

Bongkot

Arthit

Songkhla

Sadao

Kaeng Khoi

Natural Gas Fields

EGAT

Thai - Malaysia (JDA)

Existing Pipeline

TTM Pipeline

Gas Separation PlantUnit 1, 2, 3, 5 in Rayong

Gas Separation PlantUnit 4 in Nakhon Si Thammarat


P T T E P P r o j e c t s

Oil Field

Gas Field

AlgeriaEgypt

Oman Iran

Middle EastMiddle EastAfrica

433a & 416b Rommana

Oman 44Iran SavehSidi Abd El Rahman

Oman 58

Myanmar

Vietham

Laos

Cambodia

Malaysia

Thailand

Andaman Sea

Southeast Asia

Myanmar M3 & M4

Yadana

Myanmar M7 & M9

Myanmar M11

Yetagun

Nang Nuan

Pailin

Arthit

S1

Phu Hom

L22/43

E5

L53/43 & L54/43

PTTEP 1

G4/43 Unocal III

Vietnam B & 48/95

Combodia B

Vietnam52/97

MT JDA - B 17

Vietnam 9-2

Vietnam 16-1

Indonesia Bengara I

Indonesia Merangin I

L21, 28 & 29/48Project

B8/32 & 9A

G9/43

Bongkot


PTT Exploration and Production Plc.In 2006, this exploration and production (E&P) arm of PTT Plc. had a total production of natural gas, crude oil,

condensate, and LPG of 169,348 BOED, a 10.3% rise from the previous year. The majority of additional sales volume

came from B8/32 & 9A Project; Pailin Field, Bongkot Field, Yadana Field (natural gas); and S1 Project (crude oil).

The average product price for the year equaled US$ 36.5/bbl equivalent, a 24.3% rise from last year.

Highlights of PTTEP Performance in 2006

● PTTEP Siam Co., Ltd. (the seller) signed a GSA with Ratchaburi Energy Co., Ltd. (the buyer), covering

0.4 MMcf/d over a period of eight years. Successful experimental power generation was conducted in late 2006; this

was in fact a milestone in the application of flared gas from Pratu Tao-A Field under S1 Project for power generation,

substituting fuel oil.

● Located between Udon Thani and Khon Kaen, Phu Hom Project successfully produced natural gas for

delivery to Nam Phong Power Plant. With a start-up date in late 2006, the field is projected to deliver an initial average

rate of 60 MMcf/d, to rise to more than 100 MMcf/d of natural gas and condensate. PTT buys gas from this project under

a GSA previously signed and will deliver it to Nam Phong Power Plant for at least 15 years. The deal enhances the security

of power supply for the Northeast.

● According to the Arthit Project GSA previously signed by PTTEP, the company had projected a flow rate

of 330 MMcf/d by the first quarter of 2008. With the rising demand for natural gas, PTTEP rented a floating production

storage and offloading tanker to speed up 120-150 MMcf/d greater production for a minimum of three years.

● PTTEP Oman Co., Ltd., signed an exploration and production sharing agreement for Block 58 in the

Sultanate of Oman, and will operate this wholly-owned acreage.

● PTTEP Bengara I Co., Ltd. (PTTEPB), and PT Medco E&P Bengara signed a farm-in/farm-out agreement

for the Bengara I block on the east coast of Kalimantan, Indonesia. The Indonesian company, which operates the block,

holds a 60% interest and PTTEPB holds the rest. This represented PTTEP’s second exploration venture in that country.



● PTTEP Vong Vu Co., Ltd., SOCO Vietnam Ltd., and Petrovietnam Exploration and Production Company

jointly invested in Vietnam 9-2 Project, which has secured approval for commercial development from the

Vietnamese government. Crude oil production of about 20,000 bbl/d is projected to start in late 2007.

● PTTEP (Thailand) Co., Ltd. (PTTEPT), and Unocal Andaman Ltd. jointly held the G9/48 concession in the

Gulf of Thailand, with PTTEPT serving as the operator, holding an 84% interest.

● PTTEPT, Total E&P Thailand, and Thai Energy Co., Ltd., jointly held the G12/48 concession in the Gulf

of Thailand, with PTTEPT serving as the operator. The shares held by the three respective partners were 44.4445%,

33.3333%, and 22.2222%.

● PTTEP Siam Co., Ltd. (PTTEPS) served as the operator of the L21/48, L28/48, and L29/48 concessions

in the Northeast with no other partner involved.

● PTTEP, Sipetrol International S.A., Edison International SpA, and Centrica Energy have won its preliminary

bid from Egyptian National Gas Holding Company, organizer of the EGAS International Bid Round 2006, to conduct

E&P in Block 2, also known as Rommana, near the Cape of Sinai in that country’s northeast; and in offshore Block 8,

also known as Sidi Abd El Rahman, in the northwest. This represented PTTEP’s investment expansion in North Africa,

another high-potential region.

● PTTEP has set up the following subsidiaries in support of E&P work in several countries. Each has

a US$ 50,000 paid-up registered capital.

1) PTTEP Bahrain Co., Ltd., wholly owned by PTTEP Oman Co., Ltd.

2) PTTEP Holding Co., Ltd., wholly owned by PTTEP Offshore Investment Co., Ltd.

3) PTTEP Indonesia Co., Ltd., wholly owned by PTTEP Holding Co., Ltd.

4) PTTEP Bengara I Co., Ltd., wholly owned by PTTEP Indonesia Co., Ltd.

On April 12, 2006, PTTEP registered a reduction in the par value of its shares from five to one baht in accordance

with a resolution of the 2006 annual general meeting of shareholders, and amended the number of common shares

in the articles of association from 664,400,000 to 3,322,000,000.



20062004 2005

3,359

2,572

1,987

5,679

2,700

2,155

1,256

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

34.6%

11.8%

12.1%

9.8%

7.1%

34.9%

10.6%

11.7%

9.7%

6.6%

26.5%24.6%

20062005

2,183

1,922

1,223

5,250

1,125

3,439

5,615

2,584

14,802

13,93714,310

Oil Business GroupThe Oil Business Group sells refined products and lubricating oil products to three major domestic segments:

retail, wholesale, and commercial marketing. Retail marketing is conducted through service stations. Wholesale

marketing has Article 7 traders as customers. Commercial marketing deals with government agencies, state

enterprises, industrial users, airlines, and marine transport operators.

Domestic sales in 2006 fell by 3.3% from last year to 14,310 million liters because of higher oil prices. As

world oil prices rose, however, PTT was the last brand to raise gasoline and diesel prices to shoulder the burdens

of consumers. As a result, PTT’s market share rose to 34.9% in the 14th consecutive year of market leadership,

through 1,229 service stations, or 6.8%. Of all oil companies, PTT commanded the highest number of service stations

and constantly developed them to feature a complete range of services to customers and command an innovative

and convenient reputation, together with sophisticated fuels for maximum customers’ satisfaction. The Company

commanded 13 aviation refueling stations and over 22 oil and LPG terminals nationwide to reach its customers and

support its own business.

LPGGasoline

Jet/KeroseneDiesel

Fuel Oil

Sales Volume for Domestic Oil MarketsUnit : Million Liters

Domestic Market Shares : Continuously as Market LeaderUnit : %

Growth 6% Growth 3%

PTTShell

EssoCaltex

BangchakOthers


Signing of supply agreement for marine-vessel fuelsNew-look PTT Park service station

Highlights of Oil Business GroupExpanding the Market

● Since October 1, 2006, over 1,200 PTT service stations nationwide have launched PTT Gasohol 95 Plus,

the highest number nationwide. To get itself prepared, PTT joined ethanol producers in further cooperation to meet

consumers’ demand in all corners of the country.

● A new look has emerged for PTT service stations. “PTT Park” provides a complete range of fuels and

alternative energy forms, including PTT Alpha-X 91, PTT Alpha-X 95, PTT Gasohol 95 Plus, and PTT Biodiesel, together

with supplementary businesses to meet the demand of customers. Chosen popular brands with outlets inside

PTT service stations now include a Drive-Thru Banking for the Bank of Ayudhya, 7-11, Café Amazon, Progress

Pharmacy, Mister Donut, Chester Grill, S&P, Nai In, Nai Malakaw, and Petty shop. All these for customers’ shopping

convenience.

● PTT and Toyota Motor Thailand Co., Ltd., signed an agreement on the supply of fuels and fuel storage

equipment. Under the agreement, PTT is to supply five million liters per year of PTT Alpha-X 95 and PTT Delta-X Euro III,

worth about Baht 140 million, to Toyota’s new, 400,000-car/year production and assembly center at Ban Pho,

Chachoengsao, and to build quality fuel storage and distribution equipment equipped with standard, safety, and

compliance with the law. This represented PTT’s milestone success in expanding to the automotive industry.

● PTT and five marine-vessel operators (Wong Samut Nawee, World Bunker, Max Energy (1998), Marine Oil

International, and RCL Feeder Co., Ltd.) signed an agreement on marine bunker oil supply of 500 million liters/year,

worth over Baht 7,500 million, and launched the PTT Bunker Center at the Sriracha Petroleum Terminal. The terminal

is a modern distribution center for refined products, lubricating oil, and cargo vessels, with the potential for several

aspects. This represented PTT’s successful expansion into cargo vessels.

● PTT and Sojitsu (Thailand) Co., Ltd., signed an agreement on the supply of 1.2 million liters/year of

lubricating products. Sojitsu is a producer and distributor of Yanmar agricultural bulldozers and machinery. The intention

is for agricultural customers to get international-quality products.

● With the government’s reduction in the contribution to the Oil Fund for diesel, amounting to Baht one/liter

from Baht 1.95/liter, PTT cut its retail diesel price by the same margin immediately to alleviate the impacts of rising oil

prices, effective April 28, 2006.


P T T P e t r o l e u m , O i l , L P G T e r m i n a l s ,a n d A v i a t i o n F u e l S t a t i o n s

Petroleum Terminal

LPG Terminal

Oil Terminal

Aviation Fuel Station

MyanmarVietnam

Laos

Cambodia

Malaysia

Thailand

Chiang Rai

Chiang Mai

Lampang

Den Chai

Phitsanulok

Nakhon Sawan

Udon Thani

Khon Kaen

Nakhon Ratchasima

Ubon Ratchathani

Saraburi

Lam Luk KaBang Pa-in

Phra Khanong

Bangchak

Si Racha

Ban Rong PoUtapao

Samut Sakhon

Hua Hin

Surat Thani

Nakhon Si Thammarat

Pak Phanang

KrabiSongkhla

Hat Yai

Phuket

Note : Petroleum Terminal Comprises of Oil

and LPG Terminal


Signing of MOU for biodiesel

from oil palm project development

Support to alternative-energy policy through innovative

used-plastics conversion into crude oil for domestic consumption

● As the national oil company, PTT stood ready to support the government’s actions to alleviate the hardship

of consumers. PTT cut its diesel price for buses under the Bangkok Mass Transit Authority and the Transport

Co., Ltd., that directly received fuel from PTT at a special discount of one baht/liter for a period of three months, effective

May 15, 2006. Both agencies had a monthly demand of 15 million liters of diesel, making the total volume for three months

45 million liters.

Developing Products and Services

● PTT came up with the latest formula for the Performa Super Synthetic lubricating oil, which was regarded

as “the Best of the Best.” This 100% synthetic gasoline lubricating oil, manufactured to the ILSAC GF-4 standard, is also

known as “Di-Synthetic Protect.” Designed for modern cars with high performance, it adds even more performance

to engines, enabling them to accelerate and pass while maintaining engine conditions like new. Lubrication starts

immediately with engine ignition, with minimum engine wear from ignition. Usable for up to 20,000 km., Performa Super

Synthetic also saves 5-8% fuel.

● PTT and Thaksin Palm (2521) Co., Ltd., signed a preliminary agreement, as did PTT and Bioenergy Plus Co., Ltd.,

to jointly investigate the production of methyl ester from oil palm for use as a core raw material for biodiesel, which would

represent PTT’s commercial expansion of biodiesel production, thereby adding to its potential for biodiesel promotion.

The cooperation with Thaksin Palm was for the construction of a B100 biodiesel plant with a capacity of 300,000 liters/day

in Surat Thani, using CPO raw palm oil. Completion is due in 2008. The cooperation with Bioenergy Plus was for the

construction of a B100 biodiesel plant with a capacity of 200,000 liters/day at Bang Pa-in Industrial Estate, Ayutthaya,

using stearin or palm wax obtained from palm oil refiners as a raw material. Completion of this plant is due in 2007.

● PTT, BCP, and Single Point Energy and Environment Co., Ltd., signed a memorandum of understanding

on joint technical and commercial marketing development in support of the national alternative-energy policy. This is

an innovative technique of converting used plastics into oil.

● PTT, Toyota Motor Thailand Co., Ltd., Toyota Technical Center Asia Pacific (Thailand) Co., Ltd., and Kasetsart

University signed an agreement on project research and development for biodiesel from jatropha (curcas) seeds for

diesel engines in response to the alternative-energy initiatives of HM the King.

● PTT, the Mitr Phol sugar-producing group, and Thai Alcohol Plc. signed an agreement on the supply of

molasses and anhydrous ethanol (99.5% pure), whereby Mitr Phol and Thai Alcohol were to jointly supply 160,000 tons

of molasses as the raw material for the production of 40 million liters of anhydrous ethanol, which was to be sold to

PTT, which would then produce PTT Gasohol 95 Plus from June to the end of 2006. As a result, consumers had access

to this alternative fuel at Baht 1.50/liter lower than premium gasoline.

● PTT and Fa Khwan Thip Co., Ltd., signed a memorandum of understanding on the supply of 60,000 liters/day

of converted anhydrous ethanol for the production of PTT Gasohol 95 Plus.


20062004 2005

31,863

23,001

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

4,336

25,692

3,563

1,871

4,047 3,681

3,066

2,115

35,271

16,211

4,337

2,025

Signing of Jasmine crude oil

supply agreement

Signing of Oman crude oil

supply agreement

Signing of condensate market

development agreement with Petronas

International TradingInternational trading covers crude oil, condensate, refined fuels, and petrochemical products, with a traded

volume of 35,270 million liters during the year, a 10.7% rise from last year. Accounting for this rise were greater volumes

of crude oil, condensate, and refined fuels, including out-out trading.

Highlights of International Trading

● PTT and Petronas Trading Corporation Sdn. Bhd. (PETCO) signed a joint marketing agreement for the

Cakerawala condensate, obtained from the Malaysia-Thailand Joint Development Area (Block A-18). Currently averaging

for 3,000-5,000 bbl/d, the capacity is projected to rise to 8,000-10,000 bbl/d in 2007. The condensate is to be used in oil

refineries and petrochemical plants in both countries.

● PTT, PTTEP, and PTTEP Oman Co., Ltd., signed an Oman crude oil supply agreement, marking the

first time PTT had bought from PTTEP crude oil produced from an external source. Under the agreement, PTT was to

take all of the output in fulfillment of the national policy to enhance the security of energy supply while bringing in greater

revenue.

● PTT and Pearl Oil (Thailand) Co., Ltd., signed a crude oil supply agreement, whereby PTT was to take up

all the oil produced from Jasmine Field by Pearl Oil. The field currently commanded a 10,000-barrel/day capacity,

worth over Baht 9,000 million/year. This represented PTT’s milestone move for enhancing energy sufficiency for the

nation and lowering dependence on oil imports.

Sales Volume for International Trading

Growth 11%

Unit : Million Liters

Crude Oil Refined Products and Others PetrochemicalCondensate

Growth 24%

24,573


ATC and RRC signed the heads of agreement

for investment expansion projects

Signing a memorandum of understanding on the production

of methyl methacrylate

Petrochemicals and Refining Business GroupThe business group funded investment for PTT Group subsidiaries. During the year, the group restructured

its business for greater focus, specifically by allowing PTT Chemical Plc. (PTTCH) to serve as the core olefins business

leader and by expanding investment or joint investment into midstream and downstream businesses to add value,

strength, and advantage. Another milestone was reached when PTT took Thai Petrochemical Industries Plc. (TPI) out of

the business rehabilitation plan and restructured its management. In the meantime, the refining group expanded its

investment to add production efficiency and listed Rayong Refinery Plc. (RRC) on the Stock Exchange of Thailand (SET).

Highlights of Petrochemicals Business● The Aromatics (Thailand) Plc. (ATC) expanded its feed fractionation revamp project to raise its condensate

processing capacity from 50,000 to 70,000 bbl/d, and completed its cyclohexane project with a capacity of 150,000

metric tons/year (MTA). At the same time, the paraxylene capacity was raised by 35,000 to 530,000 MTA.

● ATC and RRC signed the heads of agreement for investment expansion projects for both companies, worth

about US$ 1,073 million, whereby RRC was to invest in a Reforming Complex and an Upgrading Complex while ATC

was to invest in the Aromatics Complex. When completed in the third quarter of 2008, RRC’s crude oil and feedstock

refining capacity would rise from 145,000 to 210,000 bbl/d and ATC’s production capacity would rise from 1,098,000 to

2,137,000 MTA.

● ATC and TPT Petrochemicals Plc. signed a paraxylene sales agreement for the product obtained from the

Aromatics Complex II, a volume of 100,000 MTA for eight years, worth US$ 640 million. Paraxylene serves as feedstock

for the production of PTA (purified terephthalic acid). The start-up of the complex is due in the third quarter of 2008.


P T T G r o u p P r o d u c t C h a i n i n P e t r o c h e m i c a l s B u s i n e s s

● PTT, Asahi Kasei Chemicals Corporation (AKCC), and Marubeni Corporation signed a memorandum of

understanding on a joint investment in an acrylonitrile (AN) project with a capacity of 200,000 MTA through a new

technology based on propane obtained from PTT’s gas separation plants. PTT Asahi Chemical Co., Ltd., will be formed

by the three signatories at investment proportions of 47.5%, 47.5%, and 5% respectively. The start-up is projected for

early 2010.

● PTT and AKCC signed a memorandum of understanding on the production of methyl methacrylate (MMA)

with a capacity of 70,000 MTA using core raw materials obtained from AN as feedstock. The investment proportions

were 49% and 51% respectively. Like the AN project, the start-up is projected for early 2010.


● PTT bought shares in HMC Polymers, a polypropylene (PP) operator with a capacity of 420,000 MTA.

Consisting of 12,900,685 recapitalization shares and 2,806,373 existing shares, the purchase was worth about Baht 9,089

million. As a result, PTT now held 41.443% equity in HMC.

● PTT bought all 100,000 common shares in PTT Polymer Marketing Co., Ltd. (PTTPM), held by Bangkok

Polyethylene Plc. (BPE), accounting for 25% of PTTPM, at Baht 100/share for a total payment of Baht 10 million. As a result,

PTT and PTTCH now held 75% and 25% equity in PTTPM.


● PTT sold all the shares in PTT Polyethylene Co., Ltd. (PTTPE) and BPE to PTTCH, amounting to 11.5

million and 85 million shares respectively, receiving in return Baht 1,750 million and Baht 2,000 million. As a result, PTTCH

has become the major shareholder of PTTPE and BPE, with 99.99% of the paid-up shares in each of the two companies.

● On April 26, 2006, TPI Plc. and its six affiliates, namely TPI Oil, Thai ABS, TPI Aromatics Plc., Thai Polyurethane

Industries, TPI Power Generation, and TPI Polyol Co., Ltd., left the business rehabilitation plan under a directive of the

Central Bankrupty Court.

● On October 31, 2006, TPI Plc. registered with the Ministry of Commerce its name change to IRPC Plc.,

now known in the local bourse as IRPC.

● PTT modified the investment plan for TOC Glycol Co., Ltd. (TOCGC), wholly owned by PTTCH, by abandoning

the EO/EG II project, previously designed with a capacity of 300,000 tons/year of monoethylene glycol (MEG) because of

rising plant construction and equipment costs. Instead, the MEG capacity was to be raised through capacity expansion

of the EO/EG I plant by 95,000 tons/year. Completion is projected for the first quarter of 2008. TOCGC is the first producer

of MEG in Thailand, with a start-up in 2006 of the 300,000-tons/year plant.

● PTT formed PTT Polymer Logistics Co., Ltd. (PTTPL), to manage its integrated logistics – from packaging,

storage, warehouse administration, and polymer transport under the PTT Group to domestic customers and worldwide –

to raise its potential and international competitive edge.

Highlights of Refining Business● Thai Oil Plc. (TOP) implemented its Hot Oil Project to raise its capacity from 220,000 to 225,000 bbl/d and its

mercury removal unit for its crude feed, thereby enabling TOP to process a greater volume of oil while lowering its

costs. Both projects were completed in June 2006.

● TOP, Padaeng Industry Plc., and Petrogreen Co., Ltd., jointly formed Mae Sot Clean Energy Co., Ltd., to

build and operate an ethanol plant with a capacity of 100,000 liters/day at Amphoe Mae Sot, Tak. The shareholding

proportions were 30%, 35%, and 35%.

● BCP sold its recapitalization shares and converted debentures to PTT amounting to US$ 120 million at

Baht 14 each, thereby raising PTT’s equity to 29.75%. Both parties also signed an agreement on the supply of crude

oil to lower BCP’s costs and transport expenses, and an agreement on refined-product purchase from BCP Refinery

with the completion of BCP’s product quality improvement project.

● On June 5, 2006, RRC sold common shares to the public in its initial public offering on SET at Baht 18/share,

thereby dropping PTT’s equity in RRC to 48.75%.

Business Strategies and Directions of PTT GroupTwo core business strategies remain at PTT: core value creators and integrated value enhancers. Consisting

of E&P and Gas Business Group and focusing on domestic and international business expansion, the first strategy

stresses robust and sustainable growth. The second strategy – consisting of Oil Business Group, Petrochemicals

and Refining Business Group, and International Trading – stresses business restructuring, mergers and acquisitions,

and prudent expansion along with efficiency improvement, the creation of synergy of the PTT Group, and capacity

building for business expansion and cost-effective investment management.

To enable PTT management to follow its strategies and directions, PTT’s enterprise plan for 2007-2011

features investment in plans and projects and joint-venture companies at a budget of Baht 210,318 million, most of

which (84%) were investments in the Exploration & Production and Gas Business Group, with 3% accounted for by

the Oil Business Group and 4% by the Petrochemicals and Refining Group. Of the first portion, notable projects included

the expansion of gas transmission capacity under the modified Third Gas Pipeline Master Plan, gas separation plants,

cogeneration, combined-cycle power plants, and investments in independent and small power producers.


SummaryIn 2006, PTT Group saw a steady rise in sales volume, revenue, and net income. PTT is the largest listed

company on SET with a market capitalization of about Baht 589,034 million as at year-end, or about 11.6% of the

entire bourse. Combined with the other listed companies under the PTT Group, the market capitalization value is

roughly Baht 1,339,721 million, or 26.4% of SET. PTT’s operating and management performance is internationally

renowned. The Company is ready to forge ahead to the international arena by nurturing its business potential together

with environmental stewardship and social responsibility – all of this for sustainable development and the maximum

benefit to stakeholders.

Gulf of Thailand

Chon Buri

Rayong

Bangkok

Rayong Refinery Plc.Capacity 145,000 barrels/day

Approximately 14% share of refining capacity in Thailand

IRPC Plc.Capacity 215,000 barrels/day


Bangchak Petroleum Plc.Capacity 120,000 barrels/day


Thai Oil Plc.Capacity 225,000 barrels/day


Star Petroleum Refining Co., Ltd.Capacity 150,000 barrels/day


P T T G r o u p R e f i n e r i e s

Thailand


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R E V E N U E S T R U C T U R E O F P T TA N D S U B S I D I A R I E S B Y P R O D U C T L I N E

/1 PTT owned 63.98%, 66.32%, and 66.13% equity interest of PTTEP in 2004, 2005, and 2006.

/2 On May 5, 2006, RRC conducted its Initial Public Offering (IPO) for recapitalization and existing common shares on SET, thereby reducing PTT’s equity in RRC from 100% to 48.75%

and transforming RRC from a subsidiary to an associated company.

/3 On October 2, 2006, PTT sold all common shares in BPE to PTTCH.

% Shareholding 2004 2005 2006

Product / Service Operated by of the (Audited) (Audited) (Audited)

Company Million Baht % Million Baht % Million Baht %

1. Natural Gas Products PTT Plc. (Exploration & Production and Gas Business Group) 153,541.61 22.56 178,518.61 18.65 187,092.98 14.78

PTT Plc. (Oil Business Group) 23,884.85 3.51 29,387.75 3.07 30,643.34 2.42

PTT Exploration and Production Plc. (PTTEP) /1 28,385.36 4.17 33,435.99 3.49 40,870.67 3.23

PTT Natural Gas Distribution Co., Ltd. (PTTNGD) 58.00 1,652.55 0.24 2,605.46 0.27 3,291.75 0.26

Less PTTEP’s gas revenue paid by PTT Plc. (26,314.75) (3.87) (30,377.44) (3.17) (37,981.76) (3.00)

Less Petroleum Royalty and Benefits (5,667.98) (0.83) (8,981.95) (0.94) (12,848.71) (1.02)

Total Revenue from Natural Gas Products 175,481.64 25.78 204,588.42 21.37 211,068.27 16.68

2. Oil Products PTT Plc. (Oil Business Group) 383,966.40 56.41 582,883.80 60.88 791,220.93 62.52

PTT Exploration and Production Plc. (PTTEP) /1 17,813.27 2.62 32,921.60 3.44 45,468.59 3.59

Less PTTEP’s crude revenue paid by PTT Plc. (16,843.25) (2.47) (25,644.32) (2.68) (31,719.29) (2.51)

PTT Philippines, Inc. (PTTPI) 100.00 196.01 0.03 - - - -

PTT International Trading Pte., Ltd. (PTTT) 100.00 6,756.74 0.99 19,196.90 2.01 23,393.95 1.85

PTT (Cambodia) Co., Ltd. (PTTCL) 100.00 796.42 0.12 1,277.65 0.13 2,080.86 0.16

Retail Business Alliance Co., Ltd. (RBA) 49.00 31.59 0.00 196.90 0.02 298.71 0.02

Subic Bay Group 100.00 9,352.57 1.37 12,624.41 1.32 14,413.67 1.14

Rayong Refinery Plc. (RRC) /2 20,954.55 3.08 28,435.17 2.97 12,288.59 0.97

Thai Lube Base Co., Ltd. (TLB) 55.00 1,817.68 0.27 - - - -

Total Revenue from Oil Products 424,841.98 62.42 651,892.11 68.09 857,446.01 67.76

3. Petrochemical Products PTT Plc. (Oil Business Group) 41,176.74 6.05 52,678.03 5.50 68,345.37 5.40

Bangkok Polyethylene Plc. (BPE) /3 1,597.06 0.23 5,323.54 0.56 106.77 0.01

PTT Polymer Marketing Co., Ltd. (PTTPM) 75.00 - - 6,941.29 0.73 21,748.13 1.72

PTT Chemical Plc. (PTTCH) 55.19 - - 2,733.31 0.29 41,814.68 3.30

HMC Polymers Co., Ltd. (HMC) 41.44 - - - - 3,390.87 0.27

Total Revenue from Petrochemical Products 42,773.80 6.28 67,676.17 7.07 135,405.82 10.70

4. Utilities Products District Cooling Systems and Power Plant Co., Ltd. (DCAP) 35.00 - - - - 298.00 0.02

PTT Utility Co., Ltd. (PTTUT) 40.00 - - - - 369.25 0.03

PTT Chemical Plc. (PTTCH) 55.19 - - - - 2,940.87 0.23

Total Revenue from Utilities Products - - - - 3,608.12 0.29

5. Revenue from Services PTT Exploration and Production Plc. (PTTEP) /1 1,596.13 0.23 1,997.45 0.21 2,928.09 0.23

PTT Chemical Plc. (PTTCH) 55.19 - - 115.19 0.01 2,032.48 0.16

Trans Thai-Malaysia (Thailand) Co., Ltd. (TTM (T)) 50.00 - - - - 1,386.98 0.11

Trans Thai-Malaysia (Malaysia) Co., Ltd. (TTM (M)) 50.00 - - - - 69.81 0.01

PTT Natural Gas Distribution Co., Ltd. (PTTNGD) 58.00 - - - - 39.70 0.00

Total Revenue from Services 1,596.13 0.23 2,112.64 0.22 6,457.06 0.51

Total Sales from Products and Services 644,693.55 94.72 926,269.34 96.75 1,213,985.28 95.93

6. Others

6.1 Other Revenue 8,788.84 1.29 9,435.67 0.99 15,296.85 1.21

6.2 Gain (Loss) from Foreign Exchange 425.67 0.06 0.69 0.00 9,924.88 0.78

6.3 Income from Sale of Securities - - - - 7,130.48 0.56

Total Other Revenue 9,214.51 1.35 9,436.36 0.99 32,352.21 2.56

7. Share of net income (loss) from Investments under Equity Method 26,741.97 3.93 21,651.26 2.26 19,139.45 1.51

Grand Total 680,650.03 100.00 957,356.96 100.00 1,265,476.94 100.00


C o n n e c t e d T r a n s a c t i o n s


C O N N E C T E D T R A N S A C T I O N S

Connected transactions resulted from contractual agreements of the following types:

(1) Transactions between PTT and state enterprisesTransaction

By resolution of the Cabinet dated November 26, 2002, government agencies and state enterprises buying 10,000

liters of fuel and more must do so from either PTT or Bangchak Petroleum Public Company Limited only. PTT sold fuels to

the following state enterprises: Electricity Generating Authority of Thailand, Bangkok Mass Transit Authority, and State

Railway of Thailand. Should a state enterprise have outstanding debts, the Company can levy interests.

(2) Transactions between PTT and subsidiary PTTEP Public Company Limited (PTTEP)Transaction

PTT concluded long-term purchase agreements with PTTEP for crude oil, natural gas, liquefied petroleum gas

(cooking gas), and condensate, effective each time with the latter’s production project start-up. The transactions followed

supply agreements through each project’s life. In 2006, PTTEP supplied 82.82% of its production to PTT at the same prices

sold by its partner(s) under each project.

(3) Transactions between PTT and affiliated refining companiesTransaction

PTT signed crude oil and refined product supply agreements with its affiliated refining companies at rates

corresponding to its own equity in each refinery. The agreements are summarized below.

Agreement with Thai Oil Public Company Limited (TOP)

PTT contractually takes crude oil and products equivalent to 49.99% of TOP’s refining capacity. Through a written

notice sent at least 12 months in advance, either party may revoke this agreement from the 13th year from the date of

completion of its refinancing. Alternatively either party may revoke the contract if it deems the contract violated. Under the

contract, PTT may buy the volume more than 49.99% at market prices.

PTT secures crude oil for TOP under the Phet crude sales agreement, in effect since 1985, which spans the life of

the field. As for Jasmine crude, PTT secures supply for TOP under a one-year agreement, effective from January 1, 2006 to

December 31, 2006.

Agreement with Rayong Refinery Public Company Limited (RRC)

Each RRC shareholder is required to buy refined products from RRC at no less than 70% of its refined products at

domestic market prices under a 12-year agreement from the date of commercial start-up, beyond which the contract is

assumed to continue unless otherwise notified in advance.

PTT secures crude oil for RRC under an interim crude supply agreement; effective from February 9, 2006 to the

effective termination date of RRC’s operating alliance, and a feedstock supply agreement, effective from the termination date

of the Operating Alliance to February 8, 2024. Under these agreements, PTT would secure crude oil and all other feedstock

for RRC for the grades and volumes needed by RRC at market prices.


PTT signed a New Complex Product Offtake Agreement with RRC, effective from February 9, 2006 to February 8,

2024, whereby PTT would buy from RRC all the products derived from the Reforming Complex and the Upgrading Complex.

At least half of these products will be based on domestic market prices and the rest at export prices.

Agreement with Star Petroleum Refining Company Limited (SPRC)

Shareholders of SPRC are required to secure crude oil and take delivery of refined products from SPRC at no less

than 70% of its 126,000 bbl/d capacity - or 88,200 bbl/d - at domestic market prices. For any surplus volume, PTT and

Chevron (Thailand) Ltd. - as shareholders - have the first right to buy at domestic market prices before any sale by SPRC to

a third party.

Agreement with Bangchak Petroleum Public Company Limited (BCP)

PTT secures crude oil for BCP under the Phet crude supply agreement, in effect since 1985, which spans the life of

the field.

Likewise, PTT secures crude oil under the Pattani crude supply agreement for 5 years, effective from January 26,

2005 to December 31, 2009.

PTT secures crude oil for BCP under a feedstock supply agreement, effective May 16, 2006 for a period of 12 years

from the commercial operation date of the Product Quality Improvement Project, whereby PTT would secure all the crude oil

for BCP.

PTT concluded a product off take agreement with BCP, effective May 16, 2006 for a period of 12 years from the

Commercial Operation Date: COD of the Product Quality Improvement Project, whereby after the date PTT would take

delivery of at least 30% of BCP’s capacity each month.

(4) Transactions between PTT and affiliates in the petrochemical business groupTransactions and agreement with PTT Chemical Public Company Limited (PTTCH)

PTT Chemical Public Company Limited was the result of the merger between Thai Olefins Plc. (TOC) and National

Petrochemical Plc. (NPC) under the Public Company Limited Act of 1992 on December 7, 2005. The new company

assumed all the assets, liabilities, rights, duties, and responsibilities of the two, and all contractual obligations binding

TOC and NPC to PTTCH. PTT secures feedstock for PTTCH’s production processes, namely natural gas and LPG under

a 15-year agreement, effective from 1995, renewable for five years. In 1999, the Aromatics (Thailand) Plc. (ATC) transferred

to PTT its rights and obligations under a 15-year light naphtha and raffinate supply agreement with PTTCH. PTT concluded

another supply agreement with PTTCH for feedstock and natural gas, effective from 1999 for 12 years (renewable for

five more years) for the feedstock, and for 20 years (renewable for four more years) for the natural gas. In 2001, PTT signed

a 15-year ethane supply agreement with PTTCH, effective from August 1, 2005 (renewable for five more years).

PTT amended its supply agreement for ethane, propane, and LPG with PTTCH, effective from July 1, 2003 until

the end of 2016, with five-year renewal at a time. Under the amendment, the price of ethane feedstock varies with that

of HDPE (film grade) in Southeast Asian markets, which reflects the state of the petrochemical market value chain to

the HDPE produced by PTTCH, starting in 2004. As for propane and LPG feedstock prices, an amendment was made to let

their prices vary with that of PP (film grade), from January 1, 2003 to December 31, 2016. In 2004, PTT concluded an LPG


and NGL supply agreement with PTTCH, whereby PTT would supply an additional 13,000 tons/month of LPG and

380,000-470,000 tons/year of NGL as feedstock for the olefins capacity expansion project managed by PTTCH, which was

due to complete the upgrading in 2007. Also, in 2006, PTT entered into a 15-year ethane feedstock supply agreement

with a subsidiary of PTTCH, effective from its start-up date - projected for the third quarter of 2009 - whereby the price of

ethane varies with that of HDPE (film grade) in Southeast Asian markets.

Transactions and agreement with the Aromatics (Thailand) Public Company Limited (ATC)

PTT supplies condensate for ATC’s production processes under a 15-year agreement, effective from 1998.

PTT concluded long-term supply agreements for all the core products of ATC, which directly supplies such products

to customers. These agreements are Take-or-Pay, whereby PTT guarantees minimum sales volumes for products and

obtains marketing fees from ATC. The Take-and-Pay agreement was also concluded by PTT to guarantee the product

volumes taken, but not to guarantee distribution for the surplus volumes beyond Take-or-Pay.

PTT has another product distribution agreement with ATC, namely for condensate residue, light naphtha, and LPG,

whereby ATC would directly supply these products to PTT’s customers. For the first two products, the agreement covered

15 years, and for LPG, 10 years, effective from 1997.

PTT also signed a natural gas supply agreement with ATC for use in fueling its processes for a period of 11 years,

effective from 2005 to 2015.

Transactions and agreement with HMC Polymers Co., Ltd. (HMC)

PTT concluded a feedstock supply agreement with HMC. A long-term propane feedstock supply agreement spans

15 years from 2009, with five-year renewal at a time, under which the price of propane varies with that of PP (film grade)

in Southeast Asian markets.

Policy on future connected transactionsThese will be conducted as part of the normal course of business with no special favors and no transfers of benefits

between PTT, its subsidiaries, related associated companies, or shareholders. Pricing will continue to be on an arm’s length

basis, and the prices of products supplied by PTT’s subsidiaries will be market-based.

Disclosure of connected transactions will follow the announcement of the Securities and Exchange Commission

(SEC) and the Stock Exchange of Thailand (SET), and the accounting standard on disclosure of information on related

parties or businesses, announced by the Federation of Accounting Profession.


M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s o f F i n a n c i a l S t a t u s a n d P e r f o r m a n c e


M A N A G E M E N T D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A L S T A T U S A N D P E R F O R M A N C E

In the year 2006, global economy expanded 5%, increased from the year 2005 of 4.5%, dominated by Asian,

economy, especially China and India, and the recent improvement of Europe, Middle East and Africa (EMEA) economy,

despite the fluctuation of oil price, consumer products, financial markets and capital markets. For Thailand, overall economic

conditions for the year 2006 improved slightly from the year 2005 due mainly to the high export growth and the deceleration

of the import. On the supply and demand side, the production and private consumption decelerated when compared to last

year due mainly to the adverse impacts of the high oil prices. However, LPG consumption substantially increased especially

in transportation sector due to the government’s support in LPG price. PTT and its subsidiaries’ revenue in 2006 was Baht

1,213,985 million, increased by Baht 287,716 million when compared to the year 2005, or 31.1%. Earning before interest,

tax, depreciation and amortization (EBITDA) was Baht 142,675 million, increased by Baht 28,631 million or 25.1%. Share of

net income from investments under the equity method was Baht 19,139 million, decreased by Baht 2,512 million or 11.6%.

As a result, PTT and its subsidiaries’ net profit was Baht 95,261 million, increased by Baht 9,739 million or 11.4% resulted

mainly from gain on disposal of Rayong Refinery Public Co., Ltd. (RRC)’s shares of Baht 6,682 million (after tax) and foreign

exchange of Baht 9,925 million while there was gain from debt restructuring of RRC in an amount of Baht 5,417 million and

foreign exchange of Baht 0.68 million in 2005. The details of PTT and its subsidiaries’ financial performance by business unit

are as follows: (For more details, please refer to the financial statement and Form 56-1)

Oil Business GroupSales revenue in 2006 increased by Baht 190,180 million or 23.6% due to both sales prices and sales volume.

Sales volume increased by 3,919 million liters or 7.3% from 53,349 million liters or equivalent to 919,348 barrels per day in

2005 to 57,268 million liters or equivalent to 986,883 barrels per day in 2006, resulted from the increase in both domestic

sales and trading segment, mainly from crude, condensate, aviation gasoline, gasohol, naphtha and high-speed diesel.

Average sales price in 2006 also increased in relation to the increase of global oil prices.

EBITDA in 2006 decreased by Baht 2,249 million from Baht 7,253 million in 2005 to Baht 5,003 million, or 31.0%,

due primarily to the decrease in gross margin per unit of domestic sales while selling and administrative expenses increased

by Baht 3,713 million or 35.5%, resulted partly from Baht 1,148 million of provision and expenses for excise taxes and for

refunds from the Oil Stabilization Fund Receivable from 1997 to 2003 with a low possibility to obtain refunds, Baht 206 million

provision for loss on lawsuits regarding a dispute over the construction of the Lam-Loog-Ka and the Saraburi Oil Terminals.

Exploration & Production and Gas Business GroupSales revenue in 2006 increased by Baht 35,754 million or 17.1% due to the natural gas sales (including natural

gasoline derived from Dew Point Control Unit) increased by 88 MMcf/d or 2.9% from 2,996 MMcf/d to 3,084 MMcf/d

(calculated at heat value 1,000 Btu per cubic feet) which resulted from the increase in gas demand from all customers except

Small Power Plants (SPPs). The GSPs’ products sales volume increased from 3,461,911 tons in 2005 to 3,668,045 tons

in 2006 or 6.0%. The increase in sales volume mainly resulted from the increase in production of the GSP Unit 5 (GSP5).

The average utilization rate of GSP5 in 2006 was 83% compared to 2005 of 63%. The average LPG price (Contract

Price - CP) in 2006 increased by US$ 80 per ton from US$ 432 per ton in 2005 to US$ 512 per ton in 2006 while 2006

average prices of ethylene, propylene, High Density Polyethylene (HDPE) and Polypropylene (PP) in the Southeast Asia

spot market including Naphtha in the spot market of Singapore (MOP’s) also increased when compared to 2005 due to

the increase in oil price which resulted to the higher selling price of Ethane, Propane and NGL.


The details of reference products prices for calculation of products from gas separation plants’ sales prices are as

follows:

Notes: 1/ Contract price (CP): The government capped the ex-refinery LPG price for domestic sales at US$ 315 per ton, derived from the CP of

US$ 331 per ton, effective from February 10, 2003 onward.

2/ Southeast Asia Spot Price

3/ MOP Singapore

EBITDA of the Exploration & Production and Gas Business Group in 2006 increased by Baht 2,696 million or 6.4%

due to the increase in sales prices and sales volume of both natural gas and GSPs’ products as mentioned. However,

there was discount on the price of natural gas sold to EGAT in order to reduce the impact from the Fuel Adjustment Charge

(at the given time) (Ft) in an amount of Baht 1,323 million in 2006.

Exploration and Production Business(Subsidiary: PTT Exploration and Production Public Co., Ltd. (PTTEP)

PTTEP’s sales revenue in 2006 was Baht 76,419 million, increased by Baht 17,046 million or 28.7% from the same

period of last year, resulted from the higher average petroleum sales price from US$ 29.37 per BOE in 2005 to US$ 36.52 per

BOE in 2006 or 24.3%. In addition, sales volume also increased from 153,531 barrels of oil equivalent per day (BOED) in

2005 to 169,348 BOED in 2006, due mainly to the crude oil sales from the B8/32 & 9A and S1 projects and the natural gas

sales volume from Pailin, Bongkot and Yadana projects. However, the sales volume of the Yetakun project has been

decreased.

EBITDA in 2006 was 63,313 million, increased by Baht 13,262 million or 26.5% due to the increase in sales prices

and sales volume as mentioned.

Unit : Tons 2006 2005 Changes % Changes

LPG 1,968,666 1,933,108 +35,558 +1.8

Ethane 979,763 831,893 +147,870 +17.8

Propane 239,127 221,062 +18,065 +8.2

NGL 480,489 475,848 +4,641 +1.0

Total 3,668,045 3,461,911 +206,134 +6.0

Unit : US$ / Ton 2006 2005 Changes % Changes

LPG1/ 512 432 +80 +18.6

Ethylene2/ 1,157 920 +237 +25.7

Propylene2/ 1,127 948 +179 +18.9

High Density Polyethylene2/ 1,234 1,035 +199 +19.3

Polyethylene2/ 1,228 1,061 +167 +16.1

Naphtha3/ 515 424 +90 +21.2

The details of all products sales from gas separation plants are as follows:


Refining Business(Subsidiary: Rayong Refinery Public Co., Ltd. (RRC)

Sales revenue from the refining subsidiary in 2006 decreased by Baht 64,886 million from 2005 or 45.9% due to the

transform of RRC from a subsidiary to an associate since June 5, 2006.

EBITDA in 2006 decreased by Baht 6,736 million or 51.0% from Baht 13,205 million in 2005 to Baht 6,469 million in

2006, also due to the transform of RRC from a subsidiary to an associate.

Petrochemical Business(Subsidiaries which comprise of Bangkok Polyethylene Public Co., Ltd. (BPE), PTT Polyethylene Public Co., Ltd.

