Professional Documents
Culture Documents
Contents
Message from the Chairman
03
04
07
08
10
Human Resources
14
Technology
16
20
Financial Statements
42
Major Events
48
Glossary
52
2013 Annual Report
02
The year 2013 witnessed a faltering global economic recovery, and increasing
operational risks and cost pressures in the oil and gas industry. Stabilizing
energy supply and minimizing environmental impact still remain the greatest
challenges faced by the company. With the goal of building a major integrated
international energy company, we are committed to promoting technological
progress and international cooperation, and developing and utilizing energy
in a more efficient and environmentally-friendly way. We are well positioned
to achieve industry-leading operational performance with enhanced
competitiveness and profitability by 2020 through strategic development
initiatives, technological innovation, and an accelerated shift to a new
development mode highlighting quality and efficiency.
In the past year, we were steadfast in implementing our strategies for
resources, markets and internationalization. In addition to conventional
onshore oil and gas, we put a new premium on the exploration and
development of unconventional and offshore resources. In China, our
newly added proven oil and gas reserves exceeded 1 billion tons of oil
equivalent for the seventh consecutive year, with the reserve replacement
ratio staying above 100%. Delivering more than 60% of Chinas total oil
and gas, we did a good job in meeting the burgeoning demand in the
domestic market through our nationwide distribution network. Meanwhile,
we started to partner with private, social and international investors in
pipeline construction and operation, nonproducing reserves, and shale gas
exploration and development. We entered a number of oil and gas projects
in Central Asia, Russia, offshore East Africa, Latin America and the Middle
East, consolidating the foundation for the scale and quality development
of our overseas business.
03
and Tarim basins, and made significant progress in tight oil exploration in
the Songliao and Ordos basins.
To increase daily output per well and enhance profitability of oil and
gas production, we optimized technologies and implemented fine
management in project design, production organization, field operation,
and follow-up analysis. In 2013, we produced 112.6 million tons of crude
oil, 2 million tons more than the previous year. Our natural gas output
rose to 88.8 billion cubic meters, accounting for 75% of the nations total.
In particular, Daqing Oilfield continued to produce at the 40 million tons
level for the eleventh consecutive year. Changqing Oilfield produced
51.95 million tons of oil equivalent, becoming the most productive
onshore oil-gas field in China.
In 2013, amid a range of risks and challenges both inside and outside
the company, CNPC continued its strategies for resources, market and
internationalization and capitalized on both domestic and international
resources and markets. Maintaining a focus on oil and gas operations
and emphasizing the quality and efficiency of our business growth, we
achieved operating results better than the industry average. The company
recorded a full-year operating income of RMB 2.76 trillion, total profits of
RMB 188 billion, and tax payable of RMB 407.8 billion, up 2.8%, 2.2% and
3.8% year-on-year, respectively.
04
Enhanced sustainability
with social investors from the insurance and banking sectors, and became
the first State-owned enterprise to issue preference shares through China
Reform Holdings Corporations platform.
Technological progress is playing an increasingly important role in driving
the companys business growth. ASP flooding contributed remarkably
in stabilizing production at Daqing Oilfield. Horizontal well drilling
and completion and SRV fracturing in a factory-like operation mode
enabled efficient development of the ultra-low permeability reservoirs
at Changqing Oilfield. Progress in the R&D of technologies for large-scale
shale gas development, integral development of giant carbonate reservoirs,
full-range refining catalysts, and natural gas liquefaction equipment
underpinned the sustainable growth of corresponding businesses.
We give top priority to operational safety, environmental protection, energy
efficiency, and emission reduction. In 2013, we achieved a satisfactory HSE
performance by improving the HSE management system, reinforcing risk
identification and control, and enhancing pollution control and treatment
measures. By launching a number of key energy efficiency projects and
promoting the use of resource-saving technologies, we cut our energy use
by 1.18 million tons of standard coal and fresh water use by 24.4 million
cubic meters throughout the year.
2014 is a critical year for us to achieve the objectives of the 12th Five-Year
Plan. We will adhere to the development guideline of quality, efficiency
and sustainability, while pressing ahead with our strategies for resources,
market and internationalization. Emphasis will be given to oil and gas
operations, the building of innovative capabilities, strategic business
adjustment, a shift in our development mode, and the improvement of
profitability, in order to build CNPC into a major integrated international
energy company. We remain committed to safeguarding national energy
security and fueling sound and sustained socio-economic development.
05
Operation Highlights
2011
2012
2013
2,381.3
2,683.5
2,759.3
181.7
183.9
188.0
130.5
139.2
140.8
401.5
393.0
407.8
149.27
151.88
159.81
107.54
110.33
112.60
41.73
41.55
47.21
88.19
93.52
103.89
Domestic
75.62
79.86
88.84
12.57
13.66
15.05
Financial Index
Operating income (billion RMB yuan)
179.62
191.45
188.55
Domestic
144.84
147.16
146.02
Overseas
34.78
44.29
42.53
93.00
96.38
97.90
1.57
1.84
1.89
3.47
3.69
3.98
114.98
116.62
118.33
19,323
19,840
20,272
Pipeline
60,257
66,801
72,878
Crude oil
14,807
16,369
17,640
Natural gas
36,116
40,995
45,704
Oil products
9,334
9,437
9,534
10,494
10,494
13,257
Crude oil
6,672
6,672
6,671
Natural gas
3,822
3,822
6,586
06
Yu Baocai
Shen Diancheng
Liu Yuezhen
Wang Lixin
Liu Hongbin
Vice President,
Chief Safety Officer
Chief Financial
Officer
Vice President
Vice President
Vice President
President
Chairman
General Office
Policy Research Office
Planning Department
Finance Department
Treasury Department
Tax Department
Human Resources Department
Production & Operation
Management Department
M & A Department
Legal Department
HSE and Energy Conservation
Department
Quality and Standard
Management Department
R&D Department
IT Department
Procurement Department
International Department
Supervision Department
Auditing Department
Corporate Management
Department
Logistics Department
Corporate Culture Department
Retiree Affairs Department
Holding Companies
CNPC Oilfield
Service Company
Manufacturing Companies
CNPC Manufacturing
Company
Overseas Companies
Research Institutions
Others
07
USD / bbl
130
120
110
100
90
80
70
10
11
Brent
In 2013, the world economy recovered slowly from slump. The petroleum
industry maintained steady growth, along with ample oil supply and
volatile oil prices at high level. As China accelerated its economic structural
adjustment, the Chinese economy grew at a slightly slower but stable pace,
leading to a declining growth rate of oil consumption but rising demand
for natural gas.
