Our E & P business has maintained a strong momentum of development and always played a leading role in China. By 2006, our newly proven oil reserves have remained over 500 million metric tons for the third consecutive year with an oil reserve replacement ratio of 1.097. In 2006, newly added 3-P natural gas reserves exceeded 300 billion cubic meters with a replacement ratio up to 4.37. Domestic crude oil production has been increased for the last five years, with 106.64 million metric tons in 2006, 58% of the national total. Natural gas production has registered 2-digit growth for the last seven years with 44.2 billion cubic meters in 2006, 76% of the national total. By focusing on exploration over the years, CNPC will usher in a new reserve increment period.

Refining & chemicals and marketing businesses have developed rapidly with increasing market competitiveness. By setting up several refineries of 10-million-ton capacity and a number of international-advanced refining and chemical facilities, our primary crude processing capacity reaches 138 million metric tons per year. In 2006, we processed 116 million metric tons of crude oil, more than 40% of national total. With large-scale refining and chemical bases in south and coastal China putting into stream, the size and strength of our refining and chemical business will be boosted, with a more rational production pattern, facility configuration and engineering process.

Oil and gas pipeline construction has made remarkable achievements with trunk line network covering the whole country. Thanks to the construction and operation of gas transmission trunk lines, such as West-East Gas Pipeline, the Second Shaan-Jing Gas Pipeline and Zhongxian-Wuhan Gas Pipeline in recent years, gas supply has been safer and more reliable with major gas supply systems being networked. Meanwhile, oil transmission trunk lines, namely, Kazakhstan-China Crude Pipeline, Western Crude Oil and Products Pipelines were completed and came on-stream. Currently, CNPC operated long-distance oil and gas pipelines amount to over 30,000 km, accounting for over 80% of the national total.

Our international business has developed with big strides. We have three oil fields with annual production capacity of 10-million-ton in Sudan and Kazakhstan. In 2006, we produced 54.6 million metric tons of crude oil and 5.7 billion cubic meters of natural gas overseas. We had 500 technical service crews operating in 48 countries; exported materials and equipments to 60 countries; our international trading in crude oil, oil products and chemicals was increased rapidly with total trading volume up to over 93 million metric tons and turnover up to US$ 30 billion.

The cooperation between CNPC and the Japanese government, business community and petroleum sector enjoys a long history and a wide scope. As early as 1960s, after the signing of a long-term trade agreement between the two countries, CNPC has been a major company for execution of this agreement by exporting crude oil from Daqing to Japan ever since; developing oil field with Japanese yen loans. As of 1990s, our cooperation with Japanese business community has been further extended to upstream, trade and transportation, investment, manufacturing, material and equipment procurement and technology exchanges. A large quantity of Japan-made specialized petroleum materials and equipments were imported by our oil fields, refineries and chemical plants. For example, in 2006, we imported over 210,000 metric tons of special steel products and tubing, as well as 7 sets of extruding granulators. For the year 2007, with the signed contracts on consigned processing of crude oil, gross trade volume between CNPC and Japan will come up to US$ 2 billion.

Over these years, CNPC and its Japanese partners have carried out multi-level technological exchanges and personnel trainings in various ways, for example, 400 persons from CNPC’s refining and chemical business attended the training program.

With economic globalization deepening and regional economic integration strengthening, regional cooperation is playing a more and more significant role. Both China and Japan are large oil consumers, and our bilateral energy cooperation is complementary, has a huge potential, and can bring about synergy benefits. With the philosophy of win-win cooperation for mutual benefits and common development, CNPC will strengthen cooperation with Japan in the following areas.

Firstly, the cooperation in developing overseas oil and gas resources shall be intensified. Respective advantages of the two parties in resource countries shall be brought into full play in cooperation to improve business development potentials and enhance market competitiveness.

Secondly, we shall work together to conduct R & D and technology application. In the area of oil refining and chemicals, technologies for synthetic rubber manufacturing, plastic and clean fuel production as well as R & D of catalysts and chemical agents, development of high-performance products will be included. Cooperation in upstream could start with technical exchanges and applications on the exploitation of volcanic gas reservoir.

Thirdly, the cooperation in the field of energy conservation, safe operation and environmental protection shall be reinforced. As far as energy conservation is concerned, it mainly consists of energy efficiency management methods, information system of energy efficiency management and optimizing technologies of the energy system. For safe operation, accident prevention, emergency response and rescue and safety training for employees shall be included. As to environmental protection, it involves mainly technical exchanges about integrated utilization and recycling of refining and chemical wastes, and joint efforts in development CDM could be another choice in order to make our due contribution to global environmental protection.

Fourthly, trade volume of oil and gas, materials and equipments will be increased and the cooperation in storage and transport emphasized. We are likely to increase our purchases of special petroleum steel products and refining and chemical equipments from Japan, and expand our oil and gas trade with Japan. Meantime, we can discuss about jointly using storage and transporting facilities and the feasibility of strengthening our cooperation in this regard.

The last but not the least, renewable energy and new energy such as biofuel and terrestrial heat will be developed collaboratively.

Mr. Chairman, ladies and gentlemen, and friends,

In the past several decades, the cooperation between CNPC and Japanese businesses has made fruitful achievements. CNPC is willing to continue and deepen our dialogue and exchanges with Japanese business community, petroleum sector to promote mutual understanding so as to establish a long and stable cooperative relationship for win-win outcome and common development.

Thank you all!