(PTTPE), PTT Phenol Co., Ltd. (PPCL), PTT Chemical Public Co., Ltd. (PTTCH), PTT Polymer Marketing Co., Ltd.

(PTTPM), PTT Asahi Chemical Co., Ltd. (PTTAC), HMC Polymer Co., Ltd. (HMC) and PTT Polymer Logistics Co., Ltd.

(PTTPL)

Sales revenue in 2006 from petrochemical subsidiaries increased by Baht 61,153 million from Baht 15,523 million

in 2005 to Baht 76,676 million in 2006, or 394%, due primarily to the consolidated of PTTCH as its status from an associate

to a subsidiary since December 2005 and the proportionate consolidation of HMC from share purchase since August 2006.

EBITDA in 2006 increased by Baht 22,594 million from Baht 1,740 million in 2005 to Baht 24,334 million,

an increase of 1,299% in 2006, also due primarily to the consolidated of PTTCH as its status from an associate to

a subsidiary since December 2005 and the proportionate consolidation of HMC from share purchase.

Net Income:Net income in 2006 increased from 2005 by Baht 9,739 million or 11.4%

Net income of PTT and it’s subsidiaries in 2006 was Baht 95,261 million or Baht 34.02 per share, increased from

2005 by Baht 9,739 million or 11.4%, due mainly to the followings:

: The increase in sales prices and sales volume from gas and oil products.

: In 2006 there was gain on disposal of investment from RRC’s IPO in an amount of Baht 6,682 million (after tax)

while there was gain from debt restructuring of RRC in an amount of Baht 5,417 million in 2005.

: Share of net income from investments under equity method in 2006 decreased by Baht 2,512 million from 2005

(including Baht 3,827 million share of gain on foreign exchange in 2006 while Baht 1,074 million share of loss on foreign

exchange) in 2005 due mainly to the followings:

- Slightly increase in share of net income from refining associates in 2006 due to the changing of RRC status from

PTT’s subsidiary to PTT’s associate, despite the lower performance of refining associates due to the lower Gross Refining

Margin (GRM) when compared to 2005 and scheduled plant shut down of Thai Oil Public Co., Ltd. (TOP). GRM of PTT’s

complex refineries (included inventory gain/loss) decreased from approximate US$ 7.59/bbl in 2005 to US$ 5.93/bbl in 2006.

- Decrease in share of net income from petrochemical associates when compared to 2006 due mainly to the

changing of status of PTTCH from PTT’s associate to PTT’s subsidiary despite the recognition of an investment in IRPC

Public Co., Ltd. (IRPC) under the equity method and better performance of Aromatic (Thailand) Public Co., Ltd. (ATC).

The Analysis of PTT and its subsidiariesû consolidated Financial Status at the end of the year 2006 compared tothe end of the year 2005

During 2006, there were changes in PTT’s subsidiaries’ status, therefore, balance sheets of PTT and its

subsidiaries for the year ended December 31, 2006 included PTTEP, PTTCL, SBECL, RBA, PTTT, PTT NGD, PTTLNG,

PPCL, PTTCH, PTTPM, PTTUT, EnCo, PTTICT, PTTPL, TTM (T), TTM (M), DCAP, PTTAC and HMC.


Financial status of PTT and its subsidiaries at the end of 2006 compared to the end of the year 2005 is asfollows:

Assets

The total assets as of December 31, 2006 were Baht 751,453 million, increased by Baht 101,647 million from 2005

or 15.6%. Current assets increased by Baht 31,416 million due primarily to the increase in cash and cash equivalents

of Baht 13,365 million. The rising amount was due mainly from PTTCH capital increase, trade accounts receivable of

Baht 26,567 million and materials and supplies of Baht 2,020 million despite the decrease in inventories of Baht 8,384 million

and other accounts receivable of Baht 3,701 million.

Non-current assets increased by Baht 70,231 million. Higher non-current assets were resulted from several factors.

Firstly, there was an increase in investment accounted under the equity method by Baht 33,656 million which was due mainly

to the change of RRC’s status from PTT’s subsidiary to an associate, the status changed in BCP from another related

company to an associate, and the recognition of an investment in IRPC under equity method. Secondly, there was

an increase in property, plant and equipment of Baht 31,754 million which was due to the investment in PTT’s third pipeline

project and the investment in the subsidiaries’ properties including PTTEP’s Arthit, Oman 44, S1, and Pailin projects and

PTTCH’s debottlenecking project (plant I4-1). Thirdly, there was an increase in intangible assets of Baht 11,068 million from

the shares purchasing of HMC and PTTCH. Lastly, other long-term investments also increased by Baht 1,040 million due to

HMC’s investment in Rayong Olefins Co., Ltd., investment in debt securities and investment in mutual funds while advance

payment for gas purchased decreased by Baht 3,148 million and other non-current assets reduced by Baht 3,306 million.

Liabilities

Total liabilities as of December 31, 2006 were Baht 397,131 million, increased by Baht 25,757 million or 6.9%.

Current liabilities increased by Baht 19,565 million due primarily to the increase in trade accounts payable by Baht 16,674

million. Higher trade accounts payable was due partly to trade accounts payable of RRC and the increase in accrued

expenses of Baht 3,815 million. Meanwhile, there was the decrease in bank overdrafts and short-term loans from

financial institutions of Baht 1,812 million.

Non-current liabilities increased by Baht 6,193 million. The increase was due mainly to PTTEP’s Provision for

decommissioning costs of Baht 3,693 million, deferred tax liabilities of Baht 1,154 million and other non-current liabilities of

Baht 628 million. In 2006, PTT and its subsidiaries had proceeds from long term loan and cash received from the issue of

debentures in a total amount of Baht 52,749 million which included PTT’s borrowing from a financial institution in an amount

of Yen 23,000 million (PTT has also entered into a Participating SWAP (P-SWAP) to convert the Yen principal into US$

principal, amounting US$ 196.94 million), issuing of un-subordinated and unsecured debentures in a total amount of Baht

16,000 million and club loan borrowing of US$ 300 million. During 2006, PTT and its subsidiaries had made repayment of

long term loan, debentures and government bonds in a total amount of Baht 27,451 million.

Shareholders’ Equity

Total shareholders’ equity as of December 31, 2006 were Baht 354,322 million, increased from the end of 2005 by

Baht 75,889 million or 27.3%. The increase was due mainly to the unappropriated retained earnings of Baht 55,309 million,

resulted from PTT and its subsidiaries’ net profit of Baht 95,261 million adjusted with dividend payment to the shareholders

in an amount of Baht 39,898 million and the rest are legal reserve and reserve for self-insurance fund.


In 2006 there was share capital increase from the exercise of warrants under Employee Stock Option Program

(ESOP) in August and November causing an increase in issued and paid-up share capital in an amount of Baht 76.8 million

(7,679,900 shares) and premium on ordinary shares of Baht 1,329 million. The increase in shareholder’s equity also included

an increase in Minority interests in an amount of Baht 18,874 million due mainly to the better performance as mentioned,

an increase in surplus on dilution of investments in subsidiaries and associates in an amount of Baht 808 million.

Liquidity

In 2006, net increase in cash and cash equivalents of PTT and its subsidiaries was Baht 13,365 million, due mainly

to net cash provided by operating activities Baht 104,471 million, net cash used in investing activities Baht 77,338 million,

net cash used in financing activities Baht 13,186 million, effects of exchange rates on cash and cash equivalents Baht 668

million and currency translation differences Baht 87 million while cash and cash equivalents at the beginning of the period

was Baht 73,441 million. As a result, cash and cash equivalents at the end of the period was Baht 86,806 million.

Future ProjectPTT’s future projects will mainly focus on large-scale investments in the gas business to create a value added to

business and also to sustain the demand growth of natural gas. Natural gas is basically the main fuel of power generation.

The projected growth of demand of natural gas for power generation over the next five years (2007-2011) is 5.6% annually.

Therefore PTT has planned to secure the gas procurement both domestic and international fields, including the investment

in the gas pipeline network to sustain the need of customer and to follow the Third Gas Pipeline Master Plan. The Master

Plan included 11 projects of pipeline network for both offshore and onshore such as the Third Gas Pipeline and Sainoi-North

Bangkok-South Bangkok pipeline. These projects will increase the capacity of the pipeline for both offshore and onshore for

another 1,900 and 2,300 MMcf/d respectively. The internal rate of return on equity (IRROE) for these projects will be 16%.

In order to create a value added for the natural gas, to maximize the use of the products, and to support the

expansion of petrochemical business from intermediate to downstream, PTT has planned to invest in Ethane cracker and

gas separation plant unit 6 for the capacity of 800 MMcf/d, with the IRROE of not less than 15%, in order to produce Ethane

and feed as a raw material to PTT Polyethylene Company Limited’s Ethane Cracker project. PTT Polyethylene is the

joint investment of PTT and National Petrochemical Public Company Limited (after merged with Thai Olefin Public Company

Limited, known as PTT Chemical Public Company Limited) which can produce ethylene at the capacity of 1,000,000 tons

per annum. PTT also supports PTT’s petrochemical subsidiaries for the petrochemical downstream expansion. Moreover,

PTT promotes the use of Natural Gas for Vehicle (NGV) as it is clean and environmentally friendly.

For the factors that could lead to business disruption, please refer to the Risk Factors section.


R I S K F A C T O R S

As a result of PTT’s continuous risk management efforts, the risk factors disclosed in the past year have been

reasonably managed. New risk factors, however, have been identified and managed under the current year’s risk

management plan. Therefore, PTT continues to improve this Risk Factors section to better reflect risks associated with

petroleum and petroleum-related businesses. Apart from the risk factors related to its business in general, other risk factors

need considering are:

1. Strategic Risks

1.1 The Group ManagementBecause PTT has continually expanded its investment through various business groups, the management of

PTT affiliates has become more complicated. Without effective and efficient management of all these companies, PTT and

its affiliates might have inconsistent strategies and end up competing among themselves, thereby hurting its own overall

business performance.

As a result, the Company has focused on the management of the organization in a group structure known as

the PTT Group, where PTT executives have been appointed presidents or senior executives of PTT affiliates for consistency

in policies, strategies, and business directions and closer supervision of business expansion. In addition, executives of PTT

and its affiliates took part in drafting a master strategic plan as a guideline for developing business plans for each group.

1.2 Personnel Management System in Support of Business ExpansionIn response to continued business expansion and the increase in competitive-edge in trading, PTT must

adequately prepare its resources, especially its personnel. If human resource management and business expansion are

not compatible, PTT’s business performance and competitiveness may decline.

Likewise, PTT manages its human resources using a group structure to maximize the sharing of talent and

experience, allowing human resource staff to develop plans for personnel training and development. Competency-Based

Management and Career Management serve as vital tools for such development.

2. Business Risks

2.1 Gas Sales Agreements and Take-or-Pay ConditionsEach gas sales agreement specifies a minimum quantity that PTT is obliged to purchase annually. If PTT

cannot take delivery of this minimum quantity, it is required to pay for the volume not taken during that contract year, under

the take-or-pay condition. However, PTT is entitled to take the pre-paid gas in subsequent years as make-up gas if it has

already paid the minimum contracted amount for the year in question. Problems arising from the take-or-pay requirement

or the ability to receive make-up gas might hurt PTT’s financial and operating performance.

To efficiently manage its purchase of gas under take-or-pay conditions, PTT ensures that its own sales

agreements contain similar conditions. Moreover, it constantly monitors the demand for gas and revises the days on which

PTT begins receiving contracted gas to be produced in the future. This is to ensure that the supply of gas corresponds

with the customers’ ability to receive gas and the construction completion date for gas transmission pipelines.


2.2 Fee Changes for Gas Supply Procurement, Distribution, and Throughput TariffsPipeline throughput tariffs and fees for the procurement and distribution of natural gas were approved by the

National Energy Policy Council (NEPC). The current tariffs are in effect from 2001 to 2005 and are subject to revision when

PTT has completed its network expansion under the Third Gas Pipeline Master Plan, 2001-2011, as approved by the

Cabinet. New tariffs may prove higher because such expansion covers a greater area and involves a longer distance of

transmission pipelines, and because pipes and construction machinery are more costly. At any rate, the rate adjustments

proposed by PTT are subject to approval by the authority. Depending on economic and social conditions, the government

may change the formulas for the tariffs, which could impact PTT’s business growth, financial standing, and operating

performance.

To ensure suitable tariffs, PTT constantly monitors energy situations and gas consumption and continually

revises plans for the expansion of its gas pipeline networks in line with the master plan for gas transmission so that

the demand for gas may be efficiently met. On December 23, 2004, NEPC approved the revision of PTT’s Third Gas Pipeline

Master Plan, 2001-2011, as the framework for construction of future gas pipeline systems.

2.3 Product Price FluctuationThe sales prices for the products of PTT and its affiliates in domestic and foreign markets reflect those in the

international market. Such prices of natural gas, condensate, crude oil, refined petroleum products, and petrochemicals

have recently proved highly volatile because of factors beyond the Company’s control, thereby affecting PTT’s business,

financial standing, planning, investment, and operating performance.

To alleviate this risk, PTT has made long-term agreements with its business partners to establish price and

volume targets, as well as risk management periods. All transactions involving derivatives are consistent with PTT’s physical

quantity of oil to lock in a definite margin. PTT also closely monitors the world oil market, constantly updates its risk

management tools, and regularly provides training for domestic and foreign trading personnel.

2.4 Government Action Creating Potential Conflicts of Interest with Others ShareholdersPTT’s retention of its state-enterprise status, with the Ministry of Finance serving as the major shareholder,

sometimes works against PTT’s business objectives. The government has previously used and can use PTT as its tool to

achieve national social or economic objectives. As long as this status remains, PTT cannot guarantee that it would not

follow the government policies and do the businesses for the most benefit of PTT or for other objectives.

2.5 Transfer of Former Power, Rights, Privileges, and Benefits of PTT Plc. (Provided under PTT Actand State Enterprise Corporatization Act) to the PTT Plc. Authority Regulation BoardWith the publication of a decree on the power, rights, and benefits of PTT Plc., (No. 2), B.E. 2550, in the Royal

Gazette on February 16, 2007, with effect from March 18, 2007, below are the essences of this decree:

1. Revoke the power, rights, privileges, and benefits formerly provided to PTT Plc., namely the rights and

benefits as a virtual concessionaire under the laws relating to petroleum (Section 8, Petroleum Authority of Thailand Act,

B.E. 2521 [1978]); the privileges of PTT Plc. properties not subject to liability under execution (Section 5, Royal Decree on

the Power, Rights, Privileges, and Benefits, B.E. 2544 [2001]); and the power to expropriate properties under the law on

real-estate expropriation (Section 38, Petroleum Authority of Thailand Act, B.E. 2521 [1978]).


2. Transfer the power, rights, privileges, and benefits of PTT Plc. under the Petroleum Authority of Thailand

Act, B.E. 2521 [1978]), including the survey and designation of petroleum transmission pipeline zones, and pipeline laying

under, over, or through individuals’ properties, to the PTT Plc. Authority Regulation Board, who will announce stipulated

criteria and terms and conditions for implementation in the Royal Gazette.

3. The PTT Plc. Authority Regulation Board is chaired by the permanent secretary of energy along with

a representative of the Ministry of Interior, a representative of the Council of State, up to three experts appointed by

the minister of energy as members, and the director-general of the Energy Policy and Planning Office serving as secretary to

the Board.

As for the necessity for issuing this decree, the government cited that PTT now commanded enough business

potential and competitiveness with others in the petroleum business.

2.6 Litigation in the Administrative Court about the Transformation and Privatization of thePetroleum Authority of ThailandOn August 31, 2006, the Foundation for Consumers and its parties of five (Suer) sued the prime minister, the

Cabinet, and the Energy Minister (Suee) in the Supreme Administrative Tribunal, asking it to revoke two royal decrees issued

under the State Enterprise Corporatization Act, B.E. 2542 (1999), in the transformation of the Petroleum Authority of Thailand

into PTT Public Company Limited (PTT). These consisted of a royal decree on the authority, rights, and benefits of PTT Plc.,

B.E. 2544 (2001), and a timeline for the revocation of laws concerning the Petroleum Authority of Thailand, B.E. 2544 (2001).

While PTT believes that its privatization conformed to the criteria and procedures of relevant laws, it has

no way of knowing explicitly the results from the revocation if the tribunal would order the revocation of any or both decrees,

or if the ruling would be retroactive, or if the ruling will significantly harm PTT’s status. If PTT should revert to a state

enterprise as a result of the two decrees being revoked, contractual obligations under the Company’s debentures and

the holders may merely change to a different issuer, that is, the Petroleum Authority of Thailand, comparing this with the

memorandum of the Council of State on completed case number 208/2549 (enforcement of the Supreme Administration

Tribunal’s ruling: the revocation of a royal decree on the transformation of the Electricity Generation Authority of Thailand

into EGAT Plc.).

2.7 Use of Water in Petrochemical Plants, Refineries, and Gas Separation PlantsMost of these PTT Group plants are located in Map Ta Phut Industrial Estate, Rayong. In their processes they

need a large volume of water from natural bodies of water for their cooling. If the area runs short in water supply to feed the

industrial sector, some plants could be suspended or have their output reduced - thereby directly lowering PTT’s revenue.

The PTT Group has defined alleviating measures. In the short term, it has secured nearby water sources,

prepared desalination processes from sea water, and prepared transportation of fresh water by barge and truck from other

bodies of water. Long-term measures included acquisition of reserve water supplies, investigation of the economic feasibility

of a reverse osmosis / desalination system, and investigation of air cooling or seawater cooling to replace conventional

cooling systems for new projects. Besides, PTT has monitored the drought situation while closely coordinating with the

public sector to ensure its own ability to manage the potential impact.


3. Project Execution Risks

3.1 Development of Gas Transmission System, Gas Separation Plants, and Petrochemical PlantsThe key factors for the Company’s successful business expansion include a continuous increase in natural

gas consumption, the ability to expand its gas transmission system and create value, a greater reach of its gas transmission

system to customers, its gas separation capacity, and the success in building petrochemical plants under the PTT Group,

which rely on natural gas for their processes. Projects may experience delays for various reasons, including delays

in identifying construction contractors, procurement of long-lead items, getting approval from the government, and the

preparation of environmental impact assessment (EIA) reports. Delays in project completion could hurt PTT’s financial and

operating performance.

Therefore, PTT pays close attention to Critical-Path management, that is, tackling the tasks most critical to

each project’s timing and success. These include acceleration of the hiring of construction contractors; close monitoring of

the procurement of construction materials; development of measures to reduce environmental impacts; monitoring and

analysis of impacts on project management; appointment of a community relations task group to develop plans for public

participation; and preparation of plans and measures to minimize the potential impact of project delays.

4. Operation Risks

4.1 Commercial Risks from OperationsMany hazards are inherent to the exploration, production, and transportation of natural gas, crude oil,

petrochemicals, and refined petroleum products, including fires, explosions, oil spills, well blowouts, gas pipeline leaks,

dispersion of hazardous gases, terrorist activities, natural disasters, actions of external parties, and other unforeseen events.

These hazards could prove detrimental to PTT’s personnel, assets, environment, business operations, reputation, financial

standing, and business opportunities.

PTT takes risk management seriously by adopting Preventive Maintenance measures for its production

facilities and instituting emergency and crisis response preparedness measures. Like other companies in the petroleum and

petrochemical industries, PTT has taken out insurance to protect its major operating assets against risks as well as business

interruption.

4.2 Environmental and Safety RegulationsAll our business operations must comply with the laws and regulations concerning the impact on the

environment and safety. Currently, domestic laws and regulations are more lenient than those in industrialized countries.

However, future changes, including changes to the enforcement of such laws and regulations, may limit PTT’s operations or

significantly raise operating costs. Besides, community acceptance or rejection of any operations could harm PTT’s future

business and ability to generate revenue.

To address these risks, PTT monitors and analyzes the impact of changes in environmental and safety laws

and regulations on its operations. PTT also closely coordinates with government agencies, uses available information to

develop work plans and response measures, and ensures ongoing community relations activities in operating areas.


5. Financial Risks

5.1 Fluctuation of the BahtSince PTT and its affiliates have outstanding foreign loans, changes in the exchange rate between the baht

and the US dollar have both direct and indirect effects on the majority of PTT’s revenue, consequently affecting PTT’s

bottom line. Therefore, the fluctuation of the baht and the government’s economic policies affect PTT’s consolidated

financial and operating performance.

To alleviate this, PTT has balanced its foreign loans in proportion to its revenue from foreign currencies

(Natural Hedge) while managing its Foreign Currency Deposits and purchasing foreign currency forward to match the

quantity of foreign currency required for loan repayment and for imported natural gas and crude oil. PTT has developed

a Treasury and Credit Policy for use as a common guideline for PTT and all other companies in the Group, incorporating

the requirement to institute risk management to handle risks to PTT’s financial standing.

5.2 Financial Support to Affiliated CompaniesIn the past and during the recent Asian economic crisis, PTT provided financial support to its affiliates under

a shareholder support agreement, and coordinated with the executives, creditors, and other major shareholders of these

affiliates on debt restructuring. Despite the improved performance of most affiliates since 2003, PTT cannot ensure that

these companies would be able to repay their loans to PTT; that they would not reencounter any more financial problems;

or that they would not need PTT’s financial support in the future. In any cases, the financial conditions of PTT affiliates could

impact PTT’s financial and operating performance.

To address this, PTT has played a leading role in promoting debt restructuring among its affiliates and has

issued a policy to refrain from incurring new obligations unless they are necessary and beneficial to PTT’s long-term

success. In such cases, the Company will consider providing short-term loans or commercial loans, or both, and believes

that this policy will strengthen the financial conditions of companies in PTT Group.

5.3 Acquisition of Funds for Plan ExecutionThe businesses of PTT - in particular, petroleum exploration and production, natural gas transmission,

and the petrochemical business - require massive capital investments. Although PTT closely monitors and manages risks,

the actual investment capital required may deviate from project plans due to factors beyond its control. This could affect

the success and capital costs of PTT projects.

As a rule, PTT adheres to a 1 : 1 debt-to-equity ratio and a net debt-to-EBITDA ratio of up to 2 : 1 when

securing investment capital, and continuously monitors changes in factors that affect the sourcing of investment capital.

Therefore, PTT believes it can secure sufficient and suitable funds for future business expansion.


A u d i t o r s

Corporate Governance Committee

Nomination Committee

EVP, PTT Researchand Technology Institute

Remuneration Committee

O R G A N I Z A T I O N C H A R T

SEVP,Corporate Strategy

& Development

SEVP,Corporate Finance

& Accounting

SEVP,Oil Business

Group

SEVP,Petrochemicals

& RefiningBusiness Group

SEVP,Corporate Support

SEVP,Exploration

& Production andGas Business Group

Audit Committee

S h a r e h o l d e r

B o a r d o f D i r e c t o r s

1. EVP, Strategic

Planning

2. EVP, Project

Management

3. EVP, Natural Gas

Supply & Trading

4. EVP, Natural Gas

Transmission

5. EVP, Natural Gas

Processing

6. EVP, Natural Gas

Vehicle

1. EVP, Planning

2. EVP, Retail

Marketing

3. EVP, Commercial

& International

Marketing

4. EVP, Supply

& Logistics

5. EVP, Terminal

Operations

1. EVP, Subsidiary

Planning

& Management

2. EVP, Business

Development

& Project

Management

EVP, Office of Corporate Audit

VP, Office of the President

1. EVP, Corporate

Human Resources

2. EVP, Office of

Corporate Legal

President

VP, Corporate PublicRelations Department

Managed through 11 committees

* SEVP = Senior Executive Vice President

** EVP = Executive Vice President

*** VP = Vice President

EVP, InternationalTrading

1. EVP, Corporate

Strategy & Planning

2. EVP, Corporate

Business

Development

1. EVP, Corporate

Finance

2. EVP, Corporate

Accounting


P T T B O A R D O F D I R E C T O R S

Mr. Cherdpong Siriwit Age 61

Chairman

(%) Share Holding None

Education / Training

• B.A. (Hons.) (Economics), Thammasat University

• M.A. (Economics), Georgetown University, U.S.A.

• The National Defence Cource, The National Defence College

(Class 40)

• Politics and Governance in Democratic System for Executive Course,

King Prajadhipoks Institutes (Class 5)

• Thai Institute of Directors Association (IOD) 2004 : DAP / RCM / FN

Work Experience

2002 - 2005 : Permanent Secretary, Ministry of Energy

Positions in Other Core Affiliated Companies

• Chairman of the Board, PTT Exploration and Production

Public Company Limited

• Chairman of the Board, Thai Oil Public Company Limited

• Chairman of the Board, PTT Chemical Public Company Limited

• Chairman of the Board, Ratchaburi Electricity Generating Holding


• Chairman of the Board, Rayong Refinery Public Company Limited

• Chairman of the Board, Thai Oil Power Company Limited

Dr. Pornchai Rujiprapa Age 55

Director



• B.Sc. (Agro-Industry), Kasetsart University

• M.P.A. (Programming Planning Administration)

National Institute of Development Administration (NIDA)

• M.Sc. (Regional Economics), University of Pennsylvania, U.S.A.

• Ph.D. (Regional Economics), University of Pennsylvania, U.S.A.

• The Joint State-Private Course, The National Defence College

(Class 11)

• Thai Institute of Directors Association (IOD) 2006 : DAP

Work Experience

2003 : Deputy Permanent Secretary, Ministry of Energy

2006 - Present : Member of the National Legislative Assembly, Thailand

: Permanent Secretary, Ministry of Energy


• Chairman of the Board, Electricity Generating Authority of Thailand

• Chairman of the Board, Electricity Generating Public Company Limited

• Director of the Board, PTT Chemical Public Company Limited


Mr. Metta Banturngsuk Age 56

Director

Mrs. Puntip Surathin Age 59

Director and Nominating Committee Member



• B.A. (Accounting), Chulalongkorn University

• LL.B., Ramkhamhaeng University

• The National Defence Course, The National Defence College

(Class 46)

• Thai Institute of Directors Association (IOD) 2006 : DAP / DCP

Work Experience

2002 - 2006 : Director General, Energy Policy and Planning Office,

Ministry of Energy

2006 - Present : Director General, Department of Energy Business,

Ministry of Energy

Positions in Other Core Affiliated Companies None

(%) Share Holding 0.000357


• B.A. (Accountancy) (Hons.), Chulalongkorn University

• M.A. (Business Administration), Fort Hays Kansas State College,

U.S.A.


(Class 40)

• Thai Institute of Directors Association (IOD) 2001 : DCP

Work Experience

2002 : Director General, State Enterprise Policy Office,

Ministry of Finance

2005 : Deputy Permanent Secretary, Ministry of Finance

2006 - Present : Director General, The Treasury Department,

Ministry of Finance



Mrs. Pannee Sathavarodom Age 59

Director and Remuneration Committee Member

Gen. Apichart Penkitti Age 58

Independent Director




• M.A. (Economics), Thammasat University


(Class 44)

• Bond Markets : Fixed Income Analysis, Economic Development

Institute of the World Bank (1996)

• Advances Executive Program, 2004, Kellogg School of Management,

Northwestern University

• Thai Institute of Directors Association (IOD) 2005 - 2006 :

DAP / FN / Fostering a Board and Management Team

Work Experience

2001 - 2002 : Deputy Director-General, Fiscal Policy Office

and Director-General, Public Debt Management Office,

Ministry of Finance

2002 - 2006 : Director-General, Public Debt Management Office,

Ministry of Finance

2006 - Present : Director-General, Fiscal Policy Office, Ministry of Finance


• Director of the Board, Rayong Refinery Public Company Limited



• Bachelor of Science, Chulachomklao Royal Military Academy

Class 19

• Master of Science in Mechanical Engineering,

US. Naval Post Graduate School Monterey, California, U.S.A.

• The National Defence Course,

The National Defence College (Class 43)

Work Experience

2002 : Deputy Commanding General,

Armed Forced Development Command

2003 : Director-General, Office of Policy and Planning,

Ministry of Defence

2005 - Present : Deputy Permanent Secretary for Defence



M.L. Panasarn Hasdin Age 62

Independent Director

Dr. Olarn Chaipravat Age 63

Independent Director and Chairman of the Audit Committee



• Bachelor of Architecture (Hons.), Chulalongkorn University

• Master of Architecture, University of Pennsylvania, U.S.A.


(Class 37)

• The Psychological Operation Staff Course 33

• Thai Institute of Directors Association (IOD) 2006 : Developing CG /

Setting the CEO Performance Plan & Evaluation / UFS

Work Experience

1997 - 2003 : Deputy Secretary-General to the Prime Minister for

Administration Affairs

2003 - 2005 : Deputy Permanent Secretary to the Prime Minister




• B.S. (Magna Cum Laude) (Economics), Wharton School,

University of Pennsylvania, U.S.A.

• Ph.D. (Economics), Massachusetts Institute of Technology (M.I.T.),

U.S.A.

• Thai Institute of Directors Association (IOD) 2003 : DAP

Work Experience

Present : Honorary Advisor to Fiscal Policy Research Institute

(FPRI)


• Director of the Board, Thai Oil Public Company Limited



Dr. Suchart Thada-Thamrongvech Age 55

Independent Director, Audit Committee Member,

and Chairman of the Corporate Governance Committee




• M.Sc. (Economics), The London School of Economics and Political

Science, UK

• Ph.D. (Economics), McMaster University, Canada


(Class 1)


DCP / DAP / FN / ACP / Fostering a Board and Management Team

Work Experience

2003 - 2005 : Policy Advisor to the Minister of Energy

2003 - 2006 : Director of the Board, Rice Policy Committee

: Advisor to the Board of Investment

2004 - 2006 : Eminent Advisor to the Prime Minister in the Field

of Economics

2005 - 2006 : Director of the Board, Securities and Exchange

Commission Thailand

1995 - Present : Associate Professor of Economics,

Faculty of Economics, Ramkhamhaeng University


• Director of the Board, Petroleum Committee

• Director of the Board and Chairman of the Audit Committee,

Ratchaburi Electricity Generating Holding Public Company Limited




• B.A. (Economics), Chulalongkorn University

• M.A. (Economics), California State University in Northridge, U.S.A.

• Certificate of Senior Executive Development Program (Class 12)


(Class 39)

• Thai Institute of Directors Association (IOD) 2004 :

DAP / FN / ACP/ DCP

Work Experience

2001 - 2002 : Secretary General, Board of Investment

2002 - 2004 : Secretary General, National Economic and Social

Development Board

2004 - Present : Permanent Secretary, Ministry of Industry




Mr. Chakramon Phasukavanich Age 59

Independent Director and Chairman of the Nominating Committee


Dr. Ampon Kittiampon Age 52

Independent Director, Nominating Committee Member,

and Chairman of the Remuneration Committee



• B.A., Kasetsart University

• M.S. (Economics), Northeastern University Boston, U.S.A.

• Ph.D. (Applied Economics), Clemson University,

South Carolina, U.S.A.

• CIO 3


(Class 45)


Work Experience

2002 - 2004 : Deputy Permanent Secretary of the Ministry of

Agriculture and Cooperatives

2003 : Director of the National Bureau of Agriculture

Commodity and Food Standards (ACFS)

2004 - Present : Secretary General of the Office of National Economic

and Social Development Board




Dr. Phadhadej Dhamcharee Age 56

Independent Director and Audit Committee Member



• B.A. (Economics), Yale University, U.S.A.

• M.A. (Economics), Yale University, U.S.A.

• Ph.D. (Political Economy), Amsterdam University, the Netherlands


DCP / FN / ACP/ Fostering a Board and Management Team /

Developing CG / Director Forum

Work Experience

2006 - Present : Farmer, Dairy Farm / Cash Crop in Phetchabun Province






• B.A. (History & Political Science), University of Kansas, U.S.A.

• M.A. (Political Science), University of Wisconsin, U.S.A.

• M.A. (Ibero - American Studies), University of Wisconsin, U.S.A.

• Ph.D. (Political Science), University of Wisconsin, U.S.A.

• Thai Institute of Director Association (IOD) 2004 :

DAP / Developing CG

Work Experience

Present : Deputy Director Institute of East Asian Studies,

Thammasat University

: Assistant Professor, Faculty of Political Science,

Thammasat University




• Bachelor of Science, Chulachomklao Royal Military Academy

Class 14


(Class 10)

• Thai Institute of Directors Association (IOD) 2006 : DAP / FN / ACP

Work Experience

2001 : Commander-in-Chief of the Royal Thai Armed Forced,

Ministry of Defence

2002 : Supreme Commander, the Supreme Command

Headquarters, Ministry of Defence



Dr. Pisanu Sunthraraks Age 53

Independent Director, Remuneration Committee Member,

and Corporate Governance Committee Member

Gen. Somdhat Attanand Age 63

Independent Director and Corporate Governance Committee Member




• B.Eng. (Civil Engineering), Chulalongkorn University

• M.B.A., Utah State University, U.S.A.


(Class 10)

• Certificate in Advanced Management Program,

Harvard Business School, U.S.A.

• Politics and Governance in Development Systems

for Executive Course, King Prajadhipoks Institutes (Class 6)

• Thai Institute of Directors (IOD) 2004 : DAP

• Capital Market Academy Leadership Program,

Capital Market Academy (Class 3)

Work Experience

2001 - 2003 : Senior Executive Vice President, Gas Business Group,

PTT Public Company Limited

2003 - Present : President, PTT Public Company Limited



• Director of the Board, PTT Exploration and Production Public

Company Limited




• Director of the Board, IRPC Public Company Limited

Mr. Prasert Bunsumpun Age 55

Director and Secretary




• B.Eng. (Civil Engineering), Chulalongkorn University

• M.B.A., Utah State University, U.S.A.


(Class 10)

• Certificate in Advanced Management Program, Harvard Business

School, U.S.A.

• Politics and Governance in Development Systems for Executive

Course, King Prajadhipoks Institutes (Class 6)


• Capital Market Academy Leadership Program,

Capital Market Academy (Class 3)

Work Experience

2001 - 2003 : Senior Executive Vice President, Gas Business Group,


2003 - Present : President, PTT Public Company Limited




Company Limited







• B.Sc., Chulalongkorn University

• M.B.A., Thammasat University

• Certificates in Project Investment Appraisal and Management

and Global Leadership, Harvard University

• Thai Institute of Directors (IOD) 2006 : DAP / DCP

Work Experience

2002 - Present : Senior Executive Vice President,

Corporate Strategy and Development,


2006 - Present : Acting Executive Vice President,

PTT Research and Technology Institute,




• Director of the Board, The Aromatics (Thailand)


• Director of the Board, HMC Polymers Company Limited

• Director of the Board, Star Petroleum Refining Company Limited

• Director of the Board, Independent Power (Thailand)

Company Limited

• Director of the Board, PTT Natural Gas Distribution Company Limited

Mr. Prasert Bunsumpun Age 55

President

Mr. Anon Sirisaengtaksin Age 55

Senior Executive Vice President,

Corporate Strategy & Development

P T T E X E C U T I V E S




• B.A. (Accounting), Thammasat University

• Certified Auditor No. 2918

• M.B.A. (Business Administration), Indiana University of Pennsylvania,

U.S.A.


(Class 13)

• Honorary Degree Doctor of Philosophy (Accounting)


Work Experience

2001 : Deputy Governor, Finance,

Petroleum Authority of Thailand

2001 - Present : Senior Executive Vice President, Corporate Finance

and Accounting, PTT Public Company Limited


• Director of the Board, The Aromatics (Thailand) Public

Company Limited


Company Limited

• Director of the Board, Dhipaya Insurance Public Company Limited


• Director of the Board, Bangchak Petroleum Public Company Limited

• Director of the Board, Thai Oil Company Limited

• Director of the Board, Thai Petroleum Pipeline Company Limited



• B.Eng. (Civil Engineering), Kasetsart University

• M.Eng. (Civil Engineering), Lamar University, Beaumont,

Texas, U.S.A.

• Certificate in Advanced Management Program,

Harvard Business School, U.S.A.

• Certificate in Advanced Management Program, Banff School


(Class 16)


Work Experience

1998 - 2002 : Director and General Manager, PTT Natural Gas

Distribution Company Limited (PTTNGD)

2003 - Present : Senior Executive Vice President, Corporate Support,



• Director of the Board, PTT Natural Gas Distribution

Company Limited

• Director of the Board, Energy Complex Company Limited

Mr. Pichai Chunhavajira Age 58


Corporate Finance and Accounting

Mr. Songwut Chinnawat Age 57


Corporate Support




• B.Sc. (Economics), Nathaniel Hawthorne College, U.S.A.

Work Experience

2002 - 2003 : Executive Vice President, Retail Marketing,

Oil Business Group

2003 - 2005 : Executive Vice President, Planning, Oil Business Group

2005 - Present : Senior Executive Vice President, Oil Business Group


• Director of the Board, Thai Lube Blending Company Limited

• Director of the Board, Fuel Pipeline Transportation Company Limited

• Director of the Board, Retail Business Alliance Company Limited

• Director of the Board, Energy Complex Company Limited



• B.Eng. (Mechanical Engineering), Chulalongkorn University

• M.Eng. (Industrial Engineering), Lamar University, Texas, U.S.A.

• Ph.D. (Industrial Engineering), Lamar University, Texas, U.S.A.

• Stanford Executive Program, Stanford University, U.S.A.


(Class 12)

Work Experience

2000 - 2003 : Director and President, PTT Exploration & Production



Exploration & Production and Gas Business Group,



• Chairman of the Board, PTT Natural Gas Distribution

Company Limited

• Chairman of the Board, Energy Complex Company Limited

• Director of the Board, PTT Exploration & Production




• Director of the Board, District Cooling System

& Power Plant Company Limited

• Director of the Board, HMC Polymer Company Limited

• Director of the Board, Ratchaburi Power Company Limited

Mr. Chaivat Churitti Age 59

Senior Executive Vice President

Oil Business Group

Dr. Chitrapongse Kwangsukstith Age 58


Exploration & Production and Gas Business Group




• B.E. (Civil Engineering), Chulalongkorn University

• M.S. (Civil Engineering), Stanford University, U.S.A

• Ph. D. (Civil Engineering), University of Texas at Austin, U.S.A.


(Class 15)

• Thai Institute of Directors (IOD) 2002 : DCP

Work Experience

2002 - 2003 : Senior Executive Vice President, Corporate Support,


2004 - Present : Senior Executive Vice President, Petrochemicals &

Refining Business Group, PTT Public Company Limited





• Director of the Board, The Aromatics (Thailand) Public

Company Limited




• B.E. (Electrical Engineering), Chulalongkorn University

• M.Eng. (Electrical Engineering), University of Houston, U.S.A.

• Certificate on Modern Marketing, Chulalongkorn University


Work Experience

1999 - 2005 : President and CEO,

Thai Olefins Public Company Limited

2005 - Present : President and CEO,

PTT Chemical Public Company Limited


• Chairman of the Board, Thai Ethanolamines Company Limited

• Chairman of the Board, TOC Glycol Company Limited

• Chairman of the Board, Thai Choline Chloride Company Limited


• Director of the Board, Thai Oleochemicals Company

• Director of the Board, Vinythai Public Company Limited

• Director of the Board, Thai Tank Terminal Limited

Dr. Prajya Phinyawat Age 56


Petrochemicals and Refining Business Group

Mr. Aditheb Bisalbutr Age 59

President





• B.E. (Hons.) (Civil Engineering), Chulalongkorn University

• M.S.C.E. (Civil Engineering), University of Texas at Austin, U.S.A.

• Ph.D. (Civil Engineering), University of Texas at Austin, U.S.A.

• Program for Management Development, Harvard University, U.S.A.

• Thai Institute of Directors Association (IOD) 2003 : DAP / DCP

Work Experience

1999 - 2004 : President,

National Petrochemical Public Company Limited



Present : President, Thai Oil Public Company Limited



• Director of the Board, Thai Lube Base Public Company Limited

• Director of the Board, Independent Power (Thailand)

Company Limited

• Director of the Board, Thai Oil Power Company Limited

• Director of the Board, Thai Paraxylene Company Limited

• Director of the Board, Thai Oil Marine Company Limited



• B.Eng. (Mechanical), University of Santo Tomas Manila, Philippines

• Certificate in Asian Executive Program (AEP) GE Management

Development Institute

• Certificate in Senior Executive Program (SEP) Sasin Graduate

Institute of Business Administration of Chulalongkorn University


Work Experience

2004 - Present : President, The Aromatics (Thailand)





• Director of the Board, PTT Utility Company Limited

• Director of the Board, PTT Phenol Company Limited

Dr. Viroj Mavichak Age 59

President

Thai Oil Public Company Limited

Mr. Permsak Shevawattananon Age 57

President

The Aromatics (Thailand) Public Company Limited




• B.S. (Petroleum Engineering), University of Texas at Austin, U.S.A.

• M.S. (Petroleum Engineering), University of Texas at Austin, U.S.A.

• Certificate in Advance Management Course from INSEAD, France


(Class 17)

• Thai Institute of Directors Association (IOD) : DCP / DAP

Work Experience

2002 - 2003 : Senior Vice President, Business Development,

PTT Exploration and Production


2003 - Present : President, PTT Exploration and Production


Mr. Maroot Mrigadat Age 55

President

PTT Exploration and Production Public Company Limited


• Director of the Board, PTT Exploration and Production


• Chairman of the Board and President, PTTEP International Limited

• Chairman of the Board and President, PTTEP Services Limited

• Chairman of the Board and President, PTTEP Siam Limited

• Chairman of the Board and President, PTTEP (Thailand) Limited


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S H A R E H O L D I N G A N D M A N A G E M E N T S T R U C T U R E

PTT Plc.ûs Equity Structure

-Its top 15 shareholders as of January 10, 2007 were as follows:

Item Shares (in millions) Value (million baht) % of Total Shares

Registered Capital 2,857 28,572 -

Paid-Up Capital as of December 31, 2006 2,805 28,049 100.00

- Ministry of Finance 1,468 14,677 52.33

- Vayupak Fund 1 by MFC Asset Management Plc. 218 2,179 7.77

- Vayupak Fund 1 by Krung Thai Asset Management Plc. 218 2,179 7.77

- Institutional and Public Investors 901 9,014 32.13

Unpaid Capital 52 523

%

No. Name No. of Shares of Total

Shares

1. Ministry of Finance 1,467,750,743 52.33

2. Vayupak Fund 1 by Krung Thai Asset Management Plc. 217,900,000 7.77

3. Vayupak Fund 1 by MFC Asset Management Plc. 217,900,000 7.77

4. HSBC (Singapore) Nominee Pte., Ltd. 46,666,730 1.66

5. Chase Nominees Limited 42 42,711,800 1.52

6. Thai NVDR Co., Ltd. 39,421,312 1.41

7. Nortrust Nominees Ltd. 32,815,569 1.17

8. State Street Bank and Trust Company 31,543,684 1.12

9. Mellon Bank, N.A. 25,178,909 0.90

10. HSBC Bank Plc. - Clienth General A/C 23,537,500 0.84

11. State Street Bank and Trust Company, for Australia 20,107,235 0.72

12. Social Security Office 20,009,900 0.71

13. Government Pension Fund 18,802,800 0.67

14. Investors Bank and Trust Company 16,163,640 0.58

15. The Bank of New York (Nominees) Limited 15,234,862 0.54

Note: Numbers 4, 5, 7, and 15 are nominee accounts. According to PTT’s investigation with Thailand Securities Depository Co., Ltd., (TSD) the ultimate

shareholder’s names could not be disclosed. However, the Ministry of Finance remained the single majority shareholder on behalf of the state,

which in part dictated PTT’s management policy. The ministry nominated Directors to the Board, which were approved by the shareholders. Other

substantial shareholders, including the four above-mentioned ones, did not exhibit any influence over PTT’s management policy formulation by

nominating Directors to the Board.


