WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Contents
03 Company Profile
04 Letter from the President
07 Business Structure
09 Operation Highlights
21 Business Review
22 Upstream
26 Mid and Downstream
36 Technical Services
43 Alternative Energy
44 Financial Services
48 Research and Development
51 Management
52 Internal Control System
54 Employee Health and Safety
56 Human Resources
58 Corporate Culture
61 Corporate Responsibility
62 Environmental Protection and Energy Conservation
66 Corporate Citizenship
70 Management Team
72 Major Events
74 Company Honors
75 Affiliates WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 2 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Company Profile a Company Profi le
China National Offshore Oil Corporation (CNOOC) is the largest offshore oil and gas producer in China. Established in 1982, the Company has its headquarters in Beijing. It now has 57,000 employees and registered capital of RMB 94.9 billion.
CNOOC has maintained rapid growth and a reputation for quality since its incorporation. It has evolved from an upstream company into an integrated energy company, possessing high performance core business and other related businesses along the value chain. The Company is built upon synergetic business portfolios including: upstream (oil and gas exploration, development, production and sales); mid and downstream (gas and power, chemicals, refi nery, fertilizers); technical services (oilfi eld services, offshore oil and gas engineering and construction, logistics services); fi nancial services; and alternative energy.
In recent years, the Company has implemented effective measures for corporate restructuring, capital operation, overseas acquisition and expansion into mid and downstream businesses. We have experienced a boom period with improved overall competitiveness in conjunction with an outstanding reputation as an effi cient international oil company.
Guided by the corporate values of "Win-win, Responsibility, Integrity, Innovation, Human-oriented", during the Eleventh Five-year Plan period, CNOOC will continue its focus on scientific growth, synergetic and cost effi cient development, cultivation of a strong workforce, and competitiveness in research and development. Through sustainable growth and innovation, the Company aims to become a world-class international energy company.
CNOOC is the parent company of a group of subsidiaries and affi liates. “We”, “the Group” and “the Company” in this report all refer to CNOOC.
3 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Letter from the President
Dear Friends,
Thank you for your continued attention and support.
2008 was a year of significance for all of us. Under the guidance of the Scientifi c Concept of Development, we have confronted the tough challenges of natural disasters and the financial crisis yet maintained the momentum for efficiency and quality development through operational excellence and profitable growth. During the year, we achieved the best production and operation results in history.
In the face of this global financial crisis, our high standards of corporate governance and risk management have prepared the Company for risk identification and management, which helped us secure a healthy and dynamic development in 2008.
Whilst achieving business growth, we continued to fulfi ll our commitment to environmental protection. As a responsible corporate citizen, CNOOC put more efforts into energy conservation and emission reduction. After becoming the first Chinese company to join 3C (Combat Climate Change) in 2007, during this year, CNOOC gained membership of UN Global Compact, which showed our determination to shoulder corporate responsibilities.
In 2008, CNOOC remained committed to building a harmonious relationship between the Company and society. Throughout the year, our contributions
4 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Letter from the Presidentb
to disaster relief, poverty relief, aid to Tibet and other programs amounted to RMB 282 million, reaching a record high. After the 5.12 Wenchuan Earthquake, we decided to donate RMB 100 million to the quake-hit area for reconstruction every year for the following fi ve years through cost saving and effi ciency improvement.
The past year was eventful and full of challenges; but I’m pleased to say, through our concerted efforts, we have taken an important step toward our goal of building a world-class international energy company loved by employees, trusted by partners and welcomed by society, while loyally fulfi lling our share of economic and social responsibilities.
In 2009 the deepening global fi nancial crisis will continue to pose challenges to the Company. While meeting the challenges, we will make careful study and grasp potential opportunities. We will increase investment in the core business and further improve the management system and technological research capacity.
Looking ahead, we still have a long way to go. Under the guidance of the Concept of Scientifi c Development, I believe we shall keep marching towards our dream of becoming a world-class international energy company and continue to deliver maximum values to all parties involved.
Fu Chengyu CNOOC President
5 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 6 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Structure c Business Structure
CNOOC Ltd. Upstream CNOOC Research Center
China BlueChemical Ltd.
CNOOC Oil & Petrochemicals Co., Ltd.
CNOOC Gas & Power Group
Mid and downstream China Offshore Oil & Gas Development & Utilization Company
CNOOC Marketing Company
China National Chemical Construction Corp. CNOOC
China National Chemical Supply & Sales (Group) Corp.
CNOOC Petrochemicals Import & Export Co., Ltd.
China Oilfi eld Services Limited
Offshore Oil Engineering Co., Ltd. Technical services CNOOC Energy Technology & Services Limited
China Ocean Offshore Oilfi elds Service (Hong Kong) Ltd.
CNOOC Finance Co., Ltd.
Zhonghai Trust Co., Ltd. Financial services CNOOC Insurance Ltd.
CNOOC Investment Co., Ltd.
CNOOC New Energy Investment Co., Ltd.
CNOOC Bohai Corporation
CNOOC Nanhai West Corporation
CNOOC Nanhai East Corporation Others CNOOC Donghai Corporation
CNOOC Enterprises Corporation
CNOOC Offshore Oil Communication & Computer Center
China Offshore Oil Press
7 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 8 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights d
OPERATION HIGHLIGHTS
Revenue （RMB billion） Profit before tax （RMB billion）
2008 194.8 2008 67.8 2007 162.0 2007 56.5 2006 132.7 2006 49.0 2005 88.9 2005 38.8 CAGR 29.9% CAGR 20.4%
Total assets （RMB billion） Net assets （RMB billion）
2008 409.5 2008 205.9 2007 309.0 2007 167.6 2006 250.7 2006 137.1 2005 191.4 2005 105.5 CAGR 28.9% CAGR 25.0%
CAGR: Compound Annual Growth Rate
9 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Financial Data
2005 2006 2007 2008
Sales growth 25.4% 48.9% 22.1% 31.5%
Income growth 60.1% 26.3% 15.2% 19.4%
Net profit growth 62.3% 25.5% 15.1% 18.6%
Assets growth 24.9% 31.0% 23.3% 21.2%
Return on equity 20.3% 19.8% 18.1% 17.0%
Return on assets 23.1% 22.4% 20.8% 18.5%
Gross margin 47.5% 40.3% 36.8% 37.0%
Debt to assets ratio 31.3% 27.9% 26.2% 30.0%
Accumulated ratio of capital 27.0% 30.0% 22.3% 13.7%
10 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights d
Production Volume
2005 2006 2007 2008
OIL & GAS (million tons of oil equivalent) 39.00 40.33 40.47 42.93
Domestic (%) 86 86 85 85
Overseas (%) 14 14 15 15
Petroleum liquids (million tons) 31.97 31.54 30.55 32.44
Domestic (%) 87 88 88 90
Overseas (%) 13 12 12 10
Natural gas (billion cubic meters) 7.03 8.79 9.92 10.49
Domestic (%) 82 79 75 73
Overseas (%) 18 21 25 27
MID & DOWNSTREAM (million tons)
Urea 1.36 1.93 1.85 1.95
Methanol - 0.27 0.71 0.77
Ethylene - 0.65 0.83 0.84
Bitumen 1.56 1.77 1.47 1.20
Fuel oil 5.65 6.26 6.58 5.69
Electricity (billion kwhs) 2.66 3.52 5.24 5.98
LNG - 0.75 2.98 3.33
Capital Expenditure
2005 2006 2007 2008
CAPITAL EXPENDITURE (RMB billion) 32.65 63.10 49.23 87.82
Exploration & development (RMB billion) 19.18 47.07 30.15 36.58
11 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Sales
48.3% 41.2% 35.5% 42.9% 8.4% 6.9% 7.1% 2008 2007 7.0% 0.7% 2.0%
Income
84.0% 74.7% 5.3% 10.8% 2008 2007 6.8% 7.1% 1.8% 1.7% 2.1% 5.7%
Assets
47.7% 49.4% 19.0% 2008 2007 22.3% 16.8% 9.8% 6.1% 7.5% 10.4% 11.0%
Exploration & production
Mid & downstream
Technical services
Logistics services
Financial services
12 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights d Payment to Government （1982-2008） （RMB billion） 57.0
38.3
32.1
17.4
12.0
6.7 5.2
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Payment to Government (2008) （RMB million）
Income tax 16,966 Special oil gain levy 16,384 VAT 11,220 Government share oil 3,967 2007 State-owned capital gains 2,488 Sales tax 881
Royalty 757
Employee income tax 681 Other tax 3,635
13 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 AUDITOR'S REPORT
ZhongRui YueHua Audit Zi [2009] No. 04948
To China National Offshore Oil Corporation:
We have audited the accompanying consolidated financial statements of China National Offshore Oil Corp., which comprise the consolidated balance sheet as at 31 December 2008, and the consolidated income statement and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for Business Enterprises. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Independent Auditing Standards of Chinese Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of China National Offshore Oil Corp. as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for Business Enterprises.
