Laws of the People's Republic of China

No.24

We hereby promulgate the Measures for the Administration of the Crude Oil Market, which were adopted upon the consensus of the leaders of the Ministry of Commerce on December 4, 2006which shall enter into force as of January 1, 2007. Minister of the Minister of Commerce Bo Xilai

December 4, 2006

Measures for the Administration of the Crude Oil Market Chapter I General Provisions

Article 1

In order to enhance the administration of the crude oil market, regulate the business operation of crude oil, maintain the order of the crude oil market and safeguard the legitimate rights and interests of the crude oil enterprises and consumers, we hereby formulate the present Measures under the Decision of the State Council concerning Establishing Administrative License for the Administrative Examination and Approval Items that Really Need to Be Preserved (Order No.412 of the State Council) and the related laws and administrative regulations.

Article 2

Those engaging in the crude oil business activities within the territory of the People's Republic of China shall comply with the related laws and regulations and the present Measures.

The term "crude oil enterprises" as mentioned in the present Measures refers to the enterprises that engage in the crude oil distribution or storage.

Article 3

The state applies a licensing system to the crude oil business activities.

The Ministry of Commerce shall take responsibility to draft the laws and regulations for the administration of the crude oil market, draw up ministerial regulations and organize the implementation thereof, and supervise and administer the nationwide crude oil market subject to law. The administrative departments of commerce of the people's governments at each level shall take responsibility to organize and coordinate the supervision and administration of the crude oil business activities within their respective jurisdictions.

Article 4

The term "crude oil" as mentioned in the present Measures refers to the crude oil exploited and produced at the territory of the People's Republic of China or the sea areas under the jurisdiction of the People's Republic of China and the imported crude oil.

Chapter II Application for Crude Oil Business License and Its Acceptance

Article 5

For the purpose of applying for the qualification for engaging in the distribution or storage of crude oil, an enterprise shall submit an application to the administrative department of commerce of the provincial people's government of the place where it is located, which shall examine and report the preliminary examination opinions along with the application materials to the Ministry of Commerce, which shall decide whether to grant a license of crude oil distributing or storing or not.

Article 6

For the purpose of applying for the qualification to distribute crude oil, an enterprise shall satisfy the conditions as follows:

(1)

the applicant shall be a Chinese legal person with a registered capital of at least 100 million Yuan;

(2)

it shall have secular and steady channels to provide crude oil;

(a)

it is a crude oil exploitation enterprise that has obtained a Petroleum Mining License upon the approval of the State Council and has actual output, or;

(b)

it is an import enterprise that has obtained the qualification to import crude oil and its annual import volume is at least 500,000 tons, or;

(c)

it is an enterprise that has signed, with either of the enterprises as stipulated above in a and b, an crude oil supply agreement for one year or more that matches its business scale.

(3)

it shall have secular and steady and legal channels to distribute crude oil;

(4)

it shall have a crude oil depot whose capacity shall not be smaller than 200,000 steres and whose construction shall comply with the local municipal planning and oil depot layout planning; the related departments in charge of state land and resources, planning and construction, safety and supervision, public security and fire-fighting, environmental protection, meteorology and quality inspection, etc shall have checked and accepted the depot.

Article 7

An enterprise that applies for the qualification to store crude oil shall satisfy the conditions as follows:

(1)

the applicant shall be a Chinese legal person with a registered capital of at least 50 million Yuan;

(2)

it shall have a crude oil depot whose capacity shall not be smaller than 500,000 steres and whose construction shall comply with the local municipal planning and oil depot layout planning; the related departments in charge of state land and resources, planning and construction, safety supervision, public security and fire-fighting, environmental protection, meteorology and quality inspection, etc shall have checked and accepted the depot ;

(3)

it shall be equipped such facilities to unload crude oil as conduit pipes, railway special lines or ports for transporting crude oil on water and its capacity shall be larger than 50,000 tons.

Article 8

In order to establish a foreign-funded crude oil enterprise, the present Measures, the related state policies and the provisions of the laws and regulations concerning foreign investment shall be complied with.