Dividend PolicyPTT’s dividend policy is to pay out at least 25% of its net profits after deducting various provisional items. Each

year’s payout is subject to PTT’s investment plan, justifications, and other future considerations. Upon approval by

the Board of Directors, the annual dividend payout is to be presented to the shareholders’ meeting for approval. As regards

an interim dividend, however, the Board is authorized to pay it and then report the payout at the next shareholders’ meeting.

As a rule, a subsidiary company decides its dividends by comparing its remaining cash balance with its investment

capital. If there is sufficient cash after it has set aside cash reserves as required by law, it may pay out dividends.

Organizational StructureAt the top of PTT’s organizational structure is the Board of Directors (“The Board”), which consists of four

committees: Audit Committee, Nominating Committee, Remuneration Committee, and Corporate Governance Committee.

The President, PTT’s top executive, manages the organization through 11 committees. Details of PTT’s management

structure appear below:

Board of DirectorsAs reported in the Ministry of Commerce’s certification dated December 13, 2006, the Board consisted of

15 members:

● 14 non-management Directors (9 were Independent, which exceeded half of the entire Board), and

● 1 management Director.

The Board consisted of:

No. Name Position Appointed

1. Mr. Cherdpong Siriwit Chairman April 9, 2004

2. Gen. Apichart Penkitti Independent Director November 28, 2006 2.3

(replacing Mr. Somchai Wongsawat)

3. Mr. Chakramon Phasukavanich Independent Director April 9, 2004

4. Dr. Phadhadej Dhamcharee Independent Director April 12, 2005

5. Gen. Somdhat Attanand Independent Director April 11, 2006 1.1

6. M.L. Panasarn Hasdin Independent Director April 11, 2006 1.2

7. Dr. Ampon Kittiampon Independent Director April 12, 2005

8. Dr. Olarn Chaipravat Independent Director April 11, 2006 1.3

9. Dr. Suchart Thada-Thamrongvech Independent Director April 12, 2005

10. Dr. Pisanu Sunthraraks Independent Director April 9, 2004

11. Dr. Pornchai Rujiprapa Director November 28, 2006 2.1

(replacing Mr. Prapan Naigowit)

12. Mrs. Puntip Surathin Director November 28, 2006 2.2

(replacing Mr. Suparat Kawatkul)

13. Mrs. Pannee Sathavarodom Director July 28, 2005


Share Ownership by PTT Directors in 2005 and 2006

The Board consisted of:

Notes: 1. The 2006 annual general meeting (AGM) of the shareholders of April 11, 2006 approved the appointments of the following Directors:

1.1 Gen. Somdhat Attanand, replacing Gen. Chaisuk Ketudat, who completed his term.

1.2 M.L. Panasarn Hasdin, replacing Mr. Pala Sookawesh, who resigned on September 22, 2005 on reaching his 65th birthday anniversary

1.3 Dr. Olarn Chaipravat, Mr. Prapan Naigowit, and Mr. Prasert Bunsumpun, all for another term.

2. Appointed Directors to replace resigned Directors:

2.1 Dr. Pornchai Rujiprapa, replacing Mr. Prapan Naigowit, who resigned on September 15, 2006.

2.2 Mrs. Puntip Surathin, replacing Mr. Suparat Kawatkul, who resigned on November 16, 2006.

2.3 Gen. Apichart Penkitti, replacing Mr. Somchai Wongsawat, who resigned on November 24, 2006.

No. Name Position Appointed

14. Mr. Metta Banturngsuk Director April 9, 2004

15. Mr. Prasert Bunsumpun Director and Secretary April 11, 2006 1.3

No. of Shares as of December 31,No. Name

2005 2006Increment Note

1. Mr. Cherdpong Siriwit - - - -

2. Gen. Apichart Penkitti N.A. 9,000 N.A. Appointed on November 28, 2006

(replacing Mr. Somchai Wongsawat)

3. Mr. Chakramon Phasukavanich 10,000 10,000 - -

4. Dr. Phadhadej Dhamcharee - - - Appointed on April 12, 2005

5. Gen. Somdhat Attanand N.A. - N.A. Appointed on April 11, 2005

6. M.L. Panasarn Hasdin N.A. - N.A. Appointed on April 11, 2005

7. Dr. Ampon Kittiampon - - - Appointed on April 12, 2005

As required by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET),

the Corporate Governance Committee defined an Independent Director as follows:

● Holds no more than 0.5% of all voting shares in PTT, its affiliates, joint ventures, or juristic persons that may

impose conflicts of interest (implicitly including related persons as stated in Section 258 of the Securities and

Exchange Act).

● Does not participate in the management of PTT, its affiliates, or its joint ventures; is not an employee, a regularly

paid advisor, an accounting auditor, a legal consultant, other types of consultant, or a person who has control

over PTT, its affiliates, or its joint ventures; is not a connected person; and must not have acted in any of the

mentioned capacities for at least two years.

● Has no business relationship, for example, as a customer, supplier, partner, commercial creditor/debtor,

loan creditor/debtor; has no interests in any way in the finance or management of PTT, its affiliates, or its

joint ventures; and holds no interest in connected juristic persons that may lead to biased views.

● Is not a close relative – or related in a way that may lead to biased views – of the Management or major

shareholders of PTT, its affiliates, or its joint ventures, or of connected juristic persons; and must not be

appointed to protect the interest of any Director or major shareholder.


Share Ownership by PTT Directors in 2005 and 2006

Directors Who Resigned or Whose Terms Expired in 2006



1. Gen. Chaisuk Ketudat - - - Term expired on April 11, 2006

2. Mr. Prapan Naigowit - - - Resigned on September 15, 2006

3. Mr. Suparat Kawatkul 2,000 2,000* - * As of the date of resignation

(November 16, 2006)

4. Mr. Somchai Wongsawat - - - Resigned on November 24, 2006



8. Dr. Olarn Chaipravat - - - Reappointed to another

term on April 11, 2006

9. Dr. Suchart Thada-Thamrongvech - - - Appointed on April 12, 2005

10. Dr. Pisanu Sunthraraks - - - -

11. Dr. Pornchai Rujiprapa N.A. - N.A. Appointed on November 28, 2006

(replacing Mr. Prapan Naigowit)

12. Mrs. Puntip Surathin N.A. 10,000 N.A. Appointed on November 28, 2006

(replacing Mr. Suparat Kawatkul)

13. Mrs. Pannee Sathavarodom 4,000 4,000 - Appointed on July 28, 2005

(replacing Mr. Wisudhi Srisuphan)

14. Mr. Metta Banturngsuk - - - -

15. Mr. Prasert Bunsumpun 325,820 325,820 - Reappointed to another term

on April 11, 2006

The Directors whose signatures are recognized as binding on the Company were (1) Mr. Prasert Bunsumpun,

President, authorized to sign and affix the Company’s seal, or (2) two other Directors, authorized to jointly sign and affix the

Company’s seal.

Authority of the Board of Directors● The Board is authorized to supervise and manage the Company in compliance with relevant laws, objectives,

regulations, and resolutions of shareholders’ meetings.

● The Board is to elect one Director to serve as Chairman. If deemed by the Board as suitable, one or more

Vice Chairman may be elected.

● The Board is to elect one Director to serve as President and Secretary to the Board, as deemed suitable.


Duties and Responsibilities of the BoardThe Board is to:

● Carry out their duties in accordance with relevant laws, objectives, regulations, and resolutions of shareholders’

meetings.

● Establish the Company’s vision, directions, and strategies.

● Endorse major Company strategies and policies, including objectives, financial targets, and operating plans;

monitor and ensure plan implementation.

● Ensure proper systems for corporate accounting, financial reporting, and financial auditing; ensure efficient and

effective internal control and internal audit systems.

● Monitor and remedy problems arising from conflicts of interest and connected transactions.

● Establish prudent risk management guidelines; and ensure an efficient risk management system or procedures.

● Ensure a suitable compensation system or mechanism for Senior Management, to induce short-term and

long-term motivation.

● Assess the performance of the President and determine suitable compensation.

● Ensure suitable channels for communicating with each group of shareholders and stakeholders.

● Ensure correct, clear, transparent, reliable, and high-quality disclosure of information.

● Show leadership and lead by example.

Appointment and Dismissal of Directors1. The Board consists of at least 5 but no more than 15 persons elected at the Company’s shareholders’

meetings. It consists of a minimum of 3 Independent Directors, at least half of the Directors are to reside in Thailand,

and at least 1 Director must be qualified in finance and accounting. All Directors must meet legal requirements and

Company regulations.

In 2004, the Board decided that Independent Directors were to make up at least half of the Board, and that decision

is in effect today.

2. The shareholders’ meetings are to elect qualified Directors who have previously been selected and nominated

by the Nominating Committee under the following criteria and procedures:

(1) Each shareholder has one vote per share held.

(2) Each shareholder exercises all votes applicable under (1) in electing one or more persons as Directors,

but cannot allocate only part of his or her votes to any nominee.

(3) Candidates with the most votes are to be appointed Directors according to the number required.

(4) If more candidates receive equal votes than the number of Directors required, the chairman of the meeting

must cast a vote to decide which one(s) is/are appointed.

3. At every AGM, one-third of the Directors – or if this number is not a multiple of three, then the number nearest to

one-third – must retire from office. The names of the Directors to retire during the first and second year after the Company

was listed are to be drawn by lots. For subsequent years, the Directors with the longest terms must retire.

4. Any Director wishing to resign may submit a resignation letter to the Company. The resignation is to be effective

on the date that the Company receives the letter.

5. In voting for the dismissal of Directors from office before expiry of their terms, a three-quarter (3/4) vote of

eligible shareholders present at the meeting is required, provided that the number of shares represented by the

three-quarters vote is at least half of the total number of shares represented by the total number of eligible shareholders

present at the meeting.


The duties and responsibilities of the President are as follows:Under the Articles of Association of the Company, the President has full authority and duties to manage

the Company’s business as assigned by the Board. Business is to be managed strictly, prudently, and with integrity under

the plan or budget approved by the Board, and must be in the best interests of the Company and its shareholders.

The President’s authority and duties include the following matters and activities:

● Operate and/or manage day-to-day Company business

● Hire, appoint, remove, transfer, promote, demote, reduce the salary or wages of, take disciplinary action against

employees and contractors, and dismiss any employee or contractor as specified by the Board’s regulations.

For department heads or other positions, approval of the Board is required.

● Ensure the preparation and submission of business policies, including the operating plans and budgets, to the

Board for approval, and report performance against them to the Board every three months.

● Ensure the implementation of the policies, plans, and budgets approved by the Board.

Authority Given by the BoardThe Board authorizes the President to act on behalf of the Company under the following conditions and scopes:

● Manage business under all objectives, regulations, policies, rules, specifications, directives, and resolutions of

the meetings of the Board and/or resolutions of shareholders’ meetings.

● Order, contact, command, implement, and sign legal contracts, documents, orders, announcements, or any

correspondence with government agencies, state enterprises, or other parties; and engage in any necessary

and appropriate action that would facilitate the duty specified above.

● Command each employee and contractor and hire, appoint, remove, promote, demote, reduce the salary or

wages of, take disciplinary action against, and dismiss any employee or contractor under the rules, regulations,

or directives of the Board. For employees or contractors serving as advisors, experts, executive vice

presidents, or equivalent or higher positions, approval of the Board is required. The President is also authorized

to specify the employment conditions for employees and contractors, and issue rules governing Company

operations, provided they do not conflict with rules, regulations, or directives of the Board.

● Assign the power of attorney and/or delegate specific tasks to other persons, provided that such assignment

and/or delegation complies with such document concerning the power of attorney and/or rules, regulations, or

directives of the Board and/or the Company.

These authorities and duties of the President are invalid if there is any conflict of interest with the Company

in any form resulting from the President’s exercise of powers.

The Audit CommitteeThe Board approved the appointment of the Audit Committee on October 1, 2001, which consists of Directors with

the qualifications specified by securities and exchange laws and SET. The Committee consists of at least 3 members,

at least 1 of whom must be qualified in accounting and finance. The Audit Committee currently consists of

4 Independent Directors.

Name Position Remark

1. Dr. Olarn Chaipravat Chairman Independent Director with qualifications in finance and accounting

2. Dr. Phadhadej Dhamcharee Member Independent Director with qualifications in finance and accounting

3. Dr. Suchart Thada-Thamrongvech Member Independent Director with qualifications in finance and accounting

Mr. Trakul Chatdarong, Executive Vice President, Office of Corporate Audit, served as the Committee’s secretary.

(Note: Mr. Prapan Naigowit resigned from the Board on September 15, 2006)


Duties and Responsibilities of the Audit Committee● Review the Company’s financial reporting process to ensure accuracy and adequacy.

● Ensure the suitability and effectiveness of internal control and internal audit procedures.

● Ensure compliance with securities and exchange laws, SET regulations, and relevant laws.

● Consider, select, nominate, and recommend the fee for the external auditor.

● Consider the accurate and complete disclosure of Company information in case of connected transactions or

potential conflicts of interest.

● Prepare a report on the Committee’s supervision of business for disclosure in the annual report, to be signed by

Chairman.

● Perform tasks assigned by the Board and with the approval of the Committee.

● Perform duties as specified by Company regulations.

The Committee held 12 meetings in 2006 and duly reported its findings to the Board. In addition, the Committee

participated in quarterly financial audits along with the external auditor and the Finance and Accounting Department.

The Nominating CommitteeThe Board appointed the Nominating Committee on October 1, 2001, currently consisting of 3 Directors - both

independent and non-independent.


1. Mr. Chakramon Phasukwanich Chairman Non-management, Independent Director

2. Dr. Ampon Kittiampon Director Non-management, Independent Director

3. Mrs. Puntip Surathin Director Non-management Director

(Note: Mr. Suparat Kawatkul, former Chairman of the Nominating Committee, resigned from the Board on November 16, 2006.)

Duties and Responsibilities of the Nominating Committee● Select qualified nominees as candidates for new Directors or President.

● Design the procedures and criteria for the nomination of Directors or President to ensure transparency.

The procedure for the nomination of Directors is as follows:

1. The Committee establishes the qualifications for Directors that need replacement to ensure that the new

Directors meet the criteria and qualifications as required by related laws and regulations. The Committee also

establishes the procedures for nominating qualified candidates.

2. The Committee summarizes its results of the nomination process and presents to the Board a shortlist of

qualified candidates for directorship along with supporting reasons.

3. The Board selects the candidates with suitable qualifications from the list prepared by the Committee and

submits the names of selected candidate(s) to the shareholders’ meeting for approval.

In 2006, the Committee held two meetings and duly reported its findings to the Board.



1. Dr. Suchart Thada-Thamrongvech Chairman Non-management, Independent Director

2. Gen. Somthad Attanand Director Non-management, Independent Director

3. Dr. Pisanu Sunthraraks Director Non-management, Independent Director

The Vice President, Office of the President / the Company Secretary, served as the committee’s secretary.

(Note: Mr. Prapan Naigowit, former Chairman of the Corporate Governance Committee, resigned from the Board on September 15, 2006.)

(Note: Mr. Somchai Wongsawat, former Chairman of the Remuneration Committee, resigned from the Board on November 24, 2006.)


1. Dr. Ampon Kittiampon Chairman Non-management, Independent Director

2. Dr. Pisanu Sunthraraks Director Non-management, Independent Director

3. Mrs. Pannee Sathavarodom Director Non-management Director

The Remuneration CommitteeThe Board appointed the Remuneration Committee on October 1, 2001, currently consisting of 3 Directors - both

independent and non-independent ones - as follows.

Duties and Responsibilities of the Remuneration Committee● Consider compensation guidelines for Directors and the President.

● Design the procedures and criteria for fair and reasonable compensation for Directors and the President for

approval at shareholders’ meetings.

The Committee held one meeting in 2006 and duly reported its findings to the Board.

Corporate Governance CommitteeThe Board appointed the Committee on June 24, 2004, consisting of 3 Independent Directors as follows:

Duties and Responsibilities of the Corporate Governance Committee● Propose corporate governance guidelines to the Board.

● Advise the Board on matters concerning corporate governance.

● Ensures that the duties and responsibilities of Directors and the Management comply with corporate

governance practices.

● Revise guidelines for PTT’s corporate governance for compatibility with those of international organizations,

and present its proposal for revisions to the Board.

● Convey corporate governance policies to the Corporate Governance Task Force.

The Committee held two meetings in 2006 and duly reported its findings to the Board.


Name Position

1. President Chairman

2. Senior Executive Vice President, Corporate Support Member

3. Senior Executive Vice President, Corporate Finance and Accounting Member

4. Senior Executive Vice President, Oil Business Group Member

5. Senior Executive Vice President, Exploration & Production and Gas Business Group Member

6. Senior Executive Vice President, Petrochemicals and Refining Business Group Member

7. Senior Executive Vice President, Corporate Strategy and Development Member and Secretary

The Vice President, Office of the President / Company Secretary served as the Assistant Secretary.

The Management Committee held 34 meetings in 2006 and duly reported its findings to the Board.

Duties and Responsibilities of the Management Committee● Provide advice and recommendations to the President on matters concerning corporate strategy and business

direction, investment planning, budgeting, allocation of resources for PTT and its affiliates; and ensure that PTT

affiliates have business processes that are consistent with those of PTT.

● Rank decisions made by the Board to ensure effective implementation.

● Screen meeting agendas before presentation to the Board.

● Rank matters concerning the allocation of human and financial resources for PTT and its affiliates.

● Jointly decide significant issues about PTT affiliates before the meeting of the Board of each affiliated company.

● Establish standards for business administration, human resource management, information management, and

the organizational structure for PTT and its affiliates.

● Establish a policy for human resource management and administration.

In addition, the Company appointed 10 committees to oversee specific areas of work for accurate, appropriate,

efficient, and effective implementation:

● Oil Business Group Management Committee

● Exploration & Production and Gas Business Group Management Committee

● Petrochemicals and Refining Business Group Management Committee

● Corporate Plan Committee

● Corporate Finance & Accounting Committee

● Corporate Human Resources Committee

● PTT Credit Committee

● Supply Chain Management Committee

● Research and Technology Institute Board of Management Committee

● Risk Management Committee.

ManagementA Management Committee was appointed on October 1, 2001, currently consisting of 7 members:


Names of Management team members as of December 31, 2006

No. Name Position

1. Mr. Prasert Bunsumpun President

2. Mr. Anon Sirisaengtaksin Senior Executive Vice President, Corporate Strategy & Development

3. Mr. Pichai Chunhavajira Senior Executive Vice President, Corporate Finance and Accounting

4. Mr. Songwut Chinnawat Senior Executive Vice President, Corporate Support

5. Dr. Chitrapongse Kwangsukstith Senior Executive Vice President, Exploration & Production and Gas Business Group

6. Mr. Chaiwat Churitti Senior Executive Vice President, Oil Business Group

7. Dr. Prajya Phinyawat Senior Executive Vice President, Petrochemicals and Refining Business Group

8. Dr. Viroj Mavichak Senior Executive Vice President, on secondment to Managing Director,

Thai Oil Public Company Limited, (effective January 1, 2006)

9. Mr. Aditheb Bisalbutr Senior Executive Vice President, on secondment to President,


10. Mr. Permsak Shevawattananon Senior Executive Vice President, on secondment to President,

The Aromatics (Thailand) Public Company Limited

11. Mr. Maroot Mrigadat Senior Executive Vice President,

on secondment to President,

PTT Exploration and Production Public Company Limited (effective March 1, 2006)

12. Ms. Penchan Charikasem Executive Vice President, Corporate Finance

13. Ms. Prisana Prahankhasuek Executive Vice President, Corporate Accounting (effective December 1, 2006)

Management’s Ownership of Shares

Warrant # 1 Warrant # 2

Remaining

No. Name 2005 2006 Increment Allocated after Allocated Remarkin 1/2005 in

2005 exercise 2006

Aug. 31, 2006

1. Mr. Prasert Bunsumpun 325,820 325,820 - 243,000 182,300 119,000 -

2. Mr. Anon Sirisaengtaksin 70,030 89,930 19,900 79,800 59,900 41,900 -

3. Mr. Pichai Chunhavajira - 22,000 22,000 88,000 66,000 45,800 -

4. Mr. Songwut Chinnawat 16,876 32,076 15,200 61,000 45,800 32,400 -

5. Dr. Chitrapongse Kwangsukstith 124,630 129,730 5,100 108,700 103,600 56,900 -

6. Mr. Chaiwat Churitti 68,000 57,000 (11,000) 62,100 62,100 32,900 Appointed on November 1, 2005

7. Dr. Prajya Phinyawat 101,980 133,980 32,000 88,300 66,300 45,900 -

8. Dr. Viroj Mavichak 101,980 123,880 21,900 87,800 65,900 45,100 Appointed on January 1, 2006

9. Mr. Aditheb Bisalbutr 28,809 118,809 90,000 65,900 65,900 34,700 Appointed on April 1, 2005

10. Mr. Permsak Shevawattananon 59,564 75,694 16,130 64,000 48,000 33,300 Appointed on March 1, 2006

11. Mr. Maroot Mrigadat - - - 67,200 67,200 35,100 Appointed on March 1, 2006

12. Ms. Penchan Charikasem 5,132 7,132 2,000 34,000 32,000 18,300 Appointed on December 7, 2005

13. Ms. Prisana Prahankhasuek 29,363 38,063 8,700 35,100 26,400 18,400 Appointed on June 1, 2006


Additional Information for the Board and ManagementRecords showed no violation of the law within the past ten years regarding:

(1) being sentenced for criminal charges or under criminal lawsuits, except for violation of traffic law, minor

charges, or similar charges

(2) being sentenced to bankruptcy or having assets controlled

(3) serving as the management or a person with authority in a company or partnership sentenced to bankruptcy

or whose assets are controlled.

Board of Directors Self-AssessmentAs a resolution of Board meeting No. 11/2549 on November 30, 2006, the Board approved self-assessment

forms proposed by the Corporate Governance Committee, relying on the same approach as the one used in 2005. The form

was to be used to conduct self-assessment of the Board’s performance in 2006, a vital tool for improving the Board’s

performance and reference data for corporate governance rating (CG Rating). There were three types of self-assessment,

whereby the percentages corresponded to the following levels of performance achieved in each area elaborated below.

These are the assessment forms for the entire board, individual self-assessment forms, and cross self-assessments:

Over 85% = Excellent

Over 75% = Very good

Over 65% = Good

Over 50% = Fair

Below 50% = Need improvement.

The findings from the self-assessment were as follows:

1. Self-Assessment of the Board consisted of four categories: Board policy, Board composition, Board practices,

and Board meeting. The results indicated excellent/most suitable overall performance with an average score of 90.90%.

2. Self-Assessment of Individual Directors consisted of six categories: accountability for one’s decisions

and actions; responsibility in performing the job with full ability and efficiency; equitable treatment of all stakeholders;

transparency in job performance and information disclosure; vision to create long-term value; and business ethics. Overall

results were excellent for most Directors, with an average score at 94.37%.

3. Individual Assessment of Other Directors (Cross-Assessments) consisted of six identical categories

as above so that they may be directly comparable:

● Accountability

● Responsibility

● Equitable treatment

● Transparency

● Vision to create long-term value

● Ethics.

Cross-assessment results in these six categories indicated excellent performance by most Directors, with

an average score of 93.89%.


Compensation of Directors and ManagementCompensation of Directors: PTT equitably and rationally specifies the compensation of Directors with the

oversight of the Remuneration Committee, taking into account each Director’s responsibility, the Company’s financial

performance, and compatibility with the rest of the industry. Two portions of compensation are currently paid: meeting

allowances and bonuses. Directors appointed to specific committees are paid additional allowances to reflect their

additional responsibilities. Directors’ compensation has been approved by the shareholders as follows:

(1) Directors’ compensation

The following compensation structure was approved at the AGM on Tuesday, April 11, 2006, for the Board in

2006:

1. Meeting Allowances

1.1 Board Meeting compensation consisted of:

- Monthly allowance (retainer allowance) of Baht 30,000 each

- Meeting allowance of Baht 20,000 each time (for those in attendance only).

1.2 Compensation for meetings of Committees consisted of:

1.2.1 Audit Committee

- Monthly allowance of Baht 15,000 each

- Meeting allowance of Baht 15,000 each time (for those in attendance only)

The Secretary received a monthly allowance of Baht 7,500.

1.2.2 Compensation for the three remaining committees (Nominating, Remuneration, and

Corporate Governance Committees) consisted of:

- Meeting allowance of Baht 24,000 each time (for those in attendance only).

1.2.3 Compensation for the Chairman of each committee was 25% higher than for other committee

members.

2. Directors’ Bonuses for 2006: The bonus payout to each Director corresponded to Company performance

and net income, and equaled 0.05% of the net income for 2006, and was up to Baht 2,000,000 per person. The bonus was

pro-rated to the duration of each directorship, with the Chairman receiving 25% more than individual Directors.

The total compensation for each Director in 2006 appears below:

Unit : Baht

Board Committee Total

Meeting Meeting Meeting

Allowance Allowance Allowance

No. Name Days Bonus

1. Mr. Cherdpong Siriwit 365 2,500,000.00 775,000.00 - 775,000.00 3,275,000.00

2. Gen. Apichart Penkitti 31 169,863.01 50,000.00 - 50,000.00 219,863.01

3. Mr. Chakramon Phasukavanich 365 2,000,000.00 600,000.00 48,000.00 648,000.00 2,648,000.00

4. Dr. Phadhadej Dhamcharee 365 2,000,000.00 640,000.00 330,000.00 970,000.00 2,970,000.00

5. Gen. Somdhat Attanand 296 1,452,054.79 479,000.00 48,000.00 527,000.00 1,979,054.79

6. M.L. Panasarn Hasdin 296 1,452,054.79 479,000.00 - 479,000.00 1,931,054.79

7. Dr. Ampon Kittiampon 365 2,000,000.00 640,000.00 48,000.00 688,000.00 2,688,000.00

8. Dr. Olarn Chaipravat 365 2,000,000.00 640,000.00 412,500.00 1,052,500.00 3,052,500.00

9. Dr. Suchart Thada-Thamrongvech 365 2,000,000.00 640,000.00 330,000.00 970,000.00 2,970,000.00

10. Dr. Pisanu Sunthraraks 365 2,000,000.00 640,000.00 72,000.00 712,000.00 2,712,000.00

11. Dr. Pornchai Rujiprapa 31 169,863.01 50,000.00 - 50,000.00 219,863.01

Total

Compensation


Unit : Baht

Directors Who Resigned or Whose Terms Expired in 2006




Total

CompensationNo. Name Days Bonus

12. Mrs. Puntip Surathin 31 169,863.01 50,000.00 - 50,000.00 219,863.01

13. Mrs. Pannee Sathavarodom 365 2,000,000.00 640,000.00 24,000.00 664,000.00 2,664,000.00

14. Mr. Metta Banturngsuk 365 2,000,000.00 640,000.00 - 640,000.00 2,640,000.00

15. Mr. Prasert Bunsumpun 365 2,000,000.00 640,000.00 - 640,000.00 2,640,000.00

Directors’ Compensation in 2004 - 2006




No. Name Days Bonus

1. Gen. Chaisuk Ketudat 100 547,945.21 161,000.00 - 161,000.00 708,945.21

2. Mr. Prapan Naigowit 257 1,408,219.18 434,000.00 292,000.00 726,000.00 2,134,219.18

3. Mr. Suparat Kawatkul 319 1,747,945.21 555,000.00 30,000.00 585,000.00 2,332,945.21

4. Mr. Somchai Wongsawat 327 1,791,780.82 503,000.00 30,000.00 533,000.00 2,324,780.82

Total 29,409,589.03 9,256,000.00 1,664,500.00 10,920,500.00 40,330,089.03

Total

Compensation

Unit : Baht

2004 2005 2006

Directors Baht Directors Baht Directors Baht

Meeting Allowance 15 9,207,500.00 (15) 14 10,707,750.00 15 10,920,500.00

Total Bonus 15 13,725,000.00 (15) 14 17,777,260.27 15 29,409,589.04

Total 22,932,500.00 28,485,010.27 40,330,089.04

Compensation for Management: The compensation of Management team members complies with the policies

and principles specified by the Board. It is tied to PTT’s operating results through its Performance Agreement (PA) under

an assessment system for state enterprises. The President and the rest of the Management establish Key Performance

Indicators (KPI) as well as targeted indices for each year. These indices serve as a guideline for business operation and

a basis for the Remuneration Committee in assessing the performance of the President and all managers. Each person’s

compensation is determined against performance with industry standards. The Remuneration Committee then proposes

the compensation along with compensation guidelines to the Board for review and approval.

Compensation

Unit : Baht


Total Compensation of Senior Management

Unit : Baht

2005 2006

Persons Paid Amount Persons Paid Amount

Salary 8 45,135,600 7 45,145,920

Bonus 8 22,170,695 7 31,668,840

Total 67,306,295 76,814,760

Provident Fund for Senior Management

Unit : Baht

2005 2006

Persons Paid Amount Persons Paid Amount

Provident Fund 7 3,062,216.00 6 3,005,232.00

Total 7 3,062,216.00 6 3,005,232.00

In 2006 the President and 7 Management executives received Baht 76,814,760.00 in compensation (excluding

one senior executive seconded to and paid by a PTT affiliate), detailed as follows:

PersonnelRealizing that the quality of its people is the key to its success as a high-performance organization, throughout its

28 years of existence PTT has been committed to the development of a human resource management system on par with

technological advancement and industry standards. The Company promotes both conscientious merit and business

competence for its employees, and encourages them to actively take part in public service activities. It is on employees that

PTT focuses in its development toward a High Performance Organization (HPO) to compete better and respond to prevailing

circumstances around the Company.

The number of PTT employees as of December 31, 2006 was 3,184. Throughout 2006, PTT carefully managed

its manpower to best reflect its operation, with a focus on business groups with significant expansion and investment plans

in line with national economic development. The most prominent ones were the Exploration & Production and Gas

Business Group; the Petrochemicals and Refining Business Group; and the Trading Business. These were core groups and

businesses where manpower is being added to. Besides formulating human resource plans to suit business circumstances,

PTT has undertaken a plan to develop the potential of its employees and streamline its business procedures.

Compensation

Compensation


Unit : Persons

1) Excludes PTT secondment to affiliates.

2) Includes PTT secondment to affiliates.

Unit : Baht

Compensation 2005 2006

Salary 2,020,836,159.33 2,313,239,842.61

Bonus 996,368,672.00 1,138,238,033.75

Provident Fund 199,951,973.02 228,214,687.17

Others 800,492,308.37 993,909,544.34

Total 4,017,649,112.72 4,673,602,107.87

Compensation of Personnel (excluding President and Senior Management)

As of Year-end 2005 As of Year-end 2006

PTT Consolidated PTT PTT Consolidated PTT

1. Exploration and Production and Gas 963 963 1,057 1,057

2. Oil 1,302 1,302 1,239 1,239

3. Petrochemicals and Refining 51 51 64 64

4. Support Staff, Secondees to PTT

Affiliates 840 1) 932 2) 824 1) 1,075 2)

5. Subsidiaries and Joint Ventures - 4,687 - 5,118

Total 3,156 7,935 3,184 8,553

(2) Other Compensation

PTT has in place employee welfare and other forms of compensation apart from salary, bonus, and provident

fund contribution for management and all employees. These reflect domestic economic conditions, cost of living, and other

standards for companies of the same business, and include rent allowance, relocation, and overtime pay. In 2006, PTT

allocated 20 million units of warrants, or rights to purchase common shares, to the President, the Management, employees,

and employees from affiliated companies serving PTT, as an incentive for their full and consistent dedication to PTT. This

incentive was designed to create a sense of ownership and encourage participation in the management and development

of the Company – benefiting PTT’s performance and business operations. Management team members and employees

would each receive four warrants, each equivalent to 25% of the total units received by each person, who can exercise

their first warrant by purchasing common shares one year after the warrant was issued – at one unit of warrant per share.

Similarly, the second, third, and fourth warrants can be exercised two, three and four years respectively after the date of

issue. Expiring five years after the date of issue, the warrants can be exercised every three months on the last day of each

period until their expiry.

(1) Number of Personnel and Compensation

The head counts for major functions as of year-end 2005 and 2006 were as follows:

Major Function


(3) Personnel Development

To become a High Performance Organization, during the year PTT improved the process and mechanism for

human resource management to ensure higher efficiency and realize the full potential of its people. Through these

improvements, PTT personnel would be able to fully demonstrate their competence, advance in their careers, and continue

to grow with the Company. The elements of the Company’s success include:

Implementing Learning Organization Mechanisms for Sustainable Organization

PTT developed its knowledge management system for essential information relevant to its business and

encourages everyone to do the same and update this regularly. The Company makes available such system for all to use,

to facilitate learning and efficient problem solving while actively promoting employees’ own development of their

potential - for this is the cornerstone to a High Performance Organization. The President of PTT has shared his following

views on the Learning Organization.

“To become a Learning Organization, we rely on human intelligence. Learning is an ongoing, lifetime process.”

Building Competent and Righteous Members of PTT and Society

Besides a human resource management system focusing on making PTT employees smart and responsive to

Company expectations, PTT recognizes its role of turning out people with conscience, ready to participate in social

development and public services. PTT has its corporate governance principles for all to observe, as it firmly believes that

achievement of competence and righteousness is synonymous to achievement of sustainable growth for PTT.

Participating in Decision-making on Corporate Goals and Directions

PTT focuses on broad participation in the Company in designing business plans to suit its direction and targets, as

this will efficiently align all parts of the Company. To this end, PTT institutes an annual process to draw up its vision and

corporate direction, whereby senior management of PTT and its affiliates along with support staff jointly define such vision

and direction before propagating the agreed items for other units to use in defining business strategies and business plans,

and to come up with budget plans aligning with PTT’s broad direction.

In 2006, all PTT employees defined individual objectives and key performance indicators (KPIs) to align with

Company and departmental directions and their own responsibility. These individual objectives and KPIs serve as

performance framework and assessment tools for each person.

Creating Synergy for PTT Group’s Synergy

In line with PTT’s policy to conduct its petroleum and petrochemical businesses in an integrated fashion, it needs

a coherent overall policy management, and therefore it is applying its human resource management system in the form of

a PTT Group, designed to enable all standards for human resource management and development to facilitate transfers

and rotation of executives and staff for maximum efficiency. In 2006, PTT and its subsidiaries jointly defined the Group’s

common culture and instituted personnel recruitment and training systems, as the executives of PTT and affiliates firmly

believed that the PTT Group allowed for leveraging synergy derived from each company to in turn strengthen the efficiency

of human resource management, as opposed to individual Companies’ practices.


Developing Employees’ Career Paths in Line with Corporate Business

At the heart of human resource management is human resource development. PTT has developed career

management processes for greater efficiency through the appointment of Career Counseling Teams (CCT) and a Career

Management Counseling Committee (CMCC), which are charged with defining and developing employees’ individual

competence in support of PTT’s future business. The objective of career management processes is to give employees

maximum professional competence and expertise, the development of which will be defined by the Company. Development

may be in the form of training programs, job rotation, and appointment and promotion of employees to suit their responsibility

and potential. Properly implemented, this employee development will result in employees with the competence desired by

both the individuals and the Company - leading to PTT’s ultimate achievement.

Fostering Positive Relations between Management and Staff to Reach the Same Goal

Communication between Management and staff at PTT comes in various forms. All employees need to be aware

of corporate business, obstacles, and potential repercussions, and should be allowed to share their views and take part

in business efficiency improvement. In 2006, the President had meetings with the employees of each administrative level as

follows:

- Executive Vice Presidents 1

- Vice Presidents 2

- Division Managers 1

- Other employees 1

Besides the monthly labor relations committee meetings, PTT held Joint Consultative Committee (JCC)

meetings between its management team and staff of regional offices nationwide. In addition, the President and senior

management team members held regular meetings with employees both in Bangkok and around the country, and surveyed

employees’ satisfaction to hear views and suggestions for improvement. PTT firmly believes that proper communication

and information exchange among all will lead to positive relations among everyone, which will efficiently lead the

organization to the same goal.


C o r p o r a t e G o v e r n a n c e


One of the most convincing proofs of PTT being a public company limited with good corporate governance (CG)

practices since its listing on the Stock Exchange of Thailand (SET) in late 2001 was the various acclaims together with

high ratings by organizations, offices, and public as well as private institutions, both domestic and international. Notable

examples in 2006 included:

● Best Corporate Governance award for the 2nd consecutive year from FinanceAsia Magazine in May.

● Three awards from “SET Awards 2006” voted by SET and Finance & Banking Magazine on July 26, 2006

in the categories of:

1. Best Corporate Social Responsibilities (CSR) Award for outstanding listed companies in

socially-responsible business conduct.

2. Best Investor Relations Award for outstanding listed companies with efficient investor relations activities.

3. Distinction in Maintaining Excellent Corporate Governance Report for outstanding listed companies

with a consistent standard for reporting good corporate governance for the third year.

● Recognition Awards 2006, The BEST of ASIA award, from Hong Kong-based Corporate Governance Asia

Magazine on September 20, 2006. Four Thai companies won such recognition, namely PTT, SCC, K-Bank

and AIS. The selection criteria included:

1. Recognition of CG performance

2. Participation in activities directly related to the promotion and improvement of CG practices over the past

12 months.

● Thailand Corporate Excellence Awards for its Commitment to Social and/or Environmental Issues from the

Thailand Management Association in conjunction with Sasin Graduate Institute of Business Administration of

Chulalongkorn University on September 28, 2006.

● PTT was named 1 of 9 companies with “excellent” scores by the National Corporate Governance

Committee with the support of the Thai Institute of Directors (IOD) Association, SET, and Office of the

Securities & Exchange Commission (OSEC) on October 27, 2006; based on a survey project on corporate

governance among listed companies.

● Outstanding State Enterprise in 2006 Award from the Ministry of Finance on November 15, 2006 in two areas:

Board of Directors and Social Programs.

● Asiamoney’s Corporate Governance Polls from Asiamoney Magazine for December 2006/January 2007 in

seven areas:

1. Best Overall Company in Thailand for Corporate Governance

2. Best for Disclosure and Transparency in Thailand

3. Best for Shareholders’ Rights and Equitable Treatment in Thailand

4. Large-Cap. Corporates of the year in Thailand

5. 2nd Best Company in Asia for Corporate Governance

6. 2nd Best for Disclosure and Transparency in Asia

7. 2nd Best for Shareholders’ Rights and Equitable Treatment in Asia.

PTT Board of Directors is committed to conducting its business in compliance with the good corporate governance

principles and the guidelines laid down by the Securities and Exchange Commission and Stock Exchange of Thailand.

PTT has been adhering to apply corporate governance as its guiding principle in conducting business for efficient

management and sustainable business growth. According to PTT regulations, “The Company must have and implement

a policy on its business ethics, including the ethics of its Board of Directors, Management, and employees in compliance with

good corporate governance practices as its code of conduct for the proper conduct of the organization with high standard.”

C O R P O R A T E G O V E R N A N C E


96 P T T P u b l i c C o m p a n y L i m i t e d096 P T T P u b l i c C o m p a n y L i m i t e d

PTT subsequently issued rules on good corporate governance and published them as a handbook. And in 2005, to update

and internationalize it, PTT came up with Revision 1/2005 of the handbook for current enforcement. The essences of its

corporate governance practices appear below:

1. Corporate Governance Policy● Appointing Four Committees (or Subcommittees)

The Board of Directors (“The Board”) highly values corporate governance by initially appointing three committees,

namely the Audit Committee, the Nominating Committee, and the Remuneration Committee. For a period, the Audit

Committee also looked after corporate governance. In 2004, the Board set up a Corporate Governance Committee, charged

with promotion and screening of corporate governance and promotion of excellence in such areas. Therefore, PTT today has

four committees investigating critical matters under the corporate governance principles to create maximum benefit for

shareholders, taking into account the overall stakeholders’ concerns and interests, business ethics, and transparency. Each

of these committees consists of qualified Directors as required by SET, with clearly written roles and responsibilities. Please

see details about the four committees under the “Shareholders and Management Structures” section (page 82-84.)

● Establishing a Corporate Governance Policy

The Board has defined a policy on corporate governance to be observed by all:

1. In their conduct of business, the Board, the Management, and all employees are committed to the six concepts

of corporate governance, namely Accountability, Responsibility, Equitable Treatment, Transparency, Vision to

Create Long-Term Value, and Ethics. An organizational structure is in place to balance the roles of the Board,

the Management, and shareholders.

2. Directors must perform their duties independently with full commitment and responsibility. There is a clear

division of responsibilities between the Chairman and the President.

3. The Board has a key role in the formulation of corporate visions, strategies, policies, and critical plans with due

regard for risk factors and suitable risk management. It must also ensure the credibility of the accounting

system, financial statements, and accounting audits.

4. The Board must lead the rest of PTT on ethics and corporate governance, and supervise the management and

solution to any conflict of interest or connected transactions.

5. The Board may appoint committees to help it screen critical issues.

6. The Board must undergo annual self-assessment to obtain a framework for its performance assessment.

7. The Board must establish a Code of Conduct for itself, the Management, employees, and all contract employees

to observe in addition to PTT’s rules and regulations.

8. Disclosure of financial and non-financial information must be done adequately, credibly, and promptly so that

shareholders and stakeholders may get information equitably. The Capital Market & Investor Relations

Department is responsible for such disclosure to investors and the general public.

9. PTT shareholders must receive equitable treatment and have the right to access information through suitable

communication channels with PTT.

10. There must be a proper selection procedure for the appointment of key management personnel under a fair and

transparent nomination process.

P T T P u b l i c C o m p a n y L i m i t e d 97P T T P u b l i c C o m p a n y L i m i t e d 097

The Corporate Governance Committee defined the code of conduct and guidelines for the Board and modified the

contents of the PTT handbook on corporate governance to better conform to international practices. The revised handbook

provided highlights of key topics with essential details for completeness and relevance to the corporate governance policy.

PTT Handbook of Good Corporate Governance (Revision 1/2005) is given to each person serving the Company to sign,

acknowledge, and observe.

In compliance with Company policy, all Directors were encouraged to attend training courses organized by the Thai

IOD and relevant institutes to add to their knowledge of the roles being performed for PTT. They were notified of upcoming

training and enrolled through the year.

● Self-Assessment of the Board

The Board instituted a review of its self-assessment that is similar to the process in 2005. There were three

assessment types, namely group assessment, individual self-assessment, and individual cross-assessment to help

Directors review their performance together with issues and obstacles identified during the year. Findings were then

analyzed and recommendations made for performance improvements as shown in the “Shareholders and

Management Structures” section (page 87.)

● Corporate Governance Activities

The Corporate Governance Committee was assigned to promote and screen corporate governance matters.

The Company actively campaigned for compliance with corporate governance principles. A working group on corporate

governance of employees, headed by an Executive Vice President, implemented various matters under the policy and

conducted campaigns to instill awareness for responsibility under the principles in Directors, the Management, and employees.

Periodic promotional campaigns were conducted through various media within PTT, including exhibits, CG Website that is

packed with information, and two-way communication channels. Internal news broadcast, video shows, a CG column in the

“PTT Spirit” magazine, and a CG-Digest via email-newsletters are among the publicity and awareness tools, with positive

responses from employees. In addition, the Corporate Governance Committee distributed the English version of the Corporate

Governance Handbook (1st Revision) to investors, international interested parties, and stakeholders for their reference. This

will also be publicized on PTT’s website.

● Launching Open Houses

In 2006, PTT asked all shareholders whose names were registered on the company’s roster as of the day of interim

dividend payment to notify PTT of their interest in joining the Open House activity. Of these, 300 names were drawn under

a fair and transparent process. The Open House was organized three times, each time with 100 participants.

