Stock Code: 600583

Stock Abbr.: COOEC

Announcement No.: Lin 2014-019

Announcement of Offshore Oil Engineering Co.,

Ltd. on Major Contracts
Special Notes
The board of directors and all the directors of the company pledge that
the announcement contains no false records, misleading statements or
major omissions, and bear joint and several liabilities for the authenticity,
accuracy and integrity of the announcement.

Important contents:
z

Contract type and amount: process module fabrication contract for

liquefied natural gas (LNG) factory, with contract amount of about USD
1.643 billion (converted to RMB 10.109 billion according to the exchange
rate on June 30, 2014 that USD 1 equals to RMB 6.1528).

Conditions for validating contract: both parties agree that the Contract will
come into effect since May 28, 2014 after being signed by both parties.

Deadline for contract performance: from the date of concluding contract to

the date of fulfilling the rights and obligations by both parties.

Influence on performance of current phase of listed companies: execution

of the Contract will provide powerful guarantee for the quantities of the
Company and generate positive effects on promoting corporate business
performance.

Special risk tip: the Contract shall be settled in dollars, so change in

exchange rate will generate certain influence on contract income. The
Company will consider hedging through long-term settlement of exchange
and other measures.

I. Deliberation Procedure
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Stock Code: 600583

Stock Abbr.: COOEC

Announcement No.: Lin 2014-019

According to Articles of Offshore Oil Engineering Co., Ltd. (hereinafter referred

to as the Company) and the authorities specified in Working Instructions of
the President, business contract of the Company has been reviewed and
approved by manager level.
II. Contract Object and the Opposite Party
1. Conditions of contract object
Recently, holding subsidiary Offshore Oil Engineering (Qingdao) Co., Ltd.
signed Module Fabrication Work Package 1 (hereinafter referred to as
MWP1 for short) with Yamgaz SNC, Yamal LNG EPC of Russia.
Lying in Yamal Peninsula in the north of Russia, Yamal LNG Project mainly
aims to construct a LNG factory and other facilities like auxiliary port camp.
MWP1 Contract undertaken by the Company refers to the core process
module of LNG factory.
2. Conditions of the opposite party
Novatek of Russia will operate Yamal Project, owning 60% of stock rights of
the Project. Besides, TOTAL and China National Petroleum Corporation
(CNPC) owns 20% of stock rights respectively.
As the EPC of Yamal Project, Yamgaz is a joint venture of Technip, JGC and
Chiyoda, and take charge of MWP1 core process module as a subcontractor.
III. Main Terms of Contract
1. The Contract involves the fabrication of 36 process modules.
2. It is planned to commence in September 2014 and completed in July 2017
by the Contract.
3. The contract price is about USD 1.643 billion.
4. Terms of payment
Pay according to actual project progress and milestone agreed in the Contract.
5. Fabrication site and method, conditions and time of validating contract
All modules will be fabricated in Qingdao Yard of the Company. The Contract
will come into effect since May 28, 2014 upon agreement of both parties and
expire till the Contract obligations are fulfilled.
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Stock Code: 600583

Stock Abbr.: COOEC

Announcement No.: Lin 2014-019

6. Liability for breach of contract

It will form breach of contract when either party or both parties violate(s) the
stipulations under the Contract. The breaching party will bear the liability and
compensate the loss of the other party.
7. Dispute solution
Solve by negotiation, and submit to arbitration if negotiation fails. The
arbitration will be held in London in English.
8. Other important clauses or risk clauses
The highest late charge shall be 10% of the total contract price and the
maximum liability limit shall be 35% of the total contract price.
9. Whether involving guarantee
According to the Contract, the Company will provide parent company
guarantee for Offshore Oil Engineering (Qingdao) Co., Ltd. to Party A. The
above guarantee matters are to be approved by Board of Directors of the
Company upon deliberation.
IV. Influence of Contract Execution on Listed Companies
1. The Contract refers to the biggest overseas contract of the Company till now,
which not only comprehensively reflects the obvious improvement of EPCI
general contracting capacity and overall strength of the Company in recent
years, but also shows the results of continuously enhancing international
market development.
2. The Project is the fabrication of core process module of LNG factory in
China for the first time, so its implementation will further spread the influence of
the Company in international LNG industry, and definitely promote its
popularity in module fabrication and high-end fabrication field, thus exerting a
position driving effect on further expanding international market of the
Company.
3. Execution of the Contract will help accumulate important experiences for the
Company to deepen the cooperation with large international petroleum
companies and actively participate in international competition, thus assisting
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Stock Code: 600583

Stock Abbr.: COOEC

Announcement No.: Lin 2014-019

the Company to further understanding and get familiar with international

standard and effectively enhancing its international competitiveness.
4. Implementation of the Project will further promote the efficiency of core
module fabrication by the Company and improve the utilization rate and
operation efficiency of fabrication yard by the Company, so as to cultivate a
batch of project management talents and technical talents, and well build up
the construction team.
5. Signing of the Contract marks the new breakthrough in international market
development of the Company. COOEC will continue strengthening overseas
market development and further expand international market space.
V. Risk Analysis of Contract Execution
With rich module fabrication experiences, existing technology and sufficient
resources, the Company is capable of implementing the Project, with relatively
small contract execution risk in terms of market, policy, laws and safety, as
well as guarantee for contract execution, except force majeure such as
extreme weather or war.
The Company will carry out the Contract strictly and control the risks practically
and comprehensively to ensure safe, stable and efficient operation of the
Project.
VI. Reference Documents
Contract text.

This Announcement is hereby made.

Board of Directors of Offshore Oil Engineering Co., Ltd.

July 3, 2014