Local Development

Building a Harmonious Community in Ecuador

Andes Petroleum, a joint venture of CNPC and Sinopec, is one of the major foreign petroleum companies in Ecuador. Since it acquired the operating rights in early 2006,Andes Petroleum has faced multiple challenges including amendments to Ecuador's petroleum laws,

community-related disagreements, chronic ethnic conflicts and a deterioration in public security.

The company conducts a range of programs specifically intended for the benefit of local people, based on an insightful understanding of the situation and needs of local people. These outreach programs include the Andes Cocoa Garden, a mobile medical team and school buses. In addition, we promote the growth of the local economy by introducing planting techniques and giving financial support to public services, i.e. medical services, health and education. The concept of a "harmonious oil region" has become the theme of our local activities. This in turn creates a harmonious external environment for our operations.

Meanwhile, an employment program has been initiated to create 750 jobs for local people. The purpose of this program is to achieve the safe and orderly long-term development of the company and its oilfields. This will not only end the disturbances experienced in the past two years, but will also help the government make progress in tackling historic issues, and bring key figures from the southern and northern oil regions where the company is located back to the table. The aim is to eventually conclude a permanent peace agreement that will serve as a key to the settlement of conflicts that have been troubling the community and the oil regions for many years.

According to local media, Andes Petroleum has been highly praised by Ecuador's Ministry of Internal Affairs, Ministry of Energy & Mines, and Petroecuador, as a good example of handling local affairs. The Cuyabeno government has given the company the Advanced Unit Award for Community Affairs. The company also received a Gold Medal for Community Affairs jointly issued by Ecuador's National Union of Journalists and the Constituent Assembly. According to people in the northern region, Andes Petroleum is the first foreign company in the history of Ecuador offering sincerity and friendship to local people.

Building an Information Platform to Promote Rural Development

On November 8, 2007, the State Council Leading Group Office of Poverty Alleviation and Development sent a letter of thanks to the company for building an information platform to help poor areas attract investment, which plays a role in promoting trade in agricultural and associated products and increasing the income of farmers in poor areas.

In response to the call of the Chinese government to build a "new socialist countryside", and to promote the economic development of poor areas and increase farmers' incomes, the company has offered RMB 38 million to buy 19 slots on China Central Television and ten provincial TV stations since January 2007, to broadcast free advertising for businesses in 100 poverty-stricken counties across the country.

Corncob Processing Technology

The PTMEG Project of Qianguo Petrochemical Company is a good example of CNPC's contribution to local development. Furfural, the raw material for producing PTMEG, is made from corncobs. The production of 20,000 tons of PTMEG requires 30,000 tons of furfural, and 11 tons of corncobs can produce one ton of furfural.

Therefore, the project requires 330,000 tons of corncobs. This brings an additional income of 1,500 RMB per hectare to local corn farmers. The PTMEG Project can play an active role in increasing farmers' incomes, accelerating the construction of a new socialist countryside and promoting recycling agriculture.

Safe Water for Residents in Yan'an

Wangyao Reservoir, located in Ansai County, Shaanxi Province, is a large multifunctional reservoir with a capacity of over 200 million cubic meters, controlling a drainage area of 820 square kilometers. In 2002, Wangyao Reservoir was appointed as a key water source for Yan'an, Shaanxi Province. In the meantime, the 100 meter margin outside the reservoir's capacity area and the 1,000 meter area up the main stream were designated as a National First-class Water Source Conservation Area.

Coincidentally, the main oil producing area of CNPC Changqing Ansai Oilfield is located in the upper reaches and surroundings of the Wangyao Reservoir. Therefore, strict environmental protection standards were adopted at the very beginning of the oilfield's construction. We carried out comprehensive treatment along the two sides of the river in the reservoir area and stuck to the principle of a "clean and civilized oilfield". We solved many key technical problems in treating produced water and returned it to the source to ensure local water safety. However, as the conservation area expanded, 102 oil wells which had obtained licenses from the local government were included in the water source conservation area, resulting in their closure.

However, to ensure the interests of local people, Changqing Ansai Oilfield made a careful plan to leave the water source conservation area: oil wells were closed and three oil-gathering and ducting stations, 26 oil pipelines and six pipeline bridges were moved. All of the 102 oil wells in Wangyao Reservoir Conservation Area have now been closed. Since all of the closed wells were at their peak production and could have operated for another 20 years, the cumulative loss from the closure of these wells exceeds over 5 billion RMB.

Natural Gas for Hetian City

Located in the Tarim Basin and with the Taklimakan Desert in the center, the Tarim Oilfield suffers from a harsh environment. Local people had long used Euphrates Poplars and Red Willows as fuel, resulting in their excessive depletion. To solve the fuel problem and thus save these precious trees from extinction, CNPC carried out a natural gas supply project for Hetian City, which was completed and became operational in 2004, bringing natural gas to 4,000 families. By 2008, the whole of Hetian City and all nearby counties and villages will have natural gas supplies.