Management's Discussion and Analysis (MD&A) and Operating Results for the 2nd Quarter of 2010 and the Six-Month Period Ended June 30, 2010 1. Financial and Operating Highlights 2Q 2010 2Q 2009 1H 2010 1H 2009 Crude intake (Kbpd) 125.8 143.0 120.9 140.6 Paraxylene production (thousand tons) 74 117 154 199 Average forex rate (Baht/US$) 32.4 34.8 32.7 35.0 Gross refining margin (US$/Bbl) 1.8 11.9 2.0 10.2 Sales (million Baht) 45,877 42,305 89,378 75,790 Gross profit (million Baht) 690 6,263 2,131 10,032 EBITDA (million Baht) (39) 5,557 740 8,733 Net profit (million Baht) (303) 3,558 (54) 5,384 (1) Earnings per share (Baht) (0.09) 1.03 (0.02) 1.56 (1) Based on total current number of shares: 3,461 million shares 1 2. Benchmark Prices for Crude Oil and Refined Petroleum Products Average Platts Singapore quoted prices for crude oil and refined products Unit: US$/BBL 2Q 2010 2Q 2009 1Q 2010 1H 2010 1H 2009 Dubai 78.1 59.1 75.8 77.0 51.7 Tapis 81.2 61.7 79.5 80.4 55.1 Gasoline (95 Ron) 87.5 68.7 88.5 88.0 61.8 Jet fuel / kerosene 89.9 66.5 85.2 87.5 61.0 Diesel (0.5%S) 89.5 66.2 84.8 87.1 59.7 Fuel oil (180 cs) 71.4 53.3 72.8 72.1 46.1 LPG 61.9 36.2 64.4 63.1 37.8 Paraxylene - US$/Ton 1,007 957 1,055 1,031 842 (1) Gasoline (95 Ron)-US$/Ton 744 584 752 748 525 Source: Mean of Platts Singapore and PCI (1) Converted to US$/Ton using 1 Ton = 8.5 Barrels 2Q 2010 average crude prices increased slightly from 1Q 2010, and were 32% higher than in the same quarter last year. During the second quarter, crude prices fluctuated in the range of $68/Bbl - $89/Bbl and averaged $78.1/Bbl, or about 3% higher than 1Q 2010, for Dubai crude and at $81.2/Bbl, or about 2% higher than 1Q 2010, for Tapis crude. Although average crude prices were higher, product price movements were mixed.Gasoline and fuel oil prices declined by 1% - 2% while diesel and jet fuel prices increased by about 5%. This resulted in weaker refining industry margins than the first quarter. LPG prices remained under government price control with an average of Baht 10.8/Kg during 2Q 2010 ($334/Ton or $29/Bbl). 2Q10 Paraxylene Asian Contract Prices (ACP) averaged at $1,007/Ton, decreased from 1Q 2010. 2 3. Production and Gross Margin 2Q 2010 2Q 2009 +/(-) 1H 2010 1H 2009 +/(-) Refining capacity(Kbpd) 177.0 177.0 - 177.0 177.0 - Crude intake (Kbpd) 125.8 143.0 -17.2 120.9 140.6 -19.7 Paraxylene production ('000 tons) 74 117 -43 154 199 -45 Gross Refining Margin (US$/BBL) 1.8 11.9 -10.1 2.0 10.2 -8.2 Refinery production (1) - Light products(%) 34.3% 34.9% -0.6% 33.5% 34.4% -0.9% - Middle distillates(%) 51.1% 50.5% +0.6% 51.4% 50.4% +1.0% - Heavy products (%) 14.6% 14.6% - 15.1% 15.2% -0.1% (1) Excludes reformate for chemical feedstock Consistent with weaker gross refining margins (GRM),crude intake in 2Q 2010 was lower than 2Q 2009 by 17.2 Kbpd. Also, with lower paraxylene margins in 2Q 2010 it was not economic to maintain 2Q 2009 production levels; therefore, paraxylene production reduced to 74 Ktons in 2Q 2010. 2Q 2010 Gross Refining Margin (GRM) was $1.8/Bbl versus $11.9/Bbl in 2Q 2009. The lower GRM was mainly due to absence of 2Q 2009 stock gains and weaker industry margins. The refining production yields in 2Q 2010 and 2Q 2009 were generally consistent. 3 4. Financial Performance in 2Q 2010 and 2Q 2009 (Unit: million Baht) 2Q 2010 2Q 2009 +/(-) 1H 2010 1H 2009 +/(-) Sales 45,877 42,305 3,572 89,378 75,790 13,588 Cost of sales (45,187) (36,042) (9,145) (87,247) (65,758) (21,489) Gross profit 690 6,263 (5,573) 2,131 10,032 (7,901) Selling expenses (1,117) (1,093) (24) (2,181) (2,081) (100) Administrative expenses (118) (112) (6) (208) (207) (1) Profit/(loss) from sales (545) 5,058 (5,603) (258) 7,744 (8,002) Memo: - Downstream (294) 4,580 (4,874) (156) 7,479 (7,635) - Petrochemicals (251) 478 (729) (102) 265 (367) Other income 19 22 (3) 31 34 (3) Operating profit/ (loss) (526) 5,080 (5,606) (227) 7,778 (8,005) Share of profit from an associate 64 70 (6) 145 135 10 Other non-operating income 69 - 69 69 - 69 Profit/(loss) before interest and income tax (393) 5,150 (5,543) (13) 7,913 (7,926) Finance costs, net (87) (119) 32 (162) (321) 159 Profit/(loss) before income tax (480) 5,031 (5,511) (175) 7,592 (7,767) Income tax charge 177 (1,473) 1,650 121 (2,208) 2,329 Net profit/(loss) (303) 3,558 (3,861) (54) 5,384 (5,438) Both sales and costs of sales in 2Q 2010 were higher than 2Q 2009 primarily due to higher average crude and product prices partly offset by lower volumes. Gross profit for 2Q 2010 was Baht 5,573 million lower than 2Q 2009, reflecting the lower gross refining and paraxylene margins. 