Zhongrui Yuehua Certified Public Accountants
Beijing, China
April 17, 2009
14 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights d
Consolidated Income Statement
Year ended 31 December 2008 RMB million
2007 2008
REVENUE 148,111 194,789 Less: Cost of sales 86,279 115,654 Sales taxes 5,073 7,270 Selling distribution expenses 880 807 G&A expenses 5,470 5,977 Finance cost, net -316 -2,751 Loss from asset duation 596 1,946 Add: Investment income 6,142 1,338 Sound value fl exible loss and profi t -48 -100 PROFIT FROM OPERATING ACTIVITIES 56,224 67,124 Add: Subsidiary income Non-operating income 829 1,076 Less: Non-operating expenses 261 404 PROFIT BEFORE TAX 56,792 67,797 Less: Income tax 14,761 15,099 NET PROFIT 42,031 52,698
Less: profi t applicable to minority interests 13,805 19,224
NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 28,225 33,474
15 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Consolidated Balance Sheet
31 December 2008 RMB million
1 January 2008 31 December 2008
CURRENT ASSETS
Cash 60,886 70,068 Financial assets held for trading 853 170 Notes receivable 1,703 1,133 Accounts receivable 10,548 8,512 Advance payment 3,484 5,687 Dividend receivable 52 64 Interest receivable 75 270 Other receivable 2,080 3,784 Inventory 9,021 10,330 Other current assets 23,699 17,755 Total current assets 112,400 117,774 NON-CURRENT ASSETS Available-for-sale financial assets 20,557 6,356 Held-to-maturity financial assets 6,219 7,975 Long-term stock ownership investment 16,937 15,651 Investment real estate 365 377 Fixed assets 34,872 58,759 Construction work in process 18,818 47,097 Construction materials 1,290 3,857 Fixed assets-disposal -2 63 Oil&Gas assets 119,728 137,846 Intangible assets 3,631 5,510 Development costs 32 Goodwill 748 4,465 Long-term deferred expenses 430 1,326 Deferred tax assets 1,703 2,212 OTHER NON-CURRENT ASSETS 194 205 Total non-current assets 225,489 291,732 TOTAL ASSETS 337,889 409,506
16 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights d
Consolidated Balance Sheet ( Continued )
31 December 2008 RMB million
1 January 2008 31 December 2008
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans 1,707 9,073 Financial liabilities held for trading 6 49 Notes payable 1,058 1,590 Accounts payable 16,058 17,972 Account prepaid 3,420 3,572 Salaries,wages and welfare payable 5,558 5,925 Taxes payable 9,844 5,770 Accrued interest payable 168 549 Dividend payable 67 70 Other payable 4,463 5,714 Non-current liabilities due within one year 905 1,469 Other current liabilities 1,498 1,652 Total current liabilities 44,755 53,405 NON-CURRENT LIABILITIES
Long-term bank loans 10,916 35,481 Bond payable 11,013 11,966 Other long-term payable 1,542 1,606 Special item payable 248 1,251 Provisions 6,768 8,342 Deferred tax liabilities 10,289 8,971 Other non-current liabilities 51 1,637 Total non-current liabilities 40,826 69,254 TOTAL LIABILITIES 85,581 122,659 EQUITY
Paid-in capital 95,447 95,453 Capital surplus 39,343 30,705 Profi t surplus 12,407 12,454 Retained earning 43,578 74,514 Currency translation differences -3,819 -7,196 Equity attributable to equity holders of the Company 186,956 205,930 Minority interest 65,352 80,917 Total equity 252,308 286,847 TOTAL LIABILITIES AND EQUITY 337,889 409,506
17 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Consolidated Cash Flow Statement
Year ended 31 December 2008 RMB million
2008
CASH FLOWS FROM OPERATION ACTIVITIES
Cash received from sales of goods 203,089 Refund of other taxes and extras other than value added tax 1,354 Other cash received relating to operating activities 5,163 Subtotal of Cash Inflows 209,606 Cash paid for goods and services 74,483 Cash paid to and on behalf of employees 8,981 Taxes paid 51,029 Other cash paid relating to operating activities 5,266 Subtotal of Cash Outflows 139,759 Net Cash Flows from Operating Activities 69,848
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from return of investments 35,955 Cash received from distribution of dividends or profits and from bond interest income 3,348 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 72 Net cash received from disposal of subsidiary and other operating units 1,565 Other cash received relating to investing activities 1,555 Subtotal of Cash Inflows 42,495 Cash paid to acquire fixed assets, intangible assets and other long-term assets 71,024 Cash paid to acquire equity and debt investments 29,942 Cash paid to acquire subsidiary and other operating units 17,022 Other cash paid relating to investments 435 Subtotal of Cash Outflows 118,423 Net Cash Flows from Investing Activities -75,927
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuing shares and bonds 2,919 Proceeds from borrowings 36,273 Other proceeds relating to financing activities Subtotal of Cash Inflows 39,192 Cash repayments of amounts borrowed 11,602 Cash payments for distribution of dividends or profits 10,359 Other cash payments relating to financing activities 285 Subtotal of Cash Outflows 22,246 Net Cash Flows from Financing Activities 16,945
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH -575 NET INCREASE IN CASH AND CASH EQUIVALENTS 10,291 Cash and cash equivalents at beginning of year 57,373
CASH AND CASH EQUIVALENTS AT END OF YEAR 67,664
18 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Operation Highlights NOTES TO FINANCIAL STATEMENTS d 1. Accounting System
The China National Offshore Oil Corporation (herein after refer to as the Company) and its subsidiaries (not including those companies abroad and companies in fi nance industry) apply "Accounting Standards for Business Enterprises" , "Accounting System for Business Enterprises" and supplementary stipulations issued by the Ministry of Finance of the People's Republic of China.
The companies which are registered abroad apply local Accounting Standards for Business Enterprises and will adjust accounting books according to Chinese "Accounting Standards for Business Enterprises" and "Accounting System for Business Enterprises" in preparing fi nancial statements.
Zhonghai Trust Co., Ltd. and CNOOC Finance Co., Ltd. implement "Accounting Standards for Business Enterprises" and "Accounting System for Financial Enterprises".
2. Accounting Period
The accounting period of the Company is the calendar year from January 1 to December 31.
3. Functional Currency
The functional currency of the Company and its subsidiaries, (not including 5 joint-venture companies under China Oilfi eld Service Limited) is RMB Yuan. The function currency of 5 joint-venture companies under China Oilfi eld Services Limited is US dollars. The functional currency for those companies registered abroad is local currency.
4. Basis of Account
The accompanying fi nancial statements have been prepared in accordance with the accrual base, historical cost convention.
5. Accounting Treatment of Foreign Currency Transactions
Transactions denominated in foreign currencies of the Company and its subsidiaries (except Zhonghai Trust Co., Ltd. and CNOOC Finance Co., Ltd.) are translated into Renminbi (RMB) at the exchange rate quoted by the People's Bank of China on the fi rst day of the month, and they adjusted the foreign accounts balance at the exchange rate at year end. The differences between the above two amounts are treated as exchange gains and losses. The exchange gains and losses belonging to construction period are recorded into long-term prepaid expense. When fi xed assets reach the prearranged running condition, the exchange gains and losses during the period of constructing are recorded into construction in progress. Besides the above situations, the exchange gains and losses are recorded into fi nancial expenses of the period in P/L account.
CNOOC Finance Co., Ltd. and Zhonghai Trust Co., Ltd. apply the way of divided accounts to calculate different currencies which are the functional currency to record books when foreign currency transactions occur.
6. Changes of the Accounting Policy
The Company implemented the new "Accounting Standards for Business Enterprises" from January 1, 2008, with the new accounting standards issued by Ministry of Finance of People's Republic of China on February 15, 2006. Accordingly, the figures on the Consolidated Income Statement for 2007 on page 15 and those on the Consolidated Balance Sheet for January 1, 2008 on page 16, 17 were adjusted.
19 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 20 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
Business Review
In 2008, despite the impact of natural disasters and the worsening economic
environment at home and abroad, CNOOC successfully fulfilled its production and
operation tasks for the year. Steady growth of all business segments was maintained,
and the best results in CNOOC’s history were achieved. The production of oil and gas,
fertilizers, methanol, ethylene and natural gas power increased over the previous year,
and the sales income, sales profi t, total assets and net assets grew remarkably.
21 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 1. Upstream
Exploration and Production
CNOOC Limited is CNOOC’s vehicle engaged in the exploration, development, production and marketing of oil and gas. CNOOC Limited was listed on both the Hong Kong and New York Stock Exchanges in February 2001 (Stock Code in New York: CEO; Stock Code in Hong Kong:0883). By the end of 2008, CNOOC held 64.41% of its shares.
As one of the world’s largest independent oil companies, CNOOC Limited’s exploration and development activities are mainly concentrated in offshore China, including Bohai Bay, Western South China Sea, Eastern South China Sea and East China Sea. In addition, the company holds interests in oil and gas blocks overseas, including Indonesia, Australia and Nigeria. As of December 31, 2008, the company’s net proved reserves and net production in offshore China accounted for approximately 83.6% and approximately 87.9% of the total levels respectively.
Although CNOOC Limited faced mounting challenges from the financial crisis in 2008, all staff members were able to tackle these challenges in a calm and effective way, enabling the company to continue to achieve solid growth. The company’s net production reached 194.2 million BOE, representing an increase of 14.3% year over year. The company’s net profit amounted to RMB 44.38 billion, representing an increase of 42.0% year over year and a record high for the company.
In 2008, the company continued to achieve positive results in independent exploration, with 13 new discoveries and 11 successful appraisals. For PSC exploration, 2 discoveries and 1 successful appraisal were made. In
22 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
The discovery of Jinzhou 25-1, a large-scale high-quality light oilfi eld, set many records for exploration in Bohai Bay and embodied the wisdom of generations of geologists. During the process, we experienced confusion and hesitation at undesirable exploration results, but we never gave up; we knew that only through repeated practice could we gradually unveil the underground mystery.
Xu Changgui, from Liaodong Bay Exploration Project Team, Tianjin Branch of CNOOC (China) Ltd.
2008, the company continued to strengthen its exploration activities and achieved certain breakthroughs, the main ones being: the successful appraisal of the largest light crude oilfi eld in offshore China – Jinzhou 25-1; the progress in the exploration of Yellow River Mouth trough, where Bozhong 29-5, Bozhong 35-2 and Kenli 3-2 were discovered; the enhanced explorations in both the shallow and the deep strata in Laizhou Bay frontier area, where two discoveries, Kenli 10-1 and Kenli 12-2, were made. In addition, breakthroughs in frontier areas in Bozhong, Weixi’nan and Zhusan troughs were also achieved.
The company’s achievements in development and production in 2008 primarily include: maintaining a high production time effi ciency exceeding 95% in producing fi elds; achieving a production increase in certain producing fi elds by adopting new oil production techniques and measures; bringing Penglai 19-3 phase II platform B, Xijiang 23-1 and Wenchang oilfi elds on stream; and maintaining production capacity of mature fi elds at high level through infi ll wells and enhancing water injection effi ciency.
In 2008, CNOOC Limited was ranked 101 on the “FT Global 500 2008” list released by the Financial Times. It was named the “Best Chinese Company” in the “Corporate Governance Awards 2008” by the Asset, the “2008 Best Oil & Gas Company in Asia” by the Euromoney and “Best Natural Gas Energy Enterprise of China” in the “China’s Best Banks and Companies 2008” selection campaign conducted by the Global Finance.
23 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 West Hercules Begins Drilling in Liwan Gas Field
On November 29, 2008, CNOOC, Husky Energy and Seadrill Offshore AS jointly held the West Hercules Spudding Ceremony in Shenzhen. West Hercules, a sixth generation deepwater semi-submersible drilling rig rented by Husky, is contracted to drill appraisal and exploration wells in Liwan 3-1 gas field in South China Sea. Liwan 3-1 gas field was jointly discovered by CNOOC Ltd. and Husky in 2006, marking a great breakthrough in the history of China offshore deepwater exploration.
