Report to Shareholders 2007

Delivering Scale &

More Spread
Leveraging its strong foundation in the downstream business,
SPC has grown into an integrated regional enterprise
delivering outstanding returns to its stakeholders.
 Revenue, Volume and
Production Volume
● 2001
REVENUE
$8.6 BILLION ● 2004
VOLUME ● 2007
76.9 MILLION
BARRELS
CONTENTS

1 Group Financial Highlights

2 Chairman’s Statement
6 Delivering More
14 Key Figures
REVENUE 15 Group Strategic Directions
$4.9 BILLION 16 Group at a Glance
18 Board of Directors
VOLUME 22 Key Executives
73.2 MILLION 24 Board of Directors – Past Principal
BARRELS Directorships in the Last Five Years
25 Key Executives – Past Principal
Directorships in the Last Five Years
26 Operations Review – Exploration & Production
30 Operations Review – Refining, Supply & Trading
REVENUE REVENUE 34 Operations Review – Marketing
38 Corporate Governance
REFINING,
$2.3 BILLION
$145.1 MILLION 56 Enterprise Risk Management
SUPPLY VOLUME
& TRADING 44.9 MILLION 58 Environment Health, Safety & Security
00.0 BARRELS PRODUCTION VOLUME 62 Responsible Corporate Citizenship
10,000 BOEPD Through Community Outreach
M

64 Human Capital Strategy: Moving Ahead

EA

REVENUE 67 Corporate Structure

$36.1 MILLION 68 List of Properties
TR
NS

PRODUCTION VOLUME Statutory Report and Accounts

2,600 BOEPD 70 Financial Review
W

REVENUE 72 Directors’ Report

DO

$30.9 MILLION
77 Statement by Directors
PRODUCTION VOLUME
78 Independent Auditors’ Report
1,605 BOEPD
EAM
79 Consolidated Income Statement

S TR 80 Balance Sheets
UP 81
82
Consolidated Statement of Changes in Equity
Statement of Changes in Equity – Company
83 Consolidated Cash Flow Statement
SPC 84 Notes to the Financial Statements
Investor Information
135 Corporate Directory
136 Financial Calendar
137 Shareholdings Statistics
138 Share Performance
139 Notice of Annual General Meeting/Closure of Books
Proxy Form
Notes
GROUP FINANCIAL HIGHLIGHTS

2007 2006 % change

Earnings Per Share (cents)

For the year ($ million)

Revenue 8,767 8,574 2
2006 55
Profit
Gross 747 502 49 2007 99
Before tax 581 338 72
Attributable 508 285 79
Operating cash flow 387 375 3

Per share
Earnings (cents) Return On Equity (%)
Attributable 98.79 55.33 79
Net assets ($) 3.48 3.06 14
Net tangible assets ($) 3.25 2.85 14 2006 19

At year-end ($ million) 2007 30

Shareholders’ funds 1,790 1,570 14

Net borrowings 362 23 1,491

Return on Equity (%)

Profit before tax 35 23 52
Attributable profit 30 19 58

Shareholder value
Distribution (cents per share)
Interim Dividend 20 – –
Ordinary dividend 40 20 100
Special dividend – 15 –

2007

1Q 2Q 3Q 4Q Total

Group quarterly results ($ million)

Revenue 1,925 1,975 2,239 2,628 8,767
Gross profit 153 237 152 205 747
Profit before tax 118 205 109 149 581
Attributable profit 112 179 100 117 508
EPS (cents) 22 35 19 23 99

Singapore Petroleum Company Limited Group Financial Highlights

Report to Shareholders 2007 1
CHAIRMAN’S STATEMENT

Earnings Per Share

+78.5%
2007 was a year of record
achievements for SPC, despite
this being one of the most volatile
years in the oil industry.

DEAR SHAREHOLDERS,
I am pleased to report that 2007 was a
year of record achievements for SPC,
despite this being one of the most
volatile years in the oil industry. The
Group recorded a PATMI of $508.3
million, an improvement of 78.6% over
the PATMI of 2006 and achieved a return
on equity of 30%.

Crude oil prices commenced the year at

around US$55.00 per barrel. Continuing
geopolitical tensions, supply uncertainties
and refinery outages combined to push
crude and product prices higher as the
year progressed. The benchmark West
Texas Intermediate (WTI) crude surged
to a new peak of US$99.29 per barrel
before ending the year at US$95.98 per
barrel. Refining margins were likewise
extremely volatile during the year, with
average quarterly margins swinging from
a high of US$9.00 per barrel to a low of
US$5.00 per barrel.

Singapore Petroleum Company Limited Chairman’s Statement

2 Report to Shareholders 2007
Despite these volatilities, the Group was
able to steer a steady course and deliver
its best ever performance to date.
2007 IN REVIEW
2007 was a year of strong economic
growth for the global economy. In line
with this growth, crude oil demand for
2007 was estimated to be 85.7 million
barrels per day (bpd) representing an
increase of 1.2% over the 84.7 million
bpd consumption in 2006.
Strong demand for refined petroleum
products was also seen throughout the
year. This was due to the tight global
refining capacity and continued strong
demand for energy to fuel economic
growth especially from China, India,
the Middle-East and Russia.
DOWNSTREAM PROVIDING SOLID
EARNINGS BASE
SPC’s downstream operations
continued to perform well in 2007
contributing $8.6 billion in turnover and
$523.2 million in operating profit.
The firm demand for refined products
kept the Singapore Refining Company
Private Limited (SRC) running at full
capacity during the year. Strong refining
margins coupled with the reliable
operations at SRC enabled the Group
to maintain its sales revenue. During
the year, SRC successfully carried out
a major scheduled maintenance of its
Crude Distillation Unit No. 1 complex.
Safety is always the top priority in our
operations and this major exercise was
accomplished smoothly and safely.
Other initiatives at SRC include a
US$121 million project for clean diesel
production. This will enable SPC to
meet Euro-IV diesel specifications by
Singapore Petroleum Company Limited
Report to Shareholders 2007
2009. Continuous upgrading of the
refining capabilities to meet changing
emission standards will remain a priority
as the Group does its part for a green
and clean environment. Upgrading our
refinery to process new and challenging
crudes will also be needed.
SPC’s island-wide service station
network continued to find new ways to
better serve the motoring public and
expand its base of loyal customers. SPC
is the first retail network on mainland
Singapore to provide compressed
natural gas.
GROWING E&P PORTFOLIO
2007 had also been significant for the
progress achieved in the upstream
business. Turnover from Exploration
and Production (E&P) activities totalled
$145.1 million and operating profit was
$52.4 million.
Since SPC’s move into the upstream
business in 2000, the E&P portfolio
and footprint has grown considerably
to eight Production Sharing Contracts
(PSC) and one exploration permit across
five countries. To date, the Group has
invested more than US$400 million in
E&P assets that extend from China
to Australia.
In China, SPC made its largest overseas
investment to date by acquiring producing
oilfields in the Bohai Bay. The Group
was also successful in acquiring a 100%
interest in a PSC exploration block,
Block 26/18 in China and a 35% interest
in an exploration permit in Australia.
As a result of the China acquisition and
production from the existing Kakap and
Oyong oilfields, oil and gas production at
the end of 2007 increased to an average
Chairman’s Statement
3
CHAIRMAN’S STATEMENT
10,000 barrels of oil equivalent per day
(boepd), from below 3,000 boepd at the
beginning of the year.
In line with the vision to be a strong
integrated oil and gas company, the
Group will further invest in oil and gas
producing assets, while developing
the existing acreages. This would
enhance shareholder value and ensure
long-term growth.
FINANCIAL PERFORMANCE
Record oil prices in 2007 enabled SPC
to post record revenues of $8.8 billion,
a 2.2% increase over the previous year.
PATMI reached a record level of $508.3
million, a 78.6% increase. Earnings per
share rose 78.5% to 98.8 cents.
DIVIDENDS
With the excellent performance, the
Board is recommending a record final
dividend of 40 cents per share. In
August, for the first time, SPC paid
an interim dividend. Together with the
interim payment of 20 cents per share
and the proposed final dividend, the
total dividend for full year 2007 would
The Group will further invest in oil
and gas producing assets, while
developing the existing acreages.
Singapore Petroleum Company Limited
4 Report to Shareholders 2007
amount to 60 cents per share. These
dividends are all on the new one-tier
tax exempt basis.
SHARE BUYBACK
Motivating and retaining staff is crucial
for the Group’s long-term growth. As
part of the incentive for staff to pursue
a life-long career in SPC, the Group
has in place a share award programme.
Towards fulfilling this programme, the
Group bought back 1.4 million shares
as treasury shares in 2007 under the
Share Buyback Mandate.
MAINTAINING FINANCIAL
PRUDENCE AND LIQUIDITY
The volatility in financial markets
triggered by the US sub-prime credit
crisis resulted in a liquidity and credit
squeeze for many companies. The
Group has weathered this volatility well
and has in place adequate financial
resources to continue funding its growth.
In 2007, SPC established a US$1 billion
Multicurrency Debt Issuance Programme.
This facility would enable the Group to
tap the capital markets for funds as and
when required.
Chairman’s Statement
FOCUSING ON EHSS
As the Group grows and further
regionalises its operations, it becomes
increasingly important to be more vigilant
about environmental, health, safety and
security (EHSS) issues.
Growth and expansion for the Group
must be on the basis of sound and
effective EHSS practices.
CORPORATE GOVERNANCE
ACCOLADES
SPC’s good corporate governance
practices have not gone unnoticed by
the investing public. The Company was
honoured with a third place award at
the 2007 SIAS Corporate Governance
Award event, the fifth consecutive time
it has won an award. The Company
was also recognised as a merit
recipient of the Most Transparent
Company Award. This was followed
by a joint Bronze award under the
Singapore Corporate Awards 2008
for the Best Managed Board.
OUTLOOK FOR THE INDUSTRY
Global refining capacity is expected
to be constrained both by high
construction costs and skill shortages.
Although the volatility in global financial
markets is likely to restrain economic
activities, refining margins are expected
to remain relatively healthy in 2008
given the continued lack of meaningful
spare refining capacity and the
continuing strong demand for petroleum
products from Asia, the Middle-East
and Russia.
Singapore Petroleum Company Limited
Report to Shareholders 2007
For the refining operations, the Group PATMI
intends to continuously upgrade its
capability to produce cleaner fuels
including clean motor gasoline and 2006 285
to be able to process a wider range
2007 508
of difficult crudes that will improve
its margins.
The growth that the Group has achieved
in E&P production in 2007 will also result PATMI
in increased contribution to the Group’s
508.3m
bottomline in 2008.
IN APPRECIATION
All that the Group had achieved in
2007 could not have happened without
many willing hands and great hearts.
Much of this success was due to the
+78.6%
PATMI reached a record level of
competence, passion and teamwork of
$508.3 million, a 78.6% increase.
both the SPC and SRC staff. At SPC,
we have built up a multinational and
multi-talented team to take us to the
next level as an integrated oil and gas
company. As we continue our journey
to build and grow SPC, I wish to extend
my heartfelt appreciation to fellow
Board Members for their counsel and
guidance. I would also like to thank our
shareholders, customers and business
partners for their continuing confidence
and support.
Yours sincerely,
Choo Chiau Beng
Chairman
For and on behalf of the Board
29 February 2008
Chairman’s Statement
5
 Value

Growth
With its scale and spread, SPC is

Delivering
More
Returns

Singapore Petroleum Company Limited Delivering More

6 Report to Shareholders 2007
 SPC IS DELIVERING MORE VALUE

Integrated
Total Revenue
8,766.7
$ million

2007

4,974.4 2004
From its refining roots, SPC has grown to become an
integrated oil and gas enterprise. SPC is well positioned
2,337.3 to deliver more value with its diversified earnings stream.
2001

Refining
 SPC IS DELIVERING MORE GROWTH

Regional
From a predominantly homegrown company to a regional player,
SPC’s presence has expanded to include Australia, Cambodia, China,
Hong Kong, Indonesia, Taiwan, Thailand and Vietnam.

3,361.9 Total Assets

$ million

2007

1,900.5
2004

1,012.7
779.1
2001
180.3 Upstream
107 Downstream

Singapore
 SPC IS DELIVERING MORE RETURNS

Strong
From delivering sustainable to superior returns,
SPC has a business strategy to maximise performance.
Its vision for a fully integrated value chain will continue
to fuel future growth.

PATMI
508.3
$ million

2007

252.9

2004

-1.2
2001

Steady
KEY FIGURES

Turnover The SPC Group achieved PATMI The SPC Group achieved a
revenue of $8.8 billion, PATMI of $508.3 million,
an improvement of 2.2% its best performance to date

$8.8b $508.3m
Return On Equity ROE improved from Cash and Cash Equivalents Cash and cash equivalents
19% to 30% rose 13.4% to $458.2 million

30% $458.2m
Earnings Per Share EPS increased 78.5% NAV Per Share NAV per share improved 13.7%

98.79¢
Total Acreage Size SPC owns interests in nine
exploration, pre-development
and production acreages in
the Asia-Pacific region with
a total size of more than
40,900 km2
$3.48
Dividend Payout Ratio The Board has recommended
a one-tier tax-exempt dividend
payout of 40 cents per
share for approval at the
forthcoming AGM. Together
with the interim dividend of
20 cents per share, the
total payout will be 61%
of the Group’s PATMI.

40,900 61%
Singapore Petroleum Company Limited Key Figures
14 Report to Shareholders 2007
GROUP STRATEGIC DIRECTIONS

To be a strong, integrated oil and

gas company with a premium brand
in the Asia-Pacific region.

STRATEGIC DIRECTIONS STRATEGY IN ACTION

Realise the Company’s long-term • First acreage outside Southeast

strategy to grow its business through Asia – T/47P (Bass Basin, Australia)
upstream activities.
• First operatorship – Block 26/18
(Pearl River Mouth Basin, China)

• First oil production from

Oyong field, Indonesia

• Largest upstream acquisition to date

– Blocks 04/36 and 05/36
(Bohai Bay, China)

Maintain steady downstream earnings • Undertook ultra-low sulphur diesel

and reputation as a reliable supplier of production project that would conform
quality petroleum products by enhancing to Euro-IV specifications
refining capability.
• Achieved refinery utilisation of more than
97% for 2007

Deliver value and reinforce brand equity • Increased product innovation at the
by seeking growth opportunities at home retail service stations – launched CNG
and abroad. and installed ATMs, snack kiosks, and
plasma TV screens

• Acquired 60% of PT Solar

Premium Company, an Indonesian
fuels-marketing company

Singapore Petroleum Company Limited Group Strategic Directions

Report to Shareholders 2007 15
GROUP AT A GLANCE

SINGAPORE PETROLEUM BUSINESSES

COMPANY LIMITED
SPC’s downstream business remained the Exploration & Production
main revenue generator. Steep crude and SPC’s upstream activities include the
product prices coupled with tight global exploration and production of crude oil and
refining capacity throughout 2007 enabled natural gas. Since 2000, it has grown its
the Group to realise average refining margins upstream to five countries in the Asia-Pacific
of about US$7.00 per barrel, compared to region. SPC will continue to extend its
US$4.50 per barrel in 2006. footprint as it positions itself to become
an international E&P player.
SRC operated safely and reliably throughout
the year and achieved an average utilisation
of more than 97%. SPC processed a total
of 51.5 million barrels through the refinery.
SRC will increase the production of ultra-low
sulphur diesel of Euro-IV standard by 2009.

Innovation and partnerships continued to Refining, Supply & Trading

be SPC’s competitive edge in the retail sector. SPC is an established supplier of quality
Its most visible branding platform, the island- refined petroleum products. It has a 50%
wide network of service stations was leveraged interest in SRC, a refinery of 290,000 bpd
to benefit the motoring public. SPC is the first nameplate capacity. SPC is one of the first
network to retail compressed natural gas on companies to be granted Approved Global
mainland Singapore in 2008. The marketing of Trader status. Its oil trading activities
its products was strengthened with investments include the buying and selling of crudes,
in Indonesia and China. feedstocks and finished products to
international customers.
SPC scored significant successes in the
E&P business in 2007.

SPC entered two new E&P markets –

Australia and China, and its oil and Marketing
gas production grew to an average of SPC markets petroleum products to
10,000 boepd. The E&P business contributed commercial, industrial and wholesale
$145.1 million in revenue and $52.4 million customers. With a co-owned lubricant
in operating profit. blending plant, SPC markets a wide
range of automotive, industrial and marine
lubricants. SPC owns an island-wide
network of retail services stations, providing
round-the-clock products and services to
the motoring public.

Singapore Petroleum Company Limited Group at a Glance

16 Report to Shareholders 2007
 VISION AND FOCUS RESULTS

Propel future growth by strengthening

SPC’s E&P portfolio

• Venture to new frontiers and acquire high • Extended footprint to

potential acreages China and Australia

• Grow and enhance the value of • Increased oil production from

existing assets 2,600 boepd to 10,000 boepd

Enhance refining capabilities to keep pace

with changing requirements

• Maintain reputation as a reliable supplier • Initiated ultra-low sulphur diesel

of quality products production project

• Operate all facilities safely and reliably • Posted 1 million man-hours of

‘no recordable injury’

Leverage established networks to

strengthen brand image and value offerings

• Differentiate product offerings • Introduced first CNG in a service station

• Build presence in niche markets • Acquired stake in Indonesian

fuels-marketing company

Singapore Petroleum Company Limited Group at a Glance

Report to Shareholders 2007 17
BOARD OF DIRECTORS
CHOO CHIAU BENG, 60
Chairman
Chairman of SPC and SRC. Chairman and
Chief Executive Officer of Keppel Offshore &
Marine Limited. Senior Executive Director
of Keppel Corporation Limited and
Chairman of SMRT Corporation Ltd.
Mr Choo sits on the Board of Directors of
Keppel Land Limited, k1 Ventures Ltd and
is a Board Member of Singapore Maritime
Foundation and Maritime and Port Authority
of Singapore. He is Chairman of the
Nanyang Business School’s International
Advisory Board.
He is also Chairman of Det Norske Veritas
South-east Asia Committee and Council
Member of the American Bureau of Shipping
and member of the American Bureau
of Shipping’s Southeast Asia Regional
Committee and Special Committee on
Mobile Offshore Drilling Units.
He is Singapore’s Non-Resident
Ambassador to Brazil.
Mr Choo holds a Bachelor of Science
(First Class Honours), University of
Newcastle upon Tyne (awarded the
Colombo Plan Scholarship to study Naval
Architecture), Master of Science in Naval
Architecture, University of Newcastle
upon Tyne. He attended the Programme
for Management Development in Harvard
Business School in 1982, and is a Member
of the Wharton Society of Fellows,
University of Pennsylvania.
Singapore Petroleum Company Limited
18 Report to Shareholders 2007
KOH BAN HENG, 59
Executive Director &
Chief Executive Officer
Mr Koh is the Chief Executive Officer of
SPC. He joined SPC in February 1974
and held several key positions in the
company before being appointed CEO
in August 2003. Mr Koh’s experience
spans refining operations and planning,
marketing and distribution, supply and
trading, oil and gas exploration and
production including the development and
establishment of new businesses.
Mr Koh has delivered exceptional
results over the last four years. He was
instrumental in the landmark refining and
retail acquisitions in 2004. He led and
paved the way for several key capital
investments in E&P. These have provided
the strategic drive that has led to SPC’s
current success and will be the foundation
for the Group’s sustained growth.
He holds directorships in several SPC’s
subsidiaries and associated companies.
Mr Koh has a Bachelor degree in Applied
Chemistry and post-graduate diploma in
Business Administration, University
of Singapore.
Board of Directors
 BERTIE CHENG SHAO SHIONG, 70
Independent Director
Mr Cheng was appointed Director of
SPC in 1997.
Mr Cheng retired as Chief Executive
Officer of POSBank in July 1997. He holds
and has held directorships, in both listed
and unlisted companies. Currently, he is
the Chairman of TeleChoice International
Limited. He is also a Director of Hong
Leong Finance Limited, Pacific Andes
(Holdings) Limited, Tee International
Limited, SHC Capital Ltd, Thomson
Medical Centre Limited and CFM
Holdings Limited.
Other appointments include being the
Chairman of the Medifund Committee,
Singapore General Hospital.
Mr Cheng holds a Bachelor of Arts
(Honours) Economics, University of Malaya
(in Singapore). He received the Public
Administration Medal (Silver) in 1984 and
the Public Service Medal in 2001.
Singapore Petroleum Company Limited
Report to Shareholders 2007
Board of Directors
DR CHIN WEI-LI, AUDREY MARIE, 50
Independent Director
Dr Chin is Chairman of Vietnam Investing
Associates – Financials (S) Pte Ltd.
Previously, she was Head, Investment
Services, Fortis Private Bank and Partner –
Asset Allocation Strategies at Pacific Asset
Management (S) Pte Ltd, and Executive
Director of Rossignol Pte Ltd, an investment
adviser providing consulting services to
institutional fund managers. Between 1994
and 1999, Dr Chin was Division Head,
Asset Allocation in the Economics and
Strategy Department of the Government of
Singapore Investment Corporation.
Currently, Dr Chin is also a Director of
K-REIT Asia Management Limited.
Dr Chin holds a Bachelor of Laws
(Honours), Manchester University,
a Master of Science, Public Policy,
Oxford University, and PhD, Public Policy,
Rand Graduate School.
19
BOARD OF DIRECTORS
DATO PADUKA TIMOTHY
ONG TECK MONG, 54
Independent Director
Dato Ong is the Acting Chairman of the
Brunei Economic Development Board
established by the Brunei government to
create new industries in Brunei. His many
business roles include being Chairman of
BruCapital Holdings, Co-Chairman of The
Edge Asia Inc, Chairman of Asia Inc Forum,
Chairman of Hotel Associates, Deputy
Chairman of National Insurance of Brunei
and board member of Baiduri Bank, Brunei.
Dato Ong was the Chairman of the APEC
(Asia-Pacific Economic Cooperation)
Business Advisory Council in 2000 and
currently sits on a number of international
councils, including the Asian Advisory
Board for Prudential Financial Inc, the East-
West Centre and The Nature Conservancy.
He is also a board member of the Asian
Institute of Management in the Philippines.
He represented Brunei in the APEC Eminent
Persons Group from 1993 to 1995.
Dato Ong holds a Bachelor of Arts
(Honours) Economics & Political Science,
Australian National University, and Master
of Science (with Distinction) in International
Relations, London School of Economics.
Singapore Petroleum Company Limited
20 Report to Shareholders 2007
GEOFFREY JOHN KING, 60
Independent Director
Mr King has been a Director of SPC
since 2000. He brings with him 34 years
of diversified administrative, legal and
management expertise, covering employment
with the Australian Government Public Service,
Esso Australia Ltd and Ampolex Limited
where he served as General Counsel and
member of the Executive Committee.
Mr King is the principal of a New South
Wales legal firm specialising in energy law
and he provides legal services to energy
businesses operating in Australia.
He is currently a Director of Vermilion Oil &
Gas Australia Pty Ltd.
Mr King was engaged by the World Bank
in early 2000 to provide legal consultation
on oil and gas matters to the government of
Papua New Guinea (PNG), and continues
as legal adviser to the government on
energy developments proposed for PNG,
in particular the Gas to Australia project
and recently the proposed major
LNG development.
He was engaged by the Asian Development
Bank (ADB) in 2006 to provide advice on
legal issues relating to an energy project
under review by ADB.
Mr King holds a Bachelor of Laws,
Australian National University, Bachelor of
Arts, University of New South Wales. He is
a Barrister and Solicitor, Australian Capital
Territory and Victoria.
Board of Directors
GOON KOK-LOON, 65
Independent Director
Mr Goon received both the Silver and
Gold Public Administration Medals from
the Singapore Government. He was
Deputy Group President and President
(International Business Division) of PSA
Corporation Ltd (PSA). He has over 40
years of extensive experience in corporate
management, operation and administration,
both locally and internationally, from his
service with PSA.
Currently, he is Chairman of Global
Maritime & Port Services Pte Ltd and a
Director of Grocery Logistics of Singapore
Pte Ltd, Jaya Holdings Ltd, Singapore
Offshore Petroleum Services Pte Ltd,
Yongnam Holdings Ltd and Venture
Corporation Ltd.
Mr Goon holds a Bachelor of Engineering
(Electrical) (First Class Honours), University
of Liverpool, UK, and attended Post-
graduate Study Programme, Massachusetts
Institute of Technology, USA.
Singapore Petroleum Company Limited
Report to Shareholders 2007
TEO SOON HOE, 58
Director
Mr Teo has been a Director of SPC since
1999. Currently, he is Senior Executive
Director and Group Finance Director
of Keppel Corporation Limited. He is
Chairman of Keppel Telecommunications &
Transportation Ltd and Keppel Philippines
Holding Inc. In addition, he is a Director of
Keppel Land Limited, Keppel Offshore &
Marine Limited and k1 Ventures Ltd. He is
also a Director of MobileOne Ltd.
Mr Teo commenced his career with the
Keppel Group when he joined Keppel
Shipyard Limited in 1975. He rose through
the ranks and was seconded several times
to various subsidiaries of the Keppel Group
before assuming the position of Group
Finance Director in 1985.
Mr Teo holds a Bachelor of Business
Administration, University of Singapore,
and is a Member of the Wharton Society
of Fellows, University of Pennsylvania.
Board of Directors
CHENG HONG KOK, 65
Director
Mr Cheng joined the Economic
Development Board (Singapore) in 1964
and was Chief of Projects Division from
1968 to 1970. He was also a board
member of the Economic Development
Board from 1987 to 1990 and a member
of the Government Economic Planning
Committee from 1989 to 1991.
Mr Cheng held various senior positions in
SPC in corporate planning, finance, supply
and trading, and marketing and distribution
from 1970 to 1980, and was the President
and Chief Executive Officer of the Company
from 1981 to 1996. He was Executive
Director from 1991 to 1996. Through SPC,
he was involved in the founding and
development of ASCOPE (ASEAN Council
on Petroleum).
After the takeover of SPC by Keppel
Corporation Limited, he was reappointed
Director in 1999. Currently, he is a Director
of Keppel Oil and Gas Services Pte Ltd,
SRC, SPC Refining Company Private
Limited, Orchard Parade Holdings Limited,
Gul Technologies Singapore Limited,
SP Corporation Limited and GITI Tire
Company Ltd.
Mr Cheng holds a Bachelor of Science
(First Class Honours) Chemical Engineering,
University of London; and Advanced
Executive Management Certificate at J.L.
Kellogg Graduate School of Management,
Northwestern University, USA. Mr Cheng
was a Singapore State Scholar as well as
an Eisenhower Fellow.
21
KEY EXECUTIVES
KOH BAN HENG, 59
Chief Executive Officer
Mr Koh is the Chief Executive Officer of
SPC. He joined SPC in February 1974
and held several key positions in the
company before being appointed CEO
in August 2003. Mr Koh’s experience
spans refining operations and planning,
marketing and distribution, supply and
trading, oil and gas exploration and
production including the development and
establishment of new businesses.
Mr Koh has delivered exceptional
results over the last four years. He was
instrumental in the landmark refining and
retail acquisitions in 2004. He led and
paved the way for several key capital
investments in E&P. These have provided
the strategic drive that has led to SPC’s
current success and will be the foundation
for the Group’s sustained growth.
He holds directorships in several SPC’s
subsidiaries and associated companies.
Mr Koh holds a Bachelor degree in
Applied Chemistry and post-graduate
diploma in Business Administration,
University of Singapore.
JEE-THENG TONY TAN, 58
Senior Vice-President
Exploration & Production
Dr Tan joined SPC in 2000. He was
previously Chief Executive at Gaffney,
Cline & Associates, Asia-Pacific based
in Singapore. Prior to this, he was with a
major oil company based in Calgary and
Houston for 16 years. Dr Tan held several
key positions in international exploration,
production, operation and new ventures
in Canada, Trinidad, Denmark, Southeast
22
Asia and China. With over 29 years of
international experience in E&P, he leads
SPC’s efforts in development and
acquisition, and establishment of joint
ventures and strategic alliances for
SPC’s E&P businesses.
He holds directorships in several SPC
subsidiaries and associated companies,
and was Chairman of the ASEAN
Council on Petroleum, E&P Committee
from 2003 to 2005.
Dr Tan holds a Bachelor of Science (First
Class Honours, Geology), University of
Malaya, Masters of Science, Carleton
University, Canada, PhD (Geology),
University of Calgary, and Certificate in
Corporate Finance, Wharton-Singapore
Management University.
LEE CHIANG HUAT, 58
Chief Financial Officer
Senior Vice-President
Finance & Investor Relations
Mr Lee has during his 27 years with
SPC been responsible for the Group’s
finance and accounting portfolios,
which include accounting and reporting
functions, treasury, banking and credit
management. His current responsibilities
include the investor relations and
information technology portfolios.
He holds directorships in several SPC
subsidiaries and associated companies.
Mr Lee holds a Bachelor of Business
Administration and Masters of Social
Science (Applied Economics),
University of Singapore and Masters of
Business Administration, University of
New South Wales.
Singapore Petroleum Company Limited
Report to Shareholders 2007
CHRIS KEONG POH GUAN, 54
Senior Vice-President
Marketing
Mr Keong joined SPC in 2000. Prior
to SPC, he held senior management
positions in several Asia-Pacific affiliates
of a major oil company.
He has over 28 years of extensive
experience in the oil business covering
refining, operations, technical services,
sales, marketing, corporate planning,
trading and supply, risk management and
general management. Presently, he leads
SPC’s efforts in sales, marketing and the
development and execution of SPC’s
strategic downstream initiatives to expand
and grow its fuels, lubricants and special
products businesses in the Asia-Pacific.
Additionally, he has responsibility for several
marketing support units including Operations
and Logistics, Market Development and
Ventures, and provides stewardship over
EHSS matters of the Company.
Mr Keong is a Fellow of the Chartered
Institute of Marketing (UK) and a Member
of the Singapore Institute of Directors.
He holds directorships in several SPC
subsidiaries and associated companies.
Mr Keong holds a Bachelor
(First Class Honours) in Engineering,
Chemical and Materials, University of
Auckland, a post-graduate diploma
in Business Administration, National
University of Singapore and a post-
graduate diploma in Management
Accounting and Finance, National
Productivity Board.
Key Executives
 WOO SIEW CHENG, 57
Senior Vice-President
Refining, Supply & Aviation
Mr Woo began his oil industry career
in 1976 with a major oil company. He
joined SPC in 1983. He has over three
decades of experience in the industry
with extensive exposure and knowledge
in crudes and products trading, refinery
production planning and supply
coordination and terminalling. Currently,
he leads the Refining, Supply & Aviation
business unit in aviation sales and
the operation of the Pulau Sebarok
terminalling facility.
He also has overall responsibility of
SPC’s business interests in the jointly-
owned refinery, SRC. Mr Woo played a
key role in the implementation of a SRC
unitisation plan and system that has
resulted in significant efficiency in crude
purchases and refining optimisation.
He holds directorships in several SPC
subsidiaries and associated companies.
Mr Woo holds a Bachelor of Science
(Honours, Applied Chemistry),
University of Singapore.
Singapore Petroleum Company Limited
Report to Shareholders 2007
MRS HELEN CHONG
(NEE CHIA FOONG LAN), 54
Company Secretary
Senior Vice-President
Legal, Secretariat and Insurance
Mrs Chong started her career in legal
practice and worked in an insurance
company prior to joining SPC in 1980 as
its Company Secretary/Legal Counsel.
She is responsible for the Group’s legal,
corporate secretarial and insurance
matters across all SPC businesses, from
E&P to downstream activities.
She is a Member of the Singapore
Institute of Directors.
Mrs Chong holds a Bachelor’s degree in
Law (Honours), University of Singapore,
and was admitted as an advocate and
solicitor in Singapore.
MS FOO JANG SEE, 48
Senior Vice-President
Crude & Products Trading
Ms Foo started her career in the oil
industry with SPC in 1982. During the
last 25 years with SPC, she acquired
extensive experience in a wide spectrum
of activities including crudes & products
trading, marine sales, derivatives trading,
inventory risk management, supply
operations, chartering and terminal
operations. Ms Foo has managed and
led the products trading team to
position SPC as a significant player
in the oil industry.
Ms Foo’s international networking,
together with extensive knowledge of oil
markets, is advantageous in her current
responsibility of heading the crudes &
products trading group.
Ms Foo holds a Bachelor of Science
in Chemical Engineering, National
University of Singapore.
Key Executives
23
BOARD OF DIRECTORS
PAST PRINCIPAL DIRECTORSHIPS
IN THE LAST FIVE YEARS
CHOO CHIAU BENG
Caspian Shipyard Company Ltd; EDB
Investments Pte Ltd; FELS Property
Holdings Pte Ltd; FELS Realty (Texas)
Inc; FELS (USA) Inc; K1 Ebiz Holdings
Private Limited; Kepital Holdings (Pte)
Ltd; Kepmount Shipping Pte Ltd; Keppel
Asia Limited; Keppel FELS (China)
Ltd; Keppel FELS Invest (HK) Ltd;
Keppel Infrastructure Pte Ltd; Keppel
Marine Agencies Inc; Keppel Oil and
Gas Services Pte Ltd; Keppel Offshore
Investment Ltd; Keppel Power Systems
Pte Ltd; Keppel Regional Infrastructure
Pte Ltd; Keppel Telecoms Pte Ltd;
Keppel-UAE Investment Pte Ltd; Keppel
Vietnam Investment Pte Ltd; Kepventure
Pte Ltd; Travelmore Pte Ltd; WIIG
Global Ventures Pte Ltd; Waterfront
Development Consultants Pte Ltd.
KOH BAN HENG
Changi Airport Fuel Hydrant Installation
Pte. Ltd.; FST Aviation Services Limited;
SPC Shipping Company Limited;
Singapore Petroleum (China) Private
Limited; Singapore Petroleum (Thailand)
Co. Ltd; Singapore Petroleum Trading
Company Limited; SPC Cambodia Ltd.
24
BERTIE CHENG
SHAO SHIONG
EPEX Industrial Pte Ltd; Mobile
Solutions and Payment Services Pte
Ltd; Nobel Design Holdings Limited;
Performance Group Pte Ltd; Project
Greenearth Pte Ltd; SembCorp
Engineers and Constructors Pte
Ltd; SHC Engineering Pte Ltd; SHC
Technology Pte Ltd; Singapore
Technologies Telemedia Pte Ltd; ST
Mobile Data Pte Ltd; ST SunPage
Pte Ltd; ST Teleport Pte Ltd; STT
Communications Ltd; SunPage
Communications Pte Ltd; The Nanyang
Insurance Company Ltd; Thomson
Global Healthcare Management Pte Ltd.
DR CHIN WEI-LI,
AUDREY MARIE
Rossignol Pte Ltd.
DATO PADUKA TIMOTHY
ONG TECK MONG
Alif Technologies Sdn Bhd;
BruTechnology Sdn Bhd; Jasra Harrisons
Sdn Bhd; Primrose Investment Sdn
Bhd; Watkin Syndicate; Willis Insurance
Brokers (B) Sdn Bhd.
Singapore Petroleum Company Limited
Report to Shareholders 2007
GEOFFREY JOHN KING
Wood, King & Associates Pty Ltd.
GOON KOK-LOON
Gujarat Pipavav Port Ltd, India; Heesse
Noord Natie (HNN), Belgium; Incheon
Container Terminal Co Ltd, South Korea;
iPBio Pte Ltd; iPMedia Pte Ltd; Jiwa
Harmonia Sdn Bhd; PSA International
Pte Ltd; PSA Muara Container Terminal
Sdn Bhd, Brunei; PSA SICAL Terminals
Ltd; PSA Sines Terminalds De
Contentores SA, Portugal; PSA Yemen
Ltd; SICAL CWT Distriparks Ltd, India;
Singapore Dalian Port Investment Pte
Ltd; Yemen Investment & Development
(International) Ltd.
TEO SOON HOE
Centurion Bank Limited; Keppel Bank
Philippines, Inc; Keppel Shipyard
Limited; Southern Bank Bhd.
Board of Directors
Past Principal Directorships in the Last Five Years
KEY EXECUTIVES
PAST PRINCIPAL DIRECTORSHIPS
IN THE LAST FIVE YEARS
KOH BAN HENG
Changi Airport Fuel Hydrant Installation
Pte. Ltd.; FST Aviation Services Limited;
SPC Shipping Company Limited;
Singapore Petroleum (China) Private
Limited; Singapore Petroleum (Thailand)
Co., Ltd.; Singapore Petroleum Trading
Company Limited; SPC Cambodia Ltd.
JEE-THENG TONY TAN
No past directorships in the last five years.
LEE CHIANG HUAT
Singapore Petroleum Company (Hong
Kong) Limited; Singapore Petroleum
Dovechem Private Limited; SPC
Shipping Company Limited; SPC Kakap
Limited; SP-CYC Venture Pte. Ltd.; SPC
Indo-Pipeline Co. Ltd.; SPC Cambodia
Ltd; Jiangmen City Sinjiang Gas Co. Ltd.;
Tiger Oil Corporation.
Singapore Petroleum Company Limited
Report to Shareholders 2007
CHRIS KEONG POH GUAN
Petmal Oil Corporation Sdn. Bhd.;
Singapore Petroleum Dovechem Private
Limited; Jiangmen City Sinjiang Gas Co.
Ltd.; Tiger Oil Corporation.
WOO SIEW CHENG
Singapore Carbon Dioxide Company
Private Limited; Singapore Petroleum
(China) Private Limited; Singapore
Petroleum Venture Private Limited;
Tiger Oil Corporation; Singapore
Petroleum Dovechem Private Limited.
MRS HELEN CHONG
(NEE CHIA FOONG LAN)
SPC Shipping Company Limited;
Singapore Petroleum Trading Company
Limited; Singapore Petroleum Company
(Hong Kong) Limited.
MS FOO JANG SEE
Tiger Oil Corporation
Key Executives
Past Principal Directorships in the Last Five Years 25
OPERATIONS REVIEW
EXPLORATION & PRODUCTION

The expansion of the Group’s E&P

will create and deliver sustainable
future growth.

