In 2008, PetroKazakhstan discovered massive reservoirs in carbonate buried hills, and obtained commercial oil and gas flows at Block Doshan in the west, as well as the little-explored Block Karaganda in the north.

In 2010, we made important breakthroughs in progressive exploration of two blocks and two mature oilfields in South Turgai Basin as part of PetroKazakhstan, with oil and gas discovered above the caprock of the region for the first time. These demonstrated new room for exploration to tap into unstructured reservoirs.

North Buzachi Oilfield

North Buzachi Oilfield is located in Mangghystaū, western Kazakhstan. In 2003, CNPC purchased 35% and 65% shares of Chevron Texaco North Buzachi Inc. (TNBI) from Nimir and Texaco respectively, and thereby owned a 100% stake in the North Buzachi Oilfield. CNPC and Russia's Lukoil currently have 50% holdings each in the North Buzachi Oilfield after the stock rights changed hands several times. The oilfield is jointly operated by the two companies.

In 2005, CNPC's horizontal sidetrack drilling and acidizing-based stimulation test in the North Buzachi Oilfield both obtained excellent results. Output from the horizontal sidetrack wells was as much as 14.4 times of the previous output, while the output from acidized wells was increased
3.6 times.

On July 10, 2009, the phase-Ⅱ engineering of the North Buzachi central processing station started operations, which raised the oilfield’s processing capacity to 2 million metric tons a year.

KAM Project

The KAM project mainly includes Konys and Bektas oilfields, which are located in the South Turgai Basin, covering an area of 431 square kilometers.

In November 2004, CNPC acquired 50% shares in Konys and Bektas oilfields (KAM Project). The company currently owns a 25% holding in the two oilfields respectively.

ADM Project

In January 2005, CNPC signed an agreement with Ay-Dan to buy shares for ADM and acquired a 100% stake in it. Ay-Dan has exploration licenses for the Aryss and Blinov blocks. The licensed exploration areas are 215.86 square kilometers and 59.697 square kilometers respectively.

In 2006, oil and gas flows were obtained from Cretaceous formations in appraisal well SPR5 in the northern lakeshore No.3 structure, with a daily output of 122 cubic meters. In 2007, commercial oil flows were discovered in South Aryss and Blinow, increasing the oil in place by
12 million metric tons. In 2008, we made several new discoveries in carbonate reservoirs in the lakeshore prospect area.

Jointly Operated Piplines

Kazakhstan-China Crude Oil Pipeline

Kazakhstan-China Gas Pipeline

Kenkiyak-Atyrau Pipeline

Zhanazhol-KC13 Gas Pipeline

Environmental protection

CNPC gives priority to protecting ecological environment and improving the efficiency of natural resource utilization. Moreover, we have actively promoted the use of environmentally friendly technologies and taken various measures in order to minimize our environmental footprint. Our efforts include improving energy efficiency, resource recycling, ecological restoration, and emissions reduction.

All of CNPC's projects in Kazakhstan - whether for exploration or development, refining or petrochemicals, pipeline transportation or technical services are required to make an Environmental Impact Assessment (EIA) before, during and after construction, in order to avoid negative impact to local environment. At the same time, we are committed to saving water resources and reducing wastewater discharges. Liquid and solid wastes and domestic sewage are sorted and treated at separate treatment plants.

In response to the Kazakh government's prohibition on gas flaring, we have made efficient use of oilfield associated gas and achieved significant economic, environmental and social benefits. Our oil and gas processing capability has been enhanced, resulting in increase of output. The recovered associated gas is used for power generation to improve energy efficiency. The remaining associated gas is re-injected to the reservoirs to minimize environmental pollution.

During the construction of the Kazakhstan-China Oil Pipeline, we placed a high premium on the protection of soil, vegetation, and wild animals, as well as the restoration of landforms. Among our many efforts, we avoided building camps and limited construction area. We also tried, whenever possible, not to occupy farmland and other fertile areas. Action was immediately taken to remedy any damage caused. While digging pipe ditches, we were certain to return the topsoil to its correct place.

During construction, employees were forbidden from lighting fires in the vicinity of weeds and shrubbery in order to minimize the impact on wild animals'habitats. When digging the pipe ditch, we created a temporary passage for animals so that their natural movements to and from water sources would be unimpeded. And after completion of the project, we tried our best to restore the land to its original characteristics.