Joint Development of Wenchang Oilfi elds
In July 2008, Wenchang oilfi eld group started trial production, led by Wenchang 19-1 oilfield. Located in the Pearl River Mouth Basin in the Western South China Sea, the Wenchang oilfield group consists of Wenchang 19-1, Wenchang 15-1, Wenchang 14-3 and Wenchang 8-3 oilfields. Conventional separate development of the four oilfields has disadvantages of high risk, high cost and low economic return. Zhanjiang Branch of CNOOC (China) Ltd. solved the problems by adopting a joint development mode. The existing facilities not only support the current production, but can be used for the exploration activities in the area.
24 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
Bohai Oilfi eld Working for Zero Declining Rate
In 2008, the average composite declining rate of CNOOC Ltd. decreased from 11% to 6%, of which Bohai Oilfi eld made the greatest contribution. Based on technical innovations in water injection, gas injection, sand control and polymer injection, Tianjin Branch of CNOOC (China) Ltd. achieved zero declining rate in 4 oilfi elds and negative declining rate in 5 oilfi elds among its 24 oilfi elds on stream in Bohai Bay.
25 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 2. Mid and Downstream
Gas and Power
CNOOC Gas & Power Group, a wholly owned subsidiary of CNOOC, was founded on April 25, 2008. Its business covers technology development, technology services and consulting services for oil and natural gas (including LNG) development and petrochemical engineering; contracting services for engineering design, development, management, maintenance and operation of oil and natural gas (including LNG) development; construction, management and operation of oil and gas pipeline network; power development, production, supply and other relevant contracting and technology services.
In 2008, the company’s core business was LNG project development, in which the individual segments of natural gas pipeline construction, natural gas power generation, city gas, LNG filling, LNG distribution and natural gas trade progressed well in coordination with each other.
In 2008, the total revenue of the company reached RMB 9.98 billion, and the overall profit reached RMB 1.53 billion, increasing 38.2% and 73.9% respectively over the previous year. By the end of 2008, its total assets reached RMB 25.8 billion, representing an increase of 29.3%.
In 2008, the company made breakthroughs in overseas acquisition of LNG resources. An LNG purchase agreement was signed with Qatargas in June for importing 2 million tons of LNG per year, and another LNG purchase agreement was signed with Total in December for 1 million tons of LNG.
In 2008, Guangdong Dapeng LNG received 3.21 million tons of LNG. A review book on this China’s first LNG pilot project was published.
In 2008, 11 shareholding construction projects and 3 front-end research projects progressed on schedule. On April 26, Fujian LNG Receiving Terminal and Trunkline Project received its first shipload of LNG. In December, the No.1 generating unit of Putian Gas Power Plant was officially put into operation, and Zhuhai Natural Gas Liquefaction Project was put into trial operation. Zhongshanyuan LNG Filling Station, the first gas filling station of CNOOC, was completed and put into trial operation in November.
26 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
When the first shipload of LNG arrived, I was responsible for operating the wharf ladder. While I was at the task, Joseph, a factory engineer, kept on encouraging me, “You can do it; you are a good operator.” Finally I placed the ladder in the designated area and slid the handle to the right position. My hands were trembling, but I had a strong sense of fulfi llment because I was the one who established the fi rst ship-to-shore access!
Zhuang Chuping, from Fujian LNG Project
Zhuhai NGL Project in Trial Operation
On the morning of December 6, Zhuhai Natural Gas Liquefaction Project was put into trial operation after 6 months’ commissioning. Located on Hengqin Island in Zhuhai City of Guangdong Province, it is the fi rst natural gas liquefaction plant constructed by CNOOC. It is solely invested by CNOOC G&P with a designed annual capacity of 130,000 tons of LNG. The project is a successful effort of CNOOC to extend its LNG industrial chain upstream.
Fujian LNG Project Receives First Cargo
On April 26, Fujian LNG Receiving Terminal received its first cargo for the performance test of storage tanks. Seri Alam, an LNG tanker carrying 141,897m3 of LNG, successfully arrived at Fujian LNG Receiving Terminal after a 21-day voyage from Egypt’s Idku LNG port.
27 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Refining
The refining segment plays an important part in CNOOC’s expansion into mid and downstream business. CNOOC Oil & Petrochemicals Co., a wholly owned subsidiary of CNOOC, was founded in Beijing in November 2005 with a registered capital of RMB 12.1 billion. Its business covers petroleum refining, production of petrochemicals, and research and development of petrochemical technology.
In 2008, the company processed 3.35 million tons of crude oil and achieved a revenue of RMB 27.26 billion with RMB 26.95 billion from its core business.
Huizhou Refinery Project is the first large-scale downstream project solely invested by CNOOC. Around RMB 21.6 billion was invested in Phase I to build a refinery with an annual capacity of 12 million tons. The project was designed to process high acid heavy offshore crude, and is the largest single train refinery in China and the first refinery specially designed to process high acid heavy offshore crude in the world. By the end of 2008, the overall schedule of Phase I was 98.55% fulfilled, and the refinery entered joint commissioning stage.
CNOOC and Shell Petrochemicals Co., Ltd. (CSPC) is a joint venture of CNOOC and the Royal Dutch/Shell Group of Companies. With a total investment of USD 4.2 billion, it is one of the largest joint venture projects in China. In 2008, CSPC produced 840,800 tons of ethylene, 457,500 tons of propylene and 2,489,000 tons of high quality and high value-added petrochemical products.
In 2008, CNOOC Oil & Petrochemicals Co. signed a strategic cooperation agreement with the Shenzhen Municipal Government to jointly construct a fine chemical industrial park in Shenzhen. The company also signed a framework agreement on strategic cooperation with the Shandong Provincial Government as an effort to accelerate the strategic layout around Bohai Bay.
28 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
The unfamiliar feeling and curiosity I had as a newcomer to the refinery has been gradually replaced by the pride I take in well fi tting into the plant. Now the Huizhou Refinery Project is in the commissioning stage. Every time I see the towering steel supports, the reaction towers emitting white steam and the roaring machines, I feel warm in my heart. They will always accompany me in my life journey and encourage me to go ahead.
Deng Yiyu, from No.5 Operation Division, Huizhou Refi nery Project
Oil City in Daya Bay
The 30 km2 wasteland from Xiayong Village to Aotou Village in Huizhou City of Guangdong Province has turned into a famous petrochemical base in China because of the construction of the Huizhou Refinery Project. The project has brought with it an enormous consumer demand and has greatly promoted the local economy. In addition, the project has become one of the points of interest for tourists recommended by local travel agencies.
Rubber Dam Saves Water for Huizhou Refi nery Plant
Rainwater and spring water which converged in Yanqian River near the Huizhou Refinery Project used to flow into the sea. In June 2008, in order to utilize these water resources, a rubber dam was constructed. By the end of 2008, the rubber dam had saved 150,000 m3 of fresh water for the Huizhou Refi nery Project.
29 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Bitumen and Fuel Oil
China Offshore Oil & Gas Development & Utilization Company, a wholly owned subsidiary of CNOOC, was founded on September 28, 1999 with a registered capital of RMB 320 million.
The company’s core business is the production and marketing of mid and downstream products including CNOOC 36-1 heavy traffic bitumen and low sulfur fuel oil. At present, the company has 2 wholly-owned subsidiaries; it is the holding company of 5 enterprises engaged in heavy traffic bitumen or fuel oil production and has share participation in 3 enterprises.
In 2008, the company refined a total of 6.6 million tons of crude, generating a revenue of RMB 23.39 billion and a net profit of RMB 510 million. By the end of 2008, the total assets of the company reached RMB 4.16 billion. Despite the challenge of sluggish demand for bitumen, the company managed to open up new markets and has begun to export CNOOC 36-1 bitumen to Chad and Zanzibar in Africa.
The company produced its first lubricant in 2007. In order to improve its quality, the company organized a research team to tackle the key problems and produced high-quality transformer base oil in 2008, which has successfully entered the market. In the past year, the sale of transformer base oil reached 18,000 tons.
30 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
In 2008, China Offshore Oil & Gas Development & Utilization Company launched the activity of "Offering Suggestions on Energy Conservation and Emission Reduction". As the summer was coming, I noticed a serious waste of water involving fi re cooling spray on sphere tanks, so I proposed a suggestion of separate control for spray pipes. Soon my suggestion was adopted for implementation. In this way, water consumption can be reduced by 82% and a total of 2,214 tons of water can be saved annually.
Wang Tao, from Storage and Transportation Workshop, China Offshore Bitumen Co.
CNOOC Bitumen Enters Africa
In 2008, China Offshore Oil & Gas Development & Utilization Company began to export bitumen to Chad and Zanzibar in Africa. 2,750 tons of CNOOC 36-1 Heavy Traffic Bitumen, the No.1 brand of heavy traffic bitumen in China, was exported to the two countries.
31 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Fertilizers and Chemicals
China BlueChemical Limited (China BlueChem) is engaged in the development, production and sales of fertilizer and chemical products. It is one of the largest and most energy efficient nitrogen fertilizer and methanol producers in China. Currently China BlueChem owns two production bases, one in Hainan Province and the other in Inner Mongolia, and 5 large-scale production units. In September 2006, China BlueChem was listed on the Hong Kong Stock Exchange (Stock Code: 3983). By the end of 2008, CNOOC held 59.41% of its shares.
In 2008, the company produced 1.95 million tons of urea and 690,000 tons of methanol. It achieved a revenue of RMB 5.52 billion and a gross profit of RMB 2.04 billion.
China BlueChem’s production units and process technologies have reached world advanced level. Fudao large granular urea and Tianye small granular urea have been granted National Inspection-free Product status. Its sales network covers over 20 provinces and cities throughout the country, and also extends to America, Australia and Southeast Asia. Over the past few years, China BlueChem has implemented the soil testing and the fertilizer direct sale programs to help farmers reduce costs and increase output as an effort to promote the development of China’s modern agriculture.
To implement CNOOC’s development strategy of its fertilizer segment, China BlueChem has accelerated the development of resources, including coal, phosphate and potassium, to form a business chain linked by nitrogen fertilizer, phosphate fertilizer and potassium fertilizer.
In 2008, the 800,000t/a Hainan Methanol Project commenced construction on November 12 and the 60,000t/a POM Project in Inner Mongolia continued on schedule. The company has also set up several wholly-owned or holding companies in Jincheng, Baotou and Yichang to develop fertilizer businesses.