Under the influence of long-term structural adjustment and economic
stimulus policies, 2013 saw signs of global economic revival. The
economies of the US, Europe and Japan improved to varying degrees while
the emerging economies experienced slower growth rate. Global primary
energy consumption increased 1.5% year-on-year, with energy demand
shifting towards the emerging markets in the east. China consumed 3.8%
more energy than in 2012, registering a slower increase, attributable to the
country's transitioning economy.
Despite ample supply, 2013 witnessed oil price volatility as a result
of geopolitical influences and economic stimulus. Global oil demand
and supply were 91.17 million bbl/day and 91.65 million bbl/day, up
1.2 million bbl/day and 0.7 million bbl/day year-on-year, respectively.
However, oil prices fluctuated by USD 20/bbl due to a number of
political and economic factors such as the ongoing Syria crisis, the
bleak prospects of Iran's nuclear crisis, disturbances in Libya and South
Sudan, and the currency stimulus policies launched by the European
08
12
WTI
Union and Japan. The Brent spot price fluctuated between USD100120/bbl, averaging USD108.66/bbl in 2013, down USD2.92/bbl from
2012. The growth rate of Chinas oil consumption slowed as a result of
the transition and adjustment of its economic structure. The country's
apparent oil consumption increased 1.7% year-on-year, 2.8% lower than
the rate in 2012. Around 58% of domestic consumption was dependent
on imported oil. With further changes to the economic development
mode, oil consumption in China will grow more rationally.
The world petroleum industry kept investing more in the upstream,
focusing on deepwater and unconventional resources. Oil production
increased significantly in the US, thanks to the massive development
of shale oil. Global E&P investment in 2013 increased 10% year-on-year,
with new hotspots such as deepwater resources in East Africa, Brazil, and
the Gulf of Mexico, as well as shale oil and gas in North America. Driven
by strong investment, the world saw a steady increase in remaining
proven reserves and continued growth in the production of oil and gas.
In particular, the US has enhanced investment in shale oil to raise the
daily output by 800,000 barrels from 2012, bringing its total daily crude
production to 7.5 million barrels. As the US increases investment and
production of shale oil and gas, the country is catalyzing a significant
change in the supply-demand pattern, prices, and the global trade flow
of oil and gas. In fact, the oil originally exported from the Middle East and
Africa to the US, as well as the natural gas from the US, Russia, Canada, and
Australia, will be transferred to the Asia-Pacific market.
China has sustained a high reserve growth by exploring oilfields in central,
western and offshore regions. An intensified degree of development has
helped stabilize production in major fields and yielded 2% more oil than in
2012. Gas output registered an increase of 8.6% year-on-year, as production
capacity building for conventional gas proceeded smoothly with increasing
output from major gas fields, and breakthroughs were made in tapping
unconventional gases.
In 2013, global refining capacity totaled 4,588 million tons, up 10.1 million
tons year-on-year, with per refinery capacity at 7 million tons per annum.
Daily crude runs totaled 75.96 million barrels, the highest since the
outbreak of the global financial crisis. But the overall refining margin was
weaker than in 2012. The Asia-Pacific contributed 32% of the global refining
capacity. Revamping/upgrading existing refineries and building a number
of joint venture refineries led to squeezed margins in local refineries. In Europe,
refineries made a meager profit due to high oil prices and declining demand.
North America became the most competitive region, thanks to accessible
cheap refinery feedstocks from shale oil and gas development. Global ethylene
capacity totaled 149 million tons per annum, up 2.3% year-on-year, with newly
added capacity mainly from Singapore, Iran and China.
Chinas primary crude processing capacity reached 627 million tons in
2013, up 5.6% year-on-year, and the crude runs was 484 million tons. The
average utilization rate of refineries declined to 83% from 85% in 2012. With
processing capacity growing at a faster pace than demand, there was an
ever increasing surplus supply of refined products in the past three years.
Chinas ethylene capacity totaled 17.88 million tons, up 9.8% year-on-year,
featuring diversified feedstock and a higher proportion of domestically
developed equipment and technology.
In 2013, the world saw an overall ample supply of major oil products.
Specifically, the supply and demand for gasoline was generally
balanced, while diesel and jet fuel were over supplied. Global demand
for gasoline, diesel and kerosene increased by 1.5%, 1.5% and 0.8%
year-on-year, and supply increased by 1.7%, 2.3% and 0.8%, respectively.
The supply-demand pattern varied significantly by region, with surplus
supply in Central Asia, Russia, North America, and the Middle East,
but tight markets in Latin America, the Asia-Pacific, and Africa. China
saw product-specific demand growth, year-round ample supply, and a
significant increase in net exports of refined products. The ample supply
was reflected by 296 million tons of production, up 5.2% year-on-year,
09
1.18
Energy saved
24.4
Water saved
94%
92%
Operational Safety
In 2013, we developed and implemented management rules on
operational safety, and witnessed improvements in the companys HSE
responsibility system. One of these rules was Management Procedures
of Operational Safety and Environment Accountability , which specifies
the fundamental principles, formulation procedures, responsibilities, and
performance evaluation of safety and environment accountability.
To improve prevention and control of safety and environmental risks, we
continued building a multi-level risk control mechanism and emergency
response system. Subsidiaries were organized to identify and evaluate
hidden safety and environmental risks, and work out level/disciplinespecific risk management measures. As a result of emergency drills
featuring major road transport accidents involving hazardous chemicals,
we enhanced a joint response mechanism with local governments and
improved our emergency response capacities. In addition, we allocated
dedicated funds to identifying and correcting hidden safety risks related
to pipelines intersecting with each other or subject to surface load, and
facilities subject to corrosion and aging. Through our operational accident
investigation center, we shared experiences and best practices in accident
precaution and prevention, launching three such campaigns throughout
the year, covering 150,000 employees.
Occupational Health
In view of the long industrial chain and widespread geographic distribution
of our operations, we adopt and implement an integrated, preventionoriented approach which strictly abides by the Law of the People's
Republic of China on Prevention and Control of Occupational Diseases , to
continuously improve staff occupational health management and services.
Occupational health checks are the key measures for staff health monitoring.
In 2013, more than 94% of our employees received occupational health
checks and 92% of the specific workplaces received occupational disease
hazards detection. We regularly dispatched medical professionals to work
sites for health hazard and hidden risk screening and treatment, to safeguard
the occupational health of our frontline workers, especially those in remote
locations. We intensified management of food and drinking water hygiene, and
took effective measures to prevent the occurrence of occupational poisoning,
heat stroke, food poisoning, and epidemics.