MAJOR DEVELOPMENTS IN 2007

• Expanded oil production from 2,600 boepd to 10,000 boepd

• Extended footprint to China and Australia
• Made largest acquisition to date, in Bohai Bay, China
• Became operator for the first time in the Pearl River Mouth Basin, China
• Produced first oil at Oyong oilfield, Indonesia

Singapore Petroleum Company Limited Operations Review

26 Report to Shareholders 2007 Exploration & Production
INTRODUCTION
SPC has further diversified its E&P
portfolio by entering into China and
Australia. This expansion of the Group’s
E&P will create and deliver sustainable
future growth.
In China, SPC established its presence
in the Bohai Bay through the acquisition
of the Cao Fei Dian (CFD) producing oil
fields. It also established its presence
in the prolific Pearl River Mouth
Basin through an award of a 100%
operatorship interest in Block 26/18.
SPC acquired its first E&P acreage
in Australia with the award of the
exploration permit T/47P in the Bass
Basin through a successful bid round.
Oil and gas production in 2007 was
lifted by the commencement of oil
production from the Oyong field in
Sampang PSC and further boosted by
the purchase of the CFD producing
fields. By the fourth quarter of 2007,
SPC’s combined oil and gas production
from Kakap, Oyong and CFD climbed
from 2,600 boepd to approximately
10,000 boepd.
In addition to these producing assets,
SPC has other assets at exploration
and pre-development stages. It also
holds interests in midstream gas pipeline
assets in Indonesia.
PERFORMANCE
In 2007, SPC’s production from the
Kakap PSC, the Sampang PSC and
the CFD fields totalled 1.9 million barrels
of oil equivalent (boe). At an average net
realised price of US$70.61 per barrel,
the E&P business contributed
$145.1 million in revenue and
$52.4 million in operating profit.
BUSINESS HIGHLIGHTS
Kakap PSC, Indonesia
The Kakap PSC presently has two
blocks covering 2,000 km2. It is located
Singapore Petroleum Company Limited
Report to Shareholders 2007
in the West Natuna Sea of Indonesia
and 486 km northeast of Singapore.
There are nine producing oil and gas
fields integrated by four platforms and
five subsea tie-backs. Produced oil is
processed by a Floating Production
Storage and Offloading (FPSO) vessel
and gas is transported through the
West Natuna Transportation System
pipeline to Singapore.
SPC continued to enjoy healthy and
stable production from the Kakap
PSC. For 2007, the combined field
production was approximately 975,000
boe for SPC’s share. During the year, an
exploration well Pancing-1X was drilled
which resulted in a non-commercial oil
discovery. Continued efforts to bring 1
additional gas production onstream
were carried out with the drilling of the
KG West-1 well. This well and the Lukah has been completed and tendering of the
gas discovery in 2006 are currently engineering, procurement, construction
scheduled for tie-back to the existing and installation (EPCI) contract for the
platforms. The two wells will maintain second phase development is ongoing
the Kakap gas production for supply at the time of this report. Gas production
to Singapore. is expected to commence in 2009. The
gas to be produced will be transported
Sampang PSC, Indonesia through a 55 km pipeline to an onshore
Oyong processing facility adjacent to the Grati
In 2007, the final milestone in the Power Station in East Java. A gas sales
development of Oyong oil was agreement has been concluded with
completed with the successful PT Indonesia Power for the entire gas
conversion of the production barge and reserves of the field.
subsequent tie-in with the wells and
the Floating, Storage and Offloading Wortel
(FSO) vessel. Oil started flowing from The partners are evaluating the full
the Oyong field in September 2007. This potential of the Wortel discovery
is SPC’s second producing asset after located 7 km west of the Oyong field.
the Kakap PSC. At the commencement, An appraisal well Wortel-3, located
Oyong produced oil at approximately east of Wortel-1 well, is scheduled for
8,000 to 10,000 bpd, which equates drilling in 2008. The Wortel discovery
to 3,200 to 4,000 bpd for SPC’s is planned as a tie-back to the Oyong
40% interest. gas production.
With the completion of the Oyong oil
development, the Sampang partners have
embarked on the second phase of Oyong
development to monetise its gas reserves.
Front End Engineering Design (FEED) 1. Oyong wellhead.
Operations Review
Exploration & Production 27
OPERATIONS REVIEW
EXPLORATION & PRODUCTION
1 2
Jeruk
The Sampang partners continue to
examine possible development scenarios
to commercialise Jeruk’s resources.
Bohai Bay, China
In October 2007, SPC announced
its successful US$223 million
($334.5 million) acquisition of two
producing blocks in Bohai Bay, China.
Through its wholly-owned subsidiary,
SPC E&P (China) Pte Ltd, SPC
won a competitive bid for 100% of
Sino-American Energy Corporation
shares with 18.2% (8.9% – producing
fields) and 23% (7.8% – producing
fields) working interest in Blocks 04/36
and 05/36, respectively.
Blocks 04/36 and 05/36 are located in
western Bohai Bay, 190 km east of Beijing,
covering a total of 3,080 km2. The blocks
contain several CFD producing fields with
a total gross production of approximately
50,000 bpd. Produced oil is gathered by
six platforms and processed by a FPSO
under a long term lease.
Effective 1 July 2007, the Bohai Bay
assets contributed approximately
4,300 bpd to SPC’s production.
Ongoing infill drilling and well workover
are being conducted by the operator to
maximise production from the fields.
The Bohai Bay assets is currently SPC’s
largest producing property.
1. CFD FPSO Vessel.
2. Oyong production barge.
28
Blocks 102 and 106, Vietnam
Blocks 102 and 106 cover approximately
14,000 km2 and contain the Yentu-1X
and Thai Binh oil and gas discoveries.
In 2007, the partners completed a
2,189 km 2D seismic survey in these
blocks. The joint venture partners
are currently planning to conduct a
three-well exploration/appraisal drilling
programme in 2008.
Block 101-100/04, Vietnam
Block 101-100/04 is located in the Gulf
of Tonkin, Northern Vietnam and adjacent
to Blocks 102 and 106. This block
covers approximately 6,174 km2 and
has gas and condensate discovery.
Under the exploration phase of the
PSC term, the joint venture partners
are committed to the processing and
interpretation of existing seismic data,
acquisition of new 3D seismic surveys
and drilling of one exploration well within
the first three years. To date, the 3D
seismic survey covering 689 km2
has been completed. Exploration drilling
is planned for early 2009.
Block B, Cambodia
Block B acreage is located 250 km
offshore from Cambodia. The block
lies on the southeast of the Khmer
Basin where a number of oil and gas
discoveries had been made.
In January 2007, SPC and its joint
venture partners exercised their
pre-emption rights to acquire the entire
10% participating interest of CE
Cambodia B Ltd. As a result, SPC
currently holds a 33.3% participating
Singapore Petroleum Company Limited
Report to Shareholders 2007
interest in this block. A 3D seismic
survey of 650 km2 was completed.
Exploration drilling is planned for
the second half of 2008.
Block 26/18, China
In August 2007, SPC signed a petroleum
contract with China National Offshore
Oil Corporation (CNOOC) for a 100%
operating interest in Block 26/18. The
Block covers 4,961 km2 in the Pearl River
Mouth Basin, South China Sea. It is
150 km from shore in water depths
between 85 and 200 metres.
Block 26/18 contains the EP-20-3-1
discovery well drilled in 1998.
Commercial oil production in the basin
had been centred in the Wenchang,
Penyu, Huizhou, Lufeng and Liuhua
fields. Preliminary geological and
geophysical indicate several prospects.
Under the initial three-year exploration
phase, SPC is responsible to carry out
an agreed work commitment on this
block which includes acquiring 2,000 km
of 2D seismic survey and the drilling of
one exploration well. Upon commercial
hydrocarbon discovery, CNOOC has the
right to participate up to an interest of
51% in the PSC.
T/47P, Australia
In March 2007, SPC together with
Tap Oil and Jubilant Energy were
awarded an exploration permit for Block
T/47P. The Bass Basin block contains
the Cormorant oil, condensate and
gas discoveries.
In addition to the Cormorant
discoveries, T/47P also contains
Operations Review
Exploration & Production
several exploration prospects and
leads within its 2,890 km2 acreage.
It is located 200 km from Melbourne
at a water depth of between 50 and
100 metres.
The joint venture partners are pursuing
an aggressive exploration strategy to
estimate the potential of the block. In
January 2008, a 3D seismic programme
covering 525 km2 was completed. The
partners have secured a drilling rig to
conduct exploration drilling in the permit
area, commencing early 2009.
Midstream
SPC holds a 15% interest in
Transasia Pipeline Company Pvt Ltd
(Mauritius), which in turn holds a
40% interest in PT Transportasi Gas
Indonesia (PT TGI). PT TGI owns and
operates two major gas transmission
lines: Grissik-Duri pipeline and
Grissik-Batam-Singapore pipeline.
The 468 km Grissik-Batam-Singapore
pipeline is the second direct gas pipeline
transmitting gas from Indonesia to
Singapore. Gas supply to Singapore
commenced in 2003 under a 20-year
term contract between Singapore and
Indonesia. The 536 km Grissik-Duri
pipeline transfers gas from the Grissik
gas fields to Caltex’s Duri facilities
under long-term contracts commencing
from 1998.
To support the yearly ramp up of the
contractual gas volumes to be delivered
to Singapore, PT TGI has begun the
installation of a new compressor at
Jabung in 2007. The Jabung compressor
is expected to be ready by end 2008.

Proven plus Probable Reserves (SPC Share) Based on Working Interest

Net Average 2007 Production (boepd) * 5,293

Estimated Net Reserves Year End 2007 (million of boe) ** 24.6

* Includes annualised production from Oyong and CFD (fourth quarter 2007 onwards)
** Based on in-house estimates

SPC Working Interest by Area

Location Working Interest Status

[%]

Kakap PSC Indonesia 15.0 On Production

Sampang PSC Indonesia

- Oyong 40.0 On Production
(Gas on Development)
- Jeruk 21.8 Pre-development
- Wortel 40.0 Pre-development

Block 04/36 China 8.9 On Production

18.2 Exploration

Block 05/36 China 7.8 On Production

23.0 Exploration

Blocks 102 and 106 Vietnam 20.0 Exploration

(2008: Exploration Drilling)

Block 101-100/04 Vietnam 45.0 Exploration

(2008: Exploration Drilling)

Block B Cambodia 33.3 Exploration

(2008: Exploration Drilling)

T/47P Australia 35.0 Exploration

Block 26/18 China 100.0 Exploration

Singapore Petroleum Company Limited Operations Review

Report to Shareholders 2007 Exploration & Production 29
OPERATIONS REVIEW
REFINING, SUPPLY & TRADING

Tight global refining capacity and

favourable supply-demand fundamentals
resulted in healthy refining margins.

MAJOR DEVELOPMENTS IN 2007

• Realised record average refining margins of about • SRC achieved:

US$7.00 per barrel – More than 97% utilisation
• Processed 51.5m barrels of crude – 4.3 million man-hours without any loss time injury
• Initiated ultra-low sulphur diesel production project – 1 million man-hours of “no recordable injury”
• Carried out successful turnaround of Crude Distillation Unit 1

Singapore Petroleum Company Limited Operations Review

30 Report to Shareholders 2007 Refining, Supply & Trading
 1 2
MARKET ENVIRONMENT
Crude and product prices increased
sharply in 2007 due to perceived
imbalances and uncertainties in supplies
and availabilities. Global refining capacity
remained tight in 2007.
In 2007, regional markets such as
Indonesia and Vietnam took further steps
toward cleaner fuel specifications. The
buoyant energy market also witnessed
the addition of new storage capacities
in Singapore. The addition of refining
capacity globally however continued
to be constrained by high construction
costs and the shortage of the right
skill set. Project delays were
therefore prevalent.
Global oil demand for 2007 was
85.7 million bpd, an increase of 1.2%
over the 84.7 million bpd in 2006.
The Asia-Pacific region accounted for
25.5 million bpd out of this global
demand and contributed 60% of this
incremental global demand of 1 million
bpd. The demand growth was mainly
Singapore Petroleum Company Limited
Report to Shareholders 2007
driven by China and India’s burgeoning
appetite for energy. Consumption of
energy in the Middle-East also grew
as the high oil prices triggered a
construction boom across the region.
The monthly average Dubai crude
price in January was US$51.70 per
barrel (bbl). This rose to an average of
US$86.87/bbl in November due largely
to lower crude inventory levels and
geopolitical tensions.
Product prices in Singapore were well
supported for most of the year. Gasoline
demand was strong during the second
and third quarters due to the US summer
driving season and the anticipation
of hurricanes in the US Gulf Coast.
Naphtha demand was exceptionally
high from the petrochemical sector.
The kerosene and gas oil crack spreads
peaked in the fourth quarter due to
additional demand anticipated for
heating during the winter season. Fuel
oil demand was also healthy for most
part of the year with increased demand
Operations Review
Refining, Supply & Trading
in the third quarter due to an unplanned
shutdown of a Japanese nuclear
power plant.
In the Asia-Pacific region, tight global
refining capacity and favourable
supply-demand fundamentals resulted
in healthy refining margins. Average
refining margins peaked at US$9.00
per barrel in the second quarter due
to the extensive turnaround of regional
refineries. As a result of the positive
refining environment, the Group achieved
a record average refining margin of about
US$7.00/bbl for 2007.
1. Unwavering vigilance to ensure
safety and reliability.
2
2. Round-the-clock quality control.
31
OPERATIONS REVIEW
REFINING, SUPPLY & TRADING
CRUDE AND REFINERY
The total crude throughput for 2007
was 51.5 million barrels (bbls). During
the year, SRC upgraded its facilities
to enhance its flexibility to process a
wider crude slate. The refinery achieved
maximum utilisation of its crude
distillation and upgrading units, and
operated safely and reliably throughout
the year. SRC achieved a high utilisation
rate of more than 97% for 2007. SRC’s
Injury and Incident Free (IIF) culture has
resulted in tangible benefits. The refinery
recorded 4.3 million man-hours without
any loss time injury as of December
2007. It also achieved 1 million man-
hours of “no recordable injury” in 2007.
SRC carried out a successful turnaround
of the Crude Distillation Unit 1 and
associated upgrading and auxiliary units
during May and June 2007. About 1,300
contract workers were engaged during
this month-long maintenance exercise
which was completed safely without
any incident.
As part of the Group’s environmental
initiatives, SPC and its refinery partners
announced, an ultra-low sulphur diesel
(ULSD) production project in May 2007.
ULSD with a sulphur content of
50 parts-per-million would conform to
Euro-IV specifications. For this project,
1 evolving marketplace.
32
an existing hydro-desulphurisation
unit would be revamped to produce
ULSD. The revamp to enhance the
existing capability would increase
ULSD production volumes in 2009.
In line with the commitment for a
cleaner and greener environment,
SPC continues to evaluate further
similar projects.
AVIATION SALES
The Aviation Sales unit markets and
supplies aviation fuel to airlines at four
international airports namely, Singapore,
Hong Kong, Bangkok and Taipei. With
more than 30 years of aviation fuel sales
experience, SPC has built a solid
reputation as a reliable supplier of
quality aviation fuels.
Fuel sales at Singapore Changi Airport
accounts for the largest segment of the
Group’s aviation volume. Being an
aviation hub, and Asia’s sixth busiest
airport, Changi handled close to
40 million passengers and a cargo
throughput of 1.8 million tonnes for
2007. Air passenger traffic in Southeast
Asia saw strong growth in 2007
from increased leisure travel and the
proliferation of low cost carriers. Fuel
efficient aircraft and higher load factor
however capped fuel consumption
despite passenger growth.
Singapore Petroleum Company Limited
Report to Shareholders 2007
SPC’s sales volume at Changi was
15,500 bpd, 1.3% lower than in 2006.
The total fuel throughput at the airport
was approximately 80,000 bpd, a decline
of 0.8% over 2006. SPC supplied fuel to
21 airline customers at this location.
At the Hong Kong International Airport,
SPC achieved a sales volume of 3,000
bpd. SPC provided refuelling services to
five airline customers at this location.
At the Bangkok International Airport
at Suvarnabhumi, SPC maintained its
market share supplying fuel to five
airline customers.
At the Taiwan Taoyuan International
Airport, SPC achieved a sales volume
of 1,000 bpd.
DISTILLATES
The Distillates unit is responsible for
the sales and trading of products such
as naphtha and motor gasoline (light
distillates), jet fuel and gas oil (middle
distillates). The unit actively traded
distillate products from SRC and
external sources.
2007 was a challenging year for distillates
trading. Continuous price volatilities called
for caution. The move to cleaner and
lighter fuel specifications in the region
posed a challenge for SPC to produce
and sell finished products that meet the
requirements of end-users. The Distillates
unit captured a positive trading margin
in the fast-changing environment by
closely monitoring the market and taking
advantage of the Group’s supply chain
network. The Distillates unit achieved
a turnover volume of 33 million bbls
in 2007.
Many countries in the Asia-Pacific
region are expected to tighten fuel
specifications and impose stricter
emission standards. The demand for
environmentally friendly fuels will provide
niche trading opportunities for suppliers
able to meet such stringent specifications.
The Distillates unit will continue to monitor
such changes and keep pace with the
Operations Review
Refining, Supply & Trading
 2 3
RESIDUE
The Residue unit is responsible for SPC’s
fuel oil trading and marine sales activities.
Fuel oil of various specifications, including
standard bunker grades, is sourced
directly from SRC, other oil companies
and traders. Through the unit’s activities,
SPC has maintained its reputation as a
premier fuel oil and bunker supplier in
the region.
The Singapore fuel oil market was
marked by high prices and volatilities
throughout 2007 with concerns over
excessive credit exposure. The average
monthly price of fuel oil peaked in
November rising more than 80%
compared to the beginning of the year.
Supply and demand dynamics continued
to be challenging. The Singapore market
continued to attract supplies from India,
the Middle-East and non-traditional
sources such as South Korea and China
in addition to arbitrage cargoes from the
West. On the other hand, Chinese buying
of fuel oil was cautious and at times
dampened by the record prices. Much of
the surplus fuel oil was channelled into
the bunker market resulting in excess
supplies and aggressive competition
among the marine fuel suppliers.
In 2007, there were continuing pressures
to improve product specifications to meet
new emission standards. SPC’s focus
to improve fuel quality and operational
Singapore Petroleum Company Limited
Report to Shareholders 2007
performance standards was recognised
by regulators. Throughout the year, SPC
met the quality standards of Marpol
(Marine Pollution) 73/78 Annex VI, and
the specifications of ISO:9217 2005.
In 2007, the Maritime Port Authority
announced a new certification process
for bunker suppliers to be certified by
1 June 2007. SPC was the first company
to successfully receive this QMBS
(Quality Management for Bunker Supply
Chain) SS 524: 2006 certification in
November 2006.
OPERATIONS AND LOGISTICS
SPC‘s storage terminal for petroleum
products at Pulau Sebarok supports its
marine bunker operations, distribution and
trading businesses. The 220,000 cubic
metre terminal consists of 13 storage
tanks and is equipped with a deepwater
jetty for tankers up to 160,000 tonnes
displacement. A smaller jetty for barges
of up to 10,000 tonnes displacement is
also available for smaller cargo sizes.
The terminal has a comprehensive
laboratory which has the SINGLAS
(Singapore Laboratory Accreditation
Scheme) accreditation and a highly
advanced automated Distributed Control
System to provide quick turnaround for
tanker and barge operations.
In 2007, the terminal handled a product
throughput of 2.6 million tonnes
(2.9 million cubic metres).
Operations Review
Refining, Supply & Trading
RISK MANAGEMENT
AND DERIVATIVES
The Risk Management and Derivatives
unit is responsible for the management
of SPC’s crude oil inventory and
refining margin price risks through
hedging activities.
In 2007, the unit hedged against the
volatile price risks for its physical crude
oil and refined products inventory by
engaging in “Over-The-Counter” crude
oil and refined products derivatives.
These transactions were normally of
short-term tenures ranging from 3 to 12
months, and were done in tandem with
physical barrels.
The record high oil prices and the price
volatility in late 2007 is expected to
persist, posing a challenging hedging
environment for 2008. The unit will
continue to proactively fine tune its
strategies to manage the Group’s oil
inventory and refining margin price risks
in this environment.
1. Reliable supplier at Asia’s sixth
busiest airport.
2. Bunkering operations at PST.
3. SPC’s storage terminal at
Pulau Sebarok
33
OPERATIONS REVIEW
MARKETING

Being the first to offer CNG at a service station,

SPC continues to offer a comprehensive range of
products and services across its retail network.

MAJOR DEVELOPMENTS IN 2007

• Acquired a majority stake in an Indonesian fuels-marketing company

• Established a lubricant distribution network in China
• First to offer CNG filling in a service station on mainland Singapore
• First to launch a drive-through ATM in a Singapore service station
• First service station network to promote out-of-home digital advertising
• The engineering department successfully completed 45,000 safety man-hours without any “Loss Time Injury”

Singapore Petroleum Company Limited Operations Review

34 Report to Shareholders 2007 Marketing
MARKETING REVIEW
The Marketing Business Unit (Marketing)
adopted a prudent approach in 2007
in the face of volatile oil prices.
Managing risks and limiting credit
exposures remained priorities even as
Marketing sought further commercial
opportunities. Domestically, the market
remained highly competitive. This was
further exacerbated by increasing
construction, transportation and other
operating costs.

Against this challenging backdrop,

Marketing continued to capitalise on
commercial opportunities to build long-
term commitment and market presence
1
while enhancing shareholder returns.

MARKET DEVELOPMENT
AND VENTURES
Market environment
In line with SPC’s vision to build a
premium regional brand name, the
Market Development and Ventures unit
seeks overseas marketing business
opportunities. It focuses primarily on
tapping Asian markets that are beginning
to liberalise or are actively seeking
foreign investments. The energy sector
in most Asian markets is considered to
be strategic to economic development.
There may hence be regulatory, political
or bureaucratic barriers that could
impede SPC’s participation.
New investment
In the third quarter of 2007, the unit
successfully initiated the acquisition of a
60% shareholding in a local Indonesian
fuels-marketing company, PT Solar
Premium Central (PT Solar). This joint
venture will build on and expand SPC’s
presence in Indonesia through the
marketing of fuels. PT Solar also marked
3
SPC’s physical presence for the first
time as a business entity in the country.
Prior to this venture, SPC’s presence
in Indonesia was represented by the
marketing of lubricants through
appointed distributors.
Preserving value
The unit consistently monitored and
reviewed Marketing’s investment
portfolio to ensure an adequate
return-on-investment. Investments that
have become non-strategic or are
under-performing would be divested if
these could not be turned around. In
2007, SPC completed the divestment
of its interest in Jiangmen City Sinjiang
Gas Corporation, a liquefied petroleum
gas (LPG) storage and marketing
enterprise in China. SPC also divested
its entire shareholding interest in Tiger
Oil Corporation in Korea, a company
with a network of service stations and
petroleum distribution terminals.
RETAIL SALES AND DEVELOPMENT
Market environment
The retail market remained competitive
and challenging, with fluctuating and high
product prices throughout the year. Such
high product prices were frequently not
fully recovered at the pump. At the end of
2007, SPC had a network of 38 service
stations. Two outlets, Market Street and
Aljunied Road service stations, were
closed when the leases expired. A new
service station was opened in Punggol.
New service station at Punggol
The Punggol service station (PGSS)
commenced business in September
2007. The station is fully outfitted with
fuel dispensers, a convenience store,
a snack kiosk, an ATM machine and
manual car wash facilities to meet the
1. Making Choices convenience store
your everyday choice.

Singapore Petroleum Company Limited Operations Review

Report to Shareholders 2007 Marketing 35
OPERATIONS REVIEW
MARKETING
needs of motorists and residents in
the neighbourhood. This modern and
fully-equipped station is currently the
only service station in Punggol.
At the grand opening of the service
station in November, SPC donated
$10,000 to the Punggol 21 Community
Club Building Fund, and sponsored
prizes for a constituency photography
competition themed “Fabric of Punggol”.
Retailing of compressed natural gas
In November, SPC announced the
introduction of compressed natural
gas (CNG) at its Jalan Buroh service
station. This facility began operations
in February 2008. The project is part of
SPC’s corporate social responsibility to
support clean fuels. Besides being the
first to retail CNG at a service station,
SPC continues to offer a comprehensive
range of products and services across
its retail network.
COMMERCIAL SALES
Market environment
The Commercial Sales unit is responsible
for the marketing of petroleum products
(except lubricants) to the domestic
commercial, industrial and wholesale
markets. It also markets, trades and
exports special products such as
1 2
36
LPG, asphalt and sulphur within the
Asia-Pacific region.
In 2007, the inland, commercial and
industrial markets continued to be highly
competitive. Market growth was modest as
ample supplies were available. Nonetheless
with the focus on service and reliability,
SPC was able to secure new contracts
with a number of key customers.
Marketing, trading and export of special
products in the Asia-Pacific region
contributed significantly to the unit’s
portfolio. In spite of volatile product
prices throughout the year, the
steady increase in regional demand
enabled the unit to perform profitably.
SPC Wearnes Pte Ltd
SPC retails bottled LPG to the domestic
market through its joint venture company,
SPC Wearnes Pte Ltd. The joint venture
faced a challenging year of escalating
product costs in a highly competitive
marketplace in 2007, and this is expected
to continue in 2008.
LUBRICANT SALES
Market environment
The Lubricant Sales unit markets
SPC-branded lubricants in Singapore
and Asia-Pacific. In 2007, the market
continued to experience high base oil
Singapore Petroleum Company Limited
Report to Shareholders 2007
prices. The finished products market
meanwhile lagged behind such base
oil cost increases. SPC initiated timely
marketing programmes to mitigate the
impact of high costs and low margins to
remain profitable.
Achievements
To maintain its strategy of building
market presence and strengthening
earnings, SPC focused on the
marketing of premium automotive and
industrial lubricants. Improvements
were made to SPC’s product mix with
an increased proportion of premium
lubricants marketed to maximise returns.
To generate greater cost savings and
efficiencies, the unit also undertook
initiatives with strategic distribution
partners alongside improvements in
internal processes.
2007 was an outstanding year for the
Lubricant Sales unit. The Singapore
distribution network was rationalised
resulting in more focused marketing and
new customers. SPC also entered into
an Original Equipment Manufacturer
lubricant supply partnership with a
major European engine manufacturer.
Continuing its growth in the region,
SPC successfully entered the Vietnam
and Bangladesh lubricant markets
while improving its presence in existing
overseas markets.
Operations Review
Marketing
Singapore Petroleum (Guangdong)
Private Limited (SP Guangdong)
SPC’s newly-incorporated lubricant
marketing company in China, SP
Guangdong, successfully established
a distribution network in more than 15
provinces. SP Guangdong set up an
SPC “Image Lube Service Centre” in
Shenzhen to boost brand awareness
and market share. The Centre provided
one-stop service for comprehensive
automotive vehicle maintenance and
repairs. It also acted as a model outlet
and benchmark for SPC’s distributors
in China.

Technology
SPC continued to keep pace with
new technology to meet both market
and environmental requirements. Its
lubricant products were upgraded and
new additive technology was used in 3
both SPC automotives and industrial
lubricants sold in the region.

The acceptance and effectiveness of the
technology employed in SPC lubricants
was demonstrated through the 25 cars
from Hong Kong and China that used
SPC’s SynAce Racing Pro to participate
in a “drifting” competition in the third
quarter of 2007.
OPERATIONS AND LOGISTICS
Organisation
The Operations and Logistics unit covers
two portfolios. The Engineering department
designs, implements and conducts
feasibility studies, and manages
engineering projects for all Marketing units.
The Logistics department provides the
product distribution link between the
Company’s refinery and its local and
regional customers. Its activity hub is the
Jurong Bulk Plant (JBP).
Several of the projects involved testing
and upgrading of the underground
storage and piping system at the service
stations. All fuel dispensing pumps were
tested and calibrated regularly for accuracy
at all times.
CCTV systems were upgraded to
improve security and safety. The CCTV
resolutions were increased to facilitate
face recognition and remote access
monitoring capability.
The other key projects undertaken at
service stations include the construction
and commissioning of a new outlet at
Punggol, major upgrading and improvement
programme at Upper East Coast, and
retrofitting and construction of the CNG
filling facility at Jalan Buroh.
In 2007, the Engineering department
successfully completed 45,000 safety
man-hours and performed the year’s
activities without any Loss Time Injury (LTI).
Jurong Bulk Plant Operations
SPC’s distribution hub, Jurong Bulk
Plant (JBP) handled higher throughput
volumes for most of the products in
2007. Among the products distributed
or shipped, diesel, LPG and lubricant
volumes were significantly higher, with
increases of up to 40%.
JBP continued to operate productively
without compromising on safety. Having
performed 125,000 man-hour operations
this year, it maintained its zero LTI record
for four consecutive years. There was also
no fire or major oil spill incident in 2007.

Engineering In addition, Engineering provided technical

The Engineering department carried
out several improvement projects for
the service station network. This is
part of the Company’s effort to achieve
a consistent corporate image and to
ensure that high EHSS standards are
maintained throughout the network.
support to the Commercial Sales unit. It
assisted in office planning projects for
SPC’s offices in China, Indonesia as well
as Singapore.
1. Providing a one-stop service to motorists.
2. SPC has the largest chain of
car wash outlets.
3. Working harder and smarter to deliver
products and satisfaction.

Singapore Petroleum Company Limited Operations Review

Report to Shareholders 2007 Marketing 37
CORPORATE GOVERNANCE

SPC achieved a joint third placing

for the ‘Best Managed Board
Award for 2007’.

Singapore Petroleum Company Limited Corporate Governance

38 Report to Shareholders 2007
The SPC Group believes in nurturing
a strong corporate governance culture
with the Board, management and
staff, conscientiously ensuring that
this underpins corporate behaviour.
For SPC, corporate governance is not
mere compliance, but embedding the
right corporate mindset and culture.
SPC believes it is people that will make
corporate governance work.
To maintain high standards of corporate
governance, SPC regularly reviews its
organisational needs, internal structures
and processes, in keeping with the latest
corporate governance developments
regionally and globally. Corporate
governance was given greater emphasis
at the Board level when the Board in
January 2007 formally dedicated an
agenda item to corporate governance
issues. This segment preceded every
scheduled Board meeting and was held
without the presence of management.
Decisions and guidelines arising from the
sessions were subsequently conveyed to
or discussed with senior management in
the ensuing Board session.
As part of the Company’s ongoing efforts
to foster good corporate governance,
regular in-house corporate governance
related forums were held in 2007, led
by company officers, external advisers
Singapore Petroleum Company Limited
Report to Shareholders 2007
or consultants. There were structured The Company confirms that it has
learning sessions on the Company’s complied with the spirit and
corporate governance practices, policies, requirements of the Listing Manual
internal structures and processes. (Listing Manual) of the Singapore
Specialists were also invited to share Exchange Securities Trading Limited
legal, regulatory and other market (SGX-ST) and the Code of Corporate
related developments to help keep Governance 2005 (the Code), unless
the focus on corporate governance otherwise stated. The table on
developments and compliance. SPC’s page 40 provides an easy reference
internal corporate governance principles to the disclosure of our corporate
and framework were cascaded to SPC governance arrangements.
nominated directors in its subsidiaries
and associated companies via specific The following describes SPC’s corporate
sessions for such purposes. All directors governance practices in compliance with
and employees were also encouraged to the Code. There are other sections in
attend external courses on the subject. this Annual Report that are relevant to
corporate governance and as such, this
SPC has won the SIAS’ Singapore corporate governance report (Report)
Corporate Governance Award for five should be read in conjunction with
consecutive years since 2003, achieving those sections.
third place in 2007. SPC was also one of
five recipients of the ‘Most Transparent
Company Award’ in the Non-Electronic
Manufacturing category for 2007. At the
beginning of 2008, SPC achieved a
joint third placing for the ‘Best Managed
Board Award for 2007’. Such awards
are testimony to SPC’s corporate values
and effort to build trust and confidence
as a strong and sustainable enterprise.
SPC acknowledges with gratitude, the
continued support and recognition of
the investment community.
Corporate Governance
39
CORPORATE GOVERNANCE

CODE OF CORPORATE GOVERNANCE 2005

Principles and guidelines
Principle or guideline Page(s) reference in this Report

Guideline 1.3
Delegation of authority, by the Board to any Board Committee, to make decisions on certain board matters. 41
Guideline 1.4
The number of board and board committee meetings held in the year as well as the attendance of 42
every board member at these meetings.
Guideline 1.5
The type of material transactions that require board approval under internal guidelines. 41
Guideline 2.2
Where the company considers a director to be independent in spite of the existence of a relationship 43-44
as stated in the Code that would otherwise deem him as non-independent, the nature of the director’s
relationship and the reason for considering him as independent should be disclosed.
Guideline 3.1
Relationship between the Chairman and CEO where they are related to each other. 44
Guideline 4.1
Composition of nominating committee. 45-46
Guideline 4.5
Process for the selection and appointment of new directors to the board. 42, 45
Guideline 4.6
Key information regarding directors, which directors are executive, non-executive or considered 43-45
by the nominating committee to be independent.
Guideline 5.1
Process for assessing the effectiveness of the Board as a whole, and the contribution of each 44-46
individual director to the effectiveness of the Board.
Guideline 9
Clear disclosure of its remuneration policy, level and mix of remuneration, procedure for setting 48
remuneration and link between remuneration paid to directors and key executives, and performance.
Guideline 9.1
Composition of remuneration committee. 48
Guideline 9.2
Names and remuneration of each director. The disclosure of remuneration should be in bands of 48-50
$250,000. There will be a breakdown (in percentage terms) of each director’s remuneration earned
through base/fixed salary, variable or performance-related income/bonuses, benefits in kind,
and stock options granted and other long-term incentives.
Guideline 9.2
Names and remuneration of at least the top five key executives (who are not also directors). 49-50
The disclosure should be in bands of $250,000 and include a breakdown of remuneration.
Guideline 9.3
Remuneration of employees who are immediate family members of a director or the CEO, 49
and whose remuneration exceed $150,000 during the year. The disclosure should be made
in bands of $250,000 and include a breakdown of remuneration.
Guideline 9.4
Details of employee share schemes. 50-51
Guideline 11.8
Composition of audit committee and details of the committee’s activities. 51-53
Guideline 12.2
Adequacy of internal controls including financial, operational and compliance controls, 53-54
and risk management systems.

Singapore Petroleum Company Limited Corporate Governance

40 Report to Shareholders 2007
BOARD MATTERS
The Board’s Conduct of its Affairs
Principle 1
The functions and responsibilities of the
Board are to:
• provide entrepreneurial leadership,
set strategic goals, and ensure the
Company has the necessary financial
and human resources to meet
its objectives;
• review management performance;
• establish prudent and effective
system of internal controls, values,
financial reporting, risk management,
compliance and corporate
governance processes;
• set standards and values to ensure
that obligations to stakeholders are
properly discharged at all times.
As stated above, SPC elevated onto
the Board agenda, an item focused on
corporate governance while another
regular feature was a report on EHSS
in the SPC Group, in recognition of
the importance of such issues in the
Group’s businesses and operations.
SPC’s EHSS policy and practices are
presented on page 58.
SPC has set its strategic vision to be
an integrated oil and gas company with
a premium brand. For the financial year
2007, the Group achieved a record
revenue of $8.8 billion resulting in its
highest ever PATMI of $508.3 million.
In 2007, the goal to grow SPC’s
upstream business was further enhanced
through the acquisition of three PSCs in
China; two in Bohai Bay and one in Pearl
River Basin, and one exploration permit
in Bass Basin, Australia. Added to the
existing portfolio of producing assets,
SPC has, in 2007, achieved a total
production of about 10,000 boepd.
The upgrading projects in SRC,
described elsewhere in this Annual
Report, the formation of the Indonesian
joint venture and the new service
station and other downstream efforts
were the result of the Board and
Board Committee decisions based
Singapore Petroleum Company Limited
Report to Shareholders 2007
on management recommendations.
Such recommendations were subject
to rigorous corporate governance
processes at various levels within the
organisation that ensured thorough
assessment of financial, economic, legal,
country risks and other considerations.
The Board is conscious that
accountability, performance and good
management practices are necessary
components of the Company’s
processes and practices.
Board Meetings are open and
constructive with the Chairman actively
encouraging debates and discussions
among directors and management.
The CEO and senior management
provide updates and information to
the Board at the meetings involving
business operations or projects. The
Board receives financial reports on
the performance of each business unit
including significant developments.
Taking into account the information
and knowledge of the business and
financials, the Board is expected
to make informed decisions and
exercise objective judgment in the best
interests of the Company. The results
of the Nominating and Remuneration
Committee (NRC) managed annual
peer and self assessment carried out
by the directors on themselves and
each other sufficiently shows that the
Board possesses objectivity
and independence.
Corporate authority in SPC is defined
through two sets of delegation of
authority for the day-to-day operations
of the Company. These delegations of
authority are reviewed periodically and
updated when required, to cater for
changes in operations and organisational
structure within the Group. The first,
an executive delegation of authority,
sets out guidelines on matters requiring
Board approval and authority limits for
the Executive Committee (ExCo) and
management. The second is an internal
delegation of authority with differing
authority limits for management and staff.
Corporate Governance
Matters that are specifically reserved
for the Board are those involving
annual budgets, fund raising proposals,
investment and divestment proposals,
strategic business initiatives and
significant corporate actions of
the Company.
To assist the Board in its functions,
the Board established and delegated
specific responsibilities to three Board
Committees namely the ExCo, the NRC
and the Audit Committee (AC).
The Board also established the
Enterprise Risk Management Committee
(ERMC) comprising senior management
under the leadership of the CEO, to
review SPC’s risk profile and mitigation
strategy. This committee reports its work
and recommendations to the ExCo.
The management team, headed by
the CEO and comprising senior
management, ensured the decisions
and guidelines of the Board and
Board Committees are implemented
in the Group. The Board and, where
appropriate, the Board Committees
were consulted on urgent matters,
in accordance with the delegation of
authority and terms of reference of the
committees. The respective roles and
responsibilities of the ExCo, the NRC,
the AC, ERMC, and Management
Committee are presented below.
Following the 2007 Board performance
review conducted by the NRC, the Board
considered the risk profile of SPC and
decided in early 2008 to establish a new
Board Risk Committee with oversight of
risk management in the Group. The terms
of reference of this committee and those
of the ERMC, the ExCo and the AC will
also be reviewed in tandem to ensure
the growing operations of the Group are
administered comprehensively.
41
CORPORATE GOVERNANCE

EXECUTIVE COMMITTEE
The ExCo comprises four Board members. They are Messrs Choo Chiau Beng (Chairman), Koh Ban Heng, Cheng Hong Kok
and Goon Kok-Loon.

