Laws of the People's Republic of China

The General Administration of Customs, the Ministry of Finance

Provisions of the General Administration of Customs and the Ministry of Finance Concerning the Levy and Exemption of Customs Duties and Consolidated Industrial and Commercial Tax on Imports and Exports for the Chinese-foreign Cooperative Exploitation of Offshore Oil

(Approved on February 28, 1982 by the State Council, Promulgated on April 1, 1982 by the General Administration of Customs and the Ministry of Finance)

In order to encourage Chinese-foreign cooperative exploitation of offshore oil, rules for the levy and exemption of customs duties and the consolidated industrial and commercial tax on imports and exports for offshore oil exploitation are hereby drawn up as follows:

Article 1

The following imported goods shall be exempt from the duties and the tax:

(1)

machinery, equipment, spare parts and materials verified and approved for direct use in exploration.

(2)

machinery, equipment, spare parts and materials verified and approved as necessary imports for direct use in development, in accordance with Article 19 to Article 21 of the "Regulations of the Republic of China on the Exploitation of Offshore Oil Resources in Cooperation with foreign Enterprises."

(3)

parts, components and materials verified and approved as necessary imports for manufacturing machinery and equipment in China for the exploitation of offshore oil (including prospecting, well drilling, well cementing, well logging, mud logging, oil production, work-over, etc.).

(4)

Machinery and other engineering equipment, temporarily imported for exploitation of oil and guaranteed to be re-exported by foreign contractors, shall be oil and guaranteed to be reexported by foreign contractors, shall be exempt from the duties and the tax when imported or re-exported.

Article 2

Crude oil received by foreign contractors in accordance with provisions of the oil contracts shall be exempt from export duties when it is exported.

Article 3

Customs duties and consolidated industrial and commercial tax shall be levied on imports and exports beyond the scope specified in Article 1 and Article 2 above according to the Customs Import and Export Tariff of the People's Republic of China and the Regulations of the Consolidated Industrial and Commercial Tax of the People's Republic of China (Draft).

Article 4

All goods imported free of the duties and the tax shall not be used for other purposes without Custom's approval. Breaching of these rules shall be dealt with by the Customs in accordance with "The Interim Customs Law of the People's Republic of China".

Attachment:List of Imported Goods Exempt from the Duties and the Tax for the Chinese-foreign Cooperative Exploitation of Offshore Oil

I

Goods verified and approved as necessary imports for direct use in exploration:

A.

For geophysical exploration:

(1)

ships for geophysical exploration and accessory equipment thereof.

(2)

seismographs, components and accessories thereof, gravimeter and magnetometers and accessories thereof.

(3)

hydrophone streamers and accessory equipment thereof.

(4)

data processing computers and accessory equipment thereof.

(5)

seismic tapes.

(6)

on-land navigation and positioning equipment and accessory facilities thereof.

B.

For well drilling:

(1)

various offshore drilling installations, including jack-ups and semi-submersible drilling rigs, floating drilling ships and drilling platforms as well as tender ships, working boats and service vessels.

(2)

drilling rigs, and components, accessories or fittings thereof.

(3)

well cementing equipment and auxiliary equipment, including cement mixer and feeding equipment.

(4)

well logging equipment and auxiliary equipment including electrical logging instruments, mud logging instruments, directional survey instruments and other logging instruments.

(5)

production testing equipment, work-over equipment, and components or accessories thereof.

(6)

special tools for well drilling, including drilling bits, drill collars, drill pipes, deviation control tools, fishing tools and other tools.

(7)

drilling mud treating equipment and chemicals.

(8)

materials used exclusively for oil wells, including tubing, casing, wellhead equipment and subsea equipment and tools.

(9)

oil well cements and various additives.

C.

For safety and lifesaving:

(1)

various kinds of equipment, spare parts and materials for blowout prevention.

(2)

various kinds of equipment and materials for fire prevention and fire fighting.

(3)

various kinds of equipment, accessories and tools for lifesaving.

(4)

special labor protection outfits for personnel working offshore.

(5)

equipment and materials for diving operations.

D.

For transportation and communications:

(1)

helicopters and facilities for helipad.

(2)

vessels for transportation, communications and convoy, and accessory equipment thereof.

(3)

various kinds of equipment and outfits for wire and radio communication.

E.

For fuels and oils:

Special fuels, lubricating oils and cooling fluids necessary for offshore oil operations.

II

Goods verified and approved as necessary imports for development, or, oil field construction:

A.

For oil production:

(1)

production platforms, including oil production platforms, oil-gas processing platforms, living platforms and flare platforms.

(2)

offshore oil loading facilities, including single-point mooring, single articulated leg mooring, oil storage vessels, under-water oil storages and loading berths.

(3)

vessels for offshore construction operations.

(4)

power generating equipment and accessories thereof, including internal-combustion engines, steam turbines, gas turbines, steam engines, generators and electric motors as well as controlling panels and related installation.

(5)

injection equipment and accessories thereof, including water and gas injection as well as facilities for water and gas treatment.

(6)

downhole packers and downhole blowout preventors.

(7)

cranes, lifting equipment and tools.

(8)

oil (gas) transportation equipment, line pipes, and valves and pipe fittings thereof, equipment for pumping and boosting stations and onshore terminal, and valves and pipe fittings thereof, including various kinds of pumps, equipment for liquid separating, heat-exchanging, purifying, and compressing, various kinds of measuring, monitoring and parameter indicating meters, and various kinds of valves and pipe fittings thereof, various kinds of electric instruments and cables.

B.

For automation, remote controlling and telemetering:

(1)

various kinds of installation and meters.

(2)

air-conditioning equipment.

III

Parts, components and materials verified and approved as necessary imports for manufacturing equipment and machinery in China for the exploitation of offshore oil.

IV

The importation of the above-mentioned goods shall be subject to the verification and approval of the Ministry of Petroleum Industry.