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In Pursuit of Harmony: Petroleum Industry Development, Global Climate Change & the Environment

A speech given at the 2010 China International Energy Forum and the Workshop for Energy and Climate Change
Wang Yilin, Vice President of CNPC
October 2010, Beijing

Ladies and gentlemen,

With the glorious autumn weather upon us, the China International Energy Forum has opened in Beijing. I am extremely honored to have been invited to attend this event, and I would like to thank the organizers for arranging an opportunity to share my thoughts.

In recent years global climate change has intensified, with instances of extreme weather increasingly common. The level of international concern for environmental protection is rising. The nations of the world have increasingly recognized the importance of environmental protection in ensuring sustainable socio-economic development. In May 1992, the United Nations passed the "United Nations Framework Convention on Climate Change", which was the first formal effort to introduce the idea of dealing with global climate change into the management of human social development. To date, more than 192 countries have signed this Convention. Today, we, the elites of the energy industry, are here in Beijing to exchange views on the theme of "energy and climate change,"express our understanding of the interrelationship between energy development and environmental protection, and discuss the path for sustainable development of the energy industry. This is an extremely meaningful event.

As is well known, the impacts on global climate change are many and varied. These include fluctuations in climatic conditions, as well as affects by human activities. Of particular importance is humanity's growing need for energy and its influence on the environment. Today, fossil fuels provide for 90 percent of the world's energy needs. This situation is likely to continue well into the future. The use of fossil fuels releases large volumes of carbon dioxide. As a producer of fossil fuels, the oil industry will be integral to realizing green development. In the next few minutes I’d like to speak a bit about my understanding of how to realize harmony between oil industry development and the environment.

First, development in the oil industry cannot come at the expense of sacrificing the environment. According to statistics, 60 percent of total greenhouse gas emissions each year are energy-related. It is clear that at the same time that the oil industry is promoting human social development, it is also putting lots of pressure on the environment. Since humans rely on the natural environment for their very survival, the development of our industry cannot come at the cost of sacrificing the environment. We have the responsibility to reduce greenhouse gas emissions to the lowest possible level. On the one hand, the oil industry should reduce greenhouse gases released as a byproduct of oil and gas production, foster low-carbon production and become active practitioners of emissions reduction. On the other hand, along with increasing energy demand and growing environmental protection awareness, the development and use of clean energy has become an inevitable trend. The oil industry must increase the proportion of clean energy, especially natural gas, within the energy mix, in order to satisfy society's requirements for clean, secure and reliable energy.

Second, development in the oil industry cannot come at the expense of excessive depletion of resources. Economic development and industrialization taking place throughout the world, and emerging economies in particular, have led to rapid increases in demand for energy. Human consumption of oil has increased 485 fold in the last 150 years. Going forward, oil and gas resources will become increasingly precious. As providers of energy, we must strengthen our sense of conservation, strive to change our "high carbon" production approach and reduce waste in the production process. Throughout the entire industry, in every segment of the production chain, we need to promote the goal of "energy conservation, green development."Moreover, we should actively work to change our development approach, optimize our industry structure and strive to raise the efficiency of energy use. Today there is a general consensus that in order to cope with the energy crisis and protect the environment, the most practicable choice is to raise energy efficiency and strengthen conservation. This approach is the easiest to implement and is the fastest means to significantly reduce emissions while satisfying rapidly growing energy needs.

Third, development in the oil industry cannot come at the expense of safety. Danger and risk are inherent to the oil industry. Operations are distributed over a wide geographical space and production chains are extensive. Therefore, safety is the lifeblood of the corporation. The only way to ensure coordination between the interests of the corporation and those of the society and the environment is to correctly manage the relationship between rapid development of the corporation and safety. As a consequence of the expanding scale of oil exploration and development activities, onshore conventional oil resources have progressively diminished, causing oil exploration and development activities to shift to offshore, polar, desert and other fragile regions. In these regions, mistakes can lead to catastrophe. The oil spill in the Gulf of Mexico in April of this year was the worst such disaster in the history of the oil industry, causing severe damage to both the economy and the ecology of the region. The lesson from this is that laying stress on safety and environmental protection is the important precondition of realizing sustainable development.

