0-CNPC Annual Report 2011

2011
China National Petroleum Corporation
Energize Harmonize Realize
Contents
Message from the Chairman Report of the President Top Management and Organization Environment and Community Human Resources Technology Annual Business Review Financial Statements Major Events Glossary 03 04 06 08 14 18 22 52 58 64
2011 Annual Report
Operation Highlights
2009 Financial Index Operating income (billion RMB yuan) Total profit (billion RMB yuan) Net profit (billion RMB yuan) Tax payable (billion RMB yuan) Oil and Gas Production Oil production (mmt) Domestic Overseas (CNPC's share) Gas production (bcm) Domestic Overseas (CNPC's share) Refining, Chemicals and Sales Crude runs (mmt) Domestic Overseas Domestic refined products output (mmt) Domestic lube oil output (mmt) Domestic ethylene output (mmt) Domestic refined products sales (mmt) Domestic service stations Pipeline Oil and gas pipeline mileage (km) Domestic Overseas Oil pipeline mileage (km) Domestic Overseas Gas pipeline mileage (km) Domestic Overseas 49,573 41,784 7,789 18,989 13,189 5,800 30,584 28,595 1,989 57,328 47,608 9,720 20,705 14,807 5,898 36,623 32,801 3,822 61,417 50,923 10,494 21,479 14,807 6,672 39,938 36,116 3,822 140.82 125.12 15.70 80.45 1.40 2.99 88.75 17,262 160.08 135.29 24.79 86.33 1.61 3.62 102.47 17,996 179.62 144.84 34.78 93.00 1.57 3.47 114.98 19,323 137.45 103.13 34.32 73.83 68.32 5.51 141.44 105.41 36.03 82.91 72.53 10.38 149.27 107.54 41.73 88.19 75.62 12.57 1,220.5 128.4 87.2 229.6 1,720.9 172.7 124.2 313.2 2,381.3 181.7 130.5 401.5 2010 2011
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Message from the Chairman
2011 Annual Report
& gas operation centers are taking shape. The companys oilfield service, engineering & construction and equipment manufacturing activities are playing an important role in supporting core operations, underscoring an integration of business competences. New breakthroughs and achievements have been made in technology and management innovation. We promote indigenous innovation and deepen global cooperation and international exchange of technology. As a result, the contribution of technology to business growth continues to rise. New management techniques and methods are introduced and grassroots management is further enhanced to cultivate the skills and competencies required to meet our objectives. Knowledge updating and training programs have been designed for technical professionals, highly skilled employees and executives respectively. The human resources in our overseas operations are becoming more international, professional and local, forming a dedicated and motivated team of employees.
Message from the Chairman

The world experienced profound changes in 2011. The external environment is becoming increasingly complex due to multiple factors, including the ongoing political unrest in the Middle East and North Africa, the continuing global financial crisis and a highly volatile international oil market. Faced with all of these challenges, CNPC has been adhering to the Scientific Outlook on Development in promoting a shift in its mode of development, stepping up risk management and strengthening internal controls to ensure steady and sound business growth for a successful start to the 12th Five-Year Plan. During the year, we continued to increase resources, expand markets and seek a greater international role, focusing on our core oil and gas business and working towards the goal of building an international energy conglomerate. A marked increase was achieved in oil and gas reserves/ production, crude runs, oil product sales and operating revenues. The company ranks fifth among the worlds top 50 oil companies and has risen to sixth place in the Fortune Global 500. With total assets amounting to more than RMB 3 trillion, we achieved tax payable of over RMB 400 billion in 2011, enjoying a significant rise in our business strength, competitiveness and international presence. While maintaining a firm foothold in China, CNPC is vigorous in exploring the international market to improve the resource base for sustainable development. In 2011, our domestic oil and gas production reached record highs and our natural gas business maintained its robust growth momentum. Major refining and petrochemical projects, trunk lines and main networks for oil and gas transportation progressed smoothly. There was substantial growth in our crude runs, and the sales of refined products and natural gas. The year also witnessed new progress in our overseas operations, with our equity production reaching over 50 million tons of oil equivalent out of the 100 million tons we produced. Three overseas oil
Enjoying a good corporate image, we are committed to regulatory compliance and corporate social responsibility. Giving priority to the people, environment, safety and quality and aiming at zero defects, zero injuries and zero pollution, the company has stepped up safety and environmental management and coordinated environmental efforts and business operations to continuously enhance its safety and environmental performance. The company promotes energy-efficient growth by making remarkable progress in energy conservation and emission reduction and was titled Best Enterprise in Energy Conservation and Emission Reduction in recognition of its efforts. We work closely with stakeholders to give back to the community in a variety of ways and make due contributions to economic growth and social development in the countries and regions we operate in. Looking ahead to 2012, despite an even more challenging and complex environment and much tougher tasks, we will move forward to fulfill our glorious mission and achieve greater success. Upholding the Scientific Outlook on Development, we will continue to accelerate the shift of our development mode and dedicate in oil and gas operations. We will focus our strength on exploration & production, and coordinate activities in refining & chemicals, marketing & trading, and pipeline transportation & storage, while giving oilfield services full play to ensure an overall increase in business scale, growth rate and quality-driven efficiency. We will strive to build an environmentally friendly, international and sustainable CNPC to better serve the needs of economic growth and social development.
Jiang Jiemin, Chairman
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Report of the President
In the refining and chemical sector, key technical and economic indicators were improved. We processed 144.84 million tons of crude and produced 93 million tons of refined products, up 7.1% and 7.7% year-on-year respectively. New progress was achieved in the strategic adjustment of our refinery capacity. Liaoyang Petrochemical put its upgrade/expansion project into operation, becoming CNPCs eighth 10Mt/a refining base. In addition, we analyzed market demand for petrochemical products and focused on product marketability, achieving a remarkable rise in both production volume and sales revenue. Our marketing companies mobilized and allocated market resources to meet challenges such as natural disasters and transportation constraints to ensure oil products supplies. We opened up green channels for fueling, took steps to be more consumer-friendly, and improved sales and customer service networks. In 2011, the companys market share continued to rise as sales of oil product exceeded 100 million tons, up 12.2% yearon-year, including 85.56 million tons of retail sales. Besides, we remained

In 2011, in the face of a complex and changing macroeconomic climate full of risks and challenges, CNPC continued to push ahead with its resource, market and globalization strategies. We maintained a strong growth momentum, enhanced corporate value, ensured stable energy supply, and saw safety and environmental performance continue to improve. Key business indicators soared to record highs, ushering a successful start to the 12th Five-Year Plan. Thanks to the hard work of our employees, we saw significant growth in operation results. In 2011, the company recorded operating revenues of RMB 2.38 trillion, total profits of RMB 181.7 billion, and tax payable of RMB 401.5 billion, up 38.4%, 5.3% and 28.2% respectively from the previous year. Our exploration and production activities focused on the major exploration areas in China and resulted in a number of major discoveries and breakthroughs, representing by the achievements in gas exploration in Sichuan Basin and Ordos Basin. In 2011, the newly added proven oil in place and gas in place were 715.12 million tons and 487.9 billion cubic meters. The proven oil and gas reserves stood above 1 billion tons of oil equivalent for the fifth consecutive year, indicating an optimum reserve replacement. We launched the Oilfield Development Year campaign focusing on waterflood for the third consecutive year. The increase in production capacity in new areas and improvements in key indicators of domestic fields sustained oil and gas production growth. In 2011, we produced 107.54 million tons of crude and 75.62 billion cubic meters of natural gas at home. In particular, Daqing continued to produce at the 40 million ton level and Changqing produced more than 40 million tons of oil equivalent.
top among fuel oil and asphalt suppliers in China and continued to make inroads in the lubricant market. We accelerated the development of natural gas, with gas output accounting for 36% of the companys total production in tons of oil equivalent. Gas production, transportation and distribution were better coordinated and marketing efforts were stepped up. We promoted gas utilization and explored business opportunities along newly operational pipelines. In 2011, we sold 82.7 billion cubic meters of natural gas, up 23.7% year-on-year, to 28 provinces, municipalities and autonomous regions throughout the country, and guaranteed safe and steady supplies to urban residents, utilities and major industrial consumers. In 2011, CNPC operated oil & gas pipeline mileage surpassed 60,000 km, accounting for 2/3 of the national total. An efficient, nationwide supply system backed by multi-sources and cross-border delivery has taken shape. The trunk of the Second West-East Gas Pipeline went into operation, delivering natural gas from Central Asia to energy-thirsty Yangtze River Delta and Pearl River Delta. The LNG terminals in Jiangsu and Dalian were completed and started pumping gas to the West-East Gas Pipeline network and Northeast China. The quality and efficiency of our international operations continued to improve. An integrated framework of overseas cooperation began to come into being to leverage the advantages of CNPCs business spectrum covering the whole industrial chain from upstream to downstream. Our overseas projects proceeded smoothly, producing more than 100 million tons of oil equivalent in 2011, of which CNPCs share is more than 50 million tons. Production capacity building in Iraq advanced steadily. The joint project with BP at Rumaila saw rapid increases in oil output. The joint project at Al-Ahdab Oilfield built an annual capacity of 6 million tons, making it the first new oil project to start production in Iraq over
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2011 Annual Report
the past two decades. The joint project with Total at Halfaya Oilfield was well underway. In Chad and Niger, we put into operation two upstream and downstream integration projects. Our international trade maintained rapid growth in both sales volume and financial efficiency. Additionally, we enhanced the capability to optimize the allocation of resources globally. In 2011, our international trade volume reached 250 million tons, up 29.1% year-on-year. Three overseas oil & gas operation centers in Asia, Europe and the Americas began taking shape. The acquisition and transfer of INEOS refineries were completed, which smoothly began operation. The oilfield service, engineering & construction and equipment manufacturing sectors continued to enhance service competence and market competitiveness, underscoring CNPCs strength in integrated and comprehensive operation. Our overseas oilfield services continued a favorable development momentum, taking the largest market share in onshore geophysical prospecting, ranking top six in offshore geophysical prospecting and keeping the top position in pipeline construction. The percentage of EPC and PMC contracting in our engineering & construction business rose markedly. Our equipment manufacturing business made advances in structural adjustment and new products development. The companys financial operations were healthy and robust, enabling an optimized investment portfolio and effective access to domestic and overseas financial resources. The company continued to invest heavily in technical R&D, gaining significant advances and achievements in exploration & production, refining & chemicals, as well as oilfield services. Two achievements namely Key technologies for massive and efficient field development in CNPCs overseas operations and R&D and commercial application of the technology for producing high-end products with naphthenic base oil were granted first-class National Scientific & Technological Advancement Prize. Technical breakthroughs in the development of ultralow permeability reservoirs and volcanic gas deposits enabled further increases in reserves and production. An innovative technology package for ethylene cracking furnace was worked out with proprietary intellectual property. In addition, a number of innovative techniques and equipment were developed, including vertical drilling, precise pressure controlled drilling, logging while drilling, new-generation mud, coiled tubing unit and compressor units for long-distance gas pipelines. We strengthened grassroots management by raising the caliber of employees, focusing on the professional training of technicians and frontline operators. Training became more targeted and effective, with significant gains in position-specific training, best practices and HSE knowledge and skills training. Highlights were given to the building of a corps of highly skilled technicians through participation in skills competitions. As a result, a whole class of skilled experts and technicians has come to the fore. For
example, Pei Xianfeng, a young welder from CNPC, won the first silver medal in welding for China at the 41st WorldSkills Competition. Also, we made new progress in building a corps of international talents and promoting human resources localization. In 2011, the percentage of foreign employees in our overseas projects reached 91%. While meeting the growing demand for energy, CNPC is committed to operational safety and environmental protection. By strengthening the HSE management system and reinforcing risk control, we achieved steady improvement in HSE performance. At the same time, we implemented programs for quality control and established sound quality management and corporate standard systems. A new breakthrough was achieved in standardized management. Cooperation between ISO CBM Technical Committee and CNPC CBM National Engineering Research Center was an event of great significance to establish the companys leading position in Chinas CBM sector. We continued to promote energy conservation and emission reduction. A market-driven energy-saving mechanism based on contract energy management was introduced and the energy efficiency programs were carried out, including the ten energy-saving projects and ten emission reduction projects. As a result, a total of energy equivalent to 1.22 million tons of standard coal and 23.53 million cubic meters of water were saved in 2011. The year 2012 is a crucial year for the implementation of the 12th Five-Year Plan. In a world full of opportunities and challenges, we will dedicate in oil and gas operations, encourage innovation in technology and management, and improve operational safety and environmental protection, so as to facilitate the building of an integrated international energy conglomerate. As we follow the path of sustainable development, we will continue to provide quality, clean and stable energy to fuel economic and social development.
Zhou Jiping, President
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Top Management and Organization
Jiang Jiemin
Chairman
Zhou Jiping
President
Li Xinhua
Vice President
Liao Yongyuan
Vice President, Chief Safety Officer
Wang Guoliang
Chief Financial Officer
Wang Dongjin
Vice President
Yu Baocai
Vice President
Wang Yongchun
Vice President
Shen Diancheng
Vice President
Wang Lixin
Chief of Discipline & Inspection Group
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2011 Annual Report
China National Petroleum Corporation
Quality and Standard Management Department
Supervision Department
R & D Department
HSE and Energy Conservation Department
Legal Department
M & A Department
Budgeting Management Department
Human Resources Department
Planning Department
General Oce
In 2011, CNPC reorganized the operational structure of its headquarters and redefined the functions and duties of some departments. The energy conservation and emission reduction functions are reorganized and the functions, offices and staff related to energy and water conservation activities are transferred from the former Quality Management and Energy Conservation Department to the new HSE Department. Accordingly, the former Quality Management and Energy Conservation Department is now the Quality and Standard Management Department and the former HSE Department is now the HSE and Energy Conservation Department. The Budget Management Office is now the Budgeting Management Department.
Retiree Aairs Department Others
Corporate Culture Department
Logistics Department Research Institutions
Internal Control & Risk Management Department
Auditing Department
International Department
Procurement Department CNPC Manufacturing Company
Finance & Assets Department
Policy Research Oce
IT Department
CNPC Engineering & Construction Company
CNPC Oileld Service Company

Rening and Chemical Companies
Overseas Companies
Manufacturing Companies
Engineering & Construction Companies
Oil and Gas Fields
Holding Companies
Oileld Service Companies
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Environment and Community

CNPC always gives top priority to people, the environment and safety. We highlight the importance of environmental protection, safety management and quality control, and promote a safe, green and resource-efficient development model. We are committed to improving the communities we operate in and building harmonious relationships between energy and the environment, as well as between corporate performance and community interests.
In 2011, the company further improved its HSE management system and identified the functions and procedures of the HSE Committee. Risk management practices such as Permit to Work and Job Safety Analysis were implemented at grassroots levels. We promoted the application of an HSE management system in our overseas operations. Overseas projects were required to follow the best practices and appropriate procedures used
in the headquarters to enable consistency and efficiency and to improve our overseas HSE performance. We have maintained a satisfactory track record in safety and environmental protection in overseas operations amid security incidents, natural disasters, growing business needs and increased job-related risks.
2011 Annual Report
Operational Safety
Operational safety was further enhanced, focusing on potential risk identification and control and operation process monitoring. The key safety performance indicators continued to improve. In 2011, we stepped up safety management throughout all processes and promoted the use of the HAZOP approach to achieve an improvement in intrinsic safety. Safety risks were kept under control through constant safety inspection of special equipment, offshore facilities and thunderproof devices etc., and hidden hazard screening for gas pipelines, refining installations, tank farms, and drilling rigs. With respect to contractor management in engineering and construction activities, CNPC Guidelines for Contractor Management were developed and published to manage contractor safety. The Guidelines are intended for contractor management at CNPC headquarters, wholly-owned subsidiaries and affiliates, consisting of 48 rules in eight chapters on qualification, selection, use, assessment and monitoring of contractors. The qualification requirements, application and approval procedures, methods of selection, rules and requirements for contractor use, assessment criteria and monitoring responsibilities were clearly defined. In particular, CNPC affiliates are asked to identify HSE objectives for each engineering or construction project, review the HSE management plan of contractors and see to it that the approved plan is duly implemented. chapters on environmental impact assessment (EIA) in feasibility studies, environmental activities in design, construction, commissioning and completion, and monitoring responsibilities. In particular, with respect to site/line allocation or construction projects in environmentally sensitive areas, an environmental services agency should be employed to carry out environmental feasibility studies and identify the major environmental risks and constraints as a basis for decision making.
Energy Efficiency
Energy efficiency is an important aspect of building a conservationoriented and environmentally friendly enterprise. In 2011, a market-driven energy-saving mechanism based on contract energy management was piloted successfully in some CNPC member companies, including Tarim Oilfield and Ningxia Petrochemical. The contract energy management approach will be widely used as one of the key energy efficiency solutions. Meanwhile, facing the energy consumption challenges that accompany production expansion and new projects, the company has heightened energy assessment of new projects and verification/on-site inspection of pollution reduction data to facilitate ten energy-saving projects and ten emission reduction projects. Throughout the year, we cut energy consumption equivalent to 1.22 million tons of standard coal and decreased water use by 23.53 million cubic meters.
Environmental Protection
In 2011, two monitoring substations (for oil production and refining) and eight regional monitoring centers were set up to basically form an environmental monitoring network, further strengthening our capacity in environmental monitoring and management. In March 2011, the second West-East Gas Pipeline (west section) was listed by the Ministry of Water Resources as a Model Project for Soil and Water Conservation. In addition, CNPC Guidelines for Environmental Protection in Construction Projects were published to provide guidance to environmental protection management in key aspects such as feasibility studies, EIA approval, design and construction, and final acceptance. The Guidelines are intended for environmental management at CNPC headquarters, wholly-owned subsidiaries and affiliates, consisting of 36 rules in seven
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2011 Annual Report
Green Oilfield in Bohai Bay

