With the authorization of the Chinese government, CNPC has launched cooperation with foreign oil companies to jointly explore and develop some blocks in China.

The joint blocks and projects are mainly located in the Daqing, Jilin, Liaohe, Dagang, Changqing, Southwest and Xinjiang oil and gas fields. We have worked with foreign oil companies in terms of risk exploration, development of complex oil and gas fields, offshore exploration and development, and unconventional oil and gas resources such as CBM and shale gas, etc.

By the end of 2009, 34 joint exploration and development projects were underway, covering an area of 33,500 square kilometers. These included 24 conventional oil/gas projects covering an area of 23,500 square kilometers, and produced 3.714 million metric tons of crude and 3.44 billion cubic meters of natural gas, totaling 6.45 million metric tons of oil equivalent.

By the end of 2010, 35 joint exploration and development projects were in progress, including 15 conventional crude, 10 conventional natural gas, and 10 CBM ones. These projects covered 37,600 square kilometers, producing 3.76 million metric tons of crude and 3.68 billion cubic meters of natural gas throughout the year, i.e. 6.69 million metric tons of oil equivalent, up 3.7% year-on-year.

In 2010, we signed a gas contract on Dajing Block in Junggar Basin, two agreements on joint evaluation and research of Daning CBM block and Daqing tight oil project. The joint shale gas assessment for Fushun-Yongchuan Block proceeded smoothly. CNPC was approved by the state as a pilot enterprise for international cooperation in CBM development.

Main Projects

Changbei Project

On September 23, 1999, CNPC and Shell Exporation (China) Ltd. signed a contract on the natural gas development and production of Changbei Block, in Shaanxi Province and Inner Mongolia Autonomous Region. Shell Group is our partner and the operator of the project. The contracted term of 30 years included the evaluation, development and production periods.

The joint Changbei Block, part of Changqing Oilfield in the Ordos Basin, covers an area of 1,690.72 square kilometers.

In March 2004, CNPC and Shell established the Changbei Joint Working Group to launch the Changbei project. In March 2005, development of the Changbei contracted block formally commenced.

In 2006, well CBI-1, the first bilateral horizontal well, was drilled and put into production test as planned, yielding 1 million cubic meters of natural gas per day. In November 2006, Changbei Central Gas Processing Plant was put into a test run. In March 2007, Changbei Gas Field formally went into commercial operation and became China's first commercially operational onshore oil and gas cooperation project. An annual production capacity of 3 billion cubic meters of natural gas has been constructed in the field, and it is a major source for the cities of Beijing and Tianjin, and Shandong and Hebei provinces.

In 2008, after well CB14-1 was put into production, daily productivity of Changbei reached to 10 million cubic meters, hitting the 3bcm/a target capacity two years in advance. In 2009, Changbei block produced 3.32 billion cubic meters of natural gas.

In August 2010, the overall development plan for Chengbei project was approved by NDRC, and the target commercial gas delivery was increased from 3 to 3.3 billion cubic meters per annum. Since its commercial production in March 2007, Chengbei project had cumulatively produced more than 11 billion cubic meters of natural gas, completed and tested 26 bilateral horizontal wells. By the end of 2010, the average daily output per individual well was 500,000 cubic meter. 15 of these wells produced more than 1 million cubic meters each per day at the initial stage. In particular, well CB12-1 output 2.2 million cubic meters per day at the initial stage, and 1.5 million cubic meters at the end of 2010. It had cumulatively yielded 1.1 billion cubic meters since being put into production in March 2008.

Zhaodong Project

In February 1993, China National Oil & Gas Exploration and Development Corporation (CNODC), a subsidiary of CNPC, signed an oil contract on Zhaodong Block with XCL, with the contract term of 30 years includes the evaluation, development and production periods. In August 1994 and May 1995, APACHE completed the acquisition of the 50% interest of XCL on two occasions, and became the operator of the Zhaodong Project. In March 2006, PetroChina, a holding company of CNPC, and APACHE signed the joint development contract on Block C-4 in Bohai Bay Basin. In August 2006, Australia's ROC Oil acquired all the interest of APACHE in the block and became the current operator of the Zhaodong Project.

Zhaodong Block is located at the tidal and shallow water zone in the Bohai Bay Basin. It covers two joint blocks ― C/D and C4, whose proven oil in place in are 67.86 and 11.55 million tons respectively, covering an area of 35.85 square kilometers.