In addition, PTT focused on corporate governance among companies in the PTT Group to align with their

management standards for the Group. The target was to jointly study and develop corporate governance guidelines based

on international best practices to establish a corporate governance standard that would be suitable for the PTT Group and

used with all subsidiary companies. Moreover, PTT proposed a self-assessment mechanism for each company to rate its

corporate governance activities for continuous improvement and as preparation for future ranking. Implementation plans and

proactive promotional strategies for corporate governance were also established. Activities undertaken by PTT to support

corporate governance within the PTT Group included:

1. Establishing a committee to oversee corporate governance policies for the PTT Group.

2. Organizing seminars to create awareness of corporate governance and social responsibility, with experts as

guest speakers, and to encourage experience sharing. The target audience was the staff of PTT and the

PTT Group with corporate governance roles.

3. Organizing the PTT CG Group Day to disseminate PTT Group’s corporate governance activities.

4. Sharing comments and ideas within the PTT Group on each company’s corporate governance handbook based

on international standards.


● Appointing Directors of Listed Subsidiary Companies

There are over 40 companies under the PTT Group (10 of which are listed companies on SET), and 60% of PTT’s

current net income comes from these. To create synergy among the Group, PTT proposed that its directors or executives

should be appointed as directors of the Board of subsidiary companies to ensure alignment of policies and business plans

and maximize value for all stakeholders. Therefore, there is a good probability that a PTT Director or executive would be

appointed to oversee more than five subsidiary companies, exemplified by Mr. Cherdpong Siriwit, Mr. Prasert Bunsumpun,

and Mr. Pichai Chunhavajira. PTT’s rationale is as follows:

1. To oversee business management under the policies of the PTT Group and ensure that the business

management of companies in PTT Group aligns with PTT’s policies, directions, and standards.

2. To create synergy for the businesses of the PTT Group, thereby resulting in joint benefit and enhancing value

for all related organizations and for the country alike.

3. To leverage PTT’s specific experience and competencies to improve business processes among companies

in the Group, including the application of financial knowledge to improve accounting and finance processes

so that the companies can expand sustainably. In addition, PTT’s knowledge and experience can help

companies outside the PTT Group, which will in turn foster good relationships with these companies and

strengthen PTT’s network of business allies.

4. This is part and parcel of the roles and responsibilities of Directors and executives.

2. Shareholdersû Rights and EquitabilityPTT recognizes that investors will put trust and confidence in its business only if they can be assured that PTT has

an equitable policy and maintains shareholders’ fundamental rights and equitability under the law, as well as business

management that is suitable, efficient, effective, and accepted by investors and stakeholders as one with good corporate

governance.

As a rule, PTT schedules an annual general shareholders’ meeting (AGM) within four months of the annual closing

date of its accounting books. For urgent matters relating to shareholders’ interest or requiring shareholders’ approval under

any rules, conditions, or applicable laws, it will call an extraordinary shareholders’ meeting.

● Shareholders’ Meetings

The Board acknowledges the right of shareholders to receive equal treatment and voice their opinions at meetings.

For 2007, PTT has invited minor shareholders to propose items for the AGM and nominate directors ahead of time to

promote fair and equitable treatment of all shareholders, which is part of good corporate governance practice. Furthermore,

to ensure a clear and transparent process, criteria were established for proposals made by minor shareholders that help

them to identify items that are truly beneficial to PTT; select qualified individuals as Directors who would efficiently

perform their roles for the best interest of PTT and stakeholders; as well as supports the good corporate governance

policy. Meeting notices containing details of the agenda and accompanying documents must therefore be delivered to

shareholders at least 14 days ahead of each meeting. This also provides sufficient time for shareholders who cannot

attend the meeting to delegate their authority to other individuals or the Independent Directors as allowed by the Ministry of

Commerce’s regulations to exercise their voting rights. In addition, to give shareholders enough preparation time, at least

three days ahead of the meeting the invitation must be announced through one Thai and one English newspaper for at least

three consecutive days. In meetings held in 2006, meeting invitations were made available on PTT’s website at least 30 days

ahead of the meeting. PTT ensures that each shareholder can reasonably be assured of meeting security measures and

given two hours of available registration time.



At each meeting, PTT exercises equitable treatment of all shareholders. After explaining PTT rules on voting

and vote counting for individual agenda item, the chairman of the meeting must address each opinion, question, or

recommendation of shareholders, giving adequate time for debate on each agenda item. The chairman ensures that

the meeting proceeds according to the order of the agenda and does not add an item without notifying shareholders

in advance. For the selection of Directors, individual votes are required, and PTT executives would answer all questions

clearly and precisely. The minutes of the meeting must be completely and accurately recorded with a written summary

of voting results on each matter.

● Investor Relations Department

Ever since PTT began trading on SET in 2001, the Capital Market & Investor Relations Department was established

as a clearing house for disclosing essential information to investors, which includes financial reports such as performance

reports, financial statements, and information reported to SET. Reports on current situations and trends, including the

quarterly Management Discussion and Analysis (MD&A) reports, are disclosed to both domestic and international

shareholders equitably, regularly, and thoroughly. Investors may contact the Department directly or through the PTT website

(www.pttplc.com), which is regularly updated, for information in Thai and English.

3. Stakeholdersû RightsPTT accounts for stakeholders’ rights and interests by establishing guidelines for addressing the needs of each

group inside and outside the company, including its customers, shareholders, employees, as well as its own responsibility to

society and the environment, as published in PTT’s vision: “PTT strives to be the regional leader with responsibility, equitability,

and reasonable dividend to stakeholders under good corporate governance principles”. This is clearly defined in PTT

regulations dealing with corporate governance (2001), Section 3 (Code of Conduct for the Board, the Management, and

Employees) and in PTT Handbook of Good Corporate Governance (Revision 1/2548), which has been used as a guideline

for the Board, executives, and employees in meeting the demands of each group of stakeholders. The details are

summarized below:

Shareholders : PTT is committed to being a good representative of all shareholders in operating the

business with transparency, taking into account long-term growth in share value and

decent returns.

Employees : PTT considers its employees a key success factor and supports their professional

development, attends to the quality of the workplace, and provides fair and proper

compensation.

Partners / Counter- : PTT builds good relationships for mutual benefit and strictly observes contractual

traders / Suppliers agreements made with them.

Competitors : PTT observes the framework of fair competition and refrains from harming the reputation

of business competitors through false accusations.

Creditors : PTT honors all its obligations to creditors.

Customers : PTT is committed to satisfying its customers and the public through its products and

services, as well as providing confidence in its quality at suitable prices.

Communities : PTT takes people’s safety, the environment, and the quality of life seriously.

and Societies PTT maintains active interest in community and social development activities

while strictly observing the spirit of laws and regulations.



4. Shareholdersû MeetingsIn 2006 PTT organized one shareholders’ meeting: the Annual General Shareholders’ Meeting (AGM) on April 11,

2006.

● Before the Meeting

PTT publicized the complete meeting notices on its website 30 days before the meeting. More than 14 days ahead

of the meetings, meeting notices were mailed along with agenda details, opinions of the Board, complete minutes of the

previous meeting, annual report and supplementary meeting information, and a proxy form complete with instructions to

each shareholder. In addition, PTT placed such notices in one Thai and one English newspaper for three consecutive days,

more than three days ahead of each meeting date. The complete package was sent to each shareholder whose name

appeared on the shareholder roster on the closing date. Should shareholders wish to appoint proxies to attend the meeting

and vote on their behalf, they may do so under the procedure or delegate Independent Directors as their proxies.

● Day of the Meeting

PTT values the accommodation provided to shareholders while giving them a sense of security as well as suitably

and adequately designating registration locations. Registration begins at least two hours ahead of time and proceeds until

the conclusion of the meeting through a barcode system. Meeting keepsakes and suitable reception are extended. During

the meeting, the Chairman of the Board serves as chairman by clarifying the quorum, explaining voting and vote-counting

procedures, balloting, and clearly disclosing voting results on each agenda item – and allowing shareholders to ask

questions or expressing their views in a reasonable and adequate way. The chairman also ensures that Directors or the

Management replied to questions with clarity. In 2006, a total of eight Directors attended the AGM – namely the Chairman

of the Board, the entire Audit Committee (four individuals), the Chairman of the Corporate Governance Committee, a

Corporate Governance Committee member, and the President – together with Senior Management and the external auditor.

Two legal advisors served as the moderator in audit and voting matters in cases of disagreements. The Chairman performed

his role thoroughly as defined by law and the meetings also gave their unanimous approval on each agenda item.

● After the Meeting

After the meeting, PTT submitted the report of the shareholders’ meeting, which contained meeting minutes, voting

records, and every question raised by shareholders, to SET within the specified time. Meeting information can be accessed

through PTT website (www.pttplc.com).

5. Leadership and VisionThe Board consists of knowledgeable, capable, and experienced professionals from diverse related fields, which

enables PTT to perform efficiently. Clear evidence of the Board’s achievement is the Outstanding Board of State Enterprise

Award from the Ministry of Finance in 2006.

Based on integrity, business ethics, and compliance with Directors’ code of conduct, the Board exercises its power

over business operation under laws, regulations, and resolutions of shareholders’ meetings. It also ensures strict Management

performance under PTT’s objectives and guidelines for the maximum benefit to shareholders.

The Board defines PTT’s vision, annually reviews and approves directions, strategies, policies, together with

financial and operating objectives for the Management’s application in their respective preparation of business as well as

other plans and budgets, and follows up on the Management’s implementation of operating plans. It sets assessment criteria

and Key Performance Indicators (KPIs) early in the year. Toward year end, it assesses actual performance against the

previously set Performance Agreement : PA.


● Training of the Board of Directors

The Board and the Management valued participation in development training relevant to their performance.

Over 85% of the Directors have undergone the training courses of Thai Institute of Directors Association (IDO) with

9 enrolled in 8 training sessions in 2006 as follows:

PTT supports Directors’ participation in training programs organized by IOD and other institutions through the year

and encourages the Board to visit other agencies to gain experience applicable to PTT’s business.

● Directors’ Orientation

For new Directors, PTT arranges an orientation program to inform them of its business policies, capital structure,

shareholding structure, business performance, information systems, and related laws and regulations. Moreover, each

Director receives a Director’s Handbook, which includes the following content:

Director Training Program Date of Training

1. Mr. Suparat Kawatkul - Directors Certification Program (DCP # 72) -

Director who resigned during the year

Director Training Program Date of Training

1. Mr. Chakramon Phasukavanich - Directors Certification Program (DCP # 71) March 1-30, 2006

- Audit Committee Program (ACP # 14) August 17-18, 2006

2. Dr. Phadhadej Dhamcharee - Developing CG # 2 May 18, 2006

- Develop & Implementing a Code of Ethics August 29, 2006

3. Gen. Somdhat Attanand - Directors Accreditation Program (DAP # 53) April 28, 2006

- Finance for Non-finance Directors (FN # 29) June 8, 2006

- Audit Committee Program (ACP # 14) August 17-18, 2006

4. M.L. Panasarn Hasdin - Developing CG # 2 May 18, 2006

- Setting the CEO Performance Plan & Evaluation June 20, 2006

- Understanding the Fundamental of Financial August 4, 2006

Statements

5. Dr. Ampon Kittiampon - Directors Certification Program (DCP # 80) September 2006

6. Dr. Pornchai Rujiprapa - Directors Accreditation Program (DAP # 56) -

7. Mrs. Pannee Sathavarodom - Directors Certification Program (DCP # 72) -

8. Mr. Metta Banturngsuk - Directors Accreditation Program (DAP # 52) March 21, 2006

- Directors Certification Program (DCP # 79) September 2006

9. Mr. Prasert Bunsumpun - Capital Market Academy Leadership Program, 2006

Capital Market Academy


Director’s Handbook:

1. The Public Company Act, B.E. 2535 (1992)

2. Guidelines for Directors of Listed Companies

3. Certificate of Company Registration

4. Company Certificate

5. Company Objectives

6. Company Regulations

7. Company Rules (13 Rules)

8. PTT Good Corporate Governance Handbook

9. SEC Handbook for Directors of Listed Companies.

Information:

1. Director Fiduciary Duty Checklist

2. Suggestions on information disclosure for the management of listed companies

3. Connected transactions of listed companies

4. Good corporate governance principles for listed companies in 2006

5. Handbook on understanding and preventing conflicts of interest

6. “PTT Group Moving Forward to HPO” information kit

7. PTT Plc. Company Profile

8. 2005 Sustainable Development Report

9. 2005 Annual Report (Thai Version) in hardcopy and CD

10. “PTT Spirit” monthly magazine issued in 2006.

● Company Secretary

PTT has appointed Mr. Attapol Rerkphiboon, Vice President of the Office of the President, as Company Secretary

to ensure that PTT is managed with the highest efficiency according to the principles of good corporate governance. The

Company Secretary is responsible for:

– Providing legal and regulatory advice to the Board

– Overseeing the Board’s activities

– Ensuring efficient implementation of Board resolutions.

6. Conflicts of InterestUnder the Board’s policy on conflicts of interest, business decisions made by the Management and employees

must be only for PTT’s best interests. They must avoid financial or other relationships with external parties that would result

in financial losses for PTT or a conflict in loyalty or interest, and must not compromise the efficiency of business operation.

Those with interests or related businesses to a matter requiring PTT’s review and decisions must report their relationship and

must not be involved in such decisions, including the approval of such transactions, under the disclosed information relating

to a possible conflict of interest with PTT. Any such approval must not contain special conditions or specifications that are out

of the ordinary. PTT’s Office of Corporate Audit and the Audit Committee have been entrusted with the monitoring and

resolution of issues related to conflicts of interest. To date, however, there has been no such case.


At each Board meeting, the Chairman reminds the Directors of this policy, asks them to declare a possible conflict

of interest on any agenda item(s) relating to them, and asks them to refrain from expressing opinions or voting on such

agenda item(s).

The Audit Committee regularly presents to the Board its reports on connected transactions and conflicts of interest,

which are carefully prepared in line with the regulations of SET, which specify that these issues must be reported and

disclosed every quarter and are to be disclosed in the annual report and Form 56-1.

All PTT Directors and Management, including their spouses and children under legal age, must report any changes

in their Company share ownership to SEC under Section 59 of the Securities and Exchange Act B.E. 2535 (1992) within

three days from the date of sale, purchase, disposal, or receipt of such shares. To prevent abuse of inside information, the

executives or agencies that are aware of the Company’s inside information may not disclose such information to outsiders or

unrelated persons, and may not buy or sell PTT shares within 30 days ahead of the public dissemination of its financial

statements.

7. Business EthicsAs a mark of its intention to conduct its business with transparency, ethics, responsibility to stakeholders, society,

and the environment, PTT has issued a code of conduct for its Board, Management, and all employees to strictly observe

together with Company rules and regulations. Section 3 of the Corporate Governance Handbook, entitled “Code of Conduct

for Board, Management, and Employees,” is summarized below:

7.1 The Board must properly represent shareholders by ensuring Company growth characterized by sustainability

and suitability of returns. They must perform to the best of their ability - with integrity and prudence. They must not be

politically motivated and must decide and act independently without any interest in businesses related to or in competition

with PTT. They must be committed to the prevention and elimination of all forms of dishonest practices.

7.2 The Management and employees must be committed to developing a team culture, creating customers’

satisfaction, and giving due consideration to equitability and integrity in their conduct of business. They must recognize

and be concerned about safety for society, the environment, and the quality of life of the public. They must perform with

responsibility, integrity, commitment, and dedication for the benefit of PTT.

Along this line, PTT has provided educational media, including articles, radio scripts, and video-scripts illustrating

the proper roles of the Board, the Management, and employees to instill discretion and judgment in their decision-making.

A simple test is by asking oneself whether a certain decision would lead to an action that is improper or socially unacceptable

to the public or detrimental to PTT’s reputation as an ethical company. PTT continues to monitor the implementation of such

compliance.

8. Balance of Power for Non-Management DirectorsThe appointment of the Directors rests upon the resolutions of shareholders’ meetings, with input from the

Nominating Committee and the Board. As of February 10, 2007, the Board consisted of 15 members:

● 14 were non-management Directors and 9 were Independent Directors, which exceeded 50% of the Board.

● 1 Director was the President.

As a result, the stakeholders were assured that the Directors independently represented the best interests of

shareholders and that power was properly balanced.


9. Combining or Segregating AuthorityThe Chairman and the President are two different persons. The Chairman is not in any way related to the

Management. His authority is separate from that of the President, and there is a clear distinction between supervisory

policy-making and day-to-day business administrative roles.

10.Board and Management CompensationPTT appointed the Remuneration Committee to oversee the compensation of directors and management. As

a rule, the compensation of Directors follows shareholders’ resolutions and approvals. The compensation of Directors and

the Management is disclosed under the “Shareholders and Management Structures” section on Director and Management

Compensation. (page 88-90)

11.Board of Directors MeetingsBoard of Directors meetings are planned for the entire year, that is, the final Thursday of each month, with additional

meetings called to discuss special agenda items as necessary. The Office of the President issues a meeting notice along

with the meeting agenda and relevant supplementary documents to each Director seven days ahead of the meeting.

Since April 2004, Board meetings have been made electronic to provide speed and convenience in information access

and management, and reducing the amount of accompanying documents.

At each meeting, Directors openly and freely expresses their opinions. The minutes of each are properly

documented and, after approval from the Board is given, are filed for auditing purposes and reference by Directors and

related persons. Each Board meeting lasts 3-4 hours.

In 2006, the Board held 12 regular meetings along with two special meetings of Directors as detailed below.

Board Meeting Attendance in 2006

Unit : Times

Meeting Type

Board Audit Corp. Nominating Remune-Beginning

Name (14 times) Comm. Governance Comm. rationof Term

(10 times) Comm. (2 times) Comm.

(2 times) (1 time)

1. Mr. Cherdpong Siriwit 13/14 - - - - -

2. Gen. Apichart Penkitti 1/1 - - - - November 28, 2006

3. Mr. Chakramon Phasukavanich 12/14 - - 2/2 - -

4. Dr. Phathadej Dhamcharee 14/14 10/10 - - - -

5. Gen. Somdhat Attanand 11/11 - 2/2 - - April 11, 2006

6. M.L. Panasarn Hasdin 11/11 - - - - April 11, 2006

7. Dr. Ampon Kittiampon 14/14 - - 2/2 - -

8. Dr. Olarn Chaipravat 14/14 10/10 - - - Term ended in April 11, 2006.

Reappointed on April 11, 2006.

9. Dr. Suchart Thada-Thamrongvech 14/14 10/10 - - - -

10. Dr. Pisanu Sunthraraks 14/14 - 2/2 - 1/1 -


Unit : Times

Unit : Times

Directors who resigned or whose terms ended during 2006

Note: As of February 1, 2007

- Audit Committee consisted of No. 4, 8, 9.

- Corporate Governance Committee consisted of No. 5, 9, 10 (No. 9 was appointed to the committee on December 1, 2006).

- Nominating Committee consisted of No. 3, 7, 12 (No. 12 was appointed to the committee on December 1, 2006).

- Remuneration Committee consisted of No. 7, 10, 13 (No. 7 was appointed to the committee on December 1, 2006).

Meeting Type

Board Audit Corp. Nominating Remune-Beginning



(2 times) (1 time)

11. Dr. Pornchai Rujiprapa 1/1 - - - - November 28, 2006

12. Mrs. Puntip Surathin 1/1 - - - - November 28, 2006

13. Mrs. Pannee Sathavarodom 14/14 - - - 1/1 -

14. Mr. Metta Bunturngsuk 14/14 - - - - -

15. Mr. Prasert Bunsumpun 14/14 - - - - Term ended in April 2006.

Reappointed on April 11, 2006.

Meeting Type

Board Audit Corp. Nominating Remune-End



(2 times) (1 time)

16. Mr. Suparat Kawatkul 12/12 - - 1/1 - Resigned on November 16, 2006

17. Mr. Prapan Naigowit 9/10 7/7 2/2 - - Resigned on September 15, 2006

18. Mr. Somchai Wongsawat 9/12 - - - 1/1 Resigned on November 24, 2006

19. Gen. Chaiyasuk Ketudat 3/3 - - - - Term ended on April 11, 2006


12.Committees (or subcommittees)To assist in the screening and efficient supervision of business operation, the Board appointed four committees

with expert knowledge, namely the Audit Committee, Nominating Committee, Remuneration Committee, and Corporate

Governance Committee. Each consisted of non-management Directors. The composition, scope of authority, and

responsibilities of each are detailed under the “Shareholders and Management Structures” section. (page 82-84)

13.Internal Control and AuditThe Board monitors Management performance through the approval of the Company’s operating plans, budgets,

and goals for each year. The Management is encouraged to recognize the criticality of an internal control system that is

efficient, compatible with acceptable risk levels, and suitable for Company circumstances.

● Internal Control

The Board ensures effective internal control to facilitate risk management to acceptable levels, and regularly

monitors and evaluates its efficiency. The Audit Committee examines compliance in all areas, namely:

1. Management Control: Ensuring that relevant units comply with their missions; ensuring that the Management

formulates plans to achieve its objectives and goals; and monitoring implementation.

2. Operational Control: Ensuring comprehensive control, for instance, in procurement and hiring through

E-procurement and other means, including price bargaining, open contests, and preferred bidding from PTT’s

vendor list.

3. Financial Control: Ensuring that PTT applies Result Based Budgeting and SAP (Systems Applications and

Products); ensuring adequacy of internal control, for instance, through control environment, suitable risk

assessment procedures, control activities, information and communication systems, and proper monitoring

and assessment.

Internal control plays a key role in helping the Management lower business risks, enhancing business efficiency

through proper allocation of resources, and attaining goals. It also protects Company assets from losses and corrupt

practices, reinforces the credibility of financial statements, ensures compliance of all personnel with laws and regulations,

and protects shareholders’ capital.

● Internal Audit

The Office of Corporate Audit observes the highest standards of internal audit by examining financial accounts,

information technology, safety, health, and environment, including those of affiliates and subsidiaries. The Office audited the

annual operating plans, which were consistent with the findings of the corporate risk assessment, and reported them to the

Audit Committee every quarter.

● Risk Management

A Risk Management Committee has been appointed to manage risks for the entire company, assess risks, and

define a structure for risk management to reduce risks to acceptable levels. Types of risk generally include financial,

operation, business, and event risks. The Committee is responsible for preparing an analysis and assessment of risks, their

potential effects on PTT – both internal and external – and a Risk Management Report for the Board. An early warning

system is now in place with critical risk indicators defined, for instance, the debt-to-equity ratio is to be under 1.

PTT takes risk management seriously. To illustrate, the President has issued a Corporate Risk Management Policy,

and the Risk Management Committee has prepared a corporate risk management handbook for all to use as a framework

in their assessment and management of risks. To this end, a Risk Management Information System (RMIS) has been

developed.


14.Reports of the Audit CommitteeEach quarter the Audit Committee reviews PTT’s financial reports in conjunction with the Accounting Department

and the Office of the Auditor General, and presents findings to the Board. The Board is accountable for the PTT Group’s

consolidated financial statements, as well as other financial information (such as Report on the Board’s Responsibility to

Financial Report) presented in the annual report. The financial statements are prepared under generally accepted accounting

principles, examined, and certified by the Office of the Auditor General. Essential information, including financial and

non-financial information, is completely and consistently disclosed.

15.Investor RelationsPTT values accurate, complete, and transparent disclosure of information. This also applies to the release of

operating results and Company information to investors, shareholders, and related parties – both directly and indirectly.

Since its listing on SET in 2004, PTT has established the Capital Market & Investor Relations Department as the center

for quality of assurance of the Company’s financial reporting process, including disclosure of information that affects

PTT’s stock price. PTT’s Investor Relations activities are summarized below:

Direct : PTT regularly presented information to analysts, investors, and employees at analysts’ meetings, road

shows, conference calls, and conferences. Analysts, investors, and interested parties also arranged visits to meet the

Management of PTT and make inquiries into the Company’s progress. In 2006, these activities took place:

- International road shows 9 times

- Domestic road shows 5 times

- Analysts’ meetings 4 times

- Company visits/conference calls 149 times

- E-mails/telephones 3-5 times/day

- Participation in SET excursions 3 times

- Trips for institutional investors to visit plants 1 time

and meet management team members 1 time

- Trips for minor investors to visit plants 1 time

and meet management team members 1 time

Indirect : Information on the Company, its performance, financial statements, and reports filed with SET are found

at www.pttplc.com.

: Investors and interested parties can also make inquiries through www.pttplc.com or through email at

[email protected].

Besides, PTT took the public acknowledgement important by publicizing its business activities, project

movements, and other activities through several channels, as well as serve the media and the public through

corresponding activities. In 2006, these activities could be concluded as follows:

- E-mail 2,543 pieces

- Press Release, Photo Release 327 pieces

- Press Conference 96 times

- Press site visits 1 time


1.1 1.31.2

R E C O G N I T I O N S

1.1 Boss Magazine Boss of the Year February 27, 2006 -

(Public reform and

management)

- Mr. Prasert Bunsumpun,

President

1.2 Reader’s Digest Thailand’s Top Brand February 22, 2006 ● Trust, quality, value, image,

(Service stations) appreciation of consumers’

needs, and innovations

1.3 Stock Exchange 1. Best Corporate Social July 26, 2006 1. For outstanding listed

of Thailand (SET) Responsibilities (CSR) companies who operates

and Finance Awards with social responsibilities

& Banking Magazine: 2. Best Investor Relations 2. For outstanding listed

SET Awards 2006 Awards companies with efficient

(3 awards) 3. Distinction in Maintaining investor relations activities

Excellent Corporate 3. To honor the listed

Governance Report companies with

consistency on good

corporate governance

(Award to PTT for the 3rd

consecutive year)

No. Presented by Award / Ranking Date Criteria

1. N a t i o n a l ( 7 o r g a n i z a t i o n s , 12 a w a r d s )

In 2006, PTT won 32 awards and honorable rankings from

a total of 15 organizations. Seven organizations accounted

for 12 national awards and eight organizations accounted for

20 international awards.



1.4 1.5

1.4 Tax & Business Tax Man of the Year 2006 October 5, 2006 1. Highest growth

Magazine (Outstanding company, 2. Support to national

energy group) economy

3. Corporate governance

and business ethics, with

means to return some

profits to society

1.5 Thailand Manage- The 5th Thailand Corporate September 28, 2006 ● Quantitative survey filled

ment Association Excellence Awards, by respondents, along

in conjunction with ranked 1st with a follow-up interview

Sasin Graduate 1. Commitment to Social and an in-depth phone

Institute of Business and/or Environmental interview

Administration Issues ● Respondents consisted

(2 awards) 2. Commitment to Energy of 390 senior executives,

Saving including chairpersons,

executive chairpersons,

vice chairpersons,

presidents/managing

directors, directors,

managers, or general

managers of the top

1,000 companies




1.6 1.7

1.6 National Corporate Categorized as one of the nine October 27, 2006 ● Disclosed information of

Governance “excellent” companies, based listed companies, including

Committee with the on a survey project on corporate annual reports, Form 56-1,

support of the Thai governance among listed notices to shareholders’

Institute of Directors companies (2006) meetings, websites,

(IOD) Association, information disseminated

SET, and Office of through SET and SEC.

the Securities ● 402 listed companies

& Exchange being rated into six different

Commission (SEC) levels:

1. Excellent, 90% up,

five emblem stamps

2. Very good, 80-89%,

four emblem stamps

3. Good, 70-79%,

three emblem stamps

4. Satisfactory, 60-69%,

two emblem stamps

5. Pass, 50-59%,

one emblem stamp

6. Below 50%,

no emblem stamp

1.7 Ministry of Finance Outstanding state enterprise November 15, 2006 Efficiency of organization

(3 awards) in 2006: management, with continuous

1. Outstanding Performance upgrading of operating

2. Outstanding Board of Directors potential, and commitment

3. Outstanding Social Programs to social and environmental

stewardship




2.32.22.1

2.1 Forbes Global One of the top 500 listed April 2006 ● Strong business

Magazine companies worldwide performance and financial

(Ranked 372nd in 2006 standing based on revenue,

and 425th in 2005) income, assets, and market

capitalization.

● Ranked from 2,000 major

companies worldwide

2.2 FinanceAsia 1. Best Managed Company May 2006 ● Annual survey of leading

Magazine (2nd consecutive year at No. 1) fund managers, analysts,

(5 awards) 2. Best Corporate and financial professionals

Governance to identify the best companies

(2nd consecutive year at No. 1) in five categories in 10 Asian

3. Best Investor Relations countries: Thailand, China,

(No. 1) Hong Kong, Philippines, India,

4. Best CFO (No. 1) Taiwan, Malaysia, Indonesia,

5. Best Commitment Korea, and Singapore

to Strong Dividend

Payments (No. 3)

2.3 Fortune Magazine One of the 500 largest July 31, 2006 ● Based on revenue,

companies worldwide improvement from 373rd

(Fortune Global 500), last year. Based on net

ranked 265th income, ranked 193rd.

PTT was the sole Thai

company on this list.

2. I n t e r n a t i o n a l (8 o r g a n i z a t i o n s , 2 0 a w a r d s )




2.72.5 2.6

2.4 Platts News Agency Top 250 Global Energy September 6, 2006 1. Asset

(3 awards) Company 2006: 2. Revenue

1. Ranked 31st overall 3. Net income

2. Ranked 18th of 4. Return on investment

the energy sector

3. Ranked 5th by region

2.5 Corporate Recognition Awards 2006, September 20, 2006 1. Recognition of CG

Governance Asia, “The BEST of ASIA” performance

Hong Kong-based ● No formal ranking 2. Participation in activities

● Only 4 Thai companies directly related to the

won the award: PTT, promotion and improvement

SCC, K-Bank, and AIS of CG practices over the

past 12 months

2.6 Asiamoney Magazine 1. Asiamoney’s Corporate December 2006 / ● Survey of CEOs, CIOs,

(7 awards) Governance Polls Award January 2007 and senior executives of

(Large-Cap Corporates institutional investors and

of the Year, Thailand) financial institutions in

2. Best Company in Asia for regions under Asiamoney’s

Corporate Governance, Corporate Governance

(PTT was ranked 2nd Polls, involving 313 Asian

best in Asia) companies except Japan

3. Best for Disclosure and

Transparency in Asia,

(PTT was ranked 2nd

best in Asia)




4. Best for Shareholders’ ● A total of 31 Thai companies

Rights and Equitable qualified for the corporate

Treatment in Asia, governance category.

(PTT was ranked 2nd

best in Asia)

5. Best Overall Company

in Thailand for Corporate

Governance, Thailand

6. Best for Disclosure and

Transparency, Thailand

7. Best for Shareholders’

Rights and Equitable

Treatment, Thailand

2.7 ICIS Magazine Global Top 40 Executives December 2006 ● Influence on the chemical

in Chemicals by ICIS business, ranked by

- Mr. Prasert Bunsumpun, 80 ICIS correspondents

No. 28 worldwide worldwide.

2.8 The Wall Street Asia’s Leading Companies October 2006 Ranked one of the Asia’s

Journal Asia Top 10 in Thailand 200 most admired

companies and rankd

the 6th from the 10 most

admired companies in

Thailand




Q u a l i t y , S a f e t y , H e a l t h ,a n d E n v i r o n m e n t a l P e r f o r m a n c e


As the national energy company, PTT is committed to an ethical way of doing business, meaning business not

only for revenue, but also for the control, prevention, and alleviation of potential repercussions on the quality, safety, health,

and environment (QSHE) of all stakeholders. These include workplace hazard control, security, environmental stewardship,

process improvement and quality control, product development for the environment, and community strengthening. In other

words, PTT strives for balanced, sustainable development.

Under such an approach, PTT is committed to further improvement of its QSHE management. In 2006, this

resulted in diverse activities catering to all possible stakeholders.

R e s p o n s i b i l i t y t o E m p l o y e e s a n d C o n t r a c t e d S t a f fSafety in work place and occupational health

As occupational health is vital to work efficiency, PTT focused on the prevention and control of potential safety

and health losses by its employees. Besides applying MOI/OHSAS 18001 occupational health and safety management

to its operating areas, all of which were certified in 2006, PTT stressed proactive actions to prevent and monitor risks

through monitoring, measurement of conditions in every operating area, and encouragement of the reporting of near-misses

and Substandard Conditions or Acts. PTT involved employees in quality-of-life development efforts in their operating

areas through their “Safety, Health, and Environment Committees”, which served as a critical tool for the management

and employees to jointly formulate policies, goals, plans, and safety, health, and environmental measures for each area.

Stringently and continuously applied, these have steadily lowered PTT’s Lost Time Incident Frequency Rate

(LTIF)* since 1998 down to 0.59 in 2006 against the target of 1.00.

Q U A L I T Y , S A F E T Y , H E A L T H ,A N D E N V I R O N M E N T A L P E R F O R M A N C E

* Calculating method of LTIF rate is 1 million working hour/1 frequency

1998 1999 2000 2001 2002 2003 2004 2005 2006

LTIF

(p

er 1

,000,0

00 H

rs)

3-y

ear a

verag

e L

TIF

0.720.56

2.69

3-Year Average LTIF of Employee

1998 1999 2000 2001 2002 2003 2004 2005 2006


Security Management

Recognizing its security risks, PTT has defined systematic measures to counter disasters and sabotage.

In 2006, specific measures were drawn up and remedial actions taken to international standards with due regard for

the rights of employees, staff, and visitors.

Emergency and Crisis Preparedness

This represents a significant element of PTT’s management strategies. Besides the preparation of each

area’s plans, it has developed Emergency and Crisis Management Plans to tackle problems and alleviate repercussions

at the corporate level. Plans were drilled for various situations in all areas at the corporate level and at other levels where

PTT underwent regular drills with government and other agencies.

R e s p o n s i b i l i t y t o R e l a t e d P a r t i e s i n S u p p l y C h a i nAs a leader in the supply of alternative energy forms for a better environment and an active promoter of

research and development of products and technologies for the environment, in 2006 PTT expanded its market of

alternative energy to lower petroleum imports and air pollution. Supplies of NGV, gasohol, Bio-Diesel, and palm diesel were

expanded to meet customers’ fast-rising demand. Because PTT recognized the criticality of the business relating to gas

ranging from the upstream to the petrochemical industry and several downstream industries, in 2006 it participated in

a national project on Life - Cycle Inventory Databases, dealing specifically with gas separation processes and gas

transmission. This project led to more comprehensive databases on the life-cycles of products in Thailand and supported

Thai exports under world trade conditions.

During the year, PTT organized seminars and training for distributors and customers apart from conducting

safety inspection of tools and equipment in LPG bottling plants, supplier audits, and outsourcing in business process,

safety, health, and environmental work with direct bearing on product quality and quality management service. In the

meantime, PTT extended support and assistance to emergency rescue efforts.

Security measures under PTT’s management systemRegular drills for emergency preparedness


R e s p o n s i b i l i t y t o C o m m u n i t i e s a n d E n v i r o n m e n t a l P e r f o r m a n c eWhile PTT’s business has brought about the beneficial development to the nation, its activities, operation, products,

and services have had some environmental impacts as well as the risk of emergencies and crises which could affect the

life quality of people and communities nearby PTT operational areas. PTT therefore paid great attention to the control,

prevention, and alleviation of such impacts to the minimum level and applied the ISO 14001 environmental management

standard to each operating area, including GSPs, Petroleum Terminals, Gas Transmission Pipeline System, and offices.

Every operation unit concentrates on both water and air pollution control strictly complying to the law and the Environmental

Impact Assessment (EIA). PTT has installed the standardized waste treatment devices, water and air pollution detectors, as

well as the continuous monitor of air quality around PTT operation units. In addition, PTT supported technological research

and development of environmental and pollutant management to further improve the efficiency of its operating areas, for

instance, energy conservation technologies and an investigation of hazardous waste elimination and treatment concerning

gas separation plants. Finally, each year PTT issues a Sustainability Report on business performance, environmental

operations, and social responsibility for the information of stakeholders.

Implementation of ISO 14001 environmental management

system in all operation units

PTT NGV service station Personnel at work at PTT Petroleum Terminal


Q S H E A c h i e v e m e n t s o f 2 0 0 6● 2005 Thailand Quality Class (TQC) Award, conferred by the National Quality Award Committee

Rayong Gas Separation Plant

● TPM Excellence Award, 1st Category, conferred by Japan Institute of Plant Maintenance (JIPM)

Solution

Rayong Gas Separation Plant, Khanom Gas Separation Plant, Region 5 Pipeline Operations

Division (Ratchaburi)

● National Outstanding Business Operator in Safety, Occupational Health, and Work Environment

Award, conferred by the Ministry of Labour on May 10, during the National Safety Week, to promote

standard and compliant practices of management and safety, health, and environment in workplaces

25 sites:

Petroleum Terminals – Surat Thani (10 straight years), Lampang (7 straight years), Nakhon Sawan

(6 straight years), Khon Kaen, Bangchak, Songkhla

Oil Terminals – Phitsanulok (6 straight years), Chiang Mai, Ubon Ratchathani, Udon Thani, Si Racha,

Saraburi, Lam Luk Ka, Phra Khanong, Phuket, Pak Phanang

LPG Terminals – Khao Bo Ya, Ban Rong Po

Gas Separation Plants – Khanom, Nakhon Si Thammarat

Region 1 Pipeline Operations Division (Chon Buri)

Region 2 Pipeline Operations Division (Ayutthaya)

Region 3 Pipeline Operations Division (Rayong)

Region 4 Pipeline Operations Division (Khon Kaen)

Region 5 Pipeline Operations Division (Ratchaburi)

PTT Head Office

● EIA Monitoring Award, conferred by the Ministry of Natural Resources and Environment, for

outstanding compliance with measures stated in environmental impact assessment reports and

outstanding environmental management practice

Khanom Gas Separation Plant

● Thailand Energy Award 2006

Outstanding energy administrator (controlled building category) – Mr. Anantchai Khamkasem,

Saraburi Oil Terminal

TPM assessor from Japan assessing a PTT operation unit


Q S H E M a n a g e m e n t S t a n d a r d C e r t i f i c a t i o n i n 2 0 0 6● ISO/TIS 9001 Certification awarded by MASCI (Management System Certification Institute (Thailand))

One additional category of work (vehicle service)

● TIS/OHSAS 18001 Certification awarded by MASCI

Two additional oil terminals: Phitsanulok and Udon Thani.

Presentation of management system certificates

ISO/TIS 9001, ISO/TIS 14001 and TIS/OHSAS 18001 Certified Sites

MASCI = The Management System Certification Institute (Thailand)

OHSAS = Occupational Health and Safety Advisory Services

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

ISO/TIS 9001(40 target sites)



100

90

80

70

60

50

40

30

20

10

0

% of target sites


S o c i a l a n d E n v i r o n m e n t a l R e s p o n s i b i l i t yf o r S u s t a i n a b i l i t y


On the auspicious occasion of the 60th Anniversary Celebrations of His Majesty’s Accession to the Throne, PTT

and all Thais have paid their homage to the King by committing to do good deeds and follow His Majesty’s initiatives

which have been the models for various projects conducted by various parties nationwide.

For the grand occasion, PTT chose to focus on His Majesty’s knowledge dissemination about vetiver together

with its applications in a project entitled “Vetiver Grass Cultivation Program to honor HM the King on the auspicious

occasion of the Sixtieth Anniversary Celebrations of His Majesty’s Accession to the Throne.” This was intended to

disseminate the diverse uses of vetiver, which his people are desired to learn about and implement. PTT aimed to

campaign for greater use of this plant in the conservation of soil and water, with a goal of planting at least 5 million saplings.

PTT has carried out the program concerning 3 major areas which are:

1. Planting the vetiver in four target regions, namely the 41 PTT operation units and their surrounding

communities nationwide.

2. Conducting educational sessions for the public.

3. And launching the 1st Vetiver Glass Cultivation Contest. The contest will be the highlight of the program in

promoting the participation of various parties. The contest consists of 3 main categories: vetiver cultivation, promotion, and

knowledge dissemination.

In conjunction with the Royal Project Foundation, PTT conducted research and promotion of vetiver cultivation to

protect soil erosion and for water preservation in watershed areas, high-sloped areas, and agricultural areas of communities,

including those in Chiang Mai, Nan, and Kanchanaburi.

Presentation of fund donation to HRH Princess Maha Chakri

Sirindhorn for use by Thai Red Cross.

S O C I A L A N D E N V I R O N M E N T A L R E S P O N S I B I L I T YF O R S U S T A I N A B I L I T Y

Vetiver Grass Cultivation Program to honor HM the Kingon the auspicious occasion of the Sixtieth AnniversaryCelebrations of His Majesty’s Accession to the Throne

“Mountain, Cities, and Ocean, prosper under His Grace”


Three other national projects launched during the auspicious year consisted of, first, an exhibition of social

and environmental work in response to the royal initiatives. This PTT exhibition was a part of the Government’s exhibition

to mark the 60th Anniversary Celebrations of His Majesty’s Accession to the Throne. The theme “Mountain, Cities,

and Ocean, prosper under His Grace” underlay a special multimedia show accompanying a rafting trip covering

1,000 square meters at Impact Arena exhibition center, Muang Thong Thani in Bangkok. The purpose was to give the

public chances to appreciate His Majesty’s ingenuity and immense benevolence for this land and His subjects. On this

occasion, in conjunction with the Royal Thai Armed Forces, PTT took part in a grand multimedia display of fireworks

near the exhibition site, accompanied by a musical concert of His Majesty’s compositions, performed by the bands from

the 3 royal armed forces along with artists from the Grammy Plc. This culminated in a royal homage of large

fireworks coupled with a light-and-sound show entitled “Ray of Hope and Loyalty.”

Toward the end of the year, PTT took part as a major sponsor of the Royal Flora Exhibition Ratchaphruek 2006

This exhibition was located at the Royal Agricultural Research Center in Mae Hia Sub-District, Chiang Mai Province.

Organized under the theme of “Soil, Water, Forest, Human Beings – Garden of Sustainability,” it narrated PTT’s various

projects in response to royal initiatives. In the wake of the November 1, 2006, to January 31, 2007, show, the Ministry of

Agriculture and Cooperatives modified this area into a humid tropical garden, also sponsored by PTT.

Also, during this auspicious year, PTT conducted and hosted several other activities. A good example was the

application of the royal initiative on sufficiency economy as an overriding theme for the 21st PTT Art Contest under the

title of “Sufficient Economy: A Thai Way of Living.” PTT also joined in the forging of a bell commemorating the

60th Anniversary of His Majesty’s Accession to the Throne, made of gold weighing Baht 609 (9.135 kilograms), to be

presented to His Majesty. It sponsored the Tour of Thailand 2006 international long-distance cycling tournament, from

Support to Ray of Hope and Loyalty light-and-sound show

Royal Flora Exhibition Ratchaphruek 2006 21st PTT Art Contest

Contribution to forging of bell commemorating 60th Anniversary

of HM the King’s Accession to the Throne


Chiang Mai Night Safari Zoo to Suvarnabhumi Airport, featuring many contestants from Europe and Asia. Besides,

it sponsored an eco-bike project under the Ministry of Natural Resources and Environment in honor of His Majesty

while campaigning for public participation in natural resource and environmental conservation activities under the royal

initiatives. These bicycles were later presented to schools in barren rural areas.

In addition, in 2006 PTT continued its creative activities for the development of communities, society, and the nation

to demonstrate its active ongoing commitment to the code of conduct concerning social and environmental responsibility.

Below are some examples.

Society and CommunityIn times of natural disasters, PTT is ready to help as well as promotes activities designed for society and

communities participation for their improved quality of lives.

● Around mid-2006, floods inundated the North, prompting PTT to give urgent help in several forms to meet

people’s needs, including donation of fuels to the Supreme Command; funds for fuels and rescue equipment; drinking

water to the Public Disaster Relief Center, the Third Army Area, and the Royal Thai Navy; and dry ice, cooking gas, survival

kits, and essential food and items through PTT’s operation units as well as other agencies in five northern provinces. Finally,

PTT donated survival kits through the Ministry of Energy to forward to community centers in aid of flood victims.