Article 9

An enterprise that applies for the qualification of distributing crude oil shall submit the documents as follows:

(1)

an application;

(2)

legal instruments and the related materials concerning its secular and steady crude oil supply;

(3)

legal instruments and the related materials concerning its secular, steady and legal channels for crude oil distribution;

(4)

the property right certificate of its crude oil depot and the supporting facilities; the approval certificates and acceptance documents concerning the depot and other facilities released by the departments responsible for state land and resources, planning and construction, safety supervision, public security and fire-fighting, environmental protection, meteorology and quality inspection, etc;

(5)

Business License for Enterprise Legal Person or Circular for Advance Approval of Enterprise Name as released by the department of industry and commerce;

(6)

Hazardous Chemical Business License as released by the department of safety supervision;

(7)

Approval Certificate of Foreign-funded Enterprise of the People's Republic of China as for a foreign-funded enterprise;

(8)

Other documents required by the examination and verification organs.

Article 10

An enterprise that applies for the qualification of storing crude oil shall submit the documents as follows:

(1)

application document;

(2)

the property right certificate of its crude oil depot and the supporting facilities; the approval certificates and acceptance documents concerning the depot and other facilities as released by the departments responsible for state land and resources, planning and construction, safety supervision, public security and fire-fighting, environmental protection, meteorology and quality inspection, etc;

(3)

certificates the property rights certificates of such facilities to unload crude oil as conduit pipes, railway special lines or ports for transporting crude oil on water and its capacity shall be larger than 50,000 tons

(4)

Business License for Enterprise Legal Person or Circular for Advance Approval of Enterprise Name as released by the department of industry and commerce;

(5)

Hazardous Chemical Business License released by the department of safety supervision;

(6)

Approval Certificate of Foreign-funded Enterprise of the People's Republic of China as for a foreign-funded enterprise;

(7)

Other documents required by the organs of examination and verification.

Article 11

The conditions, procedures, time limit, list of the materials to be submitted, and model of application letter for applying for license of crude oil distributing or storing at its work place shall be publicized by the administrative department of commerce at or above the provincial level.

Article 12

In case an administrative department of commerce of the provincial people's government that accepts an application considers that the application materials are not accomplish or fail to be in line with the related provisions, it shall notify the applicant, once and for all, of all the content that needs to be supplemented or corrected within five (5) workdays since receiving the application. When the time limit expires and if it fails to notify the applicant, the application shall be deemed as having been accepted since the date when the application materials are received.

Article 13

If the application materials are complete and comply with the stipulated form, or if the applicant has supplemented or corrected all the application materials as required, the administrative department of commerce of the provincial people's government shall accept the application.

In case an administrative department of commerce of the provincial people's government accepts an application, a written certificate bearing the special seal of this administrative organ and an indication of the date shall be produced by it. In case it rejects an application, it shall produce a written certificate, which bears the special seal of this administrative organ, explains the reasons for the rejection and indicates the date, and shall also inform the applicant of the right to apply for administrative reconsideration or to file an administrative lawsuit.

Chapter III Procedures and Time Limit of Crude Oil Distribution or Storage Licensing Examination

Article 14

Within twenty (20) workdays since receiving an application for distributing or storing crude oil submitted by an applicant, an administrative department of commerce of the provincial people's government shall finish the examination and report the preliminary examination opinion and application materials to the Ministry of Commerce.

Article 15

The Ministry of Commerce shall, within twenty (20) workdays since receiving the application materials of the crude oil enterprise reported by the administrative department of commerce of the provincial people's government, finish the examination and verification. In case the application meets the conditions prescribed in Article 6 of the present Measures, it shall grant a license for the distribution of crude oil and release a Certificate of Approval for the Distribution of Crude Oil; in case the application meets the conditions prescribed in Article 7 of the present Measures, it shall grant a license for the storage of crude oil and release a Certificate of Approval for the Storage of Crude Oil. In case the application fails to meet the related conditions, it shall inform the applicant in written form of the decision of disapproval, the reasons and the right to apply for administrative reconsideration or to file an administrative lawsuit.

Upon the strength of the Certificate of Approval for the Distribution of Crude Oil or the Certificate of Approval for the Storage of Crude Oil as issued by the Ministry of Commerce An enterprise shall implement the registration procedures at the administrative organ for industry and commerce and the tax organ.

Article 16

In case a crude oil enterprise newly builds, rebuilds or expands the storage facilities, it shall report to the Ministry of Commerce for record after implementing the acceptance procedures at the departments responsible for state land and resources, planning and construction, safety and supervision, public security and fire-fighting, environmental protection, meteorology and quality inspection, etc.

Article 17

In case the establishment of a foreign-funded enterprise or changing its business scope, or the M&A of domestic enterprise by a foreign businessman engages in any crude oil business, it is necessary to send an application to the administrative department of commerce of the provincial people's government, which shall accomplish the examination within one month since the date of receiving a complete set of application materials, and shall report the preliminary examination opinion and the application materials to the Ministry of Commerce, which shall make a decision concerning whether to approve it or not within three months since the date of receiving all the application documents.