Chenghai Block at Dagang Oilfield is located in Huanghua Shoals of the Bohai Bay. To minimize the environmental impact caused by drilling and oil production on the surrounding waters, three artificial islands were built. Economic and intensive use of land is realized by an onshore production of offshore oil approach that uses wellhead-slot batch drilling, cluster well drilling with a modular rig, and extended-reach horizontal well drilling and waterflood. Meanwhile, all wells are equipped with safety valves and automatic protection devices, as well as offshore firefighting equipment and an oil spill emergency response system, to ensure safe drilling and production. The artificial islands feature well-designed oil pollution treatment facilities and sewage treatment systems operating in a closed-loop. Wellhead-slot wastewater and summer rainwater are collected and recycled. Reusable drilling fluid is used in place of oil-based mud and concrete pits are available to contain workover wastes. All industrial and domestic waste is collected for centralized processing. Since becoming operational in 2007, offshore oil production has been carried out in a green way, and has been free of any man-made environmental accidents.
Occupational Health
Based on the principle of prevention-oriented intervention, we reinforced occupational health management, providing our employees with knowledge and skills regarding occupational health management, occupational health standards, and occupational disease precaution and treatment. In 2011, the occupational health management system, including its supporting measures, was further improved. Workplace health surveillance and occupational health record management were enhanced, focusing on occupational health services during field operation, construction engineering and refinery maintenance. These led to a continuous improvement in the companys occupational health status. The occupational health medical examination rate and the workplace occupational hazard detection rate remained 92% and 90% respectively throughout the year. Since 2006, we have been carrying out a Four-Coverage occupational health program which is intended to provide overseas employees with extensive health benefits, including medical examination, employee insurance, HSE training and medical evacuation. As a result, there has been a significant improvement in the medical examination rate and on-site medical treatment. During this process, cooperation with International SOS in medical assistance has played an important role. All of these contribute to a more effective occupational health system safeguarding overseas employees.
Quality Control
We are fully committed to the values of honesty, trustworthiness and excellence in an ongoing effort to improve the quality of our products and engineering services by improving the existing quality management system. By the end of 2011, 97.3% of the member companies engaged in CNPCs core business had a quality management system in place and 94% of the member companies whose business activities are subject to third-party testing or certification had been certified. In particular, the quality control systems of our marketing companies are 100% certified. In
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In 2011, coordination and cooperation with industrial and community resources were underscored. An emergency response coordination mechanism was introduced to coordinate the emergency response efforts of CNPC, Sinopec and CNOOC. We also signed agreements with the maritime authorities of Hebei, Liaoning and Tianjin to implement an offshore emergency rescue coordination mechanism. An associated emergency response drill was carried out among our affiliates in the refining and chemical sector in order to enhance preparedness and response to any emergency. addition, we have intensified random inspection of oil products and valves and heightened the quality surveillance of products manufactured or purchased by the company to ensure product and service quality. The existing standard system was further upgraded. During the year, 390 national, industrial and corporate standards were developed or amended. We solely undertook the secretariat task of the CBM Technical Committee under ISO. In 2011, the company worked closely with relevant Chinese government departments under a cooperation program with the Centre for Standardization and Metrology of Turkmenistan regarding standards in the oil and gas sectors. The negotiations focused mainly on mutual recognition of standards. According to an inter-governmental cooperation agreement with Turkmenistan on standardization, metrology, certification and accreditation, the Chinese standards developed by CNPC are applicable and valid in Turkmenistan. We continued to strengthen emergency management in our overseas operations. A comprehensive emergency response mechanism was introduced to ensure more effective emergency response and rescue. In 2011, we took a series of steps, including counter-terrorism training, involving all employees to build security awareness and necessary skills and ensure the safe operation of our overseas projects. We trained around 13,000 construction workers and 530 foremen in the year. In addition, we strive to build a harmonious relationship with local communities and work with local communities to form a barrier against security threats.
Emergency Response
CNPC has pushed ahead with its emergency response system to enable overall responsiveness to various emergencies. With the debut of the Pipeline Emergency Response Center, an emergency response system consisting of five professional teams to deal with firefighting, offshore rescue, hazardous chemicals, well control and pipeline emergencies is taking shape.
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2011 Annual Report
Community Dialogue
We emphasize the importance of understanding and responding to stakeholder expectations where we operate. A stable and longterm relationship has been created between the company and local communities through donations to education, medical assistance and building public utilities to contribute to community building, economic prosperity and social development.
Educational Programs and Medical Facilities along the Myanmar-China Oil & Gas Pipelines
A community outreach program has been started in 2011 as part of the Myanmar-China Oil & Gas Pipelines Project. In April 2011, CNPC signed a letter of intent with Myanmars Ministry of Energy on providing USD 6 million to Myanmar by stages to support the health and education initiatives in local communities. CNPC is also responsible for planning, equipment procurement, construction and staff training at these projects, while creating as many new jobs as possible for local communities in the process. The first eight CNPC-funded schools along the pipelines, including six primary schools and two secondary schools, are under construction and expected to open before the start of the new school year in 2012. On December 18, we signed an agreement with Myanmar's Ministry of Health to help improve the medical conditions in local communities by offering assistance to 19 medical sub-centers i.e. seven in Rakhine State, one in Magway Region, six in Mandalay Region and five in Shan State. Since its start, the pipeline project has been carried out in strict compliance with the local laws and regulations. The project hires 2,505 local employees, accounting for more than 50% of the total recruitment. All local employees are insured under the social security program. As to the compensation for converted land, we adhere to three principles voluntary decision, minimal impact on farmland and compensation before construction. The compensation funds are paid directly to each household. There is no involuntary conversion or forced demolition, and no complaints have ever been reported from the compensated villagers.
Educational and Medical Outreach

Over the years, CNPC has supported domestic education in various forms such as establishing scholarships and grants and making donations to build schools. In 2011, we granted a new round of CNPC Scholarships and signed cooperation agreements with 13 Chinese universities to increase financial assistance to less-privileged or freshman students. CNPC has played an active role overseas in helping local communities improve educational and medical conditions. The project team in Iraq donated stationery and sports equipment to BERJESIA a local primary school. In Chad, the Alkoudou primary school funded by N'Djamena refinery was put into use and the students have received schoolbags, stationery and sports equipment from the joint venture. The Intercampo Caracoles project team in Venezuela offered grants to three local primary schools. The Block-1AB/8 joint venture in Peru provided financial support to improve medical conditions in indigenous settlements along the Corrientes River. Andes Petroleum in Ecuador has purchased medicines for the local residents.
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Public Amenities
It is our responsibility to assist the local communities in building public infrastructure to foster overall socioeconomic development. The Intercampo Caracoles project team in Venezuela has supported power upgrading, housing and drinking water programs for local communities. The Block-6/7 project team in Peru spent special fund on improving the environment and purifying natural gas, and encouraged volunteer employees to participate in various community activities like wellsite surrounding cleanup, field survey for municipal construction and community-based environmental assessment etc. Their efforts were highly praised by the local government and the General Directorate of Environment and Energy. In Kazakhstan, the PK project team maintains a close relationship with the local community and NGOs and was granted the Presidential 2011 Gold Paryz Award for its outstanding contributions to employee welfare, social responsibility and environmental protection. In October, 2011, Kelema-1 and Kelema-2, two community markets funded by CNPC under the community sustainability program in the Southern Ijaw area of Bayelsa State, Nigeria were completed and put into use. These projects were highly praised by the local community-based organizations and the Bayelsa State government for playing an important role in improving the local business environment and promoting the sustainable development of local communities.
Abu Ushar Friendship Hospital Put to Use

In July 2011, the Sino-Sudan Abu Ushar Friendship Hospital was completed in Abu Ushar a town in Al Jazirah, Sudan. This is the first Africa assistance initiative between CNPC and a Chinese NGO China Foundation for Poverty Alleviation (CFPA). In November 2010, CNPC Nile donated USD 600,000 to CFPA as financial aid to the Abu Ushar Friendship Hospital one of the China-funded demonstration projects jointly managed by CFPA and BTO Sudan to improve the maternal and child health system in Sudan. Currently in operation, the Abu Ushar Hospital specializes in maternal and child health services while offering expertise in a variety of medical services. This 180-bed facility has 22 departments, including obstetrics and gynecology, surgery, orthopedics, internal medicine, ophthalmology and pediatric etc. In 2011, the hospital treated 39,459 patients, including 5,073 surgically treated cases. A report from an assessment team organized by CFPA and BTO Sudan shows that the patients and their families are satisfied with the therapeutic effect and clean medical environment in the hospital. The project is granted the Special Contribution Award for International Outreach Programs and listed by the Ministry of Foreign Affairs of China as one of the Best Public Diplomacy Programs in 2011.
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Human Resources
CNPC is committed to building a human resource system accommodative to an integrated international energy conglomerate. We adhere to a peopleoriented vision in achieving employment regulatory compliance, respecting and protecting employee interests, providing a platform for employee development and promoting the all-round development of both the company and its employees.
We follow the principle of democracy, openness and competition to shortlist outstanding talents from inside and outside the company. The human resources structure has been further improved in terms of age, knowledge and competencies. By the end of 2011, the company had 17 CAS (Chinese Academy of Sciences) and CAE (Chinese Academy of Engineering) members, 287 senior technical experts, 100 management experts, 250 senior specialists, 1,382 government-subsidized experts, 3,522 senior technicians and 23,351 technicians.
The company gives priority to the career development of its employees and continues to expand the scope of training and explore new training techniques. We have a training team mainly comprising CAS and CAE members, senior experts, technology leaders, highly skilled talents and senior executives. In 2011, the head office implemented 114 training programs covering nearly 20,000 person/times. Member companies trained administrative staff 263,000 person/times and technical professionals 160,000 person/times. More than 200 executives and high-performers
Human Resources
2011 Annual Report
were selected to participate in business management training. A total of 12 training workshops have been run to train more than 800 highlevel technicians in redevelopment of mature oilfields, natural gas development under complex conditions and on-site solutions for longdistance pipelines. The distance learning system was further improved with more than 600 courses available for online or off-site video training. Skill contests have become an effective way to identify highly-skilled experts and technical specialists. We hold a professional skills contest in 2011, covering five categories, i.e. maintenance electricians, atmospheric and vacuum distillation unit operators (5Mt/a refineries), oil and gas pipeline operators, gas transmission operators, and large-diameter pipeline repair workers. The purpose of such contests is to encourage front-line workers to sharpen their knowledge and skills. Pei Xianfeng, a young employee of CNPC, won a silver medal in welding at the 41st WorldSkills Competition, the first Chinese to gain medals in the competition, and was granted the title of National Skill Expert. Four CNPC employees participated in the ARC-LVM International Welding Skills Competition and won first place in four categories. Four National Skill Master Studios named after Shu Binxia (senior technician, Liaohe Oilfield), Zhou Xiaodong (senior technician, Dagang Oilfield), Wang Xijun (pipeline technician, Qinghai Oilfield) and Zuo Chengyu (senior technician, Daqing Petrochemical) have been established, among the first 50 National Skill Master Studios approved by the Ministry of Human Resources and Social Security in 2011.
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2011 Annual Report
Human Resources
Overseas HR Management and Localization

We attach great importance to overseas human resources development and management to meet the increasing demand for talent in our international operations. We promote local hiring and workplace diversity and create a communicative, coordinated and harmonious workplace atmosphere. In 2011, the company pushed ahead with language training in Russian, Arabic, Spanish and Farsi. We send employees to Russia and the United States for financial and legal training, Executive MBA (EMBA) courses and project management professional (PMP) training to prepare our high-level management and technical executives for overseas operations. Adhering to the principle of mutually beneficial and common development, we encourage our overseas projects and oilfield service crews to create new jobs for local communities. Meanwhile, we provide well-tailored management knowledge, job-related skills and HSE training to foreign employees. By the end of 2011, the percentage of foreign employees in our overseas projects reached 91%. Local employees account for more than 90% of the total workforce in the Andes project in Ecuador and the Block-6/7 project in Peru. In the joint venture projects in Venezuela, the percentage of Chinese employees is less than 5%. In Turkmenistan, a variety of training approaches, such as coaching, full-time training and off-site training have been used to train 1,336 Turkmen employees. The Niger project has a team of experienced lecturers offering training course specifically tailored to the needs of the project. In South Sudan, two training workshops in drilling and welding were held. The Kazakhstan branch of CNPC affiliated China Petroleum Engineering and Construction Corp. has worked with the local universities to broaden the channel of executive search. Meanwhile, long-term training cooperation programs between the company and local universities and colleges such as Aktobe Institute of Technology and No.2 Shymkent Vocational School are under way to offer theoretical training to local employees. The training bases in Shymkent and Zhanazhol can provide simultaneous training to 25 welders, 30 pipeline workers and 30 riveters. BGP, a CNPC subsidiary, shows respect for local cultural and religious customs and has won the trust of the local employees. The percentage of employees working with the company for three years or more is above 60% and even up to 80% in some regions. A questionnaire shows that it is the personal goal of 96% of foreign employees to become a Star Employee of BGP.
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Technology
In 2011, we focused on technological R&D, made progress in overcoming key technical bottlenecks constraining the development of our exploration and refining business, and boosted our capacity of independent innovation, providing a strong support for core businesses growth. We posited an exploration and development theory for Chinas marinefacies carbonate reservoirs and developed 12 matching exploration and development technologies. All these have effectively guided our carbonate exploration and productivity building in new blocks. Our new geological
understandings from research on hydrocarbon-rich Qikou Sag provided data and progress in the petroleum geology in hydrocarbon-rich sags in the Bohai Bay Basin. We continued to improve exploration and development theory as well as matching technologies for lithologic reservoirs, foreland basins, and unconventional hydrocarbon. We established the genetic model for low-porosity, low-permeability tight sandstone reservoirs, built the development mode of deep effective reservoirs, and worked out technical specifications and standards for the evaluation of shale gas
Technology
2011 Annual Report
resources in China. Overseas, our research into oil and gas exploration and composite matching technologies increased in variety and effectiveness, allowing us to improve the quality of our overseas exploration work. In oil and gas field development, the improvement of waterflood technology, the industrial application of polymer flooding for type-II reservoirs, and the development of petroleum sulfonate surfactants suitable to weak-base ASP flooding systems enabled Daqing Oilfield to maintain steady production. Changqing Oilfield boosted production rapidly thanks to achievements in the key development technologies for low and ultra-low-permeability reservoirs, including new stimulation techniques, overall profile control process, three plugging agent systems, low-flow precise water injection, staged fracturing stimulation and reconstruction of horizontal wells, and the surface matching technologies of skid-based digital boosting process. An integrated CCS-EOR demonstration base of emission control and efficiency enhancing, the first of its type in China, was built in Jilin Oilfield marking a major breakthrough in the intensive research and field tests of CO2 flooding and underground storage. The matching technology for the development of volcanic gas reservoirs saw commercial application in Xinjiang, Daqing, and Jilin oilfields, drawing on reserves totaling more than 200bcm and annual output of more than 2.5bcm. In the domains of refining and chemicals, we made important breakthroughs in the research and development of key technologies for the conversion of inferior heavy oil into light oil, and technologies for the industrialization of large-scale ethylene units and large-scale nitrogen fertilizer units. Five grades of refining catalyst in the LDO family were developed and used in ten units at home and abroad. We also commenced major industrial tests that led to excellent results, notably including an industrial application test of the slurry polymerization of ethylene catalyst Hostalen and a pilot test of an EPR production unit. CNPC also made progress in engineering technologies and equipment manufacturing. The ES109 seismic apparatus realized industrial upgrading, passing a field test in which it collected 100km2 of highly dense 3D seismic profiles on 15,000 channels. The company began field-testing for a newly developed 5,000-channel prototype of the G3 wired seismic apparatus. In addition to significant progress in our research on 3D imaging and other high-end logging units, we created a series of electromagnetic wave resistivity, neutron porosity with a controlled source, and azimuthal gamma ray formation evaluation LWD technologies, placing China into an elite group of countries in the world with technologies based on lithology, saturation, and porosity parameters. We also made major progress in the testing and application of precise PCD systems and BH-VDT5000 vertical drilling systems.
In 2011, we developed a 20MW electric-driven compressor package, a 30MW gas-turbine-driven compressor package, and large-diameter full-welding ball valves, all of which are ready for industrial application. In 2011, CNPC continued to push forward with the construction of key laboratories and test bases. We commenced construction of major laboratories for reservoir description, underground oil and gas storage, natural gas quality control, and energy metering, as well as test bases for CO2 flooding and storage, gas lifting, chemical catalysts, and high-performance synthetic materials. We also obtained state approval for the construction of the State Research Center on the Engineering Technology of Petroleum and Natural Gas Pipe Material and the State Energy and LNG R&D (Test) Center. By the end of 2011, CNPC had 11 major state-level laboratories/research centers. Building upon major projects, we established long-term partnerships with the Chinese Academy of Sciences (CAS) and domestic universities and colleges, and built strategic alliances with renowned foreign universities, colleges, and institutes to carry out joint research. In addition, we promoted and participated in the exchanges and cooperation with SPE, SEG, IGU, and other international academic organizations to provide us with more room for scientific and technical cooperation. In 2011, we applied for 3,026 patents (including 1,234 invention patents) and were granted 2,304 (448 of which were invention patents). Nine of our scientific and technological achievements won national awards: Key technologies for massive and efficient field development in CNPCs overseas operations and R&D and commercial application of the technology for producing high-end products with naphthenic base oil were each awarded a first-class National Scientific and Technological Advancement Prize (NSTAP); Design, manufacturing, and industrial application of 10,000m-grade ultra deep onshore drilling rigs, Geological theory, key technologies, and industrial application of medium-to-high coal-rank CBM in China, Safe production and sulfur recovery technologies of large-scale high-sulfur-content gas fields, Exploration and development technologies and their applications in low-permeability oilfields in lake basins of inland depression and two other achievements were each awarded second-class NSTAP; and the Fiber optical vibrant sensor-based pipeline pre-warning technology and its application was awarded secondclass National Technical Invention Prize.
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2011 Annual Report
Technology
Reservoir Forming Theory and Technology for Large Onshore Oil and Gas Zones
The reservoir forming geological theory and effective reservoir prestack prediction for large oil and gas zones of low-porosity, lowpermeability and clastic lithology enabled us to overcome the technological bottlenecks in amplitude-preservation processing of seismic data and prediction of effective reservoirs in low-porosity and low-permeability clastic rocks. As to carbonate krast reservoirs, backed by the reservoir forming geological theory and the matching technology for quantitative description of fracture-cave units, we solved the technical difficulties in predicting carbonate fracture-cave reservoirs. We formed new ideas on the formation and distribution of large gas zones in carbonate platform margin reefs based on the understanding on reservoir forming geological theory and supported by the technology for reservoir and fluid prediction. For complex high steep and deep structures, we gained new understanding on the reservoir forming geological theory and developed pre-stack seismic imaging technology for such structures, making us capable of tackling key technologies such as wide-line plus large geophone array seismic data acquisition and leading to improved imaging quality. The reservoir forming theory and the four-step reservoir description method for volcanic lithostratigraphic strata helped us break through the technological barrier in predicting effective volcanic reservoirs.
Key Development Technologies for Complex Overseas Reservoirs

We uncovered the genesis mechanism of layered carbonate reservoirs with microcracks as main seepage channels. CNPC was the first to use the injection-production approach that combines separated layer water injection in subdivided strata series and the shelter and oil-ring pattern water injection in gas-cap reservoirs for large carbonate oil and gas fields. This helped increase the recovery from carbonate fields by more than 13%. We found the depressurization production mechanism for ultra heavy oil. We upgraded a design method to efficiently utilize energy in foam displacement with discontinuous dispersed solution gas, as well as the process technology for cold production with integrally deployed cluster and horizontal wells. These helped increase the cold production recovery of ultra heavy oil by 2.6%. We discovered the mechanism of solid-phase precipitation from high-pour-point oil, as well as the variation laws of waterflooding temperature field. We also upgraded the waterflood technology for large-scale high-pour-point oil reservoirs, which features combined vertical and horizontal well development at controlled temperature without damaging the reservoir. We integrated Chinese technologies for waterflood and potential release of remaining oil, resulting in recovery enhancement by 5.6% in mature sandstone oilfields.
Software System for Fracture Prediction

