A.Liquid Chemical Products Terminal

1.Project Site:The Western Area of Yantai Port is situated in the west of the city proper, as well as besides the northeast sea of Dajijia Village in Yantai Economic & Technological Development Zone (YETDZ), with a distance of 35 km on the sea and a distance of 30 km on land to Zhifu Bay. The proposed liquid chemical products terminal is located in the northwest of the western port area.

2. Project ScopeThis project comprises of one berth of 50,000 DWT for liquid chemical products, with an alongside water depth of -14.5 m and a wharf length of 450 m. The terminal now is under construction and is expected to be completed in the end of 2006, of which the designed throughput capacity is 1.9 million tons per annum. Within 1,000 m behind the terminal, there is tank zone with a storage capacity of 700,000 cubic meters.

3. Project ProgressUp to now the Environment Impact Appraisal and Maritime Impact Appraisal of the project has been accomplished. The project implementation was commenced in 2005 following the approval by the Development and Reform Commission of Shandong Province.

4. Traffic AnalysisIn a quite long period from now on, the liquid chemical industry will witness a fast growth in China. In the hinterland of Yantai Port, there are quite a few petro-chemical industrial bases in Weifang, Zibo, Dongying, etc. The liquid chemical products made in the hinterland are mainly delivered to the users in the east and the south of China. This terminal to be built in Yantai will provide quality services for the chemical plants in the hinterland. In the port-related industry zone in the backup area of the terminal, a liquid chemistry industry park is to be built up in cooperation with famous corporations from home and abroad. In the short term, the main cargoes consist of fuel oil, naphtha, chloroform, paraxylene and methyl alcohol, with an annual throughput of 1.9 million tons (including an import volume of 1.35 million tons and an export volume of 0.55 million tons).

5. Distribution and Transportation ConditionsRailway: The inner-port railway, connecting with the national railway network through Lancun-Yantai railway, possesses an outstanding transport capacity. Meanwhile two additional railway lines (i.e. Dezhou-Longkou-Yantai and Huanghua-Longkou-Yantai) are under construction and will be fully completed for operation in 2008. Road: According to the planning, several port access roads will be integrated with the provincial road network by direct connection with Tongjiang-Sanya Expressway, Weihai-Wuhai Expressway and No. 206 National Road.

6. Investment and Economic Analysis The total investment of the project is estimated to be RMB 707 million yuan. The Ecomomic Internal Return Ration of the project is evaluated as 18.22%, and the FIRR (after tax) turns out to be 8.54%. The investment recovery period is anticipated to be 10.7 years (including the construction period).

7. Cooperation Partners For the purpose of this project, we are willing to cooperate with the famous chemical industries, logistic service providers, shipping companies, terminal operators and investment companies all over the world.

8. Cooperation ModeThe cooperation modes are proposed as follows: - Terminal A limited company shall be established by relevant parties for the construction and operation of the terminals. - Tanks (i) A limited company shall be established by relevant parties for the construction and operation of all or part of the storage/transportation facilities; or (ii) A limited company shall be solely established by the foreign partner for the construction and operation of all or part of the storage/transportation facilities.