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Thank you for reading this report as well as for your support to PetroChina over time.

In 2019, given the complex business environment combined with the growing risk of economic downturn worldwide as well as more intense competition in the market, PetroChina strove ahead amid the changing conditions and difficulties. We adhered to the concept of business growth stressing innovation, coordination, environmental friendliness, openness and benefit sharing and the mission to deliver high-quality energy. We focused on our principal businesses, going all out to level up quality and efficiency while effectively dealing with material risks. Through these efforts, we achieved a better performance than expected, reaped significant benefits from our quality-based business development and furthermore, we improved our value-creating capabilities.

We were much stronger in supply of clean energy through increasing the exploration and production of natural gas, promoting environmentally-friendly development and optimizing the structure of energy supply. Guided by the industry’s low-carbon transformation strategy, PetroChina was committed to developing green energy solutions and green technology, with the aim to provide clean and high-quality energy in a more responsible manner. PetroChina has maintained an increased strategic focus on natural-gas exploration and production. In 2019, PetroChina achieved substantial year-on-year growth in gas production. This growth represented 70% of the total domestic gas production as a result. Gas marketing covered over 10 million end users, with the sales volume growing 19.6% year-on-year, addressing public demand for clean, low-carbon and high-efficiency energy resources. PetroChina has accelerated construction of key cross-border and domestic gas pipelines, facilitating the import of natural gas and LNG. The Company created the Action Plan for Green Development, aiming to foster green development which centers on oil and gas, complemented by the trial development and utilization of new energies such as geothermal energy and gas hydrate. Bearing in mind that “Clean Waters and Lush Mountains are Invaluable Assets”, PetroChina pursued cleaner production and a more efficient use of energy resources, continuously highlighting carbon emission management. The Company identified the risks that climate change brings and took appropriate measures. PetroChina was deeply involved in the activities of the Oil and Gas Climate Initiative (OGCI), and hosted the OGCI 2019 Conferences. We worked closely with international peers to explore opportunities for low-carbon transformation. The Company was honored with the 2019 Best Practice for Corporate Achieving the Sustainable Development Goals granted by the UN Global Compact Network China, and also the Exemplar Low-Carbon Enterprise in China for the ninth consecutive year.

We achieved steady and quality-based business growth by consolidating growth momentum with further innovation and deeper reform. Innovation within technology, management and the business model is the fundamental path to address global energy challenges and realize an energy revolution. In this regard, PetroChina focuses on capacity building and promotes organizational and mechanism reforms related to technical innovation to stimulate research institutions and talents. In 2019, PetroChina achieved good performance in technical innovation, contributing effective solutions to issues, such as equal access to energy, response to climate change and enhancement of energy efficiency. Technical advancements boosted increases in reserves and production, as well as a series of major discoveries in risk exploration, including the billion-ton Qingcheng oilfield, and two trillion-m3 gas regions (i.e. shale gas in the Sichuan Basin and Bozi-Dabei in the Tarim Basin). Innovative theories and new technologies/products were developed, and breakthroughs were made in some core technologies. PetroChina won the First Prize of the National Science and Technology Progress Award for the 100-million-tons production capacity project and the efficient development of carbonate reservoirs in the Middle East. We increased the use of information technology across the industry chain by promoting the formation of digital oilfields, smart refineries, smart pipelines, smart gas stations and IoT, enabling the integration of automatic data collection, remote monitoring and production/business decision-making and enhancement of the efficiency and the reliability of business operations.

We further consolidated the foundation for sustainable development through improving compliance management and corporate governance. PetroChina has continued to improve its management mechanism for sustainable development, integrating this concept into the whole value chain for effective control of environmental, social and governance risks. The Company has made increased efforts to improve corporate governance and its internal control system, through compliance management focused on system optimization and responsibility implementation, together with staff training in compliance education to ensure effective control of compliance-related risks. Our internal control and risk management system was found to have zero defects in external auditing for the 14th consecutive year. PetroChina enhanced supplier access and process monitoring to control ESG risks in the supply chain, and further improved communication and engagement with stakeholders to make our business operations more transparent. The Company was honored with awards such as the Most Honored Oil & Gas Company in Asia, and the Best ESG/SRI Indicators, further adding to PetroChina’s brand value.

We have worked on openness and cooperation, to build a community of shared interests in the international oil and gas sector, and witnessed expansion of international cooperation. PetroChina is committed to being a good corporate citizen, a preferred partner of the industry, and to addressing the major changes in the energy sector together with its peers. Its aim is to establish a shared-interest community featuring openness and a win-win cooperation. In 2019, PetroChina hosted important international exchange activities including the Belt and Road Roundtable for Oil & Gas Cooperation, the Sino-Russian Energy Business Forum, and the International Cooperation Forum on the sidelines of the China International Import Expo, and the memorandum on expanding cooperation in the oil and gas field of Kazakhstan and the extension contract of Block 5 in Oman were successfully signed, which represents the continuously expansion of cooperation scale and areas in the oil and gas field.

Through corporate social responsibility, we secured equitable and inclusive development. PetroChina has undertaken projects for people’s well-being, and increased employees’ personal benefits by linking their pay to the performance of the Company, thus ensuring the employees enjoyed greater gains, enthusiasm and confidence. We managed to expand up-, mid- and downstream business partnerships with local investors to drive the economic and social development of local areas. PetroChina also leveraged its industrial, technical and human resources for targeted poverty alleviation to support the government’s initiative. In 2019, we implemented nearly 70 targeted alleviation projects, and allocated 73% more funds than in 2018, helping to lift eight of the 10 targeted counties out of poverty. The localization strategy of the Company in overseas operations secured an over 90% local employment rate, among which many took up key technical or management posts. PetroChina paid taxes according to local laws, totaling RMB 42.9 billion overseas. Meanwhile, the Company continued to implement a series of projects to support local communities. PetroChina was honored with the Responsible Enterprise 2019 award for its outstanding social contributions.

In the year to come, given the complex situation, with accelerating energy transition and the profound adjustment of the energy supply-demand pattern, PetroChina will have to shoulder greater responsibilities and face more challenges as well as more opportunities. Nevertheless, we will continue to implement the strategy with respect to resources, the market, internationalization and innovation and the goal of building a top-class international energy company. While focusing on efficiency and profit and maintaining quality-based development, we will also seize the opportunities for the petroleum industry’s low-carbon transformation, accelerate the research and layout of new energy business and contribute to the UN Sustainable Development Goals 2030, creating and sharing a bright future with all our stakeholders.

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