The anisotropy-theory-based software system is an embodiment of the advanced service-oriented architecture design concept. It integrates our unique technologies including interactive fracture analysis that combines logging and seismic data, the anisotropic pre-stack fracture prediction, the composite pre-/post-stack fracture prediction, and multi-scale visual 3D crack sculpting. The system can run in the three mainstream operating systems. It also integrates geological, logging, and seismic information to provide a composite and integrated solution to predict complex fractured reservoirs.
Exploration Theory and Technology for Ultra-deep Buried Hill Reservoirs

A concept of fine re-exploration of oil-rich sags in north China was put forward. We discovered a new mechanism whereby hydrocarbons have migrated and accumulated to form reservoirs in buried hills, and established multiple new buried hill reservoir-forming models. We also obtained new understandings that hydrocarbon sources are available to form large oil and gas fields in deep layers and that the reservoir properties in ultra-deep buried hills are generally irrelevant to the buried depth. These have guided our exploration practices in eastern China. The Niudong ultra-deep buried hill field discovered in the Jizhong depression, characterized by a reservoir bottom depth of 6,027 meters with a temperature of 201 degrees centigrade, produced high yield oil and gas flows during a formation test. In fact, Niudong is the deepest and hottest super-high-yield buried hill field that has ever been discovered in the Bohai Bay Basin, and is even the deepest and hottest of all in eastern China. The Niudong discovery is a milestone in our efforts to promote hydrocarbon exploration in deep buried hills.
Fracture prediction
20
Technology
2011 Annual Report
Precise PCD System

The full-automatic control software package allows annular pressure monitoring and control, backpressure compensation, and nearbalanced/ underbalanced precise controlled pressure drilling, under various operating conditions. It integrates hydraulic computation, online intelligent equipment monitoring and emergency response to achieve closed loop monitoring and control of annular pressure, as well as multi-strategy and adaptive safe drilling. We also developed surface systems for pressure controlled drilling, i.e. PCDS-I and CQMPD-I, to accommodate different geological characteristics and production needs. In field tests and applications, the systems showed stable performance and effectiveness in addressing drilling difficulties with a narrow mud weight window, such as the case when overflow and loss of drilling fluid coexist. In their industrial application in Jidong Oilfield, the systems helped eliminate mud loss in formations where drilling fluid would otherwise be easy to lose, significantly increasing the penetration rate.
Industrial Test of Key Technologies for Converting Venezuelas Ultra-heavy Oil to Light Constituents
The thermo hydrocracking technology for Venezuela's ultra-heavy oil saw successful application on 400kt/a and 1Mt/a industrial units. The thermo hydrocracking reduces the viscosity of the heavy oil by more than 99%. The upgraded oil passed tests of long-period storage stability, meeting the viscosity and stability requirements for oil in ocean transport. Delayed coking of Venezuela's ultra-heavy oil underwent an industrial test on a 1Mt/a industrial unit. The unit safely and stably processed more than 30,000 tons of vacuum residual from Venezuelas ultra-heavy oil, the one and only feedstock supplied to the unit. Among the many key technologies used on the unit, one technology circulates hydrogen donators to suppress coking. The unit has produced coking liquids at a yield of more than 60% and the thermal efficiency of the furnace has been more than 92%.
Industrial Application of NBR Technology with Highest Single-line Capacity Sees Long Running Period
We independently developed a technology package for 50kt/a nitrile butadiene rubber (NBR) process that ran for an extended time period on a unit at Lanzhou Petrochemical, producing new grade rubber with better performance than those of its type. The core technologies of NBR process formula have been improved. A new emulsification technology is adopted, and calcium chloride is used in place of concentrated sulfuric acid in the cohesion system. This has enabled us to independently develop multiple products. The process flow was upgraded to a 25kt/a single-line polymerization capacity. An improved polymerizer works with a process of two columns in tandem to effectively reduce the residual acrylonitrile content (AN<50ppm) in the degassed latex. Additives are added at a precisely controlled quantity and location to adjust the molecular weight. By adjusting the active polymerization system, butadiene is maximally recycled and only 6% of it is discharged. By using digital simulation technologies, the outcomes of changes to the process conditions can be simulated at lowered cost and higher accuracy.
Formation Evaluation LWD Technologies

The electromagnetic wave resistivity LWD adopts a symmetrical design consisting of two transmitting frequencies, four transmission antennas, and two reception antennas. It also consolidates intelligently and automatically adjusted transmission of electromagnetic waves, perturbation of decoding time of impulse signals, and intelligent human-machine interaction decoding. This instrument increases data storage and transmission capacity and can precisely measure data deep under the ground. The neutron porosity LWD with a controlled source uses a pulsed neutron generator in place of a chemical radioactive source, allowing formation porosity measurement during drilling. Field tests and practical application have proven that the formation evaluation LWD series can provide precise formation evaluation parameters of lithology, saturation, and porosity. Data are uploaded in real-time to reflect changes in stratigraphic horizons and geological parameters, thereby effectively guiding the formation evaluation and geosteering.
Key Equipment for Gas Pipelines and LNG Terminal Technologies

During the construction of the Second West-East Gas Pipeline, we achieved domestic production of three key devices: a 20MW-grade high-speed, frequency conversion, direct-coupling, and electric-driven compressor package, a 30MW-grade gas-turbine-driven compressor package, and 48"/40" 900lbs./600lbs. large-diameter full-welding ball valves. Through intensive research efforts, we created a package of technologies for the design, construction, material, and operation management of LNG terminals. With successful application in LNG terminals in Jiangsu and other provinces, this package has paved the way for the commencement and construction of future projects.
21
Annual Business Review
2011 saw oil price hovering around elevated levels more drastically and frequently than the previous year. The world would probably see tight energy supply in a long run although the growth rate of oil demand
fell. Faced with opportunities and challenges, CNPC carefully organized production and operation, strengthened risk control and recorded the best performance in its history and maintained rapid yet steady growth.
2011 Annual Report
USD/bbl
Oil Prices in 2011

Brent WTI
Major Discoveries
New breakthroughs were made in major exploration blocks in Sichuan, Bohai Bay, Qaidam, Ordos, Junggar, and Hailaer basins. Gas exploration in Sichuan Basin identified great potential of the Sinian System. Exploration in the deeply buried hills in Bohai Bay Basin showed favorable prospects. In Ordos Basin, the Lower Palaeozoic strata became a new exploration target. Lithologic reservoirs with abundant reserves were discovered in the Jurassic System in Junggar Basin. In addition, we made a number of major progresses at Jiyuan and Sulige in Ordos Basin, Tazhong and Tabei in Tarim Basin, Chuanzhong Xujiahe formation in Sichuan Basin, Qibei-Chenghai block in Bohai Bay Basin, north (oil) and south (natural gas) in Songliao Basin, Jimusaer Sag in Junggar Basin, Kunbei in Qaidam Basin, and Fushan Sag in North Bay Basin.
130 120 110 100 90 80 70 1 2 3 4 5 6 7 8 9
10
11
12
Exploration and Production

In 2011, CNPC focused its exploration in major domestic petroliferous basins including Songliao, Ordos, Tarim, Sichuan, and Bohai Bay. We continued to maintain a growth momentum in hydrocarbon reserves, providing a solid resource base for oil and gas production.
Exploration
In 2011, our domestic exploration resulted in newly proven oil and gas in place of 715.12 million tons and 487.9 billion cubic meters respectively, and proven oil and gas reserves exceeded 1 billion tons of oil equivalent. The newly proven reserves are mainly contained in lithostratigraphic reservoirs and lowpermeability reservoirs that are deeply buried but feature massive scale and producibility. The oil reserve replacement ratio remained above 100%.
Newly proven oil in place (Domestic)

715.12 655.77 627.50
Newly proven gas in place (Domestic)

570.10
487.90 461.60
2009
2010
2011
(mmt)
2009
2010
2011
(bcm)
Reserves and operating data (Domestic)

2009 Newly proven oil in place (mmt) Newly proven gas in place (bcm) 2D seismic (kilometers) 3D seismic (square kilometers) Exploration wells Preliminary prospecting wells Appraisal wells 627.50 461.60 26,816 11,427 1,901 1,071 830 2010 655.77 570.10 31,023 13,463 1,640 949 691 2011 715.12 487.90 33,912 12,954 1,794 1,020 774
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2011 Annual Report
Development and Production

In 2011, our oil and gas production at home was pressed ahead steadily. Productivity building for new blocks was strengthened, and new fields were put into development under an overall program, resulting in increase in the daily output of individual new well. In addition, we continued fine management of mature fields and refined measures in waterflood deployment, seeing major development indicators continue to improve. The reserves tapped by waterflood increased to 72%, the natural decline rate of mature wells reduced by 1.6%, and the water cut growth rate controlled to be within 0.5%. Mass application of proven and our unique technologies such as horizontal drilling, underbalanced drilling, and snubbing operation played an important role in speeding up drilling rate, stabilizing and increasing single well output, and improving the development efficiency and benefits of oil and gas fields. In 2011, our domestic oil and gas production reached 167.79 million tons of oil equival, up 2.8% year-on-year. In particular, natural gas contributed 36% of the companys total oil and gas production. simultaneously. Full-scale water injection was deployed in blocks that have passed water injection tests, with finely controlled water injection in uncompartmentalized fault blocks, and targeted water injection into major pay zones in complex fault blocks. As a result, the waterflooded fields produced 9,303 tons of oil every day in 2011, as compared to the 8,581 tons before effect has been seen.
Redevelopment of Mature Oilfields

The redevelopment of mature oilfields, which was launched in 2007, was equipped with improving matching technologies and yielded favorable results. In 2011, we focused on well pattern improvement in strata series, finely controlled water injection and production, and water displacement front control in some blocks, where the annual oil output was significantly increased to 7.99 million tons. By the end of 2011, a total of 1.03 billion tons of oil in place was subject to redevelopment. It is expected that the newly added recoverable reserve could be increased by 74.08 million tons, and the recovery efficiency enhanced by 7.2%. Dagang Oilfield is one of the 8 pilot oilfields for redevelopment. After more than four decades of production, it has a total water cut of more than 80%, and more than 70% of its recoverable reserves have been produced. Through redevelopment, Dagang has worked out matching technologies for redevelopment of reservoirs in complex fault blocks. Precise geological study based on high-resolution 3D seismic data and dynamic monitoring information enabled the field rebuild injection-production well pattern and surface process that led to the birth of 264.3Kt/a production capacity in Gangdong and Gangxi. In fact, the fault block 2/4 of Gangxi Oilfield outputs 304 tons of oil each day, taking its overall development back from high water cut stage to medium water cut stage.
Crude oil
In 2011, we produced 107.54 million tons of crude oil in China, 2% higher than the previous year. Despite the challenges of ultra-high water-cut, Daqing continued to produce at an annual level of 40 million tons, of which more than 13 million was attributable to tertiary recovery represented by polymer flooding and ASP flooding. Attributing to the efficient and massive development of low-permeability reservoirs, Changqing produced more than 40 million tons of oil equivalent, with an average increase of more than 5 million tons for each of the past four years. In particular, 5.5 million tons of oil was produced from ultra-low-permeability reservoirs.
Campaign of Waterflood Control

To intensify the waterflood-based comprehensive management of mature fields, CNPC launched a Fundamental Year of Oilfield Development campaign that is oriented towards fine waterflood control in 2009. In the past three years, we have converted 16,266 production wells to water injection wells, increasing the water injection volume by 59.28 million cubic meters. In 2011, Liaohe Oilfield registered an annual oil output above 10 million tons. Its waterflooded fields recorded a natural decline rate of 13%, composite decline rate of 6.4%, and total water cut of 0.5%, 7.3%, 5.1%, and 1.2% lower than in 2008, respectively. In blocks where the production capacity has been newly built, production and water injection commenced
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2011 Annual Report
Pilot Development
CNPC is carrying out intensive technical researches and development tests in Daqing, Changqing, Liaohe, Xinjiang, Jilin and Tuha oilfields, in view of that lithostratigraphic and low-permeability reservoirs account for most of its new reserves and that most of its oilfields have suffered high water cut and high recovery percentage of reserves. In 2011, we smoothly pushed forward major development tests on CO2 flooding, surfactant/polymer flooding, and fire flooding. Much better result has been obtained from the pilot and expanding tests of CO2 flooding in block Hei-59 and Hei-79 of Daqingzijing Oilfield in Jilin, with the production rate kept at 2.2%, 1.5 times as much as that of waterflood. Moreover, the formation pressure in the test zone has been restored to more than the miscible pressure. The fire flooding test, which commenced in 2009 in Hongqian test zone in Xinjiang, enabled 14 affected wells output 9,748 tons more oil at a daily rate of 34.5 tons. The test is expected to increase the recovery factor by 36.2%.
Natural Gas
In 2011, we produced 75.62 billion cubic meters of natural gas domestically, 4.3% more than that in 2010. The gas production of Changqing registered another year of rapid growth in 2011 to 25.8 billion cubic meters. Tarim produced more than 17 billion cubic meters of natural gas, supporting the need of West-East Gas Pipelines. Production capacity building projects in Sulige and Gaoqiao was pushed forward smoothly. Sulige has become the largest gas field in China.
Crude production (Domestic)

103.13 105.41 107.54
Natural gas production (Domestic)

75.62 72.53 68.32
Development of Sulige Gas Field

Sulige gas field, as part of Changqing gas-producing region, is located deep in the Mu Us Desert of Ordos Basin. It is a typical tight lithologic gas field of low permeability, low pressure, and low abundance. Since its mass and efficient development in 2006, a large amount of cluster wells and horizontal wells were drilled, leading to the continued rapid growth of its gas output. In fact, the daily gas output of the field went beyond 20 million cubic meters in 2008, reached 30 million cubic meters in 2009 and was 37 million cubic meters in 2010. In 2011, Sulige produced 46 million cubic meters of natural gas per day, i.e. 13.7 billion cubic meters throughout the year.
2009
2010
2011
(mmt)
2009
2010
2011
(bcm)
Oil and gas gathering station of Shixi Oilfield in Xinjiang
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2011 Annual Report
Daqing Hits 40Mt/a Target for Nine Consecutive Years

Daqing Oilfield - Chinas largest - has been developed for 52 years since its discovery in 1959. Its exploration and development proved the terrestrial facies theory on the origin of petroleum as suggested by Chinese scientists, and have given birth to a suite of effective technologies for the development of large-scale terrestrial multi-strata sandstone oilfields. After its crude production reached 50 million tons in 1976, production-stabilizing and water-cut-control measures were taken to suppress the rise of its natural decline rate and water-cut, and polymer flooding was introduced in addition to waterflood. As such, Daqing maintained a 50Mt/a production for 27 consecutive years. But after 2003, Daqing suffered production decline due to the ultra-high water-cut and recovery percentage of its major fields. To address this, new technologies and new development modes were adopted and tested. After years of field tests and intensive technical research, Daqing has developed suitable new technologies to stabilize production, which includes waterflooding for controlled decline rate, polymer flooding for increased development efficiency, and ASP flooding for improved base of steady production. These helped Daqing maintain 40Mt/a production for nine consecutive years by 2011, accounting for more than 30% of the total oil that CNPC domestically produced in the same period. In 2011, Daqing stimulated its production by promoting fine reservoir description, fine and efficient waterflooding, precise measures for potential release, and fine production management. Building upon fine reservoir description, the oilfield adjusted injection-production pattern, subdivided injection interval and shortened test periods, resulting in much slowed down production decline and water-cut increase. In addition, the injection distribution and artificial lifting techniques were further improved, and strongbase and weak-base ASP flooding increased the recovery factor by more than 20% in industrial tests, supporting the oilfield to maintain stable production even longer.
Changqing Yielded 40 Mtoe in 2011

In 2011, Changqing Oilfield produced 40.6 million tons of oil equivalent. In fact, the field has seen an annual production increase of more than 5 Mtoe for four consecutive years, the fastest among all oil and gas fields in China. Changqings exploration and development activities are mainly in Ordos Basin. Covering Shaanxi, Gansu, Shanxi, Ningxia and Inner Mongolia, the basin features tight and highly dispersed reservoirs that are hard to tap in a complex geological structure. Facing these challenges, Changqing has built upon low-permeability lithologic reservoirs and emphasized on new carbonate exploration areas. Multi-strata series composite reservoir-forming theory and large tight lithologic gas reservoir theory were put forward and the carbonate reservoir-forming theory was improved, boosting the hydrocarbon reserves in Jiyuan and Sulige. The fields newly proven oil and gas in place have been kept more than 200 million tons and 200 billion cubic meters each year since 2008. Because most of the new reserves are contained in lowpermeability, ultra-low-permeability, and super-low-permeability reservoirs, Changqing has established a management mode over the development of ultra-low-permeability reservoirs. Aiming at increasing output per individual well, it has developed 19 unique technologies in 6 series, namely quick reservoir evaluation, optimization of effective displacement systems, staged fracturing stimulation of horizontal wells, surface process optimization and streamlining, low-cost drilling and production package, and horizontal well development. These have enabled Changqing to effectively tap ultra-low-permeability reservoirs. In 2011, 5.5 million tons of oil was produced from ultra-low-permeability reservoirs, accounting for about 1/4 of the total oil output of the oilfield. Following a mode of integrated exploration and development, Sulige Gas Field has been able to build production capacity in a planned and standard-compliant manner. Since its massive and efficient development in 2006, the gas field had built a 17bcm/a gas production capacity, the highest in China, by the end of 2011.
26
2011 Annual Report
Gathering and transportation station in Xifeng Oilfield in Changqing
27
2011 Annual Report
Exploration and Development of Unconventional Oil and Gas

CNPC attaches great importance to the exploration and development of CBM, shale gas and other unconventional oil and gas resources. We not only expedite the construction of CBM industrial bases, but also promote shale gas demonstration projects.
Executive Summary of Major Projects

Changbei Natural Gas Project
Changbei Block covers 1,691 square kilometers in Ordos Basin. Shell Group is our partner and the operator of the project. In 2011, the block produced 3.48 billion cubic meters of natural gas. By the end of the year, it had put 29 bilateral horizontal wells into production. Among these wells, 18 initially outputted more than 1 million cubic meters per day, 12 had outputted more than 500 million cubic meters for each, and well CB12-1 had produced more than 1.31 billion cubic meters.
CBM
In 2011, we enhanced CBM production capacity building in Qinshui Basin and the eastern edge of Ordos Basin. Throughout the year, we newly proved 78.7 billion cubic meters of CBM in place, built additional 0.35 bcm/a production capacity, and supplied 420 million cubic meters of commercial CBM. We made a major breakthrough in the exploration of low-coal-rank CBM with the discovery of the first medium-to-low-coal-rank CBM field of China in the Baode block on the eastern edge of Ordos Basin. Production test has shown that the block is characterized by early gas show, rapid production increase, thick coal seam, good permeability, and high bottom hole pressure, in addition to biogas compensation. All these suggest that it can be a major block to build CBM production capacity.
South Sulige Natural Gas Project