● Later in the year, the floods from the North ravaged several other provinces in the Central Region, including

some parts of Bangkok. PTT donated fuels and lubricating oil for rescue boats of the “Princess Pa Foundation, Thai Red

Cross Society;” and donated survival kits through the Bangkok Metropolitan Administration, the Police Wife Association, and

Saw Waw Phaw 91 radio station. In addition, it secured long-tailed fiberglass boats for the Police Wife Association for

use in its visits to flood-stricken areas to present relief items. Finally, it donated empty oil drums to Tambon Bang Lane,

Administration Organization, Suphan Buri, for use as mobile toilets by flood victims.

● To help victims of drought, PTT has joined a project entitled “DMR – PEA – PTT – PWA – RTA against

Drought” since 1999.

● At year-end, PTT organized a “PTT Cold Season Warm-up” caravan to present blankets through the provincial

governors of Lampang, Phrae, Chiang Mai, and Ubon Ratchathani to those suffering from cold weather. Apart from this,

PTT employees collected money to buy additional blankets for people of the province of Sara Buri.

● The “PTT Tune Up Program Helps the Nation Save on Energy” activity offered free public service in its

third year to remind them of the significance of energy saving in all ways possible, focusing on keeping engines in good

conditions. Covering the first 15 days of December from 9 a.m. to 5 p.m., the service was available at 100 PTT service

stations on all main roads and highways nationwide, particularly in flood-stricken provinces. PTT sponsored the per-diems

for student volunteers and provided space in the service stations.

Contribution to project to fight drought Contribution to foundation for Phra Mongkut Hospital


● In its 10th year, the “Drive Safely with PTT Program,” in conjunction with the Land Transport Department,

focused on instilling a sense of safety, discipline, and awareness in motorists to lower road accidents. PTT also donated

traffic cones to police stations throughout the country and joined the Royal Thai Police in providing space in service

stations equipped with maps and road tips for 76 provinces as a service to vacationers.

● Free medical care continued for communities around the gas separation plants in Rayong and mobile clinics

provided medical care and knowledge under the “Sharing with Communities Program.”

● For the third year, PTT in conjunction with the Community Enterprise Institute expanded community projects

to include 12 provincial community-learning centers and the “Life University Program” implementation in conjunction

with Ramkhamhaeng University at bachelor’s and master’s degree levels in Interdisciplinary Study for Local Development,

to produce community researchers and strategists.

● PTT donated to the Population and Community Development Association to further strengthening

community bodies and public participation along the gas pipeline corridors.

● PTT donated to the “Santi Tham 960 Foundation,” whose aims were to operate a child development center

and run hygienic activities, take care of families of victims of terrorist acts, and promote other activities by an independent

committee for justice and liberty in the three southernmost provinces.

● PTT joined in the Thot Pha Pa Samaggi (Making merits) activity to raise funds for terminally-ill AIDS patients and

for building a hospice for HIV-afflicted children at Wat Phra Bat Nam Phu in Sara Buri.

EnvironmentBesides offering environmentally-friendly products and conducting business to minimize adverse impacts, PTT

in conjunction with its community actively joined relevant agencies in environmental programs and activities, including:

● Forest conservation and rehabilitation, specifically the rehabilitation of mangroves under a royal-initiative

environmental research and development at Laem Phuk Bia, Phetchaburi, located in an area of 1,136 rai (about 454 acres),

and rehabilitation of 10,000 rai of forests in Kui Buri, Prachuap Khiri Khan.

● The West Thong Pha Phum Program, based in Thong Pha Phum District, Kanchanaburi Province, was a joint

undertaking with the Biodiversity Research and Training Program (BRT) to extend research on biological diversity from

another program on forest and wildlife conservation in an area of 30,000 rai. The findings would form a body of knowledge on

natural resources and local resource management under community participation. PTT also sponsored a community master

plan.

● In conjunction with BRT, PTT conducted Bio-resource management from the coast to the mountain: from

Had Khanom to Kao Nan (Nun Mountain), which was Thailand’s first holistic ecological investigation of biological diversity

over a three-year period in the province of Nakhon Si Thammarat. The resulting knowledge would find applications among

communities, thereby leading to sustainable conservation and development of biological resources.

Contribution to launch of Santi Tham 960 Foundation “PTT Tune Up Helps the Nation Save on Energy” Program


● The 8th Green Globe Award contest, under the theme “A Sufficient Path of Sharing and Bounding Among

People, Water, and Forest,” honored 38 pieces of environmental conservation work from around the country. PTT staged

the contest to promote concrete creative conservation art forms inspired by His Majesty’s initiatives on sufficiency, building

on caring and sharing to instill sustainable environmental stewardship.

EducationRecognizing the value of education as a pillar of national development, PTT continually supported and promoted

various activities in 2006, including:

● PTT continued with its “One District, One Lab School” program, this year focusing on the upgrading

of personnel for the schools honored by the Ministry of Education last year.

● PTT presented its 14th school building to Ban Pak Phraek School in Rayong; the 20th Palang Thai, Phuea

Thai library to Wat Pho Nimit School in Surat Thani; and an Energy Classroom to Khon Kaen Phatthana Sueksa School,

as decided by the communities around Khon Kaen Petroleum Terminal. All these activities were in compliance with

PTT’s policy of providing useful public facilities to rural schools since 1993.

● PTT presented scholarships and educational materials to schools around its operation units

nationwide, as well as those along the gas pipeline corridors, apart from presenting sports equipment to needy schools

of the North and the Northeast.

● The “5S Schools” program promotes 5S principles for concrete results among youths in schools, organizes

5S contests, and builds network schools. This year it launched a “PTT 5S School Center” at Wat Pho Nimit School in

Surat Thani, large-school winner of the 5S contest for the third straight year.

● PTT regularly launches programs and camps to promote knowledge and instills awareness for energy

conservation in youths so that they may learn correct applications of energy and appreciate energy more. This year the

“Generation P Youth Camp,” in its ninth year, saw creative youths with a flair for innovative energy conservation enter the

contest. Chosen teams based on their fuel-saving plans at their schools took part in the 2006 edition of the Camp, after

which all teams would implement their plans and report their performance for six months as specified by the conditions of

the 7th contest on energy conservation. To the most successful and practical planners, PTT would present Khon Kaen

University engineering undergraduate scholarships. In its seventh year, the “World of Natural Gas” mobile exhibition

program and the “Gassy Camp” program for communities, in its third year, invited youths from visited schools to take part

in detailed learning activities about natural gas.

Support to Population and Community Development Association 8th Green Globe Award Contest under “A Sufficient Path of Sharing

and Bounding Among People, Water, and Forestt” theme


● The Company organized a “PTT Youth Camp for Thai Seas Conservation” and a “Secondary School

Environmental Conservation” program at Khanom Gas Separation Plant, in which teachers and students from Khanom

District took part. These activities enabled them to share their experience and learn more about marine resources and

environmental conservation along the Khanom coast, thereby instilling awareness for sustainable conservation and

development of communities.

● PTT sponsored engine tune-up tools for Don Mueang Technical College for the benefit of education and

for future public service.

● In conjunction with the Stock Exchange of Thailand (SET) and Family Knowhow Co., Ltd., PTT

launched the “Money Management Award 2006,” in its second year. This program disseminates knowledge and concepts

of financial and investment management to a new generation.

● To groom Thai youths, PTT sponsored the “Thammasat Undergraduate Business Challenge 2006” contest

at the Faculty of Commerce and Accounting, Thammasat University, where students from 15 leading universities came

up with organization management innovations.

SportsThis is one area in which PTT has constantly engaged itself to promote the quality of life for youths and the

public, promote mental development and refraining from using drugs, and promote healthy well-being – so that they can

ultimately serve as quality members of the population.

● PTT sponsored the National Sports Development Fund by supporting the Football Association of Thailand

and the Lawn Tennis Association of Thailand, both under Royal Patronage, for a total amount of Baht 90 million through

three years, to prepare national players and teams and build up their strength – ranging from youth to professional level.

● PTT was a core sponsor of international tennis tournaments held in Thailand, namely the ATP Thailand

Open 2006 and PTT Thailand Open 2006, including seven youth tennis tournaments: four PTT Junior

Championship, two PTT Championship, and one PTT Master Cup tournament (for the second straight year). The purpose

was to develop Thai tennis players’ potential and promote professional tennis in Thailand as called for by the national

policy.

● PTT has sponsored an international marathon race in Khon Kaen through the past three years.

● PTT sponsored a charity golf tournament in support of a foundation for the vocational training center

for underprivileged people in the Eastern Region, in honor of HRH Princess Maha Chakri Sirindhorn.

● Finally, PTT sponsored the sixth Asian Cadet Wrestling Championship 2006 for amateur wrestlers from more

than 20 Asian countries, which was held at the National Stadium.

Presentation of scholarships and educational materials Support to professional tennis tournaments


Arts and CulturesReflecting the national heritage and the soul of a given nation, arts and cultures are the key to civilization.

Recognizing their immense value, PTT constantly promotes the development of national arts and cultural conservation.

● During the year, PTT staged the 21st PTT Art contest in conjunction with Silpakorn University, apart from

a seventh contest with Chiang Mai University and a third with Thaksin University – in a move to reach out to northern

and southern youths.

● In conjunction with the residents of Lampang, PTT preserved the time-honored Poocha drum contest of

Khelang Nakhon (Lampang) by inviting drum masters to teach younger people the correct drum-beating method before

they entered the fifth Gong Poocha festival, featuring players from all 13 districts of the province. It also sponsored

a Poocha drum conservation youth camp to perpetuate this culture and tradition.

Thanks to PTT’s deep commitment and dedication to improving our society and the people’s quality of life,

it has won numerous awards from a variety of parties. In 2006, notable awards included Best Corporate Social

Responsibility (CSR) at the SET Awards 2006, and a Commitment to Social and Environmental Issues award for the third

straight year at the 5th Thailand Corporate Excellence Awards sponsored by the Thailand Management Association in

conjunction with Sasin Graduate Institute of Business Administration of Chulalongkorn University.

PTT Art Contest for youths from the North and the South Conservation of Poocha drum-beating tradition


The financial statements of PTT Public Company Limite’d and its subsidiaries being consolidated have been

prepared in compliance with generally accepted accounting principles under the Accounting Act B.E. 2543 (2000)

being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547 (2004), and the financial

reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535

(1992). The arrangement of items in the financial statements is in compliance with the notification of the Department

of Commercial Registration, dated September 14, B.E. 2544 (2001), “Definition of the abbreviated components required in

the financial statements, B.E. 2544 (2001)” under the third paragraph of section 11 of the Accounting Act, B.E. 2543 (2000).

The Company’s Board of Directors are responsible for the integrity and objectivity of the financial statements

of PTT Public Company Limited and its subsidiaries in providing reasonable assurance that the financial statements

present fairly financial position, results of operation, cash flows, the books and records of the Company accurately reflect

all transaction, the Company’s assets are properly safeguarded, including the control systems designed to protect

against fraud and irregularity transaction. The financial statements have been prepared with the chosen accounting

policy deemed appropriate and applied on the consistency basis in accordance with generally accepted accounting

principles, and significant information has been adequately disclosed in note to financial statements, in which the

independent auditor express an opinion on the financial statements of PTT Public Company Limited and its subsidiaries

in the report of the auditor.

(Mr. Cherdpong Siriwit) (Mr. Prasert Bunsumpun)

Chairman of the Board President

R E P O R T O F B O A R D O F D I R E C T O R Sû R E S P O N S I B I L I T I E S


A U D I T O RûS R E P O R T

T O : T H E SH A R E H O L D E R S O F P T T P U B L I C C O M P A N Y L I M I T E D

The Office of the Auditor General of Thailand has audited the accompanying consolidated balance sheets of PTT

Public Company Limited and its subsidiaries and the balance sheets of PTT Public Company Limited as of December 31,

2006 and 2005, and the related consolidated and the Company’s statements of income, changes in shareholders’ equity, and

cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to

their correctness and completeness of the presentation. The responsibility of the Office of the Auditor General of Thailand is to

express an opinion on these financial statements based on the audits and other auditors’ reports. The financial statements

of subsidiaries abroad, subsidiaries arising from joint investments between PTT Public Company Limited and subsidiaries or

others, joint ventures which are joint investments between PTT Public Company Limited and others and joint investments

between subsidiaries and others were audited by other auditors and included in the consolidated financial statements. The

Office of the Auditor General of Thailand received the other auditors’ reports and used them as a basis in auditing and expressing

an opinion on the consolidated financial statements. The assets and liabilities of the above subsidiaries and joint ventures

included in the consolidated financial statements as of December 31, 2006 constitute 15.42% and 7.46% and as of December

31, 2005 constitute 17.94% and 10.35%, respectively.

The Office of the Auditor General of Thailand conducted the audits in accordance with generally accepted auditing

standards. Those standards require that the Office of the Auditor General of Thailand plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement. The audits include examining,

on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audits also include assessing

the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial

statement presentation. The Office of the Auditor General of Thailand believes that the audits together with the other auditors’

reports as mentioned above provide a reasonable basis for the opinion.

In the opinion of the Office of the Auditor General of Thailand based on the audits and the other auditors’ reports,

the consolidated and the Company’s financial statements referred to above present fairly, in all material respects, the financial

position of PTT Public Company Limited and its subsidiaries and of PTT Public Company Limited as of December 31, 2006

and 2005, the results of operations, the changes in shareholders’ equity and the cash flows for the years then ended in

accordance with generally accepted accounting principles.

(Khunying Jaruvan Maintaka) (Jintana Vanichkajorn)

Auditor General Director of Audit Office

Office of the Auditor General

February 23, 2007

P T T P u b l i c C o m p a n y L i m i t e d130

B A L A N C E S H E E T SP T T P U B L I C C O M P A N Y L I M I T E D A N D S U B S I D I A R I E S

A S O F D E C E M B E R 3 1 , 2 0 0 6 A N D 2 0 0 5

C o n s o l i d a t e d T h e C o m p a n y

Unit : Baht Notes 2006 2005 2006 2005

A s s e t s

Current Assets

Cash and cash equivalents 3 86,806,254,165 73,440,815,749 26,509,729,979 20,884,465,980

Current investments 4 1,412,953,182 714,861,036 971,412,527 95,671,636

Trade accounts and notes receivable

- others, net 5 83,651,051,094 67,518,695,403 70,714,206,129 55,618,297,002

Trade accounts receivable

- related parties, net 6.1 32,233,254,372 21,798,865,096 41,076,883,986 40,199,888,113

Other accounts receivable,

advances and short-term

loans - related parties, net 6.2 1,485,781,424 5,186,428,630 2,595,264,377 17,510,054,024

Inventories 7 15,117,531,539 23,501,308,669 7,957,413,082 9,176,116,543

Materials and supplies - net 8 7,552,469,189 5,532,864,605 1,683,222,426 1,563,510,309

Other current assets 9 25,170,367,460 24,320,164,659 16,855,527,953 18,385,858,758

Total Current Assets 253,429,662,425 222,014,003,847 168,363,660,459 163,433,862,365

Non-current Assets

Investments accounted for under

the equity method 2.25, 10.3 100,232,967,812 66,577,148,716 229,929,117,290 170,591,164,633

Other long-term investments 11.3 3,129,323,736 2,089,316,392 1,894,120,000 1,799,078,000

Advances and long-term loans

- related parties, net 6.3 5,807,690,627 5,992,867,629 6,048,767,974 6,019,375,915

Property, plant and equipment - net 12 337,131,879,529 305,378,114,996 140,582,771,063 109,948,850,665

Intangible assets 13 22,596,923,648 11,528,865,309 3,665,779,723 3,175,955,018

Deferred tax assets 14 1,251,768,536 1,898,455,921 1,219,733,054 1,184,784,823

Advance payment for gas purchased 15 16,598,177,518 19,746,624,624 20,629,669,029 24,574,666,637

Other non-current assets 16 11,275,075,385 14,581,259,662 9,253,938,789 8,487,176,043

Total Non-current Assets 498,023,806,791 427,792,653,249 413,223,896,922 325,781,051,734

Total Assets 751,453,469,216 649,806,657,096 581,587,557,381 489,214,914,099

N o t e s t o f i n a n c i a l s t a t e m e n t s f o r m a n i n t e g r a l p a r t o f t h e s e f i n a n c i a l s t a t e m e n t s .


B A L A N C E S H E E T S ( C o n t i n u e d )

P T T P U B L I C C O M P A N Y L I M I T E D A N D S U B S I D I A R I E S



Unit : Baht Notes 2006 2005 2006 2005

L i a b i l i t i e s a n d S h a r e h o l d e r s ’ E q u i t y

Current Liabilities

Bank overdrafts and short-term loans

from financial institutions 17 1,734,797,602 3,546,735,675 - 998,410,421

Trade accounts payable - others 55,620,487,671 49,488,015,557 52,855,101,757 43,920,826,386

Trade accounts payable

- related parties 6.4 29,168,043,894 18,626,632,656 37,504,382,815 31,722,141,934

Other accounts payables

- related parties 6.5 513,089,157 334,643,566 372,626,899 158,136,236

Current portion of long-term loans 19 21,612,145,139 21,626,740,361 11,493,033,200 8,484,501,371

Income tax payable 21,161,422,580 20,935,268,286 3,868,862,856 3,997,999,648

Accrued expenses 25,251,959,602 21,437,007,568 10,055,120,041 9,084,274,666

Other current liabilities 18 12,513,974,983 12,016,282,093 6,357,907,951 6,570,473,569

Total Current Liabilities 167,575,920,628 148,011,325,762 122,507,035,519 104,936,764,231

Non-current Liabilities

Other long-term accounts payable

- related parties 6.6 - - 248,950,289 360,812,624

Long-term loans 19 198,339,307,089 197,983,341,348 165,066,437,701 146,743,072,536

Allowance for share of net loss

over investments 2.25, 10.3, 10.5 - - 22,866,362 1,074,727,910

Deferred tax liabilities 14 13,839,224,531 12,685,241,571 158,750,000 276,996,795

Provision for decommissioning costs 20 10,712,387,696 7,019,362,087 - -

Deposits on LPG cylinders 4,347,905,533 3,986,404,813 4,347,905,533 3,986,404,813

Other non-current liabilities 21 2,316,360,846 1,688,048,445 1,403,432,022 1,019,332,886

Total Non-current Liabilities 229,555,185,695 223,362,398,264 171,248,341,907 153,461,347,564

Total Liabilities 397,131,106,323 371,373,724,026 293,755,377,426 258,398,111,795



B A L A N C E S H E E T S ( C o n t i n u e d )




Unit : Baht Notes 2006 2005 2006 2005

L i a b i l i t i e s a n d S h a r e h o l d e r s ’ E q u i t y ( C o n t i n u e d )

Shareholders’ Equity

Share capital 22

Authorized share capital

2,857,245,725 ordinary shares of Baht 10 each 28,572,457,250 - 28,572,457,250 -

2,837,245,725 ordinary shares of Baht 10 each - 28,372,457,250 - 28,372,457,250

Issued and paid-up share capital

2,804,925,625 ordinary shares of Baht 10 each 28,049,256,250 - 28,049,256,250 -

2,797,245,725 ordinary shares of Baht 10 each - 27,972,457,250 - 27,972,457,250

Premium on share capital

Premium on ordinary shares 19,321,453,366 17,992,830,666 19,321,453,366 17,992,830,666

Surplus on dilution of investments

in subsidiaries and associates 2,950,404,482 2,142,400,359 2,950,404,482 2,142,400,359

Unrealized gain on available-for-sale securities 463,391,320 830,990,386 463,391,320 830,990,386

Currency translation differences (994,247,170) (800,719,785) (994,247,170) (800,719,785)

Retained earnings

Appropriated

Legal reserve 23.1 2,857,245,725 2,850,000,000 2,857,245,725 2,850,000,000

Reserve for Self-insurance Fund 23.2 888,116,510 841,395,380 888,116,510 841,395,380

Unappropriated 234,296,559,472 178,987,448,048 234,296,559,472 178,987,448,048

Total parent’s shareholders’ equity 2.25 287,832,179,955 230,816,802,304 287,832,179,955 230,816,802,304

Minority interests 66,490,182,938 47,616,130,766 - -

Total Shareholders’ Equity 354,322,362,893 278,432,933,070 287,832,179,955 230,816,802,304

Total Liabilities and Shareholders’ Equity 751,453,469,216 649,806,657,096 581,587,557,381 489,214,914,099

(Prasert Bunsumpun) (Pichai Chunhavajira)

President Senior Executive Vice President,

Corporate Finance & Accounting



S T A T E M E N T S O F I N C O M EP T T P U B L I C C O M P A N Y L I M I T E D A N D S U B S I D I A R I E S

F O R T H E Y E A R S E N D E D D E C E M B E R 3 1 , 2 0 0 6 A N D 2 0 0 5


Unit : Baht Notes 2006 2005 2006 2005

Sales and services 25 1,213,985,278,960 926,269,340,679 1,187,032,285,998 967,099,813,759

Cost of sales and services 1,072,215,730,831 811,088,811,955 1,132,575,559,668 915,357,684,468

Gross Margin 141,769,548,129 115,180,528,724 54,456,726,330 51,742,129,291

Selling and administrative expenses 28,667,616,816 21,343,732,172 21,883,286,151 16,629,303,294

Exploration expenses 3,631,646,309 1,213,024,874 - -

Income from Sales 109,470,285,004 92,623,771,678 32,573,440,179 35,112,825,997

Gain on disposal of invesments 35 7,130,480,089 (551,438,813) 7,130,480,089 -

Other income 26 25,221,723,112 9,435,673,595 18,967,526,808 12,745,029,541

Directors’ remuneration 6.8 160,588,765 79,752,401 40,330,089 28,485,010

Income from Operations 141,661,899,440 101,428,254,059 58,631,116,987 47,829,370,528

Share of net income from investments

under the equity method 27 19,139,447,260 21,651,259,802 52,537,611,460 52,984,437,048

Income before Interests and Taxes 160,801,346,700 123,079,513,861 111,168,728,447 100,813,807,576

Interest expenses 30 11,005,620,452 8,811,662,806 7,320,022,397 6,787,342,468

Income taxes 14 35,882,714,128 25,565,615,689 8,588,102,690 8,505,172,406

Income after Taxes 113,913,012,120 88,702,235,366 95,260,603,360 85,521,292,702

Income of minority interests 18,652,408,760 8,597,739,206 - -

Income from Ordinary Activities 95,260,603,360 80,104,496,160 95,260,603,360 85,521,292,702

Extraordinary items 28 - 5,416,796,542 - -

Net Income 2.25 95,260,603,360 85,521,292,702 95,260,603,360 85,521,292,702

Basic earnings per share 24

Income before extraordinary items 34.02 28.63 34.02 30.57

Extraordinary items - 1.94 - -

Net income 34.02 30.57 34.02 30.57

Diluted earnings per share 24

Income before extraordinary items 33.90 28.59 33.90 30.53

Extraordinary items - 1.94 - -

Net income 2.25 33.90 30.53 33.90 30.53



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f Jan

uary

1, 2

005

27,9

72,4

57,2

5017

,992

,830

,666

2,08

9,28

4,25

21,

046,

367,

181

(765

,711

,742

)2,

850,

000,

000

811,

830,

329

112,

377,

129,

041

164,

374,

186,

977

Curre

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trans

latio

n di

f fere

nces

--

--

(35,

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--

-(3

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secu

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s-

--

(215

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--

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--

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-29

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--

--

--

(18,

881,

408,

644)

(18,

881,

408,

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--

--

--

85,5

21,2

92,7

0285

,521

,292

,702

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as o

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1, 2

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27,9

72,4

57,2

5017

,992

,830

,666

2,14

2,40

0,35

983

0,99

0,38

6(8

00,7

19,7

85)

2,85

0,00

0,00

084

1,39

5,38

017

8,98

7,44

8,04

823

0,81

6,80

2,30

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sha

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l76

,799

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--

--

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-76

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1,32

8,62

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--

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-1,

328,

622,

700

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trans

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n di

ffere

nces

--

--

(193

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--

(193

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d lo

ss o

n av

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ale

secu

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s-

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(367

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--

-(3

67,5

99,0

66)

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ents

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10.7

--

808,

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-80

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23.1

--

--

-7,

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d23

.2-

--

--

-46

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(46,

721,

130)

-

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ends

pai

d-

--

--

--

(39,

897,

525,

081)

(39,

897,

525,

081)

Net i

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e-

--

--

--

95,2

60,6

03,3

6095

,260

,603

,360

Bala

nce

as o

f Dec

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r 31,

200

62.

2528

,049

,256

,250

19,3

21,4

53,3

662,

950,

404,

482

463,

391,

320

(994

,247

,170

)2,

857,

245,

725

888,

116,

510

234,

296,

559,

472

287,

832,

179,

955

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S T A T E M E N T S O F C A S H F L O W SP T T P U B L I C C O M P A N Y L I M I T E D A N D S U B S I D I A R I E S



Unit : Baht 2006 2005 2006 2005

Cash Flows from Operating Activities

Net income 95,260,603,360 85,521,292,702 95,260,603,360 85,521,292,702

Adjustment of net income to net cash

provided by (used in) operating activities:

Depreciation, depletion and amortization 26,755,020,578 17,478,594,420 6,642,896,508 6,619,605,938

(Reversal of) loss on impairment of assets 1,059,150,514 (326,168,952) 1,059,150,514 (282,405,380)

(Gain) loss on disposal of assets 182,611,030 (54,121,816) 113,546,614 (16,057,805)

(Gain) loss on disposal of investments (7,130,480,089) 551,438,813 (7,130,480,089) -

Write-off fixed assets adjustment (8,038,321) (4,916,178) (8,619,940) (4,916,178)

Share of net income from investments

under the equity method (19,139,447,260) (21,651,259,802) (52,537,611,460) (52,984,437,048)

Income of minority interests 18,652,408,760 8,597,739,206 - -

(Gain) loss on foreign exchange (9,548,860,892) 2,102,330,401 (4,722,995,737) 606,542,664

Unrealized gain on changes in value

of investments (2,102,695) (578,784) - -

Doubtful accounts 141,026,098 (57,733,263) 124,916,188 (62,589,990)

Amortization of exploration costs 1,701,860,553 415,689,464 - -

Amortization of bond issue expenses 8,140,262 9,575,521 - -

Amortization of bond discounts 34,411,113 24,336,136 27,015,838 23,227,287

Deferred income taxes 1,860,964,005 (282,264,349) (34,948,231) 412,395,246

Amortization of deferred interest

from finance leases 34,588,207 6,650,074 20,914,068 6,203,909

Provision for adjustment in value

of inventories 54,454,045 33,583,761 54,406,664 33,583,761

Allowance for obsolete materials

and supplies 4,637,690 17,123,860 4,637,690 -

Dividends received (493,122,953) (40,300,000) (65,100,000) (40,300,000)

Allowance for loss on lawsuits 206,950,232 - 206,950,232 -

Extraordinary items - (7,738,280,775) - -

Others 6,017,441 6,581,434 1,091,066 (4,868)

Net income from operating activities before

changes in operating assets and liabilities 109,640,791,678 84,609,311,873 39,016,373,285 39,832,140,238



S T A T E M E N T S O F C A S H F L O W S ( C o n t i n u e d )




Unit : Baht 2006 2005 2006 2005

Changes in operating assets (increase) decrease

Trade accounts and notes receivable - others (17,149,631,808) (19,270,730,408) (15,236,200,602) (16,467,730,681)

Trade accounts receivable - related parties (24,607,888,365) (2,948,901,721) (2,468,576,687) (21,314,550,000)

Other accounts receivable, advances

and short-term loans to related parties (927,586,300) 553,026,962 (839,133,243) 1,087,446,044

Inventories (743,111,295) (10,382,776,231) 1,149,181,710 (4,661,044,137)

Materials and supplies (2,026,539,898) (1,622,857,988) (97,895,132) (477,509,483)

Other current assets (2,054,721,297) (2,894,920,452) 1,579,728,423 (3,136,859,056)

Advance payment for gas purchased 3,148,447,107 2,998,896,929 3,944,997,609 3,702,109,349

Long-term advances to related parties - - 430,939 430,939

Other non-current assets (971,446,994) (4,454,580,418) (767,323,168) (3,039,286,966)

Changes in operating liabilities increase (decrease)

Trade accounts payable - others 6,263,987,621 24,226,250,750 8,948,369,951 21,064,108,637

Trade accounts payable - related parties 27,582,300,900 803,629,345 5,794,809,613 13,704,873,536

Other accounts payable - related parties 1,200,304,662 (158,806,869) 213,802,942 13,902,578

Income tax payable 1,900,492,900 7,703,626,991 (129,136,792) 1,322,094,209

Accrued expenses 3,518,549,041 7,336,380,227 9,474,217 469,669,596

Other current liabilities (742,609,035) 3,033,224,907 (446,415,796) 2,254,030,120

Deposits on LPG cylinders 361,500,720 275,315,081 361,500,720 275,315,081

Other long-term accounts payable

- related parties - - (111,862,335) 346,247,115

Deferred income taxes (433,683,755) 2,121,378,295 - -

Other non-current liabilities 511,648,523 (2,073,721,193) 174,612,983 (1,944,704,911)

(5,169,987,273) 5,244,434,207 2,080,365,352 (6,801,458,030)

Net cash provided by operating activities 104,470,804,405 89,853,746,080 41,096,738,637 33,030,682,208







Unit : Baht 2006 2005 2006 2005

Cash Flows from Investing Activities

Proceeds from disposal of property,

plant and equipment 109,915,660 24,167,971 134,964,571 19,458,581

Payment for property, plant and equipment (88,134,108,429) (86,012,339,109) (36,075,981,287) (37,106,964,863)

Payment for intangible assets (1,056,096,179) (732,410,918) (261,631,981) (288,520,582)

Long-term loans to related parties - (145,648,774) (215,000,000) (170,648,774)

Short-term loans to others (151,104,812) - - -

Short-term loans to related parties - (3,212,559,000) (302,209,625) (47,467,809,000)

Payment for investments in subsidiaries (884,236,333) 7,084,253,455 (22,511,205,137) (7,769,484,648)

Payment for investments in joint ventures (6,185,792,539) - (10,053,620,565) (148,995,000)

Payment for investments in associates (3,982,001,595) (23,982,250,884) (3,954,862,522) (26,195,881,564)

Payment for general investments (87,750,000) - (87,750,000) -

Payment for avalible-for-sale securities (886,048,691) - (585,600,000) -

Proceeds from disposal of long-term

investments 13,756,244,111 8,909,861,560 19,200,638,325 784,050

Cash received from repayment

of long-term loans to related parties 185,177,003 - 185,177,003 -


of short-term loans - 599,901,700 - 599,901,700


of short-term loans to related parties 3,487,144,556 1,388,989,356 15,487,394,556 34,243,891,056

Cash received from cancellation

of leasehold in gas stations 10,546,406 26,819,681 10,546,406 26,819,681

Current investments (increase) decrease (687,810,044) 51,491,869,646 (867,561,484) 46,550,418,233

Dividends received 7,168,344,098 5,530,800,889 18,016,978,870 12,075,685,689

Net cash used in investing activities (77,337,576,788) (39,028,544,427) (21,879,722,870) (25,631,345,441)







Unit : Baht Notes 2006 2005 2006 2005

Cash Flows from Financing Activities

Cash received from the issue of ordinary shares 2,653,039,053 955,941,500 76,799,000 -

Cash received from premium on share capital 8,663,558,328 - 1,328,622,700 -

Cash received from long-term loans 36,749,412,300 27,016,641,140 18,429,533,600 8,158,000,000

Cash received from the issue of bonds 16,000,000,000 30,183,580,318 16,000,000,000 30,183,580,318

Cash received from short-term loans 450,962,550 - - -

Cash received from the issue of notes payable - 12,745,891,210 - 12,745,891,210

Repayment of long-term loans (9,958,713,993) (45,404,672,760) (3,388,547,068) (413,957,637)

Repayment of notes payable (1,000,000,000) (11,900,276,079) (1,000,000,000) (11,761,000,000)

Redemption of debentures (12,492,062,602) - - -

Redemption of government bonds (5,000,000,000) (7,530,000,000) (5,000,000,000) (7,530,000,000)

Repayment of short-term loans - (12,470,855,218) - (11,602,418,968)

Repayment of liabilities from finance leases (161,760,725) (39,910,001) (92,865,222) (35,822,202)

Bank overdrafts and short-term loans from

financial institutions increase (decrease) (407,106,957) 348,325,254 - -

Dividends paid (48,683,543,740) (22,304,216,814) (39,897,525,081) (18,881,408,644)

Net cash provided by (used in)

financing activities (13,186,215,786) (28,399,551,450) (13,543,982,071) 862,864,077

Effects of exchange rates on cash

and cash equivalents (668,165,980) (15,612,095) (47,769,697) 643,542

Currency translation differences 86,592,565 (206,490,653) - -

Net increase in cash and cash equivalents 13,365,438,416 22,203,547,455 5,625,263,999 8,262,844,386

Cash and cash equivalents at beginning of periods 73,440,815,749 51,237,268,294 20,884,465,980 12,621,621,594

Cash and cash equivalents at end of periods 3 86,806,254,165 73,440,815,749 26,509,729,979 20,884,465,980

Supplemental disclosure of cash flow information

Cash paid during the periods for

Interest expenses 12,613,672,055 11,822,261,106 8,816,724,768 7,539,094,393

Income taxes 31,767,885,193 21,925,344,756 7,734,934,722 6,090,209,436



N O T E S T O T H E F I N A N C I A L S T A T E M E N T SP T T P U B L I C C O M P A N Y L I M I T E D A N D S U B S I D I A R I E S

F O R T H E Y E A R S E N D E D D E C E M B E R 3 1 , 2006 A N D 2 0 0 5

1. General InformationPTT Public Company Limited (“the Company”) has been incorporated as a public limited company, and listed on

the Stock Exchange of Thailand. The address of its incorporated and registered office is as follows:

The Head Office of the Company is located at 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok, Thailand.

The Company’s principal activity is the operation of petroleum business. The Company has invested in subsidiaries,

associates and joint ventures (“the Group”), which conduct petroleum exploration and production, natural gas, refining,

oil marketing and international trading, petrochemicals and other related business as discussed in Note 31 “Segment

Information”.

As of December 31, 2006 and 2005, the Group operated in 13 countries and employed 8,553 people (2005:

7,843 people). The staff costs of the Group for the year ended December 31, 2006 are Baht 9,626.18 million (2005: Baht

6,647.02 million).

2. Accounting PoliciesThe significant accounting policies adopted in the preparation of these consolidated and the Company’s financial

statements are set out below.

2.1 Basis for Preparation of Financial Statements

The consolidated and the Company’s financial statements have been prepared in accordance with generally

accepted accounting principles under the Accounting Act B.E. 2543 (2000) being those Thai Accounting Standards

issued under the Accounting Profession Act B.E. 2547 (2004), and the financial reporting requirements of the

Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535 (1992).

The arrangement of items in the financial statements is in compliance with the notification of the Department of

Commercial Registration, dated September 14, B.E. 2544 (2001), “Definition of the abbreviated components required in

the financial statements, B.E. 2544 (2001)” under the third paragraph of section 11 of the Accounting Act, B.E. 2543

(2000).

The consolidated and the Company’s financial statements have been prepared based on the assumption that

users of the financial statements have understanding of Thai generally accepted accounting principles and practices

in Thailand. Consequently, the accounting principles applied may differ from generally accepted accounting principles

adopted in other countries. The accompanying consolidated and the Company’s financial statements are, therefore,

not intended to present financial position, operating results and cash flows in accordance with generally accepted

accounting principles adopted in other countries.

The consolidated and the Company’s financial statements have been prepared under the historical cost convention

in the valuation of components in the financial statements with the exception of certain amounts, which are accounted

for under the fair value method as disclosed in the accounting policies.

For the convenience of users, an English version of the consolidated and the Company’s financial statements has

been prepared from the statutory financial statements that were issued in Thai language.


During 2006, the Company changed its investment structures in subsidiaries, associates and joint ventures which

have effects on the preparation of the consolidated and the Company’s financial statements. Details are as follows:

The Company sold its entire investments in the ordinary shares of PTT Polyethylene Co., Ltd. and Bangkok

Polyethylene Public Co., Ltd. which were 50% equally owned by the Company, to PTT Chemical Public Co., Ltd.

The Company initially included the subsidiaries: PTT ICT Solutions Co., Ltd. and PTT Polymer Logistics Co., Ltd.,

in the consolidated financial statements.

The Company initially included the joint ventures: PTT Asahi Chemicals Co., Ltd. and HMC Polymers Co., Ltd.,

in the consolidated financial statements.

The Company acquired an investment in additional ordinary shares of Bangchak Petroleum Public Co., Ltd. (BCP).

Consequently, the Company’s shareholding in BCP increased from 7.60% to 29.75%, and BCP’s status changed

from a related company to an associate.

The Company disposed of its ordinary shares in Rayong Refinery Public Co., Ltd. (RRC) Consequently, the

Company’s shareholding in RRC decreased from 100% to 48.75%, and RRC’s status changed from a subsidiary to

an associate.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Thai generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses,

assets and liabilities together with the disclosure of contingent assets and liabilities at the dates of the financial

statements. Actual results may differ from those estimates.

2.3 Investments in Subsidiaries

Subsidiaries are entities over which the parent company of the Group has the power to control their financial and

operating policies. The subsidiaries are included in the consolidated financial statements. Attention is directed more

to the substance of the control than to the legal form.

The Group includes subsidiaries in the consolidated financial statements from the dates on which the parent

company gains control over the subsidiaries, and no longer includes them from the dates on which the control ceases.

The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The acquisition costs

are measured as the fair value of the compensation provided by the Group plus the costs directly attributable to the

acquisition. The excess of the acquisition costs over the fair value of the Group’s share of identifiable assets and

liabilities of the subsidiaries acquired is recorded as goodwill. The accounting policy with respect to goodwill is discussed

in Note 2.15. Inter-company transactions, balances and unrealized gains or losses on transactions among companies

in the Group are fully eliminated except for unrealized losses which will not be recovered by the Group in the future.

If necessary, the accounting policies of subsidiaries have been changed to ensure consistency with the accounting

policies adopted by the Group. Separate disclosure is made for minority interests in the consolidated balance sheets

and statements of income.

Investments in subsidiaries have been presented in the Company’s financial statements under the equity method.

A list of subsidiaries of the Group is set out in Note 10.

2.4 Investments in Associates

Investments in associates are accounted for under the equity method in the consolidated and the Company’s

financial statements. Under this method, the Group’s share of post-acquisition gains or losses from associates is

recognized in the statements of income. The cumulative post-acquisition movements in the shareholders’ equity of

associates are adjusted against the costs of investments. Associates are entities on which the Group has significant

influence but no control. Unrealized gains or losses on transactions between the Group and its associates are eliminated

to the extent of the Group’s interest in the associates unless the transactions provide evidence of impairment of the

transferred assets.


Investments in associates include goodwill on acquisitions (net of accumulated amortization). When the Group’s

share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognize further

losses, unless the Group has incurred obligations in the liabilities of the associate or has to make repayments on behalf

of the associate. If necessary, the accounting policies of associates have been changed to ensure consistency with the

accounting policies adopted by the Group.

A list of associates of the Group is set out in Note 10.

2.5 Investments in Joint Ventures

Investments in jointly controlled entities are accounted for under the proportionate consolidation method in the

consolidated financial statements. Under this method, the Group combines its share of the joint ventures’ individual

revenues, expenses, assets, liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial

statements. The Group recognizes its share of gains or losses on sales of assets by the Group to the joint venture that

is attributable to other venturers. The Group does not recognize its share from the joint ventures’ purchase of assets

from the Group until the joint venturer resells the assets to an independent party. However, a loss from the purchase

of assets from joint ventures is recognized immediately when evidence of a reduction in the assets’ net realizable value

or an impairment occurs. If necessary, the accounting policies of joint ventures have been changed to ensure consistency

with the accounting policies adopted by the Group. Interests in joint ventures are presented in the Company’s financial

statements under the equity method.

Investments in jointly controlled assets are accounted for under the proportionate consolidation method in the

consolidated financial statements. Under this method, the Group includes its share of the joint ventures’ individual

expenses, assets and liabilities in the relevant components of its financial statements based on the Joint Operating

Agreements.

A list of joint ventures of the Group is set out in Note 10.

2.6 Other Investments

The Group classifies investments other than investments in subsidiaries, associates and joint ventures as trading,

available-for-sale, debt securities and general investments.

Investments in marketable securities, classified as available-for-sale securities, are carried at fair value in the

balance sheets. Increases/decreases in the carrying amounts are credited/charged against unrealized gains/losses

on investments in available-for-sale securities, presented separately under the shareholders’ equity. Fair value is

calculated by reference to the current bid prices of the Stock Exchange of Thailand at the balance sheet dates.

Investments in non-marketable securities, classified as general investments, are carried at cost in the balance

sheets and are adjusted for allowance for impairment of investments to recognize unrealized losses on investments if

the value of investments decreases substantially. The Group carries out a test for impairment of investments when

there is a factor indicating that an investment might be impaired if the carrying value of the investment is higher than its

recoverable amount. Impairment losses are recognized in the statements of income immediately.

Upon the disposal of investments, the differences between the net proceeds from disposal and the carrying

amounts of investments are recognized in the statements of income.

Upon the disposal of partial investments in debt securities or equity instruments, the carrying amounts of the

disposed portions are calculated under the weighted average method out of the total holding of the investments.

2.7 Related Parties

Related parties are individuals or enterprises that, directly or indirectly, control or are controlled by or are under

common control with the Company, including holding companies, subsidiaries and fellow subsidiaries. Associates and

individuals owning, directly or indirectly, interests in the voting power of the Company that give them significant influence

on the Company, key management personnel, directors or employees of the Company are also included as related

parties.

In considering each possible related party relationship, attention is directed more to the substance of the

relationship than to the legal form.


2.8 Foreign Currency Translations

The Group translates foreign currency transactions into Baht by using the exchange rates prevailing on the

transaction dates. The monetary assets and liabilities denominated in foreign currencies are translated into Baht by

using the exchange rates prevailing on the balance sheet dates. Gains and losses resulting from the settlement of

foreign currency transactions and from the translation of monetary assets and liabilities in foreign currencies are

recognized immediately in the statements of income.

The monetary assets and liabilities of foreign operations are translated into Baht by using the closing rates at the

balance sheet dates. The non-monetary assets and liabilities are translated into Baht by using the historical rates. Revenues

and expenses are translated by using the average exchange rates during the periods. Differences from these translations

are recognized as revenues or expenses in the statements of income.

The Group translates assets and liabilities of jointly controlled foreign entities into Baht by using the closing rates

at the balance sheet dates, whereas the income statements are translated by using the average exchange rates

during the periods. Differences from these translations are presented as “Currency translation differences” under the

shareholders’ equity.

Assets and liabilities of self-sustaining foreign entities are translated into Baht by using the closing rates at the

balance sheet dates. Revenues and expenses are translated by using the average exchange rates during the periods.

Differences from these translations are presented under the shareholders’ equity.

Upon the disposal of foreign entities, the Group recognizes the accumulated currency translation differences

recorded in the shareholders’ equity as a part of gains or losses on disposal of those foreign entities.

2.9 Cash and Cash Equivalents

Cash and cash equivalents, which are carried at cost, comprise cash on hand, deposits held at call with banks and

other highly liquid short-term investments with original maturity of no more than three months. Bank overdrafts and

short-term loans from financial institutions are shown as current liabilities in the balance sheets.