32 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
In recent years, we have seized every opportunity to promote soil testing, given demonstrations and provided agro-chemistry training in villages and fi elds. We are often told by farmers who use Fudao BB fertilizer that scientifi c farming does increase their output. Farmers who conducted soil testing before fertilizing in the sugar cane, peanut and pepper demonstration fi elds have received signifi cantly higher yields.
Li Zhengxian, from Agro-chemistry Service Team, Marketing Department of China BlueChem
Promotion of Soil Testing in Villages
In order to solve the long-standing problems of excessive fertilization, in 2008 China BlueChem launched a large-scale soil testing promotion program which aimed to provide agro-chemistry services and training to farmers. The activity lasted 8 months and extended throughout Hainan Province. The company provided farmers with agriculture professionals, specialty funds, and technologies. Many farmers benefi ted from the program.
The 800,000t/a Methanol Project Starts Construction
On November 12, 2008, the 800,000t/a Methanol Project commenced construction in Dongfang City, Hainan Province. The project will use the most advanced technology in the world and take natural gas from Ledong 22-1/15-1 gas fi eld as feedstock. Natural gas from the Ledong gas fields contains rich CO2 and has low heating value; therefore large quantities of CO2 will be released if it is used for civil use or power generation. If it is used for methanol production, the optimum hydrogen-to-carbon ratio for methanol production may be achieved by the components of raw gas. The designed annual consumption of CO2 will be around 252,000 tons after the project is put into operation.
33 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Marketing
CNOOC Marketing Company, a specialized company of CNOOC engaged in sales and trade business, was founded in Beijing in April 2008. The company’s business mainly covers sales and trade, storage and logistics, and marketing network construction of crude oil, product oil and chemical products.
In 2008, the company’s core business progressed steadily, generating a revenue of RMB 34.91 billion and a profit of RMB 276 million. The sale of product reached 7.53 million tons.
By the end of 2008, the company owned 187 gas stations and 8 oil depots with a total storage capacity of 550,000m3, among which 102 gas stations and 5 oil depots (410,000m3) were put into operation. The construction of Lisha oil depot and Nantong oil depot progressed smoothly, and the former had completed construction by the end of 2008.
In 2008, CNOOC set up 3 regional sales companies in Shanghai, Guangzhou and Tianjin, indicating the establishment of CNOOC’s marketing system, especially the marketing network of oil products and chemicals.
34 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
I was transferred to Jiangbei Gas station in May 2008 because of the expansion of our company. It is the third gas station I have worked in. I am full of enthusiasm at work here because the manager has set inspiring goals for us. With these goals in mind, I am reluctant to leave work for home. This is a feeling I have never had before. To me, CNOOC is just another home!
Wei Liujiao, from Jiangbei Gas Station, Huizhou City
Shenyang Beijing Dalian Tianjin Cangzhou Taiyuan Qingdao Xi'an
Nanjing Nantong Chengdu Zhangjiagang Wuhan Shanghai Hangzhou
Ningbo
Shaoguan Dongguan Shantou Guangzhou Huizhou Shenzhen Setup of Marketing Network Hong Kong
CNOOC has set up a marketing and logistic system which focuses on the areas around the Pearl River Delta, the Yangtze River Delta and Bohai Bay while covering all of the country. By the end of 2008, the Singapore Company had branches in 21 major cities in China, including Beijing, CNOOC marketing network Shanghai and Guangzhou, and established offices in Singapore and Hong Kong.
35 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 3. Technical Services
Oilfield Services
China Oilfield Services Limited (COSL) is a leading comprehensive oilfield services provider in offshore China with over 40 years of experience. Its core businesses include: drilling services, well services, marine support and transportation services and geophysical services, which cover each phase of oil and gas exploration, development and production. COSL was listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange in 2002 and 2007 respectively (Stock Code in Hong Kong: 2883; Stock Code in Shanghai: 601808). By the end of 2008, CNOOC held 54.7% of its shares.
In 2008, COSL reached a revenue of RMB 12.43 billion and a net profit of RMB 3.33 billion, increasing 35.0% and 49.4% respectively. Its total assets and net assets reached RMB 56.66 billion and RMB 19.80 billion, growing 145% and 15% respectively over the previous year.
In September 2008, COSL completed its USD 2.36 billion acquisition into all shares of Awilco Offshore ASA, Norway, and became the world's 8th largest rig fleet consisting of 34 drilling rigs.
By the end of 2008, COSL’s service coverage had extended to 20 countries and regions. COSL’s 4 onshore drilling rigs commenced operation smoothly in Libya, and its self-developed intellectual property-Enhanced Logging Image System (ELIS) won the 7th service contract in UAE. In 2008, the overseas revenue of COSL accounted for 25.1% of its total level, increasing 6.8% over the previous year.
In 2008, COSL’s investment reached RMB 6.8 billion, with a year-on-year increase of 97%. Asia’s most advanced 400-feet drilling rig (COSL942) and 8-streamer dual-detector seismic vessel (COSL719), 8 marine support vessels, 3 onshore drilling rigs and 43 modern facilities and equipment were successively completed and put into operation.
36 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
In 2008, the Bohai IV Platform continued to work in the Java Sea in Southeast Asia, setting a record that a COSL rig has operated in an overseas market for 6 consecutive years. Despite the challenges posed by the financial crisis and the even stricter requirements of operators, the platform achieved a service rate of 100%. Indonesia Petroleum Administration and the operator representative presented a medal to the Bohai IV Platform for 2 years of safe operation. I am proud of our achievements.
Zhang Chuanhua, from Drilling-COSL
First Drilling Contract in Sahara
On August 18, 2008, the 7,000-meter red and white derrick was raised up in the Sahara Desert. The site manager from a partner company highly praised the operation. The successful raising of the derrick represented a milestone in COSL’s overseas expansion of its onshore drilling service.
COSL Boss Starts Drilling in Bohai Bay
After the acquisition of Awilco, the drilling platform COSL Boss of Premium Drilling Ltd., a subordinate of Awilco, left Norway for Bohai Bay and started drilling in Bozhong 19-4 on November 20, 2008. It plans to operate in Bohai for about 3 years. COSL boss is the most advanced sixth generation jack-up rig in the world which has realized automatic control of drilling operations.
37 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Offshore Engineering and Construction
Offshore Oil Engineering Co., Ltd. (COOEC) is the largest offshore engineering and construction company in China for integrated services through engineering design, onshore fabrication and offshore installation and maintenance for oil and gas exploration and production, underwater engineering, mid and downstream, and alternative energy projects. It is one of the largest offshore EPCI contractors for offshore oil and gas exploration and production projects in the Asia-Pacific region. It was listed on the Shanghai Stock Exchange in February 2002 (Stock Code: 600853). By the end of 2008, CNOOC held 56.67% of its shares.
In 2008, COOEC achieved the best results in its history. It realized a revenue of RMB 9.59 billion and a total profit of RMB 1.37 billion, increasing 47.2% and 10.2% respectively over the previous year. By the end of 2008, its total assets reached RMB 16.07 billion and net assets reached RMB 8.19 billion, growing 110% and 100% respectively.
During the year, COOEC won contracts worth RMB 12.3 billion, representing an increase of 76%, with RMB 2 billion from overseas market and RMB 2.5 billion from mid and downstream markets and alternative energy projects, surging 230% and 320% respectively over the previous year.
By the end of 2008, COOEC had set up branches in Hong Kong, Indonesia and Nigeria. Its strategic plan for overseas development is taking shape.
In 2008, the 30,000-ton jacket launch barge (Hai Yang Shi You 229), Lanjing and the 15,000HP multi-purpuse tug (Hai Yang Shi You 699) were put into operation. The construction of the Qingdao Fabrication Yard Phase III and the signing of a Letter of Intent for Land Purchase in Tianjin Lingang Industrial Area marked the setup of strategic yard network.
In 2008, COOEC established a national welding laboratory, a physical and chemical laboratory, an offshore engineering technology center and a welding training and certificate center.
38 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
At 15:30 on November 30, 2008, Lanjing successfully completed the last lifting operation in India for the VED offshore installation project of Samsung Heavy Industries, South Korea. Put into operation in July 2008, the crane barge Lanjing possesses the world’s largest single lifting capacity of 7,500 tons.
Liu Kejian, Director of Lanjing
Debut of New Welding Robot
On December 23, 2008, a welding robot arrived at COOEC’s Tanggu fabrication yard. The “new employee” is 1.5m tall with a substructure height of 0.6m. The span of its mechanical arm is about 1.4m and the diameter of movement is 3m. It started pilot welding the day after its arrival. The welding robot is widely applied in the manufacture of automobile, machinery and heavy equipment, and this was the robot’s fi rst appearance in China offshore engineering industry.
Mabianzhou Oil Depot Receives First Cargo
Mabianzhou crude oil depot phase I constructed by COOEC received its first cargo of oil in September. As a part of Huizhou Refinery, Mabianzhou crude oil depot marks the success of COOEC’s expansion into mid and downstream. Its total capacity will reach 300,000m3 upon completion, and the capacity of Phase I is 200,000m3.
39 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Energy Technology and Services
CNOOC Energy Technology & Services Limited (CNOOC EnerTech) was founded on June 20, 2008 with a registered capital of RMB 6 billion. The company (formerly CNOOC Oil Base Group Limited) consists of 11 specialized branch companies. Its foundation marked the entrance of CNOOC into a new stage of establishing an overall modern enterprise system.
CNOOC EnerTech is a large-scale industry group providing technical services for oil exploration and production, petrochemical and refining, natural gas power generation and LNG. It also engages in chemical derivative production.
In 2008, CNOOC EnerTech realized a revenue of RMB 16.77 billion and a total profit of RMB 1.64 billion. By the end of 2008, its total assets reached RMB 16.59 billion.
Through internal resources integration, 4 business segments have formed which are operation services for energy industry, comprehensive services, fine chemical products, and health care and environmental protection.
40 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
Generally it takes 8 years to train a qualified supervisor, but most of us have grown into qualifi ed supervisors in 4~6 years. That is because we came to the company at an opportune moment. 100~200 wells were drilled each year in Bohai Sea since 2003, providing new employees with lots of opportunities to practice. Fortunately I am a member of CNOOC and have caught the good time.
Li Gang, from CNOOC EnerTech
China Ocean Offshore Oilfi elds Service (Hong Kong) Ltd.
China Ocean Offshore Oilfi elds Service (Hong Kong) Ltd. was founded in 1982 with a registered capital of RMB 250 million. Its business covers procurement, logistics and supportive services, and project investment.