South Sulige Natural Gas Block covers 2,392 square kilometers in Ordos Basin. Total is our partner of the project. According to the signed PSC amendment, CNPC is the operator. In 2011, the preparation for development was in smooth progress and an appraisal well delivered high output in a test.
Zhaodong Oilfield Project

Zhaodong Block covers 78.5 square kilometers at the tidal and shallow water zone in the Bohai Bay Basin. Australia's ROC Oil (Bohai) Company is our partner and the operator of the project. In 2011, the block produced 1.05 million tons of oil, exceeding one million tons for the eighth consecutive year. It also produced 71 million cubic meters of associated natural gas. A pipeline system was employed to transport oil to the shore in place of oil barges that had been the only way for years. In addition, approved by the Chinese government, Block Zhanghai-4 and Block Chenghai-1401 were included in the project.
Shale Gas
In 2011, we accelerated the building of demonstration zones of shale gas industrialization at Weiyuan-Changning in Sichuan and Zhaotong in Yunnan. We drilled four vertical wells and four horizontal ones, and fractured five of them. Well Wei 201-H1 was completed and fractured, maintaining a daily output of 11,500-13,400 cubic meters. In 150 days of gas testing, it outputted 1.77 million cubic meters of natural gas, and became the first completed horizontal well that began to produce shale gas.
Hainan-Yuedong Oilfield Project
Joint Exploration and Development in China

As authorized by the Chinese government, CNPC opened some of its blocks in China to foreign companies to jointly explore and develop oil and gas resources. Most of the joint projects concern low-permeability reservoirs, heavy oil, tidal and shallow water zones, high-sulfur gas reservoirs, hightemperature and high-pressure gas reservoirs, and CBM. In 2011, a natural gas cooperation project of Dajing block in Junggar Basin was approved by the Ministry of Commerce. The execution of joint CBM evaluation agreement of Daning block in Ordos Basin and the FushunYongchuan joint shale gas evaluation agreement was well underway. By the end of 2011, our 36 ongoing joint exploration and development projects, including 15 conventional oil projects, 11 conventional gas projects, and 10 CBM projects, produced 4.04 million tons of crude oil and 3.75 billion cubic meters of natural gas, which totaled 7.03 million tons of oil equivalent, up 5% year-on-year.
Hainan-Yuedong Block covers 108 square kilometers at the tidal and shallow water zone in the Bohai Bay Basin. Tincy Group Energy Resources Limited is our partner and the operator of the project. The block commenced commercial production in May, 2011 and produced 56,000 tons of oil in 2011. All development wells on Island A have been drilled. Construction of Island B, C, and D, the seafloor oil pipeline, and the seashore terminal is underway.
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2011 Annual Report
Natural Gas and Pipelines

Natural gas and pipelines are our fastest-growing core business. As a practical way to environmentally friendly development, we accelerate the development of natural gas to facilitate Chinas regulation of energy consumption mix. Our gas reserve and production are burgeoning thanks to the new breakthroughs in domestic natural gas exploration and development and the enhanced building of production capacity in new blocks. The production capacity of major gas-producing regions like Changqing and Tarim keeps expanding, especially in Changqing. We have doubled our gas import with the Central Asia-China Gas Pipeline and the Second West-East Gas Pipeline put into operation. All these have positioned us well to quickly develop our gas business. In 2011, our gas production and sales kept on a fast track. We did this by fully utilizing our advantages in resource and pipeline network and strengthening the supply chain. An efficient nationwide oil and gas supply system backed by diversified resources and cross-board delivery has taken shape, better ensuring supplies to the market. By the end of 2011, we operated 60,257 kilometers of pipelines in China, including 14,807 kilometers for crude, 36,116 kilometers for natural gas, 9,334 kilometers for refined products, about 66%, 75%, and 50% of the nation's total respectively.
Beijing Oil & Gas Pipeline Control Center

Beijing Oil & Gas Pipeline Control Center dispatches, manages, remotely monitors and controls, operates, and coordinates the service and emergency response of all long-distance oil and gas pipelines of CNPC, and carry our central dispatch and operating optimization of the network of oil and gas pipelines. It has established an all-around system for service and emergency response and assistance with its 14 service and emergency response centers and 29 service and emergency response teams. The Center also leased helicopters to inspect pipelines on a regular basis or to transport rescue crews and materials in case of emergency. At present, it controls 54 long-distance pipelines of more than 40,000 kilometers in total length. In 2011, the Center further utilized the advantage of networked operation and central control of gas pipelines, and became more capable of cross-country coordination on gas production, mutual transfer and supply switchover between key nodes in the pipeline network, and control on the large pipeline network. In addition, it ensured safe operation of oil and gas pipelines by successfully responding to emergencies such as dust and ice plugging of gas pipelines, power outage and lightning-induced failures in crude pipeline stations, and drilling theft and valve failure on refined product pipelines.
Operation and Control

In 2011, we ensured safe, steady, and efficient operation of our pipeline network by taking advantage of central control and management and optimizing resource configuration on the supply chain. We transported more crude and refined products than in 2010 to cater for the capacity building of oilfields and safe production of refineries. To meet the rapid growth of refined products demand at Sichuan and Chongqing in southwestern China, we upgraded the capacity of Lanzhou-ChengduChongqing Products Pipeline from 5.8Mt/a to 7Mt/a. We maximized the transport capacity and storage-adjustment ability of the nationwide network connecting the four major gas-producing regions of Changqing, Tarim, Sichuan, and Qinghai to key consumer markets. We swiftly adjusted resource configuration and took proactive measures to ensure gas supplies to gas-fueled power plants in Yangtze Delta and Hunan and Hubei provinces when they ran in full load in the peak power consumption season of summer. By doing so, we played an important role in mitigating seasonal short-supply of electricity in China.
Crude pipeline mileage in the nation's total
75% 66%
Natural gas pipeline mileage in the nation's total
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2011 Annual Report
Underground Gas Storages

Underground gas storages are the control valves for peak shaving. The gas storages at Dagang, Jintan, and Huabei have played a vital role in improving the ability of our natural gas network to respond to seasonal peak regulation and emergency supply. In 2011, the gas storages at Dagang and Jintan were upgraded, the Jing58 gas storages at Huabei and the gas storage at Liuzhuang in Jiangsu Province were completed and put into operation, and the construction of the gas storage at Hutubi in Xinjiang for the Second West-East Gas Pipeline commenced.
Dalian-Shenyang Gas Pipeline

Dalian-Shenyang Gas Pipeline is connected to Qinhuangdao-Shenyang Gas Pipeline. Its 433km-long trunk runs across 5 cities of Dalian, Yingkou, Anshan, Liaoyang, and Shenyang and 15 counties and districts. With a 711mm diameter, the pipeline is designed to transport 8.4 billion cubic meters of gas per year. On December 18, 2011, Dalian-Shenyang Gas Pipeline became operational. It mainly transports the gas from Dalian LNG terminal to cities along its route, connecting the gas pipeline in Northeast China to that in North China.
Shandong Gas Pipeline Network

Shandong Gas Pipeline Network starts from Tai'an City and ends at Weihai City. This 1,067km-long pipeline consisting of one trunk and six branches is designed to transport 8.6 billion cubic meters of natural gas per year. Its 342km-long Tai'an-Qingdao trunk began to receive and transport gas on April 26, 2011, to provide stable gas supplies to the prefectures and cities along its route in Shandong Province.
Storage and Transportation Facilities

In 2011, we commenced the construction of more than ten oil and gas pipelines, one of which was Lanzhou-Chengdu Crude Pipeline. We completed and put into operation the trunk of Second West-East Gas Pipeline, Qinhuangdao-Shenyang Gas Pipeline, Dalian-Shenyang Gas Pipeline, and Shandong Gas Pipeline Network, as well as some matching pipeline networks.
Lanzhou-Chengdu Crude Pipeline

Lanzhou-Chengdu Crude Pipeline starts at the Lanzhou Terminal of the Western Crude Pipeline, traversing 22 counties in Gansu, Shaanxi, and Sichuan provinces before ending at Pengzhou City, Sichuan Province. As an important part of the strategic energy channel in western China, this 878km-long and 610mm-thick pipeline is designed to transport 10 million tons of crude oil per year. Its construction commenced in Longnan, Gansu on March 30, 2011, and is planned to be completed and operational in 2012.
Qinhuangdao-Shenyang Gas Pipeline

Qinhuangdao-Shenyang Gas Pipeline consists of one trunk and three branches. The 406km-long trunk has a pipe diameter of 1,016mm and a designed annual delivery capacity of 8 billion cubic meters. It is the thickest and longest gas pipeline with the highest pressure in Northeast China. The pipeline became operational on June 18, 2011. As an important channel connecting the gas pipeline in Northeast China to that in North China, it will be connected to the Second West-East Gas Pipeline and Shaan-Jing Gas Pipeline System through Yongqing-Tangshan-Qinhuangdao Pipeline, making gas from Central Asia and Changqing available to Northeast China.
Beijing Oil & Gas Pipeline Control Center
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2011 Annual Report
Horgos Dushanzi Urumqi Turpan Hami
Lunnan
Lunnan-Turpan Branch Trunk
Zhongwei-Jingbian Branch Trunk Jiuquan Jingbian Luoyang Xian Shiyan Zaoyang-Shiyan Branch Trunk Huangpi Nanchang Xiangtan Zhangshu-Xiangtan Branch Trunk Zhangshu Nanchang-Shanghai Branch Trunk Taian Pingdingshan-Taian Branch Trunk
Zhongwei
Xuedian Pingdingshan Zaoyang
Shanghai
Nanning
Guangzhou Shenzhen Guangzhou-Shenzhen Branch Trunk
Trunk Branch Trunk

Guangzhou-Nanning Branch Trunk
Hong Kong
Trunk of Second West-East Gas Pipeline Became Operational

On June 30, 2011, the natural gas coming from the Right Bank of AmuDarya River in Turkmenistan arrived at Guangzhou City through the Second West-East Gas Pipeline. This marks the introduction of Central Asian gas to Chinas energy-hungry Yangtze Delta and Pearl River Delta. The 8,704km-long Second West-East Gas Pipeline is the first in China to import overseas gas resources. Consisting of one trunk and eight branches, it is connected to the Central Asia-China Gas Pipeline at Horgos in Xinjiang Uygur Autonomous Region, and reaches Shanghai in the east and Guangzhou and Hong Kong in the south. The 4,978kmlong, and 1,219mm-thick trunk is designed to transport 30 billion cubic meters of gas per year and keep steady supply for more than 30 years. CNPCs pipeline constructors completed the trunk that runs for nearly 5,000 kilometers across 15 provinces, municipalities, and autonomous regions from the west to the east in less than four years. Construction of the Pipeline began at its western section (Horgos-Zhongwei Trunk) in February 2008, which became operational in December 2009. Construction of the eastern section, the Zhongwei-Guangzhou Trunk, commenced in February 2009. By the time the section was completed on June 30, 2011, the whole trunk had been completed and put into operation and connected to important gas transport trunks and pipeline networks in China such as the West-East Gas Pipeline, ShaanJing Gas Pipelines, and Zhongxian-Wuhan Gas Pipeline. The Second West-East Gas Pipeline project has driven dozens of industries such as machinery, electronics, metallurgy, and gas utilization as well as the local equipment manufacturing industry of China. Largediameter X80 steel pipes saw their first application in China in the trunk installation of the Pipeline. By the end of 2011, more than 2.6 million tons of the pipes had been used. With the whole pipeline being operational in 2013, residents in the 15 provinces, municipalities, and autonomous regions along its route will benefit from the clean energy it delivers. The 30 billion cubic meters of gas transported by the pipeline each year are expected to increase the percentage of gas in Chinas primary energy mix by 1-2 percentages. This will be significant for reducing carbon emissions, improving atmospheric environment, helping optimize Chinas primary energy mix, and promoting socioeconomic growth.
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2011 Annual Report
Natural Gas Utilization and Marketing

Our natural gas marketing saw smooth progress. With the operation of the eastern trunk of the Second West-East Gas Pipeline, CNPCs natural gas supply extends to Jiangxi and Guangdong provinces, covering 28 provinces, municipalities, and autonomous regions of China. The downstream gas utilization such as urban gas and compressed natural gas (CNG) for automobiles is so improved that our gas industry chain has been expanded to market terminals with additional added value. In 2011, our gas sales maintained rapid growth to 82.7 billion cubic meters, up 23.7% year-on-year. In 2011, we explored the cooperation mode with gas networks on provincial and municipal levels, and invested jointly with local enterprises in constructing and operating provincial and municipal branch pipeline networks to receive gas supplies from trunk pipeline networks. Construction of phase II pipeline network in Jiangxi, and pipeline network in Guangxi was well underway. Also, we made new progress in developing and building our CNG sale terminal network with the startup of 7 primary filling stations and 42 secondary filling stations in 2011. Because the sales volume of the secondary stations became more coordinated with the production capacity of their primary stations, our CNG projects were made more profitable. In addition, we participated in three gas-fueled power generation projects, one of which was CHD Yizheng Thermal Power Co., Ltd.
Jiangsu LNG Project

The Jiangsu LNG Project, consisting of a dedicated dock, receiving terminals, and a sea-crossing pipeline, is the first LNG project that CNPC has independently designed, built, and operated. It is built in three phases, including Phase-I with a receiving capacity of 3.5Mt/a and a deliverability of 4.8bcm/a, and Phase-II with the receiving capacity increased to 6.5Mt/a and a deliverability of 8.7bcm/a. In the long term, it will have a receiving capacity of 10Mt/a and deliver 13.5 billion cubic meters of gas per year. In November, 2011, the phase-I project started commercial operation. The dedicated dock has a maximum cargo unloading capacity of 267,000 cubic meters of natural gas. The project mainly receives, stores, and gasifies overseas LNG. It is connected to the Ji-Ning Branch Pipeline and the West-East Gas Pipeline through export pipelines. It also fills LNG tank trucks for export purpose. Natural gas is supplied to Yangtze Delta and surrounding regions.
Dalian LNG Project

The Dalian LNG Project includes a dedicated dock, receiving terminals, and gas pipeline works. It is built in two phases, including Phase-I with a receiving capacity of 3Mt/a and a deliverability of 4.2bcm/a, and Phase-II with the receiving capacity increased to 6Mt/a and a deliverability of 8.4bcm/a. In December, 2011, the Phase-I project was put into commercial operation and began to supply gas to Northeast China and part of North China through the Dalian-Shenyang Gas Pipeline.
Liquefied Natural Gas (LNG)

Faced with the rapid growth of domestic market demand, we seek for channels to import LNG resources and realize independent design, construction, and operation of LNG projects. In 2011, we put into operation Dalian and Jiangsu LNG terminals.
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2011 Annual Report
Dalian LNG Terminal
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2011 Annual Report
Refining and Chemicals

Refining and chemicals is an important sector which builds up CNPCs composite competitiveness. In 2011, we streamlined production management based on market demands, and kept our refining units running under high load. 22 major technical and economic indicators were better than those in 2010, with light oil yield, ethylene yield, and ethylene and propylene yield leading in China. In 2011, we domestically processed 144.84 million tons of crude and produced 93 million tons of refined products, up 7.1% and 7.7% year-onyear respectively. Confronted with market changes, we optimized product portfolio and updated refined product quality, ensuring stable market supply. In 2011, facing with a complex chemical market, we optimized production plans, strengthened marketing, appropriately allocated resources for newly started units, and secured product transport. Total production and sales volume of chemical products were increased, with fertilizer sales rose by more than 20% year-on-year. units for 13 major projects were newly completed. Three quality upgrading auxiliary projects at Changqing Petrochemical, Urumqi Petrochemical and Jinzhou Petrochemical were put into operation. Fushun Petrochemicals 10Mt/a refining and 1Mt/a ethylene project was completely and delivered. Hohhot Petrochemical's 5Mt/a refining capacity expansion and reconstruction project was mechanically completed. Major projects such as Sichuan Petrochemicals large-scale integrated refining and chemical project and Daqing Petrochemicals ethylene project proceeded smoothly. As a support to the rapid productivity rise of Changqing Oilfield, Ningxia Petrochemicals 5Mt/a refining project and a 1-million-cubic-meter commercial crude storage at Lanzhou became operational as scheduled.
Construction of Large Refining Bases

Major projects ran smoothly in 2011. These include Guangxi Petrochemicals 10Mt/a refining project, Dushanzi Petrochemicals 10Mt/a refining and 1Mt/a ethylene project, and the Tarim Fertilizer project. At Dushanzi Petrochemical, the crude runs and the production of ethylene, high-grade gasoline, aviation kerosene, and rubber products increased thanks to its integrated refining and chemical production and fine management measures. In 2011, we made new progress in the restructuring of our refining business and the deployment of refining facilities. As the reconstruction and upgrading of the refining unit at Liaoyang Petrochemical was put into operation, CNPC had eight 10Mt/a refining bases in place. 36 refining
Refining and chemicals operating data (Domestic)

2009 Crude runs (mmt) Utilization rate of refining units (%) Refine products output (mmt) Gasoline Kerosene Diesel 125.12 90.1 80.45 25.82 3.64 50.99 1.40 2.99 4.76 0.14 0.48 3.97 2.71 2010 135.29 91.3 86.33 26.76 3.66 55.91 1.61 3.62 5.65 0.12 0.62 3.76 2.61 2011 144.84 91.3 93.00 28.89 3.68 60.43 1.57 3.47 5.78 0.09 0.61 4.48 3.03
Crude runs (Domestic)

144.84
Refined products output (Domestic)

93.00
Lubricating oil output (mmt) Ethylene output (mmt) Synthetic resin output (mmt) Synthetic fiber output (mmt) Synthetic rubber output (mmt) Urea output (mmt)
135.29 125.12 80.45
86.33
2009
2010
2011
(mmt)
2009
2010
2011
(mmt)
Synthetic ammonia output (mmt)
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2011 Annual Report
Ningxia Petrochemicals 5Mt/a Refining Project

Ningxia Petrochemicals 5Mt/a refining project is an important part of the industrial belt along the Western Pipeline. It includes the reconstruction and upgrading of a 5Mt/a atmospheric distillation unit, a 2.6Mt/a catalytic cracking unit, a 600kt/a continuous reforming unit, a 100kt/a PP unit, and eight other units, as well as ancillary facilities. Construction of the project commenced in December, 2009 and trial production began in December, 2011.
Urumqi Petrochemicals Refining Upgrading and Reconstruction Project

