Oil and Gas Operations

With increasing investment and engagement in overseas markets, the company's international oil and gas operations maintained rapid development in recent years. In 2007, oil and gas output from our five major oil and gas cooperation regions — Africa, Central Asia-Russia, South America, the Middle East and the Asia-Pacific was boosted to 64.45 million metric tons of oil equivalent. Rapid growth was also seen in oil and gas trading, engineering and technical services and materials and equipment export.

Exploration and Production

In 2007, CNPC focused on progressive exploration to increase reserves and production, and strengthened risk exploration to make strategic discoveries. A total of 52.41 million metric tons of recoverable reserves were newly added. Our overseas development operation produced 60.19 million metric tons of crude oil, of which CNPC's share was 29.98 million metric tons. We also produced 5.36 billion cubic meters of natural gas, of which CNPC's share was 3.51 billion cubic meters. In 2007, our oil and gas output reached 64.45 million metric tons of oil equivalent.

Our risk exploration saw significant progress in Chad, Kazakhstan, and Algeria. We were also actively engaged in a number of offshore risk exploration projects.

In Russia, Vostok Energy Ltd., a CNPC joint venture with Rosneft, won licenses to explore for oil and gas in two eastern Siberian blocks — Verkhneichersky and West Chonsky.

In Sudan, further progress was made in exploring the Fula west actic region of Block 6. Oil output from Block 3/7 in Sudan reached 10 million metric tons. Oil output from Block 1/2/4 in Sudan remained stable with a small increase.

In Venezuela, CNPC and PDVSA signed an integrated upstream and downstream cooperation agreement at the sixth session of the Sino-Venezuela High Level Joint Committee.

In Kazakhstan, our ADM project witnessed an important breakthrough, with the discovery of a thick oil layer in well UAR-1 allocated in an independent structure at the south of Aryss Oilfield.

In Oman, significant discoveries were made at our Block-5 project by peripheral exploration wells.

In Myanmar, a high-yield gas flow was obtained from well PSC-101 during a production test in Block IOR4, demonstrating the resource potential of deep layers in the block.

Oil output from PetroKazakhstan exceeded 10 million metric tons for the second consecutive year.

Pipelines and Transportation

We operate six overseas crude oil and gas pipelines with a total length of 5,170 kilometers, which can transport 52 million metric tons of oil and 5.2 billion cubic meters of natural gas every year, including:

A 1,506km-long crude pipeline from Block 1/2/4 Oilfield in Sudan to Port Sudan

A 1,370km-long crude pipeline from Block 3/7 Oilfield in Sudan to Port Sudan

A 716km-long crude pipeline from Block-6 Oilfield to Khartoum Refinery in Sudan

A 962km-long crude pipeline from Atasu to Alashankou in Kazakhstan

A 448km-long crude pipeline from Kenkiyak to Atyrau in Kazakhstan

A 156km-long gas pipeline from Zhanazhol Oilfield to KC13 compressor station on the Central Asia International Natural Gas Pipeline

Refining and Chemicals

In 2006, CNPC upgraded its overseas crude processing capacity to 11.6 million metric tons of oil, by purchasing PetroKazakhstan's Shymkent refinery in Kazakhstan, upgrading the Khartoum refinery in Sudan, and constructing the Adrar refinery in Algeria. In 2006, we processed 8.2 million metric tons of crude oil, 70% more than in 2005. This included the 4.16 million metric tons processed by the Khartoum refinery in Sudan, and 4.04 million metric tons processed by the Shymkent refinery in Kazakhstan. In 2006, Khartoum chemical plant produced 23,000 metric tons of polypropylene.

Using the delayed coking and ICR technologies, we completed the Phase II Upgrade of the Khartoum refinery in Sudan, and constructed the first delayed coking unit for high-acid and high-calcium crude oil in the world. This facility produced clean diesel oil and high octane rating gasoline complying with Euro-IV standard, achieving a breakthrough in processing and treatment technologies of high-acid and high-calcium crude oil.

In 2007, the Soralchin refinery, CNPC's joint venture with Algerian state oil company Sonatrach, was completed and put into operation, boosting our overseas crude processing capacity to 11.6Mt/a. We processed 9.16 million metric tons of oil in 2007. These crude runs included 4.74 million metric tons at the Khartoum Refinery in Sudan, 4.07 million metric tons at PetroKazakhstan's Shymkent refinery in Kazakhstan, and 350,000 metric tons at the Soralchin refinery in Algeria.