At our overseas projects, giving consideration to the living, working and
sanitary conditions in host countries, we provide employees with targeted
medical care and mental counseling services through well-equipped
medical facilities and the employee assistance program (EAP). In 2013, we
sent medical teams to Chad, providing employees with health checks for
342 person-times and one-to-one psychological counseling for 73 persontimes, and holding seven mental health lectures. In Niger, the incidence
of malaria among our employees declined substantially as we provided
training on the prevention and treatment of malaria and other tropical
diseases, and prepared test kits and anti-malaria drugs in advance.
Environmental Protection
With continuing socio-economic development and industrialization,
people are increasingly demanding a healthier and low-carbon living
environment. As an energy company, CNPC is always committed to
promoting environmentally friendly development and clean operations to
minimize pollutant emissions.
In 2013, we pushed ahead with our emission reduction projects. Nine
projects for the desulfurization of flue gas generated from catalytic
cracking units and 11 refining wastewater treatment projects became
operational. Emission reduction practices at our affiliates were more
closely supervised through an improved network for online monitoring
of pollution sources, in which 71 monitoring stations for wastewater
and 101 monitoring stations for flue gas were equipped with online
11
Energy Efficiency
We constantly promote major energy conservation projects and
demonstration technologies, and perform evaluation and monitoring
of energy conservation practices, as we strive to enhance energy
efficiency, realize resource-saving development, and build a resourceefficient enterprise.
We have adopted a quarterly reporting system to monitor the progress
of major energy conservation projects, and evaluate and examine the
results. In 2013, we launched 64 energy efficiency projects, mainly focusing
on mechanical lifting systems, surface systems and steam systems in our
oilfields. Upon completion, these projects are expected to save energy
equivalent to 335,300 tons of standard coal every year.
We collected relevant data by monitoring and evaluating major
energy and water consuming equipment and systems such as heating
furnaces, oil transfer pumps, gas compressors and diesel generators, to
facilitate the planning of targeted and workable energy-conservation
programs. We also promoted the application of demonstration energyefficiency technologies, took measures to enhance the efficiency of
heating furnaces in oilfields, and validated and applied energy system
optimization proposals. In 2013, the companys energy use and water
use were reduced by 1.18 million tons of standard coal equivalent and
22.4 million cubic meters, respectively.
Quality Control
With a firm commitment to honesty, trustworthiness and quality,
we provide society with products and services of high standard and
quality. In 2013, we issued the Implementation Plan of the State
Council's Quality Development Outline (2011-2020) , which specifies the
objectives and measures in quality control of our products, engineering
projects and services by 2020. We developed a quality index system
and improved the quality statistics and assessment system, making our
quality management more scientific and standardized. Our 103 affiliates
obtained third-party certificates for quality management system (QMS)
and QMS promotion reviews were initiated at major operating units and
research institutes.
We continued to strengthen the supervision of product quality. To
ensure the maximum protection of consumers' rights and interests,
we carried out spot checks of 2,140 batches of products in 2013, most
of which were consumer-interfacing products such as gasoline and
diesel for automobiles and LPG, or purchased products related to safety
and environmental protection, such as valves, pipes and chemicals.
Supervision of engineering quality was also enhanced. We supervised
2,674 ongoing engineering projects throughout the year, identified
12
and addressed hidden quality risks, and specified the quality control
behavior of the parties responsible for these projects. As a result, risks in
engineering quality were significantly eliminated.
In 2013, we further improved our corporate standard system by
developing 173 enterprise standards, and formulated or amended
137 national and industrial standards. Commissioned by the National
Energy Administration, we set up the Shale Gas Standard Committee of
China's energy industry, established a technical standard organization
based in CNPC, and developed a standard system for unconventional
hydrocarbon. In addition, the company deepened its cooperation
with the American Petroleum Institute (API) on quality standards, and
undertook the job as the secretariat of the ISO Upstream Natural Gas
Technical Committee (ISO/TC193/SC3).
2013 Annual Report
13
Human Resources
19
433
100
322
Management experts
15
Technology
4,481
3,639
Patents applied
Patents granted
Better understanding of the reservoir-forming theory of large, ancientcarbonate gas fields guided the discovery and resource evaluation of the
Gaoshiti-Moxi giant gas field.
New understanding on the composite reservoir-forming pattern at the edge
of the Qaidam Basin guided gas exploration at the piedmont of the Altun
Mountains, identifying a gas reserve volume of 100 billion cubic meters.
Streamlined ASP flooding with diverse surfactant series enabled Daqing
Oilfield to stabilize its oil output at 40 million tons per year.
Large-scale SRV fracturing of horizontal wells has been worked out in
addition to a series of development technologies for ultra-low-permeability
reservoirs, boosting Changqing Oilfields annual production capacity to
50 million tons.
An optimal development program and tailored waterflood techniques for
giant carbonate fields greatly facilitated production capacity building at
the Al-Ahdab, Halfaya and Rumaila oilfields in Iraq.
17
18
preliminary standard system for Chinas CBM industry, which have greatly
facilitated our demonstration projects in the Qinshui and Edong CBM fields.
In addition, a technical series for shale gas "sweet point" prediction was
developed, promoting the establishment of a field test block at Changning
in Sichuan Province. Regarding the development of conventional oilfields,
we have initially grasped the mechanisms of intelligent nanometer oil
displacement and underground crude oil upgrading, and developed
indoor samples of oil displacement agents to provide new solutions
for future development and EOR of oil and gas fields. In refining and
chemicals, we developed a high-performance crystallization-based Na-Y
synthesis technique that will serve as an important platform for preparing
catalytic cracking catalysts and other essential materials. We also made
available a new catalytic cracking process featuring coordinated multizone control with our independent intellectual property rights, which can
reduce energy consumption by 15% and increase the yield of light oil by 2%.
In drilling engineering, based on bionics techniques, we created a drilling
system featuring wall consolidation, which succeeded in the field test of
horizontal wells at Sulige Gas Field.
Technological Cooperation
In 2013, CNPC became a Contracting Party in the Enhanced Oil Recovery
IA (EOR IA) of the International Energy Agency (IEA), and will build a liaison
and information sharing mechanism to facilitate international cooperation
for faster and better development of EOR technologies in China. CNPC also
worked with peer companies and research institutions at home and abroad
on technological cooperation and joint research. Progress was made in
joint technology R&D with Exxon Mobile and Shell in terms of exploration
and development, refining and chemicals, and oilfield services. A CNPCShell joint shale oil research center was established for research on the
theory, methodology, and frontier technologies for shale oil development.
We set up a technical committee together with the Chinese Academy
of Sciences (CAS), and have initiated six cooperative research projects,
including the "R&D of high precision digital geophones (MEMS)". We also
participated in the communication activities of international and industrial
organizations to extend our scientific and technological cooperation.