Urumqi Petrochemicals refining upgrading and reconstruction project includes the construction of a 6Mt/a atmospheric-vacuum distillation unit, a 1.5Mt/a gas oil hydrotreating unit, a 1.2Mt/a delayed coking unit, a 2Mt/a diesel hydrofining unit, and a 40kt/a sulfur recovery unit, as well as the reconstruction of a 400kt/a continuous reforming unit. The entire project is expected to be completed in 2013. In 2011, the 2Mt/a diesel hydrofining unit and the 1.2Mt/a delayed coking unit were completed and put into production. Both units have produced qualified products.
Successful Trial Flight of Aviation Biofuel

To address the changing global climate and minimize the greenhouse gas emissions of the world aviation industry, China National Energy Administration (CNEA) spearheaded the founding of the Aviation Fuel Steering Committee and Clean Transport Workgroup to promote the sustainable development of Chinas aviation biofuel industry. With CNEAs sponsorship, CNPC, Air China, Boeing, and Honeywell's UOP signed MOU of cooperation on verification trial flight of sustainable aviation biofuel in China on May 26, 2010. CNPC takes charge of supplying the aviation biofuel needed by the test flight. Research has shown that aviation biofuel emits 50%-90% less greenhouse gas during its life cycle than traditional aviation kerosene. After one year of research and development, CNPC has grasped the key processing technologies for aviation biofuel that is refined from the seed of non-crop Jatropha curcas, and handed over 15 tons of such biofuel needed by the test flight. On October 28, 2011, the first test flight of a passenger plane with a fuel mixture of the biofuel and traditional aviation kerosene succeeded.
Jinzhou Petrochemicals Oil Product Upgrading Project

Jinzhou Petrochemicals oil product upgrading project includes a 1Mt/a FCC hydrotreating and desulfurization unit, a feedstock tank yard, and ancillary facilities. It was put into operation in the same year as the construction commenced. On November 5, 2011, the 1Mt/a FCC hydrotreating unit was successfully put into production at the first try, and outputted quality products at both 50ppm and 10ppm operating conditions.
Upgrading of Refined Products and Development of New Products

In 2011, all gasoline and diesel produced by CNPC for vehicle use reached national III standard, and some of them reached national IV standard. Throughout the year, 88.2% of CNPC produced gasoline was of high-grade, up by 13.4% year-on-year. The quality upgrading projects at Kelamayi Petrochemical and Jinzhou Petrochemical became operational and Jinzhou Petrochemical became the first producer of national-V-compliant gasoline in China. Lanzhou Petrochemicals LDO-75 heavy-oil catalytic-cracking catalyst and LDR-100AL catalytic-cracking catalyst were launched to overseas markets. In 2011, we developed 75 new chemical products, whose output amounted to 1.4 million tons. In particular, Dushanzi Petrochemicals PE80 pipe materials, Daqing Petrochemicals materials for chlorinated polyethylene, BOPP materials from Guangxi Petrochemical and Dagang Petrochemical, and environmentally friendly SBR1778E from Lanzhou Petrochemical and Dushanzi Petrochemical have been recognized by users.
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2011 Annual Report
Marketing and Sales

CNPC considers marketing and sales as an important window to serve end consumers and improve its brand value. We continued to strengthen our domestic distribution network and enhance services to ensure stable supply of refined products. In 2011, we achieved much increased sales volume of refined products by adapting to the trend of domestic market and adjusting our sales at the right time spot. Sales of refined products exceeded 100 million tons, up 12.2% year-on-year. Retail sales exceeded 85 million tons, 19% more than the previous year. Daily sales per individual station rose by 7.7% year-onyear. Gasoline sales climbed up considerably. The portion of terminal sales was kept at about 90%.
Marketing Network
We accelerated the development of our marketing network by leveraging integrated business advantages. In 2011, we built or put into operation more service stations, and increased the depot capacity to more than 16 million cubic meters. By the end of 2011, we operated more than 19,000 service stations throughout China. We had a more improved customer service system. Following successful promotion in 2010, we issued more than 13 million Kunlun fuel cards in 2011. In addition, our 95504 service hotline became available throughout China. We also built an integrated one-stop service platform that provides consultation services, information enquiry, card loss register, complaint, and suggestion to Kunlun card holders.
Lube Oil
In 2011, we sold 1.86 million tons of lube oil and achieved sales growth of 3% for packaged lube and 5% for top grade lube over 2010. Our ship lube oil witnessed steady growth in terms of sales and market reach. In fact, we have established a supply network of ship lube oil that radiates from Singapore and Korea to Asia. By cooperating with Russias LukOil, we supplied such oil to domestic ocean-going vessels at Istanbul, Saudi Arabia, India, and Panama. Moreover, we developed lube oil satisfying marine emission requirements for two-stroke engines and crankcases. The heavyduty diesel engine oil with an ultra-long cycle for China National Heavy Duty Truck Group (SINOTRUCK) has passed the 80,000-kilometer road test and won user acceptance. In 2011, our rapid oil change service witnessed fast development. We have established 15 outlets in Beijing, Daqing, Lanzhou, Dalian, and Chongqing. All these outlets provide emergency assistance in a short range of 3-5 kilometers. In 2011, the replacement service achieved 80%, 110%, and 46% growth in the sales revenue, filling volume of top grade oil, and serviced vehicles year-onyear, respectively, and became a new section of business growth.
Non-oil Services
Non-oil services maintained fast growth in terms of both size and profitability, with the revenue increased by 37% year-on-year. We have more than 10,000 uSmile convenience stores in operation. The customer recognition and satisfaction of uSmile brand saw steady growth.
Miscellaneous Refined Products

In 2011, sales of miscellaneous refined products including fuel oil and asphalt grew more than 16% over the previous year. Being widely used to build expressway and airport runway, Kunlun asphalt recorded an annual average increase of 20% over the past three years in sales volume. Its market share was enlarged by 5.7% over 2010 and maintained the top seller position in China.
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2011 Annual Report
Kunlun Lubricant Cup Formula SAE of China

The 2nd Formula SAE of China (FSAE) took place in Shanghai from October 17 to 21, 2011. As the main sponsor of the event, CNPC supports those college students who are keen on automobile design and manufacturing and those who race on the circuit. On the car design and test stages, we provided 21 racing teams with four types of special lubricants, namely, Kunlun Tianxie lube, Tianyuan brake fluid, Kunlun HP high-performance grease, and Kunlun LSD limited slip differential gear oil. Even on the circuit, we supplied the teams with different types of lubricant products to ensure smooth progress of the event. FSAE is an automobile design and manufacturing competition organized by the Society of Automotive Engineers of China. Teams of college students majoring in automobile engineering or related disciplines are eligible to participate in the event. The 2011 event attracted 33 university teams at home and abroad and the teams of Beijing Institute of Technology, University of Technology Munich, and Xiamen University of Technology won the champion, runnerup, and third place, respectively.
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2011 Annual Report
Overseas Oil and Gas Operations

In 2011, CNPC improved the operating quality and profitability of its overseas oil and gas operations by optimizing overseas assets configuration and enhancing the capability of risk prevention and control. We achieved major discoveries by promoting risk and progressive exploration. A hydrocarbon play was discovered at block H in Chads Bongor Basin. Through progressive exploration, we made new progresses in joint projects in Kazakhstan, Indonesia, and South American countries and regions. In oil and gas production, we further exploited mature oilfields and drilled more new wells. Proven techniques such as waterflood and horizontal drilling were deployed. In fact, horizontal wells accounted for 27.7% of the total development wells in the same period. As a result, our overseas production was boosted to 89.38 million tons of crude oil and 17.06 billion cubic meters of natural gas, up 17.9% and 24.5% year-on-year respectively. CNPC operated more than 10,000 kilometers of overseas oil/gas pipelines, including 6,672 kilometers of oil pipelines and 3,822 kilometers of gas pipelines, which transported 39.20 million tons of oil and 17.76 billion cubic meters of gas in 2011. The Kazakhstan-China Oil Pipeline and RussiaChina Crude Pipeline maintained safe and steady operation. The Central Asia-China Gas Pipeline was upgraded to have a deliverability of 23bcm per year and transported 15.86bcm in 2011.
Crude production (Overseas)
89.38 69.62 75.82 13.70 41.73 34.32 36.03 5.51 8.20 10.38 12.57
We deepened our cooperation with resource countries in downstream sectors. Chads N'Djamena JV Refinery and Nigers Zinder JV Refinery were completed and became operational on schedule. Khartoum Refinery and PetroKazakhstan's Shymkent Refinery ran safely, steadily, and efficiently with optimized process and production plans. Our JV refineries in Singapore, Japan, Scotland and France maintained steady operation. Our overseas crude runs reached 34.78 million tons in 2011.
Natural gas production (Overseas)

17.06
2009
2010
CNPC's share
2011
Total (mmt)
2009
2010
CNPC's share
2011
Total (bcm)
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2011 Annual Report
FPF Power Station at Niger's Agadem Oilfield
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2011 Annual Report
Central Asia-Russia
CNPC had joint oil and gas investments in Kazakhstan, Turkmenistan, Uzbekistan, Azerbaijan and Russia. 2011 saw the smooth operation of our joint oil and gas projects in Central Asia-Russia region and closer gas cooperation with Central Asian countries. AktobeMunaiGas was reputed by our partner KazMunaiGas as a model of Kazakhstan-China oil and gas cooperation, with the recovery efficiency of its Kenkijak Subsalt Oilfield further increased and the oil production of its MMG Oilfield recording a new high. CNPC and KazMunaiGas concluded an in-principle cooperation agreement to jointly explore and develop Urikhtau Gas Field, which will be a gas source to Phase-II Kazakhstan-China Gas Pipeline. High-yield gas flow was obtained from Block B of Amu-Darya gas project in Turkmenistan during exploration. Production capacity building works in the block commenced. The Central Asia-China Gas Pipeline has maintained safe and steady operation since the startup of its Line A and Line B in October, 2010. In 2011, No.1, 4, and 6 compressor stations were completed and put into operation, upgrading the deliverability of the pipeline to 23bcm/a. The pipeline transported 15.86 billion cubic meters of gas throughout the year. In addition, CNPC signed agreements with Uzbekneftegaz and KazMunaiGas to build and operate Line C of the Central Asia-China Gas Pipeline, which will run in parallel to the operating Line A and B to transport gas from Turkmenistan, Uzbekistan, and Kazakhstan. After Line C is completed, the deliverability of the pipeline will be upgraded to 55bcm/a. In the development of the Ronier Oilfield in Chad, CNPC strictly observe the Environmental Law of Chad and the Environmental Evaluation and Study Report of Operating Blocks. Before operation was carried out on any new block, we appointed dedicated organizations to investigate the protected trees, wild animals and plants, cultural relics, and historic sites in it. In doing this, we minimized environmental impact and ensured clean production. Before a well was spudded, water, soil, and atmosphere samples were taken and analyzed. After drilling, the environment was sampled once again for comparative analysis. After one or two rain seasons, the vegetation on the well site has been restored. Joint-ventured by CNPC and Chadian Ministry of Petroleum, N'Djamena JV Refinery is the second refinery that CNPC has ever designed and built overseas. Its main products include gasoline, diesel, fuel oil, LPG, and PP. Its associated power station will supply electricity to the capital city of Chad. On July 10, 2011, its first batch of diesel product was delivered to the local market. On November 28, 2011, Phase-I of Agadem upstream and downstream integrated project was completed and became operational. It includes a 1Mt/a oilfield, the 1Mt/a Zinder Refinery, and a 462.5km-long oil pipeline connecting them to each other. The refinery produces gasoline, diesel, fuel oil, and LPG, which will be first supplied to the domestic market of Niger and then exported to surrounding countries. Just before the oil pipeline of the project was to be operational, CNPC provided one-month training on the theory and knowledge of pipeline operation to 26 Nigerien trainees in Niamey in July, 2011. These trainees will be Nigers local engineers for the operation and maintenance of the oil pipeline. With this training, we learnt more technical knowledge on how to run the pipeline and deliver crude safely to Zinder Refinery. We are confident to take the baton, said Amsagana Lawan Sanda, a trainee.
Africa
CNPC had joint oil and gas investments in Tunis, Algeria, Libya, Niger, Chad, Nigeria, Sudan, and South Sudan. In 2011, we maintained safe, steady, and controlled operation of our joint projects despite the challenges posed by the turbulence in the region. We did this by establishing and improving an early-warning mechanism for overseas risks and strengthening our emergency response capability. In 2011, our two upstream and downstream integrated projects in Chad and Niger, including the oilfields, the crude export pipelines, and refineries, were completed and put into operation. Two self-contained modern bases of petroleum production and refining were completed, one in N'Djamena, the capital city of Chad, and the other in Zinder, a middle-southern city in Niger.
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2011 Annual Report
Americas
CNPC had joint oil and gas investments in Venezuela, Ecuador, Peru, Columbia, Canada, and Costa Rica. In 2011, our American joint venture projects saw fast growth. We made significant contribution to the steady increase of oil production in the joint blocks by leveraging our technological advantage and executing our rights and obligations as a minority shareholder. We signed a framework agreement with Cupet to expand cooperation, in addition to a MOU for cooperation in engineering construction. The two sides will extensively cooperate with each other in onshore and offshore exploration and development, operating cost control and EOR for existing oilfields, as well as engineering construction in Cuba. 2011 witnessed our progress in Venezuela. CNPCs MPE3 project increased its daily output from 60,000 barrels to 105,000 barrels by intensifying field management, speeding up drilling rate, and optimizing oil well parameters. With respect to the IntercampoCaracoles project, we stabilized the production of the mature fields by improving our coordination with PDVSA and increasing the production from gas lift. Production of the Zumano Oilfield was also stabilized, thanks to comprehensive data study and optimized stimulation measures in old wells. In Peru, we elaborately organized drilling plan and stimulation measures to minimize operational risk and met the annual production target for Block 1AB/8 and Block 6/7. CNPCs Andes Project in Ecuador improved the result of new and stimulated wells by innovatively applying our unique matching technologies. Its crude production was well underway and new contract blocks showed promising prospects. On October 10, 2011, the Andes project company received the Excellence in Petroleum Technology Development award from the Ecuadorean Ministry of Non-renewable Natural Resources and the International Society of Petroleum Engineers (SPE) in reward of its horizontal well completion technology in high-water-cut mature oilfields with discrepant seepage fields in complex and subtle traps. In 2011, we played an active role in the board of directors, joint administration committees, and partnership committees of the three cooperation projects at Al-Ahdab, Rumaila, and Halfaya oilfields in Iraq. We kept close relationship with the Iraqi government, our partners, and local communities. The joint project with BP at Rumaila saw rapid increases in oil output. The joint project at Al-Ahdab Oilfield built an annual capacity of 6 million tons, making it the first new oil project to start production in Iraq over the past two decades. The joint project with Total at Halfaya Oilfield was well underway, with seismic prospecting, drilling, and surface engineering rolled out. In fact, the project was recognized by the Iraqi Ministry of Oil the one with the fastest progress and best construction quality among of the awarded projects in the second round of international bid invitation. During the capacity building of the Iraqi projects, we appointed a tutor or co-worker to each local employee to improve their operating skills. In 2011, the Al-Ahdab project offered more than 2,000 jobs to local residents. A production internship base was opened up together with Baghdad University of Technology to provide Iraqi college students with internship opportunities. In the Halfaya project, we subcontracted works to local firm as long as they could fulfill them. The camp site construction, equipment foundation works, bounding walls, roads, and other construction projects were subcontracted to BURJ, SANIDA, BA and other local companies, providing nearly 500 local jobs. In August, 2011, CNPC organized the first selection campaign of eight outstanding Iraqi employees and 44 excellent Iraqi employees.
Middle East
CNPC had joint oil and gas investments in Iraq, Iran, Oman, Syria, and Qatar. In 2011, despite the operating risk posed by increasing instability in the region, we achieved the capacity building objectives of our joint projects in Iraq and exceeded the annual production objectives of our Omani project by accelerating horizontal well waterflood in mature fields.
Al-Ahadab Oilfield in Iraq
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2011 Annual Report
Asia-Pacific
CNPC had joint oil and gas investments in Indonesia, Myanmar, Thailand, Mongolia, Singapore, Japan, and Australia. In 2011, we maintained smooth oil and gas production in our Indonesian joint projects by rechecking and exploiting mature wells. We also made remarkable progress in oil and gas cooperation in northeastern Asia. According to a MOU on expanding oil cooperation with Mongolian Ministry of Mineral Resources and Energy, we will expand our downstream operations in Mongolia. Construction of the Myanmar section of Myanmar-China Oil and Gas Pipelines commenced. We developed and issued Environmental Supervision Plan, Specifications for the Administration of Environmental Supervision, and Detailed Implementation Rules of Environmental Supervision to minimize environmental impact during pipeline construction. Full play is given to the supervisors, who oversee and inspect how the environment is protected along the pipelines during construction and, especially, monitor and control the environmentally sensitive areas on the construction site. Contractors are required to prepare special control plans for any work in an environmentally sensible area. Moreover, these plans have to be approved by the environmental supervision office of the project before they may be implemented. As such, environmental pollution and ecological damage events are avoided. Hong Kong, with a share of 25% and 40% in the two markets respectively. We supplied 20%, 13% and 37% of ship fuel in Singapore, Hong Kong, and Taiwan, respectively, and is the largest ship fuel supplier in Singapore. We put more efforts in tapping overseas resources and market of chemical products. In addition to keeping our position as the largest importer of Middle Eastern sulfur, we successfully worked with Statoil in the first ship of methanol dealing across the European and Asian markets, and carried out CDM business in London. Our export portfolio of chemical products has been extended from the traditional petroleum coke, paraffin, urea, and sulfur to MX and PTA. We made major progress in multiple gas-sourcing projects for pipelines. These included the conclusion of a gas purchasing agreement with Uzbekistan and a gas purchasing agreement and pipeline transportation agreement with Castle Peak Power Company Limited. We established close partnership with international LNG suppliers to secure resource for the startup and stable operation of our LNG projects in Dalian and Jiangsu. Our shipping business has been strongly supporting our international trade. Despite the weak oil transport market, our fleet enjoyed higher profitability thanks to optimized transport plans and reasonably arranged delivery volume and ship schedule that lowered the transport cost. We further strengthened the building of our three major overseas oil and gas operation centers in Asia, Europe, and America, in order to make us more capable of optimizing resource configuration worldwide. In 2011, the Asian center was established, much increasing our competitiveness and influence in the region. The smooth hand-over and operation of the INEOs refinery project represented a breakthrough of our European center. Synergy was created by associated logistics facilities, including the 4.2Mcm Dalian international storage that was successfully put to use and the large storages at Qinzhou, Nansha, and Yangshan running smoothly.
International Trade
In 2011, our international trade continued fast growth with expanding size and soaring gains. We engaged in trading of oil futures and oil spot, as well as blending, transportation, wholesale, and retail of refined products. Throughout the year, we posted a trade volume of 250 million tons, up 29.1% year-on-year, worth USD 192.1 billion. We strive to enhance our ability in analyzing and forecasting the market to control operational risks. We utilized various modes and approaches of trade to better control crude resources and expanded import sources. We actively explored the resources and market of refined products to extend the value chain and improve operating performance of international trade. By leveraging the resource advantages of our overseas refineries, we carried out cross-market operation from America to the Far East. We have ranked top in trade volume of fuel oil and diesel for many years on Platts trading window in Singapore and initiated trade on Platts European window. We became the largest aviation fuel supplier in Singapore and
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2011 Annual Report
LNG carrier arrives at Dalian LNG terminal
43
2011 Annual Report
Oilfield Services, Engineering & Construction, and Equipment Manufacturing