In March 2001, development of the C/D Oilfield of Zhaodong Project started. In August 2003, the oilfield was formally put into production, with a daily output of 6,000 barrels. During the development of the field, horizontal wells and high deviated wells were drilled, and multiple fracturing with sand control completion was applied. The penetrated horizontal intervals have an average length of 400 meters. The initial daily output per individual well is averagely over 2,000 barrels. From 2004 to 2006, Zhaodong Oilfield produced more than 1 million metric tons of crude oil, up to 3.71 million metric tons cumulatively. Its average daily output of 2,250 metric tons and daily output per individual newly drilled wells of more than 300 metric tons on average are remarkable in the development and construction of China's tidal and shallow water oilfields. In 2006, 1.29 million metric tons of oil was produced.

In 2009, 1.04 million metric tons of oil was produced from these two blocks, exceeding one million metric tons for the sixth consecutive year, despite the climbing composite decline rate in mature blocks and increasing difficulties in well site locating and drilling engineering. We also drilled 16 new wells, including 12 oil producers and four water injectors. Seven of the new oil producers achieved an average daily production over 200 metric tons in initial stage.

The second-phase offshore engineering project, which lasted two-and-a-half years, became operational in August 2009. There were 86 newly added wellhead slots, the newly added crude processing capacity amounted to 30,000 barrels a day; and newly added water processing capacity 60,000 barrels a day. By the end of 2009, the offshore project was capable of processing 60,000 barrels of crude and 120,000 barrels of water per day.

In 2010, Zhaodong Project produced 1.01 million metric tons of crude oil. The natural gas pipeline became operational on a trial basis, delivering associated gas through an undersea pipeline to Chenghai 1-1 artificial island in the tidal area of Dagang Oilfield for processing. Once being fully operational, the pipeline is expected to transport 60-70 million cubic meters annually, which will provide an important new source of gas for Beijing and Tianjin.

Chuandongbei Project

On December 18, 2007, CNPC signed a natural gas development and production contract on Chuandongbei Block in Sichuan Basin with Chevron, who is also the operation of this block.

The project block is located in Sichuan Basin, covering 1,969 square kilometers, with 175.97 billion cubic meters of natural gas in place. Jointly developed by CNPC and Chevron, it is by far our largest onshore joint project.

The project was formally launched in April 2008. Currently we have reached agreement with Chevron in terms of introducing advanced management concept, providing mutual support for emergency response, introducing advanced technologies and design concept for developing sour gas fields, and handing over operation. The project is planned to reach a production capacity of 2bcm/a in 2010 and then 7bcm/a in 2013.

In 2009, with Chevron as our partner, the Chuandongbei project entered into development stage. The overall development plan for Luojiazhai gas field was approved by the National Development and Reform Commission on October 29, with a designed production capacity of 6 billion cubic meters per annum. At the same date, we signed an agreement to put Luojiazhai gas field into development with Unocal East China Sea Limited, which is wholly owned by Chevron.

The proven gas fields in the project will be developed in three stages. The first stage is the overall development of Luojiazhai gas field, including the construction of Xuanhan gas processing plant. The second stage involves the overall development of Tieshanpo gas field and the construction of a gas processing plant. The third stage refers to the overall development of Dukouhe and Qilibei gas fields. On August 5, 2010, the overall development of Luojiazhai gas field was launched.

Hainan-Yuedong Project

On February 24, 2004, CNPC signed a contract on petroleum development and production in Hainan-Yuedong Block in the Bohai Bay Basin with Tincy Group Energy Resources Limited. Tincy is the operator of the project.

The contract area, a part of the Liaohe Oilfield with an area of 349.8 square kilometers, is located at the southern end of Hainan-Yuedong structural belt in the Bohai Bay Basin. The contract term is 30 years with a production period of 20 years and a three-year pilot experiment period.

Preparation for overall development was initiated in November 2008. Four artificial islands, one combined onshore processing plant, and ancillary oil pipelines will be built.

One artificial island and two auxiliary production platforms were completed at Hainan Yuedong Project in 2010. The project has been put into trial production, with eight wells producing approximately 100 metric tons of crude a day.

Southern Sulige Block

On March 2, 2006, CNPC and Total signed a natural gas development and production contract for Southern Sulige Block, which is CNPC's second joint project for gas development in the Ordos Basin. The block is near the Shaan-Jing Gas Pipelines and the trunk of the West-East Gas Pipeline. It is expected to become operational in 2010.