The ExCo reviews and recommends to the Board:

(1) Strategic business directions and plans of the SPC Group.

(2) Substantial acquisitions and disposal of assets (including securities and business undertakings of the SPC Group).
(3) Significant joint ventures and matters requiring corporate disclosure under the Listing Manual.
(4) Significant matters requiring Board recommendations affecting shareholders’ interests in the Company.
(5) SPC risk profiles, mitigation efforts and activities of the ERMC.

In addition, the ExCo acts as an intermediate forum between the Board and management, facilitating timely review and
endorsement of recommendations on the above business matters, subject to the delegation of authority and the final decision
of the Board.

In 2007, the Board met five times. Four
scheduled meetings coincided with
the review and release of the quarterly
results with one ad-hoc meeting called
at short notice. Three ExCo, four NRC
and five AC meetings were held in
the year. The quarterly NRC and AC
meetings were held on the same day as
the regular Board meetings.
Board and ExCo resolutions by
circulation were passed using electronic
and ordinary mail. Informal meetings
of the Board and Board Committees
were convened when required. The
Company’s Articles of Association allow
Board meetings to be conducted by
telephone, radio, close-circuit television
or other electronic means.
The Board members kept in regular
communication with the management.
Directors have access to management
and were able to discuss and clarify
business and related issues. Further
elaboration is provided under the section
titled “Access to Information” below.
New directors when appointed, as a
practice, will be briefed in an orientation
programme on the Company’s vision,
mission, strategy and business. They
will also be briefed on the Company’s
corporate processes. Heads of each
functional group will provide the
briefings. Corporate data is also given to
new directors to familiarise them with the
Group’s business.
In line with the recommendation of the
Code, the Company has practised the
issuance of formal appointment letters
to new directors setting out their duties
and obligations. SPC has also compiled
its own Corporate Governance Manual
(SPC Manual) to assist directors and
management in the exercise of their
legal, fiduciary and statutory duties.
This manual was issued to new directors
and is updated to keep pace with the
developments and amendments in the
Code of Corporate Governance, best
practices, the Singapore Companies Act,
Singapore securities legislation, and the
Listing Manual. It provides guidance on
conflict of interest issues and contains
requisite forms and precedents for
declarations of directors.
The SPC Manual is provided to the
Board members as well as executives
appointed to the various boards of the
SPC Group of companies. This is to
ensure that sound corporate governance
principles and processes prevail
throughout the Group. In addition, the
Company conducts briefing sessions, to
educate and update its executives on the
boards of SPC’s subsidiaries, associated
and joint venture companies on their
duties and obligations and corporate
governance principles.
SPC recognises director training and
professional development of directors
as important. As mentioned, nominee
directors to SPC Group companies
are encouraged to attend external
courses and continuing education
on the subject. Notwithstanding
their wealth of experience, SPC’s
directors have attended company-
organised courses and conferences
such as the Asia Pacific Petroleum
and Energy Conference (APPEC),
Australian Petroleum Production &
Exploration Association (APPEA), Oil &
Money, Asia Oil and Gas Conference
(AOGC), Cambridge Energy Research
Associates (CERA), Middle-East
Petroleum and Gas Conference
(MPGC) and Offshore Technology
Conference (OTC) to network and
update themselves with the views of
energy players and consultants.
The CEO’s briefing to the Board
includes strategic business updates
in addition to the regular update on
SPC operations. In addition to in-house
strategy workshops, external consultants
have been engaged to run workshops
for the Board and management.
Directors are updated on regulatory
and compliance issues by attending
courses like the Financial Reporting
Standards training programme, Temasek
learning sessions, Singapore Institute
of Directors (SID) and legal workshops

Singapore Petroleum Company Limited Corporate Governance

42 Report to Shareholders 2007
offered by law firms. Relevant material on
developments and updates are regularly
disseminated to directors.

In the previous in-house strategic

workshops, the Board and senior
management participated in joint and
separate meetings to establish and
fine tune the Company’s strategic
business plan.

Enterprise Risk
Management Committee
The role and functions of the ERMC
are more fully described on page 56.

Management Committee
1
The Management Committee is
headed by the CEO and comprises
Board Composition and Balance while the AC has four non-executive and
senior management. The committee
Principle 2 independent directors.
meets weekly to review strategic,
The Board comprises nine directors.
business and operational issues,
The non-independent and non-executive Mr Koh Ban Heng is the sole Executive
and determines policies of the SPC
directors are Messrs Choo Chiau Beng Director of the Company.
Group. The committee implements
(Chairman), Teo Soon Hoe and Cheng
and communicates the directions and
Hong Kok. The majority of the Board The NRC annually determines the
guidelines of the Board and Board
comprises non-executive independent independence of Board members
Committees to relevant committees,
directors, and they are Messrs Bertie by having each of them complete
departments and employees. These
Cheng, Geoffrey King, Timothy Ong, a questionnaire crafted to test
meetings ensure the smooth functioning
Goon Kok-Loon and Dr Audrey Chin. independence against standards
of the Group.
The chairpersons of the AC and NRC
are independent directors. All four
members of the NRC are non-executive
1. Active participation by shareholders
directors of whom three are independent, at the AGM.

Table 1 Board and Board Committees

The nature of directors’ appointments on the Board and details of their membership on Board Committees in 2007 are
set out below:

Nominating &
Director Board Membership Executive Audit Remuneration

Choo Chiau Beng Chairman Chairman – Member

Non-Independent & Non-Executive
Koh Ban Heng Executive Director Member – –
Bertie Cheng Shao Shiong Independent & Non-Executive – Member Chairman
Geoffrey John King Independent & Non-Executive – Member Member
Timothy Ong Teck Mong Independent & Non-Executive – – –
Chin Wei-Li, Audrey Marie Independent & Non-Executive – Chairperson Member
Goon Kok-Loon Independent & Non-Executive Member Member –
Teo Soon Hoe Non-Independent & Non-Executive – – –
Cheng Hong Kok Non-Independent & Non-Executive Member – –

Singapore Petroleum Company Limited Corporate Governance

Report to Shareholders 2007 43
CORPORATE GOVERNANCE

Table 2 Attendance at Board and Board Committee Meetings

The directors’ attendance at Board and Board Committee meetings held in 2007 are disclosed below:

Committee

Nominating &
Director Board Executive Audit Remuneration

Choo Chiau Beng 5 of 5 3 of 3 – 4 of 4

Koh Ban Heng 5 of 5 3 of 3 – –
Bertie Cheng Shao Shiong 5 of 5 – 5 of 5 4 of 4
Geoffrey John King 5 of 5 – 5 of 5 4 of 4
Timothy Ong Teck Mong 5 of 5 – – –
Chin Wei-Li, Audrey Marie 5 of 5 – 5 of 5 4 of 4
Goon Kok-Loon 5 of 5 3 of 3 5 of 5 –
Teo Soon Hoe 5 of 5 – – –
Cheng Hong Kok 5 of 5 3 of 3 – –

established by the Code. The NRC has
reviewed the independence of each
director for 2007 and is satisfied that
more than 50% of the Board consists
of independent directors based on
the Code’s definition of independence
and guidelines as to the existence
of relationships which would deem a
director to be not independent.
The NRC also examines the size and
composition of the Board and along
with the Board believes that the
present Board size and composition
is appropriate in facilitating effective
decision making.
The NRC is of the view that the
Board comprises directors capable
of exercising objective judgment on
the corporate affairs of the Company,
independently of management. The
NRC considers that the directors, as a
group, possess core competencies of
and more pertinently, the right balanced
mix of background and competencies
in finance, business, legal, human
resource and managerial experience with
industry knowledge, risk management
and strategic planning experience. All
directors have regional and international
business exposure and dealings critical
for the sustainability, growth and
governance of SPC. This wealth of
experience, affords the Board the ability
to not only provide effective oversight
and strategic navigation but also the
necessary checks and balances to
facilitate effective governance.
The NRC noted that the non-executive
directors had constructively challenged
and assisted in developing proposals on
strategy and reviewed the management’s
performance in achieving agreed goals
and objectives.
The non-executive directors have had
the opportunity to meet informally
before and after Board and Board
Committee meetings with and without
the presence of management and
also communicated through electronic
means and at company-organised
events to develop and discuss strategy
and to monitor the reporting of
performance. They helped to monitor
management performance in meeting
strategic goals and objectives.
The profiles and key information of the
Board members are found in the Annual
Report section entitled “Information
on Directors”.
Chairman and
Chief Executive Officer
Principle 3
The roles and responsibilities of the
Chairman and CEO in the Company are
distinct and separate. The Chairman, Mr
Choo Chiau Beng, is a non-independent
and non-executive director from the
Keppel Group. He does not have any
relationship with the CEO and SPC
management that could interfere with
his judgment and decision making.
The Chairman leads the Board in
ensuring its effectiveness on all aspects
of its function. To this end, he ensures
that the Board receives accurate, timely
and clear information. He also facilitates
constructive relations between Board
and management, and encourages
the effective contribution of the other
directors in their sessions, with or
without the presence of management.
The Chairman has openly engaged the
shareholders of the Company at its
general meetings.
The role of the CEO, Mr Koh Ban
Heng, is governed by his employment
contract with the Company. He leads
the management team and directs the
business of the Group in alignment with
strategic decisions and goals.
The Chairman and the Board together
approve the schedule of board meetings
for the financial year with additional
meetings called as and when required.
The Board agenda is prepared by the
Company Secretary after consultation
with the Chairman, the CEO and
senior management.

Singapore Petroleum Company Limited Corporate Governance

44 Report to Shareholders 2007
The CEO keeps in regular
communication with the Chairman
to update him of corporate issues
and developments.
Board Membership
Principle 4
The NRC has the responsibility and
objective of ensuring that there is a
formal and transparent process in
the nomination, appointment and
re-appointment of directors to the
Board. The NRC is also tasked
to assess the effectiveness and
contributions of the Board and its
members, to the strategic growth
and development of the Company.
Consistent with the Code, the chairman
of the NRC is an independent director,
not associated with a substantial
shareholder. The members of the
NRC are named in Table 2.
In addition, the Company’s Articles
of Association had, from the onset,
provided that one-third of the directors
are to retire from office at its Annual
General Meeting (AGM) every year.
Mr Koh Ban Heng, Geoffrey King and
Dr Audrey Chin having served longest
since their last election, will retire at the
AGM fixed for 23 April 2008 and offer
themselves for re-election. They were
selected by lot in accordance with
Article 110 of the Articles of Association
of the Company.
Mr Bertie Cheng, who has reached 70
years of age, will also retire at the coming
AGM and offer himself for re-election
pursuant to Section 153(6) of the
Companies Act.
The NRC has reviewed directors with
multiple directorships and is of the
view that sufficient time and attention
has been given to the affairs of the
Company through attendance at
Board and Board Committee meetings
and other meetings held on a less
formal basis including electronic and
telephone communications.
The committee has encouraged directors
to make every effort to attend Board
and Board Committee meetings and
other meetings either physically, or
through electronic media, achieving a
100% attendance for Board and Board
Committee meetings in 2007.
Throughout 2007, directors maintained
dialogue with other Board members
and management on matters within their
purview, over and above their attendance
at convened meetings.
Pursuant to its 2007 annual review of
the performance of the Board and its
skill set, the NRC is of the view that
the current Board has the necessary
mix of capabilities, expertise and work
experience to serve the Company and
its shareholders.
The NRC is charged with the
responsibility to evaluate the
nomination of new candidates to the
SPC Board. The NRC continues
to hold the view that additional
directors could be invited to join
and further strengthen the Board,
taking into consideration the growth
of the Company’s exploration and
production sector. Several candidates
have been considered and the
matter continues to be under review.
In accordance with the terms of
reference of the NRC, new candidates
will be assessed based on criteria
such as background, academic and

NOMINATING AND REMUNERATION COMMITTEE

The NRC has four Board members, majority of whom are independent. They are Messrs Bertie Cheng Shao Shiong (Chairman),
Choo Chiau Beng, Geoffrey John King and Dr Chin Wei-Li, Audrey Marie.

The NRC’s principal functions are as follows:

(A) On evaluation, appointment, nomination and re-appointment of a director, the committee:

(1) Reviews the background, academic and professional qualifications of nominees.
(2) Ensures that all directors submit themselves for re-nomination and re-election at least once in every three years.
(3) Determines the independence of the directors annually.
(4) Evaluates the performance of each member of the Board and as a whole.

(B) On the remuneration of directors and key employees of the Company, the committee:
(1) Establishes a competitive remuneration framework to attract, retain and motivate directors and key employees.
(2) Reviews the Company’s relative performance and the performance of individual directors and key executives
and considers their remuneration in totality with long-term incentive schemes such as share option and
share-based schemes.
(3) Assesses the performance of the Executive Director.
(4) Administers and implements the share option and share-based schemes of the Company in accordance with the rules
of such schemes and determines offers of options or awards of share grants to directors and key employees.

Singapore Petroleum Company Limited Corporate Governance

Report to Shareholders 2007 45
CORPORATE GOVERNANCE
Table 3 Date of Directors’ Last Re-election
Name
Choo Chiau Beng
Koh Ban Heng*
Bertie Cheng Shao Shiong#
Geoffrey John King*
Timothy Ong Teck Mong
Chin Wei-Li, Audrey Marie*
Goon Kok-Loon
Teo Soon Hoe
Cheng Hong Kok
Notes:
* Mr Koh Ban Heng, Mr Geoffrey John King and Dr Chin Wei-Li, Audrey Marie will retire at the AGM fixed for 23 April 2008 and offer themselves for re-election. They were selected
by lot in accordance with Article 110 of the Articles of Association of the Company.
#
Mr Bertie Cheng Shao Shiong, who has reached 70 years of age, will retire at the AGM fixed for 23 April 2008 and offer himself for re-election pursuant to Section 153(6) of the
Companies Act.
professional qualifications, experience,
independence and track record.
Pursuant to the annual NRC review on
2007 Board performance, a decision
was made to rotate the roles of Board
members. In January 2008, Mr Goon
Kok-Loon was appointed Chairman
of the Audit Committee in place of
Dr Audrey Chin who in turn was
appointed Chairperson of the new Risk
Committee with Messrs Geoffrey King
and Cheng Hong Kok appointed
as members.
Board Performance
Principle 5
At the close of financial year 2007, the
NRC reviewed the performance of the
Board as a whole and the performance
of each director through questionnaires
tailored to the Company’s business
and requirements. Each director was
asked to return written responses on the
Board’s performance for the year and
of the performance of each of the other
directors which is made known only to
the NRC chairman, Mr Bertie Cheng
and Board Chairman, Mr Choo Chiau
Beng. As part of its ongoing efforts to
keep current with corporate governance
developments, for the 2007 Board
performance review, the NRC updated
the evaluation questionnaire with new
46
Age Position
60 Chairman
59 Executive Director
70 Director
60 Director
54 Director
50 Director
65 Director
58 Director
65 Director
questions focusing on the strength of
the independence and objectivity of
the Board.
A report of the findings of the 2007
Board performance review was
presented to the NRC by its chairman.
Upon its endorsement, the report was
presented to the Board for discussion
and endorsement during the corporate
governance segment of the Board
meeting earlier described in this
Report. The individual performance
ranking of each director was advised
separately to the Board Chairman.
The assessment parameters included
overall contribution by each Board
member, attendance and performance
at Board and Board Committee
meetings, knowledge of the industry
and the Group’s business activities.
The peer evaluation addressed issues
such as whether a director continued
to contribute effectively, the dedication
and commitment demonstrated as
well as whether insightful issues were
raised. The evaluation parameters for
the 2007 Board performance review
had been updated to incorporate the
guidelines and directions of the Code
and the feedback received from the
previous year’s evaluation exercise.
These factors are also taken into
consideration for re-appointments.
Singapore Petroleum Company Limited
Report to Shareholders 2007
Date of Last
Date of Initial Appointment Re-election
3 May 1999 26 April 2006
21 August 2003 27 April 2004
18 July 1997 25 April 2007
1 August 2000 27 April 2005
1 August 2001 25 April 2007
1 August 2001 27 April 2005
30 July 2003 25 April 2007
3 May 1999 26 April 2006
3 May 1999 26 April 2006
In its review, the NRC used a variety
of financial indicators to measure the
Company’s performance and took into
account the business environment for
the year 2007. These included return
on assets (ROA), return on capital
employed (ROCE), total shareholder’s
return (TSR), return on equity (ROE),
return on investment (ROI), economic
value added (EVA) and earnings per
share (EPS).
In the 2007 Board performance review,
it was found that the directors have
made strong contributions to the Board.
Directors scored well on areas such
as commitment, industry awareness,
providing valuable inputs, knowledge
and understanding of finance and
accounts, risk management, meeting
preparation and raising insightful issues.
The NRC also took note of the continued
in-depth and open discussions at
Board and Board Committee meetings.
In addition to the above, the NRC
assessed the performance of the CEO,
Mr Koh Ban Heng, for the financial year
2007 according to the performance
criteria approved by the NRC earlier in
the year. The NRC feedback on Mr Koh’s
performance was considered against the
backdrop of the business environment
of 2007 before deciding on the variable
component in his remuneration.
Corporate Governance
More information on the remuneration
of Mr Koh and other key executives is
on page 49.
Access to Information
Principle 6
SPC’s management updated the Board
regularly on the Group’s business
and performance through financial
and other reports. Such updates
and reports covered background
and explanatory notes and included
disclosure statements, documents,
budgets and forecasts.
The Board was kept abreast of strategic
business developments concerning the
SPC Group at its quarterly meetings
by the CEO and senior management.
The information provided contained
important business developments,
significant investments/divestments and
projects including reports on financial
performance and other performance
indicators. Directors had affirmed in the
2007 Board performance evaluation
that timely, clear, concise and pertinent
information concerning the Board
agenda items had consistently been
provided to directors.
The reports were also intended to keep
directors advised of key concerns and
issues affecting the oil and gas industry
including the challenges faced by and
opportunities open to the SPC Group.
Such information aided the Board in
making informed, sound and appropriate
decisions.
Board and Board Committee papers
were sent to directors approximately
seven days prior to the meetings for
their review. SPC’s management was
invited to attend and present their
papers/updates at Board meetings and
to discuss issues which the directors
raised. Directors have access to
management and briefings or informal
discussions on the Group’s operations
and business.
Singapore Petroleum Company Limited
Report to Shareholders 2007
In addition, the Board has separate
and independent access to senior
management including the Company
Secretary, who attended all the
scheduled Board meetings in the year
2007. The Company Secretary is also
secretary to the ExCo and the NRC.
The Company Secretary has the
responsibility to ensure that Board
procedures are followed, that applicable
rules and regulations established by
the Board and Board Committees are
complied with. The Board and Board
Committees acknowledged in the 2007
Board performance review that there
were good information flows within
the Board, Board Committees and
management. Directors were also invited
from time to time to attend seminars
pertaining to corporate governance and
strategic business affairs.
On company matters, consistent with
the delegation of authority of the Board,
directors have the discretion, whether
as a group or individually, to obtain
or require independent professional
advice. The NRC has sought
professional advice from independent
legal, financial and audit consultants on
various issues.
REMUNERATION MATTERS
Procedures for Developing
Remuneration Policies
Principle 7
Level and Mix of Remuneration
Principle 8
Disclosure on Remuneration
Principle 9
SPC’s Remuneration Policy
SPC’s remuneration policy is focused
on driving the Company’s workforce
towards performance excellence for
ongoing creation and enhancement
of stakeholder value. It is anchored by
key guiding principles of attracting,
motivating and retaining high potential
and high performing individuals as well
as aligning employees’ interests with
those of the Company’s stakeholders.
Corporate Governance
47
CORPORATE GOVERNANCE

The policy is supported by the
Company’s performance review and
assessment programme. This programme
provides a platform for the Company
and its employees to set performance
goals and targets at corporate, Group
and individual levels; identify strengths
and weaknesses of processes and
capabilities as well as establish initiatives
to address competency gaps. Goals
and targets are set using the balanced
scorecard (BSC) matrix comprising
financial imperatives, customer service
values, internal processes and human
resource capabilities. Managers and
their respective group leaders meet
regularly to discuss progress status and
action plans towards achieving their
performance goals and targets as well as
setting directions for enhancements and
modifications of business and corporate
processes, models, and practices to
keep pace with challenges in the market
place. This will conclude in a formal
year-end performance assessment
for each employee across all levels.
The performance ratings are built into
the performance incentive matrix for
consideration by the Company’s senior
management for performance
rewards purposes.
Role of NRC in SPC’s
Remuneration Policy
The NRC is responsible for determining
SPC’s remuneration policy on executive
remuneration and for setting the
remuneration packages for individual
directors and senior management. The
committee undertakes a critical role in
ensuring that the remuneration and pay
compositions for individual directors and
senior management are competitive and
reflect the varying degree of roles
and contributions.
In the spirit of good corporate
governance, the NRC engaged
an independent consultant in
2007 to undertake a review on the
competitiveness of the remuneration
package for the Company’s directors
relative to related industry and
companies with comparable market
capitalisation. The NRC reviewed the
consultant’s report and decided to
retain the Company’s current
remuneration structure for directors.
The NRC leverages the Group’s
performance and assessment review to
determine the performance reward for
the CEO and senior management. The
committee periodically engages external
consultants to advise and recommend
the latest trends and best practices
in executive remuneration philosophy.
SPC’s management, in consultation
with the NRC, plans and introduces
new measures to the Company’s
remuneration practices to enhance its
competitiveness in attracting, motivating
and retaining talent, and aligning
employees’ interest to that of
the Company’s stakeholders.
The NRC, in addition to its principal
functions, also reviews appointments,
promotions and succession plans
of senior management. The NRC
also reviews and endorses SPC
management’s development plans of the
Company’s high potential individuals.
This is to ensure that the Company has a
readily available pool of talents for future
leadership renewal to ensure continued
success of the Group.
Remuneration of
Non-Executive Directors
Non-executive directors do not have
any service contracts with the Company.
Their terms of appointment are
governed by the Company’s Articles of
Association and the requirements of
the Listing Manual.

Table 4 Directors/Board Committees’ Fees*

Name 2007# 2006

Choo Chiau Beng 58,000 58,000

Koh Ban Heng∏ – –
Bertie Cheng Shao Shiong 38,000 38,000
Geoffrey John King 32,000 32,000
Timothy Ong Teck Mong 20,000 20,000
Chin Wei-Li, Audrey Marie 38,000 38,000
Goon Kok-Loon 32,000 32,000
Teo Soon Hoe 20,000 20,000
Cheng Hong Kok 26,000 26,000
Total 264,000 264,000

* Excludes share options and awards under the Restricted Share Plan which are disclosed in the Directors’ Report.
#
The total fee (rounded to the nearest thousand) is subject to shareholders’ approval at the AGM for the financial year 2007.
∏
The Executive Director is compensated in his executive compensation package.

Note: The proposed basic director’s fee is $20,000 per annum same as in 2006.

Singapore Petroleum Company Limited Corporate Governance

48 Report to Shareholders 2007
Table 5 Remuneration of Key Executives for the year ended 31 December 2007

Variable or
Performance Restricted/
Remuneration Band & Base/Fixed Related Income/ Share Options Performance
Name of Key Executive Salary Bonuses in 2007 § Share Plan*
(%) (%) (%)

$2,500,000 to $2,749,999
Koh Ban Heng 22 30 0 48

$1,250,000 to $1,499,999
Jee-Theng Tony Tan 31 29 0 40

$1,000,000 to $1,249,999
Lee Chiang Huat 28 26 0 46
Chris Keong Poh Guan 28 25 0 46
Woo Siew Cheng 28 25 0 47
Helen Chong (nee Chia Foong Lan) 27 23 0 50

$500,000 to $749,999
Foo Jang See 22 30 0 48

§ In 2007, no share options were issued and vested pursuant to the Scheme.

* 2004 RSP awards – 1st tranche released in 2005, 2nd tranche in 2006 and 3rd tranche in 2007. Share valued at $4.20 on contingent award date.
2005 RSP awards – 1st tranche released in 2006, 2nd tranche in 2007 and 3rd tranche vests in 2008. Share valued at $5.75 on contingent award date.
2006 RSP awards – 1st tranche released in 2007, 2nd tranche vests in 2008 and 3rd tranche is scheduled to be vested in 2009. Share valued at $5.00 on contingent award date.
2007 RSP awards – 1st tranche released and vests in 2008, 2nd tranche is scheduled to be vested in 2009 and 3rd tranche in 2010. Share valued at $5.75.
2004 PSP contingent award – Vesting of the performance shares subject to achievement of pre-determined performance targets for the 3-year cycle (2004 – 2006).
Vested in 2007. Share valued at $3.70 on contingent award date.
2005 PSP contingent award – Vesting of the performance shares subject to achievement of pre-determined performance targets for the 3-year cycle (2005 – 2007).
Shares vest in 2008. Share valued at $4.98 on contingent award date.
2006 PSP contingent award – Vesting of the performance shares subject to achievement of pre-determined performance targets for the 3-year cycle (2006 – 2008).
Shares are scheduled to be vested in 2009. Share valued at $5.00 on contingent award date.
2007 PSP contingent award – Vesting of the performance shares subject to achievement of pre-determined performance targets for the 3-year cycle (2007 – 2009).
Shares are scheduled to be vested in 2010. Share valued at $5.75 on contingent award date.

Non-executive directors are paid an
annual basic retainer fee with additional
fees for serving on Board Committees.
They are participants in the Restricted
Share Plan (RSP) of the Company.
Non-executive directors are required to
hold the awarded shares for three years
or the duration of their term as Board
members, whichever is shorter.
A breakdown, showing each director’s
fee proposed for the year 2007 is in
Table 4. The table also reflects the fees
paid to directors for the year 2006.
The CEO, Mr Koh Ban Heng, also an
Executive Director, is remunerated as a
member of management and does not
receive director’s fees.
There is no employee in the SPC Group
who is an immediate family member of
a director on the SPC Board, or CEO,
and whose remuneration exceeded
$150,000 during the year.
Details of awards of share options and
shares under the SPC Share Option
Scheme 2000 (the Scheme) and the
RSP and Performance Share Plan
(PSP) (collectively, the Share Plans)
to the CEO/Executive Director and
non-executive directors are described
in the Directors’ Report to the Financial
Statements. The Scheme was
suspended in 2004 with the launch of
the RSP and PSP schemes.
Remuneration of Key Executives
The NRC applies a stringent
performance focused remuneration
philosophy to the remuneration for key
executives. The remuneration package
for each financial year varies and is
largely governed by the extent to which
performance targets of the Group are
achieved. In essence, it comprises the
fixed and variable performance based
components. This same principle is also
applied across all levels of employees.
The fixed component is made up of
the base salary and the annual wage
supplement of one month salary. The
variable performance based component
is made up of an annual performance
bonus and share grants. The awards of

Singapore Petroleum Company Limited Corporate Governance

Report to Shareholders 2007 49
CORPORATE GOVERNANCE
these variable incentives are based on
the extent of the corporate and individual
performance achievements relative to
pre-determined goals.
The level and mix of remuneration of key
executives is disclosed in Table 5.
SPC Annual Performance Bonus,
RSP and PSP
SPC’s success in motivating employees
and inculcating a mindset of engagement
and ownership is largely attributed to the
short-term, annual performance bonus
and long-term share ownership incentive
schemes adopted by the Company.
The annual performance bonus is
intended to motivate employees
to consistently deliver high levels
of performance. Bonus payouts to
employees are based on corporate and
individual performance relative to the
achievement of performance targets
set at the start and during the course
of the year. The performance incentive
awards are managed and moderated
at the corporate level by the CEO and
members of senior management.
The RSP serves to encourage a
culture of ownership and engagement
amongst SPC employees. They are
Table 6 RSP and PSP awards for employees vested in the year ended 31 December 2007
Type of RSP/PSP
awards for employees
2004 RSP
2005 RSP
2006 RSP
2004 PSP 2004 – 2006
* Approximate representation of the Company’s issued share capital as at 31 December 2007: {based on 514,708,357 shares after deducting 1,598,000 treasury shares, i.e.
516,306,357 – 1,598,000 = 514,708,357}
2004 RSP = 0.0706%
2005 RSP = 0.0833%
2006 RSP = 0.0495%
2004 PSP = 0.1089%
50
awarded contingent restricted shares
linked to corporate targets for PATMI
and ROCE approved by NRC. The
release of an award is determined by
the extent to which the targets for these
measures have been achieved and the
contributions and performance of the
individual in achieving these targets. The
award is vested annually over a period of
three years beginning in the year in which
it is released.
The PSP is a long-term incentive to
motivate and drive the CEO and key
executives to grow the Company to the
next performance level. As members of
the Company’s management team, they
are challenged to apply their leadership
and business capabilities to grow and
strengthen the Company’s financial
performance. The PSP awards are
based on pre-determined performance
targets, covering a three-year period,
set on several financial performance
measures. For the 2007 PSP awards,
the measures were weighted on the EVA
spread, average EPS and absolute TSR
as a multiple of Cost of Equity for the
performance period of 2007 to 2009.
The PSP awards would be determined
by the extent to which the targets for the
measures are achieved. The performance
share awards would be confirmed by
Remaining
For performance Tranche of No. of
in year shares vested shares vested*
2004 3rd (Final) 363,600
2005 2nd 429,000
2006 1st 255,000
1,047,600
– 560,400
Singapore Petroleum Company Limited
Report to Shareholders 2007
the NRC and would vest in the year
immediately following the end of the
performance period.
In line with the ownership philosophy, the
CEO and key executives are required to
hold a significant percentage, ranging
from 30% to 50% of the total PSP and
RSP awards vested during their tenure
with the Company, based on seniority.
The number of new shares to be issued
under the Share Plans and the Scheme
is subject to the existing maximum
limit of 15% of the Company’s total
issued share capital, as approved
by shareholders.
The Share Plans were approved by
shareholders on 27 April 2004 and will
be in force for a period of up to 10 years
unless extended for further periods with
the approval of shareholders at a general
meeting and subject to any other relevant
approvals that may be required.
In February 2007, 1,047,600 shares
were vested in tranches pursuant to the
Company’s RSP awards in consideration
of performance for 2004, 2005 and
2006. There were also 560,400 shares
vested pursuant to the Company’s
PSP awards in consideration for the
Remaining
tranche of shares No. of shares
to be vested to be vested To vest
– – –
3rd (Final) 408,600 2008
2nd and 3rd (Final) 479,200 2008 & 2009
887,800
– – –
Corporate Governance
performance period of 2004 to 2006.
The Company applied treasury shares
from its 2006 share buyback exercise to
satisfy the RSP and PSP share awards
vested in February 2007. Details of
the share awards vested are disclosed
in Table 6.
In 2007, the Company acquired
1,412,000 SPC shares from the market
under its share buyback mandate for
purposes of Share Plan awards in 2008.
A total of 51,300 share awards lapsed
in 2007 due to attrition.
Details of awards under the Share
Plans for the financial year ended
31 December 2007 are described
in Note 30(c) of the Notes to the
Financial Statements.
Share Options Scheme
The grants of share options under the
Scheme to employees have also been
based on the individual’s BSC and
competency ratings. No share options
were granted to employees in 2007,
as grants were suspended in 2004, in
favour of RSP and PSP Share awards.
The Scheme was approved by
shareholders of the Company on 16
May 2000 and will be in force for a
period up to 10 years unless extended
for further periods with the approval of
shareholders at a general meeting and
subject to any other relevant approvals
that may be required. An option
granted under the Scheme may, except
in certain special circumstances, be
exercised at any time after a vesting
period of two years but no later than
the expiry date. Options granted under
the Scheme were made to all eligible
employees of the SPC Group.
At the end of 2007, there were
351,000 options outstanding, details
of which are shown in Note 30(b)
of the Financial Statements. None
of the employees and non-executive
directors received 5% or more of the
total number of share options available
under the Scheme.
Singapore Petroleum Company Limited
Report to Shareholders 2007
SPC Online Share Option and
Share Plan System
The SPC Online Share Option and
Share Plan System (System) has been
effective in helping the Company to
administer its share awards. In year
2007, the Company together with the
System’s external developers, reviewed
and enhanced the System’s capabilities
to facilitate participants’ access and
execution as well as tracking and
reporting of Share Plans data.
ACCOUNTABILITY AND AUDIT
Accountability
Principle 10
The Board is committed to present
a balanced and understandable
assessment of the Company’s
performance, position and prospects
in order to inform and engage its
stakeholders. The Board’s review of the
Company’s quarterly, half-yearly and full
year financial results and its presentation
is an integral part of its Board meetings
and undergoes full review and discussion
before final approval and release.
The Company issues timely and
balanced financial information
and announcements of important
transactions to its shareholders
via SGX-ST’s SGXNet to facilitate
transparency and the building of greater
trust and confidence in the Company.
The Company continued to report
quarterly financial results in the year
2007. These results are available on
the Company’s corporate website.
Information on new initiatives of the
SPC Group is disseminated via
SGXNet and news releases.
Audit Committee
Principle 11
The AC assists the Board through
reviewing and recommending the
release of the quarterly SPC financial
statements. It is vested with the
authority to investigate matters with
or without management’s knowledge
including matters of impropriety in
financial reporting or other company
related issues.
Corporate Governance
51
CORPORATE GOVERNANCE

The AC reviews and ensures compliance
with the requirements of the Listing
Manual which pertains to the AC’s
functions and follows the guidelines set
out in the Code when performing its
duties and responsibilities.
The AC meets four times annually and
holds additional meetings when required,
in order to assist the Board to fulfill its
fiduciary and statutory responsibilities
relating to financial management
and corporate accountability to
the shareholders of SPC. The AC
communicates through electronic
methods in addition to their meetings.
The Board has found the AC to possess
the appropriate skills and qualifications
to discharge its responsibilities. The
members of the AC have financial,
accounting, business and legal
backgrounds to fulfill their function and
responsibilities. The AC met five times
in 2007.
The Company had in 2005, established a
Whistleblower Policy for the SPC Group
which provides whistleblowers with
clearly defined channels and processes
to report suspected reportable conduct
including a direct channel to the General
Manager, Internal Audit and/or the AC
chairperson. This policy is intended
to facilitate the reporting in good faith
by employees and relevant external
parties of suspected reportable conduct
while maintaining confidentiality of the
information and the identities of the
persons involved in resultant reviews.
It also aims to protect, to the extent
reasonably practicable, the whistleblower
and persons involved in reviews initiated
under this policy, against reprisals.
This policy forms part of the SPC Code
of Conduct.
The AC maintains open lines of
communication among the Board
members, management, the Company’s
internal and external auditors, to
exchange views and information as well
as to affirm their respective roles and
responsibilities.
The AC is supported in its functions by
the internal and external auditors. During
the year, the AC reviewed the SPC
Group’s Interested Person Transactions
(IPT) and quarterly, half-yearly and full
year financial statements.
SPC believes a periodic rotation of
external auditors will serve to further
enhance its corporate transparency
while providing a fresh perspective in
the review of the Company financial
statements and systems of internal
control.
In selecting the external auditors for
2007, the AC evaluated four international
accounting firms on the basis of pre-
determined criteria and selected
Deloitte & Touche.
Pursuant to the requirements of the
Code, the AC reviewed the non-audit
services provided by the external
auditors, Messrs Deloitte & Touche
during 2007, and had received
confirmation of their independence. The
AC was satisfied with the independence
and the objectivity of the external
auditors and had recommended to the
Board their re-appointment as external
auditors for the year 2008, at a fee to be
determined at a later date.

AUDIT COMMITTEE
The AC comprises four independent directors, Dr Chin Wei-Li, Audrey Marie (chairperson), Messrs Bertie Cheng Shao Shiong,
Geoffrey John King and Goon Kok-Loon. Effective 30 January 2008, as part of a rotational change, the Board appointed
Goon Kok-Loon as the new chairman. The AC’s principal functions are summarised as follows:

(1) Reviews and ensures compliance with the requirements of the Listing Manual pertaining to the AC’s functions.
(2) Follows the guidelines set out in the Code when performing its duties and responsibilities, wherever possible.
(3) Reviews Interested Person Transactions.
(4) Reviews reports received pursuant to the provisions of the SPC Whistleblower Policy and undertakes the proceedings
as prescribed.
(5) Reviews with the internal and external auditors their respective audit plans, scope, reports, findings and actions taken
by management.
(6) Serves as an independent party to review the financial statements presented by management to shareholders, regulators
and the general public.
(7) Reviews the independence of the external auditors annually and recommends the appointment and remuneration of the
external auditors.
(8) Maintains, by holding regular meetings, open lines of communication with the Board, the internal and external auditors to
exchange views and information as well as to affirm their respective roles and responsibilities.
(9) Investigates any matter within its terms of reference, with full access to and co-operation by management and full discretion
to invite any director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its
functions properly.

