China BlueChemical : CONNECTED TRANSACTION ESTABLISHMENT OF A JOINT VENTURE COMPANY

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 3983)

CONNECTED TRANSACTION

ESTABLISHMENT OF A JOINT VENTURE COMPANY

The Board is pleased to announce that CNOOC Fudao Limited (''CNOOC Fudao'') and CNOOC Orient Petrochemical Co., Ltd. (''Orient Petrochemical'') entered into the JV Agreement on 19 August 2020 in relation to establishment and operation of the JV with the Chinese name of 中海油（海南）富島化工有限公司 and the tentative English name of CNOOC (Hainan) Fudao Chemical Ltd.. Pursuant to the JV Agreement, the JV shall engage in production, manufacturing and sales of acrylonitrile products and methyl methacrylate products subject to the commercial registration. The registered capital of the JV is in the amount of RMB300,000,000. The contributions of CNOOC Fudao and Orient Petrochemical to the registered capital of the JV are RMB153,000,000 and RMB147,000,000, respectively.

As CNOOC is the controlling Shareholder, and Orient Petrochemical is a wholly-owned subsidiary of CNOOC, CNOOC is therefore a connected person of the Company and Orient Petrochemical is an associate of CNOOC and a connected person of the Company under Rule 14A.07 of the Listing Rules. As a result, the JV Agreement and the transaction thereunder, the establishment of the JV with Orient Petrochemical, constitute the connected transaction of the Company.

Pursuant to the Listing Rules, as the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in respect of the establishment of the JV exceeds 0.1% but is less than 5%, the establishment of the JV is subject to reporting, announcement requirements but is exempted from independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

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THE JV AGREEMENT

The Board is pleased to announce that CNOOC Fudao Limited and CNOOC Orient Petrochemical Co., Ltd. entered into the JV Agreement on 19 August 2020 in relation to establishment and operation of the JV with the Chinese name of 中海油（海南）富島化工 有限公司 and the tentative English name of CNOOC (Hainan) Fudao Chemical Ltd.

The principal terms of the JV Agreement are as follows:

Date

19 August 2020

Parties

1. 海洋石油富島有限公司 (CNOOC Fudao Limited*); and
2. 中海油東方石化有限責任公司 (CNOOC Orient Petrochemical Co., Ltd.*).

Scope of Business Activities of the JV

Pursuant to the JV Agreement, the JV engages in production, manufacturing and sales of acrylonitrile products and methyl methacrylate products subject to the commercial registration.

Registered Capital

The registered capital of the JV is in the amount of RMB300,000,000. JV Parties' contributions to the registered capital of the JV are as follows:

	Proposed	Shareholding in
	Subscription	the JV after
	Amount	Subscription
		(%)
CNOOC Fudao	RMB153,000,000	51%
Orient Petrochemical	RMB147,000,000	49%

The JV Parties shall make one-off payment of their respective subscription amount in cash within 60 business days after the date of entering into the JV Agreement.

Upon its establishment, the JV will become a non-wholly-owned subsidiary of the Company, and its financial information will be included in the consolidated financial statements of the Company.

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Operation Term of the JV

The operation term of the JV is of long-term nature and shall commence from the date of obtaining the business license, unless otherwise terminated or postponed as stipulated under the JV Agreement.

Corporate Governance Structure and Management of the JV

1. General meeting
   The general meeting is the highest authority of the JV. The shareholders of the JV shall exercise their voting rights in proportion to the amount of the subscribed capital contribution.
2. Board of directors
   The board of directors of the JV shall comprise five directors, including three recommended by CNOOC Fudao, one recommended by Orient Petrochemical and one employee director. The directors of the JV recommended by shareholders shall be elected by the general meeting, and the employee director shall be elected by the employee representative assembly.
   The board of directors of the JV shall have one chairman, the position of which shall be held by the director recommended by CNOOC Fudao and appointed by the general meeting. Each of the director shall have one vote at the board meeting. Where the number of dissenting votes is equal to the number of affirmative votes, the chairman casts another vote.
3. Supervisor
   The JV shall have one supervisor. The supervisor of the JV shall be nominated by Orient Petrochemical and elected by the general meeting.
4. Senior management
   The JV shall have one general manager, the position of which shall be held by the person recommended by CNOOC Fudao and determined by the board of directors of the JV. The JV shall have certain deputy general managers and one chief financial officer, among which, the chief financial and one deputy general manager shall be assigned by Orient Petrochemical.

Responsibility and Profit Distribution

The obligation of each JV Parties for the JV's debts shall not exceed the amount of their respective subscription. The JV Parties shall be entitled to enjoy the profit or to bear the loss of the JV in proportion to their respective paid-in capital in the JV.

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Non-competition

During the term of the JV Agreement, the JV Parties shall not (i) participate in, co-participate in, manage, operate or control any corporation or entity which competes or is likely to compete with the JV's businesses in the PRC; (ii) provide any advice, financing, guarantee or service to such corporation or entity; or (iii) procure any investment interests in such corporation or entity.

Validity and Amendment

The JV Agreement shall be effective from the date of approval by JV Parties' authorities. Any amendment to the JV Agreement shall be effective upon the written agreement signed by the JV Parties.