During the year, the company realized a revenue of RMB 73 million and a profi t of RMB 56 million. By the end of 2008, its total assets reached RMB 740 million, and net assets reached RMB 570 million.
In 2008, the company gained 7 emergency service contracts, set up a 24-hour emergency service hotline, and carried out maritime rescue maneuvers with the Hong Kong Maritime Rescue Co-ordination Center and the Hong Kong Government Flying Service once or twice a month.
41 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC’s First Specialized Oil Spill Recovery Vessel
On July 29, Hai Yang Shi You 251, an oil spill recovery vessel built by CNOOC EnerTech, was successfully launched at Shandong Rushan Shipyard. The vessel has a length of 47.5m and a hold capacity of 350m3. It is equipped with dynamic inclined plane oil spill recovery equipment and high performance oil spill monitoring radar. As CNOOC’s first specialized oil spill recovery vessel, it will provide powerful support to marine protection.
Overweight Shipment Services
In January 2008, the staff of CNOOC EnerTech-Logistics Co. shipped the third batch of equipment manufactured for Huizhou Refi nery project, including a 1,328-ton high-pressure hydrocracking reactor and a 324-ton hydrogenation reactor. Logistics Co. has provided overweight shipment services to Huizhou Refi nery Project since 2007, with the highest piece weight in its shipment record.
Hainan Biodiesel Pilot Project Starts Construction
On September 23, CNOOC’s Hainan 60,000t/a biodiesel pilot project started construction. The project is among the first batch of national biodiesel pilot projects, representing a great breakthrough in the Company’s alternative energy research. The project is scheduled to be on stream in the fourth quarter of 2009, and by that time, Hainan will be the fi rst province in China to use “green diesel”.
42 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e 4. Alternative Energy
CNOOC New Energy Investment Co., Ltd., a wholly owned subsidiary of CNOOC, was founded in August 2005 with a registered capital of RMB 80 million. Its business mainly covers the exploration and utilization of renewable and clean energies including wind power, biomass energy, clean coal energy, solar energy, hydrogen energy and CDM.
The company was established to organize and implement CNOOC’s alternative energy development. By the end of 2008, the total assets of the company reached RMB 980 million.
In the fi eld of wind power, Huade 49.5MW wind power project (Inner Mongolia) and Dongfang 48MW wind power project (Hainan) are in preparation for construction soon. In the field of biomass energy, Hainan 60,000t/a biodiesel pilot project started construction in September 2008, and CNOOC Biolux (Nantong) 270,000t/a fatty acid methyl ester project is under preliminary design.
The operating effi ciency of generating units in the Bohai Offshore Wind Power Station, China’s first offshore wind power station, has grown steadily with the units remaining stable at over 90%. By the end of 2008, the Bohai Offshore Wind Power Station had generated power 3.3 million kwhs in total.
43 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 5. Financial Services
CNOOC Finance Co., Ltd.
CNOOC Finance Co. Ltd (Finance Company) is a non-bank fi nancial institute providing fi nancial services and fi nancial management services to CNOOC and its members. It aims to enhance centralized capital management and to improve the capital efficiency of the Group, and provides internal financial services with focus on the cash fl ow of the Group. By the end of 2008, the total assets of the company reached RMB 35.92 billion. CNOOC directly held 62.9% of its shares.
In 2008, the company’s core business income reached RMB 950 million (excluding new stock purchase), with a year-on-year increase of 16%. The company achieved an income of RMB 1.17 billion and a profi t after provisions of RMB 430 million (profi t after deducting risk reserves in accordance with risk classifi cation standards); thus it successfully withstood the impact of the fi nancial crisis and kept a record of zero bad assets.
In 2008, the Finance Company took accounting settlements as its main channel for the effective centralized capital management of the Group and the safe and high-speed circulation and effective deposit of internal capital. It completed 104,000 accounting operations with the amount of RMB 515.9 billion, increasing 45% and 14% respectively over the previous year. It strived to develop internal credit business and provided loans of RMB 39.44 billion. By the end of 2008, its credit asset balance reached RMB 21.02 billion, with a year-on-year increase of 170%. Its credit business revenue reached RMB 432 million, increasing 27% over the previous year and accounting for 37% of the total revenue, hitting another record high.
The Finance Company was rated A+ (stable) and A1 (stable) respectively by Standard & Poor’s and Moody, which are the highest credit ratings granted by international credit rating agencies to Chinese fi nancial service companies. These are the same grade as China’s sovereign rating.
IHC System in Operation
To improve business security and efficiency, SAP IHC system was officially put into operation in the Finance Company in 2008, which was a fi rst in Chinese fi nance companies. Since the use of the system, the number of accounting operations and the amount of accounting settlements based on the Internet surged by 183.7% and 203.5% respectively over 2007.
44 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
Zhonghai Trust Co., Ltd.
Zhonghai Trust Co., Ltd. (CNOOC Trust) is a non-bank fi nancial institute jointly invested by CNOOC and CITIC Group. Currently the company has a registered capital of RMB 1.2 billion, and CNOOC held 95% of its shares.
CNOOC Trust is engaged in providing low-cost integrated financial services to energy, transportation and city infrastructure construction industries. The company also provides comprehensive investment services to large investment institutes as well as high-end private clients.
In 2008, despite the impact of fi nancial crisis, CNOOC Trust achieved a revenue of RMB 850 million and a total profi t of RMB 750 million. Its trust assets throughout the year amounted to RMB 300 billion, exceeding the sum of the last four years’ trust assets. At the end of 2008, the company’s trust asset balance was RMB 75.9 billion, increasing 23% over the previous year.
By 2008, the company has acquired qualifi cations for assembled funds trust at a different place, credit assets securitization, and gained the status of qualifi ed domestic investment investor and qualifi ed block trade system investor. Its new product “Liquidity Management and Capital Gain for Enterprises” successfully integrated centralized capital management, liquidity management and capital gain into one product to provide value-added fi nancial services to enterprises.
CNOOC Trust Named “Best Trust Company in China 2008”
In the List of "Best Financial Institute in China 2008", which was sponsored by the Financial News and Finance & Banking Institute of the Chinese Academy of Social Sciences, CNOOC Trust was named the “Best Trust Company in China 2008”. For its strict risk control, the company was the only one that received the highest rating by the China Banking Regulatory Commission in 2008.
45 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Investment Co., Ltd.
CNOOC Investment Co., Ltd. (CNOOC Investment), a wholly owned subsidiary of CNOOC, was established in November 2000. As the platform for assets management for the Group, its business mainly covers the management of investments transferred or entrusted by CNOOC, focusing on the retention, activation and increment of stock assets; the operation of private equity for financial investments; and strategic investments with the purpose of expanding CNOOC’s business.
By the end of 2008, CNOOC Investment had 15 equity investment projects. Its total assets reached RMB 4.30 billion and net assets recorded RMB 3.48 billion. In 2008, it received cash dividends of RMB 88 million and realized a net profit of RMB 26 million.
CNOOC Insurance Limited
CNOOC Insurance Limited (CNOOC Insurance) was established in Hong Kong on August 23, 2000. In February 2002, it secured approval from the China Insurance Regulatory Commission to start insurance activities on May 1, 2002. Wholly owned by CNOOC, CNOOC Insurance provides direct insurance or re-insurance to its parent company or affiliated companies. Its business covers ship insurance, cargo transportation insurance, fire and natural disaster insurance, property loss insurance, ship liability insurance and general liability insurance.
In 2008, CNOOC Insurance strived to expand its participation in the insurance of CNOOC business. The company maintained 100% participation in upstream property insurance with responsibility for fulfilling re-insurance shares, and had entered CNOOC’s various mid and downstream projects. By the end of 2008, it realized a total assets of HK$ 3.48 billion, paid-in capital of HK$ 1.2 billion, a premium income of HK$ 640 million and a profit of HK$ 210 million.
46 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
AEGON-CNOOC Life Insurance Co., Ltd.
AEGON-CNOOC Life Insurance Co., Ltd. (CNOOC Life Insurance) is a joint venture established in May 2002. CNOOC and Aegon jointly own the company, each holding 50 percent of the stakes. In May 2003, the company offi cially received a license to begin life insurance activities in China. Headquartered in Shanghai, CNOOC Life Insurance has a registered capital of RMB 1.2 billion. Up to now it has set up provincial-level branches in Beijing, Jiangsu, Shandong, Zhejiang, Guangdong and Tianjin. In 2008, the company put 17 products on the market, and its total premium income reached RMB 1.56 billion, representing a year-on-year increase of 23%.
In 2008, based on the existing multi-channel distribution, the company further perfected group insurance, established distribution channels of worksite marketing, opened up new markets in Guangdong and Tianjin, and successfully set up marketing offi ces in Zhenjiang, Yangzhou, Xuzhou and Shenzhen.
CNOOC Life Insurance Aids Migrant Children
In 2008, CNOOC Life Insurance and Right to Play, an international humanitarian organization, co-organized a commonweal program for migrant children, which uses sport and play programs to help migrant children improve healthiness, develop life skills and mold personality. The pilot program has been launched in Guangzhou and Dongguan cities, and children from migrant children’s schools and migrant population community centers will all benefi t from this program.
47 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 6. Research and Development
In 2008, CNOOC continued to carry out the Eleventh Five-year Plan with a focus on the technology research for the core business. The Company undertook 747 research programs, including 50 at national level, 10 at provincial and ministerial level and 220 at Group level.
We continued to work on 30 major research programs among which the national program on the development of large oil and gas field and coal-bed methane was launched in 2008. During the year, the Company also began to participate in projects of the National Basic Research Program, or 973 Program.
In 2008, the Group put in RMB 3.281 billion on scientific and technological programs with an increase of 18% over last year, with the fund on research and development increasing by 5.5% to RMB 1.134 billion.
The Group has strengthened the construction of its technology innovation system. The Deepwater Engineering Research Center and New Energy Engineering Center jointly constructed by CNOOC and Shanghai Jiao Tong University were put into operation. The National Laboratory of Petrochemical Industrial Water Treatment received approval for construction. With 32 subsidiary research institutes under its command, the Group’s technology innovation system has begun to take shape aiming to improve production efficiency through technological progress. The selection of 32 Group-level technical experts has further stimulated the enthusiasm for innovation among the research staff.
The research and application of exploration technologies has made new progress and helped the Company achieve its record-high oil and gas reserves and production in 2008.
48 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Business Review e
The 3,000-meter deepwater semi-submersible drilling platform has begun construction, with the Company owning independent intellectual property rights. The marine high-precision single-detector multi-streamer seismic data collection system and the Formation Characteristic Tool (FCT) prototype have passed preliminary sea testing.
