CORPORATE RISK MANAGEMENT

Corporate Risk Management



Corporate Risk Management

1) Organization

Fortune Oil PLC, Maoming single point mooring (SPM) and Bluesky Aviation, as a London Stock Exchange main market listed company with the operational headquarters in Hong Kong, has for over eighteen years supplied oil and natural gas in China the world's second largest economy and energy market. We have done this reliably and, importantly, safely. Today activities span across northern, central and southern China. Fortune Oil, SPM and Bluesky seeks to exploit opportunities in the oil and natural gas industry as the China market continues to expand, with particular emphasis on the supply of natural gas as a premium clean fuel. The Oil Division continues to be a strong cash generator for the Group. The Bluesky aviation fuel business supplies jet fuel to 15 major airports which handled 90 million passengers up over 10% in 2010.

Corporate social responsibility

The Company's operations are currently solely in the People's Republic of China (PRC). We ensure that the Company's operations are in compliance with national and local laws and practices. The ongoing success relies on the maintenance of excellent relationships among the communities, particularly with local joint venture partners and regulatory authorities. Fortune Oil, SPM and Bluesky have a proven track record of safe and reliable operation. The Company remains one of the few international companies with both oil and gas operations onshore China and has been at the forefront of introducing new approaches such as the SPM concept and developing CNG and LNG refuelling. Fortune Oil is proud to have played a role in introducing cleaner fuels and new standards in China. Many of the Company's businesses are among the largest foreign invested enterprises in that area and they provide a benchmark for other local companies. As part of their social responsibility programmes in China, the selected companies support community activities and provide training to customers in regards to the safe use of fuels. We also interact with local and national government and associations such as the China Energy Association to further the development of better policies. The Company intends to follow the same principles and practices as it develops operations elsewhere in the world. All senior management of the Company are required to familiarize themselves with the Company's code of ethics in relation to areas such as supervisory rules, insider dealing, market malpractices, whistle blowing policy, conflicts of interest, proper use of the Company's assets and reporting requirements for listed companies.

Analysis

The natural gas division has grown significantly since inception five years ago with natural gas sales volume increasing from 34 million cubic meters per annum in 2005 to 581 million cubic meters per annum in 2010. The selected companies' activities span the length of the natural gas supply chain from upstream production of gas to downstream marketing and sales. Upstream activities include coal bed methane (CBM) exploration, gas field development and gas production. Downstream activities include pipeline operation, transportation and processing of gas, and the marketing and sales of gas to the ...