Diverting Acid Fracturing for Carbonate Reservoirs and Its Industrial Application
In China, acidizing and fracturing is a prerequisite to discover
increment of 1.49 billion cubic meters over the past three years.
Invention Award.
maximize the oil and gas flow channels. We invented two selfviscosifying acidizing fluid diverting systems to allow in-depth fluid
diversion and intelligent fluid diversion, resulting in enlarged swept
19
Focusing on oil and gas operations, the company made great efforts to
improve the quality and efficiency of its business growth in 2013, with
production and revenue being steady, key business indicators continuing to
grow year on year, and operating results were better than expected.
54%
75%
Exploration
In 2013, our domestic exploration resulted in newly proven oil and gas
in place of 670 million tons and 492.3 billion cubic meters respectively,
and proven oil and gas reserves exceeding 1 billion tons of oil
equivalent for the seventh consecutive year. A large part of the newly
proven reserves are entrapped in low-permeability, lithologic, and
deep reservoirs, which are massive in scale and relatively producible.
The reserve replacement ratio remained above 100%, providing a solid
resource base for oil and gas production.
Major Discoveries
We obtained 24 important exploration achievements in the Sichuan, Ordos,
Tarim, Junggar, Songliao, and Bohai Bay basins throughout the year.
492.30
711.00
670.13
2011
2012
2013
(mmt)
487.90
450.40
2011
2012
2013
(bcm)
2012
2013
715.12
711.00
670.13
487.90
450.40
492.30
2D seismic (kilometers)
33,912
23,987
27,089
12,954
16,105
12,477
1,794
1,898
1,746
1,020
1,190
1,006
774
708
740
Exploration wells
Preliminary prospecting wells
Appraisal wells
21
Crude Oil
In 2013, focusing on boosting per-well output and economic benefits, we
optimized technical solutions, implemented fine management throughout
the production process and further tapped the potential of domestic
oilfields to address the harsh reality that most of our mature fields are in
the late high-water-cut development period. We produced 112.6 million
tons of crude throughout the year, maintaining an increment of more than
2 million tons for the fourth consecutive year.
Daqing Oilfield stabilized its production at more than 40 million tons for
11 consecutive years through continued waterflooding and efficient
polymer flooding. Both the natural decline rate and composite decline
rate were effectively controlled. In particular, production by tertiary
recovery, mainly polymer flooding, maintained a steady growth to reach
13.84 million tons, with the average incremental oil per ton of polymer
rising by 2.8 tons year-on-year. Changqing, Chinas most promising and by
far the largest onshore oilfield in terms of production, produced 51.95 million
tons of oil equivalent by promoting the model of development management
for ultra-low-permeability oil reservoirs, and deploying a series of unique
technologies suitable to local reservoirs.
Waterflooding
To enhance the oil recovery of mature fields, CNPC has continued to
implement a comprehensive development approach since 2009 based
on finely controlled water injection. Adjusting the development well
Crude production
(Domestic)
107.54
110.33
112.60
88.84
79.86
75.62
2011
2012
2013
(mmt)
22
2011
2012
2013
(bcm)
pattern and introducing separate layer water injection have become the
normal method for mature fields in order to increase the rate of producible
reserves and per-well output. In 2013, we completed water injection
operations 18,462 well-times, with the natural decline rate and composite
decline rate being well controlled, and the rise in water cut being less than
0.5% for the fourth consecutive year.
The natural decline rate and composite decline rate of waterflooding
were controlled at 6.85% and 4.19% respectively at Daqing Oilfield, thanks
to precise geological study, adjustment of the injection/production
system, and finely categorized quantitative injection standards. In fact,
waterflooding accounted for 64% of the total output of the field. Similarly,
Tuha Oilfield reduced the natural decline rate of its mature wells by 1.2%
year-on-year, by improving the water injection well pattern, optimizing the
injection/production system, and developing a specific injection plan for
individual oil layers.
Pilot Development
In 2013, we pushed forward with research programs and pilot tests
targeting heavy oil, high-water-cut and unconventional reservoirs. ASP
flooding was tested at four pilot blocks at Daqing Oilfield, enhancing
recovery efficiency by 18-28%. Polymer-surfactant flooding was tested
at block Jin-16 of Liaohe Oilfield, increasing the daily output 5.5 times
and reducing the composite water cut by 13%; and steam flooding was
deployed in 150 well groups at block Qi-40, increasing the daily output
of medium-to-deep heavy oil by 18.9%. A fire flooding pilot test was
deployed at Hongqian-1 block in Xinjiang Oilfield for four years, increasing
oil production by 38,300 tons and recovery efficiency by 9.1%. Faced with
the challenge that a majority of our new proven reserves are from lowpermeability reservoirs, we conducted pilot tests for EOR by gas medium
injection. In Jilins Daqingzijing Oilfield, a 500kt/a pilot development with
CO2 flooding has covered 135 steam injection wells and 683 producing
wells. In addition, we made progress in air/foam flooding tests at Dagang
and Changqing oilfields.
Natural Gas
In 2013, we produced 88.84 billion cubic meters of natural gas domestically,
up 11.2% year-on-year. Gas output from Changqing Oilfield maintained its
CBM
Sulige, located in the Ordos Basin, is a tight sandstone gas field featuring
rapid growth, reaching 34.68 billion cubic meters. Tarim Oilfield produced
22.28 billion cubic meters, ensuring reliable gas supply to the West-East
Gas Pipelines. Southwest Oil and Gas Field accelerated the building of new
low permeability, low pressure, and low abundance. CNPC has been
scientifically organizing production and rolling out a series of technologies
since 2008, such as multi-layer fracturing in vertical wells and staged
fracturing in horizontal wells, enabling the large-scale and effective
development of this field. In 2013, Sulige produced 21.18 billion cubic
meters of natural gas, with its annual capacity reaching 24 billion cubic
meters. In March 2013, Sulige was chosen as one of the three finalists
for the Excellence in Project Integration Award by the 6th International
Petroleum Technology Conference (IPTC).
Shale Gas
23
24
70%
80%
25
26
147.16
146.02
144.84
96.38
97.90
93.00
2011
2012
2013
(mmt)
2011
2012
2013
(mmt)
14
2012
2013
144.84
147.16
146.02
91.3
89.5
86.9
93.00
96.38
97.90
Gasoline
28.89
31.00
32.97
Kerosene
3.68
4.78
6.06
60.43
60.61
58.87
1.57
1.84
1.89
3.47
3.69
3.98
5.78
6.18
6.64
0.09
0.09
0.07
0.61
0.63
0.67
4.48
4.41
3.77
3.03
2.97
2.58
Diesel
27
28
Refined Products
20,272
We sold 118.33 million tons of refined products in 2013, up 1.5% year-onyear. In particular, retail sales were 87.3 million tons. The proportion of high
added-value products continued to grow. There was an increase in highgrade gasoline sales and jet fuels sales of 30% and 16.4% year-on-year,
respectively. The marketing capabilities of our service stations continued to
improve, with a steady increase in average daily sales per station.