In 2008, two achievements of CNOOC, “Research and Application of Enhanced Logging Imaging System (ELIS)” and “Safe Rapid Drilling Technology in Complex Structures in Western South China Sea Area” were awarded the second prize of the National Award for Science and Technology Progress. Throughout the year, the Company submitted 350 patent applications and gained approval for 137.
During the year, the Company issued 183 standards, including 85 national standards and 26 industrial standards. 3 standards received the Chinese Standards Innovation Contribution Award.
ELIS Wins National Award
In 2008, the Enhanced Logging Imaging System (ELIS), the first Chinese system of its kind, was awarded the second prize of the National Award for Science and Technology Progress. Before this system was developed, the Chinese oil industry had for 20 years relied on an imported logging system. Its production began in 2008, and by the end of the year, 10 sets have been manufactured and applied in offshore China, Xinjiang Province and overseas markets such as the Middle East, Indonesia and Myanmar.
Drilling Technology in Complex Structures Wins National Award
Drilling in Western South China Sea faces the challenges of a high- temperature and high-pressure environment and sidewall instability. To solve these problems, CNOOC developed a series of drilling technologies in complex structures with independent intellectual properties, which won the second prize of the National Award for Science and Technology Progress. CNOOC possesses 6 proprietary technologies, including “sidewall stability assessment in collapsible strata”, and 4 of them were granted patent approvals.
49 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 50 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management f
Management
In compliance with the modern corporate system, CNOOC has established a standard and effi cient organizational structure and exercises the President Responsibility System; committees and departments of the headquarters are responsible for the establishment of strategic plans and goals, and the supervision of subsidiaries' implementation of the economic, environmental and social policies .
After years of effort, CNOOC established a modern corporate system in 2008. The listed subsidiaries have all established an effective corporate governance system and operate under the standard management of the board of directors. For other subsidiaries, the
Group authorizes a supervisory board to exercise the same function.
Over the years of development, CNOOC has adopted the democratic centralized decision-making mechanism and an internationally advanced management system, which have played an important role in promoting the healthy and sustainable growth of the Group.
51 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 1. Internal Control System
For years, CNOOC has been striving to enhance its risk management capacity.
In 2008, with risk control in mind, CNOOC made a thorough examination of existing management policies and regulations. We improved the investment decision-making regulations and procedures, and revised operational procedures of collective decision-making bodies including the Management Committee.
After CNOOC Ltd. passed the SOX404 audit, CNOOC launched a Group level project on risk management for internal control optimization. In 2008, CNOOC began pilot programs in COOEC, CNOOC Oil & Petrochemicals Co., Ltd., COSL and China BlueChem and achieved staged progress. On December 12, the EPR project came into operation in CNOOC Ltd., indicating the remarkable progress of information construction in the Group.
CNOOC further strengthened the internal audit for key member companies and large-scale projects in construction. We initiated internal audits for subsidiaries under the diversified shareholding mode and our contractors. In 2008, the Company audited 39 projects and identified 374 issues, carried out special inspections in the subsidiaries focusing on the establishment and implementation of internal control regulations for decision-making on important issues, senior management changes, important projects and large capital usage.
52 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management f
As an employee of the Huizhou Refi nery Plant, I am also a team member of CNOOC’s comprehensive risk management project. It is quite an experience for me to be involved in both projects. The latter is a long-term project in which people play a critical role. There still is a lot to learn before we assimilate the concept of risk management into our daily thinking and behavior.
Zhang Pengfei, Risk Management Project Director of Huizhou Refi nery
CNOOC and its listed subsidiaries have adopted a comprehensive budget management system and introduced advanced software for enterprise performance management, thus ensuring future healthy development.
The Company continued to improve its Employee Discipline and incorporated it into new employee training, aiming to promote anti-corruption in employee behavior.
IT Helps Risk Control
As a method of enhancing risk control, CNOOC has worked hard on information construction. In 2008, the Company developed a risk management information system and in particular a risk management information system for key projects in construction. The latter has been applied to Jinzhou 25-1 and Lvda 27-2 project teams.
53 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 2. Employee Health and Safety
CNOOC has established a health and safety system operating to international standards to ensure staff occupational health and production safety; this is regarded as part of corporate social responsibility.
In 2008, CNOOC focused employee training on the prevention of work accidents and occupational health. During the year, the Group reported no material injury or liability claims, as well as no report of occupational diseases and group diarrhea.
The Company paid special attention to safety production management of contractors, enforcement of “5 No Works”, improvement of typhoon countermeasures, safety management of onshore mines and of hazardous chemicals and HSE regulations for overseas projects, among others. The Company made further revisions to safety regulations, covering the elimination of potential risks and ship safety management.
Meanwhile, it issued regulations on occupational health and enhanced management on project occupational health; assessments on occupational disease possibilities were made in all new projects at an early stage.
During the year, the Company continued to strengthen its emergency management capacity. In June, it issued a guide on emergency management information system construction and established construction standards for emergency centers in all subsidiary companies. Emergency centers in Tianjin, Shenzhen, Zhanjiang and Shanghai have been upgraded; the construction of three-dimensional emergency platform is under way in ten oil and gas terminals.
54 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management f
We have paid detailed attention to helicopter management. Our HSE management system covers crew management, management governance and third party assessment. By the end of 2008, Tianjin Branch has kept the record of safe fl ight for nearly 20 years.
Zhou Zhentao, from HSE Department of CNOOC (China) Ltd.-Tianjin Branch
New Emergency Center
In 2008, a new emergency center was put into operation at CNOOC Headquarters. This integrates the functions of emergency response, visual reality and video teleconferencing. Its new three-dimensional emergency response platform provides a holographic reproduction of incidents to the management and experts.
SMS: a New Tool for HSE management
To speed the emergency response, CNOOC established a HSE information platform based on SMS. The address book covers CNOOC Security Committee, senior management of all subsidiaries, HSE managers of subsidiaries and jointly developed oilfields and HSE Standardization Committee. In 2008, the system played a notable role in emergencies such as typhoon response.
55 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 3. Human Resources
CNOOC is devoted to building a first-class workforce with a focus on “three teams” cultivation, that is, teams of senior management, technology professionals and technicians.
In 2008, in compliance with the Labor Contract Law, CNOOC further improved its employment, salary and welfare policies. The Company revised its human resource management regulation with supplements on expert management, occupational skill assessment and human resource information management. It also issued documents on workforce building to enhance the human resource competitiveness of the Company.
In 2008, substantial progress was made on high-level talent cultivation and staff training. Throughout the year, each employee received an average of 70.3 hours off-job training. The total training cost increased by 26.94% over the previous year.
In 2008, the first batch of 32 Group-level technical experts was selected. Meanwhile, the Group launched its second round of technician and senior technician evaluations in 15 categories, and qualifications were granted to 128 employees. This evaluation system has stimulated the innovation and working enthusiasm of both the research and operating staff.
During the year, the CNOOC Executive Management Institute organized training for its first batch of mid-level managers and a new round of training for senior management.
56 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management f
In the 26 years that I have worked with CNOOC, this is the fi rst time for the Company to carry out such a comprehensive expert evaluation and incorporate it into its talent cultivation program. It will inspire the technological staff, especially the young people.
Jiang Wei, Group-level technical expert
It is a great honor for me, a young chemical operator, to come out first in the chemical control operators’ competition of Central State-owned Enterprises Technicians Contest and receive the title of “National Technician”. My success is one of the results of the Company’s attention to technician team cultivation. Together with my colleagues, I will strive to make more contributions to our Company.
Liu Ping, from China BlueChemical Limited and First Prize Winner in National Technicians Contest
57 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 4. Corporate Culture
To CNOOC, corporate culture has always been an integral part of soft power building. Through years of cultivation, the Company has gradually formed a corporate culture with distinctive unique features, which plays an important role in promoting our development.
In 2008, the Company launched a pilot study and implementation of the Scientific Concept of Development, and continued to work on the program of Transforming Unique Advantage of State-owned Enterprises into Core Competitiveness (TUASECC). Through analysis of the unique characters of being a state-owned enterprise, CNOOC has been exploring special ways to realize growth for both the Company and staff.
We formed the theoretical framework of the TUASECC Program, and in 2008 we obtained new understanding and practice of “Five ways of Transformation" (see right).
During the year, CNOOC held the commending ceremony of Model Workers and Teams, and Entertainment Sports Meeting in five bases with a unified image and theme. The activities of the Workers’ Congress and Communist Youth League progressed well. These efforts have played an important role in further promoting the corporate values throughout the Group.
Mr. Fu Chengyu, President of CNOOC, presented the book To Be a Thankful Employee to all staff and wrote a brief letter on its preface, calling for cultivation of a thankfulness culture, in which the staff is thankful to the Company and conversely is the Company to the staff and the society as a whole.
58 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management f
Wife Presents Model Worker Award to Husband
On the commending ceremony of Chinese Offshore Oil Industry Model Workers and Teams held on April 28, Xue Yufen handed the Model Worker Award to her husband Chen Xiumin, Captain of Binhai 109 from COOEC, which was a moment of understanding and pride for the couple despite frequent times apart. On this day, a total of 30 individuals and teams received the awards.
5 Ways of Transformation (Chart)
Construction of corporate values The Party's ideals and faith Corporate unity
Construction of corporate strategic planning and implementation system The Party's principles and Corporate growth policies
Construction of Party member improvement system The Party's leadership role Corporate leadership
Construction of performance appraisal and award system The Party's high standards Corporate stimulation for members
Construction of regulations and discipline system The Party's moral integrity Corporate executive force
59 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 60 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Corporate Responsibilityg
Corporate Responsibility
Mindful of public welfare, CNOOC pursues the harmonious development of people, the
Company, society and the environment. As a multinational company headquartered in China,
CNOOC has strived to qualify as an enterprise citizen in over ten countries where it conducts business. We are committed to maximizing our contribution to economic development, ecological environment protection, and social progress for a better human future.
61 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 1. Environmental Protection and Energy Conservation
As a significant initiative, CNOOC has taken on the social responsibility of energy conservation, emission reduction and environmental protection. To construct itself into an energy-efficient and environment-friendly enterprise, CNOOC has promoted cleaner production, energy resource-saving and has eliminated obsolete technologies and production facilities, thus controlling pollution at the root level.