Singapore Petroleum Company Limited Corporate Governance

52 Report to Shareholders 2007
The AC reviewed the external auditor’s
2007 statutory audit plan, scope,
findings and management’s responses to
the findings. It also reviewed the internal
audit plans and the quarterly internal
audit summary reports and ensured the
adequacy of the internal audit function.
At year end, the AC met with the
external and internal auditors without
the presence of management, to
discuss amongst other issues, the
SPC Group’s internal controls. Internal
controls include the Company’s
system of financial, operational and
compliance controls established by
the management. The external and
internal auditors reported that the
Group’s overall system of internal
controls and procedures were
functioning effectively.
Save as disclosed in the Notes to the
Financial Statements on IPT, there
were no material contracts involving
the interests of the CEO, each director
or the controlling shareholders and
their subsidiaries.
Management reported that the methods
and procedures for determining IPT
had not changed since the date
of the last AGM, at which time the
shareholders’ mandate for IPT was last
renewed. Management accordingly
recommended that the Company
not appoint an independent financial
advisor to review the IPT methods and
procedures. Pursuant to the provisions
under SGX-ST Listing Rule 920(1),
the AC concurred with management’s
recommendations.
Internal Controls
Principle 12
The Company believes that the SPC
Group’s framework of internal financial
controls, operational compliance
controls and risk management policies
are reasonable and well placed within a
steadfast control environment to meet
the needs of its operational requirements.
The SPC Group has a clearly
delineated operating structure based
Singapore Petroleum Company Limited
Report to Shareholders 2007
upon its delegations of authority and
reporting structures, codes of conduct
and other documented procedures
in place that cover management
accounting, financial reporting,
information technology systems
security, project appraisal and
business risk management.
The control systems in place are
intended to provide reasonable
assurance with regard to the
safeguarding of assets, maintenance
of proper accounting records,
reliability of financial information,
compliance with applicable legislation,
regulations and sound management
of business risks.
The Company’s internal and external
auditors conducted their 2007 review
in accordance with their respective
audit plans on the effectiveness of the
Company’s system of internal controls
including financial, operational and
compliance controls. Audit findings,
recommendations and actions taken by
management on the recommendations
were reported to the AC.
Based on the reviews performed by the
internal and external auditors during the
financial year, the AC is of the opinion
that there are adequate internal controls
in the SPC Group.
Internal Audit
Principle 13
The Company has an Internal Audit
Department (IAD) headed by the
General Manager, Internal Audit. The
General Manager, Internal Audit, reports
directly to the chairperson of the AC
on audit matters and to the CEO on
administrative matters.
During the year, the IAD conducted its
audit reviews based on the approved
internal audit plans. Upon completion of
each audit assignment, the IAD reported
its findings and recommendations to
management who would respond on the
actions to be taken. The IAD submitted
quarterly internal audit summary reports
to the AC on the status of the audit plan
Corporate Governance
and on audit findings and actions taken
by management on the findings. The IAD
reported that the Group’s overall system
of internal controls and procedures
functioned effectively during the year
under review.
The IAD is a member of the Singapore
branch of the Institute of Internal Auditors
Inc (IIA), which has its headquarters in
the United States. The IAD is guided by
the Standards for Professional Practice
of Internal Auditing developed by the IIA.
The AC annually reviews the adequacy
of the internal audit function and is of the
view that it is adequately resourced. The
AC is also of the view that the internal
audit function is of appropriate standing
within the Company and continue to
maintain its independence during the
year under review.
COMMUNICATION WITH
SHAREHOLDERS
Regular, Effective and
Fair Communication
with Shareholders
Principle 14
The SPC Group is committed to
providing regular, effective and fair
communication with its shareholders
and the investing public. To this
end, the SPC investor relations and
communications unit actively plans,
manages and handles communications
with all stakeholders.
Disclosure of information by the SPC
Group is made through communication
channels such as corporate
announcements via the SGX-ST’s
SGXNet broadcast network, the
publication of the Annual Report and
circulars to shareholders and the holding
of shareholders’ meetings including the
AGM. In addition, SPC publishes the
Group’s corporate announcements and
publications on its corporate website
to ensure that the latest corporate
information is available to all
interested persons.
All results, corporate announcements
and shareholder reports are issued
53
CORPORATE GOVERNANCE
promptly and within the prescribed
periods. In addition to the issue of the
Notice of AGM together with the Annual
Report, the Notice is also advertised in a
major local newspaper and posted on the
Company’s website.
In the spirit of corporate transparency,
SPC voluntarily issues SGXNet
announcements of significant
transactions, notwithstanding that some
of these transactions may not require
disclosure. These voluntary efforts are in
line with the Company’s commitment to
engage in open and fair communication
with its stakeholders.
Apart from open and fair communication,
SPC provides investors, both institutional
and retail, with clear, balanced and
useful information to aid them in their
investment decisions. Specific to
corporate development updates and
direction, the Company furnishes
project details, essential background
information including future activities and
plans. SPC’s financial statements are
accompanied by analyses of business
performances, discussions of prevailing
operating conditions as well as outlook
for the year.
SPC has a proactive investor relations
programme to foster rapport with
analysts, fund managers and the
investing community. The CEO, Chief
Financial Officer (CFO) and the investor
relations team conduct regular meetings
and conference calls with analysts
and investors, local and overseas, and
participates in conferences organised
by brokerage firms.
Actively engaging its retail investors as
well, 2007 saw SPC partnering with
SIAS in its Shareholder Communication
Services Programme. This Programme
is aimed at equipping retail investors
with essential investment insights and
skills to better manage their investment
54
portfolio, through corporate updates
and information dissemination forums
including SIAS Corporate Profile
Seminar. The SIAS’ programme
successfully enabled SPC to elevate
its corporate profile among retail
investors during the year.
Apart from the issuance of corporate
updates and meetings held as part of its
proactive communications platform with
shareholders, SPC’s investor relations
team is contactable by electronic mail
or telephone to provide clarifications
on corporate information in the public
domain with due consideration to
SGX-ST’s rules on fair disclosure and
ensuring a level playing field for investors.
In 2007, SPC re-designed its corporate
website and created a dedicated
“Investor Centre” section to cater to
the information needs of the investing
public. Designed to ensure that investors
and the interested public have good
and regular access to information, the
Investor Centre serves as a one-stop
web-based communication centre
complete with corporate press releases,
annual reports, financial calendar,
corporate directory and corporate
governance guidelines. SPC’s share
price information is also provided here,
with share price information and related
security information displayed via a live
data-feed from SGX-ST.
SPC recognises the importance of
sound corporate governance in creating
long-term stakeholder value. Emphasis
on high corporate governance standards
has been a key pillar in enhancing the
status and position of the SPC Group in
Singapore and internationally.
Greater Shareholder Participation
Principle 15
The Company is guided by the
provisions of the Code with regard to
communication with shareholders.
Singapore Petroleum Company Limited
Report to Shareholders 2007
Shareholders are given timely
notice of the Company’s AGM and
accordingly, the opportunity to attend
or be represented at the Meeting. The
Company’s Articles of Association
allows a member of the Company to
vote in absentia by appointing a proxy
to attend and vote on his behalf while
the Singapore Companies Act provides
a corporate shareholder with the option
to appoint a corporate representative to
attend and vote on its behalf.
Each year, the Chairman presides over
the AGM and is accompanied by fellow
Board members, the CEO, the CFO, the
Company Secretary, the Internal Auditor
and other key executives. The external
auditors, Messrs Deloitte & Touche are
also present to address queries from the
shareholders. The chairpersons of the
AC and NRC have consistently been
present at the AGMs.
At the Meeting, the Chairman discusses
the progress and performance of the
SPC Group and encourages meaningful
and effective shareholders participation.
Directors and management also
endeavour to address all issues raised.
The Company adopts separate
resolutions on each distinct issue
presented to shareholders and voting
is taken systematically with proper
recording of the votes cast and the
resolutions adopted. The Company’s
practice is consistent with the Code’s
recommendation that companies avoid
“bundling” resolutions unless the
resolutions are interdependent and linked
so as to form one significant proposal.
Minutes of general meetings of the
Company are available to shareholders
upon their requests as provided under
the Companies Act.
Over the past years, SPC has witnessed
an increase in attendance at its AGMs. In
2007, a total of 293 voting shareholders
and proxies attended the meeting.
Corporate Governance
Since its implementation in January
2007, the share registry analysis has
been beneficial in providing insight to
the shareholding spread, shareholders’
investing styles and the basis of their
support for SPC shares. The analysis
may also highlight the investment
portfolio, holding strength, value growth
priorities and other investment concerns
of the existing shareholders. With an
appreciation of its shareholders, the
Company is thus in a better position to
meaningfully engage them in various
forums including the forthcoming AGM.
The Company has not implemented
the suggestion in the Code that the
Company allows absentia voting
methods and proxies for shareholders
who use nominee companies. The
Company has to be confident that the
integrity of any system catering for their
use is assured.
Employees are expected to embrace and
practise these values in their everyday
conduct especially with customers,
suppliers and the public.
Employees are to act in the best interest
of the SPC Group and avoid situations
that may present a potential conflict of
their interests.
The policy also addresses the issues
of dealings in securities, insider trading
and compliance with the relevant
legislations. Directors and employees
are regularly reminded to observe
best conduct practices, particularly in
securities trading.

OTHER CORPORATE
GOVERNANCE MATTERS
Dealing in Securities
In keeping with high standards of
corporate governance, the Group has
adopted the SGX-ST’s best practices
guide with regard to dealings in the
securities of the Company.

Directors and employees are advised

not to deal in SPC’s securities during
the period commencing two weeks
before the SPC Group’s quarterly and
half-yearly results and one month before
the announcement of the SPC Group’s
full year results and ending on the date
of the announcement. Furthermore,
when the Company is involved in major
corporate activities such as investment or
divestment that could be price-sensitive
in relation to the Company’s securities,
officers involved are advised not to deal
in the Company’s securities.

Code of Conduct and Practices

SPC recognises the importance of
fairness, integrity and professionalism in
the conduct of its business activities. It
has entrenched these values in the SPC
Code of Conduct.

Singapore Petroleum Company Limited Corporate Governance

Report to Shareholders 2007 55
ENTERPRISE RISK MANAGEMENT
A sound Enterprise Risk Management
framework enables the Group to
build value, deliver more and grow.
THE ERMC’S
PRINCIPAL FUNCTIONS
(1) Identify, measure and monitor the
enterprise-wide risks profile of
the Company
(2) Identify risk mitigation efforts, their
costs, and mitigate risk appropriately
(3) Report to the Exco the residual risk of
the Company
(4) Recommend/advise the ExCo, on the
appropriate risk parameters within
which the Company should operate
(5) Monitor the implementation of ExCo’s
decisions on the mitigation efforts and
risk parameters
56
ENTERPRISE RISK MANAGEMENT
A sound Enterprise Risk Management
(ERM) framework enables the Group
to build value, deliver more and grow
while mitigating the associated risks and
uncertainties appropriately.
Integral to the downstream refining
business, SPC is involved in the sourcing
and purchasing of crude oil, and
the trading and marketing of refined
petroleum products to intermediaries
and end users. In addition, to deliver
greater value and sustain growth,
SPC has expanded its E&P activities.
Consequently, SPC is exposed to a
myriad of risks. Such risks need to be
managed without unduly affecting the
Group’s profitability.
In 2007, as part of SPC’s continued
enterprise risk review, the Company
engaged an external consultant to review
Singapore Petroleum Company Limited
Report to Shareholders 2007
the adequacy of the SPC ERM framework
and to identify new risk elements. This
exercise is expected to be completed by
the first quarter of 2008.
ENTERPRISE RISK MANAGEMENT
COMMITTEE (ERMC)
The ERMC is chaired by the CEO and
comprises heads of business and service
units. This Committee meets at least once
a quarter to review risk issues. ERM is an
integral part of the Company’s corporate
governance framework and is essential to
the Company’s decision-making process.
The framework ensures that there is a
process in place for the Group to review
and identify risks, and to then mitigate
these risks appropriately.
Four ERMC meetings were held in 2007
to discuss pertinent issues relating to the
Group’s enterprise risks. In particular,
volatility of oil prices and refining
Enterprise Risk Management
margins, and the expansion of the E&P
portfilio have altered the Group’s risk
profile. The Group’s risk profile and
mitigation actions were accordingly
reviewed and revised. Top risks were
identified in terms of probability of
occurrence and financial impact, both
before and after mitigation.
In January 2008, the Board established
a new Board Risk Committee that will
have oversight of risk management in the
Group. Dr Audrey Chin was appointed
Chairman of this Board Committee with
Geoffrey John King and Cheng Hong Kok
being appointed members.
ENVIRONMENTAL, HEALTH, SAFETY
AND SECURITY (EHSS) COMMITTEE
The EHSS Committee reports its
activities to the ERMC quarterly.
Information concerning EHSS issues,
incidents, legislation, activities and
performance are discussed and
guidelines provided.
(see EHSS on page 58)
MARKET RISK STEERING
COMMITTEE (MRSC)
A Mark to Market Committee (MTMC),
reporting directly to the CEO was
formed in 2001 to monitor the price
risks inherent in trading and hedging
activities. In 2005, the MTMC reported
to the ERMC.
In 2007, the MTMC was renamed the
Market Risk Steering Committee to reflect
a wider role to review the Group’s market
risks including the price risks associated
with the expanded E&P portfolio.
Singapore Petroleum Company Limited
Report to Shareholders 2007
The MRSC ensures these activities are
in compliance with SPC’s risk appetite,
policies and procedures. The objectives
of MRSC are:
a. Review the market price risk exposure
of sales, purchases, trading and
inventory activities of the Group. This
review includes but is not limited to
the review of mark to market reports,
market outlook, price volatility,
volumetric exposure as well as portfolio
stress testing and possible remedial
actions.
b. Oversee the establishment of
effective controls and the reporting
of these risk exposure activities.
This includes the appraisal of
policies, procedures and processes,
evaluation of the methodologies
and valuation models and the
implementation of adopted
recommendations of the MRSC.
c. Ascertain compliance and adherence
to established policies, procedures
and processes.
d. Promote an open dialogue culture
where any risk exposure activities
are identified and discussed among
its members.
e. Review any other matters, as and
when deemed necessary, which will
impact the market valuation of the
Group’s activities.
Enterprise Risk Management
57
ENVIRONMENT, HEALTH, SAFETY & SECURITY

EHSS issues and concerns

are integral to SPC’s growth
and development plans.

Singapore Petroleum Company Limited Environment, Health, Safety & Security

58 Report to Shareholders 2007
As an integrated oil and gas company,
SPC has developed an Environment,
Health, Safety and Security (EHSS)
policy that sets the direction for
achieving its business goals in a
safe, secure and environmentally
sustainable manner.
ENVIRONMENT
Efforts to improve and sustain the
environment remains foremost in the
planning and operational practices of
SPC. The company participates actively
in industry efforts. SPC has developed
best practices in EHSS that incorporate
stringent administrative, engineering
controls and standards. Embedded
in such practices is a heightened
awareness of the environment,
local regulatory requirements and
strict compliance.
SPC and its associated company,
SRC, are members of the Oil Industry
Environment Steering Committee
(OIESC). OIESC has been collaborating
with the Ministry of the Environment and
Water Resources to address various
environmental challenges faced by the
oil industry. This includes greenhouse
gas emissions through the Singapore
Green Plan Air and Climate Change
Focus Group.
Singapore Petroleum Company Limited
Report to Shareholders 2007
SPC participates in and has access to oil
spill response resources both locally and
internationally. These resources will allow
SPC to respond quickly to manage and
mitigate any impact to the environment
should incidents occur.
CLEAN FUELS
SPC’s plans to offer clean fuels
underscore its commitment to the
environment. Through SRC, SPC is
currently investing to increase production
of diesel that meets the sulphur
specifications of the Euro-IV standard.
The project is scheduled to come
onstream in 2009. SRC is also evaluating
a clean fuel gasoline desulphurisation
project which will enhance its capability
to produce Euro-IV gasoline.
Since February 2008, SPC has retailed
CNG at its Jalan Buroh service station.
CNG emits less particulates and
emissions, thereby contributing to a
cleaner environment.
ENERGY EFFICIENCY
SPC works closely with its business
partners to implement projects that
improve energy efficiency, recovery and
conservation. This includes a joint effort
via SRC to conserve work fuel through
several initiatives such as the installation
of energy-efficient heating equipment.
Environment, Health, Safety & Security
HEALTH AND SAFETY
SPC’s track record attests to a safety
culture that has been embraced by all
levels within the organisation. In 2007,
SPC employees achieved two million
man-hours without any loss time injury.
EMERGENCY RESPONSE AND
CRISIS MANAGEMENT
SPC regularly conducts emergency
response exercises and drills with the
authorities at the facility level.
In 2007, SPC began work with a consultant
and expert in the field to ensure its crisis
management plan would be considered
“fit for purpose” based on the risks and
hazards faced in its operating environment.
The plan entails regular drills and exercises
to ensure the organisation is operating
at its optimum effectiveness. The crisis
management plan will ensure SPC has the
ability to react to emergencies, preserve
business continuity, and at the same
time, manage and contain environmental,
health, safety or security impact.
SECURITY
SPC communicates and works
closely with various authorities on
security- related issues. In 2007, SPC
conducted joint security exercises
with the Singapore Police Force at
Jurong Bulk Plant.
59
ENVIRONMENT, HEALTH, SAFETY & SECURITY
EHSS IN THE COMMUNITY
SPC is supportive of EHSS programmes
in the community. In 2007, it sponsored
the National Workplace Safety and Health
Campaign, a high-profile and activity-
filled annual event to promote safety
and health at workplaces throughout
Singapore. Organised by the Workplace
Safety and Health Advisory Committee,
in collaboration with the Ministry of
Manpower, the campaign was supported
by more than 30 organisations, with over
50 talks and workshops held throughout
the month of May.
SPC actively participated and
collaborated with various regulatory
Singapore Petroleum Company Limited
60 Report to Shareholders 2007
authorities to promote industry EHSS.
It was awarded the SCDF Strategic
Partners Award by the Singapore
Civil Defence Force for its support in
promoting emergency preparedness
within the community.
CONTINUOUS COMMITMENT
The proactive management of
EHSS issues and concerns are
integral to SPC’s growth and
development plans. Sponsorships
and collaborations will also provide
important platforms for SPC to lend
its support to community-based
EHSS programmes.
Environment, Health, Safety & Security

SPC’s EHSS policy commitments
are also embodied in SRC.
SRC was the first oil refinery in
ASEAN to be ISO 9002 certified
in 1994. The refinery was awarded
the ISO 14001 certification for its
environmental management system
in 1999 – the first in Singapore’s oil
refining industry to have an integrated
ISO Quality and Environmental
management system, covering its
entire operations.
ENVIRONMENT
SRC complies with all applicable
regulations and standards
pertaining to emission controls,
effluent standards and waste
disposal. It operates a modern
waste water treatment plant, and
deploys technology and facilities
in its manufacturing process for
environmental control. It regularly
monitors the refinery’s emissions,
including direct and indirect CO2
(carbon dioxide). It adopts a two-
pronged approach of leveraging
proven technologies and adopting
best practices. Environment impact
Singapore Petroleum Company Limited
Report to Shareholders 2007
2 and affirm employees and contractors
assessment is a key metric in all
project decisions which include due
consideration of future developments
and requirements beyond current
regulatory emission standards. SRC
sets targets and strategies to drive
environmental performance and
improvements as a part of its annual
performance measure.
ENERGY EFFICIENCY
SPC works closely with SRC to
implement projects that improve energy
efficiency, recovery and conservation.
SRC is currently studying energy-
efficient technologies such as
Cogeneration, a Combined Heat and
Power application to improve power
generation efficiency. A cogeneration
plant has higher energy efficiency
compared to conventional power
generation systems. The improved
efficiency could translate to savings in
operating expenses of about US$10
million a year. Besides the economics,
such technologies lead to reduction
in greenhouse gas emissions
such as CO2 – a positive impact to
the environment.
Environment, Health, Safety & Security
HEALTH AND SAFETY
SRC firmly believes in the importance
of safety excellence for continued
business success. It focuses on
achieving Injury and Incident Free (IIF)
operation and promotes the IIF culture
through Behaviour-Based Safety (BBS)
and personal accountability. IIF
and BBS programmes involve the
active participation of employees and
contractors. SRC and its contractors
work to build safety into their
company culture, with an emphasis
on minimising workplace injuries.
Manager Safety Tours at SRC is
designed to engage ground level staff
and senior management to facilitate
solutions on safety issues. A system
has also been put in place to commend
who display exemplary safety practices.
SRC has achieved 4.3 million
man-hours without any loss time
injury as of December 2007, and
1 million man-hours of “no recordable
injury” in the year. These milestones
affirm its rigorous safety systems
and procedures.
SRC endeavours to achieve
world-class safety performance
and believes in practising not
only occupational safety but also
process safety. SRC adopts OSHA
(Occupational Safety & Health
Administration) standards which
set stringent requirements for
process safety management
aimed at preventing major
process-related incidents.
SRC carries out regular third-party
audits and other HSEQ (Health,
Safety, Environment, Quality)
assurance reviews to ensure
continued safe operations.
1. All geared up for safety.
2. Nurturing a committed EHSS culture.
61
RESPONSIBLE CORPORATE CITIZENSHIP
THROUGH COMMUNITY OUTREACH

Going green has become a

deep-rooted SPC value.

Corporate success is increasingly

being measured by socially responsible
behaviour. Successful companies today
are required to fulfill their Corporate
Social Responsibilty (CSR) role by
demonstrating their commitment through
concrete programmes.

SPC conscientiously participates

in activities that demonstrates and
exemplifies its commitment to CSR. It
actively engages the community through
diverse means – cultural, environmental
and philanthropical.

ENRICHING CULTURE
Since its early years, SPC has been an
enthusiastic supporter of the Singapore
Symphony Orchestra (SSO). Besides
sustained support for the SSO’s
musician chair, SPC also sponsored
its China Tour in 2007 where local
musicians performed in five Chinese
cities. Other cultural activities that SPC
lends its support include the Singapore
Chinese Orchestra and the Majlis Pusat
Cultural Night.

Singapore Petroleum Company Limited Responsible Corporate Citizenship

62 Report to Shareholders 2007 Through Community Outreach
For its efforts, SPC has consistently
been recognised in the Patron of the
Arts awards.
CARING FOR NATURE
SPC is committed to the environment
and the conservation of wildlife. It is
a long-time Corporate Friend of the
Singapore Zoo, and has recently
adopted the lion exhibit in keeping with
its aspiration to be lion-hearted in both
CSR as well as in business.
In July 2007, SPC participated in a
six-part documentary series, which
was aired over a regional news network.
Called Saving Gaia, (“Gaia” means
“Earth” in Greek), the programme
examined Asia’s efforts to address
environmental issues such as global
warming and climate change. Members
of the public were encouraged to
pledge their commitment to protect
the earth, during the screening of the
documentary. The first 5,000 pledgers
each received a SPC biodegradable
reusable shopping bag.
To reinforce its green efforts, SPC
participated in Save the Earth, a
recycling campaign aired on the local
media. Leveraging SPC’s retail network,
its service stations were designated
collection centres for recyclable items
such as old newspapers, drink cans and
plastic bottles. The collection activity
also helped raised funds for the
Asian Women’s Welfare Association
Special School.
Annually, SPC holds a Green Day where
employees and their families do their
part for the preservation of nature. Since
planting 35 trees in commemoration of
its 35th anniversary in 2004, SPC has
continued to visit Bukit Timah Nature
Singapore Petroleum Company Limited
Report to Shareholders 2007
1
1
Reserve to prune and upkeep the trees.
Going green has become a deep-rooted
SPC value.
SHARING WITH OTHERS
Employee volunteerism is a well-
supported SPC core value. SPC
volunteers participate in activities that
encourage and build community relations.
In recent years, the enduring activities
that inspire volunteerism include the
Down Syndrome Association (Singapore)
Charity Bowl, the Singapore Women’s
Association Annual Lunar New Year Lunch
for the Old Folks, and SPC’s Annual
Charity Car Wash. SPC employees have
consistently displayed dedication to social
work and gave generously to make a
difference to the community.
Over the years, SPC has developed
an enriching community outreach
programme. With CSR becoming
increasingly relevant, SPC will continue
to strengthen and step up its efforts
1. Chairman Choo Chiau Beng sharing at the
to be a socially responsible Singapore Women’s Association Annual
corporate citizen. Lunar New Year Lunch for the old folks.
Responsible Corporate Citizenship
Through Community Outreach 63
HUMAN CAPITAL STRATEGY:
MOVING AHEAD

Create and sustain a high performance

culture with the goal of delivering more value.

Singapore Petroleum Company Limited Human Capital Strategy:

64 Report to Shareholders 2007 Moving Ahead
In 2007, SPC continued to build on
its human capital strategy to enhance
business excellence and competitive
advantage, and to deliver more through
its people assets. This strategy
incorporated four key elements:
• Corporate Cohesion
and Alignment
• Talent Building and Development
• Leadership Development and
Succession Planning
• Performance and
Rewards Alignment
These were pivotal to the Group’s
capacity to go beyond and deliver even
more value to all stakeholders.
CORPORATE COHESION
AND ALIGNMENT
The Company introduced initiatives to
strengthen the integration and alignment
of its HR strategies to its business needs.
Orientation and induction programmes
for new employees, town hall meetings,
business units’ offsite brainstorming
sessions and CEO lunch dialogue
sessions provided employees with
varied avenues to be updated and
opportunities to contribute to the
Company’s strategy. These initiatives
enabled employees to better align
their individual performance to the
Group’s vision, strategic goals and
business objectives.
Singapore Petroleum Company Limited
Report to Shareholders 2007
In 2007, SPC commenced work on the
development of an online employee
interactive system. When completed, this
system will enable employees to access
and update personal particulars, as
well as facilitate performance planning,
development and assessment reviews.
TALENT BUILDING
AND DEVELOPMENT
SPC places emphasis on developing
employees through a combination
of in-house and external learning
programmes.
In 2007, the Company’s technical
experts from its E&P and RST business
units conducted in-house lectures for
staff. The lectures provided greater
insight into the different business areas,
and increased understanding of
technical knowledge.
The Company also partnered external
training providers to facilitate in-house
development programmes for its
employees. These programmes focused
on equipping employees with best practice
skill sets on personal mastery, team-
building, business acumen and strategic
thinking competencies.
Selected employees were offered
overseas development opportunities at the
Japan Cooperation Centre for Petroleum.
The programmes facilitated experience,
Human Capital Strategy:
Moving Ahead
knowledge and cultural exchanges, and
allowed participants to build a network of
peers from different countries.
SPC is committed to nurturing and
deepening the local oil and gas industry
talent pool. In 2007, the Company offered
two scholarships to the Mechanical
Engineering Department of the National
University of Singapore to participate
in student exchange programmes in
Texas A&M University and University of
Texas. On completion, these scholars
will be offered internships with the E&P
business unit. This was the second
consecutive year that SPC offered
these sponsorships. There are plans to
continue working with the local tertiary
institutions to build a pool of young
petroleum and reservoir engineers.
LEADERSHIP DEVELOPMENT
AND SUCCESSION PLANNING
The Company recognises that nurturing
its leaders and future leaders is
paramount to sustaining its businesses
and competitive excellence.
In 2007, as part of leadership
development, a group of leaders
enhanced their skills in business
modelling, resource management,
corporate planning and value creation
processes through simulated management
of virtual companies. This provided
participants with an understanding of
65
HUMAN CAPITAL STRATEGY:
MOVING AHEAD
the key fundamentals in leading and
managing successful businesses.
The Company’s development of its
potential future leaders was also effected
through the rotation of several senior
managers to manage different portfolios.
These rotations exposed employees
to different business complexities
and challenges, thus deepening the
leadership and bench strength of the
management echelon.
The Leadership Forum, launched in
2006, continued to gain momentum
in 2007. Participants were focused on
creating and defining the framework and
core drivers to foster a highly engaged
workforce in SPC.
The Company also reviewed its succession
plan with the Nominating and Remuneration
Committee. High potential staff were
identified for further leadership
development.
PERFORMANCE AND
REWARDS ALIGNMENT
The Company’s performance recognition
philosophy and pay-for-performance
incentive programmes continued to
66
motivate employees to strive for
higher performance.
The Company’s performance
management system was enhanced
to enable more efficient and effective
review discussions between employees
and their managers. This system will
be further enhanced as the Company
embarks on the online platform.
EMPLOYEE WELLNESS
SPC emphasises the importance of
employee engagement. The Company
believes that work-life balance
programmes enable employees to better
manage work goals and family needs.
In 2007, the Company organised events
such as the Dinner & Dance, Family
Day at the Zoo, a weekend getaway to
Phuket, movie treats for employees and
family members, salsa dancing and wine
appreciation classes to foster greater
interaction and camaraderie in the
SPC family.
SPC encouraged corporate social
responsibility among employees
through partnerships with charitable
organisations. The Company collaborated
Singapore Petroleum Company Limited
Report to Shareholders 2007
with the Singapore Cancer Society
and held cancer awareness talks for
staff. Employees donated generously
to provide financial assistance to needy
cancer families and cancer survivors.
Employees also sponsored and
organised a successful and fun-filled
weekend outing for 60 cancer patients
to Sentosa. SPC also shared Christmas
cheer through the Salvation Army
donation programme.
SPC initiated and enhanced its HR
strategies during the year to build,
motivate and retain its people. The
Group will continue to create and sustain
a high performance culture to take SPC
to the next level and deliver more value.
1. SPC’s Magical Dinner & Dance Nyte.
Human Capital Strategy:
Moving Ahead
CORPORATE STRUCTURE

Singapore Petroleum Trading SPC Shipping Company

Company Limited (Hong Kong) 100% Limited (Hong Kong) 100%
Changi Airport Fuel Hydrant
Installation Pte. Ltd. (Singapore) 12.5%

ItalSing Petroleum Company

Pte Ltd (Singapore) 50%
Singapore Carbon Dioxide
Company Private Limited (Singapore) 50%
Singapore Petroleum Company FST Aviation Services Limited
(Hong Kong) Limited (Hong Kong)100% (Hong Kong) 25%
SPC Kakap Limited (BVI)
100%
SPC Indo-Pipeline Co. Ltd. (BVI) Transasia Pipeline Company
100% Pvt. Ltd. (Mauritius) 15%

SINGAPORE SPC Vietnam (Blocks 102/106)

Co. Ltd (BVI) 100%
PETROLEUM
COMPANY SPC Production SPC Cambodia Ltd (BVI)
LIMITED Company Ltd (BVI) 100% 100%

SP (Sampang) Ltd (Cayman) 50% Singapore Petroleum

100% Sampang Ltd (Cayman) 1

Sampang Holdings Ltd (Cayman) 50%

100%
Singapore Petroleum Vietnam
Song Hong Co Ltd (BVI) 100%
SPC E&P Pte. Ltd. SPC Bass Pty Ltd
(Singapore) 100% (Australia) 100%

SPC Refining Company SPC E&P (China) Pte. Ltd. Sino-American Energy LLC
Pte. Ltd. (Singapore) 100% (Singapore) 100% (Texas, USA) 4 100%

Singapore Petroleum (China)

Private Limited (Singapore) 100%

Singapore Refining Company

Private Limited (Singapore) 50%

Tanker Mooring Services Company

Private Limited (Singapore) 25%
SP-CYC Venture Pte. Ltd.
(Singapore) 40%
Singapore Petroleum Venture
Private Limited (Singapore) 100%
SPC Wearnes Pte. Ltd. (Singapore)
50%

Singapore Petroleum (Indonesia) 50% PT. Sumber Prestasi Cemerlang

Private Limited (Singapore) 100% (Indonesia) 2
Notes:
1. Singapore Petroleum Sampang Ltd (SPS) is a wholly-owned subsidiary PT. Solar Premium Central
50%
of SPC Production Company Ltd. SPC Production Company Ltd (Indonesia) 60%
holds 100% in SPS through its two wholly-owned Cayman Islands
subsidiaries – SP (Sampang) Ltd and Sampang Holdings Ltd, which
each holds a 50% equity interest in SPS. Singapore Petroleum (Guangdong)
2. PT. Sumber Prestasi Cemerlang is a wholly-owned subsidiary of Private Limited (China) 100%
Singapore Petroleum Venture Private Limited (SPV). SPV holds
50% directly and the remaining 50% is held by SPV’s wholly-owned Singapore Petroleum (Thailand)
subsidiary, Singapore Petroleum (Indonesia) Private Limited. Co., Ltd. (Thailand) 3 100%
3. Singapore Petroleum (Thailand) Co., Ltd. is a wholly-owned subsidiary
of SPV. SPV holds 99.98% directly and the remaining 0.02% indirectly
through its six wholly-owned British Virgin Islands subsidiaries namely
Fullca Ltd., Glory Key International Limited, Orient Wise Group Limited,
Prime Sea Limited, Straits Management Ltd. and Topwish Investments
Ltd. Each of these BVI Companies holds one share (or 0.0033%) in
Singapore Petroleum (Thailand) Co., Ltd, aggregating 0.02%.
Subsidiary company
4. Sino-American Energy Corporation has on, 30 October 2007, been
converted into a limited liability company incorporated under the laws of Associated/joint venture companies
the State of Texas with the new name – Sino-American Energy LLC. Affiliated companies

Singapore Petroleum Company Limited Corporate Structure

Report to Shareholders 2007 67
LIST OF PROPERTIES

Location Tenure Area (sq m) Description

41 Jalan Buroh Singapore 619488 Leasehold (23 years unexpired) 37,020.00 Bulk Storage Plant
52 Penjuru Road (Lot A13794) Singapore 600000 Leasehold (16 years unexpired) 3,969.00 Barge Ramp Facilities
Pulau Sebarok Leasehold (12 years unexpired) 75,126.00 Oil Storage Terminal
31 Adam Road Singapore 289896 Leasehold (20 years unexpired) 656.30 Service Station
462 Balestier Road Singapore 329837 Freehold 1,319.50 Service Station
331 Bukit Timah Road Singapore 259717 Freehold 1,449.80 Service Station
337 Changi Road Singapore 419810 Freehold 1,335.40 Service Station
260 Dunearn Road Singapore 299542 Freehold 1,552.80 Service Station
397 Havelock Road Singapore 169630 Leasehold (22 years unexpired) 1,980.70 Service Station
120 Hougang Avenue 2 Singapore 538858 Leasehold (25 years unexpired) 2,256.00 Service Station
3800 Jalan Bukit Merah Singapore 159464 Leasehold (26 years unexpired) 2,367.10 Service Station
1 Jalan Leban Singapore 577546 Freehold 1,343.00 Service Station
100 Jurong West Avenue 1 Singapore 649519 Leasehold (11 years unexpired) 1,774.10 Service Station
132 Killiney Road Singapore 239562 Freehold 752.50 Service Station
429 Macpherson Road Singapore 368140 Freehold 1,360.50 Service Station
710 Mountbatten Road Singapore 437734 Leasehold (21 years unexpired) 1,600.10 Service Station
158 Pasir Panjang Road Singapore 118555 Freehold 1,487.80 Service Station
11 Pasir Ris Drive 4 Singapore 519456 Leasehold (15 years unexpired) 2,020.00 Service Station
264 Queensway Singapore 149062 Leasehold (18 years unexpired) 1,207.80 Service Station
588 Sembawang Road Singapore 758448 Leasehold (999 years tenure) 948.40 Service Station
1 Swanage Road Singapore 437168 Freehold 1,548.10 Service Station
327 Thomson Road Singapore 307673 Freehold 1,296.00 Service Station
180 Toa Payoh Lorong 6 Singapore 319381 Leasehold (27 years unexpired) 2,322.00 Service Station
16 Tuas Road Singapore 637597 Leasehold (23 years unexpired) 2,400.00 Service Station
157 Upper East Coast Road Singapore 455253 Freehold 2,186.10 Service Station
849 Upper Serangoon Road Singapore 534686 Freehold 1,131.50 Service Station
98 Upper Thomson Road Singapore 574330 Freehold 955.80 Service Station
76 Yio Chu Kang Road Singapore 545570 Freehold 958.00 Service Station
599 Yishun Ring Road Singapore 768683 Leasehold (15 years unexpired) 1,993.00 Service Station
100 Punggol Central Singapore 828839 Leasehold (30 years) 1,999.00 Service Station

Singapore Petroleum Company Limited List of Properties

68 Report to Shareholders 2007
statutory report and accounts
financial review

Income Statement Review

The achievement of $8.8 billion revenue in 2007 was a record high for the SPC Group. This was an improvement of about
$200 million over the previous revenue of $8.6 billion in 2006.

The year saw continuing robust demand from China, India and increasingly from the Middle-East where an investment and
construction boom fuelled demand. Global refining capacity remained constrained amid geopolitical tensions and supply
uncertainties. Coupled with speculative hedge fund activities global crude and product prices climbed to unprecedented highs.
The Group’s total crude and product sales volume was 78.3 million barrels in 2007, marginally lower than the 80.3 million barrels in
2006. Realisations were higher at an average US$74.37 per barrel compared to US$66.69 per barrel for 2006.

The Group’s activities are segmented into Downstream and Exploration & Production (E&P) businesses. With the principal
operations headquartered in Singapore, Downstream continued to be the main contributor to the Group and recorded $8.6 billion
and $523.2 million respectively in segmental revenue and operating profit. The E&P segment enlarged its footprint into China and
Australia during the year. With first oil production from the Indonesian Oyong field and additional production from China’s Bohai
fields, E&P segmental revenue increased from $49.2 million in 2006 to $145.1 million in 2007, while the segmental operating profit
increased from $14.6 million in 2006 to $52.4 million in 2007. Refer to Note 37 to the Financial Statements for details of the
Group’s segment information.

Gross profit of $747.1 million in 2007 was an unprecedented record achievement for the Group, 45.5% higher than the gross profit
of $513.6 million in the previous year. Despite the scheduled maintenance of SRC CDU No. 1 during the second quarter, the
refinery achieved an overall average utilisation of more than 97%. An average refining margin of about US$7.00 per barrel was
achieved for the year. The Group managed to capture high margin sales and trading volumes despite the highly volatile oil market.
As oil prices ended higher at the end of the year, the Group was not required to provide for inventory write-down as at year end
2007.

Along with business expansion, the Group maintained effective control over operating expenses amid rising costs. Operations,
selling and marketing, as well as general administrative expenses increased 2.9% from 2006 to $194.7 million in 2007. A one-off
divestment gain of $17.7 million was also recorded from the disposal of overseas business ventures in the first half-year.