Marketing Network
Non-oil Service
29
47.21mmt
15.05 bcm
30
Crude production
(Overseas)
105.86
89.38
89.78
17.06
18.20
15.05
47.21
41.73
2011
12.57
13.66
41.55
2012
CNPC's share
2013
Total
(mmt)
2011
2012
CNPC's share
2013
Total
(bcm)
Production
In 2013, we maintained steady growth in oil and gas output by optimizing the
production rate and rolling out waterflooding and horizontal drilling to achieve
increased production efficiency. As a result, we produced 123.16 million tons
of oil equivalent, of which CNPCs share was 59.2 million tons. Total production
included 105.86 million tons of crude oil and 21.7 billion cubic meters of
natural gas, with CNPCs share being 47.21 million tons and 15.05 billion cubic
meters, respectively.
We stabilized the output of mature oilfields using proven development
technologies in Central Asia, Latin America, Indonesia, and the Middle
East. In Kazakhstan, Aktobe's progress in developing the Kenkijak
Subsalt Oilfield using bilateral horizontal wells provided a new means
for the efficient development of this kind of oilfield; and the Mangystau
project produced 6 million tons of crude throughout the year by
deploying finely controlled waterflooding and horizontal drilling. In
Turkmenistan, the Amu Darya Project saw smooth operation, with a
full-year gas output of 5.98 billion cubic meters. The capacity expansion
project of its No.1 Gas Processing Plant became operational and the
No.2 Gas Processing Plant was under construction.
In Latin America, our MPE3 project in Venezuela maintained a daily
production rate of more than 130,000 barrels by speeding up the
drilling and commissioning of new wells. Our Andes Project in Ecuador
continuously stabilized output at ultra-high-water-cut oilfields by
stimulating mature wells and speeding up commissioning of new wells.
The Block 6/7 project in Peru registered the highest oil production in the
past decade by promoting the fine management of oilfields, enhancing
stimulation measures and rejuvenating long idle wells.
In the Middle East, our Oman project deployed waterflooding in horizontal
wells based on the characteristics of remaining oil distribution and
formation pressure. The project registered a 100% success rate in horizontal
well drilling and boosted its daily oil output to 45,000 tons, more than nine
times as much as that upon its takeover.
In Iraq, the Al-Ahdab Oilfield maintained an output of 135,000 barrels per
day and cumulatively produced more than 10 million tons of oil since its
inauguration in June 2011. With a diverse oil and gas transport network
consisting of pipelines, LPG loading stations, and oil loading stations,
it helps to increase the local energy supply capacity. We worked with
Total and other partners at the Halfaya project to optimize production
management and deploy multilateral horizontal drilling. Oil production
remained at more than 100,000 barrels per day, and Phase-II construction
commenced. Our Rumaila project, in partnership with BP, achieved an
output of 1.36 million barrels per day.
31
32
International Trade
CNPC is engaged in trading of crude oil, refined products, natural gas
and petrochemicals through imports and exports, consigned processing,
oil refining, storage, transportation, wholesaling, and retailing, as well as
transactions in oil futures. Backed by our overseas operation centers and
distribution networks, our international trade continued to grow with
expanding business scale. In 2013, we reported 350 million tons in trade
volume and USD 264.8 billion in trade value, reaching the markets in over
80 countries and regions, including the worlds major oil and gas producers
and consumers.
Based on in-depth market research, we managed to expand crude oil trade
and bolster resources allocation with diversified mode of trade and improved
customer service. Meanwhile, crude oil purchase schemes were optimized to
support the needs of domestic refineries for products upgrading.
Our market share and influence in the refined products market were
increased. We fastened traditional markets such as Indonesia and Vietnam,
and took a larger market share in South Asia and the Middle East. We
maintained the largest share in jet fuel market in Hong Kong. Meanwhile,
we actively explored Taiwans airport oil market and became the largest
vessel oil supplier in the region. We sold more refined products in the
Middle East and entered into new African markets such as Tanzania, Kenya
and Egypt. In 2013, the company reported a more than 10% increase yearon-year in gasoline and fuel oils traded through Platts Singapore.
Despite a downtrend in the chemicals market, we made good gains in
hedged transactions and processing contracts. Our refining byproducts,
fertilizers and liquid petrochemicals all reported a market share growth,
and made a debut in Ecuador and other South American countries. We
managed to purchase LNG from various sources and channels, ensuring
smooth operation of the Tangshan LNG project, and made a good start in
LNG re-exports.
We continued to push ahead with the building of overseas oil and gas
operation centers. Our Asian center has established significant regional
reputation. The European center performed well in cross-market operations.
The American center was involved in pipeline gas trading in Canada and
Midwestern US.
33
Oilfield Services
In 2013, we saw increased workload and operational efficiency in exploration,
drilling, and logging, as well as an increased drilling speed. This was realized
through the optimized management and wider use of proven and applicable
technologies such as horizontal drilling and underbalanced drilling.
Geophysical Prospecting
In 2013, CNPC deployed 200 seismic crew-times (97 2D and 103 3D),
10 VSP crew-times, and 34 non-seismic (gravity and magnetic survey,
electric survey, and geochemical exploration) crew-times. We acquired
data on 114,000 kilometers of 2D lines and 64,000 square kilometers of
3D profiles, 18.2% and 11.8% more than in 2012.
2012
2013
169
168
165
Domestic
98
102
95
Overseas
71
66
70
74,090
57,688
46,949
39,782
55,348
41,391
40,274
22,059
35,618
14,619
17,900
17,542
93,306
96,739 114,364
Domestic
35,618
41,391
40,274
Overseas
57,688
55,348
74,090
36,678
57,682
64,491
2012
Domestic
2013
Overseas
(kilometers)
34
2011
2012
Domestic
2013
Domestic
14,619
17,900
17,542
Overseas
Overseas
22,059
39,782
46,949
(square kilometers)
Well Drilling
In 2013, our 1,018 drilling rigs spudded 13,459 wells and completed
13,378 wells, with a total footage of 27.5 million meters, 1.1% more than
in 2012. The drilling speed remarkably increased, with the average drilling
cycle declining by 4.8% year-on-year at an average along-hole depth of
1,982 meters. We drilled 832 wells deeper than 4,000 meters, an increase
of 29.39% over 2012, with the penetration rate increasing by 6.97% and
drilling cycle decreasing by 6.19% year-on-year. The penetration rate of
horizontal wells increased by 4.05%, even though the average along-hole
depth increased by 223 meters.