2Q 2010 selling and administrative expenses were Baht 1,235 million about the same level as 2Q 2009. Profit from sales for 2Q 2010 decreased by Baht 5,603 million, with the Downstream and Petrochemical segments at Baht 4,874 million and Baht 729 million, respectively. Other non-operating income of Baht 69 million related to interest income from a VAT refund in 2Q 2010. Net finance costs reduced by 27% or Baht 32 million in 2Q 2010 compared to 2Q 2009 as a result of lower interest rates. 4 In 2Q 2010, loss before income tax of Baht 480 million included the share of after-tax profit from an associate of Baht 64 million, which resulted in a high effective tax rate of 37%.Without the effect from the equity accounting, the intrinsic effective tax rate was at 33%, which included income tax deductions on qualifying capital investments. With the above-mentioned factors, the company reported a net loss of Baht 303 million in 2Q 2010 versus a net profit of Baht 3,558 million in 2Q 2009. 5 5. Balance Sheet (Unit: million Baht except for percentages) 30 Jun, 31 Mar, + / (-) + / (-) % 2010 2010 Assets - Current assets 25,528 23,609 1,919 8% - Non-current assets 36,548 35,912 636 2% Total assets 62,076 59,521 2,555 4% Liabilities - Current liabilities 33,793 28,712 5,081 18% - on-current liabilities ,127 6,464 (1,337) (21%) Total liabilities 38,920 35,176 3,744 11% Shareholders' equity - Issued & paid-up share capital 17,075 17,075 - - - Premium on share capital 4,032 4,032 - - - Retained earnings 1,862 3,031 (1,169) (39%) - Fair value reserve 180 200 (20) (10%) Minority interest 7 7 - - Total shareholders' equity 23,156 24,345 (1,189) (5%) Total liabilities and shareholders'equity 62,076 59,521 2,555 4% As of 30 June 2010, current assets increased by Baht 1,919 million from the previous quarter; primarily due to an increase in inventory to normal operating levels following 1Q 2010 planned maintenance. Non-current assets increased by Baht 636 million, largely as a result of Euro 4 capital investments. An increase of Baht 5,081 million in current liabilities mainly reflected higher short-term borrowing of Baht 4,722 million to fund working capital needs and to repay a long-term loan.The long-term loan principal repayment of Baht 1,375 million largely reduced the non-current liabilities to Baht 5,127 million. Total debt was Baht 27,677 million, comprising of Baht 23,552 million of short-term borrowings,including bill of exchange, and Baht 4,125 million of long-term loans. Total shareholders' equity decreased by Baht 1,189 million, mainly reflecting the 2009 final dividend payment of Baht 865 million. 6 6. Financial Ratios Comparison of financial ratios is illustrated below. Profitability ratios 2Q 2010 2Q 2009 1Q 2010 1H 2010 1H 2009 Gross profit margin (%) 1.5% 14.8% 3.3% 2.4% 13.2% Net profit margin (%) (0.7%) 8.4% 0.6% (0.1%) 7.1% Interest coverage ratio (times) (0.4) 46.3 9.2 4.3 26.9 Liquidity and debt to equity ratios 30 Jun, 2010 31 Mar, 2010 31 Dec, 2009 Current ratio (times) 0.8 0.8 0.8 Quick ratio (times) 0.2 0.2 0.2 Total debt to equity ratio (times) 1.2 1.0 1.2 Long term debt to equity ratio (times) 0.2 0.2 0.2 Net debt to equity ratio (times) 1.2 1.0 1.1 Financial ratios calculation: Gross profit margin = Gross profit / Sales Net profit margin = Net profit / Sales Interest coverage ratio = EBITDA / Interest expense Current ratio = Current assets / Current liabilities Quick ratio = (Cash and cash equivalents + Short term investments + Trade receivables) / Current liabilities Total debt = Current borrowings + Non-current borrowings Total debt to equity ratio = Total debt / Total shareholders'equity Long term debt to equity ratio = Non-current borrowings/ Totalshareholders'equity Net debt to equity ratio = (Total debt - Cash and cash equivalents)/ Total shareholder's equity Name: Robert Michael Cooper Title: Managing Director Date: August 11, 2010 7