Finance income increased 12.3% from the previous year to $13.4 million due to higher deposits while finance expenses increased
13.3% to $38.6 million due to higher borrowings. The Group’s borrowings were mainly denominated in US dollar on a short-term
floating basis to match specific funding requirements which were mainly working capital in nature. With US dollar rates on the down
trend and a weakening US dollar, the Group will maintain the bulk of its borrowings in US dollar as a hedge against the weak dollar.

The Group’s share of results of associates and joint ventures totalled $13.5 million in 2007, an improvement over $11.3 million in
2006.

The Group ended the year with a higher profit before tax of $581.4 million, an increase of 71.8% over $338.5 million for the
preceding year. Tax expenses were higher on the back of higher pretax profits and also higher taxes for Exploration & Production
revenue.

2007 marked the Group’s best performance to date with a record PATMI of $508.3 million. Basic earnings per share improved
78.5% to 98.79 cents. Diluted earnings per share after taking into account the dilution effect of share options under the SPC Share
Option Scheme also improved 78.8% to 98.74 cents.

70 Singapore Petroleum Company Limited

Report to Shareholders 2007
Financial Review
Balance Sheet Review
The Group’s total assets increased 37.2% from the previous year to $4.3 billion as at 31 December 2007. The record performance
and high oil prices as at year end contributed to the higher cash and bank balances, trade receivables and inventories. Non-
current assets also increased with further investments in refining assets and the acquisition of upstream exploration and production
acreages.

The Group’s total liabilities of $2.5 billion as at 31 December 2007 comprised mainly higher trade payables and higher short-term
borrowings for working capital requirements and investments.

Shareholders equity of $1.8 billion at year-end was 14.0% higher compared to $1.6 billion as at 31 December 2006, due mainly
to higher retained earnings. During the year, the Group paid an interim dividend of 20 cents per share amounting to $103.1 million
(see Note 33). The Group bought back 1,412,000 ordinary shares and treated these as treasury shares for the SPC Share Plans.
As at the end of the year, the Group held 1,598,000 treasury shares out of the issued share capital of 516,306,357 ordinary shares.

As at year end 2007, the Group’s current ratio (current assets over current liabilities) and net gearing ratio (net borrowings over
shareholders equity) were 1.17 and 0.20 respectively, compared to 1.36 and 0.01 respectively for the previous year.

Cash Flow Review

Changes in the cash flow reflected the operating, investing and financing activities of the Group during the financial year. During
the year, the Group generated $386.9 million operating cash flow from its strong performance and working capital management of
higher trade receivables, trade payables and inventories which were due to the high oil prices. The Group invested $392.8 million
in refining and Exploration & Production assets. The financing activities included increased short-term borrowings to fund working
capital requirements and investment activities, as well as dividend and interest payments. A Multicurrency Term Note was also
established during the year to position the Group for ready access to the capital market when required.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Financial Review
71
directors’ report
For the financial year ended 31 December 2007

The directors present their report to the members together with the audited consolidated financial statements of the Group, balance
sheet and statement of changes in equity of the Company for the financial year ended 31 December 2007.

Directors
The directors of the Company in office at the date of this report are as follows:

Choo Chiau Beng, Chairman of the Board

Koh Ban Heng, Chief Executive Officer and Executive Director
Bertie Cheng Shao Shiong
Geoffrey John King
Timothy Ong Teck Mong
Chin Wei-Li, Audrey Marie
Goon Kok-Loon
Teo Soon Hoe
Cheng Hong Kok

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to
enable the directors of the Company to acquire benefits by means of an acquisition of shares in, or debentures of, the Company
or any other body corporate, other than as disclosed in the financial statements and under the “Share options” and “Share plans”
sections in this report. Shares were issued and vested to directors during the financial year pursuant to the Company’s share plans
approved by shareholders at the Extraordinary General Meeting held on 27 April 2004, namely the Singapore Petroleum Company
Restricted Share Plan and/or Performance Share Plan.

Directors’ interests in shares or debentures

According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any
interest in the shares or debentures of the Company or related corporations, except as follows:

Holdings registered Holdings in which the director

Name of directors in the name of the director is deemed to have an interest #
At At At At At At
1.1.07 31.12.07 21.1.08 1.1.07 31.12.07 21.1.08

Singapore Petroleum Company Limited

(Ordinary shares)
Choo Chiau Beng 179,000 282,500 282,500 - - -
Koh Ban Heng * 415,200 449,200 449,200 900,000 1,000,000 1,000,000
Bertie Cheng Shao Shiong § 116,000 125,500 - - - 125,500
Geoffrey John King 69,000 81,000 81,000 - - -
Timothy Ong Teck Mong 33,000 38,000 38,000 - - -
Chin Wei-Li, Audrey Marie 19,000 28,500 28,500 - - -
Goon Kok-Loon 31,000 39,000 39,000 - - -
Teo Soon Hoe 10,000 15,000 15,000 - - -
Cheng Hong Kok 121,000 87,500 87,500 - - -

(Options to subscribe for ordinary shares)

Koh Ban Heng 320,000 - - - - -
Geoffrey John King 34,000 - - - - -

# Details of directors’ interest in share options are set out in the “Share options” section below.
* Mr Koh Ban Heng is deemed to have an interest of up to an aggregate of 850,000 ordinary shares in SPC comprised outstanding awards granted under the Restricted Share
Plan and Performance Share Plan, and subject to certain pre-determined performance criteria and other terms and conditions being met. These ordinary shares have not been
vested as at 31 December 2007. Mr Koh is also deemed to have an interest in 150,000 ordinary shares in SPC, held by his spouse.
§ Mr Bertie Cheng Shao Shiong is deemed to have an interest in 125,500 ordinary shares in SPC held in the name of Hong Leong Finance Nominees Pte Ltd.

72 Singapore Petroleum Company Limited

Report to Shareholders 2007
Directors’ Report
Directors’ contractual benefits
Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract
made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which
he has a substantial financial interest, except as disclosed in the financial statements and in this report, and except that Mr Koh Ban
Heng has an employment relationship with the Company and has received remuneration in that capacity.

Share options
(a) SPC Share Option Scheme 2000 (the “Scheme”)
The Scheme is administered by the Nominating and Remuneration Committee (the “NRC”) whose members are:

Bertie Cheng Shao Shiong, Chairman

Choo Chiau Beng
Geoffrey John King
Chin Wei-Li, Audrey Marie

There were no options granted during the financial year to subscribe for unissued shares of the Company. Particulars of
options granted in 2000, 2001, 2002, 2003 and 2004 were set out in the Directors’ Reports for the respective financial
years.

No other options were granted by the Company or any subsidiary during the financial year.

(i) Details of the movement of directors’ share options during the financial year are set out below:

At beginning Granted Exercised Forfeited At end
SPC Share Option of the during the during the during the of the Exercise
Scheme 2000 financial year financial year financial year financial year financial year price Exercise Period

Chief Executive Officer/
Executive Director

Koh Ban Heng 320,000 - (320,000) - - $1.57 5.2.2006 – 3.2.2014
1/2004

Non-Executive Directors

Geoffrey John King 34,000 - (34,000) - - $1.57 5.2.2006 – 3.2.2009
1/2004
354,000 - (354,000) - -

(ii) Details of directors’ share options since the commencement of the Scheme up to the end of the financial year are set
out below:

Aggregate options Aggregate options Aggregate options

granted since exercised since lapsed since Aggregate options
Options commencement commencement commencement outstanding
granted of the Scheme of the Scheme of the Scheme as at
during the to the end of the to the end of the to the end of the the end of the
Name of directors financial year financial year financial year financial year financial year

Koh Ban Heng - 800,000 (800,000) - -

Bertie Cheng Shao Shiong - 126,000 (126,000) - -
Geoffrey John King - 87,000 (87,000) - -
Timothy Ong Teck Mong - 65,000 (65,000) - -
Chin Wei-Li, Audrey Marie - 118,000 (118,000) - -
Goon Kok-Loon - 15,000 (15,000) - -
Cheng Hong Kok - 78,000 (78,000) - -
- 1,289,000 (1,289,000) - -

Singapore Petroleum Company Limited

Report to Shareholders 2007
Directors’ Report
73
directors’ report

Share options (continued)

(b) Share options outstanding
The number of unissued ordinary shares of the Company under options outstanding at the end of the financial year are as
follows:


Number of shares
Options relating to SPC under options outstanding
Share Option Scheme 2000 at 31.12.2007 Exercise price Expiry date

Senior Management and Employees

2000 18,000 $0.78 27 August 2010
1/2001 18,000 $0.68 16 April 2011
2/2001 20,000 $0.68 18 September 2011
1/2002 19,000 $0.75 2 April 2012
2/2002 29,000 $0.87 29 October 2012
1/2003 144,000 $0.92 16 February 2013
1/2004 103,000 $1.57 3 February 2014

351,000

The above-mentioned options do not entitle the holders of the options, by virtue of such holdings, to any right to participate
in any share issue of any other company.

(c) Other information required by the Singapore Exchange Securities Trading Limited (“SGX-ST”) and the Singapore
Companies Act (“Companies Act”)
Pursuant to Rule 852 of the Listing Manual of the SGX-ST and Section 201(12)(a) of the Companies Act, other than as
disclosed elsewhere in this report, it is reported that during the financial year:

(i) No options have been granted to controlling shareholders of the Company or their associates.

(ii) No key management or employee has received 5% or more of the total number of options available under the
Scheme.

(iii) No director or employee of the Company and its subsidiaries has received 5% or more of the total number of options
available to all directors and employees of the Company and its subsidiaries under the Scheme.

(iv) No options were granted at a discount during the financial year.

(v) No shares of the Company were allotted and issued by virtue of the exercise of options to take up unissued shares
of the Company or any subsidiary.

Details regarding directors’ interest may be obtained in accordance with Section 164(8) and (9) of the Singapore Companies Act.

Share plans
The NRC administers the SPC Restricted Share Plan (“RSP”) and Performance Share Plan (“PSP”) (collectively referred to as the
“Share Plans” and each as a “Share Plan”) which were approved by shareholders of the Company on 27 April 2004.

(a) RSP
The RSP is part of the Company’s share-based incentive scheme for employees. Contingent restricted shares are intended
to be awarded annually, based on pre-determined corporate targets. After the end of the annual period, the award of
the restricted shares will be computed, based on the extent to which the performance targets at the corporate level, the
individual’s Key Performance Indicator achievements and competency ratings have been achieved. The other terms and
conditions include the prevailing personnel policies, the decisions and guidelines of the NRC and all other relevant factors
and circumstances, including the performance record, and relevant laws and regulations. If the performance targets of
the stipulated measures are fulfilled at the end of the annual period, generally, the duly determined quantum of shares is
expected to vest annually in tranches over a three-year release schedule.

Refer to Note 30(c) of the notes to the financial statements for details on the RSP awards.

74 Singapore Petroleum Company Limited

Report to Shareholders 2007
Directors’ Report
Share plans (continued)
(b) PSP
The PSP is part of the Company’s long-term incentive plan for key executives. Contingent performance shares are typically
awarded at the beginning of a three-year performance cycle and the final award will be subjected to the extent to which the
performance conditions have been achieved after the end of the relevant cycle. The three-year stretched performance target
is aligned to pre-determined performance measures. The other terms and conditions the NRC will take into consideration
include not only the extent to which the performance targets have been achieved, but all other relevant factors and
circumstances, including relevant regulations prevailing at the time of release of awards under the PSP. Upon review by the
NRC the performance conditions being fulfilled after the end of each of the relevant three-year cycles, the duly determined
quantum of shares under the PSP would be targeted for release in February of the year following the relevant three-year
performance period.

Refer to Note 30(c) of the notes to the financial statements for details on the PSP awards.

Under both Share Plans, participants will receive fully paid shares, their equivalent cash value or combinations thereof, free of
charge, provided that pre-determined performance targets, stipulated measures and conditions are met. Under the Share Plans, the
NRC has the flexibility to allot and issue and deliver new shares or purchase and deliver existing shares upon vesting of the awards.

Awards to directors under the RSP and PSP

Restricted Share Plan

Award/
Contingent
As at beginning Award granted Vested As at
of the during the during the Forfeited/ end of the
Name of Director financial year financial year financial year cancelled financial year

Chief Executive Officer/Executive Director

Koh Ban Heng 300,000 150,000 (125,000) (75,000) 250,000

Non-Executive Directors

Choo Chiau Beng - 14,500 (14,500) - -

Bertie Cheng Shao Shiong - 9,500 (9,500) - -
Geoffrey John King - 8,000 (8,000) - -
Timothy Ong Teck Mong - 5,000 (5,000) - -
Chin Wei-Li, Audrey Marie - 9,500 (9,500) - -
Goon Kok-Loon - 8,000 (8,000) - -
Teo Soon Hoe - 5,000 (5,000) - -
Cheng Hong Kok - 6,500 (6,500) - -
300,000 216,000 (191,000) (75,000) 250,000

Performance Share Plan

Contingent
As at beginning Award granted Vested As at
of the during the during the Forfeited/ end of the
Name of Director financial year financial year financial year cancelled financial year

Chief Executive Officer/Executive Director

Koh Ban Heng 600,000 200,000 (159,000) (41,000) 600,000

Shares awarded to non-executive directors are vested upon award.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Directors’ Report
75
directors’ report

Audit committee
The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, as well as the
relevant sections of the Listing Manual, the Code of Corporate Governance and the Best Practices Guide of the SGX-ST.

The Audit Committee has recommended to the directors the nomination of Deloitte & Touche for re-appointment as external
auditors of the Group at the forthcoming Annual General Meeting of the Company.

Corporate governance
The Board has issued a Corporate Governance Report in the 2007 Annual Report of the Company.

On behalf of the directors

CHOO CHIAU BENG KOH BAN HENG

Chairman of the Board Chief Executive Officer and
Executive Director

29 February 2008

76 Singapore Petroleum Company Limited

Report to Shareholders 2007
Directors’ Report
statement by directors

In the opinion of the directors,

(a) the consolidated financial statements of the Group, balance sheet and statement of changes in equity of the Company as
set out on pages 79 to 134 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the
Company as at 31 December 2007, the results of the business, changes in equity and cash flows of the Group and changes
in equity of the Company for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.

On behalf of the directors

CHOO CHIAU BENG KOH BAN HENG

Chairman of the Board Chief Executive Officer and
Executive Director

29 February 2008

Singapore Petroleum Company Limited

Report to Shareholders 2007
Statement by Directors
77
INDEPENDENT AUDITORS’ REPORT
to the members of Singapore Petroleum Company Limited

We have audited the accompanying financial statements of Singapore Petroleum Company Limited (the “Company”) and its
subsidiaries (the “Group”) which comprise the balance sheets of the Group and the Company as at 31 December 2007, the
consolidated income statement, the statements of changes in equity and the cash flow statement of the Group and the statement of
changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory
notes, as set out on pages 79 to 134.

The financial statements for the year ended 31 December 2006 were audited by another auditor whose report dated 28 February
2007 expressed an unqualified opinion on those financial statements.

Directors’ Responsibility
The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility
includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion,

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the
Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards
so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2007 and of
the results and changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on
that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in
Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche

Certified Public Accountants
Singapore

Aric Loh Siang Khee

Partner
Appointed on 25 April 2007

29 February 2008

78 Singapore Petroleum Company Limited

Report to Shareholders 2007
Independent Auditors’ Report
consolidated income statement
For the financial year ended 31 December 2007

THE GROUP
2007 2006
Notes $’000 $’000

Revenue 4 8,766,712 8,574,214

Cost of sales (8,019,638) (8,060,617)
Gross profit 747,074 513,597

Other gains (net)
- Other income 4 40,776 24,958
- Finance income 5 13,373 11,911

Expenses
- Operations (67,941) (66,658)
- Selling and marketing (6,829) (5,266)
- General administrative (119,964) (117,322)
- Finance 6 (38,604) (34,061)

Share of results of associates 744 1,938
Share of results of joint ventures 17(b) 12,770 9,379

Profit before income tax 581,399 338,476

Income tax expense 9(a) (73,058) (53,907)

Net profit 8 508,341 284,569

Attributable to:
Equity holders of the Company 508,391 284,569
Minority interests (50) -
508,341 284,569

Earnings per ordinary share
- Basic 10 98.79 cents 55.33 cents
- Diluted 10 98.74 cents 55.23 cents

The accompanying notes form an integral part of these financial statements.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Consolidated Income Statement
79
balance sheets
As at 31 December 2007

The Group The Company

2007 2006 2007 2006
Notes $’000 $’000 $’000 $’000

ASSETS
Current assets
Cash and bank balances 11 475,090 421,218 412,945 383,477
Trade and other receivables 12 1,357,532 997,426 1,786,902 1,121,279
Inventories 13 901,301 534,689 877,622 514,422
Financial assets 14 - 3,144 - 3,144
Derivative financial instruments 15 7,753 4,575 7,753 4,575
Other assets 16 22,465 20,072 4,343 3,974
2,764,141 1,981,124 3,089,565 2,030,871
Non-current assets
Restricted cash deposit 11 4,324 - - -
Investments in associates and joint ventures 17 126,674 141,154 107,925 107,925
Investments in subsidiaries 18 - - 147,903 153,903
Financial assets 14 30,199 8,430 25,116 4,340
Intangible exploration assets 20 119,528 108,493 - -
Property, plant and equipment 21 1,214,576 849,093 715,226 729,315
Loan to an investee company 26 48,710 51,888 - -
1,544,011 1,159,058 996,170 995,483

Total assets 4,308,152 3,140,182 4,085,735 3,026,354

LIABILITIES
Current liabilities
Trade and other payables 27 1,428,679 977,539 1,415,935 1,001,111
Current income tax liabilities 9(b) 79,591 30,985 69,190 29,116
Derivative financial instruments 15 13,600 6,291 13,505 6,291
Borrowings 28 836,760 443,952 826,329 405,655
2,358,630 1,458,767 2,324,959 1,442,173

Non-current liabilities
Provision for asset retirement obligations 2,046 - - -
Provision for retirement benefits 29 6,973 6,419 6,973 6,419
Deferred income tax liabilities 9(c) 149,858 104,399 75,851 91,131
Other non-current liabilities 152 162 - -
159,029 110,980 82,824 97,550

Total liabilities 2,517,659 1,569,747 2,407,783 1,539,723

NET ASSETS 1,790,493 1,570,435 1,677,952 1,486,631

EQUITY
Share capital 30 618,139 617,278 618,139 617,278
Treasury shares (8,397) (8,140) (8,397) (8,140)
Capital reserve 31 1,182 1,182 - -
Foreign currency translation reserve (29,813) (17,423) - -
Other reserves 32 20,668 14,477 19,256 14,052
Retained earnings 1,188,264 963,061 1,048,954 863,441
Equity attributable to equity holders of the Company 1,790,043 1,570,435 1,677,952 1,486,631
Minority interests 450 - - -
Total equity 1,790,493 1,570,435 1,677,952 1,486,631

The accompanying notes form an integral part of these financial statements.

80 Singapore Petroleum Company Limited

Report to Shareholders 2007
Balance Sheets
consolidated statement of changes in equity
For the financial year ended 31 December 2007

Foreign Attributable
currency to equity
Share Treasury Capital translation Other Retained holders of Minority Total
Notes capital shares reserve reserve reserves earnings the Company interests equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance as at 1 January 2007 617,278 (8,140) 1,182 (17,423) 14,477 963,061 1,570,435 - 1,570,435
Fair value gains on financial assets,
available-for-sale 32 - - - - 2,909 - 2,909 - 2,909
Currency translation differences - - - (12,390) - - (12,390) - (12,390)
Net (losses)/gains recognised
directly in equity - - - (12,390) 2,909 - (9,481) - (9,481)
Net profit - - - - - 508,391 508,391 (50) 508,341
Total recognised (losses)/gains - - - (12,390) 2,909 508,391 498,910 (50) 498,860

Purchase of treasury shares 30 - (7,583) - - - - (7,583) - (7,583)
Employee share awards and
share options scheme:
- Value of employee services 32 - - - - 11,155 - 11,155 - 11,155
- Transfer between reserves for
share awards/options - 7,326 - - (7,873) 547 - - -
Arising on acquisition of a
subsidiary company 18 - - - - - - - 500 500
Issue of shares 30 861 - - - - - 861 - 861
Dividend relating to 2006 paid 33 - - - - - (283,735) (283,735) - (283,735)
Balance as at 31 December 2007 618,139 (8,397) 1,182 (29,813) 20,668 1,188,264 1,790,043 450 1,790,493

Balance as at 1 January 2006 571,216 - 1,182 (1,252) 11,228 843,478 1,425,852 - 1,425,852
Fair value gains on financial assets,
available-for-sale 32 - - - - 62 - 62 - 62
Currency translation differences - - - (16,171) - - (16,171) - (16,171)
Net (losses)/gains recognised
directly in equity - - - (16,171) 62 - (16,109) - (16,109)
Net profit - - - - - 284,569 284,569 - 284,569
Total recognised (losses)/gains - - - (16,171) 62 284,569 268,460 - 268,460
-
Purchase of treasury shares 30 - (8,140) - - - - (8,140) (8,140)
Employee share awards and
share options scheme:
- Value of employee services 32 - - - - 10,926 - 10,926 - 10,926
Issue of shares 30 44,126 - - - (5,803) - 38,323 - 38,323
Convertible bonds - equity component 32 1,936 - - - (1,936) - - - -
Dividend relating to 2005 paid 33 - - - - - (164,986) (164,986) - (164,986)
Balance as at 31 December 2006 617,278 (8,140) 1,182 (17,423) 14,477 963,061 1,570,435 - 1,570,435

An analysis of the movements in each category within “other reserves” is presented in Note 32.

The accompanying notes form an integral part of these financial statements.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Consolidated Statement of Changes in Equity
81
statement of changes in equity - company
For the financial year ended 31 December 2007

Share Treasury Other Retained Total

Notes capital share reserves earnings Equity
$’000 $’000 $’000 $’000 $’000

Balance as at 1 January 2007 617,278 (8,140) 14,052 863,441 1,486,631

Fair value gains on financial assets, available-for-sale 32 - - 1,922 - 1,922
Net gain recognised directly in equity - - 1,922 - 1,922
Net profit - - - 468,701 468,701
Total recognised gains - - 1,922 468,701 470,623

Purchase of treasury shares 30 - (7,583) - - (7,583)

Employee share awards and share options scheme:
- Value of employee services 32 - - 11,155 - 11,155
- Transfer between reserves
for share awards/options - 7,326 (7,873) 547 -
Issue of shares 30 861 - - - 861
Dividend relating to 2006 paid 33 - - - (283,735) (283,735)
Balance as at 31 December 2007 618,139 (8,397) 19,256 1,048,954 1,677,952

Balance as at 1 January 2006 571,216 - 11,316 752,312 1,334,844

Fair value losses on financial assets, available-for-sale 32 - - (451) - (451)

Net losses recognised directly in equity - - (451) - (451)
Net profit - - - 276,115 276,115
Total recognised (losses)/gains - - (451) 276,115 275,664

Purchase of treasury shares 30 - (8,140) - - (8,140)

Employee share awards and share options scheme:
- Value of employee services 32 - - 10,926 - 10,926
Issue of shares 30 44,126 - (5,803) - 38,323
Convertible bonds - equity component 32 1,936 - (1,936) - -
Dividend relating to 2005 paid 33 - - - (164,986) (164,986)
Balance as at 31 December 2006 617,278 (8,140) 14,052 863,441 1,486,631

An analysis of the movements in each category within “Other reserves” is presented in Note 32.

The accompanying notes form an integral part of these financial statements.

82 Singapore Petroleum Company Limited

Report to Shareholders 2007
Statement of Changes in Equity - Company
consolidated cash flow statement
For the financial year ended 31 December 2007

2007 2006
Notes $’000 $’000

Operating activities
Net profit 508,341 284,569
Adjustments for:
- Income tax 73,058 53,907
- Depreciation of property, plant and equipment 91,202 55,662
- Dividend income 4 (276) (301)
- Finance income 5 (13,373) (11,911)
- Interest expense 6 32,438 30,777
- Share-based payment expense 7 11,155 10,926
- Financial assets at fair value through profit and loss 4 (133) 133
- Impairment of investment in joint venture 8 - 5,344
- Loss on disposal and write-off of property, plant and equipment 4 1,048 280
- Gain on disposals of financial assets, at fair value through profit and loss 4 (256) (987)
- Gain on disposals of financial assets, available-for-sale 4 (764) (646)
- Gain on disposal of a joint venture company 4 (5,291) -
- Gain on disposal of an associate company 4 (12,457) -
- Goodwill arising from acquisition of a subsidiary, written off 8 165 -
- (Write-back)/Impairment of trade receivables 8 (1,680) 951
- Drilling expense written off 8 4,414 -
- Exploration expenditure written off 8 - 10,981
- Changes in fair value of derivative financial instruments 15 4,131 19,740
- Share of results of associates (744) (1,938)
- Share of results of joint ventures 17(b) (12,770) (9,379)
Operating cash flow before working capital changes 678,208 448,108
Changes in operating assets and liabilities
- Trade and other receivables (353,175) (106,666)
- Inventories (367,680) 58,791
- Other assets 1,065 3,124
- Trade and other payables 451,163 (15,722)
- Foreign currency translation 18,846 7,043
Cash generated from operations 428,427 394,678
Income tax paid 9(b) (41,532) (19,842)
Net cash provided by operating activities 386,895 374,836
Investing activities
Purchases of financial assets, available-for-sale (31,005) (3,254)
Purchases of other investments - (11,217)
Purchases of exploration assets (21,320) (50,074)
Purchases of property, plant and equipment (80,458) (57,835)
Dividends received from associate/joint venture companies 11,234 8,310
Dividends received from non-associate/joint venture companies 276 301
Interest received 10,727 9,651
Proceeds from disposals of property, plant and equipment 16 -
Proceeds from sale of associate/joint venture 35,101 -
Proceeds from sale of financial assets, at fair value through profit and loss 3,533 8,656
Proceeds from disposals of financial assets, available-for-sale 12,915 699
Proceeds from disposal of interests in production sharing contract - 32,937
Acquisition of subsidiaries, net of cash acquired 18 (329,671) -
Restricted cash deposits 11 (4,140) (17,102)
Net cash used in investing activities (392,792) (78,928)
Financing activities
Proceeds from issuance of ordinary shares 861 4,505
Repayment of borrowings (short-term unsecured bank loans) - (30,000)
Proceeds from short-term borrowings 395,153 80,699
Purchase of treasury shares (7,583) (8,140)
Interest paid (44,743) (28,940)
Dividends paid (283,735) (164,986)
Net cash provided by/(used in) financing activities 59,953 (146,862)
Net increase in cash and cash equivalents 54,056 149,046
Cash and cash equivalents at beginning of the financial year 404,116 255,070
Cash and cash equivalents at end of the financial year 11 458,172 404,116
The accompanying notes form an integral part of these financial statements.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Consolidated Cash Flow Statement
83
notes to the financial statements
For the financial year ended 31 December 2007

1. General
Singapore Petroleum Company Limited (the “Company”) (Registration Number: 196900291N), is incorporated in Singapore
with its principal place of business and registered office at 1 Maritime Square, #10-10 HarbourFront Centre, Singapore
099253. The Company is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”). The financial statements
are expressed in Singapore dollars.

The principal activities of the Group and of the Company consist of exploring for, developing and producing oil and gas,
petroleum refining, marketing, distribution and trading of crude oil and petroleum products and the provision of administrative
support services.

2. Significant accounting policies

2.1 Basis of preparation
The financial statements have been prepared in accordance with the historical cost basis except for the revaluation of certain
financial instruments, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore
Financial Reporting Standards (“FRS”).

In the current financial year, the Group and the Company adopted all the new or revised FRSs and Interpretations to FRS
(“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2007. The
adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s and Company’s accounting
policies and has no material effect on the amounts reported for the current or prior years except as disclosed below.

FRS 107 - Financial Instruments: Disclosures

Amendments to FRS 1 Presentation of Financial Statements relating to capital disclosures
The Group and the Company have adopted FRS 107 with effect from 1 January 2007. The new Standard has resulted in an
expansion of the disclosures in these financial statements regarding the Group’s financial instruments. The Group and the
Company have also presented information regarding its objectives, policies and processes for managing capital (see Note
38) as required by the amendments to FRS 1 which are effective from 1 January 2007.

2.2 Revenue recognition

Revenue for the Group and the Company is measured at the fair value of the consideration received or receivable for the
sale of refined petroleum products, oil and gas, net of goods and services tax, rebates and discounts. The revenue for the
Group has been shown after eliminating sales within the Group.

The Group and the Company recognise revenue when the amount of revenue and related costs can be reliably measured,
when it is probable that future economic benefits will flow to the entity and when the specific criteria for each of the sale
transactions are met as follows:

(a) Sale of goods

Refined petroleum products revenue is recognised upon delivery to customers or when the significant risks and
rewards of ownership of the products have been transferred to the buyer and there is no retention of continuing
managerial involvement to the degree associated with ownership nor effective control over the products sold.

Oil and gas revenues are recognised when produced, lifted or delivered depending on when the title transfers. During
the course of normal operations, the Group and other joint interest owners of oil and gas reserves may take more or
less than their respective ownership share of the volume produced, lifted or delivered. The volumetric imbalances are
monitored over the lives of the wells’ production capability. If an imbalance exists at the time the wells’ reserves are
depleted, cash settlements are made among the joint interest owners under a variety of arrangements.

Revenues from oil and gas production from properties in which the Group has an interest with other producers are
recognised on the basis of the Group’s net working interest (entitlement method).

(b) Dividend income

Dividend income is recognised when the shareholders’ rights to receive payment is established.

84 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
2. Significant accounting policies (continued)
(c) Interest income
Interest income is recognised on a time basis by reference to the principal outstanding and at the effective interest
rate applicable.

2.3 Group accounting

(a) Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.
Subsidiaries are entities (including special purpose entities) over which the Company has power to govern the
financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Company controls another entity.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
in line with those of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured
at the aggregate of the fair values of assets acquired, liabilities incurred or assumed, and equity instruments issued
by the Group at the date of exchange for control, plus costs directly attributable to the business combination. The
acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS
103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups)
that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued
Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost
of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is
recognised immediately in income statement.

Minority interest is that part of the net results of operations and of net assets of a subsidiary attributable to interests
which are not owned directly or indirectly by the Group. It is initially measured at the minorities’ share of the fair
value of the subsidiaries’ identifiable assets, liabilities and contingent liabilities at the date of acquisition by the Group
and the minorities’ share of changes in equity since the date of acquisition, except when the losses applicable to
the minority in a subsidiary exceed the minority interest in the equity of that subsidiary. In such cases, the excess
and further losses applicable to the minority are attributed to the equity holders of the Company, unless the minority
has a binding obligation to, and is able to, make good the losses. When that subsidiary subsequently reports profits,
the profits applicable to the minority are attributed to the equity holders of the Company until the minority’s share of
losses previously absorbed by the equity holders of the Company have been recovered.

Please refer to Note 2.5 for the Company’s accounting policy on investments in subsidiaries.

(b) Associates
Associates are entities over which the Group has significant influence, but not control, generally accompanying a
shareholding of between and including 20% and 50% of the voting rights. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of
accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance
with FRS 105 Non-current Assets Held for Sale and Discontinued Operations.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
85
notes to the financial statements

2. Significant accounting policies (continued)

(b) Associates (continued)
Equity accounting involves recording investments in associates initially at cost, and recognising the Group’s share of
its associates’ post-acquisition results and its share of post-acquisition movements in reserves against the carrying
amount of the investments. When the Group’s share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill
is included within the carrying amount of the investment and is assessed for impairment as part of that investment.
Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over
the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where necessary, adjustments are made to the financial statements of the associates to ensure consistency with
accounting policies of the Group.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the
Group’s interest in the relevant associate.

Please refer to Note 2.5 for the Company’s accounting policy on investments in associates.

(c) Joint ventures

Joint ventures are entities over which the Group has contractual arrangements to jointly share the control over the
economic activities of the entities with one or more parties, that is when the strategic financial and operating policy
decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control.

Investments in joint ventures in the Exploration and Production segment of the Group are through taking participating
interests in various Production Sharing Contracts (“PSC”) and are considered to be jointly controlled assets.
Accordingly, the investments in such joint ventures are accounted for in the consolidated financial statements using
proportionate consolidation method. The Group’s share of the assets, liabilities, income and expenses are combined
with the equivalent items in the consolidated financial statements on a line-by-line basis. Accounting policies of the
PSCs have been changed where necessary to ensure consistency with the accounting polices adopted by the Group.

Investments in other joint ventures are accounted for in the consolidated financial statements using the equity
method of accounting.

Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is accounted for in
accordance with the Group’s accounting policy for goodwill arising on the acquisition of a joint venture. Please refer
to Note 2.4.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent
of the Group’s interest in the joint venture.

Please refer to Note 2.5 for the Company’s accounting policy on investments in joint ventures.

(d) Transaction costs

Costs directly attributable to an acquisition are included as part of the cost of acquisition.

86 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
2. Significant accounting policies (continued)
2.4 Goodwill
Goodwill arising on the acquisition of subsidiaries, associates or joint ventures represents the excess of the cost of
acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised at the date of acquisition.

Goodwill on subsidiaries and joint ventures accounted for using the proportionate consolidation method is recognised
separately as intangible assets and carried at cost less accumulated impairment losses. Goodwill on associated companies
and joint ventures accounted for using the equity method is included in the carrying amount of the investment.

On disposal of the subsidiaries, associates or joint ventures, the attributable amount of the goodwill is included in the
determination of the disposal gain or loss to be recognised in the income statement.

2.5 Investments in subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures are stated at cost less accumulated impairment losses in the
Company’s balance sheet. On disposal of investments in subsidiaries, associates and joint ventures, the difference between
the disposal proceeds and the carrying amounts of the investments is taken to the income statement.

2.6 Property, plant and equipment

(a) Measurement
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment
losses. Property, plant and equipment under construction are classified as construction-in-progress.

Proved and producing oil and gas properties, as well as oil and gas development expenditure such as expenditure for
the construction, installation or completion of infrastructure facilities, platforms, pipelines and drilling of development
wells, are capitalised within property, plant and equipment. Oil and gas development expenditure are classified as
construction-in-progress.

(b)
Depreciation
Depreciation is calculated on a straight-line basis to allocate the costs of property, plant and equipment over their
expected useful lives. The estimated useful lives are as follows:

Leasehold land Lease period (5 to 30 years)
Plant and equipment 31/3% - 331/3%

No depreciation is charged on freehold land and construction-in-progress.

The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate,
at each balance sheet date. The effects of any revision of the residual values and useful lives are included in the
income statement for the financial year in which the changes arise.

Fully depreciated assets still in use are retained in the financial statements until they are no longer in use.

For proved oil and gas properties, the capitalised costs are depleted using the units-of-production method by
reference to the ratio of production in the period and the related proved and probable reserves of the field, taking into
account future development expenditure necessary to bring those reserves into production. The estimated reserves
are reviewed at each year-end with changes in reserves being accounted for prospectively.

No depreciation is charged over the oil and gas development expenditure.

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Notes to the Financial Statements
87
notes to the financial statements

2. Significant accounting policies (continued)

(c) Subsequent expenditure
Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the
carrying amount of the asset only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. Other subsequent expenditure is recognised as
repair and maintenance expense in the income statement during the financial year in which it is incurred.

(d) Disposal
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference
between the sale proceeds and its net carrying amount and is taken to the income statement.

2.7 Intangible exploration assets

Expenditure directly associated with exploration and evaluation activities are capitalised at cost as intangible exploration
assets. Such expenditure includes seismic acquisition and studies, drilling of exploration wells and other associated costs. If
hydrocarbons are found in the exploration structure which will be subjected to further appraisal activities, which may include
the drilling of further wells, all such costs associated with the exploration structure continue to be carried as an asset in this
category. All such carried costs are subject to technical, commercial and management assessment / review annually, or as
economic events dictate, for potential impairment and to confirm the continued intent to develop or otherwise extract value
from the discovery. When this is no longer the case, the costs associated with the exploration structure are written off. When
development plans are approved, the relevant expenditure is transferred to property, plant and equipment.

2.8 Impairment of non-financial assets
(a) Intangible exploration assets
Property, plant and equipment
Investments in subsidiaries, associates and joint ventures

Intangible exploration assets, property, plant and equipment and investments in subsidiaries, associates and joint
ventures are reviewed for impairment whenever there is any indication that these assets may be impaired. If any such
indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and value in use) of the
asset is estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, the recoverable amount is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is
the case, the recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs.

If the recoverable amount of the asset or CGU is estimated to be less than its carrying amount, the carrying
amount of the asset or CGU is reduced to its recoverable amount. The impairment loss is recognised in the income
statement.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the
estimates used to determine the assets’ recoverable amount since the last impairment loss was recognised. The
carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation)
had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset
other than goodwill is recognised in the income statement, unless the asset is carried at revalued amount, in which
case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the same
revalued asset was previously recognised in the income statement, a reversal of that impairment is also recognised in
the income statement.

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Report to Shareholders 2007
Notes to the Financial Statements
2. Significant accounting policies (continued)
(a) Intangible exploration assets (continued)
Property, plant and equipment
Investments in subsidiaries, associates and joint ventures

Proved and producing oil and gas properties which are capitalised in property, plant and equipment are assessed
annually or as economic triggering events dictate, for potential impairment. For this purpose, assets are grouped
based on separately identifiable and largely independent CGUs. As changes in circumstances warrant, the net
carrying values of proved oil and gas properties are assessed to ensure that they do not exceed future cash flows
from use or disposal. Where impairment is indicated, the carrying values of proved oil and gas properties are written
down to their fair values, usually determined as the estimated discounted future cash flows.