The capacity and application scale of horizontal drilling were further
improved. We drilled and completed 2,030 horizontal wells in 2013, an increase
of 19.3% year-on-year. This includes 1,620 domestic wells and 410 overseas,
both witnessing a substantial increase over 2012.
Drilling operations
2011
2012
2013
1,009
1,019
1,018
Domestic
833
827
823
Overseas
176
192
195
Wells drilled
13,706
13,153
13,378
Domestic
12,509
11,894
12,035
Overseas
1,197
1,259
1,343
26.98
27.20
27.50
Domestic
24.39
24.30
24.32
Overseas
2.59
2.90
3.18
In block Su-35 in the Ordos Basin, Great Wall Drilling Engineering Company
(GWDC) implemented whole-process tracing and management covering
well spacing, drilling, fracturing, and gas extraction, and realized batched
drilling, inter-well acceleration and concentrated fracturing. In comparison
with other horizontal wells in the block, the drilling cycle is 24.4% shorter
and the penetration rate is 10.5% faster. Horizontal wells were more widely
deployed in unconventional oil and gas development. Chuanqing Drilling
Engineering Company completed shale gas horizontal well Gu-205-H1 in
the Sichuan Basin, registering the longest horizontal interval of 1,408m,
the longest footage in a single run of 1,167 meters and the fastest average
penetration rate of 10m/h along the horizontal interval among domestic
shale gas wells, with a reservoir encounter ratio of 100%.
Underbalanced drilling played a significant role in raising drilling
speed and per-well output in its wider application. In 2013, we drilled
and completed 606 underbalanced wells, an increase of 20.7% yearon-year. Well Zhonggu5-H2 in the Tarim basin is located in complex
formations featuring narrow pressure windows and multi-pressure
systems. In drilling this well, Bohai Drilling Engineering Company used
precise PCD (pressure controlled drilling) technology to realize long
horizontal interval penetrating multiple fractured strata, with a total
PCD footage of 1,153 meters. In addition, no mud leakage or drilling
complications were reported throughout the whole process. Daqing
Drilling Engineering Company completed 21 wells using microfoam
near-balanced drilling in peripheral oilfields of Daqing at an average
penetration rate of 37.34m/h, 25.3% higher than in conventional wells.
35
Drilling Engineering Company for ultra-high-temperature, ultra-highpressure, and ultra-deep-penetration wells succeeded in their application
at exploration wells in Tarim Oilfield, providing development solutions for
high-temperature, high-pressure, and creep salt formations in the Tarim
and Sichuan basins. Bohai Drilling Engineering Company applied wirelinefree storage-type logging in Tarim Oilfield to tackle the difficulties in
acquiring logging data from complex wells that are either underbalanced
or highly deviated.
CIFLOG, our independently developed network-based integrated logging
data processing and interpretation software, can process and interpret
conventional, imaging and special logging data. It has achieved good
results in 3,100 well-times both at home and abroad. LEAD3.0 processing
and interpretation software was improved by implementing additional
functions such as multi-well project management, multi-well plotting, layer
division and multi-well values.
CNPCs share of the overseas well logging and mud logging markets
expanded, covering 20 countries including Sudan, Kazakhstan and
Indonesia. We won new logging contracts in Algeria and Indonesia. Great
Wall Drilling Engineering Company precisely evaluated three producing
zones in Cuba by using quantitative 3D fluorescent logging technology. Its
work was recognized by Cupet, the projects owner.
Perforation of high-temperature and high-pressure reservoirs, pipeconveyed NMR transfer well logging for ultra-long horizontal intervals,
and testing of high-temperature high-pressure wells worked well in
application. New perforation technologies developed by Chuanqing
2012
2013
Logging crews
678
721
725
Domestic
546
579
587
Overseas
132
142
138
88,727
99,353
106,092
Domestic
83,317
93,585
100,129
Overseas
5,410
5,768
5,963
36
Downhole Operations
In 2013, CNPC had 1,839 downhole operation crews providing services
including fracturing and acidizing, production testing, well intervention,
overhaul and sidetrack drilling. We completed 143,000 downhole
operations throughout the year, including 15,400 fracturing operations, an
increase of 9.1% year-on-year, and 7,558 layers of formation testing.
Snubbing operations were further rolled out. In 2013, our 157 crews
applied snubbing in 4,034 wells in China, an increase of 30.3% year-on-year.
Technologies for these operations were improved. Pressure control tools
such as air-powered tubing bridge plugs and high-efficiency liquid plugs
developed by Great Wall Drilling Company tackled the challenge of scaling
in tubings and increased operating efficiency. At the Xing-13 snubbing
operation demonstration block in Daqing Oilfield, snubbing operations
were conducted in a total of 76 wells, and the formation pressure was
properly maintained. In fact, the pressure dropped by just 0.52 MPa on
average after the operations. Snubbing was also proven to be effective in
terms of energy conservation and environmental friendliness, and enabled
us to reduce wastewater discharges by about 2.64 million cubic meters and
reduce transport by 176,000 tanker-times throughout the year.
In 2013, multi-stage fracturing was applied in 1,020 horizontal wells,
an increase of 31.6% year-on-year. A total of 63% of our horizontal
wells in China are multi-stage fractured, each of which is fractured
by an average of 8.05 stages. A factory-like operation model enabled
Chuanqing Drilling Engineering Company to take two days to fracture
seven wells in the Ordos Basin. The operation cycle was shortened by
nearly 70% compared to conventional models. A multi-stage fracturing
tool with selectively-switching sliding sleeves with no stage limits,
which was developed by Bohai Drilling Engineering Company, passed
Downhole operations
2011
2012
2013
2,117
2,023
2,052
Domestic
1,913
1,818
1,831
Overseas
204
205
221
142,753
149,262
143,100
Domestic
140,283
146,826
141,019
Overseas
2,470
2,436
2,081
6,950
7,981
7,558
Domestic
5,835
6,555
6,251
Overseas
1,115
1,426
1,307
37
38
Internationally, the trunk of the Myanmar-China Gas Pipeline and the BozoyShymkent section of Phase II of the Kazakhstan-China Gas Pipeline were put
into operation. Construction began at the crude export pipeline as part of
Phase II of Iraqs Halfaya Project, Phase II of Chads Ronier-Kome Crude Pipeline,
and Tanzanias Gas Pipeline. China Petroleum Pipeline Bureau won contracts
for the gathering and transport system at LUKOIL's West Qurna-2 Oilfield in Iraq
and Nakhon Sawan Gas Pipeline Project in Thailand.