As part of our comprehensive and integrated operations, oilfield services, engineering & construction, and equipment manufacturing have provided reliable support to our oil and gas production. In 2011, we had 1,077 crews in 66 countries and regions around the world, providing technical services in geophysical prospecting, well drilling, well logging and mud logging, as well as engineering and construction services. Our petroleum equipment and materials were exported to 70 countries and regions. Our onshore geophysical prospecting continued to take the largest share in the international market. We performed the Yingdong 3D prospecting in Qaidam, the quasi-full 3D prospecting at well Ha-601 in Tarim Oilfield, Total's 3D prospecting in southern Sulige, and phase-II 4D seismic acquisition in Shu-1 block of Liaohe Oilfield. In the Yingdong project, we carried out high-density, wide-azimuth 3D seismic acquisition in the mountainous Yingxiongling region. Using a wide-azimuth 3D observation system with a high covering number, high channel density, multi-well combined excitation, seismograph array, and multiple receiving lines, we made breakthroughs in data acquisition with the discovery of a practicable technical route for hydrocarbon exploration in complex mountains. A series of composite prospecting technologies oriented about 3.5D and 4D seismic and reservoir description delivered excellent results in redeveloping the mature Liaohe and Huabei oilfields, helping improve the success ratio of development wells, identify residual oil, and increase the reserves and production.
Oilfield Services
In 2011, we saw much increased workload in our 2D seismic prospecting, drilling and downhole operations, and expanded the application special drilling techniques. Throughout the year, we completed 1,296 horizontal wells, 350 underbalanced wells, and 2,292 snubbing wells, up 49.5%, 14.8%, and 41.4% year-on-year, respectively. This strongly supported the stabilization and increase of our oil and gas output both at home and abroad. We worked closely with international oil companies, national oil companies, and industrial peers and made new progress in developing high-end overseas market.
Geophysical Prospecting
In 2011, CNPC deployed 197 seismic crew-times (93 2D and 104 3D) at home and abroad. We also had 13 VSP crews, and 41 non-seismic (gravity and magnetic survey, electric survey, and geochemical prospecting) crews in operation. We acquired 93,306 kilometers of 2D lines and 36,678 square kilometers of 3D profiles.
Geophysical prospecting operations

2009 Seismic crews in operation
2D seismic data acquired
57,688 48,171 42,495 31,897 32,959 35,618 15,383 15,671 22,059 14,619
2010 170 105 65 81,130 32,959 48,171 54,338 15,671 38,667
2011 169 98 71 93,306 35,618 57,688 36,678 14,619 22,059
175 112 63 74,392 31,897 42,495 53,525 15,383 38,142
3D seismic data acquired

38,142 38,667
Domestic Overseas 2D seismic data acquired (kilometers) Domestic Overseas 3D seismic data acquired (square kilometers)
2009
2010
Domestic
2011
Overseas (kilometers)
2009
2010
Domestic
2011
Overseas (square kilometers)
Domestic Overseas
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2011 Annual Report
In 2011, we gained entrance into the markets of Brazil, Ethiopia, Qatar, and the transition zone of the Caspian Sea, and carried out technical R&D and tests jointly with Saudi Aramco, Shell, and Petroleum Development Oman (PDO). We maintained our presence and made new breakthroughs on the high-end Middle East market by winning PDOs tremendous 3D project and three long-term exploration projects of Saudi Aramco. The S64 transition zone project in Saudi Arabia, which commenced in November, 2009, was smoothly completed. The node data acquisition, OBC data acquisition, and onshore data acquisition were integrated in complex transition zones in deep water, pushing the seafloor seismic prospecting down to more than 1,200 meters underwater. We became one of worlds top-6 deepwater prospecting service providers and maintained a fast growth momentum. In 2011, we completed 5,378 square kilometers of 3D profiles and 19,620 kilometers of 2D lines in 14 projects. Our excellent deepwater operation in Oman, Algeria, and Venezuela was highly praised by the owners. BGP-Prospector, one of the most advanced streamer vessels in the world, was launched. The ship can operate in waters as deep as 40-1,000 meters, with a towing capacity of 12 streamers. We improved the performance of our equipment products and expedited the R&D of new products. GeoEast, an integrated seismic data processing and interpretation system, has been upgraded to version 2.3.1. Built with complete pre-stack processing capacity of onshore, VSP data, and uneven ground, it supports the processing of marine, multi-wave data processing, interpretation of 2D and 3D structure, visualized 3D volume interpretation, and post-stack reservoir forecasting and inversion. The GeoMountain interpretation software subsystem was upgraded to have 30 unique features for complex mountains, some of which are the 2D fine reservoir interpretation based on seismic sequence constraints, fracture detection, and fluid identification technologies. Efficient acquisition with hightonnage vibroseises has been deployed at home and abroad. Moreover, we have researched and grasped the matching technologies for efficient acquisition with ISS and DSSS vibroseises and developed matching software for quality monitoring and control and data processing. This has improved our competitiveness in efficient vibroseis operations.
In 2011, we completed 1,296 horizontal wells, up 49.5% year-on-year and accounting for 6.3% of the total wells, including 1,018 at home and 278 abroad. Great Wall Drilling Company built up 1bcm/a gas production capacity in Sulige by drilling horizontal wells, equivalent to that by 300 vertical wells according to the original plan. Our Bohai Drilling Engineering Company drilled the horizontal well Su-76-1-20H, whose 2,856m horizontal interval registered a record among of onshore horizontal wells in China. Our Chuanqing Drilling Engineering Company finished the first horizontal shale gas well Wei-201-H1 in China, with a regional record footage of 1,688.48 meters per drilling bit. Underbalanced drilling played an important role in releasing the potential and increasing the production per individual well. In 2011, we completed 350 underbalanced wells, 14.8% more than that in 2010. Chuanqing Drilling Engineering Company applied gas drilling technology in 57 wells, at an average penetration rate of 10.85m/h, 3-8 times as fast as the drilling with conventional drilling fluid. Daqing Drilling Engineering Company applied nitrogen drilling to protect the reservoirs. This provided a new technical approach for hard-to- tap reserves.
Drilling operations
2009 Drilling rigs in operation Domestic Overseas Wells drilled Domestic Overseas Footage drilled (million meters) Domestic Overseas 1,009 814 195 12,900 11,570 1,330 24.79 22.07 2.72 2010 1,000 835 165 13,043 11,919 1,124 25.20 22.97 2.23 2011 1,009 833 176 13,706 12,509 1,197 26.98 24.39 2.59
Well Drilling
In 2011, our 1,009 drilling rigs spudded 13,751 wells, of which 13,706 were completed. Our drilling speed saw much increase thanks to the application of proven matching technologies and more detailed technical plans. The average penetration rate of wells deeper than 4,000 meters was increased by 12% year-on-year, and the construction speed of horizontal wells up by 20% year-on-year.
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2011 Annual Report
Well Logging and Mud Logging

In 2011, CNPCs 678 logging crews completed 88,727 instances of well logging and perforation, and 11,172 instances of mud logging, up 10.5% and 10.3% from 2010, respectively. 2011 saw excellent application of composite perforation, pressure-pulse boosted perforation, ultra-deep perforation for slim holes, and directional perforation for horizontal wells. Remote acoustic reflection imaging logging can adapt to physical property evaluation for complicated heterogeneous reservoirs, seeing good application in Dagang and Tarim oilfields and being used in horizontal well logging for the first time. The EILOG logging units of our independent intellectual property were widely used in Changqing, Huabei, Tuha, and Qinghai oilfields, providing an effective manner for the evaluation of complex reservoirs featuring low porosity, low permeability, low resistivity, complex lithology, floodout formation and tight gas. The logging units also provided services in Bangladesh, Mongolia, Myanmar and Canada. Our multi-pole array acoustic logging tool (MPAL) has passed the acceptance check of Russian experts as suitable to direct well logging of open holes and cased holes using multiple types of waves. The technology series of resistivity logging, acoustic wave logging and radioactive logging has been formed to compose the formation evaluation LWD system. The prototype of the FELWD was tested at the experimental well, which can satisfy the need for real-time geosteering and reservoir evaluation. We consolidated and expanded our overseas well logging, mud logging, and testing operations. We provided well logging services at oilfields in 20 countries including Sudan and Kazakhstan. Great Wall Drilling Company successfully applied EPI residual oil evaluation and rotary sidewall coring in Sudan, and entered the drilling markets of Venezuela and Columbia by way of EPC contracting.
UN Secretary General Ban Ki-moon meets with GWDC employees in Kenya
We aggressively expanded our presence and service scope in the international drilling market. In 2011, we won drilling contracts in Kyrgyz, Iraq, New Zealand, Canada, and Rwanda. We continued to provide integrated drilling services for the Amu-Darya project in Turkmenistan. Well VDW-1004 and well CMN-100 drilled by Great Wall Drilling Company in Cuba were completed at a depth of 5,652 meters and 6,588 meters, respectively. The wells recorded the largest well depth, longest horizontal interval and shortest construction period in Cuba, providing reference for the mass development in VARADERO region. We completed the drilling of 16 high-temperature geothermal wells in Kenya. CNPC Great Wall Drilling Company provides much technical support to the Olkaria geothermal power plants and is a model of South-South Cooperation," said Ban Kimoon, Secretary General of the United Nations, when he visited the plants. The China Geosteering Drilling System (CGDS) and precise PCD system independently developed by CNPC delivered excellent results in tests and applications. Developed by CNPC Drilling Research Institute, CGDS was used for 15 well-times in 2011. In its first application in Daqing Oilfield, the system precisely steered the bit to oil layers as thin as 0.4-1m. The precise PCD system jointly developed by Drilling Research Institute, Chuanqing Drilling Engineering Company and Xibu Drilling Engineering Company was tested and applied in Sichuan and Xinjiang for 20 well-times. The vertical drilling system jointly developed by Bohai Drilling Engineering Company and Xibu Drilling Engineering Company was well positioned to mass application with its accumulative application for 6 well-times in 2011.
Well logging operations

2009 Logging crews Domestic Overseas Well logging operations (well-time) Domestic Overseas 644 556 88 69,776 64,277 5,499 2010 675 556 119 80,319 74,826 5,493 2011 678 546 132 88,727 83,317 5,410
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2011 Annual Report
Downhole Operations
In 2011, CNPC had 2,117 downhole operation crews providing services including fracturing and acidizing, formation testing, well intervention, workover and sidetrack drilling. We completed 142,800 downhole operations throughout the year, 4.7% more than that in 2010; and conducted formation testing in 6,950 layers, 1.4% more than that in 2010. Snubbing was applied in a larger scope and more fields. In 2011, our 88 crews applied this operation in 2,292 wells, up 41.4% year-on-year. The scope has been extended from water injection wells to oil wells, gas wells, and polymer injection wells. We also made substantial progress in the fields of live-well completion, coiled tubing acidizing and fracturing with snubbing, and snubbing workover of gas wells. Snubbing significantly minimizes wastewater discharge and stabilizes production per individual well. By doing so, we accumulatively reduced the discharge of wastewater by 1.757 million cubic meters and cut the transportation by 115,000 tanker-times. Staged fracturing was massively applied in horizontal wells, leading to a breakthrough in reservoir stimulation. Throughout the year, it was conducted in 503 horizontal wells, with up to 16 stages being fractured in a single string run. This effectively addressed the bottleneck that restricted the output per individual well. 488 open-hole staged fracturing has been done for 57 horizontal wells, which had been developed by Chuanqing Drilling Engineering Company, maximally fracturing 13 stages. The continuous in-situ blending fracturing tool was used for 736 well-times. Two extended reach horizontal wells in Sulige were tested by Great Wall Drilling Company. With the 2,111m-long horizontal interval being fractured in 14 stages, the wells produced more than 200,000 cubic meters of natural gas per day.
Engineering and Construction

CNPC provides survey, design, construction, and supervision services for oil and gas field surface engineering, refining and chemicals, long-distance pipeline and storage tank around the world. In 2011, our engineering and construction business was significantly improved in terms of both scale and profitability. Throughout the year, we had 53 major engineering and construction projects in progress, including 16 delivered or made operational, and 15 newly commenced. We focused on building regional markets and developed technologyintensive and high value-added projects. High-end EPC and PMC projects accounted for a much higher proportion of our total projects, and took a larger market share. In 2011, CNPC affiliated China Petroleum Pipeline Bureau (CPPB) signed 24 EPC contracts. 23 EPC projects under China Petroleum Engineering & Construction Corp. (CPECC) were well underway. CNPC Petroleum Engineering Company (CPE) made progress in new project development, with 72% of its new contracts inked in an EPC form. CPECC, among ENRs Top 225 International Contractors, was recognized as the largest general contractor of petroleum engineering and construction in Asia. It set up PetroChina Petrofac Engineering Service Company with the London-based Petrofac Ltd. The JV mainly provides engineering consultancy, design, and construction services to the Middle East and other high-end markets. CNPC's China Huanqiu Contracting & Engineering Corp. (HQCEC) acquired a 19.9% stake in Australias LNGL and became LNGLs largest shareholder. This consolidated our domestic leadership in LNG sector.
Downhole operations
2009 Downhole operation crews Domestic Overseas Downhole operations (well-time) Domestic Overseas 1,892 1,739 153 131,321 128,397 2,924 2010 1,877 1,698 179 136,382 134,201 2,181 2011 2,117 1,913 204 142,753 140,283 2,470
4B Plant of Myanmar Petrochemical Enterprise
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2011 Annual Report
Pipeline and Storage Tank Construction

As the domestic leader in building and world leader in construction technologies of onshore long-distance oil and gas pipelines, we have the annual capacity to build 6,700-9,700 kilometers of pipeline with a diameter larger than 711mm. In addition, we have the technological capacity to design and construct 150,000 cubic meters of crude tank and 10,000 cubic meters of gas tank, and are capable of designing and building 26 million cubic meters of crude tanks and 16 million cubic meters of refined products tanks annually. In 2011, we put into operation the trunk and Xiangtan branch trunk of the Eastern Section of the Second West-East Gas Pipeline, the Tai'an-Qingdao pipeline as part of the Shandong Gas Pipeline Network, and DalianShenyang Gas Pipeline. Construction of Guangzhou-Shenzhen, Shanghai, and Guangzhou-Nanning branch trunks of the Eastern Section of the Second West-East Gas Pipeline, the Lanzhou-Chengdu Crude Pipeline, and Changqing-Hohhot Gas Pipeline were well underway. Some of our overseas construction projects were put into operation on schedule. These included the export pipeline of Al-Ahdab Oilfield in Iraq, the crude export pipelines of the upstream and downstream integrated projects in Niger and Chad, the compressor station of the Central Asia-China Gas Pipeline, and the upgrade of the western products pipeline as part of the No. 4 pipeline in Kenya. The Abu Dhabi Crude Pipeline began trial operation. Myitnge River spanning and Irrawaddy River crossing, the controlling works of the Myanmar-China Oil and Gas Pipelines, were completed. Construction of Line C of the Central Asia-China Gas Pipeline commenced. On November 23, 2011, CPPB and Thailands PTTEPI signed the EPCIC general contracting contract on the Myanmar-Thailand Gas Pipeline. We took advantage of the expertise and technologies in storage tank construction of HQCEC, CPECC and CNPC Northeast Refining & Chemicals Engineering Company Limited. Phase-I parts of both Jiangsu and Dalian LNG projects were completed and put into operation. Jiangsu LNG Project, which is independently designed, constructed, and operated by HQCEC, has been the first large-scale LNG terminal project ever independently built by any Chinese engineering company as a general contractor. CNPC made its presence in the Oceania engineering and construction market for the first time by concluding a memorandum regarding Gladstone Fishermans Landing LNG in Australia.
Oil and Gas Field Surface Engineering

We maintained our position as the domestic leader in building onshore oil and gas fields. We have surface engineering technology packages for conventional fields, as well as for fields featuring high water cut, low permeability, ultra heavy oil and high condensate content, high pressure, high yield, and high sulfur content. In addition, we have the capacity to build surface works to accommodate facilities with 20Mt/a oil production capacity and 10bcm/a gas production capacity. In 2011, our production capacity building projects in domestic fields were well underway. The South-8 Gas Processing Plant in Daqing and the No.5 Gas Processing Plant in Sulige were completed and put into operation. Daqing shale oil pilot base was constructed in an orderly way. Overseas, we saw smooth progress in surface engineering projects. The 6Mt/a capacity building project in Iraqs Al-Ahdab Oilfield completed ahead of schedule. The Phase-I surface engineering at Ronier Oilfield in Chad, the No. 4 Oil and Gas Processing Plant at the Hope Oilfield in Kazakhstan, and the EPC of the private station of Bagtyiarlyk Contract Block in Turkmenistan were smoothly completed.
Construction of Refining and Chemicals Facilities