In the evaluation for impairment of proved oil and gas properties and construction-in-progress, future cash flows are
estimated using risk assessments on field and reservoir performance and include outlooks on proved and probable
reserves, which are then discounted or risk-weighted utilising the results from projections of reservoir characteristics,
production, recovery and economic factors.

(b) Goodwill
Goodwill is tested annually for impairment, as well as when there is any indication that the goodwill may be impaired.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s CGUs expected to benefit from
synergies of the business combination.

An impairment loss is recognised when the carrying amount of CGU, including the goodwill, exceeds the recoverable
amount of the CGU. The recoverable amount of the CGU is the higher of the CGU’s fair value less cost to sell and
value-in-use.

The total impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then
to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.

Any impairment loss on goodwill is recognised in the income statement and is not reversed in a subsequent period.

2.9 Financial assets

(a) Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where
appropriate, a shorter period. Income is recognised on an effective interest rate basis for debt instruments other than
those financial instruments “at fair value through income statement”.

(b) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, held-to-maturity, and available-for-sale. The classification depends on the purpose for which the assets
were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates
this designation at every reporting date. The designation of financial assets at fair value through profit or loss is
irrevocable.

(i) Financial assets, at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit or loss at inception. A financial asset is classified in this category if acquired principally for
the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are
designated as hedges. Assets in this category are classified as current assets if they are either held for
trading or are expected to be realised within 12 months after the balance sheet date.

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Report to Shareholders 2007
Notes to the Financial Statements
89
notes to the financial statements

2. Significant accounting policies (continued)

(b) Classification (continued)
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They arise when the Group provides money, goods or services directly to a
debtor with no intention of trading the receivable. They are included in current assets, except those maturing
later than 12 months after the balance sheet date. These are classified as non-current assets. Loans and
receivables are included in trade and other receivables on the balance sheet (Note 12).

(iii) Financial assets, held-to-maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Group’s management has the positive intention and ability to hold to maturity.

(iv) Financial assets, available-for-sale

Financial assets, available-for-sale are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management intends
to dispose of the assets within 12 months after the balance sheet date.

(c) Recognition and derecognition

Purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of
ownership.

On sale of a financial asset, the difference between the net sale proceeds and its carrying amount is taken to the
income statement. Any amount in the fair value reserve relating to that asset is also taken to the income statement.

(d) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value
through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through
profit and loss are recognised in the income statement.

(e) Subsequent measurement

Financial assets, available-for-sale and at fair value through profit or loss are subsequently carried at fair value.
Loans and receivables and financial assets, held-to-maturity are carried at amortised cost using the effective interest
method.

Gains or losses arising from changes in the fair value of ‘financial assets, at fair value through profit or loss’, including
interest and dividend income, are presented in the income statement within ‘other gains – net’ in the financial year in
which the changes in fair values arise.

Changes in the fair value of monetary assets denominated in a foreign currency and classified as available-for-sale
are analysed into translation differences resulting from changes in amortised cost of the asset and other changes.
The translation differences are recognised in the income statement, and other changes are recognised in the fair
value reserve within equity. Changes in fair values of other monetary and non-monetary assets that are classified as
available-for-sale are recognised in the fair value reserve within equity, together with the related currency translation
differences.

Interest on financial assets, available-for-sale, calculated using the effective interest method, is recognised in the
income statement. Dividends on available-for-sale equity securities are recognised in the income statement when
the Group’s right to receive payment is established. When financial assets classified as available-for-sale are sold or
impaired, the accumulated fair value adjustments recognised in the fair value reserve within equity are included in the
income statement as “gains and losses from investment securities”.

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Report to Shareholders 2007
Notes to the Financial Statements
2. Significant accounting policies (continued)
(f) Determination of fair value
The fair values of quoted financial assets are based on current bid prices. If the market for a financial asset is not
active, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length
transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option
pricing models refined to reflect the issuer’s specific circumstances.

(g) Impairment
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group
of financial assets is impaired.

(i) Loans and receivables

An allowance for impairment of loans and receivables, including trade and other receivables, is recognised
when there is objective evidence that the Group will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators
that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The amount of the allowance for impairment is recognised in the income statement within “Administrative
expenses”

(ii) Financial assets, held-to-maturity

If there is objective evidence that an impairment loss on held-to-maturity financial assets has incurred, the
carrying amount of the asset is reduced by an allowance for impairment. This allowance, calculated as
the difference between the assets’ carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate, is recognised in the income statement in the period in which
the impairment occurs.

Impairment loss is reversed through the income statement. The carrying amount of the asset previously
impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no
impairment been recognised in prior periods.

(iii) Financial assets, available-for-sale

In the case of an equity security classified as available-for-sale, a significant or prolonged decline in the fair
value of the security below its cost is considered an indicator that the security is impaired.

When there is objective evidence that a financial asset, available-for-sale is impaired, the cumulative loss
that has been recognised directly in the fair value reserve is removed from the fair value reserve within
equity and recognised in the income statement. The cumulative loss is measured as the difference between
the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any
impairment loss on that financial asset previously recognised in income statement.

Impairment losses on debt instruments classified as available-for-sale financial assets are reversed through
the income statement. However, impairment losses recognised in the income statement on equity instruments
classified as available-for-sale financial assets are not reversed through the income statement.

2.10 Borrowing costs

Borrowing costs incurred to finance the construction of property, plant and equipment are capitalised to construction-
in-progress during the period of construction. Borrowing costs incurred after the completion of the property, plant and
equipment is recognised in the income statement. Other borrowing costs are recognised on a time-proportion basis in the
income statement using the effective interest method.

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Report to Shareholders 2007
Notes to the Financial Statements
91
notes to the financial statements

2. Significant accounting policies (continued)

2.11 Borrowings
(a) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings which are due to be settled within 12 months after the balance sheet date are presented as current
borrowings even though the original term was for a period longer than 12 months and an agreement to refinance,
or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial
statements are authorised for issue. Other borrowings due to be settled more than 12 months after the balance
sheet date are presented as non-current borrowings in the balance sheet.

(b) Convertible bonds

When convertible bonds are issued, net of deferred tax effect, the liability component and the equity component are
separately presented on the balance sheet. The liability component is recognised at its fair value, determined using a
market interest rate for equivalent non-convertible bonds. It is subsequently carried at amortised cost until the liability
is extinguished on conversion or redemption of the bonds.

The remainder of the proceeds of the bond issue is allocated to the conversion option (equity component), which is
presented in the shareholders’ equity, net of the deferred tax effect. The carrying amount of the conversion option is
not changed in subsequent periods. When a conversion option is exercised, the carrying amount of the conversion
option will be taken to share capital. When the conversion option is allowed to lapse, the carrying amount of the
conversion option will be taken to retained earnings.

2.12 Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost, using the effective
interest method.

2.13 Derivative financial instruments and hedging activities

A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into and is carried
at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as
a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:
(1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); (2) hedges of highly
probable forecast transactions (cash flow hedge); or (3) hedges of net investments in foreign operations (net investment
hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items,
as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents
its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives designated as hedging
instruments are highly effective in offsetting changes in fair value or cash flows of hedged items.

(a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
income statement, together with any changes in the fair value of the hedged asset or liability that is attributable to the
hedged risk.

(b) Cash flow hedge
The Group enters into crude oil swap contracts and freight forward contracts to hedge anticipated transactions.
These contracts do not qualify for hedge accounting and consequently, the changes in fair values of these contracts
are included in the income statement in the period they arise (Note 2.13(d)).

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Notes to the Financial Statements
2. Significant accounting policies (continued)
(b) Cash flow hedge (continued)
The Group also enters into interest rate swaps that are cash flow hedges for the Group’s exposure to interest rate
risk on its borrowings. These contracts entitle the Group to receive interest at floating rates on notional principal
amounts and oblige the Group to pay interest at fixed rates on the same notional principal amounts, thus allowing
the Group to raise non-current borrowings at floating rates and swap them into fixed rates that are lower than those
available if it borrowed at fixed rates directly.

The effective portion of changes in the fair value of these interest rate swaps are recognised in the hedging reserve
within equity and transferred to the income statement in the periods when the interest expense on the borrowings
are recognised in the income statement. The gain or loss relating to the ineffective portion is recognised immediately
in the income statement.

(c) Net investment hedge

The Group has foreign currency borrowings that qualify as net investment hedge in foreign operations. These
hedging instruments are accounted for similarly to cash flow hedges. Any currency translation difference on the
borrowings relating to the effective portion of the hedge is recognised in the currency translation reserve within
equity. The currency translation difference relating to the ineffective portion is recognised immediately in the income
statement. Gains and losses accumulated in the currency translation reserve within equity are included in the income
statement when the foreign operation is disposed of.

(d) Derivatives that do not qualify for hedge accounting

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised in the
income statement in the financial year when the changes arise.

2.14 Fair value estimation

The fair value of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities
and derivatives) is based on quoted market prices at the balance sheet date. The quoted market price used for financial
assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask
price. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows, discounted
at actively quoted interest rates. The fair value of forward foreign exchange contracts is determined using forward exchange
market rates at the balance sheet date.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The
Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance
sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques,
such as estimated discounted cash flows, are used to determine fair values of the financial instruments.

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, provisions and other
liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The
fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

2.15 Leases
(a) Finance leases (When a Group entity is the lessee)
Lease of assets in which the Group assumes substantially the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased
property and the present value of the minimum lease payments. Each lease payment is allocated between the liability
and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included as borrowings. The interest element of the finance cost is taken to
the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.

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Report to Shareholders 2007
Notes to the Financial Statements
93
notes to the financial statements

2. Significant accounting policies (continued)

(b) Operating leases (When a Group entity is the lessee)
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are taken to the income statement on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis,
except where another systematic basis is more representative of the time pattern in which economic benefits from
the leased asset are consumed.

2.16 Income taxes

Current income tax liabilities (and assets) for current and prior periods are recognised at the amounts expected to be paid to
(or recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by
the balance sheet date.

Deferred income tax assets/liabilities are recognised for all deductible taxable temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income
tax assets/liabilities arise from the initial recognition of an asset or liability in a transaction that is not a business combination
and at the time of the transaction, affects neither accounting nor taxable profit or loss.

Deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associates and
joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.

Deferred income tax assets and liabilities are measured at:

(i) the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by
the balance sheet date; and

(ii) the tax consequence that would follow from the manner in which the Group expects, at the balance sheet date, to
recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income tax are recognised as income or expenses in the income statement for the period, except to
the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred
tax on temporary differences arising from the revaluation gains and losses on land and buildings, fair value gains and losses
on available-for-sale financial assets and cash flow hedges, and the liability component of convertible debts are charged
or credited directly to equity in the same period the temporary differences arise. Deferred tax arising from a business
combination is adjusted against goodwill on acquisition.

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Notes to the Financial Statements
2.17 Provisions for other liabilities and charges
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, it is more likely
than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.

The Group recognises the estimated costs of dismantlement, removal or restoration items of property, plant and equipment
arising from the acquisition or use of assets. This provision is estimated using the best estimate of the expenditure required
to settle the obligation, taking time value into consideration.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in the income statement for
the period the changes in estimates arise except for asset dismantlement, removal and restoration costs, which are adjusted
against the cost of the related property, plant and equipment unless the decrease in the liability exceeds the carrying amount
of the asset or the asset has reached the end of its useful life. In such cases, the excess of the decrease over the carrying
amount of the asset or the changes in the liability is recognised in income statement immediately.

2.18 Employee benefits

(a) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into
separate entities such as Central Provident Fund in accordance with the Central Provident Fund Act. The Group’s
contribution to defined contribution plans are recognised in the financial year to which they relate.

(b) Employees’ leave entitlement

Employees’ entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

(c) Share-based compensation

The Group operates a number of equity-settled, share-based compensation plans, namely the SPC Share Option
Scheme 2000, the Singapore Petroleum Company Restricted Share Plan and the Singapore Petroleum Company
Performance Share Plan. The fair value of the employee services received in exchange for the grant of the options
or shares is recognised as an expense in the income statement with a corresponding increase in the share awards
and share options reserve over the vesting period. The total amount to be recognised on a straight line basis over the
vesting period is determined by reference to the fair value of the options and shares granted, excluding the impact of
any non-market vesting conditions (for example, profitability and sales growth targets), on the date of the grant. Non-
market vesting conditions are included in the estimation of the number of shares under options that are expected
to become exercisable and shares that are expected to be issued on vesting date. At each balance sheet date, the
Company revises its estimates of the number of shares under options that are expected to become exercisable and
shares that are expected to be issued on vesting date. It recognises the impact of the revision of original estimates,
if any, in the income statement, and a corresponding adjustment to the share awards and share options reserve over
the remaining vesting period.

The proceeds received net of any directly attributable transaction costs are credited to share capital when the options
are exercised.

2.19 Retirement benefits

The Company operates a retirement benefit scheme for employees who commenced employment with the Company on or
before 31 August 1998 based on 75% of the last drawn monthly salary as at 31 December 2005 for each completed year
of service by the employee. Contributions to the scheme, determined by the accrued benefit valuation method, are charged
to the income statement so as to spread the cost of retirement benefits over the employees’ working lives with the Company.
Actuarial valuations which are applicable for three years are carried out.

Employees with at least 20 years’ of continuous service may be offered a service gratuity in lieu if they retire before the
official retirement age.

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Report to Shareholders 2007
Notes to the Financial Statements
95
notes to the financial statements

2. Significant accounting policies (continued)

2.20 Currency translation
(a) Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The financial statements are presented
in Singapore Dollar, which is the Company’s functional currency.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional
currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and
losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at the closing rate at the balance sheet date are recognised in the income
statement, except for currency translation differences on net investment in foreign entities, borrowings in foreign
currencies and other currency instruments qualifying as net investment hedges for foreign operations, which are
included in the currency translation reserve within equity, in the consolidated financial statements (see Note 2.20(d)).

Changes in the fair value of monetary securities denominated in foreign currencies classified as available-for-sale are
analysed into currency translation differences on the amortised cost of the securities, and other changes. Currency
translation differences on the amortised cost are recognised in the income statement, and other changes are
recognised in fair value reserve within equity.

Non-monetary items that are measured at fair values in foreign currencies are translated using the exchange rates at
the date when the fair values are determined. Currency translation differences on non-monetary items, whereby the
gain or loss are recognised in the income statement, such as equity investments held at fair value through profit or
loss, are reported as part of the fair value gain or loss in “other gains/losses – net”. Currency translation differences
on non-monetary items whereby the gains or losses are recognised directly in equity, such as equity investments
classified as available-for-sale financial assets, investment properties and property, plant and equipment are included
in the fair value reserve and asset revaluation reserve respectively.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which operates in a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency
as follows:

(i) Assets and liabilities are translated at the closing rates at the date of that balance sheet;

(ii) Income and expenses for each income statement are translated at average exchange rates (unless the
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated using the exchange rates at the dates of the
transactions); and

(iii) All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after 1 January 2005 are
treated as assets and liabilities of the foreign entity and translated at the closing date. For acquisitions prior to 1
January 2005, the exchange rate at the dates of acquisition were used.

(d) Consolidation adjustments

On consolidation, currency translation differences arising from the net investment in foreign entities, borrowings
in foreign currencies and other currency instruments designated as hedges of such investments are taken to the
foreign currency translation reserve. When a foreign operation is sold, such currency translation differences are
recognised in the income statement as part of the gain or loss on sale.

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Notes to the Financial Statements
2. Significant accounting policies (continued)
2.21 Inventories
Crude oil inventories are stated at the lower of cost, determined on a first-in first-out basis, and net realisable value. Refined
petroleum products are stated at the lower of cost, determined on a weighted average basis, and net realisable value. The
cost of refined products includes fixed and variable refinery overheads. Net realisable value is the estimated selling price in
the ordinary course of business, less applicable variable selling expenses.

Lubricants and base oil inventories are stated at the lower of cost, determined on a first-in first-out basis, and net realisable
value.

2.22 Cash and cash equivalents

Cash and cash equivalents include cash on hand, short-term deposits and bank overdrafts.

2.23 Segment reporting

A business segment is a distinguishable component of the Group engaged in providing products or services that are subject
to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable
component of the Group engaged in providing products or services within a particular economic and political environment
that is subject to risks and returns that are different from those of segments operating in other economic and political
environments.

2.24 Share capital and treasury shares

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issuance of new equity instruments, other than for the acquisition of businesses,
are taken to equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issuance
of new equity instruments for the acquisition of businesses are included in the cost of acquisition as part of the purchase
consideration.

When the Group purchases the Company’s ordinary shares (treasury shares), the consideration paid, including any directly
attributable incremental costs, net of income taxes, is deducted from equity attributable to the Company’s equity holders and
presented as “treasury shares” within equity, until they are cancelled, sold or reissued.

Treasury shares purchased or re-issued are considered on a weighted basis in the computation of the number of shares in
issue.

When treasury shares are subsequently sold or reissued pursuant to the employee share awards and share options schemes,
the cost of the treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue,
net of any directly attributable incremental transaction costs and related income tax, is taken to the capital reserve of the
Company.

2.25 Dividends
Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the
financial year in which the dividends are approved by the shareholders.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make
judgements, estimates and assumptions about the carrying amounts of certain assets and liabilities that could not be
measured by readily apparent sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant and reasonable under the circumstances, and are reviewed on an ongoing
basis. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in
which the estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.

3.1 Critical judgements in applying the entity’s accounting policies

Management is of the opinion that there were no critical judgements involved in the process of applying the Group’s
accounting policies that would have a significant impact on the amounts recognised in the financial statements other than
those involving estimates and assumptions as described below.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
97
notes to the financial statements

3. Critical accounting judgements and key sources of estimation uncertainty (continued)

3.2 Key sources of estimation uncertainty
The key estimates and assumptions concerning the future that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are as follows:

(a) Income taxes

The Group is subject to income taxes in several jurisdictions. Significant judgment is required in determining the
capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes.
The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will be recognised in the current income tax and deferred income tax provisions in the period in which
such differences are determined.

(b) Proved oil and gas properties

In determining whether the fair values of these assets should remain capitalised or were impaired, the Group was
required to estimate the discounted future cashflows expected to be generated from the oil and gas reserves based
on certain economic assumptions. The reserve estimates were based on internal and external (where available)
technical review and risked analysis of the natural reservoir production data and well performance.

(c) Intangible exploration assets

The Group’s accounting policy follows the guidance of FRS 106 in determining if the costs pertaining to each
exploration structure should remain capitalised. The application of this policy requires the management to make
certain estimates and assumptions as to future events and circumstances, in particular, the assessment of
commercial viability based on the technical assessment of the acreage under exploration.

(d) Operator’s monthly reports for upstream operations

The Group has participating interest in Production Sharing Contracts (“PSC”) which are operated by third parties. It
relies on these operators’ monthly reports on revenues and costs to arrive at the appropriate accounting estimates
used to report the Exploration and Production segment performance.

(e) Impairment of investment in subsidiaries, associates and joint ventures

The Group follows the guidance of FRS 36 in determining when an investment is other-than-temporarily impaired.
The Group, evaluates, among other factors, the duration and extent to which the fair value of an investment is less
than its cost; and the financial health of and the near-term business outlook of the investment, including factors such
as industry and sector performance, changes in technology as well as, operational and financing cash flow.

4. Revenue and other income

The Group
2007 2006
$’000 $’000
Revenue from sale of refined petroleum products,
oil and gas 8,766,712 8,574,214

Included in other income are the following items:

Dividend income 276 301
Financial assets, at fair value through profit and loss 133 (133)
Gain on disposal of financial assets,
at fair value through profit and loss 256 987
Gain on disposal of financial assets, available-for-sale 764 646
Gain on disposal of a joint venture 5,291 -
Gain on disposal of an associate 12,457 -
Loss on disposal and write-off of property,
plant and equipment (1,048) (280)

98 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
5. Finance income

The Group
2007 2006
$’000 $’000

Interest income
- a related corporation 7,845 6,019
- an investee company - 1,146
- financial institutions 5,528 4,746
13,373 11,911

6. Finance expense

The Group
2007 2006
$’000 $’000

Interest expense
- bank loans 30,102 27,117
- convertible bonds - 3,660
- a related corporation 2,336 -
32,438 30,777
Net foreign exchange loss 6,166 3,284
38,604 34,061

7. Employee compensation

The Group
2007 2006
$’000 $’000

Wages and other benefits 37,273 21,609

Employer’s contribution to defined contribution plans,
including Central Provident Fund and
retirement benefits scheme 2,375 1,290
Share awards granted to directors
and employees (Note 32) 11,155 10,926
50,803 33,825

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
99
notes to the financial statements

8. Net profit
Net profit has been arrived at after charging (crediting):

The Group
2007 2006
$’000 $’000

Auditors’ remuneration
- auditors of the Company 190 202
- other auditors 13 11
Fees for non-audit services provided
by auditors of the Company* 189 86
Depreciation of property, plant and equipment
- leasehold land 6,049 6,173
- plant and equipment 38,490 37,694
- proved oil and gas properties 46,663 11,795
Drilling expense written off 4,414 -
Employee compensation 50,803 33,825
Exploration expenditure written off - 10,981
Fair value losses on derivative instruments
not qualifying as hedges 4,131 19,740
Write-down of inventories to net realisable value - 11,488
(Write-back)/Impairment of trade receivables (1,680) 951
Impairment of investment in joint venture - 5,344
Goodwill arising from acquisition of a subsidiary, written off 165 -
Provision for retirement benefits 441 313
Rental on operating leases 5,099 4,996

* This include non-audit fees paid by a joint venture. The Group’s share of the non-audit fees amounted to $90,000 (2006: $Nil).

9. Income tax
(a) Income tax expense

The Group
2007 2006
$’000 $’000

Tax expense attributable to profit is made up of:

Current income tax
- Singapore 56,836 24,002
- Foreign 24,726 11,916
Deferred income tax
- relating to the origination and the reversal of temporary differences 5,192 17,989
- relating to the changes in tax rate (8,301) -
78,453 53,907

Over provision in preceding financial years
- deferred income tax (5,395) -
73,058 53,907

100 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
9. Income tax (continued)
(a) Income tax expense (continued)
The tax expense on profit differs from the amount that would arise using the Singapore standard rate of income tax
due to the following:

The Group
2007 2006
$’000 $’000

Profit before income tax 581,399 338,476

Tax calculated at a tax rate of 18%

(2006: 20%) 104,652 67,695
Income taxed at concessionary rate (34,901) (22,731)
Income not subject to tax (6,019) (1,678)
Expenses not deductible for tax purposes 6,870 2,263
Effect of change in tax rates (8,301) -
Effect of different tax rates in other countries 16,152 7,865
Over provision in preceding financial years (5,395) -
Others - 493
Tax charge 73,058 53,907

Subject to the agreement of the relevant tax authorities, profits arising from activities that qualify under the Global
Trader Programme are taxed at a concessionary rate of 5% (2006: 5%) and profits from activities that do not qualify
under the Global Trader Programme are taxed at 18% (2006: 20%).

(b) Movements in current income tax liabilities

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

At beginning of the financial year 30,985 14,909 29,116 14,291
Income tax paid (41,532) (19,842) (16,096) (8,915)
Tax expense on profit for the current financial year 81,562 35,918 56,170 23,740
Acquisition of subsidiary 8,576 - - -
At end of the financial year 79,591 30,985 69,190 29,116

(c) Movements in provision for deferred income tax liabilities

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Balance at beginning of the financial year 104,399 88,385 91,131 73,462

Foreign currency translation difference (4,155) (1,655) - -
Deferred tax for convertible bonds credited to equity - (320) - (320)
Tax charge/(credit) to income statement 5,192 17,989 (1,584) 17,989
Changes in tax rate (8,301) - (8,301) -
Over provision in preceding financial years (5,395) - (5,395) -
Acquisition of subsidiary 58,118 - - -
Balance at end of the financial year 149,858 104,399 75,851 91,131

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
101
notes to the financial statements

9. Income tax (continued)

(d) Deferred income taxes
The movement in the Group’s and the Company’s deferred income tax assets and liabilities (prior to offsetting of
balances within the same tax jurisdiction) during the year is as follows:

The Group
Deferred income tax liabilities

Fair value
adjustment
of assets Accelerated
acquired tax depreciation Other Total
$’000 $’000 $’000 $’000

2007
At beginning of the financial year - 101,862 4,297 106,159
Foreign currency translation (3,447) (708) - (4,155)
Credited to income statement - (3,355) (4,297) (7,652)
Acquisition of subsidiary 48,212 9,906 - 58,118
At end of the financial year 44,765 107,705 - 152,470

2006
At beginning of the financial year 88,353 1,562 89,915
Charged to income statement 13,509 2,735 16,244
At end of the financial year 101,862 4,297 106,159

Deferred income tax assets

Provisions Total
$’000 $’000

2007
At beginning of the financial year (1,760) (1,760)
Credited to income statement (852) (852)
At end of the financial year (2,612) (2,612)

2006
At beginning of the financial year (1,530) (1,530)
Credited to income statement (230) (230)
At end of the financial year (1,760) (1,760)

The Company
Deferred income tax liabilities

Accelerated
tax depreciation Other Total
$’000 $’000 $’000

2007
At beginning of the financial year 88,594 4,297 92,891
Credited to income statement (10,131) (4,297) (14,428)
At end of the financial year 78,463 - 78,463

2006
At beginning of the financial year 73,430 1,562 74,992
Charged to income statement 15,164 2,735 17,899
At end of the financial year 88,594 4,297 92,891

102 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
9. Income tax (continued)
(d) Deferred income taxes (continued)
Deferred income tax assets

Provisions Total
$’000 $’000

2007
At beginning of the financial year (1,760) (1,760)
Credited to income statement (852) (852)
At end of the financial year (2,612) (2,612)

2006
At beginning of the financial year (1,530) (1,530)
Credited to income statement (230) (230)
At end of the financial year (1,760) (1,760)

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current
income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal
authority.

10. Earnings per share

(a) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to members of the Company by the
weighted average number of ordinary shares in issue during the financial year.
The Group
2007 2006
$’000 $’000

Net profit attributable to equity holders of the Company 508,391 284,569

Interest expense on convertible bonds (net of tax) - 111
Net profit used to determine diluted earnings per share 508,391 284,680

Weighted average number of ordinary shares in issue for

basic earnings per share (‘000) 514,611 514,308

Adjustment for:
- assumed conversion of convertible bonds (‘000) - 448
- assumed conversion of share options (‘000) 288 726
Weighted average number of ordinary shares of
diluted earnings per share (‘000) 514,899 515,482

(b) Diluted earnings per share

For the purpose of calculating diluted earnings per share, profit attributable to equity holders of the Company and the
weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary
shares. The Company has two categories of dilutive potential ordinary shares: convertible bonds and share options.

The adoption of new or revised FRS did not affect the basic and diluted earnings per share for the current and
preceding period.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
103
notes to the financial statements

11. Cash and bank balances

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Cash at bank and on hand 103,172 116,116 57,945 95,477

Short-term deposits 355,000 288,000 355,000 288,000
Cash and cash equivalents 458,172 404,116 412,945 383,477
Restricted cash:
- Cash held in trust 4,324 - - -
- Pledged deposits 16,918 17,102 - -
Total 479,414 421,218 412,945 383,477
Less: Current portion (475,090) (421,218) (412,945) (383,477)
Non-current portion 4,324 - - -

The restricted cash deposits are held in trust in relation to the disposal of an associate company (Note 17).

Fixed deposit of a subsidiary amounting to $16,918,000 (2006: $17,102,000) was pledged as security for a short-term loan
facility granted to another subsidiary (Note 28). Accordingly, this has been included under restricted cash deposits.

The carrying amount of cash and bank balances approximate its fair values.

Cash and bank balances are denominated in the following currencies:

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Singapore Dollar 376,455 309,788 375,818 307,537

United States Dollar 91,578 103,328 37,127 75,940
Others 11,381 8,102 - -
479,414 421,218 412,945 383,477

Short-term deposits have an average maturity of 1 month (2006: 1 month) from the end of the financial year with the
following weighted average effective interest rates per annum:

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Singapore Dollar 1.44 3.25 1.44 3.25

United States Dollar 4.85 5.25 - -
Others 3.55 3.80 - -

The exposure of cash and cash equivalents to interest rate risks is disclosed in Note 38(c).

104 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
12. Trade and other receivables

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Trade receivables from third parties 909,481 726,475 796,723 656,053

Less: Allowance for impairment of receivables (3,131) (4,990) (2,119) (3,954)
Trade receivables from third parties – net 906,350 721,485 794,604 652,099
Due from subsidiaries (trade) - - 503 -
Due from subsidiaries (non-trade) (Note 22(a)) - - 542,200 197,169
Due from associates (trade) 657 806 657 806
Due from associates (non-trade) (Note 23) 32 29 32 29
Due from joint ventures (trade) 246,010 190,632 246,010 190,632
Due from joint ventures (non-trade) (Note 24) 198,288 70,995 198,288 70,995
Due from related corporations (trade) 3,840 2,075 3,840 2,075
Other receivables 2,355 11,404 768 7,474
1,357,532 997,426 1,786,902 1,121,279

Balance at beginning of the financial year 4,990 4,235 3,954 3,124

Foreign currency translation adjustment (179) (196) (116) (101)
Allowance (written back) made during the financial year (1,680) 951 (1,719) 931
Balance at end of the financial year 3,131 4,990 2,119 3,954

Allowance for impairment made and allowance written back are included in “General administrative expenses” in the income
statement.

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers who
are internationally dispersed, covering a large spectrum of industries and having a variety of end markets in which they sell.
Due to these factors, management believes that there is no anticipated additional credit risk beyond the amount provided for
collection losses that is inherent in the Group’s and Company’s trade receivables.

The carrying amounts of trade and other receivables approximate its fair values.

Trade and other receivables are denominated in the following currencies:

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Singapore Dollar 36,620 26,515 39,495 30,131

United States Dollar 1,314,807 968,340 1,747,407 1,091,148
Others 6,105 2,571 - -
1,357,532 997,426 1,786,902 1,121,279

The credit risks of trade and other receivables are disclosed in Note 38(d).

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
105
notes to the financial statements

13. Inventories

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Crude oil 456,987 262,426 456,987 262,426

Refined petroleum products 420,856 251,112 415,494 245,080
Lubes and base oil 19,005 16,280 2,225 3,951
Materials and supplies 4,453 4,871 2,916 2,965
901,301 534,689 877,622 514,422

The cost of inventories recognised as an expense and included in ‘Cost of sales’ in the income statement amounted to
$7,915,791,000 (2006: $8,027,562,000).

During the financial year, the Group and the Company reversed $11,488,000, being part of an inventory write-down made
in 2006, as the inventories were sold above the carrying amounts in 2007. The reversal was included in ‘Cost of sales’ in the
income statement.

14. Financial assets

(a) Financial assets, at fair value through profit or loss
Financial assets amounting to $Nil (2006: $3,144,000) comprised of listed equity securities held for trading.

(b) Financial assets, available-for-sale

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Balance at beginning of the financial year 8,430 4,992 4,340 1,590

Currency translation differences 6 175 - -
Additions 31,005 3,254 31,005 3,254
Gains/(losses) transferred to equity (Note 32(b)(ii)) 2,909 62 1,922 (451)
Disposals (12,151) (53) (12,151) (53)
Balance at end of the financial year 30,199 8,430 25,116 4,340
Less: Non-current portion (30,199) (8,430) (25,116) (4,340)
Current portion - - - -

Available-for-sale financial assets include the following investments:

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

At fair value:
Listed equity shares 28,868 7,099 24,030 3,254
Unlisted equity shares 1,331 1,331 1,086 1,086
30,199 8,430 25,116 4,340

The market values of the quoted equity securities are determined by reference to the stock exchange listed closing
market prices on the last market day of the financial year.

The unlisted securities include a 12.5% (2006: 12.5%) equity interest in Changi Airport Fuel Hydrant Installation
Private Limited, incorporated in Singapore, and a 6% (2006: 6%) equity interest in PT Transportasi Gas Indonesia,
incorporated in Indonesia. The above companies are engaged in activities ancillary to the operations of the Company.
There is no active market for the equity interests of these securities. As such, it is not practicable to determine
with sufficient reliability the fair value of these unlisted securities. However, the directors do not anticipate that the
carrying amount of the unlisted securities will be significantly different from their fair values.

106 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
14. Financial assets (continued)
(b) Financial assets, available-for-sale (continued)

Available-for-sale financial assets are denominated in the following currencies:

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Singapore Dollar 1,086 1,086 1,086 1,086

United States Dollar 245 245 - -
Australian Dollar 22,737 3,254 22,737 3,254
New Zealand Dollar 1,293 - 1,293 -
Thai Baht 4,838 3,845 - -
30,199 8,430 25,116 4,340

15. Derivative financial instruments

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Balance at beginning of the financial year (1,716) 18,024 (1,716) 18,024

Losses on forward contracts
- Included in income statement (4,131) (19,740) (4,036) (19,740)
Balance at end of the financial year (5,847) (1,716) (5,752) (1,716)

Analysed as:

The Group The Company

Contract/
Notional Fair value Fair value
Amount Assets Liabilities Assets Liabilities
$’000 $’000 $’000 $’000 $’000

2007
Forward contracts
- Oil swaps 366,049 2,135 (13,600) 2,135 (13,505)
- Freight forwards 128,540 5,618 - 5,618 -
Total 7,753 (13,600) 7,753 (13,505)
Less: Current portion 7,753 (13,600) 7,753 (13,505)
Non-current portion - - - -

2006
Forward contracts
- Oil swaps 291,135 3,803 (1,487) 3,803 (1,487)
- Freight forwards 276,953 772 (4,804) 772 (4,804)
Total 4,575 (6,291) 4,575 (6,291)
Less: Current portion 4,575 (6,291) 4,575 (6,291)
Non-current portion - - - -

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
107
notes to the financial statements

16. Other assets

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Deposits 542 266 362 -

Prepayments 18,576 16,092 1,665 1,337
Tax recoverable 3,347 3,714 2,316 2,637
22,465 20,072 4,343 3,974

The carrying amounts of deposits approximate their fair values.

17. Investments in associates and joint ventures

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Investments in associates - 16,218 - -

Investments in joint ventures 126,674 124,936 107,925 107,925
126,674 141,154 107,925 107,925

(a) Investments in associates

The Group
2007 2006
$’000 $’000

The summarised financial information of associates

are as follows:
- Assets - 78,166
- Liabilities - (33,330)
- Revenues - 448,237
- Net profit - 3,951

Details of associates are included in Note 19.

Disposal of associate
During the year, the Group disposed its interest in Tiger Oil Corporation (“TOC”) for a cash consideration of $29.8
million. This divestment resulted in a net gain of $12.4 million.

108 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
17. Investments in associates and joint ventures (continued)
(b) Investments in joint ventures
The following amounts represented the Group’s share of the results, assets employed and liabilities of its joint
ventures. The Group’s interests in joint ventures are accounted for in the consolidated financial statements using the
equity method of accounting.

The Group
2007 2006
$’000 $’000

Assets:
Current assets 85,632 81,486
Non-current assets 117,398 106,527
203,030 188,013

Liabilities:
Current liabilities (52,752) (43,030)
Non-current liabilities (23,604) (20,047)
(76,356) (63,077)

Net assets 126,674 124,936

Sales 164,163 192,393

Expenses (150,408) (180,351)
Profit before income tax 13,755 12,042
Income tax (985) (2,663)
Profit after income tax 12,770 9,379

Capital commitments in relation to interest in joint ventures 52,519 40,988

The Company uses the production facilities of a joint venture, Singapore Refining Company Private Limited, and other
production facilities, which are jointly owned by the Company with another party and for which a processing fee is
payable by the Company.

Further details of joint ventures are included in Note 19.

Disposal of a joint venture

During the year the Group divested its investment in Jiangmen City Sinjiang Gas Co Ltd for a cash consideration of
$5.3 million and recorded a gain of $5.3 million as a result.

18. Investments in subsidiaries

The company
2007 2006
$’000 $’000

Unquoted equity investments at cost 166,194 172,194

Allowance for impairment (18,291) (18,291)
147,903 153,903

Details of subsidiaries are included in Note 19.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
109
notes to the financial statements

18. Investments in subsidiaries (continued)

Acquisition of subsidiaries

1. PT Solar Premium Central (“PT Solar”)

In 2007, the Group acquired a 60% equity interest in PT Solar for a total consideration of $914,000. This transaction
has been accounted for using the purchase method of accounting. The effective date of acquisition was
7 August 2007.
The net assets acquired in the transaction, and the goodwill arising, are as follows:

Acquiree’s
carrying amount Fair value
before combination adjustments Fair value
$’000 $’000 $’000

Net assets acquired:

Bank 5 - 5
Receivable 1,244 - 1,244
Net assets 1,249 - 1,249

Minority interest (500)
Goodwill 165
Total consideration, satisfied by cash 914

Net cash outflow arising on acquisition:
Cash consideration paid 914
Cash and cash equivalents acquired (5)
909

PT Solar did not contribute revenue to the Group and reduced the Group’s profit before tax by $132,000 for
the period between the date of acquisition and the balance sheet date. PT Solar contributed to the Downstream
segment.
If the acquisition had been completed on 1 January 2007, total Group revenue for the year would have been
unchanged and total Group profit for the year would have been $507,944,000.

2. Sino-American Energy LLC (“Sino-American”)

In 2007, the Group acquired 100% equity interest of Sino-American Energy LLC which owns Bohai Bay
(Blocks 04/36 and 05/36) for a total consideration of $374,254,000. This transaction has been accounted for using
the purchase method of accounting. The effective date of acquisition was 1 July 2007.
The net assets acquired in the transaction are as follows:
Acquiree’s
carrying amount Fair value
before combination adjustments Fair value
$’000 $’000 $’000

Net assets acquired:

Property, plant and equipment 173,086 224,515 397,601
Intangible exploration asset - 11,373 11,373
Cash and bank 28,586 - 28,586
Trade receivable 9,430 - 9,430
Inventory 115 - 115
Total assets 211,217 235,888 447,105
Accruals 4,064 - 4,064
Provision for taxation 8,576 - 8,576
Deferred taxation 9,906 48,212 58,118
Provision for asset retirement obligation 2,093 - 2,093
24,639 48,212 72,851
Net assets 186,578 187,676 374,254

Total consideration 374,254
Net cash outflow arising on acquisition:
Total consideration 374,254
Purchase consideration payable (16,906)
Cash and cash equivalents acquired (28,586)
328,762

110 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
18. Investments in subsidiaries (continued)
Acquisition of subsidiaries (continued)

Sino-American contributed $61,451,000 revenue and $10,856,000 to the Group’s profit before tax for the period
between the date of acquisition and the balance sheet date. Sino-American contributed to the Exploration and
Production segment.

