PTT Exploration and Production PCL : Q&A on incorporating entities in Cayman, Cyprus, Bermuda and Bahamas

1. Is the objective of incorporating entities in the Cayman Islands to evade taxes?

PTTEP's objective for incorporating entities in the Cayman Islands is not for tax evasion or money laundering. Entities incorporated in the Cayman Islands provide flexibility for management of investments and reduction of investment risks. Rules for incorporating entities in the Cayman Islands, as well as increasing or decreasing capital investments or closing entities are relatively simple and cost effective. Cayman Islands entities are used widely and their use is standard industry practice for large international oil companies. PTTEP pays its taxes in both Thailand and in its countries of operations in full compliance with applicable laws.

2. Is it true that subsidiaries in Cayman Islands are established for the purpose of money laundering such that it cannot be detected or audited through internal controls?

As stated earlier, the purpose of setting up PTTEP subsidiaries in the Cayman Islands is not for money laundering. Furthermore, PTTEP neither has cash operations nor bank accounts opened in Cayman Islands. All of the Cayman Islands subsidiaries' bank accounts were opened in Thailand or in countries with exploration and production investments, which comply with the rules and regulations from the Bank of Thailand and other countries' respective central banks. PTTEP Head Office is responsible for the oversight of these accounts and, additionally, the company's Board of Directors is responsible for assuring good governance and transparency with these subsidiaries.

3. How transparent are the subsidiaries in Cayman Islands? Has there been an audit carried out and by whom? Does this conflict with the company's value on good governance to the shareholders?

All financial statements of PTTEP's subsidiaries in the Cayman Islands are audited by the Office of the Auditor General of Thailand, except for Taninthayi Pipeline Company LLC, a jointly-controlled entity in which PTTEP holds 19.3178%, which is audited by Ernst & Young. Moreover, as a public-listed company on the Stock Exchange of Thailand (SET), PTTEP has constantly disclosed information to the public with utmost transparency and in accordance to the good governance frameworks as guided by the Securities Exchange Commissions (SEC) and SET.

4. Why is PTTEP in a rush to close its Cayman Island entities? It has been pointed out that PTTEP might be trying to destroy evidence and seek alternative locations to hide money. Is this true?

PTTEP is not in a rush to close its Cayman Island entities. PTTEP continuously restructures its corporate entity structure for management efficiency, and to manage costs. PTTEP reviews and evaluates the necessity and suitability of each of its corporate entities according to changes in business environment and strategic directions. This evaluation process may include incorporating new entities, or dissolving existing ones. In the past PTTEP has dissolved both Thai and International corporate entities. For example, it closed 2 companies in Thailand and 4 companies in the Cayman Islands after not achieving exploration success in several petroleum concessions resulting in the relinquishment of such concessions back to the government. The companies it closed were formerly established in order to hold the rights to the aforementioned concessions.

5. Why did PTTEP incorporate the Cove Energy entity in Cyprus, a country which is allegedly a location for money laundering, and which also recently experienced a financial crisis in 2013? Wouldn't Cyprus be considered a financially risky location, also given the fact that Cove Energy owns exploration rights in Mozambique which is located in Africa?

PTTEP has 3 entities which are incorporated in Cyprus where it holds a 100% stake. All three entities were formerly subsidiaries of Cove Energy, and are the group of entities which hold exploration rights in Mozambique. PTTEP entered into the transaction to acquire Cove Energy's shares in 2012 which were listed in the Alternative Investment Market (AIM), a securities exchange in London (similar the MAI exchange in Thailand). Cove Energy's original shareholders were institutional investors who invested in the United Kingdom's securities exchanges.

After fully closing the acquisition transaction, PTTEP, similar to its practice in other countries, began an evaluation study for the restructuring of Cove Energy's entity structure to enhance management efficiency. At the moment, PTTEP is still studying the potential impacts of changes to Cove Energy's entity structure.

The following is the list of companies incorporated in Cyprus:

1. Cove Energy East Africa Limited (CEEAL)
2. Cove Energy Rovuma Offshore Limited (CEMROFL)
3. Cove Energy Rovuma Onshore Limited (CEMROL)

6. Referring to the establishment of the gas pipeline company in Bermuda, 25% of which is owned by PTT subsidiaries; the two gas pipeline companies in Cayman Islands, one of which is owned by PTTEP at 19.3178% and the other at 80%; and the marine business subsidiary in the Bahamas, which the company owns 13.11% - who owns the remaining shares? Are there politicians, government officials or PTT Board of Directors involved? And have these companies been audited?

With respect to the related entities established in Bermuda, the Cayman Islands and the Bahamas, the investments are related to PTTEP's business, such as delivering piped gas from Myanmar to Thailand and rental of shipping facilities for oil storage in the Gulf of Thailand. Other shareholders of the related entities include international oil and gas companies and other national oil and gas enterprises. No politicians, government officials or PTT Board of Directors are involved with these related companies. PTTEP reiterates that it neither has bank accounts open in Cyprus, the Bahamas, the Cayman Islands nor Bermuda. The bank accounts of the entities that we operate are open in Thailand or in countries with exploration, development and production investments.

In addition, all the financial statements of PTTEP and its related companies, as mentioned above, have been audited by the Office of the Auditor General of Thailand and other globally renowned audit firms, such as Pricewaterhouse Coopers (PwC), Ernst and Young (EY) and KPMG.

The company discloses information of its group companies, including their nature of business, with good governance and business ethics. The general public can access the information via the Annual Registration Statement (Form 56-1) on the Stock Exchange of Thailand, the Annual Report and the company's website.

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