A number of major projects were completed and put into operation,
including the Lanzhou Commercial Storage Base EPC-contracted by China
Petroleum Pipeline Bureau, and the Hutubi underground gas storage in
Xinjiang Oilfield, Suqiao underground gas storage in Huabei Oilfield and
a 5Mcm/d LNG plant in Hubei Province EPC-contracted by CPE. Phase I
of the Tangshan LNG Project EPC-contracted by China Huanqiu became
operational. Core technologies for LNG regasification and low-temperature
pre-stressed concrete have been successfully applied, and the project
recorded 21.86 million working hours of safe operation.
Offshore Engineering
We have the capacity to provide integrated and comprehensive support
for offshore production. Our services include well drilling, well completion,
well cementing, production tests, downhole operations, design and
construction of marine engineering, and vessel services. By the end of 2013,
CNPC had 41 sets of large-scaled offshore equipment, including 10 mobile
drilling platforms, one modular drilling/workover rig, five production test
platforms, and a variety of 25 vessels. In 2013, 23 of our vessels provided
services for 5,918 working days.
In 2013, CNPC's Offshore Engineering Ltd. (CPOE) completed a total drilling
footage of 166,000 meters in the Bohai Sea, Yellow Sea, East China Sea,
South China Sea, and the Persian Gulf. The company spudded 76 wells and
CPOE-10 jack up rig operating in the East China Sea
39
40
41
Financial Statements
Consolidated Balance Sheet
2011
2012
2013
278,416.84
293,696.71
322,375.35
Current assets
Cash and cash equivalent
3,064.12
2,323.12
8,883.41
101,809.68
132,746.01
153,260.31
Prepayments
51,975.04
48,201.93
78,405.51
55,533.84
57,788.42
48,537.46
314,589.98
360,150.69
360,220.84
Inventories
Other current assets
Total current assets
81,823.47
86,813.51
70,071.29
887,212.97
981,720.39
1,041,754.17
Fixed assets
Available-for-sale financial assets
Held-to-maturity investments
45,588.19
71,297.57
87,845.18
138,700.62
123,563.27
128,811.40
71,785.95
79,370.53
139,602.62
619,741.11
725,436.36
766,655.83
Construction in progress
319,252.25
369,470.56
395,385.97
699,907.96
790,132.31
869,697.34
Intangible assets
60,451.38
69,707.18
76,924.93
185,235.81
198,722.20
250,682.42
2,140,663.27
2,427,699.98
2,715,605.69
Total Assets
3,027,876.24
3,409,420.37
3,757,359.86
92,165.76
110,124.15
103,613.04
327,909.63
394,373.95
415,016.81
73,298.16
76,128.13
86,043.12
Current liabilities
Short-term loans
Bills and accounts payable
Prepayments
23,164.33
19,041.00
20,045.47
132,842.21
92,768.24
85,804.27
92,315.83
90,255.67
93,151.82
241,099.05
214,653.86
327,927.92
982,794.97
997,345.00
1,131,602.45
Long-term loans
29,671.92
22,633.17
13,730.29
Estimated liabilities
73,384.11
88,965.18
99,533.29
25,319.25
27,253.49
20,203.42
216,024.16
409,112.90
436,744.65
42
344,399.44
547,964.74
570,211.65
1,327,194.41
1,545,309.74
1,701,814.10
2011
Owners equity
2012
2013
Paid-in capital
379,863.46
397,540.32
431,514.04
Capital reserves
261,852.85
265,360.66
294,806.78
Special reserves
32,442.96
31,178.59
29,559.30
Surplus reserves
841,139.88
942,093.06
1,035,602.97
1,480.42
2,392.73
5,452.65
14,241.18
15,498.38
20,478.40
-17,096.43
-17,826.16
-29,883.14
1,513,924.32
1,636,237.58
1,787,531.00
Minority interests
186,757.51
227,873.05
268,014.76
1,700,681.83
1,864,110.63
2,055,545.76
3,027,876.24
3,409,420.37
3,757,359.86
2011
2012
2013
2,381,278.23
2,683,480.30
2,759,303.41
2,376,592.51
2,678,563.64
2,753,729.56
4,685.72
4,916.66
5,573.85
1,716,446.17
2,026,837.02
2,101,254.46
1,712,817.27
2,022,621.55
2,096,268.76
3,628.90
4,215.47
4,985.70
268,676.76
257,977.86
249,723.07
61,139.91
64,277.62
72,350.51
120,923.24
116,260.26
122,550.66
Operating income
Sales expenses
Management expenses
Financial expenses
14,251.20
16,592.13
23,484.44
13,352.40
8,195.50
18,866.33
Others
26,460.65
25,735.97
27,184.82
-67.22
17.46
-44.74
21,735.58
17,214.24
17,446.33
181,696.26
184,835.64
161,290.71
14,434.13
15,780.33
45,422.92
Plus: Income from change in fair value (Loss is presented with "-")
14,406.35
16,715.87
18,686.14
181,724.04
183,900.10
188,027.49
51,196.20
44,725.51
47,219.42
Net profit
130,527.84
139,174.59
140,808.07
105,490.19
114,802.85
113,775.07
25,037.65
24,371.74
27,033.00
43
2. Fiscal year
The fiscal year starts on January 1 and ends on December 31 each
calendar year.
44
7. Financial assets
(1) Financial assets are classified upon initial recognition into four
categories: financial assets at fair values through profit or loss, heldto-maturity investments, loans, receivables, and available-for-sale
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.
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.
45
(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.
46
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. Once the provision for the depreciation of the long-term
equity investment is retained, it should not be reversed during subsequent
accounting periods.
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;
B. Main Taxes
1. Income tax
The applicable tax rate for business income taxes of the Company is 25%.
Value added tax is set at 17% for petroleum and petrochemical products
and 13% for natural gas and LPG.
3. Operating tax
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.
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.
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.
47
Major Events
January
January 4 DushanziUrumqi Crude Pipeline became operational. The pipeline has a
total length of 229.6 kilometers and an annual delivery capacity of 10 million tons.
January 8 CNPC, Shenergy (Group) Company Limited and Yangkou Port Company
Limited signed a framework agreement on the Rudong-Haimen-Chongming Gas
Pipeline. Under the agreement, a three-party JV will be established to invest in, build and
operate the pipeline. The pipeline will be 89.5 kilometers long, with a designed annual
delivery capacity of 2.4 billion cubic meters.
January 4
February
February 20 PetroChina entered into agreements with ConocoPhillips, whereby
PetroChina will acquire 20% interest in the Poseidon offshore discovery in the Browse
Basin, and 29% interest in the Goldwyer Shale onshore Canning Basin.