Chapter IV Issuance and Change of the Approval Certificate for the Distribution or Storage of Crude Oil

Article 18

The Approval Certificate for the Distribution of Crude Oil and the Approval Certificate for the Storage of Crude Oil shall be uniformly printed and released by the Ministry of Commerce.

Article 19

In case a crude oil enterprise intends to amend any item of the Approval Certificate for the Distribution of Crude Oil or the Certificate of Approval for the Storage of Crude Oil, it shall send an application to the administrative department of commerce of the provincial people's government, which shall implement a preliminary examination and report the preliminary examination opinions and the application materials to the Ministry of Commerce.

In case it meets the conditions to continue engaging in the crude oil business, the Ministry of Commerce shall released a new Approval Certificate for the Distribution of Crude Oil or Certificate of Approval for the Storage of Crude Oil.

Article 20

In case a crude oil enterprise intends to change any item of the Approval Certificate for the Distribution of Crude Oil or the Approval Certificate for the Storage of Crude Oil, it shall hand in the documents as follows:

(1)

as regards the change of enterprise name, the Circular for Advance Approval of Enterprise Name produced by the administrative department for industry and commerce;

(2)

as regards the change of legal representative, employment certificate and identity certificate of the new legal representative;

(3)

as regards the change of business place that does not relate to the move of the warehousing and transportation facilities, certificate concerning legal right of using the business place;

(4)

as regards the change of investment subject of the business entity, the original business entity shall implement the related procedures for deregistering its business qualification, while the new business entity shall apply for the related qualification over again.

Chapter V Supervision and Administration

Article 21

The administrative departments of commerce of the people's governments of each level shall enhance their supervision and inspection of the crude oil market within their respective jurisdictions and investigate and punish the disobediences committed by crude oil enterprises.

Article 22

The administrative departments of commerce of the provincial people's governments shall, subject to the present Measures, organize the inspection concerning the enterprises qualified to engage in the crude oil business every year and report the inspection results to the Ministry of Commerce.

In case a crude oil enterprise that is found unqualified in the annual inspection, the Ministry of Commerce shall order it to rectify within a certain time limit; in case it is still unqualified after the rectification, its qualification for engaging in crude oil business shall be revoked.

Article 23

The major content of the annual inspection concerning an enterprise that distributes crude oil is as follows:

(1)

the crude oil operation of the enterprise in the previous year;

(2)

the conclusion and conduction of crude oil supply and distribution agreements;

(3)

whether the crude oil enterprise and its supporting facilities comply with the present Measures and the related technical specifications and requirements;

(4)

the status quo of the enterprise concerning fire-fighting, security and environmental protection, etc.

Article 24

The major content of the annual inspection concerning an enterprise that stores crude oil is as follows:

(1)

the storage of crude oil of the enterprise in the previous year;

(2)

whether the crude oil storage enterprise and its supporting facilities comply with the present Measures and the related technical specifications and requirements;

(3)

the status quo of the enterprise regarding fire-fighting, security and environmental protection, etc.

Article 25

A crude oil enterprise that is to suspend or stop its business shall implement the suspension or cancellation procedures with the Ministry of Commerce. In case an enterprise that fails to implement the suspension or cancellation procedures without reason for 18 month or more, the Ministry of Commerce shall revoke its crude oil business license, cancel the Certificate of Approval for the Distribution of Crude Oil or the Certificate of Approval for the Storage of Crude Oil and notify the related departments.

Article 26

The administrative departments of commerce of each level shall supervise and manage the crude oil business license and crude oil market without collecting any fee.

Article 27

The Ministry of Commerce shall publicize the list of enterprises that have obtained a crude oil business license and the information concerning the change or cancellation of any enterprise.

Article 28

The Approval Certificate for the Distribution of Crude Oil or the Approval Certificate for the Storage of Crude Oil must not be forged, changed, traded, leased, lent or transferred in any other form. Any changed or cancelled Approval Certificate for the Distribution of Crude Oil or Certificate of Approval for the Storage of Crude Oil shall be submitted to the Ministry of Commerce, any other entity or individual must not remain it privately.

