Suchuang Gas : VOLUNTARY ANNOUNCEMENT ENTERING INTO COOPERATION FRAMEWORK AGREEMENT WITH CNOOC GAS AND POWER GROUP CO., LIMITED

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SUCHUANG GAS CORPORATION LIMITED

蘇 創 燃 氣 股 份 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1430)

VOLUNTARY ANNOUNCEMENT

ENTERING INTO

COOPERATION FRAMEWORK AGREEMENT WITH

CNOOC GAS AND POWER GROUP CO., LIMITED

This announcement is made by Suchuang Gas Corporation Limited (the "Company", together with its subsidiaries, the "Group") on a voluntary basis to provide the shareholders of the Company and the potential investors an update on the latest business development of the Company.

ENTERING INTO OF COOPERATION FRAMEWORK AGREEMENT

The board of the directors (the "Board") of the Company is pleased to announce that, on 27 July 2020, the Company and CNOOC Gas and Power Group Co., Limited (中海石油氣電集團有限責任 公司) ("CNOOC Gas and Power Group") entered into a cooperation framework agreement (the "Cooperation Framework Agreement") for a term of five years from the date of the Cooperation Framework Agreement to establish a cooperative relationship in relation to, among other things, the development of the liquefied natural gas ("LNG") sector, the construction of an LNG receiving terminal at the Taicang Port, a port located in Taicang City, Jiangsu Province, the People's Republic of China (the "PRC"), the development and operation of LNG tank containers business and the construction of LNG refuelling stations for vehicles and vessels.

Pursuant to the Cooperation Framework Agreement, the Company and CNOOC Gas and Power Group agreed as follows:

1. The parties shall set up a special working group as soon as possible after signing of the Cooperation Framework Agreement to exchange information, discuss, negotiate and facilitate the submissions in respect of, and the construction proposals of, the LNG receiving terminal and the cooperation proposals in respect of the LNG tank containers business, the LNG refuelling stations for vehicles and vessels and market development, and enter into further cooperation agreements based on specific cooperation proposals;

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1. The parties shall jointly facilitate the submissions in respect of, and the construction and operation of, the LNG receiving terminal at the Taicang Port. CNOOC Gas and Power Group shall provide professional advice on the planning and design proposals of the LNG receiving terminal based on its own expertise, and cooperate with the Company to make the required submissions to competent authorities. CNOOC Gas and Power Group can also provide support for international trading of LNG. The Company shall leverage on its expertise to provide support in exploring downstream markets and potential major users and obtaining administrative approval. The parties agreed that after CNOOC Gas and Power Group decides
   to invest in the LNG receiving terminal at the Taicang Port, CNOOC Gas and Power Group shall become a shareholder of Taicang Zhongcheng Port Construction Co. Ltd.* (太倉市眾 城港口建設有限公司) (the "Project Company"), which is a company currently held as to
   90% and 10% respectively by the Company and Taicang City Development Group Co., Ltd.* (太倉市城市發展集團有限公司). The name of the Project Company can be changed based on CNOOC Gas and Power Group's view after CNOOC Gas and Power Group becomes a shareholder. The parties shall enter into a separate investment agreement, and other strategic investors may be introduced as and when appropriate with the consent of the parties;
2. The parties agreed that, with the extensive experience of CNOOC Gas and Power Group in the design and construction of receiving terminals and tank containers, and on the premise of ensuring "the lowest cost, the best quality and the highest efficiency", CNOOC Gas and Power Group and its affiliates shall have the priority to take charge of the construction of the LNG receiving terminal at the Taicang Port (or the parties may mutually agree other ways to construct the LNG receiving terminal);
3. The parties agreed that the operation of the LNG receiving terminal at the Taicang Port shall adopt the "tolling model" ("代加工" 模式), and the Project Company shall charge processing fees based on the LNG processing volume. The unit processing rate charged at the LNG receiving terminal at the Taicang Port shall be fixed according to the standard approved by the national pricing authority with reference to the market conditions;
4. Based on the actual development of the LNG tank containers business, CNOOC Gas and Power Group shall be the preferred partner of the Company and shall supply LNG to the Company at the most competitive price. The Company shall assist in handling the lifting, filling, stacking and other relevant procedures based on the condition of the loading location designated by the parties, and provide modification services to CNOOC Gas and Power Group for its auxiliary facilities as and when necessary based on the actual situation. The parties shall formulate effective, flexible and cost-effective proposals in relation to the loading, logistics and transit of LNG tank containers based on the demand of the end customers;
5. According to the plan of Taicang City on the construction of the LNG refuelling stations for vehicles and vessels, Taicang City intends to construct several refuelling stations for vehicles and vessels. CNOOC Gas and Power Group has extensive experience in the design, construction and operation of refuelling stations for vehicles and vessels, and the parties shall jointly handle the submissions in respect of, and the construction and operation of, the refuelling stations for vehicles and vessels;

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1. The parties shall jointly promote the development of the natural gas (including LNG) market in Jiangsu Province, the lower stream of Yangtze River and the Yangtze River Delta; and
2. The parties shall work together to build a natural gas trading center and delivery site in the Yangtze River Delta through project cooperation, and form a Yangtze River index for natural gas.