If the acquisition had been completed on 1 January 2007, total Group revenue for the year would have been
$8,832,644,000 and total Group profit for the year would have been $524,117,000.

The Group has engaged an independent reserves certifier to determine the fair value of the proved oil and gas
properties and intangible exploration assets. As at 31 December 2007, the fair value of the proved oil and gas
properties and intangible exploration asset has been determined on a provisional basis as the results of the
independent valuation report from the reserves certifier has not been received by the date the financial statements
was authorised for issue.

19. Listing of companies/entities in the Group

Details of companies in the Group are as follows:

Country of
Name of companies Principal activities incorporation Equity holding
2007 2006
% %

Subsidiaries

(1) PT Solar Premium Central (c) Wholesaler and importer of Indonesia 60 -

(Held via Singapore Petroleum petroleum products
Venture Private Limited)

(2) PT. Sumber Prestasi Cemerlang (c) (f) Wholesaler and importer of Indonesia 100 100
(Held directly and indirectly via petroleum products
Singapore Petroleum Venture
Private Limited)

(3) Sampang Holdings Ltd (d) Investment holding Cayman 100 100
(Held via SPC Production Company Ltd) Islands

(4) Singapore Petroleum (China) Investment holding Singapore 100 100
Private Limited (a)

(5) Singapore Petroleum Company Trading in petroleum Hong Kong 100 100
(Hong Kong) Limited (b) products

(6) Singapore Petroleum (Guangdong) Marketing, distribution and China 100 100
Private Limited (c) trading of lubricants and
(Held via Singapore Petroleum Venture automotive related products and
Private Limited) provision of automotive services

(7) Singapore Petroleum (Indonesia) Investment holding Singapore 100 100

Private Limited (a) (f)
(Held via Singapore Petroleum Venture
Private Limited)

(8) Singapore Petroleum Sampang Ltd (d) (g) Exploration, development Cayman 100 100
(Held via SP (Sampang) Ltd and production of crude oil Islands
and Sampang Holdings Ltd) and natural gas

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
111
notes to the financial statements

19. Listing of companies/entities in the Group (continued)

Subsidiaries (continued)

Country of
Name of companies Principal activities incorporation Equity holding
2007 2006
% %

(9) Singapore Petroleum (Thailand) Marketing, supply, distribution Thailand 100 100
Co., Ltd (c) (e) and trading of petroleum products
(Held directly and indirectly
via Singapore Petroleum Venture
Private Limited)

(10) Singapore Petroleum Trading Investment holding Hong Kong 100 100
Company Limited (b)

(11) Singapore Petroleum Venture Investment holding Singapore 100 100

Private Limited (a)

(12) Singapore Petroleum Vietnam Exploration, development British Virgin 100 100
Song Hong Co Ltd (d) and production of crude oil Islands
(Held via SPC Production Company Ltd) and natural gas

(13) Sino-American Energy LLC (d) Exploration, development Texas, USA 100 -
(Held via SPC E&P (China) Pte. Ltd.) and production of crude oil
and natural gas

(14) SP (Sampang) Ltd (d) Investment holding Cayman 100 100

(Held via SPC Production Company Ltd) Islands

(15) SPC Bass Pty Ltd (d) Exploration, development Australia 100 -
(Held via SPC E&P Pte. Ltd.) and production of crude oil
and natural gas

(16) SPC Cambodia Ltd (d) Exploration, development British Virgin 100 100
(Held via SPC Production Company Ltd) and production of crude oil Islands
and natural gas

(17) SPC E&P (China) Pte. Ltd. (a) Exploration, development Singapore 100 -
(Held via SPC E&P Pte. Ltd.) and production of crude oil
and natural gas

(18) SPC E&P Pte. Ltd. (a) Investment holding Singapore 100 -

(19) SPC Indo-Pipeline Co. Ltd. (d) Investment holding British Virgin 100 100
(Held via SPC Production Company Ltd) Islands

(20) SPC Kakap Limited (d) Exploration, development British Virgin 100 100
(Held via SPC Production Company Ltd) and production of crude oil Islands
and natural gas

(21) SPC Production Company Ltd (d) Investment holding British Virgin 100 100
Islands

(22) SPC Refining Company Pte. Ltd. (d) Dormant Singapore 100 100

112 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
19. Listing of companies/entities in the Group (continued)
Subsidiaries (continued)
Country of
Name of companies Principal activities incorporation Equity holding
2007 2006
% %

(23) SPC Shipping Company Limited (b) Chartering and re-chartering Hong Kong 100 100
(Held via Singapore Petroleum Trading of shipping vessels for
Company Limited) oil transportation

(24) SPC Vietnam (Blocks 102/106) Exploration, development British Virgin 100 100
Co. Ltd (d) and production of crude oil Islands
(Held via SPC Production Company Ltd) and natural gas

Joint ventures

(1) FST Aviation Services Limited (c) Provision of warehousing, Hong Kong 25 25
(Held via Singapore Petroleum transporting and inspection
Company (Hong Kong) Limited) services of aviation petroleum
products for its shareholders

(2) ItalSing Petroleum Company Pte Ltd (a) Manufacturing and blending Singapore 50 50
of lubricants

(3) Jiangmen City Sinjiang Gas Co. Ltd (h) Processing, distributing and China - 50
(Held via Singapore Petroleum (China) marketing of LPG and lubricants
Private Limited)

(4) Singapore Carbon Dioxide Company Sale of carbon dioxide products Singapore 50 50
Private Limited (c)

(5) Singapore Refining Company Refining crude oil Singapore 50 50

Private Limited (c)

(6) SPC Wearnes Pte. Ltd. (c) Bottling, storage, marketing, Singapore 50 50
(Held via Singapore Petroleum Venture distribution and sale of LPG
Private Limited) (bottled and bulk)

(7) Tanker Mooring Services Company Provision of services for the Singapore 25 25
Private Limited (c) discharge of crude oil using the
fixed berth jetty on Jurong Island

Associates

(1) Petmal Oil Corporation Sdn. Bhd. (d) (m) Marketing and distribution Malaysia 40 40
(Held via Singapore Petroleum Venture of petroleum products
Private Limited)

(2) SP-CYC Venture Pte Ltd (c) Marketing, distribution and Singapore 40 40
(Held via Singapore Petroleum Venture trading of petroleum products and
Private Limited) spare parts for motor vehicles,
provision of ancillary services
and investment holding

(3) Tiger Oil Corporation (i) Retailing of petroleum products Korea - 40.2
(Held via Singapore Petroleum Venture through service stations network
Private Limited) and wholesaling to industrial,
commercial and other retail customers

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
113
notes to the financial statements

19. Listing of companies/entities in the Group (continued)

The Group has the following interests which are held by the respective wholly owned subsidiaries:

PSCs/Exploration Permits Location Interest

2007 2006
% %

(1) Block B Petroleum Agreement (j)

(Held via SPC Cambodia Ltd) Cambodia 33.33 30

(2) Block 04/36 (k) China 18.18 -

(Held via Sino-American Energy LLC)

(3) Block 05/36 (k) China 23.08 -

(Held via Sino-American Energy LLC)

(4) Block 26/18 China 100 -

(Held via SPC E&P (China) Pte. Ltd.)

(5) Block 101-100/04 Vietnam 45 -

(Held via Singapore Petroleum Vietnam
Song Hong Co Ltd)

(6) Blocks 102 & 106 Vietnam 20 20

(Held via SPC Vietnam (Blocks 102/106) Co. Ltd)

(7) Exploration Permit T/47P Australia 35 -

(Held via SPC Bass Pty Ltd)

(8) Kakap Production Sharing Contract Indonesia 15 15

(Held via SPC Kakap Limited)

(9) Sampang Production Sharing Contract (l) Indonesia 40 36

(Held via Singapore Petroleum Sampang Ltd)

Notes on auditors
(a) Audited by Deloitte & Touche, Singapore.

(b) Audited by Messrs CWCC, Hong Kong.

(c) Audited by other firms of certified public accountants.

(d) Unaudited

Notes on entities
(e) Singapore Petroleum (Thailand) Co., Ltd. is a wholly owned subsidiary of Singapore Petroleum Venture Private
Limited (“SPV”). SPV holds 99.98% directly and the remaining 0.02% indirectly through its six wholly owned British
Virgin Islands subsidiaries namely, Fullca Ltd., Glory Key International Limited, Orient Wise Group Limited, Prime Sea
Limited, Straits Management Ltd. and Topwish Investments Ltd.

(f) PT. Sumber Prestasi Cemerlang is a wholly owned subsidiary of SPV. SPV holds 50% directly and the remaining
50% is held by SPV’s wholly owned subsidiary, Singapore Petroleum (Indonesia) Private Limited.

(g) Singapore Petroleum Sampang Ltd (“SPS”) is a wholly owned subsidiary of SPC Production Company Ltd. SPC
Production Company Ltd holds 100% in SPS through its two wholly owned Cayman Islands subsidiaries namely, SP
(Sampang) Ltd and Sampang Holdings Ltd each holding a 50% equity interest in SPS.

114 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
 (h) Pursuant to a Sale and Purchase Agreement dated 29 November 2006, Singapore Petroleum (China) Private Limited
had sold its 50% equity interest in Jiangmen City Sinjiang Gas Co. Ltd. The share sale transaction was completed in
the first quarter of 2007.

(i) Pursuant to a Share Purchase Agreement dated 12 March 2007, SPV has sold its 40.16% interest in Tiger Oil
Corporation. The share sale transaction was completed in the second quarter of 2007.

(j) SPC Cambodia Ltd (“SPC Cambodia”), and its co-venturers in Block B, PTTEP International Limited (“PTTEPI”) and
Resourceful Petroleum Limited (“RPL”) have in the first quarter of 2007 jointly exercised their pre-emption rights
to acquire the entire 10% participating interest of CE Cambodia B Ltd. Upon completion of the acquisition in the
third quarter of 2007, SPC Cambodia and RPL each hold a 33.33% participating interest in Block B and PTTEPI the
remaining 33.33%.

(k) Sino-American Energy LLC has a participating interest of 8.91% for existing producing fields CFD 11-1, CFD 11-2
and CFD 11-3/5 located in Block 04/36, and a participating interest of 7.82% for the unitised producing fields CFD
11-6, CFD 12-1 and CFD 12-1S which straddle between Block 04/36 and Block 05/36.

(l) Pursuant to the terms of the Sampang Production Sharing Contract (“PSC”), the Indonesian Government was
entitled and had nominated PT Petrogas Oyong Jatim (“Petrogas”) to participate in a 10.0% undivided interest in the
Sampang PSC. Petrogas has decided not to acquire the interest and SPC’s participating interest in the Sampang
PSC therefore remains at 40.0%.

(m) SPV had on 23 March 2005 terminated the joint venture agreement dated 2 August 1993 entered into with Petmal
Oil (Malaysia) Sendirian Berhad in respect of Petmal Oil Corporation Sdn. Bhd. (in liquidation) (“POC”). By an order of
the Kuala Lumpur High Court dated 3 March 2007, POC has been ordered to be wound up.

20. Intangible exploration assets

The Group $’000

Cost
At 1 January 2007 108,493
Foreign currency translation adjustment (7,299)
Additions 21,320
Acquired on acquisition of a subsidiary 11,373
Transfer to proved oil and gas properties (Note 21) (8,625)
Transfer to construction-in-progress (Note 21) (5,734)
At 31 December 2007 119,528

Cost
At 1 January 2006 -
Effect of retrospective adoption of FRS 106 104,454
As restated 104,454
Foreign currency translation adjustment (8,552)
Additions 50,074
Disposals (26,502)
Exploration expenditure written off (10,981)
At 31 December 2006 108,493

Exploration expenditure written off of $Nil (2006: $10,981,000) was included in operation expenses in the income
statement.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
115
notes to the financial statements

21. Property, plant and equipment

Proved
Freehold Leasehold Plant and oil and gas Construction-
land land equipment properties in-progress Total
$’000 $’000 $’000 $’000 $’000 $’000

The Group

Cost
At 1 January 2007 62,842 134,095 1,091,195 96,329 69,240 1,453,701
Foreign currency translation adjustment - - (6) (28,790) (4,157) (32,953)
Additions - - 355 11,649 68,454 80,458
Acquired on acquisition of subsidiary - - - 397,601 - 397,601
Transfer from construction-in-progress - 8,754 9,860 91,892 (110,506) -
Reclassifications (Note 20) - - - 8,625 5,734 14,359
Disposals - - (2,966) - - (2,966)
Drilling expense written off - - - - (4,414) (4,414)
At 31 December 2007 62,842 142,849 1,098,438 577,306 24,351 1,905,786

Accumulated depreciation
At 1 January 2007 - 31,427 528,437 44,744 - 604,608
Foreign currency translation adjustment - - (9) (2,689) - (2,698)
Depreciation charge - 6,049 38,490 46,663 - 91,202
Disposals - - (1,902) - - (1,902)
At 31 December 2007 - 37,476 565,016 88,718 - 691,210

Net book value
At 31 December 2007 62,842 105,373 533,422 488,588 24,351 1,214,576

The Company

Cost
At 1 January 2007 62,842 134,095 1,091,044 - 1,105 1,289,086
Additions - - - - 31,490 31,490
Transfer from construction-in-progress - 8,754 9,860 - (18,614) -
Disposals - - (2,966) - - (2,966)
At 31 December 2007 62,842 142,849 1,097,938 - 13,981 1,317,610

Accumulated depreciation
At 1 January 2007 - 31,427 528,344 - - 559,771
Depreciation charge - 6,049 38,466 - - 44,515
Disposals - - (1,902) - - (1,902)
At 31 December 2007 - 37,476 564,908 - - 602,384

Net book value
At 31 December 2007 62,842 105,373 533,030 - 13,981 715,226

116 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
21. Property, plant and equipment (continued)

Proved
Freehold Leasehold Plant and oil and gas Construction-
land land equipment properties in-progress Total
$’000 $’000 $’000 $’000 $’000 $’000

The Group

Cost
At 1 January 2006 62,842 134,095 1,054,182 94,716 73,914 1,419,749
Foreign currency translation adjustment - - (7) (8,188) (6,282) (14,477)
Additions - - 36 9,555 48,244 57,835
Transfer from construction-in-progress - - 39,955 - (39,955) -
Disposals - - (2,971) - - (2,971)
Adjustments - - - 246 (6,681) (6,435)
At 31 December 2006 62,842 134,095 1,091,195 96,329 69,240 1,453,701

Accumulated depreciation
At 1 January 2006 - 25,550 493,439 36,464 - 555,453
Foreign currency translation adjustment - - (7) (3,515) - (3,522)
Depreciation charge - 6,173 37,694 11,795 - 55,662
Disposals - - (2,689) - - (2,689)
Adjustments - (296) - - - (296)
At 31 December 2006 - 31,427 528,437 44,744 - 604,608

Net book value
At 31 December 2006 62,842 102,668 562,758 51,585 69,240 849,093

The Company

Cost
At 1 January 2006 62,842 134,095 1,054,060 - 1,241 1,252,238
Additions - - - - 39,819 39,819
Transfer from construction-in-progress - - 39,955 - (39,955) -
Disposals - - (2,971) - - (2,971)
At 31 December 2006 62,842 134,095 1,091,044 - 1,105 1,289,086

Accumulated depreciation
At 1 January 2006 - 25,550 493,348 - - 518,898
Depreciation charge - 6,173 37,685 - - 43,858
Disposals - - (2,689) - - (2,689)
Adjustments - (296) - - - (296)
At 31 December 2006 - 31,427 528,344 - - 559,771

Net book value
At 31 December 2006 62,842 102,668 562,700 - 1,105 729,315

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
117
notes to the financial statements

22. Due from/(to) subsidiaries (non-trade)

(a) Due from subsidiaries
The non-trade amounts due from subsidiaries consist of the following (Note 12):

The company
2007 2006
$’000 $’000

Interest bearing loan, unsecured, repayable within

12 months from the balance sheet date 22,379 17,761
Other (interest-free, unsecured and repayable upon demand) 519,821 179,408
542,200 197,169

The weighted average interest rate at the balance sheet date on interest-bearing balances due from the subsidiaries
is 4.71% (2006: 5.26%) per annum.

(b) Due to subsidiaries

The non-trade amounts due to subsidiaries consist of the following (Note 27):

The company
2007 2006
$’000 $’000

Interest bearing loan, unsecured, repayable within

12 months from the balance sheet date 11,570 6,235
Other (interest-free, unsecured and repayable upon demand) 60,635 54,058
72,205 60,293

The weighted average interest rate at the balance sheet date on interest-bearing balances due to subsidiaries is
3.92% (2006: 6.11%) per annum.

23. Due from associates (non-trade)

The non-trade amounts due from associates are unsecured, interest-free and repayable upon demand. The Directors believe
that the carrying amount of the amount due from associates approximates their fair value.

24. Due from/(to) joint ventures (non-trade)

The non-trade amounts due from/(to) joint ventures are unsecured, interest-free and repayable upon demand. The Directors
believe that the carrying amount of the amount due from/(to) joint ventures approximates their fair value.

25. Due to related corporations (non-trade)

The non-trade amounts due to related corporations are unsecured, interest-free and repayable upon demand. The directors
believe that the carrying amount of the amount due to related corporations approximates their fair value.

26. Loan to an investee company

The loan to an investee company is unsecured, bears interest at 10% (2006: 10%) per annum and has no fixed terms of
repayment. However, interest will be recognised on a receipt basis due to uncertainty over collectability. This loan is in turn
provided by the investee company to PT Transportasi Gas Indonesia, incorporated in Indonesia and of which the Group has a
6% equity interest, for its pipeline infrastructure construction projects. This loan is in proportion to the Group’s equity interest
and is denominated in United States dollar. The loan is not expected to be repaid within the next 12 months. Accordingly,
this has been presented as non-current. The Directors believe that the carrying amount of the loan to the investee company
approximates its fair value.

118 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
27. Trade and other payables
The Group The Company
2007 2006 2007 2006
$’000 $’000 $’000 $’000

Trade payables to third parties 1,071,533 826,639 996,645 792,747

Due to subsidiaries (trade) - - - 187
Due to subsidiaries (non-trade) (Note 22(b)) - - 72,205 60,293
Due to joint ventures (trade) 114,616 54,620 114,525 54,533
Due to joint ventures (non-trade) (Note 24) 198,161 73,126 198,161 70,626
Due to related corporations (non-trade) (Note 25) 63 74 63 74
Other creditors 35,595 17,472 26,057 17,369
Accruals for operating expenses 8,711 5,608 8,279 5,282
1,428,679 977,539 1,415,935 1,001,111

The carrying amounts of trade and other payables approximate their fair values.

Trade and other payables are denominated in the following currencies:

The Group The Company
2007 2006 2007 2006
$’000 $’000 $’000 $’000

Singapore Dollar 119,944 85,574 118,653 82,345

United States Dollar 1,278,530 883,559 1,297,282 918,766
Other 30,205 8,406 - -
1,428,679 977,539 1,415,935 1,001,111

28. Borrowings (unsecured)

The Group The Company
2007 2006 2007 2006
$’000 $’000 $’000 $’000

Short-term loans 836,760 443,952 826,329 405,655

In 2006, short-term bank loans amounting to $15,430,000 was secured by a pledge of a fixed deposit of another subsidiary
(Note 11). The amount was fully repaid in 2007.

Included in the Company’s short-term borrowings is an amount of $299,100,000 (2006: $Nil) from a subsidiary of a
substantial shareholder contracted at normal commercial terms.

(a) Maturity of borrowings

The current borrowings are unsecured and have an average maturity of 2.5 months (2006: 2 months) from the end
of the financial year.

(b) Currency risk

The carrying amounts of total borrowings are all denominated in the United States dollar.

(c) Interest rates risks

The weighted average effective interest rates per annum of total borrowings at the balance sheet date are as follows:

The Group The Company

2007 2006 2007 2006
% % % %

United States Dollar 5.35 5.79 5.34 5.75

(d) Carrying amounts and fair values

The carrying amounts of current borrowings approximate their fair values. The fair values are determined from a
discounted cash flow analysis, using a discount rate based upon the borrowing rates which the directors expect
would be available to the Group and the Company at the balance sheet date.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
119
notes to the financial statements

29. Provision for retirement benefits

The Group and

The company
2007 2006
$’000 $’000

Balance at beginning of the financial year 6,419 6,199

Provision for the financial year 441 313
Payment for the financial year - (93)
Adjustments – in liability 113 -
Balance at end of the financial year 6,973 6,419

Present value of obligation 6,973 6,419

The principal actuarial assumptions used for accounting purposes as at 31 December 2007 are as follows:

The Group and

The company
2007 2006
% %

Discount rate applied to retirement obligations 3.0 3.0

Future salary increases* - -

* With effect from 1 January 2006, the Group calculates the retirement benefits based on the last drawn salary as at 31 December 2005. Any salary increases thereafter
will not be included for the computation of the retirement benefits.

The amounts recognised in the income statements are as follows:

The Group and

The company
2007 2006
$’000 $’000

Current service expense 264 140
Interest expense 177 173
Expense recognised in the income statement 441 313

During the financial year, the Company engaged an independent professional valuation firm to conduct an actuarial valuation
of the retirement benefit scheme to determine the retirement benefit expenses to be charged for the financial years ended/
ending 31 December 2007, 2008 and 2009. The actuarial valuation was conducted based on the principal rules of the
retirement scheme and actuarial assumptions.

30. Share capital

The Group and

The company
No. of shares Share
issued Capital
’000 $’000

2007
Balance at beginning of the financial year 515,685 617,278
Exercise of options 621 861
Balance at end of the financial year 516,306 618,139

2006
Balance at beginning of the financial year 502,580 571,216
Exercise of options 3,111 4,504
Restricted Share Plan 895 5,803
Conversion of convertible bonds 9,099 35,755
Balance at end of the financial year 515,685 617,278

120 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
30. Share capital (continued)
All issued shares are fully paid.

In 2007, the Company issued 621,000 (2006: 3,111,000) ordinary shares upon the exercise of 621,000 (2006: 3,111,000)
share options granted under the SPC Share Option Scheme 2000 at the exercise price of between $0.68 and $1.57 (2006:
$0.68 and $1.57) per share.

The newly issued shares rank pari passu in all respects with the previously issued shares.

In 2006, the Company issued:

(i) 895,200 ordinary shares under the SPC Restricted Share Plan.

(ii) 9,098,921 ordinary shares were issued upon the exercise of conversion under the Company’s 5 year convertible
bonds. The bonds were converted at the exchange rate of US$1: S$ of 1.6898 and at a conversion price of $3.90
per ordinary share.

(a) Treasury shares
The Company acquired 1,412,000 shares (2006: 1,860,000) in the Company through purchase on the Singapore
Exchange during the year. The total amount paid to acquire the shares was $7,583,000 (2006: $8,140,000) and
this was deducted against shareholders’ equity.

(b) Share options

Share options were granted to employees and non-executive directors under the SPC Share Option Scheme 2000
(“2000, 1/2001, 2/2001, 1/2002, 2/2002, 1/2003 and 1/2004 Options”) which commenced on 28 August 2000.
Movements in the total number of shares under options outstanding are as follows:

2007 2006
Number Number
of shares of shares
under options under options

Balance at beginning of the financial year 972,000 4,083,000

Exercised (621,000) (3,111,000)
Balance at end of the financial year 351,000 972,000

The exercise price of the granted options is equal to the average of the closing prices of the Company’s ordinary
shares on the SGX-ST for the three market days immediately preceding the date of grant. The vesting of granted
options is conditional on the participants being in the service of the Company on vesting date.

Once the options are vested, they are exercisable for a contractual option term of 8 years for senior management
and employees and 3 years for non-executive directors. The options may be exercised in full or in part in respect of
100 shares or a multiple thereof, on the payment of the exercise price. The persons to whom the options have been
issued have no right to participate by virtue of the options in any share issue of any other company. The Group has
no legal or constructive obligation to repurchase or settle the options in cash.

No share options were granted during the financial year.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
121
notes to the financial statements

30. Share capital (continued)

(b) Share options (continued)

Movements in the number of shares under options outstanding at the end of the financial year and their exercise
prices are as follows:

The Group and the Company

Financial year ended 31 December 2007

At beginning Granted Exercised Forfeited At end

of the during the during the during the of the Exercise
financial year financial year financial year financial year financial year price Exercise period

Senior Management
and Employees
2000 Options 18,000 - - - 18,000 $0.78 29.8.2002 – 27.8.2010
1/2001 Options 18,000 - - - 18,000 $0.68 18.4.2003 – 16.4.2011
2/2001 Options 21,000 - (1,000) - 20,000 $0.68 20.9.2003 – 18.9.2011
1/2002 Options 24,000 - (5,000) - 19,000 $0.75 4.4.2004 – 2.4.2012
2/2002 Options 60,000 - (31,000) - 29,000 $0.87 31.10.2004 – 29.10.2012
1/2003 Options 279,000 - (135,000) - 144,000 $0.92 18.2.2005 – 16.2.2013
1/2004 Options 518,000 - (415,000) - 103,000 $1.57 5.2.2006 – 3.2.2014

Non-Executive Directors
1/2004 Options 34,000 - (34,000) - - $1.57 5.2.2006 – 3.2.2009

972,000 - (621,000) - 351,000

Financial year ended 31 December 2006

At beginning Granted Exercised Forfeited At end

of the during the during the during the of the Exercise
financial year financial year financial year financial year financial year price Exercise period

Senior Management
and Employees
2000 Options 18,000 - - - 18,000 $0.78 29.8.2002 – 27.8.2010
1/2001 Options 18,000 - - - 18,000 $0.68 18.4.2003 – 16.4.2011
2/2001 Options 25,000 - (4,000) - 21,000 $0.68 20.9.2003 – 18.9.2011
1/2002 Options 140,000 - (116,000) - 24,000 $0.75 4.4.2004 – 2.4.2012
2/2002 Options 100,000 - (40,000) - 60,000 $0.87 31.10.2004 – 29.10.2012
1/2003 Options 668,000 - (389,000) - 279,000 $0.92 18.2.2005 – 16.2.2013
1/2004 Options 2,922,000 - (2,404,000) - 518,000 $1.57 5.2.2006 – 3.2.2014

Non-Executive Directors
1/2004 Options 192,000 - (158,000) - 34,000 $1.57 5.2.2006 – 3.2.2009

4,083,000 - (3,111,000) - 972,000

Out of the outstanding options of 351,000 shares (2006: 972,000), options on 351,000 ordinary shares (2006:
972,000) were exercisable as at 31 December 2007.

122 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
30. Share capital (continued)
(c) Restricted Share Plan (“RSP”) and Performance Share Plan (“PSP”)
Details of the awards under the two share plans are as follows:

The Group and the Company

Financial year ended 31 December 2007

¤
RSP 2006
RSP 2004 RSP 2005 RSP 2006 (non-executive RSP 2007
(employees) (employees) (employees) directors) (employees)

Balance at beginning of the financial year 363,600 858,100 1,559,100 - -

Number of contingent shares awarded
during the financial year - - - - 1,667,100
Number of contingent shares under awards
cancelled/forfeited during the
financial year - - - - (41,700)
Number of contingent shares under awards
adjusted at release of awards cancelled/
forfeited during the financial year - - (794,100) - -
Number of contingent shares released
during the financial year # # 765,000 # #
Number of contingent shares awarded but
not released during the financial year # # # # 1,625,400
Number of shares awarded during the
financial year - - - 66,000 -
Number of shares under awards vested
during the financial year (363,600) (429,000) (255,000) (66,000) -
Number of shares under awards forfeited
during the financial year - (20,500) (30,800) - -
Balance at end of the financial year - 408,600 479,200 - 1,625,400

Targeted vesting period 2005 – 2007 2006 – 2008 2007-2009 # 2008 – 2010
* Fair values at grant date $4.20 $5.75 $5.00 $5.00 $5.75

PSP 2004 PSP 2005 PSP 2006 PSP 2007

(key executives) (key executives) (key executives) (key executives)

Balance at beginning of the financial year 705,000 730,000 730,000 -

Number of contingent shares awarded
during the financial year - - - 730,000
Number of contingent shares under awards
cancelled/forfeited during the
financial year (144,600) - - -
Number of contingent shares released
during the financial year 560,400 # # #
Number of contingent shares awarded but
not released during the financial year - 730,000 730,000 730,000
Number of shares awarded during the
financial year - - - -
Number of shares under awards vested
during the financial year (560,400) - - -
Number of shares under awards forfeited
during the financial year - - - -
Balance at end of the financial year - 730,000 730,000 730,000

Targeted vesting period 2007 2008 2009 2010

* Fair values at grant date $3.70 $4.98 $5.00 $5.75
¤
Shares awarded to non-executive directors are vested upon award.
# Not applicable
* The fair values are based on the market price of the shares at the grant date.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
123
notes to the financial statements

30. Share capital (continued)

(c) Restricted Share Plan (“RSP”) and Performance Share Plan (“PSP”) (continued)

Financial year ended 31 December 2006

¤
RSP 2005
RSP 2004 RSP 2005 (non-executive RSP 2006
(employees) (employees) directors) (employees)

Balance at beginning of the financial year 761,400 1,477,500 - -

Number of contingent shares awarded
during the financial year - - - 1,581,000
Number of contingent shares under awards
cancelled/forfeited during the
financial year - (27,000) - (21,900)
Number of contingent shares under awards
adjusted at release of awards cancelled/
forfeited during the financial year - (104,900) - -
Number of contingent shares released
during the financial year # 1,345,600 # #
Number of contingent shares awarded but
not released during the financial year # # # 1,559,100
Number of shares awarded during the
financial year - - 66,000 -
Number of shares under awards vested
during the financial year (380,700) (448,500) (66,000) -
Number of shares under awards forfeited
during the financial year (17,100) (39,000) - -
Balance at end of the financial year 363,600 858,100 - 1,559,100

Targeted vesting period 2005 – 2007 2006 – 2008 # 2007-2009

* Fair values at grant date $4.20 $5.75 $5.75 $5.00

PSP 2004 PSP 2005 PSP 2006

(key executives) (key executives) (key executives)

Balance at beginning of the financial year 705,000 - -

Number of contingent shares awarded
during the financial year - 730,000 730,000
Number of contingent shares under awards
cancelled/forfeited during the
financial year - - -
Number of contingent shares released
during the financial year # # #
Number of contingent shares awarded
but not released during the financial year 705,000 730,000 730,000
Number of shares awarded during the
financial year - - -
Number of shares under awards vested
during the financial year - - -
Number of shares under awards forfeited
during the financial year - - -
Balance at end of the financial year 705,000 730,000 730,000

Targeted vesting period 2007 2008 2009

* Fair values at grant date $3.70 $4.98 $5.00

¤
Shares awarded to non-executive directors are vested upon award.
* The fair values are based on the market price of the shares at the grant date.
# Not applicable.

124 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
31. Capital reserve
The balance relates to an amount of retained profits of a related corporation capitalised by way of a bonus issue of shares.

The capital reserve is non-distributable.

32. Other reserves

The Group The Company
2007 2006 2007 2006
$’000 $’000 $’000 $’000

(a) Composition:
Share awards and share options reserve 17,186 13,904 17,186 13,904
Fair value reserve 3,482 573 2,070 148
20,668 14,477 19,256 14,052

(b) Movements:
(i) Share awards and share options reserve
Balance at beginning of the financial year 13,904 8,781 13,904 8,781
Employee share award and
share option scheme:
- Value of employee services (Note 7) 11,155 10,926 11,155 10,926
- Share issue (7,873) (5,803) (7,873) (5,803)
Balance at end of the financial year 17,186 13,904 17,186 13,904

(ii) Fair value reserve

Balance at beginning of the financial year 573 511 148 599
Fair value gains/(losses) on
available-for-sale financial assets (Note 14) 2,909 62 1,922 (451)
Balance at end of the financial year 3,482 573 2,070 148

(iii) Equity component of convertible bonds

Balance at beginning of the financial year - 1,936 - 1,936
Movement arising from conversion of
convertible bonds into ordinary shares
of the Company - (1,936) - (1,936)
Balance at end of the financial year - - - -

Other reserves are non-distributable.

33. Dividends
The company
2007 2006
$’000 $’000

Dividends paid:
Interim one-tier tax exempt dividend of 20 cents per share
for the financial year ended 31 December 2007 103,119 -
Final one-tier tax exempt dividend of 20 cents per share
for the financial year ended 31 December 2006
(2006: 20 cents) 103,209 103,116
Special one-tier tax-exempt dividend of 15 cents per share
for the financial year ended 31 December 2006
(2006: 12 cents) 77,407 61,870
283,735 164,986

In respect of the current financial year, the directors have proposed a final one-tier tax-exempt dividend for 2007 of
40 cents (2006: 20 cents) per share amounting to $205,883,000 to be paid to shareholders on 12 May 2008. These
financial statements do not reflect this dividend payable, which will be accounted for in shareholders’ equity as an
appropriation of retained earnings in the financial year ending 31 December 2008 when it is approved and declared in the
next Annual General Meeting.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
125
notes to the financial statements

34. Commitments
As at the end of financial year, the Group and the Company have the following outstanding commitments:

(a) Operating – Exploration Commitments

Certain joint ventures are required to incur minimum exploration costs of which the Group’s share amounted to
$25,475,000 (2006: $8,772,000) to maintain the PSCs.

(b) Capital commitments

Capital expenditures not contracted for at the balance sheet date and not recognised in the financial statements
(excluding those relating to investments in associates and joint ventures (Note 17)) relating to plant and equipment
are as follows:

The Group and

The company
2007 2006
$’000 $’000

Approved by the directors but not contracted for at the balance sheet date 274,045 251,150

(c) Operating lease commitments

The Group and the Company leases land and building and various plant and machinery under non-cancellable
operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The lease
expenditure charged to the income statement during the financial year is disclosed in Note 8.

The future aggregate minimum lease payable under non-cancellable operating leases contracted for at the balance
sheet date but not recognised as liabilities, are analysed as follows:

The Group and

The company
2007 2006
$’000 $’000

Not later than one year 11,718 5,093

Between two and five years 41,092 11,701
Later than five years 25,145 27,762
77,955 44,556

126 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
35. Interested person transactions
In compliance with Rule 920(1) of the Listing Manual of the SGX-ST, a shareholders’ mandate was obtained for the
following types of interested person transactions (as defined in Chapter 9 of the Listing Manual). The aggregate value of
these transactions conducted pursuant to the shareholders’ mandate during the financial year is as follows:

The Group and The Company

Aggregate value of
all interested person Aggregate value of
transactions during the all interested person
financial year (excluding transactions conducted
transactions less than under shareholders’
$100,000 and mandate pursuant
transactions conducted to Rule 920 during
under shareholders’ the financial year
mandate pursuant (excluding transactions
Name of interested person to Rule 920) less than $100,000)
2007 2006 2007 2006
$’000 $’000 $’000 $’000

Sales of goods and services

Keppel Corporation Group - - 11,675 10,592
PSA Corporation Group - - - 703
SembCorp Marine Group - - 29,719 21,090
Singapore Airlines Group - - 463,425 464,588
Temasek Holdings Group
(Other than the above) - - 36,830 68,333

Purchases of goods and services

Keppel Corporation Group - - 485 -
PSA Corporation Group - - 9,850 10,368
Temasek Holdings Group
(Other than the above) - - 17,527 29,245

Treasury transactions (interest income)
Keppel Corporation Group - - 7,845 6,019

Management and support services

Keppel Corporation Group - - 500 500

36. Related party transactions
In addition to the related party information disclosed elsewhere in the financial statements, the following transactions took
place between the Group and the Company and related parties during the financial year on terms agreed by the parties
concerned:

(a) Sales and purchases of goods and services

The Group The Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Sales to associates and joint ventures 29,148 31,194 29,148 31,194

Sales to related parties 165,873 139,226 11,400 8,051
Purchases from a joint venture 13,229 15,479 13,172 15,211
Purchases from related parties 1,666 74 1,666 74

Sales to associates, joint ventures and related parties and purchases of materials from the joint venture and related
parties were carried out on commercial terms and conditions and at market prices. Related parties above refer to
companies related to a substantial shareholder of the Company.

Outstanding balances at 31 December 2007, arising from sale/purchase of goods and services, are set out in Notes
12 and 27 respectively.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
127
notes to the financial statements

36. Related party transactions (continued)

(b) Share options granted to key management
No share options were granted to key management of the Group during the financial year. The total outstanding
number of share options granted to key management of the Group at the end of the financial year was Nil (2006:
320,000).

(c) Key management personnel compensation

Key management personnel compensation is as follows:

The Group and

The company
2007 2006
$’000 $’000

Salaries and other short-term employee benefits 5,498 6,731

Post-employment benefits – contribution to CPF 53 55
Share awards and share options granted 5,654 6,285
11,205 13,071

Included in the above was total compensation for the Group and the Company, including share awards and deemed
interest in share options for the executive director of the Company, amounted to $1,437,500 (2006: $1,750,000).