March
March 13 CNPC signed an agreement with Eni to purchase a 28.57% share of Eni East
Africa, whereby indirectly holds a 20% interest in Mozambiques Block 4. The two sides
also signed a joint study agreement on unconventional hydrocarbon development at
the Rongchangbei block in China's Sichuan Basin.
March 13
April
April 6 CNPC and KazMunayGas entered into an agreement on the principles regarding
expansion of the Kazakhstan-China Crude Pipeline.
April 6 A memorandum for cooperation was signed with PEMEX.
April 6
48
May
May 20 CNPC signed a framework agreement on strengthening oil and gas
cooperation with the Ministry of Energy and Industry of Tajikistan. Under the
agreement, the two sides will step up joint efforts in oil and gas exploration and
development in Tajikistan.
June
June 3
June 3 CNPC inked documents with RECOPE for financing a JV company to revamp the
Moin refinery.
June 6 A framework agreement on integrated cooperation in the Pacific Refinery and
upstream development was signed with Ecuadors Coordinating Ministry for Strategic
Sectors, Ministry of Finance, PetroEcuador and the local Amazon Company. Under the
agreement, CNPC will take a share in the construction of the Pacific Refinery project and
participate in the exploration and development of Ecuador's upstream resources.
June 18 A cooperation agreement regarding the development of the Block Bokhtar
in Tajikistan was signed with the Tajikistan Ministry of Energy and Industry, TOTAL and
Tethys Petroleum. Under the agreement, a joint venture will be set up, and CNPC and
Total will take the lead in project operation.
June 21 Long-term contract on increasing crude oil deliveries from Russia to China was
signed with Rosneft.
July 23
June 21 A framework agreement was signed with Novatek to purchase a 20% stake in
the Yamal LNG Project. A stock purchase agreement was signed between the two sides
on September 5, 2013.
June 26 A strategic agreement on investment and cooperation in CNPCs oil and
gas pipeline projects was signed with National Council for Social Security Fund (SSF),
Changjiang Pension Insurance Co., Ltd, China Clean Development Mechanism Fund,
Baosteel and institutional investors from the insurance and banking sectors.
July
July 10 Phase I of the YiningHorgos Gas Pipeline, the first large diameter SNG pipeline in
China, became operational. The pipeline runs 64 kilometers from Yining to Horgos in Xinjiang
Uygur Autonomous Region, capable of delivering 30 billion cubic meters of SNG per annum.
July 29
July 23 A cooperation agreement on the Malang block in the Santanghu Basin was
signed with Hess Corporation.
July 29 A joint study agreement on the Changdong block in the Ordos Basin was signed
with ExxonMobil.
49
August
August 19 CNPC and Kenyan Ministry of Energy and Petroleum signed an MOU on
promoting geothermal development and power generation in Kenya.
August 20 An MOU was signed with Celanese to jointly promote the application of
synthetic fuel ethanol.
September
August 19
September 3 CNPC and Turkmengaz inked an EPC contract on 30bcm/a gas production
capacity building in Galkynysh Gas Field, and an additional 25bcm/a gas sales &
purchase agreement.
September 5 A framework agreement on natural gas supply from Russia to China via
the eastern route was signed with Gazprom.
September 7 A comprehensive planning agreement on strategic cooperation and a
confirmation agreement for CNPC to hold shares in the Kashagan project were signed
with KazMunayGas.
September 9 CNPC and the Uzbek Government signed an MOU for feasibility study on
oil and gas exploration and development in two blocks in Uzbekistan and an agreement
on the principles of establishing a JV company for oil and gas exploration and
development in the Karakul block. Under the agreement, CNPC and Uzbekneftegaz will
establish a JV to develop the three gas fields and other potential oil and gas resources in
the Karakul block.
September 3
October
October 17 An MOU was signed with Rosneft on expanding upstream cooperation in
eastern Siberia.
October 20 Trunk of the Myanmar-China Gas Pipeline became operational. The pipeline
has a total length of 2,520 kilometers, including 793 kilometers in Myanmar and 1,727 kilometers
in China, with a designed annual delivery capacity of 12 billion cubic meters.
October 21 A consortium comprised of CNPC, Petrobras, Shell, Total and CNOOC won
the contract to develop Brazils offshore Libra oilfield. CNPC holds 10% in the consortium,
while Petrobras 40% and as operator.
September 5
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October 22 A document on major terms of commissioning schedule and oil supply for
Tianjin Refinery was signed with Rosneft. CNPC holds a 51% stake and Rosneft holds a
49% stake in the Tianjin Refinery project.
October 25 Zhongwei-Guiyang Gas Pipeline was completed. The 1,613km-long pipeline,
with a designed annual capacity of 15 billion cubic meters, was put into commercial
operation on November 19, 2013.
October 25
October 30 The Shale Oil Research Center jointly established by CNPC and Shell was
inaugurated. Research focuses of the center are the exploration and development of marine
facies shale oil blocks in the US and the continental facies shale oil blocks in China.
November
November 1 The Yangluo-Changsha section of the Lanzhou-Zhengzhou-Changsha
Refined Products Pipeline became operational, marking the operation of the whole trunk
line. The 2,080km-long trunk line, capable of delivering 15 million tons per annum, will
greatly facilitate oil products transmission from Western China to Central China.
November 13 CNPC E&D Holdings Cooperation U.A. and CNODC International Holding
Ltd., both being indirect subsidiaries of PetroChina, entered into an agreement with
Petrobras International Braspetro B.V. and Petrobras De Valores Internacional De Espana
S.L., regarding the acquisition of the entire shares of Petrobras Energia Peru S.A.
November 13
December
December 9 Sichuan Changning Natural Gas Development Co., Ltd. was incorporated as
part of the joint effort to develop the shale gas resources in the Changning block. CNPC
holds a 55% share in this company, with Sichuan Energy Industry Investment Group
Co., Ltd. 30%, Yibin State-owned Asset Operation Corporation 10% and Beijing Guolian
Energy Industry Investment Fund 5%.
December 9 A strategic cooperation framework agreement was signed with Schlumberger.
December 10 PetroChina and Datang International Power Generation Co., Ltd (Datang
Power) signed a purchase and sale agreement regarding Datang Power's SNG project in
Keshiketeng Qi, Inner Mongolia. Under the agreement, the project will supply 4 million
cubic meters of SNG to Beijing on a daily basis starting from December, 2013.
December 9
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Glossary
Proven reserves
Tertiary recovery
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.
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.
Recovery rate
The percentage of oil/gas in place that is recoverable from underground.
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.
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.
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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.
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.
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.
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.
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.
Occupational diseases
A disease or ailment caused due to excessive exposure to noxious fumes or
substances in a working environment.
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