To achieve the energy conservation and emission reduction targets identified in the Eleventh Five-Year Plan, in 2008 the Company further improved the relavant regulations. Energy conservation and emission reduction has become an integral part of the Company’s development strategy, management system and daily work.
During the year, CNOOC put forward the concept of “Zero Emission” and assimilated it as a standard that must be followed in the design and
62 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Corporate Responsibilityg
Flash gas is fl ashed out by reducing pressure in natural gas processing. In the past, nearly 10,000m3 fl ash gas was vented and wasted daily at Dongfang 1-1 Terminal. Through consultation and reference, we successfully recovered flash gas as low- pressure fuel by means of equipment modification. 5,000m3 high heating value natural gas can be recovered daily as fuel gas and 1.8 million m3 fuel gas can be saved annually, thus signifi cantly reducing greenhouse gas emissions.
Chen Zhaori, Production Supervisor from Dongfang Terminal Treatment Plant
construction of all new projects. To implement the standard, the Group held a “Zero Pollutant Emission and Greenhouse Gas Emission Control Workshop” in Beijing.
In 2008, CNOOC actively promoted a number of research projects related to cleaner production. Throughout the year, the Company saved 382,000 tons of coal equivalent and reduced 836.4 tons of sulfur dioxide emissions and 373.1 tons of chemical oxygen demand emissions.
After becoming the fi rst Chinese enterprise to be invited to join 3C (Combat Climate Change) in 2007, CNOOC gained membership of the UN Global Compact in 2008, readily meeting the environmental changes challenge and fulfi lling social responsibilities along with the international community.
63 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Power Network for Oilfi elds
On December 28, the first phase of the power network between Southwest Weizhou oilfields was successfully grid-connected for operation. By sharing the power supply among the individual oilfi elds, this project can save 15,000 tons of coal equivalent every year. It also reduces the operational costs of the oilfi eld/terminal power station and the initial investment on new oilfi eld development.
Over 5,000 Corals Moved to New Homes
Over the past few years, CNOOC has furnished funds for relocating corals in several sea areas to keep them unharmed by offshore operations. The relocation of 5,203 corals from the petrochemical zone of Daya Bay to 7 kilometers away offshore in 2007 was the latest effort. In November 2008, it was learned that their survival rate reached 95.2%. This successful ecological system migration sets a new model for coordinating offshore engineering and marine ecology protection.
Seal Sunbathing on Oilfi eld
On April 1, a white seal rested on a pipeline floating outside Qinghuangdao 32-6 oilfield; it seemed to be enjoying sunbathing on the pipe. Equipped with a sharp sense of smell, seals are usually picky about their resting environment. In recently years, CNOOC has further strengthened measures to reduce emissions with the aim of “zero emissions” in oilfi eld production, thus attracting the “guest” to stay.
64 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Corporate Responsibilityg
Copolymerization: Degradation: CO2+H2O CO2+C3H6O
PPC
Environment-friendly products
Green material for Plastic Bags
On July 1, China BlueChemical Limited and Changchun Institute of Applied Chemistry, Chinese Academy of Science, successfully developed carbon dioxide degradable materials which can produce environmental friendly plastic bags. This kind of bags can be wholly biodegraded under controlled composting conditions.
65 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 2. Corporate Citizenship
As a responsible corporate citizen, CNOOC has been committed to various charity events, including poverty relief, Tibet aid, support to needy students and disaster relief.
As a state-owned oil company, CNOOC has benefited from the reform and opening-up policy and the stability of the country and exerted itself to repay society. We regard win-win as our philosophy in developing the Company and fulfilling our social responsibility; and we pursue the harmonious relationship between the Company, people, society, and the environment. The Company has established the Charity and Commonwealth Committee to be responsible for the planning, management and supervision of charity funds, and has issued regulations on fund management.
In 2008, CNOOC contributed RMB 282 million (among which RMB 27.96 million was from CNOOC employees) to welfare activities, establishing a record high.
66 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Corporate Responsibility Disaster Relief g At the beginning of 2008, many of the southern China provinces were struck by severe snowstorms. Within 48 hours, CNOOC transferred an endowment of RMB 32 million to 8 provincial governments for disaster relief work.
CNOOC contributed RMB 10 million to the quake-hit area through the China Charity Federation within 24 hours after 5.12 Wenchuan Earthquake. On May 17, the Company donated RMB 3 million to the Dongfang Electric Corporation Limited which had suffered great losses during the quake; this was followed by another contribution of RMB 10 million to Sichuan Provincial Department of Finance on May 19.
On May 15, CNOOC urgently dispatched 14 helicopters that served offshore production to fly to Sichuan and join the national disaster-response system. An early estimation showed that the helicopter lease expense alone amounted to RMB 7.5 million.
To support post-disaster reconstruction, CNOOC decided to donate RMB 100 million to the quake-hit area in Sichuan every year for the following fi ve years; the contribution would be raised by cost saving and effi ciency improvement. In September, the Company delivered this year’s RMB 100 million to Sichuan Youth Development Foundation, Sichuan Children and Teenagers’ Fund and Sichuan Education Foundation.
In 2008, CNOOC and Sichuan Government settled that the main task for the fi rst phase was the rebuilding of Deyang City People’s Hospital, Luojiang County People’s Hospital and Guangyuan City No.1 People’s Hospital.
14 Helicopters Fly to Sichuan for Rescue Work
On May 15, 14 helicopters that served offshore production flew to Sichuan from Shenzhen, Tianjin and Xiamen. In 2008, the Company totally contracted 27 helicopters for logistical supply, staff transportation and typhoon countermeasures for its oil and gas fi elds.
CNOOC Medical Team in Quake-hit Town
On May 30, three doctors from CNOOC's Bohai Employees Hospital left for quake-hit Malu Township, Qingchuan County, Sichuan Province, to provide medical treatment. Wen Bing, a physician, Ma Guilin, a dermatologist and Xie Liping, a pediatrician worked at the front for 21 days. The medical team was awarded the title of "Advanced Central Enterprise Unit in Earthquake Disaster Relief".
67 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Aid to Tibet
In 2008, CNOOC invested RMB 19.41 million on seven construction projects, training and stimulating programs for the reserve officials and technicians in Nima County of Tibet. By the end of October, the projects of Nima Cultural Center, a Broadcasting Center, a teaching building of Shenya Primary School, Nima Hotel expansion, and a toilet for county middle school were completed on schedule, as well as the settlement project of 250 herdsmen families.
In June 2008, Nima Medical Education Fund was put into operation providing training and assistance to medical personnel, teachers and students. In October, under the arrangement of CNOOC, 25 Nima officials received training in inland cities.
Poverty Relief and Financial Support to Students
CNOOC’s poverty relief program in Lingshui County, Baoting County and Wuzhishan City of Hainan Province progressed well in 2008; RMB 5 million was put into the program during the year. Baoting County constructed a middle school dormitory building and offered free surgery to 60 patients who suffered from cataracts and other eye diseases; Lingshui County built an outpatient building for a local hospital.
In 2008, the Company donated another RMB 1 million to Mother Cellar Program, RMB 150,000 to the Hope Project, RMB 1 million to the drinking water project in Malipo County, Yunnan Province, RMB 5 million for construction of the Museum of Chinese Women and Children, RMB 3.648 million to the Soong Ching Ling Foundation to help needy college students, and RMB 2 million to China Primary Health Care Foundation.
Donation Overseas
In April 2008, CNOOC organized the “Fuwa-Love Deliver” activity in Kenya, Equatorial Guinea and Indonesia and made a donation of RMB 2.114 million, presenting Fuwas, school and sports things to local students. In August 2008, CNOOC presented uniforms to the Equatorial Guinea Olympic Delegation for competition events. The Company also drilled two wells in Kenya for the local people.
In May 2008, Myanmar was hit by a tropical storm which caused huge causalities and economic losses. CNOOC took a quick action and contributed USD 100,000.
68 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Corporate Responsibilityg
Cleaning-up of Enteromorpha Prolifera in Qingdao
To help battle the invasion of enteromorpha prolifera into Qingdao Olympic Sailing Center since middle June, CNOOC urgently dispatched two multi-purpose marine support vessels, together with over 40 personnel including 10 experts on oil spillage recovery. This team actively participated in drift net layout and laid 60% of the total net length, which helped ensure a timely cleaning-up before the Olympic events.
International Corporate Citizenship Model Award
On October 12, CNOOC was granted the International Corporate Citizenship Model Award, jointly launched by China International Charity Foundation, China Internet Information Center, the Association for Poverty Alleviation and Development and some other 40 agencies, in honor of enterprises that have made contributions to commonwealth activities in aspects of natural disaster relief, poverty alleviation, and support to education and environmental protection.
Delivering Fuwa to Africa
In April, CNOOC carried the little Chinese messenger Fuwa to children in Kenya, Equatorial Guinea and Indonesia. The Company signed agreements for improving local school facilities and drilling wells.
69 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Management Team
Fu Chengyu Luo Han Zhou Shouwei Cao Xinghe President Vice President Vice President Vice President Party Leadership Group Secretary Vice Party Leadership Group Secretary Party Leadership Group Member Party Leadership Group Member
Wu Zhenfang Wu Guangqi Lv Bo Wu Mengfei Vice President Chief Compliance Officer Party Leadership Group Member Chief Financial Officer Party Leadership Group Member Party Leadership Group Member
Chen Lihua Zheng Changbo Yang Hua Liu Jian Chief Economist Assistant President Assistant President Assistant President
Yuan Guangyu Wang Jiaxiang Zhu Weilin Zhao Liguo Assistant President Assistant President Chief Geologist Chief Legal Officer
70 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Management Team h
Senior Management Changes
January 2009 Li Fanrong was appointed as Assistant President of CNOOC.
January 2009 Chen Lihua retired as the Chief Economist of CNOOC.
January 2009 Meng Liming was appointed as the Chief Economist of CNOOC.
March 2009 Luo Han was appointed as Chairman of the Board of Supervisors for
Key Large-sized State-owned Enterprises by the State Council and
is no longer the Vice President and Vice Party Leadership Group
Secretary of CNOOC.
71 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Major Events
January 7 CNOOC Executive Management Institute was formally established.
January 8 Two achievements of CNOOC, "Innovation in the Exploitation of Complicated Oilfields in Bohai Sea Area" and "Research and Application of Key Drilling Technologies of Offshore Extended-Reach Well with High Horizontal Displacement to Vertical Depth Ratio in China", were awarded the second prize of the National Award for Science and Technology Progress.
February 4 CNOOC donated RMB 32 million to 8 southern China provinces which had been struck by severe snowstorms.