In 2009, PetroKazakhstan Inc., a holding company of CNPC, adheres strictly to the environment laws and rules of Kazakhstan and actively responds to the call of the local government for comprehensive utilization of natural gas. The company strengthened the development of projects involved in the comprehensive use of natural gas. The second phase of the PKKR project and the TP oil/gas processing plant has been completed and made operational. Over 90% of the company’s natural gas is comprehensively utilized, taking the lead among companies in Kazakhstan. In October 2009, PK was granted the highest honor in environmental protection in the oil industry - Golden Prometheus - by the government of Kazakhstan in recognition of its efforts in the comprehensive utilization of natural gas and its achievements in environmental protection.

In 2010, we invested USD 350 million in three major natural gas utilization projects — the oil transfer station of Hope Oilfield, No. 4 Oil and Gas Processing Plant, and wet gas re-injection. The three projects were built and became operational within only eight months. CNPC-AktobeMunayGas was therefore granted the "Golden Award of Most Socially Responsible Enterprise" by Nursultan Abishevich Nazarbayev, President of Kazakhstan.

Economic Development

CNPC promotes local economic development through supplying natural gas to local people and companies at a preferential price, as well as crude oil to Kazakh refineries and agricultural oil to farmers at a reduced price. Currently, we supply natural gas to residents and industrial enterprises in Aktobe at a 75% discount. Meanwhile, CNPC supplied more than 3.4 million metric tons of crude oil at the domestic rate to Kazakh refineries between 2001 and 2008.

We also seek to stimulate the development of Kazakhstan's small-and medium-sized enterprises through the purchase of local goods and services. In 2006, CNPC AktobeMunaiGas purchased goods and services worth USD 719 million from Kazakh suppliers, which were mainly small-and medium-sized enterprises. During the construction of the first section of the Kazakhstan-China Oil Pipeline, our purchases from Kazakh companies, such as locally produced raw materials and mechanical equipment, were worth more than USD 17 million. The supply of concrete, sand, rocks, steel, and LNC used for welding was ll sub-contracted to local companies with a contract value of USD 19.3367 million. We also sub-contracted projects worth USD 18.6 million to local contractors, which directly and indirectly created 1,500 jobs.

Our sustained development in Kazakhstan has promoted the construction of local infrastructure. The Emba-Zhanazhol Railway, invested and constructed by CNPC, became operational in December 2006. With a designed freight capacity of 2.262 million metric tons per year and passenger capacity of 6,000 people per month, the 79.7 kilometers railway is free for our employees and can satisfy the needs for production and living. It has also made it easier for farmers along the line to reach new markets.

In 2007, CNPC donated USD 4 million and USD 1.8 million to Kyzylorda Province and South Kazakhstan Province respectively, funding the construction of railway, community park, school and library, and helping local residents to improve drinking water and power supply facilities.

In 2010, we provided support to five agricultural areas, and funded the repair and maintenance of community kindergartens in Mangystau Province.

Training and Education

CNPC is committed to staff career planning, and to this end provides training and education opportunities to all employees. The education and training programs are well-thought out and based on the needs of career planning. We have long-term cooperative ties with reputable universities, colleges and specialized training agencies in Kazakhstan and foreign countries, providing training in technology, management, sales, HSE, quality supervision, business and foreign languages.

We have been holding a three-week management training for Kazakh managers at a training center of the China University of Petroleum (Beijing) for many years so that local managers can study business practices, and also organize visits to CNPC-affiliated oilfields in China for business exchanges.

CNPC AktobeMunaiGas supports the education of Kazakhs by setting up education funds, sponsoring academic meetings of higher education institutions, holding nationwide debates for college students, and sponsoring Kazakh students to study overseas. In 2000, the company allocated USD 1 million in education funds to support young Kazakh experts, outstanding students, and talented students from poor families. In 2008, we contributed USD 776,900 to support education in Kazakhstan. This included financing the study of 77 young Kazakhs at the China University of Petroleum (Beijing) and 35 students in Kazakhstan.

PK has also set up a special education fund to finance the education of excellent young Kazakhs. It has helped many middle school students from rural and mountainous areas to receive higher education at home and abroad. With the support of the Kyzylorda government, in 2005, PK established a scholarship to finance the college education of local outstanding students, and provide full scholarships to facilitate the sharpening of skills and talents that fally significantly short of the demands of the Kazakh oil industry. After acquisition, PK has provided higher education opportunities to 54 Kazakh middle school students.

