Risk Management Committee

Risk Management Committee Charter (Revision No.9)

Table of Contents

1. Objective
2. Definition
3. Appointment
4. Qualifications
5. Duties and Responsibilities
6. Terms and Remuneration
7. Meetings
8. Reporting
9. Risk Management Function
10. Effective Date

1. Objective

PTT Exploration and Production Public Company Limited (PTTEP) is committed to continuously enhancing effective risk management to support the achievement of its vision, mission, objectives, and strategies for long-term sustainability as well as to comply with corporate governance standard for listed companies. PTTEP consequently appoints a Risk Management Committee responsible for oversight, policy setting, and fostering the integration of risk management into business operations for both management and employees.

2. Definition

In this Charter

1. “The Company” means PTT Exploration & Production Public Company Limited (PTTEP) and PTTEP’ s subsidiaries.
2. “Board” means the Board of Directors of PTTEP.
3. “Independent Director” means an Independent Director of PTTEP as stated in the Good Corporate Governance and Business Ethics Regulation of PTTEP.
4. “Risk Management Function” means the function that is appointed by the Chief Executive Officer to be responsible for Enterprise Risk Management in accordance with the Company’s Enterprise Risk Management Policy and Framework defined by the company.

3. Appointment

The Board appoints the Risk Management Committee which is composed of at least three PTTEP directors, with at least one Committee Member being an Independent Director.

One of the Committee Members shall be nominated to be the Chairman and the Head of the Risk Management Function is appointed as the Secretary of the Risk Management Committee.

4. Qualification

A Committee Member must possess qualifications and not have any forbidden elements based on the following criteria;

1. Be a Director and not the Chairman of the Board or Chief Executive Officer of PTTEP.
2. Be able to devote adequate time to perform the Risk Management Committee’s duties and responsibilities.
3. A Risk Management Committee member who is an Independent Director should possess independence qualifications as prescribed in the Good Corporate Governance and Business Ethics Regulation of PTTEP.

5. Duties and Responsibilities

The duties and responsibilities of the Risk Management Committee are as follows;

1. Define the Enterprise Risk Management Policy and Framework including providing guidance and recommendations to the Board and Management on key risks and mitigations.
2. Consider the Risk Appetite Statement and Corporate Level Risk Metrics & Limits prior to submission to the Board for approval as well as monitor the results regularly.
3. Govern and support the risk management implementation to ensure its effectiveness and efficiency at both the corporate and business unit levels (Enterprise-wide Risk Management) by considering risks in decision making, resource allocation, and the execution of business activities.
4. Consider strategic risks and key risks at the corporate level in core and strategic business areas by providing recommendations to manage the risks within acceptable level according to clause (2), as well as monitor and evaluate the mitigation strategies in response to the business environment.
5. Screen and provide opinions on any material transaction involving the company's investments or divestments prior to the Board's approval.
6. Consider the oil price risk management and financial risk management hedging objectives and guidelines prior to the Board's approval as well as monitor hedging performance regularly.
7. Foster risk management as an integral part of the corporate culture.
8. Support the Risk Management function in assessing key risks and advising on other potential risks that may impact the corporate level to ensure continuous and effective risk management in line with industry best practices. This includes the authority to directly assign tasks related to PTTEP's risk management to the Risk Management function.
9. Report key risks and results of risk management to the Board regularly and promptly alert all concerned of any significant risk management events.
10. Disclose the Committee’s performance in the Company’s Annual Report.
11. Review and update its own charter to ensure its appropriateness and effectiveness.
12. Perform other risk management related duties as may be assigned by the Board.

In order to perform these duties, the Risk Management Committee may seek independent opinions from any other professional counselors when it is deemed necessary and appropriate, including provision of training and development courses related to enhancing knowledge of company activities for the Committee Members. PTTEP is to be responsible for the expenses.

The Risk Management Committee is responsible directly to the Board according to the duties and responsibilities, while the responsibilities for all activities of PTTEP towards third person are still vested in the entire Board.

6. Term and Remuneration

The term of service of a Committee Member is equivalent to the director of the Board.

In the case of any Committee Member vacating the office or becoming unavailable before the expiration of their term of service, the Board must appoint another Risk Management Committee Member who is fully qualified to replace the resigning member not later than 3 months as of the date of incomplete composition of the Risk Management Committee.

Upon the expiration of a term of service, if there is no appointment of a new Risk Management Committee Member, the resigning Member has to standby to perform the duty until the appointment of a new Risk Management Committee Member.

Any resigning Committee Members may be reappointed for another term.

Besides vacating office due to the expiration of a Member’s term of service, the Risk Management Committee Member shall resign once he/she does not possess the qualifications according to Article 4.

The Risk Management Committee will receive appropriate remuneration, approved by the Shareholders’ Meetings, for fulfilling their duties and responsibilities and PTTEP shall disclose such remuneration in its Annual Report.

7. Meeting

The Risk Management Committee shall meet at least four times a year.

The Risk Management Committee meetings shall have a quorum of not less than a half of the Committee Members. If the Chairman is absent, the attending Committee Members shall select one Committee Member to serve as Chairman of the meeting.

Each decision of the meeting is exercised by majority vote. Each Risk Management Committee Member has one vote. If the votes are equal, the Chairman will have an additional casting vote. The Secretary of the Risk Management Committee has no right to vote.

