Mr. Lu Dong, FREP Board Chairman and President, convened and presided over the Chinese Management Special Meeting on the afternoon of May 9^th. Mr. Liu Yanchang, Operation General Manager, Mr. Hu Hongye, PMG Project Director, and departmental management from Chinese side attended the meeting.

The meeting analyzed the severe situation that confronted the Company, namely, the scale advantage was not fully leveraged after turnaround/revamp and the market imposed harsh challenges upon the Company which added up to continuous loss of the Company. It was raised that in face of the tough complexion, all levels of the Company should strengthen the awareness of crisis, get prepared for unexpected development, build up confidence in loss reduction, profit increase and achieving a positive turnaround, start from trivial issues, start from ourselves, enhance cross functional cooperation, give play to leadership, make concerted efforts to tight over difficulties and go all out to improve management and profit.                     

At the meeting, President Lu Dong fully recognized the fruitful efforts made by the employees under the leadership of management level. For months, the Company enjoyed stable operation, continuous improvement of HSE performance, normal flare release, leading position of chemical units among Sinopec Group especially PO economic and technical indices. These achievements further consolidated our confidence. But on the other hand, we should also keep sober-minded that great improvement opportunities remained in our work. Each department has the potential for optimization and improvement. The key to that is building the sense of mission and responsibility for change of management and improvement of benefit, pulling together and leading our teams and employees to try out best to reduce cost and increase profit, and pooling the wisdom and efforts to improve profit. First of all, when we keep close eyes on improvement of HSE performance and reliability, we should also attach importance to corporate profitability. Turning loss into gains is the top priority among priorities. To improve gross margin, we should increase income and save cost and break through from fine management. Assuming we process one ton of crude oil, should we manage to save 10 Yuan by several means ranging from procurement, production to sales and we should be able to do that, we could generate additional profit of over 10 Million Yuan every month based on the existing process rate. Second, each team should set goals since improvement of profit needs a major direction for fighting. Trade Union should get close to operation and business center, organize labor competitions with substantial effect, make every penny count and encourage teams and employees that have made contributions to profit improvement. Third, always run the enterprise industriously and thriftily, always practice austerity, significantly reduce controllable costs, strictly enforce travel expenses ad conference fees and control provisional measures; Chinese management should lead by example, adopt centralized management of vehicles for management layer and thus save transportation cost. Improve profit by strengthening management and by saving cost. Reverse the negative situation of the Company as soon as possible and lay a solid foundation for fulfillment of targets and tasks of this year.