Fourth, the development of the oil industry should rely on scientific and technological innovation. The oil industry is technology intensive, embodying multiple disciplines and technologies. Each new theoretical and technological advancement provides new impetus for development in the oil industry. The circumstances of today's global oil industry are a far cry from past predictions: oil resources have not been depleted, the price of oil has not risen to wild heights and oil crises have not been replayed. All of these have been avoided due to progress in science and technology. Theoretical and technological innovation both played important roles in the process of China's oil industry development from a nonentity to a major player in the world. One could say that the history of oil industry development in China is a history of self-reliant innovation in science and technology. With the increasing prominence of scientific and technological innovation as a driver of social development, the oil industry must itself persist along the path. This is the best way for humanity to adapt to nature, and enable nature to benefit humanity.

CNPC is China's foremost producer of oil and natural gas, and is ranked fifth among world top 50 oil companies. As a responsible energy company, CNPC has for many years made "Caring for energy, Caring for you" its mission. The company has remained committed to technological progress; promoted clean energy development, as well as energy conservation and emissions reduction.

First, we emphasize the importance of controlling and reducing greenhouse gas emissions on mitigating climate change. Animated by ecological concerns, we actively take measures to reduce carbon emissions and employ carbon sequestration in order to help mitigate global climate change; and establish an environmentally friendly and resource-conserving corporation. In recent years, CNPC has invested in new scientific and technological innovations, developed low-carbon & new energy and taken other substantial actions to control greenhouse gas emissions. The sustainable development big picture perspective has guided management of the corporation. More specifically, we have established systems for monitoring energy conservation and emissions reduction, compiling statistics and conducting evaluations; and integrated pollution reduction goals into all levels of the manager evaluation system, in order to instill the spirit of energy conservation and emissions reduction into each and every employee.

Second, we accelerate the development of our oil and gas business, and increase our ability to supply clean energy domestically. As a result of the country's resource endowments, China is the world's biggest consumer of coal. Coal accounts for 70 percent of all energy consumed in China, much higher than the 22.4 percent global average. By contrast, oil and gas only account for 22.6 percent of the country’s overall energy consumption, which is much lower than the 62.4 percent global average. Therefore, lowering coal's share of the national energy mix, while raising the proportion of oil and natural gas, especially natural gas, is the most practical means by which China can achieve low carbon development and the greatest contribution the country can make to global low carbon economic development. CNPC has long focused on exploration and development of domestic sources of oil and gas. It has worked hard to discover massive, high-quality reserves, maximize potential for resource extraction and raise the proportion of oil and gas in the country's energy consumption mix. Given natural gas's clean properties, CNPC has regarded it as a long-term strategic growth sector. By accelerating domestic exploration and development of natural gas and expanding purchases of foreign natural gas, we have realized rapid increases in natural gas supply. For many years, CNPC's output of natural gas has recorded better than 10 percent annual growth, and the company now supplies 80 percent of the domestic market.

Third, we continue to strengthen research and application of new technologies; while developing traditional fossil fuels, actively and judiciously move forward with development of new energy. In order to effectively support the company's oil and gas business development, we increase investment and concentrate efforts to develop key science and technology projects, and strengthen the integration and application of scientific and technological achievements. Since 2006, CNPC has engaged in large-scale exploration and development of coal bed methane. After many years of research and trial application, the company has established an initial set of technologies suitable for high coal-rank coal bed methane exploration and development. In the Qinshui Basin of Shanxi province the company has started production at the country’s first high coal-rank coal bed methane field. In 2007, at the Ordos Basin CNPC initiated tight gas production operations. In order to accelerate the exploration and development of shale gas domestically, CNPC, in cooperation with Royal Dutch Shell and ConocoPhilips, has carried out research into shale gas exploration and development and evaluation of potential resources.

Fourth, we actively change our development approach, enhance energy efficiency, and fully strengthen energy conservation and emissions reduction work. CNPC will realize its goal of harmonizing the development of the corporation with the best interests of society and the environment by doing the following: driving the overall development of oil and gas resources to enhance recovery efficiency; accelerating adjustment in the distribution of refineries, optimization of the industry structure and upgrading of refined oil products; investing heavily to move forward twenty major projects in energy conservation and emissions reduction; removing outdated production capacity and promoting the use of adaptable energy conservation technologies; strengthening responsibility for reaching energy conservation targets and other important measures in order to create a development model that attaches importance to safe, clean, economical and high quality production. In 2009, we reached the targets of the Eleventh Five Year Plan ahead of schedule.

Ladies and Gentlemen:

"Caring for energy, Caring for you" is the unwavering pursuit of CNPC. Going forward, we will continue to promote technological innovation within the energy field. By developing at a healthier, more stable pace and improving our record in fulfilling our corporate social responsibilities, we will continue to offer clean, good quality, high efficiency energy, and strive hard to build a good life for all.

Thank you very much.

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