In 2011, we ensured smooth progress and on-schedule operation of major projects. Ningxia Petrochemicals 5Mt/a refinery upgrade and reconstruction, Karamay Petrochemicals continuous reforming unit, and Urumqi Petrochemicals 1.2Mt/a delayed coking unit were completed and became operational. Fushun Petrochemicals ethylene project was completed and delivered. Sichuan Petrochemicals integrated refining and chemicals project and Daqing Petrochemicals ethylene project were pushed forward orderly. As the EPC contractor, CPECC achieved 99.06% first-run yield and 100% acceptance of unit constructions in Ningxia Petrochemicals refinery upgrade and reconstruction project. We also made new progress in coal chemicals with the winning of Ordos Energy Groups 500kt/a coal tar contract, in addition to the Phase-I contract of two coal olefin units of Shenhua Groups Ningxia Coal Industry Group Co., Ltd. Chads N'Djamena JV Refinery, Nigers Zinder JV Refinery, and Vietnams fertilizer project became operational. 4A and 4B plants of Myanmar Petrochemical Enterprise's No. 4 Fertilizer Plant, with HQCEC as the EPS contractor, ran safely and smoothly, and reached their designed capacity of urea production. In addition, we signed EPC contracts with Cuba on the Cienfuegos refinery expanding project and a LNG project.
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2011 Annual Report
Offshore Engineering
We have the capacity to provide integrated and comprehensive support for offshore production in 80m-deep waters. Our services include well drilling, well completion, well cementing, production test, downhole operations, design and construction of marine engineering, and vessel services. In 2011, we spudded 44 wells and delivered 41 wells, with a total footage of 105,000 meters. We also provided downhole operations for 43 well-times, formation testing in 20 layers, and acidizing and fracturing for 26 formationtimes. In well Chenghai-33 at Dagang Oilfield, our CPOE-10 rig completed drilling at a depth of 3,977 meters by optimizing drilling parameters, strictly controlling the process, and adjusting the drilling pressure, displacement, and pump pressure in real-time. The fast and safe penetration was finished with a drilling period of 36.5 days, construction period of 44.5 days, and average penetration rate of 14.71 meters per hour. Plug drilling saw success with an average footage of 10.01 meters per hour in a deep slim hole at Bohai Bay. The main part of our Tangshan production support base was put into trial operation. The matching facilities of the Qingdao offshore engineering construction base, which has the capacity to process 38,000 tons of steel per year, saw smooth progress. Installation of the Shenzhen-Hong Kong Seafloor Pipeline of the Second West-East Gas Pipeline was well underway. The pipeline laying vessel CPOE-101 was in place. CNPC has 39 large-scaled offshore equipment units, including 9 mobile drilling platforms, 1 modular drilling and workover rig, 5 mobile production test platforms, and a variety of 25 vessels. In 2011, our 23 vessels provided transportation service for 6,100 steaming days.
CPOE-5 jack up rig
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2011 Annual Report
Petroleum Equipment Manufacturing

Petroleum equipment manufacturing is an important part of CNPCs core business. With the continued reconstruction of our specialized units, the sector boasts improved industrial concentration and professional level, provided by six major equipment manufacturers, namely Baoji Oilfield Machinery Co., Ltd. (BOMCO), Baoji Petroleum Steel Pipe Co., Ltd.(BSG), Bohai Equipment Manufacturing Co., Ltd. (BHEM), CNPC Jichai Power Complex, Daqing Oilfield Equipment Manufacturing Co., Ltd., and Liaohe Petroleum Equipment Manufacturing Corporation, in addition to one international trading firm China Petroleum Technology & Development Company (CPTDC). The competitive edge of our core and flagship products has been further strengthened. Our position as the technological leader in the field of petroleum pipes was consolidated with the establishment of the State Research Center on the Engineering Technology of Oil and Natural Gas Pipe Material at BSG. Our production of petroleum steel pipes was made more reasonable. Petroleum steel pipe projects invested by BSG and BHEM commenced and will build two petroleum steel pipe production lines in Xinjiang Uyghur Autonomous Region. Our production capacity of high value-added and state-of-theart petroleum pipes was improved. A petroleum pipe production line was completed and put into operation in Baoji, Shaanxi. The line can produce 200,000 tons of ERW welding pipes per year and a complete production chain from pipe manufacturing to downstream processing will be set up. We intensified our R&D on new equipment and technologies to accommodate for business development and market needs. The highly-reliable diesel engine was ready for mass production, with its prototype running trouble-free for more than 5,000 hours after first startup in an industrial test at Tarim Oilfield. A prototype of the snubbing equipment was put into an industrial test. Progresses were obtained in the R&D of new technology of high-steel-grade HFW oil pipes, and new products of X100 high-steel-grade longitudinal submerged arc welded pipes and spiral submerged arc welded pipes, and X65/X70 steel grade welded pipes for seafloor oil and gas transportation. The CP-300 jack-up rig of our full and independent intellectual property was delivered to the customer. The rig can operate at a max. water depth of 91.4 meters and drill up to 9,000 meters. Among of the rigs independently designed by China, it is the one with the highest operating water depth and widest adaptability of operating conditions. In 2011, our petroleum equipment and materials were exported to 70 countries and regions, taking a markable market share in central Asia-Russia, the Middle East,North Africa and South America. The export of our flagship products kept growth. In addition to increasing contract value of long-distance pipeline, offshore engineering equipment, special pipe and drilling rig, we doubled the export of conventional products including oil tube, line pipe, mud pump, and wire line. The coiled tubings produced by BSG were sold to the Middle East market. A 5,000m highly mobile desert drilling rig developed by BOMCO was delivered to the user UAE's National Drilling Co. (NDC). Recognizing the product, NDC renewed the contract to purchases three more rigs of the same type. Leveraging its advantage in technologies and brand, BOMCO established Bomcobras JV with Brazilian companies BRCP and Asperbras. The JV will manufacture and assemble petroleum drilling rig packages and provide technical services in Brazil and other South American countries.
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2011 Annual Report
Assembly line for highly flexible automated high-power engine at CNPC Jichai Power Complex
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2011 Annual Report
Financial Statements
Consolidated Balance Sheet
2009
Current assets Cash and cash equivalent Tradable financial assets Net bills and accounts receivable Prepayments Other accounts receivables Inventories Other current assets Total current assets Fixed assets Available-for-sale financial assets Held-to-maturity investments Long-term equity investments Fixed assets-net value Construction in progress Oil and gas assets Intangible assets Other fixed assets (other long-term assets) Total fixed assets Total Assets Current liabilities Short-term loans Bills and accounts payable Prepayments Employee pay payable Taxes payable Other payables Other current liabilities Total current liabilities Non-current liabilities Long-term loans Estimated liabilities Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 43,069.83 48,003.47 23,883.07 146,365.52 261,321.89 800,443.56 34,393.32 65,440.66 23,752.57 217,448.21 341,034.76 1,061,845.66 29,671.92 73,384.11 25,319.25 216,024.16 344,399.44 1,327,194.41 31,931.15 219,829.48 40,545.11 26,264.18 25,117.64 70,108.08 125,326.03 539,121.67 60,943.52 286,325.64 57,032.51 23,130.42 53,071.31 82,353.68 157,953.82 720,810.90 92,165.76 327,909.64 73,298.16 23,164.33 132,842.21 92,315.83 241,099.04 982,794.97 38,508.08 125,210.98 39,155.85 470,011.78 258,150.89 551,207.55 40,954.66 83,922.14 1,607,121.93 2,221,605.01 45,553.44 160,513.86 66,070.31 555,665.29 284,671.93 636,605.70 47,721.77 158,236.11 1,955,038.41 2,629,956.26 45,588.18 138,700.62 71,785.96 619,741.11 319,252.25 699,907.95 60,451.37 185,235.83 2,140,663.27 3,027,876.24 257,975.98 564.20 63,389.14 38,412.29 18,109.40 188,526.43 47,505.64 614,483.08 235,670.40 1,431.72 88,233.81 37,657.95 43,307.85 227,676.04 40,940.08 674,917.85 278,416.84 3,064.12 101,809.68 51,975.03 55,533.84 314,589.98 81,823.48 887,212.97
million RMB yuan
2010
2011
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2011 Annual Report
Consolidated Balance Sheet (continued)

2009
Owners equity Paid-in capital Capital reserves Special reserves Surplus reserves Retained profits Converted difference in Foreign Currency Statements General risk preparation Total owners' equity attributable to parent company Minority interests Total owners' equity Total liabilities and owners' equity 320,429.89 270,562.90 23,230.89 115,838.40 552,514.46 -11,319.15 635.88 1,271,893.27 149,268.18 1,421,161.45 2,221,605.01 348,953.24 267,207.03 26,645.64 749,117.88 13,129.06 -10,517.80 1,117.06 1,395,652.11 172,458.49 1,568,110.60 2,629,956.26
million RMB yuan
2010
2011
379,863.46 261,852.85 32,442.96 841,139.89 14,241.18 -17,096.44 1,480.42 1,513,924.32 186,757.51 1,700,681.83 3,027,876.24
million RMB yuan
Consolidated Profit Statement

2009
Operating income Income from core businesses Income from other businesses Less: Operating cost Cost of core businesses Cost of other businesses Business tax and supertax Sales expenses Management expenses Financial expenses Loss on depreciation of assets Others Plus: Income from change in fair value (Loss is presented with "-") Income from investments Operating profit Plus: Non-operating income Less: Non-operating expense Total profit Less: Income tax expense Net profit Less: Loss and gain from minority Net profit attributable to owners' equity of the parent company 1,220,488.13 1,219,788.48 699.65 778,764.31 778,563.37 200.94 139,160.76 53,848.23 90,724.85 4,702.95 2,440.19 22,791.93 101.15 7,441.11 135,597.17 7,566.70 14,743.57 128,420.30 41,196.09 87,224.21 17,652.96 69,571.26
2010
1,720,885.19 1,716,365.86 4,519.33 1,154,873.26 1,151,017.90 3,855.36 188,782.79 63,531.85 101,427.99 8,406.80 7,248.65 27,140.64 -44.98 12,844.91 182,273.14 7,594.28 17,210.44 172,656.98 48,473.02 124,183.96 26,931.64 97,252.32
2011
2,381,278.23 2,376,592.51 4,685.72 1,716,446.20 1,712,817.30 3,628.90 268,676.76 61,139.91 120,923.24 14,251.20 13,352.40 26,460.65 -67.21 21,735.59 181,696.25 14,434.14 14,406.35 181,724.04 51,196.20 130,527.84 25,037.65 105,490.19
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2011 Annual Report
Notes to the Financial Statements

A. Description of Principal Accounting Policies and Accounting Estimates
1. Accounting standard and accounting system
Since January 1, 2007, CNPC (hereinafter referred to as the Company) started to follow the Accounting Standard for Business Enterprises issued by the Ministry of Finance in 2006. date; the owners equity other than undistributed profit is converted at spot exchange rate when occurred. Foreign incomes and expenses presented in the Income Statement are converted at the mean value of the reference rates for RMB published by PBC on a daily basis over the period of time covered by the income statement. The exchange difference of Foreign Currency Balance Sheet arising from the conversions mentioned above is presented separately in Converted Difference in Foreign Currency Statement under owners equity. The exchange difference arising from monetary foreign currency items materially invested in foreign business due to the change in exchange rate is also presented separately in owners equity when preparing consolidated financial statements. When disposing foreign business, the related exchange difference is carried, in proportion, to the gains/ losses of the period the business is disposed. The opening balances of cash and cash equivalents in the Foreign Currency Cash Flow Statement are converted at statements initial exchange rate; and the closing balances are converted at the spot exchange rate on the balance sheet date. And other items are converted at the mean value of the reference rates for RMB published by PBC on a daily basis over the period of time covered by the cash flow statement. The converted difference of cash flow statement arising from the conversions mentioned above is presented separately in Effect of the Change of Exchange Rate on Cash.
2. Fiscal year
The fiscal year starts on January 1 and ends on December 31 each calendar year.
3. Standard accounting currency

The Company adopts RMB yuan as currency used in bookkeeping.
4. Accounting basis and valuation

Accounting is based on the accrual system. Unless otherwise specified, all assets are measured at historical cost.
5. Foreign currency accounting and conversion

(1) Foreign currency transaction Our foreign currency transactions are converted into RMB yuan at the spot exchange rate on the days the transactions occurred; the monetary foreign currency assets and liabilities on the balance sheet date are converted into RMB yuan at the spot exchange rate on the balance sheet date. The exchange gains and losses arising from these translations that occurred in construction preparation, production and operation are taken into financial expenses; those related to the acquisition and construction of fixed asset, oil and gas asset and other assets in line with the capitalization condition are handled according to relevant provisions about borrowing costs; and those occurred in the period of liquidation are taken into liquidation gain or loss. A non-monetary foreign currency asset measured at historical cost is converted into RMB yuan at the spot exchange rate on the trading day, with its amount in RMB yuan unchanged. A non-monetary foreign currency asset measured at fair value is converted into RMB yuan at the spot exchange rate for the date when the faire value was determined, with the difference thus caused taken into the current profits and losses as a change in fair value. (2) Conversion of financial statement in foreign currency All asset and liability items presented in Foreign Currency Balance Sheet are converted into RMB yuan at spot exchange rate on the balance sheet
6. Recognition of cash and cash equivalents

The cash presented in the Cash Flow Statement comprises cash in hand and the deposits available for payment from time to time. Cash equivalents presented in the Cash Flow Statement are short-term (mature within three months), highly liquid investments that are readily convertible into cash and almost have no risk of change in value.
7. Financial assets
(1) Financial assets are classified upon initial recognition into four categories: financial assets at fair values through profit or loss, held-to-maturity investments, loans, receivables, and available-for-sale financial assets. (2) Recognition and measurement of financial assets Financial assets are initially recognized at fair value. For financial assets at fair value through profit or loss, the costs of acquisition are directly stated in profit and loss accounts. Transaction costs of other financial assets are initially recognized at fair value. Financial assets at fair value through profit or loss and available-for-sale financial assets are subsequently measured at fair value; the investments in equity instruments that are not quoted in active market and its fair value can not be measured reliably are measured at costs; loans, receivables and
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2011 Annual Report
held-to-maturity investments are measured at amortized cost using the effective interest method. Changes in fair value of financial assets at fair value through profit or loss are recorded in profit/loss on changes in fair value; interests or cash dividends from the assets held are recognized as income from investment; when disposed, the difference between its fair value and initially recognized amount is recognized as gain/loss on investment, and its gain/ loss on changes in fair value are adjusted accordingly. The held-to-maturity investments during the period of holding shall be determined using the effective interest method and shall be recognized as income from investment. The effective interest rate shall be determined upon obtaining such investment and remain unchanged in the following period. When disposed, the difference between the price of obtaining such investment and its book value shall be determined as income from investment. When recovering the loans and receivables or disposing of the loans, the difference between the price of obtaining such investment and loan book value shall be determined as the income statement. Changes in fair value of available-for-sale financial assets are recorded in owner's equity; interests are recorded in gains on investment using the effective interest method; cash dividends of available-for-sale investment in equity instruments are recorded in gains on investment when invested enterprises announce to distribute dividends; when disposed, the difference between acquisition cost and the carrying value is recorded in gains from investment; meanwhile, the accumulative amount of the changes in fair value originally recorded in owners equity and corresponding to the disposition is carried into gains from investment. (3) Impairment of financial assets An assessment of carrying value of financial assets, except for financial assets at fair value through profit or loss, is made at each term end to determine whether there is objective evidence of impairment. If there is an objective evidence of impairment of a financial asset, a provision for impairment is recognized. For an impairment of financial assets held at amortized cost, a provision for impairment is made at the difference between the estimated discounted future cash flows from the asset and the book value thereof. If there is any objective evidence proving that the value of the said financial asset has been restored, and it is objectively related to the events occurring after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into profits and losses of the current period. Where there is a substantial or non-temporary decrease in fair value of available-forsale financial assets, the accumulated losses on decrease of fair value that are directly recorded in owners equity before are recorded in losses on
impairment. For available-for-sale investment in debt instruments with recognized loss on impairment, if its fair value is increased in a subsequent period and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized loss on impairment is reversed and recognized in the income statement. For available-for-sale investment in equity instruments with recognized loss on impairment, if its fair value is increased in a subsequent period and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized loss on impairment is reversed and recognized directly in the shareholders equity.
8. Inventories
(1) Categories of inventory: raw materials, work in progress and semifinished goods, finished goods, packing materials, low-value consumption goods, goods sold, materials for consigned processing, engineering construction (outstanding payment) etc. (2) Inventories are carried at the actual cost when acquired, using perpetual inventory method; actual cost of delivered or sold inventories are carried at weighted average. (3) Low-value consumption goods and packing materials are amortized using one-off amortization method when they are put into use. (4) Year-end inventories are carried at the lower of cost and net realizable value. Based on wall-to-wall inventory at the end of the period, provision for inventory write-down is retained at the difference between cost and net realizable value of inventory on the individual item basis in the following circumstances, where the net realizable value is lower than the cost. For inventory of large quantity and low unit price, provision for inventory writedown may be recognized by category. The net realizable value is expected selling price less estimated complete cost, selling cost and related tax. a. The market price of inventory continues to fall with no hope of recovery in the foreseeable future; b. The product using the raw material is manufactured at a cost higher than the selling price thereof; c. The existing raw material fails to meet the needs of new products as a result of product upgrading and the market price of such raw material is lower than its carrying cost; d. The goods or services are obsolete or there is a preference-driven change in market needs, resulting in a gradual decline in the market price thereof; e. Other circumstances demonstrating a substantial impairment of inventory.
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2011 Annual Report
9. Long-term equity investment

(1) Initial measurement of long-term equity investment The assets paid, liabilities occurred or assumed and the fair value of the equity securities issued on the purchase day for acquiring the control of the purchased business are recognized as cost on combination. And the cost on combination is recognized on the purchase day as initial cost of investment in the long-term equity investment. Except for the long-term equity investment obtained from combination of business mentioned above, if a long-term equity investment is obtained through payment of cash, payment of non-monetary assets or issue of equity securities, its fair value is recognized as initial cost of long-term equity investment; if a long-term equity investment is obtained from debt reorganization, the fair value of the shares converted from financial claim is recognized as the initial cost of investment to the debtor; if a long-term equity investment is invested directly, the value agreed in investment contract is recognized as initial cost of the investment, in the event that the value agreed is unfair, the fair value of the equity invested is recognized as initial cost of investment. (2) Subsequent measurement of long-term equity investment Investment in subsidiary is the equity investment in a business practically controlled by the Company. The investment in subsidiary is recognized using cost method, and is adjusted using equity method for the purpose of consolidated financial statements. Investment in joint venture is the equity investment in a mutual control on a contracted commercial activity in which the sharing party agrees to share the control on the significant financial, production and operating decisions with the Company. The investment in joint venture is recognized using equity method. Investment in subsidiary is the equity investment in a business on which the Company does significant influence. The investment in associate is recognized using equity method. Long-term equity investment that is not quoted in active market and with undeterminable fair value and insignificant influence are recognized using cost method. For the long-term equity investment quoted in active market and with determinable fair value, if it is not quite influential, its fair value is reported in available-for-sale financial assets, and the change in fair value is taken into owners equity. (3) Provision for depreciation of long-term equity investment At the end of the year, the long-term equity investment is reviewed and the provision for the depreciation of the long-term equity investment
is retained against the difference between the recoverable amount and the carrying value. Recoverable amount of marketable long-term equity investment is the market price of the investment less disposal expenses; if a long-term equity investment is not marketable, but its fair value can be measured reliably, the recoverable amount of the investment is determined against the lower of its fair value less disposal expenses and the expected current value of cash flows from holding and exposal of the investment in the future. If a long-term equity investment is not marketable and its fair value can not be measured reliably, its recoverable amount is determined against the discount of its future cash flow at the market earnings ratio for the similar financial assets. For marketable long-term equity investment, depreciation is likely in the following circumstances: a. The market price has been lower than the carrying value in the past two years; b. The investment has been suspended of trading for more than one year; c. The invested business suffered serious loss in the year; d. The invested business has been running at a deficit in the past two years; e. The invested business is in liquidation, reorganization or business discontinuance. For non-marketable long-term equity investment, depreciation is likely in the following circumstances: a. There is a change in the political or legal environment of the invested business, such as an enactment of or amendment to the tax and trade regulations, that may result in huge losses of the invested business; b. The goods or services of the invested business are obsolete or there is a change in market needs, resulting in a serious deterioration in the financial conditions of the invested business; c. The invested business has lost its competitive edge due to a major technological change etc. in the sector, resulting in a serious deterioration in the financial conditions of the invested business such as clean-up or liquidation; d. Other circumstances demonstrating a substantial failure of the invested business to generate economic benefits for the company.
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2011 Annual Report
10. Government subsidies