March 5 CNOOC launched a pilot study and implementation of the Scientific Concept of Development.
April 10 CNOOC signed a liquefied natural gas (LNG) purchase agreement with Qatar Liquefi ed Gas Company Limited (Qatargas).
April 16 32 CNOOC employees were selected as Group-level technical experts; 119 employees were granted qualifi cations of technician and senior technician.
April 28 CNOOC held the commending ceremony of 2004-2006 Chinese Offshore Oil Industry Model Workers and Teams.
April 28 CNOOC began construction of a deepwater semi-submersible drilling platform, which is China's first deepwater semi-sub drilling unit with an operating depth of 3,000 meters.
May 21 CNOOC decided to donate RMB 100 million to the quake-hit area in Sichuan Province every year in the following fi ve years for post-disaster reconstruction.
June 26 CNOOC became a member of UN Global Compact.
July 14 CNOOC signed as a global partner of World Expo Shanghai 2010.
72 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Major Events i
August 7 CNOOC began the construction of an offshore multifunctional environmental protection vessel.
August 13 CNOOC signed a cooperation agreement with Shanghai Jiao Tong University on the construction of Deepwater Engineering Research Center and New Energy Engineering Center.
September 16 CNOOC started construction of its first deepwater pipe-laying barge Hai Yang Shi You 201, which is also the fi rst autonomous deepwater pipe-laying barge independently designed and constructed in China.
September 22 COSL announced that it completed acquisition of all shares of the Norwegian offshore drilling company Awilco Offshore ASA.
September 27 Fu Chengyu attended 2008 Summer Davos and was invited to make a speech at the forum of "Global Growth at Risk".
November 29 Appraisal work for Jinzhou 25-1, the largest light crude oil reserve in Bohai Sea Area, was fi nished.
December 18 The fi rst phase of Southwest Weizhou oilfi elds power network passed the test and was successfully grid-connected for operation.
December 26 CNOOC and Taiwan’s CPC Corporation signed four cooperation agreements, including a letter of intent for closer cooperation, a revised contract on joint exploration in the Tainan Basin of the Taiwan Strait and the Chaozhou Shantou Basin, joint study on the Wuqiuyu Basin and the transfer of a 30 percent stake of CNOOC’s Block 9 in Kenya to CPC.
December 27 CNOOC signed a cooperation agreement with Tianjin Municipal Government for construction of a new energy base and a sales branch.
73 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Company Honors
July 9 CNOOC ranked 409 on Fortune Global 500 list, advancing on its last ranking of 469.
August 28 State-owned Assets Supervision and Administration Commission (SASAC) of the State Council released the list of Central State-owned Enterprises (SOEs) with Grade A in performance for 2007; CNOOC won Grade A for the fourth consecutive year.
October 8 CNOOC received the "2008 Most Globally Competitive Chinese Company Award" jointly presented by Roland Berger Strategy Consultants and Global Entrepreneur Magazine.
October 12 CNOOC received the "International Corporate Citizenship Model Award".
October 20 CNOOC ranked 34 in Platts Top 250 Global Energy Companies List.
October 30 Zhanjiang Branch of CNOOC (China) Ltd., China Offshore Bitumen Co., Ltd., CNOOC Ningbo Daxie Petrochemical Co., Ltd. and China BlueChemical Limited were granted the title of "National Energy Reservation and Emission Reduction Advanced Unit" on the National Petroleum and Chemical Industry Energy Reservation and Emission Reduction Conference.
November 18 Fu Chengyu attended the Global China Business Meeting held in Barcelona and received the title of "2008 China Business Leader".
December 5 CNOOC was named as one of the "Advanced Central Units in Targeted Poverty Reduction" by the State Council Leading Group Offi ce of Poverty Alleviation and Development.
December 11 CNOOC was honored with the "Charity Pioneer Award" on the 20th anniversary celebration ceremony of China Women's Development Foundation (CWDF), the highest award from the organization.
December 21 CNOOC won the "People's Social Responsibility Award" from www.people.com.cn for the second time.
December 31 Fu Chengyu received the title of “The Most Socially Responsible Business Leader” at the 2008 “Responsible China” appraisal hosted by www.people.com.cn.
74 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Annual Report 2008 Affiliates j
Affi liates
China National Offshore Oil Corporation Offshore Oil Engineering Co., Ltd. Fu Chengyu, President Zhou Shouwei, Chairman NO. 25 Chaoyangmenbei Dajie, Dongcheng District Jiang Xizhao, President Beijing 100010, P. R. China P.O. Box 616, No. 1078 Danjiang Road Tel: 86 10 8452 1010 Tanggu District Tianjin 300451, P.R. China Fax: 86 10 6460 2600 Tel: 86 22 6690 8018 http://www.cnooc.com.cn Fax: 86 22 6690 8000 www.cnoocengineering.com CNOOC Limited Fu Chengyu, Chairman & CEO CNOOC Energy Technology & Services Limited Yang Hua, President Cao Xinghe, Chairman 65/F, Bank of China Tower Li Fanrong, General Manager Garden Road, Hong Kong No.25 Chaoyangmenbei Dajie, Dongcheng District Tel: 852 2213 2500 Beijing 100010, P.R. China Fax: 852 2525 9322 Tel: 86 10 8452 5000 http://www.cnoocltd.com Fax: 86 10 8452 5111
China Oilfi eld Services Limited CNOOC Bohai Corporation Fu Chengyu, Chairman Li Zifa, General Manager Liu Jian, Vice Chairman & CEO No.688 Bohaishiyou Road, Tanggu District NO. 25 Chaoyangmenbei Dajie, Dongcheng District Tianjin 300452, P.R. China Beijing 100010, P. R. China Tel: 86 22 2580 7313 Tel: 86 10 8452 2840 Fax: 86 22 2580 7332 Fax: 86 10 8452 2133 http://www.cosl.com.cn
75 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 CNOOC Nanhai West Corporation CNOOC Oil & Petrochemicals Co., Ltd. Song Enlai, General Manager Wu Zhenfang, Chairman & General Manager P.O. Box 11, Potou District, Zhanjiang P.O. Box 29, Shihua Dadao Zhong Avenue Guangdong province 524057, P.R. China Daya Bay Economic Development Zone, Huizhou Tel: 86 759 3900 392 Guangdong province 516084, P.R. China Fax: 86 759 3900 151 Tel: 86 752 3685 123 Fax: 86 752 3685 260 CNOOC Nanhai East Corporation Tu Zhimin, General Manager China Offshore Oil & Gas Development & Utilization Company No.168 Middle of Jiangnan Avenue, Guangzhou Zheng Baoguo, General Manager Guangdong province 510240, P.R. China No.25 Chaoyangmenbei Dajie, Dongcheng District Te l: 86 20 8426 2245 Beijing 100010, P.R. China Fax: 86 20 8442 0984 Tel: 86 10 8452 1682 Fax: 86 10 6460 2565 CNOOC Donghai Corporation Zheng Li, General Manager CNOOC Finance Co., Ltd. 24/F CNOOC Tower Fu Chengyu, Chairman No.583 Lingling Road Xie Weizhi, General Manager Shanghai 200030, P.R. China No.25 Chaoyangmenbei Dajie, Dongcheng District Tel: 86 21 6487 6285 Beijing 100010, P.R. China Fax: 86 20 6487 6800 Tel: 86 10 8452 1246 Fax: 86 10 8452 3878 CNOOC Enterprises Corporation Liu Wenbo, General Manager Zhonghai Trust Co., Ltd. Jingxin Tower Fu Chengyu, Chairman No.2, East 3rd Ring Road, Chaoyang District Chu Xiaoming, President Beijing 100027, P.R. China 7/F, No.15, Second Zhongshandong Road, Huangpu District Tel: 86 10 8452 6308 Shanghai 200002, P.R. China Fax: 86 10 8452 5020 Tel: 86 21 6355 5000 Fax: 86 21 6355 1955 CNOOC Gas & Power Group http://www.zhtrust.com Wang Jiaxiang, General Manager Jingxin Tower CNOOC Insurance Ltd. No.2, East 3rd Ring Road, Chaoyang District Wu Mengfei, Chairman Beijing 100027, P.R. China Wang Zhiliang, General Manager Tel: 86 10 8452 1166 Unit 1-3A, 38/F, No.148 Electric Road, North Point Fax: 86 10 8452 1091 Hong Kong http://www.cnoocgas.com Tel: 852 2164 4807 Fax: 52 2164 4878 China BlueChemical Limited Wu Mengfei, Chairman CNOOC Investment Co., Ltd. Yang Yexin, CEO & President Wu Mengfei, Chairman No. 1 Zhujiangnan Dajie, Dongfang Cheng Chi, General Manager Hainan province 572600, P.R. China No.25 Chaoyangmenbei Dajie, Dongcheng District Tel: 86 898 2569 1356/1819 Beijing 100010, P.R. China Fax: 86 898 2552 3070 Tel: 86 10 8452 1996 http://www.chinabluechem.com.cn Fax: 86 10 8452 2059
76 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 Aegon-CNOOC Life Insurance Co., Ltd. Wu Mengfei, Chairman Peter Brudnak, General Manager 15/F, Pufa Building, No.588 Pudongnan Road Shanghai 200120, P.R. China Tel: 86 21 3878 4868 Fax: 86 21 6888 0208 http://www.aegon-cnooc.com
CNOOC Research Center Chen Wei, Director No.6 Dongzhimenwai Xiaojie, Dongcheng District Beijing 100027, P.R. China Tel: 86 10 8452 2744 Fax: 86 10 6466 0095
China Ocean Offshore Oilfields Service (Hong Kong) Ltd. Cao Xinghe, Chairman Huang Dongyang, Vice General Manager Room 2507, 25/F, Harcourt House, 39 Gloucester Road Hong Kong Tel: 852 2811 5216 Fax: 852 2564 0309
CNOOC New Energy Investment Co., Ltd. Zheng Changbo, Chairman & General Manager Ambassador Mansion, No.B21 Jiuxianqiao Road, Chaoyang District Beijing 100016, P. R. China Tel: 86 10 8452 5571 Fax: 86 10 8452 5500
CNOOC Marketing Company Zhou Dechun, General Manager No. 4 District 7, Hepingli, Dongcheng District Beijing 100013, P. R. China Tel: 86 10 8425 0595 Fax: 86 10 8425 0881
Affiliates Information Valid as of May 2009 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398 WorldReginfo - 663cc705-a351-4a9e-a8fa-803cdfd33398