2.10 Trade Accounts and Notes Receivable

Trade accounts receivable are carried at net realizable value. The allowance for doubtful accounts receivable is

estimated from the percentages of the aging of outstanding receivables at the balance sheet dates, and anticipated

non-collectible amounts based on the amounts of outstanding receivables at the balance sheet dates according to

receivables’ repayment history and current financial status.

2.11 Advance Payment for Gas Purchased under Take-or-Pay Agreement

The Company has entered into gas purchase agreements with natural gas producers, under which the Company

is required to take delivery of natural gas at annual minimum quantities. During each contract year, if the Company

cannot accept natural gas according to the minimum quantities under the agreements, it has to make prepayments for

the quantities of natural gas which it can not accept (Take-or-Pay) in the next contract year. After the end of each contract

year, the Company and the natural gas producers have to agree on the volumes of gas that should be taken into

the calculation for Take-or-Pay for that contract year, subject to the basis and conditions in the agreements. Under

the agreements, the Company can take volumes of prepaid gas (Make-up) in subsequent years after taking delivery

of natural gas at the minimum quantities for that given contract year. The Company recognizes its obligations under

the agreements as advance payment for gas purchased.

2.12 Inventories

Inventories are stated at the lower of the acquisition costs or net realizable values. Costs are determined by using

the weighted average cost method. Some associates apply the first-in, first-out (FIFO) or last-in, first-out (LIFO) methods

to determine their inventory costs. However, the effect of differences in accounting policies for inventories is insignificant.

The costs of imported petroleum products comprise various importation expenses and levies, surveyors’ fees and


contribution to or compensation from the Oil Stabilization Fund, as the case may be. Net realizable values are estimated

selling prices in the ordinary course of business, less costs of product completion and related selling expenses. The Group

recognizes an allowance for decreases in inventory value for obsolete, slow-moving and defective inventories.

2.13 Materials and Supplies

Materials and supplies are valued at the weighted average cost. Allowance is made in full for obsolete or defective

and unserviceable items.

2.14 Property, Plant and Equipment

Property, plant and equipment is initially recognized at cost less accumulated depreciation and allowance for

impairment.

Repair and maintenance costs are charged to the income statements during the periods in which they are incurred.

The costs of major renovations are included in the carrying amounts of the assets when it is probable that the Group’s

future economic benefits exceed the originally assessed performance standards of the assets. The major renovations

are depreciated over the remaining useful lives of the related assets.

General Properties

Depreciation is calculated by using the straight-line method over the estimated useful lives of the assets as follows:

Buildings and building improvements 10 - 30 years

Machinery and equipment 10 - 30 years

Other assets 5 - 10 years

Where the carrying amount of an asset is greater than its net realizable value, which is the higher of the present value

of anticipated future cash flows from the continuing use of the asset or the amount obtainable from the sale of the asset

less any disposal costs, the carrying amount is written-down immediately to its net realizable value. The decrease is

recognized in the statements of income.

Gains or losses on disposal of property, plant and equipment are determined by comparing the proceeds from

sales with the carrying amounts on the disposal dates, and are included in operating profit or loss.

The capitalization rates used to determine the amounts of borrowing costs to be capitalized are the weighted-

average interest rates applicable to the outstanding borrowings during the year. Where funds are borrowed specifically

for the construction or production of assets, the amounts of borrowing costs for capitalization are determined from the

actual borrowing costs incurred during the year less any income from the temporary investments of those borrowings.

Oil and Gas Exploration and Production Properties

The exploration and production petroleum business accounts for oil and gas exploration and production properties

by using the successful efforts method, which has the following accounting policies:

Cost of Properties

Costs of properties comprise the total acquisition costs of concession rights or the portion of acquisition costs

applicable to properties as well as decommissioning costs.

If exploratory wells establish proven reserves, and are included in the plan for development in the near future,

exploratory drilling costs (both tangible and intangible) are initially capitalized as proved properties, otherwise the related

costs are fully charged as expenses in the statements of income.

Exploratory costs comprising geological and geophysical costs as well as area reservation fees incurred during

the exploration stage, are charged as expenses in the statements of income as incurred.

Development costs, irrespective of whether they relate to development wells or unsuccessful development wells,

are capitalized.


Depreciation, Depletion and Amortization

The capitalized acquisition costs of concession rights are depleted and amortized by using the unit of production

method, which is based on the estimated proven recoverable reserves. Depreciation, depletion and amortization of

exploratory wells, development and equipment costs and the operating costs of supporting equipment as well as

decommissioning costs, with the exception of costs arising from unsuccessful projects, are calculated by using the unit

of production method, which is based on the estimated proven recoverable and development reserves. Changes in

reserve estimates are recognized prospectively.

Proven recoverable and development reserves are calculated by the Group’s own engineers based on information

from the Group’s joint ventures.

Depreciation of the gas transportation pipelines of the Yadana and Yetagun projects is calculated by using the

straight-line method over an estimated useful life of 30 years.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately

to its recoverable amount, and the difference is charged to the statements of income.

2.15 Intangible Assets

Intangible assets comprise expenditure on leasehold rights of land and/or buildings, land rights, computer software

license, other operating rights, patents and goodwill. Amortization is calculated by using the straight-line method over

the contract periods ranging from five to 30 years.

Goodwill represents the excess of the business acquisition costs over the fair value of the Group’s share of the

identifiable assets and liabilities of the acquired subsidiaries, associates or joint ventures at the business acquisition

dates. Goodwill arising from the acquisitions of subsidiaries and joint ventures is reported in the balance sheets as

an intangible asset, and is amortized by using the straight-line method over the estimated economic useful lives of no

more than 20 years.

The Group reviews the carrying amounts of intangible assets in the balance sheets. Where an indication of impairment

exists, the carrying amounts of the relevant intangible assets are assessed and written-down to their recoverable

amounts.

2.16 Finance Leases - Where the Group is the Lessee

Leases of property, plant and equipment, where the lessee assumes substantial risks and rewards of ownership

are classified as finance leases. The leased assets are capitalized at the lower of the net present value of underlying

minimum lease payments or the fair value of the leased assets. Each minimum lease payment is allocated between

liabilities and financial charges in order to achieve a constant interest rate on the remaining balance of the liabilities. The

finance leases’ liabilities less financial charges are included in long-term loans. Interest expenses are charged in the

statements of income over the lease periods. Depreciation is charged on the shorter of the estimated useful lives of

the relevant assets or the lease periods. However, if it is certain that the ownership of the assets will be transferred to

the lessee at the end of the lease periods, depreciation is charged over the estimated useful lives of the assets.

2.17 Operating Leases - Where the Group is the Lessee

Leases of property, plant and equipment where the lessor assumes substantial risks and rewards of ownership

are classified as operating leases. Payments made under operating leases are charged to the statements of income

by using the straight-line method over the lease periods.

Expenses incurred from the termination of operating lease agreements before maturity, i.e. the compensation paid

to the lessor for such termination, are recognized as expenses for the periods in which the termination takes place.

2.18 Provision for Decommissioning Costs

The Group records provision for decommissioning costs whenever an obligation is likely to arise as a result of

a past event and the amount of the obligation can be reliably estimated.


The Group recognizes provision for decommissioning costs, which is provided at the onset of the project completion,

based on an estimate of the eventual costs related to the removal of the production facilities. These costs are included

as part of the oil and gas properties and are amortized by using the unit of production method based on proven reserves.

Provision for decommissioning costs is determined based on reviews and estimates by the Group’s own engineers

and management’s judgment.

2.19 Pension Fund and Provident Fund

The Company contributes to the Pension Fund scheme on a monthly basis at a rate of 10% of its employees’

salaries, and also contributes additional amounts to provide an adequate reserve at a rate of 100% of the pension

obligation due to mature at the end of each accounting period. The contributions are included in other non-current

liabilities in the balance sheets. The interest earned from the assets of the Pension Fund is recognized as income, while

the contributions to the fund are recognized as expenses in the statements of income.

The Company established a Provident Fund under the name of “the Registered Provident Fund of PTT Public

Company Limited and Affiliates”. All employees joining the Company on or after October 1, 1993 are required to be

members of the Provident Fund. Employees joining prior to October 1, 1993 may elect to be members of either the

Pension Fund or the Provident Fund. The Company contributes to the Provident Fund on a monthly basis at a rate of 10%

of its employees’ salaries and recognizes the contributions as expenses in the statements of income.

On September 26, 2005, the Company established another Provident Fund under the name of “the Registered

Provident Fund of PTT Public Company Limited and Affiliates (PTT Group)” and changed the name of the existing

Provident Fund to “the Registered Provident Fund of PTT Public Company Limited and Affiliates (Fund 1)”. The

objective was to give its employees the opportunity to choose investments (Employees’ Choices). The investment policy

of Fund 1 is to invest in the combination of both debt securities and equity instruments (with investments in equity

instruments constituting no more than 25% of total investments). PTT GROUP’s policy is to invest in short-term debt

securities with an emphasis on debt securities issued by the Government, state enterprises and financial institutions.

PTT GROUP has been effective since January 2006.

The Group operates the Provident Funds which are managed by independent fund managers, and contributes to

the funds on a monthly basis at determined rates. The contributions to the Provident Funds are recognized as expenses

in the statements of income for the periods in which they are incurred.

2.20 Income Taxes

For business without promotional privileges, the Group is taxed pursuant to the Revenue Code of Thailand, the

Petroleum Income Tax Act B.E. 2514 (1971) and Amendment B.E. 2532 (1989), and the corporate income tax regulations

of the Southeast Asian countries in which the Group has invested.

Deferred income taxes are provided in full in the balance sheets by using the liability method on temporary differences

between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The principal

temporary differences arise from the allowance for doubtful accounts, accumulated depreciation on property, plant and

equipment and amortization of decommissioning costs, including the previous tax losses carried forward and differences

between the fair value of the derived assets and their tax bases.

The tax rates at the balance sheet dates are used in the determination of deferred income taxes.

Deferred tax assets are recognized to the extent that it is probable that the Group’s future taxable profit will be

available against which the temporary differences can be utilized.

2.21 Revenue Recognition

The Group recognizes sales upon the delivery of products.

Other income is recognized on the following bases:

Interest income - on a time proportional basis by using the effective yields of the interest bearing assets.

Royalty income - based on the substance of the underlying agreements.

Dividend income - when shareholders have the rights to receive dividends.

Revenues other than those mentioned above are recognized on an accrual basis.


2.22 Earnings per Share

Basic earnings per share is calculated by dividing the net income attributable to ordinary shareholders by the

weighted average number of ordinary shares held by third parties during the year.

For diluted earnings per share, the Group adjusts net income for the year attributable to ordinary shares. The weighted

average number of ordinary shares held by third parties during the year is adjusted by the number of potential diluted

ordinary shares to assume that all potential diluted ordinary shares are converted into ordinary shares.

2.23 Financial Instruments

Financial assets carried in the balance sheets comprise cash and cash equivalents, current investments, trade

accounts and notes receivable, trade accounts receivable-related parties, other accounts receivable, advances, short-term

loans to related parties and long-term loans to related parties. The financial liabilities carried in the balance sheets

comprise bank overdrafts and short-term loans from financial institutions, trade accounts payable-others, trade

accounts payable-related parties, other accounts payable-related parties and long-term loans. The particular accounting

policies adopted are disclosed in the individual policy statements associated with each item.

The Group utilizes financial instruments to reduce its exposure to risks arising from the fluctuations of foreign

exchange rates, interest rates and oil market prices. The principal financial instruments are as follows:

Forward Foreign Exchange Contracts

The forward foreign exchange contracts protect the Group from risks arising from the fluctuations of exchange rates

by determining the future rates at which foreign currency assets will be realized or foreign currency liabilities will be

settled. The forward foreign exchange contracts are recognized in the financial statements at inception. The premium or

discount on the establishment of each agreement is amortized over the contract period.

Cross-currency and Interest Rate Swap Contracts

The cross-currency and interest rate swap contracts protect the Group from risks arising from the fluctuations of

foreign exchange rates and interest rates. The cross-currency and interest rate swap contracts are not recognized in

the financial statements at inception. The financial assets and liabilities denominated in foreign currencies as at the

balance sheet dates which are protected by such contracts are translated by using the exchange rates determined in

the contracts. Gains or losses on early termination of the contracts or on repayment of the borrowings before maturity

are recognized in the statements of income.

Futures Oil and Gas Contracts

The Company has entered into futures oil and gas contracts to hedge risks arising from the fluctuations of oil and

gas prices in the world market in accordance with the oil and gas purchase and sale agreements by determining the

future buying and selling prices. Gains or losses from such contracts are recognized in the statements of income at the

end of the contracts.

The risk management policies are described in Note 32: Disclosure of Financial Instruments.

2.24 Segment Information

The Company presents its financial information by business segments, not by geographical segments. The reason

is that the revenues, operating results and total assets of the geographical segments other than Thailand are less than

10% of the consolidated revenues, operating results and total assets of all business segments.


2.25 Adoption of Newly Issued Accounting Standards

In October 2006, the Federation of Accounting Professions issued Notification No. 26/2006 regarding the

Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries”

(Amendment No. 1), under which the investments in subsidiaries, jointly controlled entities and associates are to be

presented in the separate financial statements under the cost method rather than the equity method. (the entities which

are not ready to adopt the cost method in 2006 can continue using the equity method through the end of 2006 and

adopt the cost method from January 1, 2007 onwards). In this regard, the Company has elected to adopt the change in

2007. Had the Company adopted the change in 2006, its investments accounted for under the equity method would

have decreased by Baht 95,769.09 million to be under the cost method, allowance for share of net loss over investments

would have decreased by Baht 22.87 million, net income for the year ended December 31, 2006 would have decreased

by Baht 30,706.59 million to Baht 64,554.01 million (Diluted earnings per share of Baht 22.99 per share) and

shareholders’ equity in the balance sheet as of December 31, 2006 would have decreased by Baht 95,746.22 million to

Baht 192,085.95 million.

3. Cash and Cash EquivalentsCash and cash equivalents as of December 31, 2006 and 2005 are as follows:

Consolidated The Company

Unit : Million Baht 2006 2005 2006 2005

Cash on hand 279.45 509.21 240.64 229.68

Deposits held at call with banks 26,488.86 25,978.08 11,268.47 4,798.32

Fixed deposits 19,587.96 11,976.80 9,300.00 6,500.00

Treasury bills 6,531.87 19,577.43 1,029.73 113.57

Promissory notes 29,247.22 6,887.39 - 730.99

Bank of Thailand bonds 4,670.89 8,511.91 4,670.89 8,511.91

Total 86,806.25 73,440.82 26,509.73 20,884.47

Cash and cash equivalents as of December 31, 2006 mainly bear interest at rates ranging from 0.10% to 5.00%

per annum, (December 31, 2005: the interest rates range from 0.25% to 5.75% per annum).

4. Current InvestmentsCurrent investments as of December 31, 2006 and 2005 are as follows:



Fixed deposits 68.45 88.32 68.45 88.32

Treasury bills 391.54 - - -

Promissory notes 939.55 320.00 889.55 -

General investments 13.41 7.35 13.41 7.35

Unit trusts - 299.19 - -

Total 1,412.95 714.86 971.41 95.67

The Group’s deposits at banks and promissory notes as of December 31, 2006 were issued by local financial

institutions, and bear interest rates ranging from 3.50% to 5.38% per annum (2005: the interest rates range from 1.00%

to 4.00% per annum).


The treasury bills of the Group as of December 31, 2006 bear interest at rates ranging from 4.78% to 5.22% per

annum.

General investments as of December 31, 2006 amounting to Baht 13.41 million (2005: Baht 7.35 million) represent

investments in the ordinary shares of Petro Asia (Sanshui) Co., Ltd. amounting to Baht 6.06 million and Petro Asia

(Maomimg) Co., Ltd. amounting to Baht 7.35 million, net of allowance for impairment of investments. These investments

are in the process of being disposed.

5. Trade Accounts and Notes Receivable - Others, NetTrade accounts and notes receivable - others as of December 31, 2006 and 2005 are as follows:



Trade accounts receivable 83,709.20 66,694.60 69,993.48 53,921.88

Notes receivable 2,390.97 3,206.47 2,390.97 3,206.47

Total 86,100.17 69,901.07 72,384.45 57,128.35

Less Allowance for doubtful

accounts 2,449.12 2,382.37 1,670.24 1,510.05

Trade accounts and notes

receivable - others, net 83,651.05 67,518.70 70,714.21 55,618.30

Aged trade accounts and notes receivable - others as of December 31, 2006 and 2005 can be analyzed as follows:



Current 70,936.30 57,732.30 59,324.27 46,451.30

Overdue

- Up to 3 months 2,683.07 2,534.70 1,583.28 2,079.64

- Over 3 - 6 months 959.95 1,444.45 912.32 1,380.87

- Over 6 - 12 months 2,257.02 1,519.06 2,157.81 1,476.47

- Over 12 months 9,263.83 6,670.56 8,406.77 5,740.07

Total 86,100.17 69,901.07 72,384.45 57,128.35


accounts 2,449.12 2,382.37 1,670.24 1,510.05

Trade accounts and notes

receivable - others, net 83,651.05 67,518.70 70,714.21 55,618.30

Trade accounts and notes receivable - others, net as of December 31, 2006 include receivables from government

agencies and state enterprises amounting to Baht 27,733.79 million in the consolidated financial statements (2005:

Baht 19,046.78 million), and Baht 27,614.68 million in the Company’s financial statements (2005: Baht 18,881.51 million).


6. Related Party TransactionsThe following are details of significant transactions carried out with related parties.

6.1 Trade accounts receivable - related parties as of December 31, 2006 and 2005



Subsidiaries - - 10,415.53 20,077.16

Associates 32,013.50 19,822.83 30,462.38 18,154.13

Other related parties 474.45 2,244.18 367.09 2,244.18

Joint ventures - - 94.43 0.84

32,487.95 22,067.01 41,339.43 40,476.31


accounts 254.70 268.14 262.55 276.42


- related parties, net 32,233.25 21,798.87 41,076.88 40,199.89

Aged trade accounts receivable - related parties as of December 31, 2006 and 2005 can be analyzed as follows:



Current 32,139.61 21,899.84 37,551.51 35,492.97

Overdue

- Up to 3 months 107.39 - 334.70 231.32

- Over 3 - 6 months 99.46 99.45 96.15 709.47

- Over 6 -12 months 140.21 58.26 2,050.77 60.37

- Over 12 months 1.28 9.46 1,306.30 3,982.18

Total 32,487.95 22,067.01 41,339.43 40,476.31


accounts 254.70 268.14 262.55 276.42


- related parties, net 32,233.25 21,798.87 41,076.88 40,199.89

6.2 Other accounts receivable, advances and short-term loans - related parties as of December 31, 2006and 2005



Other accounts receivable

Subsidiaries - - 185.35 577.58

Associates 1,364.60 1,173.15 1,363.00 1,170.44

Other related parties 0.39 20.62 - 12.24


1,364.99 1,193.77 1,680.40 1,891.12


accounts 142.60 141.71 146.88 142.02

1,222.39 1,052.06 1,533.52 1,749.10




Advances


Associates - 250.01 308.47 -

Other related parties 263.39 397.22 259.46 270.13

263.39 647.23 1,068.00 273.56


accounts - - 308.47 -

263.39 647.23 759.53 273.56

Short-term loans

Subsidiaries - - - 12,000.25

Associates - 3,487.14 - 3,487.14

Joint ventures - - 302.21 -

- 3,487.14 302.21 15,487.39

Total 1,485.78 5,186.43 2,595.26 17,510.05

Changes in short-term loans - related parties for the year ended December 31, 2006 are as follows:

Unit : Million Baht Consolidated The Company

Balance as of December 31, 2005 3,487.14 15,487.39

- Payment for loans granted - 302.21

- Receipt from loan repayment (3,487.14) (15,487.39)

Balance as of December 31, 2006 - 302.21

Short-term loans to related parties are unsecured and bear interest at rates ranging from 6.03% to 6.17%

per annum.

6.3 Advances and long-term loans - related parties as of December 31, 2006 and 2005



Advances


Associates - 304.86 - 304.86

- 304.86 1.08 306.37


accounts - 304.86 - 304.86

- - 1.08 1.51

Long-term loans


Associates 5,807.69 5,807.69 5,807.69 5,807.69

Other related parties - 185.18 - 185.18

5,807.69 5,992.87 6,047.69 6,017.87

Total 5,807.69 5,992.87 6,048.77 6,019.38


Changes in long-term loans - related parties for the year ended December 31, 2006 are as follows:



- Payment for loans granted - 215.00

- Receipt from loan repayment (185.18) (185.18)


Long-term loans to related parties bear interest at rates ranging from 3.13% to 7.69% per annum.

6.4 Trade accounts payable - related parties as of December 31, 2006 and 2005



Subsidiaries - - 8,369.36 12,920.87

Associates 28,793.75 17,826.54 28,162.13 17,441.24



Total 29,168.04 18,626.63 37,504.38 31,722.14

6.5 Other accounts payable - related parties as of December 31, 2006 and 2005




Associates 449.93 309.70 89.17 103.16



Total 513.09 334.64 372.63 158.14

6.6 Other long-term accounts payable - related parties as of December 31, 2006 and 2005




Joint ventures - - 16.77 -

Total - - 248.95 360.81


6.7 Revenue and expense transactions carried out with related parties

For the years ended December 31, 2006 and 2005



Revenues

Sales

Subsidiaries - - 109,261.25 123,689.19

Associates 379,337.65 248,005.77 367,759.86 246,712.79

Other related parties 19,608.64 30,752.07 15,876.28 30,752.07


Interest income

Subsidiaries - - 235.74 1,646.55

Associates 441.30 399.23 440.45 399.23



Other income

Subsidiaries - - 1,862.82 3,077.19

Associates 3,577.01 3,380.85 3,531.76 3,367.82



Expenses

Purchases

Subsidiaries - - 146,745.27 172,626.04

Associates 390,076.92 232,981.66 380,898.52 232,053.37

Other related parties 5,754.91 12,708.23 5,395.67 12,708.23

Joint ventures - - 6,478.29 -

Other expenses


Associates 261.80 21.29 29.90 20.00


The above related party transactions exclude transactions carried out with government agencies and state

enterprises.

The prices between the Company and its related parties are determined based on the normal prices used in the

same types of business in transactions with third parties. With respect to the selling prices of natural gas between the

Company and an associate, the Company has granted a special discount for five years from 2002 to 2007 to support

the manufacturing capacity expansion project of the associate. However, the purchase volumes were insignificant.

The prices of goods purchased from a subsidiary are the normal selling prices determined by the subsidiary

with reference to the world market prices.


6.8 Directorsû remuneration

Directors’ remuneration for the year ended December 31, 2006 in the consolidated financial statements amounting

to Baht 160.59 million (2005: Baht 79.75 million) and in the Company’s financial statements amounting to Baht 40.33

million (2005: Baht 28.49 million) comprises directors’ meeting fees and bonuses.

6.9 Crude oil purchase and sale transactions carried out with related parties without the delivery ofproducts, with the objective of maintaining crude oil reserves, were offset in the financial statements.Details are as follows:



Sales

Subsidiaries - - 239.94 3,218.59

Associates 2,284.06 3,446.75 2,284.06 3,446.75

Other related parties 116.81 - 116.81 -

Purchases

Subsidiaries - - 239.94 3,218.59

Associates 2,284.06 3,446.75 2,284.06 3,446.75

Other related parties 116.81 - 116.81 -

7. InventoriesInventories as of December 31, 2006 and 2005 are as follows:



Oil products 9,781.61 19,731.85 7,193.65 8,562.29

Gas products 397.48 413.37 396.03 413.37

Petrochemical products 4,570.33 2,985.38 - -

Others 368.11 370.71 367.73 200.46

Total 15,117.53 23,501.31 7,957.41 9,176.12

The Company’s inventories as stated above exclude the legal reserve, which is presented under other non-current

assets as discussed in Note 16.

8. Materials and SuppliesMaterials and supplies as of December 31, 2006 and 2005 are as follows:



Spare parts, equipment and others 7,679.12 5,855.95 1,742.00 1,617.64

Less Allowance for obsolescence 126.65 323.09 58.78 54.13

Materials and supplies, net 7,552.47 5,532.86 1,683.22 1,563.51


9. Other Current AssetsOther current assets as of December 31, 2006 and 2005 are as follows:



Other accounts receivable 7,695.30 6,830.71 5,775.46 4,722.15


accounts 1,559.98 599.44 1,557.68 595.19

Other accounts receivable, net 6,135.32 6,231.27 4,217.78 4,126.96

Prepaid expenses 4,486.99 3,388.51 826.20 2,457.57

Refund receivable from the

Oil Stabilization Fund 9,719.74 10,182.96 9,719.74 9,204.20

Accrued interest income

and other accrued income 1,352.87 1,893.62 901.76 1,650.17

Undue input VAT 1,618.14 1,563.46 1,056.04 801.55

Others 1,857.31 1,060.34 134.01 145.41

Total 25,170.37 24,320.16 16,855.53 18,385.86

Other accounts receivable mainly represent excise tax and input VAT receivables.

Refund receivable from the Oil Stabilization Fund comprises compensation for locally manufactured oil or imported

oil and refunds from the Oil Stabilization Fund for exported oil or oil sold to outbound transportation barges. The

compensation and refund rates are determined by the Committee of Energy Policy Administration.

10. Investments Accounted for under the Equity Method

10.1 Details of subsidiaries, associates and joint ventures of the Company are as follows:

Country of Shareholding

Company Incorporation Business Percentage

2006 2005

Subsidiaries

PTT Exploration and Production Public Co., Ltd. Thailand Petroleum exploration 66.13 66.32

(PTTEP) and production

PTT (Cambodia) Co., Ltd. (PTTCL) Cambodia Oil marketing 100.00 100.00

Subic Bay Energy Co., Ltd. (SBECL) Cayman Oil marketing 100.00 100.00

Islands

Retail Business Alliance Co., Ltd. (RBA) Thailand Management services 49.00 49.00

and oil marketing

PTT International Trading Pte. Ltd. (PTTT) Singapore International oil trading 100.00 100.00

PTT Natural Gas Distribution Co., Ltd. (PTTNGD) Thailand Natural gas 58.00 58.00

PTT LNG Co., Ltd. (PTTLNG) Thailand Natural gas 100.00 100.00

Bangkok Polyethylene Public Co., Ltd. (BPE) Thailand Petrochemicals - 50.00

PTT Polyethylene Co., Ltd. (PTTPE) Thailand Petrochemicals - 50.00

PTT Phenol Co., Ltd. (PPCL) Thailand Petrochemicals 40.00 40.00

PTT Chemical Public Co., Ltd. (PTTCH) Thailand Petrochemicals 55.19 50.03

PTT Polymer Marketing Co., Ltd. (PTTPM) Thailand Polymer marketing 75.00 50.00




2006 2005

Rayong Refinery Public Co., Ltd. (RRC) Thailand Refining - 100.00

PTT Utility Co., Ltd. (PTTUT) Thailand Generation and supply 40.00 40.00

of electricity, steam

and water for industry

Energy Complex Co., Ltd. (EnCo) Thailand Commercial 50.00 50.00

PTT ICT Solutions Co., Ltd. (PTTICT) Thailand Information and 20.00 -

communication

technology services

PTT Polymer Logistics Co., Ltd. (PTTPL) Thailand Logistics services 100.00 -

Associates

Thai Oil Public Co., Ltd. (TOP) Thailand Refining 49.54 49.54

Star Petroleum Refining Co., Ltd. (SPRC) Thailand Refining 36.00 36.00

Rayong Refinery Public Co., Ltd. (RRC) Thailand Refining 48.75 -

Bangchak Petroleum Public Co., Ltd. (BCP) Thailand Refining 29.75 -

Thai Lube Blending Co., Ltd. (TLBC) Thailand Blending and bottling 48.95 48.95

lube oil

Thai Petroleum Pipeline Co., Ltd. (THAPPLINE) Thailand Oil transmission pipeline 34.04 34.04

Petro Asia (Thailand) Co., Ltd. (PA (Thailand)) Thailand Oil marketing 35.00 35.00

Petro Asia (Sanshui) Co., Ltd. (PA (Sanshui)) China Oil marketing - 25.00

Vietnam LPG Co., Ltd. (VLPG) Vietnam Bottling and selling LPG 45.00 45.00

KELOIL-PTT LPG Sdn. Bhd. (KPL) Malaysia Bottling and selling LPG 40.00 40.00

Aromatics (Thailand) Public Co., Ltd. (ATC) Thailand Petrochemicals 49.82 49.99

IRPC Public Co., Ltd. Thailand Petrochemicals 31.50 31.50

(Formerly Thai Petrochemical Industry Public and refining

Co., Ltd. (TPI))

Independent Power (Thailand) Co., Ltd. (IPT) Thailand Electricity generation 20.00 20.00

Thai Oil Power Co., Ltd. (TP) Thailand Generation and supply 26.00 26.00

of electricity

Joint Ventures

Trans Thai-Malaysia (Thailand) Co., Ltd. Thailand Natural gas 50.00 50.00

(TTM (T))

Trans Thai-Malaysia (Malaysia) Sdn. Bhd. Malaysia Natural gas 50.00 50.00

(TTM (M))

District Cooling System and Power Plant Co., Ltd. Thailand Generation and supply 35.00 35.00

(DCAP) of electricity

and chilled water

PTT Asahi Chemicals Co., Ltd. (PTTAC) Thailand Petrochemicals 47.50 -

HMC Polymers Co., Ltd. (HMC) Thailand Petrochemicals 41.44 -


10.2 Details of the subsidiaries, associates and joint ventures of subsidiaries are as follows:



2006 2005

Subsidiaries of PTTEP:

PTTEP International Limited (PTTEPI) Thailand Petroleum exploration 100.00 100.00

and production

PTTEP Offshore Investment Co., Ltd. (PTTEPO) Cayman Commercial 100.00 100.00

Islands

PTTEP Siam Limited (PTTEP Siam) Thailand Petroleum exploration 100.00 100.00

and production

PTTEP Services Limited (PTTEP Services) Thailand Services operation 100.00 100.00

PTTEP Kim Long Vietnam Co., Ltd. (PTTEPKV) Cayman Petroleum exploration 100.00 100.00

Islands and production

PTTEP Southwest Vietnam Co., Ltd. (PTTEPSV) Cayman Petroleum exploration 100.00 100.00


PTTEP Hoan-Vu Co., Ltd. (PTTEP HV) Cayman Petroleum exploration 100.00 100.00


PTTEP Hoang-Long Co., Ltd. (PTTEP HL) Cayman Petroleum exploration 100.00 100.00


PTTEP Oman Co., Ltd. (PTTEP OM) Cayman Petroleum exploration 100.00 100.00


PTTEP Algeria Co., Ltd. (PTTEP AG) Cayman Petroleum exploration 100.00 100.00


PTTEP (Thailand) Limited (PTTEP T) Thailand Petroleum exploration 100.00 100.00

and production

PTTEP Iran Co., Ltd. (PTTEP IR) Iran Petroleum 100.00 100.00

Diamond Petroleum Co., Ltd. (DPC) Thailand Petroleum 100.00 100.00

PTTEP Merangin Co., Ltd. (PTTEPM) Indonesia Petroleum 100.00 100.00

PTTEP Bahrain Co., Ltd. (PTTEP BH) Cayman Islands Petroleum 100.00 -

PTTEP Holding Co., Ltd. (PTTEPH) Cayman Islands Petroleum 100.00 -

PTTEP Indonesia Co., Ltd. (PTTEP ID) Cayman Islands Petroleum 100.00 -

PTTEP Bengara I Co., Ltd. (PTTEPB) Cayman Islands Petroleum 100.00 -

Subsidiaries of SBECL:

PTT Philippines Trading Corporation (PTTTC) Philippines Oil marketing 100.00 100.00

(Formerly Subic Bay Fuels Co., Inc. (SBFCI))

PTT Philippines Corporation (PTTPC) Philippines Oil marketing 100.00 100.00

(Formerly Subic Bay Distribution, Inc. (SBDI))

Subsidiary of PTTCL:

Houakhong Trading Co., Ltd. (Houakhong) Laos Oil marketing 100.00 100.00




2006 2005

Subsidiaries of PTTCH:

TOC Glycol Co., Ltd. (TOCGC) Thailand Petrochemicals 100.00 100.00

Thai Ethanolamines Co., Ltd. (TEA) Thailand Petrochemicals 100.00 100.00

Thai Choline Chloride Co., Ltd. (TCC) Thailand Petrochemicals 100.00 100.00

Thai Oleochemicals Co., Ltd. (TOL) Thailand Petrochemicals 100.00 100.00

NPC Safety and Environmental Services Thailand Safety and 100.00 100.00

Co., Ltd. (NPC S&E) environmental services

NPTC Maintenance & Engineering Services Thailand Factory maintenance 60.00 60.00

Co., Ltd. (NPTC) and engineering services

Thai Tank Terminal Co., Ltd. (TTT) Thailand Storage and 51.00 51.00

transportation services

for liquid chemicals,

oil and gas

Bangkok Polyethylene Public Co., Ltd. (BPE) Thailand Petrochemicals 100.00 -

PTT Polyethylene Co., Ltd. (PTTPE) Thailand Petrochemicals 100.00 -

Associates of PTTEP:

Energy Complex Co., Ltd. (EnCo) Thailand Commercial 50.00 50.00


communication

technology services

Associate of PTTNGD:

Amata Natural Gas Distribution Co., Ltd. Thailand Natural gas 50.00 50.00

(AMATA NGD)

Associate of SBECL:

FST Aviation Services Limited (FST) Hong Kong Aircraft refueling 25.00 25.00

services

Associates of PTTCH:

Bangkok Polyethylene Public Co., Ltd. (BPE) Thailand Petrochemicals - 50.00

PTT Polyethylene Co., Ltd. (PTTPE) Thailand Petrochemicals - 50.00

PTT Phenol Co., Ltd. (PPCL) Thailand Petrochemicals 30.00 40.00

PTT Polymer Marketing Co., Ltd. (PTTPM) Thailand Polymer marketing 25.00 25.00

PTT Utility Co., Ltd. (PTTUT) Thailand Generation and supply 40.00 40.00

of electricity, steam

and water for industry

Vinythai Public Co., Ltd. (VNT) Thailand Petrochemicals 24.98 23.02

Eastern Fluid Transport Co., Ltd. (EFT) Thailand Petrochemicals 22.65 22.65

transmission

pipeline system


communication

technology services




2006 2005

Jointly Controlled Entities of PTTEP:

Carigali - PTTEPI Operating Company Malaysia Petroleum 50.00 50.00

Sdn. Bhd. (CPOC)

Moattama Gas Transportation Company Myanmar Overseas gas 25.50 25.50

(MGTC) transmission pipelines

Taninthayi Pipeline LLC. (TPC) Myanmar Overseas gas 19.3178 19.3178

transmission pipelines

Orange Energy Limited (Orange) Thailand Petroleum 53.9496 53.9496

B8/32 Partners Limited (B8/32 Partners) Thailand Petroleum 25.0009 25.0009

Jointly Controlled Entity of PTTCH:

Thai Ethoxylate Co., Ltd. (TEX) Thailand Petrochemicals 50.00 50.00

Joint Ventures of PTT Exploration and Production Public Co., Ltd.

Project Country Operator Shareholding Percentage

2006 2005

Unocal III Thailand Chevron Thailand Exploration and Production Limited 5.00 5.00

E5 Thailand Exxon Mobil Exploration and Production Korat Inc. 20.00 20.00

Phu Horm Thailand Hess (Thailand) Limited 20.00 20.00

(Block E5 North)

S1 Thailand PTTEP Siam Limited 25.00 25.00

Bongkot Thailand PTT Exploration and Production Public Co., Ltd. 44.4445 44.4445

Pailin Thailand Chevron Thailand Exploration and Production Limited 45.00 45.00

Arthit Thailand PTT Exploration and Production Public Co., Ltd. 80.00 80.00

Joint Ventures of PTTEP International Limited


2006 2005

Yetagun Myanmar Petronas Carigali Myanmar (Hong Kong) Ltd. 19.3178 19.3178

Yadana Myanmar Total E&P Myanmar 25.50 25.50

Bongkot Thailand PTTEP International Limited 44.4445 44.4445

(Block B13/38)

Joint Development Thailand - Carigali - PTTEPI Operating Company Sdn. Bhd. 50.00 50.00

Area Thailand - Malaysia

Malaysia-B17

(Block B-17 &

B-17-01)

G4/43 Thailand Chevron Offshore (Thailand) Limited 15.00 15.00

Cambodia B Cambodia PTTEP International Limited 30.00 30.00


Joint Ventures of PTTEP Offshore Investment Co., Ltd. (PTTEPO)


2006 2005

B8/32 & 9A1) Thailand Chevron Offshore (Thailand) Co., Ltd. 25.0010 25.0010

Indonesia Indonesia PT Medco E&P Merangin - 39.00

Merangin-12)

Joint Ventures of PTTEP Kim Long Vietnam Co., Ltd.


2006 2005

Vietnam B Vietnam Chevron Vietnam (Block B), Ltd. 8.50 8.50

& 48/95

Joint Ventures of PTTEP Southwest Vietnam Co., Ltd.


2006 2005

Vietnam 52/97 Vietnam Chevron Vietnam (Block 52), Ltd. 7.00 7.00

Joint Ventures of PTTEP Hoan-Vu Co., Ltd.


2006 2005

Vietnam 9-2 Vietnam Hoan-Vu Joint Operating Company 25.00 25.00

Joint Ventures of PTTEP Hoang-Long Co., Ltd.


2006 2005

Vietnam 16-1 Vietnam Hoang-Long Joint Operating Company 28.50 28.50

Joint Ventures of PTTEP Algeria Co., Ltd.


2006 2005

Algeria 433a Algeria Petro Vietnam Investment and Development Company 35.00 35.00

& 416b

Joint Ventures of PTTEP Siam Limited


2006 2005

Phu Horm Thailand Hess (Thailand) Limited 20.00 20.00

(Block EU-1)

S1 Thailand PTTEP Siam Limited 75.00 75.00


Joint Ventures of PTTEP (Thailand) Limited


2006 2005

Bongkot Thailand PTTEP (Thailand) Limited 44.4445 -

(Block G12/48)

Arthit (Block G9/48) Thailand PTTEP (Thailand) Limited 84.00 -

Joint Ventures of PTTEP Merangin Co., Ltd.


2006 2005

Indonesia Indonesia PT Medco E&P Merangin 39.00 -

Merangin-12)

Joint Ventures of PTTEP Bengara I Co., Ltd.


2006 2005

Indonesia Bengara-1 Indonesia PT Medco E&P Bengara 40.00 -

1) PTTEPO held shares in Orange Energy Limited and B8/32 Partners Limited, which were concession holders in this project.

2) In 2006, PTTEPO transferred its total shareholding in this project to PTTEP Merangin Co., Ltd.


10.3 Investments accounted for under the equity method as of December 31, 2006 and 2005

Consolidated

Unit : Million Baht Shareholding

Percentage 2006 2005 Dividends

Allowance for Allowance for

share of net share of net

Cost Equity loss over Cost Equity loss over

Company 2006 2005 method method investments method method investments 2006 2005

Associates:

Refining

Business Group

1. TOP 49.54 49.54 11,483.09 28,093.30 - 11,483.09 23,927.80 - 5,053.24 1,819.17

2. SPRC 36.00 36.00 14,770.48 14,733.04 - 14,770.48 12,509.94 - - -

3. RRC 48.75 - 8,515.39 19,095.76 - - - - - -

4. BCP 29.75 - 4,060.18 4,511.24 - - - - 15.67 -

Oil Business

Group

5. THAPPLINE 34.04 34.04 2,682.35 - - 2,682.35 - - - -

6. TLBC 48.95 48.95 140.00 120.38 - 140.00 97.75 - - -

7. PA (Thailand) 35.00 35.00 131.25 - - 131.25 - - - -

8. PA (Sanshui) - 25.00 - - - 7.17 6.07 - - -

9. VLPG 45.00 45.00 87.35 96.40 - 87.35 114.00 - - -

10. KPL 40.00 40.00 21.49 12.56 - 21.49 11.27 - - -

11. FST 25.00 25.00 1.13 1.10 - 1.13 0.94 - - -

Petrochemicals

Business Group

12. ATC 49.83 49.99 4,423.12 5,539.21 - 4,423.12 3,851.99 - 966.05 1,331.54

13. IRPC (TPI) 31.50 31.50 20,363.81 21,674.38 - 20,364.91 20,364.91 - - -

14. VNT 24.98 23.02 3,297.39 3,273.54 - 3,070.87 3,127.28 - 171.70 -

15. EFT 22.65 22.65 2.26 7.43 - 2.26 6.88 - 0.52 -

Exploration &

Production and Gas

Business Group

16. IPT 20.00 20.00 400.19 915.58 - 400.19 556.84 - - -

17. AMATA NGD 50.00 50.00 80.00 197.71 - 80.00 177.47 - 60.00 -

18. TP 26.00 26.00 2,304.76 1,961.34 - 2,304.76 1,824.01 - 91.33 73.06

Total 72,764.24 100,232.97 - 59,970.42 66,577.15 - 6,358.51 3,223.77


The Company







Subsidiaries:

1. PTTEP 66.13 66.32 9,615.13 62,443.79 - 9,483.34 51,724.45 - 7,188.49 3,904.67

2. PTTT 100.00 100.00 2.50 186.70 - 2.50 53.81 - - -

3. PTTCL 100.00 100.00 0.23 - (22.87) 0.23 - (58.16) - -

4. SBECL 100.00 100.00 1,154.81 514.29 - 0.41 - (1,016.57) - -

5. PTTNGD 58.00 58.00 418.14 890.49 - 418.14 819.30 - 377.00 324.80

6. PTTLNG 100.00 100.00 50.00 25.13 - 13.25 9.53 - - -

7. BPE - 50.00 - - - 1,694.06 1,531.64 - - -

8. PTTPE - 50.00 - - - 900.00 875.74 - - -

9. PTTPM 75.00 50.00 30.00 46.51 - 20.00 24.79 - - -

10. RRC - 100.00 - - - 13,862.35 20,406.00 - - -

11. EnCo 50.00 50.00 400.00 389.54 - 400.00 397.86 - - -

12. RBA 49.00 49.00 0.49 26.49 - 0.49 15.92 - - -

13. PPCL 40.00 40.00 1,080.00 1,017.57 - 320.00 303.45 - - -

14. PTTUT 40.00 40.00 1,017.00 946.98 - 563.00 552.63 - - -

15. PTTCH 55.19 50.03 35,753.32 49,507.64 - 15,714.28 26,327.08 - 4,260.10 -

16. PTTICT 20.00 - 30.00 29.66 - - - - - -

17. PTTPL 100.00 - 300.00 298.48 - - - - - -

Associates:

Refinings

Business Group

18. TOP 49.54 49.54 11,483.09 28,107.99 - 11,483.09 23,927.80 - 5,053.24 1,819.17

19. SPRC 36.00 36.00 14,770.48 14,733.04 - 14,770.48 12,509.94 - - -

20. RRC 48.75 - 8,515.39 19,095.76 - - - - - -

21. BCP 29.75 - 4,060.18 4,511.24 - - - - 15.67 -

Oil Business Group

22. THAPPLINE 34.04 34.04 2,682.35 - - 2,682.35 - - - -

23. TLBC 48.95 48.95 140.00 120.38 - 140.00 97.75 - - -

24. PA (Thailand) 35.00 35.00 131.25 - - 131.25 - - - -

25. PA (Sanshui) - 25.00 - - - 7.17 6.07 - - -

26. VLPG 45.00 45.00 87.35 96.40 - 87.35 114.00 - - -

27. KPL 40.00 40.00 21.49 12.56 - 21.49 11.27 - - -

Petrochemicals

Business Group

28. ATC 49.82 49.99 4,423.12 6,170.09 - 4,423.12 4,065.98 - 966.05 1,331.54

29. IRPC (TPI) 31.50 31.50 20,363.81 22,061.26 - 20,364.91 20,364.91 - - -


The Company (Continued)







Exploration &

Production and Gas

Business Group

30. IPT 20.00 20.00 400.19 915.58 - 400.19 556.84 - - -

31. TP 26.00 26.00 2,304.76 2,442.09 - 2,304.76 2,304.76 - 91.33 -

Joint Ventures:

Exploration &

Production and Gas

Business Group

32. TTM (T) 50.00 50.00 5,110.00 5,018.73 - 4,240.00 3,018.55 - - -

33. TTM (M) 50.00 50.00 281.32 248.27 - 281.32 237.88 - - -

34. DCAP 35.00 35.00 350.00 293.63 - 350.00 333.21 - - -

Petrochemicals

Business Group

35. PTTAC 47.50 - 66.50 66.18 - - - - - -

36. HMC 41.44 - 9,117.12 9,712.64 - - - - - -

Total 134,160.02 229,929.11 (22.87) 105,079.53 170,591.16 (1,074.73) 17,951.88 7,380.18

10.4 Movements in investments accounted for under the equity method for the year ended December31, 2006 are as follows:



- Share of net income from investments under the equity method 19,139.45 52,537.61

- Dividends received (6,358.51) (17,951.88)

- Reclassifications 17,165.76 98.17

- Additional investments 4,181.38 28,057.33

- Business acquisition (Note 34) - 9,117.12

- Investment disposal - (3,750.00)

- Business disposal (Note 35) - (10,452.87)

- Amortization of negative goodwill (Note 35) - 2,132.71

- Share of net loss over investments - (1,051.86)

- Unrealized gain on available-for-sale securities (13.23) (12.85)

- Surplus on dilution of investments 300.90 808.00

- Currency translation differences (10.78) (193.53)

- Adjustment of inter-company accounts (749.15) -



10.5 Movements in allowance for share of net loss over investments as of December 31, 2006 are asfollows:


Balance as of December 31, 2005 - (1,074.73)

- Share of net income from investments under the equity method - 55.28

- Debt to equity conversion - 1,154.40

- Currency translation differences - 356.46

- Reclassifications - (514.28)

Balance as of December 31, 2006 - (22.87)

10.6 The Companyûs share of the net assets and operating results of joint ventures included in theconsolidated financial statements as of December 31, 2006 and 2005 is detailed as follows:

Balance Sheets:

As of December 31, 2006 and 2005

Unit : Million Baht 2006 2005

TTM (T) TTM (M) DCAP PTTAC HMC TTM (T) TTM (M) DCAP PTTAC HMC

Current assets 1,535.65 89.12 200.63 13.03 4,149.17 941.24 128.29 58.36 - -

Non-current assets 13,526.64 770.05 986.47 53.56 3,940.60 12,539.88 797.22 835.86 - -

Current liabilities (1,166.22) (24.31) (123.48) (0.41) (1,060.29) (826.62) (18.69) (55.26) - -

Non-current liabilities (8,877.34) (586.59) (770.00) - (708.55) (9,635.95) (668.94) (505.75) - -

Net assets 5,018.73 248.27 293.62 66.18 6,320.93 3,018.55 237.88 333.21 - -

Statements of Income:

For the years ended December 31, 2006 and 2005


TTM (T) TTM (M) DCAP PTTAC HMC TTM (T) TTM (M) DCAP PTTAC HMC

Revenues 2,534.37 110.61 306.46 0.07 4,175.24 9.17 6.93 15.26 - -

Expenses (1,404.19) (84.32) (346.05) (0.39) (3,341.51) (883.10) (4.09) (21.19) - -

Gain (loss) before

income taxes 1,130.18 26.29 (39.59) (0.32) 833.73 (873.93) 2.84 (5.93) - -

Income taxes - (0.59) - - (90.88) - (1.22) - - -

Net income (loss) 1,130.18 25.70 (39.59) (0.32) 742.85 (873.93) 1.62 (5.93) - -


10.7 Significant events occurring during the year ended December 31, 2006

PTTEP

During the year ended December 31, 2006, warrants were exercised to purchase ordinary shares in PTTEP under

its Employee Stock Ownership Program (ESOP) as detailed in Note 24. The effect from the dilution of investments

amounting to Baht 80.84 million was recognized as a surplus on dilution of investments in subsidiaries and associates,

presented in the balance sheet under shareholders’ equity.

