FORTUNE OIL PLC

The Company shall ensure that these Terms of Reference are made generally available by means of publication on the Company’s website as required by the Combined Code July 2003.

2. Membership

1. The Committee shall be appointed by the Board from amongst the Non-Executive Directors of the Company and shall comprise at least three members.
2. The Chairman of the Committee shall be appointed by the Board. The Chairman of the Board shall not be eligible to be appointed as Chairman of the Committee.
3. The members of the Remuneration Committee for the time being shall be:
   • Wang Jinjun (Chairman)
   • Dennis Chiu
   • Ian Taylor
   • Qian Benyuan
   In the absence of the Committee Chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.

3. Quorum

The quorum necessary for the transaction of business shall be two. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

4. Secretary

The Company Secretary or their nominee shall act as the Secretary of the Committee.

5. Notice of meetings

1. Meetings of the Committee may be summoned by the Secretary of the Committee at the request of any of its members.
2. Unless otherwise agreed, Notice of each meeting confirming the venue, time and date together an agenda of items to be discussed, shall be forwarded to each member of the Committee, any other person required to attend, no fewer than 3 working days prior to the date of the meeting.

6. Attendance at meetings

Only members of the Committee have the right to attend Committee meetings. Other individuals such as the Vice-Chairmen, Chief Executive, Deputy Chief Executive, Finance Director and any relevant senior management and external advisers may be invited to attend for all or part of any meeting as and when appropriate.

7. Frequency of meetings

1. Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of any of its members.
2. The Committee shall meet as required.

8. Minutes

1. The Secretary shall minute the proceedings and resolutions of all Committee meetings including recording the names of those present and in attendance.
2. Minutes of the Committee shall be circulated to all members of the Committee and to all members of the Board.
   

9. Annual General Meeting (AGM)

The Chairman (or in his absence, an alternative member) of the Committee attends the Company's AGM to answer questions concerning the Committee's activities.

10. Authority

The Committee is authorised by the Board to:

1. investigate any matter within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any reasonable requests made by the Committee;
2. obtain outside legal or other professional advice as it considers necessary in the fulfilment of its duties, and such advice to be provided at the Company's expense.

11. Duties

Within the Policy on Remuneration of Directors¹ and Senior Executives adopted by the Committee on 26 April 1996 and the Remuneration Committee Policy in relation to the Operation of the Senior Executive² Incentive Plan approved by the shareholders on 25 June 2004, the Committee shall be responsible for overseeing all the elements of remuneration payable to the Executive Directors and senior executives of the Company. The specific duties of the Committee shall:

1. determine and agree with the Board the framework for the remuneration of the Company's all executive directors and such other members of the executive management as it is designated to consider. The remuneration of non-executive directors shall be a matter for the executive members of the Board. No director or manager shall be involved in any decisions as to his or her own remuneration;
   
   
2. within the terms of the Policy and in consultation with the Chairman and /or Vice-Chairmen as appropriate, determine the total individual remuneration package of each executive director and other senior executives including bonuses, incentive payments and share options and other share awards;
   
   
3. ensure that executive directors and senior executives are fairly but responsibly rewarded for their individual contributions to the Group's overall performance; and are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company;
   
   
4. review and note annually the remuneration trends across the company and group;
   
   
5. review the ongoing appropriateness and relevance of the remuneration policy;
   
   
6. ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised;
   
   
7. determine the policy for and scope of, pension arrangements (if applicable), termination payments and compensation commitments for each executive director and other senior executives;
   
   
8. consider any specific matters relating to the remuneration or terms of employment for executive directors as referred by the Board for the Committee's consideration;
   
   
9. review the design of all share incentive plans for approval by the Board and/or shareholders. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors and other senior executives and the performance targets to be used;
   
   
10. oversee any major changes in employee benefits structures throughout the Company or Group. Notwithstanding the above, the Committee may at any time make any necessary recommendations to the Board in respect of the above matters for the Board to consider and/or decide as it sees fit and in carrying out its duties above, the Committee shall give due regard to the comments and recommendations to the UKLA Listing Rules and relevant guidance.
    

Notwithstanding the above, the Committee may at any time make any necessary recommendations to the Board in respect of the above matters for the Board to consider and/or decide as it sees fit and in carrying out its duties above, the Committee shall give due regard to the comments and recommendations to the UKLA Listing Rules and relevant guidance.

The Remuneration Committee has adopted the above Terms of Reference on 23 June 2005