Risk Management Committee

Risk Management Committee Charter (Revision No.8)

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

With the purpose of enhancing the risk management of PTT Exploration and Production Public Company Limited (PTTEP) and to remain in compliance with the corporate governance practice of listed companies, PTTEP has appointed a Risk Management Committee to oversee and support the enterprise risk management program, which is a significant component to support the company to achieve its objectives.

2. Definition

In this Charter

1. “The Company” means PTT Exploration & Production Public Company Limited and PTTEP’ s subsidiaries.
2. “Board” means Board of Directors of PTTEP.
3. “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 Risk Management Committee.

3. Appointment

The Board appoints the Risk Management Committee which is composed of at least three PTTEP directors, with at least one of the committee member being an independent director.

One of the committee members is to be nominated to be the Chairmen and the Head of Risk Management Function is appointed as the Secretary of the Risk Management Committee.

4. Qualification

A Committee Member must possess qualifications according to the criteria as follows:

1. Is to be a member of the Board of Directors of PTTEP but neither the Chairman of the Board nor the Chief Executive Officer.
2. Is to dedicate sufficient time to perform the Risk Management Committee’s duties and responsibilities.
3. Independent Committee Members must have qualifications according to the definition of independent director as prescribed in Good Corporate Governance of PTTEP.

5. Duties and Responsibilities

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

1. Define Enterprise Risk Management Policy and Framework including providing guidance and recommendations to the Board and Managements on key risks and mitigations.
2. Review Risk Appetite Statement prior to the Board approval as well as approve corporate level Risk Metrics & Limits and monitor the results regularly.
3. Ensure effective establishment and implementation of enterprise-wide risk management by enhancing the level of risk awareness within PTTEP through the development of procedures and commitment of resources appropriately.
4. Maintain an enterprise-wide view of risks which are related to the Corporate Direction in the businesses i.e. E&P, related businesses and other businesses in which PTTEP invests, as well as to recommend mitigation strategies to manage the risks to keep them within the acceptable level according to clause (2) and to continuously monitor, assess and improve the mitigation strategy in responding to any changes of the business environment.
5. Support Risk Management Function in assessing key risks and advise on other potential risks which may impact the Company on continuous and efficient risk management in comparable to leading companies as well as assign tasks related to PTTEP risk management for the Risk Management Function to perform.
6. Report key risks and results of risk management to the Board regularly and promptly alert all concerned any significant events related to risk management to the Board.
7. Disclose the committee’s performance in the company’s annual report.
8. Regularly review and update its own charter to ensure its appropriateness.
9. Perform other duties relating to PTTEP risk management 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 providing the training and development courses to the committee members for knowledge related to the company activities enhancement. 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’s Board term.

In case of any Committee Member’s vacates the Office or is unavailable before the expiration of his 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 arrival of a new Risk Management Committee Member.

The resigning Committee Members may be re-appointed for another term.

Besides vacating from office by expiration of term of service, the Risk Management Committee member has to resign once he/she cannot possess the qualifications according to Article 4.

The Risk Management Committee will receive appropriate remuneration approved by the Shareholders Meetings for their duties and responsibilities and PTTEP also has to disclose that remuneration in its annual report.

7. Meeting

The frequency of meeting is to be at least four times a year.

The Risk Management Committee fixes the number of members required to attend a valid at not less than a half of the Committee Members. If the Chairman is absent, the attending committee members must select one Committee member to serve as Chairman for 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 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 explain the concerned subjects in the meeting.

8. Reporting

The Risk Management Committee must regularly report to the Board the results of the Meeting or other necessary reports.

9. Risk Management Function

The Risk Management Function has to support 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 meeting and report including informing all concerned parties of the meeting resolution for their acknowledgment and implementation.
2. Report Corporate Risks and significant operational risks together with mitigation strategies and progress of mitigation plans to reduce risks regularly and promptly.
3. Report key risks for investment decisions to the Risk Management Committee enabling them to consider the investment proposal.
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 in August, 20 2021.

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