INFORMATION ABOUT CNOOC GAS AND POWER GROUP

CNOOC Gas and Power Group is a company established in the PRC with limited liability. It is

1. wholly-ownedsubsidiary of China National Offshore Oil Corporation Limited ("CNOOC"). CNOOC Gas and Power Group is responsible for the centralized operation and management of the natural gas and power generation segment of CNOOC. Its principal scope of business includes investment and investment management; organization and management of the following business projects: technology development, technical services and consulting related to oil and natural gas (including LNG) and petrochemical; contracting services related to design, development, management, maintenance and operation of oil and natural gas (including LNG) projects; processing, storage, transportation, utilization and sales of oil and natural gas and their by-products; construction, management and operation of oil and natural gas pipeline networks; development, utilization, operation and management of coal-bed methane and coal chemical projects; power development, generation and supply as well as related contracting services, technology development, technical services and consulting; self-operated and agency businesses in respect of LNG and oil and gas related products and import and export of related equipment, technology and labour (excluding products and technologies which can only be exclusively operated by certain companies designated by the state or which are prohibited from import and export); research, development and utilization of new energy and renewable energy as well as related businesses.

REASONS FOR AND BENEFITS OF ENTERING INTO THE COOPERATION FRAMEWORK AGREEMENT

According to the national development strategy, clean energy such as LNG will be the main energy to be applied in the future. With the growing demand for natural gas consumption and the significant difference in seasonal consumption, and affected by factors such as insufficient gas storage facilities in China in the short term, the LNG receiving terminals currently in operation or under construction in China are unable to fully meet and adapt to the growth of natural gas consumption and market demand. In order to ensure the safe gas supply in Suzhou and the Yangtze River Delta region, accelerate the upgrading of the industrial structure and fully capitalize on the natural advantages of Taicang Port, the Company intends to construct an LNG receiving terminal at the Taicang Port.

The Company also wishes to exploit the development potential of LNG tank containers, which can be transported flexibly either by vehicles or vessels. The State Council and the Ministry of Transport in the PRC have issued a number of relevant policies to promote the rapid development of LNG tank containers business, and the National Development and Reform Commission and the National Energy Administration also opined on the possibility of using LNG tank containers as temporary gas storage facilities for local governments and various enterprises. Such policies have greatly promoted the application and development of LNG tank containers. Meanwhile, the Company has signed the LNG Sales and Purchase Contract with CNOOC Gas and Power Group, pursuant to which, the parties shall purchase and sell LNG in the form of tank containers.

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Further, given the clean, efficient and safe nature of LNG, the Ministry of Transport and the National Energy Administration in the PRC have been promoting the application of LNG as fuel for water transport, which may potentially boost the consumption demand for LNG.

As such, the Board considers that the entering into of the Cooperation Framework Agreement is in line with the development strategy of the Company, and enables the Company to leverage on the advantages in technologies and resources of CNOOC Gas and Power Group in the areas of LNG receiving terminals and refuelling stations, LNG tank containers and international trading of LNG. The Board also considers that the cooperation between the Company and CNOOC Gas and Power Group will create synergies for each other to explore further business cooperation in certain projects, including the Company's development of the LNG receiving terminal at the Taicang Port and the construction and development of LNG refuelling stations in Taicang City, which is in the interest of the Company's long-term development and its shareholders as a whole. This cooperation may be a breakthrough to the prevailing limit on supply of natural gas and expand the source of natural gas supply to alleviate the long-term supply shortage of natural gas in the market, while boosting the revenue and profit of the Company.

The Cooperation Framework Agreement sets out the general principles of possible cooperation between the parties. Detailed terms and conditions of the possible business cooperation under the Cooperation Framework Agreement will be subject to further definitive agreements to be entered into between the parties. Further announcement(s) will be made by the Company as and when appropriate in compliance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.

Further definitive agreements may or may not be entered into and cooperation may or may not materialise. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board

Suchuang Gas Corporation Limited

Su Yi

Chairman

Taicang City, Suzhou, Jiangsu Province, PRC, 30 July 2020

As at the date of this announcement, the Company's executive Directors are Ms. Su Yi, Mr. Du Shaozhou, Mr. Li Jianyi and Ms. Su Wen; the non-executive Directors are Mr. Xu Lei and Mr. Jin Bo; and the independent non-executive Directors are Mr. Zhou Qingzu, Mr. Zhu Tong and Mr. Feng Yijing.

• For identification purposes only

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