Constantly Expanding Investment

Energy development requires consistent and substantial capital input. The past few years have witnessed constantly increasing investment made by Sinopec in the exploration and production of hydrocarbon resources. Our investment in 2011 reached RMB 78.3 billion from RMB 43.6 billion in 2006, with the aggregate investment from 2006 to 2011 exceeding RMB 409.3 billion. In the meantime, taking advantage of capital operation, we expand our resource portfolios globally with 29 deals of merge and acquisition and accumulative investment of RMB 365.4 billion in overseas upstream business from 2006 to 2011.

Making Efforts to Expand Reserves and Production

In 2011, Sinopec continued to implement the resource strategy of "stabilizing output in eastern fields, expanding production in western areas, accelerating development in southern blocks, pushing forward offshore exploration and development, making breakthrough in unconventional resource development, depending on technologies and building up upstream strength". Great efforts were made to increase the hydrocarbon reserves and output in Shengli, Erdos, Sichuan, Tarim, and unconventional resources. Relying on innovation in theories, technology and management, we achieved high quality development with good economic benefits.

In 2011, we made 5 breakthroughs, 8 important progresses, 4 significant discoveries and 10 major results. Measured geological reserves added by 356 million tons and that of natural gas added by 215.7 billion cubic meters, both registering substantial growth and strengthening the resource basis for Sinopec.

In 2011, Sinopec produced 42.73 million tons of crude oil and 14.6 billion cubic meters of natural gas in China while the oil production from the western region increased to 8.466 million tons. Sinopec has also established overseas oil and gas production bases in 6 regions, including Africa, South America, North America, the Middle East, Asia—Pacific and Russia—Central Asia. Overseas equity oil production reached 22.07 million tons, up by 20% and exceeding 20 million tons for the first time. The equity production of natural gas was 1 billion cubic meters

Ningdong block, Sinopec Shengli Oilfield Sinopec Addax Petroleum operates in Iraq

Accelerating the Import of Overseas Resources

Faced with the unstable situation in the Middle East and North Africa, Sinopec has pressed ahead with the diversification of its crude import, strengthened international cooperation, explored more sources and mitigated supply risks. We have adopted multiple trade patterns, optimized logistics and transportation and expanded the gross volume of international trade, therefore guaranteeing the stable supply of oil and gas to the domestic market.

In 2011, the gross volume of Sinopec's crude trade reached 234 million tons, up by 25.8% on yearly basis. Meanwhile, Sinopec accelerated the import of overseas natural gas and signed the 6.3 million-ton/year LNG long-term procurement agreements with relevant suppliers.

Diversifying the Energy Mix

Sinopec has placed emphasis on the development and utilization of new types of energy, including the development of unconventional hydrocarbon resources (CBM, shale gas and shale oil etc.) and biomass energy (bio-diesel and bio-jet fuel) and the clean utilization of coal.

In 2011, Sinopec achieved significant progress in the exploration of unconventional resources. CBM discoveries were made in Yanchuannan, Zhijin and Heshun blocks while shale gas was found in Jiannan (the west of Hubei and the east of Chongqing) and Yuanba (northeast Sichuan). The first horizontal well for shale oil was drilled in the deeply depressed zone in Biyang Depression in Henan Oilfield.

With the successful commercial scale-up of the in-house developed bio-jet fuel technology in 2011, Sinopec became the first company in China which is in possession of the proprietary bio-jet fuel production technology and capable of large scale production.

By 2020, Sinopec is expected to have more than 30 billion tons of coal resources with 40 million to 45 million tons of equity coal production, 4 million tons of oil equivalent of biomass energy production and 4 million tons of oil equivalent of unconventional oil and gas production.