In addition, after the exercise of warrants in the fourth quarter of 2006, the Company acquired additional ordinary

shares in PTTEP of 1.37 million shares from third parties amounting to Baht 131.78 million. Consequently, as of December

31, 2006 the Company’s shareholding in PTTEP was 66.13%. Goodwill arising from the acquisition was Baht 95.16 million.

ATC

The Company’s shareholding in ATC has decreased from 49.99% to 49.82% as of December 31, 2006 due to

the exercise of warrants to purchase ordinary shares in ATC under its Employee Stock Ownership Program (ESOP)

as detailed in Note 24. The effect from the dilution of investments amounting to Baht 6.65 million was recognized

as a surplus on dilution of investments in subsidiaries and associates, presented in the balance sheet under

shareholders’ equity.

PTTLNG

On January 19, 2006, PTTLNG called for payment from the Company for the total remaining unpaid shares

amounting to Baht 36.75 million. The Company paid for these shares on February 28, 2006.

PTTPE

On January 25, 2006, PTTPE called for payment from shareholders for the total remaining unpaid shares

amounting to Baht 500 million, including the Company’s portion of Baht 250 million. The Company paid for these shares

on February 22, 2006.

PPCL

PPCL’s extraordinary shareholders’ meetings No. 1/2006 held on February 15, 2006 and No. 2/2006 held on March 2,

2006 respectively passed and confirmed a resolution to increase the authorized share capital of PPCL by Baht

3,200 million from Baht 800 million to Baht 4,000 million by issuing 32 million additional ordinary shares at a par value

of Baht 100 each. PPCL called for the first payment of Baht 1,200 million from shareholders. The Company paid for

its portion of 40% amounting to Baht 480 million.

PPCL’s extraordinary shareholders’ meetings No. 3/2006 held on August 2, 2006 and No. 4/2006 held on August 18,

2006 respectively passed and confirmed a resolution to increase the authorized share capital of PPCL by Baht

1,400 million from Baht 4,000 million to Baht 5,400 million by issuing 14 million additional ordinary shares at a par value

of Baht 100 each. PPCL called for the first payment of Baht 700 million from shareholders. The Company paid for its

portion of 40% amounting to Baht 280 million. However, PTTCH purchased PPCL’s additional shares for only

a certain part of its entire investment portion, and ATC purchased the remaining of PTTCH’s portion. As a result, PTTCH’s

shareholding in PPCL decreased from 40% to 30%, and ATC’s shareholding in PPCL increased from 20% to 30%.

BCP

On April 10, 2006, the Company’s shareholding in BCP decreased from 7.60% to 7.56% as convertible debenture

shareholders exercised their convertible debentures to purchase 3.50 million ordinary shares. The effect from the

dilution of investments amounting to Baht 96.67 million was recognized as a surplus on dilution of investments in

subsidiaries and associates, presented in the balance sheet under shareholders’ equity.


On March 16, 2006, the Company’s board of directors’ meeting No. 3/2006 passed a resolution to invest in additional

ordinary shares and convertible debentures of BCP, with an investment limit of USD 120 million.

On April 21, 2006, the Company and BCP co-signed a Share Subscription Agreement under which the Company

would purchase additional ordinary shares in BCP at a price of Baht 14 per share and convertible debentures at

a conversion price of Baht 14 per share, with an investment limit of USD 120 million.

On May 16, 2006, the Company acquired 280.68 million additional ordinary shares in BCP at a price of Baht 14 per

share amounting to Baht 3,954.86 million, including directly related acquisition costs of Baht 25.34 million. Consequently,

the Company’s shareholding in BCP increased from 7.56% to 29.75%, and BCP’s status changed from a related

company to an associate. Goodwill arising from the acquisition was Baht 257.08 million.

In addition, on the same day, the Company acquired 58,560 units of BCP’s convertible debentures at a price of

Baht 10,000 per unit and a conversion price of Baht 14 per share as mentioned in Note 11.

IRPC (TPI)

In the second quarter of 2006, the Company started recognizing an investment in TPI under the equity method

as a result of an order from the Central Bankruptcy Court issued on April 26, 2006 to terminate the Business

Reorganization Plan for TPI and its subsidiaries. On April 27, 2006, the annual general meeting of TPI’s shareholders

No. 1/2006 approved the appointment of representatives from the Company to participate in the management and

determination of financial and operating policies of TPI. The initial recognition of the investment in TPI under the equity

method resulted in the difference of Baht 4,589.55 million between the acquisition costs and the book value of TPI’s

identifiable assets and liabilities for the Company’s portion.

On October 26, 2006, TPI’s extraordinary shareholders’ meeting No. 2/2006 passed the resolutions to change

the company’s name from Thai Petrochemical Industrial Public Co., Ltd. to IRPC Public Co., Ltd. and to change its seal.

On October 31, 2006, TPI registered the change of the company’s name with the registrar at the Ministry of Commerce,

and changed its security symbol from “TPI” to “IRPC”.

PTTUT

During the year ended December 31, 2006, PTTUT called for payment from shareholders for its additional shares

of Baht 1,135 million. The Company paid for its portion of 40% amounting to Baht 454 million.

PTTUT’s extraordinary shareholders’ meetings No. 3/2006 held on December 1, 2006 and No. 4/2006 held on

December 20, 2006 respectively passed and confirmed a resolution to increase the authorized share capital of PTTUT

by Baht 3,384 million from Baht 3,475 million to Baht 6,859 million by issuing 33.84 million additional ordinary shares at

a par value of Baht 100 each. PTTUT called for payment of Baht 36.91 per share whereby the Company’s portion of

40% amounted to Baht 499.64 million. However, as of December 31, 2006 PTTUT was in the process of registering

the increase in share capital with the Ministry of Commerce. As a result, the Company accounted for this amount as

advance payment for share subscription.

TTM (T)

In the second quarter of 2006, TTM (T) called for payment from shareholders for its additional shares of Baht 1,740

million. The Company paid for its portion of 50% amounting to Baht 870 million.

RRC

On June 5, 2006, RRC made an Initial Public Offering (IPO) for its 1,397.50 million ordinary shares, comprising

520 million additional ordinary shares and 877.50 million existing ordinary shares held by the Company at an IPO price

of Baht 18 per share. The Company offered its 877.50 million shares jointly with RRC resulting in a gain on disposal

of investments amounting to Baht 7,130.48 million as detailed in Note 35. After the IPO, the Company’s shareholding

in RRC decreased from 100% to 49.99%, and RRC’s status changed from a subsidiary to an associate. A surplus on

dilution of investments in subsidiaries and associates amounting to Baht 420.57 million was recognized in the balance

sheet under shareholders’ equity.


On July 7, 2006, RRC registered its additional issued and paid-up share capital of 71.39 million shares, since an

over-allotment agent had exercised its rights under the green-shoe options to purchase newly issued shares from

RRC. As a result, the Company’s shareholding in RRC decreased from 49.99% to 48.75%. A surplus on dilution of

investments in subsidiaries and associates amounting to Baht 142.19 million was recognized in the balance sheet

under shareholders’ equity.

PTTCH

During the year ended December 31, 2006, the Company acquired 9.17 million additional ordinary shares in

PTTCH from third parties amounting to Baht 747.60 million. In addition, on September 28, 2006, PTTCH’s extraordinary

shareholders’ meeting No. 1/2006 approved the issuance and offer of 358,974,300 additional ordinary shares in

PTTCH to existing shareholders at a price of Baht 78 per share, which were subsequently sold. On December 1, 2006,

the Company paid for a total of 247.33 million additional ordinary shares in PTTCH amounting to Baht 19,291.43 million.

As a result, the Company’s shareholding in PTTCH increased from 50.03% to 55.19%. Goodwill arising from the

acquisition was Baht 1,943.90 million.

PTTICT

On June 26, 2006, the Company, PTTEP, PTTCH, TOP and ATC jointly established PTT ICT Solutions Co., Ltd.

(PTTICT) with the objectives of providing all information and communication technology (ICT) services as well as

developing new ICT potentials to increase business operation capacity. The initial service receivers were those

companies who are currently PTTICT’s shareholders and affiliates of the Group. PTTICT had initial authorized share

capital of Baht 150 million, comprising 15 million shares at a par value of Baht 10 per share. Each of the shareholder

companies had a 20% shareholding, representing the Company’s investment portion of Baht 30 million, and PTTICT

became a subsidiary of the Company.

PA (Sanshui)

On November 16, 2005, the Company, together with existing shareholders of PA (Sanshui) entered into a contract

to transfer the ownership rights in the total ordinary shares of PA (Sanshui) held by them to transferees at a price of

Yuan 4 million (equivalent to Baht 19.16 million). The transfer is currently being processed. As of December 31, 2006,

the Company accounted for the investment in PA (Sanshui) as a current investment.

PTTAC

On August 1, 2006, the Company, together with Asahi Kasei Chemicals Corporation (AKCC) and Marubeni

Corporation (Marubeni) jointly established PTT Asahi Chemical Co., Ltd. (PTTAC) with authorized share capital of Baht

200 million, comprising two million ordinary shares at a par value of 100 Baht each. The investment proportions of

the Company, AKCC and Marubeni were 47.50%, 47.50%, and 5% of the authorized share capital, respectively. The

first share payment was called at Baht 35 per share, whereby the Company’s portion amounted to Baht 33.25 million.

As a result of the acquisition, PTTAC became joint ventures of the Company.

On October 31, 2006, PTTAC’s board of directors’ meeting No. 2/2006 passed a resolution to call for the second

payment for the authorized share capital at Baht 35 per share, whereby the Company’s portion amounted to Baht

33.25 million.

HMC

On August 3, 2006, the Company acquired existing ordinary and preferred shares in HMC Polymers Co., Ltd.

(HMC) from existing shareholders as well as additional shares in HMC, totalling Baht 9,117.12 million. The Company’s

shareholding was 41.44% of the authorized and paid-up share capital. As a result of the acquisition, HMC became

joint ventures of the Company. Goodwill arising from the acquisition was Baht 3,539.17 million as detailed in Note 34.


PTTPM

On August 23, 2006, the Company’s board of directors’ meeting No. 8/2006 approved the acquisition of all of the

ordinary shares in PTTPM held by BPE, representing a 25% shareholding, comprising 100,000 shares at a price of Baht

100 per share, totalling Baht 10 million. On September 4, 2006, the Company made payment for these ordinary shares.

After the acquisition, the shareholdings of the Company and PTTCH were 75% and 25%, respectively.

PTTPL

On September 11, 2006, the Company registered the establishment of PTT Polymer Logistics Co., Ltd. (PTTPL)

with the objective of providing logistics services to petrochemicals affiliates of the Company. PTTPL had authorized

share capital of Baht 1,200 million, consisting of 12 million shares at a par value of Baht 100 each. The Company had

a shareholding of 100% in PTTPL, and therefore, PTTPL became a subsidiary of the Company. On August 31, 2006,

the Company made the first share payment for a 25% shareholding amounting to Baht 300 million in accordance with

the resolution of the meeting held on August 8, 2006 regarding the establishment of PTTPL.

PTTPE and BPE

On October 2, 2006, the Company sold all of its ordinary shares in PTTPE and BPE to PTTCH, amounting to 11.50

million shares and 85 million shares, respectively in accordance with the resolution of the board of directors’ meeting

No. 8/2006 held on August 23, 2006. The Company received payments for these shares from PTTCH amounting to

Baht 1,750 million and Baht 2,000 million, respectively. After the disposal, PTTCH was the only major shareholder of

PTTPE and BPE with a shareholding of 100% of the total paid-up share capital of each company.

SBECL

On July 1, 2006, two subsidiaries of SBECL changed their company names from Subic Bay Distribution, Inc. (SBDI)

to PTT Philippines Corporation (PTTPC), and from Subic Bay Fuels Company, Inc. (SBFCI) to PTT Philippines Trading

Corporation (PTTTC).

On November 17, 2006, SBECL registered its additional share capital of 31.62 million shares amounting to USD

31.62 million (approximately Baht 1,154.40 million) in accordance with a Joint Restructuring Agreement and the

resolution of the Company’s board of directors’ meeting No. 4/2001 held on April 26, 2001, which approved the conversion

of debt to equity amounting to USD 31.62 million. However, the Company has still maintained its shareholding of 100%.

VNT (An associate of PTTCH)

During the first quarter of 2006, PTTCH acquired 59 million shares in VNT from third parties amounting to Baht

226.52 million. As a result, PTTCH’s shareholding in VNT increased from 23.02% to 24.98%.

11. Other Long-term InvestmentsDetails of other long-term investments as of December 31, 2006 and 2005 are as follows:



General investments 1,271.49 540.01 337.52 249.77

Investments in available-for-sale

securities

- Investments in equity instruments 336.00 441.32 336.00 441.32

- Investments in debt securities 585.60 - 585.60 -

- Investments in mutual funds 300.45 - - -

Add Allowance for changes

in value of investments 635.78 1,107.99 635.00 1,107.99

Total 3,129.32 2,089.32 1,894.12 1,799.08


11.1 Details of other long-term investments of the Company



2006 2005

Petro Asia (Huizhou) Co., Ltd. (PA (Huizhou)) China Oil marketing 25.00 25.00

Petro Asia (Shantou) Co., Ltd. (PA (Shantou)) China Oil marketing 15.00 15.00

PTT Mart Co., Ltd. (PTT Mart) Thailand Management services 49.00 49.00

Fuel Pipeline Transportation Co., Ltd. (FPT) Thailand Oil pipeline 2.76 2.76

Intoplane Services Co., Ltd. (IPS) Thailand Aircraft 16.67 16.67

refuelling services

Ratchaburi Power Co., Ltd. (RPCL) Thailand Electricity 15.00 15.00

generation

Dhipaya Insurance Public Co., Ltd. (TIP) Thailand Insurance 13.33 13.33

Bangkok Aviation Fuel Services Thailand Aircraft 7.06 7.06

Public Co., Ltd. (BAFS) refuelling services

Bangchak Petroleum Public Co., Ltd. (BCP) Thailand Refining - 7.60

11.2 Details of other long-term investments of subsidiaries



2006 2005

Other Long-term Investments of PTTCH:

Alliance Petrochemical Investment Singapore Petrochemicals 16.67 16.67

(Singapore) Pte. Ltd. (API)

Other Long-term Investments of HMC:

Rayong Olefins Co., Ltd. (ROC) Thailand Petrochemicals 5.91 -

Basell Advanced Polyolefins (Thailand) Thailand Petrochemicals 2.07 -

Co., Ltd. (BAPT)

11.3 Other long-term investments as of December 31, 2006 and 2005

Shareholding

Company Percentage Consolidated The Company Dividends

Unit : Million Baht 2006 2005 2006 2005 2006 2005 2006 2005

General Investments

1. PA (Huizhou) 25.00 25.00 15.16 15.16 15.16 15.16 - -

2. PTT Mart 49.00 49.00 78.40 78.40 78.40 78.40 - -

3. FPT 2.76 2.76 44.00 44.00 44.00 44.00 - -

4. IPS 16.67 16.67 0.02 0.02 0.02 0.02 - -

5. PA (Shantou) 15.00 15.00 60.84 60.84 60.84 60.84 - -

6. RPCL 15.00 15.00 337.50 249.75 337.50 249.75 - -

7. API 16.67 16.67 290.24 290.24 - - - -

8. ROC 5.91 - 643.73 - - - 428.02 -

9. BAPT 2.07 - 18.19 - - - - -

Total investments accounted for

under the cost method 1,488.08 738.41 535.92 448.17

Less Allowance for impairment

of investments 216.59 198.40 198.40 198.40

Total general investments 1,271.49 540.01 337.52 249.77


Shareholding

Company Percentage Consolidated The Company Dividends

Unit : Million Baht 2006 2005 2006 2005 2006 2005 2006 2005

Investments in Available-for-sale

Securities

Investments in Equity Instruments

10. TIP 13.33 13.33 312.00 312.00 312.00 312.00 48.00 30.40

11. BAFS 7.06 7.06 24.00 24.00 24.00 24.00 17.10 9.90

12. BCP - 7.60 - 105.32 - 105.32 - -

Total investments in equity

instruments 336.00 441.32 336.00 441.32

Investments in Debt Securities 585.60 - 585.60 -

Investments in Mutual Funds 300.45 - - -

Add Allowance for changes in

value of investments 635.78 1,107.99 635.00 1,107.99

Total investments in

available-for-sale securities 1,857.83 1,549.31 1,556.60 1,549.31

Total other long-term investments 3,129.32 2,089.32 1,894.12 1,799.08 493.12 40.30

11.4 Movements in other long-term investments for the year ended December 31, 2006 are as follows:



- Unrealized loss on available-for-sale-securities (472.21) (472.99)

- Additional investments 1,635.72 673.35

- Allowance for impairment of investments (18.19) -

- Reclassifications (105.32) (105.32)


11.5 Significant events occurring during the year ended December 31, 2006

RPCL

During the year ended December 31, 2006, RPCL increased its authorized share capital from Baht 1,665 million to

Baht 2,325 million, and called for payment from shareholders for the additional share capital amounting to Baht 585

million. The Company paid for its portion of 15% amounting to Baht 87.75 million.

The Group accounted for investments in certain associates under the cost method, adjusted by allowance for

impairment of investments, since the Company intended to dispose of these investments.

In the consolidated financial statements, allowance for impairment of investments in associates and other related

companies of Baht 216.59 million comprised allowance for impairment of investments in PTT Mart, PA (Huizhou), FPT,

PA (Shantou) and BAPT amounting to Baht 78.40, 15.16, 44.00, 60.84 and 18.19 million, respectively. In the Company’s

financial statements, the allowance amounted to Baht 198.40 million.

Investments in Debt Securities

On May 16, 2006, the Company acquired 58,560 units of name registered non-transferable unsecured

subordinated convertible debentures of BCP No. 1/2006, at a par value of Baht 10,000 per unit amounting to Baht 585.60

million. The interest rate is 3% per annum, payable every six months with a redemption period of 10 years starting

from the date of debenture issuance. The debentures can be converted into BCP’s ordinary shares at a conversion

price of Baht 14 per share unless there is a subsequent revision of the conversion price in compliance with a condition

under the right adjustments.


Investments in Mutual Funds

On May 25, 2006, PTTCH reclassified investments in mutual funds from trading securities to available-for-sale

securities due to changes in PTTCH’s investment policies.

12. Property, Plant and Equipment, NetProperty, plant and equipment as of December 31, 2006 and 2005 are as follows:

Consolidated

Unit : Million Baht Buildings Oil

and Machinery and

building and gas Other Construction

Land improvements equipment properties assets in progress Total

Cost

As of December 31, 2005 4,897.20 17,799.72 201,859.78 162,761.20 10,665.49 74,357.17 472,340.56

- Business acquisition (Note 34) - 81.48 1,704.50 - 87.03 112.16 1,985.17

- Business disposal (Note 35) (152.48) (1,280.17) (49,665.96) - - (413.87) (51,512.48)

- Additions 475.72 395.56 2,518.53 38,723.87 1,307.79 49,487.92 92,909.39

- Borrowing costs - - - - - 2,881.90 2,881.90

- Reclassifications 1,366.37 352.55 31,441.00 - 226.15 (35,723.05) (2,336.98)

- Disposal - (4.87) (231.40) (1,420.62) (307.63) (12.15) (1,976.67)

- Currency translation differences - (0.14) (3.70) (1,009.04) (1.29) (43.12) (1,057.29)

As of December 31, 2006 6,586.81 17,344.13 187,622.75 199,055.41 11,977.54 90,646.96 513,233.60

Accumulated Depreciation

As of December 31, 2005 - (8,632.76) (84,747.13) (65,667.67) (7,253.93) - (166,301.49)

- Business acquisition (Note 34) - (56.61) (1,123.35) - (69.08) - (1,249.04)

- Business disposal (Note 35) - 401.30 16,081.63 - - - 16,482.93

- Depreciation for the year - (832.61) (9,100.97) (14,487.80) (1,036.67) - (25,458.05)

- Reclassifications - (8.46) 706.25 - (145.91) - 551.88

- Disposal - 5.80 81.22 (1.18) 227.48 - 313.32

- Currency translation differences - 0.07 2.77 219.31 (2.46) - 219.69

As of December 31, 2006 - (9,123.27) (78,099.58) (79,937.34) (8,280.57) - (175,440.76)

Allowance for Impairment of Assets

As of December 31, 2005 (42.87) (373.13) (244.96) - - - (660.96)

As of December 31, 2006 (42.87) (373.13) (244.96) - - - (660.96)

Net Book Value

As of December 31, 2005 4,854.33 8,793.83 116,867.69 97,093.53 3,411.56 74,357.17 305,378.11

As of December 31, 2006 6,543.94 7,847.73 109,278.21 119,118.07 3,696.97 90,646.96 337,131.88


The Company

Unit : Million Baht Buildings Machinery

and building and Other Construction

Land improvements equipment assets in progress Total

Cost

As of December 31, 2005 2,684.44 12,270.45 108,454.72 7,450.01 46,058.79 176,918.41

- Additions 63.55 126.77 1,441.14 768.64 32,379.57 34,779.67

- Borrowing costs - - - - 2,778.17 2,778.17

- Reclassifications 1,117.08 230.44 7,108.15 41.82 (9,098.25) (600.76)

- Disposal - (4.87) (37.59) (237.22) - (279.68)

As of December 31, 2006 3,865.07 12,622.79 116,966.42 8,023.25 72,118.28 213,595.81

Accumulated Depreciation

As of December 31, 2005 - (6,684.68) (54,282.95) (5,340.97) - (66,308.60)

- Depreciation for the year - (513.53) (5,054.88) (706.16) - (6,274.57)

- Reclassifications - - 0.10 - - 0.10

- Disposal - 2.45 36.28 192.26 - 230.99

As of December 31, 2006 - (7,195.76) (59,301.45) (5,854.87) - (72,352.08)


As of December 31, 2005 (42.87) (373.13) (244.96) - - (660.96)

As of December 31, 2006 (42.87) (373.13) (244.96) - - (660.96)

Net Book Value

As of December 31, 2005 2,641.57 5,212.64 53,926.81 2,109.04 46,058.79 109,948.85

As of December 31, 2006 3,822.20 5,053.90 57,420.01 2,168.38 72,118.28 140,582.77

Borrowing costs of Baht 2,881.90 million in the consolidated financial statements (December 31, 2005: Baht 1,458.40

million) and Baht 2,778.17 million in the Company’s financial statements (December 31, 2005: Baht 1,346.02 million)

were capitalized as part of costs of property, plant and equipment. The Group used capitalization rates ranging from

4.00% to 7.23% (December 31, 2005: from 4.00% to 5.00%).

Buildings, manufacturing plants, machinery and equipment of Baht 17,686.37 million in the consolidated financial

statements were used as collateral for long-term loans of Baht 6,764.29 million (the Company’s financial statements:

none).

As of December 31, 2006 and 2005, the assets acquired under finance leases included in other assets are

vehicles. Details are as follows:



Cost 851.71 163.20 546.74 162.21

Less Accumulated depreciation 214.84 45.96 73.77 45.42

Net book value 636.87 117.24 472.97 116.79


13. Intangible AssetsIntangible assets as of December 31, 2006 and 2005 are as follows:

Consolidated

Unit : Million Baht Leasehold Other

Computer rights/rights operating Negative

software to use rights Goodwill goodwill Total

Cost

As of December 31, 2005 1,648.56 7,863.94 1,217.37 11,714.31 (6,504.95) 15,939.23

- Business acquisition (Note 34) 37.69 - 186.45 - - 224.14

- Business disposal (Note 35) (66.44) (1,068.70) - - 6,504.95 5,369.81

- Additions 247.75 485.09 312.65 5,736.65 - 6,782.14

- Reclassifications 42.51 676.56 107.34 - - 826.41

- Disposal (6.21) (41.28) - - - (47.49)

- Currency translation differences (0.03) (1.11) (4.42) - - (5.56)

As of December 31, 2006 1,903.83 7,914.50 1,819.39 17,450.96 - 29,088.68

Accumulated Amortization

As of December 31, 2005 (964.48) (2,492.21) (139.07) (423.22) 704.70 (3,314.28)

- Business acquisition (Note 34) (15.17) - (140.38) - - (155.55)

- Business disposal (Note 35) 5.26 335.59 - - (3,108.45) (2,767.60)

- Amortization for the year (203.97) (318.83) (93.50) (886.96) 2,403.75 900.49

- Reclassifications (0.46) (0.68) (107.34) - - (108.48)

- Disposal 3.59 20.35 - - - 23.94

- Currency translation differences 0.06 0.68 2.48 18.11 - 21.33

As of December 31, 2006 (1,175.17) (2,455.10) (477.81) (1,292.07) - (5,400.15)


As of December 31, 2005 - (1,096.09) - - - (1,096.09)

- Reversal of loss on

impairment of assets - 4.48 - - - 4.48

As of December 31, 2006 - (1,091.61) - - - (1,091.61)

Net Book Value

As of December 31, 2005 684.08 4,275.64 1,078.30 11,291.09 (5,800.25) 11,528.86

As of December 31, 2006 728.66 4,367.79 1,341.58 16,158.89 - 22,596.92


The Company

Unit : Million Baht Leasehold

Computer rights/rights Other operating

software to use rights Total

Cost

As of December 31, 2005 624.80 6,103.81 51.55 6,780.16

- Additions 74.81 187.80 - 262.61

- Reclassifications 17.91 582.84 - 600.75

- Disposal (0.98) (16.62) - (17.60)

As of December 31, 2006 716.54 6,857.83 51.55 7,625.92

Accumulated Amortization

As of December 31, 2005 (456.36) (2,017.88) (33.87) (2,508.11)

- Amortization for the year (111.15) (251.99) (5.18) (368.32)

- Reclassifications (0.06) - - (0.06)

- Disposal 0.98 6.98 - 7.96

As of December 31, 2006 (566.59) (2,262.89) (39.05) (2,868.53)


As of December 31, 2005 - (1,096.09) - (1,096.09)

- Reversal of loss on

impairment of assets - 4.48 - 4.48

As of December 31, 2006 - (1,091.61) - (1,091.61)

Net Book Value

As of December 31, 2005 168.44 2,989.84 17.68 3,175.96

As of December 31, 2006 149.95 3,503.33 12.50 3,665.78

14. Income Taxes and Deferred Income TaxesDetails of applicable income taxes for the Group are as follows:

Tax Rates

Petroleum income tax on petroleum business in Thailand

pursuant to the Petroleum Income Tax Act, B.E. 2514 (1971) and B.E. 2532 (1989) 50%

Income tax under the Revenue Code 30%

- Exemption for total net income of the Company for five accounting

periods from 2002 to 2006 25%

- Exemption for net income of PTTEP not exceeding Baht 300 million for

five accounting periods from 2002 to 2006 25%

Corporate income tax in the Union of Myanmar 30%

Corporate income taxes in other countries in the Southeast Asia region 20% - 35%


Income taxes recognized in the consolidated and the Company’s statements of income for the years ended

December 31, 2006 and 2005 are as follows:



Petroleum income tax

Current income tax 18,279.93 13,496.11 - -

Deferred income tax 1,059.28 (220.44) - -

Total petroleum income tax 19,339.21 13,275.67 - -

Income tax under the Revenue Code

Current income tax 13,236.62 10,609.33 8,623.05 8,092.77

Deferred income tax 651.60 (257.28) (34.95) 412.40

Total income tax under the Revenue Code 13,888.22 10,352.05 8,588.10 8,505.17

Corporate income tax in the Union of Myanmar

Current income tax 2,433.81 1,667.73 - -

Deferred income tax 136.76 230.65 - -

Total corporate income tax in the Union of Myanmar 2,570.57 1,898.38 - -

Corporate income taxes in the Southeast Asia region

Current income tax 70.90 25.50 - -

Deferred income tax 13.81 14.01 - -

Total corporate income taxes in other countries

in the Southeast Asia region 84.71 39.51 - -

Total income tax expenses 35,882.71 25,565.61 8,588.10 8,505.17

Deferred income taxes presented in the consolidated and the Company’s balance sheets as of December 31, 2006

and 2005 are as follows:


Deferred tax assets


As of December 31, 2005 1,862.25 1,184.78

Business disposal (Note 35) (693.10) -

Income tax expenses 51.15 34.95

As of December 31, 2006 1,220.30 1,219.73


As of December 31, 2005 (9.08) -

Income tax expenses 9.08 -

As of December 31, 2006 - -



Corporate income tax in the Philippines

As of December 31, 2005 45.24 -

Current income tax - MCIT 14.18 -

Income tax expenses (28.38) -

As of December 31, 2006 31.04 -

Corporate income tax in Singapore

As of December 31, 2005 0.04 -


As of December 31, 2006 0.43 -

Total deferred tax assets 1,251.77 1,219.73

Deferred tax liabilities


As of December 31, 2005 274.50 277.00

Income tax expenses 584.51 (118.25)

As of December 31, 2006 859.01 158.75


As of December 31, 2005 10,816.31 -


As of December 31, 2006 11,450.99 -

Corporate income tax in the Union of Myanmar

As of December 31, 2005 1,594.43 -

Income tax expenses (65.21) -

As of December 31, 2006 1,529.22 -

Total deferred tax liabilities 13,839.22 158.75

Deferred tax assets mainly comprised allowance for doubtful accounts and accumulated depreciation of property,

plant and equipment. Deferred tax liabilities mainly comprised accumulated depreciation of property, plant and equipment,

amortization of decommissioning costs and unrealized gain on revaluation of decommissioning costs.

15. Advance Payment for Gas PurchasedAdvance payment for gas purchased as of December 31, 2006 and 2005 is as follows:



Less Make-up during the period 3,148.44 3,945.00



The Company paid in advance for the committed gas volumes purchased from the Yadana and Yetagun gas fields

in the Union of Myanmar irrespective of take-up in 1999-2001, in accordance with the established minimum volumes

stated in the Export Gas Sales Agreements (Take-or-Pay). The Company has the rights to take the prepaid gas (Make-up)

in subsequent years, without expiry.

16. Other Non-current AssetsOther non-current assets as of December 31, 2006 and 2005 are as follows:



Retention and refundable deposits 112.46 143.15 36.12 31.74

Prepaid expenses 1,821.47 947.04 29.54 25.08

Inventories - legal reserve 9,158.70 12,800.76 9,158.70 7,921.22

Others 182.45 690.31 29.58 509.14

Total 11,275.08 14,581.26 9,253.94 8,487.18

The Fuel Oil Trading Act B.E. 2543 (2000) categorizes the Company as an oil trader under section 7 of this Act to

protect against and resolve fuel oil shortages. This Act prescribes that the oil traders under section 7 must reserve fuel

oil in accordance with the categories and volumes set by the Director General of the Department of Energy Business.

The Company currently reserves 5% of the trading volume, which is informed to the Director General of the Department

of Energy Business, the Ministry of Energy.

17. Bank Overdrafts and Short-term Loans from Financial InstitutionsBank overdrafts and short-term loans from financial institutions of the Group as of December 31, 2006 and 2005

are short-term loans from financial institutions, bearing interest at rates ranging from 6.20% to 8.25% per annum and

from 2.00% to 3.64% per annum, respectively.

18. Other Current LiabilitiesOther current liabilities as of December 31, 2006 and 2005 are as follows:



Other accounts payable 6,989.62 7,316.47 3,289.47 4,360.55

Accounts payable - forward foreign

exchange contracts (purchase), net 42.43 39.31 25.20 24.39

Advances received 125.53 185.64 67.89 121.24

Undue output VAT 2,640.08 1,859.13 2,311.33 1,648.94

Retention (due not later than 1 year) 783.13 656.57 21.72 15.83

Others 1,933.18 1,959.16 642.30 399.52

Total 12,513.97 12,016.28 6,357.91 6,570.47

Accounts payable - forward foreign exchange contracts (purchase) resulted from entering into forward foreign

exchange contracts to hedge risks arising from the fluctuations of the USD currency value associated with the repayment

of foreign loans and the import of raw materials.


19. Long-term LoansLong-term loans as of December 31, 2006 and 2005 are as follows:

Current Portion of Long-term Loans



Loans - Baht currency 12,258.15 8,356.35 11,000.00 8,000.00

Loans - Foreign currencies 391.85 671.13 391.85 431.56

Bonds - Baht currency 1,750.58 4,257.14 - -

Bonds - Foreign currencies 7,002.59 8,234.09 - -

Liabilities from finance leases 208.97 108.03 101.18 52.94

Total 21,612.14 21,626.74 11,493.03 8,484.50

Long-term Loans



Loans - Baht currency 52,940.73 68,569.63 44,400.00 55,400.00

Loans - Foreign currencies 29,315.14 22,259.54 19,852.01 10,895.95

Bonds - Baht currency 72,181.70 53,814.29 70,118.00 50,000.00

Bonds - Foreign currencies 43,327.16 53,119.79 30,309.76 30,366.98


Total 198,339.31 197,983.34 165,066.44 146,743.07

The Company’s loans as of December 31, 2006 amounting to Baht 46,741.52 million (December 31, 2005: Baht

55,492.59 million) are secured by the Ministry of Finance.

The loans of three subsidiaries amounting to Baht 6,764.29 million in the consolidated financial statements as of

December 31, 2006 (December 31, 2005: Baht 6,571.43 million) are secured by machinery, buildings, manufacturing

plants and structures. In addition, the Group has commitments in accordance with the stipulated conditions.

On April 5, 2006, the Company signed a loan agreement of Yen 23,000 million with a maturity period of 30 years,

the principal of which is repayable once at maturity. The interest is charged in USD, payable every six months at a rate

of 4.45% per annum. On the same day, the Company entered into a Participating Swap contract (P-SWAP) to swap Yen

for USD, equivalent to USD 196.94 million with a P-SWAP premium of approximately 1% per annum of the USD principal.

The maturity date is April 7, 2036.

On November 14, 2006, the Company signed a loan agreement of USD 300 million with a maturity period of

seven years, bearing interest at a floating rate of LIBOR + 0.265% per annum, payable every six months. The principal

is repayable in installments of USD 37.5 million every six months from May 2010 to November 2013.

On September 26, 2006, a subsidiary signed a loan agreement for the Phenol Project with five local financial

institutions totalling Baht 8,320 million. The loan agreement comprised a long-term loan of Baht 6,320 million and

a short-term loan of Baht 2,000 million with a maturity period of 13 years and a grace period of three years, bearing

interest at a rate equivalent to the six-month fixed deposit rate plus 2.5% to 2.625% per annum. As of December 31, 2006,

the subsidiary drew down Baht 1,000 million of the long-term loan in accordance with the loan agreement.


Long-term loans as of December 31, 2006 and 2005 can be classified by interest rate categories as follows:



Floating interest rate 29,669.67 28,500.36 13,210.76 3,092.59

Fixed interest rate 190,281.79 191,109.72 163,348.71 152,134.98

Total 219,951.46 219,610.08 176,559.47 155,227.57

Interest rates charged on long-term loans as of December 31, 2006 and 2005 are as follows:


2006 2005 2006 2005

PTT bonds 3.49% - 8.75% 3.49% - 8.91% 3.49% - 8.75% 3.49% - 8.91%

Loans - Baht currency 3.52% - 9.06% 3.38% - 9.06% 9.06% 8.83% - 9.06%

Loans - Foreign currencies

- US Dollar 5.35% - 6.78% 3.00% - 6.29% 5.35% - 5.94% 3.00% - 6.29%

- Japanese Yen 4.45% - 4.45% -

Bonds - Baht currency 2.70% - 7.40% 2.70% - 5.95% 4.25% - 7.40% 4.25% - 5.95%

Bonds - Foreign currencies 3.85% - 7.86% 3.85% - 7.86% 4.55% - 5.88% 5.75% - 5.88%

Liabilities from finance leases 1.75% - 10.00% 1.75% - 10.00% 5.50% - 8.10% 5.50% - 8.10%

19.1 Loans

Movements of loans in Baht currency and foreign currencies as of December 31, 2006 and 2005 are as follows:

Consolidated

Unit : Million Currency Total equivalent

Baht US Dollar Yen in Baht

Balance as of December 31, 2005 76,925.97 356.97 - 91,621.73

- Business acquisition (Note 34) 745.97 - - 745.97

- Business disposal (Note 35) (11,000.00) (150.00) - (16,734.89)

- Additions 5,933.15 615.00 23,000.00 36,752.01

- Repayments (8,375.00) (166.30) - (14,724.02)

- Gain on exchange rate - - - (2,754.93)

- Current portion (12,258.15) (26.37) - (12,650.00)

Balance as of December 31, 2006 51,971.94 629.30 23,000.00 82,255.87

The Company

Unit : Million Currency Total equivalent

Baht US Dollar Yen in Baht

Balance as of December 31, 2005 63,400.00 75.11 - 66,492.59

- Additions - 300.00 23,000.00 18,429.53

- Repayments (8,000.00) (10.48) - (8,431.56)

- Gain on exchange rate - - - (846.70)

- Current portion (11,000.00) (10.82) - (11,391.85)

Balance as of December 31, 2006 44,400.00 353.81 23,000.00 64,252.01


19.2 Bonds

Bonds as of December 31, 2006 and 2005 are as follows:

Consolidated

Unit : Million December 31, 2006 December 31, 2005

Baht USD Baht USD

Unsecured unsubordinated bonds

- USD currency 50,329.75 1,390.67 61,353.87 1,491.62

- Baht currency 73,932.28 - 58,071.43 -

Less Current portion

- USD currency (7,002.59) (193.28) (8,234.09) (200.00)

- Baht currency (1,750.58) - (4,257.14) -

Total 115,508.86 1,197.39 106,934.07 1,291.62

The Company

Unit : Million December 31, 2006 December 31, 2005

Baht USD Baht USD


- USD currency 30,309.76 836.57 30,366.98 737.52

- Baht currency 70,118.00 - 50,000.00 -

Total 100,427.76 836.57 80,366.98 737.52

The Company and the Group issued bonds and entered into various cross currency and interest rate swap contracts

for some of their bonds. Details are as follows:

On June 20, 2005, the Company issued unsecured unsubordinated bonds for sales to financial institutional

investors with a principal amount of Baht 4,040 million and a redemption period of 10 years at a fixed interest rate of

4.75% per annum. However, the Company entered into a cross currency swap contract to swap Baht bonds for USD

bonds amounting to USD 100 million at a fixed interest rate of 4.55% per annum, to be redeemed on June 20, 2015.

On August 25, 2005, the Company issued unsecured unsubordinated Baht bonds for sales to financial institutional

investors with a principal amount of Baht 4,118 million and a redemption period of 15 years at a fixed interest rate of

5.95% per annum. However, the Company entered into a cross currency swap contract to swap Baht bonds for USD

bonds amounting to USD 100 million at a fixed interest rate of 5.48% per annum, to be redeemed on August 25, 2020.

In addition, on November 17 and November 22, 2006, the Company signed an agreement with a financial institution for

the cancellation of commitments in accordance with a cross currency swap contract to swap Baht currency of Baht

4,118 million at an interest rate of 5.48% per annum for USD currency of USD 100 million at a fixed interest rate of 4.55%

per annum. In cancelling the agreement, the Company received compensation from the financial institution amounting

to Baht 465 million. Consequently, the Company has commitments in Baht currency as before.

