Special Explanation on the Fund Occupation Situation of the Company's Controlling Shareholder and Related Parties
China Petroleum Shengli Oilfield Daming (Group) Co., Ltd.: We have been entrusted to audit the financial statements of China Petroleum Shengli Oilfield Daming (Group) Co., Ltd. (hereinafter referred to as "Daming") for the year 2005 in accordance with the "Independent Auditing Standards for Chinese Certified Public Accountants" and issued a standard unqualified audit report on April 16, 2006.