In 2010, the CNPC’s Kazakhstan project companies spent RMB 5 million in total to help outstanding local youth receive education in prestigious universities in China, Kazakhstan and other countries.

Localization and Diversification

CNPC AktobeMunaiGas employs 20,000 local people from more than 10 nationalities, accounting for nearly 15% of the city's workforce and more than 97% of employees in major oil and gas investment businesses. This makes it the firm with the highest percentage of local staff among all the foreign businesses operating in Kazakhstan.

We respect different customs and religious freedom, and follow Kazakh customs in food, marriages, funerals and festivals. During important national festivals and holidays, we organize grand get-togethers to celebrate with the local employees. Meanwhile, we have created various platforms to remove linguistic and cultural barriers between employees from China, Kazakhstan, Russia and the West.

In 2005, CNPC took over the operation and management of PetroKazakhstan Inc. More than 4,000 employees from more than 10 countries like Kazakhstan, US, Canada and China were grappling with their many differences in terms of language, culture, religion, customs, lifestyles and values. We have built a culture of mutual trust based on effective communication in PK. We also organize language training and encourage collective activities to facilitate employee communication. The training also provides insights into Chinese, Kazakh and Western traditional cultures, and this has greatly enhanced mutual understanding. We also organize outings on holidays, and hold banquets and parties to boost cultural exchang4es within the company.

Community building

Since 1997, CNPC AktobeMunaiGas has signed a socio-economic cooperation memorandums with the province of Aktobe to help beef up the rural infrastructure, develop agriculture, build public facilities and boost education, culture, sports, healthcare, and poverty relief. In 2008, CNPC AktobeMunaiGas honored its USD 6.38 million commitment in the Socio-Economic Cooperation Memorandums. From 2006 to 2008, PK signed Socio-Economic Cooperation Memorandums with the governments of Kzyl-Orda and South Kazakhstan and put USD 15 million in local infrastructure construction, urban heating, agricultural development, sports, culture, education, healthcare, and other public welfare projects.

In the past decade, CNPC has taken several initiatives to help disadvantaged groups. In May 2003, CNPC AktobeMunaiGas Built 80 homes for widowed seniors and veterans of World War II. The company also set aside USD 63,700 to subscribe to newspapers and magazines, and sponsors a Veteran Soldier Festival every year. To improve healthcare service, CNPC AktobeMunaiGas had donated a57 ambulances to Aktobe province by 2008. We also spent RMB 23.73 million on the construction and maintenance of infrastructure, hospitals, and cultural and religious venues in Aktobe and Astana in 2010.

CNPC also carries out public welfare projects in cooperation with non-governmental organizations. PK has been supporting the Foundation for Promoting Employment of the Socially Insecure Kazakh Citizens and Social Security. From 2006 to 2007, the company allocated USD 56.3 thousand to carry out projects aimed at socially vulnerable groups. In 2008, PK supported the foundation in its efforts to promote temporary and long-term employment, develop the urban infrastructure, and assess the condition of people not covered by social security.

Support for Culture and Sport

Since 1997, CNPC AktobeMunaiGas has sponsored many social and cultural activities in Aktobe. For example, the company has sponsored the Aktobe soccer club, financed the local museum and monument, and backed academic meetings, art exhibitions and concerts. In 2006, the company invested USD 793,100 in building the monument and museum in honor of the Kazakh musician Zhubanov, and held a nationwide commemoration for him. CNPC AktobeMunaiGas also provides strong support to the development of both popular and professional sports, including weightlifting, swimming, hockey and free boxing. In recent years, the Aktau soccer club, which is sponsored by CNPC AktobeMunaiGas, has recorded a string of successes.

Since 2000, PK has been supporting a fund for young people, whose aim is to introduce economics to middle and primary school students and hone their social skills. It has benefited 37,000 middle and primary school students. Meanwhile, PK also joined hands with the provincial government of Kyzylorda to set up a Development Fund, for promoting local culture and sports. A local soccer team named Caesar, set up under this fund's support, even won a national championship. This money also helped renovate the central stadium of Kazakhstan and given the sport of weightlifting a leg up.