Laws of the People's Republic of China

Supplementary Notice of the Ministry of Finance on Relevant Issues concerning the Levy of Special Profit Charge on Crude Oil

Cai Qi No. 183 [2006]

Departments (Bureaus) of public finance of all provinces, autonomous regions, municipalities directly under the Central government and cities under separate state planning, relevant ministries and commissions under the State Council, relevant departments directly under the State Council, China National Petroleum Corporation, China Petrochemical Corporation, China National Offshore Oil Corporation,

After the issuance of the Notice of Ministry of Finance on Printing and Distributing the Measures for the Administration on the Levy of Special Profit Charge on Crude Oil (Cai Qi No.72[2006], hereinafter referred to as "the Measures"), some oil exploitation enterprises have made some suggestion on overall and accurate implementation of the Measures. And hereby supplementary notice on relevant issues concerning the levy of special profit charge on crude oil is noticed:

1.

As for the levy scope of special profit charge on crude oil

No matter whether the crude oil, exploited within the land areas of the People's Republic of China or the sea areas under its jurisdiction, is sold within the territory of China or not, special profit charge on it shall be paid in accordance with the relevant provisions. The value-added tax for crude oil , charge for using the mining area and conservation oil of the state, paid to the state by the Chinese-foreign cooperative oilfield in accordance with the relevant provisions, may not be levied the special profit charge on crude oil .

2.

As for the main bodies paying special profit charge on crude oil of joint venture cooperative enterprises

As to the payment of special profit charge on crude oil by a joint venture cooperative enterprise, an application for declaration shall be made to the financial authority uniformly by the party having the license for oil exploration and exploitation among the two parties of the joint venture cooperative enterprise. The financial authority shall, after verifying the submitted report form of special profit charge on crude oil, confirm in writing the sum of special profit charge on crude oil that shall be paid by each party of the enterprise. The enterprise shall, in light of the sum confirmed in the written notice, fill in a "Common Payment Book" and pay it directly.

3.

As for relevant issues on the calculation of special profit charge on crude oil of Chinese-foreign cooperative oilfield

All parties of Chinese-foreign cooperative oilfield shall, on the basis of the price of shares set on schedule by all cooperative parties, calculate the special profit charge on crude oil. Special profit charge on crude oil may not be recovered as corresponding cost in the joint account book of the parties of the cooperative enterprise.

4.

Other relevant issues

(1)

The special profit charge on crude oil shall be paid in RMB;

(2)

The special profit charge on crude oil, which shall be paid by each party of the cooperative oilfield, shall be listed separately when the application for payment is made. The late fee and fine, which shall be collected additionally due to the delay of application or payment in a fixed period of time , shall be separately born by relevant responsible parties.

(3)

Petroleum exploitation enterprises shall, when applying for special profit charge on crude oil that shall be paid, provide their price implementation document for selling crude oil in each month. The Chinese-foreign oilfield shall provide the definite document for the price of shares determined by all cooperative parties.

The Ministry of Finance of the People's Republic of China

June 30, 2006