The Transactions among the JV Parties and the JV

After the establishment of the JV, the JV Parties agree to enter into a tripartite agreement with the JV on the supply of bulk raw materials such as propylene and synthetic ammonia and the supply of water, electricity, steam and other public utilities. Parties will negotiate in connection with this matter separately and entered into a separate agreement as appropriate. The tripartite agreement to be entered into and the transactions under such agreement will comply with Chapter 14A of the Listing Rules, where applicable.

INFORMATION ON THE GROUP AND THE JV PARTIES

The Group mainly engages in the developments, production and sales of fertilisers (mainly urea, phosphate fertilisers and compound fertilisers) and chemical products (mainly methanol and polyformaldehyde).

CNOOC Fudao, a wholly-owned subsidiary of the Company, mainly engages in manufacturing and sales of fertilisers and methanol.

Orient Petrochemical mainly engages in manufacturing and sales of petroleum and petrochemical products.

REASONS FOR AND BENEFITS FROM THE JV ESTABLISHMENT

The Company believes that the establishment of the JV is beneficial to the operation and development of the Company, primarily based on the following reasons:

1. The establishment of the JV, which is designated to produce acrylonitrile products and methyl methacrylate products, could improve the Group's product mix to support the transition to new chemical materials;
2. the JV Parties are able to maintain the stable supply of key raw materials for the production of the JV as Orient Petrochemical and CNOOC Fudao could manufacture propylene and synthetic ammonia, respectively; and

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1. the establishment of the JV is conducive to exerting the synergistic effect of regional resources and realizing the collaborative development.

The establishment of the JV will be entered into on normal commercial terms. The Directors (including the independent non-executive Directors) are of the view that the JV Agreement is entered into on normal commercial terms and its terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As CNOOC is the controlling Shareholder, and Orient Petrochemical is a wholly-owned subsidiary of CNOOC, CNOOC is therefore a connected person of the Company and Orient Petrochemical is an associate of CNOOC and a connected person of the Company under Rule 14A.07 of the Listing Rules. As a result, the JV Agreement and the transaction, the transaction thereunder, the establishment of the JV with Orient Petrochemical, constitute the connected transaction of the Company.

Pursuant to the Listing Rules, as the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in respect of the establishment of the JV exceeds 0.1% but is less than 5%, the establishment of the JV is subject to reporting, announcement requirements but is exempted from independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

Due to their positions in CNOOC, Mr. Meng Jun and Mr. Guo Xinjun have abstained from voting at the Board meeting on the resolution for approval of the establishment of the JV. Save for the above, to the best knowledge, information and belief of the Directors after having made all reasonable enquiries, no other Director has material interest in the establishment of the JV that are required to abstain from voting on the relevant resolution at the Board meeting.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions having the following meanings:

''Board''

the board of Directors

''CNOOC''中國海洋石油集團有限公司（原中國海洋石油總公司） (China National Offshore Oil Corporation*), a state-owned company established in China which is also the controlling Shareholder

''CNOOC Fudao'' 海洋石油富島有限公司 (CNOOC Fudao Limited*), a company incorporated in the PRC and a wholly-owned subsidiary of the Company

''Company''中海石油化學股份有限公司 company incorporated in CNOOC, the H shares of Exchange (stock code: 3983)

(China BlueChemical Ltd.*), a the PRC and a subsidiary of which are listed on the Stock

''Director(s)''	the director(s) of the Company
''Group''	the Company and its subsidiaries
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''JV''	the joint venture company in form of limited liability company
	to be established in the PRC pursuant to the JV Agreement with
	a Chinese name of 中海油（海南）富島化工有限公司 and a
	tentative English name of CNOOC (Hainan) Fudao Chemical
	Ltd.*
''JV Agreement''	the joint venture and shareholders' agreement dated 19 August
	2020 entered into between CNOOC Fudao and Orient
	Petrochemical in relation to the establishment and operation of
	the JV
''JV Parties''	CNOOC Fudao and Orient Petrochemical
''Listing Rules	The Rules Governing the Listing of Securities on the Stock
	Exchange
''Orient	中海油東方石化有限責任公司 (CNOOC Orient Petrochemical
Petrochemical''	Co., Ltd.*), a company incorporated in the PRC and a
	wholly-owned subsidiary of CNOOC

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''PRC'' or ''China''	the People's Republic of China, which for the purpose of this
	announcement excludes Hong Kong, the Macau Special
	Administrative Region and Taiwan
''RMB''	Renminbi, the lawful currency of the PRC
''Shareholder(s)''	shareholder(s) of the Company
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''%''	percent

In addition, the terms ''associate'', ''connected person'', ''connected transaction'', ''controlling shareholder'', ''percentage ratio(s)'' and ''subsidiary'' shall have the meanings ascribed to them under the Listing Rules.

By Order of the Board

China BlueChemical Ltd.*

Wu Xiaoxia

Company Secretary

Beijing, 19 August 2020

As at the date of this announcement, the executive director of the Company is Mr. Wang Weimin, the non-executive directors of the Company are Mr. Meng Jun and Mr. Guo Xinjun, and the independent non-executive directors of the Company are Ms. Karen Lee Kit Ying, Mr. Eddie Lee Kwan Hung and Mr. Yu Changchun.

• For identification purposes only

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