(1) Types of government subsidies Government subsidies comprise mainly of treasury funding, interest subsidies, tax rebates and free allocation of non-monetary assets etc. (2) Acknowledgment of government subsidies The company has acknowledged government subsidies that it is eligible for and granted. Asset-related governmental subsidies are recognized as asset and deferred income when received, and contributed averagely to gains/losses of the period against the useful life of such asset. For a disposal upon or before end of the useful life of such asset, the un-contributed deferred income is carried into gains/losses of the period. Income-related governmental subsidy used to recover related expenses or losses in the subsequent period is recognized upon receiving as deferred income, and is taken into the income statement of the period in which the related expenses is recognized; those used to recover related expenses and losses occurred in this period are directly recognized upon receiving as the gains/ losses of the current period.
4. Supertax
Urban tax is calculated and paid at 1% of turnover tax. Maintenance tax is calculated and paid at 5% of turnover tax. Construction tax is calculated and paid at 7% of turnover tax. Educational surtax is calculated and paid at 3% of turnover tax.
5. Excise tax
Tax payable is calculated at the rate of 1.0 yuan per liter for lead-free gasoline, 0.8 yuan per liter for diesel, 1.0 yuan per liter for naphtha, solvent, and lubricant, and 0.8 yuan per liter for fuel oil.
6. Personal income tax

The employees are responsible for their own income tax, which is withheld and remitted by the Company.
7. Royalties
A value-based resource tax is imposed on crude oil and natural gas at a rate of 5%. According to the Circular on Some Issues in the Reform of Resource Tax on Crude Oil and Natural Gas (CS [2011] No.114), crude oil and natural gas used for heating in on-site heavy oil transmission are exempt from the resource tax; heavy oil, high pour point oil and acid gas enjoy 40% tax reduction; EOR operations enjoy 30% tax reduction; low-abundance fields enjoy 20% tax reduction on a temporary basis; and deepwater fields enjoy 30% tax reduction.
11. Income tax

Income tax expenses are recognized using balance sheet debt method. Asset and liability of the deferred income tax is based on the (temporary) difference between the tax base of asset and liability and the carrying value thereof.
B. Main Taxes
1. Income tax
The applicable tax rate for business income taxes of the Company is 25%.
2. Value added tax

Value added tax is set at 17% for petroleum and petrochemical products and 13% for natural gas and LPG.
3. Operating tax
Operating tax is set at 3% for transportation and construction, and at 5% for finance and insurance, service operations, transfer of intangible assets and real estate sales.
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2011 Annual Report
Major Events
Major Events
January
On January 1, the Russia-China Crude Pipeline became operational. On January 17, Jilin Oilfield celebrated its 50th anniversary. In 1961, Fuyu Oilfield was established, marking the start of development of Jilin Oilfield.
January 17
On January 27, China Huanqiu Contracting & Engineering Corporation (HQCEC) signed an equity aquisition framework agreement with Australia's LNG Limited to acquire 19.9 percent of the total common shares of Australia's LNG.
February
On February 22, CNPC inked an agreement in principal with KazMunaiGas on the cooperation project at Urikhtau in Kazakhstan. According to the agreement, the two sides will establish a joint venture on equal equities to jointly develop the Urikhtau gas field.
January 27
March
On March 17, CNPC and Saudi Aramco signed a MOU on the refining project in Yunnan and a supplemental agreement for the crude sales agreement. According to the documents signed, the two parties will jointly build a refinery in Yunnan and launch integrated cooperation in terms of resources, processing and marketing. On March 23, Tangshan LNG project was kicked off. The project consists of three parts under a two-stage plan, i.e. a dock, receiving terminals and gas pipelines. The project is expected to become operational in 2013 to serve as a new source of natural gas supply to Beijing, Tianjin and Hebei. On March 25, China's first horizontal shale gas well Wei 201-H1 in the Weiyuan structure of the Sichuan Basin was successfully completed, extending 1,079 meters horizontally after sinking vertically 2,823.48 meters.
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Major Events
2011 Annual Report
April
On April 4, CNPC and the Ministry of Energy of Myanmar signed a letter of intent on building or upgrading local hospitals in Myanmar. According to the letter of intent, CNPC will provide USD 6 million by stages to build or upgrade local medical and educational facilities.
April 4
May
On May 6, Zhou Yongkang, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Secretary of the Committee of Political and Legislative Affairs of the CPC Central Committee, paid a visit to Tuha Oilfield. On May 11, Zhang Dejiang, Member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council visited Changqing Oilfield. On May 24, Jiangsu LNG project was put into trial commission, with a maximum unshipping capacity of 267,000 cubic meters per day. It is CNPCS first independently designed, built and operated LNG project. On May 26, CNPC signed a MOU with Air China, Boeing and Honeywell's UOP to evaluate and prepare for a biofuel trial flight in China. Under this agreement, CNPC will provide the aviation biofuel for this trial flight.
June
On June 1, Li Yuanchao, Member of the Political Bureau of the CPC Central Committee, Secretary of CCCPC Secretariat and Head of the Central Organisation Department, paid a visit to CNPC Southeast Asia Pipeline Co., Ltd. On June 5, CNPC and CUPET signed three cooperation documents, including an expanded cooperative framework agreement between the two state-owned oil companies and a MOU on cooperation in engineering construction. According to the framework agreement and relevant documents, the two sides will carry out extensive cooperation in exploring and developing new onshore and offshore blocks in Cuba, reducing operation costs and raising oil recovery in some producing oilfields and in engineering construction.
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2011 Annual Report
Major Events
On June 6, Xi Jinping, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Vice President of China, inspected the Cuba project of CNPC Great Wall Drilling Company. On June 18, Wu Bangguo, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Chairman of the NPC Standing Committee, paid a visit to CNPC Urumqi Petrochemical Company.
June 6
On June 20, CNPC and Shell signed a global strategic cooperation agreement and relevant documents concerning cooperation in Canadian oil sands development, unconventional natural gas and oilfield services. On June 21, the Al-Ahdab Oilfield in Iraq (phase-I) became operational with a 3-million ton annual capacity. This is the first new oil project to start production in Iraq over the past two decades. On June 29, N'djamena Refinery, jointly funded by CNPC and Chads Ministry of Petroleum, was completed and went on stream, marking the full operation of the first phase of Chad's upstream and downstream integrated project. As the second refinery independently designed and constructed by CNPC overseas, N'djamena Refinery mainly produces gasoline, diesel, fuel oil, LNG and polypropylene, etc. On June 30, the trunk Second West-East Gas Pipeline was put into operation. The natural gas introduced from Central Asia arrived at Guangzhou off-take station.
June 20
June 30
July
On July 1, PetroChina Company Limited (PetroChina) and INEOS Group Holdings plc (INEOS) completed the deal to form trading and refining Joint Ventures between PetroChina International (London) Company Limited, and INEOS Investments (Jersey) Limited. The joint ventures will mainly take charge of trading and refining activities at the Grangemouth Refinery in Scotland and the Lavra Refinery in France. On July 6, Wang Zhaoguo, Member of the Political Bureau of the CPC Central Committee, Deputy Chairman of the NPC Standing Committee and AllChina Federation of Trade Unions President, paid a visit to Daqing Oilfield.
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Major Events
2011 Annual Report
On July 9, Jia Qinglin, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Chairman of the National Committee of CPPCC, paid a visit to Jinli Petrochemical Company. On July 10, Ningxia Petrochemical Company laid the foundation for its 450Kt/a synthetic ammonia and 800Kt/a urea projects, which are planned to be operational in 2013.
July 13
On July 13, CNPC and ADNOC signed a principle agreement on crude oil supply which will be effective for 20 years. Under the agreement, ADNOC will provide additional quantities of crude oil to CNPC based on the existing crude oil supply since 2014.
August
On August 13, Jia Qinglin, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Chairman of the National Committee of CPPCC, paid a visit to CNPC Baoji Petroleum Steel Pipe Co., Ltd. On August 18, CNPC and National Natural Science Foundation of China (NSFC) signed an agreement to jointly establish a United Petrochemical Fund. Under the agreement, CNPC will invest RMB 20 million per annum in the next three years to provide financial support for thereotical research and technological innovation in heavy oil refining/processing, new materials and energy-efficent chemical processing. On August 20, Li Yuanchao, Member of the Political Bureau of the CPC Central Committee, Secretary of CCCPC Secretariat and Head of the Central Organisation Department, paid a visit to Daqing Oilfield. On August 24, CNPC and Ministry of Mineral Resources and Energy of Mongolia signed a MOU for expanding petroleum cooperation. According to the MOU, the two sides agreed to set up a steering committee to coordinate significant matters occurring in cooperation. On August 27, Li Changchun, Member of the Standing Committee of the Political Bureau of the CPC Central Committee, paid a visit to Jilin Petrochemical Company.
August 24
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2011 Annual Report
Major Events
September
On September 6, the phase-II of Kazakhstan-China Gas Pipeline was kicked off. The pipeline starts from Beyneu in Mangghystau and will meet the Central Asia-China Gas Pipeline at Shymkent in South Kazakhstan. The pipeline is designed with an annual capacity of 10 billion cubic meters, which can be expanded to 15 billion cubic meters. On Septembe 21, Wu Bangguo, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Chairman of the NPC Standing Committee, paid a visit to CNPC projects in Uzbekistan. On September 21, CNPC and Uzbekneftegaz signed an agreement on construction and operation of Line C of Central Asia-China Gas Pipeline. With a designed capacity of 25 billion cubic meters per year, the 1,840 km-long pipeline is running parallel with Line A and Line B of the Central Asia-China Gas Pipeline. On September 26, CNPC and KazMunaiGas signed an agreement on basic principles regarding the design, financing, construction and operation of Line C of Kazakhstan-China Gas Pipeline. It is expected to start gas delivery in early 2014.
September 26
October
On October 10, CNPC, Qatar Petroleum International and Shell (China) Limited signed a cooperation framework agreement with Taizhou Municipal Government, to jointly build a refining and petrochemical complex with such materials as imported condensed oil in Taizhou, Zhejiang province.
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Major Events
2011 Annual Report
November
On November 20, Chinas first CP-300 jack-up offshore rig was put in use. A proprietary innovation of CNPC Liaohe Oilfield Equipment Manufacturing Corporation, the rig is intended for offshore exploration and development in relatively shallow waters as deep as 90 meters and a maximum drilling depth of 9,000 meters. On November 28, a joint venture with the Ministry of Energy of Niger the Zinder Refinery became operational, marking the completion of the Phase-I Agadem upstream and downstream integrated project.
December
On December 13, ground breaking ceremony for No.2 Gas Processing Plant of the Amu Darya project was held in Turkmenistan, with a designed capacity of 8 billion cubic meters per year. On December 17, Dalian LNG Project (Phase-I) became operational to supply natural gas to the Northeast and North China.
December 13
On December 27, Changqing Oilfields annual production went beyond 40 million tons of oil equivalent, making it the fastest-growing oilfield in China.
December 17
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2011 Annual Report
Glossary
Glossary
Proven reserves
According to China National Standards, proven reserves are estimated quantities of mineral deposits. They can be recovered from reservoirs proved by appraisal drilling during the period of reservoir evaluation, with a reasonable certainty or a relative difference of no more than 20%.
Tertiary recovery
Tertiary recovery is also called enhanced oil recovery and is abbreviated as EOR. It is a method to increase the recovery of crude oil by injecting fluid or heat to physically or chemically alter the oil viscosity or the interfacial tension between the oil and another medium in the formation, in order to displace any discontinuous or hard-to-tap oil in reservoirs. EOR methods mainly include thermal recovery, chemical flooding and miscible flooding.
Remaining recoverable reserves

Remaining recoverable reserves are the remaining portion of recoverable reserves in an oil (gas) field (reservoir) which have been developed to a certain stage. They are the recoverable reserves minus the volume of oil (gas) that have been cumulatively extracted until that stage.
Polymer flooding
This is an EOR method by which a polymer solution is used as the agent to displace oil. Polymer is injected to increase the viscosity of formation water, changing the oil/water viscosity ratio and reducing the difference between water flowability and oil flowability in the formation. This will increase the swept volume of water flooding and thereby the oil displacement efficiency.
Reserve replacement ratio

The reserve replacement ratio refers to the value of the amount of oil and gas reserves added in a year divided by the amount of oil and gas produced during that same year. It can be further expressed in terms of the oil reserve replacement ratio, gas reserve replacement ratio, and oil and gas equivalent reserve replacement ratio.
ASP flooding
A flooding system is prepared with alkali, surfactant and polymer. It not only has a high viscosity but also can create ultra-low water-oil interfacial tension to improve the oil-washing capability.
Oil equivalent
Oil equivalent is the conversion coefficient by which the output of natural gas is converted to that of crude oil by calorific value. In this report, the coefficient is 1,255, i.e. 1,255 cubic meters of natural gas, is equivalent to one metric ton of crude oil.
Redevelopment
It is a process to enhance the ultimate recovery of a mature field which should have reached its limit or should have been abandoned with the use of conventional primary-development techniques. The development system of the oilfield is reconstructed by consolidating new concepts, and using and developing new secondary recovery technologies.
Recovery rate
The percentage of oil/gas in place that is recoverable from underground.
LNG
Liquid Natural Gas is produced by dewatering, deacidifying, dehydrating and fractionating the natural gas produced from a gas field and then turning it into liquid under low temperatures and high pressure.
Decline rate
A decline in production occurs in an oil or gas field that has been producing for a certain period of time. The natural decline rate is defined as the negative relative change of production over a period of time, without taking into account an increase in production resulting from EOR (enhanced oil recovery) techniques. The general decline rate is defined as the rate of decline in the actual production of such an oil or gas field, taking into account an increase in production from the new wells and EOR techniques.
Processing loss rate

The percentage of the crude oil that is lost when it is processed. It immediately determines the profitability of a refinery.
Water injection
The pressure of the reservoirs continues to drop after the oilfield has been producing for a certain period of time. Water injection refers to the method where water is injected back into the reservoir through the water injection wells to raise and maintain the pressure, increase oil recovery, and thereby stimulate production.
64
About this Report In this report, the expressions "CNPC", "the corporation", and "the company" are used for convenience where references are made to China National Petroleum Corporation in general. Likewise, the words "we", "us" and "our" are also used to refer to China National Petroleum Corporation in general or to those who work for it. This report is presented in Chinese, English, Russian, Spanish, and French. In case there is any divergence of interpretation, the Chinese text shall prevail. Recycled/recyclable paper are used for this annual report.
Horizontal well
A class of nonvertical wells where the wellbore axis is near horizontal (within approximately 10 degrees of the horizontal), or fluctuating above and below 90 degrees deviation. A horizontal well may produce at rates several times greater than a vertical well, enhance recovery efficiency and prolong the production cycle, due to the increased wellbore surface area within the producing interval. Meanwhile, the environmental costs or land use problems that may pertain in some situations, such as the aggregate surface "footprint" of an oil or gas recovery operation, can be reduced by the use of horizontal wells.
Underbalanced drilling
Underbalanced drilling is a well drilling technique in which the hydrostatic pressure of the drilling fluid column is lower than the pore pressure in the stratum. Formation fluid is allowed to flow into the well bore, circulate out, and be controlled on the surface. It plays an important role in discovering and protecting reservoirs.
EPC
Under an EPC contract, the contractor carries the project risk for quality assurance, safety, schedule and budget within the scope of work, i.e. engineering, procurement and construction.
PMC
Under a Project Management Contract (PMC), the contractor is authorized by the project owner to be responsible for managing the whole process comprising project planning, project definition, bidding, EPC contractor selection, project design, procurement and construction.
HSE management system

The HSE management system provides a framework for managing all aspects of health, safety and the environment. It is defined as the company structure, responsibilities, practices, procedures, processes and resources for implementing health, safety and environmental management.
Occupational diseases
A disease or ailment caused due to excessive exposure to noxious fumes or substances in a working environment.
Planning: CNPC International Department Editing: CNPC Research Institute of Economics & Technology photographer: Guo Chao, He Bingyan, Jia Weiyuan, Ma Yidong, Wang Hongyan, Wang Maohuan Design: Beijing FineDesign Co., Ltd. Printing: Beijng Duocai Printing Co., Ltd.
9 Dongzhimen North Street, Dongcheng District, Beijing 100007, P. R. China
www.cnpc.com.cn

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2011

China National Petroleum Corporation

Energize Harmonize Realize

2011 Annual Report

Message from the Chairman

2011 Annual Report

Message from the Chairman

Jiang Jiemin, Chairman

2011 Annual Report

Report of the President

Report of the President

Report of the President

2011 Annual Report

Zhou Jiping, President

2011 Annual Report

Top Management and Organization

Top Management and Organization

Top Management and Organization

2011 Annual Report

China National Petroleum Corporation

Quality and Standard Management Department

HSE and Energy Conservation Department

Budgeting Management Department

Human Resources Department

Retiree Aairs Department Others

Corporate Culture Department

Logistics Department Research Institutions

Internal Control & Risk Management Department

Procurement Department CNPC Manufacturing Company

Finance & Assets Department

Policy Research Oce

CNPC Engineering & Construction Company

CNPC Oileld Service Company

Engineering & Construction Companies

Oil and Gas Fields

Oileld Service Companies

Environment and Community

Environment and Community

2011 Annual Report

2011 Annual Report

Environment and Community

Green Oilfield in Bohai Bay

Environment and Community

2011 Annual Report

2011 Annual Report

Environment and Community

Educational and Medical Outreach

Environment and Community

2011 Annual Report

Abu Ushar Friendship Hospital Put to Use

2011 Annual Report

2011 Annual Report

Overseas HR Management and Localization

2011 Annual Report

2011 Annual Report

2011 Annual Report

Key Development Technologies for Complex Overseas Reservoirs

Software System for Fracture Prediction

Exploration Theory and Technology for Ultra-deep Buried Hill Reservoirs

2011 Annual Report

Precise PCD System

Formation Evaluation LWD Technologies

Key Equipment for Gas Pipelines and LNG Terminal Technologies

Annual Business Review