37. Segment information

Primary reporting format – business segments

Exploration &
Downstream Production Others Group
$’000 $’000 $’000 $’000

Financial year ended 31 December 2007

Revenue 8,621,585 145,127 - 8,766,712

Segment result 523,165 52,363 16,291 591,819
Net unallocated income 1,297
593,116
Finance income 13,373
Finance expenses (38,604)
Share of results of associates 744
Share of results of joint ventures 12,770
Profit before income tax 581,399
Income tax expense (73,058)
Net profit attributable to equity holders of the Company 508,341

Segment assets 3,361,934 779,137 10,208 4,151,279

Unallocated assets 156,873
Consolidated total assets 4,308,152

Segment liabilities 1,399,060 50,054 2,336 1,451,450

Unallocated liabilities 1,066,209
Consolidated total liabilities 2,517,659

Other segment items

Capital expenditure 34,584 67,194 - 101,778
Depreciation 44,538 46,664 - 91,202
Drilling expense written off - 4,414 - 4,414

128 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
37. Segment information (continued)
Primary reporting format – business segments (continued)
Exploration &
Downstream Production Others Group
$’000 $’000 $’000 $’000

Financial year ended 31 December 2006

Revenue 8,525,043 49,171 - 8,574,214

Segment result 338,184 14,558 (5,366) 347,376

Net unallocated income 1,933
349,309
Finance income 11,911
Finance expenses (34,061)
Share of results of associates 1,938
Share of results of joint ventures 9,379
Profit before income tax 338,476
Income tax expense (53,907)
Net profit attributable to equity holders of the Company 284,569

Segment assets 2,652,565 334,503 3,550 2,990,618

Unallocated assets 149,564
Consolidated total assets 3,140,182

Segment liabilities 970,286 18,547 2,508 991,341

Unallocated liabilities 578,406
Consolidated total liabilities 1,569,747

Other segment items

Capital expenditure 39,855 68,054 - 107,909
Depreciation 43,861 11,795 6 55,662
Write-down of inventories to net realisable value 11,488 - - 11,488
Exploration expenditure written off - 10,981 - 10,981

The Group has segmented its activities into downstream, exploration and production and others. The downstream activities
include petroleum refining, marketing of products to airlines, commercial accounts, utilities, shipping accounts, operation
of retail service stations, trading activities and the storage and terminalling of finished oil products. The exploration and
production activities involve the exploration, development, production and sale of oil and gas.

Secondary reporting format - geographical segments

The Group’s two business segments operate in four main geographical areas:

Singapore The Group is headquartered and its principal operations include petroleum refining, marketing,
trading and distribution of crude oil and petroleum products and the storage and terminalling of
refined products.

Hong Kong & China The operations in this area are principally bunkering and aviation sales activities, as well as
exploration and production activities.

Indonesia The operations in this area are principally exploration, development, production and sale of
oil and gas.

Other countries The business activities are principally aviation sales, product trading and distribution, as well as
exploration activities.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
129
notes to the financial statements

37. Segment information (continued)

Secondary reporting format - geographical segment (continued)

With the exception of Singapore, Hong Kong and China, no other individual country contributed more than 10% of
consolidated sales and assets. Sales are based on the country in which the customer is located. Total assets and capital
expenditure are shown by the geographical area where the assets are located.

Sales Total assets Capital expenditure

2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000

Singapore 7,996,930 8,024,013 3,423,614 2,711,933 31,489 39,819

Hong Kong & China 586,975 410,656 468,910 72,432 3,716 36
Indonesia 58,659 49,171 328,273 302,694 39,368 54,242
Other countries 124,148 90,374 87,355 53,123 27,205 13,812
8,766,712 8,574,214 4,308,152 3,140,182 101,778 107,909

38. Financial risk management

Financial risk management policies and objectives

The Group’s activities expose it to a variety of financial risks: market risk (including price risk, foreign currency risk, cash flow
and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on
the volatility in the oil and financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. As appropriate, the Group uses derivative financial instruments such as oil paper swaps, oil options, physical oil
contracts, interest rate caps as well as freight forward contracts, foreign exchange contracts to hedge certain exposures.

The Refinery, Supply and Trading Business Unit of the Group carries out risk management for oil price risks whilst the Group
Treasury and Middle Office manages the financial risks, with authority as delegated by the Board of Directors. The Group
does not hold any derivative financial instruments for speculative purposes.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures
these risks.

(a) Price risk

The Group is exposed to price risk (due to volatility of oil prices) arising from its derivatives portfolio which comprises
of paper oil swaps and freight forward contracts (Note 15). The derivatives portfolio is marked-to-market with
reference to quoted market prices at the balance sheet date.

The Group systematically quantifies and manages this risk exposure by implementing a Value-At-Risk (“VAR”)
framework which measures the worst expected loss over a given time horizon under normal market conditions at a
given confidence level. With the VAR framework, all trading business units are allocated a VAR limit which in turn
dictates the trading units’ open position and stop-loss limits. These limits are monitored closely by the Middle Office.
The Risk Management and Derivative Unit is responsible for hedging the Company’s oil inventory and refining margin
price risks.

A sensitivity analysis has been performed based on the exposure to oil prices as at settlement date for the Group’s
derivatives portfolio as at 31 December 2007, assuming that this portfolio is held till settlement date and there is no
change in this derivatives portfolio in 2008. A 5% increase or decrease is used when reporting price risk internally to
key management personnel and represents management’s assessment of the possible changes for the prices as at
settlement date.

If the quoted market prices used to mark-to-market the derivatives portfolio had been 5% lower or higher and
all other variables were held constant, the Group’s profit for the year ended 31 December 2007 would increase/
decrease by $15,308,000 (2006: $6,079,000).

As the Group practises a flexible hedging ratio within a range endorsed by the Board of Directors, the derivatives
portfolio will change during the year and hence, the sensitivity analysis is unrepresentative of the risk exposure during
the year.

130 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
38. Financial risk management (continued)
(b) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from business transactions in foreign currencies, mainly the
United States dollar.

The Group’s risk management principles with regard to its foreign currency denominated monetary assets, liabilities,
commitments and cash flows is to match as far as possible the values of such assets and cash flows against similarly
denominated liabilities and cash flows. Decisions on either holding net short or long positions in foreign currency
denominated monetary assets or liabilities are taken on a case-by-case basis and by taking into consideration the
amount and duration of the exposure, market volatility, economic trends and the requirements of the business.

In addition, the Group Treasury is responsible for hedging the net position of each foreign currency by using external
currency borrowings, spot and forward currency contracts as appropriate.

The Company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency
translation risk. The Group currently designates certain foreign currency borrowings as a hedging instrument for the
purpose of hedging the translation of its foreign operations.

At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in foreign
currencies other than the respective Group entities’ functional currencies are as follows:

THE Group THE Company

Assets Liabilities Assets Liabilities
2007 2006 2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

US dollar 1,812,062 1,185,444 2,137,116 1,330,711 1,792,814 1,174,104 2,137,116 1,330,711

Others 24,121 3,382 - - 24,030 3,254 - -

Included in the above table, is an amount of $43,455,000 (2006 : $46,290,000) of United States dollar borrowings
which is designated as a net investment hedge by the Company.

A sensitivity analysis has been performed based on the outstanding foreign currency denominated monetary items as
detailed in the above table, based on a 5% increase and decrease in the United States dollar against the functional
currency of each Group entity. 5% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the possible changes in foreign exchange
rates.

If the United States dollar strengthen or weaken by 5% against the functional currency of each Group entity and all
other variables were held constant:

i) the Group’s and Company’s profit for the year ended 31 December 2007 would decrease/increase by
$14,080,000 and $15,042,000 respectively (2006: $4,646,000 and $5,178,000).

ii) the Group’s and Company’s other equity reserves, due to net investment hedge, would decrease/increase by
$2,173,000 (2006: $2,314,000).

As other foreign currencies denominated monetary items are not significant, accordingly a sensitivity analysis has not
been performed.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
131
notes to the financial statements

38. Financial risk management (continued)

(c) Cash flow and fair value interest rate risks
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates.

As the Group has no significant interest-bearing assets and balances its short-term borrowings with short-term cash
deposits, the Group’s income and operating cash flows are substantially independent of changes in market interest
rates. In addition as at balance sheet date, the Group has not entered into any interest rate derivative contracts.

The tables below set out the Group and the Company’s exposure to interest rate risks. Included below are the assets
and liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.
Variable rates Fixed rates Non-
Less than Less than 6 to 12 1 to 5 interest
6 months 6 months months years bearing Total
$’000 $’000 $’000 $’000 $’000 $’000

The Group
At 31 December 2007
Cash and bank balances 68,499 371,918 - - 34,673 475,090
Trade and other receivables - - - - 1,357,532 1,357,532
Restricted cash deposit - - 4,324 - - 4,324
Other assets - - - - 2,471,206 2,471,206
Total assets 68,499 371,918 4,324 - 3,863,411 4,308,152

Borrowings - 836,760 - - - 836,760

Other liabilities - - - - 1,680,899 1,680,899
Total liabilities - 836,760 - - 1,680,899 2,517,659

At 31 December 2006
Cash and bank balances 97,998 305,102 - - 18,118 421,218
Trade and other receivables - - - - 997,426 997,426
Available-for-sale assets - - - - 8,430 8,430
Other assets - - - - 1,713,108 1,713,108
Total assets 97,998 305,102 - - 2,737,082 3,140,182

Borrowings - 403,988 39,964 - - 443,952

Other liabilities - - - - 1,125,795 1,125,795
Total liabilities - 403,988 39,964 - 1,125,795 1,569,747

The Company
At 31 December 2007
Cash and bank balances 41,832 355,000 - - 16,113 412,945
Trade and other receivables - - - - 1,786,902 1,786,902
Other assets - - - - 1,885,888 1,885,888
Total assets 41,832 355,000 - - 3,688,903 4,085,735

Borrowings - 826,329 - - - 826,329

Other liabilities - - - - 1,581,454 1,581,454
Total liabilities - 826,329 - - 1,581,454 2,407,783

At 31 December 2006
Cash and bank balances 83,330 288,000 - - 12,147 383,477
Trade and other receivables - - - - 1,121,279 1,121,279
Available-for-sale assets - - - - 4,340 4,340
Other assets - - - - 1,517,258 1,517,258
Total assets 83,330 288,000 - - 2,655,024 3,026,354

Borrowings - 365,691 39,964 - - 405,655

Other liabilities - - - - 1,134,068 1,134,068
Total liabilities - 365,691 39,964 - 1,134,068 1,539,723

132 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
38. Financial risk management (continued)
(d) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. The Group’s Credit and Receivables Policy provides guidelines to transact with creditworthy
counterparties and to obtain sufficient collateral where appropriate, as a means of mitigating the risk of financial loss
from defaults. The Group’s exposure and credit reviews of the counterparties are reviewed by the Credit Committee
and the credit limits revised where appropriate. The Group has no significant concentration of credit risk.

The carrying amount of financial assets recorded in the financial statements, grossed up for any allowance for losses,
represents the Group’s maximum exposure to credit risk without taking into account the value of any collateral
obtained.

The aging analysis of trade receivables that are past due but not impaired is as follows:

THE Group THE Company

2007 2006 2007 2006
$’000 $’000 $’000 $’000

Past due:
Less than 3 months 26,292 25,144 339,278 41,648
3 to 6 months - 340 9,961 1,803
Over 6 months 1,145 881 186,339 167,148
Total 27,437 26,365 535,578 210,599

Impaired receivables, individually assessed:

Overdue debtors assessed
with high risk of non recoverability 3,131 4,990 2,119 3,954
Less : Provision for impairment (3,131) (4,990) (2,119) (3,954)
Total - - - -

(e) Liquidity risk

The Group Treasury manage liquidity risk by maintaining sufficient cash and marketable securities to enable the
Group to meet normal operating commitments, having an adequate amount of committed credit facilities and the
ability to close market positions at a short notice.

At 31 December 2007, the Company had in place a Multicurrency Debt Issuance Programme of US$1.0 billion which
was yet to be drawn down.

(f) Capital risk

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings (Note 28), cash and cash
equivalents (Note 11) and equity attributable to equity holders of the parent, comprising issued capital (Note 30),
reserves (Note 31 and Note 32) and retained earnings.

Management reviews the capital structure regularly and manages the overall capital structure through the payment of
dividends, share buy-backs as well as the issue of new debt or the redemption of existing debt.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
133
notes to the financial statements

39. New accounting standards and FRS interpretations

Certain new accounting standards, amendments and interpretations to existing standards have been published and they
are mandatory for accounting periods beginning on or after 1 January 2008. The Group and the Company do not expect
the adoption of these accounting standards, amendments and interpretations to have a material impact on the financial
statements for the financial year ended 31 December 2007, except for the following:

FRS 108 Operating Segments

FRS 108 supersedes FRS 14 Segment Reporting and requires the Group to report the financial performance of its
operating segments based on the information used internally by management for evaluating segment performance and
deciding on allocation of resources.

The Group will apply FRS 108 from 1 January 2009 and provide comparative information that conforms to the requirements
of FRS 108.

Revised FRS 23 Borrowing Costs

The revised standard removes the option to recognise immediately as an expense borrowing cost that are attributable to
qualifying assets, except for those borrowing costs on qualifying assets that are measured at fair value or inventories that are
manufactured or produced in large quantities on a repetitive basis.

The Group will apply the revised FRS 23 from 1 January 2009. As the Group has been capitalising the relevant borrowing
costs, the revised standard is not expected to have any impact on the Group.

40. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Singapore
Petroleum Company Limited dated 29 February 2008.

134 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notes to the Financial Statements
Corporate Directory

board of directors Registered Office

Choo Chiau Beng (Chairman) 1 Maritime Square #10-10
Koh Ban Heng HarbourFront Centre
Bertie Cheng Shao Shiong Singapore 099253
Geoffrey John King
Timothy Ong Teck Mong Registrar
Chin Wei-Li, Audrey Marie Boardroom Corporate & Advisory
Goon Kok-Loon Services Pte. Ltd.
Teo Soon Hoe 3 Church Street #08-01
Cheng Hong Kok Samsung Hub
Singapore 049483
Executive Committee
Choo Chiau Beng (Chairman) Auditors
Koh Ban Heng Deloitte & Touche
Cheng Hong Kok 6 Shenton Way #32-00
Goon Kok-Loon DBS Building
Singapore 068809
Nominating & Remuneration Partner-in-charge: Aric Loh Siang Khee
Committee Date of appointment: 25 April 2007
Bertie Cheng Shao Shiong (Chairman)
Choo Chiau Beng Solicitors
Chin Wei-Li, Audrey Marie Rajah & Tann LLP
Geoffrey John King 4 Battery Road #26-01
Bank of China Building
Audit Committee Singapore 049908
Goon Kok-Loon (Chairman)*
Chin Wei-Li, Audrey Marie Allen & Gledhill
Bertie Cheng Shao Shiong One Marina Boulevard #28-00
Geoffrey John King Singapore 018989

risk committee
(formed on 30 January 2008)
Chin Wei-Li, Audrey Marie (Chairperson)
Cheng Hong Kok
Geoffrey John King

* As part of a rotational change, Mr Goon Kok-Loon was appointed Chairman of the Audit Committee with effect from 30 January 2008 in place of Dr Chin Wei-Li, Audrey Marie,
who remains as a member of the committee.

Singapore Petroleum Company Limited

Report to Shareholders 2007
Corporate Directory
135
FINANCIAL CALENDAR

End of Financial Year 31 December 2007

Announcement of 2007 Full Year Results 30 January 2008

Despatch of Report to Shareholders 9 April 2008

Announcement of 2008 First Quarter Results 22 April 2008

Annual General Meeting 23 April 2008

2007 proposed final dividend

- Book Closure Dates 5 p.m., 29 – 30 April 2008
- Payment Date 12 May 2008

Announcement of 2008 Second Quarter and Half Year Results 29 July 2008

Announcement of 2008 Third Quarter and Nine Months Results 21 October 2008

136 Singapore Petroleum Company Limited

Report to Shareholders 2007
Financial Calendar
Shareholdings statistics
As at 10 March 2008

Total Issue Shares : 516,318,357

Class of Shares : Ordinary shares
Voting Rights : One vote per share

Distribution of Shareholdings*

No. of No. of
Size of Shareholdings Shareholders % Shares %

1 - 999 281 3.09 87,497 0.02

1,000 -10,000 7,982 87.87 22,441,248 4.35
10,001 - 1,000,000 806 8.87 40,933,452 7.93
1,000,001 and above 15 0.17 452,653,060 87.70

Total: 9,084 100.00 516,115,257 100.00

Twenty Largest Shareholders*

No. of
Name Shares %#

1. Keppel Oil and Gas Services Pte Ltd 234,522,797 45.44

2. DBS Nominees Pte Ltd 79,578,474 15.42
3. HSBC (Singapore) Nominees Pte Ltd 40,314,107 7.81
4. Citibank Nominees Singapore Pte Ltd 25,629,568 4.97
5. DBSN Services Pte Ltd 18,889,007 3.66
6. United Overseas Bank Nominees Pte Ltd 18,058,020 3.50
7. Raffles Nominees Pte Ltd 16,654,575 3.23
8. Morgan Stanley Asia (S’pore) Securities Pte Ltd 8,023,840 1.55
9. DB Nominees (S) Pte Ltd 3,334,854 0.65
10. Merrill Lynch (S’pore) Pte Ltd 1,753,698 0.34
11. OCBC Nominees Singapore Pte Ltd 1,369,100 0.27
12. Royal Bank Of Canada (Asia) Ltd 1,172,000 0.23
13. Phillip Securities Pte Ltd 1,145,000 0.22
14. SBS Nominees Pte Ltd 1,121,000 0.22
15. BNP Paribas Nominees S’pore Pte Ltd 1,087,020 0.21
16. HL Bank Nominees (S) Pte Ltd 929,000 0.18
17. UOB Kay Hian Pte Ltd 855,000 0.17
18. Kim Eng Securities Pte. Ltd. 789,000 0.15
19. DBS Vickers Securities (S) Pte Ltd 777,000 0.15
20. OCBC Securities Private Ltd 707,040 0.14

Total: 456,710,100 88.51

Note:
* Based on CDP Records as at 10 March 2008
# Based on 516,115,257 issued shares (excluding 203,100 shares held as treasury shares, representing 0.04% of the total issued shares of the Company).

Substantial Shareholders
No. of Shares
Shareholders Direct Interest Deemed Interest % of Shares

Temasek Holdings (Private) Limited 235,861,797 45.70

Keppel Oil and Gas Services Pte Ltd 234,522,797 45.44
Keppel Corporation Limited 234,522,797 45.44

Notes:
(i) By operation of Section 7 of the Companies Act, Temasek Holdings (Private) Limited is deemed to be interested in the 235,861,797 shares held by the DBS group
of companies and the Keppel group of companies.
(ii) By operation of Section 7 of the Companies Act, Keppel Corporation Limited is deemed to be interested in 234,522,797 shares held by the Keppel Oil and Gas
Services Pte Ltd.

Free Float
Based on the information available to the Company as at 10 March 2008 and in compliance with Rule 723 of the SGX-ST Listing Manual, approximately 54% of the
issued ordinary shares of the Company is held by the public

Singapore Petroleum Company Limited

Report to Shareholders 2007
Shareholdings Statistics
137
share performance

Share prices 2007

Last Transacted 7.57
High 9.05
Low 4.04
Average 5.93

Total volume for year 2007 719,036,000

Volume (’000) Share prices ($)

100,000 10

80,000 8

60,000 6

40,000 4

20,000 2

0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Turnover High and Low Prices

138 Singapore Petroleum Company Limited

Report to Shareholders 2007
Share Performance
Notice of annual general meeting/closure of books

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the shareholders of the Company will be held in the Olivia Room,
Level Four, Raffles City Convention Centre, Singapore 178882 on 23 April 2008 at 3 p.m. to transact the following business:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Accounts for the year ended Resolution 1
31 December 2007.

2. To declare a final tax exempt one-tier dividend of 40 cents per share for the financial year ended Resolution 2
31 December 2007 (2006: 35 cents per share).

3. To approve Directors’ Fees of $264,000 for the year ended 31 December 2007 (2006: $264,000). Resolution 3

4. To re-elect the following Directors each of whom will retire pursuant to Article 109 of the Company’s
Articles of Association and who, being eligible, will offer themselves for re-election:

(a) Mr Koh Ban Heng Resolution 4(a)

(b) Mr Geoffrey John King Resolution 4(b)

(c) Dr Chin Wei-Li, Audrey Marie Resolution 4(c)

5. To re-elect Mr Bertie Cheng Shao Shiong who, having attained the age of 70 years after the date Resolution 5
of the last Annual General Meeting will retire pursuant to Section 153(2) of the Companies Act
(Cap. 50) (the “Companies Act”) and who, being eligible, will offer himself for re-election pursuant
to Section 153(6), to hold office from the date of this Annual General Meeting until the next
Annual General Meeting.

6. To re-appoint Auditors and authorise the Directors to fix their remuneration. Resolution 6

AS SPECIAL BUSINESS

To consider and, if thought fit, to approve, with or without modification, the following resolutions as Ordinary Resolutions:

7. That:

(a) for the purposes of the Companies Act, the exercise by the Directors of the Company of Resolution 7
all the powers of the Company to purchase or otherwise acquire the shares in the capital
of the Company (the “Shares”) not exceeding in aggregate the Prescribed Limit
(as hereinafter defined), at such price(s) as may be determined by the Directors of the
Company from time to time up to the Maximum Price (as hereinafter defined), whether
by way of:

(i) market purchases (each a “Market Purchase”) on the Singapore Exchange Securities
Trading Limited (“SGX-ST”); and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than

on the SGX-ST in accordance with any equal access scheme(s) as may be
determined or formulated by the Directors of the Company as they consider fit,
which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other provisions of the Companies Act and listing rules
of the SGX-ST as may for the time being be applicable, be and is hereby authorised and
approved generally and unconditionally (the “Share Buyback Mandate”);

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books 139
Notice of annual general meeting/closure of books

(b) unless revoked or varied by the Company in general meeting, the authority conferred on
the Directors of the Company pursuant to the Share Buyback Mandate may be exercised
by the Directors at any time and from time to time during the period commencing from
the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held or
required by law to be held;

(ii) the date on which the share buybacks are carried out to the full extent mandated; or

(iii) the date on which the authority contained in the Share Buyback Mandate is revoked
or varied;

(c) in this Resolution:

“Prescribed Limit” means ten per cent of the total number of issued Shares excluding
treasury shares as at the date of the last Annual General Meeting or at the date of the
passing of this Ordinary Resolution whichever is higher unless the Company has effected
a reduction of the share capital of the Company in accordance with the applicable provisions
of the Companies Act, at any time during the Relevant Period (as hereinafter defined),
in which event the total number of issued Shares shall be taken to be the total number of
issued Shares as altered (excluding any treasury shares that may be held by the Company
from time to time); and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding
brokerage, stamp duties, applicable goods and services tax and other related expenses)
not exceeding:

(i) in the case of a Market Purchase: 105 per cent of the Average Closing Price;

(ii) in the case of an Off-Market Purchase: 120 per cent of the Average Closing Price,

where:

“Average Closing Price” means the average of the closing market prices of a Share over
the last five market days (a “market day” being a day on which the SGX-ST is open for
trading in securities), on which transactions in the Shares were recorded, in the case
of Market Purchases, preceding the day of the Market Purchase, and deemed to be adjusted
for any corporate action that occurs after the relevant five-day period, or in the case of
Off-Market Purchases, before the Day of the Making of the Offer (as hereinafter defined)
pursuant to the Off-Market Purchase;

“Relevant Period” means the period commencing from the date on which the last Annual
General Meeting was held and expiring on the date the next Annual General Meeting is held
or is required by law to be held, whichever is the earlier, after the date of this Ordinary
Resolution; and

“Day of the Making of the Offer” means the day on which the Company announces its
intention to make an offer for the purchase of Shares from shareholders of the Company
stating the purchase price (which shall not be more than the Maximum Price calculated
on the foregoing basis) for each Share and the relevant terms of the equal access scheme
for effecting the Off-Market Purchase; and

140 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books
 (d) the Directors of the Company be and are hereby authorised to complete and do all such
acts and things (including executing such documents as may be required) as they may
consider expedient or necessary to give effect to the transactions contemplated by this
Resolution.

8. That authority be and is hereby given to the Directors of the Company to: Resolution 8

(a) issue Shares (as defined in Resolution 7 above) in the capital of the Company whether by
way of rights, bonus or otherwise, including any capitalisation pursuant to Article 151 of
the Company’s Articles of Association of any sum for the time being standing to the credit
of any of the Company’s reserve accounts or any sum standing to the credit of the profit
and loss account or otherwise available for distribution; and/or

(b) make or grant offers, agreements or options (collectively, “Instruments”) that might or
would require Shares to be issued, including but not limited to the creation and issue of
(as well as adjustments to) warrants, debentures or other instruments convertible into
Shares;

at any time and upon such terms and conditions and for such purposes and to such persons as
the Directors may in their absolute discretion deem fit; and (notwithstanding that the authority so
conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any
Instrument made or granted by the Directors while the authority was in force, provided that:

(i) the aggregate number of Shares to be issued pursuant to this Resolution (including Shares
to be issued in pursuance of Instruments made or granted pursuant to this Resolution
and including Shares which may be issued pursuant to any adjustments effected under any
relevant Instrument), does not exceed 50 per cent of the total number of issued Shares
excluding treasury shares, in the capital of the Company (as calculated in accordance with
sub-paragraph (ii) below), of which the aggregate number of Shares to be issued other
than on a pro rata basis to existing shareholders of the Company (including Shares to be
issued in pursuance of Instruments made or granted pursuant to this Resolution and
including Shares which may be issued pursuant to any adjustments effected under any
relevant Instrument) does not exceed 20 per cent of the total number of issued Shares
excluding treasury shares in the capital of the Company (as calculated in accordance with
sub-paragraph (ii) below);

(ii) For the purpose of determining the aggregate number of Shares that may be issued under
sub-paragraph (i) above, the percentage of total number of issued Shares excluding
treasury shares in the capital of the Company shall be calculated based on the total
number of issued Shares excluding treasury shares in the capital of the Company as at the
date of the passing of this Resolution after adjusting for:

(aa) new Shares arising from the conversion or exercise of convertible securities or
employee share options on issue as at the date of the passing of this Resolution;
and

(bb) any subsequent consolidation or sub-division of Shares;

(iii) in exercising the power to make or grant Instruments (including the making of any
adjustments under the relevant Instrument), the Company shall comply with the provisions
of the listing manual of the SGX-ST for the time being in force (unless such compliance has
been waived by the SGX-ST) and the Articles of Association for the time being of the
Company; and

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books 141
Notice of annual general meeting/closure of books

(iv) (unless revoked or varied by the Company in general meeting), the authority conferred
by this Resolution shall continue in force until the conclusion of the next Annual
General Meeting of the Company or the date by which the next Annual General
Meeting is required by law to be held whichever is the earlier.

9. (a) That approval be and is hereby given to the Directors to offer and grant options in Resolution 9
accordance with the provisions of the SPC Share Option Scheme 2000 and/or to grant
awards in accordance with the provisions of the SPC Restricted Share Plan and/or the
SPC Performance Share Plan; and

(b) That approval be and is hereby given to the Directors to exercise full powers of the
Company to issue, allot or otherwise dispose of Shares in the capital of the Company as
may be required to be issued, allotted or disposed, in connection with or pursuant to the
exercise of the options granted under the SPC Share Option Scheme 2000 and/or such
number of Shares as may be required to be issued or allotted pursuant to the vesting of
awards under the SPC Restricted Share Plan and/or the SPC Performance Share Plan;

Provided that the aggregate number of Shares to be issued and allotted pursuant to the
SPC Share Option Scheme 2000, the SPC Restricted Share Plan and the SPC Performance
Share Plan shall not exceed 15 per cent of the total number of issued Shares excluding
treasury shares in the capital of the Company from time to time.

10. (a) That approval be and is hereby given, for the purposes of Chapter 9 of the listing manual Resolution 10
(“Chapter 9”) of the SGX-ST, for the Company, its subsidiaries and target associated
companies or any of them, to enter into any of the transactions falling within the types of
Interested Person Transactions, as set out in the Company’s Circular to Shareholders
dated 30 May 1997 (the “Circular”) and as amended by shareholders’ resolutions on
21 June 1999 and 14 May 2003 (collectively the “Updates to the Circular”), with any
party who is of the class of Interested Persons described in the Circular as amended by
the Updates to the Circular, provided that such transactions are carried out in the ordinary
course of business, on normal commercial terms and in accordance with the guidelines
and review procedures for Interested Person Transactions as set out in the Circular and
amended by the Updates to the Circular (the “Shareholders’ Mandate”);

(b) the Shareholders’ Mandate shall, unless revoked or varied by the Company in general
meeting, continue in force until the conclusion of the next Annual General Meeting of the
Company or the date by which the next Annual General Meeting is required by law to be
held whichever is the earlier; and

(c) the Directors of the Company be and are hereby authorised to complete and do all such
acts and things (including, without limitation, executing all such documents as may be
required) as they may consider expedient or necessary or in the interests of the Company
to give effect to the Shareholders’ Mandate and/or this Resolution.

11. To transact such other business which can be transacted at an Annual General Meeting. Resolution 11

142 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books
NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and the Register of Members of the Company will be closed from
5 p.m., 29 to 30 April 2008, both days inclusive, for the preparation of dividend warrants. Duly completed transfers received by
the Company’s registrar, Boardroom Corporate & Advisory Services Pte Ltd, 3 Church Street #08-01, Samsung Hub, Singapore
049483, up to the close of business at 5 p.m. on 29 April 2008 will be registered to determine shareholders’ entitlement to the
proposed dividend. The proposed final tax exempt one-tier dividend if approved at the Annual General Meeting will be paid on
12 May 2008.

BY ORDER OF THE BOARD

HELEN CHONG/LEE SEOK HIAN

Secretaries
Singapore, 9 April 2008

Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books 143
Note:

A member of the Company is entitled to appoint a proxy to attend the meeting and vote in his stead. A proxy need not be a member
of the Company.

The instrument appointing a proxy must be deposited at the registered office of the Company, 1 Maritime Square #10-10,
HarbourFront Centre, Singapore 099253, not less than 48 hours before the time appointed for holding the Annual General Meeting.
Members intending to deposit their instrument appointing a proxy on Saturdays, Sundays or after office hours, will have to deposit
the same in the Company’s mail box located next to Lift Lobby A on the ground floor of HarbourFront Centre.

Explanatory Notes on:

Special Business:

Ordinary Resolution No. 2, relates to the proposal for the payment of a final total tax exempt one-tier dividend of 40 cents per share
(further to the interim tax exempt one-tier dividend of 20 cents per share paid to shareholders on 22 August 2007).

Ordinary Resolution Nos. 4 and 5, relating to the retirement and re-election of Directors, details and information of these Directors
may be found in the Board and Directors section in the Company’s Annual Report.

Ordinary Resolution No. 7 is to renew the Share Buyback Mandate, which was originally approved by the shareholders on 26 April
2006. Please refer to Appendix 1 to this Notice of Annual General Meeting for details.

Ordinary Resolution No. 8 if passed, will empower the Directors from the date of the Annual General Meeting until the date of
the next Annual General Meeting to issue further Shares and Instruments in the Company, including a bonus or rights issue. The
maximum number of Shares, which the Directors may issue under this Resolution shall not exceed the quantum set out in the
Resolution.

Ordinary Resolution No. 9 if passed, will empower the Directors to take certain actions relating to the SPC Restricted Share Plan,
the SPC Performance Share Plan and the SPC Share Option Scheme 2000. Directors may exercise their power to issue and allot
Shares in the Company pursuant to the aforesaid grant or release of share awards and/or exercise of options, provided that the
aggregate number of Shares to be issued and allotted shall not exceed 15 per cent of the total number of issued Shares excluding
treasury shares in the capital of the Company from time to time. This authority is in addition to the general authority to issue Shares
sought under Ordinary Resolution No. 8.

Ordinary Resolution No. 10 if passed, will renew the mandate given by shareholders to the Company on 23 June 1997 (last
amended on 14 May 2003 and approved on 25 April 2007) to allow the Company and its subsidiaries and target associated
companies to enter into transactions with Interested Persons as defined in Chapter 9 of the listing manual of the SGX-ST. Please
refer to Appendix 2 to this Notice of Annual General Meeting for details.

144 Singapore Petroleum Company Limited

Report to Shareholders 2007
Notice of Annual General Meeting/
Closure of Books
 PROXY FORM

IMPORTANT
1. For investors who have used their CPF moneys to buy shares in the capital
of Singapore Petroleum Company Limited, this Circular is forwarded to them
at the request of their CPF Approved Nominees and is sent solely FOR
Singapore Petroleum Company Limited INFORMATION ONLY.
Co Reg No: 196900291N 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective
(Incorporated in the Republic of Singapore) for all intents and purposes if used or purported to be used by them.
3. CPF investors who wish to attend the Annual General Meeting as observers
have to submit their requests through their respective agent banks so
that their agent banks may register, within the specified timeframe, with
Singapore Petroleum Company Limited. (Agent banks: please refer to Note
No. 7 below on the required details).
ANNUAL GENERAL MEETING

I/We__________________________________________________________________________________________________________ (name)

of___________________________________________________________________________________________________________(address)
being a member/members of SINGAPORE PETROLEUM COMPANY LIMITED (the “Company”) hereby appoint:
NRIC/ Proportion of
Name Address
Passport Number Shareholdings %

and/or (delete as appropriate)
NRIC/ Proportion of
Name Address
Passport Number Shareholdings %

Fold and glue along dotted line

Fold and glue along dotted line

as my/our proxy/proxies to attend and vote for me/us and my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting
of the Company to be held on 23 April 2008 at 3 p.m. in the Olivia Room, Level Four, Raffles City Convention Centre, Singapore 178882
and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as
indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion.
Only one joint proxy may vote on a Resolution put to the vote and decided by a show of hands.
To be used on To be used in the
a show of hands event of a poll
Resolutions Number Number
For* Against* of Votes of Votes
For** Against**
Ordinary Business
1. Adoption of Directors’ Report and Accounts.
2. Declaration of Dividends.
3. Approval of Directors’ Fees.
4(a) Re-election of Mr Koh Ban Heng.
4(b) Re-election of Mr Geoffrey John King.
4(c) Re-election of Dr Chin Wei-Li, Audrey Marie.
5. Re-election of Mr Bertie Cheng Shao Shiong.
6. Re-appointment of Auditors.
Special Business
7. Shareholders’ Mandate for Share BuyBack.
8. Authority to issue additional Shares in the Company and make/grant/offer
Instruments.
9. Grant of options and/or share awards and issue of additional Shares pursuant
to the SPC Share Option Scheme 2000, SPC Restricted Share Plan and/or
SPC Performance Share Plan.
10. Shareholders’ Mandate for Interested Person Transactions.
11. Any Other Business.
* Please indicate your vote “For” or “Against” with an “X” within the box provided.
** If you wish to exercise all your votes “For” or “Against”, please indicate with an “X” within the box provided.
Alternatively, please indicate the number of votes as appropriate. Total Number of
Shares held
Dated this _______ day of ____________ 2008

_____________________________________
Signature(s) or Common Seal of Member(s)
IMPORTANT: Please read the notes on the overleaf.

Fold and glue along dotted line

Notes:

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined
in Section 130A of the Companies Act of Singapore, Cap 50), you should insert that number of shares. If you only have shares registered in
your name in the Register of Members, you should insert that number of shares. However, if you have shares entered against your name in
the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares
entered against your name in the Depository Register and registered in your name in the Register of Members.

2. A Member may appoint not more than two (2) proxies to attend and vote at the same General Meeting. A Member appointing more than
one (1) proxy shall specify the percentage of shares to be represented by each proxy and if no percentage is specified, the first named
proxy shall be deemed to represent one hundred (100) per cent of the shareholding and the second named proxy shall be deemed to be an
alternate to the first named. The Company shall be entitled (i) to reject any instrument of proxy executed by a Depositor if the Depositor’s
name does not appear in the Depository Register forty eight (48) hours prior to the commencement of the relevant General Meeting as
certified by CDP to the Company, and (ii) for the purpose of a poll, to treat an instrument of proxy executed by a Depositor as representing
the number of shares equal to the number of shares appearing against his name in the Depository Register referred to in (i) above,
notwithstanding the number of shares actually specified in the relevant instrument of proxy.

3. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 1 Maritime Square #10-10,
HarbourFront Centre, Singapore 099253 not less than 48 hours before the time appointed for the Annual General Meeting. Members
intending to deposit their instrument appointing a proxy on Saturdays, Sundays or after office hours, will have to deposit the same in the
Company’s mail box located next to Lift Lobby A on the ground floor of HarbourFront Centre.

Fold along this line (2)

Affix
Postage
Stamp

The Company Secretary

Singapore Petroleum Company Limited
1 Maritime Square #10-10
HarbourFront Centre
Singapore 099253

Fold along this line (1)

4. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where
the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an
officer or attorney duly authorised. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter
or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of
proxy, failing which the instrument may be treated as invalid.

5. A corporation which is a Member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its
representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act of Singapore (Cap. 50).

6. The Company shall be entitled to reject the instrument appointment a proxy or proxies if it is incomplete, improperly completed or illegible or
where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing
a proxy or proxies. In addition, in the case of Members whose shares are entered against their names in the Depository Register, the
Company may reject any instrument appointing a proxy or proxies lodged if such Members are not shown to have shares entered against
their names in the Depository Register 48 hours before the time appointed for holding the Annual General Meeting as certified by The
Central Depository (Pte) Limited to the Company.

7. Agent banks acting on the request of CPF investors who wish to attend the Annual General Meeting as observers are required to submit
in writing, a list with details of the investor’s name, NRIC/Passport number, address and number of shares held. The list, signed by an
authorised signatory of the agent bank, has to reach the Company Secretary at the registered office of the Company not less than 48 hours
before the time appointed for holding the Annual General Meeting.
Notes
Notes
Singapore Petroleum Company Limited
(Incorporated in the Republic of Singapore)

1 Maritime Square #10-10

HarbourFront Centre
Singapore 099253
Tel: (65) 6276 6006
Fax: (65) 6275 6006
Website: www.spc.com.sg
Email: spccc@spc.com.sg

Co Reg No: 196900291N

This annual report is printed on recycled paper