On May 23, 2006, the Company issued two lots of unsecured unsubordinated bonds for sales to general investors

and financial institutional investors with principal amounts of Baht 2,970 million and Baht 1,030 million and redemption

periods of 10 years and 15 years, respectively. The interest is fixed at 6.17% and 6.53% per annum, payable every

six months with redemption dates of May 23, 2016 and May 23, 2021, respectively.


On October 12, 2006, the Company issued two lots of unsecured unsubordinated bonds for sales to general investors

and financial institutional investors with principal amounts of Baht 4,000 million and Baht 8,000 million, and redemption

periods of five years and 10 years, respectively. The interest is fixed at 5.53% and 5.79% per annum, payable every

six months with redemption dates of October 12, 2011 and October 12, 2016, respectively.

On March 27, 2003, PTTEP issued 2,500,000 unsecured unsubordinated bonds at a face value of Baht 1,000

each, totalling Baht 2,500 million with a redemption period of 15 years. The bonds bear interest at a rate of 4.625%

per annum, payable every six months on March 27 and September 27 of every year. However, PTTEP entered into

a cross currency swap contract to swap Baht bonds for the USD currency of USD 60.82 million at an interest rate of

3.85% per annum, to be redeemed on March 27, 2018.

19.3 Liabilities from Finance Leases

Liabilities from finance leases as of December 31, 2006 and 2005 are as follows:



Liabilities from finance leases

- Not more than 1 year 252.66 119.78 132.49 60.28

- More than 1 year and not more than 5 years 620.73 241.14 420.86 87.50

Future finance charges (89.84) (32.80) (65.50) (14.70)

Present value of liabilities from finance leases 783.55 328.12 487.85 133.08

Present value of liabilities from finance leases

- Current liabilities (Not more than 1 year) 208.97 108.03 101.18 52.94

- Non-current liabilities (More than 1 year

and not more than 5 years) 574.58 220.09 386.67 80.14

Total 783.55 328.12 487.85 133.08

The maturity of long-term loans as of December 31, 2006 and 2005 are as follows:

Consolidated

Unit : Million Baht 2006

Loans- Loans- Bonds- Bonds- Liabilities

foreign Baht foreign Baht from finance

currencies currency currencies currency leases Total

Not more than 1 year 391.85 12,258.15 7,002.59 1,750.58 208.97 21,612.14

More than 1-2 years 405.21 8,656.26 - 1,263.70 207.80 10,532.97

More than 2-5 years 8,948.61 30,560.89 - 19,100.00 366.78 58,976.28

More than 5 years 19,961.33 13,723.58 43,327.16 51,818.00 - 128,830.07

Total 29,707.00 65,198.88 50,329.75 73,932.28 783.55 219,951.46


Consolidated





Not more than 1 year 671.13 8,356.35 8,234.09 4,257.14 108.03 21,626.74

More than 1-2 years 1,085.59 11,904.73 7,958.11 1,757.14 91.07 22,796.64

More than 2-5 years 3,540.27 29,417.64 - 2,057.15 129.02 35,144.08

More than 5 years 17,633.69 27,247.25 45,161.68 50,000.00 - 140,042.62

Total 22,930.68 76,925.97 61,353.88 58,071.43 328.12 219,610.08

The Company





Not more than 1 year 391.85 11,000.00 - - 101.18 11,493.03

More than 1-2 years 405.21 8,000.00 - - 109.08 8,514.29

More than 2-5 years 6,744.78 26,400.00 - 18,300.00 277.59 51,722.37

More than 5 years 12,702.02 10,000.00 30,309.76 51,818.00 - 104,829.78

Total 20,243.86 55,400.00 30,309.76 70,118.00 487.85 176,559.47

The Company





Not more than 1 year 431.56 8,000.00 - - 52.94 8,484.50

More than 1-2 years 445.32 11,000.00 - - 22.53 11,467.85

More than 2-5 years 1,433.41 26,400.00 - - 57.61 27,891.02

More than 5 years 9,017.22 18,000.00 30,366.98 50,000.00 - 107,384.20

Total 11,327.51 63,400.00 30,366.98 50,000.00 133.08 155,227.57

20. Provision for Decommissioning CostsThe Group recognized provision for liabilities as of December 31, 2006 for decommissioning costs expected to

be incurred in the future as follows:

Unit : Million Baht Consolidated

Balance as of December 31, 2005 7,019.36

Exchange rate differences (839.62)

Provision for liabilities during the year 4,532.65

Balance as of December 31, 2006 10,712.39


21. Other Non-current LiabilitiesOther non-current liabilities as of December 31, 2006 and 2005 are as follows:



Retention (due later than 1 year) 869.55 477.67 676.94 327.17

Provision for loss on lawsuits 218.60 12.60 218.60 12.60

Deferred revenues 335.35 328.81 227.49 240.21

Other advances received 282.43 457.79 275.68 435.34

Pension Fund 23.25 30.10 4.72 4.01

Others 587.18 381.08 - -

Total 2,316.36 1,688.05 1,403.43 1,019.33

22. Share CapitalAs of December 31, 2006, the Company had authorized share capital of 2,857,245,725 ordinary shares (as of

December 31, 2005: 2,837,245,725 ordinary shares) with a par value of Baht 10 per share. The issued and fully

paid-up share capital comprised 2,804,925,625 ordinary shares (as of December 31, 2005: 2,797,245,725 ordinary

shares). Details are as follows:

On April 26, 2006, the Company registered an increase in share capital with the Ministry of Commerce amounting

to Baht 200 million from Baht 28,372.46 million to Baht 28,572.46 million through the issue of 20,000,000 additional

ordinary shares at a par value of Baht 10 each. As a result, the number of authorized ordinary shares of the Company

increased from 2,837,245,725 shares to 2,857,245,725 shares.

Details of the issue and offer of warrants are as follows: «—π∑’ËÕÕ°·≈– Õ—μ√“°“√„™â ‘∑∏‘

Exercise right The number of The number of

Date of issue Exercise price (warrant per exercised warrants unexercised warrants Last exercise date

and offer of warrants (Baht per share) ordinary share) (Million units) (Million units) of warrants

September 1, 2005 183 1 : 1 7.68 32.32 August 31, 2010

September 29, 2006 234 1 : 1 - 20.00 September 28, 2011

7.68 52.32

23. Reserves

23.1 Legal Reserve

Under the Public Limited Companies Act B.E. 2535 (1992), the Company is required to appropriate not less than

5% of its annual net income as legal reserve until the reserve fund reaches 10% of its authorized share capital. The

legal reserve is non-distributable.

On April 26, 2006, the Company appropriated its net income of Baht 7,245,725 as legal reserve. Accordingly,

the balance of the legal reserve as of December 31, 2006 is Baht 2,857.25 million which has reached 10% of the

Company’s authorized share capital, as stipulated in the Act.


23.2 Reserve for Self-insurance Fund

Reserves for Self-insurance Fund as of December 31, 2006 and 2005 are detailed as follows:


Balance as of December 31, 2005 841.40 841.40

Appropriated net income for the year 2006 46.72 46.72

Balance as of December 31, 2006 888.12 888.12

The Self-insurance Fund was set up with the objective of providing insurance coverage solely for the Company’s

business. The Company has annually appropriated its net income from operations and interest income from the fund, to

the fund.

24. Earnings per ShareBasic earnings per share is calculated by dividing the net income attributable to ordinary shareholders by the

weighted average number of ordinary shares held by third parties during the period.

For the calculation of diluted earnings per share, the Company assumes that all warrants of the Group allocated

to directors, management and employees are converted into ordinary shares. Due to the total exercise of those

warrants, the net income of the Group recognized in the Company’s financial statements is adjusted by decreases

in shareholding proportions. The number of diluted shares is calculated by considering a market price (an average

market price of the Company’s ordinary shares during the period) and exercise prices. This calculation is prepared to

determine the number of ordinary shares to be added to ordinary shares held by third parties for the calculation of diluted

earnings per share.

The calculation of basic earnings per share and diluted earnings per share in the consolidated and the Company’s

financial statements for the years ended December 31, 2006 and 2005 is detailed as follows:

Basic Earnings per Share Diluted Earnings per Share

2006 2005 2006 2005

Net income attributable to ordinary

shareholders before extraordinary

items (Baht) 95,260,603,360 80,104,496,160 95,260,603,360 80,104,496,160

Adjustment of net income (Baht) - - (63,743,020) (46,419,088)

Net income before extraordinary

items for the calculation of

earnings per share (Baht) 95,260,603,360 80,104,496,160 95,196,860,340 80,058,077,072

Extraordinary items (Baht) - 5,416,796,542 - 5,416,796,542

Net income for the calculation

of earnings per share (Baht) 95,260,603,360 85,521,292,702 95,196,860,340 85,474,873,614

Weighted average number of ordinary

shares for the calculation of earnings

per share (Shares) 2,799,752,669 2,797,245,725 2,808,118,415 2,799,953,629

Net income before extraordinary items

(Baht/share) 34.02 28.63 33.90 28.59

Extraordinary items (Baht/share) - 1.94 - 1.94

Earnings per share (Baht/share) 34.02 30.57 33.90 30.53


The adjustment of net income resulted from the issue of name registered non-transferable warrants to purchase

ordinary shares, by the Company and the Group to their directors, management and employees.

Information regarding the issue of warrants to purchase ordinary shares to the Company’s employees is provided

in Note 22.

PTTEP

On April 12, 2006, PTTEP registered a split in par value of its ordinary shares from Baht 5 per share of 664.40

million shares to Baht 1 per share of 3,322 million shares, totalling Baht 3,322 million.

As a result of the registration of the split in par value of its ordinary shares, the number of ordinary shares reserved

for the exercise of warrants under PTTEP’s Employee Stock Ownership Program allocated to employees changed

from 12.40 million shares to 62 million shares, and the exercise rights (warrant per ordinary share) and exercise prices

also changed. Details are as follows:




August 1, 2002 22.2 1 : 5 9.65 0.35 July 31, 2007

August 1, 2003 23.4 1 : 5 7.05 2.95 July 31, 2008

August 1, 2004 36.6 1 : 5 6.41 7.59 July 31, 2009

August 1, 2005 55.6 1 : 5 2.89 11.11 July 31, 2010

August 1, 2006 91.2 1 : 5 - 14.00 July 31, 2011

26.00 36.00

ATC

Details of the issue and offer of warrants to purchase ordinary shares allocated to ATC’s employees are as follows:




February 2, 2004 10 1 : 1 11.55 3.05 November 23, 2007

PTTCH

Details of the issue and offer of warrants to purchase ordinary shares allocated to PTTCH’s employees are as

follows:




September 29, 2006 66.50 1 : 1 - 29 September 28, 2011


25. Sales and ServicesSales and services for the years ended December 31, 2006 and 2005 are as follows:



Oil products 857,446.01 651,892.12 883,609.72 700,697.34

Gas products 223,916.98 213,570.37 248,221.81 213,724.45

Petrochemical products 135,405.82 67,676.16 55,200.76 52,678.02

Utility products 3,608.12 - - -

Services 6,457.06 2,112.64 - -

Less Petroleum royalties and remuneration 12,848.71 8,981.95 - -

Total 1,213,985.28 926,269.34 1,187,032.29 967,099.81

Sales and services for the years ended December 31, 2006 and 2005 include sales and services to government

agencies and state enterprises amounting to Baht 97,954.89 million in the consolidated financial statements (2005:

Baht 103,804.87 million), and amounting to Baht 97,184.52 million in the Company’s financial statements (2005: Baht

102,809.92 million).

26. Other IncomeOther income for the years ended December 31, 2006 and 2005 is as follows:



Interest income 3,197.86 1,497.85 1,584.91 2,303.26

Penalty income 370.05 271.33 564.56 247.14

Transportation income 5,252.20 3,276.31 6,075.48 5,273.87

Dividend income 493.12 40.30 65.10 40.30

Compensation for loan interest for

advance payment for gas purchased 3,544.26 2,221.33 3,544.26 2,221.33

Gain on foreign exchange 9,924.88 0.68 4,944.11 -

Others 2,439.35 2,127.87 2,189.11 2,659.13

Total 25,221.72 9,435.67 18,967.53 12,745.03

In the Company’s financial statements for the year ended December 31, 2005, loss on foreign exchange of Baht

234.52 million is included in the selling and administrative expenses.

Other income for the year ended December 31, 2005 includes revenues from the settlement of a dispute

between the Company and a foreign contractor over a breach of the construction contract for the laying of the Rayong-

Bangpakong-Wang Noi onshore parallel natural gas pipelines. After the settlement of the dispute, the damage claims

recorded by the Company decreased by Baht 826.07 million.

Compensation for loan interest for advance payment for gas purchased (Take-or-Pay) represents the Company’s

compensation received from the Electricity Generating Authority of Thailand (EGAT) and the Independent Power

Plants (IPPs) to absorb interest on the loans obtained by the Company for advance payment for gas purchased.


27. Share of Net Income from Investments under the Equity MethodShare of net income from investments under the equity method for the years ended December 31, 2006 and 2005

includes share of gain (loss) on foreign exchange as follows:



Share of net income before gain (loss) on foreign exchange 15,312.53 22,725.09 44,293.51 53,836.57

Add share of gain (loss) on foreign exchange 3,826.92 (1,073.83) 8,244.10 (852.13)

Total 19,139.45 21,651.26 52,537.61 52,984.44

28. Extraordinary ItemsIn November 2004, the board of directors of the Company approved a short-term loan to RRC amounting to

USD 1,134.75 million (Baht 44,255.25 million), bearing interest at a rate of LIBOR + 2.5% per annum for the refinancing

of RRC’s loans. On January 17, 2005, the lenders reduced their loans to RRC by USD 200.25 million (Baht 7,738.28

million), equivalent to 15% of the original loans of USD 1,335 million. Consequently, the loans were reduced to USD

1,134.75 million (Baht 44,255.25 million).

Gain from debt restructuring of Baht 7,738.28 million (USD 200.25 million) is presented as an extraordinary item

in the consolidated statement of income for the year ended December 31, 2005 amounting to Baht 5,416.80 million,

net of income tax of Baht 2,321.48 million.

29. Operating IncomeThe following items, classified by natures, were charged in arriving at the operating income for the years ended

December 31, 2006 and 2005:



Gain (loss) on foreign exchange 9,924.88 0.68 4,944.11 (234.52)

Depreciation of property, plant and equipment

- Owned assets 25,311.26 17,440.88 6,187.76 6,266.53

- Assets under finance leases 146.79 38.20 86.81 37.99

Amortization of intangible assets

- Negative goodwill (1,516.78) (460.92) - -

- Other intangible assets 616.29 460.15 368.32 315.08

Reversal of loss on impairment of property,

plant and equipment

- Current operations (4.48) (43.76) (4.48) -

Staff costs 9,626.18 6,647.02 4,753.42 4,088.02


30. Interest ExpensesInterest expenses for the years ended December 31, 2006 and 2005 are as follows:



Loans from financial institutions 5,534.17 4,925.37 3,847.37 4,512.35

Bonds 4,626.35 3,541.49 2,834.61 2,123.51


Others 813.00 338.44 619.25 145.60

Total 11,005.62 8,811.66 7,320.02 6,787.34

31. Segment InformationThe financial information classified by business segments in the consolidated financial statements for the years

ended December 31, 2006 and 2005 is as follows:

Consolidated

For the year ended December 31, 2006

Unit : Million Baht Petroleum

Natural exploration and Petro-

Oil Gas production Refining chemicals Others Elimination Total

Sales - others 930,391.06 192,554.24 19,566.30 12,288.59 72,033.80 - - 1,226,833.99

- related parties 65,051.46 52,129.69 69,701.06 64,100.51 4,642.27 - (255,624.99) -

Petroleum royalties

and remuneration - - (12,848.71) - - - - (12,848.71)

Net sales 995,442.52 244,683.93 76,418.65 76,389.10 76,676.07 - (255,624.99) 1,213,985.28

Gross margin 12,860.66 43,958.71 55,308.48 5,907.21 24,177.77 - (443.28) 141,769.55

EBITDA 5,003.40 44,805.96 63,313.21 6,468.88 24,334.12 (619.55) (631.17) 142,674.85

Depreciation and amortization 2,054.19 5,571.19 14,898.52 740.83 2,691.66 48.22 750.42 26,755.03

EBIT 2,949.21 39,234.77 48,414.69 5,728.05 21,642.46 (667.77) (1,381.59) 115,919.82

Share of net income

(loss) from associates 0.17 80.24 (8.66) - 215.16 52,537.61 (33,685.07) 19,139.45

Interest-net (7,838.86)

Other income 12,650.43

Gain on foreign exchange 9,924.88

Income taxes (35,882.71)

Minority interests (18,652.41)

Net Income 95,260.60





Segment assets 132,128.60 208,468.68 149,317.62 - 116,940.40 43,113.43 - 649,968.73

Inter-company assets 1,225.95 11,182.03 8,076.58 - 719.91 1,252.30 (22,456.77) -


the equity method 1.10 197.71 419.21 - 6,554.54 93,060.41 - 100,232.97

Total segment assets 133,355.65 219,848.42 157,813.41 - 124,214.85 137,426.14 (22,456.77) 750,201.70

Non-allocated assets 1,251.77

Total Assets 751,453.47

Segment liabilities 71,620.30 48,747.95 52,016.14 - 27,836.82 183,070.68 - 383,291.89

Inter-company liabilities 2,998.47 6,687.30 4,215.23 - 4,588.72 3,967.05 (22,456.77) -

Total segment liabilities 74,618.77 55,435.25 56,231.37 - 32,425.54 187,037.73 (22,456.77) 383,291.89

Non-allocated liabilities 13,839.22

Total Liabilities 397,131.11

Capital Expenditure 2,942.95 35,375.73 39,419.22 31.63 13,844.88 2,408.94 - 94,023.35

Consolidated

For the year ended December 31, 2005




Sales - others 698,245.43 181,124.07 12,333.29 28,435.17 15,113.33 - - 935,251.29

- related parties 107,017.57 27,805.72 56,021.76 112,840.20 409.94 - (304,095.19) -

Petroleum royalties

and remuneration - - (8,981.95) - - - - (8,981.95)

Net sales 805,263.00 208,929.79 59,373.10 141,275.37 15,523.27 - (304,095.19) 926,269.34

Gross margin 12,176.67 40,905.28 44,804.48 13,158.19 2,117.98 - 2,017.93 115,180.53

EBITDA 7,252.65 42,109.57 50,051.48 13,205.20 1,739.86 (375.52) 61.39 114,044.63

Depreciation and amortization 2,088.53 4,813.42 9,429.93 1,337.35 426.68 16.47 (633.79) 17,478.59

EBIT 5,164.12 37,296.15 40,621.55 11,867.85 1,313.18 (391.99) 695.18 96,566.04

Share of net income

(loss) from associates 0.02 68.39 206.60 - (5.67) 52,984.44 (31,602.52) 21,651.26

Interest-net (7,302.27)

Other income 3,352.13

Gain on foreign exchange 0.69

Income taxes (25,565.62)

Extraordinary items 5,416.80

Minority interests (8,597.74)

Net Income 85,521.29





Segment assets 108,789.70 166,541.98 137,868.86 56,763.23 73,068.23 38,299.05 - 581,331.05

Inter-company assets 17,093.69 13,311.18 5,023.35 7,987.58 447.84 12,114.24 (55,977.88) -


the equity method 0.93 177.47 397.86 - 6,523.48 59,477.41 - 66,577.15

Total segment assets 125,884.32 180,030.63 143,290.07 64,750.81 80,039.55 109,890.70 (55,977.88) 647,908.20

Non-allocated assets 1,898.46

Total Assets 649,806.66

Segment liabilities 56,414.31 39,234.99 54,241.51 16,559.15 26,967.07 165,271.45 - 358,688.48

Inter-company liabilities 10,251.61 2,801.49 4,970.27 22,600.16 4,206.98 11,147.37 (55,977.88) -

Total segment liabilities 66,665.92 42,036.48 59,211.78 39,159.31 31,174.05 176,418.82 (55,977.88) 358,688.48

Non-allocated liabilities 12,685.24

Total Liabilities 371,373.72

Capital Expenditure 2,141.74 40,443.33 55,528.82 285.04 1,763.49 722.97 - 100,885.39

Pricing among business segments is based on normal market prices except for pricing among business sectors

within the Company for which net market prices, after the deduction of management fees with respect to petroleum

terminals and operating fees, are applied.

EBITDA means Earnings before interest expenses, finance costs, income taxes, depreciation and amortization,

including other expenses and income not relevant to operations.

EBIT means Earnings before interest expenses, finance costs, income taxes, including other expenses and

income not relevant to operations.

The Group categorizes segments for major business as follows:

Oil Business

The Group conducts oil business, which can be categorized into two income generating activities, in both domestic

and overseas markets.

1. Oil marketing: marketing of fuel oil and lubricant products through channels of retail, commercial and

international markets.

2. Oil trading: international trading, import and export of crude oil, fuel oil products, raw materials and

petrochemicals products.

Natural Gas Business

The Group conducts natural gas business including procurement, natural gas pipeline transmission, natural gas

separation and distribution in both domestic and overseas markets.

Exploration and Production Petroleum Business

The Group conducts exploration and production petroleum business in both domestic and overseas markets.

The Group is the operator and jointly invests with leading exploration and production companies. Most domestic

projects are located in the Gulf of Thailand. Overseas projects cover the Asia Pacific and Middle East regions.


Refining Business

The Group conducts refining business, including the production and distribution of finished oil products for both

domestic and overseas customers.

Petrochemicals Business

The Group conducts petrochemicals business, including the procurement of feedstock for petrochemicals plants,

and the production and distribution of main petrochemicals products and by-products, for both domestic and overseas

markets.

Other operations of the Group mainly represent other segments, none of which constitutes a separately reportable

segment.

32. Disclosure of Financial InstrumentsThe Company has faced principal financial risks with respect to the fluctuations of exchange rates, interest rates,

and oil and gas prices in the world market. Some of the Company’s sale, purchase and borrowing transactions are

denominated in foreign currencies. In addition, the Company’s borrowings to finance its operations bear interest at

both fixed and floating rates. As a result, the Company’s management has entered into derivative instrument contracts

to hedge all potential risk exposure. The strategies for hedging risks comprise forward foreign exchange contracts

and cross-currency and interest rate swap contracts. The risk exposure associated with oil prices in the world market

is managed through forward oil price contracts.

The department responsible for managing the risk exposure arising from exchange rates and oil and gas prices

in the world market, has to report to the Company’s management details of the costs and market prices of all financial

instruments, including outstanding forward foreign exchange contracts and forward oil and gas price contracts. The

reported information principally covers the risk exposure arising from:

- foreign exchange rates

- currencies and interest rates

- interest rates

- the fluctuations of oil and gas prices

- credit risks

32.1 Risks from Foreign Exchange Rates

During the year ended December 31, 2006, the Company entered into forward foreign exchange contracts

(purchase) for the procurement of raw materials and the repayment of foreign loans for a total amount of USD 163

million, equivalent to approximately Baht 5,854.99 million, maturing in January and June 2007. In addition, due to the

import of finished oil, the Company entered into forward foreign exchange contracts (sale) of USD 81.04 million, equivalent

to approximately Baht 2,925.37 million, maturing in January 2007.

The receivable amounts and exchange rates under the forward foreign exchange contracts as of December 31,

2006 and 2005 are as follows:



Forward foreign exchange contracts (purchase)

At the rates of Baht 35.0818 - 44.0560 = 1 USD 7,217.28 10,286.72 5,854.99 10,286.72

At the rates of Baht 49.5100 - 49.5130 = 1 EUR - 10.15 - -

Total 7,217.28 10,296.87 5,854.99 10,286.72

Forward foreign exchange contracts (sale)

At the rates of Baht 35.5000 - 39.3500 = 1 USD 2,934.15 334.05 2,925.37 -


32.2 Risks from Currencies and Interest Rates

The Group entered into various cross-currency and interest rate swap contracts. The terms of the outstanding

cross-currency and interest rate swap contracts as of December 31, 2006 and 2005 are as follows:



- Baht 4,040 million/USD 100 million 3,623.08 4,117.46 3,623.08 4,117.46

- Baht 4,118 million/USD 100 million - 4,117.46 - 4,117.46

- USD 60.82 million/Baht 2,500 million 2,203.82 2,500.00 - -

- USD 193.28 million/Yen 23,000 million 7,002.59 8,074.96 - -

Total 12,829.49 18,809.88 3,623.08 8,234.92

The maturity of the contracts can be analyzed as follows:



More than 1 year but not more than 5 years 7,002.59 8,074.96 - -

More than 5 years 5,826.90 10,734.92 3,623.08 8,234.92

Total 12,829.49 18,809.88 3,623.08 8,234.92

32.3 Risks from Interest Rates

The Group entered into various interest rate swap contracts. The terms of the outstanding interest rate swap

contracts as of December 31, 2006 and 2005 are as follows:



Interest rate swap contracts to swap floating

for fixed rate in Baht currency 504.13 - - -

Interest rate swap contracts to swap floating

for fixed rate in USD currency 5,028.83 - - -

Total 5,532.96 - - -

The maturity of the contracts can be analyzed as follows:



More than 1 year but not more than 5 years 264.13 - - -

More than 5 years 5,268.83 - - -

Total 5,532.96 - - -


32.4 Risks from the Fluctuations of Oil Prices

The Company has entered into forward oil price contracts. As of December 31, 2006, the outstanding forward

oil price contracts had maturity periods within January 2007. The total oil volume under such contracts was 0.12 million

barrels.

PTTT has entered into gross refinery margin swap contracts to swap floating for fixed gross refinery margin with

a total oil volume of 0.10 million barrels, maturing within one to three months.

32.5 Credit Risks

Credit risks arise when customers do not comply with the credit agreements or contracts, causing financial losses

to the Company. However, the Company conducts commercial business with customers who are large companies in

the electricity business group and large industrial sectors. In addition, collateral is requested for doing business with

other customers. Consequently, the Company has no significant credit risk.

32.6 Fair Value of Financial Instruments

The majority of the carrying values of financial assets and liabilities of the Group are classified as short-term. The

fair values of these financial assets and liabilities approximate their carrying values.

The Group calculates the fair values of long-term loans and fixed interest rate bonds by using the discounted cash

flow method based on the discounted rates of those with similar borrowing conditions. For forward foreign exchange

contracts, cross-currency and interest rate swap contracts and participating swap contracts, the Group calculates their

fair values by using the exchange rates determined by the Group’s banks as if those contracts were cancelled as of

the balance sheet dates. Forward oil and gas price contracts are presented at their fair values based on their quoted

market prices as of December 31, 2006 and 2005. Details are as follows:

Consolidated


Carrying Value Fair Value Carrying Value Fair Value

Long-term loans - Baht currency 65,198.88 66,057.69 76,925.98 78,471.76

Long-term loans - Foreign currencies 29,706.99 29,503.85 22,930.67 22,198.72

Secured unsubordinated bonds

- Baht currency 3,314.28 3,279.36 - -


- Baht currency 70,618.00 74,306.70 58,071.43 56,919.54


- Foreign currencies 50,329.75 47,029.35 61,353.88 62,975.33

Forward foreign exchange contracts

(purchase) - 27.84 - (2.15)

Forward foreign exchange contracts (sale) - 0.42 - (14.78)

Cross-currency and interest rate

swap contracts - 690.45 - 676.82

Participating swap contracts - (345.36) - -

Forward oil price contracts - 7.73 - 76.35


The Company


Carrying Value Fair Value Carrying Value Fair Value

Long-term loans - Baht currency 55,400.00 56,258.81 63,400.00 64,946.75

Long-term loans - Foreign currencies 20,243.86 20,040.72 11,327.51 10,595.56


- Baht currency 70,118.00 73,806.70 50,000.00 48,967.48


- Foreign currencies 30,309.76 26,908.92 30,366.98 30,754.24

Forward foreign exchange contracts

(purchase) - 21.02 - (2.01)

Forward foreign exchange contracts (sale) - 0.56 - -

Cross-currency and interest rate

swap contracts - 353.29 - 321.36

Participating swap contracts - (345.36) - -

Forward oil price contracts - (11.35) - 23.96

33. Dividend PaymentOn April 11, 2006, the annual general meeting of the Company’s shareholders approved a dividend payment

for the year 2005 of Baht 9.25 per share from 2,797,245,725 shares amounting to Baht 25,874.52 million. The Company

made the dividend payment to its shareholders on April 25, 2006.

On August 23, 2006, the Company’s board of directors’ meeting No. 8/2006 approved an interim dividend payment

for the operating results of the first half of 2006 at Baht 5 per share from 2,804,600,425 shares amounting to Baht

14,023 million. The Company made the interim dividend payment to its shareholders on September 22, 2006.

34. Business AcquisitionDuring the year ended December 31, 2006, the Company acquired HMC as described in Note 10.7.

Details of the net assets acquired and goodwill are as follows:

Unit : Million Baht

Purchase consideration (Note 10.4) 9,117.12

Less Fair value of net assets acquired 5,577.95

Goodwill 3,539.17

Assets and liabilities derived from the acquisition are as follows:

Unit : Million Baht

Cash and cash equivalents 2,931.33

Accounts receivable 1,267.84

Inventories, materials and supplies 668.74

Other current assets 76.59

Other long-term investments 1,757.11

Property, plant and equipment (Note 12) 736.13

Intangible assets (Note 13) 68.59

Other non-current assets 14.01

Bank overdrafts and short-term loans from banks (248.66)


Assets and liabilities derived from the acquisition are as follows: (Continued)

Unit : Million Baht

Accounts payable (859.43)

Current portion of long-term loans (Note 19.1) (37.30)

Accrued expenses (72.19)

Long-term loans (Note 19.1) (708.67)

Other non-current liabilities (16.14)

Fair value of net assets 5,577.95

Less Purchase consideration (Note 10.4) 9,117.12

Goodwill 3,539.17

35. Business DisposalOn June 5, 2006, RRC made an Initial Public Offering (IPO) for its 1,397.50 million ordinary shares, including

877.50 million shares held by the Company whereby the Company offered its 877.50 million shares jointly with RRC.

After the IPO, the Company’s shareholding in RRC decreased from 100% to 49.99%, and RRC’s status changed

from a subsidiary to an associate. A gain on disposal of investments amounting to Baht 7,130.48 million arose as detailed

in Note 10.7. The effect from the disposal of investments is detailed as follows:

Unit : Million Baht

Proceeds from disposal of investments 15,450.64

Less Investments disposed of (Note 10.4) 10,452.87

Add Amortization of negative goodwill (Note 10.4) 2,132.71

Gain on disposal of investments (Note 10.7) 7,130.48

Unit : Million Baht

Cash and cash equivalents 1,699.24

Accounts receivable 10,840.31

Inventories, materials and supplies 9,029.26

Other current assets 1,277.10

Property, plant and equipment (Note 12) 35,029.56

Intangible assets (Note 13) (2,602.21)

Deferred tax assets (Note 14) 693.10

Other non-current assets 5,564.72

Bank overdrafts and short-term loans from financial institutions (1,100.00)

Accounts payable (14,122.16)

Other current liabilities (2,462.36)

Long-term loans (Note 19.1) (16,734.89)

Other non-current liabilities (11.77)

Net shareholders’ equity 27,099.90

Less Outstanding investments after business disposal 16,647.03

Investments disposed of (Note 10.4) 10,452.87


On February 17, 2005, PTTEPO sold of all of its shares in New Links to Encore Int’l Limited and received payments

for shares and warranty claims for a total amount of Baht 9,101.84 million (USD 236.5 million). The net book value

of investment was Baht 9,679.71 million. A loss of Baht 577.87 million arose from the investment disposal.

On November 17, 2005, PTTEPO sold some of its shares in Orange Energy Limited and B8/32 Partners Limited

to Palang Sophon International Limited, for an amount of Baht 2,052.61 million while the net book value of investments

was Baht 2,026.18 million. A gain of Baht 26.43 million arose from the investment disposal.

36. ReclassificationThe Group has reclassified certain items in the consolidated and the Company’s financial statements for the year

ended December 31, 2005 to conform to the presentation of the consolidated and the Company’s financial statements

for the year ended December 31, 2006. The reclassifications do not affect the net income previously reported.

37. Promotional PrivilegesThe Company received promotional privileges from the Board of Investments (BOI) under the Investment

Promotion Act, B.E. 2520 for the Gas Separation Plant Unit 5 project, the Sai Noi - South Bangkok Power Plant gas

transmission pipeline project, the third gas offshore and onshore transmission pipeline project, the Songkhla Power

Plant gas transmission pipeline project, the District Cooling and Cogeneration at Future Park Rangsit project, the

Ethane Separation Plant project, the Suvarnabhumi - Phayathai NGV gas distribution pipeline project, and the gas

distribution pipelines to the Rojana Industrial Park project. The promotional privileges include exemption from import

duties for the machinery approved by the BOI and exemption from corporate income tax for the net income generated

from the promotional business for a period of eight years from the date of initial recognition of operating revenues.

The sales from the promotional and non-promotional business for the years ended December 31, 2006 and 2005

are detailed as follows:

The Company


Promotional business 38,014.36 28,692.51

Non-promotional business 1,149,017.93 938,407.30

Total 1,187,032.29 967,099.81

Some subsidiaries and joint ventures received promotional privileges from the BOI under the Investment Promotion

Act, B.E. 2520. Details are as follows:

PTTCH received promotional privileges for its business with respect to the production of chemicals from petroleum

feedstock, the production and distribution of polyethylene, the public utility generation, the jetty services for the storage

and handling of liquid products, and the marine shipment services at the Mab Ta Phut Industrial Estate, Rayong. The

promotional privileges cover exemption from various taxes and duties, including exemption from corporate income tax

for the net income generated from the promotional business for a period of eight years from the date of initial recognition

of operating revenues, and a 50% reduction from the normal rate of corporate income tax for the net income generated

from investments for a period of five years from the expiry date of the corporate income tax exemption.

HMC received promotional privileges for its business with respect to the production of chemicals from petroleum

feedstock. The promotional privileges cover exemption from various taxes and duties, including exemption from

corporate income tax for the net income generated from the promotional business for a period of eight years from the

date of initial recognition of operating revenues, and a 50% reduction from the normal rate of corporate income tax for the

net income generated from investments for a period of five years from the expiry date of the corporate income tax

exemption.


PTTNGD received promotional privileges which include exemption from corporate income tax for the net income

generated from the promotional business for a period of eight years from the date of initial recognition of operating

revenues and exemption from or a 100% reduction in import duties for the machinery approved by the BOI.

TTM (T) received promotional privileges for its public utility and basic services business Category 7.1 and natural

gas transmission pipeline business Category 7.7. The promotional privileges cover exemption from various taxes and

duties, including exemption from corporate income tax not exceeding Baht 13,724 million for the net income generated

from the promotional business for a period of eight years from the date of initial recognition of operating revenues.

The amount of tax exemption is adjusted in accordance with the investment amounts excluding land and effective

working capital on the date of initial operation. The promotional privileges also include a 50% reduction from the normal

rate of corporate income tax for the net income generated from investments for a period of five years from the expiry date

of the corporate income tax exemption, and exemption from import duties for the machinery approved by the BOI.

PTTUT received promotional privileges for its electricity, steam and water generation business. The promotional

privileges cover exemption from corporate income tax for the net income generated from the promotional business for

a period of eight years from the date of initial recognition of operating revenues, a 50% reduction from the normal rate

of corporate income tax for the net income generated from investments for a period of five years from the expiry date of

the corporate income tax exemption, and exemption from import duties for the machinery approved by the BOI.

DCAP received promotional privileges for its public utility and basic services business Category 7.1. The promotional

privileges cover exemption from various taxes and duties, including exemption from corporate income tax.

PPCL received promotional privileges for its phenol and acetone production business. The promotional privileges

cover exemption from corporate income tax for the net income generated from the promotional business for a period of

eight years from the date of initial recognition of operating revenues, a 50% reduction from the normal rate of corporate

income tax for the net income generated from investments for a period of five years from the expiry date of the corporate

income tax exemption, and exemption from import duties for the machinery approved by the BOI.

With the receipt of promotional privileges, the Group must comply with all conditions and regulations stated in the

Promotional Certificates.

38. Commitments and Contingent Liabilities

38.1 Commitments to subsidiaries, associates, joint ventures and other related companies are detailedas follows:

According to a condition with a financial institution, the Company entered into two Shareholder’s Commercial

Support Arrangements with its subsidiaries and associates with credit limits of USD 100 million and USD 90 million,

respectively. The Company had obligations under the arrangements in the form of extended credit for raw materials

and/or advance product payment. As of December 31, 2006, the subsidiaries and associates had not used the credit lines.

The Company had an obligation with a subsidiary in a foreign country under a commercial credit agreement in the

form of extended credit for raw materials with a credit limit of USD 100 million. As of December 31, 2006, the subsidiary

had used a commercial credit line of USD 95.23 million. The outstanding credit line was USD 4.77 million or approximately

Baht 172.82 million.

The Company entered into agreements of financial support (Sponsor Support Agreements) with two joint ventures

with a total credit limit equal to the loan obligations of the two joint ventures to a financial institution. As of December 31,

2006, the Company had outstanding commitments of USD 261.30 million or approximately Baht 9,467.11 million under

these agreements.

The Group had obligations under various Shareholder Agreements with respect to capital injections. As of

December 31, 2006, the Group had total outstanding obligations under the agreements of Baht 16,395.73 million in the

consolidated financial statements and Baht 4,063.77 million in the Company’s financial statements.


38.2 As of December 31, 2006, the Group and the Company had contingent liabilities in the form of letters of guarantee

amounting to Baht 871.44 million in the consolidated financial statements and Baht 161.71 million in the

Company’s financial statements.

38.3 On August 31, 2006, the Foundation for Consumers and a group of five individuals (the “Claimants”) filed

a complaint to the Supreme Administration Court, naming the Prime Minister, the Cabinet and the Minister of

Energy as respondents (the “Respondents”), seeking the court to order to revoke two Royal Decrees issued

under the Corporatization Act B.E. 2542 (A.D. 1999) in relation to the privatization of the Petroleum Authority

of Thailand to PTT Public Company Limited. The two Royal Decrees were the Royal Decree Determining

the Powers, Rights and Benefits of PTT Public Company Limited B.E. 2544 (A.D. 2001) and the Royal Decree

Determining the Time for Repealing the Laws Governing the Petroleum Authority of Thailand B.E. 2544 (A.D.

2001). On September 4, 2006, the Supreme Administration Court issued an order to accept this complaint. The

Respondents made a statement to the court, and the Claimants prepared a dispute over the Respondents’

statement and submitted it to the court in accordance with the procedures of the Administration Court. On

January 22, 2007, the Respondents prepared and submitted an additional statement to the court.

However, the Company filed a petition to act as a litigant in the lawsuit. On November 28, 2006, the Supreme

Administration Court issued an order to permit the Company to act as a litigant. The lawsuit is currently under

the consideration of the Supreme Administration Court.

39. Subsequent Events39.1 On January 5, 2007, PTTEPI exercised its pre-emptive right to purchase an additional participation interest

of 3.333334% in Cambodia Block B from CE Cambodia B Ltd. (CEL), resulting in an increase in its participation

interest to 33.333334%. The joint venturers have offered to pay CEL USD 3.5 million by paying an upfront amount

of USD 1 million after receiving approval from the Cambodian government. PTTEPI will be required to make

payment for the remaining amount when the production reaches 100 million barrels of oil equivalent onwards.

39.2 On January 12, 2007, PTTEP incorporated PTTEP Thai Project Company Limited with authorized share capital

of Baht 1 million, consisting of 100,000 ordinary shares at a par value of Baht 10 per share. PTTEP Thai Project

Company Limited was wholly owned by PTTEP (Thailand) Limited (a subsidiary of PTTEP).

39.3 On January 16, 2007, PTTEPO was granted Cabinet approval to be the operator in concession Block A4/48,

A5/48 and A6/48 with a 100% interest.

39.4 According to the resolution of the annual general meeting of PTTEP’s shareholders for the year 1998 to issue

and offer debentures for a total amount up to Baht 10,000 million, PTTEP issued and offered Baht debentures

totalling Baht 6,500 million. Consequently, the remaining balance from the approval was Baht 3,500 million

for the next debenture issuance. On February 12, 2007, PTTEP issued and offered 3,500,000 unsecured

unsubordinated debentures at a face value of Baht 1,000 each amounting to Baht 3,500 million. The interest is

fixed at a rate of 4.88% per annum, payable every six months as of February 12 and August 12 of every year with

a redemption period of three years, to be redeemed on February 12, 2010.

39.5 The board of directors of the Company approved these financial statements to be issued on February 23, 2007.


A U D I T F E E S O F T H E A U D I T O R S

Audit FeesPTT and subsidiaries paid for the audit fees for the latest accounting period amounting to Baht 15,556,862

(Fifteen million, five hundred and fifty-six thousand, eight hundred and sixty-two Baht.)


G L O S S A R Y O F T E C H N I C A L T E R M S

AN Acrylonitrile

API American Petroleum Institute

bbl or bbls barrel (s)

bbl/d barrel (s) per day

bcf billion cubic feet

BOE barrel of oil equivalent

BOED barrel of oil equivalent per day

Btu British thermal unit

B/MMbtu Baht/Million Btu

BZ Benzene

CHP Combined Heat and Power

CNG Compressed Natural Gas

DCSPP District Cooling System Power Plant

DDF Diesel Dual Fuel

EPPO Energy Policy and Planning Office

GDC & Cogen Gas District Cooling and Cogeneration

IPP Independent Power Producer

JDA Joint Development Area

Kbd or KBbl/d thousand barrels per day

LNG Liquefied Natural Gas

LPG Liquefied Petroleum Gas

LPG CP Liquefied Petroleum Gas Contact Price

MEG Monoethylene glycol

MMA Methyl Methacrylate

MMBOE one million barrels of oil equivalent

MMcf one million cubic feet

MMcf/d one million cubic feet per day

NGL Natural Gasoline

NGV Natural Gas for Vehicles

PP Polypropylene

PPP Purchasing Power Parity

PQI Product Quality Improvement Project

PTA Purified Terephthalic Acid

PX Paraxylene

Rt Refrigerated ton

SPP Small Power Producers


A U D I T F E E S O F T H E A U D I T O R S

Audit FeesPTT and subsidiaries paid for the audit fees for the latest accounting period amounting to Baht 15,556,862

(Fifteen million, five hundred and fifty-six thousand, eight hundred and sixty-two Baht.)


G L O S S A R Y O F T E C H N I C A L T E R M S

AN Acrylonitrile

API American Petroleum Institute

bbl or bbls barrel (s)

bbl/d barrel (s) per day

bcf billion cubic feet

BOE barrel of oil equivalent

BOED barrel of oil equivalent per day

Btu British thermal unit

B/MMbtu Baht/Million Btu

BZ Benzene

CHP Combined Heat and Power

CNG Compressed Natural Gas

DCSPP District Cooling System Power Plant

DDF Diesel Dual Fuel

EPPO Energy Policy and Planning Office

GDC & Cogen Gas District Cooling and Cogeneration

IPP Independent Power Producer

JDA Joint Development Area

Kbd or KBbl/d thousand barrels per day

LNG Liquefied Natural Gas

LPG Liquefied Petroleum Gas

LPG CP Liquefied Petroleum Gas Contact Price

MEG Monoethylene glycol

MMA Methyl Methacrylate

MMBOE one million barrels of oil equivalent

MMcf one million cubic feet

MMcf/d one million cubic feet per day

NGL Natural Gasoline

NGV Natural Gas for Vehicles

PP Polypropylene

PPP Purchasing Power Parity

PQI Product Quality Improvement Project

PTA Purified Terephthalic Acid

PX Paraxylene

Rt Refrigerated ton

SPP Small Power Producers

Ptt 06

Documents

i c c o

i g h t snotes

h i g h

p t t p u b

t e df

board of directors

report of board

directors responsibilities