SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
FOR PURPOSES OF SECTION 303A. 11 OF
THE NEW YORK STOCK EXCHANGE LISTED COMPANY MANUAL
On November 4, 2003, the New York Stock Exchange (the "NYSE") adopted new corporate governance rules.
Under these rules, we are required to disclose a summary of the significant differences between our corporate
governance practices and those that would apply to a U.S. domestic issuer under the NYSE corporate
We are incorporated under the laws of the People's Republic of China (the "PRC"), with H shares publicly
traded on the Hong Kong Stock Exchange (the "HKSE") and American Deposit Shares representing H shares
on the NYSE. As a result, our corporate governance framework is subject to the mandatory provisions of the
PRC Company Law and the securities laws and regulations of Hong Kong and the United States.
The following discussion summarizes the significant differences between our corporate governance practices and
those that would apply to a U.S. domestic issuer under the NYSE corporate governance rules.
Under the NYSE corporate governance rule 303A.01, a listed company must have a majority of independent
directors on its board of directors. A company of which more than 50% of the voting power is held by an
individual, a group or another company (a "controlled company") is not required to comply with this requirement.
Because approximately 90% of our voting power is controlled by China National Petroleum Corporation
("CNPC"), we, as a controlled company, would not be required to comply with the majority of independent
directors requirement. In addition, we are not required under the PRC Company Law and the Rules Governing
the Listing of Securities on the Stock Exchange Hong Kong Limited (the "HKSE Listing Rules") to have a
majority of independent directors on our board of directors. Currently, three of our thirteen directors are
independent non-executive directors.
Under the NYSE corporat