Any Risk Management Committee Member who has any personal interest or any conflict of interest in a matter being considered must inform the meeting and abstain from expressing an opinion and voting on the issue, and leave the meeting room. An exception can be made if the other Committee Members vote unanimously to allow such Committee Member to stay in the meeting room to provide information on the issue so that the committee can deliberate on the issue thoroughly. However, such Committee Member is not allowed to vote or make a decision on the issue.

The Risk Management Committee has the authority to invite the management, or any other concerned parties or other appropriate persons to participate or to provide additional explanation of the concerned subjects in the meeting.

8. Reporting

The Risk Management Committee must regularly report the results of the meeting or report on any other material matter to the Board.

9. Risk Management Function

The Risk Management Function shall support the Risk Management Committee as follows;

1. Support the Risk Management Committee by performing duties regarding the Risk Management Committee meetings; prepare complete and accurate minutes of meetings and report to all concerned parties any relevant meeting resolutions for their acknowledgment and implementation.
2. Regularly and promptly report Strategic Risks, Corporate Risks and significant Operational Risks together with mitigation strategies and progress of mitigation plans to reduce risks
3. Report key risks for investment decisions to the Risk Management Committee to enable them to fully consider significant investments.
4. Perform any other duties relevant to PTTEP risk management as may be assigned by the Risk Management Committee.

10. Effective Date

This Charter came into force on 22 November 2024.

The Risk Management Committee Report

PTTEP is committed to effective risk management to enable the Company to achieve its vision, mission, objectives, and strategies in fostering energy security as well as to care for society and the environment. In 2023, PTTEP continued to face the challenges. These compelled the Company to adapt so as to cope with the changing business environment such as the situations of unrest in various countries, e.g. The Republic of the Union of Myanmar (Myanmar) and The Republic of Mozambique (Mozambique), oil price volatility, exchange rate and interest rate volatility, increasing cybersecurity threats, global warming, climate change, and the more frequent and more severe occurrence of natural disasters as well as disruptive technology. As of December 31, 2023, the Risk Management Committee comprised 4 members, 3 of whom were independent directors appointed by PTTEP’s Board Directors to oversee PTTEP’s risk management to ensure that it is in line with the established risk management policy and framework.

In 2023, the Committee convened 14 times, which included a meeting with the Audit Committee. The duties and responsibilities of the Committee can be summarized as follows:

1. Governed strategic risk management in response to the dynamic changes of internal and external environment to ensure that PTTEP would be able to execute its main strategies which are Drive Value – strengthening the petroleum exploration and production business, Decarbonize – reducing Greenhouse Gas emissions, and Diversify – expanding into areas beyond E&P businesses. The Committee considered PTTEP’s undertakings to maintain the strengths of its E&P businesses for energy security while expanding investments in environmentally friendly energy businesses moving towards becoming a low-carbon organization. Moreover, the Committee considered the 2024 Work Program and Budget, a 5-year (2024-2028) investment plan to ensure its alignment with the changing situations, and the corporate directions and policies.
2. Monitored risks of the existing projects and provided recommendations to mitigate the potential impacts such as unrest situations and plans in Myanmar to maintain and continue natural gas production which would lead to energy security for Thailand and Myanmar. The Committee also monitored investment risks in Malaysia as well as considered the exploration and production period extension of various projects in Malaysia such as the Malaysia SK314A Project. In addition, the Committee considered the Petroleum Contract Extension of the Vietnam 9-2 and 16-1 project in Vietnam, and the Natuna Sea A Production Sharing Contract (PSC) Amendment in Indonesia by considering risks along with economic returns.
3. Considered risks related to the petroleum exploration and production business expansion including investments in new exploration fields, farm-in, and divestment to manage the PTTEP portfolio and serve the Net Zero GHG Emissions target, such as the investment in the G12/48 project in the Gulf of Thailand and the Malaysia SK325 exploration field in Malaysia. The committee provided recommendations on risks, potential opportunities, and mitigation as well as monitored risks.
4. Considered risks related to investment expansion into new businesses to support the energy transition towards a low-carbon organization, such as investment in renewable energy business and green hydrogen production concession area. The committee provided opinions on risks and opportunities, such as conducting option analysis, formulating partnership with experts, and defining exit strategy, etc.
5. Considered and approved the oil price hedging guideline as well as provided suggestions to improve the oil price hedging approval authority framework in order to have more flexibility and respond to the rapid change in situation. Moreover, the Committee provided advice to enhance Middle Office roles to oversee the execution of hedging more strictly and to thus remain in line with the new authority framework. As a result, PTTEP has been able to reduce the negative impact on cash flow and operation performance resulting from oil price volatility.
6. Supervise undertaking the Enterprise Risk Management Maturity Assessment of PTTEP to review the risk management framework against international standards and other companies in the same industry in order to apply the assessment results to further improve PTTEP's risk management to be more efficient.

Furthermore, Risk Management Committee consistently oversaw enterprise risk management to ensure the businesses were operated within PTTEP’s risk appetite, for example, risks related to exploration and production operations, financial, cybersecurity, legal, and environment, including emerging risks. The outcomes of Risk Management Committee meetings were reported to the Board of Directors on a monthly basis.

In summary, the Committee independently performed its duties relating to PTTEP risk management prudently, and competently according to its scopes, authorities and duties defined in PTTEP’s Risk Management Committee Charter. These has led PTTEP to efficiently manage risks in order to achieve our objectives and goals for fair and maximum benefit to PTTEP, shareholders, and other stakeholders appropriately and sustainably.

Pitipan Tepartimargorn
(Mr. Pitipan Tepartimargorn)
Chairman of the Risk Management Committee