Article 29

A crude oil enterprise shall operate subject to law, any of the following acts is forbidden:

(1)

doing business without a certificate or license or with a certificate and license which are not coincident with each other or beyond its authorized business scope;

(2)

mixing impurities or imitations, passing a fake product off as a genuine one or passing a defective product off as a high-quality one;

(3)

distributing or storing the crude oil obtained through illegal channels;

(4)

distributing crude oil to the refining enterprises or distributing enterprises that have not been approved by the state or supplying them with storage service ;

(5)

driving up oil prices or dumping oil at low prices by infringing the laws and regulations concerning price;

(6)

other business activities as forbidden by any law or regulation of the state.

Article 30

In case it is under any of the following circumstances, the Ministry of Commerce shall revoke the crude oil business license:

(1)

granting any license to an applicant that is unqualified or fails to satisfy the statutory requirements;

(2)

granting any license by exceeding the legal authority;

(3)

granting any license by infringing the statutory procedure;

(4)

a crude oil distributing enterprise failing to meet the conditions stipulated in Article 6 of the present Measures any more;

(5)

a crude oil storing enterprise failing to meet the conditions stipulated in Article 7 of the present Measures any more;

(6)

failing to take part in or pass the annual inspection;

(7)

the licensee having obtained the business license by such illegal ways as fraud or bribery;

(8)

hiding the related information, supplying false materials or refusing to supply the real materials that reflect its business activities;

(9)

other circumstances under which the administrative license shall be revoked under law.

Chapter VI Legal Liabilities

Article 31

In case any administrative department of commerce or any of its staff commits any of the following acts by infringing the present Measures, the administrative department or supervisory department at a higher level shall order it/him to correct; as for serious situation, the person in charge who is held directly responsible and other personnel directly responsible shall be given an administrative punishment:

(1)

failing to accept an application that satisfies the statutory requirements;

(2)

failing to explain to an applicant the reasons of refusing to accept its application or to grant a license;

(3)

granting a license to an applicant not satisfying the statutory requirements or by exceeding the legal authority;

(4)

refusing to make an approval decision or failing to make, without justifiable reasons, such a decision within the statutory time limit for an applicant satisfying the statutory requirements; and

(5)

failing to perform or effectively perform its supervision duty, which has resulted in serious consequences.

Article 32

In case any administrative department of commerce unlawfully charges fees in the process of granting crude oil business license, it shall be ordered to refund the fees illegally charged and impose administrative punishment on the personnel in charge and the personnel held directly responsible by the administrative department or supervisory department at a higher level.

Article 33

Where any crude oil enterprise commits any of the following acts, if there are specific provisions in any law or regulation, they shall be followed; where there is no provision in the laws and regulations, the Ministry of Commerce shall give it an admonition under law subject to the specific situation, order it to correct within a certain time limit, and impose a fine of at most three times the illegal gains or 30,000 Yuan:

(1)

changing, reselling, leasing, lending or illegally transferring its certificate of approval for crude oil business in any other form;

(2)

newly building, rebuilding or expanding any crude oil depot without authorization by infringing the conditions and procedure stipulated in the present Measures;

(3)

selling crude oil by mixing impurities or imitations, using a fake product as a genuine one, using a defective product as high-quality one or passing an inferior product off as a standard one;

(4)

distributing or storing the crude oil obtained through illegal channels;

(5)

distributing crude oil to the refining enterprises or distributing enterprises that have not been approved by the state or supplying them with storage service

(6)

distributing crude oil in violation of the laws and regulations concerning price of the state;

(7)

other illegal acts as stipulated in any law or regulation.

Article 34

In case any of the following acts are committed by an enterprise applying for the qualification of engaging in the crude oil business, the Ministry of Commerce shall make a decision of rejecting its application or not granting a license and shall give it an admonition; and the applicant may not apply for a crude oil business license again within one year.

(1)

hiding the real situation;

(2)

supplying any false materials;

(3)

infringing the related policies and application procedure, and the situation is serious.

Chapter VII Supplementary Provisions

Article 35

The foreign contractors that engage in Chinese-foreign cooperative exploitation of continental or offshore petroleum resources within the territory of the People's Republic of China shall comply with the related provisions in the Regulations of the People's Republic of China concerning Sino-foreign Cooperation in the Continental Petroleum Resources Exploitation and the Regulations of the People's Republic of China concerning the Offshore Petroleum Resources Exploitation in Cooperation with Foreign Enterprises.

Before the present Measures are released, the crude oil producing enterprises that have already been approved subject to law and conform to the state policies shall apply for and obtain a Certificate of Approval for Crude Oil Business under the present Measures.

Article 36

The Ministry of Commerce is the authoritative interpreter of the present Measures.

Article 37

The present Measures shall enter into force as of January 1, 2007.